EXHIBIT 1.2
Exhibit A to the
Dealer-Manager Agreement
AEI INCOME & GROWTH FUND 27 LLC
PARTICIPATING DEALER AGREEMENT
Dear :
AEI Securities, Inc., as dealer-manager (the "Dealer-
Manager") for AEI Income & Growth Fund 27 LLC, a Delaware limited
liability company (the "Company") and for which AEI Fund
Management XXI, Inc. ("AFM") and Xxxxxx X. Xxxxxxx 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 Company 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 Company 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. COMMERCIALLY REASONABLE 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 C, 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 27
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 Company. No subscription agreement will be accepted unless
the registered representative soliciting such order has completed
and signed the representations 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 $10.00 per Unit payable in
cash. A minimum initial purchase of five hundred Units ($5,000)
is required. The Units are non assessable and limited members
will not be required to contribute further sums to the capital of
the Company.
4. DEALER'S COMMISSIONS AND EXPENSES
(a) Except as set forth in the "Plan of Distribution"
section of the Prospectus, 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 6.5% of the
gross offering proceeds from Units sold by or through Dealer. As
set forth in the "Plan of Distribution" section of the
Prospectus, the Company may place Units directly at the offering
price to the general investing public, at the offering price net
of commissions to NASD registered representatives or affiliated
registered investment advisors, or at the net offering price in
accordance with the deferred commission option when elected by
purchasers subject to the terms and conditions stated in the
Prospectus. In the event Dealer, Dealer-Manager and the Company
agree to the deferred commission option, one hundred and fifty
basis points (1.5% of the gross offering proceeds) of Dealer's
commission will be paid within the time frame set forth in
Section 5 below, but the remaining five hundred basis points (5%
of gross proceeds) will be deferred and paid in annual increments
on one hundred basis points (1% of gross proceeds) by
distribution by the Company to the Dealer-Manager, and then from
the Dealer-Manager to the Dealer as of the date on which such
commissions are subtracted from cash distributions that would
have been paid to the investor. 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 Company 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 Company or the Managers even though it is entitled to
certain benefits deriving therefrom. Notwithstanding any other
provision of this Agreement or the Dealer-Manager Agreement, no
commissions or other compensation shall be due Dealer with
respect to purchases under the Company's distribution
reinvestment plan.
(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, unless and
until the minimum units have been accepted and transferred from
escrow to the Company, in accordance with the terms of the
Impoundment Agreement (Exhibit 10 to the Registration Statement).
Payments for selling commissions will be made by the Dealer-
Manager to Dealer within twenty (20) days after acceptance by the
Company of minimum subscriptions, or earlier at the election of
the Dealer-Manager. Thereafter, and subject to the provisions in
Section 4 above with respect to the deferred commission option,
commissions shall be paid by 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 Company. 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 Company, and the Managers
reserve the right to reject any order for any reason. Orders not
accompanied by a properly completed 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 Company 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 Company 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 (b)(3) of NASD Rule 2810) are
adequately and accurately disclosed and provide a basis for
evaluating an investment in the Company. 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 Company.
(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
"Federal Income Tax Considerations"; (b) the customer has a fair
market net worth sufficient to sustain the risks inherent in an
investment in the Company, including loss of investment and lack
of liquidity; and (c) an investment in the Company 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.
(i) The Dealer agrees that it will (i) establish and
maintain procedures reasonably designed to ensure the security
and privacy of information that constitutes nonpublic personal
information ("Nonpublic Personal Information") under the Xxxxx-
Xxxxx-Xxxxxx Act or other federal and state privacy laws and the
regulations promulgated thereunder (collectively, "Privacy
Laws"); (ii) cooperate with the Company and Dealer-Manager and
provide reasonable assistance in ensuring the compliance with
Privacy Laws to the extent applicable to any such party, and
(iii) not disclose or use any Nonpublic Personal Information
except as required to carry out its duties under this Agreement
or as otherwise permitted by the Privacy Laws.
(j) The Dealer agrees that it will (a) comply with all
applicable laws and regulations designed to prevent, detect, and
report money laundering and suspicious transactions, including,
without limitation, applicable provisions of the Bank Secrecy
Act, the USA Patriot Act of 2001 and the regulations administered
by the U.S. Department of the Treasury's Office of Foreign Assets
Control, (b) take all necessary and appropriate steps, consistent
with applicable laws and regulations, to obtain, verify, and
retain information with regard to client and/or account owner
identification and source of funds for its customers, (c) notify
immediately the Company and the Dealer-Manager in the event that
it has reason to believe that any purchaser or prospective
purchaser of Units are engaged in money laundering activities or
are associated with any terrorist organization or other
individuals, entities or organizations sanctioned by the United
States.
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.
AEI SECURITIES, INC.
By
Xxxx X. Xxxxxxx
Authorized Signatory for
Xxxxxx X. Xxxxxxx, Its President
AEI INCOME & GROWTH FUND 27
PARTICIPATING DEALER AGREEMENT SIGNATURE PAGE
We have read the foregoing Participating Dealer Agreement
and we hereby accept and agree to the terms and conditions
therein set forth. We hereby represent that the jurisdictions in
which we are registered or licensed as a broker or dealer, as
indicated below, is true and correct and that we are fully
authorized to sell securities in such jurisdictions during the
term of this Agreement. We agree to advise you of any change in
our registration or licensing status during the term of this
Agreement.
Broker-Dealer Firm Name Date Agreement Approved
Address Due Diligence Contact Name
City, State, Zip Code Marketing Contact
Telephone Number Clearing/Custodial Firm
X
Fax Number Authorized Signature
Tax Identification No. Title
as assigned by the IRS
AUTHORIZATION FOR AUTOMATIC DEPOSIT OF COMMISSION CHECKS: AEI
Securities, Inc. and Fidelity Bank of Edina, Minnesota are hereby
authorized to initiate variable entries to the account identified
below. This authority will remain in effect until AEI is notified
in writing to cancel in such time as to afford a reasonable
opportunity to act upon the cancellation. THE DETAILED COMMISSION
REMITTANCE REPORT WILL CONTINUE TO BE MAILED TO YOUR HOME OFFICE
OR, UPON REQUEST, IT CAN BE FAXED.
SIGNATURE OF ACCOUNT HOLDER:
Name Typed or Printed: Title:
FINANCIAL INSTITUTION NAME AND ADDRESS - Please Print:
Account Type (Circle One): Checking Savings Bank Routing (ABA) No.
Account No. Transaction Code
PLEASE STAPLE A VOIDED CHECK OR DEPOSIT SLIP TO THIS FORM.
If automatic deposit is not used, mail commission checks to:
CHECK ONE:
[ ] Dealer is registered or licensed as a broker-dealer and is
fully authorized to sell securities in all states.
[ ] Dealer is registered or licensed as a broker-dealer and is
fully authorized to sell securities according to
the list attached hereto.
FOR INTERNAL USE ONLY
Received by: Date Received: Commission Rate:
Date of Rep List: Rep List Contact:
