EXHIBIT 1.1
MANAGING SALES AGENT AGREEMENT
MANAGING SALES AGENT AGREEMENT
MANAGING SALES AGENT AGREEMENT made as of October 27, 1997, between XXXXXXX
XXXXXX & COMPANY FINANCIAL SERVICES, INC., an Iowa corporation (the "Managing
Sales Agent"), XXXXXXX XXXXXX & COMPANY LEASING, INC., an Iowa corporation (the
"General Partner"), and TELECOMMUNICATIONS INCOME FUND XI, L.P. (the
"Partnership").
RECITALS
The General Partner is a corporation duly organized under the laws of Iowa,
and is the General Partner of the Partnership formed as a limited partnership
under the laws of Iowa pursuant to a Limited Partnership Agreement (the "Limited
Partnership Agreement"). The Partnership proposes to offer and sell up to
25,000 units representing limited partnership interests (the "Units") to the
general public, pursuant to a public offering of the Units (the "Offering")
registered with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act").
The Managing Sales Agent is a corporation presently in good standing in the
State of Iowa, is a member presently in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"), is presently licensed or
will be licensed as a securities broker-dealer qualified to offer and sell to
members of the public securities of the type represented by the Units in the
states in which the Units are to be offered and is presently registered with the
SEC as a broker-dealer.
The General Partner, on behalf of the Partnership, will file with the SEC a
registration statement on Form S-1, including a preliminary prospectus, for the
registration of the Units under the Securities Act. Such registration
statement, as it may be amended, and the prospectus included therein at the time
the registration statement becomes effective, including any supplements and
amendments to such documents after the effective date of the registration
statement, are herein referred to as the "Registration Statement" and the
"Prospectus," respectively.
The offer and sale of the Units shall be made pursuant to the terms and
conditions of the Registration Statement and the Prospectus as well as pursuant
to the terms and conditions of all applicable securities laws of all states in
which the Units are offered and sold.
The Partnership and the General Partner desire to retain the Managing Sales
Agent to use its best efforts to sell the Units and to manage the sale of Units
by others, and the Managing Sales Agent is willing and desires to serve as the
managing placement agent for the Partnership for the sale of the Units upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and terms and conditions
thereof, it is agreed as follows:
1. EMPLOYMENT; OPTION.
(a) Subject to the terms and conditions herein set forth, the
Partnership hereby employs the Managing Sales Agent as a broker-dealer to use
its best efforts to sell the Units for the Partnership's account, pursuant to
the Registration Statement and the Prospectus. The Managing Sales Agent hereby
accepts such employment and covenants, warrants and agrees that all Units sold
by or through it will be sold according to all of the terms and conditions of
the Registration Statement, the Conduct Rules of the NASD and all applicable
state and federal laws, including the Securities Act and any and all regulations
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and rules pertaining thereto heretofore or hereafter issued by the SEC. Neither
the Managing Sales Agent nor any other person shall have any authority or give
any information or make any representations in connection with any offer or sale
of the Units other than as contained in the Prospectus and as is otherwise
expressly authorized in writing by the General Partner.
(b) Promptly following receipt of written notice from the General
Partner of the effective date of the Registration Statement, the Managing Sales
Agent shall use its best efforts as managing broker-dealer to cause the Units to
be sold at the price per Unit specified in, and in such quantities and to such
persons and according to such terms as are contained in, the Registration
Statement and the Prospectus. The Managing Sales Agent shall comply with all
requirements set forth in the Registration Statement and the Prospectus. The
Managing Sales Agent shall use and distribute, in conjunction with the offer and
sale of the Units, only the Prospectus and such sales literature and advertising
as shall conform in all respects to any restrictions of local law and the
applicable requirements of the Securities Act and which shall be approved by the
General Partner. The General Partner reserves the right to establish such
additional procedures as they may deem necessary to insure compliance with the
requirements of the Registration Statement, and the Managing Sales Agent shall
comply with all such additional procedures to the extent that it has received
such written notice thereof.
(c) All checks received for purchase of any of the Units shall be
made out to "First Xxxxxxxx Xxxx Xxxx, Xxxxx Xxxxxx, Xxxx, Xxxxxx #00-0000-00"
and shall be deposited by the Managing Sales Agent in an escrow account (the
"Escrow Account") established at First National Bank Iowa, Cedar Rapids, Iowa,
solely for such deposits pursuant to an Escrow Agreement between the Partnership
and First National Bank Iowa, Cedar Rapids, Iowa. The funds will be held in
escrow in such Escrow Account or in an escrow account with such other
substantial commercial bank designated by the Partnership as successor escrow
agent, under and subject to the terms of an Escrow Agreement entered into
between the Partnership and the escrow agent. All checks received from Selected
Sales Agents who have obtained subscription payments by debiting an investor's
account will be deposited by the Managing Sales Agent in the Escrow Account by
the end of the next business day following receipt of such checks. Checks
received from Selected Sales Agents who have not received subscribers' funds by
debiting a customer's account will be deposited by the Managing Sales Agent in
the Escrow Account no later than the second business day following receipt.
After the Minimum number of Units has been sold, all checks received from
Selected Sales Agents who have obtained subscription payments by debiting an
investor's account will be deposited by the Managing Sales Agent to the account
of the Partnership by the end of the next business day following receipt of such
checks. Checks received from Selected Sales Agents who have not received
subscribers' funds by debiting a customer's account will be deposited by the
Managing Sales Agent to the account of the Partnership no later than the second
business day following receipt.
(d) During the full term of this Agreement, the General Partner shall
have full authority to take such action as it may deem advisable with respect to
all matters pertaining to the performance of the Managing Sales Agent under this
Agreement.
(e) The Units shall be offered and sold only where the Units may be
legally offered and sold, and only to such persons in such states who shall be
legally qualified to purchase the Units.
(f) Notwithstanding anything herein to the contrary, the Managing
Sales Agent shall have no obligation under this Agreement to purchase any of the
Units for its own account.
2. COMPENSATION TO THE MANAGING SALES AGENT. The Partnership shall pay
the Managing Sales Agent, as compensation for services to be rendered by the
Managing Sales Agent hereunder, a Managing Sales Agent Fee on each Unit sold on
behalf of the Partnership of nine percent (9%) of the
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selling price of each Unit sold and delivered, which shall remain in effect
during the full term of this Agreement unless otherwise changed by a written
agreement between the General Partner and the Managing Sales Agent. From the
Managing Sales Agent Fee the Managing Sales Agent shall pay the Selected Agent
Fee which is an amount up to six and one-half percent (6.5%) of the selling
price of each Unit sold and delivered. The Managing Sales Agent shall also be
reimbursed by the General Partner for accountable expenses paid on behalf of the
Partnership, as described in paragraph 7(c) herein. A sale of a Unit shall be
deemed to be completed when a properly completed Subscription Agreement,
Signature Page and Power of Attorney has been received by the Partnership and
payment of the full purchase price of each purchased Unit has been received by
the Partnership or the administrator of the Escrow Account, from a buyer who
satisfies each of the terms and conditions of the Registration Statement and
Prospectus. Such compensation due under this paragraph shall be payable to the
Managing Sales Agent by the Partnership within ten (10) days after the end of
the month of the receipt of the full purchase price; provided, however, that
such compensation may, at the sole election of the Partnership, be paid at any
time prior to such time; and provided further that no compensation shall be paid
to the Managing Sales Agent with respect to any Units sold unless and until the
purchase price for the Units is released from the Escrow Account to the
Partnership or delivered directly to the Partnership in accordance with the
Prospectus and the Escrow Agreement.
3. CONDITIONS TO THE MANAGING SALES AGENT'S OBLIGATIONS. The Managing
Sales Agent's obligations hereunder are subject, during the full term of this
Agreement and the Offering, to: (a) the performance by the General Partner and
the Partnership of their obligations hereunder and (b) the conditions that: (i)
the Registration Statement shall become and 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 suspending the effectiveness of the Offering.
