Document:

Exhibit
10.PP

 

MERCANTILE
BANK AND TRUST BUILDING

 

 

LEASE
AGREEMENT

 

 

by and between

 

 

MBC REALTY,
LLC

(Landlord)

 

 

and

 

MERCANTILE-SAFE
DEPOSIT AND TRUST COMPANY

(Tenant)

 

 

TABLE OF
CONTENTS

 

	
  1.

  	
  PRINCIPAL LEASE PROVISIONS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Landlord’s
  Address:

  	
   

  
	
   

  	
  1.2

  	
  Tenant’s
  Address:

  	
   

  
	
   

  	
  1.3

  	
  Agreed
  Rentable Square Footage of Building for Taxes

  	
   

  
	
   

  	
  1.4

  	
  Agreed
  Rentable Square Footage of Building for Expenses

  	
   

  
	
   

  	
  1.5

  	
  Agreed Area of the Premises

  	
   

  
	
   

  	
  1.6

  	
  Initial Term

  	
   

  
	
   

  	
  1.7

  	
  Commencement
  Date

  	
   

  
	
   

  	
  1.8

  	
  Expiration
  Date

  	
   

  
	
   

  	
  1.9

  	
  Basic Annual Rental

  	
   

  
	
   

  	
  1.10

  	
  Security
  Deposit

  	
   

  
	
   

  	
  1.11

  	
  Use of
  Premises

  	
   

  
	
   

  	
  1.12

  	
  Base
  Year for Taxes

  	
   

  
	
   

  	
  1.13

  	
  Base Year for Building
  Expenses

  	
   

  
	
   

  	
  1.14

  	
  Cost of Additional Services

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Agents

  	
   

  
	
   

  	
  2.2

  	
  Building Expenses

  	
   

  
	
   

  	
  2.3

  	
  Landlord

  	
   

  
	
   

  	
  2.4

  	
  Lease Year

  	
   

  
	
   

  	
  2.5

  	
  Mortgage

  	
   

  
	
   

  	
  2.6

  	
  Real Property

  	
   

  
	
   

  	
  2.7

  	
  Taxes

  	
   

  
	
   

  	
  2.8

  	
  Tax Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  PREMISES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Premises

  	
   

  
	
   

  	
  3.2

  	
  Common Area

  	
   

  
	
   

  	
  3.3

  	
  Back Office and Storage
  Space

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  TERM

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Initial Term

  	
   

  
	
   

  	
  4.2

  	
  Renewal
  Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  RENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Basic
  Annual Rental

  	
   

  
	
   

  	
  5.2

  	
  Basic
  Annual Back Office and Storage Rental

  	
   

  
	
   

  	
  5.3

  	
  Past
  Due Obligations

  	
   

  
	
   

  	
  5.4

  	
  Adjustment
  for Taxes

  	
   

  
	
   

  	
  5.5

  	
  Adjustments for
  Building Expenses

  	
   

  
	
   

  	
  5.6

  	
  Payments

  	
   

  
	
   

  	
  5.7

  	
  Personal Property Taxes

  	
   

  

 

i

 

	
   

  	
  5.8

  	
  Excise
  Tax on Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  USE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Use

  	
   

  
	
   

  	
  6.2

  	
  Rules and Regulations

  	
   

  
	
   

  	
  6.3

  	
  Conduct
  on Premises

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  POSSESSION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Acceptance of Possession

  	
   

  
	
   

  	
  7.2

  	
  Quiet
  Enjoyment

  	
   

  
	
   

  	
  7.3

  	
  Surrender

  	
   

  
	
   

  	
  7.4

  	
  Condition of Premises

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  SERVICES AND UTILITIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Services by Landlord

  	
   

  
	
   

  	
  8.2

  	
  Additional
  Services

  	
   

  
	
   

  	
  8.3

  	
  Extraordinary Services

  	
   

  
	
   

  	
  8.4

  	
  Additional
  Equipment

  	
   

  
	
   

  	
  8.5

  	
  Light and Air

  	
   

  
	
   

  	
  8.6

  	
  Interruption of Service

  	
   

  
	
   

  	
  8.7

  	
  Janitorial
  Services

  	
   

  
	
   

  	
  8.8

  	
  Access
  and Security

  	
   

  
	
   

  	
  8.9

  	
  Parking

  	
   

  
	
   

  	
  8.10

  	
  Elevator
  Service

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  MAINTENANCE,
  REPAIRS, AND ALTERATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Maintenance by Landlord

  	
   

  
	
   

  	
  9.2

  	
  Maintenance by Tenant

  	
   

  
	
   

  	
  9.3

  	
  Alterations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  DAMAGE
  OR DESTRUCTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Repair
  of Damage

  	
   

  
	
   

  	
  10.2

  	
  Abatement

  	
   

  
	
   

  	
  10.3

  	
  Termination

  	
   

  
	
   

  	
  10.4

  	
  End of Term

  	
   

  
	
   

  	
  10.5

  	
  Continuing
  Access

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  INSURANCE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Requirements,
  Prohibitions and Indemnifications

  	
   

  
	
   

  	
  11.2

  	
  Insurance by Landlord

  	
   

  
	
   

  	
  11.3

  	
  Insurance
  by Tenant

  	
   

  
	
   

  	
  11.4

  	
  Indemnification
  -

  	
   

  
	
   

  	
  11.5

  	
  Mutual Waiver of
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  CONDEMNATION:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Right to Award

  	
   

  
	
   

  	
  12.2

  	
  Separate Proceeding by
  Tenant

  	
   

  

 

ii

 

	
   

  	
  12.3

  	
  Termination

  	
   

  
	
   

  	
  12.4

  	
  Proration

  	
   

  
	
   

  	
  12.5

  	
  Non-liability of Landlord

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  DEFAULT AND REMEDIES:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Default of Tenant

  	
   

  
	
   

  	
  14.2

  	
  Remedies of Landlord

  	
   

  
	
   

  	
  14.3

  	
  Landlord Default

  	
   

  
	
   

  	
  14.4

  	
  Tenant’s Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  LANDLORD’S RIGHT OF ENTRY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MECHANICS’ LIENS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  SUBORDINATION, ATTORNMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  17.1

  	
  Subordination

  	
   

  
	
   

  	
  17.2

  	
  Attornment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  ESTOPPEL CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  SIGNAGE, BUILDING
  NAME AND DIRECTORY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20.1

  	
  Building Name

  	
   

  
	
   

  	
  20.2

  	
  Exterior Signage

  	
   

  
	
   

  	
  20.3

  	
  Interior Signage

  	
   

  
	
   

  	
  20.4

  	
  Building Directory

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  TENANT’S EXPANSION RIGHTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  FIRST REFUSAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  23.1

  	
  Waivers

  	
   

  
	
   

  	
  23.2

  	
  Definition of Landlord

  	
   

  
	
   

  	
  23.3

  	
  Entire Agreement

  	
   

  
	
   

  	
  23.4

  	
  Covenant to Survive

  	
   

  
	
   

  	
  23.5

  	
  Applicable Law

  	
   

  
	
   

  	
  23.6

  	
  Time of Essence

  	
   

  
	
   

  	
  23.7

  	
  Brokers

  	
   

  
	
   

  	
  23.8

  	
  Captions

  	
   

  
	
   

  	
  23.9

  	
  Severability

  	
   

  
	
   

  	
  23.10

  	
  Recordation

  	
   

  
	
   

  	
  23.11

  	
  Construction

  	
   

  
	
   

  	
  23.12

  	
  Tenant as Corporation

  	
   

  
	
   

  	
  23.13

  	
  Indemnification

  	
   

  

 

iii

 

	
   

  	
  23.14

  	
  Merger

  	
   

  
	
   

  	
  23.15

  	
  Transfer by Landlord

  	
   

  
	
   

  	
  23.16

  	
  Inability to Perform

  	
   

  
	
   

  	
  23.17

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  ADDITIONAL RIGHTS OF
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  24.1

  	
  Building Cafeteria

  	
   

  
	
   

  	
  24.2

  	
  Lobby Shop

  	
   

  
	
   

  	
  24.3

  	
  Main Lobby

  	
   

  
	
   

  	
  24.4

  	
  Roof Antenna

  	
   

  
	
   

  	
  24.5

  	
  Chases, Ducts,
  Conduits and Wires

  	
   

  
	
   

  	
  24.6

  	
  Flagpole

  	
   

  
	
   

  	
  24.7

  	
  Preventive Maintenance
  Program

  	
   

  
	
   

  	
  24.8

  	
  Building Security

  	
   

  
	
   

  	
  24.9

  	
  ATM

  	
   

  
	
   

  	
  24.10

  	
  Tenant Exclusive

  	
   

  

 

	
  LIST OF EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  A –

  	
  Description of Premises

  	
   

  
	
  B -

  	
  Basic Annual Rental

  	
   

  
	
  C -

  	
  Rules and Regulations

  	
   

  
	
  D -

  	
  Janitorial Services

  	
   

  
	
  E -

  	
  Executive Level and Wall Space Parking Area

  	
   

  

 

iv

 

LEASE
AGREEMENT

 

THIS LEASE AGREEMENT (“this Lease”), made
this           day
of               ,
2004, but effective as
of               ,
2004, by and between MBC REALTY, LLC, a Maryland limited liability company
(“Landlord”), and MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, a Maryland banking
corporation (Tenant”).

 

WITNESSETH, that for and in consideration of the
respective representations and agreements, the payment of the rent and
performance of the provisions, obligations, agreements, covenants, terms, and
conditions (collectively, the “terms”) as hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each party hereto, Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for the Term (as defined below), unless
sooner terminated as herein provided, all of that area described on Exhibit A (the “Premises”) and located in
an office tower and adjoining pavilion; subject, however, to the lien,
operation, and effect of any instruments and matters of record or in fact.  Such office tower and adjoining pavilion
(collectively, the “Building”), are located at the southeast corner of the
intersection of Baltimore Street and Hopkins Place, Area 12, Charles
Center, with the address of Two Hopkins Plaza, Baltimore City, Maryland 21201.  The Premises are leased by Landlord to Tenant
and are accepted and are to be used and possessed by Tenant on and subject to
the following terms:

 

PRINCIPAL LEASE PROVISIONS:

 

Landlord’s Address:

 

MBC REALTY, LLC

Mercantile Bank and Trust Building

Two Hopkins Plaza

Baltimore, Maryland 
21201

 

Tenant’s Address:

 

Mercantile-Safe Deposit and Trust Company

Mercantile Bank and Trust Building

Two Hopkins Plaza

Baltimore, Maryland 
21201

 

Agreed Rentable Square Footage of Building for Taxes: 
385,000 leasable square feet.

 

Agreed Rentable Square Footage of Building for Expenses: 
365,000 leasable square feet.

 

Agreed Area of the Premises:  the leasable square feet of
space identified on Exhibit A, A-1 and
A-2 hereof, from time to time.

 

Initial
Term:  Ten
(10) years.

 

Commencement Date:                 ,
2004.

 

 

Expiration Date: 
               ,
2014.

 

Basic
Annual Rental:  As
set forth in Exhibit B, B-1 and B-2,
attached hereto as a part hereof.

 

Security Deposit:  NONE.

 

Use of Premises:  The Premises shall be occupied
subject to the terms hereof for any lawful purpose.

 

Base Year for Taxes:  The base year for Taxes shall
be July 1, 2005 through June 30, 2006.

 

Base
Year for Building Expenses:  The
base year for Building Expenses shall be calendar year 2005.

 

Cost of Additional Services:  To be charged at Landlord’s
reasonable rates for such service.

 

DEFINITIONS:  For purposes hereof, the following
definitions shall apply:

 

Agents -
“Agents” of Tenant means Tenant’s agents (including independent contractors),
employees, representatives, guests, visitors and invitees.

 

Building Expenses - “Building Expenses” means all those expenses (computed on a calendar
basis) paid or incurred by Landlord in connection with owning, maintaining,
operating, managing, replacing, and repairing the Real Property (as defined
below) or any part thereof, in a manner deemed reasonable and appropriate by
Landlord, including, but not limited to, the following:

 

Reasonable
administrative costs, including, but not limited to, legal accounting,
engineering, and other professional fees, and office and bookkeeping expenses.

 

All
insurance.

 

Cleaning
(including windows), janitorial service and trash removal.

 

Electricity,
water, sewer, and other fuel and utilities.

 

Maintenance,
repair, replacement, repainting, and redecorating all or any part of the Real
Property, whether structural or non-structural, including, but not limited to,
the removal of snow, ice, and debris therefrom and the policing and regulating
of traffic with respect thereto.

 

All
other expenses which would be considered an expense of owning, maintaining,
operating, managing or repairing the Real Property under generally accepted
accounting principles and which is normal, customary and

 

2

 

usual in
connection with other first-class professional office buildings in the downtown
Baltimore City area.

 

Reasonable
management or managing agents’ fees, wages, salaries, labor charges,
compensation and subcontract expenses of all persons, including, but not
limited to, contractors, engaged in the maintenance, operation, administration,
protection, replacement, or repair of the Real Property.

 

Personal
property taxes on all personal property used for the Real Property.

 

Reasonable
cost of repainting and redecorating the Common Area.

 

Supplies,
equipment, uniforms, equipment rental and sundries and sales and use taxes on
supplies and sundries, payroll taxes and other personnel costs.

 

The
annual amortization over its useful life with a reasonable salvage value on a
straight-line basis of the costs of any equipment or capital improvements made
by Landlord as a labor-saving measure or to accomplish other savings in
operating, repairing, managing, or maintaining of the Property, but only to the
extent of the savings.

 

Notwithstanding anything to the contrary in this
Lease, Building Expenses shall not include the following:

 

Any charges borne
directly by tenants, including, but not limited to, personal property taxes and
additional electrical services directly paid for by tenants;

 

Costs incurred by
Landlord for alterations that are considered capital improvements and
replacements under generally accepted accounting principles consistently
applied except that the annual amortization of these costs shall be included to
the extent permitted in Section 2.2.11;

 

Executive salaries
for services not benefiting the Real Property, the Building, or the Premises as
performed by personnel above the grade of General Manager; and

 

Payments of
mortgage principal and interest.

 

Repairs or other
work occasioned by fire, windstorm or other casualty of an insurable nature or
by the exercise of eminent domain;

 

Leasing
commissions, attorneys’ fees, costs and disbursements and other expenses
incurred in connection with negotiations or disputes with tenants, other
occupants, or prospective tenants or occupants;

 

Renovating or
otherwise improving or decorating, painting or redecorating space for tenants
or other occupants of the Building;

 

3

 

Depreciation and
amortization except as provided above;

 

Expenses incurred
in connection with services or other benefits of a type which are not provided
Tenant but which are provided to another tenant or occupant for which Landlord
receives reimbursement other than as a Building Expense;

 

Costs incurred due
to violation by Landlord or any tenant of the terms and conditions of any
Lease;

 

Overhead and
profit increment paid to subsidiaries or affiliates of Landlord for services on
or to the Real Property, to the extent only that the costs of such services
exceed comparable costs of such services in comparable first class office
buildings in the Baltimore downtown area were they not so rendered by a
subsidiary or affiliate;

 

Rental under any
ground or underlying lease or leases;

 

Landlord’s general
overhead except as it directly relates to the operation and management of the
Building;

 

Any compensation
paid to clerks, attendants or other persons in commercial concessions operated
by Landlord;

 

All items and
services for which Tenant reimburses Landlord (other than as a Building
Expense) or pays third persons;

 

Advertising and
promotional expenditures;

 

Any costs, fines
or penalties incurred due to violations by Landlord of any governmental rule or
authority, unless such violation is due to or arises out of acts or omissions
of Tenant;

 

Management fees to
the extent they exceed comparable costs incurred in comparable first-class
office buildings in the Baltimore downtown area;

 

Costs for
sculpture, paintings or other objects of art;

 

INTENTIONALLY
DELETED;

 

Wages, salaries,
or other compensation paid to any executive employees above the grade of
General Manager;

 

Rentals and other
related expenses incurred in leasing air-conditioning systems, elevators or
other equipment ordinarily considered to be of a capital nature, except
equipment which is used in providing janitorial services and which is not
affixed to the Building;

 

4

 

Costs incurred by
Landlord in the removal of any toxic or hazardous waste or asbestos, if any,
from the Building which is not the result of Tenant’s or its Agents’
activities.

 

Landlord - “Landlord” means the entity named as such
above, and its successors and assigns (each of whom shall have the same rights,
remedies, powers, authorities, and privileges as it would have had, had it
originally signed this Lease as Landlord).

