1
Exhibit 1.2
SOLICITING DEALER AGREEMENT
XXXXX XXXXXX DIVERSIFIED FUTURES FUND X. X. XX
150,000 Units of Limited Partnership Interest
Ladies and Gentlemen:
We have entered into an agreement (the "Selling Agreement") with, and have
agreed to act as selling agent for, Xxxxx Xxxxxx Diversified Futures Fund X. X.
XX, a New York limited partnership (the "Partnership"), in connection with the
sale of up to 150,000 units of limited partnership interest in the Partnership
(the "Units"). The Units and the terms of the offering are more fully described
in the enclosed prospectus, receipt of which you hereby acknowledge.
We are hereby inviting certain dealers, subject to the other terms and
conditions set forth below and in such Prospectus, to solicit subscriptions for
the Units. Such dealers who execute and deliver a Soliciting Dealer Agreement
are referred to herein as "Soliciting Dealers". You hereby confirm that you are
a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD") or if you are a non-member broker or dealer in a country other
than the United States, that you will comply with the provisions of Rules 2730,
2740 and 2750 of the Conduct Rules of the NASD (the "Rules") in making any sales
to purchasers within the United States to the same extent as if you were a
member of the NASD and to comply with Rule 2420 of the Rules as that Rule
applies to a non-member broker/dealer in a country other than the United States.
You hereby confirm that you are registered with the National Futures Association
("NFA") as an introducing broker or a futures commission merchant if you will
receive any portion of the commodity brokerage fees paid by the Partnership and
any of your associated persons who receive continuing compensation in the form
of a portion of the commodity brokerage commissions are duly registered with the
NFA as an associated person of a futures commission merchant or introducing
broker (qualified as an associated person by having taken the Series 3 or Series
31 Commodity Exam or having been "grandfathered" as an associated person
qualified to do commodities brokerage).
The public offering price of the Units is to be Net Asset Value per Unit during
the Offering Period (as defined in the Selling Agreement), with the minimum
purchase being $5,000 except in the case of employee benefit plans, as to which
the minimum purchase is $2,000 (subject to higher minimum investments required
by certain states). You shall be paid as selling commissions a total of up to
$__ per Unit sold.
In the event that the sale of Units for which you have solicited a Subscription
Agreement shall not occur, whether by reason of the failure of any condition
specified herein or in the
2
Subscription Agreement or in the Selling Agreement, rejection of the
subscription by the Partnership or otherwise, no commission in respect thereof
shall be due. Commissions will be payable only with respect to transactions
lawful in the jurisdictions where they occur.
You agree to retain in your records and make available to us and the
Partnership, for a period of at least six years, information establishing that
each purchaser of the Units pursuant to a Subscription Agreement solicited by
you is within the permitted class of investors under the requirements set forth
in the Prospectus, and under the requirements, if any, of the jurisdiction in
which such purchaser is a resident.
All subscriptions solicited by you will be subject to acceptance by us and by
the Partnership and we reserve the right in our uncontrolled discretion to
reject any such subscription, to accept or reject subscriptions in the order of
their receipt by the Partnership or otherwise, and to allot. Neither you nor any
other person is authorized to give any information or make any representations
other than those contained in the Prospectus in connection with the sale of any
of the Units. No Soliciting Dealer is authorized to act as agent for us when
offering any of the Units to the public or otherwise, it being understood that
you and each other Soliciting Dealer are independent contractors with us.
Nothing herein contained shall constitute you or any other Soliciting Dealer an
associate or partner with us.
Upon release by us, you may offer the Units at the Price to the Public set forth
in the Prospectus, subject to the terms and conditions hereof.
This Agreement shall terminate upon the termination of the Selling Agreement,
unless earlier terminated. We may terminate this Agreement at any time by
written or telegraphic notice.
We shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement. Nothing contained in this paragraph is intended
to operate as, and the provisions of this paragraph shall not constitute, a
waiver by you of compliance with any provision of the Securities Act of 1933, as
amended (the "1933 Act"), or of the rules and regulations thereunder.
Upon application to us, we will inform you as to the jurisdictions in which we
believe the Units have been qualified for sale under, or are exempt from the
requirements of, the respective securities laws of such jurisdictions, but we
assume no responsibility or obligation as to your right to sell Units in any
jurisdiction.
3
You confirm that you are familiar with Securities Act Release No. 4968 and Rule
15c2-8 under the Securities Exchange Act of 1934 (the "1934 Act"), relating to
the distribution of preliminary and final prospectuses, and confirm that you
have complied and will comply therewith, as well as with all other applicable
provisions of the 1933 Act and 1934 Act, and the rules and regulations
promulgated thereunder. We will make available to you, to the extent they are
made available to us by the Partnership, such number of copies of the Prospectus
as you may reasonably request for the purposes contemplated by the 1933 Act, the
1934 Act, and the applicable rules and regulations thereunder.
You confirm your obligation to transmit customer funds to the escrow agent in
accordance with Rule 15c2-4 under the 1934 Act and the NASD's Notices to Members
84-7, 84-64 and 87-61. Investors will be instructed to make checks payable to
European American Bank, Escrow Agent for Xxxxx Xxxxxx Diversified Futures Fund
X. X. XX, Subscribers' Escrow Account No. 002-060739. Each Soliciting Dealer
shall promptly, upon receipt of checks, drafts or money orders from subscribers
for Units, transmit such checks, drafts or money orders, together with a copy of
the executed Subscription Agreement, to the Escrow Agent by noon of the second
business day after the General Partner receives the subscription documents for
purposes of a suitability determination, which documents were forwarded to the
General Partner by noon of the next business day following receipt of the check
by the Soliciting Dealer.
You represent to us that you have complied or will comply with Paragraphs (b)(2)
and (b)(3) of Rule 2810 of the Conduct Rules of the NASD, which requires as
follows:
4
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.
(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
5
(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 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
6
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).
Any notice from us to you shall be deemed to have been duly
given if mailed or telegraphed to you at the address to which this Agreement is
mailed.
Please confirm your agreement hereto by signing and returning
to us the enclosed duplicate of this letter. Upon receipt thereof, this letter
and such signed duplicate copy will evidence the agreement between us. Notice
will thereafter be given to the Partnership in order that you shall become a
party to the Selling Agreement.
Very truly yours,
XXXXX XXXXXX INC.
By
----------------------------
AGREED AND ACCEPTED:
------------------------------------
(Name of Soliciting Dealer)
By
------------------------------------
(Signature of Soliciting Dealer)
------------------------------------
(Address to which all communications
are to be sent)
Dated as of _________, 1997
