PURCHASE AGREEMENT
0000 X Xxxxxxxx
Xxxxxxx, XX
This AGREEMENT, entered into effective as of the 28th of
February, 2003 (the "Effective Date").
l. PARTIES. Seller is AEI Real Estate Fund XVI Limited
Partnership ("Seller"). Seller holds an undivided 100% interest
in the fee title to that certain real property legally described
in the attached Exhibit "A" (the "Property"). Buyer is Lake
Michigan Credit Union and/or its assigns ("Buyer"). Seller wishes
to sell and Buyer wishes to buy the Property.
2. PROPERTY. The Property to be sold to Buyer in this transaction
is legally described on Exhibit "A" attached hereto, subject to
the provisions of Buyer review of title as set forth below in
paragraph 8, including that certain Net Lease Agreement between
Seller and Lake Michigan Credit Union as extended by letter
agreement of December 9, 2002.
3. PURCHASE PRICE. The Purchase Price for this Property is
$400,000 cash based on the following terms:
4. TERMS. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $10,000
in cash or good funds (the "First Payment") to Chicago Title
of Michigan, Inc., 0000 00xx Xxxxxx XX, Xxxxx Xxxxxx 00000,
Attn: Xxx Xxxxxx ("Escrowee"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed, or otherwise disbursed
pursuant to the terms of this Agreement. After the
expiration of the Review Period as defined in paragraph 6
below, the First Payment held for the account of Seller
shall become non-refundable.
(b) Buyer will pay the balance of purchase price for the
Property, $390,000 in cash or good funds (the "Second
Payment"), at closing to the Escrowee who shall close the
transaction according to the terms hereof.
5. CLOSING DATE. Escrow shall close on or before April 15, 2003.
6. DUE DILIGENCE. Buyer will have until the expiration of the
20th day after delivery of the signed Agreement (the "Review
Period"), to conduct all of its inspections and due diligence and
satisfy itself regarding title to the Property, and to inspect
the Property. Buyer agrees to indemnify and hold harmless for any
loss or damage to the Property or persons caused by Buyer or its
agents arising out of such physical inspections of the Property.
Buyer expressly acknowledges that the sale of the Property as
provided for herein is made on an "AS IS" basis, and such
provision shall survive closing.
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice by certified mail,
return receipt requested, or by personal delivery to Seller and
escrow holder before the expiration of the Review Period. If this
Agreement is not canceled as set forth herein, the First Payment
shall be non-refundable unless Seller shall default hereunder.
If Buyer cancels this Agreement as permitted under this
Section or Section 16, except for any title insurance and/or
escrow cancellation fees of the escrowee which will be paid by
the Buyer, and any liabilities under sections 15(a)(iii) and
16(b) of this Agreement (which will survive), Buyer (after
execution of such documents reasonably requested by Seller to
evidence the termination hereof) shall be returned its First
Payment, and Buyer will have absolutely no rights, claims or
interest of any type in connection with the Property or this
transaction, regardless of any alleged conduct by Seller or
anyone else.
Unless Seller shall be in default of any obligation
hereunder, or this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to have canceled this Agreement and
relinquish all rights in and to the Property. If this Agreement
is not canceled and the Second Payment is made when required, all
of Buyer's conditions and contingencies will be deemed satisfied.
7. ESCROW. The opening of the escrow shall be initiated by Buyer
and the First Payment shall be deposited by Buyer with Escrowee.
A copy of this Agreement will be delivered to the Escrowee and
will serve as escrow instructions together with the Escrowee's
standard instructions and any additional instructions required by
the Escrowee to clarify its rights and duties. The parties agree
to sign these additional instructions of the Escrowee, if any. If
there is any conflict between these other instructions and this
Agreement, this Agreement will control. Escrow will be opened
upon acceptance of this Agreement by Seller.
8. TITLE. Closing will be conditioned on the commitment of
Escrowee to issue an Owner's policy of title insurance, dated as
of the close of escrow, in an amount equal to the purchase price,
insuring that Buyer will own marketable and insurable fee simple
title to the Property subject only to: the Permitted Exceptions
as defined in paragraph 2 above; current real property taxes and
assessments; and survey exceptions. Buyer shall have a Title
Commitment issued and tendered to Buyer within ten (10) days of
the date this Purchase Agreement is delivered to Escrowee.
Buyer shall be allowed until the expiration of the
Inspection and Feasibility Study Period for examination and the
making of any objections to the survey and to any exception
contained in the Title Commitment, said objections to be made in
writing or deemed waived. If any objections are so made, the
Seller shall be allowed thirty (30) days to cure Buyer's
objections, or in the alternative to obtain a commitment for
insurable title insuring over Buyer's objections. If Seller
shall decide to make no efforts to cure Buyer's objections, or is
unable to make title marketable or obtain insurable title, (after
execution by Buyer of such documents reasonably requested by
Seller to evidence the termination hereof) Buyer's First Payment
shall be returned and this agreement shall be null and void and
of no further force and effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this agreement according to its terms.
If Buyer shall make no written objection to Seller within
the Review Period setting forth Buyer's objections to the status
of title, Buyer shall have been deemed to have waived any such
objections.
9. CLOSING COSTS. Buyer will pay all closing costs including but
not limited to the deed stamp taxes, if any, escrow fees
attributable to the closing services for this transaction, the
costs of a new survey or an update to the Survey in Seller's
possession (if an update is required by Buyer), the cost of
issuing the title commitment, the cost of the title insurance
premium for an Owner's policy in the amount of the Purchase Price
(if desired by Buyer), all recording fees, and all escrow fees.
Each party will pay its own attorneys' fees and costs to document
and close this transaction. Buyer will pay real estate
commissions of three percent (3%) to Xxxxxxx, Xxxxxxx & Tol,
Inc., only.
10. REAL ESTATE TAXES, SPECIAL ASSESSMENTS AND PRORATIONS.
Seller represents that to the best of its knowledge, all real
estate taxes and assessments due and payable in all years prior
to the year of Closing have been paid in full. All real estate
taxes and special assessments due and payable in the years
following the year in which closing occurs shall otherwise be the
responsibility of Buyer. The parties acknowledge and agree that
the tenant of the property is responsible for payment of taxes
and special assessments and thus no actual proration of funds at
closing shall occur.
11. SELLER'S REPRESENTATION AND AGREEMENTS.
Seller represents and warrants as of this date that:
(i) The Property is subject to a Net Lease Agreement as
follows:
(a) Net Lease Agreement entered into October 1, 1992
by and between Seller and
Lake Michigan Credit Union (formerly known as Grand
Rapids Teachers Credit Union), as amended.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property that have not been disclosed to
Buyer.
(iii) It is not aware of any contracts affecting this
Property and potentially or actually binding on Buyer after
the closing date.
(iv) Seller has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
12. DISCLOSURES.
(a) Seller has been an absentee landlord. Consequently,
Seller has little, if any, knowledge of the physical
characteristics of the Property.
Accordingly, except as otherwise specifically stated in the
Agreement, Seller hereby specifically disclaims any
warranty, guaranty, or representation, oral or written,
past, present, or future of, as to, or concerning (i) the
nature and condition of the Property, including, without
limitation, the water, soil, and geology, and the
suitability thereof and of the Property for any and all
activities and uses which Buyer may elect to conduct
thereon; (ii) except for the warranty of title contained in
the Deed to be delivered by Seller at the closing, the
nature and extent of any right of way, lease, possession,
lien, encumbrance, license, reservation, condition, or
otherwise, and (iii) the compliance of the Property or its
operation with any laws, ordinances, or regulations of any
government or other body.
(b) This Agreement is subject to an inspection contingency
as set forth in Section 16. Buyer acknowledges and agrees
that Buyer is not relying upon any representation or
warranties made by Seller or Seller's Agent except those
provided herein.
(c) Buyer acknowledges that, having been given the
opportunity to inspect the Property, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer expressly acknowledges that, in
consideration of the agreements of the Seller herein, except
as otherwise specified herein, Seller makes no Warranty or
representation, express or implied, or arising by operation
of law, including, but not limited to, any warranty or
condition, habitability, tenantability, suitability for
commercial purposes, merchantability, profitability, or
fitness for a particular purpose, in respect of the
Property.
(d) BUYER AGREES THAT IT SHALL BE PURCHASING THE PROPERTY IN
ITS THEN PRESENT CONDITION, AS IS, WHERE IS, AND SELLER HAS
NO OBLIGATION TO CONSTRUCT OR REPAIR ANY IMPROVEMENTS
THEREON, OR TO PERFORM ANY OTHER ACT REGARDING THE PROPERTY.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER ALSO
AGREES THAT SELLER WILL HAVE NO LIABILITY OF ANY TYPE,
DIRECT OR INDIRECT, TO BUYER OR BUYER'S SUCCESSORS, ASSIGNS,
LENDERS OR AFFILIATES IN CONNECTION WITH ANY HAZARDOUS,
TOXIC, DANGEROUS, FLAMMABLE, EXPLOSIVE OR CHEMICAL
SUBSTANCES OF ANY TYPE (WHETHER OR NOT DEFINED AS SUCH UNDER
ANY APPLICABLE LAWS) ON OR IN CONNECTION WITH THE PROPERTY
EITHER BEFORE OR AFTER THE CLOSING DATE.
The provisions (a) through (d) shall survive closing.
13. CLOSING.
(a) Before the closing date, Seller will deposit into escrow
an executed limited warranty deed subject to Permitted
Exceptions conveying insurable title of the Property to
Buyer. At Closing, Seller shall deliver to Buyer a standard
Seller's Affidavit regarding liens and judgments. Buyer
will be given five (5) business days, prior to closing, to
review all closing documents.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign and
deliver to the escrow holder any other documents reasonably
required by the escrow holder to close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the official
records of the county where the Property is located; cause the
title company to commit to issue the title policy;
immediately deliver to Seller the portion of the purchase price
deposited into escrow by cashier's check or wire transfer (less
debits and prorations, if any); deliver to Seller and Buyer
a signed counterpart of the escrow holder's certified closing
statement and take all other actions necessary to close escrow.
14. DEFAULTS. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer as Seller's sole remedy.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, performed
all of its other obligations and satisfied all conditions under
this Agreement, and unconditionally notifies Seller that it
stands ready to tender full performance, purchase the Property
and close escrow as per this Agreement. Provided, however, that
in no event shall Seller be liable for any consequential,
punitive or speculative damages arising out of any default by
Seller hereunder.
15. BUYER'S REPRESENTATIONS AND WARRANTIES.
a. Buyer represents and warrants to Seller as follows:
(i) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(ii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
(iii) Buyer agrees to indemnify and hold Seller harmless
from any and all claim of any persons or entities claiming a
brokerage or other fee arising out of representation of
Buyer.
16. PROPERTY INSPECTION AND ENVIRONMENTAL.
(a) Seller shall provide Buyer reasonable access to the
Property from time to time for the purpose of conducting
inspections thereof including mechanical, structural,
electrical and other physical inspections. Buyer has until
20 days after the signing of the agreement by Seller to
complete such physical inspection (the "Inspection and
Feasibility Study").
(b) Buyer shall indemnify, defend, and hold harmless Seller
from and against any and all losses, claims, causes of
action, liabilities, and costs to the extent caused by the
actions of Buyer, its agents, employees, contractors, or
invitees, during any such entry upon the Property. The
foregoing duty of indemnification shall include the duty to
pay all reasonable attorney's fees incurred by the Seller in
responding to or defending any such claims or proceedings.
(c) Buyer shall pay for any Phase I Environmental studies it
wants to be performed on the Property. If Buyer desires a
Phase I Environmental, Buyer shall obtain and review the
same within twenty (20) days from the date this agreement is
signed by Seller. If the Phase I Environmental report does
not meet hazardous material standards as required by the
ruling state and Federal agencies, the Buyer may terminate
this Agreement within said 20 day period and receive a full
refund of the Xxxxxxx Money. However, if Buyer terminates,
Buyer prior to termination will provide Seller with copies
of all reports and test results Buyer had performed on the
Property.
(d) Seller shall deliver to Buyer, on or before ten (10)
days following the date Seller signs this contract, the
following items to the extent within Seller's possession, or
if such item(s) do not exist or Seller does not possess such
items, a statement to that effect:
(a.) None requested.
If this transaction does not close as scheduled, Purchaser
shall return the items set forth in (a.) to Seller within a
reasonable time following termination of Contract.
The Inspection and Feasibility Study Period (as hereinafter
defined) shall be extended for one (1) day for each day by
which Seller is late in delivering the items (a.).
17. DAMAGES, DESTRUCTION AND EMINENT DOMAIN.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$20,000, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any period provided for above in this Subparagraph 17a for
Buyer to elect to terminate this Agreement has expired or
Buyer has, by written notice to Seller, waived Buyer's right
to terminate this Agreement. If Buyer elects to proceed and
to consummate the purchase despite said damage or
destruction, there shall be no reduction in or abatement of
the purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to all insurance
proceeds resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property.
If the cost of repair is less than $20,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds in relation to the
Property.
(b) If, prior to closing, the Property, or any part thereof,
is taken (other than as disclosed in writing to Buyer prior
to the date of this Agreement) by eminent domain, this
Agreement shall become null and void, at Buyer's option. If
Buyer elects to proceed and to consummate the purchase
despite said taking, there shall be no reduction in, or
abatement of, the purchase price, and Seller shall assign to
Buyer all the Seller's right, title, and interest in and to
any award made, or to be made, in the condemnation
proceeding in relation to the Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 17(a) or 17(b), the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
18. SELLER'S AND BUYER'S BROKERS. The Seller is represented by
Xxxxxxx Xxxxxxx & Tol, Inc. in this transaction. Buyer will pay
commissions of three percent (3%) to Xxxxxxx Xxxxxxx & Tol, Inc.
Any real estate broker commission earned by a broker enlisted by
the Buyer is to be paid solely by the Buyer. Both parties
represent and warrant that no other broker has been involved on
behalf of the warranting party, and both parties agree to
indemnify the other and hold harmless from any claim through or
on behalf of such other party.
19. CANCELLATION If any party elects to cancel this Contract
because of any breach by another party, the party electing to
cancel shall deliver to escrow agent a notice containing the
address of the party in breach and stating that this Contract
shall be canceled unless the breach is cured within 13 days
following the delivery of the notice to the escrow agent. Within
three days after receipt of such notice, the escrow agent shall
send it by United States Mail to the party in breach at the
address contained in the Notice and no further notice shall be
required. If the breach is not cured within the 13 days
following the delivery of the notice to the escrow agent, this
Contract shall be canceled.
20. MISCELLANEOUS.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or understandings.
Exhibits attached to this Agreement are incorporated into
this Agreement.
(b) If this escrow has not closed through no fault of
Seller, by the thirtieth day after the completion of the
Inspection and Feasibility Study, Seller may either, at its
election, extend the closing date, exercise any remedy
available to it by law, including but not limited to
terminating this Agreement.
(c) FUNDS TO BE DEPOSITED OR PAID BY BUYER WILL BE GOOD AND
CLEAR FUNDS IN THE FORM OF CASH, CASHIER'S CHECKS OR WIRE
TRANSFERS.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Xxxxx X. Xxxxxx
AEI Real Estate Fund XVI Limited Partnership
1300 Minnesota World Trade Center
00 X. 0xx Xxxxxx
Xx. Xxxx, XX 00000-0000
If to Buyer:
Lake Michigan Credit Union
XX Xxx 0000
Xxxxx Xxxxxx, XX 00000-0000
(e) Buyer may freely assign his rights and obligations under
this Agreement to a third party controlled by Buyer, provided
however, Buyer shall not be relieved of his obligations
hereunder.
When accepted, this offer will be a binding agreement for valid
and sufficient consideration which will bind and benefit Buyer,
Seller and their respective successors and assigns. Buyer is
submitting this offer by signing a copy of this offer and
delivering it to Seller and delivering a copy of this Agreement
signed by Buyer and the $10,000.00 First Payment to Escrowee;
Escrowee shall sign below acknowledging receipt of this Agreement
signed by Buyer and the First Payment, which will be deposited in
to escrow by Escrowee. Seller has five (5) business days after
receipt of the executed offer, Option Consideration, and
acknowledgment of receipt of the First Payment by Escrowee within
which to accept this offer by fully executing this contract and
giving both Buyer and Escrowee written notice thereof; if not
accepted by Seller, Escrowee shall immediately return the First
Payment to Buyer and shall not require any releases by the
Seller.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER:
Lake Michigan Credit Union
By: /s/ Xxxxx Xxxxxxxx
Its: President / CEO
Title
SELLER:
AEI Real Estate Fund XVI Limited Partnership, a Minnesota
limited partnership
By: AEI Fund Management XVI, Inc., its corporate general
partner, a Minnesota corporation
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Chief Financial Officer
ESCROWEE:
The Title Company hereby acknowledges receipt of a fully
executed copy of this Agreement and the First Payment referred to
in the Agreement on March 21, 2003, and agrees to accept, hold,
deliver and disburse the First Payment and Second Payment,
together with all interest accrued thereon and received by the
Title Company, strictly in accordance with the terms and
provisions of this Agreement. In performing any of its duties
hereunder, the Title Company shall not incur any liability to
anyone for any damages, losses or expenses, except for
negligence, willful default or breach of trust, and it shall
accordingly not incur any liability with respect (i) to any
action taken or omitted in good faith upon advice of its counsel,
or (ii) to any action taken or omitted in reliance upon any
instrument, including any written notice or instruction provided
for in this Agreement, not only as to its due execution and the
validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which
the Title Company shall in good faith believe to be genuine, to
have been signed or presented by a proper person or persons and
to conform with the provisions of this Agreement. Seller and
Buyer hereby agree to indemnify and hold harmless the Title
Company against any and all losses, claims, damages, liabilities
and expenses, imposed upon the Title Company or incurred by the
Title Company in connection with its acceptance or the
performance of its duties hereunder, including any litigation
arising from this Agreement or involving the subject matter
hereof, unless such losses, claims, damages, liabilities and
expenses arise out of Title Company's negligence, willful default
or breach of trust. In the event of a dispute between Seller and
Buyer sufficient in the discretion of the Title Company to
justify its doing so, the Title Company shall be entitled to
tender into the registry of the District Court of Kent County,
Michigan, all money or property in its hands under this
Agreement, together with such legal pleadings as it deems
appropriate, and thereupon be discharged from all further duties
and liabilities under this Agreement. Seller and Buyer shall
bear all costs and expenses of such legal proceedings.
Chicago Title of Michigan, Inc.
By: /s/ Xxxxxx X Xxxxxx
Its: Commercial Operations Manager
Exhibit "A"
Legal Description
0000 X Xxxxxxxx, Xxxxxxx, XX
Xxxx 0, 0 xxx 0, XXXXXX the West 17 feet; ALSO Lots 48, 49, 50,
51 and 52, all in Block 2, Southlawn Park, as recorded in liber
26 of Plats, Page 34, Kent County Records.
