Document:

exv10w26

 

Exhibit 10.26

Portions of this exhibit have been omitted and filed separately pursuant to an application for confidential treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
 
Omissions are designated as [****].

Station License Agreement to Receive and Use Arbitron Radio Listening Estimates

Date of Proposal: December 2, 2004

THIS AGREEMENT is between Arbitron Inc., a Delaware corporation (“Arbitron”), and the
undersigned radio broadcaster (“Station”), a Nevada corporation.
Arbitron hereby grants to Station, for the radio stations listed below, a limited license to
receive and use Arbitron data and listening estimates (“Arbitron Data” or “Data”) for the survey(s)
and for the geographic area (“Market”) described in Section 1. This license is personal,
nontransferable and nonexclusive. Such Arbitron Data may be furnished to Station in printed or
other form (“Reports”), at Arbitron’s option, but title thereto will remain with Arbitron at all
times.

1. Services Provided; Term: This Agreement shall become effective when countersigned by
Arbitron’s Contract Manager and shall
be for a period of    *     years    *     months
beginning and ending on the dates described below (the “Term”). This Agreement will continue without regard to Station’s
ownership of the radio station(s) licensed hereunder absent a valid Assignment pursuant to Section
11 of this Agreement.

Broadcaster (“Station”):  Clear Channel Communications 

For use only by radio station(s):  *See Attached Schedule 1 

Arbitron Radio Geographic Area (“Market”):  *See Attached Schedule 1 

Term begins  *       ; ends  *       .

Number of surveys currently provided during first Term year:  *       .

Reports currently

licensed hereunder:  o Spring  o Fall  o Winter  o Summer

First Report:  *See Attached Schedule 1 

Number of printed copies currently provided:  20 

All representations in this Section regarding number of surveys, number of printed copies and
Report titles are subject to qualifications set forth in Section 6(a) herein.

2. Annual Rate:

A License Charge in the form of a Net Annual Rate for each year of the Term, which may be
subject to adjustments and discounts pursuant to Sections 3, 4, 6, 11 and 16 of this Agreement,
shall be paid by Station, with the first of  *  payments (the “Periodic Charge” or
“Charge”) due on  *      

The Gross Annual Rate for the first Term year is $  *See Schd. 1      .

For each succeeding Term year, the Gross Annual Rate shall be the Gross Annual Rate for the
previous Term year increased by a factor of
  *    percent. Any applicable discounts or other adjustments will be applied thereafter to
the Gross Annual Rate so derived.

3. Discounts:

(a) Continuous Service Discount: A discount of ten percent (10%) in calculating the Periodic
Charge shall be allowed for each month in excess of twelve (12) consecutive months that Station is
continuously licensed to use the Arbitron Data for this Market, provided that such discount shall
no longer apply if Station fails to sign and return this Agreement to Arbitron within forty-five
(45) days after the termination of a prior Arbitron radio listening estimates License Agreement.

(b) Group Discount: If Station owns two or more radio stations located in different markets and
such radio stations are under common ownership as defined by Arbitron, Station may be entitled to a
Group Discount based on the number of subscribing radio stations owned at the time this Agreement
is executed, which discount may vary and be adjusted during the Term of this Agreement in
accordance with Arbitron’s Group Discount Schedule should the number of subscribing commonly owned
radio stations change.

(c) Long-Term Discount: A discount of

	 	 	 
	[****] % in months 1-12,

	 	[****] % in months 13-24,
	[****] % in months 25-36,

	 	[****] % in months 37-48,
	* % in months 49-60,

	 	* % in months 61-72,
	* % in months 73-84
	 	 

shall be allowed in calculating the Net Annual Rate charged during the applicable months.

4. Periodic Charge;Taxes: The Periodic Charge, due and payable by Station on the
first day of each billing period, shall be: (a) the Gross Annual Rate plus any adjustments; (b)
less any applicable Continuous Service Discount; (c) less, from the amount thereby derived, any
applicable Group Discount; (d) less, from the amount thereby derived, any applicable Long-Term
Discount; (e) with such amount prorated equally between the number of payments for the Term year.

In addition to and together with the above payments, Station shall pay to Arbitron any sales,
excise, gross-receipts, service, use or other taxes, however designated, now or hereafter imposed
upon or required to be collected by Arbitron by any authority having jurisdiction over the Market
being surveyed or over any location to which Station directs Arbitron to deliver Data, or by any
other taxing jurisdiction.

5. Late Payment Charge and Right to Suspend Report Delivery or Terminate License:

(a) A late payment charge of one and one-half percent (1.5%) per month will be charged on all
Periodic Charges, as adjusted, which are not paid within 60 days after due hereunder, but in no
event will the applicable per-month late payment charge exceed one-twelfth of the maximum annual
percentage allowed to be charged by applicable state usury law. Any failure to impose a late
payment charge shall not prejudice Arbitron’s right to do so should the default continue or should
a subsequent payment not be made when due.

(b) In the event Station is in default in its payment obligations hereunder, and in addition to
Arbitron’s right to impose a late payment charge, Arbitron may, with respect to this Agreement
and/or any other agreement for Station’s use of services licensed by Arbitron in this Market or an
adjacent market, and without terminating, breaching or committing a default under this Agreement or
such other agreements: (i) accelerate or modify in any way the payment schedule of Periodic Charges
for the duration of this Agreement or such other agreement(s) to a number of installments to be
determined by Arbitron in its discretion; and/or (ii) suspend delivery to Station of any Data or
Report(s), in any form, which are due until such time as Station is current in its payments of all
sums due; and/or (iii) send Station written notice that Station’s license hereunder is suspended,
in which case Station further expressly agrees that it thereafter shall not use Data and/or Reports
previously received by Station until such time as Station becomes current in its payments of all
sums due for services licensed by Arbitron.

(c) In the event Station is in default in its payment obligations under this Agreement or under any
other agreement for Station’s use of services licensed by Arbitron in this Market or an adjacent
market, then Arbitron may exercise any or all of its rights set forth in Section 5(b) of this
Section 5 with respect to any such agreement entered into with Arbitron by Station or any of
Station’s affiliated, subsidiary or related corporations or entities regardless of whether such
other agreements are in default. For purposes of this Section 5(c), a corporation or entity shall
be deemed to be affiliated with or related to Station if (i) such corporation or entity owns or
controls more than a fifty percent (50%) interest in Station and/or it enters or has entered into
any management agreement, joint operating agreement or other business relationship with Station; or
(ii) Station owns or controls more than a fifty percent (50%) interest in such corporation or
entity and/or it enters or has entered into any management agreement, joint operating agreement or
other business relationship with such corporation or entity; or (iii) a third party owns or
controls more than a
fifty percent (50%) interest in, and/or enters or has entered into, any management agreement, joint

	 	 	 	 	 
	© 2003 Arbitron Inc.

	 	
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operating agreement or other business relationship with both Station and such corporation or
entity.

(d) Arbitron’s suspension hereunder of delivery of Data and/or Reports to Station, and of this
License, shall not relieve Station of any of its obligations hereunder. Station further agrees to
reimburse Arbitron for all collection costs and expenses (including reasonable attorneys’ fees)
incurred hereunder. This license may be terminated immediately by Arbitron should Station or its
station(s) default in payment of any sum due or should Station or its station(s) default in any
other condition or obligation of this Agreement and/or any other agreement for Station’s use of
services licensed by Arbitron.

6. Changes in Service; Modification of Rates:

(a) Arbitron reserves the right to change at any time the geographical territory comprising any
Market, its policies and procedures, survey dates, survey length, survey frequency, sampling
procedures, delivery schedules, methodology, method of Data or Report collection or delivery,
provision of printed copies of Reports, Report content, Report titles, Report format, or any other
aspect of the Data and Reports provided hereunder, and to cancel surveys and the preparation of
Arbitron Data and Reports or any other aspect of the Data services provided.

Arbitron reserves the right not to publish any Data or Reports whenever, in its judgment,
insufficient data are available to meet its minimum research standards or any event has jeopardized
the reliability of the data. In the event that Data and/or Reports are not published, Station shall
receive a credit reflecting the pro rata value of the Net Annual Rate for said Data and/or
Report(s). Without limiting the foregoing, Station expressly understands and agrees that Arbitron
may, at any time during the Term of this Agreement, reduce the number of surveys conducted and/or
Reports published for any Market and consequently reduce the number of Reports provided to Station
and that, in the event such reduction occurs, Station is not relieved of any of its obligations
under this Agreement.

(b) In the event that any cause(s) prevents Arbitron from conducting any survey in accordance with
its methodology, schedules or other publications, Arbitron reserves the right to publish
abbreviated Report(s). Station hereby consents to publication of such abbreviated Report(s) under
such circumstances. In the event that such an abbreviated Report covers a substantially decreased
geographic area, or deletes twenty-five percent (25%) or more of the survey days from the aggregate
number of days scheduled, Station shall be entitled to either a proportionate credit for the
abbreviated Report, or, upon return of the abbreviated Report within 10 days, a full credit for the
abbreviated Report, at Station’s option, provided however, that if Station elects to return an
abbreviated Report for full credit, Station shall no longer be licensed to use that Report during
the remainder of the Term of this Agreement. Further, Arbitron reserves the right in its sole
discretion to augment available data by means of expanded or extended samples and Station agrees it
shall not be entitled to any credit in such event.

(c) Arbitron may increase the Gross Annual Rate hereunder at any time. If Arbitron increases the
Rate for a reason other than as permitted elsewhere in this Agreement, it shall give prior written
notice to Station. Station may, within a 30-day period following such notice, cancel the unexpired
Term of the Agreement for only the Data and/or Reports and/or services and Market for which
Arbitron has increased its Rate pursuant to such notice, by written notice pursuant to Section
15(a), without cancellation charge or other cost, effective on the date the new Gross Annual Rate
would have become effective. In the absence of such timely cancellation, this Agreement shall
continue and the new Gross Annual Rate shall become payable as stated in Arbitron’s notice and
thereafter.

7. Permitted Uses and Confidentiality: Subject to the restrictions stated herein
and to the permitted uses set forth in Arbitron’s publication entitled Working with Arbitron’s
Copyrighted Estimates available to all Arbitron licensees and posted on Arbitron’s Web site at
www.arbitron.com, Station agrees to limit its uses of the Arbitron Data and Report(s) to its
programming and media selling. Station understands and agrees that this use is limited exclusively
to the radio station(s) specified in Section 1 of this Agreement and only for

the Term of this
Agreement. In this connection, Station agrees that the Arbitron Data and/or Report(s) will only be
disclosed:

(a) directly or through its Station representatives to advertisers, prospective advertisers and
their agencies for the purpose of obtaining and retaining advertising accounts; and

(b) through
advertising or other promotional literature as permitted hereunder.

All such disclosures shall identify Arbitron as the source of the disclosed Arbitron Data
and/or Report(s) and should identify the Market, survey period and type of audience estimate,
daypart and survey area and shall state that the Arbitron Data and/or Report(s) quoted therein are
copyrighted by Arbitron and are subject to all limitations and qualifications disclosed in the Data
and/or Report(s) (“Sourcing”).*  At all times during the Term of this Agreement and
thereafter, Station agrees to keep the Arbitron Data and/or Report(s) confidential and not to
disclose the same except as permitted by this Agreement. Station agrees to use its best efforts to
prevent the unauthorized disclosure of Arbitron Data and/or Report(s) by Station’s employees and/or
its radio station(s)’s employees and agents, by its radio station(s)’s representatives, by its
advertisers and their advertising agencies, by data processing firms, and by all other persons who
obtain the Arbitron Data and/or Reports from Station or its radio station(s)’s employees or agents.
For Station or its radio station(s) to divulge any Arbitron Data and/or Report(s) to a
nonsubscribing station or to lend and/or give an original copy or any reproduction of any part of
any Data and/or Report(s) or any Arbitron Data and/or Reports to any person or entity not
authorized by this Agreement constitutes a breach of this Agreement and an infringement of
Arbitron’s copyright.

In the event that a Report listed in Section 1 of this Agreement is delivered after the expiration
of the Term of this Agreement, Station’s license to use that Report shall continue under the terms
and conditions of this Agreement until the release of the next survey Report in the applicable
licensed Market.

Station may authorize a third party to process the Data licensed hereunder on Station’s behalf,
provided: (1) that said third party is a then current Arbitron licensee in good standing who is
authorized to process the Data and (2) that all restrictions concerning the use of the Data
provided under this Agreement shall apply with full force and effect to any data, estimates,
reports or other output, in any form, containing or derived from the Data, produced by said third
party for Station.

8. Confidentiality of Arbitron Respondents: Station agrees that it will not try
either before, during or after a survey, or in connection with any litigation, to determine or
discover the identity or location of any Arbitron survey participant. Station will under no
circumstances directly or indirectly attempt to contact any such persons. Station agrees to
promptly report to Arbitron any evidence or indication that has come to Station’s attention
regarding the identity or location of any such persons. Station agrees to abide by Minimum Standard
A9 (or any successor provision concerning confidentiality of survey respondents) of the Media
Rating Council and shall abide by any determination of the Media Rating Council concerning
respondent confidentiality. Station further agrees that Arbitron may enjoin any breach of the
above-stated obligations and shall have the right to damages or other remedies (including costs,
expenses and reasonable attorneys’ fees) available to it at law or hereunder.

9. Methodology: ARBITRON MAKES NO WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS, CONCERNING:

(A) DATA GATHERED OR OBTAINED BY ARBITRON FROM ANY SOURCE;

(B) THE PRESENT OR FUTURE METHODOLOGY EMPLOYED BY ARBITRON IN PRODUCING ARBITRON DATA AND/OR
REPORT(S); OR

(C) THE ARBITRON DATA AND/OR REPORT(S) LICENSED HEREUNDER.

	*	 	Station(s) should refer to current regulations
and guidelines of the federal government for further requirements concerning
the manner of quoting audience estimates.

	 	 	 	 	 
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ALL ARBITRON DATA AND/OR REPORT(S) REPRESENT ONLY THE OPINION OF ARBITRON. RELIANCE THEREON AND USE
THEREOF BY STATION IS AT STATION’S OWN RISK.

IN NO EVENT SHALL ARBITRON BE LIABLE FOR THE FAILURE OF ANY THIRD PARTY TO PROVIDE ANY DATA OR
SERVICES FOR USE IN CONNECTION WITH THE DATA AND/OR REPORTS LICENSED HEREUNDER.

