DEALER-MANAGER AGREEMENT
(Best Efforts)
, 2002
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Anthem Securities, Inc.
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Gentlemen:
The undersigned, LEAF Asset Management, Inc. (the "General Partner"),
on behalf of Lease Equity Appreciation Fund I, L.P. (the "Partnership"),
confirms their agreement with you, as dealer-manager, as follows:
1. Description of Units. The Partnership proposes to issue and sell the
units in the Partnership (the "Units") at a price of $100 per Unit
subject to the discounts set forth in Section 4(c) of this Agreement
for certain investors. Except as provided in Section 4(f) relating to
the Pennsylvania Escrow Account, as such term is defined therein, the
proceeds of any sales of the Units will be held in an escrow account
(the "Escrow Account") pursuant to an escrow agreement, a form of which
is attached hereto as Exhibit "A" (the "Escrow Agreement") until the
Partnership has received and accepted subscriptions for the Minimum
Offering Amount (as such term is defined below in this Section 1). Upon
such receipt and acceptance, the Escrow Account will terminate and the
subscription proceeds shall be delivered to the Partnership.
No subscriptions to the Partnership will be accepted after whichever of
the following events occurs first, (the "Offering Termination Date"):
(a) receipt and acceptance of subscriptions of 500,000 Units;
(b) ___________, 2003, if subscriptions for 20,000 Units,
excluding Units sold to the General Partner and its
affiliates and to Pennsylvania residents (the "Minimum
Offering Amount"), have not been received and accepted by
such date; or
(c) ___________, 2004;
provided, however, no subscriptions will be accepted after
_____________, 2003 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 or requalification has been obtained.
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 (Commission File No. 333-___________), including a
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prospectus relating to the offer and sale of the Units. The
term "Registration Statement" means such 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) The Registration Statement, at the date of filing thereof with
the Commission, 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 upon and in conformity with information
furnished to the Partnership in writing by you expressly for
use therein.
(c) The Partnership will not file any amendment to the
Registration Statement or make any amendment or supplement to
the Prospectus of which you shall not previously have been
advised.
(d) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period 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 dealer, without charge, as many copies of the Prospectus
(and of any amendment or supplement thereto) as you may
reasonably request. If during the offering period any event
shall occur 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 therein in order to make the statements therein, 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 forthwith prepare and file with the
Commission an appropriate supplement or amendment thereto, and
will expeditiously furnish to you and dealers a reasonable
number of copies thereof.
(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 an Appendix
to the Prospectus (the "Partnership Agreement"), subject only
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,
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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. 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 Exhibit "B"
hereto, and to form and manage a selling group composed of soliciting
broker/dealers (the "Selling Agents"), each of which shall be duly
registered as a broker-dealer under the Securities Exchange Act of
1934, as amended (the "1934 Act"), duly registered as a broker-dealer
in the jurisdictions where they are required to be registered in order
to offer and sell the Units, and a member of the National Association
of Securities Dealers, Inc. ("NASD") in good standing, and shall enter
into a "Selling Agent Agreement" in substantially the form attached to
this Agreement as Exhibit "C."
The General Partner shall have three business days after the receipt of
an executed Selling Agent Agreement to refuse that Selling Agent's
participation.
4. Compensation and Fees.
(a) As Dealer-Manager you shall receive from the General Partner
the following compensation, based on each Unit sold to
investors and whose subscriptions for Units are accepted and
closed upon by the General Partner:
(i) a Dealer-Manager fee of 2% of the public offering
price of each Unit sold;
(ii) a sales commission of 7% of the public offering price
of each Unit sold; and
(iii) a reimbursement of bona fide accountable due
diligence expenses of you and the Selling Agents to a
maximum of 1% of the public offering price of each
Unit sold.
(b) All of the sales commissions shall be reallowed to the Selling
Agents except for Units sold directly by you. The due
diligence expense reimbursement shall be payable to a Selling
Agent only to the extent of the Units sold by it.
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(c) Notwithstanding the foregoing, the General Partner, you, the
Selling Agents and each of your and their officers, directors
and affiliates, may subscribe to Units for a subscription
price reduced by the Dealer-Manager fee, the sales commission
and due diligence expense reimbursement, which shall not be
paid to you.
