Document:

exv10w5

 

Exhibit 10.5

REAL PROPERTY PURCHASE AND SALE AGREEMENT

(UNITED STATES)

Between

PBC–POCONO, L.L.C.,

a Virginia limited liability company

and

PBC–NORFOLK, L.L.C.,

a Virginia limited 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 Condemnation
	 	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
	 	14
	6.16 Service Contracts
	 	15
	6.17 Permits
	 	15
	6.18 Taxes
	 	15

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	6.19 Books and Records
	 	15
	6.20 No Brokers
	 	16
	6.21 Survival of Representations and Warranties; Indemnification
	 	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
	10.8 Purchase and Sale of Member Interests
	 	23

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REAL PROPERTY PURCHASE AND SALE AGREEMENT

(UNITED STATES)

     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 PBC–POCONO, L.L.C., a Virginia limited
liability company (“PBC–Pocono”), and PBC–NORFOLK, L.L.C., a Virginia limited liability company
(“PBC–Norfolk,” and, together with PBC–Pocono, the “Sellers”), and GLADSTONE COMMERCIAL LIMITED
PARTNERSHIP, a Delaware limited partnership (the “Purchaser”), recites and provides as follows:

RECITALS:

     A. The Sellers are the legal and beneficial owners of fee simple title to 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:

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1. PURCHASE AND SALE

1.1 Certain Definitions. For purposes of this Agreement:

1.1.1 “GE Capital” means General Electric Capital Business Asset Funding Corporation.

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 A “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 free and clear of all
liabilities, obligations and commitments of the Sellers and free and clear of all liens and
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

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Sellers in and to the Properties and the “Leases” (as hereafter defined) for an aggregate purchase
price (the “Aggregate Purchase Price”) of $8,265,660. 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,

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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; 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 “Pocono Lease”),
between United Envelope, LLC, as Tenant, and PBC-Pocono, 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 PBC-Pocono;

     2.3.1.3 That certain Lease Agreement, dated as of July 28, 2001 (the “Norfolk Lease”),
between i Get Smart.com, Inc., as Tenant (together with United Envelope, LLC, the
“Tenants”), and PBC-Norfolk, as Landlord; and

     2.3.1.4 That certain Unconditional Guaranty Agreement, dated as of July 27, 2001, from
the Guarantor to PBC-Norfolk; 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.

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3. STATUS OF TITLE TO THE PROPERTIES

     3.1 State of Title. At Closing, the Sellers shall own, beneficially and of record,
good and marketable fee simple title to the Properties, subject only to those easements, 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 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 Written results of searches reflecting any liens, judgments, tax liens, bankruptcies,
and open dockets (the “UCC Searches”), conducted by a company reasonably acceptable to the
Purchaser. The UCC Searches shall name each Seller and shall search the appropriate land
records and/or county prothonotary’s and central filing office for Uniform Commercial Code
financing statements.

3.2.3 Legible copies of all documents of record referred to in any Title Commitment or
disclosed by the UCC Searches.

     3.3 Title Defects. The Purchaser shall have the right to review the Title
Commitments, UCC Searches and any surveys of the Properties obtained by Purchaser or any existing
survey (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, the Surveys or the
UCC 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, 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 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

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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 (other than the Permitted
Exceptions), at the Closing so as to effect the release of the Properties from any mortgages, deeds
of trust 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 Special warranty deeds for the Properties (the “Deeds”) in the form attached
as Schedule 5.2.1.1;

     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;

     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;

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     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 certificate of fact, a certified copy of each of the operating agreement
and the articles of organization for such Seller, 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 For each Seller, an affidavit stating, under penalty of perjury, its U.S.
taxpayer identification number and that it is not a foreign person within the meaning of
Section 1445 of the Internal Revenue Code of 1986, as amended;

     5.2.1.8 The Seller’s Certificate Re: Representations and Warranties (the “Seller’s
Certificate”) in the form attached as Schedule 5.2.1.8;

     5.2.1.9 An opinion of Sellers’ counsel substantially in the form attached as
Schedule 5.2.1.9; and

     5.2.1.10 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 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;

     5.2.2.3 The Assignment;

     5.2.2.4 An opinion of Purchaser’s counsel substantially in the form attached as
Schedule 5.2.2.4; and

     5.2.2.5 All other documents reasonably required by the Sellers in connection with the
transactions contemplated by this Agreement, provided that such documents do

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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 “Canadian Sellers” (as hereafter defined) shall close under that certain Real
Property Purchase and Sale Agreement, of even date herewith (the “Canadian Purchase
Agreement”), between the Purchaser and 3058348 Nova Scotia Company and 3058349 Nova Scotia
Company (the “Canadian 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
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;

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(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 Canadian 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
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,

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including title examination costs, and for all title insurance premiums and charges and survey
costs. 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. The Sellers shall pay the Grantor’s tax payable
in connection with the recordation of the Deed as to the Norfolk Property and one-half of the
recordation taxes payable in connection with the recordation of the Deed as to the Pocono Property.
All other documentary stamps, clerk’s fees, transfer and recordation taxes and other recording
costs with respect to the Deeds shall be paid by the Purchaser.

6. REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers, jointly and severally, 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 a limited liability company duly organized
and validly existing under the laws of the Commonwealth of Virginia, 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 limited liability company
action, and by all necessary action of the members, 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 record and beneficial owner of, and
has good, marketable and insurable fee simple title to, the Properties set forth opposite such
Seller’s name on Schedule 1.2, free and clear of all liens, options, adverse claims or
encumbrances, except the Permitted Exceptions. Between the date hereof and the Closing Date, no
liens, claims

10

 

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, 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 Condemnation. 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 condemnation 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, 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 franchise, restriction, easement, or restrictive covenant 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
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

11

 

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 and usual charges imposed by such utility services.

     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.

     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 easements, 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 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, state, and local laws and regulations
relating to pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, wetlands, land

12

 

surface, subsurface
strata, and indoor and outdoor workplace), including, without limitation, the Federal Clean
Air Act, as amended; the Federal Clean Water Act, as amended; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”); the
Federal Insecticide, Fungicide, and Rodenticide Act, as amended (“FIFRA”); the Resource
Conservation and Recovery Act, as amended (“RCRA”); the Superfund Amendments and
Reauthorization Act of 1986, as amended; and the Toxic Substances Control Act, as amended
(“TSCA”), other laws and regulations relating to emissions, discharges, releases, or
threatened releases of Substances of Concern, and common law principles of tort liability.

     6.12.1.3 “Substances of Concern” means chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, or radioactive materials that are regulated under
any Environmental Law or by any federal, state or local government authority including,
without limitation, (a) crude oil, petroleum or any fraction thereof, (b) asbestos, (c)
PCBs, (d) mold, (e) myotoxins, (f) any substance or material defined as a
“hazardous substance” pursuant to CERCLA, or any state or local equivalent, (g) any solid or
hazardous waste, as defined under RCRA or any state or local equivalent, (h) any chemical
substances and mixtures, as defined under TSCA or any state or local equivalent, and (i) any
pesticides, as defined under FIFRA or any state or local equivalent.

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 on or at the Properties, 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.

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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 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

14

 

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 Pocono Lease is $48,667.50, and under the
Norfolk Lease is $8,009.46. Such monthly base rent has been paid 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 filed all federal, state and local tax returns required
to be filed by the Sellers. With respect to any periods prior to the Closing Date, each Seller has
no knowledge of any unpaid taxes that would create a lien on either of the Properties (other than
the lien of real estate taxes not yet due and payable).

     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.

15

 

     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 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.

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 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

16

 

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.

17

 

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

18

 

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 Canadian Sellers, or a
default by either or both of the Canadian Sellers in the performance of its or their obligations,
under the Canadian Purchase Agreement that entitles the Purchaser to pursue the remedies specified
in Section 9.1 of the Canadian 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 Canadian Purchase Agreement that entitles the Canadian Sellers to pursue
the remedies specified in Section 9.2 of the Canadian Purchase Agreement shall also be deemed

20

 

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

22

 

     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.

     10.8 Purchase and Sale of Member Interests. Notwithstanding any contrary provisions
of this Agreement, the Purchaser, at its option, may elect to acquire all of the member interests
in PBC-Pocono rather than acquiring the Property owned by PBC-Pocono as contemplated hereunder.
The Purchaser may exercise such option by giving written notice of exercise to the Sellers prior to
the end of the Due Diligence Period. If the Purchaser exercises such option as aforesaid:

(a) the portion of the Aggregate Purchase Price payable by the Purchaser at the Closing for
the Property owned by PBC-Pocono as set forth in Schedule 1.2 shall instead be
payable by the Purchaser at the Closing for the member interests in PBC-Pocono,

(b) the execution and delivery of the Deed as to the Property owned by PBC-Pocono shall not
be required,

(c) to the extent that they contemplate the transfer of the Property of PBC-Pocono, any
other documents and instruments that either or both of the Sellers and the Purchaser are
required to deliver or to execute and deliver at the Closing shall be amended to reflect
that the member interests in PBC-Pocono are being sold and transferred to the Purchaser
rather than the Property owned by PBC-Pocono,

(d) the parties shall execute and deliver at the Closing such additional documents and
instruments as are necessary to transfer to the Purchaser all of the member interests in
PBC-Pocono, and

(e) any other conditions and requirements of this Agreement shall be deemed amended to the
extent necessary to reflect that the member interests in PBC-Pocono are being sold and
transferred to the Purchaser rather than the Property owned by PBC-Pocono.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

SIGNATURE PAGE TO FOLLOW

23

 

SIGNATURE PAGE

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

	 	 	 
	

	 	PBC – POCONO, L.L.C.,

a Virginia limited liability company
	 
	 	 
	Date:                                        , 2004
	 	 
	

	 	By:                                                   (SEAL)
	

	 	Name                                                             
	

	 	Title:                                                              
	 
	 	 
	

	 	PBC – NORFOLK, L.L.C.,

a Virginia limited 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

24

 

SCHEDULE 1.2 - PROPERTIES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	SITE NO.	 	 	FEE OWNER	 	 	PROPERTY ADDRESS	 	 	PURCHASE PRICE	 
	 	1)

