-----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, IpMqoPhKnRthUzkLeocFrGbTg7SO1DMbFLJh5xqZ3oZW2RD2+qN6W6IS/TA3TH/9 kQNX89qsAdMimceu/je48A== 0000759641-02-000020.txt : 20020415 0000759641-02-000020.hdr.sgml : 20020415 ACCESSION NUMBER: 0000759641-02-000020 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEI INCOME & GROWTH FUND XXI LTD PARTNERSHIP CENTRAL INDEX KEY: 0000931755 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 411789725 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-85076 FILM NUMBER: 02593866 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 EAST SEVENTH STREET CITY: ST PAUL STATE: MN ZIP: 55101 10KSB 1 k214-01.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the Fiscal Year Ended: December 31, 2001 Commission file number: 0-29274 AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP (Name of Small Business Issuer in its Charter) State of Minnesota 41-1789725 (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) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered None None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Units (Title of class) 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 past 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 Check if disclosure of delinquent filers in response to Rule 405 of Regulation S-B is not contained in this Form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or and amendment to this Form 10-KSB. [X] The Issuer's revenues for year ended December 31, 2001 were $1,843,888. As of February 28, 2002, there were 23,235.346 Units of limited partnership interest in the registrant outstanding and owned by nonaffiliates of the registrant, which Units had an aggregate market value (based solely on the price at which they were sold since there is no ready market for such Units) of $23,235,346. DOCUMENTS INCORPORATED BY REFERENCE The registrant has not incorporated any documents by reference into this report. Transitional Small Business Disclosure Format: Yes No [X] PART I ITEM 1. DESCRIPTION OF BUSINESS. AEI Income & Growth Fund XXI Limited Partnership (the "Partnership" or the "Registrant") is a limited partnership which was organized pursuant to the laws of the State of Minnesota on August 31, 1994. The registrant is comprised of AEI Fund Management XXI, Inc. (AFM) as Managing General Partner, Robert P. Johnson as the Individual General Partner, and purchasers of partnership units as Limited Partners. 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 February 1, 1995. The Partnership commenced operations on April 14, 1995 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. On January 31, 1997, the Partnership offering terminated when the maximum subscription limit of 24,000 Limited Partnership Units ($24,000,000) was reached. The Partnership was organized to acquire existing and newly constructed commercial properties located in the United States, to lease such properties to tenants under triple net leases, to hold such properties and to eventually sell such properties. From subscription proceeds, the Partnership purchased ten properties including partial interests in seven properties, at a total cost of $19,686,525. The balance of the subscription proceeds was applied to organization and syndication costs, working capital reserves and distributions, which represented a return of capital. The properties are commercial, single tenant buildings leased under triple net leases. The Partnership's properties were purchased with subscription proceeds without any indebtedness. The Partnership will not finance properties in the future to obtain proceeds for new property acquisitions. If it is required to do so, the Partnership may incur short-term indebtedness, which may be secured by a portion of the Partnership's properties, to finance day-to-day cash flow requirements (including cash flow necessary to repurchase Units). The amount of borrowings that may be secured by the properties is limited in the aggregate to 10% of the purchase price of all properties. The Partnership will not incur borrowings prior to application of the proceeds from sale of the Units, will not incur borrowings to pay distributions, and will not incur borrowings while there is cash available for distributions. The Partnership will hold its properties until the General Partners determine that the sale or other disposition of the properties is advantageous in view of the Partnership's investment objectives. In deciding whether to sell properties, the General Partners will consider factors such as potential appreciation, net cash flow and income tax considerations. In addition, certain lessees may be granted options to purchase properties after a specified portion of the lease term has elapsed. The Partnership expects to sell some or all of its properties prior to its final liquidation and to reinvest the proceeds from such sales in additional properties. The Partnership reserves the right, at the discretion of the General Partners, to either distribute proceeds from the sale of properties to the Partners or to reinvest such proceeds in additional properties, provided that sufficient proceeds are distributed to the Limited Partners to pay federal and state income taxes related to any taxable gain recognized as a result of the sale. It is anticipated that the Partnership will commence liquidation through the sale of its remaining properties twelve to fifteen years after its formation, although final liquidation may be delayed by a number of circumstances, including market conditions and seller financing of properties. ITEM 1. DESCRIPTION OF BUSINESS. (Continued) Leases Although there are variations in the specific terms of the leases, the following is a summary of the general terms of the Partnership's leases. The properties are leased to various tenants under triple net leases, which are classified as operating leases. Under a triple net lease, the lessee is responsible for all real estate taxes, insurance, maintenance, repairs and operating expenses for the property. The initial lease terms are for 15 to 20 years. The leases provide for base annual rental payments, payable in monthly installments, and contain rent clauses which entitle the Partnership to receive additional rent in future years based on stated rent increases. The leases provide the lessees with two to five five-year renewal options subject to the same terms and conditions as the initial lease. Certain lessees have been granted options to purchase the property. Depending on the lease, the purchase price is either determined by a formula, or is the greater of the fair market value of the property or the amount determined by a formula. In all cases, if the option were to be exercised by the lessee, the purchase price would be greater than the original cost of the property. During 1999, the Partnership sold 85.0382% of the Arby's restaurant, in four separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $881,682, which resulted in a total net gain of $220,469. The total cost and related accumulated depreciation of the interests sold was $731,056 and $69,843, respectively. On October 26, 1999, the Partnership sold the Caribou Coffee store to an unrelated third party. The Partnership received net sale proceeds of $1,553,867, which resulted in a net gain of $301,764. At the time of sale, the cost and related accumulated depreciation of the property was $1,310,597 and $58,494, respectively. On August 2, 2000, the Media Play store was sold to an unrelated third party for $2,500,000. The sale agreement required $500,000 in cash and a $2,000,000 contract for deed, which bore interest at 9%. On January 16, 2001, the Partnership received its share of the outstanding principal and accrued interest on the Note. The Partnership's share of the net sale proceeds was $820,651, which resulted in a net gain of $129,813. At the time of sale, the cost and related accumulated depreciation was $833,860 and $143,022. Through December 31, 2001, the Partnership sold its interest in the Champps Americana restaurant in Columbus, Ohio, in eleven separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $2,295,174, which resulted in a total net gain of $631,607. The total cost and related accumulated depreciation of the interests sold was $1,808,880 and $145,313, respectively. For the year ended December 31, 2001, the net gain was $289,679. Through December 31, 2001, the Partnership sold 48.6778% of the Champps Americana restaurant in Schaumburg, Illinois, in twelve separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $2,838,148, which resulted in a total net gain of $821,530. The total cost and related accumulated depreciation of the interests sold was $2,214,507 and $197,889, respectively. For the years ended December 31, 2001 and 2000, the net gain was $727,695 and $93,835, respectively. During 2001, the Partnership sold 25.3199% of the Champps Americana restaurant in Livonia, Michigan, in six separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $1,355,792, which resulted in a total net gain of $423,383. The total cost and related accumulated depreciation of the interest sold was $1,050,791 and $118,382, respectively. ITEM 1. DESCRIPTION OF BUSINESS. (Continued) On August 28, 1998, the Partnership purchased a 25% interest in a parcel of land in Centerville, Ohio for $462,747. 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 $32,392. Effective December 25, 1998, the annual rent was increased to $48,588. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to ADC for the construction of a Champps Americana restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 7%. Effective December 25, 1998, the interest rate was increased to 10.5%. On January 27, 1999, after the development was completed, the Lease Agreement was amended to require annual rental payments of $101,365. The Partnership's share of the total acquisition costs, including the cost of the land, was $984,426. The remaining interests in the Fund property are owned by AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate Fund XVIII Limited Partnership and AEI Income & Growth Fund XXII Limited Partnership, affiliates of the Partnership. On March 8, 2000, the Partnership purchased a parcel of land in Fort Wayne, Indiana for $549,000. The land is leased to Tumbleweed, Inc. (TWI) under a Lease Agreement with a primary term of 15 years and annual rental payments of $48,038. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to TWI for the construction of a Tumbleweed restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 8.75%. Effective July 5, 2000, the interest rate was increased to 9.875%. On September 11, 2000, after the development was completed, the Lease Agreement was amended to require annual rental payments of $132,621. Total acquisition costs, including the cost of the land, were $1,334,315. On March 30, 2001, the Partnership purchased a Children's World daycare center in Mundelein, Illinois for $1,618,824. The property is leased to ARAMARK Educational Resources, Inc. under a Lease Agreement with a primary term of 15 years and annual rental payments of $153,710. On March 8, 2001, the Partnership purchased a 25% interest in a parcel of land in Austin, Texas for $283,000. The land is leased to Kona Restaurant Group, Inc. (KRG) under a Lease Agreement with a primary term of 17 years and annual rental payments of $29,715. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to KRG for the construction of a Johnny Carino's restaurant on the site. The Partnership charged interest on the advances at a rate of 10.5%. On September 26, 2001, after the development was completed, the Lease Agreement was amended to require annual rental payments of $60,191. The Partnership's share of the total acquisition costs, including the cost of the land, was $571,902. The remaining interests in the property are owned by AEI Real Estate Fund 85-A Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, and AEI Income & Growth Fund 23 LLC, affiliates of the Partnership. ITEM 1. DESCRIPTION OF BUSINESS. (Continued) In May, 2001, Huntington Restaurants Group, Inc. (HRG), the lessee of the Denny's Restaurant in Covington, Louisiana notified the Partnership that it was experiencing financial problems and would not make the lease payments while they worked out a plan which would enable them to continue operations without seeking bankruptcy protection. In October, 2001, the Partnership received an offer to buy the restaurant for $900,000 from an unrelated third party. Effective December 10, 2001, the Partnership terminated the Lease to accommodate the sale. Through this date, HRG owed $80,316 of rent, which will not be collected and was not accrued for financial reporting purposes. On February 19, 2002, the sale closed with the Partnership receiving net sale proceeds of approximately $850,000. In the third quarter of 2001, a charge to operations for real estate impairment of $295,354 was recognized, which was the difference between the book value at September 30, 2001 of $1,145,354 and the estimated net sales proceeds of $850,000. The charge was recorded against the cost of the building and equipment. The land and building have been classified as Real Estate Held for Sale at December 31, 2001. Major Tenants During 2001, two tenants each contributed more than ten percent of the Partnership's total rental revenue. The major tenants in aggregate contributed 80% of total rental revenue in 2001. It is anticipated that, based on minimum rental payments required under the leases, each major tenant will continue to contribute more than ten percent of rental revenue in 2002 and future years. Any failure of these major tenants could materially affect the Partnership's net income and cash distributions. Competition The Partnership is a minor factor in the commercial real estate business. There are numerous entities engaged in the commercial real estate business which have greater financial resources than the Partnership. At the time the Partnership elects to dispose of its properties, the Partnership will be in competition with other persons and entities to find buyers for its properties. Employees The Partnership has no direct employees. Management services are performed for the Partnership by AEI Fund Management, Inc., an affiliate of AFM. ITEM 2. DESCRIPTION OF PROPERTIES. Investment Objectives The Partnership's investment objectives are to acquire existing or newly-developed commercial properties throughout the United States that offer the potential for (i) regular cash distributions of lease income; (ii) growth in lease income through rent escalation provisions; (iii) preservation of capital through all-cash sale-leaseback transactions; (iv) capital growth through appreciation in the value of properties; and (v) stable property performance through long-term lease contracts. The Partnership does not have a policy, and there is no limitation, as to the amount or percentage of assets that may be invested in any one property. However, to the extent possible, the General Partners attempt to diversify the type and location of the Partnership's properties. ITEM 2. DESCRIPTION OF PROPERTIES. (Continued) Description of Properties The Partnership's properties are commercial, single tenant buildings. The properties were acquired on a debt-free basis and are leased to various tenants under triple net leases, which are classified as operating leases. The Partnership holds an undivided fee simple interest in the properties. The Partnership's properties are subject to the general competitive conditions incident to the ownership of single tenant investment real estate. Since each property is leased under a long-term lease, there is little competition until the Partnership decides to sell the property. At this time, the Partnership will be competing with other real estate owners, on both a national and local level, in attempting to find buyers for the properties. In the event of a tenant default, the Partnership would be competing with other real estate owners, who have property vacancies, to attract a new tenant to lease the property. The Partnership's tenants operate in industries that are very competitive and can be affected by factors such as changes in regional or local economies, seasonality and changes in consumer preference. The following table is a summary of the properties that the Partnership acquired and owned as of December 31, 2001. Total Property Annual Annual Purchase Acquisition Lease Rent Per Property Date Costs Lessee Payment Sq. Ft. Arby's Restaurant Montgomery, AL RTM Gulf (2.6811%) 5/31/95 $ 23,049 Coast, Inc. $ 2,601 $32.72 Garden Ridge Retail Store Pineville, NC Garden (40.75%) 3/28/96 $3,644,391 Ridge, L.P. $423,945 $ 7.34 Denny's Restaurant Covington, LA 3/19/97 $1,304,948 (1) Champps Champps Americana Restaurant Entertainment San Antonio, TX 12/23/97 $2,833,357 of Texas, Inc. $317,780 $36.61 Champps Americana Restaurant Schaumburg, IL Champps (.9222%) 12/31/97 $ 41,954 Americana, Inc. $ 4,720 $45.87 Champps Americana Restaurant Livonia, MI Champps (74.6801%) 5/19/98 $3,099,269 Americana, Inc. $344,034 $50.33 Champps Americana Restaurant Champps Centerville, OH Operating (25.0%) 1/27/99 $ 984,426 Corporation $101,365 $43.28 ITEM 2. DESCRIPTION OF PROPERTIES. (Continued) Total Property Annual Annual Purchase Acquisition Lease Rent Per Property Date Costs Lessee Payment Sq. Ft. Tumbleweed Restaurant Tumbleweed, Fort Wayne, IN 9/11/00 $1,334,315 Inc. $135,274 $22.51 Children's World ARAMARK Daycare Center Educational Mundelein, IL 3/30/01 $1,618,824 Resources, Inc. $153,710 $16.81 Johnny Carino's Restaurant Austin, TX Kona Restaurant (25.0%) 9/26/01 $ 571,902 Group, Inc. $ 60,191 $37.27 (1)The property is vacant and under contract to be sold. The properties listed above with a partial ownership percentage are owned with affiliates of the Partnership and/or unrelated third parties. The remaining interests in the Garden Ridge retail store are owned by AEI Net Lease Income & Growth Fund XIX Limited Partnership and AEI Net Lease Income & Growth Fund XX Limited Partnership. The remaining interests in the Champps Americana restaurant in Schaumburg, Illinois are owned by AEI Net Lease Income & Growth Fund XX Limited Partnership and unrelated third parties. The remaining interests in the Champps Americana restaurant in Centerville, Ohio are owned by AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate Fund XVIII Limited Partnership and AEI Income & Growth Fund XXII Limited Partnership. The remaining interests in the Johnny Carino's restaurant are owned by AEI Real Estate Fund 85-A Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, and AEI Income & Growth Fund 23 LLC. The remaining interests in the Arby's restaurant and the Champps Americana restaurant in Livonia, Michigan are owned by unrelated third parties. The Partnership accounts for properties owned as tenants- in-common with affiliated Partnerships and/or unrelated third parties using the proportionate consolidation method. Each tenant-in-common owns a separate, undivided interest in the properties. Any tenant-in-common that holds more than a 50% interest does not control decisions over the other tenant-in- common interests. The financial statements reflect only this Partnership's percentage share of the properties' land, building and equipment, liabilities, revenues and expenses. The initial Lease terms are 20 years, except for the Children's World daycare center and the Tumbleweed restaurant, which have Lease terms of 15 years, and the Johnny Carino's restaurant, which has a Lease term of 17 years. The Leases contain renewal options which may extend the Lease term an additional 10 years for the Arby's and Tumbleweed restaurants, 15 years for the Children's World daycare center and the Champps Americana and Johnny Carino's restaurants, and 25 years for the Garden Ridge retail store. Pursuant to the Lease Agreements, the tenants are required to provide proof of adequate insurance coverage on the properties they occupy. The General Partners believe the properties are adequately covered by insurance and consider the properties to be well-maintained and sufficient for the Partnership's operations. ITEM 2. DESCRIPTION OF PROPERTIES. (Continued) For tax purposes, the Partnership's properties are depreciated under the Modified Accelerated Cost Recovery System (MACRS). The largest depreciable component of a property is the building which is depreciated, using the straight-line method, over 39 or 40 years. The remaining depreciable components of a property are personal property and land improvements which are depreciated, using an accelerated method, over 5 and 15 years, respectively. Since the Partnership has tax-exempt Partners, the Partnership is subject to the rules of Section 168(h)(6) of the Internal Revenue Code which requires a percentage of the properties' depreciable components to be depreciated over longer lives using the straight-line method. In general, the federal tax basis of the properties for tax depreciation purposes is the same as the basis for book depreciation purposes except for properties whose book value was reduced by a real estate impairment loss pursuant to Financial Accounting Standards Board Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The real estate impairment loss, which was recorded against the book cost of the land and depreciable property, was not recognized for tax purposes. Through December 31, 2001, all properties listed above were 100% occupied by the lessees, except the Denny's restaurant which has been 100% vacant since December 10, 2001. ITEM 3. LEGAL PROCEEDINGS. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED SECURITY HOLDER MATTERS. As of December 31, 2001, there were 1,296 holders of record of the registrant's Limited Partnership Units. There is no other class of security outstanding or authorized. The registrant's Units are not a traded security in any market. However, 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 will not be obligated to purchase in any year any number of Units that, when aggregated with all other transfers of Units that have occurred since the beginning of the same calendar year (excluding Permitted Transfers as defined in the Partnership Agreement), would exceed 5% of the total number of Units outstanding on January 1 of such 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. During 2001, eight Limited Partners redeemed a total of 86.83 Partnership Units for $68,050 in accordance with the Partnership Agreement. In prior years, twenty-five Limited Partners redeemed a total of 677.82 Partnership Units for $579,879. The redemptions increase the remaining Limited Partners' ownership interest in the Partnership. ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED SECURITY HOLDER MATTERS. (Continued) Cash distributions of $16,899 and $17,641 were made to the General Partners and $1,604,986 and $1,559,999 were made to the Limited Partners in 2001 and 2000, respectively. The distributions were made on a quarterly basis and represent Net Cash Flow, as defined, except as discussed below. These distributions should not be compared with dividends paid on capital stock by corporations. As part of the Limited Partner distributions discussed above, the Partnership distributed $159,075 and $226,111 of proceeds from property sales in 2001 and 2000, respectively. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. Results of Operations For the years ended December 31, 2001 and 2000, the Partnership recognized rental income of $1,763,031 and $1,738,729, respectively. During the same periods, the Partnership earned investment income of $80,857 and $132,150, respectively. In 2001, rental income increased as a result of additional rent received from three property acquisitions in 2000 and 2001, and rent increases on three properties. These increases in rental income were partially offset by a decrease in rental income as a result of the loss of rent from the Denny's restaurant and the property sales discussed below. In 2001, investment income decreased as the Partnership received less interest income from construction advances, from the money market account (due to lower interest rates in 2001) and from the Note related to the sale of the Media Play store, which was outstanding for a shorter period in 2001 versus 2000. In May, 2001, Huntington Restaurants Group, Inc. (HRG), the lessee of the Denny's Restaurant in Covington, Louisiana notified the Partnership that it was experiencing financial problems and would not make the lease payments while they worked out a plan which would enable them to continue operations without seeking bankruptcy protection. In October, 2001, the Partnership received an offer to buy the restaurant for $900,000 from an unrelated third party. Effective December 10, 2001, the Partnership terminated the Lease to accommodate the sale. Through this date, HRG owed $80,316 of rent, which will not be collected and was not accrued for financial reporting purposes. On February 19, 2002, the sale closed with the Partnership receiving net sale proceeds of approximately $850,000. In the third quarter of 2001, a charge to operations for real estate impairment of $295,354 was recognized, which was the difference between the book value at September 30, 2001 of $1,145,354 and the estimated net sales proceeds of $850,000. The charge was recorded against the cost of the building and equipment. The land and building have been classified as Real Estate Held for Sale at December 31, 2001. During the years ended December 31, 2001 and 2000, the Partnership paid Partnership administration expenses to affiliated parties of $282,187 and $260,974, respectively. These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and correspondence to the Limited Partners. During the same periods, the Partnership incurred Partnership administration and property management expenses from unrelated parties of $32,447 and $74,283, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit and accounting costs, taxes, insurance and other property costs. The decrease in these expenses in 2001, when compared to 2000, is mainly the result of expenses incurred in 2000 related to the Media Play store. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) As of December 31, 2001, the Partnership's annualized cash distribution rate was 6.75%, based on the Adjusted Capital Contribution. Distributions of Net Cash Flow to the General Partners were subordinated to the Limited Partners as required in the Partnership Agreement. As a result, 99% of distributions were allocated to Limited Partners and 1% to the General Partners. Inflation has had a minimal effect on income from operations. Leases may contain rent increases, based on the increase in the Consumer Price Index over a specified period, which will result in an increase in rental income over the term of the leases. In addition, leases may contain rent clauses which entitle the Partnership to receive additional rent in future years if gross receipts for the property exceed certain specified amounts. Increases in sales volumes of the tenants, due to inflation and real sales growth, may result in an increase in rental income over the term of the leases. Inflation also may cause the real estate to appreciate in value. However, inflation and changing prices may have an adverse impact on the operating margins of the properties' tenants, which could impair their ability to pay rent and subsequently reduce the Net Cash Flow available for distributions. Liquidity and Capital Resources During the year ended December 31, 2001, the Partnership's cash balances increased $3,072,684 mainly as a result of cash generated from the sale of property which was partially offset by cash used to purchase property and the Partnership distributed more cash to the Partners than it generated from operating activities. Net cash provided by operating activities decreased from $1,571,670 in 2000 to $1,500,344 in 2001 mainly as a result of a decrease in income in 2001 and net timing differences in the collection of payments from the lessees and the payment of expenses, which were partially offset by a decrease in Partnership administration expenses in 2001. The major components of the Partnership's cash flow from investing activities are investments in real estate and proceeds from the sale of real estate. During the years ended December 31, 2001 and 2000, the Partnership generated cash flow from the sale of real estate of $4,746,672 and $499,585, respectively. During the same periods, the Partnership expended $2,175,331 and $1,335,405, respectively, to invest in real properties (inclusive of acquisition expenses) as the Partnership reinvested cash generated from property sales. On August 2, 2000, the Media Play store was sold to an unrelated third party for $2,500,000. The sale agreement required $500,000 in cash and a $2,000,000 contract for deed, which bore interest at 9%. On January 16, 2001, the Partnership received its share of the outstanding principal and accrued interest on the Note. The Partnership's share of the net sale proceeds was $820,651, which resulted in a net gain of $129,813. At the time of sale, the cost and related accumulated depreciation was $833,860 and $143,022. Through December 31, 2001, the Partnership sold its interest in the Champps Americana restaurant in Columbus, Ohio, in eleven separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $2,295,174, which resulted in a total net gain of $631,607. The total cost and related accumulated depreciation of the interests sold was $1,808,880 and $145,313, respectively. For the year ended December 31, 2001, the net gain was $289,679. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) Through December 31, 2001, the Partnership sold 48.6778% of the Champps Americana restaurant in Schaumburg, Illinois, in twelve separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $2,838,148, which resulted in a total net gain of $821,530. The total cost and related accumulated depreciation of the interests sold was $2,214,507 and $197,889, respectively. For the years ended December 31, 2001 and 2000, the net gain was $727,695 and $93,835, respectively. During 2001, the Partnership sold 25.3199% of the Champps Americana restaurant in Livonia, Michigan, in six separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $1,355,792, which resulted in a total net gain of $423,383. The total cost and related accumulated depreciation of the interest sold was $1,050,791 and $118,382, respectively. During 2001 and 2000, the Partnership distributed $160,682 and $228,395 of the net sale proceeds to the Limited and General Partners as part of their regular quarterly distributions which represented a return of capital of $6.85 and $9.68 per Limited Partnership Unit, respectively. The remaining net sale proceeds will either be reinvested in additional property or distributed to the Partners in the future. On March 8, 2000, the Partnership purchased a parcel of land in Fort Wayne, Indiana for $549,000. The land is leased to Tumbleweed, Inc. (TWI) under a Lease Agreement with a primary term of 15 years and annual rental payments of $48,038. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to TWI for the construction of a Tumbleweed restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 8.75%. Effective July 5, 2000, the interest rate was increased to 9.875%. On September 11, 2000, after the development was completed, the Lease Agreement was amended to require annual rental payments of $132,621. Total acquisition costs, including the cost of the land, were $1,334,315. On March 30, 2001, the Partnership purchased a Children's World daycare center in Mundelein, Illinois for $1,618,824. The property is leased to ARAMARK Educational Resources, Inc. under a Lease Agreement with a primary term of 15 years and annual rental payments of $153,710. On March 8, 2001, the Partnership purchased a 25% interest in a parcel of land in Austin, Texas for $283,000. The land is leased to Kona Restaurant Group, Inc. (KRG) under a Lease Agreement with a primary term of 17 years and annual rental payments of $29,715. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to KRG for the construction of a Johnny Carino's restaurant on the site. The Partnership charged interest on the advances at a rate of 10.5%. On September 26, 2001, after the development was completed, the Lease Agreement was amended to require annual rental payments of $60,191. The Partnership's share of the total acquisition costs, including the cost of the land, was $571,902. The remaining interests in the property are owned by AEI Real Estate Fund 85-A Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, and AEI Income & Growth Fund 23 LLC, affiliates of the Partnership. 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. Redemption payments are paid to redeeming Partners in the fourth quarter of each year. Effective April 1, 2001, the Partnership's distribution rate was increased from 6.5% to 6.75%. As a result, distributions were higher during 2001 when compared to 2000. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) 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 will not be obligated to purchase in any year any number of Units that, when aggregated with all other transfers of Units that have occurred since the beginning of the same calendar year (excluding Permitted Transfers as defined in the Partnership Agreement), would exceed 5% of the total number of Units outstanding on January 1 of such 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. During 2001, eight Limited Partners redeemed a total of 86.83 Partnership Units for $68,050 in accordance with the Partnership Agreement. The Partnership acquired these Units using Net Cash Flow from operations. In prior years, twenty-five Limited Partners redeemed a total of 677.82 Partnership Units for $579,879. The redemptions increase the remaining Limited Partners' ownership interest in the Partnership. The continuing rent payments from the properties, together with cash generated from property sales, should be adequate to fund continuing distributions and meet other Partnership obligations on both a short-term and long-term basis. 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. ITEM 7. FINANCIAL STATEMENTS. See accompanying index to financial statements. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP INDEX TO FINANCIAL STATEMENTS Report of Independent Auditors Balance Sheet as of December 31, 2001 and 2000 Statements for the Years Ended December 31, 2001 and 2000: Income Cash Flows Changes in Partners' Capital Notes to Financial Statements REPORT OF INDEPENDENT AUDITORS To the Partners: AEI Income & Growth Fund XXI Limited Partnership St. Paul, Minnesota We have audited the accompanying balance sheet of AEI Income & Growth Fund XXI Limited Partnership (a Minnesota limited partnership) as of December 31, 2001 and 2000 and the related statements of income, cash flows and changes in partners' capital for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AEI Income & Growth Fund XXI Limited Partnership as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Minneapolis, Minnesota /s/ BOULAY, HEUTMAKER, ZIBELL & CO. P.L.L.P. January 23, 2002 Boulay, Heutmaker, Zibell & Co. P.L.L.P. Certified Public Accountants AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP BALANCE SHEET DECEMBER 31 ASSETS 2001 2000 CURRENT ASSETS: Cash and Cash Equivalents $ 4,460,840 $ 1,388,156 Receivables 9,567 5,100 Short-Term Note Receivable 0 675,920 ----------- ----------- Total Current Assets 4,470,407 2,069,176 ----------- ----------- INVESTMENTS IN REAL ESTATE: Land 4,976,315 6,134,768 Buildings and Equipment 9,175,172 10,832,312 Property Acquisition Costs 0 15,395 Accumulated Depreciation (1,418,203) (1,504,698) ----------- ----------- 12,733,284 15,477,777 Real Estate Held for Sale 846,124 0 ----------- ----------- Net Investments in Real Estate 13,579,408 15,477,777 ----------- ----------- Total Assets $18,049,815 $17,546,953 =========== =========== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Payable to AEI Fund Management, Inc. $ 37,491 $ 61,934 Distributions Payable 405,719 390,705 ----------- ----------- Total Current Liabilities 443,210 452,639 ----------- ----------- PARTNERS' CAPITAL (DEFICIT): General Partners 13,932 (38,243) Limited Partners, $1,000 Unit Value; 24,000 Units authorized and issued; 23,235 and 23,322 Units outstanding in 2001 and 2000, respectively 17,592,673 17,132,557 ----------- ----------- Total Partners' Capital 17,606,605 17,094,314 ----------- ----------- Total Liabilities and Partners' Capital $18,049,815 $17,546,953 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31 2001 2000 INCOME: Rent $ 1,763,031 $ 1,738,729 Investment Income 80,857 132,150 ----------- ----------- Total Income 1,843,888 1,870,879 ----------- ----------- EXPENSES: Partnership Administration - Affiliates 282,187 260,974 Partnership Administration and Property Management - Unrelated Parties 32,447 74,283 Depreciation 472,431 473,893 Real Estate Impairment 295,354 0 ----------- ----------- Total Expenses 1,082,419 809,150 ----------- ----------- OPERATING INCOME 761,469 1,061,729 GAIN ON SALE OF REAL ESTATE 1,440,757 223,648 ----------- ----------- NET INCOME $ 2,202,226 $ 1,285,377 =========== =========== NET INCOME ALLOCATED: General Partners $ 69,074 $ 12,854 Limited Partners 2,133,152 1,272,523 ----------- ----------- $ 2,202,226 $ 1,285,377 =========== =========== NET INCOME PER LIMITED PARTNERSHIP UNIT (23,300 and 23,492 weighted average Units outstanding in 2001 and 2000, respectively) $ 91.55 $ 54.17 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 2,202,226 $ 1,285,377 Adjustments To Reconcile Net Income To Net Cash Provided By Operating Activities: Depreciation 472,431 473,893 Real Estate Impairment 295,354 0 Gain on Sale of Real Estate (1,440,757) (223,648) Increase in Receivables (4,467) (5,100) Increase (Decrease) in Payable to AEI Fund Management, Inc. (24,443) 41,148 ----------- ----------- Total Adjustments (701,882) 286,293 ----------- ----------- Net Cash Provided By Operating Activities 1,500,344 1,571,670 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in Real Estate (2,175,331) (1,335,405) Proceeds from Sale of Real Estate 4,746,672 499,585 Payments Received on Short-Term Note Receivable 675,920 4,080 ----------- ----------- Net Cash Provided By (Used For) Investing Activities 3,247,261 (831,740) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (Decrease) in Distributions Payable 15,014 (33) Distributions to Partners (1,621,198) (1,575,757) Redemption Payments (68,737) (188,262) ----------- ----------- Net Cash Used For Financing Activities (1,674,921) (1,764,052) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,072,684 (1,024,122) CASH AND CASH EQUIVALENTS, beginning of period 1,388,156 2,412,278 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 4,460,840 $ 1,388,156 =========== =========== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES: Note Receivable Acquired in Sale of Property $ 680,000 =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31 Limited Partnership General Limited Units Partners Partners Total Outstanding BALANCE, December 31, 1999 $(33,456) $17,606,412 $17,572,956 23,548.50 Distributions (15,758) (1,559,999) (1,575,757) Redemption Payments (1,883) (186,379) (188,262) (226.32) Net Income 12,854 1,272,523 1,285,377 --------- ----------- ----------- ----------- BALANCE, December 31, 2000 (38,243) 17,132,557 17,094,314 23,322.18 Distributions (16,212) (1,604,986) (1,621,198) Redemption Payments (687) (68,050) (68,737) (86.83) Net Income 69,074 2,133,152 2,202,226 --------- ----------- ----------- ----------- BALANCE, December 31, 2001 $ 13,932 $17,592,673 $17,606,605 23,235.35 ========= =========== =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (1) Organization - AEI Income & Growth Fund XXI 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. Robert P. Johnson, the President and sole shareholder of AFM, serves as the Individual General Partner and an affiliate of AFM, AEI Fund Management, Inc. (AEI), 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. The Partnership commenced operations on April 14, 1995 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. On January 31, 1997, the offering terminated when the maximum subscription limit of 24,000 Limited Partnership Units ($24,000,000) was reached. Under the terms of the Limited Partnership Agreement, the Limited Partners and General Partners contributed funds of $24,000,000 and $1,000, respectively. During operations, any Net Cash Flow, as defined, which the General Partners determine to distribute will be distributed 90% to the Limited Partners and 10% to the General Partners; provided, however, that such distributions to the General Partners will be subordinated to the Limited Partners first receiving an annual, noncumulative distribution of Net Cash Flow equal to 10% of their Adjusted Capital Contribution, as defined, and, provided further, that in no event will the General Partners receive less than 1% of such Net Cash Flow per annum. Distributions to Limited Partners will be made pro rata by Units. Any Net Proceeds of Sale, as defined, from the sale or financing of 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 10% 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. For tax purposes, profits from operations, other than profits attributable to the sale, exchange, financing, refinancing or other disposition of 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. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (1) Organization - (Continued) For tax purposes, profits arising from the sale, financing, or other disposition of 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 10% 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. (2) Summary of Significant Accounting Policies - Financial Statement Presentation The accounts of the Partnership are maintained on the accrual basis of accounting for both federal income tax purposes and financial reporting purposes. Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. The Partnership regularly assesses whether market events and conditions indicate that it is reasonably possible to recover the carrying amounts of its investments in real estate from future operations and sales. A change in those market events and conditions could have a material effect on the carrying amount of its real estate. Cash Concentrations of Credit Risk The Partnership's cash is deposited primarily in one financial institution and at times during the year it may exceed FDIC insurance limits. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (2) Summary of Significant Accounting Policies - (Continued) Statement of Cash Flows For purposes of reporting cash flows, cash and cash equivalents may include cash in checking, cash invested in money market accounts, certificates of deposit, federal agency notes and commercial paper with a term of three months or less. Income Taxes The income or loss of the Partnership for federal income tax reporting purposes is includable in the income tax returns of the partners. Accordingly, no recognition has been given to income taxes in the accompanying financial statements. The tax return, the qualification of the Partnership as such for tax purposes, and the amount of distributable Partnership income or loss are subject to examination by federal and state taxing authorities. If such an examination results in changes with respect to the Partnership qualification or in changes to distributable Partnership income or loss, the taxable income of the partners would be adjusted accordingly. Real Estate The Partnership's real estate is leased under triple net leases classified as operating leases. The Partnership recognizes rental revenue on the accrual basis according to the terms of the individual leases. For leases which contain rental increases based on cost of living increases, the increases are recognized in the year in which they are effective. Real estate is recorded at the lower of cost or estimated net realizable value. The Partnership compares the carrying amount of its properties to the estimated future cash flows expected to result from the property and its eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the property, the Partnership recognizes an impairment loss by the amount by which the carrying amount of the property exceeds the fair value of the property. The Partnership has capitalized as Investments in Real Estate certain costs incurred in the review and acquisition of the properties. The costs were allocated to the land, buildings and equipment. The buildings and equipment of the Partnership are depreciated using the straight-line method for financial reporting purposes based on estimated useful lives of 25 years and 5 years, respectively. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (2) Summary of Significant Accounting Policies - (Continued) The Partnership accounts for properties owned as tenants- in-common with affiliated Partnerships and/or unrelated third parties using the proportionate consolidation method. Each tenant-in-common owns a separate, undivided interest in the properties. Any tenant-in-common that holds more than a 50% interest does not control decisions over the other tenant-in-common interests. The financial statements reflect only this Partnership's percentage share of the properties' land, building and equipment, liabilities, revenues and expenses. Newly Issued Pronouncements The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (SFAS 143) and Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 143 will be applicable to the Partnership in the year ended December 31, 2003. SFAS 144 will be applicable to the Partnership in the year ended December 31, 2002. Management is currently evaluating the impact of SFAS 143 and SFAS 144 on its financial statements. (3) Related Party Transactions - The Partnership owns a 40.75% interest in a Garden Ridge retail store. The remaining interests in this property are owned by AEI Net Lease Income & Growth Fund XIX Limited Partnership and AEI Net Lease Income & Growth Fund XX Limited Partnership, affiliates of the Partnership. As of December 31, 2001, the Partnership owns a .9222% interest in a Champps Americana restaurant in Schaumburg, Illinois. The remaining interests in this property are owned by AEI Net Lease Income & Growth Fund XX Limited Partnership and unrelated third parties. Net Lease Income & Growth Fund 84- A Limited Partnership, an affiliate of the Partnership, owned a 13.4% interest in this property until the interest was sold, in a series of transactions, to unrelated third parties in 2000. The Partnership owns a 25.0% interest in a Champps Americana restaurant in Centerville, Ohio. The remaining interests in this property are owned by AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate Fund XVIII Limited Partnership and AEI Income & Growth Fund XXII Limited Partnership, affiliates of the Partnership. The Partnership owns a 25.0% interest in a Johnny Carino's restaurant. The remaining interests in this property are owned by AEI Real Estate Fund 85-A Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, and AEI Income & Growth Fund 23 LLC, affiliates of the Partnership. The Partnership owned a 34.0% interest in a Media Play retail store. The remaining interests in this property were owned by AEI Net Lease Income & Growth Fund XIX Limited Partnership and AEI Net Lease Income & Growth Fund XX Limited Partnership. The Partnership owned a 67.8% interest in a Champps Americana restaurant in Columbus, Ohio. The remaining interests in this property are owned by AEI Real Estate Fund XVIII Limited Partnership and unrelated third parties. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (3) Related Party Transactions - (Continued) AEI and AFM received the following compensation and reimbursements for costs and expenses from the Partnership: Total Incurred by the Partnership for the Years Ended December 31 2001 2000 a.AEI and AFM are reimbursed for all costs incurred in connection with managing the Partnership's operations, maintaining the Partnership's books and communicating the results of operations to the Limited Partners. $ 282,187 $ 260,974 ======== ======== b.AEI and AFM are reimbursed for all direct expenses they have paid on the Partnership's behalf to third parties relating to Partnership administration and property management. These expenses included printing costs, legal and filing fees, direct administrative costs, outside audit and accounting costs, taxes, insurance and other property costs. $ 32,447 $ 74,283 ======== ======== c.AEI is reimbursed for all costs and direct expenses incurred by it in acquiring properties on behalf of the Partnership. The amounts are net of financing and commitment fees and expense reimbursements received by the Partnership from the lessees in the amount of $36,659 and $37,442 for 2001 and 2000, respectively. $ (15,919) $ (7,595) ======== ======== d.AEI is reimbursed for all costs incurred in connection with the sale of property. $ 190,895 $ 13,445 ======== ======== The payable to AEI Fund Management, Inc. represents the balance due for the services described in 3a, b, c and d. This balance is non-interest bearing and unsecured and is to be paid in the normal course of business. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (4) Short-Term Note Receivable - On August 2, 2000, the Partnership received a Contract for Deed from an affiliate of the buyer of the Media Play store in Apple Valley, Minnesota. The Note bore interest at 9% and was secured by the land, building and equipment. As of December 31, 2000, the Partnership's share of outstanding principal due on the Note was $675,920. On January 16, 2001, the Partnership received the outstanding principal and accrued interest on the Note. (5) Investments in Real Estate - The Partnership leases its properties to various tenants through triple net leases, which are 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 20 years, except for the Children's World daycare center and the Tumbleweed restaurant, which have Lease terms of 15 years, and the Johnny Carino's restaurant, which has a Lease term of 17 years. The Leases contain renewal options which may extend the Lease term an additional 10 years for the Arby's and Tumbleweed restaurants, 15 years for the Children's World daycare center and the Champps Americana and Johnny Carino's restaurants, and 25 years for the Garden Ridge retail store. The Leases contain rent clauses which entitle the Partnership to receive additional rent in future years based on stated rent increases. Certain lessees have been granted options to purchase the property. Depending on the lease, the purchase price is either determined by a formula, or is the greater of the fair market value of the property or the amount determined by a formula. In all cases, if the option were to be exercised by the lessee, the purchase price would be greater than the original cost of the property. The Partnership's properties are commercial, single-tenant buildings. The Arby's restaurant was constructed and acquired in 1995. The Champps Americana restaurant in Livonia, Michigan was constructed and acquired in 1998. The land for the Champps Americana restaurant in Centerville, Ohio was acquired in 1998 and construction of the restaurant was completed in 1999. The Tumbleweed restaurant was constructed and acquired in 2000. The Children's World daycare center was constructed in 2000 and acquired in 2001. The Johnny Carino's restaurant was constructed and acquired in 2001. The remaining properties were constructed and acquired in 1996 or 1997. There have been no costs capitalized as improvements subsequent to the acquisitions. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (5) Investments in Real Estate - (Continued) The cost of the property not held for sale and related accumulated depreciation at December 31, 2001 are as follows: Buildings and Accumulated Property Land Equipment Total Depreciation Arby's, Montgomery, AL $ 10,033 $ 13,016 $ 23,049 $ 3,427 Garden Ridge, Pineville, NC 1,181,253 2,463,138 3,644,391 566,522 Champps Americana, San Antonio, TX 1,127,016 1,706,341 2,833,357 324,308 Champps Americana, Schaumburg, IL 17,836 24,118 41,954 4,291 Champps Americana, Livonia, MI 853,156 2,246,113 3,099,269 370,550 Champps Americana, Centerville, OH 498,204 486,222 984,426 63,410 Tumbleweed, Fort Wayne, IN 562,078 772,237 1,334,315 47,316 Children's World, Mundelein, IL 435,936 1,182,888 1,618,824 35,487 Johnny Carino's, Austin, TX 290,803 281,099 571,902 2,892 ----------- ----------- ----------- ---------- $ 4,976,315 $ 9,175,172 $14,151,487 $1,418,203 =========== =========== =========== ========== On August 2, 2000, the Media Play store was sold to an unrelated third party for $2,500,000. The sale agreement required $500,000 in cash and a $2,000,000 contract for deed, which bore interest at 9%. On January 16, 2001, the Partnership received its share of the outstanding principal and accrued interest on the Note. The Partnership's share of the net sale proceeds was $820,651, which resulted in a net gain of $129,813. At the time of sale, the cost and related accumulated depreciation was $833,860 and $143,022. Through December 31, 2001, the Partnership sold its interest in the Champps Americana restaurant in Columbus, Ohio, in eleven separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $2,295,174, which resulted in a total net gain of $631,607. The total cost and related accumulated depreciation of the interests sold was $1,808,880 and $145,313, respectively. For the year ended December 31, 2001, the net gain was $289,679. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (5) Investments in Real Estate - (Continued) Through December 31, 2001, the Partnership sold 48.6778% of the Champps Americana restaurant in Schaumburg, Illinois, in twelve separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $2,838,148, which resulted in a total net gain of $821,530. The total cost and related accumulated depreciation of the interests sold was $2,214,507 and $197,889, respectively. For the years ended December 31, 2001 and 2000, the net gain was $727,695 and $93,835, respectively. During 2001, the Partnership sold 25.3199% of the Champps Americana restaurant in Livonia, Michigan, in six separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $1,355,792, which resulted in a total net gain of $423,383. The total cost and related accumulated depreciation of the interest sold was $1,050,791 and $118,382, respectively. During 2001 and 2000, the Partnership distributed $160,682 and $228,395 of the net sale proceeds to the Limited and General Partners as part of their regular quarterly distributions which represented a return of capital of $6.85 and $9.68 per Limited Partnership Unit, respectively. The remaining net sale proceeds will either be reinvested in additional property or distributed to the Partners in the future. On March 8, 2000, the Partnership purchased a parcel of land in Fort Wayne, Indiana for $549,000. The land is leased to Tumbleweed, Inc. (TWI) under a Lease Agreement with a primary term of 15 years and annual rental payments of $48,038. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to TWI for the construction of a Tumbleweed restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 8.75%. Effective July 5, 2000, the interest rate was increased to 9.875%. On September 11, 2000, after the development was completed, the Lease Agreement was amended to require annual rental payments of $132,621. Total acquisition costs, including the cost of the land, were $1,334,315. On March 30, 2001, the Partnership purchased a Children's World daycare center in Mundelein, Illinois for $1,618,824. The property is leased to ARAMARK Educational Resources, Inc. under a Lease Agreement with a primary term of 15 years and annual rental payments of $153,710. On March 8, 2001, the Partnership purchased a 25% interest in a parcel of land in Austin, Texas for $283,000. The land is leased to Kona Restaurant Group, Inc. (KRG) under a Lease Agreement with a primary term of 17 years and annual rental payments of $29,715. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to KRG for the construction of a Johnny Carino's restaurant on the site. The Partnership charged interest on the advances at a rate of 10.5%. On September 26, 2001, after the development was completed, the Lease Agreement was amended to require annual rental payments of $60,191. The Partnership's share of the total acquisition costs, including the cost of the land, was $571,902. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (5) Investments in Real Estate - (Continued) In May, 2001, Huntington Restaurants Group, Inc. (HRG), the lessee of the Denny's Restaurant in Covington, Louisiana notified the Partnership that it was experiencing financial problems and would not make the lease payments while they worked out a plan which would enable them to continue operations without seeking bankruptcy protection. In October, 2001, the Partnership received an offer to buy the restaurant for $900,000 from an unrelated third party. Effective December 10, 2001, the Partnership terminated the Lease to accommodate the sale. Through this date, HRG owed $80,316 of rent, which will not be collected and was not accrued for financial reporting purposes. On February 19, 2002, the sale closed with the Partnership receiving net sale proceeds of approximately $850,000. In the third quarter of 2001, a charge to operations for real estate impairment of $295,354 was recognized, which was the difference between the book value at September 30, 2001 of $1,145,354 and the estimated net sales proceeds of $850,000. The charge was recorded against the cost of the building and equipment. The land and building have been classified as Real Estate Held for Sale at December 31, 2001. The Partnership owns a 2.6811% interest in an Arby's restaurant. The remaining interests in this property are owned by unrelated third parties, who own the property with the Partnership as tenants-in-common. The minimum future rentals on the Leases for years subsequent to December 31, 2001 are as follows: 2002 $ 1,543,643 2003 1,544,435 2004 1,546,732 2005 1,546,773 2006 1,546,814 Thereafter 16,027,880 ----------- $23,756,277 ======== There were no contingent rents recognized in 2001 or 2000. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (6) Major Tenants - The following schedule presents rent revenue from individual tenants, or affiliated groups of tenants, who each contributed more than ten percent of the Partnership's total rent revenue for the years ended December 31: 2001 2000 Tenants Industry Champps Americana Group Restaurant $ 998,729 $1,137,251 Garden Ridge, L.P. Retail 417,283 383,973 ---------- ---------- Aggregate rent revenue of major tenants $1,416,012 $1,521,224 ========== ========== Aggregate rent revenue of major tenants as a percentage of total rent revenue 80% 87% ========== ========== (7) Partners' Capital - Cash distributions of $16,899 and $17,641 were made to the General Partners and $1,604,986 and $1,559,999 were made to the Limited Partners for the years ended December 31, 2001 and 2000, respectively. The Limited Partners' distributions represent $68.88 and $66.41 per Limited Partnership Unit outstanding using 23,300 and 23,492 weighted average Units in 2001 and 2000, respectively. The distributions represent $68.88 and $46.18 per Unit of Net Income and $-0- and $20.23 per Unit of return of contributed capital in 2001 and 2000, respectively. As part of the Limited Partner distributions discussed above, the Partnership distributed $159,075 and $226,111 of proceeds from property sales in 2001 and 2000, respectively. Distributions of Net Cash Flow to the General Partners during 2001 and 2000 were subordinated to the Limited Partners as required in the Partnership Agreement. As a result, 99% of distributions were allocated to the Limited Partners and 1% to the General Partners. 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 will not be obligated to purchase in any year any number of Units that, when aggregated with all other transfers of Units that have occurred since the beginning of the same calendar year (excluding Permitted Transfers as defined in the Partnership Agreement), would exceed 5% of the total number of Units outstanding on January 1 of such 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. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (7) Partners' Capital - (Continued) During 2001, eight Limited Partners redeemed a total of 86.83 Partnership Units for $68,050 in accordance with the Partnership Agreement. The Partnership acquired these Units using Net Cash Flow from operations. In 2000, twelve Limited Partners redeemed a total of 226.32 Partnership Units for $186,379. The redemptions increase the remaining Limited Partners' ownership interest in the Partnership. After the effect of redemptions, the Adjusted Capital Contribution, as defined in the Partnership Agreement, is $1,032.91 per original $1,000 invested. (8) Income Taxes - The following is a reconciliation of net income for financial reporting purposes to income reported for federal income tax purposes for the years ended December 31: 2001 2000 Net Income for Financial Reporting Purposes $2,202,226 $1,285,377 Depreciation for Tax Purposes Under Depreciation for Financial Reporting Purposes 161,296 150,861 Real Estate Impairment Loss Not Recognized for Tax Purposes 295,354 0 Amortization of Start-Up and Organization Costs (49,289) (60,493) Gain on Sale of Real Estate for Tax Purposes Under Gain for Financial Reporting Purposes (121,527) (607,617) ----------- ----------- Taxable Income to Partners $2,488,060 $ 768,128 =========== =========== AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 (8) Income Taxes - (Continued) The following is a reconciliation of Partners' capital for financial reporting purposes to Partners' capital reported for federal income tax purposes for the years ended December 31: 2001 2000 Partners' Capital for Financial Reporting Purposes $17,606,605 $17,094,314 Adjusted Tax Basis of Investments in Real Estate Over Net Investments in Real Estate for Financial Reporting Purposes 808,776 473,653 Capitalized Start-Up Costs Under Section 195 291,517 291,517 Amortization of Start-Up and Organization Costs (283,543) (234,254) Organization and Syndication Costs Treated as Reduction of Capital for Financial Reporting Purposes 3,214,043 3,214,043 ----------- ----------- Partners' Capital for Tax Reporting Purposes $21,637,398 $20,839,273 =========== =========== (9) Fair Value of Financial Instruments - The estimated fair values of the financial instruments, none of which are held for trading purposes, are as follows at December 31: 2001 2000 Carrying Fair Carrying Fair Amount Value Amount Value Cash $ 115 $ 115 $ 176 $ 176 Money Market Funds 4,460,725 4,460,725 1,387,980 1,387,980 ---------- ---------- ---------- ---------- Total Cash and Cash Equivalents $4,460,840 $4,460,840 $1,388,156 $1,388,156 ========== ========== ========== ========== ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. The registrant is a limited partnership and has no officers, directors, or direct employees. The General Partners of the registrant are Robert P. Johnson and AFM. The General Partners manage and control the Partnership's affairs and have general responsibility and the ultimate authority in all matters affecting the Partnership's business. The director and officers of AFM are as follows: Robert P. Johnson, age 57, is Chief Executive Officer, President and Director and has held these positions since the formation of AFM in August, 1994, and has been elected to continue in these positions until December, 2002. From 1970 to the present, he had been employed exclusively in the investment industry, specializing in tax-advantaged limited partnership investments. In that capacity, he has been involved in the development, analysis, marketing and management of public and private investment programs investing in net lease properties as well as public and private investment programs investing in energy development. Since 1971, Mr. Johnson has been the president, a director and a registered principal of AEI Securities, Inc., which is registered with the Securities and Exchange Commission as a securities broker-dealer, is a member of the National Association of Securities Dealers, Inc. (NASD) and is a member of the Security Investors Protection Corporation (SIPC). Mr. Johnson has been president, a director and the principal shareholder of AEI Fund Management, Inc., a real estate management company founded by him, since 1978. Mr. Johnson is currently a general partner or principal of the general partner in thirteen limited partnerships and a managing member in two LLCs. Mark E. Larson, age 49, is Executive Vice President, Secretary, Treasurer and Chief Financial Officer and has held these positions since the formation of AFM in August, 1994, and has been elected to continue in these positions until December, 2002. Mr. Larson has been employed by AEI Fund Management, Inc. and affiliated entities since 1985. From 1979 to 1985, Mr. Larson was with Apache Corporation as manager of Program Accounting responsible for the accounting and reports for approximately 46 public partnerships. Mr. Larson is responsible for supervising the accounting functions of AFM and the registrant. ITEM 10. EXECUTIVE COMPENSATION. The General Partner and affiliates are reimbursed at cost for all services performed on behalf of the registrant and for all third party expenses paid on behalf of the registrant. The cost for services performed on behalf of the registrant is actual time spent performing such services plus an overhead burden. These services include organizing the registrant and arranging for the offer and sale of Units, reviewing properties for acquisition and rendering administrative and management services. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following table sets forth information pertaining to the ownership of the Units by each person known by the Partnership to beneficially own 5% or more of the Units, by each General Partner, and by each officer or director of the Managing General Partner as of February 28, 2002: Name and Address Number of Percent of Beneficial Owner Units Held of Class AEI Fund Management XXI, Inc. 0 0% 1300 Minnesota World Trade Center 30 East 7th Street, St. Paul, Minnesota 55101 Robert P. Johnson 0 0% 1300 Minnesota World Trade Center 30 East 7th Street, St. Paul, Minnesota 55101 Mark E. Larson 0 0% 1300 Minnesota World Trade Center 30 East 7th Street, St. Paul, Minnesota 55101 The General Partners know of no holders of more than 5% of the outstanding Units. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The registrant, AFM and its affiliates have common management and utilize the same facilities. As a result, certain administrative expenses are allocated among these related entities. All of such activities and any other transactions involving the affiliates of the General Partner of the registrant are governed by, and are conducted in conformity with, the limitations set forth in the Limited Partnership Agreement of the registrant. The following table sets forth the forms of compensation, distributions and cost reimbursements paid by the registrant to the General Partners or their Affiliates in connection with the operation of the Fund and its properties for the period from inception through December 31, 2001. Person or Entity Amount Incurred From Receiving Form and Method Inception (August 31, 1994) Compensation of Compensation To December 31, 2001 AEI Securities, Inc. Selling Commissions equal to 8% $2,400,000 of proceeds plus a 2% nonaccountable expense allowance, most of which was reallowed to Participating Dealers. General Partners and Reimbursement at Cost for other $ 877,000 Affiliates Organization and Offering Costs. General Partners and Reimbursement at Cost for all $ 413,421 Affiliates Acquisition Expenses ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (Continued) Person or Entity Amount Incurred From Receiving Form and Method Inception (August 31, 1994) Compensation of Compensation To December 31, 2001 General Partners and Reimbursement at Cost for all $1,645,064 Affiliates Administrative Expenses attributable to the Fund, including all expenses related to management of the Fund's properties and all other transfer agency, reporting, partner relations and other administrative functions. General Partners and Reimbursement at Cost for all $ 317,193 Affiliates expenses related to the disposition of the Fund's properties. General Partners 1% of Net Cash Flow in any fiscal $ 95,242 year until the Limited Partners have received annual, non-cumulative distributions of Net Cash Flow equal to 10% of their Adjusted Capital Contributions and 10% of any remaining Net Cash Flow in such fiscal year. General Partners 1% of distributions of Net Proceeds $ 14,193 of Sale until Limited Partners have received an amount equal to (a) their Adjusted Capital Contributions, plus (b) an amount equal to 12% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously distributed. 10% of distributions of Net Proceeds of Sale thereafter. The limitations included in the Partnership Agreement require that the cumulative reimbursements to the General Partners and their affiliates for administrative expenses not allowed under the NASAA Guidelines ("Guidelines") will not exceed the sum of (i) the front-end fees allowed by the Guidelines less the front-end fees paid, (ii) the cumulative property management fees allowed but not paid, (iii) any real estate commission allowed under the Guidelines, and (iv) 10% of Net Cash Flow less the Net Cash Flow actually distributed. The reimbursements not allowed under the Guidelines include a controlling person's salary and fringe benefits, rent and depreciation. As of December 31, 2001, the cumulative reimbursements to the General Partners and their affiliates did not exceed these amounts. PART IV ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A. A. Exhibits - Description 3.1 Certificate of Limited Partnership (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form SB-2 filed October 10, 1994 [File No. 33- 85076C]). 3.2 Restated Limited Partnership Agreement to the Prospectus (incorporated by reference to Exhibit A of Amendment No. 2 of the registrant's Registration Statement on Form SB-2 filed January 20, 1995 [File No. 33-85076C]). ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A. (Continued) A. Exhibits - Description 10.1 Net Lease Agreement dated May 31, 1995, between the Partnership and RTM Gulf Coast, Inc., relating to the property at 2719 Zelda Road, Montgomery, Alabama (incorporated by reference to Exhibit A of Form 8-K filed June 14, 1995). 10.2 Net Lease Agreement dated August 2, 1995, between TKC X, LLC and Garden Ridge, Inc. relating to the property at 11415 Carolina Place Parkway, Pineville, North Carolina (incorporated by reference to Exhibit 10.1 of Form 8-K filed April 10, 1996). 10.3 First Amendment to Lease Agreement dated March 1, 1996 between TKC X, LLC and Garden Ridge, L.P. relating to the property at 11415 Carolina Place Parkway, Pineville, North Carolina (incorporated by reference to Exhibit 10.2 of Form 8-K filed April 10, 1996). 10.4 Assignment and Assumption of Lease dated March 28, 1996 between the Partnership, AEI Net Lease Income & Growth Fund XIX Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, and TKC X, LLC relating to the property at 11415 Carolina Place Parkway, Pineville, North Carolina (incorporated by reference to Exhibit 10.3 of Form 8-K filed April 10, 1996). 10.5 Net Lease Agreement dated March 14, 1997 between the Partnership and Champps Entertainment of Texas, Inc. relating to the property at 11440 Interstate Highway 10, San Antonio, Texas (incorporated by reference to Exhibit 10.2 of Form 8-K filed March 25, 1997). 10.6 Net Lease Agreement dated March 19, 1997 between the Partnership and Huntington Restaurants Group, Inc. relating to the property at 720 North Highway 190, Covington, Louisiana (incorporated by reference to Exhibit 10.6 of Form 8-K filed March 25, 1997). 10.7 Net Lease Agreement dated April 21, 1997 between the Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, Net Lease Income & Growth Fund 84-A Limited Partnership and Champps Americana, Inc. relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed May 13, 1997). 10.8 Net Lease Agreement dated July 8, 1997 between the Partnership and Champps Americana, Inc. relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed August 5, 1997). 10.9 First Amendment to Net Lease Agreement dated December 23, 1997 between the Partnership and Champps Entertainment of Texas, Inc. relating to the property at 11440 Interstate Highway 10, San Antonio, Texas (incorporated by reference to Exhibit 10.2 of Form 8-K filed January 5, 1998). 10.10 First Amendment to Net Lease Agreement dated December 31, 1997 between the Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, Net Lease Income & Growth Fund 84-A, and Champps Americana, Inc. relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.2 of Form 8-K filed January 5, 1998). 10.11 First Amendment to Net Lease Agreement dated May 19, 1998 between the Partnership and Champps Americana, Inc. relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.2 of Form 8-K filed June 16, 1998). 10.12 Net Lease Agreement dated June 29, 1998 between AEI Income & Growth Fund XXII Limited Partnership and Americana Dining Corporation relating to the property at 7880 Washington Village Drive, Centerville, Ohio (incorporated by reference to Exhibit 10.4 of Form 10-QSB filed November 9, 1998). 10.13 First Amendment to Net Lease Agreement dated January 27, 1999 between the Partnership, AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate Fund XVIII Limited Partnership, AEI Income & Growth Fund XXII Limited Partnership and Americana Dining Corp. relating to the property at 7880 Washington Village Drive, Centerville, Ohio (incorporated by reference to Exhibit 10.26 of Form 10- KSB filed March 12, 1999). ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A. (Continued) A. Exhibits - Description 10.14 Co-Tenancy Agreement dated July 27, 1999 between the Partnership and Catharine C. Whittenburg Testamentary Trust relating to the property at 2719 Zelda Road, Montgomery, Alabama (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed July 30, 1999). 10.15 Co-Tenancy Agreement dated July 28, 1999 between the Partnership and Terry Roland relating to the property at 2719 Zelda Road, Montgomery, Alabama (incorporated by reference to Exhibit 10.4 of Form 10-QSB filed July 30, 1999). 10.16 Co-Tenancy Agreement dated August 6, 1999 between the Partnership and VTA Building Company relating to the property at 2719 Zelda Road, Montgomery, Alabama (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed November 8, 1999). 10.17 Co-Tenancy Agreement dated October 22, 1999 between the Partnership and The Barrett Family Trust relating to the property at 2719 Zelda Road, Montgomery, Alabama (incorporated by reference to Exhibit 10.5 of Form 10-QSB filed November 8, 1999). 10.18 Development Financing Agreement dated March 8, 2000, between the Partnership and Tumbleweed, Inc. relating to the property at 8607 US Highway 24 West, Fort Wayne, Indiana (incorporated by reference to Exhibit 10.28 of Form 10-KSB filed March 10, 2000). 10.19 Net Lease Agreement dated March 8, 2000, between the Partnership and Tumbleweed, Inc. relating to the property at 8607 US Highway 24 West, Fort Wayne, Indiana (incorporated by reference to Exhibit 10.29 of Form 10-KSB filed March 10, 2000). 10.20 Purchase Agreement dated June 12, 2000 between the Partnership, AEI Net Lease Income & Growth Fund XIX Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership and MAH Properties LLC relating to the property at 7370 W. 153rd Street, Apple Valley, Minnesota (incorporated by reference to Exhibit 10.1 of Form 10-QSB filed August 2, 2000). 10.21 First Amendment to Net Lease Agreement dated September 11, 2000 between the Partnership and Tumbleweed, Inc. relating to the property at 8607 US Highway 24 West, Fort Wayne, Indiana (incorporated by reference to Exhibit 10.1 of Form 10-QSB filed November 7, 2000). 10.22 Second Amendment to Net Lease Agreement dated September 11, 2000 between the Partnership and Tumbleweed, Inc. relating to the property at 8607 US Highway 24 West, Fort Wayne, Indiana (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed November 7, 2000). 10.23 Purchase Agreement dated September 26, 2000 between the Partnership, Net Lease Income & Growth Fund 84- A Limited Partnership and Garden Ridge Development LLC relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.3 of Form 10-QSB filed November 7, 2000). 10.24 Purchase Agreement dated October 12, 2000 between the Partnership and the Neal Goldman Revocable Trust relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.4 of Form 10-QSB filed November 7, 2000). 10.25 Purchase Agreement dated January 26, 2001 between the Partnership and Charles M. and Judith K. Westfahl relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.31 of Form 10-KSB filed March 8, 2001). 10.26 Purchase Agreement dated March 5, 2001 between the Partnership and James and Mary Rea relating to the property at 161 E. Campus View Boulevard, Columbus, Ohio (incorporated by reference to Exhibit 10.1 of Form 10-QSB filed May 10, 2001). 10.27 Purchase Agreement dated March 5, 2001 between the Partnership and Michael J. Rush relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed May 10, 2001). ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A. (Continued) A. Exhibits - Description 10.28 Development Financing Agreement dated March 8, 2001 between the Partnership, AEI Real Estate Fund 85-A Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, AEI Income & Growth Fund 23 LLC and Kona Restaurant Group, Inc. relating to the property at 5601 Brodie Lane, Austin, Texas (incorporated by reference to Exhibit 10.3 of Form 10-QSB filed May 10, 2001). 10.29 Net Lease Agreement dated March 8, 2001 between the Partnership, AEI Real Estate Fund 85-A Limited Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership, AEI Income & Growth Fund 23 LLC and Kona Restaurant Group, Inc. relating to the property at 5601 Brodie Lane, Austin, Texas (incorporated by reference to Exhibit 10.4 of Form 10-QSB filed May 10, 2001). 10.30 Purchase Agreement dated March 26, 2001 between the Partnership and Patrick and Dolores Devlin relating to the property at 161 E. Campus View Boulevard, Columbus, Ohio (incorporated by reference to Exhibit 10.5 of Form 10- QSB filed May 10, 2001). 10.31 Net Lease Agreement dated March 30, 2001 between the Partnership and ARAMARK Educational Resources, Inc. relating to the property at 800 South Route 83, Mundelein, Illinois (incorporated by reference to Exhibit 10.6 of Form 10-QSB filed May 10, 2001). 10.32 Purchase Agreement dated April 3, 2001 between the Partnership and Lynn and Camille Bushman relating to the property at 161 E. Campus View Boulevard, Columbus, Ohio (incorporated by reference to Exhibit 10.1 of Form 10- QSB filed August 7, 2001). 10.33 Purchase Agreement dated May 8, 2001 between the Partnership and The Wood Family Trust relating to the property at 161 E. Campus View Boulevard, Columbus, Ohio (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed August 7, 2001). 10.34 Purchase Agreement dated May 17, 2001 between the Partnership, AEI Real Estate Fund XVIII Limited Partnership and Walter L. Schrock relating to the property at 161 E. Campus View Boulevard, Columbus, Ohio (incorporated by reference to Exhibit 10.3 of Form 10-QSB filed August 7, 2001). 10.35 Purchase Agreement dated June 26, 2001 between the Partnership and David L. Cruickshank relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.4 of Form 10-QSB filed August 7, 2001). 10.36 Purchase Agreement dated July 2, 2001 between the Partnership and The Charles M. and Judith K. Westfahl Community Trust relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.5 of Form 10-QSB filed August 7, 2001). 10.37 Purchase Agreement dated July 20, 2001 between the Partnership and The White Family Living Trust relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.6 of Form 10-QSB filed August 7, 2001). 10.38 Purchase Agreement dated July 30, 2001 between the Partnership and the Hoang/Do Living Trust relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.1 of Form 10-QSB filed October 26, 2001). 10.39 Purchase Agreement dated August 14, 2001 between the Partnership and Munkberg Farms Inc. relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.2 of Form 10-QSB filed October 26, 2001). 10.40 Purchase Agreement, as amended, dated September 11, 2001 between the Partnership and The Elizabeth C. Hsu Living Trust relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.3 of Form 10-QSB filed October 26, 2001). 10.41 Purchase Agreement dated September 14, 2001 between the Partnership and Barbara Bou-Sliman relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.4 of Form 10-QSB filed October 26, 2001). ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A. (Continued) A. Exhibits - Description 10.42 Purchase Agreement dated September 14, 2001 between the Partnership and Barbara Bou-Sliman Trust relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.5 of Form 10-QSB filed October 26, 2001). 10.43 Property Co-Tenancy Ownership Agreement, as amended, dated September 18, 2001 between the Partnership and The Elizabeth C. Hsu Living Trust relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.6 of Form 10-QSB filed October 26, 2001). 10.44 Purchase Agreement, as amended, dated September 21, 2001 between the Partnership and The Sherrill L. Hossom Family Trust relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.7 of Form 10-QSB filed October 26, 2001). 10.45 Purchase Agreement, as amended, dated September 24, 2001 between the Partnership and The Linda L. Landes Family Trust relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.8 of Form 10-QSB filed October 26, 2001). 10.46 Purchase Agreement dated September 25, 2001 between the Partnership and Kenneth Robert Mayne Properties, L.C. relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.9 of Form 10-QSB filed October 26, 2001). 10.47 First Amendment to Net Lease Agreement dated September 26, 2001 between the Partnership, AEI Real Estate Fund 85-A Limited Partnership, AEI Income & Growth Fund XX Limited Partnership, AEI Income & Growth Fund 23 LLC and Kona Restaurant Group, Inc. relating to the property at 5601 Brodie Lane, Austin, Texas (incorporated by reference to Exhibit 10.10 of Form 10-QSB filed October 26, 2001). 10.48 Property Co-Tenancy Ownership Agreement dated October 1, 2001 between the Partnership and Barbara Bou- Sliman relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.11 of Form 10-QSB filed October 26, 2001). 10.49 Property Co-Tenancy Ownership Agreement, as amended, October 1, 2001 between the Partnership and The Linda L. Landes Family Trust relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.12 of Form 10-QSB filed October 26, 2001). 10.50 Property Co-Tenancy Ownership Agreement, as amended, October 1, 2001 between the Partnership and The Sherrill L. Hossom Family Trust relating to the property at 19470 Haggerty Road, Livonia, Michigan (incorporated by reference to Exhibit 10.13 of Form 10-QSB filed October 26, 2001). 10.51 Purchase Agreement dated October 5, 2001 between the Partnership and The Patricia A. Struif Trust relating to the property at 955 Golf Road, Schaumburg, Illinois (incorporated by reference to Exhibit 10.14 of Form 10-QSB filed October 26, 2001). 10.52 Purchase Agreement dated October 19, 2001 between the Partnership and Tony Thai Nguyen relating to the property at 720 North Highway 190, Covington, Louisiana. 10.53 Purchase Agreement dated October 23, 2001 between the Partnership and Gregory A. Roemhild relating to the property at 19470 Haggerty Road, Livonia, Michigan. 10.54 Purchase Agreement dated November 1, 2001 between the Partnership and David L. Cruickshank relating to the property at 19470 Haggerty Road, Livonia, Michigan. 10.55 Property Co-Tenancy Ownership Agreement dated November 7, 2001 between the Partnership and David L. Cruickshank relating to the property at 19470 Haggerty Road, Livonia, Michigan. 10.56 Property Co-Tenancy Ownership Agreement dated November 16, 2001 between the Partnership and Gregory A. Roemhild relating to the property at 19470 Haggerty Road, Livonia, Michigan. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A. (Continued) A. Exhibits - Description 10.57 Lease Termination Agreement dated December 3, 2001 between the Partnership and Huntington Restaurants Group, Inc. relating to the property at 720 North Highway 190, Covington, Louisiana. B. Reports on Form 8-K - None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AEI INCOME & GROWTH FUND XXI Limited Partnership By: AEI Fund Management XXI, Inc. Its Managing General Partner March 8, 2002 By: /s/ Robert P. Johnson Robert P. Johnson, President and Director (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Title Date /s/ Robert P. Johnson President (Principal Executive Officer) March 8, 2002 Robert P. Johnson and Sole Director of Managing General Partner /s/ Mark E. Larson Executive Vice President, Treasurer March 8, 2002 Mark E. Larson and Chief Financial Officer (Principal Accounting Officer) EX-10.52 4 nguyenpa.txt AGREEMENT TO PURCHASE Mandeville, LA October 19, 2001 Purchaser: Tony Thai Nguyen and/or his assigns offers and agrees to purchase Property Description: Land, building, and all improvements thereon having municipal address 720 North Highway 190, St. Tammany Oaks Lot 4 on grounds measuring about 1.27 acres (Exhibit A attached for identification or as per title). Sale is to include all furniture, fixtures and equipment owned by AEI Income & Growth Fund XXI Limited Partnership that is presently located on the premises. Price: Property sold in its present condition after all inspections are complete and purchaser is satisfied with the building and its components after Purchaser has completed his due diligence. Property is purchased subject to all title and zoning restrictions, servitudes on record, and laws or ordinances for the sum of nine hundred thousand dollars ($900,000.00) Dollars on the terms of all cash to seller at act of sale. Financing: This sale is conditioned upon the ability of purchaser to borrow upon this property as security by a mortgage loan or loans on the terms agreeable to Purchaser. Commitment by lender to make loan subject to approval of title shall constitute obtaining of loan. Should Purchaser be unable to obtain the loan stipulated on or before December 10, 2001 this contract shall then become null and void and the agent is hereby authorized to return the purchaser's deposit in full, upon receipt of a written cancellation signed by all parties involved, evidencing mutual consent to the release of said deposit. Purchaser is obligated to make a good faith application of said loan within five (5) calendar days from acceptance of this offer. Purchaser's failure to apply for said loan to reasonably produce all documents required by lender, and diligently pursue loan approval shall not void this agreement but shall be considered a breach hereof. If Purchaser fails to notify seller of Purchaser's inability to obtain such a loan within the period herein provided, Purchaser shall be deemed to have obtained such a loan and this condition shall be deemed satisfied. Leases: Property is to be acquired free of any leases. If seller is unable to timely terminate the existing lease between AEI Income & Growth Fund XXI Limited Partnership and Huntington Restaurant Group, the purchaser at his option may extend the act of sale date at his discretion to allow seller to terminate the lease or declare this purchase agreement null and void. Premises to be vacated by Denny's Restaurant prior to Act of Sale. Property is to be free of accumulated trash. Occupancy: at Act of Sale. Liens: All improvement liens and assessments of any kind bearing against the property at time of act of sale are to be paid by Seller. Prorations/Other Cost: Real Estate Taxes are to be prorated to date of Act of Sale. All keys are to be transferred to Purchaser at Act of Sale. All costs and fees for necessary Seller's certificates, and Seller's closing fee are to be paid by Seller. Cost of survey and/or title insurance, if required or requested, is to be paid by Purchaser. Act of Sale: Time being of the essence, the Act of Sale, is to be passed before Purchaser's Notary Public, on December 19, 2001, or sooner if mutually agreeable. Curative Work: In the event curative work in connection with the title is required, the parties, agree to and do extend the date for passing the Act of Sale to a date not more than ten (10) days following completion of curative work; but in no event shall such extension exceed thirty (30) days without the written consent of all parties. The parties hereby agree that Seller may or may not perform curative work and if Seller chooses not to perform curative work then Purchaser may elect to purchase the property "as is" or terminate this agreement and have his deposit returned in full. Deposit: Seller and Purchaser shall be bound by all the terms and conditions as stated herein and Purchaser is obligated to deposit with Purchaser's agent/broker at date of notification by seller of Huntington Restaurant Group's termination of lease an amount of seven thousand ($7000.00) dollars and failure to do so shall be considered a breech of this agreement. This deposit is to be non-interest bearing and may be placed in any bank in Metropolitan New Orleans, without responsibility on the part of the agent in case of failure or suspension of such bank. Merchantable Title: Seller shall deliver to Purchaser a merchantable title, and Seller's inability to deliver such title, within the time stipulated herein, shall render this agreement null and void, reserving unto Purchaser the right to demand the return of the deposit Breach of Agreement by Seller: In the event the Seller fails to comply with this agreement for any reason other than inability to deliver a merchantable title, within the time specified, the Purchaser shall have the right to demand specific performance; or at Purchaser's option, Purchaser shall have the right to demand the return of his deposit in full. Purchaser shall have the right to recover from Seller actual costs and/or fees, including expenses and reasonable attorney's fees incurred as a result of this agreement or breach thereof if Purchaser shall seek specific performance. Breach of Agreement by Purchaser: In the event the Purchaser fails to comply with this agreement within the time specified, the Seller shall have the right to demand specific performance; or, at Seller's option, Seller shall have the right to reoffer the property for sale and may declare the deposit, ipso-facto, forfeited, without formality beyond tender of title to Purchaser. Seller shall have the right to recover any costs and/or fees, including expenses and reasonable attorney's fees, incurred as a result of this agreement or breach thereof only if Seller seeks specific performance. Deadlines: Time is of the essence and all deadlines are final except where modifications, changes, or extensions are made in writing and signed by all parties. Commission: If this offer is accepted, Seller agrees to pay to Property One, Inc. the agent's commission of four (4%) percent of the purchase price, which commission is earned by agent at Act of Sale and when title is transferred to Purchaser. Inspection: The Purchaser shall have through November 2, 2001 to have its engineers and attorneys examine, approve and certify the physical property for environmental hazards, approval of new survey, code requirements, zoning clarification, maintenance record, and any other matters affecting the ownership of the property as a condition to Purchaser's obligation Purchaser has the right to inspect and approve the physical condition of the building and its components, including but not limited to plumbing, electrical, and HVAC and to check and approve the condition of the walk-in coolers, hood, and other kitchen equipment. Purchaser shall be able to receive the necessary liquor licenses and any local or state governmental licenses and/or permits. Seller shall be under no obligation to assist Purchaser in obtaining such licenses and permits; however, Seller agrees to allow Purchaser to place a sign in the window as required by law when Purchaser applies for the liquor license, but only after the Purchase Agreement has been accepted and the termination process of the lease is agreed to. The approval of said inspection shall be at Purchaser's sole discretion. Seller agrees to make all records in Seller's possession available to the Purchaser, including but not limited to all easement agreements, tax bills, insurance policies, a copy of a current survey showing all easements, servitudes, and right of ways and a copy of any available plans and building specifications for existing structure. Failure to make inspections or to give written response to Seller by November 2, 2001 shall be deemed as acceptance by Purchaser of the property's present condition and suitability of the property for Purchaser's purposes. Purchaser must indicate in writing the deficiencies with which he is not satisfied and must provide Seller and/or Purchaser's agent with a copy of all inspection reports. Seller shall have five (5) calendar days from receipt of Purchaser's response to respond in writing his willingness to remedy those deficiencies. Purchaser shall at his option the right to accept Seller's remedy or declare this agreement null and void. Purchaser shall have the right to reinspect the property within five (5) days prior to the act of sale in order to determine if the property is in substantially the same or better condition as was present at the initial inspection. Purchaser shall indemnify and hold Seller harmless against any claim or cause of action against Seller (including Seller's reasonable attorneys fees) arising out of the inspection. Purchaser agrees to make reasonable repairs to any damage caused to the property due to said inspections at Purchaser's expense. Disclosure of Agency Relationship: Purchaser and Seller hereby acknowledge that the agent, Property One, Inc.- Marcia/Mike D'Amico is acting as an agent for the Purchaser. Furthermore, both Purchaser and Seller hereby acknowledge that they have read and signed the "Agency Disclosure" form prepared by the Louisiana Real Estate Commission. Notice: The Louisiana Bureau of Criminal Identification and Information maintains a State Sex Offender and Child Predator Registry, which is a public access data base of the locations of individuals required to register pursuant to LSA-R.S. 15:540 et seq. Sheriff's Departments and Police Departments serving jurisdictions of 450,000 also maintain such information. The State Sex Offender and Child Predator Registry database can be accessed at www.lasocpr.lsp.org/socpr/ and contains address, pictures and conviction records for registered offenders. The database can be searched by zip cord, city, and parish or by offender name. Information is also available by phone at 1- 800-858-0551 or 225-925-6100 or mail at P.O. Box 66614, Mail Slip #18, Baton Rouge, Louisiana, 70896. You can also e- mail State Services at SOCPR@dps.state.la.us for more information. Other Conditions: This offer remains binding and irrevocable through October 19, 2001. Submitted to: Date /s/ Tony Thai Nguyen 10/19/01 Purchaser's Signature Date Tony Thai Nguyen Purchaser's Name (Print or Type) Purchaser's Signature Date Purchaser's Name (Print or Type) Submitted by: Marcia/Mike D'Amico Selling Agent Date I/We accept the above in all its terms and conditions. AEI INCOME & GROWTH FUND XXI LIMITED 10/19/01 PARTNERSHIP DATE BY: AEI FUND MANAGEMENT XXI , INC ITS MANAGING GENERAL PARTNER BY MARK E LARSON CHIEF FINANCIAL OFFICER Seller's Signature Date Seller's Name (Print or Type) Seller's Signature Date Seller's Name (Print or Type) Received by: Time: Date: Amendment to Purchase Agreement RE: Purchase Agreement dated October 19, 2001 Lot 4 St Tammany Oaks 720 N. Hwy 190 Covington, LA Purchaser: Tony Thai Nguyen Seller: AEI Income & Growth fund XXI Limited Partnership Purchaser agrees to accept the above described property in its present condition and agrees that the cost of all repairs including but not limited to the roof leaks or replacement of rood and all leaks at the windows, as well as other repairs listed in the Proposal for Repairs #4529 by E.C.O. Builders, Inc. dated November 1, 2001, attached hereto and any other repairs that may be needed for a reduction of the purchase from $900,000 to $875,000. Seller assumes no obligation for the cost of the repairs other than the reduction in the purchase price. Loan approval date is extended to on or before January 21, 2002. Act of Sale Date is extended to on or before January 31, 2002. All other terms and conditions of the Purchase Agreement to remain unchanged and in full force and effect. /s/ Tony Thai Nguyen AEI Income & Growth Fund XXI Ltd Partnership Purchaser By AEI Fund Management XXI Inc. its Managing General Partner Tony Thai Nguyen Seller By Mark E Larson its Chief Financial Officer 11/11/01 11/11/01 Date Date EX-10.53 5 roempa.txt PURCHASE AGREEMENT Champps Americana Restaurant Livonia, Michigan This AGREEMENT, entered into effective as of the 23 of October, 2001. l. PARTIES. Seller is AEI Income & Growth Fund XXI Limited Partnership which owns an undivided 84.1398% interest in the fee title to that certain real property legally described in the attached Exhibit "A" (the "Entire Property") Buyer is Gregory A. Roemhild ("Buyer"). Seller wishes to sell and Buyer wishes to buy a portion as Tenant in Common of Seller's interest in the Entire Property. 2. PROPERTY. The Property to be sold to Buyer in this transaction consists of an undivided 3.8828 percentage interest (hereinafter, simply the "Property") as Tenant in Common in the Entire Property. 3. PURCHASE PRICE . The purchase price for this percentage interest in the Entire Property is $230,800 all cash. 4. TERMS. The purchase price for the Property will be paid by Buyer as follows: (a) Buyer will deposit the purchase price, $230,800 into escrow in sufficient time to allow escrow to close on the closing date. 5. CLOSING DATE. Escrow shall close on or before November 16, 2001. 6. DUE DILIGENCE. Buyer will have until the expiration of the fifth business day (The "Review Period") after delivery of each of following items, to be supplied by Seller, to conduct all of its inspections and due diligence and satisfy itself regarding each item, the Property, and this transaction. Buyer agrees to indemnify and hold Seller harmless for any loss or damage to the Entire Property or persons caused by Buyer or its agents arising out of such physical inspections of the Entire Property. (a) The original and one copy of a title insurance commitment for an Owner's Title insurance policy (see paragraph 8 below). (b) A copy of a Certificate of Occupancy or other such document certifying completion and granting permission to permanently occupy the improvements on the Entire Property as are in Seller's possession. (c) A copy of an "as built" survey of the Entire Property done concurrent with Seller's acquisition of the Property. (d) Lease (as further set forth in paragraph 11(a) below) of the Entire Property showing occupancy date, lease expiration date, rent, and Guarantys, if any, accompanied by such Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI tenant financial statements as may have been provided most recently to Seller by the Tenant and/or Guarantors. It is a contingency upon Seller's obligations hereunder that two (2) copies of Co-Tenancy Agreement in the form attached hereto duly executed by Buyer and AEI Income & Growth Fund XXI Limited Partnership and dated on escrow closing date be delivered to the Seller on the closing date. Buyer may cancel this agreement for ANY REASON in its sole discretion by delivering a cancellation notice, return receipt requested, to Seller and escrow holder before the expiration of the Review Period. Such notice shall be deemed effective only upon receipt by Seller. If Buyer cancels this Agreement as permitted under this Section, except for any escrow cancellation fees and any liabilities under the first paragraph of section 6 of this agreement (which will survive), Buyer (after execution of such documents reasonably requested by Seller to evidence the termination hereof) will have absolutely no rights, claims or interest of any type in connection with the Property or this transaction, regardless of any alleged conduct by Seller or anyone else. Unless this Agreement is canceled by Buyer pursuant to the terms hereof, if Buyer fails to pay the Purchase Price, Buyer irrevocably will be deemed to be in default under this Agreement. Seller may, at its option, declare this Agreement null and void, in which event Buyer will be deemed to have canceled this Agreement and relinquish all rights in and to the Property or Seller may exercise its rights under Section 14 hereof. If this Agreement is not canceled and the Purchase Price is paid when required, all of Buyer's conditions and contingencies will be deemed satisfied. 7. ESCROW. Escrow shall be opened by Seller upon acceptance of this Agreement by both parties. The escrow holder will be a nationally-recognized escrow company selected by Seller. A copy of this Agreement will be delivered to the escrow holder and will serve as escrow instructions together with the escrow holder's standard instructions and any additional instructions required by the escrow holder to clarify its rights and duties (and the parties agree to sign these additional instructions). If there is any conflict between these other instructions and this Agreement, this Agreement will control. 8. TITLE. Closing will be conditioned on the agreement of a title company selected by Seller to issue an Owner's policy of title insurance, dated as of the close of escrow, in an amount equal to the purchase price, insuring that Buyer will own insurable title to the Property subject only to: the title company's standard exceptions; current real property taxes and assessments; survey exceptions; the rights of parties in possession pursuant to the lease defined in paragraph 11 below; all matters of public record; and other items disclosed to Buyer during the Review Period. Buyer shall be allowed five (5) days after receipt of said commitment for examination and the making of any objections to marketability thereto, said objections to be made in writing or deemed waived. If any objections are so made, the Seller shall be allowed eighty (80) days to make such title marketable or in Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI the alternative to obtain a commitment for insurable title insuring over Buyer's objections. If Seller shall decide to make no efforts to make title marketable, or is unable to make title marketable or obtain insurable title, (after execution by Buyer of such documents reasonably requested by Seller to evidence the termination hereof) this Agreement shall be null and void and of no further force and effect. Seller has no obligation to spend any funds or make any effort to satisfy Buyer's objections, if any. Pending satisfaction of Buyer's objections, the payments hereunder required shall be postponed, but upon satisfaction of Buyer's objections and within ten (10) days after written notice of satisfaction of Buyer's objections to the Buyer, the parties shall perform this Agreement according to its terms. 9. CLOSING COSTS. Seller will pay one-half of escrow fees, the cost of the title commitment and any brokerage commissions payable. The Buyer will pay the cost of issuing a Standard Owners Title Insurance Policy in the full amount of the purchase price, if Buyer shall decide to purchase the same. Buyer will pay all recording fees, transfer taxes and clerk's fees imposed upon the recording of the deed, one-half of the escrow fees, and the cost of an update to the Survey in Sellers possession (if an update is required by Buyer.) Each party will pay its own attorney's fees and costs to document and close this transaction. 10. REAL ESTATE TAXES, SPECIAL ASSESSMENTS AND PRORATIONS. (a) Because the Entire Property (of which the Property is a part) is subject to a triple net lease (as further set forth in paragraph 11(a)(i), the parties acknowledge that there shall be no need for a real estate tax proration. However, Seller represents that to the best of its knowledge, all real estate taxes and installments of special assessments due and payable in all years prior to the year of Closing have been paid in full. Unpaid real estate taxes and unpaid levied and pending special assessments existing on the date of Closing shall be the responsibility of Buyer and Seller in proportion to their respective Tenant in Common interests, pro-rated, however, to the date of closing for the period prior to closing, which shall be the responsibility of Seller if Tenant shall not pay the same. Seller and Buyer shall likewise pay all taxes due and payable in the year after Closing and any unpaid installments of special assessments payable therewith and thereafter, if such unpaid levied and pending special assessments and real estate taxes are not paid by any tenant of the Entire Property. (b) All income and all operating expenses from the Entire Property shall be prorated between the parties and adjusted by them as of the date of Closing. Seller shall be entitled to all income earned and shall be responsible for all expenses incurred prior to the date of Closing, and Buyer shall be entitled to its proportionate share of all income earned and shall be responsible for its proportionate share of all operating expenses of the Entire Property incurred on and after the date of closing. Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI 11. SELLER'S REPRESENTATION AND AGREEMENTS. (a) Seller represents and warrants as of this date that: (ii) Except for the Net Lease Agreement in existence between AEI Income & Growth Fund XXI Limited Partnership (as "Landlord") and Champps Americana, Inc. ("Tenant"), dated July 8, 1997 and amended May 19th, 1998, and that Guarantee of Lease in existence dated July 8, 1997 between Landlord, Tenant, and Champps Entertainment, Inc., and that Guarantee of Lease in existence dated July 8, 1997 between Landlord, Tenant, and Unique Casual Restaurants, Inc., and that Guarantee of Lease in existence dated July 8, 1997 between Landlord, Tenant, and DAKA International, Inc., Seller is not aware of any leases of the Property. The above referenced lease agreement includes a right of first refusal in favor of the Tenant as set forth in Article 34 of said lease agreement, which right will apply to any attempted disposition of Property by Buyer after this transaction. (iii) It is not aware of any pending litigation or condemnation proceedings against the Property or Seller's interest in the Property. (iv) Except as previously disclosed to Buyer and as permitted in paragraph (b) below, Seller is not aware of any contracts Seller has executed that would be binding on Buyer after the closing date. (b) Provided that Buyer performs its obligations when required, Seller agrees that it will not enter into any new contracts that would materially affect the Property and be binding on Buyer after the Closing Date without Buyer's prior consent, which will not be unreasonably withheld. However, Buyer acknowledges that Seller retains the right both prior to and after the Closing Date to freely transfer all or a portion of Seller's remaining undivided interest in the Entire Property, provided such sale shall not encumber the Property being purchased by Buyer in violation of the terms hereof or the contemplated Co-Tenancy Agreement. 12. DISCLOSURES. (a) Seller has not received any notice of any material, physical, or mechanical defects of the Entire Property, including without limitation, the plumbing, heating, air conditioning, ventilating, electrical system. To the best of Seller's knowledge without inquiry, all such items are in good operating condition and repair and in compliance with all applicable governmental, zoning, and land use laws, ordinances, regulations and requirements. If Seller shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (b) Seller has not received any notice that the use and operation of the Entire Property is not in full compliance with applicable building codes, safety, fire, zoning, and land use laws, and other applicable local, state and federal laws, ordinances, regulations and requirements. If Seller Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (c) Seller knows of no facts nor has Seller failed to disclose to Buyer any fact known to Seller which would prevent the Tenant from using and operating the Entire Property after the Closing in the manner in which the Entire Property has been used and operated prior to the date of this Agreement. If Seller shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (d) Seller has not received any notice that the Entire Property is in violation of any federal, state or local law, ordinance, or regulations relating to industrial hygiene or the environmental conditions on, under, or about the Entire Property, including, but not limited to, soil, and groundwater conditions. To the best of Seller's knowledge, there is no proceeding or inquiry by any governmental authority with respect to the presence of Hazardous Materials on the Entire Property or the migration of Hazardous Materials from or to other property. Buyer agrees that Seller will have no liability of any type to Buyer or Buyer's successors, assigns, or affiliates in connection with any Hazardous Materials on or in connection with the Entire Property either before or after the Closing Date, except such Hazardous Materials on or in connection with the Entire Property arising out of Seller's gross negligence or intentional misconduct. If Seller shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (e) BUYER AGREES THAT IT SHALL BE PURCHASING THE PROPERTY IN ITS THEN PRESENT CONDITION, AS IS, WHERE IS, AND SELLER HAS NO OBLIGATIONS TO CONSTRUCT OR REPAIR ANY IMPROVEMENTS THEREON OR TO PERFORM ANY OTHER ACT REGARDING THE PROPERTY, EXCEPT AS EXPRESSLY PROVIDED HEREIN. (f) BUYER ACKNOWLEDGES THAT, HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE ENTIRE PROPERTY AND SUCH FINANCIAL INFORMATION ON THE LESSEE AND GUARANTORS OF THE LEASE AS BUYER OR ITS ADVISORS SHALL REQUEST, IF IN SELLER'S POSSESSION, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND NOT ON ANY INFORMATION PROVIDED BY SELLER OR TO BE PROVIDED EXCEPT AS SET FORTH HEREIN. BUYER FURTHER ACKNOWLEDGES THAT THE INFORMATION PROVIDED AND TO BE PROVIDED BY SELLER WITH RESPECT TO THE PROPERTY, THE ENTIRE PROPERTY AND TO THE LESSEE AND GUARANTORS OF LEASE WAS OBTAINED FROM A VARIETY OF SOURCES AND SELLER NEITHER (A) HAS MADE INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION, OR (B) MAKES ANY REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION EXCEPT AS HEREIN SET FORTH. THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS" BASIS, AND BUYER EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF THE AGREEMENTS OF SELLER HEREIN, EXCEPT AS OTHERWISE SPECIFIED HEREIN IN PARAGRAPH 11(A) AND (B) ABOVE AND THIS PARAGRAPH 12, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY, TENANTABILITY, SUITABILITY FOR COMMERCIAL PURPOSES, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, IN RESPECT OF THE PROPERTY. Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI The provisions (d) - (f) above shall survive Closing. 13. CLOSING. (a) Before the closing date, Seller will deposit into escrow an executed special warranty deed warranting title against lawful claims by, through, or under a conveyance from Seller, but not further or otherwise, conveying insurable title of the Property to Buyer, subject to the exceptions contained in paragraph 8 above. (b) On or before the closing date, Buyer will deposit into escrow: the Purchase Price when required under Section 4; any additional funds required of Buyer, (pursuant to this agreement or any other agreement executed by Buyer) to close escrow. Both parties will sign and deliver the Co-Tenancy Agreement, and deliver to the escrow holder any other documents reasonably required by the escrow holder to close escrow. (c) On the closing date, if escrow is in a position to close, the escrow holder will: record the deed in the official records of the county where the Property is located; cause the title company to commit to issue the title policy; immediately deliver to Seller the portion of the purchase price deposited into escrow by cashier's check or wire transfer (less debits and prorations, if any); deliver to Seller and Buyer a signed counterpart of the escrow holder's certified closing statement and take all other actions necessary to close escrow. 14. DEFAULTS. If Buyer defaults, Buyer will forfeit all rights and claims and Seller will be relieved of all obligations and will be entitled to retain all monies heretofore paid by the Buyer. In addition, Seller shall retain all remedies available to Seller at law or in equity. If Seller shall default, Buyer irrevocably waives any rights to file a lis pendens, a specific performance action or any other claim, action or proceeding of any type in connection with the Property or this or any other transaction involving the Property, and will not do anything to affect title to the Property or hinder, delay or prevent any other sale, lease or other transaction involving the Property (any and all of which will be null and void), unless: it has deposited the Purchase Price into escrow, performed all of its other obligations and satisfied all conditions under this Agreement, and unconditionally notified Seller that it stands ready to tender full performance, purchase the Property and close escrow as per this Agreement, regardless of any alleged default or misconduct by Seller. Provided, however, that in no event shall Seller be liable for any actual, punitive, consequential or speculative damages arising out of any default by Seller hereunder. 15. BUYER'S REPRESENTATIONS AND WARRANTIES. a. Buyer represents and warrants to Seller as follows: (i) In addition to the acts and deeds recited herein and contemplated to be performed, executed, and delivered by Buyer, Buyer shall perform, execute and deliver or cause to Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI be performed, executed, and delivered at the Closing or after the Closing, any and all further acts, deeds and assurances as Seller or the Title Company may require and be reasonable in order to consummate the transactions contemplated herein. (ii) Buyer has all requisite power and authority to consummate the transaction contemplated by this Agreement and has by proper proceedings duly authorized the execution and delivery of this Agreement and the consummation of the transaction contemplated hereby. (iii) To Buyer's knowledge, neither the execution and delivery of this Agreement nor the consummation of the transaction contemplated hereby will violate or be in conflict with (a) any applicable provisions of law, (b) any order of any court or other agency of government having jurisdiction hereof, or (c) any agreement or instrument to which Buyer is a party or by which Buyer is bound. 16. DAMAGES, DESTRUCTION AND EMINENT DOMAIN. (a) If, prior to closing, the Property or any part thereof be destroyed or further damaged by fire, the elements, or any cause, due to events occurring subsequent to the date of this Agreement to the extent that the cost of repair exceeds $10,000.00, this Agreement shall become null and void, at Buyer's option exercised, if at all, by written notice to Seller within ten (10) days after Buyer has received written notice from Seller of said destruction or damage. Seller, however, shall have the right to adjust or settle any insured loss until (i) all contingencies set forth in Paragraph 6 hereof have been satisfied, or waived; and (ii) any ten-day period provided for above in this Subparagraph 16a for Buyer to elect to terminate this Agreement has expired or Buyer has, by written notice to Seller, waived Buyer's right to terminate this Agreement. If Buyer elects to proceed and to consummate the purchase despite said damage or destruction, there shall be no reduction in or abatement of the purchase price, and Seller shall assign to Buyer the Seller's right, title, and interest in and to all insurance proceeds (pro-rata in relation to the Entire Property) 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 any Tenant of the Entire Property. If the cost of repair is less than $10,000.00, Buyer shall be obligated to otherwise perform hereinunder with no adjustment to the Purchase Price, reduction or abatement, and Seller shall assign Seller's right, title and interest in and to all insurance proceeds pro-rata in relation to the Entire Property, subject to rights of any Tenant of the Entire Property. (b) If, prior to closing, the Property, 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 the Seller's right, title, and interest in and to any award made, or to be made, in the condemnation proceeding pro-rata Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI in relation to the Entire Property, subject to rights of any Tenant of the Entire Property. In the event that this Agreement is terminated by Buyer as provided above in Subparagraph 16a or 16b, Buyer agrees to execute such documents reasonably requested by Seller to evidence the termination hereof. 17. BUYER'S 1031 TAX FREE EXCHANGE. While Seller acknowledges that Buyer is purchasing the Property as "replacement property" to accomplish a tax free exchange, Buyer acknowledges that Seller has made no representations, warranties, or agreements to Buyer or Buyer's agents that the transaction contemplated by the Agreement will qualify for such tax treatment, nor has there been any reliance thereon by Buyer respecting the legal or tax implications of the transactions contemplated hereby. Buyer further represents that it has sought and obtained such third party advice and counsel as it deems necessary in regards to the tax implications of this transaction. Buyer wishes to novate/assign the ownership rights and interest of this Purchase Agreement to American Title and Abstract who will act as Accommodator to perfect the 1031 exchange by preparing an agreement of exchange of Real Property whereby American Title and Abstract will be an independent third party purchasing the ownership interest in subject property from Seller and selling the ownership interest in subject property to Buyer under the same terms and conditions as documented in this Purchase Agreement. Buyer asks the Seller, and Seller agrees to cooperate in the perfection of such an exchange if at no additional cost or expense to Seller or delay in time. Buyer hereby indemnifies and holds Seller harmless from any claims and/or actions resulting from said exchange. Pursuant to the direction of American Title and Abstract, Seller will deed the property to Buyer. 18. CANCELLATION If any party elects to cancel this Contract because of any breach by another party or because escrow fails to close by the agreed date, the party electing to cancel shall deliver to escrow agent a notice containing the address of the party in breach and stating that this Contract shall be cancelled unless the breach is cured within 13 days following the delivery of the notice to the escrow agent. Within three days after receipt of such notice, the escrow agent shall send it by United States Mail to the party in breach at the address contained in the Notice and no further notice shall be required. If the breach is not cured within the 13 days following the delivery of the notice to the escrow agent, this Contract shall be cancelled. 19. 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 Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI parties relating to this Agreement the prevailing party will be entitled to recover attorney's fees and costs. This is an integrated agreement containing all agreements of the parties about the Property and the other matters described, and it supersedes any other agreements or understandings. Exhibits attached to this Agreement are incorporated into this Agreement. (b) If this escrow has not closed by November 16, 2001, through no fault of Seller, Seller may either, at its election, extend the closing date or exercise any remedy available to it by law, including terminating this Agreement. (c) Funds to be deposited or paid by Buyer must be good and clear funds in the form of cash, cashier's checks or wire transfers. (d) All notices from either of the parties hereto to the other shall be in writing and shall be considered to have been duly given or served if sent by first class certified mail, return receipt requested, postage prepaid, or by a nationally recognized courier service guaranteeing overnight delivery to the party at his or its address set forth below, or to such other address as such party may hereafter designate by written notice to the other party. If to Seller: AEI Income & Growth Fund XXI Limited Partnership 1300 Minnesota World Trade Center 30 East Seventh Street St. Paul, MN 55101 If to Buyer: Gregory A. Roemhild 814 - 10 1/2 Avenue Box 103 Almena, WI 54805 When accepted, this offer will be a binding agreement for valid and sufficient consideration which will bind and benefit Buyer, Seller and their respective successors and assigns. Buyer is submitting this offer by signing a copy of this offer and delivering it to Seller. Seller has five (5) business days from receipt within which to accept this offer. This Agreement shall be governed by, and interpreted in accordance with, the laws of the state of Michigan. Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI IN WITNESS WHEREOF, the Seller and Buyer have executed this Agreement effective as of the day and year above first written. BUYER: Gregory A. Roemhild By: /s/ Gregory A Roemhild Gregory A. Roemhild WITNESS: /s/ Philip N Kluge Philip N Kluge (Print Name) Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI SELLER: AEI Income & Growth Fund XXI Limited Partnership, by AEI Fund Management XXI, Inc., its corporate general partner By: /s/ Robert P Johnson Robert P. Johnson, its President WITNESS: /s/ Debra A Jochum Debra A Jochum (Print Name) Buyer Initial: /s/ GAR Purchase Agreement for Champps, Livonia, MI EXHIBIT "A" Unit 3, Pentagon Centre Condominium, according to the Master Deed recorded in Liber 29370, Pages 706 through 766 1/2, both inclusive, as amended by First Amendment to the Master Deed recorded in Liber 29631, Pages 1995 through 2003, both inclusive, as amended by Second Amendment to the Master Deed recorded in Liber 29696, Pages 571 through 577, both inclusive, as amended by Third Amendment to the Master Deed recorded in Liber 29805, Pages 766 through 767, both inclusive, and as amended by Fourth Amendment to the Master Deed recorded in Liber 31338, Pages 1 through 4, both inclusive, Wayne County Records, and designated as Wayne County Condominium Subdivision Plan No. 437, together with rights in general common elements and limited common elements, as set forth in the above Master Deed and as described in Act 229 of the Public Acts of 1963, and Act 59 of the Public Acts of 1978, as amended. 19470 Haggerty Tax I.D. No. 46-023-01-0003-000 EX-10.54 6 cruickpa.txt PURCHASE AGREEMENT Champps Americana Restaurant Livonia, Michigan This AGREEMENT, entered into effective as of the 1st of November, 2001. l. PARTIES. Seller is AEI Income & Growth Fund XXI Limited Partnership which owns an undivided 84.1398% interest in the fee title to that certain real property legally described in the attached Exhibit "A" (the "Entire Property") Buyer is David Louis Cruickshank, trustee under the trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased ("Buyer"). Seller wishes to sell and Buyer wishes to buy a portion as Tenant in Common of Seller's interest in the Entire Property. 2. PROPERTY. The Property to be sold to Buyer in this transaction consists of an undivided 5.5769 percentage interest (hereinafter, simply the "Property") as Tenant in Common in the Entire Property. 3. PURCHASE PRICE . The purchase price for this percentage interest in the Entire Property is $331,500 all cash. 4. TERMS. The purchase price for the Property will be paid by Buyer as follows: (a) Buyer will deposit the purchase price, $331,500 into escrow in sufficient time to allow escrow to close on the closing date. 5. CLOSING DATE. Escrow shall close on or before November 5, 2001. 6. DUE DILIGENCE. Buyer will have until the expiration of the fifth business day (The "Review Period") after delivery of each of following items, to be supplied by Seller, to conduct all of its inspections and due diligence and satisfy itself regarding each item, the Property, and this transaction. Buyer agrees to indemnify and hold Seller harmless for any loss or damage to the Entire Property or persons caused by Buyer or its agents arising out of such physical inspections of the Entire Property. (a) The original and one copy of a title insurance commitment for an Owner's Title insurance policy (see paragraph 8 below). (b) A copy of a Certificate of Occupancy or other such document certifying completion and granting permission to permanently occupy the improvements on the Entire Property as are in Seller's possession. (c) A copy of an "as built" survey of the Entire Property done concurrent with Seller's acquisition of the Property. (d) Lease (as further set forth in paragraph 11(a) below) of the Entire Property showing occupancy date, lease expiration date, rent, and Guarantys, if any, accompanied by such Buyer Inital: /s/ DLC Purchase Agreement for Champps, Livonia, MI tenant financial statements as may have been provided most recently to Seller by the Tenant and/or Guarantors. It is a contingency upon Seller's obligations hereunder that two (2) copies of Co-Tenancy Agreement in the form attached hereto duly executed by Buyer and AEI Income & Growth Fund XXI Limited Partnership and dated on escrow closing date be delivered to the Seller on the closing date. Buyer may cancel this agreement for ANY REASON in its sole discretion by delivering a cancellation notice, return receipt requested, to Seller and escrow holder before the expiration of the Review Period. Such notice shall be deemed effective only upon receipt by Seller. If Buyer cancels this Agreement as permitted under this Section, except for any escrow cancellation fees and any liabilities under the first paragraph of section 6 of this agreement (which will survive), Buyer (after execution of such documents reasonably requested by Seller to evidence the termination hereof) will have absolutely no rights, claims or interest of any type in connection with the Property or this transaction, regardless of any alleged conduct by Seller or anyone else. Unless this Agreement is canceled by Buyer pursuant to the terms hereof, if Buyer fails to pay the Purchase Price, Buyer irrevocably will be deemed to be in default under this Agreement. Seller may, at its option, declare this Agreement null and void, in which event Buyer will be deemed to have canceled this Agreement and relinquish all rights in and to the Property or Seller may exercise its rights under Section 14 hereof. If this Agreement is not canceled and the Purchase Price is paid when required, all of Buyer's conditions and contingencies will be deemed satisfied. 7. ESCROW. Escrow shall be opened by Seller upon acceptance of this Agreement by both parties. The escrow holder will be a nationally-recognized escrow company selected by Seller. A copy of this Agreement will be delivered to the escrow holder and will serve as escrow instructions together with the escrow holder's standard instructions and any additional instructions required by the escrow holder to clarify its rights and duties (and the parties agree to sign these additional instructions). If there is any conflict between these other instructions and this Agreement, this Agreement will control. 8. TITLE. Closing will be conditioned on the agreement of a title company selected by Seller to issue an Owner's policy of title insurance, dated as of the close of escrow, in an amount equal to the purchase price, insuring that Buyer will own insurable title to the Property subject only to: the title company's standard exceptions; current real property taxes and assessments; survey exceptions; the rights of parties in possession pursuant to the lease defined in paragraph 11 below; all matters of public record; and other items disclosed to Buyer during the Review Period. Buyer shall be allowed five (5) days after receipt of said commitment for examination and the making of any objections to marketability thereto, said objections to be made in writing or deemed waived. If any objections are so made, the Seller shall be allowed eighty (80) days to make such title marketable or in Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI the alternative to obtain a commitment for insurable title insuring over Buyer's objections. If Seller shall decide to make no efforts to make title marketable, or is unable to make title marketable or obtain insurable title, (after execution by Buyer of such documents reasonably requested by Seller to evidence the termination hereof) this Agreement shall be null and void and of no further force and effect. Seller has no obligation to spend any funds or make any effort to satisfy Buyer's objections, if any. Pending satisfaction of Buyer's objections, the payments hereunder required shall be postponed, but upon satisfaction of Buyer's objections and within ten (10) days after written notice of satisfaction of Buyer's objections to the Buyer, the parties shall perform this Agreement according to its terms. 9. CLOSING COSTS. Seller will pay one-half of escrow fees, the cost of the title commitment and any brokerage commissions payable. The Buyer will pay the cost of issuing a Standard Owners Title Insurance Policy in the full amount of the purchase price, if Buyer shall decide to purchase the same. Buyer will pay all recording fees, transfer taxes and clerk's fees imposed upon the recording of the deed, one-half of the escrow fees, and the cost of an update to the Survey in Sellers possession (if an update is required by Buyer.) Each party will pay its own attorney's fees and costs to document and close this transaction. 10. REAL ESTATE TAXES, SPECIAL ASSESSMENTS AND PRORATIONS. (a) Because the Entire Property (of which the Property is a part) is subject to a triple net lease (as further set forth in paragraph 11(a)(i), the parties acknowledge that there shall be no need for a real estate tax proration. However, Seller represents that to the best of its knowledge, all real estate taxes and installments of special assessments due and payable in all years prior to the year of Closing have been paid in full. Unpaid real estate taxes and unpaid levied and pending special assessments existing on the date of Closing shall be the responsibility of Buyer and Seller in proportion to their respective Tenant in Common interests, pro-rated, however, to the date of closing for the period prior to closing, which shall be the responsibility of Seller if Tenant shall not pay the same. Seller and Buyer shall likewise pay all taxes due and payable in the year after Closing and any unpaid installments of special assessments payable therewith and thereafter, if such unpaid levied and pending special assessments and real estate taxes are not paid by any tenant of the Entire Property. (b) All income and all operating expenses from the Entire Property shall be prorated between the parties and adjusted by them as of the date of Closing. Seller shall be entitled to all income earned and shall be responsible for all expenses incurred prior to the date of Closing, and Buyer shall be entitled to its proportionate share of all income earned and shall be responsible for its proportionate share of all operating expenses of the Entire Property incurred on and after the date of closing. Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI 11. SELLER'S REPRESENTATION AND AGREEMENTS. (a) Seller represents and warrants as of this date that: (ii) Except for the Lease Agreement in existence between AEI Income & Growth Fund XXI Limited Partnership (as "Landlord") and Champps Americana, Inc. ("Tenant"), dated July 8, 1997 and amended May 19th, 1998, and that Guarantee of Lease in existence dated July 8, 1997, Seller is not aware of any leases of the Property. The above reference lease agreement has a right of first refusal in favor of the Tenant as set forth in Article 34 of said lease agreement, which right will apply to any attempted disposition of Property by Buyer after this transaction. (iii) It is not aware of any pending litigation or condemnation proceedings against the Property or Seller's interest in the Property. (iv) Except as previously disclosed to Buyer and as permitted in paragraph (b) below, Seller is not aware of any contracts Seller has executed that would be binding on Buyer after the closing date. (b) Provided that Buyer performs its obligations when required, Seller agrees that it will not enter into any new contracts that would materially affect the Property and be binding on Buyer after the Closing Date without Buyer's prior consent, which will not be unreasonably withheld. However, Buyer acknowledges that Seller retains the right both prior to and after the Closing Date to freely transfer all or a portion of Seller's remaining undivided interest in the Entire Property, provided such sale shall not encumber the Property being purchased by Buyer in violation of the terms hereof or the contemplated Co-Tenancy Agreement. 12. DISCLOSURES. (a) Seller has not received any notice of any material, physical, or mechanical defects of the Entire Property, including without limitation, the plumbing, heating, air conditioning, ventilating, electrical system. To the best of Seller's knowledge without inquiry, all such items are in good operating condition and repair and in compliance with all applicable governmental, zoning, and land use laws, ordinances, regulations and requirements. If Seller shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (b) Seller has not received any notice that the use and operation of the Entire Property is not in full compliance with applicable building codes, safety, fire, zoning, and land use laws, and other applicable local, state and federal laws, ordinances, regulations and requirements. If Seller shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (c) Seller knows of no facts nor has Seller failed to disclose to Buyer any fact known to Seller which would prevent the Tenant from using and operating the Entire Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI Property after the Closing in the manner in which the Entire Property has been used and operated prior to the date of this Agreement. If Seller shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (d) Seller has not received any notice that the Entire Property is in violation of any federal, state or local law, ordinance, or regulations relating to industrial hygiene or the environmental conditions on, under, or about the Entire Property, including, but not limited to, soil, and groundwater conditions. To the best of Seller's knowledge, there is no proceeding or inquiry by any governmental authority with respect to the presence of Hazardous Materials on the Entire Property or the migration of Hazardous Materials from or to other property. Buyer agrees that Seller will have no liability of any type to Buyer or Buyer's successors, assigns, or affiliates in connection with any Hazardous Materials on or in connection with the Entire Property either before or after the Closing Date, except such Hazardous Materials on or in connection with the Entire Property arising out of Seller's gross negligence or intentional misconduct. If Seller shall receive any notice to the contrary prior to Closing, Seller will inform Buyer prior to Closing. (e) BUYER AGREES THAT IT SHALL BE PURCHASING THE PROPERTY IN ITS THEN PRESENT CONDITION, AS IS, WHERE IS, AND SELLER HAS NO OBLIGATIONS TO CONSTRUCT OR REPAIR ANY IMPROVEMENTS THEREON OR TO PERFORM ANY OTHER ACT REGARDING THE PROPERTY, EXCEPT AS EXPRESSLY PROVIDED HEREIN. (f) BUYER ACKNOWLEDGES THAT, HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE ENTIRE PROPERTY AND SUCH FINANCIAL INFORMATION ON THE LESSEE AND GUARANTORS OF THE LEASE AS BUYER OR ITS ADVISORS SHALL REQUEST, IF IN SELLER'S POSSESSION, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND NOT ON ANY INFORMATION PROVIDED BY SELLER OR TO BE PROVIDED EXCEPT AS SET FORTH HEREIN. BUYER FURTHER ACKNOWLEDGES THAT THE INFORMATION PROVIDED AND TO BE PROVIDED BY SELLER WITH RESPECT TO THE PROPERTY, THE ENTIRE PROPERTY AND TO THE LESSEE AND GUARANTORS OF LEASE WAS OBTAINED FROM A VARIETY OF SOURCES AND SELLER NEITHER (A) HAS MADE INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION, OR (B) MAKES ANY REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION EXCEPT AS HEREIN SET FORTH. THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS" BASIS, AND BUYER EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF THE AGREEMENTS OF SELLER HEREIN, EXCEPT AS OTHERWISE SPECIFIED HEREIN IN PARAGRAPH 11(A) AND (B) ABOVE AND THIS PARAGRAPH 12, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY, TENANTABILITY, SUITABILITY FOR COMMERCIAL PURPOSES, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, IN RESPECT OF THE PROPERTY. The provisions (d) - (f) above shall survive Closing. Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI 13. CLOSING. (a) Before the closing date, Seller will deposit into escrow an executed special warranty deed warranting title against lawful claims by, through, or under a conveyance from Seller, but not further or otherwise, conveying insurable title of the Property to Buyer, subject to the exceptions contained in paragraph 8 above. (b) On or before the closing date, Buyer will deposit into escrow: the Purchase Price when required under Section 4; any additional funds required of Buyer, (pursuant to this agreement or any other agreement executed by Buyer) to close escrow. Both parties will sign and deliver the Co-Tenancy Agreement, and deliver to the escrow holder any other documents reasonably required by the escrow holder to close escrow. (c) On the closing date, if escrow is in a position to close, the escrow holder will: record the deed in the official records of the county where the Property is located; cause the title company to commit to issue the title policy; immediately deliver to Seller the portion of the purchase price deposited into escrow by cashier's check or wire transfer (less debits and prorations, if any); deliver to Seller and Buyer a signed counterpart of the escrow holder's certified closing statement and take all other actions necessary to close escrow. 14. DEFAULTS. If Buyer defaults, Buyer will forfeit all rights and claims and Seller will be relieved of all obligations and will be entitled to retain all monies heretofore paid by the Buyer. In addition, Seller shall retain all remedies available to Seller at law or in equity. If Seller shall default, Buyer irrevocably waives any rights to file a lis pendens, a specific performance action or any other claim, action or proceeding of any type in connection with the Property or this or any other transaction involving the Property, and will not do anything to affect title to the Property or hinder, delay or prevent any other sale, lease or other transaction involving the Property (any and all of which will be null and void), unless: it has deposited the Purchase Price into escrow, performed all of its other obligations and satisfied all conditions under this Agreement, and unconditionally notified Seller that it stands ready to tender full performance, purchase the Property and close escrow as per this Agreement, regardless of any alleged default or misconduct by Seller. Provided, however, that in no event shall Seller be liable for any actual, punitive, consequential or speculative damages arising out of any default by Seller hereunder. 15. BUYER'S REPRESENTATIONS AND WARRANTIES. a. Buyer represents and warrants to Seller as follows: (i) In addition to the acts and deeds recited herein and contemplated to be performed, executed, and delivered by Buyer, Buyer shall perform, execute and deliver or cause to be performed, executed, and delivered at the Closing or after the Closing, any and all further acts, deeds and assurances as Seller or the Title Company may require and be reasonable in order to consummate the transactions contemplated herein. Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI (ii) Buyer has all requisite power and authority to consummate the transaction contemplated by this Agreement and has by proper proceedings duly authorized the execution and delivery of this Agreement and the consummation of the transaction contemplated hereby. (iii) To Buyer's knowledge, neither the execution and delivery of this Agreement nor the consummation of the transaction contemplated hereby will violate or be in conflict with (a) any applicable provisions of law, (b) any order of any court or other agency of government having jurisdiction hereof, or (c) any agreement or instrument to which Buyer is a party or by which Buyer is bound. 16. DAMAGES, DESTRUCTION AND EMINENT DOMAIN. (a) If, prior to closing, the Property or any part thereof be destroyed or further damaged by fire, the elements, or any cause, due to events occurring subsequent to the date of this Agreement to the extent that the cost of repair exceeds $10,000.00, this Agreement shall become null and void, at Buyer's option exercised, if at all, by written notice to Seller within ten (10) days after Buyer has received written notice from Seller of said destruction or damage. Seller, however, shall have the right to adjust or settle any insured loss until (i) all contingencies set forth in Paragraph 6 hereof have been satisfied, or waived; and (ii) any ten-day period provided for above in this Subparagraph 16a for Buyer to elect to terminate this Agreement has expired or Buyer has, by written notice to Seller, waived Buyer's right to terminate this Agreement. If Buyer elects to proceed and to consummate the purchase despite said damage or destruction, there shall be no reduction in or abatement of the purchase price, and Seller shall assign to Buyer the Seller's right, title, and interest in and to all insurance proceeds (pro-rata in relation to the Entire Property) 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 any Tenant of the Entire Property. If the cost of repair is less than $10,000.00, Buyer shall be obligated to otherwise perform hereinunder with no adjustment to the Purchase Price, reduction or abatement, and Seller shall assign Seller's right, title and interest in and to all insurance proceeds pro-rata in relation to the Entire Property, subject to rights of any Tenant of the Entire Property. (b) If, prior to closing, the Property, 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 the Seller's right, title, and interest in and to any award made, or to be made, in the condemnation proceeding pro-rata in relation to the Entire Property, subject to rights of any Tenant of the Entire Property. Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI In the event that this Agreement is terminated by Buyer as provided above in Subparagraph 16a or 16b, Buyer agrees to execute such documents reasonably requested by Seller to evidence the termination hereof. 17. BUYER'S 1031 TAX FREE EXCHANGE. While Seller acknowledges that Buyer is purchasing the Property as "replacement property" to accomplish a tax free exchange, Buyer acknowledges that Seller has made no representations, warranties, or agreements to Buyer or Buyer's agents that the transaction contemplated by the Agreement will qualify for such tax treatment, nor has there been any reliance thereon by Buyer respecting the legal or tax implications of the transactions contemplated hereby. Buyer further represents that it has sought and obtained such third party advice and counsel as it deems necessary in regards to the tax implications of this transaction. Buyer wishes to novate/assign the ownership rights and interest of this Purchase Agreement to Starker Services, Inc. who will act as Accommodator to perfect the 1031 exchange by preparing an agreement of exchange of Real Property whereby Starker Services, Inc. will be an independent third party purchasing the ownership interest in subject property from Seller and selling the ownership interest in subject property to Buyer under the same terms and conditions as documented in this Purchase Agreement. Buyer asks the Seller, and Seller agrees to cooperate in the perfection of such an exchange if at no additional cost or expense to Seller or delay in time. Buyer hereby indemnifies and holds Seller harmless from any claims and/or actions resulting from said exchange. Pursuant to the direction of Starker Services, Inc., Seller will deed the property to Buyer. 18. CANCELLATION If any party elects to cancel this Contract because of any breach by another party or because escrow fails to close by the agreed date, the party electing to cancel shall deliver to escrow agent a notice containing the address of the party in breach and stating that this Contract shall be cancelled unless the breach is cured within 13 days following the delivery of the notice to the escrow agent. Within three days after receipt of such notice, the escrow agent shall send it by United States Mail to the party in breach at the address contained in the Notice and no further notice shall be required. If the breach is not cured within the 13 days following the delivery of the notice to the escrow agent, this Contract shall be cancelled. 19. MISCELLANEOUS. (a) This Agreement may be amended only by written agreement signed by both Seller and Buyer, and all waivers must be in writing and signed by the waiving party. Time is of the essence. This Agreement will not be construed for or against a party whether or not that party has drafted this Agreement. If there is any action or proceeding between the parties relating to this Agreement the prevailing party will be entitled to recover attorney's fees and costs. This is an integrated agreement containing all agreements of the parties about the Property and the other matters described, Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI and it supersedes any other agreements or understandings. Exhibits attached to this Agreement are incorporated into this Agreement. (b) If this escrow has not closed by November 5, 2001, through no fault of Seller, Seller may either, at its election, extend the closing date or exercise any remedy available to it by law, including terminating this Agreement. (c) Funds to be deposited or paid by Buyer must be good and clear funds in the form of cash, cashier's checks or wire transfers. (d) All notices from either of the parties hereto to the other shall be in writing and shall be considered to have been duly given or served if sent by first class certified mail, return receipt requested, postage prepaid, or by a nationally recognized courier service guaranteeing overnight delivery to the party at his or its address set forth below, or to such other address as such party may hereafter designate by written notice to the other party. If to Seller: AEI Income & Growth Fund XXI Limited Partnership 1300 Minnesota World Trade Center 30 East Seventh Street St. Paul, MN 55101 If to Buyer: David Louis Cruickshank, trustee under the trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased 8050 Poplar Lane Carmel, CA 93923 When accepted, this offer will be a binding agreement for valid and sufficient consideration which will bind and benefit Buyer, Seller and their respective successors and assigns. Buyer is submitting this offer by signing a copy of this offer and delivering it to Seller. Seller has five (5) business days from receipt within which to accept this offer. This Agreement shall be governed by, and interpreted in accordance with, the laws of the state of Michigan. Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI IN WITNESS WHEREOF, the Seller and Buyer have executed this Agreement effective as of the day and year above first written. BUYER: The trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased By:/s/ David Louis Cruickshank David Louis Cruickshank, trustee WITNESS: /s/ Patricia A Worden Patricia A Worden (Print Name) (THE REMAINDER OF THIS PAGE TO BE LEFT BLANK) Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI SELLER: AEI Income & Growth Fund XXI Limited Partnership, by AEI Fund Management XXI, Inc., its corporate general partner By:/s/ Robert P Johnson Robert P. Johnson, its President WITNESS: /s/ Debra Jochum Debra Jochum (Print Name) (THE REMAINDER OF THIS PAGE TO BE LEFT BLANK) Buyer Initial: /s/ DLC Purchase Agreement for Champps, Livonia,MI EXHIBIT "A" Unit 3, Pentagon Centre Condominium, according to the Master Deed recorded in Liber 29370, Pages 706 through 766 1/2, both inclusive, as amended by First Amendment to the Master Deed recorded in Liber 29631, Pages 1995 through 2003, both inclusive, as amended by Second Amendment to the Master Deed recorded in Liber 29696, Pages 571 through 577, both inclusive, as amended by Third Amendment to the Master Deed recorded in Liber 29805, Pages 766 through 767, both inclusive, and as amended by Fourth Amendment to the Master Deed recorded in Liber 31338, Pages 1 through 4, both inclusive, Wayne County Records, and designated as Wayne County Condominium Subdivision Plan No. 437, together with rights in general common elements and limited common elements, as set forth in the above Master Deed and as described in Act 229 of the Public Acts of 1963, and Act 59 of the Public Acts of 1978, as amended. 19470 Haggerty Tax I.D. No. 46-023-01-0003-000 EX-10.55 7 curickco.txt PROPERTY CO-TENANCY OWNERSHIP AGREEMENT Champps Americana Restaurant Livonia, Michigan THIS CO-TENANCY AGREEMENT, Made and entered into as of the 7th day of November, 2001, by and between AEI Income & Growth Fund XXI Limited Partnership (hereinafter called "Co-Tenancy Manager"), and David Louis Cruickshank, trustee under the trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased (hereinafter called "Cruickshank"). (Cruickshank, Co-Tenancy Manager (and any other Owner in Fee where the context so indicates) being hereinafter sometimes collectively called "Co-Tenants" and referred to in the neuter gender). WITNESSETH: WHEREAS, AEI Income & Growth Fund XXI Limited Partnership presently owns an undivided 78.5629% interest in and to, and Cruickshank presently owns an undivided 5.5769% interest in and to, and Barbara A. Bou-Sliman, Trustee of the First Amended and Restated Trust Agreement of Barbara A. Bou-Sliman dated July 8, 1992 presently owns an undivided 3.4211% interest in and to, and Sherrill L. Hossom as Trustee of the Sherrill L. Hossom Family Trust dated May 15, 1992 presently owns an undivided 4.2226% interest in and to, and Linda L. Landes as Trustee of the Linda L. Landes Family Trust dated May 15, 1992 presently owns an undivided 4.6600% interest in and to and Elizabeth C. Hsu Living Trust dated 11/13/89, Elizabeth C. Hsu, trustee presently owns an undivided 3.5565% interest in and to the land, situated in the City of Livonia, County of Wayne, and State of Michigan, (legally described upon Exhibit A attached hereto and hereby made a part hereof) and in and to the improvements located thereon (hereinafter called "Premises"); WHEREAS, The parties hereto wish to provide for: the orderly monitoring of performance by the present tenant of the Premises under the triple net lease agreement for the Premises; if necessary, upon a vacancy in the Premises, the operation and management of the Premises; the continued leasing of space within the Premises; and, the distribution of income from and the pro- rata sharing in expenses of the Premises by Co-Tenancy Manager in connection with Cruickshank's interest in the Premises. NOW THEREFORE, in consideration of the purchase by Cruickshank of an undivided interest in and to the Premises, for at least One Dollar ($1.00) and other good and valuable consideration by the parties hereto to one another in hand paid, the receipt and sufficiency of which are hereby acknowledged, and of the mutual covenants and agreements herein contained, it is hereby agreed by and between the parties hereto, as follows: Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI 1. Cruickshank, subject to the limitations and power of revocation herein expressed, hereby designates Co-Tenancy Manager as its sole and exclusive agent and delegates to Co-Tenancy Manager the sole right to monitor and enforce on behalf of Cruickshank the terms of the present lease of the Premises, including but not limited to any amendments, consents to assignment, sublet, releases or modifications to the lease or guarantees of lease and to deal with any property agent or tenant. Should the Premises become vacant, the operation and management of the Premises, is delegated by the Co-Tenants, subject to revocation on an individual basis by an individual Co- Tenant as otherwise set forth herein, to Co-Tenancy Manager, or its designated agent, successors or assigns. Provided, however, if Co-Tenancy Manager shall sell all of its interest in the Premises, (or shall no longer be delegated the operation and management of the Premises), the duties and obligations of Co- Tenancy Manager respecting management of the Premises as set forth herein, including but not limited to its duties and obligations respecting paragraphs 2, 3, and 4 hereof, shall be exercised by the holder or holders of a majority undivided co- tenancy interests in the Premises. Subject to the approval of all Co-Tenants evidenced by their written consent, Co-Tenancy Manager shall negotiate and execute re-leases of the Premises upon termination of the present lease of the Premises or negotiate and execute easements affecting the Premises, may incur ordinary and necessary operating expenses in connection with the management of the Premises, and propose extraordinary or capital expenditures to the Premises. Until Cruickshank shall revoke such authority as provided herein, Co-Tenancy Manager or Cruickshank itself may obligate Cruickshank with respect to any ordinary and necessary operating expense for the Premises. However, Co-Tenancy Manager has no right to obtain a loan for which any other Co-Tenant would be liable, nor may Co-Tenancy Manager finance or refinance the Premises by secured by any lien or any pledge of the Premises. Cruickshank agrees to execute and deliver to Co-Tenancy Manager such written approval of documents approved by Cruickshank, such approval to take such form as may be reasonably required by Co- Tenancy Manager to evidence its authority to sign approved documents on behalf of Cruickshank. As further set forth in paragraph 2 hereof, Co-Tenancy Manager agrees to require any lessee of the Premises to name Cruickshank as an insured or additional insured in all insurance policies provided for, or contemplated by, any lease on the Premises. Co- Tenancy Manager shall use its best efforts to obtain endorsements adding Co-Tenants to said policies from lessee within 30 days of commencement of this agreement. In any event, Co-Tenancy Manager shall distribute any insurance proceeds it may receive, to the extent consistent with any lease on the Premises, to the Co- Tenants in proportion to their respective ownership of the Premises. 2. Income and expenses shall be allocated among the Co-Tenants in proportion to their respective share(s) of ownership. Shares of net income shall be pro-rated for any partial calendar years included within the term of this Agreement. Co-Tenancy Manager may offset against, pay to itself and deduct from any payment due to Cruickshank under this Agreement, and may pay to itself the amount of Cruickshank's share of any reasonable expenses of the Premises which are not paid by Cruickshank to Co-Tenancy Manager or its assigns, within ten (10) days after demand by Co-Tenancy Manager. In the event there is insufficient operating income Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI from which to deduct Cruickshank's unpaid share of operating expenses, Co-Tenancy Manager may pursue any and all legal remedies for collection. Operating Expenses shall include all normal operating expense, including but not limited to: maintenance, utilities, supplies, labor, management, advertising and promotional expenses, salaries and wages of rental and management personnel, leasing commissions to third parties, a monthly accrual to pay insurance premiums, real estate taxes, installments of special assessments and for structural repairs and replacements, management fees, legal fees and accounting fees, but excluding all operating expenses paid by tenant under terms of any lease agreement of the Premises. Cruickshank has no requirement to, but has, nonetheless elected to retain, and agrees to annually compensate, Co-Tenancy Manager in the amount of $899 for the expenses, direct and indirect, incurred by Co-Tenancy Manager in providing Cruickshank with quarterly accounting and distributions of Cruickshank's share of net income and for tracking, reporting and assessing the calculation of Cruickshank's share of operating expenses incurred from the Premises. This invoice amount shall be pro-rated for partial years and Cruickshank authorizes Co-Tenancy Manager to deduct such amount from Cruickshank's share of revenue from the Premises. Cruickshank may terminate this agreement in this paragraph respecting accounting and distributions at any time and attempt to collect its share of rental income directly from the tenant; Co-Tenancy Manager may terminate its obligation under this paragraph upon 30 days written notice to Cruickshank prior to the end of each anniversary hereof, unless agreed in writing to the contrary. 3. Full, accurate and complete books of account shall be kept in accordance with generally accepted accounting principles at Co- Tenancy Manager 's principal office, and each Co-Tenant shall have access to such books and may inspect and copy any part thereof during normal business hours. Within ninety (90) days after the end of each calendar year during the term hereof, Co- Tenancy Manager shall prepare an accurate income statement for the ownership of the Premises for said calendar year and shall furnish copies of the same to all Co-Tenants. Quarterly, as its share, Cruickshank shall be entitled to receive 5.5769% of all items of income and expense generated by the Premises. Upon receipt of said accounting, if the payments received by each Co- Tenant pursuant to this Paragraph 3 do not equal, in the aggregate, the amounts which each are entitled to receive proportional to its share of ownership with respect to said calendar year pursuant to Paragraph 2 hereof, an appropriate adjustment shall be made so that each Co-Tenant receives the amount to which it is entitled. 4. If Net Income from the Premises is less than $0.00 (i.e., the Premises operates at a loss), or if capital improvements, repairs, and/or replacements, for which adequate reserves do not exist, need to be made to the Premises, the Co-Tenants, upon receipt of a written request therefore from Co-Tenancy Manager shall, within fifteen (15) business days after receipt of notice, make payment to Co-Tenancy Manager sufficient to pay said net operating losses and to provide necessary operating capital for the premises and to pay for said capital improvements, repairs and/or replacements, all in proportion to their undivided interests in and to the Premises. All Co-Tenants shall have the right to review all contracts that will have a material effect on the Premises. All Co-Tenants shall have the right to approve budgets and major capital expenditures affecting the Premises. Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI While Co-Tenancy Manager shall own an interest in the Premises, Co-Tenants agree to delegate the determination of such budgets and need for capital expenditures to Co-Tenancy Manager subject to the power of any Co-Tenant to revoke such delegation in accordance with the provisions hereof. 5. Co-Tenants may, at any time, sell, finance, or otherwise create a lien upon their interest in the Premises but only upon their interest and not upon any part of the interest held, or owned, by any other Co-Tenant, and shall not create any lien upon their individual interest if by operation of law such lien shall by law extend to the interest of any other Co-Tenant. All Co- Tenants reserve the right to escrow proceeds from a sale of their interests in the Premises to obtain tax deferral by the purchase of replacement property. 6. If any Co-Tenant shall be in default with respect to any of its obligations hereunder, and if said default is not corrected within thirty (30) days after receipt by said defaulting Co- Tenant of written notice of said default, or within a reasonable period if said default does not consist solely of a failure to pay money, the remaining Co-Tenant(s) may resort to any available remedy to cure said default at law, in equity, or by statute. 7. This Co-Tenancy agreement shall continue in full force and effect and shall bind and inure to the benefit of the Co-Tenant and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns until May 31, 2018 or upon the sale of the entire Premises in accordance with the terms hereof and proper disbursement of the proceeds thereof, whichever shall first occur. Unless specifically identified as a personal contract right or obligation herein, this agreement shall run with any interest in the Property and with the title thereto. Once any person, party or entity has ceased to have an interest in fee in any portion of the Entire Property, it shall not be bound by, subject to or benefit from the terms hereof; but its heirs, executors, administrators, personal representatives, successors or assigns, as the case may be, shall be substituted for it hereunder. Any Co-Tenant may, at any time effective upon written notice to Co-Tenancy Manager revoke the designation of Co- Tenancy Manager as such Co-Tenant's agent for the purposes as set forth herein. Any Co-Tenant revoking such designation of Co- Tenancy Manager's agency shall notify Co-Tenancy Manager in writing in accordance with the terms hereof and such revocation shall be effective upon Co-Tenancy Manager's receipt of such written revocation. 8. Any notice or election required or permitted to be given or served by any party hereto to, or upon any other, shall be given to all known Co-Tenants and deemed given or served in accordance with the provisions of this Agreement, if said notice or elections addressed as follows; If to AEI Income & Growth Fund XXI Limited Partnership: 1300 Minnesota World Trade Center 30 East Seventh Street St. Paul, MN 55101 Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI If to Cruickshank: David Louis Cruickshank, trustee under the trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased 8050 Poplar Lane Carmel, CA 93923 If to Bou-Sliman: Barbara A. Bou-Sliman, Trustee of the First Amended and Restated Trust Agreement of Barbara A. Bou-Sliman, dated July 8, 1992 267 Colonade Circle Naples, FL 34103 If to Hossom: Sherrill L. Hossom as trustee of the Sherrill L. Hossom Family Trust, dated May 15, 1992 16428 Lookout Lane Bow, WA 98232 If to Landes: Linda L. Landes as trustee of the Linda L. Landes Family Trust, dated May 15, 1992 5621 Corso Di Napoli Long Beach, CA 90802 If to Hsu: Elizabeth C. Hsu Living Trust, dated 11/13/89 7224 Old Mill Road Bloomfield Township, MI 48301 Each mailed notice or election shall be deemed to have been given to, or served upon, the party to which addressed on the date the same is deposited in the United States certified mail, return receipt requested, postage prepaid, or given to a nationally recognized courier service guaranteeing overnight delivery as properly addressed in the manner above provided. Any party hereto may change its address for the service of notice hereunder by Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI delivering written notice of said change to the other parties hereunder, in the manner above specified, at least ten (10) days prior to the effective date of said change. Any Co-Tenant selling or transferring all or a portion of its interest in the Premises shall provide, within a reasonable time after the completion of such sale or transfer, written notice to all other Co-Tenants of the name and address of such new Co-Tenant and the interest held by such new Co-Tenant. Upon written request from Co-Tenancy Manager from time to time at reasonable intervals, Co- Tenant shall provide a current Affidavit of Trustee or Certificate of Trustee verifying the name and address of the current trustee(s) empowered to transfer interests in the Premises owned by Co-Tenant. 9. This Agreement shall not create any partnership or joint venture among or between the Co-Tenants or any of them; no Co- Tenant shall file any partnership tax returns nor otherwise take any action respecting nor represent the relationship among the Co- Tenants as other than co-tenants of undivided interests in real property. The only relationship among and between the Co-Tenants hereunder shall be that of owners of the Premises as tenants in common subject to the terms hereof. 10. The unenforceability or invalidity of any provision or provisions of this Agreement as to any person or circumstances shall not render that provision, nor any other provision hereof, unenforceable or invalid as to any other person or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 11. In the event any litigation arises between the parties hereto relating to this Agreement, or any of the provisions hereof, the party prevailing in such action shall be entitled to receive from the losing party, in addition to all other relief, remedies and damages to which it is otherwise entitled, all reasonable costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in connection with said litigation. 12. To the extent that this agreement binds all Co-Tenants of the Premises, such covenants are deemed to run with the land and shall be evidenced in a Co-Tenancy Agreement entered into by any Co-Tenant with any purchaser of all or any portion of its interest in the Premises. Except as otherwise provided or modified herein, Co-Tenants retain all rights otherwise available under law to any Co-Tenant of an interest in Real Property. 13. Every Co-Tenant, shall have a right of first refusal to purchase the interest of any other Co-Tenant in the Premises, upon the following limited terms and conditions. If and only when a Co-Tenant shall give written notice to another Co-Tenant (and only as to such Co-Tenant receiving such notice) of a desire to be notified of any proposed sale "Notice of Desire to Purchase"), Co-Tenants desiring notice of proposed sales of Co- Tenancy interests shall receive notice of proposed sales of the interest of the Co-Tenant who has received a Notice of Desire to Purchase. Any Co-Tenant offering its interest or any portion thereof for sale ("Selling Co-Tenant") shall first notify all Co- Tenants who have provided a Notice of Desire to Purchase. Such notice ("Selling Co-Tenant's Notice") shall give Selling Co- Tenant's name and address and state a price at which Selling Co- Tenant intends to sell and will sell a specified portion or all of its interest in the fee simple to the Leased Premises. Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI If a Co-Tenant shall fail to exercise its Right of First Refusal as set forth herein, those Co-Tenant's exercising their Right of First Refusal shall buy all, but not less than all, of the interest in the Premises offered for sale by the Selling Co- Tenant, purchasing prorata in proportion that the purchasing Co- Tenant's interests in the Premises shall bear to one another. For ten (10) business days (the "Right of First Refusal Period") following the giving of such notice, a Co-Tenant shall have the option to purchase such portion of the fee interest of the Selling Co-Tenant as set forth in Selling Co-Tenant's Notice at the price in cash stated in the Selling Co-Tenant's Notice. A written notice addressed to Selling Co-Tenant and signed by the purchasing Co-Tenant shall be given, in accordance with the provisions hereof respecting the giving of notice, within the period set forth above for exercising the Right of First Refusal. If no Co-Tenant shall exercise its Right of First Refusal, Selling Co-Tenant shall be free to market its interest in the Premises after expiration of the Right of First Refusal Period and shall be free to sell all or any portion of its interest in the Premises at a price prorata greater than, or equal to, that which is set forth in the Selling Co-Tenant's Notice. The above provisions shall not apply to the sale or transfer of a Co-Tenant's interest in the Premises if such sale or transfer shall be to an affiliate of the selling or transferring Co-Tenant or to a trust established by such Co-Tenant for estate planning purposes. THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be executed and delivered, as of the day and year first above written. The trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased By: /s/ David Louis Cruickshank David Louis Cruickshank, trustee Address: 8050 Poplar Lane Carmel, CA 93923 STATE OF CALIFORNIA) ) ss COUNTY OF TULARE) I, a Notary Public in and for the state and county of aforesaid, hereby certify there appeared before me this 16th day of October, 2001, David Louis Cruickshank, trustee under the trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased, who executed the foregoing instrument in said capacity. /s/ Patricia A. Worden Notary Public [notary seal] WITNESS 1: WITNESS 2: By: /s/ Patricia A Worden By: /s/ Kara Wiley (Print Name & Address below) (Print Name & Address below) Patricia A Worden Kara Wiley 1750 W Walnut Visalia, CA 1750 W Walnut Visalia, CA 93277 Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI AEI Income & Growth Fund XXI Limited Partnership by AEI Fund Management XXI, Inc., its corporate general partner By:/s/ Robert P Johnson Robert P. Johnson, its President State of Minnesota ) ) ss. County of Ramsey ) I, a Notary Public in and for the state and county of aforesaid, hereby certify there appeared before me this 7th day of November, 2001, Robert P. Johnson, President of AEI Fund Management XXI, Inc., the corporate general partner of AEI Income & Growth Fund XXI Limited Partnership, who executed the foregoing instrument in said capacity and on behalf of the corporation. /s/ Debra A Jochum Notary Public [notary seal] WITNESS 1: WITNESS 2: By: /s/ Debra L Achman By: /s/ Jeanne C Herda (Print Name & Address below) (Print Name & Address below) Debra L Achman 1300 WTC 1300 World Trade Center St. Paul MN 55105 30 E 7th St Jeanne C Herda St. Paul, MN 55101 The name of the party who drafted this document is: AEI Fund Management, Inc., 1300 World Trade Center, 30 East Seventh Street, St. Paul, MN 55101 651-227-7333 Co-Tenant Initial: /s/ DLC Co-Tenancy Agreement for Champps, Livonia, MI EXHIBIT "A" Unit 3, Pentagon Centre Condominium, according to the Master Deed recorded in Liber 29370, Pages 706 through 766 1/2, both inclusive, as amended by First Amendment to the Master Deed recorded in Liber 29631, Pages 1995 through 2003, both inclusive, as amended by Second Amendment to the Master Deed recorded in Liber 29696, Pages 571 through 577, both inclusive, as amended by Third Amendment to the Master Deed recorded in Liber 29805, Pages 766 through 767, both inclusive, and as amended by Fourth Amendment to the Master Deed recorded in Liber 31338, Pages 1 through 4, both inclusive, Wayne County Records, and designated as Wayne County Condominium Subdivision Plan No. 437, together with rights in general common elements and limited common elements, as set forth in the above Master Deed and as described in Act 229 of the Public Acts of 1963, and Act 59 of the Public Acts of 1978, as amended. 19470 Haggerty Tax I.D. No. 46-023-01-0003-000 EX-10.56 8 roemco.txt PROPERTY CO-TENANCY OWNERSHIP AGREEMENT Champps Americana Restaurant Livonia, Michigan THIS CO-TENANCY AGREEMENT, Made and entered into as of the 16th day of November, 2001, by and between AEI Income & Growth Fund XXI Limited Partnership (hereinafter called "Co-Tenancy Manager"), and Gregory A. Roemhild (hereinafter called "Roemhild"). (Roemhild, Co-Tenancy Manager (and any other Owner in Fee where the context so indicates) being hereinafter sometimes collectively called "Co- Tenants" and referred to in the neuter gender). WITNESSETH: WHEREAS, AEI Income & Growth Fund XXI Limited Partnership presently owns an undivided 74.6801% interest in and to, and Roemhild presently owns an undivided 3.8828% interest in and to, and David Louis Cruickshank, trustee under the trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased presently owns an undivided 5.5769% interest in and to, and Barbara A. Bou-Sliman, Trustee of the First Amended and Restated Trust Agreement of Barbara A. Bou-Sliman dated July 8, 1992 presently owns an undivided 3.4211% interest in and to, and Sherrill L. Hossom as Trustee of the Sherrill L. Hossom Family Trust dated May 15, 1992 presently owns an undivided 4.2226% interest in and to, and Linda L. Landes as Trustee of the Linda L. Landes Family Trust dated May 15, 1992 presently owns an undivided 4.6600% interest in and to and Elizabeth C. Hsu Living Trust dated 11/13/89, Elizabeth C. Hsu, trustee presently owns an undivided 3.5565% interest in and to the land, situated in the City of Livonia, County of Wayne, and State of Michigan, (legally described upon Exhibit A attached hereto and hereby made a part hereof) and in and to the improvements located thereon (hereinafter called "Premises"); WHEREAS, The parties hereto wish to provide for: the orderly monitoring of performance by the present tenant of the Premises under the triple net lease agreement for the Premises; if necessary, upon a vacancy in the Premises, the operation and management of the Premises; the continued leasing of space within the Premises; and, the distribution of income from and the pro- rata sharing in expenses of the Premises by Co-Tenancy Manager in connection with Roemhild's interest in the Premises. NOW THEREFORE, in consideration of the purchase by Roemhild of an undivided interest in and to the Premises, for at least One Dollar ($1.00) and other good and valuable consideration by the parties hereto to one another in hand paid, the receipt and sufficiency of which are hereby acknowledged, and of the mutual covenants and agreements herein contained, it is hereby agreed by and between the parties hereto, as follows: Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI 1. Roemhild, subject to the limitations and power of revocation herein expressed, hereby designates Co-Tenancy Manager as its sole and exclusive agent and delegates to Co-Tenancy Manager the sole right to monitor and enforce on behalf of Roemhild the terms of the present lease of the Premises, including but not limited to any amendments, consents to assignment, sublet, releases or modifications to the lease or guarantees of lease and to deal with any property agent or tenant. Should the Premises become vacant, the operation and management of the Premises, is delegated by the Co-Tenants, subject to revocation on an individual basis by an individual Co-Tenant as otherwise set forth herein, to Co-Tenancy Manager, or its designated agent, successors or assigns. Provided, however, if Co-Tenancy Manager shall sell all of its interest in the Premises, (or shall no longer be delegated the operation and management of the Premises), the duties and obligations of Co-Tenancy Manager respecting management of the Premises as set forth herein, including but not limited to its duties and obligations respecting paragraphs 2, 3, and 4 hereof, shall be exercised by the holder or holders of a majority undivided co-tenancy interests in the Premises. Subject to the approval of all Co- Tenants evidenced by their written consent, Co-Tenancy Manager shall negotiate and execute re-leases of the Premises upon termination of the present lease of the Premises or negotiate and execute easements affecting the Premises, may incur ordinary and necessary operating expenses in connection with the management of the Premises, and propose extraordinary or capital expenditures to the Premises. Until Roemhild shall revoke such authority as provided herein, Co-Tenancy Manager or Roemhild itself may obligate Roemhild with respect to any ordinary and necessary operating expense for the Premises. However, Co-Tenancy Manager has no right to obtain a loan for which any other Co-Tenant would be liable, nor may Co-Tenancy Manager finance or refinance the Premises by secured by any lien or any pledge of the Premises. Roemhild agrees to execute and deliver to Co-Tenancy Manager such written approval of documents approved by Roemhild, such approval to take such form as may be reasonably required by Co-Tenancy Manager to evidence its authority to sign approved documents on behalf of Roemhild. As further set forth in paragraph 2 hereof, Co-Tenancy Manager agrees to require any lessee of the Premises to name Roemhild as an insured or additional insured in all insurance policies provided for, or contemplated by, any lease on the Premises. Co- Tenancy Manager shall use its best efforts to obtain endorsements adding Co-Tenants to said policies from lessee within 30 days of commencement of this agreement. In any event, Co-Tenancy Manager shall distribute any insurance proceeds it may receive, to the extent consistent with any lease on the Premises, to the Co- Tenants in proportion to their respective ownership of the Premises. 2. Income and expenses shall be allocated among the Co-Tenants in proportion to their respective share(s) of ownership. Shares of net income shall be pro-rated for any partial calendar years included within the term of this Agreement. Co-Tenancy Manager may offset against, pay to itself and deduct from any payment due to Roemhild under this Agreement, and may pay to itself the amount of Roemhild's share of any reasonable expenses of the Premises which are not paid by Roemhild to Co-Tenancy Manager or its assigns, within ten (10) days after demand by Co-Tenancy Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI Manager. In the event there is insufficient operating income from which to deduct Roemhild's unpaid share of operating expenses, Co-Tenancy Manager may pursue any and all legal remedies for collection. Operating Expenses shall include all normal operating expense, including but not limited to: maintenance, utilities, supplies, labor, management, advertising and promotional expenses, salaries and wages of rental and management personnel, leasing commissions to third parties, a monthly accrual to pay insurance premiums, real estate taxes, installments of special assessments and for structural repairs and replacements, management fees, legal fees and accounting fees, but excluding all operating expenses paid by tenant under terms of any lease agreement of the Premises. Roemhild has no requirement to, but has, nonetheless elected to retain, and agrees to annually compensate, Co-Tenancy Manager in the amount of $626 for the expenses, direct and indirect, incurred by Co-Tenancy Manager in providing Roemhild with quarterly accounting and distributions of Roemhild's share of net income and for tracking, reporting and assessing the calculation of Roemhild's share of operating expenses incurred from the Premises. This invoice amount shall be pro-rated for partial years and Roemhild authorizes Co-Tenancy Manager to deduct such amount from Roemhild's share of revenue from the Premises. Roemhild may terminate this agreement in this paragraph respecting accounting and distributions at any time and attempt to collect its share of rental income directly from the tenant; Co-Tenancy Manager may terminate its obligation under this paragraph upon 30 days written notice to Roemhild prior to the end of each anniversary hereof, unless agreed in writing to the contrary. 3. Full, accurate and complete books of account shall be kept in accordance with generally accepted accounting principles at Co- Tenancy Manager 's principal office, and each Co-Tenant shall have access to such books and may inspect and copy any part thereof during normal business hours. Within ninety (90) days after the end of each calendar year during the term hereof, Co- Tenancy Manager shall prepare an accurate income statement for the ownership of the Premises for said calendar year and shall furnish copies of the same to all Co-Tenants. Quarterly, as its share, Roemhild shall be entitled to receive 3.8828% of all items of income and expense generated by the Premises. Upon receipt of said accounting, if the payments received by each Co-Tenant pursuant to this Paragraph 3 do not equal, in the aggregate, the amounts which each are entitled to receive proportional to its share of ownership with respect to said calendar year pursuant to Paragraph 2 hereof, an appropriate adjustment shall be made so that each Co-Tenant receives the amount to which it is entitled. 4. If Net Income from the Premises is less than $0.00 (i.e., the Premises operates at a loss), or if capital improvements, repairs, and/or replacements, for which adequate reserves do not exist, need to be made to the Premises, the Co-Tenants, upon receipt of a written request therefore from Co-Tenancy Manager shall, within fifteen (15) business days after receipt of notice, make payment to Co-Tenancy Manager sufficient to pay said net operating losses and to provide necessary operating capital for the premises and to pay for said capital improvements, repairs and/or replacements, all in proportion to their undivided interests in and to the Premises. All Co-Tenants shall have the right to review all contracts that will have a material effect on Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI the Premises. All Co-Tenants shall have the right to approve budgets and major capital expenditures affecting the Premises. While Co-Tenancy Manager shall own an interest in the Premises, Co-Tenants agree to delegate the determination of such budgets and need for capital expenditures to Co-Tenancy Manager subject to the power of any Co-Tenant to revoke such delegation in accordance with the provisions hereof. 5. Co-Tenants may, at any time, sell, finance, or otherwise create a lien upon their interest in the Premises but only upon their interest and not upon any part of the interest held, or owned, by any other Co-Tenant, and shall not create any lien upon their individual interest if by operation of law such lien shall by law extend to the interest of any other Co-Tenant. All Co- Tenants reserve the right to escrow proceeds from a sale of their interests in the Premises to obtain tax deferral by the purchase of replacement property. 6. If any Co-Tenant shall be in default with respect to any of its obligations hereunder, and if said default is not corrected within thirty (30) days after receipt by said defaulting Co- Tenant of written notice of said default, or within a reasonable period if said default does not consist solely of a failure to pay money, the remaining Co-Tenant(s) may resort to any available remedy to cure said default at law, in equity, or by statute. 7. This Co-Tenancy agreement shall continue in full force and effect and shall bind and inure to the benefit of the Co-Tenant and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns until May 31, 2018 or upon the sale of the entire Premises in accordance with the terms hereof and proper disbursement of the proceeds thereof, whichever shall first occur. Unless specifically identified as a personal contract right or obligation herein, this agreement shall run with any interest in the Property and with the title thereto. Once any person, party or entity has ceased to have an interest in fee in any portion of the Entire Property, it shall not be bound by, subject to or benefit from the terms hereof; but its heirs, executors, administrators, personal representatives, successors or assigns, as the case may be, shall be substituted for it hereunder. Any Co-Tenant may, at any time effective upon written notice to Co-Tenancy Manager revoke the designation of Co- Tenancy Manager as such Co-Tenant's agent for the purposes as set forth herein. Any Co-Tenant revoking such designation of Co- Tenancy Manager's agency shall notify Co-Tenancy Manager in writing in accordance with the terms hereof and such revocation shall be effective upon Co-Tenancy Manager's receipt of such written revocation. 8. Any notice or election required or permitted to be given or served by any party hereto to, or upon any other, shall be given to all known Co-Tenants and deemed given or served in accordance with the provisions of this Agreement, if said notice or elections addressed as follows; If to AEI Income & Growth Fund XXI Limited Partnership: 1300 Minnesota World Trade Center 30 East Seventh Street St. Paul, MN 55101 Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI If to Roemhild: Gregory A. Roemhild 814 - 10 1/2 Avenue Box 103 Almena, WI 54805 If to Cruickshank: David Louis Cruickshank, trustee under the trust created by the will dated June 5, 1964 of Louis William Achenbach, deceased 8050 Poplar Lane Carmel, CA 93923 If to Bou-Sliman: Barbara A. Bou-Sliman, Trustee of the First Amended and Restated Trust Agreement of Barbara A. Bou-Sliman, dated July 8, 1992 267 Colonade Circle Naples, FL 34103 If to Hossom: Sherrill L. Hossom as trustee of the Sherrill L. Hossom Family Trust, dated May 15, 1992 16428 Lookout Lane Bow, WA 98232 If to Landes: Linda L. Landes as trustee of the Linda L. Landes Family Trust, dated May 15, 1992 5621 Corso Di Napoli Long Beach, CA 90802 Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI If to Hsu: Elizabeth C. Hsu Living Trust, dated 11/13/89 7224 Old Mill Road Bloomfield Township, MI 48301 Each mailed notice or election shall be deemed to have been given to, or served upon, the party to which addressed on the date the same is deposited in the United States certified mail, return receipt requested, postage prepaid, or given to a nationally recognized courier service guaranteeing overnight delivery as properly addressed in the manner above provided. Any party hereto may change its address for the service of notice hereunder by delivering written notice of said change to the other parties hereunder, in the manner above specified, at least ten (10) days prior to the effective date of said change. Any Co-Tenant selling or transferring all or a portion of its interest in the Premises shall provide, within a reasonable time after the completion of such sale or transfer, written notice to all other Co-Tenants of the name and address of such new Co-Tenant and the interest held by such new Co-Tenant. 9. This Agreement shall not create any partnership or joint venture among or between the Co-Tenants or any of them; no Co- Tenant shall file any partnership tax returns nor otherwise take any action respecting nor represent the relationship among the Co- Tenants as other than co-tenants of undivided interests in real property. The only relationship among and between the Co-Tenants hereunder shall be that of owners of the Premises as tenants in common subject to the terms hereof. 10. The unenforceability or invalidity of any provision or provisions of this Agreement as to any person or circumstances shall not render that provision, nor any other provision hereof, unenforceable or invalid as to any other person or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable. 11. In the event any litigation arises between the parties hereto relating to this Agreement, or any of the provisions hereof, the party prevailing in such action shall be entitled to receive from the losing party, in addition to all other relief, remedies and damages to which it is otherwise entitled, all reasonable costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in connection with said litigation. 12. To the extent that this agreement binds all Co-Tenants of the Premises, such covenants are deemed to run with the land and shall be evidenced in a Co-Tenancy Agreement entered into by any Co-Tenant with any purchaser of all or any portion of its interest in the Premises. Except as otherwise provided or modified herein, Co-Tenants retain all rights otherwise available under law to any Co-Tenant of an interest in Real Property. 13. Every Co-Tenant, shall have a right of first refusal to purchase the interest of any other Co-Tenant in the Premises, upon the following limited terms and conditions. If and only when a Co-Tenant shall give written notice to another Co-Tenant (and only as to such Co-Tenant receiving such notice) of a desire Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI to be notified of any proposed sale "Notice of Desire to Purchase"), Co-Tenants desiring notice of proposed sales of Co- Tenancy interests shall receive notice of proposed sales of the interest of the Co-Tenant who has received a Notice of Desire to Purchase. Any Co-Tenant offering its interest or any portion thereof for sale ("Selling Co-Tenant") shall first notify all Co- Tenants who have provided a Notice of Desire to Purchase. Such notice ("Selling Co-Tenant's Notice") shall give Selling Co- Tenant's name and address and state a price at which Selling Co- Tenant intends to sell and will sell a specified portion or all of its interest in the fee simple to the Leased Premises. If a Co-Tenant shall fail to exercise its Right of First Refusal as set forth herein, those Co-Tenant's exercising their Right of First Refusal shall buy all, but not less than all, of the interest in the Premises offered for sale by the Selling Co- Tenant, purchasing prorata in proportion that the purchasing Co- Tenant's interests in the Premises shall bear to one another. For ten (10) business days (the "Right of First Refusal Period") following the giving of such notice, a Co-Tenant shall have the option to purchase such portion of the fee interest of the Selling Co-Tenant as set forth in Selling Co-Tenant's Notice at the price in cash stated in the Selling Co-Tenant's Notice. A written notice addressed to Selling Co-Tenant and signed by the purchasing Co-Tenant shall be given, in accordance with the provisions hereof respecting the giving of notice, within the period set forth above for exercising the Right of First Refusal. If no Co-Tenant shall exercise its Right of First Refusal, Selling Co-Tenant shall be free to market its interest in the Premises after expiration of the Right of First Refusal Period and shall be free to sell all or any portion of its interest in the Premises at a price prorata greater than, or equal to, that which is set forth in the Selling Co-Tenant's Notice. The above provisions shall not apply to the sale or transfer of a Co-Tenant's interest in the Premises if such sale or transfer shall be to an affiliate of the selling or transferring Co-Tenant or to a trust established by such Co-Tenant for estate planning purposes. THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be executed and delivered, as of the day and year first above written. Gregory A. Roemhild By: /s/ Gregory A Roemhild Gregory A. Roemhild Address: 814 - 10 1/2 Avenue Box 103 Almena, WI 54805 STATE OF WISCONSIN) ) ss COUNTY OF BARRON) I, a Notary Public in and for the state and county of aforesaid, hereby certify there appeared before me this 23rd day of October, 2001, Gregory A. Roemhild, who executed the foregoing instrument in said capacity. /s/ Constance M Roemhild Notary Public [notary seal] WITNESS 1: WITNESS 2: By: /s/ Philip N Kluge By: /s/ Darlene Emerson (Print Name & Address below) (Print Name & Address below) Philip N Kluge Darlene Emerson 115 Keller Ave N 1402 85th Ave Amery, WI 54001 Amery, WI 54001 Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI AEI Income & Growth Fund XXI Limited Partnership By: AEI Fund Management XXI, Inc., its corporate general partner By: /s/ Robert P Johnson Robert P. Johnson, its President State of Minnesota ) ) ss. County of Ramsey ) I, a Notary Public in and for the state and county of aforesaid, hereby certify there appeared before me this 16th day of November, 2001, Robert P. Johnson, President of AEI Fund Management XXI, Inc., the corporate general partner of AEI Income & Growth Fund XXI Limited Partnership, who executed the foregoing instrument in said capacity and on behalf of the corporation. /s/ Debra A Jochum Notary Public [notary seal] WITNESS 1: WITNESS 2: By: /s/ Brent D Cook By: /s/ Elizabeth Schulte (Print Name & Address below) (Print Name & Address below) Brent D Cook Elizabeth Schulte 30 E 7th St 30 E 7th St., St. Paul, MN St. Paul, MN 55101 55101 The name of the party who drafted this document is: AEI Fund Management, Inc., 1300 World Trade Center, 30 East Seventh Street, St. Paul, MN 55101 651-227-7333 Co-Tenant Initial:/s/ GAR Co-Tenancy Agreement for Champp's Americana Restaurant, Livonia, MI EXHIBIT "A" Unit 3, Pentagon Centre Condominium, according to the Master Deed recorded in Liber 29370, Pages 706 through 766 1/2, both inclusive, as amended by First Amendment to the Master Deed recorded in Liber 29631, Pages 1995 through 2003, both inclusive, as amended by Second Amendment to the Master Deed recorded in Liber 29696, Pages 571 through 577, both inclusive, as amended by Third Amendment to the Master Deed recorded in Liber 29805, Pages 766 through 767, both inclusive, and as amended by Fourth Amendment to the Master Deed recorded in Liber 31338, Pages 1 through 4, both inclusive, Wayne County Records, and designated as Wayne County Condominium Subdivision Plan No. 437, together with rights in general common elements and limited common elements, as set forth in the above Master Deed and as described in Act 229 of the Public Acts of 1963, and Act 59 of the Public Acts of 1978, as amended. 19470 Haggerty Tax I.D. No. 46-023-01-0003-000 EX-10.57 9 lsterm.txt LEASE TERMINATION AGREEMENT THIS LEASE TERMINATION AGREEMENT ("Agreement") is made and entered into as of this 3rd day of December, 2001 by and between AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP, a Minnesota limited partnership, whose address is 1300 Minnesota World Trade Center, 30 East Seventh Street, St. Paul, Minnesota 55101 ("Landlord") and HUNTINGTON RESTAURANTS GROUP, INC., a Texas corporation, whose address is 6560 N. Scottsdale Road, Suite G206, Scottsdale, Arizona 85261 ("Tenant"). RECITALS: A. Tenant entered into a certain Net Lease Agreement with Landlord on March 18, 1997 (the "Lease"), with respect to a certain parcel of real property and the building and improvements thereon (collectively, the " Premises") located at I-10 and U.S. Highway 90, Covington, Louisiana, as legally described in Exhibit A to the Lease; B. Landlord and Tenant desire to terminate the Lease prior to its stated expiration date, subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows: 1. SURRENDER. Tenant agrees to vacate and surrender the Premises not later than December 10, 2001 (the "Termination Date"). If Tenant vacates the Premises prior to the Termination Date, Tenant shall give Landlord three (3) business days notice prior to vacation. 2. TERMINATION. Until the Termination Date, the Lease will remain in full force and effect in accordance with all of its terms. Except as provided otherwise in this Agreement, the Lease and any options contained in the Lease, including without limitation the option to renew, the right of first refusal and the option to purchase the Premises, will be deemed terminated effective on the Termination Date, with the same effect as if such date were the stated expiration date of the Lease; and thereafter neither party will have any claim against the other except any arising out of this Agreement. 3. CONDITION. Tenant shall vacate and surrender to Landlord the Premises in the condition required by Articles 8 and 20 of the Lease, on or before the Termination Date. 4. ACCESS. Tenant agrees, effective as of the date hereof, to give Landlord and prospective tenants or purchasers and their architects, consultants, contractors and other agents access to inspect the Premises during regular business hours, upon reasonable prior notice. If Tenant vacates and surrenders the Premises prior to the Termination Date, Landlord will be given possession of the Premises and access thereto upon such vacancy. 5. UTILITIES. All meters for gas, electricity, water and other utilities which are provided by utility companies will be read as of the Termination Date, and Tenant will be responsible for the payment of the final bills with respect to all such utilities. Subsequent to the Termination Date, all utility meters will be transferred to the name of Landlord or as it directs. 6. NOTICES AND CONSENTS. Tenant represents and warrants that the execution and delivery of this Agreement will not violate or contravene any agreement, contract, mortgage, deed of trust, or security agreement, including without limitation that certain Franchise Agreement between Tenant, as Franchisee, and Denny's, Inc., as Franchisor (the "Franchise Agreement"), to which Tenant or the Premises are bound. Tenant represents and warrants that it has provided requisite notice of this Agreement to Franchisor and otherwise fully complied with the requirements of the Franchise Agreement, and that no further notices or consents are required under the Franchise Agreement or any other agreement, contract, mortgage, deed of trust, or security agreement to which Tenant or the Premises are bound. Tenant has provided Landlord with documentation that Franchisor has waived its rights to assume the Lease upon its termination and to enter the Premises after the Termination Date to remove property or otherwise, pursuant to the terms of the Franchise Agreement and Article 36 of the Lease. 7. FINAL ADJUSTMENT. Tenant agrees: (i) to pay to Landlord Ten Thousand Dollars ($10,000.00) in cash and (ii) to deliver to Landlord a note in the form attached hereto as Exhibit A in the principal amount of Fifteen Thousand Dollars ($15,000.00) (collectively, the "Consideration"). The Consideration shall be deemed to be payment in full for all amounts of rent, additional rent, real estate taxes, personal property taxes and any other costs and expenses due through the Termination Date (exclusive of payments for utilities pursuant to Section 5 hereof). 8. PERSONAL PROPERTY. Tenant shall remise, release, quit claim, and surrender to Landlord, its successors and assigns, forever, all its rights and interests and title, if any, in and to any and all improvements, furniture, personal property, equipment and fixtures contained on the Premises. Tenant agrees that all personal property or other items which may be considered personal property shall remain on the Premises and belong to the Landlord, and this Agreement shall constitute a bill of sale therefor to Landlord. Tenant shall indemnify and protect Landlord from any liability, damage, loss, cost or expense arising out of any encumbrance or financing affecting any of the improvements, furniture, personal property, equipment and fixtures contained on the Premises. 9. DEFAULT. If Tenant defaults in the performance of any of its obligations under this Agreement, this Agreement shall remain in full force and effect, except that Tenant shall pay to Landlord, on demand, as liquidated damages and not as a penalty, the sum of $150.00 for every day that Tenant remains in default. Landlord may also pursue all other remedies at law or in equity, including specific performance. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. LANDLORD: AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP By:AEI FUND MANAGEMENT XXI, INC., its general partner By: /s/ Mark E Larson Its: CFO TENANT: HUNTINGTON RESTAURANTS GROUP, INC. By: /s/ Rich Beatty Its: President -----END PRIVACY-ENHANCED MESSAGE-----