8-K

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):                July 18, 2005
POTOMAC ELECTRIC POWER COMPANY                                     (Exact name of registrant as specified in its charter)
District of Columbia and Virginia (State or other jurisdiction         of incorporation)				001-01072      (Commission File Number)		53-0127880     (IRS Employer Identification No.)
701 Ninth Street, N.W., Washington, DC                   (Address of principal executive offices)						20068                    (Zip Code)
Registrant's telephone number, including area code           (202) 872-3526
Not Applicable                                        (Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Potomac Electric Power Company Form 8-K
Item 1.01		Entry Into a Material Definitive Agreement.
		On July 18, 2005, John Akridge Development Company ("Ackridge") definitively committed to purchase 384,051 square feet of excess non-utility land owned by Potomac Electric Power Company ("Pepco") located at Buzzard Point in the District of Columbia under the terms of a tentative sale agreement entered into by Akridge, Pepco Holdings, Inc. and Pepco on June 3, 2005 and subsequently amended. The sale agreement and amendments are filed herewith as Exhibits 10.1, 10.2 and 10.3. Consummation of the sale is subject to customary closing conditions and closing is scheduled to occur in August 2005. The sale price of the land is $75 million in cash and will result in an after-tax gain of approximately $38 - $42 million that will be recorded by Pepco in the third quarter. The sale agreement provides that Akridge will release Pepco from, and indemnify Pepco for, substantially all environmental liabilities associated with the land, except that Pepco will retain liability for claims by third part ies arising from the release, if any, of hazardous substances from the land onto adjacent property occurring before the closing of the sale.
Item 9.01		Financial Statements and Exhibits.
		Exhibit No.	Description of Exhibit
		10.1	Sale and Purchase Agreement
		10.2	First Amendment to Sale and Purchase Agreement
		10.3	Second Amendment to Sale and Purchase Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
					POTOMAC ELECTRIC POWER COMPANY                         (Registrant)
Date           July 22, 2005					JOSEPH M. RIGBY                     Name:  Joseph M. Rigby Title:    Senior Vice President                 and Chief Financial Officer
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EX-10

SALE AND PURCHASE AGREEMENT
THIS SALE AND PURCHASE AGREEMENT ("Agreement") is made between PEPCO HOLDINGS, INC., a Delaware corporation ("Seller"), and THE JOHN AKRIDGE DEVELOPMENT COMPANY, a Virginia corporation ("Buyer"). The effective date of this Agreement (the "Effective Date") shall be the date on which the last of the Seller or Buyer sign this Agreement below.
WHEREAS, Seller is the owner of certain real property consisting of land totaling approximately 384,051 square feet in size, which land is more particularly described in Exhibit A attached hereto located between First and Second Street from S Street on the north to V Street on the south in Southwest Washington, D.C. (the "Property").
AND, WHEREAS, Seller has agreed to sell the Property to Buyer, and Buyer has agreed to purchase the Property from Seller, under all of the terms set forth herein.
NOW, THEREFORE, for good and valuable consideration, Seller hereby agrees to sell to Buyer, and Buyer hereby agrees to purchase from Seller, the Property, together with all improvements thereto, all structures thereon, all rights, privileges, easements and appurtenances thereto, all equipment and personal property, if any, owned by Seller and located at such Property, and all of Seller's right, title and interest in any leases (including ground leases) of any portions of such Property, under all of the following terms and conditions:
1.         Price and Deposit.
1.01     Purchase Price. The purchase price for the Property (the "Purchase Price") shall be Seventy-Five Million Dollars ($75,000,000.00).
1.02     Payment. The Purchase Price shall be paid as follows:
(a)        On the Effective Date of this Agreement, Buyer shall deposit with the Title Company (as defined in Section 2.04 below), which shall also act as escrow agent ("Escrow Agent"), a deposit (by wire transfer of immediately available federal funds sent in accordance with the instructions to be provided by Seller) in the amount of $1,500,000 (the "Initial Deposit"). Unless Buyer delivers the Study Period Notice (defined in Section 2.02 below), on or before the Study Period Expiration Date (defined in Section 2.02 below) Buyer shall deposit with Escrow Agent an additional deposit (by a wire transfer of immediately available federal funds) in the amount of $1,500,000 (the "Second Deposit"). The Initial Deposit and, if delivered in accordance herewith, the Second Deposit are collectively the "Deposit." Failure by Buyer to deliver the Second Deposit to Escrow Agent on time shall be a default by Buyer entitling Seller to the remedies set forth in Section 7.02 hereof. The Deposit shall be held, released or retained by Escrow Agent in accordance with the terms and provisions of Section 8 of this Agreement. Unless Buyer terminates this Agreement pursuant to Section 2.02, the Deposit
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shall be non-refundable, except upon the occurrence of a default by Seller in accordance with Section 7.01 hereof.
(b)          Upon closing under this Agreement, the Deposit and the remainder of the Purchase Price, subject to closing adjustments provided herein, shall be paid by wire transfer of funds to Seller's account.
2.         Review of Property.
2.01     Property Information. Seller has or shall, within 10 business days after the Effective Date, deliver to Buyer, or make available for review by Buyer, copies of the following documents to the extent in the Seller's possession:
(a)          All written leases, licenses or other occupancy agreements (with any amendments thereto) of any portions of the Property which are in effect on the Effective Date.
(b)          Any survey of the Property prepared for Seller at the time of Seller's acquisition of the Property.
(c)          The most recent bill(s) for real estate taxes and assessments.
(d)          All contracts or agreements (with any amendments thereto) for maintenance, trash removal, landscaping, snow removal and other ongoing services provided to Seller in connection with the Property, if any.
(e)          Any title policy insuring Seller and all endorsements thereto.
(f)          A copy of all Environmental Reports (as defined in § 3.01 below).
2.02     Study Period. Buyer shall have a period (the "Study Period"), commencing upon the Effective Date and ending 30 business days thereafter (the "Study Period Expiration Date"), in which to determine in its discretion whether to proceed to closing of the purchase of the Property. If Buyer elects not to proceed to closing of the purchase of the Property, then Buyer shall have the right to terminate this Agreement upon written notice to Seller delivered prior to 4:00 p.m. Eastern Standard Time on the Study Period Expiration Date (the "Study Period Notice"), in which event the Deposit shall be returned to Buyer and the parties shall have no further liability hereunder (excepting any obligations, covenants and agreements of the parties hereto which pursuant to the terms of this Agreement survive termination, including without limitation Buyer's obligations under Sections 2.03, 8.03, 9.04, 9.07 and 9.08 and the indemnity obligations of Buyer under Sections 2.03 and 9.07 (collectively the "Continuing Obligations")). In the event Buyer does not deliver the Study Period Notice in accordance with this Section 2.02, Buyer shall be deemed to have automatically waived its right to terminate this Agreement, and the parties shall proceed to closing in accordance with the terms set forth herein.
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2.03     Right of Entry. During the Study Period, Buyer and its agents shall have the right to enter the Property for the purpose of examining the environmental, physical, and other conditions of the Property. Such right of entry shall be governed by the following provisions:
(a)          In exercising such right of entry, Buyer or the Buyer's representatives, attorneys, consultants, engineers, architects and other employees and agents, who, because of their involvement with the proposed transaction, need to know such information for the purpose of giving advice with respect to, bidding on or consummating the proposed transaction (collectively, the "Buyer Parties") are entitled to enter upon the Property, including any leased areas, however such entry may be done only during normal business hours, upon reasonable prior notice to Seller, and for the sole purposes, each of which must be expressly approved in advance by Seller, in Seller's reasonable discretion, (i) to perform inspections and tests of th e Property, including surveys, environmental studies and examinations, and (ii) to examine the books and records of Seller and Seller's property manager relating to the Property, excluding (1) any proprietary information related to Seller's business, (2) any opinions, appraisals, audits, internal memoranda or other internal work product or similar documents with respect to the Property and (3) any information related to the financing of the Seller or the Property. Buyer shall not communicate with any officials at environmental, zoning, assessment or other government agencies regarding the Property or the Seller by name without the Seller's prior consent (which consent shall not be unreasonably withheld by Seller). Notwithstanding the foregoing, Buyer and the Buyer Parties shall not interfere unreasonably with Seller's operations at the Property or interfere with any service provider's or tenant's operations at the Property, and the scheduling of any inspections shall take into account the ti ming and availability of access to tenants' premises pursuant to tenants' rights under their leases or otherwise. Buyer agrees that it or the Buyer Parties will not communicate with any tenants or service providers unless (x) such meetings are coordinated with Seller and (y) a representative of Seller is present during any such tenant or service provider meeting.
(b)          If Buyer wishes to engage in any testing of any portion of the Property, Buyer shall obtain Seller's prior written consent thereto, which may be refused or conditioned as Seller may deem appropriate in its reasonable discretion. Notwithstanding anything to the contrary contained herein, Buyer shall not conduct or allow any physically intrusive testing of, on or under the Property without first obtaining Seller's written consent as to the timing and scope of the work to be performed, which shall not be unreasonably withheld, and the parties entering into an amendment hereto memorializing such scope of work and any additional agreements of the parties with respect to such testing. Without limiting the generality of the fo regoing, Seller's written approval (which may be granted, withheld or conditioned in Seller's sole discretion) shall be required prior to any Phase II environmental survey or any testing or sampling of surface or subsurface soils, surface water, groundwater or any materials in or about the Property in connection with Buyer's environmental due diligence. If any testing is approved by Seller, Buyer agrees to cooperate with any request by Seller in connection with the timing of any such inspection or test. Buyer agrees to provide Seller, upon Seller's request, with a copy of any written inspection or test report or summary prepared by any third party. Buyer agrees that any inspection, test or other study or analysis of the Property shall be performed at
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Buyer's expense and in accordance with applicable law. Buyer agrees at its own expense to promptly restore the Property or, at Seller's option, to reimburse Seller for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of its condition.
(c)          Buyer agrees that Buyer and any person accessing the Property hereunder will be covered by not less than $2,000,000 commercial general liability insurance (with, in the case of Buyer's coverage, a contractual liability endorsement, insuring its indemnity obligation under this Agreement) insuring all activity and conduct of Buyer and such persons while exercising such right of access and naming Seller as insured, issued by a licensed insurance company reasonably acceptable to Seller.
