Exhibit
10.27
    
  CONTRACT
OF SALE
  between
  HYPERION
PARTNERS II L.P.,
  as S eller ,
  and
 
 CAPLEASE,
LP
  as P urchaser .
  
  
 
    **TABLE
OF CONTENTS**
  **Section**
    **Page**1.
    Sale
      and Purchase
    22.
    Purchase
      Price
    23.
    The
      Closing
    34.
    To
      be Delivered by Seller at the Closing
    35.
    To
      be Delivered by Purchaser at the Closing
    36.
    Expenses
      & Adjustments
    47.
    Brokerage
    48.
    Notices
    69
    General
    6
 
 
    -i-
   **CONTRACT
OF SALE**
  AGREEMENT
made as of the 1st day of November, 2004, between HYPERION PARTNERS II L.P.,
having an office at 50 Charles Lindbergh Boulevard, Suite 500, Uniondale,
NY 11553 (“Seller”), and CAPLEASE, LP, a Delaware limited partnership,
having an office at 110 Maiden Lane, New York, New York 10005
(“Purchaser”).
  The
parties hereto covenant and agree as follows:
 
 1. Sale
and Purchase
  1.1. For in
consideration of the Purchase Price, the mutual covenants contained herein, and
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, Seller hereby agrees to sell and transfer to Purchaser and
Purchaser hereby agrees to purchase from Seller, upon the terms and conditions
hereinafter set forth, all of the rights, title and interest of Seller as
beneficiary under that certain Trust Agreement for CA Portsmouth Investment
Trust (the “Beneficial Interest”) dated as of August 17, 1998 among Paul
H. McDowell, as Administrative Trustee, PNC Bank, Delaware, as Delaware
trustee, Mark A. Ferrucci as Independent Trustee and Seller as Beneficiary (the
“Trust Agreement”). The trust created by the Trust Agreement shall hereinafter
be referred to as the “Trust”. The Trust’s sole asset is a free-standing
Walgreen’s located in Portsmouth, Virginia (the “Property”).
  2. Purchase
Price
   2.1. The
purchase price to be paid by Purchaser to the Seller for the Beneficial Interest
(the “Purchase Price”) FOUR MILLION, ONE HUNDRED SIXTY FOUR THOUSAND, NINE
HUNDRED, TWELVE DOLLARS, AND 37/100 ($4,164,912.57) and shall be payable
as follows:
  (a)by
      check or checks delivered to Seller at the Closing or wire transfer in
      accordance with the provisions of §2.2:
    $  727,000.00(b)assumption
      of the existing loan from Capital Lease Funding, L.P. to Trust, which is
      secured by the Property and has an outstanding principal balance of
      $3,426,946.34 as of October 15, 2004 and accrued interest of $10,966.23 as
      of November 1, 2004 (the “Loan”), and all documents evidencing, securing
      or affecting the Loan:
    $ 3,437,912.57**Total
      Purchase Price**
    $ 4,164,912.57
  -2-
 2.2.  All
amounts payable under this Agreement, unless otherwise specified in this
Agreement, shall be paid by (a) certified checks of Purchaser, or any person
making a purchase money mortgage to Purchaser in connection with this Agreement,
drawn on any bank, savings bank, trust company or savings and loan association
bank which is a member of the New York Clearing House Association, (b) official
bank checks drawn by any such banking institution, in either case of (a) or (b)
payable directly to the order of Seller or to such other order as Seller may
direct by notice delivered to Purchaser not less than two business days prior to
the Closing, or, at Seller’s election, (c) by wire transfer of immediately
available federal funds to an account designated by Seller not less than two
business days prior to the Closing, except that uncertified checks of Purchaser
payable directly to the order of Seller up to the amount of $1,000.00 shall be
acceptable for sums payable to Seller at the Closing.
  3. The
Closing
  3.1. The
closing of the transfer of the Beneficial Interest (the “Closing”) shall take
place at the offices of Purchaser, 110 Maiden Lane, New York, New York 10005, or
the New York offices of the financial institution which provides financing to
Purchaser for the purchase contemplated hereby, or such other office as may be
mutually acceptable to Seller and Purchaser, at 10:00 a.m. on or prior to
November 1, 2004 (the date of the Closing being herein referred to as the
“Closing Date”). Seller and Purchaser agree to use reasonable good faith efforts
to close by mail if agreeable.
 
 4. To be
Delivered by Seller at the Closing
  At the
Closing, Seller will deliver the following to Purchaser (in addition to any
items or documents otherwise required by this Agreement):
  4.1. An
assignment, executed by Seller, assigning to Purchaser the Beneficial
Interest.
  5.  To be
Delivered by Purchaser at the Closing
  At the
Closing, Purchaser will deliver (in addition to any items or documents otherwise
required by this Agreement) the following to Seller:
  5.1. Checks or
wire transfers in payment of the balance of the Purchase Price, subject to
closing adjustments.
  5.2. Such
other documents as may be reasonably required by Seller or the title insurance
company to consummate the transaction contemplated herein.
  5.3. All
documents required to be delivered by Purchaser pursuant to this Section 5 and
such other documents which are otherwise required to be delivered pursuant to
this Agreement, shall be in form and substance reasonably satisfactory to Seller
and its counsel.
  -3-
 6. Expenses
& Adjustments
  6.1. Purchaser
shall pay all state and/or local transfer and conveyance taxes and the cost of
recording all documents required to be recorded by the title company, including,
without limitation, mortgage releases, satisfactions and deeds.
  6.2. If
required by the Purchaser, Purchaser shall pay the costs of examination of title
and any premiums for owner’s or mortgagee’s policies of title insurance to be
issued insuring Purchaser’s title to or such mortgagee’s interest in the
Property as well as all other title charges, survey expenses, and any and all
costs and expenses, if any incident to the recordation of the documents required
in order to transfer the Beneficial Interest to the Purchaser.
  6.3. Each
party shall pay its own attorneys’ fees in connection herewith.
  7. Representations
and Warranties . Seller
hereby represents and warrants to Purchaser, which representations and
warranties shall survive closing:
  7.1. Seller
has not mortgaged, pledged, hypothecated or subjected to any lien, charge or any
other encumbrance the Beneficial Interest.
  7.2. Seller,
to its actual knowledge and without any inquiry, has not received any written
notice of the pendency of any litigation or similar proceeding, which would
affect the Property, the Beneficial Interest or the Trust.
  7.3. Seller,
to its actual knowledge and without any inquiry, has not received any written
notice from any governmental authority that any physical condition exists with
respect to the Property which is in violation of any applicable law, ordinance
or regulation and which remains uncured.
  7.4. Seller,
to its actual knowledge and without any inquiry, has not received any written
notice of any condemnation proceeding pending or threatened.
  7.5. Seller
has not taken any action which to its actual knowledge created any liability or
obligation, secured or unsecured, whether accrued, absolute, contingent,
unasserted or otherwise.
  8. Due
Diligence
  8.1. Purchaser
has ordered an update of the Owner’s Policy issued by Lawyers Title Insurance
Corporation on August 20, 1998, Policy Number 136-01-274207 (the “Original
Policy”). The parties acknowledge that such update will not be completed until
after the Closing. If the update discloses Title Defects (as that term is
hereinafter defined) which are not satisfactory to Purchaser, in Purchaser’s
reasonable discretion, Purchaser shall send written notice to Seller (the “Title
Notice”) **on
or before the first to occur of 5 days after Purchaser’s receipt of such update
or 5:00 p.m. November 30, 2004,** which
shall specify (i) how such matters constitute Title Defects, (ii) the reasons
why such Title Defects are not reasonably satisfactory to Purchaser, and (iii)
the curative steps necessary to remove the basis for Purchaser’s disapproval or
the basis upon which such matters constitute Title Defects. In the event
Purchaser fails to send the Title Notice, Purchaser shall be deemed to have no
objections to title and be deemed to have waived its rights under this Section
8.1. In the event the Title Defects are estimated, in writing by Purchaser’s
counsel attached to the Title Notice, to cost between $5,000 and $14,999.99,
exclusive of attorney’s fees, Purchaser’s sole remedy under this Contract shall
be an adjustment to the Purchase Price in the same amount, which Seller shall
deliver within 30 business days following receipt by Seller of the Title Notice
in the form and manner permitted by Section 2.2. In the event the Title Defects
are estimated, in writing by Purchaser’s counsel attached to the Title Notice,
to cost $15,000.00 or more, exclusive of attorney’s fees, Seller shall have 30
business days following receipt by Seller of the Title Notice to elect to, in
its sole discretion, (a) cure or remove any such Title Defects disclosed in the
Title Notice, (b) repurchase the Beneficial Interest for the Purchase Price, or
(c) deliver to Purchaser an adjustment to the Purchase Price in the amount of
said estimated costs. If Seller elects either of (b) or (c) of the immediately
preceding sentence, Seller shall, within 30 business days following receipt by
Seller of the Title Notice, deliver the appropriate funds to Purchaser in the
form and manner permitted by Section 2.2. For purposes of this Contract, the
term “Title Defects” shall not include: (a) any condition (other than
environmental) of the Property or the title thereto which existed on March 31,
2000, whether or not the same appeared on Schedule B of the Original Policy; and
(b) any condition (other than environmental) of the Property or title thereto,
which does not preclude the present use of the Property.
  -4-
 8.2 Purchaser
has ordered an environmental assessment of the Property (the “Environmental
Assessment”). The parties acknowledge that the Environmental Assessment will not
be completed until after the Closing. If the Environmental Assessment discloses
any matters (“Environmental Issues”) which are not satisfactory to Purchaser, in
Purchaser’s reasonable discretion, Purchaser shall send written notice to Seller
(the “Environmental Notice”) **on
or before the first to occur of 5 days after Purchaser’s receipt of the
Environmental Assessment or 5:00 p.m. November 30, 2004,** which
shall specify the reason the Environmental Issues are not satisfactory to
Purchaser. In the event Purchaser fails to send Environmental Notice, Purchaser
shall be deemed to have no objections to the environmental condition of the
Property and be deemed to have waived its rights under this Section 8.2. Seller
shall have 10 business days following receipt by Seller of the Environmental
Notice to repurchase the Beneficial Interest for the Purchase
Price.
  8.3. Except as
expressly provided in this Contract, the Seller makes no representations and
warranties with respect to the Beneficial Interest or to the Property and
Purchaser agrees that they are being purchased “as-is”.
   -5-
  9. Brokerage
  9.1. Purchaser
and Seller each warrant and represent to the other that neither
has dealt or negotiated with any broker in connection with the within
transaction. Purchaser shall, and hereby does agree to, indemnify and hold
Seller harmless from and against any and all claims, demands or causes of action
or other liability against Seller arising from or pertaining to any brokerage
commission fee, cost or other expense, which may be due any broker with whom
Purchaser has dealt. Seller shall, and hereby does agree to, indemnify and hold
Purchaser harmless from and against any and all claims, demands or causes of
action or other liability against Purchaser arising from or pertaining to any
brokerage commission fee, cost or other expense, which may be due any broker
with whom Seller has dealt. The representations, warranties and indemnity
contained in this Section 9 shall survive the Closing and the delivery of the
instruments contemplated hereunder, or if the Closing does not occur, the
termination of this Agreement.
  10. Notices
  10.1. All
notices, demands and requests required to be given or which may be given
hereunder shall be in writing and shall be deemed to have been properly given if
delivered personally or sent by prepaid registered or certified mail, or
nationally recognized overnight courier, or by telecopier addressed as set forth
below, or as Seller, or Purchaser shall otherwise have given notice as herein
provided.
  If to
Seller:
  Hyperion
Partners II L.P.
 50
Charles Lindbergh Blvd, Suite 500
 Uniondale,
New York 11553
 Attention:
Mr. Robert A. Perro
 Telecopier
No.: 516-745-6787
  If to
Purchaser:
  Caplease,
LP
 110
Maiden Lane
 New York,
New York 10005
 Attention:
Mr. Michael J. Heneghan
 Telecopier
No.: 212-217-6301
  11. General
  11.1. No waiver
of any party to any breach hereunder shall be deemed a waiver of any other or
subsequent breach.
  -6-
  11.2. This
Agreement may not be altered, amended, changed, waived, terminated
or modified in any respect or particular unless the same shall be in writing and
signed by or on behalf of the party to be charged therewith.
  11.3. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective successors and permitted assigns.
  11.4. All
understandings and agreements heretofore had between the parties hereto are
merged into this Agreement, which alone fully and completely expresses all of
the terms agreed upon between the parties with respect to the subject matter
hereof.
  11.5. This
Agreement shall be construed and enforced in accordance with the laws of the
State of New York.
  11.6. The
captions in this Agreement are inserted for convenience of reference only and in
no way define, describe or limit the scope or intent of this Agreement or the
provisions hereof.
  11.7. This
Agreement may be executed in one or more counterparts.
  11.8. In the
event one or more of the provisions of this Agreement are deemed unenforceable
by a court of competent jurisdiction, the remainder of the Agreement shall
remain in full force and effect.
  11.9. Unless
otherwise expressly stated, this Agreement shall terminate upon the earlier
of the Closing or notice from one party to the other providing for the canceling
of the Agreement.
  [SIGNATURE
PAGE TO FOLLOW]
  -7-
  IN
WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed
the day and year first above written.
  SELLER:HYPERION PARTNERS II L.P.By:Hyperion Ventures II L.P., its general
      partnerBy: Hyperion Funding II Corp., its general
      partnerBy:Name:Title:
 
 
 PURCHASER:CAPLEASE, LP, a Delaware limited
      partnershipBy:
    CLF OP General Partner, LLC, a Delaware limited liability
      company, its general partnerBy:
      Capital Lease Funding, Inc., a Maryland corporation, its sole
    memberBy: /s/ Robert C.
      BlanzName: ROBERT BLANZTitle: Senior Vice
    President
   -8-
   IN
WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed
the day and year first above written.
  SELLER:HYPERION PARTNERS II L.P.By:Hyperion Ventures II L.P., its general
      partnerBy: Hyperion Funding II Corp., its general
      partnerBy:
    /s/ Scott A.
ShayName: SCOTT A. SHAYTitle: EXECUTIVE VICE
      PRESIDENT
 
 PURCHASER:CAPLEASE, LP, a Delaware limited
      partnershipBy:
    CLF OP General Partner, LLC, a Delaware limited liability
      company, its general partnerBy: Capital Lease Funding, Inc., a Maryland corporation,
      its sole memberBy:Name:Title
 -9-