<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PORTFOLIO BOOST I, L.P.
(Name of small business issuer in its charter)
<TABLE>
<S> <C> <C>
IOWA 6289 36-4230817
(State or jurisdiction of (Primary Standard Industrial I.R.S. Employer Identification
incorporation or organization) Classification Code Number) No.
</TABLE>
4320 WINFIELD ROAD, SUITE 320, WARRENVILLE, ILLINOIS 60555
1-(877) 777-2846
(Address and telephone number of principal executive offices)
4320 WINFIELD ROAD, SUITE 320, WARRENVILLE, ILLINOIS 60555
(Address of principal place of business or intended principal place of business)
WADE H. SCHUT OR GREGORY P. PAGE
NYEMASTER, GOODE, VOIGTS, WEST, HANSELL & O'BRIEN, P.C.
700 WALNUT, SUITE 1600, DES MOINES, IOWA 50309
(515) 283-3100
(Name, address and telephone number of agent for services)
Approximate date of proposed sale to the public: As soon as possible after
effectiveness of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ___________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_] ___________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate offering Amount of
to be registered registered per Unit price registration fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units of Limited $25,000,000 $1,000 per Unit $25,000,000 $7,575.76
Partnership Interest until 500 Units
are sold; net
asset value per
unit thereafter
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
Portfolio Boost I, L.P.
$500,000 Needed to Break Escrow
______________
This is an initial public offering of units of limited partnership interest
in Portfolio Boost I, L.P. The initial purchase price is $1,000 per unit. The
first $500,000 from the sale of units will be placed in an escrow account at
First American Bank, Fort Dodge, Iowa. If $500,000 is collected before October
28, 1999, the escrow account will be closed and the funds in the account will be
released to PB I for its use. If $500,000 is not collected before October 28,
1999, this offering will be terminated, and all of the funds in the escrow
account will be returned to the subscribers, along with any interest earned on
the funds.
PB I will seek long term capital appreciation through trading in domestic
and foreign futures contracts in various grains, energies, metals, currencies,
interest rate contracts and other financial interests.
A minimum investment of $10,000 is required for first time investors.
<TABLE>
<CAPTION>
Per Unit Minimum Maximum
-------- ------- -------
<S> <C> <C> <C>
Public Offering Price Before Trading... $1,000 $500,000 $25,000,000
Underwriting Commissions............... -0- -0- -0-
Proceeds to PB I....................... $1,000 $500,000 $25,000,000
</TABLE>
After PB I starts trading, the purchase price for units will be the net asset
value per unit. No underwriting commissions are payable by PB I, but PB I will
pay filing fees, legal and accounting fees, printing costs and other expenses.
Those expenses are estimated to be $193,660. The underwriter will receive fees
from the general partner of PB I.
The units are speculative, high risk securities. Before you decide to
invest, read this entire prospectus and carefully consider "Principal Risk
Factors" beginning on page 7. The risks of this investment include that:
* Futures trading is highly speculative and volatile
* You could lose all or substantially all of your investment in PB I
* PB I is subject to conflicts of interest
* The success of PB I's trading will depend entirely on certain
software
* The software has been developed with the benefit of hindsight and is
untested in actual trading
* There is no public or secondary market for the units, and there are
conditions and restrictions on assignments of units and on
liquidations of units by PB I
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The Commodity Futures Trading Commission has not passed upon the merits of
participating in this pool nor has the Commodity Futures Trading Commission
passed on the adequacy or accuracy of this prospectus.
_________________
Vacation Investors, Inc.
Underwriter
Prospectus dated January 28, 1999
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Miscellaneous State Law Notices.................. (iii)
Risk Disclosure Statement........................ (iv)
Summary Of The Offering.......................... 1
Principal Risk Factors........................... 7
Conflicts Of Interest............................ 26
Fiduciary Responsibility Of The General Partner.. 33
Description Of Charges To PB I................... 35
Potential Advantages............................ 40
Use Of Proceeds.................................. 42
Investment Program............................... 43
The General Partner.............................. 46
The CTA--Quiet Systems Limited................... 50
Nicholas Gogerty................................. 51
Frischmeyer Trading Corporation.................. 52
Performance Records Of The General Partner....... 55
Performance Records Of Quiet Systems Limited..... 58
Futures Commission Merchant...................... 60
Transferability And Liquidation Of Units......... 62
The Futures Markets.............................. 68
Federal Income Tax Aspects....................... 76
The Limited Partnership Agreement................ 80
Plan Of Distribution............................. 89
Subscription Procedure........................... 93
Vacation Award................................... 95
Legal Opinion.................................... 98
Experts.......................................... 98
</TABLE>
Appendix 1 - Supplemental Performance Information of PB I
Exhibit "A" - Limited Partnership Agreement
Exhibit "B" - Subscription Documents
Exhibit "C" - Balance Sheet of PB I as of September 30, 1998 (audited)
Exhibit "D" - Balance Sheet of General Partner as of September 30, 1998
(audited)
(ii)
<PAGE>
Miscellaneous State Law Notices
Notice to Illinois Residents
These securities have not been approved or disapproved by the Secretary of
State of Illinois or the State of Illinois, nor has the Secretary of State of
Illinois or the State of Illinois passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Notice to Virginia Residents
The Virginia State Corporation Commission does not pass upon the adequacy
or accuracy of this prospectus or upon the merits of this offering, and the
Commission expresses no opinion as to the quality of this security.
Notice to Connecticut Residents
These securities have not been approved or disapproved by the Banking
Commissioner of the State of Connecticut nor has the Commissioner passed on the
accuracy or adequacy of this offering. Any representation to the contrary is
unlawful.
Notice to California Residents
The exemption set forth in Section 25104(h) of the California Corporate
Securities Law from the nonissuer transaction qualification requirement of
Section 25130 of the California Corporate Securities Law will not be available
to California investors.
(iii)
<PAGE>
Risk Disclosure Statement
You should carefully consider whether your financial condition permits you
to participate in a commodity pool. In so doing, you should be aware that
futures and options trading can quickly lead to large losses as well as gains.
Such trading losses can sharply reduce the net asset value of the pool and
consequently the value of your interest in the pool. In addition, restrictions
on redemptions may affect your ability to withdraw your participation in the
pool.
Further, commodity pools may be subject to substantial charges for
management, and advisory and brokerage fees. It may be necessary for those
pools that are subject to these charges to make substantial trading profits to
avoid depletion or exhaustion of their assets. This prospectus contains a
complete description of each expense to be charged this pool, beginning at page
35, and a statement of the percentage return necessary to break even, that is,
to recover the amount of your initial investment, at page 39.
This brief statement cannot disclose all the risks and other factors
necessary to evaluate your participation in this commodity pool. Therefore,
before you decide to participate in this commodity pool, you should carefully
study this prospectus, including a description of the principal risk factors of
this investment, beginning at page 7.
You should also be aware that this commodity pool may trade foreign futures
or options contracts. Transactions on markets located outside the United
States, including markets formally linked to a United States market, may be
subject to regulations which offer different or diminished protection to the
pool and its participants. Further, United States regulatory authorities may be
unable to compel the enforcement of the rules of regulatory authorities or
markets in non-United States jurisdictions where transactions for the pool may
be effected.
(iv)
<PAGE>
SUMMARY OF THE OFFERING
-----------------------
The following is a summary of this offering and of PB I. This summary is
materially complete, but this prospectus contains additional information. You
need to read this entire prospectus for more detailed information about this
offering and PB I and about any agreement or document discussed in this
prospectus.
PB I and Its Business. Portfolio Boost I, L.P. is an Iowa limited
----------------------
partnership. PB I's principal office is at 4320 Winfield Road, Suite 320,
Warrenville, Illinois 60555; and its telephone number is 1-877-RRRATIO.
PB I will be dissolved on December 31, 2050, if it has not already been
dissolved by that date.
PB I's business will be the speculative trading of domestic and foreign
futures contracts and other interests in various grains, energies, metals,
currencies, interest rate contracts and other financial interests. PB I's
principal objective is to generate increased capital for the limited partners,
but it may not achieve this objective since futures trading is a speculative,
volatile, high risk business. Funds for PB I's business will be obtained only by
the sale of units and from the retention of any profits generated from PB I's
trading.
PB I had not commenced trading and had no operating history as of the
date of this prospectus.
The audited balance sheet of PB I as of September 30, 1998 is attached as
Exhibit "C".
General Partner of PB I. The commodity pool operator and general partner
------------------------
of PB I is Portfolio Boost, L.L.C. The general partner is an Iowa limited
liability company. Its main business office is at 4320 Winfield Road, Suite 320,
Warrenville, Illinois 60555; and its telephone number is 1-877-RRRATIO. The
books and records of PB I will be maintained at the offices of Schoenauer &
Co., P.C., 328 Main Street, Ames, Iowa 50010.
Trading Advisor for PB I. The trading advisor for PB I is Quiet
-------------------------
Systems Limited. Quiet Systems Limited will determine all of PB I's trades.
Quiet Systems Limited had not directed the trading of any accounts and had no
performance history as of the date of this prospectus.
<PAGE>
All of the trading decisions in Quiet Systems Limited's trading program are
determined by software owned by Quiet Systems Limited. Trading in the program
is limited to various grains, energies, metals, currencies, interest rate
contracts and other financial interests.
PB I's Offering. This is an initial public offering by PB I. PB I's
----------------
units are being publicly offered in various states. The units are being
continuously offered by PB I.
The units are only offered by this prospectus. You cannot distribute this
prospectus to any one else without the general partner's written consent. If
you do, you may place yourself and PB I in violation of federal and state
securities laws.
PB I first intends to use this prospectus on January 28, 1999.
Securities Offered. The units are initially offered for sale at a fixed
------------------
price of $1,000 per unit. This price was arbitrarily established by the general
partner.
PB I may start trading if 500 units are sold before October 28, 1999.
Any sales of units which are made after PB I has started trading will be
effective on the first business day of a month, and the purchase price for the
units will be the net asset value per unit as of the opening of trading on that
day. This offering will be terminated if 500 units are not sold before October
28, 1999. If that happens, all subscriptions will be returned to the subscribers
within 10 business days of October 28, 1999.
<PAGE>
The money collected for the first 500 units that are sold will be deposited
in an escrow account at First American Bank, Fort Dodge, Iowa. Money received
for units sold after that time will be immediately available for use by PB I.
A maximum of $25,000,000 of units are offered by this prospectus, but PB
I may make other offerings.
Minimum Subscription and Suitability Requirements. The minimum initial
-------------------------------------------------
investment is $10,000 for first time investors. Any investment by an existing
limited partner may be in any amount that is acceptable to the general
partner.
In order to invest, you must deliver to the general partner:
. a subscription agreement,
. a suitability standards requirement form, and
. an acknowledgment of receipt of this prospectus.
Copies of those documents are attached as Exhibit "B." You should carefully
review them because you will make various representations and warranties in
those documents.
3
<PAGE>
There are minimum income and net worth requirements that you will need to
meet in order to be able to purchase units. Those requirements are set out in
"Subscription Procedure" below.
Your subscription will be irrevocable, unless the law of the state in which
you reside provides otherwise.
The general partner may partially or totally reject any subscription for
units, in the general partner's sole discretion.
Distribution of the Units. The units are being offered on a best efforts
--------------------------
basis by Vacation Investors, Inc. Vacation Investors, Inc. is registered as a
fully disclosed broker dealer with the Securities and Exchange Commission and is
a member of the National Association of Securities Dealers. Vacation Investors,
Inc. will not receive any commissions or other fees from PB I. Vacation
Investors, Inc. will receive its compensation from the general partner.
The general partner and Vacation Investors, Inc. are not required to
purchase any units.
4
<PAGE>
Vacation Award. The general partner will provide one of 4 vacation awards
---------------
to each limited partner who meets the qualification requirements at any time
prior to February 1, 2002. The vacation awards and the qualification
requirements are discussed in detail in "Vacation Award" below.
The costs of the vacation awards will be paid by the general partner,
except for the costs of the dinner meetings provided in some of the awards. The
dinner meetings will be paid for by the limited partnerships.
Break Even Point. The general partner estimates that the profit PB I
----------------
must make on a $10,000 investment in order for a limited partner to break even
if the limited partner redeemed his or her units at the end of the first year of
investment is:
a. $472 or 4.72%, if PB I had average annual net assets of $5,000,000;
5
<PAGE>
b. $371 or 3.71%, if PB I had average annual net assets of $15,000,000;
and
c. $352 or 3.52%, if PB I had average annual net assets of
$25,000,000.
For actual calculations of these figures, see "Description of Charges to PB I--
Break Even Point" below.
6
<PAGE>
PRINCIPAL RISK FACTORS
----------------------
Risks Relating to Quiet Systems Limited:
- ---------------------------------------
PB I Will Not Have Any Benefits Multiple Trading Advisors May Provide
-----------------------------------------------------------------------
Because Quiet Systems is PB I's Only Trading Advisor. Quiet Systems
- ----------------------------------------------------
Limited will make all of the trading decisions for PB I, so PB I will be
relying solely upon Quiet Systems Limited for establishing a successful trading
program. The general partner and the limited partners will not receive any
advance notice of PB I's trades.
It is unlikely that PB I will ever retain any other trading advisors. PB
I therefore will not have the benefit of diversification in trading methods
that the use of multiple trading advisors may provide.
PB I May Lose Quiet Systems Services At Any Time. Quiet Systems Limited
------------------------------------------------
may terminate or become unable to continue advising PB I. The general partner
may also decide it is in the best interests of PB I to terminate PB I's
relationship with Quiet Systems Limited if Quiet Systems Limited's trading is
not profitable over the long term. No assurance can be given that a substitute
trading advisor will perform as well as Quiet Systems Limited or can be retained
on the same terms as currently in effect with Quiet Systems Limited.
Quiet Systems Limited relies upon a key person for updating and maintaining
the software it uses in its trading program. If that person terminates or
becomes unable (through death, disability, etc.) to continue to provide services
to Quiet Systems
7
<PAGE>
Limited, the trading program could be adversely affected in a material way.
Quiet Systems Limited may be forced to terminate its services to PB I if it
loses any of its key persons.
Quiet Systems May Have Difficulties With the Software That Determines the
-------------------------------------------------------------------------
Trades in the Trading Program. Quiet Systems Limited depends upon certain
- ------------------------------
software for the operation of its trading program. There is no guarantee that
the operation of the software will be uninterrupted or error-free or that the
trading signals generated by the software will generate profits. There also is
no guarantee that the software will continue to be available to Quiet Systems
Limited or that the software can be updated as necessary to properly respond to
changes in the market place and trading conditions. Quiet Systems Limited's use
of the software is also subject to various other matters beyond its control,
like computer viruses, communication line failure, power failure, or equipment
malfunction and failure. Any difficulties or problems with the software will
adversely affect PB I's trading, and may lead to PB I either temporarily or
permanently ceasing trading.
Quiet Systems Has No Experience or Operating History. Quiet Systems
----------------------------------------------------
Limited had not directed the trading of any accounts and had no performance
history as of the date of this Prospectus.
8
<PAGE>
Quiet Systems May Change its Trading Methods, Which Could Result in a
---------------------------------------------------------------------
Material Change in PB I's Trading Approach. Quiet Systems Limited may change
- ------------------------------------------
any of its trading program without notifying the general partner or the limited
partners. Any changes by Quiet Systems Limited could materially change the
trading approach of PB I.
Quiet Systems Rate of Return May Be Adversely Affected as the Assets Traded
---------------------------------------------------------------------------
by Quiet Systems Increase. A considerable number of analysts believe that a
- --------------------------
trading advisor's rate of return tends to decrease as the amount of funds under
management increases. Quiet Systems Limited contemplates managing a substantial
amount of funds, and there is no assurance that the trading program and PB I
will not be adversely affected by Quiet Systems Limited's management of
additional funds.
Changes in Trading Advisors by the General Partner May Materially Change
------------------------------------------------------------------------
PB I's Trading Approach and the Fees Paid by PB I. The general partner may
- -------------------------------------------------
retain new or additional trading advisors without the consent of the limited
partners. Any change in trading advisors could result in a substantial change
in the overall emphasis and diversity of PB I's trading. The compensation of
any new or additional trading advisors may also be different from that paid to
Quiet Systems Limited.
If PB I ever retains more than one trading advisor, there still is no
assurance that this change will result in any diversification of the assets of
or the trading methods used by PB I. It is also possible in this circumstance
that management fees or incentive fees could be payable to one or more of the
advisors during a period in which PB I's net asset value per unit actually
declines due to losses incurred by the other trading advisors. The use of more
than one trading advisor could also result in PB I holding opposite positions
in the same contracts at the same time.
9
<PAGE>
Risks Relating to Trading and Markets:
- -------------------------------------
Futures Prices Are Very Difficult to Predict Because They Are Speculative
-------------------------------------------------------------------------
and Volatile. Price movements of futures contracts are highly volatile and are
- -------------
influenced by many factors. Some of those factors are:
* changing supply and demand relationships;
* weather and other environmental conditions;
* acts of God;
* agricultural, fiscal, monetary and exchange control programs and
policies of governments;
* national and international political and economic events and policies;
* changes in rates of inflation; and
* the general emotions and psychology of the marketplace, which at times
can be totally unrelated to other more tangible factors.
10
<PAGE>
The currency markets which are traded in Quiet Systems Limited's trading program
are in general highly interest rate sensitive. Governments often intervene in
the currency markets with the specific intention of devaluing or revaluing their
currency or influencing exchange or interest rates.
Year 2000 compliance issues may also adversely affect the markets.
None of these factors can be controlled by Quiet Systems Limited.
Even if current and correct information as to substantially all factors is
known or thought to be known, prices still will not always react as predicted.
Trading decisions will be incorrect in many instances, and PB I will enter into
positions which will result in substantial losses. For example, you should note
that Corn Belt Commodities Round Trip Limited Partnership, another Iowa limited
partnership for which PB I's general partner serves as the general partner, has
failed to generate any profits since 1995.
The volatility of the futures markets is one reason that an investment in
units should be viewed as a long term investment.
Year 2000 Risks May Adversely Affect the Futures Markets. A substantial
--------------------------------------------------------
amount of public discussion is being devoted to considering and addressing the
ability of businesses and of the various trading markets to cause their
computers, software and related systems to be able to recognize and perform date
sensitive functions both prior to and after December 31, 1999.
It is possible that some of the futures exchanges or other trading markets
will not achieve Year 2000 compliance before January 1, 2000. If that occurs,
it would materially and adversely affect futures prices and the ability of the
exchanges and other trading markets to properly function.
It is likely that not all businesses will timely achieve Year 2000
compliance. The failure of a substantial number of businesses or business
sectors to achieve Year 2000 compliance could also adversely affect futures
prices.
11
<PAGE>
The general emotions and psychology of the marketplace regarding concerns
for Year 2000 issues could also in itself adversely affect futures prices.
The computer systems and software of Quiet Systems Limited are Year 2000
compliant. The computer systems and software of the general partner and of
Frischmeyer Trading Corporation are also Year 2000 compliant. The general
partner has been advised that the computer systems and software of First Options
of Chicago, Inc. will be Year 2000 compliant by the close of 1998 or January of
1999, but there is no guarantee that First Options of Chicago, Inc. will be Year
2000 compliant prior to January 1, 2000. There is also no guarantee that the
various exchanges and other trading markets will be Year 2000 compliant by
January 1, 2000. All United States futures exchanges will, however, be
monitored by the Commodity Futures Trading Commission for their Year 2000
preparedness, and the major foreign futures exchanges are also expected to be
subject to market-wide testing of their Year 2000 compliance during 1999.
Failure to achieve Year 2000 compliance by First Options of Chicago, Inc.,
any exchange or other trading market or any other third party with whom PB I may
have a material relationship could result in a material financial risk to PB I.
For example, the failure to achieve Year 2000 compliance by an exchange on which
PB I has an open position may cause PB I to be unable to close out that
position, or to somehow lose that open position if the failure to achieve Year
2000 compliance makes the exchange unable to identify the fact that PB I had an
open position.
The general partner intends to monitor the progress of First Options of
Chicago, Inc. and of the exchanges and other trading markets for their Year 2000
compliance. If the general partner is able to determine that First Options of
Chicago, Inc. or any exchange or other trading market will not be Year 2000
compliant by January 1, 2000, the general partner will direct Quiet Systems
Limited to close out some or all of PB I's then open positions, and to wait to
reinstitute trading until otherwise directed by the general partner. This type
of action would likely be inconsistent with Quiet Systems Limited's trading
approach, and may result in substantial losses to PB I. There is also no
guarantee that the above steps will be sufficient to avoid any adverse results
to PB I due to the failure of any third parties to achieve Year 2000
compliance.
The High Degree of Leverage Used in Futures Trading Increases the Risk of
-------------------------------------------------------------------------
Sudden, Major Losses. The low margin deposits normally required in futures
- --------------------
trading permit an extremely high degree of leverage. A small adverse price
movement in a futures contract could result in a substantial loss to PB I,
greatly exceeding its margin on the trade. PB I may hold positions with a face
value exceeding the net assets of PB I, and even a slight adverse movement in
the prices of PB I's open positions could result in losses exceeding PB I's
net assets.
Quiet Systems Limited will utilize leverage in trading PB I's account,
and it is currently contemplated that from between 5% to 25% of PB I's net
assets will be committed as margin at any one time.
12
<PAGE>
The amount of PB I's net assets committed as margin may, however, at times
greatly exceed those percentages. Any increase in leverage will increase the
risks to PB I.
Illiquid Markets Could Make It Impossible to Realize Profits or Limit
---------------------------------------------------------------------
Losses. The futures markets will sometimes be illiquid. In illiquid markets, PB
- ------
I may not be able to execute a buy or sell order at the desired price, or to
close out an open position in a timely manner.
Market illiquidity can arise from the various regulations that are
applicable to futures trading, such as the "daily price fluctuation limits" or
"daily limits" regulations. The daily limits are the maximum amount the price of
a futures contract may vary either up or down from the previous day's settlement
price. No trades may be made at a price beyond the daily limits.
Market illiquidity also occurs in a "thin" market where little trading is
taking place. Market illiquidity can also occur because many trading approaches
use similar analyses. This can lead to the bunching of buy and sell orders,
which makes it more difficult for a position to be taken or liquidated. It is
also possible that an exchange or the Commodity Futures Trading Commission may
suspend trading in a particular contract, order immediate liquidation and
settlement of a particular contract, or order that trading in a particular
contract be conducted for liquidation only.
13
<PAGE>
PB I may even be required in extreme circumstances to make or take
delivery of the interest underlying a particular position if the position cannot
be offset or liquidated prior to its expiration date.
PB I Could Lose Assets or Have Its Trading Disrupted Due to the Failure
-------------------------------------------------------------------------
of Exchanges or Brokers. PB I is subject to the risk of failure of any of
- ------------------------
the exchanges on which it trades and of their clearinghouses. PB I is also
subject to the loss of its funds on deposit with its futures commission
merchant. For example, if its futures commission merchant became insolvent or
bankrupt, it is likely that PB I would be able to recover none or only a small
portion of its assets held by its futures commission merchant. None of these
factors or occurrences can be controlled by Quiet Systems Limited or PB I.
PB I will Trade on Foreign Exchanges That are Less Regulated than U.S.
-----------------------------------------------------------------------
Markets and are Subject to Risks That Don't Always Apply to U.S. Markets. PB I
- ------------------------------------------------------------------------
will trade on exchanges located outside the United States. The regulations of
the Commodity Futures Trading Commission do not apply to trading on foreign
exchanges, and trading on foreign exchanges may involve different and greater
risks than trading on United States exchanges. For example, on some foreign
exchanges the performance on a contract is the responsibility only of the
individual member with whom the trader has entered into the contract, and not of
the exchange. PB I will be subject to the risk of the inability or refusal by
any such member to perform on the contract. Foreign markets are also much more
susceptible to disruption than United States exchanges due to the lack of a
clearinghouse system in foreign markets.
Trading on foreign exchanges also involves certain risks that are not
applicable to trading on United States exchanges. Those risks include:
* varying exchange rates,
* exchange controls,
* expropriation,
* burdensome or confiscatory taxation,
* moratoriums, and
* political or diplomatic events.
14
<PAGE>
Some foreign markets are also newly formed and may lack personnel
experienced in floor trading or in monitoring floor trades for compliance with
any foreign exchange rules.
It will also likely be more costly and difficult for PB I to enforce the
laws or regulations of a foreign country or exchange, and it is possible that
the foreign country or exchange may not have laws or regulations which
adequately protect the rights and interests of PB I.
PB I May Trade in Forward Contracts That are Less Regulated and Involve
-----------------------------------------------------------------------
More Risks Than Trading on Exchanges. Although it is unlikely to occur for some
- ------------------------------------
time, Quiet Systems Limited may cause PB I to trade currencies through forward
contracts in the interbank markets. Banks and dealers act as principals in the
forward contract markets, and forward contracts are not traded on exchanges. PB
I will be subject to the risk of the refusal or failure to perform by the other
party to a forward contract. This risk is not as great when trading on exchanges
because of the various regulatory and other protections that are available when
trading on exchanges and through their clearinghouses. Also, although banks may
be involved with forward contracts, trading in forward contracts is not
regulated by the various domestic and foreign banking authorities. Trading in
forward contracts is also not regulated by the Commodity Futures Trading
Commission. Daily price limits and speculative position limits also do not apply
to forward contracts.
15
<PAGE>
PB I's Trading Could be Adversely Affected by Speculative Position
------------------------------------------------------------------
Limits. The Commodity Futures Trading Commission and the United States exchanges
- ------
have established "speculative position limits" or "position limits" on the
maximum open positions which any person or group of persons may own or control
in particular futures contracts.
All accounts owned or managed by a trading advisor and the advisor's
principals and affiliates will be combined for position limit purposes. Quiet
Systems Limited believes that at some point it could face difficulties with
established position limits. If that occurs, Quiet Systems Limited's trading
program may have to be modified, which may have an adverse effect on the
operation and profitability of the trading program and PB I.
16
<PAGE>
Quiet Systems Analyzes Only Technical Market Data, Not Any Economic or
----------------------------------------------------------------------
Other Market Factors. A technical trading system generates buy and sell
- ---------------------
signals which are primarily based upon a study of actual daily, weekly and
monthly price fluctuations, volume variations and changes and other related
mathematical, statistical or quantitative data utilizing charts and computer
programs.
Quiet Systems Limited's trading program is a computerized, technical
trading system.
The profitability of Quiet Systems Limited's trading program depends upon
the occurrence and accurate forecasting of significant sustained and discernable
price movements or trends. Periods without moves or trends will lead to losses.
There have been periods without sustained and discernable trends in the past and
such periods will occur again in the future.
The occurrence of any factor which lessens the prospect of major trends
occurring in the future may also adversely affect the trading program. Any
increase in the use of similar trading approaches may alter historical trading
patterns which may also adversely affect Quiet Systems Limited's trading
program.
In addition, a technical trading approach may under perform other trading
approaches when fundamental factors dominate price moves because a technical
trading approach may be unable to respond to fundamental events until after
their impact has ceased to influence the markets. A technical trading
approach may also be ineffective and lead to losses in markets subject to random
price fluctuations, rather than defined trends or patterns. There have been
periods in the past when the markets have been subject to large, random price
movements. Those types of periods will occur again in the future. A technical
trading approach may also have difficulty in taking into account the numerous
and varied factors which can affect prices and price movements.
No assurance is given that Quiet Systems Limited's trading program will be
successful under any market conditions. You should note that there are always
17
<PAGE>
two parties to a futures contract. If one party to the contract experiences a
gain on the contract, the other party to the contract experiences an equal
amount of loss. Only 50% of futures contracts can experience gain, and that gain
will be lowered and might be eliminated by commissions and other costs of
trading and other fees. Quiet Systems Limited's trading decisions will be
incorrect in many instances, and PB I will enter into positions which will
result in substantial losses for PB I.
Competition From Other Traders Could Reduce PB I's Profitability.
----------------------------------------------------------------
Futures trading is highly competitive. PB I will be competing with others who
may have greater experience, more extensive information about and access to
developments affecting the markets, more sophisticated means of analyzing and
interpreting the markets, and greater financial resources. PB I's competitors
include commodity warehousemen, dealers, professional farmers, international
traders, representatives of governments, users of commodities, other pools, and
other trading advisors.
PB I may also experience increased competition for its trades if a
significant number of other traders use trading methods which are similar to
those used by Quiet Systems Limited.
Risks Relating to PB I and the Offering of Units:
- ------------------------------------------------
There are Conflicts of Interest in PB I's Structure. Although the general
---------------------------------------------------
partner does not believe any material conflict of interest exists which in
practice will be detrimental to PB I, conflicts of interest do exist in the
structure and operation of PB I. The various conflicts are discussed in
"Conflicts of Interest" below. The conflicts include that Mr. Raun is
financially interested in Quiet Systems Limited.
The General Partner Will Receive Fees Even if PB I is Unprofitable. The
------------------------------------------------------------------
general partner will receive its management fee whether or not PB I is
profitable.
18
<PAGE>
Since the incentive fee payable to the general partner will be determined
quarterly, PB I may pay a substantial incentive fee for a quarter despite a
subsequent decline in PB I's net assets.
The incentive fee and management fee are partially based upon any increased
value in PB I's open positions. This value may never be realized by PB I
because the prices of its open positions could later decline. All fees paid to
the general partner will be retained by the general partner even if PB I
subsequently realizes losses when the open positions upon which the fees were
paid are closed.
PB I Relies on Frischmeyer Trading Corporation But May Lose Its Services
--------------------------------------------------------------------------
At Any Time. PB I will rely upon Frischmeyer Trading Corporation for
- -----------
communicating the trading signals generated by the software utilized in the
trading program to PB I's futures commission merchant. If Frischmeyer Trading
Corporation terminates or otherwise becomes unable to continue to provide
services to PB I, another person or entity will have to be selected to provide
those services. No guarantee can be given that any
19
<PAGE>
replacement will perform as well as Frischmeyer Trading Corporation or can be
retained on the same terms as currently in effect with Frischmeyer Trading
Corporation.
Frischmeyer Trading Corporation relies upon a key person for providing
services to PB I. If that person terminates or otherwise becomes unable
(through death, disability, etc.) to continue to provide services to Frischmeyer
Trading Corporation, the ability of Frischmeyer Trading Corporation to provide
services to PB I may be adversely affected in a material way.
The Units May Not Be a Liquid Investment. Units are not freely
-----------------------------------------
transferable. They can only be assigned or transferred upon the terms and
conditions set forth in the limited partnership agreement. Those restrictions
may at times preclude a transfer of a unit.
Substantial restrictions and conditions are also imposed upon the
liquidation of units. For example, the general partner may require a limited
partner to provide up to 60 days prior written notice of the limited partner's
desire to liquidate units. Given the volatility of the futures markets, the net
asset value per unit could decline significantly during that period.
Liquidations may also be honored only in part and delayed or suspended in
various circumstances.
Substantial liquidations of units could require PB I to liquidate open
positions more rapidly than otherwise desirable in order to raise the cash to
fund the liquidations, while at the same time achieving a market position
appropriately reflecting a smaller equity base. Illiquidity in the market could
also make it difficult to liquidate positions on favorable terms, which could
result in losses to PB I.
Limited partners will have to depend on their limited and restricted
transfer and liquidation rights in order to realize on their investment in the
units because it is likely that no distributions will ever be made to the
limited partners.
Under certain limited circumstances PB I may make a claim against a
limited partner for funds received by the limited partner from PB I.
20
<PAGE>
Limited Partners Will Not Participate in the Management of PB I.
----------------------------------------------------------------
Limited partners will not participate in the control or management of PB I or
its business. For example, distributions to the limited partners will only be
made in the sole discretion of the general partner.
This Offering May Be Unsuccessful for Various Reasons. There is no
------------------------------------------------------
assurance that all or any portion of the units available in this offering will
be sold. Vacation Investors, Inc. and the general partner do not have any
obligation to purchase any units.
The general partner has the right to withdraw or modify this offering. The
general partner may also partially or totally reject any subscription. There
are minimum investment, net worth and suitability standards that must be met in
order for the general partner to be able to accept a subscription so the number
of investors who qualify for investment in PB I is limited.
21
<PAGE>
Vacation Investors, Inc. has limited experience in public offerings.
Funds Contributed Before PB I Breaks Escrow May Sit Idle For Some Time.
-----------------------------------------------------------------------
PB I cannot commence trading until 500 units are sold. PB I has until October
28, 1999 to sell the 500 units.
PB I Has No Operating History For You to Consider. PB I had not
--------------------------------------------------
commenced trading and had no operating or performance history as of the date of
this prospectus. Quiet Systems Limited also had no operating history as of the
date of this prospectus.
The Start-Up of PB I's Trading Will Involve Risks Not Applicable to
-------------------------------------------------------------------
Established Pools. PB I will encounter a start-up period during which it
- ------------------
will incur certain risks relating to the initial investment of its assets. PB
I may commence trading at an inopportune time, such as after sustained moves
in the markets, resulting in significant initial losses. The start-up period
also represents a special risk because the level of diversification of PB I's
assets may be lower than in a fully-committed portfolio.
Investing in the Units Might Not Diversify an Overall Portfolio. One of the
----------------------------------------------------------------
objectives of PB I is to add a valuable element of diversification to a
traditional securities and bond portfolio. While PB I may perform in a manner
largely independent from the general stock and bond markets, there is no
assurance it will do so. An investment in PB I could increase rather than
reduce overall portfolio losses during periods when PB I and stocks and bonds
decline in value. There is no way of predicting whether PB I will lose more or
less than stocks and bonds in declining markets. You must not rely on PB I as
any form of hedge against losses in your securities and bond portfolios. You
should consider whether diversification in itself is worthwhile even if PB I
is unprofitable.
The General Partner May Resign at Any time, Which Could Result in the Need
--------------------------------------------------------------------------
to Terminate PB I. Limited partners will be relying entirely on the ability
- ------------------
of the general partner to manage PB I.
There is no assurance that the general partner will continue to provide
services to PB I because the general partner may withdraw as the general partner
of PB I without the consent of the limited partners.
Mr. Raun is the President and key employee of the general partner. If
Mr. Raun discontinues his services to the general partner or otherwise becomes
unable to provide services to the general partner (through death, disability,
etc.), the general partner will be unable to continue to manage the business of
PB I unless it is able to retain another qualified employee.
The Purchase of Units by the General Partner or Mr. Raun Will Create
--------------------------------------------------------------------
Conflicts of Interest for Them. The General Partner and Mr. Raun may
- -------------------------------
purchase units for their own account. Any purchase of units by the general
partner or Mr. Raun should not be relied upon as an indication of the merits of
this offering.
22
<PAGE>
Conflicts of interest will arise if the general partner and/or Mr. Raun
hold a substantial number of units, because the general partner and Mr. Raun
will then be in a position to substantially influence matters submitted to a
vote of the limited partners. For example, conflicts of interest could arise
regarding the dissolution of PB I because the dissolution of PB I would
terminate the general partner's compensation from PB I. Any investments in PB I
by affiliates or family members of the general partner or Mr. Raun could
increase the risks discussed in this paragraph. As of the date of this
prospectus, however, the general partner had not purchased any units, and Mr.
Raun had purchased only $1,000 of units in his capacity as the initial limited
partner of PB I. The latter amount will be returned to Mr. Raun upon the
admission of the first limited partner.
The Nonvoting Members of the General Partner Do Not Have Experience in
-----------------------------------------------------------------------
Managing a Pool. The general partner has 3 nonvoting members. The nonvoting
- ---------------
members do not have voting rights, except in very limited circumstances. It is
possible, therefore, that the nonvoting members of the general partner may at
some point have the ability to participate in the management of the general
partner. This could have adverse effects to PB I because none of the nonvoting
members have any experience in the management or operation of a pool such as PB
I. It is contemplated, however, that even if a circumstance arises in which the
nonvoting members may participate in the management of the general partner, Mr.
Raun will still continue to be the sole officer of the general partner and will
continue to be responsible for the day-to-day operation of the general partner's
business as it relates to PB I.
The nonvoting members of the general partner may purchase units. The risks
noted in "The Purchase of Units by the General Partner or Mr. Raun Will Create
Conflicts of Interest for Them" above are therefore also potentially applicable
to the nonvoting members.
You May Not Be Able to Use a Vacation Award Even if You Have Qualified
----------------------------------------------------------------------
for One. One requirement that must be met in order to qualify for any of the
- --------
vacation awards discussed in "Vacation Award" below, is that the limited partner
be a limited partner in at least 3 limited partnerships for which the general
partner serves as the commodity pool operator. As of the date of this
prospectus, the only limited partnerships of the general partner which were open
to investors were PB I, Portfolio Boost II, L.P. and Portfolio Boost III, L.P.
The general partner is also the commodity pool operator of CBC-RT. CBC-RT is
not, however, open to new investors. You therefore need to become a limited
partner in PB I and in Portfolio Boost II, L.P. and Portfolio Boost III, L.P. in
order to be able to qualify for any of the vacation awards, unless you are
already a limited partner in CBC-RT. If you are a limited partner in CBC-RT, you
would need to become a limited partner in any two of PB I, Portfolio Boost II,
L.P. or Portfolio Boost III, L.P.
Unforeseen financial difficulties could arise which could prevent the
general partner from being able to satisfy its obligation to provide the
vacation awards. Weather and other
23
<PAGE>
factors beyond the general partner's control may also prevent a qualifying
limited partner from being able to take any vacation award.
Taxation, Regulatory and Other Risks:
- ------------------------------------
Limited Partners Will Owe Taxes on PB I's Profits But Will Very Likely
----------------------------------------------------------------------
Never Receive Any Distributions From PB I. PB I is not required to make
- ------------------------------------------
any distributions, and it is likely that no distributions will ever be made
because the principal objective of PB I is to increase capital, not create
cash flow.
Any PB I profits will be taxable to you in accordance with your
distributive share of PB I profits, whether or not the profits have been
distributed. Even if distributions are made, the distributions may not equal the
taxes payable by you on your share of PB I's profits.
PB I might sustain losses offsetting the profits of a prior fiscal year,
so you might never receive a distribution or be able to liquidate your units for
an amount equal to the taxes which have already been paid by you.
24
<PAGE>
The Tax Laws May Change to the Detriment of PB I and its Limited
----------------------------------------------------------------
Partners. It is possible that the current federal income tax treatment accorded
- ---------
an investment in the units will be modified by subsequent legislative,
administrative or judicial action. Any such changes could significantly alter
the tax consequences and decrease the after-tax rate of return on an investment
in the units.
Other Laws and Circumstances Regarding the Futures Markets Will Change and
--------------------------------------------------------------------------
May Adversely Affect PB I's Trading. The regulation of the United States and
- ------------------------------------
foreign futures markets has undergone substantial change over the years, and
further changes should be expected. It is impossible to predict, however, what
changes may occur, or the effect of any such changes on PB I. The effects
could be substantial and adverse.
The number of markets available for trading is increasing and will continue
to increase and also change in other ways, any of which may also have adverse
consequences to Quiet Systems Limited's trading program and to PB I.
PB I's and Limited Partners' Tax Returns May Be Audited. There is no
----------------------------------------------------------
assurance that PB I's tax return will not be audited by the Internal Revenue
Service or that adjustments to PB I's return will not be required as a result
of an audit. If an audit results in an adjustment, limited partners may be
required to file amended returns (which may themselves also be audited) and to
pay back taxes, plus interest and possibly penalties.
25
<PAGE>
The foregoing discussion is not a complete list or explanation of the risks
involved in this offering. Additional risks may be experienced which are not
presently foreseen by PB I. You are not to construe this prospectus as legal or
tax advice. Before determining to invest in the units, you should read this
entire prospectus, including its exhibits, and consult with your own personal
investment, legal, tax and other professional advisors.
CONFLICTS OF INTEREST
---------------------
Significant conflicts of interest exist in the structure and operation of
PB I. PB I has used its best efforts to describe the principal conflicts of
interest in this section and elsewhere in this prospectus. (See, e.g.
---
"Principal Risk Factors" above.) Although the general partner will attempt to
examine these conflicts of interest, no formal procedures have been established
to monitor or resolve any conflicts of interest and there is no assurance that
any conflict of interest will not result in adverse consequences to PB I.
Mr. Raun is Financially Interested in Quiet Systems Limited. All of the
-----------------------------------------------------------
issued stock of Quiet Systems Limited is owned by a Cayman Islands trust, as
discussed in "The CTA-Quiet Systems Limited" below. The trust has several
beneficiaries. Mr. Raun and members of his family are some of those
beneficiaries. Mr. Raun and his family do not control the trust, but they will
benefit from any compensation payable to Quiet Systems Limited since they are
beneficiaries of the trust. As a beneficiary, Mr. Raun will have a personal
interest in PB I continuing to use Quiet Systems Limited as the sole trading
advisor of PB I. Mr. Raun will also have the authority on behalf of the general
partner to make all decisions regarding trading advisors for PB I. He therefore
has a conflict of interest in determining whether PB I should terminate the
services of Quiet Systems Limited or add additional trading advisors. Mr. Raun
is aware of this conflict of interest, however, and will utilize his best
efforts to make determinations regarding these issues independent of any
personal considerations.
26
<PAGE>
It is not uncommon for pools to experience losses from trading for many
consecutive months or for many of the months in any given one year or longer
period. The general partner is not required to retain additional trading
advisors or to replace Quiet Systems Limited simply because PB I has experienced
substantial losses from its trading.
Trading Decisions of Quiet Systems Limited. Quiet Systems Limited will
------------------------------------------
determine all of PB I's trades. Quiet Systems Limited may also effect trades for
its own account and will be effecting trades for others. A conflict of interest
arises from this fact because it is possible that other positions taken by Quiet
Systems Limited may be taken ahead of or opposite to positions taken on behalf
of PB
27
<PAGE>
I. It is the general partner's belief, however, that Quiet Systems Limited will
not knowingly trade for its own or another's account ahead of PB I's account. It
should be noted, however, that the trading decisions generated in Quiet Systems
Limited's other trading programs may be different from those made in Quiet
Systems Limited's trading program in which PB I's account is traded. PB I may
therefore hold positions opposite of those held in one of Quiet Systems
Limited's other trading programs.
The various accounts being traded by Quiet Systems Limited will be
competing for the same positions. Depending on market liquidity and other
factors, this could result in orders for PB I being executed at prices less
favorable than would otherwise be the case. It could also result in the orders
of other clients of Quiet Systems Limited being executed when similar trades for
PB I are not executed. These possibilities will increase if the trading
decisions in Quiet Systems Limited's other trading programs are the same as
those made in the trading program in which PB I's account is traded, and if
Quiet Systems Limited's own accounts are also making the same trades.
Quiet Systems Limited may determine the manner in which orders will be
entered or filled. There is no assurance PB I's performance will not be
adversely affected by the manner in which orders are entered or filled by Quiet
Systems Limited. It is the general partner's belief, however, that Quiet Systems
Limited will use an allocation system that Quiet Systems Limited in good faith
believes is equitable and systematic.
Other Business of Quiet Systems Limited. Quiet Systems Limited uses
---------------------------------------
systematic trading methods that require little human involvement on a regular
basis. Quiet Systems Limited is not required to devote its full time or
attention to the trading program or PB I's account, and Quiet Systems Limited
will be involved in other futures related businesses and possibly other
businesses or ventures. Quiet Systems Limited will therefore experience
conflicts of interest in allocating its time and
28
<PAGE>
services between the trading program and Quiet Systems Limited's other business
ventures, such as the other trading programs offered by Quiet Systems Limited.
Quiet Systems Limited may have financial or other incentives to favor other
trading programs, accounts or businesses over PB I. For example, Quiet Systems
Limited's other trading programs may have better trading results than the
trading program in which PB I's account is traded. This fact may cause Quiet
Systems Limited to devote more attention to the other trading programs. Quiet
Systems Limited's other trading programs may have better trading results because
of, for example, the trading approach being used or because Quiet Systems
Limited imposes lower fees in its other trading programs.
Key Persons of Quiet Systems Limited. Quiet Systems Limited relies upon
------------------------------------
certain key persons for the proper operation of its business. Those persons may
provide services to others and may also effect trades for their own account and
for others. Those persons are not required to devote their full time or
attention to the services they provide to Quiet Systems Limited. The conflicts
of interests noted in "Trading Decisions of Quiet Systems Limited" and "Other
Business of Quiet Systems Limited" immediately above are therefore also
applicable to those persons.
Other Business of Frischmeyer Trading Corporation. Frischmeyer Trading
-------------------------------------------------
Corporation is not required to devote its full time or attention to the services
it will provide to PB I, and Frischmeyer Trading Corporation and its key persons
will be providing trading advice and related services to others as well as
effecting trades for their own and others' accounts. The conflicts of interest
noted in "Trading Decisions of Quiet Systems Limited" and "Other Business of
Quiet Systems Limited" above are also applicable to Frischmeyer Trading
Corporation and its key persons.
Agreements Required by Quiet Systems Limited. PB I was required to enter
--------------------------------------------
into an Advisory Agreement with Quiet Systems Limited. The Advisory Agreement
provides that Quiet Systems Limited will have no liability to PB I except only
for acts or omissions constituting willful misconduct or fraud. The Advisory
Agreement also provides that Quiet Systems Limited shall have no liability for
any acts or omissions which are in any way restricted or affected by any:
. communication line failure,
. computer failure,
. power failure,
. mechanical failure,
. equipment malfunction or failure,
. computer virus,
. software error or interruption,
. act or omission of any third party, or
. other factors beyond the reasonable control of Quiet Systems Limited.
29
<PAGE>
The Advisory Agreement also provides that PB I bears the risk of all errors and
problems of its futures commission merchant, Frischmeyer Trading Corporation,
any exchange or clearinghouse and all other third parties. The Advisory
Agreement also obligates PB I to defend and indemnify Quiet Systems Limited and
its affiliates against various losses, liabilities, costs and expenses. The
Advisory Agreement also provides that any action or proceeding on any dispute
between PB I and Quiet Systems Limited must be commenced within 1 year, or any
claims on the dispute will be lost and forever barred. The Advisory Agreement
also provides that any dispute between PB I and Quiet Systems Limited shall be
resolved on Grand Cayman, in the Cayman Islands, British West Indies. These
provisions of the Advisory Agreement are all very favorable to Quiet Systems
Limited. PB I does not believe, however, that the provisions of the Advisory
Agreement will change or affect the trading decisions that Quiet Systems Limited
would otherwise make on behalf of PB I.
Agreement With Frischmeyer Trading Corporation. PB I was also required
----------------------------------------------
to enter into an agreement with Frischmeyer Trading Corporation. The agreement
provides that Frischmeyer Trading Corporation shall not be liable to PB I for
any losses of PB I unless the losses are directly caused by Frischmeyer Trading
Corporation's gross negligence or willful misconduct as finally adjudicated by a
court of competent jurisdiction. The agreement also provides that any dispute
between PB I and Frischmeyer Trading Corporation must be resolved in Fort Dodge,
Webster County, Iowa. These provisions are all very favorable to Frischmeyer
Trading Corporation. PB I does not believe, however, that the provisions of the
agreement will change or affect the nature or quality of the services that
Frischmeyer Trading Corporation would otherwise provide to PB I. Frischmeyer
Trading Corporation will be acting as PB I's agent, and Quiet Systems Limited
has no liability or responsibility for any acts or omissions of Frischmeyer
Trading Corporation.
Distribution and Liquidation Decisions by the General Partner. The general
-------------------------------------------------------------
partner will determine whether PB I will make any distributions to the limited
partners. The general partner will be financially motivated to not declare any
30
<PAGE>
distributions because distributions will lower the net assets of PB I, which
will in turn reduce the amount of the monthly management fee which is payable to
the general partner by PB I. Any decrease in the net assets of PB I will also
indirectly lower the amount of incentive fees payable to the general partner.
The general partner will also have an incentive to discourage liquidation of
units by any limited partner for the same reason.
Distributions and liquidations will lower the fees payable by the general
partner to Quiet Systems Limited. This fact may also affect distribution and
liquidation decisions of the general partner because Mr. Raun and members of his
family are financially interested in the compensation payable to Quiet Systems
Limited. See "Conflicts of Interest--Mr. Raun is Financially Interested in
---
Quiet Systems Limited" above.
The general partner is aware of these conflicts of interest and will use
its best efforts to make determinations about distributions and liquidation of
units independent of its personal considerations regarding its compensation or
Quiet Systems Limited's compensation. You need to remember, however, that the
principal objective of PB I is to generate increased capital, so it is very
likely that no distributions will ever be made to the limited partners. An
investment in PB I must only be viewed as a long term investment.
Performance Records Not Independently Prepared. The performance
----------------------------------------------
information in this prospectus was prepared by the general partner or Quiet
Systems Limited, and has not been audited or otherwise confirmed by any
independent party. This is also true about any other performance information
that may be provided to you in connection with your consideration of an
investment in the units. All performance information does, however, accurately
reflect the performance for the periods shown.
Other Pools and Business of the General Partner and Mr. Raun. The general
------------------------------------------------------------
partner is the general partner and commodity pool operator for 4 other limited
partnerships. The general partner also contemplates serving as the general
partner and commodity pool operator for other pools in the future. Mr. Raun is
the general partner and commodity pool operator for 4 limited partnerships and
is the sole owner, director and officer of Vacation Investors, Inc. Both the
general partner and Mr. Raun may also be involved with other businesses. The
general partner will not spend its entire time managing the business of PB I,
and Mr. Raun will not spend his full time managing the business and affairs of
the general partner. The general partner believes, however, that its time
available for the management of PB I's business will be sufficient for the
general partner to fulfill its duties and obligations to PB I. The general
partner also believes that Mr. Raun's time available for the management of the
general partner will be adequate to fully perform his duties to the general
partner.
31
<PAGE>
No assurance is given that PB I's performance will be better or worse
than any other pool managed by the general partner or Mr. Raun.
The Underwriter. Vacation Investors, Inc. is the underwriter for PB I's
---------------
offering. Mr. Raun is one of the registered representatives of Vacation
Investors, Inc., and he will be offering the units pursuant to his registration
with Vacation Investors, Inc. Mr. Raun is also the sole shareholder, director
and officer of Vacation Investors, Inc. The general partner does not believe
that any material conflict of interest exists because of Mr. Raun's ownership of
and position with Vacation Investors, Inc. because there will be no underwriting
commissions or other fees payable to Vacation Investors, Inc. by PB I.
Vacation Investors, Inc. will receive compensation from the general
partner, as discussed in "Plan of Distribution" below. Since Mr. Raun is the
sole shareholder of Vacation Investors, Inc., Mr. Raun is interested in that
compensation. The general partner does not believe that any material conflicts
of interest are presented by this fact, however, because any compensation which
is paid to Vacation Investors, Inc. will be paid by the general partner, and not
by PB I. Payments by the general partner to Vacation Investors, Inc. will
reduce the profits of the general partner. This affects Mr. Raun individually
given that he is the sole owner of the corporation that holds all of the voting
units of the general partner. Also, it is currently contemplated that there
will not be any material profits generated in Vacation Investors, Inc. This is
because the payments by the general partner to Vacation Investors, Inc. will
either be paid out to the registered representatives of Vacation Investors, Inc.
or used by Vacation Investors, Inc. to offset out-of-pocket costs and
expenses.
Other Pools and Trading by the General Partner and the Members of the
---------------------------------------------------------------------
General Partner. The general partner may manage additional pools in the future
- ---------------
and the general partner and the members of the general partner may trade for
their own and others' accounts. This creates a potential conflict of interest
because it is possible that positions taken by the general partner or its
members for their own or others' accounts may be the same as or may be taken
ahead of or opposite positions taken on behalf of PB I. The general partner
and its members will not, however, knowingly trade for their own or another's
account ahead of PB I's account.
32
<PAGE>
FIDUCIARY RESPONSIBILITY OF THE GENERAL PARTNER
-----------------------------------------------
The general partner has a fiduciary duty to the limited partners. If a
limited partner believes the general partner has violated its fiduciary duty,
the limited partner may seek to recover damages from or require an accounting by
the general partner. It will, however, be difficult to recover damages based
upon a claim that PB I's trading has been excessive because of the broad
trading authority given to Quiet Systems Limited and the absence of judicial
decisions providing clear standards for defining excessive trading or churning.
The general partner's performance of its fiduciary duty will also be measured by
the terms of PB I's limited partnership agreement. Some provisions of the
limited partnership agreement may take away or limit some of the legal remedies
that might otherwise be available to limited partners. Those provisions are
summarized in the following paragraphs.
Limited partners may also have the right to bring an arbitration,
reparations or other legal proceeding against the general partner if the general
partner violates any applicable laws or regulations, like the Commodity Exchange
Act or the regulations of the Commodity Futures Trading Commission.
Limited partners who have questions concerning the responsibilities of the
general partner should consult their own legal counsel.
As mentioned above, some provisions of PB I's limited partnership agreement
may take away or limit some of the legal remedies that might be available to
limited partners. For example, the limited partnership agreement provides that
the general partner will not be liable for damages to PB I or any of the
limited partners except for acts or omissions which constitute negligence or
misconduct. The general partner's defenses to any claim that the general partner
has breached any fiduciary duty or other responsibility will therefore include
that the general partner's act or omission was not negligent and did not involve
any misconduct. The limited partnership agreement also provides that the general
partner will not be liable for any adjustments in PB I's or any limited
partner's income tax returns, or for the return or repayment of the capital
contributions or profits of any limited partner. Any return of capital or
profits will be made solely from the assets of PB I, and not by the general
partner.
33
<PAGE>
The limited partnership agreement also provides that PB I will indemnify
the general partner against any loss, liability, damage, cost or expense
(including court costs, arbitration costs, attorneys' and accountants' fees and
expenses) incurred by the general partner, so long as the general partner acted
in good faith and in a manner the general partner reasonably believed to be in,
or not opposed to, the best interests of PB I, and the conduct in question did
not constitute negligence or misconduct.
The limited partnership agreement establishes additional conditions that
must be met before the general partner can be indemnified for any losses,
liabilities, damages, costs or expenses arising from any violation of federal or
state securities laws. PB I has been advised, however, that in the opinion of
the Securities and Exchange Commission, any indemnification of the general
partner or its affiliates for any liabilities under the Securities Act of 1933
would be against public policy as expressed in that Act and, therefore, is
unenforceable.
The limited partnership agreement authorizes the advancement of costs and
expenses to the general partner, subject to certain conditions specified in the
limited partnership agreement.
The provisions of the limited partnership agreement discussed in this
section are also applicable to and benefit any affiliate of the general partner
when the affiliate is performing services on behalf of PB I. The term
"affiliate" for this purpose is defined in the limited partnership agreement,
and will include Mr. Raun.
The provisions of the limited partnership agreement discussed in this
section will not be affected by the termination of PB I or the resignation,
removal, death, withdrawal, insolvency or dissolution of the general
partner.
The payment by PB I of any indemnity to the general partner, Mr. Raun or
any of the general partner's other affiliates will affect the limited partners
because the payment would reduce the net assets of PB I.
PB I will not carry any liability insurance covering its indemnification
obligations.
34
<PAGE>
DESCRIPTION OF CHARGES TO PB I
------------------------------
PB I will be subject to the following fees and charges, which are
described in more detail below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Entity Form of Compensation Amount of Compensation
- ------ -------------------- ----------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
General Partner Monthly Management Fee of one-half Based on net assets. See
---
of one percent (0.5%) of net assets. "Management Fee and Incentive Fee
to General Partner" below.
Quarterly Incentive Fee equal to Based on performance of PB I.
15% of the new trading profits of See "Management Fee and Incentive
---
PB I for each quarter. Fee to General Partner" below.
Reimbursement of PB I expenses Reimbursement of actual expenses
paid or incurred by the general paid or incurred by the general
partner. partner. See "Other Expenses"
---
below.
- -------------------------------------------------------------------------------------------------------
First Options of Portion of brokerage commissions. Subject to agreement with LBS. See
---
Chicago, Inc., the "Allocation of Commissions" below.
Futures Commission
Merchant
Reimbursement of delivery, Reimbursement of actual payments to
insurance, storage and any other third parties. See "Futures
---
charges paid to third parties in Commission Merchant; Brokerage
connection with PB I's trading. Commissions" below.
- -------------------------------------------------------------------------------------------------------
LBS Limited Portion of brokerage commissions. Subject to agreement with First
Partnership Options of Chicago, Inc. See
---
"Allocation of Commissions" below.
- -------------------------------------------------------------------------------------------------------
Various Exchanges Exchange fees and National Futures Varies dependent upon the trades
and the National Association fees. made, but estimated at between
Futures Association $1,000 to $2,000 per year. See
---
"Other Expenses" below.
- -------------------------------------------------------------------------------------------------------
Organizational and Payment of legal and accounting Estimated at $193,660. See "Other
Offering Expenses fees, securities filing fees, Expenses" below. ---
from this offering printing and advertising costs, and
other organizational and offering
expenses.
- -------------------------------------------------------------------------------------------------------
Attorneys and Ongoing annual legal, accounting Estimated at $25,000 for legal, and
Accountants and auditing expenses. $21,000 for accounting and
auditing. See "Other Expenses"
---
below.
- -------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Various Third Party Escrow fees, printing costs, office Actual expenses. Estimated at
Suppliers of Goods supplies expenses, meeting between $10,000 and $20,000 per
and Services expenses, and other expenses year. See "Other Expenses" below.
---
necessary or appropriate for the
operation of PB I.
- -------------------------------------------------------------------------------------------------------
Others Possible unanticipated and Unable to Estimate. See "Other
---
extraordinary expenses. Expenses" below.
- -------------------------------------------------------------------------------------------------
</TABLE>
Management Fee and Incentive Fee to General Partner. The general partner
---------------------------------------------------
receives a monthly management fee of one-half of one percent (0.5%) of PB I's
net assets as of the close of business on the last business day of each month.
Net assets means all of PB I's assets, less all of its liabilities, determined
in accordance with generally accepted accounting principles and before accrual
of both the management fee and any incentive fee payable to the general partner.
The management fee is payable by PB I within 10 business days of the close of
each month.
The general partner will also receive a quarterly incentive fee of 15% of
the new trading profits, if any, of PB I for each quarter. New trading
profits means the excess, if any, of the net assets of PB I at the end of a
quarter over the highest net assets of PB I at the end of any previous quarter
or on the date trading commences, whichever is higher. Net assets will be
adjusted for this purpose to eliminate the effect of new capital contributions
or distributions or liquidations made during the quarter, and will be decreased
by any interest or other income earned on PB I's assets which is not directly
related to trading activity. Net assets for this purpose will be determined
before accrual of the incentive fee, but including accrual of the management
fees payable to the general partner during the quarter. The incentive fee is
payable as soon as is reasonably practicable following the close of each
quarter.
If PB I incurs a net loss during any quarter, no incentive fee will be
payable to the general partner until the loss has been offset by net profits in
succeeding quarters. As an example, if in successive quarters PB I has new
trading profits of $2,000, $8,000, <$4,000>, <$3,000>, $2,000, and $8,000, the
incentive fee payable to the general partner will be, respectively, $300,
$1,200, $0, $0, $0, and $450.
The general partner will also be reimbursed by PB I for PB I expenses
which are paid by the general partner (such as delivery charges, copying costs,
telephone charges and postage).
The general partner will not receive any portion of the brokerage
commissions which are paid by PB I.
Futures Commission Merchant; Brokerage Commissions. First Options of
--------------------------------------------------
Chicago, Inc. is PB I's futures commission merchant. LBS Limited Partnership
will, however, execute all of the trades of PB I, but will give up all of the
trades to First Options of Chicago, Inc. for clearing. LBS Limited Partnership
and First Options of Chicago, Inc. will receive brokerage commissions in return
for their services
36
<PAGE>
as described in "Description of Charges to PB I--Allocation of Commissions"
below.
One-half (1/2) of the brokerage commissions will generally be paid by PB I
at the time the trade is established, with the remaining one-half (1/2) to be
paid on the liquidation of the trade. The brokerage commissions are commonly
referred to as "round-turn commissions" which cover both the initial purchase
(or sale) of the futures contract and the subsequent offsetting sale (or
purchase). The brokerage commissions payable by PB I are always subject to
change.
The round turn commission payable by PB I as of the date of this
prospectus was fixed at $11.00. The general partner believes that is a
competitive rate. The general partner estimates that the annual brokerage
commissions payable by PB I will amount to approximately 1.47% of PB I's net
assets at the fixed $11.00 rate. No guaranty is given that annual brokerage
commissions will not exceed that percentage.
PB I will also pay First Options of Chicago, Inc. for all delivery,
insurance, storage and other charges incidental to trading. Those types of
charges are not included in the percentage set forth in the preceding paragraph.
The general partner does not anticipate significant charges of this nature.
Allocation of Commissions. It is not uncommon in the futures industry for
-------------------------
brokerage commissions to be allocated among various parties, and the brokerage
commissions payable by PB I will be allocated between LBS Limited Partnership
and First Options of Chicago, Inc. pursuant to their own agreement. PB I does
not control the allocation, and the allocation may be changed without the
knowledge or consent of PB I. As indicated above, the commissions payable by
PB I were fixed at $11.00, round turn, as of the date of this prospectus.
Other Expenses. PB I is obligated to pay legal, accounting and auditing
--------------
fees, as well as any other expenses incurred by PB I, such as exchange and
National Futures Association fees, office supplies expenses and organizational
and offering expenses.
The National Futures Association fees payable by PB I as of the date of
this prospectus were $0.20 round turn. Exchange fees vary, but the general
partner estimates that exchange fees may range anywhere from approximately $800
to $1,800 per year.
The general partner estimates that PB I will incur legal fees of $72,000
and accounting fees of $10,000 in this offering. The general partner estimates
that PB I will incur ongoing annual legal fees and accounting and auditing
fees of approximately $25,000 and $21,000. The organizational and offering
expenses (legal, accounting, printing, advertising, filing fees, etc.) to be
incurred by PB I in this offering are estimated to be $193,660.
PB I will be responsible for the payment of the escrow fee to First
American Bank under PB I's escrow agreement with First American Bank. The
escrow fee will be the greater
37
<PAGE>
of (a) $300.00, or (b) an amount calculated by multiplying $5.00 by the number
of checks received or issued by First American Bank under the escrow
agreement.
PB I estimates that it will pay filing fees of approximately $25,000 to
various federal and state authorities in connection with the registration of
this offering with those authorities.
PB I will also be responsible for all other expenses incurred by PB I.
The other expenses may include extraordinary expenses such as the cost of
litigation in which PB I may be engaged. By their nature, the dollar amount
of extraordinary expenses cannot be estimated with any reasonable certainty, but
they could be substantial.
The actual expenses incurred by PB I will be set forth in reports to the
limited partners. See "Reports" below.
---
The general partner will be reimbursed by PB I for PB I expenses paid
by the general partner (such as delivery charges, copying costs, telephone
charges and postage).
Quiet Systems and Vacation Investors Compensation. The compensation
-------------------------------------------------
payable to Quiet Systems Limited for its services to PB I will be paid by the
general partner, and PB I is not liable or responsible for Quiet Systems
Limited's compensation. The current agreement is that the general partner will
pay Quiet Systems Limited a certain percentage of the management fees and
incentive fees which are paid to the general partner by PB I.
The compensation payable to Vacation Investors, Inc. for its services to PB
I is also payable by the general partner, and PB I is not liable or responsible
for Vacation Investors, Inc.'s compensation. The current agreement between the
general partner and Vacation Investors, Inc. is described in "Plan of
Distribution" below.
Quiet Systems Limited and Vacation Investors, Inc. will not receive any
brokerage commissions.
Frischmeyer Trading Corporation Compensation. The compensation of
---------------------------------------------
Frischmeyer Trading Corporation is also payable by the general partner, and PB I
is not liable or responsible for Frischmeyer Trading Corporation's compensation.
Frischmeyer Trading Corporation will not receive any brokerage commissions.
Reports. The general partner will furnish each limited partner with a
-------
monthly statement. The statement will include, in general, a description of the
performance of PB I and will set forth the aggregate fees, brokerage
commissions, and other expenses incurred or accrued by PB I during the month.
PB I will also provide the limited partners with all other reports required
under the regulations of the Commodity Futures Trading Commission and under the
Securities Exchange Act of 1934. Those
38
<PAGE>
reports are discussed at "The Limited Partnership Agreement--Reports to Limited
Partners" below.
Break Even Calculation. The general partner estimates that the trading
----------------------
profit PB I must make on a $10,000 investment in order for a limited partner to
break even if the limited partner redeemed his or her units at the end of the
first year of investment is:
a. $472 or 4.72%, if PB I had average annual net assets of $5,000,000;
b. $371 or 3.71%, if PB I had average annual net assets of $15,000,000;
and
c. $352 or 3.52%, if PB I had average annual net assets of
$25,000,000.
The calculations have been given for the various levels of net assets because
the amount of subscriptions received by PB I in this offering could vary
widely.
The following table and explanatory notes set forth the basis for and
calculation of the above figures. The table is based on the fees as described
above.
<TABLE>
<CAPTION>
Net Assets $5,000,000 $15,000,000 $ 25,000,000
- ---------- ---------- ----------- ------------
<S> <C> <C> <C>
Selling Price per Unit/(1)/ $ 10,000 $ 10,000 $ 10,000
General Partner's $ 300,000 $ 900,000 $ 1,500,000
Management Fee/(2)/
General Partner's Quarterly $ - 0 - $ - 0 - $ - 0 -
Incentive Fee on New Trading
Profits/(3)/
PB I Operating Expenses/(4)/ $ 93,482 $ 129,232 $ 166,232
Brokerage Commissions, Exchange, $ 92,531 $ 277,594 $ 462,656
National Futures Association and
Other Trading Fees/(5)/
Less Interest Income/(6)/ ($ 250,000) ($ 750,000) ($ 1,250,000)
------------ ------------ -------------
Amount of Trading Income Required
for PB I's Net Asset
Value Per Unit (Redemption
Value) at the End of One Year to
Equal the Selling Price per Unit $ 236,013 $ 556,826 $ 878,888
Percentage of Initial Selling
Price Per Unit 4.72% 3.71% 3.52%
</TABLE>
39
<PAGE>
Explanatory Notes:
- -----------------
1. Units may be purchased at a price of $1,000 per unit until PB I
starts trading. After that time, they may be purchased at a price per unit
equal to the net asset value per unit as of the opening of trading on the first
business day of a month. The minimum initial investment is $10,000.
2. The general partner receives a monthly management fee of one-half of
one percent (0.5%) [which equals 6% annually] of PB I's net assets as of the
close of business on the last business day of each month. The above amounts are
annual amounts.
3. The general partner also receives a quarterly incentive fee of 15% of
the new trading profits of PB I. No amount is shown above for incentive fees
because all fees and expenses payable by PB I are deducted before calculation
of the incentive fee.
4. PB I's actual accounting, auditing, legal and other operating
expenses will be borne by PB I. These expenses are estimated to amount to
approximately 1.87%, 0.86% and 0.66%, respectively, assuming annual average net
assets of $5,000,000, $15,000,000, and $25,000,000. The expenses include
$193,660 as an estimate of the organizational and offering expenses for this
offering. That amount has been amortized over a 5 year period for purposes of
the above calculations (i.e., at $3,228 per month) because amortization is
required under the terms of the limited partnership agreement as part of the
calculation of the net asset value per unit.
5. Brokerage commissions, exchange and National Futures Association fees
and other trading fees are estimated at 1.85% of net assets.
6. PB I will earn interest on treasury bills purchased and held in its
account with First Options of Chicago, Inc., and on funds held in PB I's bank
account. Based on interest rates in effect as of the date of this prospectus,
interest income has been estimated at 5% of net assets.
POTENTIAL ADVANTAGES
--------------------
Although an investment in PB I is highly speculative and involves a high
degree of risk, an investment will offer the following potential advantages.
Professional Management. Studies have shown that the vast majority of
- -----------------------
individual investors lose money in the futures market. However, other studies
have shown that a majority of professionally managed futures programs realize
annual net gains for their customers over the long term.
40
<PAGE>
Asset Allocation Support. Studies have also shown that including a
------------------------
diversified mix of professionally managed futures programs in an investment
portfolio reduces volatility while enhancing the possibility of returns.
Low Correlation with Stock and Bond Markets. Quiet Systems Limited's
-------------------------------------------
trading program has a low correlation to the stock and bond markets. An
investment in PB I is therefore one way to attempt to obtain some
diversification from those markets.
Vacation Awards. An investor meeting the applicable qualification
---------------
requirements may receive a vacation award from the general partner, as described
in "Vacation Award" below.
Lower Initial Investment Requirements. The general minimum new account
-------------------------------------
size for Quiet Systems Limited's trading program is $1,500,000. You can
participate in the trading program through PB I with only a minimum initial
investment of $10,000. An investment in PB I therefore gives you the ability
to participate in a trading program most persons cannot afford to invest in
alone.
Limited Liability. Unlike an individual who invests directly in futures, a
-----------------
limited partner who does not participate in the control of PB I's business
generally cannot lose more than:
a. the amount of the limited partner's capital contribution,
b. the limited partner's share of undistributed profits, if any,
and,
c. under limited circumstances, some amounts received as distributions or
upon liquidation of units.
The potential liability of a limited partner is discussed in more detail at "The
Limited Partnership Agreement--Nature of PB I; Liability of Limited Partners"
below.
Lower Time Commitment. Trading in futures is a complicated process
---------------------
involving a substantial time commitment and knowledge of the numerous factors
affecting the futures markets. An investment in PB I gives you the ability
to participate in those markets without such a substantial time commitment.
Gain Market Understanding. An investment in PB I may also, however, be a
-------------------------
way for you to gain a useful understanding of the futures markets by studying
the way Quiet Systems Limited trades and the various reports PB I will provide
to you.
No Load. No front-end or back-end fees are charged by PB I. This allows
-------
more of your money to remain available for investment through PB I.
41
<PAGE>
Administrative Convenience. PB I is structured to provide you with
--------------------------
certain services designed to alleviate the administrative details involved in
engaging directly in futures trading, including providing monthly and annual
financial reports and all tax information about PB I which is necessary for
you to complete your federal income tax returns.
USE OF PROCEEDS
---------------
The funds received from subscribers will be deposited and held in a
separate escrow account at First American Bank, Fort Dodge, Iowa, until $500,000
of units have been sold. PB I therefore cannot start trading until at least
$500,000 of units have been sold. Any contributions which are accepted by PB I
after funds have been released from escrow will be immediately available for
use in its business.
Once released from escrow, approximately 80% of PB I's funds will
generally be maintained in PB I's trading account with First Options of
Chicago, Inc. Those funds will be available for trading in Quiet Systems
Limited's trading program. The general partner estimates that from between
approximately 5% to 25% of those funds will normally be committed as margin for
its open positions, but the amount of funds committed as margin will greatly
exceed those percentages at times. PB I's remaining funds will be held in
bank checking and interest bearing accounts for PB I's use and benefit.
PB I's trading account funds which are not committed as margin may be
invested in various interest bearing instruments or accounts. Those instruments
and accounts include certificates of deposit, money market funds, treasury
bills, sweep accounts, money market funds or other similar liquid
investments.
All interest and other earnings earned on PB I's funds will be paid to
PB I and not to the broker or other custodian having custody of the funds.
PB I will not have significant assets or properties other than PB I's
trading account with First Options of Chicago, Inc. and the other types of
accounts described in this section. PB I's account with First Options of
Chicago, Inc. and some of the other accounts in which PB I's funds will be
deposited and held are not federally insured or guaranteed. PB I is subject
to the failure of the entities holding those funds, as noted at "Principal Risk
Factors--PB I Could Lose Assets or Have Its Trading Disrupted Due to the
Failure of Exchanges or Brokers" above.
42
<PAGE>
The types of interests PB I will trade in are discussed at "Investment
Program" below.
Neither PB I nor any of its affiliates are doing business with the
government of Cuba or with any person or affiliate located in Cuba.
INVESTMENT PROGRAM
------------------
The following description of Quiet Systems Limited's trading program is not
intended to be exhaustive since most of the trading methods, systems and
strategies utilized in the trading program are proprietary and confidential
information of Quiet Systems Limited. If they were disclosed, it would cause
material harm to Quiet Systems Limited's business. It is also very difficult to
explain the trading program in a helpful way in this prospectus since it is
based on various complex mathematical, statistical and other theories and
analyses.
There are numerous trading methods, systems and strategies utilized in
futures trading. The following discussion only addresses those methods, systems
and strategies utilized in Quiet Systems Limited's trading program, and you will
therefore not be able to compare them with trading methods, systems and
strategies that are utilized by other trading advisors or trading managers.
43
<PAGE>
Quiet Systems Limited's trading program in which PB I's account will be
traded is called the "Diversified Program" by Quiet Systems Limited. It is a
technical trading program that is based upon computer software. It is a
systematic, trend following trading approach that utilizes multiple moving
averages and a breakout system to determine what trades should be made. The
Diversified Program is not correlated with traditional debt and equity
investments.
The Diversified Program is currently programmed to trade in the following
types of interests:
. grains;
. energies;
. metals;
. currencies;
. interest rates; and
. other financial interests.
The types of interests traded may be changed by Quiet Systems Limited at any
time.
The allocation among the types of interests being traded is determined
pursuant to a mathematical optimizer program. The allocation may be changed by
Quiet Systems Limited at any time.
Quiet Systems Limited contemplates that from approximately 5% to 25% of an
account traded in the Diversified Program will generally be committed as margin.
The percentage of an account committed as margin may, however, substantially
exceed those percentages at times.
No stops are utilized in the Diversified Program. Stops are procedures
that are designed to automatically close out a position if a certain amount has
been lost on that position.
Trading in the Diversified Program will mostly be through futures contracts
on United States and foreign exchanges. Trading may some day also be done in
the interbank forward markets.
Although the Diversified Program is a computerized trading program, Quiet
Systems Limited does have the right to exercise subjective discretion over
trades in times of what Quiet Systems Limited believes are extremely unusual
market conditions. The general partner believes, however, that is extremely
unlikely that Quiet Systems Limited will ever exercise any subjective discretion
in determining what trades will be made in the Diversified Program.
44
<PAGE>
All of Quiet Systems Limited's trading methods, systems and strategies may
be modified and adjusted at any time, in the sole discretion of Quiet Systems
Limited. If changes are made, the prior performance of Quiet Systems Limited
will not necessarily reflect the potential future performance of the trading
program.
You should also review "The CTA--Quiet Systems Limited" and "Performance
Records of Quiet Systems Limited" below for a further discussion of Quiet
Systems Limited's experience and its trading programs.
Various agreements and documents were required to be executed by PB I in
order to be able to participate in the trading program and to establish and
maintain PB I's trading account with First Options of Chicago, Inc. Those
agreements are discussed at "Conflicts of Interest--Agreements Required by Quiet
Systems Limited" and "Agreement with Frischmeyer Trading Corporation" above and
"Futures Commission Merchant" below.
45
<PAGE>
THE GENERAL PARTNER
-------------------
Background of the General Partner. The general partner and commodity pool
---------------------------------
operator of PB I is Portfolio Boost, L.L.C. The general partner will manage the
business of PB I. The general partner may retain third parties to provide
services to PB I, and other parties will be retained to provide accounting,
auditing, legal and other professional services.
The following paragraphs discuss the business background of the general
partner and of its principals for at least the five years preceding the date of
this prospectus.
The General Partner, Portfolio Boost, L.L.C.
--------------------------------------------
The general partner is an Iowa limited liability company that was organized
in May of 1998. Its principal office is at 4320 Winfield Road, Suite 320,
Warrenville, Illinois 60555, and its telephone number is 1-877-RRRATIO. The
general partner is registered as a commodity pool operator with the Commodity
Futures Trading Commission, and is also a member of the National Futures
Association.
The general partner was organized for the purpose of serving as the general
partner of PB I and of Portfolio Boost II, L.P., Portfolio Boost III, L.P.,
Portfolio Boost MJF, L.P. and Corn Belt Commodities Round Trip Limited
Partnership. Those other entities are Iowa limited partnerships formed to
operate as commodity pools. The general partner may also serve as the commodity
pool operator for other new or existing pools in the future.
The trading accounts of Portfolio Boost II, L.P. and Portfolio Boost III,
L.P. will be traded in the 2 other trading programs offered by Quiet Systems
Limited as of the date of this prospectus. A brief discussion of those trading
programs is set forth in "Performance
46
<PAGE>
Records of Quiet Systems Limited" below. Portfolio Boost II, L.P. and Portfolio
Boost III, L.P. were each formed in June of 1998, and neither had accepted any
capital contributions or had commenced trading as of the date of this
prospectus.
The trading account of Portfolio Boost MJF, L.P. will be traded in one of
the trading programs of Michael J. Frischmeyer. Portfolio Boost MJF, L.P. was
formed in June of 1998, and had not accepted any capital contributions or
commenced trading as of the date of this prospectus. The general partner has not
decided when, if ever, it will offer Portfolio Boost MJF, L.P. to the
public.
No offering of any units of limited partnership interest in Portfolio Boost
II, L.P., Portfolio Boost III, L.P. or Portfolio Boost MJF, L.P. is being made
pursuant to this prospectus.
The general partner is also the general partner and commodity pool operator
of an Iowa limited partnership known as Corn Belt Commodities Round Trip Limited
Partnership ("CBC-RT"). CBC-RT has been trading since late 1994. CBC-RT utilizes
a different commodity trading advisor than PB I. CBC-RT is closed to new
investors, and no offering of any units of limited partnership interest in CBC-
RT is being made pursuant to this prospectus.
