EXHIBIT 1.1
LEASE EQUITY APPRECIATION FUND II, L.P.
DEALER-MANAGER AGREEMENT
WITH
ANTHEM SECURITIES, INC.
ANTHEM SECURITIES, INC.
DEALER-MANAGER AGREEMENT
TABLE OF CONTENTS
PAGE
1. Description of Units..................................................................................1
2. Representations, Warranties and Covenants of the Partnership and General Partner......................2
3. Grant of Authority to the Dealer-Manager..............................................................3
4. Compensation and Fees.................................................................................3
5. Representations, Warranties and Covenants of the Dealer-Manager.......................................6
6. State Securities Registration........................................................................11
7. Expense of Sale......................................................................................12
8. Conditions of the Dealer-Manager's Duties............................................................12
9. Conditions of the Partnership's and the General Partner's Duties.....................................12
10. Indemnification and Contribution.....................................................................12
11. Representations and Agreements to Survive Delivery...................................................15
12. Termination..........................................................................................15
13. Notices..............................................................................................15
14. Format of Checks/Escrow Agent........................................................................16
15. Transmittal Procedures...............................................................................16
16. Parties..............................................................................................17
17. Relationship.........................................................................................17
18. Effective Date.......................................................................................17
19. Entire Agreement, Waiver.............................................................................17
20. Governing Law........................................................................................17
21. Complaints...........................................................................................17
22. Privacy..............................................................................................18
23. Anti-Money Laundering Provision......................................................................18
24. Acceptance...........................................................................................18
Exhibit A - Form of Escrow Agreement for Lease Equity Appreciation Fund II, L.P.
Exhibit B - Selling Dealer Agreement
i
ANTHEM SECURITIES, INC.
DEALER-MANAGER AGREEMENT
(Best Efforts)
________________________ , 2004
Anthem Securities, Inc.
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
RE: LEASE EQUITY APPRECIATION FUND II, L.P.
---------------------------------------
Gentlemen:
The undersigned, LEAF Asset Management, Inc. (the "GENERAL PARTNER"),
and Lease Equity Appreciation Fund II, L.P. (the "PARTNERSHIP"), confirm their
agreement with you, as Dealer-Manager, as set forth below.
1. DESCRIPTION OF UNITS.
(a) The Partnership proposes to issue and sell limited partner interests in
the Partnership (the "UNITS") at a price of $100 per Unit, subject to
the discounts set forth in Section 4(c) for certain investors (the
"OFFERING"). Except as provided in Section 4(f) relating to the Iowa
and Pennsylvania Escrow Account, as that term is defined therein, the
proceeds of any sales of the Units will be held in an escrow account
(the "ESCROW ACCOUNT") under an escrow agreement, a form of which is
attached to this Agreement as Exhibit "A" (the "ESCROW AGREEMENT"),
until the Partnership has received and accepted subscriptions for the
Minimum Offering Amount, as that term is defined in paragraph (b)
below. At that time, the Escrow Account will terminate and the
subscription proceeds will be delivered to the Partnership.
(b) No subscriptions to the Partnership will be accepted after whichever of
the following events occurs first (the "OFFERING TERMINATION DATE"):
(i) receipt and acceptance of subscriptions for 600,000 Units;
(ii) ___________, 2005, if subscriptions for 20,000 Units
($2,000,000), excluding Units sold to the General Partner and
its "AFFILIATES," as that term is defined in the Partnership
Agreement, and to Iowa and Pennsylvania residents and after any
discounts set forth in Section 4(c) for certain investors (the
"MINIMUM OFFERING AMOUNT"), have not been received and accepted
by that date; or
(iii) ___________, 2006;
provided, however, no subscriptions will be accepted after
_____________, 2005 from subscribers in any jurisdiction in which
renewal, requalification or other consent by a securities administrator
to the continuance of the registration or qualification of the Offering
is required, unless the renewal, requalification or other consent has
been obtained.
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2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PARTNERSHIP AND GENERAL
PARTNER. The Partnership and General Partner represent, warrant and covenant
to you that:
(a) The Partnership has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "1933 ACT"), a
registration statement on Form S-1, including a prospectus relating to
the offer and sale of the Units. The term "REGISTRATION STATEMENT"
means that registration statement (including all financial schedules
and exhibits), as amended. The term "PROSPECTUS" means the prospectus
in the form included in the Registration Statement. The Registration
Statement has been declared effective by the Commission, and no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission.
(b) On the date the Registration Statement was filed with the Commission it
complied in all material respects with the requirements of the 1933 Act
and did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made as
to statements in or omissions from the Registration Statement made in
reliance on and in conformity with information furnished to the
Partnership in writing by you expressly for use in the Registration
Statement.
(c) The Partnership will advise you before it files any amendment to the
Registration Statement or makes any amendment or supplement to the
Prospectus.
(d) As soon after the execution and delivery of this Agreement as possible
and thereafter from time to time for as long as, in the opinion of your
counsel, a prospectus is required by the 1933 Act to be delivered in
connection with sales by any dealer, the Partnership will expeditiously
deliver to you and each Selling Dealer, as that term is defined in
Section 3(a), without charge, as many copies of the Prospectus (and of
any amendment or supplement to the Prospectus) as you may reasonably
request. If during the offering period any event occurs that in the
judgment of the Partnership or in the opinion of your counsel is
required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth in the Prospectus in order to make
the statements in the Prospectus, in the light of the circumstances
under which they were made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with the 1933 Act or any
other law, the Partnership will promptly prepare and file with the
Commission an appropriate supplement or amendment to the Prospectus,
and will expeditiously furnish a reasonable number of copies thereof to
you and the Selling Dealers, as that term is defined in Section 3(a).
(e) The Units when issued will conform, in all material respects, to all
statements concerning them contained in the Prospectus.
(f) The Units when issued will be duly authorized and validly issued as set
forth in the Amended and Restated Agreement of Limited Partnership of
the Partnership included as Appendix A to the Prospectus (the
"PARTNERSHIP AGREEMENT"), subject only
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to the rights and obligations set forth in the Partnership Agreement or
imposed by the laws of the state of the Partnership's formation or of
any jurisdiction to the laws of which the Partnership is subject.
(g) The Partnership was duly formed and is validly existing as a limited
partnership in good standing under the laws of the State of Delaware,
with full power and authority to own its properties and conduct its
business as described in the Prospectus. The Partnership will be
qualified to do business as a limited partnership or similar entity
offering limited liability in those jurisdictions where the General
Partner deems the qualification necessary to assure limited liability
of the limited partners.
This Agreement, when executed by you, will be a valid and binding
agreement of the Partnership and the General Partner, duly authorized,
executed and delivered by them and enforceable in accordance with its
terms except as may be limited by the effect of bankruptcy, insolvency,
moratorium, preferential or fraudulent conveyance or other laws or
equitable principles relating to or affecting the rights of creditors
generally, general principles of equity, and by public policy relating
to claims for indemnification for securities laws violations.
(h) The consummation of the transactions contemplated by this Agreement
will not result in the following:
(i) any breach of any of the terms of, or a default under the
certificate of incorporation or bylaws of the General Partner,
the certificate of limited partnership or Partnership Agreement
of the Partnership or any other indenture, agreement or
instrument to which either of them is a party or by which either
of them is bound; or
(ii) any violation of any order applicable to either of them of any
court or any governmental regulatory body or administrative
agency having jurisdiction over either of them or their
affiliates.
3. GRANT OF AUTHORITY TO THE DEALER-MANAGER.
(a) Based on the representations and warranties contained in this
Agreement, and subject to the terms and conditions set forth in this
Agreement, the General Partner appoints you as the Dealer-Manager for
the Partnership and gives you the exclusive right to solicit
subscriptions for the Units on a "best efforts" basis in all states
other than those listed on Appendix "A" to this Agreement, and to form
and manage a selling group composed of soliciting broker/dealers (the
"SELLING DEALERS"). Each Selling Dealer shall be duly registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended
(the "1934 ACT"), and in the jurisdictions where it is required to be
registered in order to offer and sell the Units, shall be a member in
good standing of the National Association of Securities Dealers, Inc.
(the "NASD"), and shall enter into a "Selling Dealer Agreement" in
substantially the form attached to this Agreement as Exhibit "B."
(b) The General Partner shall have three business days after the receipt of
an executed Selling Dealer Agreement to refuse that Selling Dealer's
participation.
4. COMPENSATION AND FEES.
(a) Subject to Section 4(c), as Dealer-Manager you shall receive from the
General Partner the following compensation, based on the purchase price
of each Unit sold to investors and whose subscriptions for Units are
accepted by the General Partner:
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(i) a 3% Dealer-Manager fee;
(ii) a 7% sales commission; and
(iii) an up to .5% reimbursement of the Selling Dealers' bona fide
accountable due diligence expenses.
Out of the 3% Dealer-Manager fee set forth above, you may pay the
Selling Dealers a marketing fee for their assistance in this Offering,
and coordinating their sales efforts with yours, of up to a maximum of
1% of the purchase price of each Unit sold by them.
You also shall have the right, but not the obligation, to provide or
reimburse Selling Dealers for the following expenses they incur in
connection with their offer and sale of Units (the "PERMISSIBLE
NON-CASH COMPENSATION"). Under Rule 2810 of the NASD Conduct Rules, the
reimbursable expenses composing Permissible Non-Cash Compensation are
as follows:
(i) an accountable reimbursement for training and education meetings
for associated persons of the Selling Dealers;
(ii) gifts that do not exceed $100 per year and are not
preconditioned on achievement of a sales target;
(iii) an occasional meal, a ticket to a sporting event or the theater,
or comparable entertainment which is neither so frequent nor so
extensive as to raise any question of propriety and is not
preconditioned on achievement of a sales target; and
(iv) contributions to a non-cash compensation arrangement between a
Selling Dealer and its associated persons, provided that neither
the Partnership, the General Partner nor you directly or
indirectly participates in the Selling Dealer's organization of
a permissible non-cash compensation arrangement.
Any reimbursements for Permissible Non-Cash Compensation shall be
provided or reimbursed from the Dealer-Manager fee set forth above.
(b) All of the sales commissions shall be reallowed to the Selling Dealers
except for Units sold directly by you, and all of the up to .5%
reimbursement of the Selling Dealers' bona fide accountable due
diligence expenses shall be reallowed to the Selling Dealers.
Wholesaling fees shall be reallowed to the wholesalers from the 3%
Dealer-Manager fee for subscriptions obtained through their efforts,
less any reimbursements made by the General Partner or the Partnership
for expenses which are received by the wholesalers in connection with
the Partnership, and any salaries for the wholesalers in connection
with the Partnership. You, as Dealer-Manager, shall retain any
Dealer-Manager fee not used for the Selling Dealers' marketing fees or
reallowed to the wholesalers, which may be used for such items as
Permissible Non-Cash Compensation, legal fees associated with the
underwriting and salaries of dual employees of you and the Managing
General Partner which are required to be included in underwriting
compensation under NASD Conduct Rule 2810 as determined jointly by the
General Partner and you.
You are responsible for ensuring that all non-cash compensation
arrangements comply with NASD Conduct Rule 2810. For example, payments
or reimbursements by you or the General
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Partner may be made in connection with meetings held by you or the
General Partner for the purpose of training or education of registered
representatives of a Selling Dealer only if the following conditions
are met:
(i) the registered representative obtains his Selling Dealer's prior
approval to attend the meeting and attendance by the registered
representative is not conditioned by the Selling Dealer on the
achievement of a sales target;
(ii) the location of the training and education meeting is
appropriate to the purpose of the meeting as defined in NASD
Conduct Rule 2810;
(iii) the payment or reimbursement is not applied to the expenses of
guests of the registered representative;
(iv) the payment or reimbursement by you or the General Partner is
not conditioned by you or the General Partner on the achievement
of a sales target; and
(v) the recordkeeping requirements are met.
