ASSIGNMENT AND ASSUMPTION
OF
PURCHASE AND SALE AGREEMENT
THIS ASSIGNMENT made and entered into effective as of
this 12th day of January, 2007, by and between AEI FUND
MANAGEMENT, INC., a Minnesota corporation, ("Assignor") and
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP, a Minnesota
limited partnership, whose corporate general partner is AEI
Fund Management XXI, Inc., a Minnesota corporation, and AEI
INCOME & GROWTH FUND 24 LLC, a Delaware limited liability
company, whose corporate managing member is AEI Fund
Management XXI, Inc., a Minnesota corporation (as tenants in
common, together collectively referred to as "Assignee");
WITNESSETH, that:
WHEREAS, on the 4th day of December, 2006, Assignor
entered into an Purchase and Sale Agreement, as subsequently
amended (hereinafter together collectively referred to as the
"Agreement") for that certain property located at 4460 32nd
Avenue South, Grand Forks, North Dakota, which is more
particularly described within the Agreement, (the "Property")
with CDK Associates LLC, a South Dakota limited liability
company, as Seller; and
WHEREAS, Assignor desires to assign its right, title and
interest in and to the Agreement regarding the Property to AEI
Income & Growth Fund XXII Limited Partnership, an undivided
fifty percent (50.0%) interest as a tenant in common, and AEI
Income & Growth Fund 24 LLC, an undivided fifty percent
(50.0%) as a tenant in common, and Assignee desires to assume
all of Assignor's rights, title and interest in, to and under
the Agreement regarding the Property 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 regarding the Property 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 regarding the
Property 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.,
a Minnesota corporation
By: /s/ Robert P Johnson
Name: Robert P Johnson
Title: President
ASSIGNEE:
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: AEI Fund Management XXI, Inc.,
a Minnesota corporation, its General Partner
By: /s/ Robert P Johnson
Name: Robert P Johnson
Title: President
AEI INCOME & GROWTH FUND 24 LLC,
a Delaware limited liability company
By: AEI Fund Management XXI, Inc.,
a Minnesota corporation, its Managing Member
By: /s/ Robert P Johnson
Name: Robert P Johnson
Title: President
PURCHASE AGREEMENT
This PURCHASE AGREEMENT ("Agreement") is made and entered
into as of the Effective Date, as hereinafter defined, by and
between CDK Associates LLC, a South Dakota limited liability
company (the "Seller"), and AEI Fund Management Inc., a
Minnesota corporation, or its successors and assigns (the
"Buyer"). This Agreement shall be effective as of the last
party's execution hereof (the "Effective Date").
RECITALS:
A. Seller desires to sell the Property, as further
described below, to Buyer and Buyer desires to
purchase the Property, as described below, in
accordance with the terms and conditions as
hereinafter set forth.
B. Seller leases the Property to Tractor Supply
Company pursuant to that certain lease dated
December 29, 2004, by and between Seller, as lessor,
and Tractor Supply Company, as lessee (the
"Tenant").
C. In accordance with the terms and conditions set
forth in this Agreement, Seller wishes to sell to
Buyer, and Buyer wishes to purchase from Seller, all
of Seller's right, title and interest in, to and
under the Property, the building, fixtures and
improvements thereon and any personal or intangible
property related thereto.
NOW, THEREFORE, the parties do hereby agree as follows:
1. DESCRIPTION:
Seller is the owner of all right, title and interest
in and all the property located at 4460 32nd Avenue
South, City of Grand Forks, County of Grand Forks,
State of North Dakota; and more particularly
described as follows:
Lot 1, Block 1, Johnson's West First
Addition,
City of Grand Forks, Grand Forks
County, North Dakota
The conveyance shall include all easements, rights,
and appurtenances thereto, all improvements,
fixtures, personal property and intangible property
relating to or now or hereafter located thereon and
all of Seller's right, title and interest in and to
any streets, roadways, alleys, sidewalks, both
public and private, adjacent to the above real
estate (hereinafter collectively referred to as the
"Property").
2. PURCHASE PRICE:
The Purchase Price for the Property is Two Million
Seven Hundred Sixty-Six Thousand and No/100 Dollars
($2,766,000); payable as follows:
A. Within five (5) days after the Effective Date
of this Agreement, Buyer shall deposit Twenty-Five Thousand
Dollars ($25,000) (the "Earnest Money") in an interest bearing
account with First American Title Insurance Company, 1900
Midwest Plaza West, 801 Nicollet Mall, Minneapolis, MN (the
"Closing Agent" or "Title Company"), which shall be held in
trust pending the closing of the transaction contemplated by
this Agreement.