The audited balance sheet of the general partner as of September 30, 1998
is attached as Exhibit "D".
Jeffrey A. Raun.
---------------
Mr. Raun is the sole officer of the general partner. He owns all of the
issued and outstanding shares of stock of Vacation Partners, Inc. Vacation
Partners, Inc. owns all of the voting units of the general partner. The
ownership of the general partner is discussed in more detail at "The General
Partner--Members of the General Partner" below.
Mr. Raun was born on June 23, 1956. He is presently a resident of
Illinois. Mr. Raun holds a bachelor's degree in agricultural economics from
Iowa State University, Ames, Iowa. From late 1983 until January, 1994, Mr. Raun
was a Senior Account Manager and Sales Team Leader for Learning International
(formerly Xerox Learning Systems), Schaumburg, Illinois. Learning International
was the world's largest corporate sales and management training organization.
From June of 1978 until joining Learning International in June of 1983, Mr. Raun
served as a sales representative for Shell Chemical Company, Houston,
Texas.
47
<PAGE>
Mr. Raun is the general partner and commodity pool operator for 4 commodity
pools. Those pools are Agri-Center Commodities, Ltd., Corn Belt Commodities
Limited Partnership, Corn Belt Commodities Limited Partnership II, and Corn Belt
Commodities Limited Partnership III. Those pools commenced trading in,
respectively, 1980, 1983, 1985, and 1988. The pools are still in operation, but
are no longer open to new investors, and no offering of any units of limited
partnership interest in any of those pools is being made by this prospectus. The
aggregate capital contribution to all four pools was $1,800,000. None of the
pools use Quiet Systems Limited.
Mr. Raun was the sole shareholder, director and officer of Corn Belt
Management, Inc. Corn Belt Management, Inc. was incorporated in July, 1994, and
served as the general partner of CBC-RT until May, 1998. In May, 1998, Corn Belt
Management, Inc. was merged with and into the general partner.
Mr. Raun is the sole shareholder, director and officer of the underwriter,
Vacation Investors, Inc. Vacation Investors, Inc. is registered as a fully
disclosed broker dealer with the Securities and Exchange Commission and is a
member of the National Association of Securities Dealers. Vacation Investors,
Inc. was organized in April, 1994 for the purpose of offering units of limited
partnership interest in CBC-RT. Vacation Investors, Inc. is also the underwriter
for the offerings of the other limited partnerships for which the general
partner serves as the general partner. Vacation Investors, Inc. also engages in
other broker-dealer activities.
Mr. Raun will participate in this offering pursuant to his registration
with Vacation Investors, Inc. Mr. Raun also provides general brokerage services
to various persons and entities in that capacity.
Mr. Raun has been registered with the Commodity Futures Trading Commission
as an associated person of Iowa Commodities, Ltd., Fort Dodge, Iowa since
November 17, 1993. Iowa Commodities, Ltd. is registered as an introducing broker
with the Commodity Futures Trading Commission. Iowa Commodities, Ltd. has no
involvement with PB I or this offering.
Mr. Raun has also been registered with the Commodity Futures Trading
Commission as a commodity pool operator since October 4, 1982. Mr. Raun became a
member of the National Futures Association in April of 1983. Mr. Raun has also
been registered with the Commodity
48
<PAGE>
Futures Trading Commission as a commodity trading advisor since December 27,
1984. Mr. Raun served as the commodity trading advisor for the 4 commodity pools
he is the general partner of from approximately 1984 through 1989. Mr. Raun was
not serving as the commodity trading advisor for any accounts as of the date of
this prospectus.
Members of the General Partner.
------------------------------
The general partner is an Iowa limited liability company that has two
different classes of members. One class of members holds voting units, and the
other class of members holds nonvoting units. As indicated above, all of the
voting units are held by Vacation Partners, Inc. Vacation Partners, Inc. is an
Iowa corporation that is wholly owned by Mr. Raun. Vacation Partners, Inc. was
incorporated in April, 1998, and was formed for the purpose of holding the
voting units in the general partner. Vacation Partners, Inc. does not engage in
any business.
The nonvoting units of the general partner are owned by Dr. Mark and
Rebecca Westberg, Dr. Craig and Elizabeth Rowles, and Dr. Alan and Dorothy Raun,
with each couple as joint tenants. The nonvoting members do not have the right
to participate in or control the day-to-day operation of the general partner's
business, except only in certain limited circumstances specified in the
operating agreement of the general partner. Even if any of those circumstances
occur, however, it is contemplated that Mr. Raun will continue to serve as the
sole officer of the general partner and will make all operational decisions
regarding the general partner's services to PB I. No discussion of the business
background of the nonvoting members is included in this prospectus.
Performance Records of the General Partner. PB I had not started trading
------------------------------------------
as of the date of this prospectus, so this prospectus does not contain any
actual performance information for PB I. The general partner also serves as
the pool operator for CBC-RT. CBC-RT had commenced trading as of the date of
this prospectus, and certain performance records regarding CBC-RT are included
in "Performance Records of the General Partner" below, beginning on page
55.
Trading by the General Partner and its Members; Interest in PB I. The
----------------------------------------------------------------
general partner and its members may trade commodities and other interests for
their own accounts. The records of any such trading and any written policies
related to such trading will not be made available to limited partners.
---
The general partner and Mr. Raun may purchase and hold units. As of the
date of this prospectus, the general partner had not acquired any units, and
Mr. Raun had contributed $1,000 to PB I in his capacity as the initial limited
partner. The $1,000 will be returned to Mr. Raun upon the admission of the first
limited partner, as is provided in the limited partnership agreement. The
nonvoting members of
49
<PAGE>
the general partner may purchase units, but no nonvoting members had acquired
any units as of the date of this prospectus. The purchase of units by the
general partner, Mr. Raun or the nonvoting members may create conflicts of
interest. See "Principal Risk Factors--The Purchase of Units by the General
---
Partner or Mr. Raun Will Create Conflicts of Interest for Them" above.
Compensation of the General Partner. The compensation payable to the
-----------------------------------
general partner is discussed in "Description of Charges to PB I" above.
THE CTA--QUIET SYSTEMS LIMITED
------------------------------
Business Background. Quiet Systems Limited is a corporation that was
-------------------
organized under the laws of the Cayman Islands in March of 1998. Quiet Systems
Limited was registered as a commodity trading advisor with the Commodity Futures
Trading Commission and became a member of the National Futures Association in
August, 1998. Quiet Systems Limited is not registered in any capacity with any
authorities from any foreign country or jurisdiction.
The business of Quiet Systems Limited will be the trading of accounts under
the trading programs established by Quiet Systems Limited from time to time. As
of the date of this prospectus, however, Quiet Systems Limited had not directed
trading for any client or account.
All of the issued and outstanding shares of stock of Quiet Systems Limited
are owned and held by The Dr. Raun Family Trust. The trust was established and
organized under the laws of the Cayman Islands. The trust is not actively
engaged in any business, and was organized for the sole purpose of owning and
holding the stock of Quiet Systems Limited and of one other trading advisor.
The members of the board of directors and the officers of Quiet Systems Limited
are set forth below, along with the other persons who provide any material
services to Quiet Systems Limited.
The directors of Quiet Systems Limited are Dr. Alan Raun, of Cumming, Iowa,
and Thomas Schnurr, of Fort Dodge, Iowa. John Leo O'Brien, of Paris, France, is
the President and Secretary of Quiet Systems Limited. Dr. Raun, Mr. Schnurr, and
Mr. O'Brien do not make, control or otherwise have any involvement with any
trading decisions of Quiet Systems Limited, so no discussion of their business
backgrounds is included in this prospectus.
Quiet Systems Limited's trading program is a computerized trading system
that was developed by Nicholas Gogerty. Mr. Gogerty has agreed to provide
consulting services to Quiet Systems Limited. The business background and other
information regarding Mr. Gogerty are set forth in "Nicholas Gogerty"
below.
Performance Records. The performance records of Quiet Systems Limited are
-------------------
set forth in "Performance Records of Quiet Systems Limited" below, beginning at
page 58.
50
<PAGE>
Trading by Quiet Systems Limited; Interest in the Pool. Quiet Systems
------------------------------------------------------
Limited may trade commodities and other interests for its own account. The
records of any such trading activities and any written policies related to such
trading will not be made available to limited partners. Quiet Systems Limited's
---
trading for its own account may create conflicts of interest for Quiet Systems
Limited. See "Conflicts of Interest--Trading Decisions of Quiet Systems
---
Limited" above.
Quiet Systems Limited will not purchase any units.
Trading Policies and Practices. Some of the trading methods, systems and
------------------------------
strategies of Quiet Systems Limited are discussed at "Investment Program"
above.
Compensation of Quiet Systems Limited. The compensation to be received by
-------------------------------------
Quiet Systems Limited will be paid by the general partner, not PB I, as
discussed at "Description of Charges to PB I--Quiet Systems and Vacation
Investors Compensation" above.
NICHOLAS GOGERTY
Business Background. As discussed in "The CTA--Quiet Systems Limited"
-------------------
above, Quiet Systems Limited's trading program is a computerized trading system
that was developed by Mr. Gogerty. Quiet Systems Limited has purchased the
software for the trading program from Mr. Gogerty. Quiet Systems Limited's use
of the software involves various risks, as described at "Principal Risk Factors
- -- Quiet Systems May Have Difficulties With the Software That Determines the
Trades in the Trading Program" above.
Mr. Gogerty has also agreed to provide consulting services to Quiet Systems
Limited. The services include attempting to develop updates and enhancements to
the software and monitoring the general operation of the software. Mr. Gogerty
has not made any representations or warranties to Quiet Systems Limited
regarding the consulting services to be provided by him. There is no guarantee
that any updates, upgrades or enhancements to the software will be developed by
Mr. Gogerty. There is also no guarantee of Mr. Gogerty's continued services to
Quiet Systems Limited, which creates risks for PB I. See "Principal Risk
Factors--PB I May Lose Quiet Systems Services At Any Time" above.
51
<PAGE>
Mr. Gogerty is providing his services as an independent contractor, and he
is not an employee, director, officer or an associated person of Quiet Systems
Limited.
Mr. Gogerty was born in Clinton, Iowa. He graduated in 1993 with a B.A. in
Cultural Anthropology from the University of Iowa. In 1996, Mr. Gogerty received
his M.B.A. from the Ecole des Ponts et Chaussees, Paris, France. Mr. Gogerty
held various programmer and research positions using thermodynamic modeling and
CAD programs prior to graduating from the University of Iowa. He was President
and co-founder of ISYS Technologies, where his team designed and built PC and
mainframe solutions for the financial services industry. ISYS Technologies was
an Iowa corporation that was dissolved in 1993. Mr. Gogerty began working in the
financial markets industry in 1994. Since then, he has held positions with
Lakeshore Trading, Swiss Bank Corporation, and Banque National De Paris. His
final responsibility at Banque National De Paris was Vice President, Senior
Quantitative Trader, where he developed multiple strategies for quantitative
currency funds. Mr. Gogerty's M.B.A. thesis entitled "Building a Winning
Portfolio" allowed him to analyze markets in statistical terms and to develop
the software for Quiet Systems Limited's trading program. Mr. Gogerty also
developed the software used in Quiet Systems Limited's other 2 trading
programs.
Mr. Gogerty and certain members of his family are beneficiaries of the
trust that owns Quiet Systems Limited.
Mr. Gogerty was registered as a commodity trading advisor with the
Commodity Futures Trading Commission and become a member of the National Futures
Association in September, 1998.
Performance Records. MR. GOGERTY HAS NOT PREVIOUSLY DIRECTED ANY ACCOUNTS.
-------------------
Mr. Gogerty also does not contemplate doing so in the future.
Trading by Mr. Gogerty; Interest in the Pool. Mr. Gogerty may trade
--------------------------------------------
commodities and other interests for his own account. The records of any such
trading and any written policies related to such trading will not be made
---
available to limited partners.
Mr. Gogerty will not purchase any units.
Compensation of Mr. Gogerty. Mr. Gogerty will not receive any compensation
---------------------------
from PB I. Any compensation received by Mr. Gogerty which is related to PB I
will be payable solely by Quiet Systems Limited.
FRISCHMEYER TRADING CORPORATION
Frischmeyer Trading Corporation will act as PB I's agent for purposes of
receiving the trading signals generated by the software utilized in Quiet
Systems Limited's trading program and for communicating those trades to First
Options of Chicago, Inc. or LBS Limited Partnership. Frischmeyer Trading
Corporation will also receive and maintain trade confirmations, monthly activity
statements and any other statements
52
<PAGE>
or documents generated as a result of PB I's trading. Frischmeyer Trading
Corporation will not exercise any discretion whatsoever in determining what
trades will be made by PB I.
Frischmeyer Trading Corporation will be acting as PB I's agent, and Quiet
Systems Limited will have no liability or responsibility for any acts or
omissions of Frischmeyer Trading Corporation.
Some of the other terms of PB I's agreement with Frischmeyer Trading
Corporation are discussed at "Conflicts of Interest--Agreement With Frischmeyer
Trading Corporation" above.
Frischmeyer Trading Corporation is an Iowa corporation with its main
business office in Fort Dodge, Iowa. Frischmeyer Trading Corporation is
registered as a commodity trading manager with the Ontario, Canada Securities
Commission, and as a commodity trading advisor with the Commodity Futures
Trading Commission.
As of the date of this prospectus, Frischmeyer Trading Corporation was
offering one trading program that was available only to citizens or residents of
Canada. Frischmeyer Trading Corporation's trading program is materially
different from Quiet Systems Limited's trading programs, and the trading program
is not in any way connected with Quiet Systems Limited.
Frischmeyer Trading Corporation will provide its services primarily through
or under the direction of Michael J. Frischmeyer. Mr. Frischmeyer is the sole
director and officer of Frischmeyer Trading Corporation.
Mr. Frischmeyer was born in 1953. Mr. Frischmeyer graduated from Iowa State
University, Ames, Iowa, in 1976, with a bachelor of science degree in
agricultural business. From March of 1976 to November of 1979, Mr. Frischmeyer
was an account executive in the brokerage business of Stark Brokerage, Inc.,
Fort Dodge, Iowa. In November of 1979, Mr. Frischmeyer joined North Iowa
Commodities, which is now known as Iowa Commodities, Ltd. Mr. Frischmeyer is
registered as an associated person of Iowa Commodities, Ltd. with the Commodity
Futures Trading Commission, and is the Vice President and a minority shareholder
of Iowa Commodities, Ltd. Mr. Frischmeyer has various management and
administrative duties in Iowa Commodities, Ltd. Iowa Commodities, Ltd. serves as
an introducing broker for various traders, and is registered as an introducing
broker with the Commodity Futures Trading Commission. Its offices are located in
Fort Dodge, Iowa.
Mr. Frischmeyer has been registered with the Commodity Futures Trading
Commission as a commodity trading advisor since October 12, 1984. He directs the
trading for a substantial number of discretionary accounts in that individual
capacity. Mr. Frischmeyer is also registered as a trading manager with the
Ontario, Canada Securities Commission. The trading programs of Mr. Frischmeyer
are materially different from Quiet Systems Limited's trading programs, and they
are not in any way connected with Quiet Systems Limited.
53
<PAGE>
Mr. Frischmeyer is also a registered representative of the underwriter,
Vacation Investors, Inc. Mr. Frischmeyer will not, however, solicit investors
for PB I and he does not otherwise engage in any substantial activities on
behalf of Vacation Investors, Inc.
Mr. Frischmeyer also has other business interests and ventures, and he and
certain members of his family are beneficiaries of the trust that owns Quiet
Systems Limited.
CRS Management Co. owns all of the issued and outstanding shares of stock
of Frischmeyer Trading Corporation. C. Richard Stark, of Fort Dodge, Iowa, and
Mr. Frischmeyer own all of the issued and outstanding shares of stock of CRS
Management Co. Neither Mr. Stark nor CRS Management Co. are involved in any way
with any operational decisions for Frischmeyer Trading Corporation or any
trading or operational decisions for Quiet Systems Limited.
The following capsule shows the past performance of Frischmeyer Trading
Corporation's trading program since the inception of the trading program (in
June, 1998) and year-to-date (through November 30, 1998). PAST PERFORMANCE IS
NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
- --------------------------------------------------------------------------------
Percentage Rate of Return
(Computed on a compounded monthly basis)*
- --------------------------------------------------------------------------------
1998
(June-November)
- --------------------------------------------------------------------------------
(8.06%)
- --------------------------------------------------------------------------------
Name of Commodity Trading Advisor: Frischmeyer Trading Corporation
Name of Trading Program: Managed Account Program ("Managed Program")
Date Commodity Trading Advisor Began Trading Client Accounts: June 1, 1998
Date When Client Funds Began Being Traded Pursuant To The Managed Program: June
1, 1998
Number of Accounts Directed Pursuant To The Managed Program (as of November 30,
1998): 2
Total Assets Under Management of Frischmeyer Trading Corporation (as of November
30, 1998): $106,726
Total Assets Traded Pursuant To The Managed Program (as of November 30, 1998):
$106,726
Largest Monthly Draw-Down** For The Managed Program Since Inception and Year-to-
Date (through November 30, 1998): 8-98/4.93% of client funds
Worst Peak-to-Valley Draw-Down*** For The Managed Program Since Inception and
Year-to-Date (through November 30, 1998): 7-98 to 11-98/8.06% of net asset
value
Number of Accounts Closed with Positive Net Performance (Profits) Since
Inception and Year-to-Date (through November 30, 1998): -0-
Number of Accounts Closed with Negative Net Performance (Losses) Since Inception
and Year-to-Date (through November 30, 1998): -0-
54
<PAGE>
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions
and Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable Commodity Futures Trading Commission
regulations to mean losses experienced by a pool or account over the
specified period.
*** "Worst Peak-to-Valley Draw-Down" is defined by applicable Commodity Futures
Trading Commission regulations to mean the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
The above performance capsule has been included in this prospectus in order
to comply with certain regulations of the Commodity Futures Trading Commission.
As indicated above, Frischmeyer Trading Corporation will not exercise any
discretion regarding PB I's trades. In addition, Frischmeyer Trading
Corporation's trading program is materially different from Quiet Systems
Limited's trading program. Given this, you should not assume that the
performance of Frischmeyer Trading Corporation's trading program will be
indicative of or similar to PB I's or Quiet Systems Limited's performance.
PERFORMANCE RECORDS OF THE GENERAL PARTNER
------------------------------------------
PB I HAS NOT COMMENCED TRADING AND DOES NOT HAVE ANY PERFORMANCE HISTORY.
This prospectus therefore does not contain any actual performance records or
performance information for PB I.
Some supplemental performance information is, however, attached to this
prospectus as Appendix 1. The supplemental performance information presented in
Appendix 1 is hypothetical performance information. The footnotes and
assumptions following the table in Appendix 1 describe the supplemental
performance information. You should also carefully review the disclosures on the
------
cover page to Appendix 1 regarding the many limitations inherent in hypothetical
performance information.
The regulations of the Commodity Futures Trading Commission require that
the disclosure document of a pool operator include certain performance
information for each pool operated by the pool operator. As of the date of this
prospectus, the general partner was also serving as the pool operator for
Portfolio Boost II, L.P., Portfolio Boost III, L.P., Portfolio Boost MJF, L.P.
and CBC-RT. Those pools are briefly described in "The General Partner" above.
Portfolio Boost II, L.P., Portfolio Boost III, L.P., and Portfolio Boost MJF,
L.P. had not commenced trading as of the date of this prospectus, so no
performance records for any of those pools were available at that time.
55
<PAGE>
CBC-RT began trading in December, 1994, and some performance and other
information regarding CBC-RT is set forth below. CBC-RT has a different trading
advisor that utilizes trading methods which are materially different from the
trading methods utilized in Quiet Systems Limited's trading program. CBC-RT also
pays different fees than PB I. The performance information for CBC-RT therefore
should not be relied upon as any indication of PB I's potential performance. The
general partner temporarily suspended trading by CBC-RT on April 30, 1998,
because the trading of CBC-RT's account by its trading advisor had failed to
generate any profits since 1995. CBC-RT did recommence trading, however, on July
1, 1998. The trading advisor for CBC-RT is Michael J. Frischmeyer.
CBC-RT is a single advisor pool that does not have a guarantee feature. The
following capsule shows the annual past performance of CBC-RT since the
inception of trading by CBC-RT (in December, 1994) and year-to-date (through
November 30, 1998). PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
RESULTS.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Percentage Rate of Return
(Computed on a compounded monthly basis)*
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 1995 1996 1997 1998
(December only) (January through
November 30,
1998)*****
- ----------------------------------------------------------------------------------------
(1.21%) 15.7% (27.6%) (19.8%) (9.12%)
- ----------------------------------------------------------------------------------------
</TABLE>
Name of Pool: Corn Belt Commodities Round Trip Limited Partnership
Type of Pool: Publicly offered, but currently closed to new investors
Date of Inception of Trading: December 30, 1994
Aggregate Gross Capital Subscriptions to the Pool (as of November 30, 1998):
$3,883,696
Pool's Net Asset Value (as of November 30, 1998): $1,762,040.22
Largest Monthly Draw-Down** Since Inception of Trading and Year-to-Date (through
November 30, 1998): 8-96/13.9% of net asset value***
Worst Peak-to-Valley Draw-Down**** Since Inception of Trading and Year-to-Date
(through November 30, 1998): 5-96 to 11-98/54.3% of net asset value
* Rate of return is computed by dividing the net performance by the sum of
the beginning net asset value and net additions, capital withdrawals and
redemptions.
56
<PAGE>
** "Draw-Down" is defined by applicable Commodity Futures Trading Commission
regulations to mean losses experienced by a pool or account over the
specified period.
*** "Net Asset Value" is defined by applicable Commodity Futures Trading
Commission regulations to mean total assets minus total liabilities,
determined on an accrual basis of accounting in accordance with generally
accepted accounting principles, with each position in a commodity interest
accounted for at fair market value.
**** "Worst Peak-to-Valley Draw-Down" is defined by applicable Commodity
Futures Trading Commission regulations to mean the greatest cumulative
percentage decline in month-end net asset value due to losses sustained by
a pool, account or trading program during any period in which the initial
month-end net asset value is not equaled or exceeded by a subsequent
month-end net asset value.
***** The general partner temporarily suspended trading by CBC-RT on April 30,
1998, given the failure of CBC-RT's trading to generate any profits since
1995. The general partner reinstituted trading on July 1, 1998.
CBC-RT pays the general partner a monthly incentive fee equal to 15% of
the new trading profits of CBC-RT, if any, for each month. CBC-RT also pays the
general partner a monthly management fee of one-third of one percent of CBC-RT's
net assets as of the close of business on the last business day of each month.
CBC-RT's trading advisor receives a portion of the brokerage commissions payable
on trades made by CBC-RT. CBC-RT is also responsible for all brokerage
commissions, exchange and National Futures Association fees and other trading
costs and expenses. The range of commissions payable by CBC-RT as of the date of
this prospectus was between $40 and $64 per contract, with an average of
approximately $56. The other operating expenses of CBC-RT, such as legal and
accounting and auditing fees, are lower than the operating expenses of
PB I.
No performance records for the four limited partnerships for which Mr.
Raun serves as the general partner are included in this prospectus because:
. they are not required under the Commodity Futures Trading Commission's
regulations,
. none of those limited partnerships utilize Quiet Systems Limited,
. the trading advisor for the limited partnerships utilizes trading
methods which are materially different from the trading methods
utilized by Quiet Systems Limited, and
. the limited partnerships pay different fees than PB I.
57
<PAGE>
Also, the performance records of CBC-RT are somewhat representative of the
performance of each of the limited partnerships during the period presented for
CBC-RT because the limited partnerships have the same general fee load as CBC-RT
and use the same trading advisor.
PERFORMANCE RECORDS OF QUIET SYSTEMS LIMITED
--------------------------------------------
NEITHER QUIET SYSTEMS LIMITED NOR ANY OF ITS TRADING PRINCIPALS HAVE
PREVIOUSLY DIRECTED ANY ACCOUNTS.
As of the date of this prospectus, Quiet Systems Limited was offering three
trading programs. All of the trading programs are based on software purchased
from Mr. Gogerty. Quiet Systems Limited refers to the programs as:
. the Diversified Program (which is the trading program used by PB I),
. the Financial Program, and
. the Forex Index Program.
The accounts of Portfolio Boost II, L.P. and Portfolio Boost III, L.P. will be
traded in the latter 2 programs. No performance records of Quiet Systems
Limited are included in this prospectus since Quiet Systems Limited had not
directed trading for any accounts under any of its trading programs as of the
date of this prospectus.
Financial Program of Quiet Systems Limited.
------------------------------------------
Quiet Systems Limited's Financial Program is a systematic, trend following
trading approach which utilizes multiple moving averages and a breakout system
to determine what trades should be made.
58
<PAGE>
The Financial Program is not correlated with traditional debt and equity
investments.
Trading in the Financial Program will be limited to various financial
instruments, currencies, indices and interest rate contracts. The particular
financial instruments, currencies, indices and interest rate contracts that are
traded may be changed by Quiet Systems Limited at any time.
The allocation among the financial instruments, currencies, indices and
interest rate contracts being traded is determined pursuant to a mathematical
optimizer program. The allocation may be changed by Quiet Systems Limited at
any time.
Quiet Systems Limited contemplates that from between approximately 5% to
25% of an account traded in the Financial Program will generally be committed as
margin for trading. No stops are utilized in the Financial Program.
Trading in the Financial Program will mostly be through futures contracts
on United States and foreign exchanges. Trading may some day also be through
the interbank forward markets.
Although the Financial Program is a computerized trading program, Quiet
Systems Limited does have the right to exercise subjective discretion over
trades in times of what Quiet Systems Limited believes to be extremely unusual
market conditions.
The Financial Program provides clients of Quiet Systems Limited with
additional diversification options within the managed futures industry.
59
<PAGE>
Forex Index Program of Quiet Systems Limited.
---------------------------------------------
Quiet Systems Limited's Forex Index Program is a systematic, trend
following trading approach which utilizes multiple moving averages to determine
what trades should be made. Trading in the Forex Index Program is currently
limited to 8 different currency pairs, which are discussed below.
The Forex Index Program has a high correlation with the Barclay Currency
Traders Index, and is intended to be leveraged so that it has similar
return/risk parameters to the currency trading managers followed by the Barclay
Currency Traders Index. The Barclay Currency Traders Index is an index of
trading managers tracked by Barclay's managed futures reports. The Forex Index
Program does not, however, attempt to include all currency pairs or currency
programs.
The Forex Index Program is not correlated with traditional debt and equity
investments.
A determination will be made every day whether to be long or short the
currency pairs. The information most important in making this decision is
deviation of price from the moving averages. Trades will be determined at a
particular time during each day, and entered at a specified time on that day. It
is contemplated that a long or short position will always be held in each
currency pair.
The currency pairs traded in the Forex Index Program will currently be
those that make up approximately 68% of the total global currency volume as set
forth in the 1995 Bank of International Settlements foreign exchange survey.
Those currency pairs are as follows:
. U.S. Dollar/Japanese Yen;
. British Pound/Japanese Yen;
. Euro/Japanese Yen;
. Euro/Swiss Franc;
. U.S. Dollar/Euro;
. U.S. Dollar/Swiss Franc;
. U.S. Dollar/Canadian Dollar; and
. U.S. Dollar/British Pound.
The Forex Index Program utilizes a static allocation among the currency
pairs being traded. The allocation is generally based upon world trade flow as
set forth in the 1995 survey referred to above, with netted out moving averages.
The choice of the currency pairs and the allocation among those pairs may
be changed by Quiet Systems Limited at any time. One reason Quiet Systems
Limited might make a change would be to maintain correlation with global trade
flows.
Quiet Systems Limited contemplates that from between approximately 5% to
25% of an account traded in the Forex Index Program will generally be committed
as margin for trading. No stops are utilized in the Forex Index Program.
Trading in the Forex Index Program will mostly be through futures contracts
on United States and foreign exchanges. Trading may some day also be done in the
interbank forward markets.
Quiet Systems Limited does not contemplate that it will ever exercise any
subjective discretion in determining any trades made in the Forex Index Program.
The Forex Index Program provides clients of Quiet Systems Limited with
additional diversification options within the managed futures industry.
FUTURES COMMISSION MERCHANT
---------------------------
First Options of Chicago, Inc. has been selected as the initial futures
commission merchant for PB I. First Options has an agreement with LBS Limited
Partnership whereby LBS will execute all of the trades of PB I, but will give up
all of the trades to First Options for clearing.
First Options is a Chicago-based commodities brokerage firm whose principal
business is the clearing of futures, options and securities for its customers.
First Options is registered as a futures commission merchant with the Commodity
Futures Trading Commission, and is also registered as a securities broker-
dealer. First Options is also a member of the National Futures Association and
the National Association of Securities Dealers, as well as a member of major
futures and securities exchanges
60
<PAGE>
in the United States. First Options is also a clearing member of the Chicago
Board of Trade and the Chicago Mercantile Exchange and has established
facilities to handle business on all other exchanges on which PB I currently
contemplates trading.
First Options' services are limited solely to providing clearing services.
First Options does not have any responsibility to, and will not, supervise the
actions of Quiet Systems Limited, PB I or the general partner. First Options'
agreement to clear trades for PB I does not constitute an endorsement or
recommendation by First Options of PB I, the general partner, Frischmeyer
Trading Corporation, Quiet Systems Limited, or Quiet Systems Limited's trading
program. The same is true for LBS.
PB I's agreements with First Options may be terminated by PB I at any time.
The only written agreements that have been entered into between PB I and First
Options are First Options' standard customer account agreements.
LBS is registered as a non-clearing futures commission merchant with the
Commodity Futures Trading Commission.
PB I has not retained any introducing broker, and does not intend to do
so.
As a futures commission merchant and securities broker-dealer, First
Options is involved in litigation and regulatory actions on an on-going basis.
The general partner does not, however, believe that there have been any material
administrative, civil or criminal actions against First Options during the 5
years before the date of this prospectus, except for the matter described in the
following paragraphs.
In January of 1994, a customer of First Options was awarded $886,000 in an
NASD arbitration proceeding which had been instituted by the customer against
First Options. The amount which had been sought by the customer was $5,800,000.
The customer's claims against First Options related to margin calls, alleged
misrepresentations and other clearing and breach of contract disputes.
61
<PAGE>
Although the above matter is material, the general partner does not believe
that it is indicative of First Options' standard business practices. The
general partner's belief is based upon First Options having served as the
futures commission merchant for some of the limited partnerships for which Mr.
Raun serves as the general partner since late 1992, and the general partner's
review of public records supplied by the National Futures Association and the
National Association of Securities Dealers regarding claims and actions brought
against First Options. Although those records do reveal that various other
actions or claims have been brought against First Options, the general partner
does not believe the other actions or claims are material in number or of a
material nature.
As of the date of this prospectus, the round turn commission payable by PB
I for trades cleared by First Options was fixed at $11.00. The commissions
payable by PB I are divided between First Options and LBS as discussed at
"Description of Charges to PB I--Allocation of Commissions" above. The brokerage
commissions are subject to change at any time.
TRANSFERABILITY AND LIQUIDATION OF UNITS
----------------------------------------
The following is a summary of the conditions that must be met in order to
transfer units and to liquidate units. You should read the limited partnership
agreement for complete details of the conditions. See, in particular, Articles
---
IV and VIII of the limited partnership agreement.
Transfers of Units. Units cannot be assigned or transferred until the
------------------
assignor of the units and the assignee have delivered an assignment and
assumption agreement to the general partner, and the general partner gives its
written consent to the assignment. The general partner will generally give its
consent if the assignment or transfer will not violate any securities, tax or
other laws or rules and will not affect the tax status or treatment of PB I. The
general partner may, however, also withhold its consent if either the assignor
of the units or the assignee will hold units that represent less than the
$10,000 minimum initial investment in PB I. The general partner may also require
the assignee of the units to pay all expenses incurred in connection with the
assignment, such as attorneys' fees. Any assignment of a unit not made in
compliance with the limited partnership agreement is invalid.
62
<PAGE>
The transfer or assignment of a unit will not relieve the assignor of any
obligations already owed to PB I.
The effective date of an assignment of a unit will generally be the first
business day of the month which follows the date on which the general partner
has given its consent to the assignment.
An assignee of a unit only has the right to receive the share of the
profits, losses, distributions and returns of capital that apply to the assigned
unit. The assignee cannot vote the unit unless and until the assignee becomes a
substituted limited partner, as discussed in the following paragraph.
63
<PAGE>
The assignor of a unit can direct that the assignee will be a substituted
limited partner in PB I. The consent of the general partner or the limited
partners is not necessary, and the assignee of a unit will automatically become
a substituted limited partner unless the assignor of the unit states otherwise.
In that case, the assignor can still choose to make the assignee a substituted
limited partner at a later time. An assignee of a unit may also become a
substituted limited partner without the approval of the assignor, if all of the
other limited partners vote to allow the assignee to become a substituted
limited partner. An assignee of a unit who has become a substituted limited
partner has all of the rights of a limited partner with respect to the unit,
including the right to vote.
Liquidation of Units. Units can generally be liquidated on the first
--------------------
business day of any month. In order to do so, however, a limited partner must
give the general partner prior written notice. The general partner may require
that the liquidation notice be received by the general partner 60 days in
advance of the desired liquidation date.
The liquidation price per unit will be the net asset value per unit as of
the opening of trading on the first business day of the applicable month. Net
asset value per unit means the net assets of PB I at that time divided by the
aggregate number of outstanding units at that time. Net assets means total
assets minus total liabilities, determined in accordance with generally accepted
accounting principles, except that all organizational and offering expenses
incurred by PB I prior to the effective date of its initial registration
statement filed with the Securities and Exchange Commission will be amortized
over a period of 5 years. The amortization of the organizational and offering
expenses is required under the limited partnership agreement, and is intended to
spread out those costs so limited partners are treated more fairly.
The liquidation price will not be fixed until the first business day of the
applicable month. In other words, limited partners are subject to any change in
the net asset value per unit occurring between the date of their request for
liquidation and the effective date of the liquidation. That delay may be a
period of up to 60 days. The net asset value per unit could change
significantly, for better or worse, during that period, given the volatile
nature of futures
64
<PAGE>
trading.
The general partner will not assess any fees or charges for liquidations.
The general partner may change this policy in the future.
A limited partner will be notified within 10 days after the first business
day of the applicable month of whether the limited partner's units have been
liquidated. Payment for liquidated units will generally be made within 30 days
after the first business day of the applicable month.
The limited partnership agreement authorizes the general partner to refuse
to liquidate units if the number of requested liquidations may be detrimental to
the tax status or treatment of PB I. The general partner may also refuse a
liquidation request if the remaining capital account of the limited partner will
be less than the $10,000 minimum initial investment amount. The limited
partnership agreement also authorizes the general partner to
65
<PAGE>
temporarily suspend all liquidations and to delay payment for liquidations under
special circumstances. Some examples of special circumstances for this purpose
include:
. the inability to generate sufficient cash due to market
illiquidity,
. where the cash can only be generated by sustaining significant losses,
and
. defaults or delays in payments due PB I from brokers or other
persons.
All units will remain at risk in the business of PB I in any of these
circumstances.
A limited partner therefore may not always be able to liquidate his or her
units.
The general partner will give each limited partner written notice in the
event there is a 50% decline in the net asset value per unit over any 1 year
period. The written notice will be given within 7 days of the date the 50%
drawdown has occurred. If this occurs, PB I will temporarily suspend trading
for a period of 30 calendar days, beginning on the date of the general partner's
notice. The limited partners will be able to request liquidation of their units
during that 30 day period. A liquidation in this event will be effective as of
the opening of trading on the business day after the general partner receives
the limited partner's liquidation request. Any requests may, however, be
denied, suspended or delayed for the same reasons described in the preceding
paragraphs.
The general partner will also give each limited partner notice at least 30
days before the general partner makes any material change related to brokerage
commissions. The limited partners will be able to request liquidation of their
units during that 30 day period.
Requests for liquidation should be transmitted to the general partner at
the main business office of PB I set forth on page 1 of this prospectus.
66
<PAGE>
The general partner may require IRA or retirement plan or employee benefit
plan accounts to liquidate their units if the liquidation will help PB I, the
general partner or any limited partner avoid being subject to or violating any
of the provisions of the Employee Retirement Income Security Act of 1974.
The general partner may make distributions to IRA or retirement plan or employee
benefit accounts for the same reason.
A limited partner who has received the return of any part of the limited
partner's capital contribution through the liquidation of units or through
distributions to the limited partner can be required to return that amount to PB
I for a period of up to one year after the return, if needed to pay creditors
who extended credit to PB I during the time the contribution was held by PB I.
If the return violated the limited partnership agreement or the Iowa Uniform
Limited Partnership Act, however, the limited partner can be required to return
that amount to PB I for a period of up to 6 years after the return.
67
<PAGE>
THE FUTURES MARKETS
-------------------
This section is intended to give you an overview of the futures markets and
futures trading in general. It is not a complete discussion of the futures
markets or futures trading.
Markets. Futures contracts are contracts usually made on an exchange which
-------
provide for the future delivery of specified quantities and grades of various
commodities, currencies, financial instruments or other interests. The size
and term of futures contracts are identical and are not subject to negotiation
between the buyer and seller. A futures contract is satisfied either by taking
or making physical delivery of an approved grade of the interest being traded or
by making an offsetting sale or purchase of an equivalent but opposite futures
contract on the same exchange prior to the designated date of delivery. For
example, the contractual obligation arising from the sale of one contract of
December wheat may be satisfied at any time before delivery of the wheat is
required by the purchase of one contract of December wheat on the same exchange.
In that example, the difference between the price at which the futures contract
was sold and the price paid for the offsetting purchase, after allowance for
brokerage commissions and other transaction costs and expenses, represents the
profit or loss to the trader.
A trader who purchases a futures contract is obligated to take delivery of
the underlying interest, and is sometimes said to be "long" in the futures
market. A trader who sells a futures contract is obligated to make delivery of
the underlying interest, and is sometimes said to be "short" in the futures
market. A trader who is long the market believes the market in the interest
will go up. A trader who is short the market believes the market in the
interest will go down.
Before a trader closes out the long or short position by an offsetting sale
or purchase, the outstanding contract is sometimes referred to as an "open
trade" or "open position." The aggregate amount of open positions held by
traders in a particular contract is sometimes referred to as the "open interest"
in the contract.
68
<PAGE>
Some of the agricultural commodities for which there are futures contracts
are corn, wheat, soybeans, soybean oil, soybean meal, live cattle, live hogs,
pork bellies, iced broilers, sugar, cocoa and cotton. Some of the
nonagricultural commodities for which there are futures contracts are copper,
silver, gold, lumber, currencies, United States Treasury bills, commercial paper
and mortgage-backed securities.
The two broad classifications of persons who trade in futures contracts are
"hedgers" and "speculators." Commercial interests (such as farmers) which
market or process commodities and financial
69
<PAGE>
institutions that market or deal in interest rate sensitive instruments, foreign
currencies and stock portfolios may use the futures markets primarily for
hedging. Hedging is a protective procedure designed to minimize losses which may
occur because of price fluctuations occurring in the underlying commodity. For
example, a farmer may hedge against price fluctuations between the day the
farmer plants the farmer's crop and the day the crop is ready for delivery. If
the futures price quoted for the anticipated date of delivery will cover the
farmer's costs and leave a profit deemed adequate, the farmer can sell the
future "short" (i.e., become obligated to make delivery), and deliver the crop
----
grown on the delivery date under the futures contract. If the farmer does not
want to make delivery under the futures contract, the farmer can sell the crop
in the local market and close out the futures position by purchasing a futures
contract.
The usual objective of the hedger is to protect the profit which the hedger
expects to earn from the hedger's general business operations, rather than to
profit from the futures trading.
The speculator's objective, on the other hand, is to make a profit from
price fluctuations in futures contracts. Speculators rarely make or take
delivery of the physical commodity, but rather close out their futures positions
by entering into offsetting purchases or sales of futures contracts. Since the
speculator may take either a long or short position in the market, it is
possible to make profits or incur losses regardless of whether prices are going
up or down.
All trades made by PB I will be speculative, and not for hedging purposes.
There are always two parties to a futures contract. If one party to the contract
experiences a gain on the contract, the other party experiences an equal amount
of loss. Accordingly, only 50% of futures contracts can experience gain at any
one time, without reference to commissions and other costs of trading which will
reduce and could eliminate the gain.
Regulation. Exchanges provide centralized market facilities for trading in
----------
futures contracts on various commodities, currencies and other interests. Among
the principal exchanges in the United States are the Chicago Board of Trade, the
Chicago Mercantile Exchange and the Commodity Exchange, Inc.
70
<PAGE>
Each of the exchanges in the United States has an associated
"clearinghouse." Once trades between members of an exchange have been
confirmed, the clearinghouse becomes substituted for each buyer and each seller
of contracts traded on the exchange and, in effect, becomes the other party to
each trader's open position. The parties to the trade then generally look only
to the clearinghouse for performance.
The clearinghouse generally establishes some sort of security or guarantee
fund to which all clearing members of the exchange must contribute. This fund
is intended to act as an emergency buffer to enable the clearinghouse to attempt
to meet the obligations of an insolvent clearing member's contracts.
Clearinghouses also require margin deposits and continuously mark positions to
market to attempt to provide some assurance that their members will be able to
fulfill their contractual obligations. A central function of the clearinghouses
is to attempt to support the integrity of trades, and members effecting futures
transactions on an organized exchange generally do not need to worry about the
solvency of the other party to the trade. An exchange and clearinghouse system
is not, however, available when trading in forward contracts, as discussed at
"Principal Risk Factors--PB I May Trade in Forward Contracts That are Less
Regulated and Involve More Risks Than Trading on Exchanges" above.
Trading on non-United States exchanges involves other risks, some of which
arise from the fact that the Commodity Futures Trading Commission has no
authority to regulate trading on foreign exchanges. The risks to trading on
foreign exchanges are discussed at "Principal Risk Factors--PB I Will Trade on
Foreign Exchanges That are Less Regulated Than U.S. Markets and are Subject
to Risks That Don't Always Apply to U.S. Markets" above.
Trades made on an exchange are subject to the rules of that exchange.
Exchanges in the United States are given some latitude in promulgating rules and
regulations to control and regulate their members. Examples of regulations by
exchanges include the establishment of initial margin levels, size of trading
units, contract specifications, speculative position limits and daily price
fluctuation limits. The Commodity Futures Trading Commission reviews some of
those rules and can disapprove or require that they be amended or modified.
Exchanges in the United States are subject to regulation by the Commodity
Futures Trading Commission under the Commodity Exchange Act. Under the
Commodity Exchange Act, the Commodity Futures Trading Commission is the
governmental agency having primary responsibility for the regulation of
exchanges and futures trading in the United States. The general function of the
Commodity Futures Trading Commission is to implement the objectives of the
Commodity Exchange Act of preventing price manipulation and excessive
speculation and promoting orderly and efficient futures markets.
71
<PAGE>
The Commodity Futures Trading Commission and the exchanges may take
extraordinary actions in the event of a market emergency, including, for
example, the retroactive implementation of speculative position limits or higher
margin requirements, the establishment of daily price limits and the suspension
of trading. For example, some emergency actions were taken with respect to
certain stock index futures contracts following the extraordinary decline of
stock prices on October 19, 1987. The excercise of emergency actions by the
Commodity Futures Trading Commission or the exchanges could have a detrimental
effect on PB I's trading performance.
The Commodity Futures Trading Commission has exclusive jurisdiction to
regulate the activities of commodity trading advisors and commodity pool
operators.
The general partner is registered as a commodity pool operator with the
Commodity Futures Trading Commission. The Commodity Exchange Act requires a
registered commodity pool operator to make annual filings with the Commodity
Futures Trading Commission and authorizes the Commodity Futures Trading
Commission to require and to review the books and records of the commodity pool
operator. The Commodity Exchange Act authorizes the Commodity Futures Trading
Commission to suspend the registration of a commodity pool operator in various
circumstances.
Quiet Systems Limited is registered as a commodity trading advisor with the
Commodity Futures Trading Commission and the Commodity Exchange Act gives the
Commodity Futures Trading Commission similar authority with respect to the
activities of commodity trading advisors.
If the registration of the general partner as a commodity pool operator
were terminated or suspended, the general partner would be unable to manage the
business of PB I. If the registration of Quiet Systems Limited as a commodity
trading advisor were terminated or suspended, Quiet Systems Limited would be
unable to provide trading advice and services to PB I.
72
<PAGE>
First Options of Chicago, Inc., PB I's futures commission merchant, is also
subject to regulation by the Commodity Futures Trading Commission. The Commodity
Exchange Act requires all futures commission merchants to meet and maintain
specified fitness and financial requirements, segregate customer funds from
proprietary funds, account separately for all customers' funds and positions,
and maintain specified books and records on customer transactions which are open
to inspection by the staff of the Commodity Futures Trading Commission. The
Commodity Exchange Act authorizes the Commodity Futures Trading Commission to
regulate trading by futures commissions merchants and their officers and
directors.
The National Futures Association was formed pursuant to authority in the
Commodity Exchange Act, and is registered with the Commodity Futures Trading
Commission as a registered futures association. At the present time, the
National Futures Association is the only non-exchange self-regulatory
organization. The National Futures Association promulgates rules governing the
conduct of various futures participants and disciplines those persons who do not
comply with those rules. The National Futures Association also arbitrates
disputes between members and their customers and conducts fitness screening of
applicants for membership and audits of its existing members. The Commodity
Futures Trading Commission has delegated to the National Futures Association
responsibility for the review of disclosure documents of commodity pool
operators offering private pools and of commodity trading advisors, and the
registration under the Commodity Exchange Act of commodity trading advisors,
commodity pool operators, futures commission merchants, introducing brokers and
their respective associated persons and floor brokers. The general partner,
Quiet Systems Limited and First Options of Chicago, Inc. are members of the
National Futures Association.
73
<PAGE>
The regulations of the Commodity Futures Trading Commission and National
Futures Association prohibit any representation that registration or membership
with those entities indicates that the Commodity Futures Trading Commission or
the National Futures Association has approved or endorsed the person or the
person's trading programs or objectives. The registrations and memberships
described above must not be considered as constituting any such approval or
endorsement. Also, no exchange has given or will give any such approval or
endorsement.
PB I is not registered under the Investment Company Act of 1940 and the
general partner and Quiet Systems Limited are not registered under the
Investment Advisors Act of 1940 or any similar state law. Any protective
measures provided by any of that legislation therefore is not available to
investors in the units.
Limited partners will have the right in some circumstances to institute
reparations proceedings under the Commodity Exchange Act, and the Commodity
Futures Trading Commission has adopted regulations about those proceedings. The
regulations provide that any person may file a complaint for a reparations award
with the Commodity Futures Trading Commission for violation of the Commodity
Exchange Act against a floor broker, a futures commission merchant and its
associated persons, an introducing broker, a commodity trading advisor or a
commodity pool operator and their respective associated persons. As discussed
at "Fiduciary Responsibility of the General Partner" above, however, it may be
difficult for limited partners to establish a violation of the Commodity
Exchange Act, and the limited partnership agreement may limit some of the legal
remedies otherwise available to the limited partners.
Most United States exchanges limit the amount of fluctuation in the prices
of futures contracts during a single trading day by regulations sometimes
referred to as "daily price fluctuation limits" or "daily limits." The daily
limits establish the maximum amount the price of a futures contract may vary
either up or down from the previous day's settlement price. Once the daily limit
has been reached, no trades may be made at a price beyond the limit. This
creates liquidity problems because positions in the interest can then be taken
or liquidated only if traders are willing to effect trades at or within the
limit. Because the daily limit regulations only govern price movement for a
particular trading day, the regulations do not limit losses. Futures prices have
occasionally moved the daily limit for several consecutive trading days
preventing prompt liquidation of futures positions on one side of the market,
and causing substantial losses for those days. Daily price limits can create
risks, as discussed in "Principal Risk Factors--Illiquid Markets Could Make it
Impossible to Realize Profits or Limit Losses" above.
The Commodity Futures Trading Commission and certain United States
exchanges have established limits on the maximum net long or net short position
which any person or group of persons may hold or control in particular futures
contracts. One of the purposes of these speculative position limits is to
attempt to prevent a "corner" on a market or undue influence on prices by any
single trader or group of traders. The Commodity Futures Trading
74
<PAGE>
Commission has jurisdiction to establish position limits, and the Commodity
Futures Trading Commission requires each United States exchange to submit
position limits for approval by the Commodity Futures Trading Commission. Some
exchanges or their clearinghouses also set limits on the total net positions
that may be held by a futures commission merchant, such as First Options of
Chicago, Inc. Position limits do not, however, generally apply to many currency
futures contracts, and no position limits are currently in effect in forward
contract trading. "Principal Risk Factors--PB I's Trading Could Be Adversely
Affected by Speculative Position Limits" above provides a discussion of the
potential adverse effects to PB I if position limits are triggered by Quiet
Systems Limited's trading.
Margins. Futures contracts are customarily bought and sold on initial
-------
margins which range upward from less than 1% of the purchase price of the
contract being traded. The initial margin is the minimum amount of funds which
must be deposited by the trader with the futures commission merchant in order to
establish open positions in futures contracts. Because of these low margins,
price fluctuations occurring in futures markets may create profits and losses
which are greater, in relation to the amount invested, than are customary in
other forms of investment. Leverage can also quickly lead to substantial
losses, however, as discussed at "Principal Risk Factors--The High Degree of
Leverage Used in Futures Trading Increases the Risk of Sudden, Major Losses"
above.
"Maintenance" margin is the amount (generally less than initial margin) to
which a trader's account may decline before the trader must deliver additional
margin.
A margin deposit is like a cash performance bond because it is intended to
help assure the trader's performance of the futures contract the trader has
purchased or sold.
Margin amounts are set by the exchanges. Brokerage firms may require higher
margin amounts to attempt to obtain further protection for themselves.
Trading in forward contract markets does not currently require margin.
75
<PAGE>
Margin requirements are computed each day by a trader's futures commission
merchant. When the market value of an open futures position changes to a point
where the margin on deposit does not satisfy maintenance margin requirements, a
margin call will be made by the trader's futures commission merchant. Margins
calls can occur frequently and the amount of a margin call can be significant.
If a margin call is not met, the futures commission merchant is required to
close out the trader's position.
FEDERAL INCOME TAX ASPECTS
--------------------------
General. In the opinion of Nyemaster, Goode, Voigts, West, Hansell &
-------
O'Brien, P.C., the following summary of the tax consequences to United States
taxpayers who are individuals is materially correct. (This discussion assumes
that an investor is an individual, and not a corporation or other entity. The
tax issues and analysis applicable to corporations or other entities may be
different than set forth in this discussion.) Its opinion is filed as an
Exhibit to the Registration Statement of which this prospectus is a part. The
opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C. is its best
judgment of the law and published interpretations as of September 3, 1998. The
opinion is not binding on the IRS or the courts. PB I has not asked for a
ruling from the IRS with respect to any matter.
PB I Tax Status. PB I will be taxed as a partnership and will not pay
-----------------
federal income tax. Based on the income expected to be earned by PB I, it will
not be taxed as a "publicly traded" partnership.
Taxation of Limited Partners on Profits or Losses. Each limited partner
-------------------------------------------------
must pay tax on his or her share of PB I's income and gains. Such share must
be included each year in a limited partner's taxable income whether or not the
limited partner has liquidated units or received any cash distributions. PB I
provides each limited partner with an annual schedule of his or her share of tax
items. PB I generally allocates these items equally to each unit.
76
<PAGE>
Loss Deductions. A limited partner may not deduct losses or deductions in
---------------
excess of his or her tax basis in his or her units as of year-end. A limited
partner's tax basis in his or her units is the amount paid for such units
reduced by his or her share of any distributions, losses and deductions, and
increased by his or her share of income and profits.
Limited Deductibility for Certain Expenses. Individual taxpayers are
------------------------------------------
subject to material limitations on their ability to deduct investment expenses
and other expenses of producing income. The amount of such expenses subject to
the limitation should be small as a percentage of total income. Individuals
cannot deduct investment expenses in calculating alternative minimum tax.
Mark-to-Market of Open Positions. Section 1256 Contracts are futures,
--------------------------------
futures options traded on U.S. exchanges, certain foreign currency contracts and
stock index options. Certain of PB I's open positions will likely be Section
1256 Contracts. Section 1256 Contracts which remain open at the end of each year
are treated for tax purposes as if such positions had been sold and any gain or
loss recognized. The gain or loss on Section 1256 Contracts is characterized as
40% short-term capital gain or loss and 60% long-term capital gain or loss
regardless of how long any given position has been held. Non-U.S. exchange-
traded futures are non-Section 1256 Contracts. Gain or loss on non-Section 1256
Contracts will be recognized when sold by PB I and will be primarily short-term
gain or loss.
Section 988 Transaction. A Section 988 Transaction is a forward contract,
-----------------------
futures contract, option or other similar financial instrument denominated in a
currency other than the dollar. Section 988 Transaction gains or losses are
separately computed from other gains or losses and are treated as ordinary
income or loss rather than as capital gain. An election can be made to apply
Section 1256 to any gain or loss attributable to a forward contract, futures
contract or option which is otherwise a capital asset in the hands of the
taxpayer and is not part of a straddle or hedge.
Tax on Capital Gains and Losses; Interest Income. As described under
------------------------------------------------
"Mark-to-Market of Open Positions," PB I's trading, not including its cash
management which generates primarily ordinary income, generates 60% long-term
capital gains or losses and 40% short-term capital gains or losses from its
Section 1256 Contracts and primarily short-term capital gain or loss from its
non-Section 1256 Contracts. Individuals pay tax on long-term capital gains,
other than gains on assets held for more than 1 year but less than 18 months, at
a maximum rate of 20%. Short-term capital gains are subject to tax at the same
rates as ordinary income, with a maximum rate of 39.6% for individuals.
Individual taxpayers may deduct capital losses only to the extent of their
capital gains plus $3,000. Accordingly, PB I could incur significant losses,
but a limited partner will still be required to pay taxes on his or her share of
PB I's interest income.
If an individual taxpayer incurs a net capital loss for a year, the
taxpayer may elect to carry back (up to three years) the portion of such loss
which consists of a net loss on Section 1256 Contracts. A taxpayer may deduct
such losses only against net capital gain for a carry back year to the extent
that such gain includes gains on Section 1256 Contracts. To the extent that a
taxpayer could not use such losses to offset gains on Section 1256 Contracts in
a carry back year, the taxpayer may carry forward those losses indefinitely as
losses on Section 1256 Contracts.
77
<PAGE>
Investment by Employee Benefit Plans and IRA's. If you exercise
---------------------------------------------
discretionary authority or control over the management or disposition of an
employee benefit plan's plan assets or you render investment advice for a fee,
you are a plan fiduciary under the Employee Retirement Income Security Act of
1974 ("ERISA"). If you, as fiduciary, are considering investing plan assets in
PB I, keep in mind ERISA's applicable fiduciary standards, including:
. the definition of plan assets under Department of Labor regulations
(see below),
. whether the investment is subject to ERISA's diversification
requirements,
. whether the investment is prudent and whether there will be a market for
sale or disposal of the units, and
. whether the investment is in accordance with the qualified plan's
governing documents.
An investment of IRA assets in PB I generally will not be subject to
ERISA's diversification and prudence requirements unless the IRA is treated as
a plan established or maintained by an employer, employee organization or both.
The Department of Labor's regulation defining "plan assets" generally
provides that when a plan makes an equity investment in another entity, the
underlying assets of that entity will be considered plan assets unless, for
purposes relevant here, equity participation by benefit plan investors is not
"significant."
78
<PAGE>
Equity participation by benefit plan investors becomes "significant" if
immediately after the most recent acquisition of any equity interest in the
entity, 25% or more of the value of equity interest in the entity is held by
benefit plan investors. If benefit plan investment exceeds 25% of the value of
the equity interest, the assets of PB I are treated as the assets of a plan
investing in PB I.
If the underlying assets of PB I are characterized as "plan assets,"
ERISA's fiduciary standards may be imposed upon PB I, the general partner, and
perhaps Quiet Systems Limited. The cost and feasibility for PB I or the
general partner to comply with such standards and whether application of such
standards will adversely affect the performance of PB I or the general partner
cannot be predicted. Additionally, if a plan asset is subject to the control
and management of a person other than the plan trustee, there may be an improper
delegation of the plan trustee's responsibility.
ERISA also requires that plan assets be valued to reflect market value as
of the close of each plan year. It may not be possible to adequately value the
units from year to year, since there may not be a market for them and the
appreciation of any properties may not be shown in the value of the units until
PB I sells or otherwise disposes of its properties.
If the underlying assets of PB I are characterized as "plan assets," the
Internal Revenue Code may impose the prohibited transaction excise taxes upon
the general partner and Quiet Systems Limited equal to 5% of the amount involved
and 100% of the amount involved, respectively, in the prohibited transaction.
Many of the transactions involving the general partner, Quiet Systems Limited,
PB I and employee benefit plans will constitute prohibited transactions unless
they qualify as exempt transactions. Because of the inherently factual nature
of the determination, no assurance can be given that the transactions will
qualify as exempt transactions. If excise taxes are imposed on the general
partner and Quiet Systems Limited, significant changes in the method of
operating PB I may become necessary. Such changes could result in increased
costs being incurred by PB I and have an adverse effect on its performance.
Before investing employee benefits plan assets in PB I, you should also
consider that as a retirement plan, it must be taxed on unrelated business
income if income from all sources exceeds $1,000 per year. Interest, as well
as gains or losses from the sale, exchange or other disposition of property,
including commodity futures contracts, are excluded from the computation of
unrelated business income. Moreover, it appears that gains or losses on Section
1256 contracts marked-to-market at the end of the taxable year are also
79
<PAGE>
excluded from the computation of unrelated business income. Even though no tax
may be due, a tax return (Form 990-T) must be filed for any year in which an
employee benefit plan's gross unrelated business income equals or exceeds
$1,000. Prospective plan investors should consult their own legal and financial
advisors regarding these and other considerations involved in an investment in
PB I by a particular plan.
Notwithstanding the exclusion of any specific type of income from unrelated
business income, a tax-exempt limited partner will be taxed on its share of any
income from PB I to the extent that either such limited partner's investment
in PB I, or PB I's investment in the assets from which the income is derived, is
debt financed. Such an investment will be debt financed if the investment is
made with the use of borrowed funds, or if it is reasonably foreseeable that, as
a result of such investment, future borrowing would be necessary to meet
anticipated cash requirements.
Units may not be purchased with plan assets if the general partner or
Quiet Systems Limited either: (a) has investment discretion with respect to the
investment of such plan assets; (b) has authority or responsibility to give or
regularly gives investment advice with respect to such plan assets for a fee and
pursuant to an agreement or understanding that such advice will serve as a
primary basis for investment decisions with respect to such plan assets and that
such advice will be based on the particular investment needs of the plan; or (c)
is an employer maintaining or contributing to such plan.
The foregoing discussion is general in nature and is not intended to be
all-inclusive. Because the issues under ERISA and the Internal Revenue Code are
complex and the potential consequences can be adverse, a fiduciary of a
qualified plan considering investment in PB I should consult with its own tax
or legal advisors with respect to the impact of all of the foregoing on such
qualified plan.
Any reference to the opinion of Nyemaster, Goode, Voigts, West, Hansell &
O'Brien, P.C. received by PB I is in all events subject to all assumptions,
exceptions and qualifications set forth in such opinion, and such opinion is
otherwise in all events only made upon all of the terms and conditions of such
opinion in the form rendered to PB I. A copy of the opinion of Nyemaster,
Goode, Voigts, West, Hansell & O'Brien, P.C. will be provided to you upon
request.
THE LIMITED PARTNERSHIP AGREEMENT
---------------------------------
This following is a summary of what PB I believes are some of the more
significant terms and provisions of the limited partnership agreement. A copy of
the limited partnership agreement is attached to this prospectus as Exhibit "A".
You will need to read the limited partnership agreement for complete details of
its terms and conditions.
Nature of PB I; Liability of Limited Partners. The liability of a limited
---------------------------------------------
partner for the losses, debts and obligations of PB I will be limited to the
limited partner's capital contributions to PB I and the limited partner's share
of any undistributed assets of PB I, except as provided in the following three
paragraphs.
80
<PAGE>
A limited partner may become liable as a general partner of a limited
partnership if the limited partner participates in the control of the limited
partnership's business or knowingly permits the limited partner's name to be
used in the name of the limited partnership. PB I is structured to attempt
to avoid any limited partner from participating in the control of PB I's
business. The exercise of any rights of the limited partners set forth in the
limited partnership agreement will not cause any limited partner to participate
in the control of PB I's business for this purpose.
As discussed in "Transferability and Liquidation of Units" above, a limited
partner who has received the return of any part of his or her capital
contribution can be required to return the contribution to PB I for up to one
year after the return if necessary to pay creditors who extended credit to PB I
during the period the contribution was held by PB I. If the capital
contribution was returned to the limited partner in violation of PB I's
limited partnership agreement or the Iowa Uniform Limited Partnership Act,
however, the limited partner can be required to return the contribution to PB I
for up to six years after the return.
If the certificate of limited partnership or a certificate of amendment or
cancellation of a limited partnership contains a false statement, a person who
incurs a loss by relying on the statement may recover damages from a limited
partner who knew the statement to be false at the time the certificate was
executed. The general partner will exercise its best efforts to assure that this
circumstance does not occur.
The general partner will be liable for all obligations of PB I which PB I
is not able to pay or satisfy. The general partner will not, however, be
liable for the return or repayment of all or any portion of the capital or
profits of any limited partner.
Units. Interests in PB I are evidenced by units. Units which are issued
-----
to limited partners will be fully paid and nonassessable.
81
<PAGE>
Management of PB I's Affairs. The limited partners will not take part in
----------------------------
the management or operation of the business or property of PB I and will have
no voice in the operations of PB I. Any participation by the limited partners
in the management of PB I will jeopardize their limited liability, as
discussed in "The Limited Partnership Agreement--Nature of PB I; Liability of
the Limited Partners" above. Accordingly, under the limited partnership
agreement, responsibility for managing PB I and its business is vested solely
in the general partner. See Sections 5.01 and 5.02 of the limited partnership
---
agreement.
The general partner may make certain limited amendments to the limited
partnership agreement without the vote or consent of the limited partners. See
---
Section 11.02 of the limited partnership agreement.
Any material change in PB I's basic investment policies or structure
will, however, require the prior written consent or vote of the limited partners
who hold at least a majority of the total number of outstanding units. PB I's
"basic investment policies" for this purpose are only that:
. it will not make any loans to the general partner or any other
person,
. it will not engage in pyramiding, and
. it will not permit churning of its assets.
Pyramiding generally means using an unrealized profit in an open position to
provide margin for additional futures contracts. Churning generally means
excessive trading of PB I's account. The limited partnership agreement provides
that changes in trading advisors or futures commission merchants or in the
trading methods utilized by any trading advisor or in the types of contracts or
interests traded by PB I will not constitute a material change for this purpose.
82
<PAGE>
The limited partners who hold at least a majority of the outstanding units
may vote to:
. amend the limited partnership agreement and PB I's certificate of
limited partnership,
. remove the general partner and elect a new general partner(s), and
. cancel any contract with the general partner without penalty upon 60
days prior written notice.
Any amendment to the limited partnership agreement by the limited partners which
modifies the compensation of the general partner or which affects its duties or
obligations or its rights or protections will, however, need the consent of the
general partner. If the limited partners vote to remove the general partner, the
general partner will be entitled to liquidate its units.
Each limited partner shall be entitled to 1 vote for each outstanding whole
unit owned by the limited partner, and to a fractional vote in an amount equal
to any fractional unit owned by the limited partner. The limited partnership
agreement provides that the vote of the limited partners who hold a majority of
the outstanding units is generally necessary for the limited partners to approve
or take any action submitted to a vote of the limited partners. A unanimous
vote of the limited partners is, however, required to cause an assignee of units
to become a substituted limited partner over the objections of the assignor, and
in order to carry on the business of PB I after the withdrawal of all of the
general partners of PB I. The latter issue is discussed in "The Limited
Partnership Agreement--Termination and Dissolution of PB I" below.
The limited partners will appoint the general partner their attorney-in-
fact by executing the power of attorney which is included as part of the
subscription agreement that is required to purchase units. The limited partners
also grant the general partner the power of attorney set forth in Section 12.03
of the limited partnership agreement. The documents that may be executed by the
general partner on behalf of the limited partners under the powers of attorney
include amendments to the certificate of limited partnership and the limited
partnership agreement.
83
<PAGE>
Resignation or Withdrawal of General Partner. The limited partnership
--------------------------------------------
agreement provides that the general partner may resign if the general partner
can obtain the approval of the limited partners who hold at least a majority of
the outstanding units, and if the general partner can provide a successor
general partner satisfactory to those limited partners.
The general partner may also resign by giving at least 120 days prior
written notice to the limited partners. There is therefore no assurance of the
general partner's continued service to PB I. This creates a risk for investors,
as described in "Principal Risk Factors--The General Partner May Resign at Any
Time, Which Could Result in the Need to Terminate PB I" above.
Admission of Other General Partners. Any other individual or entity may be
-----------------------------------
admitted as an additional general partner with the consent of the limited
partners who hold at least a majority of the outstanding units. Any additional
general partner will be permitted to continue and carry on the business of PB I
following the withdrawal of any other general partner.
Additional Offerings. The general partner may terminate this offering at
--------------------
any time. The general partner may also make additional public or private
offerings of units. There is no maximum aggregate amount of units which may be
sold by PB I.
No limited partner shall have any preemptive or other right to acquire any
additional units.
The general partner can accept additional capital contributions from
existing limited partners. Additional capital contributions from existing
limited partners can be in any amount, and will be effective as of the opening
of trading on the first business day of the month next following the date of the
general partner's acceptance of the capital contribution.
Partnership Accounting. Each limited partner will have a capital
----------------------
account. It will be credited with the amount of the limited partner's capital
contributions, and the limited partner's proportionate share of PB I's income
or gains. The capital account will be debited with the limited partner's
proportionate share of PB I's deductions or losses, and the amount of any
distributions made to and liquidations made by the limited partner.
Profits and losses for each fiscal year will be allocated among the limited
partners pro rata based upon the number of units held by the limited
partners.
84
<PAGE>
Distributions. PB I is not required to make any distributions, and
-------------
distributions will be made only as determined by the general partner, in its
sole discretion. It is not anticipated that any distributions will ever be
made. If distributions occur, they will be made pro rata based upon the number
of units held by the limited partners.
Upon liquidation of PB I, the remaining assets of PB I will be distributed
to the limited partners in the proportion that the capital account of each
limited partner bears to the total capital accounts of all limited partners. If
those distributions are not enough to return the full amount of a limited
partner's capital contribution, the limited partner will not have recourse
against any other limited partner.
Federal Tax Allocations. At the end of each fiscal year, PB I's realized
-----------------------
capital gain or loss and ordinary income or loss will be allocated among the
limited partners. The allocations will be made after having given effect to the
fees payable by PB I. Each limited partner's share of such items will need to
be included in the limited partner's personal income tax return.
Transfer and Liquidation of Units. A description of a limited partner's
---------------------------------
ability to transfer units and liquidate units is set forth in "Transferability
and Liquidation of Units" above.
85
<PAGE>
Termination and Dissolution of PB I. PB I will be terminated on
-----------------------------------
December 31, 2050. PB I may also be terminated and dissolved before that time
if any of the events set out in the following paragraphs occurs.
PB I will be terminated upon the occurrence of any event specified under
the Iowa Uniform Limited Partnership Act as causing the dissolution of an Iowa
limited partnership. The events which could cause a dissolution of PB I under
the Iowa Uniform Limited Partnership Act are as follows:
. if PB I ceased to have any limited partners,
. if all of the limited partners consented in writing to the dissolution
of PB I,
. if PB I is judicially dissolved, which could occur if a court
determines that it is not reasonably practical to carry on PB I's
business in accordance with the limited partnership agreement, or
. if PB I is dissolved by the Iowa Secretary of State because PB I does
not have a registered agent or registered office in Iowa for 60 days or
more or PB I does not notify the Iowa Secretary of State within 60
days that its registered agent or registered office has been changed,
that its registered agent has resigned, or that its registered office
has been discontinued.
The general partner will exercise its best efforts to assure that none of the
above events occur.
PB I may be dissolved at any time by the general partner, in the general
partner's sole discretion.
PB I will also be dissolved if the general partner withdraws or ceases to
be the general partner, unless there is then at least one other general partner
who is willing to continue PB I's business, or unless the limited partners
unanimously elect to carry on PB I's business and elect a new general partner
within 90 days of the general partner's withdrawal. This procedure is provided
for in Sections 9.01(a)(iii) and 9.03 of the limited partnership agreement. As
discussed in "Admission of Other General Partners" above, the limited
partnership agreement provides that any new or additional general partners will
have the authority to carry on the business of PB I following the withdrawal
of any other general partner.
PB I may also be dissolved by the vote of the limited partners who hold
at least a majority of the outstanding units.
86
<PAGE>
Meetings. No regular meetings of PB I will be held. A meeting of the
--------
limited partners may, however, be called by the general partner at any time and
for any purpose.
The general partner will call a meeting within 15 days after the general
partner receives a written request for a meeting which sets forth the purpose of
the meeting and is signed by limited partners who own at least 10% of the
outstanding units.
The general partner will give written notice of any meeting and the purpose
of the meeting to all limited partners. All meetings will be held at a
reasonable time and place on a date no less than 30 nor more than 60 days after
the date of the general partner's written notice of the meeting. The principal
office of PB I will be a reasonable place to hold a meeting.
87
<PAGE>
Reports to Limited Partners. PB I's books and records are maintained at
---------------------------
the offices of Schoenauer & Co., P.C., 328 Main Street, Ames, Iowa 50010.
PB I will provide limited partners with monthly statements of account, in
the form required by the regulations of the Commodity Futures Trading
Commission. PB I will also provide limited partners with an annual report
containing financial statements. The annual financial statements will be
certified by independent certified public accountants. The limited partners
will also receive information necessary for the preparation of their annual
federal income tax returns by not later than March 15 of each year.
PB I will also be subject to the informational requirements of the
Securities Exchange Act of 1934 for at least as long as PB I's registration
statement with the Securities and Exchange Commission is effective. PB I will
accordingly provide the limited partners with the information required under the
Exchange Act during at least that period of time, which will include quarterly
reports on Form 10-QSB and annual reports on Form 10-KSB.
Limited partners or their duly authorized representatives may inspect and
copy (at their cost) PB I's books and records during normal business hours
upon reasonable written notice to the general partner.
As indicated above, PB I is currently subject to the informational
requirements of the Securities Exchange Act, and PB I will accordingly file
periodic reports and other information with the Securities and Exchange
Commission. Copies of those reports and other information can be obtained from
the public reference facilities of the Securities and Exchange Commission
located at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices located at Seven World Trade Center, New York, New
York 10048 and Citicorp Center, 500 W. Madison Street, Chicago, Illinois 60661-
2511. The Commission also maintains a Web site, and documents which are filed
by PB I with the Commission may also be inspected at that Web site at
http://www.sec.gov.
PB I has filed with the Securities and Exchange Commission a Registration
Statement on Form SB-2 under the Securities Act of 1933 regarding the units
offered by this prospectus. This prospectus does not contain all of the
information set forth in the registration statement. The registration statement
may be inspected and copied at prescribed rates at the offices of the Securities
and Exchange Commission referred to above.
88
<PAGE>
PLAN OF DISTRIBUTION
--------------------
The units are being offered and sold only by the underwriter, Vacation
Investors, Inc. The units are being offered on a best efforts basis. The
underwriter has not committed to purchase any unsold units.
PB I will not pay any underwriting or selling commission or other fee to
the underwriter. The underwriter will receive compensation for its sales
efforts, however, from the general partner.
The compensation payable to the underwriter by the general partner is a fee
of a potential maximum amount of 5.625% of the subscriptions which have been
collected by PB I.
89
<PAGE>
The fee is payable in three equal installments. The first installment is payable
within 10 business days of the close of the month in which the subscription was
collected by PB I. The second and third installments are payable on the 2 and
3 year anniversaries of the date the subscription was effective as a capital
contribution to PB I, which will be the first business day of a month. The
second and third installments will not be payable, however, if the limited
partner who contributed the subscription has caused the limited partner's
capital account to fall below the amount of the subscription through
liquidations of units by the limited partner. Adjustments will be made to the
limited partner's capital account for this purpose to take away the effect of
reductions to the limited partner's capital account caused by distributions made
to the limited partner or by any trading losses that have been allocated to the
limited partner's capital account.
If a limited partner contributes subscriptions in different months, the
underwriter's fee will be calculated and payable separately based on each
subscription. If the limited partner later liquidates units, the amount of
the
90
<PAGE>
liquidation proceeds will be applied pro rata against the subscriptions for
purposes of determining whether the second and third installments of the fee are
payable.
The underwriter will not receive any further fees from the general partner
after the date of the termination of the sales agreement between PB I, the
general partner and the underwriter.
The general partner may also pay some of the costs and expenses of the
underwriter, subject to certain maximum limitations set forth in the sales
agreement.
The underwriter is an Iowa corporation which was incorporated on April 15,
1994. The underwriter's registration as a fully disclosed broker dealer with
the Securities and Exchange Commission became effective on May 11, 1994, and the
underwriter became a member of the National Association of Securities Dealers on
July 21, 1994. Mr. Raun is the sole shareholder, director and officer of the
underwriter. Mr. Raun is also a registered representative and the general
securities principal and financial and operations principal of the underwriter.
As of the date of this prospectus, the underwriter had 6 registered
representatives.
The principal business of the underwriter as of the date of this prospectus
was the offering of the units of PB I and the units of limited partnership
interest in Portfolio Boost II, L.P. and Portfolio Boost III, L.P. The
underwriter may also participate in the offering of other pools sponsored by the
general partner or by others. The underwriter also offers general brokerage
services to the public.
The underwriter's prior experience in public offerings is limited to the
underwriter's offering of units of limited partnership interest in CBC-RT. CBC-
RT is another Iowa limited partnership for which the general partner serves as
the general partner. CBC-RT is closed to new investors, but it previously
offered its units of limited partnership interest pursuant to Regulation A under
the federal Securities Act of 1933. Mr. Raun was the only registered
representative of the underwriter who participated in CBC-RT's offerings. The
underwriter has also offered units of limited partnership interest in one other
Iowa limited partnership. The offering of that limited partnership was pursuant
to Rule 504 under federal Securities Act of 1933, and the only registered
representative of the underwriter participating in that offering was the
individual who serves as the general partner of that limited partnership. That
limited partnership was closed to new investors as of the date of this
prospectus. The underwriter therefore has limited experience in public
offerings.
Mr. Raun has participated in offering units of limited partnership interest
in the limited partnerships for which he serves as the general partner on an
individual basis. All of those offerings were, however, pursuant to exemptions
from registration available at the
91
<PAGE>
federal and state levels.
Units are initially offered for sale at fixed value of $1,000 per unit.
The $1,000 amount was arbitrarily set by the general partner. It was not based
on past or expected earnings and does not represent that the units have or will
have a market value of or can be resold or liquidated at that price.
PB I may commence trading after it has sold 500 units. After PB I has
commenced trading, units will be offered at the net asset value per unit as of
the opening of trading on the effective date of the purchase. The effective date
of a purchase will be the first business day of the month that follows the date
on which the general partner accepts a subscription agreement and the capital
contribution from the limited partner. The organizational and offering expenses
incurred by PB I prior to the effective date of its initial registration
statement filed with the Securities and Exchange Commission are amortized over a
period of 5 years for purposes of calculating the net asset value per unit.
Funds from subscriptions accepted prior to the sale of 500 units will be
deposited and held in an escrow account at First American Bank, Fort Dodge,
Iowa, until 500 units have been sold. The escrow agreement requires PB I and
the underwriter to transmit all monies received from subscribers during the
escrow period to First American Bank by at least 12:00 noon of the next business
day. First American Bank will receive an aggregate fee of the greater of (a)
$300.00; or (b) an amount determined by multiplying the total number of checks
received and issued by First American Bank, by $5.00.
Subscription payments deposited in the escrow account may not be withdrawn
by any subscriber under any circumstance.
If 500 units are not sold before October 28, 1999, this offering will
terminate. If that happens, all amounts paid by a subscriber will be returned
to the subscriber within 10 business days of October 28, 1999, along with the
subscriber's pro rata share of all interest earned on subscriptions deposited in
the escrow account. Any units which are purchased by the general partner or Mr.
Raun will not be counted in determining whether the 500 units required to break
escrow have been sold.
92
<PAGE>
The sale of the 500 units should not be relied upon as any indication of
the merits of this offering because the required sale of those units is not
intended to protect investors or to show PB I is a good or safe investment.
The escrowed funds will be released for use by PB I on the first business
day after the 500 units have been sold. If PB I breaks escrow, this offering
will continue until the earlier of such time as all of the units offered hereby
have been sold, or this offering is terminated by the general partner, in its
sole discretion. All subscriptions accepted by the general partner after the
breaking of escrow will be immediately available for use in PB I's business.
The underwriter will maintain a web site at www.vacationinvestors.com. The
web site contains information regarding this offering.
SUBSCRIPTION PROCEDURE
----------------------
In order to purchase units, you will need to execute a copy of the
subscription agreement that is attached to this prospectus as part of Exhibit
"B," and deliver the executed subscription agreement and the full purchase price
for the units subscribed for to the general partner. You will also need to
return an executed acknowledgment of receipt of this prospectus, and a completed
and executed suitability standards requirement form. Those documents are also
attached to this prospectus as part of Exhibit "B".
The minimum subscription is $10,000 for first time investors. Subsequent
investments by existing limited partners may be in any amount as the general
partner may accept.
Unless you are from California, in order to purchase units, you must have
at least either:
a. a minimum net worth of $150,000, or
b. a minimum annual gross income of $45,000 and a minimum net worth of
$45,000.
If you are a resident of California or an entity with its principal place of
business in California, you must have at least either:
93
<PAGE>
a. a minimum net worth of $250,000, or
b. a minimum annual gross income of $65,000 and a minimum net worth of
$100,000.
Your net worth for these purposes must be determined exclusive of your home,
home furnishings and automobiles. In the case of sales to fiduciary accounts,
the net worth and income standards may be met by the beneficiary, the fiduciary
account, or by the donor or grantor who directly or indirectly supplies the
funds to purchase the units.
The subscription agreement includes a representation and warranty that the
subscriber meets the above suitability standards. The subscription agreement
also contains various other representations, warranties, agreements, and
acknowledgments, and you should therefore carefully review the subscription
agreement. You will also be required by the subscription agreement to agree to
indemnify PB I, the general partner, the underwriter and their affiliates and
agents against all losses, liabilities, damages, costs or expenses (including
court costs, arbitration costs and reasonable attorneys' fees) which are
incurred by any of them because of any breach or default by you of your
subscription agreement.
The total purchase price for the units must be paid at the time of
executing the subscription agreement. The purchase price must be paid in cash
or its equivalent.
All subscriptions are irrevocable, except only as may be provided by the
securities laws of your state. The general partner has the right, however, to
totally or partially reject any subscription for units. The general partner may
require you to provide additional information and documentation.
PB I will issue fractional units, rounded up to the sixth decimal point,
to the extent necessary to fill an accepted subscription for units.
The general partner will try to deposit checks received from subscribers
after the release of funds from escrow promptly following the acceptance of the
subscription agreement. IRA investments may be effective as of the first
business day of the month even though funds have not been received if the check
and the IRA trustee's executed signature page to the subscription agreement are
received by the 20th of the month.
All units will be issued subject to the collection of good funds, and any
units issued to a subscriber who has not provided collectible funds (whether in
the form of a bad check or draft, or otherwise) will be canceled.
94
<PAGE>
You will not deposit funds directly with First Options of Chicago,
Inc.
VACATION AWARD
--------------
The general partner will provide one of the following vacation awards
(generally, an "Award") to each limited partner who meets the qualifications set
forth below at any time prior to February 1, 2002. All of the Awards will be
provided at the general partner's cost, and not with funds of PB I.
Bronze Award. The general partner will provide each qualifying limited
------------
partner with a "Bronze Award." The Bronze Award includes: (a) one nights
lodging in any Hyatt Hotel or Resort located in the United States, the
Caribbean, Canada or Mexico, and (b) a $100 Hyatt spending allowance.
In order to qualify for the Bronze Award, a limited partner must (a) be a
limited partner in at least three limited partnerships for which the general
partner serves as the commodity pool operator, and (b) have made a combined
capital contribution of $20,000 or more to such limited partnerships and have
maintained that capital contribution (adjusted only for liquidations by the
limited partner) for a consecutive period of 12 full months. Further
requirements and conditions are set forth below in "Award Conditions,
Restrictions and Procedures."
Silver Award. The general partner will provide each qualifying limited
------------
partner with a "Silver Award." The Silver Award includes: (a) two nights
lodging in any Hyatt Hotel or Resort located in the United States, the
Caribbean, Canada or Mexico; and (b) a $100 Hyatt spending allowance.
In order to qualify for the Silver Award, a limited partner must (a) be a
limited partner in at least three limited partnerships for which the general
partner serves as the commodity pool operator; and (b) have made a combined
capital contribution of $50,000 or more to such limited partnerships and have
maintained that capital contribution (adjusted only for liquidations by the
limited partner) for a consecutive period of 12 full months. Further
requirements and conditions are set forth below in "Award Conditions,
Restrictions and Procedures."
Gold Award. The general partner will provide each qualifying limited
----------
partner with a "Gold Award." The Gold Award includes either: (a) two
nontransferable round trip airfare tickets on a group trip to a four or five
star hotel or resort located outside of the continental United States; and (b) 2
nights lodging at such location (the "group trip"); or at the qualifying limited
--
partner's option: (c) 3 nights lodging in any Hyatt Hotel or Resort located in
the United States, the Caribbean, Canada or Mexico, and (d) a $300 Hyatt
spending allowance (the "land option").
95
<PAGE>
A dinner meeting will be provided to the limited partners participating in
the group trip option of the Gold Award. The cost of the dinner meeting will be
borne by the applicable limited partnerships as is discussed in "Award
Conditions, Restrictions and Procedures" below.
In order to qualify for the Gold Award, a limited partner must (a) be a
limited partner in at least three limited partnerships for which the general
partner serves as the commodity pool operator; and (b) have made a combined
capital contribution of $100,000 or more to such limited partnerships and have
maintained that capital contribution (adjusted only for liquidations by the
limited partner) for a consecutive period of at least 12 full months. Further
requirements and conditions are set forth below in "Award Conditions,
Restrictions and Procedures."
Platinum Award. The general partner will provide each qualifying limited
--------------
partner with a "Platinum Award." The Platinum Award includes either: (a) two
nontransferable round trip airfare tickets on a group trip to a four or five
star hotel or resort located outside of the continental United States; and (b)
five nights lodging at such location (the "group trip"); or at the qualifying
--
limited partner's option: (c) 7 nights lodging in any Hyatt Hotel or Resort
located in the United States, the Caribbean, Canada or Mexico; and (d) a $700
Hyatt spending allowance (the "land option").
A dinner meeting will be provided to the limited partners participating in
the group trip option of the Platinum Award. The cost of the dinner meeting
will be borne by the applicable limited partnerships as is discussed in "Award
Conditions, Restrictions and Procedures" below.
In order to qualify for the Platinum Award, a limited partner must (a) be a
limited partner in at least three limited partnerships for which the general
partner serves as the commodity pool operator; and (b) have made a combined
capital contribution of $250,000 or more to such limited partnerships and have
maintained that capital contribution (adjusted only for liquidations by the
limited partner) for a consecutive period of at least 12 full months. Further
requirements and conditions are set forth below in "Award Conditions,
Restrictions and Procedures."
Award Conditions, Restrictions and Procedures. Accounts held in more than
---------------------------------------------
one name are only entitled to one Award, regardless of the number of owners of
or persons named on the account. Limited partners with separate accounts and
residing in the same household may, however, combine their capital contributions
for purposes of qualifying for the Awards.
The general partner will give a written notice to each limited partner who
qualifies for any Award within 30 days of the date the limited partner qualifies
for the Award.
A limited partner who has qualified for the Bronze Award or the Silver
Award or who has selected the land option for the Gold Award or Platinum Award
will have 12 months from the date of the general partner's qualification notice
to utilize the Award. The limited partner must provide the general partner with
written notice of the desired Hyatt location and the dates at that location.
The limited partner will be provided with a certificate for use at the Hyatt
location selected by the limited partner. Once the certificate has been issued,
all risk of loss for the certificate passes to the limited partner. If a
limited partner has not utilized the Award within 12 months of the date of the
general partner's qualification notice to the limited partner, the limited
partner will be deemed to have waived the Award. All other costs and expenses
of the limited partner will be borne by the limited partner, such as airfare or
other travel costs, meals, entertainment and lodging at the chosen location
beyond the nights payable by the general partner.
96
<PAGE>
The dates and location of the group trip option for the Gold Award and the
Platinum Award will be selected by the general partner. The general partner
will give each qualifying limited partner a written notice (the "trip notice")
of such dates and location at least 6 months prior to the date of the group
trip. A qualifying limited partner who desires to use the land option as
provided above must give the general partner written notice within 30 days of
the date of the general partner's trip notice. A limited partner selecting the
land option will not be allowed to change back to the group trip. A limited
partner who wants to utilize the group trip option must confirm dates and
departure airport no less than 120 days in advance of the departure date. Any
penalties due to changes by the limited partner will be the limited partner's
responsibility. If the general partner has not received written confirmation
from a qualifying limited partner within 120 days in advance of the departure
date for the group trip, the limited partner shall be deemed to have waived the
Award. The limited partnerships in which the qualifying limited partner is a
limited partner shall provide, at the limited partnerships' cost, one dinner
meeting on the first night of each group trip. The cost of the dinner meeting
will be borne proportionately by the limited partnerships in question, based
upon the capital contributions of the qualifying limited partner. Except for
the dinner meeting on the group trip option of the Gold Award and the Platinum
Award, all other costs and expenses of a qualifying limited partner will be
borne by the limited partner, such as transportation costs to the departure
airport selected by the limited partner, meals, entertainment and lodging at the
chosen location beyond the nights payable by the general partner.
Once a trip has been scheduled and booked, it will only be rescheduled due
to weather or other difficulties or problems in the sole discretion of the
general partner.
The general partner will provide the appropriate Award to a limited partner
for each 12 month period that the limited partner otherwise meets the
qualifications set forth above. As of the date of this prospectus, a limited
partner could therefore have the possibility of qualifying for up to a maximum
of 3 awards.
The rooms that will be provided at the location of each Award will be
double occupancy rooms on any night of the week or weekend, subject to
availability. All Hyatt spending allowances can only be utilized for purchases
at the Hyatt location and are only valid for use during the dates of the trip.
They are not convertible into cash.
Except for PB I's proportionate cost of the dinner meeting to be provided
in the group trip option of the Gold Award and the Platinum Award, the Awards
will not affect the value of the units because the cost and expense of the
Awards will be paid by the general partner. You should note, however, that PB I
will not receive any direct benefits for its payment for the dinner meetings for
any qualifying limited partners.
No compensation or reimbursement will be paid to any limited partner who
fails or determines not to utilize any Award.
No limited partner will be entitled or allowed to utilize more than one
Award in any given 12 month period. For example, a Gold Award qualifier is not
entitled to take advantage of the Gold, Silver, and the Bronze Award, and a
Silver Award qualifier is not entitled to take advantage of both the Silver and
Bronze Awards, etc.
97
<PAGE>
You should also review "Principal Risk Factors--You May Not Be Able to Use
a Vacation Award Even if You Have Qualified For One" above for certain risks
applicable to the Awards.
As indicated above, the general partner has only committed to provide the
Awards to limited partners who qualify for the Awards prior to February 1, 2002.
No promise or representation is made that the general partner will offer the
same or similar awards or any other trip or incentive of any nature at any
subsequent time. The Awards may have tax consequences for you. For example, it
is likely that the value of the Awards will be treated as income. Accordingly,
you should consult with your own legal, tax and other professional advisors as
to the possible tax consequences of the Awards.
LEGAL OPINION
-------------
The legality of the units being offered hereby will be passed upon for PB I
by Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C., 700 Walnut, Suite
1600, Des Moines, Iowa 50309. Attorneys with Nyemaster, Goode, Voigts, West,
Hansell & O'Brien, P.C. may hold units in PB I.
EXPERTS
-------
The balance sheets as of September 30, 1998 of PB I and of the general
partner included in this prospectus at Exhibit C and Exhibit D have each been
audited by Roth & Company, P.C., independent auditors, as stated in their
reports appearing therein. The balance sheets have been included in this
prospectus in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
98
<PAGE>
APPENDIX 1
Supplemental Performance Information
The performance information presented in this Appendix 1 is hypothetical
performance information. As such, you should be aware of the following:
Hypothetical performance results have many inherent limitations, some of which
are described below. No representation is being made that any account will or is
likely to achieve profits or losses similar to those shown. In fact, there are
frequently sharp differences between hypothetical performance results and the
actual results subsequently achieved by any particular trading program.
One of the limitations of hypothetical performance results is that they are
generally prepared with the benefit of hindsight. In addition, hypothetical
trading does not involve financial risk, and no hypothetical trading record can
completely account for the impact of financial risk in actual trading. For
example, the ability to withstand losses or to adhere to a particular trading
program in spite of trading losses are material points which can also adversely
affect actual trading results. There are numerous other factors related to the
markets in general or to the implementation of any specific trading program
which cannot be fully accounted for in the preparation of hypothetical
performance results and all of which can adversely affect actual trading
results.
PB I's trading advisor has had no experience in trading actual accounts for
itself or for customers. Because there are no actual trading results to compare
to the hypothetical performance results, you should be particularly wary of
placing undue reliance on these hypothetical performance results.
Further, past performance is in no event necessarily indicative of future
results.
1
<PAGE>
PB I is a single advisor pool that does not have a guarantee feature. The
following capsules show hypothetical performance information for PB I since
an assumed inception of trading by PB I on January 1, 1981, and year-to-date
(through November 30, 1998). PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF
FUTURE RESULTS.
<TABLE>
<CAPTION>
Percentage Rate of Return*
For the Most Recent Five Calendar Years and Year-to-Date
(Annual results computed on a compounded monthly basis)
- --------------------------------------------------------------------
Month 1993 1994 1995 1996 1997 1998 YTD
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jan 2.4% 2.0% 3.0% 8.8% 11.0% (3.4%)
- --------------------------------------------------------------------
Feb 6.3% 2.2% 6.5% (7.2%) (0.1%) (2.3%)
- --------------------------------------------------------------------
Mar (1.1%) (2.0%) 19.3% 5.0% 3.7% 5.4%
- --------------------------------------------------------------------
Apr 11.0% 3.3% 16.9% 4.2% 3.3% (2.4%)
- --------------------------------------------------------------------
May (3.3%) 0.5% 15.4% 4.9% (1.8%) 5.7%
- --------------------------------------------------------------------
Jun (7.5%) 4.4% (5.5%) 3.3% (2.3%) 4.0%
- --------------------------------------------------------------------
Jul 3.3% 2.1% 8.6% (1.2%) 14.5% 2.4%
- --------------------------------------------------------------------
Aug 2.5% (1.5%) 4.3% (3.3%) (6.6%) 10.3%
- --------------------------------------------------------------------
Sep 3.3% (2.6%) 4.0% 4.3% 0.3% 3.4%
- --------------------------------------------------------------------
Oct (2.5%) (4.3%) 3.9% 8.6% 0.2% 2.9%
- --------------------------------------------------------------------
Nov (1.1%) 3.4% 0.3% (0.4%) 1.4% 5.5%
- --------------------------------------------------------------------
Dec 3.4% 1.3% 4.0% (1.1%) 6.4%
- --------------------------------------------------------------------
Year 16.5% 8.8% 112.4% 27.7% 32.1% 35.4%
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Percentage Rate of Return*
Since Assumed Inception of Trading through December, 1992
(Annual results computed on a compounded monthly basis)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mo. 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992
- -----------------------------------------------------------------------------------------------------
Jan 3.6% 2.1% 1.0% 4.3% 6.0% (4.2%) 8.2% 2.4% 9.4% 1.9% 0.4% (10.3%)
- -----------------------------------------------------------------------------------------------------
Feb 4.7% 5.1% 2.2% 0.1% 5.4% 16.8% 0.1% (0.6%) 3.8% 2.2% (1.6%) 0.6%
- -----------------------------------------------------------------------------------------------------
Mar 1.7% 1.4% (2.7%) 0.6% (0.3%) 12.8% 2.7% (1.5%) 2.1% 5.4% 7.3% 1.2%
- -----------------------------------------------------------------------------------------------------
Apr 2.8% 0.2% 3.4% 1.0% 8.3% (4.3%) 9.4% (5.6%) 0.6% 1.5% (1.9%) (1.8%)
- -----------------------------------------------------------------------------------------------------
May 2.9% 2.1% (1.1%) 5.3% 9.1% (4.0%) 1.9% 4.4% 12.6% (3.4%) 0.7% 7.4%
- -----------------------------------------------------------------------------------------------------
Jun 1.2% 7.1% (3.6%) (3.0%) (2.2%) (0.7%) 2.4% 7.0% 2.0% 2.6% (3.2%) 6.8%
- -----------------------------------------------------------------------------------------------------
Jul 2.7% (1.0%) 1.6% 4.7% 4.6% 9.8% 8.5% 6.5% 0.9% 7.8% (0.4%) 13.7%
- -----------------------------------------------------------------------------------------------------
Aug 2.1% 17.4% (3.7%) 3.6% 0.8% 5.3% 0.3% (0.3%) (4.2%) 1.0% 4.4% 8.0%
- -----------------------------------------------------------------------------------------------------
Sep 2.4% 4.6% 4.0% (1.4%) (3.8%) (6.0%) (1.1%) (0.1%) (6.1%) 11.5% 8.0% (0.8%)
- -----------------------------------------------------------------------------------------------------
Oct 3.3% 16.4% (0.1%) 10.4% (0.5%) 1.4% 5.0% 6.3% (1.1%) 33.3% 1.1% 1.4%
- -----------------------------------------------------------------------------------------------------
Nov (1.1%) (1.6%) (1.9%) 2.5% 2.9% (1.4%) 11.4% 0.5% 1.4% (0.1%) 2.7% 7.5%
- -----------------------------------------------------------------------------------------------------
Dec (4.0%) 7.5% 0.6% 4.2% 0.6% (1.8%) 9.3% 2.6% 3.1% 1.9% 12.6% (4.0%)
- -----------------------------------------------------------------------------------------------------
Year 24.5% 78.1% (0.6%) 36.5% 34.3% 22.8% 74.7% 22.8% 25.7% 81.8% 32.8% 31.3%
- -----------------------------------------------------------------------------------------------------
</TABLE>
Name of Pool: Portfolio Boost I, L.P.
Type of Pool: Publicly Offered
Assumed Date of Inception of Trading: January 1, 1981
Assumed Aggregate Gross Capital Subscriptions to the Pool (as of November 30,
1998): $1,500,000
Pool's Net Asset Value (as of November 30, 1998): $390,608,416
Largest Monthly Draw-Down**
During the Most Recent Five Calendar Years and Year-to-Date (through
November 30, 1998): 6-93/7.5% of Net Asset Value ***
<PAGE>
From Assumed Inception of Trading and Year-to-Date (through November 30,
1998): 1-92/10.3% of Net Asset Value
Worst Peak-to-Valley Draw-Down****
During the Most Recent Five Calendar Years and Year-to-Date (through
November 30, 1998): 5-93 to 6-93/10.6% of Net Asset Value
From Assumed Inception of Trading and Year-to-Date (through November 30,
1998): 8-89 to 10-89/11.0% of Net Asset Value
* Rate of return is computed by dividing the net performance by the sum of
the beginning net asset value and net additions, capital withdrawals and
redemptions.
** "Draw-Down" is defined by applicable Commodity Futures Trading Commission
regulations to mean losses experienced by a pool or account over the
specified period.
*** "Net Asset Value" means total assets minus total liabilities, determined on
an accrual basis of accounting in accordance with generally accepted
accounting principles, with each open position accounted for at fair market
value.
**** "Worst Peak-to-Valley Draw-Down" is defined by applicable Commodity Futures
Trading Commission regulations to mean the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account, or trading program during any period in which the initial month-
end net asset value is not equaled or exceeded by a subsequent month-end
net asset value.
Assumptions to supplemental performance information:
- ----------------------------------------------------
1. $1,500,000 in capital was contributed as of 1/1/81 and no additional
capital contributions were made during the entire period shown above.
2. No withdrawals or distributions were made during the entire period shown
above.
3. Brokerage commissions of $11.00, National Futures Association and exchange
fees of $3.50 and slippage of $75 per contract were included in the costs.
These rates are consistent with current industry standards. Slippage is
calculated due to the fact that the trades were done on a hypothetical
basis and not in real market situations.
4. Interest income will be earned on the trading account of PB I. For
purposes of the above calculations, a 5% per annum interest rate was used.
Actual interest earnings would have been higher during the period shown.
However, to maintain a conservative reporting process, the 5% rate was
used.
5. The management fee and incentive fee payable to the general partner as set
forth in the prospectus were both utilized for purposes of the above
calculations. See the Section of the prospectus entitled "Description of
Charges to PB I."
6. The quantitative, non-discretionary, systematic approach of Quiet Systems
Limited was applied to actual market data for the periods indicated in
order to determine trading results.
7. All amounts displayed are in U. S. Dollar denominations
You should carefully review the disclosures on the cover page to this Appendix 1
regarding the many limitations which are inherent in hypothetical performance
information.
<PAGE>
Exhibit A
Limited Partnership Agreement
<PAGE>
PORTFOLIO BOOST I, L.P.
LIMITED PARTNERSHIP AGREEMENT
THIS LIMITED PARTNERSHIP AGREEMENT ("Agreement") is made as of the date set
forth on the signature page hereof by and among Portfolio Boost, L.L.C. (the
"General Partner"), as general partner of Portfolio Boost I, L.P. (the
"Partnership"); the person designated on the signature page hereto as the
initial limited partner (the "Initial Limited Partner"); and the persons who may
hereafter become limited partners of the Partnership (collectively, the "Limited
Partners"). The General Partner and the Limited Partners are at times
collectively referred to herein as the "Partners".
ARTICLE I: General Provisions
1.01 Formation of Partnership. The Partnership is hereby formed by the
------------------------
General Partner and the Initial Limited Partner under the provisions of the Iowa
Uniform Limited Partnership Act, Chapter 487 of the Code of Iowa, as amended and
as may be amended from time to time (the "Act"). The rights and liabilities of
the Partners shall be as provided in the Act, except as otherwise expressly
provided in this Agreement. The Initial Limited Partner's contribution of
$1,000 will be refunded upon admission of the first Limited Partner acquiring a
Unit (as that term is defined in Section 1.11 below), and the Initial Limited
Partner will thereupon withdraw from the Partnership. The Initial Limited
Partner may, however, purchase Units in the Partnership.
1.02 Certificate of Limited Partnership. The General Partner shall
----------------------------------
execute a Certificate of Limited Partnership for the Partnership (the
"Certificate") and file the Certificate in the Iowa Secretary of State's office,
and in such other public offices as deemed advisable in the discretion of the
General Partner. Amendments to the Certificate shall also be duly executed and
filed in the Iowa Secretary of State's office, and in such other public offices
as deemed advisable in the discretion of the General Partner.
1.03 Name of the Partnership. The name of the Partnership is Portfolio
-----------------------
Boost I, L.P.
1.04 Business of the Partnership. The business of the Partnership is to
---------------------------
conduct and engage in the speculative trading of domestic and foreign futures
contracts and options in commodities, currencies, securities and/or any other
types of interests whatsoever. Such trading may include all futures contracts
and options which may now or hereafter be dealt in on any exchange or in the
interbank markets. The Partnership shall have and may exercise all of the
powers now or hereafter conferred by the laws of the State of Iowa on limited
partnerships formed under the laws of that State, and the Partnership may do any
and all things related or incidental to its business as fully as natural persons
might or could do under the laws of said State.
1.05 Place of Business of the Partnership and Specified Office and Agent.
-------------------------------------------------------------------
The initial principal place of business of the Partnership is at Cornerstone at
Cantera, 4320 Winfield Road, Suite 320, Warrenville, Illinois 60555. The
initial specified office of the Partnership in Iowa, as required by Section 104
of the Act, is at 328 Main Street, P.O. Box 187, Ames, Story County, Iowa 50010,
and the initial agent for service of process at that address as required by
Section 104 of the Act is Don Kramer. The General Partner may change the
principal place of business or the specified office or agent for service of
process upon written notice to the other Partners. The General Partner may also
establish such additional places of business as the General Partner may
determine. The Partnership shall maintain at the Partnership's specified office
in Iowa such records as may be required by the Act from time to time, including,
as applicable, copies of (i) a current list of the full name and the last known
business address of each Partner separately identifying the General Partner and
the Limited Partners, with each such list being in alphabetical order; (ii) the
Certificate and all certificates of amendment to the Certificate, together with
executed copies of any powers of attorney pursuant to which the Certificate or
any certificates of amendment have been executed; (iii) the Partnership's
federal, state, and local income tax returns and reports, if any, for the three
most recent years; (iv) this Agreement and all amendments hereto; (v) any
financial statements of the Partnership for the three most recent years; and
(vi) to the extent not already set forth in this Agreement, and if otherwise
applicable, a writing setting out (x) the amount of cash and a description and
statement of the agreed value of the other property or services contributed by
each Partner and which each Partner has agreed to contribute, (xx) the times at
which or events on the happening of which any additional contributions agreed to
be made by each Partner are to be made, (xxx) any right of a Partner to receive,
or of a General Partner to make, distributions to a Partner which include a
return of all or any part of the Partner's contribution, and (xxxx) any events
upon the happening of which the Partnership is to be dissolved and its
<PAGE>
affairs wound up. The records kept pursuant to this Section 1.05 are subject to
inspection and copying during ordinary business hours at the reasonable request
and at the expense of any Partner.
1.06 Effective Date and Duration of the Partnership. This Agreement shall
----------------------------------------------
become effective and the Partnership may commence business upon the filing of
the Certificate in the Iowa Secretary of State's office, and shall continue
until 11:59 p.m. on December 31, 2050, unless the Partnership is dissolved at an
earlier date as provided herein.
1.07 Partners' Names and Addresses. The General Partner as of the date of
-----------------------------
this Agreement is Portfolio Boost, L.L.C., whose main business address is
currently Cornerstone at Cantera, 4320 Winfield Road, Suite 320, Warrenville,
Illinois 60555. The names and addresses of the Initial Limited Partner and
subsequent Limited Partners shall be maintained at the Partnership's specified
office in Iowa as provided in Section 1.05 above.
1.08 Title to Partnership Property. All property owned by the Partnership,
-----------------------------
whether real or personal or tangible or intangible, shall be deemed to be owned
by the Partnership as an entity, and no Partner, individually, shall have any
ownership interest in any such property.
1.09 Filing of Other Certificates. The General Partner shall file and
----------------------------
publish all certificates, notices, statements or other instruments as may be
required by law for the operation of a limited partnership in all jurisdictions
where the Partnership elects to do business.
1.10 Expenses. Each Partner shall bear any personal expenses incurred in
--------
connection with the acquisition of the Partner's Units. The Partnership will
pay, without limitation, all organizational expenses of the Partnership and all
costs and expenses incurred in the offering and sale of Units, including the
costs of registration of Units under federal and applicable state securities
laws; producing the registration statement and the prospectus used to register
and offer Units and other promotional materials, documents and forms; filing
fees and taxes under applicable partnership and securities laws; accounting and
legal fees; escrow fees; and all other costs and expenses of organizing and
qualifying the Partnership and in offering and selling Units. The
organizational and offering expenses to be paid by the Partnership shall not,
however, exceed fifteen percent (15%) of the total Capital Contributions (as
that term is defined in Section 2.01(a) below) of all Limited Partners. Any
deficiency in such expenses shall be borne by the General Partner, and all such
expenses shall be borne by the General Partner in the event the General Partner
has not accepted subscriptions for at least the Minimum Units before the close
of the Minimum Units Offering Period (as those two terms are defined in Section
2.01(c) below). The Partnership may pay all costs and expenses directly or may
reimburse others, including the General Partner, for all Partnership costs and
expenses which have been paid by such other persons.
1.11 Partnership Interests. The interests of the Partners in the
---------------------
Partnership shall be designated as units ("Units"), as more further described
and defined in Section 2.01(c) below.
ARTICLE II: Capital Contributions
2.01 Capital Contributions.
---------------------
(a) Capital Contribution Defined. The term "Capital Contribution"
----------------------------
means, with respect to each Partner, the sum of all cash (or its
equivalent) contributed to the Partnership by the Partner. No Partner
shall receive interest on any Capital Contribution. A Partner may withdraw
the Partner's Capital Contribution only as provided in this Agreement. No
Partner is required to make any contribution to the Partnership other than
the Partner's initial Capital Contribution. The aggregate of all Capital
Contributions shall be available to the Partnership to carry on its
business.
(b) Capital Contribution of General Partner. The General Partner may
---------------------------------------
make Capital Contributions (in cash or its equivalent) from time to time,
in the General Partner's sole discretion. All Capital Contributions of the
General Partner shall be evidenced by Units, and the General Partner shall
have the same rights with respect to Units as do the Limited Partners,
except as otherwise expressly provided in this Agreement. No Units held by
the General Partner shall
2
<PAGE>
be counted in determining whether the Minimum Units have been sold. Upon
the dissolution and termination of the Partnership, the General Partner
will contribute to the Partnership an amount equal to the deficit balance,
if any, in the General Partner's capital account.
(c) Capital Contribution of Limited Partners. Each Limited Partner
----------------------------------------
shall make a Capital Contribution (in cash or its equivalent) at the time
of subscription for the Limited Partner's Units in the amount set forth in
the Limited Partner's Subscription Agreement. The purchase price per Unit
prior to the commencement of trading by the Partnership shall be One
Thousand Dollars ($1,000) per Unit. The Partnership shall not commence
trading unless and until the General Partner has accepted subscriptions for
at least Five Hundred (500) Units (the "Minimum Units"), which must occur
within nine (9) months of the effective date of the Registration Statement
to be filed with the Securities and Exchange Commission (the "SEC") with
respect to the Minimum Units (the "Minimum Units Offering Period"). The
Partnership may commence trading at any time after the funds for the
Minimum Units have been released from escrow (at which time subscribers
shall first be admitted to the Partnership as Limited Partners). If the
General Partner has not accepted subscriptions for the Minimum Units prior
to the close of the Minimum Units Offering Period, the offering of the
Units shall terminate and all amounts paid by subscribers for Units shall
be returned in the manner provided in the subscribers' Subscription
Agreements. Units may be offered and sold after the Partnership has
commenced trading, in the sole discretion of the General Partner. The
purchase price per Unit after the Partnership has commenced trading shall
be the Net Asset Value Per Unit (as that term is defined in Section 2.01(d)
below) as of the opening of trading on the effective date of the purchase
(which date is specified in Section 8.06 below). The Partnership will
issue fractional Units, rounded up to the sixth decimal point, to the
extent necessary to fill an accepted subscription for Units.
All Units shall be issued subject to the collection of good funds, and
any Units issued to a subscriber who has not provided collectible funds
shall be canceled.
(d) Net Assets; Net Asset Value Per Unit. "Net Assets" of the
------------------------------------
Partnership for purposes of this Agreement means the Partnership's total
assets minus the Partnership's total liabilities, determined in accordance
with generally accepted accounting principles, except (i) that for purposes
of calculating the Net Asset Value Per Unit, Net Assets shall be determined
by amortizing all organizational and offering expenses incurred by the
Partnership prior to the effective date of the initial registration
statement filed by the Partnership with the SEC over a period of five (5)
years; and (ii) as may be otherwise provided herein.
The term "Net Asset Value Per Unit" for purposes of this Agreement
means the Net Assets of the Partnership at the time of calculation divided
by the aggregate number of outstanding Units at that time.
2.02 Termination of Offerings; Additional Offerings. The General Partner
----------------------------------------------
may, in its sole discretion, terminate any offering of Units. The General
Partner may also register Units and/or make additional public or private
offerings of Units, in its sole discretion. The General Partner does not,
however, have any obligation or duty to register any Units with any authority.
No Limited Partner shall have any preemptive or other rights with respect to the
issuance or sale of any additional Units. No Limited Partner shall have the
right to consent to the admission of any additional Limited Partners or to any
additional Capital Contributions made by any existing Partner. There is no
maximum aggregate amount of Units which may be sold by the Partnership.
ARTICLE III: Allocation of Profits and Losses
3.01 Profits and Losses. Profits and losses for each fiscal year of the
------------------
Partnership shall be allocated among the Partners pro rata based upon the
respective number of Units held by the Partners. For purposes of determining
the profits, losses or any other items allocable to any period, profits, losses,
and any such other items shall be determined on a daily, monthly, or other
basis, as determined by the General Partner using any permissible method under
Section 706 of the United States Internal Revenue Code and the regulations
thereunder.
3
<PAGE>
3.02 Allocation of Distributions Upon Assignment of a Unit. The profits or
-----------------------------------------------------
losses of the Partnership attributable to any assigned Unit and any
distributions made with respect to such Unit shall be allocated to the assignor
up to and including the effective date of the assignment, and to the assignee
thereafter.
3.03 Capital Account Balance. A capital account shall be established for
-----------------------
each Partner and shall be credited with (i) the amount of cash paid to the
Partnership as the Partner's Capital Contribution, and (ii) the share of
Partnership income or gains allocable to the account; and shall be debited with
(x) the share of Partnership deductions or losses allocable to the account, and
(y) the amount of any distributions made to and liquidations made by the Partner
with respect to the account. The manner in which capital accounts are to be
maintained pursuant to this Section 3.03 is intended and shall be construed so
as to comply with the requirements of Internal Revenue Code Section 704 and the
regulations promulgated thereunder, and in the event there exists any
inconsistency the Internal Revenue Code and said regulations shall control.
3.04 General. The respective interests of the Partners in the profits and
-------
losses of the Partnership shall remain as set forth herein unless changed by
amendment to this Agreement or by an assignment or liquidation of a Unit. For
tax purposes, all items of income, gain, loss, deduction or credit shall be
allocated among the Partners according to the same percentages and provisions
for allocating profits and losses set forth in this Article III.
ARTICLE IV: Distributions
4.01 Distributions. The Partnership is not required to make any
-------------
distributions to the Partners, and any distributions by the Partnership will be
made only at such times and in such amounts as are determined by the General
Partner, in its sole discretion. Any distributions which are made shall be made
pro rata based upon the respective number of Units held by the Partners. This
Section 4.01 is not applicable to distributions to be made upon the dissolution
and liquidation of the Partnership, which circumstance is governed by Section
9.02 below.
4.02 No Priority. No Limited Partner shall have the right to receive
-----------
property other than cash in connection with any distribution, whether upon
winding up of the Partnership or otherwise and whether or not it shall
constitute a return of capital. No Limited Partner shall have priority over any
other Limited Partner as to any distributions, whether upon winding up of the
Partnership or otherwise, the return of any Capital Contribution or as to
allocations of profits or losses.
4.03 Liquidation of Units. A Limited Partner may withdraw from the
--------------------
Partnership and liquidate the Units held by the Limited Partner only with the
consent of the General Partner, which consent shall be given only if the
following conditions are satisfied:
(a) A Limited Partner must give the General Partner written notice (a
"Liquidation Notice") of the intention of the Limited Partner to liquidate
Units, and stating the date upon which the liquidation is desired, which
date must be the first business day of any month. The Liquidation Notice
must be received by the General Partner no later than 12:00 noon on the
sixtieth (60th) business day immediately preceding the desired effective
date of liquidation or by such later date as may be acceptable to the
General Partner, in the General Partner's sole discretion.
(b) Any liquidation request approved by the General Partner shall be
effective as of the opening of trading on the first business day of the
month specified in the Liquidation Notice.
(c) The liquidation price per Unit shall be equal to the Net Asset
Value Per Unit as of the effective time and date of the liquidation. From
the time of the General Partner's receipt of a Liquidation Notice to the
effective time and date of the liquidation, the Units will remain at risk
in the business of the Partnership and the liquidation price for the Units
shall not be fixed. Subsequent to the effective time and date of a
liquidation, however, the liquidation price per Unit shall be fixed at the
Net Asset Value Per Unit as of the effective time and date of the
liquidation.
(d) Subject to subparagraph (a) above and to the following, the General
Partner shall honor all Liquidation Notices in the order they are received
(on the basis of postmark or delivery, with the General Partner selecting
Units for liquidation by lot with respect to Liquidation Notices received
on the same date). If, however, the number of
4
<PAGE>
liquidations requested for any month or over any other given period of
time, in the opinion of the General Partner, threatens the termination of
the Partnership or the Partnership's tax year or is otherwise detrimental
to the tax status of the Partnership, the General Partner may (but is not
required to) select by lot only so many liquidations as will, in its
judgment, not result in such consequences. Any Units not liquidated in this
event shall remain at risk in the business of the Partnership and shall not
be liquidated absent another separate Liquidation Notice given in the
manner provided in this Section 4.03. In addition, the General Partner may
(but is not required to) temporarily suspend all liquidations if, in the
General Partner's judgment, special circumstances exist such that
additional liquidations would impair the ability of the Partnership to meet
its objectives, and under special circumstances the Partnership may also
(but is not required to) delay payment for liquidated Units until the
special circumstances have been remedied or otherwise rectified. Examples
of special circumstances for either of these purposes include (i) the
inability to generate sufficient cash to effect liquidations, (ii) where
such cash can only be generated by sustaining significant losses, (iii) the
inability to liquidate open positions, or (iv) the default or delay in
payments which are due the Partnership from brokers or other persons. In
the event of a suspension of liquidations, all Units will remain at risk in
the business of the Partnership and shall not be liquidated absent a
Liquidation Notice given following the lifting of the suspension by the
General Partner and in the manner otherwise provided in this Section 4.03.
(e) In the case of a notice given pursuant to Section 7.04(a)(i) below,
trading by the Partnership shall be temporarily suspended for a period of
thirty (30) calendar days, beginning on the date of such notice, during
which time Limited Partners shall have the right to request liquidation of
their Units. The General Partner shall honor all liquidation requests
which are received by the General Partner prior to the close of said thirty
(30) calendar day period, subject to, however, and in accordance with the
provisions of Sections 4.03(c) and 4.03(d) above and 4.03(f) below.
Liquidations in this event shall be effective as of the opening of trading
on the business day next following the General Partner's receipt of written
notice from the Limited Partner.
(f) The General Partner shall give written notice to a Limited Partner
within ten (10) days after the first business day of the applicable month
of whether or not the Limited Partner's Units have been liquidated.
Payment for liquidated Units shall be made by the Partnership within
thirty (30) days after the first business day of the applicable month,
subject, however, to delays in payment pursuant to subparagraph (d) above.
A Limited Partner may request liquidation of less than all of the Limited
Partner's Units upon the same terms and conditions as set forth above; provided,
however, that the General Partner may, in the General Partner's sole discretion,
refuse any such request for a partial liquidation if the liquidation would cause
the capital account of the Limited Partner to be less than the minimum initial
investment amount as then established by the General Partner.
4.04 Retirement Accounts. The General Partner may, in the General Partner's
-------------------
sole discretion, require any Limited Partner which is an IRA or a retirement
plan or employee benefit plan subject to Title I of the United States Employee
Retirement Income Security Act of 1974 ("ERISA") to either: (i) withdraw from
the Partnership, in whole or in part, through liquidation of some or all of the
Limited Partner's Units, or (ii) make immediate distributions to the Limited
Partner in such amount as determined by the General Partner; if such liquidation
or distribution is, in the General Partner's sole discretion, necessary or
appropriate to cause the Partnership, the General Partner or any Limited
Partners to avoid being subject to or in violation of any of the provisions of
ERISA or regulations promulgated pursuant thereto or any similar or successor
act, statutes or regulations.
ARTICLE V: Management
5.01 Management of the Partnership. The management and control of all of
-----------------------------
the business and affairs of the Partnership shall be vested solely in the
General Partner.
5.02 Authority of the General Partner. The General Partner shall have all
--------------------------------
rights and powers of general partners as provided in the Act and other
applicable law. Without limiting Section 5.01 above, the General Partner is
hereby granted the right, power and authority to do on behalf of the Partnership
all things which, in the General Partner's sole discretion, are
5
<PAGE>
appropriate to carry out the Partnership's business and/or the duties and
responsibilities of the General Partner, including all of the following (without
notice to or the consent or approval of any Limited Partners):
(a) to cause to be paid all amounts due and payable by the Partnership
to any person or entity (including the General Partner), including, without
limitation, brokerage commissions, management fees, incentive fees, and
transaction fees and charges such as floor brokerage, clearinghouse, give
up or transfer and exchange and National Futures Association ("NFA") fees;
(b) to employ or otherwise retain the services of such agents,
employees, managers, accountants, attorneys, consultants and other persons
(including, without limitation, commodity trading advisors, introducing
brokers and futures commission merchants and floor brokers) as the General
Partner determines to be appropriate to carry out the business and affairs
of the Partnership, whether or not any such persons so employed or retained
are the General Partner or are affiliated or related to any Partner, all
upon terms satisfactory to the General Partner, and to pay such fees,
salaries, wages and other compensation to such persons as the General
Partner shall in its sole discretion determine;
(c) to pay, extend, renew, modify, adjust, contest, submit to
arbitration, prosecute, defend or compromise, upon such terms and upon such
evidence as the General Partner deems sufficient, any obligation, suit,
liability, cause of action, claim, counterclaim or other dispute,
including, without limitation, taxes, either in favor of or against the
Partnership;
(d) to pay all fees and make all other expenditures which the General
Partner, in its sole discretion, deems appropriate in connection with the
organization of the Partnership, the registration, offering and sale of
Units, the operation of the Partnership's business, and/or the carrying out
of the General Partner's obligations and responsibilities under this
Agreement;
(e) to accept additional Capital Contributions from any Partner, to
admit additional Limited Partners, and to admit an assignee of a Unit to be
a substituted Limited Partner, pursuant to and subject to the terms hereof,
without notice to or the consent of any Limited Partner;
(f) to invest any funds of the Partnership that are not committed to
the conduct of the Partnership's business as the General Partner shall
determine, in its sole discretion, including in certificates of deposit,
treasury bills, so called "sweep" accounts, and other investments;
(g) to negotiate, enter into, execute, acknowledge and deliver all
contracts, agreements, documents and instruments appropriate to carry on
the business of the Partnership, including granting the commodity trading
advisor or advisors a power of attorney to effect trades on behalf of the
Partnership on a discretionary basis and without notice to the General
Partner or any Limited Partners, and subscription agreements for Units;
(h) to cause to be paid all taxes, charges and assessments that are
levied, assessed or imposed upon any of the assets of the Partnership,
unless the same are contested in good faith by the General Partner;
(i) to enter into agreements with others and engage in the trading
described in Section 1.04 above, including with or through entities and
persons affiliated with the General Partner;
(j) to sell, lease, trade, exchange, encumber, or otherwise transfer or
dispose of any or all of the Partnership's property, whether tangible or
intangible, in the ordinary course of business and upon such terms and
conditions and for such consideration as the General Partner deems
appropriate, in its sole discretion;
(k) in connection with any offering of Units, to: (i) cause to be filed
one or more offering statements or registration statements and related
documentation, and all amendments thereto, with the SEC, the National
Association of Securities Dealers, Inc. ("NASD") and/or any other domestic
or foreign authorities for the registration and offering of Units in the
United States or elsewhere and one or more offering circulars or
prospectuses and amendments and
6
<PAGE>
supplements thereto with the Commodity Futures Trading Commission ("CFTC")
and the NFA; (ii) register or otherwise qualify Units for offering and sale
under the blue sky and securities laws of any states of the United States
and other domestic or foreign jurisdictions; (iii) make all arrangements
for the offering and sale of Units; and (iv) take all such action with
respect to the matters described in the preceding subclauses (i) through
(iii) as the General Partner deems appropriate.
(l) to take all such action as the General Partner deems appropriate to
avoid the requirement that the Partnership register as an investment
company under the Investment Company Act of 1940, as amended (the "1940
Act"), or to take all such action as the General Partner deems appropriate
to register the Partnership as an investment company under and to bring the
Partnership in compliance with the 1940 Act;
(m) to compromise the obligation of a Partner to make a contribution to
the Partnership or to return money or other property paid or distributed to
the Partner in violation of the Act or this Agreement; and
(n) to do any act or thing whatsoever which in the General Partner's
sole discretion is necessary or appropriate to carry out any of the
foregoing or otherwise to the business and affairs of the Partnership.
5.03 Limitation on Authority of General Partner. Notwithstanding Section
------------------------------------------
5.02 above, the General Partner shall not, without the prior written consent or
vote of the Limited Partners who possess at least a Majority in Interest (as
that term is defined in Section 6.03 below):
(a) do any act in contravention of this Agreement, as amended from time
to time;
(b) do any act not authorized by this Agreement which would make it
impossible to carry on the ordinary business of the Partnership;
(c) possess or assign rights in Partnership property for other than a
Partnership purpose;
(d) sell, transfer, assign, encumber or convey all or substantially all
of the properties of the Partnership, except in the ordinary course of
business of the Partnership or as may be otherwise authorized by this
Agreement; or
(e) effect any material change in the Partnership's basic investment
policies (which are only those set forth in Article X, subparagraphs (a),
(e) and (j) below) or structure; provided, however, that amendments
authorized by Section 11.02 below, or any changes in (i) commodity trading
advisors or introducing brokers or futures commission merchants, (ii) the
trading methods, systems or strategies utilized by any commodity trading
advisor, (iii) the allocation or diversification of the Partnership's
assets among the types of interests traded or in the positions held in
contracts or options, or (iv) the types of contracts or options or
commodities, currencies, securities or other interests traded by the
Partnership, shall not, without limitation, constitute a material change
within the meaning of this Section 5.03(e).
5.04 Right of Public to Rely on Authority of General Partner. No person
-------------------------------------------------------
shall be required to determine the General Partner's authority to make or incur
any undertaking on behalf of the Partnership, or to see to the application or
distribution of revenues or proceeds paid to the General Partner.
5.05 Obligations of General Partner; Partners' Interests in Other Business.
---------------------------------------------------------------------
The General Partner shall devote such time and effort to the Partnership's
business as is necessary or appropriate to manage the affairs of the
Partnership. It is specifically understood and agreed, however, that no
Partner (including the General Partner) shall be required to devote full time to
the Partnership's business and that any Partner (including the General Partner)
may engage in and possess interests in other business ventures, including
ventures which are competitive with the Partnership; and neither the Partnership
nor any Partner shall by virtue of this Agreement have any right, title or
interest in or to such ventures.
5.06 Liability of the General Partner; Indemnification. The General Partner
-------------------------------------------------
shall not be liable, responsible or accountable in damages or otherwise to the
Partnership or any of the Limited Partners for any act or omission performed or
7
<PAGE>
omitted by the General Partner in good faith on behalf of the Partnership and in
a manner reasonably believed by the General Partner to be within the scope of
authority granted by this Agreement and in, or not opposed to, the best
interests of the Partnership, except only when such action or failure to act
constitutes negligence or misconduct.
The Partnership shall defend, indemnify and hold the General Partner
harmless from and against any loss, liability, damage, cost or expense
(including court costs, arbitration costs, and attorneys' and accountants' fees
and expenses) actually and reasonably incurred by the General Partner and
arising from any act, omission, activity or conduct undertaken by or on behalf
of the Partnership and reasonably believed by the General Partner to be within
the scope of authority conferred by this Agreement, including against any
demands, claims, lawsuits, arbitration proceedings or other actions initiated by
a Limited Partner; provided, however, that such indemnity shall be payable only
if the General Partner (a) acted in good faith and in a manner the General
Partner reasonably believed to be in, or not opposed to, the best interests of
the Partnership, and (b) the act, omission, activity or conduct in question did
not constitute negligence or misconduct. No indemnification may be made,
however, with respect to any losses, liabilities, damages, costs or expenses
arising from or out of an alleged violation of federal or state securities laws
unless (i) there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular indemnitee, or
(ii) such claim has been dismissed by a court with prejudice on the merits as to
the particular indemnitee, or (iii) a court approves a settlement of the claims
against the particular indemnitee and finds that indemnification of the
settlement and related costs and expenses should be made, provided the
indemnitee must apprise the court of the position of the SEC and of the
securities administrator of the state in which the plaintiffs claim they were
offered or sold Units with respect to indemnification for securities laws
violations before seeking court approval for indemnification.
The General Partner shall in no event be liable to the Partnership or any
Limited Partner because any taxing authority disallows or adjusts any deductions
or credits in the Partnership's or any Limited Partners' income tax returns.
The General Partner shall also in no event be liable for the return or repayment
of the Capital Contributions or profits of any Partner, with any return or
repayment of capital or profits to be made solely from the assets of the
Partnership (which shall not include any right of contribution from the General
Partner).
The Partnership shall make advances of costs and expenses to the General
Partner and the General Partner's affiliates (as that term is defined in Section
12.06 below) with respect to any demand, claim, proceeding, lawsuit or action,
but only if (i) it relates to acts or omissions with respect to the performance
of duties or services on behalf of the Partnership; (ii) it is initiated by a
third party who is not a Limited Partner or it is initiated by a Limited Partner
and a court specifically approves such advancement; and (iii) the General
Partner or the General Partner's affiliate, as the case may be, undertakes to
repay the advanced funds to the Partnership, together with interest at the legal
rate under Iowa law, if the General Partner or the affiliate is ultimately found
not to be entitled to indemnification hereunder.
The provisions of this Section 5.06 shall not be affected by the termination
of the Partnership or the resignation, removal, death, withdrawal, insolvency or
dissolution of the General Partner.
All of the provisions of this Section 5.06 shall apply to affiliates of the
General Partner when such affiliates are performing services on behalf of the
Partnership.
Any indemnity under this Section 5.06 shall be paid from, and only to the
extent of, Partnership assets, and no Limited Partner shall have any personal
liability for the payment of any such indemnity. The Partnership shall not
incur the cost of that portion of liability insurance, if any, which insures the
General Partner for any liability for which indemnification is not allowed under
this Section 5.06.
8
<PAGE>
5.07 Compensation and Reimbursement of the General Partner.
-----------------------------------------------------
(a) The General Partner shall be paid a quarterly incentive fee of 15%
of the New Trading Profits (as that term is defined below) of the
Partnership for each quarter, if any. "New Trading Profits" means the
excess, if any, of the Net Assets of the Partnership at the end of each
respective quarter over the highest Net Assets of the Partnership at the
end of any previous quarter or on the date trading commences, whichever is
higher. Net Assets shall be adjusted for this purpose to eliminate the
effect thereon resulting from new Capital Contributions or distributions or
liquidations made during the quarter, and shall be decreased by any
interest or other income earned on Partnership assets during the quarter
which is not directly related to trading activity and whether such assets
are held separately or in a margin account. Also, Net Assets shall be
determined excluding accrual of the incentive fee (if any), but including
accrual of the management fee for the months comprising the quarter in
question, as the management fee is calculated pursuant to Section 5.07(b)
below. In addition, if the Partnership incurs a net loss during any
quarter, such loss shall be carried over and charged against the Net Assets
of the succeeding quarters until such loss has been exhausted and before
any further incentive fees shall be paid to the General Partner. The
incentive fee shall be payable as soon as is reasonably practicable
following the close of each quarter.
(b) The General Partner shall also be paid a monthly management fee of
one-half of one percent (0.5%) [which equates to 6% annually] of the
Partnership's Net Assets as of the close of business on the last business
day of each month. Net Assets for this purpose shall be determined before
accrual of both the management fee and the incentive fee contemplated by
Section 5.07(a) above. The management fee shall be paid by the Partnership
within ten (10) business days of the close of each month.
(c) The General Partner shall be entitled to reimbursement from the
Partnership for all Partnership obligations or expenses which are paid or
incurred by the General Partner.
5.08 Fiduciary Responsibility. The General Partner shall have a fiduciary
------------------------
responsibility for the safekeeping and use of all funds and assets of the
Partnership.
5.09 Resignation or Withdrawal of General Partner; Admission of Additional
---------------------------------------------------------------------
General Partners. The General Partner may resign or withdraw from the
- ----------------
Partnership as General Partner upon (i) the affirmative vote of the Limited
Partners who possess at least a Majority in Interest, and (ii) if there is not
then another general partner for the Partnership, providing a successor general
partner(s) satisfactory to the Limited Partners who possess at least a Majority
in Interest. The General Partner may not otherwise voluntarily resign or
withdraw from the Partnership as general partner except upon the giving of at
least one hundred twenty (120) days prior written notice to the Limited
Partners. In the latter event, the General Partner shall pay all reasonable
expenses incurred as a result of the General Partner's withdrawal if there is
not then another general partner and the Limited Partners elect to carry on the
business of the Partnership by a substituted general partner(s) in accordance
with Section 9.03 below. Any resignation or withdrawal by the General Partner
in accordance with this Section 5.09 shall not violate or constitute a breach of
this Agreement and shall not give rise to or create any claim for damages in the
Partnership or any of the Partners. No resignation or withdrawal of the General
Partner, whether voluntary, involuntary or by operation of law, shall relieve
the General Partner of any obligation up to the date of withdrawal, except with
the express written consent of the Limited Partners who possess at least a
Majority in Interest.
Any other person(s) may be admitted as additional general partners of the
Partnership upon the written consent or vote of the Limited Partners who
possess at least a Majority in Interest. Any such additional general partner(s)
shall be permitted to continue and carry on the business of the Partnership
following the withdrawal, for whatever reason, of any other general partner of
the Partnership. Written notice of the admission of any additional general
partner shall be given to the Limited Partners who did not consent to such
admission within ten (10) business days of such admission. In the event there
is more than one general partner for the Partnership, all of such general
partners shall have all of the rights, duties and obligations of the General
Partner as set forth in this Agreement, and any decisions to be made by such
general partners shall be made by a majority vote of such general partners.
9
<PAGE>
ARTICLE VI: Rights and Obligations of Limited Partners
6.01 Limitations on Limited Partners. No Limited Partner shall: (a)
-------------------------------
participate in the control of the business of the Partnership; (b) have any
voice in the management or operation of any Partnership property; (c) have the
authority or power to bind or act as agent for or on behalf of the Partnership
or any other Partner, or to incur any expenditures on behalf of the Partnership;
or (d) withdraw from the Partnership except in accordance with Section 4.03
above.
6.02 Liability of Limited Partners. No assessments of any kind shall be
-----------------------------
made against any of the Limited Partners. In addition, so long as such Limited
Partner complies with the provisions of Section 6.01 above, the liability of
each Limited Partner for the losses, debts and obligations of the Partnership
shall be limited to the Limited Partner's Capital Contribution and share of any
undistributed assets of the Partnership; provided, however, that under the Act
(i) if a Limited Partner has received the return of any part of the Limited
Partner's Capital Contribution without violation of this Agreement or the Act,
for one (1) year after the return, the Limited Partner is liable to the
Partnership for the amount of the returned contribution to the extent necessary
to discharge the Partnership's liabilities to creditors who extended credit to
the Partnership during the period the contribution was held by the Partnership,
and (ii) if a Limited Partner has received the return of any part of the Limited
Partner's Capital Contribution in violation of this Agreement or the Act, for
six (6) years after the return, the Limited Partner is liable to the Partnership
for the amount of the contribution wrongfully returned.
6.03 Meetings; Vote; Voting Rights.
-----------------------------
(a) A meeting of the Limited Partners may be called by the General
Partner at any time and for any purpose, and shall be called by the General
Partner no more than fifteen (15) days after receipt by the General Partner
of a written request for such a meeting setting forth the purpose thereof,
and signed by Limited Partners who collectively own at least ten percent
(10%) of the then outstanding Units. The General Partner shall give
written notice of any meeting and the purpose thereof to all Limited
Partners. Any such meeting shall be held at a reasonable time and place
(which includes the Partnership's principal office) on a date no less than
thirty (30) nor more than sixty (60) days after the date of the General
Partner's written notice of the meeting.
(b) Any action required or permitted to be taken by Limited Partners at
a meeting may be taken without a meeting, prior notice, or a vote, if a
consent in writing setting forth the action taken is signed by the Limited
Partners owning Units having not fewer than the minimum number of votes
otherwise necessary to take such action under this Agreement. Written
notice of the taking of action under this Section 6.03(b) shall be given to
those Limited Partners who did not consent to such action. All written
consents shall be treated for all purposes as votes at a meeting.
(c) Each Limited Partner shall be entitled to one (1) vote for each
outstanding whole Unit owned by such Limited Partner, and to a fractional
vote in an amount equal to any fractional Unit owned by such Limited
Partner. All actions of the Limited Partners taken at any meeting or by
written action without a meeting shall require the affirmative vote of the
Limited Partners holding at least a majority of the total number of
outstanding Units ("a Majority in Interest"), unless a higher vote is
affirmatively required by any other provision of this Agreement or by the
Act. Partners may vote in person or by proxy.
(d) The Limited Partners who possess at least a Majority in Interest
may, to the extent permitted by law, and without the concurrence of the
General Partner (except as provided below), vote to (i) amend this
Agreement and, if necessary, the Certificate; (ii) remove the General
Partner and elect a new general partner(s); and (iii) cancel any contract
for services with the General Partner without penalty upon sixty (60) days
prior written notice. Provided, however, that any amendment of this
Agreement pursuant to this Section 6.03 which modifies the compensation or
distributions to which the General Partner is entitled or which affects the
duties or obligations or the rights or protections of the General Partner
shall be conditioned upon the consent of the General Partner, which may be
withheld in the General Partner's sole discretion. In the event of the
removal of the General Partner by the Limited Partners pursuant to this
Section 6.03, the General Partner shall be entitled to a liquidation of any
or all of the General Partner's Units at the Net Asset Value Per Unit on
and as of the opening of trading on the first business day of the month
next following
10
<PAGE>
the date on which the General Partner is removed. If the General Partner
does not liquidate all of its Units at such time, the General Partner shall
thereafter be entitled to a liquidation of its Units in accordance with
Section 4.03 above.
ARTICLE VII: Books, Records and Bank Accounts
7.01 Books and Records. The General Partner shall keep true books of
-----------------
account and records with respect to the operations of the Partnership, including
those books and records as may be required under the CFTC's regulations. Such
books and records shall be maintained at the Partnership's principal place of
business, and all Partners, and their duly authorized representatives, shall at
all reasonable times have access to such books and records. The General Partner
shall maintain and preserve such books and records for a period of not less than
five (5) years.
7.02 Accounting Basis; Fiscal Year. The books and records of the
-----------------------------
Partnership (i) shall be kept in accordance with generally accepted accounting
principles, except as may be otherwise provided in this Agreement or as may be
otherwise determined by the General Partner, in the General Partner's sole
discretion; (ii) shall reflect all Partnership transactions, (iii) shall be
appropriate and adequate for the Partnership's business and to carry out the
provisions of this Agreement, and (iv) shall be closed and balanced at the end
of each fiscal year of the Partnership. The fiscal year of the Partnership
shall be the calendar year.
7.03 Reports. The General Partner shall cause such reports or information
-------
to be provided to the Partners as the CFTC, the NFA, the SEC, the NASD or any
other applicable governmental authority may from time to time require to be
given to the Partners.
The General Partner shall also provide to all Partners, by not later than
March 15 of each year, all information with respect to the Partnership which is
necessary for the preparation of the Partners' respective income tax returns.
The General Partner shall calculate the Net Assets of the Partnership on a
daily basis, and shall promptly advise a Partner, upon request, of the Net Asset
Value Per Unit as of the time of the request.
7.04 Notices.
-------
(a) The General Partner shall cause a notice to be given to each
Partner within seven (7) business days from the date of: (i) the date (the
"Decline Date") upon which there shall have been a decline in the Net Asset
Value Per Unit to less than fifty percent (50%) of the Net Asset Value Per
Unit as of the close of business on the day which is one year prior to the
Decline Date; (ii) any material change in contracts with any of the
Partnership's commodity trading advisors, including any change in commodity
trading advisors or any modification in the method of calculating any
incentive fee which may be payable by the Partnership to any commodity
trading advisor; and (iii) any other material change affecting the
compensation of any party which is payable by the Partnership. In the case
of a notice given pursuant to subclause (i) above, the Limited Partners
will have the opportunity to request the liquidation of their Units as
provided in Section 4.03(e) above.
(b) The General Partner shall also cause a notice to be given to each
Partner prior to effecting any material change related to brokerage
commissions. Any such change shall not be made for 30 calendar days,
during which time the Partners will have the right to request liquidation
of their Units pursuant to Section 4.03 above.
(c) Any notification pursuant to this Section 7.04 shall include a
description of the Partner's liquidation rights and voting rights, if any,
and a description of any material effect the changes specified in the
notice may have on the interests of the Partners. Any notice given
pursuant to Section 7.04(a)(i) above shall also include the following, in
capital letters and bold face print: "A LIMITED PARTNER SHOULD OBTAIN
ADVICE FROM AN INDEPENDENT INVESTMENT AND PROFESSIONAL ADVISOR AS TO
WHETHER THE LIMITED PARTNER SHOULD REQUEST LIQUIDATION OF THE LIMITED
PARTNER'S UNITS BECAUSE OF THE DECLINE IN THE NET ASSET VALUE PER UNIT."
11
<PAGE>
7.05 Bank Accounts. The General Partner shall establish one or more bank
-------------
accounts to be used for the payment of the expenditures of the Partnership. All
such accounts shall be the property of the Partnership, and shall be used only
for Partnership purposes. Only Partnership funds shall be deposited in said
accounts.
7.06 Tax Returns. The General Partner shall cause Partnership tax returns
-----------
to be prepared and timely filed, and shall also cause the Partnership to pay any
taxes payable by the Partnership. The General Partner is not, however, required
to cause the Partnership to pay any tax so long as the General Partner or the
Partnership is in good faith and by appropriate means contesting the
applicability, validity or amount thereof and such contest shall not materially
endanger any right or interest of the Partnership.
7.07 Tax Elections. The General Partner will make all tax elections or
-------------
allocations deemed necessary or desirable for the Partnership or the purposes of
this Agreement. Without limiting the preceding sentence, the General Partner is
authorized to perform all duties imposed by Sections 6221 through 6232 of the
United States Internal Revenue Code on the General Partner as "tax matters
partner" of the Partnership, including the following: (i) the power to
represent the Partnership in all audits and other administrative proceedings;
(ii) the power to extend the statute of limitations for all Limited Partners;
(iii) the power to file a petition with an appropriate federal court for a
review of a final Partnership administrative adjustment; and (iv) the power to
enter into a settlement with the Internal Revenue Service (the "IRS") on behalf
of, and binding upon, those Limited Partners having less than a one percent (1%)
interest in the Partnership, unless a Limited Partner has notified the IRS and
the General Partner to the contrary.
ARTICLE VIII: Assignability of Units; Additional Limited Partners
8.01 Assignment of a Limited Partner's Units.
---------------------------------------
(a) Except as otherwise provided below, a Limited Partner may not sell,
transfer, assign, hypothecate, pledge, or otherwise dispose of any Unit
(whether voluntarily, involuntarily or by operation of law) unless and
until all of the following conditions have been satisfied, except that the
General Partner may, in its sole discretion, waive any one or more of the
conditions specified in subclauses (ii) and (iv) below:
(i) the assignor and the assignee shall have delivered a written
instrument of assignment and assumption in a form satisfactory to the
General Partner;
(ii) after the assignment, neither the assignee nor the assignor,
if the assignor has retained any part of a Unit, shall hold Units that
represent less than the minimum initial investment in the Partnership
as then established by the General Partner, except for transfers by
gift, inheritance, intra family transfers, family dissolutions, and
transfers to affiliates;
(iii) the General Partner shall have consented in writing to the
assignment, which consent shall be granted if the other conditions are
met (or have been waived by the General Partner) and in the opinion of
the Partnership's counsel such assignment (1) may be effected without
registration under any applicable securities laws; (2) will not
violate any applicable laws or governmental rules or regulations,
including securities laws or limited partnership laws; and (3) will
not jeopardize the status of, or cause a termination of, the
Partnership or the Partnership's tax year for federal income tax
purposes nor affect the characterizations or treatment of income or
loss; and
(iv) the assignee agrees to pay all reasonable expenses incurred
in connection with the assignment, including attorneys' fees.
The Partnership shall not be required to recognize any assignment of
any Unit until the effective date of such assignment. Unless and until an
assignee becomes a substituted Limited Partner in accordance with Section
8.03 below, the assignee shall only have the right to receive the share of
the profits, losses, distributions and returns of capital
12
<PAGE>
(including pursuant to a liquidation of Units in accordance with Section
4.03 above) to which the assignor would be otherwise entitled to with
respect to the assigned Units.
By executing or otherwise adopting this Agreement, each Limited Partner
shall be deemed to have consented to any assignment of a Unit consented to
by the General Partner.
(b) The Partnership and the General Partner shall be entitled to treat
the record owner of any Units (as shown on the books of the Partnership) as
the absolute owner thereof for all purposes, and shall incur no liability
for distributions made to such owner.
(c) Each Limited Partner shall, in connection with the assignment of
any Unit, and upon the request of the General Partner, execute such
documents and perform such other acts as the General Partner deems
appropriate to preserve the limited liability status of the Partnership.
(d) A Limited Partner ceases to be a limited partner for all purposes
upon assignment of all of the Limited Partner's Units. No assignment
shall, however, relieve a Limited Partner of any obligation under this
Agreement without the express written consent of the General Partner.
(e) Any purported assignment of a Unit which is not made in compliance
with this Agreement is null and void and of no force and effect whatsoever.
For purposes of this Section 8.01, any transfer of a Unit in the
Partnership shall be considered an assignment, whether the transfer is
voluntary, involuntary, or by operation of law.
8.02 Assignee's Rights. An assignee of a Unit shall be entitled to receive
-----------------
distributions and to receive allocations of the profits and losses of the
Partnership attributable to such Unit after the effective date of the
assignment. The "effective date" of an assignment of a Unit under this Section
8.02 and Section 8.01 above shall be the date designated in the written
instrument whereby the General Partner consents to the assignment, which date
shall be not later than (but may in the sole discretion of the General Partner
be prior to) the first business day of the month next following the date on
which all conditions precedent to such assignment have been satisfied.
8.03 Substituted Limited Partner. Each Limited Partner shall have the right
---------------------------
to allow and cause an assignee of any of the Limited Partner's Units to become a
substituted Limited Partner with respect to those Units in the place of such
assigning Limited Partner, without the consent of the General Partner or any of
the other Partners. Any assignment effectuated in accordance with Section 8.01
above shall be deemed to cause the assignee to be a substituted Limited Partner
with respect to the assigned Units unless otherwise designated by the assignor.
In addition, and notwithstanding any reservations or objections of the assignor
of the Units, an assignee of any Units may be substituted as a Limited Partner
as to such Units upon and with the consent or vote of all of the Partners, other
than the assignor of the Units. By executing or adopting this Agreement, each
Limited Partner shall be deemed to have consented to any substitution of an
assignee of any Units in the place of the assignor.
8.04 Substitution Required for Vote. Unless and until an assignee of a Unit
------------------------------
becomes a substituted Limited Partner, the assignee shall not be entitled to
exercise any vote with respect to such Unit or otherwise have any rights of a
Limited Partner, except only as provided in Sections 8.01 and 8.02 above.
8.05 Effective Date of Substitution. The effective date of a substitution
------------------------------
of an assignee of a Unit made by the assignor shall be the effective date
specified in Section 8.02 above if the substitution is made at the time of the
assignment of the Unit, or upon receipt by the General Partner of written notice
thereof from the assignor if made at a later time. The effective date of a
substitution of an assignee of a Unit made pursuant to the consent or vote of
all of the other Partners pursuant to Section 8.03 above shall be the date upon
which the requisite consent or vote has been obtained.
8.06 Additional Limited Partners; Additional Contributions by Existing
-----------------------------------------------------------------
Partners. The General Partner shall have the right to admit additional Limited
- --------
Partners to the Partnership and to accept additional Capital Contributions from
existing Partners. Additional Limited Partners shall be admitted to the
Partnership effective on and as of the opening of trading on the first business
day of the month next following the date on which the General Partner accepts a
duly executed subscription
13
<PAGE>
agreement and the required applicable capital contribution from the Limited
Partner in question. By executing or otherwise adopting this Agreement, each
Limited Partner shall be deemed to have consented to the admission of all
additional Limited Partners admitted to the Partnership by the General Partner.
Additional Capital Contributions from existing Partners shall be in such amount
as is acceptable to the General Partner, in its sole discretion, and shall be
effective on and as of the opening of trading on the first business day of the
month next following the date of the General Partner's acceptance of the
additional Capital Contribution in question.
8.07 Bankruptcy, Death, Incapacity, Etc. of Limited Partner. The
------------------------------------------------------
withdrawal, insolvency, bankruptcy, termination, liquidation, dissolution, death
or other legal incapacity of a Limited Partner shall not cause a dissolution of
the Partnership. The rights of such a Limited Partner to share in the profits
and losses of the Partnership, to receive distributions of Partnership funds, to
assign such Limited Partner's Units and cause the substitution of a substituted
Limited Partner with respect to such Units, and to vote such Units shall, on the
happening of such an event, devolve on such Limited Partner's estate, trustee,
custodian, personal representative, or in the event of the death of one whose
Unit is held in joint tenancy, pass to the surviving joint tenant, in each case
subject to the terms and conditions of this Agreement. The estate of a deceased
or incapacitated Limited Partner shall be liable for all of the obligations of
such Limited Partner.
ARTICLE IX: Dissolution and Termination
9.01 Events of Dissolution.
---------------------
(a) The Partnership shall be dissolved and its affairs shall be wound
up:
(i) upon the occurrence of an event specified under the Act as
one causing or effecting dissolution (subject to any right to
reinstate the Partnership as may be provided under the Act);
(ii) upon the election of the General Partner, in the General
Partner's sole discretion, to terminate and dissolve the Partnership;
(iii) upon the General Partner withdrawing as or otherwise
ceasing to be the general partner of the Partnership, whether by
reason of an act or circumstance contemplated by this Agreement or the
Act, unless at the time there is at least one other general partner
and such remaining general partner continues and carries on the
business of the Partnership or unless the Limited Partners shall elect
to carry on the business of the Partnership pursuant to Section 9.03
below;
(iv) upon the affirmative vote of the Limited Partners who
collectively hold at least a Majority in Interest; or
(v) in any event, at 11:59 p.m. on December 31, 2050.
(b) The dissolution of the Partnership shall be effective on the day on
which the event giving rise to the dissolution occurs. The Partnership
shall not terminate, however, until the Certificate has been canceled and
the assets of the Partnership have been distributed as provided herein, and
the business of the Partnership and the affairs of the Partners shall
continue to be governed by this Agreement until the termination of the
Partnership. Upon dissolution, the General Partner, or if there be none, a
liquidator appointed by the Limited Partners who collectively hold at least
a Majority in Interest, shall liquidate the assets of the Partnership,
apply and distribute the proceeds thereof as provided by this Agreement and
cause the cancellation of the Certificate.
9.02 Distributions Upon Liquidation.
------------------------------
(a) After payment of liabilities owing to creditors (including, to the
extent permitted by law, to Partners who are creditors), the General
Partner or liquidator, as the case may be, shall set up such reserves as it
deems reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership. The reserves may
14
<PAGE>
be paid over and held in escrow in a bank account for the purpose of paying
any contingent or unforeseen liabilities or obligations, and at the
expiration of such period as the General Partner or liquidator may deem
advisable, such reserves shall be distributed to the Partners in the manner
set forth in Section 9.02(b) below.
(b) After paying such liabilities and providing for such reserves, the
General Partner or liquidator, as the case may be, shall cause the
remaining assets of the Partnership to be distributed to the Partners in
the proportion that the capital account of each Partner bears to the total
capital account of all Partners. If those distributions are insufficient to
return the full amount of any Partner's Capital Contribution, such Partner
shall have no recourse against any other Partner; provided, however, that
this provision shall not be interpreted as a waiver by any Partner of any
rights under existing and future laws regarding fiduciary duties of the
General Partner.
9.03 Election to Carry on Business. In the event of the withdrawal of the
-----------------------------
General Partner or the General Partner otherwise ceasing to be the General
Partner, the Limited Partners may, within ninety (90) days of such event, elect
to carry on the business of the Partnership with one or more substituted general
partner(s) by the unanimous affirmative vote of all Limited Partners.
ARTICLE X: Miscellaneous Restrictions on Partnership Relationships and
Activities
The following relationships or activities are prohibited or restricted, as
the case may be, as follows:
(a) The Partnership shall not make any loans to the General Partner or
any other person.
(b) The General Partner shall not receive any rebates or giveups nor
participate in any reciprocal business arrangements which circumvent the
restrictions set forth in this Article X and those against dealing with
affiliates or other interested parties.
(c) Neither the Partnership's commodity trading advisor nor any other
person acting in such capacity shall receive a management fee or an
advisory fee (which terms do not include an incentive fee) if such person
shares or participates, directly or indirectly, in any brokerage
commissions generated by the Partnership.
(d) The term of any contract between the Partnership and the
Partnership's commodity trading advisor or General Partner shall not exceed
one year and any such contract must be terminable without penalty upon
sixty (60) days written notice by the Partnership; provided, however, that
any such contract may provide for a continuous term or renewable terms so
long as such contract is otherwise terminable upon thirty (30) days or less
written notice by the Partnership.
(e) The Partnership shall not engage in pyramiding, which means using
all or a part of an unrealized profit in a futures contract position to
provide margin for any additional futures contracts of the same or related
commodities; provided, however, that taking into account the Partnership's
open trade equity on existing positions in determining generally whether to
acquire additional positions on behalf of the Partnership will not be
considered to constitute "pyramiding."
(f) All expenses of the Partnership shall be billed directly to and
paid by the Partnership or reimbursed to others upon receipt of
satisfactory evidence of payment.
(g) Neither the General Partner nor any affiliate of the General
Partner may receive interest, points or other financing charges on any
loan made by them to the Partnership.
(h) Any subscription agreement executed by a Limited Partner in
connection with the purchase of Units shall be retained by the General
Partner for 6 years.
15
<PAGE>
(i) The funds of the Partnership shall not be commingled with the funds
of the General Partner; provided, however, without limitation, that funds
used to satisfy margin requirements will not be considered commingled.
(j) The Partnership shall not permit "churning" of the Partnership's
assets.
ARTICLE XI: Amendments to Limited Partnership Agreement
11.01 Amendments Proposed. Amendments to this Agreement may be proposed by
-------------------
the General Partner by the General Partner giving a written notice of the
proposed amendment to the Limited Partners. Each such notice shall state that
the proposed amendment shall become effective thirty (30) days after the mailing
of such notice, unless Limited Partners holding ten percent (10%) or more of the
then outstanding Units shall object in writing to the General Partner prior to
that date. In the event of such objection, the matter may be resubmitted to the
Limited Partners in accordance with Section 6.03 above.
11.02 Amendments by General Partner.
-----------------------------
(a) Additions, deletions, amendments or other modifications may be made
to this Agreement and the Certificate by the General Partner without the
consent or approval of the Limited Partners: (i) to add to the duties or
obligations of or surrender any right or power granted to the General
Partner; (ii) to change the name of the Partnership; (iii) to cure any
ambiguity, to correct or supplement any inconsistent provisions, or to make
any other provisions which will not be inconsistent with the provisions of
this Agreement; (iv) to delete any provision of, add any provision to, or
amend or modify any provision of this Agreement as suggested by the CFTC,
the NFA, the SEC, the NASD, a state securities commissioner or similar such
official, or by any other domestic or foreign governmental authority; (v)
to attempt to ensure that the Partnership is not taxed as a corporation or
to effect the intent of the allocations herein to the maximum extent
possible in the event of a change in applicable laws affecting such
allocations; (vi) to prevent the Partnership or the General Partner or its
affiliates from being subject to the provisions of the United States
Investment Company Act of 1940, the United States Investment Advisers Act
of 1940, or regulations adopted under the United States Employee Retirement
Income Security Act of 1974, as amended, or any successor legislation;
(vii) to qualify the Partnership under the United States Investment Company
Act of 1940 and any persons under the United States Investment Company Act
of 1940 or the United States Investment Advisers Act of 1940, as amended,
or any successor legislation to any of the foregoing; (viii) to qualify or
maintain the qualification of the Partnership as a limited partnership in
any jurisdiction; (ix) to address or in response to any new or any change
or changes in the Act and/or applicable tax laws, rules, regulations,
rulings, procedures, orders, interpretive notices or otherwise; (x) to
effectuate Section 12.05 below; and (xi) to reflect the admission or
withdrawal of additional or substitute general partners. Provided, however,
that no amendment shall be adopted pursuant to this Section 11.02(a) unless
the adoption thereof (1) is not materially adverse to the interests of the
Limited Partners, (2) is consistent with Section 5.01 above, (3) does not
affect the distributions provided in Article IV above or the allocation of
profits or losses provided in Article III above, and (4) does not affect
the limited liability of the Limited Partners contemplated by Section 6.02
above or the status of the Partnership as a partnership for federal income
tax purposes. The power of attorney granted pursuant to Section 12.03
below and pursuant to any subscription agreement given by a Limited Partner
may be used by the General Partner to execute on behalf of a Limited
Partner any document evidencing an amendment adopted in accordance with the
terms of this Section 11.02(a).
(b) The General Partner shall provide the Limited Partners with a copy
of any amendment adopted pursuant to this Section 11.02.
ARTICLE XII: Miscellaneous
12.01 Notices. Any and all notices or other communications permitted or
-------
required to be made or given under this Agreement shall be in writing, signed by
the Partner giving the notice or other communication, and shall be personally
delivered or sent by mail or courier to the other Partner(s) at the address set
forth in the books and records of the Partnership, or at such other address as
may be supplied by written notice given in conformity with the terms of this
Section 12.01. The date of
16
<PAGE>
personal delivery or the date of mailing, as the case may be, shall be the date
of the giving of any notice or other communication for purposes of this
Agreement.
12.02 Successors and Assigns. Subject to the restrictions on transfer set
----------------------
forth herein, this Agreement shall be binding upon and shall inure to the
benefit of the Partners, their respective successors, legal representatives,
heirs and permitted assigns. Each successor-in-interest to any Partner shall
hold such interest upon and subject to all of the terms and conditions of this
Agreement.
