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EXHIBIT 1.1
MARKET-MAKING AGREEMENT
XXXXX XXXXXX WESTPORT FUTURES FUND L. P.
120,000 Outstanding Units of Limited Partnership Interest
AGREEMENT made as of the 30th day of June, 1998, 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 sold 120,000 Units of Limited
Partnership Interest in the Partnership (the "Units") pursuant to a registration
statement on Form S-1 (File No. 333-24923) filed 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
WHEREAS, the Partnership has filed a registration statement on
Form S-1 (File No. 333-_______) with the SEC in accordance with the Act and as a
part thereof a form of preliminary prospectus relating to a secondary offering
in the Units whereby SB will make offers and sales of Units (to the extent
available due to existing holders of Units wishing to transfer or redeem these
Units) upon the terms and in reliance upon the representations, warranties and
agreements set forth herein (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
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WHEREAS, the Partnership has entered into a management
agreement with Xxxx X. Xxxxx & Company, Inc. (the "Advisor") and SBFM, (the
"Management Agreement"), pursuant to which commodity trading decisions are made
by the Advisor as described in the Prospectus.
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of Market Making Agent
(a) 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.
(b) SB hereby accepts appointment as market making agent for the
Partnership to effect purchases and sales of 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 transfer of Units for any reason and to suspend sales of Units at
any time.
(c) SB agrees that all funds received by SB from purchasers shall
be promptly delivered to European American Bank as escrow agent for the benefit
of subscribers by noon of the second business day after receipt. SB agrees that
funds delivered by the escrow agent to SB will be used by SB to pay limited
partners who desire to transfer their Units. SB agrees to notify SBFM in a
reasonable period of time so that SBFM may cause the Partnership's records to
reflect the change in ownership of the Units from the transferring limited
partners to the purchasing investors.
(d) SB represents and confirms that it is registered with the
Commodity Futures Trading Commission ("CFTC") as a futures commission merchant
and is a member of the National Futures Association ("NFA") in that capacity.
Further, any associated person of SB who receives continuing compensation in the
form of a portion of the commodity brokerage fees paid by the Partnership shall
be registered with the CFTC as an associated person of a futures commission
merchant or an introducing broker (qualified
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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) and shall also be a member of the NFA.
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 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
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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
Units are available for secondary distribution.
3. Partnership 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 during the term of this Agreement, 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 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
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to qualify to do business as a foreign organization in any jurisdiction.
(d) This Market-Making Agreement 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 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 (the "Escrow Account") has been
opened at European American Bank and will be maintained for all funds received
from purchasers of Units. All payments received from purchasers of Units will be
deposited in such account and held in accordance with the terms of such Escrow
Agreement, as amended, until such funds are transferred to SB for further
payment to transferors of Units.
(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.
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4. SB Representations and Warranties.
SB represents and warrants to the Partnership that:
(a) All funds received from purchasers shall be promptly deposited
in the Escrow Account.
(b) Subscription documents received by SB will be promptly
forwarded to SBFM for review and approval or rejection.
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 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 this Agreement
shall not have been fulfilled when and as required by this Agreement to be
fulfilled.
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(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. 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.
(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
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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.
(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:_______________________________________
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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.
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(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 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
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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.
(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).
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