EXHIBIT 10.1
------------
PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made this 20th day
of October, 2004, by and between FIRST MARINER BANCORP, a Maryland corporation,
hereinafter referred to as "Purchaser," and CANTON CROSSING, LLC, a Maryland
limited liability company, and XXXX CANTON, LLC, a Maryland limited liability
company, hereinafter collectively referred to as "Seller."
RECITALS
--------
A. Seller is the owner of 100% of the membership interests (the "Membership
Interests") in CANTON CROSSING II, LLC, a Maryland limited liability company
(the "Company").
B. The Company owns the real property (the "Land") and the improvements,
structures, and fixtures now constructed and completed or under construction and
situated thereon (the "Building"), located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx, as more particularly described in Exhibit A attached hereto, together
with all of the Company's rights, if any, to architectural plans, site plans,
sewer, water and other utility approvals, permits and licenses, for and to the
Land and Building, including but not limited to, any prepaid impact, access,
services, and other fees of any kind, all contract rights and all other rights
appurtenant to the Land and the Building (hereinafter collectively referred to
as the "Property").
C. The Company is the sole member and owner of 100% of the membership
interests in Canton Crossing Borrower, LLC, a Maryland limited liability company
("Borrower").
D. Borrower is the borrower on an existing mortgage loan secured by the
Property, which loan is in the original principal amount of Ten Million Dollars
($10,000,000.00) and is evidenced by a promissory note dated July 9, 2003 (the
"Loan"). The Company is a guarantor of the Loan and the grantor of an indemnity
deed of trust on the Property to secure the Loan.
E. The Company is party to certain leases, as landlord, for commercial
office space within the Building (the "Leases") with First Mariner Bank and
other direct or indirect subsidiaries of Purchaser, in addition to third-party
tenants (the "Tenants"). The Leases, excepting the First Mariner leases, are
attached hereto as Exhibit B.
F. Purchaser desires to purchase Seller's Membership Interests in the
Company, which Membership Interests include all assets of the Company including,
but not limited to, the Property, the Leases, and the membership interests in
Borrower and Seller has agreed to sell its Membership Interests in the Company
on the terms set forth herein.
NOW, THEREFORE, WITNESSETH, that for and in consideration of the mutual
terms promises and agreements herein contained, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Recitals. The foregoing Recitals are incorporated herein as a
substantive part of this Agreement.
2. Purchase and Sale of Membership Interests. Seller agrees to sell, grant
and convey, and Purchaser agrees to purchase and accept, the Membership
Interests, on the terms set forth herein, free and clear of all liens, charges,
restrictions, encumbrances and security interests of any kind.
(a) Purchase Price. The purchase price to be paid for the Membership
Interests shall be Twenty Million Dollars ($20,000,000.00) (the "Purchase
Price").
(b) Purchase Deposit. Within three (3) days of the execution and
delivery of this Agreement by the parties (the "Effective Date"), Purchaser
shall deposit with Kenilworth Title Company, LLC ("Escrow Agent") the sum of One
Hundred Thousand Dollars ($100,000.00) ("Purchase Deposit") to be held by Escrow
Agent in an interest-bearing federally insured account pursuant to the terms of
this Agreement. All interest on the Purchase Deposit shall be for credit of
Purchaser. The Purchase Deposit shall be applied toward the Purchase Price at
Closing (as hereinafter defined).
(c) Payment of Purchase Price. Purchaser agrees to pay Seller the
Purchase Price at Closing. The Purchase Price shall be paid as follows:
(i) Purchaser will assume the outstanding principal balance on
the Loan as described in Section 3(a) hereof, which principal loan amount is
approximately Ten Million Dollars ($10,000,000.00);
(ii) Purchaser shall pay the difference between the outstanding
principal balance of the Loan and the Purchase Price via wire transfer or via
certified funds, at the option of Seller.
(d) Closing/Closing Date. Seller and Purchaser agree to make a full
settlement in accordance with the terms hereof within one hundred eighty (180)
days from the Effective Date or such earlier date as the parties may agree (the
"Closing" or "Closing Date").
(i) Either party may request one (1) extension of the Closing
Date for a period of up to of ninety (90) days. Such request shall be in writing
and delivered to the other party not less than ten (10) days prior to the
Closing Date.
(e) Place of Settlement. The Closing shall take place at the offices
of Escrow Agent or such other place as the parties may agree.
(f) Payment of Settlement Costs. Seller shall pay at the Closing any
amounts required to satisfy any open judgments against Seller or the Company and
any amounts required to obtain the release of any other monetary liens upon the
Land, other than the lien of the Loan. Purchaser shall pay at the Closing any
costs in connection with the issuance of an owner's title insurance policy or
the assignment of the Company's owner's title insurance policy and the amendment
of the Lender's title insurance coverage. Each party shall pay its own
attorneys' fees incurred.
