MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

EXHIBIT 10.1

Execution Copy

 

MEMBERSHIP INTEREST

PURCHASE AND SALE AGREEMENT

BY AND AMONG

PRIP 10637, LLC,

a Delaware limited liability company

AS PURCHASER,

SHILOH CROSSING PARTNERS II, LLC,

an Indiana limited liability company

AS SELLER

AND

GLENWOOD HOUSING PARTNERS I, LLC,

an Indiana limited liability company,

AS THE COMPANY

As of December 1, 2006

 

TABLE OF CONTENTS

 

 

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MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is made as of December 1, 2006 (the “ Effective Date ”), by and among PRIP 10637, LLC , a Delaware limited liability company (“ Purchaser ”), SHILOH CROSSING PARTNERS II, LLC, an Indiana limited liability company (“ Seller ”), and GLENWOOD HOUSING PARTNERS I, LLC, an Indiana limited liability company (the “ Company ”).

BRADLEY B. CHAMBERS, a resident of the State of Indiana (“ Chambers ”), BUCKINGHAM INVESTMENT CORPORATION , an Indiana corporation (“ Buckingham ”), and ICE MILLER LLP ( “ Escrow Agent ”) are parties to this Agreement for the limited purposes set forth herein

WITNESSETH:

ARTICLE 1

PURCHASE AND SALE

1.1 Agreement of Purchase and Sale of Membership Interest . Subject to the terms and conditions hereinafter set forth, Seller agrees to sell, transfer, assign, set over and convey, or cause to be conveyed, to Purchaser on the Closing Date (as hereinafter defined), and Purchaser hereby agrees to purchase from Seller on the Closing Date, such right, title and interest of Seller in and to its membership interests, and all other legal and equitable interests in the Company, such that following said transfer Purchaser shall own sixty-five percent (65%) of all legal and equitable interests in the Company, free and clear of any and all liens, encumbrances and other interests (collectively, the “ Membership Interest ”).

1.2 Company Property . Seller represents and warrants to Purchaser that the Company owns the following:

(a) that certain tract or parcel of land located in Hamilton County, Ohio, and more particularly described on Schedule 1.2(a) , attached hereto and by this reference made a part hereof (the property described in this clause (a) being herein referred to as the “ Land ”), together with any rights, easements and appurtenances pertaining to the Land;

(b) the structures and other improvements (if any) on the Land (the property described in this clause (b) being herein referred to as the “ Improvements ”, and the Land and the Improvements being hereinafter sometimes collectively referred to as the “ Real Property ”);

(c) all of the right, title and interest in, to and under all tangible personal property upon the Land or within the Improvements, including specifically, without limitation, appliances, equipment, furniture, carpeting, draperies and curtains, tools and supplies, and other items of tangible personal property owned by the Company and used exclusively in connection with the ownership, use, maintenance or operation of the Land and the Improvements, and including those items of tangible personal property identified on Schedule 1.2(c) , attached hereto and incorporated herein by this reference, but excluding (i) personal property owned by tenants under the Leases, (ii) any equipment installed by, or in connection with, any telecommunication or utility provider and which is owned by any party other than the Company, and (iii) any items leased to the Company (the property described in this clause (c), other than the excluded items, being herein referred to collectively as the “ Tangible Personal Property ”).

(d) all of the right, title and interest as landlord or lessor in, to and under all agreements listed and described on Schedule 1.2(d) (the “ Rent Roll ”) attached hereto and made a part hereof, pursuant to which any portion of the Land or Improvements is used or occupied by anyone other than the Company (the property described in this clause (d) being herein referred to collectively as the “ Leases ”);

(e) all right, title and interest as the owner in, to and under (i) the contracts listed and described on Schedule 1.2(e) (the “ Service Contracts ”) attached hereto and made a part hereof, (ii) all existing warranties and guaranties issued to or inuring to the benefit of the Company in connection with the Improvements or the Tangible Personal Property, and (iii) all governmental permits, licenses and approvals, if any, belonging to or inuring to the benefit of Company and pertaining to the Real Property or the Tangible Personal Property (the property described in this clause (e) being sometimes herein referred to collectively as the “ Intangible Property ”.

