PURCHASE AGREEMENT
1. PARTIES. This Purchase Agreement is made this 12th day
of June 2000 by and between AEI Net Lease Income & Growth Fund
XIX Limited Partnership, AEI Net Lease Income & Growth Fund XX
Limited Partnership, and AEI Income & Growth Fund XXI Limited
Partnership, a Minnesota Limited Partnership, hereinafter
"Seller" (whether one or more), and MAH Properties LLC and/or
assigns, a Minnesota Limited Liability Company hereinafter
"Purchaser", for the sale and purchase of the property described
in the following paragraph.
2. PROPERTY. Seller hereby sells and Purchaser hereby
buys real property located in Dakota County, Minnesota legally
described as follows:
Lot Two (2), Block One (1), Apple Valley Retail Second
Addition, City of Apple Valley, County of Dakota, State of
Minnesota.
The property sold hereunder shall include all fixtures,
machinery, equipment, appliances and personal property owned by
Seller and located in, on or about the above real property and
used or intended to be used with or in connection with the use,
operation or enjoyment.
3. PURCHASE PRICE. The property described in the
preceding paragraph is hereby sold to the Purchaser for the sum
of Two Million Five Hundred Thousand and No/100 ($2,500,000.00)
Dollars which the Purchaser agrees to pay in the following
manner:
$25,000.00 earnest money, by check, receipt of which is
hereby acknowledged. Earnest money paid hereunder shall be
deposited in an interest bearing account at Commercial
Partners Title, LLC, upon execution by Seller of this
Purchase Agreement. All interest upon the earnest money
shall be credited to the Purchaser unless such earnest money
shall be forfeited to the Seller in accordance with the
terms of this Purchase Agreement, in which event the
interest shall be credited to and received by the Seller.
$2,475,000.00, cash, at the time of closing.
4. PERMITTED ENCUMBRANCES. Upon and subject to
performance by Purchaser, the Seller shall execute and deliver to
Purchaser on the date of closing a Limited Warranty Deed
conveying marketable title to said property subject only to the
following:
a. Reservations of minerals or mineral rights by the
State of Minnesota, if any.
b. Building, zoning and subdivision laws and
regulations.
c. The lien of real estate taxes which are payable by
Purchaser hereunder.
d. Restrictions relating to use or improvement of the
premises which do not conflict with present use or contain
effective forfeiture provision.
e. Utility and drainage easements which do not
interfere with present improvements.
All of the above exceptions may hereafter collectively be
referred to as "Permitted Encumbrances".
5. SELLER'S PERFORMANCE. Subject to performance by
Purchaser, Seller shall execute and deliver to Purchaser the
following at closing:
a. A Limited Warranty Deed, in recordable form, as
aforesaid.
b. A Bill of Sale conveying and warranting the
personal property to Purchaser free of any liens.
c. An Affidavit attesting that, on the date of
closing, there are no unsatisfied outstanding judgments, tax
liens or bankruptcies against or involving the Seller; that
there has been no lienable skill, labor or material
furnished to the property; that there are no other
unrecorded interests in the property of any kind of which
Seller is aware and any other standard form Seller's
Affidavit which may reasonably be required for Purchaser.
d. An assignment of leases, service and maintenance
contracts, permits and licenses and any warranties and
guarantees relating to the real or personal property being
acquired.
e. Certificate of Occupancy, if applicable, or other
evidence issued by the appropriate governmental body
evidencing and authorizing the use of the real property for
the purposes for which presently used.
f. All keys and security system codes required to
afford Purchaser access to the property.
g. All other documents necessary or appropriate to
complete the transaction contemplated by this Agreement
agreed upon by the parties and their respective counsel.
h. Receipt of documents satisfactory to the Purchaser
terminating any existing management and service contracts
effective as of the date of closing.
i. Certification by the Seller as to the location of
any above-ground or underground tanks located in or about
the property and evidence of the fact that said tanks have
been removed or have been filled in accordance with the
specifications of the MPCA or such other governing
regulatory body.
j. All unrecorded instruments, contracts or
conveyances required to perfect or evidence the
marketability of Seller's title to the property in
recordable form.
k. All security deposits in Seller's possession.
6. BUYER'S PERFORMANCE. Subject to performance by Seller,
Purchaser shall deliver to Seller the following at closing:
a. Subject to closing prorations, all sums payable by
Purchaser at closing under Paragraph 3 of this Purchase
Agreement in cash or by certified or cashier's check, bank
money order, wire transfer or title company check.
b. Such other and further documents, instruments and
certificates, not inconsistent with the provisions of this
agreement, executed by Purchaser that Seller shall
reasonably require to carry out and effectuate the purposes
and terms of this Agreement.
7. RECORDING COSTS. Seller shall pay the deed tax imposed
upon the transfer of the property to Purchaser and the cost of
recording any instruments, conveyances or other documents
required to perfect or evidence the marketability of Seller's
title to the property. Purchaser shall pay for recording the
Warranty Deed to be executed and delivered by Seller under this
Agreement.
8. SPECIAL ASSESSMENTS. All special assessments levied or
pending as of the date of closing shall be paid by Seller.
9. REAL ESTATE TAX PRORATION. Seller shall pay all taxes
due in the year 1999 and prior years. Taxes payable in 2000
shall be paid prorated as of the date of closing on a daily basis
based upon the calendar year.
10. HAZARDOUS SUBSTANCES.
a. SELLER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. Seller represents, warrants and covenants the
following:
(1) To the best of Seller's knowledge, the
Property does not presently contain and is free from
all hazardous substances and/or wastes, toxic and
nontoxic pollutants and contaminants, including but not
limited to petroleum products and asbestos ("Hazardous
Substances").
(2) To the best of Seller's knowledge, the
Property has not in the past been used for the storage,
manufacture or sale of Hazardous Substances or for any
activity involving Hazardous Substances.
(3) To the best of Seller's knowledge and except
as disclosed in the Assessment, no Hazardous Substances
are located in the vicinity of the Property.
(4) Seller shall not store, manufacture, use or
sell any Hazardous Substances on or in the Property
prior to closing.
(5) Seller has not transported, or caused to be
transported, any Hazardous Substances to or from the
Property.
(6) Seller has not received and is not aware of
any notification from any federal, state, county or
city agency or authority relating to Hazardous
Substances on or in the Property.
(7) To the best of Seller's knowledge, no
underground or aboveground storage tanks have every
been or are located under or on the Property.
b. SELLER'S INDEMNITY. Seller shall indemnify and
hold harmless Purchaser, its successors and assigns from and
against any and all liability arising from any and all
claims, demands, litigation or governmental action involving
any of the following:
(1) Any breach of the representations, warranties
and covenants in this Agreement.
Without limiting the generality of the foregoing, this
indemnification shall specifically cover fines, penalties,
sums paid in settlement of claims or litigation, fees for
attorneys, consultants and experts (to be selected by
Purchaser) and costs for investigation, clean-up, testing,
removal and restoration.
11. SELLER'S WARRANTIES. Seller covenants and makes the
following warranties to Purchaser to the best of Seller's
knowledge.
a. That all plumbing, electrical, mechanical and HVAC
systems serving the real property and its improvements shall
be in proper working order as of the date of closing.
b. That Seller has received no notice of violations
relating to the property from any city, state or other
governmental agency or authority and believes the property
to be in compliance with the Uniform Fire Code.
c. There are no unrecorded interests in or rights to
possession of the property except the rights of tenants in
possession as tenants only.
d. That all leases, service, supply, management or
commission agreements and any agreements with tenants or
third parties regarding the property that will survive
closing, including a written summary of any such oral
agreements, has been or will be provided to Purchaser within
five (5) days after full execution of this Purchase
Agreement.
e. That all permit and licensing fees due and payable
prior to the date of closing shall have been paid to said
date.
f. That no suit, action, arbitration or other
proceeding or investigation is pending or threatened against
or affecting Seller or the property.
g. That all figures, documents and other information
relating to the property supplied to Purchaser by Seller (to
the best of Seller's knowledge as to the data furnished by
third parties) are true, accurate and complete and that all
information shall be updated (except data from third
parties) and correct as of the closing date.
h. To the best of Seller's knowledge, all
improvements upon the property are located entirely within
the boundary lines of the property and any applicable
setbacks.
i. That all personal property of the Seller not
included under the terms of this Purchase Agreement and all
debris shall be removed from the property at Seller's
expense prior to closing.
j. Seller shall enter into no new leases without the Buyer's
prior written consent.
Seller's covenants shall survive the closing of the
transaction and execution and delivery of instruments by the
parties. Seller hereby covenants and agrees to indemnify
Purchaser with respect to all loss or damage suffered by
Purchaser caused or arising due to breach of the warranties of
Seller contained in this Purchase Agreement.
12. SURVIVAL OF CLOSING. All representations, warranties,
agreements and indemnities contained in this Agreement shall
survive the closing for one year.
13. SURVEY. Purchaser shall forthwith obtain, at
Purchaser's expense, an accurate survey of the property certified
to Purchaser and any lender and/or title company designated by
Purchaser as of a current date prepared by a Registered Land
Surveyor acceptable to Purchaser and conforming to ALTA standards
showing access, the location of all easements, buildings,
improvements and encroachments, utilities and applicable
setbacks, together with the legal description. Purchaser shall
have the right to make written objections to title based upon
said survey within 5 days after delivery thereof from the
Surveyor. Any objection to title based upon survey shall be
treated in the same manner as objections to title based upon the
Abstract of Title or Registered Property Abstract to be delivered
pursuant to this Purchase Agreement. If Purchaser does raise any
objections to title based on the survey, Purchaser shall supply
to Seller a copy of the survey along with the objection.
14. EXAMINATION OF TITLE AND PERMITTED ENCUMBRANCES.
Seller shall, as soon hereafter as reasonably possible and in no
event later than 25 days after execution of this agreement by
Seller, furnish an Abstract of Title or Registered Property
Abstract covering the property, certified to date and including
proper searches covering bankruptcies and state and federal
judgments and liens. Purchaser shall be allowed 10 days after
receipt thereof for examination of said title and the making of
any objections thereto. Objections to title, including
objections based upon examination of survey or regarding security
interest in personal property, shall be made in writing within
the time herein limited or shall be deemed to be waived and
Purchaser shall be obligated to accept such title as Seller may
be able to convey, without reduction of the purchase price,
credit or allowance against the same without any other liability
on the part of the Seller. This waiver shall survive the closing
of the transaction and delivery of documents provided for by this
Purchase Agreement.
If any objection to marketability of title is made, Seller
shall be allowed 120 days to make such title marketable. Pending
correction of title, the closing and payments required hereunder
shall be postponed. Upon correction of title and within 10 days
after written notice to Purchaser, the parties shall perform this
Agreement according to its terms.
If said title is not marketable and is not made within 120
days from the date of written objection thereto as above
provided, this Agreement shall be null and void at option of the
Purchaser and neither Seller nor Purchaser shall be liable for
damages hereunder. The sole obligation of Seller in such event
shall be to refund to Purchaser all monies theretofore paid by
Purchaser. Purchaser may, however, accept such title as Seller
may be able to convey without reduction of the purchase price or
any other credit or allowance against the same and without any
other liability on the part of the Seller. Acceptance of an
instrument of conveyance by Purchaser shall be deemed to be full
performance and discharge of every covenant and agreement on the
part of the Seller performed under this Agreement with the
exception of such warranties and covenants as are specifically
hereinabove identified as surviving the closing.
15. REMEDIES. If the title to the property is to be found
marketable or be made marketable within the time limited and
Purchaser shall default in any of the agreements contained herein
and continue in default for a period of 10 days, Seller may
terminate this contract and, upon such termination, all payments
made by Purchaser under this Agreement shall be retained by
Seller as liquidated damages, time being of the essence hereof.
Nothing herein shall deprive either Seller or Purchaser of
the right of enforcing this Agreement by specific performance
provided such actions shall be commenced within 6 months after
such right of action shall arise and provided this Agreement
shall not be previously terminated as aforesaid.
16. CONTINGENCIES AND CONDITIONS PRECEDENT. This Agreement
shall be subject to the following contingencies or conditions
precedent:
a. DOCUMENT DELIVERY AND REVIEW CONTINGENCY. Within
five (5) days after full execution of this Purchase
Agreement, Seller shall provide to Purchaser the following
document and information:
(1) Copies of building plans and specifications
and a survey of the property showing present
improvements to the extent that the same are in the
Seller's possession or available to Seller.
(2) Copies of any warranties or guarantees
relating to the property or any fixtures or personal
property located thereon.
(3) Copies of any written notices received from
any governmental agency or authority relating to the
property.
(4) Copies of present leases relating to the
property and any addenda, agreements or material
correspondence with tenants or other relative thereto.
(5) Copies of present rent rolls and an income
and expense statement relating to the operation of the
property for 1999 and current 2000.
(6) Copies of all management and service
contracts relating to the operation of the property
that shall survive closing.
(7) Lists of all personal property located on the
premises.
Purchaser may terminate this Agreement as his sole
discretion within thirty (30) days following
Purchaser's receipt of all of the documents referred to
in subparagraphs (1), (3), (4), (5) and (6) and in
paragraph (a) above.
b. ENVIRONMENTAL INVESTIGATION. Purchaser shall have
the right to obtain a Phase I Environmental Evaluation and
soils investigation by parties acceptable to Purchaser. The
cost of such investigation shall be paid equally by
Purchaser and Seller in the event that Purchaser desires to
obtain environmental and/or soils investigation. Purchaser
shall obtain such report(s) within thirty (30) days
following the date of full execution of this Agreement and
shall have thirty (30) days after receipt of such report(s)
to terminate this Agreement if the report(s) reveals a
condition affecting the property which is unacceptable to
the Purchaser in the Purchaser's sole discretion. Purchaser
shall make arrangements for such investigation.
c. PROPERTY INSPECTION CONTINGENCY. Purchaser and
Purchaser's agent shall have the right to make a thorough
examination of the property within thirty (30) days of the
date of full execution of this Purchase Agreement.
Purchaser shall advise the Seller, in writing within ten
(10) days of the expiration of said thirty (30) day
inspection period of any defects or conditions deemed
unacceptable by the Purchaser. Seller shall, at Seller's
option, either correct such conditions to Purchaser's
satisfaction at Seller's expense or terminate this Purchase
Agreement and refund all earnest money to Purchaser.
Purchaser shall have the right to reinspect the property
within five (5) days of the date of closing. Seller
covenants and agrees that Seller shall maintain the property
in its present condition until the date of closing and shall
repair or correct any conditions noted by Purchaser upon
reinspection which have occurred or arisen since the date of
Purchaser's original inspection.
D. CONTINGENCY REGARDING FINANCING. This Purchase
Agreement and the obligations of Purchaser hereunder shall
be contingent upon Purchaser's ability to obtain a
commitment for financing from a lender of Purchaser's choice
in an amount and upon terms and conditions satisfactory to
Purchaser in Purchaser's discretion within thirty (30) days
of the date of full execution of this Agreement. In the
event that such commitment is not obtained by Purchaser,
Purchaser shall have the right to terminate this Purchase
Agreement by providing written notice to Seller within
thirty (30) days of the date of full execution of this
Purchase Agreement.
e.
In the event that this Purchase Agreement is terminated
pursuant to any of the foregoing contingencies and conditions
precedent, all earnest money, together with accrued interest,
shall be promptly refunded to the Purchaser and Purchaser shall
execute a termination statement or quit claims deed upon the
request of Seller or Seller's agent.
17. NOTICE. Any notice required or permitted by this
Purchase Agreement or the purchase money mortgage shall be
considered to have been given and received if personally
delivered to the parties or their agents personally or deposited
in the United States mail postage prepaid by certified or
registered mail addressed to the parties at the following
addresses:
Seller: AEI Fund Management, Inc.
Attn: Robert P. Johnson
1300 Minnesota World Trade Center
30 Seventh Street East
St. Paul, Minnesota 55101-4901
With copies to: Mr. Michael B. Daugherty
Attorney of Law
1300 Minnesota World Trade Center
30 East Seventh Street
St. Paul, Minnesota 55101-4901
With copies to: Mr. John J. Johannson
Welsh Companies
8200 Normandale Boulevard
Suite 200
Minneapolis, Minnesota 55437-1060
Purchaser: Mr. Mark A. Hotzler
MAH Properties LLC
18317 Java Trail
Lakeville, Minnesota 55044
With copies to: Mr. Robert D. Schwartz
Robert D. Schwartz Law Office
130 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
18. DESTRUCTION AND EMINENT DOMAIN. In the event the
property is destroyed, substantially damaged or any part thereof
shall be taken by eminent domain, this Agreement shall become
null and void, at Purchaser's option, and all monies paid
hereunder shall be refunded to Purchaser. Should Purchaser elect
to proceed and close the transaction contemplated hereby, there
shall be no reduction in or abatement of the purchase price, but
Seller shall assign to Purchaser Seller's right, title and
interest in and to all insurance proceeds or award resulting from
such destruction or taking.
19. POSSESSION. Possession of the property shall be
granted by Seller to Purchaser on the date of closing.
20. CLOSING. The closing shall take place at the offices
of Commercial Partners Title, LLC, 330 Second Avenue South, Suite
820, Minneapolis, Minnesota 55401, on July 10, 2000 at 10:00
a.m., unless otherwise agreed by Purchaser and Seller. At
closing, Seller shall deliver to Purchaser, at Seller's expense,
the documents specified in paragraph 5 of this Agreement.
21. CLOSING PRORATION. All rental and other income from
the property shall be prorated as of the closing date and any
such income allocable through the day of closing and thereafter
which has been paid to Seller shall be credited to Purchaser.
All rental and other income from the property which is paid to
Purchaser or its employees after closing allocable to the period
prior to the day of closing shall be paid by Purchaser to Seller
upon receipt. All rental and other income from the property
allocable to the period after closing which is paid after closing
to Seller or its employees or agents shall be paid by Seller to
Purchaser upon receipt.
All expenses of or relating to the property shall be
prorated as of the closing date. Any bills received after
closing shall be paid by Seller to the extent they are allocable
to the period prior to the closing date.
All credits to Purchaser of items of income, expenses, taxes
or assessments prorated or adjusted at closing shall reduce the
cash portion of the purchase price payable at closing. All such
credits to Seller shall increase the cash portion of the purchase
price payable at closing. In the event any closing proration is
based upon incorrect information, adjustment or correction
thereof shall be made within sixty (60) days after the date of
closing or shall be deemed to be waived.
22 INDEMNIFICATION. Seller agrees to indemnify and hold
Purchaser, its successors and assigns, harmless of and from any
and all liabilities, claims, causes of action, penalties, demands
and expenses of any kind or nature whatsoever (except those items
which by this Agreement specifically become the obligation of
Purchaser) arising out of, resulting from, relating to, or
incident to the Property up to and including the date of closing
or which are in any way related to the ownership, maintenance or
operation of the Property, and all expenses related thereof,
including, without limitation, court costs and attorney's fees.
23. SUCCESSORS AND ASSIGNS. Subject to any restriction
upon assignment of this Agreement, this Agreement shall inure to
the benefit of and be binding upon Seller and Purchaser and their
respective heirs, executors, legal representatives, successors
and assigns.
24. TIME OF THE ESSENCE. Time is of the essence of this
Agreement and the closing of the transaction contemplated hereby.
25. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
26. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties relative to the sale of the
property. The parties acknowledge there exists no understanding
or provisions relative to the sale of the property except as set
forth in this Agreement. This Agreement may not be changed,
waived, discharged or terminated except in writing executed by
Purchaser and Seller or canceled pursuant to statute.
27. CONSTRUCTION. No provision of this Agreement shall be
construed by any court or other judicial authority against either
Seller or Purchaser by reason of any such party being deemed to
have drafted or structured such provision.
Headings contained in this Agreement are for convenience of
reference only and shall not be considered in the construction
hereof.
28. AGENT AND BROKER STATUS. Seller and Purchaser mutually
represent to each other that each has had no dealings,
negotiations or consultations with any broker, representative,
employee, agent or other intermediary in connection with this
Agreement on the sale of the Premises other than Welsh Companies
whose brokerage commission will be paid by Seller and that each
will indemnify, defend and hold the other free and harmless from
the claims of any other brokers, representatives, employees,
agents or other intermediaries claiming to have represented
Seller or Purchaser, respectively in connection with this
Agreement or in connection with the sale of the Premises. The
provisions of this paragraph shall survive delivery of the Deed.
29. ATTORNEY'S FEES. If either party commences an action
against the other to enforce any of the terms of this agreement
or because of the breach by the other party of any of the terms
hereof, the losing or defaulting party shall pay to the
prevailing party reasonable attorney's fees, costs and expenses
incurred in connection with the prosecution or defense of such
action.
30. OFFER AND ACCEPTANCE. This Agreement has been executed
first by Purchaser and shall be deemed a continuing offer by
Purchaser to Seller until June 7, 2000. If an executed and
unaltered acceptance by Purchaser is not delivered to and
actually received by Purchaser at the offices of Robert D.
Schwartz Law Office, 130 International Centre, 900 Second Avenue
South, Minneapolis, Minnesota 55402, such offer shall be deemed
withdrawn. If an executed and unaltered acceptance by Seller is
returned to Purchaser in care of his attorney, Robert D.
Schwartz, by said time, the date of such delivery shall be the
date of this Agreement.
31. DISCLOSURE. Buyer advises Seller that Mark A. Hotzler
is the sole shareholder of MAH Properties LLC and is a Minnesota
Licensed Real Estate Broker. This Purchase Agreement may be
assigned to be a newly created entity that may have two or more
Minnesota Real Estate Licenses as owners. No commission shall be
payable to Buyer or its assignees
Seller and Purchaser have executed this Agreement as of the
day and year first above written.
SELLER: AEI Net Lease Income & Growth Fund XIX
Limited Partnership,
A Minnesota limited partnership.
By: AEI Fund Management XIX, Inc., a
Minnesota corporation
By: /s/ Robert P Johnson
Robert P. Johnson, President
AEI New Lease Income & Growth Fund XX
Limited Partnership, a Minnesota corporation.
By: AEI Fund Management XX, Inc., a
Minnesota corporation
By: /s/ Robert P Johnson
Robert P. Johnson, President
AEI Income and Growth Fund XXI Limited
Partnership, a Minnesota limited partnership.
By: AEI Fund Management XXI, Inc., a
Minnesota corporation
By: /s/ Robert P Johnson
Robert P. Johnson, President
PURCHASER:
MAH Properties LLC and/or Assigns
By: /s/ Mark G Hotzler
Its: Chief Manager
Date: June 5, 2000