2
(i) In the event that, either prior to Closing or after Closing,
the State of Maryland and/or Baltimore City imposes recordation and/or transfer
taxes on this transaction, then Purchaser shall be responsible for the timely
payment of fifty percent (50%) of such recordation and/or transfer taxes and
Seller shall be responsible for the timely payment of the remaining balance of
such recordation and/or transfer taxes.
(g) Payment for Escrow Reserve Account Funds. Purchaser shall
pay to Seller at Closing an amount equal to the total amount of the funds then
in the following escrow reserve accounts maintained with GEMSA Loan Services,
L.P. related to the Loan: (i) tax, (ii) insurance, and (iii) other (the "other"
escrow reserve account includes funds for repairs, tenant improvements, and
capital improvements) (collectively, the "Escrow Funds"). At the time of Closing
Seller will assign to Purchaser all Seller's interest in, and rights to, the
Escrow Funds and no distributions from the escrow reserve accounts shall be made
to Seller.
3. Contingencies. Seller agrees that Purchaser's obligation to purchase the
Membership Interests is contingent on the following conditions (any of which
may be waived in whole or in part by Purchaser at or prior to the Closing):
(a) Lender's Consent. Seller shall have seventy-five (75) days from
the Effective Date to provide Purchaser with the written consent of the current
holder of the Loan, or its servicing agent (the "Lender") to the acquisition of
the Membership Interests by Purchaser and Purchaser's resulting acquisition of
the membership interests in Borrower. Seller and Purchaser shall each pay
one-half of the application fee, the transfer fee, Lender's out-of-pocket costs,
and all other costs imposed by the Lender in connection with obtaining Lender's
consent.
(b) Parking Agreement. Seller shall have seventy-five (75) days from
the Effective Date to provide Purchaser with an agreement, the terms of which
shall be satisfactory to Purchaser in its sole discretion, to provide the
Company with a parking area containing spaces for at least Thirty-Five (35)
motor vehicles at a location acceptable to Purchaser.
(c) Estoppel Certificates. On the Closing Date, Seller shall provide
Purchaser with tenant estoppel certificates in accordance with the provisions of
Section 6(i) below in regards to the Leases listed on Exhibit C, attached hereto
(collectively, the "Third Party Leases").
(d) Representations and Warranties. The representations and warranties
of Seller contained in this Agreement shall be true and correct on, and as of,
the Closing Date, in all material respects as though such representations and
warranties were made on, and as of, such date.
3
(e) Material or Adverse Change. Since the Effective Date until the
Closing Date, there shall not have occurred any material and adverse change in
the physical condition of the Land or the Building or any part thereof, except:
(i) those changes caused by ordinary wear and tear; or
(ii) as caused directly or indirectly by any act or omission of
Purchaser, or its agents, representatives or employees.
(f) Company Operations. Since the Effective Date, the operations of
the Company shall have been carried out in the ordinary course of business and
there shall not have occurred:
(i) any material adverse change in the condition (financial or
otherwise) or in the overall business of the Company, provided, however, that
Seller shall have the right to withdraw any excess cash in the Company as of the
Closing Date;
(ii) any material increase in the liabilities of the Company from
those liabilities of the Company listed or otherwise disclosed in the Company's
most recent Financial Statements (hereinafter defined); or
(iii) any other occurrence, event, condition or state of facts of
any kind which may materially affect the business of the Company in any adverse
manner.
(g) Seller's Performance. Seller shall have performed, observed and
complied with all of the covenants, agreements and conditions outlined in this
Agreement to be performed, observed and complied with by Seller prior to or as
of the Closing.
(h) Title to the Property. At or prior to the execution of this
Agreement, Seller shall provide Purchaser with a copy of the Company's owner's
title insurance policy, and all supplements or updates thereto, covering, inter
alia, the Land, accompanied by copies of all recorded documents relating to
liens, encumbrances, plats, easements, rights of way, restrictions, covenants,
condominium associations, ground leases and conditions affecting the Land (the
"Permitted Exceptions"). A list of the Permitted Exceptions is attached hereto
as Exhibit D. Within seventy-five (75) days of the Effective Date, Purchaser, at
its expense shall obtain an update of the title to the Land. If said title
update reveals exceptions to title other than the Permitted Exceptions,
Purchaser shall notify Seller in writing specifying any such exceptions to which
Purchaser objects. Upon receipt of said notice, Seller shall, within five (5)
days of receipt of notice from Purchaser, give Purchaser notice:
(i) of Seller's election to cure or remove the exception, at its
sole cost and expense; or
(ii) of Seller's election not to cure the exception.
4
(iii) Upon notice from Seller that Seller has elected not to cure
an exception, Purchaser may (1) terminate this Agreement by written notice to
Seller and the Purchase Deposit and accrued interest shall be refunded to
Purchaser, or (2) accept such title as Seller can deliver.
