Exhibit
10.26






**PURCHASE
AND SALE AGREEMENT**
 **(MEMBERSHIP
INTEREST)**
 
 
 
 **SELLER:**
  **10720-10750-10770
COLUMBIA PIKE INVESTORS LLC**
  
  **PURCHASER:**
  **CAPLEASE,
LP**
  
  **PROPERTY:**
  **CHOICE
CENTRE**
 **10720,
10750 AND 10770 COLUMBIA PIKE**
 **SILVER
SPRING, MARYLAND**
   **October** **22** **,
2004**
  
 
   
   Term
Sheet
  Purchaser:
    **Caplease,
      LP**Notice
      Address:
    **110
      Maiden Lane**
      **36****th****Floor**
      **New
      York, New York****Attention:
      Michael Heneghan**
      **Phone:
      (212) 217-6300**
      **Fax:
      (212) 217-6301**Seller:
    **10720-10750-10770
      Columbia Pike Investors LLC**Notice
      Address:
    **c/o**
      **UBS
      Realty Investors LLC**
      **242
      Trumbull Street**
      **Hartford,
      Connecticut 06103****Attention:
      Paul Canning**
      **Phone:
      (860) 616-9032**
      **Fax:
      (860) 616-9010**Property:
    **Choice
      Centre**
      **10720,
      10750 and 10770 Columbia Pike**
      **Silver
      Spring, Maryland**Purchase
      Price:
    **$43,500,000**Deposit:
    **$1,000,000**Approval
      Date:
    **November
      15, 2004**Closing
      Date:
    **November
      22, 2004**
  
   **PURCHASE
AND SALE AGREEMENT**
  THIS
PURCHASE AND SALE AGREEMENT (this “Agreement”) dated as of the 22 day of
October, 2004 (the “ **Effective
Date** ”), is
made by and between **10720-10750-10770
COLUMBIA PIKE INVESTORS LLC** , a
Delaware limited liability company (“ **Seller** ”), c/o
UBS Realty Investors, 242 Trumbull Street, Hartford, Connecticut 06103 and **CAPLEASE,
LP** , a
Delaware limited partnership (“ **Purchaser** ”), with
an office at 110 Maiden Lane, 36th Floor, New York, New York.
  **R** **** **E** **** **C** **** **I** **** **T** **** **A** **** **L** **** **S** **:**
  Seller is
the sole member of Columbia Pike I, LLC, a Maryland limited liability company
(the “ **LLC** ”), which
owns as its sole asset certain improved real property commonly known as Choice
Centre, 10720, 10750 and 10770 Columbia Pike, Silver Spring, Maryland, along
with certain related personal and intangible property. Purchaser desires to
purchase Seller’s membership interest in the LLC (the “ **Membership
Interest** ”) and
Seller is willing to sell the Membership Interest.
  **A
G R E E M E N T S** **:**
  **NOW,
THEREFORE,** in
consideration of the foregoing, of the covenants, promises and undertakings set
forth herein, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser hereby agree
as follows:
  **1.** **The
Property** .
  1.1. Description . Subject
to the terms and conditions set forth in this Agreement, and for the
consideration herein set forth, Seller agrees to sell and transfer, and
Purchaser agrees to purchase and acquire, the Membership Interest and thereby
acquire all of Seller’s right, title, and interest in and to the following
(collectively, the “ **Property** ”):
  1.1.1.  Certain
real property (the “ **Land** ”)
located in Silver Spring, Montgomery County, Maryland, and more specifically
described in Exhibit 1.1.1 attached
hereto;
  1.1.2.  All
improvements located on the Land, including, but not limited to, three office
buildings located at 10720,
10750 and 10770 Columbia Pike, Silver Spring, Maryland and
commonly known as “Choice Centre,” (the “ **Buildings** ”), and
all other structures, systems, fixtures, and utilities associated with, and
utilized by the LLC in the ownership and operation of the Buildings (all such
improvements, together with the Buildings, being referred to herein collectively
as the “ **Improvements** ”);
  1.1.3.  All
furniture, artwork, personal property, machinery, appliances, tools, building
materials, hardware, carpeting, apparatus, and equipment currently used in the
operation, repair and maintenance of the Land and Improvements and situated
thereon (collectively, the “ **Personal
Property** ”),
generally described on Exhibit 1.1.3 attached
hereto, but expressly excluding all furniture, artwork, personal property,
equipment, fixtures, appliances, machinery, tools, building materials, apparatus
and all other personal property owned by tenants of the Buildings, public or
private utilities or contractors working at the Property, except, in each of the
foregoing cases, to the extent of any reversionary or other interest of the LLC
therein. The Personal Property to be conveyed is subject to depletions,
replacements and additions in the ordinary course of business and contractual
and legal transfer and use restrictions;
  
 1.1.4.  All
rights, easements, hereditaments, interests, and appurtenances belonging to or
inuring to the benefit of the LLC and pertaining to the Land, if any, including
any development rights and water or mineral rights owned by or leased to the
LLC, if any;
  1.1.5.  Any
street or road abutting the Land to the center lines thereof;
  1.1.6.  The
leases and occupancy agreements, including those in effect on the date of this
Agreement which are identified on the Schedule of Leases attached hereto as Exhibit 1.1.6 , and any
new leases entered into pursuant to Section 4.4, which as of the Closing
Date (as hereinafter defined) affect all or any portion of the Land or
Improvements (collectively, the “ **Leases** ”), and
any security and other deposits actually held by the LLC as of the Closing (as
hereinafter defined) with respect to any such Leases;
  1.1.7.  Subject
to Section 3.3, all assignable contracts and agreements and equipment
leases (collectively, the “ **Contracts** ”)
relating to the operation, repair or maintenance of the Land, Improvements or
Personal Property the terms of which extend beyond midnight of the day preceding
the Date of Closing (as hereinafter defined);
  1.1.8.  To the
extent assignable without the consent of third parties, all trademarks, trade
names including the name “Choice Centre”, it being understood that the LLC has
not registered any property rights in such name, domain names, permits,
approvals, entitlements and other intangible property owned by the LLC, if any,
and used solely in connection with the Property, including, without limitation,
all of the LLC’s right, title and interest in any and all transferable,
unexpired warranties and guaranties (collectively, the “ **Intangible
Personal Property** ”);
and
  1.1.9.  All
transferable consents, authorizations, variances or waivers, licenses, permits
and approvals from any governmental or quasigovernmental agency, department,
board, commission, bureau or other entity or instrumentality held by the LLC in
respect of the Land or Improvements (collectively, the “ **Approvals** ”).
  1.2. Purchase
Price . The
total purchase price to be paid for the Property (“ **Purchase
Price** ”) is
Forty Three Million Five Hundred Thousand Dollars **** ($43,500,000)
U.S.
  1.3. Payment . Payment
of the Purchase Price is to be made in cash as follows:
  1.3.1. (a)
Purchaser will make an earnest money deposit of One Million Dollars ($1,000,000)
(the “ **Deposit** ”) within
two (2) business days of the Effective Date.
  
 (b) The
Deposit will be placed and held in escrow by Chicago Title Insurance Company, at
2001 Bryan Street, Suite 1700, Dallas, Texas 75201, attention: Ellen Schwab
(214) 965-1670 (“ **Title
Company”** or **“Escrow
Agent** ”) in an
interest bearing account using Purchaser’s tax identification number at a
mutually acceptable banking institution. Any interest earned and accrued on the
Deposit shall be considered as part of the Deposit. Except as otherwise provided
in this Agreement, the Deposit shall be applied to the Purchase Price at
Closing. The Deposit shall be paid in cash or by cashier’s check, or wire
transfer of immediately available federal funds. The failure by Purchaser to
deposit with Escrow Agent the earnest money Deposit as installments of same are
required to be paid hereunder shall result in the immediate, automatic
cancellation and termination of this Agreement. By its execution hereof, Title
Company acknowledges the receipt of the Deposit.
  1.3.2.  On or
prior to the Date of Closing (at a time and in a manner so the Title Company
will have immediately available funds at the time of its disbursement in
connection with Closing), the Purchaser shall deposit the Purchase Price,
inclusive of the Deposit and subject to adjustments and pro rations as expressly
provided herein, with the Title Company for payment to Seller to a bank account
designated by Seller via wire transfer or other form of immediately available
funds.
  1.4.**** [ intentionally
omitted ]
  1.5. Closing . Payment
of the Purchase Price and closing hereunder (the “ **Closing** ”) will
take place pursuant to a deed and money escrow closing on or before the November
22, 2004, at the offices of the Title Company at 10:00 a.m. local time or at
such other time and place as may be agreed upon in writing by Seller and
Purchaser (the aforesaid date, or such other date as may be agreed upon the
parties, being referred to in this Agreement as the “ **Closing
Date** ” or the
“ **Date
of Closing** ”). The
Closing Date is of extreme importance to Seller as the Purchase Price is needed
by Seller on the Closing Date in order to satisfy certain obligations of Seller,
and that Purchaser’s covenant to close the transaction contemplated by this
Agreement on the Closing Date constitutes a material inducement to the entry by
Seller into this Agreement.
  1.6. Agreement
to Convey . Subject
to the terms and conditions hereof, Seller shall convey, and Purchaser shall
accept, title to the Membership Interest in the LLC by the Assignment of
Membership Interest (hereinafter defined) **.**
  **2.** **“As
Is” Purchase** .
  2.1. No
Reliance by Purchaser.
  (a)  Purchaser
shall not rely on any warranties, promises, understandings or representations,
express or implied, of Seller or any agent of Seller relating to the present or
future physical condition, development potential, operation, income generated
by, or any other matter or thing affected by or related to the Membership
Interest or the Property which are not contained in this Agreement, and no such
representation or warranty shall be implied. The Membership Interest is being
sold, and Purchaser is thereby acquiring ownership of the Property, in its
present condition and state of repair. Purchaser shall accept the Property in an
“AS IS” “WHERE IS” condition and “WITH ALL FAULTS” as of the date of this
Agreement and as of the Closing.
  
 (b)  Neither
the Seller nor the LLC (i) developed or constructed the Property; and (ii) the
LLC has delegated the day-to-day management of the Property to a property
management company (the “ **Manager** ”).
Except as expressly set forth herein, Purchaser hereby releases Seller from all
responsibility and liability regarding the Property and, subject to Section 5.2,
regarding the Membership Interest.
  (c)  Purchaser
expressly understands and acknowledges that unknown liabilities may exist with
respect to the Property, that, except as expressly set forth herein, Purchaser
explicitly took that possibility into account in determining and agreeing to the
Purchase Price, and that a portion of such consideration, having been bargained
for between the parties with the knowledge of the possibility of such unknown
liabilities, shall be given in exchange for a full accord and satisfaction and
discharge of Seller of all such liabilities.
  (d)  Seller
and the LLC do not make and have not made and specifically disclaim any
representation or warranty regarding the compliance or noncompliance of the
Property with the Americans With Disabilities Act, or any other statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning access and accommodation
for disabled persons.
  2.1.1.  Seller
and the LLC have requested Purchaser to fully inspect the Property and
investigate all matters relevant thereto to Purchaser’s complete satisfaction
and Purchaser shall so inspect and investigate the Property and matters relevant
to the Property to its satisfaction. Except as expressly provided herein,
Purchaser shall rely solely upon the results of Purchaser’s own inspections or
other information obtained or otherwise available to Purchaser, rather than any
information that may have been provided by Seller or the LLC.
  2.1.2.  Except as
expressly provided herein, Purchaser expressly disclaims any reliance on
information provided to it by Seller or the LLC in connection with its
inspection and agrees that it shall rely solely on its own independently
developed or verified information.
  2.1.3.  Purchaser
waives and releases Seller and the LLC from any present or future claims,
including claims for punitive and/or consequential damages, arising from or
relating to the presence or alleged presence of asbestos or harmful or toxic
substances in, on, under or about the Property including, without limitation,
any claims under or on account of (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as the same may have been or may be
amended from time to time, and similar state statutes, and any regulations
promulgated thereunder, (ii) any other federal, state or local law, ordinance,
rule or regulation, now or hereafter in effect, that deals with or otherwise in
any manner relates to, environmental matters of any kind, or (iii) this
Agreement or the common law.
  
 2.2. Disclaimer . Except as
may be expressly set forth in this Agreement, and the closing documents
identified herein, no representations or warranties have been made or are made
and no responsibility has been or is assumed by Seller or by any partner,
officer, person, member, firm, agent, manager, or representative acting or
purporting to act on behalf of Seller or the LLC as to the condition or repair
of the Property or the value, expense of operation, or income potential thereof
or as to any other fact or condition which has or might affect the Property or
the condition, repair, value, expense of operation or income potential of the
Property or any portion thereof. All understandings and agreements heretofore
made between the parties or their respective agents or representatives are
merged in this Agreement and the Exhibits hereto annexed, which alone fully and
completely express their agreement, and this Agreement has been entered into
after full investigation, or with the Purchaser satisfied with the opportunity
afforded for investigation, neither party relying upon any statement or
representation by the other unless such statement or representation is
specifically embodied in this Agreement or the Exhibits annexed hereto. Seller
makes no representations or warranties as to whether the Property contains
asbestos or harmful or toxic substances or pertaining to the extent, location or
nature of same. To the extent that Seller has provided or hereafter may provide
to Purchaser any inspection, engineering or environmental reports, Seller makes
no representations or warranties with respect to the accuracy or completeness,
methodology of preparation or otherwise concerning such reports.
  2.2.1.  Purchaser
acknowledges that any information which Purchaser has received or may receive
from Seller or the LLC or any of its agents, employees or contractors is
furnished on the express condition, except as otherwise expressly provided
herein, that Purchaser shall make an independent verification of the accuracy of
such information, all such information being furnished without any
representation or warranty whatsoever.
  2.2.2.  Survival . The
terms and provisions of this Section 2.2 and of Section 2.1 shall survive
Closing or any termination of this Agreement.
 
 2.3.  Due
Diligence .
Purchaser shall have until the Approval Date (as defined in Section 3.5 below)
to conduct due diligence investigation with respect to the Property and the LLC.
Seller shall make available to Purchaser and its employees, representatives,
counsel and consultants access to the Property and the records of the LLC during
normal business hours and to documents, materials, reports, books, records and
files relating to the Property (except as set out below) in Seller’s possession.
Seller agrees to respond to requests for information within three (3) business
days..
  Seller
shall have no obligation to make available to Purchaser any of the following:
(i) Seller’s credit reports, credit authorizations, credit or financial analyses
or projections, Investment Committee information, including Seller’s
pre-acquisition due diligence materials, acquisition files on the Property and
the book value of the Property or the Membership Interest; (ii) material which
is subject to attorney client privilege or which is attorney work product; (iii)
market valuations and appraisals; (iv) financials of Seller or any affiliate of
Seller; or (v) material which Seller is legally required not to
disclose.
  
 Seller
shall also allow Purchaser to make copies at the LLC’s office or the property
management office of such items as Purchaser reasonably requests, at Purchaser’s
sole cost and expense. Prior to the Approval Date, and subject to Section 3.1,
below, Purchaser shall make an onsite inspection of the Property and otherwise
investigate the Property to Purchaser’s complete satisfaction. “ **Due
Diligence Period** ” means
the period commencing on the date of this Agreement and ending on the Approval
Date. Purchaser shall observe all appropriate safety precautions in conducting
any inspection(s) of the Property. At the sole discretion of Seller, Purchaser
may be required to observe safety precautions which exceed those required by
law. Except with respect to conducting zoning due diligence with the local
municipality, Purchaser shall not contact any governmental authority having
jurisdiction over the Property without Seller’s prior written
consent.
  **3.** **Inspections
and Approvals** .
  3.1. Inspections .
  3.1.1.  Seller
shall allow Purchaser or Purchaser’s agents or representatives reasonable access
to the Property (during normal business hours) for purposes of non-intrusive
physical or environmental inspection of the Property and review of the Leases,
expenses and other matters. **PURCHASER
SHALL NOT CONDUCT OR ALLOW ANY PHYSICALLY INTRUSIVE TESTING, CORINGS, BORINGS,
THE TAKING OF SAMPLES, AND SIMILAR INTRUSIVE ACTIVITIES OF, ON OR UNDER THE
PROPERTY WITHOUT FIRST OBTAINING SELLER’S WRITTEN CONSENT AS TO THE TIMING AND
SCOPE OF WORK TO BE PERFORMED AND, UPON REQUEST OF SELLER, ENTERING INTO AN
ACCESS AND INSPECTION AGREEMENT IN A FORM ACCEPTABLE TO SELLER. PURCHASER’S
BREACH OF THE FOREGOING PROHIBITION SHALL ENTITLE SELLER, AT ITS OPTION,
IMMEDIATELY AND WITHOUT ANY CURE PERIOD, TO DECLARE THIS AGREEMENT TO BE
TERMINATED AND TO RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES PURSUANT TO SECTION
10.1 HEREOF.**
  3.1.2.  When
making any non-intrusive physical or environmental inspection(s) of the
Property, Purchaser and its agents shall not interfere with the business
activity of tenants or any persons occupying or providing services at the
Property, shall not reveal to any third party other than the “ **Purchaser
Parties** ” (as
defined in Section 3.6) and persons approved by Seller the results of its
inspections other than a lender in connection with its decision to finance
Purchaser’s acquisition of the Membership Interest or to finance the Property
and provided that such lender has been advised of this confidentiality
restriction and has agreed to abide by it **** ( except as
may be required by law), and shall restore promptly any physical damage caused
by such inspection(s). Purchaser shall not damage the Property and shall
immediately restore the Property and remove anything placed on the Property in
connection with its inspection(s). If any such inspections occur after any
permitted assignment under Section 11.4, Purchaser and Purchaser’s agents shall
carry the insurance coverages set out on Exhibit
3.1.2 attached
hereto, and, upon request of Seller, shall provide Seller with written evidence
of same.
  
 Purchaser
shall give Seller two business days **** prior
notice of its intention to conduct any inspection(s), and Seller reserves the
right to have a representative present. Purchaser shall provide Seller with a
copy of any inspection report as a condition to discussing its contents or
findings with Seller. Purchaser agrees (which agreement shall survive Closing or
termination of this Agreement) to indemnify, defend, and hold Seller (and in the
event of termination without Closing, the LLC) free and harmless from any loss,
injury, damage, claim, lien, cost or expense, including attorney’s fees and
costs, arising out of a breach of the foregoing by Purchaser in connection with
the inspection of the Property, or otherwise from the exercise by Purchaser or
its agents or representatives of the right of access under this
Section 3.1.2. (collectively, the “ **Purchaser’s
Indemnity Obligations** ”). Any
inspections shall be at Purchaser’s expense. Purchaser’s Indemnity Obligations
shall survive Closing or any termination of this Agreement.
  3.1.3. Except as
expressly provided herein, Seller makes no representations or warranties as to
the truth, accuracy or completeness of any materials, data or other information
supplied to Purchaser in connection with Purchaser’s inspection of the Property
(e.g., that such materials are complete, accurate or the final version thereof,
or that all such materials are in Seller’s possession). It is the parties’
express understanding and agreement that such materials are provided only for
Purchaser’s convenience in making its own examination and determination prior to
the Approval Date (as hereinafter defined) as to whether it wishes to purchase
the Property, and, in doing so, Purchaser shall rely exclusively on its own
independent investigation and evaluation of every aspect of the Property and not
on any materials supplied by Seller or Seller’s agent(s). Purchaser expressly
disclaims any intent to rely on any such materials provided to it by Seller or
Seller’s agent(s) in connection with its inspection and agrees that it shall
rely solely on its own independently developed or verified
information.
  3.2. Title
and Survey . Prior
to or concurrently with execution of this Agreement, Seller has delivered to
Purchaser a commitment from the Title Company for an owner’s standard coverage
policy of title insurance insuring fee title to the Land, a copy of which is
attached hereto as Exhibit 3.2 **** (“ **Title
Commitment** ”),
together with copies of all items shown as exceptions to title therein. Prior to
execution of this Agreement, Seller has ordered an updated survey of the Land
prepared in accordance with the most recent “Minimum Standard Detail
Requirements for Land Title Surveys” jointly established and adopted by ALTA and
ACSM (“ **Survey** ”).
Seller shall promptly deliver the Survey to Purchaser upon receipt thereof. In
the event the Survey has not been delivered to Purchaser at least ten (10)
business days prior to the Approval Date, Seller shall deliver to Purchaser a
copy of Seller’s most current existing survey. Purchaser shall have until five
(5) business days prior to the Approval Date to provide written notice to Seller
of any matters shown by the Title Commitment or Survey, or such prior existing
survey, which are not satisfactory to Purchaser, which notice (“ **Title
Notice** ”) shall
specify the reason such matter(s) are not satisfactory and the curative steps
necessary to remove the basis for Purchaser’s disapproval, provided ,
however, that (i) the
standard printed exceptions on an A LTA Owner’s
Policy of Title Insurance and non-delinquent liens for general and special real
estate taxes and installment payments of special assessments, the current zoning
of the Property, including all permits, waivers and stipulations, and the
interest of any tenant occupying space at the Property, as a tenant only, shall
be “ **Permitted
Encumbrances** ”, and
(ii) Seller shall be obligated to remove any exceptions caused by Seller’s
voluntary acts after the end of the Due Diligence Period and not approved by
Purchaser. The term “ **Permitted
Encumbrances** ” shall
not include any mechanic’s lien or any monetary lien, except for taxes and
special assessments not yet due and payable, or any deeds of trust, mortgages,
or other loan documents secured by the Property.
  