(d)          Buyer agrees that any materials or information provided or made available to Buyer by Seller or its representatives pursuant to Section 2.01 or otherwise in connection with the Property and any and all information, studies and tests obtained by Buyer pursuant to Section 2.03 above, including without limitation any and all Property Information as defined in the certain Confidentiality Agreement, dated April 22, 2005, as amended by Amendment to Confidentiality Agreement dated May 20, 2005, by and between Buyer and Seller (collectively, the "Property Information") is proprietary and confidential, unless such information is in the public domain. Buyer further agrees that all such Property Information and any notes regarding such Property Information ("Notes") will be used solely for the purpose of evaluating the potential purchase of the Property by Buyer and will not be used or duplicated for any other purpose. Buyer shall keep all Property Information and Notes strictly confidential. Notwithstanding the foregoing, Buyer may disclose the Property Information to the Buyer Parties, provided that Buyer shall inform the Buyer Parties of the confidential nature of such information and shall direct and cause such Buyer Parties to keep all such information in the strictest confidence and to use such information only in connection with the proposed transaction and in accordance with the terms of this Agreement. In any event, Buyer has caused or will cause any Buyer Party to execute the agreement attached hereto as Exhibit D (or as attached to the prior confidentiality agreement delivered by Buyer to Seller) (the "Confidentiality Agreement") and such executed agreement has been or shall be delivered t o Seller prior to (a) Buyer giving such Buyer Party Property Information or Notes or authorizing or directing such Buyer Party to receive such Property Information or Notes, or (b) any entry by a Buyer Party onto the Property. If, at any time, either Buyer elects not to proceed with the purchase of the Property, upon any termination of this Agreement or upon the request of Seller, Buyer will promptly deliver to Seller all Property Information and destroy all Notes, and promptly certify to Seller, in writing, that, to the best of Buyer's knowledge, all Property Information has been returned and all Notes destroyed. All obligations of Buyer under this Section 9 shall be referred to as the "Confidentiality Obligations."
(e)          Buyer agrees to indemnify, defend with counsel reasonably acceptable to Seller and hold harmless Seller and all employees, affiliates, subsidiaries, shareholders, officers, directors, trustees and partners of Seller, as well as any investment manager and other agents of Seller (collectively, the "Seller Parties"), from and against any and all loss, injury, damage, claim, lien, liability, suit, cost, including without limitation reasonable
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attorneys' fees and costs, or expense (collectively, "Claims"), caused by or arising from the exercise by Buyer or any of the Buyer Parties or their respective employees, contractors, consultants, agents or representatives of the right of access under this Agreement or arising out of a breach by Buyer of its obligations under this Section 2.03. The indemnity in this Section 2.03(e) shall survive closing or any termination of this Agreement.
Except as otherwise may be expressly set forth herein, Seller makes no representation or warranty as to the truth, accuracy or completeness of the Property Information, including without limitation the contents of Seller's or Seller's agents' and representatives' books and records, contracts, rent rolls, leases or income and expense statements, which it may make available to Buyer in connection with Buyer's evaluation of the Property, including without limitation the Property Information, or that actual results will conform to any projections contained therein. Seller expressly disclaims any and all liability for representations, warranties, express or implied, in such materials or in any other written, oral or other communications transmitted or made available to Buyer by Seller or its consultants, agents or representatives including, without limitation, computer disks containing files with financial data or projections. Buyer acknowledges and agrees that all materials, data and other information made available to Buyer are made available as a convenience and accommodation only. Buyer shall be responsible for verifying through Buyer's own due diligence the accuracy and completeness of all documents and information, provided by Seller to Buyer, and any reliance by Buyer on such documents and information shall be at Buyer's own risk.
2.04     Legal Review Period. After the Effective Date, Buyer shall have the right to obtain a current survey ("Survey") of the Property by a recognized local surveyor reasonably acceptable to Seller and a title insurance commitment ("Title Commitment") with respect to the Property from a nationally recognized title insurer acceptable to Seller in its sole discretion (the "Title Company"). On or before a date which is the earlier of (i) 10 business days after the later of Buyer's receipt of the Survey or Buyer's receipt of the Title Commitment, or (ii) the date on which the Study Period expires, Buyer shall notify Seller in writing of any bona-fide defect in title to the Property or of any other matter which is indicated on the Survey or Title Commitment to which Buyer reasonably objects (the "Title Notic e"). If Buyer does so notify Seller of a defect in title or other matter reasonably objectionable to Buyer within the prescribed time, Seller shall have 5 business days in which to determine whether to cure the defect or other matter so objected to by Buyer and to notify Buyer of Seller's decision in this regard. Notwithstanding anything to the contrary in this Agreement, Seller shall not be required or obligated to expend any amount of money or take any other action to cure any defect or other matter, except that Seller will cause to be paid off (with proceeds up to the Seller's proceeds of sale) and released, bond over, or otherwise secure any mortgage or deed of trust encumbering title to the Property. If Seller is unable or elects not to cure the defect or other matter so objected to by Buyer to the reasonable satisfaction of Buyer, or if a new bona-fide defect in title to the Property first arises of record following the Title Notice (a "New Defect"), Buyer shall have the right, as its sole remedy on account thereof, to either (i) waive such defect or other matter and take title to the Property without any adjustment in the Purchase Price, or (ii) terminate this Agreement and receive a return of the Deposit, provided that if Buyer elects to terminate this Agreement Buyer notifies Seller of its election to terminate within 5 business days after the Seller's notice or, in the case of
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any New Defect, within 5 business days after the date Buyer becomes aware of such New Defect (or by the date of closing, if earlier), failing which option (i) will be applicable. In the event Buyer elects to terminate this Agreement by timely notifying Seller of Buyer's election as aforesaid, the Deposit shall be returned to Buyer and the parties shall have no further liabilities hereunder except for the Continuing Obligations. In the event that Buyer fails to initially notify Seller in writing of a defect or other objectionable matter within the prescribed time as described above, or Buyer fails to terminate the Agreement within the prescribed time upon Seller's failure to cure the defect or other matter to Buyer's reasonable satisfaction, Buyer shall be deemed to have automatically waived any objection to the state of title to the Property or to any matter shown on the Survey and to have agreed to proceed to closing in accordance with the terms of this Agreement without adjustment of the Purchase Price.
3.          Representations and Warranties.
3.01     Seller's Representations and Warranties. Seller hereby represents and warrants that to Seller's knowledge:
(a)       All of the documents and information required to be delivered to Buyer pursuant to Section 2.01 have been or will be so delivered without intentional alteration or omission. The leases, licenses and other occupancy agreements, including any amendments thereto, delivered pursuant to Section 2.01 are all the leases, licenses and other occupancy agreements affecting the Property and such leases licenses and other occupancy agreements are true, accurate and complete copies of such agreements.
(b)       There are not pending any special assessments or condemnation actions with respect to the Property. All real estate taxes, due and payable with respect to the Property, on or before closing (excepting special assessments or benefit charges, which are payable over a period of years) have been or will be paid in full prior to closing, subject to pro-ration in accordance with Section 5.05 below.
(c)       This Agreement has been, and all the documents to be delivered by Seller to Buyer at closing pursuant to Section 5.02 will be, duly authorized.
(d)       This Agreement, and the transfer of the Property by Seller, shall not violate any contract, agreement or instrument to which Seller is a party or by which the Seller is bound.
(e)       The Property is not, or at closing hereunder will not be, subject to mechanics' liens or other similar liens for services provided to or on behalf of the Seller, or other matters of record that evidence, secure or create a lien upon the Property, for payment of any monetary sum, other than a lien for real estate taxes, assessments, vault rents or other similar charges not yet due and payable.
(f)       The Seller is not a "foreign person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986.
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(g)       There are no court actions or other legal proceedings pending against Seller before any court or administrative agency that affects or could affect Seller's ability to perform its obligations under this Agreement or that, if decided adversely to Seller, could have a material adverse effect on the Property.
(h)       Except as disclosed in the environmental reports listed on Exhibit B attached hereto (the "Environmental Reports"), Seller has received no written notice of any violation of any Environmental Laws from any governmental authority. For purposes of this Agreement, "Environmental Laws" shall mean all federal, state and local laws, statutes, ordinances, codes, rules, regulations, decisions, or decrees, and any judicial interpretation of any of the foregoing, applicable to the Property that pertains or relates to Hazardous Substances, and all amendments to any of the foregoing (including, without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986; the Resource Conservation and Recovery Act of 1976; the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Hazardous Materials Transportation Act; the Toxic Substances and Control Act of 1976; the Occupational Safety and Health Act; the Safe Drinking Water Act; and the Underground Storage Tank Management Act of 1990). For the purposes of this Agreement "Hazardous Substances" shall mean (i) any "hazardous substance," "hazardous material," "toxic substance" or "solid waste" as such terms are presently defined in those laws specifically listed under the definition of Environmental Laws in this Agreement.
(i)        There are no due and payable but unpaid leasing commissions relating to the Property.
(j)       Seller has not entered into any agreement or assumed any obligation which is not of public record with any governmental authority or agency which would impose on Buyer the obligation to make any contributions of money, dedications of land, grants of easements or rights of way, or to construct, install or maintain any improvements, public or private, on or off the Property, or which otherwise affect, restrict or encumber the development of the Property, which has not been, or will not be, satisfied or discharged prior to closing.
Any reference in this Agreement to "knowledge," "actual knowledge" or "best of knowledge" of Seller, shall be deemed to mean the actual knowledge of Vernon D. Gibson, without inquiry or review of Seller's books and records. Any reference in this Agreement to the receipt of notices or other communications by Seller shall be deemed to mean the knowledge by Vernon D. Gibson of receipt by Seller of such notice or communication in writing to Seller. Buyer acknowledges and agrees that neither such party nor any other employee or agent of Seller shall have any duty or obligation under this Agreement or other law to make any affirmative investigation of the matters covered by the foregoing provisions in order to determine the accuracy or truthfulness thereof. Buyer has not relied an d will not rely on, and Seller is not liable for or bound by, any express or implied warranties, guaranties, statements, representations or information pertaining to the Property or relating thereto made or furnished by Seller, or any real estate broker or agent representing or purporting to represent Seller, or any third
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party in the form of reports or otherwise, to whomever made or given, directly or indirectly, orally or in writing, unless specifically set forth in this Agreement. In addition, Buyer hereby acknowledges and agrees that except with respect to the foregoing representations and warranties set forth in this provision above, or that which may be expressly set forth elsewhere in this Agreement (if at all), the Property is to be conveyed by Seller to Buyer in "as-is, where-is, with all faults" condition without warranty or representation, express or implied, as to zoning, physical condition, environmental condition, suitability for a particular purpose or any other matter whatsoever.
3.02     Conditions to Buyer's Closing. The (i) continued accuracy in all material respects of the representations and warranties set forth in Section 3.01 above, and (ii) the commitment by the Title Company, upon payment by Buyer of the premium therefore, to issue to Buyer a title insurance policy in the form called for by the Title Commitment, subject, however, to all matters to which the deed is subject in accordance with Section 5.02(a), shall be a condition precedent to the Buyer's obligation to close hereunder. If any representation or warranty set forth in Section 3.01 above shall not be correct in any material respect at or before closing, as may be determined by the certificate delivered from Seller to Buyer at closing as described in Section 5.02 or otherwise, or if the Title Company fails upon closing and payme nt of its premium to commit to issue a title policy to Buyer as above provided, Buyer may, as its sole remedy on account thereof, terminate this Agreement and receive a return of its Deposit, in which event the parties shall have no further liability hereunder (except for the Continuing Obligations). Absent any such termination, upon closing hereunder the covenants, representations and warranties set forth in Section 3.01 above, as modified by the certificate delivered from Seller to Buyer at closing as described in Section 5.02, shall be deemed remade as of the date of closing hereunder. However, notwithstanding anything to the contrary herein, to the extent that any documents or information regarding the Seller or the Property are disclosed to Buyer or brought to Buyer's attention prior to closing, either orally or in writing, and Buyer nevertheless closes on purchase of the Property, Buyer shall be deemed to have accepted and to have waived any objection to or claim based on such documents or information. Furthermore, except with respect to any covenants, representations or warranties which are expressly to survive closing hereunder (if any), any and all covenants, representations and warranties contained in this Agreement shall merge in the deed delivered at closing and shall not survive closing hereunder.
