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 desires to have the Bank deposit such
funds in an escrow account until the termination of the offering of
Units, and the Bank has agreed to serve as Impoundment Agent for
such purpose.
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 of Securities for the
State of Minnesota or an agent thereof (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. 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.
(b) 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.
IN WITNESS WHEREOF, the parties hereto have executed this
Impoundment Agreement on the date first above written.
AEI INCOME & GROWTH FUND 23LLC
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