"NON-CASH COMPENSATION" means any form of compensation received in
connection with the sale of the Units that is not cash compensation,
including but not limited to merchandise, gifts and prizes, travel
expenses, meals and lodging.
(c) Notwithstanding the foregoing:
(i) the General Partner, its officers, directors and Affiliates,
including you;
(ii) investors who buy Units through the officers and directors of
the General Partner;
(iii) registered investment advisors and their clients; and
(iv) Selling Dealers and their registered representatives and
principals;
may subscribe to Units for a subscription price reduced by the sales
commission, which shall not be paid to you on those sales. In addition,
the up to .5% reimbursement of the Selling Dealers' bona fide
accountable due diligence expenses shall not be paid to you for Units
sold to:
(i) the General Partner, its officers, directors or Affiliates,
including you; or
(ii) investors who buy Units through the officers and directors of
the General Partner.
(d) Subject to Section 4(f), pending receipt and acceptance by the General
Partner of subscriptions for the Minimum Offering Amount, all proceeds
received by you from the sale of Units shall be held in the Escrow
Account as provided in Section 14.
Unless at least the Minimum Offering Amount is received on or before
the Offering Termination Date, the Offering will be terminated, in
which event:
(i) the Dealer-Manager fee, the sales commission and the up to .5%
reimbursement of the Selling Dealers' bona fide accountable due
diligence expenses shall not be payable to you;
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(ii) all funds advanced by subscribers shall be returned to them with
interest earned; and
(iii) you shall deliver a termination letter in the form provided to
you by the General Partner to each of the subscribers and to
each of the offerees previously solicited by you and the Selling
Dealers in connection with the offering of the Units.
(e) Except as otherwise provided below, the fees, reimbursements, and sales
commissions set forth in Section 4(a) shall be paid to you within five
business days after the following:
(i) at least the Minimum Offering Amount has been received and
accepted by the Partnership; and
(ii) the subscription proceeds have been released from the Escrow
Account to the Partnership.
Thereafter, your fees, reimbursements and sales commissions shall be
paid to you and shall be reallowed to the Selling Dealers as described
above approximately every week until the Offering Termination Date, and
all your remaining fees, reimbursements and sales commissions shall be
paid by the Partnership no later than fourteen business days after the
Offering Termination Date.
(f) Notwithstanding anything to the contrary set forth in this Section 4:
(i) the Minimum Offering Amount shall not include Units subscribed
for by Iowa or Pennsylvania investors;
(ii) the subscription proceeds from Iowa and Pennsylvania investors
shall be deposited in a separate escrow account (the "IOWA AND
PENNSYLVANIA ESCROW ACCOUNT") by the Escrow Agent; and
(iii) no subscription proceeds shall be released from the Iowa and
Pennsylvania Escrow Account, and no fees, reimbursements or
commissions shall be payable with respect to Units sold to Iowa
and Pennsylvania investors, until an aggregate of $3,000,000 of
subscription proceeds, including the subscription proceeds of
Iowa and Pennsylvania investors and after any discounts set
forth in paragraph (c) above for certain investors, have been
received and accepted by the General Partner.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEALER-MANAGER. You
represent, warrant and covenant to the General Partner and the Partnership
that:
(a) You are a corporation duly organized, validly existing and in good
standing under the laws of the state of your formation or of any
jurisdiction in which your ownership of property or conduct of business
requires you to be so qualified. You have all requisite power and
authority to enter into this Agreement and to carry out your
obligations under this Agreement.
(b) This Agreement, when executed by you, will be duly authorized, executed
and delivered by you and a valid and binding agreement on your part and
enforceable in accordance with its
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terms except as may be limited by the effect of bankruptcy, insolvency,
moratorium, preferential or fraudulent conveyance or other similar laws
or equitable principles relating to or affecting the rights of
creditors generally, by general principles of equity, and by public
policy relating to claims for indemnification for securities laws
violations.
(c) The consummation of the transactions contemplated by this Agreement
will not result in the following:
(i) any breach of any of the terms or conditions of, or a default
under your Articles of Incorporation or Bylaws, or any other
indenture, agreement or instrument to which you are a party or
by which you are bound; or
(ii) any violation of any order applicable to you of any court,
regulatory body or administrative agency having jurisdiction
over you or your affiliates.
(d) You are duly registered under the 1934 Act as a broker and dealer, and
you are a member in good standing of the NASD. You are duly registered
as a broker and dealer in the states where you are required to be
registered in order to carry out your obligations as contemplated by
this Agreement and the Prospectus. You agree to maintain all the
foregoing registrations in good standing throughout the term of the
offer and sale of the Units, and you agree to comply with all statutes
and other requirements applicable to you as a broker or dealer under
those registrations.
(e) Pursuant to your appointment as Dealer-Manager, you shall use your best
efforts to exercise the supervision and control that you deem necessary
and appropriate to the activities of you and the Selling Dealers to
comply with all the provisions of the 1933 Act insofar as the 1933 Act
applies to your and their activities under this Agreement. Further, you
and the Selling Dealers shall not engage in any activity which would
cause the offer and/or sale of the Units not to comply with the 1933
Act, the 1934 Act, the applicable rules and regulations of the
Commission, the applicable state securities laws and regulations, this
Agreement, and the NASD Conduct Rules, including Rules 2420, 2730, 2740
and 2750, and Rule 2810(b)(2) and (b)(3), which provide as follows:
Sec. (b)(2)
SUITABILITY
(A) A member or person associated with a member shall not
underwrite or participate in a public offering of a direct
participation program unless standards of suitability have
been established by the program for participants therein
and such standards are fully disclosed in the prospectus
and are consistent with the provisions of subparagraph (B)
of this section.
(B) In recommending to a participant the purchase, sale or
exchange of an interest in a direct participation program,
a member or person associated with a member shall:
(i) have reasonable grounds to believe, on the basis of
information obtained from the participant concerning
his investment objectives, other investments,
financial situation and
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needs, and any other information known by the member
or associated person, that:
(a) the participant 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 tax benefits
where they are a significant aspect of the
program;
(b) the participant has a fair market net worth
sufficient to sustain the risks inherent in
the program, including loss of investment and
lack of liquidity; and
(c) the program is otherwise suitable for the
participant; and
(ii) maintain in the files of the member documents
disclosing the basis upon which the determination of
suitability was reached as to each participant.
(C) Notwithstanding the provisions of subparagraphs (A) and
(B) hereof, no member shall execute any transaction in a
direct participation program in a discretionary account
without prior written approval of the transaction by the
customer.
Sec. (b)(3)
DISCLOSURE
(A) Prior to participating in a public offering of a direct
participation program, a member or person associated with
a member shall have reasonable grounds to believe, based
on information made available to him by the sponsor
through a prospectus or other materials, that all material
facts are adequately and accurately disclosed and provide
a basis for evaluating the program.
(B) In determining the adequacy of disclosed facts pursuant to
subparagraph (A) hereof, a member or person associated
with a member shall obtain information on material facts
relating at a minimum to the following, if relevant in
view of the nature of the program:
(i) items of compensation;
(ii) physical properties;
(iii) tax aspects;
(iv) financial stability and experience of the sponsor;
(v) the program's conflicts and risk factors; and
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(vi) appraisals and other pertinent reports.
(C) For purposes of subparagraphs (A) and (B) hereof, a member
or person associated with a member may rely upon the
results of an inquiry conducted by another member or
members, provided that:
(i) the member or person associated with a member has
reasonable grounds to believe that such inquiry was
conducted with due care;
(ii) the results of the inquiry were provided to the
member or person associated with a member with the
consent of the member or members conducting or
directing the inquiry; and
(iii) no member that participated in the inquiry is a
sponsor of the program or an affiliate of such
sponsor.
(D) Prior to executing a purchase transaction in a direct
participation program, a member or person associated with
a member shall inform the prospective participant of all
pertinent facts relating to the liquidity and
marketability of the program during the term of
investment.
You and the Selling Dealers shall maintain records on the information
used to determine that the investment in the Units is suitable and
appropriate for each subscriber, and shall maintain these records for
at least six years after the Offering Termination Date.
(f) You agree to advise the General Partner in writing of each jurisdiction
in which you and the Selling Dealers propose to offer or sell the
Units; and you shall not nor shall you permit any Selling Dealer to
offer or sell the Units in any jurisdiction until you have been advised
in writing by the General Partner, or the General Partner's special
counsel, that the offer or sale of the Units:
(i) has been qualified in the jurisdiction;
(ii) is exempt from the qualification requirements imposed by such
jurisdiction; or
(iii) is otherwise not required to be qualified.
(g) You and the Selling Dealers have received copies of the Prospectus
relating to the Units and you and the Selling Dealers have relied only
on the statements contained in the Prospectus and not on any other
statements whatsoever, either written or oral, with respect to the
details of the Offering.
You agree to provide, and shall require the Selling Dealers to provide,
each offeree with the following:
(i) a copy of the Prospectus; and
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(ii) any supplement or amendment to the Prospectus.
Also, unless advised otherwise by the General Partner, you and the
Selling Dealers may choose to provide each offeree with the following
sales materials (the "SALES LITERATURE"):
(i) an investor-use brochure reviewed by the NASD;
(ii) an investor presentation and invitations reviewed by the NASD;
and
(iii) any additional investor-use materials prepared by the
Partnership or the General Partner and reviewed by the NASD.
Any Sales Literature, if distributed, must have been preceded or
accompanied by the Prospectus.
(h) If a supplement or amendment to the Prospectus is prepared and
delivered to you by the Partnership, you agree and shall require any
Selling Dealer to agree as follows:
(i) to distribute each supplement or amendment to the Prospectus to
every person who has previously received a copy of the
Prospectus from you and/or the Selling Dealer; and
(ii) to include each supplement or amendment in all future deliveries
of the Prospectus.
(i) In connection with any offer or sale of the Units you agree and shall
require any Selling Dealer to agree to the following:
(i) to comply in all respects with statements set forth in the
Prospectus, the Partnership Agreement, and any supplements or
amendments to the Prospectus;
(ii) not to make any statement inconsistent with the statements in
the Prospectus, the Partnership Agreement, and any supplements
or amendments to the Prospectus;
(iii) not to make any untrue or misleading statements of a material
fact in connection with the Offering; and
(iv) not to provide any written information, statements, or sales
materials other than the Prospectus, the Sales Literature, and
any supplements or amendments to the Prospectus unless approved
in writing by the General Partner.
(j) You agree to use your best efforts in the solicitation and sale of the
Units and to coordinate and supervise the efforts of the Selling
Dealers, and you shall require any Selling Dealer to agree to use its
best efforts in the solicitation and sale of the Units, including that:
(i) the prospective purchasers meet the suitability requirements set
forth in the Prospectus, the Subscription Agreement and this
Agreement; and
(ii) the prospective purchasers properly complete the Subscription
Agreement, together with any additional forms provided in any
supplement or amendment to the
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Prospectus, or otherwise provided to you by the General Partner
to be completed by prospective purchasers.
The General Partner shall have the right to reject any subscription at
any time for any reason without liability to anyone, including you, the
subscriber and the Selling Dealer. Subscription funds and executed
Subscription Agreements shall be transmitted as set forth in
Section 15.
