EXHIBIT 1.2
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EXHIBIT "A" TO FORM OF
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DEALER-MANAGER AGREEMENT WITH XXXXX FUNDING, INC.
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EXHIBIT "A"
ESCROW AGREEMENT
THIS AGREEMENT is dated as of ________________________, 2004, by and
among LEAF Financial Corporation, a Delaware corporation (the "GENERAL
PARTNER"), Anthem Securities, Inc., a Pennsylvania corporation, Xxxxx Funding,
Inc., a Pennsylvania corporation (Anthem Securities, Inc. and Xxxxx Funding,
Inc. are sometimes referred to collectively in this Agreement as the
"DEALER-MANAGER"), Lease Equity Appreciation Fund II, L.P., a Delaware limited
partnership (the "PARTNERSHIP"), and COMMERCE BANK, NATIONAL ASSOCIATION, 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, Anthem Securities, Inc. for all states other than Minnesota
and New Hampshire and Xxxxx Funding, Inc. for Minnesota and New Hampshire have
each executed an agreement (collectively the "DEALER-MANAGER AGREEMENT") with
the General Partner under which each Dealer-Manager will in its respective
states 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.
Escrow 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 the Commerce Bank
Trust Capital Reserves Money Market Account, which is an
interest-bearing 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
Escrow Agreement 2
from Pennsylvania or Iowa residents, total $3,000,000 or more. The
Dealer-Manager and the General Partner 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 third-party 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 this
Agreement, then the Escrow Agent may consult with its counsel and rely
without liability on written opinions given to it by its counsel.
Escrow Agreement 3
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
Section 10 shall survive the termination of this Agreement and the
resignation or removal of the Escrow Agent.
Escrow Agreement 4
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, National Association
0000 Xxxxx 00 Xxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Corporate Trust Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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 Financial Corporation
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, President and Chief Operating 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
Xxxxx Funding, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
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.
Escrow Agreement 5
(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.
(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, NATIONAL ASSOCIATION
As Escrow Agent
By:
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(Authorized Officer)
LEAF FINANCIAL CORPORATION
By:
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Xxxxx Xxxxxx, President and Chief Operating Officer
ANTHEM SECURITIES, INC.
By:
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Xxxxxxx X. Xxxxx, Vice President
XXXXX FUNDING, INC.
By:
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Xxxxxxx X. Xxxxx, Xx., President
LEASE EQUITY APPRECIATION FUND II, L.P.
By: LEAF FINANCIAL CORPORATION
General Partner
By:
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Xxxxx Xxxxxx, President and Chief Operating Officer
Escrow Agreement 6
APPENDIX I TO ESCROW AGREEMENT
Compensation for Services of Escrow Agent
SCHEDULE OF FEES (1)
RE: ESCROW AGENT SERVICES FOR LEAF FINANCIAL CORPORATION
A. Acceptance Fee: $1,000
This is a one-time fee to establish the account on our records.
B. Administration Fee: (2) $4,000
This is a one-time fee to maintain your account on our system.
If the subscription should fail, there is an additional fee $10 per check
To return funds to the investors.
Additional fee for calculation of interest and prepare checks. $1,000
C. Out of Pocket Expenses (annually in arrears): (3) At Cost
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(1) All fees are due and payable upon the signing of the account
agreements.
(2) The Administration fee includes up to 300 subscribers.
(3) Out of Pocket Expenses shall be billed at cost which may include,
but is not limited to, postage, stationery, communication charges,
counsel fees and expenses or other experts as may be required from
time to time.
Escrow Agreement 7
CERTIFICATE OF AUTHORIZED REPRESENTATIVES
The following individuals are Authorized Representatives for purposes of giving
direction on behalf of LEAF Financial Corporation pursuant to that Escrow
Agreement dated __________________, 2004 by and between Commerce Bank, National
Association and LEAF Financial Corporation, Lease Equity Appreciation Fund II,
L.P., Anthem Securities, Inc., and Xxxxx Funding, Inc.
Name and Title Signature
Crit XxXxxx, Chairman of Board of Directors, CEO
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Xxxxx Xxxxxx, President, COO
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Dated this ___________ day of _____________, 2004
LEAF Financial Corporation
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By:
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Title:
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ATTEST:
LEAF Financial Corporation
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By:
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Title:
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Escrow Agreement 8