4. CONDITIONS TO THE OBLIGATIONS OF THE GENERAL PARTNER AND THE
PARTNERSHIP. The obligations of the General Partner and the Partnership
hereunder are subject, during the full term of this Agreement and the Offering,
to the conditions that: (a) at the effective date of the Registration
Statement, and thereafter during the term of this Agreement while any Units
remain unsold, the Registration Statement shall remain in full force and effect
authorizing the offer and sale of the Units; (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 theretofore initiated or
threatened by any state regulatory agency or the SEC; and (c) the Managing Sales
Agent shall have satisfactorily performed all of its obligations hereunder.
5. COVENANTS OF THE GENERAL PARTNER. The General Partner covenants,
warrants and represents, during the full term of this Agreement, that:
(a) It shall use its best efforts to maintain the effectiveness of
the Registration Statement and shall file, or cause to be filed, such amendments
to the Registration Statement as may be reasonably necessary for that purpose.
(b) It shall advise the Managing Sales Agent whenever and as soon as:
(i) the SEC or any state regulatory agency requests any
amendment or supplement to the Registration Statement or the
Prospectus;
(ii) it receives or learns of any order issued by the SEC, any
state regulatory agency or any other regulatory agency which suspends
the effectiveness of the Registration Statement or prevents the use of
the Prospectus or which otherwise prevents or suspends the Offering of
the Units; or
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(iii) it receives notice of any proceedings involving any of the
matters as set forth herein.
(c) It shall use its best efforts to prevent the issuance of any
order described herein in subsection (b) above and to obtain the lifting of any
such order if issued.
(d) It shall give the Managing Sales Agent written notice when the
Registration Statement becomes effective and shall deliver to the Managing Sales
Agent one copy of the exhibits to the Registration Statement and such number of
copies of the Registration Statement, without exhibits, and the final
Prospectus, and any supplements and amendments thereto, in the form in which
filed with the SEC, as the Managing Sales Agent 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 and all applicable
rules and regulations promulgated thereunder, and which Prospectus shall not
contain any untrue statement of a material fact required to be stated therein or
omit any material statement necessary to make the statements therein, in light
of the circumstances under which they are made, not misleading.
(e) It shall promptly notify the Managing Sales Agent of any
post-effective amendments or supplements to the Registration Statement or
Prospectus, and shall furnish the Managing Sales Agent with copies thereof.
(f) It shall keep the Managing Sales Agent fully informed of any
material development to which the Partnership is a party or which concerns the
business and condition of the Partnership.
(g) It shall cause the Partnership to be operated in the manner
described in the Registration Statement and shall abide by all applicable
provisions of the Limited Partnership Agreement of the Partnership, as the same
may be amended.
(h) It shall use its best efforts to cause, at or prior to the time
the Registration Statement becomes effective, the qualification of the Units (or
exemption from qualification) for offering and sale under the securities laws of
every state in which the Units will be sold.
6. COVENANTS OF THE MANAGING SALES AGENT. The Managing Sales Agent
covenants, warrants and represents that:
(a) It shall use its best efforts to prevent the sale of Units
through persons other than broker-dealers who are licensed members of the NASD,
registered as broker-dealers with the SEC and duly licensed by the appropriate
regulatory agency of each state in which they will offer and sell the Units.
(b) It shall provide the General Partner, 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) Based upon a review, to the extent relevant to the Offering, of
the items referred to in Rule 2810(b)(3)(B) of the Conduct Rules of the NASD, as
set forth in the Prospectus and other materials made available to it by the
General Partner, it has reasonable grounds to believe that all material facts
relating to the Offering are adequately disclosed and provide a basis for
evaluation of the Offering.
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(d) At the date of execution of this Agreement, it has complied with
Rules 2810(b)(3)(A) and 2810(b)(3)(B) of the Conduct Rules of the NASD.