If for any reason this Agreement is terminated prior
to the expiration of the Due Diligence Period, then the
Earnest Money and any interest accrued thereon shall be
immediately returned to Buyer. If the transaction
contemplated hereby proceeds to closing, the Earnest Money
shall be paid to Seller at closing and Buyer shall receive a
credit against the Purchase Price payable hereunder in the
amount of the Earnest Money plus interest accrued thereon. If
the Buyer does not terminate this Agreement as expressly
allowed hereunder, the Earnest Money shall thereafter be
deemed non-refundable, except to the extent any of the
contingencies to Buyer's performance hereunder (including
without limitation, Seller's performance of its obligations
hereunder) shall not be satisfied.
B. The balance of the Purchase Price in cash is to
be deposited by Buyer into an escrow account with the Closing
Agent on or before the Closing Date (as defined below).
3. DUE DILIGENCE, CLOSING, DISPOSITION OF EARNEST
MONEY:
A. Subject to the terms provided below, Buyer
shall have until no later than forty-five (45) days after the
Document Delivery Date (as defined below) (but not less than
thirty (30) days after Buyer's actual receipt of any
information or documents that Buyer shall undertake to update
as further set forth in to this Agreement) to conduct its due
diligence of the Property (the "Due Diligence Period").
B. The parties hereto may extend the Due
Diligence Period by written agreement.
C. If Buyer does not send Seller notification of
Buyer's satisfaction of its due diligence contingency by 11:59
p.m. CST of the last date of the Due Diligence Period, as such
may be extended under the terms of this Agreement, then this
Agreement shall expire and have no further force and effect;
and all Earnest Money, including any interest accrued thereon,
shall be returned to Buyer.
In the event Buyer does give notice of satisfaction
of its due diligence contingency, then the closing date of the
Property shall occur no later than ten (10) days after Buyer
has provided Seller with notice of satisfaction of Buyer's due
diligence contingency (the "Closing Date"), provided no
materially adverse change to the Property Documents has
occurred. If a materially adverse change to the Property
Documents has occurred, Buyer shall be allowed five (5)
business days to review and approve such changes or to
terminate this Agreement, and upon such termination, receive
immediate return of the Earnest Money together with interest
thereon.
Furthermore, in the event closing does not occur on
or before January 15, 2007, Buyer shall have the option to
either (a) terminate this Agreement by providing Seller with
thirty (30) days written notice, at which the Earnest Money
and any interest accrued thereon shall be immediately be
returned to Buyer or (b) reduce the purchase price
corresponding to a reduction in the cap rate of 5 basis
points.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER:
Seller does hereby covenant, warrant and represent
to Buyer as follows:
A. Seller has and will convey good, marketable,
insurable title to the Property of record, free and clear of
all liens, encumbrances, leases, claims, and charges; all
easements, rights-of-way, covenants, conditions and
restrictions; and any other matters affecting title thereto,
except for such matters as are approved or Buyer's objections
thereto are waived by Buyer in writing (the "Permitted
Encumbrances").
B. To the best of Seller's knowledge and belief,
the conveyance of the Property pursuant hereto will not
violate any applicable statute, conditional use, variance,
ordinance, governmental restriction or regulation, or any
private restriction or agreement.
C. The Property is benefited by direct access to a
publicly dedicated street or road and other adjacent right of
ways and shall be conveyed as a separate legal and tax parcel
(the "Legal Parcel").
D. There is no litigation pending, or to the best
of Seller's knowledge, investigation, condemnation or
proceeding of any kind threatened against the Seller, which
may have a material adverse effect upon the Property.
E. Seller is not a "foreign person" (as defined in
section 1445(f)(3) of the Internal Revenue Code and
regulations issued thereunder).
F. Neither Seller nor, to the best of Seller's
knowledge, any of Seller's members, are an entity or person:
(i) that is listed in the Annex to, or is otherwise subject to
the provisions of Executive Order 13224 issued on
September 24, 2001 ("EO13224"); ii) whose name appears on the
United States Treasury Department's Office of Foreign Assets
Control ("OFAC") most current list of "Specifically Designated
National and Blocked Persons" (which list may be published
from time to time in various mediums including, but not
limited to, the OFAC website,
(http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf)
; (iii) who commits, threatens to commit or supports
"terrorism," as that term is defined in EO13224; (iv) is
subject to sanctions of the United States government or is in
violation of any federal, state, municipal or local laws,
statutes, codes, ordinances, orders, decrees, rules or
regulations relating to terrorism or money laundering,
including, without limitation, EO13224 and the Uniting and
Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001; or (v) who is
otherwise affiliated with any entity or person listed above
(any and all parties or persons described in subsections (i) -
(v) above are herein referred to as a "Prohibited Person").
Neither Seller nor its members shall knowingly: (A) conduct
any business, nor engage in any transaction or dealing, with
any Prohibited Person, including, but not limited to, the
making or receiving of any contribution of funds, goods, or
services, to or for the benefit of a Prohibited Person; or
(B) engage in or conspire to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding,
or attempts to violate, any of the prohibitions set forth in
EO13224;
G. Seller is not aware of any private covenant or
restriction that would prohibit or adversely impact the
development or operation of the Property.
H. To the best of Seller's knowledge, Seller
represents that there are no underground tanks, basements,
foundations, wells, cisterns, or other underground structures
or debris of any nature on the Property. Seller further
represents that the Property is not located in a designated
flood plain, nor does the Property contain any wetlands.
I. Seller has the requisite power and authority to
enter into and perform this Agreement and those Seller's
Closing Documents to be signed by it.
J. The Improvements (including, but not limited
to, the utilities, mechanical systems, roof, foundation and
walls), to the best of Seller's knowledge, are in sound
condition and in good working order as of the Effective Date
hereof. Seller shall further have the on-going obligation up
through the Closing Date to inform Buyer in writing of any
defect in the Improvements that occur between the Effective
Date of this Agreement and the Closing Date. Seller's written
notice to Buyer of any defect in the Improvements shall be
considered for purposes herein to be an adverse change in the
Property Documents.
K. To Seller's knowledge, Seller has disclosed to
Buyer all information relating to the Property that could
reasonably be expected to have a material adverse effect on
the Property.
If the Seller subsequently becomes aware of the fact that
any of the representations and warranties made herein is no
longer accurate, then the Seller shall immediately disclose
same in writing to the Buyer. Seller's written notice to
Buyer of any inaccuracy in the representations and warranties
made herein shall be considered to be an adverse change to the
Property Documents. Each of the warranties and
representations contained in this Section and other Sections
of this Agreement shall be deemed made as of the date of this
Agreement and again as of the Closing Date.
Seller shall indemnify Buyer, its successors and assigns,
against, and shall hold Buyer, its successors and assigns,
harmless from, any costs, expenses or damages of any kind or
nature, including reasonable attorneys' fees, which Buyer may
incur because of any breach of any of the representations and
warranties herein contained, whether incurred prior to or
after the Closing Date. All warranties, representations and
indemnifications contained in this Agreement shall survive
Closing.
5. ENVIRONMENTAL LAWS:
A. Seller represents and warrants, to the best of
Seller's knowledge, that no toxic or hazardous substances or
wastes, pollutants or contaminants (including, without
limitation, asbestos, urea formaldehyde, the group of organic
compounds known as polychlorinated biphenyls, petroleum
products including gasoline, fuel oil, crude oil and various
constituents of such products, or any hazardous substance as
defined in the Comprehensive Environmental Response
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
9601-9657, as amended) ("Hazardous Materials") have been
generated, treated, stored, released or disposed of, or
otherwise placed, deposited in or located on the Property by
Seller or by any lessee, agent, employee, licensee or invitee
of Seller nor has any activity been undertaken on the Property
by Seller or by any lessee, agent, employee, licensee or
invitee of Seller that would cause or contribute to (a) the
Property to become a treatment, storage or disposal facility
within the meaning of, or otherwise bring the Property within
the ambit of, the Resource Conservation and Recovery Act of
1976 ("RCRA"), 42 U.S.C. 6901 et seq., or any similar state
law or local ordinance, (b) a release or threatened release of
toxic or hazardous wastes or substances, pollutants or
contaminants, from the Property within the meaning of, or
otherwise bring the Property within the ambit of, CERCLA, or
any similar state law or local ordinance, or (c) the discharge
of pollutants or effluents into any water source or system,
the dredging or filling of any waters or the discharge into
the air of any emissions, that would require a permit under
the Federal Water Pollution Control Act, 33 U.S. C. 1251 et
seq., or the Clean Air Act, 42 U.S.C., 7401 et seq., or any
similar state law or local ordinance. To the best knowledge
of Seller after due inquiry by Seller, neither Seller nor any
lessee, agent, employee, licensee or invitee of Seller has
introduced any substances or conditions in or on the Property
that may support a claim or cause of action under RCRA, CERCLA
or any other federal, state or local environmental statutes,
regulations, ordinances or other environmental regulatory
requirements. To the best knowledge of Seller after due
inquiry by Seller, no above ground or underground tanks, are
located in or about the Property or have been located under,
in or about the Property and have subsequently been removed or
filled.
Seller further warrants that Seller has not been
informed, advised or notified, of any Hazardous Materials
including the use of above or underground storage tanks on,
under or about the Property.
B. In the event that Hazardous Materials as
defined herein are found or suspected to be present on the
Property, or other circumstances as set forth in the preceding
section exist, then Buyer may terminate this Agreement. If
Buyer does not elect to terminate, then Seller shall remove or
otherwise remediate any Hazardous Materials on or under the
Property and/or rectify any other condition set forth in the
preceding section to Buyer's satisfaction within thirty (30)
days after receipt of notice from Buyer that the contingencies
have been satisfied. The Closing shall be delayed for the
period necessary for Seller to comply with the terms of this
section.
6. OBLIGATIONS OF SELLER PRIOR TO CLOSING:
Seller shall deliver to Buyer, at Seller's sole cost
and expense, the following documents:
A. Property Documents. Within five (5) business
days of the Effective Date ("Document Delivery Date"), Seller
shall deliver or cause to be delivered to Buyer the following:
a) Copies of Seller's existing Owner's Title Policy, or
Abstract, for the Property, with copies of its underlying
documents, if in Seller's possession;
b) A complete copy of the Lease and any amendments thereto,
including but not limited to amendments, assignments and
assumption of lease, and/or letter agreements, commencement
agreement, memorandum of lease, project acceptance letter
(wherein Tenant accepts possession of the property, if Tenant
shall have issued the same or similar), guaranties of the
lease, if any, and the most recent tenant estoppel currently
in Seller's possession;
c) If in Seller's possession, any zoning information
concerning the current zoning of the Property;
d) A copy of the soils report, if in Seller's possession;
e) Copies of the existing final building plans and
specifications for the improvements and copies of any evidence
that Landlord has delivered and Tenant has approved such;
f) A copy of an MAI appraisal, if in Seller's possession;
g) A copy of the most recent real estate tax statement for
the Property;
h) Copies of any and all certificates, permits, licenses and
other authorizations of any governmental body or authority
which are necessary to permit the use and occupancy of the
Improvements;
i) Copies of any and all warranties respecting construction
of the improvements, including but not limited to the roof,
HVAC system, structural, plumbing or electrical that have not
expired by their terms, and assignments thereof to Tenant,
issued to or required to be provided to Tenant as designated
in the Lease, if any. Buyer will require any and all
warranties, which have not expired and have not been
transferred to Tenant, to be transferred to Buyer on the
Closing Date. In the event the warranties are unable to be
transferred to Buyer on the Closing Date, Seller shall provide
Buyer with a letter of undertaking wherein Seller agrees, at
Seller's expense, to transfer the warranties in Buyer's name
or to obtain consents to the transfer of warranties, if such
transfer is not allowed;
j) A copy of the Certificate of Occupancy from the governing
municipality;
k) A copy of the existing store sales of the Property for
the last six months, and if currently in Seller's possession,
the store sales numbers for the last three years, or the
number of years the store has been open if less than three
years; and
l) A rent accounting for the last twelve (12) months showing
when Seller received each check from Tenant or the number of
months the lease has been in effect if less than twelve (12)
months.
Seller shall provide Buyer with any and all updates to the
Property Documents and any other information regarding the
Property that may become available prior to the Closing Date.
B. Title, Survey, and Environmental. Within
fifteen (15) days after the Effective Date:
m) A commitment for an ALTA Owner's Policy of Title
Insurance (most recent edition) from the Closing Agent (the
"Title Company") insuring marketable title in the Property,
subject only to such matters as Buyer may approve and contain
such endorsements as Buyer may require that are available for
a property in North Dakota, including extended coverage and
owner's comprehensive coverage (the "Updated Title
Commitment"). The Updated Title Commitment shall show Seller
as the present fee owner of the Property and show Buyer as the
fee owner to be insured.
The Updated Title Commitment shall also include:
1. an itemization of all outstanding and pending special
assessments and an itemization of taxes affecting the Property
and the tax year to which they relate;
2. shall state whether taxes are current and if not, show
the amounts unpaid;
3. the tax parcel identification numbers and whether the
tax parcel includes property other than the Property to be
purchased.
All easements, restrictions, documents and other
items affecting title shall be listed in
Schedule "B" of the Title Commitment. Copies of
all documents referred to in the Updated Title
Commitment (the "Updated Title Commitment
Documents") must be attached to the Updated
Title Commitment.
n) Copy of the Seller's existing as-built ALTA survey or
existing boundary ALTA survey of the Property. If Buyer
shall desire to do so, at its own expense, Buyer shall within
five (5) business days after receipt of Seller's survey, order
an updated ALTA survey. Buyer shall have until the end of the
Due Diligence Period to review and approve the updated ALTA
survey (the "Updated Survey");
o) Copy of any Phase I environmental report completed for
the Seller for the Property. Buyer shall, at its sole
expense, be responsible for obtaining an updated Phase I
environmental report and shall have until the end of the Due
Diligence Period to review and approve of the same (the
"Updated Phase I Report");
C. Buyer shall be allowed up to the latter of the
end of the Due Diligence Period or thirty (30) days after
receipt of the Updated Title Commitment and Updated Title
Commitment Documents, Updated Phase I Report and Updated
Survey (and five (5) business days from receipt of any
subsequent update or endorsement to the Updated Title
Commitment occurring after the date of the Updated Title
Commitment to be delivered by Seller adding new or additional
requirements or exceptions thereto) to make any objections, in
Buyer's sole discretion, to the Title Commitment or matters
not previously reflected on the ALTA Survey or Phase I
Environmental Report of previous date supplied by Seller.
Objections are to be made in writing or are to be deemed to be
waived.
If any objections are made, Seller shall be allowed
thirty (30) days to correct such objections. In the event
Seller is unable to cure such objections within this period,
Buyer shall have the option to either (1) acquire the Property
subject to such objections, lien, encumbrance or other title
defect at Buyer's discretion, with a right to deduct from the
Purchase Price amounts required to clear any title defects; or
(2) rescind this Agreement, in which latter event the Earnest
Money herein paid, together with all interest earned thereon,
shall be immediately refunded to Buyer.
D. Closing Documents. At least seven (7) days
prior to the end of the Due Diligence Period, Seller shall, at
its sole expense, provide to Buyer the following documents,
and Seller and Buyer shall agree, prior to the end of the Due
Diligence Period, on the form of the following documents to be
delivered to Buyer on the Closing Date by Seller as set forth
in Section 9 hereof:
(a) Limited or special warranty deed;
(b) Seller's Affidavit;
(c) FIRPTA Affidavit;
(d) Assignment and Assumption of the Lease in the form
attached hereto and incorporated herein as Exhibit "A";
(e) A generic Assignment of warranties in the form as
attached hereto and incorporated herein as Exhibit "B"; and
(f) A tenant estoppel certificate substantially in the form
(if any) as contemplated by the Lease that shall include
confirmation that tenant pays real estate taxes based upon
what is assessed during the lease year or is due and payable
during the lease year. If the form of Tenant estoppel
certificate is not prescribed by the Lease and Buyer submits
to Seller the form of estoppel certificate (as the case may
be) preferred by Buyer or required by Buyer's Lender (if any)
prior to the expiration of the Due Diligence Period, Seller
will submit such form of estoppel certificate to Tenant.
In the event that Seller and Buyer do not reach mutual
agreement on the form of the above described documents (a)
through (f) prior to the end of the Due Diligence Period, this
Agreement may be terminated by either Seller or Buyer and the
Earnest Money and accrued interest shall be returned in full
to the Buyer immediately and neither party shall have any
further duties or obligations to the other hereunder.
7. EXAMINATION OF PROPERTY:
It is expressly understood by Seller that, during
the term of this Agreement, Buyer intends to undertake
preliminary investigation for the development of the Property,
as follows:
A. From and after the date hereof, Buyer, and its
representatives, shall have the right to enter upon the
Property for the purpose of surveying, conducting soil tests
thereon, and making such other physical inspection thereof as
Buyer deems necessary or appropriate; provided, however, that
in the course of such activities, Buyer shall make no visible
improvements to or changes in the property prior to the
Closing Date, and shall repair any damage or disturbance
caused by Buyer's activities. Any inspection of Buyer
pursuant to this section shall not be construed so as to waive
or limit any of Buyer's rights or remedies hereunder.
B. Buyer hereby agrees to hold Seller harmless
from liabilities that may arise out of Buyer's presence on the
Property prior to the Closing Date.
