AGREEMENT OF SALE

THIS AGREEMENT OF SALE (this Agreement) is made as of this 19th day of December, 2002 (the Effective Date), by and between JOLLY KNOLLS, LLC, a Maryland limited liability company (Seller), and CORPORATE OFFICE PROPERTIES, L.P., a Delaware limited partnership (Buyer).

Background

Seller is the owner in fee simple of that certain parcel of land known as Cedar Knolls (the Land), located in Anne Arundel County, Maryland (the County), within The National Business Park (National Business Park), and containing approximately 108.183 acres.  The Land is more particularly shown on the plats entitled The National Business Park Phase 4 Formerly Cedar Knolls Property Previously Recorded in Liber 9138, folio 677, consisting of plats 1 through 7 and recorded among the Land Records at Plat Book 246, pp. 23 through 29, plats 12850 through 12856 (collectively, the Subdivision Plat).

Under the Subdivision Plat, the Land has been divided into two phases.  The first phase is that portion of the Land which has been subdivided into eight (8) Lots, numbered 21 through 25 and 30 through 32, inclusive, on the Subdivision Plat.  Lots Nos. 21-25 and 30-32 are herein referred to collectively as the Lots and individually, as a Lot.  The second phase is that portion of the Land which is shown on plat 5 of the Subdivision Plat as the Reserve Parcel.  The Land, as described on the Subdivision Plat, also contains (i) roadways to be dedicated to the County with an aggregate acreage of approximately 3.784 acres (the Roadways); (ii) three (3) open space parcels with an aggregate acreage of approximately 17.339 acres (each individually, an Open Space Parcel, and collectively the Open Space Parcels); and (iii) a flood plain area comprising approximately 1.192 acres (the Flood Plain Area).

All of the Land has been annexed and is subject to the Declaration (as hereinafter defined).  The Lots as now subdivided will be permitted under applicable law to have a total FAR (as hereinafter defined) of approximately 900,000 square feet.  It is anticipated that if the Reserve Parcel is subdivided it will have a total FAR of not less than 350,000 square feet.

Seller desires to sell the Property (as hereinafter defined in Section 2) to Buyer and Buyer desires to purchase the Property from

1

Seller, upon the terms, covenants and conditions set forth in this Agreement.

Agreements

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Seller and Buyer, the parties hereto covenant and agree as follows:

SECTION 1.  DEFINITIONS.  As used herein, the following terms shall have the meanings indicated:

Additional Guaranty is defined in Subsection 3.1.2.

Alternative Sale Structure is defined in Section 2.

Assignment Agreement means the agreement by and among Seller, Arbitrage Land Limited Partnership (Arbitrage), Jolly Acres Limited Partnership (Jolly Acres) and Corporate Office Properties, L.P., in recordable form, in which Seller, Arbitrage and Jolly Acres shall assign to Corporate Office Properties, L.P., jointly and severally and non-exclusively with Seller, their rights as Declarant under the Declaration, and Arbitrage and Jolly Acres, the remaining two Declarants under the Declaration.  The Assignment Agreement shall be in the form attached hereto as Exhibit G-1.

Assignment of Member Interests is defined in Section 2.

Association means the Maryland nonprofit corporation organized or to be organized pursuant to the Declaration.

Closing Dates means, collectively, the First Closing Date and the Second Closing Date.

Closing Statement is defined in Subsection 5.3.5.

Closings means, collectively, the First Closing and the Second Closing.

Completion of the Ponds means the Sellers completion of the three ponds referenced in the Mass Grading Permit for purposes of sediment control, two of which ponds have been completed as sediment control ponds as of the Effective Date and the third of which ponds will be completed by Seller as a sediment control pond and may be located offsite on Lot 17R.

COPT means Corporate Office Properties Trust, a Maryland real estate investment trust.

2

County is defined above in the Background Section.

Declaration means the Declaration of Covenants, Conditions and Restrictions dated April 21, 2000 and recorded among the Land Records of the County at Liber 9853, folio 591, as amended by a First Amendment to Declaration of Covenants, Conditions and Restrictions dated July 6, 2001 and recorded among the Land Records of the County at Liber 11048, folio 310.

Deed of Trust is defined in Subsection 3.1.2.

Default Rate means an annual interest rate equal to the greater of (i) fifteen percent (15%); and (ii) eight percent (8%) in excess of the prime rate as announced from time to time in the Money Rates section of the Wall Street Journal.

Easement Agreement means that easement agreement in recordable form, granting to Seller, its successors and assigns, a non-exclusive perpetual easement for vehicular and pedestrian access, ingress and egress over the Roadways to allow for access to and from the Reserve Parcel to public roadways.  In addition, the Easement Agreement shall grant to Seller, its successors and assigns, an easement to install, maintain, operate and replace utility lines, cables, conduits and other utility lines for utility service for any portion of the Reserve Parcel.  The Easement Agreement shall be in the form attached hereto as Exhibit E.

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