Exhibit 1.1
Form of Selling Agent Agreement
SHAFFER DIVERSIFIED FUND, L.P.
(A Delaware Limited Partnership)
_______________, 2001
Berthel Fisher & Company Financial Services, Inc.
P.O. Box 74250
Cedar Rapids, IA 52407-4250
Gentlemen:
Shaffer Asset Management, Inc., a New York corporation (the "General
Partner"), is the sole general partner of Shaffer Diversified Fund, L.P. (the
"Fund"), a limited partnership organized under the Delaware Revised Uniform
Limited Partnership Act to speculatively trade in commodity futures contracts
and related interests as described in the Prospectus and accompanying Statement
of Additional Information (as defined in Section 1(a) hereof). The Fund proposes
to offer publicly for subscription and to sell to subscribers acceptable to the
General Partner, upon the terms and subject to the conditions set forth in this
Agreement and the Registration Statement (as defined in Section 1(a) hereof) and
the Prospectus and Statement of Additional Information included therein, as
either or both may from time to time be amended or supplemented, a minimum of
one thousand (1,000) and a maximum of twenty five thousand (25,000) units of
limited partnership interest ("Units") in the Fund at a purchase price equal to
(i) $1,000 per Unit ($950 per Unit, plus an initial sales charge of $50 per
Unit) during the initial offering period of the Fund, and (ii) at the Net Asset
Value per Unit, plus a sales charge of 5% of the Net Asset Value per Unit for
each Unit purchased, thereafter, each as more fully described in the Prospectus
and Statement of Additional Information.
Berthel Fisher & Company Financial Services, Inc., an Iowa corporation (the
"Selling Agent"), will act as the syndicator and sales agent for the Fund on a
best efforts basis.
1. Representations and Warranties of the General Partner and the Fund. The
General Partner and the Fund jointly and severally represent and warrant to the
Selling Agent that:
(a) A registration statement on Form S-1 (File No. 333-46550), and as
a part thereof a prospectus and statement of additional information
relating to the Units, prepared in conformity with the applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"),
and the rules and regulations promulgated thereunder, have been filed with
the Securities and Exchange Commission (the "SEC") in the form heretofore
delivered to the Selling Agent (which registration statement at the time
and in the form it is declared effective by the SEC shall be referred to
herein as the "Registration Statement", which prospectus in the form filed
with the SEC pursuant to Rule 424(b) shall be referred to herein as the
"Prospectus", and which statement of additional information in the form
filed with the SEC pursuant to Rule 424(b) shall be referred to herein as
the "Statement of Additional Information"); provided that (i) if the Fund
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 the term "Statement of
Additional Information" shall refer to the amended statement of additional
information then on file with the SEC, (ii) if a prospectus filed by the
Fund pursuant to either Rule 424(b) or (c) promulgated under the 1933 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 (iii) if a statement of additional information filed
by the Fund pursuant to either Rule 424(b) or (c) promulgated under the
1933 Act shall differ from the statement of additional information on file
at the time the Registration Statement or any post-effective amendment
thereof shall have become effective, the term "Statement of Additional
Information" shall refer to the statement of additional information filed
pursuant to Rule 424(b) or (c), from and after the date on which it shall
have been filed;
(b) Copies of the Registration Statement have also been filed with:
(i) the Commodity Futures Trading Commission (the "CFTC"), (ii) the
National Association of Securities Dealers, Inc. (the "NASD"); and (iii)
the National Futures Association (the "NFA").
(c) No order preventing or suspending the use of the SEC or any
previous prospectus or statement of additional information with respect to
the Units has been issued by the SEC. The Registration Statement contains
all statements which are required to be made therein, conforms in all
material respects to the requirements of the 1933 Act, and does not 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,
in light of the circumstances under which they were made, not misleading;
(d) The Fund has been duly organized and is validly existing as a
limited partnership in good standing under the Delaware Revised Uniform
Limited Partnership 1933 Act, with full power and authority to carry out
its obligations under this Agreement, its Certificate of Limited
Partnership (the "Partnership Certificate") and its Agreement of Limited
Partnership (the "Limited Partnership Agreement"), and to own its
properties, conduct its business and engage in the activities as described
in the Prospectus and the Statement of Additional Information; and the Fund
conducts no business and owns or leases no properties that would require it
to qualify to do business as a foreign limited partnership in any
jurisdiction except the State of New York, where the Fund will qualify to
do business on or before the Initial Closing Date (as defined in Section
7(d) hereof);
(e) The offer and sale of the Units have been duly authorized by the
Fund, and the Units constitute valid limited partnership interests in the
Fund which conform to the description thereof contained in the Prospectus
and the Statement of Additional Information; the liability of each limited
partner of the Fund ("Limited Partner") will be limited as set forth in the
Prospectus and the Statement of Additional Information, and no Limited
Partner will be subject to personal liability for the debts, obligations,
or liabilities of the Fund by reason of his being a limited partner of the
Fund other than as described in the Prospectus and the Statement of
Additional Information;
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(f) The offer and sale of the Units and the performance by the Fund
and the General Partner of all of the provisions of this Agreement will not
conflict with or result in a breach of any of the terms or provisions of,
or in the imposition of any lien, charge or encumbrance upon any of the
property or assets of the Fund pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Fund is a party or by which the Fund is bound or to which any of