	 	 	PBC-Pocono, L.L.C.,
a Virginia limited
liability company
	 	 	Huxley Envelope
Building
Industrial Park Blvd.
Mt. Pocono, PA
	 	 	$ 7,210,000	 
	 	2)

	 	 	PBC-Norfolk,
L.L.C., a Virginia
limited liability
company
	 	 	3701 E. Virginia
Beach Blvd.
Norfolk, VA
	 	 	$ 1,055,660	 
	 

25

 

SCHEDULE 1.4

FORM OF ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”) is made and entered into this ___ day of _____, 2004,
among PBC-NORFOLK, L.L.C., a Virginia limited liability company (“PBC-Norfolk”), and PBC-POCONO,
L.L.C., a Virginia limited liability company (together with PBC-Norfolk, 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 (United States) 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:
	 	PBC-Norfolk, L.L.C.
	

	 	 	 	 	 	 	 	PBC-Pocono, L.L.C.
	

	 	 	 	 	 	 	 	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:
	 
	 	 
	

	 	PBC-NORFOLK, L.L.C., a Virginia limited liability
	

	 	company
	 
	 	 
	

	 	By:                                                             
	

	 	Name:                                                             
	

	 	Its:                                                             
	 
	 	 
	

	 	PBC-POCONO, L.L.C., a Virginia limited 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 NORFOLK PROPERTY:

	1.  	Any taxes due for the fiscal year 2004.
	 
	2.  	Possible supplemental assessments and taxes for improvements constructed on the premises.
	 
	3.  	Twenty-five (25) foot building setback line along Norfolk Square and fifty (50) foot along
Virginia Beach Boulevard as shown on the recorded plats of subdivision in Map Book 23, page 57
and in Map Book 23, page 82.
	 
	4.  	Easements to Virginia Electric and Power Company as recorded in the said Clerk’s Office in
Deed Book 1073, page 86; Deed Book 1073, page 88 and Deed Book 1102, page 53.
	 
	5.  	Examination of a plat of survey made by W.P. Large, Inc., dated July 26, 2001, last revised
October 16, 2001, provided by the insured herein for matters adverse to the title herein
insured disclosed the following:

	 	(a)  	Existing curb inlet in northern portion of insured premises.
	 
	 	(b)  	Existing Virginia Power and Electric Company easement R/W #1367 (M.B. 23, PG.
82) across the southwestern portion of insured premises.
	 
	 	(c)  	Existing signs (cable marker) in two locations in the northwestern portion of
insured premises.
	 
	 	(d)  	Existing cable television vault in the northwestern portion of insured premises.

AS TO THE POCONO PROPERTY:

	1.  	Encroachments, overlaps, boundary line disputes, and any other matters which would be
disclosed by an accurate survey and inspection of the premises.
	 
	2.  	Easements, or claims of easements, not shown by the public records
	 
	3.  	Taxes not yet due and payable and possible additional assessment for taxes on any new
construction or major improvements to premises.
	 
	4.  	Covenants as set forth in Record Book 2022, page 3517 (Premises “A”).
	 
	5.  	Rights granted to Pennsylvania Power and Light Company as in Record Book 2023, page 7053.
	 
	6.  	Declaration of Right, Easements, Covenants, Conditions, Affirmative Obligations and
Restrictions Applicable to Pocono Mountains Business Park recorded in Record Book 1882, page
276 and First Amendment thereto which is unrecorded.

29

 

	7.  	Conditions disclosed by map entitled “Minor Subdivision of Lands of Senn and Pocono Mountains
Industries, Inc.” recorded in Plat Book 66, page 207.
	 
	8.  	Conditions disclosed by map entitled “Pocono Mountains Business Park, Section 2” recorded in
Plat Book 65, page 56.
	 
	9.  	Conditions as disclosed on Plan of Survey prepared for PBC-Pocono, LLC by Leonard T. Tusar,
P.L.S. PA License No. SU 028864-E, dated July 13, 2001:

	 	a.  	10’ drainage easement with specific rights to Lot 13;
	 
	 	b.  	existing outlet control structure;
	 
	 	c.  	existing sewage pumping station surrounded by chain-link fence;
	 
	 	d.  	existing gravity sewer line, bathroom waste only;
	 
	 	e.  	existing 15” outfall;
	 
	 	f.  	25’ slope and drainage easement;
	 
	 	g.  	existing 4’ walk;
	 
	 	h.  	existing 4’ high chain-link fence around detention pond area;
	 
	 	i.  	existing storm water detention basin; and
	 
	 	j.  	notes.

30

 

SCHEDULE 5.2.1.1 - FORM OF DEEDS

This instrument was prepared by:

Paul G. Saunders, II, Esq.

Williams Mullen

Two James Center

1021 East Cary Street

Richmond, Virginia 23219

Tax Parcel No. ____________

DEED OF BARGAIN AND SALE

[to convey the Norfolk Property]

     THIS DEED OF BARGAIN AND SALE, dated as of ___, 2004, by and between PBC-NORFOLK,
L.L.C., a Virginia limited liability company (“Grantor”), and GLADSTONE COMMERCIAL LIMITED
PARTNERSHIP, a Delaware limited partnership (“Grantee”), 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 Grantor hereby acknowledges, Grantor
hereby grants and conveys to Grantee, with Special Warranty but subject to the matters hereafter
set forth, the real property located in the City of Norfolk, Virginia, and more particularly
described on Schedule A, attached and made a part hereof (the “Property”).