 After a
Title Notice is provided to Seller, the parties shall then have until the
Approval Date (hereinafter defined) or such later date as may be mutually
acceptable, to make such arrangements or take such steps as they may mutually
agree upon to satisfy Purchaser’s objection(s). In the event the Survey has not
been delivered to Purchaser at least ten (10) business days prior to the
Approval Date, Purchaser shall have a right to issue a second Title Notice,
limited solely to matters not disclosed on the prior existing survey or the
Title Commitment, on or before the fifth (5 th )
business day following Purchaser’s receipt of the Survey. Seller shall have no
obligation to expend or agree to expend any funds, to undertake or agree to
undertake any obligations or otherwise to cure or agree to cure any title or
survey objections, other than to remove deeds of trust, mortgages, or other loan
documents secured by the Property, where the indebtedness evidenced or secured
by such instruments will not be assumed by Purchaser at Closing and to remove or
bond over mechanic’s liens, judgment liens against Seller and voluntary monetary
encumbrances **.** Seller
shall have no obligation to cure unless Seller expressly undertakes such an
obligation by a written notice to or written agreement with Purchaser given or
entered into on or prior to the Approval Date and which recites that it is in
response to a Title Notice. Purchaser’s sole right with respect to any Title
Commitment or Survey matter to which it objects in a Title Notice given in a
timely manner shall be to elect on or before the Approval Date to terminate this
Agreement pursuant to Section 3.5 hereof and to receive a refund of the
Deposit as provided therein, or, in the event Purchaser has issued a Title
Notice with respect to matters not disclosed on the prior existing survey or the
Title Commitment but shown on the Survey, on or before the fifth (5 th )
business day following issuance of such Title Notice if Seller and Purchaser
fail to reach agreement on the resolution of Purchaser’s objections properly set
forth in such later Title Notice. All matters shown in the Title Commitment
and/or Survey with respect to which Purchaser fails to give a Title Notice on or
before the last date for so doing, or with respect to which a timely Title
Notice is given but Seller has not undertaken an express obligation to cure as
provided above, shall be deemed to be approved by Purchaser as “ **Permitted
Encumbrances** ”,
subject, however, to Purchaser’s termination right provided in Section 3.5
hereof.
  Subject
to Section 4.5 of this Agreement, neither Seller nor the LLC shall, after the
date of this Agreement, by voluntary act, intentionally create any new
encumbrances to title to all or any portion of the Property without the prior
written consent of Purchaser.
  3.2.1.  If
Purchaser elects to secure an extended coverage owner’s and/or
lender’s **** policy(ies)
of title insurance, Purchaser shall satisfy, at its cost, Title Company’s
requirements therefor and shall be responsible for the additional premium as
well as the base premium as provided in Section 6.1.4. Purchaser shall also be
solely responsible for the cost of any Endorsements to any policy that Purchaser
or its lender may require.
  
 3.2.2.  Seller
shall pay for any endorsement(s) to any Title Policy if such endorsement(s) are
issued in connection with an election by Seller to insure over a title matter as
to which Title Notice has been given by Purchaser pursuant to Section 3.2.
Seller shall not pay or be responsible to secure any endorsements that may be
requested by Purchaser, such as patent, contiguity, separate tax parcels,
access, or zoning endorsements, all of which shall be Purchaser’s sole cost and
expense if Purchaser elects to secure such endorsements, provided ,
however, that Seller
shall not be obligated to provide to Title Company any owner’s affidavit,
indemnity, certifications, covenants, obligations or liabilities beyond those
that Seller is providing to Purchaser under this Agreement or which go beyond
that required for the issuance by Title Company of a standard owner’s policy of
title insurance. Notwithstanding the foregoing, provided the form and substance
thereof is reasonably acceptable to Seller and its counsel, Seller shall execute
and deliver to the Title Company such assurances as the Title Company shall
reasonably require to issue a nonimputation endorsement to any owner’s policy of
title insurance which Purchaser elects to purchase at Closing.
  3.3. Contracts . On or
before the Approval Date, Purchaser shall notify Seller in writing (such a
notice, a “ **Contract
Notice** ”) if
Purchaser elects not to assume at Closing some or all of the contracts which are
identified on Exhibit 3.3 (the
“ **Contracts** ”)
attached hereto. If Purchaser does not exercise its right to terminate this
Agreement on or before the Approval Date, Seller shall cause the LLC or the
Manager to give notice of termination of such disapproved Contract(s) as of the
Closing Date; provided  that , if
under the disapproved Contract(s) the LLC has no right to terminate same on or
prior to Closing, or if a termination fee or charge is due thereunder as a
result of such termination, Purchaser shall (i) purchase the Membership
Interest; (ii) assume at Closing all obligations thereunder from the Date of
Closing until the expiration dates of such Contracts or (ii) reimburse Seller
for the payment of the termination related fee or charge, as
applicable.
  Unless
Purchaser gives a Contract Notice **** to Seller
prior to expiration of the Due Diligence Period that it disapproves any of the
Contracts, Purchaser will be deemed to have approved same, and such Contracts
will be assigned by the LLC and assumed by Purchaser at Closing.
  3.4. Tenant
Estoppels . Seller
shall use commercially reasonable efforts to obtain and deliver to Purchaser
estoppel certificates in the respective forms attached hereto as Exhibit
3.4 , and
signed by Choice Hotels International and American Institutes for Research.
Notwithstanding the foregoing, provided it does so within five (5) business days
of the date Purchaser has received complete copies of each such lease, Purchaser
may propose modifications or additions to such forms of estoppel certificates
for Seller’s approval, modifications shall be incorporated into the exhibited
forms unless Seller demonstrates to Purchaser’s reasonable satisfaction why such
proposed modifications would be inappropriate. If **** by
November 18, 2004, Seller has been unable to obtain and deliver to Purchaser
estoppel certificates in such form, which estoppel certificates do not show any
materially adverse information not disclosed to or known by Purchaser as of the
Approval Date (the “ **Required
Estoppels** ”),
Seller shall have the right by written notice to Purchaser to extend the Date of
Closing to December 8, 2004. If by December 3, 2004, Seller is still unable to
deliver the Required Estoppels, Purchaser shall have the right to either (i)
waive the requirements contained herein and proceed to close this transaction
upon the terms and conditions of this Agreement, or (ii) terminate this
Agreement. The delivery of Required Estoppels either in the approved form, or if
they differ, which do not show any materially adverse information not disclosed
to or known by Purchaser as of the Approval Date, shall satisfy any condition
relating to delivery of estoppel certificates. Notwithstanding the foregoing,
Seller shall use commercially reasonable efforts to obtain, within the same time
frame as aforesaid, an estoppel from Sunburst Hospitality Corporation, but such
estoppel shall not be a condition to Closing.
  
 3.5. Purchaser’s
Right to Terminate . If, as
a result of its inspection and investigations, Purchaser determines that the
Property or the LLC is not suitable for its purposes, Purchaser shall have the
right to terminate its obligation to purchase the Membership Interest by giving
Seller written notice (the “ **Termination
Notice** ”) on or
before November 15, 2004 (the “ **Approval
Date** ”). If
the Termination Notice is timely given, Seller shall direct the Title Company
promptly to return the Deposit to Purchaser, and neither party shall have any
further liability hereunder except for Purchaser’s obligations set forth in
Sections 3.1.2 and 3.6 hereof and in this Section. Time is agreed to be
strictly of the essence with respect to the giving of the Termination
Notice. **** No
Termination by Purchaser shall relieve Purchaser of liability for any prior
breach of, or default under, this Agreement or shall entitle Purchaser to a
return of the Deposit if it would otherwise be payable to Seller.
  3.6. Confidentiality . Unless
Seller specifically and expressly otherwise agrees in writing, all information
regarding the Membership Interest, the LLC or the Property made available to
Purchaser by Seller or Seller’s agents or representatives (the “ **Proprietary
Information** ”) is
confidential (except to the extent such information is already in the public
domain) and shall not be disclosed, except as may be required by law, to any
other person except those assisting Purchaser with the transaction, or
Purchaser’s lender, if any (collectively, the “ **Purchaser
Parties** ”) and
then only upon Purchaser making such person aware of the confidentiality
restriction and procuring such person’s agreement to be bound thereby. If the
purchase and sale contemplated hereby fails to close for any reason whatsoever,
Purchaser shall return to Seller, or cause to be returned to Seller, all
Proprietary Information. Purchaser shall not use or allow to be used any
Proprietary Information for any purpose other than to determine whether to
proceed with the contemplated purchase, except that if Closing occurs, Purchaser
may use the Proprietary Information for any reason post Closing. Notwithstanding
that the identity of the current ultimate beneficial owner of the Membership
Interest may not previously have been treated as being confidential or
Proprietary Information, Purchaser agrees not to disclose such identity to any
person or in any fashion unless required by law or a final order of a court of
competent jurisdiction. The foregoing shall not be deemed to prevent Purchaser
from complying with laws, rules, regulations and court orders, including,
without limitation, rules of the Securities and Exchange Commission and
governmental regulatory, disclosure, tax and reporting requirements, which may
require disclosure of Proprietary Information otherwise required to be kept
confidential pursuant to this Section 3.6, but only to the extent such
disclosure is required by any of the foregoing. Notwithstanding any other term
of this Agreement, the provisions of this Section 3.6 shall survive Closing
and any termination of this Agreement.
  Notwithstanding
the foregoing, it shall not be a breach of this Agreement to disclose such
Proprietary Information to a person who already knows such
information.
  
