Contract of Sale
ASSIGNMENT
OF
PURCHASE AGREEMENT
THIS ASSIGNMENT made and entered into this 22nd day of
April, 2004, by and between AEI FUND MANAGEMENT, INC., a
Minnesota corporation, ("Assignor") and AEI Net Lease Income &
Growth Fund XX Limited Partnership, a Minnesota limited
partnership, and AEI Income & Growth Fund 24 LLC, a Delaware
limited liability company (as tenants in common, together
collectively referred to as "Assignee");
WITNESSETH, that:
WHEREAS, on the 24th day of March, 2004, Assignor entered
into a Contract of Sale, as subsequently amended by that First
Amendment to Contracts of Sale dated April 7, 2004 (together,
collectively referred to as the "Agreement") for that certain
property located at 5503 Milan Rd., Sandusky, OH (the "Property")
with PRECO II CRIC LLC, a Delaware limited liability company, as
Seller; and
WHEREAS, Assignor desires to assign to AEI Net Lease Income
& Growth Fund XX Limited Partnership, an undivided fifty percent
(45.0%) interest as a tenant in common; and AEI Income & Growth
Fund 24 LLC, an undivided fifty percent (55.0%) interest as a
tenant in common, of its rights, title and interest in, to and
under the Agreement as hereinafter provided;
NOW, THEREFORE, for One Dollar ($1.00) and other good and
valuable consideration, receipt of which is hereby acknowledged,
it is hereby agreed between the parties as follows:
1. Assignor assigns all of its rights,
title and interest in, to and under the Agreement to Assignee, to
have and to hold the same unto the Assignee, its successors and
assigns;
2. Assignee hereby assumes all rights, promises,
covenants, conditions and obligations under the Agreement to
be performed by the Assignor thereunder, and agrees to be
bound for all of the obligations of Assignor under the
Agreement.
All other terms and conditions of the Agreement shall remain
unchanged and continue in full force and effect.
ASSIGNOR:
AEI FUND MANAGEMENT, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
ASSIGNEE:
AEI Net Lease Income & Growth
FUND XX LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: AEI FUND MANAGEMENT XX, INC.,
a Minnesota corporation, its General Partner
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI INCOME & GROWTH FUND 24 LLC,
a Delaware limited liability company
By: AEI FUND MANAGEMENT XXI, INC.,
a Minnesota corporation, its Authorized Member
By: /s/ Robert P Johnson
Robert P. Johnson, its President
(Property: Sandusky, Ohio)
CONTRACT OF SALE
THIS CONTRACT OF SALE (this "Contract") is made and entered
into as of March 24, 2004 (the "Effective Date"), by and between
PRECO II CRIC LLC, a Delaware limited liability company
("Seller"), and AEI FUND MANAGEMENT INC., a Minnesota
corporation, or its successors or assigns ("Purchaser").
ARTICLE I.
SALE OF THE PROPERTY
1.1 SUBJECT PROPERTY. For the consideration and upon and
subject to the terms, provisions and conditions of this Contract,
Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase from Seller, that certain parcel of real property owned
by Seller, which is more fully described on Exhibit A attached
hereto (the "Land") and all improvements (the "Improvements") and
appurtenances (the "Appurtenances") located on or pertaining to
the Land (the Land, Improvements and Appurtenances being
collectively referred to herein as the "Property"). The Property
is subject to and encumbered by (i) a Lease (the "Lease") dated
as of October 21, 2003, by and between Seller, as landlord, and
Apple Ohio LLC, a Delaware limited liability company ("Tenant"),
as tenant, and (ii) the Permitted Exceptions (as hereinafter
defined) applicable to the Property. Apple American Group LLC, a
Delaware limited liability company ("Guarantor"), is the
guarantor of the performance of Tenant under the Lease pursuant
to a Guaranty dated effective as of October 21, 2003 (the
"Guaranty").
ARTICLE II.
PURCHASE PRICE
2.1 PURCHASE PRICE. The total Purchase Price (herein so
called) to be paid by Purchaser to Seller for the Property is Two
Million Seven Hundred Eighty-Eight Thousand Six Hundred Fifty-
Eight No/100 Dollars ($2,788,658.00). The total Purchase Price
shall be paid to Seller in Current Funds (as hereinafter defined)
at Closing (as hereinafter defined).
ARTICLE III.
EARNEST MONEY DEPOSIT
3.1 EARNEST MONEY DEPOSIT. Not later than two (2) business
days after the Effective Date, Purchaser shall deliver to Chicago
Title Insurance Company, located at 220 Commerce Drive,
Suite 200, Fort Washington, Pennsylvania 19034, Attention:
Jon R. Gundling (the "Title Company"), Twenty-Five Thousand and
No/100 Dollars ($25,000.00) (the "Earnest Money Deposit") in
Current Funds, to be held by the Title Company in escrow to be
applied or disposed of by the Title Company as is provided in
this Contract. In the event Purchaser fails to deposit the
Earnest Money Deposit with the Title Company as herein provided,
Seller may, at its option, terminate this Contract, in which
event neither Seller nor Purchaser shall have any further rights,
duties or obligations hereunder except for provisions of this
Contract which expressly survive the termination of this
Contract. As used in this Contract, the term "Current Funds"
shall mean wire transfers, certified funds or a cashier's check
in a form acceptable to the Title Company that would permit the
Title Company to immediately disburse such funds.
3.2 APPLICATION AND INTEREST. If the purchase and sale
hereunder is consummated, then the Earnest Money Deposit and any
interest earned thereon shall be applied to the Purchase Price at
Closing to reduce the amount required under Section 8.2(b)(i)
hereof. In all other events, the Earnest Money Deposit shall be
disposed of by the Title Company as provided in this Contract.
The Title Company shall invest the Earnest Money Deposit in a
federally insured interest-bearing account for the benefit of
Purchaser at a bank deemed appropriate by the Title Company. All
interest earned on the Earnest Money Deposit is part of the
Earnest Money Deposit, to be applied or disposed of in the same
manner as the Earnest Money Deposit under this Contract.