(i) Regulatory Approval. Purchaser shall have received any necessary
approvals from Purchaser's state and/or federal regulatory supervising agencies
including, but not limited to, the Maryland Commissioner of Financial Regulation
and the Federal Reserve Board.
(j) Subdivision Approval. Seller shall provide Purchaser with evidence
of subdivision approval from the applicable governmental zoning or other agency
authorizing the partition of the parking parcel from the 2.147 acre parcel owned
by the Company.
4. Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser that the following are true and complete as of the
Effective Date and shall be true, accurate and complete as of the Closing Date:
(a) The Company is a limited liability company duly organized and
validly existing under the laws of the State of Maryland pursuant to Articles of
Organization dated June 17, 2003, a true and complete copy of which is attached
hereto as Exhibit E (the "Articles of Organization").
(b) The Company operates pursuant to a written Limited Liability
Company Agreement attached hereto as Exhibit F.
(c) Seller has the full legal power and authority to enter into and
perform this Agreement in accordance with its terms. The execution and delivery
of this Agreement and the performance by Seller of its obligations hereunder
require no further action or approval by Seller (or either of them), the Company
or any other person or entity.
(d) Except with regard to the Loan, the execution, delivery and
performance of this Agreement and all documents in connection therewith are not
in contravention of or in conflict with any deed of trust, agreement or
undertaking to which Seller (or either of them), the Company, or any of their
respective property or assets, including the Property and the Membership
Interests, may be bound or affected.
(e) The Company has filed any and all federal and state income,
estimated income, excise, property, franchise, or license tax returns that the
Company at any time heretofore has been required by law to file, and has paid
any and all taxes, interest, penalties, or other sums shown thereby to be due
from the Company or Seller.
(f) As of the date of this Agreement, Seller owns one hundred percent
(100%) of the Membership Interests, which Membership Interests were validly
issued and are fully paid and nonassessable.
5
(g) There are outstanding no options, warrants, or other rights or
agreements to acquire any or all of the Membership Interests.
(h) None of the Membership Interests is the subject of any voting
trust agreement or other agreement relating to the ownership of any of the
Membership Interests or any of the rights held by the holder thereof, or
restricting in any way the sale or other transfer thereof.
(i) There is no action, suit, litigation, or proceeding
pending against the Company, the Seller (or either of them), or any of the
Membership Interests, at law or in equity, or before or by any federal, state,
municipal, or other governmental department, commission, board, agency, or
instrumentality.
(j) Attached hereto as Exhibit G are true, accurate and complete
financial statements of Canton Crossing, LLC for the period June 1, 2003 through
June 30, 2004 (the "Financial Statements"). Canton Crossing, LLC has maintained
its books of accounts in a regular and ordinary manner on a consistent basis and
the Financial Statements fairly represent the financial condition of, inter
alia, the Company and the results of its operations as of the dates, and for the
periods, stated, in all material respects.
(k) Except as and only to the extent reflected or reserved in the
Financial statements and except for obligations incurred in the ordinary course
of business since the date of the Financial Statements, the Company has no
material debts, liabilities or other obligations (including, without limitation,
obligations for federal, state or local taxes or other governmental assessments
or penalties, and obligations and advances, directly or indirectly, to the
Company), absolute or contingent, due or to become due, and the Company does not
know or have reasonable grounds for knowing the basis for any assertion against
the Company of any liability (including any tax liability) of any nature or in
any amount not reflected on or reserved in the Financial Statements. The Company
is current in the payment of all of its obligations and liabilities, including
those shown on the Financial Statements, and there are no obligations due or to
become due, or liabilities, fixed or contingent, that the Company shall not be
able to satisfy in the ordinary course of business.
(l) No bankruptcy, insolvency, rearrangement or similar action or
proceeding, whether voluntary or involuntary, is pending or, to the best of
Seller's knowledge, threatened against the Company.
(m) The Company owns good and merchantable fee simple title to the
Property free and clear of all mortgages, liens, encumbrances, leases,
tenancies, commitments, agreements, security interests, covenants, conditions,
restrictions, rights of easements, judgments and other matters affecting title
to the Property except for those Permitted Exceptions (as hereinafter defined)
set forth on Exhibit D, the lien of the Loan, and the rights of the tenants
under the Leases.
6
(n) Seller is not aware of any facts or conditions which will
result in the termination of the present access from the Property to any utility
services or to existing highways and roads.
(o) Except as set forth on Exhibit H attached hereto and made a part
hereof, there are no maintenance or other contracts to which the Company is a
party, affecting the Land or the Building.
(p) Seller is not aware of any zoning, fire, building or similar law,
ordinance or regulation that is violated by the continued maintenance, operation
or use of the Building or by the continued maintenance, operations or use of the
existing parking areas. No notice of violation of any applicable zoning
regulation or ordinance or other law, order, ordinance, permit, rule, regulation
or requirement, or any covenants, conditions or restrictions affecting or
relating to the use or occupancy of the Building has been given to the Company
or Seller by any governmental agency having jurisdiction or by any other person
entitled to enforce the same.
(q) Subsequent to the Effective Date and until the Closing Date,
Seller will maintain the Building in its current condition. Without limiting the
generality of the foregoing, neither the Company nor Seller has received notice
from any lender or any insurance company, insurance rating board, fire
underwriting board, or governmental agency requiring any repairs or work to be
done to the Building or any equipment installed thereon.
(r) Except as set forth on Exhibit I attached hereto and made a part
hereof, Seller has no knowledge of any claim, litigation or proceeding or
governmental investigation, pending or threatened, against or affecting the
Building or any portion thereof or with respect to the Leases or relating to or
arising out of the ownership of the Land, in any court or before or by any
Federal or Maryland department, commission, board, bureau or agency or other
governmental instrumentality. Seller shall give Purchaser immediate notice of
any such claim, litigation, proceeding or investigation which becomes known to
it prior to the date of the Closing.
(s) Each of the two (2) entities comprising the Seller is a Maryland
limited liability company, in good standing, with full power and authority to
execute and deliver this Agreement and all of the closing documents required
hereunder ("Seller's Documents") and to perform all obligations under this
Agreement and Seller's Documents. This Agreement constitutes, and each of
Seller's Documents will constitute, the legal, valid and binding obligation of
Seller, enforceable in accordance with their respective terms, covenants and
conditions.
(t) All water, sewer, gas (if any), electric, telephone, drainage and
other utility equipment, facilities and services necessary for the operation of
the Building as it is now being operated are installed and connected pursuant to
valid permits.
(u) All storm water flowing from the Land drains either into a public
system or onto a permitted location and through easements.
7
(v) The elevators, HVAC systems and other mechanical systems located
in, or serving, the Building are located on the Land, are presently owned by the
Company, and shall be owned by the Company at the time of the Closing, free and
clear of all liens, encumbrances, security interests and adverse claims.
(w) The Leases attached hereto as Exhibit B are the only leases or
other agreements permitting the use or possession of space on or about the
Property in effect on the date hereof. There are no other rights of use or
possession, options, agreements of sale or any other right, title or interests
in or to any part or all of the Property except as set forth in the Leases.
(x) No additional leases or rights will be executed or given for any
portion or portions of the Building, nor will the existing Leases be extended,
canceled, modified, added to or amended in any respect, or any assignment or
subletting approved for the Lease, without, in each instance, obtaining the
prior written approval of Purchaser.
(y) No controversy, complaint, proceeding, suit or litigation relating
to any Lease, tenancy or rent of the Building or any party thereof is pending in
any court, or administrative agency, or before any arbitrator.
(z) The Property shall be conveyed free and clear of any obligations,
other than the lien of the Loan, upon Purchaser's assumption of the Loan, to any
person, firm, partnership or corporation in connection with the management
thereof or with the procurement of leases thereon and there shall be no
brokerage or leasing fees or commissions or other compensation due or payable on
an absolute or contingent basis to any person, firm, corporation or other
entity, with respect to or on account of the Leases and no such fees,
commissions or other compensation shall, by reason of any existing agreement,
become due during the terms of the Leases or with respect to any renewal or
extension thereof or the leasing of additional space by a tenant.
(aa) Except as set forth on Exhibit J attached hereto and made a part
hereof, there are no pending or proposed special assessments affecting or which
may affect the Property or any part thereof.
(bb) There are no commitments made by the Company to any governmental
or quasi-governmental authority having jurisdiction, or to any third party, to
dedicate or grant any portion of the Property for easements, rights-of-way, or
other public purposes, or to subject the Property to any restrictions, or to
incur any other expense or obligation relating to the Property.
(cc) There are no penalties due with respect to real estate taxes, and
all real estate taxes (excepting those for the current tax year which are not
yet overdue, i.e., which are still payable without interest or penalty), have
been paid in full.
8
(dd) Environmental Matters.
(i) Except as expressly disclosed in (1) that certain
Environmental Report entitled Phase I Environmental Site Assessment, dated May
12, 2003 and prepared by National Assessment Corporation, a copy of which is
attached hereto as Exhibit K (the "Environmental Report"), (2) Seller's
Environmental Exhibit dated September 10, 2004, attached hereto as Exhibit L
(the "Seller's Environmental Exhibit"), and (3) the letter dated September 7,
2001, issued by the Maryland Department of the Environment (the "Site Status
Letter") attached hereto as Exhibit M: (a) to the best of Seller's knowledge,
the Property has not at any time been in violation of, or otherwise exposed to
any liability under, any state or federal law, rule or regulation or common law
duty pertaining to human health, natural resources or the environment
(collectively, "Environmental Laws"); (b) the Property is not subject to any
private or governmental lien arising under Environmental Laws; (c) there is no
pending, nor, to Seller's knowledge, threatened litigation arising under
Environmental Laws affecting Seller or the Property; and (d) there has been no
claim by any party that a use or condition of the Property has caused an
environmental hazard condition on any other property.