3.03     Buyer's Representations and Warranties. Buyer hereby covenants, represents and warrants to Seller as follows:
(a)       This Agreement has been, and all the documents to be delivered by Buyer to Seller at closing will be, duly authorized.
(b)       This Agreement, and the acquisition of the Property by Buyer, shall not violate any contract, agreement or instrument to which Buyer is a party or by which the Buyer is bound.
3.04     Conditions to Seller's Closing. The continued accuracy in all material respects of the representations and warranties set forth in Section 3.03 above shall be a condition
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precedent to the Seller's obligation to close hereunder. If any representation or warranty set forth in Section 3.03 above shall not be correct in any material respect at or before closing, Seller may terminate this Agreement and retain the Deposit without prejudice to or limitation on Seller's remedies on account of breach or default of contract by Buyer.
3.05     Survival of Representations. All of the representations of Seller and Buyer expressly made in this Agreement and in any other instrument or agreement entered into in connection herewith shall survive closing hereunder for a period of six (6) months, after which no suit, action or claim may be initiated with respect to such matters.
4.         Pre-closing Obligations.
4.01     Operations. Between the Effective Date and closing hereunder, Seller shall continue to operate the Property in the normal course of business.
4.02     Actions Affecting Property. Between the Effective Date and the expiration of the Study Period, Seller shall give Buyer notice of any actions taken or notices received, with regard to leases, title or otherwise, with respect to the Property. Between the expiration of the Study Period and closing hereunder, Seller shall not execute any new leases or lease amendments without Buyer's prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. In addition, during the period between the expiration of the Study Period and closing hereunder, Seller shall not execute any documents, agreements or instruments affecting title to the Property, or (to the extent within Seller's control) otherwise allow or permit the imposition of any liens or other encumbrances which affect title to the Property, without the prior written approval of the Buyer. In the event that Buyer fails to respond within 3 business days after its receipt of any request for approval of a lease or any other document, then Buyer's approval shall be deemed granted. Furthermore, Buyer shall be responsible for paying, and shall indemnify and hold harmless Seller from, leasing commissions and other similar expenses related to leases of space at the Property, provided the terms of such leases or a renewal or extension thereof commence after the Effective Date, when and as due, provided further that with respect to any such obligations which arise in connection with the execution of a new lease after the Effective Date, such lease is approved or deemed approved by Buyer pursuant to this section.
4.03     Service Contracts. Before the expiration of the Study Period, Buyer shall designate in writing to Seller any landscaping, trash removal, maintenance or other service contracts or agreements Buyer elects to have Seller terminate as of closing, and at closing Seller shall take steps to terminate such contracts and agreements in accordance with their terms (with the understanding that to the extent that any such contracts require advance notice for termination to be effective, Buyer shall at closing assume and perform such contracts until the first date on which the termination may become effective). Buyer shall be responsible for, and shall pay as of closing, any cancellation charges or fees for termination of contracts or agreements which Buyer elects to have terminated.
4.04     Marketing of Property. After the Effective Date, and until closing or earlier termination of this Agreement, Seller may communicate with other prospective third party
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purchasers, but Seller shall not enter into any other contract for sale of the Property unless such contract is expressly subject to the prior rights of Buyer hereunder.
5.         Closing and Settlement.
5.01     Closing Date. The purchase and sale contemplated herein shall close at the office of Wilmer Cutler Pickering Hale and Dorr LLP ("Seller's Counsel"), 1801 Pennsylvania Avenue, Washington, D.C. within 15 business days after the expiration of the Study Period. In addition, at the request of Seller, the parties shall meet at the aforesaid offices of Seller's Counsel one day prior to the closing date in order to verify compliance with all terms of the Agreement by both parties.
5.02     Seller's Deliveries. At closing, upon payment to Seller of the Purchase Price (subject to closing adjustments in accordance with this Agreement), Seller shall execute and deliver to Buyer the following documents, each of which shall be in a form prepared by or reasonably acceptable to Seller:
(a)       A special warranty deed subject to (i) liens securing payment of taxes, assessments, vault rents and other public charges imposed in connection with the Property but which are not yet due as of the date of closing, (ii) all matters, including without limitation defects in title to the Property indicated on the Title Commitment, to which Buyer is deemed to have waived any objection under Section 2.04, (iii) any matters which could be disclosed by an accurate survey of the Property, (iv) any zoning, subdivision or other public laws and regulations, and (v) leases or other occupancy agreements with tenants at the Property.
(b)       A bill of sale, conveying to Buyer without warranty or representation and without recourse, title to all personal property, if any, owned by Seller and located at the Property.
(c)       An assignment by Seller, with an assumption by Buyer, of (1) all leases affecting the Property provided to Buyer pursuant to Section 2.01 above, (2) all service contracts and agreements which Buyer elects not to have terminated at closing, (3) all equipment leases, permits and warranties and other rights relating to the Property which are assignable without charge or restriction (the "Assignment").
(d)       Letters to each tenant at the Property notifying the tenants of the sale of the Property to Buyer.
(e)       Evidence, in form reasonably satisfactory to the Title Company, of Seller's power and authority to enter into this transaction.
(f)       A written certificate stating that all representations and warranties contained in Section 3.01 above remain, as of the date of closing, correct in all material respects as when first made hereunder or, if not correct, stating the extent to which any such representations and warranties are not correct ("Seller's Certificate").
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(g)       A District of Columbia Form FP-7C (the "FP-7C").
(h)       An owner's title affidavit in form acceptable to the Title Company and Seller.
(i)       A settlement statement in accordance with the terms of this Agreement (the "Settlement Statement").
(j)       Such additional documents as may be reasonably necessary or customary to consummate the transactions contemplated by this Agreement.
5.03     Buyer's Deliveries.
(a)       At closing, Buyer shall pay the Purchase Price in accordance with Section 1.
(b)       At closing, Buyer shall execute and deliver to Seller the following documents:
(i)       The Settlement Statement.
(ii)      The Assignment.
(iii)     A written certificate stating that all representations and warranties contained in Section 3.03 above remain, as of the date of closing, correct in all material respects as when first made hereunder or, if not correct, stating the extent to which any such representations and warranties are not correct (the "Buyer's Certificate").
(iv)     The FP-7C.
(v)       Such additional documents as may be reasonably necessary or customary to consummate the transactions contemplated by this Agreement.
5.04     Possession. Possession of the Property shall be delivered to the Buyer on the date of closing. In addition, on or before the date of closing, Seller shall deliver to Buyer the Seller's copies of all leases (including all amendments thereto).
5.05     Prorations. The following provisions shall apply to the division of funds, obligations and payments between the parties as of closing hereunder:
(a)       The parties shall adjust and prorate the following items as of 11:59 p.m. on the day prior to closing:
(i)       All rent, including base rent, minimum rent and percentage rent (if any), which relates to the months or other applicable rent periods up through the month or other applicable period within which the closing occurs. Any rent which is payable in arrears
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shall be adjusted on the basis of figures equivalent to such rent payable for the immediately preceding rent period, then readjusted after closing upon determination of final, actual amounts in accordance with this section. Seller shall receive a credit for any rental amounts which are due and payable prior to closing but not actually paid by the respective tenant(s), and Buyer shall have all rights of collection and enforcement with respect thereto after closing.
(ii)      All amounts payable by tenants at the Property as periodic estimates of the costs of utilities, vault rents, taxes, insurance, maintenance, repairs and other operating expenses relating to the months or other applicable periods up through the month or other applicable period within which the closing occurs. Seller shall receive a credit for any estimates of expenses which are due and payable prior to closing but not actually paid by the respective tenant(s), and Buyer shall have all rights of collection and enforcement with respect thereto after closing.
(iii)     All real property taxes, assessments and other governmental impositions of any kind or nature, including any special assessments or similar charges, accrued or imposed in any connection with the Property (collectively "Taxes"), which relate to the tax year or other applicable tax period within which the closing occurs (whether paid or accrued). With respect to any portion of the Taxes which are payable by any tenant directly to the authorities, no proration or adjustment shall be made.
(iv)      All fees, costs and expenses under maintenance, trash removal, janitorial or other service contracts which relate to the period within which the closing occurs.
(b)      The parties agree that in the event the Seller's proceeds of the Purchase Price are not delivered to Seller's account pursuant to Section 1.02(b) by 3:00 p.m. Eastern Standard Time on the day of closing determined in accordance with Section 5.01 above, then the prorations described in subsection (a) above shall be recalculated as of 11:59 p.m. Eastern Standard Time the day immediately prior to the first day on which Seller has such funds by 3:00 p.m. Eastern Standard Time. Such recalculation shall not diminish or otherwise affect the parties' obligation to close at the time and at the place required by the terms of this Agreement.
(c)      Seller shall transfer to Buyer a credit against the Purchase Price equal to the total amount held by the Seller as security deposit money under tenant leases in connection with the Property. All leasing commissions and tenant improvement costs arising in connection with leases, lease amendments or other agreements with tenants which are entered into by Seller with Buyer's approval (not to be unreasonably withheld) on or after the Effective Date and before closing shall be assumed and paid by Buyer, with an adjustment of the Purchase Price to be made at closing in order to credit to Seller any payments of such amounts made by Seller prior to closing. In addition, Buyer shall assume and pay, and hereby indemnifies Seller from, any commissions or fee s becoming payable to brokers or agents after closing, including commissions or fees which become payable after closing on account of property visits, lease negotiations or other broker or agent activities taking place prior to closing.
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(d)      The obligations under this section shall survive closing. In the event that any errors in prorations made at closing are discovered or additional adjustments to prorations are necessary after closing, the parties shall promptly re-adjust the subject amounts, with such payments to be made between the parties as are necessary to correct the errors. In all events, the parties shall make such adjustments, or confirm in writing that no such adjustments are necessary, within 120 days after the end of the calendar year in which the closing occurs.
5.06     Closing Costs. Buyer shall pay any and all transfer, recordation, documentary stamp and other similar taxes and charges imposed in connection with the delivery and recordation of a deed for the Property and otherwise in connection with this transaction. In addition, Buyer shall pay all costs of the survey, examination of title and all title insurance policy premiums. Seller and Buyer shall each pay the costs of its own counsel.
6.         Condemnation. In the event any governmental or quasi-governmental authority notifies Seller, or Seller becomes aware, of any permanent or temporary actual taking or condemnation of all or any material portion of the Property ("Taking"), Seller shall promptly notify Buyer of the same. If such Taking would not materially adversely affect Buyer's intended development of the Property, Buyer shall proceed to closing with no reduction in the Purchase Price, and all proceeds of such Taking less costs of collection incurred by Seller shall be delivered or assigned to Buyer at closing. If, however, such Taking would materially adversely affect Buyer's intended development of the Property, Buyer shall have the right, at its sole option, either to (a) proceed to closing with no reduction in the Purchase Price, in which event any and all proceeds of such Taking less costs of collection incurred by Seller shall be delivered or assigned to Buyer at closing, or (b) terminate this Agreement, in which event the Deposit shall be promptly released to Buyer, and Seller and Buyer thereafter shall be released from any further liabilities or obligations under this Agreement, except for the Continuing Obligations. Within ten (10) days after Buyer's receipt of written notice from Seller regarding the occurrence of any Taking, Buyer shall notify Seller in writing of Buyer's determination as to whether such Taking would or would not materially adversely affect Buyer's intended development of the Property. If Buyer fails to deliver such written notice to Seller prior to the expiration of said 10-day period, then Buyer shall be deemed to have made a determination that such Taking shall not adversely affect Buyer's intended development of the Property, and an election to proceed to closing with no reduction of the Purchase Price in accordance with subclause (a) above.
