EXHIBIT 10
AEI INCOME & GROWTH FUND 25 LLC
IMPOUNDMENT AGREEMENT
THIS IMPOUNDMENT AGREEMENT, made and entered into this
day of July, 2002, by and among AEI Income & Growth
Fund 25 LLC, (the "Fund"), AEI Securities, Inc. ("AEI") and
Fidelity Bank, Edina, Minnesota (the "Bank");
WITNESSETH THAT:
WHEREAS, the Fund proposes to issue and sell up to
50,000 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, Inc. (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
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. Prior to initial release of funds in accordance
with Section 3(a), all proceeds will be invested in a bank
account, bank certificate of deposit or money market account
issued by a bank, or in short-term securities issued by or
guaranteed by the United States Government. All subscription
checks shall be payable to "Fidelity Bank - AEI Fund 25
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 that 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 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 said
Impoundment Agent, on demand of AEI, shall pay over to the
Fund all or any portion of the impounded funds. If
$1,500,000 in subscription proceeds is not received by the
Impoundment Agent during the term of this Impoundment
Agreement, then, within a reasonable time, but in no event
more than thirty (30) days after the last day of the term of
this Impoundment Agreement, Impoundment Agent shall 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. 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.
(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 non-accountable 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 non-accountable
expenses on accepted subscriptions directly to the Dealer-
Manager;
(ii) representing accepted subscription proceeds net of
commissions and non-accountable 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.
5. 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.
6. 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.
7. 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 76, 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.
8. 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.
9. INSPECTION OF RECORDS.
The Fund 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.
10. 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 25 LLC
By AEI Fund Management XXI, Inc.
Managing Member
By:
Its President
FIDELITY BANK
By:
Its
AEI SECURITIES, INC.
By:
Its President
Accepted for filing
Commissioner of Commerce