(ii) Neither the Company nor Seller has utilized the Land or
Building (1) as a land fill to receive garbage, refuse or waste, whether or not
hazardous, or (2) for the storage, deposit, disposal, treatment or recycling of
any toxic, dangerous or Hazardous Materials. Except as disclosed in the Seller's
Environmental Exhibit and the Site Status Letter, the Land and Building do not
contain any Hazardous Materials nor has there been a release of any Hazardous
Materials on or from the Land or Building. For purposes of this Agreement,
"Hazardous Materials" means and includes petroleum, petroleum products,
flammable explosives, radioactive materials, asbestos or any material containing
asbestos, polychlorinated biphenyls or urea formaldehyde.
(iii) Except as disclosed in the Seller's Environmental Exhibit
and the Site Status Letter, neither the Company nor Seller has received any
notice from any governmental agency, entity or person with regard to Hazardous
Materials on, from or affecting the Land or Building.
(iv) Through and including the Closing Date: (1) the Property
shall be kept free of all Hazardous Materials; (2) Seller shall immediately give
Purchaser oral and written notice in the event that the Company or Seller
receives any notice from any governmental agency, entity, or any other party
with regard to Hazardous Materials on, from or affecting the Property.
(v) Seller hereby agrees to indemnify, defend and hold harmless
Purchaser from and against any and all liens, demands, defenses, suits,
proceedings, disbursements, liabilities, losses, litigation, judgments,
obligations, penalties, injuries, costs, expenses (including, without
limitation, attorneys' and experts' fees) and claims of any and every kind
whatsoever paid, incurred, suffered by, or asserted against, Purchaser and/or
the Land or the Building including loss of value and out-of-pocket expenses for,
with respect to, or as a direct or indirect result of any warranty or
representation made by Seller in this Section being false, untrue or misleading
in any respect.
9
(vi) Purchaser understands and agrees that, upon purchase of the
Membership Interests, the Company will continue to be responsible for compliance
with the provisions of the Site Status Letter as to all monitoring xxxxx located
on the property.
If any representation or warranty contained in this Agreement should become
materially untrue or incorrect after the Effective Date and before the Closing
Date, Seller shall immediately notify Purchaser of such condition and Purchaser
may: (i) waive such condition and close; or (ii) terminate this Agreement,
whereupon the Purchase Deposit, and all accrued interest, shall be refunded to
Purchaser and no party thereto shall have any further rights, claims or
liabilities hereunder except as expressly provided for by the terms of this
Agreement.
Seller shall certify in the Assignment of Membership Interests executed and
delivered at Closing that all of the representations and warranties contained in
this Section 4 are true and correct as of the Closing Date, except as to facts,
if any, set forth in said Assignment.
5. Covenants. During the term of this Agreement, Seller covenants and
agrees as follows:
(a) Without prior written approval of Purchaser, Seller shall not:
(i) make, permit or cause the Company to make, or otherwise
permit to be made, any changes or alterations to or upon any part of the
Property;
(ii) enter into, extend, modify or terminate or permit or cause
the Company to enter into, extend, modify or terminate any of the Leases;
(iii) assign, transfer, convey, hypothecate, pledge, create a
security interest in or lien, mortgage deed of trust, easement or other
encumbrance upon any part of the Membership Interests, or permit or cause the
Company to assign, transfer, convey, hypothecate, pledge, create a security
interest in or lien, mortgage, deed of trust, easement or other encumbrance upon
any part of the Property or any interest therein; or
(iv) apply for or consent to, or cause the Company to apply for
or consent to, any zoning, rezoning, special exception, subdivision, or
condemnation of the Property, except that the Company may proceed with any
activities relating to the foregoing commenced as of the date of this Agreement
with the written consent of Purchaser, which consent shall not be unreasonably
delayed or withheld.
(b) Seller shall continue to maintain the Property, or cause the same
to be maintained, in its present order and condition (ordinary wear and tear and
damage by casualty excepted) until the Closing Date.
10
(c) Seller shall continue to operate and manage the Company, and to
cause the same to be operated and managed, in the ordinary course of business
and in such manner as to maintain the Building in its present order and
condition.
(d) Seller shall continue to maintain, or cause to be maintained, all
of the insurance policies relating to the Company or the Property, or any part
thereof, in full force and effect until the Closing date.