10. Liabilities and Limitations of Remedies: THE SOLE AND EXCLUSIVE REMEDY, AT
LAW OR IN EQUITY, FOR ARBITRON’S AND/OR ANY THIRD PARTY DATA AND/OR SERVICE PROVIDER’S BREACH OF
ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS, AND THE SOLE AND EXCLUSIVE REMEDY FOR ARBITRON’S AND/OR ANY THIRD PARTY DATA AND/OR
SERVICE PROVIDER’S LIABILITY OF ANY KIND, INCLUDING WITHOUT LIMITATION LIABILITY FOR NEGLIGENCE OR
DELAY WITH RESPECT TO THE ARBITRON DATA AND/OR REPORTS AND ALL PERFORMANCE PURSUANT TO THIS
AGREEMENT, SHALL BE LIMITED TO A CREDIT TO LICENSEE OF AN AMOUNT EQUAL TO, AT THE MAXIMUM AMOUNT,
THE LICENSE CHARGE PAID BY LICENSEE WHICH IS ATTRIBUTABLE TO THE MATERIALLY AFFECTED DATA OR
REPORT. IN NO EVENT SHALL ARBITRON AND/OR ANY THIRD PARTY DATA AND/OR SERVICE PROVIDER BE LIABLE
FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, NOR SHALL THEY BE SUBJECT TO INJUNCTIVE
RELIEF WITH RESPECT TO THE PUBLICATION OF ANY DATA AND/OR REPORT. STATION UNDERSTANDS THAT THE DATA
AND/OR REPORTS EITHER WOULD NOT BE PREPARED OR WOULD BE AVAILABLE ONLY AT A SUBSTANTIALLY INCREASED
LICENSE CHARGE WERE IT NOT FOR THE LIMITATIONS OF LIABILITIES AND REMEDIES AS SET FORTH IN THIS
SECTION.

Station agrees that it will notify Arbitron in writing of any alleged defect in any Data and/or
Report within thirty (30) days after Station learns of said alleged defect. In the event that
Station does not timely notify Arbitron, then Station waives all rights with regard to said alleged
defect. Station further agrees that any action to be brought by it concerning any Data and/or
Report shall be brought not more than one (1) year after such Data or Report was originally
published by Arbitron.

In the event that either party commences litigation against the other party and fails to ultimately
prevail on the merits of such litigation, the commencing party shall reimburse and indemnify the
other party from any and all costs and expenses incurred with respect to such litigation, including
reasonable attorneys’ fees, provided, however, that this sentence shall not apply where Arbitron
commences litigation pursuant to Sections 5, 7 or 8 of this Agreement. This provision shall survive
the termination of this Agreement.

11. Assignments and Changes in Station Status: Station may not assign either its
rights or obligations under this Agreement without the prior written consent of Arbitron. Subject
to Arbitron’s consent, a successor-in-interest by merger, operation of law, assignment, purchase or
otherwise of the entire business of Station shall acquire all rights and be subject to all
obligations of Station hereunder. In the event that Arbitron consents to the assignment of this
Agreement, Arbitron reserves the right to redetermine the rate to be charged to the assignee in
accordance with the terms of this Agreement. Arbitron shall be entitled to assign any of its rights
or obligations under this Agreement, including the right to receive License Charge payable
hereunder.

Station acknowledges and agrees that the License Charge due and the adjustments and discounts
applied hereunder are based on Station’s group ownership status and/or any joint operating
agreement with one or more other radio stations and/or Station’s ownership of radio stations in
this Market or other Markets. In the event Station conveys any one of its radio stations, Station
remains fully obligated for the License Charge specified for any radio station covered by the terms
of this Agreement. Station may only be released from such obligations upon valid assignment of this
Agreement and subject to the terms thereof.

Station agrees that if at any time it changes or has changed its ownership, operating or sales
policy, frequency, broadcasting

arrangements, group or business relationships of the station(s)
licensed under this Agreement, or if it enters or has entered into any management or other business
relationship with another radio station in any Market and/or its adjacent Market(s), or if it
enters or has entered into any joint operating agreement with one or more other radio stations, or
if it is or was purchased or controlled by an entity owning or otherwise controlling other radio
stations in any Market and/or its adjacent Market(s), or if it purchases, or an entity which is in
any manner controlled by it purchases, at any time, another radio station in any Market or its
adjacent Market(s), Station and its radio station(s) will report the change and the effective date
thereof to Arbitron within thirty (30) days of such change. In the event of such occurrence,
Station agrees that such station(s) shall be licensed under this Agreement and that Arbitron may
redetermine the Gross Annual Rate for the Data, Reports, and/or services pursuant to the then
current Arbitron rate card in order to license such additional station(s), effective the first
month following the date of the occurrence. Notwithstanding Station’s failure to notify Arbitron,
pursuant to the provisions of this Section 11, Arbitron may redetermine Station’s Gross Annual Rate
for all Data, Reports, and/or services, based on the foregoing, effective the first month following
the date of the occurrence.

Station further agrees that if the parent company or other controlling entity of Station, or any
entity in any manner related to Station, purchases or otherwise acquires a controlling interest in
a radio station in Station’s Market that is not licensed by Arbitron for the same Data, Reports
and/or services, then Arbitron may redetermine Station’s Gross Annual Rate based on such occurrence
as described in this Section 11.

In the event Arbitron increases Station’s Gross Annual Rate as a result of an occurrence as
described in this Section, then Arbitron shall amend this Agreement to permit use of the Data,
Reports and/or services by the additional radio station(s) prompting the increase.

12. Other Arbitron Services and Reports : If, during the Term of this Agreement,
Station orders any Arbitron services or report(s) not licensed through any other Arbitron
agreement, Station hereby agrees that this Agreement shall be applicable with respect to all such
services and/or reports with the same force and effect as if printed out at length in a separate
agreement executed by Station.

13. Ratings Distortion Activity:

(a) Station agrees that it shall not engage in any activities which are determined by Arbitron
to be ratings distortion. Such prohibited activities may include, but are not limited to,
activities which could:

(i) cause any survey participant to record erroneous listening information in his or her Arbitron
diary; or

(ii) cause any survey participant to utilize an Arbitron diary for a contest or promotion
conducted by Station or its radio station(s).

(b) Station further agrees that Arbitron may delete all estimates of listening to Station and/or
its radio station(s) from any Data, Reports, computer tape and/or other Arbitron service or method
of delivery where, in its judgment it has deemed that Station or its radio station(s) has engaged
in such activities. Arbitron shall:

(i) first give Station and its radio station(s) notice setting forth what activities it
deems Station and its radio station(s) have engaged in which allegedly could cause or have caused
ratings distortion;

(ii) present evidence to substantiate the allegations set forth in (i) above; and

(iii) give Station and its radio station(s) reasonable opportunity (in light of Arbitron’s
publication schedule for any Report) to present its position both in writing and orally.

In the event that Station or its radio station(s) is notified by Arbitron that allegations of
ratings distortion have been made against Station or its radio station(s), then Station or its
radio station(s) shall submit a written response to Arbitron’s inquiry concerning the allegations
within seven (7) days from the receipt of Arbitron’s notice, which time may be shortened by
Arbitron for reasons relating to the Report publication schedule. Arbitron shall then advise
Station or its radio station(s) of its decision following its receipt of Station’s or its radio
station(s)’ written response or oral presentation. All such writings shall be addressed and

	 	 	 	 	 
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sent to
the respective party by facsimile, overnight courier service, or certified mail with return receipt
requested. In the event that estimates of listening to Station and/or its radio station(s) are
deleted from a Report(s) (and/or other Arbitron services) following the procedure set forth above,
Station and its radio station(s) agree that the only remedy for such deletion shall be a credit of
the License Charge paid by Station for such Report(s) or other affected services and that in no
event shall Arbitron be liable for special, incidental, consequential or punitive damages or be
subject to injunctive relief with respect to any such deletion of estimates of listening to Station
and/or its radio station(s). In the event that estimates of listening to Station and/or its radio
stations are deleted from a Report pursuant to this Section, Arbitron agrees that it will give
Station and its radio station(s) an opportunity to submit to Arbitron a written statement (not
exceeding 200 words) of Station’s and/or its radio station(s)’s views concerning its alleged
activities, with such written statement to be published in the Report subject to such reasonable
editing deemed necessary by Arbitron. In addition, Station and its radio station(s) agree to abide
by the Arbitron policies and procedures governing various special station activities, including,
but not limited to, rating bias.

14. Information to be Provided by Station and Its Radio Station(s): Station and
its radio station(s) agree to provide to Arbitron, within ten (10) days of receipt of Arbitron’s
request, such information which Arbitron deems necessary for the publication of a Report,
including, but not limited to, accurate descriptions of the following information for Station and
its radio station(s): (a) facilities; (b) broadcast station names; (c) broadcast hours; (d)
simulcast hours; (e) radio frequency; (f) operating power; (g) format; (h) height of antenna above
average terrain; and (i) programming information. Station and its radio station(s) further
understand and agree to notify Arbitron of any changes to the above-referenced information. Station
and its radio station(s) hereby hold Arbitron harmless and agree to indemnify Arbitron from and
against any and all loss, cost or expense (including reasonable attorneys’ fees) arising out of any
omission or error in information provided, or the failure to provide such information to Arbitron
by Station and its radio station(s) pursuant to this Section.

15. General:

(a) All notices to either party shall be in writing and shall be directed to the addresses
stated hereafter unless written notice of an address change has been provided.

(b) This Agreement shall be deemed to be an agreement made under, and to be construed and governed
by, the laws of the State of New York, exclusive of its choice of law rules. The parties expressly
agree that any and all disputes arising out of or concerning this Agreement or the Arbitron Data or
Reports licensed hereunder shall be litigated and adjudicated exclusively in State and/or Federal
Courts located in either the State of New York or the State of Maryland, at Arbitron’s option, and
each party consents to and submits to both such jurisdictions.

(c) This Agreement constitutes the entire agreement between the parties concerning the subject
matter hereof, notwithstanding any previous discussions and understandings; and shall not be deemed
to have been

modified in whole or in part except by written instruments signed hereafter by
officers of all of the parties or other persons to whom the parties have delegated such authority.

(d) Any litigated question regarding the legality, enforceability or validity of any section or
part hereof shall not affect any other section, and if any section or part hereof is ultimately
determined illegal, invalid, unconstitutional or unenforceable, that section or part hereof shall
be severed from this Agreement and the balance of the Agreement shall thereafter remain in full
force and effect for the remainder of the Term.

(e) In addition to the rights of termination stated elsewhere in this Agreement, this Agreement,
and the license provided hereunder, may be terminated by Arbitron for any or all of the Data,
Reports and/or services in any or all of the Markets in which they are licensed, for any reason, on
thirty (30) days’ written notice to Station. Station agrees that this Agreement shall continue for
the markets and services not named in such notice.

(f) The provisions governing payment of taxes, confidentiality of the Data and Reports, and
confidentiality of respondents shall survive the termination of this Agreement.

16. Calculation of License Charges:

	 	 	 
	Individual Station Gross Annual Rate:

	 	Percent:

	 	 	 	 	 	 	 	 	 
	Station *                
	 	$*	 	 	 	*	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Station                     
	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 
	First Term Year Gross Annual Rate (Combined):
	 	$	     	*
	 
	 	 	 
	LESS DISCOUNTS (Per Section 3):
	 	 	 	 
	X Continuous Service (10%):
	 	$	     	*
	 
	 	 	 
	X Group (at beginning of Term)
	 	 	 	 
	o 10%    o
7.5%    o 5%    o 2.5%
	 	$	     	*
	 
	 	 	 
	X Long-Term Discount:
	 	 	 	 
	[****] % in months 1-12
	 	 	 	 
	(see Section 3(c) above)
	 	$	     	*
	 
	 	 	 
	 
	 	$	     	*
	 
	 	 	 
	FIRST TERM YEAR NET ANNUAL RATE:
	 	$	     	*
	 
	 	 	 

Station further understands and agrees that the Net Annual Rate payable during any Term year
subsequent to the first Term year will vary in accordance with an applicable Group Discount, any
other applicable discount, or any adjustment as specified in Sections 2, 3, 4, 6 and 11 of this
Agreement.

AGREED TO:

	 
	Clear Channel Communications

	

	BROADCASTER (“STATION”)

	 

	*See Attached Schedule 1

	

	FOR USE ONLY BY STATION(S)

	 

	200 E Basse Road

	

	ADDRESS

	 	 	 	 	 	 	 
	San Antonio

	 	TX
	 	 	78209	 
	 

	 	 
	 	 	 	 
	CITY

	 	STATE
	 	ZIP

	 
	/S/ JOHN HOGAN

	

	BY (AUTHORIZED SIGNATURE)

	 

	John Hogan

	

	NAME (TYPE OR PRINT NAME OF PERSON SIGNING ABOVE)

	 	 	 
	CEO/Radio Division

	 	12/20/2004
	

	TITLE

	 	DATE

ACCEPTED BY:

	 
	/S/ LAURA PIOSO

	

	CONTRACT MANAGER

	 

	12/27/04

	

	DATE

	 

	Arbitron Inc.

	9705 Patuxent Woods Drive

	Columbia, Maryland 21046-1572

	 

	*See Attached Schedule 1

	 	 	 	 	 
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Exhibit 10.26

ADDENDUM ONE

     This is Addendum One to the “Station License Agreement to Receive and Use Arbitron Radio
Listening Estimates” dated December 27, 2004 between Clear Channel Communications, Inc.
(hereinafter referred to as “Clear Channel”) for use by its Radio Station(s) listed on Schedule “A”
(hereinafter referred to as “Station(s)”) and Arbitron Inc. (hereinafter referred to as
“Arbitron”), for a Term commencing January 1, 2005 ending December 31, 2008 **(hereinafter referred
to as the “Agreement”) and an Addendum to the “Arbitron Supplementary Services (“Specials”) License
Agreement,” the “Radio Station License Agreement to Receive and Use the Arbitron Retail Direct
Service,” the “License to Receive and Use Scarborough Reports,” the “Arbitron Network License
Agreement to Receive and Use the Arbitron Radar Service”, the “Arbitron Network License Agreement
to Receive and Use the Arbitron Nationwide Service” and the “License Agreement to Use the Tapscan
Services,” all of the same date above referenced.

The parties agree as follows:

1. This is an overview of the material financial terms of the above referenced agreements. In the
event of any inconsistency, the terms of the separate documents titled “Addendum” and Schedule ‘A’
to the Arbitron License Agreements shall control.

