Document:

exv10w31

 

 Exhibit  10.31

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 II, 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 2723 Jefferson Davis Highway, Stafford, Virginia containing
approximately 30,377 rentable square feet in the aggregate and approximately
1.08 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, 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 Two Hundred Sixty Four
Thousand and 00/100 Dollars ($5,264,000) (the “Purchase Price”).

         2.2 The Purchase Price shall be payable 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 Thirty Five Thousand and 00/100 Dollars ($235,000) (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 Four Hundred Seventy Thousand Dollars
($470,000) (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.

         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

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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,
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 first lien indebtedness
(the “Existing Indebtedness”), which will be satisfied in full at Closing. 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 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

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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 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

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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 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

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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 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.

         3.21 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.

         3.22 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

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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.

         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

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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 after the
expiration of the Inspection Period and shall thereafter constitute “Permitted
Exceptions” for all purposes of this Agreement. Notwithstanding the foregoing,
all liens securing the Existing Indebtedness shall be removed and discharged at
Closing and shall not be Permitted Exceptions irrespective of whether or not
such items were objected to by Purchaser as aforesaid.

     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 exceptions to be discharged at Closing.

                (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 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

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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 a
Statement 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 One. Concurrent with execution of this
Agreement, Aquia Commerce Center, 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
One Contract”) for the property known by street address as 2721 Jefferson Davis
Highway, Stafford County, Virginia (“Aquia One”). 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 One (a “Related
Purchaser”), on Aquia One. If due to the default of the Purchaser the Aquia
One Contract terminates or the closing on the Aquia One 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 One Contract terminates
or the closing on the Aquia One 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 One Contract, or (ii) elect to pursue a suit for specific
performance unless Purchaser has also elected to pursue specific performance on
the Aquia One Contract. If for any reason other than a Purchaser or Seller
default the Aquia One Contract shall terminate in accordance with its terms or
the closing on the Aquia One 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
	 
	(ii)	 	waive the condition and proceed to Closing.

9

 

     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 in 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 agreements,
however, that (i) the Closing Date shall occur no later than the later of the
fifteenth (15th) day following expiration of the Inspection Period, subject to
any extension by Seller as permitted under Section 5.3 above, and (ii) if the
Purchaser has not yet closed on the Aquia One Contract but the Aquia One
Contract remains in effect and the Purchaser continues to be entitled or
obligated to close thereunder, the Closing Date under this Agreement shall be
extended to the last allowable date for closing on the Aquia One Contract. 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 “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 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.

         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 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.

10

 

         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 E, 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 pay the Purchase
Price, 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 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.
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 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, 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

11

 

the day prior to 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-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

12

 

	 	 	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 One 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 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 One Contract, Purchaser shall be
entitled at its option to notify

13

 

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.

         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.

14

 

     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.

         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.

15

 

         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 II, 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

	 

	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

16

 

	 
	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 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.

17

 

         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]

18

 

     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 II, 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

19

 

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:
	 	/s/ 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

	 	 

20exv10w32

 

Exhibit 10.32

 [Virginia Retail

 Yield Maintenance]

PROMISSORY NOTE

 

		
	US$1,500,000.00	Stafford, Virginia

January     , 1998

    
FOR VALUE RECEIVED, the undersigned promise to
pay GMAC COMMERCIAL MORTGAGE CORPORATION, or order, the
principal sum of ONE MILLION FIVE HUNDRED THOUSAND and 00/100
Dollars (US$1,500,000.00), with interest on the unpaid principal
balance from the date of this Note, until paid, at the rate of
Seven and 28/100 percent (7.28%) per annum. The principal and
interest shall be payable at GMAC Commercial Mortgage
Corporation, 650 Dresher Road, Horsham, Pennsylvania 19044,
or such other place as the holder hereof may designate in
writing, in consecutive monthly installments of Thirteen
Thousand Seven Hundred Eighteen and 32/100 Dollars
(US$13,718.32) on the first day of each month beginning
March 1, 1998, (herein “amortization commencement
date”), until the entire indebtedness evidenced hereby is
fully paid, except that any remaining indebtedness, if not
sooner paid, shall be due and payable on February 1, 2013
(the “Maturity Date”).

    
If any installment under this Note is not paid
when due, the entire principal amount outstanding hereunder and
accrued interest thereon shall at once become due and payable,
at the option of the holder hereof. The holder hereof may
exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of
any default in the payment of this Note or any other payment due
under the instrument or any other Loan Document (as such terms
are hereinafter defined) and if the same is referred to an
attorney at law for collection or any action at law or in equity
is brought with respect hereto, the undersigned shall pay the
holder hereof all expenses and costs, including, but not limited
to, attorneys’ fees.