(k) Although not anticipated, if you assist in any transfers of the Units,
then you shall comply, and you shall require any Selling Dealer to
comply, with the requirements of Rule 2810(b)(2)(B) and (b)(3)(D) of
the NASD Conduct Rules.
(l) You agree and covenant that:
(i) the representations and warranties you make in this Agreement
are and shall be true and correct at the applicable closing
date; and
(ii) you shall have fulfilled all your obligations under this
Agreement at the applicable closing date.
6. STATE SECURITIES REGISTRATION. Incident to the offer and sale of the Units,
the Partnership shall use its best efforts either in taking:
(a) all necessary action and filing all necessary forms and documents
deemed reasonable by it in order to qualify or register Units for sale
under the securities laws of the jurisdictions requested by you; or
(b) any necessary action and filing any necessary forms deemed reasonable
by it in order to obtain an exemption from qualification or
registration in those jurisdictions.
Notwithstanding the foregoing, the Partnership may elect not to qualify
or register Units in any state or jurisdiction for any reason in its
sole discretion. The Partnership shall inform you as to the
jurisdictions in which the Units have been qualified for sale or are
exempt from qualification. The Partnership and the General Partner have
not assumed and will not assume any obligation or responsibility as to
your right or any Selling Dealer's right to act as a broker or dealer
with respect to the Units in any jurisdiction.
The Partnership shall provide to you and the Selling Dealers for
delivery to all offerees and purchasers any additional information,
documents, and instruments that the Partnership deems necessary to
comply with the rules, regulations, and judicial and administrative
interpretations of all jurisdictions in which the Units will be offered
or sold.
The Partnership shall file all post-offering forms, documents, or
materials and take all other actions required by the jurisdictions in
which the offer and sale of Units has been qualified, registered, or is
exempt. However, the Partnership shall not be required to take any
action, make any filing, or prepare any document necessary or required
in connection with your status or any Selling Dealer's status as a
broker or dealer in any jurisdiction.
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The Partnership shall provide you with copies of all applications,
filings, correspondence, orders, other documents, or instruments
relating to any application for qualification, registration, or
exemption under all applicable securities laws for the offering.
7. EXPENSE OF SALE. Except as otherwise specifically set forth in this
Agreement, the expenses in connection with the offer and sale of the Units
shall be payable as set forth below.
(a) The Partnership shall pay all expenses incident to the performance of
its obligations under this Agreement, including the fees and expenses
of its attorneys and accountants and all fees and expenses of
registering or qualifying the Units for offer and sale in the states
and jurisdictions as set forth in this Agreement, or obtaining
exemptions from qualification or registration, even if this Offering is
not successfully completed.
(b) You shall pay all expenses incident to the performance of your
obligations under this Agreement, including the formation and
management of the selling group and the fees and expenses of your own
counsel and accountants, even if this Offering is not successfully
completed.
8. CONDITIONS OF THE DEALER-MANAGER'S DUTIES. Your obligations under this
Agreement shall be subject to the accuracy, as of the date of this Agreement
and at each applicable closing date of:
(a) the representations and warranties of the Partnership and the General
Partner made in this Agreement and
(b) to the performance by the Partnership and the General Partner of their
obligations under this Agreement.
9. CONDITIONS OF THE PARTNERSHIP'S AND THE GENERAL PARTNER'S DUTIES. The
Partnership's and the General Partner's obligations under this Agreement,
including the duty to pay compensation to you as set forth in this Agreement,
shall be subject to the following:
(a) the accuracy, as of the date of this Agreement and at each applicable
closing date, of your representations and warranties made in this
Agreement;
(b) the performance by you of your obligations under this Agreement; and
(c) the General Partner's receipt, at or before the applicable closing
date, of fully executed subscription documents for each prospective
purchaser as required by this Agreement.
10. INDEMNIFICATION AND CONTRIBUTION.
(a) The General Partner agrees to indemnify, hold harmless and defend you
and your affiliates (within the meaning of Rule 405 of the 0000 Xxx)
and your respective directors, officers, employees, agents and
controlling persons (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) (each, an "UNDERWRITER INDEMNIFIED
PARTY") from and against any and all losses, claims, damages,
liabilities and expenses (including but not limited to reasonable
attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation) ( "LOSSES") which any such
Underwriter Indemnified Party may incur under any applicable
Anthem Securities, Inc. 12
Dealer-Manager Agreement
federal or state law, or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except to the extent but only to the extent that such
losses, claims, damages, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement
or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information furnished in
writing to the Partnership or the General Partner by or on behalf of
you expressly for use in connection therewith; provided, further, that
the indemnification contained in this paragraph (a) with respect to any
Prospectus shall not inure to the benefit of any Underwriter
Indemnified Party on account of any such Loss arising from the sale of
the Units by such Underwriter Indemnified Party to any person if a copy
of the Prospectus shall not have been delivered or sent to such person
within the time required by the 1933 Act and the regulations
thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such
Prospectus was corrected in an amendment to the Prospectus.
(b) If any action, suit or proceeding is brought against any Underwriter
Indemnified Party with respect to which indemnity may be sought under
Section 10 (a), the Underwriter Indemnified Party shall promptly notify
the General Partner in writing, and the General Partner may elect to
assume the defense thereof, including the employment of counsel (which
counsel shall be reasonably acceptable to the Underwriter Indemnified
Party) and payment of all reasonable fees and expenses. The failure or
delay by an Underwriter Indemnified Party to notify the General Partner
shall not relieve it from liability which it may have to an Underwriter
Indemnified Party unless the failure or delay materially prejudices the
General Partner's ability to defend the action, suit or proceeding on
behalf of the Underwriter Indemnified Party. The Underwriter
Indemnified Party shall have the right to employ separate counsel in
any such action, suit or proceeding and to participate in (but not
control) the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Underwriter Indemnified Party unless:
(i) the General Partner has agreed in writing to pay such fees and
expenses;
(ii) the General Partner has failed to assume the defense or employ
counsel reasonably satisfactory to the Underwriter Indemnified
Party; or
(iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both the Underwriter
Indemnified Party and/or the Partnership and the General
Partner, and the Underwriter Indemnified Party has been advised
by its counsel that representation of the Underwriter
Indemnified Party and/or the Partnership and the General Partner
by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to
actual or potential differing interests between them (in which
case the General Partner shall not have the right to assume the
defense of the action, suit or proceeding on behalf of the
Underwriter Indemnified Party) or that there may be legal
defenses available to the Underwriter Indemnified Party that are
different from or in addition to those available to the
Partnership and/or the General Partner.
Anthem Securities, Inc. 13
Dealer-Manager Agreement
It is agreed, however, that the General Partner shall, in connection
with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only
one separate firm of attorneys (in addition to any local counsel) at
any time for all the Underwriter Indemnified Parties not having actual
or potential differing interests with you or among themselves, which
firm shall be designated in writing by you, and that all such fees and
expenses shall be reimbursed as they are incurred.
The General Partner shall not be liable for any settlement of any such
action, suit or proceeding effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its
written consent, or if there is a final judgment for the plaintiff in
any such action, suit or proceeding, the General Partner agrees to
indemnify and hold harmless any Underwriter Indemnified Party, to the
extent provided in this Section 10(b) and Section 10(a), from and
against any Loss by reason of the settlement or judgment.
(c) You agree to indemnify, hold harmless and defend the General Partner,
the Partnership, their respective directors and officers who sign the
Registration Statement, any person who controls the General Partner or
the Partnership within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, and the Partnership's attorneys (each, a
"PARTNERSHIP INDEMNIFIED PARTY"), to the same extent as the foregoing
indemnity to you and the Selling Dealers, with respect to information
furnished in writing by or on behalf of you expressly for use in the
Registration Statement, the Prospectus or any amendment or supplement
thereto and with respect to a breach of your duties, obligations,
representations or warranties under this Agreement. If any action, suit
or proceeding is brought against a Partnership Indemnified Party in
respect of which indemnity may be sought under this Section 10(c), you
shall have the rights and duties given to the General Partner under
Section 10(b).
(d) If the indemnification provided for in this Section 10 is unavailable
to an indemnified party under either Section 10(a) or Section 10(c), as
the case may be, with respect to any Losses, then the appropriate
indemnifying party, in lieu of indemnifying the indemnified party,
shall contribute to the amount paid or payable by the indemnified party
as a result of those Losses:
(i) in the proportion that is appropriate to reflect the relative
benefits received by the General Partner and the Partnership on
the one hand and you and the Selling Dealers on the other hand
from the Offering; or
(ii) if, but only if, the allocation provided by clause (i) above is
not permitted by applicable law, in the proportion that is
appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the
General Partner and the Partnership on the one hand and you and
the Selling Dealers on the other hand in connection with the
statements or omissions that resulted in those Losses, as well
as any other relevant equitable considerations.
The relative benefits received by the General Partner and the
Partnership on the one hand and you and the Selling Dealers on the
other hand shall be deemed to be in the same proportion as the total
net proceeds from the Offering (before deducting expenses) received by
the Partnership bear to the total underwriting compensation set forth
in Section 4(a) paid or reimbursed to you and the Selling Dealers. No
person guilty of
Anthem Securities, Inc. 14
Dealer-Manager Agreement
fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act), however, shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened action, suit or
proceeding with respect to which any indemnified party is or could have
been a party and indemnity could have been sought under this Section 10
by the indemnified party, unless the settlement includes an
unconditional release of the indemnified party from all liability on
the claims that are the subject matter of the action, suit or
proceeding.
(f) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section 10 shall be paid by
the indemnifying party to the indemnified party as the Losses are
incurred.
11. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All representations,
warranties, and agreements of the Partnership, the General Partner and you
in this Agreement, including the indemnity agreements contained in Section
10, shall:
(a) survive the delivery, execution and closing of this Agreement;
(b) remain operative and in full force and effect regardless of any
investigation made by or on behalf of: you or any person who controls
you within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act; the General Partner, or any of its officers, directors or
any person who controls the General Partner within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act; or any other
indemnified party; and
(c) survive the delivery of the Units.
12. TERMINATION.
(a) You shall have the right to terminate this Agreement, other than the
indemnification provisions of Section 10, by giving written notice any
time at or before a closing date if:
(i) the Partnership and the General Partner have failed, refused, or
been unable at or before the closing date, to perform any of
their obligations under this Agreement; or
(ii) an event has materially and adversely affected the value of the
Units.
(b) The Partnership and the General Partner may terminate this Agreement,
other than the indemnification provisions of Section 10, for any reason
and at any time, by promptly giving written notice to you at or before
a closing date.
13. NOTICES.
(a) Any notice, request or consent provided for or permitted to be given
under this Agreement must be in writing and must be given by depositing
it in the United States mail, addressed to the party to be notified,
postpaid, and registered or certified with return receipt requested, or
by delivering it in person or by telecopier to that party. Notice given
by personal delivery or mail shall be effective on actual receipt.
Anthem Securities, Inc. 15
Dealer-Manager Agreement
Notice given by telecopier shall be effective on actual receipt if
received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours.
(b) All notices to be sent to you shall be sent to 0000 Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Facsimile: (000) 000-0000,
Attention: Xxx Xxxxx, Vice President.
(c) All notices to be sent to the General Partner or the Partnership shall
be sent c/o Leaf Asset Management, Inc., 0000 Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Facsimile: (000) 000-0000; or
at such other address as such party may stipulate to the other parties
in the manner provided in this Section.