(e) In recommending to a prospective Subscriber the purchase, sale or
exchange of Units, the Managing Sales Agent shall have, and shall insure that
all persons associated with the Managing Sales Agent ("Associates") making such
recommendations shall have, reasonable grounds to believe, on the basis of
information obtained from the prospective Subscriber concerning his investment
objectives, other investments, financial situation and needs, and any other
information known by the Managing Sales Agent or such Associates, that the
prospective Subscriber satisfies the criteria as to suitability set forth in
Rule 281(b)(2)(B)(i) of the Conduct Rules of the NASD, and prior to executing a
purchase transaction with respect to Units, the Managing Sales Agent shall, and
shall insure that each of its Associates proposing to execute such a transaction
shall, inform the prospective Subscriber of all pertinent facts relating to the
liquidity and marketability of the Units during the term of the investment.
(f) It shall maintain in its files, for the longer of the period
prescribed by SEC Rule 17a-4 or the period prescribed by the state blue sky laws
applicable to it, documents disclosing the basis upon which the determination of
suitability was reached as to each Subscriber who subscribes for Units through
it.
(g) It shall not execute any transaction for a Subscriber in
connection with the Offering in a discretionary account without the prior
written approval of such transaction by such Subscriber.
(h) It shall not distribute or provide any sales incentive items
other than in compliance with Rule 2810(b)(4)(E).
(i) It is familiar with Release No. 4968 and Rule 15C2-8 under the
Exchange Act, which relate to the distribution of preliminary and final
prospectuses, and shall comply therewith.
7. PAYMENT OF COSTS AND EXPENSES.
(a) The Managing Sales Agent shall pay all costs and expenses
incident to the performance of its obligations under this Agreement not
expressly assumed by the Partnership as provided herein.
(b) The Partnership shall pay all costs and expenses, up to a maximum
amount equal to three and one-half percent (3.5%) of gross proceeds related to:
(i) the registration of the offer and sale of the Units with
the SEC, including the cost of preparation, printing, filing and
delivery of the Registration Statement, all amendments or supplements
thereto and all copies of the Prospectus used in the Offering;
(ii) the qualification or registration of the Units under state
securities or "Blue Sky" laws of states where the Units are offered or
sold and must be qualified or registered;
(iii) the filing and clearance of the Registration Statement and
its Exhibits with the NASD;
(iv) communications for prospective investors, including the
cost of preparation, printing, filing and delivery and all sales
brochures and similar literature used in the Offering and the cost of
preparation of video presentations for use in that connection;
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(v) any fees and disbursements of counsel and accountants
relating to the above items; and
(vi) bona fide "due diligence" activities relating to the
Offering, including training meetings and seminars held for
participating broker-dealers and their registered representatives.
(c) The General Partner may advance to the Managing Sales Agent all
or any portion of the costs and expenses described above. The General Partner
shall be responsible for payment of all such costs and expenses as exceed three
and one-half percent (3.5%) of gross proceeds of the offering.
8. INDEMNIFICATION.
(a) The Managing Sales Agent agrees to indemnify, defend and hold
harmless the Partnership and the General Partner and their officers, directors,
employees and agents against all losses, claims, demands, liabilities and
expenses, including reasonable legal and other expenses incurred in defending
such claims or liabilities, whether or not resulting in any liability to the
Partnership, the General Partner or any of their officers, directors, employees
or agents, which they or any of them may incur, arising out of the offer or sale
by the Managing Sales Agent of any Units pursuant to this Agreement or arising
out of the breach by the Managing Sales Agent of any of the terms and conditions
of this Agreement, including but not limited to alleged violations of the
Securities Act and/or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), OTHER THAN any claim, demand or liability arising from any
untrue statement or alleged untrue statement of a material fact contained in the
Prospectus or the Registration Statement, as filed and in effect with the SEC,
or any amendments or supplement thereto, or in any application prepared by the
General Partner and filed with any state regulatory agent in order to register
or qualify the Units under the securities laws thereof (the "blue sky
applications"), or in any supplemental sales material which is prepared by the
General Partner for distribution to prospective investors, or which shall arise
out of or be based upon any omission or alleged omission to state therein a
material fact required to be stated in the Prospectus or the Registration
Statement or any of the blue sky applications or such supplemental sales
material necessary to make the statements therein not misleading. This
indemnity provision shall survive the termination of this Agreement.