3.3 DEMAND FOR EARNEST MONEY DEPOSIT. If for any reason
the Closing does not occur and either party makes a written
demand upon the Title Company for payment of the Earnest Money
Deposit, the Title Company shall give written notice to the other
party of such demand. If the Title Company does not receive a
written objection from the other party to the proposed payment
within ten (10) business days after the giving of such notice,
the Title Company is hereby authorized to make such payment. If
the Title Company does receive such written objection within such
ten (10) business day period or if for any other reason the Title
Company in good faith shall elect not to make such payment, the
Title Company shall continue to hold such amount until otherwise
directed by written instructions from both parties to this
Contract or a final judgment of a court of competent jurisdiction
which is not subject to further appeal. The parties acknowledge
that the Title Company is acting solely as a stakeholder at their
request and for their convenience, that the Title Company shall
not be deemed to be the agent of either of the parties, except as
expressly set forth herein, and that the Title Company shall not
be liable to either of the parties for any act or omission on its
part unless taken or suffered in bad faith, in willful disregard
of this Contract or of any escrow agreement or involving gross
negligence. The Title Company joins in the execution of this
Contract solely for the purpose of acknowledging receipt of the
Earnest Money Deposit and its agreement to hold the same pursuant
to the terms hereof.
ARTICLE IV.
TITLE AND SURVEY
4.1 TITLE. Seller shall deliver to Purchaser copies of the
following: (a) Seller's existing Owner's Title Policy or Pro
Forma Title Policy delivered to Seller at the closing of Seller's
purchase of the Property (referred to hereinafter as the "Title
Policy") for the Property [with the insurance amount removed],
(b) instruments, documents or agreements referenced in the Title
Policy that create or evidence conditions or exceptions to title
affecting the Property (the "Exception Documents"), and (c) the
survey of the Property provided to Seller at its purchase of the
Property (the "Existing Survey"). Within ten (10) business days
following the Effective Date, Seller shall cause the Title
Company to deliver to Purchaser a title commitment (the "Title
Commitment") for the Property, naming Purchaser as the insured,
in the amount of the Purchase Price, together with copies of any
documents (which shall also constitute Exception Documents) for
any exceptions to the Title Commitment not previously contained
in the Title Policy. Purchaser may, at its sole cost and
expense, obtain a new or updated survey of the Property (the "New
Survey"). Purchaser shall obtain the New Survey and an updated
Phase I Environmental Report ("Environmental Report"), at its
sole cost and expense, using reasonably diligent efforts to
obtain the same in a timely manner. Within five (5) business
days of the Effective Date, Purchaser shall notify Seller whether
or not it will be obtaining a New Survey and/or Environmental
Report.
4.2 REVIEW OF TITLE AND SURVEY. Notwithstanding the
expiration of either the Inspection Period or the Environmental
Inspection Period, Purchaser shall have until five (5) business
days after receipt of the last of the Title Commitment, Exception
Documents, Existing Survey, and New Survey, if applicable, in
which to notify Seller in writing (the "Title Objection Notice")
of any objections Purchaser has to any matters shown or referred
to in the Title Commitment, the Exception Documents, the Existing
Survey or any New Survey; PROVIDED, that Purchaser shall not
object to current real estate taxes and assessments which shall
be Permitted Exceptions hereunder. Any title encumbrances,
exceptions or other matters which are set forth in the Title
Commitment, the Exception Documents, the Existing Survey or any
New Survey, and to which Purchaser does not object within the
aforementioned five (5) business day period, shall be deemed to
be permitted exceptions to the status of Seller's title (such
encumbrances, exceptions or other matters, together with such
other matters included pursuant to other provisions of this
Contract, shall be referred to as the "Permitted Exceptions").
4.3 OBJECTIONS TO STATUS OF TITLE AND SURVEY. If Purchaser
properly objects to any item shown or referred to in the Title
Commitment, Exception Documents or on the Existing Survey or any
New Survey within the five (5) business day period set forth in
Section 4.2, Seller shall be given until five (5) business days
after receipt of the Title Objection Notice to notify Purchaser
whether or not Seller will cure, prior to Closing and at Seller's
option and sole discretion but without any obligation to do so,
any objection to the condition of title raised by Purchaser. If
Seller notifies Purchaser that it elects not to cure any such
objections, then Purchaser may, at its option exercisable within
five (5) days following the date of receipt by Purchaser of
written notice from Seller stating that Seller is unable or
unwilling to cure such objections, either (a) accept such title
as Seller can deliver, in which case all exceptions to title set
forth in the Title Commitment, Exception Documents, Existing
Survey and New Survey which are not removed shall be deemed to be
Permitted Exceptions, or (b) terminate this Contract by notice in
writing to Seller in which event the Title Company shall return
the Earnest Money Deposit to Purchaser and neither party shall
have any further rights, duties or obligations hereunder, except
for provisions of this Contract which expressly survive
termination of this Contract. In the event Purchaser fails to
notify Seller, within such five (5) day period, that Purchaser
has elected to proceed under either subpart (a) or (b) of the
immediately preceding sentence, Purchaser shall be deemed to have
elected to proceed under subpart (a), and this Contract shall
remain in full force and effect. If Seller notifies Purchaser
that it elects to cure any such objections but is unable to cure
same by Closing or if Seller fails to notify Purchaser of its
intentions with respect to such objections and fails to cure same
by Closing, then Purchaser may, at its option, either (x) accept
such title as Seller can deliver in which case the parties shall
proceed with Closing and all exceptions to title set forth in the
Title Commitment, Exception Documents, Existing Survey and New
Survey which are not removed shall be deemed to be Permitted
Exceptions, or (y) terminate this Contract by notice in writing
to Seller at Closing, in which event the Title Company shall
return the Earnest Money Deposit to Purchaser and neither party
shall have any further rights, duties or obligations hereunder
except for provisions of this Contract which expressly survive
termination of this Contract.
