Document:

exv10w29

 

Exhibit 10.29

SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT

     This Second Amendment to Revolving Credit Agreement (this “Second
Amendment”) amends that certain Revolving Credit Agreement (as amended, the
“Credit Agreement”) dated as of December 31, 2003, and is made and entered into
as of the 14th day of April, 2004 by and among FIRST POTOMAC REALTY INVESTMENT
LIMITED PARTNERSHIP (“FPLP”), certain other borrowers, FLEET NATIONAL BANK
(“Fleet”), a national banking association, having its principal place of
business at 100 Federal Street, Boston, Massachusetts 02109 and KEYBANK
NATIONAL ASSOCIATION (collectively with Fleet, the “Banks”) and FLEET NATIONAL
BANK, as managing administrative agent for itself and each other Bank.

     WHEREAS, the Banks and the Borrower have determined to make certain
amendments to the Credit Agreement, as set forth herein.

     NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and
valuable consideration by each of the parties hereto, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:

	1.	 	Capitalized terms used but not defined herein shall have the
respective meanings assigned to such terms in the Credit Agreement.
	 
	2.	 	The definition of “Consolidated Tangible Net Worth” contained
in Section 1 of the Credit Agreement is amended by inserting the
following new proviso at the end thereof:

”, provided that any amounts attributable to Real Estate
Assets that are required to be reported as “intangibles”
under GAAP pursuant to Financial Accounting Standards Board
Statement of Policy No. 141 and 142 shall be permitted to
be added back to “tangible property” for purposes of
calculating such Consolidated tangible net worth.”

	3.	 	Section 9.1(j) of the Credit Agreement is amended to read in
its entirety as follows:

"(j) (x) Recourse Indebtedness of the Borrower incurred
after the Closing Date (other than relating to the
Collateral Properties) in connection with the acquisition
of a real estate asset and having a term of not more than 6
months, and (y) Recourse Indebtedness of the Borrower
incurred after the Closing Date (other than relating to the
Collateral Properties) in connection with the construction
of or renovation of improvements on any Real Estate Asset,
provided

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that at the time any such Indebtedness under clause (x) or
(y) is incurred and after giving effect thereto, there
exists no Default or Event of Default hereunder;”

	4.	 	Section 10.1 of the Credit Agreement is amended by inserting,
after the first sentence contained therein, the following new
sentence:

“Notwithstanding the foregoing, through the fiscal quarter
ending September 30, 2004, the reference to “65%” in the
preceding sentence shall be deemed to be a reference to
“75%”, provided that in the event that such Consolidated
Total Leverage Ratio exceeds 65% at any time prior to
September 30, 2004, the Applicable Libor Margin and the
Applicable Base Rate Margin shall be deemed to be 3.50% and
1.50%, respectively, during such time (notwithstanding the
provisions of Section 2.3(c)).”

	5.	 	The Borrower hereby represents and warrants as follows:

(a) Representations in Credit Agreement. Both before and after
giving effect to this Second Amendment, each of the
representations and warranties made by or on behalf of the
Borrower, the Trust or any of their respective Subsidiaries
contained in the Credit Agreement or any of the other Loan
Documents, was true when made and is true on and as of the date
hereof with the same full force and effect as if each of such
representations and warranties had been made on the date hereof
and in this Second Amendment, except to the extent that such
representations and warranties relate expressly to an earlier
date.

(b) No Events of Default. No Default or Event of Default exists
on the date hereof (both before and after giving effect to this
Second Amendment).

(c) Binding Effect of Documents. This Second Amendment has been
duly executed and delivered by the Borrower and is in full force
and effect as of the date hereof, and the agreements and
obligations of the Borrower contained herein constitute legal,
valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their respective terms.

	6.	 	Provisions of General Application.

(a) No Other Changes. Except as otherwise expressly provided by
this Second Amendment, all of the terms, conditions and provisions
of the Credit Agreement and each of the other Loan Documents
remain

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unaltered. The Credit Agreement and this Second Amendment shall
be read and construed as one agreement.

(b) Governing Law. This Second Amendment is intended to take
effect as a sealed instrument and shall be deemed to be a contract
under the laws of the State of New York. This Second Amendment
and the rights and obligations of each of the parties hereto shall
be governed by and interpreted and determined in accordance with
the laws of the State of New York (without regard to conflicts of
laws provisions).

(c) Binding Effect; Assignment. This Second Amendment shall be
binding upon and inure to the benefit of each of the parties
hereto and their respective successors in title and assigns.

(d) Counterparts. This Second Amendment may be executed in any
number of counterparts, but all such counterparts shall together
constitute but one and the same agreement. In making proof of
this Second Amendment, it shall not be necessary to produce or
account for more than one counterpart thereof signed by each of
the parties hereto.

(e) Conflict with Other Agreements. If any of the terms of this
Second Amendment shall conflict in any respect with any of the
terms of any of the Credit Agreement or any other Loan Document,
the terms of this Second Amendment shall be controlling.

(f) Condition Precedent. The effectiveness of this Second
Amendment is subject to the condition precedent that the Agent
shall have received, in form and substance satisfactory to it, an
executed original of this Second Amendment from each Borrower, the
Trust and each of the Lenders.

     WITNESS the execution hereof, under seal, as of the day and year first
written above.

	 	 	 	 	 
	 	 	FLEET NATIONAL BANK,
	 	 	individually and as Managing Administrative
	 	 	Agent
	 
	 	 	 	 
	

	 	By:	 	/s/ Daniel Sibert
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 

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	 	 	KEYBANK NATIONAL ASSOCIATION,
	 	 	Individually
	 
	 	 	 	 
	

	 	By:	 	/s/ John Scott
	

	 	 	 	

	

	 	Name: John Scott
	

	 	Title: Vice President

	 	 	 	 	 	 	 	 	 
	 	 	FIRST POTOMAC REALTY INVESTMENT	 	 
	 	 	LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	First Potomac Realty Trust., its sole general	 	 
	 	 	 	 	partner	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By:  /s/ Barry H. Bass
	 	 	 	(SEAL)
	

	 	 	 	 	 	

	 	 
	

	 	 	 	 	 	Name:	 	 
	

	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	[insert Bren Mar, if applicable]	 	 

	 	 	 	 	 	 	 
	ACCEPTED AND AGREED:	 	 
	 
	 	 	 	 	 	 
	FIRST POTOMAC REALTY TRUST, Guarantor	 	 
	 
	 	 	 	 	 	 
	By:  /s/ Barry H. Bass

	 	 	 	(SEAL)
	 	 
	 	 	

	 	 	 	 
	

	 	Name:	 	 	 	 
	

	 	Title:	 	 	 	 

-4-exv10w30

 

Exhibit 10.30

AGREEMENT OF PURCHASE
AND SALE

     THIS AGREEMENT OF PURCHASE AND SALE (“Agreement”) is made and entered into
as of the 12th day of March, 2004 (the “Effective Date”), by and between AQUIA
COMMERCE CENTER, L.C., a Virginia limited liability company (“Seller”), and
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP, a Delaware limited
partnership, or its permitted assigns (collectively “Purchaser”).