(e) Seller shall maintain, or cause to be maintained, all of the
Company's permits and licenses and Leases in full force and effect, and shall
file timely, or cause to be filed timely, all reports, statements, renewal
applications and other filings, and shall pay timely, or cause to be paid
timely, all fees and charges in connection therewith that are required to keep
the Company's permits and licenses and Leases in full force and effect.
(f) Seller shall pay, or cause to be paid, all taxes, assessments,
governmental charges or levies (including interest and penalties) imposed upon
the Property, the Membership Interests or the Company as and when such are due
and payable, and shall pay, or cause to be paid, all other liabilities and
charges which are due and payable and which, if unpaid, might become a lien or
charge upon the Property, the Membership Interests or any of the assets of the
Company.
(g) Seller shall not dispose of the Property, or permit or cause the
Company to dispose of the Property.
(h) Seller shall provide Purchaser with true copies of all notices
concerning the Property or the Company received by Seller or the Company within
ten (10) days after receipt. If Seller or the Company receives any notices
concerning the Property or the Company after Closing, Seller shall provide
Purchaser promptly with true copies thereof.
6. Deliveries at Closing. On the Closing Date, unless otherwise noted,
Seller shall deliver to Escrow Agent the following executed documents:
(a) An assignment of Membership Interests in the form attached hereto
as Exhibit N (the "Assignment of Membership Interests").
(b) A financial statement for the Company which shall be accurate
through the Closing Date.
(c) If required as a matter of law, an affidavit, signed by Seller,
stating under penalty of perjury, Seller's United States taxpayer identification
numbers and stating that neither of the two (2) entities comprising Seller is:
(i) a foreign person as defined by the United States Internal
Revenue Code of 1986, as amended (the "Code"), Section 1445(f)(3); or
11
(ii) a non-resident payee under the laws of the State of Maryland
(the "FIRPTA Affidavit");
(d) If required as a matter of law, an affidavit and Form 1099S from
Seller containing all information required for compliance with Code Section 6405
in the form required by the Internal Revenue Service for filing thereunder
signed by Seller (the "Form 1099S");
(e) If required by the company issuing title insurance on the
Property, an affidavit of Seller, for the purposes of deleting from Purchaser's
title policy, the standard exceptions of such title insurance company for claims
of parties-in-possession, including but not limited to, claims relating to
unrecorded leases and mechanic's liens arising from work performed at the
request of a party other than Purchaser, all as they pertain to the Property
(the "Owner's Affidavit");
(f) Such other documents as may reasonably be required by Purchaser or
Escrow Agent or required by Maryland law to consummate the transaction
contemplated herein;
(g) An affidavit reaffirming Seller's representations and warranties
set forth herein or identifying those representations and warranties which are
no longer true and correct.
(h) Original executed copies of the Third Party Leases and any
amendments thereto (if any original is not available, Seller shall provide a
clear photostatic copy of such Lease accompanied by a representation that said
copy is a true, accurate and complete copy of the original Lease) together with
the complete tenant file for each tenant;
(i) A tenant estoppel certificate (dated no earlier than thirty (30)
days prior to the Closing Date) from each tenant under the Third Party Leases in
the form attached hereto as Exhibit O;
(j) Notice to the tenants executed by the Company informing the
tenants under the Third Party Leases of the change of address to which rents
should be sent; and
(k) An indemnification agreement from Seller to Purchaser in the form
attached hereto as Exhibit P, providing for indemnification against all
operating expenses or other liabilities of the Company allocable to any period
prior to the Closing Date.
7. Closing Adjustments. All income and expenses relating to the Property
including, but not limited to, taxes, water, rents, and all utility and other
operating expenses of the Building, except as otherwise provided herein, are to
be adjusted to the Closing Date.
8. Tax Returns. Seller shall, at its expense and as soon as is reasonably
possible after the Closing Date and in any event within such time as is
permitted by the provisions of the Code, or other applicable law, cause to be
prepared and filed the federal and state interim, final or estimated income,
excise, property, franchise or license tax returns for the Company's taxable
year for the period ending on the Closing Date and, in such return, Seller shall
make an election under Code Section 754. Seller shall provide to Purchaser a
copy of any such return within fifteen (15) days of the filing of the return. If
any such return indicates that Seller has incurred any liability for any such
tax, Seller shall cause such tax to be paid to the assessing authority on or
before the last date on which payment thereof is due without penalty.
12
9. Audits. If at any time after the Closing Date the Company's or
Seller's federal or state interim, final, or estimated income, excise, property,
franchise, or license tax returns for any taxable year beginning before the
Closing Date are audited by the Internal Revenue Service, the Comptroller of the
Treasury of Maryland, or any other governmental body, or if any other inquiry is
made as to the same, Seller shall, at its expense and in a timely fashion, take
any and all actions reasonably necessary to respond to the same and to resolve
any issues presented thereby, and shall pay any and all taxes, penalties,
interest, or other charges that may be assessed or shown to be due as a result
thereof.
