Partnership Interest Purchase Agreement, dated as of July 23, 2018, by and between SeD Development USA, Inc and American Real Estate Investors, LLC

WHEREAS, the General Partner of the Partnership, 150 Black Oak GP, Inc. (“General Partner”) manages the operations of the Partnership; and

Section 1.01 Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing (as defined herein), Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Purchased Interest, free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance (“Encumbrance”), and all the rights and claims Seller may have, now and in the future, against Buyer, Buyer’s affiliates, officers, directors, employees, and agents, for the consideration specified in Section 1.02.

 

Section 1.02 Consideration. The consideration for the Purchased Interest shall be as follows:

 

(a)           Buyer shall pay Seller $35,000.00 (thirty-five thousand dollars) at the Closing by wire transfer of immediately available funds in accordance with the wire transfer instructions provided to Buyer by Seller; and

 

(b)           Buyer and Partnership will amend the obligation required by the Consultant Fee Release that the Consultant Fees are not payable until the Partnership received $4,000,000.00 (four million) in district reimbursement revenue, as determined by SeD Development USA; and

 

(c)           The Partnership will pay a sum of $30,000.00 (thirty thousand dollars) at the Closing to Seller for the satisfaction of the Consultant Fee Release.

 

Section 1.03 Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place on July 23, 2018., or at such time as Buyer and Seller shall mutually agree.

 

Section 1.04 Releases. Upon the receipt of the consideration described in Section 1.02(a), Seller will release Partnership, General Partner, Buyer, as well as General Partners’ and Buyers’ affiliates, officers, directors, managers, employees, and agents from any and all obligations arising under the LPA and the Fee Releases.

Section 2.01 Organization and Authority of Seller; Enforceability. Seller is a limited liability company duly formed, validly existing and in good standing under the laws of the state of Missouri. Seller has full power and authority to enter into this Agreement and any documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Buyer) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.

Section 2.02 No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with, or result in a default under, its certificate of organization, operating agreement, or other similar organizational documents (collectively, “Organizational Documents) of Seller, as applicable; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Seller, which would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), results of operations or prospects of Seller (any such effect or change, where the context so requires, is hereinafter called a “Material Adverse Effect”); (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any contract or other instrument to which Seller or Parent is a party, which would reasonably be expected to have a Material Adverse Effect; or (d) result in the creation or imposition of any Encumbrance on the Purchased Interest, or any property or assets of Seller. Except as disclosed herein, no consent, approval, waiver or authorization is required to be obtained by Seller from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby, except such consents, approvals, waivers or authorizations which would not, in the aggregate, have a Material Adverse Effect or a material adverse effect on Seller's ability to consummate the transactions contemplated hereby on a timely basis.

 

Section 2.03 Legal Proceedings. There is no claim, action, suit, proceeding or governmental investigation ("Action") of any nature pending or, to Seller's knowledge, threatened against or by Seller (a) relating to or affecting the Purchased Interest; or (b) that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement, except as would not have a Material Adverse Effect. To Seller's knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

 

Section 2.04 Debt. The Seller has no loans, other debts, unpaid taxes, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise ("Debt") that could cause an Encumbrance on the Purchased Interest or the Property (defined in Section 2.07), except those which are adequately disclosed here: ____NONE______________.

 

Section 2.05 Related Party Transactions. There are no existing arrangements or proposed transactions between or among the Seller or any of its affiliates and (i) any trustee, beneficiary, officer, manager or managing member of the Seller or any of immediate family of any of the foregoing persons (such trustee, beneficiary, officers, managers, managing members and family members being hereinafter individually referred to as a "Related Party"), (ii) any business (corporate or otherwise) which a Related Party owns, directly or indirectly, or in which a Related Party.

Section 2.06 No Breach. Seller is not in breach or violation of, or in default under any contract, which would reasonably be expected to have a Material Adverse Effect.

 

Section 2.07 Property Assets. Seller represents and warrants that the Partnership is the fee simple owner of the real property listed in the legal descriptions in Exhibit A (the “Property”).

 

Section 2.08 Ownership of Partnership Interests

 

(a)           Seller is the sole legal, beneficial, record and equitable owner of 7% of the issued and outstanding partnership interests of the Partnership (the “Partnership Interests”), free and clear of all Encumbrances.

