EXHIBIT 10.QQ

 

EXECUTION VERSION

 

 

MEMBERSHIP INTERESTS PURCHASE AGREEMENT

 

 

(MBC Realty, LLC)

 

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MERCANTILE BANKSHARES CORPORATION, Seller

 

and

 

HARBOR GROUP INTERNATIONAL, L.L.C., Buyer

 

--------------------------------------------------------------------------------

 

 

Property:

 

Two Hopkins Plaza

Baltimore, Maryland

 

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TABLE OF CONTENTS

 

1.

DEFINITIONS

 

 

 

 

 

1.1

Definitions

 

 

1.2

Terms Generally

 

 

 

 

2.

membership interests; PROPERTY

 

 

 

 

3.

PURCHASE PRICE

 

 

 

 

 

3.1

Purchase Price

 

 

3.2

Failure to Pay Deposit

 

 

 

 

4.

DUE DILIGENCE

 

 

 

 

 

4.1

Seller Deliverables

 

 

4.2

Independent Investigation

 

 

4.3

Termination During Due Diligence Period

 

 

4.4

Buyer’s Knowledge

 

 

4.5

AS-IS SALE

 

 

4.6

Service Contracts to be Assumed

 

 

4.7

No Obligation to Repair or to Comply

 

 

4.8

Buyer’s Entry and Indemnity; Limits on Government Contact

 

 

4.9

Release

 

 

 

 

5.

BUYER’S CONDITIONS PRECEDENT

 

 

 

 

 

5.1

Conditions to Buyer’s Obligation to Purchase

 

 

 

5.1.1

Seller’s Representations and Warranties

 

 

 

5.1.2

Seller’s Performance

 

 

 

5.1.3

Condition of Title

 

 

 

5.1.4

Estoppel Certificates

 

 

 

5.1.5

Income and Expenses

 

 

 

5.1.6

Mercantile Lease

 

 

 

5.1.7

Disposition of Other Properties

 

 

5.2

Failure of Conditions

 

 

 

 

6.

SELLER’S CONDITIONS PRECEDENT

 

 

 

 

 

6.1

Conditions to Seller’s Obligations to Sell

 

 

 

6.1.1

Purchase Price

 

 

 

6.1.2

Buyer’s Representations and Warranties

 

 

 

6.1.3

Buyer’s Performance

 

 

 

 

7.

REPRESENTATIONS AND WARRANTIES

 

 

 

 

 

7.1

Representations and Warranties of Seller

 

 

7.2 [a05-4585_1ex10dqq.htm#RepresentationsAndWarrantiesOfBuy_133735]

Representations and Warranties of Buyer
[a05-4585_1ex10dqq.htm#RepresentationsAndWarrantiesOfBuy_133735]

 

 

 

 

8. [a05-4585_1ex10dqq.htm#TitleAndSurvey_133706]

TITLE and survey [a05-4585_1ex10dqq.htm#TitleAndSurvey_133706]

 

 

 

 

 

8.1 [a05-4585_1ex10dqq.htm#Title_133739]

Title [a05-4585_1ex10dqq.htm#Title_133739]

 

 

8.2 [a05-4585_1ex10dqq.htm#Survey_133743]

Survey [a05-4585_1ex10dqq.htm#Survey_133743]

 

 

i

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9. [a05-4585_1ex10dqq.htm#PreclosingOperations_133751]

PRE-CLOSING OPERATIONS [a05-4585_1ex10dqq.htm#PreclosingOperations_133751]

 

 

 

 

 

9.1 [a05-4585_1ex10dqq.htm#InterimOperationOfTheProperty_133753]

Interim Operation of the Property
[a05-4585_1ex10dqq.htm#InterimOperationOfTheProperty_133753]

 

 

9.2 [a05-4585_1ex10dqq.htm#LeaseEnforcement__133801]

Lease Enforcement [a05-4585_1ex10dqq.htm#LeaseEnforcement__133801]

 

 

9.3 [a05-4585_1ex10dqq.htm#LeaseTerminationPriorToClosin_133802]

Lease Termination Prior to Closing
[a05-4585_1ex10dqq.htm#LeaseTerminationPriorToClosin_133802]

 

 

9.4 [a05-4585_1ex10dqq.htm#RiskOfLossAndInsuranceProceeds__133807]

Risk of Loss and Insurance Proceeds
[a05-4585_1ex10dqq.htm#RiskOfLossAndInsuranceProceeds__133807]

 

 

9.5 [a05-4585_1ex10dqq.htm#Notifications_133813]

Notifications [a05-4585_1ex10dqq.htm#Notifications_133813]

 

 

 

 

10. [a05-4585_1ex10dqq.htm#Closing_133817]

CLOSING [a05-4585_1ex10dqq.htm#Closing_133817]

 

 

 

 

 

10.1 [a05-4585_1ex10dqq.htm#EscrowInstructions_133820]

Escrow Instructions [a05-4585_1ex10dqq.htm#EscrowInstructions_133820]

 

 

10.2 [a05-4585_1ex10dqq.htm#ClosingDate_133823]

Closing Date [a05-4585_1ex10dqq.htm#ClosingDate_133823]

 

 

10.3 [a05-4585_1ex10dqq.htm#Location_133826]

Location [a05-4585_1ex10dqq.htm#Location_133826]

 

 

10.4 [a05-4585_1ex10dqq.htm#ClosingDocuments_133829]

Closing Documents [a05-4585_1ex10dqq.htm#ClosingDocuments_133829]

 

 

10.5 [a05-4585_1ex10dqq.htm#AdditionalSellerDeliveries_133853]

Additional Seller Deliveries
[a05-4585_1ex10dqq.htm#AdditionalSellerDeliveries_133853]

 

 

10.6 [a05-4585_1ex10dqq.htm#BuyerClosingDeliveries_133855]

Buyer Closing Deliveries [a05-4585_1ex10dqq.htm#BuyerClosingDeliveries_133855]

 

 

10.7 [a05-4585_1ex10dqq.htm#ClosingInstructions_133859]

Closing Instructions [a05-4585_1ex10dqq.htm#ClosingInstructions_133859]

 

 

 

 

11. [a05-4585_1ex10dqq.htm#ProrationsExpenses_133902]

PRORATIONS; EXPENSES [a05-4585_1ex10dqq.htm#ProrationsExpenses_133902]

 

 

 

 

 

11.1 [a05-4585_1ex10dqq.htm#Rents_133906]

Rents [a05-4585_1ex10dqq.htm#Rents_133906]

 

 

11.2 [a05-4585_1ex10dqq.htm#ReceivablesAndCollections_133908]

Receivables and Collections
[a05-4585_1ex10dqq.htm#ReceivablesAndCollections_133908]

 

 

11.3 [a05-4585_1ex10dqq.htm#CollectionEfforts_133912]

Collection Efforts [a05-4585_1ex10dqq.htm#CollectionEfforts_133912]

 

 

11.4 [a05-4585_1ex10dqq.htm#SecurityDeposits_133913]

Security Deposits [a05-4585_1ex10dqq.htm#SecurityDeposits_133913]

 

 

11.5 [a05-4585_1ex10dqq.htm#AdjustmentsToProrations_133919]

Adjustments to Prorations [a05-4585_1ex10dqq.htm#AdjustmentsToProrations_133919]

 

 

11.6 [a05-4585_1ex10dqq.htm#IntentionallyOmitte_133925]

INTENTIONALLY OMITTED [a05-4585_1ex10dqq.htm#IntentionallyOmitte_133925]

 

 

11.7 [a05-4585_1ex10dqq.htm#PostClosingAdjustment_133928]

Post Closing Adjustments [a05-4585_1ex10dqq.htm#PostClosingAdjustment_133928]

 

 

11.8 [a05-4585_1ex10dqq.htm#ProrationCalculations_133935]

Proration Calculations [a05-4585_1ex10dqq.htm#ProrationCalculations_133935]

 

 

11.9 [a05-4585_1ex10dqq.htm#ClosingExpenses_133940]

Closing Expenses [a05-4585_1ex10dqq.htm#ClosingExpenses_133940]

 

 

11.10 [a05-4585_1ex10dqq.htm#Survival_133946]

Survival [a05-4585_1ex10dqq.htm#Survival_133946]

 

 

11.11 [a05-4585_1ex10dqq.htm#PaymentByBuyer_133950]

Payment by Buyer [a05-4585_1ex10dqq.htm#PaymentByBuyer_133950]

 

 

 

 

12. [a05-4585_1ex10dqq.htm#Default_134009]

DEFAULT [a05-4585_1ex10dqq.htm#Default_134009]

 

 

 

 

 

12.1 [a05-4585_1ex10dqq.htm#SellersDefault_134013]

Seller’s Default [a05-4585_1ex10dqq.htm#SellersDefault_134013]

 

 

12.2 [a05-4585_1ex10dqq.htm#BuyersDefault__134017]

Buyer’s Default [a05-4585_1ex10dqq.htm#BuyersDefault__134017]

 

 

 

 

13. [a05-4585_1ex10dqq.htm#Brokers_134020]

BROKERS [a05-4585_1ex10dqq.htm#Brokers_134020]

 

 

 

 

14. [a05-4585_1ex10dqq.htm#Indemnification_134027]

INDEMNIFICATION [a05-4585_1ex10dqq.htm#Indemnification_134027]

 

 

 

 

 

14.1 [a05-4585_1ex10dqq.htm#GeneralIndemnificationBySelle_134030]

General Indemnification by Seller
[a05-4585_1ex10dqq.htm#GeneralIndemnificationBySelle_134030]

 

 

14.2 [a05-4585_1ex10dqq.htm#IndemnificationByBuyer_134035]

Indemnification by Buyer [a05-4585_1ex10dqq.htm#IndemnificationByBuyer_134035]

 

 

14.3 [a05-4585_1ex10dqq.htm#ThirdPersonClaims_134043]

Third Person Claims [a05-4585_1ex10dqq.htm#ThirdPersonClaims_134043]

 

 

 

 

15. [a05-4585_1ex10dqq.htm#Miscellaneous_134051]

MISCELLANEOUS [a05-4585_1ex10dqq.htm#Miscellaneous_134051]

 

 

 

 

 

15.1 [a05-4585_1ex10dqq.htm#Notices_134057]

Notices [a05-4585_1ex10dqq.htm#Notices_134057]

 

 

15.2 [a05-4585_1ex10dqq.htm#Recording_134107]

Recording [a05-4585_1ex10dqq.htm#Recording_134107]

 

 

15.3 [a05-4585_1ex10dqq.htm#JointUndertaking_134109]

Joint Undertaking [a05-4585_1ex10dqq.htm#JointUndertaking_134109]

 

 

15.4 [a05-4585_1ex10dqq.htm#WholeAgreementAmendment_134214]

Whole Agreement; Amendments
[a05-4585_1ex10dqq.htm#WholeAgreementAmendment_134214]

 

 

15.5 [a05-4585_1ex10dqq.htm#AttorneysFees_134217]

Attorneys’ Fees [a05-4585_1ex10dqq.htm#AttorneysFees_134217]

 

 

15.6 [a05-4585_1ex10dqq.htm#Assignment_134219]

Assignment [a05-4585_1ex10dqq.htm#Assignment_134219]

 

 

ii

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15.7 [a05-4585_1ex10dqq.htm#Counterparts__134227]

Counterparts [a05-4585_1ex10dqq.htm#Counterparts__134227]

 

 

15.8 [a05-4585_1ex10dqq.htm#Holidays__134229]

Holidays [a05-4585_1ex10dqq.htm#Holidays__134229]

 

 

15.9 [a05-4585_1ex10dqq.htm#GoverningLaw_134230]

Governing Law [a05-4585_1ex10dqq.htm#GoverningLaw_134230]

 

 

15.10 [a05-4585_1ex10dqq.htm#WaiverOfTrialByJury_134233]

Waiver of Trial by Jury [a05-4585_1ex10dqq.htm#WaiverOfTrialByJury_134233]

 

 

15.11 [a05-4585_1ex10dqq.htm#NoThirdPartyBeneficiary_134238]

No Third Party Beneficiary
[a05-4585_1ex10dqq.htm#NoThirdPartyBeneficiary_134238]

 

 

15.12 [a05-4585_1ex10dqq.htm#Severability__111312]

Severability [a05-4585_1ex10dqq.htm#Severability__111312]

 

 

15.13 [a05-4585_1ex10dqq.htm#DraftsNotAnOfferToEnterIntoALegal_111315]

Drafts not an Offer to Enter into a Legally Binding Contract
[a05-4585_1ex10dqq.htm#DraftsNotAnOfferToEnterIntoALegal_111315]

 

 

15.14 [a05-4585_1ex10dqq.htm#Consents_111318]

Consents [a05-4585_1ex10dqq.htm#Consents_111318]

 

 

15.15 [a05-4585_1ex10dqq.htm#ConfidentialInformation_111320]

Confidential Information [a05-4585_1ex10dqq.htm#ConfidentialInformation_111320]

 

 

15.16 [a05-4585_1ex10dqq.htm#DateOfThisAgreemen_111326]

Date of this Agreement; Effective Date
[a05-4585_1ex10dqq.htm#DateOfThisAgreemen_111326]

 

 

15.17 [a05-4585_1ex10dqq.htm#Captions_111330]

Captions [a05-4585_1ex10dqq.htm#Captions_111330]

 

 

15.18 [a05-4585_1ex10dqq.htm#TransactionAsSaleAndPurchaseOfAs_111332]

Transaction as Sale and Purchase of Assets
[a05-4585_1ex10dqq.htm#TransactionAsSaleAndPurchaseOfAs_111332]

 

 

15.19 [a05-4585_1ex10dqq.htm#VenableLeaseReznickLeas_111337]

Venable Lease; Reznick Lease
[a05-4585_1ex10dqq.htm#VenableLeaseReznickLeas_111337]

 

 

iii

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EXHIBITS AND RIDERS

 

A [a05-4585_1ex10dqq.htm#ExhibitA_111012]

LEGAL DESCRIPTION OF THE LAND [a05-4585_1ex10dqq.htm#ExhibitA_111012]

B [a05-4585_1ex10dqq.htm#ExhibitB_111015]

ASSIGNMENT [a05-4585_1ex10dqq.htm#ExhibitB_111015]

C [a05-4585_1ex10dqq.htm#ExhibitC_111020]

FIRPTA AFFIDAVIT [a05-4585_1ex10dqq.htm#ExhibitC_111020]

D [a05-4585_1ex10dqq.htm#ExhibitD_111022]

INTENTIONALLY OMITTED [a05-4585_1ex10dqq.htm#ExhibitD_111022]

E [a05-4585_1ex10dqq.htm#ExhibitE_111023]

INITIAL RENT ROLL AND LIST OF SECURITY DEPOSITS
[a05-4585_1ex10dqq.htm#ExhibitE_111023]

F [a05-4585_1ex10dqq.htm#ExhibitF_111025]

SCHEDULE OF LITIGATION [a05-4585_1ex10dqq.htm#ExhibitF_111025]

G [a05-4585_1ex10dqq.htm#ExhibitG_111028]

CONTRACTS [a05-4585_1ex10dqq.htm#ExhibitG_111028]

H [a05-4585_1ex10dqq.htm#ExhibitH_111029]

PERSONAL PROPERTY [a05-4585_1ex10dqq.htm#ExhibitH_111029]

J [a05-4585_1ex10dqq.htm#ExhibitJ_111033]

TERM SHEET FOR MERCANTILE LEASE [a05-4585_1ex10dqq.htm#ExhibitJ_111033]

 

 

RIDERS [a05-4585_1ex10dqq.htm#Rider_111036]

 

 

1 [a05-4585_1ex10dqq.htm#DepositEscrowAgreement_111039]

DEPOSIT ESCROW AGREEMENT [a05-4585_1ex10dqq.htm#DepositEscrowAgreement_111039]

 

iv

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MEMBERSHIP INTERESTS PURCHASE AGREEMENT

 

This Membership Interests Purchase Agreement (“Agreement”) is entered into as of
October    , 2004, by and between MERCANTILE BANKSHARES CORPORATION, a Delaware
corporation (“Seller”), and HARBOR GROUP INTERNATIONAL, L.L.C., a Virginia
limited liability company, or its designee (“Buyer”).  In consideration of the
mutual agreements herein set forth, the parties hereto, intending to be legally
bound, agree as follows:

 

DEFINITIONS

 

Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:

 

“Affiliates” shall mean with respect to any Person (i) any other Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, (ii) any other Person
owning or controlling 10% or more of the outstanding voting securities of or
other ownership interests in such Person, (iii) any officer, director or partner
of such Person, or (iv) if such Person is an officer, director or partner, any
other company for which such Person acts in any such capacity.

 

“Agreement” shall mean this Membership Interests Purchase Agreement, as amended
or supplemented from time to time by documents executed by both Seller and
Buyer.

 

“ALTA” shall mean The American Land Title Association.

 

 “Books and Records” is defined in Section 2(g).

 

“Business Day” shall mean any day other than a Saturday, a Sunday, or a holiday
recognized by banks in the states of Maryland or New York or by the Federal
government.

 

“Buyer” shall mean the Person identified as Buyer in the first paragraph of this
Agreement and such Person’s Permitted Assignees.

 

 “Buyer Party” or “Buyer Parties” shall mean Buyer, any Permitted Assignee of
Buyer, and any partner or member in, or, as applicable, any shareholder or
director of Buyer, or any Permitted Assignee of Buyer, as well as the officers,
employees, attorneys, and agents of Buyer or any Permitted Assignee of Buyer.

 

“Buyer’s actual knowledge” and similar phrases are defined in Section 4.4.

 

“Buyer’s Conditions Precedent” is defined in Section 5.1.

 

--------------------------------------------------------------------------------

 

“Claim” or “Claims” shall mean any suits, actions, proceedings, investigations,
demands, claims, liabilities, fines, penalties, liens, judgments, losses,
injuries, damages, expenses or costs, including, without limitation, attorneys’
and experts’ fees and costs of investigation.

 

“Closing” is defined in Section 10.1.

 

“Closing Date” shall mean the date on which Closing actually occurs.

 

“Closing Documents” shall mean all the documents, other than this Agreement, to
be executed and delivered by the parties in order to complete Closing, as
specified herein.

 

“Closing Instructions” is defined in Section 10.4(f).

 

“Closing Month” shall mean the calendar month in which Closing occurs.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provision(s) of any succeeding law.

 

“Contracts” is defined in Section 2(d).

 

“Cross Keys Lease” is defined in Section 7.1(A)(iv).

 

 “Deposit” is defined in Section 3.1(B).

 

“Deposit Date” shall mean the two Business Days after the Effective Date.

 

“Deposit Escrow Agreement” shall mean that certain Deposit Escrow Agreement
among Seller, Buyer and the Title Insurance Company, a counterpart of which is
attached hereto as Rider 1.

 

“Due Diligence Materials” shall mean, collectively, the Seller Deliverables and
all studies, reports and information obtained by the Buyer from any source prior
to the end of the Due Diligence Period.

 

“Due Diligence Period” shall mean the period commencing on the Effective Date
and ending at 11:59 P.M. (prevailing Eastern Time) on the date which is 30 days
after the Effective Date (such date being herein referred to as the “Due
Diligence Period Expiration Date”), during which period Buyer may, inter alia,
conduct the due diligence activities contemplated by Section 4.

 

“Effective Date” shall mean the date appearing in the first paragraph of this
Agreement, subject to Section 15.16.

 

“Existing Leases” shall mean all leases, license agreements and occupancy
agreements pertaining to the Property on the Effective Date, including without
limitation those identified in the Initial Rent Roll, together with all
associated guaranties and

 

2

--------------------------------------------------------------------------------

 

sureties, as the same may be amended or modified from time to time in accordance
with the terms of this Agreement.

 

“Federalsburg Call Center” is defined in Section 7.1(A)(iv).

 

“GAAP” means United States generally accepted accounting principles,
consistently applied.

 

“Governmental Authority” shall mean any federal, state, county or municipal
government, or political subdivision thereof, any governmental agency,
authority, board, bureau, commission, department, instrumentality, or public
body, or any court or administrative tribunal.

 

“Hazardous Materials” shall mean materials, wastes or substances that are (a)
included within the definition of any one or more of the terms “hazardous
substances,” “hazardous materials,” “toxic substances,” “toxic pollutants” and
“hazardous waste” in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et
seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe Drinking
Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), and the Toxic Substance
Control Act (15 U.S.C. Section 2601, et seq.) and the regulations promulgated
pursuant to such laws, (b) regulated, or classified as hazardous or toxic, under
other federal, state or local environmental laws or regulations, (c) petroleum,
(d) asbestos or asbestos-containing materials, (e) polychlorinated biphenyls,
(f) flammable explosives or (g) radioactive materials.

 

“Improvements” is defined in Section 2(a).

 

“Land” is defined in Section 2(a).

 

“Leases” shall mean all Existing Leases and New Leases, collectively.

 

“Licenses and Permits” is defined in Section 2(h).

 

“Linthicum Operations Center” is defined in Section 7.1(A)(iv).

 

“List of Security Deposits” is defined in Section 4.1(a).

 

“MBCR” is defined in Section 2.

 

“MBCR Financial Statements” is defined in Section 7.1(A)(xxvii).

 

“Membership Interests” is defined in Section 2.

 

“Mercantile Lease” is defined in Section 5.1.6.

 

3

--------------------------------------------------------------------------------

 

“New Leases” is defined in Section 9.1(A).

 

“Non-Permitted Exceptions” is defined in Section 8.1.

 

“Order” shall mean an order or decree of any Governmental Authority.

 

“Other Properties” is defined in Section 7.1(A)(iv).

 

“Parties” shall mean Seller and Buyer.

 

“Permitted Assignee” is defined in Section 15.6.

 

“Person” shall mean any individual, partnership, corporation, limited liability
company, trust or other legal entity.

 

“Personal Property” is defined in Section 2(b).

 

“Plans” is defined in Section 2(f).

 

“Prime Rate” shall mean the prime rate of interest published in the Wall Street
Journal from time to time.

 

“Privileged Material” shall mean (a) all communications between any Seller Party
and any attorney for such Seller Party or any other Seller Party, (b)
evaluations, analyses and communications among Seller Parties regarding the
Property, Buyer, the transaction evidenced by this Agreement, or Seller’s
marketing of the Property, which evaluations, analyses and communications are
intended by any Seller Party to be confidential.

 

“Property” is defined in Section 2.

 

“Purchase Price” is defined in Section 3.1(A).

 

“Real Estate Taxes” is defined in Section 4.1(c).

 

“Real Property” is defined in Section 2(a).

 

“Rent Roll” is defined in Section 4.1(a).

 

“Rents” is described in Section 11.1.

 

“Reznick” is defined in Section 9.3.

 

“Reznick Lease” is defined in Section 9.3.

 

“Scheduled Closing Date” is defined in Section 10.2.

 

“Seller” shall mean the Person identified as Seller in the first paragraph of
this Agreement and such Person’s successors and assigns.

 

4

--------------------------------------------------------------------------------

 

“Seller Caused Non-Permitted Exceptions” is defined in Section 8.1.

 

“Seller Deliverables” is described in Section 4.1.

 

“Seller Parties” shall mean Seller and any partner or member in, or, as
applicable, any shareholder or director of Seller, as well as the officers,
employees, attorneys, and agents of Seller.

 

“Seller’s Broker” is defined in Section 13.1.

 

“Seller’s Conditions Precedent” is described in Section 6.1.

 

“Seller Default” is defined in Section 12.1.

 

“Seller’s Knowledge”, “MBCR’s Knowledge”, and similar phrases shall mean the
actual knowledge, on any relevant date, of W. Joseph Smith, Edie Councilman or
Ronald D. Mettam (W. Joseph Smith and Edie Councilman having principal
operational authority for MBCR), without investigation or inquiry.

 

“Seller’s Undertakings” is defined in Section 4.5.

 

“Survey” is defined in Article 8.

 

“Tenant” shall mean the tenant, occupier or licensee under any Lease.

 

“Title Policy” is defined in Article 8.

 

“Title Insurance Company” shall mean LandAmerica Title Insurance Company

 

“Venable” is defined in Section 15.19.

 

“Venable Lease” is defined in Section 15.19.

 

“Warranties” is defined in Section 2(e).

 

Terms Generally.  For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, (a) the words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or
provision, (b) the words “including” and “include” and other words of similar
import shall be deemed to be followed by the phrase “without limitation”. 
Whenever the context may require, any defined term or pronoun used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of defined terms, pronouns or nouns shall include the plural and vice
versa. The captions of the Sections of this Agreement are for convenience only
and have no meaning with respect to this Agreement or the rights or obligations
of the parties.  References herein to “Exhibit”, “Schedule”, “Rider”, “Article”,
“Section” or “subsection” shall be deemed references to an Exhibit, Schedule,
Rider, Article, Section or subsection attached to, or, as applicable, contained
in, this Agreement.

 

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MEMBERSHIP INTERESTS; PROPERTY

 

Seller owns one hundred percent (100%) of the membership interests (the
“Membership Interests”) in MBC Realty, LLC, a Maryland limited liability company
(“MBCR”), which owns all of the Property (as hereinafter defined).  Seller
hereby agrees to sell and cause to be conveyed to Buyer, and Buyer hereby agrees
to purchase from Seller, all of Seller’s rights, title and interest in and to
the Membership Interests and all of the benefits accruing to the owner thereof,
including, but not limited to, MBCR’s interest in the following described
property (herein collectively called the “Property”):

 

THE PARCEL OR PARCELS OF LAND DESCRIBED IN EXHIBIT “A” (“LAND”), TOGETHER WITH
ANY AND ALL RIGHTS, PRIVILEGES AND EASEMENTS APPURTENANT THERETO OWNED BY MBCR,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL RIGHTS OF MBCR IN AND TO ALL AIR AND
DEVELOPMENT RIGHTS, ROADS, ALLEYS, EASEMENTS, STREETS AND WAYS ADJACENT TO THE
LAND, ALL APPURTENANT RIGHTS OF INGRESS AND EGRESS THERETO OR THEREFROM, ANY
STRIPS AND GORES WITHIN OR BOUNDING THE LAND AND ANY PROFITS, RIGHTS OR
APPURTENANCES PERTAINING TO THE LAND, TOGETHER WITH ALL BUILDINGS, IMPROVEMENTS
AND FIXTURES (OTHER THAN FIXTURES OWNED OR REMOVABLE BY ANY TENANT OR OTHER
PERSON PURSUANT TO A LEASE OR CONTRACT) LOCATED THEREON (COLLECTIVELY,
“IMPROVEMENTS”; THE LAND, TOGETHER WITH THE IMPROVEMENTS, THE “REAL PROPERTY”);

 

ALL EQUIPMENT, FURNISHINGS, INVENTORY AND OTHER TANGIBLE PERSONAL PROPERTY OWNED
BY MBCR AND NOT OWNED OR REMOVABLE BY ANY TENANT OR OTHER PERSON PURSUANT TO A
LEASE OR CONTRACT, IF ANY, PLACED OR LOCATED ON THE REAL PROPERTY NOW OR PRIOR
TO CLOSING AND USED IN THE OPERATION OF THE REAL PROPERTY (THE “PERSONAL
PROPERTY”);

 

ALL THE INTEREST OF THE LANDLORD IN ALL LEASES, ANY AND ALL CLAIMS OR RIGHTS TO
CLAIM AGAINST A TENANT UNDER ANY LEASE AND ALL SECURITY DEPOSITS PAID OR
DEPOSITED BY TENANTS IN RESPECT OF THE LEASES;

 

ALL OF MBCR’S RIGHTS IN AND TO ALL SERVICE, MAINTENANCE AND OPERATING CONTRACTS,
EQUIPMENT LEASES AND SIMILAR AGREEMENTS RELATING TO THE OPERATION, MAINTENANCE
AND REPAIR OF THE PROPERTY, INCLUDING SERVICE AND MAINTENANCE AGREEMENTS,
UTILITY AGREEMENTS AND OTHER CONTRACTUAL ARRANGEMENTS, ALL TO THE EXTENT ASSUMED
BY BUYER IN ACCORDANCE WITH SECTION 4.6 OF THIS AGREEMENT (COLLECTIVELY,
“CONTRACTS”);

 

ALL OF MBCR’S RIGHTS, TITLE AND INTEREST IN AND TO ANY WARRANTIES, GUARANTIES, 
ENTITLEMENTS TO USE, AND ALL OTHER PROPERTY RIGHTS AND INTERESTS RELATING TO THE
PROPERTY MADE BY OR RECEIVED FROM ANY PERSON WITH RESPECT TO ANY BUILDING
COMPONENT, MACHINERY, EQUIPMENT, FURNISHINGS, FIXTURE OR MATERIAL COMPRISING A
PART OF ANY IMPROVEMENT OR WITH RESPECT TO ANY PERSONAL PROPERTY OR CONTRACT
(COLLECTIVELY, “WARRANTIES”);

 

TO THE EXTENT IN THE POSSESSION OF MBCR OR SELLER, AND TO THE EXTENT ASSIGNABLE,
ALL AS-BUILT BUILDING PLANS AND SPECIFICATIONS RELATING TO THE REAL PROPERTY
(COLLECTIVELY, “PLANS”);

 

ALL CURRENT ON-SITE BOOKS AND RECORDS EXCLUSIVELY PERTAINING TO THE CURRENT
OPERATION OF THE PROPERTY, TO THE EXTENT IN MBCR’S OR SELLER’S POSSESSION,
EXCLUDING PRIVILEGED MATERIAL (COLLECTIVELY, “BOOKS AND RECORDS”);

 

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ALL LICENSES, PERMITS, BUILDING INSPECTION APPROVALS, CERTIFICATES OF OCCUPANCY,
APPROVALS, SUBDIVISION MAPS AND ENTITLEMENTS, IF ANY, ISSUED, APPROVED OR
GRANTED BY GOVERNMENTAL AUTHORITIES IN CONNECTION WITH THE REAL PROPERTY
(COLLECTIVELY, “LICENSES AND PERMITS”); AND

 

ALL RIGHTS TO ANY AWARD MADE OR TO BE MADE OR SETTLEMENT IN LIEU THEREOF FOR
DAMAGE TO THE LAND OR IMPROVEMENTS BY REASON OF CONDEMNATION, EMINENT DOMAIN,
EXERCISE OF POLICE POWER OR CHANGE OF GRADE OF ANY STREET.

 

PURCHASE PRICE

 

PURCHASE PRICE. 

 

(A)                              The purchase price for the Membership Interests
is Fifty-One Million Two Hundred Fifty Thousand Dollars ($51,250,000) (“Purchase
Price”).

 

(B)                                The Purchase Price shall be paid by Buyer as
follows:

 

ON THE DEPOSIT DATE, BUYER SHALL DEPOSIT BY DELIVERY OF A BANK DRAFT OR WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS PURSUANT TO THE WIRE TRANSFER
INSTRUCTIONS SET FORTH IN THE DEPOSIT ESCROW AGREEMENT, IN ESCROW WITH THE TITLE
INSURANCE COMPANY, A CASH PAYMENT OF FIVE HUNDRED THOUSAND DOLLARS ($500,000)
(SUCH CASH PAYMENT, TOGETHER WITH ALL INTEREST EARNED ON SUCH FUNDS, THE
“DEPOSIT”).  THE DEPOSIT SHALL BE HELD IN ESCROW, IN AN INTEREST-BEARING ACCOUNT
WITH A FEDERALLY INSURED BANK (WHICH MAY BE AN AFFILIATE OF SELLER), AND
DISBURSED BY THE TITLE INSURANCE COMPANY PURSUANT TO THE PROVISIONS OF THIS
AGREEMENT AND THE DEPOSIT ESCROW AGREEMENT.  AT CLOSING, THE DEPOSIT (INCLUDING
ALL ACCRUED INTEREST) SHALL BE PAID TO SELLER AS A CREDIT AGAINST THE PURCHASE
PRICE.

 

THE BALANCE OF THE PURCHASE PRICE OVER AND ABOVE THE DEPOSIT, PLUS OR MINUS ANY
APPORTIONMENTS, PRORATIONS, CREDITS AND COSTS IN ACCORDANCE WITH SECTION 11
HEREOF, SHALL BE PAID BY BUYER AT CLOSING, BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS TO THE TITLE INSURANCE COMPANY, PURSUANT TO THE WIRE TRANSFER
INSTRUCTIONS SET FORTH IN THE DEPOSIT ESCROW AGREEMENT, OR ANY REPLACEMENT
INSTRUCTIONS, FOR PAYMENT TO SELLER OR ON ITS BEHALF AT CLOSING.

 

Failure to Pay Deposit.  In the event that Buyer fails to fund the Deposit on
the Deposit Date (with time being of the essence) for any reason whatsoever,
this Agreement shall immediately and automatically terminate.  Upon any
termination of this Agreement pursuant to this Section 3.2, no party shall have
any further rights, duties or obligations under this Agreement, except as
otherwise expressly set forth herein.

 

DUE DILIGENCE

 

Seller Deliverables.  Seller hereby represents and warrants to Buyer that, to
Seller’s Knowledge, the copies previously or hereafter delivered to Buyer
(collectively, the “Seller

 

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Deliverables”) of the following items (which, to the extent not previously
delivered by Seller, shall be delivered by Seller to Buyer promptly following
the Effective Date or as otherwise expressly required herein), are or will be
true, correct and complete copies of all such items as maintained or possessed
by Seller and/or MBCR at the time of delivery in all material respects:

 

A RENT ROLL FOR THE PROPERTY FOR THE CURRENT YEAR AND FOR PAST TWO CALENDAR
YEARS, IN THE FORM CURRENTLY MAINTAINED BY MBCR (“RENT ROLL”) AND AN ACCOUNTING
OF ALL REFUNDABLE SECURITY DEPOSITS MADE BY TENANTS UNDER THE LEASES (THE “LIST
OF SECURITY DEPOSITS”);

 

ANNUAL OPERATING, INCOME AND EXPENSE STATEMENTS FOR THE PROPERTY FOR CALENDAR
YEARS 2002 AND 2003, AND FOR THE FIRST NINE MONTHS OF 2004, AS WELL AS
OPERATING, INCOME AND EXPENSE STATEMENTS ON A MONTHLY BASIS FOR THE TRAILING 12
MONTH PERIOD ENDED SEPTEMBER 30, 2004, TOGETHER WITH SUCH OTHER FINANCIAL
INFORMATION AS IS SPECIFIED IN SECTION 7.1(A)(XXVII) HEREOF;

 

THE BILLS ISSUED FOR THE MOST RECENT YEAR AND THE PRECEDING TWO (2) YEARS FOR
THE PROPERTY FOR ALL REAL ESTATE TAXES AND ASSESSMENTS (COLLECTIVELY, “REAL
ESTATE TAXES”) RELATING TO THE PROPERTY;

 

THE LEASES AND THE CONTRACTS;

 

THE WARRANTIES;

 

THE PLANS;

 

THE BOOKS AND RECORDS AND EXPENSE RECOVERY WORKSHEETS AND BILLINGS FOR THE PAST
TWO CALENDAR YEARS AND FIRST NINE MONTHS OF 2004;

 

THE LICENSES AND PERMITS;

 

ALL ENVIRONMENTAL REPORTS AND STUDIES IN THE POSSESSION OF MBCR, SELLER OR ITS
AGENTS RELATING TO THE DETERMINATION AS TO WHETHER ANY HAZARDOUS MATERIALS EXIST
AT THE PROPERTY AND AS TO ANY WORK PERFORMED OR PROPOSED IN CONNECTION WITH ANY
HAZARDOUS MATERIALS AT ANY TIME LOCATED AT THE PROPERTY, IF ANY, AND ANY
ENGINEERING REPORTS WITH RESPECT TO THE PROPERTY TO THE EXTENT IN THE POSSESSION
OF SELLER OR MBCR;

 

ALL ORGANIZATIONAL DOCUMENTS RELATED TO THE FORMATION AND OPERATION OF MCBR;

 

ALL INFORMATION IN THE POSSESSION OF SELLER OR MBCR RELATED TO THE TRANSFER OF
TITLE OF THE PROPERTY TO MBCR;

 

ALL INFORMATION AND DOCUMENTATION IN THE POSSESSION OF SELLER OR MBCR RELATED TO
MBCR’S TENANCY UNDER ANY LEASE OR AGREEMENT, INCLUDING THE CROSS KEYS LEASE;

 

CALL REPORTS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2001, DECEMBER 31, 2002
AND DECEMBER 31, 2003 FOR MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY AS TENANT;

 

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A COMPLETE AND ACCURATE LIST OF ALL SELLER PENSION PLANS, AS SUCH TERM IS
DEFINED IN SECTION 7.1(A)(XXX) AND INCLUDING TRUE, CORRECT AND COMPLETE COPIES
OF THE MOST RECENT FORMS 5500 AND ANY ATTACHED FINANCIAL STATEMENTS AND ANY
RELATED ACTUARIAL REPORT; AND

 

ALL INFORMATION RELATED TO THE SALE OR ASSIGNMENT OF THE OTHER PROPERTIES,
INCLUDING COPIES OF THE AGREEMENTS FOR THE PURCHASE AND SALE THEREOF AND ANY
ENVIRONMENTAL REPORTS TO THE EXTENT IN THE POSSESSION OF SELLER OR MBCR.

 

Seller shall make the originals of all Leases available to Buyer at the Property
for Buyer’s inspection at all times from and after the Effective Date through
the Closing Date.

 

Independent Investigation.  Notwithstanding any information which Seller may
have provided to Buyer, Buyer may, during the Due Diligence Period, inspect and
investigate each and every aspect of the Property, either independently or
through agents, representatives or experts of Buyer’s choosing, as Buyer
considers necessary or appropriate.  Without limiting the generality of the
foregoing but subject to the other provisions of this Article 4, Buyer shall
have the right to have performed (i) a physical, mechanical and environmental
inspection of the Property, including but not limited to soil borings, samplings
and other tests and engineering inspections, as Buyer deems necessary to
determine the physical condition of the Property, including but not limited to
whether any Hazardous Materials exist at the Property, and, if so, to determine
the appropriate manner and cost of removal or other corrective measures with
respect to the same, and (ii) an inspection of all books and records and
financial information pertaining thereto.  During the Due Diligence Period,
Seller shall cooperate with Buyer in its inspection of the Property, including
but not limited to, furnishing to Buyer such information, materials and
documents as Buyer may reasonably request and making W. Joseph Smith and other
representatives and agents of Seller and MBCR available to Buyer at reasonable
times and upon reasonable notice; Seller shall not, however, have any obligation
to incur any cost not otherwise contemplated by this Agreement.

 

Termination During Due Diligence Period. 

 

(A)                              At any time prior to the Due Diligence Period
Expiration Date, Buyer shall have the right, in its sole and absolute
discretion, and for any or no reason whatsoever, to terminate this Agreement by
written notice to Seller given by Buyer on or prior to the Due Diligence Period
Expiration Date, and, upon such election, the Deposit shall be immediately
refunded to Buyer, other than Fifty Thousand Dollars ($50,000) which shall be
paid to Seller as consideration for the aforementioned Due Diligence Period;
provided, however, that the entire Deposit of Five Hundred Thousand Dollars
($500,000) shall be immediately refunded to Buyer upon Buyer’s election to
terminate this Agreement by written notice to Seller given by Buyer on or prior
to the Due Diligence Period Expiration Date on the grounds that: (i) the results
of the environmental inspection are unacceptable to Buyer; (ii) the condition of
title, including survey issues, is unacceptable to Buyer; (iii) the liabilities
related to the Other Properties are in any respect unacceptable to Buyer; or
(iv) Buyer and Seller are unable to agree on the terms of the Mercantile Lease. 
In addition, the entire Deposit of $500,000 shall be immediately refunded to
Buyer, whether before or after the Due Diligence Period Expiration Date, in the
event that Buyer is entitled to terminate this Agreement following the Due
Diligence Period pursuant to the terms

 

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of this Agreement.  Upon Buyer’s election to terminate this Agreement as set
forth in the preceding sentence, the parties hereto shall have no further
liabilities one to the other (other than those that are expressly stated to
survive the termination of this Agreement).

 

(B)                                Buyer agrees that it will exercise good faith
efforts to advise Seller immediately if Buyer decides at any time prior to the
Due Diligence Period Expiration Date not to proceed with the purchase
contemplated hereunder.

 

BUYER’S KNOWLEDGE.

 

Seller shall have no liability whatsoever to Buyer with respect to any matter
related to the Property disclosed by Seller in the Due Diligence Materials or of
which Buyer or its agent or counsel obtains actual knowledge, by any means,
prior to the Due Diligence Period Expiration Date.  For purposes of this Section
4.4, Buyer’s actual knowledge shall mean the actual, conscious knowledge of T.
Richard Litton, Jr., Jordan E. Slone or Michael H. Heinricher.

 

AS-IS SALE. 

 

BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT (a) EXCEPT FOR (I) THE
REPRESENTATIONS, WARRANTIES AND COVENANTS MADE BY SELLER IN THIS AGREEMENT, AS
QUALIFIED BY SECTION 4.4, AND SUBJECT TO THE SURVIVAL PROVISIONS OF THIS
AGREEMENT, AND (II) THE REPRESENTATIONS, WARRANTIES AND COVENANTS MADE BY SELLER
IN THE CLOSING DOCUMENTS (ALL THE FOREGOING BEING REFERRED TO, COLLECTIVELY, AS
“SELLER’S UNDERTAKINGS”), SELLER SHALL SELL AND BUYER SHALL PURCHASE THE
MEMBERSHIP INTERESTS AND THEREBY THE PROPERTY “AS IS, WHERE IS AND WITH ALL
FAULTS AND LATENT PATENT DEFECTS” AND WITH ALL VIOLATIONS OF LAWS AND
ORDINANCES, AND (b) EXCEPT FOR SELLER’S UNDERTAKINGS, BUYER IS NOT RELYING ON
ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER ORAL OR
WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER, OR ANY SELLER
PARTY AS TO ANY MATTER, CONCERNING THE PROPERTY, OR (EXCEPT TO THE EXTENT
PROVIDED OTHERWISE IN SELLER’S UNDERTAKINGS) SET FORTH, CONTAINED OR ADDRESSED
IN THE DUE DILIGENCE MATERIALS (INCLUDING WITHOUT LIMITATION, THE COMPLETENESS
THEREOF), INCLUDING WITHOUT LIMITATION ANY WARRANTIES AS TO: (i) THE QUALITY,
NATURE, HABITABILITY, MERCHANTABILITY, USE, OPERATION, VALUE, MARKETABILITY,
ADEQUACY OR PHYSICAL CONDITION OF THE PROPERTY OR ANY ASPECT OR PORTION THEREOF,
INCLUDING, WITHOUT LIMITATION, STRUCTURAL ELEMENTS, FOUNDATION, ROOF,
APPURTENANCES, ACCESS, LANDSCAPING, PARKING FACILITIES, ELECTRICAL, MECHANICAL,
HVAC, PLUMBING, SEWAGE, AND UTILITY SYSTEMS, FACILITIES AND APPLIANCES, SOILS,
GEOLOGY AND GROUNDWATER, (ii) THE DIMENSIONS OR LOT SIZE OF THE PROPERTY OR THE
SQUARE FOOTAGE OF THE IMPROVEMENTS THEREON OR OF ANY TENANT SPACE THEREIN, (iii)
THE DEVELOPMENT OR INCOME POTENTIAL, OR RIGHTS OF OR RELATING TO, THE PROPERTY,
OR THE PROPERTY’S USE, HABITABILITY,

 

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MERCHANTABILITY, OR FITNESS, OR THE SUITABILITY, VALUE OR ADEQUACY OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE, THE ZONING OR OTHER LEGAL STATUS OF THE
PROPERTY OR ANY OTHER PUBLIC OR PRIVATE RESTRICTIONS ON THE USE OF THE PROPERTY,
THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANY APPLICABLE CODES, LAWS,
REGULATIONS, STATUTES, ORDINANCES, COVENANTS, CONDITIONS AND RESTRICTIONS OF ANY
GOVERNMENTAL AUTHORITY OR OF ANY OTHER PERSON OR ENTITY (INCLUDING, WITHOUT
LIMITATION, THE AMERICANS WITH DISABILITIES ACT), THE ABILITY OF BUYER TO OBTAIN
ANY NECESSARY GOVERNMENTAL APPROVALS, LICENSES OR PERMITS FOR BUYER’S INTENDED
USE OR DEVELOPMENT OF THE PROPERTY, THE PRESENCE OR ABSENCE OF HAZARDOUS
MATERIALS ON, IN, UNDER, ABOVE OR ABOUT THE PROPERTY OR ANY ADJOINING OR
NEIGHBORING PROPERTY, THE QUALITY OF ANY LABOR AND MATERIALS USED IN THE
CONSTRUCTION OF ANY IMPROVEMENTS, THE CONDITION OF TITLE TO THE PROPERTY, THE
LEASES, CONTRACTS OR ANY OTHER AGREEMENTS AFFECTING THE PROPERTY OR THE
INTENTIONS OF ANY PARTY WITH RESPECT TO THE NEGOTIATION AND/OR EXECUTION OF ANY
LEASE OR CONTRACT WITH RESPECT TO THE PROPERTY, SELLER’S TITLE TO OR OWNERSHIP
OF THE PROPERTY OR ANY PORTION THEREOF OR THE ECONOMICS OF, OR THE INCOME AND
EXPENSES, REVENUE OR EXPENSE PROJECTIONS OR OTHER FINANCIAL MATTERS, RELATING
TO, THE OPERATION OF THE PROPERTY.  WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, BUT EXCEPTING SELLER’S UNDERTAKINGS, BUYER EXPRESSLY ACKNOWLEDGES AND
AGREES THAT BUYER IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF ANY SELLER
PARTY, NOR ANY BROKER OR REPRESENTATIVE OF SELLER, WHETHER IMPLIED, PRESUMED OR
EXPRESSLY PROVIDED AT LAW OR OTHERWISE, ARISING BY VIRTUE OF ANY STATUTE, COMMON
LAW OR OTHER LEGALLY BINDING RIGHT OR REMEDY IN FAVOR OF BUYER.  BUYER FURTHER
ACKNOWLEDGES AND AGREES, BUT WITHOUT LIMITING SELLER’S UNDERTAKINGS, THAT SELLER
IS UNDER NO DUTY TO MAKE ANY INQUIRY REGARDING ANY MATTER THAT MAY OR MAY NOT BE
KNOWN TO ANY SELLER PARTY OR ANY BROKER OF SELLER.  THIS SECTION SHALL SURVIVE
THE CLOSING, OR, IF THE CLOSING DOES NOT OCCUR, SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT INDEFINITELY.

 

Service Contracts to be Assumed.  Not later than the Due Diligence Period
Expiration Date, Buyer will notify Seller in writing of those Contracts which
Buyer at its discretion has elected to have terminated.  Seller shall terminate
the Contracts which Buyer has elected to have terminated, and Seller shall be
responsible for all penalties, termination fees and other costs.  Seller shall
indemnify Buyer with respect to all Contracts that Buyer elects to have
terminated and, with respect to those Contracts Buyer elects to have terminated,
for the period before the Closing.  This provision shall survive the Closing.

 

No Obligation to Repair or to Comply.  Except in the ordinary course of
operating the Property in accordance with MBCR’s current practices, and except
for Seller’s Undertakings (to the extent

 

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applicable), neither Seller nor MBCR shall be obliged to make any changes,
alterations or repairs to the Property.  Except for Seller’s Undertakings (to
the extent applicable), under no circumstances shall Seller or MBCR be obliged
to cure any violations of law or to comply with the requirements of any insurer
with respect to the Property or to make any capital improvements or repairs.

 

Buyer’s Entry and Indemnity; Limits on Government Contact.  (A) In connection
with any entry by any Buyer Party or any of their contractors onto the Property,
Buyer shall give to W. Joseph Smith at (410) 237-5451 or Seller’s Broker advance
telephone notice of such entry and shall conduct such entry and any inspections
in connection therewith so as to minimize, to the greatest extent possible,
interference with MBCR’s business and the business and occupancy of the Tenants
and otherwise in a manner reasonably acceptable to Seller.  Without limiting the
foregoing, prior to any entry to perform any on-site testing or inspection of
structural, subsoil or engineering conditions of the Property, Buyer shall
provide W. Joseph Smith or Seller’s Broker with the identity of the Persons who
will perform such testing or inspections and the proposed scope thereof.  Seller
or its representative may, at Seller’s option, be present to observe any testing
or other inspection performed on the Property.

 

(B)                                Buyer shall maintain or cause to be
maintained at all times during the effectiveness of this Agreement, and for six
months thereafter if such policy is a “claims made” policy, insurance insuring
Buyer and Seller for acts or omissions by Buyer, its employees, agents or
contractors occurring by virtue of any entry onto the Property by any Buyer
Party, with limits of not less than $1,000,000.  If Closing does not occur,
Buyer shall repair any damage to the Property caused by any entry onto the
Property by any Buyer Party  or any of their contractors and the performance of
any tests by any Buyer Party or any of their contractors.  Buyer shall indemnify
and hold the Seller Parties harmless from and against any Claims arising out of
or relating to any entry on the Property by any Buyer Party or any of their
contractors; provided, however, the indemnity which is the subject of this
sentence shall not cover liability arising from any Hazardous Materials situated
on or about the Property unless such Hazardous Materials are introduced onto the
Property by Buyer, nor shall such indemnification cover any Claims arising from
the negligence of Seller, its agents, employees, contractors or
representatives.  The foregoing indemnity shall survive the Closing, or, if the
Closing does not occur, survive the termination of this Agreement.

 

(C)                                Notwithstanding any provision in this
Agreement to the contrary, neither Buyer nor any other Buyer Party nor any of
their contractors shall discuss with any Governmental Authority or any Tenant
regarding any Hazardous Materials on or the environmental condition of the
Property, except upon the prior written consent of Seller or as otherwise
required by applicable law; provided, however, that Buyer or any Buyer Party may
make customary and standard inquiry to any Governmental Authority as to the
presence or history of Hazardous Materials or environmental conditions at the
Property.  Buyer shall give prior written notice to Seller before producing any
records, reports or other data requested by any Governmental Authorities. 
Seller shall have the right to have a representative present when Buyer has, or
causes to be had, any such contact with any Governmental Authority.

 

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RELEASE. 

 

(A)                              Excepting Seller’s Undertakings, Buyer, for
itself, all Buyer Parties and their successors and assigns, waives its right to
recover from, and forever releases and discharges, and covenants not to sue, all
Seller Parties and all Seller’s Affiliates with respect to any and all Claims,
whether direct or indirect, known or unknown, foreseen or unforeseen, that may
arise on account of or in any way be connected with the Property, the Membership
Interests or this Agreement, including, without limitation, the physical,
environmental and structural condition of the Property or any law or regulation
applicable thereto, including, without limitation, but excepting Seller’s
Undertakings, any Claim or matter relating to the use, presence, discharge or
release of Hazardous Materials on, under, in, above or about the Property.

 

(B)                                This Section 4.9 shall survive Closing, and
any termination of this Agreement, indefinitely.

 

BUYER’S CONDITIONS PRECEDENT

 

Conditions to Buyer’s Obligation to Purchase.  Buyer’s obligation to complete
Closing is conditioned upon the satisfaction (or Buyer’s written waiver at its
sole discretion) on or prior to the Closing Date of all of the following
conditions (collectively, “Buyer’s Conditions Precedent”):

 

Seller’s Representations and Warranties.  The representations and warranties of
Seller herein contained, with such updates and changes as are herein expressly
permitted, shall be true and correct in all material respects, except that those
representations and warranties separately qualified by a materiality standard
shall be true and correct in all respects.

 

Seller’s Performance.  Seller shall have performed in all material respects all
of Seller’s covenants, agreements and obligations required by this Agreement to
be performed at or prior to Closing, except that those covenants, agreements and
obligations separately qualified by a materiality standard shall have been
performed by Seller in all respects.

 

Condition of Title.  At Closing, the Real Property shall not be subject to any
Seller Caused Non-Permitted Exceptions.

 

5.1.4                     Estoppel Certificates.  Seller shall have furnished to
Buyer estoppel certificates in a form to be provided by Buyer, as approved by
Buyer’s lender (without material modifications as to any estoppel certificate),
from (i) all Tenants leasing five thousand (5,000) or more square feet of space
in the Improvements and (ii) Tenants who in the aggregate lease at least
eighty-five percent (85%) of the leased area of the Premises, which certificates
shall be dated not earlier than thirty (30) days prior to the Closing Date, and
none of the Leases shall have been terminated or cancelled and none of the
Tenants shall have ceased operating its business at the Premises, or given
Seller any notice of its intention to terminate its Lease or cease operating its
business at the Premises.  In addition, if required by Buyer’s lender, Seller
shall have furnished to Buyer a subordination, nondisturbance and attornment
agreement (“SNDA”), in a form provided by Buyer, executed by each of those
Tenants under the Leases as required by Buyer’s lender.  Prior to the Due
Diligence Period Expiration Date, Buyer shall notify Seller in

 

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writing whether or not Buyer’s lender requires SNDAs, and if it does, the
Tenants from which it is so required.  If Buyer fails to give such notice to
Seller by the Due Diligence Period Expiration Date, this condition precedent to
Buyer’s obligation to close the transaction contemplated hereunder shall be
deemed null and void and of no further force or effect.  Seller shall use
commercially reasonable efforts to obtain and deliver to Buyer estoppel
certificates from all Tenants and, if required, such SNDAs at least ten (10)
days prior to the Closing.  If, on the Closing Date, Seller shall not have
obtained all required estoppel certificates and SNDAs and if Buyer does not
waive such requirement, then, at Seller’s option, Seller may adjourn the Closing
Date by up to fifteen (15) days (the “Adjourned Closing Date”) to try to obtain
all required estoppel certificates and SNDAs.  If, by the Adjourned Closing
Date, Seller shall not have obtained and delivered to Buyer all required
estoppel certificates and SNDAs, then Buyer shall have the right, at its option,
to (i) waive such requirement and close without adjustment in the Purchase
Price; or (ii) terminate this Agreement by written notice to Seller with a copy
to the Title Insurance Company, with instructions to the Title Insurance
Company, as escrow agent, to return the Deposit to Buyer (subject to the
provisions of the Escrow Deposit Agreement), and upon return of the Deposit to
Buyer, this Agreement shall terminate and neither party shall have any further
liability or obligation to the other hereunder, except for Buyer’s obligations
to treat Due Diligence Documents as confidential, proprietary information and
return the same to Seller pursuant to Paragraph 15.15 hereof.  Prior to the
Adjourned Closing Date Buyer may at any time waive such requirement and close
the transaction without adjustment or reduction in the Purchase Price.

 

Income and Expenses.  There shall have been no material adverse change in the
income or expenses related to the Premises.

 

Mercantile Lease.  Prior to the Due Diligence Period Expiration Date, Seller and
Buyer shall negotiate in good faith and agree upon the text of a lease to be
entered into by Mercantile Safe-Deposit and Trust Company, as Tenant, with MBCR
(the “Mercantile Lease”) that shall be substantially in accordance with the
terms set forth in the term sheet attached hereto as Exhibit “J”, and, on or
prior to the Due Diligence Period Expiration Date, Seller shall cause
Mercantile-Safe Deposit and Trust Company and MBCR to execute and deliver to
Buyer the Mercantile Lease, which shall be effective as of the consummation of
the Closing.

 

Disposition of Other Properties.  Prior to the Due Diligence Period Expiration
Date, (i) Seller shall convey the Federalsburg Call Center and the Linthicum
Operations Center from MBCR to third parties and shall provide evidence of such
disposition to Buyer and (ii) the Cross Keys Lease shall have been terminated or
assigned by MBCR in accordance with its terms.

 

Failure of Conditions.  If at the time of Closing any Buyer’s Conditions
Precedent shall not have been satisfied in any material respect, then unless
such lack of satisfaction has been caused by a Seller Default (in which case the
provisions of Section 12.1 shall apply), Buyer shall have the right (as Buyer’s
exclusive right and remedy, subject to the Sections 8.1 and 8.2 hereof) either
(a) to proceed with Closing without any adjustment in the Purchase Price, in
which case Buyer shall be deemed to have waived all unsatisfied Buyer’s
Conditions Precedent, or (b) to terminate

 

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this Agreement by giving Seller notice on or before the Scheduled Closing Date,
in which case the Deposit shall be refunded to Buyer promptly and, thereupon,
neither party shall have any further rights, duties, liabilities or obligations
under this Agreement, except as otherwise expressly set forth herein.

 

SELLER’S CONDITIONS PRECEDENT

 

Conditions to Seller’s Obligations to Sell.  Seller’s obligation to complete
Closing is conditioned upon the satisfaction (or Seller’s written waiver) on or
prior to the Closing Date of all of the following conditions (collectively,
“Seller’s Conditions Precedent”):

 

Purchase Price. The Title Insurance Company shall have received the entire
Purchase Price, plus or minus any prorations, deduction, apportionments or costs
in accordance with Section 11 hereof, and Buyer shall have executed and
delivered the Closing Instructions directing the Title Insurance Company to
disburse the same.

 

Buyer’s Representations and Warranties.  The representations and warranties of
Buyer herein contained shall be true and correct in all material respects.

 

Buyer’s Performance.  Buyer shall have performed, in all material respects, all
of Buyer’s covenants, agreements and obligations required by this Agreement to
be performed at or prior to Closing.

 

REPRESENTATIONS AND WARRANTIES

 

REPRESENTATIONS AND WARRANTIES OF SELLER.

 

(A)                              In addition to the representations, warranties
and covenants contained elsewhere in this Agreement, Seller hereby represents,
warrants, and covenants to Buyer as follows, which representations and
warranties shall survive Closing except to the extent otherwise set forth
herein:

 

(i)                                     Seller is and will at Closing be duly
organized, validly existing and in good standing under the laws of the state of
its formation.  MBCR is and will at Closing be duly organized, validly existing
and in good standing under the laws of its state of formation.  Seller owns of
record and beneficially 100% of the membership interests in MBCR free and clear
of all liens, claims and encumbrances.  Seller has delivered to Buyer true,
correct and complete copies of the Articles of Organization of MBCR, the
operating agreement of MBCR (the “Operating Agreement”) and the minute books and
records of transfer of membership interests of MBCR.  MBCR was formed as a
Maryland limited liability company on December 17, 1998 pursuant to the Articles
of Organization and the Operating Agreement described in the preceding
sentence.  The membership interests of MBCR are not subject to any restriction
with

 

15

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respect to their transferability (other than restrictions on transfer under
applicable federal and state securities laws).  No third party has grounds for
any claim (i) against the membership interests, or (ii) that it has any
ownership interest in MBCR .  No person is entitled to any preemptive rights
with respect to the purchase or sale of any membership or ownership interest in
MBCR, and as of the Closing Date there will be no outstanding options, warrants
or other rights, commitments or arrangements, written or oral to purchase or
otherwise acquire any membership or ownership interest in MBCR or any security
directly or indirectly convertible into or exchangeable or exercisable for any
membership or ownership interest in MBCR.  MBCR does not presently own or
control, directly or indirectly, any interest in any other corporation,
association or other business entity and MBCR does not own or hold any assets
other than the Property.  MBCR is not a participant in any joint venture,
partnership or other similar arrangement.

 

(ii)                                  This Agreement and all Closing Documents
to which Seller is a party (a) are, and at the time of Closing will be, duly
authorized, executed and delivered by Seller, (b) do not, and at the time of
Closing will not, violate any provision of any agreement to which Seller is a
party or to which Seller is subject, (c) constitute (or in the case of Closing
Documents will constitute) a valid and legally binding obligation of Seller,
enforceable in accordance with its terms, and (d) do not, and at the time of
Closing, will not require the consent of any third parties to be a valid and
legally binding obligation of Seller.

 

(iii)                               At closing, MBCR shall not be obligated
under any Contract other than those Contracts that Buyer elects not to have
terminated pursuant to Section 4.6 of this Agreement.

 

(iv)                              Seller represents that in addition to the
Property, MBCR has owned only two other properties, one being known as the
Linthicum Operations Center and one being known as the Federalsburg Call Center,
and has leased only one property, being a lease of approximately 839 square feet
at the Village at Cross Keys, Baltimore, Maryland pursuant to a lease, dated
March 19, 2004, between MBCR, as tenant, and VCK Business Trust, as landlord
(the “Cross Keys Lease,” and together with the Linthicum Operations Center and
the Federalsburg Call Center, the “Other Properties”).

 

(v)                                 MBCR has not at any time had any assets or
liabilities, other than assets and liabilities directly related to the ownership
and operation of the Property and the Other Properties in the ordinary course of
business, and liabilities to employees involved in such business.

 

(vi)

 

(a) Neither Seller nor MBCR has within the past five years received written
notice of any violation of law with respect to Hazardous Materials at the
Property.  To Seller’s Knowledge and MBCR’s Knowledge, the Property does not
contain any Hazardous Materials which might subject MBCR to any liability on or
after the date hereof.  To Seller’s Knowledge and MBCR’s Knowledge, the Property
does not violate any law with respect

 

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to Hazardous Materials in any material respect.  This Section 7.1(A)(vi)(a)
shall not survive the Closing.

 

(b) Neither Seller nor MBCR has received written notice of any violation of law
with respect to Hazardous Materials at the Other Properties.  The Other
Properties do not contain any Hazardous Materials which might subject MBCR to
any liability on or after the date hereof.  None of the Other Properties violate
any law with respect to Hazardous Materials in any material respect.

 

(vii)

 

(a) Neither Seller nor MBCR has received any written notice which remains
outstanding from any governmental body having jurisdiction over the Property as
to any violation of any building, fire, environmental, health or any
governmental law or ordinance affecting the Property which might constitute a
liability of MBCR at or after Closing, nor do Seller or MBCR have knowledge of
any such violations.  This Section 7.1(A)(vii)(a) shall not survive the Closing.

 

(b) Neither Seller nor MBCR has received any written notice which remains
outstanding from any governmental body having jurisdiction over the Other
Properties as to any violation of any building, fire, environmental, health or
any governmental law or ordinance affecting the Other Properties which might
constitute a liability of MBCR at or after Closing, and no such violations exist
for which Seller or MBCR may become liable.

 

(viii)                        On or before the Closing Date, all expenses of the
Other Properties shall have been paid current or the liability therefor shall
have been assumed by the transferee owners of each of the Other Properties or
the Seller.

 

(ix)                                MBCR shall have no liabilities as of the
Effective Date, whether fixed or contingent, or arising subsequent to the
Closing Date as a result of MBCR’s ownership and operation of the Other
Properties, with the exception of the worker’s compensation claim described on
Exhibit “F” attached hereto, for which MBCR and Seller are fully insured and for
which Seller agrees to be liable in the event that its insurance fails to cover
such claim, and with the exception of liabilities described in the MBCR
Financial Statements, for which Seller shall be responsible.

 

(x)                                   At and after Closing MBCR shall not be
subject to any liabilities or obligations pertaining to its prior ownership of
the Other Properties, whether known or unknown, fixed or contingent, liquidated
or unliquidated, except such as have been assumed by and will be paid by the
transferees of the Other Properties.  MBCR has not received written notice of
any litigation that is pending or threatened against MBCR and, to the knowledge
of Seller and MBCR, no such litigation is pending or threatened.

 

(xi)                                As of the Effective Date, MBCR shall have no
employees and MBCR shall have no liability to or with respect to any employee,
including without limitation no obligations for salary, wages or benefits for
any accrued vacation pay, sick leave, contributions to pension or profit-sharing
plans, cafeteria plans or any other employee benefit whatsoever.

 

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(xii)                             As of Closing, MBCR shall have filed all tax
returns and paid all taxes theretofore due or payable.  Seller represents and
warrants that for United States federal income tax purposes (and also, to the
extent applicable, for all state and local income tax purposes) MBCR is and
since its formation has been classified and properly characterized as an entity
disregarded as separate from its owner under Treasury Regulation Sections
301.7701-2 and 301.7701-3, and that all tax returns, filings and elections made
by MBCR and Seller to date have been consistent with said classification, and
further (for avoidance of doubt) that MBCR is not and never has been classified
or properly characterized as a corporation, as an association taxable as a
corporation, or as a “publicly traded partnership” treated as a corporation
under Internal Revenue Code Section 7704 or any similar tax law.

 

(xiii)                          MBCR holds all licenses, franchises, permits and
other governmental authorizations the absence of any of which could have a
material adverse effect on MBCR, and MBCR or Seller has delivered to Buyer an
accurate list and description of all governmental licenses, franchises, permits
and other governmental authorizations, including permits, titles, licenses,
franchises and certificates, which, to Seller’s Knowledge, exist.  All of those
licenses, franchises, permits and other governmental authorizations are valid,
and MBCR has not received any notice that any Governmental Authority intends to
cancel, terminate or not renew any such license, franchise, permit or other
governmental authorization.  MBCR has conducted and is conducting its business
in compliance with the requirements, standards, criteria and conditions set
forth in all licenses, franchises, permits and other governmental
authorizations, and is not in violation of any of the foregoing except where
such non-compliance or violation would not have a material adverse effect on
MBCR.  This Section 7.1(A)(xiii) shall not survive the Closing.

 

(xiv)                         Except as otherwise set forth in this Agreement
and the Exhibits hereto, (aa) all of the Leases are in full force and effect,
(bb) not more than one (1) month’s rent under any of the Leases has been
collected in advance, (cc) Seller is not in default under any of the Leases,
(dd) Seller has not assigned or pledged the Leases or the rent due thereunder,
and (ee) Seller has no obligation to provide any Tenant any allowances or
credits except as set forth in the Leases.  Other than the Leases, there are no
leases or occupancy agreements in force with respect to the Property.  As of the
Effective Date, no Tenant is in default in any material respect under any
Lease.  This Section 7.1(A)(xiv) shall not survive the Closing.

 

(xv)                            As of the Effective Date, neither Seller nor
MBCR has actual notice, or has received from any Person any written notice, of
any pending or threatened condemnation or similar proceeding and, to Seller’s
knowledge, there is no change or proposed change in the route, grade, or width
of, or otherwise affecting, and street or road that is contiguous to the
Property or any portion of the Property or of pending public improvements in or
adjoining the Property which will in any manner affect the Property.  This
Section 7.1(A)(xv) shall not survive the Closing.

 

(xvi)                         As of the Effective Date, neither Seller nor MBCR
has actual notice, or has received written notice, of any litigation that is
pending or threatened with respect to the Property or MBCR which could affect
the Property or MBCR upon or subsequent to the Closing, except for the worker’s
compensation claim described on Exhibit “F”, which is fully

 

18

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insured and for which Seller agrees to be liable in the event its insurance
fails to cover such claim.  This Section 7.1(A)(xvi) shall not survive the
Closing.

 

(xvii)                      The rent roll and List of Security Deposits annexed
hereto as Exhibit “E” (the “Initial Rent Roll and List of Security Deposits”)
are true and accurate as of their date, and there are no Tenants at the Property
as of the date of such rent roll except as set forth thereon.  There are no rent
concessions presently in effect other than a rent-free occupancy agreement for
                  square feet of space for a barbershop for the use and
convenience of the Tenants and a rent-free occupancy agreement for              
square feet of space for a café for the use and convenience of the Tenants..

 

(xviii)                   All payments due on or before Closing in respect of
lease commissions for existing Leases, including commissions with respect to
renewals or extensions thereof which have heretofore been exercised, are or will
be paid current by Seller or MBCR at or before the Closing.

 

(xix)                           A correct and complete list of the Contracts
which affect the Property is set forth on Exhibit “G” annexed hereto, and such
Contracts have been delivered to Buyer.  On the Closing Date, all Contracts,
except for those Buyer has elected not to have terminated in accordance with
Section 4.6 hereof, shall be terminated and of no further force and effect, and
any payments due thereunder shall have been paid by Seller.  Each of the
Contracts are valid and in full force and effect, and, neither MBCR nor, to
Seller’s Knowledge, the other party thereto is in default thereunder.

 

(xx)                              The schedule of Personal Property annexed
hereto as Exhibit “H” contains a correct and substantially complete list of all
Personal Property and fixtures owned by MBCR and located at or used in
connection with the operation of the Property.  All Personal Property is owned
by MBCR free from encumbrances or liens, or is the subject of a Lease.

 

(xxi)                           The Property is free and clear of all mechanics’
and materialmen’s liens and all work performed or materials furnished up to
Closing which are or might become a lien against the Property shall be paid for
or bonded off at or prior to the Closing, or an amount sufficient to pay for the
same shall be escrowed with the Title Insurance Company at Closing.

 

(xxii)                        To Seller’s Knowledge, the Property does not
contain any Hazardous Materials other than as set forth in any reports delivered
by Seller to Buyer pursuant to the provisions of Section 4.1, or such limited
quantities of substances used for cleaning and maintenance as are customarily
used in the operation of office buildings such as the Property.  This
Section 7.1(A)(xxii) shall not survive the Closing.

 

(xxiii)                     Neither Seller nor MBCR, nor, to Seller’s Knowledge,
any Tenant at the Property is the subject of any existing, pending, threatened
or contemplated bankruptcy, solvency or other debtor’s relief proceeding.  This
Section 7.1(A)(xxiii) shall not survive the Closing.

 

(xxiv)                    Neither Seller nor MBCR has received any written
notice which remains outstanding from any governmental body having jurisdiction
over the Property as to any

 

19

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violation of any building, fire, environmental, health or other governmental law
or ordinance affecting the Property, or any written notice which remains
outstanding from any insurance company or inspection or rating bureau setting
forth any requirements as a condition to the continuation to any insurance
coverage on or with respect to the Property or the continuation thereof at the
existing premium rates.  This Section 7.1(A)(xxiv) shall not survive the
Closing.

 

(xxv)                       Seller is not a “foreign person” as such term is
defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended
(the “Code”).

 

(xxvi)                    To Seller’s Knowledge, Seller is in compliance with
all laws, statutes, rules and regulations of any federal, state or local
governmental authority in the United States of America applicable to such
Persons (as hereinafter defined), including, without limitation, the
requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001)
(the “Order”) and other similar requirements contained in the rules and
regulations of the Office of Foreign Asset Control, Department of the Treasury
(“OFAC”) and in any enabling legislation or other Executive Orders in respect
thereof (the Order and such other rules, regulations, legislation, or orders are
collectively called the “Orders”), to the extent that noncompliance would have a
material adverse effect on Seller’s ability to convey the Membership Interests
or would cause Buyer to incur a liability.  For purposes of this subsection,
“Person” shall mean any corporation, partnership, limited liability company,
joint venture, individual, trust, real estate investment trust, banking
association, federal or state savings and loan institution and any other legal
entity, whether or not a party hereto; and Seller:

 

(a)                                  is not listed on the Specially Designated
Nationals and Blocked Persons List maintained by OFAC pursuant to the Order
and/or on any other list of terrorists or terrorist organizations maintained
pursuant to any of the rules and regulations of OFAC or pursuant to any other
applicable Orders (such lists are collectively referred to as the “Lists”);

 

(b)                                 has not been indicted or arrested for money
laundering or for predicate crimes to money laundering, convicted or pled nolo
contendere to charges involving money laundering or predicate crimes to money
laundering;

 

(c)                                  has not been determined by competent
authority to be subject to the prohibitions contained in the Orders;

 

(d)                                 is not owned or controlled by, nor acts for
or on behalf of, any Person on the Lists or any other Person who has been
determined by competent authority to be subject to the prohibitions contained in
the Orders; or

 

(e)                                  shall not assign this Agreement or any
interest herein, to any Person who is listed on the Lists or who is engaged in
illegal activities.

 

If prior to Closing, Seller becomes listed on the Lists or is indicted,
arraigned, or custodially detained on charges involving money laundering or
predicate crimes to money laundering (each, a “Triggering Event”), Seller shall
immediately notify Buyer, but in no event later than five (5) business days
after the occurrence of the Triggering Event.  In the event of a

 

20

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Triggering Event, Buyer may terminate this Agreement upon written notice to
Seller, whereupon the Deposit, shall be returned to Buyer, and neither party
shall have any further obligation hereunder.  At Seller’s option, Seller shall
have ten (10) business days after receipt of Buyer’s notice to remove such party
from any interest in Seller.

 

(xxvii)                 Seller has delivered, or shall deliver within two (2)
Business Days following the Effective Date, to Buyer copies of the following
financial statements:  balance sheets and income statements, at and for each of
the years ended December 31, 2000, 2001, 2002 and 2003, and for the nine-month
period ended September 30, 2004 prepared by or on behalf of MBCR and all balance
sheets and income and expense statements prepared in connection with the
Property and Other Properties (such income and expense statements, but not such
balance sheets, shall be prepared on a property by property or stand alone
basis) (collectively, the “MBCR Financial Statements”).  Each of the MBCR
Financial Statements is consistent with the books and records of MBCR (which, in
turn, are accurate and complete in all material respects) and fairly presents
MBCR’s financial condition, assets and liabilities as of their respective dates
and the results of operations and cash flows for the periods related thereto in
compliance with GAAP, consistently applied throughout the periods which are the
subject of MBCR Financial Statements.  All books and records relating to
operating income and expenses of the Property furnished or made available to
Buyer by Seller concerning the operation of the Property shall be those
maintained by Seller in regard to the Property in the normal course of business
and  shall be true and correct in all material respects; all financial and
operating statements and information to be delivered to Buyer shall to be
current, correct and complete in all material respects, fairly present the
results of operations for such periods, and have been prepared on a modified
cash basis consistently applied since the beginning of the periods covered
thereby.

 

(xxviii)              Seller has delivered, or shall deliver within two (2)
Business Days following the Effective Date, to Buyer:

 

(a)                                  true and complete copies of all policies of
insurance to which MBCR is a party or under which MBCR, is or has been covered
at any time within two years preceding the date of this Agreement;

 

(b)                                 true and complete copies of all pending
applications for policies of insurance;

 

(c)                                  any statement by the auditor of the MBCR
Financial Statements with regard to the adequacy of such entity’s coverage or of
the reserves for claims;

 

(d)                                 a written description of any self-insurance
arrangement by or affecting MBCR, including any reserves established thereunder;
any contract or arrangement, other than a policy of insurance, for the transfer
or sharing of any risk by MBCR;

 

(e)                                  all policies to which MBCR is a party or
that provide coverage to MBCR are valid, outstanding and enforceable;

 

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(f)                                    MBCR has paid (or caused to be paid) all
premiums due, and has otherwise performed all of its obligations, under each
policy to which it is a party or that provides coverage to it or any director
thereof; and

 

(g)                                 MBCR has given notice to the insurer of all
claims known by it to be insured thereby.

 

This Section 7.1(A)(xxviii) shall not survive the Closing.

 

(xxix)

 

(a) MBCR has complied with all laws, rules, regulations, writs, injunctions,
decrees, and orders applicable to it or to the ownership, management,
maintenance and operation of the Property (collectively, “Laws”) and has not
received any notice of any alleged claim or threatened claim, violation of,
liability or potential responsibility under, any such Law which has not
heretofore been cured and for which there is no remaining liability. This
Section 7.1(A)(xxix)(a) shall not survive the Closing.

 

(b) MBCR has complied with all laws, rules, regulations, writs, injunctions,
decrees, and orders applicable to it or to the ownership, management,
maintenance and operation of the Other Properties (collectively, “Laws”) and has
not received any notice of any alleged claim or threatened claim, violation of,
liability or potential responsibility under, any such Law which has not
heretofore been cured and for which there is no remaining liability.

 

(xxx)                         For the purposes of this representation and
warranty, the following terms shall have the meanings set forth herein:

 

(a) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations and rules issued thereunder, or any successor law;

 

(b) “ERISA Affiliate” means any person or entity that, together with MBCR, would
be, or was at any time, treated as a single employer under Code Section 414 or
ERISA Section 4001;

 

(c) “Multiemployer Plan” means any employee pension benefit plan described in
ERISA Section 3(37);

 

(d) “Pension Plan” means any employee pension benefit plan subject to
Section 412 or ERISA Section 302 or Title IV (including any Multiemployer Plan);
and

 

(e) “Seller Pension Plan” means any Pension Plan that Seller or any ERISA
Affiliate has sponsored, or any Multiemployer Plan to which Seller or any ERISA
Affiliate has made contributions, at any time prior to the date of this
Agreement.

 

The Seller Deliverables include a complete and accurate list of all Seller
Pension Plans.  With respect to each Seller Pension Plan, the Seller
Deliverables include true, correct, and complete

 

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copies of the most recent Forms 5500 and any attached financial statements and
any related actuarial report.  Since 1974, neither MBCR, Seller nor any ERISA
Affiliate has sponsored or maintained or had any liability (whether actual or
contingent) with respect to any Pension Plan, other than the Seller Pension
Plans, whether maintained by any of them or by any predecessor entity.  Seller,
MBCR and each other ERISA Affiliate has no liability (whether actual or
contingent) with respect to any Pension Plan other than the Seller Pension
Plans.  With respect to each Seller Pension Plan:  (i) neither Seller nor any
ERISA Affiliate has terminated or withdrawn or sought a funding waiver, and no
facts exist that could reasonably be expected to cause such actions; (ii) no
accumulated funding deficiency (under Code Section 412 and without regard to
waivers) exists or has existed; (iii) no reportable event (as defined in ERISA
Section 4043) has occurred; (iv) all costs have been provided for on the basis
of consistent methods in accordance with sound actuarial assumptions and
practices; (v) the assets of such Pension Plan, as of its last valuation date,
exceeded its “Benefit Liabilities” (as defined in ERISA Section 4001(a)(16));
and (vi) since the last valuation date, there have been no amendments or changes
to increase the amounts of benefits, except for an increase to certain retiree
pension benefits, and, to the knowledge of Seller, nothing has occurred that
would reduce the excess of assets over benefit liabilities in such plans.  There
are no pending claims (other than routine benefit claims) or lawsuits that have
been asserted or instituted by, against, or relating to, any of the Seller
Pension Plans.  Seller, MBCR and each other ERISA Affiliate has paid all amounts
it is required to pay as contributions to the Seller Pension Plans through and
as of the date of this Agreement.

 

(B)                                Each of the representations and warranties of
Seller contained in this Section 7.1 (i) with respect to the Property only, is
made subject to and is qualified by the information disclosed in the Due
Diligence Materials; (ii) is made as of the Effective Date; (iii) to the extent
set forth in Section 10.4(i) shall be deemed remade by Seller at the Closing
Date; (iv) shall be true, in all material respects, as of the Closing Date,
except to the extent such representations and warranties are qualified by any
(a) separately stated material qualifiers, in which event such representations
and warranties shall be true in all respects, or (b) changes permitted in this
Agreement or otherwise approved in writing by Buyer; and (v) except as set forth
herein, shall survive Closing.

 

REPRESENTATIONS AND WARRANTIES OF BUYER.

 

(A)                              Buyer hereby represents and warrants to Seller
as follows:

 

BUYER IS A VIRGINIA LIMITED LIABILITY COMPANY, DULY ORGANIZED, VALIDLY EXISTING
AND IN GOOD STANDING UNDER THE LAWS OF ITS ORGANIZATION.

 

AS OF THE EFFECTIVE DATE, AND, PROVIDED BUYER HAS NOT TERMINATED THIS AGREEMENT
FOR ANY REASONS PERMITTED HEREUNDER, AT THE CLOSING DATE, THIS AGREEMENT AND ALL
CLOSING DOCUMENTS TO WHICH BUYER IS A PARTY (AA) ARE, AND WILL BE, DULY
AUTHORIZED, EXECUTED AND DELIVERED BY BUYER, (BB) DO NOT, AND WILL NOT, VIOLATE
ANY PROVISION OF ANY AGREEMENT OR JUDICIAL ORDER TO WHICH BUYER IS A PARTY OR TO
WHICH BUYER OR ANY PROPERTY OWNED BY BUYER IS SUBJECT AND (CC) CONSTITUTE (OR IN
THE CASE OF CLOSING DOCUMENTS WILL CONSTITUTE) A VALID AND LEGALLY BINDING
OBLIGATION OF BUYER, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS.

 

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NO CONSENTS OR APPROVALS ARE REQUIRED TO BE OBTAINED FROM, AND NO FILINGS ARE
REQUIRED TO BE MADE WITH, ANY GOVERNMENTAL AUTHORITY, LENDER, EQUITY PARTNER OR
OTHER PERSON IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY
BUYER OR THE CONSUMMATION BY BUYER OF THE TRANSACTION CONTEMPLATED HEREBY (OTHER
THAN ANY APPLICABLE FILING REQUIREMENTS UNDER FEDERAL OR STATE SECURITIES LAWS.)

 

EACH PERSON EXECUTING AND DELIVERING THIS AGREEMENT AND ALL DOCUMENTS TO BE
EXECUTED AND DELIVERED BY BUYER AT CLOSING HAS OR WILL HAVE DUE AND PROPER
AUTHORITY TO EXECUTE AND DELIVER THE SAME.

 

BUYER IS NOT THE SUBJECT OF ANY EXISTING, PENDING, THREATENED OR CONTEMPLATED
(A) BANKRUPTCY, SOLVENCY OR OTHER DEBTOR’S RELIEF PROCEEDING, OR (B) LITIGATION
OR OTHER JUDICIAL OR ADMINISTRATIVE PROCEEDING WHICH CHALLENGES OR COULD
ADVERSELY AFFECT BUYER’S RIGHT OR ABILITY TO ENTER INTO THIS AGREEMENT OR TO
CONSUMMATE THE TRANSACTIONS HEREIN CONTEMPLATED.

 

(B)                                Each of the representations and warranties of
Buyer contained in this Section 7.2 is made as of the Effective Date, and (ii)
shall be deemed remade by Buyer, and shall be true in all material respects, as
of the Closing Date.

 

TITLE AND SURVEY

 

On the Effective Date, Seller, if it has not already done so, shall provide to
Buyer a copy of the current owner’s policy of title insurance for the Property
(the “Title Policy”), if such Title Policy is in the possession of Seller or
MBCR, and a copy of the most recent ALTA survey of the Property showing all
Improvements thereon (the “Survey”), if such Survey is in the possession of
Seller or MBCR.

 

Title.  At Closing, MBCR shall have good and marketable fee simple title to the
Property, subject only to exceptions to title specifically permitted pursuant to
this Section 8.1.  Buyer shall have until the Due Diligence Period Expiration
Date to examine the condition of title.  If Buyer shall disapprove the condition
of title, such disapproval shall be set forth in a written notice (a “Title
Disapproval Notice”) given to Seller prior to the Due Diligence Period
Expiration Date stating that the condition of title to the Property or any of
the terms, provisions or contents of said items and documents are disapproved by
Buyer.  Seller shall have until the date which is five (5) Business Days after
the date of the applicable Title Disapproval Notice (the “Title Cure Expiration
Date”) in which to cure or eliminate or agree to cure or eliminate all items
which Buyer disapproves in the applicable Title Disapproval Notice, and to
furnish evidence satisfactory to Buyer in its sole discretion that all such
items have been cured or eliminated or that arrangements acceptable to Buyer in
its sole discretion have been made with the Title Insurance Company and any
parties in interest to cure or eliminate the same at or prior to the Closing. 
If such evidence is not received and approved by Buyer in its sole discretion on
or before the Title Cure Expiration Date (all exceptions to title set forth in
any and all Title Disapproval Notices are herein called “Non-Permitted
Exceptions”), then Buyer shall have the right by written notice delivered to
Seller within two (2) Business Days after the applicable Title Cure Expiration
Date (time being of the essence) to elect to terminate this Agreement and, upon
such election, the Deposit shall be immediately refunded to Buyer and thereupon
the Parties hereto shall have no further obligations one to the other under this
Agreement (other than those

 

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that are expressly stated to survive the termination of this Agreement). 
Notwithstanding anything contained herein to the contrary, Seller shall be
obligated to cause to be removed from record at Seller’s sole cost and expense,
only the following: (i) all Non-Permitted Exceptions which are caused by, result
from or arise out of Seller’s failure to pay real estate taxes (or cause MBCR to
pay such taxes), (ii) any lien, charge or encumbrance on the Property which
secures a debt incurred by Seller or MBCR, including, but not limited to a
mortgage or other security interest affecting the Property, (iii) all mechanic’s
liens and materialman’s liens, unless bonded against so as not to be enforceable
against the Property such that a bring-to-date title endorsement for the
Property issued as of the Closing Date would not contain any exceptions for
mechanic’s or materialman’s liens, and (iv) any Non-Permitted Exceptions that
Seller shall have committed to cure in a written notice to Buyer.  (Any
Non-Permitted Exception or lien, charge or encumbrance that Seller is required
to remove from record pursuant to the immediately preceding sentence is herein
called a “Seller Caused Non-Permitted Exception”.)  If Seller fails to remove
any Seller Caused Non-Permitted Exception, Buyer, nevertheless, may elect (at or
prior to the Closing) to consummate the transaction provided for herein subject
to any such Seller Caused Non-Permitted Exception as may exist as of the Closing
with a credit against the balance of the Purchase Price payable at the Closing
equal to (y) the sum necessary to remove any such Seller Caused Non-Permitted
Exception which can be satisfied by a liquidated amount and (z) the reasonably
estimated reduction in the fair market value of the Property resulting from any
Seller Caused Non-Permitted Exception which cannot be satisfied by the payment
of a liquidated amount.  Any title exception other than a Seller Caused
Non-Permitted Exception shall be deemed conclusively approved by Buyer if it is
not set forth in a timely Title Disapproval Notice or if Buyer does send a
timely Title Disapproval Notice but does not elect in writing to terminate this
Agreement within the two (2) Business Day period following the related Title
Cure Expiration Date.

 

Survey.  Buyer shall have until the Due Diligence Period Expiration Date to
examine and approve or disapprove the Survey.  If Buyer shall disapprove the
Survey, such disapproval shall be set forth in a written notice (a “Survey
Disapproval Notice”) given to Seller prior to the Due Diligence Period
Expiration Date stating that the Survey or any of the terms, provisions or
contents of the Survey are disapproved by Buyer.  Seller shall have until the
date which is five (5) Business Days after the date of the Survey Disapproval
Notice (the “Survey Cure Expiration Date”) in which to cure or eliminate or
agree to cure or eliminate all items which Buyer disapproves in the Survey
Disapproval Notice, to the satisfaction of Buyer in its sole discretion, and to
furnish evidence to Buyer that all such items have been eliminated from the
Survey or that arrangements have been made with a surveyor to eliminate the same
from the Survey or with the Title Insurance Company to insure over them at or
prior to the Closing in a manner acceptable to Buyer in its sole discretion.  If
such evidence is not received by Buyer on or before the Survey Cure Expiration
Date (all items on the Survey set forth in the Survey Disapproval Notice being
herein called “Non-Permitted Survey Exceptions”), then Buyer shall have the
right by written notice delivered to Seller within two (2) Business Days after
the applicable Survey Cure Expiration Date (time being of the essence) to elect
to terminate this Agreement and, upon such election, the Deposit shall be
immediately refunded to Buyer and thereupon the parties hereto shall have no
further obligations one to the other under this Agreement (other than those that
are expressly stated to survive the termination of this Agreement). 
Notwithstanding anything contained herein to the contrary, Seller shall be
obligated to cause to be removed from the

 

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Survey, at Seller’s sole cost and expense, only those Non-Permitted Survey
Exceptions which Seller shall commit to remove in a written notice to Buyer
(each, a “Seller Removal Survey Exception”).  If Seller fails to remove any
Seller Removal Survey Exception, Buyer, nevertheless, may elect (at or prior to
the Closing) to consummate the transaction provided for herein subject to any
such Seller Removal Survey Exception as may exist as of the Closing with a
credit against the balance of the Purchase Price payable at the Closing equal to
(y) the sum necessary to remove such Seller Removal Survey Exception which can
be satisfied by a liquidated amount, or (z) the reasonably estimated reduction
in the fair market value of the Property resulting from any Seller Removal
Survey Exception which cannot be satisfied by the payment of a liquidated
amount.  Any survey matter other than a Seller Removal Survey Exception shall be
deemed conclusively approved by Buyer if it is not set forth in a timely Survey
Disapproval Notice or if Buyer does send a timely Survey Disapproval Notice but
does not elect in writing to terminate this Agreement within the two (2)
Business Day period following the Survey Cure Expiration Date.

 

PRE-CLOSING OPERATIONS

 

INTERIM OPERATION OF THE PROPERTY.

 

(A)                              Seller hereby covenants that from and after the
Effective Date and until the Closing, Seller shall:

 

(i)                                     Not permit MBCR to enter into any new
Contracts or amend or (unless the contractor is in default) terminate any
existing Contracts without the prior written consent of Buyer (except that such
consent shall not be required with respect to Contracts to be terminated
pursuant to Section 4.6 hereof), which consent may be withheld or denied in
Buyer’s sole discretion.  From time to time prior to Closing, Seller shall (with
reasonable promptness) provide Buyer with copies of all Contracts entered into
by MBCR, with the Buyer’s consent, after the Effective Date affecting the
Property, and all operating statements and other periodic reports relating to
the Property (excluding Privileged Material) prepared by or delivered to MBCR
and/or Seller after the Effective Date.

 

(ii)                                  Except for trash and consumables, not
remove any fixtures, equipment, supplies or Personal Property owned by MBCR from
the Property unless replaced prior to Closing with items of equal or better
quality;

 

(iii)                               Not withdraw, settle or compromise any
protest or reduction proceeding affecting real estate taxes assessed against the
Property for any fiscal period subsequent to the Closing without the prior
written consent of Buyer, which consent shall not be unreasonably withheld.  All
real estate tax refunds and credits received after the Closing attributable to
the fiscal tax year during which the Closing occurs shall be apportioned between
Seller and Buyer, after deducting and reimbursing Seller and Buyer for all of
their respective expenses of obtaining an assessment reduction, which obligation
shall survive the Closing;

 

(iv)                              Maintain in full force and effect the current
casualty insurance policies covering the Property or equivalent replacement
policies;

 

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(v)                                 Collect rents on a current basis in
accordance with past practices and not in advance;

 

(vi)                              Give Buyer notice of any actions commenced
against Seller or MBCR which affect the Property;

 

(vii)                           Except for tenant improvements and emergency
repairs payable at MBCR’s sole cost and expense, not enter into any commitment
or agreement which would obligate Buyer or MBCR, or which would be cause for a
lien on any part of the Property at Closing, or which would not be completed
prior to Closing, for repairs, or construction of improvements upon or within
the Property except those with respect to which Buyer’s written consent has
first been obtained;

 

(viii)                        Perform, at Seller’s sole cost and expense and in
accordance with Seller’s current practices and industry standard, all normal
maintenance and repair in connection with the Property, including, without
limitation, making repairs and replacements to any broken, defective or
malfunctioning portions of the Property, subject to reasonable wear and tear and
further subject to the occurrence of any damage or destruction to the Property
due to fire or other casualty, and manage and operate the Property in accordance
with the terms of the Leases, all insurance policies and applicable federal,
state, and municipal laws, ordinances and regulations; and

 

(ix)                                Until Closing, conduct the business of the
Property in a normal businesslike and prudent manner.

 

(B)                                Except as otherwise provided in this
Agreement or approved by Buyer in writing, from the Effective Date to the
Closing Date, Seller shall cause MBCR, in the ordinary course and consistent
with MBCR’s current practices and industry standard, (i) to negotiate with
prospective Tenants and enter into new Leases on terms that Seller believes, in
its good faith business judgment, to be at market rents and upon commercially
reasonable terms (the “New Leases”) provided, however, that all New Leases, as
well as all extensions, modifications or amendments to Existing Leases, shall be
subject to Buyer’s prior written approval, which approval may be withheld in
Buyer’s sole and absolute discretion, (ii) to enforce Leases and (iii) to
perform landlord’s obligations under the Leases (other than Leases that have
been or that are in the process of being terminated);

 

(C)                                Except as otherwise provided in this
Agreement or approved by Buyer in writing, from the Effective Date through the
Closing Date, Seller shall not permit MBCR to enter into any New Lease, or any
extension, modification or amendment to any Existing Lease, or any agreement to
(nor shall MBCR) create a lien, encumbrance, covenant or restriction on or
affecting the Property without Buyer’s prior written consent, which consent may
be withheld in Buyer’s sole and absolute discretion with respect to any utility
or similar easement necessary for the operation of the Property, and which shall
be deemed granted if Buyer does not respond in

 

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writing to Seller’s request for consent within five (5) Business Days after
Buyer’s receipt of such request.

 

Lease Enforcement.  Subject to the provisions of Section 9.1, prior to the
Closing Date, Seller shall have the right, but not the obligation, to cause MBCR
to enforce the rights and remedies of the landlord under any Lease, by summary
proceedings or otherwise; provided, however, that Seller shall not cause MBCR to
seek to terminate any Lease without the prior written consent of Buyer, unless
the failure to seek such termination would materially prejudice MBCR’s rights to
enforce such Lease.

 

Lease Termination Prior to Closing.  Except as set forth in Section 5.1.4, the
bankruptcy or default of any Tenant or the termination of any Lease or the
removal of any Tenant by reason of a default by such Tenant (by summary
proceedings or otherwise) or by operation of the terms of such Lease (including
expiration) shall not affect the obligations of Buyer under this Agreement in
any manner or entitle Buyer to a reduction in, or credit or allowance against,
the Purchase Price or give rise to any other Claim on the part of Buyer.  The
termination in part of the lease between Reznick Fedder & Silverman, C.P.A.S.,
L.L.C. (“Reznick”) and MBCR (the “Reznick Lease”) shall not affect the
obligations of Buyer under this Agreement in any manner, as Mercantile-Safe
Deposit and Trust Company and Venable LLP each have entered into agreements with
Reznick to assume portions of the premises currently leased under the Reznick
Lease (with the exception of the approximately 10,763 square feet sublet by
Reznick to Adelberg, Rudlow, Dorf & Hendler, LLC, which shall remain subject to
the terms and conditions of the Reznick Lease) as set forth in greater detail in
Section 15.19 and Exhibit J hereof..

 

RISK OF LOSS AND INSURANCE PROCEEDS.

 

(A)                              The risk of loss or damage to the Property by
fire or other casualty shall be borne by Seller.  However, Buyer shall be bound
to purchase the Membership Interests for the full Purchase Price as required by
the terms hereof, without regard to the occurrence or effect of any damage to
the Property or destruction of any improvements thereon due to fire or other
casualty, if:  i) the repair is completed prior to Closing or if such damage is
not repaired but the cost to repair the Property is less than or equal to
$1,000,000 as determined by the insurance carrier’s estimate of the cost to
repair such loss or damage, and ii) none of the Tenants shall have terminated
their Lease, or be entitled to terminate its Lease as a result of such loss or
damage.  At Closing the proceeds of the insurance maintained by Seller covering
the casualty (and not theretofore applied to costs of repair or restoration)
shall be paid, credited or assigned to Buyer and Seller shall also pay or credit
Buyer with the amount of any deductible with respect to such policies and any
uninsured loss based solely on the insurance carrier’s estimate described in
clause (i) of the preceding sentence, less any amount paid by Seller for repair
or restoration.

 

(B)                                If the amount of the damage or destruction as
described in this Section 9.5 exceeds $1,000,000 or any of the Tenants shall
have terminated their Lease, or be entitled to terminate its Lease as a result
of such loss or damage, then Buyer may, at its option to be exercised within ten
(10) Business Days after becoming aware of the occurrence of the damage or
destruction and receiving the estimate of the cost to repair the Property and a
certified copy of MBCR’s insurance policies related to the Property, either
terminate this Agreement or

 

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consummate the purchase.  If Buyer elects to terminate this Agreement, then the
Deposit shall be immediately returned to Buyer and, thereupon, neither party
shall have any further rights or obligations hereunder except to the extent set
forth otherwise in this Agreement.  If Buyer elects to proceed with the Closing,
then, pending the Closing, Buyer, and not Seller, shall alone have the right to
cause MBCR (i) to adjust, compromise and settle with the insurance company(s)
with respect to the insurance policies, and (ii) to settle, compromise and
contest such award or proposed award relating to the Property, and Seller agrees
to cooperate with Buyer with respect to the collection of any payments or awards
or rights to payments or awards on behalf of MBCR.  If Buyer proceeds to
Closing, the proceeds of any insurance covering the casualty or loss of future
rents (and not theretofore applied to the costs of repair or restoration) shall
be paid, credited or assigned to Buyer and Seller shall also pay or credit Buyer
with the amount of any deductible with respect to such policies and any
uninsured loss mutually agreed to prior to Closing (if no such mutual agreement
is reached, Seller shall not owe any amount to Buyer for any such uninsured loss
and Buyer can elect to terminate this Agreement or proceed to Closing, as
described in this Section 9.4(B)) less any reasonable amounts paid by Seller for
repair or restoration. The provisions of this Section 9.5(B) shall survive the
Closing.

 

(C)                                If, prior to Closing, any governmental
authority or other entity having condemnation authority shall institute an
eminent domain proceeding or take any steps preliminary thereto (including the
giving of any direct or indirect notice of intent to institute such proceedings)
with regard to the Land or Improvements, and the same is not dismissed in a
final determination for which all appeal periods have passed on or before ten
(10) days prior to the Scheduled Closing Date, then Seller shall promptly notify
Buyer thereof and Buyer shall be entitled to terminate this Agreement in which
event, the Deposit shall be immediately returned to Buyer and neither party
shall have any further rights or obligations hereunder except to the extent set
forth otherwise in this Agreement.  In the event Buyer does not exercise its
right to terminate this Agreement within said ten (10) day period, Seller shall
assign and transfer to Buyer, at the Closing, all of Seller’s right, title and
interest in and to any awards due Seller from the condemnation and Buyer shall
be given credit against the Purchase Price for all awards received by Seller on
account thereof prior to the Closing.  Seller shall not enter into any
settlement of any condemnation proceedings or eminent domain award without the
prior written consent of Buyer, which consent may be withheld in Buyer’s sole
discretion.  Nothing herein shall obligate Seller to appeal any condemnation or
decision as to compensation resulting from condemnation; provided, Seller shall,
upon request of Buyer, assign to Buyer all of Seller’s rights to appeal such
decision in Seller’s name, if necessary, and Buyer may proceed with such appeal
at Buyer’s sole cost, expense and risk.

 

(D)                               Notwithstanding anything in this Section 9.5
to the contrary, if the Property is damaged by fire or other casualty prior to
the Closing and Seller reasonably believes that Seller can repair (or cause MBCR
to repair) such damage prior to the Closing, then Seller shall have the absolute
right to proceed with such repairs.  If Seller is unable to complete such
repairs by Closing, Section 9.5(A) or 9.5(B), as applicable, shall apply to the
repairs remaining to be completed.

 

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Notifications.  Between the Effective Date and the Closing, Seller shall
promptly notify Buyer in writing of any condemnation, environmental, zoning or
other land-use regulation proceedings specifically relating to the Property of
which Seller or MBCR receives written notice after the Effective Date, any
written notices of violations of any legal requirements relating to the Property
received by Seller or MBCR after the Effective Date, and any litigation of which
Seller or MBCR receives written notice after the Effective Date that affects the
operation of the Property.  It shall be a condition precedent to Buyer’s
obligation to purchase the Membership Interests, that there shall be no
litigation or proceeding pending at Closing having a potential material adverse
effect upon the Property or Seller’s ability to convey MBCR to Buyer, except for
(a) personal injury cases covered by MBCR’s insurance, subject to commercially
reasonable deductibles, and (b) mechanic’s lien proceedings which have been
bonded off, provided that in all such cases a title bring-to-date endorsement
dated as of the Closing Date would not contain any exception for a mechanic’s or
materialman’s lien.  Notwithstanding anything herein to the contrary, if Buyer
does not terminate this Agreement on or before the Due Diligence Period
Expiration Date, Buyer shall be deemed to have accepted the Property subject to
and without adjustment for any pending or threatened litigation disclosed by
Seller and MBCR prior to the Due Diligence Period Expiration Date.

 

CLOSING

 

Escrow Instructions.  Upon execution of this Agreement, the parties hereto shall
deposit an executed counterpart of this Agreement with the Title Insurance
Company, and this Agreement, as well as the Deposit Escrow Agreement, shall
serve as the instructions to the Title Insurance Company as escrow agent for
consummation of the purchase and sale contemplated hereby (“Closing”).  Seller
and Buyer agree to execute such reasonable additional escrow instructions as may
be appropriate to enable the Title Insurance Company to conduct Closing in
accordance with the terms of this Agreement, provided, however, that in the
event of any conflict between or among the provisions of this Agreement, the
Deposit Escrow Agreement and/or any supplementary escrow instructions, the terms
of this Agreement shall control.

 

Closing Date.  Closing shall be held commencing at 10:00 A.M. prevailing local
time on December 13, 2004 or on any earlier date which is mutually acceptable to
Seller and Buyer (“Scheduled Closing Date”).

 

Location.  The parties shall use their best effort to conduct Closing through
the Title Insurance Company pursuant to the escrow instructions provided
herein.  If Closing shall require in person attendance by the Parties, then such
in person Closing shall be held on the Scheduled Closing Date at the offices of
Buyer’s or Seller’s counsel, as the parties may decide.

 

Closing Documents.  At least one (1) Business Day prior to the Scheduled Closing
Date, Seller shall execute and deposit into escrow with the Title Insurance
Company fully executed counterparts of each of the following, in recordable form
where applicable, and dated as of the Closing Date:

 

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AN ASSIGNMENT OF MEMBERSHIP INTERESTS ASSIGNING AND CONVEYING TO BUYER 100% OF
THE MEMBERSHIP INTERESTS IN MBCR, FREE AND CLEAR OF ALL LIENS, CLAIMS AND
ENCUMBRANCES (THE “ASSIGNMENT”), IN THE FORM ATTACHED HERETO AS EXHIBIT “B”.

 

A SO-CALLED NON-IMPUTATION AFFIDAVIT ADDRESSED TO THE TITLE INSURANCE COMPANY IN
SUCH FORM AS THE TITLE INSURANCE COMPANY SHALL REASONABLY REQUIRE (THE
“NON-IMPUTATION AFFIDAVIT”),

 

RESIGNATION LETTERS FROM ALL THE OFFICERS AND DIRECTORS OF MBCR, TO BE EFFECTIVE
AS OF THE CLOSING DATE, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO BUYER,

 

AN OPINION FROM GALLAGHER EVELIUS & JONES LLP, COUNSEL TO SELLER, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO BUYER, CONFIRMING (A) THE DUE INCORPORATION
OF SELLER, THE CORPORATE POWER OF SELLER, THE DUE AUTHORIZATION, EXECUTION AND
DELIVERY OF THIS AGREEMENT AND THE CLOSING DOCUMENTS TO WHICH SELLER IS A PARTY
BY SELLER, NON-CONTRAVENTION OF AGREEMENTS AND LAW, ALL NECESSARY CONSENTS BEING
OBTAINED, AND THE ENFORCEABILITY OF THIS AGREEMENT AND SUCH CLOSING DOCUMENTS
AGAINST SELLER, (B) THE DUE ORGANIZATION OF MBCR, THE DUE AUTHORIZATION AND
VALID ISSUANCE OF ITS MEMBERSHIP INTERESTS, THE RECORD OWNERSHIP OF SUCH
INTERESTS, THE ABSENCE OF OPTIONS, WARRANTS AND RIGHTS TO PURCHASE SUCH
INTERESTS OR ANY PREEMPTIVE RIGHTS IN RESPECT THEREOF, THE NONCONTRAVENTION OF
AGREEMENTS AND LAW ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT AND THAT UPON CLOSING, BUYER WILL OWN 100% OF THE OUTSTANDING
MEMBERSHIP INTERESTS IN MBCR, FREE AND CLEAR OF ANY CLAIMS OF ANY THIRD PARTY,
AND (C) SUCH OTHER MATTERS AS BUYER MAY REASONABLY REQUEST, SUBJECT TO USUAL AND
CUSTOMARY QUALIFICATIONS AND BASED ON COUNSEL’S KNOWLEDGE AND ON SELLER’S AND
MBCR’S CERTIFICATION OF FACTS MATERIAL TO THE OPINION,

 

A FIRPTA AFFIDAVIT, IN THE FORM ATTACHED HERETO AS EXHIBIT “C”,

 

CLOSING INSTRUCTIONS, WITH ATTACHED SETTLEMENT STATEMENT TO BE PREPARED BY THE
TITLE INSURANCE COMPANY, CONSISTENT WITH THE TERMS OF THIS AGREEMENT (“CLOSING
INSTRUCTIONS”),

 

A RENT ROLL FOR THE PROPERTY, CERTIFIED BY SELLER TO BE TRUE AND CORRECT AS OF A
DATE NO EARLIER THAN FIVE (5) BUSINESS DAYS PRIOR TO THE CLOSING DATE,

 

ANY USUAL AND CUSTOMARY AFFIDAVITS AND CERTIFICATES REQUIRED BY THE TITLE
INSURANCE COMPANY,

 

A CERTIFICATE STATING THAT THE REPRESENTATIONS AND WARRANTIES OF SELLER
CONTAINED IN THIS AGREEMENT ARE TRUE AND CORRECT IN ALL MATERIAL RESPECTS (OR,
WITH RESPECT TO REPRESENTATIONS AND WARRANTIES SEPARATELY QUALIFIED BY
MATERIALITY STANDARDS, TRUE IN ALL RESPECTS) AS OF THE DATE OF CLOSING (WITH
APPROPRIATE MODIFICATIONS OF THOSE REPRESENTATIONS AND WARRANTIES MADE IN
SECTION 7.1 TO REFLECT ANY CHANGES RESULTING FROM ACTIONS MADE IN COMPLIANCE
WITH SECTION 9.1) OR IDENTIFYING ANY REPRESENTATION OR WARRANTY WHICH IS NOT, OR
NO LONGER IS, TRUE AND CORRECT IN ANY MATERIAL RESPECT AND EXPLAINING THE
CHANGE; PROVIDED, HOWEVER, THAT (1) THE REPRESENTATIONS AND WARRANTIES SET FORTH
IN CLAUSES (I)-(V), (VI)(B), (VII)(B), (VIII)-(XII), (XVII)-(XXI),
(XXV)-(XXVII), (XXIX)(B) AND (XXX) OF SECTION 7.1(A) (THE “PERMANENT
REPRESENTATIONS”) MAY NOT BE SO IDENTIFIED BY SELLER AS REPRESENTATIONS OR
WARRANTIES THAT ARE NO LONGER TRUE AND CORRECT, SELLER HEREBY AGREEING THAT IF
ANY OF THE PERMANENT REPRESENTATIONS IS NOT TRUE AND CORRECT AT THE CLOSING,

 

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SELLER SHALL BE DEEMED TO BE IN BREACH OF THIS AGREEMENT AND BUYER SHALL HAVE
ALL RIGHTS AND REMEDIES SPECIFIED HEREIN FOR SUCH BREACH BY SELLER, AND (2) IF
ANY OF THE OTHER REPRESENTATIONS OR WARRANTIES MADE BY SELLER IN THIS AGREEMENT
IS NOT TRUE AND CORRECT IN ALL MATERIAL RESPECTS AT CLOSING WITHOUT CHANGE SINCE
THE DATE HEREOF, EXCEPT CHANGES OCCASIONED BY ACTS, CONDUCT AND OCCURRENCES
PERMITTED UNDER THIS AGREEMENT, AND CHANGES WHICH DO NOT HAVE A MATERIAL ADVERSE
EFFECT ON THE PROPERTY OR THE OPERATIONS THEREOF, THEN BUYER MAY, BY NOTICE TO
SELLER, ELECT TO TERMINATE THIS AGREEMENT, IN WHICH EVENT THE DEPOSIT SHALL BE
PROMPTLY RETURNED TO BUYER AND, THEREAFTER, THIS AGREEMENT SHALL BE DEEMED
TERMINATED AND THE PARTIES HERETO SHALL HAVE NO FURTHER LIABILITIES TO EACH
OTHER EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE HEREIN.  IF, DESPITE
CHANGES OR OTHER MATTERS DESCRIBED IN SUCH CERTIFICATE, THE CLOSING OCCURS,
SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT SHALL BE
DEEMED TO HAVE BEEN MODIFIED BY ALL STATEMENTS MADE IN SUCH CERTIFICATE;

 

THE MERCANTILE LEASE; AND

 

ANY OTHER INSTRUMENTS REQUIRED BY THIS AGREEMENT.

 

Additional Seller Deliveries.  On or prior to the Closing Date, Seller shall
deliver to Buyer at the Property to the extent in Seller’s or MBCR’s possession,
the original counterparts of the Leases, Contracts, Licenses and Permits (if
any), Books and Records and Warranties (if any), all Plans, operating manuals,
brochures, marketing materials, advertisements, Tenant lease files, and other
on-site files and records in the possession of Seller or MBCR and MBCR’s
managing agent and utilized in connection with the operation and maintenance of
the Land and Improvements; and all keys and combinations to all locks in the
Improvements.

 

Buyer Closing Deliveries.  Not later than the Scheduled Closing Date, Buyer
shall have complied with Section 11.11 and shall execute and deposit into escrow
with the Title Insurance Company fully executed counterparts of each of the
following:

 

A DULY EXECUTED COUNTERPART OF THE ASSIGNMENT,

 

A DULY EXECUTED COUNTERPART OF THE CLOSING INSTRUCTIONS AND SETTLEMENT
STATEMENT, AND

 

ANY OTHER INSTRUMENTS REQUIRED BY THIS AGREEMENT.

 

Closing Instructions.  At or prior to Closing, Buyer and Seller shall each
execute and deposit in escrow with the Title Insurance Company such other
instructions and documents as are reasonably required by the Title Insurance
Company, on the Closing Date, to: (a) pay Seller the Purchase Price (after any
adjustments or prorations made in accordance with Section 11), (b) record those
Closing Documents (if any) to be recorded, and (c) close the escrow and
consummate Closing in accordance with the terms hereof.

 

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PRORATIONS; EXPENSES

 

Rents.  Rents, including, without limitation, common area maintenance charges,
taxes, parking charges, operating costs escalations and all other sums payable
by Tenants under the Leases (collectively, “Rents”), (subject, however, to
Section 11.2 as to unpaid Rents); Real Estate Taxes and personal property taxes,
including refunds with respect thereto; the current installment (only) of any
improvement bond, assessment or charge that is a lien on the Property or that is
pending and may become a lien on the Property; water, sewer and utility charges;
amounts paid or payable by MBCR under any Contract that Buyer has not elected to
have terminated pursuant to Section 4.6; annual permit fees, license fees and/or
inspection fees (calculated on the basis of the period covered); and any other
actually received income or prepaid expense relating to the operation of the
Property and covering a time period which spans the Closing Date shall all be
prorated as of 12:01 a.m. prevailing Eastern Time on the Closing Date, with
Buyer deemed the owner of MBCR on the entire Closing Date.

 

Receivables and Collections.  Any pre-Closing delinquent Rents collected by
Seller or Buyer after the Closing shall be applied as follows:  (i) first, to
all months succeeding the Closing Month until paid up-to-date; (ii) second, to
the Closing Month; and (iii) third, to all months preceding the Closing Month. 
If Buyer receives said past due rents, Seller’s aforesaid share thereof shall be
remitted by Buyer to Seller, provided such Tenant is otherwise current in its
rent, and if Seller receives such past due rents, Buyer’s aforesaid share
thereof shall be promptly remitted by Seller to Buyer.

 

Collection Efforts.  Buyer shall have no obligation after the Closing Date to
collect any delinquent Rents that accrued prior to the Closing Date and Seller
shall have the right to collect such delinquent Rents but under no circumstance
shall Seller have the right to initiate, threaten or pursue eviction
proceedings.

 

Security Deposits. Buyer (or MBCR) shall be solely obligated to the Tenants for
the return of any security deposits under the Leases.  At Closing, Buyer shall
receive a credit against the Purchase Price in an amount equal to (i) all
security deposits and accrued interest required to be available for return to
the Tenants under the Leases, and (ii) all advance rent received by Seller from
Tenants under the Leases for periods subsequent to the Closing.

 

Adjustments to Prorations.  In addition to the other provisions of this
Article 11, the following shall apply:

 

REAL ESTATE TAXES AND PERSONAL PROPERTY TAXES, IF ANY, SHALL BE PRO RATED ON THE
BASIS OF THE TAX YEAR IN WHICH THE CLOSING OCCURS.  IF THE CLOSING SHALL OCCUR
BEFORE THE REAL ESTATE TAX RATE FOR THE APPORTIONMENT PERIOD IS FIXED OR KNOWN,
THE APPORTIONMENT OF REAL ESTATE TAXES SHALL BE ON THE BASIS OF THE REAL ESTATE
TAX RATE FOR THE NEXT PRECEDING PERIOD APPLIED TO THE LATEST ASSESSED VALUATION
AND SHALL BE ADJUSTED WHEN THE FINAL TAX BILL IS AVAILABLE.

 

WATER AND SEWER CHARGES, AS WELL AS ELECTRICITY, GAS AND STEAM CHARGES, SHALL BE
PRO RATED ON THE BASIS OF THE MOST RECENT BILLS AVAILABLE, BUT IF THERE ARE
WATER, ELECTRIC OR GAS METERS ON THE PROPERTY, SELLER, TO THE EXTENT THE SAME IS
OBTAINABLE, SHALL FURNISH A READING EFFECTIVE AS OF THE DATE PRIOR TO THE
CLOSING DATE, OR IF NOT SO OBTAINABLE, TO A DATE NOT MORE THAN THIRTY (30) DAYS
PRIOR TO THE DATE PRIOR TO THE CLOSING DATE, AND THE UNFIXED METER CHARGES BASED

 

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THEREON FOR THE INTERVENING PERIOD SHALL BE APPORTIONED ON THE BASIS OF SUCH
LAST READING.  UPON THE TAKING OF A SUBSEQUENT ACTUAL READING, SUCH
APPORTIONMENT SHALL BE READJUSTED AND SELLER OR BUYER, AS THE CASE MAY BE, WILL
PROMPTLY DELIVER TO THE OTHER THE AMOUNT DETERMINED TO BE SO DUE UPON SUCH
READJUSTMENT.  IF SELLER IS UNABLE TO FURNISH SUCH PRIOR READING, ANY READING
SUBSEQUENT TO THE CLOSING WILL BE APPORTIONED ON A PER DIEM BASIS FROM THE DATE
OF SUCH READING IMMEDIATELY PRIOR THERETO AND SELLER SHALL PAY THE PROPORTIONATE
CHARGES DUE UP TO THE DATE OF CLOSING.  THE PROVISIONS AND OBLIGATIONS OF THE
PARTIES PURSUANT TO THIS SUBPARAGRAPH (B) SHALL SURVIVE THE CLOSING.

 

ANY OTHER FUNDS THAT WILL INURE TO THE BENEFIT OF OR BE REFUNDED TO MBCR AFTER
THE CLOSING DATE (E.G., UTILITY DEPOSITS) SHALL BE ADJUSTED OR PRORATED.

 

ANY UP-FRONT “BONUS” PAYMENTS MADE IN CONSIDERATION OF ENTERING INTO ANY
CONTRACT SHALL BE AND REMAIN THE PROPERTY OF SELLER.

 

EXCEPT AS SET FORTH IN THIS AGREEMENT, THE CUSTOMS OF THE COUNTY IN WHICH THE
PROPERTY IS LOCATED SHALL GOVERN PRORATIONS.

 

IF SUCH PRORATIONS RESULT IN A PAYMENT DUE BUYER, THEN THE PORTION OF THE
PURCHASE PRICE PAYABLE AT CLOSING SHALL BE REDUCED BY SUCH SUM.  IF SUCH
PRORATIONS RESULT IN A PAYMENT DUE SELLER, THEN THE SAME SHALL BE PAID TO SELLER
AT CLOSING IN ADDITION TO THE PURCHASE PRICE.  THE PARTIES HERETO SHALL ENDEAVOR
TO PREPARE A SCHEDULE OF PRORATIONS NO LESS THAN FIVE (5) DAYS PRIOR TO CLOSING.

 

INTENTIONALLY OMITTED.

 

Post Closing Adjustments.  In the event accurate and complete prorations and
adjustments cannot be made as of the Closing Date because current bills or
statements are not available, the parties shall prorate on the basis of the best
available information, and readjust within nine months following the Closing
upon receipt of final bills and statements (including, without limitation, those
related to common area maintenance charges and operating costs escalations).  In
addition, if after the Closing Date an error or new information is discovered
with respect to the prorations and adjustments made at Closing, the proration or
apportionment shall be adjusted based upon the accurate or new information. 
Also, at the request of either party made at any time after the Closing Date,
there shall be a post-Closing apportionment with respect to any estimated
prorations which were not reasonably susceptible of final determination at
Closing.  Seller and Buyer shall cooperate with each other with respect to all
such adjustments and prorations made after the Closing Date, and either party
owing the other party a sum of money based on such subsequent prorations or
adjustments shall promptly pay said sum to the other party.  The provisions and
obligations of the parties pursuant to this Section 11.7 shall survive the
Closing.

 

Proration Calculations.  Seller shall initially calculate the prorations
contemplated by this Article 11 and present its calculations to Buyer, and Buyer
shall be afforded the opportunity to review Seller’s underlying work papers
pertaining to the preparation of proration calculations to determine the
correctness of Seller’s calculations.

 

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Closing Expenses.  Seller shall pay any recording fees for instruments required
to remove Seller-Caused Non-Permitted Exceptions and Seller Removal Survey
Exceptions.  Buyer shall pay the costs of any title report or search, any
updating of the Title Policy and all endorsements thereto and of updating the
Survey, all costs of any appraisal, engineering and environmental reports
ordered by Buyer and any other filing, administrative or legal expenses payable
by a buyer of limited liability company membership interests in Maryland
including, without limitation, fees and charges of any lender providing purchase
money financing to Buyer.  Seller and Buyer agree that they shall each be
responsible for one-half of any transfer taxes (if any) that become payable with
respect to the Property as a result of Buyer’s acquisition of the Membership
Interests; provided, however, that Seller shall be solely responsible for any
interest payments or penalties (if any) associated with any failure to pay such
transfer taxes in a timely fashion.  Seller and Buyer agree that they shall each
be responsible for one-half of the charges of the Title Insurance Company under
the Deposit Escrow Agreement.  Seller shall pay the outstanding balances of any
and all mortgages and the fees and charges, if any, of the holder thereof for
providing discharges thereof at Closing.  Seller and Buyer shall each be
responsible for paying their respective attorneys’ and other professional fees
and costs.

 

Survival.  The obligations of Seller and Buyer under this Article 11 shall
survive Closing.

 

Payment by Buyer.  On the Business Day prior to the Closing Date, Buyer shall
wire to the Title Insurance Company, in immediately available funds, sufficient
cash to enable the Title Insurance Company (a) to pay Seller the entire Purchase
Price (as adjusted by the prorations, allocations, costs and credits set forth
in this Agreement) by wire transfer of immediately available funds, to be
received by Seller (at an account or accounts designated by Seller at least one
Business Day prior to Closing) no later than 5:00 p.m., prevailing Eastern time,
on the Closing Date, and (b) to pay those prorations, transfer taxes, recording
costs, closing costs and similar sums payable by Buyer hereunder.

 

DEFAULT

 

Seller’s Default.  In the event of Seller’s failure to perform in any material
respect any of its obligations hereunder (or, with respect to covenants or
obligations separately qualified by materiality standards, failure to perform in
any respect) or if any of the representations and warranties made herein by
Seller (after giving effect to such changes and updates as are herein expressly
permitted) are untrue in any material respect (or, with respect to
representations and warranties separately qualified by materiality standards,
untrue in any respect) (each event referred to in the foregoing provisions of
this sentence is herein sometimes called a “Seller Default”), Buyer may either
(i) seek specific performance of this Agreement or (ii) terminate this Agreement
by written notice of termination to Seller and Title Insurance Company,
whereupon the Deposit shall be returned by Title Insurance Company to Buyer
promptly and Seller shall, on Buyer’s demand, tendered in reasonable detail to
Seller within thirty (30) days after written notice of termination, reimburse
Buyer for Buyer’s actual and reasonable out of pocket documented expenses
incurred exclusively with respect to this transaction, and not any indirect,
consequential or punitive damages, no “overhead” or similar charges, and no
damages relating to

 

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lost profits or lost opportunity, which reimbursement shall not exceed $150,000;
provided, however, that if Seller, prior to the termination of this Agreement,
enters into an agreement with a third party to sell the Property or the
Membership Interests and fails to close the purchase contemplated under this
Agreement without the occurrence of any default by Buyer, Buyer shall thereafter
be entitled to pursue all rights and remedies available under law or in equity,
including all actual damages Buyer has suffered as a result of such Seller’s
Default, exclusive of indirect, consequential or punitive damages.  The
provisions of this Section 12.1 shall survive the Closing.  Buyer hereby waives
its right to collect damages and all other remedies, except as provided in this
Section, and agrees that the foregoing shall be Buyer’s sole and exclusive
remedies in the event Buyer terminates this Agreement as a result of Seller’s
Default, provided that the foregoing is not intended to limit Seller’s
agreements or obligations under Section 15.5 (Attorneys’ Fees) or Article 11
(Prorations; Expenses) or Article 13 (Brokers), or any right or remedy of Buyer
to recover the sums therein provided for (but no consequential damages) if
Seller breaches any of such Sections.

 

Buyer’s Default.  Buyer recognizes that MBCR and the Property will be removed by
Seller from the market during the existence of this Agreement and that, if
Closing is not consummated because of a default by Buyer under this Agreement,
Seller’s sole remedy shall be to terminate this Agreement and retain the Deposit
(including all accrued interest) as liquidated damages.  The Parties have agreed
that Seller’s actual damages, in the event of a failure to consummate this sale
due to Buyer’s default, would be extremely difficult or impracticable to
determine.  After negotiation, the parties have agreed that, considering all the
circumstances existing on the date of this Agreement, the amount of the Deposit
is a reasonable estimate of the damages that Seller would incur in such event.
Upon Seller’s receipt of the Deposit, this Agreement shall be terminated and
thereupon the parties shall have no further obligations one to the other under
this Agreement.  The Parties agree that the sum stated above as liquidated
damages shall be the sole and exclusive relief to which Seller might otherwise
be entitled as a result of the Closing not being consummated because of Buyer’s
default under this Agreement, Seller hereby specifically waiving any and all
rights which it may have to damages or specific performance as a result of
Buyer’s default under this Agreement.  The foregoing is not intended to limit
Buyer’s agreements or obligations under Sections 4.8, 15.5 or 15.15 or Articles
11 or 13, or any right or remedy of Seller to recover the sums therein provided
for (but no consequential damages) in the event Buyer breaches any such Sections
or Articles.

 

BROKERS

 

Seller and Buyer represent and warrant to each other that no broker or finder
was instrumental in arranging or bringing about this transaction and that there
are no Claims or rights for brokerage commissions or finders’ fees in connection
with the transaction contemplated hereby by any Person or entity other than
Trammell Crow Services, Inc. (“Seller’s Broker”), which has been engaged by the
Seller in this transaction and whose fees shall be the responsibility of
Seller.  If any other Person brings a Claim for a commission or finder’s fee
based upon any contact, dealings or communication with Buyer or Seller, then the
party through whom such Person makes its Claim shall defend the other party from
such Claim, and shall indemnify such other party and hold such other party
harmless from any and all costs, damages,

 

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claims, liabilities or expenses (including without limitation, reasonable
attorneys’ fees and disbursements) incurred by it in defending against the
Claim.  The provisions of this Section shall survive the Closing or, if the
Closing does not occur, any termination of this Agreement.

 

INDEMNIFICATION

 

The Seller and Buyer agree as follows:

 

General Indemnification by Seller.  Seller covenants and agrees that it will
indemnify, defend, protect and hold harmless Buyer at all times, from and after
the Effective Date, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys’ fees and reasonable
expenses of investigation), in excess of $10,000 on an aggregate basis, incurred
by Buyer as a result of or arising from:

 

(A)                              With respect solely to such representations and
warranties that shall survive Closing as set forth in this Agreement, any breach
of the representations and warranties of the Seller, set forth herein or on the
schedules or certificates delivered in connection herewith;

 

(B)                                With respect solely to such covenants and
agreements that shall survive Closing as set forth in this Agreement, any breach
of any covenants or agreement on the part of the Seller under this Agreement;
and

 

(C)                                Any liabilities (i) arising from or
associated with the ownership, operation, or management of the Other Properties
or (ii) arising out of the business or operations of MBCR at any time prior to
the Closing Date (including, without limitation, any litigation disclosed on
Exhibit F attached hereto).

 

Indemnification by Buyer.  Buyer covenants and agrees that it will indemnify,
defend, protect and hold harmless Seller at all times from and after the
Effective Date, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys’ fees and expenses of
investigation) incurred by the Seller as a result of or arising from (a) any
breach by Buyer of its representations and warranties set forth herein or on the
schedules or certificates delivered in connection herewith, (b) any breach of
any agreement on the part of Buyer under this Agreement, or (c) all Claims
arising from the ownership, operation and management of the Property and MBCR
after the Closing Date.

 

THIRD PERSON CLAIMS.

 

(A)                              Promptly after any party hereto (hereinafter
the “Indemnified Party”) has received notice of or has knowledge of any claim,
or of the commencement of any action or proceeding, by a Person not a party to
this Agreement (a “Third Person”) that could give the Indemnified Party any
right to assert a claim for indemnification hereunder, the Indemnified Party
shall, as a condition precedent to a claim with respect thereto being made
against any party

 

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obligated to provide indemnification pursuant to Section 14.1 or 14.2 hereof
(hereinafter the “Indemnifying Party”), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding.  Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof.

 

(B)                                The Indemnifying Party shall have the right
to defend and settle, at its own expense and by its own counsel, any such matter
so long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any criminal proceeding
without the written consent of the Indemnified Party, such consent not to be
unreasonably withheld or delayed, and further provided that the parties hereto
comply with the condition in the first sentence of paragraph (E) of this
Section 14.3. If the Indemnifying Party undertakes to defend or settle, it shall
promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate, at the Indemnifying Party’s expense, with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof.  Such cooperation shall include, but shall not be limited to,
furnishing the Indemnifying Party with any books, records or information
reasonably requested by the Indemnifying Party that are in the Indemnified
Party’s possession or control. All Indemnified Parties shall endeavor to use the
same counsel, which shall be the counsel selected by the Indemnifying Party,
provided that if counsel to the Indemnifying Party shall have a conflict of
interest in the opinion of such counsel that prevents counsel for the
Indemnifying Party from representing the Indemnified Party, the Indemnified
Party shall have the right to participate in such matter through counsel of its
own choosing and the Indemnifying Party will reimburse the Indemnified Party for
the reasonable expenses of its counsel and experts.

 

(C)                                After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any defense
or settlement of such asserted liability, except (i) as set forth in the last
sentence of subparagraph (B), or (ii) to the extent such participation is
requested by the Indemnifying Party, in which event the Indemnified Party shall
be reimbursed by the Indemnifying Party for reasonable additional legal expenses
and out-of-pocket expenses.

 

(D)                               If the Indemnifying Party does not undertake
to defend such matter to which the Indemnified Party is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnified Party may undertake such defense through counsel of its choice, at
the cost and expense of the Indemnifying Party, and the Indemnified Party may
settle such matter, and the Indemnifying Party shall reimburse the Indemnified
Party for the amount paid in such settlement and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith.

 

(E)                                 All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the Indemnified Party, at its
sole discretion, otherwise agrees in writing. The parties hereto will make
appropriate adjustments for any insurance proceeds in determining the amount of
any indemnification obligation under this Article, provided that no

 

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Indemnified Party shall be obligated to seek any payment pursuant to the terms
of any insurance policy.

 

MISCELLANEOUS

 

Notices.  Except as otherwise provided in this Agreement, any notices required
or permitted to be given hereunder shall be given in writing signed by the party
giving the same and shall be deemed to have been properly given and shall be
deemed effective (a) upon delivery, if delivered in person, (b) three days after
deposit, if deposited in the United States mail, certified mail, postage
prepaid, return receipt requested, (c) one Business Day after delivery to a
commercial overnight courier that guarantees next day delivery and provides a
receipt, or (d) on the date of transmission, if transmitted by electronic mail
or by facsimile with machine generated confirmation of transmission (followed by
hard copy delivered in accordance with preceding subsections (a)-(c)), and such
notices shall be addressed as follows:

 

Seller:                                                               
Mercantile Bankshares Corporation

Two Hopkins Plaza

Baltimore, Maryland 21201

Attention:  Mr. Ronald D. Mettam

Telephone:  (410) 237-5623

Fax: (410) 237-5869

E-mail: ron.mettam@mercantile.net

 

With a copy to:

 

Gallagher Evelius & Jones LLP

218 North Charles Street

Suite 400

Baltimore, Maryland 21201

Attention:  Stephen A. Goldberg, Esquire, and Philip F. Diamond, Esquire

Telephone: (410) 347-1343; (410) 347-1350

Fax: (410) 468-2786

E-mail: sgoldberg@gejlaw.com and pdiamond@gejlaw.com

 

Buyer:                                                             Harbor Group
International, L.L.C.

555 East Main Street, Suite 1700

Norfolk, Virginia 23510

Attention:  T. Richard Litton, Jr., Executive Vice President and General Counsel

Fax:  (757) 640-0817

E-mail:  trlitton@harborg.com

 

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With a copy to:

 

Whiteford, Taylor & Preston LLP

Seven Saint Paul Street

14th Floor

Baltimore, Maryland 21202

Attention:  Priscilla K. Carroll, Esquire

Telephone:  (410) 347-8797

Fax:  (410) 347-8731

E-mail:  pcarroll@wtplaw.com

 

Title Insurance Company:

 

LandAmerica Title Insurance Company

31 Light Street

Suite 500

Baltimore, Maryland  21202-1035

Attention:  Nancy Sacci, Esquire

Telephone:  (410) 752-7070

Fax:  (410) 752-7043

E-mail: nsacci@landam.com

 

or to such other address as either party may from time to time specify in
writing to the other party; provided, however, that the time period in which a
response to any such notice, election, demand or request must be given shall
commence on the date of receipt thereof.  Personal delivery to a party or to any
officer, partner, member, agent or employee of such party at said address shall
constitute receipt.  Rejection or other refusal to accept or inability to
deliver because of changed address of which no notice has been received shall
also constitute receipt.  Notices may be given or received by attorneys for the
parties hereunder.

 

Recording.  This Agreement shall not be recorded or otherwise filed or made a
matter of public land or lien records and any attempt to record or file same by
Buyer shall be deemed a default by Buyer hereunder.

 

Joint Undertaking.  In addition to the obligations expressly required to be
performed hereunder by Seller and Buyer, each party agrees to cooperate with the
other and to perform such other acts and to execute, acknowledge and deliver,
prior to and after Closing, such other instruments, documents and materials as a
party may reasonably request and as shall be necessary in order to effect the
consummation of the transaction contemplated hereby; provided that no such other
instrument, document or material shall either extend or enlarge the obligations
of the non-requesting party beyond the express undertakings of this Agreement or
shall require or could require the non-requesting party to make any payment or
expend any funds which are not expressly provided for herein or which the
requesting party shall not reimburse.  This Section shall survive Closing.

 

Whole Agreement; Amendments.  This Agreement and the Exhibits and Riders
attached hereto set forth all of the agreements, representations, warranties and
conditions of the Parties hereto with respect to the subject matter hereof, and
supersede all prior or contemporaneous agreements, representations, warranties
and conditions.  The Exhibits and Riders referred to herein constitute parts of
this Agreement.  No alteration, amendment, modification or waiver of any of the
terms or provisions hereof, and no future representation or warranty by either
party

 

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with respect to this transaction, shall be valid or enforceable unless the same
be in writing and signed by the party against whom enforcement of same is
sought.

 

Attorneys’ Fees.  If either party hereto defaults in the performance of any of
its obligations under this Agreement or if any dispute arises between the
Parties hereto concerning the meaning, interpretation or enforcement of any
provision of this Agreement, then the defaulting party or the party not
prevailing in such dispute, as the case may be, shall pay the reasonable costs
and expenses incurred by the other party in enforcing or establishing its rights
hereunder, including, without limitation, court costs (including costs of any
trial or appeal therefrom), expert witness fees and reasonable attorneys’ and
paralegals’ fees and disbursements.

 

Assignment.  Buyer’s and Seller’s rights and obligations hereunder shall not be
assignable, directly or indirectly or by operation of law, without the prior
written consent of Seller or Buyer, as applicable; provided, however, that Buyer
may assign its rights under this Agreement, without Seller’s prior written
consent to such assignment, to any Affiliate of Buyer and, in the event of an
assignment by Buyer to an Affiliate, Buyer shall be released from its
obligations hereunder, effective upon completion of Closing.  Subject to the
limitations described herein, this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their permitted successors and assigns
(each a “Permitted Assignee”). The provisions of this Section shall survive the
Closing.

 

Counterparts.  This Agreement may be executed by the parties hereto in any
number of separate counterparts, all of which, when delivered, shall together
constitute one and the same Agreement.

 

Holidays.  Wherever this Agreement provides for a date, day or period of time on
or prior to which action or events are to occur or not occur, and if such date,
day or last day of such period of time falls on a day which is not a Business
Day, then same shall be deemed to fall on the immediately following Business
Day.

 

Governing Law.  This Agreement and all issues arising hereunder shall be
governed by the laws of the State of Maryland.

 

Waiver of Trial by Jury.  EACH PARTY HEREBY WAIVES, IRREVOCABLY AND
UNCONDITIONALLY, TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE OF
OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY OF THE DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, THE PROPERTY, OR ANY CLAIMS, DEFENSES, RIGHTS OF SET-OFF OR
OTHER ACTIONS PERTAINING HERETO OR TO ANY OF THE FOREGOING.  IN THE EVENT OF ANY
JUDICIAL PROCEEDING UNDER THIS AGREEMENT, EACH PARTY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF
MARYLAND AND WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW ANY OBJECTION TO
JURISDICTION OR VENUE THEREIN.

 

No Third Party Beneficiary.  Except and to the extent of provisions hereof that
expressly deal with Seller Parties and Buyer Parties and the Affiliates of such
parties, the provisions of this

 

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Agreement are not intended to benefit any Person not a party hereto, and no
person not a party hereto shall have any rights hereunder.

 

Severability.  If any provision of this Agreement, or the application thereof to
any Person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable or void in any respect, the remainder
of this Agreement and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect.

 

Drafts not an Offer to Enter into a Legally Binding Contract.  The submission of
a draft, or a marked up draft, of this Agreement by one party to another is not
intended by either party to be an offer to enter into a legally binding contract
with respect to the purchase and sale of the Property.  The parties shall be
legally bound with respect to the purchase and sale of the Property pursuant to
the terms of this Agreement only if each of Seller and Buyer have fully executed
and delivered to each other a counterpart of this Agreement, including, without
limitation, all Exhibits and Riders hereto, and the Deposit Escrow Agreement,
and the Title Insurance Company has also executed and delivered the Deposit
Escrow Agreement.

 

Consents.  Unless otherwise provided, any consent, determination, election or
approval required to be obtained, or permitted to be given, by or of any party
hereunder, shall be granted, withheld or made (as the case may be) by such party
in the exercise of such party’s sole and absolute discretion.

 

Confidential Information.  Buyer acknowledges that the transaction contemplated
herein is of a confidential nature and shall not be disclosed except to Buyer’s
consultants, investors, lenders, appraisers, attorneys, accountants, advisors,
and affiliates, or as required by law or court order.  Except for information
lawfully possessed by Buyer from other sources and information which is publicly
available, Buyer agrees to treat any information provided by Seller, or its
agents, or relating to Seller or the Property as confidential, preserve the
confidentiality thereof, and not disclose, duplicate or use such information,
except to Buyer’s advisors, consultants, investors, lenders, appraisers,
attorneys, accountants and Affiliates in connection with the transaction
contemplated hereby, or as required by law or court order.  In the event of the
termination of this Agreement for any reason whatsoever, Buyer will return to
Seller (or, at Buyer’s option, destroy) all documents, work papers, and other
material (including all copies thereof) obtained from Seller, or its agents, in
connection with the transaction contemplated hereby, and Buyer shall instruct
its employees and others who have had access to such information, to keep such
information confidential.  The provisions of this Section shall survive any
termination of this Agreement but not the Closing.  No party will make any
public disclosure of the specific terms of this Agreement, except as required by
law or the order of a court or an order to complete the Closing Documents. 
Without limiting the generality of the foregoing, any press release or other
public disclosure regarding this Agreement or the transaction contemplated
herein, and the wording of same, must be approved in advance by both parties in
writing.

 

Date of this Agreement; Effective Date.  Seller shall fill in the date of this
Agreement on page 1 hereof as the date which is one Business Day after Seller
delivers two (2) fully executed

 

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counterparts of this Agreement to an overnight delivery service for delivery to
Buyer or Buyer’s attorneys.

 

Captions.  The Article and Exhibit headings herein are for convenience only, and
are not to be used in determining the meaning of this Agreement or any part
hereof.

 

Transaction as Sale and Purchase of Assets.  Seller and Buyer agree that they
shall treat the transaction contemplated under this Agreement as a sale and
purchase of assets for federal income tax purposes (and, to the extent
available, for state, local, and other income tax purposes), as contemplated by
Internal Revenue Service Revenue Ruling 99-5, 1999-1 C.B. 434, Revenue Ruling
99-6, 1999-1 C.B. 432, and, to the extent applicable, Revenue Ruling 2004-85,
2004-33 I.R.B.  Specifically, Buyer shall treat its purchase of the Membership
Interests as Buyer’s purchase of MBCR’s assets from Seller in accordance with
Internal Revenue Code Section 1001, and Seller shall treat Buyer’s purchase of
the Membership Interests from Seller as Seller’s sale to Buyer of MBCR’s assets
in accordance with Internal Revenue Code Section 1001.

 

Venable Lease; Reznick Lease. 

 

(A)                              Venable LLP (“Venable”), pursuant to that
certain Lease, dated as of May       , 2001, by and between Venable, as Tenant,
and MBCR, as landlord (the “Venable Lease”), has an option to terminate the
Venable Lease upon the satisfaction of certain conditions.  The current term of
the Venable Lease runs through April 30, 2011.  The Mercantile Lease shall
provide that, if Venable shall exercise the termination option described in this
Section 15.19, Mercantile-Safe Deposit and Trust Company shall assume the
Venable Lease (including without limitation any additional space leased by
Venable pursuant to Section 15.19(B) below) and shall be liable for all of
Venable’s obligations thereunder and entitled to all of Venable’s rights, except
for the termination option.  At Buyer’s option, Seller shall cause
Mercantile-Safe Deposit and Trust Company to execute a new lease or other
instrument evidencing such assumption which shall set forth the terms of the
lease through the balance of the Venable Lease term on the same terms as that of
the Venable Lease.  Seller shall have the right, subject to Buyer’s approval,
which approval shall not be unreasonably withheld, to cause Mercantile-Safe
Deposit and Trust Company to sublet any or all of the space subject to the
Venable Lease to such Person or Persons as it shall choose in its sole
discretion (provided that no such sublease shall relieve Seller of its
obligations under this Section 15.19), and Seller shall have the exclusive right
to receive and retain the proceeds from any termination payment paid by Venable
in connection with the exercise of the option described herein.

 

(B)                                Buyer acknowledges that, prior to the Due
Diligence Period Expiration Date, Seller shall have the right, at its sole
discretion, to cause MBCR to enter into an agreement with Reznick whereby MBCR
will agree to modify the Reznick Lease so as to allow Reznick to vacate a
portion (consisting of a total of approximately 38,914 square feet) of the
premises currently leased under the Reznick Lease no later than January 15,
2005; provided, however, and as to be set forth in the Mercantile Lease, that
Mercantile-Safe Deposit and Trust Company and/or Venable shall modify their
respective written agreements with MBCR regarding their assumption of the
premises currently leased under the Reznick Lease (excepting the approximately
10,763 square feet sublet by Reznick.to Adelberg, Rudow, Dorf & Hendler, LLC) so
as to assume such premises (in whole either individually or collectively) upon
Reznick’s

 

43

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vacating such premises on or before January 15, 2005.  Seller acknowledges that
Venable and Mercantile-Safe Deposit and Trust Company shall assume rights and
obligations under the Reznick Lease on the same terms as their respective Leases
and any assumption of the Reznick Lease by Venable and/or Mercantile-Safe
Deposit and Trust Company shall be coterminous with their respective Leases.

 

44

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IN WITNESS WHEREOF, the parties have executed this Agreement the date and year
first above written.

 

WITNESS:

SELLER:

 

 

 

 

MERCANTILE BANKSHARES CORPORATION

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

BUYER:

 

 

 

 

HARBOR GROUP INTERNATIONAL, L.L.C.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

T. Richard Litton, Jr.

 

 

Title:

Executive Vice President and

 

 

 

General Counsel

 

 

[Signature Page to Membership Interests Purchase Agreement—MBC Realty, LLC]

 

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EXHIBIT A

 

DESCRIPTION OF LAND

 

ALL THAT PARCEL OF LAND at the southeast corner of Baltimore Street and Hopkins
Place, containing 1.37 acres of land, more or less, known as Development Area
No. 12 – Charles Center Project, together with a perpetual easement for the
construction, maintenance, operation and use of a private vehicular tunnel and
ramp within a portion of the former bed of Hopkins Place (now closed), in
Baltimore City, State of Maryland.

 

A-1

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EXHIBIT B

 

FORM OF ASSIGNMENT

AGREEMENT OF ASSIGNMENT AND ASSUMPTION

(Membership Interests in MBC Realty, LLC)

 

This Agreement of Assignment and Assumption (the “Assignment”) is made
this          day of          , 2004, by and between MERCANTILE BANKSHARES
CORPORATION, a Delaware corporation (“Assignor”)
and                              , a                              (“Assignee”).

 

Recital of Facts

 

WHEREAS, Assignor owns 100% of the outstanding membership interests (the
“Membership Interests”) in MBC Realty, LLC, a Maryland limited liability company
(the “Company”), pursuant to that certain Articles of Organization of the
Company, dated as of          , 2004, and that certain Operating Agreement of
the Company, dated as of          , 2004 (collectively, the “Operating
Agreement”); and

 

WHEREAS, Assignor desires to convey the Membership Interests to Assignee.

 

NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and the
agreements herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:

 

1.                                       Assignor does hereby assign, transfer
and set over to Assignee all of Assignor’s right, title and interest in and to
the Membership Interests, including, without limitation, (i) all right, title
and interest of Assignor from time to time in and to the Company, (ii) all
right, title and interest of Assignor pursuant to the Operating Agreement from
time to time in and to all real and personal property and every other right,
however characterized, now or hereafter held by the Company, and (iii) all of
Assignor’s respective claims, rights, powers, privileges, security interests,
liens and remedies under the Operating Agreement.  A true and complete copy of
the Operating Agreement and all amendments thereto are attached as Exhibit A.

 

2.                                       Assignee hereby accepts the assignment
and transfer from Assignor of the Membership Interests in the Company and
assumes all liability of Assignor with respect thereto which pertains to the
Membership Interests accruing on or after the date hereof.

 

3.                                       Assignor represents that (i) this
Assignment has been duly authorized by all necessary corporate action and that
this Assignment constitutes the legal, valid and binding obligation of Assignor,
enforceable in accordance with its terms; (ii) Assignor is the sole member of
the Company; (iii) no other person or party has any membership interest in the
Company; (iv) the Membership Interests are not evidenced by a certificate of
membership interest issued by the Company; (v) the Membership Interests are not
subject to any restriction

 

B-1

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with respect to their transferability (other than restrictions on transfer under
applicable federal and securities laws); (vi) no third party has grounds for any
claim (a) against the Membership Interests or (b) that it has any ownership
interest in the Company; (vii) no person or entity is entitled to any preemptive
rights with respect to the purchase or sale of any membership or ownership
interest in the Company and there are no outstanding options, warrants or other
rights, commitments or arrangements, written or oral, to purchase or otherwise
to acquire any membership or ownership interest in the Company or any security
directly or indirectly convertible into or exchangeable or exercisable for any
membership or ownership interest in the Company; (viii) the Company does not
presently own or control, directly or indirectly, any interest in any other
corporation, association or other business entity; (ix) the Company is not a
participant in any joint venture, partnership or other similar arrangement; (x)
by virtue of this Assignment, Assignee will be admitted as the sole member of
the Company in accordance with the terms and provisions of the Operating
Agreement; (xi) Assignor owns of record and beneficially and hereby transfers
the Membership Interests free and clear of all liens, claims and encumbrances;
(xii) the Assignor has been given no notice of any default by any party in
performing its obligations under the provisions of the Operating Agreement and,
to the best of the Assignor’s knowledge, information, and belief, the Assignor
is not in default in performing those obligations.

 

4.                                       Assignee hereby represents that this
Assignment has been duly authorized by all necessary
                              action and that this Assignment constitutes the
legal, valid and binding obligation of Assignee, enforceable in accordance with
its terms.

 

5.                                       This Assignment expressly incorporates
the terms and conditions of Section 4.5 and Article 7 of that certain Membership
Interests Purchase Agreement (the “Agreement”), dated as of October     , 2004,
between Assignor and Harbor Group International, L.L.C. (of which Assignee is a
permitted assignee pursuant to Section 15.6 of the Agreement) solely to the
extent that such terms and conditions survive Closing (as such term is defined
in the Agreement).  Assignee acknowledges that Section 4.5 is a material
inducement to Assignor’s entry into the Agreement and this Assignment.  Assignor
acknowledges that Article 7 is a material inducement to Assignee’s entry into
the Agreement and this Assignment.

 

6.                                       The Assignor shall defend, protect,
indemnify, and hold harmless the Assignee, from and after the Closing Date (as
such term is defined in the Agreement), as set forth specifically in
Section 14.1 of the Agreement.

 

7.                                       The Assignee shall defend, protect,
indemnify, and hold harmless the Assignor against and from any and all
liability, claim of liability, or expense arising out of: (a) any default by the
Assignee in performing its obligations under the provisions of the Operating
Agreement occurring after the Closing Date, and (b) as set forth specifically in
Section 14.2 of the Agreement.  The Assignee, on behalf of the Company, also
hereby releases any and all claims the Company has or may have against the
Assignor, except to the extent inconsistent with Paragraph 6 hereof.

 

B-2

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8.                                       Assignor and Assignee agree that this
Assignment shall become effective as of the date hereof and upon its execution
and delivery by each party.

 

9.                                       This Assignment will be construed under
and governed by the laws of the State of Maryland, without giving effect to
principles of conflict of laws of that state.

 

10.                                 Assignor hereby agrees to use commercially
reasonable efforts to forward to Assignee any mail or notices it may receive on
behalf of the Company.

 

11.                                 This Assignment shall be binding upon and
inure to the benefit of Assignor and Assignee and their respective legal
representatives, successors and assigns.

 

12.                                 This Assignment may be executed in
counterparts, each of which shall be deemed to be an original and each of which
taken together shall constitute one and the same instrument.

 

 

[Remainder of Page Left Blank Intentionally]

[Signature Pages Follow]

 

B-3

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IN WITNESS WHEREOF, Assignor and Assignee have executed this instrument as of
the day and year first above written.

 

 

ASSIGNOR:

 

MERCANTILE BANKSHARES

 

 

CORPORATION,

 

 

a Delaware corporation

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

[Assignor’s Signature Page to Assignment of Membership Interests in MBC Realty,
LLC]

 

B-4

--------------------------------------------------------------------------------

 

ASSIGNEE:

 

 

 

 

 

a

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

[Assignee’s Signature Page to Assignment of Membership Interests in MBC Realty,
LLC)]

 

B-5

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EXHIBIT C

 

Internal Revenue Code

Section 1445(b)(2)

Non-foreign Affidavit

(FIRPTA)

 

For purposes of Section 1445(b)(2) of the Internal Revenue Code, as amended,
with respect to MERCANTILE BANKSHARES CORPORATION, a Delaware corporation
(“Transferor”), the undersigned hereby certifies, under penalty of perjury, to
                                        , a                                    
that (i) Transferor’s United States taxpayer identification number is
                                   ,  (ii) Transferor’s address is Two Hopkins
Plaza, Baltimore, Maryland 21201, and (iii) Transferor is not a “foreign
person”, within the meaning of said Section 1445(b)(2), as amended, and  is not
a foreign corporation, foreign partnership, foreign trust, or foreign estate (as
those terms are defined in the Internal Revenue Code and Income Tax
Regulations). Transferor understands that this Affidavit may be disclosed to the
Internal Revenue Service by the transferee, and that any false statement made
herein could be punished by fine, imprisonment or both.

 

Under penalties of perjury I declare that I have examined this certification and
to the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of
Mercantile Bankshares Corporation.

 

 

Dated:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

Sworn to and subscribed

 

 

before me this          day

 

 

of                          , 2004.

 

 

 

 

 

 

 

 

 

Notary Public

 

 

My Commission Expires:

 

 

 

C-1

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EXHIBIT D

 

INTENTIONALLY OMITTED

 

D-1

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EXHIBIT E

 

RENT ROLL AND LIST OF SECURITY DEPOSITS

 

[To be delivered within 2 Business Days after the Effective Date]

 

E-1

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EXHIBIT F

 

SCHEDULE OF LITIGATION

 

MBC Realty, LLC Schedule of Pending Workers Compensation Claims (Insured under
coverage provided by Seller to its subsidiaries and affiliates)

 

1.               Murry, Charles – Shoulder sprain.  Occurred while loading data
center paper on lift.  Date of injury: July 8, 2004.  Returned to work July 12,
2004.  Medical expenses and surgery.  Total anticipated payment of $8,000, of
which $350 has been paid as of October 18, 2004.

 

F-1

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EXHIBIT G

 

CONTRACTS

 

[To be delivered within 2 Business Days after the Effective Date]

 

G-1

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EXHIBIT H

 

PERSONAL PROPERTY

 

[To be delivered within 2 Business Days after the Effective Date]

 

H-1

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EXHIBIT J

 

MERCANTILE LEASE TERM SHEET

 

1.               All terms not defined herein shall have the meanings set forth
in the Membership Interests Purchase Agreement between Mercantile Bankshares
Corporation (“Mercantile Bankshares”) and Harbor Group International, L.L.C.
(“Harbor Group”).

 

2.               A lease will be entered into by Mercantile-Safe Deposit and
Trust Company (“Mercantile”) and MBCR prior to the Due Diligence Period
Expiration Date, and shall be effective as of the date of Closing (the
“Mercantile Lease”).  The terms and conditions of the Mercantile Lease,
including rent for the entire Leased Premises (as defined in Section 3 below),
shall be substantially the same as the terms and conditions in that certain
lease between MBCR and Mercantile dated August 23, 2004, which lease was
subsequently terminated on October 8, 2004; subject, however, to any matters to
be renegotiated upon written notice from Buyer to Seller within five (5)
Business Days of the Effective Date; provided, however, that (i) the term of the
Mercantile Lease shall commence on the date of Closing and shall run for a term
of ten (10) full calendar years and (ii) the rent for the Venable Space (as also
defined in Section 3 below) shall be as set forth in Section 3.c. below.

 

3.               The “Leased Premises” under the lease shall include:

 

a.               All leased space currently occupied by Mercantile, specifically
encompassing 150,651 SF of office space in the office tower on full or partial
floors 1 through 12; 23,746 SF of back office space in the office tower and
pavilion; and 3,270 SF of storage space.  Notwithstanding any current
arrangements between Mercantile and Mercantile Bankshares or MBCR, Mercantile
shall be responsible for expense reimbursements, including parking expenses, on
the 23,746 SF of back office space in the office tower and pavilion and the
150,651 SF of office space in the office tower.

 

b.              Beginning no later than January 15, 2005, 28,423 SF of space on
the 11th, 20th and 21st floors currently occupied by Reznick, Fedder &
Silverman, L.L.C. (“Reznick”), which leased space is to be assumed and leased by
Mercantile under the same terms and conditions as the Mercantile Lease
(including without limitation rent).

 

c.               All space under that certain lease between Venable LLP and MBCR
effective May, 2001, as amended (the “Venable Lease”), specifically
encompassing:  121,708 SF of office space on floors 13 through 19; 7,161 SF of
lower level space; 6,572 SF of storage space; and all space which Venable
assumes or is obligated to assume from Reznick (approx. 11,780 square feet),
under the same terms as the Venable Lease (all of such space collectively the
“Venable Space”);

 

1

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provided, however, that Mercantile’s obligations with respect to leasing the
Venable Space shall arise only in the event Venable LLP exercises its early
termination option in the Venable Lease such that the term expires prior to its
April 30, 2011 expiration date.  Mercantile shall have the right, subject to
Harbor Group’s approval, which approval shall not be unreasonably withheld, to
sublet any or all of the Venable Space to such Person or Persons as it shall
choose in its sole discretion, and Mercantile Bankshares shall have the
exclusive right to receive and retain the proceeds from any termination payment
paid by Venable in connection with the exercise of the termination option
described in the preceding sentence.  Any rent paid by Mercantile for Venable
Space shall be paid at the rental rates set forth in the Venable Lease.

 

4.               All other lease terms and conditions shall be mutually
agreeable to Mercantile Bankshares and Harbor Group.

 

2

--------------------------------------------------------------------------------

 

RIDER

 

DEPOSIT ESCROW AGREEMENT

 

LANDAMERICA TITLE INSURANCE COMPANY (“Escrowee”) agrees to hold in escrow
pursuant to this Agreement, the sum of Five Hundred Thousand Dollars ($500,000)
(which sum, together with the interest earned hereon, is herein referred to as
the “Deposit”) to be deposited by HARBOR GROUP INTERNATIONAL, L.L.C., a Virginia
limited liability company (“Buyer”) pursuant to a certain Membership Interests
Purchase Agreement dated October        , 2004 (“Contract”), between Buyer and
MERCANTILE BANKSHARES CORPORATION, a Delaware corporation (“Seller”), the
provisions of which (including, without limitation, the defined terms) are
hereby incorporated herein by reference.

 

The parties hereto agree as follows:

 

1.                                       Escrowee shall, immediately upon
receipt of the Deposit, deposit same in an interest bearing, money market type
escrow account with                                        .

 

2.                                       The Deposit shall be held by Escrowee
until the earlier of (y) the Closing, or (z) such time as Seller or Buyer may be
entitled to the Deposit in accordance with the Contract and this Agreement, at
which time Escrowee shall remit the Deposit to the party entitled thereto in
accordance with the Contract and this Agreement.  The Deposit shall be released
or delivered to the party entitled thereto pursuant to the Contract with
reasonable promptness after Escrowee shall have received notice:

 

(a)                                  from Seller and Buyer authorizing release
of the Deposit, or

 

(b)                                 from Buyer at any time on or prior to the
Due Diligence Period Expiration Date, or

 

(c)                                  from Seller authorizing the return of the
Deposit to Buyer; or

 

(d)                                 of the occurrence of either of the following
events:

 

(i)                                     the Closing, at which time the Deposit,
subject to any prorations or adjustments made pursuant to Section 11 of the
Contract, shall be paid to Seller and applied to the Purchase Price; or

 

(ii)                                  the receipt by Escrowee of a written
notice from either Seller or Buyer stating that an event has

 

1

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occurred under the Contract entitling the party delivering such notice to the
Deposit, whereupon Escrowee shall deliver written notice (the “Default Notice”)
thereof to the other party and, unless such other party shall have delivered a
written notice of objection to Escrowee within ten (10) days following receipt
by such other party of the Default Notice, Escrowee shall deliver the Deposit to
the party initially requesting the Deposit.

 

3.        (a)                         Escrowee is to be considered as a
depository only, shall not be deemed to be a party to any document other than
this Agreement, and shall not be responsible or liable in any manner whatsoever
for the sufficiency, manner of execution, or validity of any written
instructions, certificates or any other documents received by it, nor as to the
identity, authority or rights of any persons executing the same.  Escrowee shall
be entitled to rely at all times on instructions given by Seller and/or Buyer,
as the case may be and as required hereunder, without any necessity of verifying
the authority therefor.  Notices given by Joseph N. Schaller, Esq. or Priscilla
K. Carroll, Esq. of Whiteford, Taylor & Preston L.L.P., as counsel to and on
behalf of Buyer, shall be deemed given by Buyer.  Notices given by Stephen A.
Goldberg, Esq. or Philip F. Diamond, Esq. of Gallagher Evelius & Jones LLP, as
counsel to and on behalf of Seller, shall be deemed given by Seller.

 

(b)                                 Escrowee shall not at any time be held
liable for actions taken or omitted to be taken in good faith and without
negligence.  Seller and Buyer agree to save and hold Escrowee harmless and
indemnify Escrowee from any loss and from any claims or demands arising out of
its actions hereunder other than any claims or demands arising (i) from
Escrowee’s negligence or willful misconduct or (ii) under the Title Policy.

 

(c)                                  It is further understood by Seller and
Buyer that if, as a result of any disagreement between them or adverse demands
and claims being made by any of them upon Escrowee, or if Escrowee otherwise
shall become involved in litigation with respect to the Contract or this
Agreement, or if Escrowee shall determine in good faith that there may be an
issue of fact or law as to the delivery of the Deposit, Escrowee may deposit the
Deposit with a court of competent jurisdiction and/or in accordance with the
order of a court of competent jurisdiction and in any such event, Seller and
Buyer agree that they, jointly and severally, are and shall be liable to
Escrowee and shall reimburse Escrowee on demand for all costs, expenses and
reasonable counsel fees it shall incur or be compelled to pay by reason of any
such  litigation.  Seller and Buyer agree between themselves that each shall be
responsible to advance one-half of all amounts due Escrowee pursuant to this
Agreement, provided that any such advance by Seller or Buyer as a result of any
dispute or litigation between them shall be without prejudice to its right to
recover such amount as damages from the breaching party.

 

2

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(d)                                 In taking or omitting to take any action
whatsoever hereunder, Escrowee shall be protected in relying upon any notice,
paper, or other document believed by it to be genuine, or upon evidence deemed
by it to be sufficient, and in no event shall Escrowee be liable hereunder for
any act performed or omitted to be performed by it hereunder in the absence of
negligence or bad faith.  Escrowee may consult with counsel in connection with
its duties hereunder and shall be fully protected in any act taken, suffered or
permitted by it in good faith and without negligence in accordance with the
advice of such counsel.

 

4.                                       Upon the satisfaction of the mutual
obligations of the parties hereunder, Escrowee shall promptly submit for
recording or filing, as applicable, all appropriate instruments delivered to it
at the Closing.

 

5.                                       Escrowee shall have no right or
obligation to approve any amendment to the Contract unless such amendment
purports to affect the Escrowee’s rights or obligations hereunder.

6.                                       Escrowee shall not charge any title
search or examination fees or fees in connection with its duties as escrow agent
in connection with this transaction.

7.                                       This Agreement shall be governed by the
laws of the State of Maryland.

 

Seller represents that its Federal Tax ID Number is 52-0898572.

 

Buyer represents that its Federal Tax ID Number is 54-1934716.

 

Escrowee represents that its wire transfer instructions are as follows:

 

 

 

 

3

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IN WITNESS WHEREOF, Buyer, Seller and Escrowee, for valuable consideration, each
intending to be legally bound and to bind their respective successors and
assigns, have caused this Agreement to be executed and delivered as of
October        , 2004.

 

 

 

MERCANTILE BANKSHARES

 

 

 

CORPORATION

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

HARBOR GROUP INTERNATIONAL,

 

 

 

L.L.C.

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

LANDAMERICA TITLE INSURANCE
COMPANY

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

4

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