-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OpXLcM8EDpm8Ml95qoyPo4n/UumOsBIxet3p03jEN7upXvWbi2qppcg133DUfn+M lxseLjq3tMZlPrsgIHgV1g== 0000793631-98-000037.txt : 19981111 0000793631-98-000037.hdr.sgml : 19981111 ACCESSION NUMBER: 0000793631-98-000037 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEI INCOME & GROWTH FUND XXII LTD PARTNERSHIP CENTRAL INDEX KEY: 0001023458 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 411848181 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24003 FILM NUMBER: 98741729 BUSINESS ADDRESS: STREET 1: 1300 MINNESOTA WORLD TRADE CENTER STREET 2: 30 EAST SEVENTH ST CITY: ST PAUL STATE: MN ZIP: 55101 BUSINESS PHONE: 6122277333 MAIL ADDRESS: STREET 1: 1300 MINNESOTA WORLD TRADE CENTER STREET 2: 30 SEVENTH ST EAST CITY: ST PAUL STATE: MN ZIP: 55101 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the Quarter Ended: September 30, 1998 Commission file number: 333-5604 AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP (Exact Name of Small Business Issuer as Specified in its Charter) State of Minnesota 41-1848181 (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1300 Minnesota World Trade Center, St. Paul, Minnesota 55101 (Address of Principal Executive Offices) (651) 227-7333 (Issuer's telephone number) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No Transitional Small Business Disclosure Format: Yes No [X] AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP INDEX PART I. Financial Information Item 1. Balance Sheet as of September 30, 1998 and December 31, 1997 Statements for the Periods ended September 30, 1998 and 1997: Operations Cash Flows Changes in Partners' Capital Notes to Financial Statements Item 2. Management's Discussion and Analysis PART II. Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP BALANCE SHEET SEPTEMBER 30, 1998 AND DECEMBER 31, 1997 ASSETS 1998 1997 CURRENT ASSETS: Cash and Cash Equivalents $10,150,301 $ 5,808,792 Receivables 24,977 0 ----------- ----------- Total Current Assets 10,175,278 5,808,792 ----------- ----------- INVESTMENTS IN REAL ESTATE: Land 720,747 295,020 Buildings and Equipment 373,124 373,124 Construction in Progress 85,368 0 Property Acquisition Costs 353,744 93,860 Accumulated Depreciation (12,686) (668) ----------- ----------- Net Investments in Real Estate 1,520,297 761,336 ----------- ----------- Total Assets $11,695,575 $ 6,570,128 =========== =========== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Payable to AEI Fund Management, Inc. $ 152,986 $ 161,446 Distributions Payable 228,024 100,335 Unearned Rent 5,637 0 ----------- ----------- Total Current Liabilities 386,647 261,781 ----------- ----------- PARTNERS' CAPITAL (DEFICIT): General Partners (15,997) (4,970) Limited Partners, $1,000 Unit Value; 24,000 Units authorized; 13,948 and 7,656 Units issued and outstanding in 1998 and 1997, respectively 11,324,925 6,313,317 ----------- ----------- Total Partners' Capital 11,308,928 6,308,347 ----------- ----------- Total Liabilities and Partners' Capital $11,695,575 $ 6,570,128 =========== =========== The accompanying notes to financial statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP STATEMENT OF OPERATIONS FOR THE PERIODS ENDED SEPTEMBER 30 (Unaudited) Three Months Ended Nine Months Ended 9/30/98 9/30/97 9/30/98 9/30/97 INCOME: Rent $ 39,918 $ 0 $ 74,463 $ 0 Investment Income 118,024 34,835 315,280 49,053 --------- --------- --------- --------- Total Income 157,942 34,835 389,743 49,053 --------- --------- --------- --------- EXPENSES: Partnership Administration - Affiliates 50,591 42,707 158,561 92,272 Partnership Administration and Property Management - Unrelated Parties 1,020 164 12,056 249 Depreciation 4,006 0 12,018 0 --------- --------- --------- --------- Total Expenses 55,617 42,871 182,635 92,521 --------- --------- --------- --------- NET INCOME (LOSS) $ 102,325 $ (8,036) $ 207,108 $ (43,468) ========= ========= ========= ========= NET INCOME (LOSS) ALLOCATED: General Partners $ 3,069 $ (81) $ 6,213 $ (435) Limited Partners 99,256 (7,955) 200,895 (43,033) --------- --------- --------- --------- $ 102,325 $ (8,036) $ 207,108 $ (43,468) ========= ========= ========= ========= NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT (12,894, 3,024, 10,665 and 2,545 weighted average Units outstanding for the periods, respectively) $ 7.70 $ (2.63) $ 18.84 $ (16.91) ========= ========= ========= ========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED SEPTEMBER 30 (Unaudited) 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ 207,108 $ (43,468) Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 12,018 0 Increase in Receivables (24,977) 0 Increase (Decrease) in Payable to AEI Fund Management, Inc. (8,460) 92,036 Increase in Unearned Rent 5,637 0 ----------- ----------- Total Adjustments (15,782) 92,036 ----------- ----------- Net Cash Provided By Operating Activities 191,326 48,568 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in Real Estate (770,979) (54,895) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Capital Contributions from Limited Partners 6,292,182 4,596,787 Organization and Syndication Costs (924,018) (689,518) Increase in Distributions Payable 127,689 50,705 Distributions to Partners (574,691) (74,504) ----------- ----------- Net Cash Provided By Financing Activities 4,921,162 3,883,470 ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 4,341,509 3,877,143 CASH AND CASH EQUIVALENTS, beginning of period 5,808,792 943 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $10,150,301 $ 3,878,086 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL FOR THE PERIODS ENDED SEPTEMBER 30 (Unaudited) Limited Partnership General Limited Units Partners Partners Total Outstanding BALANCE, December 31, 1996 $ 643 $ 0 $ 643 0 Capital Contributions 0 4,596,787 4,596,787 4,596.79 Organization and Syndication Costs (60) (689,458) (689,518) Distributions (1,181) (73,323) (74,504) Net Loss (435) (43,033) (43,468) --------- ----------- ----------- -------- BALANCE, September 30, 1997 $ (1,033) $ 3,790,973 $ 3,789,940 4,596.79 ========= =========== =========== ======== BALANCE, December 31, 1997 $ (4,970) $ 6,313,317 $ 6,308,347 7,656.00 Capital Contributions 0 6,292,182 6,292,182 6,292.18 Organization and Syndication Costs 0 (924,018) (924,018) Distributions (17,240) (557,451) (574,691) Net Income 6,213 200,895 207,108 --------- ----------- ----------- --------- BALANCE, September 30, 1998 $(15,997) $11,324,925 $11,308,928 13,948.18 ========= =========== =========== ========= The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 (Unaudited) (1) The condensed statements included herein have been prepared by the Partnership, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim period, on a basis consistent with the annual audited statements. The adjustments made to these condensed statements consist only of normal recurring adjustments. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the Partnership's latest annual report on Form 10-KSB. (2) Organization - AEI Income & Growth Fund XXII Limited Partnership (Partnership) was formed to acquire and lease commercial properties to operating tenants. The Partnership's operations are managed by AEI Fund Management XXI, Inc. (AFM), the Managing General Partner of the Partnership. Robert P. Johnson, the President and sole shareholder of AFM, serves as the Individual General Partner of the Partnership. An affiliate of AFM, AEI Fund Management, Inc., performs the administrative and operating functions for the Partnership. The terms of the Partnership offering call for a subscription price of $1,000 per Limited Partnership Unit, payable on acceptance of the offer. Under the terms of the Restated Limited Partnership Agreement, 24,000 Limited Partnership Units are available for subscription which, if fully subscribed, will result in contributed Limited Partners' capital of $24,000,000. The Partnership commenced operations on May 1, 1997 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. At September 30, 1998, 13,948.177 Units ($13,948,177) were subscribed and accepted by the Partnership. The General Partners have contributed capital of $1,000. The Managing General Partner has extended the offering of Units to the earlier of completion of sale of all Units or January 9, 1999. During the operation of the Partnership, any Net Cash Flow, as defined, which the General Partners determine to distribute will be distributed 97% to the Limited Partners and 3% to the General Partners. Distributions to Limited Partners will be made pro rata by Units. Any Net Proceeds of Sale, as defined, from the sale or financing of the Partnership's properties which the General Partners determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Partners and 1% to the General Partners until the Limited Partners receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 9% of their Adjusted Capital Contribution per annum, cumulative but not compounded, to the extent not previously distributed from Net Cash Flow; (ii) any remaining balance will be distributed 90% to the Limited Partners and 10% to the General Partners. Distributions to the Limited Partners will be made pro rata by Units. AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (2) Organization - (Continued) For tax purposes, profits from operations, other than profits attributable to the sale, exchange, financing, refinancing or other disposition of the Partnership's property, will be allocated first in the same ratio in which, and to the extent, Net Cash Flow is distributed to the Partners for such year. Any additional profits will be allocated in the same ratio as the last dollar of Net Cash Flow is distributed. Net losses from operations will be allocated 99% to the Limited Partners and 1% to the General Partners. For tax purposes, profits arising from the sale, financing, or other disposition of the Partnership's property will be allocated in accordance with the Partnership Agreement as follows: (i) first, to those partners with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Partners and 1% to the General Partners until the aggregate balance in the Limited Partners' capital accounts equals the sum of the Limited Partners' Adjusted Capital Contributions plus an amount equal to 9% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously allocated; (iii) third, the balance of any remaining gain will then be allocated 90% to the Limited Partners and 10% to the General Partners. Losses will be allocated 98% to the Limited Partners and 2% to the General Partners. The General Partners are not required to currently fund a deficit capital balance. Upon liquidation of the Partnership or withdrawal by a General Partner, the General Partners will contribute to the Partnership an amount equal to the lesser of the deficit balances in their capital accounts or 1% of total Limited Partners' and General Partners' capital contributions. (3) Investments in Real Estate - The Partnership will lease its properties to various tenants through triple net leases, which are or will be classified as operating leases. Under a triple net lease, the lessee is responsible for all real estate taxes, insurance, maintenance, repairs and operating expenses of the property. The initial Lease terms are 15 years for the TGI FridayOs restaurant and 20 years for the Champps Americana restaurant. The leases contain renewal options which may extend the Lease term an additional 10 years for the TGI FridayOs restaurant and 15 years for the Champps Americana restaurant. The Leases contain rent clauses which entitle the Partnership to receive additional rent in future years based on stated rent increases. The Partnership's properties are commercial, single-tenant buildings. The cost of the property and related accumulated depreciation at September 30, 1998 are as follows: Buildings and Accumulated Property Land Equipment Total Depreciation TGI Friday's Greensburg, PA $ 295,020 $ 373,124 $ 668,144 $ 12,686 Champps Americana Centerville, OH 425,727 0 425,727 0 ----------- ----------- ----------- ---------- $ 720,747 $ 373,124 $ 1,093,871 $ 12,686 =========== =========== =========== ========== AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (3) Investments in Real Estate - (Continued) On December 10, 1997, the Partnership purchased a 40.0% interest in a TGI Friday's restaurant in Greensburg, Pennsylvania for $668,144. The property is leased to Ohio Valley Bistros, Inc. under a Lease Agreement with a primary term of 15 years and annual rental payments of $67,650. The remaining interest in the property was purchased by AEI Real Estate Fund XVII Limited Partnership, an affiliate of the Partnership. On June 29, 1998, the Partnership purchased a parcel of land in Centerville, Ohio for $1,850,988. On August 28, 1998, the Partnership assigned, for diversification purposes, 77% of its interest in the property to three affiliated partnerships. The land is leased to Americana Dining Corporation (ADC) under a Lease Agreement with a primary term of 20 years and annual rental payments of $29,801. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership will advance funds to ADC for the construction of a Champps Americana restaurant on the site. Through September 30, 1998, the Partnership had advanced $85,368 for the construction of the property and was charging interest on the advances at a rate of 7.0%. The Partnership's share of the total purchase price, including the cost of the land, will be approximately $974,000. After the construction is complete, the Lease Agreement will be amended to require annual rental payments of approximately $100,000. The remaining interests in the property are owned by AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate Fund XVIII Limited Partnership and AEI Income & Growth Fund XXI Limited Partnership, affiliates of the Partnership. In October, 1998, the Partnership entered into an agreement to purchase a Hollywood Video store in Saraland, Alabama. The purchase price will be approximately $1,300,000. The property will be leased to Hollywood Entertainment Corporation under a Lease Agreement with a primary term of 15 years and annual rental payments of approximately $129,600. The Partnership has incurred net costs of $361,888 relating to the review of potential property acquisitions. Of these costs, $8,144 have been capitalized and allocated to land, building and equipment. The remaining costs of $353,744 have been capitalized and will be allocated to properties acquired subsequent to September 30, 1998. (4) Payable to AEI Fund Management, Inc. - AEI Fund Management, Inc. performs the administrative and operating functions for the Partnership. The payable to AEI Fund Management represents the balance due for those services. This balance is non-interest bearing and unsecured and is to be paid in the normal course of business. ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations For the nine months ended September 30, 1998, the Partnership recognized rental income of $74,463. During the same period, the Partnership also earned $315,280 in investment income from subscription proceeds which were invested in short-term money market accounts. This investment income constituted 81% of total income. The percentage of total income represented by investment income declines as subscription proceeds are invested in properties. During the nine months ended September 30, 1998 and 1997, the Partnership paid Partnership administration expenses to affiliated parties of $158,561 and $92,272, respectively. These administration expenses include initial start-up costs and expenses associated with processing distributions, reporting requirements and correspondence to the Limited Partners. The administrative expenses decrease after completion of the offering and acquisition phases of the Partnership's operations. During the same period, the Partnership incurred Partnership administration and property management expenses from unrelated parties of $12,056 and $249, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit and accounting costs, insurance and other property costs. The Partnership distributes all of its net income during the offering and acquisition phases, and if net income after deductions for depreciation is not sufficient to fund the distributions, the Partnership may distribute other available cash that constitutes capital for accounting purposes. As of September 30, 1998, the Partnership's cash distribution rate was 7.0% on an annualized basis. Pursuant to the Partnership Agreement, distributions of Net Cash Flow were allocated 97% to the Limited Partners and 3% to the General Partners. Since the Partnership has only recently purchased its real estate, inflation has had a minimal effect on income from operations. The Leases may contain cost of living increases which will result in an increase in rental income over the term of the Leases. Inflation also may cause the Partnership's real estate to appreciate in value. However, inflation and changing prices may also have an adverse impact on the operating margins of the properties' tenants which could impair their ability to pay rent and subsequently reduce the Partnership's Net Cash Flow available for distributions. AEI Fund Management, Inc. (AEI) performs all management services for the Partnership. AEI is currently analyzing its computer hardware and software systems to determine what, if any, resources need to be dedicated regarding Year 2000 issues. The Partnership does not anticipate any significant operational impact or incurring material costs as a result of AEI becoming Year 2000 compliant. Liquidity and Capital Resources The Partnership's primary sources of cash are from proceeds from the sale of Units, investment income, rental income and proceeds from the sale of property. Its primary uses of cash are investment in real properties, payment of expenses involved in the sale of units, the organization of the Partnership, the acquisition of properties, the management of properties, the administration of the Partnership, and the payment of distributions. ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) The Partnership Agreement requires that no more than 15% of the proceeds from the sale of Units be applied to expenses involved in the sale of Units (including Commissions) and that such expenses, together with acquisition expenses, not exceed 20% of the proceeds from the sale of Units. As set forth under the caption "Estimated Use of Proceeds" of the Prospectus, the General Partners anticipate that 14% of such proceeds will be applied to cover such expenses if the maximum proceeds are obtained. To the extent organization and offering expenses actually incurred exceed 15% of proceeds, they are borne by the General Partners. During the offering of Units, the Partnership's primary source of cash flow will be from the sale of Limited Partnership Units. The Partnership offered for sale up to $24,000,000 of limited partnership interests (the "Units") (24,000 Units at $1,000 per Unit) pursuant to a registration statement effective January 10, 1997. From January 10, 1997 to May 1, 1997, the minimum number of Limited Partnership Units (1,500) needed to form the Partnership were sold and on May 1, 1997, a total of 1,629.201 Units ($1,629,201) were transferred into the Partnership. Through September 30, 1998, the Partnership raised a total of $13,948,177 from the sale of 13,948.177 Units. The Managing General Partner has extended the offering of Units to the earlier of completion of sale of all Units or January 9, 1999. From subscription proceeds, the Partnership paid organization and syndication costs (which constitute a reduction of capital) of $2,072,418. Before the acquisition of properties, cash flow from operating activities is not significant. Net income, after adjustment for depreciation, is lower during the first few years of operations as administrative expenses remain high and a large amount of the Partnership's assets remain invested on a short- term basis in lower-yielding cash equivalents. Net income will become the largest component of cash flow from operating activities and the largest component of cash flow after the completion of the acquisition phase. The Partnership Agreement requires that all proceeds from the sale of Units be invested or committed to investment in properties by the later of two years after the date of the Prospectus or six months after termination of the offer and sale of Units. While the Partnership is purchasing properties, cash flow from investing activities (investment in real property) will remain negative and will constitute the principal use of the Partnership's available cash flow. On December 10, 1997, the Partnership purchased a 40.0% interest in a TGI Friday's restaurant in Greensburg, Pennsylvania for $668,144. The property is leased to Ohio Valley Bistros, Inc. under a Lease Agreement with a primary term of 15 years and annual rental payments of $67,650. The remaining interest in the property was purchased by AEI Real Estate Fund XVII Limited Partnership, an affiliate of the Partnership. On June 29, 1998, the Partnership purchased a parcel of land in Centerville, Ohio for $1,850,988. On August 28, 1998, the Partnership assigned, for diversification purposes, 77% of its interest in the property to three affiliated partnerships. The land is leased to Americana Dining Corporation (ADC) under a Lease Agreement with a primary term of 20 years and annual rental payments of $29,801. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership will advance funds to ADC for the construction of a Champps Americana restaurant on the site. Through September 30, 1998, the Partnership had advanced $85,368 for the construction of the property and was charging interest on the advances at a rate of 7.0%. The Partnership's share of the total purchase price, including the cost of the land, will be approximately $974,000. After the construction is complete, the Lease Agreement will be amended to require annual rental payments of approximately $100,000. The remaining interests in the property are owned by AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate Fund XVIII Limited Partnership and AEI Income & Growth Fund XXI Limited Partnership, affiliates of the Partnership. ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) In October, 1998, the Partnership entered into an agreement to purchase a Hollywood Video store in Saraland, Alabama. The purchase price will be approximately $1,300,000. The property will be leased to Hollywood Entertainment Corporation under a Lease Agreement with a primary term of 15 years and annual rental payments of approximately $129,600. After completion of the acquisition phase, the Partnership's primary use of cash flow is distribution and redemption payments to Partners. The Partnership declares its regular quarterly distributions before the end of each quarter and pays the distribution in the first week after the end of each quarter. The Partnership attempts to maintain a stable distribution rate from quarter to quarter. Beginning in 1998, the Partnership may acquire Units from Limited Partners who have tendered their Units to the Partnership. Such Units may be acquired at a discount. The Partnership is not obligated to purchase in any year more than 5% of the number of Units outstanding at the beginning of the year. In no event shall the Partnership be obligated to purchase Units if, in the sole discretion of the Managing General Partner, such purchase would impair the capital or operation of the Partnership. Until capital is invested in properties, the Partnership will remain extremely liquid. At September 30, 1998, $10,151,553 or 87% of the Partnership's assets were in cash or cash equivalents (including accrued interest receivable). After completion of property acquisitions, the Partnership will attempt to maintain a cash reserve of only approximately 1% of subscription proceeds. Because properties are purchased for cash and leased under triple-net leases, this is considered adequate to satisfy most contingencies. Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 The foregoing Management's Discussion and Analysis contains various "forward looking statements" within the meaning of federal securities laws which represent management's expectations or beliefs concerning future events, including statements regarding anticipated application of cash, expected returns from rental income, growth in revenue, taxation levels, the sufficiency of cash to meet operating expenses, rates of distribution, and other matters. These, and other forward looking statements made by the Partnership, must be evaluated in the context of a number of factors that may affect the Partnership's financial condition and results of operations, including the following: Market and economic conditions which affect the value of the properties the Partnership owns and the cash from rental income such properties generate; the federal income tax consequences of rental income, deductions, gain on sales and other items and the affects of these consequences for investors; resolution by the General Partners of conflicts with which they may be confronted; the success of the General Partners of locating properties with favorable risk return characteristics; the effect of tenant defaults; and the condition of the industries in which the tenants of properties owned by the Partnership operate. PART II - OTHER INFORMATION ITEM 1.LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Partnership is a party or of which the Partnership's property is subject. ITEM 2.CHANGES IN SECURITIES None. ITEM 3.DEFAULTS UPON SENIOR SECURITIES None. ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5.OTHER INFORMATION None. ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits - Description 10.1 Assignment of the Development Financing Agreement and Net Lease Agreement dated August 27, 1998 between the Partnership, AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate Fund XVIII Limited Partnership, AEI Income & Growth Fund XXI Limited Partnership, and Americana Dining Corp. relating to the property at 7880 Washington Village Drive, Centerville, Ohio. 10.2 Purchase Agreement dated October 8, 1998 between AEI Fund Management and Centurion Video Ltd. relating to the property at 1097 Industrial Parkway, Saraland, Alabama. 10.3 Assignment of Purchase Agreement dated November 2, 1998 between the Partnership and AEI Fund Management relating to the property at 1097 Industrial Parkway, Saraland, Alabama. 27 Financial Data Schedule for period ended September 30, 1998. b. Reports filed on Form 8-K - None. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 9, 1998 AEI Income & Growth Fund XXII Limited Partnership By: AEI Fund Management XXI, Inc. Its: Managing General Partner By: /s/ Robert P Johnson Robert P. Johnson President (Principal Executive Officer) By: /s/ Mark E Larson Mark E. Larson Chief Financial Officer (Principal Accounting Officer) EX-10.1 2 ASSIGNMENT OF DEVELOPMENT FINANCING AND LEASING COMMITMENT DEVELOPMENT FINANCING AGREEMENT DEVELOPMENT FINANCING DISBURSEMENT AGREEMENT NET LEASE AGREEMENT AFFIDAVIT OF LESSEE AND GUARANTOR GUARANTEE OF LEASE GUARANTEE OF DEVELOPMENT FINANCING AGREEMENT THIS ASSIGNMENT made and entered into this 27th day of August, 1998, by and between AEI INCOME & GROWTH FUND XXII, a Minnesota Limited Partnership, ("Assignor") and AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP, a Minnesota limited partnership, AEI REAL ESTATE FUND XVIII LIMITED PARNTERSHIP, a Minnesota limited partnership, AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP, a Minnesota limited partnership ("Assignees"); WITNESSETH, that: WHEREAS, on the 26th day of June, 1998, Assignor entered into Development Financing And Leasing Commitment, Development Financing Agreement, Development Financing Disbursement Agreement, Affidavit Of Lessee And Guarantor, Guarantee Of Lease, Guarantee Of Development Financing Agreement ("the Agreements") for that certain property located at 7880 Washinton Villiage DriveCenterville, OH 45459 (the "Property") with Americana Dining Corp., as Seller/Lessee; and WHEREAS, Assignor desires to assign an undivided interest of its rights, title and interest in, to and under the Agreements to the Assignees as hereinafter provided; AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP 25.00% AEI REAL ESTATE FUND XVIII LIMITED PARNTERSHIP 38.00% AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP 14.00% 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 maintains a twenty-three percent (23%) right, title and interest in, to and under the Agreements, to have and to hold the same unto its successors and assigns; 2. Assignor assigns all of its rights, title and interest in, to and under the Agreements to the Assignees as noted above, to have and to hold the same unto the Assignees, its successors and assigns; 3. Assignees hereby assumes all rights, promises, covenants, conditions and obligations under the Agreements to be performed by the Assignor thereunder, and agrees to be bound for all of the obligations of Assignor under the Agreements from this day forward. 4. The Purchase Price paid by the Assignees designated herein is equal to the prorata share of the amounts funded as of the date of this Agreement. All other terms and conditions of the Agreements shall remain unchanged and continue in full force and effect. AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP ("Assignor") BY: AEI FUND MANAGEMENT XXII, INC. By: /s/ Robert P Johnson Robert P. Johnson, its President AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP ("Assignee") BY: AEI FUND MANAGEMENT XXI, INC. By: /s/ Robert P Johnson Robert P. Johnson, its President AEI REAL ESTATE FUND XVIII LIMITED PARNERSHIP ("Assignee") BY: AEI FUND MANAGEMENT XVIII, INC. By:/s/ Robert P Johnson Robert P. Johnson, its President AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP ("Assignee") BY: AEI FUND MANAGEMENT XVII, INC. By:/s/ Robert P Johnson Robert P. Johnson, its President EX-10.2 3 PURCHASE AGREEMENT CENTURION VIDEO LTD. HOLLYWOOD VIDEO STORES INDUSTRIAL BOULEVARD (HIGHWAY 158), SARALAND, ALABAMA, AND HIGHWAY 190, COVINGTON, LOUISIANA This Purchase Agreement (the "Agreement") entered into and effective as of the 8 day of October, 1998, by and between Centurion Video Ltd. (the "Seller") and AEI Fund Management, Inc., a Minnesota corporation, or its assigns (the "Buyer"). 1. Property. Seller holds an undivided 100% interest in the fee title to that certain real property legally described in the attached Exhibit "A" (the "Parcels"). Seller wishes to sell and Buyer wishes to purchase the Parcels and all improvements thereon developed as Hollywood Video stores (the "Improvements") on the Parcels (the Parcels and the Improvements collectively, the "Property" or "Properties"). 2. Lease. The Properties are being sold subject to existing Leases of the Properties by and between Seller, as lessor, and Hollywood Entertainment Corporation, as lessee (the "Lessee"), each dated December 15, 1997 (the " Lease" or "Leases"). Buyer shall have the right to approve each such Lease which approval shall include but shall not be limited to an Opinion of Counsel from the State in which each Property is located regarding the enforceability of the Lease, to be obtained at Buyer's expense during the First Contingency Period as hereinafter defined. 