14. FORMAT OF CHECKS/ESCROW AGENT. Subject to Section 4(f) with respect to the
deposit in escrow of subscriptions of Iowa and Pennsylvania residents before
receipt and acceptance of $3,000,000 of subscriptions, until receipt of the
Minimum Offering Amount, the General Partner and you and the Selling
Dealers, including customer carrying broker/dealers, agree that all
subscribers shall be instructed to make their checks, drafts, or money
orders payable solely to "Lease Equity Appreciation Fund II, L.P. Escrow
Account" for the Partnership under the Escrow Agreement, and you agree and
shall require the Selling Dealers, including customer carrying
broker/dealers, to agree to comply with Rule 15c2-4 adopted under the 1934
Act.
If you receive a check, draft, or money order not conforming to the
foregoing instructions, then you shall return the check, draft, or money
order to the Selling Dealer not later than the end of the next business day
following its receipt by you. The Selling Dealer shall then return the
check, draft, or money order directly to the subscriber not later than the
end of the next business day following its receipt from you. Checks, drafts,
or money orders received by you or a Selling Dealer which conform to the
foregoing instructions shall be transmitted by you as set forth in
Section 15.
You represent that you have executed the Escrow Agreement and agree that you
are bound by the terms of the Escrow Agreement.
15. TRANSMITTAL PROCEDURES. You and each Selling Dealer shall transmit received
investor funds in accordance with the following procedures. For purposes of
the following, the term "Selling Dealer" shall also include you as
Dealer-Manager when you receive subscriptions from investors.
(a) Pending receipt of the Minimum Offering Amount, but subject to Section
4(f) with respect to subscriptions from Iowa and Pennsylvania
residents, the Selling Dealers on receipt of any check, draft or money
order from a subscriber shall promptly transmit the check, draft, or
money order and the original executed subscription documents to you, as
Dealer-Manager, by the end of the next business day following receipt
of the check, draft, or money order by the Selling Dealer. By the end
of the next business day following your receipt of the check, draft, or
money order and the original executed subscription documents, you, as
Dealer-Manager, shall transmit the check, draft, or money order and a
copy of the executed subscription agreement to the Escrow Agent, and
the original executed subscription documents and a copy of the check,
draft, or money order to the General Partner.
(b) On receipt by you, as Dealer-Manager, of notice from the General
Partner that the Minimum Offering Amount has been received, the General
Partner, you, and the Selling Dealers agree that, subject to Section
4(f) with respect to subscriptions from Iowa and Pennsylvania
residents, all
Anthem Securities, Inc. 16
Dealer-Manager Agreement
subscribers then may be instructed, in the General Partner's sole
discretion, to make their checks, drafts, or money orders payable
solely to "Lease Equity Appreciation Fund II, L.P. Subscription
Account."
Thereafter, the Selling Dealers shall promptly transmit any and all
checks, drafts, and money orders received from subscribers and the
original executed subscription documents to you as Dealer-Manager by
the end of the next business day following receipt of the check, draft,
or money order by the Selling Dealer. By the end of the next business
day following your receipt of the check, draft, or money order and the
original executed subscription documents, you, as Dealer-Manager, shall
transmit the check, draft or money order and the original executed
subscription documents to the General Partner.
16. PARTIES. This Agreement shall inure to the benefit of and be binding on you,
the Partnership, the General Partner and any respective successors and
assigns. This Agreement shall also inure to the benefit of the indemnified
parties and their successors and assigns. This Agreement is intended to be
and is for the sole and exclusive benefit of the parties to this Agreement,
and their respective successors and assigns, and the indemnified parties and
their successors and assigns, and for the benefit of no other person. No
other person shall have any legal or equitable right, remedy or claim under
or with respect to this Agreement. No purchaser of any of the Units from you
or a Selling Dealer shall be construed to be a successor or assign merely by
reason of the purchase.
17. RELATIONSHIP. This Agreement shall not constitute you a partner of the
General Partner, the Partnership, or any general partner of the Partnership,
nor render the General Partner, the Partnership, or any general partner of
the Partnership liable for any of your obligations.
18. EFFECTIVE DATE. This Agreement is made effective among the parties to this
Agreement as of the date accepted by you as indicated by your signature to
this Agreement.
19. ENTIRE AGREEMENT, WAIVER.
(a) This Agreement constitutes the entire agreement among the parties to
this Agreement, and shall not be amended or modified in any way except
by subsequent agreement executed in writing.
(b) Any party to this agreement may waive, but only in writing, any term,
condition, or requirement under this Agreement that is intended for its
benefit. However, any written waiver of any term or condition of this
Agreement shall not operate as a waiver of any other breach of that
term or condition. Also, any failure to enforce any provision of this
Agreement shall not operate as a waiver of that provision or any other
provision of this Agreement.
20. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Pennsylvania. Unless the context
otherwise requires, "Section" references in this Agreement are references to
Sections of this Agreement.
21. COMPLAINTS. The General Partner and you, as Dealer-Manager, agree as
follows:
(a) to notify the other if either receives an investor complaint in
connection with the offer or sale of Units by you or a Selling Dealer;
Anthem Securities, Inc. 17
Dealer-Manager Agreement
(b) to cooperate with the other in resolving the complaint; and
(c) to cooperate in any regulatory examination of the other to the extent
it involves this Agreement or the offer or sale of Units by you or a
Selling Dealer.
22. PRIVACY. Each of the General Partner, the Partnership and you acknowledge
that certain information made available to the other under this Agreement
may be deemed nonpublic personal information under the Xxxxx-Xxxxx-Xxxxxx
Act, other federal or state privacy laws (as amended), and the rules and
regulations promulgated thereunder, which are referred to collectively, as
the "Privacy Laws." Each of the General Partner, the Partnership and you
agree as follows:
(a) not to disclose or use the information except as required to carry out
each party's respective duties under this Agreement or as otherwise
permitted by law in the ordinary course of business;
(b) to establish and maintain procedures reasonably designed to assure the
security and privacy of all the information; and
(c) to cooperate with the other and provide reasonable assistance in
ensuring compliance with the Privacy Laws to the extent applicable to
any of them.
23. ANTI-MONEY LAUNDERING PROVISION. You and the Selling Dealers represent and
warrant to the General Partner that each of you has in place and will
maintain suitable and adequate "know your customer" policies and procedures
and that each of you will comply with all applicable laws and regulations
regarding anti-money laundering activity and will provide documentation of
the foregoing to the General Partner on written request.
24. ACCEPTANCE. Please confirm your agreement to the terms and conditions set
forth above by signing and returning the enclosed duplicate copy of this
Agreement to us at the address set forth above.
Very truly yours,
PARTNERSHIP:
LEASE EQUITY APPRECIATION FUND II, L.P.
By: LEAF Asset Management, Inc.
General Partner
___________________________ , 2004 By: ___________________________________
Date Xxxxx Xxxxxx, President and Chief
Executive Officer
Anthem Securities, Inc. 18
Dealer-Manager Agreement
GENERAL PARTNER:
LEAF ASSET MANAGEMENT, INC.
___________________________ , 2004 By: ___________________________________
Date Xxxxx Xxxxxx, President and Chief
Executive Officer
DEALER-MANAGER:
ANTHEM SECURITIES, INC.
___________________________ , 2004 By: ___________________________________
Date Xxxxxxx X. Xxxxx, Vice President
Anthem Securities, Inc. 19
Dealer-Manager Agreement
APPENDIX "A"
The states in which you are not registered as a broker/dealer are:
1. Minnesota
---------------------
2. New Hampshire
------------------------
Anthem Securities, Inc. 20
Dealer-Manager Agreement
EXHIBIT "A"
ESCROW AGREEMENT
THIS AGREEMENT is dated as of ________________________, 2004, by and
among LEAF Asset Management, Inc., a Delaware corporation (the "GENERAL
PARTNER"), Anthem Securities, Inc., a Pennsylvania corporation (the
"DEALER-MANAGER"), Lease Equity Appreciation Fund II, L.P., a Delaware limited
partnership (the "PARTNERSHIP"), and COMMERCE BANK NA/PENNSYLVANIA, as escrow
agent (the "ESCROW AGENT").
WITNESSETH:
WHEREAS, the Partnership intends to offer for sale to qualified
investors up to 600,000 limited partner interests in the Partnership (the
"UNITS").
WHEREAS, each person who subscribes for the purchase of Units (a
"SUBSCRIBER") will be required to pay his subscription in full at the time of
subscription by check, draft or money order (the "SUBSCRIPTION PROCEEDS").
WHEREAS, the General Partner and the Dealer-Manager have executed an
agreement (the "DEALER-MANAGER AGREEMENT") under which the Dealer-Manager will
solicit subscriptions on a "best efforts" "all or none" basis for 20,000 Units
and on a "best efforts" basis for the remaining Units and has been authorized to
select certain members in good standing of the National Association of
Securities Dealers, Inc. to participate in the offering of the Units ("SELLING
DEALERS").
WHEREAS, under the terms of the Dealer-Manager Agreement the
Subscription Proceeds are required to be held in escrow subject to the receipt
and acceptance by the General Partner of subscriptions for 20,000 Units,
excluding any subscriptions by the General Partner and its affiliates or by
Pennsylvania or Iowa residents (the "MINIMUM OFFERING AMOUNT").
WHEREAS, no subscriptions to the Partnership will be accepted after the
"Offering Termination Date," which is the first to occur of either:
o receipt and acceptance of subscriptions for 600,000 Units; or
o _________________, 2005, if the Minimum Offering Amount has not
been received and accepted by that date; or
o __________________, 2006, if the Minimum Offering Amount has been
received and accepted by ______________, 2005;
provided, however, no subscriptions will be accepted after ________, 2005 from
Subscribers in any jurisdiction in which renewal, requalification or other
consent by a securities administrator to the continuance of the registration or
qualification of the offering is required, unless such renewal, requalification
or other consent has been obtained.
WHEREAS, to facilitate compliance with the terms of the Dealer-Manager
Agreement and Rule 15c2-4 adopted under the Securities Exchange Act of 1934, the
Partnership, the General Partner and the Dealer-Manager desire to have the
Subscription Proceeds deposited with the Escrow Agent until the Minimum Offering
Amount has been obtained and the Escrow Agent agrees to hold the Subscription
Proceeds under the terms and conditions set forth in this Agreement.
1
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained in this Agreement, the parties to this Agreement, intending to be
legally bound, agree as follows:
1. APPOINTMENT OF ESCROW AGENT. The General Partner, the Partnership and the
Dealer-Manager appoint the Escrow Agent as the escrow agent to receive and to
hold the Subscription Proceeds deposited with the Escrow Agent by the
Dealer-Manager and the General Partner under this Agreement. The Escrow Agent
agrees to serve in this capacity during the term and subject to the
provisions of this Agreement.
2. DEPOSIT OF SUBSCRIPTION PROCEEDS. Pending receipt of the Minimum Offering
Amount, and subject to Section 6, the Dealer-Manager and the General Partner
shall deposit the Subscription Proceeds of each Subscriber to whom they sell
Units with the Escrow Agent and shall deliver to the Escrow Agent a copy of
the Subscription Agreement. A "SUBSCRIPTION AGREEMENT" is the execution and
subscription instrument signed by the Subscriber to evidence his agreement to
purchase Units in the Partnership. Payment for each subscription for Units
shall be in the form of a check made payable to "Lease Equity Appreciation
Fund II, L.P. Escrow Account." Verification of the Subscription Proceeds by
the Escrow Agent will be available via direct, online access, telecopier, or
other electronic media as soon as practicable after receipt.