2. The services licensed under the above agreements are as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Subsequent Years’	 
	 	 	 	 	 	 	 	 	 	Initial Annual	 	 	 	Percentages of	 
	 	Services	 	 	Term Period **	 	 	 	Payment *	 	 	 	Annual Increase	 
	 	 	 	 	 	 	 	 	 	 	 
	 	Radio Market Report
Service for
Stations, including
Radio Market
Report, Maximi$er,
Arbitrends, PD
Advantage, National
Regional Database,
Sample Surcharge,
RetailDirect##
 and Tapscan
Software***
	 	 	 	1/1/05 – 12/31/08	 	 	 	$	54,000,000	 	 	 	[****]% over preceding year’s fee
	 	 	 	 	 	 	 	 	 	 	 
	 	Replacement
contracts for
existing services
to stations,
networks and radio
representative
firms, including
Radio Market
Report, Maximi$er,
Arbitrends, PD
Advantage,
Scarborough, Radar,
Nationwide and
National Regional
Database
	 	 	 	1/1/05 – 12/31/08	 	 	 	$	4,500,000	 	 	 	[****]% over preceding year’s fee
	 	 	 	 	 	 	 	 	 	 	 
	 	Scarborough
	 	 	 	1/1/05 – 12/31/08	 	 	 	$	3,400,000	 	 	 	[****]% over preceding year’s fee
	 	 	 	 	 	 	 	 	 	 	 

	*	 	Indicates Initial Annual Payment commencing with start of term period as indicated.
Additional terms relating to the services licensed under the above agreements, including data
access fees, are set forth in a separate document titled “Addendum” to the above agreements.
	 
	**	 	Certain agreements may extend to 3/31/09 or 6/30/09 in certain circumstances, including for
two book markets.
	 
	***	 	Subject to early termination in 2006 under certain circumstances as set forth in the
separate document titled “Addendum” to the above agreements.
	 
	##	 	RetailDirect percentage of annual increase is [****]% over preceding year’s fees;
Sample Surcharge percentage of annual increase is generally flat.exv10w4

 

Exhibit 10.4

REAL PROPERTY PURCHASE AND SALE AGREEMENT

(CANADA)

Between

3058348 NOVA SCOTIA COMPANY,

a Nova Scotia unlimited liability company

and

3058349 NOVA SCOTIA COMPANY,

a Nova Scotia unlimited liability company, as Sellers

and

GLADSTONE COMMERCIAL LIMITED PARTNERSHIP,

a Delaware limited partnership, as Purchaser

Dated August 11, 2004

 

 

TABLE OF CONTENTS

Page

	 	 	 	 	 
	1.PURCHASE AND SALE 
	 	 	2	 
	1.1 Certain Definitions 
	 	 	2	 
	1.2  Agreement to Purchase and Sell 
	 	 	2	 
	1.3  Encumbrances 
	 	 	2	 
	1.4 Purchase Price 
	 	 	2	 
	2. DUE DILIGENCE 
	 	 	3	 
	2.1 Purchaser’s Tests and Inspections 
	 	 	3	 
	2.2 Surveys and Title Commitments 
	 	 	4	 
	2.3 Delivery of Documents and Information 
	 	 	4	 
	2.4 Additional Information 
	 	 	4	 
	3. STATUS OF TITLE TO THE PROPERTIES 
	 	 	5	 
	3.1 State of Title
	 	 	5	 
	3.2  Preliminary Evidence of Title 
	 	 	5	 
	3.3 Title Defects 
	 	 	5	 
	4.CLOSING PRORATIONS AND ADJUSTMENTS
	 	 	6	 
	4.1 Prorations and Adjustments 
	 	 	6	 
	5.CLOSING 
	 	 	6	 
	5.1  Closing Date 
	 	 	6	 
	5.2 Closing Documents 
	 	 	6	 
	5.3  Conditions to the Purchaser’s Obligation to Close
	 	 	8	 
	5.4 Conditions to the Sellers’ Obligation to Close 
	 	 	9	 
	5.5 Transaction Costs
	 	 	9	 
	6.REPRESENTATIONS AND WARRANTIES OF THE SELLERS
	 	 	10	 
	6.1  Organization 
	 	 	10	 
	6.2  Authority 
	 	 	10	 
	6.3  Interest in Properties 
	 	 	10	 
	6.4  No Defaults
	 	 	11	 
	6.5  No Litigation; No Expropriation 
	 	 	11	 
	6.6  No Violation 
	 	 	11	 
	6.7 Required Obligations 
	 	 	12	 
	6.8 Condition of Properties
	 	 	12	 
	6.9  Utilities 
	 	 	12	 
	6.10 Zoning 
	 	 	12	 
	6.11  Improvements
	 	 	12	 
	6.12  Environmental Matters
	 	 	12	 
	6.13 Insurance 
	 	 	13	 
	6.14  Compliance
	 	 	13	 
	6.15 Leases
	 	 	13	 
	6.16  Service Contracts 
	 	 	15	 
	6.17  Permits 
	 	 	15	 

i

 

	 	 	 	 	 
	6.18  Taxes
	 	 	15	 
	6.19  Books and Records 
	 	 	15	 
	6.20  No Brokers 
	 	 	15	 
	6.21 Survival of Representations and Warranties; Indemnification
	 	 	16	 
	6.22  Bulk Sales 
	 	 	16	 
	7.REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 
	 	 	16	 
	7.1  Organization, Good Standing and Qualification 
	 	 	16	 
	7.2  Authorization
	 	 	16	 
	7.3  No Violation 
	 	 	17	 
	7.4  No Litigation 
	 	 	17	 
	7.5  No Brokers 
	 	 	17	 
	7.6 Survival of Representations and Warranties; Indemnification
	 	 	17	 
	8.COVENANTS 
	 	 	18	 
	8.1  Covenants of the Purchaser 
	 	 	18	 
	8.2  Covenants of the Sellers 
	 	 	18	 
	9.TERMINATION 
	 	 	19	 
	9.1  Termination by the Purchaser
	 	 	19	 
	9.2  Termination by the Sellers 
	 	 	20	 
	10.  MISCELLANEOUS 
	 	 	21	 
	10.1  Assignment 
	 	 	21	 
	10.2  Entire Agreement 
	 	 	21	 
	10.3  Notices 
	 	 	21	 
	10.4  Governing Law 
	 	 	22	 
	10.5  Counterparts 
	 	 	22	 
	10.6  Interpretation 
	 	 	22	 
	10.7  Risk of Loss 
	 	 	23	 

ii

 

 

REAL PROPERTY PURCHASE AND SALE AGREEMENT

(CANADA)

     THIS REAL PROPERTY PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as
of the 11th day of August, 2004, by and between 3058348 NOVA SCOTIA COMPANY, a Nova
Scotia unlimited liability company (the “Dorval Seller”), and 3058349 NOVA SCOTIA COMPANY, a Nova
Scotia unlimited liability company (the “Granby Seller,” and, together with Dorval, the “Sellers”),
and GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited partnership (the “Purchaser”),
recites and provides as follows:

RECITALS:

     A. The Sellers are the registered and beneficial owners of all of the interest (or its Quebec
civil law equivalent) in the real property and improvements as indicated on Schedule 1.2
attached (including the residual interests in any tenant improvements thereon) together with all
rights and appurtenances pertaining to such land, including, without limitation, (i) all minerals,
oil, gas, and other hydrocarbon substances thereon; (ii) all right, title and interest of Sellers
in and to adjacent strips, streets, roads, avenues, alleys and rights of way, public or private,
open or proposed; (iii) all easements, covenants, privileges, and hereditaments, whether or not of
record; (iv) all access, air, water, riparian, development, utility, and solar rights; (v) all
signs, appliances, security systems, fixtures, mechanical systems, landscaping and other property
owned by Sellers located at either Property (as hereafter defined), but excluding items of property
owned by Tenant (as hereinafter defined) attached to the Property that, pursuant to the provisions
of the corresponding Lease (as hereafter defined), may be removed by Tenant; (vi) all site plans,
surveys, plans and specifications, and floor plans relating to the Property; (vii) all warranties,
guarantees and bonds relating to the Property; and (viii) all permits, licenses, certificates of
occupancy, and other governmental approvals which relate to the Property, each of which is referred
to individually as a “Property” and which are collectively referred to as the “Properties.” The
Properties are identified on Schedule 1.2 by street address.

     B. Each of the Sellers desires to sell all of its interest in the corresponding Property to
the Purchaser, and the Purchaser desires to purchase all of the Sellers’ interests in the
Properties.

AGREEMENT:

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

1

 

1. PURCHASE AND SALE

1.1 Certain Definitions. For purposes of this Agreement:

1.1.1 “GE Capital” means GE Capital Canada Equipment Financing, Inc.

1.1.2 “Mortgage Loan” shall mean the mortgage loans made by GE Capital the repayment of
which is secured by mortgages or deeds of trust encumbering the Properties.

1.1.3 “Purchase Price” means the amount, in U.S. dollars, that is the purchase price of each
Property, as identified on Schedule 1.2 for such Property.

1.1.4 “Person” shall mean and include natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts, business
trusts, Indian tribes or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.

1.1.5 For purposes of this Agreement, the “knowledge” of a Person shall mean the actual
knowledge of such Person’s officers, senior executives, managing members, managing partners,
general partners, majority shareholders, key employees or their equivalents, and shall mean
that the applicable party has conducted a reasonable review of its files and such review did
not disclose any information contrary to the accuracy or veracity of any such representation
or warranty, but without attribution or other duty of inquiry.

1.1.6 For purposes of this Agreement, “business day” shall mean any day excluding Saturday,
Sunday and any day which in the Commonwealth of Virginia is a legal holiday or a day on
which banking institutions are authorized by law or by other governmental actions to close.

     1.2 Agreement to Purchase and Sell. Subject to the terms and conditions of this
Agreement, at the “Closing” (as hereafter defined), each Seller shall sell, transfer and convey to
the Purchaser, and the Purchaser shall purchase and accept from the Sellers, all of each Seller’s
rights, title and interests in and to its Property as identified on Schedule 1.2.

     1.3 Encumbrances. The Purchaser shall acquire each Property with legal warranty free
and clear of all liabilities, obligations and commitments of the Sellers and free and clear of all
liens, hypothecs, prior claims, servitudes and any other encumbrances other than the “Permitted
Exceptions” (as hereafter defined).

     1.4 Purchase Price. On the terms and subject to the conditions of this Agreement, at
the Closing, the Sellers shall sell, transfer, convey, assign and deliver to the Purchaser, and the
Purchaser shall purchase and accept from the Sellers, all of the rights, title and interests of the

2

 

Sellers in and to the Properties and the “Leases” (as hereafter defined) for an aggregate purchase
price (the “Aggregate Purchase Price”) of $4,467,340 (US). On the date of full execution of this
Agreement (as reflected by the dates opposite the signatures on the execution page hereof) (the
“Execution Date”), the Purchaser shall deposit with First American Title Insurance Company (the
“Title Insurer”) the sum of $100,000, to be held in an interest-bearing account to be approved by
the Purchaser (such deposit, together with any interest earned thereon, is hereafter referred to as
the “Deposit”), to be held in accordance with an Escrow Agreement substantially in the form
attached hereto as Schedule 1.4, which shall be applied to the Aggregate Purchase Price,
retained by the Sellers, or refunded to the Purchaser, all as more particularly set forth herein.
The Aggregate Purchase Price shall be allocated between the Properties as set forth in Schedule
1.2, provided that the parties may change such allocations hereafter by mutual agreement. The
Aggregate Purchase Price shall be payable as follows:

1.4.1 At the Closing, the Deposit shall be applied against the Aggregate Purchase Price; and

1.4.2 At the Closing, the Purchaser shall pay the remainder of the Aggregate Purchase Price
to the Sellers by wire transfer of immediately available funds.

The Aggregate Purchase Price will be adjusted pursuant to Sections 4.1, 6.1 and 6.2, as applicable.

2. DUE DILIGENCE

     2.1 Purchaser’s Tests and Inspections. The Purchaser, its agents, contractors,
employees and other representatives, shall have the right at any time during normal business hours
throughout the period (the “Due Diligence Period”) extending from the Execution Date to 11:59 p.m.
on the 30th day thereafter, and upon 24 hours prior notice to the Sellers (which notice
may be oral or written,) to enter upon the Properties, subject to the rights of the respective
tenants thereof, and to conduct environmental assessments, appraisals, surveys and other
inspections and tests of the Properties. The Purchaser shall have the right, by written notice to
the Sellers, to extend the Due Diligence Period for up to ten (10) days to the extent necessary for
the Purchaser to obtain final reports from the third party inspectors and service providers
performing the services referenced in the preceding sentence. The Purchaser, in its sole and
absolute discretion, shall have the right to terminate this Agreement by giving written notice of
termination to the Sellers at any time prior to the expiration of the Due Diligence Period. Upon
any such termination, the Deposit shall be returned to the Purchaser, and the parties shall have no
further rights or obligations hereunder, except for any obligations imposed under the last 3
sentences of this Section 2.1, the Sellers’ indemnification obligations under Section 6.21 hereof
with respect to a breach of the Sellers’ representations and warranties under Section 6.20 hereof,
the Purchaser’s indemnification obligations under Section 7.6 hereof with respect to a breach of the Purchaser’s representations
and warranties under Section 7.5 hereof, the Purchaser’s obligations under Sections 8.1.1 and 8.1.3
hereof, and the Sellers’ obligations under Sections 8.2.1 and 8.2.2 hereof (together, the
"Post-Termination Obligations”). The Purchaser shall indemnify against and hold the Sellers
harmless from any claims, demands, liabilities,

3

 

losses damages, costs, and expenses, including, without limitation, attorneys’ fees, arising from entry upon the Properties by the Purchaser, or
any of the Purchaser’s agents, contractors, employees, or other representatives, or the conduct of
such tests, surveys, studies or other due diligence. If the Closing does not occur, the Purchaser,
at its own expense, shall repair any damage to the Properties caused in the performance of the
Purchaser’s tests and studies. If the Purchaser elects to rescind and terminate this Agreement as
aforesaid, the Purchaser shall deliver to the Sellers copies of the written results of such tests,
surveys, studies and other due diligence (other than internal marketing or economic studies) within
thirty (30) days after the expiration of the Due Diligence Period.

     2.2 Surveys and Title Commitments. Within five (5) days after the commencement of the
Due Diligence Period, the Purchaser will order the following relative to the Properties: (a)
ALTA/ACSM land title surveys (or an acceptable Canadian equivalent thereof); and (b) ALTA Form B
1970 title insurance commitments, including all required endorsements (together, the “Title
Commitments”), issued by the Title Insurer’s National Accounts Office in Washington, D.C. The
Purchaser shall be responsible for the costs of such surveys and the Title Commitments as provided
in Section 5.5 hereof.