8. TAXES, PRORATIONS AND CLOSING COSTS:
A. Real Estate Taxes and Assessments. On or
before the Closing Date, Seller shall pay all real estate
taxes and installments of special assessments payable in all
years prior to the year of Closing. All real estate taxes for
due and payable in the year of Closing shall be prorated as of
the Closing Date.
Seller shall pay all special assessments if levied
or pending as of the Closing Date including all installments
of special assessments for the year of Closing or subsequent
years. For purposes of this Agreement, a "pending" special
assessment means any work or project which, as of the Closing
Date, has been directed or authorized by any governmental
authority, the cost of which will be, but has not yet been
certified to and included in the real property taxes payable
with respect to the Property. "Special assessments" does not
include the general tax levy of Special Improvement Districts
which shall be treated as real estate taxes.
Seller represents to Buyer that to the best of its
knowledge, all real estate taxes and installments of special
assessments due and payable prior to and in the year of
Closing on or before the Closing Date have been or will be
paid in full as of the Closing Date. It is understood between
Seller and Buyer that all unpaid levied and pending special
assessments payable in the year of Closing are paid by the
Tenant and shall be the responsibility of the Tenant under the
Lease after the Closing Date. Seller further represents to
Buyer that Tenant shall pay a pro-rata share of all real
estate taxes and installments of special assessments due and
payable in the year of Closing.
In the event Tenant does not pay any special
assessments or real estate taxes that are the responsibility
of the Tenant under the Lease, Seller and Buyer agreed to each
pay its prorata share of said assessments or taxes as of the
Closing Date.
The provisions of this paragraph 8 shall survive Closing.
B. Prorations. The Buyer and the Seller, as of
the Closing Date, shall prorate: (i) all rent due under the
Lease, if any, (ii) ad valorem taxes, personal property taxes,
charges or assignments affecting the Property (on a calendar
year basis), (iii) utility charges, including charges for
water, gas, electricity, and sewer, if any, (iv) other
expenses relating to the Property which have accrued but not
paid as of the Closing Date, based upon the most current
ascertainable tax bill and other relevant billing information,
including any charges arising under any of the encumbrances to
the Property. (Provided, however, no adjustments shall be
made at closing for items payable by the tenant, or payable
between the parties hereto thereafter, unless the tenant
ultimately does not pay the same.) To the extent that
information for any such proration is not available on the
Closing Date or if the actual amount of such taxes, charges or
expenses differs from the amount used in the prorations at
closing, then the parties shall make any adjustments necessary
so that the prorations at closing are adjusted based upon the
actual amount of such taxes, charges or expenses. The parties
agree to make such reprorations as soon as possible after the
actual amount of real estate taxes, charges or expenses
prorated at closing becomes available. In the event Tenant
does not pay any expenses that are the responsibility of the
Tenant under the Lease, Seller and Buyer agreed to each pay
its prorata share of said assessments or taxes as of the
Closing Date. This provision and the respective obligations
of the parties shall survive Closing.
C. Closing Costs. Seller and Buyer shall pay one-
half of the following costs of closing, including, but not
limited to, all escrow fees of Buyer and Seller.
Seller shall pay the following costs: any and all
brokerage commissions owed by Seller to Duemelands Commercial
LLLP, any and all costs associated with the updated title
commitment/search, all costs associated with the Owner's Title
policy premium, any and all costs associated with recording of
the Deed and Assignment and Assumption of Lease, as well as
any costs associated with any document(s) or instrument(s)
necessary to cure any title objections raised by Buyer, the
transfer taxes (state, county and municipality, if such is
required) and/or transfer fees.
Buyer shall pay any and all costs associated with
any special endorsements it may require on its Owner's Title
Policy, except the costs associated with any endorsement
required to cure Buyer's objection to the existing matters of
title or survey..
Each party will pay its own attorneys' fees to close this
transaction.
E. Any escrow closing fee shall be paid equally by
Buyer and Seller. Seller shall pay the premium for the Title
Policy in favor of Buyer in the amount of the Purchase Price
issued at or after the Closing by the Title Company. Each
party shall pay its attorneys' fees.
9. OBLIGATIONS OF SELLER AT CLOSING:
At Closing and subject to the full performance by
Buyer under this Agreement, Seller shall deposit into escrow
with the Closing Agent, with a simultaneous copy to Buyer, the
following documents on or before the Closing Date:
A. A limited or special warranty deed conveying
title to the Property to Buyer, in form and substance as
agreed to between Seller and Buyer during the Due Diligence
Period, conveying good and marketable (as required by this
Agreement) fee title thereto, subject to the Permitted
Exceptions;
B. Seller's counterpart to the Assignment and
Assumption of the Lease, in form and substance as Exhibit "A"
attached hereto, accompanied by the original Lease and
originals of any and all documentation modifying the Lease,
including but not limited to, assignments, amendments,
commencement agreement, memorandum of lease, letter
agreements, and guaranty of the lease, if any;
C. Seller's corporate documentation wherein
Seller's authority and authorization to enter into this
Agreement and the transactions contemplated hereby, and such
proof of the power and authority of the individual(s)
executing or delivering any instruments, documents or
certificates on behalf of Seller to act for and bind Seller as
may be reasonably required by Title Company, Buyer, or both;
E. Affidavit of Seller, in form and substance as
agreed to between Seller and Buyer during the Due Diligence
Period;
F. FIRPTA Affidavit, in form and substance as
agreed to between Seller and Buyer during the Due Diligence
Period;
G. Any and all documentation required by the
Closing Agent and/or Title Company or by the terms of this
Agreement so that the title insurer may issue the title policy
described in this Agreement;
H. Notice of Sale to Tenant;
..
I. Tenant's Certificate of Insurance naming Buyer
as additional insured and/or loss payee, as required by the
Lease;
J. A letter from Seller to Buyer wherein the
Seller itemizes (in percentages totaling 100%), the following
percentages of costs of the Premises: land acquisition, soft
costs, building construction, and site work (this assists
Buyer in allocating the Property onto its books at Closing);
K. Seller's executed counterpart to the Assignment
of warranties in the form as attached hereto and incorporated
herein as Exhibit "B", including copies of all warranties, and
assignments thereof to Buyer and/or Lessee, issued to or
required to be provided to Lessee as designated in the Lease
and if required, Seller's Letter of Undertaking to complete at
Seller's expense the transfer of such warranties; and
L. At least three (3) business days prior to the
Closing Date, Seller shall deliver to Buyer an executed Tenant
Estoppel in form and substance as agreed to between Seller and
Buyer or as supplied by Buyer to Seller during the Due
Diligence Period;
10. OBLIGATIONS OF BUYER AT CLOSING:
Subject to the full, complete and timely performance by
Seller of its obligations hereof, Buyer shall deposit into
escrow with the Closing Agent, with a simultaneous copy to
Seller, the following documents on or before the Closing Date:
A. The balance of the purchase price in the manner
set forth herein and authorize the payment of the earnest
money to Seller.
B. Pay, or make satisfactory arrangements to pay, any sum
required to be paid by Buyer pursuant to any part of this
Agreement.
C. Buyer's counterpart to the Assignment and Assumption of
the Lease, in form and substance as Exhibit "A" attached
hereto; and
D. Buyer's counterpart to the Assignment of warranties in
the form as attached hereto and incorporated herein as Exhibit
"B".
11. REMEDIES:
A. If Buyer defaults on its obligations hereunder
and such default continues for a period of ten (10) days after
written notice, then the retention of the earnest money shall
be Seller's exclusive remedy hereunder and said monies shall
be deemed liquidated damages. The parties hereto agree that
such liquidated damages are not a penalty, but represent
actual damages Seller will sustain upon any default by Buyer,
which damages will be substantial but are extremely difficult
to ascertain.
B. In the event Seller defaults upon its
obligations hereunder and shall fail to consummate the sale of
the Property for any reason except the default of Buyer, and
such failure continues for a period of ten (10) days after
written notice, Buyer may terminate this Agreement and receive
return of its Earnest Money, or enforce specific performance
of this Agreement within six (6) months from the time such
cause of action arose and may bring suit for damages against
Seller, which damages shall include, but not be limited to,
all losses, liabilities, costs, and expenses (including
reasonable attorney's fees) incurred by Buyer.
12. NOTICES:
All notices, demands, requests, approvals or other
communications ("notices") required to be given or which may
be given hereunder shall be in writing and shall be given by
personal delivery with receipt acknowledged or by United
States registered or certified mail, return receipt requested,
postage prepaid, by Federal Express or other reputable
national overnight courier service or by facsimile
transmission, and shall be deemed given when received or
refused at the following addresses:
If to Seller: CDK Associates LLC
c/o Les Kinstad
PO Box 89925
117 South Main Avenue
Sioux Falls, SD 57109-9925
Email: lkinstad@legacysiouxfalls.com
Fax No: (605) 275-8833
Phone: (605) 336-7376
If to Buyer: AEI Fund Management, Inc.
Attn: George Rerat and Jenn Dingmann
1300 Wells Fargo Place
Saint Paul, Minnesota 55101
Email: jdingmann@aeifunds.com
Fax No: (651) 225-8144
Phone: (651) 227 - 7333
With a copy to:Michael B. Daugherty
Daugherty Law Firm
Suite 1300
30 East Seventh Street
Saint Paul, Minnesota 55101
Email: mbdlaw@usinternet.com
Fax No: (612) 677-3181
Phone: (612) 720-0777
All notices shall be deemed delivered either upon: (1) receipt
in case of personal service, or (2) mailing in case of U.S.
mail or certified mail, (3) deposit in the case of express
mail or (4) by facsimile upon transmission.
13. ASSIGNMENT:
The rights and obligations of Buyer hereunder may be
freely assigned by Buyer and Buyer shall provide Seller with
notice of the assignment. Seller shall notify Buyer of any
assignment of its interest herein, and such assignment shall
not relieve Seller of its obligations to perform hereunder.
14. TAX PLANNING:
Buyer or Seller may assign its interest herein to a
third party for purposes of effectuating a like-kind exchange
of real estate pursuant to Section 1031 of the Internal
Revenue Code. Seller and Buyer agree to cooperate and execute
documents as may be necessary for this purpose.
15. RISK OF LOSS:
Seller shall bear the risk of loss or damage to the
Property from all causes, other than the activities of Buyer,
until Closing. If, prior to Closing, all or any material part
of the Property is damaged by a fire or other casualty, or
condemnation proceedings are commenced or written notice of
such proceedings given, Seller shall promptly give Buyer
written notice of such damage or condemnation notice. Upon
delivery of such notice of damage or condemnation (from Seller
or otherwise), Buyer shall have the right to terminate this
Agreement by delivering written notice to Seller within ten
business days. If Buyer does not elect to terminate this
Agreement within such period, Seller shall convey the Property
to Buyer on the Closing date in its damaged condition, and
will assign to Buyer all of Seller's right, title and interest
in and to any claims Seller may have under insurance policies
covering the Property or under any condemnation awards.
16. MISCELLANEOUS:
A. This Agreement shall inure to the benefit of,
and be binding upon, the administrators, successors and
assigns of the parties hereto.
B. This Agreement shall not be construed more
strictly against one party than against the other, merely by
virtue of the fact that it may have been drafted or prepared
by counsel for one of the parties, it being recognized that
both Buyer and Seller have contributed substantially and
materially to the preparation of this Agreement.
C. The parties agree to execute mutually and
deliver to each other, at closing, such other and further
documents as may be reasonable required by counsel for the
parties or title insurer, to carry into effect the purposes
and intents of this Agreement.
D. This offer to purchase expires at 5:00 p.m. CT
on the fifth (5th) business day after execution by Buyer
unless this Agreement is fully executed by Seller.
E. This is a final agreement between the parties
and supersedes all previous understandings and agreements,
oral or written, relative to the subject matter of this
Agreement. Any amendments or alterations to this Agreement
shall be made in writing and appended hereto.
F. This Agreement may be executed by facsimile or
in multiple counterparts, each of which shall be deemed to be
an original, but all of which, together, shall constitute one
and the same instrument.
G. This agreement shall be deemed to have been
made in North Dakota and shall be construed in accordance with
the laws of the State of North Dakota.
H. Unless otherwise expressly stated, all time
periods referred to herein shall be deemed to mean calendar
days. In the event any date for performance by either party
of any obligation hereunder required to be performed by such
party falls on a Saturday, Sunday or holiday recognized by the
federal government or the State of North Dakota, the time for
performance of such matter shall be deemed extended until the
next business day immediately following such date.
17. REAL ESTATE BROKERS:
In this transaction, Duemelands Commercial LLLP, is
the only real estate broker and is a facilitating transaction
broker and does not represent either the Buyer or the Seller.
Each party shall hold the other harmless from any claims by
any other broker for compensation in connection with this
transaction.
Seller shall pay a commission fee equal to 1.5% of
total sale price, plus any required state sales tax, to the
procuring broker, Duemelands Commercial LLLP.
The parties have caused these presents to be executed as of
the day and year written below.
SELLER: CDK ASSOCIATES LLC
By: /s/ Lester A Kinstad
Name: Lester A Kinstad
Its: Managing Member
Dated: December 4, 2006
BUYER: AEI FUND MANAGEMENT, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, President
Dated: November 29, 2006