3. Closing Date. The closing date on the Buyer's purchase of the Properties shall take place fifteen (15) days after the end of the First Contingency Period as herein defined, subject to the Second Due Diligence Period. (the "Closing Date"). 4. Purchase Price. The purchase prices for the Properties are as follows: Saraland, Alabama $1,332,305 and Covington, Louisiana $1,291,105 (the "Purchase Prices"), which as a contingency to Buyer's obligations hereunder must each be supported by an MAI appraisal of the Property to be obtained by Buyer as described in Article 8.03 hereof. If all conditions precedent to Buyer's obligations to purchase have been satisfied, Buyer shall deposit the Purchase Prices with a title company acceptable to Buyer as described in Article 6 hereof (the "Closing Agent") on or before the Closing Date. Within five (5) business days of full execution of this Agreement, Buyer will deposit $25,000 (the "Earnest Money") for each Property in an escrow account with the Closing Agent. The Earnest Money will be credited against the Purchase Price paid by Buyer at closing when and if the transaction contemplated herein closes and the sale is completed. The balance of the Purchase Prices shall be deposited by Buyer into an escrow account with the Closing Agent on or before the Closing Date. The Earnest Money is nonrefundable following the expiration of the First Contingency Period as set forth in paragraph 8.01. On the Closing date Buyer shall receive an overhead/supervision reimbursement for each property as follows: Saraland, Alabama $38,805 and Covington, Louisiana $37,605. The remaining Purchase Prices shall be disbursed in accordance with this Agreement as designated herein. 5. Escrow. Escrow shall be opened by Seller with the Closing Agent upon execution of this Agreement. A copy of this Agreement will be delivered to the Closing Agent by Seller and will serve as escrow instructions together with any additional instructions required by Seller and/or Buyer or their respective counsels. Seller and Buyer agree to cooperate with the Closing Agent and sign any additional instructions reasonably required by the Closing Agent to close escrow. If there is any conflict between any other instructions and this Agreement, this Agreement shall control. 6. Title. Seller shall deliver to Buyer a commitment for an ALTA Owner's Policy of Title Insurance (ALTA owner-most recent edition), individually for each Property, issued by a nationally recognized title insurance company acceptable to Buyer (the "Title Company"), insuring marketable title in the Properties, subject only to such matters as Buyer may approve and contain such endorsements as Buyer may require, including extended coverage and owner's comprehensive coverage (the "Title Commitment" or "Title Commitments"). The Title Commitments shall show Seller as the present fee owner of the Properties and show Buyer as the fee owner to be insured. The Title Commitments also shall include the following: (a) an itemization of all outstanding and pending special assessments and an itemization of taxes affecting the Properties and the tax year to which they relate; (b) shall state whether taxes are current and if not, show the amounts unpaid; and (c) the tax parcel identification numbers and whether the tax parcel includes property other than the Properties to be purchased. All easements, restrictions, documents and other items affecting title shall be listed in Schedule "B" of each Title Commitment. Copies of all instruments creating such exceptions must be attached to each Title Commitment. Buyer shall be allowed ten (10) business days after receipt of the Title Commitments and copies of all underlying documents or until the end of the First Contingency Period, whichever is later to be consistent with Article 8.01 hereof, for examination and the making of any objections thereto, said objections to be made in writing or deemed waived. If any objections are so made, the Seller shall be allowed thirty (30) days to cure such objections or in the alternative to obtain a commitment for insurable title insuring over Buyer's objections. If Seller shall decide to make no efforts to cure Buyer's objections, or is unable to obtain insurable title within said thirty (30) day period, this Agreement shall be null and void and of no further force and effect and the Earnest Money shall be returned in full to Buyer immediately and neither party shall have any further duties or obligations to the other hereunder The Buyer shall also have ten (10) business days to review and approve any easement, lien, hypothecation or other encumbrance placed of record affecting the Properties after the date of the Title Commitments. If necessary, the Closing Date shall be extended by the number of days necessary for the Buyer to have ten (10) business days to review any such items. Such ten (10) business day review period shall commence on the date the Buyer is provided with a legible copy of the instrument creating such exception to title. The Seller agrees to inform the Buyer of any item executed by the Seller placed of record affecting the Properties after the date of the Title Commitments. If any objections are so made, the Seller shall be allowed thirty (30) days to cure such objections or in the alternative to obtain a commitment for insurable title insuring over Buyer's objections. If Seller shall decide to make no efforts to cure Buyer's objections, or is unable to obtain insurable title within said thirty (30) day period, this Agreement shall be null and void and of no further force and effect and the Earnest Money shall be returned in full to Buyer immediately and neither party shall have any further duties or obligations to the other hereunder. 7. Site Inspection. Each property has been inspected and approved by Buyer. Seller has agreed to reimburse Buyer $1,500 for inspection costs. Such reimbursement is due and payable, to Buyer, at the mutual execution of the Purchase Agreement. This reimbursement is nonrefundable in the event this transaction is terminated by either Seller or Buyer for any reason. 8. Due Diligence and Contingency Periods. 8.01 First Due Diligence Documents and First Contingency Period. Buyer shall have until the later of thirty (30) days from the Date of the Purchase Agreement or until the end of the tenth (10th) business day after the delivery of all of the Seller provided First Due Diligence Documents (the "First Contingency Period") to conduct all of its inspections, due diligence and review to satisfy itself regarding each item, the Properties and this transaction. Due Diligence Documents, for each Property, are to be delivered by Seller at Seller's expense unless specifically designated herein to be obtained by Buyer as described below: (a) The Title Commitment, of current or recent date and copies of all exceptions to title listed therein; (b) Existing ALTA As-Built survey of the Property, dated after the completion of the present improvements on the Property, with a reliance letter from the surveyor to Buyer; (c) Copies of the Lease and all amendments and assignments thereto, Seller already provided; (d) Phase I environmental assessment report prepared by a company satisfactory to Buyer containing evidence that the Property complies with all federal, state and local environmental regulations, to be of current date and certified to Buyer. Seller and Buyer shall each pay one- half the cost of updating existing reports and the cost for Seller and Buyer each shall not exceed $500 per property; (e) Copies of the insurance certificates for Lessee as required by the Lease; (f) Final plans and specifications for the Improvements; (g) All documents Title Company deems necessary to support the authority of the persons executing any documents on behalf of the Seller or Lessee; (h) Existing soils report; (I) Permits and licenses issued or required for the operation of the premises by Tenant, if any; (j) Real estate tax statement; (k) Certificate of Occupancy; (l) MAI appraisal, stating the value of the Property with the completed Improvements thereon to be of current date and certified to Buyer and shall be paid for and obtained by Buyer; (m) Seller prepared AIA Certificate of Substantial Completion executed by the general contractor and Seller certifying, to Seller as of the completion date of the Improvements, that the Improvements have been completed in accordance with the plans and specifications and the soils report for the Property and comply with all applicable building, zoning, energy, environmental laws and regulations and the Americans with Disabilities Act; and (n) Zoning compliance letter from the municipality or county exercising land use control over the Property in form and substance satisfactory to Buyer, to be obtained by Buyer, to be of current date and certified to Buyer. (All of the above described documents (a) through (n) are hereinafter collectively the "First Due Diligence Documents"). Buyer may cancel this Agreement for any reason in its sole discretion by delivering a cancellation notice, return receipt requested, to Seller and Closing Agent prior to the end of the First Contingency Period. All due diligence documents, provided by Seller, are to be returned to Seller and the Earnest Money shall be returned in full to Buyer immediately and neither party shall have any further duties or obligations to the other hereunder. Such notice shall be deemed effective upon receipt by Seller. 8.02 Form of Closing Documents. Prior to the end of the First Contingency Period, Seller and Buyer shall agree on the form of the following documents, for each Property, to be delivered to Buyer on the Closing Date by Seller as set forth in Article 14 hereof: (a) Special warranty deed; (b) Seller's Affidavit; (c) FIRPTA Affidavit; (d) Assignment of the Lease; (e) Assignment of warranties from the party or parties constructing the Improvements on the Property; (g) Seller prepared AIA Certificate of Substantial Completion executed by the general contractor and Seller, certifying, to Seller as of the completion date of the Improvements, that the Improvements have been completed in accordance with the plans and specifications and the soils report for the Property and comply with all applicable building, zoning, energy, environmental laws and regulations and the Americans with Disabilities Act; (h) Estoppel from Lessee; (I) Indemnity from Seller in favor of Buyer over representations and warranties (including but not limited to construction matters) for which the Landlord is liable under the Lease; (j) Any documentation modifying the Lease as may be required by Buyer and agreed to between Buyer and/or Seller and Tenant; and (k) The Assignments of all warranties, and if such warranties are not unassignable on their face, the written consents of the assignments thereof by the party giving the warranty from the party or parties constructing the Improvements on the Property. In the event that Seller and Buyer, and where applicable, Lessee, do not reach mutual agreement on the form of the above described documents (a) through (k) prior to the end of the First Contingency Period, this Agreement may be terminated by either Seller or Buyer and the Earnest Money shall be returned in full to the Buyer immediately and neither party shall have any further duties or obligations to the other hereunder. 8.03 Second Due Diligence Documents and Second Contingency Period. (A) As soon as available, but in any event no later than at least ten (10) business days prior to the Closing Date (the "Second Contingency Period"), Seller shall deliver to Buyer, for each Property, the following items for review and acceptance: (1) Any documents or written summary of facts known to Seller that materially change or render incomplete, invalid, or inaccurate any of the First Due Diligence Documents; and (2) Seller to provide representation to Buyer that the transaction contemplated herein does not represent a fraudulent conveyance. (All of the above described documents (1) through (2) are hereinafter collectively the "Second Due Diligence Documents"). Buyer shall have ten (10) business days to examine and to accept all of the above-described Second Due Diligence Documents. After Buyer's receipt and review of the Second Due Diligence Documents, Buyer may cancel this Agreement if any of the Second Due Diligence Documents are not acceptable to Buyer, in its sole discretion, by delivering a cancellation notice, as provided herein, to Seller and Closing Agent prior to the end of the Second Contingency Period. Such notice shall be deemed effective upon receipt by Seller. If Buyer so terminates this Agreement, the Earnest Money shall be returned in full to Buyer immediately and thereafter neither party shall have any further duties or obligations to the other hereunder. It shall be a condition precedent to BuyerOs obligations to close hereunder that there have been no material changes in any of the information reflected in the First or Second Due Diligence Documents after the date of such document and prior to closing. Until this Agreement is terminated or the Closing has occurred, Seller shall deliver to Buyer any documentation that comes in Seller's possession that modifies any of the First or Second Due Diligence Documents, including the Lease, or could render any of the First or Second Due Diligence Documents materially inaccurate, incomplete or invalid. Buyer shall, in any event, have five (5) business days before the Closing Date to review any such document and, if necessary, the Closing Date shall be extended by the number of days necessary for Buyer to have five (5) business days to review any such document or documents. 9. Closing Costs. Seller shall pay all costs of closing, including, but not limited to, the owner's title insurance commitment and policy, recording fees, escrow fees, any brokerage fees to American Asset Advisors and the costs of updating and certifying all Due Diligence Documents unless otherwise designated herein to be paid by Buyer. Each party will pay its own attorneys' fees to close this transaction. Buyer is to pay any transfer fees or mortgage registration taxes resulting from its recording of a mortgage or deed of trust on any of the Properties. Seller and Buyer shall each pay one-half the cost of updating the existing Phase I environmental reports limited to each party paying up to $500 per property. 10. Real Estate Taxes and Assessments. Seller represents to Buyer that to the best of its knowledge, all real estate taxes and installments of special assessments due and payable 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 are paid by the Lessee and shall be the responsibility of the Lessee under the Lease after the Closing Date. In the event Lessee does not pay any special assessments or real estate taxes that are the responsibility of the Lessee under the Lease, Seller and Buyer agree to each pay its prorata share of said assessments or taxes as of the Closing Date. 11. Prorations. The Buyer and the Seller, as of the Closing Date, shall prorate: (i) all rent due under the Leases, (ii) ad valorem taxes, personal property taxes, charges or assignments affecting the Properties (on a calendar year basis), (iii) utility charges, including charges for water, gas, electricity, and sewer, if any, (iv) other expenses relating to the Properties 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. 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. 12. Seller's Representations and Warranties. For each Property, Seller represents and warrants as of this date and to the best of Seller's actual knowledge that: (a) Except for this Agreement and the Lease between Seller and Hollywood Entertainment Corporation, it is not aware of any other agreements or leases with respect to the Property. (B) 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 hereunder. (C) Seller does not have any actions or proceedings pending, which would materially affect the Property or Lessee, except matters fully covered by insurance. (D) The consummation of the transactions contemplated hereunder, and the performance of this Agreement and the delivery of the special warranty deed to Buyer, will not result in any breach of, or constitute a default under, any instrument to which Seller is a party or by which Seller may be bound or affected. (E) All of Seller's covenants, agreements, and representations made herein, and in any and all documents which may be delivered pursuant hereto, shall survive the delivery to Buyer of the special warranty deed and other documents furnished in accordance with this Agreement, for a period of one (1) year and the provision hereof shall continue to inure to BuyerOs benefit and its successors and assigns. (F) The Property is in good condition, substantially undamaged by fire and other hazards, and has not been made the subject of any condemnation proceeding. (G) The use and operation of the Property now is in full compliance with applicable local, state and federal laws, ordinances, regulations and requirements. (H) These Seller's representations and warranties deemed to be true and correct as of the Closing Date and shall survive the closing, for a period of one (1) year. (I) Seller has not caused or permitted any, and to Seller's actual knowledge, the Property is not in violation of, any federal, state or local law, ordinance or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions. To Seller's actual knowledge, there is no proceeding or inquiry by any governmental authority with respect to the presence of hazardous materials on the Property or the migration of hazardous materials from or to other property. (J) The transaction contemplated herein does not represent a fraudulent conveyance. 13. Buyer's Representations and Warranties. Buyer represents and warrants to Seller that: (a) 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 hereunder. (B) To Buyer's knowledge, neither the execution and delivery of this Agreement nor the consummation of the transaction contemplated hereunder will violate or be in conflict with any agreement or instrument to which Buyer is a party or by which Buyer is bound. (C) These Buyer's representations and warranties deemed to be true and correct as of the Closing Date and shall survive the closing. 14. Closing. (a) Three (3) days prior to the Closing Date, with simultaneous copy to Buyer, Seller will deposit into escrow with the Closing Agent the following documents, for each Property: (1) A Special warranty deed conveying insurable title to the Property to Buyer, in form and substance as agreed to between Seller and Buyer during the First Contingency Period; (2) Estoppel letter from Lessee, in form and substance as agreed to between Seller and Buyer during the First Contingency Period; (3) Affidavit of Seller, in form and substance as agreed to between Seller and Buyer during the First Contingency Period; (4) FIRPTA Affidavit, in form and substance as agreed to between Seller and Buyer during the First Contingency Period; (5) Assignment of Lease, in form and substance as agreed to between Seller and Buyer during the First Contingency Period; (6) Any documentation modifying the Lease as may be required by Buyer and agreed to between Buyer and/or Seller and Lessee during the First Contingency Period; (7) Assignments of all warranties (and the written consents of the assignments thereof by the party giving the warranty) from the party or parties constructing the Improvements on the Property; (8) Original insurance policy of Lessee as required by the Lease; (9) Copy of the final unconditional Certificate of Occupancy for the Property authorizing LesseeOs use and occupancy of the Property; (10) Certificate of Completion executed by the project architect, general contractor and the Seller, in form and substance as agreed to between the Seller and Buyer prior to the end of the First Contingency Period; (11) A down-dated title commitment for an owner's title insurance policy, reflecting only permitted exceptions approved by Buyer during the First Contingency Period and including all endorsements required by Buyer, with all Schedule C requirements, if any, removed; (12) 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; (13) Project cost statement, signed by Seller, itemizing, at a minimum, the following costs: land acquisition, building construction and site work; (14) Seller indemnification from Seller to Buyer for Landlord's representations and warranties in the Lease, for a period of one (1) year from Commencement Date of each Lease; and (15) The original Lease and any Amendments thereto, executed by all parties. (B) On or before the Closing Date, Buyer will deposit the Purchase Price with the Closing Agent; (c) Both parties will sign and deliver to the Closing Agent any other documents reasonably required by the Closing Agent and/or the Title Company. 15. Termination. This Agreement may be terminated prior to closing at Buyer's option and the Earnest Money returned to Buyer in full immediately in the event of any of the following occurrences: (a) Seller fails to comply with any of the terms hereof; (b) A default exists in any material financial obligation of Seller or Lessee; (c) Any representation made or contained in any submission from Seller or Lessee, or in the Due Diligence Documents, proves to be untrue, substantially false or misleading at any time prior to the Closing Date; (d) There has been a material adverse change in the financial condition of Lessee or there shall be a material action, suit or proceeding pending or threatened against Seller which affects SellerOs ability to perform under this Agreement or against Lessee which affects Lessee's ability to perform under the Lease; (e) Any bankruptcy, reorganization, insolvency, withdrawal, or similar proceeding is instituted by or against Seller or Lessee; (f) Seller or Lessee shall be dissolved, liquidated or wound up; and (g) Notice given by Buyer pursuant to any right of termination herein. 16. Damages, Destruction and Eminent Domain. If, prior to the Closing Date, any one of the Properties, or any part thereof, should be destroyed or further damaged by fire, the elements, or any cause, due to events occurring subsequent to the date of this Agreement, this Agreement shall become null and void, at Buyer's option, exercised by written notice to Seller within ten (10) business 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 (a) all contingencies set forth in Article 8 hereof have been satisfied, or waived; and (b) any period provided for above in Article 8 hereof for Buyer to elect to terminate this Agreement has expired or Buyer has, by written notice to Seller, waived BuyerOs 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 respective 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, subject to rights of the Lessee. If prior to closing, any one of the Properties, or any part thereof, is taken 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 pro- rata, subject to rights of the Lessee. In the event that this Agreement is terminated by Buyer as provided above, the Earnest Money shall be returned to Buyer immediately after execution by Buyer of such documents reasonably requested by Seller to evidence the termination hereof. 17. Notices. 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: Centurion Video Ltd. C/O Centurion Development Corp. 5031 - F West WT Harris Boulevard Charlotte, North Carolina 28269 Attention: Jeff Wakeman Phone No.: (704) 598-0056 x11 If to Buyer: AEI Fund Management, Inc. 1300 Minnesota World Trade Center 30 E. 7th Street St. Paul, Minnesota 55101 Attention: Robert P. Johnson Phone No.: (612) 227-7333 Notice shall be deemed received 48 hours after proper deposit in U.S. Mail, or 24 hours after proper deposit with a nationally recognized overnight courier. 18. 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 Properties and the other matters described, and it supersedes any other agreement or understandings. Exhibits attached to this Agreement are incorporated into this Agreement. b. If the transaction contemplated hereunder does not close by the Closing Date, through no fault of Buyer, Buyer may either, at it election, extend the Closing Date, exercise any remedy available to it by law, or terminate this Agreement and receive its Earnest Money back in full immediately. c. This Agreement shall be assignable by Buyer, at its option, in whole or in part, in such manner as Buyer may determine, to an affiliate of affiliates of Buyer. d. The Buyer and Seller each warrant to the other that American Asset Advisors is the only party which either has dealt with which would result in a claim for a commission. Seller acknowledges that Seller is solely responsible for any claim of commission that American Assets Advisors may have concerning this transaction. e. Seller and Buyer agree that it is Seller's responsibility to continue liability under the Leases with regard to any Landlord warranty of construction through the first anniversary date of the Leases. For each Property, Seller will provide, in a form acceptable to Buyer, an indemnification of warranty of construction. For each Lease, Seller will further assist Buyer in obtaining an Estoppel from the Tenant. Buyer is submitting this offer by signing a copy of this Agreement and delivering it to Seller. Seller has until October 12, 1998 within which time to accept this offer by signing and returning this Agreement to Buyer. When executed by both parties, this Agreement will be a binding agreement for valid and sufficient consideration which will bind and benefit Seller, Buyer and their respective successors and assigns. The remainder of this page has been intentionally left blank. IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement effective as of the day and year above first written. SELLER: CENTURION VIDEO LTD. Attest: By: Centurion Development Corp. Its: General Partner By: /s/ Jeffery R Wakeman /s/ Marva Reddington Its: President Marva Reddington Print Name BUYER: AEI FUND MANAGEMENT, INC. Attest: By: /s/ Robert P Johnson /s/ Barbara J Kochevar Robert P. Johnson, its President Barbara J Kochevar Print Name EXHIBIT "A" Legal Description of the Parcel SARALAND, ALABAMA Lot 1 of Wal*Mart Square, according to a plat thereof as recorded in Map Book 70, Page 25 of the Probate Court Records, Mobile County, Alabama COVINGTON, LOUISIANA PARCEL NO. 2-1 Beginning at a point along Vendor's southerly property line, which point is also along the easterly existing right of way of La-US 190 Business and which if point were extended would intersect project centerline at highway Survey Stateion 210+39.90 and where there is a 1/2 inch iron pipe; thence proceed North 09 degrees 56' 52" East a distance of 154.76 feet to a point and corner where there is a 1/2 inch iron pipe which point is along the Vendor's notherly p roperty line, which line intersects project centerline at highway Survey Station 211+95.68;thence proceed North 55 degrees 58' 38" East a distance of 20.94 feet to a point and corner; thence proceed along the arc of a curve having radius of 1,328.24 feet (the chord which bears South 09 degrees 12' 37" West a distance of 153.75 feet) an arc distance of 153.84 feet to a point and corner which point is along Vendor's southerly property line, which if point were extended would intersect project centerline at Highway Survey Station 211+01.83 and which point is 62 feet from project centerline; thence proceed South 57 degrees 33' 28" West a distance of 23.09 feet to a point of beginning and containing a net required area of 2,720.6 square feet. All being a portion of the same property acquired by Mose and Joyce Ellis by Act recorded March 20, 1974, COB 725, Page 724 in the records of ST. Tammany parish, Louisian, less and except conveyed by Mose and Joyce Ellis (Parcel No. 2-1) on or about March, 1998. EXHIBIT "B" FINANCIAL DOCUMENTATION REQUIREMENTS Prior to closing, the following must be received and approved by AEI, along with those items specified more fully in the Purchase Agreement: I. Representation, satisfactory to Buyer, that the sale of the Parcel does not constitute a fraudulent conveyance. II. Itemized budget of total project cost for the property to be purchased. Items I & II above must be signed by an authorized officer of Seller certifying to the accuracy thereof. The certification language must read as follows: "The undersigned hereby certifies and warrants that the information contained in these documents is true and correct, understands that AEI is relying upon such information as an inducement for entering into a purchase transaction with the undersigned, and expressly represents that AEI may have reliance upon such information." EX-10.3 4 ASSIGNMENT OF PURCHASE AGREEMENT THIS ASSIGNMENT made and entered into this 2nd day of November, 1998, by and between AEI FUND MANAGEMENT, INC., a Minnesota corporation, ("Assignor") and AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP for the property located at 1097 Industrial Parkway, Saraland Alabama, AND AEI PRIVATE NET LEASE FUND 1998 LIMITED PARTNERSHIP for the property located at 1180 Business Highway #190, Covington, Louisiana ("Assignees"); WITNESSETH, that: WHEREAS, on the 8th day of October, 1998, Assignor entered into a Purchase Agreement ("Agreement") for that certain property located at 1097 Industrial Parkway, Saraland, Alabama and 1180 Business Highway #190, Covington, Louisiana (the "Properties") with Centurion Video LTD., as Seller/Lessee; and WHEREAS, Assignor desires to assign all of its rights, title and interest in, to and under the Agreement to Assignees 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 with respect to the Saraland, AL property to AEI Income & Growth Fund XXII Limited Partnership, to have and to hold the same unto the Assignee, its successors and assigns; 2. Assignor assigns all of its rights, title and interest in, to and under the Agreement with respect to the Covington, LA property to AEI Private Net Lease Fund 1998 Limited Partnership, to have and to hold the same unto the Assignee, its successors and assigns; 3. Assignees hereby assume 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 as it pertains to the property identified as to be acquired by each Assignee. All other terms and conditions of the Agreement shall remain unchanged and continue in full force and effect. AEI FUND MANAGEMENT, INC. ("Assignor") By: /s/ Robert P Johnson Robert P. Johnson, its President AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP ("Assignee" for Saraland, AL property) BY: AEI Fund Management XXI, Inc. By: /s/ Robert P Johnson Robert P. Johnson, its President AEI PRIVATE NET LEASE FUND 1998 LIMITED PARTNERSHIP ("Assignee" for Covington, LA property) BY: AEI Fund Management XVIII, Inc. By: /s/ Robert P Johnson Robert P. Johnson, its President EX-27 5
5 0001023458 AEI INCOME & GROWTH FUND XXII LTD PARTNERSHIP 9-MOS DEC-31-1998 SEP-30-1998 10,150,301 0 24,977 0 0 10,175,278 1,532,983 (12,686) 11,695,575 386,647 0 0 0 0 11,308,928 11,695,575 0 389,743 0 182,635 0 0 0 207,108 0 207,108 0 0 0 207,108 18.84 18.84
-----END PRIVACY-ENHANCED MESSAGE-----