Exhibit 10
AEI INCOME & GROWTH FUND 23 LLC
IMPOUNDMENT AGREEMENT
THIS IMPOUNDMENT AGREEMENT, made and entered into this
day of , 1998, by and among AEI INCOME &
GROWTH FUND 23 LLC, (the "Fund"), AEI Securities Incorporated
("AEI") and Fidelity Bank, Edina, Minnesota (the "Bank");
WITNESSETH THAT:
WHEREAS, the Fund proposes to issue and sell to the
public up to 24,000 units of limited liability company interest
(the "Units"), at a subscription price of $1,000 per Unit, and
has entered into an agreement (the "Dealer-Manager Agreement")
with AEI Securities Incorporated (the "Dealer-Manager") pursuant
to which the Dealer-Manager and various members of the National
Association of Securities Dealers, Inc. (collectively, the
"Dealers") will offer the Units for sale to the public for and on
behalf of the Fund; and
WHEREAS, the Dealer-Manager Agreement provides that all
funds received by Dealers in connection with the sale of Units
shall be transmitted to the Dealer-Manager as processing broker-
dealer and promptly deposited in an escrow account with the Bank
until the offering of Units is terminated or until the minimum
$1,500,000 of subscription proceeds have been obtained; and
WHEREAS, the Fund has applied to the commissioner of
commerce for the State of Minnesota (the "Commissioner") for
registration of the Units for sale to the residents of the State
of Minnesota; and
WHEREAS, as a condition of registration of such
offering under the Securities Laws of the State of Minnesota, the
Commissioner requires that the Fund provide for the impoundment
of the proceeds to be received from such offering of securities;
and
WHEREAS, the Fund, the Bank and AEI desire to enter
into an agreement with respect to the said impoundment of
proceeds; and
NOW, THEREFORE, for and in consideration of the
covenants and agreements set forth below, the parties agree as
follows:
l. APPOINTMENT OF IMPOUNDMENT AGENT; DELIVERY OF FUNDS
TO ESCROW ACCOUNT.
The Fund hereby appoints the Bank as Impoundment Agent
to receive and hold all proceeds from the sale of Units for the
term of this Impoundment Agreement, and to invest the same in
such manner as it shall be directed to in writing by the Fund.
All subscription checks shall be payable to "Fidelity Bank_AEI
Real Estate Escrow." Dealers shall transmit all subscription
checks for Units to the Dealer-Manager by noon of the business
day following receipt of such checks and the Dealer-Manager shall
transmit all such checks, or return unaccepted checks to
subscribers, as soon as practicable thereafter but in any event
by the end of the second business day following receipt of such
checks by the Dealer-Manager.
2. IDENTITY OF SUBSCRIBERS; OWNERSHIP OF FUNDS
DEPOSITED.
The Dealer-Manager shall deliver to the Impoundment
Agent, with each deposit of checks, a list which contains the
names and addresses of all persons who have subscribed for Units,
the amount of money tendered by each subscriber and the date on
which the funds were received from each subscriber. The
Impoundment Agent shall hold all funds received for the
individual account of each subscriber identified by the Dealer-
Manager. The funds, as
well as any interest or income earned thereon, shall remain the
property of the subscribers until released to the Fund as
hereinafter provided, and shall not be subject to any liens by
the Impoundment Agent or judgments or claims against Dealers, the
Dealer-Manager or the Fund.
3. DISBURSEMENT OF FUNDS.
(a) After such time as the Impoundment Agent has
received not less than $1,500,000 in subscription amounts, the
Impoundment Agent shall forthwith notify the Commissioner in
writing of the escrow of such amounts. Upon receipt by the
Impoundment Agent of written authorization from the Commissioner,
said Impoundment Agent, on demand of AFM, shall pay over to the
Fund all or any portion of the impounded funds. If $1,500,000 in
subscription amount is not received by the Impoundment Agent
during the term of this Impoundment Agreement, then, within three
business days after the last day of the term of this Impoundment
Agreement, the Impoundment Agent shall notify the Commissioner in
writing that the conditions of this Impoundment Agreement have
not been satisfied, and shall within a reasonable time, but in no
event more than thirty (30) days after the last day of the term
of this Impoundment Agreement refund to each subscriber the face
amount of payments made in subscription for Units, together with
his or her pro rata share of interest or income, if any, earned
on the funds deposited in escrow, and shall then notify the
Commissioner in writing of such refund.
(b) After receipt by the Impoundment Agent of written
authorization for the initial release of funds hereunder, the
Impoundment Agent shall release to the Fund, from time to time,
any funds deposited pursuant to this Agreement, upon the written
request of the Fund and without any necessity of further
authorization from the Commission. The Fund shall send written
notice of each request for disbursement of funds which shall
specify the subscriptions that have been accepted on behalf of
the Fund, the commissions and nonaccountable expenses payable on
such subscriptions, the subscriptions that have been rejected,
and the subscriptions that have been deposited in escrow but upon
which acceptance by the Fund remains pending. In accordance with
such notice, the Impoundment Agent shall disburse funds:
(i) representing commissions and nonaccountable
expenses on accepted subscriptions_ directly to the
Dealer-Manager;
(ii) representing accepted subscription proceeds net
of commissions and nonaccountable expenses_directly to the
account of the Fund as authorized in such notice;
(iii) representing interest accrued on accepted
subscriptions proceeds_directly to the subscribers; and
(iv) representing rejected subscription proceeds and
interest accrued thereon_directly to the subscribers.
All subscription proceeds upon which acceptance remains pending
shall be held by the Impoundment Agent for disbursement in
accordance with the direction contained in the next succeeding
notice.
4. TERM OF IMPOUNDMENT.
This Impoundment Agreement shall terminate on the 365th
day following the effective date of the registration statement
relating to the Units or on such earlier date as all funds are
released to the Fund as provided in Section 3 above; provided,
however, that if $1,500,000 in subscription amounts have been
received prior to the 365th day and the Fund elects to extend the
offering of Units in accordance with the registration statement
relating thereto, this Impoundment Agreement shall terminate upon
the expiration of such extension (but not, in any event, later
than the 730th day after the effective date). The Fund and the
Dealer-Manager may also terminate this Impoundment Agreement at
any time upon notice to the Impoundment Agent that the Fund has
made a decision to terminate the offer and sale of Units.
6. CONSENT OF COMMISSIONER TO RELEASE FUNDS.
Until the Impoundment Agent has received $1,500,000 in
subscription amounts no funds shall be released to the Fund
hereunder except upon the express written authorization of the
Commissioner. If the Commissioner finds that any conditions of
this Impoundment Agreement have not been satisfied, or that any
provisions of the Minnesota Securities Laws or regulations have
not been complied with, then he may withhold such authorization
for release of funds by the Impoundment Agent to the Fund and may
direct the Impoundment Agent to return the funds to the
subscribers. After the initial release of funds is authorized by
the Commissioner, the Impoundment Agent shall release funds, from
time to time, to the Fund upon written request.
7. FEE OF IMPOUNDMENT AGENT.
The Impoundment Agent shall receive reasonable
compensation for its services as Impoundment Agent. Such
compensation shall be paid by the Fund and shall not be
subtracted from the funds held in escrow by the Impoundment
Agent. The fee agreed upon for services rendered hereunder shall
constitute full compensation for the services of the Impoundment
Agent performed pursuant to this Impoundment Agreement; provided,
however, that if the Impoundment Agent renders any material
services not contemplated by this Impoundment Agreement, the
Impoundment Agent shall be reasonably compensated for such
services.
8. REPRESENTATIONS OF IMPOUNDMENT AGENT. The
Impoundment Agent represents and warrants that:
(a) subscription proceeds deposited on behalf of each
subscriber will be insured by the Federal Deposit Insurance
Corporation to the maximum extent such proceeds would be
insured if deposited in individual accounts for each such
subscriber; and
(b) it will distribute to subscribers within the time
period prescribed by the Internal Revenue Code of 1986, as
amended, reports of all interest income earned on escrowed
funds.
Except as provided in this Section 8, the sole duty of the
Impoundment Agent shall be to receive funds from the sale of the
Units and hold them for release in accordance with the terms of
this Impoundment Agreement.
9. LIABILITY OF IMPOUNDMENT AGENT.
The Impoundment Agent may conclusively rely upon and
shall have no duty to verify any statement, certificate, notice,
request, consent, order or other document believed by it to be
genuine and to have been signed or presented by the proper party
or parties. The Impoundment Agent shall be under no obligation
to institute or defend any action, suit or proceeding in
connection with this Impoundment Agreement unless first
indemnified to its satisfaction by the Fund. The Impoundment
Agent may consult counsel with respect to any question arising
under this Impoundment Agreement, and the Impoundment Agent shall
not be liable for any action taken or omitted in good faith on
advice of such counsel. All funds held by the Impoundment Agent
pursuant to this Impoundment Agreement shall constitute trust
property for the purposes for which they are held.
10. INSPECTION OF RECORDS.
Either the Fund or the Commissioner may, at any time
during regular business hours, inspect the records of the
Impoundment Agent, insofar as they relate to this Impoundment
Agreement, for the purpose of determining that the Impoundment
Agent is acting in compliance with the provisions of this
Impoundment Agreement.
11. BINDING EFFECT AND SUBSTITUTION OF IMPOUNDMENT
AGENT.
The terms and conditions of this Impoundment Agreement
shall be binding upon the parties hereto and their respective
creditors, transferees, successors in interest and assigns,
whether by operation of law or otherwise. If for any reason the
Bank should be unable or unwilling to continue to assume its
duties as Impoundment Agent, nothing in this Impoundment
Agreement shall prevent the Fund from appointing an alternative
Impoundment Agent.
12. ISSUANCE OF CERTIFICATES.
Until the terms of this Agreement have been met and the
funds hereunder released to the Issuer, the Issuer may not issue
any certificates or other evidences of securities, except
subscription agreements.
IN WITNESS WHEREOF, the parties hereto have executed
this Impoundment Agreement on the date first above written.
AEI INCOME & GROWTH FUND 23 LLC
By AEI Fund Management XXI,Inc.
By /s/ Xxxxxx X Xxxxxxx
Its President
FIDELITY BANK
By /s/ Xxxxxx Xxxxxxxxx
Its E.V.P
AEI Securities Incorporated
By /s/ Xxxxxx X Xxxxxxx
Its President
Accepted for filing
Commissioner of Commerce