7.         Default/Remedies.
7.01     Default by Seller. If Seller breaches or defaults in any covenant or obligation under this Agreement prior to closing (but not including the breach of any representation or warranty set forth in Section 3.01 hereof, which shall be addressed in Section 3.02 above), and such breach or default is not cured within a reasonable time after written notice from Buyer, then Buyer shall have, as its sole option and remedy on account thereof, the right to either (a) enforce this Agreement by specific performance, or (b) terminate this Agreement and receive a return of the Deposit; provided, however, if Seller intentionally
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breaches any of its covenants contained herein, and Buyer terminates this Agreement as a result thereof, Seller shall reimburse Buyer for its reasonable out-of-pocket costs up to $300,000.
7.02     Default by Buyer. If prior to closing, Buyer breaches any covenant, warranty or representation contained in this Agreement, then Seller shall have the right to retain the full amount of the Deposit hereunder, as Seller's sole remedy and liquidated damages on account of the Buyer's default. Notwithstanding the foregoing, this provision shall not limit the Seller's right and claim against Buyer for any portion of the total Deposit which is not paid to Seller, and further provided that this provision shall not limit the Seller's right to pursue and recover on a claim with respect to any Continuing Obligations of Buyer. The parties agree that the Seller's actual damages would be difficult to ascertain and that the total Deposit is the parties' best and good faith estimate of such damages and not a penal ty.
8.            Deposit.
8.01     Disbursement of Deposit. Escrow Agent shall hold the Deposit in an interest bearing account at a federally insured financial institution in the Washington metropolitan area. Any interest earned on the Deposit shall be and become part of the Deposit. Escrow Agent shall retain and/or return the Deposit as provided in this Agreement. If by 4:00 p.m. (Eastern Standard Time) on the expiration date of the Study Period, Buyer has delivered the Study Period Notice, terminating the Agreement, then Escrow Agent shall return the Deposit to Buyer.
8.02     Disputes. In the event of any dispute between Seller and Buyer regarding the disbursement of the Deposit, Seller shall hold the Deposit until (i) Seller and Buyer agree with respect to the disbursement of the Deposit or (ii) Escrow Agent receives a final, non-appealable, unstayed order binding upon it from a court of competent jurisdiction with respect to the disbursement of the Deposit.
8.03     Attorneys' Fees and Interest. In the event there exists a dispute between Seller and Buyer as to the disbursement of the Deposit in accordance with Section 8.01, and a court of competent jurisdiction determines that the Deposit should have been disbursed to either Seller or to Buyer, then in addition to all other amounts payable under this Agreement, and notwithstanding any limitation set forth in this Agreement on the liability of any party, the non-prevailing party in such litigation or proceeding shall pay all fees and expenses (including, without limitation, court costs and reasonable attorneys' fees) incurred by the other party in obtaining the release of the Deposit.
9.          Miscellaneous.
9.01     Assignment. Buyer represents to Seller that Buyer intends to purchase the Property for Buyer's own investment purposes. Likewise, Buyer shall not assign or transfer this Agreement or any interest herein or in the Property to any third party without the prior written consent of the Seller. However, Seller agrees to not unreasonably withhold its consent to any request by Buyer for consent to an assignment of this Agreement prior to closing to a single asset
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entity formed solely for the purpose of holding title to the Property for benefit of Buyer. Likewise, Seller may withhold its consent to, and Buyer hereby agrees to not undertake, any assignment for the purpose of transferring directly or indirectly the rights to purchase the Property in return for monetary consideration. Upon any assignment, the original named Buyer herein shall not be released but shall remain primarily responsible for all duties, obligations and liabilities of the Buyer hereunder. This Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of the parties hereto.
9.02     No Personal Liability. No employee, officer, director, trustee, partner or affiliate of Seller, or any investment manager or other agent of Seller, and except for the obligations of Buyer Parties under Section 2.03(d) or any Confidentiality Agreement delivered under Section 2.03(d), no employee, officer, director, trustee, partner or affiliate of Buyer or any investment manager or agent of Buyer, shall be personally liable or responsible for any duties, obligations or liabilities of the Seller or Buyer, as applicable, hereunder or in any other connection with the Property or this transaction.
9.03     Limitation of Assets. To the extent that Seller has obligations or liabilities of any kind after closing under this Agreement, recourse for enforcement of such obligations or liabilities (if any) shall be limited to an amount of $500,000, and no action may be taken with respect to any greater amounts or other assets of Seller. However, this provision shall not be construed or interpreted as creating any such obligations or liabilities of Seller, which shall be determined by other provisions of this Agreement.
9.04     Limitation of Claims. No statutory or other legal rights under federal, state or local laws and/or regulations shall apply between the parties with respect to the Property and the transactions contemplated by this Agreement, and the parties are liable only pursuant to the covenants, representations and/or warranties expressly stated in this Agreement and no other agreements, laws or regulations. Likewise, upon closing hereunder, except as otherwise specifically set forth in this Agreement, Buyer shall be deemed to have automatically released and discharged forever the Seller and all Seller Parties from and against any and all Claims, including but not limited to actions for contribution or reimbursement after environmental remediation, which might otherwise arise under any law or regulation. Without limiting the foregoing, from and after closing hereunder, Buyer shall indemnify, defend with counsel reasonably acceptable to Seller, and hold harmless Seller and all Seller Parties from and against any and all Claims caused by or arising from the generation, storage, presence, release, discharge, remediation or removal of Hazardous Substances on or from the Property, including without limitation the soils or groundwater in or under the Property. Notwithstanding the foregoing, Buyer shall not be liable to Seller or Seller Parties under the immediately preceding sentence for claims by third parties arising from the occurrence before closing of any release (including without limitation any release by migration through the soils or ground water) of Hazardous Substances from the Property onto adjacent property. The provisions of this Section 9.04 shall survive closing or any termination of this Agreement.
9.05     Notices. All notices given in connection with this Agreement shall be effective as of the date personally delivered, one day after the date delivered to overnight courier,
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or three days after being mailed by U.S. Mail (postage prepaid), as the case may be, if sent to the parties at the following addresses:
		If to Seller:		Potomac Electric Power Company 701 Ninth Street, N.W., Rm. 9404 Washington, D.C. 20068 Attn: Mr. Vernon D. Gibson
		and to:		Potomac Electric Power Company 701 Ninth Street, N.W., Rm. 9404 Washington, D.C. 20068 Attn: Mr. Kambiz Molkara
		and to:		Potomac Electric Power Company 701 Ninth Street, N.W., Rm. 1113 Washington, D.C. 20068 Attn: Michael J. Boland, Esq.
		With a copy to:		Wilmer Cutler Pickering Hale and Dorr LLP 1455 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Attn: Allen H. Fox, Esq.
		If to Buyer:		Akridge 601 Thirteenth Street, NW, Suite 300N Washington, DC 20005 Attn: Thomas W. Wilbur
9.06     Entire Agreement. This Agreement contains all agreements of the parties with respect to the Property and supersedes any prior discussions, contracts or other agreements with respect thereto. No modifications to this Agreement or waivers of any rights or benefits provided herein shall be binding unless signed by the party against whom such modification or waiver is sought to be enforced.
9.07     Broker. Each of Seller and Buyer represents and warrants to the other that it has not dealt with any broker or finder in connection with the transaction contemplated by this Agreement, except for Cassidy & Pinkard on behalf of Seller (the "Broker"). Seller shall pay a commission to the Brokers at closing according to separate agreement. Furthermore, each of Seller and Buyer indemnifies and holds the other harmless from and against any losses, damages, costs or expenses (including attorneys' fees) incurred by such other party due to a breach of the foregoing warranty and representation. The foregoing indemnity shall survive closing or any termination of this Agreement.
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9.08     Attorney's Fees. If any action is brought by either party hereto against the other party, the party in whose favor a final judgment shall be entered shall be entitled to recover court costs and reasonable attorneys' fees incurred in connection therewith.
9.09     Perpetuities. If the rule against perpetuities would invalidate this Agreement or any portion hereof, due to the potential failure of an interest in property created herein to vest within a particular time, then notwithstanding anything to the contrary herein, each such interest in property must vest, if at all, before the passing of 21 years from the date of this Agreement, or this Agreement shall become null and void upon the expiration of such 21 year period and the parties shall have no further liability hereunder.
9.10     Severability. No determination by any court, governmental body or otherwise that any provision of this Agreement or any amendment hereof is invalid or unenforceable in any instance shall affect the validity or enforceability of any other such provision or such provision in any circumstance not controlled by such determination. Each such provision shall be valid and enforceable to the fullest extent allowed by, and shall be construed wherever possible as being consistent with, applicable law.
9.11     Recording. This Agreement may not be recorded among the land records or among any other public records without the Seller's prior written consent (which consent may be withheld for any reason).
9.12     Counterparts. This Agreement may be signed in counterparts and shall be fully enforceable when signed in such manner.
9.13     Timing. The phrase "business days" as used herein shall mean the days of Monday through Friday, excepting only federal holidays. The phrase "calendar days" as used herein shall mean all days of the week, including all holidays. The term "days" without reference to calendar or business days shall mean calendar days. Time is of the essence of this Agreement.
9.14     Soil Disclosure. The characteristics of soil on the Property as described by the Soil Conservation Service of the United States Department of Agriculture in the Soil Survey of the District of Columbia and as shown on the Soil Maps of the District of Columbia is Urban Land. For further information, Purchaser may contact a soil-testing laboratory, the District of Columbia Department of Environmental Services or the Soil Conservation Service of the Department of Agriculture.
9.15     UST Disclosure. Concurrently with its execution of this Agreement, Seller has executed and delivered to Purchaser, pursuant to the Underground Storage Tank Management Act of 1990, an Underground Storage Tank Real Estate Transfer Disclosure Form in the form attached to this Agreement as Exhibit E.
9.16     Approval by Seller's Board of Directors. The obligation of Seller and Buyer to proceed to closing shall be conditioned upon approval by Seller's Board of Directors of this Agreement and the consummation of the transactions described herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth below.
SELLER:					PEPCO HOLDINGS, INC.
KEVIN McGOWAN                     Witness					By:             W. J. SIM                                             Name: William J. Sim                                     Title: President & C.O.O.