     2.3 Delivery of Documents and Information. Prior to the date of this Agreement, the
Sellers delivered to the Purchaser certain documents and items of information with respect to the
Properties, including, without limitation, the following:

2.3.1 Copies of the leases as to each of the Properties (the “Leases”), and the related
lease guaranties (the “Lease Guaranties”), as follows:

     2.3.1.1 That certain Lease Agreement, dated as of July 28, 2001 (the “Dorval Lease”),
between Data Business Form Limited, as Tenant (the “Tenant”), and the Dorval Seller, as
Landlord;

     2.3.1.2 That certain Unconditional Guaranty Agreement, dated as of July 27, 2001, from
Workflow Management, Inc., a Delaware corporation (the “Guarantor”), to the Dorval Seller;

     2.3.1.3 That certain Lease Agreement, dated as of July 28, 2001 (the “Granby Lease”),
between the Tenant, as Tenant, and the Granby Seller, as Landlord; and

     2.3.1.4 That certain Unconditional Guaranty Agreement, dated as of July 27, 2001, from
the Guarantor to the Granby Seller; and

2.3.2 Copies of the most recent survey and owner’s title insurance policy for each of the
Properties.

     2.4 Additional Information. The Sellers shall furnish to the Purchaser all
information concerning the title to, the condition or operation of, and the income from the
Properties that is in the possession of the Sellers and that the Purchaser may reasonably request.

4

 

3. STATUS OF TITLE TO THE PROPERTIES

     3.1 State of Title. At Closing, the Sellers shall own and be the registered owner of
good and marketable fee simple title (or its Quebec civil law equivalent) to the Properties,
subject only to those servitudes, covenants, conditions, restrictions and other matters affecting
title as set forth in Schedule 3.1 attached (the “Scheduled Exceptions.”) The Leases and
the Scheduled Exceptions are referred to collectively herein as the “Permitted Exceptions.”

     3.2 Preliminary Evidence of Title. Within 3 weeks after the Execution Date, the
Purchaser shall obtain, in a form acceptable to the Purchaser, the following documents to evidence
the condition of the title to each Property:

3.2.1 The Title Commitments which shall commit the Title Insurer to insure, at standard
rates, good and marketable title to each Property, subject only to the Permitted Exceptions,
in the amount of the Purchase Price of each such Property. The Title Commitments shall
reflect that fee simple title (or its Quebec civil law equivalent) is held by the respective
Seller. The owner’s title insurance policies, and endorsements thereto, to be issued to the
Purchaser at Closing pursuant to Section 5.3.5 hereof are hereafter referred to as the
“Title Insurance Policies.”

3.2.2 Sub-searches followed by title opinions (the “Title Opinions”) for each Property
evidencing that each Property is owned by the corresponding Seller by good and marketable
title free and clear of all hypothecs, prior claims, servitudes, leases, encumbrances and
other charges other than the Permitted Exceptions.

3.2.3 Written results of searches reflecting any liens, hypothecs, bankruptcies, and
litigation (the “RDPRM Searches”), conducted by the Purchaser’s attorneys in connection with
the Sellers or the Properties. The RDPRM Searches shall be conducted as to each Seller and
shall search the appropriate registries.

     3.3 Title Defects. The Purchaser shall have the right to review the Title
Commitments, Title Opinions, RDPRM Searches and any surveys or certificates of location of the
Properties obtained by Purchaser or any existing survey or certificate of location (or any revision or update of any of them, all of which are
collectively referred to as the “Surveys”). The Purchaser shall obtain any new Surveys within 3
weeks after the Execution Date. The Purchaser shall notify the Sellers in writing within 10
business days after the Purchaser receives the last of the Title Commitments, Surveys, Title
Opinions and RDPRM Searches, as the case may be, of any defects in or exceptions to title to either
of the Properties (other than the Permitted Exceptions) that the Purchaser finds to be
unacceptable. Within 5 business days after receiving such notice from the Purchaser, the Sellers
shall notify the Purchaser of the Sellers’ election (a) to cure such exceptions, in which event the
Sellers shall cure such exceptions promptly and at their expense, including, if applicable,
obtaining a judgment confirming title, and the Closing Date shall be extended as necessary to
permit the completion of such cure, or (b) not to cure such exceptions, in which event the
Purchaser shall either waive such condition

5

 

and proceed to purchase the Properties as provided herein or terminate this Agreement. If the Purchaser so elects to terminate, the Deposit shall be
returned to the Purchaser, and the parties shall have no further rights or obligations hereunder,
except for the Post-Termination Obligations. Unless the Sellers expressly agree to do so, the
Sellers shall have no obligation to cure or remove any title defects or exceptions; provided that
the Sellers shall pay off the Mortgage Loan, and any other monetary liens and hypothecs (other than
the Permitted Exceptions), at the Closing so as to effect the release of the Properties from any
mortgages, deeds of trust, hypothecs and other documents and instruments securing repayment of the
Mortgage Loan.

4. CLOSING PRORATIONS AND ADJUSTMENTS

     4.1 Prorations and Adjustments. Rent payable under the Leases shall be prorated
between the Sellers and the Purchaser as of the Closing Date, with the Sellers being entitled to
all of such rent accruing up to and through the Closing Date, and the Purchaser being entitled to
all of such rent accruing after the Closing Date. The Tenant for each Property is solely
responsible for, and the Sellers and the Purchaser shall not prorate or adjust between themselves,
any other disbursements, payments, or obligations relating to the Properties, whether accruing
before, during or after the Closing Date, including, without limitation,:

     4.1.1 Real estate and personal property taxes and assessments; and

     4.1.2 Water, electric, telephone and all other utility and fuel charges.

5. CLOSING

     5.1 Closing Date. The closing of the purchase and sale transaction contemplated by
this Agreement (the “Closing”) shall occur at the offices of the Title Insurer at 9:00 a.m. on the
20th day after the expiration of the Due Diligence Period (the “Closing Date,” provided
that, if such 20th day is not a business day, the Closing Date shall be the
next business day thereafter), provided that all conditions to Closing have been satisfied or
waived, or at such other time and place as the Sellers and the Purchaser shall agree in writing.

5.2 Closing Documents

5.2.1 Sellers. Not later than the Closing Date, the Sellers shall deliver or
execute and deliver, as the case may be, to the Purchaser the following:

     5.2.1.1 Executed originals of the deeds of transfer for the Properties;

     5.2.1.2 Original, executed counterparts of the Leases and the Lease Guaranties;

     5.2.1.3 An executed assignment and assumption agreement (the “Assignment”) with
respect to the Leases in the form attached as Schedule 5.2.1.3;

6

 

     5.2.1.4 An executed quitclaim bill of sale as to all of Sellers’ rights, title and
interests, if any, in and to any tangible personal property and fixtures at or on the
Properties in the form attached as Schedule 5.2.1.4;

     5.2.1.5 Any affidavits, certificates and other documents that are reasonably required
for the Title Insurer to issue the Title Insurance Policies in the form required by this
Agreement;

     5.2.1.6 For each Seller, a resolution authorizing the transactions contemplated by
this Agreement, a certified copy of each of the Certificates of Incorporation and
Registration, and the Memorandum and Articles of Association, and a certificate of
incumbency certifying the titles and signatures of the persons authorized to consummate the
transactions contemplated hereunder on behalf of such Seller;

     5.2.1.7 The Seller’s Certificate Re: Representations and Warranties (the “Seller’s
Certificate”) in the form attached as Schedule 5.2.1.7;

     5.2.1.8 An opinion of Sellers’ counsel substantially in the form attached as
Schedule 5.2.1.8; and

     5.2.1.9 All other documents reasonably required by the Purchaser in connection with
the transactions contemplated by this Agreement, provided that such documents do not require
the Sellers to make representations, warranties and covenants, or to incur obligations, in
addition to those required by or provided under this Agreement.

5.2.2 Purchaser. At the Closing, the Purchaser shall deliver, pay or execute and
deliver, as the case may be, the following:

     5.2.2.1 The Aggregate Purchase Price as provided in Section 1.4 hereof;

     5.2.2.2 An executed original of the deeds of transfer of the Properties;

     5.2.2.3 For the Purchaser, a resolution authorizing the transactions contemplated by
this Agreement, a certified copy of each of the partnership certificate, the partnership
agreement and any other structural documents of the Purchaser, a certificate of incumbency
certifying the titles and signatures of the persons authorized to consummate the
transactions contemplated hereunder on behalf of the Purchaser, and a certificate of good
standing, or its equivalent, from the appropriate governmental authority in the state of the
Purchaser’s organization;

     5.2.2.4 The Assignment;

     5.2.2.5 An opinion of Purchaser’s counsel substantially in the form attached as
Schedule 5.2.2.5;

7

 

     5.2.2.6 All other documents reasonably required by the Sellers in connection with the
transactions contemplated by this Agreement, provided that such documents do not require the
Purchaser to make representations, warranties and covenants, or to incur obligations, in
addition to those required by or provided under this Agreement.

     5.3 Conditions to the Purchaser’s Obligation to Close. The obligations of the
Purchaser under this Agreement, including the obligation to pay the Aggregate Purchase Price at
Closing as provided in Section 1.4 hereof, are subject to the satisfaction of the following
conditions (unless explicitly waived in writing):

5.3.1 Each and every representation and warranty of the Sellers contained in this Agreement
shall be true, correct and complete in all material respects as of the date hereof and at
all times through the Closing Date as certified in Seller’s Certificate;

5.3.2 The Sellers shall have fully performed and satisfied each and every material
obligation, term and condition to be performed and satisfied by them under this Agreement;

5.3.3 All consents, authorizations, certificates, and approvals required to be obtained by
the Sellers in connection with this Agreement shall have been obtained;

5.3.4 The condition of the Property shall not have changed materially since the Execution
Date;

5.3.5 The Purchaser shall have received the Title Insurance Policy (or marked-up commitment
therefor) for each Property insuring fee simple title to such Property in the
amount of the Purchase Price for such Property, subject only to the Permitted Exceptions, at
the Purchaser’s expense.

5.3.6 The Sellers shall have delivered to the Purchaser all closing documents required by
Section 5.2.1 hereof.

5.3.7 The “U.S. Sellers” (as hereafter defined) shall close under that certain Real Property
Purchase and Sale Agreement, of even date herewith (the “U.S. Purchase Agreement”), between
the Purchaser and PBC-Pocono, L.L.C. and PBC-Norfolk, L.L.C. (the “U.S. Sellers”)
contemporaneously with the Closing.

5.3.8 No material adverse change shall have occurred in the financial condition of the
Tenants and the Guarantor since the Execution Date.

5.3.9 The Sellers shall have delivered to the Purchaser a certificate from each Tenant,
dated no more than 30 days prior to the Closing Date, certifying: (1) that such Tenant has
accepted the premises leased under its Lease; (2) that such Lease is in full force and
effect and has not been modified (or, if modified, setting forth all modifications thereof),
or, if such Lease is not in full force and effect, specifying the reasons therefor; (3) the

8

 

commencement date and the scheduled expiration date of such Lease, whether such Tenant has
any options to extend the term thereof and, if so, describing such extension options; (4)
the date to which the base rent and additional rent under such Lease have been paid and the
amount thereof then payable; (5) the amount of the prepaid rent and/or security deposit, if
any, being held by the corresponding Seller, as landlord; (6) whether, to such Tenant’s
knowledge, there are then any existing defaults by the corresponding Seller in the
performance of its obligations under such Lease, and, if there are any such defaults,
specifying the nature and extent thereof; and (7) that no notice has been received by such
Tenant of any default under such Lease that has not been cured, except as to defaults
specified in such certificate. Each such certificate shall not contain any information that
is inconsistent with the terms of the corresponding Lease; provided that such certificate
may reflect any uncured claim of breach or default, or any information that is inconsistent
with the terms of the corresponding Lease, only if such uncured claim or inconsistent
information is acceptable to the Purchaser.

5.3.10 The Purchaser shall have received as to each Property (i) a zoning letter for the
jurisdiction in which the Property is located in form acceptable to the Purchaser or (ii) a
zoning report/evaluation from a zoning consultant selected by the Purchaser or (iii) an
opinion of counsel acceptable to the Purchaser, in each case indicating that the use and
operation of the Property are in compliance with the applicable zoning ordinance. Purchaser
shall request such zoning letter, zoning report/evaluation or opinion of counsel, as
appropriate, promptly after the Execution Date, shall thereafter diligently pursue the
issuance thereof and shall be solely responsible for any fees or costs in connection
therewith.

     5.4 Conditions to the Sellers’ Obligation to Close. The obligations of the Sellers
under this Agreement are subject to the satisfaction of the following conditions (unless explicitly
waived in writing):

5.4.1 Each of the representations and warranties of the Purchaser contained in this
Agreement shall be true, correct and complete as of the date hereof and at all times through
the Closing Date.

5.4.2 The Purchaser shall have fully performed and satisfied each and every material
obligation, term and condition to be performed and satisfied by it under this Agreement.

5.4.3 All consents, authorizations and approvals required to have been obtained by the
Purchaser in connection with this Agreement shall have been obtained.

5.4.4 The Purchaser shall close under the U.S. Purchase Agreement contemporaneously with the
Closing.

     5.5 Transaction Costs. Regardless of whether Closing occurs, but subject to the
provisions of Article 9 hereof, each of the parties shall be responsible for its own costs in
connection with this Agreement and the transaction contemplated hereby, including, without

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limitation, fees of attorneys, engineers, accountants, surveyors, title insurers and other
professionals; provided that the Purchaser shall be responsible for all of its due diligence costs,
including title examination costs, for all title insurance premiums and charges, survey costs,
mutation duties, the cost for the preparation and delivery of title opinions, searches at the
applicable land registries, and notary fees. The Sellers shall be responsible for any fees or
costs that are charged by GE Capital in connection with the payoff of the Mortgage Loan.
Documentary stamps, clerk’s fees, transfer and recordation taxes, costs of registration and other
recording, filing and registration costs with respect to the deeds of transfer, including, without
limitation, land transfer duties, shall be paid by the Purchaser.

6. REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers, jointly and severally, and solidarily, represent and warrant to the Purchaser that,
except as described on the Schedules attached and incorporated by reference herein, the
following are true, complete and correct as of the date of this Agreement.

     6.1 Organization. Each of the Sellers is an unlimited liability company duly
organized and validly existing under the laws of the Province of Nova Scotia, and has all requisite
power and authority to own or lease and operate its properties (including its respective Property)
and assets and to conduct its business in the manner in which they are being owned or leased and
operated and conducted, as the case may be. Each Seller is duly qualified in all jurisdictions
where its ownership, lease or operation of assets and properties (including the Properties) or the
conduct of its business requires such qualification.