10. Intentionally Omitted.
11. Indemnity.
(a) Seller agrees to indemnify, defend and hold harmless Purchaser
from and against, and shall reimburse Purchaser with respect to any and all
claims, demands, causes of action, losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs, whether suit is
instituted or not), asserted against or actually incurred by Purchaser by reason
of or arising out of:
(i) the discovery following the Closing Date of the breach or
material misstatement by Seller of any representation or warranty contained in
this Agreement; or
(ii) the existence of any material liability of the Company
existing as of the Closing Date, or prior thereto, that is not listed or
otherwise disclosed in writing to, and assumed in writing by Purchaser; or
(iii) the operation or ownership of the Company or the Property
on or before the Closing Date.
(b) Purchaser agrees to indemnify, defend and hold harmless the Seller
from and against, and shall reimburse Seller with respect to any and all claims,
damages, causes of action, losses, damages, liabilities, costs and expenses
(including reasonable attorneys' fees and court costs, whether suit is
instituted or not), asserted against or actually incurred by Seller by reason of
or arising out of:
(i) any liabilities or expenses of Seller incurred or accruing
after the Closing Date; or
(ii) the operation or ownership of the Company or the Property
after the Closing Date.
13
12. Remedies.
(a) Seller's Default. In the event Purchaser shall be ready, willing
and able to settle on the purchase of the Membership Interests pursuant to the
terms of this Agreement, and Seller shall fail to sell, transfer and assign the
Membership Interests to Purchaser for any reason and/or perform any other
obligation of Seller hereunder, Purchaser shall be entitled to its choice of the
following remedies:
(i) Purchaser may enforce specific performance of this Agreement;
or
(ii) Purchaser may declare this Agreement to be null and void and
demand return of the Purchase Deposit and all accrued interest, and
reimbursement of any out-of-pocket costs and expenses reasonably incurred or
paid by Purchaser pursuant to the terms of this Agreement or to satisfy any
condition or requirement for the Closing, and upon the return and reimbursement
of same, the parties hereto shall be relieved of any further liability
hereunder.
(b) Purchaser's Default. In the event that Purchaser shall fail to
consummate this Agreement for any reason, except upon a default of Seller or
termination of this Agreement by Seller or Purchaser pursuant to the terms
and/or provisions hereof, Seller shall be entitled to receive the Purchase
Deposit, with any accrued interest, as full and agreed upon liquidated damages
and each of the parties shall be released from any further liability hereunder.
13. Destruction or Damage Prior to the Closing Date. Except as provided
herein, Seller and the Company assume all risk of loss or damage to the Building
by fire or other casualty until the Closing. Seller agrees to maintain, or cause
the Company to maintain, at its sole cost and expense all insurance (including
fire and extended coverage and public liability insurance) currently in force
covering the Building until the Closing. If at any time on or prior to the
Closing Date any portion of the Building is destroyed or damaged as a result of
fire or any other cause whatsoever, Seller shall promptly give notice thereof to
Purchaser. In the event of such destruction or damage, Purchaser shall have the
right to terminate this Agreement by written notice to Seller within ten (10)
days following the date upon which Purchaser receives written notice of the
extent and estimated cost of such destruction or damage from Seller, along with
a good faith estimate of the amount of insurance proceeds it expects to recover
with respect thereto. If Purchaser does not elect to so terminate this Agreement
within said ten (10) day period, this Agreement shall remain in full force and
effect and Seller shall assign, or cause the Company to assign, to Purchaser at
the Closing any and all proceeds of the claims under any then existing insurance
policies.
14. Condemnation. In the event, at any time prior to the Closing Date, any
action or proceeding is filed or notice of any pending action is received by
Seller or the Company, under which the Property, or any portion thereof, may be
taken pursuant to any law, ordinance or regulation or by condemnation or the
right of eminent domain, Seller shall promptly give notice thereof to Purchaser
and Purchaser shall have the right to terminate this Agreement by written notice
to Seller. If Purchaser does not elect to so terminate this Agreement, it shall
remain in full force and effect and Seller shall assign, or cause the Company to
assign, to Purchaser at the Closing all of Seller's, or the Company's, right,
title and interest in and to any proceeds received or which may be received by
reason of such taking, or a sale in lieu thereof.