 

Lease
Year - “Lease Year” means a period of twelve (12) consecutive calendar
months beginning on the Commencement Date with subsequent lease years beginning
on the anniversary date of the first lease year.

 

Mortgage. “Mortgage” means any mortgage, deed of trust, sale-leaseback, ground
lease, or other security interest made or granted by Landlord at any time in
regard to all or any part of the Real Property.

 

Real
Property: 
“Real Property” means the Building, the Common Area, and all fixtures,
equipment, and other improvements and personal property on, above, or under
such site, Building and/or Common Area, and adjacent sidewalks and other
improvements.

 

Taxes:  “Taxes” means all real estate taxes,
assessments (regular, special, or otherwise), metropolitan charges, sewer
rents, ad valorem charges, water rates, rents and charges, front foot benefit
charges, and all other government impositions in the nature of any of the
foregoing.  If at any time during the
Term the method of taxation prevailing at the Commencement Date shall be
altered so as to cause the whole or any part of the items listed in the first
sentence of this Section to be levied, assessed, or imposed, wholly or
partly as a capital levy, or otherwise, on the rents received from the
Building, wholly or partly in lieu of imposition of, or the increase of, taxes
in the nature of real estate taxes issued against the Real Property, then the
charge to Landlord resulting from such altered method of taxation shall be
deemed to be within the definition of “Taxes.”

 

Tax
Year:  “Tax
Year” means the period from July 1 of any year through June 30 of the
following year unless a different tax year is adopted by the taxing authority,
in which event it shall mean the tax year so adopted.

 

PREMISES:

 

Premises - Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the Premises. 
The Premises includes (a) the prime office space containing
approximately 179,073 square feet described on Exhibit A which reflects the inclusion of a ten percent (10%)
common area factor, and (b) the back office space and storage space described
on Exhibits A-1 and A-2 and in
Section 3.3 hereof.

 

Common
Area - Tenant shall have, as appurtenant to the Premises, the nonexclusive
right, in common with others, subject to reasonable rules of general
applicability to tenants of the Building from time to time made by Landlord and
of which Tenant is given notice, by posting in the Building, to the use of the
following common areas of the Building: 
(a) street level

 

5

 

entrances,
(b) lobbies, (c) corridors, (d) public elevators, (e) ramps, drives,
serviceways, (f) restrooms, (g) walkways necessary for access to the Building
and (h) equipment, machine and light rooms and other amenities not within the
exclusive control of Tenant (collectively, the “Common Area” or the “Common
Areas”).  Landlord shall have the right
to increase or decrease the configuration and dimensions or to otherwise alter
the Common Areas on any floor so long as Tenant’s use of and access to the
Premises, restrooms, stairwells, elevators, first floor lobby, parking areas
and other appurtenances is not adversely affected thereby.  Landlord reserves the right from time to
time, without affecting the obligations of Tenant hereunder: (i) to install,
use, maintain, repair, replace, and relocate for service to the Premises and/or
other parts of the Building pipes, ducts, conduits, wires, appurtenant
fixtures, and mechanical systems, wherever located in the Premises or the
Building, and (ii) to alter, close, or relocate any facility in the Common
Area.  Notwithstanding the above,
Landlord’s increase or decrease in the dimensions of the lobby on the first
floor or modification of the use thereof shall require prior written consent of
the Tenant, which consent shall not be unreasonably withheld or delayed.  In addition, any changes made by Landlord in
or to the Common Areas shall not alter the character and size of the Premises
or adversely affect Tenant’s use thereof, and provided further that Landlord at
all times shall operate and maintain the Building in a manner consistent with
the operation and maintenance of other first-class professional office
buildings in the downtown Baltimore City area and (ii) Landlord shall reimburse
Tenant for any damage for any improvement which was made by Tenant at its
expense, resulting from such Landlord activities, ordinary wear and tear
accepted.

 

Back Office and Storage Space.  As
part of the Premises, Landlord leases to Tenant (a) 23,746 square feet of back
office space and (b) 3270 square feet of storage space within the Building for
the Term of this Lease, as shown on Exhibit
A-1 and A-2 respectively, and Tenant shall pay unto Landlord the
Basic Annual Back Office Rental and Storage Rental set forth in Sections 5.2
and 5.3 hereof in equal monthly installments, payable in advance on the
Commencement Date and thereafter on the first day of each calendar month
throughout the Term of this Lease.  If
the Term of this Lease ends other than on the last day of a month, the Basic
Annual Back Office Rental and Storage Rental for a partial month shall be
prorated on a thirty (30) day month based on the number of days in such month
that this Lease is in effect.  All terms
of this Lease shall apply to the back office space.  All terms shall apply to the storage space
except as follows:  (i) subsections 5.4
and 5.5 shall be inapplicable and (ii) Landlord shall supply electric current
for the adequate illumination of such space.

 

TERM:

 

Initial
Term - The initial term of this Lease shall be for the term set forth in
Section 1.6 (Initial Term), commencing on the Commencement Date as set
forth in Section 1.7 (Commencement Date) and ending on the Expiration Date
as set forth in Section 1.8 (Expiration Date) above, unless sooner or
later commenced or terminated in accordance with the terms hereof.

 

Renewal
Option -  Provided (a) this Lease is
then in full force and effect, (b) Tenant is not in material default of any
provision or condition of this Lease 
beyond any period for the cure thereof either on the date Tenant elects
to renew or on the date the renewal term begins, (c)

 

6

 

Tenant
is then in possession of the Premises, and (d) Tenant shall have validly
exercised its option for all prior Renewal Terms, if applicable, then Tenant
shall have the right to renew this Lease, with respect to all, but not less
than all, of the area leased by Tenant on the last day of the Initial Term, for
two (2) renewal term(s) of five (5) year(s) each (the “First Renewal Term” and
the “Second Renewal Term,” respectively the First Renewal Term and the Second
Renewal Term are hereinafter collectively referred to the as “Renewal Term,”
and the Initial Term and the Renewal Term are hereinafter collectively referred
to as the “Term”), by giving not more than twelve (12) months and not less than
six (6) months prior written notice thereof to Landlord, in each instance prior
to the end of the then current term. 
Notwithstanding the foregoing, if Tenant does not exercise any renewal
option in the time period or in the manner provided in this Section, such
option of extension shall nonetheless continue in full force and effect, shall
not lapse and may be exercised by Tenant until the date that is fifteen (15)
days after the date upon which Tenant has received written notice from Landlord
that such deadline has passed and that Landlord has not received such renewal
notice.  Within ten days after Tenant
delivers a renewal notice, Landlord will notify Tenant in writing of the
prevailing market rental rate then charged by Landlords of buildings of
comparable quality and age as the Building in the Baltimore Central Business
district for tenants similar to Tenant in size, credit quality and stature,
with such prevailing market rental rate taking into account allowances,
inducements, commissions and the applicable base year then being offered
(“Market Rental Rate”), at which base rent shall be payable during the
applicable renewal term (“Rate Notice”). 
If Tenant agrees with the rental rate set forth in the Rate Notice, such
rental rate will be the market rental rate during the applicable Renewal Term
for the purposes of this Section 4.2. 
If Tenant disagrees with the market renewal rate set forth in the Rate
Notice, Landlord and Tenant will, for a period of thirty days from and after
the date Landlord gives the Rate Notice, negotiate the market rental rate
acceptable to both parties.  If the
parties are unable to agree upon the market rental rate during such thirty day
period, then, within ten days after the expiration of such thirty-day period,
Landlord and Tenant each shall appoint a licensed real estate broker who has
full-time experience in commercial office leasing in the Baltimore central
business district (the “Parties’ Brokers”). 
The Parties’ Brokers will negotiate in good faith for ten days after the
date that both Parties’ Brokers have been appointed to determine a market
rental rate acceptable to both Landlord and Tenant.  If the Parties’ Brokers cannot reach
agreement on the market rental rate within such ten day period, then within
five days after the expiration of such ten-day period, the Parties’ Brokers
shall mutually agree upon and engage a third-party real estate broker.  Each of the real estate brokers shall deliver
to Landlord and Tenant within thirty days a copy of its determination of the
fair market rent.  Landlord and Tenant
shall each bear the cost of its broker and share the cost of the third real
estate broker.  The basic annual rental
for the applicable Renewal Term shall be the average of the two closest
brokers’ determinations.  Notwithstanding
the above, Tenant shall have the right at any time prior to the appointment of
the third broker to rescind its renewal notice with respect to such Renewal
Term, in which event same shall be of no further force and effect and this
Lease shall terminate as of the termination date of the then current Term.

 

RENT:

 

Basic
Annual Rental - Tenant shall pay to Landlord the Basic Annual Rental set forth in
Section 1.9 (Basic Annual Rental), payable in advance on the Commencement
Date and thereafter on the first day of each calendar month throughout the Term
If the Term begins other

 

7

 

than
on the first day of a month or ends other than on the last day of the month,
the Basic Annual Rental for a partial month shall be prorated on a thirty (30)
day month, based on the number of days in such month as this Lease is in
effect.

 

Basic Annual Back Office and Storage Rental - As part of the consideration from Tenant unto the Landlord for the
demise as aforesaid, Tenant shall pay unto Landlord the Basic Annual Back
Office Rental and Storage Rental in the amounts set forth on Exhibits B-1 and B-2 hereto, payable in
advance on the Commencement Date and thereafter on the first day of each
calendar month throughout the Term of this Lease, prorated daily if the Term
commences other than on the first day of a month.

 

Past
Due Obligations - Unless otherwise expressly provided herein, any payment of rent,
taxes, expenses, or any other amounts due from Tenant hereunder that is not
received by Landlord within fifteen (15) days after written notice from
Landlord that such payment is past due shall bear interest (the “Interest
Rate”) from the due date until paid at an annual rate equal to the lesser of
(a) the maximum then allowed by applicable law, or (b) two percent (2%) above
the then current prime rate of interest (on a floating basis) announced by
Mercantile-Safe Deposit and Trust Company from time to time as its prime
rate.  Payment of any such interest shall
not excuse or cure any default by Tenant under this Lease and shall be in
addition to, and not in lieu of, the rights and remedies provided elsewhere in
this Lease.

 

Adjustment
for Taxes - If the Taxes levied or assessed against the Real Property for any tax
fiscal year that is wholly or partly within the Term are greater than the
applicable Base Year Taxes, Tenant shall pay to Landlord, as additional rent
during the calendar year in which such tax increase takes place, the amount or
amounts determined for each floor or part of a floor of the Premises as follows:

 

	
  The amount of the

  increase in Taxes above

  the applicable Base

  Year Taxes

  	
   

  	
  X

  	
   

  	
  Agreed Area of the

  Premises

  Agreed Rentable

  Square Footage of

  Building for Taxes

  (385,000 s.f.)

  	
   

  	
  X

  	
   

  	
  Number of months in

  the calendar year that

  the Premises are leased

   

  12

  

 

Any additional rent due to Landlord shall be due and
payable at the later of (a) the time the Taxes are due and payable or (b)
submission by Landlord to Tenant of a written statement showing the amount due
including documentation of such changes. 
All reasonable expenses incurred by Landlord (including attorneys’,
appraisers’, consultants’ fees and other costs) in contesting any increase in
Taxes, including, but not limited to, any increase in the rate or assessment of
the Taxes on the Real Property shall be included as an item of Taxes for the
purpose of computing additional rent due hereunder.

 

8

 

Adjustments for Building Expenses - If the Building Expenses for any calendar year that is wholly or
partly within the Term are greater than the applicable Base Year Building
Expense for that part of the Premises, Tenant shall pay to Landlord, as
additional rent, the amount or amounts determined as follows:

 

	
  The amount of the

  increase in Building

  Expenses above the

  Base Year Building

  Expenses

  	
   

  	
  X

  	
   

  	
  Agreed Area of the

  Premises

  Agreed Rentable

  Square Footage of

  Building for Expenses

  (365,000 s.f.)

  	
   

  	
  X

  	
   

  	
  Number of months in the

  calendar year that the

  Premises are leased

   

  12

  

 

Any additional rent due to Landlord under this
Section shall be due within thirty (30) days after the Landlord has
submitted a written statement to Tenant showing the amount due, together with a
statement showing in reasonable detail the breakdown of Building Expenses for
the calendar year on which the statement is based.  In the event that the Building is not at
least ninety-five percent (95%) leased and occupied pursuant to arms length
leases for an entire year, those Building Expenses which vary with the level of
occupancy shall be adjusted by Landlord to the amount that Landlord reasonably
believes they would have been if ninety-five percent (95%) of the rentable area
of the Building had been occupied for the entire year.  Landlord may make a reasonable estimate of
such additional rent for Tenants’ share of Building Expenses for the
forthcoming calendar year, and beginning with calendar year 2006, Tenant shall
pay upon the written request of Landlord in advance, each month during the
calendar year one-twelfth (1/12) of Tenant’s estimated share of such Building
Expenses, at the time of payment of equal monthly installments of Basic Annual
Rental against Landlord.  In such event,
Tenant shall pay any underpayment or Landlord shall refund any overpayment of
such additional rent within thirty (30) days after submission of the written
statement by Landlord of the Building Expenses due for the calendar year.  Although Tenant shall render payment in
accordance with Landlord’s determination of Building Expenses, such determination
shall not be final if, within one hundred eighty (180) days of receipt of
Landlord’s determination, Tenant notifies Landlord in writing that it desires
to inspect the books and records of Landlord as they relate to such
computations, in which event, Landlord shall allow Tenant to undertake such
inspection at such reasonable times and location as Landlord shall
specify.  In the event that, following
such inspection a dispute arises, the matter shall be submitted to an
independent firm of Certified Public Accountants, whose decision shall be
binding upon the parties.  The costs of
such review and the engagement of the independent firm of certified public
accountants shall be borne solely by the Tenant unless the dispute is settled
in favor of Tenant and decreases Tenant’s resulting liability for Taxes and/or
Building Expenses by more than five percent (5%), in which event, all costs
shall be borne by Landlord.

 

Payments - Tenant shall pay the Basic Annual Rental
and any Additional Rent and other charges, in lawful money of the United States
of America, due hereunder to Landlord, without any prior demand or notice
therefor and without any deduction, offset, counterclaim, or

 

9

 

defense
and, except as otherwise expressly provided herein, without abatement,
suspension, deferment, diminution, or reduction whatsoever.  Tenant shall make all payments of rent and
other charges to Landlord at Landlord’s Address set forth in Section 1.1
(Landlord’s Address) or at such other address as Landlord may from time to time
request in writing.

 

Personal
Property Taxes - Tenant shall be liable for and pay when due all taxes attributable to
Tenant’s personal property and all trade fixtures and improvements placed or
affixed by Tenant in, on, or about the Premises.  If any such taxes are levied against Landlord
or Landlord’s property and if Landlord pays the same (Landlord hereby being
granted the right, but not undertaking the obligation, to do so regardless of
the validity or correctness of such levy), or if the assessed value of the
Building is increased by the inclusion therein of a value placed on such
property of Tenant and if Landlord pays the taxes based on such increased
assessment (Landlord hereby being granted the right, but not undertaking the
obligation, to do so regardless of the validity or correctness of such levy),
Tenant shall pay to Landlord the amount of all such taxes paid by Landlord
immediately on Landlord’s demand thereof; provided however, that Landlord has
complied with the notice requirement set forth in this Section 5.7.

 

Landlord shall promptly notify Tenant of any such
taxes levied against Landlord or Landlord’s property or of any increase in the
assessment of the Building resulting from Tenant’s personal property.  Subject to any contrary provisions of any
Mortgage, Tenant may after notice to Landlord, by appropriate proceedings
conducted promptly at Tenant’s own expense in Tenant’s name, contest in good
faith, the validity or correctness of such levy or assessment.  In no event shall Tenant permit a lien to
attach to any part of the Premises for taxes levied on any part of Tenant’s
property whether or not affixed to the Premises.

 

Excise
Tax on Rent - Tenant shall be liable for and shall pay when due an excise taxes
payable on the Basic Annual Rental and any additional rent payable under this
Lease.  If the excise taxes are payable
by Landlord, Tenant shall pay to Landlord the amount of all such excise taxes
paid by Landlord immediately on Landlord’s demand therefor.