     6.2 Authority. The execution and delivery of this Agreement and all agreements,
documents and instruments contemplated hereby, and the performance of all transactions contemplated
herein or therein, have been duly and validly authorized by all necessary corporate action, and by
all necessary action of the board of directors, of each Seller. This Agreement and the agreements,
documents and instruments to be executed and delivered by the Sellers in connection herewith
constitute the legal, valid and binding obligations of the Sellers, enforceable against the Sellers
in accordance with their respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws generally affecting creditors’ rights and
remedies, and subject, as to enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity) and except to the extent that rights to indemnification
under or contemplated by this Agreement or such other agreements may be limited by federal or state
securities laws or public policy relating thereto. To the knowledge of the Sellers, neither of the
Sellers is required to obtain any consent, authorization, approval or waiver from any governmental
agency or authority or from any third party in connection with the execution and delivery of, and
the performance of the obligations to be performed under, this Agreement and the documents and
instruments to be executed and delivered in connection herewith, or, if any of the foregoing is
required, it has been obtained.

     6.3 Interest in Properties. Each Seller is the registered and beneficial owner of,
and has good, marketable and insurable fee simple title (or its Quebec civil law equivalent) to,
the

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Properties set forth opposite such Seller’s name on Schedule 1.2, free and clear of all
hypothecs, prior claims, servitudes, encroachments, leases, charges, liens, options, adverse claims
or encumbrances, except the Permitted Exceptions. Between the date hereof and the Closing Date, no
liens, claims, hypothecs, servitudes or encumbrances will be created by Seller or permitted to be
created by Seller on any Property other than Permitted Exceptions. Except for the Tenants, their
assigns and subtenants, if any, there are no parties in possession of any portion of the Properties
as of the Closing Date, and there are no other rights of possession, or agreements providing for
the sale, assignment or transfer of title to either Property or portion thereof (other than this
Agreement), which have been granted by the Sellers to any third parties.

     6.4 No Defaults. (a) Each of the Sellers has performed in all material respects its
material obligations under any agreement, license, contract, deed, mortgage, hypothec, lease,
instrument, certificate, affidavit or covenant affecting title to the Properties; (b) there are no
contracts or agreements between either of the Sellers and any third party, such as maintenance,
service, or utility contracts, affecting title to the Properties; and (c) there are no contracts or
agreements between either of the Sellers and any third party for the management or leasing of
either Property, and there is no leasing commission due and owing, or to become due and owing, in
connection with either of the Leases; and (d) except for the Permitted Exceptions, there are no
contracts, agreements, liabilities, claims or obligations of any
kind or nature relating to title to the Properties and to which the Purchaser will be bound or the
Properties will be subject after the Closing.

     6.5 No Litigation; No Expropriation. There are no actions, suits, proceedings or
claims pending, or to the knowledge of each Seller, threatened or contemplated, with respect to or
in any manner affecting the Properties, or either Seller’s interest therein, or the ability of each
Seller to complete the transactions contemplated by this Agreement, or that could prevent either
Seller from satisfying its obligations under this Agreement. Neither Seller has received written
notice of any pending or threatened expropriation or similar proceedings or special assessments
affecting the Properties, or any part thereof.

     6.6 No Violation. The execution and delivery of this Agreement and the agreements,
documents and instruments executed and delivered in connection herewith, the consummation of the
transactions contemplated hereby or thereby, and the operation of each Property shall not: (a)
conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a
default under, any agreement, contract, mortgage, hypothec, deed, lease, license, or instrument to
which either Seller is a party or is subject or to which either Property is subject; (b) to the
Sellers’ knowledge, violate any agreement, contract, mortgage, deed, hypothec, lease, license,
franchise, restriction, easement, servitude, restrictive covenant or instrument to which either
Seller or either Property is subject; (c) to the Sellers’ knowledge, constitute a violation of any
applicable code, resolution, law, statute, regulation, ordinance, rule, judgment, decree or order
applicable to either Seller; (d) with respect to each Seller, violate any provision of its
organizational documents; or (e) result in the acceleration of any indebtedness or any encumbrance
pertaining to either Seller or either Property, or the cancellation of any contract, agreement,
license, instrument or lease pertaining to either Property. Neither of the Sellers has received
any written notice of any material violation (both as to the condition and the use of the

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Properties) of any applicable laws, statutes, ordinances, codes (including, but not limited to,
zoning, building, subdivision, pollution, environmental protection, water disposal, health, fire
and safety engineering codes, and laws and regulations with respect to the submetering of any
utilities serving either Property), and the rules and regulations of, any governmental authority
having jurisdiction over either of the Properties.

     6.7 Required Obligations. The Sellers have paid and performed all material
obligations relating to the Properties required to have been paid or performed prior to the date
hereof and prior to the Closing Date.

     6.8 Condition of Properties. To Sellers’ knowledge, none of the structural,
mechanical, electrical, plumbing, roofing and other major systems on either Property are required
to be replaced or are in need of material repair.

     6.9 Utilities. To the Sellers’ knowledge, usable sanitary and storm sewers and public
water, gas and electrical utilities of adequate capacity for the operation of the Properties as
presently operated, are installed in, and are duly connected to, the Properties and can be used without any charge except the normal user charges for sanitary
sewers and the normal and usual charges imposed for public water, gas and electrical utilities.

     6.10 Zoning. To each Seller’s knowledge, each Property is currently located in areas
zoned for its current use, which classification permits the development, use and operation of the
improvements on such Property as such improvements currently are being used. The Sellers have no
knowledge of any threat of, and have not received written notice of, any proceeding to change
adversely or down-zone the existing zoning classification as to any portion of either Property.
The Properties are not subject to the provisions of an Act to Preserve Agricultural Land and
Agricultural Activities or the Cultural Property Act.

     6.11 Improvements. To Sellers’ knowledge, all improvements on the Properties comply
with all requirements of applicable laws, ordinances, regulations and orders, including, without
limitation, applicable zoning, building and fire safety codes and all restrictive covenants, if
any, and other servitudes, encumbrances or agreements affecting title to either of the Properties.

     6.12 Environmental Matters.

     6.12.1 For purposes of this Agreement:

     6.12.1.1 “Environmental Claim” means any claim, action, cause of action,
investigation, or notice (written or oral) by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages, property damages,
personal injuries, or civil or criminal penalties) arising out of or resulting from (a) the
actual or alleged presence or release into the environment of any Substance of Concern at
any

12

 

location, whether or not owned or operated by either of the Sellers, or (b)
circumstances forming the basis of any actual or alleged violation of any Environmental Law.

     6.12.1.2 “Environmental Laws” means all federal, provincial, local, and municipal
laws, regulations, bylaws, treaties, orders in counsil, policies, directives or guidelines
relating to pollution or protection of human health or the environment (including, without
limitation, those (i) relating to actual or threatened emissions, discharges, releases, or
migration of Substances of Concern, (ii) civil or common law principles of delictual
liability, and (iii) otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Substances of Consern.

     6.12.1.3 “Substances of Concern” means contaminants of any kind, pollutants,
chemicals, wastes, toxic substances, hazardous substances, or radioactive materials, as they
are regulated pursuant to any Environmental Laws, including, without limitation, (a)
petroleum or any fraction thereof, (b) asbestos, or (c) any substance or material
defined as a “hazardous material” pursuant to Section 1 of the Environment Quality Act
(R.S.Q. c. Q-2) and its regulations.

6.12.3 To the Sellers’ knowledge, each Seller and its Property are in material compliance
with all applicable Environmental Laws.

6.12.4 To the Sellers’ knowledge, there are no pending or actual Environmental Claims
relating to the Sellers or the Properties.

6.12.5 The Sellers have not caused or, to their knowledge, allowed the generation,
treatment, storage or disposal of Substances of Concern at the Properties, except in
accordance with applicable Environmental Laws, and have no knowledge of the release of
Substances of Concern in, on or under the Properties, or of the migration offsite of such
Substances of Concern, except in accordance with applicable Environmental Laws.

     6.13 Insurance. Neither Seller has received from any insurance company that carries
underwriters insurance on either Property, or any Board of Fire Underwriters, any notice of any
defect or inadequacy in connection with either Property or its operation that has not been
corrected.

     6.14 Compliance. To the Sellers’ knowledge, each Seller has complied in all material
respects with all laws, ordinances, rules, regulations and orders of governmental authorities
applicable to the ownership, management, operation, maintenance and repair of the Properties.

     6.15 Leases.

6.15.1 Schedule 6.15.1 contains a true, complete and correct list of all current
Leases for the Properties or any part thereof, including, without limitation, all agreements
and understandings with respect to the use or lease of all or any portion of the Properties
or

13

 

otherwise constituting Leases that are currently outstanding, including all amendments
thereof and modifications thereto, and the Sellers have delivered to the Purchaser complete
copies of each of the Leases, and complete written descriptions of all oral modifications
thereof, if any;

6.15.2 To the Sellers’ knowledge, neither Tenant has any claim or basis for any claim for
reduction, deduction or set-off against the landlord or the rent under its Lease;

6.15.3 Each Seller is the sole owner of the lessor’s interest in the corresponding Lease,
both of the Leases are in full force and effect, and, to the Sellers’ knowledge, there are
no defaults thereunder by the Tenants or either of the Sellers;

6.15.4 The Leases have not been modified except as reflected on Schedule 6.15.1;

6.15.5 All painting, repairs, alterations, and other work required to be performed by each
Seller, as landlord, under its Lease, if any, and all other obligations of such Seller, as
landlord, required to be performed thereunder, if any, have been fully performed and paid
for in full;

6.15.6 The Tenants are not, and shall not become, entitled to any concession, rebate,
allowance or free rent for any period subsequent to the Closing Date without the prior
written consent of the Purchaser, no change in the Leases shall be made without the prior
written consent of the Purchaser, and no new leases as to either of the Properties shall be
entered into by the Sellers after the date hereof, except with the prior written consent of
the Purchaser, in its sole and absolute discretion;

6.15.7 Neither Tenant has given either of the Sellers notice of its intention to vacate its
demised premises prior to the end of the term of its Lease;

6.15.8 There are no leasing commissions required under or in connection with the Leases;

6.15.9 Each Tenant is the sole lessee under its Lease. To the Sellers’ knowledge, there are
no subleases of all or any part of the Properties, and (except for any leasehold mortgage or
mortgages permitted by the terms of the respective Lease), neither of the Tenants has
assigned or encumbered all or any portion of its Lease or the corresponding Property or
otherwise transferred its interest in such Lease or such Property.

6.15.10 The commencement date and expiration date of each of the Leases are July 28, 2001
and July 31, 2021, respectively. Neither of the Tenants has exercised any options or rights
to renew, extend, amend, modify, or change the term of its Lease, and has no renewal options
or rights other than as set forth in its respective Lease.

6.15.11 The current monthly base rent under the Dorval Lease is $19,132.25 (CDN), and under
the Granby Lease is $35,701.94 (CDN). Such monthly base rent has been paid

14

 

through August 31, 2004 for each Lease. No such rent has been prepaid for more than one month. No
abatements in such monthly base rent are currently in effect, and neither of the Tenants is
entitled to any such abatements.

6.15.12 Neither of the Tenants has made a security deposit under its Lease.

6.15.13 Each of the Tenants has accepted possession of the premises under its Lease and is
conducting its business therein.

6.15.14 There are no actions for which any landlord consent required under a Lease has been
given to the corresponding Tenant (by way of illustration and not limitation, consent to
sublease or alter the premises) that have not yet been taken or performed.

6.15.15 To the Sellers’ knowledge, neither of the Tenants has filed, or is the subject of
any filing, for bankruptcy or reorganization under federal or state bankruptcy, insolvency,
reorganization or similar laws.

     6.16 Service Contracts. Schedule 6.16 is a list of all of the Sellers’
contracts affecting or pertaining to the Properties, including, without limitation, union,
purchase, service and maintenance agreements, and equipment leases affecting or pertaining to the
Properties or any part thereof (the “Service Contracts”). Neither Seller is a party to any
licenses or leases of personal property or any other contracts or agreements, written or oral,
relating to the management, operation, maintenance or repair of either Property, or otherwise,
except for the Leases and the Service Contracts. The Sellers have performed all obligations
required to be performed by them, and are not in default, under any of the Service Contracts.

     6.17 Permits. All material permits, licenses, inspections and other approvals from
all applicable governmental authorities having jurisdiction over each Seller and Property that are
necessary in connection with the ownership, and, to the Sellers’ knowledge, in connection with the
use and operation, of each Property as it is currently used, have been obtained and are in full
force and effect.

     6.18 Taxes. The Sellers have paid all real property taxes and assessments applicable
to the Properties that are required to be paid prior to Closing.

     6.19 Books and Records. The books, records and notes of each Seller with respect to
its Property which have been made available to the Purchaser are complete and correct in all
material respects.

     6.20 No Brokers. Except for Thalhimer Commercial Real Estate (“TCRE”), neither of the
Sellers has dealt with any other broker, finder, real estate agent or other person in connection
with the transaction contemplated hereunder, and no such broker, finder, real estate agent or other
person is entitled to a commission or finder’s fee in connection with the transaction contemplated
hereunder, or will be entitled to make any claim against either of the Properties or the Purchaser
for a commission or finder’s fee, by reason of having been engaged by either or

15

 

both of the Sellers. Sellers shall be responsible for payment of any and all broker fees and commissions
payable to TCRE in connection with the transaction contemplated hereunder.

     6.21 Survival of Representations and Warranties; Indemnification. The representations
and warranties of the Sellers made in this Agreement shall survive the Closing and consummation of
the transactions contemplated hereby, and shall remain in full force and effect thereafter only to
the extent that the Purchaser provides the Seller with written notice of any breach, violation or
right to indemnification thereunder within a period ending 12 months after the Closing. The
Sellers hereby agree to indemnify against and hold the Purchaser harmless
from any and all losses, damages, liabilities, claims, demands, suits, actions, causes of action,
proceedings, fines, costs and expenses, including, without limitation, attorneys’ fees and costs,
made or filed against, or incurred by, the Purchaser and arising out of or in connection with any
breach of any of the representations, warranties and covenants of the Sellers made in this
Agreement.

     6.22 Bulk Sales. Each of the Sellers agree, for a period of 1 year following the
Closing Date, to solidarily indemnify and save harmless the Purchaser with respect to any claim
(including all reasonable legal expenses, losses, damages, costs and expenses associated with such
claims) which any unpaid creditor of the Sellers may assert as a result of the failure by the
Sellers to obtain an unpaid creditor’s consent to the sale of the Properties without being paid
from the proceeds of sale or as a result of any non-compliance or alleged non-compliance with the
provisions of the Civil Code of Quebec regarding the sale of an enterprise or the provisions of any
other applicable similar legislation of another jurisdiction.

7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Sellers that the following are true, complete and
correct as of the date of this Agreement:

     7.1 Organization, Good Standing and Qualification. The Purchaser (a) is a limited
partnership duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority to carry on its
business and to own or lease and operate its assets and properties in the manner in which it or
they are being conducted and owned or leased and operated, as the case may be, and (c) is duly
qualified to transact business and is in good standing in all jurisdictions where its ownership,
lease or operation of its properties or assets or the conduct of its business requires such
qualification.