the property or assets of the Fund are subject, nor will any such action or
performance result in a violation of the provisions of the Partnership
Certificate or the Limited Partnership Agreement or any statute or any
order, rule or regulation of any court or governmental authority or body
having jurisdiction over the Fund or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or with
any court or any such governmental authority or other governmental body is
required for the issuance and sale of the Units or the consummation of the
other transactions contemplated by this Agreement, except the registration
of the General Partner with the CFTC as a commodity pool operator, the
registration under the 1933 Act of the Units and such consents, approvals,
authorizations, registrations or qualifications as may be required by the
CFTC and state securities or blue sky laws in connection with the offer and
sale of the Units;
(g) Anchin Block & Anchin LLP, who has examined certain financial
statements of the General Partner and the Fund, are independent certified
public accountants as required by the 1933 Act;
(h) The Fund has been capitalized as set forth in the Prospectus and
the Statement of Additional Information;
(i) The Fund has complied, and will continue to comply, with all laws,
rules and regulations applicable to its business, including regulations
promulgated by the CFTC, the violation of which would materially and
adversely affect the business, financial condition or earnings of the
General Partner or the Fund; and there are no actions, suits or proceedings
pending or, to the knowledge of the General Partner or the Fund, threatened
against the Fund, at law or in equity, before or by any Federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, or before or by any commodity exchange, in which
an adverse decision would materially and adversely affect the business,
financial condition or earnings of the General Partner or the and which are
not adequately disclosed in the Prospectus or the Statement of Additional
Information;
(j) The General Partner shall have, from time to time, purchased or
subscribed to the number of units of general partnership interest required
by it to be purchased or subscribed for by the Limited Partnership
Agreement and shall have a Net Worth (as defined in the Limited Partnership
Agreement) equal to or in excess of the requirements thereof;
(k) The financial statements of the Fund contained in the Registration
Statement, the Prospectus and the Statement of Additional Information
fairly present the financial condition and the results of operations of the
Fund as of the dates and for the periods therein specified, and such
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as is otherwise noted or reported therein;
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(l) There are no contracts or other documents that are required to be
filed as exhibits to the Registration Statement by the 1933 Act which will
not have been so filed prior to the declaration of the effectiveness of the
Registration Statement by the SEC;
(m) The Registration Statement, including the Prospectus and Statement
of Additional Information, contains all statements and information required
to be included therein by the Commodity Exchange Act (the "CE Act") and the
rules and regulations promulgated thereunder by the CFTC (the "CFTC
Rules");
(n) When the Registration Statement becomes effective under the 1933
Act and at all times subsequent thereto, up to and including each closing
hereunder, the Registration Statement and the Prospectus and Statement of
Additional Information therein will comply in all material respects with
the requirements of the 1933 Act and the regulations promulgated
thereunder, the CE Act, the CFTC Rules, and the rules of the NASD and the
NFA. As of its effective date, the Registration Statement will not contain
any 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. The Prospectus and Statement of Additional Information
therein, as of its date of issue and as of each closing, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not misleading. Any supplemental
sales literature employed in offering the Units (the "Sales Literature"),
when read in conjunction with the Prospectus and Statement of Additional
Information therein, as of its date of issue and as of each closing, will
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading. The
Sales Literature will comply with the 1933 Act, the regulations promulgated
thereunder, the CE Act, the CFTC Rules, and the rules of the NASD and the
NFA. This representation and warranty shall not, however, apply to any
statement or omission in the Registration Statement, Prospectus and
Statement of Additional Information therein or Sales Literature relating to
the Selling Agent or made in reliance upon and in conformity with
information furnished in writing by the Selling Agent for inclusion in such
Registration Statement, Prospectus and Statement of Additional Information
therein or the Sales Literature.
(o) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus and Statement of Additional
Information therein, except as may otherwise be stated in or contemplated
by the Registration Statement and the Prospectus and Statement of
Additional Information therein, there has not been any material adverse
change in the condition, financial or otherwise, business or prospects of
the General Partner or the Fund, whether or not arising in any ordinary
course of business.
(p) The Limited Partnership Agreement, the Advisory Agreement between
the Fund and the General Partner (the "Advisory Agreement") and this
Agreement have each been duly and validly authorized, executed, and
delivered by the General Partner, individually and on behalf of the Fund,
as the case may be, and each constitutes a valid and binding agreement of
the Fund and of the General Partner, as the case may be, enforceable
against the Fund and the General Partner, as the case may be, in accordance
with its terms. The Escrow Agreement (the "Escrow Agreement") between the
Fund, The Chase Manhattan Bank (the "Escrow Agent") and the Selling Agent
has been duly and validly authorized, executed, and delivered by the
General Partner on behalf of the
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Fund, and constitutes a valid and binding agreement of the Fund,
enforceable against the Fund in accordance with its terms.