					Date of Execution: 6/3/05
BUYER:					THE JOHN AKRIDGE DEVELOPMENT COMPANY
JAYNE SHISTER                         Witness					By:           T. WILBUR                                            Name: Thomas W. Wilbur      Title: Senior Vice President
					Date of Execution: 3 June 2005
Attachments
			Exhibit A - Plat/Description of Property Exhibit B - Environmental Reports Exhibit C - Not Applicable Exhibit D - Confidentiality Agreement Exhibit E - UST Disclosure Form
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EXHIBIT A
DESCRIPTION OF PROPERTY
(See Attached)
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EXHIBIT B
ENVIRONMENTAL REPORTS
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EXHIBIT C
NOT APPLICABLE
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EXHIBIT D
CONFIDENTIALITY AGREEMENT
The undersigned, a Buyer Party (as defined in the attached Purchase Agreement) of _______________________, with respect to the property located between First and Second Street from S Street on the north to V Street on the south in Southwest Washington, D.C., agrees to be bound by the terms of Section 9 of the attached Purchase Agreement.
[BUYER PARTY NAME]
By:     _____________________________            Name:            Title:
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EXHIBIT E
UST DISCLOSURE FORM
D.C. DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS ENVIRONMENTAL REGULATION ADMINISTRATION
UNDERGROUND STORAGE TANK REAL ESTATE TRANSFER DISCLOSURE FORM
The Underground Storage Tank (UST) Management Act of 1990, as amended, and implementing regulations, require that sellers of real property in the District of Columbia inform prospective purchasers in writing, prior to entering into a contract for sale, of the existence or removal of any USTs of which the seller has knowledge. If the sale is of commercial property, seller is also required to inform prospective purchasers of any prior use of the property of which seller has actual knowledge which suggests the existence of tanks on the property. (For example, if seller knows there was formerly a gas station at the site, he is required to disclose this fact). Sellers of individual condominium or cooperative units are not subject to the disclosure requirements. Sellers of single-family homes should use the appropriate from or provide disclosure in the sales contract.
Seller Name: ______________________________________________________________ Address of property to be sold: _______________________________________________
1)	To the best of your knowledge, are there any underground storage tanks (USTs) located on or under the above-reference real property? Yes ____ No ____
2)	If yes, how many USTs are located on the property? ________________________
	a)	What is the capacity of the tanks? _______
	b)	Are they presently in service _______ or abandoned _______?
	c)	If in service, for what purpose are they used? ________________________ _____________________________________________________________
3)	Have you removed any USTs during the period of time you have owned the above-referenced property? Yes ____ No ____
4)	If Yes, how many USTs were removed? ____________ When? _______________
	By whom? _________________________________________________________
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	a)	What were their capacities?  ____________________________________
	b)	Have you and/or the parties who removed the USTs complied with all requirements of the D.C. UST Regulations pertaining to closure of USTs? Yes ____ No ____ Don't know ____
5)	Do you know of any prior uses of the property which suggest that USTs may be or have been used on the property? Yes ____ No ____
	If yes, please describe the former use:  __________________________________
PEPCO HOLDINGS, INC., as seller
By:  ______________________________ Name: Title:						_________________________ Date
PURCHASER ACKNOWLEDGES THAT PURCHASER HAS RECEIVED THE ABOVE DISCLOSURES PRIOR TO SIGNING A CONTRACT FOR PURCHASE.
THE JOHN AKRIDGE DEVELOPMENT COMPANY, as purchaser
By:  ______________________________ Name: Title:						_________________________ Date
Information pertaining to USTs and UST removals of which the D.C. Government has received notification, is on file with the D.C. Department of Consumer and Regulatory Affairs, Environmental Regulation Administration, UST Branch, 2100 MLK, Jr. Avenue, S.E., Wash., D.C., Phone (202) 404-1167.
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EX-10

FIRST AMENDMENT TO SALE AND PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO SALE AND PURCHASE AGREEMENT ("Amendment") is made to be effective for all purposes as of June 3, 2005, between PEPCO HOLDINGS, INC., a Delaware corporation ("Seller") and THE JOHN AKRIDGE DEVELOPMENT COMPANY, a Virginia corporation ("Buyer").
Seller and Buyer entered into a Sale and Purchase Agreement with an Effective Date of June 3, 2005 ("Original Agreement"). Seller and Buyer desire to amend the Original Agreement as set forth in this Amendment. Each capitalized term used but not defined in this Amendment has the meaning assigned to it in the Original Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.	Exhibits. Exhibits A and B to this Amendment are hereby adopted by Seller and Buyer as Exhibits A and B, respectively, to the Original Agreement.
2.	Escrow Agent; Title Company. The "Title Company" as defined in Section 2.04 of the Original Agreement shall be Tri-State Commercial Closings, Inc., as agent for Fidelity National Title Insurance Company. Seller hereby approves such Title Company as required by the Original Agreement. Pursuant to Section 1.02(a) of the Original Agreement, the Title Company shall also act as Escrow Agent.
3.	Escrow Provisions.
	a.	Escrow Agent acknowledges receipt of the Initial Deposit, which shall be deposited and held at Branch Banking & Trust Company in Account #5160018455 (subaccount number to be determined). Escrow Agent shall hold and release the Deposit in accordance with the terms and provisions of the Original Agreement, as such provisions are modified by this Section 3.
	b.	Notwithstanding Section 1.02(a) of the Original Agreement, Buyer and Seller agree that, provided Buyer deposited the Initial Deposit with Escrow Agent on or before 11:00 a.m. (EDT), June 8, 2005, by wire transfer of immediately available funds sent in accordance with instructions provided by Escrow Agent, the Initial Deposit shall be deemed to have been made in accordance with the Original Agreement.
	c.	Section 8.02 of the Original Agreement is hereby amended by deleting the phrase "Seller shall hold the Deposit" in the second line and replacing such phrase with the phrase "Escrow Agent shall hold the Deposit".
________________________________________________________________________
	d.	Except as otherwise set forth in Section 8.02 of the Original Agreement (as modified by Section 3(c) of this Amendment) or in this Section 3(d), Escrow Agent shall release the Deposit only in accordance with joint written instructions of Seller and Buyer.
	e.	In carrying out or performing its responsibilities hereunder, Escrow Agent shall have the right, but not the obligation, to require and receive such written certifications or instruction from either or both of Seller and Buyer, as Escrow Agent deems reasonably necessary or appropriate for taking any action hereunder.
	f.	Escrow Agent may assume the genuineness of any document or signature which appears to be genuine (whether original or photocopy) if such document or signature is presented to it. Escrow Agent may act and rely upon any writing, affidavit, instrument, or signature, which it, in good faith believes to be genuine, and it may assume the validity and accuracy of any statement or assertion contained in such writing or instrument, and may assume that any person purporting to give such writing, notice, advice or instruction in connection with provisions hereof has been duly authorized to do so.
	g.	Escrow Agent shall not charge any fees or charges for its functions as Escrow Agent under the Agreement.
	h.	The duties and undertakings of Escrow Agent hereunder shall be limited to the safekeeping of the funds deposited hereunder and the disposition of same in accordance with the Agreement. Escrow Agent agrees to perform only the duties and undertakings as expressly provided herein and no other duties or obligations shall be implied against Escrow Agent. Seller and Buyer each hereby agree to indemnify Escrow Agent and its officers, directors, shareholders, employees and agents and hold them harmless from and against any and all manner of claims, damages, liabilities, losses, actions, expenses, fees or charges of any character or nature, including attorney's fees, arising out of Escrow Agent's performance of its obligations under the Agreement, including any litigation arising from the Agreement or involving the subject matter of the Agreement, except to the extent caused by the negligence, willful misconduct or fraud of such indemnified parties.
4.	Notices. Section 9.05 of the Original Agreement is hereby amended as follows:
	a.	A copy of all notices delivered to Buyer shall be delivered to:
		Arnold & Porter LLP 555 Twelfth Street, N.W. Washington, D.C. 20004 Attn: Carey W. Smith, Esq.
2 ________________________________________________________________________
	b.	Notices to Escrow Agent shall be delivered in accordance with Section 9.05 of the Original Agreement to:
		Tri-State Commercial Closings, Inc. 1150 18th Street, N.W. Suite 575 Washington, D.C. 20036 Attn: Richard W. Klein, Jr., Esq.
5.	Ratification. Except as expressly modified by this Amendment, the Original Agreement shall continue in full force and effect in accordance with its terms. References in the Original Agreement or in this Amendment to "Agreement" shall be deemed to be references to the Original Agreement as modified by this Amendment.
6.	Counterparts; Execution By Facsimile. This Amendment may be executed in any number of counterparts with the same effect as if all of the parties had signed the same document. All counterparts shall be construed together and shall constitute one agreement. Execution and delivery of this Amendment by facsimile shall be sufficient for all purposes and shall be binding on any person who so executes and delivers this Amendment. Solely for purposes of this Section 6, delivery of an executed counterpart of this Amendment shall be effective upon delivery of a facsimile transmission to: Seller, c/o Mr. Vernon D. Gibson, Fax No. 202-331-6355, with a copy to Allen H. Fox, Fax No. 202-663-6363; Buyer, c/o Mr. Thomas W. Wilbur, Fax No. 202-347-8043; and Escrow Agent, c/o Richard W. Klein, Jr., Esq., Fax No. 202-955-5646.
[signatures on following page]
3 ________________________________________________________________________
IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment on the dates set forth below, to be effective for all purposes as of the Effective Date.
SELLER:			PEPCO HOLDINGS, INC.
			By:         W. J. SIM                                          Name:  W. J. Sim                                  Title:    S.V.P.
			Date of Execution:      6/10/05
BUYER:			THE JOHN AKRIDGE DEVELOPMENT COMPANY
			By:         THOMAS W. WILBUR                   Name:   Thomas W. Wilbur                  Title:     SVP
			Date of Execution:    8 June 2005
Joinder of Escrow Agent
The undersigned has executed this Amendment for the sole purpose of evidencing its agreement to comply with the provisions of Section 3 of this Amendment. The undersigned's consent is not required for, nor must notice be given to the undersigned of, any amendment, supplement, waiver or modification of the Agreement that does not affect the rights or obligations of Escrow Agent under the Agreement.
ESCROW AGENT:			TRI-STATE COMMERCIAL CLOSINGS, INC.
			By:      RICHARD W. KLEIN, JR.                  Name:   Richard W. Klein, Jr.              Title:     President
			Date of Execution:   June 8, 2005
4 ________________________________________________________________________
EXHIBIT A
DESCRIPTION OF PROPERTY
Parcel I:
Lot 13 in the subdivision made by Potomac Electric Power Company in Square 607, per plat recorded in Book 152 at page 52 in the Office of the Surveyor of the District of Columbia.
Parcels II:
Original Lots 1 through 14, both inclusive, in Square 609.
Parcel III:
Lot 19 in the subdivision made by Potomac Electric Power Company in Square 611, per plat recorded in Book 156 at page 110 in the Office of the Surveyor of the District of Columbia.
Parcel IV:
That portion of U Street closed, which vested in the owner(s) of Lot(s) __________ in Square 611, and which is shown on plat recorded in Book 112 at page 89 in the Office of the Surveyor of the District of Columbia.
5 ________________________________________________________________________
EXHIBIT B
ENVIRONMENTAL REPORTS
Draft Phase I Environmental Site Assessment, Buzzard Point (Squares 609 & 611), 2nd St SW, Washington, D.C., dated October 13, 2004, prepared by URS Corporation, Inc.
