PURCHASE AGREEMENT
1812 N Valley Mills
Waco, TX 76710
This AGREEMENT, entered into effective as of the 24th of March,
1999.
l. PARTIES. Sellers are AEI Real Estate Fund XV Limited
Partnership and AEI Real Estate Fund XVI Limited Partnership
(collectively "Seller"). AEI Real Estate Fund XV Limited
Partnership holds an undivided 44.9042% and AEI Real Estate Fund
XVI Limited Partnership holds an undivided 55.0958% interest in
the fee title to that certain real property legally described in
the attached Exhibit "A" (the "Property"). Buyer is Tom Salome,
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
all easements, covenants, conditions, restrictions and agreements
of record that do not affect marketability of title or affect
adversely the use of the Property ("Permitted Exceptions"),
subject to the provisions of Buyer review of title as set forth
below in paragraph 8.
3. PURCHASE PRICE. The purchase price for this Property is
$310,000 cash plus $50 independent consideration, 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
Insurance Company, attention Mary Furgason, 14607 San Pedro
Avenue, Suite 175, San Antonio, TX 78232("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, $300,000 in cash or good funds (the "Second
Payment"), at closing to the Escrowee who shall close the
transaction according to the terms hereof.
(c) When this Agreement is executed, Buyer will also pay $50
in cash in good funds directly to Seller ("Option
Consideration"), which shall be in consideration for Seller's
execution of this Agreement, but will be credited against the
purchase price when and if escrow closes and the sale is
completed. The Option Consideration shall be considered non-
refundable if this Agreement is terminated for any reason.
5. CLOSING DATE. Escrow shall close on or before the fifteenth
day after the Inspection and Feasibility Study is completed.
6. DUE DILIGENCE. Buyer will have until the expiration of the
thirtieth day after delivery of the signed "Agreement" (the
"Inspection and Feasibility Study 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 Inspection and
Feasibility Study Period or Inspection Period as defined in
Section 16. Such notice shall be deemed effective only upon
receipt by Seller. 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. Escrow shall be opened by Buyer and the First Payment
shall be deposited by Buyer with Escrowee. A copy of this
Agreement will be delivered to the escrow holder and will serve
as escrow instructions together with the escrow holder's standard
instructions and any additional instructions required by the
escrow holder 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.
8. TITLE. Closing will be conditioned on the commitment of a
nationally recognized title company selected by Seller 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 be allowed until the expiration of the
"Inspection and Feasibility Study Period" for examination and the
making of any objections to marketability of title thereto, or
that an exception to title adversely affects the use of the
Property, said objections to be made in writing or deemed waived.
If any objections are so made, the Seller shall be allowed sixty
(60) days to make such title marketable or 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 make title marketable, 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. Seller will pay the deed stamp taxes, if any,
and one-half of escrow fees attributable to the closing services
for this transaction, and any brokerage commissions payable to
Jim Stewart, Realtors only. Seller shall pay for the cost of
issuing the title policy. Buyer will pay all recording fees, one-
half of the escrow fees, the costs of an update to the Survey in
Seller's possession (if an update is required by Buyer). Each
party will pay its own attorneys' fees and costs to document and
close this transaction.
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. Responsibility
for real estate taxes and special assessments shall be prorated
as of the date of closing based upon the most recently available
tax bill with no readjustment for the taxes due for the year in
which closing shall occur. 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.
11. SELLER'S REPRESENTATION AND AGREEMENTS.
Seller represents and warrants as of this date that:
(i) The Property is not subject to any leases.
(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.
(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 special 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.
(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 (First, and if made, the
final Payments) heretofore paid by the Buyer. Seller shall
retain all remedies available to Seller at law or in equity.
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 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 thirty (30) 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 thirty (30) days from the date this agreement is
signed by Seller. The Buyer may terminate this Agreement
within said thirty (30) day period and receive a full refund
of the Earnest 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 provide Buyer the most recent inspection in
Seller's possession performed on the Property by Kizer
Inspection Service on February 18, 1999.
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. Other than Jim Stewart,
Realtors, whose six percent (6%) commission is to be paid solely
by Seller, 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 fifteenth 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:
AEI Real Estate Fund XV Limited Partnerships
AEI Real Estate Fund XVI Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
Tom Salome
c\o Brad Davis, CCIM
Jim Stewart, Realtors
500 North Valley Mills Drive
Waco, TX 76710
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 along with the Option Consideration, 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; if
not accepted by Seller, Escrowee shall immediately return the
First Payment to Buyer and Seller shall refund the Option
Consideration directly to Buyer.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER:
Tom Salome
By: /s/ Tom Salome
Its:
SELLER:
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP, a Delaware
limited partnership.
By: AEI Fund Management 86-A, Inc., its corporate general
partner
By: /s/ Mark E Larson
Its: Chief Financial Officer
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP, a Minnesota
limited partnership.
By: AEI Fund Management XVI, Inc., its corporate general
partner
By: /s/ Mark E Larson
Its: 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 2/19/99, 1999, 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 McLennan
County, Texas, 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 Insurance Company
By: /s/ Mary Furgason
EXHIBITA "A"
Legal Description
Lot 3, Block 1 of the Skaggs Addition Part 2 to the City of Waco,
McLennan County, Texas, Plat Recorded in Volume 1296, Page 678 of
the McLennan County, Texas Deed Records.