     7.2 Authorization. The execution and delivery of this Agreement and all agreements,
documents and instruments contemplated hereby, and the performance of all transactions contemplated
herein or therein, have been duly and validly authorized by all requisite action of the Purchaser
and its directors and shareholders. This Agreement, and the agreements, documents and instruments
to be executed and delivered in connection herewith, constitute the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies

16

 

generally, and subject, as to
enforceability, to general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except to the extent that rights to indemnification under or contemplated by this
Agreement or such other agreements may be limited by federal or state securities laws or public
policy relating thereto. To the knowledge of the Purchaser, the Purchaser is not required to
obtain any consent,
authorization, approval or waiver from any governmental agency or authority or from any third party
in connection with the execution and delivery of, and the performance of the obligations to be
performed under, this Agreement and the documents and instruments to be executed and delivered in
connection herewith or, if any of the foregoing is required, it has been obtained.

     7.3 No Violation. The execution and delivery of this Agreement and the agreements,
documents and instruments to be executed and delivered in connection herewith, the consummation of
the transactions contemplated hereby or thereby, and the operation of each Property shall not: (a)
conflict with, violate, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement, contract, mortgage, deed, lease, license, franchise or
instrument to which the Purchaser is a party or is subject; (b) constitute a violation of any
applicable code, resolution, law, statute, regulation, ordinance, rule, judgment, decree or order
applicable to the Purchaser; or (c) violate any provision of the organizational documents of the
Purchaser.

     7.4 No Litigation. The Purchaser is not involved in any pending or, to its knowledge,
threatened litigation that, if adversely resolved, could materially affect its operations or
financial condition or the ability to perform its obligations under this Agreement.

     7.5 No Brokers. Except for TCRE, the Purchaser has not dealt with any other broker,
finder, real estate agent or other person in connection with the transaction contemplated
hereunder, and no such broker, finder, real estate agent or other person is entitled to a
commission or finder’s fee in connection with the transaction contemplated hereunder, or will be
entitled to make any claim against either of the Properties or the Sellers for a commission or
finder’s fee, by reason of having been engaged by the Purchaser.

     7.6 Survival of Representations and Warranties; Indemnification. The representations
and warranties of the Purchaser made in this Agreement shall survive the Closing and consummation
of the transactions contemplated hereby, and shall remain in full force and effect only to the
extent that the Sellers provide the Purchaser with written notice of any breach, violation or right
to indemnification thereunder within a period ending 12 months after the date of this Agreement.
The Purchaser hereby agrees to indemnify against and hold the Sellers harmless from any and all
losses, damages, liabilities, claims, demands, suits, actions, causes of action, proceedings,
fines, costs and expenses, including, without limitation, attorneys’ fees and costs, made or filed
against, or incurred by, either or both of the Sellers and arising out of or in connection with any
breach of any of the representations and warranties of the Purchaser made in this Agreement.

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8. COVENANTS

     8.1 Covenants of the Purchaser. The Purchaser hereby covenants and agrees as follows:

8.1.1 If this Agreement is terminated for any reason, the Purchaser shall promptly return to
the Sellers all materials furnished by the Sellers to the Purchaser pursuant to this
Agreement.

8.1.2 In connection with inspection of the Properties, the Purchaser shall not unreasonably
interfere with either of the Tenants or their respective business operations on the
Properties.

8.1.3 Except as and to the extent required by law, the Purchaser will not disclose or use,
and will direct its representatives not to disclose or use, any Seller Confidential
Information (as hereafter defined) with respect to the Sellers or the Properties furnished,
or to be furnished, by either the Sellers or their respective representatives to the
Purchaser or its representatives at any time or in any manner, other than in connection with
the Purchaser’s evaluation of the transaction contemplated by this Agreement. For purposes
of this Paragraph, “Seller Confidential Information” means any information about any of the
Sellers or the Properties stamped “confidential” or identified in writing as such to the
Purchaser by any of the Sellers in connection with or promptly following its disclosure,
unless (a) such information is already known to the Purchaser or its representatives at the
time of its disclosure, or such information becomes publicly available through no fault of
the Purchaser or its representatives; (b) the use of such information is necessary in making
any filing or obtaining any consent or approval required for the consummation of the
transaction contemplated by this Agreement; or (c) the furnishing or use of such information
is required by or necessary in connection with legal proceedings. If this Agreement is
terminated for any reason, the Purchaser will promptly return to the Sellers, or destroy,
any Seller Confidential Information in its possession and certify in writing to the Sellers
that it has done so.

8.2 Covenants of the Sellers. The Sellers hereby covenant and agree as follows:

8.2.1 If this Agreement is terminated for any reason, the Sellers shall promptly return to
the Purchaser, or destroy, all materials that were furnished by the Purchaser to the Sellers
pursuant to this Agreement and certify in writing to the Purchaser that they have done so.

8.2.2 Except as and to the extent required by law, without the prior written consent of the
Purchaser, the Sellers shall not, and shall direct their employees, officers, agents and
representatives not to, directly or indirectly, make any public comment, statement or
communication with respect to, or otherwise disclose or permit the disclosure of the
existence of, or discussions regarding a possible transaction between the Purchaser and the
Sellers or any of the terms or other aspects of the transaction contemplated by this
Agreement, except (i) to the extent required by judicial order or other governmental rules

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or regulations, or (ii) to the partners, attorneys, officers, directors, employees,
accountants
and other advisors of Sellers, so long as such persons shall have been informed of Sellers’
obligations hereunder.

8.2.3 The Sellers (i) shall not modify, amend or terminate any Lease, or enter any new lease
or other agreement for the use or occupancy of all or any portion of the Properties, without
first obtaining the written consent of the Purchaser, and (ii) shall continue to maintain in
full force and effect the insurance coverage, if any, that they currently have in effect for
the Properties.

8.2.4 The Sellers shall not become a party to any new licenses, equipment leases, contracts
or agreements of any kind relating to the Properties, except for (a) such contracts or
agreements as will be terminated at or prior to Closing without cost or expense to the
Purchaser or (b) contracts which the Purchaser agrees, in its sole discretion, to assume at
the Closing. The Sellers shall exercise their respective rights under the Leases to cause
the Tenants to continue to maintain and operate the respective Properties, and to keep the
respective Properties and the tangible personal property thereon in such condition and
repair, as is required by the respective Leases.

8.2.5 The Sellers shall not knowingly take, allow or fail to take any action that will cause
the Properties or any of them to fail to comply in any material respect with any federal,
state, municipal and other governmental laws, ordinances, requirements, rules, regulations,
notices, codes and orders, or any agreements, covenants, conditions, easements and
restrictions currently in effect relating to the Properties.

8.2.6 Promptly upon receipt, the Sellers shall provide the Purchaser with copies of all
written notices delivered or received under the Leases, correspondence received from any of
the Tenants, neighboring property owners, any insurance company which carried insurance on
the Properties, from any Governmental Authorities or from any other person or entity with
respect to the Properties or any of them, in each case if delivered or received after the
date of this Agreement.

8.2.7 The Sellers shall not sell, mortgage, pledge, hypothecate or otherwise transfer or
dispose of all, or any part, of any Property or any interest therein, nor initiate, consent
to, approve or otherwise take any action with respect to zoning or any other governmental
rules or regulations presently applicable to all or any part of any Property.

9. TERMINATION

     9.1 Termination by the Purchaser. If any condition for the protection of the
Purchaser set forth in this Agreement cannot or will not be satisfied prior to Closing, or upon the
occurrence of any other event that would entitle the Purchaser to terminate its obligations under
this Agreement, the Purchaser, at its option, may either (a) terminate this Agreement, in which
event the parties shall have no further obligations or liabilities to each other hereunder, and the
Deposit shall be returned promptly to the Purchaser, or (b) proceed to purchase the Properties as

19

 

provided in Section 5. Notwithstanding the foregoing, (i) the parties shall remain liable for the Post-Termination Obligations, and (ii) if the Purchaser
exercises either of the foregoing options as a consequence of a material misrepresentation or
breach of warranty by either or both of the Sellers hereunder, or of a default by either or both of
the Sellers in the performance of their obligations hereunder, the Purchaser shall be entitled to
recover the “Due Diligence Expenses” (as hereafter defined) and shall retain all remedies at law
and in equity with respect to such misrepresentation, breach or default, including, but not limited
to, the right to recover its reasonable attorneys’ fees and costs incurred in connection therewith
and (if the Purchaser has not terminated this Agreement) the right to specific performance of this
Agreement; provided that the Purchaser shall not be entitled to seek, obtain or recover any
consequential or punitive damages. For purposes of the preceding sentence, the term “Due Diligence
Expenses” shall mean third party costs and expenses incurred by the Purchaser in conducting its due
diligence review of the Properties, including, without limitation, the reports, investigations,
surveys and other information described in Section 2.1 hereof, and the Purchaser’s attorneys’ fees
incurred in connection with the preparation and negotiation of the letter of intent between the
parties, dated June 22, 2004, and this Agreement, and in connection with matters related thereto.
Notwithstanding any contrary provisions hereof, a material misrepresentation or breach of warranty
by either or both of the U.S. Sellers, or a default by either or both of the U.S. Sellers in the
performance of its or their obligations, under the U.S. Purchase Agreement that entitles the
Purchaser to pursue the remedies specified in Section 9.1 of the U.S. Purchase Agreement shall also
be deemed to be a default by the Sellers in the performance of their obligations under this
Agreement that entitles the Purchaser to pursue the remedies specified in this Section 9.1.
Notwithstanding any contrary provisions of this Section 9.1 or any other provisions of this
Agreement, the Sellers shall not have any obligations or liabilities to the Purchaser, and the
Purchaser hereby waives and releases any and all rights and remedies that it may have against the
Sellers, arising under Environmental Laws, whether by direct action or proceeding, impleader,
cross-claim or other third party claim, action or proceeding or otherwise.

     9.2 Termination by the Sellers. If the Purchaser makes a material misrepresentation
or breach of warranty or defaults in the performance of any obligation of the Purchaser under this
Agreement for any reason, the Sellers may, at their option, give the Purchaser prompt written
notice of such default or failure, and, after 10 days written notice thereof (if the Purchaser
fails to cure such misrepresentation, breach or default within such time), the Sellers may, at
their option, terminate this Agreement, in which event the Deposit shall be paid to the Sellers as
full and complete liquidated damages hereunder, and the parties shall have no further claims
against each other and no further rights or obligations hereunder, except for the Post-Termination
Obligations. The Sellers shall also have the option, in lieu of terminating this Agreement, to
pursue all of the Sellers’ other remedies at law and in equity with respect to such default or
failure (including, but not limited to, the right to specific performance of this Contract and the
right to recover their reasonable attorneys’ fees and costs incurred in connection therewith);
provided that the Sellers shall not be entitled to seek, obtain or recover any consequential or
punitive damages. Notwithstanding any contrary provisions hereof, a material misrepresentation or
breach of warranty or default in the performance of any obligation of the Purchaser under the U.S. Purchase Agreement that entitles the U.S. Sellers to
pursue the remedies specified in Section 9.2 of the U.S. Purchase Agreement shall also be deemed to
be a

20

 

default by the Purchaser in the performance of its obligations under this Agreement that
entitles the Sellers to pursue the remedies specified in this Section 9.2. Notwithstanding any
contrary provisions of this Section 9.2 or any other provisions of this Agreement, the Purchaser
shall not have any obligations or liabilities to the Sellers, and the Sellers hereby waive and
release any and all rights and remedies that they may have against the Purchaser, arising under
Environmental Laws, whether by direct action or proceeding, impleader, cross-claim or other third
party claim, action or proceeding or otherwise.

10. MISCELLANEOUS

     10.1 Assignment. Neither this Agreement nor any interest hereunder may be assigned or
transferred by either the Sellers or the Purchaser without the prior written consent of the other
party, in such other party’s sole and absolute discretion. Notwithstanding the foregoing
provisions, the Purchaser shall be entitled to assign its rights under this Agreement to any entity
that is owned, controlled or managed by, or under common control or management with, the Purchaser.
No such assignment shall relieve the Purchaser of any of its liabilities or obligations under this
Agreement.

     10.2 Entire Agreement. Any prior agreement or understanding among the parties
concerning the subject matter hereof is hereby superseded. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and the transaction
contemplated hereunder and shall not be modified or amended except by a written document signed by
all of the parties. This Agreement shall be for the benefit of, and shall be binding on, the
parties and their respective successors and assigns.

     10.3 Notices. All notices or other communications required or permitted under this
Agreement shall be in writing and delivered personally or by registered or certified mail, return
receipt requested, postage prepaid, or by a nationally recognized overnight courier (such as UPS or
Federal Express) with receipted delivery, or by facsimile transmission. Notices to the parties
shall be addressed as follows:

	 	 	 
	

	 	If to the Sellers:
	 
	 	 
	

	 	c/o Palm Beach Capital Partners
	

	 	180 Royal Palm Way
	

	 	Palm Beach, FL 33480
	

	 	Attn: Shaun L. McGruder
	

	 	Fax: 561-659-9055

21

 

	 	 	 
	with a copy to:
	 
	 	 
	

	 	Paul G. Saunders, II, Esq.
	

	 	Williams, Mullen, Clark & Dobbins
	

	 	Two James Center
	

	 	1021 Cary Street
	

	 	Richmond, VA 23219
	

	 	Fax: 804-783-6507
	 
	 	 
	If to the Purchaser:
	 
	 	 
	

	 	Gladstone Commercial Limited Partnership
	

	 	1616 Anderson Road, Suite 208
	

	 	McLean, Virginia 22102
	

	 	Attn: Mr. Christopher Massey
	

	 	Fax: 703-286-0795
	 
	 	 
	With a copy to:
	 
	 	 
	

	 	Winston & Strawn LLP
	

	 	1400 L Street, N.W.
	

	 	Washington, D.C. 20005
	

	 	Richard F. Williamson, Esq.
	

	 	Fax: 202-371-5950

All notices given in accordance with the terms hereof shall be deemed effective (a) if delivered in
person or by overnight courier, on the business day it is delivered, (b) if sent by registered or
certified mail, two (2) business days after deposit with the U.S. mail, and (c) if sent by
facsimile transmission, on the date received, if it is a business day, otherwise, on the next
business day. Any party may change its address by written notice to all parties sent in accordance
with the terms of this Section, and any such notice of change of address shall be effective five
(5) days after delivery.

     10.4 Governing Law. Except with respect to conveyancing and related matters where the
laws of the Province of Quebec and Canada apply, this Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Virginia, without regard to its
conflicts of law principles.