     This conveyance is subject to the matters set forth on Schedule B, attached and made a
part hereof.

     WITNESS the following signature:

	 	 	 
	

	 	PBC-NORFOLK, L.L.C., a Virginia limited
	

	 	liability company
	 
	 	 
	

	 	By:                                                             
	

	 	Name:                                                             
	

	 	Its:                                                             

31

 

STATE OF ____________

CITY/COUNTY OF _____________, to-wit:

     The foregoing instrument was acknowledged before me in the City/County of ___,
State of ___this ___day of ___, 2004, by ___, as
___of PBC-Norfolk, L.L.C., a Virginia limited liability company, on behalf of the
limited liability company.

     My commission expires:

	 	 	 
	

	 	                                                                                
	

	 	Notary Public

Grantee’s address:

1616 Anderson Road

Suite 208

McLean, Virginia 22102

32

 

SCHEDULE A

[Legal Description]

 

 

SCHEDULE B

[List of Permitted Exceptions]

-2-

 

Tax Code No. 3/88941

[To convey the Mt. Pocono Property]

     THIS INDENTURE made the ___day of ___in the year of our Lord one two
thousand four (2004).

Between PBC-NORFOLK, L.L.C., a Virginia limited liability company with an office at c/o Palm Beach
Capital Partners, LLC, 180 Royal Palm Way, Palm Beach, Florida 33480, Grantor, party of the first
part,

-  A N D  -

GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited partnership, with an office at 1616
Anderson Road, Suite 208, McLean, Virginia 22102, Grantee, party of the second part.

Witnesseth, that the said
party of the first part, for and in consideration of the sum of
____________________________ DOLLARS ($____________), lawful money of the United States of America, unto
it well and truly paid by the said party of the second part at and before the sealing and delivery
of these presents, the receipt whereof is hereby acknowledged, has granted, bargained, sold,
aliened, enfeoffed, released and confirmed, and by these presents does grant, bargain, sell, alien,
enfeoff, release and confirm unto the said party of the second part, its successors and assigns,

THE REAL PROPERTY MORE PARTICULARLY DESCRIBED ON EXHIBIT A

ATTACHED

     UNDER AND SUBJECT to (a) the Declaration of Rights, Easements, Covenants, Conditions,
Affirmative obligations and Restrictions Applicable to Pocono Mountains Business Park dated January
15, 1993 and recorded April 16, 1993 in the aforesaid Recorder’s Office in Record Book Volume 1882,
Page 276 as amended by that certain First Amendment to Declaration of Rights, Easements, Covenants,
Conditions, Affirmative Obligations and Restrictions Applicable to Pocono Mountains Business Park,
and (b) that certain Lease Agreement, dated as of July 28, 2001, between United Envelope, LLC, as
tenant, and the said party of the first part, as Landlord.

Together with all and singular the buildings, ways, waters, water-courses, rights, liberties,
privileges, hereditaments and appurtenances whatsoever thereunto belonging, or in any wise
appertaining, and the reversions and remainders, rents, issues and profits thereof; and all the
estate, right, title, interest, property, claim and demand whatsoever, of the said party of the
first part, in law equity, or otherwise howsoever, of, in, and to the same and every part thereof,

-3-

 

To have and to hold the said lot, parcel or piece of ground, hereditaments and premises hereby
granted or mentioned and intended so to be, with the appurtenances, unto the said party of the
second part, its successors and assigns, to and for the only proper use and behoof of the said
party of the second part, its successors and assigns, forever.

And the said party of the first part, for itself, its successors and assigns, does by these
presents, covenant, grant and agree, to and with the said party of the second part, its successors
and assigns, that it, the said party of the first part, its successors and assigns, all and
singular the hereditaments and premises herein above described and granted, or mentioned and
intended so to be, with the appurtenances, unto the said party of the second part, its successors
and assigns, against it, the said party of the first part, its successors and assigns, and against
all and every other person or persons whomsoever lawfully claiming or to claim the same or any
party thereof, shall and will S P E C I A L L Y WARRANT and forever DEFEND.

In Witness Whereof, the said limited liability company has caused these presents to be
executed and its common or corporate seal hereto affixed.

	 	 	 
	 
	 	PBC-POCONO, L.L.C., a Virginia limited liability
	 
	 	company
	 
	 	 
	 
	 	By:                                                             
	 
	 	Name:                                                             
	 
	 	Its:                                                             

-4-

 

	 	 	 
	STATE OF                                                        
	:	 
	 
	 	ss
	CITY/COUNTY OF                                            
	:	 

          On this, the ___day of ___, 2004, before me, a Notary Public in and for said
County and State, the undersigned officer, personally appeared ___, who
acknowledged himself to be the ___of PBC-Pocono, L.L.C., a Virginia limited liability
company, and that he as such ___, being authorized to do so, executed the foregoing
instrument for the purposes herein contained by signing the name of the limited liability company
by himself as ___.

          IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

	 	 	 
	 
	 	                                                                                

The correct and precise P.O. address

of the within named Grantee is:

1616 Anderson Road

Suite 208

McLean, Virginia 22102

     On behalf of said Grantee

     Recorded in the Office for the Recording of Deeds in and for

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	in Deed Book No. ______
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	page ___________ &c.
	 
	 	 	 	 	 	 
	 	 	 	 	Witness my hand and seal of Office this

day of                    Anno Domini 20__

-5-

 

EXHIBIT A

[Legal Description]

-6-

 

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 PBC-NORFOLK, L.L.C., a Virginia limited liability company
(“PBC-Norfolk”), and PBC-POCONO, L.L.C., a Virginia limited liability company (“PBC-Pocono” and,
together with PBC-Norfolk, “Assignor”), and GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware
limited partnership (“Assignee”), recites and provides as follows:

RECITALS:

     1. PBC-Norfolk is the owner of certain real property located in Norfolk, Virginia, and more
particularly described in Schedule A, attached and made a part hereof (the “Norfolk Real
Property”), and PBC-Pocono is the owner of certain real property located in Mt. Pocono,
Pennsylvania, and more particularly described in Schedule B, attached and made a part
hereof (the “Pocono Real Property”).

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

     3. By deed, of even date herewith, PBC-Norfolk has conveyed the Norfolk Real Property to
Assignee, and by indenture, of even date herewith, PBC-Pocono has conveyed the Pocono Real Property
to Assignee.

     4. PBC-Norfolk desires to assign to Assignee all of its rights, title and interests in and to
the Norfolk Lease and the Norfolk Income, PBC-Pocono desires to assign to Assignee all of its
rights, title and interests in and to the Pocono Lease and the Pocono Income, and Assignee desires
to accept such rights, title and interests, and to assume certain obligations with respect thereto,
all as hereafter set forth.

-7-

 

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. PBC-Norfolk hereby sells, grants, conveys, transfers,
sets over, delivers, and assigns unto Assignee, its successors and assigns, all rights, title and
interests that PBC-Norfolk has in and to the Norfolk Lease and the Norfolk Income, and PBC-Pocono
hereby sells, grants, conveys, transfers, sets over, delivers, and assigns unto Assignee, its
successors and assigns, all rights, title and interests that PBC-Pocono has in and to the Pocono
Lease and the Pocono Income; provided that the provisions of Section 4.1 of that certain Real
Property Purchase and Sale Agreement (United States), dated August 11, 2004, between Assignor and
Assignee, shall govern the proration of the Norfolk Income and the Pocono Income between
PBC-Norfolk and PBC-Pocono, 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 PBC-Norfolk under the Norfolk Lease,
and of PBC-Pocono under the Pocono Lease, accruing after, but not before, the date of this
Assignment.

     3. Indemnity. PBC-Norfolk 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 PBC-Norfolk’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 Norfolk Lease
prior to the date of this Assignment. PBC-Pocono 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 PBC-Pocono’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 Pocono
Lease prior to the date of this Assignment. Assignee hereby agrees to indemnify against and hold
PBC-Norfolk 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 Norfolk Lease after the date of this
Assignment. Assignee hereby agrees to indemnify against and hold PBC-Pocono 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,

-8-

 

obligations, and liabilities assumed by Assignee pursuant to Section 2 of this Assignment and
accruing under the Pocono 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:
	 
	 	 
	

	 	PBC-NORFOLK, L.L.C., a Virginia limited liability
	

	 	company
	 
	 	 
	

	 	By:                                                             
	

	 	Name:                                                             
	

	 	Its:                                                             
	 
	 	 
	

	 	PBC-POCONO, L.L.C., a Virginia limited liability
	

	 	company
	 
	 	 
	

	 	By:                                                             
	

	 	Name:                                                             
	

	 	Its:                                                             

-9-

 

	 	 	 
	

	 	ASSIGNEE:
	 
	 	 
	

	 	GLADSTONE COMMERCIAL LIMITED PARTNERSHIP,
	

	 	a Delaware limited partnership
	 
	 	 
	

	 	By:                                                             
	

	 	Name:                                                             
	

	 	Its:                                                             

SCHEDULE A

[Norfolk Real Property Legal Description]

-10-

 

SCHEDULE B

[Description of Norfolk Lease]

-2-

 

SCHEDULE C

[Pocono Real Property Legal Description]

-3-

 

SCHEDULE D

[Description of Pocono 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 PBC-NORFOLK,
L.L.C., a Virginia limited liability company (“PBC-Norfolk”), and PBC-POCONO, L.L.C., a Virginia
limited liability company (“PBC-Pocono” and, together with PBC-Norfolk, “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)
PBC-Norfolk hereby quitclaims, grants, bargains, sells, assigns, transfers, sets over and delivers
unto Purchaser, its successors and assigns, all rights, title and interests of PBC-Norfolk, 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 “Norfolk Personalty”), and (b) PBC-Pocono hereby quitclaims, grants, bargains, sells, assigns,
transfers, sets over and delivers unto Purchaser, its successors and assigns, all rights, title and
interests of PBC-Pocono, 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 “Pocono Personalty” and, together with the
Norfolk Personalty, the “Personalty”).

