SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: September 30, 1997
Commission file number: 0-17467
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1603719
(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)
(612) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of September 30, 1997 and December 31, 1996
Statements for the Periods ended September 30, 1997 and 1996:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
ASSETS
1997 1996
CURRENT ASSETS:
Cash and Cash Equivalents $ 4,848,130 $ 4,798,584
INVESTMENTS IN REAL ESTATE:
Land 3,469,538 3,469,538
Buildings and Equipment 8,026,412 8,026,412
Accumulated Depreciation (2,692,525) (2,441,191)
----------- -----------
8,803,425 9,054,759
Real Estate Held for Sale 261,644 577,072
----------- -----------
Net Investments in Real Estate 9,065,069 9,631,831
----------- -----------
Total Assets $13,913,199 $14,430,415
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 22,827 $ 96,543
Distributions Payable 305,644 433,349
Security Deposit 49,953 37,307
Unearned Rent 62,787 0
----------- -----------
Total Current Liabilities 441,211 567,199
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (66,692) (62,780)
Limited Partners, $1,000 Unit value;
30,000 Units authorized; 23,389 Units issued;
22,920 Units outstanding 13,538,680 13,925,996
----------- -----------
Total Partners' Capital 13,471,988 13,863,216
----------- -----------
Total Liabilities and Partners' Capital $13,913,199 $14,430,415
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/97 9/30/96 9/30/97 9/30/96
INCOME:
Rent $ 335,386 $ 348,769 $ 953,877 $ 1,108,861
Investment Income 64,903 82,269 190,367 245,577
--------- --------- ----------- -----------
Total Income 400,289 431,038 1,144,244 1,354,438
--------- --------- ----------- -----------
EXPENSES:
Partnership Administration -
Affiliates 65,647 75,136 201,015 221,490
Partnership Administration
and Property Management -
Unrelated Parties 19,476 38,160 74,552 139,416
Depreciation 83,778 103,378 251,533 311,103
--------- --------- ----------- -----------
Total Expenses 168,901 216,674 527,100 672,009
--------- --------- ----------- -----------
OPERATING INCOME 231,388 214,364 617,144 682,429
GAIN ON SALE OF REAL ESTATE 0 347,224 0 425,514
--------- --------- ----------- -----------
NET INCOME $ 231,388 $ 561,588 $ 617,144 $ 1,107,943
========= ========= =========== ===========
NET INCOME ALLOCATED:
General Partners $ 2,314 $ 5,615 $ 6,172 $ 11,079
Limited Partners 229,074 555,973 610,972 1,096,864
--------- --------- ----------- -----------
$ 231,388 $ 561,588 $ 617,144 $ 1,107,943
========= ========= =========== ===========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(22,920 and 23,107 weighted average
Units outstanding in 1997
and 1996 respectively) $ 10.00 $ 24.06 $ 26.66 $ 47.47
========= ========= =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 617,144 $ 1,107,943
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 251,533 311,103
Gain on Sale of Real Estate 0 (425,514)
Decrease in Receivables 0 44,521
Decrease in Payable to
AEI Fund Management, Inc. (73,716) (8,281)
Increase in Security Deposit 12,646 0
Increase in Unearned Rent 62,787 69,111
----------- -----------
Total Adjustments 253,250 (9,060)
----------- -----------
Net Cash Provided By
Operating Activities 870,394 1,098,883
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Real Estate 315,229 2,097,736
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Distributions Payable (127,705) (282,237)
Distributions to Partners (1,008,372) (1,421,042)
----------- -----------
Net Cash Used For
Financing Activities (1,136,077) (1,703,279)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 49,546 1,493,340
CASH AND CASH EQUIVALENTS, beginning of period 4,798,584 6,467,946
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 4,848,130 $ 7,961,286
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1995 $ (21,896) $17,973,501 $17,951,605 23,106.79
Distributions (14,210) (1,406,832) (1,421,042)
Net Income 11,079 1,096,864 1,107,943
--------- ----------- ----------- ----------
BALANCE, September 30, 1996 $ (25,027) $17,663,533 $17,638,506 23,106.79
========= =========== =========== ==========
BALANCE, December 31, 1996 $ (62,780) $13,925,996 $13,863,216 22,920.29
Distributions (10,084) (998,288) (1,008,372)
Net Income 6,172 610,972 617,144
--------- ----------- ----------- ----------
BALANCE, September 30, 1997 $ (66,692) $13,538,680 $13,471,988 22,920,29
========= =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Real Estate Fund XVII Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management XVII, Inc. (AFM), the Managing
General Partner of the Partnership. Robert P. Johnson, the
President and sole shareholder of AFM, serves as the
Individual General Partner of the Partnership. An affiliate
of AFM, AEI Fund Management, Inc., performs the
administrative and operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on February 10, 1988 when minimum
subscriptions of 2,000 Limited Partnership Units
($2,000,000) were accepted. The Partnership's offering
terminated on November 1, 1988 when the one-year offering
period expired. The Partnership received subscriptions for
23,388.7 Limited Partnership Units ($23,388,700).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$23,388,700 and $1,000, respectively. During the operation
of the Partnership, 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.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 6% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) next, 99% to
the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to 14% of their
Adjusted Capital Contribution per annum, cumulative but not
compounded, to the extent not previously distributed; (iii)
next, to the General Partners until cumulative distributions
to the General Partners under Items (ii) and (iii) equal 15%
of cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% 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 the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated 90% to the Limited Partners and 10% to the General
Partners. In the event no Net Cash Flow is distributed to
the Limited Partners, 90% of each item of Partnership
income, gain or credit for each respective year shall be
allocated to the Limited Partners, and 10% of each such item
shall be allocated to the General Partners. Net losses from
operations will be allocated 98% to the Limited Partners and
2% to the General Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those Partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 14% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, to the
General Partners until cumulative allocations to the General
Partners equal 15% of cumulative allocations. Any remaining
balance will be allocated 85% to the Limited Partners and
15% 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.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
In January, 1996, the Cheddar's restaurant in Indianapolis,
Indiana was destroyed by a fire. The Partnership reached an
agreement with the tenant and insurance company which called
for termination of the Lease, demolition of the building and
payment to the Partnership of $407,282 for the building and
equipment and $49,688 for lost rent. The property will not
be rebuilt and the Partnership listed the land for sale.
The Partnership recognized net disposition proceeds of
$406,892 which resulted in a net gain of $78,290. At the
time of disposition, the cost and related accumulated
depreciation was $512,433 and $183,831, respectively. The
Partnership's cost of the land is $261,644.
In June, 1996, the Partnership entered into an agreement to
sell the Danny's Family Car Wash in Phoenix, Arizona to the
lessee. On September 25, 1996, the sale closed with the
Partnership receiving net sale proceeds of $1,690,844 which
resulted in a net gain of $347,224. At the time of sale,
the cost and related accumulated depreciation was $1,688,271
and $344,651, respectively.
In July, 1996, the Partnership entered into an agreement to
sell the J.T. McCord's in Mesquite, Texas to an unrelated
third party. In September, 1996, the Agreement was
terminated by the purchaser. The property was listed for
sale or lease until March, 1997 when it was re-leased to
Texas Sports City Cafe, Ltd. under a triple net lease
agreement with a primary term of 12 years which may be
renewed for up to two consecutive five-year periods. The
Partnership's share of the annual base rent is $32,500 for
the first lease year and $58,500 for the second lease year,
with rent increases in each subsequent lease year of either
three percent of the prior year's rent or three percent of
gross receipts in years two and three and six percent of
gross receipts thereafter, to the extent they exceed the
base rent.
The Partnership owned a 65.09% interest in the Sizzler
restaurant at the King's Island Theme Park near Cincinnati,
Ohio. In January, 1994, the Partnership closed the
restaurant and listed it for sale or lease. On January 23,
1997, the Partnership sold its interest in the property to
an unrelated third party. The Partnership received net
sales proceeds of $315,229, which resulted in a net loss of
$503,600, which was recognized as a real estate impairment
in the fourth quarter of 1996. Prior to the sale, the
Partnership was responsible for the real estate taxes and
other costs required to maintain the property. No rent was
received in 1997 or 1996 from the property. At December 31,
1996, the property was classified on the balance sheet as
Real Estate Held for Sale.
During the first nine months of 1997 and the year 1996, the
Partnership distributed $139,694 and $3,607,123 of the net
sale proceeds to the Limited and General Partners which
represented a return of capital of $6.04 and $155.66 per
Limited Partnership Unit, respectively. In June, 1997, the
Managing General Partner filed a proxy statement to propose
an Amendment to the Limited Partnership Agreement that would
allow the Partnership to reinvest the majority of the sales
proceeds in additional properties. The Amendment passed
with a majority of Units voting in favor of the Amendment.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In October, 1997, the Partnership entered into a Development
Financing Commitment under which the Partnership will
advance funds for the construction of a Timber Lodge
Steakhouse restaurant in Rockford, Illinois. The purchase
price will be approximately $1,620,000. The property will
be leased to Timber Lodge Steakhouse, Inc. under a Lease
Agreement with a primary term of 20 years and annual rental
payments of approximately $174,000.
In October, 1997, the Partnership entered into an agreement
to purchase a 60% interest in a TGI Friday's restaurant in
Greensburg, Pennsylvania. The purchase price for the entire
property will be approximately $1,650,000. The property
will be leased to Ohio Valley Bistros, Inc. under a Lease
Agreement with a primary term of 15 years and annual rental
payments of approximately $169,000. AEI Income & Growth
Fund XXII Limited Partnership, an affiliate of the
Partnership, is expected to acquire the remaining interest.
(4) Payable to AEI Fund Management -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
(5) Security Deposit -
In May, 1997, the Partnership received a deposit from the
tenant of the Texas Sport City Cafe as security for
construction improvements being made by the tenant. The
funds are invested in a short term money market account and
will be returned to the lessee, without interest, within ten
days after written notification of satisfactory completion
of the work. In October, 1997, the Partnership returned the
deposit to the lessee.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the nine months ended September 30, 1997 and 1996, the
Partnership recognized rental income of $953,877 and $1,108,861,
respectively. During the same periods, the Partnership earned
investment income of $190,367 and $245,577, respectively. In
1997, rental income decreased as a result of the property sales
discussed below. The decrease in rental income was partially
offset by rent increases on ten properties and rent received from
re-leasing the Mesquite property. In 1997, investment income
decreased mainly as a result of a decrease in short-term
investments in 1997 due to a special distribution of net sale
proceeds to the Partners in November, 1996.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In July, 1996, the Partnership entered into an agreement to
sell the J.T. McCord's in Mesquite, Texas to an unrelated third
party. In September, 1996, the Agreement was terminated by the
purchaser. The property was listed for sale or lease until
March, 1997 when it was re-leased to Texas Sports City Cafe, Ltd.
under a triple net lease agreement with a primary term of 12
years which may be renewed for up to two consecutive five-year
periods. The Partnership's share of the annual base rent is
$32,500 for the first lease year and $58,500 for the second lease
year, with rent increases in each subsequent lease year of either
three percent of the prior year's rent or three percent of gross
receipts in years two and three and six percent of gross receipts
thereafter, to the extent they exceed the base rent.
The Partnership owned a 65.09% interest in the Sizzler
restaurant at the King's Island Theme Park near Cincinnati, Ohio.
In January, 1994, the Partnership closed the restaurant and
listed it for sale or lease. On January 23, 1997, the
Partnership sold its interest in the property to an unrelated
third party. The Partnership received net sales proceeds of
$315,229, which resulted in a net loss of $503,600, which was
recognized as a real estate impairment in the fourth quarter of
1996. Prior to the sale, the Partnership was responsible for the
real estate taxes and other costs required to maintain the
property. No rent was received in 1997 or 1996 from the
property. At December 31, 1996, the property was classified on
the balance sheet as Real Estate Held for Sale.
During the nine months ended September 30, 1997 and 1996,
the Partnership paid Partnership administration expenses to
affiliated parties of $201,015 and $221,490, 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 $74,552 and $139,416, 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 1997, when compared to 1996, is the result
of expenses incurred in 1996 related to the J.T. McCordOs and
Sizzler situations discussed above.