4.4 OTHER PERMITTED EXCEPTIONS. The Permitted Exceptions
shall include those matters shown in the Title Commitment, the
Exception Documents, the Existing Survey and any New Survey which
become Permitted Exceptions pursuant to sections 4.2 and 4.3
above and, in addition, the following: (a) the Lease; (b) taxes
and assessments for the year in which Closing occurs and
subsequent years; (c) liens and encumbrances arising after the
date hereof to which Purchaser consents in writing; (d) Building,
zoning (provided the same shall permit the use of the Property as
a restaurant without the need for a special use permit, variance
or grandfathering) and subdivision laws and ordinances, and
local, state and federal laws, rules and regulations;(e) Any
title exceptions arising out of the acts of Purchaser; and
(f) Encumbrances permitted or arising in accordance with the
terms of the Lease.
ARTICLE V.
INSPECTION BY PURCHASER
5.1 INSPECTION RIGHTS. Purchaser shall have a period of
time commencing on the Effective Date and expiring at 5:00 p.m.
Boston, Massachusetts time twenty-one (21) days from the
Effective Date (the "Inspection Period"), within which to examine
the Property and the Lease and conduct its feasibility study
thereof. Purchaser shall complete physical inspection of the
Property by April 7, 2004. Notwithstanding the foregoing, (a)
Purchaser shall not interfere with, interrupt or disrupt the
operation of any Tenant's business on the Property and, further,
such access by Purchaser and/or its agents, contractors and
representatives shall be subject to the rights of the Tenant and
the restrictions on Seller's access to the Property set forth in
the Lease; (b) Purchaser shall not permit any construction,
mechanic's or materialman's liens or any other liens to attach to
the Property or any portion thereof by reason of the performance
of any work or the purchase of any materials by Purchaser or any
other party in connection with any studies or tests conducted
pursuant to this Section 5.1; (c) Purchaser shall give not less
than two (2) business days notice to Seller prior to entry onto
the Property and shall permit Seller to have a representative
present during all investigations and inspections conducted with
respect to the Property; and (d) Purchaser shall take all
reasonable actions and implement all reasonable protections
necessary to ensure that all actions taken in connection with the
investigations and inspections of the Property, and all
equipment, materials and substances generated, used or brought
onto the Property pose no threat to the safety of persons or the
environment and cause no damage to the Property, Tenant or other
persons. Purchaser shall indemnify, defend and hold Seller and
the Tenant harmless for, from and against any and all claims,
liabilities, causes of action, damages, liens, losses and
expenses (including, without limitation, attorneys' fees and
costs) incident to, resulting from or in any way arising out of
any of Purchaser's or its agents', contractors' or
representatives' activities on the Property or from Purchaser's
breach of its obligations or agreements under this Article V.
Purchaser's indemnity obligations contained in this Section 5.1
shall survive the Closing and not be merged therein and shall
also survive any termination of this Contract.
5.2 APPROVAL OF INSPECTIONS. If Purchaser determines at any
time prior to the expiration of the Inspection Period that the
Property is not satisfactory to Purchaser, then Purchaser may
terminate this Contract by delivering written notice of
termination to Seller prior to the end of such Inspection Period.
If Purchaser properly terminates this Contract pursuant to this
Section 5.2, then this Contract shall be terminated, the Title
Company shall return the Earnest Money Deposit to Purchaser, and
neither party shall have any further rights, duties or
obligations hereunder except with respect to the provisions of
this Contract which expressly survive the termination of this
Contract. If Purchaser does not timely deliver to Seller written
notice of termination during the Inspection Period, the
conditions of this Section 5.2 shall be deemed satisfied, and
Purchaser may not thereafter terminate this Contract pursuant to
this Section 5.2.
5.3 MATTERS DELIVERED BY SELLER. Seller has previously
delivered or shall deliver to Purchaser copies of the documents
on Schedule 5.3 to this Contract, (collectively, the "Submission
Matters"), except as otherwise noted on Schedule 5.3.
5.4 ENVIRONMENTAL INSPECTION PERIOD. Notwithstanding the
termination of the Inspection Period or the Purchaser's right to
terminate as set forth in Section 4.3 hereunder, Purchaser shall
have a period of time commencing on the Effective Date and
expiring at 5:00 p.m., Boston, Massachusetts time five (5)
business days after Purchaser's receipt of the Environmental
Report (the "Environmental Inspection Period") to review the
Environmental Report. If the Environmental Report obtained by
Purchaser discloses either (i) the existence of any Hazardous
Substance (as such term is defined in the Lease) on the Property,
the existence of which violates any Environmental Laws (as such
term is defined in the Lease), or (ii) any material environmental
matter which, in the reasonable opinion of Purchaser, based upon
the counsel of the environmental consultants or other
environmental advisors retained by Purchaser, would warrant
additional investigation and/or remediation with respect to the
Property or would require a No Further Action Letter (herein so
called) with respect to such remediation, then Purchaser may
terminate this Contract by delivering written notice of
termination to Seller on or before the Environmental Inspection
Period, but in no event shall the Environmental Inspection Period
extend beyond thirty (30) days after the Effective Date of this
Contract. If Purchaser properly terminates this Contract
pursuant to this Section 5.4, then this Contract shall be
terminated, the Title Company shall return the Earnest Money
Deposit to Purchaser, and neither party shall have any further
rights, duties or obligations hereunder except with respect to
the provisions of this Contract which expressly survive the
termination of this Contract. If Purchaser does not timely
deliver to Seller written notice of termination during the
Environmental Inspection Period, the conditions of this
Section 5.4 shall be deemed satisfied, and Purchaser may not
thereafter terminate this Contract pursuant to this Section 5.4.
Notwithstanding the foregoing, if Purchaser chooses not to obtain
an Environmental Report, then this Section 5.4 shall not apply,
and Purchaser shall complete any and all environmental inspection
by the end of the Inspection Period.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES; DISCLAIMERS AND WAIVERS
6.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller as of the Effective Date and as
of the Closing Date, as applicable, that (a) Purchaser is a
corporation duly organized and validly existing under the laws of
the State of Minnesota, (b) Purchaser has the full right, power
and authority to enter into this Contract and to consummate the
transactions contemplated herein; and (c) this Contract
constitutes a valid and legally binding obligation of Purchaser,
enforceable in accordance with its terms.