R E C I T A L S:

     A. Seller is the fee simple owner of that certain real property located in
Stafford County, Virginia consisting of certain improvements known by street
address 2721 Jefferson Davis Highway, Stafford, Virginia containing
approximately 34,111 rentable square feet in the aggregate and approximately
2.35 acres of land, inclusive of the required on-site parking facilities for
such improvements pursuant to applicable local law, such real property being
more particularly described on Exhibit A attached hereto; and all right, title
and interest of Seller, if any, that is appurtenant to the real property
described on Exhibit A in and to the following: any land lying in the bed of
any existing, dedicated street, road or alley, all strips and gores adjoining
thereto and all appurtenances, rights, easements, rights-of-way, covenants,
tenements, hereditaments and other rights incident thereto, including, without
limitation, any right or option to acquire or benefit from any future easement
or right-of-way to the extent that such rights and interests may benefit such
real property (collectively, the “Land”), together with all improvements
situated thereon and all right, title and interest of Seller in and to all
other improvements, driveways, landscaping, paving, walkways, plumbing and
heating pipes and fixtures situated thereon that they may benefit such
improvements, situated thereon and/or used in connection therewith to the
extent that they may benefit such improvements (collectively, the
“Improvements”), together with all of Seller’s right, title and interest in and
to the Government Lease identified on Exhibit C attached hereto (the
“Government Lease”), together with, to the extent assignable, any contract
rights other than the Government Lease, any escrow or security deposits,
utility agreements, guarantees (if any), licenses, approvals, amounts held in
reserve by the holder of the Existing Indebtedness (defined below) with respect
to the Improvements; certificates, certificates of occupancy, plans and
specifications, logos, permits, warranties or other rights related to the
development of, construction of, ownership or, or use and operation of, the
real property (all such items being collectively referred to as the
“Intangibles”), and all furniture, fixtures and equipment and other items of
personal property owned by Seller and located in or on the real property, as
described in Exhibit B attached hereto and made a part hereof (collectively,
the “Personalty”) (the Land and Improvements, together with the Intangibles and
Personalty, being hereinafter sometimes referred to collectively as the
“Property”); and

     B. Purchaser desires to acquire the Property, and Seller desires to sell
the Property, all pursuant to the following terms.

     NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

     1. Purchase and Sale. Purchaser agrees to acquire the Property and Seller
agrees to sell the Property (including without limitation its interests in the
Government Lease), pursuant to the terms and conditions set forth herein.

 

     2. Purchase Price and Method of Payment.

        2.1 The purchase price for the Property (including Seller’s interests in
the Government Lease as aforesaid) shall be Five Million Nine Hundred Thirty
Six Thousand and 00/100 Dollars ($5,936,000) (the “Purchase Price”).

        2.2 The Purchase Price shall be payable by Purchaser as follows: (i)
Purchaser shall assume the indebtedness outstanding as of the Closing Date owed
to GMAC Commercial Mortgage Corporation (the “Lender”) and secured by the
Property, as more particularly described in Section 3.20 below (the “Existing
Indebtedness”), and (ii) the balance after application of the assumption amount
described in (i) above shall be paid by wire transfer of immediately available
funds, of which the Deposit shall be a part, subject to such prorations and
adjustments as are set forth hereinafter.

        2.3 Within three (3) business days following the Effective Date, Purchaser
shall deposit with Tri-State Commercial Closings, Inc., located at 1150 18th
Street, N.W., Suite 575, Washington, D.C. 20036 (“Escrow Agent”) in cash, Two
Hundred Sixty Five Thousand Dollars ($265,000) (the “Initial Deposit”) (as
used herein, the term “Deposit” shall include the aforesaid Initial Deposit,
the Supplemental Deposit (below defined), and all interest earned on the
Initial Deposit and Supplemental Deposit). Within three (3) business days
following expiration of the Inspection Period (below defined), Purchaser shall
deposit with the Escrow Agent the additional sum as shall be necessary to
increase the Deposit to Five Hundred Thirty Thousand Dollars ($$530,000) (it
being understood that if the Purchaser shall fail to make such additional
deposit in accordance with the foregoing provisions then Purchaser shall have
been deemed to have elected to terminate this Agreement by reason of its rights
during the Inspection Period and the Initial Deposit together with all interest
earned thereon shall be returned by the Escrow Agent to the Purchaser without
any further act of Seller). The Escrow Agent shall not be liable for any acts
or omissions at any time unless caused by the gross negligence or willful
malfeasance of the Escrow Agent with respect to the escrow established herein.
If a dispute arises between the parties as to the disposition of the Deposit,
the Escrow Agent shall: (a) hold the Deposit until the Escrow Agent has
received releases signed by all parties to the transaction authorizing
disposition of the Deposit, or (b) hold the Deposit until such time as one of
the parties to the transaction files suit and the court in which the suit is
filed orders the disbursement of the Deposit, or (c) deliver such Deposit into
the court by filing an Interpleader Action. In the event of any litigation
between Seller and Purchaser concerning the Deposit, Escrow Agent’s sole
responsibility may be satisfied, at Escrow Agent’s option, by delivering the
Deposit into the court in which such litigation is pending, and Purchaser and
Seller agree that upon deliverance of such Deposit into court, neither
Purchaser nor Seller shall have any further right, claim, demand, or action
against the Escrow Agent. In the event any dispute arises under this Agreement
between Seller and Purchaser resulting in the Escrow Agent being made a party
to any litigation, Seller and Purchaser, jointly and severally, shall indemnify
the Escrow Agent for all costs, and reasonable attorneys’ fees and legal
expenses incurred by the Escrow Agent as a result thereof, provided that such
litigation does not result in a judgment against the Escrow Agent for acting
improperly under this Agreement.

     3. Seller’s Representations and Warranties. In order to induce Purchaser
to enter into this Agreement and to purchase the Property, Seller makes the
following representations and warranties, each of which being true and correct
in all material respects as of the date hereof and each of which shall be true
and correct in all material respects on the Closing Date.

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        3.1 Organization and Authority. Seller has full power and authority to
enter into this Agreement, to sell the Property to Purchaser and to otherwise
perform its obligations hereunder. Seller further represents to Purchaser that
the execution, delivery and performance of this Agreement, the fulfillment of
and compliance with the terms and provisions hereof and the due consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by all requisite organizational action, all of which are in full force
and effect. The sale of the Property pursuant to this Agreement (and the
consummation of the transactions contemplated herein) shall not violate any
law, ordinance, judgment, decree or order to which Seller or the Property is
subject. Seller is not a “foreign person” as that term is defined by Section
1445 of the Internal Revenue Code of 1986, as amended. All Related Documents
executed by Seller at the Closing will be duly authorized, executed, and
delivered by Seller, are or at the Closing will be legal, valid, and binding
obligations of Seller, are sufficient to convey title, and do not violate any
provisions of any agreement to which Seller is a party or to which it is
subject. The term “Related Documents” shall mean any document or instrument
executed and/or delivered by Seller in connection with or pursuant to the
Closing of the transaction contemplated by this Agreement including, without
limitation, the Deed, bill of sale, Lease Assignment and Assumption Agreement,
Loan Assumption Documents, assignment and assumption of contracts, and the
FIRPTA Certificate.

        3.2 Encroachments. To Seller’s knowledge, no part of the Improvements
encroaches on any other property, and no Improvements violate any setback
requirements. To Seller’s knowledge, no structures of any kind encroach on the
Property.

        3.3 Ownership. Seller is the sole, fee simple owner of the Property, free
and clear of liens and encumbrances other than the Permitted Exceptions
(defined below) and the liens securing the Existing Indebtedness which shall be
assumed by Purchaser as of the Closing Date. As of the date of this Agreement,
there is no Personalty included in or related to the Property.

        3.4 Oral Agreements. No oral agreement has been entered into with any
person or entity relating to or connected with the ownership, construction,
use, operation, maintenance or condition of the Property which would be binding
upon Purchaser at or subsequent to the Closing.

        3.5 Insurance. Seller has not received any written notice from any
insurance company which has issued a policy with respect to the Property
requesting performance of any structural or other major repairs or alterations
to any of the Property which has not been complied with. Seller has not
received from any insurance company presently insuring the Property any notice
of cancellation of any policy or of a material increase in the current premium
of any policy. Seller agrees to keep present coverages in full force and
effect, and to pay the premiums thereon, until the date of Closing.

        3.6 Building Documents. To the extent not previously provided or made
available to Purchaser, Seller shall make available to Purchaser within the
five (5) day period from and after the date hereof, for Purchaser’s inspection
and photocopying at Seller’s place of business, copies of all documents,
instruments, reports, analyses, surveys, inspections and other information in
Seller’s possession and relating to the Land and/or the condition or
construction of the Improvements and/or the presence of any Hazardous
Substances (as herein defined) in or around the Property, together with copies
in Seller’s possession of any and all plans, operating statements, engineering
or architectural studies or reports and soil or environmental studies or
reports; copies in Seller’s possession of any and all agreements, permits
(including use and occupancy certificates and

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building permits) and approvals which the Seller has with any governmental
authority pertaining to the Property; copies of the Seller’s existing title
policy and all surveys; plats; engineering, mechanical, and architectural data
in Seller’s possession relating to the Property, including if available
“as-built” surveys and “as-built” site plans (including the current, approved
site plan) relating to the Property; copies of all warranties and guaranties of
every type in Seller’s possession with respect to the Property; a copy of
Seller’s certificate of insurance evidencing insurance coverage on the
Property; and a copy of most recent real estate tax bill/assessment for the
Property (collectively the “Building Documents”).