 

(b)           To Seller's knowledge, the Partnership Interests were issued in compliance with applicable laws. To Seller's knowledge, the Partnership Interests were not issued in violation of the Organizational Documents of the Partnership any other agreement, arrangement or commitment to which Seller is a party.

 

(c)           To Seller’s knowledge, other than the Organizational Documents of Seller and the LPA, there are no other agreements or understandings in effect with respect to the voting or transfer of any of the Partnership Interests.

 

Section 2.09 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller.

 

Section 2.10 Due Diligence. Seller has had the opportunity to request, receive, and review the operations and prospects of the Partnership and is familiar with the Partnership, its operations, its assets, and its financial status and projections.

Section 3.01 Organization and Authority of Buyer; Enforceability. Buyer is a limited liability company duly formed, validly existing and in good standing under the laws of the state of Delaware. Buyer has full limited liability company power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.

 

Section 3.02 No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with the Organizational Documents of Buyer; or (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Buyer, which would reasonably be expected to have a material adverse effect on the Buyer’s ability to consummate the transactions contemplated hereby on a timely basis. No consent, approval, waiver or authorization is required to be obtained by Buyer from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby, except such consents, approvals, waivers or authorizations which would not, in the aggregate, have a material adverse effect on Buyer’s ability to consummate the transactions contemplated hereby on a timely basis.

 

Section 3.03 Investment Purpose. Buyer is acquiring the Purchased Interest solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Purchased Interest is not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Purchased Interest may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended, or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Buyer is able to bear the economic risk of holding the Purchased Interest for an indefinite period (including total loss of its investment), and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment.

 

Section 3.04 Legal Proceedings. There is no Action pending or, to Buyer's knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To Buyer’s knowledge, no event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

 

Section 3.05 Due Diligence. Buyer acknowledges that it has had the opportunity to conduct a thorough due diligence investigation with respect to this transaction and the Partnership’s assets.

Section 4.01 Seller's Deliveries. At the Closing, Seller shall deliver to Buyer:

 

(a)           A Bill of Sale in the form attached hereto as Exhibit B¸ duly executed by Seller, evidencing the issuance and sale to Buyer of the Purchased Interest; and

 

(b)           A certificate of the manager or similar officer of Seller certifying as to the authorization of the execution, delivery and performance of this Agreement and the transactions contemplated hereby, and (ii) the names and signatures of the trusteed authorized to sign this Agreement and the documents to be delivered hereunder.

 

Section 4.02 Buyer's Deliveries. At the Closing, Buyer shall deliver the following to Seller:

 

(a)           The Consideration described in 1.02(a); and

 

(b)           A certificate of the Secretary or Assistant Secretary (or equivalent officer) of Buyer certifying as to (i) the resolutions of the board of managers (or equivalent managing body) of Buyer, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby, and (ii) the names and signatures of the officers of Buyer authorized to sign this Agreement and the documents to be delivered hereunder.

Section 5.01 Indemnification By Seller. Seller shall defend, indemnify and hold harmless Buyer, its affiliates and their respective members, managers, officers and employees from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including attorneys' fees and disbursements (a "Loss"), arising from or relating to:

 

(a)           any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or any document to be delivered hereunder; or

 

(b)           any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement or any document to be delivered hereunder.

 

Section 5.02 Indemnification By Buyer. Buyer shall defend, indemnify and hold harmless Seller, its trustees and affiliates and their respective members, managers, officers, directors and employees from and against all Losses arising from or relating to:

 

(a)           any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any document to be delivered hereunder; or

 

(b)           any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or any document to be delivered hereunder.

Section 6.01 Confidentiality. The Parties agree that the terms of this Agreement shall remain confidential without receiving prior written consent from the other Parties; provided however, that any Party may disclose the terms as required by law, including any court order or compliance with federal, state, or local regulations that a Party may be subject to.

 

Section 6.02 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.

 

Section 6.03 Further Assurances. Following the Closing, each of the Parties hereto shall, and shall cause their respective affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

 

Section 6.04 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6.04):

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

AMERICAN REAL ESTATE INVESTMENTS, LLC, a Missouri limited liability company     By:                                                                Name:                                                            Title: