1
EXHIBIT 1.1
SELLING AGREEMENT
XXXXX XXXXXX WESTPORT FUTURES FUND L. P.
120,000 Units of Limited Partnership Interest
AGREEMENT made as of the ___ day of ______, 1997, by and among
XXXXX XXXXXX WESTPORT FUTURES FUND L. P., a New York limited partnership (the
"Partnership"), XXXXX XXXXXX FUTURES MANAGEMENT INC., a Delaware corporation
("SBFM") and XXXXX XXXXXX INC., a Delaware corporation ("SB").
W I T N E S S E T H :
WHEREAS, the Partnership has filed a registration statement on
Form S-1 (File No. 33-_____) with the Securities and Exchange Commission (the
"SEC") in accordance with the provisions of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively, the "Act"),
and as a part thereof a form of preliminary prospectus relating to the offer
and sale of up to 120,000 Units of Limited Partnership Interest in the
Partnership (the "Units") (the registration statement in the form in which it
becomes effective under the Act being hereinafter referred to as the
"Registration Statement" and the prospectus in the form included therein being
hereinafter referred to as the "Prospectus"; provided that (1) if the
Partnership files a post-effective amendment to such registration statement,
then the term "Registration Statement" shall refer to the registration
statement as amended by such post-effective amendment, and the term
"Prospectus" shall refer to the amended prospectus then on file with the SEC
and (2) if a prospectus filed by the Partnership pursuant to either Rule 424(b)
or (c) promulgated under the Act shall differ from the prospectus on file at
the time the Registration Statement or any post-effective amendment thereof
shall have become effective, the term "Prospectus" shall refer to the
prospectus filed pursuant to Rule 424(b) or (c), from and after the date on
which it shall have been filed); and
WHEREAS, the Partnership intends to enter into a management
agreement with Xxxx X. Xxxxx & Company, Inc. (the "Advisor") and SBFM (the
"Management Agreement"), pursuant to which commodity trading decisions will be
made by the Advisor as described in the Prospectus; and
WHEREAS, SB has agreed to assist in the offer and sale of the
Units upon the terms and in reliance upon the representations, warranties and
agreements set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
2
1. Appointment of Selling Agent
(a) (i) The Partnership hereby appoints SB as its exclusive agent to
offer and sell the Units on the terms and conditions set forth herein and in
the Registration Statement and the Prospectus during the initial offering
period (the "Initial Offering Period"), a period of 90 days commencing on the
date the Registration Statement is declared effective by the SEC, unless SBFM,
the general partner of the Partnership, terminates the offering at an earlier
date or extends the Initial Offering Period for up to an additional 60 days by
written notice to SB. As described in the Prospectus, 20,000 Units must be
sold during the Initial Offering Period for the Partnership to commence its
trading activities; if fewer than 20,000 Units are sold during the Initial
Offering Period, proceeds will be promptly returned to subscribers at the
termination thereof.
(ii) The Partnership hereby also appoints SB as its exclusive
agent to offer and sell the Units on the terms and conditions set forth herein
and in the Registration Statement and the Prospectus during a period commencing
on the date of termination of the Initial Offering Period (assuming 20,000
Units are sold) and ending upon the earlier of the date two years from the date
the Registration Statement is declared effective and the date on which 120,000
Units are sold (the "Continuous Offering", and, together with the Initial
Offering Period, the "Offering Period").
(b) SB hereby accepts appointment as selling agent for the
Partnership to effect sales of up to 120,000 Units as provided herein, in the
Registration Statement and in the Prospectus. SB represents and hereby
confirms that in selling to subscribers and otherwise carrying out its
obligations under this agreement it will comply with Paragraphs (b)(2) and
(b)(3) of Rule 2810 of the Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD"), as set forth in Schedule I hereto. SB
agrees that SBFM has the right to reject any subscription for Units for any
reason and to suspend sales of Units during the Offering Period. At SB's
discretion it may form a group of securities dealers ("Soliciting Dealers") to
solicit sales of the Units during the Offering Period. Any such Soliciting
Dealer shall execute a Soliciting Dealer Agreement in substantially the form
attached hereto as Exhibit A.
Each such dealer shall become a party to this Agreement upon notice by
SB to the Partnership that SB and such dealer have entered into such Soliciting
Dealer Agreement.
(c) SB agrees initially to bear all expenses of the Partnership in
connection with the Initial Offering Period (estimated at $710,000), including,
without limitation, fees and expenses of its counsel, SEC and other filing
fees, blue sky fees and expenses, printing expenses, fees and expenses of
independent public accountants and escrow fees.
2
3
(d) SB agrees that all funds received by SB from subscribers shall
be promptly delivered to European American Bank as escrow agent for the benefit
of the subscribers by noon of the second business day after receipt.
Furthermore, SB will require all Soliciting Dealers to forward to SB, for
delivery to the escrow agent, all checks received by them from subscribers for
Units by noon of the next business day after their receipt of the checks. SB
represents and hereby confirms that if it receives checks from customers it
will act as processing broker-dealer in accordance with Rule 15c2-4 under the
Securities Exchange Act of 1934 and NASD Notices to Members 84-7 and 84-64.
(e) SB represents and confirms that it is registered with the
National Futures Association ("NFA") as a futures commission merchant, and any
Soliciting Dealer selected by SB that receives continuing compensation in the
form of a portion of the commodity brokerage fees paid by the Partnership shall
be registered with the NFA as a futures commission merchant or an introducing
broker. Further, any associated person of SB or a Soliciting Dealer who
receives continuing compensation in the form of a portion of the commodity
brokerage fees paid by the Partnership shall be registered with the NFA as an
associated person of a futures commission merchant or an introducing broker
(qualified as an associated person by having taken the Series 3 or Series 31
Commodities Exam or having been "grandfathered" as an associated person
qualified to do commodity brokerage).
2. Agreements of the Partnership. The Partnership agrees with SB as
follows:
(a) The Partnership will advise SB, promptly after it receives
notice thereof, (i) of the time when the Registration Statement has become
effective and when any amendment thereto becomes effective, (ii) of the
issuance by the SEC of any stop order or of any order preventing or suspending
the use of any Prospectus, or the initiation or threat of any proceeding for
any such purpose and (iii) of any request by the SEC for amendments or
supplements to the Registration Statement or Prospectus or for additional
information. In the event of the issuance of any stop order or of any order
preventing or suspending the use of any Prospectus, the Partnership will
promptly use its best efforts to obtain its withdrawal.
(b) The Partnership will furnish to SB, without charge, two signed
copies of the Registration Statement as originally filed and each amendment
thereto, including all exhibits.
(c) The Partnership will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which SB
shall not previously have been advised or to which SB shall reasonably object
in writing.
(d) The Partnership will furnish SB with copies of any preliminary
prospectus and of the Prospectus in such quantities
3
4
as they may from time to time reasonably request. If at any time when the
Prospectus is required to be delivered under the Act any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if for any
other reason it shall be necessary to amend or supplement the Prospectus in
order to comply with the Act, the Partnership will notify SB and upon its
request prepare and furnish without charge to it as many copies as it may from
time to time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance.
(e) The Partnership will take such action as SB may reasonably
request to qualify the Units for offering and sale under the securities or blue
sky laws of such jurisdictions as it may request and will comply with such laws
so as to permit the continuance of sales in such jurisdictions for as long as
may be necessary to complete the distribution.
3. Representations and Warranties.
The Partnership represents and warrants to SB that:
(a) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto complied or
when so filed will comply in all material respects with the requirements of the
Act and the Commodity Exchange Act ("CEA").
(b) At the time the Registration Statement becomes effective and at
all times subsequent thereto up to the termination of the Offering Period, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, will comply in all material respects with the provisions of the Act
and the CEA and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided, however,
that the representations and warranties contained in subparagraphs (a) and (b)
above do not apply to any statements or omissions in the Registration Statement
or Prospectus, or any amendment or supplement thereto, made in reliance upon
information furnished to the Partnership by SB or on its behalf expressly for
use therein.
(c) The Partnership is duly formed and validly existing as a limited
partnership under the New York Revised Uniform Limited Partnership Act (the
"Partnership Law"), with full partnership power and authority to carry out its
obligations under this Agreement, its Certificate of Limited Partnership, as
amended
4
5
from time to time (the "Partnership Certificate"), and its Limited Partnership
Agreement, as amended from time to time (the "Partnership Agreement"), and to
conduct its business as described in the Prospectus. The Partnership conducts
no business and owns or leases no properties which would require it to qualify
to do business as a foreign organization in any jurisdiction.
(d) The offer and sale of the Units has been duly authorized by the
Partnership and the Units constitute valid limited partnership interests in the
Partnership which conform to the description thereof contained in the
Prospectus; and the liability of each limited partner will be limited as set
forth in the Prospectus, and no limited partner will be subject to personal
liability for the debts, obligations, or liabilities of the Partnership by
reason of his being a limited partner other than as described in the
Prospectus.
(e) The offer and sale of the Units and the compliance by the
Partnership with all of the provisions of this Agreement will not conflict with
or result in a breach of any of the terms or provisions of any agreement to
which the Partnership is a party or by which it is bound, nor will such action
result in a violation of the provisions of the Partnership Agreement or
Partnership Certificate or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Partnership
or any of its properties.
(f) A separate escrow account will be opened at European American
Bank (the "Escrow Agent") and maintained for all funds received from
subscribers for Units. All payments received from persons desiring to purchase
Units will be deposited in such account and held in accordance with the terms
of such Escrow Agreement.
(g) Coopers & Xxxxxxx L.L.P., who have certified certain financial
statements contained in the Registration Statement, are independent public
accountants as required by the Act.
4. Conditions of Closing. The obligations of the parties hereunder
shall at all times be subject to the continued accuracy of all representations
and warranties of the parties contained herein as though such representations
and warranties had been made at and as of such times, and the following
additional conditions:
(a) The Registration Statement shall have become effective and no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceeding for that purpose shall have been initiated
or threatened by the SEC; and all requests for additional information on the
part of the SEC shall have been complied with;
5
6
(b) SB shall have received an opinion of Xxxxxxx Xxxx & Xxxxxxxxx,
dated the Closing Date (as defined in Paragraph 7 below), in form and substance
satisfactory to it, to the effect that:
(i) The Partnership has been duly formed and is validly
existing as a limited partnership under the Partnership Law with full
partnership power and authority to carry out its obligations under this
Agreement and the Partnership Agreement, and to conduct its business as
described in the Prospectus, and, to the best of the knowledge of such counsel,
the Partnership conducts no business and owns or leases no properties which
would require it to qualify to do business as a foreign organization in any
jurisdiction;
(ii) The offer and sale of the Units has been duly
authorized by the Partnership and the Units constitute valid limited
partnership interests in the Partnership which conform to the description
thereof contained in the Prospectus; and the liability of each limited partner
will be limited as set forth in the Prospectus, and no limited partner will be
subject to personal liability for the debts, obligations, or liabilities of the
Partnership by reason of his being a limited partner, other than as described
in the Prospectus;
(iii) The offer and sale of the Units and the compliance by
the Partnership with all of the provisions of this Agreement will not conflict
with or result in a breach of any of the terms or provisions of the Partnership
Certificate or Partnership Agreement, or, to the best of the knowledge of such
counsel, any agreement to which the Partnership is a party or by which it is
bound;
(iv) To the best of the knowledge of such counsel, there is
no action, suit, litigation or proceeding before or by any court or
governmental agency, federal, state or local, pending or threatened against, or
affecting or involving the property or business of SBFM, or the business of the
Partnership, that would materially and adversely affect the condition
(financial or otherwise), business or prospects of SBFM or the Partnership; and
(v) The Registration Statement has become effective under
the Act, and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued nor
has any proceeding for the issuance of such an order been initiated or
threatened.
5. Indemnification.
SB agrees to indemnify and hold harmless the Partnership against any
and all loss, liability, claim, damage and expense whatsoever (including but
not limited to any and all expense whatsoever reasonably incurred in
investigating, preparing or
6
7
defending against any litigation, commenced or threatened, or any claim
whatsoever) arising out of or based upon any untrue or alleged untrue statement
of material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented), or
any related sales material used by SB in connection with this offering of
Units, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided that such statement or omission was made in reliance upon
and in conformity with information furnished to the Partnership by SB,
expressly for use in any preliminary prospectus, the Registration Statement or
Prospectus or any amendment or supplement thereto.
6. Term.
(a) This Agreement may be terminated by SB, at its option, by giving
notice to the Partnership, if:
(i) there shall have been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the condition, financial or otherwise, of the Partnership or SBFM,
which change in its judgment shall render it inadvisable to proceed with the
offer and sale of the Units; or
(ii) any of the conditions specified in Section 4 hereof
shall not have been fulfilled when and as required by this Agreement to be
fulfilled.
(b) The termination of this Agreement for any reason set forth in
this Section 6 shall not affect the obligations of the Partnership contained in
Section 2 hereof.
7. Closing Date.
The Closing Date shall not be later than ten business days following
the termination of the Initial Offering Period to which reference is made in
Section 1(a)(i) above.
8. Miscellaneous.
(a) All representations, warranties and agreements contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of any party, (ii) delivery of and
payment for the Units, or (iii) termination of this Agreement.
(b) Except as otherwise expressly provided, this Agreement is made
solely for the benefit of, and shall be binding upon, the parties hereto and
their respective successors and assigns, and no other person shall have any
right or obligation under it. The terms "successors" and "assigns" shall not
include any purchasers, as such, of Units in the Partnership.