(q) Except as set forth in the Registration Statement or the
Prospectus and Statement of Additional Information therein, there has not
been in the five years preceding the date of the Prospectus and there is
not pending or, to the best of the General Partner's knowledge, threatened,
any action, suit, or proceeding at law or in equity before or by any court,
governmental body, administrative agency, panel, or self-regulatory
organization to which the General Partner, any of the "principals" of the
General Partner, as defined in CFTC Rule 4.10(e) (the "General Partner
Principals"), or the Fund is or was a party, or to which any of the assets
of the General Partner or the Fund is or was subject; and neither the
General Partner nor any General Partner Principal has received any notice
of an investigation by the SEC, CFTC, NASD or NFA regarding non-compliance
by the General Partner, the General Partner Principals or the Fund with the
1933 Act, the 1934 Act, any other federal securities laws, rules or
regulations, the CE Act, the CFTC Rules, or the rules of the NASD or the
NFA, which action, suit, proceeding, or investigation resulted or might
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, business or prospects of the General
Partner or the Fund, or which could be material to an investor's decision
to invest in the Fund.
2. Representations and Warranties of the General Partner. The General
Partner represents and warrants to the Selling Agent that:
(a) It has been duly incorporated and is validly existing as a
corporation under the laws of the State of New York with full power and
authority to conduct its business as described in the Prospectus and the
Statement of Additional Information; and it is duly qualified to conduct
business as a foreign corporation and is in good standing in every
jurisdiction in which the character of such business requires such
qualification;
(b) It has complied, and will continue to comply, with all laws, rules
and regulations applicable to its business, including regulations
promulgated by the CFTC, the violation of which would materially and
adversely affect the business, financial condition or earnings of the Fund
or the General Partner; and there are no actions, suits or proceedings
pending or, to its knowledge, threatened against the General Partner, at
law or in equity, before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, or before or by any commodity exchange, in which an
adverse decision would materially and adversely affect the business,
financial condition or earnings of the Fund or the General Partner and
which are not adequately disclosed in the Prospectus or the Statement of
Additional Information;
(c) Its financial statements contained in the Registration Statement,
the Prospectus and the Statement of Additional Information fairly present
its financial condition and the results of its operations as of the dates
and for the periods therein specified, and such financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as is
otherwise noted or reported therein.
(d) The General Partner and each "principal" of the General Partner,
as defined in CFTC Rule 3.1(a), have all federal, state, and foreign
governmental, regulatory, self-regulatory, and exchange approvals,
licenses, registrations, and memberships, and have effected all filings
with federal, state, and foreign governmental
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regulators, self-regulatory organizations, and exchanges required to
conduct their business and to act as described in the Registration
Statement and the Prospectus and Statement of Additional Information
therein, or required to perform their obligations under the Limited
Partnership Agreement, the Advisory Agreement, the Escrow Agreement and
this Agreement. The General Partner is registered as a commodity pool
operator under the CE Act and is a member of the NFA as a commodity pool
operator. The General Partner's principals identified in the Prospectus are
all of the General Partner Principals.
(e) To the extent required under CFTC Rules and applicable CFTC staff
no-action letters, the actual performance of all pools "operated" within
the meaning of the CE Act by the General Partner and of the General Partner
Principals is disclosed in the Prospectus and Statement of Additional
Information therein.
3. (a) Appointment of the Selling Agent. Subject to the terms and
conditions and upon the basis of the representations and warranties set forth
herein, the Fund hereby appoints the Selling Agent as its selling agent, and the
Selling Agent agrees to use its best efforts, without any commitment on the part
of the Selling Agent to purchase any Units, to procure subscribers for the Units
at an initial purchase price of One Thousand Dollars ($1,000) per Unit ($950 per
Unit, plus an initial sales charge of $50 per Unit) and will continue such
efforts to and including that day which is sixty (60) days after the date on
which the Registration Statement is declared effective by the SEC, subject to a
possible extension for up to an additional sixty (60) days at the discretion of
the General Partner (the "Initial Offering Period") and thereafter (if at least
1,000 Units have been sold during the Initial Offering Period and the Fund
continues to offer Units to the public) at a purchase price equal to the then
current Net Asset Value per Unit (as defined in the Prospectus and the Statement
of Additional Information), plus a sales charge of 5% of the Net Asset Value per
Unit for each Unit purchased.
(b) All proceeds from the sale of Units during the Initial Offering Period
shall be deposited by the General Partner in an escrow account with The Chase
Manhattan Bank, 1214 Mamaroneck Avenue, White Plains, NY 10605, for the benefit
of the subscribers, and thereafter shall be paid to the Fund on the appropriate
date of purchase of Units. If subscriptions for at least one thousand (1,000)
Units shall not have been received and accepted by the General Partner by the
conclusion of the Initial Offering Period, then each subscriber shall have
returned to him one hundred percent (100%) of his subscription within fifteen
(15) days following the termination of the offering, plus any interest accrued
thereon (pro rata taking in account the amount and the time of deposit).
(c) The Selling Agent may appoint as its agent to make offers and sales of
the Units any securities broker/dealer which is a member in good standing of the
NASD and foreign broker/dealers and institutions which are not members of the
NASD but which agree to abide by the NASD Rules of Fair Practice in making sales
of the Units (hereinafter collectively referred to as the "Selected Dealers").
The Selling Agent and the Selected Dealers will make offers to sell Units to, or
solicit offers to subscribe for any Units from, only those persons who meet the
suitability requirements set forth in the Prospectus and the Statement of
Additional Information and persons in only those states where the Fund has
registered or qualified the offering of Units for sale or under circumstances
where the offering of Units for sale is exempt from registration and
qualification.
(d) In consideration of the services to be rendered by the Selling Agent
hereunder, if at least 1,000 Units are sold and accepted by the General Partner
during the Initial Offering Period, the Fund shall pay the Selling Agent selling
commissions equal to eighty percent (80%) of the sales charges imposed by the
Fund and described in the Prospectus and Statement of Additional Information
with respect to each Unit sold by or though the Selling Agent and the Selected
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Dealers (as defined in Section 3(c) hereof) and accepted by the General Partner
if at least 1,000 Units are sold and accepted by the General Partner during the
Initial Offering Period.
(e) If at least 1,000 Units are sold and accepted by the General Partner
during the Initial Offering Period, the Selling Agent may pay to each Selected
Dealer an amount up to sixty percent (60%) of the sales charges imposed by the
Fund and described in the Prospectus and Statement of Additional Information
with respect to each Unit sold by such Selected Dealer and accepted by the
General Partner. Such amount will be paid by the Selling Agent to the Selected
Dealers only out of the compensation received by the Selling Agent in respect of
the sale of Units hereunder and described in Section 3(d) hereof. The
arrangements, if any, between the Selling Agent and any Selected Dealer shall be
set forth in a Selected Dealer Agreement in substantially the form filed as an
Exhibit to the Registration Statement, unless the Fund shall consent to other
arrangements.
4. Representations and Warranties of the Selling Agent. (a) The Selling
Agent represents and warrants to the Fund and the General Partner that:
(i) All references to and information concerning the Selling Agent
contained in the Registration Statement, the Prospectus and the Statement
of Additional Information are accurate in all material respects, and, as to
the Selling Agent, the Registration Statement, the Prospectus and the
Statement of Additional Information do not contain any misleading or untrue
statement of a material fact or omit to state a material fact which is
necessary to prevent the statements made therein, in light of the
circumstances in which they were made, from being misleading;
(ii) The Selling Agent is a corporation duly organized and validly
existing under the laws of the State of Iowa, is a member in good standing
of the NASD and has full power and authority to act as selling agent in the
manner contemplated by this Agreement and as described in the Registration
Statement, the Prospectus and the Statement of Additional Information;
(iii) The Selling Agent is in good standing and in compliance with all
applicable broker/dealer registration requirements in the places where the
Units will be sold by it, and any use or distribution of the Registration
Statement, the Prospectus and the Statement of Additional Information by
the Selling Agent will comply with the terms and conditions for use and/or
distribution set forth in the Prospectus and the Statement of Additional
Information, with the procedures set forth in this Agreement, and with the
1933 Act, the 1934 Act, the CE Act, all applicable state securities and
commodity laws, the rules and regulations promulgated under all such acts
and all such laws, and all applicable rules and regulations of the NASD and
other self-regulatory organizations;
(iv) The Selling Agent has obtained all required governmental and
regulatory approvals and licenses to perform its obligations under this
Agreement and to act as described in the Registration Statement, the
Prospectus and the Statement of Additional Information, and the performance
of its obligations under this Agreement and its acting as described in the
Registration Statement, the Prospectus and the Statement of Additional
Information will not
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violate or result in a breach of any provisions of its Articles of
Incorporation or by-laws or any agreement, order, law or regulation binding
upon it; and
(v) This Agreement and the Escrow Agreement have each been duly and
validly authorized, executed and delivered on behalf of the Selling Agent,
and is a valid and binding agreement of the Selling Agent enforceable
against the Selling Agent in accordance with its terms.
(b) The Selling Agent agrees that, except as specifically set forth herein,
neither the Fund nor the General Partner shall be liable for any underwriting
compensation in connection with the offer or sale of Units, and any compensation
payable in respect thereof, except as specifically set forth herein, shall be
the sole responsibility of the Selling Agent.
