TRIPLE NET COMMERCIAL LEASE/PURCHASE AGREEMENT
THIS TRIPLE NET COMMERCIAL LEASE/PURCHASE AGREEMENT is made this ___ day of December 1999, by and between JOSEPH D. QUINN, hereinafter referred to as "LESSOR" and the COMMISSIONERS OF RIDGELY, MARYLAND, hereinafter referred to as "LESSEE".
In consideration of the rent, covenants, agreements, and conditions herein contained, Lessor hereby leases to Lessee and the latter does hereby rent from the Lessor, the real property and premises known as 2 Central Avenue, Ridgely, Caroline County, Maryland (the Property"). Said property being described on SCHEDULE A - attached hereto and incorporated herein by reference.
1. Cost of Acquisition and Development of the Leased Premises. The Lessor, as assignee, intends to enter into a Contract of Sale to purchase the Property in consideration of the sum of One Hundred Ten Thousand ($110,000.00) Dollars. The Contract to purchase the Property will be entered into based on an assumption that the Lessee will agree to the terms of this Agreement, and the Contract is contingent upon the execution of this Agreement. It is also the Lessor's intention to expend substantial sums of money to renovate the Property, in consultation with the Lessee, in conjunction with this Agreement.
In consideration of the Lessor purchasing and renovating the Property, the parties agree as follows:
a. Lessor will hire an architect and engineering firm to prepare a renovation program in consultation with the Lessee. The plan of renovation will be subject final approval by the Lessee.
b. It is the intention of the parties that all renovations will meet all requirements necessary to qualify for a ten (10%) percent federal and/or state tax credit for the rehabilitation of a building originally placed in service prior to 1936. The Lessor shall disclose to the Lessee the amount of any federal and/or state tax credit claimed and received relative to the property. Any such federal and/or state tax credits realized and recognized by the Lessor during the first year of the lease shall be divided by twelve and applied monthly in the Second year of the lease to reduce the rent payment. Such tax credits to Lessor in the second year will be likewise applied to the third year's rent, and so forth for each year except that, at the end of the base five-year term, any rent reduction for the sixth year shall instead be credited to the purchaser if the purchase option is exercised.
c. The Lessor will not incur without prior written approval of Lessee, nor be liable to expend in excess of Two Hundred Fifty Thousand ($250,000.00) Dollars of costs to purchase, lease, and renovate the Property. Said costs shall include, but are not necessarily limited to, the purchase price of the Property, plus settlement costs, costs of architectural and engineering services, cost of construction, including the general contractor, all subcontractors, and materialmen, cost to treat any termite damage to the property, cost of any lead and/or asbestos abatement, Lessor's legal fees related to this transaction incurred through the date of the completion of the renovations, cost of permits, inspections, etc. Any such costs in excess of $250,000.00 will be paid in full by the Lessee, it being the understanding of the parties that the Lessor will not be required to expend in excess of $250,000.00 to purchase, lease, and renovate the Property to the satisfaction of the Lessee.
d. If the renovations of the Property are not substantially completed on the commencement date of the Lease term, the rental payments shall, nonetheless, be due and payable as provided herein, but shall be paid into an interest-bearing escrow account and disbursed therefrom pursuant to the mutual agreement of the parties' attorneys, Robert L. Greenleaf and Douglas H. Everngam, acting as escrow agents, or Order of Court.
e. Upon purchasing the property, the Lessor shall obtain Owner's Title Insurance coverage for the property with coverage of One Hundred Ten Thousand ($110,000.00) Dollars.
f. Lessor, at Lessee's request and expense, will cause the contractor for the renovations to provide a payment and/or performance Bond in an amount stipulated by the Lessee.
2. Contingencies. The Lessor's and Lessee's obligations under this Agreement are contingent upon the purchase of the Property by the Lessor in consideration of a sum not to exceed One Hundred Ten Thousand ($110,000.00) Dollars. In addition, the Lessor's obligations under this Agreement are contingent upon the Lessor obtaining a three (3%) percent fixed rate mortgage for at least One Hundred Forty Thousand ($140,000.00) Dollars from an agency of the State or Federal Government for a term of not less than twenty (20) years.
3. Term of Lease. The term of this Lease shall commence on July 1, 2000, and shall extend to and include the last day of June 30, 2006 (the "Term"). PROVIDED the parties can agree on the amount of rent, Lessee shall have the option to renew this Lease for three additional five year terms, such options to be exercised by Lessee giving Lessor written notice not later than ninety (90) days nor earlier than one hundred eighty (180) days prior to the end of a term. All provisions of this Lease shall apply during the renewal term of this Lease.
Should the Lessee chose not to renew the Lease for any additional five (s) year term, or if the parties are unable to agree on an amount of rent for a renewal term, then the Lessee shall be absolutely obligated to purchase the Property in consideration of the sum set forth in paragraph 22 of this Agreement.
4. Rent. For the initial five (5) year term, rent shall be the sum of Two Thousand Dollars ($2,000.00) Dollars per month, due and payable on or before the first day of each month. Said payments shall be made by check or draft payable to and mailed to Lessor at P.O. Box 186, Denton, Maryland 21629, or by check or draft made payable to any other address which Lessor, or any successor interest of Lessor, may in writing designate.