 

USE:

 

Use - Tenant shall continuously throughout the
Term use and occupy the Premises for the purposes as described in
Section 1.11 and for no other purposes whatsoever.  Tenant shall maintain sufficient personnel on
the Premises during normal business hours to receive and supervise visitors to
the Premises.  Tenant shall furnish and
decorate the Premises in a manner consistent with its business and other
businesses in this Building.  Tenant
shall not do or permit anything to be done in or about the Premises that would
significantly and unreasonably interfere with the use of any area of the
Building other than the Premises.

 

Rules
and Regulations - Tenant and its Agents shall faithfully observe the Rules and
Regulations attached hereto as a part hereof as Exhibit C, and such other changes to and further Rules and
Regulations as Landlord may from time to time adopt; provided, however, that
Landlord shall provide Tenant with a copy of any changes to the Rules and
Regulations and further that Landlord shall adopt no rules and regulations that
adversely affect Tenant’s use or enjoyment of the Premises.  Landlord shall not be liable to Tenant for
violation of any Rules and

 

10

 

Regulations
or the breach of any provision in any lease by any other tenant or other party
in the Building.

 

Conduct
on Premises -

 

Compliance with Laws - Tenant shall comply promptly with all
statutes, laws, ordinances, rules, orders, regulations, decrees, notices, and
requirements of the federal, state, and local governments and any of their
departments and bureaus, and any rules and regulations issued by the
Association of Fire Underwriters, or similar governing insurance body, which
now or hereafter may be applicable to Tenant’s use of the Premises
(collectively, the “Laws”).  Tenant shall
pay all costs, expenses, claims, fines, penalties, and damages that may in any
manner arise out of or be imposed because of the failure of Tenant to comply
with this Section and in any event agrees to indemnify, defend, and hold harmless
Landlord and its agents, employees, and officers from and against any
liabilities, claims, fines, damages, costs, expenses, and fees, including
attorney’s fees, relating to the same. 
Tenant shall promptly give notice to Landlord of any notice of violation
received by Tenant.  Landlord and Tenant
shall promptly give notice to the other of any notice of violation received by
Landlord or Tenant, respectively. 
Landlord promptly shall comply with all of the Laws as they relate to
the Common Areas and those portions of the Building not leased to others and
shall indemnify, defend and hold harmless Tenant and its agents, employees and
officers from and against any liabilities, claims, fines, damages, costs,
expenses and fees, including attorneys’ fees relating to same.

 

Right to Contest - Subject to any contrary provisions of any
Mortgage, Tenant may, after notice to Landlord, by appropriate proceedings
conducted promptly at Tenant’s own expense in Tenant’s name, contest in good
faith, the validity or enforcement of any Law and may similarly contest any
assertion of violation of any certificate of occupancy, permit, or any consent
issued for the Building.  Pending such
contest, Tenant may defer compliance therewith if (a) in the opinion of counsel
for Landlord, such deferral will not subject either Landlord or the Premises or
the Real Property (or any part thereof) to any penalty, fine, encumbrance, or
forfeiture, and (b) Tenant shall post a bond with corporate surety approved by
Landlord sufficient, in Landlord’s opinion, fully to indemnify Landlord from
loss.

 

POSSESSION:

 

Acceptance
of Possession – Tenant acknowledges that it currently occupies the Premises and that
it accepts the Premises as complying with all requirements of Tenant and all
obligations of Landlord with respect to the condition, order and repair
thereof.  Notwithstanding the same,
Tenant’s acceptance hereunder shall not limit the Landlord’s maintenance
obligations under the provisions of subsection 9.1 hereof nor the
condition of such additional premises, if any as Tenant hereafter may lease or
occupy subsequent to the Commencement Date of this Lease.

 

Quiet
Enjoyment - Landlord represents and warrants that Tenant, on paying the rental
under this Lease and observing and keeping the covenants and agreements of this
Lease on its part to be kept and performed, shall lawfully and quietly hold,
occupy, enjoy, manage, and

 

11

 

operate
the Premises, subject to the terms of this Lease, without hindrance or
molestation by Landlord during the Term or by any person or persons claiming
under Landlord.

 

Surrender - If Tenant shall not immediately surrender
possession of the Premises at the end of the Term, Tenant shall, at Landlord’s
sole election, become a tenant from month to month, and shall be liable for
rental on the Premises in an amount equal to one hundred twenty percent (120%)
of the Basic Annual Rental, and for all additional rental payable hereunder,
just before the termination of this Lease, such rental to be payable to
Landlord in monthly installments, in advance, on the first day of each month
for so long as Tenant shall remain in possession of the Premises.  If Landlord does not so elect to treat Tenant
as a tenant from month to month, Tenant shall nevertheless be liable for the
rental hereinabove provided, payable to Landlord in monthly installments, in
advance on the first day of each month for so long as Tenant shall remain in
possession of the Premises.  In the event
Landlord does not elect to treat Tenant as a tenant from month to month,
Landlord shall continue to be entitled to retake possession of the Premises at
any time after five (5) days prior notice to Tenant, and Tenant shall in no
case whatsoever be entitled to receive a refund for any rental paid in
advance.  Tenant hereby expressly waives
(a) the service of any notice in writing of intention to retake possession and
(b) any right that Tenant may have to a jury trial in connection with such retaking
of possession.  If Tenant shall fail to
surrender possession of the Premises immediately on the expiration of the Term,
all of the obligations of Tenant and all rights of Landlord applicable during
the Term shall be equally applicable during such period of subsequent
occupancy, regardless of whether a month to month tenancy shall have been
created as aforesaid, with the exception of Sections 7.2 (Quiet Enjoyment) and
13 (Assignment and Subletting).  No act
or conduct of Landlord, its employees, agents, or representatives, including,
but not limited to, the acceptance of the keys to the Premises, shall
constitute an acceptance of the surrender of the Premises before the Expiration
Date.  Only a written notice of
acceptance and surrender and termination from Landlord to Tenant shall
constitute acceptance of the surrender of the Premises and accomplish a
termination of this Lease by Tenant.

 

Condition
of Premises - Tenant shall keep the Premises and the improvements and appurtenances
therein in good repair, order, and condition, and at the expiration or earlier
termination of the Term, return the same in the same good repair, order, and
condition as at the Commencement Date, reasonable wear and tear and casualty
damage excepted, and Tenant shall remove such of its property (but excluding,
at Tenant’s option, any vaults, safes, safe deposit boxes, fixtures, wiring
installed by or for the benefit of Tenant in telephone closets and building
chases if and to the extent that Tenant elects to have the same remain at the
Premises) therefrom before such expiration or earlier termination.  Tenant hereafter shall not place a load on
any floor of the Premises exceeding the floor load per square foot area that
such floor was designed to carry and that may be allowed by the Laws.  Landlord reserves the right to prescribe the
weight and position of all safes, telephone switchboards, computers, or other
heavy equipment, and to prescribe the reinforcing necessary, if any, which in
the reasonable opinion of Landlord may be required under the circumstances,
such reinforcing to be at Tenant’s sole cost and expense.

 

Business Equipment - Business machines and mechanical equipment
shall be placed and maintained by Tenant, at Tenant’s expense, in settings
sufficient to absorb

 

12

 

and
prevent vibration, noise, or annoyance, and Tenant shall, at its expense, take
such steps as Landlord may from time to time reasonably direct to remedy such
condition.

 

No Waste - Tenant shall pay, as additional rent, for
all damage to the Building, its fixtures and appurtenances, as well as all
damage sustained by other tenants or occupants of the Building due to any
waste, misuse, or neglect of the Premises, its fixtures and appurtenances by
Tenant or its Agents.  If Tenant’s
fixtures are removed, Tenant shall at its sole cost and expense, repair any
damage to the Premises caused by the removal of the fixtures.  Where the removal of a fixture leaves holes,
open spaces, or voids in the Premises, Tenant shall seal the area and finish it
in a manner and with material that matches the remainder of the area.

 

SERVICES AND UTILITIES:

 

Services
by Landlord - Landlord shall, at its expense, furnish or cause to be furnished
without additional charge to Tenant the Premises with (a) sufficient electrical
power to satisfy Tenant’s electrical needs, as are consistent with Tenant’s use
and this Section 8, (b) heating and air-conditioning for the comfortable
use and occupancy of the Premises between 8:00 a.m. and 8:00 p.m., Monday
through Thursday, 8:00 a.m. to 6:00 p.m., Friday, and 8:00 a.m. to 4:00 p.m. on
Saturday (except for New Year’s Day, Memorial Day, July 4, Labor Day,
Thanksgiving and Christmas) of each week during the Term or such other times as
mutually shall be agreed upon by Landlord and Tenant, (c) janitorial service as
more fully set forth in Section 8.7 hereof, and (d) elevator service as
set forth in Section 8.10 hereof. 
Landlord shall take all necessary efforts to ensure that during (i)
normal business hours, the temperature in the Premises does not (a) exceed 75°F with a 50% relative humidity and (b) fall below 70°F; and (ii) all other hours, the temperature in the Premises does not
(a) exceed 77°F with a 50% relative humidity and (b) fall
below 66°F.

 

Additional
Services - If Tenant desires heat or air-conditioning service for times other
than those set forth in Section 8.1 (Services by Landlord), Tenant shall
request such additional service by not later than 1:00 p.m. on the day
immediately before the weekday for which the service is desired, or not later
than 3:00 p.m. on the Friday immediately before the Saturday or Sunday for
which such service is desired.  If
Landlord provides such additional service, Tenant shall reimburse Landlord as
additional rental for the reasonable cost, in the sole judgment of Landlord, of
such service.  Tenant recognizes that the
heat and air-conditioning service may serve areas other than the Premises and
Tenant’s costs will include the cost of providing service to such other areas.

 

Extraordinary
Services - If Tenant requires electrical current or installs electrical
equipment (including, but not limited to, any electrical heating or
refrigeration equipment, computers, electronic data processing machine,
punch-card machine, or machinery or equipment using current in excess of 110
volts) that in any way increases the amount of needed electricity beyond that
provided by Landlord to Tenant under Section 8.1 (Services by Landlord),
then in such case Tenant shall not do so without first obtaining Landlord’s
written approval thereof (which consent shall not be unreasonably withheld or
delayed).  Tenant shall not overload
wiring or the electrical system.

 

13

 

Additional
Equipment - If Tenant requires additional air-conditioning equipment for
computers, business machines, meeting rooms, or other special purposes beyond
that currently in place (a written list of all major components thereof to be
provided by Tenant to Landlord), any additional air-conditioning units,
chillers, condensers, compressors, ducts, piping, and other equipment shall be
installed and maintained by Tenant at Tenant’s sole cost and expense.  Tenant shall pay any additional energy
charges therefore so long as Landlord, at its expense, installs separate meters
or submeters to measure the same.

 

Light
and Air - This Lease does not grant any rights to light and air.

 

Interruption
of Service - Landlord reserves the right temporarily to suspend service of the
heating, air-conditioning, elevator, plumbing, and electric systems, when
necessary, by reason of accident, or emergency, or for repairs, alterations,
replacements, or improvements, which in the reasonable judgment of Landlord are
desirable or necessary to be made, until such repairs, alterations,
replacements, or improvements shall have been completed.  Landlord shall give Tenant five (5) days’
prior notice of any planned temporary suspension of services.  Landlord shall use its best efforts to
restore any suspended service as promptly as possible, but Landlord shall have
no responsibility or liability, and the Basic Annual Rental and additional
rental payable to Landlord under this Lease shall not abate, for failure to
supply heating, air-conditioning, elevator, plumbing, cleaning, and electric
service, during such period when prevented from so doing by any Laws or by
strikes or accidents.  Landlord’s
obligation to supply heat and air-conditioning shall also be subject to
applicable Laws as to energy conservation and other such restrictions.  Notwithstanding the above, if, due solely to
Landlord’s negligence or failure to repair as required hereunder or failure to
pay public utility companies, there is an interruption in essential services to
the Premises (defined as “HVAC, Electric Service, Water or Elevator Service”)
and such interruption continues for a period of five (5) consecutive days,
Tenant, in addition to all other remedies hereunder shall be entitled to an
abatement of Basic Annual Rental only for the period that such services are not
provided if such interruption interferes with Tenant’s use of the
Premises.  If such interruption continues
for a period of thirty (30) consecutive days, Tenant shall have the option to
cancel and terminate this Lease.

 

Janitorial
Services: 
Landlord shall provide janitorial services within the Premises during
the Term hereof.  Such services shall be
only with union janitorial service providers unless Tenant, in its sole
discretion, consents otherwise in writing and shall be performed during
weekdays, after normal business hours and in accordance with the standard
building cleaning specifications set forth on Exhibit
D attached hereto.

 

Access
and Security: 
Tenant shall have access to the Premises twenty-four (24) hours per day,
365 days per year.  At least two (2)
elevators will be in service at all times outside of normal business hours in
the Office Building and at least one (1) elevator will be in service at all
times outside of normal business hours in the adjoining Pavilion Building,
subject to force majeure conditions.  Landlord shall operate, provide and maintain
security and life safety systems for the Building comparable to the services
provided at other bank headquartered and anchored Class A office buildings in
downtown Baltimore, which services, shall include, but not by way of
limitation, at least two (2) 24-hour guards in the main lobby, cameras, card
access

 

14

 

systems,
alarms, entry systems (by intercom, a-phones/remote system or otherwise), fire
systems, sprinkler systems, elevator systems, and parking gate control systems.

 

Tenant will purchase, install and maintain its own
security equipment within the Premises in good working order so that Landlord
may operate and respond to Premises security and life safety conditions as they
arise.  Tenant’s equipment may include,
but not by way of limitation card access on suite doors; hold open alarms and
cameras in the premises.

 

Parking - Landlord agrees that during the Term of
this Lease Landlord will provide, or will cause the then current operator of
the parking garage located in the garage portion of the Building (the
“Operator”) to make available to Tenant (a) thirty (30) monthly parking
contracts, which shall increase to fifty (50) on such date as Tenant shall be
obligated to commence the payment of Basic Annual Rent on the Expansion Space,
in the parking garage of the Building at Operator’s current monthly rates, as
modified from time to time; and (b) sixty (60) parking spaces in the parking
garage at $135.00 per month subject to modification in the same percentage as
the increase or decrease, if any, of Operator’s standard monthly rates,
provided, however, that in no event shall any increase exceed three percent
(3%) in the aggregate in any calendar year and (c) the exclusive right during
the Term to use the first (executive) level of the parking area and the wall
area and all of the parking spaces therein shown as shaded on Exhibit E attached hereto, at no
charge.  Tenant shall be obligated to
enter into monthly contracts directly with any Operator and shall comply with
all rules and regulations of the Operator. 
Landlord further grants to Tenant, or shall cause the Operator to grant
to Tenant, a right of first refusal to lease additional parking spaces in the
parking garage of the Building at the then current monthly rates, as modified
from time to time, as the same may become available, subject, however, to the
right of Landlord to make available to new tenants in occupancy of the Building
one (1) parking space for each 1,500 square feet of space which it
occupies.  Tenant shall be provided
written notice as and when such additional spaces are available and Tenant
shall have the first right to the use of the same by giving Landlord written
notice of its election within not more than fifteen (15) days after receipt of
Landlord’s notice.

 

Landlord shall continue to operate the parking
garage as a private garage for the exclusive use of the tenants of the
Building, to include parking for the employees, visitors, customers, and
vendors, of the tenants of the Building. 
Landlord will continue to operate the garage in a manner to ensure that
those vehicles/individuals entering the parking garage and loading dock area
are duly authorized and/or are conducting business in the Building.  Landlord will continue to permit means of
access to the garage “24/7 365” days per year on a key card or comparable
access basis.

 

Upon approval of the Tenant, Landlord may elect to
open the garage to the public for certain events for parking similar to those
events which the current owner has opened for over the past two years, copies
of which have been provided.  It is the
responsibility of the Landlord to have sufficient parking staff and to ensure
that reserved parking spaces are not used by event parkers.  Tenant will not permit event parking during
normal business hours.  If, however, the
national terrorist threat level rises to orange or above, or if the Tenant is notified
by local security of a terrorist threat or if there are threats against banks,
then the Tenant may elect to require, and Landlord agrees to close the garage
for any or all event parking.

 

15

 

Elevator
Service - In
addition to the Elevator Service provided by the elevator bank in the office
tower, Landlord herewith confirms and agrees that Tenant shall have the
exclusive right to the use of the elevator which runs from the G level of the
office building to the fourth floor thereof and which passes through the
Premises.  Notwithstanding such exclusive
usage, Landlord shall be responsible for all maintenance, repairs and
replacements for this Tenant exclusive elevator.

 

MAINTENANCE,
REPAIRS, AND ALTERATIONS:

 

Maintenance
by Landlord - Landlord shall maintain the Common Area in good condition, shall
maintain the plumbing, heating, ventilating, air-conditioning, elevator,
electrical and other mechanical systems of the Building in good working
order.  Landlord shall maintain and
replace overhead lights and fixtures and provide all required bulbs within the
Premises at its sole cost.  Landlord
shall make necessary repairs to the roof, structural components and the
exterior of the Building, and shall repair promptly any damage to the Premises
and the Building to the extent provided in Section 10 (Damage of
Destruction), keep the Real Property reasonably clean, and free of snow, ice,
dirt and rubbish, and provide the services herein described, all in a manner
and to the same extent as are provided in other first-class, high rise office
buildings located in downtown Baltimore City. 
Landlord shall have reasonable access to the Life Safety Fire Alarm
Control Panel (“Panel”) located in the lower level parking area leased to
Tenant for the servicing and monitoring of the Panel.

 

Maintenance
by Tenant -
Tenant shall take good care of the Premises and fixtures and appurtenances
therein and maintain them in good order, condition, and repair in a quality and
class equal to the original work, ordinary and reasonable wear and tear
excepted.  Tenant shall at its sole cost
and expense, maintain all plumbing fixtures and the area in which such plumbing
fixtures are located within the Premises, except the restrooms located in the
core of the Building, in good order, condition, and repair to the reasonable satisfaction
of Landlord.  On the expiration or
earlier termination of this Lease, Tenant shall surrender the Premises to
Landlord, broom clean, in as good order, condition, and repair as they are on
the Commencement Date, ordinary and reasonable wear and tear and damage by
casualty excepted.  Without limiting the
foregoing, Landlord may require that any such maintenance or repairs be
performed by Landlord at Tenant’s expense. 
All repairs done by Tenant will be done in a good and workman like
fashion.

 

Alterations -

 

General - Tenant may from time to time, at its own
expense make changes, additions, or improvements (collectively, the
“Alterations”) in or to the Premises with Landlord’s prior written consent,
which shall not be unreasonably withheld or delayed.  Notwithstanding the above, no consent from
Landlord will be required with respect to alterations in or to the Premises
which do not exceed $100,000.00 or are being made as presently contemplated on
the second floor or to the space described in Section 21 hereof (a) unless
same are of a structural nature or adversely impact the use of the mechanical
or electrical systems and (b) provided Tenant shall comply with all applicable
Laws.  All alterations paid for by Tenant
will be and remain Tenant’s property during the term and will, without
compensation to Tenant automatically become Landlord’s property upon the
expiration or earlier termination of the Term, unless Tenant in its sole
discretion elects to remove the same, in which event Tenant shall remove the
same at its sole cost and expense and repair any damage caused thereby.

 

Personal Property - All articles of personal property and all
business and trade fixtures, machinery, and equipment, movable cabinetwork,
furniture and movable partitions, owned or installed by Tenant at its expense,
in the Premises, shall remain the property

 

16

 

of
Tenant and may be removed by Tenant at any time provided Tenant, at its
expense, shall repair any damage to the Premises or the Building caused by such
removal or by the original installation. 
If Tenant elects not to, or shall fail to remove the property, (which
Tenant shall have the right to do,) the property shall be deemed to become
Landlord’s property.

 

DAMAGE OR DESTRUCTION:

 

Repair
of Damage - If the Premises or the Real Property shall be damaged by fire or
other casualty insured against by Landlord’s fire and extended coverage
insurance policy covering the Building (a “Casualty”), as required under
Section 11.2 (Insurance by Landlord), and the Premises or the Real
Property can be fully repaired, in Landlord’s reasonable opinion, within 180
days from the date of such damage, Landlord, at Landlord’s expense, shall
promptly repair such damage; provided however, that Landlord shall have no
obligation to replace or to repair any damage to Tenant’s Property or Tenant’s
leasehold improvements, installed by Tenant or any other property located in
the Premises.  Tenant shall vacate such
portion of the Premises as Landlord reasonably requires to enable Landlord to
repair the Premises or the Building. 
Landlord shall take all reasonable efforts to restore the Premises as
required hereunder as promptly as possible to the conditions existing prior to
such casualty and in any event within not more than one hundred eighty (180)
days.

 

Abatement - If the entire Premises shall be rendered
untenantable, then Rent shall abate for the period from the date of such damage
to the date which is ten (10) days after the date when such damage shall have
been repaired.  If only a part of the
Premises shall be so rendered untenantable, then Rent shall abate for such
period in the proportion that the area of the part of the Premises so rendered
untenantable bears to the total area of the Premises; provided, however, if,
before the date when all of such damage shall have been repaired, any part of
the Premises so damaged shall be rendered tenantable and shall be used or
occupied by Tenant or any person claiming through or under Tenant other than
for purposes of repair, then the amount by which the Rent shall abate shall be
equitably apportioned for the period from the date of any such use or occupancy
to the date when all such damage shall have been repaired.  Except as specifically provided in this
Lease, this Lease shall not terminate, and Landlord and Tenant shall not be
released from any of their liabilities or obligations under this Lease, as a
result of damage or destruction to the Premises or the Building caused by fire
or other casualty.

 

Termination -

 

By Landlord - If, before or during the Term, (a) the
Premises shall be so damaged that, in Landlord’s reasonable opinion, the
Premises cannot be fully repaired within 180 days from the date the damage
occurred, (b) the Building shall be so damaged by a Casualty that, in
Landlord’s reasonable opinion, substantial repair or reconstruction of the
Building shall be required and cannot be completed within 180 days (regardless
of whether the Premises shall have been damaged or rendered untenantable), or
(c) if Landlord is not obligated to repair the Premises or the Building, or
both, under Section 10.1 (Repair of Damage), then, in any of such events,
Landlord, at its option and in the exercise of its good faith judgment, may
give to Tenant, within sixty (60) days after the Casualty, a thirty (30) days’
notice of termination of this Lease.  If
Landlord provides such termination notice, this Lease shall terminate on the
expiration of such

 

17

 

thirty
(30) days with the same effect as if the date of expiration of such thirty (30)
days were the date definitely fixed for expiration of the Term and the then
applicable rent shall be apportioned as of such date, including any rent
abatement as provided above.

 

By Tenant - Notwithstanding anything herein to the
contrary, should the Premises and/or the Building be damaged by a Casualty,
Landlord shall, within thirty (30) days of the date of such damage, notify
Tenant in writing of Landlord’s good faith estimate of the time necessary to
repair and restore the damage.  If such
estimate sets forth a period of greater than 180 days from the date the damage
occurred, Tenant shall have the option, to be exercised with thirty (30) days
of receipt of Landlord’s notice, to terminate this Lease, whereupon this Lease
shall terminate effective as of the date of damage or destruction with all rent
to be apportioned as of such date. 
Furthermore, should landlord elect to restore the Premises but fail to
complete the same within one hundred eighty (180) days after the occurrence of
the casualty, Tenant shall have the option to be exercised within thirty (30)
days thereafter, to terminate this Lease by giving written notice thereof to
Landlord, whereupon this Lease shall terminate effective as of such date and
all rents shall be apportioned as of the date of the damage or destruction.

 

End
of Term - Landlord shall not have any obligation to repair, reconstruct, or
restore the Premises during the last twelve (12) months of the Initial Term or
of any Renewal Term as a result of any damage to the Premises if (a) in the
case of any such damage that occurs during the last twelve (12) months of the
Initial Term Tenant has not and does not elect to exercise its option for the
First Renewal Term or, (b) in the case of such damage that occurs during the
last twelve (12) months of any Renewal Term, Tenant has not and does not elect
to exercise its option for the next Renewal Term, and such option to renew
exists.  If Landlord elects not to repair
the Premises pursuant to this Section, Tenant may elect to terminate this Lease
within thirty (30) days of receipt of Landlord’s notification of such
election.  If Tenant elects to terminate
this Lease as provided above, this Lease shall terminate thirty (30) days following
the election by Tenant to terminate this Lease and rent pro rated to the date
of damage or destruction.  If Tenant does
not elect to terminate this Lease within such thirty (30) day period, the rent
and other expenses payable by Tenant shall abate in proportion to the reduction
of the area of the Premises not usable by Tenant in its reasonable discretion.

 

Continuing
Access - In
the event of damage which results in the termination of this Lease, Tenant
shall have a reasonable time, not to exceed 90 days, to remove Tenant’s
property from the Real Property provided Tenant does not interfere with any
person that may be salvaging, repairing or demolishing the Building.  Whether or not the Lease is terminated, Tenant
shall have immediate and continuous access to the Premises under the terms
hereof provided that such access is permitted by the appropriate governmental
authorities.

 

INSURANCE:

 

Requirements, Prohibitions and Indemnifications - Tenant shall not do or permit anything to be done in or on the Premises
or in the Building or the Common Area or bring or keep anything therein that
will, in any way, increase the rate of fire insurance on the Building, or
invalidate or conflict with the fire insurance policies on the Building,
fixtures, or on property kept therein, or obstruct or interfere with the rights
of Landlord or the other tenants or in any other way injure or annoy Landlord
or the other tenants, or subject Landlord to any liability for injury to
persons or damage to property, or interfere with the good order of the
Building, or

 

18

 

conflict
with any Laws or the rules or regulations of the Maryland Fire Underwriters
Rating Bureau or similar governing insurance body.  Tenant shall indemnify, defend, and hold
Landlord and its agents, employees, contractors, and officers harmless from and
against any and all liability, loss, damage, and expense (including, but not
limited to, attorneys’ fees and court costs) arising from injury or death to
person or damage to property in, on, or about the Premises whether occasioned
by an act or omission of Tenant or its Agents, unless caused by the gross
negligence or willful misconduct of Landlord. 
Any increase of fire insurance premiums on the Building or contents caused
by the occupancy of Tenant and any expense or cost incurred in consequence of
negligence or carelessness or the willful action of Tenant or its Agents shall,
as they accrue, be added to the Basic Annual Rental and be paid as a part
thereof, and Landlord shall have all the rights and remedies for the collection
of same as are conferred on Landlord for the collection of rent provided to be
paid under this Lease.

 

Insurance
by Landlord - Landlord shall obtain and keep in full force and effect during the
Term fire and extended coverage insurance with a vandalism and malicious
mischief endorsement for the Building and comprehensive general liability
insurance in such reasonable amounts with such reasonable deductions as would
be carried by a prudent owner of a first class office building in downtown
Baltimore, Maryland, or which the holder of the first Mortgage deems necessary
for the operation of the Building, whichever is greater, but in any event, in
an amount not less than eighty percent (80%) of the Building’s full replacement
cost.  Landlord may obtain insurance for
the Building and the rents from the Building against such other perils as
Landlord reasonably considers appropriate. 
Tenant acknowledges that it will not be a named or additional insured in
any such policy and that it has no right to receive any proceeds from any such
insurance policies carried by Landlord.

 

Insurance
by Tenant -
Tenant shall, at its sole cost and expense, obtain and keep in full force and
effect during the Term the following insurance: (a) fire and extended coverage
insurance with a water damage endorsement and with a vandalism and malicious
mischief endorsement, for property of Tenant located in the Building in an
amount not less than eighty percent (80%) of its cash value for any property
such as standard office furniture, furnishings, equipment, files, and supplies,
(b) comprehensive general liability insurance, including contractual liability,
personal injury, and property damage insuring against all claims and liability
arising out of the use or occupancy of the Premises, with combined per
occurrence coverage of at least One Million Dollars ($1,000,000), and (c)
umbrella (excess) insurance in the minimum amount of Ten Million Dollars
($10,000,000) over the primary CGL policy. 
All insurance policies of Tenant required by this Lease shall be taken
out with insurers licensed to do business in Maryland (which insurers shall be
reasonably acceptable to Landlord) and shall be in form reasonably satisfactory
to Landlord.  All such policies shall
name Landlord as an additional insured and any other person holding an interest
in the Building designated by Landlord as additional insureds (with respect to
liability insurance policies) and as their interests appear (with respect to property
insurance policies).  All such policies
shall provide that they cannot be canceled, terminated, or modified without
thirty (30) days prior written notice to Landlord and any other person holding
an interest in the Building designated by Landlord.  Tenant shall deliver copies of such policies
to Landlord annually upon renewal.  As an
alternative to copies of Tenant’s insurance policies, Landlord agrees to accept
annual certificates of such insurance upon renewal that are in a form
satisfactory to Landlord.  All such
policies shall be primary policies - not as contributing with, or in excess of
the coverage that the other party may carry, and shall have deductibles
acceptable to Landlord.  Notwithstanding
the above, Tenant may self-insure any of its insurance coverage obligations
hereunder so long as Tenant’s net worth is in excess of $150,000,000.00 as
evidenced by annual financial statements or by reports published in accordance
with the Securities Exchange Commission reporting requirements for publicly
traded companies, as computed in accordance with generally accepted accounting
principles. 

 

19

 

Indemnification
-

 

By
Tenant - Tenant hereby waives all claims against Landlord (for
purposes of this Section 11.4.1 only, the term “Landlord” shall include
Landlord, its parent, affiliates and subsidiaries and their directors, agents,
employers, contractors and officers), its directors, agents, employees,
contractors, and officers, and neither Landlord, nor Landlord’s directors,
agents, employees, contractors, and officers nor any other person, firm,
corporation, or other entity having an interest in the Building, shall be
liable for loss, theft, or damage to equipment, furniture, records, and other
property on or about the Premises, for loss or damage to Tenant’s business, or
for death or injury to persons on or about the Premises or the Building, except
to the extent caused by the gross negligence or willful misconduct of Landlord,
its directors, agents, employees, and officers. 
Except in cases involving the gross negligence or intentional misconduct
of Landlord or its directors, agents, employees and officers, Tenant shall
indemnify, defend, and hold harmless Landlord, its directors, agents,
employees, and officers from and against any claims, liability, damage, and
expenses (including, but not limited to, attorneys’ fees, fines, penalties and
court costs) for the loss, theft, or damage to property on or about the
Premises, for death or injury to persons on or about the Premises, or arising
from any breach or default by Tenant in the performance of any obligation of
Tenant under this Lease or arising from the negligence or willful misconduct of
Tenant or its Agents.  Landlord shall not
be liable to Tenant for any negligence or act of any occupant of the Building
or any owner or occupant of any property adjoining the Building.

 

By
Landlord - Landlord shall hold Tenant harmless from any and all
claims by and liability to third persons arising from any act that is due
solely to the gross negligence or willful misconduct of Landlord, its
directors, agents, employees and officers.

 

Mutual Waiver of Subrogation - Landlord shall
cause each insurance policy carried by it insuring the Premises against loss by
fire or any of the casualties covered by extended coverage insurance to be
written in such a manner so as to provide that the insurer waives all tight of
recovery by way of subrogation against Tenant, its Agents, and Tenant’s
subtenants and assignees, and any other person or entity claiming through or
under Tenant, for any loss or damage covered by the policy.  Tenant shall cause each insurance policy
carried by it insuring the Premises as well as the contents thereof, including
inventory, trade fixtures, floor coverings, furniture, and other property
removable by Tenant, and leasehold improvements installed by Tenant against
loss by fire or any of the casualties covered by extended coverage insurance to
be written in such a manner so as to provide that the insurer waives all right
of recovery by way of subrogation against the Landlord, Landlord’s directors,
agents, employees and officers, and against any other person, firm,
corporation, or entity claiming through or under Landlord, including any other
person or entity holding an interest in the Building, for any loss or damage
covered by the policy.  Landlord and
Tenant waive any right of recovery against each other for any loss or damage
caused by fire or any of the casualties covered by extended coverage insurance,
which loss or damage is covered by the insurance policies maintained by the
other party, provided that such policies are not invalidated by the aforesaid
waivers.

 

20

 

CONDEMNATION:  Right to Award  - If any or all of
the Premises are taken by the exercise of any power of eminent domain or are
conveyed to or at the direction of any governmental entity under a threat of
such taking (each a “Condemnation”), Landlord shall be entitled to collect from
the condemning authority thereunder the entire amount of any award made in such
proceeding or as consideration for such deed (including any amount awarded by
order of a court), without deduction therefrom for any leasehold or other
estate held by Tenant by virtue of this Lease. 
Tenant hereby (a) assigns to Landlord all of Tenant’s right, title, and
interest, if any, in and to any such award; (b) waives any right that it may
otherwise have in connection with such Condemnation, against Landlord or such
condemning authority, to any payment for the value of the then unexpired
portion of the Term, leasehold damages, and any damage to or diminution of the
value of Tenant’s leasehold interest, hereunder or any portion of the Premises
not covered by such condemnation; and (c) agrees to execute any further
documents that may be required to facilitate Landlord’s collection of any such
awards.

 

Separate Proceeding by
Tenant  - Subject to the operation and effect of Section
12.1 (Right to Award), Tenant may seek, in a separate proceeding, a separate
award on account of any damages or costs incurred by Tenant as a result of such
Condemnation, so long as such separate award in no way diminishes any award or
payment that Landlord would otherwise receive as a result of such Condemnation.

 

Termination  - If (a) all of the
Premises are covered by a Condemnation, (b) any part of the Premises is covered
by a Condemnation and the remainder thereof is insufficient for the operation
therein of Tenant’s business in the exercise of Landlord’s reasonable judgment,
or (c) any of the Building is covered by a Condemnation and, in Landlord’s
reasonable opinion, it would be impractical to restore the remainder thereof,
then, in any such event, the Term shall terminate on the date on which
possession of so much of the Premises or the Building, as the case may be, as
is covered by such Condemnation is taken by the condemning authority
thereunder, and all rental additional rental and any other payments and charges
payable hereunder shall be prorated and paid to such date.

 

Proration  - If there is a
Condemnation and the Term does not terminate under Section 12.3 (Termination),
the operation and effect of this Lease shall be unaffected by such
Condemnation, except that the Basic Annual Rental, Taxes and Building Expenses
payable under Section 5 (Rent) shall be reduced in proportion to the remaining
square footage of floor area, if any, of the Premises and/or the Real Property
covered by such Condemnation.

 

Non-liability of Landlord
- If there is a Condemnation, Landlord shall have no liability to Tenant on
account of any interruption of Tenant’s business on the Premises, diminution in
Tenant’s ability to use the Premises, or other loss, injury, or damage
sustained by Tenant as a result of such Condemnation.  Except for any separate proceeding brought by
Tenant under Section 12.2 (Separate Proceeding by Tenant), Landlord shall be
entitled to conduct any such condemnation proceeding and any settlement thereof
free of interference from Tenant, and Tenant hereby waives any right that it
might otherwise have to participate therein.

 

ASSIGNMENT AND SUBLETTING:  Tenant may assign this Lease, or sublease all
or any portion of the Premises upon obtaining the prior written consent of Landlord,
which shall not be

 

21

 

unreasonably withheld, conditioned or delayed.  Tenant shall notify Landlord of any
assignment of this Lease prior to the effective date thereof and of any
sublease of all or any part of the Premises prior to the commencement date
thereof.  In the event of any such
assignment, the Assignee shall assume in writing all of Tenant’s obligations
under this Lease that accrue after the effective date of such assignment, and
Tenant shall provide Landlord with a copy thereof prior to the effective date
of such assignment.  From and after the
date of any assignment of this Lease, (i) Landlord shall provide a duplicate
copy of any notice of default thereafter given to the tenant, to the originally
named Tenant hereunder in accordance with the provisions of this Lease, and
(ii) Landlord shall permit the originally named Tenant to cure such default
within the applicable time period set forth in this Lease.  Notwithstanding the assignment of this Lease,
Tenant shall remain fully liable hereunder; provided, however, that neither
named Tenant or any successor thereto shall be liable for any change,
modification or amendment made to this Lease by any Assignee to the extent by
which such change, modification or amendment increases the liability of “Tenant”
under this Lease, but shall remain liable as to all obligations as though such
increase had not occurred.  If the Lease
is assigned to an entity which, on such date, either alone or in combination
with one or more guarantors of its obligations hereunder (pursuant to a
Guaranty reasonable acceptable to Landlord) has a net worth computed in
accordance with generally accepted accounting principles consistently applied,
equal to at least $100,000,000, then Tenant and its successors shall thereafter
be released from obligations thereafter arising on the part of Tenant to be
performed or observed hereunder.

 

DEFAULT AND REMEDIES:

 

Default of Tenant  - The
following shall constitute events of default (each an “Event of Default”) by
Tenant under this Lease and, in any such event, Landlord shall be entitled to
exercise any remedies provided herein or that may be available at law or in
equity.  An Event of Default shall occur
if:

 

The
Premises shall become vacant or deserted during the Term for a period of more
than thirty (30) consecutive business days other than for reasons beyond the
reasonable control of Tenant;

 

Default
be made in the payment of rental including, but not limited to, additional
rental or any part thereof and such default shall continue for a period of
fifteen (15) days after written notice thereof from Landlord;

 

Tenant
shall fail, within thirty (30) days after receiving any notice of violations
thereof to comply (or if same reasonably cannot be complied with in thirty (30)
days if Tenant fails to commence compliance within thirty (30) days or fails to
complete compliance within a reasonable period thereafter) with any Laws now in
force or that may hereinafter be in force, pertaining to all or any part of the
Premises;

 

Tenant
fails to maintain any insurance coverages that it is required to maintain under
this Lease;

 

Default
be made in the performance of any of the other terms, covenants, and conditions
in this Lease (including, but not limited to, the Rules and Regulations on part
of Tenant to be kept or performed), and

 

22

 

such default remains uncured for a
period of thirty (30) days after written notice from Landlord that such default
has occurred, provided, however, that such period shall be extended in the
event the cure was diligently commenced and pursued to completion and could not
reasonable have been completed within such thirty (30) days;

 

At any
time during the Term, proceedings shall be commenced by Tenant in bankruptcy or
for reorganization or for the readjustment of debts under the Bankruptcy Code
or under any other Law, now or hereafter existing for the relief of debtors, or
a receiver or trustee is appointed for Tenant or for any substantial part of
its assets, or any proceeding is commenced for dissolution, or the full or
partial liquidation, of Tenant, or Tenant makes an assignment for the benefit
of its creditors.

 

Remedies of Landlord  - On an
Event of Default, Landlord may, at its election, after any applicable grace
period provided to Tenant herein, without further notice, with or without
terminating this Lease, terminate Tenant’s right to possession of the Premises
and right to enter the Building, and Tenant shall then quit and surrender the
entire Premises to Landlord, but Tenant shall remain liable as provided in this
Lease.  Landlord or its agents and
employees may, lawfully without notice, re-enter the Premises and remove all
persons and contents therefrom.  Tenant
shall pay as additional rental at the same time as the rental becomes payable
under these terms hereof a sum equivalent to the rental and additional rental
reserved herein, and Landlord shall have the right, but not the obligation, to
relet the Premises or any part or parts thereof in the name of Landlord or
otherwise, for a term or terms that may at Landlord’s option be less than or
exceed the period that would otherwise have constituted the balance of the
Term.  If the Premises or any part or
parts thereof are relet by Landlord, Tenant shall nevertheless remain liable
for any deficiency between the rental and additional rental reserved herein or
covenanted to be paid and any proceeds of such reletting, after deducting from
such proceeds all expenses incurred by Landlord in connection with repossession
and reletting, including, but not limited to, legal expenses, attorneys’ fees,
brokerage commissions, and expenses of keeping the Premises in good order and
preparing and altering the same for reletting. 
Tenant shall not be entitled to any excess rental above that covenanted
to be paid by Tenant under this Lease. 
The failure or refusal of Landlord to relet the Premises or any part
thereof shall not release or affect Tenant’s liability hereunder.  Any sums due to Landlord shall be paid in
monthly installments by Tenant on the rent day specified in this Lease and any
suit brought to collect on the amount due for any month shall not prejudice in
any way the rights of Landlord to collect any due for any subsequent month.  Landlord may, at its option, make
commercially reasonable alterations, repairs, and replacements to the Premises
and paint the Premises as Landlord may consider advisable to relet the Premises
or any part thereof and the making of such alterations, repairs, and
replacements and the painting shall not be construed as releasing Tenant from
liability hereunder.  The cost of making
such alterations, repairs, and replacements and painting shall be at the
expense of Tenant, and shall constitute additional rental under this Lease; but
shall not exceed an amount equal to Landlord’s then building standard.  Notwithstanding anything here to the
contrary, Landlord agrees that within a reasonable time following the exercise
of its remedies after an Event of Default, Landlord shall list the Premises
with a broker, make the Premises available for viewing by prospective tenants
and take reasonable actions to mitigate the damages of Tenant.

 

23

 

Right to Terminate Lease
- On an Event of Default, Landlord shall have the option, after notice to
Tenant, to terminate this Lease and the Term shall immediately expire and come
to an end and Tenant shall then quit and surrender the entire Premises to
Landlord and Landlord or its agents and employees may, lawfully without further
notice, re-enter the Premises and remove all persons and contents
therefrom.  Tenant shall nevertheless
remain liable on all of the terms of this Lease and shall reimburse Landlord
for all expenses incurred by Landlord for repossessing and reletting all or any
portion of the Premises, including, but not limited to, legal expenses,
attorneys’ fees, brokerage commissions, and expenses of keeping the Premises in
good order and preparing and altering the same for reletting.

 

Non-Exclusive Remedies
- Any mention in this Lease of any particular remedy shall not preclude
Landlord from exercising or pursuing any remedy in law or in equity.  Election by Landlord of its right to
terminate possession of the Premises and Building by Tenant shall not preclude
Landlord from subsequently exercising its right to terminate this Lease.  Tenant hereby waives any rights of redemption
granted by or under any present or future Laws. 
In the event of the termination of this Lease pursuant to this Section,
Landlord shall forthwith notwithstanding any other contrary provisions of this
Lease, be entitled to recover from Tenant as actual damages an amount equal to
the difference between the rental and additional rental reserved in this Lease
for the unexpired portion of the then Term leased and the then fair and
reasonable rental value of the Premises for the same period.  Such amount shall be discounted to the date
payable to present worth at a discount rate equal to five (5) percentage points
above the discount rate then in effect, at the Federal Reserve Bank located
nearest to the Premises.  These
provisions shall not limit or prejudice the rights of Landlord to prove and
obtain as damages by reason of such termination, an amount equal to the maximum
allowed by any statute or rule of law in effect at the time such damages are
proved, regardless of whether such amount be greater than the amount of the
deficiency referred to above.

 

Cure by Landlord
- If an Event of Default occurs, Landlord shall have the immediate right, in
addition to all rights and remedies outlined in this Section 14.2 (Remedies),
after thirty (30) days prior written notice to Tenant and its failure to cure
within said period, to cure the Event of Default for the account of and at the
cost and expense of Tenant, and the full amount so expended by Landlord, plus
interest thereon at the annual rate equal to two percent (2%) above the then
current present rate announced by Mercantile Safe Deposit & Trust Company,
shall immediately be due and owing by Tenant to Landlord as additional rental
hereunder.  Landlord’s cure of the Event
of Default shall not cure Tenant’s Event of Default.

 

Landlord Default - If Tenant
believes that Landlord has breached or failed to comply with any provision of
this Lease applicable to Landlord, Tenant shall give written notice to Landlord
describing the alleged breach or non-compliance.  Landlord will not be deemed in default under
this Lease if Landlord cures the breach or non-compliance within fifteen (15)
days after receipt of Tenant’s notice or, if the same cannot reasonably be
cured within such fifteen (15) day period, if Landlord in good faith commences
to cure such breach or non-compliance within such period and then diligently
pursues the cure to completion.  Tenant
also will send a copy of such notice to the holder of any Mortgage of whom
Tenant has been notified in writing and such holder also will have the right to
cure the breach or non-compliance within the period of time described
above.  Without modifying the cure period
set forth above, Landlord and any Mortgagee will use commercially reasonable
efforts to remedy any breach or failure to comply with this Lease that
adversely affects Tenant’s use or access to the Premises as soon as possible.

 

Tenant’s Remedies - Time shall be of
the essence hereof.  If Landlord breaches
or fails to comply with any provision of this Lease applicable to Landlord, and
such breach or non-compliance is not cured within the

 

24

 

period of time described
in Section 14.3 hereof, then Tenant may exercise any right or remedy available
to Tenant at law or in equity expressly including, but not by way of
limitation, the right to cure any such defaults for the account of and at the
cost and expense of Landlord, and the full amount so expended by Tenant, plus
interest thereon at the annual rate equal to 2% above the then current prime
rate announced by Mercantile Safe Deposit and Trust Company immediately shall
be due and owing by Landlord to Tenant and upon the failure of Landlord to make
payment thereof within ten (10) days after written request therefore, Tenant
shall have the right to offset the same against any rental hereafter falling
due.

 

LANDLORD’S RIGHT OF ENTRY:  Landlord shall have the right, without
abatement of rent, after reasonable prior written notice, but only with a
representative of Tenant unless Tenant agrees otherwise, in each instance, to
enter the Premises at any hour to examine the same, or to make such repairs and
alterations as Landlord shall deem necessary (including, but not limited to,
the installation of pipes, ducts, conduits, wires, appurtenant fixtures, and
mechanical systems to serve other tenants or the Common Area of the Building)
and also to exhibit the Premises to be let. 
If, during the last month of the Term, Tenant shall have removed all or
substantially all of its property therefrom Landlord may immediately enter and
alter, renovate, and redecorate the Premises, without elimination or abatement
of rent, or incurring liability to Tenant for any compensation, and such acts
shall have no effect on this Lease. 
Nothing herein contained, however, shall be deemed or construed to
impose on Landlord any obligation, responsibility, or liability whatsoever, for
the care, supervision, or repair of all or any part of the Building, other than
as herein elsewhere expressly provided. 
Landlord shall also have the right at any time, without the same
constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, but only with Tenants’ prior written consent
which may not be unreasonably withheld or delayed provided same does not
adversely affect Tenant’s use and enjoyment of the Real Property, to change the
arrangement and/or location of entrances or passageways, doors and doorways,
and corridors, stairs, toilets, elevators, or other public parts of the
Building and any other rental spaces in the Building other than the Premises.

 

MECHANICS’ LIENS:  Tenant shall not permit, and shall indemnify,
defend, and hold harmless Landlord for any mechanics’ or materialmen’s liens
against the Premises or any part thereof, arising through Tenant, or any person
furnishing work, labor, services, or materials to the Premises or to fixtures
located thereon, and claiming directly or indirectly through or under Tenant,
or through or under any act or omission of Tenant; provided, however, that if
such a mechanics’ or materialmen’s lien is established against the Premises
arising out of a bona fide dispute with the subcontractor or supplier making
claim for same, the establishing of such a lien shall not be deemed a
breach  hereunder, so long as Tenant
posts an adequate bond for the amount of such lien or otherwise posts monies,
which amounts are sufficient to release the Premises from the lien.

 

SUBORDINATION, ATTORNMENT:

 

Subordination  - If requested by
Landlord, Tenant shall, at any time hereafter, on request, execute any
instruments, leases, or other documents that may be reasonably required by any
holder of a Mortgage, or by Landlord to subject or subordinate this Lease and
the tenancy created hereunder to the lien, operation, and effect of any such
Mortgage created after the date hereof; provided, however, that every such
Mortgagee shall grant nondisturbance to Tenant on such terms reasonably
required by Tenant to recognize, inter alia,
the validity of this Lease in the event of a foreclosure of Landlord’s interest
and also Tenant’s right to remain in occupancy of

 

25

 

and have access to the
Premises as long as no Tenant Event of Default has occurred and is
continuing.  Tenant shall execute such
instruments, releases or documents within ten (10) business days of Landlord’s
written request therefor.  If Tenant
fails to do so, Landlord shall issue a second written request and Tenant’s
failure to so execute any such instruments, releases, or documents within ten
(10) days of the second written request therefor shall constitute an Event of
Default.  Tenant acknowledges the right
of the holder of any Mortgage on all or any part of the Building, whether
presently existing or hereafter created, to subordinate the lien, operation,
and effect of all or any portion of the Mortgage to this Lease provided such
holder grants Tenant a non-disturbance agreement as aforesaid in connection
with such subordination.  On not less
than ten (10) days notice, Tenant shall execute, acknowledge, and deliver to
such holder Tenant’s agreement to such a subordination in such form as such
holder may reasonably require.

 

Attornment  - On any termination
of Landlord’s interest in the Premises, (whether through foreclosure of a
Mortgage or otherwise), Tenant shall, on request, attorn to the person or
organization then holding title to the reversion of the Premises (the “Successor”)
and to all subsequent Successors, and will pay to the Successor all of the
rents and other monies required to be paid by Tenant hereunder and perform all
of the other terms, covenants, conditions, and obligations on its part in this
Lease contained.

 

ESTOPPEL CERTIFICATE:  Tenant or Landlord shall from time to time,
upon request of Landlord or Tenant or any other person, firm, corporation, or
other entity having an interest in the Premises, deliver or cause to be
delivered to each other or such other person, within ten (10) days from the
date of demand, without charge, a written statement, duly executed and
acknowledged, certifying (a) that this Lease is valid and subsisting,
unmodified, and in full force and effect as of the date of such certification
(or, if there has been any modification thereof, that it is in full force and
effect as so modified, stating therein the nature of such modification), (b)
that Landlord is not in default under any of the terms of this Lease, or if
Landlord is in default, the exact nature of such default, (c)that Tenant has
accepted possession of the Premises, and the Commencement Date, (d) that Tenant
is not in default under any of the terms of this Lease (except as may be expressly
set forth by Tenant as a qualification of such certification), (e) the date
through which all rents hereunder have been paid, (f) the amount of any prepaid
rents under this Lease, and (g) as to any other fact or condition reasonably
requested by Landlord, Tenant, any Mortgagee of the Building or prospective
Mortgagee or purchaser of all or any of the Premises or the Building or any
assignee or prospective assignee of any interest of Landlord or Tenant under
this Lease.

 

NOTICES:  Any notices required or permitted to be given
under this Lease shall be in writing and may be delivered personally or by
certified mail return receipt requested, to Landlord at its office at the
address set forth in Section 1.1 (Landlord’s Address) and to Tenant at the Premises.  Any notice given by mail shall be deemed
received one (1) day after the date such notice and the required copies are
mailed as provided in this Section.

 

SIGNAGE, BUILDING NAME AND
DIRECTORY:

 

Building Name  - Landlord
covenants and agrees that so long as Tenant or any successor thereto shall be
in possession of the Premises and is occupying at least 100,000 square

 

26

 

feet therein, the
Building shall be known as The Mercantile Bank and Trust Building or such other
name as Tenant or any successor or assign of Tenant shall elect and the
Building shall be so referred to in any signage or media relating to the
Building, and during such period, Landlord shall not be permitted to change the
name of the Building.

 

Exterior Signage  - Landlord
herewith confirms, consents and agrees that all existing signage on the
exterior of the Building which identifies the Tenant by its name and/or its
logo shall be permitted to remain and shall not be modified, removed or obstructed
without the prior written approval of Tenant, which may be granted or withheld
in the sole discretion of Tenant. 
Furthermore, Landlord shall not be permitted to install any additional
exterior signs without the prior written approval of Tenant which may be
granted or withheld in the sole discretion of Tenant.  Tenant, provided it restores any damage
caused thereby shall have the right to change, alter or modify all of such
existing exterior signage, with Landlord’s consent, not to be unreasonably withheld.

 

Interior Signage  - Landlord
herewith approves all of the existing interior signage which identifies Tenant
by its name or logo and agrees that same may not be removed by Landlord or in
any manner obstructed by Landlord without the prior written approval of Tenant,
which may be granted or withheld in Tenant’s sole discretion.  Tenant, provided it restores any damage
caused thereby, shall have the right to change, alter or modify all of such
existing interior signage, with Landlord’s consent, not to be unreasonably
withheld..

 

Building Directory  - Landlord
currently maintains and operates a Building directory in the lobby of the
Building.  Landlord agrees that during
the term, Tenant shall be entitled to the same number of listings thereon as
Tenant currently utilizes.  In addition,
in the event Tenant shall lease additional space from Landlord in the Building
pursuant to Sections 21 or 22 hereof, or otherwise Tenant shall be permitted to
add such additional lines for listing as Tenant reasonably shall request in
conjunction therewith.

 

TENANT’S EXPANSION RIGHTS:  Landlord has advised Tenant that effective as
of January 1, 2005, the lease (“RFS Lease”) between Landlord and Reznick,
Fedder and Silverman (“RFS”) of the entire 21st floor and
approximately 5,365 square feet of space on the 20th floor and
approximately 5,482 square feet of space on the 11th floor
(collectively “Expansion Space”) may become available.  Subject to that availability, Landlord
herewith rents unto Tenant the Expansion Space described in Exhibit A at and for the rental described
in Exhibit B hereof and all of
said Expansion Space, effective as of the date of the delivery thereof as
required hereunder to Tenant, in each instance will be deemed part of the
Premises and subject to the terms and conditions of this Lease.  Landlord will deliver the Expansion Space to
Tenant in the condition which RFS is obligated to return the space to Landlord
under the terms of the RFS Lease, and otherwise in its then current “AS IS”
condition.  The term of Tenant’s Lease of
the Expansion Space shall commence on the date on which Landlord shall deliver
such space to Tenant, and shall be co-terminus with the Term of this Lease and
although Landlord shall not be responsible for any delays in the delivery
thereof caused or occasioned by RFS’s holdover of the space, Landlord shall
deliver the Expansion Space to Tenant as promptly as reasonably possible.  In the event RFS is obligated to deliver the
Expansion Space to Landlord as of January 1, 2005, but fails to do so, Landlord
agrees that it shall promptly pursue RFS to recapture possession of the

 

27

 

Expansion Space and for all holdover rent as set forth in the RFS Lease
and all such holdover rent in excess of the rent due from RFS but for holdover
will be paid to Tenant for the inconvenience caused by such delay in delivery
of the Expansion Space.  In the event
that RFS shall fail to terminate its lease of the Expansion Space effective as
January 1, 2005, Landlord and Tenant each herewith covenant and agree that upon
the termination date of the current term of the RFS Lease pursuant to its terms
(September 30, 2007, or on such earlier date as the same may be terminated),
Landlord herewith agrees to lease to Tenant and Tenant herewith agrees to lease
from Landlord all of the Expansion Space in the condition which RFS is
obligated to return the space to Landlord under the terms of the RFS Lease, and
otherwise in its then current “AS IS” condition.  In such event, the term shall be co-terminus
with the Term of this Lease, the Basic Annual Rent shall be as established
under Exhibit B hereto and all
other terms and conditions of this Lease shall be applicable thereto save and
except that the Base Year for Taxes and the Base Year for Building Expenses
will be the then current fiscal tax year, or calendar year, as the case may be,
during which the Expansion Space is delivered to Tenant.

 

FIRST REFUSAL:  If Landlord, at any time during the Term of
this Lease, receives an offer (“Offer”) in the form of a written and executed “Letter
of Intent” or “Proposal Letter”, acceptable to the Landlord, from third parties
to lease any space within the Building that becomes vacant and which space
Landlord otherwise is not committed to lease to an existing tenant within the
Building under lease existing as of the date hereof, Landlord will notify
Tenant in writing and include in such notice the business terms of such
Offer.  Tenant will have ten (10)
business days from and after the date of its receipt of such notice from
Landlord in which to elect by notice to Landlord to lease such space for the
consideration and on the terms contained in the Offer.  If Tenant elects to exercise this right of
first refusal, Landlord and Tenant will amend this Lease to include such
additional space on the terms stated in the Offer.  The execution of the Lease Amendment will
take place on or before the later of (a) the applicable commencement date set
forth in the Offer or (b) fifteen (15) days after the date that Landlord
receives Tenant’s acceptance notice.  If
Tenant fails to deliver its acceptance notice within such ten (10) business day
period, Tenant shall be deemed to have rejected the Offer and thereafter
Landlord shall be free to lease the space subject to the Offer to the
prospective tenant upon economic terms substantially similar to those contained
in the Offer at any time after expiration of such ten (10) business day
period.  Tenant’s right of first refusal
will be deemed a continuing right throughout the term and will apply to all
space which becomes vacant within the Building. 
In the event Tenant elects to lease the space, then notwithstanding the
term set forth in the Offer, the term for such space will be co-terminus with
the Term of this Lease.

 

MISCELLANEOUS:

 

Waivers  - The acceptance of rent
or other payments by Landlord, or the endorsement or statement on any check or
any letter accompanying any check for rent or other payment shall not be deemed
an accord or satisfaction or waiver of any obligation of Tenant regardless of
whether Landlord had knowledge of any breach of such obligation.  Neither failure to insist on compliance with
any of the terms, covenants, or conditions, nor any waiver or relinquishment of
any right or power hereunder, at any one time or more times, shall be deemed a
waiver or relinquishment of such rights and power at any other time or times or
under any other circumstances.

 

28

 

Definition of Landlord  - As used
herein, the term “Landlord” shall mean the entity hereinabove named as such,
and its successors and assigns (each of whom shall have the same rights,
remedies, powers, authorities, and privileges as it would have had, had it
originally signed this Lease as Landlord). 
No person holding Landlord’s interest hereunder (regardless of whether
such person is named as “Landlord” herein) shall have any liability hereunder
after such person ceases to hold such interest, except for any such liability
accruing while such person holds such interest. 
Neither Landlord nor any principal of Landlord, whether disclosed or
undisclosed, shall have any personal liability under any provision of this
Lease.  If Landlord defaults in the
performance of any of its obligations hereunder or otherwise, Tenant shall look
solely to Landlord’s equity, interest, and rights in the Real Property for
satisfaction of Tenant’s remedies on account thereof.

 

Entire Agreement - This Lease,
including any exhibits and addenda, contains all of the terms and conditions
agreed on by Landlord and Tenant for the Premises and the Building.  All prior negotiations, correspondence, and
agreements are superseded by this Lease and any other contemporaneous
documents.  As of the date hereof, all
prior leases and agreements between Landlord and Tenant are terminated.  No officer or employee of any party has any
authority to make any representation or promise not set forth in this Lease and
other contemporaneous documents, and each of the parties hereto agrees that it
has not executed this Lease in reliance on any representations or promise not
set forth in this Lease or such contemporaneous documents.  This Lease may not be modified or changed
except by written instrument signed by Landlord and Tenant.  Notwithstanding the foregoing, if in
connection with obtaining construction, interim, or permanent financing for the
Building, the lender shall request reasonable modifications in this Lease as a
condition to such financing, Tenant shall not unreasonably withhold, delay, or
defer its consent therefor, provided that such modifications do not increase
the obligations of Tenant hereunder or materially adversely affect the
leasehold interest hereby created or Tenant’s rights hereunder.

 

Covenant to Survive  - If any
covenants or obligations are yet to be performed by Tenant as of the date of
expiration or other termination of this Lease, regardless of whether they are
then known or determined, including, but not limited to, the payment of
escalation of Taxes and Building Expenses and of other rents accruing under
this Lease as of such date, such covenants and obligations shall survive the
expiration or other termination of this Lease.

 

Applicable Law  - This Lease
shall be given effect and construed by application of Maryland law, without
regard to principles of conflict of laws. 
Any action or proceeding arising hereunder shall be brought in the
courts of Maryland; provided, however, that if any such action or proceeding
arises under the Constitution, laws or treaties of the United States of
America, or if there is a diversity of citizenship between the parties thereto,
so that it is to be brought in a United States District Court, it shall be
brought in the United States District Court for the Northern District of
Maryland.

 

Time of Essence  - Time is of the
essence in every particular, and particularly where the obligation to pay money
is involved.

 

29

 

Brokers  - Tenant represents and
warrants to Landlord that Tenant has not had dealings with any broker or finder
in locating the Premises and that it knows of no other person who is or might
be entitled to a commission, finder’s fee, or other like payment in connection
herewith and does hereby indemnify, defend, and agree to hold Landlord harmless
from and against all claims, liabilities, and expenses that Landlord may incur
should such representation and warranty be incorrect.  Landlord agrees to indemnify and hold Tenant
harmless from any claims of liability to any broker or other person arising out
of or relating to any agreement by Landlord to pay a brokerage commission,
finder’s fee, or like payment to such broker or such person relating to the
leasing of the Premises, provided, however, that Landlord shall not be
obligated to Tenant for any claims or liability to any broker or other person
with whom Tenant has had any dealings concerning the Building whose identity
Tenant has failed to disclose to Landlord as required by this Section.

 

Captions  - All headings anywhere
contained in this Lease are intended for convenience of reference only and are
not to be deemed or taken as a summary of the provisions to which they pertain
or as a construction thereof.

 

Severability  - If any term or
provision of this Lease or the application thereof to any person or
circumstances shall to any extent be invalid or unenforceable, the remainder of
this Lease or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby, and each term and provision of this Lease shall
be valid and enforced to the fullest extent permitted by Law.

 

Recordation  - If at any time
Landlord or any Mortgagee of Landlord’s interest in the Premises shall require
the recordation of this Lease, such recordation shall be at Landlord’s
expense.  If at any time Tenant shall
desire the recordation of this Lease, such recordation shall be permitted at
Tenant’s expense and after fifteen (15) days written notice of intended
recordation to Landlord.  If the
recordation of this Lease shall be required by any valid governmental order, or
if any governmental authority having jurisdiction in the matter shall assess
and be entitled to correct recordation and transfer taxes on this Lease, Tenant
shall execute such acknowledgments as may be necessary to effect such
recordation, and pay as additional rent, on Landlord’s request, an recording
fees and recordation and transfer taxes payable on, or in connection with, this
Lease or such recordation.

 

Construction  - As used herein
the term “person” shall mean a natural person, a trustee, a corporation, a
partnership, a limited liability company, and any other form of legal entity;
and all reference made (a) in the neuter, masculine, or feminine gender shall
be deemed to have been made in all such genders, (b) in the singular or plural
number shall be deemed to have been made, respectively, in the plural or
singular number as well, and (c) to any section, paragraph, or subparagraph
shall unless therein expressly indicated to the contrary, be deemed to have
been to such section, paragraph, or subparagraph of this Lease..

 

Tenant as Corporation  - If
Tenant executes this Lease as a corporation, then Tenant and the persons
executing this Lease on behalf of Tenant represent and warrant that the
individuals executing this Lease on Tenant’s behalf are duly authorized to
execute and deliver this Lease on its behalf in accordance with a duly adopted
resolution of the board of directors of

 

30

 

Tenant, a copy of which
is to be delivered to Landlord on execution hereof, and in accordance with the
By-Laws of Tenant and that this Lease is binding on Tenant in accordance with
its terms.

 

Indemnification  - In each
instance in this Lease that either party agrees to indemnify, defend, and hold
the other harmless, (a) such indemnification shall be against any and all
liabilities, claims, fines, damages, costs, expenses, and fees, including
attorneys’ fees, causes of action and judgments and executions thereon, of any
kind and nature, and (b) such defense counsel shall be acceptable to such party
in all respects.

 

Merger  - There shall be no
merger of this Lease or of the leasehold estate hereby created with the fee
estate in the Premises or any part thereof because the same person, firm,
corporation, or other legal entity may acquire or hold, directly or indirectly,
this Lease or the leasehold estate and the fee estate in the Premises or any
interest in such fee estate without the prior written consent of the Mortgagee.

 

Transfer by Landlord  - Landlord
may transfer its interest in the Premises and this Lease without the consent of
Tenant, at any time and from time to time. 
Landlord and its successors shall be relieved of their obligation to
refund security deposits and other funds to Tenant that they have received from
Tenant or a predecessor Landlord only to the extent they transfer such amounts
to their respective transferees. 
Landlord may lease any portion of the Building to others on such terms
and for such purposes as Landlord considers appropriate and may terminate or
modify leases with others for any portion of the Building without obligation to
Tenant and without relieving Tenant of any obligation under this Lease..

 

Inability to Perform  - Except as
may otherwise be provided in this Lease, no conduct or act or failure to act on
the part of either the Landlord or the Tenant, and no failure to perform any
covenant condition or provision of this Lease on the part of either Landlord or
Tenant to be performed shall constitute a default hereunder if such conduct or
act, or failure to act or perform was due to causes beyond the control of
Landlord or Tenant, as the case may be, including any conduct or act, or
failure to act or perform caused by or resulting from act of god or a public
enemy, strike, lockout, other labor dispute or disturbance, riot or civil
commotion, fire or other casualty, or other similar event.  Nothing in this subsection 23.16 shall be
construed to prevent any abatement of rent to which the Tenant would be
entitled under any other provision of this Lease.  This Subsection 23.16 shall not be construed
to excuse Tenant from paying when due the rent, additional rent and all sums due
from Tenant to Landlord except as may be expressly set forth herein.

 

WAIVER OF JURY TRIAL  - LANDLORD
AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THEY
OR ANY OF THEM MAY BE A PARTY ARISING OUT OF OR IN ANY WAY RELATED TO THIS
LEASE.  IT IS UNDERSTOOD THAT THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS.  THIS WAIVER IS
KNOWINGLY, WILLINGLY, AND VOLUNTARILY MADE BY LANDLORD AND TENANT, AND EACH
PARTY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY
ANY INDIVIDUAL

 

31

 

TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  LANDLORD AND TENANT ACKNOWLEDGE AND AGREE
THAT THIS PROVISION IS A SPECIFIC AND MATERIAL ASPECT OF THIS LEASE.  LANDLORD AND TENANT EACH REPRESENT THAT IT
HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, AND THAT IT HAS HAD AN OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL.

 

ADDITIONAL RIGHTS OF TENANT: - Landlord recognizes that as a result of this Lease, Tenant will lease
from Landlord approximately fifty percent (50%) of the Building and will be the
prime Tenant therein.  Landlord further
recognizes that Tenant will be using the Premises as the headquarters for its
banking operations and that in addition to the other rights of Tenant herein
before set forth, Tenant requires certain additional rights and amenities with
respect to the Premises.  For and as
additional consideration for Tenant entering into this Lease, Landlord
covenants and agrees that during and throughout the Term of this Lease, Tenant
shall have the following additional rights.

 

Building Cafeteria - Landlord
recognizes that a cafeteria currently is located in the lower level of the
Building for the primary use of tenants in the Building.  Landlord covenants and agrees to take all
reasonable efforts to cause a cafeteria or other restaurant of comparable size
and quality to operate within the Building for the benefit of tenants therein
for duration of the term of its agreement dated March 3, 2004, as amended
November   , 2004, (“Agreement”) with Jeb Brownstein trading as
Hopkins Plaza Deli as the operator, and which runs until March 2, 2006,
with the operator having a right of extension thereof through March 2,
2008.  Notwithstanding the above, upon
termination of the Agreement, whether as a result of the expiration or early
termination thereof, Tenant shall have the right to lease such space from
Landlord for cafeteria or restaurant use only within thirty (30) days after
written notice of the availability thereof from Landlord, with the term thereof
to be coextensive with the term of this Lease for a Basic Annual Rental of
$1.00, and with Tenant to be responsible for all of the maintenance, repairs
and replacements to such space and the equipment thereon, and for payment for
utilities, cleaning, housekeeping and janitorial services, including all
kitchen equipment and the provision of all insurance and permits for the
operation thereof.

 

Lobby Shop - Landlord recognizes
that a lobby shop currently is located in the lobby of the Building for the
primary use of tenants in the Building. 
Landlord covenants and agrees to take all reasonable efforts to cause a
lobby shop or other shop of comparable size and quality to operate within the
Building for the benefit of tenants therein for duration of the Term of this
Lease.

 

Main Lobby  - Landlord recognizes
that the use, appearance and operation of the first floor lobby of the Office
Building is critical to the business, security and image of the Tenant.  In furtherance thereof, Landlord agrees that
it shall comply with all reasonable requests of Tenant for maintenance, repair,
replacements, decorations, esthetic appearance, access and security and that it
will make only such modifications to the main lobby with regard to any or all
of such matters as shall have been approved in advance in writing by Tenant
which approval shall not be unreasonably withheld or delayed so long as such
modifications do not adversely affect Tenant’s identity, image, or use of the
Premises.  It further is understood and
agreed that Tenant expressly reserves the right to use the main lobby and the lower
level lobby for displays, as a museum area and for public and private events
subject to reasonable rules and regulations as may be adopted from time to time
by Landlord with the reasonable approval of Tenant.

 

Roof Antenna - Landlord recognizes
that Tenant currently has installed certain rooftop antennae on the office
tower and the pavilion.  Tenant shall
have the right to (a) continue such usage for so long as Tenant shall desire,
and (b) expand its communications facilities for its own use so long as same
does not impair the

 

32

 

structural integrity of
the roof or the Building, and Landlord agrees that it will not permit any other
rooftop communication facilities or usage which interferes with the use by
Tenant of the roof for communications purposes.

 

Chases, Ducts, Conduits
and Wires - Landlord recognizes that Tenant currently is
using certain chases, ducts, conduits and wires to provide mechanical,
electrical and communications systems (collectively “Systems”) to its
Premises.  Landlord covenants and agrees
that (a) as to those Systems which Tenant currently is sharing the use of with
others, Tenant shall have the continued and uninterrupted use thereof in common
with others; and (b) as to those Systems which Tenant is using exclusively,
Tenant shall have the continued exclusive right to the use of same.

 

Flagpole - Tenant shall have the
right in its sole and absolute discretion, to continue the use of the existing
flagpole on the Building for the display of Tenant’s flag and such other flags
as Tenant reasonably elects to display in its sole discretion.  Landlord agrees not to erect any additional
flagpoles on the Building unless requested by Tenant for Tenant’s use or unless
approved by Tenant.  Landlord agrees, but
at the sole cost of Tenant, that it shall be responsible for all maintenance,
repair and replacement of the flagpoles and for the hanging and display of
Tenant’s flags on such schedule as reasonably may be adopted by Tenant and
provided in writing to Landlord from time to time.

 

Preventive Maintenance
Program - Landlord expressly covenants and agrees that the
Preventive Maintenance Program utilized within the Building is consistent with
standards for same as reasonably required by Tenant.  In the event such system fails to meet
standards comparable to the services provided at other bank headquartered and
anchored Class A office buildings in downtown Baltimore.

 

Building Security - In addition to
and not in limitation of the standards set forth in Section 8.8 hereof,
Landlord covenants and agrees that (a) it will coordinate all security systems
and policies and procedures for the Building and all of the components thereof
with Tenant so as to assure that security and life safety systems shall be in
place and operating at all times in a manner comparable to the services
provided at other bank headquartered and anchored Class A office buildings in
downtown Baltimore; (b) it shall provide such additional security and life
safety systems for the main lobby and the Building at its expense.  Additionally, Tenant shall have the right, at
its expense, to undertake, install and use such security and life safety
systems (a) within its Premises as Tenant deems appropriate, and (b) within the
Common Areas of the Building, in addition to those required of Landlord
hereunder, as approved by the Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed.

 

ATM - Landlord covenants and agrees
that Tenant shall have the right, in its sole discretion, to operate within the
first floor lobby and elsewhere within the Building, an ATM system and any
successor system thereto provided that the installation, maintenance, repair
and security therefore shall be at the sole risk of Tenant.

 

Tenant Exclusive - Landlord
covenants and agrees that during the Term of this Lease, Landlord shall not
permit or suffer any tenant, licensee or occupant of the Building to use the
Building, any part thereof, or the real property (other than Tenant or a tenant
under a lease existing as of this date where such use expressly is permitted)
for (a) the operation of a bank or banking operations (b) for the provision of
commercial and retail banking, lending and brokerage services, trust services,
and any comparable type services not currently in usage but hereafter adopted
and (c) for the use of an ATM or other comparable machine or service, which
exclusive is of the essence of this Lease to Tenant.  Notwithstanding the above, if Tenant abandons
any exclusive use for a continuing period of more than one (1) year,
Landlord thereafter may cancel the exclusive on the abandoned usage at any time
thereafter by written notice to Tenant prior to resumption of such use by
Tenant.

 

 

[SIGNATURES
CONTAINED ON NEXT PAGE]

 

33

 

IN WITNESS WHEREOF, the
parties hereto have executed this Lease duly attested on the date first above
written with the specific intention of creating a document under seal.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
  WITNESS:

  	
  MBC REALTY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
  WITNESS:

  	
  MERCANTILE-SAFE DEPOSIT
  AND

  TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

34

 

EXHIBIT
A

 

DESCRIPTION OF
PRIME OFFICE SPACE

(See attached
page)

 

A-1

 

EXHIBIT
A-1

 

DESCRIPTION OF
BACK OFFICE SPACE

(See attached
page)

 

A-1-1

 

EXHIBIT
A-2

 

DESCRIPTION OF
STORAGE SPACE

(See attached
page)

 

A-2-1

 

EXHIBIT
B

 

BASIC ANNUAL RENT
OFFICE SPACE

(See attached
page)

 

B-1

 

EXHIBIT
B-1

(See attached
page)

 

B-1-1

 

EXHIBIT
B-2

(See attached
page)

 

B-2-1

 

EXHIBIT
C

 

RULES AND
REGULATIONS

 

1.             Tenant shall not obstruct or permit its Agents to
obstruct, in any way, the sidewalks, entry passages, corridors, halls, ramps,
stairways or elevators of the Building, or use the same in any other way than
as a means of passage to and from the Premises; smoke in the elevators; throw
substances of any kind down the passages of or out of the Building, or in the halls
or passageways.

 

2.             Water closets, urinals, and all plumbing shall not be
used for any purpose other than those for which they were constructed; and no
sweepings, rubbish, ashes, newspaper, or any other substances of any kind shall
be thrown into them.

 

3.             Landlord shall have the right, within reasonable
limitations, to prescribe the weight, size, and position of all safes and other
bulky or heavy equipment and all freight brought into the Building by any
tenant; and also the times of moving the same in and out of the Building; and
all such moving must be done under the supervision of the Landlord.

 

4.             No bicycle, vehicles, or animals (except seeing eye
dogs) of any kind shall be brought into or kept in or about the Premises.

 

5.             The requests for services by Tenant will be attended to
only on application at the office of the Building Manager.   Employees of Landlord shall not perform any
work for Tenant or do anything outside of their regular duties, unless under special
instructions from the office of Landlord.

 

6.             No contract of any kind with any supplier, including
suppliers of towels, water, ice, toilet articles, waxing, rug shampooing,
venetian blind washing, furniture polishing, lamp servicing, cleaning of
electrical fixtures, and removal of waste paper, rubbish, or garbage, or other
like service shall be entered into by Tenant, nor shall any vending machine of
any kind be installed by or on behalf of the Tenant, in the Building, without
prior written consent of Landlord, which consent shall not be unreasonable
withheld or delayed.

 

7.             Tenant shall not employ any person or persons for the
purpose of cleaning the Premises, without the prior written consent of
Landlord, and then only such janitor contractor or employees satisfactory to
Landlord, who shall be subject to Landlord’s supervision, but at Tenant’s sole
expense and responsibility.  Landlord
shall not be responsible to Tenant for any loss of property from the Premises
however occurring, or for any damage done to the effects of Tenant by such janitors
or any of its employees, or by any other person or any other cause.

 

8.             Tenant shall not make any unusual noises in the
Building; permit to be played any musical instrument in the Premises, permit to
be played any radio, television, recorded or wired music in such a loud manner
as to disturb or annoy other tenants; or permit any unusual odors to be
produced on the Premises.

 

C-1

 

9.             Landlord shall endeavor to prevent canvassing,
soliciting, and peddling in the Building and Tenant shall cooperate to prevent
the same.

 

10.           There shall not be used in the
Premises or in the Building, either by Tenant or by others for or on the Tenant’s
behalf in the delivery or receipt of merchandise, and hand trucks except those
that comply with Landlord’s requirements and no hand trucks will be allowed in
public passenger elevators.

 

11.           Before closing and leaving the
Premises at the end of each day, Tenant shall ensure that all entrance doors to
the Premises are locked.  No additional
lock or locks or similar devices shall be placed by Tenant or any duplicate key
made.  Tenant shall not change any
locks.  Keys to doors and washrooms shall
be returned to Landlord at the termination of the tenancy, and, in the event of
loss of any keys furnished, Tenant shall pay Landlord the cost thereof.

 

12.           The windows, doors, partitions and
lights that reflect or admit light into the halls or other places of the
Building shall not be obstructed.  NO
SIGNS, ADVERTISEMENTS OR NOTICES SHALL BE INSCRIBED, PAINTED, AFFIXED OR
DISPLAYED IN, ON, UPON OR BEHIND ANY WINDOWS, by or on behalf of Tenant, except
as may be required by Law or agreed by the parties in writing; and no sign,
advertisement, or notice shall be inscribed, painted, or affixed on any doors,
partitions, or other part of the inside or outside of the Building by or on
behalf of the Tenant, without the prior written consent of the Landlord.  If such consent be given, any such sign
advertisement, or notice shall be inscribed, painted, or affixed by Landlord,
or a company approved by Landlord, but the cost of the same shall be charged to
and be paid by Tenant, and Tenant agrees to pay the same promptly, on demand as
additional rent.  All signs, advertisements,
or notices permitted herein shall be only of such color, size, style, place,
and material as approved by Landlord, in writing.

 

13.           No curtains, blinds, shades, screens,
awnings, or other form of inside or outside window covering, or window
ventilators or similar devices shall be attached or hung in, or used in
connection with, any window or door of the Premises, without the prior written
consent of Landlord.  If Landlord
consents, such coverings or devices must be of a quality, type, design, and
color, and attached in a manner approved by Landlord.

 

14.           After
6:00 p.m., until 8:00 a.m., on weekdays; after 1:00 p.m on Saturdays, and at
all hours on Sunday and legal holidays, any person entering or leaving the
Building is expected to be questioned by such watchman as to his or her business
in the Building and to register on records provided by Landlord the name of the
person to be admitted, the space to which admitted, and time admitted and the
time departed.  Landlord reserves the
right to exclude from the Building during such periods all persons who do not
present a pass to the Building signed by Tenant.

 

C-2

 

EXHIBIT D

 

JANITORIAL
SERVICES

(See attached
pages)

 

D-1

 

EXHIBIT E

 

EXECUTIVE LEVEL
AND WALL SPACE PARKING AREA

(See attached
page)

 

1EXHIBIT 10.QQ

 

EXECUTION VERSION

 

 

MEMBERSHIP
INTERESTS PURCHASE AGREEMENT

 

 

(MBC
Realty, LLC)

 

 

MERCANTILE
BANKSHARES CORPORATION, Seller

 

and

 

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

 

 

 

Property:

 

Two
Hopkins Plaza

Baltimore,
Maryland

 

 

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

  	
   

  
						

 

i

 

	
  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

  	
   

  

 

ii

 

	
   

  	
  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

  	
   

  

 

iii

 

	
  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

  
			

 

iv

 

MEMBERSHIP
INTERESTS PURCHASE AGREEMENT

 

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

 

DEFINITIONS

 

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

 

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

 

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

 

“ALTA” shall mean
The American Land Title Association.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

“Closing”
is defined in Section 10.1.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

“Land”
is defined in Section 2(a).

 

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

 

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

 

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

 

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

 

“MBCR”
is defined in Section 2.

 

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

 

“Membership
Interests” is defined in Section 2.

 

“Mercantile
Lease” is defined in Section 5.1.6.

 

3

 

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

 

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

 

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

 

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

 

“Parties” shall
mean Seller and Buyer.

 

“Permitted Assignee”
is defined in Section 15.6.

 

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

 

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

 

“Plans”
is defined in Section 2(f).

 

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

 

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

 

“Property” is
defined in Section 2.

 

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

 

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

 

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

 

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

 

“Rents” is
described in Section 11.1.

 

“Reznick” is
defined in Section 9.3.

 

“Reznick Lease” is
defined in Section 9.3.

 

“Scheduled Closing
Date” is defined in Section 10.2.

 

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

 

4

 

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

 

“Seller Deliverables”
is described in Section 4.1.

 

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

 

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

 

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

 

“Seller
Default” is defined in Section 12.1.

 

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

 

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

 

“Survey”
is defined in Article 8.

 

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

 

“Title
Policy” is defined in Article 8.

 

“Title
Insurance Company” shall mean LandAmerica Title Insurance Company

 

“Venable”
is defined in Section 15.19.

 

“Venable
Lease” is defined in Section 15.19.

 

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

 

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

 

5

 

membership interests;
PROPERTY

 

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

 

the parcel or
parcels of land described in Exhibit “A” (“Land”), together with
any and all rights, privileges and easements appurtenant thereto owned by MBCR,
including, without limitation, any and all rights of MBCR in and to all air and
development rights, roads, alleys, easements, streets and ways adjacent to the
Land, all appurtenant rights of ingress and egress thereto or therefrom, any
strips and gores within or bounding the Land and any profits, rights or
appurtenances pertaining to the Land, together with all buildings, improvements
and fixtures (other than fixtures owned or removable by any Tenant or other
Person pursuant to a Lease or Contract) located thereon (collectively, “Improvements”;
the Land, together with the Improvements, the “Real Property”);

 

all equipment,
furnishings, inventory and other tangible personal property owned by MBCR and
not owned or removable by any Tenant or other Person pursuant to a Lease or
Contract, if any, placed or located on the Real Property now or prior to
Closing and used in the operation of the Real Property (the “Personal
Property”);

 

all the
interest of the landlord in all Leases, any and all claims or rights to claim
against a Tenant under any Lease and all security deposits paid or deposited by
Tenants in respect of the Leases;

 

all of MBCR’s
rights in and to all service, maintenance and operating contracts, equipment
leases and similar agreements relating to the operation, maintenance and repair
of the Property, including service and maintenance agreements, utility
agreements and other contractual arrangements, all to the extent assumed by
Buyer in accordance with Section 4.6 of this Agreement (collectively, “Contracts”);

 

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

 

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

 

all current
on-site books and records exclusively pertaining to the current operation of
the Property, to the extent in MBCR’s or Seller’s possession, excluding
Privileged Material (collectively, “Books and Records”);

 

6

 

all licenses,
permits, building inspection approvals, certificates of occupancy, approvals,
subdivision maps and entitlements, if any, issued, approved or granted by
Governmental Authorities in connection with the Real Property (collectively, “Licenses
and Permits”); and

 

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

 

PURCHASE PRICE

 

Purchase Price. 

 

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

 

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

 

On the Deposit Date, Buyer shall deposit by delivery of a
bank draft or wire transfer of immediately available funds pursuant to the wire
transfer instructions set forth in the Deposit Escrow Agreement, in escrow with
the Title Insurance Company, a cash payment of Five Hundred Thousand Dollars
($500,000) (such cash payment, together with all interest earned on such funds,
the “Deposit”).  The Deposit shall be
held in escrow, in an interest-bearing account with a federally insured bank
(which may be an Affiliate of Seller), and disbursed by the Title Insurance
Company pursuant to the provisions of this Agreement and the Deposit Escrow
Agreement.  At Closing, the Deposit (including
all accrued interest) shall be paid to Seller as a credit against the Purchase
Price.

 

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

 

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

 

DUE DILIGENCE

 

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

 

7

 

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

 

a rent roll
for the Property for the current year and for past two calendar years, in the
form currently maintained by MBCR (“Rent Roll”) and an accounting of all
refundable security deposits made by Tenants under the Leases (the “List of
Security Deposits”);

 

annual
operating, income and expense statements for the Property for calendar years
2002 and 2003, and for the first nine months of 2004, as well as operating,
income and expense statements on a monthly basis for the trailing 12 month
period ended September 30, 2004, together with such other financial information
as is specified in Section 7.1(A)(xxvii) hereof;

 

the bills
issued for the most recent year and the preceding two (2) years for the
Property for all real estate taxes and assessments (collectively, “Real
Estate Taxes”) relating to the Property;

 

the Leases and
the Contracts;

 

the
Warranties;

 

the Plans;

 

the Books and
Records and expense recovery worksheets and billings for the past two calendar
years and first nine months of 2004;

 

the Licenses
and Permits;

 

all
environmental reports and studies in the possession of MBCR, Seller or its
agents relating to the determination as to whether any Hazardous Materials
exist at the Property and as to any work performed or proposed in connection
with any Hazardous Materials at any time located at the Property, if any, and
any engineering reports with respect to the Property to the extent in the
possession of Seller or MBCR;

 

all
organizational documents related to the formation and operation of MCBR;

 

all
information in the possession of Seller or MBCR related to the transfer of
title of the Property to MBCR;

 

all
information and documentation in the possession of Seller or MBCR related to
MBCR’s tenancy under any lease or agreement, including the Cross Keys Lease;

 

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

 

8

 

a complete and
accurate list of all Seller Pension Plans, as such term is defined in Section
7.1(A)(xxx) and including true, correct and complete copies of the most recent
Forms 5500 and any attached financial statements and any related actuarial
report; and

 

all information
related to the sale or assignment of the Other Properties, including copies of
the agreements for the purchase and sale thereof and any environmental reports
to the extent in the possession of Seller or MBCR.

 

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

 

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

 

Termination During Due
Diligence Period.  

 

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

 

9

 

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

 

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

 

Buyer’s Knowledge. 

 

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

 

AS-IS SALE.  

 

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

 

10

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

12

 

Release.  

 

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

 

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

 

BUYER’S CONDITIONS
PRECEDENT

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

SELLER’S CONDITIONS
PRECEDENT

 

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

 

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

 

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

 

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

 

REPRESENTATIONS AND
WARRANTIES

 

Representations and
Warranties of Seller.

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

(vi)

 

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

 

16

 

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

 

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

 

(vii)

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

(xxix)

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

Representations and
Warranties of Buyer.

 

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

 

Buyer is a Virginia limited liability company, duly
organized, validly existing and in good standing under the laws of its
organization.

 

As of the Effective Date, and, provided Buyer has not
terminated this Agreement for any reasons permitted hereunder, at the Closing
Date, this Agreement and all Closing Documents to which Buyer is a party (aa)
are, and will be, duly authorized, executed and delivered by Buyer, (bb) do
not, and will not, violate any provision of any agreement or judicial Order to
which Buyer is a party or to which Buyer or any property owned by Buyer is
subject and (cc) constitute (or in the case of Closing Documents will
constitute) a valid and legally binding obligation of Buyer, enforceable in
accordance with its terms.

 

23

 

No consents or approvals are required to be obtained from,
and no filings are required to be made with, any Governmental Authority,
lender, equity partner or other Person in connection with the execution and
delivery of this Agreement by Buyer or the consummation by Buyer of the transaction
contemplated hereby (other than any applicable filing requirements under
federal or state securities laws.)

 

Each person executing and delivering this Agreement and all
documents to be executed and delivered by Buyer at Closing has or will have due
and proper authority to execute and deliver the same.

 

Buyer is not the subject of any existing, pending,
threatened or contemplated (A) bankruptcy, solvency or other debtor’s relief
proceeding, or (B) litigation or other judicial or administrative proceeding
which challenges or could adversely affect Buyer’s right or ability to enter
into this Agreement or to consummate the transactions herein contemplated.

 

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

 

TITLE and survey

 

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

 

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

 

24

 

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

 

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

 

25

 

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

 

PRE-CLOSING OPERATIONS

 

Interim Operation of the
Property.

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

Risk of Loss and
Insurance Proceeds.

 

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

 

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

 

28

 

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

 

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

 

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

 

29

 

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

 

CLOSING

 

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

 

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

 

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

 

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

 

30

 

an assignment
of membership interests assigning and conveying to Buyer 100% of the Membership
Interests in MBCR, free and clear of all liens, claims and encumbrances (the “Assignment”),
in the form attached hereto as Exhibit “B”.

 

a so-called
non-imputation affidavit addressed to the Title Insurance Company in such form
as the Title Insurance Company shall reasonably require (the “Non-Imputation
Affidavit”),

 

resignation
letters from all the officers and directors of MBCR, to be effective as of the
Closing Date, in form and substance reasonably satisfactory to Buyer,

 

an opinion
from Gallagher Evelius & Jones LLP, counsel to Seller, in form and
substance reasonably satisfactory to Buyer, confirming (a) the due
incorporation of Seller, the corporate power of Seller, the due authorization,
execution and delivery of this Agreement and the Closing Documents to which
Seller is a party by Seller, non-contravention of agreements and law, all
necessary consents being obtained, and the enforceability of this Agreement and
such Closing Documents against Seller, (b) the due organization of MBCR, the
due authorization and valid issuance of its membership interests, the record
ownership of such interests, the absence of options, warrants and rights to
purchase such interests or any preemptive rights in respect thereof, the
noncontravention of agreements and law arising out of the transactions
contemplated by this Agreement and that upon Closing, Buyer will own 100% of
the outstanding membership interests in MBCR, free and clear of any claims of
any third party, and (c) such other matters as Buyer may reasonably request,
subject to usual and customary qualifications and based on counsel’s knowledge
and on Seller’s and MBCR’s certification of facts material to the opinion,

 

a FIRPTA
Affidavit, in the form attached hereto as Exhibit “C”,

 

closing
instructions, with attached settlement statement to be prepared by the Title
Insurance Company, consistent with the terms of this Agreement (“Closing
Instructions”),

 

a rent roll
for the Property, certified by Seller to be true and correct as of a date no
earlier than five (5) Business Days prior to the Closing Date,

 

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

 

a certificate
stating that the representations and warranties of Seller contained in this
Agreement are true and correct in all material respects (or, with respect to
representations and warranties separately qualified by materiality standards,
true in all respects) as of the date of Closing (with appropriate modifications
of those representations and warranties made in Section 7.1 to reflect any
changes resulting from actions made in compliance with Section 9.1) or
identifying any representation or warranty which is not, or no longer is, true
and correct in any material respect and explaining the change; provided,
however, that (1) the representations and warranties set forth in clauses
(i)-(v), (vi)(b), (vii)(b), (viii)-(xii), (xvii)-(xxi), (xxv)-(xxvii),
(xxix)(b) and (xxx) of Section 7.1(A) (the “Permanent Representations”)
may not be so identified by Seller as representations or warranties that are no
longer true and correct, Seller hereby agreeing that if any of the Permanent
Representations is not true and correct at the Closing, 

 

31

 

Seller shall be deemed to be in
breach of this Agreement and Buyer shall have all rights and remedies specified
herein for such breach by Seller, and (2) if any of the other representations
or warranties made by Seller in this Agreement is not true and correct in all
material respects at Closing without change since the date hereof, except
changes occasioned by acts, conduct and occurrences permitted under this
Agreement, and changes which do not have a material adverse effect on the
Property or the operations thereof, then Buyer may, by notice to Seller, elect
to terminate this Agreement, in which event the Deposit shall be promptly
returned to Buyer and, thereafter, this Agreement shall be deemed terminated
and the parties hereto shall have no further liabilities to each other except
to the extent expressly provided otherwise herein.  If, despite changes or other matters
described in such certificate, the Closing occurs, Seller’s representations and
warranties set forth in this Agreement shall be deemed to have been modified by
all statements made in such certificate;

 

the Mercantile
Lease; and

 

any other
instruments required by this Agreement.

 

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

 

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

 

a duly
executed counterpart of the Assignment,

 

a duly
executed counterpart of the Closing Instructions and settlement statement, and

 

any other
instruments required by this Agreement.

 

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

 

32

 

PRORATIONS; EXPENSES

 

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

 

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

 

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

 

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

 

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

 

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

 

Water and
sewer charges, as well as electricity, gas and steam charges, shall be pro
rated on the basis of the most recent bills available, but if there are water,
electric or gas meters on the Property, Seller, to the extent the same is
obtainable, shall furnish a reading effective as of the date prior to the
Closing Date, or if not so obtainable, to a date not more than thirty (30) days
prior to the date prior to the Closing Date, and the unfixed meter charges
based 

 

33

 

thereon for the intervening
period shall be apportioned on the basis of such last reading.  Upon the taking of a subsequent actual
reading, such apportionment shall be readjusted and Seller or Buyer, as the
case may be, will promptly deliver to the other the amount determined to be so
due upon such readjustment.  If Seller is
unable to furnish such prior reading, any reading subsequent to the Closing
will be apportioned on a per diem basis from the date of such reading
immediately prior thereto and Seller shall pay the proportionate charges due up
to the date of Closing.  The provisions
and obligations of the parties pursuant to this subparagraph (b) shall survive
the Closing.

 

Any other
funds that will inure to the benefit of or be refunded to MBCR after the
Closing Date (e.g., utility deposits) shall be adjusted or prorated.

 

Any up-front “bonus”
payments made in consideration of entering into any Contract shall be and
remain the property of Seller.

 

Except as set
forth in this Agreement, the customs of the county in which the Property is
located shall govern prorations.

 

If such
prorations result in a payment due Buyer, then the portion of the Purchase
Price payable at Closing shall be reduced by such sum.  If such prorations result in a payment due
Seller, then the same shall be paid to Seller at Closing in addition to the
Purchase Price.  The parties hereto shall
endeavor to prepare a schedule of prorations no less than five (5) days
prior to Closing.

 

INTENTIONALLY OMITTED. 

 

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

 

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

 

34

 

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

 

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

 

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

 

DEFAULT

 

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

 

35

 

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

 

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

 

BROKERS

 

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

 

36

 

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

 

INDEMNIFICATION

 

The Seller and Buyer
agree as follows:

 

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

 

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

 

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

 

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

 

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

 

Third Person Claims.

 

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

 

37

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

MISCELLANEOUS

 

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

 

Seller:                                                                Mercantile
Bankshares Corporation

Two Hopkins Plaza

Baltimore, Maryland 21201

Attention:  Mr. Ronald D. Mettam

Telephone:  (410) 237-5623

Fax: (410)
237-5869

E-mail:
ron.mettam@mercantile.net

 

With a copy to:

 

Gallagher Evelius &
Jones LLP

218 North Charles Street

Suite 400

Baltimore, Maryland 21201

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

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

Fax: (410) 468-2786

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

 

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

555 East Main Street,
Suite 1700

Norfolk, Virginia 23510

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

Fax:  (757) 640-0817

E-mail:  trlitton@harborg.com

 

39

 

With a copy to:

 

Whiteford, Taylor &
Preston LLP

Seven Saint Paul Street

14th Floor

Baltimore, Maryland 21202

Attention:  Priscilla K. Carroll, Esquire

Telephone:  (410) 347-8797

Fax:  (410) 347-8731

E-mail:  pcarroll@wtplaw.com

 

Title Insurance Company:

 

LandAmerica Title
Insurance Company

31 Light Street

Suite 500

Baltimore, Maryland  21202-1035

Attention:  Nancy Sacci, Esquire

Telephone:  (410) 752-7070

Fax:  (410) 752-7043

E-mail: nsacci@landam.com

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

Venable Lease; Reznick
Lease.  

 

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

 

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

 

43

 

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

 

44

 

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

 

	
  WITNESS:

  	
  SELLER:

  
	
   

  	
   

  	
   

  
	
   

  	
  MERCANTILE
  BANKSHARES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
  HARBOR GROUP
  INTERNATIONAL, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  T. Richard
  Litton, Jr.

  
	
   

  	
   

  	
  Title: 

  	
  Executive Vice
  President and

  
	
   

  	
   

  	
   

  	
  General Counsel

  
								

 

 

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

 

 

EXHIBIT A

 

DESCRIPTION OF
LAND

 

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

 

A-1

 

EXHIBIT B

 

FORM OF ASSIGNMENT

AGREEMENT OF ASSIGNMENT AND ASSUMPTION

(Membership Interests in MBC Realty, LLC)

 

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

 

Recital of Facts

 

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

 

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

 

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

 

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

 

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

 

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

 

B-1

 

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

 

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

 

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

 

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

 

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

 

B-2

 

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

 

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

 

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

 

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

 

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

 

 

[Remainder of Page Left Blank Intentionally]

[Signature Pages Follow]

 

B-3

 

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

 

 

	
  ASSIGNOR:

  	
   

  	
  MERCANTILE
  BANKSHARES

  
	
   

  	
   

  	
  CORPORATION,

  
	
   

  	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

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

 

B-4

 

	
  ASSIGNEE:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
										

 

 

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

 

B-5

 

EXHIBIT C

 

Internal Revenue Code

Section 1445(b)(2)

Non-foreign Affidavit

(FIRPTA)

 

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

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Sworn to and
  subscribed

  	
   

  	
   

  
	
  before me this         
  day

  	
   

  	
   

  
	
  of                          ,
  2004.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  
	
  My Commission
  Expires:

  	
   

  	
   

  
						

 

C-1

 

EXHIBIT D

 

INTENTIONALLY OMITTED

 

D-1

 

EXHIBIT E

 

RENT ROLL AND LIST OF SECURITY DEPOSITS

 

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

 

E-1

 

EXHIBIT F

 

SCHEDULE OF LITIGATION

 

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

 

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

 

F-1

 

EXHIBIT G

 

CONTRACTS

 

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

 

G-1

 

EXHIBIT H

 

PERSONAL PROPERTY

 

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

 

H-1

 

EXHIBIT J

 

MERCANTILE LEASE TERM SHEET

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

2

 

RIDER

 

DEPOSIT ESCROW AGREEMENT

 

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

 

The parties hereto
agree as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

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

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

 

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

 

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

 

Escrowee
represents that its wire transfer instructions are as follows:

 

 

 

 

3

 

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

 

	
   

  	
   

  	
  MERCANTILE BANKSHARES

  
	
   

  	
   

  	
   

  	
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HARBOR GROUP
  INTERNATIONAL,

  
	
   

  	
   

  	
   

  	
  L.L.C.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANDAMERICA
  TITLE INSURANCE

  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  
								

 

4

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