5. Covenants of the Fund and the Selling Agent. The Fund agrees with the
Selling Agent:
(a) To advise the Selling Agent, promptly after it receives notice
thereof, of (i) the time when the Registration Statement or any amended
Registration Statement has become effective or any amended or supplemented
Prospectus or Statement of Additional Information has been filed, (ii) the
issuance by the SEC of any stop order or of any other order preventing or
suspending the use of the Prospectus or the Statement of Additional
Information or any amended or supplemented Prospectus or Statement of
Additional Information, (iii) the initiation or threatening of any
proceeding for any such purpose, or (iv) any request by the SEC for the
amending or supplementing of the Registration Statement, the Prospectus or
the Statement of Additional Information or for additional information; and
in the event of the issuance of any stop order or of any order preventing
or suspending the use of the Prospectus or the Statement of Additional
Information or any amended or supplemented Prospectus or Statement of
Additional Information or suspending any such qualification of the Units,
promptly to use its best efforts to obtain its withdrawal;
(b) To furnish the Selling Agent with copies of the Prospectus and the
Statement of Additional Information in such quantities as the Selling Agent
may from time to time reasonably request, and if delivery of a Prospectus
or Statement of Additional Information is required at any time prior to the
expiration of nine (9) months after the date of the Prospectus or the
Statement of Additional Information and at any such time any event shall
have occurred as a result of which the Prospectus or the Statement of
Additional Information, as then amended or supplemented, would include an
untrue statement of a material fact or omit to state any material fact
necessary to be stated therein in order to make the statements therein, in
light of the circumstances under which they were made when such Prospectus
or Statement of Additional Information is delivered, not misleading, or if
for any other reason it shall be necessary to amend or supplement the
Prospectus or the Statement of Additional Information in order to comply
with the 1933 Act, to notify the Selling Agent and, upon the Selling
Agent's request, to prepare and furnish, without charge to the Selling
Agent, as many copies as the Selling Agent may from time to time reasonably
request of an amended Prospectus and Statement of Additional Information or
a supplement to the Prospectus and Statement of Additional Information
which will correct such statement or omission or otherwise effect such
compliance;
(c) Promptly from time to time to take such action as the Selling
Agent may reasonably request to qualify the Units for offering and sale
under the securities or blue sky laws of such jurisdictions as the Selling
Agent may request and in which such qualification
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is possible and to comply with such laws so as to permit the continuance of
sales in such jurisdictions for so long as may be necessary to complete the
distribution; provided, however, that in connection therewith the Fund
shall not be required to qualify as a foreign limited partnership (except
in the State of New York) or to file a general consent to service of
process in any jurisdiction;
(d) To make generally available to the holders of Units as soon as
practicable, but in any event not later than ____________, an earnings
statement of the Fund (which need not be audited) complying with Section
11(a) of the 1933 Act and covering a period of at least twelve (12)
consecutive months beginning after the effective date of the Registration
Statement;
(e) During a period of five (5) years from the effective date of the
Registration Statement, to furnish the Selling Agent with copies of all
reports or other communications (financial or otherwise) furnished to the
Limited Partners, and to deliver to the Selling Agent, as soon as they are
available, copies of any reports and financial statements furnished to or
filed with the SEC; and
(f) To furnish, without charge, to the Selling Agent one (1) signed
copy of the Registration Statement and of each amendment thereto, including
all financial statements and exhibits, and such number of conformed copies
of the Registration Statement and of each amendment thereto, including all
financial statements but excluding exhibits to the Registration Statement,
as the Selling Agent may reasonably request.
6. Conditions to the Obligations of the Selling Agent. The obligations of
the Selling Agent hereunder shall be subject, in its discretion, to the
condition that all representations and warranties and other statements of the
Fund and the General Partner herein are, at and as of the time of effectiveness
of the Registration Statement, true and correct, to the condition that each of
the Fund and the General Partner shall have performed all of its obligations
hereunder theretofore to be performed, and to the following additional
conditions:
(a) The Registration Statement shall have become effective, and the
Selling Agent shall have received notice thereof; 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 to the reasonable satisfaction of the Selling
Agent and its counsel.
(b) The Selling Agent shall have received a certificate of the General
Partner, dated the Initial Closing Date, and each subsequent date as of
which subscriptions to Units are accepted, to the effect that:
(i) On and as of the date of such certificate, the
representations and warranties of each of the Fund and the General
Partner contained herein are true and correct, and each of the Fund
and the General Partner has complied with all the agreements and
satisfied all the conditions required to be performed or satisfied on
its or their part at or prior to such date;
(ii) No stop order suspending the effectiveness of the
registration Statement has been issued and no proceedings for that
purpose have been
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instituted or, to the best of its knowledge, are pending or
contemplated under the 1933 Act with respect to the Registration
Statement, the Prospectus or the Statement of Additional Information;
and
(iii) Neither the Registration Statement, the Prospectus, the
Statement of Additional Information nor any amendments or supplements
thereto contain an untrue statement of a material fact or omit to
state any material fact required c to be stated therein or necessary
to be stated therein to make the statements made therein, in light of
the circumstances in which they were made, not misleading and, since
the effective date of the Registration Statement, no event has
occurred or been discovered which is required to which is required to
be set forth in an amended or supplemental Prospectus or Statement of
Additional Information which has not been so set forth.