1.3 Property Defined . The Land, the Improvements, the Leases and the Intangible Property are hereinafter sometimes referred to collectively as the “ Property .”

1.4 Permitted Exceptions . At Closing, Seller covenants that the Company shall hold good, marketable and indefeasible title to the Property subject only to the matters which are, or are deemed to be, Permitted Exceptions pursuant to ARTICLE 2 hereof (herein referred to collectively as the “ Permitted Exceptions ”).

1.5 Purchase Price . Seller is to sell, and Purchaser is to purchase, the Membership Interest for a total purchase price of Four Million Sixty-Two Thousand Five Hundred Dollars ($4,062,500.00) (the “ Purchase Price ”). The Purchase Price shall be paid and allocated as follows: (i)  Three Million Eight Hundred Thirty-Five Thousand Dollars ($3,835,000.00) shall be paid to Seller (subject to the prorations and adjustments hereinafter provided), (ii)  Thirty-Two Thousand Five Hundred Dollars ($32,500.00) shall be paid to the Company to be used for the working capital needs of the Company after the Closing, and (iii) the remainder of the Purchase Price shall be used to fund Purchaser’s pro rata share of the closing costs of the Company contemplated by Section 5.3(a).

 

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1.6 Payment of Purchase Price . The Purchase Price shall be payable in full at Closing in cash by wire transfer of immediately available federal funds to a bank account of Ice Miller LLP, in its capacity as escrow agent (the “ Escrow Agent ”) designated by Escrow Agent in writing to Purchaser prior to the Closing

1.7 Deposit . Within three (3) business days following the satisfaction of the condition set forth in Section 4.6(e) , Purchaser shall deposit with Escrow Agent the sum of Five Hundred Thousand Dollars ($500,000.00) by wire transfer of immediately available funds (the “ Deposit ”). The Escrow Agent shall invest the Deposit pursuant to Purchaser’s directions and in accordance with the terms and conditions of ARTICLE 9. All interest accruing and other income earned on such sum shall become a part of the Deposit and shall be distributed as a part of the Deposit in accordance with the terms of this Agreement. In any event, if Purchaser is entitled to have Deposit returned to Purchaser pursuant to any provision of this Agreement, then One Hundred Dollars ($100.00) of the Deposit shall nevertheless be paid to Seller as good and sufficient consideration for entering into this Agreement. In addition, Seller acknowledges that Purchaser, in evaluating the Property and the Membership Interests and performing its due diligence investigation of the Property and the Membership Interests, will devote internal resources and incur expenses, and that such efforts and expenses of Purchaser also constitute good, valuable and sufficient consideration for this Agreement.

ARTICLE 2

TITLE AND SURVEY

2.1 Title Insurance; Survey . Prior to the Effective Date, Seller has delivered to Purchaser its existing title insurance policy number O-9993-11010656 insuring the Real Property (the “ Title Policy ”) issued by Stewart Title Guaranty Company (the “ Title Company ”). Prior to the Effective Date, Seller has also delivered to Purchaser a current survey of the Real Property prepared by a licensed surveyor (such survey, as it may be subsequently updated or revised, the “ Survey ”).

2.2 Title to the Property . At Closing, the Company shall own good, marketable and indefeasible title to the Property, subject only the Permitted Exceptions. It shall be a condition to Purchaser’s obligation to close this transaction that the Title Company shall have issued to Purchaser a current title report updating the status of title to the Real Property since the effective date of the Title Policy (the “ Title Update ”) and confirming that the Company continues to own good, marketable and indefeasible title to the Property, subject only to the following matters (the “ Permitted Exceptions ”):

(a) the lien of all ad valorem real estate taxes and assessments not yet due and payable as of the Closing Date, subject to proration and adjustment as herein provided;

(b) the rights of tenants, as tenants only, under the Leases described in the Rent Roll and any new Leases entered into between the Effective Date and Closing and (if required) approved by Purchaser in accordance with the terms of this Agreement;

(c) the matters set forth on Schedule B of the Title Policy;

 

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(d) the items shown on the Survey; and

(e) the documents evidencing and securing the Existing Financing (hereinafter defined).

ARTICLE 3

INSPECTION PERIOD

3.1 Right of Inspection of the Property .

(a) From and after the Effective Date and so long as this Agreement remains in full force and effect, Purchaser, subject to the rights of tenants at the Property, shall have the right to make a physical inspection of the Property, and Purchaser, personally or through agents, employees or contractors, may go upon the Property during normal business hours or at other reasonable times to make boundary line or topographical surveys and to conduct such studies, tests, samplings, investigations and analyses of any and all aspects of the Property as Purchaser deems necessary or desirable, including, without limitation, engineering, environmental, soil, and groundwater and other tests, samplings and studies of the Property. Purchaser’s environmental study of the Property may include, among other matters, studies of soil and groundwater contamination, asbestos, polychlorinated biphenyls (PCBs), lead in drinking water, lead based paint, radon gas, and wetlands. Seller and the Company will provide Purchaser and its agents with access to the Property and will cooperate with Purchaser’s surveys, studies, tests, samplings, investigations, and analyses.

(b) In addition to any other obligation to assist Purchaser in the inspection of the Property, Seller hereby agrees to provide to Purchaser, within ten (10) days after the Effective Date, true and correct copies of all materials described on Schedule 3.1(b) attached hereto and by this reference made a part hereof, to the extent Seller has not already done so and these materials are available to Seller, the Company, or any consultants employed by Seller or the Company, or are in the reasonable control of Seller, the Company, or any consultants employed by Seller or the Company.

(c) Purchaser shall indemnify, hold harmless and defend the Company from and against any and all claims, demands, causes of action, liabilities, losses, costs, damages and expenses (including reasonable attorneys’ fees and expenses and court costs incurred in defending any such claim or in enforcing this indemnity) of whatsoever nature (individually, a “ Claim ,” and collectively, “ Claims ”) that may be incurred by the Company and arise out of or in connection with the acts or omissions of Purchaser and its agents, representatives, contractors and consultants, or any of them in the inspection of the Property. Such Claims shall include, but are not limited to, Claims arising out of or in connection with personal injury or death of persons, loss, destruction or damage to property, or liens or Claims of lien filed against the Property. Such Claims shall exclude, however, any Claims to the extent such Claims arise out of the discovery of, or the non-negligent, accidental or inadvertent actual or threatened

 

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release or movement of, any Hazardous Materials resulting from Purchaser’s inspections and other activities (unless the Hazardous Materials are brought onto the Property by Purchaser or Purchaser’s authorized agents, employees, consultants or contractors). Purchaser shall backfill all trenches, fill holes and similarly repair damage and eliminate dangerous conditions created during its inspections, tests, and studies, whether such conditions are created by the Purchaser or any of its agents, employees, contractors, or consultants. This Section 3.1(c) shall survive any termination of this Agreement.

ARTICLE 4

CLOSING

4.1 Time and Place . The consummation of the transaction contemplated hereby (“ Closing ”) shall be held in escrow at the offices of the Escrow Agent in Indianapolis, Indiana at 10:00 a.m. (eastern time) on or before December 1, 2006 (or such extended date as may be provided under other provisions of this Agreement). The Closing may be held at such other place or such earlier time and date as Seller and Purchaser shall mutually approve in writing. The date on which the Closing is scheduled to occur hereunder (or, if earlier, the date on which Closing occurs) is sometimes referred to herein as the “Closing Date ”. Notwithstanding the foregoing provisions of this Section 4.1, Purchaser shall have the right to extend the Closing Date for up to an additional thirty (30) period by (i) giving written notice to Seller at least three (3) days prior to the initial Closing Date specifying the extended Closing Date.

4.2 Seller’s Obligations at Closing . At Closing, Seller shall:

(a) deliver to Purchaser an Assignment of Membership Interest in the form attached hereto as Schedule 4.2(a) and by this reference made a part hereof, duly executed by Seller with respect to the Membership Interest;

(b) deliver to Purchaser an amendment to the articles of organization of the Company in a form prepared by Purchaser and approved by Seller, such approval not to be unreasonably withheld (the “ Articles Amendment ”);

(c) execute and deliver to Purchaser an Amended and Restated Operating Agreement of Glenwood Housing Partners I, LLC (the “ Restated Operating Agreement ”) substantially in the form attached hereto as Schedule 4.2(c) ;

(d) deliver to Purchaser written resignation from any manager or officer of the Company;

(e) execute and deliver to Purchaser a closing statement, prepared by Seller and approved by Purchaser, consistent with the terms of this Agreement;

 

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(f) execute and deliver to Purchaser a certificate (“ Seller’s Closing Certificate ”), dated as of the Closing Date, in the form of attached hereto as Schedule 4.2(f) and by this reference made a part hereof, stating that the representations and warranties of Seller contained in Sections 5.1 and 5.2 of this Agreement are true and correct in all material respects as of the Closing Date;

(g) cause Glenwood Housing Partners II LLC, an Indiana limited liability company and an affiliate of Seller, to execute and deliver to Purchaser an Option Agreement in the form attached hereto as Schedule 4.2(g) ;

(h) deliver to Purchaser an updated Rent Roll, certified by the Company’s Property Manager to be true and correct in all material respects; and

(i) execute and deliver to Purchaser an affidavit of Seller stating that each Seller is not a “foreign person” as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act.

4.3 Purchaser’s Obligations at Closing . At Closing, Purchaser shall:

(a) deliver to the Escrow Agent the full amount of the Purchase Price, as increased or decreased by prorations and adjustments as herein provided, in immediately available federal funds wire transferred to an account designated in writing by Escrow Agent as set forth in Section 1.6 (“ Escrow Agent’s Account ”), and, as adjusted by prorations and adjustments as herein provided, shall be subsequently payable in full at Closing in cash by wire transfer of immediately available federal funds to a bank account designated by Seller in writing to Escrow Agent prior to the Closing;

(b) execute and deliver to Seller such evidence as Purchaser’s counsel and/or the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Purchaser;

(c) execute and deliver to Seller a closing statement, prepared by Seller and approved by Purchaser, consistent with the terms of this Agreement; and

(d) execute and deliver the Restated Operating Agreement.

4.4 Credits and Prorations .

(a) If the transaction closes before 12:00 P.M. Eastern time on the Closing Date, all income and expenses in connection with the operation of the Company and the Property shall be apportioned, as of 12:01 A.M., on the Closing Date, as if Purchaser were vested with ownership of the Membership Interest during the entire Closing Date, and such that, except as otherwise expressly provided to the contrary in this Agreement, Seller (as owner of 100% of the outstanding membership interests in the Company) shall have the benefit of all income and the burden of all expenses for all periods preceding the Closing Date. If the transaction closes after 12:00 P.M. Eastern Time on the Closing Date, all income and expenses in connection with the operation of the Company and the Property shall be apportioned, as of 12:01 A.M., on the day after the Closing Date, as if Purchaser were vested

 

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with ownership of the Membership Interest during the entire day after the Closing Date, and such that, except as otherwise expressly provided to the contrary in this Agreement, Seller (as owner of 100% of the outstanding membership interests in the Company) shall have the benefit of all income and the burden of all expenses for all periods preceding the day after the Closing Date. Items (1)-(5) below will be prorated at Closing utilizing the information known at that time. A post-closing “true-up” shall take place within ninety (90) days of the Closing Date to adjust the prorations of said items (1), (3), (4) and (5), if necessary, and within a reasonable time to adjust the proration of said item (2), if necessary. Such prorated items shall include, without limitation, the following:

(1) rents, if any, based on the amount collected for the current month. The term “rents” as used in this Agreement includes all payments due and payable by tenants under the Leases other than refundable deposits, application fees, late charges, pet charges and termination payments (of which deposits shall remain the property of the Company);

(2) ad valorem taxes and assessments levied against the Property (including personal property taxes on the Tangible Personal Property), which shall be prorated as set forth in Section 4.4(b)(1) hereof;

(3) payments under the Service Contracts;

(4) accrued and unpaid interest on the Existing Financing;

(5) gas, electricity and other utility charges for which the Company is liable, if any, such charges to be apportioned at Closing on the basis of the most recent meter reading occurring prior to Closing; and

(6) any other operating expenses or other items pertaining to the Property which are customarily prorated between a purchaser and a s eller in comparable commercial transactions in the area in which the Property is located.

(b) Notwithstanding anything contained in the foregoing provisions:

(1) Any ad valorem taxes paid at or prior to Closing shall be prorated based upon the amounts actually paid for the current tax year. If all taxes and assessments for the current tax year have not been paid before Closing, then such apportionment shall be based upon the tax rate and/or assessed valuation last fixed. To the extent that the actual taxes and assessments for the current tax year differ from the amount apportioned at Closing, the parties shall make all necessary adjustments by appropriate payments between themselves following Closing upon the availability of the final tax bills.

(2) Gas, electricity and other utility charges referred to in Section 4.4(a)(4) above which are payable by any tenant to a third party shall not be apportioned hereunder.

 

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(3) Seller shall cause the Company to pay in full prior to the Closing all leasing commissions and locators’ and finders’ fees, if any, due to leasing or other agents (pursuant to a contractual arrangement with the Company) for each Lease entered into by the Company prior to the Closing Date promptly when due. Trade payables in the nature of open accounts payable to trade vendors or suppliers and all other accounts payable which have accrued prior to the Closing Date shall be the obligation of Seller.

(4) Unpaid and delinquent rent collected by the Company after the date of Closing shall be delivered as follows: (a) if the Company collects any unpaid or delinquent rent for the Property relating to the date of Closing and any period thereafter, the Company shall distribute any such rent pursuant to the provisions of the Restated Operating Agreement, and (b) if the Company collects any unpaid or delinquent rent from the Property relating to the period prior to the date of Closing, the Company shall, within fifteen (15) days after the receipt thereof, deliver to Seller any such rent which Seller is entitled to hereunder. Seller and Purchaser agree that all rent received by the Company after the Closing shall be applied first to current rentals and then to delinquent rentals, if any, in inverse order of maturity. The Company will make a good faith effort after Closing to collect all rents in the usual course of the Company’s operation of the Property, but the Company will not be obligated to institute any lawsuit or other collection procedures to collect delinquent rents.

(c) The provisions of this Section 4.4 shall survive Closing.

4.5 Closing Costs .

(a) The Company shall pay (i) the fees of c ounsel representing Seller and the fees of counsel representing Purchaser in connection with this transaction, (ii) any escrow fees charged by the Title Company, (iii) the costs of recording all mortgage cancellations, if any, (iv) if applicable, any and all applicable transfer taxes, documentary stamp taxes, recordation taxes, and similar charges relating to the transfer of the Membership Interest, (v) the cost of the Title Update, and (v) the cost of the Survey. Each of Seller and Purchaser, as members of the Company, will contribute to the Company its pro rata share of the funds necessary to enable the Company to pay such Closing Costs (with Purchaser’s pro rata share being a part of the Purchase Price as contemplated by Section 1.5).

(b) Except as otherwise provided herein, all other costs and expenses incident to this transaction and the closing thereof shall be paid by the party incurring same.

4.6 Conditions Precedent to Obligation of Purchaser . The obligation of Purchaser to consummate the transaction hereunder shall be subject to the fulfillment on or before the Closing Date (or such earlier time as otherwise required hereby) of all of the following conditions, any or all of which may be waived by Purchaser in its sole discretion:

(a) All of the representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects as of the Closing Date, as if made and updated as of the Closing Date (without any reference to “knowledge”).

 

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(b) Seller shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Seller as of the Closing Date.

(c) Seller and Purchaser shall have agreed upon the terms and provisions of, and shall have executed and delivered, the Restated Operating Agreement.

(d) Purchaser shall have obtained (i) the written approval of the Federal Home Loan Mortgage Corporation (“ FHLMC ”), the holder of the Multifamily Deed of Trust, dated June 5, 2006, from the Company to P/R Mortgage and Investment Corp., as assigned to FHLMC, recorded in Book 10118, Page 358, in the Hamilton County, Ohio Public Records, of the transactions contemplated by this Agreement and continuation of the existing mortgage loan secured by such Multifamily Deed of Trust from and after Closing on the terms and conditions set forth in Schedule 4.6(d) attached hereto and made a part hereof and otherwise pursuant to any additional loan documentation in form and substance reasonably satisfactory to Purchaser and duly executed and delivered by the Company and FHLMC (collectively, the “ Existing Financing ”) and (ii) a current estoppel certificate from FHLMC stating that there exists no default under the Existing Financing and otherwise in form and substance reasonably satisfactory to Purchaser.

(e) $100,000 of the Purchase Price payable to Seller pursuant Section 1.5(i) shall be deposited in escrow with Escrow Agent pursuant to an escrow agreement in form and substance reasonably satisfactory to Purchaser, which escrow Agent will provide that (i) such sum shall be delivered to Seller only after completion of renovations of the two cottages on the Property so as to place such cottages in “rent-ready” condition and receipt of certificates of occupancy therefore and (ii) Seller and its principals (and not the Company) shall pay all costs and expenses of such renovations.

(f) All other conditions precedent to Purchaser’s obligation to consummate the transaction hereunder (if any) which are expressly set forth in this Agreement shall have been satisfied on or before the Closing Date.

In the event any of the foregoing conditions has not been satisfied by the Closing Date other than through failure of Purchaser to fully comply with its obligations under this Agreement, Purchaser shall have the right to terminate this Agreement by written notice given to Seller on or promptly after the Closing Date, whereupon Escrow Agent shall refund the Deposit to Purchaser and the parties shall have no further rights, duties or obligations hereunder, other than those which are expressly provided herein to survive the termination of this Agreement; provided, however, that if any of the foregoing conditions has not been satisfied due to a default by Purchaser or Seller hereunder, then Purchaser’s and Seller’s respective rights, remedies and obligations shall instead be determined in accordance with ARTICLE 6.

 

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4.7 Conditions Precedent to Obligation of Seller . The obligation of Seller to consummate the transaction hereunder shall be subject to the fulfillment on or before the Closing Date of all of the following conditions, any or all of which may be waived by Seller in their sole discretion:

(a) The Company shall have received the Purchase Price as adjusted pursuant to and payable in the manner provided for in this Agreement.

(b) Purchaser shall have delivered to Seller all of the items required to be delivered to Seller by Purchaser or Purchaser’s agents pursuant to the terms of this Agreement.

(c) All of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects as of the Closing Date, as if made and updated as of the Closing Date.

(d) Purchaser shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Purchaser as of the Closing Date.

(e) Seller and Purchaser shall have agreed upon the terms and provisions of, and shall have executed and delivered, the Restated Operating Agreement.

(f) All other conditions precedent to Seller’s obligation to consummate the transaction hereunder (if any) which are expressly set forth in this Agreement shall have been satisfied on or before the Closing Date.

In the event any of the foregoing conditions has not been satisfied by the Closing Date other than through failure of Seller to fully comply with its obligations under this Agreement, Seller shall have the right to terminate this Agreement by written notice given to Purchaser on or promptly after the Closing Date, whereupon Seller shall refund the Deposit to Purchaser and the parties shall have no further rights, duties or obligations hereunder, other than those which are expressly provided herein to survive a termination of this Agreement; provided, however, that if any of the foregoing conditions has not been satisfied due to a default by Purchaser or Seller hereunder, then Purchaser’s and Seller’s respective rights, remedies and obligations shall instead be determined in accordance with ARTICLE 6.

