Exhibit 1.2
Form of Selected Dealers Agreement
[Letterhead of Berthel Fisher& Company
Financial Services Inc.
___________ , 2001
To: The Selected Dealer
_________________________
_________________________
_________________________
Shaffer Diversified Fund, L.P.
Gentlemen:
Shaffer Diversified Fund, L.P., a Delaware limited partnership (the
"Fund"), proposes to offer and sell to the public a minimum of 1,000 and a
maximum of 25,000 units of limited partnership interest of the Fund ("Units")
upon the terms and subject to the conditions set forth in (i) the selling agent
agreement dated as of __________, 2001 (the "Selling Agent Agreement") entered
into among Shaffer Asset Management, Inc., the general partner of the Fund (the
"General Partner"), the Fund and Berthel Fisher & Company Financial Services,
Inc. (the "Selling Agent") and (ii) the Registration Statement, Prospectus and
Statement of Additional Information of the Fund (as defined in Section 1(a) of
the Selling Agent Agreement).
Pursuant to the terms of the Selling Agent Agreement, the Selling Agent has
agreed to use its best efforts to obtain subscribers for the Units. The Fund has
agreed that the Selling Agent may, in its discretion, use the services of other
members of the National Association of Securities Dealers, Inc. (the "NASD") and
any foreign broker/dealer or institution which is not eligible for membership in
the NASD but which agrees to abide by the NASD's Rules of Fair Practice
(hereinafter collectively referred to as "Selected Dealers") in connection with
the offer and sale of the Units. You are invited to become one of the Selected
Dealers and to use your best efforts to obtain subscribers for the Units in
accordance with the Selling Agent Agreement and the terms and conditions
contained herein.
1. Solicitation and Solicitation Material.
Solicitation and other activities by Selected Dealers hereunder shall be
undertaken only in accordance with applicable laws and regulations and the terms
hereof. Each person desiring to purchase Units will be required to complete and
execute a Subscription Agreement / Power of Attorney as described in the
Prospectus and Statement of Additional Information and to return such
Subscription Agreement / Power of Attorney, together with a check made payable
to "Shaffer Diversified Fund, L.P. Escrow Account No. __________" in an amount
equal to $1,000 per Unit ($950 per Unit, plus an initial sales charge of $50 per
Unit) multiplied by the number of Units subscribed for prior to the Initial
Closing Date (as defined in Section 7(d) of the Selling Agent Agreement). After
the Initial Closing Date, checks should be made payable to "Shaffer Diversified
Fund, L.P." in the amount of the desired
subscription, plus a sales charge of five percent (5%) of the desired
subscription. The appropriate number of Units will be issued at a purchase price
per Unit equal to the then current Net Asset Value per Unit (as defined in the
Prospectus and Statement of Additional Information). You shall ascertain that
each such Subscription Agreement / Power of Attorney has been completed and
executed by such prospective purchaser and shall then mail or deliver such
Subscription Agreements / Powers of Attorney, together with the checks and such
other documents as may be required by the Selling Agent or under any Federal or
state securities law, to the Selling Agent at 701 Tama Street, Building B, P.O.
Box 609, Marion, IA 52302-0609, to the attention of Diane M. Anderson, by noon
of the next business day following your receipt of such Subscription Agreement /
Power of Attorney and check. The Selling Agent will arrange for the opening of a
customer account with you, for each subscriber of Units you procure that is
accepted by the General Partner, for the purpose, among other things, of
crediting interest thereon, redeeming Units with respect thereto, and receiving
distributions thereon. If the subscription for Units is not accepted, the
subscriber's monies will be returned directly to the subscriber, without
interest, and notice will be given to you of such rejection.