    
If any installment under this Note is not
received by the holder hereof within ten (10) calendar days
after the installment is due, the undersigned shall pay to the
holder hereof a late charge of the greater of (a) US$250.00
or (b) five percent (5%) of such installment, such late
charge to be immediately due and payable without demand by the
holder hereof. If any installment under this Note or any other
monetary payment due under this Note, the Instrument or any
other Loan Document remains past due for ten (10) calendar
days or more, the outstanding principal balance of this Note
shall bear interest during the period in which the undersigned
is in default at a rate of Twelve and 28/100 percent (12.28%)
per annum, or if there shall exist any non-monetary default
under this Note, the Instrument or any other Loan Document which
remains uncured for the later of (i) ten (10) calendar
days or (ii) the expiration of any applicable grace or cure
period specifically provided in the Instrument, the outstanding
principal balance of this Note shall bear interest during the
period the undersigned is in default at the rate of Nine and
28/100 percent (9.28%) percent per annum, or, if such increased
rate of interest may not be collected from the undersigned under
applicable law, then at the maximum increased rate of interest,
if any, which may be collected from the undersigned under
applicable law.

    
From time to time, without affecting the
obligation of the undersigned or the successors or assigns of
the undersigned to pay the outstanding principal balance of this
Note and observe the covenants of the undersigned contained
herein, in the Instrument or in any other Loan Document without
affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance
of this Note, without giving notice to or obtaining the consent
of the undersigned, the successors or assigns of the undersigned
or guarantors, and without liability on the part of the holder
hereof, the holder hereof may, at the option of the holder
hereof, extend the time for payment of said outstanding
principal balance or any part thereof, reduce the payments
thereon, release anyone liable on any of said outstanding
principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance,
join in any extension or subordination agreement, release any
security given herefor, take or release other or additional
security, and agree in writing with the undersigned to modify
the rate of interest or period of amortization of this Note or
change the amount of the monthly installments payable hereunder.

    
Presentment, notice of dishonor, and protest are
hereby waived by all makers, sureties, guarantors and endorsers
hereof. This Note shall be the joint and several obligation of
all makers, sureties, guarantors, and endorsers, and shall be
binding upon them and their successors and assigns.

    
The indebtedness evidenced by this Note is
secured by, among other things, that certain Deed of Trust,
Assignment of Rents and Security Agreement (the
“Instrument”), executed by the undersigned,
encumbering real property more particularly described therein
(the “Property”), dated of even date herewith, and
reference is made thereto for rights as to acceleration of the
indebtedness evidenced by this Note.

    
Prior to and through January 31, 2006, this
Note may not be prepaid in whole or (except as hereinafter
provided) in part. Commencing February 1, 2006 and
continuing through and including July 31, 2012, this Note
may only be prepaid (whether voluntarily or involuntarily,
except as hereinafter provided, and including any acceleration
by the holder hereof) in whole (but not in part) upon not less
than forty five (45) days and not more than ninety
(90) days prior written notice by the undersigned to the
holder hereof and the simultaneous payment by the undersigned to
the holder hereof of an amount (the “Yield Maintenance
Premium”) equal to the aggregate (without duplication) of:

		
	 	    
    (a) the product obtained by multiplying
    (1) the entire unpaid principal balance of this Note at the
    time of prepayment, times (2) the difference obtained by
    subtracting from the interest rate on this Note the yield rate
    (the “Yield Rate”) on the 6.125% U.S. Treasury
    Security due August 15, 2007 (the “Specified
    U.S. Treasury Security”), as the Yield Rate is
    reported in the Wall Street Journal on the fifth Business
    Day (as hereinafter defined) preceding (x) the date notice
    of prepayment is given to holder hereof where prepayment is
    voluntary, or (y) the date holder hereof accelerates the
    Loan (as hereinafter defined), times (3) the present value
    factor calculated using the following formula:
    

			
	 		
    1-(1 + r)-n
    

     r
    

			
	 	r = 	
    Yield Rate
    

			
	 	n = 	
    the number of years, and any fraction thereof,
    remaining between the prepayment date and the Maturity Date.
    

		
	 	    
    In the event that no Yield Rate is published for
    the Specified U.S. Treasury Security, then the nearest
    equivalent U.S. Treasury Security shall be selected at the
    holder hereof’s sole discretion. If the publication of such
    Yield Rates in the Wall Street Journal is discontinued,
    the holder hereof shall determine
    

 

		
	 	
    such Yield Rates from another source selected by
    the holder hereof. As used herein, the term “Business
    Day” means any day other than a Saturday, a Sunday, or any
    other day on which the holder hereof is not open for business;
    and
    

		
	 	    
    (b) an amount equal to the interest which
    would have accrued on the amount of such prepayment during the
    remaining days of the full calendar month within which such
    prepayment is made.
    