        3.7 Hazardous Wastes. With respect to the Property (including, without
limitation, the soil and ground water underneath the Improvements), no summons,
citation, directive, notice or complaint issued by the United States
Environmental Protection Agency or other federal or local Government authority
has been received by Seller, its employees or to Seller’s knowledge, its
agents, concerning any alleged violations of any environmental laws and
regulations or any investigation or request for information relating to the
handling, packaging, transportation, treatment, storage or disposal of
Hazardous Substances on-site or when transported off-site. To Seller’s
knowledge, the Property is in compliance with all laws, regulations, orders,
decrees and agreements relating to Hazardous Substances and there are no
Hazardous Substances on, at or under the Property as of the date hereof. The
term “Hazardous Substances” has the meaning set forth in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. § 9601 et seq.), and all regulations thereunder. For the purposes of
this Agreement, the term Hazardous Substances also includes radon, petroleum
and petroleum products and asbestos and asbestos products.

        3.8 Condemnation. No taking by power of eminent domain or condemnation
proceeding has been instituted or, to Seller’s knowledge, threatened for the
permanent or temporary taking or condemnation of all or any portion of the
Property.

        3.9 Litigation. There is no pending or, to Seller’s knowledge,
threatened, litigation, proceeding or investigation relating to the Property,
Seller’s title thereto, Seller’s right to sell the Property or the zoning or
use of the Property.

        3.10 Compliance; Notice of Violations. Seller has received no written
notice of any violation of any law, rule, regulation, order, requirement, code,
ordinance, statute or regulation issued by any Government agency, board,
commission, authority or other Government entity, or any insurance board of
underwriters, or of any action in any court or in any Government or
administrative body on account thereof, against or affecting the zoning, use,
development, maintenance, condition or operation of the Property or any part
thereof.

        3.11 Commitments. Seller has not made, and prior to Closing hereunder
shall not make, any commitments to any Government authority or agency, utility
company, or to any other organization, group or person relating to the Property
that would impose on Purchaser or the Property (or any future owner thereof)
the obligation to make on or after the Closing any contributions of money,
dedication of land or grants of easements, rights-of-way or other things, or to
construct, install or maintain any improvements, public or private, on or off
the Property.

        3.12 Liens. No labor has been performed or materials furnished at the
request or direction of Seller that could result in a materialman’s or
mechanic’s lien filed against the Property except as shall be fully paid or
released prior to Closing. All real estate taxes on the

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Property which have become due and payable prior to Closing have been or
will be paid by Closing.

        3.13 Government Lease. There are no leases, license agreements or other
occupancy agreements for the Property binding upon the Purchaser or its
successors other than the Government Lease. The Government Lease shall not be
further extended, modified or amended prior to Closing without the Purchaser’s
consent, which shall not be unreasonably withheld, conditioned or delayed.
Neither landlord nor, to Seller’s knowledge tenant, is in default under the
Government Lease, and there are no other obligations of the landlord pertaining
to the Property except as expressly set forth in the Government Lease. To the
knowledge of Seller, no controversy, claim, dispute or disagreement exists
between the parties to the Government Lease and no event has occurred which,
with the giving of notice or the passage of time, or both, would constitute a
default under the Government Lease. The Government Lease is in full force and
effect. Neither the tenant thereunder nor any other person, firm or
corporation has any right, option or agreement to purchase the Property,
including, but not limited to, purchase options or rights of first refusal to
purchase the Property or any portion thereof. There are no security deposits
or other deposits under the Government Lease. There are no brokerage, leasing
or other commissions payable with respect to the Government Lease as of the
date hereof, and at Closing, there shall be no such commissions payable,
whether with respect to the present term thereunder or any renewal term. There
are no unperformed requirements under the Government Lease for the Seller to
perform tenant build-out or improvement work.

        3.14 Service Contracts. At Closing, there shall be no service,
maintenance, supply, management, leasing contracts or other agreements
(“Service Contracts”) except as shown on Exhibit D attached hereto and made a
part hereof. Seller is not in default under any of the Service Contracts and
to its knowledge no other parties to any of the Service Contracts are in
default thereunder. All of the Service Contracts may be terminated at any time
by the Seller or Purchaser at no cost or expense other than for services
provided prior to the effective date of such termination, and with a notice of
not more than thirty (30) days in advance, unless expressly set forth on
Exhibit D to the contrary. Seller will cause the Management Agreement for the
Property between the Seller and Garrett Development Corporation to be cancelled
effective as of the Closing Date. The copies of the Service Contracts
delivered to Purchaser by or on behalf of Seller prior to execution of this
Agreement are true, accurate and complete in all material respects as of the
date hereof, are in full force and effect and none of them has been further
modified, amended or extended.

        3.15 Assessments. To Seller’s knowledge, there are no assessments for
public improvements or repairs made or pending against the Property (or any
component thereof) which remain unpaid, including, without limitation, those
for construction of sewer, water, gas and electric lines and mains, streets,
roads, sidewalks and curbs and, to Seller’s knowledge, none has been proposed.
Seller has provided Purchaser a true and complete copy of the most recent real
property tax bills for the Property and true and complete copies of bills for
any and all public space rentals, vault rentals and any other public rentals or
taxes relating to the use or ownership of the Property (and all components
thereof). Seller shall promptly deliver to Purchaser a true and complete copy
of any new real property tax assessment received for any component of the
Property.

        3.16 No Actions. Seller shall not knowingly cause or permit by its agents
or employees any action to be taken which would cause any of the
representations or warranties contained or incorporated in this Agreement to be
untrue as of the Closing Date. Seller agrees to notify Purchaser promptly in
writing of any event or condition of which Seller becomes aware

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which occurs prior to Closing hereunder and which causes a material change
in the truth of any of the representations or warranties contained herein.

        3.17 Employees. Seller has not entered into any management contracts,
employment contracts or labor union contracts and has not established any
retirement, health insurance, vacation, pension, profit sharing or other
benefit plans relating to the operation or maintenance of the Property (or any
component thereof) for which Purchaser shall have any liability or obligation.
Neither Seller nor its management agent has any employees at the Property (or
any component thereof), other than at-will employees who shall remain the
responsibility of Seller or its management agent and as to whom Purchaser shall
have no liability or obligation whatsoever. As of the Closing Date, there
shall be no employees working at the Property (or any component thereof).
Seller shall have paid or caused to be paid to all employees of the Seller or
its management agent all salary and any other payments which shall be payable
on account of each such employee for such period through Closing Date.

        3.18 USTs. Seller has no knowledge of any underground storage tanks that
are located on or under the Property (or any component thereof).

        3.19 No Termination of Utilities. Seller has not received any written
notice of the termination or impairment of the furnishing of services to the
Property or any component thereof of water, sewer, gas (if any), electric,
telephone, drainage and other such utility services.

        3.20 Existing Indebtedness. The documents described on Exhibit E hereto
and made a part hereof (the “Loan Documents” and the funds disbursed
thereunder, the “Loan”), are the only documents or agreements relating to the
Existing Indebtedness to which Purchaser will be bound after the Closing.
There are no amendments or modifications (written, oral, by course of conduct
or otherwise) to the Loan Documents other than as described on Exhibit E.

        The Loan was originated by GMAC Commercial Mortgage Corporation, a
California corporation (the “Lender”). The original principal amount of the
Loan to Seller under the Loan Documents was $1,500,000.00. The current amount
of principal outstanding under the Loan Documents is $1,087,379.89. The annual
rate of interest throughout the remaining term of the Loan is 7.280%. All
payments required to be made under the Loan Documents to date have been made
and will be made as of Closing. There are no other fees, expenses or other
amounts due to Lender as of the date hereof (other than transfer or assumption
fees which may be imposed after the date of execution of this Agreement in
connection with the transfer of the Existing Indebtedness to Purchaser and
which shall be payable by Purchaser in accordance with Section 4.5 below).

