AGREEMENT OF SALE

EXECUTION COPY

AGREEMENT OF SALE

by and between

Pacy Oletsky, general and limited partner, Jack L. Baylin, general and limited partner, Michael Baylin, limited partner, Gail Baylin, limited partner, Bonnie Oletsky, limited partner, Howard Gartner, limited partner, Ruth P. Weiss, limited partner, The Abraham & Virginia Weiss Charitable Trust A, limited partner, and The Abraham & Virginia Weiss Charitable Trust B, limited partner, (collectively the “Owners”),

Seller

and

BERKSHIRE INCOME REALTY, INC.,

Buyer

BUSDOCS/1447877.5

AGREEMENT OF SALE

This AGREEMENT made this 16th day of March, 2005 by and among the undersigned (the “Seller”), being all of the Owners of PELHAM WOOD LIMITED LIABILITY LIMITED PARTNERSHIP , a Maryland limited liability limited partnership (the “Partnership”), having an office at 106 Old Court Road, Suite 203, Baltimore, Maryland 21208 and BERKSHIRE INCOME REALTY, INC., a Maryland corporation organized under the laws of the State of Maryland, having an office at c/o The Berkshire Group, One Beacon Street, Suite 1500, Boston, Massachusetts 02108, or a subsidiary or an affiliated entity (a subsidiary or an affiliated entity being an entity in which said Berkshire Income Realty, Inc. or its principals own a controlling interest) (“Buyer”).

W I T N E S S E T H :

Seller hereby agrees to sell and assign to Buyer, and Buyer hereby agrees to purchase from Seller, upon the terms and conditions hereinafter set forth, all of Seller’s right, title and interest in and to all of the partnership interests (the “Partnership Interests”) in the Partnership, the sole assets of which consist of the following:

1.1                   Real Property . That certain lot or parcel of real property located in Baltimore County, Maryland and commonly known as 34 Dowling Circle, which is more particularly described on Exhibit “1.1” hereto, and the buildings and improvements situated on each such parcel (collectively, the “Premises” ), together with all the rights and appurtenances pertaining to the Premises, including any right, title and interest of Seller (if any) in and to adjacent streets and rights-of-way (and together with the Premises, the “ Real Property ”);

1.2                   Personal Property . The fixtures, furnishings, equipment and other items of personal property, if any, owned by Seller and located on, and used in connection with the operation of, the Premises, including, without limitation the items, if any, listed on Exhibit “1.2” hereto (collectively, the “Personal Property” ); and

1.3                   Related Materials . To the extent transferable and in the possession of Seller or Seller’s property manager, Seller’s right, title and interest, if any, in and to the Existing Leases (as hereinafter defined), the Existing Agreements (as hereinafter defined), any intangible property now or hereafter owned by Seller related to the Real Property or the Personal Property including, without limitation, any trademarks, trade styles, service marks, software, domain names and websites related to the Real Property or the Personal Property, all rights under any certificates of occupancy, licenses, permits, warranties and guaranties, if any, which relate to the Real Property or Personal Property to be retained by the Partnership after the Closing, and all contract rights, escrow or security deposits, utility agreements or other rights related to the ownership of or use and operation of the Real Property or the Personal Property (the “ Intangible Property ” and together with the Real Property and the Personal Property, the “ Property ”).

1.4                   It is understood and agreed that this sale does not include any cash in bank, chose in action, or the like (collectively “cash”) of the Partnership and that Seller shall, at or prior to closing, withdraw and pay over to Seller all such cash belonging to the Partnership. Sellers shall pay, or cause to be paid, all accounts payable of the Partnership, existing or accrued prior to closing, which payments shall be made at or prior to Closing. In the event any accounts payable of the Partnership cannot be calculated as of Closing (hereinafter defined) because the amount thereof is not ascertained or an invoice therefor

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has not been received, Seller covenants and agrees to pay all such accounts payable of the Partnership from their own funds within fifteen (15) days after such sums are determined.