The amount of rent for any subsequent five (5) year term will be subject to negotiation between the parties. If, within sixty (60) days prior to the expiration of a five (5) year lease term, the parties have been unable to come to an agreement as to the amount of rent for a subsequent five (5) year term, the Lessee shall be absolutely obligated to purchase the Property for the amount set forth in paragraph 22 of this Agreement.
5. Security Deposit. Lessee has deposited with the Lessor the sum of $2,000.00, which is to be held in an interest-bearing account as security and applied on any rent or any other charge that may remain due and owing at the expiration of this agreement, any extension thereof or holding over period or applied on any damages to the premises caused by the Lessee, its invitees, employees, or tradespeople or other expenses suffered by Lessor as a result of a breach of any covenant of this Agreement. Lessee may not utilize the security deposit as rent nor shall it deduct same from the last month's rent nor require the Lessor to indemnify itself from said sum of money or any part thereof with respect to any particular violation or default of Lessee. In the event that any part of the said security deposit shall have been utilized by Lessor in accordance with the terms hereof or applicable law, the Lessee shall, upon the delivery of notice of same, immediately deposit with the Lessor the amount so applied by Lessor so that the Lessor shall have the full deposit on hand at all times during the term of this Lease and any renewal thereof or holding over.
6. Late Charge. Lessee covenants and agrees to pay the aforesaid rent promptly as it becomes due and to abide by and perform all covenants on its part to be performed, and it is further agreed that if said rent or any part thereof shall be in arrears at any time, Lessor may bring action against Lessee for possession, rent or damages as provided by law of the state of Maryland and/or Caroline County, Maryland. It is understood and agreed by all parties that any rent payment made five (5) days or more after due date shall be subject to the imposition of a late charge of 5% of the monthly rental. Said late charge, if not submitted with the late rental payment, shall be due and payable with the next and ensuing payment or will be deducted from the security deposit.
7. Taxes, Utilities, Etc. Lessee shall pay any State, County and Town real estate and personal property taxes attributable to the Property during the Lease term and any renewals. Lessee agrees to pay such taxes on or before their due date. Lessee shall pay all utilities, including, but not limited to, water, sewer, electric, and fuel, which are charged to the Property. This lease shall be deemed and construed a "net lease" and Lessee shall pay to Lessor the rent and other payments hereunder free of any charges, assessments, impositions or deductions of any kind and without abatement, deduction or setoff.
8. Use. The premises may be used for the conduct of town business and for such other purposes that a permit can be obtained, shall be in compliance with all applicable laws and ordinances, and shall not substantially or adversely affect the insurance on the premises. No unlawful business or occupation shall be carried on or permitted on the Property.
9. Sign. Lessee has the right, subject to local law and regulation, to erect a sign at its own expense, provided that Lessee has the responsibility of obtaining the necessary permits and provided further that the Lessor must agree to the design and placement of the sign, which approval shall not be unreasonably withheld.
10. Repairs, Maintenance and Alterations. After completion of the initial renovations mentioned in paragraph 1 above, Lessee shall make all necessary repairs and maintain the Property and the improvements thereto and Lessee agrees that Lessor shall be under no obligation to rebuild, replace, maintain or make any repairs to the Property, or to the improvements thereon during the Term. Lessee shall maintain the roof and exterior, including doors and windows, in reasonably good repair and in a clean and presentable fashion. Lessee shall maintain the heating system, ventilation system, plumbing system, electrical system, and the air conditioning system in good repair. Lessor agrees that Lessee may make, or permit to be made, such alterations, and improvements to the Property, at any time during the Term and without cost to the Lessor, as Lessee may desire; provided, however, that prior to making such alterations and/or improvements Lessee shall receive the prior written consent of Landlord for all alterations costing in excess of Ten Thousand Dollars ($10,000), such consent not to be unreasonably withheld. Should Lessee fail to make repairs and maintain the Property as provided in this section, Lessor is authorized to enter into the premises and make such repairs and maintenance, with the cost to be assessed as additional rent charges.
Lessee will not do, suffer, or permit anything to be done in or about the premises which will contravene the policy of insurance against loss by fire, public liability or another cause for which insurance may be carried by the Lessor or Lessee on the leased premises, nor may use, or permit the use of the premises for any purpose except that herein stated. Lessee shall keep grass cut, trimmed and maintained, and shall generally maintain grounds in good condition; Lessee shall furnish its own electric light bulbs and fuses, and at its own expense replace faucet washers and furnace filters, as needed; Lessee shall keep in a state of good repair, maintenance and cleanliness all parts of the premises, including equipment therein, and shall promptly report any defect to the Lessor.
The Lessee shall keep the streets and alleys adjacent to the premises clear of filth, refuse and obstructions and will use the premises in compliance with all laws and ordinances applicable thereto and in a manner which will not increase the fire insurance rate applicable thereto.
11. Insurance.
(a) Fire and Extended Coverage Insurance - During the Term, Lessee will keep in effect upon the Property fire insurance, with extended coverage endorsement, written by a responsible insurance company or insurance companies authorized to do business in the state of Maryland, in an amount equal to not less than 80% of the insurable replacement value of the building improvements thereon. Said policy or policies of insurance shall provide that payment for any losses covered under or by said policy of insurance shall be made to Lessor and/or any mortgagee and/or assignee designated by Lessor from time to time, as their respective interests may appear.
(b) Damage By Fire and Other Casualty - In case of partial damage to the Property by fire or other casualty, Lessee shall give immediate notice thereof to Lessor and Lessor shall, subject to the limitations stated hereinafter, thereupon cause such damage to be repaired with reasonable speed, due allowance being made for reasonable delay which may arise by reason of adjustment of loss under insurance policies and for reasonable delay on account of Force Majeure as hereinafter defined. The rent shall not abate during the repair. In the event the damage shall be so extensive to the Property as to render it untenantable, this Lease, at the option of Lessor, shall be terminated upon written notice to the Lessee and the rent shall be paid to or adjusted as of the date of such damage, and the terms of this Lease shall expire by lapse of time upon the third day after such notice is mailed, and Lessee shall thereupon vacate the Property and surrender the same to Lessor, in which case all applicable insurance proceeds covering the property shall be paid to the Lessor. In the event Lessor elects to terminate this Lease, Lessee may elect to continue this Lease and to rebuild at its sole expense and in a manner reasonably acceptable to Lessor and Lessor shall make available to Lessee insurance proceeds actually received by Lessor to the extent of the cost of such rebuilding. If Lessee elects to continue this Lease and rebuild, the rent shall not be abated during the rebuilding.
In no event shall Lessor's obligation to reconstruct the damaged improvements exceed available insurance proceeds.
(c) Liability Insurance - Lessee shall, at Lessee's sole cost and expense, maintain a general public liability and fire liability insurance against claims for personal injury, death or property damage occurring upon, in or about the Property, such insurance to afford protection to the limit of not less than Five Hundred Thousand Dollars ($500,000) in respect to injury or death of a single person, to the limit of One Million Dollars ($1,000,000) in respect to any one accident, and to the limit of not less than One Hundred Thousand Dollars ($100,000) with respect to each incident of property damage. Such policies shall name the Lessor and the Lessee as insured parties. On or before the commencement of the term of this Lease, Lessee shall deliver to Lessor certificates of insurance certifying that the insurance required hereunder is in full force and effect.
12. INDEMNIFICATION/RESPONSIBILITY FOR DAMAGE OR INJURY.
Lessee hereby expressly agrees that Lessor shall not be liable or responsible in any manner for any damage or injury to the person or property of Lessee (including, but not limited to, the leased premises) or the person or property of any other person or entity directly or indirectly caused by (i) dampness of water in any part of the leased premises caused by Lessee and/or Lessee's contractors, servants, employees, agents, licensees, or invitees; (ii) theft; (iii) fire or other casualty; and/or (iv) any other cause whatsoever, unless directly attributed to Lessor's negligent or intentional act or omission.
Lessee shall indemnify and hold harmless Lessor for all losses, costs and expenses (including attorney's fees), settlement payments, and, whether or not reduced to final judgment, all liabilities, damages, or fines paid, incurred or suffered by Lessor; (i) by reason of any breach, violation, and/or nonperformance by Lessee or Lessee's employees, agents, licensees, invitees, or visitors, of any covenants or provision of this lease; (ii) by reason of or arising out of the occupancy or use by Lessee of the leased premises (iii) by reason of or arising out of any claim, action, suit, or proceeding; threatened, instituted and/or made against Lessor arising out of or in connection with Lessee's use and/or occupancy of the leased premises; and/or (iv) from any other cause whatsoever due to the carelessness, negligence, intentional, wanton and/or improper conduct of Lessee and/or Lessee's contractors, servants, employees, agents, licensees and/or invitees.
13. Assignment and subletting. Except as otherwise provided herein, neither Lessee, nor Lessor, nor their successors or assigns, shall transfer, assign, mortgage or encumber this Agreement by operation of law or otherwise, or sublet or permit the Property or any part thereof, to be used by others without the prior written consent of the other party, which consent shall not be unreasonably withheld. Any transaction in violation of this provision shall be void.
14. Subordination. Lessee accepts this Agreement, and the tenancy created hereunder, subject and subordinate to any mortgages, deeds of trust, or other security interest now or hereafter a lien upon or affecting the Property or any part thereof. Lessee shall, at any time hereafter on request, execute any instruments or other documents which may be required by any mortgage, mortgagee, deed of trust, or trustee, to subordinate Lessee's interest hereunder, and the failure of Lessee to execute any such instrument shall constitute a default hereunder.
15. Attornment. Lessee agrees that upon any termination of Lessor's interest in the Property, Lessee will, upon request, attorn to the person or organization then holding title to the reversion of the Property (the "Successor") and to all subsequent successors, and shall pay to the successor all rents and other monies required to be paid by the Lessee hereunder and perform all of the other terms, covenants, conditions, obligations in this Agreement contained.
16. Default.
(a) Event of Default - The occurrence of any one or more of the following events shall constitute an event of default by Lessee and shall be deemed a breach by Lessee hereunder;
(1) The failure by Lessee to make any payments of rent or other payment as required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of five (5) days after written notice thereof from Lessor to Lessee;
(2) Failure by Lessee to observe or perform any of the covenants, conditions or provisions of the Agreement where such failure shall continue for a period of fifteen (15) days after written notice thereof from Lessor to Lessee;
(3) (i) The making of any general arrangement or any assignment by Lessee for the benefit of creditors, (ii) if not cured within thirty (30) days, the filing by or against Lessee of a petition to have Lessee adjudged bankrupt or a petition of reorganization or arrangement under any law relating to bankruptcy, or the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets, and (iii) if not cured within thirty (30) days, the attachment, execution or other judicial procedure of substantially all of Lessee's assets.
(4) The Abandonment of the Property by Lessee.
(b) Remedies Upon Default- Upon the occurrence of an event of default, Lessor shall have the right, at its election then or at any time thereafter while such event of default shall continue, to the following:
(1) Provide Lessee written notice of its intent to terminate this Lease on the date of such notice or on any later date specified therein, whereby the Lessee's right to possession of the Property as a Tenant shall cease and this Lease shall thereupon be terminated; and
(2) Without demand or notice, to reenter and take possession of the Property, or any part thereof, and repossess the same by summary proceedings, or by an action at law or in equity; and
(3) Be availed of any other rights or remedies, at law or in equity, as provided for by the laws of the state of Maryland; or
(4) Require the Lessee to tender the full purchase price which was due at the expiration of the prior five (5) year term as provided in paragraph 22, or, if the default occurs during the initial five (5) year term, require the Lessee to tender the full purchase price which is due at the expiration of that term, as provided in paragraph 22, plus all remaining rent payments due for that initial term.
(c) Right to Reinstate. In the event of a default pursuant to subparagraph 16.(a) (1) hereof, Lessee shall have the right to reinstate this Lease as follows:
(1) Lessee shall have the right to reinstate during the Term.
(2) Lessee shall pay the following amounts to Lessor, within fifteen (15) days of the date upon which the payment of rent unpaid was due, to reinstate the Lease:
(i) All amounts
which are past due and
(ii) Five percent (5%)
of the amount set forth in (i) above as provided in paragraph 6 and,
(iii) All reasonable
legal fees and expenses incurred by Lessor in connection with the default.
17. Quiet Enjoyment. Lessor covenants that Lessee, upon paying the rent as provided for in this Lease, and upon performing and observing all of the terms, covenants, conditions and provisions of this Lease, shall quietly hold, occupy and enjoy the Property during the term of this Lease without hindrance, disturbance or ejection by Lessor or any party claiming through or under Lessor.
18. Force Maieure. Lessor shall not be required to perform any of its obligations under this Lease, nor be liable for loss or damage for failure so to do, nor shall Lessee thereby be released from any of its obligations under this Lease, where such failure arises from or through acts of God, strikes, lockouts, labor difficulties, explosions, sabotage, accidents, riots, civil commotions, acts of war, results of any warfare or warlike conditions in this or any foreign country, fire and casualty, legal requirements, energy shortage, or causes beyond the reasonable control of Lessor, unless such loss or damage results from willful misconduct or negligence by Lessor or its employees.
19. Right of Entry. Subject to Lessee's security regulations, Lessor may at all reasonable times and with reasonable prior notice to Lessee enter upon the Property for the purposes of inspecting the same and making repairs, restorations and/or alterations thereto as it may be required or permitted to make under the term of this Lease.
20. No Waiver. The failure of either party to insist in any one or more instances upon a strict performance of any covenant of this Agreement or exercise any right herein contained, shall not be constructed as a waiver for the future of such covenant or right, but the same shall continue in full force and effect unless the contrary is expressed in writing.
21. Condemnation or other Taking. Eminent Domain. If the entire Leased Premises shall be taken, leased, or condemned.(either temporarily or permanently) for public purposes, or in the event Lessor shall convey or lease the Property to any public authority in settlement of a threat of condemnation or taking, the rent shall be adjusted to the date of such taking or leasing or conveyance, and this Lease shall thereupon terminate. If only a portion of the Leased Premises shall be so taken, leased, or condemned, and as a result of such partial taking, and Lessee determines that it is reasonably able to use the remainder of the Leased Premises for the purposes intended hereunder, then this Lease shall not terminate but, effective as of the date of such taking, leasing, or condemnation, the rent hereunder shall be abated in an amount thereof proportionate to the area of the Leased Premises so taken, leased, or condemned. If, following such partial taking, Lessee shall not be reasonably able to use the remainder of the Leased Premises for the purposes intended hereunder, then this Lease shall terminate as if the entire Leased Premises had been taken, leased, or condemned. In the event of a taking, lease, or condemnation as described in this Section, whether or not there is a termination hereunder, Lessee shall have no claim against Lessor, other than an adjustment of rent, to the date of taking, lease, or condemnation, and Lessee shall not be entitled to any portion of any amount that may be awarded as damages or paid as a result or in settlement of such proceedings or threat.
If the Lessee shall condemn the property, they shall be precluded from asserting that the fair market value of the property is less than the purchase price established in paragraph 22 of this Agreement.
22. Option/Contract to Purchase.
(A) At the conclusion of each five (5) year term, Lessee shall have the right to purchase the property from Lessor on the following terms and conditions ("the Option"):
(1) At least ninety (40) days prior to the expiration of a five (5) year lease term, Lessee shall exercise the Option by giving notice of its exercise, in writing, to Lessor.
(2) The purchase price to be paid to Lessor for the Property shall be paid at settlement by certified check and shall be the sum of Two Hundred Twenty Thousand ($220,000.00) Dollars, if the option is exercised at the conclusion of the first five (5) year term; One Hundred seventy Thousand ($170,000.00) Dollars, if the option is exercised at the conclusion of the second five (5) year term One Hundred Five Thousand ($105,000.00) Dollars, if the option is exercised at the conclusion of the third five (5) year term; or Fifty Thousand ($50,000.00) Dollars, if the option is exercised at the conclusion of the final five (5) year term.
(3) At the settlement, Lessor shall deliver to Lessee a special warranty deed conveying to Lessee a good and merchantable fee simple title to the Property insurable at standard rates with no exceptions other than standard exceptions (other than matters created by Lessee), by a title insurance company acceptable to Lessee.
Other than costs related to curing defects of title which shall be paid by Lessor, all transfer taxes, recordation stamps, survey expenses, document preparation, title insurance premiums and other similar costs shall be paid by Lessee.
(B) If the option to purchase has not been exercised at the time of the expiration of the fourth and final five (5) year term, the Lessee shall have the absolute obligation to purchase the Property for the sum of Fifty Thousand ($50,000.00) Dollars at the conclusion of the fourth and final five (5) year term, and Lessee shall pay the expenses as provided in paragraph 22(c).
(c) Except us otherwise provided herein, there will be no credit toward the purchase price for rent paid pursuant to the terms of this Agreement.
23. General Provisions.
(a) Benefit and Burden. Except as otherwise expressly set forth in this Lease, the covenants, conditions, agreements, terms and provisions herein contained shall be binding upon, and shall inure to the benefit of the parties hereto and each of their respective heirs, successors and assigns. Time shall be of the essence in all provisions of this Lease.
(b) Governing Law. It is the intention of the parties hereto that this Lease (and the terms and provisions hereof) shall be construed and enforced in accordance with the laws of the state of Maryland.
(c) Notices. No notice, request, consent, approval, waiver or other communication which may be or is required or permitted to be given under this Lease shall be effective unless the same is in writing and is delivered, if to Lessor at the address set forth above for the payment of rent, or if to Lessee, care of the address of the Property, or at any other address that may be given by one party to the other by notice pursuant to this subsection. Such notices, if sent by certified mail, shall be deemed to have been given at the time of mailing.
(d) Recordation of Agreement. The parties agree to record this Agreement in accordance with Maryland law. All recording costs and recordation stamps or taxes shall be paid by Lessee.
(e) It is understood and agreed that the relationship of the parties hereto is strictly that of landlord and Tenant and that the Lessor has no ownership in the Lessee's enterprise and that this Lease shall not be construed as a joint venture or partnership. The Lessee is not and shall not be deemed to be agent or representative of the Lessor.
(f) Entire Agreement. This document contains the final and entire agreement between the parties hereto, and they shall not be bound by any terms, statements, conditions or representations, oral or written, express or implied, not herein contained.
(g) Not a Land Installment Contract: Lessor and Lessee concur that this Agreement does NOT constitute a land installment contract.
(h) Brokerage: The parties represent to each other that this Agreement was not brought about by the efforts of any realtor and that no brokerage commission is due to anyone.
i) No Collusion: Lessor and Lessee expressly state and concur that no financial consideration was paid to any official, paid or otherwise, of the Lessee to induce the Lessee to enter into this Agreement.
24. Notices. All notices required to be given shall be in writing and mailed or delivered to the following addresses:
To Lessor: To Lessee:
P.O. Box 186 P.O. Box 710
Denton, MD 21629 Ridgely, MD 21660
IN WITNESS WHEREOF, the said parties have hereunto signed, their names and affixed their seals.
WITNESS:
__________________ _________________________(SEAL)
Joseph D. Quinn (LESSOR)
ATTEST: Commissioners of Ridgely, MD
__________________ By: _________________________ (SEAL)
Lou Hayes, President (LESSEE)
STATE OF MARYLAND, CAROLINE COUNTY, to wit:
I HEREBY CERTIFY, that on this ___ day of December,1999, the above named JOSEPH D. QUINN "LESS0R," personally appeared before me and made oath in due form of law that the matters and facts set forth in the foregoing Agreement with respect to the Commercial Lease Purchase Agreement of the parties is true and correct as therein stated and acknowledged that the said Commercial Lease Agreement is in fact his act and deed and that he has a full understanding thereof.
AS WITNESS my hand and Notarial Seal. ____________________
My Commission Expires: Notary Public
Carol Balderson, Caroline Co. MD
STATE OF MARYLAND, CAROLINE COUNTY, to wit:
I HEREBY CERTIFY, that on this , ___ day of December, 1999, the above named Lou Hayes, president of the Commissioners of Ridgely, Maryland, LESSEE, personally appeared before me and made oath in due form of law that he, as such president, being authorized so to do, executed the foregoing Agreement for the purposes therein contained, by signing the name of the corporation by himself as president, and acknowledged said Agreement and on behalf of said corporation as its proper corporate act and deed, the matters and facts set forth in the foregoing Agreement with respect to the Commercial Lease Purchase Agreement of the parties is true and correct as therein stated and acknowledged that the said Commercial Lease Agreement is in fact his act and deed and that he has a full understanding thereof.
AS WITNESS my hand and Notarial Seal.
My Commission Expires:
______________________
Notary Public
Carol Balderson, Caroline Co. MD
ADDENDUM A
The parties, in the interest of clarification, acknowledge:
1. Interest paid by Lessor on the loan for the property during the construction term is to be included within Lessor’s $250,000.00 limit of expenditures on the property.
2. If the renovations of the property are not substantially completed on the commencement date of the Lease Term, rental payments deposited pursuant to paragraph 1(d) may be used by the Lessor toward any mortgage payments directly related to the property.
IN WITNESS WHEREOF, the said parties have hereunto signed their names and affixed their seals.
WITNESS:
______________________________________ _______________________________(SEAL)
Joseph D. Quinn, "LESSOR"
ATTEST: COMMISSIONERS OF RIDGELY, MD
_______________________________ BY: _____________________________(SEAL) Lou Hayes, President
"LESSEE"
ADDENDUM B
WHEREAS, Joseph D. Quinn and the Commissioners of Ridgely, Maryland entered into a Triple Net Commercial Lease/Purchase Agreement on December 5, 1999 (hereinafter referred to as the "Agreement"), and
WHEREAS, the parties to said Agreement desire to add Barbara Quinn as a Lessor, due to the fact that the real property which is the subject of the Agreement is currently titled in the name of Joseph D. Quinn and Barbara Quinn, as tenants by entireties, and
WHEREAS, the said Barbara Quinn, as witness her execution of this Addendum, agrees to assume the rights and obligations of a Lessor pursuant to the terms of the Agreement.
NOW THERETOFORE, witness this Addendum to the said Triple Net Commercial Lease/Purchase Agreement, for and in consideration of the sum of $1.00 (One Dollar) and other good and valuable consideration, the undersigned agree to add Barbara Quinn as a Lessor in said Agreement, subject to all the rights and obligations of a Lessor as outlined in the Agreement.
__________________________________
Joseph D. Quinn, LESSOR
ADDENDUM C
THIS ADDENDUM TO LEASE/PURCHASE AGREEMENT is made this _____ day of January, 2001, by and between JOSEPH D. QUINN and BARBARA J. QUINN, "Lessors", and COMMISSIONERS OF RIDGELY, MARYLAND, "Lessees":
R E C I T A L S
The Parties hereto entered into a Lease/Purchase Agreement (hereinafter, the "Lease") on December 5, 1999 relating to property known as 2 Central Avenue, Ridgely, Caroline County, Maryland, said property being more fully described in a deed to the Lessors recorded in Liber F. D. M. No. 311, folio 376, Land Records of Caroline County, Maryland.
The Parties hereto wish to amend the Lease upon the terms set forth in this Addendum.
NOW, THEREFORE, WITNESSETH, that for and in consideration of the mutual promises set forth herein, the parties hereto agree as follows:
1. The amount that Lessor is authorized to incur for acquisition and renovation expenses pursuant to Paragraph 1.c. of the Lease is increased from Two Hundred Fifty-Thousand ($250,000.00) Dollars to Three Hundred Thousand ($300,000.00) Dollars.
2. In addition to plans for renovations previously agreed upon, Lessor will contract with: (1) Stanley Hutchison, trading as Hutchison Supply Co. ("Hutchison"), the general contractor engaged to perform such renovations, for that work shown on Exhibit A attached hereto; (2) Sard & Son for HVAC in the additional amount of $8,100; and (3) AES, LLC, for an additional amount of $2,257.50.
3. All bills received from Hutchison, including any bills in excess of the additional sums required to be spent by Lessor in accordance with this Agreement, shall be due and payable by the Lessee to the Lessor in as timely a manner as will allow the Lessee to obtain any credit for prompt payment offered by Hutchison; in time to avoid the imposition of any finance charge or late fee by Hutchison, and, in any event, not later than thirty (30) days after presentation by Hutchison of invoices for all undisputed matters, and, in the case of disputed matters, not later than thirty (30) days after: (i) any work done or material supplied as reflected on any invoice from Hutchison shall have been accepted and approved by Lessee, which acceptance and approval shall not be unreasonably withheld; or (ii) the entry of a final, non-appealable judgement for any disputed amount by any court of competent jurisdiction, whichever shall occur first.
4. Lessee shall have the right to dispute any bill submitted by Hutchison or by Sard & Son, but hereby agrees to indemnify and save Lessors harmless from any and all claims by Hutchison or by Sard & Son, or any of their respective agents, employees, suppliers, materialmen, laborers, or subcontractors rising from the renovations performed or to be performed at 2 Central Avenue, Ridgely, Maryland, as well as any and all reasonable expenses incurred by Lessor in defending against any such claim, or in proceeding against the Lessee to enforce this Agreement to indemnify and save harmless.
5. Although the parties have agreed in this Lease Addendum to include more renovation work than was to be performed under the original Lease, and have agreed to increase the amount to be spent by the Lessor in an amount that corresponds to the increase in renovation work, nevertheless, as to that renovation work addressed in the original Lease, the $250,000.00 limitation set forth therein shall continue to apply to the Lessor’s obligation to make payment of expenses incurred in the performance of the renovation work originally contemplated.
6. The parties nevertheless anticipate that some duplication of costs is contained within the estimates received for the original contract work and the estimates received for the additional work described on Exhibit A. To the extent that such duplication reduces the amount billed by Hutchison to Quinn, Quinn agrees to reduce the amount that is required by this Addendum to be paid by the Town, that is, those amounts by which the work on Exhibit A exceed the $250,000 amount required to be spent by Quinn before the Town is required to pay the excess. Resolution of disputes with Hutchison concerning any claim for adjustment arising from duplication shall be the Town’s responsibility rather than Quinn’s, and Quinn is under no obligation to seek or obtain such resolution.
7. The first sentence of paragraph 3 of the Lease is amended to read as follows: "The term of this Lease shall commence on July 1, 2000, and shall extend to and include the last day of June 30, 2006." All references thereafter in the lease to an initial term of five years are hereby corrected to read an "initial term of six years". Likewise Paragraph 22 is amended as follows:
(a) In Paragraph (A), the phrase "at the conclusion of each five year term" is amended to read "at the conclusion of the initial or any renewal term";
(b) In the first clause of Paragraph (B), the words "of a five (5) year lease term" are amended to read "of the initial term". Nevertheless, all additional or renewal terms shall remain five years in length, commencing July 1, 2006.
8. In making the $140,000.00 loan referred to in Paragraph 2 of the Lease, the Lender required that the loan may be declared due and payable in full upon the death of either obligor (the Lessors herein). The Town agrees that in the event the Lender shall exercise its right to demand full payment, and the Lessor is required to obtain a replacement loan at an interest rate in excess of four (4%) percent, then the Town will increase its monthly rent payment to fully reimburse the Lessors for their increased interest expense, so long as the replacement loan is obtained as a result of arms-length negotiations and so long as the interest on such replacement loan is in accord with the prevailing rate for loans of similar term and quality.
9. The second paragraph of Section 1b of the lease reads as follows:
The lessor shall disclose to the Lessee the amount of any federal and/or state tax credit claimed and received relative to the property. Any such federal and/or state tax credits realized and recognized by the Lessor during the first year of the lease shall be divided by twelve and applied monthly in the second year of the lease to reduce the rent payment. Such tax credits to Lessor in the second year will be likewise applied to the third year’s rent, and so forth for each year except that, at the end of the base five year term, any rent reduction for the sixth year shall instead be credited to the purchaser if the purchase option is exercised.
Such paragraph is hereby deleted and the following substituted in lieu thereof:
The lessor shall disclose to the Lessee the amount of any federal and/or state tax credit claimed and received relative to the property. Any such federal and/or state tax credits realized and recognized by the Lessor during the earliest year of the lease that such credits are available shall be divided by twelve and applied monthly in the following year of the lease,
i) FIRST: to the reimbursement to the Lessor of all "soft costs" shown on Exhibit B attached hereto, and to such other "soft costs" that Lessor and Lessee may agree will be not be reimbursed directly by Lessee to Lessor, but, rather, will be reimbursed by application of such tax credits; and
ii) SECONDLY, to reduce the rent payment.
Such tax credits to Lessor in all ensuing years will be likewise applied to the continued reduction of Lessor’s soft costs, if any remain unreimbursed, and the excess, if any there be, to the following year’s rent, and so forth for each year except that, at the end of the base six-year term, any rent reduction for the seventh year in excess of such unreimbursed soft costs shall instead by credited to the purchaser if the purchase option is exercised.
10. The Lessee will be responsible for completion and filing of all documents required to obtain the tax credits contemplated by this Lease. If such credits, or any portion thereof, are denied by the various taxing authorities or disallowed by such taxing authorities upon review of Lessor’s return for any reason not arising from the negligent or intentional act of Lessor that contravenes qualification of such credits, then no rent reduction will be allowed by Lessor to the Lessee; all unrecouped portions of any of Lessors’ expenses in excess of the original $250,000 investment will be paid by the Lessee to the Lessor within 30 days following the date that the determination of the taxing authority has become final and nonappealable; and any tax credits previously used to reduce the rent that are disallowed upon review will be repaid by the Lessee to the Lessor within such 30-day period.
11. As amended by this Addendum, the parties hereto reaffirm the Lease Agreement dated December 5, 1999, as amended by Letter Agreement dated July 21, 2000 from Joseph D. Quinn addressed to Commissioners of Ridgely; by undated addendum to Triple Net Commercial Lease Agreement adding Barbara J. Quinn as Lessor; and by Addendum appearing on Schedule A of the Lease. In the event of a conflict between the terms of the original Agreement (as so amended) and this Agreement, the provisions hereof shall govern.
IN WITNESS WHEREOF, the Parties hereto have signed, or caused to be signed on its behalf, these presents, and have affixed their respective seals hereto, the date and year first above written.
WITNESS:
______________________________________ ___________________________________(SEAL)
Joseph D. Quinn
______________________________________ ___________________________________(SEAL)
Barbara J. Quinn
ATTEST: COMMISSIONERS OF RIDGELY:
______________________________________ __________________________________(SEAL)
Louis Hayes, President
EXHIBIT A
ESTIMATE
1. Extras to second floor - Electric and plumbing, floor-covering, fans, showers, doors. $ 6,800.00
2. Extra in downstairs Police Department area 1,200.00
3. Chimney replacement 3,200.00
4. Fire escape on end of building next to Police Department 4,500.00
5. Provide work to basement for fireproof room and sprinkler system 2,800.00
6. Provide for handicap ramp at back door on South side of building
3,200.00
$21,700.00
========
EXHIBIT B
Dec. 1999
PBM L/C Int. -Dec.
$ 33.58
January
2000
PBM L/C Int.
-Jan.
33.59
January
PBM Mtg. Int.
748.61
February
PBM L/C Int. - Feb.
55.68
March
PBM Mtg. Int.
800.45
March
PBM L/C Int. - March
181.35
April
PBM L/C Int. - April
283.17
April
PBM Mtg. Int.
799.20
May
PBM Mtg. Int.
797.94
May
PBM L/C Int. - May
294.75
June
PBM Mtg. Int.
796.67
July
PBM L/C Int. - June
292.50
July
PBM Mtg. Int.
795.39
August
PBM L/C Int. - July
467.53
August
PBM Mtg. Int.
794.10
September
PBM Mtg. Int.
792.81
September
PBM L/C Int. - Aug.
542.39
September
PBM L/C Int. - Sept.
555.00
MARCH
PBM Mtg. Int.
791.91
MARCH
PBM L/C Int. - Oct.
618.50
November
PBM Mtg. Int.
790.60
November
PBM L/C Int. - Nov.
605.00
December
PBM Mtg. Int.
789.27
December
PBM L/C Int. - Dec.
325.16
---------------
Balance
12/31/00
$
12,985.15
2001:
January
PBM Mtg. Int.
$To be completed as
January
PBM L/C Int.
figures become
February
PBM Mtg. In.
available
February
PBM L/C Int.
"
March
PBM Mtg. Int.
"
March
PBM L/C Int.
"
April
PBM Mtg. Int.
"
April
PBM L/C Int.
"
May
PBM Mtg. Int.
"
May
PBM L/C Int.
"
May
DHCD Int. On Construction Draws
"
$_____________
To be computed
Total Subject to Lessor’s Tax Credit Application $___________
RIDGELY HOUSE VENTURE
SCHEDULE OF INVESTMENT COMMITMENT
EXPENDITURES THRU DECEMBER 31, 2000
12/06/99 LEADCO 0001 Lead Base Paint Report Report $ 1,400.00
12/05/99
Kinko’s
1001
Photocopies of Lead Base
Paint Report for Town
18.90
12/17/99 Archie Carroll 1002 Deposit Real Est. Contract 1,000.00
12/17/99 Jarrell & Everngam 1003 Legal Fees 1,089.00
12/17/99 Eaton’s Pest Control 1004 Pest - Termite Inspection 75.00
01/30/00
Jarrell & Everngam 1007
Settlement Sheet -
Purchase Price Less Deposit 108,300.00
Settlement Charges
2,105.15
02/04/00 AES - LLC 1008 Deposit - Architect Contract 500.00
02/25/00 Hutchison Sup. 1012 Roof - Contract 6,200.00
03/13/00 Hutchison Sup. 1014 Roof - Contract 6,200.00
04/01/00 Hutchison Sup. 1018 Roof - Contract 6,100.00
04/07/00 AES - LLC 1019 Architect Contract 5,460.00
06/24/00 Hutchison Sup. 1026 Phase 2 - Contract 7,500.00
07/14/00 Sard & Son 1029 HVAC - Contract 5,520.00
07/22/00 Hutchison Sup. 1032 Phase 2 - Contract 7,500.00
08/01/00 AES - LLC 1035 Architect Contract 1,345.20
08/19/00 R. S. VandeVisser 1038 Appraisal 1,800.00
08/19/00 Hutchison Sup 1039 Phase 2 - Contract 5,000.00
10/08/00 Sard & Son 1044 HVAC - Contract 5,365.00
12/11/00 Jarrell & Everngam 1052 Settlement DHCD Mtg. 2,402.00
12/31/00 Hutchison Sup. 1053 Phase 2 - Contract 5,000.00
12/13/00
Jarrell & Everngam 1054
Settlement DHCD Mtg.
44.00
$179,924.25
ESTIMATED PROJECT COSTS - as
of 1/07/01
RIDGELY HOUSE
Expenditures to Date (Exhibit C) $179,924.25
Hutchison Supply Co. - Phase III 93,500.00
Sard & Son - 1st Floor
Balance Due Original Contract 5,365.00
2nd Floor, Phase III ($8,100.00)
Direct with Sard
AES - LLC - Architect Additions to Contract 2,257.50
AES - LLC - Architect
Balance Due Original Contract
3,695.00
$292,841.75
Contract Maximum 250,000.00
Balance Due Quinns Upon Completion $ 42,841.75