6.2 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Purchaser as of the Effective Date and
as of the Closing Date, as applicable that (a) Seller is a
limited liability company duly organized and validly existing
under the laws of the State of Delaware; (b) Seller has the full
right, power and authority to enter into this Contract and to
consummate the transactions contemplated herein; (c) this
Contract constitutes a valid and legally binding obligation of
Seller, enforceable in accordance with its terms; (d) the
Submission Matters furnished by Seller to Purchaser are true,
complete and correct copies of the documents they purport to
represent; (e) Seller has not delivered to Tenant or received
from Tenant any notice of default under the Lease; (f) Seller has
not received any written notice of any existing or threatened
lawsuits concerning the Property; (g) Seller has not received any
written notice of any threatened or pending condemnation
proceedings affecting the Property; (h) Seller has not received
any written notice of any actions or proceedings pending, which
would materially affect the Property or Tenant; (i) Seller has
not received any written notice of any written lease or leases
with respect to the Property; and (j) from the date the Seller
acquired title to the Property, Seller has not received any
written notice from any governmental authorities stating that the
use and operation of the Property is not in compliance with
applicable local, state and federal laws, ordinances, regulations
and requirements.
6.3 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES OF SELLER.
PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY
SPECIFIED IN SECTION 6.2 OF THIS CONTRACT, SELLER HAS NOT MADE,
AND SELLER HEREBY SPECIFICALLY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY OF ANY KIND, ORAL OR WRITTEN, EXPRESS OR IMPLIED, OR
ARISING BY OPERATION OF LAW, WITH RESPECT TO THE PROPERTY, THE
LEASE, TENANT OR GUARANTOR, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING,
TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES,
OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL
APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS,
THE TRUTH, ACCURACY OR COMPLETENESS OF ANY INFORMATION PROVIDED
BY OR ON BEHALF OF SELLER TO PURCHASER, THE FINANCIAL CONDITION
OF THE GUARANTOR OR TENANT, OR ANY OTHER MATTER OR THING
REGARDING GUARANTOR, TENANT, THE PROPERTY OR THE LEASE.
PURCHASER AGREES TO ACCEPT THE PROPERTY AND ACKNOWLEDGES THAT THE
SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE BY SELLER ON
AN "AS IS, WHERE IS, AND WITH ALL FAULTS" BASIS. PURCHASER IS AN
EXPERIENCED PURCHASER OF PROPERTIES SUCH AS THE PROPERTY AND
PURCHASER HAS MADE OR WILL MAKE PURCHASER'S OWN INDEPENDENT
INVESTIGATION OF THE PROPERTY. THE PROVISIONS OF THIS SECTION 6.3
SHALL SURVIVE THE CLOSING HEREUNDER.
6.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller and Purchaser set forth
in this Article VI shall survive the Closing for a period of six
(6) months subsequent to Closing, and any action brought upon a
claim by Purchaser or Seller against the other party for breach
of any representation or warranty contained in this Article VI
must be brought, if at all, within six (6) months after Closing
or such claim and action shall be forever barred.
ARTICLE VII.
CONDITIONS PRECEDENT TO PURCHASER'S AND
SELLER'S PERFORMANCE
7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. Purchaser's
obligation under this Contract to purchase the Property is
subject to the fulfillment of each of the following conditions
(any or all of which may be waived by Purchaser):
(a) the representations and warranties of Seller
contained herein shall be true, accurate and correct in all
material respects as of the Closing Date;
(b) Seller shall have delivered all the documents and
other items required pursuant to Section 8.2(a), and shall
have performed, in all material respects, all other
covenants, undertakings and obligations, and complied with
all conditions required by this Contract to be performed or
complied with by the Seller at or prior to the Closing;
(c) no Event of Default (as such term is defined in
the Lease) shall have occurred and be continuing under the
Lease as of the Closing Date; and
(d) Seller shall have delivered to Purchaser an
Estoppel Certificate executed and delivered by Tenant in
accordance with the Lease.
7.2 CONDITIONS TO SELLER'S OBLIGATIONS. Seller's
obligation under this Contract to sell the Property to Purchaser
is subject to the fulfillment of each of the following conditions
(any or all of which may be waived by Seller):
(a) the representations and warranties of Purchaser
contained herein shall be true, accurate and correct in all
material respects as of the Closing Date; and
(b) Purchaser shall have delivered the Purchase Price,
and other funds required hereunder and all the documents and
other items required pursuant to Section 8.2(b), and shall
have performed, in all material respects, all other
covenants, undertakings and obligations, and complied with
all conditions required by this Contract to be performed or
complied with by Purchaser at or prior to Closing.
ARTICLE VIII.
CLOSING
8.1 CLOSING DATE.
(a) TIME AND PLACE. Provided the terms and conditions
set forth in this Contract have been fulfilled, the
consummation of the purchase and sale of the Property (the
"Closing") shall take place by delivery of documents to the
office of the Title Company on or before April 22, 2004 (the
"Closing Date").
(b) DELIVERY OF DOCUMENTS IN ESCROW; TITLE INSURANCE.
The documents required hereunder to be delivered at Closing
shall be delivered by Seller and Purchaser into escrow with
the Title Company, which shall record and/or deliver all
documents deposited into escrow hereunder upon unconditional
payment of the Purchase Price to the Title Company and shall
remit the Purchase Price to Seller simultaneously with the
recordation and/or delivery of all documents deposited into
escrow hereunder.