The purchase price to be paid by Buyer to Seller for the Partnership Interests is the sum of THIRTY MILLION ONE HUNDRED SIXTY THOUSAND AND NO/100 ($30,160,000.00) (the “Purchase Price” ), adjusted in accordance with Section 6 hereof. The Purchase Price shall be paid as follows:

2.1                   Deposit . The sum of TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) (the “Initial Deposit” ) shall be deposited with the Title Company, as hereinafter defined (“ Title Company ” or “Escrowee” ) within 24 hours of the execution of this Agreement by Buyer and Seller and delivery of a fully-executed counterpart to each (the “Effective Date” ). Within two (2) business days after the expiration of the Inspection Period, as hereinafter defined, an additional TWO HUNDRED FIFTY THOUSAND AND NO/100 Dollars ($250,000.00) (the “Second Deposit” ), in immediately available funds, shall be deposited with the Title Company. The First Deposit and the Second Deposit, together with any interest earned thereon are hereinafter referred to as the “ Deposit . ” All interest earned on the Deposit shall be added to and made a part of the Deposit for all purposes hereof. Interest earned on the Deposit shall be taxed to the account of Buyer and Buyer shall provide Escrowee with its tax identification number for reporting purpose with delivery of the Initial Deposit.

2.1.1               Escrow Agent . Upon receipt from Buyer of the Deposit, Escrowee shall invest the Deposit in an interest-bearing account or money market fund acceptable to Buyer and Seller. All interest on the Deposit shall accrue to Buyer, except as otherwise provided in Section 14.1 hereof. At the Closing, Escrowee shall release the Deposit to Seller, which Deposit shall be credited against the balance of the Purchase Price owed by Buyer to Seller. Escrowee shall agree to hold and dispose of the Deposit in accordance with the terms and provisions of this Agreement.

2.1.2               Escrow Provisions . Escrowee agrees to hold, keep and deliver the Deposit and all other sums delivered to it pursuant hereto in accordance with the terms and provisions of this Agreement. Escrowee shall not be entitled to any fees or compensation for its services hereunder. Escrowee shall be liable only to hold said sums and deliver the same to the parties named herein in accordance with the provisions of this Agreement, it being expressly understood that by acceptance of this Agreement, Escrowee is acting in the capacity of a depository only and shall not be liable or responsible to anyone for any damages, losses or expenses unless same shall have been caused by the negligence or willful malfeasance of Escrowee. In the event of any disagreement between Buyer and Seller resulting in any adverse claims and demands being made in connection with or for the monies involved herein or affected hereby, Escrowee shall be entitled to refuse to comply with any such claims or demands so long as such disagreement may continue; and in so refusing Escrowee shall make no delivery or other disposition of any of the monies then held by it under the terms of this Agreement, and in so doing Escrowee shall not become liable to anyone for such refusal; and Escrowee shall be entitled to continue to refrain from acting until (a) the rights of the adverse claimants shall have been finally adjudicated in a court of competent jurisdiction of the monies involved herein or affected hereby, or (b) all differences shall have been adjusted by agreement between Seller and Buyer, and Escrowee shall have been notified in writing of such agreement signed by the parties hereto. Escrowee shall not be required to disburse any of the monies held by it under this Agreement unless in accordance with either a joint written instruction of Buyer and Seller or an Escrow Demand (as hereinafter defined) from either Buyer or Seller in accordance with the provisions hereinafter. Upon receipt by Escrowee from either Buyer or Seller (the “ Notifying Party ”) of any notice or request (the “ Escrow Demand ”) to perform any act or disburse any portion of the monies held by Escrowee under the terms of this Agreement, Escrowee shall give written

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notice to the other party (the “ Notified Party ”). If within five (5) days after the giving of such notice, Escrowee does not receive any written objection to the Escrow Demand from the Notified Party, Escrowee shall comply with the Escrow Demand. If Escrowee does receive written objection from the Notified Party in a timely manner, Escrow Agent shall take no further action until the dispute between the parties has been resolved pursuant to either clause (a) or (b) above. Further Escrowee shall have the right at all times to pay all sums held by it (i) to the appropriate party under the terms hereof, or (ii) into any court of competent jurisdiction in the State of Maryland after a dispute between or among the parties hereto has arisen, whereupon Escrowee’s obligations hereunder shall terminate.

2.1.3               Indemnification . Seller and Buyer jointly and severally agree to indemnify and hold harmless said Escrowee from any and all costs, damages and expenses, including reasonable attorneys’ fees, that said Escroweet may incur in its compliance of and in good faith with the terms of this agreement; provided, however, this indemnity shall not extend to any act of negligence or willful malfeasance on the part of the Escrowee.

2.2                   Escrow Amount . At the Closing, Seller and Buyer shall enter into an escrow agreement in the form attached hereto as Exhibit “2.2” (the " Escrow Agreement "), pursuant to which Seller shall deposit One Million and 00/100 Dollars ($1,000,000.00) (the " Escrow Amount ") with the Escrowee, which shall be held by the Escrowee in a segregated account as security for Seller’s indemnification obligations under this Agreement and for breaches of representations and warranties of Seller under this Agreement. All interest accruing on the Escrow Amount shall be for the benefit of Seller. In the event Buyer makes a written claim or demand for indemnification under the Agreement (an " Indemnification Claim "), and Seller does not dispute such Indemnification Claim, or is determined to be liable for and in respect of such Indemnification Claim by a court of competent jurisdiction, then the Escrowee promptly thereafter shall pay such Indemnification Claim in full to Buyer, all as more particularly provided in the Escrow Agreement. On the date which is six (6) months after the Closing Date (as defined in Section 4 hereof), fifty percent (50%) of the Escrow Amount then remaining in escrow under the Escrow Agreement and not then subject to an outstanding Indemnification Claim shall be paid by the Escrow Agent to Seller. The Escrow Agreement shall expire upon the termination of the Survival Period (as defined in Section 22.3 hereof), and immediately thereafter the Escrow Agent shall pay the portion, if any, of the then remaining Escrow Amount not in dispute to Seller; provided, however, that if prior to the expiration of the Survival Period, Buyer shall have made an Indemnification Claim or commenced litigation or any other proceeding on account of any such claim, the term of the Escrow Agreement shall be extended, and the Escrow Agent shall continue to hold in escrow the portion of the then Escrow Amount in dispute, in each case until the final resolution of such Indemnification Claim or litigation or proceeding relating thereto, all as more particularly provided in the Escrow Agreement.

2.3                   Closing Payment . At Closing, Buyer shall pay the balance of the Purchase Price to Seller, adjusted as hereinafter provided, through the Title Company, by wire transfer of immediate federal funds, to accounts specified by Seller at a bank or banks designated by Seller. For convenience of distribution of the Purchase Price among Sellers, the Purchase Price may be paid to a nominee or agency account for distribution designated by Pacy Oletsky and/or Jack L. Baylin, the present general partners of the Partnership.

The closing of the transfers contemplated hereby (the “Closing”) shall be held and completed on April 27, 2005 (such date, as the same may be extended pursuant to Section 4.2.2, Section 4.3 or Section 12.1.5, is hereafter referred to as the “Closing Date”), or in another mutually agreeable manner and location. Notwithstanding the foregoing, and so as to comply with notice and payoff requirements under Seller’s financing documents secured by the Property, in no event shall Closing be held more than four

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(4) business days prior to the end of the month in which the Closing Date is to occur, and if necessary to accommodate this provision, Closing shall be delayed so that it shall be held no more than four (4) business days prior to the end of the next month in which Closing was to occur. It is agreed that time is of the essence of this Agreement. The transactions described herein shall be closed by means of concurrent delivery of the documents of title, transfer of interest, and delivery of the Purchase Price, customarily referred to as a “New York Style” closing.

4.1                   Title to Premises . Fee simple title to the Premises shall be vested in the Partnership at the completion of Closing, as herein defined, subject only to the Permitted Encumbrances (hereinafter defined). Seller’s interest in the Personal Property shall be vested in the Partnership at the completion of Closing. Title to the Premises shall be such as will be insured by the Title Company pursuant to the standard stipulations and conditions of the most current standard ALTA form of Owner’s Title Insurance Policy in use in the State of Maryland, in the amount of the Purchase Price, free and clear of all liens and encumbrances, except for the Permitted Encumbrances. The term “Permitted Encumbrances” shall mean (x) the Existing Leases (as hereinafter defined) in effect as of the Closing Date, and any new lease made by the Partnership after the date hereof in accordance with this Section 4, (y) any matters set forth in the Title Commitment and/or reflected on the Survey Plan as to which Buyer does not timely object in accordance with this Section 4 and (z) any matters reflected on any update of the Title Commitment as to which Buyer does not timely object in accordance with this Section 4.

4.2.1 Survey . Simultaneous with the execution of this Agreement by Seller, Seller will deliver to Buyer a 1997 ALTA survey plan of the Premises (the “Existing Survey” ), and on or before the expiration of the Inspection Period, Buyer may obtain a current as-built survey (the “ New Survey ”) of the Real Property by a registered land surveyor.

4.2.2 Survey Matters . Should the Existing Survey contain any encumbrances, encroachments or other survey defects (collectively “Existing Survey Matters”) which are not acceptable to Buyer in its sole discretion, Buyer shall, prior to the expiration of the Inspection Period, notify Seller if any such Existing Survey Matters are unacceptable. In addition, if Buyer obtains a New Survey, should the New Survey contain any encumbrances, encroachments or other survey defects which do not appear on the Prior Survey (collectively, “New Survey Matters”) and which are not acceptable to Buyer in its sole discretion, Buyer shall, prior to the expiration of the Inspection Period, notify Seller if any such New Survey Matters are unacceptable (the Existing Survey Matters and the New Survey Matters are referred to collectively as “Survey Matters”). If Buyer does not obtain a New Survey or if Buyer fails to so notify Seller of any unacceptable Survey Matters as described above, all Survey Matters shall be deemed accepted by Buyer. If any Survey Matters are unacceptable to Buyer and Buyer timely notifies Seller in writing of such fact as above provided, Seller, in Seller’s sole discretion, shall have five (5) days from the date Seller receives notice of such unacceptable Survey Matters (the “Seller Response Deadline”) to elect to either cure such Survey Matters as a condition to closing, or refuse to cure such Survey Matters. Seller shall be deemed to have given notice to Buyer that Seller refuses to cure any unacceptable Survey Matters, which Seller may so do in its sole discretion, unless Seller, prior to the Seller Response Deadline, shall notify Buyer in writing that Seller will attempt to cure such unacceptable Survey Matters. If Seller refuses to cure said unacceptable Survey Matters within the time period provided, Buyer may (a) terminate this Agreement on or before the date which is five (5) days after the Seller Response Deadline and the Deposit shall be returned to Buyer, or (b)  waive such Survey Matters and accept title subject thereto, in which event there shall be no reduction in the Purchase Price if Closing occurs in accordance with this Agreement. If Seller shall elect to cure any Survey Matter that is not a Permitted

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Exception (as defined below), if necessary, the Date of Closing may be extended by Seller for up to twenty (20) days to allow Seller to attempt to cure such survey matter.

4.3                   Title Defects . Buyer may order, at its sole cost and expense, a title commitment with respect to the Premises (the “Title Commitment”) . Buyer shall give Seller a written notice of any objection to title (a “Title Notice” ) prior to the expiration of the Inspection Period. Seller shall have no obligation to cure any alleged defect, objection or survey matter raised in the Title Notice, except for the Monetary Liens referred to in Section 4.4 of this Section 4 that are to be paid by Seller at or before Closing. Any encumbrance or other title exception or matter to which Buyer does not so object, shall thereafter be deemed a Permitted Encumbrance. Seller shall have the right, at its sole option, upon written notice to Buyer within five (5) days of receipt of Buyer’s Title Notice, to (A) defer the Closing for a period not exceeding ten (10) days after the Closing Date to give Seller an opportunity, at Seller’s sole option, of either (i) attempting to remove any encumbrance or other title exception or matter which is not a Permitted Encumbrance or (ii) providing the Title Company such assurances as the Title Company requires to insure Buyer to Buyer’s satisfaction against any loss arising from such encumbrance or other title exception or matter, or (B) elect to do neither (i) nor (ii), in which event Buyer shall have the election set forth in subparagraph 4.4 of this Section 4. Failure by Seller to deliver such notice shall be deemed an election under subpart (B) above. If Seller shall elect to cure any title matter that is not a Permitted Exception, if necessary, the Date of Closing may be extended by Seller for up to twenty (20) days to allow Seller to attempt to cure such title matter.

4.4                   Failure of Title . If on or before the Closing Date title to the Premises is not insurable as set forth in the third sentence of Section 4.1 above and Seller does not elect to cure same or provide the assurances as provided in subpart 4.3(A) above, Buyer may elect, as its sole right and remedy by reason thereof, within five (5) business days of Seller’s notice in accordance with the penultimate sentence of Section 4.3 above, either (i) to take such title to the Premises as Seller can convey, with no abatement of the Purchase Price on account of such objected matters (except as set forth below) or (ii) upon written demand by Buyer to Seller and Escrowee, to terminate this Agreement and receive the return of the Deposit. Notwithstanding the foregoing provisions of this Section 4, Seller shall be obligated, at Seller’s expense, to cause the removal of, or cause the Title Company to insure Buyer against loss by reason of, any lien filed against the Real Property prior to the Closing that can be removed by the payment of a liquidated sum (“ Monetary Liens ”). Upon the return of the Deposit, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller set forth in this Agreement which expressly survive the cancellation of this Agreement).

5.    Seller’s Pre-Closing Deliveries . On or prior to the date of this Agreement, Seller has furnished to Buyer the following:

(a)   Leases . Access on-site to the originals (or copies, if originals are not available) of all leases listed on the “ Rent Roll ” attached hereto as Exhibit “5.1(a)” (the " Existing Leases "), and related Existing Lease files. The Rent Roll shall include: apartment number, unit type, tenant name, commencement and termination dates, lease rent (including any prepaid rent), security deposits and details of any concessions and current delinquencies, in such form as is prepared by the Partnership in the ordinary course of business.

(b)   Taxes . A copy of the 2002, 2003 and 2004 real estate and personal property tax statements for the Real Property.

(c)   Existing Agreements . Copies of all services, maintenance, supply and management contacts entered into by Seller or the Partnership (collectively, " Existing Agreements ")

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listed on Exhibit “5.1(c)” attached hereto currently affecting the use, ownership, maintenance and/or operation of the Real Property.

(d)   Utility Bills . Access on-site to the originals (or copies, if originals are not available) of all gas, electric, water and sewer bills relating to the Real Property for June 2003 to July 2004, and a general ledger detail of gas, electric, water and sewer accounts for May 2003 through June 2004.

(e)   Personal Property . A current inventory of all Personal Property, including all tangible personal property owned by the Partnership, and located on or used in connection with the Real Property and to be retained by the Partnership after the Closing listed on Exhibit “1.2” attached hereto.

(f)    Plans . Access on-site to any existing plans and specifications with respect to the Real Property (which records may be incomplete) in the possession of Seller.

(g)   Third Party Reports . Copies of all soils, engineering, architectural, environmental, termite, pest control, endangered species, ADA and Fair Housing Act compliance, handicapped access reports or studies and any other third party reports applicable to the Property.

(h)   Permits . Copies of certificates of final inspection and occupancy, pool permits, building permits and licenses for the operation of the Real Property.

(i)     Litigation . A list of actions commenced against tenants indicated on the Rent Roll by asterisks beside the names of such tenants.

(j)     On-Site Reports . A complete set of monthly profit and loss statements (" Monthly Operating Reports ") from the Seller’s property management and accounting systems located at the Real Property from January 2004 to February 2005.

(k)   Partnership Agreement . A copy of the Partnership Agreement of the Partnership and all amendments thereto (collectively referred to as the " Partnership Agreement ") attached hereto as Exhibit “5.1(k) ” .

(l)     Certificate of Limited Partnership. A copy of the Certificate of Limited Partnership and all amendments thereto (collectively referred to as the " Certificate of Limited Partnership ") attached hereto as Exhibit “5.1(l) ” .

(m)                  Warranties . Access on site to all warranties regarding the Property, if any, in the possession of Seller or the Partnership.

(n)   Capital Reports and Budgets . Copies of all capital expenditure reports (general ledger) and budgets for 2003, 2004 and 2005.

6.1                   Leases . At all times after the Effective Date, Seller shall not enter into new leases for portions of the Premises now vacant or for portions of the Premises which may become vacant, or enter into any amendments of any Existing Leases or consent to any renewals, extensions or expansions of Existing Leases or agree to any rental concessions (other than (i) those to which the tenant is entitled pursuant to the terms of the Existing Leases, and (ii) those entered into in accordance with the

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leasing guidelines with respect to base rent, term, rental concessions and tenant qualifications set forth on Exhibit “6.1” (the “ Leasing Guidelines ”) using forms substantially the same as those used for the Existing Leases) without first submitting such a copy of such proposed lease or lease amendment (including any renewal, extension or expansion as to which the lessor's consent is required) to Buyer for Buyer's approval, which approval shall not be unreasonably withheld or delayed. If Buyer does not disapprove in writing such a proposed lease or amendment (or renewal, extension or expansion agreement) within five (5) business days of Buyer's receipt of a copy thereof, Buyer shall be deemed to have approved the proposed lease or amendment (or renewal, extension or expansion agreement). All such new leases and modifications approved or deemed approved by Buyer (and renewals, extensions or expansions approved or deemed approved by Buyer or as to which the lessor's consent is not required), all new leases entered into prior to the expiration of the Inspection Period, and the presently existing leases that are listed on Exhibit "5.1(a)" hereto are collectively herein called the " Existing Leases ". The termination or expiration of any of the Existing Leases prior to Closing shall not excuse Buyer from its obligation to complete Closing and to pay the full Purchase Price.

6.2                   Ready Work . On or prior to the Closing Date, Seller shall have performed all Ready Work (as hereinafter defined). In the event that all Ready Work has not been completed for more than fifteen (15) apartments prior to the Closing Date, Buyer may elect to terminate this Contract and the Deposit shall be returned to Buyer, and neither party shall have further rights or obligations pursuant to this Contract. In the event that all Ready Work has not been completed for fifteen (15) or less apartments, or if Buyer waives its right to terminate this Agreement as above provided, Buyer shall proceed to close the transaction, and receive a credit on account of the incomplete Ready Work in an amount equal to $250 per unit, plus the cost of replacing missing appliances or repairing existing appliances. “ Ready Work ” shall mean all work necessary (including, without limitation, supplying operable kitchen appliances, carpet cleaning and repainting) to make all apartments within the Property that have been vacant for more than seven (7) days prior to the Closing Date ready for occupancy by incoming tenants, consistent with Seller’s past practices. It is understood and agreed that apartments 1009 Halstead Road T-1 and T-2 are used for storage and 10 Altura Court T-1 is used for maintenance and are not required to be made ready for occupancy by tenants as part of the Ready Work required hereunder.

6.3                   Agreements . At all times after the Effective Date, the Partnership shall not have the right to enter into new service or maintenance agreements or modify any existing service or maintenance agreements in any material respect without Buyer’s approval, which may not be unreasonably withheld or delayed; provided , however , that Buyer’s approval shall not be required for any such new agreement that shall be terminable, without penalty or premium, on or before the Closing Date. Buyer and Seller hereby acknowledge that the laundry lease dated as of April 17, 1996 between Seller and Solon Automated Services, Inc. (successor entity is Coinmach Corporation), as amended by Addendum to Lease Agreement dated as of May 29, 2001 (the “Laundry Lease”) expires on May 31, 2006 and may not be terminated prior to May 31, 2006 without the payment of a penalty. The “ Existing Agreements ” shall mean the existing agreements listed on Exhibit “5.1(c)” hereto (together with any other agreements entered into in accordance with this Section 6.3. During the Inspection Period, Buyer shall notify Seller which Existing Agreements Buyer wishes to assume at Closing and which Existing Agreements (except the Laundry Lease) Buyer wants terminated at Closing (the “ Rejected Agreements ”). As to the Rejected Agreements, at Closing Seller shall give notice of termination, at its sole cost and expense, as to such Rejected Agreements so designated by Buyer, and Buyer will assume all other Existing Agreements from the date of the Closing.

6.4                   Ongoing Operations . During the pendency of this Agreement, Seller shall carry on its business and activities relating to the Premises, including (a) the leasing of the Premises, substantially in the same manner as it did for the one year period preceding the date of this Contract and maintain staffing at the same levels; (b) all maintenance, repair and replacement work in accordance with

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Seller’s policies and practices prior to the date of this Agreement including: (i) replacement of carpet and appliances (including individual air-conditioning units) in the ordinary course of business, (ii) interior painting in the ordinary course of business, and (iii) day to day maintenance and repair of roofs and other building systems, decks, patios, stairways, parking lots and structures, landscaping, gates and fences and other items requiring periodic maintenance and repair. Notwithstanding the foregoing, nothing contained in this Section shall affect or otherwise diminish the rights and obligations of Buyer and Seller under Section 17 with respect to a casualty.

6.5                   Management . During the pendency of this Agreement, Seller will manage the Premises in substantially the same manner as Seller managed the Premises prior to the date hereof. Seller shall maintain inventories of supplies, building materials, etc. at the same levels it has maintained them during the one (1) year period prior to the date of this Agreement. Seller will not remove any Personal Property except as may be required for necessary repair or replacement, and replacements shall be of equal quality and quantity as existed as of the time of its removal.

7.1.1               Taxes and Fees . Real estate taxes for the real estate tax year in which the Closing occurs and annual municipal or special district assessments (on the basis of the actual fiscal tax years for which such taxes are assessed), lienable water and sewer rentals, sums paid to or paid or payable by Seller under the Existing Agreements, license, permit and inspection fees and rentals, shall be apportioned as of the Closing Date between Buyer and Seller. If the tax bill for the real estate tax year in which the Closing occurs has not been issued on or before the date of the Closing, the apportionment of taxes shall be computed based upon the most recent tax bill available plus five percent (5%). If, on the date of Closing, bills for the real estate taxes imposed upon the Premises for the real estate tax year in which Closing occurs have been issued but shall not have been paid, such taxes shall be paid at the time of Closing. Seller shall not be obligated to, but shall have the right to, commence and conduct, at its sole cost and expense, any tax certiorari or reduction proceedings relating to the Premises in respect of the real estate tax year in which the Closing occurs. Buyer agrees to reasonably cooperate with Seller in all such proceedings brought by Seller.

7.1.2               Rent . Collected rent, including, without limitation, fixed rent, prepaid rent, additional rent and any other sums paid under the Leases, shall be apportioned as of the Closing Date in accordance with the provisions of this Section 7. All rent under the Leases collected by Buyer after Closing shall be applied first to unpaid rent accruing to the month of closing (but only to the extent received during such month), then to unpaid rent accruing after the Closing, and then to unpaid rent accruing prior to the month of the Closing. Seller (upon written notification to Buyer) shall be entitled to sue a tenant before and/or after Closing, for any delinquent rent (or other tenant charges) due to the Partnership (and not previously paid to the Partnership) under a Lease, so long as Seller does not evict such tenant.

7.1.3               Leasing Costs . Seller shall pay all leasing commissions, rent concessions, and tenant costs (including, without limitation, tenant improvement costs, moving costs, design costs incurred by the tenant, lease buyout costs and similar tenant inducement costs) in connection with Leases (and renewals, extensions or expansions thereof) entered into (or, in the case of renewals, extensions and expansions, exercised) prior to the Closing Date.

7.1.4               Utilities . Water, electric, sewer, and all other utility and fuel charges shall be apportioned as of the Closing Date between Buyer and Seller.

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7.1.5               Contract Arrearages . Any portion of any payments received by Buyer after the date of Closing under any of the Existing Agreements that relates to periods prior to Closing shall be determined by Buyer upon receipt of such payment and shall promptly be paid by Buyer to Seller. Any portion of any payments received by Seller after the date of Closing under any of the Existing Agreements that relates to periods after the Closing shall be determined by Seller upon receipt of such payment and shall promptly be paid by Seller to Buyer. Any income payable in connection with any Existing Agreement will be prorated, and any lump sum or up front payments paid to Seller with respect to any Existing Agreement will be prorated.

7.1.6               Other Apportionments . Amounts payable under the Existing Agreements and other Premises operation and maintenance expenses and other recurring costs, including license and permit fees, shall be apportioned as of the Closing Date.

7.1.7               Preliminary Closing Adjustment . Seller and Buyer shall jointly prepare a preliminary Closing Statement on the basis of the Leases, Existing Agreements, real estate taxes and other sources of income and expenses for the Property, and shall deliver such preliminary Closing Statement to each other and the Title Company on or prior to the Closing Date. All apportionments and prorations provided for in this Section 7 to be made as of the Closing Date shall be made, on a per diem basis, as of midnight of the day immediately preceding the Closing Date. The preliminary Closing Statement and the apportionments and/or prorations reflected therein shall be based upon actual figures to the extent available. If any of the apportionments and/or prorations cannot be calculated accurately based on actual figures on the Closing Date, then they shall be calculated based on Seller’s and Buyer’s good faith estimates thereof (other than with respect to determination of real estate taxes that shall be estimated as set forth in Section 7.1.1 above), subject to reconciliation as hereinafter provided.

7.1.8               Post-Closing Reconciliation . If there is an error on the preliminary Closing Statement or, if after the actual figures become available as to any items that were estimated on the preliminary Closing Statement, the proration or apportionment shall be adjusted based on the actual figures as soon as feasible but not later than twelve (12) months after the Closing Date. Either party owing the other party a sum of money based on such subsequent proration(s) shall promptly pay said sum to the other party.

7.2                   Tenant Security Deposits . All security deposits held by or for the Partnership under the Existing Leases, as shown on the Rent Roll hereto shall be retained by the Partnership after Closing.

7.3                   Utility Readings . Seller shall use reasonable efforts to obtain readings of the water and electric meters on the Premises to a date no sooner than ten (10) days prior to the Closing Date. At or prior to Closing, Seller shall pay all charges based upon such meter readings. However, if after reasonable efforts Seller is unable to obtain readings of any meters prior to Closing, Closing shall be completed without such readings and upon the obtaining thereof after Closing, Seller shall pay the charges incurred prior to Closing as reasonably determined by Seller and Buyer based upon such readings

7.4                   Survival . The provisions of this Section 7 shall survive Closing and delivery of the Deed.

8.1                   Buyer’s Costs . Buyer shall pay (i) the costs of its counsel, architect, engineers and other professionals and consultants, (ii) of the costs of the Buyer’s standard title policy and other Title Company charges, (iii) 50% of state and local transfer and recordation taxes, and similar taxes, if any and

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(iv) the cost of obtaining the New Survey and all other closing costs including costs of financing, including mortgage tax.

8.2                   Seller’s Costs . Seller shall pay (i) the costs of its counsel, and (ii) 50% of state and local transfer and recordation taxes, and similar taxes, if any, and (iii) all other Closing costs of Seller.

9.1                   Assessments . Buyer shall pay all unpaid installments becoming due on or after the Closing Date in respect of assessments against the Premises or any part thereof for improvements or other work (including any fines, interest or penalties thereon due to the non-payment thereof), and shall indemnify, defend and save Seller harmless from any claims therefore or any liability, loss, cost or expenses arising therefrom. Seller shall pay all unpaid installments becoming due prior to the Closing Date in respect of assessments against the Premises or any part thereof for improvements or other work (including any fines, interest or penalties thereon due to the non-payment thereof), and shall indemnify, defend and save Buyer harmless from any claims therefore or any liability, loss, cost or expenses arising therefrom.

9.2                   Survival . The provisions of this Section 9 shall survive Closing and delivery of the Deed.

he Sellers hereby represent to Buyer, as of the date hereof and as of Closing, as follows:

10.1                Organization . the Partnership is a Maryland limited liability limited partnership duly organized and validly existing under the laws of the State of Maryland and has all requisite power and authority to carry on its business as now conducted.

10.2                Partnership Interests . The partnership interests of the Partnership set forth in the Partnership Agreement constitute 100% of such partnership interests and the Partnership Interests hereby sold of each Seller is held and owned by such Seller free and clear of any and all liens and encumbrances, that each Seller has full power and authority to sell such Seller’s respective Partnership Interest upon the terms provided in this Agreement, and there are no outstanding option rights or other arrangements with respect to such Seller’s Partnership Interest except as set forth in the Partnership Agreement. By execution of this Agreement, each Seller hereby waives any option rights or other arrangements such Seller may have, either under the Partnership Agreement or otherwise, to purchase or acquire the Partnership Interest of any other Seller.

10.3                Partnership Agreement . That the copy o