        Neither Seller nor, to the best of Seller’s knowledge, Lender is in
default under the Loan Documents. There are no other obligations of the Seller
to the Lender except as set forth in writing in the Loan Documents. No
controversy, claim, dispute or disagreement exists between the parties to the
Loan Documents. No event has occurred which, with the giving of notice or the
passage of time, or both, would constitute a default under any of the Loan
Documents. The Loan Documents are in full force and effect. There are no
reserves held by Lender except as set forth on Exhibit F.

        The Loan Documents shall not be further extended, modified or amended
prior to Closing.

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        There is no pending or, to Seller’s knowledge, threatened, litigation,
proceeding or investigation relating to the Loan Documents.

        3.21 No Other Agreements. Without in any way limiting the generality of
the foregoing representation, Seller further represents and warrants to
Purchaser that no understanding, agreement (either express or implied), or
reasonable expectancy of agreement with respect to sale, lease or other
transfer of the Property exists between Seller and any third party other than
the Government Lease.

        3.22 Completeness and Accuracy. The documents delivered by Seller to
Purchaser pursuant to Section 3.6 are the material documents in the possession
of Seller or its representative and agents relating to the Property and used by
Seller in its operation of the Property. The representations and warranties
contained in this Agreement do not contain any material untrue statement of
fact and do not omit any statement of fact necessary to make the information
herein or therein not materially misleading.

        3.23 Fence. Seller has no legally binding obligation to build a fence on
or around the Property except as and to the extent expressly set forth in the
Government Lease, which has not been amended orally or in writing other than as
set forth on Exhibit C hereto. The tenant under the Government Lease is
obligated to reimburse the Seller for fence-related expenditures made by the
Seller which the tenant requested and has agreed to reimburse. Any such
reimbursements attributable to expenditures billed by the Seller prior to
Closing which are paid by such tenant to the Purchaser after Closing will be
paid by the Purchaser to the Seller within five (5) business days following
Purchaser’s receipt thereof, in accordance with Section 9.1(ii) below.
Purchaser may obtain additional information regarding the fence project during
the Inspection Period, and Seller will reasonably cooperate with such Purchaser
requests for additional information.

     4. Inspection; Condition of Property and Title.

        4.1 Right of Inspection. Purchaser shall have the right, at its own risk,
cost and expense, at any time prior to Closing during normal business hours
(i.e. Monday through Friday from 9:00 a.m. to 5:00 p.m. - federal holidays
excepted) upon not less than twenty-four (24) hours prior notice to Seller, and
subject to the approval of the tenant under the Government Lease with respect
to any entry into the leased premises, to enter, or cause its agents or
representatives to enter, upon the Property for the purpose of making surveys,
tests, test borings, inspections, investigations and architectural, structural,
economic, environmental and other studies of the Property as Purchaser may deem
desirable. Seller agrees that it shall reasonably cooperate with Purchaser in
connection with any other information regarding the Property reasonably
requested by Purchaser and will provide or make available such information
during the Inspection Period and at all periods thereafter through the Closing
to the extent either in Seller’s possession or control. Purchaser shall, at
Purchaser’s sole cost and expense, promptly and fully restore any damage or
destruction to the Property occurring as a result of any act or omission of
Purchaser by reason of such tests, studies or investigations. Purchaser shall
indemnify, defend and hold Seller harmless from and against all loss, cost,
damage or claim (including attorneys’ fees reasonably incurred, court costs and
costs of investigation) arising out of or resulting from Purchaser’s exercise
of the right and privilege granted to Purchaser contained in this Section 4,
and the undertakings contained in this Section 4 shall survive closing or prior
termination of this Agreement. The obligations of Purchaser under the
immediately preceding sentence shall expressly survive any termination of this
Agreement.

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        4.2
Inspection Period. Purchaser’s obligations under this Agreement are
subject to Purchaser’s approval of the Property for Purchaser’s intended use
and to satisfaction of certain other contingencies more fully described in
Article 5 below. Purchaser shall have the period commencing on the date hereof
and ending at 5 p.m. on that date which is thirty (30) days after the date of a
fully executed copy of this Agreement shall be delivered to Purchaser (the
“Inspection Period”) to inspect the Property and to conduct such tests and
investigations as it deems advisable in order to determine that the Property
can be used for Purchaser’s intended use. Also during the Inspection Period,
to assist Purchaser in its inspection as an accommodation by the Seller, the
Seller agrees to use good faith efforts to obtain assurances (in writing if
possible) from the tenant under the Government Lease that it consents to the
assignment of the Government Lease to the Purchaser or its permitted affiliate
hereunder, and the Seller agrees upon reasonable notice from the Purchaser to
facilitate a conversation between the Purchaser and a representative for the
tenant under the Government Lease (provided that the Seller at the Seller’s
option may be a party to any such conversation), but Seller shall not be liable
to Purchaser if Seller is unable to obtain such assurances or to organize such
a conversation despite such good faith efforts. If, during the Inspection
Period, Purchaser in its sole discretion is not satisfied with the results of
its inspection or its findings hereof for any or no reason whatsoever,
Purchaser shall notify Seller in writing (prior to the expiration of the
Inspection Period) in which event:

	(i)	 	the Deposit shall be returned to Purchaser;
	 
	(ii)	 	this Agreement shall be terminated; and
	 
	(iii)	 	the parties shall be relieved of any further
obligation and responsibility under this Agreement, subject
only to the Purchaser’s obligations under Section 4.1.

It is expressly recognized and agreed by the parties that following delivery by
Purchaser of the Supplemental Deposit, Purchaser shall be deemed to have waived
its termination right under this Section 4.2, and the entire Deposit shall
thereupon be deemed at risk to Purchaser. Consequently, should Purchaser
wrongfully fail to settle on the Property pursuant to the terms of this
Agreement, the Deposit shall be non-refundable to Purchaser and paid to Seller
in accordance with the Default provisions below provided as final, liquidated
damages.

        4.3.
 “As-Is and Where Is Condition.” The Purchaser acknowledges that,
subject to Purchaser’s rights in Sections 4.1 and 4.2 above, it is accepting
the Property “as is and where is,” in its present physical condition, which
Purchaser is familiar with or has had adequate opportunity to become familiar
with. Except as specifically provided in this Agreement, the Purchaser
acknowledges that Seller has made no representations or warranties to the
Purchaser regarding the condition of the Property.

        4.4  Title Commitment. Purchaser shall be responsible for obtaining a
preliminary title report for the Property after the Effective Date, and shall
notify Seller in writing after Purchaser’s receipt thereof whether any items
shown on such title report are unacceptable to Purchaser. Seller may, at its
sole option, seek to cure any such title defects on or before the expiration of
the Inspection Period. However, any title defects or exceptions shown on
Purchaser’s title report which Purchaser does not object to in writing prior to
the expiration of the Inspection Period, or which remain uncured for any reason
at the expiration of the Inspection Period (regardless of whether or not
Purchaser has objected thereto), shall be deemed waived by Purchaser

8

 

after the expiration of the Inspection Period and shall thereafter constitute
“Permitted Exceptions” for all purposes of this Agreement.

        4.5  Assumption of Existing Indebtedness. Commencing on the Effective
Date, the Purchaser and the Seller shall work actively and in good faith with
the holder of the Existing Indebtedness to ensure that the Purchaser will be
able to timely and satisfactorily assume the Existing Indebtedness at Closing.
Purchaser shall be responsible for the payment of all assumption and transfer
fees (including attorney’s fees of holder’s counsel) which may be imposed by
the holder of the Existing Indebtedness as a condition of approving the
assumption thereof. Purchaser shall also reimburse Seller for any reasonable,
out-of-pocket costs incurred by Seller in connection with Purchaser’s
assumption of the Existing Indebtedness.