8.2 ITEMS TO BE DELIVERED AT THE CLOSING.
(a) SELLER. At the Closing, Seller shall deliver, or
cause to be delivered, to Purchaser each of the following
items with respect to the Property:
(i) A Limited Warranty Deed (the "Deed"), in the
form of the deed through which Seller obtained title to
the Property, subject to the Permitted Exceptions, duly
executed by Seller;
(ii) An Assignment and Assumption of the Lease,
dated as of the Closing Date, in the form of Exhibit B
hereto (the "Lease Assignment"), duly executed by
Seller;
(iii) A Bill of Sale and General Assignment,
dated the Closing Date, in the form of Exhibit C hereto
(the "Bill of Sale"), duly executed by Seller;
(iv) Counterpart originals, of the Lease and the
Guaranty, except that Seller may, at its option,
deliver such originals directly to Purchaser within
five (5) business days after Closing;
(v) A Non-Foreign Affidavit for purposes of
compliance with Section 1445 (b)(2) of the Internal
Revenue Code of 1986, as amended, and the regulations
adopted thereunder;
(vi) Notice to Tenant from Seller of the sale of
the Property hereunder to Purchaser and instructing
Tenant to send all correspondence under the Lease to
Purchaser (the "Notice Letter");
(vii) The Title Commitment for the issuance of
an Owner's Title Insurance Policy (the "Owner's Title
Policy") for the Property effective as of the Closing
Date which insures Purchaser in an amount equal to the
Purchase Price, and indicates no encumbrances other
than the Permitted Exceptions; and
(viii) Other items reasonably requested by the
Title Company for the sale of the Property in
accordance with this Contract or for administrative
requirements for consummating the Closing.
(b) PURCHASER. At the Closing, Purchaser shall
deliver or cause to be delivered, to Seller or perform, as
applicable, each of the following items with respect to the
Property:
(i) The Purchase Price in Current Funds;
(ii) Such additional funds in Current Funds, as
may be necessary to cover Purchaser's share of the
closing costs and prorations hereunder;
(iii) The Lease Assignment, dated as of the
Closing Date, duly executed by Purchaser;
(iv) If the Purchaser is corporation, partnership
or other entity, a certificate from an officer of
Purchaser, or the general partner of Purchaser,
evidencing that the person or persons executing this
Contract and the closing documents on behalf of
Purchaser have full right, power and authority to do
so, and attaching the articles of incorporation and
bylaws (or other appropriate organizational documents)
of Purchaser and appropriate resolutions authorizing
this Contract and the transactions contemplated
hereunder;
(v) The Notice Letter duly executed by Purchaser;
(vi) Consent Agreement duly executed by Purchaser
pursuant to which Purchaser will consent to and agree
to be bound by the Landlord Agreement referred to on
Schedule 5.3 hereto; and
(vi) Other items reasonably requested by the Title
Company for the sale of the Property in accordance with
this Contract or for administrative requirements for
consummating the Closing.
8.3 COSTS OF CLOSING. Purchaser shall pay all of the costs
and expenses incurred in connection with the transfer of the
Property contemplated by this Contract including, without
limitation, the following: (i) all costs and expenses incurred
by Purchaser in connection with its due diligence investigation
of the Property, (ii) all premiums and fees charged by the Title
Company for the Owner's Title Policy and the mortgagee's title
policy, if applicable, (iii) all escrow fees charged by the Title
Company for the closing on this sale transaction, (iv) all
transfer taxes, intangible taxes, documentary taxes and stamps,
recording fees and other governmental taxes and charges in
connection with the conveyance of the Property, and (v) all costs
associated with Purchaser's loan for the purchase of the
Property, if any. If the Closing hereunder occurs, Purchaser
shall receive a credit against Purchase Price in an amount not
greater than Five Thousand and No/100 Dollars ($5,000.00) to
offset a portion of the costs and expenses incurred by Purchaser
in connection with the transfer of the Property contemplated by
this Contract. Each party shall pay its own legal fees and
advisory fees incidental to the execution of this Contract and
the consummation of the transactions contemplated hereby. The
provisions of this Section 8.3 shall survive the Closing or
earlier termination of this Contract.
8.4 PRORATIONS. The Base Rent and Additional Rent payable
to the Landlord under the Lease shall be prorated through the
Closing, with Seller being entitled to all such Base Rent and
Additional Rent through and including the Closing Date. Except
for the proration of rents as aforesaid, there shall be no
proration of normal and customarily pro ratable items as the
parties agree that Tenant are required to pay, pursuant to the
terms of the Lease, all items usually prorated in transactions of
the type described herein; provided, that if Tenant does not pay
such amounts under the terms of the Lease, Purchaser shall not
have, and Purchaser hereby waives and releases, any claim against
Seller for payment of such amounts. The provisions of this
Section 8.4 shall survive the Closing.
ARTICLE IX.
CONDEMNATION OR CASUALTY
9.1 CONDEMNATION.
(a) In the event that all or any significant portion
of the Property is condemned or taken by eminent domain or
conveyed by deed in lieu thereof, or if any condemnation
proceeding is commenced for all or any significant portion
of the Property prior to Closing, either party may elect to
terminate this Contract by written notice thereof to the
other party within ten (10) days after such party is
notified of the condemnation, taking or deed in lieu or
institution of such condemnation proceeding. Upon
termination of this Contract as provided in this Section
9.1(a), all rights, duties and obligations hereunder shall
cease and be of no further force or effect (except with
respect to the provisions hereof which expressly survive the
termination of this Contract). If neither party terminates
this Contract as aforesaid, then both parties shall proceed
to close the transaction contemplated herein pursuant to the
terms hereof, in which event Purchaser shall have the rights
set forth in the Lease (including, without limitation, the
rights, if any exist, of the landlord to receive
condemnation proceeds with respect to such condemnation or
taking) and there shall be no reduction in the Purchase
Price. For purposes of this Section 9.1(a), "significant
portion" of the Property shall be deemed to be any portion
of the Land which, if subject to a condemnation, eminent
domain or similar proceeding, gives rise to the right of the
Tenant under the Lease to terminate the Lease.
(b) In the event that less than a significant portion
of the Property is condemned, taken by eminent domain,
conveyed by deed in lieu thereof or is the subject of a
condemnation proceeding, neither party shall have the right
to terminate this Contract and the Closing shall occur with
no reduction of the Purchase Price, and any award or payment
made therefor shall be paid as provided in the Lease.
9.2 CASUALTY.
(a) In the event that all or a substantial portion of
the Property shall be damaged or destroyed by fire or other
casualty prior to Closing, either party may terminate this
Contract by written notice thereof to the other party within
ten (10) days after such party is notified of the casualty.
Upon termination of this Contract as provided in this
Section 9.2(a), all rights, duties and obligations hereunder
shall cease and be of no further force or effect (except
with respect to the provisions hereof which expressly
survive the termination of this Contract). If neither party
terminates this Contract as aforesaid, then both parties
shall proceed to close the transaction contemplated herein
pursuant to the terms hereof, in which event Purchaser shall
have the rights set forth in the Lease (including, without
limitation, the rights, if any exist, of the landlord to
receive insurance proceeds with respect to such casualty)
with respect to the Property and there shall be no reduction
in the Purchase Price. In the event less than a substantial
portion of a Property shall be damaged or destroyed by fire
or other casualty prior to Closing, then the parties shall
proceed in accordance with the third sentence in this
Section 9.2(a).
(b) For the purposes of Section 9.2(a), a "substantial
portion" of a Property shall be deemed to be any portion of
the Property with either a fair market value or replacement
cost equal to or greater than twenty-five percent (25%) of
the Purchase Price.
ARTICLE X.
DEFAULTS AND REMEDIES
10.1 DEFAULT BY PURCHASER. If Purchaser refuses or fails to
consummate the Closing under this Contract for reasons other than
as expressly set forth in Section 5.2, 5.4 (if applicable) or
Article IX hereof or other than due to a failure of a condition
precedent to Purchaser's obligation to close as set forth in
Section 7.1 hereof, the Purchaser shall be in default under this
Contract and Seller may, as its sole and exclusive remedy,
terminate this Contract in which event the Title Company shall
pay the Earnest Money Deposit to Seller and Seller shall be
entitled to receive and retain the Earnest Money Deposit as
liquidated damages (Seller and Purchaser hereby acknowledging
that the amount of damages in the event of Purchaser's default is
difficult or impossible to ascertain but that such amount is a
fair estimate of such damages), and neither party shall have any
further rights, duties, or obligations hereunder except with
respect to the provisions hereof which expressly survive the
termination of this Contract.
10.2 DEFAULT BY SELLER. If Seller refuses or fails to
consummate the Closing under this Contract other than due to a
termination permitted under this Contract or a failure of a
condition precedent to Seller's obligation to close as set forth
in Section 7.2 hereof, then Seller shall be in default under this
Contract and Purchaser may, at Purchaser's sole option and as its
sole and exclusive remedies, either (a) terminate this Contract
in which event neither party shall have any further rights,
duties or obligations hereunder except with respect to the
provisions of this Contract which expressly survive the
termination hereof, and Purchaser shall be entitled to a refund
of the Earnest Money Deposit, or (b) enforce specific performance
of this Contract against Seller. In no event shall Seller be
liable to Purchaser for any damages, including, without
limitation, any actual, punitive, speculative or consequential
damages or damages for loss of opportunity or lost profit, in the
event of Seller's default hereunder.
10.3 ATTORNEYS' FEES. If it shall be necessary for either
Purchaser or Seller to employ an attorney to enforce its rights
pursuant to this Contract, the non-prevailing party shall
reimburse the prevailing party for its reasonable attorneys'
fees. The provisions of this Section 10.3 shall survive the
Closing or termination of this Contract.
ARTICLE XI.
BROKERAGE COMMISSIONS
11.1 BROKERAGE COMMISSION. Seller and Purchaser each
represent to the other that each has had no dealings with any
broker, finder or other party concerning the purchase of the
Property other than Marcus & Millichap (the "Broker"). Seller
hereby agrees to pay at Closing a commission to the Broker
pursuant to the terms of a separate written agreement; provided,
however, that Seller's obligation to pay, and Broker's right to
receive, this commission or any other amount with respect to this
Contract is expressly conditioned upon Closing the sale of the
Property and Seller's receipt of the Purchase Price under this
Contract. Broker shall have no right to receive this commission
or any other amount with respect to this Contract unless and
until Closing shall be final and fully consummated and the
Purchase Price has been paid as provided in this Contract.
Purchaser and Seller each agree to indemnify, defend and hold the
other harmless for, from and against any and all loss, liability,
damage, cost or expense (including, without limitation,
reasonable attorneys' fees) arising out of or paid or incurred by
such party by reason of any claim to any broker's, finder's or
other fee in connection with this transaction by any party
claiming by, through or under such party other than Broker. The
indemnity obligations set forth in this Section 11.1 shall
survive the Closing or the termination of this Contract.
ARTICLE XII.
MISCELLANEOUS
12.1 NOTICES. Any notice provided or permitted to be given
under this Contract must be in writing and may be served by
depositing the same in the United States Mail, postage prepaid,
certified or registered mail with return receipt requested, or by
delivering the same in person to the party to be notified via a
delivery service, Federal Express or any other nationally
recognized overnight courier service that provides a return
receipt showing the date of actual delivery of same to the
addressee thereof, or by facsimile copy transmission with proof
of receipt. Any party giving notice hereunder shall use
reasonable efforts to send a copy of any such notice by facsimile
transmission on the same date as deposited in the mail or given
to such delivery service. Notice given in accordance herewith
shall be deemed given and shall be effective upon the earlier of
actual receipt (including, without limitation, receipt of a
facsimile transmission) or refusal of delivery. For purposes of
notice, the addresses of the parties shall be as follows:
If to Seller: PRECO II CRIC LLC
One Exeter Plaza
Boston, Massachusetts 02116
Attention: Jay Hooper
Telephone No.: 617/303-4400
Facsimile No.: 617/303-4440
Email Address: jhooper@criccapital.com
With a copy to: Liechty & McGinnis, P.C.
7502 Greenville Avenue, Suite 750
Dallas, Texas 75231
Attention: G. Dean Reed, Esq.
Telephone No.: 214/265-0008
Facsimile No.: 214/378-5938
Email Address: dreed@lmlawyers.com
If to Purchaser: AEI Fund Management Inc.
30 East 7th Street, Suite 1300
St. Paul, Minnesota 55101
Attention: George Rerat
Telephone No: 800/328-3519
Facsimile No.: 651/227-7705
Email Address: grerat@aeifunds.com
With a copy to: The Daugherty Law Firm
30 East 7th Street, Suite 1300
St. Paul, Minnesota 55101
Attention: Michael Daugherty
Telephone No: 612/720-0777
Facsimile No.: 612/677-3181
Email Address: mbdlaw@usinternet.com
If to Title Company: Chicago Title Insurance Company
220 Commerce Drive, Suite 200
Fort Washington, Pennsylvania 19034
Attention: Jon R. Gundling, Esq.
Telephone No: 800/647-2867
Facsimile No.: 215/619-7115
Email Address: gundlingj@ctt.com
12.2 GOVERNING LAW. THE LAWS OF THE STATE OF OHIO SHALL
GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION
OF THIS CONTRACT.
12.3 ENTIRETY AND AMENDMENTS. This Contract embodies the
entire agreement between the parties and supersedes all prior
agreements and understandings, if any, relating to the
transaction described herein, and may be amended or supplemented
only by an instrument in writing executed by the party against
whom enforcement is sought.
12.4 ASSIGNMENT. Purchaser may assign its rights under this
Contract to an entity controlling, controlled by, or under common
control with Purchaser without the prior written consent of
Seller; provided, that Purchaser must immediately provide Seller
with a copy of any instrument assigning this Contract and
evidence of the Purchaser's affiliation with the assignee.
Except as expressly provided in the preceding sentence, this
Contract may not be assigned in whole or in part by Purchaser
without the prior written consent of Seller, which consent may be
granted or withheld by Seller in Seller's sole and absolute
discretion. In the event of an assignment of this Contract by
Purchaser, Purchaser shall not be released from any liability or
obligations hereunder, and Purchaser shall promptly deliver to
Seller a copy of the instrument effecting such assignment.
Subject to the foregoing, this Contract shall be binding upon and
inure to the benefit of Seller and Purchaser and their respective
heirs, personal representatives, successors and assigns.
12.5 SURVIVAL. Except as otherwise expressly provided
herein, no representations, warranties, covenants or agreements
contained in this Contract shall survive the termination of this
Contract or the Closing and the assignment of the Property
hereunder.
12.6 TIME OF ESSENCE. It is expressly agreed by the parties
hereto that time is of the essence with respect to this Contract
and Closing hereunder.
12.7 MULTIPLE COUNTERPARTS. To facilitate execution, this
Contract may be executed in as many counterparts as may be
convenient or required. It shall not be necessary that the
signature of, or on behalf of, each party, or that the signature
of all persons required to bind any party, appear on each
counterpart. Facsimile copies of a signature of any party shall
be deemed the same as the original. All counterparts shall
collectively constitute a single instrument. It shall not be
necessary in making proof of this Contract to produce or account
for more than a single counterpart containing the respective
signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such
counterpart without impairing the legal effect of the signatures
thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.
12.8 RISK OF LOSS. Subject to the provisions of Article IX
of this Contract, risk of loss or damage to the Property, or any
part thereof, by fire or any other casualty from the date this
Contract is fully executed up to the time of Closing will be on
Seller and, thereafter, will be on Purchaser.
12.9 NO RECORDATION OF CONTRACT. In no event shall this
Contract or any memorandum hereof be recorded in the public
records of the state or county in which any portion of the
Property is situated, and any such recordation or attempted
recordation shall constitute a breach of this Contract by the
party responsible for such recordation or attempted recordation.
12.10 BUSINESS DAYS. All references to "business days"
contained herein are references to normal working business days,
i.e., Monday through Friday of each calendar week, exclusive of
federal and national bank holidays. In the event that any event
hereunder is to occur, or a time period is to expire, on a date
which is not a business day, such event shall occur or time
period shall expire on the next succeeding business day.
12.11 CAPTIONS. The captions, headings and arrangements
used in this Contract are for convenience only and do not in any
way affect, limit, amplify or modify the terms and provisions
hereof.
12.12 NUMBER AND GENDER OF WORDS. Whenever herein the
singular number is used, the same shall include the plural where
appropriate, and words of any gender shall include each other
gender where appropriate.
12.13 INTERPRETATION. No provision of this Contract
shall be construed in favor of, or against, any particular party
by reason of any presumption with respect to the drafting of this
Contract; both parties, being represented by counsel and having
fully participated in the negotiation of this instrument, hereby
agree that this Contract shall not be subject to the principle
that a contract would be construed against the party which
drafted the same.
12.14 INCORPORATION OF EXHIBITS. All exhibits attached
and referred to in this Contract are hereby incorporated herein
as though fully set forth in (and shall be deemed to be a part
hereof) this Contract.
12.15 THIRD-PARTY BENEFICIARIES. Nothing in this
Contract, express or implied, is intended to confer any rights or
remedies upon any person, other than the parties hereto and,
subject to the restrictions on assignment herein contained, their
respective successors and assigns.
12.16 FAXED SIGNATURES. The parties agree that faxed
signatures may be used to expedite the transaction contemplated
by this Contract. Each party intends to be bound by its faxed
signature and each is aware that the other will rely on the faxed
signature, and each acknowledges such reliance and waives any
defenses to the enforcement of the documents effecting the
transaction contemplated by this Contract based on a faxed
signature.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
IN WITNESS WHEREOF, the undersigned have executed this
Contract of Sale to be effective as of the Effective Date.