3. INVESTMENT OF SUBSCRIPTION PROCEEDS. Subject to Section 6, the Escrow Agent
shall deposit all Subscription Proceeds in interest-bearing savings or bank
money market accounts (other than mutual funds). The interest earned shall be
added to the Subscription Proceeds and disbursed in accordance with the
provisions of Section 4 or 5, as the case may be.
4. DISTRIBUTION OF SUBSCRIPTION PROCEEDS. Subject to Section 6, if the Escrow
Agent:
(a) receives written notice from an authorized officer of the General Partner
that at least the Minimum Offering Amount has been received and accepted
by the General Partner; and
(b) determines that the Minimum Offering Amount has cleared the banking
system and constitutes good funds;
then the Escrow Agent shall promptly release and distribute to the General
Partner the escrowed Subscription Proceeds which have cleared the banking
system and constitute good funds plus any interest paid and investment income
earned on the Subscription Proceeds while held by the Escrow Agent in the
escrow account.
Any remaining Subscription Proceeds, plus any interest paid and investment
income earned on the Subscription Proceeds while held by the Escrow Agent in
the escrow account, shall be promptly released and distributed to the General
Partner by the Escrow Agent as the Subscription Proceeds clear the banking
system and become good funds.
5. SEPARATE PARTNERSHIP ACCOUNT. Subject to Section 6, during the continuation
of the offering after the Escrow Agent has performed its duties described in
Section 4, but before the Offering Termination Date, any additional
Subscription Proceeds may be deposited by the Dealer-Manager and the General
Partner directly in a separate Partnership account which shall not be subject
to the terms of this Agreement.
6. SUBSCRIPTIONS OF PENNSYLVANIA OR IOWA RESIDENTS. The Escrow Agent shall
deposit subscriptions from Pennsylvania or Iowa residents into a separate
escrow account. Funds shall be released from that account in accordance with
Section 4 (and Subscription Proceeds from Pennsylvania or Iowa residents may
be deposited in a separate Partnership account in accordance with Section 5)
only if the aggregate of all Subscription Proceeds received and accepted by
the General Partner, including those from Pennsylvania or Iowa residents,
total $3,000,000 or more. The Dealer-Manager and the General Partner
2
will specifically identify subscriptions of Pennsylvania or Iowa residents to
the Escrow Agent and will not commingle those subscriptions with
subscriptions of residents of other states.
7. DISTRIBUTIONS TO SUBSCRIBERS.
(a) If the Minimum Offering Amount has not been received and accepted by the
General Partner by 12:00 p.m. (noon), local time, on the Offering
Termination Date, or if the offering is terminated before then for any
other reason, then the General Partner shall notify the Escrow Agent, in
writing, and the Escrow Agent shall promptly distribute to each
Subscriber a refund check made payable to the Subscriber in an amount
equal to the Subscription Proceeds of the Subscriber plus any interest
paid or investment income earned on the Subscriber's Subscription
Proceeds while held by the Escrow Agent in the escrow account, all as
calculated by the Escrow Agent.
A refund check will not be issued to a Subscriber under this provision
until after the Escrow Agent has determined that the Subscriber's funds
have cleared banking channels and are recognized as "good funds."
(b) If a subscription for Units submitted by a Subscriber is rejected by the
General Partner for any reason after the Subscription Proceeds relating
to the subscription have been deposited with the Escrow Agent, then the
General Partner promptly shall notify the Escrow Agent in writing of the
rejection, and the Escrow Agent shall promptly distribute to the
Subscriber a refund check made payable to the Subscriber in an amount
equal to the Subscription Proceeds of the Subscriber, plus any interest
or investment income earned, as calculated by Escrow Agent, after the
Escrow Agent has determined that the Subscriber's check has cleared
banking channels and is recognized as good funds.
8. COMPENSATION AND EXPENSES OF ESCROW AGENT. The General Partner shall be
solely responsible for and shall pay the compensation of the Escrow Agent
for its services under this Agreement, as provided in Appendix 1 to this
Agreement and made a part of this Agreement, and the charges, expenses
(including any reasonable attorneys' fees), and other out-of-pocket expenses
incurred by the Escrow Agent in connection with the administration of the
provisions of this Agreement. The Escrow Agent shall have no lien on the
Subscription Proceeds deposited in the escrow account.
9. DUTIES OF ESCROW AGENT. The Escrow Agent shall not be obligated to accept
any notice, make any delivery, or take any other action under this Agreement
unless the notice or request or demand for delivery or other action is in
writing and given or made by the party given the right or charged with the
obligation under this Agreement to give the notice or to make the request or
demand. In no event shall the Escrow Agent be obligated to accept any
notice, request, or demand from anyone other than the General Partner or the
Dealer-Manager.
10. LIABILITY OF ESCROW AGENT. The Escrow Agent shall not be liable for any
damages, or have any obligations other than the duties prescribed in this
Agreement, in carrying out or executing the purposes and intent of this
Agreement. However, nothing in this Agreement shall relieve the Escrow Agent
from liability arising out of its own willful misconduct or gross
negligence. The Escrow Agent's duties and obligations under this Agreement
shall be entirely administrative and not discretionary. The Escrow Agent
shall not be liable to any party to this Agreement or to any thirdparty as a
result of any action or omission taken or made by the Escrow Agent in good
faith. The parties to this Agreement will indemnify the Escrow Agent, hold
the Escrow Agent harmless, and reimburse the Escrow Agent from, against and
for, any and all liabilities, costs, fees and expenses (including reasonable
attorney's fees) the Escrow Agent may suffer or incur by reason of its
execution and performance of this Agreement. If any legal questions arise
concerning the Escrow Agent's duties and obligations under
3
this Agreement, then the Escrow Agent may consult with its counsel and rely
without liability on written opinions given to it by its counsel.
The Escrow Agent shall be protected in acting on any written notice,
request, waiver, consent, authorization, or other paper or document which
the Escrow Agent, in good faith, believes to be genuine and what it purports
to be.
If there is any disagreement between any of the parties to this Agreement,
or between them or any other person, resulting in adverse claims or demands
being made in connection with this Agreement, or if the Escrow Agent, in
good faith, is in doubt as to what action it should take under this
Agreement, then the Escrow Agent may, at its option, refuse to comply with
any claims or demands on it or refuse to take any other action under this
Agreement, so long as the disagreement continues or the doubt exists. In any
such event, the Escrow Agent shall not be or become liable in any way or to
any person for its failure or refusal to act and the Escrow Agent shall be
entitled to continue to so refrain from acting until the dispute is resolved
by the parties involved.
The Escrow Agent is acting solely as the Escrow Agent and is not a party to,
nor has it reviewed or approved, any agreement or matter of background
related to this Agreement, the offer and sale of the Units, the registration
statement relating to the Partnership and the Units or the prospectus
included as a part thereof, other than this Agreement itself, and has
assumed, without investigation, the authority of the individuals executing
this Agreement.
The parties to this Agreement agree that the Escrow Agent has not reviewed
and is not making any recommendations with respect to the Units. The use of
the Escrow Agent's name in any communication, written or oral, in connection
with the offering of the Units without the specific written approval of the
Escrow Agent is expressly prohibited. The Escrow Agent grants permission to
use its name in the Prospectus.
11. RESIGNATION OR REMOVAL OF ESCROW AGENT. The Escrow Agent may resign after
giving thirty days' prior written notice to the other parties to this
Agreement provided that a substitute Escrow Agent has been appointed. The
General Partner and the Dealer-Manager may remove the Escrow Agent after
giving thirty days' prior written notice to the Escrow Agent. In either
event, the duties of the Escrow Agent shall terminate thirty days after the
date of the notice (or as of an earlier date as may be mutually agreeable);
and the Escrow Agent shall then deliver the balance of the Subscription
Proceeds (and any interest paid or investment income earned thereon while
held by the Escrow Agent in the escrow account) in its possession to a
successor escrow agent appointed by the other parties to this Agreement as
evidenced by a written notice filed with the Escrow Agent.
If the other parties to this Agreement are unable to agree on a successor
escrow agent or fail to appoint a successor escrow agent before the
expiration of thirty days following the date of the notice of the Escrow
Agent's resignation or removal, then the Escrow Agent may petition any court
of competent jurisdiction for the appointment of a successor escrow agent or
other appropriate relief. Any resulting appointment shall be binding on all
of the parties to this Agreement.
On acknowledgment by any successor escrow agent of the receipt of the then
remaining balance of the Subscription Proceeds (and any interest paid or
investment income earned thereon while held by the Escrow Agent in the
escrow account), the Escrow Agent shall be fully released and relieved of
all duties, responsibilities, and obligations under this Agreement.
12. TERMINATION. This Agreement shall terminate and the Escrow Agent shall have
no further obligation with respect to this Agreement after the distribution
of all Subscription Proceeds (and any interest paid or investment income
earned thereon while held by the Escrow Agent in the escrow account) as
contemplated by this Agreement or on the written agreement of all of the
parties to this Agreement. The provisions of
4
Section 10 shall survive the termination of this Agreement and the
resignation or removal of the Escrow Agent.
13. NOTICE. Any notices or instructions, or both, to be given under this
Agreement shall be validly given if set forth in writing and mailed by
certified mail, return receipt requested, as follows:
If to the Escrow Agent:
Commerce Bank NA/Pennsylvania
___________________________
Cherry Hill, NJ _____________
Attention: __________________
Telephone: _________________
Facsimile: __________________
If to the Partnership:
Lease Equity Appreciation Fund II, L.P.
000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the General Partner:
LEAF Asset Management, Inc.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, President and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Dealer-Manager:
Anthem Securities, Inc.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may designate any other address to which notices and
instructions shall be sent by notice duly given in accordance with this
Agreement.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
(b) This Agreement shall be binding on and shall inure to the benefit of the
undersigned and their respective successors and assigns.
(c) This Agreement may be executed in multiple copies, each executed copy to
serve as an original.
5
(d) References in this Agreement to "Sections" are references to Sections of
this Agreement unless the context clearly indicates otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the day and year first above written.
COMMERCE BANK NA/PENNSYLVANIA
As Escrow Agent
By:_____________________________________________
(Authorized Officer)
LEAF ASSET MANAGEMENT, INC.
By:_____________________________________________
Xxxxx Xxxxxx, President and Chief Executive
Officer
ANTHEM SECURITIES, INC.
By:_____________________________________________
Xxxxxxx X. Xxxxx, Vice President
LEASE EQUITY APPRECIATION FUND II, L.P.
By: LEAF ASSET MANAGEMENT, INC.
General Partner
By:_____________________________________________
Xxxxx Xxxxxx, President and Chief Executive
Officer
6
APPENDIX I TO ESCROW AGREEMENT
Compensation for Services of Escrow Agent
7
CERTIFICATE OF AUTHORIZED REPRESENTATIVES
The following individuals are Authorized Representatives for purposes of giving
direction on behalf of LEAF Asset Management, Inc. pursuant to that Escrow
Agreement dated ___________________________, 2004 by and between Commerce Bank
NA/Pennsylvania and LEAF Asset Management, Inc., Lease Equity Appreciation Fund
II, L.P. and Anthem Securities, Inc.
Name and Title Signature
Crit XxXxxx, Chairman/Directors
------------------------------------- -------------------------------------
Xxxxx Xxxxxx, President, CEO
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
Dated this ___________ day of ________________________, 2004
LEAF Asset Management, Inc.
-------------------------------------
By:
----------------------------------
Title:
-------------------------------
ATTEST:
LEAF Asset Management, Inc.