(c) Kurzman Karelsen & Frank, LLP shall have furnished the Selling Agent
with their written opinion, dated the Initial Closing Date, and each subsequent
date as of which subscriptions to Units are accepted, to the effect that:
(i) The Fund has been duly organized and is validly existing in
good standing under the Delaware Revised Uniform Limited Partnership
Act with full power and authority to carry out its obligations under
this Agreement, the Partnership Certificate and the Limited
Partnership Agreement and to own properties and conduct business as
described in the Prospectus and the Statement of Additional
Information, and the Fund is duly qualified to conduct business as a
foreign limited partnership and is in good standing in the State of
New York;
(ii) The General Partner has been duly incorporated and is
validly existing in good standing as a corporation under the laws of
its state of incorporation with full power and authority to carry out
its obligations under this Agreement, the Partnership Certificate and
the Limited Partnership Agreement and to conduct its businesses as
described in the Prospectus and the Statement of Additional
Information, and it is duly qualified to conduct business as a foreign
corporation and is in good standing in every jurisdiction in which the
character of such business requires such qualification;
(iii) The Partnership Certificate and the Limited Partnership
Agreement, as each shall have been amended at the time of such
opinion, have been duly and validly authorized, executed and delivered
by the General Partner and Daniel S. Shaffer (the "Initial Limited
Partner"), and each constitutes the legal, valid and binding
obligation of the Partnership and the General Partner, enforceable in
accordance with its terms, except (A) as rights under the exculpation
and indemnification provisions thereof may be limited by applicable
law, (B) as enforcement may be limited by equitable principles
applicable to the granting or withholding of equitable remedies
including specific performance, and (C) subject to any applicable
bankruptcy, insolvency, reorganization or other law generally
affecting the enforcement of creditors' rights generally from time to
time in effect;
(iv) The offer and sale of the Units have been duly authorized by
the General Partner on behalf of the Fund;
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(v) Upon the filing with the Secretary of State of the State of
Delaware of an amendment to the Partnership Certificate which states
the names and addresses of the purchasers of the Units, specifies
their contributions and designates them as Limited Partners of the
Fund, (A) such purchasers will be limited partners under the Delaware
Revised Uniform Limited Partnership Act, and (B) the Units will
constitute valid limited partnership interests in the Fund which
conform to the description thereof contained in the Prospectus and the
Statement of Additional Information, (C) the liability of each Limited
Partner will be limited as set forth in the Prospectus and the
Statement of Additional Information, and (D) no Limited Partner will
be subject to personal liability for liabilities of the Fund by reason
of his being a limited partner except as set forth in the Prospectus
and the Statement of Additional Information;
(vi) This Agreement has been duly and validly authorized,
executed and delivered by each of the Partnership and the General
Partner and constitutes the legal, valid and binding obligation of
each of them, enforceable in accordance with its terms, except (A) as
rights under the exculpation and indemnification provisions thereof
may be limited by applicable law, (B) as enforcement may be limited by
equitable principles applicable to the granting or withholding of
equitable remedies including specific performance, (C) subject to any
applicable bankruptcy, insolvency or reorganization or other law
generally affecting the enforcement of creditors' rights from time to
time in effect, and (D) except that no opinion is required to be
expressed as to the enforceability of this Agreement, including the
provisions relating to indemnification, in the event that the
Registration Statement, the Prospectus or the Statement of Additional
Information contains a material untrue statement or omission;
(vii) The offer and sale of the Units and the compliance by the
Fund 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, or
constitute a default under, the Partnership Certificate or Limited
Partnership Agreement, or, to the extent of such counsel's knowledge
(without any independent investigation), any indenture, mortgage, deed
of trust or other instrument or agreement to which the Fund is a party
or by which it is bound, or any statute, order, rule or regulation
applicable to the Fund of any court or other governmental authority;
(viii) The Registration Statement has become effective under the
1933 Act and, to the extent of such counsel's knowledge, 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;
(ix) The Registration Statement, the Prospectus and the Statement
of Additional Information comply as to form in all material respects
with the requirements of the 1933 Act and the rules and regulations
under the 1933 Act, and such counsel has no reason to believe that the
Registration Statement, the Prospectus or the Statement of Additional
Information contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to
be stated therein to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that
such counsel is not required to express any opinion as to the
financial statements or other financial, statistical or performance
data, tables or
-11-
information contained in the Registration Statement, the Prospectus or
the Statement of Additional Information;
(x) Such counsel does not know of any pending or threatened
litigation or governmental proceedings against the Fund or the General
Partner required to be described in the Registration Statement which
are not so described, nor of any contract or other document required
to be described in or filed as an exhibit to the Registration
Statement which has not been described and filed as required;
(xi) The Units have been registered under the securities or blue
sky laws of certain states, [naming them], and, to the extent of such
counsel's knowledge, may lawfully be offered and sold to residents
thereof or from places of business therein in the amounts specified
and subject to such conditions and limitations as may be noted in the
opinion.
(d) _______________ shall have furnished the Selling Agent with their
written opinion, dated the Initial Closing Date, and each subsequent date as of
which subscriptions to Units are accepted, to the effect that:
(i) Such counsel has no reason to believe that the Registration
Statement, the Prospectus or the Statement of Additional Information
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to be stated
therein to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that
such counsel is not required to express any opinion as to the
financial statements or other financial, statistical or performance
data, tables or information contained in the Registration Statement,
the Prospectus or the Statement of Additional Information; and
(ii) The statements in the Prospectus under the caption "Federal
Income Tax Consequences" have been reviewed by such counsel and such
statements are correct as to matters of law and legal conclusions and
they have rendered the legal opinion referred to therein.