SELLER:
PRECO II CRIC LLC,
a Delaware limited liability
company
By: /s/ Marjorie Palace
Name: Marjorie Palace
Title: Authorized Person
Date:
PURCHASER:
AEI FUND MANAGEMENT INC.,
a Minnesota corporation
By: /s/ Pat Keene
Name: Patrick Keene
Title: CFO
Date: 3/24/04
Purchaser's EIN: 41-1328249
RECEIPT OF EARNEST MONEY DEPOSIT
AND AGREEMENT OF TITLE COMPANY
Chicago Title Insurance Company (the "Title Company") hereby
acknowledges the receipt of one (1) fully signed and executed
copy of this Contract.
Upon receipt, the Title Company agrees to hold the Earnest
Money Deposit in escrow as escrow agent for the benefit of Seller
and Purchaser and to dispose of the Earnest Money Deposit in
strict accordance with the terms and provisions of this Contract.
CHICAGO TITLE INSURANCE COMPANY
By: /s/ Jon Guilding
Name:
Title: Vice President
Date: 3/26/04
SCHEDULE 5.3
SUBMISSION MATTERS
1. Lease dated as of October 21, 2003 (the "Lease").
2. Memorandum of Lease dated October 21, 2003.
3. Guaranty executed by Apple American Group LLC with respect
to the Lease and dated effective as of October 21, 2003.
4. Certificates of Insurance for the Property in Seller's
possession.
5. Survey of the Property in Seller's possession.
6. Phase I Environmental Site Assessment with respect to the
Property.
7. Zoning evidence of the Property in Seller's possession.
8. Landlord Agreement dated October 21, 2003.
EXHIBIT A
LEGAL DESCRIPTION
PARCEL 1:
SITUATED IN THE TOWNSHIP OF PERKINS, COUNTY OF ERIE AND STATE OF
OHIO AND BEING PART OF LOT NO. 2, IN THE HALLAM TRACT, OF SECTION
NO. 2 AND BEING PART OF THAT 3.56 ACRE PARCEL CONVEYED TO
BANCOHIO NATIONAL BANK, O.R. 21, PAGE 529 AND PART OF THAT 1.0733
ACRE PARCEL CONVEYED TO BANCOHIO NATIONAL BANK, O.R. 106 PAGE
314, ERIE COUNTY OHIO DEED RECORDS AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
BEGINNING FOR REFERENCE AT A 3 / 4" IRON ROD FOUND IN THE
SOUTHWESTERLY LINE OF AN EASEMENT FOR HIGHWAY PURPOSES DESCRIBED
AS PARCEL 203LA, CASE NO. 32676, D.V. 317, PG. 550-52 AT THE
NORTHERLY LINE OF STATE ROUTE 2 (U.S. ROUTE 6 RELOC.); THENCE
UPON THE SOUTHWESTERLY LINE OF U.S. ROUTE 250, N. 35 DEG. 00' 00"
W. 203.79 FEET TO A 1/2" IRON ROD FOUND AT THE SOUTH LINE OF LOT
2 HALLAM TRACT; THENCE UPON THE SOUTHWESTERLY LINE OF U.S. ROUTE
250, DESCRIBED AS PARCEL 200, CASE 32675, D.V.317, PAGE 557 N 36
DEG. 21' 30" W. 364.94 FEET TO A 1/2" IRON ROD SET AT THE
NORTHEASTERLY CORNER OF A 1.0193 ACRE TRACT OF BAYWINDS
PROPERTIES LIMITED PARTNERSHIP, O.R. 106, PAGE 317 AND THE TRUE
POINT OF BEGINNING FOR THIS DESCRIPTION;
THENCE UPON THE NORTHERN LINE OF SAID TRACT AND THROUGH SAID
LANDS OF BANCOHIO S. 52 DEG. 14' 30" W. 231.11 FEET TO A 1 / 2"
CAPPED REBAR SET; THENCE THROUGH SAID LANDS OF BANCOHIO, N. 37
DEG. 54' 24" W. 234.95 FEET TO A 1 / 2" CAPPED REBAR SET IN THE
SOUTH LINE OF LANDS OF J.L. HUNTER AND J.P. LAYCOCK, TR., D.V.
567, PAGE 493; THENCE UPON SAID LINE N. 52 DEG. 13' 49" E, 245.00
FEET TO A 1 / 2" CAPPED REBAR SET IN THE SOUTHWESTERLY LINE OF
U.S. ROUTE 250 AS DESCRIBED IN D.V. 397, PAGE 787; THENCE UPON
SAID LINE, S. 37 DEG. 54' 24" E. 204.94 FEET TO A 1 / 2" CAPPED
REBAR SET; THENCE UPON SAID LINE, S 52 DEG. 05' 36" W. 13.08
FEET TO A 1 / 2" CAPPED REBAR SET; THENCE SOUTH 36 DEG. 21' 30"
E., 30.03 FEET TO THE POINT OF BEGINNING CONTAINING 1.3123 ACRES,
MORE OR LESS, SUBJECT TO ALL LEGAL HIGHWAYS.
THIS DESCRIPTION WAS PREPARED BY JOHN HANCOCK, R.S. 6918 FROM
SURVEYS CONDUCTED IN MAY, 1993 AND SEPTEMBER, 1994. BEARINGS
HEREIN ARE BASED ON AN ASSUMED MERIDIAN FOR PURPOSES OF
INDICATING ANGLES.
BEING THE SAME PREMISES CONVEYED BY S & S REALTY, AN OHIO
PARTNERSHIP TO APPLE AMERICAN LIMITED PARTNERSHIP OF OHIO, AN
OHIO LIMITED PARTNERSHIP BY GENERAL WARRANTY DEED DATED OCTOBER
3, 1994, RECEIVED FOR RECORD NOVEMBER 8, 1994 AT 2:21 P.M. AND
RECORDED IN ERIE COUNTY OFFICIAL RECORDS BOOK 200 PAGE 884.
PARCEL 2:
TOGETHER WITH THE RECIPROCAL EASEMENT AGREEMENT BY AND BETWEEN
APPLE AMERICAN LIMITED PARTNERSHIP OF OHIO AND S&S REALTY, DATED
NOVEMBER 25, 1994 IN VOLUME 200 PAGE 886 ERIE COUNTY RECORDS.