In the event of a prepayment of this Note after
July 31, 2012, Borrower shall pay, together with the amount
of such prepayment, an amount equal to the interest which would
have been accrued on the amount of such prepayment during the
remaining days of the full calendar month within which such
prepayment is made.

    
The undersigned shall pay the Yield Maintenance
Premium whether the prepayment is voluntary or involuntary (in
connection with holder hereof’s acceleration of the unpaid
principal balance of this Note) or the instrument is satisfied
or released by foreclosure (whether by power of sale or judicial
proceeding), deed in lieu of foreclosure or by any other means.
Notwithstanding any other provision herein to the contrary, the
undersigned shall not be required to pay any Yield Maintenance
Premium in connection with any prepayment occurring as a result
of the application of insurance proceeds or condemnation awards
under the instrument.

    
The Yield Maintenance Premium is not a penalty or
additional interest, but is holder hereof’s cost of
liquidating its investments in the event of any prepayment of
this Note. The undersigned hereby covenants and agrees to
indemnify holder hereof and hold it harmless from any costs,
fees, expenses (including attorney’s fees) resulting from
any action, litigation or judicial decision alleging, claiming
or holding that the Yield Maintenance Premium is a penalty or
additional interest, and from any damages (whether compensatory
or punitive) ordered by a court, judge or administrative law
judge which may determine that the Yield Maintenance Premium is
a penalty or additional interest.

    
Notwithstanding anything herein contained to the
contrary, any permitted prepayment of this Note may only be made
by payment of the principal amount to be prepaid together with
(i) the applicable Yield Maintenance Premium, (ii) all
accrued and unpaid interest and (iii) any other sums due
under this Note, the Instrument or any other Loan Document.

    
Subject to the qualifications below in this
paragraph, the undersigned shall be liable for payment and
performance of all of the obligations, covenants and agreements
of the undersigned under this Note, the Instrument, the
Assignment of Leases and Rents (herein so called), dated of even
date herewith, and executed by the undersigned to the holder
hereof, the Environmental Indemnity Agreement (herein so
called), dated of even date herewith, and executed by the
undersigned and the holder hereof, and all other instruments and
documents evidencing, securing or governing the terms of the
loan (the “Loan”) evidenced by this Note
(collectively, the “Loan Documents”), to the full
extent (but only to the extent) of all of the Property and any
other items, property or amounts which are collateral or
security for the Loan. If a default occurs in the timely and
proper payment of any portion of such indebtedness or in the
timely performance of any obligations, agreements or covenants
under any of the Loan Documents, except as set forth below in
this paragraph, neither the undersigned, nor any partner of the
undersigned, nor any partner, stockholder, director or officer
of any partner of the undersigned, shall be personally liable
for the repayment of any of the principal of, interest on, or
prepayment fees (including yield maintenance premiums) or late
charges, or other charges or fees, due in connection with, the
Loan, the performance of any covenants of the undersigned under
this Note, the Instrument or any of the other Loan Documents or
for any deficiency judgment which the holder hereof may obtain
after default by the undersigned. Notwithstanding the foregoing
provisions of this paragraph or any other agreement, the
undersigned shall be fully and personally liable for any and
all: (1) liabilities, costs, losses, damages, expenses or
claims (including, without limitation, any reduction in the
value of the Property or any other items, property or amounts
which are collateral or security for the Loan) suffered or
incurred by the holder hereof by reason of or in connection with
(a) any fraud or misrepresentation by the undersigned in
connection with the Loan, including but not limited to any
misrepresentation of the undersigned contained in any Loan
Document, (b) any failure to pay taxes, insurance premiums
(except to the extent that such taxes and insurance premiums are
then held by the holder hereof), assessments, charges for labor
or materials or other charges that can create liens on any
portion of the Property to the extent that income generated from
the Property is sufficient to pay such amounts, (c) any
misapplication of (i) proceeds of insurance covering any
portion of the Property, or (ii) proceeds of the sale or
condemnation of any portion of the Property, (d) any
rentals, income, profits, issues and products received by or on
behalf of the undersigned subsequent to the date on which the
holder hereof gives written notice that a default has occurred
under the Loan and not applied to the payment of principal or
interest due under this Note or the payment of operating
expenses (excluding any operator’s, manager’s, or
developer’s fee payable to the undersigned or any affiliate
of the undersigned) of the Property, (e) any failure to
maintain, repair or restore the Property in accordance with any
Loan Document, to the extent not covered by insurance proceeds
made available to the holder hereof, (f) any failure by the
undersigned to deliver to the holder hereof all unearned advance
rentals and security deposits paid by tenants of the Property
received by or on behalf of the undersigned, and not refunded to
or forfeited by such tenants, (g) any failure by the
undersigned to return to, or reimburse the holder hereof for,
all personalty taken from the Property by or on behalf of the
undersigned, except in accordance with the provisions of the
Instrument, and (h) any and all indemnities given by the
undersigned to the holder hereof set forth in the Environmental
Indemnity Agreement or any other Loan Document in connection
with any environmental matter relating to the Property; and
(2) court costs and all attorneys’ fees provided for
in any Loan Document incurred in connection with the enforcement
of the Loan. Furthermore, no limitation of liability or recourse
provided above in this paragraph shall (x) apply to the
extent that the holder hereof’s rights of recourse to the
Property are suspended, reduced or impaired by or as a result of
any act, omission or misrepresentation of the undersigned or any
other party now or hereafter liable for any part of the Loan and
accrued interest thereon, or by or as a result of any case,
action, suit or proceeding to which the undersigned or any such
other party, voluntarily becomes a party; or (y) constitute
a waiver, forfeiture, abrogation or limitation of or on any
right accorded by any law establishing a debtor relief
proceeding, including, but not limited to, Title 11,
U.S. Code, which right provides for the assertion in such
debtor relief proceeding of a deficiency arising by reason of
the insufficiency of collateral notwithstanding an agreement of
the holder hereof not to assert such deficiency.