(b) The General Partner agrees to indemnify, defend and hold harmless
the Managing Sales Agent and its officers, directors, employees and agents
(including selected sales agents) against all losses, claims, demands,
liabilities and expenses, including reasonable legal and other expenses incurred
in defending such claims or liabilities, whether or not resulting in any
liability to the Managing Sales Agent or any of its officers, directors,
employees or agents, which they or any of them may incur, including but not
limited to alleged violations of the Securities Act and/or the Exchange Act, BUT
ONLY to the extent that such losses, claims, demands, liabilities and expenses
shall arise out of or be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus or the Registration
Statement, as filed and in effect with the SEC, or any amendment or supplement
thereto, or in any of the blue sky applications, or in any supplemental sales
material which is prepared by the General Partner for distribution to
prospective investors, or which shall arise out of or be based upon a breach of
this Agreement by the General Partner or the Partnership. This indemnity
provision shall survive the termination of this Agreement.
9. TERM OF AGREEMENT. This Agreement shall become effective when
executed. Any party hereto may prevent this Agreement from becoming effective,
without liability to the other parties, by written notice before the day on
which the Registration Statement becomes effective. After this Agreement
becomes effective, any party may terminate it at any time for any reason by
giving thirty (30) days' written
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notice to the other parties; PROVIDED, HOWEVER, that this Agreement shall in any
event automatically terminate at the first occurrence of any of the following
events: (a) the Registration Statement shall cease to be effective; (b) the
Offering shall be terminated; or (c) the Managing Sales Agent'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 ten (10) days from the date of such occurrence.
10. NOTICES. All notices and communications hereunder shall be in writing
and, if sent to the Partnership and the General Partner, shall be mailed to:
TELECOMMUNICATIONS INCOME FUND XI, L.P.
000 Xxxxxx Xxxxxx, XX
Xxxxx Xxxxxx, Xxxx 00000
XXXXXXX XXXXXX & COMPANY LEASING, INC.
000 Xxxxxx Xxxxxx, XX
Xxxxx Xxxxxx, Xxxx 00000
and if sent to the Managing Sales Agent, shall be mailed to:
XXXXXXX XXXXXX & COMPANY FINANCIAL SERVICES, INC.
000 Xxxxxx Xxxxxx, XX
Xxxxx Xxxxxx, Xxxx 00000
11. SUCCESSORS. This Agreement shall not be assigned or transferred by
the Managing Sales Agent by operation of law or otherwise.
12. CONSTRUCTION.
(a) This Agreement shall be governed by, and construed in accordance
with, the applicable laws of the State of Iowa without regard to any provision
or rule of law which should require the application of the law of any state
other than Iowa.
(b) Nothing in this Agreement shall constitute the Managing Sales
Agent as in association or partnership with the Partnership or with the General
Partner, and, instead, this Agreement shall only constitute the Managing Sales
Agent as a broker-dealer authorized by the Partnership and the General Partner
to sell and to manage the sale by others of the Units according to the terms
expressly set forth herein, provided that the Managing Sales Agent shall not in
any event have any authority to act as the agent of the Partnership or the
General Partner except according to the terms expressly set forth herein.
(c) 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 all parties
hereto.
(d) If any provision of this Agreement shall be deemed void, invalid
or ineffective for any reason, the remainder of this Agreement shall remain in
full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
MANAGING SALES AGENT:
XXXXXXX XXXXXX & COMPANY FINANCIAL
SERVICES INC.
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
XXXXXX X. XXXXXXX, President
GENERAL PARTNER:
XXXXXXX XXXXXX & COMPANY LEASING, INC.
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
XXXXXX X. XXXXXXX, President
PARTNERSHIP:
TELECOMMUNICATIONS INCOME FUND XI, L.P.
By: XXXXXXX XXXXXX & COMPANY LEASING, INC.
By /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
XXXXXX X. XXXXXXX, President
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