 **4.** **Prior
to Closing** .
  Until
Closing, Seller shall cause the LLC or its agent to:
  4.1. Insurance . Keep
the Property insured against fire and other hazards covered by extended coverage
endorsement and comprehensive public liability insurance against claims for
bodily injury, death and property damage occurring in, on or about the
Property.
  4.2. Operation . Subject
to the Leases, operate and maintain the Property in a businesslike manner and
substantially in accordance with Seller’s and the LLC’s past practices with
respect to the Property, and make any and all repairs and replacements
reasonably required to deliver the Property to Purchaser at Closing (by sale of
the Membership Interest) in its present condition, normal wear and tear excepted
(excluding extra ordinary capital expenditures or expenditures not incurred in
the LLC’s normal course of business) provided that in the event of any loss or
damage to the Property as described in Section 7, the LLC shall repair the
Property only if the LLC is obligated to do so under the Leases or any debt
instrument currently encumbering the Property and if the LLC so elects and then
only to the extent of available insurance proceeds. Purchaser shall not contact,
deal with, or negotiate with tenants, subtenants or prospective tenants or
subtenants, of the Property without prior written consent of Seller and shall
notify Seller promptly if any tenant, or prospective tenant, contacts Purchaser.
In the event of any loss or damage to the Property as described in Section 7,
Section 7 shall control.
  4.3. New
Contracts . Enter
into only those third party contracts which are necessary to carry out its
obligations under Section 4.2 and which shall be cancelable without fee or
penalty **** on no
more than thirty (30) days written notice. After the Approval Date, the LLC will
not enter into any such contract except with the prior written consent of
Purchaser, which consent may be given or withheld in the sole discretion of
Purchaser. If Purchaser withholds any such consent, Seller shall be excused from
its obligation under Section 4.2 to the extent its ability to perform such
obligation is affected by such withholding of consent.
  4.4. New
Leases .
Continue its present rental program and efforts at the Property to rent vacant
space and renew expiring leases, provided that (i) prior to the Approval Date,
Seller shall give notice to Purchaser of any new Leases and any renewals,
amendments, terminations or surrenders of leases, and (ii) after the Approval
Date, the LLC shall not execute any new or renewal leases or amend, terminate or
accept the surrender of any existing tenancies or approve any subleases or lease
assignments without the prior written consent of Purchaser, which consent may be
withheld, conditioned or delayed in the sole discretion of the Purchaser, except
that the LLC is authorized to accept the termination of Leases at the end of
their existing terms. In the event that any Leases are identified on Exhibit 4.4 hereto,
or that the LLC executes any new lease after the date of this Agreement, and in
either event such lease requires the construction of tenant fixtures or
improvements and/or the payment of leasing or brokerage commission(s) at the
expense of the landlord, Purchaser, by electing to proceed with the purchase
notwithstanding its termination right pursuant to Section 3.5, or by
approving such Leases, if executed after the Approval Date, agrees to assume the
obligation to pay and/or at Closing to reimburse Seller for the paid portion of
the cost of such improvements and leasing or brokerage commission(s) and with
the prior written approval of Purchaser  any other
costs associated with such Leases, unless Seller and Purchaser expressly agree
in writing that Seller shall be responsible for any such costs.  In its
leasing activities, except in circumstances where it would be commercially
unreasonable to do so, the LLC shall utilize the standard form of lease
presently in use at the Property, a copy of which is available for the review
and inspection of Purchaser. The parties acknowledge that any form lease is
subject to negotiation.
  
 4.5. New
Liens . Not, on
or after the Approval Date, create any new encumbrance or lien affecting the
Property other than liens and encumbrances (i) that can be discharged prior to
Closing, and (ii) that in fact are discharged **** prior to
or at the Closing.
  4.6. Lease
Terminations; Defaults . Nothing
herein shall in any way affect or restrict the right of the LLC to seek to
enforce its rights under any Lease, but the taking of any actions or the
exercise of any remedies which could result in the termination of the Lease
shall require the written consent of Purchaser which, prior to the Approval Date
shall not be unreasonably withheld, delayed or conditioned but on or after the
Approval Date may be withheld in Purchaser’s sole discretion; provided, however,
that such action is consistent with what a reasonable and prudent property owner
would do under the circumstances then existing.
  4.7 Façade
Work . Seller,
at its sole cost and expense, shall cause to be completed and shall pay for the
façade repair work presently in process under and to the extent of its existing
contract with Valcourt Building Services. Seller shall use commercially
reasonable efforts to cause such repair work to be completed prior to
Closing.
 
  **5.** **Representations
and Warranties** .
  5.1. By
Seller .
  (a)  Seller
represents and warrants to Purchaser that, except as otherwise disclosed to
Purchaser:
  5.1.1.  Seller is
a Delaware limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware, has duly authorized the
execution and performance of this Agreement, and such execution and performance
will not violate any material term of its articles of organization. The LLC is a
Delaware limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, is authorized to do business
in the State of Maryland, and the execution and performance of this Agreement
will not violate any material term of its articles of organization **.**
  5.1.2.  Neither
the Seller nor the LLC has and as of the Closing Date Seller and/or the LLC
shall not have, (a) made a general assignment for the benefit of creditors, (b)
filed any voluntary petition in bankruptcy or suffered the filing of any
involuntary petition by either the Seller’s or the LLC’s creditors, (c) suffered
the appointment of a receiver to take possession of all, or substantially all,
of Seller’s or the LLC’s assets, which remains pending as of such time, (d)
suffered the attachment or other judicial seizure of all, or substantially all,
of Seller’s or the LLC’s assets, which remains pending as of such time, (e)
admitted in writing its inability to pay its debts as they come due, or (f) made
an offer of settlement, extension or composition to its creditors
generally.
  
 5.1.3.  Seller
and the LLC are not, and as of the Closing shall not be, a “foreign person” as
defined in Section 1445 of the Internal Revenue Code of 1986, as amended (the
“ **Code** ”) and
any related regulations.
  5.1.4.  Seller is
acting as principal in this transaction with authority to close the transaction.
This Agreement is the valid and legally binding obligation of
Seller.
  5.1.5  Seller
owns its Membership Interest, which constitutes the sole membership interests in
the LLC, and will convey it at Closing free and clear of any liens or
encumbrances.
  5.1.6  The LLC
engages and has engaged in no business other than the ownership and operation of
the Property, has and has had no ownership interest in any other person, and
does not own, lease or have, and has not owned, leased or had any other property
other than the Property; provided, however, that the foregoing does not extend
to items of personalty which may have previously been owned or leased but were
replaced, disposed, retired from service or are otherwise not presently owned or
leased.
  5.1.7  The LLC
has no employees.
  5.1.8  The
organizational documents of the LLC, which have been or will be furnished to
Purchaser in connection with its due diligence, are true, correct and complete
copies of such documents.
  5.1.9  Except as
set forth in Exhibit
5.1.9 attached
hereto, to the best of Seller’s knowledge Seller has received no written notice
from any governmental authority of any condemnation proceeding pending or
threatened which would have any materially adverse impact on the Property, its
value or its operation.
  5.1.10  Except as
set forth in Exhibit
5.1.10 , to the
best of Seller’s knowledge Seller has received no written notice of the pendency
of any litigation or similar proceeding, which would affect the Property, the
Membership Interest or the LLC following Closing except for any matter fully
insured against.
  5.1.11  Except as
set forth in Exhibit
5.1.11 , to the
best of Seller’s knowledge Seller has received no written notice from any
governmental authority having jurisdiction 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.
  5.1.12  Seller is
not a person or entity described by Section 1 of the Executive Order (No.
13,224) Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism, 66 Fed. Reg. 49,079 (September 24,
2001), and does not engage in any dealings or transactions, and is not otherwise
associated, with any such persons or entities.
  
 5.1.13  Except as
and to the extent (a) reflected and reserved against in its trial balance
sheet dated September 30, 2004 attached as Exhibit
5.1.13 or (b)
incurred in the ordinary course of business after the date of such balance sheet
and not material in amount, either individually or in the aggregate or (c)
ordinary trade debt, the LLC does not have any liability or obligation, secured
or unsecured, whether accrued, absolute, contingent, unasserted or otherwise,
which, either individually or in the aggregate, is material to the condition
(financial or otherwise) of the assets, properties, business or prospects of the
LLC.
  (b) Neither
the Seller nor the LLC shall have any liability with respect to a breach of the
representations and warranties set forth above to the extent that Purchaser
proceeds with the closing of the transaction contemplated hereby with actual
knowledge of such breach or should have known of such breach, through the
exercise of reasonable diligence prior to the Closing Date.
  5.2. Condition
Precedent . It shall
be a condition precedent to Purchaser’s obligation to purchase Membership
Interest from Seller that all of Seller’s representations and warranties
contained in or made pursuant to this Agreement shall have been true and correct
in all material respects when made and remain true and correct in all material
respects as of the Closing Date. At the Closing, Seller shall deliver to
Purchaser a certificate certifying that each of Seller’s representations and
warranties in this Agreement are true and correct as of the Closing
Date **.** The
representations and warranties of Seller set forth in this Agreement or any
documents executed in connection herewith shall survive the
Closing.
  5.3. By
Purchaser .
  (a)  Purchaser
represents and warrants to Seller that, except as otherwise disclosed to
Seller.
  5.3.1.  Purchaser
is a Delaware limited partnership, duly organized, validly existing and in good
standing under the laws of such State, is authorized to do business in the State
of Maryland, has duly authorized the execution and performance of this
Agreement, and such execution, delivery, and performance will not violate any
material term of any of its constitutive documents.
  5.3.2.  Purchaser
has not, and as of the Closing Purchaser shall not have (a) made a general
assignment for the benefit of creditors, (b) filed any voluntary petition in
bankruptcy or suffered the filing of any involuntary petition by Purchaser’s
creditors, (c) suffered the appointment of a receiver to take possession of all,
or substantially all, of Purchaser’s assets, which remains pending as of such
time, (d) suffered the attachment or other judicial seizure of all, or
substantially all, of Purchaser’s assets, which remains pending as of such time,
(e) admitted in writing its inability to pay its debts as they come due, or (f)
made an offer of settlement, extension or composition to its creditors
generally.
  
 5.3.3.  Purchaser
is not, and as of the Closing shall not be, a “foreign person” as defined in
Section 1445 of the Internal Revenue Code of 1986, as amended (the “ **Code** ”) and
any related regulations.
  5.3.4.  Purchaser
is acting as principal in this transaction with authority to close the
transaction. This Agreement is the valid and legally binding obligation of
Purchaser.
  5.3.5.  By the
Approval Date, Purchaser shall have inspected the Property fully and completely
to its satisfaction and **** at its
expense and shall have ascertained to its satisfaction the extent to which the
Property complies with applicable zoning, building, environmental, health and
safety and all other laws, codes and regulations **,** including,
without limitation, laws relating to the presence of lead based paint and/or
lead based paint hazards.
  5.3.6.  By the
Approval Date, Purchaser shall have reviewed the Leases, Contracts, expenses and
other matters relating to the Property and, based upon its own investigations,
inspections, tests and studies, determined whether to purchase the Membership
Interest with the LLC’s rights and obligations under the Leases, Contracts and
otherwise with respect to the Property.
  5.3.7.  Unless
otherwise disclosed to Seller in writing, neither Purchaser nor any affiliate of
or principal in Purchaser is other than a citizen of, or partnership,
corporation or other form of legal person domesticated in the United States of
America.
  5.3.8.  Purchaser
shall not use the assets of an employee benefit plan as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
(“ **ERISA** ”) and
covered under Title I, Part 4 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended, in the performance or discharge of its obligations
hereunder, including the acquisition of the Membership Interest. Purchaser shall
not assign its interest hereunder to any person or entity which does not
expressly make this covenant and warranty for the benefit of Seller.
  5.3.9.  Purchaser
is not a person or entity described by Section 1 of the Executive Order (No.
13,224) Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism, 66 Fed. Reg. 49,079 (September 24,
2001), and does not engage in any dealings or transactions, and is not otherwise
associated, with any such persons or entities.
  (b) Purchaser
shall have no liability with respect to a breach of the representations and
warranties set forth above to the extent that Seller proceeds with the closing
of the transaction contemplated hereby with actual knowledge of such breach or
should have known of such breach, through the exercise of reasonable diligence
prior to the Closing Date.
  5.4. Condition
Precedent . It
shall be a condition precedent to Seller’s obligation to sell the Membership
Interest to Purchaser that all of Purchaser’s representations and warranties
contained in or made pursuant to this Agreement shall have been true and correct
in all material respects when made and shall be true and correct in all material
respects as of the Closing Date. At the Closing, Purchaser shall each deliver to
Seller a certificate certifying that each of Purchaser’s representations and
warranties in this Agreement is true and correct as of the Closing Date. The
representations and warranties of Purchaser set forth in this Agreement or any
documents executed in connection herewith shall survive the
Closing.
  
 5.5. Mutual
Representation .
  (a) Each of
Seller and Purchaser represents to the other that it has had no dealings,
negotiations, or consultations with any broker, representative, employee, agent
or other intermediary except CB Richard Ellis in connection with the Agreement
or the sale of the Property. Seller and Purchaser agree that each will
indemnify, defend and hold the other free and harmless from the claims of any
other broker(s), representative(s), employee(s), agent(s) or other
intermediary(ies) claiming to have represented Seller or Purchaser,
respectively, or otherwise to be entitled to compensation in connection with
this Agreement or the sale of the Property.
  (b) Neither
Seller nor Purchaser will knowingly take, or agree to or commit to take, any
action that would make any representation or warranty made by such party
inaccurate in any material respect at or prior to the Closing Date.
  **6.** **Costs
and Prorations** .
  6.1. Purchaser’s
Costs .
Purchaser shall pay the following costs of closing this
transaction:
  6.1.1.  The fees
and disbursements of its counsel, inspecting architect and engineer, if
any;
  6.1.2.  One-half
(1⁄2) of any real estate transfer, stamp or documentary tax(es) **** and of
any escrow fees and;
  6.1.3.  One-half
(1⁄2) **** of any
sales or use taxes relating to the transfer of Personal Property to
Purchaser;
  6.1.4.  The cost
of any owner’s title insurance polic(ies) issued in connection with this
transaction, whether pursuant to the Title Commitment or otherwise;
  6.1.5.  The cost
of any title insurance and any cancellation charge(s) imposed by any title
company in the event a title insurance policy is not issued, unless caused by
default of Seller hereunder;
  6.1.6.  The cost
of the Survey;
  6.1.7.  Any
recording fees;
  6.1.8.  Any other
expense(s) incurred by Purchaser or its representative(s) in inspecting or
evaluating the Property or closing this transaction; and
  
 6.2. Seller’s
Costs . Seller
shall pay the following costs of closing this transaction:
  6.2.1. The fees
and disbursements of its counsel and other professionals, if any, assisting
Seller with this transaction;
  6.2.2.  One-half
(1⁄2) **** of any
real estate transfer, stamp or documentary taxes and of any escrow
fees;
  6.2.3.  One-half
(1⁄2) **** of any
sales or use taxes relating to the transfer of Personal Property to
Purchaser;
  6.2.4.  The
broker’s fee to the extent any such fee is payable pursuant to the separate
agreement with CB Richard Ellis.
  6.3. Prorations .
Collected rents and any other amounts (including, without limitation, payment of
base rent, ground rent, parking income and reimbursements of Property operating
costs) paid by tenants applicable to the month in which the Date of Closing
occurs shall be prorated as of the Date of Closing and be adjusted against the
Purchase Price on the basis of a schedule (the “ **Rent
Schedule** ”) which
shall be prepared by Seller and delivered to Purchaser in connection with
Closing. The Rent Schedule shall set forth (i) rents and other amounts payable
applicable to the month in which the Date of Closing occurs, (ii) rents and
other amounts collected by Seller applicable to the month in which the Date of
Closing occurs, and (iii) rents and other amounts due but uncollected and
applicable to the month in which the Date of Closing occurs (the latter unpaid
obligations being referred to herein as the “ **Current
Delinquencies** ”), as
well as rental and other payment delinquencies (excluding those applicable to
the month in which the Date of Closing occurs) which are owed to the LLC but
uncollected as of the Date of Closing (“ **Delinquencies** ”).
Purchaser shall receive a credit against the Purchase Price for any cash
security and other deposits with respect to the Leases, which deposits are held
by the Seller or the LLC and are not turned over to Purchaser, and have not been
applied or forfeited as of Date of Closing.
  In the
event that any security deposits are in the form of letters of credit or other
financial instruments, Seller or the LLC will, at Closing, assign its interest
in such letters of credit or financial instruments to Purchaser, and, following
Closing, Seller will cooperate with Purchaser, at no cost to Seller, in order to
cause Purchaser to be named as beneficiary under such letters of credit and
other financial instruments to be assigned to Purchaser, and Purchaser shall not
receive a credit against the Purchase Price for such security
deposits.
  6.3.1.  Vault
charges, sewer charges, utility charges and operating expenses actually paid or
payable as of the Date of Closing shall be prorated as of the Date of Closing
and adjusted against the Purchase Price, provided that within sixty (60) days
after the Closing, Purchaser and Seller shall make a further adjustment for such
charges which may have accrued or been incurred prior to the Date of Closing,
but not collected or paid at that date. All prorations shall be made on a 365
day calendar year basis, using actual number of days in the month.
  
 6.3.2.   Payments
made by tenants which are in the nature of reimbursements for Property operating
costs which are prorated as provided above shall not be subject to reproration
or adjustment at the time of reconciliation provided for in the subject
Lease(s).
  6.4. Taxes . Real
estate taxes, personal property taxes, special assessments (and installments
thereof) and other governmental taxes and charges relating to the Property,
including annual or periodic permit fees, (collectively, “ **Taxes** ”)
payable during the year in which Closing occurs shall be prorated as of the Date
of Closing and adjusted against the Purchase Price in accordance with local
custom in Montgomery County, Maryland. If Closing occurs before the actual Taxes
payable during such year are known, the proration of Taxes shall be upon the
basis of Taxes for the Property payable during the immediately preceding year;
provided, however, that if the Taxes payable during the year in which Closing
occurs are thereafter determined to be more or less than the Taxes payable
during the preceding year (after any appeal of the assessed valuation thereof is
concluded), Seller and Purchaser promptly (but no later than June 30, 2005
except in the case of an ongoing tax protest), shall adjust the proration of
Taxes and Seller or Purchaser, as the case may be, shall pay to the other any
amount required as a result of such adjustment, and further provided that any
reproration of real estate taxes shall take into account only increases in the
tax rate or millage, i.e., any portion of any real estate tax increase
attributable to an increase in assessed value shall not be taken into account.
This covenant shall not merge with the deed delivered hereunder but shall
survive the Closing.
  6.5. In
General .
  (a) Any other
costs or charges of closing this transaction not specifically mentioned in this
Agreement shall be paid and adjusted in accordance with local custom in
Montgomery County, Maryland.
  (b)  (i)
Notwithstanding its purchase of the Membership Interest and thereby its
acquisition of ownership of the LLC, Purchaser shall be responsible for
arranging for its own insurance as of the Closing Date; (ii) utilities,
including telephone, electricity, water and gas, shall be read as close to the
Closing Date as possible and Purchaser with cooperation from the Manager, if
necessary, shall be responsible for all the necessary actions needed to arrange
for utilities to be transferred to the name of Purchaser on the Closing Date,
including the posting of any required deposits (it being understood, however,
that Seller shall be entitled to a credit at the Closing for any utility
deposits which the LLC or its predecessors have made prior to the Closing Date,
to the extent the same are transferred to Purchaser, and Seller shall be
entitled to recover and retain from the providers of such utilities any refunds
or overpayments to the extent applicable to the period prior to and including
the Closing Date, and any utility deposits for which it does not receive a
credit hereunder); and (iii) on the Closing Date, the Property will not be
subject to any financing obtained by the LLC or its predecessors unless
Purchaser has expressly agreed to assume such financing. Accordingly, there will
be no prorations for insurance, utilities (except to the extent provided above
for utility deposits), payroll or debt service. In the event a meter reading is
unavailable for any particular utility or is read on a date other than the
Closing Date, such utility shall be prorated in the manner provided in Section
6.6.
  
 6.6. Purpose
and Intent. Except
as expressly provided herein, the purpose and intent of the provisions of this
Agreement relating to prorations, adjustments and apportionments is that Seller
shall bear all expenses of ownership and operation of the LLC and the Property
and shall receive all income therefrom accruing through midnight at the end of
the day preceding the Closing Date, and Purchaser shall bear all such expenses
and receive all such income accruing thereafter. This provision shall survive
Closing.
  6.7. Closing
Adjustment . Seller
and Purchaser shall jointly prepare Closing adjustments on the basis set out
above, and shall endeavor to deliver such computation to Escrow Agent at least
one (1) business day prior to Closing.
  6.8. Post-Closing
Reconciliation . If any
of the aforesaid prorations cannot be calculated accurately as of the Closing
Date, then they shall be calculated as soon after the Closing Date as feasible,
but in any event no later than thirty (30) days following Closing.
Notwithstanding any provision contained in this Agreement to the contrary, after
the expiration of said period, no further adjustments, credits or prorations
shall be made or allocated between the parties under this Agreement for any of
the items listed in this Section 6, except for any Delinquencies due to Seller
or the LLC, pass through of operating expenses and tenant reconciliations, and
reproration of Taxes.
  6.9. Post-Closing
Collections .
Purchaser shall use commercially reasonable and diligent efforts during the
sixty (60) day period immediately following the Date of Closing to collect
Current Delinquencies and Delinquencies. Amounts collected from tenants who or
which, as of the Date of Closing, were obligors with respect to Current
Delinquencies and/or Delinquencies shall be applied first to satisfy such
tenants’ obligations for the payment period during which collection occurred,
second to satisfy Current Delinquencies, third to satisfy Delinquencies, and the
balance to satisfy any other rental obligations of such tenants to Purchaser.
Amounts collected and applicable to satisfy Current Delinquencies shall be paid
promptly to Seller to the extent of Seller’s prorata entitlement thereto, and
amounts collected and applicable to satisfy Delinquencies shall be promptly paid
to Seller.
  At the
end of the sixty (60) day period following the Date of Closing, Purchaser shall
prepare and deliver to Seller a statement (“ **Collection
Statement** ”)
identifying all payments collected during such sixty (60) days from tenants who
were listed on the Rent Schedule prepared and delivered pursuant to
Section 6.3 hereof as obligors on Current Delinquencies or Delinquencies.
If any uncollected Current Delinquencies or then unsatisfied Delinquencies
exist, Purchaser hereby agrees to assign to Seller any and all rights afforded
the obligee with respect thereto (with respect to Current Delinquencies, to the
extent of Seller’s prorata entitlement thereto), whereupon Seller shall be
entitled to take such steps, including the right to file suit in the name of the
LLC but only for monetary damages, as Seller in its sole and absolute discretion
deems necessary or appropriate to collect such sums, excepting only the right to
dispossess any tenant still in possession of its further right to occupy the
premises demised to it. Such assignment shall be effective automatically,
without the need for execution or delivery of any instrument of assignment. Upon
request of Seller, however, Purchaser shall execute and deliver to Seller such
instrument(s) as Seller may reasonably request to confirm such assignment.
Purchaser shall, at no cost to Purchaser, cooperate with Seller in any manner
reasonably requested by Seller in connection with any such collection effort.
  
 Purchaser
shall keep and maintain at all times full and accurate books of account and
records adequate to reflect correctly total rental and other payments collected
under each of the Leases, and all such books and records shall be kept and shall
be available to Seller for at lease one year after the Date of Closing. Seller
shall have the right to inspect, copy and audit such books of account and
records at Seller’s expense, during reasonable business hours, and upon
reasonable notice to Purchaser, whether such books and records are in the
possession of Purchaser or any agent of Purchaser for the purpose of verifying
the accuracy of the Collection Statement and the rental and any other payments
collected by Purchaser, which were earned during Seller’s ownership period, and
which should have been paid to Seller pursuant to this Section 6.9.
  The
provisions of this Section 6.9 shall survive Closing.
  6.10. Other
Items . All
cash in any operating, reserve or other property accounts on the Closing Date
shall belong to Seller.
  6.11. Indemnity
Against Certain Pre-Existing and Undisclosed Liabilities of LLC .
Effective as of Closing, Seller agrees to indemnify and hold harmless Purchaser
and its heirs, successors, representatives and assigns from and against all
loss, cost, damage, expense, claims and causes of action arising in respect of
any liability or obligation of the LLC which arose or accrued prior to Closing
and (i) which was not disclosed to or known by Purchaser as of Closing, and (ii)
which is of a nature or type such that, had Purchaser purchased the Property
instead of the Membership Interest, Purchaser would not have incurred such loss,
cost, damage, expense, claims and causes of action. This provision shall survive
Closing.
  **7.** **Damage,
Destruction or Condemnation** .
  7.1. Material
Event . If,
prior to Closing, there is damage to or destruction of the Buildings reasonably
estimated to cost in excess of One Million Dollars to repair or replace, or such
number of the parking spaces on the Property as to result in a deficiency either
under local law or the terms of the Leases, or all access to the Property, is or
are taken under power of eminent domain (any of the foregoing, a “ **Material
Event** ”),
Purchaser may elect to terminate this Agreement by giving written notice of its
election to Seller within ten (10) **** business
days after receiving notice of such destruction or taking. If Purchaser does not
give such written notice within such period, this transaction shall be
consummated on the date and at the Purchase Price provided for in
Section 1, and Seller shall assign to Purchaser (i) its interest in the
physical damage proceeds of any insurance policies payable to Seller or the LLC,
and the proceeds of rent loss insurance, but only to the extent available for
loss of rental income attributable to periods after Closing or (ii) Seller’s or
the LLC’s portion of any condemnation award, as applicable, in both cases, up to
the amount of the Purchase Price, and including any rights of Seller or the LLC
to prosecute, settle, compromise, or appeal such payments, and, if an insured
casualty, pay to Purchaser the amount of any deductible not previously paid by
Seller or the LLC, but not to exceed the amount of the loss. It is acknowledged
that notwithstanding the sale of the Membership Interest, any right to insurance
not specifically assigned is reserved to Seller and is not included in the
sale.
  7.2. Immaterial
Event . If,
prior to Closing, there is damage or destruction to the Buildings or a taking,
but such is not a Material Event, Purchaser shall close this transaction on the
date and at the Purchase Price agreed upon in Section 1, and Seller shall
assign to Purchaser (i) its interest in the physical damage proceeds of any
insurance policies payable to Seller or the LLC, and the proceeds or rent loss
insurance, but only to the extent available for loss of rental income
attributable to periods after Closing or (ii) Seller’s or the LLC’s portion of
any condemnation award, as applicable, in both cases, up to the amount of the
Purchase Price, and including any rights of Seller or the LLC to prosecute,
settle, compromise, or appeal such payments, and, if an insured casualty, pay to
Purchaser the amount of any deductible not previously paid by Seller or the LLC,
but not to exceed the amount of the loss. It is acknowledged that
notwithstanding the sale of the Membership Interest, any right to insurance not
specifically assigned is reserved to Seller and is not included in the
sale.
  
 7.3. Cooperation . Seller
and Purchaser, as may be appropriate, shall cooperate in prosecuting, settling,
and compromising any such condemnation award and insurance claim.
  7.4. Termination
and Return of Deposit . If
Purchaser elects to terminate this Agreement pursuant to this Section 7,
and if Purchaser is not, on the date of such election, in default of its
obligation to have closed under this Agreement, Seller shall promptly direct the
Title Company to return the Deposit to Purchaser.
  **8.** **Notices** . Any
notice required or permitted to be given hereunder shall be in writing and shall
be deemed to be given when hand delivered or one (1) business day after pickup
by Emery Air Freight, Airborne, Federal Express, UPS overnight, or similar
overnight express service, or on the date when delivered by facsimile
transmission with written acknowledgment of receipt, in any case addressed to
the parties at their respective addresses referenced below:
 
 If
      to Seller:
    c/o
      UBS Realty Investors LLC242
      Trumbull StreetHartford,
      CT 06103-1212Attention:
      General CounselPhone: 
      860-616-9158Fax:      
      860-616-9004With
      a copy to:
    Paul
      M. Canning, Executive DirectorUBS
      Realty Investors LLC242
      Trumbull StreetHartford,
      CT 061031212Phone:
      860-616-9032Fax:860-616-9010With
      a copy to:
    Kroll,
      McNamara, Evans & Delehanty, LLP29
      South Main StreetWest
      Hartford, CT 06107Attention:
      Garrett Delehanty, Esq.Phone:
      860-761-1122Fax:
      860-561-7075
  
  If
      to Purchaser:
    Caplease,
      LP110
      Maiden Lane, 36th FloorNew
      York, New YorkAttention:
      Michael HeneghanPhone: 
      (212) 217-6300Fax:      
      (212) 217-6301With
      copy to:
    Dechert
      LLP4000
      Bell Atlantic Tower1717
      Arch StreetPhiladelphia,
      Pennsylvania 19103-2793Attention:
      Helene S. JaronPhone:
      (215) 994-4000Fax:
      (215) 994-2222With
      a copy toEscrow
      Agent:
    Chicago
      Title Insurance Company2001
      Bryan Street, Suite 1700Dallas,
      Texas 75201attention:
      Ellen SchwabPhone:(214) 965-1670Fax:(214) 965-1627
 or, in
each case, to such other address as either party may from time to time designate
by giving notice in writing to the other party. Notice hereunder may be given by
counsel acting on behalf of either party. Telephone numbers are for
informational purposes only. Effective notice will be deemed given only as
provided above.
  **9.** **Closing
and Escrow** .
  9.1. Escrow
Instructions . Upon
execution of this Agreement, the parties shall deliver an executed counterpart
of this Agreement to the Title Company to serve as the instructions to the Title
Company as the Escrow Agent for consummation of the transaction contemplated
herein, and Title Company shall execute this Agreement to acknowledge acceptance
of the escrow. Seller and Purchaser shall execute such additional and
supplementary escrow instructions as may be appropriate to enable the Title
Company to comply with the terms of this Agreement, provided ,
however, that in the
event of any conflict between the provisions of this Agreement and any
supplementary escrow instructions, the terms of this Agreement shall
prevail.
  
 9.2. Duties
of Escrow Agent .
  (a)  Escrow
Agent is acting solely as a stakeholder under the Section 9.2. Escrow Agent’s
duties shall be determined solely by the express provisions hereof and are
purely ministerial in nature.
  (b)  During
the term of this Agreement, Escrow Agent shall hold and deliver the Deposit in
accordance with the terms and provisions of this Agreement. Escrow Agent shall
disburse the Deposit in strict accordance with the written instructions of the
parties hereto.
  (c)  If this
Agreement is terminated by the mutual written agreement of Seller and Purchaser,
or if Escrow Agent is unable at any time to determine to whom the Deposit should
be delivered, or if a dispute develops between Seller and Purchaser concerning
the proper disposition of the Deposit, then Escrow Agent shall deliver the
Deposit in accordance with the joint written instructions of the Seller and
Purchaser. If written instructions are not received by Escrow Agent within ten
(10) days after Escrow Agent has served a written request for instructions upon
both Seller and Purchaser, the Escrow Agent shall have the right to pay the
Deposit into any court of competent jurisdiction and to interplead Seller and
Purchaser. Upon the filing of the interpleader action, Escrow Agent shall be
discharged from any further obligations in connection with this
Agreement.
  (d)  If costs
or expenses are incurred by Escrow Agent because of litigation or a dispute
between Seller and Purchaser, Seller and Purchaser shall each pay Escrow Agent
one-half of Escrow Agent’s reasonable costs and expenses. Except for such costs
and expenses, no fee or charge shall be due or payable to Escrow Agent for its
services under this Agreement.
  (e)  Escrow
Agent undertakes only to perform the duties and obligations imposed upon it
under the terms of this Agreement and does not undertake to perform any of the
covenants, terms and provisions applicable to Seller and Purchaser.
  (f)  Purchaser
and Seller acknowledge and agree that Escrow Agent has assumed no liability
except for negligence or willful misconduct; that Escrow Agent shall not be
responsible for the validity, correctness or genuineness of any document or
notice referred to under this Agreement; and that Escrow Agent may seek advice
from its own counsel and shall be fully protected in any action taken by it in
good faith in accordance with the opinion of its counsel.
  (g)  The
conditions to the Closing shall be the Escrow Agent’s receipt of funds and
documents as described in this Section 9. Upon receipt of such funds and
documents, Escrow Agent shall deliver the items as described in this
Agreement.
  (h)  The funds
required from Purchaser and all acts and documents required of Purchaser or
Seller in order to close the escrow pursuant hereto shall be deposited with
Escrow Agent on the business day prior to the Closing Date, shall be performed
no later than 10:00 a.m. (Eastern Time) on the Closing Date, and shall be
available for immediate distribution at Closing.
  
 9.3. Seller’s
Deliveries .
  (a) Seller
shall deliver or cause to be delivered, either at the Closing through the Title
Company or by making available at the Property, as appropriate, the following
items and original documents, each executed and, if required, acknowledged, as
appropriate:
 
 9.3.1.  An
assignment of membership interest, in the form attached hereto as Exhibit 9.3.1 (the
“ **Assignment
of Membership Interest** ”).
  9.3.2.  (i) The Leases and any new leases entered into pursuant to
Section 4.4; (ii) the Rent Schedule, including a listing of any tenant
security and other deposits and prepaid rents held by Seller with respect to the
Property;
  9.3.3.  Copies
of all Contracts which Purchaser has elected to assume or which are not
terminable by the LLC on or before the Date of Closing;
  9.3.4.  To the
extent available, Contracts and building plans and specifications relating to
the Property which are in Seller’s or the LLC’s possession. All other books and
records requested by Purchaser will be provided at Seller’s sole discretion and
at Purchaser’s sole cost. These materials may be delivered at the
Property.
  9.3.5.  An
affidavit pursuant to the Foreign Investment and Real Property Tax Act in the
form attached hereto as Exhibit 9.3.5 .
  9.3.6.  A
corporate or other appropriate authorization as required by the Title
Company.
  9.3.7.  Any
Tenant Estoppel Certificates which are available and have not been previously
provided to Purchaser.
  9.3.8.  Transfer
tax declaration(s) in the form required by applicable governmental
authorities.
  9.3.9.  The
Closing Statement.
  9.3.10.  Such
other documents as may be reasonably required by the Title Company or as may be
agreed upon by Seller and Purchaser to consummate the transaction.
  9.3.11
The certificate required pursuant to Section 5.2.
  9.4. Purchaser’s
Deliveries . At
Closing, Purchaser shall (i) pay Seller the Purchase Price through the Escrow
Agent and provide any instruments required by the Title Company; and (ii)
execute and deliver to Seller the certificate required pursuant to Section 5.4,
the assignment referred to in Sections 9.3.1, the ERISA certificate
attached hereto as Exhibit 9.4 ., and
the Closing Statement. Purchaser shall also deliver to Seller evidence
reasonably satisfactory to Seller that Purchaser has arranged its own agent for
service of process for the LLC and, concurrently with Closing, has made the
requisite filing with the Secretary of State of Delaware to designate such
agent.
  
 9.5. Mutual
Obligations . Seller
and Purchaser shall each deposit such other instruments as are reasonably
required (i) to confirm their respective authority to close this transaction,
(ii) by Escrow Agent, or (iii) otherwise to consummate the sale and acquisition
of the Membership Interest in accordance with the terms hereof (provided that in
no event shall any such documents increase the liability of Purchaser or
Seller). To the extent applicable to a sale of the sole membership in a limited
liability company, Seller and Purchaser hereby designate Escrow Agent as the
“ **Reporting
Person** ” for the
transaction pursuant to Section 6045(e) of the Internal Revenue Code and the
regulations promulgated thereunder and agree to execute such documentation as is
reasonably necessary to effectuate such designation.
  9.6. Possession .
Purchaser shall be entitled to possession of the Property owned by the LLC upon
conclusion of the Closing, subject to the rights of tenants and matters of
record.
  9.7. Insurance . Seller
may terminate its or the LLC’s policies of insurance as of noon on the Date of
Closing and Purchaser shall be responsible for obtaining its own insurance
effective as of the Date of Closing.
  9.8. Utility
Service and Deposits . To the
extent any utility account is in Seller’s or the LLC’s name, Seller shall be
entitled to the return of any deposit(s) posted by it or the LLC with any
utility company and Purchaser shall notify each utility company serving the
Property to terminate the existing account, effective at noon on the Date of
Closing, such notice to be in the form of Exhibit
9.8 attached
hereto and establishing its own account.
  9.9. Notice
Letters .
Subsequent to Closing, Seller shall execute and provide to Purchaser, to the
extent provided to it by Purchaser for signature, copies of form letters to
tenants and to service, maintenance, supply and other contractors serving the
Property, advising them of the sale of the Membership Interest to Purchaser and
directing to Purchaser all rents and bills for the services and supplies,
respectively, provided to the Property on and after the Date of
Closing.
  **10.** **Breach;
Default; Failure of Condition** .
  10.1. Purchaser
Default . If
Purchaser shall breach or default under this Agreement and, with respect to
breaches or defaults for which a cure period is applicable, fail to cure such
breach or default within such cure period, Seller may terminate this Agreement,
the Deposit shall be retained by Seller as liquidated damages, and both parties
shall be relieved of and released from any further liability hereunder except
for Purchaser’s Indemnity Obligations set forth in Sections 3.1.2 and 3.6
hereof. Seller and Purchaser agree that the Deposit is a fair and reasonable
amount to be retained by Seller as agreed and liquidated damages in light of
Seller’s removal of the Membership Interest and the Property from the market and
the costs incurred by Seller and shall not constitute a penalty or a forfeiture.
  10.2.**** Seller
Default . If
Seller shall refuse or fail to convey the Membership Interest as herein provided
for any reason other than (i) a breach or default by Purchaser under this
Agreement and the expiration of the cure period, if any, provided under
Section 11.6 hereof, or (ii) any other provision of this Agreement
which permits Seller to terminate this Agreement or otherwise relieves Seller of
the obligation to convey the Membership Interest, Purchaser shall elect as its
sole remedy hereunder either to terminate the Agreement and recover the Deposit,
together with its actual out of pocket costs and expenses to third parties
incurred in connection with its due diligence up to a maximum amount of
$50,000.00, or to enforce the Seller’s obligations to convey the Membership
Interest in accordance with this Agreement, provided  that no
action in specific performance shall seek to require the Seller to do any of the
following: (a) change the condition of the Property or restore the same
after any fire or other casualty; (b) subject to Sections 3.2 and 10.3
hereof, expend money or post a bond to remove a title encumbrance or defect or
correct any matter shown on a survey of the Property; or (c) secure any
permit, approval, or consent with respect to the Property or Seller’s conveyance
of the Membership Interest.
  
 10.3. Failure
of Condition . If
prior to Closing Seller discloses to Purchaser or Purchaser discovers that (i)
title to the Property is subject to defects, limitations or encumbrances other
than Permitted Encumbrances, or (ii) any representation or warranty of Seller
contained in this Agreement is or, as of the Date of Closing, will be untrue,
then Purchaser shall promptly give Seller written notice of its objection, if
any, thereto. In such event, Seller may elect to postpone the Closing for up to
thirty (30) days and attempt to cure such objection, provided that Purchaser may
not object to the state of title of the Property on the basis of any Permitted
Encumbrance(s).
  10.3.1.  Seller
shall have no obligation to cure any objection. If Purchaser fails to waive an
objection within five (5) days after notice from Seller that Seller will not
cure the objection, this Agreement shall terminate automatically and Seller
shall promptly direct the Title Company to return the Deposit to Purchaser, provided  that Purchaser shall not then be in breach or default hereunder, and neither party
shall have any liability to the other except for Purchaser’s obligations set
forth in Section 3.1.2 and 3.6 hereof. For the purposes of this Agreement,
any title defect, limitation or encumbrance other than a Permitted Encumbrance
shall be deemed cured if Title Company or another title insurance company
reasonably acceptable to Purchaser and authorized to do business in Maryland,
agrees to issue an ALTA **** owner’s
title insurance policy to Purchaser in the amount of the Purchase Price, which
policy(ies) takes no exception for such defect, limitation or encumbrance and
is **** issued
for no additional premium or for an additional premium if Seller agrees to pay
such additional premium upon Closing.
  **11.** **Miscellaneous** .
  11.1. Entire
Agreement . This
Agreement, together with the Exhibits attached hereto, all of which are
incorporated by reference, is the entire agreement between the parties with
respect to the subject matter hereof, and no alteration, modification or
interpretation hereof shall be binding unless in writing and signed by both
parties. The parties are not bound by any agreements, understandings,
provisions, conditions, representations or warranties (whether written or oral
and whether made by Seller or any agent, employee or principal of seller or any
other party) other than as are expressly set forth and stipulated in this
Agreement.
  
 11.2. Severability . If any
provision of this Agreement or application to any party or circumstances shall
be determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances, other than those as to which
it is so determined invalid or unenforceable, shall not be affected thereby, and
each provision hereof shall be valid and shall be enforced to the fullest extent
permitted by law.
  11.3. Applicable
Law . This
Agreement shall be construed and enforced in accordance with the laws of the
State of Maryland.
  11.4. Assignability .
Purchaser shall not assign this Agreement without first obtaining Seller’s
written consent. Any assignment in contravention of this provision shall be
void. No assignment, whether or not permitted, shall release the Purchaser
herein named from any obligation or liability under this Agreement. The
Purchaser and any permitted assignee shall be jointly and severally liable for
all such obligations and liabilities. Any permitted assignee shall be deemed to
have made any and all representations and warranties made by Purchaser
hereunder, as if the assignee were the original signatory hereto.
  If
Purchaser requests Seller’s consent to an assignment of this Agreement,
Purchaser shall (i) notify Seller in writing of the proposed assignment; (ii)
provide Seller with the name and address of the proposed assignee; (iii) provide
Seller with financial information, including current financial statements, for
the proposed assignee; and (iv) provide Seller with a copy of the proposed
instrument of assignment.
  Any
transfer or assignment of any membership or other beneficial interest of
Purchaser in excess of forty-nine percent (49%) shall be deemed an assignment
within the meaning of this Section 11.4.
  Notwithstanding
the foregoing, Purchaser, upon prior written notice to Seller given not less
than five (5) business days prior to the Date of Closing (which time period is
agreed to be material and is required to permit Seller properly to prepare,
execute and deliver the items required to be delivered by it pursuant to Section
9.3) which notice specifies the exact legal name, address and any other
information necessary for the preparation of the closing documents to be
delivered under this Agreement, may assign its rights and delegate is duties
under this Agreement to an entity or person of which it, or an entity it
controls, is manager, general partner or otherwise in a position of exclusive
control, and in which it, or an entity or person it controls, has a material
economic interest, provided each of the representations and warranties of
Purchaser are true and correct for such assignee.
  This
provision shall survive Closing.
  11.5. Successors
Bound . This
Agreement shall be binding upon and inure to the benefit of Purchaser and Seller
and their respective successors and permitted assigns.
  11.6. Right
to Cure . Should
either party be in material breach of or default under or otherwise fail to
comply with any of the terms of this Agreement, except for Section 1.3.1. and
except as otherwise provided in this Agreement, the complying party shall have
the option to cancel this Agreement upon ten (10) days written notice to the
other party of the alleged breach and failure by such other party to cure such
breach within such ten (10) day period. The non-defaulting party shall promptly
notify the defaulting party in writing of any alleged default upon obtaining
knowledge thereof. The Date of Closing shall be extended to the extent necessary
to afford the defaulting party the full ten (10) day period within which to cure
such default; provided, however, that the failure or refusal by a party to
perform on the scheduled Date of Closing (except in respect of a Pending Default
by the other party) shall be deemed to be an immediate default without the
necessity of notice; and provided further, that if the Date of Closing shall
have been once extended as a result of default by a party, such party shall be
not be entitled to any further notice or cure rights with respect to that or any
other default. For purposes of this Section 11.6, a “Pending Default” shall
be a default for which (i) written notice was given by the non-defaulting party,
and (ii) the cure period extends beyond the scheduled Date of
Closing.
  
 11.7. Captions . The
captions in this Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this Agreement or
the scope or content of any of its provisions.
  11.8. Attorneys’
Fees . In the
event of any litigation arising out of this Agreement, the prevailing party
shall be entitled to recover from the other party reasonable attorneys’ fees and
costs actually incurred.
  11.9. No
Partnership . Nothing
contained in this Agreement shall be construed to create a partnership or joint
venture between the parties or their successors or assigns.
  11.10. Time
of Essence . Time is
of the essence for all purposes of this Agreement.
  11.11. Counterparts . This
Agreement may be executed and delivered in any number of counterparts, each of
which so executed and delivered shall be deemed to be an original and all of
which shall constitute one and the same instrument. Each counterpart may be
delivered by facsimile transmission. The signature page of any counterpart may
be detached therefrom without impairing the legal effect of the signature(s)
thereon provided such signature page is attached to any other counterpart
identical thereto.
  11.12. Recordation . Neither
this Agreement nor any memorandum or notice hereof shall be recorded. Purchaser
shall (i) not to file any notice of pendency or other instrument against the
Property or any portion thereof in connection herewith and (ii) indemnify Seller
against all liabilities (including reasonable attorneys’ fees, expenses and
disbursements) incurred by Seller by reason of the filing by Purchaser or its
agent of any such memorandum, notice or other instrument.
  11.13. Proper
Execution . The
submission by Seller to Purchaser of this Agreement in unsigned form shall be
deemed to be a submission solely for Purchaser’s consideration and not for
acceptance and execution. Such submission shall have no binding force and
effect, shall not constitute an option, and shall not confer any rights upon
Purchaser or impose any obligations upon Seller irrespective of any reliance
thereon, change of position or partial performance. The submission by Seller of
this Agreement for execution by Purchaser and the actual execution and delivery
thereof by Purchaser to Seller shall similarly have no binding force and effect
on Seller unless and until Seller shall have executed this Agreement and the
Deposit shall have been received by the Title Company and a counterpart thereof
shall have been delivered to Purchaser.
  
 11.14. Tax
Protest . If, as
a result of any tax protest or otherwise, any refund or reduction of any real
property or other tax or assessment relating to the Property during the period
for which, under the terms of this Agreement, Seller is responsible, Seller
shall be entitled to receive or retain such refund or the benefit of such
reduction, less equitable prorated costs of collection.
  11.15. Best
Knowledge; Received Written Notice .
Whenever a representation, warranty or other statement is made in this Agreement
or in any document or instrument to be delivered at Closing pursuant to this
Agreement, on the basis of the best of knowledge of Seller, or is qualified by
Seller having received written notice, such representation, warranty or other
statement is made with the exclusion of any facts disclosed to or otherwise
known by Purchaser, and is made solely on the basis of the current, conscious,
and actual, as distinguished from implied, imputed and constructive, knowledge
on the date that such representation or warranty is made, without inquiry or
investigation or duty thereof, of Steven Jacob or Steven Olstein, (the
officer(s) of UBS Realty Investors LLC, Seller’s investment advisor and the
LLC’s manager, having responsibility for the management of the Property),
without attribution to such specific officers of facts and matters otherwise
within the personal knowledge of any other officers or employees of Seller or
third parties, including but not limited to tenants and property managers of
the **** Property,
and excluding, whether or not actually **** known by
such specific officers, any matter known to Purchaser or its agents at the time
of Closing. So qualifying Seller’s knowledge shall in no event give rise to any
personal liability on the part of such named individuals or any other officer or
employee of Seller, the LLC or UBS Realty Investors LLC.
  11.16. Survival
and Limitation .
  (a) Any
action, suit or proceeding brought by Purchaser against Seller under this
Agreement or under any documents executed and delivered in connection herewith
shall be commenced and served, if at all, on or before the date which is six (6)
months after the date of Closing and, if not commenced and served on or before
such date, thereafter shall be void and of no force or effect.
  (b) The
aggregate liability of the Seller with **** respect
to all claims under this Agreement shall not exceed Two Hundred Fifty Thousand
Dollars ($250,000), and in no event shall any liability arise in connection
therewith unless and except to the extent that the direct damages to Purchaser
by reason of all such claims, collectively, exceed $10,000. In no event shall
Seller be liable to Purchaser for any consequential, exemplary, or punitive
damages in respect of any such claims. Without limiting the specificity of the
foregoing, Seller’s liability shall be strictly limited to its interest in the
LLC and the proceeds of the sale thereof.
  11.17. Committee
Approval .
[intentionally omitted]
  
 11.18. Time
to Execute and Deliver . This
Agreement shall be voidable at Seller’s election if one fully executed copy is
not received by Seller, along with confirmation that the Deposit has been
received by the Title Company, on or before 5:00 p.m. Eastern Time on October
27, 2004.
  11.19. Date
of Agreement . All
references to the date of this Agreement mean the date upon which both Seller
and Purchaser have executed this Agreement.
  11.20. Date
of Performance . If the
date of performance of any obligation or the expiration of any time period
provided herein should fall on a Saturday, Sunday or legal holiday, then said
obligation shall be due and owing, and said time period shall expire, on the
first day thereafter which is not a Saturday, Sunday or legal holiday. Any
reference in this Agreement to a “business day” shall mean any day of the week
other than a Saturday, Sunday or legal holiday. Except as may otherwise be set
forth herein, any performance provided for herein shall be timely made if
completed not later than 5:00 p.m. (Eastern Time.) on the day of performance.
  11.21. Waiver . Excuse
or waiver of the performance by the other party of any obligation under this
Agreement shall only be effective if evidenced by a written statement signed by
the party so excusing or waiving. No delay in exercising any right or remedy
shall constitute a waiver thereof, and no waiver by Seller or Purchaser of the
breach of any covenant of this Agreement shall be construed as a waiver of any
preceding or succeeding breach of the same or any other covenant or condition of
this Agreement. All of the provisions of this Section 11 shall survive the
Closing, or in the event that the Closing does not occur, any termination or
cancellation of this Agreement.
  11.22. Interpretation . The
caption of the Sections of this Agreement are for convenience only and shall not
govern or influence the interpretation hereof. This Agreement is the result of
negotiations between the parties who are experienced in sophisticated and
complex matters similar to the transaction contemplated by this Agreement and is
entered into by both parties in reliance upon the economic and legal bargains
contained herein and shall be interpreted and construed in a fair and impartial
manner without regard to such factors as the party which prepared the Agreement,
the relative bargaining powers of the parties or the domicile of any party.
Seller and Purchaser are each represented by legal counsel competent of advising
them of their obligations and liabilities hereunder.
  11.23. Public
Disclosure .
Following Closing, Purchaser and Seller shall have the right to announce the
acquisition and sale of the Membership Interest in the media (including
“tombstones”), provided that (i) Purchaser shall consult with Seller with
respect to any such notice or publication and implement any comments or
objections of Seller, and (ii) the Purchase Price is not disclosed and neither
party discloses the name of the other party, directly or indirectly. Seller may
also publicize the sale of the Property in the ordinary course of its business.
The provisions of this Section shall survive Closing.
  Purchaser
shall not publicly disclose the terms of this transaction without the prior
written consent of the Seller, except as may be required by law or as required
to enforce the terms and provisions hereof.
  
 11.24. Governmental
Approvals . Nothing
in this Agreement shall be construed as authorizing Purchaser to apply for a
zoning change, variance, subdivision map, lot line adjustment, or other
discretionary governmental act, approval or permit with respect to the Property
prior to Closing, and Purchaser shall not do so without the prior written
approval of Seller, which approval may be withheld in Seller’s sole and absolute
discretion. Purchaser also agrees not to submit any reports, studies or other
documents, including without limitation, plans and specifications, impact
statements for water, sewage, drainage or traffic, environmental review forms,
or energy conservation checklists to any governmental agency, or any amendment
or modification to any such instruments or documents prior to Closing, unless
first approved in writing by Seller, which approval Seller may withhold in its
sole, absolute discretion, provided, however, that Purchaser shall have the
right without the consent of Seller to request a zoning confirmation letter or
certificate from the City of Silver Spring, Maryland. Purchaser’s obligation to
purchase the Property shall not be subject to or conditioned upon Purchaser
obtaining any variance(s), zoning amendment, subdivision map, lot line
adjustment or other discretionary governmental act, approval or
permit.
  11.25. Purchaser
Not a Successor of Seller .
Purchase is not and shall not be deemed to be a successor to Seller. Purchaser
is acquiring only the Property through acquisition of the Membership Interest
and not an ongoing business enterprise.
  11.26. Termination. Upon
termination of this Agreement in accordance with its terms (and not as a result
of a default by either party), neither party shall have any further rights or
obligations, except those rights and obligations arising under any sections of
this Agreement which expressly survive termination of this Agreement. It is
hereby agreed that, in addition to express statements of survivability, all
references in this Agreement to Seller’s obligation to return the Deposit to
Purchaser shall survive the termination of this Agreement.
  **[no
further text; signatures follow]**
   
  **IN
WITNESS WHEREOF,** Purchaser and Seller have executed and delivered this Agreement as of the date
set forth above.
  **SELLER:**
    **10720-10750-10770 COLUMBIA PIKE**INVESTORS
      LLC****By:
    UBS Realty Investors LLC,its
      managerBy:
    /s/ Paul M.
  CanningPrinted Name: Paul M. CanningIts: Executive Director
 
 **PURCHASER:**
    **CAPLEASE,
      LP**By:
    /s/ Robert C.
  BlanzPrinted Name: Robert C. BlanzIts: Senior Voce
    President
  
  An
original, fully executed copy of this Agreement, together with the Deposit, has
been received by the Title Company this 26th day of October, 2004, and by
execution hereof the Title Company hereby covenants and agrees to be bound by
the terms of this Agreement and hereby covenants and agrees to enter into a
designation agreement, if required **.**
  **Chicago Title
      Insurance Company**By:
    /s/ Rebecca S.
    ConradPrinted Name: Rebecca S. ConradIts: Commercial Counsel
 ****