(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 15.
Unless at least the Minimum Offering Amount is received on or
before the Offering Termination Date, the offering of Units
shall be terminated, in which event:
(i) the Dealer-Manager fee, the sales commission and the
due diligence expense reimbursement shall not be
payable to you;
(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 Agents 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 Subscription 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
Agents 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 set forth in this Section 4:
(i) the Minimum Offering Amount shall not include Units
subscribed by Pennsylvania investors;
(ii) the proceeds of Unit sales from Pennsylvania
investors shall be deposited in a separate escrow
account (the "Pennsylvania Escrow Account") by the
Escrow Agent; and
(iii) such proceeds shall not be released from the
Pennsylvania Escrow Account, and no fees,
reimbursements and commissions shall be payable with
respect thereto, until an aggregate of $2,500,000 of
subscription proceeds have been received and accepted
by the General Partner.
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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
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 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. 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 Agents to comply with all the provisions of
the 1933 Act. You and the Selling Agents 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,
applicable state securities laws and regulations, this
Agreement, or the NASD Conduct Rules. You further agree:
(i) To advise the General Partner in writing of each
jurisdiction in which you and the Selling Agents
propose to offer or sell the Units; and not to offer
and sell, or to permit any Selling Agent 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:
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A. has been qualified in the jurisdiction;
B. is exempt from the qualification requirements
imposed by such jurisdiction; or
C. is otherwise not required to be qualified.
(ii) To provide, and to require the Selling Agents to
provide each offeree with the following:
A. a copy of the Prospectus; and
B. any supplement or amendment to the Prospectus.
Also, unless advised otherwise by the General
Partner, you and the Selling Agents may choose to
provide each offeree with the following sales
materials (the "Sales Literature"):
A. a brochure entitled ____________________; and
B. ________________________
(iii) If a supplement or amendment to the Prospectus is
prepared and delivered to you by the Partnership:
A. to distribute, and to require each Selling Agent
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 Agent.
B. to include, and to require each Selling Agent to
include, each supplement or amendment in all
future deliveries of any Prospectus.
(iv) In connection with any offer or sale of the Units.
A. to comply, and to require each Selling Agent to
comply in all respects with statements set forth
in the Prospectus, the Partnership Agreement,
and any supplements or amendments to the
Prospectus;
B. not to make, and to require each Selling Agent
not to make, any statement inconsistent with the
statements in the Prospectus, the Partnership
Agreement, and any supplements or amendments to
the Prospectus;
C. not to make, and to require each Selling Agent
not to make, any untrue or misleading statements
of a material fact in connection with the Units;
and
D. not to provide, and require each Selling Dealer
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.
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(v) Prior to the sale of any of the Units, to have, and
require each Selling Dealer to have, reasonable
grounds to believe that a purchase of the Units is a
suitable and appropriate investment for each
subscriber. In making this determination, you and the
Selling Agents shall ascertain that the subscriber:
A. meets the minimum income and net worth standards
set forth in the Prospectus;
B. can reasonably benefit from an investment in the
Units based on the subscriber's overall
investment objectives and portfolio structure;
C. is able to bear the economic risk of an
investment in the Units based on the
subscriber's overall financial situation; and
D. has apparent understanding of:
(1) the fundamental risks of an investment
in the Units;
(2) the risk that the subscriber may lose
his or her entire investment;
(3) the lack of liquidity of the Units;
(4) the restrictions on transferability of
the Units;
(5) the background and qualifications of the
General Partner and the persons
responsible for managing the
Partnership; and
(6) tax consequences of an investment in the
Units.
You and the Selling Agents 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.
(vi) To use your best efforts in the solicitation and sale
of the Units and to coordinate and supervise the
efforts of the Selling Agents, and to require any
Selling Agent to agree to use its best efforts in the
solicitation and sale of the Units, including that
the prospective purchasers properly complete the
Subscription Agreement, together with any additional
forms provided in any supplement or amendment to the
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 it. Subscription funds and
executed Subscription Agreements shall be transmitted
as set forth in Section 16.
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(f) You agree and covenant that the representations and warranties
you make in this Agreement are and shall be true and correct
at the applicable closing date, and you shall have fulfilled
all your obligations under this Agreement at the applicable
closing date.
7. 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 in which it deems the
qualification or registration is not warranted 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 does not assume and will not
assume any obligation or responsibility as to your right or any Selling
Agent'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 Agents 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
are 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 Agent's status as a
broker or dealer in any jurisdiction.
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.
8. Expense of Sale. Except as otherwise specifically set froth 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 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.
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9. 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 the representations
and warranties of the Partnership and the General Partner made in this
Agreement, and to the performance by the Partnership and the General
Partner of their obligations under this Agreement.
10. 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.
11. Indemnification and Contribution.
(a) The Partnership and the General Partner agree to indemnify,
hold harmless and defend you and your affiliates (within the
meaning of Rule 405 of the ▇▇▇▇ ▇▇▇) 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 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.
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(b) If any action, suit or proceeding shall be brought against any
Underwriter Indemnified Party in respect of which indemnity
may be sought pursuant to Section 11(a), such Underwriter
Indemnified Party shall promptly notify the General Partner in
writing, and the Partnership and the General Partner may elect
to assume the defense thereof, including the employment of
counsel (which counsel shall be reasonably acceptable to such
Underwriter Indemnified Party) and payment of all reasonable
fees and expenses. The failure or delay by an Underwriter
Indemnified Party to notify the indemnifying party shall not
relieve it from liability which it may have to an Underwriter
Indemnified Party unless such failure or delay materially
prejudices the indemnifying party's ability to defend such
action, suit or proceeding on behalf of such Underwriter
Indemnified Party. Such 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 such Underwriter Indemnified Party
unless (i) the Partnership and the General Partner have agreed
in writing to pay such fees and expenses, (ii) the Partnership
and the General Partner have failed to assume the defense or
employ counsel reasonably satisfactory to such Underwriter
Indemnified Party or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties)
include both such Underwriter Indemnified Party and the
Partnership and the General Partner, and such Underwriter
Indemnified Party shall have been advised by its counsel that
representation of such Underwriter Indemnified Party and 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
Partnership and the General Partner shall not have the right
to assume the defense of such action, suit or proceeding on
behalf of such Underwriter Indemnified Party) or that there
may be legal defenses available to such Underwriter
Indemnified Party that are different from or in addition to
those available to the Partnership and the General Partner. It
is understood, however, that the Partnership and 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 such 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 Partnership and the General Partner
shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent
(which consent shall not be unreasonably withheld), but if
settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or
proceeding, the Partnership and the General Partner agree to
indemnify and hold harmless any Underwriter Indemnified Party,
to the extent provided in the preceding paragraph, from and
against any Loss by reason of such settlement or judgment.
(c) You agree to indemnify, hold harmless and defend the General
Partner and the Partnership, their respective directors and
officers who sign the Registration Statement, and 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 (each, a "Partnership Indemnified Party") to the same
extent as the foregoing indemnity to you and the Selling
Agents with respect to information furnished in writing by or
on behalf of you expressly for use in the Registration
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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 shall be brought
against a Partnership Indemnified Party in respect of which
indemnity may be sought pursuant to this paragraph (c), you
shall have the rights and duties given to the Partnership and
the General Partner by paragraph (b) above.
(d) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party under paragraph (a) or (c)
hereof in respect of any Losses, then an indemnifying party,
in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified
party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the
General Partner and the Partnership on the one hand and you
and the Selling Agents on the other hand from the offering of
the Units, or (ii) if, but only if, the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as 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 Agents on the other in connection
with the statements or omissions that resulted in such 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 Agents on
the other shall be deemed to be in the same proportion as the
total net proceeds from the Offering (before deducting
expenses) received by Partnership bear to the total
underwriting commissions received by you and the Selling
Agents. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) 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 in respect of which
any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or
proceeding.
(f) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section 11 shall be
paid by the indemnifying party to the indemnified party as
such Losses are incurred.
12. 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 11, shall survive the delivery,
execution and closing of this Agreement, and shall 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 the
1933 Act; by the General Partner, or any of its officers, directors or
any person who controls the General Partner within the meaning of the
1933 Act; or any other indemnified party, and shall survive delivery of
the Units.
13. Termination. You shall have the right to terminate this Agreement
other than the indemnification provisions of Section 11, by giving
written notice any time at or before a closing date:
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(a) if the Partnership and the General Partner have failed,
refused, or been unable at or before a closing date, to
perform any of their obligations under this Agreement; or
(b) there has occurred an event materially and adversely affecting
the value of the Units.
The Partnership and the General Partner may terminate this Agreement,
other than the indemnification provisions of Section 11, for any reason
and at any time, by promptly giving written notice to you at or before
a closing date.
14. Notices. All notices or requests or consents provided for or permitted
to be given pursuant to this Agreement must be in writing and must be
given by depositing same in the United States mail, addressed to the
party to be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by
telecopier to such party. Notice given by personal delivery or mail
shall be effective upon actual receipt. Notice given by telecopier
shall be effective upon 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. All notices to be sent to you shall
be sent to ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President;
all notices to be sent to the General Partner or the Partnership shall
be sent c/o Leaf Asset Management, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇; or at such
other address as such party may stipulate to the other parties in the
manner provided in this Section.
15. Format of Checks/Escrow Agent. Subject to Section 4(f) with respect to
the deposit in escrow of subscriptions of Pennsylvania residents prior
to receipt of $2,500,000 of subscriptions, until receipt of the Minimum
Offering Amount, the General Partner and you and the Selling Agents
agree that all subscribers shall be instructed to make their checks,
drafts, or money orders payable solely to "__________________________,"
as escrow agent (the "Escrow Agent") for the Partnership under the
Escrow Agreement, and you agree and shall require the Selling Agents 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 Agent not later than the end of the next
business day following its receipt by you. The Selling Agent 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 Agent
which conform to the foregoing instructions shall be transmitted by you
as set forth in Section 16.
You represent that you have executed the Escrow Agreement and agree
that you are bound by the terms thereof.
16. Transmittal Procedures. You and each Selling Agent shall transmit
received investor funds in accordance with the following procedures.
For purposes of the following, the term "Selling Agent" 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 Pennsylvania
residents, on receipt the Selling Agents shall promptly
transmit any and all checks, drafts, and money orders received
by them from subscribers and the original executed
12
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 Agent. 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 Agents
agree that, subject to Section 4 (f) with respect to
subscriptions from Pennsylvania residents, all subscribers
then may be instructed, in the General Partner's sole
discretion, to make their checks, drafts, or money orders
payable solely to "________________"
Thereafter, the Selling Agents 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
Agent. 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.
17. 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, 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 in respect of this Agreement.
No purchaser of any of the Units from you or a Selling Agent shall be
construed a successor or assign merely by reason of the purchase.
18. Effective Date. This Agreement is made effective between the parties as
the date accepted by you as indicated by your signature to this
Agreement.
19. Entire Agreement Waiver. This Agreement constitutes the entire
agreement between the parties, and shall not be amended or modified in
any way except by subsequent agreement executed in writing. Any party
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 of
this Agreement, nor shall any failure to enforce any provision of this
Agreement 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.
21. Complaints. The General Partner and you, as Dealer-Manager, agree as
follows:
13
(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 Agent;
(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 Agent.
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
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 designated 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.
14
23. 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 I, L.P.
By: LEAF Asset Management, Inc.
General Partner
, 2002 By:
----------------- ----------------------------------------------------
Date ▇▇▇▇▇ ▇▇▇▇▇▇, President, Chief Executive Officer and
Secretary
GENERAL PARTNER:
LEAF ASSET MANAGEMENT, INC.
, 2002 By:
----------------- ----------------------------------------------------
Date ▇▇▇▇▇ ▇▇▇▇▇▇, President, Chief Executive Officer and
Secretary
DEALER-MANAGER:
ANTHEM SECURITIES, INC.
, 2002 By:
----------------- ----------------------------------------------------
Date ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
15
EXHIBIT "A"
ESCROW AGREEMENT
THIS AGREEMENT is dated as of _____________________________________,
2002, 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 I, L.P., a Delaware limited
partnership (the "Partnership"), and ________, as escrow agent (the "Escrow
Agent").
