EXHIBIT 1
SALES AGREEMENT
THIS SALES AGREEMENT is entered into as of the 20th day of December, 1998,
by and between Portfolio Boost I, L.P., an Iowa limited partnership (the
"Partnership"), and Vacation Investors, Inc., an Iowa corporation ("VII").
Portfolio Boost, L.L.C., an Iowa limited liability company (the "General
Partner"), is also a party hereto for purposes of Sections 2, 7, 8 and 11(d)
below.
RECITALS
WHEREAS the Partnership is an Iowa limited partnership of which the General
Partner is the general partner; and
WHEREAS the Partnership desires to raise capital to engage in the business
of speculative trading of various domestic and foreign futures contracts and
options and contemplates raising such capital through the offering of up to a
maximum of $25,000,000 of units of limited partnership interests ("Units")
pursuant to a Registration Statement on Form SB-2 to be filed with the
Securities and Exchange Commission (the "SEC") (the "Offering"); and
WHEREAS VII is a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD"), is registered as a broker dealer with the
SEC, and is or will be, as the case may be, licensed by the appropriate
regulatory agency in each state in which Units may be offered and sold; and
WHEREAS the Partnership desires to retain VII as its exclusive sales agent
to use its best efforts to sell the Units, and VII is willing and desires to
serve as the exclusive sales agent for the sale of the Units on a best efforts
basis, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the Recitals, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Engagement.
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(a) Subject to the terms and conditions herein set forth, the
Partnership hereby engages and appoints VII as the Partnership's exclusive agent
to use VII's best efforts to sell Units for the Partnership's account. VII
hereby accepts such engagement and appointment and covenants, warrants and
agrees that all Units sold by it will be sold according to all of the terms and
conditions of the Offering, the Rules of Fair Practice of the
NASD and all state and federal laws applicable to VII's selling activities.
Neither VII nor any other person shall give any information or make any
representations, warranties or guarantees in connection with any offer or sale
of any Units other than as contained in the Prospectus utilized in connection
with the Offering (the "Prospectus") or in any other written materials as may be
expressly authorized in writing by the Partnership from time to time.
(b) VII shall use its best efforts as the Partnership's agent,
promptly following receipt of written notice from the Partnership of the
effective date of the Offering, to sell the Units, with all offers and sales to
in all events be only at the price per Unit to be specified in, and in such
quantities and to such persons and according to such terms as are contained in,
the Prospectus and the related Registration Statement on Form SB-2 and the
various related state Registration Statements (collectively, the "Registration
Statements"). VII shall comply with all requirements set forth in the Prospectus
and the Registration Statements, including, without limitation, the Escrow
Agreement included as an exhibit thereto (the "Escrow Agreement"). As provided
in the Escrow Agreement, during the Escrow Period (as that term is defined in
the Escrow Agreement), VII shall (i) instruct all subscribers to make checks for
subscriptions payable to "First American Bank--Escrow Agent For PB I," and (ii)
promptly (and in all events by 12:00 noon of the next business day after receipt
by VII) transmit all checks received from subscribers directly to the Escrow
Agent (as that term is defined in the Escrow Agreement). VII shall use and
distribute only the Prospectus, sales literature and advertising material that
has been prepared or distributed by the Partnership, and such other sales
literature and advertising material as shall conform in all respects to all
applicable securities and other laws, rules, regulations and orders, including,
without limitation, the Securities Act of 1933, and as shall be expressly
approved in writing by the Partnership. The Partnership reserves the right to
establish such additional procedures as it may deem necessary to insure
compliance with the requirements of the Offering and of any applicable laws,
rules, regulations or orders, and VII shall comply with all such additional
procedures to the extent that it has received notice thereof.
(c) During the term of this Agreement, the Partnership shall have full
authority to take such action as it may deem advisable with respect to all
matters pertaining to VII's activities and performance under this Agreement.
(d) The Units shall be offered and sold only where the Units may be
legally offered and sold and only to such persons as shall be legally qualified
to purchase the Units. The Partnership currently contemplates selling the Units
in the states listed in the attached Exhibit A, and unless VII shall receive
notice from the Partnership authorizing the offering and sale of Units in any
states other than those set forth on Exhibit A, no Units shall be offered or
sold except in such states. The Partnership also reserves the right, in its
sole discretion, to determine to not offer and sell any Units, or to at any time
and for any reason discontinue the offer and sale of Units, as the case may be,
in any state set forth on Exhibit
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A, and VII shall not offer and sell or shall discontinue the further offer and
sale of Units, as the case may be, in any such state upon receipt of notice from
the Partnership to such effect.
(e) Notwithstanding anything herein which may appear to be to the
contrary, VII shall have no obligation under this Agreement to purchase any of
the Units for its own account.
2. Compensation to VII. The General Partner agrees, subject to the
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following and to Section 8 below, to pay VII the following fees for the services
to be provided by VII pursuant to this Agreement:
(a) The General Partner shall pay VII a fee (the "Fee") on each new
subscription (including any additional subscription by an existing limited
partner in the Partnership) which is both accepted and collected by the General
Partner and the Partnership in the given calendar month in an amount calculated
by multiplying (i) the dollar amount of such new subscription (the "Subscription
Amount"), by (ii) 1.875%. The aggregate amount of Fees payable by the General
Partner with respect to any given calendar month shall be payable within ten
(10) business days of the close of that month.
(b) If the limited partner who contributed a Subscription Amount to
the Partnership has not, at any time before the Second Fee Date (as that term is
defined below) caused the limited partner's capital account with the Partnership
to fall below the Subscription Amount by reason of liquidations of units in the
Partnership by the limited partner (the "Second Fee Condition"), the General
Partner shall pay VII a fee (the "Second Fee") in an amount calculated by
multiplying (i) the Subscription Amount, by (ii) 1.875%. The term Second Fee
Date means the date which is the two (2) year anniversary of the date upon which
the Subscription Amount was effective (as determined by the Limited Partnership
Agreement of the Partnership) as a capital contribution to the Partnership. If a
Second Fee is payable by the General Partner, it shall be paid within ten (10)
business days of the Second Fee Date. For purposes of determining whether the
Second Fee Condition has been satisfied, any distributions made to the limited
partner by the Partnership shall be added back to the limited partner's capital
account, plus the amount by which any Partnership losses which have been
allocated to the limited partner's capital account exceed the Subscription
Amount (the "Loss Adjustment").
(c) If the limited partner who contributed a Subscription Amount to the
Partnership has not, at any time before the Third Fee Date (as that term is
defined below) caused the limited partner's capital account with the Partnership
to fall below the Subscription Amount by reason of liquidations of units in the
Partnership by the limited partner (the "Third Fee Condition"), the General
Partner shall pay VII a fee (the "Third Fee") in an amount calculated by
multiplying (i) the Subscription Amount, by (ii) 1.875%. The term Third Fee Date
means the date which is the three (3) year anniversary of the date upon which
the Subscription Amount was effective (as determined by the Limited Partnership
Agreement of the Partnership) as a capital contribution to the Partnership. If a
Third Fee is payable by the General Partner, it shall be paid within ten (10)
business days of the Third Fee Date. For purposes of determining whether the
Third Fee Condition has been satisfied, any distributions made to the limited
partner by the Partnership shall be added back to the limited partner's capital
account, plus the amount by which any Partnership losses which have been
allocated to the limited partner's capital account exceed the Subscription
Amount (the "Loss Adjustment").
In the event a limited partner contributes Subscription Amounts in
different months, the Fee, Second Fee and Third Fee shall be calculated and
payable separately based on each such respective Subscription Amount. In this
circumstance, however, if the limited partner subsequently liquidates units in
the Partnership, the amount of the liquidation proceeds shall be applied pro
rata against the Subscription Amounts in question for purposes of determining
the Loss Adjustment and whether the Second Fee Condition and the Third Fee
Condition have been satisfied for each such subscription. By way of example, if
a limited partner contributes $10,000 in month one, then contributes an
additional $10,000 in month six, and then liquidates $5,000 of units, $2,500 of
said liquidation proceeds shall be applied against each of the two $10,000
Subscription Amounts for purposes of determining the Loss Adjustment and whether
the Second Fee Condition and the Third Fee Condition have been satisfied for
purposes of each such subscription.
VII acknowledges and agrees that it shall not be entitled to and shall not
receive any compensation whatsoever from the Partnership for the services to be
provided and performed by VII under this Agreement, and that VII's compensation
for such services shall be payable solely by the General Partner, and the
Partnership shall have no liability or responsibility whatsoever for any such
compensation. VII accordingly also agrees that any breach or default by the
General Partner in the payment of any such compensation from time to time shall
not constitute a breach or default of this Agreement and that VII shall continue
to timely and fully perform all of its services, duties and obligations under
this Agreement for the full term hereof notwithstanding any such breach or
default from time to time by the General Partner.
3. Conditions to VII's Obligations. VII's obligations hereunder are
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subject during the full term of this Agreement and the Offering to: (a) the
performance by the Partnership of its obligations hereunder; and (b) the
conditions that (i) the Registration Statement on Form SB-2 pertaining to the
Offering shall have been declared effective by the SEC and shall remain
effective; (ii) the NASD shall have indicated that it does not disapprove of the
underwriting arrangements with respect to the Offering; and (iii) no stop order
shall have been issued by the SEC suspending the effectiveness of the Offering.
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4. Conditions to the Partnership's Obligations. The Partnership's
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obligations hereunder are subject during the full term of this Agreement and the
Offering to the conditions that: (a) the Registration Statement on Form SB-2
pertaining to the Offering shall have been declared effective by the SEC and
shall remain effective; (b) no stop order suspending the effectiveness of the
Offering or other order restraining the offer or sale of the Units shall have
been issued or proceedings therefor initiated or threatened by any state or
federal regulatory agency, including, without limitation, the SEC or the
Commodity Futures Trading Commission; and (c) VII shall have satisfactorily
performed all of its obligations hereunder.
5. Covenants of the Partnership. The Partnership covenants, warrants and
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represents, during the full term of this Agreement, that:
(a) It shall use its best efforts to prevent the sale of the Units
through persons other than VII.
(b) It shall provide VII, when received, with a copy of any letter
from the NASD in which the NASD indicates that it does not disapprove of the
underwriting arrangements with respect to the Offering.
(c) It shall use its best efforts to maintain the effectiveness of the
Registration Statement on Form SB-2 with the SEC and to file such amendments to
said Registration Statement as may be reasonably necessary for that purpose.
(d) It shall advise VII whenever and as soon as it receives or learns
of any order issued by the SEC or any state regulatory agency or any other
regulatory agency which suspends or withdraws any of the Registration
Statements, or prevents the use of the Prospectus, or which otherwise prevents
or suspends the Offering, or receives notice of any proceedings regarding any
such order.
(e) It shall use its best efforts to prevent the issuance of any order
described in subsection (d) above and to obtain the lifting of any such order if
issued.
(f) It shall give VII notice when the Offering becomes effective and
shall deliver to VII such number of copies of the Prospectus and any supplements
and amendments thereto, in the form in which filed with the SEC, as VII may
reasonably request in connection with the sale of the Units, which Prospectus
shall in all respects conform to the applicable requirements of the Securities
Act of 1933 and any applicable state securities law and all applicable rules and
regulations promulgated thereunder, and which Prospectus shall not contain any
untrue statement of a material fact or omit to state a material fact necessary
in
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order to make the statements made, in light of the circumstances under which
they are made, not misleading.
(g) It shall make available such number of copies of the Prospectus as
VII reasonably requests for the purposes contemplated by the Securities Act of
1933 and any applicable state securities law and the rules and regulations
promulgated thereunder.
(h) It shall promptly notify VII of any amendments or supplements to
Prospectus and shall furnish VII with copies thereof.
(i) It shall keep VII fully informed of any material development to
which the Partnership is a party or which concerns the business and condition of
the Partnership.
(j) It shall use its best efforts to cause the registration or
qualification of the Units for offering and sale under the securities laws of
all states listed on Exhibit A attached hereto, subject, however, to Section
1(d) above.
6. Covenants of VII. VII covenants, warrants and represents, and
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undertakes that:
(a) Based upon a review, to the extent relevant to the Offering, of
the items referred to in Rule 2810(b)(3) of the Rules of Fair Practice of the
NASD, as set forth in the Prospectus and other materials made available to it by
the Partnership, it has reasonable grounds to believe that all material facts
relating to the Offering are adequately disclosed and provide a basis for
evaluating the Offering.
(b) In recommending to a prospective subscriber the purchase of Units,
VII shall have reasonable grounds to believe, on the basis of information
obtained from the prospective subscriber concerning the subscriber's investment
objectives, other investments, financial situation and needs, and any other
information known by VII, that the prospective subscriber satisfies the criteria
as to suitability set forth in Rule 2810(b)(2)(B)(i), and prior to executing a
purchase transaction with respect to Units, VII shall inform the prospective
subscriber of all pertinent facts relating to the liquidity and marketability of
the Units during the term of the investment. This representation will survive
the termination of this Agreement.
(c) It shall maintain in its files such records as are required by
applicable rules of the NASD and state securities commissions disclosing the
basis upon which the determination of suitability was reached as to each
subscriber who subscribes for Units through it.
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(d) If a subscriber provides any subscription documents to VII, VII
shall provide the Partnership with such subscription documents.
(e) It undertakes to comply with all other applicable NASD Rules of
Fair Practice.
7. Payment of Costs and Expenses. Unless otherwise agreed by the General
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Partner from time to time, VII shall pay all costs and expenses incident to the
performance of VII's obligations under this Agreement, including:
(a) All expenses incident to the preparation, printing and filing of
all advertising originated by VII; and
(b) All other costs and expenses incurred in connection with VII's
sales efforts, except expenses which the Partnership has expressly assumed and
are incurred in connection with its due diligence with respect to the
Offering.
The amount of any costs and expenses of VII which may be reimbursed by the
General Partner in any consecutive forthcoming twelve (12) month period shall
not, when added to the Fees paid or payable on the aggregate subscriptions
accepted and collected by the General Partner and the Partnership during that
twelve (12) month period, exceed ten percent (10%) of such aggregate
subscriptions.
8. Term of Agreement. This Agreement shall become effective as of the
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date hereof. After this Agreement becomes effective, either party may terminate
it at any time for any reason by giving 30 days' prior written notice to the
other party; provided, however, that this Agreement shall in any event
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automatically terminate at the first occurrence of any of the following events:
(a) a stop order suspending the effectiveness of the Offering or other order
restraining the offer or sale of the Units shall have been issued by the SEC and
such order is not withdrawn by the SEC within 10 business days of the issuance
of such order; (b) the Offering shall be terminated; or (c) VII's license or
registration to act as a broker-dealer shall be revoked or suspended by any
federal or state regulatory agency and such revocation or suspension is not
cured within 10 days from the date of such occurrence. No further Second Fees or
Third Fees shall be payable by the General Partner to VII from and after the
date of the termination of this Agreement, whether this Agreement is terminated
by the Partnership or VII, and for whatever reason, with or without cause. VII
shall, however, be entitled to receive Fees pursuant to Section 2(a) following
the termination of this Agreement with respect to any new subscriptions which
were accepted by the General Partner prior to the effective date of the
termination of this Agreement, provided such subscriptions are in fact
subsequently collected by the Partnership.
9. Notices. All notices and communications hereunder shall be in writing
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and, if sent to the Partnership, shall be mailed to:
Portfolio Boost I, L.P.
Attn: Portfolio Boost, L.L.C.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
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or, if sent to VII, shall be mailed to:
Vacation Investors, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn: President
10. Successors. This Agreement may not be assigned or transferred by VII
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by operation of law or otherwise.
11. Construction.
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(a) This Agreement shall be governed by and construed in accordance
with the applicable laws of the State of Iowa and the laws of the United States,
but without regard to any provision or rule of law which would require the
application of the law of any other state or jurisdiction.
(b) Nothing in this Agreement shall constitute VII as in association
or in partnership with the Partnership and, instead, this Agreement shall only
constitute VII as an independent contractor (and not as an employee or other
agent of the Partnership) authorized by the Partnership to sell the Units
according to the terms expressly set forth herein.
(c) If any provision of this Agreement shall be deemed void, invalid
or ineffective for any reason, the remainder of the Agreement shall remain in
full force and effect.
(d) This Agreement embodies the entire understanding between the
parties hereto, and no variation, modification or amendment to this Agreement
shall be deemed valid or effective unless and until it is signed by both parties
hereto. Without limiting the generality of the foregoing, this Agreement
supersedes and replaces in entirety the prior Sales Agreement dated June 17,
1998 regarding the Offering and to which the Partnership, VII and the General
Partner were parties, it being the intent of the parties hereto that said prior
Sales Agreement is hereby terminated in its entirety.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PORTFOLIO BOOST I, L.P. VACATION INVESTORS, INC.
By: Portfolio Boost, L.L.C.
General Partner
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, Member and Xxxxxxx X. Xxxx, President
President
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PORTFOLIO BOOST, L.L.C., FOR
PURPOSES OF SECTIONS 2, 7, 8 AND 11(D)
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, President
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EXHIBIT A
TO SALES AGREEMENT
States in which Units will be offered:
California
Colorado
Connecticut
Delaware
Florida
Illinois
Indiana
New Jersey
North Carolina
Xxxxxxxx
Xxxxxxxxxx
Wisconsin
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