12.03 Power of Attorney.
-----------------
(a) Each Limited Partner, including any additional or substituted
Limited Partner, by virtue of and as a condition to the acceptance of
Units, unconditionally adopts and consents to this Agreement, and also
irrevocably constitutes and appoints the General Partner and each
substitute or additional general partner, and each of them acting singly,
with full power of substitution, such Limited Partner's true and lawful
agent and attorney-in-fact, with full power and authority in such Limited
Partner's name, place and stead, to make, execute, acknowledge, swear to,
deliver, file and record all such documents and instruments as may be
appropriate to carry out this Agreement or the business of the Partnership,
including (i) the original Certificate and all amendments thereto; (ii) all
certificates and other instruments to permit the Partnership to become or
to continue as a limited partnership; (iii) all instruments that effect a
change or modification of the Partnership in accordance with this
Agreement, including the admission of additional Limited Partners and the
substitution of assignees as Limited Partners; (iv) all conveyances and
documents and instruments to effect the dissolution and termination of the
Partnership; (v) fictitious or assumed name certificates; and (vi) all
other documents or instruments which may be required or permitted by law to
be filed by or on behalf of the Partnership.
(b) The foregoing power of attorney:
(i) is coupled with an interest and shall be irrevocable and
survive the death or incapacity of each Limited Partner;
(ii) may be exercised by the General Partner by a single
signature of the General Partner acting as attorney-in-fact for all of
the Limited Partners; and
(iii) shall survive an assignment of Units by a Limited Partner.
(c) The grants of authority and powers of attorney set forth herein
are in addition and cumulative to any other grants of authority or powers
of attorney given by any Limited Partner in any other document, including
any subscription agreement. Each Limited Partner shall execute and deliver
to the General Partner, within five (5) days after receipt of the General
Partner's request, such further powers-of-attorney and other instruments as
the General Partner deems appropriate to carry out this Agreement.
12.04 Gender and Number. Words and phrases herein shall be construed as in
-----------------
the singular or plural number and as masculine, feminine or neuter gender,
according to the context.
12.05 Legends. If certificates for any Units are issued, each such
-------
certificate shall bear all such legends as the General Partner, in its sole
discretion, determines to be appropriate to give notice of this Agreement or to
comply with any applicable law, rule or regulation, including securities laws,
rules and regulations. The General Partner shall also have the right to place
any such legends upon this Agreement.
12.06 Affiliate; Person. For purposes of this Agreement, the term
-----------------
"affiliate" when used with reference to a specified person shall mean any person
that directly or indirectly controls or is controlled by or is under common
control with the specified person. For purposes of this Agreement, the term
"person" means any individual, partnership, corporation, trust or other form of
entity whatsoever.
17
<PAGE>
12.07 No Waiver. The failure of any Partner to insist upon strict
---------
performance of this Agreement, irrespective of the length of time for which such
failure continues, shall not be a waiver of such Partner's right to demand
strict compliance in the future. No consent or waiver to or of any breach or
default of this Agreement shall constitute a consent or waiver to or of any
other similar or different breach or default.
12.08 Entire Agreement. This Agreement constitutes the full and complete
----------------
agreement of the parties hereto with respect to the subject matters hereof and
supersedes all negotiations, preliminary agreements and all prior or
contemporaneous discussions and understandings of the parties hereto in
connection with the subject matters hereof.
12.09 Captions. The titles or captions of Articles or Sections in this
--------
Agreement are for convenience of reference only, and in no way define, limit,
extend or describe the scope or extent of this Agreement or the intent of any
provision hereof.
12.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which together shall constitute one agreement, binding on
all the Partners notwithstanding that all Partners have not signed the same
counterpart.
12.11 Applicable Law. This Agreement shall be governed by and interpreted,
--------------
construed and enforced in accordance with the laws of the State of Iowa, but
without regard to provisions thereof relating to conflicts of law.
IN WITNESS WHEREOF, the General Partner and the Initial Limited Partner
executed this Limited Partnership Agreement as of the 26th day of May, 1998.
GENERAL PARTNER: INITIAL LIMITED PARTNER:
PORTFOLIO BOOST, L.L.C.
By: /s/ Jeffrey A. Raun By: /s/ Jeffrey A. Raun
---------------------------- -----------------------------
Jeffrey A. Raun, President Jeffrey A. Raun
18
<PAGE>
Exhibit B
Subscription Documents
<PAGE>
SUBSCRIPTION AGREEMENT
TO UNITS IN
PORTFOLIO BOOST I, L.P.
________________________________________________________________________________
THESE SECURITIES, IN THE FORM OF UNITS OF LIMITED PARTNERSHIP INTEREST IN
PORTFOLIO BOOST I, L.P., AN IOWA LIMITED PARTNERSHIP, CANNOT BE SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
FEDERAL AND APPLICABLE STATE SECURITIES LAWS AND WITH THE LIMITED PARTNERSHIP
AGREEMENT OF PORTFOLIO BOOST I, L.P.
THE BUSINESS OF PORTFOLIO BOOST I, L.P. IS HIGHLY SPECULATIVE AND VOLATILE
AND INVOLVES A HIGH DEGREE OF RISK. SUBSCRIBERS MUST CAREFULLY READ THE ENTIRE
PROSPECTUS OF PORTFOLIO BOOST I, L.P. IN ORDER TO FULLY UNDERSTAND AND
COMPREHEND THE BUSINESS OF AND THE RISKS ASSOCIATED WITH AN INVESTMENT IN
PORTFOLIO BOOST I, L.P. AND IN ORDER TO DETERMINE THAT AN INVESTMENT IN
PORTFOLIO BOOST I, L.P. IS A SUITABLE AND APPROPRIATE ONE FOR THE SUBSCRIBER.
NO OFFICER, EMPLOYEE OR AGENT OF PORTFOLIO BOOST I, L.P. OR ANY DEALER,
SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OTHER THAN
THAT CONTAINED IN THE PROSPECTUS OF PORTFOLIO BOOST I, L.P. OR IN ANY OTHER
WRITTEN MATERIALS EXPRESSLY APPROVED BY PORTFOLIO BOOST I, L.P., OR TO IN ANY
EVENT MAKE ANY REPRESENTATIONS, WARRANTIES OR GUARANTEES WHATSOEVER AND, IF
GIVEN OR MADE, SUCH INFORMATION, REPRESENTATIONS, WARRANTIES OR GUARANTEES MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED OR OTHERWISE GIVEN BY PORTFOLIO
BOOST I, L.P. ANY MATERIALS OTHER THAN THE PROSPECTUS ARE SUMMARIES AND GENERAL
DESCRIPTIONS ONLY, AND SUBSCRIBERS MUST MAKE ANY DECISION TO INVEST IN PORTFOLIO
BOOST I, L.P. BASED SOLELY ON THE INFORMATION SET FORTH IN THE PROSPECTUS OF
PORTFOLIO BOOST I, L.P.
________________________________________________________________________________
1. ADOPTION. The undersigned (referred to as "Subscriber") hereby agrees
--------
to become a Limited Partner in Portfolio Boost I, L.P., an Iowa limited
partnership (the "Partnership"), and specifically accepts and adopts and agrees
to be bound by each and every provision of the Portfolio Boost I, L.P. Limited
Partnership Agreement, as amended to date and as may be amended from time to
time (the "Partnership Agreement").
2. SUBSCRIPTION. Subscriber agrees to purchase units of limited
------------
partnership interest in the Partnership ("Units") equal to the dollar amount set
forth on the signature page hereto in accordance with and on the terms and
conditions set forth in this Subscription Agreement and in the Partnership's
Prospectus (the "Prospectus"). Subscriber acknowledges receipt of the
Prospectus. Capitalized terms not otherwise defined herein shall have the
meanings given them in the Prospectus.
The purchase price per Unit prior to the commencement of trading by the
Partnership is $1,000. The purchase price per Unit after that time shall be the
Net Asset Value Per Unit as of the opening of trading on the effective date of
the purchase, which will be the first business day of the month next following
the date on which
<PAGE>
the General Partner (as that term is defined in Section 3 below) accepts this
Subscription Agreement and the purchase price from Subscriber. The Partnership
will issue fractional Units, rounded up to the sixth decimal point, to the
extent necessary to fill an accepted subscription.
A minimum initial investment of $10,000 is required, but the General Partner
reserves the right to require a higher minimum initial investment from any
subscriber or subscribers. Subsequent investments by existing Limited Partners
in the Partnership may be in such amounts as may be accepted by the General
Partner from time to time, in the General Partner's sole discretion.
3. PAYMENT AND DELIVERY OF DOCUMENTS. Prior to the release of
---------------------------------
subscription payments from escrow as described in Section 4 below, Subscriber
shall tender to Portfolio Boost, L.L.C., an Iowa limited liability company
serving as the general partner of the Partnership (the "General Partner"),
Subscriber's check in the dollar amount set forth on the signature page hereto
made payable to "First American Bank--Escrow Agent for PB I." Following the
release of subscription payments from escrow, Subscriber shall tender to the
General Partner Subscriber's check in the dollar amount set forth on the
signature page hereto made payable to "Portfolio Boost I, L.P." Payment of the
dollar amount set forth on the signature page hereto shall constitute
Subscriber's capital contribution to the Partnership.
The executed signature page to this Agreement and Subscriber's payment
should be forwarded to the Partnership at the address set forth in the
Prospectus. Subscriber shall also forward the other Subscription Documents (as
that term is defined in the Prospectus) to that address. Subscriber acknowledges
that the General Partner or Vacation Investors, Inc. (the "Underwriter") may
request additional information from Subscriber in connection with this
subscription.
4. ESCROW ACCOUNT. Subscription payments will initially be deposited and
--------------
held in a separate escrow account at First American Bank, Fort Dodge, Iowa,
pending receipt, acceptance and collection of subscriptions totaling $500,000.
Subscription payments deposited in the escrow account may not be withdrawn by
Subscriber under any circumstances. If subscriptions totaling $500,000 are not
received and accepted within nine (9) months of the date of the initial
Prospectus utilized by the Partnership in offering its units of limited
partnership interest, the Partnership will terminate the offering and all
amounts paid by Subscriber will be returned to Subscriber within ten (10)
business days of the close of said nine (9) month period, without deduction and
together with Subscriber's pro rata share of all amounts earned in excess of the
subscriptions received, if any. If subscriptions for $500,000 are received and
accepted by the designated date, the escrowed funds (including all earnings
thereon) will be released to the Partnership, and the Partnership shall
thereafter commence trading at such time as is determined by the Commodity
Trading Advisor for the Partnership.
No escrow will be utilized for subscriptions received and accepted following
the release of funds from escrow to the Partnership as provided above.
5. ACCEPTANCE OR REJECTION OF SUBSCRIPTION. Subscriber acknowledges and
---------------------------------------
agrees that this subscription shall not be effective until accepted in writing
by the General Partner and that the General Partner reserves the right to reject
this subscription in whole or in part. Subscriptions may be rejected for failure
to conform to the requirements of the offering, insufficient documentation,
oversubscription of the offering or for such other reason or reasons as the
General Partner may determine, in its sole discretion. In the event of rejection
of this subscription in whole, Subscriber's payment will promptly be returned to
Subscriber without deduction and this Subscription Agreement shall have no
further force or effect. In the event of rejection of this subscription in part,
the rejected amount of Subscriber's payment will be promptly returned to
Subscriber, but in that circumstance this Subscription Agreement shall remain in
full force and effect. Subscriber shall not be
-2-
<PAGE>
entitled to receive any interest or other earnings on Subscriber's subscription
in the event of rejection of this subscription, in whole or in part, by the
General Partner.
6. ADMISSION TO PARTNERSHIP. In the event Subscriber's subscription is
------------------------
accepted by the General Partner and the minimum offering contingency specified
in Section 4 above is satisfied, Subscriber shall be admitted to the Partnership
as a Limited Partner in accordance with the following:
(a) If Subscriber's subscription is accepted by the General Partner
prior to the release of funds from escrow, Subscriber shall be admitted to
the Partnership as a Limited Partner as of the date on which such escrowed
funds are released to the Partnership.
(b) If Subscriber's subscription is accepted by the General Partner
after release of funds from escrow, Subscriber shall be admitted to the
Partnership as a Limited Partner effective as of the time provided in the
Partnership Agreement.
7. REPRESENTATIONS, WARRANTIES, ACKNOWLEDGMENTS AND AGREEMENTS.
-----------------------------------------------------------
Subscriber represents, warrants, acknowledges and agrees that:
(a) Subscriber is a resident of the State set forth on the signature
page hereto (the "State"), and
(i) if Subscriber is a corporation, partnership, trust or other
form of organization or entity, Subscriber has its principal office in the
State, and Subscriber was not organized for the specific purpose of
acquiring Units; or
(ii) if Subscriber is an individual, Subscriber is of full
legal age in the State, is legally competent to execute this Subscription
Agreement, and has his or her principal residence in the State.
(b) If Subscriber is not a natural person, Subscriber either (i) is not
engaged in the business of or operated for the purpose of trading in
futures or options, or (ii) if Subscriber is engaged in such business or
operated for such purpose, Subscriber has obtained or is exempt from
obtaining all licenses, registrations, memberships, consents or approvals
as are required therefor by any governmental or regulatory authority,
including, without limitation, the Commodity Futures Trading Commission and
the National Futures Association. Subscriber shall maintain, or maintain
its exemption from, as the case may be, all such licenses, registrations,
memberships, consents or approvals throughout the entire time Subscriber
holds any Units. Any information requested from Subscriber pursuant to
Section 7(d) below regarding this subparagraph (b) may be filed with or
provided to the applicable governmental or regulatory authority if
requested by such authority or if otherwise determined to be appropriate by
the Partnership.
(c) Subscriber is making the representations, warranties,
acknowledgments and agreements in this Subscription Agreement with the
intent that the same may be relied upon by the General Partner and the
Partnership in determining compliance with federal and state securities
laws and in determining the suitability of Subscriber as a purchaser of
Units and a Limited Partner in the Partnership. Subscriber understands that
no federal or state agency has recommended or endorsed the Units or made
any finding or determination as to the fairness,
-3-
<PAGE>
accuracy or completeness of the provisions hereof or of the Partnership
Agreement, the Prospectus, the Units or the offering of the Units.
(d) The General Partner or the Underwriter may at any time (including
after Subscriber has become a Limited Partner) require Subscriber to submit
such additional information and documentation as they deem necessary or
appropriate to ascertain that Subscriber's investment in the Partnership is
appropriate in light of the suitability standards imposed for the offering
and Subscriber's investment objectives and financial situation or to
establish or otherwise evidence or substantiate compliance with the
requirements of the Partnership's offering, this Subscription Agreement or
federal or state securities laws or regulations, including, without
limitation, a purchaser questionnaire, financial statements of Subscriber
and a letter from Subscriber justifying the suitability of Subscriber's
investment in the Partnership and containing such additional disclosures
and additional representations and warranties from Subscriber as the
General Partner determines to be necessary or appropriate to establish or
otherwise evidence or substantiate compliance with the requirements of the
Partnership's offering, this Subscription Agreement or any federal or state
securities laws or regulations. All such additional information and
documentation will be true and accurate in all respects.
(e) The General Partner shall have the right to accept or reject
Subscriber's subscription in whole or in part. Subscriptions may be
rejected for, without limitation, failure to conform to the requirements of
the Partnership's offering, insufficient documentation, oversubscription of
the offering, or for any such other reason as the General Partner may
determine, in its sole discretion.
(f) Subscriber has received and carefully read and is familiar with
the Prospectus (including, without limitation, the sections in the
Prospectus setting forth the risk factors and conflicts of interest
applicable to an investment in the Partnership and the fees payable by the
Partnership to the General Partner and others), the Partnership Agreement
and this Subscription Agreement, and confirms that all documents
incorporated in the Prospectus and all records and books pertaining to the
investment in the Units made pursuant to this Subscription Agreement have
been made available to Subscriber.
(g) Subscriber has had access, during the course of this transaction
and prior to sale, to all information necessary to enable Subscriber to
evaluate the merits and risks of a prospective investment in Units and the
Partnership, and Subscriber has had the opportunity to ask questions of and
receive answers from the General Partner, or a person or persons acting on
the General Partner's behalf, concerning the terms and conditions of the
offering and the opportunity to obtain any additional information which the
Partnership or the General Partner possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
the information contained in and incorporated in the Prospectus or to which
Subscriber has had access; and all questions raised by Subscriber have been
answered to the full satisfaction of Subscriber.
(h) Subscriber (i) is acquiring the Units for Subscriber's own account
for investment only and not with a view to the distribution, resale or
transfer thereof, and as the sole record and beneficial holder thereof,
(ii) is acquiring such Units without any intention of reselling or
distributing any of such Units except in accordance with the provisions of
the
-4-
<PAGE>
Securities Act of 1933 (the "Act") and rules and regulations promulgated
thereunder and applicable state securities laws and regulations and with
the provisions of the Partnership Agreement, and (iii) agrees that the
Units shall not be sold, pledged, hypothecated, donated or otherwise
transferred, whether or not for consideration, by Subscriber except in
accordance with such laws, rules and regulations and with the Partnership
Agreement.
(i) Subscriber understands and agrees that (i) the effect of the foregoing
subparagraph (h) is that Subscriber shall be restricted from selling or
otherwise transferring or disposing of any of the Units except in
accordance with the Partnership Agreement and pursuant to a registration
statement rendered effective under the Act and applicable state securities
laws, or at some indeterminable date in the future, in accordance with the
Partnership Agreement and an applicable exemption from registration which
is the subject of a favorable legal opinion rendered by counsel for the
Partnership, and (ii) as of the date hereof, the Partnership and the
General Partner have no legal obligation to include the Units in any
registration statement to be filed under the Act or applicable state
securities laws.
(j) Subscriber understands the fundamental aspects of the business and the
pool to be conducted by the Partnership and the nature and extent of the
management and control by the General Partner and the Commodity Trading
Advisor over the Partnership as a whole, including, but not limited to: (i)
the trading methods to be used and decisions made in the trading of
futures, options or other interests by the Partnership; (ii) the transfer
of Units and the ability or right of a transferee of a Unit to become a
substituted Limited Partner; (iii) the making of distributions by the
Partnership; and (iv) the ability or right of a Limited Partner to redeem
or liquidate its Units.
(k) Subscriber understands that the Units are a highly speculative
investment which involve a high degree of risk, including the possibility
of the loss of a substantial portion or all of the investment, and that
neither the Partnership nor the General Partner make any representation or
warranty as to, and that there is no assurance of, any economic, income,
tax, profits or other benefits whatsoever from an investment in the Units.
Subscriber also understands that the Partnership may not ever accomplish
any of the purposes or objectives of the Partnership.
(l) Subscriber understands that the Partnership Agreement establishes
substantial restrictions on the transferability and liquidation of Units,
including, but not limited to, the consent of the General Partner.
Accordingly, Subscriber also understands that Subscriber will need to bear
the economic risk of the investment in the Units for an indefinite period
of time and will not be readily able to liquidate the Units in case of an
emergency.
(m) Subscriber understands the tax consequences of an investment in the
Units and the Partnership and that any federal or state income or other tax
benefits which may be available to Subscriber may be lost through changes
to, or in the interpretation of, existing laws and regulations. Subscriber
is relying solely upon the advice of Subscriber's personal tax advisors
with respect to all tax aspects of an investment in the Units and the
Partnership.
(n) Subscriber has such knowledge and experience in financial and business
matters that Subscriber is capable of evaluating the merits and risks of an
investment in the Units. Subscriber is able to bear the economic risk of
the investment in the Units, and
-5-
<PAGE>
Subscriber has adequate financial or other means for providing for
Subscriber's current and anticipated needs and contingencies and has no
need for liquidity in this investment.
(o) If Subscriber is not a resident of the State of California or an
entity with its principal place of business in California, Subscriber has
at least either: (i) a minimum net worth (determined exclusive of home,
home furnishings and automobiles) of $150,000; or (ii) a minimum annual
gross income of $45,000 and a minimum net worth (once again determined
exclusive of home, home furnishings and automobiles) of $45,000. In the
case of sales to fiduciary accounts, the net worth and income standards may
be met by the beneficiary, the fiduciary account, or by the donor or
grantor who directly or indirectly supplies the funds to purchase the
Units.
(p) If Subscriber is a resident of the State of California or is an
entity with its principal place of business in California, Subscriber has
at least either (i) a minimum net worth (determined exclusive of home, home
furnishings and automobiles) of $250,000; or (ii) a minimum annual gross
income of $65,000 and a minimum net worth (once again determined exclusive
of home, home furnishings and automobiles) of $100,000. In the case of
sales to fiduciary accounts, the net worth and income standards may be met
by the beneficiary, the fiduciary account, or by the donor or grantor who
directly or indirectly supplies the funds to purchase the Units.
(q) Subscriber understands that a notation will be made on the
records of the Partnership regarding the restrictions on transferability of
the Units, and that the Partnership Agreement may also contain legends
addressing the restrictions on transferability of the Units.
(r) Subscriber understands that as of the date of the Prospectus the
Partnership had no financial or operating history.
(s) This Subscription Agreement has been duly authorized, executed
and delivered by Subscriber and constitutes the valid, legal and binding
obligation of Subscriber, enforceable in accordance with its terms.
8. APPOINTMENT OF POWER OF ATTORNEY.
--------------------------------
(a) Subscriber hereby constitutes and appoints the General Partner
(and any additional or substitute general partner's from time to time)
the true and lawful attorney-in-fact
-6-
<PAGE>
of Subscriber with full power and authority for Subscriber, and in the name
of Subscriber, to make and execute and, if required or if advisable,
acknowledge, file and publish wherever appropriate:
(i) The Partnership Agreement and all authorized or required
amendments thereto;
(ii) The Certificate of Limited Partnership of the Partnership
and any and all certificates of amendments thereto, and all fictitious
name certificates, as may be required by or appropriate under the laws
of Iowa or any other jurisdiction;
(iii) Any other instrument which may be required to be filed by
the Partnership under the laws of any jurisdiction or by any
governmental agency or authority, or which the General Partner deems
it advisable to file in order to effectuate any offering of units of
limited partnership interest by the Partnership, or the terms and
provisions of this Subscription Agreement, the Prospectus or the
Partnership Agreement; and
(iv) Any documents which may be required to effect or report the
continuation of the Partnership, the admission of initial, additional
or substituted Limited Partners or general partners, the withdrawal or
reduction of capital contributions or the dissolution and termination
of the Partnership in accordance with this Subscription Agreement or
the Partnership Agreement.
(b) The foregoing grant of authority:
(i) Is a special power of attorney coupled with an interest,
is irrevocable, and shall not be affected by and shall survive the
death, disability, incompetence, dissolution or other termination of
Subscriber;
(ii) May be exercised by the General Partner either by signing
separately as attorney-in-fact for Subscriber or by a single signature
of the General Partner acting as attorney-in-fact for all of the
parties executing any instrument; and
(iii) Shall survive the delivery of an assignment of a Unit by
Subscriber.
(c) Subscriber acknowledges and agrees that the Partnership Agreement
also contains a grant of authority and power of attorney by each and all of
the Limited Partners to the General Partner, and that Subscriber, by
adoption of the Partnership Agreement hereby, also grants such authority
and power of attorney to the General Partner. The grants of authority and
powers of attorney set forth herein and in the Partnership Agreement are
each respectively in addition and cumulative to the other, and neither
restricts or limits the other.
9. CORRECT AND CURRENT INFORMATION. Subscriber represents and
-------------------------------
warrants that all of the information set forth herein as it relates to
Subscriber is true, correct and complete as of the date hereof.
-7-
<PAGE>
Subscriber further represents, warrants and agrees that if there should be any
change in any of such information prior to Subscriber's admission to the
Partnership as a Limited Partner, Subscriber shall immediately furnish such
revised or corrected information to the General Partner. Without limiting the
generality of the foregoing, Subscriber agrees to furnish the General Partner
with written notice of any change of address of Subscriber. If Subscriber is an
entity, Subscriber and the individual(s) executing this Subscription Agreement
on behalf of Subscriber each represent and warrant that (i) such individual(s)
is of full legal age and is otherwise legally competent to execute this
Subscription Agreement; (ii) such individual(s) has full power and authority to
execute this Subscription Agreement on behalf of Subscriber and to make the
representations, warranties, acknowledgments and agreements contained herein for
Subscriber and on Subscriber's behalf; (iii) Subscriber is authorized to become
a Limited Partner in, and to make Subscriber's capital contribution to, the
Partnership; and (iv) the purchase of the Units and the investment in the
Partnership by Subscriber has been authorized by the governing board of
Subscriber (if required) and is not prohibited by the governing documents of
Subscriber.
10. INDEMNIFICATION BY SUBSCRIBER. Subscriber understands that the
-----------------------------
offer, sale and issuance of the Units to Subscriber were and will be based upon
the representations, warranties, acknowledgments and agreements of Subscriber
contained herein. Subscriber hereby agrees to defend and indemnify the
Partnership, the General Partner, the Underwriter and any person or entity
acting for or on the Partnership's, the General Partner's or the Underwriter's
behalf with respect to the offer, sale and/or issuance of the Units, and to hold
the Partnership, the General Partner, the Underwriter and each such person or
entity harmless from and against all losses, liabilities, damages, costs or
expenses (including, without limitation, court costs, arbitration costs and
reasonable attorneys' fees) arising by reason of or in connection with (i) any
misrepresentation or any breach or default of any representation, warranty,
acknowledgment or agreement by Subscriber; (ii) any sale or distribution of
Units by Subscriber in violation of this Subscription Agreement, the Partnership
Agreement, the Act, or any applicable state securities laws; or (iii)
Subscriber's failure to fulfill any of Subscriber's other agreements set forth
herein.
11. REVOCATION. Except only as may be expressly provided by applicable
----------
securities laws, Subscriber agrees that Subscriber shall not and cannot cancel,
terminate or revoke this Subscription Agreement or any representation, warranty,
acknowledgment or agreement of Subscriber made hereunder or herein and that (if
Subscriber is an individual) this Subscription Agreement shall survive the
death, disability or incompetence of Subscriber.
12. MISCELLANEOUS. This Subscription Agreement shall be construed in
-------------
accordance with and governed by the laws of the State of Iowa. This Subscription
Agreement constitutes the entire agreement among the parties hereto with respect
to the subject matters hereof and may be amended only by a writing executed by
all parties. Words and phrases herein shall be construed as in the singular or
plural number and as masculine, feminine or neuter gender, according to the
context. The remedies provided herein to the Partnership, the General Partner,
the Underwriter and their agents are cumulative and are not exclusive of any
rights or remedies that may be available to any of them at law, in equity or
otherwise. In the event any provision of this Subscription Agreement is held
invalid, illegal or unenforceable, in whole or in part, the remaining provisions
of this Subscription Agreement shall not be affected thereby and shall continue
to be valid and enforceable. In the event any provision of this Subscription
Agreement is held to be invalid, illegal or unenforceable as written, but valid,
legal and enforceable if modified, then such provision shall be deemed to be
amended to such extent as shall be necessary for such provision to be valid,
legal and enforceable and it shall be enforced to that extent. This Subscription
Agreement and the representations, warranties, acknowledgments and agreements
contained herein shall be binding upon the heirs, legal representatives,
successors and assigns of Subscriber.
[SIGNATURE PAGE FOLLOWS]
-8-
<PAGE>
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR INDIVIDUALS
---------------
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this ___ day of __________________, ____.
PLEASE PRINT SUBSCRIPTION AMOUNT $__________
Name(s) of Individual(s) __________________________________________________
Residence Address: __________________________________________________
__________________________________________________
Social Security __________________________________________________
Numbers: __________________________________________________
TITLE IS TO BE HELD IN EQUAL SHARES AS (STRIKE OUT THE ONE THAT DOES NOT APPLY,
IF NO DESIGNATION IS MADE, TITLE WILL BE JTWFRS):
(A) JOINT TENANTS, WITH FULL RIGHTS OF SURVIVORSHIP
(B) TENANTS IN COMMON
SIGNATURE(S): _________________________________________________
_________________________________________________
________________________________________________________________________________
VACATION INVESTORS, INC. CERTIFICATION
The undersigned certifies that: (1) the undersigned has informed
Subscriber of all pertinent facts relating to the liquidity and marketability of
the Units as set forth in the Prospectus; and (2) the undersigned has reasonable
grounds to believe (on the basis of information obtained from Subscriber
concerning such Subscriber's investment objectives, other investments, financial
situation and needs, and any other information known by the undersigned), that
(a) Subscriber is or will be in a financial position appropriate to enable
Subscriber to realize to a significant extent the benefits described in the
Prospectus, (b) Subscriber has a fair market net worth sufficient to sustain the
risks inherent in the Partnership (including loss of investment and lack of
liquidity), and (c) the Partnership is otherwise a suitable investment for
Subscriber.
VACATION INVESTORS, INC.
Date: ________________________ By:___________________________________________
Jeffrey A. Raun, Registered Representative
________________________________________________________________________________
ACCEPTANCE
The foregoing subscription and agreement to purchase units of limited
partnership interest in Portfolio Boost I, L.P. is accepted.
PORTFOLIO BOOST I, L.P.
By: Portfolio Boost, L.L.C.
General Partner
Date of Acceptance:___________ By:_____________________________
Jeffrey A. Raun, President
<PAGE>
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR
QUALIFIED RETIREMENT PLANS AND IRAS
-----------------------------------
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this ___ day of ______________________, ____.
PLEASE PRINT SUBSCRIPTION AMOUNT $_________
Name: ________________________________________________
Residence Address: ________________________________________________
________________________________________________
Social Security Number: ________________________________________________
Signature: ________________________________________________
Name of Trustee/Fiduciary: ________________________________________________
Taxpayer I.D. Number: ________________________________________________
Address of ________________________________________________
Trustee/Fiduciary: ________________________________________________
Name and Title of Person
signing on behalf of
Trustee/Fiduciary ________________________________________________
Title
Signature of person
Signing on behalf of
Trustee/Fiduciary _______________________________________________
________________________________________________________________________________
VACATION INVESTORS, INC. CERTIFICATION
The undersigned certifies that: (1) the undersigned has informed Subscriber
of all pertinent facts relating to the liquidity and marketability of the Units
as set forth in the Prospectus; and (2) the undersigned has reasonable grounds
to believe (on the basis of information obtained from Subscriber concerning such
Subscriber's investment objectives, other investments, financial situation and
needs, and any other information known by the undersigned), that (a) Subscriber
is or will be in a financial position appropriate to enable Subscriber to
realize to a significant extent the benefits described in the Prospectus, (b)
Subscriber has a fair market net worth sufficient to sustain the risks inherent
in the Partnership (including loss of investment and lack of liquidity), and (c)
the Partnership is otherwise a suitable investment for Subscriber.
VACATION INVESTORS, INC.
Date: __________________ By:____________________________________________
Jeffrey A. Raun, Registered Representative
________________________________________________________________________________
ACCEPTANCE
The foregoing subscription and agreement to purchase units of limited
partnership interest in Portfolio Boost I, L.P. is accepted.
PORTFOLIO BOOST I, L.P.
By: Portfolio Boost, L.L.C.
General Partner
Date of Acceptance:__________ By:______________________________
Jeffrey A. Raun, President
<PAGE>
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR
UNIFORM GIFTS TO MINORS
-----------------------
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this ___ day of ______________________, ____.
PLEASE PRINT SUBSCRIPTION AMOUNT $_________
Account Name: ____________________________ as custodian for ____________________
under the _______________________ Uniform Gifts/Transfers to Minors Act
(State)
Address of __________________________________________________________
Minor: __________________________________________________________
Social Security
Number of Minor: __________________________________________________________
Name and
Relationship of
Custodian to Minor: __________________________________________________________
Address of __________________________________________________________
Custodian: __________________________________________________________
Signature of
Custodian: __________________________________________________________
________________________________________________________________________________
VACATION INVESTORS, INC. CERTIFICATION
The undersigned certifies that: (1) the undersigned has informed
Subscriber of all pertinent facts relating to the liquidity and marketability of
the Units as set forth in the Prospectus; and (2) the undersigned has reasonable
grounds to believe (on the basis of information obtained from Subscriber
concerning such Subscriber's investment objectives, other investments, financial
situation and needs, and any other information known by the undersigned), that
(a) Subscriber is or will be in a financial position appropriate to enable
Subscriber to realize to a significant extent the benefits described in the
Prospectus, (b) Subscriber has a fair market net worth sufficient to sustain the
risks inherent in the Partnership (including loss of investment and lack of
liquidity), and (c) the Partnership is otherwise a suitable investment for
Subscriber.
VACATION INVESTORS, INC.
Date: ____________________________ By:____________________________
Jeffrey A. Raun, Registered
Representative
________________________________________________________________________________
ACCEPTANCE
The foregoing subscription and agreement to purchase units of limited
partnership interest in Portfolio Boost I, L.P. is accepted.
PORTFOLIO BOOST I, L.P.
By: Portfolio Boost, L.L.C.
General Partner
Date of Acceptance:______________ By:_________________________________
Jeffrey A. Raun, President
<PAGE>
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR
TRUSTS
------
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this ___ day of ______________________, ____.
PLEASE PRINT AMOUNT: $_________
Name of Trust: _____________________________________________________________
Address: _____________________________________________________________
_____________________________________________________________
Taxpayer
Identification
Number: _____________________________________________________________
Names of
Beneficiaries
of Trust: _____________________________________________________________
Document Forming
the Trust: _____________________________________________________________
Name of Trustee _____________________________________________________________
/Fiduciary:
Address of
Trustee/Fiduciary: _____________________________________________________________
Name and Title of
Person signing on
behalf of Trustee
/Fiduciary _____________________________________________________________
Title
Signature of person
Signing on behalf of
Trustee/Fiduciary _____________________________________________________________
________________________________________________________________________________
VACATION INVESTORS, INC. CERTIFICATION
The undersigned certifies that: (1) the undersigned has informed
Subscriber of all pertinent facts relating to the liquidity and marketability of
the Units as set forth in the Prospectus; and (2) the undersigned has reasonable
grounds to believe (on the basis of information obtained from Subscriber
concerning such Subscriber's investment objectives, other investments, financial
situation and needs, and any other information known by the undersigned), that
(a) Subscriber is or will be in a financial position appropriate to enable
Subscriber to realize to a significant extent the benefits described in the
Prospectus, (b) Subscriber has a fair market net worth sufficient to sustain the
risks inherent in the Partnership (including loss of investment and lack of
liquidity), and (c) the Partnership is otherwise a suitable investment for
Subscriber.
VACATION INVESTORS, INC.
Date: ____________________________ By:___________________________________
Jeffrey A. Raun, Registered
Representative
________________________________________________________________________________
ACCEPTANCE
The foregoing subscription and agreement to purchase units of limited
partnership interest in Portfolio Boost I, L.P. is accepted.
PORTFOLIO BOOST I, L.P.
By: Portfolio Boost, L.L.C.
General Partner
Date of Acceptance:______________ By:_________________________________
Jeffrey A. Raun, President
<PAGE>
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR
CORPORATIONS, LIMITED LIABILITY COMPANIES, PARTNERSHIPS AND OTHER ENTITIES
--------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this ___ day ________________________, ____.
PLEASE PRINT SUBSCRIPTION AMOUNT $________
Name of Entity ____________________________________________________________
Address: ____________________________________________________________
____________________________________________________________
Taxpayer
Identification
Number: ____________________________________________________________
State of
Organization or
Incorporation: ____________________________________________________________
Name and Title of
Person(s) Signing
for Entity ____________________________________________________________
Title
____________________________________________________________
Title
SIGNATURE(S): ____________________________________________________________
____________________________________________________________
________________________________________________________________________________
VACATION INVESTORS, INC. CERTIFICATION
The undersigned certifies that: (1) the undersigned has informed
Subscriber of all pertinent facts relating to the liquidity and marketability of
the Units as set forth in the Prospectus; and (2) the undersigned has reasonable
grounds to believe (on the basis of information obtained from Subscriber
concerning such Subscriber's investment objectives, other investments, financial
situation and needs, and any other information known by the undersigned), that
(a) Subscriber is or will be in a financial position appropriate to enable
Subscriber to realize to a significant extent the benefits described in the
Prospectus, (b) Subscriber has a fair market net worth sufficient to sustain the
risks inherent in the Partnership (including loss of investment and lack of
liquidity), and (c) the Partnership is otherwise a suitable investment for
Subscriber.
VACATION INVESTORS, INC.
Date: ____________________________ By:__________________________________
Jeffrey A. Raun, Registered
Representative
________________________________________________________________________________
ACCEPTANCE
The foregoing subscription and agreement to purchase units of limited
partnership interest in Portfolio Boost I, L.P. is accepted.
PORTFOLIO BOOST I, L.P.
By: Portfolio Boost, L.L.C.
General Partner
Date of Acceptance:______________ By:_________________________________
Jeffrey A. Raun, President
<PAGE>
PORTFOLIO BOOST I, L.P.
SUITABILITY STANDARDS REQUIREMENT
FOR NON-CALIFORNIA RESIDENTS
- ----------------------------
I(We) have read the Prospectus and Subscription Agreement and attest that I(we)
qualify for an investment in Portfolio Boost I, L.P. I(We) understand one
requirement I(we) must meet in order to qualify is that I(we) must meet one or
more of the qualifications below:
Qualifications:
- --------------
1. I(We) have a minimum annual gross income of $45,000 and a minimum net worth
(determined exclusive of home, home furnishings and automobiles) of
$45,000.
or,
2. I(We) have a minimum net worth (determined exclusive of home, home
furnishings and automobiles) of $150,000.
FOR CALIFORNIA RESIDENTS
- ------------------------
I(We) have read the Prospectus and Subscription Agreement and attest that I(we)
qualify for an investment in Portfolio Boost I, L.P. I(We) understand one
requirement I(we) must meet in order to qualify is that I(we) must meet one or
more of the qualifications below:
Qualifications:
- --------------
1. I(We) have a minimum annual gross income of $65,000 and a minimum net worth
(determined exclusive of home, home furnishings and automobiles) of
$100,000.
or,
2. I(We) have a minimum net worth (determined exclusive of home, home
furnishings and automobiles) of $250,000.
FIRST PERSON OR INDIVIDUAL SECOND PERSON
-------------------------- -------------
Signed ______________________________ Signed __________________
Print name ______________________________ Print name __________________
Date ______________________________ Date __________________
<PAGE>
Portfolio Boost I, L.P.
Acknowledgment Of Receipt
-------------------------
I hereby acknowledge that on the date set forth below I received the
Portfolio Boost I, L.P. prospectus dated January 28, 1999.
I also acknowledge that any other information or other written materials I
may have received regarding Portfolio Boost I, L.P. ("Other Information") are
a summary and general description of only portions of the prospectus. I also
acknowledge that the Other Information is not intended to be complete or
utilized by me except in connection with the prospectus. I also acknowledge
that I should read the entire prospectus in order to fully analyze and
understand the Other Information and for complete details of this offering.
______________________________________
Print Name
______________________________________
Signature
______________________________________
Date
Return to:
Vacation Investors, Inc.
4320 Winfield Road, Suite 320
Warrenville, Illinois 60555
Attn: Jeffrey A. Raun
<PAGE>
Exhibit C
Balance Sheet
of
PB I
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Partners and Management
of Portfolio Boost I, L.P.
We have audited the accompanying balance sheet of Portfolio Boost I, L.P. (an
Iowa partnership) as of September 30, 1998. This financial statement is the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Portfolio Boost I, L.P. as of
September 30, 1998, in conformity with generally accepted accounting
principles.
Roth & Company, P.C.
/s/ Roth & Company, P.C.
- ------------------------
Des Moines, Iowa
October 15, 1998
<PAGE>
PORTFOLIO BOOST I, L.P.
BALANCE SHEET
SEPTEMBER 30, 1998
- ----------------------------------------------------------------
ASSETS
- ------
Cash $1,000
=====
PARTNERS' CAPITAL
- -----------------
Partners' Capital $1,000
=====
See notes to balance sheet.
- ----------------------------------------------------------------
<PAGE>
PORTFOLIO BOOST I, L.P.
- ----------------------
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
- ---------------------------------------------------------------
1. NATURE OF BUSINESS
Portfolio Boost I, L.P. (the "Partnership") is an Iowa limited partnership
organized on May 28, 1998 with its principal office in Warrenville,
Illinois. The Partnership has not yet commenced operations. The only
transaction to date is the original capital contribution of $1,000 by the
initial limited partner, who is an officer of the General Partner. The
General Partner may, but is not obligated to make a capital contribution.
The Partnership will terminate on December 31, 2050, or upon the occurrence
of an event causing an earlier termination as set forth in The Limited
Partnership Agreement.
The Partnership is a single advisor commodity pool which will be engaged in
the business of speculative trading of various domestic and foreign futures
contracts, options and other interests pursuant to one of the trading
programs of the Partnership's commodity trading advisor (CTA). The
Partnership's principal objective is to generate increased capital for the
partners, but there can be no assurance that the Partnership will achieve
this objective since it is involved in a speculative, volatile, high risk
business. The Limited Partnership Agreement provides the Partnership may
commence trading after the General Partner has accepted subscriptions for
500 units of limited partnership interest ("Units") at $1,000 per Unit. If
subscriptions for a minimum of 500 Units have not been accepted within nine
months of the date of the Prospectus, the offering will terminate and all
amounts paid by the subscribers will be returned.
Interests in the Partnership are evidenced by Units. Profits and losses of
the Partnership are allocated to the partners pro rata based upon the
respective number of Units held. The Partnership's income tax attributes
pass-through to the partners of the Partnership.
2. FEES AND EXPENSES
Fees
----
The Partnership will pay to its commodity pool operator and General
Partner, Portfolio Boost, L.L.C., a monthly management fee in an amount
equal to one-half of one percent (0.5%) of
<PAGE>
PORTFOLIO BOOST I, L.P.
----------------------
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
---------------------------------------------------------
the Partnership's net assets as of the close of business on the last
business day of each month. The Partnership will also pay to its General
Partner a quarterly incentive fee in an amount equal to 15% of New Trading
Profits, as defined in The Limited Partnership Agreement, for each
quarter.
The General Partner is solely responsible for the payment of compensation
to the Partnership's CTA, to the Partnership's agent (Agent) and to the
Underwriter of the offering of Partnership Units. Additionally, the General
Partner will provide, at its cost, vacation awards to qualifying Limited
Partners.
All trading decisions will be made for the Partnership by its CTA, Quiet
Systems Limited. The sole officer of the General Partner and certain
members of his family are some of the beneficiaries of the trust which owns
the CTA.
The Partnership's Agent for purposes of receiving the signals generated by
the CTA's trading program and communicating the trades which are directed
to be made is Frischmeyer Trading Corporation. The individual who controls
the Agent and certain members of his family are some of the beneficiaries
of the trust which owns the CTA.
The Underwriter of the offering is Vacation Investors, Inc. which is owned
by the sole officer of the General Partner.
Other Expenses
--------------
The Partnership is responsible for payment of brokerage commissions and
other fees incidental to trading to its futures commission merchant, First
Options of Chicago, Inc., payment of exchange and National Futures
Association fees, and payment of all other expenses of the Partnership,
including organization and offering (excluding underwriting) expenses,
legal and accounting fees and meeting and office expenses.
3. DISTRIBUTIONS AND REDEMPTIONS
Distributions, if any, will be made only at such times and in such amounts
as determined by the General Partner, in its sole
<PAGE>
PORTFOLIO BOOST I, L.P.
----------------------
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
----------------------------------------------------------
discretion. With the consent of the General Partner, a Limited Partner may
liquidate, with at least sixty days prior written notice, the Units held by
the Limited Partner at Net Asset Value Per Unit on the liquidation date.
For purposes of calculating Net Asset Value Per Unit, Net Assets includes
partners' capital, as determined for financial statement purposes, plus an
adjustment for unamortized organizational and offering costs.
Organizational and offering costs are expensed when incurred for financial
statement purposes. For purposes of calculating Net Asset Value Per Unit,
these costs are capitalized and amortized over a period of five years.
<PAGE>
Exhibit D
Balance Sheet
Of
The General Partner
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Members of
Portfolio Boost, L.L.C.
We have audited the accompanying balance sheet of Portfolio Boost, L.L.C. (an
Iowa limited liability company) as of September 30, 1998. This financial
statement is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Portfolio Boost, L.L.C. as of
September 30, 1998, in conformity with generally accepted accounting principles.
Roth & Company, P.C.
/s/Roth & Company, P.C.
- ------------------------
Des Moines, Iowa
October 15, 1998
<PAGE>
PORTFOLIO BOOST, L.L.C.
BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Cash Equivalents $ 85,026
Marketable Securities 9,507
Accounts Receivable 6,391
Airline Ticket Credits 118,129
Costs Reimbursable From Limited Partnerships 44,386
Residential Rental Property 224,833
Investment in Limited Partnership 51,567
----------
TOTAL ASSETS $ 539,839
==========
LIABILITIES AND MEMBERS' EQUITY
- -------------------------------
LIABILITIES:
Accounts Payable $ 1,813
Deferred Revenue 118,129
----------
Total Liabilities 119,942
----------
MEMBERS' EQUITY:
Voting Member's Equity -
Nonvoting Members' Equity 1,069,897
----------
1,069,897
Less Subscriptions Receivable (650,000)
----------
Total Members' Equity 419,897
----------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 539,839
==========
</TABLE>
See notes to balance sheet.
- --------------------------------------------------------------
<PAGE>
PORTFOLIO BOOST, L.L.C.
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION
Nature of Business
------------------
Portfolio Boost, L.L.C. (Company) was organized on May 20, 1998 with Corn
Belt Management, Inc. being merged into the Company on May 22, 1998. The
Company serves as the general partner and commodity pool operator for
commodity pools.
The Company is the general partner and commodity pool operator of Corn Belt
Commodities Round Trip Limited Partnership (CBCRT), which is a limited
partnership operating a commodity pool. Corn Belt Management, Inc. was the
prior general partner and commodity pool operator of CBCRT.
The Company will also serve as general partner and commodity pool operator
of four commodity pools currently being organized which have not yet begun
operations, Portfolio Boost I, L.P.; Portfolio Boost II, L.P.; Portfolio
Boost III, L.P.; and Portfolio Boost MJF, L.P. These commodity pools are
expected to begin operations in 1998 or early 1999.
Under the terms of the limited partnership agreements, the Company earns
monthly management fees and quarterly incentive fees and is liable for
certain expenses of the partnerships, such as commodity trading advisor
fees and underwriting fees.
As the general partner, the Company is liable for the obligations of the
limited partnerships. Management is unaware of any such liabilities which
would have a material adverse affect on the Company's financial position.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
-------------------------
The Company considers all demand deposit accounts, money market funds and
debt securities with an original maturity of three months or less to be
cash and cash equivalents.
<PAGE>
PORTFOLIO BOOST, L.L.C.
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
Marketable Securities
---------------------
The Company considers all investments in marketable equity and debt
securities as trading securities and are carried at fair value.
Airline Ticket Credits and Deferred Revenue
-------------------------------------------
The Company has airline ticket credits from an unrelated travel management
company which are used to purchase airline tickets. The cost of tickets
purchased with the credits generally approximates the lowest fare amount
available in the market place on the date the tickets are purchased.
The airline ticket credits are used in the Company's operations as a
general partner and commodity pool operator for various limited
partnerships. In connection with these activities, the Company provides
vacation awards to those limited partners who meet specified
qualifications.
The airline ticket credits were received by the Company in exchange for
consulting services provided to the unrelated travel management company.
The credits were earned based on an amount negotiated with the unrelated
travel management company for the consulting services provided. The Company
does not anticipate any such future exchanges.
The revenue from consulting services provided is deferred and is recognized
when the airline ticket credits are used.
Costs Reimbursable From Limited Partnerships
--------------------------------------------
The Company is the general partner of four limited partnerships that are
currently being organized which will operate commodity pools. These limited
partnerships are currently preparing offering documents and in the process
of filing them with various regulatory agencies which is required before
the limited partnerships can accept capital contributions.
The Company, as the general partner, has paid costs related to the
preparation of the offering documents and the regulatory filings. These
costs are reimbursable from the limited partnerships once the limited
partnerships have received the minimum amount of capital contributions and
commenced operations.
The Company continually monitors and assesses the progress of each
offering. If an offering is aborted or discontinued, the
<PAGE>
costs related to that limited partnership would be immediately charged to
expense.
PORTFOLIO BOOST, L.L.C.
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
Residential Rental Property
---------------------------
This property is held for sale, and is carried at the lower of cost or fair
value less estimated costs to sell.
Investment in Limited Partnership
---------------------------------
The investment in CBCRT, a limited partnership in which the Company is the
general partner but not the majority owner, is accounted for under the
equity method.
Income Taxes
------------
The Company is a limited liability company under which the income tax
attributes pass-through to the members of the Company. Therefore, no income
tax expense is recorded by the Company.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3. REGULATORY REQUIREMENTS
The Company is subject to various regulatory guidelines relating to the
maintenance of a minimum amount of regulatory net worth. Under the
guidelines regulatory net worth is generally required equal to five percent
of the sum of partner contributions received and limited partnership
interests being offered in limited partnerships for which the Company is
the general partner. However, pursuant to the regulatory net worth
requirements, net worth may not be less than $50,000, but is not required
to exceed $1,000,000.
<PAGE>
PORTFOLIO BOOST, L.L.C.
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
At September 30, 1998, the Company's regulatory net worth under applicable
guidelines was $1,069,897 as follows:
<TABLE>
<S> <C>
Total members' equity $ 419,897
Add subscriptions receivable from
nonvoting members 650,000
----------
Total regulatory net worth $1,069,897
==========
</TABLE>
Subscriptions receivable are evidenced by promissory notes which are due on
demand and are secured by letters of credit issued by financial
institutions for the benefit of the Company.
4. MEMBERS' EQUITY
Members' Equity at September 30, 1998 consists of:
Voting Nonvoting
------ ---------
Units Outstanding 100 100
The voting member is responsible for the management of the Company.
Profit and Loss Allocations
---------------------------
Net losses of the Company are generally allocated first to the Voting
Member to the extent of its capital account balance and then to the
Nonvoting Members.
Earnings of the Company attributable to CBCRT are allocated to the Voting
Member. The remaining net profits (Net Profits) of the Company are
generally allocated (i) first to Nonvoting Members to the extent of
previously allocated losses; (ii) second to the Voting Member to the extent
of previously allocated losses; (iii) third to Nonvoting Members equal to
an aggregate of 28% of Net Profits of the Company; and (iv) the balance of
Net Profits to the Voting Member.
<PAGE>
PORTFOLIO BOOST, L.L.C.
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
Distributions
-------------
Annual distributions accrue to Nonvoting Members through December 31, 2001,
in an amount equal to an aggregate of 28% of the Company's Net Profits, if
any. Any accrued and unpaid distributions are payable as of December 31,
2001. However, a Nonvoting Member may request an annual distribution in an
amount equal to the tax liability attributable to that member's Net Profit
allocations.
Nonvoting Members shall also receive distributions, payable annually, in an
amount equal to an aggregate of 28% of the Company's Net Profits, if any,
for the years 2002 through 2004.
The Voting Member may receive distributions at any time, provided the net
worth of the Company exceeds the sum of $700,000 plus the accrued
distributions payable to Nonvoting Members.
Return of Nonvoting Member Capital Account
------------------------------------------
Under the Company's operating agreement, the Company has agreed to pay the
Nonvoting Members within thirty days after December 31, 2001, an amount
equal to the capital account of each member less any unpaid subscription
receivable balance. If requested by a Nonvoting Member, the Voting Member
has agreed to make capital contributions if the Company is unable to
otherwise make such payments.
Subscriptions Receivable
------------------------
The subscriptions receivable from Nonvoting Members are due on demand at
the option of the Company. These balances are secured by letters of credit
issued by financial institutions for the benefit of the Company.
5. RELATED PARTY TRANSACTIONS
The residential rental property is leased to a relative of the officer of
the Company.
<PAGE>
PORTFOLIO BOOST, L.L.C.
NOTES TO BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
The investments in marketable securities are traded through Vacation
Investors, Inc. The officer of the Company is the sole shareholder,
director and officer of Vacation Investors, Inc. as well as a registered
representative.
6. MERGER WITH CORN BELT MANAGEMENT, INC.
Corn Belt Management, Inc. was merged with the Company on May 22, 1998 in a
transaction accounted for at historical cost as the entities were under
common control. The initial capital contribution of the Voting Member
consisted of the net assets of Corn Belt Management, Inc., of $299,284. The
capital account of the Voting Member was subsequently reduced by
distributions and results of operations through September 30, 1998.
7. EVENTS SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT
In January 1999, the Company had the following transactions that affect
members' equity. The Company received cash payments on subscriptions
receivable of $100,000. Subscriptions receivable of $450,000 and related
letters of credit were canceled. As of January 17, 1999, outstanding
subscriptions receivable total $100,000.
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Officers and Directors
The Partnership's limited partnership agreement provides that the
Partnership shall defend, indemnify, and hold the General Partner harmless from
and against any loss, liability, damage, cost or expense incurred by the General
Partner and arising from any act, omission, activity or conduct undertaken by or
on behalf of the Partnership and reasonably believed by the General Partner to
be within the scope of authority conferred on it by the limited partnership
agreement. Such indemnity is available only if the General Partner (a) acted in
good faith and in a manner the General Partner reasonably believed to be in, or
not opposed to, the best interests of the Partnership, and (b) the act,
omission, activity or conduct in question did not constitute negligence or
misconduct. No indemnification may be made with respect to alleged violations of
federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations, or (ii) such claim has been dismissed by a court with prejudice on
the merits; or (iii) a court approves a settlement of the claims against the
indemnitee and finds that the indemnification of the settlement and related
costs and expenses should be made. In the case of (iii), the indemnified party
must apprise the court of the position of the Securities and Exchange Commission
and of the securities administrator of the state in which the plaintiffs in the
underlying case claim they were offered or sold Units with respect to
indemnification for securities laws violations before seeking any approval from
the court for indemnification.
The Articles of Organization of Portfolio Boost, L.L.C., the General Partner
of the Partnership, provide that a voting member of the General Partner shall
not be personally liable to the General Partner or its members for damages for
breach of a fiduciary duty as a voting member, except for liability (i) for
breach of the voting member's duty of loyalty to the General Partner or its
members, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, or (iii) for a transaction
from which the voting member derives an improper personal benefit or wrongful
distribution in violation of Section 490A.807 of the Iowa Limited Liability
Company Act. The Articles of Organization of the General Partner further provide
that if the foregoing Act or any other applicable law is amended to authorize
the further elimination or limitation of the liability of members, then the
liability of the members of the General Partner will be eliminated or limited to
the extent of any such amendment without any further action on behalf of the
General Partner or its members.
The Operating Agreement of the General Partner provides indemnification for
each person who is or was a member of the General Partner to the maximum extent
that a corporation has authority to indemnify a director of the corporation by
or under the Iowa Business Corporation Act or other applicable law, as the same
now exists or may hereafter be amended or changed, but in the case of any such
amendment or change, only to the extent that the amendment or change would
permit broader indemnification than is then currently the case. Any person's
right to indemnification is conditioned upon the General Partner being afforded
an opportunity to participate directly on behalf of such person in any such
claim, action, suit or proceeding or any settlement discussions relating
thereto, and with respect to any settlement or other non-adjudicated disposition
of any of the foregoing, entitlement to indemnification is also conditioned upon
the prior approval of the General Partner of the proposed settlement or other
non-adjudicated disposition. The General Partner's Operating Agreement also
would permit the General Partner to purchase and maintain insurance to provide
such an indemnification.
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commisson registration fee.. $ 7,575.76
Legal Fees and Expenses............................. 72,000.00
Accounting Fees and Expenses........................ 10,000.00
Expenses relating to conversion for EDGAR filing.... 13,000.00
Printing............................................ 13,000.00
Blue Sky and NASD Filing Fees....................... 18,085.00
Miscellaneous....................................... 60,000.00
TOTAL $193,660.76
===========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The Partnership sold 1 Unit to Jeff Raun on June 4, 1998, for $1,000 in
order to create an intial limited partner. This Unit will be returned and the
money refunded upon admission of the next limited partner.
No commissions were paid with respect to this sale.
ITEM 27. EXHIBITS
* 1. Sales Agreement
* 2.1 Limited Partnership Agreement - Portfolio Boost I, L.P. (See Exhibit
A to Prospectus)
2.2 Articles of Organization of Portfolio Boost, L.L.C.
2.3 Operating Agreement of Portfolio Boost, L.L.C
5. Opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C.
8. Opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C.
regarding certain federal income taxation matters
10.1 Advisory Agreement of Quiet Systems Limited
10.2 Letter Agreement with Frischmeyer Trading Corporation
10.3 Account documents with First Options of Chicago, Inc. (the futures
commission merchant)
*10.4 Subscription Agreement, Suitability Standards Requirement Form and
Acknowledgment of Receipt Form (see Exhibit B to Prospectus)
10.5 Fee Agreement with Quiet Systems Limited
10.6 Escrow Agreement with First American Bank
23.1 Consent of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C.
(included in Exhibits 5 and 8 hereto)
*23.2 Consent of Independent Auditors, Roth & Company, P.C.
*FILED HEREWITH
<PAGE>
ITEM 28. UNDERTAKINGS
(a) Not Applicable
(b) Not Applicable
(c) Not Applicable
(d) Not Applicable
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Amendment No. 2
to Registration Statement to be signed on its behalf by the undersigned, in the
City of Warrenville, State of Illinois on January 26, 1999.
PORTFOLIO BOOST I, L.P.
PORTFOLIO BOOST, L.L.C., General Partner
By:/s/Jeffrey A. Raun
-------------------------------
Jeffrey A. Raun, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ Jeffrey A. Raun
-----------------------------------------------------------------------
Jeffrey A. Raun, Sole Officer of and Sole Owner of the Voting Member of
Portfolio Boost, L.L.C. January 26, 1999
<PAGE>
INDEX TO EXHIBITS
TO AMENDMENT NO. 2
TO REGISTRATION STATEMENT ON FORM SB-2
OF PORTFOLIO BOOST I, L.P.
Description of
Exhibit Document
- ------- --------------
*1 Sales Agreement
*2.1 Limited Partnership Agreement--Portfolio Boost I, L.P. (See
Exhibit A to Prospectus)
2.2 Articles of Organization of Portfolio Boost, L.L.C.
2.3 Operating Agreement of Portfolio Boost, L.L.C.
5 Opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien,
P.C.
8 Opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien,
P.C. regarding certain federal income taxation matters
10.1 Advisory Agreement of Quiet Systems Limited
10.2 Letter Agreement with Frischmeyer Trading Corporation
10.3 Account documents with First Options of Chicago, Inc. (the
futures commission merchant)
*10.4 Subscription Agreement, Suitability Standards Requirement Form
and Acknowledgment of Receipt Form (See Exhibit B to
Prospectus)
10.5 Fee Agreement with Quiet Systems Limited
10.6 Escrow Agreement with First American Bank
23.1 Consent of Nyemaster, Goode, Voigts, West, Hansell & O'Brien,
P.C. (included in Exhibits 5 and 8 hereto)
*23.2 Consent of Independent Auditors, Roth & Company, P.C.
*Filed herewith
<PAGE>
EXHIBIT 1
SALES AGREEMENT
THIS SALES AGREEMENT is entered into as of the 20th day of December, 1998,
by and between Portfolio Boost I, L.P., an Iowa limited partnership (the
"Partnership"), and Vacation Investors, Inc., an Iowa corporation ("VII").
Portfolio Boost, L.L.C., an Iowa limited liability company (the "General
Partner"), is also a party hereto for purposes of Sections 2, 7, 8 and 11(d)
below.
RECITALS
WHEREAS the Partnership is an Iowa limited partnership of which the General
Partner is the general partner; and
WHEREAS the Partnership desires to raise capital to engage in the business
of speculative trading of various domestic and foreign futures contracts and
options and contemplates raising such capital through the offering of up to a
maximum of $25,000,000 of units of limited partnership interests ("Units")
pursuant to a Registration Statement on Form SB-2 to be filed with the
Securities and Exchange Commission (the "SEC") (the "Offering"); and
WHEREAS VII is a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD"), is registered as a broker dealer with the
SEC, and is or will be, as the case may be, licensed by the appropriate
regulatory agency in each state in which Units may be offered and sold; and
WHEREAS the Partnership desires to retain VII as its exclusive sales agent
to use its best efforts to sell the Units, and VII is willing and desires to
serve as the exclusive sales agent for the sale of the Units on a best efforts
basis, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the Recitals, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Engagement.
----------
(a) Subject to the terms and conditions herein set forth, the
Partnership hereby engages and appoints VII as the Partnership's exclusive agent
to use VII's best efforts to sell Units for the Partnership's account. VII
hereby accepts such engagement and appointment and covenants, warrants and
agrees that all Units sold by it will be sold according to all of the terms and
conditions of the Offering, the Rules of Fair Practice of the
<PAGE>
NASD and all state and federal laws applicable to VII's selling activities.
Neither VII nor any other person shall give any information or make any
representations, warranties or guarantees in connection with any offer or sale
of any Units other than as contained in the Prospectus utilized in connection
with the Offering (the "Prospectus") or in any other written materials as may be
expressly authorized in writing by the Partnership from time to time.
(b) VII shall use its best efforts as the Partnership's agent,
promptly following receipt of written notice from the Partnership of the
effective date of the Offering, to sell the Units, with all offers and sales to
in all events be only at the price per Unit to be specified in, and in such
quantities and to such persons and according to such terms as are contained in,
the Prospectus and the related Registration Statement on Form SB-2 and the
various related state Registration Statements (collectively, the "Registration
Statements"). VII shall comply with all requirements set forth in the Prospectus
and the Registration Statements, including, without limitation, the Escrow
Agreement included as an exhibit thereto (the "Escrow Agreement"). As provided
in the Escrow Agreement, during the Escrow Period (as that term is defined in
the Escrow Agreement), VII shall (i) instruct all subscribers to make checks for
subscriptions payable to "First American Bank--Escrow Agent For PB I," and (ii)
promptly (and in all events by 12:00 noon of the next business day after receipt
by VII) transmit all checks received from subscribers directly to the Escrow
Agent (as that term is defined in the Escrow Agreement). VII shall use and
distribute only the Prospectus, sales literature and advertising material that
has been prepared or distributed by the Partnership, and such other sales
literature and advertising material as shall conform in all respects to all
applicable securities and other laws, rules, regulations and orders, including,
without limitation, the Securities Act of 1933, and as shall be expressly
approved in writing by the Partnership. The Partnership reserves the right to
establish such additional procedures as it may deem necessary to insure
compliance with the requirements of the Offering and of any applicable laws,
rules, regulations or orders, and VII shall comply with all such additional
procedures to the extent that it has received notice thereof.
(c) During the term of this Agreement, the Partnership shall have full
authority to take such action as it may deem advisable with respect to all
matters pertaining to VII's activities and performance under this Agreement.
(d) The Units shall be offered and sold only where the Units may be
legally offered and sold and only to such persons as shall be legally qualified
to purchase the Units. The Partnership currently contemplates selling the Units
in the states listed in the attached Exhibit A, and unless VII shall receive
notice from the Partnership authorizing the offering and sale of Units in any
states other than those set forth on Exhibit A, no Units shall be offered or
sold except in such states. The Partnership also reserves the right, in its
sole discretion, to determine to not offer and sell any Units, or to at any time
and for any reason discontinue the offer and sale of Units, as the case may be,
in any state set forth on Exhibit
2
<PAGE>
A, and VII shall not offer and sell or shall discontinue the further offer and
sale of Units, as the case may be, in any such state upon receipt of notice from
the Partnership to such effect.
(e) Notwithstanding anything herein which may appear to be to the
contrary, VII shall have no obligation under this Agreement to purchase any of
the Units for its own account.
2. Compensation to VII. The General Partner agrees, subject to the
-------------------
following and to Section 8 below, to pay VII the following fees for the services
to be provided by VII pursuant to this Agreement:
(a) The General Partner shall pay VII a fee (the "Fee") on each new
subscription (including any additional subscription by an existing limited
partner in the Partnership) which is both accepted and collected by the General
Partner and the Partnership in the given calendar month in an amount calculated
by multiplying (i) the dollar amount of such new subscription (the "Subscription
Amount"), by (ii) 1.875%. The aggregate amount of Fees payable by the General
Partner with respect to any given calendar month shall be payable within ten
(10) business days of the close of that month.
(b) If the limited partner who contributed a Subscription Amount to
the Partnership has not, at any time before the Second Fee Date (as that term is
defined below) caused the limited partner's capital account with the Partnership
to fall below the Subscription Amount by reason of liquidations of units in the
Partnership by the limited partner (the "Second Fee Condition"), the General
Partner shall pay VII a fee (the "Second Fee") in an amount calculated by
multiplying (i) the Subscription Amount, by (ii) 1.875%. The term Second Fee
Date means the date which is the two (2) year anniversary of the date upon which
the Subscription Amount was effective (as determined by the Limited Partnership
Agreement of the Partnership) as a capital contribution to the Partnership. If a
Second Fee is payable by the General Partner, it shall be paid within ten (10)
business days of the Second Fee Date. For purposes of determining whether the
Second Fee Condition has been satisfied, any distributions made to the limited
partner by the Partnership shall be added back to the limited partner's capital
account, plus the amount by which any Partnership losses which have been
allocated to the limited partner's capital account exceed the Subscription
Amount (the "Loss Adjustment").
(c) If the limited partner who contributed a Subscription Amount to the
Partnership has not, at any time before the Third Fee Date (as that term is
defined below) caused the limited partner's capital account with the Partnership
to fall below the Subscription Amount by reason of liquidations of units in the
Partnership by the limited partner (the "Third Fee Condition"), the General
Partner shall pay VII a fee (the "Third Fee") in an amount calculated by
multiplying (i) the Subscription Amount, by (ii) 1.875%. The term Third Fee Date
means the date which is the three (3) year anniversary of the date upon which
the Subscription Amount was effective (as determined by the Limited Partnership
Agreement of the Partnership) as a capital contribution to the Partnership. If a
Third Fee is payable by the General Partner, it shall be paid within ten (10)
business days of the Third Fee Date. For purposes of determining whether the
Third Fee Condition has been satisfied, any distributions made to the limited
partner by the Partnership shall be added back to the limited partner's capital
account, plus the amount by which any Partnership losses which have been
allocated to the limited partner's capital account exceed the Subscription
Amount (the "Loss Adjustment").
In the event a limited partner contributes Subscription Amounts in
different months, the Fee, Second Fee and Third Fee shall be calculated and
payable separately based on each such respective Subscription Amount. In this
circumstance, however, if the limited partner subsequently liquidates units in
the Partnership, the amount of the liquidation proceeds shall be applied pro
rata against the Subscription Amounts in question for purposes of determining
the Loss Adjustment and whether the Second Fee Condition and the Third Fee
Condition have been satisfied for each such subscription. By way of example, if
a limited partner contributes $10,000 in month one, then contributes an
additional $10,000 in month six, and then liquidates $5,000 of units, $2,500 of
said liquidation proceeds shall be applied against each of the two $10,000
Subscription Amounts for purposes of determining the Loss Adjustment and whether
the Second Fee Condition and the Third Fee Condition have been satisfied for
purposes of each such subscription.
VII acknowledges and agrees that it shall not be entitled to and shall not
receive any compensation whatsoever from the Partnership for the services to be
provided and performed by VII under this Agreement, and that VII's compensation
for such services shall be payable solely by the General Partner, and the
Partnership shall have no liability or responsibility whatsoever for any such
compensation. VII accordingly also agrees that any breach or default by the
General Partner in the payment of any such compensation from time to time shall
not constitute a breach or default of this Agreement and that VII shall continue
to timely and fully perform all of its services, duties and obligations under
this Agreement for the full term hereof notwithstanding any such breach or
default from time to time by the General Partner.
3. Conditions to VII's Obligations. VII's obligations hereunder are
-------------------------------
subject during the full term of this Agreement and the Offering to: (a) the
performance by the Partnership of its obligations hereunder; and (b) the
conditions that (i) the Registration Statement on Form SB-2 pertaining to the
Offering shall have been declared effective by the SEC and shall remain
effective; (ii) the NASD shall have indicated that it does not disapprove of the
underwriting arrangements with respect to the Offering; and (iii) no stop order
shall have been issued by the SEC suspending the effectiveness of the Offering.
3
<PAGE>
4. Conditions to the Partnership's Obligations. The Partnership's
-------------------------------------------
obligations hereunder are subject during the full term of this Agreement and the
Offering to the conditions that: (a) the Registration Statement on Form SB-2
pertaining to the Offering shall have been declared effective by the SEC and
shall remain effective; (b) no stop order suspending the effectiveness of the
Offering or other order restraining the offer or sale of the Units shall have
been issued or proceedings therefor initiated or threatened by any state or
federal regulatory agency, including, without limitation, the SEC or the
Commodity Futures Trading Commission; and (c) VII shall have satisfactorily
performed all of its obligations hereunder.
5. Covenants of the Partnership. The Partnership covenants, warrants and
----------------------------
represents, during the full term of this Agreement, that:
(a) It shall use its best efforts to prevent the sale of the Units
through persons other than VII.
(b) It shall provide VII, when received, with a copy of any letter
from the NASD in which the NASD indicates that it does not disapprove of the
underwriting arrangements with respect to the Offering.
(c) It shall use its best efforts to maintain the effectiveness of the
Registration Statement on Form SB-2 with the SEC and to file such amendments to
said Registration Statement as may be reasonably necessary for that purpose.
(d) It shall advise VII whenever and as soon as it receives or learns
of any order issued by the SEC or any state regulatory agency or any other
regulatory agency which suspends or withdraws any of the Registration
Statements, or prevents the use of the Prospectus, or which otherwise prevents
or suspends the Offering, or receives notice of any proceedings regarding any
such order.
(e) It shall use its best efforts to prevent the issuance of any order
described in subsection (d) above and to obtain the lifting of any such order if
issued.
(f) It shall give VII notice when the Offering becomes effective and
shall deliver to VII such number of copies of the Prospectus and any supplements
and amendments thereto, in the form in which filed with the SEC, as VII may
reasonably request in connection with the sale of the Units, which Prospectus
shall in all respects conform to the applicable requirements of the Securities
Act of 1933 and any applicable state securities law and all applicable rules and
regulations promulgated thereunder, and which Prospectus shall not contain any
untrue statement of a material fact or omit to state a material fact necessary
in
4
<PAGE>
order to make the statements made, in light of the circumstances under which
they are made, not misleading.
(g) It shall make available such number of copies of the Prospectus as
VII reasonably requests for the purposes contemplated by the Securities Act of
1933 and any applicable state securities law and the rules and regulations
promulgated thereunder.
(h) It shall promptly notify VII of any amendments or supplements to
Prospectus and shall furnish VII with copies thereof.
(i) It shall keep VII fully informed of any material development to
which the Partnership is a party or which concerns the business and condition of
the Partnership.
(j) It shall use its best efforts to cause the registration or
qualification of the Units for offering and sale under the securities laws of
all states listed on Exhibit A attached hereto, subject, however, to Section
1(d) above.
6. Covenants of VII. VII covenants, warrants and represents, and
----------------
undertakes that:
(a) Based upon a review, to the extent relevant to the Offering, of
the items referred to in Rule 2810(b)(3) of the Rules of Fair Practice of the
NASD, as set forth in the Prospectus and other materials made available to it by
the Partnership, it has reasonable grounds to believe that all material facts
relating to the Offering are adequately disclosed and provide a basis for
evaluating the Offering.
(b) In recommending to a prospective subscriber the purchase of Units,
VII shall have reasonable grounds to believe, on the basis of information
obtained from the prospective subscriber concerning the subscriber's investment
objectives, other investments, financial situation and needs, and any other
information known by VII, that the prospective subscriber satisfies the criteria
as to suitability set forth in Rule 2810(b)(2)(B)(i), and prior to executing a
purchase transaction with respect to Units, VII shall inform the prospective
subscriber of all pertinent facts relating to the liquidity and marketability of
the Units during the term of the investment. This representation will survive
the termination of this Agreement.
(c) It shall maintain in its files such records as are required by
applicable rules of the NASD and state securities commissions disclosing the
basis upon which the determination of suitability was reached as to each
subscriber who subscribes for Units through it.
5
<PAGE>
(d) If a subscriber provides any subscription documents to VII, VII
shall provide the Partnership with such subscription documents.
(e) It undertakes to comply with all other applicable NASD Rules of
Fair Practice.
7. Payment of Costs and Expenses. Unless otherwise agreed by the General
-----------------------------
Partner from time to time, VII shall pay all costs and expenses incident to the
performance of VII's obligations under this Agreement, including:
(a) All expenses incident to the preparation, printing and filing of
all advertising originated by VII; and
(b) All other costs and expenses incurred in connection with VII's
sales efforts, except expenses which the Partnership has expressly assumed and
are incurred in connection with its due diligence with respect to the
Offering.
The amount of any costs and expenses of VII which may be reimbursed by the
General Partner in any consecutive forthcoming twelve (12) month period shall
not, when added to the Fees paid or payable on the aggregate subscriptions
accepted and collected by the General Partner and the Partnership during that
twelve (12) month period, exceed ten percent (10%) of such aggregate
subscriptions.
8. Term of Agreement. This Agreement shall become effective as of the
-----------------
date hereof. After this Agreement becomes effective, either party may terminate
it at any time for any reason by giving 30 days' prior written notice to the
other party; provided, however, that this Agreement shall in any event
-------- -------
automatically terminate at the first occurrence of any of the following events:
(a) a stop order suspending the effectiveness of the Offering or other order
restraining the offer or sale of the Units shall have been issued by the SEC and
such order is not withdrawn by the SEC within 10 business days of the issuance
of such order; (b) the Offering shall be terminated; or (c) VII's license or
registration to act as a broker-dealer shall be revoked or suspended by any
federal or state regulatory agency and such revocation or suspension is not
cured within 10 days from the date of such occurrence. No further Second Fees or
Third Fees shall be payable by the General Partner to VII from and after the
date of the termination of this Agreement, whether this Agreement is terminated
by the Partnership or VII, and for whatever reason, with or without cause. VII
shall, however, be entitled to receive Fees pursuant to Section 2(a) following
the termination of this Agreement with respect to any new subscriptions which
were accepted by the General Partner prior to the effective date of the
termination of this Agreement, provided such subscriptions are in fact
subsequently collected by the Partnership.
9. Notices. All notices and communications hereunder shall be in writing
-------
and, if sent to the Partnership, shall be mailed to:
Portfolio Boost I, L.P.
Attn: Portfolio Boost, L.L.C.
4320 Winfield Road, Suite 320
Warrenville, Illinois 60555
6
<PAGE>
or, if sent to VII, shall be mailed to:
Vacation Investors, Inc.
4320 Winfield Road, Suite 320
Warrenville, Illinois 60555
Attn: President
10. Successors. This Agreement may not be assigned or transferred by VII
----------
by operation of law or otherwise.
11. Construction.
------------
(a) This Agreement shall be governed by and construed in accordance
with the applicable laws of the State of Iowa and the laws of the United States,
but without regard to any provision or rule of law which would require the
application of the law of any other state or jurisdiction.
(b) Nothing in this Agreement shall constitute VII as in association
or in partnership with the Partnership and, instead, this Agreement shall only
constitute VII as an independent contractor (and not as an employee or other
agent of the Partnership) authorized by the Partnership to sell the Units
according to the terms expressly set forth herein.
(c) If any provision of this Agreement shall be deemed void, invalid
or ineffective for any reason, the remainder of the Agreement shall remain in
full force and effect.
(d) This Agreement embodies the entire understanding between the
parties hereto, and no variation, modification or amendment to this Agreement
shall be deemed valid or effective unless and until it is signed by both parties
hereto. Without limiting the generality of the foregoing, this Agreement
supersedes and replaces in entirety the prior Sales Agreement dated June 17,
1998 regarding the Offering and to which the Partnership, VII and the General
Partner were parties, it being the intent of the parties hereto that said prior
Sales Agreement is hereby terminated in its entirety.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PORTFOLIO BOOST I, L.P. VACATION INVESTORS, INC.
By: Portfolio Boost, L.L.C.
General Partner
By: /s/ Jeffrey A. Raun By: /s/ Jeffrey A. Raun
---------------------------- -------------------------
Jeffrey A. Raun, Member and Jeffrey A. Raun, President
President
7
<PAGE>
PORTFOLIO BOOST, L.L.C., FOR
PURPOSES OF SECTIONS 2, 7, 8 AND 11(D)
By: /s/ Jeffrey A. Raun
-----------------------------
Jeffrey A. Raun, President
8
<PAGE>
EXHIBIT A
TO SALES AGREEMENT
States in which Units will be offered:
California
Colorado
Connecticut
Delaware
Florida
Illinois
Indiana
New Jersey
North Carolina
Virginia
Washington
Wisconsin
9
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No. 333-
62407 of Portfolio Boost I, L.P. on Form SB-2 of our reports dated October 15,
1998 relating to the balance sheet of Portfolio Boost I, L.P., and of our
report dated October 15, 1998 relating to the balance sheet of Portfolio Boost,
L.L.C., appearing in, respectively, Exhibit C and Exhibit D of the Prospectus
which is part of this Amendment No. 2 to Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Roth & Company, P.C.
Des Moines, Iowa
/s/ Roth & Company, P.C.
- ---------------------------------------------
January 26, 1999