(e) Anchin Block & Anchin LLP shall have furnished to the Selling Agent a
letter, dated the Initial Closing Date, in form and substance satisfactory to
the Selling Agent, to the effect that:
(i) They are independent public accountants with respect to the
Fund and the General Partner, within the meaning of the 1933 Act and
the applicable published instructions, rules and regulations
thereunder, and the answer to Item 10 of the Registration Statement as
set forth under the caption "Experts" in the Prospectus is correct
insofar as it relates to them;
(ii) In their opinion, the financial statements of the Fund and
the General Partner examined by them and included in the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published
instructions, rules and regulations hereunder; and
-12-
(iii) On the basis of limited procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the General Partner, consultations with officers of the
General Partner responsible for financial and auditing matters, and
review of such other documents as they requited, and other specified
inquiries, nothing has come to their attention which would give them
reason to believe that, during the period subsequent to the effective
date of the Registration Statement to a specified date not more than
five (5) business days prior to the date of such letter, there has
been any decrease in the shareholders' equity of the General Partner
or any decrease in the net assets of the General Partner (other than
due to a decrease in the quoted market value for securities, if any,
held by the General Partner), all as compared with the amounts shown
in the balance sheet of the General Partner included in the
Prospectus, or that the General Partner or the Fund have incurred any
long-term liabilities, except changes, increases or decreases
specified in said letter or which the Registration Statement discloses
have occurred or may occur.
(f) There shall have been furnished to the Fund, the General Partner, the
Selling Agent and ADM Investor Services, Inc. (the "Commodity Broker") a letter
from one or more firms of certified public accountants acceptable to the Fund,
the General Partner, the Selling Agent and the Commodity Broker, dated the
Initial Closing Date, and any subsequent date relating to an amended
Registration Statement, Prospectus and Statement of Additional Information which
includes performance data of the General Partner subsequent to that contained in
the prior effective Registration Statement, Prospectus and Statement of
Additional Information, in form and substance satisfactory to the Fund, the
General Partner, the Selling Agent and the Commodity Broker and their respective
counsel, with respect to the General Partner to the effect that:
(i) They are independent public accountants with respect to the
General Partner; and
(ii) They have applied certain agreed upon, limited procedures
with respect to the information contained in the tables (including
tables relating to "pro forma" brokerage and management and incentive
fee / allocation amounts) under the caption "The General Partner /
Advisor - Past Performance" in the Prospectus (the "Tables") relating
to the General Partner, and that, in connection with such procedures,
no facts came to their attention to cause them to believe that the
information set forth therein does not represent in all material
respects the past performance and the composite past performance of
accounts managed by the General Partner and their respective
predecessors, affiliates and principals for the periods indicated.
It is understood that the letter referred to in this subsection (e) is
solely for the information of, and assistance to, the Fund, the General Partner,
the Selling Agent and the Commodity Broker in conducting and documenting their
investigation of the affairs of the General Partner and for the presentation of
its past performance histories in the Prospectus and the Statement of Additional
Information, and it is not to be used, circulated, quoted or otherwise referred
to for any other purpose, including but not limited to, the registration,
purchase or transfer of Units, nor is it to be referred to in whole or in part
in the Registration Statement (other than in this Agreement which will be
included as an exhibit to the Registration Statement).
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(g) All documents required to be delivered to the Selling Agent by the
General Partner on the Initial Closing Date, or any subsequent date, have been
delivered in form and substance satisfactory to the Selling Agent and its
counsel.
7. Termination. (a) If at least 1,000 Units have not been sold to the
public prior to the conclusion of the Initial Offering Period specified in
Section 3(a), above, this Agreement shall be terminated at the Initial Closing
Date (as hereinafter defined in Section 7(d)). Otherwise this Agreement shall be
terminated at the Final Closing Date (as hereinafter defined in Section 7(d)).
(b) Until such time as this Agreement shall terminate pursuant to
subsection (a), above, this Agreement may be terminated by the Selling Agent, at
the Selling Agent's option, by giving notice to the Fund and the General
Partner, 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 Fund
or the General Partner, which change in the judgment of the Selling
Agent shall render it inadvisable to proceed with the offering and
sale of the Units; or
(ii) any event shall occur which, in the opinion of counsel for
the Selling Agent, should be set forth in the Registration Statement,
the Prospectus or the Statement of Additional Information in order to
make the statements therein not misleading, and the Fund does not
concur and fails or refuses to amend or supplement the Registration
Statement, the Prospectus or the Statement of Additional Information
promptly after written request by the Selling Agent to it to do so; or
(iii) any of the conditions specified in Section 6 hereof shall
not have been fulfilled when and as required by this Agreement to be
fulfilled; or
(iv) there shall have been an outbreak of hostilities between the
United States and any foreign sovereign, or there shall have occurred
any insurrection or other armed conflict involving the United States
which, in the opinion of the Selling Agent, makes it impractical or
inadvisable to offer or sell the Units.
(c) In addition to subsection 7(b), above, this Agreement may be terminated
by written agreement between the Selling Agent and the General Partner or the
Fund. The termination of this Agreement for any reason set forth in this Section
7 shall not affect the obligations of the Fund contained in Section 5 hereof.
(d) The "Initial Closing Date" shall be a date selected by the Selling
Agent (by written or telegraphic notice to the General Partner) not less than
five (5) and not more than ten (10) business days following the termination of
the Initial Offering Period referred to in Section 3(a), above. The initial
closing shall be held on the date set forth in the notice. Subsequent Closing
Dates shall be determined by agreement between the Selling Agent and the General
Partner. Each closing shall be held at 10:00 a.m. at the offices of Kurzman
Karelsen & Frank, LLP, 230 Park Avenue, New York, NY 10169, or at the option of
the Fund, at the offices of the General Partner, 70 West Red Oak Lane, White
Plains, NY 10604.
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8. Indemnification. (a) The Fund agrees to indemnify and hold harmless the
Selling Agent and the selected dealers and their respective officers, directors,
employees, affiliates and each person who controls the Selling Agent and the
selected dealers from and against any loss, claim, damage, cost, expense
(including, without limitation, attorneys' and accountants' fees and
disbursements), judgments and liabilities (including, without limitation, civil
liabilities under the 1933 Act or any applicable state securities law)
(collectively "Loss") which arises out of or results from the inclusion in the
Registration Statement, the Prospectus or the Statement of Additional
Information of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, and will reimburse any and all persons indemnified herein for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any actions or claims in respect thereof; provided,
however, that no such indemnification or reimbursement shall be made with
respect to the Selling Agent or its officers, directors, employees, affiliates
or controlling persons for any Loss which results from any violation by the
General Partner or its respective affiliates of the 1933 Act or any applicable
state securities law in connection with the Registration Statement or the sale
of the Units or any untrue statement or omission of any information or material
facts in the Registration Statement or the Prospectus relating to or concerning
the Selling Agent.
(b) The Selling Agent agrees to indemnify and hold harmless the Fund, the
General Partner and their respective officers, directors, employees, affiliates,
partners and controlling persons against any Loss incurred by them which arises
out of or results from the Selling Agent's failure to deliver the Prospectus, or
any amendment or supplement thereto, as required by the 1933 Act and the rules
and regulations thereunder, or the inclusion in the Registration Statement, the
Prospectus or the Statement of Additional Information of an untrue statement of
a material fact relating to the Selling Agent or the omission to state a
material fact relating to the Selling Agent required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading.
(c) Promptly after receipt by an indemnified party under subsection (a),
above, of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party or parties under such subsection, notify the indemnifying party or parties
in writing of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and to assume the defense thereof, with counsel
satisfactory to such indemnified party (which shall include, in the event of
conflicts of interest between such indemnified party and other defendants and/or
the availability to such indemnified party of defenses which are not available
to other defendants, separate counsel for such indemnified party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses, other than reasonable
costs of investigation requested by the indemnifying party, subsequently
incurred by such indemnified party in connection with the defense thereof.
9. Miscellaneous. (a) All representations, warranties and agreements
contained in this Agreement shall be deemed restated as of each dated subsequent
to the Initial Closing Date as of which subscriptions to Units are accepted and
shall remain operative and in full force and effect regardless of {a) any
investigations made by or on behalf of the Selling Agent, the Fund or the
General Partner, {b) the delivery of any payment for the Units, or (c) the
termination of this Agreement.
(b) This Agreement is made solely for the benefit of, and shall be binding
upon, the Selling Agent, the Fund and the General Partner and their respective
successors and assigns, and no other person
-15-
shall have any right or obligation under this Agreement. The terms "successors"
and "assigns" shall not include any purchasers, as such, of Units.
(c) Whenever notice is required by the provisions of this Agreement to be
given, such notice shall be effective only if in writing and delivered
personally or by registered mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Selling Agent, to it at:
Berthel Fisher & Company Financial Services, Inc.
P.O. Box 74250
Cedar Rapids, IA 52407-4250
Attention: _______________
If to the General Partner or the Fund, to it at:
Shaffer Asset Management, Inc.
70 West Red Oak Lane
White Plains, NY 10604
Attention: Daniel S. Shaffer
(d) The Selling Agent and the Selected Dealers sellers are not authorized
by the Fund to give any information or make any representation in connection
with the offering of Units other than those contained in the Prospectus, the
Statement of Additional Information and such sales literature as has been
authorized in writing by the Fund.
(e) This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York without giving effect to the
principles of conflict of laws.
Very truly yours,
SHAFFER DIVERSIFIED FUND, L.P.
By: Shaffer Asset Management, Inc.,
the General Partner
By:___________________________
Daniel S. Shaffer
President
SHAFFER ASSET MANAGEMENT, INC.
By:_______________________________
Daniel S. Shaffer
President
Accepted and agreed to as of
the date first written above:
BERTHEL FISHER & COMPANY FINANCIAL SERVICES, INC.
By: ______________________________
Name:
Title: