EXHIBIT 1.2
Exhibit A to the
Dealer-Manager Agreement
AEI INCOME & GROWTH FUND 25 LLC
PARTICIPATING DEALER AGREEMENT
, 2002
Dear :
AEI Securities, Inc., as dealer-manager (the "Dealer-
Manager") for AEI Income & Growth Fund 25 LLC, a Delaware limited
liability company (the "Fund") and for which AEI Fund Management
XXI, Inc. ("AFM") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ will serve as managing
members (the "Managers"), invites you ("Dealer") to participate
in the distribution of units (the "Units"), subject to the terms
set forth below.
The Dealer-Manager has entered into, or will enter
into, an Agreement with the Fund called the Dealer-Manager
Agreement, a copy of which has been provided to you. By your
acceptance of this Agreement, you will become one of the Dealers
referred to in such Dealer-Manager Agreement between the Fund and
the Dealer-Manager and will be entitled to and subject to the
indemnification provisions contained in such Agreement, including
the provisions of such Agreement (Section 4) wherein the Dealers
severally agree to indemnify and hold harmless the Managers and
the Dealer-Manager and each officer and director thereof, and
each person, if any, who controls the Managers and Dealer-Manager
within the meaning of the Securities Act of 1933. Except as
otherwise specifically stated herein, all terms used in this
Agreement have the meanings provided in the Dealer-Manager
Agreement. The Units being sold are offered solely through
broker-dealers who are members of the National Association of
Securities Dealers, Inc. (the "NASD").
1. BEST EFFORTS
Dealer hereby agrees to use its best efforts to sell
the Units for cash on the terms and conditions stated in the
Prospectus. Nothing in this Agreement shall be deemed or
construed to make Dealer an employee, agent, representative or
partner of the Dealer-Manager or the Managers, and Dealer is not
authorized to act for the Dealer-Manager or the Managers or to
make any representations on their behalf except as set forth in
the Prospectus and in such other printed information furnished to
Dealer by the Dealer-Manager or the Managers to supplement the
Prospectus ("supplemental information").
2. SUBMISSION OF ORDERS
Dealer shall transmit to the Dealer-Manager, as
processing broker-dealer, each prospective investor's check in
payment of Units together with a subscription agreement in the
form attached to the Prospectus as Exhibit D, properly completed
by the investor and the investor's registered representative, and
all other investor documentation by noon of the next business day
following receipt by Dealer. The Dealer-Manager shall transmit
all investor checks to Fidelity Bank, Edina, Minnesota by the end
of the second business day after receipt by the Dealer-Manager.
All checks shall be made payable to "Fidelity Bank -- AEI Fund 25
Escrow," and Dealer agrees to return promptly all investor checks
made payable to any other person or entity to the investor. All
subscriptions shall be subject to acceptance by AFM on behalf of
the Fund. No subscription agreement will be accepted unless the
registered representative soliciting such order has completed and
signed the representation contained on the reverse side of the
Subscription Agreement.
3. PRICING
Subject to Section 4 (a) below, Units shall be offered
to the public at the offering price of $1,000 per Unit payable in
cash. A minimum initial purchase of two and one-half Units
($2,500) is required, except that tax-qualified retirement plans,
including individual retirement accounts and ▇▇▇▇▇ plans, will be
permitted to purchase two Units ($2,000) unless applicable state
law requires a larger purchase. Additional investments may be
made in cash in multiples of one (1) Unit. The Units are
nonassessable and limited members will not be required to
contribute further sums to the capital of the Fund.
4. DEALER'S COMMISSIONS AND EXPENSES
(a) Dealer's selling commission applicable to the total
public offering price of Units sold by Dealer which it is
authorized to sell hereunder shall be equal to 7% of the gross
offering proceeds from Units sold by or through Dealer. The
parties hereby agree that the foregoing amounts are not in excess
of the usual and customary distributors' or sellers' commission
received in the sale of securities similar to the Units, that the
Dealer's interest in the offering is limited to such payments
from the Dealer-Manager and Dealer's indemnity referred to in
Section 4 of the Dealer-Manager Agreement, that the Fund and the
Managers are not liable or responsible for the direct payment of
such commission to the Dealers, and that the Dealer is not in
privity of contract with the Fund or the Managers even though it
is entitled to certain benefits deriving therefrom.
(b) The Dealer-Manager may also reimburse Dealer for
actual out-of-pocket expenses of Dealer incurred in connection
with such Dealer's due diligence review related to the offering
in an amount not to exceed 1/2 of 1% of the gross proceeds from
all Units sold by Dealer.
5. PAYMENT
Notwithstanding any other provision of this Agreement,
Dealer-Manager shall not be liable to any Dealer for payment of
selling commissions, or any expenses of any kind, until after
subscriptions for the minimum 1,500 Units have been received and
accepted. Payments for selling commissions for the sale of the
minimum 1,500 Units will be made by the Dealer-Manager to Dealer
within twenty (20) days after acceptance by the Fund of
subscriptions for such minimum, or earlier at the election of the
Dealer-Manager. Thereafter, commissions shall be paid on the
20th day of each month for Units sold and accepted in the
preceding month, but in no event before the Dealer-Manager is
first paid by the Fund. Payment of such commissions shall be
deemed acceptance of confirmation of orders.
6. RIGHT TO REJECT ORDERS OR CANCEL SALES
All orders, whether initial or additional, are subject
to acceptance by, and shall only become effective upon,
confirmation by the Managers on behalf of the Fund, and the
Managers reserve the right to reject any order for any reason.
Orders not accompanied by a Subscription Agreement and the
required check in payment for the Units may be rejected.
Issuance and delivery of the Units will be made only after actual
receipt of payment therefor. If any check is not paid upon
presentment, or if the Fund is not in actual receipt of
clearinghouse funds or cash, certified or cashier's check or the
equivalent in payment for the Units within fifteen (15) days of
sale, the Managers reserve the right to cancel the sale without
notice. In the event an order is rejected, canceled or rescinded
for any reason, Dealer agrees to return to the Dealer-Manager any
compensation theretofore paid with respect to such order.
7. PROSPECTUS AND SUPPLEMENTAL INFORMATION
Dealer is not authorized or permitted to give, and will
not give, any information or make any representation concerning
the Units except as set forth in the Prospectus and supplemental
information thereto. The Dealer-Manager will supply Dealer with
reasonable quantities of the Prospectus, any supplements thereto
and any amended Prospectus, as well as any supplemental
information, for delivery to investors and Dealer will deliver a
copy of the Prospectus and all supplements thereto and any
amended Prospectus to each investor to whom an offer is made
prior to or simultaneously with the first solicitation of an
offer to sell the Units to a prospective investor, and thereafter
at the request of the Managers or the Dealer-Manager.
8. REPRESENTATIONS OF DEALER
(a) Dealer agrees that it will not show or give to any
investor or reproduce any material or writing which is supplied
to it by the Dealer-Manager or any of the Dealer-Manager's
wholesalers, employees or salesmen and marked "dealer-only" or
otherwise bearing a legend denoting that it is not to be used
with respect to dealings with members of the public. Dealer
agrees that it will not use in connection with the offer or sale
of Units any material or writing which relates to another program
supplied to it by the Managers, the Dealer-Manager or any of the
Dealer-Manager's wholesalers, employees or salesmen and bearing a
legend which states that such material may not be used in
connection with the offer or sale of any securities other than
the program to which it relates. Dealer further agrees that it
will not use in connection with the offer or sale of Units any
materials or writings which have not been previously approved by
the Dealer-Manager and the Managers.
(b) Dealer agrees, if the Dealer-Manager so requests,
to furnish a copy of any revised preliminary Prospectus to each
person to whom it has furnished a copy of any previous
preliminary Prospectus, and further agrees that it will itself
mail or otherwise deliver all preliminary and final Prospectuses
required for compliance with the provisions of Rule l5c2-8 under
the Securities Exchange Act of 1934. Regardless of the
termination of this Agreement, Dealer will deliver a Prospectus
in transactions in the Units as required herein for a period of
90 days from the effective date of the Registration Statement or
such longer period as may be required by the Securities Act of
1933.
(c) On becoming a Dealer, and in offering and selling
Units, you agree to comply with all the applicable requirements
under the Securities Act of 1933, and the Securities Exchange Act
of 1934, including, without limitation, the provisions of Rule
l5c2-4 under the Securities Exchange Act. Notwithstanding the
termination of this Agreement or the payment of any amount to
you, you agree to pay your proportionate share of any claim,
demand or liability asserted against you and the other Dealers on
the basis that the Dealers or any of them constitute an
association, unincorporated business or other separate entity,
including in each case your proportionate share of any expenses
incurred in defending against any such claim, demand or
liability.
(d) Dealer represents that it has reasonable grounds
to believe, based on information obtained from the Fund through
the Prospectus or other materials, that all material facts
relating to a sale of the Units (including the facts relating to
items set forth in Section 3(b) of NASD Rule 2810) are adequately
and accurately disclosed and provide a basis for evaluating an
investment in the Fund. If a Dealer has relied on an evaluation
of such information made by another member of the NASD, such
Dealer represents that it has reasonable grounds to believe such
evaluation was conducted with due care, that it has received the
consent of such other member to its reliance, and that such other
member is not one of the Managers or an affiliate of one of the
Managers.
(e) Dealer shall not execute any subscription on
behalf of any customer for which it holds a discretionary account
without the prior written approval of the customer. Dealer shall
maintain records substantiating the suitability determination
pursuant to subparagraph 8(f) for a period of at least six years
after termination of the offering with respect to the Fund.
(f) In recommending the purchase of Units, and before
confirming any sale of such Units to a customer, the Dealer shall
have reasonable grounds to believe, on the basis of information
obtained from such customer concerning his or her investment
objectives, other investments, financial condition and needs, and
any other information known to Dealer, that (a) the customer is
or will be in a financial position appropriate to enable him to
realize to a significant extent the benefits described in the
Prospectus, including the benefits described under the caption
"Income Tax Aspects"; (b) the customer has a fair market net
worth sufficient to sustain the risks inherent in an investment
in the Fund, including loss of investment and lack of liquidity;
and (c) an investment in the Fund is otherwise suitable for the
customer.
(g) Prior to executing a transaction in the Units on
behalf of a customer, Dealer will inform the customer of all
pertinent facts relating to the liquidity and marketability of
the Units during the term of the investment.
(h) Dealer will comply with NASD Rules 2730, 2740,2420
and 2750 in connection with the offer and sale of the Units.
9. LICENSE AND ASSOCIATION MEMBERSHIP
Dealer's acceptance of this Agreement constitutes a
representation to the Managers and the Dealer-Manager that Dealer
is a properly registered or licensed securities broker-dealer,
duly authorized to sell Units under federal and state securities
laws and regulations in all states where it offers or sells
Units, and that it is a member in good standing of the NASD. This
Agreement shall automatically terminate if Dealer ceases to be a
member in good standing of such association, or in the case of a
foreign dealer, to so conform. Dealer agrees to notify the Dealer-
Manager immediately if Dealer ceases to be a member in good
standing, or in the case of a foreign dealer, to so conform. The
Dealer also hereby agrees to abide by the Conduct Rules of the
NASD.
10. LIMITATION OF OFFER
Dealer will offer Units only to persons who meet the
financial qualifications set forth in the Prospectus or in any
suitability letter or other letter or memorandum sent to it by
the Managers or the Dealer-Manager and will make offers only to
persons in the states in which it is advised in writing that the
Units are qualified for sale or that such qualification is not
required.
11. TERMINATION AND AMENDMENT
Dealer will suspend or terminate its offer and sale of
Units upon the request of the Managers or the Dealer-Manager at
any time and will resume its offer and sale of Units hereunder
upon subsequent request of the Managers of the Dealer-Manager.
Either party may terminate this Agreement by written notice. Such
termination shall be effective forty-eight (48) hours after the
mailing of such notice. This Agreement is entire and supersedes
all prior Agreements, if any, between the parties hereto.
This Agreement may be amended at any time by the Dealer-
Manager by written notice to Dealer and any such amendment shall
be deemed accepted by Dealer upon placing an order for sale of
Units after he has received such notice.
12. NOTICE
All notices will be in writing and will be duly given
when mailed to the Dealer-Manager at the address given above, and
to Dealer when mailed to the address specified by it below.
13. ATTORNEYS' FEES; CONSTRUCTION
In any action to enforce the provisions of this
Agreement or to secure damages for its breach, the prevailing
party shall recover its costs and reasonable attorneys' fees.
This Agreement shall be construed under the laws of the State of
Minnesota and shall take effect when signed by Dealer and
countersigned and dated by the Dealer-Manager.
Dated: AEI SECURITIES, INC.
By
Its President
We have read the foregoing Agreement and we hereby accept and
agree to the terms and conditions therein set forth. We hereby
represent that the list below of jurisdictions in which we are
registered or licensed as a broker or dealer and are fully
authorized to sell securities is true and correct and we agree to
advise you of any change in such list during the term of this
Agreement.
Dated: , 1998
(Dealer's Firm Name)
(Address)
(City and State)
Home Office Telephone No.
By
Authorized Signature:
President, Vice President,
Partner or Proprietor
(Print or Type Name and Title)
Commission Checks to be (Name)
mailed to:
*Identification No. (Address)
(City and State)
(*Show your employer identification number as assigned by the
Internal Revenue Service or, if you operate as an individual,
your Social Security number.)
