Exhibit 1.2
AEI INCOME & GROWTH FUND 23 LLC
PARTICIPATING DEALER AGREEMENT
, 1998
Dear Sirs:
AEI Incorporated, as dealer-manager (the "Dealer-Manager")
for AEI Income & Growth Fund 23 LLC, a Delaware limited liability
company (the "Fund") 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 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 Real Estate 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 Xxxxx 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 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.
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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 l0b-6,
Rule l0b-7 and 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.
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(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 Rules of Fair Practice 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.
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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 INCORPORATED
By
Its
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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.)
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