The first amended purchase and sales agreement signed with B’D’ Turman’d Entertainment has holes big enough for a herd of elephants to pass through. Recently, I addressed some of the problems that attorney John Bannon, of Murray, Plumb and Murray, found in the agreement. This week, I will discuss others.

Jobs last longer than six months not required: A qualifying job is defined as one “created and continuously employed” for at least six months. It need not constitute long-term employment. Qualifying jobs are those for which the LLC will receive credits against the $175,000 it otherwise must pay Camden at the end of five years. If the LLC creates 24 jobs of only six months duration, Camden will need to pay them $175,000. The LLC could hire 24 people for the last six months of the five-year period and meet this qualification.

 

Lack of penalties for breach of job creation: Creation of jobs is not required, and the town has no power to sue the LLC for breach of contract if it has not created 24 qualifying jobs, let alone any jobs, at the end of five years.

 

No guarantee of local jobs: The agreement does not require the LLC to hire Camden residents to fill any of the qualifying jobs. The LLC does not commit to preferring Camden residents, or filling a minimum percentage of the qualifying jobs with Camden townspeople or even local or Maine people. There is no guarantee that any of the qualifying jobs will benefit Camden residents or otherwise compensate for the town’s investment in cleaning up the property.

 

Town’s risk of loss if property is damaged: The agreement provides that if the property is substantially damaged before the closing, the LLC has two choices. First, it may terminate the contract and take back its deposit money. However, because the agreement requires no earnest money or deposit from the LLC, and the selling price is $1, that provision is meaningless.

The second option, that the LLC may accept insurance proceeds for any damage to the property and proceed to closing without reduction in the purchase price, is also not beneficial to the town. Such a clause is intended to prevent buyers from benefiting from preclosing damage by both accepting the insurance payout for the loss, and demanding a lower purchase price. Because the purchase price is $1 it is not a deterrent. The LLC can accept insurance proceeds and still purchase the property essentially for free.

 

Town’s liability for misrepresentations: The agreement recites that the town has made no representations or warrantees concerning the condition of the property, including but not limited to the presence or absence of hazardous, toxic or special waste. The purpose is to prevent the LLC from repudiating the contract or suing the town for misrepresentation if, after closing, the LLC discovers the property is more contaminated than it believed.

However, it is undermined, if not negated by the second paragraph where the town recites that “The documents attached… demonstrate that Camden believes that it has completed satisfactory remediation efforts consistent with the VRAP program referred, therein.” To accomplish the intended purpose of shielding the town against misrepresentation claims by the LLC, this last statement must be deleted.

 

Contingencies under which the LLC is not required to close

Permitting: It is a typical condition for a contract to have a clause making closing contingent on the buyer obtaining necessary permits. The agreement describes the project only as the ‘use of the premises and construction of buildings, fixtures, improvements, and parking, consistent with the buyer’s intended use and development of property as a state of the art film production facility, administrative offices and related accessory uses.”

The description incorporates no development plans by reference. If the town has no knowledge of the size or layout of the LLC’s project, and thus no idea of its potential impact on natural resources or the town’s health, safety or welfare, it has no reasonable basis for guaging the probability of the project’s obtaining necessary permits and approvals. Therefore, the town cannot rationally decide how long it should allow the LLC to keep pursuing permit applications. The LLC could tie up the property for years while it experiments with different project designs.

Financing: The LLC’s obligation to close is contingent on its obtaining sufficient financing… to perform the purchase of the premises. The agreement leaves the term “sufficient” entirely to the LLC’s discretion. Because the town has no idea how much financing is needed, it has no way of knowing whether the LLC has breached its obligation to obtain such financing.

Purchase of additional properties: This is one of the most puzzling parts of the document. The LLC need not close on the property until it has purchased “any other real properties, in the buyer’s sole discretion, that may be of interest to buyers as additional properties that are essential to buyer’s business plan.”

Even if the town is ready, willing and able to perform all of its obligations under the agreement, the LLC need not purchase the Apollo Tanning Property if it can’t acquire these other (unknown to the town) properties that it would like to acquire.

More troubling, the agreement establishes no deadline at all by which the LLC needs to acquire those discretionary additional properties. The LLC can postpone the deal indefinitely, meanwhile tying up the property, while it waits for other essential real properties to become available and then exercises its right to purchase them.

Do we want to obligate ourselves to this agreement with all of its inadequacies and its failure to meet our economic goals and to guarantee jobs? Is it prudent to enter into any agreement with this particular buyer? The choice in order to protect our town is to vote no on May 10. Absentee ballots are now available at the town office.

 

Nancy Caudle-Johnson lives in Camden.