4.8 Certain Tax Definitions .

(a) For purposes of this Agreement, the following terms have the following meanings:

(1) “ Tax ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, natural resources, customs, duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use,

 

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transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, and including any express or implied obligation of the Company to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

(2) “ Tax Return ” means any return, declaration, report, claim for refund, information return, or other document, including any related or supporting schedule, statement, information or attachment, and including any amendment thereof filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.

(b) The provisions of this Section 4.8 shall survive Closing

ARTICLE 5

REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1 Representations and Warranties of Seller Primarily Relating to the Membership Interest and the Company . Seller hereby represents and warrants to, and covenants with, Purchaser as of the Effective Date and as of the Closing Date, that:

(a) Authority of Seller . Neither the execution and delivery of this Agreement nor any other documents executed and delivered, or to be executed and delivered, by Seller in connection with the transactions described herein, will violate any material agreements, regulations, or laws to or by which the Company or Seller is bound.

(b) Organization and Authority of the Company . The Company has been duly organized and is validly existing and in good standing as a limited liability company under the laws of the State of Indiana. The person signing this Agreement on behalf of the Company is authorized to do so. Neither the execution and delivery of this Agreement nor any other documents executed and delivered, or to be executed and delivered, by the Company in connection with the transactions described herein, will violate (i) any provision of the Company’s organizational documents; or (ii) any material agreements, regulations, or laws to or by which the Company is bound. This Agreement has been duly authorized, executed and delivered by the Company.

(c) Ownership of Membership Interest . Seller is the only member in the Company and owns one hundred percent (100%) of the outstanding membership interests in the Company. There are no managers or members in the Company other than Seller. Seller has good and marketable title to, and is the sole owner and holder of, the Membership Interest, free and clear of any and all liens, encumbrances, pledges and other interests on, in or to the Membership Interest. Seller has not previously assigned,

 

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sold, participated or otherwise transferred all or any part of the Membership Interest nor has Seller entered into any agreement to assign, sell, transfer or participate all or any part of the Membership Interest. The transfer of the Membership Interest to the Purchaser shall validly assign ownership of the Membership Interest to the Purchaser free and clear of any pledge, lien, encumbrance or security interest. Following Seller’s assignment of the Membership Interest to Purchaser, Purchaser shall own 65% of all legal and equitable interests in the Company, free and clear of any and all liens, encumbrances, pledges or other interests.

(d) Authority to Transfer Membership Interest . Seller has full right and authority to enter into this Agreement and to sell, assign and transfer the Membership Interest to the Purchaser. No documents relating to the Company or the Membership Interest prohibit or restrict Seller’s right to sell, assign or transfer the Membership Interest.

(e) Membership Interest Files . Seller has made and shall make available to the Purchaser for inspection a true, correct and complete copies of all material documents and reports relating to the Membership Interest, the Company and the Property.

(f) Assets and Liabilities . At the time of the Closing, the only material assets of the Company will be the Property. To Seller’s knowledge, the Company has no liabilities (contingent or otherwise), other than as set forth on Schedule 5.1(f) , attached hereto and by this reference made a part hereof.

(g) Taxes and Tax Returns . All Tax Returns required to be filed by, on behalf of or with respect to the income, assets or operations of, Seller and the Company have been timely filed with the appropriate taxing authorities in all jurisdictions in which such Tax Returns are required to be filed, and all such Tax Returns were accurate and complete in all material respects. As of the date hereof, (i) all Taxes payable by, on behalf of or with respect to the income, assets or operations of, Seller and the Company have been fully and timely paid, and (ii) adequate reserves or accruals for Taxes have been provided with respect to any period for which Tax Returns are not yet due and have not yet been filed. Neither Seller nor the Company has executed or filed with the Internal Revenue Service or any other taxing authority any agreement, waiver or other document or arrangement extending or having the effect of extending the period for assessment or collection of Taxes (including, but not limited to, any applicable statute of limitation), and no power of attorney with respect to any Tax matter is currently in force with respect to Seller or the Company.

(h) No Defaults . Seller has performed all obligations required to be performed by