Accompanying this letter is a copy of the Prospectus and Statement of
Additional Information. Additional copies of the Prospectus and Statement of
Additional Information are being sent to you under separate cover and further
additional copies will be sent to you in reasonable quantities upon your
request. Public advertisement of the offering shall be made by the Selling Agent
on such date(s), if any, as it shall determine. No Selected Dealer is authorized
to publish or circulate any advertising or solicitation material ("Sales
Literature") other than the Prospectus and Statement of Additional Information
without the prior written consent of the Fund and the Selling Agent, and any
such advertising made by a Selected Dealer pursuant to such written consent
shall be at the expense, responsibility and risk of the Selected Dealer. You
agree to maintain and produce for the Selling Agent at its request a full and
complete record showing all persons to whom copies of any preliminary
prospectus, Prospectus, Statement of Additional Information or Sales Literature
have been delivered or mailed at any time.
Upon receipt by you from time to time of notices from the Selling Agent
that an amended or supplemented Prospectus or Statement of Additional
Information is required to be delivered in connection with the offer and sale of
the Units, you shall immediately cease making deliveries of the non-amended or
non-supplemented Prospectus or Statement of Additional Information, as the case
may be, and shall also cease making offers and sales of Units until such time as
(i) you shall have received the consent of the Selling Agent to resume such
offers and sales; and (ii) you shall have received copies of the amended or
supplemented Prospectus or Statement of Additional Information , as the case may
be.
2. Compensation.
As compensation for your services in soliciting and obtaining purchasers of
the Units, the Selling Agent agrees to pay to you a selling commission equal to
_____ percent of the sales charges paid to the Selling Agent with respect to the
subscriptions for Units paid for through your efforts and accepted by the
General Partner; provided, however, that subscriptions for at least 1,000 Units
offered by the Prospectus and Statement of Additional Information are received
and accepted by the General Partner on or before sixty (60) days after the date
of the Prospectus and Statement of Additional Information (subject to the right
of the General Partner, in its sole discretion, to extend such offering period
for up to an additional sixty (60) days) and further subject to the conditions
set forth in the Prospectus and the Statement of Additional Information.
Determination by the Selling Agent of the amount payable to each Selected Dealer
shall be conclusive. A Selected Dealer is not entitled to any selling
commissions or other compensation in any case in which it is determined by the
Selling Agent that the solicitation engaged in by such Selected Dealer was made
in violation of the applicable securities laws of any jurisdiction. The selling
commissions payable to a
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Selected Dealer shall be paid by the Selling Agent within seven (7) business
days after both (i) the General Partner has accepted the subscription for the
Units for which such commissions are payable and (ii) such subscription has been
contributed to the, capital of the Fund. Acceptance of such selling commissions
shall constitute a representation by you that you have complied with all of the
provisions of this Agreement.
You understand that the General Partner of the Fund, in its discretion, may
reject any tendered subscription in whole or in part for any reason.
You hereby authorize the Selling Agent to deduct from the compensation you
are to receive under this Section 2 all transfer taxes, if any, paid by the
Selling Agent for your account with respect to sales of Units made through your
efforts.
In the event that you agree to provide the continuing services to the Fund
and its limited partners in the Continuing Services Agreement attached to the
Registration Statement as Exhibit 1.3 (the "Continuing Services Agreement"), the
Selling Agent will pay, or cause the Fund to pay, to your firm (i) 1/12 of 1.0%
of the Net Asset Value per Unit of the Fund's assets under management at month's
end (without reduction for distributions or redemptions effected as of such date
or management fees payable or incentive allocations allocable as of such date)
with respect to Units purchased within the prior twelve-month period which are
held by persons who are being serviced by your firm pursuant to the terms of the
Continuing Services Agreement, and (ii) 1/12 of 3.0% of the Net Asset Value per
Unit of the Fund's assets under management at month's end (without reduction for
distributions or redemptions effected as of such date or management fees payable
or incentive allocations allocable as of such date) with respect to Units
purchased more than twelve months prior thereto which are held by persons who
are being serviced by your firm pursuant to the terms of the Continuing Services
Agreement.