WITNESSETH:
WHEREAS, the Partnership intends to offer for sale to qualified investors
up to 500,000 limited partnership 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
Agents").
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
residents (the "Minimum Subscription 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 500,000 Units; or
o __________, 2003, if the Minimum Subscription Amount has not been
received and accepted by such date; or
o __________, 2004;
provided, however, no subscriptions will be accepted after _________, 2003 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 or
requalification 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
Subscription Proceeds deposited with the Escrow Agent until the Minimum
Subscription Amount has been obtained and the Escrow Agent agrees to hold such
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 such capacity during the
term and subject to the provisions of this Agreement.
2. Deposit of Subscription Proceeds. Pending receipt of the Minimum
Subscription 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.
Payment for each subscription for Units shall be in the form of a check
made payable to "Lease Equity Appreciation Fund I, L.P. Escrow
Account." The Escrow Agent shall deliver a receipt to either:
(a) the Dealer-Manager and the General Partner for each deposit of
Subscription Proceeds made under this Agreement by the
Dealer-Manager; or
(b) the General Partner for each deposit of Subscription Proceeds
made under this Agreement by the General Partner.
3. Investment of Subscription Proceeds. Subject to Section 6, the
Subscription Proceeds shall be deposited in an interest bearing account
maintained by the Escrow Agent. Subscription Proceeds may be
temporarily invested by the Escrow Agent only in income producing
short-term, highly liquid investments issued or guaranteed by the
United States government or any agency or instrumentality thereof where
there is appropriate safety of principal, such as U.S. Treasury Bills.
The interest earned shall be added to the Subscription Proceeds and
disbursed in accordance with the provisions of Paragraph 4 or 5 of this
Agreement, 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 Subscription Amount has been
received and accepted by the General Partner; and
(b) determines that the Minimum Subscription 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 constitutes 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.
2
5. Separate Partnership Account. Subject to Section 6, during the
continuation of the offering, after the Escrow Agent has performed its
duties described in Paragraph 4, and 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 Residents. The Escrow Agent shall deposit
subscriptions from Pennsylvania residents into a separate escrow
account. Funds shall be released from such account in accordance with
Section 4 (and Subscription Proceeds from Pennsylvania 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 Partnership, including those from Pennsylvania
residents, shall be $2,500,000 or more.
7. Distributions to Subscribers.
(a) If less than the Minimum Subscription Amount has been received
and accepted by the General Partner by 12:00 p.m. (noon), local
time, on the Offering Termination Date, or for any other reason,
then the General Partner shall notify the Escrow Agent, and the
Escrow Agent promptly shall 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.
(b) If a subscription for Units submitted by an 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 of the rejection, and the
Escrow Agent promptly shall 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 paid
or investment income earned on the Subscriber's Subscription
Proceeds while held by the Escrow Agent in the escrow account.
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
3
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.
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 (registration no. 333- ) 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.
11. Resignation or Removal of Escrow Agent. The Escrow Agent may resign
such after giving thirty days' prior written notice to the other
parties to this Agreement. 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.
4
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
consent of all the parties to this Agreement.
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:
---------------------------
---------------------------
Attention: __________________________
Phone: ____________________
Facsimile: __________________
If to the Partnership:
Lease Equity Appreciation Fund I, L.P.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇-▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the General Partner:
LEAF Asset Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, President, Chief Executive Officer
and Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Dealer-Manager:
Anthem Securities, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the day and year first above written.
As Escrow Agent
By:
---------------------------------------
(Authorized Officer)
LEAF ASSET MANAGEMENT, INC.
By:
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President,
Chief Executive Officer and Secretary
ANTHEM SECURITIES, INC.
By:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
LEASE EQUITY APPRECIATION FUND I, L.P.
By: LEAF ASSET MANGAGEMENT, INC.
General Partner
By:
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President,
Chief Executive Officer and Secretary
6
APPENDIX I TO ESCROW AGREEMENT
Compensation for Services of Escrow Agent
Escrow Agent annual fee per year or any part thereof $____________
7