     10.5 Counterparts. This Agreement may be executed in any number of identical
counterparts, any or all of which may contain the signatures of fewer than all of the parties, but
all of which shall be taken together as a single instrument.

     10.6 Interpretation. Both the Sellers and the Purchaser have negotiated the terms and
provisions of this Agreement, and, therefore, the rule of construction that any ambiguities shall

22

 

be construed against the drafter shall not apply, it being understood and agreed that both parties
have participated in the drafting of this Agreement.

     10.7 Risk of Loss. The Sellers shall retain the risk of loss until Closing (except
for any loss or damage caused by the Purchaser’s tests, surveys, studies and due diligence), and
the Purchaser shall bear the risk of loss after Closing.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

SIGNATURE PAGE TO FOLLOW

23

 

SIGNATURE PAGE

     IN WITNESS WHEREOF, the parties have executed this Agreement under seal:

	 	 	 	 	 
	 	 	3058348 NOVA SCOTIA COMPANY,

a Nova Scotia unlimited liability company
	 
	 	 	 	 
	Date:                     , 2004
	 	 	 	 
	

	 	By:                                                                                 (SEAL)	 	 
	

	 	Name:                                                                                 	 	 
	

	 	Title:                                                                                 	 	 
	 
	 	 	 	 
	 	 	3058349 NOVA SCOTIA COMPANY,

a Nova Scotia unlimited liability company
	 
	 	 	 	 
	Date:                     , 2004

	 	By:                                                                                 (SEAL)	 	 
	

	 	Name:                                                                                 	 	 
	

	 	Title:                                                                                	 	 
	 
	 	 	 	 
	 	 	GLADSTONE COMMERCIAL
LIMITED PARTNERSHIP, a Delaware limited partnership
	 
	 	 	 	 
	 	 	By: Gladstone Commercial Corporation, its general partner
	 
	 	 	 	 
	Date:                     , 2004

	 	By:                                                                  
              
  (SEAL)	 	 
	

	 	        Christopher Massey, Managing Director	 	 
	1064780.06
	 	 	 	 

24

 

SCHEDULE 1.2 - PROPERTIES

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	SITE NO.	 	 	FEE OWNER	 	 	PROPERTY ADDRESS	 	 	PURCHASE PRICE	 
	 	1)

	 	 	3058348 Nova Scotia
Company, a Nova
Scotia unlimited
liability company
	 	 	290 Guthrie,

Dorval, Quebec
	 	 	$1,528,708 (US)	 
	 	2)

	 	 	3058349
Nova Scotia Company, a Nova
Scotia unlimited liability company
	 	 	855 boul.
Industrial, Granby,
Quebec
	 	 	$2,938,632 (US)	 
	 

25

 

SCHEDULE 1.4

FORM OF ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”) is made and entered into this ___ day of _____, 2004,
among 3058348 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability company (the “Dorval Seller”),
and 3058349 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability company (together with the
Dorval Seller, the “Sellers”), GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited
partnership (the “Company”), and FIRST AMERICAN TITLE INSURANCE COMPANY (“Escrow Agent”).
Reference is made to that certain Real Property Purchase and Sale Agreement (Canada) dated as of
August 11, 2004 (the “Contract”), between Sellers and the Company. The defined terms

Purchaser and Sellers have agreed to select Escrow Agent to serve as escrow agent with respect to
the $100,000.00 deposit (together with any interest earned thereon, the “Deposit”) to be made by
Purchaser pursuant to the Contract. The purpose of this Agreement is to prescribe instructions
governing the services of Escrow Agent with respect to the Deposit and the Closing.

1. Sellers and Purchaser hereby engage Escrow Agent to serve as escrow agent with respect to the
Deposit made by Purchaser pursuant to the terms of the Contract, a copy of which has been delivered
to and received by Escrow Agent. Escrow Agent hereby accepts such engagement.

2. Escrow Agent acknowledges receipt of the Deposit and agrees to place the Deposit into an
interest-bearing escrow account and to notify Purchaser and Sellers of the location and number of
such interest-bearing account. Interest shall be maintained in the escrow account as a part of the
Deposit and credited to Purchaser for tax purposes. Purchaser’s Federal Taxpayer Identification
Number is ________________.

3. Escrow Agent shall disburse the Deposit and any interest earned thereon in accordance with the
terms and conditions of the Contract.

4. In the event that there is a dispute regarding the disbursement or disposition of the Deposit or
the interest earned thereon, or in the event Escrow Agent shall receive conflicting written demands
or instructions with respect thereto, then Escrow Agent shall withhold such disbursement or
disposition until notified by both parties that such dispute is resolved or Escrow Agent may file a
suit of interpleader at the cost and expense of Sellers and Purchaser.

5. Escrow Agent shall not be liable for any damage, liability or loss arising out of or in
connection with the services rendered by Escrow Agent pursuant to this Agreement unless the same
results from the negligence, gross negligence, or willful misconduct of Escrow Agent.

6. Copies of all notices given by any party hereunder shall be delivered in person or mailed,
postage prepaid, to all other parties hereto, to the following addresses:

26

 

	 	 	 	 	 
	 
	 	(1)  If to Purchaser	 	Gladstone Commercial Limited Partnership
	 
	 	 	 	1616 Anderson Road, Suite 208
	 
	 	 	 	McLean, Virginia 22102
	 
	 	 	 	Attn:  Mr. Christopher Massey
	 	 	 	 	 
	 
	 	with a copy to:	 	Winston & Strawn LLP
	 
	 	 	 	1400 L Street, N.W.
	 
	 	 	 	Washington, D.C.  20005
	 
	 	 	 	Attn:  Richard F. Williamson, Esq.
	 	 	 	 	 
	 
	 	(2)  If to the Sellers:	 	3058348 Nova Scotia Company
	 
	 	 	 	3058349 Nova Scotia Company
	 
	 	 	 	c/o Palm Beach Capital Partners
	 
	 	 	 	180 Royal Palm Way
	 
	 	 	 	Palm Beach, FL 33480
	 
	 	 	 	Attn:  Shaun L. McGruder
	 	 	 	 	 
	 
	 	(3)   with a copy to:	 	Paul G. Saunders, II, Esq.
	 
	 	 	 	Williams, Mullen, Clark & Dobbins
	 
	 	 	 	Two James Center
	 
	 	 	 	1021 Cary Street
	 
	 	 	 	Richmond, VA 23219

The instructions contained herein may not be modified, amended or altered in any way except by a
writing (which may be in counterpart copies) signed by Sellers, Purchaser and Escrow Agent.

7. Purchaser and Sellers reserve the right, at any time and from time to time, to substitute a new
escrow agent in place of Escrow Agent.

8. This Agreement is intended solely to supplement and implement the provisions of the Contract and
is not intended to modify, amend or vary any of the rights or obligations of Purchaser or Sellers
under the Contract.

9. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same instrument; provided,
however, in no event shall this Agreement be effective unless and until signed by all parties
hereto.

27

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written
above.

	 	 	 
	

	 	SELLERS:
	 
	 	 
	

	 	3058348 NOVA SCOTIA COMPANY, a Nova Scotia

	

	 	unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                 
	

	 	Its:                                                                                 
	 
	 	 
	

	 	3058349 NOVA SCOTIA COMPANY, a Nova Scotia

	

	 	unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                
	

	 	Its:                                                                                 
	 
	 	 
	

	 	PURCHASER:
	 
	 	 
	

	 	GLADSTONE COMMERCIAL LIMITED PARTNERSHIP,

	

	 	a Delaware limited partnership
	 
	 	 
	

	 	By                                                                                 
	

	 	Name:                                                                                
	

	 	Its:                                                                                 
	 
	 	 
	

	 	ESCROW AGENT:
	 
	 	 
	

	 	FIRST AMERICAN TITLE INSURANCE COMPANY
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                 
	

	 	Its:                                                                                 

28

 

SCHEDULE 3.1 - SCHEDULED EXCEPTIONS

AS TO THE DORVAL PROPERTY

	1.  	Any unregistered easements, rights of way or other unregistered interests or claims not
disclosed by the Public Records which affect the land.

	2.  	Taxes, assessments, levies or betterment charges, which are not shown as existing liens by
the Public Records or by the records of any relevant taxing authority.

	3.  	Reservations, limitations, provisos, conditions, restrictions and exceptions contained in the
letters patent or the original grant from the Crown, as varied by statute, and unpatented
mining claims.

	4.  	Rights to Hydro-Quebec on, under and/or over any property, without notice, under By-law 634
adopted by Hydro-Quebec, and approved by the Quebec Government.

	5.  	Matters shown on the Survey/Certificate of Location dated July 19, 2001 prepared by Gaston
Lemay, Q.L.S. under file no.3366 including encroachment of curb, chain link fencing and
asphalt entrance.

	6.  	Servitudes registered as numbers 1128231 and 1270629 with respect to the Montreal
International Airport (Dorval) Zoning Regulations.

	7.  	Servitude created in perpetuity under Instrument No. 1754468 and amended by Instrument No.
1814515, 582346 and 569791 restricting the erection of terminals or public warehouses for
storage.

	8.  	A Servitude of right of way between the property and the adjacent property to the west (Lot
875-231) allowing access to Guthrie Avenue, is registered under number 3698403 and affects a
30 feet wide strip of land along either side of the common limit of both properties.

	9.  	A Servitude and right of superficies created by Multiple Business Forms Canada Inc. and the
City of Dorval by deed registered under number 3764379 affecting a strip of land of 6.1 meters
in width located along the entire eastern boundary line of the Property, for City’s sewer and
water conduits.

	10.  	Terms and conditions contained in the Lease made between 3058348 Nova Scotia Company and Data
Business Forms Inc. dated July 28, 2001 registered under number 5281365, having a 20 year
term.

	11.  	Real Estate Taxes, Assessments and Utilities that are not yet due and payable.

AS TO THE GRANBY PROPERTY

29

 

	1.  	Any unregistered easements, rights of way or other unregistered interests or claims not
disclosed by the Public Records which affect the land.

	2.  	Taxes, assessments, levies or betterment charges, which are not shown as existing liens by
the Public Records or by the records of any relevant taxing authority.

	3.  	Reservations, limitations, provisos, conditions, restrictions and exceptions contained in the
letters patent or the original grant from the Crown, as varied by statute, and unpatented
mining claims.

	4.  	Rights to Hydro-Quebec on, under and/or over any property, without notice, under By-law 634
adopted by Hydro-Quebec, and approved by the Quebec Government.

	5.  	Servitudes in favor of Hydro-Quebec registered under Instrument No. 198275 and 197675 against
title to the property. The surveyor has confirmed however that the servitudes do not directly
concerns the subject lands.

	6.  	Matters shown on the Survey/Certificate of Location dated July 18, 2001 prepared by Jacques
Bonneau, Q.L.S. under file no. 11384 including a minor setback shortfall on the north limit.
The building should be setback from the street Andre-Line a minimum of 12.2 metres when in
fact the actual setback is only 12.1 and 12.0 metres.

	7.  	Terms and Conditions contained in the Lease made between 3058349 Nova Scotia Company and Data
Business Forms Inc. dated July 28, 2001 registered under number 424824.

	8.  	Real Estate Taxes, School Taxes, Assessments and Utilities that are not yet due and payable.

30

 

SCHEDULE 5.2.1.3 - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT

     THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment") made as of the ___day of
___, 2004 by and between 3058348 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability
company (the “Dorval Seller”), and 3058349 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability
company (the “Granby Seller,” and, together with the Dorval Seller, the “Assignor"), and GLADSTONE
COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited partnership (“Assignee"), recites and provides
as follows:

RECITALS:

     1. The Dorval Seller is the owner of certain real property located in Quebec, Canada, and more
particularly described in Schedule A, attached and made a part hereof (the “Dorval Real
Property"), and the Granby Seller is the owner of certain real property located in Quebec, Canada,
and more particularly described in Schedule B, attached and made a part hereof (the “Granby
Real Property").

     2. The Dorval Seller is the lessor of the Dorval Real Property pursuant to the lease that is
listed on Schedule C, attached and made a part hereof (the “Dorval Lease", which term shall
include all guaranties of the tenants’ obligations thereunder), and the Dorval Seller is entitled
to receive all rents, issues and profits that are or will be payable pursuant to the Dorval Lease
(collectively, the “Dorval Income”, which term shall include all security and other deposits
thereunder). The Granby Seller is the lessor of the Granby Real Property pursuant to the lease
that is listed on Schedule D, attached and made a part hereof (the “Granby Lease", which
term shall include all guaranties of the tenants’ obligations thereunder), and the Granby Seller is
entitled to receive all rents, issues and profits that are or will be payable pursuant to the
Granby Lease (collectively, the “Granby Income”, which term shall include all security and other
deposits thereunder).

     3. By deed of transfer, of even date herewith, the Dorval Seller has conveyed the Dorval Real
Property to Assignee, and by deed of transfer, of even date herewith, the Granby Seller has
conveyed the Granby Real Property to Assignee.

     4. The Dorval Seller desires to assign to Assignee all of its rights, title and interests in
and to the Dorval Lease and the Dorval Income, the Granby Seller desires to assign to Assignee all
of its rights, title and interests in and to the Granby Lease and the Granby Income, and Assignee
desires to accept such rights, title and interests, and to assume certain obligations with respect
thereto, all as hereafter set forth.

31

 

AGREEMENT:

     NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements herein
set forth, $10.00 cash, in hand paid, and other good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge, the parties hereby covenant and agree as
follows:

     1. Transfer and Assignment. The Dorval Seller hereby sells, grants, conveys,
transfers, sets over, delivers, and assigns unto Assignee, its successors and assigns, all rights,
title and interests that the Dorval Seller has in and to the Dorval Lease and the Dorval Income,
and the Granby Seller hereby sells, grants, conveys, transfers, sets over, delivers, and assigns
unto Assignee, its successors and assigns, all rights, title and interests that the Granby Seller
has in and to the Granby Lease and the Granby Income; provided that the provisions of Section 4.1
of that certain Real Property Purchase and Sale Agreement (Canada), dated August 11, 2004, between
Assignor and Assignee, shall govern the proration of the Dorval Income and the Granby Income
between the Dorval Seller and the Granby Seller, on the one hand, and Assignee, on the other hand.

     2 Assumption of Obligations. Assignee hereby assumes and shall observe and perform
all of the covenants, duties, obligations and liabilities of the Dorval Seller under the Dorval
Lease, and of the Granby Seller under the Granby Lease, accruing after, but not before, the date of
this Assignment.

