MANAGING SALES AGENT AGREEMENT
MANAGING SALES AGENT AGREEMENT made as of ____________, 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 Part-
nership 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 "__________________, Escrow #________________" and shall be
deposited by the Managing Sales Agent in an escrow account (the "Escrow
Account") established at___________, ____________________, ___________, ___
_____, solely for such deposits pursuant to an Escrow Agreement between the
Partnership and ______________________. 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
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__________________________________________
XXXXXX X. XXXXXXX, President
GENERAL PARTNER:
XXXXXXX XXXXXX & COMPANY LEASING, INC.
By__________________________________________
XXXXXX X. XXXXXXX, President
PARTNERSHIP:
TELECOMMUNICATIONS INCOME FUND XI, L.P.
By: XXXXXXX XXXXXX & COMPANY LEASING, INC.
By_____________________________________
XXXXXX X. XXXXXXX, President
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