     Notwithstanding anything in this Agreement to the contrary, either party
may terminate this Agreement by written notice to the other at any time prior
to the Closing Deadline (in which event the Deposit shall be returned to
Purchaser and neither party shall have any further obligations or liabilities
to the other, subject only to the obligations of the Purchaser under Section
4.1), and such termination shall not be a default of the terminating party nor
a willful failure by the terminating party to settle hereunder, in the event
that: (i) the Lender refuses to permit the assumption of the Loan by the
Purchaser, or is not ready to close on the assumption of the Loan by the
Closing Deadline, for reasons unrelated to the terminating party’s failure to
cooperate actively and in good faith with the Lender or to comply with any
commercially reasonable requirements of the Lender not inconsistent with this
Agreement in connection with the Loan assumption, or (ii) the Lender imposes
commercially unreasonable requirements on the terminating party as a condition
to permitting the assumption of the Loan.

     5.  Conditions Precedent to Closing

        5.1  Purchaser’s Conditions Precedent to Closing. It shall be a condition
precedent to Purchaser’s obligation to make a full settlement hereunder that
each and every one of the following conditions shall exist on the Closing Date:

            (a)  Representations and Warranties. Each of Seller’s representations and
warranties contained herein shall be true and correct in all material respects
in the same manner and with the same effect as though such representations and
warranties had been made on and as of the Closing Date. In addition, Seller
shall have complied with its obligations under Article 12 below as of the
Closing Date.

            (b)  Title Insurance. Purchaser shall have been able to secure a
commitment, naming Purchaser as the proposed insured, for an owner’s policy of
title insurance (“Title Policy”) for the Property. Upon Purchaser’s payment to
the title company of the stipulated title insurance premium, the Title Policy
shall insure Purchaser that, upon consummation of the purchase and sale herein
contemplated at the Closing, Purchaser will be vested with good, fee simple,
marketable title to the Property (having a legal description consistent with
that set forth on the annexed Exhibit A), free and clear of all encumbrances
other than the Permitted Exceptions and liens securing the Existing
Indebtedness.

            (c)  Condition of Property. Seller shall not have committed waste or
nuisance upon the Property and shall have maintained and kept the Property
(including the grounds thereof) in substantially the same order and condition
as exists as of the date hereof, normal wear, tear and obsolescence excepted.
Seller shall not cause any renovations, alterations or significant

9

 

cosmetic changes to be made at or to the Property prior to Closing except
required repairs and any alterations or changes made with Purchaser’s written
consent (which consent shall not be unreasonably delayed, withheld or
conditioned). Seller shall not have undertaken or permitted any action within
Seller’s control, without the consent of Purchaser, which would impair or
otherwise affect the use, ownership, acquisition or development of the Property
on or after Closing in any material, adverse respect or which would cause any
of the representations or warranties set forth herein to be untrue in any
material respect.

            (d)  Statement of Lease. Seller shall have delivered to the Purchaser aStatement of Lease (or comparably titled document) from the tenant under the
Government Lease containing customary estoppel-type statements regarding the
status of the Government Lease as shall be reasonably required by the
Purchaser.

            (e)  Covenants of Seller. Seller shall have delivered those documents
required of Seller at Closing under Section 7 herein.

        5.2  Concurrent Closing with Aquia Two. Concurrent with execution of this
Agreement, Aquia Commerce Center II, LC, a Virginia limited liability company
(the “Related Seller”) controlled by the same individuals as Seller, and
Purchaser have entered into that certain other Agreement of Sale and Purchase
(the “Aquia Two Contract”) for the property known by street address as 2723
Jefferson Davis Highway, Stafford County, Virginia (“Aquia Two”). Purchaser
and Seller recognize and agree that the sale of the Property is expressly
conditioned upon the concurrent closing by Related Seller and Purchaser, or an
entity to be designated by Purchaser for the purpose of acquiring Aquia Two (a
“Related Purchaser”), on Aquia Two. If due to the default of the Purchaser the
Aquia Two Contract terminates or the closing on the Aquia Two Contract shall
not occur by the deadline for closing thereunder, such default shall constitute
a default under this Agreement and the provisions of Section 11.1 below shall
apply. If due to the default of the Seller the Aquia Two Contract terminates
or the closing on the Aquia Two Contract shall not occur by the deadline for
closing thereunder, such default shall constitute a default under this
Agreement. In such event, Purchaser shall be entitled to elect its remedy
under Section 11.2 herein, but Purchaser agrees that it shall not be entitled
to (i) waive the default and proceed to Closing on this Agreement without
closing on the Aquia Two Contract, or (ii) elect to pursue a suit for specific
performance unless Purchaser has also elected to pursue specific performance on
the Aquia Two Contract. If for any reason other than a Purchaser or Seller
default the Aquia Two Contract shall terminate in accordance with its terms or
the closing on the Aquia Two Contract shall not occur by the deadline for
closing thereunder, then this Agreement shall automatically terminate, the
Deposit shall be refunded to Purchaser and the parties shall be released of all
obligations hereunder other than the obligations of Purchaser under Section
4.1.

        5.3  Failure of Condition to Purchaser’s Obligations. In the event of the
failure of any condition precedent set forth in Section 5.1 above as of the
Closing Date, Seller shall have the right to extend the Closing Date by written
notice to the Purchaser on or prior to the Closing Date for up to thirty (30)
days in order to attempt to satisfy such condition. In the event of the
failure as of the Closing Date (as the same may have been extended) of any
condition precedent set forth above, Purchaser, at its sole election, may, at
its option, either:

	(i)	 	terminate this Agreement, in which event the
Deposit shall be returned to Purchaser, whereupon neither
party shall have any further obligations or liabilities to
the other, subject only to the obligations of the Purchaser
under Section 4.1, or

10

 

	(ii)	 	waive the condition and proceed to Closing.

     However, nothing contained herein shall be deemed to affect the rights of
Purchaser under Section 11.2 in the event Seller has breached a representation
or warranty made by Seller under this Agreement or Seller shall willfully
default on its obligations to settle on the Property.

     6.  Closing. The purchase and sale contemplated herein shall be
consummated at a settlement (“Closing”) which shall take place on the date
(the “Closing Date”) to be designated by Purchaser by written notice to Seller
no less than five (5) business days prior thereto, with the agreement, however,
that the Closing Date shall occur promptly after all conditions to closing on
the assumption of the Existing Indebtedness have been satisfied, and in no
event later than sixty (60) days after the expiration of the Inspection Period
(“the Closing Deadline”). If the Closing Date is not a Business Day, the
Closing shall occur on the next day which is a Business Day thereafter. The
Closing shall be performed in escrow through the Escrow Agent. The Closing
shall take place during normal business hours on the Closing Date at the
offices of the Escrow Agent or at such other location as the parties may
mutually agree.

     7.  Seller’s Deliveries. Seller shall execute, as appropriate, and deliver
to the Escrow Agent at Closing:

        7.1  Deed. A special warranty deed (“Deed”) in such form as shall be
reasonably acceptable to the Escrow Agent and Purchaser’s counsel whereunder
Seller grants and conveys fee simple title to the Property.

        7.2  Assignment of Government Lease. An agreement (the “Lease Assignment
and Assumption Agreement”) evidencing the Seller’s assignment and the
Purchaser’s assumption of the Government Lease as of the Closing Date in form
and content reasonably acceptable to counsel for Purchaser and Seller.

        7.3  Loan Assumption Documents. Such commercially reasonable documents or
instruments as the Lender may require to effectuate the assignment by Seller
and assumption by Purchaser of the Existing Indebtedness in accordance with the
Existing Loan Documents (the “Loan Assumption Documents”).

        7.3  Seller’s Affidavit. Such certificates, affidavits and other evidence
signed and delivered by Seller, as may reasonably be required to induce the
title company to issue the Title Policy, without exception except for the
Permitted Exceptions and the liens securing the Existing Indebtedness.

        7.4  FIRPTA Affidavit. An affidavit certifying that Seller is not a
“foreign person” as that term is defined by Section 1445 of the Internal
Revenue Code of 1986, as amended.

        7.5  Resolutions. A certified true copy of Seller’s resolutions
authorizing the sale contemplated herein and the execution of this Agreement
and all other documents delivered by Seller at Closing and such other
certificates, documents and instruments as may reasonably be required by the
title company to issue the Title Policy.

        7.6  Bill of Sale and Assignment of Contracts. A bill of sale and an
assignment of contracts, each in form reasonably acceptable to Purchaser’s
counsel, conveying to

11

 

Purchaser all Personalty and the Intangibles, and all of Seller’s right,
title and interest, to the extent assignable, in and to any (i) unexpired
warranties and guarantees now in effect with respect to any part of the
Property and/or mechanical equipment and appliances at the Property, (ii) all
architectural, engineering, rezoning and subdivision plans (if any),
specifications, drawings, and reports, and (iii) all licenses and permits
relating to the Property to the extent the same exist and are assignable.

        7.7 Possession; Keys. Possession of the Property and keys for the
Improvements in the possession or control of Seller or its agents.

        7.8 Original Documents. The originals (or copies if originals are not
available) of all the Building Documents.

        7.9 Files. To the extent available, originals (or copies, if originals are
not available) of all documents and books and records necessary for the
continued operation of the Property, other than proprietary information,
including without limitation, Lease files, rent records, escalation records and
statements and maintenance records.

        7.10 Notice of Sale; Novation Agreement. Sufficient original letters,
executed by Seller, advising the tenant under the Government Lease of the sale
of the Property to Purchaser and directing that all rents and other payments
thereafter becoming due be sent to Purchaser or as Purchaser may direct,
together with a proposed Novation Agreement substantially in the form attached
hereto as Exhibit G, or with such changes thereto as the Purchaser may request,
subject to the Seller’s consent, not to be unreasonably withheld (the “Novation
Agreement”) executed by Seller for submission to the tenant under the
Government Lease. It is expressly understood and agreed by Purchaser that the
tenant under the Government Lease may not provide any written recognition of
the Purchaser as the new owner of the Property prior to Closing, and such
written recognition shall not be a condition to Purchaser’s obligations
hereunder nor shall the absence of such written recognition be grounds for
termination of this Agreement by the Purchaser.

     8. Purchaser’s Closing Obligations. Purchaser shall assume the Existing
Indebtedness and pay the remaining Purchase Price (as described in Section 2
above), together with all other funds required hereunder to be paid by the
Purchaser in connection with the Closing, by federal wire transfer to the
Escrow Agent on the Closing Date. Purchaser shall also execute the Assignment
and Assumption Agreement, the Loan Assumption Documents, the Novation Agreement
and such other documents or instruments as the Escrow Agent or title company
may reasonably require in connection with the Closing.

     9. Settlement Charges; Prorations and Adjustments.

        9.1 Allocation of Settlement Charges. Seller shall pay the Grantor’s Tax
and the cost of preparation and recordation of the Deed. Purchaser shall pay
the recordation taxes on the sale, title examination fees, the title insurance
premium and any survey update costs. Other settlement expenses (except as
otherwise expressly set forth in this Section 9.1) shall be paid in accordance
with the customs of real estate transactions in Stafford County, Virginia.
Seller shall be responsible at its sole cost and expense for the cost to
release any existing liens on the Property other than the Permitted Exceptions
and the liens securing the Existing Indebtedness. Purchaser will pay one-half
of the escrow fees of the Escrow Agent and Seller shall be responsible for the
balance of the escrow fees. Purchaser shall be solely responsible for the
costs incurred in

12

 

connection with obtaining, executing, recording and insuring any financing
obtained by Purchaser. Purchaser and Seller each shall pay its own legal fees
related to the preparation of this Agreement and all documents required to
settle the transaction contemplated hereby.

        9.2
Prorations and Adjustments. At Closing, interest on the Existing
Indebtedness, rents (to the extent prepaid), all real and personal property
taxes, water rents, sewer charges, electric and other utility charges, fuel if
any, operating expenses, wages, any special assessments, if any, and other
similar charges affecting the Property and all utility charges, if any, shall
be adjusted and prorated as of midnight of the day prior to the Closing Date.
Seller shall assign to Purchaser at Closing all of Seller’s right, title and
interest in and to the reserves held by the holder of the Existing Indebtedness
as of the Closing Date, as described on Exhibit F hereto. Such amount of
reserves will be credited to Seller and paid by Purchaser on the Closing Date.
To the extent practicable, Seller shall attempt to have utility providers read
the meters for the Property on the day prior to Closing for purposes of making
such prorations and adjustments. All other charges or fees customarily
prorated and adjusted in similar transactions shall be adjusted at Closing.
All rent (other than prepaid rent) payable by the tenant of the Property (which
is acknowledged by the parties to be paid in arrears under the Government
Lease) shall be adjusted (prorated) as of the Closing Date and paid in
accordance with the following provisions:

	(i)	 	Following receipt of the monthly installment of
Basic Rent under the Government Lease attributable to the
month in which the Closing occurs, such installment shall be
adjusted as of the Closing, with Seller being entitled to the
portion thereof attributable to the period of the month
immediately preceding the Closing Date and Purchaser entitled
to the balance of such monthly installment. The party
receiving such installment shall pay over to the other party
within five (5) business days following receipt the portion
of the installment to which the other party is entitled.
	 
	(ii)	 	Purchaser shall be entitled to all Basic Rent
and other sums due under the Government Lease to the extent
collected on any date after the Closing with the exception of
(a) common area maintenance (CAM) and real estate tax
reimbursements attributable to periods prior to the Closing;
(b) the Basic Rental for the Closing month to which Seller is
entitled under (i) above, and (c) to the extent specified in
Subsection (iii) below, rentals paid by the Government on
account of rental arrearages for periods preceding the
Closing. Annual CAM and tax reimbursements, which are
payable by the tenant on an annual basis after the conclusion
of each calendar year, will be adjusted as of closing, with
Seller being entitled to the portion thereof attributable to
the period of the year immediately preceding the Closing Date
and Purchaser being entitled to the balance of such payment.
Purchaser shall pay over to Seller within five (5) business
days following receipt the portion of the installment to
which the Seller is entitled. Additionally, any post-Closing
tenant payments of amounts for special services which were
specifically billed by Seller prior to the Closing Date shall
be remitted by Purchaser to Seller within five (5) business
days following Purchaser’s receipt thereof.
	 
	(iii)	 	Rent which is due, but uncollected, as of the
Closing shall not be adjusted, but Purchaser shall cause the
rent for the period prior to Closing to be remitted to Seller
if, as and when collected, less any reasonable, out-of-

13

 

	 	 	pocket expenses incurred by Purchaser for such collection;
provided, that, except with respect to Basic Rental for the
Closing month, which shall be treated as specified in (i)
above, all rents collected subsequent to Closing by
Purchaser shall first be applied to current rentals then due
which have accrued subsequent to Closing and any remaining
amounts shall be applied to rental arrearages as of Closing.
Similarly, if Seller receives any Basic Rent or other sums
under the Government Lease which is payable to Purchaser
under this Section 9.2, then Seller shall promptly deliver
such sums to Purchaser. Purchaser, at Seller’s request,
will use reasonable efforts for a period of ninety (90) days
after the Closing Date to collect past due rental amounts or
other payments owed to Seller in accordance with this
Section 9.2.

All adjustment items to the extent they cannot be precisely determined at
Closing (or to the extent found to be erroneous after the Closing), shall be
estimated at Closing and shall be resolved by the parties in good faith no
later than sixty (60) days after the Closing.

        9.3 Release of Closing Escrow. Upon receipt of Purchaser’s deliveries
required under Section 8 above, and subject to all of Seller’s deliveries
having been received and such other conditions to Purchaser’s performance as
are contained in Section 5 hereof, Escrow Agent shall record the Deed, disburse
the settlement proceeds as indicated on the settlement sheets, and distribute
all Closing documents as directed by counsel for Purchaser and Seller.

     10. Condemnation and Risk of Loss. The risk of condemnation of all or any
portion of the Property or loss or damage to the Property by fire or other
casualty shall be borne by Seller until recordation of the Deed. In the event
of (a) the threatened or actual commencement of eminent domain proceedings or
actual condemnation or taking of all or any material part of the Property, or
(b) damage to the Property by fire or other casualty, act of God or any other
event on or prior to the Closing Date, which would cost in excess of $250,000
to repair, Purchaser, at its sole option exercisable within thirty (30) days
following receipt of written notice of the event giving rise to the exercise of
such option, shall have the right to terminate this Agreement, in which event
the Deposit shall be returned to Purchaser, and neither party shall have any
further obligations or liabilities to the other, subject to the obligations of
the Purchaser under Section 4.1 herein. Purchaser understands and agrees that
if it does not exercise its termination option in the event of condemnation or
casualty as described above, the terms and conditions of the documents
governing the Existing Indebtedness will control the use of any insurance
proceeds and the settlement of any insurance claims related thereto, and that
Purchaser will have no rights with respect to such proceeds or claims. The
provisions of the Paragraph 10 shall expressly survive Closing and delivery of
the Deed for the Property.

11. Default Provisions; Remedies.

        11.1 Purchaser’s Default. If Purchaser fails to consummate the purchase
and sale contemplated herein after all conditions precedent to Purchaser’s
obligation to consummate the transactions herein contemplated have been
satisfied or waived by Purchaser, or if, pursuant to Section 5.2 above,
Purchaser has defaulted under the Aquia Two Contract, and if Seller has
notified Purchaser of such default and Purchaser has failed to cure such
default within ten (10) days after Seller’s notice, then Escrow Agent shall
deliver to Seller the Deposit. In such event the Deposit shall be deemed as
full and complete liquidated damages and the sole and exclusive remedy of
Seller, the parties hereby agreeing that they have considered carefully the
loss to Seller that would

14

 

be a consequence of such default and that the Deposit is a reasonable
estimate of such loss. Upon payment to Seller of the Deposit, this Agreement
shall terminate, and neither party shall have any further obligations or
liabilities to any other party, other than any obligations or liabilities which
expressly survive any termination of this Agreement.

        11.2 Seller’s Default. If Seller breaches its representations,
warranties, covenants and agreements hereunder or fails to consummate the
purchase and sale contemplated herein by the Closing Date, and Purchaser has
notified Seller of such default and Seller has failed to cure such default
within ten (10) days of Purchaser’s notice, or if, pursuant to Section 5.2
above, Seller has defaulted under the Aquia Two Contract, then Purchaser shall
be entitled at its option to notify Seller of the election by Purchaser to
terminate this Agreement, whereupon Escrow Agent shall return the Deposit to
Purchaser and neither party will have any further obligation to the other
hereunder, other than the obligations of the Purchaser under Section 4.1.
Alternatively, in the event Seller shall willfully fail to close as required
hereunder, Purchaser at its election shall be entitled to bring suit for
specific performance, inasmuch as the parties recognize and acknowledge that
the Property is unique, and that there is no adequate remedy at law to
compensate fully Purchaser for a breach by Seller of Seller’s obligations to
convey the Property to Purchaser in accordance with the terms and conditions of
this Agreement. In no event shall Purchaser be entitled to monetary damages
for a default by Seller to close hereunder, with the exception that in the case
of a willful failure of Seller to close hereunder after the foregoing ten (10)
day notice and cure period, and provided that in the absence of such default
Purchaser would have been ready, willing and able to close, Purchaser shall be
entitled to recover its reasonable, out-of-pocket due diligence costs and
expenses incurred in connection with this Agreement (including reasonable
attorney’s fees).

        For purposes of this Agreement, a willful failure or default of Seller is
one which is both intentional and voluntary (i.e., within the Seller’s
reasonable control to prevent).

     12. Obligations of Seller Pending Closing. Between the date hereof and
the Closing Date:

        12.1 Occupancy at Closing. The parties understand that the Property will
be delivered subject only to the rights of the tenant under the Government
Lease.

        12.2 Leasing. Seller agrees that it will not enter into any new leases
for premises in the Property, extend or modify the existing Government Lease or
enter into any other new agreements affecting the Property without the
Purchaser’s consent, which consent shall not be unreasonably delayed, withheld
or conditioned. Notwithstanding the foregoing, Seller may freely enter into
any ordinary and necessary service agreement affecting the Property without
Purchaser’s consent if the agreement shall by its terms terminate or be
terminable at will by the Seller prior to Closing, provided that Seller shall
give written notice of any such agreement to the Purchaser promptly after
execution thereof.

        12.3 Maintenance and Operation of Property. Seller shall continue to
maintain the Property consistent with its prior practices, in order that its
present operating condition be maintained in good and proper repair, order and
condition, normal wear and tear excepted, and shall cause the continuation of
the normal operation thereof, including the purchase and replacement of
supplies and equipment. Seller shall not remove or permit to be removed from
the Property any Personalty, except as may be necessary for repairs or
discarding worn out or useless items, provided that discarded items shall be
replaced with new items of substantially equal quality and quantity and shall
be free and clear of any lien or encumbrance.

15

 

        12.4 No Action. Seller shall not knowingly take any action or direct,
require or advise any other person or entity to take any action that would
invalidate, void or make untrue any representation or warranty provided under
this Agreement or otherwise breach this Agreement.

        12.5 Additional Deliveries. Seller shall deliver to Purchaser promptly
following its receipt copies of any notices received by Seller or its
management agent from the holder of any liens existing against the Property or
the Government pertaining to the Property from and after the date hereof
through Closing.

        12.6 Scheduled Payments of Existing Indebtedness. Seller will make the
scheduled monthly payments of principal and interest under the Existing
Indebtedness until Closing.

    13. Miscellaneous Provisions.

        13.1 Completeness and Modification. This Agreement constitutes the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior discussions, understandings or
agreements between the parties. This Agreement shall not be modified or
amended except by an instrument or writing signed by and on behalf of the
parties.

        13.2 Additional Documents. Purchaser and Seller agree that they will, at
any time after the Closing, duly execute and deliver to each other any
additional conveyances, assignments, documents and instruments, and shall take
or cause to be taken such further actions (including the making of filings),
which are necessary in connection with the consummation of the purchase and
sale contemplated herein.

        13.3 Severability. If fulfillment of any provision of this Agreement, or
performance of any transaction related hereto, at the time such fulfillment or
performance shall be due, shall involve transcending the limit of validity
prescribed by law, then the obligation to be fulfilled or performed shall be
reduced to the limit of such validity; and if any clause or provision contained
in this Agreement operates or would prospectively operate to invalidate this
Agreement in whole or in part, then such clause or provision only shall be held
ineffective, as though not herein contained, and the remainder of this
Agreement shall remain operative and in full force and effect.

        13.4 Cumulative Remedies. Except as specifically provided in this
Agreement, each and every of the rights, benefits, and remedies provided to
Purchaser or Seller by this Agreement, or any instruments or documents executed
pursuant to this Agreement, are cumulative and shall not be exclusive of any
other rights, remedies and benefits allowed to such party by this Agreement, at
law or in equity.

        13.5 Construction. Each party hereto hereby acknowledges that all parties
hereto participated equally in the negotiation and drafting of this Agreement
and that, accordingly, no court construing this Agreement shall construe it
more stringently against one party than against the other.

        13.6 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity
of the person or entity may require.

16

 

        13.7 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors and
permitted assigns. Purchaser may not assign this Agreement to any person or
entity other than a wholly owned subsidiary of Purchaser without the prior
written consent of Seller, which consent shall not be unreasonably withheld,
conditioned or delayed. In the event of an assignment by Purchaser to a wholly
owned subsidiary of Purchaser, Purchaser shall remain liable for the
performance of the obligations of Purchaser hereunder, unless and until
expressly released by Seller. Seller shall not assign this Agreement.

        13.8 Waiver; Modification. Failure by Purchaser or Seller to insist upon
or enforce any of its rights hereto shall not constitute a waiver thereof.

        13.9 Governing Law. This Agreement shall be governed by and construed
under the laws of the state of Virginia.

        13.10 Headings. The headings are used herein for convenience of reference
only, and shall not be deemed to vary the content of this Agreement.

        13.11 Exhibits. All Exhibits attached hereto are incorporated herein and
made a part of this Agreement.

        13.12 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signature of each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of each party or that the signatures of the
persons required to bind any party, appear on one or more such counterparts.
All counterparts shall collectively constitute a single agreement. This
document and any amendment hereto may be executed by facsimile and any such
facsimile shall be deemed to constitute an original for all purposes hereof.

        13.13 Notices. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be personally delivered, sent by
facsimile transmission, sent by Federal Express or other recognized overnight
delivery service, prepaid by the party sending such notice, to the addresses
indicated below.

	 	 	 
	

	 	If intended for Seller to:
	 
	 	 
	

	 	Aquia Commerce Center, L.C.
	

	 	Garrett Development Corporation
	

	 	25 Center Street, Suite 101
	

	 	Stafford, Virginia 22556
	

	 	Attention: Andrew S. Garrett
	 
	 	 
	

	 	With a copy to:
	 
	 	 
	

	 	Stephanie Cutler, Esq.
	

	 	Foley Hoag LLP
	

	 	1875 K Street, N.W., Suite 800
	

	 	Washington, D.C. 20006

17

 

	 	 	 
	

	 	If intended for Purchaser to:
	 
	 	 
	

	 	First Potomac Realty Trust
	

	 	7200 Wisconsin Avenue, Suite 310
	

	 	Bethesda, Maryland 20814
	

	 	Fax No. 301-986-5554
	

	 	Attention: Nicholas R. Smith
	 
	 	 
	

	 	With a copy to:
	 
	 	 
	

	 	Armstrong Teasdale LLP
	

	 	One Metropolitan Square, Suite 2600
	

	 	211 North Broadway
	

	 	St. Louis, Missouri 63102-2740
	

	 	Fax No. 314-612-2349
	

	 	Attention: Amit Shah, Esq.

     The addresses and parties set forth above may be changed from time to time
by any party by notice to the other. For purposes of this Agreement, notices
shall be effective upon receipt or refusal thereof.

        13.14
Business Day. As used herein, the term “Business Day” shall mean
any day other than a Saturday or Sunday, or other day recognized as a holiday
by the U.S. Government. All times specified hereunder shall be deemed to be
Eastern Standard Times.

        13.15 Survival. It is the express intention and agreement of the parties
hereto that the covenants, agreements, statements, representations and
warranties made in this Agreement by Seller and Purchaser shall survive the
execution and delivery of this Agreement for one (1) year following Closing.

        13.16 Attorneys’ Fees. If Purchaser institutes any proceeding or action
to obtain specific performance by Seller of its closing obligations hereunder,
and Purchaser prevails thereunder (i.e. Purchaser obtains specific performance)
then and in such event Seller shall reimburse Purchaser for reasonable,
out-of-pocket costs and other expenses, including reasonable attorneys’ fees,
incurred in connection with such proceeding or action.

        13.17 Waiver of Jury. SELLER AND PURCHASER EACH HEREBY IRREVOCABLY WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY OR AGAINST THE OTHER PARTY
UNDER OR IN CONNECTION WITH THIS AGREEMENT.

        13.18 Brokerage Commission. Seller and Purchaser represent and warrant to
each other that they have dealt with no brokers or finders in connection with
the sale of the Property other than Grubb & Ellis (the “Broker”) and that no
brokerage fee or real estate commission is or shall be due or owing in
connection with this transaction other than to the Broker, who shall be paid
solely by Seller from the proceeds at Closing in accordance with the terms of a
separate written agreement with Seller. Seller and Purchaser hereby indemnify
and hold the other harmless from any and all loss, costs or damage (including,
without limitation, reasonable attorneys fees and expenses) arising out of any
claims of any broker or agent so claiming based on action or alleged

18

 

action of the indemnifying party recognizing the Seller alone shall bear
the cost of the Broker as aforesaid. This Section 13.18 shall survive Closing.

        13.19 Exclusivity. Seller agrees that it will not (either directly or
indirectly) offer to sell, or solicit any offers to purchase or negotiate for
the sale or disposal of the Property with any other party other than the
Purchaser and its affiliates prior to Closing or an earlier default by the
Purchaser hereunder (beyond any applicable notice and cure period) or
termination of this Agreement in accordance with its terms.

        13.20 Confidentiality. Each party agrees that, except as otherwise set
forth in this Agreement or required by law or legal process, it shall: (i)
keep the contents of this Agreement and any information related to the
transaction contemplated hereby confidential (except that Purchaser and Seller
may disclose such data and information to their respective employees, lenders,
consultants, accountants and attorneys, provided that such persons agree to
treat such data and information confidentially); and (ii) refrain from
generating or participating in any publicity statement, press release or other
public notice regarding this transaction without the prior written consent of
the other party unless required under applicable law or by legal process;
provided, however, that Purchaser and Seller may at or following the Closing
publicly announce the sale of the Property and the identity of the new owner
thereof. The provisions of this Section 13.20 shall survive the Closing.
Seller acknowledges that the general partner of Purchaser is a publicly traded
real estate investment trust. Notwithstanding the foregoing confidentiality
provisions, Seller acknowledges that the rules and regulations promulgated by
the United States Securities and Exchange Commission (the “SEC”) may require
Purchaser to disclose certain basic information concerning this Agreement and
the transactions contemplated herein in documents to be filed with the SEC.
The parties agree that Purchaser shall be permitted to make such disclosures
and that such disclosures shall not constitute a breach or a violation of this
Section 13.20 or any other confidentiality or non-disclosure agreement executed
by the parties prior to the Effective Date. Such confidentiality or
non-disclosure agreement, if any, shall be amended and modified to the extent
provided in this Section.

[THE BALANCE OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]

19

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.

	 	 	 	 	 
	 	 	PURCHASER:
	 
	ATTEST:	FIRST POTOMAC REALTY INVESTMENT

LIMITED PARTNERSHIP
	 
	 	 	 	 
	 

	 	By:	 	 /s/ Nicholas R. Smith
	

	 	 	

	Name:

	 	Name:	 	 
	Title:

	 	Title:	 	 Executive Vice President
	 
	 	 	 	 
	(CORPORATE SEAL)
	 	 	 
	 	 	SELLER:
	 
	 	 	 	 
	WITNESS:	AQUIA COMMERCE CENTER, L.C.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Miriam J. Cutler
	

	 	 	

	Name:	 	Name: Miriam J. Cutler
	 	 	Title: Manager
	 
	 	 	 	 
	(CORPORATE SEAL)
	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	/s/ Andrew S. Garrett
	

	 	 	

	Name:	 	Name: Andrew S. Garrett
	 	
	Title: Manager
	 
	 	 	 	 
	(CORPORATE SEAL)
	 	 	 

ACCEPTED AND AGREED BY ESCROW AGENT:

TRI-STATE COMMERCIAL CLOSINGS, INC.

	 	 	 
	By:
	 	/s/ Richard W. Klein, Jr.
	

	 	

	Name:
	 	 
	

	 	

	Title:
	 	 President
	

	 	

20

 

GUARANTY

     The representations and warranties set forth in Section 3 of this
Agreement of Purchase and Sale shall be unconditionally guaranteed, jointly and
severally, by each of the undersigned prior to Closing and for so long as the
representations and warranties survive under Section 13.15 above. The
liability of each of the undersigned hereunder shall be primary, and in any
right of action which shall accrue to Purchaser for breach of a representation
or warranty under this Agreement of Purchase and Sale, Purchaser may, at its
option and in its sole discretion, proceed directly against the any or all of
the undersigned without giving any additional notice of default (other than the
notice of default required to be given to the Seller under Section 11.2 above)
or having made any demand, commenced any action, or having obtained any
judgment against Seller.

	 	 	 	 	 
	 	 	CUTLER DEVELOPMENT CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 Miriam J. Cutler
	

	 	 	
 
	

	 	 	Name:	 
	

	 	 	 	
 
	

	 	 	Title:	 President
	

	 	 	 	
 
	 
	 	 	 	 
	 	 	GARRETT DEVELOPMENT CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 /s/Andrew S. Garrett
	

	 	 	
 
	

	 	 	Name:	 
	

	 	 	 	
 
	

	 	 	Title:	 
	

	 	 	 	
 
	 
	 	 	 	 
	 	 	MTM BUILDER/DEVELOPER, INC.
	 
	 	 	 	 
	

	 	By:	 	 /s/ Dean F. Morehouse
	

	 	 	
 
	

	 	 	Name:	 
	

	 	 	 	
 
	

	 	 	Title:	 President
	

	 	 	 	
 

21

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