3. Unauthorized Information and Representations.
Neither you nor any other person is authorized by the Selling Agent, the
General Partner or the Fund to give any information or make any representations
in connection with this Agreement or the offering of Units other than those
contained in the Prospectus and the Statement of Additional Information and in
sales literature, the content, publication and circulation of which has been
approved in writing by the Selling Agent and the Fund. You understand that you
are not authorized to act as an agent of the Selling Agent or the Fund in any
connection or transaction, and you agree not to act as such agent and not to
purport to do so.
4. Blue Sky Qualification.
Upon application to the Selling Agent, you will be informed of the
jurisdictions in which it is believed that solicitations and sales of Units may
be legally made under the applicable securities or blue sky laws, but neither
the Selling Agent nor the Fund assumes any responsibility as to such legality or
as to the qualification of any Selected Dealer to offer or sell Units in any
jurisdiction. Solicitations are to be made only by Selected Dealers qualified to
act as such for such purpose within the jurisdiction(s) in which they act. You
understand and agree that under no circumstances will you engage in any
activities hereunder in any state or jurisdiction unless (i) the Units have been
registered or qualified for sale under the securities or blue sky laws thereof,
or are exempt therefrom, and (ii) you may lawfully engage in such activities
therein.
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5. General.
In soliciting purchasers of Units, you agree to comply with any applicable
requirements of the Securities Exchange Act of 1933, as amended (the "1933
Act"), the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
Commodity Exchange Act, as amended (the "CE Act"), and the published rules and
regulations under each of the Acts (hereinafter collectively referred to as the
"Acts"), and in particular, without limiting any of the foregoing, you agree not
to deliver any Sales Literature to any person unless preceded or accompanied by
a Prospectus and Statement of Additional Information. You also confirm that you
are familiar with the Statement of Policy of the North American Securities
Administrators Association, Inc., adopted on September 21, 1983 (effective
January 1, 1984), as amended and adopted on August 30, 1990, establishing
guidelines for the registration of commodity pool programs, and you agree to
observe the requirements of such Statement of Policy, or of any regulatory
provisions comparable thereto, with respect to offers and sales of Units in any
jurisdictions in which such Statement of Policy or comparable provisions have
been adopted or are in effect to the extent that the Prospectus and Statement of
Additional Information are not inconsistent with such Statement of Policy and
comparable provisions.
6. Termination.
This Agreement may be terminated by either party upon written or
telegraphic notice to the other and in any case it will terminate upon
termination of the Selling Agent Agreement; provided, however, that all selling
commissions and other compensation payable to you under the terms and conditions
hereof shall be paid when due although this Agreement shall have theretofore
been terminated. Upon termination of this Agreement, all authorizations, rights
and obligations hereunder shall cease except for the indemnification obligations
set forth in Section 9 hereof, and the obligations to settle accounts hereunder.
7. Liability of the Selling Agent.
Nothing herein contained shall constitute the Selected Dealers, inter se,
or any of the Selected Dealers and the Selling Agent an association,
partnership, unincorporated business, joint venture or any other separate
entity. The Selling Agent shall be under no liability to make any payment to you
except as provided in Section 2 hereof. The Selling Agent shall not be under any
liability for or in respect of the value or validity of the Units, the
performance by any other person of any agreement on its part, or for or in
respect of any matter connected with this Agreement, except for lack of good
faith and for obligations expressly assumed by the Selling Agent under the terms
of this Agreement. You agree to pay your proportionate share of any amount
asserted against and discharged by the Selling Agent or the Selected Dealers, or
any of them, based upon the claim that the Selling Agent and the Selected
Dealers constitute an association, partnership, unincorporated business, joint
venture or any other separate entity, including any expense incurred in
defending against any and all such claims.
8. Representations and Warranties.
(a) You represent and warrant that (i) if you are located within the United
States, you are a member in good standing of the NASD, and if you are not
located within the United States, you will conform to the rules of the NASD
contained in its Rules of Fair Practice in connection with all offers and sales
of Units; (ii) your registered representatives who offer and sell Units are duly
registered representatives of your firm; (iii) you have examined the
Registration Statement and the Prospectus as amended to date and are familiar
with the terms of the offering of the Units; (iv) you are willing to accept the
responsibilities of a Selected Dealer under the Acts; (v) you are willing to
proceed with the offering of the Units in the manner contemplated in the
Registration Statement, the Prospectus, the Statement of Additional Information,
the Selling Agent Agreement and this Agreement; and (vi) your commitment to use
your best efforts to find purchasers for Units will not result in a violation of
the 1934
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Act or any rule or regulation thereunder, or of any rules of any securities or
commodity exchange to which the Selling Agent or the Fund is subject, or of any
restriction imposed upon the Selling Agent or the Fund by any such exchange or
governmental authority.
(b) You further represent and warrant that, in recommending to a
participant the purchase, sale or exchange of Units, you shall:
(i) have reasonable grounds to believe, on the basis of information
obtained from the purchaser concerning his investment objectives, his
other investments, his financial situation and needs, and any other
information known by you, that:
(A) the purchaser is or will be in a financial position
appropriate to enable him to realize, to a significant
extent, the benefits described in the Prospectus and the
Statement of Additional Information;
(B) the purchaser has a fair market net worth sufficient to
sustain the risks inherent in an investment in the Fund,
including the loss of his entire investment and the lack of
liquidity; and
(C) investment in the Fund is otherwise suitable for the
participant; and
(ii) maintain in your files documents disclosing the basis upon which the
determination of suitability was reached as to each purchaser.
(c) Notwithstanding the provisions of Section 8(b)(i)(B) hereof, you shall
not execute any transaction without prior written approval of the transaction by
the purchaser.
(d) You shall have reasonable grounds to believe, based on information made
available to you by the General Partner through the Prospectus, the Statement of
Additional Information or other materials, that all material facts relating to
an investment in the Fund are adequately and accurately disclosed and provide a
basis for evaluating the investment.
(e) In determining the adequacy of disclosed facts pursuant to Section
8(b)(i)(D) hereof, you shall obtain information on material facts relating, at a
minimum, to (i) the items of compensation to be paid by the Fund; (ii) the tax
aspects of an investment in the Fund; (iii) the financial stability and
experience of the sponsors of the Fund; (iv) the conflicts of interest and risk
factors inherent in an investment in the Fund; and (v) other pertinent reports,
including financial statements.
(f) For purposes of Sections 8(b)(i)(D) and (E) hereof, you may rely upon
the results of an inquiry conducted by another member or members of the NASD,
provided that (i) you have reasonable grounds to believe that such inquiry was
conducted with due care; (ii) the results of the inquiry were provided to you
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 Fund or
an affiliate of such sponsor.
(g) Prior to executing a purchase transaction for Units, you shall inform
the prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Units during the term of the investment.
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9. Indemnity.
You agree to indemnify and hold harmless the Fund, the General Partner, the
Selling Agent, and their respective shareholders, directors, officers, employees
and affiliates and each person, if any, who controls the Fund, the General
Partner or the Selling Agent within the meaning of the 1933 Act against any and
all losses, claims, damages, liabilities, costs and expenses (including, without
limitation, costs of investigation and attorneys' fees and disbursements)
arising directly or indirectly out of or based directly or indirectly upon (i)
your failure to send or deliver a copy of the Prospectus or Statement of
Additional Information (or any correcting amendment or supplement thereto of the
kind described in Section 1 hereof) furnished to you by the Selling Agent, the
Fund or the General Partner to any purchaser of Units at the time of or prior to
the written confirmation of the sale of Units to such purchaser or your failure
to send or deliver to any purchaser, at the time of or prior to the written
confirmation of the sale of Units to such purchaser, any correcting amendment or
supplement to the Prospectus or Statement of Additional Information of which you
were informed as to the necessity of such delivery in accordance with said
Section 1, and (ii) any violation by you of any of the Acts or any state "blue
sky" laws. Without limitation, any loss of the Selling Agent's right of
indemnification under Section 8 of the Selling Agent Agreement shall be deemed a
loss indemnified against by you under this Section 9. The indemnification
agreements in this Section 9 shall be in addition to any liability that you may
otherwise have. Nothing contained in this Section 9 or elsewhere in this
Agreement shall be construed as an admission that you are an "underwriter" of
the Units within the meaning of the 1933 Act.
10. Miscellaneous. (a) Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all prior arrangements or
understandings with respect thereto.
(b) Descriptive Headings. The descriptive headings of this Agreement are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement.
(c) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by registered or certified mail, postage prepaid, addressed to the
respective parties hereto at the following addresses:
Party: Address:
The Selling Agent __________________________________
__________________________________
Attention: _______________________
The Selected Dealer At the address specified by such Additional
Seller in the Confirmation of Acceptance
Any party may by notice change the address to which notices or other
communications to such party are to be delivered or mailed.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(e) Arbitration. Any controversy or claim arising out of, resulting from or
relating to this Agreement shall be settled exclusively by arbitration conducted
in New York, New York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (or organization which is
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the successor thereto). The parties hereto agree that service of process or
notice of motion or other application in connection with any arbitration may be
served by the means by which notices are to be given under this Agreement,
provided that a reasonable time for appearance is allowed. Any award in such
arbitration may be enforced on application of either party by the order or
judgment of any Federal or state court in the State of New York as the party
making such application shall elect, having jurisdiction over the subject matter
thereof. Each of the parties hereto hereby submits itself to the jurisdiction of
any such court and agree that service of process on it in any action, suit or
proceeding to enforce any such award may be effected by the means by which
notices are to be given to it under this Agreement. The fees and expenses of any
arbitration shall be borne by the parties equally, but each party shall bear the
expenses of its own attorneys and experts and the additional expenses of
presenting its own proof.
(f) Illegalities. In the event that any provision contained in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions of this Agreement
shall not, at the election of the party for whose benefit the provision exists,
be in any way impaired.
(g) Assignability. This Agreement shall not be assignable by either party
hereto without the prior written consent of the other party hereto, and any
purported assignment by any party without such consent shall be void.
(h) Third Party Rights. Notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any third party
(other than those third parties referred to in Section 9 hereof), and this
Agreement shall be effective only as between the parties hereto, the third
parties referred to in Section 9 hereof and their respective successors, heirs
and permitted assigns.
(i) Amendments and Waivers. Any term or provision of this Agreement may be
waived at any time by the party which is entitled to the benefits thereof, and
any term or provision of this Agreement may be amended or supplemented at any
time by the mutual consent of the parties hereto, except that any waiver of any
term or condition, or any amendment or supplementation, of this Agreement shall
be effective only if in writing and, in the case of any waiver by the
Corporation and any amendment or supplementation to which the Corporation
consents, if approved by resolution of a majority of the disinterested members
of the Board of Directors of the Corporation.
11. Confirmation.
Please confirm your agreement to become one of the Selected Dealers under
the terms and conditions set forth herein by signing the Confirmation of
Acceptance attached hereto and made a part hereof and returning this letter to
the Selling Agent. The enclosed duplicate of this letter is for your files.
Very truly yours,
BERTHEL FISHER & COMPANY
FINANCIAL SERVICES, INC.
By:______________________________
Name:
Title:
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Confirmation of Acceptance
The undersigned hereby confirms its acceptance of the terms and conditions
of the foregoing Selected Dealers Agreement. The undersigned understands that no
selling commissions will be payable to it for sales of Units by it except as
expressly set forth in Section 2 of said agreement.
The undersigned hereby acknowledges receipt of the Prospectus and Statement
of Additional Information referred to in the foregoing Selected Dealers
Agreement and confirms that in executing this Confirmation of Acceptance it has
relied solely upon such Prospectus and Statement of Additional Information and
upon no other statements or representations whatsoever, written or oral.
Dated:_______________, 2001
______________________________
Name of Firm
By:___________________________
Name:
Title:
______________________________
Street Address
______________________________
City, State, Zip Code
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