    
This Note shall be governed by and construed in
accordance with the law of the state in which the Property is
located, and applicable federal law. The parties hereto intend
to conform strictly to the applicable usury laws. In no event,
whether by reason of demand for payment, prepayment,
acceleration of the maturity hereof or otherwise, shall the
interest contracted for, charged or received by the holder
hereof hereunder or otherwise exceed the maximum amount
permissible under applicable law. If from any circumstance
whatsoever interest would otherwise be payable to the holder
hereof in excess of the maximum lawful amount, the interest
payable to the holder hereof shall be reduced automatically to
the maximum amount permitted by applicable law. If the holder
hereof shall ever receive anything of value deemed interest
under applicable law which would apart from this provision be in
excess of the maximum lawful amount, an amount equal to any
amount which would have been excessive interest shall be applied
to the reduction of the principal amount owing hereunder in the
inverse order of its maturity and not to the payment of
interest, or if such amount which would have been excessive
interest exceeds the unpaid balance of principal hereof, such
excess shall be refunded to the undersigned. All interest paid
or agreed to be paid to the holder hereof shall, to the extent
permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full stated term (including any
renewal or extension) of such indebtedness so that the amount of
interest on account of such indebtedness does not exceed the
maximum permitted by applicable law. The provisions of this
paragraph shall control all existing and future agreements
between the undersigned and the holder hereof.

2

 

    
THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THE UNDERSIGNED MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONJUNCTION WITH THIS NOTE, THE
INSTRUMENT, ANY OTHER LOAN DOCUMENT, ANY OTHER AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF EITHER PARTY.

     
The holder hereof shall have the right to assign,
in whole or in part, this Note, the Instrument and any other
Loan Document and all of its rights hereunder and thereunder,
and all of the provisions herein and therein shall continue to
apply to the Loan. The holder hereof shall have the right to
participate the Loan with other parties.

     
Interest on the principal sum of this Note shall
be calculated on the basis of the actual number of days elapsed
over a year consisting of 360 days. Interest on the Note
shall be paid in arrears.

     
The undersigned shall pay the holder hereof, in
advance, on the date hereof, interest only on the outstanding
principal balance of this Note, at the interest rate first
mentioned above, from the date hereof through and including the
last day of the calendar month in which this Note is executed.

     
Executed as of the date set forth above.

		
	 	
    AQUIA COMMERCE CENTER, L.C.,
    
	 	
    a Virginia limited liability company
    

			
	 	By: 	
    Andrew S. Garrett, Inc.,
    

		
	 	
    a Virginia corporation, a
    
	 	
    managing member of the authorized signatory
    

 

		
	By:  /s/  Andrew S. Garrett	(SEAL)

		
	 	
    

			
	 	Title: 	

		
	 	
    

     
This is to certify that this is the Note
described in and secured by a Deed of Trust dated of even date
herewith, on the property located in Stafford, Virginia.

My Commission expires:

11-30-2000

		
	 	
    /s/ CYNTHIA M. YEARS
    
	 	
    

	 	
    Notary Public
    

3

 

ALLONGE ENDORSEMENT TO PROMISSORY
NOTE

     
This allonge is attached to that Promissory Note
dated as of January 12th, 1998, made by Aquia Commerce
Center, L.C., a Virginia limited liability company, to the
undersigned.

     
Pay to the Order of CITICORP REAL ESTATE, INC.
without recourse.

		
	 	
    GMAC Commercial Mortgage Corporation,
    
	 	
    a California corporation
    

			
	 	By: 	
    /s/ Michael I. Lipson
    

		
	 	
    

	 	
    Name: /s/ Michael I. Lipson
    
	 	
    Title:  SVP
    

[Local counsel to review and advise whether form
and use of name is acceptable under local law.]

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