     3. Indemnity. The Dorval Seller hereby agrees to indemnify against and hold Assignee
harmless from all claims, demands, losses, damages, liabilities, suits, actions, expenses and
costs, including, but not limited to, attorneys’ fees, incurred, arising out of or in connection
with the Dorval Seller’s failure, prior to the date hereof, to observe, perform and discharge each
and every one of its covenants, duties, obligations and liabilities accruing under the Dorval Lease
prior to the date of this Assignment. The Granby Seller hereby agrees to indemnify against and
hold Assignee harmless from all claims, demands, losses, damages, liabilities, suits, actions,
expenses and costs, including, but not limited to, attorneys’ fees, incurred, arising out of or in
connection with the Granby Seller’s failure, prior to the date hereof, to observe, perform and
discharge each and every one of its covenants, duties, obligations and liabilities accruing under
the Granby Lease prior to the date of this Assignment. Assignee hereby agrees to indemnify against
and hold the Dorval Seller harmless from all claims, demands, losses, damages, liabilities, suits,
actions, expenses and costs, including, but not limited to, attorneys’ fees, incurred, arising out
of or in connection with Assignee’s failure, after the date hereof, to observe, perform and
discharge each and every one of the covenants, duties, obligations and liabilities assumed by
Assignee pursuant to Section 2 of this Assignment and accruing under the Dorval Lease after the
date of this Assignment. Assignee hereby agrees to indemnify against and hold the Granby Seller
harmless from all claims, demands, losses, damages, liabilities, suits, actions, expenses and
costs, including, but not limited to, attorneys’ fees, incurred, arising out of or in connection
with Assignee’s failure, after the date hereof, to observe, perform and discharge each and every
one of the covenants, duties, obligations, and liabilities assumed by Assignee

32

 

pursuant to Section 2 of this Assignment and accruing under the Granby Lease after the date of this
Assignment.

     4. Headings. The headings used in this Assignment are for purposes of convenience
only and shall not be used in construing the provisions hereof.

     5. Covenant of Further Assurances. The parties agree to execute such other documents
and perform such other acts as may be necessary or desirable to carry out the purposes of this
Assignment.

     6. Successors And Assigns. This Assignment shall bind and benefit the respective
successors and assigns of the parties.

     7. Governing Law. This Assignment shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia, without regard to the conflict of law principles
thereof.

     8. Severability. The provisions of this Assignment shall be deemed severable, and the
invalidity or unenforceability of any one or more of the provisions hereof shall not affect the
validity or enforceability of the other provisions hereof.

     IN WITNESS WHEREOF, the parties have caused this Assignment to be executed as of the day and
year first above written.

	 	 	 
	

	 	ASSIGNOR:
	 
	 	 
	

	 	3058348 NOVA SCOTIA COMPANY, a Nova Scotia

unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                
	

	 	Its:                                                                                 
	 
	 	 
	

	 	3058349 NOVA SCOTIA COMPANY, a Nova Scotia

unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                
	

	 	Its:                                                                                 

33

 

	 	 	 
	

	 	ASSIGNEE:
	 
	 	 
	

	 	GLADSTONE COMMERCIAL LIMITED PARTNERSHIP,

a Delaware limited partnership
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                
	

	 	Its:                                                                                 

SCHEDULE A

[Dorval Real Property Legal Description]

34

 

SCHEDULE B

[Description of Dorval Lease]

-2-

 

SCHEDULE C

[Granby Real Property Legal Description]

-3-

 

SCHEDULE D

[Description of Granby Lease]

-4-

 

SCHEDULE 5.2.1.4 - FORM OF QUITCLAIM BILL OF SALE

QUITCLAIM BILL OF SALE

     THIS QUITCLAIM BILL OF SALE, dated as of ___, 2004, by and between 3058348 NOVA
SCOTIA COMPANY, a Nova Scotia unlimited liability company (the “Dorval Seller”), and 3058349 NOVA
SCOTIA COMPANY, a Nova Scotia unlimited liability company (the “Granby Seller” and, together with
the Dorval Seller, “Seller”), and GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited
partnership (“Purchaser”), provides as follows:

W I T N E S S E T H:

     THAT, for and in consideration of the sum of $10.00, cash, in hand paid, and other good and
valuable consideration, the receipt and sufficiency of which Seller hereby acknowledges, (a) the
Dorval Seller hereby quitclaims, grants, bargains, sells, assigns, transfers, sets over and
delivers unto Purchaser, its successors and assigns, all rights, title and interests of the Dorval
Seller, if any, in and to all personal property, fixtures, goods, chattels, machinery, furniture,
furnishings and equipment of every kind and type, located on or used in connection with the real
property more particularly described in Schedule A attached, including, without limitation,
all rights, title and interests of Seller, if any, in and to all compressors, engines, elevators
and escalators and other mechanical systems, fixtures and equipment, all electrical systems,
fixtures and equipment, all heating fixtures, systems and equipment, all air conditioning fixtures,
systems and equipment, all plumbing fixtures, systems and equipment, all carpets, drapes and other
furnishings, maintenance equipment and tools, signs, appliances, and all other machinery,
equipment, fixtures and personal property of every kind and character, and all accessories,
improvements, modifications, additions, restorations, repairs and replacements thereto and thereof
(collectively, the “Dorval Personalty”), and (b) the Granby Seller hereby quitclaims, grants,
bargains, sells, assigns, transfers, sets over and delivers unto Purchaser, its successors and
assigns, all rights, title and interests of the Granby Seller, if any, in and to all personal
property, fixtures, goods, chattels, machinery, furniture, furnishings and equipment of every kind
and type, located on or used in connection with the real property more particularly described in
Schedule B attached, including, without limitation, all rights, title and interests of
Seller, if any, in and to all compressors, engines, elevators and escalators and other mechanical
systems, fixtures and equipment, all electrical systems, fixtures and equipment, all heating
fixtures, systems and equipment, all air conditioning fixtures, systems and equipment, all plumbing
fixtures, systems and equipment, all carpets, drapes and other furnishings, maintenance equipment
and tools, signs, appliances, and all other machinery, equipment, fixtures and personal property of
every kind and character, and all accessories, improvements, modifications, additions,
restorations, repairs and replacements thereto and thereof (collectively, the “Granby Personalty”
and, together with the Dorval Personalty, the “Personalty”).

-5-

 

     SELLER MAKES NO WARRANTY, EXPRESS OR IMPLIED, WHETHER OF TITLE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE. PURCHASER HAS MADE AND RELIED UPON ITS OWN INSPECTION OF THE
PERSONALTY AND ACCEPTS IT IN “AS IS” CONDITION.

     IN WITNESS WHEREOF, the Dorval Seller and the Granby Seller have caused this Bill of Sale to
be executed on their behalf as of the ___day of ___, 2004.

	 	 	 
	

	 	SELLER:
	 
	 	 
	

	 	3058348 NOVA SCOTIA COMPANY, a Nova Scotia

unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                 
	

	 	Its:                                                                                 
	 
	 	 
	

	 	3058349 NOVA SCOTIA COMPANY, a Nova Scotia

unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                
	

	 	Its:                                                                                 

SCHEDULE A

[Dorval Property Legal Description]

 
-6-

 

SCHEDULE B

[Granby Property Legal Description]

 - 2 -

 

SCHEDULE 5.2.1.7

SELLERS’ CERTIFICATE RE: REPRESENTATIONS AND WARRANTIES

THIS SELLERS’ CERTIFICATE RE: REPRESENTATIONS AND WARRANTIES (this “Certificate”), is made as of
___________ ___, 200__, by 3058348 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability company,
and 3058349 NOVA SCOTIA COMPANY, a Nova Scotia unlimited liability company, each having an address
at c/o Palm Beach Capital Partners, LLC, 180 Royal Palm Way, Palm Beach, Florida 33480 (“Sellers”),
to GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited partnership (the “Company”) having
an address at ____________________________________________________________________, in connection
with the sale of certain land and improvements located at
_________________________________________, as further identified on Exhibit A attached
hereto (collectively, the “Property”).

W I T N E S S E T H:

WHEREAS, Sellers and the Company entered into that certain Real Property Purchase and Sale
Agreement (Canada) dated as of August 11, 2004 (the “Agreement”), for the sale of the Property.

WHEREAS, Section 5.1 of the Agreement requires the delivery of this Certificate.

NOW THEREFORE, Sellers do hereby certify to the Company that, in accordance with Section 5.1 of the
Agreement, each of the representations and warranties of Sellers as and to the extent contained in
the Agreement is true and correct as of the date hereof.

     IN WITNESS WHEREOF, Sellers have caused this Certificate to be executed on their behalf as of
the ___day of ___, 2004.

	 	 	 
	

	 	SELLER:
	 
	 	 
	

	 	3058348 NOVA SCOTIA COMPANY, a Nova Scotia

unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                
	

	 	Its:                                                                                 

 - 3 -

 

	 	 	 
	

	 	3058349 NOVA SCOTIA COMPANY, a Nova Scotia

unlimited liability company
	 
	 	 
	

	 	By:                                                                                 
	

	 	Name:                                                                                 
	

	 	Its:                                                                                 

EXHIBITS:

Exhibit A – Legal Description of both Properties

 - 4 -

 

SCHEDULE 5.2.1.8

FORM OF OPINION OF SELLERS’ COUNSEL

1. The Seller is duly organized or formed, validly existing and in good standing under the laws of
its State of organization or formation.

2. The Seller has the requisite corporate, partnership or other entity power and authority to
execute and deliver, and to perform its obligations under the [list and define applicable
transaction documents].

3. The execution and delivery of the [applicable transaction documents] by the Seller have been
duly authorized by all necessary corporate, partnership or other entity action and the persons
executing the [applicable transaction documents] have been duly authorized to do so.

4. The execution and delivery of the [applicable transaction documents] and the performance
thereunder by the Seller will not violate the charter, organizational documents or bylaws of the
Seller.

5. Each of the [applicable transaction documents] has been duly executed and delivered by the
Seller, and all such documents are the legal, valid and binding obligation of the Seller,
enforceable against Seller in accordance with their terms, except that enforcement may be limited
by bankruptcy, insolvency, reorganization, arrangement, moratorium, or similar laws, or by
equitable principles, relating to or limiting the rights of creditors generally.

6. To the undersigned’s knowledge, without investigation, the execution and delivery of the
[applicable transaction documents] will not breach or otherwise violate the provisions of or cause
an event of default under any agreement, contract, mortgage or other binding commitment or existing
obligation of the Seller, and will not breach or otherwise violate any permit, license, court
judgment, decree or order of any court or any law, rule or regulation of any governmental body to
which the Seller is subject or by which Seller is bound.

7. To the undersigned’s knowledge, there are no actions, suits or proceedings pending or threatened
against the Seller or the Property (as defined in the Purchase Agreement) that affect the Property
or would materially affect the Seller’s ability to perform under the [applicable transaction
documents] or which seeks to affect the enforceability of the [applicable transaction documents].

8. To the undersigned’s knowledge, the Seller is not in default and has not received any notice of
default with respect to any judgment, order, writ, injunction or decree or any lease, contract,
agreement, commitment, instrument or obligation to which it is a party or by which the Property is
bound or may be subject that affects the Property or could materially affect the Seller’s ability
to perform its obligations under the [applicable transaction documents].

 - 5 -

 

9. To the undersigned’s knowledge, all consents, approvals, or authorizations required by any third
party or governmental authority in connection with the performance of the Seller’s obligations
under the [applicable transaction documents] have been properly obtained.

10. No filing, registration or qualification with any governmental authority is required in
connection with the execution and delivery by Seller of the deeds to the Property and the
[applicable transaction documents].

This Opinion may be relied upon by the Company and its counsel, Winston & Strawn LLP.

 - 6 -

 

Schedule 5.2.2.5

FORM OF OPINION OF PURCHASER’S COUNSEL

1. The Purchaser is duly organized or formed, validly existing and in good standing under the laws
of its State of organization or formation.

2. The Purchaser has the requisite corporate, partnership or other entity power and authority to
execute and deliver, and to perform its obligations under the [list and define applicable
transaction documents].

3. The execution and delivery of the [applicable transaction documents] by the Purchaser have been
duly authorized by all necessary corporate, partnership or other entity action and the persons
executing the [applicable transaction documents] have been duly authorized to do so.

4. The execution and delivery of the [applicable transaction documents] and the performance
thereunder by the Purchaser will not violate the charter, organizational documents or bylaws of the
Purchaser.

5. Each of the [applicable transaction documents] has been duly executed and delivered by the
Purchaser, and all such documents are the legal, valid and binding obligation of the Purchaser,
enforceable against Purchaser in accordance with their terms, except that enforcement may be
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, or similar laws, or by
equitable principles, relating to or limiting the rights of creditors generally.

6. To the undersigned’s knowledge, without investigation, the execution and delivery of the
[applicable transaction documents] will not breach or otherwise violate the provisions of or cause
an event of default under any agreement, contract, mortgage or other binding commitment or existing
obligation of the Purchaser, and will not breach or otherwise violate any permit, license, court
judgment, decree or order of any court or any law, rule or regulation of any governmental body to
which the Purchaser is subject or by which Purchaser is bound.

7. To the undersigned’s knowledge, there are no actions, suits or proceedings pending or threatened
against the Purchaser that would materially affect the Purchaser’s ability to perform under the
[applicable transaction documents] or which seeks to affect the enforceability of the [applicable
transaction documents].

8. To the undersigned’s knowledge, the Seller is not in default and has not received any notice of
default with respect to any judgment, order, writ, injunction or decree or any lease, contract,
agreement, commitment, instrument or obligation to which it is a party or by which it is bound or
may be subject that could materially affect the Purchaser’s ability to perform its obligations
under the [applicable transaction documents].

 - 7 -

 

9. To the undersigned’s knowledge, all consents, approvals, or authorizations required by any third
party or governmental authority in connection with the performance of the Purchaser’s obligations
under the [applicable transaction documents] have been properly obtained.

10. No filing, registration or qualification with any governmental authority is required in
connection with the execution and delivery by Purchaser of the [applicable transaction documents].

This Opinion may be relied upon by the Sellers.

 - 8 -

 

SCHEDULE 6.15.1 - LEASES AND TENANTS

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	PROPERTY	 	 	 	 	 	 	 
	 	NO.	 	 	ADDRESS	 	 	TENANT	 	 	LEASES	 
	 	1)

	 	 	290 Guthrie, Dorval, Quebec
	 	 	Data Business Form Limited
	 	 	Lease Agreement
between 3058348
Nova Scotia
Company, and Data
Business Form
Limited, dated July
28, 2001	 
	 	2)

	 	 	855 boul. Industrial,
Granby, Quebec
	 	 	Data Business Form Limited
	 	 	Lease Agreement
between 3058349
Nova Scotia
Company, and Data
Business Form
Limited, dated July
28, 2001	 
	 

 - 9 -

 

SCHEDULE 6.16 - SERVICE CONTRACTS

NONE

 - 10 -

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