14
15. Disposition of Deposit. The entire Purchase Deposit shall be held by
Escrow Agent and deposited in interest bearing account(s) in accordance with
this Agreement until the Closing, or until disposition thereof is made pursuant
to the terms of this Agreement. Escrow Agent shall have the right to disburse
the Purchase Deposit to Purchaser or Seller (and the interest earned with
respect to each amount escrowed) as follows: (a) at the Closing, the Purchase
Deposit, and any accrued interest with respect thereto shall be disbursed with
and credited toward the Purchase Price and/or (b) otherwise, as provided in this
Agreement upon ten (10) days written notice to the parties; provided however,
that Escrow Agent shall not have received any written objections to such
disbursements within ten (10) days after receipt by Purchaser and Seller of said
notice. The parties hereto hereby acknowledge that Escrow Agent shall have no
liability to any party on account of Escrow Agent's failure to disburse the
Purchase Deposit (or interest thereon) if a dispute shall have arisen with
respect to the propriety of such disbursement; and, in the event of any dispute
as to who is entitled to receive the amount(s) escrowed, or interest earned
thereon, Escrow Agent shall deposit such funds with the Baltimore City Circuit
Court pending a final decision of such controversy. The parties hereto further
agree that Escrow Agent shall not be liable for failure of any depository and
shall not be otherwise liable except in the event of Escrow Agent's negligence
or willful misconduct.
16. Condition of the Property; Local Violations. Subject to the terms
and conditions hereof, Purchaser is acquiring the Property in its "as is"
condition as of the Effective Date. All written notices of violations of
statutes, municipal orders or regulations issued by any department of the
jurisdiction in which the Property is situated, or prosecutions in any of the
Courts of the jurisdiction in which the Property is situated on account thereof,
against or affecting the Land or the Building that have been received by Seller,
or the Company, shall be complied with by Seller, or the Company.
Notwithstanding the foregoing, Seller and the Company shall: (a) deliver the
Property in substantially the same physical condition as on the Effective Date;
(b) not defer normal maintenance of the Building during the period from the
Effective Date to the date of the Closing; and (c) not enter into, modify or
terminate the Leases or any maintenance or service contracts relating to the
Property, if any, prior to the Closing Date without the prior written consent of
Purchaser which consent shall not be unreasonably withheld or denied. As of the
Closing Date, Seller and the Company will leave the electrical, plumbing,
heating and air conditioning and any other mechanical systems and equipment in
the same condition as at the Effective Date.
17. Choice of Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto shall be governed by
and construed in accordance with the laws of the State of Maryland.
18. Time is of the Essence. Purchaser and Seller agree that time is of the
essence as to this Agreement.
15
19. Binding Effect; Entire Agreement; Amendment. Purchaser and Seller
mutually agree that this Agreement shall be binding upon them, and their
respective heirs, executors, administrators, successors and assigns; that this
Agreement contains the final and entire Agreement between the parties hereto,
and that they shall not be bound by any terms, conditions, statements,
warranties, or representations, oral or written, express or implied, not
expressly contained herein. The language of the Agreement shall in all cases be
construed as a whole and according to its fair meaning and not strictly for or
against any party hereto, whether or not all or any portion of this Agreement
was drafted by or on behalf of any party hereto. This Agreement may not be
amended except by a written instrument signed by all parties.
20. Pronouns. The words "Seller," "Purchaser," and all pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identity of the person or entity and the context may
require.
21. Notice. All notices required or permitted herein shall be in writing
and effective as of the date on which such notice is mailed in any United States
Post Office, by certified or registered mail, postage prepaid, or hand-delivered
by commercial courier service, to Seller, Purchaser and/or Escrow Agent (as
shall be applicable) at the addresses designated herein, or to such other
address as the parties may designate in writing from time to time.
If to Purchaser: First Mariner Bancorp
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to Seller: Canton Crossing, LLC
Xxxx Canton, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to Escrow Agent: Kenilworth Title Company, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
22. Brokerage. Seller and Purchaser represent to each other that no broker
or person is entitled to any commission by reason of the negotiation and
execution of this Agreement. Seller and Purchaser agree to hold each other
harmless against any and all claims by any person for brokerage commissions
arising out of any conversation, negotiations or other dealings held by the
other party with any broker regarding this Agreement.
23. Tax Free Exchange. Purchaser agrees to cooperate with Seller in its
implementation of a tax free exchange pursuant to Section 1031 of the Internal
Revenue Code, provided, however, Purchaser shall bear no additional expenses in
connection with providing such cooperation.
16
24. Survival. The respective rights and obligations of the parties hereto
under the provisions of this Agreement shall survive Closing.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date and year first above-written.
WITNESS: SELLER:
CANTON CROSSING, LLC
a Maryland limited liability company
/s//Xxxxx X. Xxxx, Xx.
---------------------------- By: ____________________________________
Xxxxx X. Xxxx, Xx., Member
WITNESS: XXXX CANTON, LLC
a Maryland limited liability company
/s/Xxxxx X. Xxxx, Xx.
---------------------------- By: ____________________________________
Xxxxx X. Xxxx, Xx., Member
WITNESS: PURCHASER:
FIRST MARINER BANCORP
a Maryland corporation
/s/Xxxxxx X. Xxxxxx
---------------------------- By: ______________________________
Xxxxxx X. Xxxxxx
President & Chief Operating Officer
17