Limited Phase II Environmental Investigation Buzzard Point, 2nd Street SW / V Street SW, Washington, D.C., dated March 22, 2005, prepared by URS Corporation, Inc.
6 ________________________________________________________________________

EX-10

 

SECOND AMENDMENT TO SALE AND PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO SALE AND PURCHASE AGREEMENT ("Amendment") is made as of July 18, 2005 ("Amendment Date"), between PEPCO HOLDINGS, INC., a Delaware corporation ("Holdings"), THE JOHN AKRIDGE DEVELOPMENT COMPANY, a Virginia corporation ("Buyer"), acknowledged by TRI-STATE COMMERCIAL CLOSINGS, INC. ("Escrow Agent"), and joined by POTOMAC ELECTRIC POWER COMPANY, a District of Columbia and Virginia corporation ("PEPCO").
Holdings and Buyer entered into a Sale and Purchase Agreement with an Effective Date of June 3, 2005, which was amended by that certain First Amendment to Sale and Purchase Agreement, with an effective date of June 3, 2005 (as amended, the "Agreement"). Holdings and Buyer desire to amend the Agreement as set forth in this Amendment. Each capitalized term used but not defined in this Amendment has the meaning assigned to it in the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.	Substitution and Assignment. The designation of Holdings as "Seller" under the Agreement was a mutual mistake and, in fact, title to the Property is vested in PEPCO, which is a wholly owned subsidiary of Holdings. It is the intention of the parties that PEPCO be the "Seller" under the Agreement; and, therefore, PEPCO is hereby substituted as "Seller" under the Agreement as if initially named as "Seller" therein. Holdings hereby assigns to PEPCO all of Holdings's rights under the Agreement and PEPCO hereby assumes all obligations of Holdings under the Agreement and from this point forward, all references to "Seller" in the Agreement shall mean PEPCO. Holdings is hereby released from all liabilities and obligations under the Agreement.
2.	Approval by Holdings. Section 9.16 is hereby amended by inserting "and by the Board of Directors of PEPCO Holdings, Inc." immediately after "Seller's Board of Directors"; it being the parties' intent that the approval of the Board of Directors of both Holdings and PEPCO is a condition to Buyer's and Seller's obligation to proceed to closing.
3.	Second Deposit. Notwithstanding the second sentence of Section 1.02(a) or anything else in the Agreement to the contrary, (a) the Study Period shall expire upon execution and delivery of this Amendment, (b) the amount of the Second Deposit shall be $4,500,000 and not $1,500,000, and (c) Buyer shall deposit the Second Deposit with Escrow Agent by wire transfer of immediately available funds not later than 5 pm Eastern Standard time on Tuesday, July 19, 2005.
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4.	Assignment by Buyer. Notwithstanding Section 9.01 or any other provision of the Agreement to the contrary, Seller hereby consents to Buyer's assignment of the Agreement to a limited liability company ("Assignee") prior to the closing under the Agreement, provided that (i) The John Akridge Development Company, or an entity controlled by, controlling or under common control with The John Akridge Development Company, is the managing member of Assignee, (ii) Buyer gives at least five (5) business days advance written notice to Seller of such assignment, and (iii) upon any such assignment, Assignee shall be substituted as Buyer under the Agreement, but the original named Buyer in the Agreement shall not be released but shall remain jointly and severally liable with such Assignee for all duties, obligations and liabilities of Buyer under the Agreement. In addition, Buyer shall have the right to designate a separate entity as nominee to receive title to the Property by deed at c losing, subject to all of the conditions and obligations of Buyer in the Agreement and provided that Buyer shall remain jointly and severally liable with such nominee for all of Buyer's obligations and liabilities under this Agreement.
5.	Section 1031 Exchange. Notwithstanding anything contained in the Agreement to the contrary, Seller acknowledges that Buyer may designate the Property as replacement property to consummate a like-kind exchange under Section 1031 of the Internal Revenue Code (an "Exchange") through the use of a qualified intermediary. In the event that Buyer designates the Property as replacement property to consummate an Exchange through the use of a qualified intermediary, Seller shall at Buyer's sole cost and expense (and with no cost, expense or liability to Seller) cooperate in structuring the transaction as an Exchange for the benefit of Buyer and Seller agrees to render all required performance under this Agreement to such qualified intermediary to the extent reasonably directed by Buyer and to accept performance of all of Buyer's obligations by the qualified intermediary provided nothing herein shall release or relieve Buyer of any of its obligations or liabilities under this Agreement as provided in Section 4 above. Seller agrees that performance by the qualified intermediary will be treated as performance by Buyer, and Buyer agrees that Seller's performance to the qualified intermediary will be treated as performance to Buyer. Seller consents to an assignment of the Agreement by Buyer to such qualified intermediary, and upon any such assignment, the original named Buyer in the Agreement shall not be released but shall remain primarily responsible for all duties, obligations and liabilities of Buyer under the Agreement.
6.	Third Party Reports. Upon receipt of any environmental and acoustical reports from investigations at the Property, Buyer shall immediately remit to Seller copies of all reports. If the transaction contemplated by the Agreement fails to close for any reason, Buyer shall immediately remit to Seller all existing copies and originals of all such reports.
7.	Closing Date. Section 5.01 is hereby amended by designating August 25, 2005 as the date of closing under the Agreement; provided, however, that Buyer may elect in its sole discretion to accelerate the date of closing to any earlier date on or
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	after August 8, 2005 by giving written notice to Seller at least five (5) business days prior to such accelerated date of closing.
8.	Additional Payment. Section 1.01 is hereby amended by adding the following at the end thereof: "The Purchase Price shall increase at the rate of 3.25% per annum for each day from and excluding August 8, 2005 through and including the date of closing. Notwithstanding the foregoing, if Buyer is ready, willing and able to close on the date of closing otherwise applicable under this Agreement, but the date of closing is delayed through the action or wrongful omission by Seller, then, without limiting any other remedy of Buyer, the Purchase Price shall not increase under the preceding sentence for the period of such delay."
9.	Credit Against Purchase Price. Buyer shall receive a credit in the amount of Sixty-Five Thousand Dollars ($65,000) from Seller to be applied against the Purchase Price at closing under the Agreement.
10.	Adjacent Property. From and after the closing under the Agreement, Seller and Buyer agree to all of the terms and provisions set forth in Exhibit 1 attached hereto, which is hereby incorporated into this Amendment as if fully set forth herein. The provisions of Exhibit 1 shall survive the closing, but shall be of no force or effect in the event that the Agreement is terminated prior to closing.
11.	Ratification. Except as expressly modified by this Amendment, the Agreement shall continue in full force and effect in accordance with its terms.
12.	Counterparts; Execution By Facsimile. This Amendment may be executed in any number of counterparts with the same effect as if all of the parties had signed the same document. All counterparts shall be construed together and shall constitute one agreement. Execution and delivery of this Amendment by facsimile shall be sufficient for all purposes and shall be binding on any person who so executes and delivers this Amendment. Solely for purposes of this Section 12, delivery of an executed counterpart of this Amendment shall be effective upon delivery of a facsimile transmission to: Holdings and PEPCO, c/o Mr. Vernon D. Gibson, Fax No. 202-331-6355, with a copy to Allen H. Fox, Fax No. 202-663-6363; Buyer, c/o Mr. Thomas W. Wilbur, Fax No. 202-347-8043; and Escrow Agent, c/o Richard W. Klein, Jr., Esq., Fax No. 202-955-5646.
[signatures on following page]
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IN WITNESS WHEREOF, Holdings and Buyer have executed this Amendment, Escrow Agent evidences its acknowledgement thereto, and PEPCO joins for the purposes set forth herein, on the dates set forth below, to be effective for all purposes as of the Amendment Date.
HOLDINGS:		PEPCO HOLDINGS, INC.
		By:           JOSEPH M. RIGBY                                Name:   Joseph M. Rigby             Title:      SVP & CFO
		Date of Execution:        7/18/05
BUYER		THE JOHN AKRIDGE DEVELOPMENT COMPANY
		By:           M. KLEIN                                               Name:   Matthew J. Klein             Title:      President
		Date of Execution:     July 18th, 2005
JOINED BY PEPCO:		POTOMAC ELECTRIC POWER COMPANY
		By:           JAMES P. LAVIN                                  Name:   James P. Lavin             Title:     Controller
		Date of Execution:        7/18/05
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ACKNOWLEDGED BY ESCROW AGENT:		TRI-STATE COMMERCIAL CLOSINGS, INC.
		Escrow Agent has executed this Second Amendment to acknowledge the substitution of PEPCO as the "Seller" under the Agreement and the assignment to PEPCO of all rights and obligations of HOLDINGS thereunder including all rights in and to the Deposit held by Escrow Agent in connection therewith.
		By:           RICHARD W. KLEIN, JR.                       Name:   Richard W. Klein, Jr.             Title:      President
		Date of Execution:     July 19, 2005
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Exhibit 1 to Second Amendment to Sale and Purchase Agreement
Adjacent Property
1.	Definitions and Interpretation. Each capitalized term used but not defined in this Exhibit 1 shall have the meaning set forth in the Agreement. All references to "this Agreement" or "this Agreement" in any amendments thereto shall be deemed to refer to the Agreement as defined in the Second Amendment to which this Exhibit 1 is attached as modified by such Second Amendment and including this Exhibit 1. For purposes of this Agreement, the following terms shall have the meanings indicated:
	1.1	Adjacent Property: the land located between First Street and Half Street from S Street on the north to V Street on the south in Southwest Washington, D.C., more particularly described as Lot 24 in Square 665 (formerly known collectively as Squares 663, 665 and 667).
	1.2	Adjacent Property Owner: as defined in Section 3.2 of this Exhibit 1.
	1.3	Allowed Costs: any costs incurred and actually paid by Owner or its agents after closing under the Agreement to third parties that are not affiliates of Buyer or the Owner relating to the design, development, construction, or permitting of the Screen, whether hard or soft costs, but excluding costs of ordinary maintenance of the Screen, fees paid to affiliates of Buyer or the Owner, and overhead expenses of Buyer or the Owner or their respective affiliates, and further excluding any costs that are incurred after the initial construction of the Screen is completed or Clean Site Conditions have been satisfied.
	1.4	Clean Site Conditions: the occurrence of all of the following:  (i) the Generators have been removed from the Adjacent Property; and (ii) all improvements constituting the Substation have been removed from the Adjacent Property; provided that for purposes of this definition, the term "removed" means that all material evidence of the Generators or such improvements constituting the Substation, as applicable, visible from the Property has been removed.
	1.5	Construction Commencement Date: the first date on which Owner obtains issuance of a building permit (including an excavation, sheeting and shoring permit for below-grade work) for the construction of the initial Improvements on the Property (excluding any Improvements that may exist as of the Amendment Date).
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	1.6	Generators: collectively, the electrical power generating facility located as of the Amendment Date on the Adjacent Property, including the oil tanks serving the generators.
	1.7	Improvements: any building for office, retail or residential use, the construction or installation of which requires a building permit to be issued after the Amendment Date under applicable District of Columbia law.
	1.8	Owner: the Buyer and any succeeding owner of the Property or portion thereof on which the Improvements are to be built.
	1.9	Removing Owner: as defined in Section 7.3 of this Exhibit 1.
	1.10	Screen: as defined in Section 3 of this Exhibit 1.
	1.11	Substation: collectively, the substation switchyard located on the Adjacent Property.
2.	Overview. Seller and Buyer have agreed, as a material inducement to Buyer's agreement to proceed to closing under the Agreement and to purchase the Property, to amend the Agreement by adding this Exhibit 1, for the general purpose (subject to the terms hereof) of allowing Owner to construct a sound and aesthetic barrier between Property and Improvements, on the one hand, and the Generators and/or the Substation, on the other hand.
3.	Right to Construct Screen. Owner shall have the right, at any time and from time to time after closing under the Agreement but not later than the earlier of (i) eleven (11) years from the date of closing under the Agreement and (ii) the date the Clean Site Conditions have been satisfied, to cause the design, development and completion of construction of a sound barrier and/or aesthetic barrier on the Adjacent Property (collectively, the "Screen"), subject to the terms and conditions of this Section 3. Adjacent Property Owner shall keep Owner reasonably informed with respect to any plans on the part of Adjacent Property Owner to remove the Generators and/or Substation from the Adjacent Property. Owner shall keep Adjacent Property Owner reasonably informed with respect to any plans on the part of Owner to construct the Screen.
	3.1	The Screen shall consist of a façade or vertical barrier only around all or any portion of the perimeter of the Adjacent Property. The design, location, shape, size and scale of the Screen shall not interfere with access to or the operations of the Adjacent Property (including by any licensees, easement holders or tenants at the Adjacent Property) or any equipment now or hereafter placed thereon.
	3.2	Subject to the approval rights of the owner(s) of the Adjacent Property (collectively, "Adjacent Property Owner") as set forth in Section 3.4 of this Exhibit 1 and the other provisions of this Exhibit 1 including without
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		limitation Section 3.1, Owner shall have the right, in its sole and absolute discretion, to determine the design, location, shape, size and scale of the Screen, the materials used for construction of the Screen, the identity of contractors, consultants, employees or agents performing design, development, construction, maintenance or other services in connection with the Screen, and the timing of design and construction of the Screen; provided, however, that (i) the shape of the Screen, including the extent the Screen may project into the Adjacent Property due to structural purposes only, shall be subject to the reasonable approval of Adjacent Property Owner, and (ii) the Screen shall not be permitted to contain any writing, nor shall it be used for any commercial or income producing purposes, of which all of the foregoing shall include but not be limited to advertising.
	3.3	Upon closing under the Agreement, Adjacent Property Owner shall grant to Owner an easement in recordable form, incorporating the terms of this Exhibit 1, effective from and after the closing under the Agreement, giving Owner the right to enter onto and over the Adjacent Property for the purpose of construction, repair, maintenance and restoration of the Screen, all in accordance with the terms and conditions of this Exhibit 1 (the "Easement"). Owner and its agents shall have the right, upon reasonable advance written notice to Adjacent Property Owner, to enter the Adjacent Property in accordance with such Easement for the purpose of examining the physical, structural and other conditions of the Adjacent Property, including the conduct of testing such as soil sampling, to the extent that any of the foregoing are necessary in connection with design of the Screen, and for the purpose of constructing and maintaining the Screen, provided if Owner wishes to engage in any testing of any portion of the Adjacent Property, Owner shall obtain Adjacent Property Owner's prior written consent thereto, which may be refused or conditioned as Adjacent Property Owner may deem appropriate in its reasonable discretion. Notwithstanding anything to the contrary contained herein, Owner shall not conduct or allow any physically intrusive testing of, on or under the Adjacent Property without first obtaining Adjacent Property Owner's written consent as to the timing and scope of the work to be performed, which shall not be unreasonably withheld, and the parties entering into a written agreement memorializing such scope of work and any additional agreements of the parties with respect to such testing. Without limiting the generality of the foregoing, Adjacent Property Owner's written approval (which may be granted, withheld, or conditioned in Adjacent Property Owner's sole discretion) shall be required prior to any environmental survey or any environmental testing or sampling of surface or subsurface soils, surface water, groundwater or any materials in or about the Adjacent Property. If any testing is approved by Adjacent Property Owner, Owner agrees to cooperate with any reasonable request by Adjacent Property Owner in connection with the timing of any
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		such inspection or test. Owner agrees to provide Adjacent Property Owner, upon Adjacent Property Owner's request, with a copy of any written inspection or test report or summary prepared by any third party. Owner agrees that any inspection, test or other study or analysis of the Adjacent Property shall be performed at Owner's expense (subject to the provisions of Section 4 of this Exhibit 1) and in accordance with applicable law. Owner agrees at its own expense (subject to the provisions of Section 4 of this Exhibit 1) to promptly restore the Adjacent Property or, at Adjacent Property Owner's Option, to reimburse Adjacent Property Owner for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of its condition. The Easement granted to Owner in accordance with this Exhibit 1 shall automatically expire in accordance with its terms upon removal of the Screen in accordance with Section 3.9, Section 5.4, Section 7 or Section 12 below and may be terminated unilaterally by Adjacent Property Owner upon the satisfaction of the Clean Site Conditions, subject to any unperformed obligations of either party, which shall survive such expiration or termination until fully performed.
	3.4	Owner and its agents and contractors shall give Adjacent Property Owner five (5) business days advance notice before entering on the Adjacent Property and coordinate any and all work under this Agreement (including without limitation any removal or demolition of the Screen in accordance with Section 7 of this Exhibit 1) with any work being performed by or for Adjacent Property Owner on the Adjacent Property, and Owner shall use commercially reasonable efforts to cause such work to be performed by or for Owner in a manner to maintain harmonious labor conditions. Owner and its agents and contractors shall not interfere with Adjacent Property Owner's access to or operations at the Adjacent Property or with any licensee's, easement holder's, operator's, service provider's or tenant's access to or operations at the Adjacent Property. Owner shall indemnify, defend with counsel reasonably acceptable to Adjacent Property Owner and hold harmless Adjacent Property Owner and all employees, affiliates, subsidiaries , shareholders, officers, directors, trustees and partners of Adjacent Property Owner, as well as any investment manager and other agents of Adjacent Property Owner, from and against any and all Claims caused by or arising from the exercise by Owner or its contractors or agents or their respective agents, contractors or employees of Owner's rights under this Exhibit 1 or its breach of any of its obligations hereunder.
	3.5	Owner and any person accessing the Adjacent Property hereunder will be covered by not less than $5,000,000 commercial general liability insurance (with, in the case of Owner's coverage, a contractual liability endorsement, insuring its indemnity obligation under this Agreement) insuring all activity and conduct of Owner and such persons while exercising such right of access and naming Adjacent Property Owner as
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		insured, issued by a licensed insurance company reasonably acceptable to Adjacent Property Owner.
	3.6	By entering or causing any of its agents or contractors to enter upon the Adjacent Property, Owner agrees that any materials or information provided or made available to Owner by Adjacent Property Owner or its representatives pursuant to this Exhibit 1 or otherwise obtained by Owner in connection with the Adjacent Property and any and all information, studies and tests obtained by Owner pursuant to this Agreement ("Adjacent Property Information") is proprietary and confidential, unless such information is in the public domain. Owner further agrees that all such Adjacent Property Information and any notes regarding such Adjacent Property Information ("Notes") will be used solely for the purpose of designing and constructing the Screen and will not be used or duplicated for any other purpose. Owner shall keep all Adjacent Property Information and Notes strictly confidential. Notwithstanding the foregoing, Owner may disclose the Adjacent Property Information to its agents, contractors and employees engaged in design and construction of the Screen, provided that Owner shall inform such persons of the confidential nature of such information and shall direct and cause such persons to keep all such information in the strictest confidence and to use such information only in connection with the design, development, construction or maintenance of the Screen and in accordance with the terms of this Agreement. In any event, Owner has caused or will cause any such persons to execute an agreement substantially in the form of the Confidentiality Agreement and such executed agreement has been or shall be delivered to Adjacent Property Owner prior to (a) Owner giving such Adjacent Property Information or Notes to any such persons or authorizing or directing such persons to receive such Adjacent Property Information or Notes, or (b) any entry by any such persons onto the Adjacent Property.
	3.7	Owner shall not commence construction or demolition and removal of the Screen or any portion thereof unless and until Owner has provided Adjacent Property Owner with (a) the final budget for the Allowed Costs of design, engineering and construction or, if applicable, the removal of the Screen and an executed lump sum or guarantied maximum cost construction contract for the construction of the Screen, (b) 100% payment and performance bonds for the work under such construction or demolition contract, (c) evidence reasonably acceptable to Adjacent Property Owner that either Owner has funds set aside with Escrow Agent (or Owner's Lender or another escrow agent reasonably acceptable to Adjacent Property Owner), or that Owner's Lender is obligated to disburse amounts to pay or reimburse Owner for Allowed Costs, equal to one-half of the following amounts: (x) in the case of the initial construction of the Screen the sum of (i) 50% of the amount of the total budgeted Allowed Costs up to an amount of $5, 000,000 plus (ii) 100% of the amount if any by which the total budgeted Allowed Costs will exceed $5,000,000, and
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		(y) in the case of any demolition, to the amount of the total costs of such demolition (such funds are collectively referred to herein as the "Escrowed Funds"), and (d) Adjacent Property Owner has reviewed and approved the plans and specifications for such Screen or portion thereof or any proposed demolition thereof; provided that (i) Adjacent Property Owner shall complete its review process expeditiously, and (ii) the scope of Adjacent Property Owner's review and approval or disapproval shall be limited to technical aspects of the plans and specifications of the Screen and any potential physical impacts on the access to or operations of the Adjacent Property or any equipment located thereon. Owner shall pay from out of pocket or other funds (and not the Escrowed Funds) its share of the total Allowed Costs and the Escrowed Funds shall not be applied or otherwise disbursed until the sum of the Escrowed Funds plus those funds remaining to be paid by Adjacent Property Owner is suffic ient to pay 100% of the total Allowed Costs to complete the Screen. For purposes of this section, "Owner's Lender" shall mean a third-party institutional lender which has made a loan to Owner for the construction of the Improvements and which loan is secured by a mortgage upon the Property. Upon approval of plans and specifications pursuant to this Section 3.4, the requirements of Section 3.1 shall be deemed satisfied so long as Owner causes the construction of the Screen to be completed substantially in accordance with such plans and specifications.
	3.8	Any actions taken by Owner with respect to the construction or removal of the Screen and all work performed by or for Owner on the Adjacent Property shall be done in a good and workmanlike manner and accordance with all applicable laws, statutes, rules and regulations. Adjacent Property Owner shall cooperate, at the expense of Owner (subject to the provisions of Section 4 of this Exhibit 1), with Owner in obtaining any required permits, licenses or governmental or quasi-governmental approvals required for the construction of the Screen, copies of which shall be provided to Adjacent Property Owner before any such work on the Adjacent Property may begin.
