**EXHIBIT 10.QQ**

 

**EXECUTION VERSION**

 

 

**MEMBERSHIPINTERESTS PURCHASE AGREEMENT**

 

 

**(MBCRealty, LLC)**

 

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**MERCANTILEBANKSHARES CORPORATION, Seller**

 

**and**

 

**HARBORGROUP INTERNATIONAL, L.L.C., Buyer**

 

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**Property:**

 

**TwoHopkins 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**                             | **Representations  and Warranties of Buyer**                        | ** ** |
| ** ** | ** **                          | ** **                                                          |
| 8.         | TITLE and survey                    |                                                                |
|       |                                |                                                                |
| ** ** | **8.1**                             | **Title**                                                           | ** ** |
| ** ** | **8.2**                             | **Survey**                                                          | ** ** |
|            |                                     |                                                                     |  |  |  |

 

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| 9.         | PRE-CLOSING OPERATIONS |                                     |
|------------|------------------------|------------------------------------------|
|       |                   |                                     |
|       | **9.1**                | **Interim Operation of  the Property**   |   |
|       | **9.2**                | **Lease Enforcement**                    |   |
|       | **9.3**                | **Lease Termination  Prior to Closing**  |   |
|       | **9.4**                | **Risk of Loss and  Insurance Proceeds** |   |
|       | **9.5**                | **Notifications**                        |   |
| ** ** | ** **             |                                     |
| 10.        | CLOSING                |                                     |
|       |                   |                                     |
| ** ** | **10.1**               | **Escrow Instructions**                  | ** ** |
| ** ** | **10.2**               | **Closing  Date**                        | ** ** |
| ** ** | **10.3**               | **Location**                             | ** ** |
| ** ** | **10.4**               | **Closing Documents**                    | ** ** |
| ** ** | **10.5**               | **Additional Seller  Deliveries**        | ** ** |
| ** ** | **10.6**               | **Buyer Closing Deliveries**             | ** ** |
| ** ** | **10.7**               | **Closing Instructions**                 | ** ** |
| ** ** | ** **             | ** **                               |
| 11.        | PRORATIONS; EXPENSES   |                                     |
|       |                   |                                     |
| ** ** | **11.1**               | **Rents**                                | ** ** |
| ** ** | **11.2**               | **Receivables and Collections**          | ** ** |
| ** ** | **11.3**               | **Collection Efforts**                   | ** ** |
| ** ** | **11.4**               | **Security Deposits**                    | ** ** |
| ** ** | **11.5**               | **Adjustments to Prorations**            | ** ** |
| ** ** | **11.6**               | **INTENTIONALLY OMITTED**                | ** ** |
| ** ** | **11.7**               | **Post Closing Adjustments**             | ** ** |
| ** ** | **11.8**               | **Proration Calculations**               | ** ** |
| ** ** | **11.9**               | **Closing Expenses**                     | ** ** |
| ** ** | **11.10**              | **Survival**                             | ** ** |
| ** ** | **11.11**              | **Payment by Buyer**                     | ** ** |
| ** ** | ** **             | ** **                               |
| 12.        | DEFAULT                |                                     |
|       |                   |                                     |
| ** ** | **12.1**               | **Seller’s Default**                | ** ** |
| ** ** | **12.2**               | **Buyer’s Default**                 | ** ** |
| ** ** | ** **             | ** **                               |
| 13.        | BROKERS                |                                     |
|       |                   |                                     |
| 14.        | INDEMNIFICATION        |                                     |
|       |                   |                                     |
| ** ** | **14.1**               | **General Indemnification  by Seller**   | ** ** |
| ** ** | **14.2**               | **Indemnification by Buyer**             | ** ** |
| ** ** | **14.3**               | **Third Person Claims**                  | ** ** |
| ** ** | ** **             | ** **                               |
| 15.        | MISCELLANEOUS          |                                     |
|       |                   |                                     |
| ** ** | **15.1**               | **Notices**                              | ** ** |
| ** ** | **15.2**               | **Recording**                            | ** ** |
| ** ** | **15.3**               | **Joint Undertaking**                    | ** ** |
| ** ** | **15.4**               | **Whole Agreement; Amendments**          | ** ** |
| ** ** | **15.5**               | **Attorneys’ Fees**                 | ** ** |
| ** ** | **15.6**               | **Assignment**                           | ** ** |

 

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| ** ** | **15.7**  | **Counterparts**                                                  | ** ** |
|------------|-----------|-------------------------------------------------------------------|------------|
| ** ** | **15.8**  | **Holidays**                                                      | ** ** |
| ** ** | **15.9**  | **Governing Law**                                                 | ** ** |
| ** ** | **15.10** | **Waiver of Trial by Jury**                                       | ** ** |
| ** ** | **15.11** | **No Third Party Beneficiary**                                    | ** ** |
| ** ** | **15.12** | **Severability**                                                  | ** ** |
| ** ** | **15.13** | **Drafts  not an Offer to Enter into a Legally Binding Contract** | ** ** |
| ** ** | **15.14** | **Consents**                                                      | ** ** |
| ** ** | **15.15** | **Confidential Information**                                      | ** ** |
| ** ** | **15.16** | **Date of this Agreement; Effective  Date**                       | ** ** |
| ** ** | **15.17** | **Captions**                                                      | ** ** |
| ** ** | **15.18** | **Transaction as  Sale and Purchase of Assets**                   | ** ** |
| ** ** | **15.19** | **Venable Lease; Reznick  Lease**                                 | ** ** |

 

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| EXHIBITS AND RIDERS |
|---------------------|
|                |
| A                   | LEGAL  DESCRIPTION OF THE LAND |
| B                   | ASSIGNMENT |
| C                   | FIRPTA  AFFIDAVIT |
| D                   | INTENTIONALLY  OMITTED |
| E                   | INITIAL  RENT ROLL AND LIST OF SECURITY DEPOSITS |
| F                   | SCHEDULE  OF LITIGATION |
| G                   | CONTRACTS |
| H                   | PERSONAL  PROPERTY |
| **J**               | **TERM  SHEET FOR MERCANTILE LEASE** |
| ** **          | ** ** |
| RIDERS              |
|                |   |
| 1                   | DEPOSIT ESCROW AGREEMENT |
|                     |  |  |

 

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**MEMBERSHIPINTERESTS PURCHASE AGREEMENT**

 

This Membership InterestsPurchase Agreement (“Agreement”) is entered into as of October    ,2004, by and between **MERCANTILE BANKSHARESCORPORATION**, a Delaware corporation (“Seller”), and **HARBOR GROUP INTERNATIONAL, L.L.C.**, a Virginia limitedliability company, or its designee (“Buyer”).  In consideration of the mutual agreementsherein set forth, the parties hereto, intending to be legally bound, agree asfollows:

 

# **DEFINITIONS**

# ** **

Definitions.As used inthis 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 orindirectly through one or more intermediaries controls or is controlled by oris under common control with such Person, (ii) any other Person owning orcontrolling 10% or more of the outstanding voting securities of or otherownership interests in such Person, (iii) any officer, director or partnerof such Person, or (iv) if such Person is an officer, director or partner, anyother company for which such Person acts in any such capacity.

 

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

 

“ALTA” shall meanThe American Land Title Association.

 

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

 

“BusinessDay” shall mean any day other than a Saturday, a Sunday, or a holidayrecognized by banks in the states of Maryland or New York or by the Federalgovernment.

 

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

 

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

 

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

 

“Buyer’sConditions Precedent” is defined in Section 5.1.

 

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“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.

 

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

 

“ClosingDocuments” shall mean all the documents, other than this Agreement, to beexecuted and delivered by the parties in order to complete Closing, asspecified herein.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“DepositEscrow Agreement” shall mean that certain Deposit Escrow Agreement amongSeller, Buyer and the Title Insurance Company, a counterpart of which isattached hereto as Rider 1.

 

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

 

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

 

“EffectiveDate” shall mean the date appearing in the first paragraph of thisAgreement, subject to Section 15.16.

 

“ExistingLeases” shall mean all leases, license agreements and occupancy agreementspertaining to the Property on the Effective Date, including without limitationthose identified in the Initial Rent Roll, together with all associatedguaranties and 

 

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

 

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

 

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

 

“GovernmentalAuthority” 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 courtor administrative tribunal.

 

“HazardousMaterials” shall mean materials, wastes or substances that are (a) includedwithin the definition of any one or more of the terms “hazardous substances,” “hazardousmaterials,” “toxic substances,” “toxic pollutants” and “hazardous waste” in theComprehensive Environmental Response, Compensation and Liability Act of 1980,as amended (42 U.S.C. Sections 9601, etseq.), the ResourceConservation and Recovery Act of 1976 (42 U.S.C. Section 6901, etseq.),the Clean Water Act (33 U.S.C. Section 1251, etseq.), the SafeDrinking Water Act (14 U.S.C. Section 1401, etseq.), theHazardous Materials Transportation Act (49 U.S.C. Section 1801, etseq.),and the Toxic Substance Control Act (15 U.S.C. Section 2601, etseq.)and the regulations promulgated pursuant to such laws, (b) regulated, orclassified as hazardous or toxic, under other federal, state or localenvironmental laws or regulations, (c) petroleum, (d) asbestos orasbestos-containing materials, (e) polychlorinated biphenyls, (f) flammableexplosives 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.

 

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

 

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

 

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

 

“MBCR”is defined in Section 2.

 

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

 

“MembershipInterests” is defined in Section 2.

 

“MercantileLease” is defined in Section 5.1.6.

 

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“NewLeases” is defined in Section 9.1(A).

 

“Non-PermittedExceptions” is defined in Section 8.1.

 

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

 

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

 

“Parties” shallmean 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.

 

“PersonalProperty” is defined in Section 2(b).

 

“Plans”is defined in Section 2(f).

 

“PrimeRate” shall mean the prime rate of interest published in the Wall StreetJournal from time to time.

 

“PrivilegedMaterial” shall mean (a) all communications between any Seller Party andany 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 theProperty, which evaluations, analyses and communications are intended by anySeller Party to be confidential.

 

“Property” isdefined in Section 2.

 

“PurchasePrice” is defined in Section 3.1(A).

 

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

 

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

 

“RentRoll” is defined in Section 4.1(a).

 

“Rents” isdescribed in Section 11.1.

 

“Reznick” isdefined in Section 9.3.

 

“Reznick Lease” isdefined in Section 9.3.

 

“Scheduled ClosingDate” is defined in Section 10.2.

 

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

 

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

 

“Seller Deliverables”is described in Section 4.1.

 

“SellerParties” 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’sConditions Precedent” is described in Section 6.1.

 

“SellerDefault” is defined in Section 12.1.

 

“Seller’sKnowledge”, “MBCR’s Knowledge”, and similar phrases shall mean the actualknowledge, on any relevant date, of W. Joseph Smith, Edie Councilman or RonaldD. Mettam (W. Joseph Smith and Edie Councilman having principal operationalauthority for MBCR), without investigation or inquiry.

 

“Seller’sUndertakings” is defined in Section 4.5.

 

“Survey”is defined in Article 8.

 

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

 

“TitlePolicy” is defined in Article 8.

 

“TitleInsurance Company” shall mean LandAmerica Title Insurance Company

 

“Venable”is defined in Section 15.19.

 

“VenableLease” 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 otherwiserequires, (a) the words “herein,” “hereof” and “hereunder” and other words ofsimilar import refer to this Agreement as a whole and not to any particularArticle, Section or provision, (b) the words “including” and “include” andother words of similar import shall be deemed to be followed by the phrase “withoutlimitation”.  Whenever the context mayrequire, any defined term or pronoun used herein shall include thecorresponding masculine, feminine or neuter forms, and the singular form ofdefined terms, pronouns or nouns shall include the plural and vice versa. Thecaptions of the Sections of this Agreement are for convenience only and have nomeaning with respect to this Agreement or the rights or obligations of theparties.  References herein to “Exhibit”,“Schedule”, “Rider”, “Article”, “Section” or “subsection” shall be deemedreferences to an Exhibit, Schedule, Rider, Article, Section or subsectionattached to, or, as applicable, contained in, this Agreement.

 

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# **membership interests;PROPERTY**

# ** **

Seller owns onehundred percent (100%) of the membership interests (the “MembershipInterests”) 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 beconveyed to Buyer, and Buyer hereby agrees to purchase from Seller, all ofSeller’s rights, title and interest in and to the Membership Interests and allof the benefits accruing to the owner thereof, including, but not limited to,MBCR’s interest in the following described property (herein collectively calledthe “Property”):

 

#### the parcel orparcels of land described in Exhibit “A” (“Land”), together withany 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 anddevelopment rights, roads, alleys, easements, streets and ways adjacent to theLand, all appurtenant rights of ingress and egress thereto or therefrom, anystrips and gores within or bounding the Land and any profits, rights orappurtenances pertaining to the Land, together with all buildings, improvementsand fixtures (other than fixtures owned or removable by any Tenant or otherPerson 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 andnot owned or removable by any Tenant or other Person pursuant to a Lease orContract, if any, placed or located on the Real Property now or prior toClosing and used in the operation of the Real Property (the “PersonalProperty”);

####  

#### all theinterest of the landlord in all Leases, any and all claims or rights to claimagainst a Tenant under any Lease and all security deposits paid or deposited byTenants in respect of the Leases;

####  

#### all of MBCR’srights in and to all service, maintenance and operating contracts, equipmentleases and similar agreements relating to the operation, maintenance and repairof the Property, including service and maintenance agreements, utilityagreements and other contractual arrangements, all to the extent assumed byBuyer in accordance with Section 4.6 of this Agreement (collectively, “Contracts”);

####  

#### all of MBCR’srights, title and interest in and to any warranties, guaranties,  entitlements to use, and all other propertyrights and interests relating to the Property made by or received from anyPerson with respect to any building component, machinery, equipment, furnishings,fixture or material comprising a part of any Improvement or with respect to anyPersonal Property or Contract (collectively, “Warranties”);

####  

#### to the extentin the possession of MBCR or Seller, and to the extent assignable, all as-builtbuilding plans and specifications relating to the Real Property (collectively, “Plans”);

####  

#### all currenton-site books and records exclusively pertaining to the current operation ofthe Property, to the extent in MBCR’s or Seller’s possession, excludingPrivileged 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 byGovernmental Authorities in connection with the Real Property (collectively, “Licensesand Permits”); and

####  

#### all rights toany award made or to be made or settlement in lieu thereof for damage to theLand or Improvements by reason of condemnation, eminent domain, exercise ofpolice power or change of grade of any street.

####  

# **PURCHASE PRICE**

# ** **

## Purchase Price. 

 

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

 

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

 

##### On the Deposit Date, Buyer shall deposit by delivery of abank draft or wire transfer of immediately available funds pursuant to the wiretransfer instructions set forth in the Deposit Escrow Agreement, in escrow withthe 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 beheld in escrow, in an interest-bearing account with a federally insured bank(which may be an Affiliate of Seller), and disbursed by the Title InsuranceCompany pursuant to the provisions of this Agreement and the Deposit EscrowAgreement.  At Closing, the Deposit (includingall accrued interest) shall be paid to Seller as a credit against the PurchasePrice.

 

##### The balance of the Purchase Price over and above theDeposit, plus or minus any apportionments, prorations, credits and costs inaccordance with Section 11 hereof, shall be paid by Buyer at Closing, by wiretransfer of immediately available funds to the Title Insurance Company,pursuant to the wire transfer instructions set forth in the Deposit EscrowAgreement, or any replacement instructions, for payment to Seller or on itsbehalf at Closing.

 

Failure to Pay Deposit.  In the event that Buyer fails to fund theDeposit on the Deposit Date (with time being of the essence) for any reasonwhatsoever, this Agreement shall immediately and automatically terminate.  Upon any termination of this Agreement pursuantto this Section 3.2, no party shall have any further rights, duties orobligations under this Agreement, except as otherwise expressly set forthherein.

 

# **DUE DILIGENCE**

# ** **

SellerDeliverables.  Sellerhereby represents and warrants to Buyer that, to Seller’s Knowledge, the copiespreviously or hereafter delivered to Buyer (collectively, the “Seller 

 

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

 

#### a rent rollfor the Property for the current year and for past two calendar years, in theform currently maintained by MBCR (“Rent Roll”) and an accounting of allrefundable security deposits made by Tenants under the Leases (the “List ofSecurity Deposits”);

####  

#### annualoperating, income and expense statements for the Property for calendar years2002 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 monthperiod ended September 30, 2004, together with such other financial informationas is specified in Section 7.1(A)(xxvii) hereof;

####  

#### the billsissued for the most recent year and the preceding two (2) years for theProperty for all real estate taxes and assessments (collectively, “RealEstate Taxes”) relating to the Property;

####  

#### the Leases andthe Contracts;

####  

#### theWarranties;

####  

#### the Plans;

####  

#### the Books andRecords and expense recovery worksheets and billings for the past two calendaryears and first nine months of 2004;

####  

#### the Licensesand Permits;

####  

#### allenvironmental reports and studies in the possession of MBCR, Seller or itsagents relating to the determination as to whether any Hazardous Materialsexist at the Property and as to any work performed or proposed in connectionwith any Hazardous Materials at any time located at the Property, if any, andany engineering reports with respect to the Property to the extent in thepossession of Seller or MBCR;

####  

#### allorganizational documents related to the formation and operation of MCBR;

####  

#### allinformation in the possession of Seller or MBCR related to the transfer oftitle of the Property to MBCR;

####  

#### allinformation and documentation in the possession of Seller or MBCR related toMBCR’s tenancy under any lease or agreement, including the Cross Keys Lease;

####  

#### call reportsfor each of the years ended December 31, 2001, December 31, 2002 and December31, 2003 for Mercantile-Safe Deposit and Trust Company as Tenant;

 

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#### a complete andaccurate list of all Seller Pension Plans, as such term is defined in Section7.1(A)(xxx) and including true, correct and complete copies of the most recentForms 5500 and any attached financial statements and any related actuarialreport; and

####  

#### all informationrelated to the sale or assignment of the Other Properties, including copies ofthe agreements for the purchase and sale thereof and any environmental reportsto the extent in the possession of Seller or MBCR.

####  

Seller shall make theoriginals of all Leases available to Buyer at the Property for Buyer’sinspection at all times from and after the Effective Date through the ClosingDate.

 

Independent Investigation.  Notwithstanding any information whichSeller may have provided to Buyer, Buyer may, during the Due Diligence Period,inspect and investigate each and every aspect of the Property, eitherindependently or through agents, representatives or experts of Buyer’schoosing, as Buyer considers necessary or appropriate.  Without limiting the generality of theforegoing but subject to the other provisions of this Article 4, Buyer shallhave the right to have performed (i) a physical, mechanical and environmentalinspection of the Property, including but not limited to soil borings,samplings and other tests and engineering inspections, as Buyer deems necessaryto determine the physical condition of the Property, including but not limitedto whether any Hazardous Materials exist at the Property, and, if so, todetermine the appropriate manner and cost of removal or other correctivemeasures with respect to the same, and (ii) an inspection of all books andrecords and financial information pertaining thereto.  During the Due Diligence Period, Seller shallcooperate with Buyer in its inspection of the Property, including but notlimited to, furnishing to Buyer such information, materials and documents asBuyer may reasonably request and making W. Joseph Smith and otherrepresentatives and agents of Seller and MBCR available to Buyer at reasonabletimes and upon reasonable notice; Seller shall not, however, have anyobligation to incur any cost not otherwise contemplated by this Agreement.

 

Termination During DueDiligence Period.  

 

(A)                              Atany time prior to the Due Diligence Period Expiration Date, Buyer shall havethe right, in its sole and absolute discretion, and for any or no reasonwhatsoever, to terminate this Agreement by written notice to Seller given byBuyer on or prior to the Due Diligence Period Expiration Date, and, upon suchelection, the Deposit shall be immediately refunded to Buyer, other than FiftyThousand Dollars ($50,000) which shall be paid to Seller as consideration forthe aforementioned Due Diligence Period; provided, however, that the entireDeposit of Five Hundred Thousand Dollars ($500,000) shall be immediatelyrefunded to Buyer upon Buyer’s election to terminate this Agreement by writtennotice to Seller given by Buyer on or prior to the Due Diligence PeriodExpiration Date on the grounds that: (i) the results of the environmentalinspection are unacceptable to Buyer; (ii) the condition of title, includingsurvey issues, is unacceptable to Buyer; (iii) the liabilities related to theOther Properties are in any respect unacceptable to Buyer; or (iv) Buyer andSeller are unable to agree on the terms of the Mercantile Lease.  In addition, the entire Deposit of $500,000shall be immediately refunded to Buyer, whether before or after the DueDiligence Period Expiration Date, in the event that Buyer is entitled toterminate this Agreement following the Due Diligence Period pursuant to theterms 

 

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

 

(B)                                Buyeragrees that it will exercise good faith efforts to advise Seller immediately ifBuyer decides at any time prior to the Due Diligence Period Expiration Date notto proceed with the purchase contemplated hereunder.

 

## Buyer’s Knowledge. 

 

Seller shall have noliability whatsoever to Buyer with respect to any matter related to theProperty disclosed by Seller in the Due Diligence Materials or of which Buyeror its agent or counsel obtains actual knowledge, by any means, prior to theDue Diligence Period Expiration Date. For purposes of this Section 4.4, Buyer’s actual knowledge shall meanthe actual, conscious knowledge of T. Richard Litton, Jr., Jordan E. Slone orMichael H. Heinricher.

 

## AS-IS SALE.  

 

BUYER SPECIFICALLYACKNOWLEDGES AND AGREES THAT (a) EXCEPT FOR (I) THE REPRESENTATIONS, WARRANTIESAND COVENANTS MADE BY SELLER IN THIS AGREEMENT, AS QUALIFIED BY SECTION 4.4,AND SUBJECT TO THE SURVIVAL PROVISIONS OF THIS AGREEMENT, AND (II) THEREPRESENTATIONS, WARRANTIES AND COVENANTS MADE BY SELLER IN THE CLOSINGDOCUMENTS (ALL THE FOREGOING BEING REFERRED TO, COLLECTIVELY, AS “SELLER’SUNDERTAKINGS”)**,**SELLER SHALLSELL 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 ALLVIOLATIONS OF LAWS AND ORDINANCES, AND (b) EXCEPT FOR SELLER’S UNDERTAKINGS,BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KINDWHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OROTHERWISE, FROM SELLER, OR ANY SELLER PARTY AS TO ANY MATTER, CONCERNING THEPROPERTY, OR (EXCEPT TO THE EXTENT PROVIDED OTHERWISE IN SELLER’S UNDERTAKINGS)SET FORTH, CONTAINED OR ADDRESSED IN THE DUE DILIGENCE MATERIALS (INCLUDINGWITHOUT LIMITATION, THE COMPLETENESS THEREOF), INCLUDING WITHOUT LIMITATION ANYWARRANTIES AS TO: (i) THE QUALITY, NATURE, HABITABILITY, MERCHANTABILITY, USE,OPERATION, VALUE, MARKETABILITY, ADEQUACY OR PHYSICAL CONDITION OF THE PROPERTYOR ANY ASPECT OR PORTION THEREOF, INCLUDING, WITHOUT LIMITATION, STRUCTURALELEMENTS, FOUNDATION, ROOF, APPURTENANCES, ACCESS, LANDSCAPING, PARKINGFACILITIES, ELECTRICAL, MECHANICAL, HVAC, PLUMBING, SEWAGE, AND UTILITYSYSTEMS, FACILITIES AND APPLIANCES, SOILS, GEOLOGY AND GROUNDWATER, (ii) THEDIMENSIONS OR LOT SIZE OF THE PROPERTY OR THE SQUARE FOOTAGE OF THEIMPROVEMENTS THEREON OR OF ANY TENANT SPACE THEREIN, (iii) THE DEVELOPMENT ORINCOME POTENTIAL, OR RIGHTS OF OR RELATING TO, THE PROPERTY, OR THE PROPERTY’SUSE, HABITABILITY,

 

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MERCHANTABILITY, ORFITNESS, OR THE SUITABILITY, VALUE OR ADEQUACY OF THE PROPERTY FOR ANYPARTICULAR PURPOSE, THE ZONING OR OTHER LEGAL STATUS OF THE PROPERTY OR ANYOTHER PUBLIC OR PRIVATE RESTRICTIONS ON THE USE OF THE PROPERTY, THE COMPLIANCEOF THE PROPERTY OR ITS OPERATION WITH ANY APPLICABLE CODES, LAWS, REGULATIONS,STATUTES, ORDINANCES, COVENANTS, CONDITIONS AND RESTRICTIONS OF ANYGOVERNMENTAL AUTHORITY OR OF ANY OTHER PERSON OR ENTITY (INCLUDING, WITHOUTLIMITATION, THE AMERICANS WITH DISABILITIES ACT), THE ABILITY OF BUYER TOOBTAIN ANY NECESSARY GOVERNMENTAL APPROVALS, LICENSES OR PERMITS FOR BUYER’SINTENDED USE OR DEVELOPMENT OF THE PROPERTY, THE PRESENCE OR ABSENCE OFHAZARDOUS MATERIALS ON, IN, UNDER, ABOVE OR ABOUT THE PROPERTY OR ANY ADJOININGOR NEIGHBORING PROPERTY, THE QUALITY OF ANY LABOR AND MATERIALS USED IN THECONSTRUCTION OF ANY IMPROVEMENTS, THE CONDITION OF TITLE TO THE PROPERTY, THELEASES, CONTRACTS OR ANY OTHER AGREEMENTS AFFECTING THE PROPERTY OR THEINTENTIONS OF ANY PARTY WITH RESPECT TO THE NEGOTIATION AND/OR EXECUTION OF ANYLEASE OR CONTRACT WITH RESPECT TO THE PROPERTY, SELLER’S TITLE TO OR OWNERSHIPOF THE PROPERTY OR ANY PORTION THEREOF OR THE ECONOMICS OF, OR THE INCOME ANDEXPENSES, REVENUE OR EXPENSE PROJECTIONS OR OTHER FINANCIAL MATTERS, RELATINGTO, THE OPERATION OF THE PROPERTY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,****BUTEXCEPTING SELLER’S UNDERTAKINGS, BUYER EXPRESSLY ACKNOWLEDGES AND AGREES THATBUYER IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF ANY SELLER PARTY, NORANY BROKER OR REPRESENTATIVE OF SELLER, WHETHER IMPLIED, PRESUMED OR EXPRESSLYPROVIDED AT LAW OR OTHERWISE, ARISING BY VIRTUE OF ANY STATUTE, COMMON LAW OROTHER LEGALLY BINDING RIGHT OR REMEDY IN FAVOR OF BUYER.  BUYER FURTHER ACKNOWLEDGES AND AGREES**,**BUT WITHOUT LIMITING SELLER’S UNDERTAKINGS, THAT SELLER ISUNDER NO DUTY TO MAKE ANY INQUIRY REGARDING ANY MATTER THAT MAY OR MAY NOT BEKNOWN 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 AGREEMENTINDEFINITELY.

 

Service Contracts to be Assumed.  Not later than the Due Diligence PeriodExpiration Date, Buyer will notify Seller in writing of those Contracts whichBuyer at its discretion has elected to have terminated.  Seller shall terminate the Contracts whichBuyer has elected to have terminated, and Seller shall be responsible for allpenalties, termination fees and other costs. Seller shall indemnify Buyer with respect to all Contracts that Buyerelects to have terminated and, with respect to those Contracts Buyer elects tohave 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 ofoperating the Property in accordance with MBCR’s current practices, and exceptfor Seller’s Undertakings (to the extent 

 

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

 

Buyer’s Entry and Indemnity; Limitson Government Contact.  (A) Inconnection with any entry by any Buyer Party or any of their contractors ontothe Property, Buyer shall give to W. Joseph Smith at (410) 237-5451 or Seller’sBroker advance telephone notice of such entry and shall conduct such entry andany inspections in connection therewith so as to minimize, to the greatestextent possible, interference with MBCR’s business and the business andoccupancy of the Tenants and otherwise in a manner reasonably acceptable toSeller.  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 willperform such testing or inspections and the proposed scope thereof.  Seller or its representative may, at Seller’soption, be present to observe any testing or other inspection performed on theProperty.

 

(B)                                Buyershall maintain or cause to be maintained at all times during the effectivenessof this Agreement, and for six months thereafter if such policy is a “claimsmade” policy, insurance insuring Buyer and Seller for acts or omissions byBuyer, its employees, agents or contractors occurring by virtue of any entryonto 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 theProperty by any Buyer Party  or any oftheir contractors and the performance of any tests by any Buyer Party or any oftheir contractors.  Buyer shall indemnifyand hold the Seller Parties harmless from and against any Claims arising out ofor relating to any entry on the Property by any Buyer Party or any of theircontractors; provided, however, the indemnity which is the subject of thissentence shall not cover liability arising from any Hazardous Materialssituated on or about the Property unless such Hazardous Materials areintroduced onto the Property by Buyer, nor shall such indemnification cover anyClaims arising from the negligence of Seller, its agents, employees,contractors or representatives.  Theforegoing indemnity shall survive the Closing, or, if the Closing does notoccur, survive the termination of this Agreement.

 

(C)                                Notwithstandingany provision in this Agreement to the contrary, neither Buyer nor any otherBuyer Party nor any of their contractors shall discuss with any GovernmentalAuthority or any Tenant regarding any Hazardous Materials on or theenvironmental condition of the Property, except upon the prior written consentof Seller or as otherwise required by applicable law; provided, however, thatBuyer or any Buyer Party may make customary and standard inquiry to anyGovernmental Authority as to the presence or history of Hazardous Materials orenvironmental conditions at the Property. Buyer shall give prior written notice to Seller before producing anyrecords, reports or other data requested by any Governmental Authorities.  Seller shall have the right to have arepresentative present when Buyer has, or causes to be had, any such contactwith any Governmental Authority.

 

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## Release.  

 

(A)                              ExceptingSeller’s Undertakings, Buyer, for itself, all Buyer Parties and theirsuccessors and assigns, waives its right to recover from, and forever releasesand discharges, and covenants not to sue, all Seller Parties and all Seller’sAffiliates with respect to any and all Claims, whether direct or indirect,known or unknown, foreseen or unforeseen, that may arise on account of or inany way be connected with the Property, the Membership Interests or thisAgreement, including, without limitation, the physical, environmental andstructural condition of the Property or any law or regulation applicablethereto, including, without limitation, but excepting Seller’s Undertakings,any Claim or matter relating to the use, presence, discharge or release ofHazardous Materials on, under, in, above or about the Property.

 

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

 

# **BUYER’S CONDITIONSPRECEDENT**

# ** **

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

 

**Seller’s Representations and Warr****anties. **The representations and warranties of Seller herein contained, withsuch updates and changes as are herein expressly permitted, shall be true andcorrect in all material respects, except that those representations andwarranties separately qualified by a materiality standard shall be true andcorrect in all respects.

 

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

 

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

 

**5.1.4****                     Estoppel****Certificates.**  Seller shall have furnished to Buyer estoppelcertificates in a form to be provided by Buyer, as approved by Buyer’s lender(without material modifications as to any estoppel certificate), from (i) allTenants leasing five thousand (5,000) or more square feet of space in theImprovements and (ii) Tenants who in the aggregate lease at least eighty-fivepercent (85%) of the leased area of the Premises, which certificates shall bedated not earlier than thirty (30) days prior to the Closing Date, and none ofthe Leases shall have been terminated or cancelled and none of the Tenantsshall have ceased operating its business at the Premises, or given Seller anynotice of its intention to terminate its Lease or cease operating its businessat the Premises.  In addition, if requiredby 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’slender.  Prior to the Due DiligencePeriod 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 PeriodExpiration Date, this condition precedent to Buyer’s obligation to close thetransaction contemplated hereunder shall be deemed null and void and of nofurther force or effect.  Seller shalluse commercially reasonable efforts to obtain and deliver to Buyer estoppelcertificates from all Tenants and, if required, such SNDAs at least ten (10)days prior to the Closing.  If, on theClosing Date, Seller shall not have obtained all required estoppel certificatesand SNDAs and if Buyer does not waive such requirement, then, at Seller’soption, Seller may adjourn the Closing Date by up to fifteen (15) days (the “AdjournedClosing Date”) to try to obtain all required estoppel certificates andSNDAs.  If, by the Adjourned ClosingDate, Seller shall not have obtained and delivered to Buyer all requiredestoppel certificates and SNDAs, then Buyer shall have the right, at itsoption, to (i) waive such requirement and close without adjustment in thePurchase Price; or (ii) terminate this Agreement by written notice to Sellerwith a copy to the Title Insurance Company, with instructions to the TitleInsurance Company, as escrow agent, to return the Deposit to Buyer (subject tothe provisions of the Escrow Deposit Agreement), and upon return of the Depositto Buyer, this Agreement shall terminate and neither party shall have anyfurther liability or obligation to the other hereunder, except for Buyer’sobligations to treat Due Diligence Documents as confidential, proprietary informationand return the same to Seller pursuant to Paragraph 15.15 hereof.  Prior to the Adjourned Closing Date Buyer mayat any time waive such requirement and close the transaction without adjustmentor reduction in the Purchase Price.

 

**Income and Expe****nses.**  There shall have been no material adversechange in the income or expenses related to the Premises.

 

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

 

**Disposition of Other****Properties.** Prior to the Due Diligence Period ExpirationDate, (i) Seller shall convey the Federalsburg Call Center and the LinthicumOperations Center from MBCR to third parties and shall provide evidence of suchdisposition to Buyer and (ii) the Cross Keys Lease shall have been terminatedor assigned by MBCR in accordance with its terms.

 

Failure of Conditions.  If at the time of Closing any Buyer’sConditions Precedent shall not have been satisfied in any material respect,then unless such lack of satisfaction has been caused by a Seller Default (inwhich case the provisions of Section 12.1 shall apply), Buyer shall have theright (as Buyer’s exclusive right and remedy, subject to the Sections 8.1 and8.2 hereof) either (a) to proceed with Closing without any adjustment in thePurchase Price, in which case Buyer shall be deemed to have waived allunsatisfied Buyer’s Conditions Precedent, or (b) to terminate 

 

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

 

# **SELLER’S CONDITIONSPRECEDENT**

# ** **

Conditions to Seller’sObligations to Sell. Seller’s obligation to complete Closing is conditioned upon thesatisfaction (or Seller’s written waiver) on or prior to the Closing Date ofall of the following conditions (collectively, “Seller’s ConditionsPrecedent”):

 

**Purchase Price.**TheTitle Insurance Company shall have received the entire Purchase Price, plus orminus any prorations, deduction, apportionments or costs in accordance withSection 11 hereof, and Buyer shall have executed and delivered the ClosingInstructions directing the Title Insurance Company to disburse the same.

 

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

 

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

 

# **REPRESENTATIONS ANDWARRANTIES**

 

## Representations andWarranties of Seller.

 

(A)                              Inaddition to the representations, warranties and covenants contained elsewherein this Agreement, Seller hereby represents, warrants, and covenants to Buyeras follows, which representations and warranties shall survive Closing exceptto the extent otherwise set forth herein:

 

(i)                                     Selleris and will at Closing be duly organized, validly existing and in good standingunder the laws of the state of its formation. MBCR is and will at Closing be duly organized, validly existing and ingood 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 andencumbrances.  Seller has delivered toBuyer true, correct and complete copies of the Articles of Organization ofMBCR, the operating agreement of MBCR (the “*Operating Agreement*”)and the minute books and records of transfer of membership interests ofMBCR.  MBCR was formed as a Marylandlimited liability company on December 17, 1998 pursuant to the Articles ofOrganization and the Operating Agreement described in the precedingsentence.  The membership interests ofMBCR are not subject to any restriction with 

 

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respect to their transferability (other than restrictions on transferunder 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 inMBCR .  No person is entitled to anypreemptive rights with respect to the purchase or sale of any membership orownership interest in MBCR, and as of the Closing Date there will be nooutstanding options, warrants or other rights, commitments or arrangements,written or oral to purchase or otherwise acquire any membership or ownershipinterest in MBCR or any security directly or indirectly convertible into orexchangeable or exercisable for any membership or ownership interest inMBCR.  MBCR does not presently own orcontrol, directly or indirectly, any interest in any other corporation,association or other business entity and MBCR does not own or hold any assetsother than the Property.  MBCR is not aparticipant in any joint venture, partnership or other similar arrangement.

 

(ii)                                  ThisAgreement and all Closing Documents to which Seller is a party (a) are, and atthe 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 anyagreement 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 andlegally 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 anythird parties to be a valid and legally binding obligation of Seller.

 

(iii)                               Atclosing, MBCR shall not be obligated under any Contract other than thoseContracts that Buyer elects not to have terminated pursuant to Section 4.6 ofthis Agreement.

 

(iv)                              Sellerrepresents that in addition to the Property, MBCR has owned only two otherproperties, one being known as the Linthicum Operations Center and one beingknown as the Federalsburg Call Center, and has leased only one property, beinga lease of approximately 839 square feet at the Village at Cross Keys,Baltimore, Maryland pursuant to a lease, dated March 19, 2004, between MBCR, astenant, and VCK Business Trust, as landlord (the “Cross Keys Lease,” and togetherwith the Linthicum Operations Center and the Federalsburg Call Center, the “OtherProperties”).

 

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

 

(vi)

 

(a)Neither Seller nor MBCR has within the past five years received written noticeof any violation of law with respect to Hazardous Materials at theProperty.  To Seller’s Knowledge and MBCR’sKnowledge, the Property does not contain any Hazardous Materials which mightsubject 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 notsurvive the Closing.

 

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

 

(vii)

 

(a)Neither Seller nor MBCR has received any written notice which remainsoutstanding from any governmental body having jurisdiction over the Property asto any violation of any building, fire, environmental, health or anygovernmental law or ordinance affecting the Property which might constitute aliability of MBCR at or after Closing, nor do Seller or MBCR have knowledge ofany such violations.  This Section7.1(A)(vii)(a) shall not survive the Closing.

 

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

 

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

 

(ix)                                MBCRshall 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 andoperation of the Other Properties, with the exception of the worker’scompensation claim described on Exhibit “F” attached hereto, for whichMBCR and Seller are fully insured and for which Seller agrees to be liable inthe event that its insurance fails to cover such claim, and with the exceptionof liabilities described in the MBCR Financial Statements, for which Sellershall be responsible.

 

(x)                                   Atand after Closing MBCR shall not be subject to any liabilities or obligationspertaining to its prior ownership of the Other Properties, whether known orunknown, fixed or contingent, liquidated or unliquidated, except such as havebeen assumed by and will be paid by the transferees of the OtherProperties.  MBCR has not receivedwritten notice of any litigation that is pending or threatened against MBCRand, to the knowledge of Seller and MBCR, no such litigation is pending orthreatened.

 

(xi)                                Asof the Effective Date, MBCR shall have no employees and MBCR shall have noliability to or with respect to any employee, including without limitation noobligations for salary, wages or benefits for any accrued vacation pay, sickleave, contributions to pension or profit-sharing plans, cafeteria plans or anyother employee benefit whatsoever.

 

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(xii)                             As ofClosing, MBCR shall have filed all tax returns and paid all taxes theretoforedue or payable.  Seller represents andwarrants that for United States federal income tax purposes (and also, to theextent applicable, for all state and local income tax purposes) MBCR is andsince its formation has been classified and properly characterized as an entitydisregarded as separate from its owner under Treasury Regulation Sections301.7701-2 and 301.7701-3, and that all tax returns, filings and elections madeby MBCR and Seller to date have been consistent with said classification, andfurther (for avoidance of doubt) that MBCR is not and never has been classifiedor properly characterized as a corporation, as an association taxable as acorporation, or as a “publicly traded partnership” treated as a corporationunder Internal Revenue Code Section 7704 or any similar tax law.

 

(xiii)                          MBCRholds all licenses, franchises, permits and other governmental authorizationsthe absence of any of which could have a material adverse effect on MBCR, andMBCR or Seller has delivered to Buyer an accurate list and description of allgovernmental licenses, franchises, permits and other governmentalauthorizations, including permits, titles, licenses, franchises and certificates,which, to Seller’s Knowledge, exist.  Allof those licenses, franchises, permits and other governmental authorizationsare valid, and MBCR has not received any notice that any Governmental Authorityintends to cancel, terminate or not renew any such license, franchise, permitor other governmental authorization. MBCR has conducted and is conducting its business in compliance with therequirements, standards, criteria and conditions set forth in all licenses, franchises,permits and other governmental authorizations, and is not in violation of anyof the foregoing except where such non-compliance or violation would not have amaterial adverse effect on MBCR.  ThisSection 7.1(A)(xiii) shall not survive the Closing.

 

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

 

(xv)                            As ofthe Effective Date, neither Seller nor MBCR has actual notice, or has receivedfrom any Person any written notice, of any pending or threatened condemnationor similar proceeding and, to Seller’s knowledge, there is no change orproposed change in the route, grade, or width of, or otherwise affecting, andstreet or road that is contiguous to the Property or any portion of theProperty or of pending public improvements in or adjoining the Property whichwill in any manner affect the Property.  ThisSection 7.1(A)(xv) shall not survive the Closing.

 

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

 

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

 

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

 

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

 

(xix)                           Acorrect and complete list of the Contracts which affect the Property is setforth on Exhibit “G” annexed hereto, and such Contracts have beendelivered to Buyer.  On the Closing Date,all Contracts, except for those Buyer has elected not to have terminated inaccordance with Section 4.6 hereof, shall be terminated and of no furtherforce and effect, and any payments due thereunder shall have been paid bySeller.  Each of the Contracts are validand in full force and effect, and, neither MBCR nor, to Seller’s Knowledge, theother party thereto is in default thereunder.

 

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

 

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

 

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

 

(xxiii)                     NeitherSeller nor MBCR, nor, to Seller’s Knowledge, any Tenant at the Property is thesubject 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 Sellernor MBCR has received any written notice which remains outstanding from anygovernmental body having jurisdiction over the Property as to any 

 

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violation of any building, fire, environmental, health or othergovernmental law or ordinance affecting the Property, or any written noticewhich remains outstanding from any insurance company or inspection or ratingbureau setting forth any requirements as a condition to the continuation to anyinsurance coverage on or with respect to the Property or the continuationthereof at the existing premium rates.  ThisSection 7.1(A)(xxiv) shall not survive the Closing.

 

(xxv)                       Seller isnot a “foreign person” as such term is defined in Section 1445(f)(3) ofthe Internal Revenue Code of 1986, as amended (the “Code”).

 

(xxvi)                    To Seller’sKnowledge, Seller is in compliance with all laws, statutes, rules and regulationsof any federal, state or local governmental authority in the United States ofAmerica applicable to such Persons (as hereinafter defined), including, withoutlimitation, the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079(Sept. 25, 2001) (the “Order”) and other similar requirements contained in therules and regulations of the Office of Foreign Asset Control, Department of theTreasury (“OFAC”) and in any enabling legislation or other Executive Orders inrespect thereof (the Order and such other rules, regulations, legislation, ororders are collectively called the “Orders”), to the extent that noncompliancewould have a material adverse effect on Seller’s ability to convey theMembership Interests or would cause Buyer to incur a liability.  For purposes of this subsection, “Person”shall mean any corporation, partnership, limited liability company, jointventure, 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)                                  isnot listed on the Specially Designated Nationals and Blocked Persons Listmaintained by OFAC pursuant to the Order and/or on any other list of terroristsor terrorist organizations maintained pursuant to any of the rules andregulations of OFAC or pursuant to any other applicable Orders (such lists arecollectively referred to as the “Lists”);

 

(b)                                 hasnot been indicted or arrested for money laundering or for predicate crimes tomoney laundering, convicted or pled nolo contendere to charges involving moneylaundering or predicate crimes to money laundering;

 

(c)                                  hasnot been determined by competent authority to be subject to the prohibitionscontained in the Orders;

 

(d)                                 isnot owned or controlled by, nor acts for or on behalf of, any Person on theLists or any other Person who has been determined by competent authority to besubject to the prohibitions contained in the Orders; or

 

(e)                                  shallnot assign this Agreement or any interest herein, to any Person who is listedon the Lists or who is engaged in illegal activities.

 

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

 

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Triggering Event, Buyer may terminate this Agreement upon writtennotice to Seller, whereupon the Deposit, shall be returned to Buyer, andneither 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 fromany interest in Seller.

 

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

 

(xxviii)              Seller hasdelivered, or shall deliver within two (2) Business Days following theEffective Date, to Buyer:

 

(a)                                  trueand complete copies of all policies of insurance to which MBCR is a party orunder which MBCR, is or has been covered at any time within two years precedingthe date of this Agreement;

 

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

 

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

 

(d)                                 a writtendescription of any self-insurance arrangement by or affecting MBCR, includingany reserves established thereunder; any contract or arrangement, other than apolicy of insurance, for the transfer or sharing of any risk by MBCR;

 

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

 

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

 

(g)                                 MBCRhas given notice to the insurer of all claims known by it to be insuredthereby.

 

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

 

(xxix)

 

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

 

(b) MBCR has compliedwith all laws, rules, regulations, writs, injunctions, decrees, and ordersapplicable to it or to the ownership, management, maintenance and operation ofthe Other Properties (collectively, “Laws”) and has not received any notice ofany alleged claim or threatened claim, violation of, liability or potentialresponsibility under, any such Law which has not heretofore been cured and for whichthere is no remaining liability.

 

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

 

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

 

(b) “ERISA Affiliate”means any person or entity that, together with MBCR, would be, or was at anytime, 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” meansany employee pension benefit plan subject to Section 412 or ERISA Section 302or Title IV (including any Multiemployer Plan); and

 

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

 

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

 

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copies of the most recentForms 5500 and any attached financial statements and any related actuarialreport.  Since 1974, neither MBCR, Sellernor any ERISA Affiliate has sponsored or maintained or had any liability(whether actual or contingent) with respect to any Pension Plan, other than theSeller Pension Plans, whether maintained by any of them or by any predecessorentity.  Seller, MBCR and each otherERISA Affiliate has no liability (whether actual or contingent) with respect toany Pension Plan other than the Seller Pension Plans.  With respect to each Seller PensionPlan:  (i) neither Seller nor any ERISAAffiliate has terminated or withdrawn or sought a funding waiver, and no factsexist that could reasonably be expected to cause such actions; (ii) noaccumulated funding deficiency (under Code Section 412 and without regardto waivers) exists or has existed; (iii) no reportable event (as defined inERISA Section 4043) has occurred; (iv) all costs have been provided for onthe basis of consistent methods in accordance with sound actuarial assumptionsand practices; (v) the assets of such Pension Plan, as of its last valuationdate, exceeded its “Benefit Liabilities” (as defined in ERISA Section 4001(a)(16));and (vi) since the last valuation date, there have been no amendments orchanges to increase the amounts of benefits, except for an increase to certainretiree pension benefits, and, to the knowledge of Seller, nothing has occurredthat would reduce the excess of assets over benefit liabilities in such plans.  There are no pending claims (other thanroutine 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 Affiliatehas paid all amounts it is required to pay as contributions to the SellerPension Plans through and as of the date of this Agreement.

 

(B)                                Eachof 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 bythe information disclosed in the Due Diligence Materials; (ii) is made as ofthe Effective Date; (iii) to the extent set forth in Section 10.4(i) shallbe deemed remade by Seller at the Closing Date; (iv) shall be true, in allmaterial respects, as of the Closing Date, except to the extent suchrepresentations and warranties are qualified by any (a) separately statedmaterial qualifiers, in which event such representations and warranties shallbe true in all respects, or (b) changes permitted in this Agreement orotherwise approved in writing by Buyer; and (v) except as set forth herein,shall survive Closing.

 

## Representations andWarranties of Buyer.

 

(A)                              Buyerhereby represents and warrants to Seller as follows:

 

##### Buyer is a Virginia limited liability company, dulyorganized, validly existing and in good standing under the laws of itsorganization.

 

##### As of the Effective Date, and, provided Buyer has notterminated this Agreement for any reasons permitted hereunder, at the ClosingDate, 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) donot, and will not, violate any provision of any agreement or judicial Order towhich Buyer is a party or to which Buyer or any property owned by Buyer issubject and (cc) constitute (or in the case of Closing Documents willconstitute) a valid and legally binding obligation of Buyer, enforceable inaccordance 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 anddelivery of this Agreement by Buyer or the consummation by Buyer of the transactioncontemplated hereby (other than any applicable filing requirements underfederal or state securities laws.)

 

##### Each person executing and delivering this Agreement and alldocuments to be executed and delivered by Buyer at Closing has or will have dueand 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 reliefproceeding, or (B) litigation or other judicial or administrative proceedingwhich challenges or could adversely affect Buyer’s right or ability to enterinto this Agreement or to consummate the transactions herein contemplated.

 

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

 

# **TITLE and survey**

# ** **

On the Effective Date, Seller, if it has notalready done so, shall provide to Buyer a copy of the current owner’s policy oftitle insurance for the Property (the “Title Policy”), if such TitlePolicy is in the possession of Seller or MBCR, and a copy of the most recentALTA 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 andmarketable fee simple title to the Property, subject only to exceptions totitle specifically permitted pursuant to this Section 8.1.  Buyer shall have until the Due DiligencePeriod Expiration Date to examine the condition of title.  If Buyer shall disapprove the condition oftitle, such disapproval shall be set forth in a written notice (a “TitleDisapproval Notice”) given to Seller prior to the Due Diligence PeriodExpiration Date stating that the condition of title to the Property or any ofthe terms, provisions or contents of said items and documents are disapprovedby Buyer.  Seller shall have until thedate which is five (5) Business Days after the date of the applicable TitleDisapproval Notice (the “Title Cure Expiration Date”) in which to cureor eliminate or agree to cure or eliminate all items which Buyer disapproves inthe applicable Title Disapproval Notice, and to furnish evidence satisfactoryto Buyer in its sole discretion that all such items have been cured oreliminated or that arrangements acceptable to Buyer in its sole discretion havebeen made with the Title Insurance Company and any parties in interest to cureor eliminate the same at or prior to the Closing.  If such evidence is not received and approvedby 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 areherein called “Non-Permitted Exceptions”), then Buyer shall have theright by written notice delivered to Seller within two (2) Business Days afterthe applicable Title Cure Expiration Date (time being of the essence) to electto terminate this Agreement and, upon such election, the Deposit shall beimmediately refunded to Buyer and thereupon the Parties hereto shall have nofurther obligations one to the other under this Agreement (other than those 

 

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that are expressly stated to survive the termination of thisAgreement).  Notwithstanding anythingcontained herein to the contrary, Seller shall be obligated to cause to beremoved 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 ofSeller’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 debtincurred by Seller or MBCR, including, but not limited to a mortgage or othersecurity interest affecting the Property, (iii) all mechanic’s liens andmaterialman’s liens, unless bonded against so as not to be enforceable againstthe Property such that a bring-to-date title endorsement for the Propertyissued as of the Closing Date would not contain any exceptions for mechanic’sor materialman’s liens, and (iv) any Non-Permitted Exceptions that Seller shallhave committed to cure in a written notice to Buyer.  (Any Non-Permitted Exception or lien, chargeor encumbrance that Seller is required to remove from record pursuant to theimmediately preceding sentence is herein called a “Seller CausedNon-Permitted Exception”.)  If Sellerfails to remove any Seller Caused Non-Permitted Exception, Buyer, nevertheless,may elect (at or prior to the Closing) to consummate the transaction providedfor herein subject to any such Seller Caused Non-Permitted Exception as mayexist as of the Closing with a credit against the balance of the Purchase Pricepayable at the Closing equal to (y) the sum necessary to remove any such SellerCaused Non-Permitted Exception which can be satisfied by a liquidated amountand (z) the reasonably estimated reduction in the fair market value of theProperty resulting from any Seller Caused Non-Permitted Exception which cannotbe satisfied by the payment of a liquidated amount.  Any title exception other than a SellerCaused Non-Permitted Exception shall be deemed conclusively approved by Buyerif it is not set forth in a timely Title Disapproval Notice or if Buyer doessend a timely Title Disapproval Notice but does not elect in writing toterminate this Agreement within the two (2) Business Day period following therelated Title Cure Expiration Date.

 

Survey.  Buyer shall have until the Due DiligencePeriod Expiration Date to examine and approve or disapprove the Survey.  If Buyer shall disapprove the Survey, suchdisapproval shall be set forth in a written notice (a “Survey DisapprovalNotice”) given to Seller prior to the Due Diligence Period Expiration Datestating that the Survey or any of the terms, provisions or contents of theSurvey are disapproved by Buyer.  Sellershall have until the date which is five (5) Business Days after the date of theSurvey Disapproval Notice (the “Survey Cure Expiration Date”) in whichto cure or eliminate or agree to cure or eliminate all items which Buyerdisapproves in the Survey Disapproval Notice, to the satisfaction of Buyer inits sole discretion, and to furnish evidence to Buyer that all such items havebeen eliminated from the Survey or that arrangements have been made with asurveyor to eliminate the same from the Survey or with the Title InsuranceCompany to insure over them at or prior to the Closing in a manner acceptableto Buyer in its sole discretion.  If suchevidence 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 beingherein called “Non-Permitted Survey Exceptions”), then Buyer shall havethe right by written notice delivered to Seller within two (2) Business Daysafter the applicable Survey Cure Expiration Date (time being of the essence) toelect to terminate this Agreement and, upon such election, the Deposit shall beimmediately refunded to Buyer and thereupon the parties hereto shall have nofurther obligations one to the other under this Agreement (other than thosethat are expressly stated to survive the termination of this Agreement).  Notwithstanding anything contained herein tothe 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-PermittedSurvey Exceptions which Seller shall commit to remove in a written notice toBuyer (each, a “Seller Removal Survey Exception”).  If Seller fails to remove any Seller RemovalSurvey Exception, Buyer, nevertheless, may elect (at or prior to the Closing)to consummate the transaction provided for herein subject to any such SellerRemoval Survey Exception as may exist as of the Closing with a credit againstthe balance of the Purchase Price payable at the Closing equal to (y) the sumnecessary to remove such Seller Removal Survey Exception which can be satisfiedby a liquidated amount, or (z) the reasonably estimated reduction in the fairmarket value of the Property resulting from any Seller Removal Survey Exceptionwhich cannot be satisfied by the payment of a liquidated amount.  Any survey matter other than a Seller RemovalSurvey Exception shall be deemed conclusively approved by Buyer if it is notset forth in a timely Survey Disapproval Notice or if Buyer does send a timelySurvey Disapproval Notice but does not elect in writing to terminate thisAgreement within the two (2) Business Day period following the Survey CureExpiration Date.

 

# **PRE-CLOSING OPERATIONS**

 

## Interim Operation of theProperty.

 

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

 

(i)                                     Notpermit MBCR to enter into any new Contracts or amend or (unless the contractoris in default) terminate any existing Contracts without the prior writtenconsent of Buyer (except that such consent shall not be required with respectto Contracts to be terminated pursuant to Section 4.6 hereof), whichconsent may be withheld or denied in Buyer’s sole discretion.  From time to time prior to Closing, Sellershall (with reasonable promptness) provide Buyer with copies of all Contractsentered into by MBCR, with the Buyer’s consent, after the Effective Dateaffecting the Property, and all operating statements and other periodic reportsrelating to the Property (excluding Privileged Material) prepared by ordelivered to MBCR and/or Seller after the Effective Date.

 

(ii)                                  Exceptfor trash and consumables, not remove any fixtures, equipment, supplies orPersonal Property owned by MBCR from the Property unless replaced prior toClosing with items of equal or better quality;

 

(iii)                               Notwithdraw, settle or compromise any protest or reduction proceeding affectingreal estate taxes assessed against the Property for any fiscal periodsubsequent to the Closing without the prior written consent of Buyer, whichconsent shall not be unreasonably withheld. All real estate tax refunds and credits received after the Closingattributable to the fiscal tax year during which the Closing occurs shall beapportioned between Seller and Buyer, after deducting and reimbursing Sellerand Buyer for all of their respective expenses of obtaining an assessmentreduction, which obligation shall survive the Closing;

 

(iv)                              Maintainin full force and effect the current casualty insurance policies covering theProperty or equivalent replacement policies;

 

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

 

(vi)                              GiveBuyer notice of any actions commenced against Seller or MBCR which affect theProperty;

 

(vii)                           Exceptfor tenant improvements and emergency repairs payable at MBCR’s sole cost andexpense, not enter into any commitment or agreement which would obligate Buyeror MBCR, or which would be cause for a lien on any part of the Property atClosing, or which would not be completed prior to Closing, for repairs, orconstruction of improvements upon or within the Property except those withrespect 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 currentpractices and industry standard, all normal maintenance and repair in connectionwith the Property, including, without limitation, making repairs andreplacements to any broken, defective or malfunctioning portions of theProperty, subject to reasonable wear and tear and further subject to theoccurrence of any damage or destruction to the Property due to fire or othercasualty, and manage and operate the Property in accordance with the terms ofthe Leases, all insurance policies and applicable federal, state, and municipallaws, ordinances and regulations; and

 

(ix)                                UntilClosing, conduct the business of the Property in a normal businesslike andprudent manner.

 

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

 

(C)                                Exceptas otherwise provided in this Agreement or approved by Buyer in writing, fromthe Effective Date through the Closing Date, Seller shall not permit MBCR toenter into any New Lease, or any extension, modification or amendment to anyExisting Lease, or any agreement to (nor shall MBCR) create a lien, encumbrance,covenant or restriction on or affecting the Property without Buyer’s priorwritten consent, which consent may be withheld in Buyer’s sole and absolutediscretion with respect to any utility or similar easement necessary for theoperation of the Property, and which shall be deemed granted if Buyer does notrespond in 

 

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writing to Seller’s request for consent within five (5) Business Daysafter 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 anyLease, by summary proceedings or otherwise; provided, however, that Sellershall not cause MBCR to seek to terminate any Lease without the prior writtenconsent of Buyer, unless the failure to seek such termination would materiallyprejudice MBCR’s rights to enforce such Lease.

 

Lease Termination Priorto Closing.  Except as set forth in Section 5.1.4, thebankruptcy or default of any Tenant or the termination of any Lease or theremoval of any Tenant by reason of a default by such Tenant (by summaryproceedings or otherwise) or by operation of the terms of such Lease (includingexpiration) shall not affect the obligations of Buyer under this Agreement inany 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 betweenReznick Fedder & Silverman, C.P.A.S., L.L.C. (“Reznick”) and MBCR (the “ReznickLease”) shall not affect the obligations of Buyer under this Agreement in anymanner, as Mercantile-Safe Deposit and Trust Company and Venable LLP each haveentered into agreements with Reznick to assume portions of the premisescurrently leased under the Reznick Lease (with the exception of theapproximately 10,763 square feet sublet by Reznick to Adelberg, Rudlow, Dorf& Hendler, LLC, which shall remain subject to the terms and conditions ofthe Reznick Lease) as set forth in greater detail in Section 15.19 andExhibit J hereof..

 

## Risk of Loss andInsurance Proceeds.

 

(A)                              Therisk of loss or damage to the Property by fire or other casualty shall be borneby Seller.  However, Buyer shall be boundto purchase the Membership Interests for the full Purchase Price as required bythe terms hereof, without regard to the occurrence or effect of any damage tothe Property or destruction of any improvements thereon due to fire or othercasualty, if:  i) the repair is completedprior to Closing or if such damage is not repaired but the cost to repair theProperty is less than or equal to $1,000,000 as determined by the insurancecarrier’s estimate of the cost to repair such loss or damage, and ii) none ofthe Tenants shall have terminated their Lease, or be entitled to terminate itsLease as a result of such loss or damage. At Closing the proceeds of the insurance maintained by Seller coveringthe casualty (and not theretofore applied to costs of repair or restoration)shall be paid, credited or assigned to Buyer and Seller shall also pay orcredit Buyer with the amount of any deductible with respect to such policiesand any uninsured loss based solely on the insurance carrier’s estimatedescribed in clause (i) of the preceding sentence, less any amount paid bySeller for repair or restoration.

 

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

 

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consummate the purchase.  IfBuyer elects to terminate this Agreement, then the Deposit shall be immediatelyreturned to Buyer and, thereupon, neither party shall have any further rightsor obligations hereunder except to the extent set forth otherwise in thisAgreement.  If Buyer elects to proceedwith the Closing, then, pending the Closing, Buyer, and not Seller, shall alonehave the right to cause MBCR (i) to adjust, compromise and settle with theinsurance company(s) with respect to the insurance policies, and (ii) tosettle, compromise and contest such award or proposed award relating to theProperty, and Seller agrees to cooperate with Buyer with respect to thecollection of any payments or awards or rights to payments or awards on behalfof 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 bepaid, credited or assigned to Buyer and Seller shall also pay or credit Buyerwith the amount of any deductible with respect to such policies and anyuninsured loss mutually agreed to prior to Closing (if no such mutual agreementis reached, Seller shall not owe any amount to Buyer for any such uninsuredloss and Buyer can elect to terminate this Agreement or proceed to Closing, asdescribed in this Section 9.4(B)) less any reasonable amounts paid bySeller 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 havingcondemnation authority shall institute an eminent domain proceeding or take anysteps preliminary thereto (including the giving of any direct or indirectnotice of intent to institute such proceedings) with regard to the Land orImprovements, and the same is not dismissed in a final determination for whichall appeal periods have passed on or before ten (10) days prior to theScheduled Closing Date, then Seller shall promptly notify Buyer thereof andBuyer shall be entitled to terminate this Agreement in which event, the Depositshall be immediately returned to Buyer and neither party shall have any furtherrights or obligations hereunder except to the extent set forth otherwise inthis Agreement.  In the event Buyer doesnot exercise its right to terminate this Agreement within said ten (10) dayperiod, Seller shall assign and transfer to Buyer, at the Closing, all ofSeller’s right, title and interest in and to any awards due Seller from thecondemnation and Buyer shall be given credit against the Purchase Price for allawards received by Seller on account thereof prior to the Closing.  Seller shall not enter into any settlement ofany condemnation proceedings or eminent domain award without the prior writtenconsent of Buyer, which consent may be withheld in Buyer’s solediscretion.  Nothing herein shallobligate Seller to appeal any condemnation or decision as to compensationresulting from condemnation; provided, Seller shall, upon request of Buyer,assign to Buyer all of Seller’s rights to appeal such decision in Seller’sname, if necessary, and Buyer may proceed with such appeal at Buyer’s solecost, expense and risk.

 

(D)                               Notwithstandinganything in this Section 9.5 to the contrary, if the Property is damagedby fire or other casualty prior to the Closing and Seller reasonably believesthat Seller can repair (or cause MBCR to repair) such damage prior to theClosing, then Seller shall have the absolute right to proceed with suchrepairs.  If Seller is unable to completesuch repairs by Closing, Section 9.5(A) or 9.5(B), as applicable, shallapply 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 specificallyrelating to the Property of which Seller or MBCR receives written notice afterthe Effective Date, any written notices of violations of any legal requirementsrelating to the Property received by Seller or MBCR after the Effective Date,and any litigation of which Seller or MBCR receives written notice after theEffective Date that affects the operation of the Property.  It shall be a condition precedent to Buyer’sobligation to purchase the Membership Interests, that there shall be nolitigation or proceeding pending at Closing having a potential material adverseeffect upon the Property or Seller’s ability to convey MBCR to Buyer, exceptfor (a) personal injury cases covered by MBCR’s insurance, subject tocommercially reasonable deductibles, and (b) mechanic’s lien proceedings whichhave been bonded off, provided that in all such cases a title bring-to-dateendorsement dated as of the Closing Date would not contain any exception for amechanic’s or materialman’s lien. Notwithstanding anything herein to the contrary, if Buyer does notterminate this Agreement on or before the Due Diligence Period Expiration Date,Buyer shall be deemed to have accepted the Property subject to and withoutadjustment for any pending or threatened litigation disclosed by Seller andMBCR prior to the Due Diligence Period Expiration Date.

 

# **CLOSING**

# ** **

Escrow Instructions.  Upon execution of this Agreement, the partieshereto shall deposit an executed counterpart of this Agreement with the TitleInsurance Company, and this Agreement, as well as the Deposit Escrow Agreement,shall serve as the instructions to the Title Insurance Company as escrow agentfor consummation of the purchase and sale contemplated hereby (“Closing”).  Seller and Buyer agree to execute suchreasonable additional escrow instructions as may be appropriate to enable theTitle Insurance Company to conduct Closing in accordance with the terms of thisAgreement, provided, however, that in the event of any conflict between oramong the provisions of this Agreement, the Deposit Escrow Agreement and/or anysupplementary 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 ismutually acceptable to Seller and Buyer (“Scheduled Closing Date”).

 

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

 

Closing Documents.  At least one (1) Business Day prior to theScheduled Closing Date, Seller shall execute and deposit into escrow with theTitle 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 assignmentof membership interests assigning and conveying to Buyer 100% of the MembershipInterests in MBCR, free and clear of all liens, claims and encumbrances (the “Assignment”),in the form attached hereto as Exhibit “B”.

####  

#### a so-callednon-imputation affidavit addressed to the Title Insurance Company in such formas the Title Insurance Company shall reasonably require (the “Non-ImputationAffidavit”),

####  

#### resignationletters from all the officers and directors of MBCR, to be effective as of theClosing Date, in form and substance reasonably satisfactory to Buyer,

####  

#### an opinionfrom Gallagher Evelius & Jones LLP, counsel to Seller, in form andsubstance reasonably satisfactory to Buyer, confirming (a) the dueincorporation of Seller, the corporate power of Seller, the due authorization,execution and delivery of this Agreement and the Closing Documents to whichSeller is a party by Seller, non-contravention of agreements and law, allnecessary consents being obtained, and the enforceability of this Agreement andsuch Closing Documents against Seller, (b) the due organization of MBCR, thedue authorization and valid issuance of its membership interests, the recordownership of such interests, the absence of options, warrants and rights topurchase such interests or any preemptive rights in respect thereof, thenoncontravention of agreements and law arising out of the transactionscontemplated by this Agreement and that upon Closing, Buyer will own 100% ofthe outstanding membership interests in MBCR, free and clear of any claims ofany third party, and (c) such other matters as Buyer may reasonably request,subject to usual and customary qualifications and based on counsel’s knowledgeand on Seller’s and MBCR’s certification of facts material to the opinion,

####  

#### a FIRPTAAffidavit, in the form attached hereto as Exhibit “C”,

####  

#### closinginstructions, with attached settlement statement to be prepared by the TitleInsurance Company, consistent with the terms of this Agreement (“ClosingInstructions”),

####  

#### a rent rollfor the Property, certified by Seller to be true and correct as of a date noearlier than five (5) Business Days prior to the Closing Date,

####  

#### any usual andcustomary affidavits and certificates required by the Title Insurance Company,

####  

#### a certificatestating that the representations and warranties of Seller contained in thisAgreement are true and correct in all material respects (or, with respect torepresentations and warranties separately qualified by materiality standards,true in all respects) as of the date of Closing (with appropriate modificationsof those representations and warranties made in Section 7.1 to reflect anychanges resulting from actions made in compliance with Section 9.1) oridentifying any representation or warranty which is not, or no longer is, trueand 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 nolonger true and correct, Seller hereby agreeing that if any of the PermanentRepresentations is not true and correct at the Closing, 

 

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#### Seller shall be deemed to be inbreach of this Agreement and Buyer shall have all rights and remedies specifiedherein for such breach by Seller, and (2) if any of the other representationsor warranties made by Seller in this Agreement is not true and correct in allmaterial respects at Closing without change since the date hereof, exceptchanges occasioned by acts, conduct and occurrences permitted under thisAgreement, and changes which do not have a material adverse effect on theProperty or the operations thereof, then Buyer may, by notice to Seller, electto terminate this Agreement, in which event the Deposit shall be promptlyreturned to Buyer and, thereafter, this Agreement shall be deemed terminatedand the parties hereto shall have no further liabilities to each other exceptto the extent expressly provided otherwise herein.  If, despite changes or other mattersdescribed in such certificate, the Closing occurs, Seller’s representations andwarranties set forth in this Agreement shall be deemed to have been modified byall statements made in such certificate;

 

#### the MercantileLease; and

 

#### any otherinstruments 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’spossession, the original counterparts of the Leases, Contracts, Licenses andPermits (if any), Books and Records and Warranties (if any), all Plans,operating manuals, brochures, marketing materials, advertisements, Tenant leasefiles, and other on-site files and records in the possession of Seller or MBCRand MBCR’s managing agent and utilized in connection with the operation andmaintenance of the Land and Improvements; and all keys and combinations to alllocks 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 depositinto escrow with the Title Insurance Company fully executed counterparts ofeach of the following:

 

#### a dulyexecuted counterpart of the Assignment,

 

#### a dulyexecuted counterpart of the Closing Instructions and settlement statement, and

 

#### any otherinstruments required by this Agreement.

 

Closing Instructions.  At or prior to Closing, Buyer and Seller shalleach execute and deposit in escrow with the Title Insurance Company such otherinstructions and documents as are reasonably required by the Title InsuranceCompany, on the Closing Date, to: (a) pay Seller the Purchase Price (after anyadjustments or prorations made in accordance with Section 11), (b) recordthose Closing Documents (if any) to be recorded, and (c) close the escrow andconsummate Closing in accordance with the terms hereof.

 

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# **PRORATIONS; EXPENSES**

# ** **

Rents.  Rents, including, without limitation, commonarea maintenance charges, taxes, parking charges, operating costs escalationsand all other sums payable by Tenants under the Leases (collectively, “Rents”),(subject, however, to Section 11.2 as to unpaid Rents); Real Estate Taxesand personal property taxes, including refunds with respect thereto; thecurrent installment (only) of any improvement bond, assessment or charge thatis a lien on the Property or that is pending and may become a lien on theProperty; water, sewer and utility charges; amounts paid or payable by MBCRunder 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 thebasis of the period covered); and any other actually received income or prepaidexpense relating to the operation of the Property and covering a time periodwhich spans the Closing Date shall all be prorated as of 12:01 a.m. prevailingEastern Time on the Closing Date, with Buyer deemed the owner of MBCR on theentire Closing Date.

 

Receivables and Collections.  Any pre-Closing delinquent Rents collected bySeller or Buyer after the Closing shall be applied as follows:  (i) first, to all months succeeding theClosing 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’saforesaid share thereof shall be remitted by Buyer to Seller, provided suchTenant is otherwise current in its rent, and if Seller receives such past duerents, Buyer’s aforesaid share thereof shall be promptly remitted by Seller toBuyer.

 

Collection Efforts.  Buyer shall have no obligation after theClosing Date to collect any delinquent Rents that accrued prior to the ClosingDate and Seller shall have the right to collect such delinquent Rents but underno circumstance shall Seller have the right to initiate, threaten or pursueeviction proceedings.

 

Security Deposits. Buyer(or MBCR) shall be solely obligated to the Tenants for the return of anysecurity deposits under the Leases.  AtClosing, Buyer shall receive a credit against the Purchase Price in an amountequal to (i) all security deposits and accrued interest required to beavailable for return to the Tenants under the Leases, and (ii) all advance rentreceived by Seller from Tenants under the Leases for periods subsequent to theClosing.

 

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

 

#### Real EstateTaxes and personal property taxes, if any, shall be pro rated on the basis ofthe tax year in which the Closing occurs. If the Closing shall occur before the Real Estate Tax rate for theapportionment period is fixed or known, the apportionment of Real Estate Taxesshall be on the basis of the real estate tax rate for the next preceding periodapplied to the latest assessed valuation and shall be adjusted when the finaltax bill is available.

 

#### Water andsewer charges, as well as electricity, gas and steam charges, shall be prorated 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 isobtainable, shall furnish a reading effective as of the date prior to theClosing Date, or if not so obtainable, to a date not more than thirty (30) daysprior to the date prior to the Closing Date, and the unfixed meter chargesbased 

 

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#### thereon for the interveningperiod shall be apportioned on the basis of such last reading.  Upon the taking of a subsequent actualreading, such apportionment shall be readjusted and Seller or Buyer, as thecase may be, will promptly deliver to the other the amount determined to be sodue upon such readjustment.  If Seller isunable to furnish such prior reading, any reading subsequent to the Closingwill be apportioned on a per diem basis from the date of such readingimmediately prior thereto and Seller shall pay the proportionate charges due upto the date of Closing.  The provisionsand obligations of the parties pursuant to this subparagraph (b) shall survivethe Closing.

 

#### Any otherfunds that will inure to the benefit of or be refunded to MBCR after theClosing 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 andremain the property of Seller.

 

#### Except as setforth in this Agreement, the customs of the county in which the Property islocated shall govern prorations.

 

#### If suchprorations result in a payment due Buyer, then the portion of the PurchasePrice payable at Closing shall be reduced by such sum.  If such prorations result in a payment dueSeller, then the same shall be paid to Seller at Closing in addition to thePurchase Price.  The parties hereto shallendeavor to prepare a schedule of prorations no less than five (5) daysprior to Closing.

 

## INTENTIONALLY OMITTED. 

 

Post Closing Adjustments.  In the event accurate and complete prorationsand adjustments cannot be made as of the Closing Date because current bills orstatements are not available, the parties shall prorate on the basis of thebest available information, and readjust within nine months following theClosing upon receipt of final bills and statements (including, withoutlimitation, those related to common area maintenance charges and operatingcosts escalations).  In addition, ifafter the Closing Date an error or new information is discovered with respectto the prorations and adjustments made at Closing, the proration orapportionment shall be adjusted based upon the accurate or newinformation.  Also, at the request ofeither party made at any time after the Closing Date, there shall be apost-Closing apportionment with respect to any estimated prorations which werenot reasonably susceptible of final determination at Closing.  Seller and Buyer shall cooperate with eachother with respect to all such adjustments and prorations made after theClosing Date, and either party owing the other party a sum of money based onsuch subsequent prorations or adjustments shall promptly pay said sum to theother party.  The provisions andobligations of the parties pursuant to this Section 11.7 shall survive theClosing.

 

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

 

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Closing Expenses.  Seller shall pay any recording fees forinstruments required to remove Seller-Caused Non-Permitted Exceptions andSeller Removal Survey Exceptions.  Buyershall pay the costs of any title report or search, any updating of the TitlePolicy and all endorsements thereto and of updating the Survey, all costs ofany appraisal, engineering and environmental reports ordered by Buyer and anyother filing, administrative or legal expenses payable by a buyer of limitedliability company membership interests in Maryland including, withoutlimitation, fees and charges of any lender providing purchase money financingto Buyer.  Seller and Buyer agree thatthey shall each be responsible for one-half of any transfer taxes (if any) thatbecome payable with respect to the Property as a result of Buyer’s acquisitionof the Membership Interests; provided, however, that Seller shall be solelyresponsible for any interest payments or penalties (if any) associated with anyfailure to pay such transfer taxes in a timely fashion.  Seller and Buyer agree that they shall eachbe responsible for one-half of the charges of the Title Insurance Company underthe Deposit Escrow Agreement.  Sellershall pay the outstanding balances of any and all mortgages and the fees andcharges, if any, of the holder thereof for providing discharges thereof atClosing.  Seller and Buyer shall each beresponsible for paying their respective attorneys’ and other professional feesand costs.

 

Survival.  The obligations of Seller and Buyer underthis 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 availablefunds, sufficient cash to enable the Title Insurance Company (a) to pay Sellerthe entire Purchase Price (as adjusted by the prorations, allocations, costsand credits set forth in this Agreement) by wire transfer of immediatelyavailable funds, to be received by Seller (at an account or accounts designatedby 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 byBuyer hereunder.

 

# **DEFAULT**

# ** **

Seller’s Default.  In the event of Seller’s failure to perform inany material respect any of its obligations hereunder (or, with respect tocovenants or obligations separately qualified by materiality standards, failureto perform in any respect) or if any of the representations and warranties madeherein by Seller (after giving effect to such changes and updates as are hereinexpressly permitted) are untrue in any material respect (or, with respect torepresentations and warranties separately qualified by materiality standards,untrue in any respect) (each event referred to in the foregoing provisions ofthis sentence is herein sometimes called a “Seller Default”), Buyer mayeither (i) seek specific performance of this Agreement or (ii) terminate thisAgreement by written notice of termination to Seller and Title InsuranceCompany, whereupon the Deposit shall be returned by Title Insurance Company toBuyer promptly and Seller shall, on Buyer’s demand, tendered in reasonabledetail to Seller within thirty (30) days after written notice of termination,reimburse Buyer for Buyer’s actual and reasonable out of pocket documentedexpenses incurred exclusively with respect to this transaction, and not anyindirect, 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 thisAgreement, enters into an agreement with a third party to sell the Property orthe Membership Interests and fails to close the purchase contemplated underthis Agreement without the occurrence of any default by Buyer, Buyer shallthereafter be entitled to pursue all rights and remedies available under law orin equity, including all actual damages Buyer has suffered as a result of suchSeller’s Default, exclusive of indirect, consequential or punitivedamages.  The provisions of this Section 12.1shall survive the Closing.  Buyer herebywaives its right to collect damages and all other remedies, except as providedin this Section, and agrees that the foregoing shall be Buyer’s sole andexclusive remedies in the event Buyer terminates this Agreement as a result ofSeller’s Default, provided that the foregoing is not intended to limit Seller’sagreements or obligations under Section 15.5 (Attorneys’ Fees) or Article 11(Prorations; Expenses) or Article 13 (Brokers), or any right or remedy ofBuyer 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 Propertywill be removed by Seller from the market during the existence of thisAgreement and that, if Closing is not consummated because of a default by Buyerunder this Agreement, Seller’s sole remedy shall be to terminate this Agreementand retain the Deposit (including all accrued interest) as liquidateddamages.  The Parties have agreed thatSeller’s actual damages, in the event of a failure to consummate this sale dueto Buyer’s default, would be extremely difficult or impracticable todetermine.  After negotiation, theparties have agreed that, considering all the circumstances existing on thedate of this Agreement, the amount of the Deposit is a reasonable estimate ofthe damages that Seller would incur in such event. Upon Seller’s receipt of theDeposit, this Agreement shall be terminated and thereupon the parties shall haveno further obligations one to the other under this Agreement.  The Parties agree that the sum stated aboveas liquidated damages shall be the sole and exclusive relief to which Sellermight otherwise be entitled as a result of the Closing not being consummatedbecause of Buyer’s default under this Agreement, Seller hereby specificallywaiving any and all rights which it may have to damages or specific performanceas a result of Buyer’s default under this Agreement.  The foregoing is not intended to limit Buyer’sagreements or obligations under Sections 4.8, 15.5 or 15.15 or Articles 11 or13, 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 orArticles.

 

# **BROKERS**

# ** **

Seller and Buyerrepresent and warrant to each other that no broker or finder was instrumentalin arranging or bringing about this transaction and that there are no Claims orrights for brokerage commissions or finders’ fees in connection with thetransaction contemplated hereby by any Person or entity other than TrammellCrow Services, Inc. (“Seller’s Broker”), which has been engaged by theSeller in this transaction and whose fees shall be the responsibility ofSeller.  If any other Person brings aClaim for a commission or finder’s fee based upon any contact, dealings orcommunication with Buyer or Seller, then the party through whom such Personmakes its Claim shall defend the other party from such Claim, and shallindemnify such other party and hold such other party harmless from any and allcosts, damages, 

 

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

 

# **INDEMNIFICATION**

# ** **

The Seller and Buyeragree as follows:

 

General Indemnificationby Seller.  Sellercovenants and agrees that it will indemnify, defend, protect and hold harmlessBuyer at all times, from and after the Effective Date, from and against allclaims, damages, actions, suits, proceedings, demands, assessments,adjustments, costs and expenses (including specifically, but withoutlimitation, reasonable attorneys’ fees and reasonable expenses ofinvestigation), in excess of $10,000 on an aggregate basis, incurred by Buyeras a result of or arising from:

 

(A)                              Withrespect solely to such representations and warranties that shall surviveClosing as set forth in this Agreement, any breach of the representations andwarranties of the Seller, set forth herein or on the schedules or certificatesdelivered in connection herewith;

 

(B)                                Withrespect solely to such covenants and agreements that shall survive Closing asset forth in this Agreement, any breach of any covenants or agreement on thepart of the Seller under this Agreement; and

 

(C)                                Anyliabilities (i) arising from or associated with the ownership, operation, ormanagement of the Other Properties or (ii) arising out of the business oroperations of MBCR at any time prior to the Closing Date (including, withoutlimitation, any litigation disclosed on Exhibit F attached hereto).

 

Indemnification by Buyer.  Buyer covenants and agrees that it willindemnify, defend, protect and hold harmless Seller at all times from and afterthe Effective Date, from and against all claims, damages, actions, suits,proceedings, demands, assessments, adjustments, costs and expenses (includingspecifically, but without limitation, reasonable attorneys’ fees and expensesof investigation) incurred by the Seller as a result of or arising from(a) any breach by Buyer of its representations and warranties set forthherein 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 theProperty and MBCR after the Closing Date.

 

## Third Person Claims.

 

(A)                              Promptlyafter any party hereto (hereinafter the “Indemnified Party”) has receivednotice of or has knowledge of any claim, or of the commencement of any actionor 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 forindemnification hereunder, the Indemnified Party shall, as a conditionprecedent to a claim with respect thereto being made against any party 

 

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obligated to provide indemnification pursuant to Section 14.1 or14.2 hereof (hereinafter the “Indemnifying Party”), give the Indemnifying Partywritten notice of such claim or the commencement of such action orproceeding.  Such notice shall state thenature and the basis of such claim and a reasonable estimate of the amountthereof.

 

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

 

(C)                                Afterthe Indemnifying Party has notified the Indemnified Party of its intention toundertake to defend or settle any such asserted liability, and for so long asthe Indemnifying Party diligently pursues such defense, the Indemnifying Partyshall not be liable for any additional legal expenses incurred by theIndemnified Party in connection with any defense or settlement of such assertedliability, 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 IndemnifyingParty for reasonable additional legal expenses and out-of-pocket expenses.

 

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

 

(E)                                 Allsettlements hereunder shall effect a complete release of the Indemnified Party,unless the Indemnified Party, at its sole discretion, otherwise agrees inwriting. The parties hereto will make appropriate adjustments for any insuranceproceeds in determining the amount of any indemnification obligation under thisArticle, provided that no 

 

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

 

# **MISCELLANEOUS**

# ** **

Notices.  Except as otherwise provided in thisAgreement, any notices required or permitted to be given hereunder shall begiven in writing signed by the party giving the same and shall be deemed tohave been properly given and shall be deemed effective (a) upon delivery, ifdelivered in person, (b) three days after deposit, if deposited in the UnitedStates mail, certified mail, postage prepaid, return receipt requested, (c) oneBusiness Day after delivery to a commercial overnight courier that guaranteesnext day delivery and provides a receipt, or (d) on the date of transmission,if transmitted by electronic mail or by facsimile with machine generatedconfirmation of transmission (followed by hard copy delivered in accordancewith preceding subsections (a)-(c)), and such notices shall be addressed asfollows:

 

Seller:                                                                MercantileBankshares 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:                                                             HarborGroup International, L.L.C.

555 East Main Street,Suite 1700

Norfolk, Virginia 23510

Attention:  T. Richard Litton, Jr., Executive VicePresident 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 TitleInsurance 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 aseither 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 receiptthereof.  Personal delivery to a party orto any officer, partner, member, agent or employee of such party at saidaddress shall constitute receipt. Rejection or other refusal to accept or inability to deliver because ofchanged address of which no notice has been received shall also constitutereceipt.  Notices may be given orreceived by attorneys for the parties hereunder.

 

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

 

Joint Undertaking.  In addition to the obligations expresslyrequired to be performed hereunder by Seller and Buyer, each party agrees tocooperate 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 benecessary in order to effect the consummation of the transaction contemplatedhereby; provided that no such other instrument, document or material shalleither extend or enlarge the obligations of the non-requesting party beyond theexpress undertakings of this Agreement or shall require or could require thenon-requesting party to make any payment or expend any funds which are notexpressly provided for herein or which the requesting party shall notreimburse.  This Section shallsurvive Closing.

 

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

 

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

 

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

 

Assignment.  Buyer’s and Seller’s rights and obligationshereunder shall not be assignable, directly or indirectly or by operation oflaw, 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 ofBuyer and, in the event of an assignment by Buyer to an Affiliate, Buyer shallbe released from its obligations hereunder, effective upon completion ofClosing.  Subject to the limitationsdescribed herein, this Agreement shall inure to the benefit of and be bindingupon the parties hereto and their permitted successors and assigns (each a “PermittedAssignee”). The provisions of this Section shall survive the Closing.

 

Counterparts. This Agreement may be executed by the partieshereto 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 notoccur, and if such date, day or last day of such period of time falls on a daywhich is not a Business Day, then same shall be deemed to fall on theimmediately following Business Day.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Confidential Information.  Buyer acknowledges that the transactioncontemplated herein is of a confidential nature and shall not be disclosedexcept to Buyer’s consultants, investors, lenders, appraisers, attorneys,accountants, advisors, and affiliates, or as required by law or courtorder.  Except for information lawfullypossessed by Buyer from other sources and information which is publiclyavailable, Buyer agrees to treat any information provided by Seller, or itsagents, or relating to Seller or the Property as confidential, preserve theconfidentiality 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 transactioncontemplated hereby, or as required by law or court order.  In the event of the termination of thisAgreement for any reason whatsoever, Buyer will return to Seller (or, at Buyer’soption, destroy) all documents, work papers, and other material (including allcopies thereof) obtained from Seller, or its agents, in connection with thetransaction contemplated hereby, and Buyer shall instruct its employees andothers who have had access to such information, to keep such informationconfidential.  The provisions of this Section shallsurvive any termination of this Agreement but not the Closing.  No party will make any public disclosure ofthe specific terms of this Agreement, except as required by law or the order ofa court or an order to complete the Closing Documents.  Without limiting the generality of theforegoing, any press release or other public disclosure regarding thisAgreement or the transaction contemplated herein, and the wording of same, mustbe approved in advance by both parties in writing.

 

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

 

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counterparts of thisAgreement to an overnight delivery service for delivery to Buyer or Buyer’sattorneys.

 

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

 

Transaction asSale and Purchase of Assets.  Seller and Buyer agree that they shall treatthe transaction contemplated under this Agreement as a sale and purchase ofassets for federal income tax purposes (and, to the extent available, for state,local, and other income tax purposes), as contemplated by Internal RevenueService 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 purchaseof the Membership Interests as Buyer’s purchase of MBCR’s assets from Seller inaccordance with Internal Revenue Code Section 1001, and Seller shall treatBuyer’s purchase of the Membership Interests from Seller as Seller’s sale toBuyer of MBCR’s assets in accordance with Internal Revenue Code Section 1001.

 

Venable Lease; ReznickLease.  

 

(A)                              VenableLLP (“Venable”), pursuant to that certain Lease, dated as of May       ,2001, by and between Venable, as Tenant, and MBCR, as landlord (the “VenableLease”), has an option to terminate the Venable Lease upon the satisfaction ofcertain conditions.  The current term ofthe Venable Lease runs through April 30, 2011.  The Mercantile Lease shall provide that, ifVenable 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 pursuantto Section 15.19(B) below) and shall be liable for all of Venable’sobligations thereunder and entitled to all of Venable’s rights, except for thetermination option.  At Buyer’s option,Seller shall cause Mercantile-Safe Deposit and Trust Company to execute a newlease or other instrument evidencing such assumption which shall set forth theterms of the lease through the balance of the Venable Lease term on the sameterms as that of the Venable Lease. Seller shall have the right, subject to Buyer’s approval, which approvalshall not be unreasonably withheld, to cause Mercantile-Safe Deposit and TrustCompany to sublet any or all of the space subject to the Venable Lease to suchPerson or Persons as it shall choose in its sole discretion (provided that nosuch sublease shall relieve Seller of its obligations under this Section 15.19),and Seller shall have the exclusive right to receive and retain the proceedsfrom any termination payment paid by Venable in connection with the exercise ofthe option described herein.

 

(B)                                Buyeracknowledges that, prior to the Due Diligence Period Expiration Date, Sellershall have the right, at its sole discretion, to cause MBCR to enter into anagreement with Reznick whereby MBCR will agree to modify the Reznick Lease soas to allow Reznick to vacate a portion (consisting of a total of approximately38,914 square feet) of the premises currently leased under the Reznick Lease nolater than January 15, 2005; provided, however, and as to be set forth inthe Mercantile Lease, that Mercantile-Safe Deposit and Trust Company and/or Venableshall modify their respective written agreements with MBCR regarding theirassumption of the premises currently leased under the Reznick Lease (exceptingthe approximately 10,763 square feet sublet by Reznick.to Adelberg, Rudow, Dorf& Hendler, LLC) so as to assume such premises (in whole either individuallyor collectively) upon Reznick’s

 

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vacating such premises onor before January 15, 2005.  Selleracknowledges that Venable and Mercantile-Safe Deposit and Trust Company shallassume rights and obligations under the Reznick Lease on the same terms astheir respective Leases and any assumption of the Reznick Lease by Venableand/or Mercantile-Safe Deposit and Trust Company shall be coterminous with theirrespective Leases.

 

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INWITNESS WHEREOF, the parties have executed this Agreement the date and yearfirst 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 OFLAND**

 

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

 

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**EXHIBIT B**

 

**FORM OF ASSIGNMENT**

**AGREEMENT OF ASSIGNMENT AND ASSUMPTION**

**(Membership Interests in MBC Realty, LLC)**

 

ThisAgreement 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 Marylandlimited 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 theagreements herein and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged by the parties hereto, the partieshereto agree as follows:

 

1.                                       Assignordoes hereby assign, transfer and set over to Assignee all of Assignor’s right,title and interest in and to the Membership Interests, including, withoutlimitation, (i) all right, title and interest of Assignor from time to time inand to the Company, (ii) all right, title and interest of Assignor pursuant tothe Operating Agreement from time to time in and to all real and personalproperty and every other right, however characterized, now or hereafter held bythe Company, and (iii) all of Assignor’s respective claims, rights, powers,privileges, security interests, liens and remedies under the OperatingAgreement.  A true and complete copy ofthe Operating Agreement and all amendments thereto are attached as Exhibit A.

 

2.                                       Assigneehereby accepts the assignment and transfer from Assignor of the MembershipInterests in the Company and assumes all liability of Assignor with respectthereto which pertains to the Membership Interests accruing on or after thedate hereof.

 

3.                                       Assignorrepresents that (i) this Assignment has been duly authorized by all necessarycorporate action and that this Assignment constitutes the legal, valid andbinding obligation of Assignor, enforceable in accordance with its terms; (ii)Assignor is the sole member of the Company; (iii) no other person or party hasany membership interest in the Company; (iv) the Membership Interests are notevidenced 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 respectto their transferability (other than restrictions on transfer under applicablefederal 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 inthe Company; (vii) no person or entity is entitled to any preemptive rightswith respect to the purchase or sale of any membership or ownership interest inthe Company and there are no outstanding options, warrants or other rights,commitments or arrangements, written or oral, to purchase or otherwise toacquire any membership or ownership interest in the Company or any securitydirectly or indirectly convertible into or exchangeable or exercisable for anymembership or ownership interest in the Company; (viii) the Company does notpresently own or control, directly or indirectly, any interest in any othercorporation, association or other business entity; (ix) the Company is not aparticipant in any joint venture, partnership or other similar arrangement; (x)by virtue of this Assignment, Assignee will be admitted as the sole member of theCompany in accordance with the terms and provisions of the Operating Agreement;(xi) Assignor owns of record and beneficially and hereby transfers theMembership Interests free and clear of all liens, claims and encumbrances;(xii) the Assignor has been given no notice of any default by any party inperforming its obligations under the provisions of the Operating Agreement and,to the best of the Assignor’s knowledge, information, and belief, the Assignoris not in default in performing those obligations.

 

4.                                       Assigneehereby represents that this Assignment has been duly authorized by allnecessary                               actionand that this Assignment constitutes the legal, valid and binding obligation ofAssignee, enforceable in accordance with its terms.

 

5.                                       ThisAssignment expressly incorporates the terms and conditions of Section 4.5and 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 whichAssignee is a permitted assignee pursuant to Section 15.6 of theAgreement) 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 toAssignor’s entry into the Agreement and this Assignment.  Assignor acknowledges that Article 7 isa material inducement to Assignee’s entry into the Agreement and thisAssignment.

 

6.                                       TheAssignor shall defend, protect, indemnify, and hold harmless the Assignee, fromand after the Closing Date (as such term is defined in the Agreement), as setforth specifically in Section 14.1 of the Agreement.

 

7.*                                      *TheAssignee shall defend, protect, indemnify, and hold harmless the Assignoragainst and from any and all liability, claim of liability, or expense arisingout of: (a) any default by the Assignee in performing its obligations under theprovisions 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, alsohereby releases any and all claims the Company has or may have against theAssignor, except to the extent inconsistent with Paragraph 6 hereof.

 

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

 

9.                                       ThisAssignment 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.                                 Assignorhereby agrees to use commercially reasonable efforts to forward to Assignee anymail or notices it may receive on behalf of the Company.

 

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

 

12.                                 ThisAssignment may be executed in counterparts, each of which shall be deemed to bean original and each of which taken together shall constitute one and the sameinstrument.

 

 

[Remainder of Page Left Blank Intentionally]

[Signature Pages Follow]

 

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INWITNESS WHEREOF, Assignor and Assignee have executed this instrument as of theday and year first above written.

 

 
| **ASSIGNOR:** |   | **MERCANTILE  BANKSHARES** |
|---------------|--------|----------------------------|
| ** **    |   | **CORPORATION**,           |
| ** **    |   | a Delaware  corporation    |
| ** **    |   |                       |
|          |   |                       |
|          |   | By:                        |   |   |
|          |   |                       | Name: |   |   |
|          |   |                       | Title: |   |   |
|               |        |                            |  |  |  |  |

 

 

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

 

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| **ASSIGNEE:** |   |   |   |
|---------------|--------|--------|--------|
|          |   | a      |   |   |
|          |   |   |
|          |   |   |
|          |   | By:    |   |   |
|          |   |   | Name:  |   |   |
|          |   |   | Title: |   |   |
|               |        |        |        |  |  |  |  |  |  |

 

 

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

 

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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 theInternal Revenue Code, as amended, with respect to **MERCANTILEBANKSHARES 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 HopkinsPlaza, 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, foreignpartnership, foreign trust, or foreign estate (as those terms are defined inthe Internal Revenue Code and Income Tax Regulations). Transferor understandsthat this Affidavit may be disclosed to the Internal Revenue Service by thetransferee, and that any false statement made herein could be punished by fine,imprisonment or both.

 

Under penalties of perjury I declare that I haveexamined this certification and to the best of my knowledge and belief it istrue, correct and complete, and I further declare that I have authority to signthis 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:                                                                                                                                           |   |   |
|                                                                                                                                                                   |        |        |        |  |  |

 

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**EXHIBIT D**

 

**INTENTIONALLY OMITTED**

 

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**EXHIBIT E**

 

**RENT ROLL AND LIST OF SECURITY DEPOSITS**

 

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

 

E-1

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**EXHIBIT F**

 

**SCHEDULE OF LITIGATION**

 

MBC Realty, LLC Schedule ofPending Workers Compensation Claims (Insured under coverage provided by Sellerto its subsidiaries and affiliates)

 

1.               Murry, Charles – Shouldersprain.  Occurred while loading datacenter 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 2Business Days after the Effective Date]

 

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**EXHIBIT J**

 

**MERCANTILE LEASE TERM SHEET**

 

1.               All terms notdefined herein shall have the meanings set forth in the Membership InterestsPurchase Agreement between Mercantile Bankshares Corporation (“MercantileBankshares”) and Harbor Group International, L.L.C. (“Harbor Group”).

 

2.               A lease will beentered into by Mercantile-Safe Deposit and Trust Company (“Mercantile”) andMBCR prior to the Due Diligence Period Expiration Date, and shall be effectiveas of the date of Closing (the “Mercantile Lease”).  The terms and conditions of the MercantileLease, including rent for the entire Leased Premises (as defined in Section 3below), shall be substantially the same as the terms and conditions in thatcertain lease between MBCR and Mercantile dated August 23, 2004, whichlease was subsequently terminated on October 8, 2004; subject, however, toany 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 termof the Mercantile Lease shall commence on the date of Closing and shall run fora 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 “LeasedPremises” under the lease shall include:

 

a.               All leased spacecurrently occupied by Mercantile, specifically encompassing 150,651 SF ofoffice space in the office tower on full or partial floors 1 through 12; 23,746SF of back office space in the office tower and pavilion; and 3,270 SF ofstorage space.  Notwithstanding anycurrent arrangements between Mercantile and Mercantile Bankshares or MBCR,Mercantile shall be responsible for expense reimbursements, including parkingexpenses, on the 23,746 SF of back office space in the office tower andpavilion and the 150,651 SF of office space in the office tower.

 

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

 

c.               All space underthat 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 13through 19; 7,161 SF of lower level space; 6,572 SF of storage space; and allspace 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 suchspace collectively the “Venable Space”);

 

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provided, however, that Mercantile’s obligations withrespect to leasing the Venable Space shall arise only in the event Venable LLPexercises its early termination option in the Venable Lease such that the termexpires prior to its April 30, 2011 expiration date.  Mercantile shall have the right, subject toHarbor Group’s approval, which approval shall not be unreasonably withheld, tosublet any or all of the Venable Space to such Person or Persons as it shallchoose in its sole discretion, and Mercantile Bankshares shall have theexclusive right to receive and retain the proceeds from any termination paymentpaid by Venable in connection with the exercise of the termination optiondescribed in the preceding sentence.  Anyrent paid by Mercantile for Venable Space shall be paid at the rental rates setforth in the Venable Lease.

 

4.               All other leaseterms and conditions shall be mutually agreeable to Mercantile Bankshares andHarbor Group.

 

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**RIDER**

 

**DEPOSIT ESCROW AGREEMENT**

 

**LANDAMERICATITLE INSURANCE COMPANY** (“Escrowee”) agrees to hold inescrow pursuant to this Agreement, the sum of Five Hundred Thousand Dollars($500,000) (which sum, together with the interest earned hereon, is hereinreferred to as the “Deposit”) to be deposited by **HARBOR GROUPINTERNATIONAL, L.L.C.**, a Virginia limited liability company (“Buyer”)pursuant to a certain Membership Interests Purchase Agreement dated October        ,2004 (“Contract”), between Buyer and **MERCANTILEBANKSHARES CORPORATION**, a Delaware corporation (“Seller”),the provisions of which (including, without limitation, the defined terms) arehereby incorporated herein by reference.

 

The parties heretoagree as follows:

 

1.                                       Escroweeshall, immediately upon receipt of the Deposit, deposit same in an interestbearing, money market type escrow account with                                        .

 

2.                                       TheDeposit 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 withthe Contract and this Agreement, at which time Escrowee shall remit the Depositto the party entitled thereto in accordance with the Contract and thisAgreement.  The Deposit shall be releasedor delivered to the party entitled thereto pursuant to the Contract withreasonable promptness after Escrowee shall have received notice:

 

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

 

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

 

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

 

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

 

(i)                                     theClosing, at which time the Deposit, subject to any prorations or adjustmentsmade pursuant to Section 11 of the Contract, shall be paid to Seller andapplied to the Purchase Price; or

 

(ii)                                  thereceipt by Escrowee of a written notice from either Seller or Buyer statingthat an event has

 

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occurred under the Contract entitling the partydelivering such notice to the Deposit, whereupon Escrowee shall deliver writtennotice (the “Default Notice”) thereof to the other party and, unlesssuch other party shall have delivered a written notice of objection to Escroweewithin ten (10) days following receipt by such other party of the DefaultNotice, Escrowee shall deliver the Deposit to the party initially requestingthe Deposit.

 

3.        (a)                         Escrowee is to be consideredas a depository only, shall not be deemed to be a party to any document otherthan this Agreement, and shall not be responsible or liable in any mannerwhatsoever for the sufficiency, manner of execution, or validity of any writteninstructions, certificates or any other documents received by it, nor as to theidentity, authority or rights of any persons executing the same.  Escrowee shall be entitled to rely at alltimes on instructions given by Seller and/or Buyer, as the case may be and asrequired hereunder, without any necessity of verifying the authoritytherefor.  Notices given by Joseph N.Schaller, Esq. or Priscilla K. Carroll, Esq. of Whiteford, Taylor & PrestonL.L.P., as counsel to and on behalf of Buyer, shall be deemed given by Buyer.  Notices given by Stephen A. Goldberg, Esq. orPhilip F. Diamond, Esq. of Gallagher Evelius & Jones LLP, as counsel to andon behalf of Seller, shall be deemed given by Seller.

 

(b)                                 Escroweeshall not at any time be held liable for actions taken or omitted to be takenin good faith and without negligence.  Sellerand Buyer agree to save and hold Escrowee harmless and indemnify Escrowee fromany loss and from any claims or demands arising out of its actions hereunderother than any claims or demands arising (i) from Escrowee’s negligence orwillful misconduct or (ii) under the Title Policy.

 

(c)                                  Itis further understood by Seller and Buyer that if, as a result of anydisagreement between them or adverse demands and claims being made by any ofthem upon Escrowee, or if Escrowee otherwise shall become involved in litigationwith respect to the Contract or this Agreement, or if Escrowee shall determinein good faith that there may be an issue of fact or law as to the delivery ofthe Deposit, Escrowee may deposit the Deposit with a court of competentjurisdiction and/or in accordance with the order of a court of competentjurisdiction and in any such event, Seller and Buyer agree that they, jointlyand severally, are and shall be liable to Escrowee and shall reimburse Escroweeon demand for all costs, expenses and reasonable counsel fees it shall incur orbe compelled to pay by reason of any such litigation.  Seller and Buyeragree between themselves that each shall be responsible to advance one-half ofall amounts due Escrowee pursuant to this Agreement, provided that any suchadvance by Seller or Buyer as a result of any dispute or litigation betweenthem shall be without prejudice to its right to recover such amount as damagesfrom the breaching party.

 

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

 

4.                                       Uponthe satisfaction of the mutual obligations of the parties hereunder, Escroweeshall promptly submit for recording or filing, as applicable, all appropriateinstruments delivered to it at the Closing.

 

5.                                       Escroweeshall have no right or obligation to approve any amendment to the Contractunless such amendment purports to affect the Escrowee’s rights or obligationshereunder.

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

7.                                       ThisAgreement shall be governed by the laws of the State of Maryland.

 

Seller representsthat its Federal Tax ID Number is 52-0898572.

 

Buyer representsthat its Federal Tax ID Number is 54-1934716.

 

Escroweerepresents that its wire transfer instructions are as follows:

 

 

 

 

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INWITNESS WHEREOF, Buyer, Seller and Escrowee, for valuable consideration, eachintending to be legally bound and to bind their respective successors andassigns, 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: |   |   |   |
|        |        |                                       |  |  |  |  |  |

 

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