-------------------------------------
By:
----------------------------------
Title:
-------------------------------
EXHIBIT "B"
SELLING DEALER AGREEMENT
WITH ANTHEM SECURITIES, INC.
TO:
RE: LEASE EQUITY APPRECIATION FUND II, L.P.
---------------------------------------
Ladies and Gentlemen:
Lease Equity Appreciation Fund II, L.P. (the "Partnership") is offering limited
partner interests (the "Units") as described in the Prospectus (the
"Prospectus"), copies of which have been furnished to you with this Agreement.
Our firm, Anthem Securities, Inc. (the "Dealer-Manager"), has entered into a
Dealer-Manager Agreement with the Partnership for sales of the Units, a copy of
which has been furnished to you and is incorporated in this Agreement by this
reference. Under the Dealer-Manager Agreement, the Dealer-Manager has been
authorized to select certain members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD") to participate in the
offering of the Units (the "Selling Dealers") on a "best efforts" basis.
You are invited to become one of the Selling Dealers, on a non-exclusive basis.
By your acceptance below you will have agreed to act in that capacity and to use
your best efforts, in accordance with the following terms and conditions, to
solicit subscriptions for the Units in all jurisdictions in which you are
registered as a broker-dealer in good standing as set forth on Schedule A to
this Agreement.
1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLING DEALER. You represent,
warrant and covenant to the Dealer-Manager that:
(a) You are a corporation or other entity duly organized, validly existing
and in good standing under the laws of the state of your formation and
are duly qualified to do business and in good standing under the laws
of any jurisdiction in which your ownership of property or conduct of
business requires you to be so qualified. You have all requisite power
and authority to enter into this Agreement and to carry out your
obligations under this Agreement.
(b) This Agreement when executed by you will be duly authorized, executed
and delivered by you and will be a valid and binding agreement on your
part and enforceable in accordance with its terms except as may be
limited by the effect of bankruptcy, insolvency, moratorium,
preferential or fraudulent conveyance or other similar laws or
equitable principles relating to or affecting the rights of creditors
generally, by general principles of equity, and by public policy
relating to claims for indemnification for securities laws violations.
(c) The consummation of the transactions contemplated by this Agreement and
the Prospectus will not result in:
(i) any breach of any of the terms or conditions of, or constitute a
default under, your organizational documents, bylaws, any
indenture, agreement or other instrument to which you are a
party or by which you are bound; or
(ii) any violation of any order applicable to you of any court,
regulatory body or administrative agency having jurisdiction
over you or your affiliates.
(d) You are duly registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and you are a member
in good standing of the NASD. You are duly registered as a
broker-dealer in the jurisdictions where you are required to be
registered in order to carry out your
Anthem Securities, Inc. 1
Selling Dealer Agreement
obligations as contemplated by this Agreement and the Prospectus. You
agree to maintain all the foregoing registrations in good standing
throughout the term of the offer and sale of the Units and you agree to
comply with all statutes and other requirements applicable to you as a
broker-dealer under those registrations.
(e) Pursuant to your appointment as a Selling Dealer, you shall comply with
all the provisions of the Securities Act of 1933, as amended (the "1933
Act"), insofar as the 1933 Act applies to your activities under this
Agreement. Further, you shall not engage in any activity which would
cause the offer and/or sale of the Units not to comply with the 1933
Act, the 1934 Act, the applicable rules and regulations of the
Securities and Exchange Commission, which is referred to as the
"Commission," the applicable state securities laws and regulations,
this Agreement, and the NASD Conduct Rules including Rules 2420, 2730,
2740 and 2750, and Rule 2810(b)(2) and (b)(3), which provide as
follows:
Sec. (b)(2)
SUITABILITY
(A) A member or person associated with a member shall not
underwrite or participate in a public offering of a direct
participation program unless standards of suitability have
been established by the program for participants therein
and such standards are fully disclosed in the prospectus
and are consistent with the provisions of subparagraph (B)
of this section.
(B) In recommending to a participant the purchase, sale or
exchange of an interest in a direct participation program,
a member or person associated with a member shall:
(i) have reasonable grounds to believe, on the basis of
information obtained from the participant concerning
his investment objectives, other investments,
financial situation and needs, and any other
information known by the member or associated
person, that:
(a) the participant 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 tax benefits
where they are a significant aspect of the
program;
(b) the participant has a fair market net worth
sufficient to sustain the risks inherent in
the program, including loss of investment and
lack of liquidity; and
(c) the program is otherwise suitable for the
participant; and
(ii) maintain in the files of the member documents
disclosing the basis upon which the determination of
suitability was reached as to each participant.
(C) Notwithstanding the provisions of subparagraphs (A) and
(B) hereof, no member shall execute any transaction in a
direct participation program in a discretionary account
without prior written approval of the transaction by the
customer.
Anthem Securities, Inc. 2
Selling Dealer Agreement
Sec. (b)(3)
DISCLOSURE
(A) Prior to participating in a public offering of a direct
participation program, a member or person associated with
a member shall have reasonable grounds to believe, based
on information made available to him by the sponsor
through a prospectus or other materials, that all material
facts are adequately and accurately disclosed and provide
a basis for evaluating the program.
(B) In determining the adequacy of disclosed facts pursuant to
subparagraph (A) hereof, a member or person associated
with a member shall obtain information on material facts
relating at a minimum to the following, if relevant in
view of the nature of the program:
(i) items of compensation;
(ii) physical properties;
(iii) tax aspects;
(iv) financial stability and experience of the sponsor;
(v) the program's conflicts and risk factors; and
(vi) appraisals and other pertinent reports.
(C) For purposes of subparagraphs (A) and (B) hereof, a member
or person associated with a member may rely upon the
results of an inquiry conducted by another member or
members, provided that:
(i) the member or person associated with a member has
reasonable grounds to believe that such inquiry was
conducted with due care;
(ii) the results of the inquiry were provided to the
member or person associated with a member with the
consent of the member or members conducting or
directing the inquiry; and
(iii) no member that participated in the inquiry is a
sponsor of the program or an affiliate of such
sponsor.
(D) Prior to executing a purchase transaction in a direct
participation program, a member or person associated with
a member shall inform the prospective participant of all
pertinent facts relating to the liquidity and
marketability of the program during the term of
investment.
(f) You shall not offer or sell the Units in any jurisdiction until you
have been advised in writing by the General Partner, or the General
Partner's special counsel, that the offer or sale of the Units:
(i) has been qualified in the jurisdiction;
(ii) is exempt from the qualification requirements imposed by the
jurisdiction; or
(iii) is otherwise not required to be qualified.
Anthem Securities, Inc. 3
Selling Dealer Agreement
(g) You have received copies of the Prospectus and you have relied only on
the statements contained in the Prospectus and not on any other
statements whatsoever, either written or oral, with respect to the
Partnership, the Units or the offering of Units.
You shall deliver a copy of the Prospectus to each subscriber to whom
you sell the Units at or before the completion of any sale of Units to
the subscriber (which sale shall be deemed, for purposes of this
Agreement, to occur on the date on which the subscriber delivers
subscription funds to the escrow agent), or earlier if required by the
blue sky or securities laws of any state or jurisdiction. Unless
advised otherwise by the General Partner, you may choose to provide
each offeree with the following sales materials which are collectively
referred to as the "Sales Literature":
(i) an investor-use brochure reviewed by the NASD;
(ii) an investor presentation and invitations reviewed by the NASD;
and
(iii) any additional investor-use materials prepared by the
Partnership or the General Partner and reviewed by the NASD.
Any Sales Literature, if distributed, must have been preceded or
accompanied by the Prospectus.
(h) You agree that you shall not place any advertisement or other
solicitation with respect to the Units (including, without limitation,
any material for use in any newspaper, magazine, radio or television
commercial, telephone recording, motion picture, or other public media)
without:
(i) the prior written approval of the Partnership; and
(ii) the prior filing with and review of the form and content of the
advertisement or solicitation by the Commission, the NASD and
the securities authorities of the states where the advertisement
or solicitation is to be circulated.
Any such advertisements or solicitations shall be at your expense.
(i) If a supplement or amendment to the Prospectus (each, a "Supplement")
is prepared and delivered to you by the Partnership or the
Dealer-Manager, you agree as follows:
(i) to distribute the Supplement to every person who has previously
received a copy of the Prospectus from you; and
(ii) to include the Supplement in all future deliveries of the
Prospectus.
(j) In connection with any offer or sale of the Units, you agree to the
following:
(i) to comply in all respects with restrictions and procedures set
forth in the Prospectus and the Partnership's Amended and
Restated Agreement of Limited Partnership, included as Appendix
A to the Prospectus (the "Partnership Agreement");
(ii) not to make any statement inconsistent with the statements in
the Prospectus, any Supplement or the Partnership Agreement;
(iii) not to provide any written information, statements or sales
literature other than the Prospectus, the Sales Literature, any
Supplement and any other material that is provided to you by the
Partnership or specifically authorized in writing by the
Partnership; and
Anthem Securities, Inc. 4
Selling Dealer Agreement
(iv) not to make any untrue statement of a material fact or omit to
state a material fact necessary in order to make statements
made, in light of the circumstances under which they were made,
not misleading in connection with the Partnership, the Units or
the offering of the Units.
(k) You agree to use your best efforts in the solicitation and sale of the
Units, including that:
(i) you comply with all the provisions of the 1933 Act, the Act of
1934, the applicable rules and regulations of the Commission,
the applicable state securities laws and regulations, this
Agreement, and the NASD Conduct Rules;
(ii) the prospective purchasers meet the suitability requirements set
forth in the Prospectus, the subscription agreement, a form of
which is included in Appendix C to the Prospectus (the
"Subscription Agreement"), and this Agreement; and
(iii) the prospective purchasers properly execute the Subscription
Agreement, together with any additional forms provided in any
Supplement or otherwise provided to you by the Partnership or
the Dealer- Manager to be completed by prospective purchasers.
You acknowledge and agree that the Partnership has the right to reject
any subscription at any time for any reason without liability to
anyone, including you and the subscriber. Investor funds and executed
Subscription Agreements shall be transmitted as set forth in Section 11
of this Agreement.
(l) Although not anticipated, if you assist in any transfers of the Units,
then you shall comply with the requirements of Rules 2810(b)(2)(B) and
(b)(3)(D) of the NASD Conduct Rules.
(m) You agree and covenant that:
(i) the representations and warranties made in this Agreement are
and shall be true and correct at each applicable closing date on
Unit sales; and
(ii) you shall have fulfilled all your obligations under this
Agreement at the applicable closing date.
2. COMMISSIONS.
(a) Subject to the receipt of the minimum subscription proceeds as
described in the Dealer-Manager Agreement (the "Minimum Offering
Amount"), the restrictions with respect to sales to Iowa and
Pennsylvania residents described in the Dealer-Manager Agreement, and
the exceptions for sales to:
(i) LEAF Asset Management, Inc., the general partner of the
Partnership (the "General Partner"), its officers, directors and
"Affiliates" (as that term is defined in the Partnership
Agreement);
(ii) Selling Dealers and their registered representatives and
principals;
(iii) registered investment advisors and their clients; and
(iv) investors who buy Units through the officers and directors of
the General Partner;
Anthem Securities, Inc. 5
Selling Dealer Agreement
the Dealer-Manager is entitled to receive from the Partnership a
commission (the "Sales Commission") of 7% of the purchase price of each
subscription obtained by you and accepted by the Partnership.
In addition, and subject to the above conditions and qualifications,
the General Partner has undertaken to pay (from its Organization and
Offering Expense Allowance, as that term is defined in the Partnership
Agreement) to the Dealer-Manager an amount equal to the Selling
Dealers' bona fide accountable due diligence expenses per Unit up to a
maximum of .5% of the purchase price of each subscription obtained by
the Dealer-Manager or the Selling Dealers and accepted by the
Partnership. Also, the Dealer-Manager may reallow from its
Dealer-Manager fee a portion of your "Permissible Non-Cash
Compensation," which is composed of: training and education meetings;
gifts that do not exceed $100 per year and are not preconditioned on
the achievement of a sales target; an occasional meal, a ticket to a
sporting event or the theater, or comparable entertainment which is
neither so frequent nor so extensive as to raise any question of
propriety and is not preconditioned on achievement of a sales target;
and contributions by the Dealer-Manager or the General Partner to a
non-cash compensation arrangement between you and your associated
persons, provided that the Dealer-Manager or the General Partner do not
directly or indirectly participate in your organization of the
permissible non-cash compensation arrangement.
Subject to the terms and conditions set forth in this Agreement,
including the Dealer-Manager's receipt from you of the documentation
required of you in Section 1 of this Agreement, and to the exceptions
and conditions set forth in the preceding paragraph and the first
paragraph of this Section 2(a), and the performance by you of your
obligations under Appendix I to this Agreement, which is incorporated
in this Agreement by reference the Dealer-Manager agrees to pay you:
(i) a 7% Sales Commission; and
(ii) up to a .5% reimbursement of your bona fide accountable due
diligence expenses per Unit. With respect to the up to .5%
reimbursement of your bona fide accountable due diligence
expenses, any xxxx presented by you to the Dealer-Manager for
reimbursement of costs associated with your due diligence
activities must be for actual costs and may not include a profit
margin. Although the Dealer-Manager is not required to obtain an
itemized expense statement before paying out due diligence
expenses, any xxxx for due diligence submitted by you must be
based on your actual expenses incurred in conducting due
diligence. If the Dealer-Manager receives a non-itemized xxxx
for due diligence that it has reason to question, then it has
the obligation to ensure your compliance by requesting an
itemized statement to support the xxxx submitted by you. If such
a due diligence xxxx cannot be justified, any excess over actual
due diligence expenses that is paid is considered by the NASD to
be undisclosed underwriting compensation, and is required to be
included within its 10% compensation guideline and reflected on
your books and records. Notwithstanding, if you provide an
itemized xxxx in excess of .5%, then the excess will not be
included within the 10% compensation guideline, but instead will
be included within the NASD's 4.5% guideline.
(iii) In addition, the Dealer-Manager or the General Partner may make
certain non-cash compensation arrangements with you or your
registered representatives which will be included in the
Permissible Non-Cash Compensation described in the second
paragraph of this Section 2(a). The Dealer-Manager is
responsible for ensuring that all non-cash compensation
arrangements comply with the restrictions on non-cash
compensation in connection with direct participation programs as
set forth in NASD Conduct Rule 2810. For example, if the General
Partner or the Dealer-Manager
Anthem Securities, Inc. 6
Selling Dealer Agreement
pays or reimburses you in connection with meetings held by the
General Partner or the Dealer-Manager for the purpose of
training or educating your registered representatives, then the
following conditions must be met:
(A) your registered representative must obtain your prior
approval to attend the meeting and attendance by your
registered representatives must not be conditioned by you
on the achievement of a sales target;
(B) the location must be appropriate to the purpose of the
meeting as defined in NASD Conduct Rule 2810;
(C) the payment or reimbursement must not be applied to the
expenses of guests of the registered representative;
(D) the payment or reimbursement by the General Partner or the
Dealer-Manager must not be conditioned by the General
Partner or the Dealer-Manager on the achievement of a
sales target; and
(E) the appropriate records must be maintained.
Non-cash compensation means any form of compensation received in
connection with the sale of the Units that is not cash
compensation, including but not limited to merchandise, gifts
and prizes, travel expenses, meals and lodging.
(iv) Your compensation and reimbursements which are owed to you as
set forth above shall be paid to you within seven business days
after the Dealer-Manager has received the related amounts owed
to it under the Dealer-Manager Agreement, which the
Dealer-Manager is entitled to receive within five business days
after the conditions described in Section 4(e) of the
Dealer-Manager Agreement are satisfied, and approximately every
week thereafter until the Partnership's "Offering Termination
Date," which is defined in Section 1(b) of the Dealer-Manager
Agreement. The balance shall be paid to the Dealer-Manager
within fourteen business days after the Offering Termination
Date.
(b) Notwithstanding anything in this Agreement to the contrary, you agree
to waive payment of your compensation and reimbursements which are owed
to you as set forth above until the Dealer-Manager receives the related
amounts owed to it under the Dealer-Manager Agreement, and you further
agree that the Dealer-Manager's liability to you for those amounts is
limited solely to the proceeds of the related amounts owed to and
received by it under the Dealer-Manager Agreement.
(c) If the Partnership does not receive the Minimum Offering Amount,
nothing will be payable to you and all funds advanced by subscribers
will be returned to them with interest earned, if any.
3. STATE SECURITIES REGISTRATION. The Partnership may elect not to qualify or
register Units in any state or jurisdiction any reason in its sole
discretion. The Dealer-Manager shall advise you as to the jurisdictions in
which the Units have been qualified for sale or are exempt from
qualification.
Notwithstanding the foregoing, the Dealer-Manager, the Partnership and the
General Partner have not assumed and will not assume any obligation or
responsibility as to your right to act as a broker or dealer with respect to
the Units in any jurisdiction.
4. EXPENSES OF SALE. Except as otherwise specifically set forth in this
Agreement, the expenses in connection with the offer and sale of the Units
shall be payable as set forth below.
Anthem Securities, Inc. 7
Selling Dealer Agreement
(a) The Dealer-Manager shall pay all expenses incident to the performance
of its obligations under this Agreement, including the fees and
expenses of its attorneys and accountants, even if this offering is not
successfully completed.
(b) You shall pay all expenses incident to the performance of your
obligations under this Agreement, including the fees and expenses of
your own counsel and accountants, even if this offering is not
successfully completed.
5. CONDITIONS OF YOUR DUTIES. Your obligations under this Agreement, as of the
date of this Agreement and at each applicable closing date, shall be subject
to the following:
(a) the performance by the Dealer-Manager of its obligations under this
Agreement; and
(b) the performance by the Partnership of its obligations under the
Dealer-Manager Agreement.
6. CONDITIONS OF DEALER-MANAGER'S DUTIES. The Dealer-Manager's obligations
under this Agreement, including the duty to pay compensation and
reimbursements to you as set forth in Section 2 of this Agreement, shall be
subject to the following:
(a) the accuracy, as of the date of this Agreement and at each applicable
closing date (as if made at such closing date) of your representations
and warranties made in this Agreement;
(b) the performance by you of your obligations under this Agreement; and
(c) the Dealer-Manager's receipt at or before the applicable closing date,
of a fully executed Subscription Agreement for each purchaser as
required by this Agreement.
7. INDEMNIFICATION.
(a) You agree to indemnify, defend and hold harmless the Dealer-Manager,
the General Partner, the Partnership, its attorneys, and any person who
controls the Dealer-Manager, the General Partner and the Partnership
within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act from and against any and all losses, claims, damages,
liabilities and expenses (including but not limited to reasonable
attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation) ("Losses") which the indemnified
party or parties may incur under federal or state law, or otherwise,
arising out of or based upon any breach by you of any of your
representations, warranties, covenants, duties or obligations contained
in this Agreement.
(b) If any action, suit or proceeding is brought against any indemnified
party with respect to which indemnity may be sought under Section 7(a),
the indemnified party shall promptly notify you in writing, and you may
elect to assume the defense thereof, including the employment of
counsel (which counsel shall be reasonably acceptable to the
indemnified party) and payment of all reasonable fees and expenses. The
failure or delay by an indemnified party to notify you shall not
relieve you from liability which you may have to an indemnified party
unless the failure or delay materially prejudices your ability to
defend the action, suit or proceeding on behalf of the indemnified
party. The indemnified party shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in
(but not control) the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless:
(i) you have agreed in writing to pay such fees and expenses;
Anthem Securities, Inc. 8
Selling Dealer Agreement
(ii) you have failed to assume the defense or employ counsel
reasonably satisfactory to the indemnified party; or
(iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both the indemnified
party and you, and the indemnified party has been advised by its
counsel that representation of the indemnified party and you by
the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to
actual or potential differing interests between it and you (in
which case you shall not have the right to assume the defense of
the action, suit or proceeding on behalf of the indemnified
party) or that there may be legal defenses available to the
indemnified party that are different from or in addition to
those available to you.
It is agreed, however, that you shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in
addition to any local counsel) at any time for all the indemnified
parties not having actual or potential differing interests with you or
among themselves, which firm shall be designated in writing by the
indemnified party or parties, and that all such fees and expenses shall
be reimbursed as they are incurred.
You shall not be liable for any settlement of any such action, suit or
proceeding effected without your written consent (which consent shall
not be unreasonably withheld), but if settled with your written
consent, or if there is a final judgment for the plaintiff in any such
action, suit or proceeding, you agree to indemnify and hold harmless
any indemnified party, to the extent provided in this Section 7(b) and
Section 7(a) above, from and against any Loss by reason of the
settlement or judgment.
(c) The Dealer-Manager agrees to indemnify, defend and hold harmless you
and any person who controls you within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, to the same extent as the
foregoing indemnity from you, with respect to a breach by the Dealer-
Manager of its representations, warranties, covenants, duties or
obligations contained in this Agreement. If any action, suit or
proceeding is brought against an indemnified party in respect of which
indemnity may be sought under this Section 7(c), the Dealer-Manager
shall have the rights and duties given to you under Section 7(b).
(d) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party under either Section 7(a) or Section 7(c), as the
case may be, with respect to any Losses, then the appropriate
indemnifying party, in lieu of indemnifying the indemnified party,
shall contribute to the amount paid or payable by the indemnified party
as a result of those Losses in the proportion that is appropriate to
reflect the relative fault of you on the one hand and of the
Dealer-Manager on the other hand in connection with the matters which
resulted in those Losses, as well as any other relevant equitable
considerations.
(e) No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened action, suit or
proceeding with respect to which any indemnified party is or could have
been a party and indemnity could have been sought under this Section 7
by the indemnified party, unless the settlement includes an
unconditional release of the indemnified party from all liability on
the claims that are the subject matter of the action, suit or
proceeding.
Anthem Securities, Inc. 9
Selling Dealer Agreement
(f) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by
the indemnifying party to the indemnified party as the Losses are
incurred.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All representations,
warranties and agreements of the Dealer-Manager and you in this Agreement,
including the indemnification agreements contained in Section 7, shall:
(a) survive the delivery, execution and closing of this Agreement;
(b) remain operative and in full force and effect regardless of any
investigation made by or on behalf of: you or any person who controls
you within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act; the Dealer-Manager or any person who controls the
Dealer-Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act; or any other indemnified party; and
(c) survive any sale, acceptance or delivery of Units under this Agreement.
9. TERMINATION. You shall have the right to terminate this Agreement, other
than the indemnification provisions of Section 7, by giving written notice
any time at or before a closing date if:
(a) the Dealer-Manager has failed, refused, or been unable at or before the
closing date, to perform any of its obligations under this Agreement;
or
(b) an event has materially and adversely affected the value of the Units.
The Dealer-Manager may terminate this Agreement, other than the
indemnification provisions of Section 7, for any reason and at any time by
promptly giving written notice to you.
10. FORMAT OF CHECKS/ESCROW AGENT. Pending receipt of the Minimum Offering
Amount (subject to the additional restrictions with respect to Iowa and
Pennsylvania residents as set forth in the Dealer-Manager Agreement), the
Dealer-Manager and you, including if you are a customer carrying
broker/dealer, agree that all subscribers shall be instructed to make their
checks, drafts, or money orders payable solely to "Lease Equity Appreciation
Fund II, L.P. Escrow Account," and you agree to comply with Rule 15c2-4
adopted under the 1934 Act.
If you receive a check, draft, or money order not conforming to the
foregoing instructions, you agree to return the check, draft, or money order
directly to the subscriber not later than the end of the next business day
following its receipt from the subscriber. If the Dealer-Manager receives a
check, draft, or money order not conforming to the foregoing instructions,
then the Dealer-Manager shall return the check, draft, or money order to you
not later than the end of the next business day following its receipt by the
Dealer-Manager and you shall then return the check, draft, or money order
directly to the subscriber not later than the end of the next business day
following its receipt from the Dealer-Manager. Checks, drafts, or money
orders received by you which conform to the foregoing instructions shall be
transmitted by you as set forth in Section 11.
You agree that you are bound by the terms of the escrow agreement, a copy of
which is attached to the Dealer-Manager Agreement as Exhibit "A" (the
"Escrow Agreement").
11. TRANSMITTAL PROCEDURES. You, including if you are a customer carrying
broker/dealer, shall transmit received investor funds in accordance with the
following procedures.
(a) Pending receipt of the Minimum Offering Amount (subject to the
additional restrictions with respect to Iowa and Pennsylvania residents
as set forth in the Dealer-Manager Agreement), you shall promptly
transmit any
Anthem Securities, Inc. 10
Selling Dealer Agreement
and all checks, drafts, and money orders received by you from
prospective purchasers of Units and the original executed Subscription
Agreements to the Dealer-Manager by the end of the next business day
following receipt of the check, draft, or money order by you. By the
end of the next business day following its receipt of the check, draft,
or money order and the original executed Subscription Agreement, the
Dealer-Manager shall transmit the check, draft, or money order and a
copy of the executed Subscription Agreement to the escrow agent (the
"Escrow Agent") under the Escrow Agreement, and the original executed
Subscription Agreement and a copy of the check, draft, or money order
to the Partnership.
(b) On receipt by you of notice from the Partnership or the Dealer-Manager
that the Minimum Offering Amount (subject to the additional
restrictions with respect to Iowa and Pennsylvania residents as set
forth in the Dealer-Manager Agreement) has been received, you agree
that all subscribers thereafter may be instructed, in the Partnership's
sole discretion, to make their checks, drafts, or money orders payable
solely to "Lease Equity Appreciation Fund II, L.P. Subscription
Account."
Thereafter, you shall promptly transmit any and all checks, drafts, and
money orders received by you from prospective purchasers of Units and
the original executed Subscription Agreement to the Dealer-Manager by
the end of the next business day following receipt of the check, draft,
or money order by you. By the end of the next business day following
its receipt of the check, draft, or money order and original executed
Subscription Agreement, the Dealer-Manager shall transmit the check,
draft, or money order and the original executed Subscription Agreement
to the Partnership.
12. PARTIES. This Agreement shall inure to the benefit of and be binding on you,
the Dealer-Manager, and any respective successors and assigns. This
Agreement shall also inure to the benefit of the indemnified parties and
their successors and assigns. This Agreement is intended to be and is for
the sole and exclusive benefit of the parties to this Agreement, and their
respective successors and assigns, and the indemnified parties and their
successors and assigns, and for the benefit of no other person. No other
person shall have any legal or equitable right, remedy or claim under or
with respect to this Agreement. No purchaser of any of the Units from you
shall be construed to be a successor or assign merely by reason of the
purchase.
13. RELATIONSHIP. You are not authorized to hold yourself out as an agent of the
Dealer-Manager, the General Partner, the Partnership or any other Selling
Dealer. This Agreement shall not: constitute you a partner of the General
Partner, the Dealer-Manager, the Partnership or any general partner of the
Partnership, or any other Selling Dealer; nor render the General Partner,
the Dealer-Manager, the Partnership or any general partner of the
Partnership, or any other Selling Dealer liable for any of your obligations.
14. EFFECTIVE DATE. This Agreement is made effective between the parties to this
Agreement as of the date accepted by you as indicated by your signature to
this Agreement.
15. ENTIRE AGREEMENT, WAIVER.
(a) This Agreement constitutes the entire agreement between the parties to
this Agreement and shall not be amended or modified in any way except
by subsequent agreement executed in writing, and no party shall be
liable or bound to the other by any agreement, except as specifically
set forth in this Agreement.
(b) Any party to this Agreement may waive, but only in writing, any term,
condition, or requirement under this Agreement that is intended for its
benefit. However, any written waiver of any term or condition of this
Anthem Securities, Inc. 11
Selling Dealer Agreement
Agreement shall not operate as a waiver of any other breach of that
term or condition. Also, any failure to enforce any provision of this
Agreement shall not operate as a waiver of that provision or any other
provision of this Agreement.
16. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Pennsylvania. Unless the context
otherwise requires, "Section" references in this Agreement are references to
Sections of this Agreement.
17. NOTICES.
(a) Any notice, request, or consent provided for or permitted to be given
under this Agreement must be in writing and must be given by depositing
it in the United States mail, addressed to the party to be notified,
postpaid, and registered or certified with return receipt requested, or
by delivering it in person or by telecopier to that party. Notice given
by personal delivery or mail shall be effective on actual receipt.
Notice given by telecopier shall be effective on actual receipt if
received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours.
(b) Any communications from you shall be addressed to the Dealer-Manager at
0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000;
Telecopy: (000) 000-0000.
(c) Any notice from the Dealer-Manager to you shall be deemed to have been
duly given if mailed, telecopied or personally delivered to you at your
address shown below.
18. COMPLAINTS. The Dealer-Manager and you agree as follows:
(a) to notify the other if either receives an investor complaint in
connection with the offer or sale of Units by you;
(b) to cooperate with the other in resolving the complaint; and
(c) to cooperate in any regulatory examination of the other to the extent
it involves this Agreement or the offer or sale of Units by you.
19. PRIVACY. The Dealer-Manager and you each acknowledge that certain
information made available to the other under this Agreement may be deemed
nonpublic personal information under the Xxxxx-Xxxxx-Xxxxxx Act, other
federal or state privacy laws (as amended), and the rules and regulations
promulgated thereunder, which are referred to collectively as the "Privacy
Laws." The Dealer-Manager and you agree as follows:
(a) not to disclose or use the information except as required to carry out
each party's respective duties under this Agreement or as otherwise
permitted by law in the ordinary course of business;
(b) to establish and maintain procedures reasonably designed to assure the
security and privacy of all the information; and
(c) to cooperate with the other and provide reasonable assistance in
ensuring compliance with the Privacy Laws to the extent applicable to
either or both the Dealer-Manager and you.
20. ANTI-MONEY LAUNDERING PROVISION. You represent and warrant to the General
Partner and the Dealer-Manager that you have in place and will maintain
suitable and adequate "know your customer" policies and
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Selling Dealer Agreement
procedures and that you will comply with all applicable laws and
regulations regarding anti-money laundering activity and will provide
documentation of the foregoing to the General Partner and the
Dealer-Manager on written request.
21. ACCEPTANCE. Please confirm your agreement to become a Selling Dealer under
the terms and conditions set forth above by signing and returning the
enclosed duplicate copy of this Agreement to us at the address set forth
above.
Sincerely,
______________________ , 2004 ANTHEM SECURITIES, INC.
Date
By:___________________________________
Name: Xxxxxxx X. Xxxxx, Vice President
ACCEPTANCE:
We accept your invitation to become a Selling Dealer under all the
terms and conditions stated in the above Agreement and confirm that all the
statements set forth in the above Agreement are true and correct. We hereby
acknowledge receipt of the Prospectuses and Sales Literature and a copy of the
Dealer-Manager Agreement referred to above.
______________________ , 2004 ______________________________________,
Date a(n) ________________ corporation,
ATTEST:
_____________________________ By:___________________________________
(SEAL) Secretary ____________________, President
______________________________________
(Address)
______________________________________
______________________________________
______________________________________
(Telephone Number)
Your CRD Number is ___________________
Your Tax ID Number is ________________
Anthem Securities, Inc. 13
Selling Dealer Agreement
APPENDIX I TO SELLING DEALER AGREEMENT
In partial consideration for the payment to you, as Selling Dealer, by the
Dealer-Manager of the Sales Commission as set forth in Section 2(a) of the
Selling Dealer Agreement, you warrant, represent, covenant, and agree with the
Dealer-Manager that you, as Selling Dealer, shall do the following:
o prominently and promptly announce your participation in the
offering as Selling Dealer to your registered representatives,
whether by newsletter, e-mail, mail or otherwise, which
announcement also shall advise your registered representatives to
contact __________________ in whose territory the registered
representative is located, with a copy of the announcement
provided concurrently to the Dealer-Manager; and
o provide the Dealer-Manager with the names, telephone numbers,
addresses and e-mail addresses of your registered representatives,
which information shall be kept confidential by the Dealer-Manager
and the General Partner and shall not be used for any purpose
other than the marketing of the offering as set forth in the
Dealer-Manager Agreement and the Selling Dealer Agreement.
Further, you, as Selling Dealer, agree that the Dealer-Manager and
the General Partner may directly contact your registered
representatives, in person or otherwise, to:
o inform them of the offering;
o explain the merits and risks of the offering; and
o otherwise assist in your registered representatives' efforts
to solicit and sell Units.
Anthem Securities, Inc. 14
Selling Dealer Agreement
SCHEDULE A
(FOR BLUE SKY PURPOSES)
Name of Firm:________________________________
Please check the states or jurisdictions in which you are registered as a
broker/dealer in good standing.
1. Alabama [ ] 27. Montana [ ]
2. Alaska [ ] 28. Nebraska [ ]
3. Arkansas [ ] 29. Nevada [ ]
4. Arizona [ ] 30. New Hampshire [ ]
5. California [ ] 31. New Jersey [ ]
6. Colorado [ ] 32. New Mexico [ ]
7. Connecticut [ ] 33. New York [ ]
8. Delaware [ ] 34. North Carolina [ ]
9. District of Columbia [ ] 35. North Dakota [ ]
10. Florida [ ] 36. Ohio [ ]
11. Georgia [ ] 37. Oklahoma [ ]
12. Hawaii [ ] 38. Oregon [ ]
13. Idaho [ ] 39. Pennsylvania [ ]
14. Illinois [ ] 40. Rhode Island [ ]
15. Indiana [ ] 41. South Carolina [ ]
16. Iowa [ ] 42. South Dakota [ ]
17. Kansas [ ] 43. Tennessee [ ]
18. Kentucky [ ] 44. Texas [ ]
19. Louisiana [ ] 45. Utah [ ]
20. Maine [ ] 46. Vermont [ ]
21. Maryland [ ] 47. Virginia [ ]
22. Massachusetts [ ] 48. Washington [ ]
23. Michigan [ ] 49. West Virginia [ ]
24. Minnesota [ ] 50. Wisconsin [ ]
25. Mississippi [ ] 51. Wyoming [ ]
26. Missouri [ ] 52. Puerto Rico [ ]
Comments:______________________________________________________________________
_______________________________________________________________________________
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Selling Dealer Agreement