	3.9	Owner shall not permit (and shall promptly discharge, bond over or otherwise satisfy in a manner reasonably satisfactory to Adjacent Property Owner) and shall indemnify, defend with counsel acceptable to Adjacent Property Owner and hold harmless Adjacent Property Owner harmless from any and all mechanic's or materialman's lien attaching to the Adjacent Property as a result of any of the construction, maintenance or other activities of Owner or its agents or contractors pursuant to this Exhibit 1. If Owner fails to discharge or bond off any lien within 30 days of written notice by Adjacent Property Owner, Adjacent Property Owner shall be entitled to pay off such amounts, and be reimbursed from the Escrowed Funds, and if the Escrowed Funds are not sufficient to reimburse Adjacent Property Owner in full for such amounts, Adjacent
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		Property Owner, at its election, may terminate the Easement and remove the Screen.
	3.10	Notwithstanding anything in this Section 3 to the contrary, Owner may not commence construction of the Screen until the Construction Commencement Date, provided that Owner may enter the Adjacent Property for the purposes of inspection, testing, and other gathering of information that is relevant to the design and placement of the Screen prior to the Construction Commencement Date, subject to the other terms and conditions of this Exhibit 1.
	3.11	Owner shall have the right under this Section 3 to design and/or construct the Screen in stages, provided that any costs of a second or subsequent stage that are properly allocable as maintenance costs of existing stage(s) shall be governed by Section 5 and shall not be treated as Allowed Costs.
4.	Costs.
	4.1	From and after the Construction Commencement Date, Owner shall have the right to submit to Adjacent Property Owner from time to time, but no more often than once per month, a disbursement request for Allowed Costs, accompanied by paid invoices, lien waivers and other documents reasonably requested by Adjacent Property Owner all of which shall be reasonably acceptable to Adjacent Property Owner to demonstrate that the costs contained therein are Allowed Costs, that such costs have been paid to architects, engineers, contractors, consultants or other vendors, and that all such architects, engineers, contractors, consultants and vendors and their respective subcontractors and sub-subcontractors have been paid for all services or work performed by them through the date covered by such disbursement request. Within 30 days after its receipt of a disbursement request meeting the criteria of this Section, Adjacent Property Owner shall pay to Owner an amount equal to 50% of the Allowed Costs shown in such disbur sement request; provided that Adjacent Property Owner's aggregate liability under this Section shall not exceed Two Million Five Hundred Thousand Dollars ($2,500,000).
	4.2	Except as set forth in Section 4.1, Owner shall be responsible for all of its own costs incurred in connection with the Screen or any other matters set forth in this Exhibit 1.
	4.3	Adjacent Property Owner shall be responsible for all of its costs related to escort, protection, inspection, engineering, review, construction, reconstruction, maintenance or any other internal or external costs incurred by Adjacent Property Owner in connection with the Screen or any other matters set forth in this Exhibit 1.
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5.	Maintenance of Screen. From and after the installation of the Screen or a portion thereof, subject to the terms and conditions of this Section 5 and the other provisions of this Exhibit 1, Owner shall be solely responsible at its sole cost and expense for the maintenance of the Screen.
	5.1	Owner shall maintain the Screen in good condition and repair, normal wear and tear, casualty or similar damage excepted and in compliance with all applicable laws, statutes, rules and regulations.
	5.2	All maintenance costs incurred by Owner shall be paid solely by Owner and shall not be treated as an Allowed Cost.
	5.3	Notwithstanding the foregoing provisions of this Section 5, if Owner desires to remove all or a portion of the Screen as described in Section 7.1 of this Exhibit 1, but Adjacent Property Owner elects to keep the Screen or such portion in place as described in such Section, then (i) Owner's maintenance obligations under this Section 5 shall terminate with respect to the Screen or such portion and (ii) thereafter, Adjacent Property Owner shall perform all of the obligations of Owner under this Section 5 with respect to the Screen or such portion.
	5.4	If Owner (or, from and after the termination of Owner's maintenance obligations pursuant to Section 5.3 of this Exhibit 1, Adjacent Property Owner) (as applicable, "Maintaining Owner") fails to maintain the Screen as herein provided, the other party ("Non-Maintaining Owner") may if it so elects take such actions as Non-Maintaining Owner deems necessary in its reasonable discretion to maintain the same or, if Maintaining Owner fails to cure any such default within 30 days following written notice thereof from Non-Maintaining Owner, Non-Maintaining Owner may, if it so elects, demolish and remove the Screen, which removal shall be in accordance with the requirements of Section 7. Maintaining Owner shall forthwith reimburse Non-Maintaining Owner any and all costs and expenses incurred by Non-Maintaining Owner in accordance with this Section 5.4, with interest thereon at the prime rate of interest charged from time to time by Citibank, NA or any successor to Citibank, N.A.
6.	Insurance; Damage and Reconstruction. From and after the installation of the Screen or a portion thereof, subject to the terms and conditions of this Section 6 and the other provisions of this Exhibit 1, Adjacent Property Owner shall be solely responsible for the maintenance of casualty insurance relating to the Screen.
	6.1	Adjacent Property Owner shall include the Screen on its casualty and liability insurance policy that Adjacent Property Owner maintains in the normal course of its business. Adjacent Property Owner shall be solely responsible for paying the costs (excluding any deductible) of any damage to the Screen by casualty or similar damage that is covered by such
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		insurance or that would have been covered by such insurance had Adjacent Property Owner complied with its obligations under this Section. In the event that Owner desires to reduce the amount of any deductible applicable to any such insurance program then held by Adjacent Property Owner, Owner may purchase such additional insurance at Owner's sole cost and expense.
	6.2	Notwithstanding any other provision in this Exhibit 1, if any damage is caused to the Screen and is not otherwise covered under the insurance maintained or required to be maintained by Adjacent Property Owner pursuant to Section 6.1 above, then Owner shall, at its sole expense and not as an Allowed Cost, promptly repair, restore, reconstruct or (subject to Section 7 of this Exhibit 1) remove the Screen or the damaged portion thereof.
	6.3	Notwithstanding any other provision in this Exhibit 1, if any damage is caused to the Screen as a result of the willful action or gross negligence of Adjacent Property Owner or its agents, then Adjacent Property Owner shall, at its sole expense, promptly repair, restore, reconstruct or (subject to Section 7 of this Exhibit 1) remove the Screen or the damaged portion thereof.
7.	Removal of Screen.
	7.1	From time to time, Owner shall have the right to elect to remove all or any portion of the Screen, by giving notice to Adjacent Property Owner provided such removal is performed in accordance with this Exhibit 1. If Adjacent Property Owner elects within 30 days after receipt of such notice, by giving notice to Owner, to assume responsibility for the Screen or such portion and keep it in place, then Section 5.3 of this Exhibit 1 shall apply. If Adjacent Property Owner does not so elect within such 30 day period, then Owner shall have the right to remove the Screen or portion, at Owner's sole cost, subject to and in accordance with Section 7.3 of this Exhibit 1.
	7.2	From time to time after either the Generators or the Substation have been completely removed from the Adjacent Property, Adjacent Property Owner shall have the right to remove all or any portion of the Screen, at Adjacent Property Owner's sole cost and otherwise subject to and in accordance with Section 7.3 of this Exhibit 1.
	7.3	If either Owner or Adjacent Property Owner (as applicable, "Removing Owner") has the right under Section 7.1 or Section 7.2, respectively, of this Exhibit 1 to remove all or a portion of the Screen, then the following terms and conditions shall apply to such removal:
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		7.3.1	Any actions taken by Removing Owner with respect to the removal of the Screen shall be done in accordance with all applicable laws, statutes, rules and regulations. If Owner is Removing Owner, then Adjacent Property Owner shall cooperate, at the expense of Owner (subject to the provisions of Section 4.3 of this Exhibit 1), with Owner in obtaining any required permits, licenses or governmental or quasi-governmental approvals required for the removal of the Screen or portion.
		7.3.2	The removal shall be performed expeditiously and continuously once commenced, and the Adjacent Property and any portion of the Screen that is not then being removed shall be put back into comparable condition as prior to the installation of the Screen or portion thereof that is being removed. In particular, any portion of the Screen that is not being removed shall be restored in a manner that is safe and aesthetically similar to such portion as it existed prior to such removal.
		7.3.3	If Adjacent Property Owner is Removing Owner, then (i) such removal may be a removal of the entire Screen only if the Clean Site Conditions have been satisfied; and (ii) if the removal is of a portion of the Screen, such removal shall not expose the Property to additional sound from the Generators or a view of the Generators or improvements constituting the Substation.
	7.4	Except as otherwise set forth in this Section 7, neither Owner nor Adjacent Owner shall have the right to remove or demolish the Screen or any portion thereof.
8.	Successors. The provisions of this Exhibit 1 are shall run with the land and shall be binding upon, and inure to the benefit of, the owners of the Property and the owners of the Adjacent Property.
9.	Estoppel Certificates. Each party agrees at any time and from time to time during the term of this Agreement, within 14 days after written request by any other party, to execute, acknowledge and deliver to the requesting party or to any existing or prospective purchaser, mortgagee, tenant or other person designated by the requesting party, a fact certificate covering such matters as the requesting party may reasonably require.
10.	Indemnities. Owner shall indemnify, defend and hold Adjacent Property Owner harmless from and against any and all Claims relating to or arising out of the breach by Owner or any of its agents, employees or contractors of any representation, warranty, covenant or other obligation of Owner under this Exhibit 1. Adjacent Property Owner shall indemnify, defend and hold Owner harmless from and against any and all Claims relating to or arising out of the breach by
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	Adjacent Property Owner or any of its agents, employees or contractors of any representation, warranty, covenant or other obligation under this Exhibit 1.
11.	Adjacent Property Owner. By its execution and delivery of this Amendment, PEPCO hereby represents, warrants and covenants that (i) PEPCO is the Adjacent Property Owner as of the Amendment Date, (ii) PEPCO has the authority to enter into this Agreement subject to the terms of the Agreement including Section 9.16 thereof, and (iii) the Adjacent Property shall not be as of the date the Easement is delivered to Owner, subject to any liens or encumbrances that would materially adversely affect Owner's rights under this Exhibit 1 and that all consents required of the lienholder to PEPCO's execution, delivery and performance of all of its obligations under this Exhibit 1 will be obtained.
12.	Failure to Complete. If Owner or Adjacent Property Owner (as applicable, the "Constructing Owner") begins construction, demolition or removal of the Screen in accordance with this Exhibit 1, then Constructing Owner shall diligently and continuously pursue such construction, demolition or removal until completed, subject to delays arising from circumstances outside the reasonable control of Constructing Owner (excluding ability to pay). If Constructing Owner fails to comply with the requirements of this Section 12, and such failure continues for more than 30 days following notice thereof from the other party ("Non-Constructing Owner"), then Non-Constructing Owner shall have the right (but not the obligation), at its option, either to complete such construction, demolition or removal, or remove the Screen in accordance with the terms of Section 7.3. Constructing Owner shall forthwith reimburse Non-Constructing Owner any and all costs and expenses incurred by Non-Constructing Owner in accorda nce with this Section 5.4, with interest thereon at the prime rate of interest charged from time to time by Citibank, NA or any successor to Citibank, N.A.
13.	Remedies. In addition to any remedies expressly provided in this Exhibit 1, the parties shall have all remedies available under applicable law or at equity to enforce the rights and obligations of the parties contained in this Exhibit 1. Any limitation on liability of Holdings, PEPCO or Buyer elsewhere in this Agreement shall not apply to this Exhibit 1.
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