As of September 30, 1997, the Partnership's annualized
cash distribution rate was 7.5%, 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 and
income were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of
the tenants, due to inflation and real sales growth, will result
in an increase in rental income over the term of the leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
Liquidity and Capital Resources
During the nine months ended September 30, 1997, the
Partnership's cash balances increased $49,546 as a result of net
proceeds received from the sale of the Sizzler property which
were partially offset by distributions made in excess of cash
generated from operating activities. Net cash provided by
operating activities decreased from $1,098,883 in 1996 to
$870,394 in 1997 mainly as the result of a decrease in income in
1997, when compared to 1996.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
For the nine months ended September 30, 1997 and 1996, net
cash provided by investing activities was $315,229 and
$2,097,736, respectively, which represents cash generated from
the disposition of real estate.
In January, 1996, the Cheddar's restaurant in
Indianapolis, Indiana was destroyed by a fire. The Partnership
reached an agreement with the tenant and insurance company which
called for termination of the Lease, demolition of the building
and payment to the Partnership of $407,282 for the building and
equipment and $49,688 for lost rent. The property will not be
rebuilt and the Partnership listed the land for sale. The
Partnership recognized net disposition proceeds of $406,892 which
resulted in a net gain of $78,290. At the time of disposition,
the cost and related accumulated depreciation was $512,433 and
$183,831, respectively. The Partnership's cost of the land is
$261,644.
In June, 1996, the Partnership entered into an agreement
to sell the Danny's Family Car Wash in Phoenix, Arizona to the
lessee. On September 25, 1996, the sale closed with the
Partnership receiving net sale proceeds of $1,690,844 which
resulted in a net gain of $347,224. At the time of sale, the
cost and related accumulated depreciation was $1,688,271 and
$344,651, respectively.
During the first nine months of 1997 and the year 1996,
the Partnership distributed $139,694 and $3,607,123 of the net
sale proceeds to the Limited and General Partners which
represented a return of capital of $6.04 and $155.66 per Limited
Partnership Unit, respectively. In June, 1997, the Managing
General Partner filed a proxy statement to propose an Amendment
to the Limited Partnership Agreement that would allow the
Partnership to reinvest the majority of the sales proceeds in
additional properties. The Amendment passed with a majority of
Units voting in favor of the Amendment.
In October, 1997, the Partnership entered into a
Development Financing Commitment under which the Partnership will
advance funds for the construction of a Timber Lodge Steakhouse
restaurant in Rockford, Illinois. The purchase price will be
approximately $1,620,000. The property will be leased to Timber
Lodge Steakhouse, Inc. under a Lease Agreement with a primary
term of 20 years and annual rental payments of approximately
$174,000.
In October, 1997, the Partnership entered into an
agreement to purchase a 60% interest in a TGI Friday's restaurant
in Greensburg, Pennsylvania. The purchase price for the entire
property will be approximately $1,650,000. The property will be
leased to Ohio Valley Bistros, Inc. under a Lease Agreement with
a primary term of 15 years and annual rental payments of
approximately $169,000. AEI Income & Growth Fund XXII Limited
Partnership, an affiliate of the Partnership, is expected to
acquire the remaining interest.
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. During 1996, the Partnership distributed approximately
$354,000 of net sale proceeds in addition to the regular
quarterly distributions of net cash flow. The distributions were
made in equal quarterly installments. As a result, distributions
are higher in 1996, when compared to 1997. In November, 1996,
the Partnership distributed net sale proceeds of $2,828,283 to
the Partners as a special distribution.
ITEM 2.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 is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
On October 1, 1997, fifteen Limited Partners redeemed a
total of 364.4 Partnership Units for $153,502 in accordance with
the Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, a total of
thirty Limited Partners redeemed 468.5 Partnership Units for
$337,842. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2.CHANGES IN SECURITIES
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In June, 1997, the Managing General Partner solicited by
mail a proxy statement to propose two Amendments to the
Limited Partnership Agreement. In order for a proposed
Amendment to be adopted, a majority of the Units must be voted
in favor of the Amendment.
The first Amendment would allow the Partnership to
reinvest the majority of net sale proceeds in additional
properties. Of the 22,920 outstanding Units, 12,655 voted for
the Amendment, 2,632 voted against and 632 abstained. As a
result, the Amendment was adopted.
The second Amendment made changes to the PartnershipOs
Unit repurchase provisions. Of the 22,920 outstanding Units,
13,827 voted for the Amendment, 1,369 voted against and 723
abstained. As a result, the Amendment was adopted.
ITEM 5.OTHER INFORMATION
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Development Financing and Leasing
Commitment dated October 17, 1997 between
AEI Fund Management, Inc. and Timber
Lodge Steakhouse, Inc. relating to the
sale and leaseback of a Timber Lodge
Steakhouse restaurant at 7375 East State
Street, Rockford, Illinois.
10.2 Assignment of Development Financing
and Leasing Commitment dated October 21,
1997, between the Partnership and AEI
Fund Management, Inc. relating to the
sale and leaseback of a Timber Lodge
Steakhouse restaurant at 7375 East State
Street, Rockford, Illinois.
10.3 Sale and Leaseback Financing
Commitment dated May 13, 1997 between AEI
Fund Management, Inc. and Ohio Valley
Bistros, Inc. relating to the sale and
leaseback of a TGI Friday's restaurant at
#1507, Rural Route #6, Greensburg,
Pennsylvania.
10.4 Assignment of Sale and Leaseback
Financing Commitment dated November 7,
1997 between the Partnership and AEI Fund
Management, Inc. relating to the sale and
leaseback of a TGI Friday's restaurant at
#1507, Rural Route #6, Greensburg,
Pennsylvania.
27 Financial Data Schedule for period
ended September 30, 1997.
b. Reports filed on Form 8-K -
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: November 7, 1997 AEI Real Estate Fund XVII
Limited Partnership
By: AEI Fund Management XVII, Inc.
Its: Managing General Partner
By: /s/ Robert P Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)
DEVELOPMENT FINANCING AND LEASING COMMITMENT
(the "Commitment")
October 17, 1997
AEI Fund Management, Inc., or its assigns, ("AEI"), agrees
to purchase, and you, Timber Lodge Steakhouse Inc. ("Lessee"),
agree to lease from AEI, a parcel of land to be located at 7375
East State Street, Rockford, Illinois legally described on
Exhibit "A" attached hereto (together with the "Improvements" as
defined below, (the "Parcel"), with the understanding that the
building, site improvements, fixtures, HVAC, non-trade fixture
items financed by AEI, constituting a Timber Lodge Steakhouse
restaurant (the "Improvements") is to be developed by you on the
Parcel after AEI's purchase of the Parcel from Shoney's, Inc.
("Seller"). The Parcel's purchase, development and lease will be
subject to the provisions and conditions herein contained:
A. LESSEE
Lessee: Timber Lodge Steakhouse Inc.
Address: 4021 Vernon Avenue South
Minneapolis, MN 55416
Phone: 612-929-9353
Fax Number: 612-929-5658
B. ACQUISITION OF PARCEL
This Commitment is contingent upon AEI's purchase of the
Parcel from Seller, pursuant to an assignment to AEI of the
purchaser's interest in a purchase agreement between Lessee
and Seller. Said purchase agreement and assignment shall be
in a form and substance reasonably satisfactory to AEI. The
assignment of the purchase agreement to AEI would not be
executed until the Closing Date, defined in Article D.2.
AEI will not assume any liability to Seller except for
payment of the Purchase Price.
C. FEES AND COSTS
1. A commitment fee equal to one and one-half percent
(1.5%) of the Estimated Total Project Cost of the
Parcel (defined below) (the "Commitment Fee"), not
including the amount estimated for Lessee's overhead
allocation, will be payable by Lessee to AEI upon the
signing and delivery of this Commitment by Lessee to
AEI. Lessee's estimate of the total project cost which
will be incurred to acquire the land and complete the
Improvements is $1620000.00("Estimated Total Project
Cost" as set forth on Exhibit "B" attached hereto).
Subject to Article L hereof, the Commitment Fee
shall be considered earned upon AEI's execution and
delivery of this Commitment to Lessee. At Lessee's
election, the Commitment Fee may be included as a
funded project cost and reimbursed to Lessee at closing
on AEI's acquisition of the Parcel (the "Closing").
Said Commitment fee will be adjusted on the date of the
final disbursement of the Development Financing,
defined in Article C.4 hereof, (the "Final Disbursement
Date") to reflect one and one-half percent (1.5%) of
the Actual Total Project Cost, defined in Article D.1
hereof.
2. All outstanding real estate taxes, and levied and
pending special assessments, presently due and payable
prior to the Closing Date, (or required to be paid to
record the documents transferring title to AEI) as
defined in Article C.2 hereof, or assessed for the year
in which closing shall occur, if presently due and
payable (or required to be paid to record the documents
transferring title to AEI) in the year in which closing
shall occur, shall be paid by Lessee in full at or
prior to the Closing Date (except as pro-rated in the
Purchase Agreement for the Parcel as of the Closing
Date).
3. Lessee shall pay all expenses incident to the
Closing and necessary to comply with the requirements
herein, as consistent with this Commitment, including
AEI's outside legal costs, which, absent a default
under the Development Financing Agreement by Lessee and
barring extraordinary circumstances, shall be capped at
$12,500, plus such additional legal fees incurred by
AEI and reimbursable in such amounts as agreed to by
Lessee as set forth on the Estimated Total Project Cost
Budget. Such costs may be included, at Lessee's
option, as project costs funded by AEI.
4. AEI shall permit Lessee to construct the
Improvements on the Parcel owned by AEI, according to
the plans and specifications submitted to AEI, and
pursuant to a construction contract between Lessee and
its contractor ("General Contractor"), a copy of which
would be provided in advance of the Closing Date to
AEI. Subject to the terms of the Development Financing
Agreement, (the form of such document to be mutually
agreed upon by the parties hereto) funds will be
advanced for the construction of the Improvements and
related soft costs, up to the Actual Total Project Cost
set forth in Article D.1 hereof, (the "Development
Financing") by AEI as set forth in Article E. hereof.
At the Final Disbursement Date, AEI shall pay
Lessee a fee for developing the Improvements in the
amount of $23225.00(the "Parcel Development Fee"). The
Parcel Development Fee will be included as a funded
project cost and paid to Lessee on the Final
Disbursement Date. However, the Actual Total Project
Cost (defined in Article D.1 hereof), including the
Parcel Development Fee, shall not exceed the MAI
appraised value such appraisal to be approved by AEI.
D. CLOSING TERMS
1. Actual Total Project Cost: The Actual Total
Project Cost will include only all verifiable project
costs actually incurred, which costs are approved by
AEI, either as part of the Estimated Total Project Cost
Budget, or subsequently incurred and approved in AEI's
reasonable discretion (the "Actual Total Project
Cost"), and in any event shall not exceed the MAI
appraisal value , such appraisal to be approve by AEI.
2. Closing Date: The closing date for AEI's purchase
of the Parcel from Seller and the commencement of the
Lease described in Article F. hereof shall be on or
before October 1 24, 1997 (the "Closing Date"), after
delivery and approval of all of the items contemplated
hereunder including, but not limited to, the execution
of the documents described in Article G. hereof. If
Lessee has not performed under this Commitment by the
Closing Date, this Commitment shall be null and void at
the option of AEI. In the event Lessee requests an
extension of this Commitment, and said extension is
approved by AEI in its sole discretion, a written
addendum to this Commitment shall be required.
3. Closing Agent: The closing contemplated hereunder
shall be handled by the national office of Chicago
Title Insurance Company located in Rockford, Illinois
or other such title company acceptable to Buyer, acting
under instructions from AEI's counsel.
4. This Commitment shall not be assignable by Lessee
by law, or otherwise, without AEI's prior written
approval, but may be assigned by AEI at its option, in
whole or in part, in such manner as AEI may determine,
to an affiliate or affiliates of AEI.
5. Parcel Inspection: The Parcel has been inspected
and approved by AEI.
6. As a condition precedent to closing on AEI's
acquisition of the Parcel and AEI's initial
disbursement for the Development Financing, the
supporting documentation listed below must be submitted
to AEI not less than five (5) business days prior to
the Closing Date, or to avoid being in default under
the Development Financing Agreement and as condition
precedent to further disbursement under the Development
Financing Agreement, by the date otherwise indicated,
in form and content satisfactory to AEI and its
counsel:
a. Lessee is to furnish AEI with an acce
ptable cost breakdown itemizing estimated
construction costs, including, but not limited to,
land acquisition, building construction, site
development, landscaping and soft costs, equal to
the Estimated Total Project Cost (also, the
"Project Cost Budget");
b.The Lessee shall submit to AEI current
financial statements as described on Exhibit "C".
c.The Lessee shall furnish a commitment for
an ALTA Owner's Policy of Title Insurance (ALTA
owner - most recent edition) insuring marketable
title in the Parcel, subject only to such matters
as AEI may approve and excluding exceptions for
mechanic's liens, survey and parties in possession
(the "Title Commitment"). The policy shall be
issued by the national office of Lawyer's Title
Insurance Company located in Phoenix, Arizona (the
"Title Company") and shall contain such
endorsements as AEI may require including, a
future disbursements endorsement up to the
Estimated Total Project Cost, an extended coverage
endorsement, creditor's rights endorsement, and an
owners comprehensive coverage endorsement. The
Title Commitment shall list Seller as the present
fee owner and should show AEI as the fee owner to
be insured. The Title Commitment shall also
include an itemization of all outstanding and
pending special assessments or should state that
there are none, if such is the case, and state the
manner in which any outstanding assessments are
payable, that is, whether they are payable in
monthly or yearly installments, setting forth the
amount of each such installment and its duration.
The Title Commitment shall also include an
itemization of taxes affecting the Parcel and the
tax year to which they relate; should state
whether taxes are current and, if not, shall show
the amounts unpaid, the tax parcel numbers, and
whether the tax parcel includes property other
than the Parcel to be purchased. All easements,
restrictions, documents, and other items affecting
title should be listed in Schedule "B" of the
Title Commitment. COPIES OF ALL INSTRUMENTS
CREATING SUCH EXCEPTIONS MUST BE ATTACHED TO THE
TITLE COMMITMENT.
During construction of the Improvements, AEI
is to be furnished with down-date endorsements to
the owner's title insurance policy with continuing
affirmative mechanic's lien coverage pursuant to
acceptable endorsements increasing coverage to the
aggregate of all disbursements made by AEI to the
date thereof.
d. AEI is to be furnished with a policy of
builder's risk insurance, as well as public
liability coverage, hazard insurance, and
workman's' compensation coverage, all in such
amounts and placed with such companies as may be
reasonably acceptable to AEI, in accordance with
the Instructions to Insurance Agent set forth on
Exhibit "D-1" attached hereto. In addition, AEI
shall be furnished with satisfactory flood and
earthquake insurance, unless satisfactory evidence
is given that the Parcel is not located within a
federally designated flood plain area or is above
the applicable 100 year flood plain level, and not
in a federally designated earthquake prone area or
is not in an ISO High Risk Earthquake Zone
respectively.
All policies of insurance must name as a
dditional named insureds: AEI or its specific
assigns and the Corporate General Partner of said
assignee, and Robert P. Johnson, as the Individual
General Partner of said assignee, and Lessee as
insured or additional insured, as their respective
interests may appear, and shall provide that the
policies cannot be canceled without thirty (30)
days written notice to the parties. In addition,
all policies shall contain endorsements by the
respective insurance companies waiving all rights
of subrogation, if any, against the parties named
as insured or additional insured. All insurance
companies must be approved in writing by AEI. No
closing will occur without all insurance policies
completed and in place.
e.Preliminary survey acceptable to AEI p
repared by a licensed surveyor, complying with the
guidelines set forth on Exhibit "E-1" attached
hereto.
f.Final plans and specifications for the
Improvements upon which construction shall
commence, prepared by an architect or engineer
reasonably acceptable to AEI, not later than
November 15, 1997.
g.A soils report prepared by an engineer
reasonably acceptable to AEI, not later than
November 15, 1997.
h.Appraisal of the Parcel by an independent
MAI appraiser acceptable to AEI (AEI shall make
the initial attempts to obtain such appraisal in a
form satisfactory to AEI). An "As Is" Appraisal
shall be required by October 23, 1997 and an
Appraisal of the Parcel based upon the proposed
and in progress improvements, if any shall be
required not later than November 30, 1997.
i.A letter from the appropriate officer of
the municipality or county exercising land use
control over the Parcel stating: (a) the zoning
code affecting the Parcel; (b) that the Parcel and
its intended use complies with such zoning code,
city ordinances and building and use restrictions;
(c) that there are no variances, conditional use
permits or special use permits required for use of
the Improvements on the Parcel, or if such permits
are required, specifying the existence of same and
their terms, and (d) that the Parcel complies with
the platting ordinances affecting them and can be
conveyed without the requirement of a plat or
replat of the Parcel. If the Parcel falls within
any subdivision rules or regulations, evidence of
compliance with such subdivision regulations, or
waiver of the same by the appropriate officials,
is required. (AEI shall make the initial attempts
to obtain such zoning compliance letter in a form
satisfactory to AEI).
j.Written advice from all proper public
utilities and municipal authorities, that utility
services are available and connected to the Parcel
for gas, electricity, telephone, water and sewer
(AEI shall make the initial attempts to obtain
such utility letters in a form satisfactory to
AEI), not later than November 24, 1997.
k.Copy of the building permit for constr
uction of the Improvements on the Parcel, not
later than November 24, 1997.
l.Copies of all construction contracts, not
later than November 24, 1997.
m.Copy of architect's contract.
n.Copy of purchase agreement for the land
between Lessee and Seller and all amendments and
assignments of said purchase agreement, including
the assignment of the purchase agreement to AEI.
o.Photographs of all sides of the Parcel.
p.Certified copies of the Articles of In
corporation, By-Laws (or Partnership Agreement)
and Good Standing Certificate for the Lessee,
together with all other documents AEI deems
necessary to support the authority of the persons
executing any documents on behalf of the
corporation, including encumbrancy certificates
and corporate resolutions of the directors and
shareholders (or of the Partnership, including
resolution of the partners).
q.UCC searches on Seller and Lessee from the
offices of the Secretary of State and the county
recorder for the state and county in which the
Parcel is located.
r.Phase I Environmental Assessment Report
prepared by an engineer reasonably satisfactory to
AEI containing evidence satisfactory to AEI that
the Parcel complies with all federal, state and
local environmental regulations. Additional
reports may be required by AEI based upon its
review of the Phase I report. If Lessee fails to
deliver any additional reports AEI may deem
necessary to complete and approve its
environmental investigation of this Parcel, AEI
may terminate this Commitment and retain that
portion of the Commitment Fee to cover any and all
of its costs incurred hereunder.
s.Executed documents described in Article G.
hereof.
t.All documentation listed on Exhibit "F"
attached hereto.
7. At the completion of construction of the Improvements
on the Parcel and prior to the Final Disbursement of the
Development Financing, Lessee shall deliver the following
documents to AEI:
a.Certificate of Completion executed by the
Project Architect, General Contractor. Said
Certificate shall be in a form reasonably
satisfactory to AEI, and substantially similar to
the form attached hereto as Exhibit "G".
b.Certificate of Occupancy.
c.Copies of all necessary permits and li
censes of any governmental body or authority which
are necessary to permit the use and occupancy of
the Improvements on the Parcel, specifically
including, but not limited to, liquor licenses.
d.Certified cost statement itemizing the
Actual Total Project Costs signed by the Lessee
and related documentation supporting said project
costs.
e.Insurance policies issued by companies
acceptable to AEI for coverage as required by the
lease, with AEI named as additional named insured,
complying with the guidelines set forth on Exhibit
"D-2" attached hereto.
f.As-built survey, complying with the re
quirements of Exhibit "E-2" attached hereto.
g.Final date-down endorsement to title p
olicy.
h.Final draw documentation as required by the
development financing documentation described in
Article D. hereof.
i.Estoppel from Lessee.
j.Lease amendment setting forth the second
full lease year's commencement date, the rent for
the remainder of the term and terminating the
Development Financing Agreement (as described in
Article D. hereof).
8. A Letter of Credit will be required from
Lessee, in the amount of the initial disbursement for
the land and related soft costs, in form and content
acceptable to AEI, attached as Exhibit "I". The Letter
of Credit will be released upon the submission of all
items listed in Article D. 6, a.-t. and D.7. a.-j.,
acceptable to AEI in its sole discretion. If AEI shall
call the Letter of Credit according to the terms to be
set forth in the Development Financing Agreement, under
certain conditions, AEI shall tender a Quit Claim Deed
to Lessee, and AEI shall have not further obligation to
Lessee under the Development Financing Agreement, the
Lease orally other ancillary document, but reserving
unto AEI its remedies for default by Lessee.
E. DEVELOPMENT FINANCING TERMS
Disbursements for construction of the Improvements and related
soft costs, the Development Financing, will be made in accordance
with the provisions of the Development Financing Agreement and
Development Financing Disbursement Agreement, in forms to be
agreed upon between the parties hereto.
F. LEASE TERMS
The Lease, (in the form to be agreed upon between the
parties hereto prior to the Closing Date), will be executed and
delivered by AEI and Lessee at Closing, to include the following
terms:
1. Base Rent:
a. Annual rent on the Initial Disbursed Funds,
for the purchase of the land and land related soft
costs, from date of disbursement through the
Rental Modification Date, not including Lessee's
overhead allocation: the greater of seven and one-
quarter percent (7.25%) or one percent (1.0%)
under the prime rate of interest.
b. Initial Annual Rent as a Percentage of Actual
Total Project Cost from the earlier of the Rental
Modification Date or the Final Disbursement Date:
ten and three quarters percent (10.75%).
Rent shall be payable in advance of the first day
of each month in equal monthly installments calculated
on the Purchase Price less Lessee's overhead allocation.
c.Beginning in the third (3rd) full Lease Year after
the Final Disbursement Date and every Lease Year
thereafter, including any renewal terms, an amount
equal to one and nine hundred twenty-five
thousandths percent (1.925%) of the prior period's
scheduled annual rent.
2. Initial Lease Term: twenty (20) years plus the
Development Financing Period set forth in the
Development Financing Agreement
3. Renewal Terms: two (2) terms of five (5) years
each with rent increases as set forth above in Article
F.1.c.
4. Type of Use: Timber Lodge Steakhouse Restaurant
5. Lease effective date: The Lease shall be effective as
of the Closing Date.
6. Lessee's Right of Assignment: The Lease shall not
be assignable by Lessee until after the Final
Disbursement Date, and then only in accordance with the
terms of the Lease.
G. DOCUMENTS
The documents listed below shall be prepared by AEI's
counsel in accordance with the terms hereof and executed at,
or prior to, the Closing Date in form and substance
satisfactory to AEI, subject to Section K hereof:
1. Development Financing Agreement;
2. Development Financing Disbursement Agreement;
3. Assignment of purchase agreement for the land;
4. Assignments of construction contracts and architect's
contract;
5. Net Lease Agreement;
6. Attorney's Opinion Letter to be given by Lessee's
internal and outside counsel necessarily familiar with
the conduct of Lessee's business and the jurisdiction
in which the Parcel is situated to render such opinion
(i.e. an local Illinois counsel), as to the
enforceability of the Lease and compliance of the Lease
with local law and due authority of the signatures, in
a form and substance reasonably satisfactory to AEI.
Such form of opinion shall be satisfactory if
reasonably similar in form and content (except as to
matters and documents particular to this transaction)
to opinions previously delivered to AEI or its
affiliates.
7. Affidavit of Lessee;
8. Hazardous Substances Indemnification Agreement of
Lessee; and
9. FIRPTA Affidavit of Seller.
Lessee, or its counsel, shall furnish a copy of the proposed
warranty deed to AEI's counsel for its review and approval
prior to closing and such other documents as the Title
Company deems necessary for the terms contemplated hereunder
in accordance with the provisions of this Commitment.
H. FAIR CREDIT REPORTING ACT
Lessee warrants that all credit information submitted is
true and correct, and authorizes AEI to make credit
investigations and obtain credit reports and other financial
information, written or oral, respecting Lessee's credit and
financial positions, as it may deem necessary or expedient
at Lessee's cost and expense.
I. INTERPRETATION
This Commitment and the terms of the transaction
contemplated to be made in conformity herewith, shall be
construed in accordance with all applicable governmental
regulations and in accordance with the laws of the state
where the Parcel is located.
J. CERTIFICATION
Lessee hereby certifies that:
1. It has no actions or proceedings pending, which
would materially affect the Parcel, Lessee, except
matters fully covered by insurance;
2. The consummation of the transactions contemplated
hereby, and the performance of this Commitment and the
delivery of the Lease and other security and credit
instruments contemplated hereunder, will not result in
any material breach of, or constitute a material
default under, any indenture, bank loan or credit
agreement, or other instruments to which Lessee is a
party or by which Lessee may be bound or affected,
which breach or default would have a material adverse
effect on Lessee's performance under this Commitment;
3. All of Lessee's covenants, agreements, and
representations made herein, and in any and all
documents which may be delivered pursuant hereto, shall
survive the delivery to AEI of the Lease and other
documents furnished in accordance herewith, for one
year from the Final Disbursement Date, except for the
Lease which survives, and the provisions hereof shall
continue to inure for such period to AEI's benefit, and
its successors and assigns;
4. The Parcel is in good condition, substantially
undamaged by fire and other hazards, and has not been
made the subject of any condemnation proceeding.
K. TERMINATION
This Commitment may be terminated in writing prior to
closing at AEI's option (but reserving to AEI its right to
pursue its remedies at law or equity for Lessee's breach
hereof) in such manner as AEI may reasonably determine, if:
1) Lessee fails to comply with any of the material terms
hereof, including but not limited to, obtaining AEI's
approval of the documents listed in Article D.6. hereof, and
does not satisfactorily cure the same on or before the
Closing Date; 2) a material default exists in any financial
obligation of Seller or Lessee which would have a material
adverse effect on Seller or Lessee's performance under this
Commitment; 3) any representation made in any submission
proves to be untrue, substantially false or misleading at
any time prior to the Closing Date which would have a
material adverse effect on Seller or Lessee's performance
under this Commitment; 4) there has been a material adverse
change in the financial condition of Seller or Lessee or
there shall be a material action, suit or proceeding pending
or threatened against Seller or Lessee which would have a
material adverse effect on Seller or Lessee's performance
under this Commitment; 5) any bankruptcy, reorganization,
insolvency, withdrawal, or similar proceeding is instituted
by or against Seller or Lessee and such proceeding is not
removed prior to Closing. Provided, however, if AEI shall
terminate this Agreement under paragraphs 2-5 only because
of the Seller or a material adverse change in connection
with the Seller, AEI's remedy shall be limited to
reimbursement of its out of pocket costs (including
reasonable attorneys fees), and AEI shall return the
remaining balance, if any, after such out of pocket
expenses, of the Commitment Fee of Lessee hereunder.
In the event Lessee and AEI do not reach mutual agreement
prior to the Initial Disbursement of Funds on the documents
contemplated to be executed by either party hereunder by
delivery of written notice to the other party, this
Commitment may be terminated at the option of either party.
AEI shall, in such event, refund the Commitment Fee to
Lessee, less AEI's reasonable out-of-pocket expenses
incurred hereunder, including, but not limited to,
attorney's fees.
AEI and Lessee acknowledge the unique nature of the Parcel
and agree that the mutual remedies of any party hereunder
shall be limited to the liquidated damages in the amount of
either the return of the Commitment Fee to Lessee or
retention of the Commitment Fee by AEI plus the outside
counsel fees incurred by the non-breaching party in
connection with this Commitment prior to the date of
termination hereof; provided, however, if Lessee shall
refuse to close (and being without right to terminate this
Commitment as otherwise set forth herein) even though AEI
shall be ready, willing, and able to do so, and Lessee shall
thereafter occupy the Leased Premises, AEI shall retain all
remedies available to it at law or in equity.
L. INCORPORATION OF SUBMITTED WRITTEN MATERIALS AND AMENDMENTS
This Commitment is issued by AEI pursuant to all written
materials previously submitted by Seller and Lessee to AEI
as set forth on Exhibit "H" (the "Submitted Written
Materials") and it is a proviso hereof that the content,
terms and provisions of said Submitted Written Materials are
by express and specific reference incorporated herein and
made a part hereof. Provided, however, in the case of any
contradiction, variance, or ambiguity between any of the
content, terms and provisions hereof and those of the
Submitted Written Materials, the terms specifically
delineated in this Commitment shall govern and shall
supersede the conditions of the Submitted Written Materials.
Neither this Commitment nor any provision hereof may be
changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination
is sought, and in the case of AEI, signed by Robert P.
Johnson, President of AEI, or his designee in writing signed
by Mr. Johnson authorizing such other party to execute a
specific change, waiver, discharge or termination instrument
on behalf of AEI.
M. FEES AND COSTS
As a condition hereof, Lessee agrees to pay the fees of
AEI's outside counsel (absent default by Lessee under the
Development Financing Agreement or such extraordinary
circumstances, such fees not to exceed $12,500 plus AEI's
Illinois legal counsel fees) plus all costs and expenses
incurred by AEI, as well as all title and escrow charges,
the cost of issuance of interim title certifications,
recording and release fees and all other costs incurred in
connection with the transaction contemplated hereunder.
N. ADVERTISING
During construction, AEI may place a sign on the Parcel at a
location to be determined by Lessee in its reasonable
discretion, specifying that it is participating in the
financing on the Parcel, to the extent permitted by law or
private covenant, condition, or agreement affecting the
Project. Further, AEI may publicize the financing and may
include in publicity releases, if applicable, the names of
Lessee's corporate officers, principals, and a general
description of the Parcel, occupancy and rentals.
O. EXPIRATION
This Commitment must be executed and returned to AEI no
later than October 14, 1997 for the terms to be effective.
AEI FUND MANAGEMENT, INC. (AEI)
By: /s/ Robert P Johnson
Robert P. Johnson
President
STATE OF MINNESOTA )
) ss
COUNTY OF RAMSEY )
On this 17th day of October, 1997, before me, the
undersigned, a Notary Public in and for said State, personally
appeared Robert P. Johnson, personally known to me to be the
person who executed the within instrument as the President of AEI
Fund Management, Inc., a Minnesota corporation, on behalf of said
corporation.
/s/ Janine M Pacholke
Notary Public
This Commitment is accepted and agreed to
this 17th day of October, 1997.
(Lessee) Timber Lodge Steakhouse Inc.
By:/s/ Peter S Bedcyk
Its: President
STATE OF Minnesota ) [notary seal]
) ss
COUNTY OF Hennepin )
On this 17th day of October, 1997, before me, the
undersigned, a Notary Public in and for said State, personally
appeared Peter S Bedcyk, personally known to me to be the person
who executed the within instrument as the President of Timber
Lodge Steakhouse, a Minnesota corporation, on behalf of said
corporation.
/s/ Janine M Pacholke
Notary Public
I authorize the release of any information deemed necessary by
AEI to verify any and all information supplied to AEI. Lessee
shall hold AEI harmless for any damages arising from verification
of said information.
(Lessee) Timber Lodge Steakhouse Inc.
Dated: 10/17/97
By: /s/ Peter S Bedcyk
Its: President
EXHIBIT "A"
LEGAL DESCRIPTION
EXHIBIT "B"
ESTIMATED TOTAL PROJECT COST BUDGET
EXHIBIT "C"
FINANCIAL DOCUMENTATION REQUIREMENTS
Prior to Closing, the following must be received and
approved by AEI, along with those items specified more fully
in the Sale and Leaseback Financing Commitment.
I. Lessee's prior three (3) fiscal years' Form 10-K
reports as filed with the Securities and Exchange
Commission.
II.Lessee's prior three fiscal years' Annual
Shareholder Reports.
III. Lessee's Form 10-Q reports filed with
the Securities and Exchange Commission during its
current and prior two fiscal year periods.
IV.Lessee's internally generated per store annual
financial statements for the current and year-to-date
periods. Said financial statements shall include at a
minimum, a balance sheet and statement of income. Cash
flow statements and statements of stockholder's equity
should also be provided if available.
V. Lessee's internally generated per store
financial statements for each of its prior two
fiscal year periods. Said financial statements
shall include at a minimum, a balance sheet and
statement of income. Cash flow statements and
statements of stockholder's equity should also be
provided if available.
VI.Pro forma of first year's operations for the
property to be purchased.
VII.Itemized budget of total project cost
for the property to be purchased.
Lessee's financial statements, and any additional financial
information requested by AEI shall be prepared in accordance
with current GAAP guidelines and signed by an authorized
officer who must certify to the accuracy thereof. The
certification language must read as follows:
"The undersigned hereby certifies and warrants that
the information contained in these financial
statements is true and correct, understands that AEI
is relying upon such information as an inducement
for entering into a purchase transaction with the
undersigned, and expressly represents that AEI may
have reliance upon such information."
EXHIBIT "D-1"
INSTRUCTIONS TO INSURANCE AGENT
(Construction Phase)
The following instructions should be followed with respect to
requesting insurance policies on the Parcel:
1. AEI shall receive Builder's Risk hazard insurance, covering
"All Risk" or "Special Form" perils, including the perils of
collapse and mudslide, in the amount of Replacement Cost.. The
coverage shall include building materials, and shall include
property in transit. The deductible shall not exceed
.
2. AEI shall receive Commercial Liability Insurance of
$3,000,000 per occurrence and $4,000,000 aggregate. These limits
can be accomplished either by underlying liability policies or by
the sum of the underlying policy plus an excess or umbrella
policy. The coverage shall include an endorsement in favor of
"AEI" which is ISO Form CG 20 11 11 85 - "Additional Insured -
Managers Or Lessors Of Premises", or an equivalent endorsement
and shall include Broad Form Contractual Liability coverage. The
Claims Made form of coverage is not acceptable.
3. Flood insurance shall be required if the Parcel is located
in a designated flood area or in an area exposed to flood or
storm surge. If the Parcel is not in a designated flood plain
area or is above the applicable one hundred year flood plain
level, provide satisfactory evidence to the effect. Satisfactory
evidence to determine if coverage is necessary shall be a Base
Flood Elevation Certificate and/or a National Geodetic Vertical
Datum (NGDV)-National standard reference datum for elevations,
formerly referred to as Mean Sea Level (MSL) of 1929. If the
coverage is necessary, it shall be in the following amount
. The deductible shall be .
4. Earthquake insurance shall be required, in amounts
acceptable to AEI, unless evidence is provided that the Parcel is
not located in a federally designated earthquake prone area or is
not an ISO High Risk Earthquake Zone. The deductible shall be
.
5. AEI shall receive Certificates of Insurance for
Comprehensive General Liability with limits and provisions
referred to in Item 2 above, and for Workers' Compensation
coverage, from all contractors and suppliers who will be present
on the jobsite.
6. AEI shall receive Certificates of Insurance for Business
Auto Liability, from all contractors and suppliers whose vehicles
will be present on the jobsite. The coverage limits shall be
per occurrence.
7. The "Additional Requirements For All Insurance Policies"
below shall be required by AEI for each policy.
Please call AEI's lease management department to determine
amounts, 800-328-3519.
ADDITIONAL REQUIREMENTS FOR ALL INSURANCE POLICIES
1 Each policy shall be accompanied by proof of payment of the
first annual premium.
2 All hazard policies shall name AEI as Loss Payee and
Additional Insured.
3. All liability policies shall name AEI as Additional
Insured.
4. Definition of "AEI" regarding Additional Insured and Loss
Payee Endorsements:
"AEI Limited Partnership and/or its
specific assigns and AEI , Inc., the Corporate
General Partner of said assignee, and Robert P. Johnson, as the
Individual General Partner of said assignee, and Lessee as
insured or additional insured, as their respective interests
may appear. "
5. AEI shall receive a thirty (30) day written notice in the
event of cancellation, material amendment, or expiration without
renewal of the policies.
6. All hazard policies shall contain Waiver of Subrogation
Endorsements waiving all rights of subrogation, if any, against
AEI as defined above.
7. All insurance companies shall be approved in writing by AEI.
EXHIBIT AD-2"
INSURANCE REQUIREMENTS
(Post Construction)
The following instructions should be followed with respect to
requesting insurance policies on the Parcel:
1. An original hazard insurance policy for "All Risk" or
"Special Form" coverage perils, including all exclusions and
endorsements, will be required. The policy(s) shall be written
with a coverage amount of the Replacement Cost of the Parcel,
annually updated, including Improvements. The Parcel insured
shall be described by the address of the Parcel. In the event
that it is impossible to furnish the original policy at the
completion of construction, an Insurance Certificate, form ACCORD
27, detailing the policy coverage forms, with a paid receipt
shall be acceptable. The original policy shall be forwarded to
AEI without delay.
2. If the coverage referred to in Item 1. above is written via
a blanket insurance policy, a Certificate of Insurance with a
Statement of Values attached will be acceptable.
3. All hazard insurance policies shall include the Replacement
Cost Endorsement.
4. All hazard insurance policies shall include a Building
Ordinance Compliance Endorsement.
5. All hazard insurance policies shall be written with no
coinsurance or with an Agreed Amount Endorsement with the total
property value under the blanket amount.
6. N/A
7. The maximum deductible for any hazard insurance policy shall
be $10,000.
8. Hazard insurance shall include Loss of Rents (Business
Interruption) insurance in an amount to cover at least a 12 month
period with the loss proceeds payable to AEI.
9. Flood insurance shall be required if the Parcel is located
in a designated flood area or in an area exposed to flood or
storm surge. If the Parcel is not in a designated flood plain
area or is above the applicable one hundred year flood plain
level, provide satisfactory evidence to that effect. Satisfactory
evidence to determine if coverage is necessary shall be a Base
Flood Elevation Certificate and/or a National Geodetic Vertical
Datum (NGDV)-National standard reference datum for elevations,
formerly referred to as Mean Sea Level (MSL) of 1929. If flood
insurance coverage is required, it shall be in amounts of
with deductibles of .
10. Earthquake insurance shall be required, in amounts
acceptable to AEI, unless evidence is provided that the Parcel is
not located in a federally designated earthquake prone area or is
not in an ISO High Risk Earthquake Zone. If earthquake coverage
is required, it shall be in the amounts of
with deductibles of .
11. Comprehensive General Liability coverage shall be written,
with limits of $3,000,000 per occurrence and $4,000,000 general
aggregate including a self retention limit of $250,000, or less
if Lessee's financial condition shall be adversely materially
diminished, in which event AEI may set commercially reasonable
self retention limits. These limits can be accomplished either by
underlying liability policies or by the sum of the underlying
policy plus an excess or umbrella policy. The coverage shall
include an Endorsement in favor of AEI which is ISO Form CG 20 11
11 85 Additional Insured - Managers Or Lessors Of Premises", or
an equivalent endorsement. The coverage shall by written on an
Occurrence Form basis and shall include Broad Form Contractual
Liability coverage. The Claims Made form of coverage is not
acceptable.
12. If liquor is sold on the premises of the Parcel, Liquor
Liability coverage (also known as Dram Shop coverage) shall be
required. The coverage shall be written in the statutory amount
which is required by the State in which the Parcel is located, if
said State has a maximum recovery statute. Otherwise, the
coverage shall be written with the above limits.
13. N/A
14. The "Additional Requirements For All Insurance Policies"
shown below shall be required by AEI for each policy.
* Please call AEI's lease management department to determine
amounts, 1-800-328-3519.
ADDITIONAL REQUIREMENTS FOR ALL INSURANCE POLICIES
1. Each policy shall be accompanied by proof of payment of the
first annual premium.
2. All hazard policies shall name AEI as Loss Payee and
Additional Insured.
3. All liability policies shall name AEI as Additional Insured.
4. Definition of "AEI" regarding Additional Insured and Loss
Payee Endorsements:
"AEI Limited Partnership and/or
its specific assigns and AEI , Inc., the
Corporate General Partner of said assignee, and Robert P.
Johnson, as the Individual General Partner of said assignee,
and Lessee as insured or additional insured, as their
respective interests may appear. "
5. AEI shall receive a thirty (30) day written notice in the
event of cancellation, material amendment, or expiration without
renewal of the policies.
6. All hazard policies shall contain Waiver of Subrogation
Endorsements waiving all rights of subrogation, if any, against
AEI as defined above.
7. All insurance companies shall be approved in writing by AEI.
** Contact Barbara Kochevar at AEI (800) 328-3519 for the name of
the specific AEI entity to be insured.
EXHIBIT "E-1"
Survey Requirements
(Pre-Construction)
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the
survey, that surveyor's official seal and license number (if
any, or both), and the date of the survey, with the
following certification:
I, , a registered land surveyor, in
and for the State of do hereby certify to AEI
Fund Management, Inc., a Minnesota corporation, or its
assigns (PLEASE CONTACT BARBARA KOCHEVAR AT 1-800-328-3519
FOR INFORMATION), and (insert name of
title company), that this is a true and correct plat of a
survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described Parcel; that
there are no visible encroachments onto adjoining
properties, streets, alleys, easements or setback lines by
any of said buildings, structures or improvements; that
there are no recorded or visible right of ways or easements
on said described Parcel, except as shown on said survey;
that there are no party walls or visible encroachments on
said described Parcel by buildings, structures or other
improvements situated on adjoining property, except as shown
on said plat or survey; and that the described Parcel has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By:
Dated:
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic
scale should be indicated. When practical, the plat or map
of survey should be oriented so that North is at the top of
the drawing. Supplementary or exaggerated scale diagrams
should be presented accurately on the plat
or map and drawn to scale. No plat or map drawing less than
the minimum size of 8-1/2" by 11" will be acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as
adopted by the American Title Association and American
Congress on Surveying and Mapping.
5. The character and location of all buildings upon the Parcel
must be shown and their location given with reference to
boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes
of all kinds, including but not limited to those created by
roads, rights of way, water courses, drains, telephone,
telegraph or electric lines, water, sewer, oil or gas
pipelines, etc., on or across the surveyed Parcel and on
adjoining properties if they appear to affect the enjoyment
of the surveyed Parcel should be located and noted. If the
surveyor has knowledge of any such easements and/or
servitudes, not physically evidenced at the time the present
survey is made, such physical non-evidence should be noted.
All recorded easements, rights of way and other record
matters affecting the Parcel should be located and
identified by recording date. Surface indications, if any,
of underground easements and/or servitudes should also be
shown. If there are no buildings erected on the Parcel
being surveyed, the plat or map of survey should bear the
statement "No Buildings". Curb cuts and adjoining streets
should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown
together with the width thereof. Encroaching driveways,
strips, ribbons, aprons, etc., should be noted. Rights of
access to public highways should be shown. The right-of-way
line of any public street must be shown in relationship to
the Parcel surveyed and the street must be labeled "Publicly
Dedicated" or "Private Thoroughfare" as the case may be.
7. As a minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI and one
(1) set to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the
exterior walls of any improvements on the Parcel. The
survey should note the absence of, or indicate the existence
of, any building restriction or setback lines. Paved areas
should be shown and the survey should designate the area for
parking and its dimensions. If completed, the survey should
indicate the actual number of parking spaces and, if
possible, the actual parking spaces should be outlined on
the survey.
EXHIBIT "E-2"
Survey Requirements
(As-Built/Post-Construction)
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the
survey, that surveyor's official seal and license number (if
any, or both), and the date of the survey, with the
following certification:
I, , a registered land surveyor, in
and for the State of do hereby certify to AEI
Fund Management, Inc., a Minnesota corporation, or its
assigns (PLEASE CONTACT BARBARA KOCHEVAR AT 1-800-328-3519
FOR INFORMATION), and (insert name of
title company), that this is a true and correct plat of a
survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described Parcel; that
there are no visible encroachments onto adjoining
properties, streets, alleys, easements or setback lines by
any of said buildings, structures or improvements; that
there are no recorded or visible right of ways or easements
on said described Parcel, except as shown on said survey;
that there are no party walls or visible encroachments on
said described Parcel by buildings, structures or other
improvements situated on adjoining property, except as shown
on said plat or survey; and that the described Parcel has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By:
Dated:
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic
scale should be indicated. When practical, the plat or map
of survey should be oriented so that North is at the top of
the drawing. Supplementary or exaggerated scale diagrams
should be presented accurately on the plat or map and drawn
to scale. No plat or map drawing less than the minimum size
of 8-1/2" by 11" will be acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as
adopted by the American Title Association and American
Congress on Surveying and Mapping.
5. The character and location of all buildings upon the Parcel
must be shown and their location given with reference to
boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes
of all kinds, including but not limited to those created by
roads, rights of way, water courses, drains, telephone,
telegraph or electric lines, water, sewer, oil or gas
pipelines, etc., on or across the surveyed Parcel and on
adjoining properties if they appear to affect the enjoyment
of the surveyed Parcel should be located and noted. If the
surveyor has knowledge of any such easements and/or
servitudes, not physically evidenced at the time the present
survey is made, such physical non-evidence should be noted.
All recorded easements, rights of way and other record
matters affecting the Parcel should be located and
identified by recording date. Surface indications, if any,
of underground easements and/or servitudes should also be
shown. If there are no buildings erected on the Parcel
being surveyed, the plat or map of survey should bear the
statement "No Buildings". Curb cuts and adjoining streets
should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown
together with the width thereof. Encroaching driveways,
strips, ribbons, aprons, etc., should be noted. Rights of
access to public highways should be shown. The right-of-way
line of any public street must be shown in relationship to
the Parcel surveyed and the street must be labeled "Publicly
Dedicated" or "Private Thoroughfare" as the case may be.
7. As a minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI and one
(1) set to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the
exterior walls of any improvements on the Parcel. The
survey should note the absence of, or indicate the existence
of, any building restriction or setback lines. Paved areas
should be shown and the survey should designate the area for
parking and its dimensions. If completed, the survey should
indicate the actual number of parking spaces and, if
possible, the actual parking spaces should be outlined on
the survey.
EXHIBIT "F"
PRELIMINARY DOCUMENTATION CHECKLIST
Prior to closing, the following should be received and approved
by AEI, along with those items specified more fully in the
Commitment:
1. Business and marketing plan, with an explanation
of what Lessee proposes to do, when, and at what costs
to promote the success of this Parcel. (Include a
structure/organizational chart of Lessee or operator,
identifying departments and key personnel.)
2. Resumes of all principals of Lessee, including:
A. educational, management and other experience
histories;
B. history of businesses owned with the
dates established/terminated; ownership structure
and number of employees.
3. Site plan and maps showing site(s) and location(s)
of competition.
4. Complete city map.
5. Market report and/or feasibility study, or report
(include demographic data on trade area and a
description of the neighborhood) supporting this site.
EXHIBIT "G"
CERTIFICATE OF COMPLETION
EXHIBIT "H"
MATERIALS PREVIOUSLY SUBMITTED BY LESSEE
1. Unsigned land purchase contract .
2. Chicago Title Insurance Owner's Policy of named insured
Shoney's, Inc.
3. Executed proposal letter dated June 23, 1997 between Timber
Lodge Steakhouse and Shoney's, Inc.
4. Copy of "As-Built" Survey from Shoney's, Inc.
EXHIBIT "I"
LETTER OF CREDIT
To Follow
ASSIGNMENT
OF
DEVELOPMENT FINANCING AND LEASING COMMITMENT
THIS ASSIGNMENT made and entered into this 21st day of
October, 1997, by and between AEI FUND MANAGEMENT, INC., a
Minnesota corporation, ("Assignor") and AEI REAL ESTATE FUND
XVII LIMITED PARTNERSHIP, a Minnesota limited partnership
("Assignee");
WITNESSETH, that:
WHEREAS, on the 17th day of October, 1997, Assignor
entered into a Development Financing and Leasing Commitment
("the Commitment") for that certain property located at 7375
E. State Street, Rockford, IL (the "Property") with Timber
Lodge Steakhouse, Inc., as Seller/Lessee; and
WHEREAS, Assignor desires to assign all of its rights,
title and interest in, to and under the Commitments to
Assignee as hereinafter provided;
NOW, THEREFORE, for One Dollar ($1.00) and other good
and valuable consideration, receipt of which is hereby
acknowledged, it is hereby agreed between the parties as
follows:
1. Assignor assigns all of its rights, title and
interest in, to and under the Commitment to Assignee,
to have and to hold the same unto the Assignee, its
successors and assigns;
2. Assignee hereby assumes all rights, promises,
covenants, conditions and obligations under the
Commitment to be performed by the Assignor thereunder,
and agrees to be bound for all of the obligations of
Assignor under the Commitment.
All other terms and conditions of the Commitment shall
remain unchanged and continue in full force and effect.
AEI FUND MANAGEMENT, INC.
("Assignor")
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI REAL ESTATE FUND XVII
LIMITED PARTNERSHIP ("Assignee")
BY: AEI FUND MANAGEMENT XVII, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
SALE AND LEASEBACK FINANCING COMMITMENT
("COMMITMENT")
TGI FRIDAY'S RESTAURANT
GREENSBURG, PENNSYLVANIA
5/13, 1997
In reliance upon representations made by you in documents
you furnished to us, AEI Fund Management, Inc., or its assigns,
("AEI"), agrees to purchase and you agree to sell and lease from
AEI a TGI FridayOs restaurant to be located in Greensburg, PA and
to be developed by the Seller/Lessee (the OParcelO), which Parcel
will be subject to the provisions and conditions herein
contained.
A. SELLER
Name: Ohio Valley Bistros, Inc., an Ohio Corporation
Address: 5803 Mariemont Avenue
Cincinnati, Ohio 45227
Phone: (513) 271-2349
B. LESSEE
Name: Ohio Valley Bistros, Inc., an Ohio Corporation
Address: 5803 Mariemont Avenue
Cincinnati, Ohio 45227
Phone: (513) 271-2349
C. PREMISES
1. Type of Improvements: A TGI Friday's restaurant (the
"Improvements").
2. Location: Greensburg, PA, Westmoreland County
3. Land: s.f.
D. FEES AND COSTS
1. A Commitment Fee equal to one percent (1.0%) of
the total Purchase Price, as defined in Article E.1
hereof, (the "Commitment Fee") will be payable to AEI
upon execution of this Commitment and shall be
considered earned upon Seller/Lessee's execution and
delivery of this Commitment. At Seller/Lessee's
election the Commitment Fee may included as a project
cost funded by AEI and reimbursed to Lessee.
2. All outstanding real estate taxes, and levied and
pending special assessments, due and payable prior to
the Closing Date, shall be paid by Seller or Lessee in
full at or prior to the Closing Date.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
3. Lessee shall pay all expenses incident to the
closing and necessary to comply with the requirements
herein, as consistent with this Commitment, including
AEI's attorney's fees necessary to complete this
transaction. AEI's out-of-pocket costs such as attorney
fees, state registration and reporting fees and credit
and background report fees, which are exclusive of
Seller's and Lessee's soft costs, shall not exceed
$7,500.00, plus, if any, such additional fees or costs
not reasonably anticipated or evident from the
information available to AEI as of the date hereof, as
long as Seller and/or Lessee is not in default
hereunder. Such costs may be included, at Lessee's
option, in total costs funded by AEI, if and when the
transaction contemplated hereunder shall close.
E. PURCHASE TERMS
1. Purchase Price: Not to exceed $1,650,000.00 (may
include all verifiable project costs approved by AEI,
including those costs shown on Exhibit "A" attached
hereto, (the "Total Project Cost"), but not to exceed
AEI approved MAI appraised value (the "Purchase
Price").
2. Closing Date: If Seller has not performed under
this agreement by December 31, 1997, (the "Closing
Date"), this Commitment shall be null and void at the
option of AEI. In the event of a delay in closing
caused by a Force Majeure Event, this Commitment shall
be extended upon written notice by Seller of such
event, in any event not more than by sixty (60) days,
provided Seller immediately commences a cause of action
designated to fulfill is obligations hereunder. An
extension for reason other than a Force Majeure Event
must be submitted in writing by Seller and must be
approved by AEI, in its sole discretion. A written
addendum to this Commitment shall be required for all
extensions. For purposes of the foregoing, a Force
Majeure Event includes acts of God, action of the
elements, warlike action, insurrection, revolution, or
civil strife, piracy, civil war or hostile action,
strikes, acts of public enemies, federal or state laws,
rules and regulations of any governmental authorities
having jurisdiction over the Parcel, beyond the control
of Seller or Lessee. A Force Majeure Event shall not
include a delay, damage or failure for which the cure
may be effected by the expenditure of funds at then
current market prices.
3. This Commitment shall not be assignable by Seller
or Lessee, by law, or otherwise, but may be assigned by
AEI at its option, in whole or in part, in such manner
as AEI may determine, to an affiliate of AEI.
Notwithstanding any such assignment, AEI and its
assignee shall both be liable for AEI's obligations
hereunder.
4. Parcel Inspection: As a condition precedent to
AEI's obligation hereunder, the Parcel shall be
inspected and approved by AEI prior to or after issuing
a Sale/Leaseback commitment. Within five (5) business
days of receipt of an invoice from AEI, Seller/Lessee
shall reimburse AEI for its actual out-of-pocket costs
of performing such site inspection, not to exceed
$1,000.00. At LesseeOs election this fee may be
included as a project cost and reimbursed to Lessee at
closing.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
5. Management Review and Interview: AEI has reviewed and
approved the management of Seller. As a condition
precedent to AEI's obligations hereunder, there shall
be no material changes in the management of Seller
prior to closing.
6. Supporting Documents: As soon as possible, and as
a condition precedent to closing on the Parcel, the
supporting documentation listed must be submitted to
AEI, not less than ten (10) business days prior to the
Closing Date, in form and content satisfactory to AEI
and its counsel:
a. All documentation listed on Exhibit "B"
attached hereto.
b. A Commitment for an ALTA Owner's Policy of
Title Insurance insuring marketable title in the
Parcel. The policy shall be issued by a company
acceptable to AEI and shall contain such
endorsements as AEI may require including extended
coverage, owners comprehensive coverage, and
absent independent verification thereof
satisfactory to AEI, a zoning compliance
endorsement. Seller must provide, at its expense,
an original and a copy of an ALTA owner's
preliminary commitment for title insurance (ALTA
owner - 1970 Form B) insuring marketability and
subject only to such matters as AEI may approve.
The title commitment should list Seller as the
present fee owner and should show AEI as the fee
owner to be insured. The title commitment should
also include an itemization of all outstanding and
pending special assessments or should state that
there are none, if such is the case. It should
also state the manner in which any outstanding
assessments are payable, that is, whether they are
payable in monthly or yearly installments, setting
forth the amount of each such installment and its
duration. The commitment should also include an
itemization of taxes affecting the Parcel and the
tax year to which they relate; should state
whether taxes are current and, if not, should show
the amounts unpaid, the tax parcel numbers, and
whether the tax parcel includes property other
than the Parcel to be purchased. All easements,
restrictions, documents, and other items affecting
title should also be listed in Schedule "B" of the
title commitment. COPIES OF ALL INSTRUMENTS
CREATING SUCH EXCEPTIONS MUST BE ATTACHED TO THE
TITLE COMMITMENT.
c.Insurance policies issued by companies
acceptable to AEI, with loss clauses in favor of
AEI, complying with the guidelines set forth on
Exhibit "D" attached hereto.
d.As-Built survey acceptable to AEI prepared
by a licensed surveyor acceptable to AEI,
complying with the guidelines set forth on Exhibit
"E" attached hereto.
e.Final plans and specifications for the
Improvements prepared by an architect or engineer
acceptable to AEI.
f.A soil report prepared by an engineer
acceptable to AEI.
g.Appraisal of the Parcel by an independent
M.A.I. or other appraiser acceptable to AEI, which
report shall include a land value estimate,
application of the three approaches to value
(sales comparison, income capitalization, and
cost), and a reconciliation of value.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
h.Certificate of Occupancy, or its equiv
alent, issued by the appropriate authorities
indicating that the Parcel is in compliance with
building, zoning and subdivision, environmental
and energy laws and regulations. Also a letter
from the appropriate officer of the municipality
or county exercising land use control over the
Parcel stating: (a) the zoning code affecting the
Parcel; (b) that the Parcel and its intended use
complies with such zoning code, city ordinances
and building and use restrictions; (c) that there
are no variances, conditional use permits or
special use permits required for use of the
Improvements on the Parcel, or if such permits are
required, specifying the existence of same and
their terms, and (d) that the Parcel complies with
the platting ordinances affecting them and can be
conveyed without the requirement of a plat or
replat of the Parcel. If the Parcel falls within
any subdivision rules or regulations, evidence of
compliance with such subdivision regulations, or
waiver of the same by the appropriate officials,
is required. (AEI shall make the initial attempts
to obtain the zoning compliance letter in a form
satisfactory to AEI).
i.Written advice from all proper public
utilities and municipal authorities, that utility
services are available and connected to the Parcel
for gas, electricity, telephone, water and sewer.
(AEI shall make the initial attempts to obtain the
utility letters in form satisfactory to AEI).
j.Certificate of Completion executed by the
project architect, general contractor and owner
certifying that the Improvements have been
completed in accordance with the plans and
specifications and comply with all applicable
building, zoning, energy, environmental laws and
regulations, and the objective standards of the
Americans with Disabilities Act.
k.Copies of any and all certificates, pe
rmits, licenses and other authorizations of any
governmental body or authority which are necessary
to permit the use and occupancy of the
Improvements on the Parcel, specifically
including, but not limited to, liquor licenses.
l.Certified cost statement showing the cost
of the land and of the Improvements constructed on
the Parcel, signed by the owner and general
contractor, and an item by item list of the
components comprising the Improvements.
m.Fully executed Franchise Agreement for use
of the Parcel as an TGI Friday's Restaurant.
n.Photographs of all sides of the exterior
and interior of the completed Improvements.
o.Certified copies of the Articles of In
corporation, By-Laws, or partnership agreement,
and Good Standing Certificate for the
Seller/Lessee, together with all other documents
AEI deems necessary to support the authority of
the persons executing any documents on behalf of
the corporation, or partnership, including
applicable encumbrancy certificates and
corporate/partnership resolutions of the directors
and shareholders.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
p.UCC searches on Seller and Lessee from the
offices of Secretary of State and the County
Recorder for the state and county in which the
Parcel is located.
q.Phase I Environmental Assessment Report
prepared by an engineer satisfactory to AEI
containing evidence satisfactory to AEI that the
Parcel complies with all federal, state and local
environmental regulations. Additional reports may
be required by AEI based upon its review of the
Phase I report. If Seller fails to deliver any
additional reports AEI may deem necessary to
complete and approve its environmental
investigation of this Parcel, AEI may terminate
this Commitment and retain that portion of the
Commitment Fee to cover any and all of its costs
incurred hereunder.
r.Execution of: Lease; Opinion of Seller and
Lessee's Counsel; Hazardous Substance Indemnity
Agreement of Seller and Lessee, Seller's and
LesseeOs Affidavit; all in form and substance
satisfactory to AEI, consistent with the terms
hereof.
s.Financial statements as listed and ref
erenced on Exhibit "C" attached hereto.
F. LEASE TERMS
The lease, in the form agreed upon between the parties
hereto prior to the Closing Date will be executed and
delivered by AEI and Seller/Lessee at closing, to include
the following terms:
1. Base Rent:
a.Initial Annual Rental Rate as Percentage of
Purchase Price: 10.25% for the first and all those
subsequent Parcel.
Rent shall be payable in advance of the first
day of each month in equal monthly installments.
b.Beginning in the second (2nd) lease year
and continuing every lease year thereafter,
including renewal terms, such annual rent would
increase by an amount equal to one and thirteen
one hundredths percent (1.13%) of the prior
periodOs annual rent.
2. Initial Lease Term: 15 years.
3. Renewal Terms: Two (2) terms of five (5)
years each .
4. Type of Use:Casual Dining Restaurant.
6. It is the intent of the parties that the Lease
shall be a net lease in all respects and that the Rent
shall be a net rent paid to AEI; any and all other
expenses including, but not limited to, maintenance,
repair, insurance, utilities, costs, taxes and
assessments shall be paid by Lessee.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
G. DOCUMENTS
The documents listed below shall be prepared by AEI's
counsel in accordance with the terms hereof and executed at,
or prior to, the Closing Date in form and substance
satisfactory to AEI and (subject to Article L. hereof)
Seller and its Counsel:
1. Net Lease Agreement.
2. Attorney's Opinion Letter to be given by Seller's
and Lessee's outside counsel necessarily familiar with
the conduct of Seller's and Lessee's business to render
such opinion and an opinion from an attorney in the
state in which the Parcel is situated as to, inter
alia, the enforceability of the Lease and due authority
of signatories.
3. Lessee Estoppel Letter.
4. Affidavit of Seller and Lessee.
5. Hazardous Substances Indemnification Agreement of
Seller and Lessee.
6. Foreign Investment in Real Property Tax Act
(FIRPTA) Affidavit of Seller.
7. Tri-Party Agreement with Provident Bank in
substantially the same form as agreed to between AEI,
Ristorante Karlo, Inc. and Provident Bank on December
29, 1995, except that in the event of any future
assignment, the release of Provident Bank shall be
subject to the provisions and restrictions of
assignment and subletting as set forth in the Lease.
Seller shall furnish a proposed Warranty Deed to AEI's
counsel for its review and approval.
H. FAIR CREDIT REPORTING ACT
Seller/Lessee warrants that all credit information submitted
is true and correct, and authorizes AEI to make credit
investigations and obtain credit reports and other financial
information, written or oral, respecting Seller/Lessee's
credit and financial position, as it may deem necessary or
expedient at Seller/Lessee's cost and expense.
I. INTERPRETATION
This Commitment, and the terms of the transaction
contemplated to be made in conformity herewith, shall be
construed in accordance with all applicable governmental
regulations and in accordance with the laws of the State of
Minnesota.
J. CERTIFICATION
Seller and Lessee hereby certify that:
1. It does not have any actions or proceedings
pending, which would materially affect the Parcel, or
Lessee, except matters fully covered by insurance;
2. The consummation of the transactions contemplated
hereby, and the performance of this Commitment and the
delivery of the Lease and other security and credit
instruments, will not result in any breach of, or
constitute a default under, any indenture, bank loan or
credit agreement, or other instruments to which Seller
or Lessee is a party or by which it may be bound or
affected;
3. All of both Seller's and Lessee's covenants,
agreements, and representations made herein, and in any
and all documents which may be delivered pursuant
hereto, shall survive the delivery to
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
AEI of the Lease and other documents furnished in
accordance herewith, and the provisions hereof shall
continue to inure to AEI's benefit, and its successors
and assigns;
4. Upon the date of execution of the other documents
contemplated by this Commitment, the Parcel shall be in
good condition, substantially undamaged by fire and
other hazards, and the same shall not have been made
the subject of any condemnation proceedings.
K. TERMINATION
This Commitment may be terminated prior to closing at
AEI's option (but reserving to AEI its right to pursue its
remedies at law or equity for Seller's breach hereof) in
such manner as AEI may determine, if: 1) Seller or Lessee
fails to comply with any of the terms hereof, including but
not limited to, obtaining AEIOs approval of the Supporting
Documents listed in Paragraph E.6. above, and does not
satisfactorily cure the same on or before the Closing Date;
2) a default exists in any financial obligation of Lessee;
3) any representation made in any submission proves to be
untrue, substantially false or misleading at any time prior
to the Closing Date; 4) there has been a material adverse
change in the financial condition of a Lessee since the date
of execution of the Commitment or there shall exist a
material action, suit or proceeding pending or threatened
against Lessee; 5) any bankruptcy, reorganization,
insolvency, withdrawal, or similar proceeding is instituted
by or against Lessee
In the event Seller or Lessee and AEI do not reach mutual
agreement on the documents contemplated to be executed by
either party hereunder, this Commitment may be terminated at
the option of either party; AEI shall in such event refund
the Commitment Fee to Seller, less AEI's out-of-pocket
expenses incurred hereunder, including but not limited to
attorney's fees.
If AEI shall exercise a right to terminate this Agreement
for any reason other than Seller/LesseeOs unwillingness to
close, AEI shall in such event refund the Commitment Fee to
Seller/Lessee, less AEI's out-of-pocket expenses incurred
hereunder, including, but not limited to, attorney's fees.
However, if Seller/Lessee shall refuse to close though AEI
shall be ready, willing and able to close, AEI may exercise
any remedy available at law or equity, including but not
limited to retention of the entire Commitment Fee.
AEI, Seller and Lessee acknowledge the unique nature of the
Parcel and agree that Seller's or Lessee's breach of this
Commitment may result in irreparable harm to AEI not
compensable by an action for monetary damages. The parties
therefore agree that AEI shall have the right of specific
performance to enforce the sale of the Parcel, to retain the
Commitment Fee, as well as to such other forms of equitable
relief as are available, without having to precede a suit in
equity with an action at law. Seller and Lessee likewise
are entitled hereby to specific performance; however, such
right of Seller and Lessee shall terminate automatically in
the event AEI exercises its option to terminate this
Commitment by reason of Seller's or Lessee's failure to
close pursuant to this Commitment on or before the date
earlier stated in Section E.2. hereof through no fault of
AEI. Each party agrees to pay and discharge all reasonable
costs, and actual attorneys' fees and expenses that shall be
incurred by the prevailing party in enforcing the covenants,
conditions and terms of this Commitment or in successfully
defending against an alleged breach thereof.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
L. INCORPORATION OF SUBMITTED WRITTEN MATERIALS/AMENDMENTS
This Commitment is issued by AEI pursuant to all written
materials previously submitted to AEI by Seller and Lessee
(the "Submitted Written Materials") and it is a proviso
hereof that the terms and provisions of said Submitted
Written Materials are by express and specific reference
incorporated herein and made a part hereof. Provided,
however, in the case of any contradiction, variance, or
ambiguity between any of the terms and provisions hereof and
those of the Submitted Written Materials, the terms
specifically delineated in this Commitment shall govern and
shall supersede the conditions of the Submitted Written
Materials. Neither this Commitment nor any provision hereof
may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against
whom enforcement of the change, waiver, discharge or
termination is sought, and in the case of AEI, signed by
Robert P. Johnson, President of AEI, or his designee in
writing signed by Mr. Johnson authorizing such other party
to execute a specific change, waiver, discharge or
termination instrument on behalf of AEI.
M. EXPIRATION
This Commitment must be executed and returned by registered
or certified mail to AEI no later than May 23, 1997.
AEI Fund Management, Inc. (AEI)
By: /s/ Robert P Johnson
Robert P. Johnson
President
STATE OF MINNESOTA )
) ss
COUNTY OF RAMSEY )
On this 12th day of May, 1997, before me, the undersigned, a
Notary Public in and for said State, personally appeared Robert
P. Johnson, personally known to me to be the person who executed
the within instrument as the President of AEI Fund Management,
Inc., a Minnesota corporation, on behalf of said corporation.
/s/ Laura J Miner
Notary Public
[notary seal]
This Commitment is accepted and agreed to
this 13 day of May, 1997.
Ohio Valley Bistros, Inc. Ohio Valley Bistros, Inc.
(Seller) (Lessee)
By: /s/ James Cox By: /s/ James Cox
Its: President Its: President
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
STATE OF Ohio )
) ss
COUNTY OF Hamilton )
On this 13th day of May, 1997, before me, the undersigned, a
Notary Public in and for said State, personally appeared James S
Cox, personally known to me to be the person who executed the
within instrument as the President of Ohio Valley Bistros, Inc.,
an Ohio corporation, on behalf of said corporation.
/s/ Joyce L Hoffman
Notary Public
[notary seal]
STATE OF Ohio )
) ss
COUNTY OF Hamilton )
On this 13th day of May, 1997, before me, the undersigned, a
Notary Public in and for said State, personally appeared /s/
James S Cox, personally known to me to be the person who executed
the within instrument as the President of Ohio Valley Bistros,
Inc., an Ohio corporation, on behalf of said corporation.
/s/ Joyce L Hoffman
Notary Public
[notary seal]
I/We authorize the release of any information deemed
necessary by AEI to verify any and all information supplied to
AEI. I/We shall hold AEI harmless for any damages arising from
verification of said information.
/s/ James Cox Dated: 5/13/97
Title: (Seller)
/s/ James Cox Dated: 5/13/97
Title: (Lessee)
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
EXHIBIT "A"
(Costs which may be included in the purchase.)
01. Land Costs or Site Acquisition Costs at Lessee's actual cost
from unaffiliated parties.
02. Demolition Costs and Site Preparation Costs.
03. Architectural and Engineering Fees paid to non-affiliates.
04. Outside Labor Costs.
05. Material Costs.
06. Soil Tests Costs.
07. Surveying Costs paid to non-affiliates.
08. Building permits, use permits and other governmental
charges.
09. Contractor Fees to non-affiliates.
10. Builders' Risk Insurance and Public Liability Insurance
Premiums during the
construction period.
11. Utility Charges during construction.
12. Construction Interest.
13. AEI's one percent (1.0%) Commitment fee.
14. Title Insurance Fees and Charges.
15. Recording Fees and Registration or Conveyancing Taxes, Fees,
or Charges.
16. Real Estate Taxes due and payable, or actually paid by
Seller as of the date of closing.
17. Special Assessments levied and pending and actually paid by
Seller as of the date of closing.
18. Any fees or costs incurred by AEI in qualifying to hold
title in the state where the Property is located.
19. Appraisal Fees paid to non-affiliates (maximum $5,000).
20. Attorneys' Fees of Seller and Lessee.
21. Attorneys' Fees of AEI.
22. Attached, Permanent Equipment, not including signage, up to
nine percent (9.0%) of Total Project Cost.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
EXHIBIT "B"
PRELIMINARY DOCUMENTATION CHECKLIST
Prior to funding, the following must be received and approved by
AEI, along with those items specified more fully in the Sale and
Leaseback Financing Commitment.
1. Business and marketing plan, with an explanation
of what Lessee proposes to do, when, and at what costs
to promote the success of this Parcel. (Include a
structure/organizational chart of Lessee or operator,
identifying departments and key personnel.)
2. Resumes of all principals of Lessee, including:
A. educational, management and other experience
histories;
B. history of businesses owned with the
dates established/terminated; ownership structure
and number of employees.
3. Current financial statements as described on
Exhibit "C" attached hereto.
4. Site plan and maps showing site(s) and location(s)
of competition.
5. Complete city map.
6. Market report and/or feasibility study, or report
(include demographic data on trade area and a
description of the neighborhood) supporting this site.
7. Dated and captioned photographs showing view of
the Parcel and Improvements if completed.
8. MAI appraisal. (To be ordered by AEI.)
9. Itemized Budget of total project cost.
10. Franchise agreement(s), license and UFOC.
11. Other:
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
EXHIBIT "C"
FINANCIAL DOCUMENTATION REQUIREMENTS
Lessee shall deliver to AEI, for its approval, the following
documents to support AEI's standard credit underwriting
requirements:
I. Lessee's financial statements for its three most
recent fiscal years, audited by an independent
certified public accountant and prepared in
conformity with generally accepted accounting
principles. In lieu of audited financial
statements for Lessee, audited financial statements
for The Bistro Group inclusive of supporting
schedules for Lessee, in form and substance
substantially similar to those financial statements
for The Bistro Group for each of the three fiscal
years shall be acceptable. All financial statements
submitted to AEI shall include a balance sheet and
related statements of income, cash flows and
stockholder's equity, and related notes to the
financial statements. Additionally, all audited
financial statements shall be accompanied by the
auditor's opinion.
II.Lessee's internally generated consolidated
financial statements for the current and year-to-
date periods. Said financial statements shall
include at a minimum, a balance sheet and statement
of income. Cash flow statements and statements of
stockholder's equity should also be provided if
available.
III. Lessee's internally generated per
store financial statements for the current and year-
to-date periods. Said financial statements shall
include at a minimum, a balance sheet and statement
of income. Cash flow statements and statements of
stockholder's equity should also be provided if
available.
IV.Lessee's internally generated per store annual
financial statements for each of its prior three
fiscal year periods. Said financial statements
shall include at a minimum, a balance sheet and
statement of income. Cash flow statements and
statements of stockholder's equity should also be
provided if available.
V. Pro forma of first year's operations for the
property to be financed.
VI.Itemized budget of total project cost for the
property to be financed.
VII. Current personal financial statements for all
Guarantors and, if individuals, their spouses. All
personal financial statements must be signed, dated
and include certification language attesting to
their accuracy (see below).
Items I-VI above shall be prepared by Lessee in accordance
with current GAAP guidelines and signed by Lessee's Chief
Financial Officer, or other authorized individual, who must
represent and warrant the accuracy thereof. For Item VII,
each personal financial statement submitted to AEI shall be
accompanied by the certification language appearing below
and shall be personally signed by the Guarantor reflected on
the personal financial statement. The certification
language must read as follows:
"The undersigned hereby represents and warrants that
the information contained in these financial
statements is true and correct in all material
respects, understands that AEI is relying upon such
information as an inducement for entering into a
purchase and lease transaction with the undersigned,
and expressly represents that AEI may have reliance
upon such information."
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
EXHIBIT "D"
INSURANCE REQUIREMENTS
(SALE AND LEASEBACK)
The following instructions should be followed with respect to
requesting insurance policies on the Parcel:
1. An original property insurance policy for "All Risk" or
"Special Form" coverage perils, including all exclusions and
endorsements, will be required. The policy(s) shall be written
with a coverage amount at full Replacement Cost of the Parcel,
annually updated, including Improvements. The insured Parcel
shall be described by the address of the Parcel. In the event
that it is impossible to furnish the original policy in time for
the closing on AEIOs purchase of the Parcel, an Insurance
Certificate, form ACORD 27, detailing the policy coverage forms,
with a paid receipt shall be acceptable. The original policy
shall be forwarded to AEI without delay.
2. If the coverage referred to in Item 1. above is written via
a blanket insurance policy, a Certificate of Insurance with a
Statement of Values attached will be acceptable.
3. All property insurance policies shall include a Building
Ordinance Compliance Endorsement.
4. All property insurance policies shall be written with no
coinsurance.
5. The maximum deductible for any property insurance policy
shall be $5,000.
6. Property insurance shall include Loss of Rents insurance in
an amount to cover at least a 12 month period with the loss
proceeds payable to AEI.
7. Flood insurance shall be required, in amounts acceptable to
AEI, unless evidence is provided that the Parcel is not located
in a designated Federal flood or storm surge area. Satisfactory
evidence to determine if coverage is necessary shall be a Base
Flood Elevation Certificate and/or a National Geodetick Vertical
Datum (NGDV)-National standard reference datum for elevations,
formerly referred to as Mean Sea Level (MSL) of 1929. If flood
insurance coverage is required, it shall be in amounts of
with deductibles of .
8. Earthquake insurance shall be required, in amounts
acceptable to AEI, unless evidence is provided that the Parcel is
not located in a federally designated earthquake prone area or is
not in an ISO High Risk Earthquake Zone. If earthquake coverage
is required, it shall be in the amounts of with
deductibles of .
9. Comprehensive General Liability coverage shall be written,
with limits of $2,000,000 per occurrence and $5,000,000
aggregate. These limits can be accomplished either by underlying
liability policies or by the sum of the underlying policy plus an
excess or umbrella policy. The coverage shall include an
endorsement in favor of AEI which is ISO Form CG 20 11 11 85
Additional Insured - Managers Or Lessors Of Premises", or an
equivalent endorsement. The coverage shall by written on an
Occurrence Form basis and shall include Broad Form Contractual
Liability coverage. The Claims Made form of coverage is not
acceptable. The maximum deductible for any liability insurance
policy shall be .
10. If liquor is sold on the premises of the Parcel, Liquor
Liability coverage (also known as Dram Shop coverage) shall be
required. The coverage shall be written in the statutory amount
which is required by the State in which the Parcel is located, if
said State has a maximum recovery statute. Otherwise,
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
the coverage shall be written with limits of $2,000,000 per
occurrence and $5,000,000 aggregate.
11. At any time, at the discretion of AEI, Pollution Liability
coverage may be required.
12. The "Additional Requirements For All Insurance Policies" are
as follows:
a. Definition of "AEI" regarding Additional Insured and Loss
Payee Endorsements:
"AEI Limited Partnership, AEI
, Inc., the Corporate General Partner,
Robert P. Johnson, as the Individual General Partner
and its successors and assigns as their respective
interests may appear. "
b. Each policy shall be accompanied a proof of payment of
the first annual premium.
c. All property policies shall name AEI as Loss Payee and
Additional Insured.
d. All liability policies shall name AEI as Additional
Insured.
e. All property and liability insurance policies shall
contain Waiver of Subrogation Endorsements waiving all
rights of subrogation, if any, against AEI.
f. AEI shall receive a thirty (30) day written notice in the
event of cancellation, material amendment, or expiration
without renewal of the policies. The certificate of
insurance must not contain the following language: "will
endeavor to mail" and "but failure to mail such notice shall
impose no obligation or liability of any kind upon the
company, its agents or representatives".
g. All insurance companies shall be approved in writing by
AEI.
h. All property and liability insurance policies will be
analyzed at least quarterly regarding their coverages and
adjusted at any time at the option of AEI.
13. At the discretion of AEI, key man insurance can be required
as called for in Lessee's Sale and Leaseback Financing Commitment
with AEI as owner of the policy or sole and irrevocable
beneficiary.
* Please call in AEI's Insurance Analyst in the Lease Management
Department to determine amounts, 1-800-328-3519.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
EXHIBIT "E"
SURVEY REQUIREMENTS
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the
survey, that surveyor's official seal and license number (if
any, or both), and the date of the survey, with the
following certification:
I, , a registered land surveyor, in
and for the State of do hereby certify to AEI
Fund Management, Inc., a Minnesota corporation, or its
assigns (PLEASE CONTACT ACQUISITIONS CLOSING MANAGER AT 1-
800-328-3519 FOR INFORMATION), and
(insert name of title company), that this is a true and
correct plat of a survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described property; that
there are no visible encroachments onto adjoining
properties, streets, alleys, easements or setback lines by
any of said buildings, structures or improvements; that
there are no recorded or visible right of ways or easements
on said described property, except as shown on said survey;
that there are no party walls or visible encroachments on
said described property by buildings, structures or other
improvements situated on adjoining property, except as shown
on said plat or survey; and that the described property has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By:
Dated:
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic
scale should be indicated. When practical, the plat or map
of survey should be oriented so that North is at the top of
the drawing. Supplementary or exaggerated scale diagrams
should be presented accurately on the plat or map and drawn
to scale. No plat or map drawing less than the minimum size
of 8-1/2" by 11" will be acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as
adopted by the American Title Association and American
Congress on Surveying and Mapping.
5. The character and location of all buildings upon the plot or
parcel must be shown and their location given with reference
to boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes
of all kinds, including but not limited to those created by
roads, rights of way, water courses, drains, telephone,
telegraph or electric lines, water, sewer, oil or gas
pipelines, etc., on or across the surveyed property and on
adjoining properties if they appear to affect the enjoyment
of the surveyed property should be located and noted. If
the surveyor has knowledge of any such easements
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
and/or servitudes, not physically evidenced at the time the
present survey is made, such physical non-evidence should be
noted. All recorded easements, rights of way and other
record matters affecting the Parcel should be located and
identified by recording date. Surface indications, if any,
of underground easements and/or servitudes should also be
shown. If there are no buildings erected on the property
being surveyed, the plat or map of survey should bear the
statement "No Buildings". Curb cuts and adjoining streets
should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown
together with the width thereof. Encroaching driveways,
strips, ribbons, aprons, etc., should be noted. Rights of
access to public highways should be shown. The right-of-way
line of any public street must be shown in relationship to
the property surveyed and the street must be labeled
"Publicly Dedicated" or "Private Thoroughfare" as the case
may be.
7. As minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI, 1300
Minnesota World Trade Center, 30 E. Seventh Street, St.
Paul, MN 55101, attention: Acquisitions Closing Manager,
and one (1) copy to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the
exterior walls of any improvements on the Parcel. The
survey should note the absence of, or indicate the existence
of, any building restriction or setback lines. Paved areas
should be shown and the survey should designate the area for
parking and its dimensions. If completed, the survey should
indicate the actual number of parking spaces and, if
possible, the actual parking spaces should be outlined on
the survey.
Seller/Lessee Initial:
Commitment For: TGI Friday's Restaurant, /s/ JC
May 6, 1997
ASSIGNMENT
OF
SALE AND LEASEBACK FINANCING COMMITMENT
THIS ASSIGNMENT made and entered into this 7th day of
November, 1997, by and between AEI FUND MANAGEMENT, INC., a
Minnesota corporation, ("Assignor") and AEI REAL ESTATE FUND
XVII LIMITED PARTNERSHIP, a Minnesota limited partnership
("Assignee");
WITNESSETH, that:
WHEREAS, on the 13th day of May, 1997, Assignor entered
into a Sale and Leaseback Financing Commitment ("the
Commitment") for that certain property located at #1507 RR
#6, Box 218, Greensburg, PA (the "Property") with Ohio
Valley Bistros, Inc., as Seller/Lessee; and
WHEREAS, Assignor desires to assign an undivided sixty
percent (60.0%) of its rights, title and interest in, to and
under the Commitment to Assignee as hereinafter provided;
NOW, THEREFORE, for One Dollar ($1.00) and other good
and valuable consideration, receipt of which is hereby
acknowledged, it is hereby agreed between the parties as
follows:
1. Assignor assigns all of its rights, title and
interest in, to and under the Commitment to Assignee,
to have and to hold the same unto the Assignee, its
successors and assigns;
2. Assignee hereby assumes all rights, promises,
covenants, conditions and obligations under the
Commitment to be performed by the Assignor thereunder,
and agrees to be bound for all of the obligations of
Assignor under the Commitment.
All other terms and conditions of the Commitment shall
remain unchanged and continue in full force and effect.
AEI FUND MANAGEMENT, INC.
("Assignor")
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI REAL ESTATE FUND XVII
LIMITED PARTNERSHIP ("Assignee")
BY: AEI FUND MANAGEMENT XVII, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000819577
<NAME> AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,848,130
<SECURITIES> 0
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<CURRENT-ASSETS> 4,848,130
<PP&E> 11,757,594
<DEPRECIATION> (2,692,525)
<TOTAL-ASSETS> 13,913,199
<CURRENT-LIABILITIES> 441,211
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,471,988
<TOTAL-LIABILITY-AND-EQUITY> 13,913,199
<SALES> 0
<TOTAL-REVENUES> 1,144,244
<CGS> 0
<TOTAL-COSTS> 527,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 617,144
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> 617,144
<EPS-PRIMARY> 26.66
<EPS-DILUTED> 26.66
</TABLE>