7
8
(c) Whenever notice is required to be given by the provisions of
this Agreement, such notice shall be in writing and delivered personally or by
registered or certified mail, return receipt requested, postage prepaid, and
properly addressed as follows:
If to the Partnership to:
Xxxxx Xxxxxx Westport Futures Fund L. P.
c/o Xxxxx Xxxxxx Futures Management Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to SB to:
Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to SBFM to:
Xxxxx Xxxxxx Futures Management Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(d) No party is authorized by the Partnership to give any
information or make any representation in connection with the offering of Units
other than those contained in the Prospectus and such sales literature the use
of which has been authorized in writing by the Partnership.
(e) This Agreement may be signed in counterpart.
8
9
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of the parties as of the day and year first above mentioned.
XXXXX XXXXXX WESTPORT
FUTURES FUND L. P.
By: Xxxxx Xxxxxx
Futures Management Inc.,
(General Partner)
By:
------------------------------
XXXXX XXXXXX
FUTURES MANAGEMENT INC.
By:
------------------------------
XXXXX XXXXXX INC.
By:
------------------------------
9
10
SCHEDULE I
SUITABILITY
(b)(2)(A) A member or person associated with a member shall not
underwrite or participate in a public offering of a direct participation
program unless standards of suitability have been established by the program
for participants therein and such standards are fully disclosed in the
prospectus and are consistent with the provisions of subparagraph (B) below.
(B) In recommending to a participant the purchase, sale
or exchange of an interest in a direct participation program, a member or
person associated with a member shall:
(i) have reasonable grounds to believe, on the
basis of information obtained from the participant concerning his
investment objectives, other investments, financial situation and
needs, and any other information known by the member or associated
person, that:
a. the participant is or will be in a
financial position appropriate to enable him to realize to a
significant extent the benefits described in the prospectus, including
the tax benefits where they are a significant aspect of the program:
b. the participant has a fair market
net worth sufficient to sustain the risks inherent in the program,
including loss of investment and lack of liquidity; and
c. the program is otherwise suitable
for the participant; and
(ii) maintain in the files of the member documents
disclosing the basis upon which the determination of suitability was
reached as to each participant.
(C) Notwithstanding the provisions of subparagraphs (A)
and (B) hereof, no member shall execute any transaction in a direct
participation program in a discretionary account without prior written
approval of the transaction by the customer.
(D) Subparagraphs (A) and (B), and, only in situations
where the member is not affiliated with the direct participation
program, Subparagraph (C), shall not apply to:
(i) a secondary public offering of or a secondary
market transaction in a unit, depositary receipt, or other interest in
a direct participation program for which
10
11
quotations are displayed on Nasdaq or which is listed on a registered
national securities exchange; or
(ii) an initial public offering of a unit, depositary
receipt or other interest in a direct participation program for which
an application for inclusion on Nasdaq or listing on a registered
national securities exchange has been approved by Nasdaq or such
exchange and the applicant makes a good faith representation that it
believes such inclusion on Nasdaq or listing on an exchange will occur
within a reasonable period of time following the formation of the
program.
DISCLOSURE
(b)(3)(A) Prior to participating in a public offering of a direct
participation program, a member or person associated with a member shall have
reasonable grounds to believe, based on information made available to him by
the sponsor through a prospectus or other materials, that all material facts
are adequately and accurately disclosed and provide a basis for evaluating the
program.
(B) In determining the adequacy of disclosed facts
pursuant to subparagraph (A) hereof, a member or person associated with a
member shall obtain information on material facts relating at a minimum to the
following, if relevant in view of the nature of the program:
(i) items of compensation;
(ii) physical properties;
(iii) tax aspects;
(iv) financial stability and experience of the sponsor;
(v) the program's conflict and risk factors; and
(vi) appraisals and other pertinent reports.
(C) For purposes of subparagraphs (A) or (B) hereof, a
member or person associated with a member may rely upon the results of an
inquiry conducted by another member or members, provided that:
(i) the member or person associated with a member has
reasonable grounds to believe that such inquiry was conducted with due
care;
(ii) the results of the inquiry were provided to the
member or person associated with a member with the consent of the
member or members conducting or directing the inquiry; and
(iii) no member that participated in the inquiry is a
sponsor of the program or an affiliate of such sponsor.
11
12
(D) Prior to executing a purchase transaction in a direct
participation program, a member or person associated with a member shall inform
the prospective participant of all pertinent facts relating to the liquidity
and marketability of the program during the term of the investment; provided,
however, that this paragraph (b) shall not apply to an initial or secondary
public offering of or a secondary market transaction in a unit, depositary
receipt or other interest in a direct participation program which complies with
subparagraph (2)(D).
12