     SELLER MAKES NO WARRANTY, EXPRESS OR IMPLIED, WHETHER OF TITLE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE.

-5-

 

PURCHASER HAS MADE AND RELIED UPON ITS OWN INSPECTION OF THE PERSONALTY AND ACCEPTS IT IN “AS IS”
CONDITION.

     IN WITNESS WHEREOF, PBC-Norfolk and PBC-Pocono have caused this Bill of Sale to be executed on
their behalf as of the ______ day of ______, 2004.

	 	 	 	 	 
	

	 	SELLER:	 	 
	 
	 	 	 	 
	

	 	PBC-NORFOLK, L.L.C., a Virginia limited liability
company
	 	     
	 
	 	 	 	 
	

	 	By:                                                             	 	 
	

	 	Name:                                                        	 	 
	

	 	Its:                                                             	 	 
	 
	 	 	 	 
	

	 	PBC-POCONO, L.L.C., a Virginia limited liability
company	 	 
	 
	 	 	 	 
	

	 	By:                                                             	 	 
	

	 	Name:                                                        	 	 
	

	 	Its:                                                             	 	 
	 
	 	 	 	 
	SCHEDULE A
	 
	 	 	 	 
	[Norfolk Property Legal Description]

-6-

 

SCHEDULE B

[Pocono Property Legal Description]

 - 2 -

 

SCHEDULE 5.2.1.8

SELLERS’ CERTIFICATE RE: REPRESENTATIONS AND WARRANTIES

THIS SELLERS’ CERTIFICATE RE: REPRESENTATIONS AND WARRANTIES (this “Certificate”), is made as of
______, 200______, by PBC-NORFOLK, L.L.C., a Virginia limited liability company , and
PBC-POCONO, L.L.C., a Virginia limited 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 (United States) 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:
	 
	 	 
	

	 	PBC-NORFOLK, L.L.C., a Virginia limited liability

company
	 
	 	 
	

	 	By:                                                             
	

	 	Name:                                                        
	

	 	Its:                                                             

 - 3 -

 

	 	 	 
	

	 	PBC-POCONO, L.L.C., a Virginia limited liability
company
	 
	 	 
	

	 	By:                                                             
	

	 	Name:                                                        
	

	 	Its:                                                             

EXHIBITS:

Exhibit A – Legal Description of both Properties

 - 4 -

 

SCHEDULE 5.2.1.9

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 5.2.2.4

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 Purchaser 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)
	 	 	Huxley Envelope Building Industrial
Park Blvd. Mt. Pocono, PA	 	 	United Envelope, LLC, a Delaware
limited liability company	 	 	Lease Agreement between PBC-Pocono,
L.L.C., and United Envelope, LLC, dated July 28, 2001	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	2)
	 	 	3701 E. Virginia Beach Blvd. Norfolk, VA	 	 	iGetSmart.com, Inc., a Delaware
corporation	 	 	Lease Agreement between
PBC-Norfolk, L.L.C., iGetSmart.com, Inc. dated July 28, 2001	 
	 	 	 	 	 	 	 	 	 	 	 	 

 - 9 -

 

SCHEDULE 6.16 - SERVICE CONTRACTS

NONE

 - 10 -exv10w6

 

Exhibit 10.6

TRADEMARK LICENSE AGREEMENT

     THIS TRADEMARK LICENSE AGREEMENT (“Agreement”) made this December 20, 2004 (the “Effective
Date”) between GLADSTONE MANAGEMENT CORPORATION, a corporation organized and existing under the
laws of the state of Delaware, with its principal place of business at 1616 Anderson Road, McLean,
Virginia 22102 (“Licensor”), and GLADSTONE COMMERCIAL CORPORATION, a corporation organized and
existing under the laws of the state of Delaware, with its principal place of business at 1616
Anderson Road, McLean, Virginia 22102 (“Licensee”) (together, the “Parties”).

     WHEREAS, Licensor is the owner of the GLADSTONE word mark and the GLADSTONE & Diamond G Design
Logo, both displayed in Appendix A attached hereto (the “Marks”), which Licensor has adopted, used
and continues to use in connection with financial services, namely, lending money to businesses,
investment of funds for others, financial investment in the field of real estate, lease-purchase
financing, and leasing of real property (the “Gladstone Services”);

     WHEREAS, Licensor owns a United States application to register the GLADSTONE & Diamond G
Design Logo in connection with the Gladstone Services, as evidenced by United States Serial No.
76/597,879;

     WHEREAS, Licensee desires a license to use the Marks on a worldwide basis in connection with
the Gladstone Services offered by Licensee in the field of financial investments;

     WHEREAS, Licensor is willing to grant Licensee a license to use the Marks pursuant to the
terms and conditions hereinafter recited;

     NOW, THEREFORE, in consideration of the mutual rights and obligations contained herein, the
Parties hereby agree as follows:

     1. LICENSE GRANT: Licensor hereby grants to Licensee a non-assignable, revocable,
nonexclusive license to use the Marks in connection with services relating to debt, equity and
other financial investments, namely, investment of funds for others in companies, and in connection
with the advertising, promotion, sale and marketing of such services.

     2. ROYALTY PAYMENT: In consideration for the license granted hereunder, Licensee agrees to
make a yearly royalty payment to Licensor, due on January 1 of each new year throughout the term of
the Agreement. The first such royalty payment, due on January 1, 2005, shall be in the amount of
One Dollar (US$1). The amount of the annual royalty payment due for each subsequent year shall be
reviewed and negotiated by the Parties every December preceding the upcoming year to assure that it
continues to reflect the arm’s length value of the rights granted to Licensee under the terms of
this Agreement. If the Parties are unable to mutually agree on an acceptable royalty payment for
the upcoming year by December 31 of the year preceding the upcoming year, the license granted
hereunder shall be revoked indefinitely until the Parties are able to reach an agreement on the
royalty payment.

 

 

     3. DISPLAY OF THE MARKS: Licensee will display the Marks only in such form and manner as
displayed in Appendix A attached hereto, except that Licensor shall also be permitted to (a) use
the word marks and trade names GLADSTONE COMMERCIAL and GLADSTONE COMMERCIAL CORPORATION in
connection with the services identified in Section 1 of this Agreement, and (b) use fonts and upper
and lower case lettering schemes of its choice with respect to the word marks GLADSTONE, GLADSTONE
COMMERCIAL, and GLADSTONE COMMERCIAL CORPORATION.

     4. ACKNOWLEDGMENTS: Licensee hereby acknowledges the validity of the Marks and Licensor’s
exclusive right, title, interest and all related rights in and to the Marks. Licensee further
recognizes the value of the reputation and goodwill associated with the Marks, and acknowledges
that the Marks have acquired secondary meaning, and that all related rights and goodwill belong
exclusively to Licensor.

     5. LIMITED LICENSE: Nothing in this Agreement shall be construed to grant Licensee any rights
or license to any trademark, trade name, certification mark, service mark, domain name, product
name, logo, trade secret, technical information, copyright or other intellectual property owned by
Licensor other than as specified herein. All rights not expressly granted herein to Licensee are
reserved to Licensor and may be exercised and exploited by Licensor during the term of this
Agreement freely and without restriction or limitation. Licensor shall have the right to exploit
its intellectual property in any manner whatsoever, including without limitation, the right to
license the Marks to a third party during the term of the Agreement.

     6. ASSIGNMENT TO LICENSOR: Upon request, Licensee shall transfer to Licensor any rights which
accrue to Licensee arising from its use of the Marks.

     7. PROTECTION OF THE MARKS: Licensee shall cooperate with Licensor in taking all appropriate
measures for the protection of the Marks, including but not limited to the use of appropriate
trademark symbols in connection with the same, and shall faithfully observe and execute the
requirements, procedures, and directions of Licensor with respect to the use and protection of the
Marks. Licensee shall not, during the term of this Agreement, or thereafter:

          a. do or permit to be done any act or thing which prejudices, infringes or impairs the rights
of Licensor with respect to the Marks;

          b. represent that it has any right, title, or interest in or to the Marks, other than the
limited license granted hereunder;

          c. use, register or attempt to register any trademarks, trade names, or logos, that are
identical to, or confusingly similar to the Marks or any other trademarks, trade names or logos of
Licensor or any of its subsidiaries or affiliated companies;

          d. offer any goods or services, or otherwise do anything, in connection with the Marks that
damages or reflects adversely upon Licensor, its subsidiaries or affiliated companies or any of
their trademarks, trade names, logos or domain names; and/or

2

 

          e. continue any use or action in relation to or in connection with the Marks or this Agreement
if objected to by Licensor.

     8. ASSIGNMENT, SUB-LICENSING: This agreement and the rights hereunder shall be freely
assignable by Licensor. This Agreement and the rights hereunder shall not be assignable by
Licensee without the prior written consent of Licensor, and any attempt to assign this Agreement
and/or the rights hereunder without such consent is null and void. Further, this Agreement and the
rights herein granted may not be sub-licensed by Licensee except to a company in which Licensee has
a majority ownership interest. Any attempt to sub-license this Agreement and/or the rights
hereunder in violation of the foregoing shall be null and void and of no force or effect.

     9. ASSIGNS & SUB-LICENSEES: To the extent this Agreement and the rights hereunder may be
assigned or sub-licensed pursuant to Section 8 above, this Agreement shall inure to the benefit of
and be binding upon the Parties’ assignees and sub-licensees. By taking an assignment or
sub-license, an assignee or sub-licensee shall be deemed to have accepted and agreed to perform all
of the rights and obligations of the assignor or sub-licensor under this Agreement.

     10. TERM AND TERMINATION: This Agreement shall become effective upon the Effective Date and
shall continue in full force and effect until terminated. The Agreement and the license granted
herein shall terminate:

          a. if Licensee, or substantially all of Licensee’s assets, are no longer managed by Licensor;
or

          b. if Licensee files a petition in bankruptcy or is adjudicated a bankrupt or insolvent, or
makes an assignment for the benefit of creditors, or an arrangement pursuant to any bankruptcy or
insolvency law.

Moreover, this Agreement may be terminated by either party upon THIRTY (30) days prior written
notice. Such termination may be with or without cause and in the event thereof neither party shall
be liable to the other for any loss, expense, liability, termination compensation or payments of
any kind, including but not limited to, any investment, promotion or selling expense. Upon
termination of this Agreement, Licensee shall immediately discontinue all use of the Marks.

     11. NOTIFICATION OF INFRINGEMENT: Licensee shall notify Licensor in writing of any
manufacture, distribution, sale or advertisement of any product or offering of any service, or any
other activity, that may constitute an infringement upon Licensor’s rights or Licensee’s authorized
use of the Marks. Licensee shall not commence, prosecute or institute any action or proceeding
against any person, firm, or entity alleging infringement, imitation, or unauthorized use of the
Marks.

     12. INFRINGEMENT ACTION: Licensor shall have the sole right to determine the appropriate
action to be taken against any infringement, imitation, or unauthorized use of the Marks including
having the sole discretion to settle any claims or any controversy arising out of any such claims.
Licensee shall provide Licensor with such reasonable assistance as Licensor may require in
obtaining any protection of Licensor’s rights to the Marks at no expense to

3

 

Licensor. Licensee shall not have any rights or claim against Licensor for damages or
otherwise arising from any determination by Licensor to act or not to act with respect to any
alleged infringement, imitation or unauthorized use by others, and any such determination by
Licensor shall not affect the validity or enforceability of this Agreement. Any and all damages
and settlements recovered or arising from any action or proceeding relating to the Marks shall
belong solely and exclusively to Licensor.

     13. QUALITY STANDARDS: So that the value of the goodwill and reputation associated with the
Marks will not be diminished, Licensee shall have an obligation to ensure that all services offered
by Licensee under or relating to the Marks, and all promotional, advertising and marketing
materials bearing the Marks, shall (a) be at least the same uniform high quality as offered by
Licensee immediately prior to the effective date of this Agreement, and (b) meet any reasonable
quality standards that Licensor may issue from time to time at its discretion. To monitor for
Licensee’s adherence to such obligations, Licensor shall have the right to review any services,
promotional materials, advertising materials, or marketing materials offered, rendered or
distributed by Licensee or on behalf of Licensee under the Marks. Services, promotional materials,
or marketing materials with or on which the Marks are used that do not meet the quality standards
or other requirements set forth in this Agreement shall not be sold, offered, distributed, or in
any way promoted in connection with the Marks, and all references to the Marks on promotional
materials and marketing materials shall be removed at Licensee’s expense. If the quality of the
services, or of any promotional and marketing materials, associated with the Marks falls below such
quality, Licensee shall use its best efforts to restore such quality. In the event that Licensee
has not taken appropriate steps to restore such quality within THIRTY (30) days after receiving
from Licensor notification that Licensee in is breach of this Paragraph 13, Licensor shall have the
right to require that Licensee immediately cease using the Marks, and Licensee acknowledges that it
shall do so if instructed accordingly by Licensor.

     14. LICENSING NOTICE: Licensee shall include a notice on all advertising, promotional
literature, Internet sites, and other marketing materials that the Marks are licensed from
Licensor. The notice shall be as follows or as otherwise specified by Licensor:

“The GLADSTONE word mark and the GLADSTONE & Diamond G Design mark are
trademarks of Gladstone Management Corporation and are used under license to
Gladstone Commercial Corporation.”

     15. CHOICE OF LAW: This Agreement shall be governed by and construed under the laws of the
Commonwealth of Virginia, excluding conflicts of laws principles. Any suit hereunder may be
brought in the federal or state courts of the Commonwealth of Virginia, and both Parties hereby
agree to submit to the jurisdiction thereof.

     16. SEVERABILITY: In the event that one or more provisions of this Agreement shall, for any
reason, be held to be invalid, illegal, or unenforceable, the remaining provisions shall be
unimpaired and shall be given full force and effect.

     17. INDEMNITY: Licensee hereby agrees to indemnify, defend, and hold Licensor harmless from
and against any and all claims, suits, obligations, causes of action, liabilities, costs, and
damages based upon, arising out of, or directly or indirectly related to, the operations or
business conducted by Licensee under this or related to this Agreement. Said indemnity shall

4

 

further extend to the Licensee’s performance or nonperformance under this Agreement, including
any default on the part of the Licensee, whether or not any such violation or failure to comply has
been disclosed to Licensor. This indemnity and all representations and warranties made by the
Parties herein or in any instrument or document furnished in connection herewith shall survive
termination of the Agreement.

     18. ENTIRE AGREEMENT: This Agreement constitutes the understanding of the Parties with
respect to the subject matter of this Agreement and supersedes all prior understandings, whether
written or oral, express or implicit, pertaining to the subject matter of this Agreement. This
Agreement shall not be modified except by written instrument agreed to and executed by both
Parties, or their authorized representatives. Facsimiles and photo copies of executed versions of
this Agreement shall be treated as originals.

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and the year
first written above.

	 	 	 
	GLADSTONE MANAGEMENT CORPORATION

	 	GLADSTONE MANAGEMENT CORPORATION
	 
	 	 
	By:
 
	 	By:  

	 
	 	 
	Title:
 
	 	Title:  

	 
	 	 
	Date:
 

	 	Date:
 

5

 

APPENDIX A

GLADSTONE

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