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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. )*
Pacific Gateway Properties, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
694329-10-3
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(CUSIP Number)
Marc C. Krantz, Kohrman Jackson & Krantz P.L.L.,
1375 East 9th Street, Cleveland, Ohio 44114, 216-736-7204
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 3, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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<TABLE>
SCHEDULE 13D
CUSIP NO. 105368-10-4
<S> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Richard M. Osborne Trust
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
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NUMBER OF 7 SOLE VOTING POWER
SHARES 807,500
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 807,500
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PERSON 10 SHARED DISPOSITIVE POWER
WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
807,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.7%
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14 TYPE OF REPORTING PERSON*
OO
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</TABLE>
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<TABLE>
SCHEDULE 13D
CUSIP NO. 105368-10-4
<S> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Turkey Vulture Fund XIII, Ltd.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC,OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
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NUMBER OF 7 SOLE VOTING POWER
SHARES 264,800
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 264,800
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PERSON 10 SHARED DISPOSITIVE POWER
WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
264,800
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
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14 TYPE OF REPORTING PERSON*
OO
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</TABLE>
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CUSIP No. 694329-10-3
This original Schedule 13D Statement is filed on behalf of the
Richard M. Osborne Trust (the "Trust") and Turkey Vulture Fund XIII, Ltd., an
Ohio limited liability company (the "Fund"), for the purpose of reporting
certain acquisitions by the Trust and the Fund of shares of common stock, $1.00
par value per share, of Pacific Gateway Properties, Inc.
Item 1. Security and Issuer.
This Schedule 13D Statement relates to the shares of Common Stock, $1.00
par value per share (the "Shares"), of Pacific Gateway Properties, Inc, a New
York corporation ("Pacific Gateway"), which has its principal executive offices
at One Rincon Center, 101 Spear Street, Suite 215, San Francisco, California
94105.
Item 2. Identity and Background.
(a) The persons filing this Schedule 13D are the Richard M. Osborne Trust
and Turkey Vulture Fund XIII, Ltd., an Ohio limited liability company. Richard
M. Osborne is the sole trustee of the Trust and the sole manager of the Fund.
(b) The address of the Trust and Fund, and the business address of Mr.
Osborne, is 7001 Center Street, Mentor, Ohio 44060.
(c) The Trust was established by Mr. Osborne for estate planning
purposes, and the principal business of the Fund is to acquire, hold, sell or
otherwise invest in all types of securities and other instruments. Mr.
Osborne's principal occupation is President and Chairman of the Board of OsAir,
Inc., a property developer and manufacturer of industrial gases for pipeline
delivery. OsAir, Inc. is located at 7001 Center Street, Mentor, Ohio 44060.
(d) Negative with respect to the Trust, the Fund and Mr. Osborne.
(e) Negative with respect to the Trust, the Fund and Mr. Osborne.
(f) The Trust is a trust organized under the laws of the State of Ohio
and the Fund is a limited liability company organized under the laws of the
state of Ohio. Mr. Osborne is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
The Shares reported herein as having been acquired by the Trust and the
Fund were acquired for the aggregate purchase price of approximately $5.7
million. The Trust paid the approximate aggregate price of $4.4 million, which
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CUSIP No. 694329-10-3
consideration was comprised of margin debt from Everen Securities, Inc.
("Everen"). The Fund acquired the other Shares with a combination of working
capital of the Fund and margin debt from Smith Barney, Inc. ("Smith Barney")
for an approximate aggregate purchase price of $1.3 million.
Interest on the Smith Barney margin debt is charged in accordance with
Smith Barney's policy. Interest charges, if not paid, are added to the debit
balance for the next interest period. Smith Barney has a lien on the Shares
reported herein as having been acquired by the Fund. Smith Barney may impose
margin requirements more stringent than those required by law or exchange
regulations. A copy of the agreement setting forth the general terms of the
Smith Barney margin debt is attached hereto as Exhibit 7.1.
Interest on the Everen margin debt is computed at a select rate above the
rate banks charge securities brokers ("brokers call money rate") and is subject
to change, without notice, if the brokers call money rate changes. To the
extent permitted by law, Everen has a lien on the Shares reported herein as
having been acquired by the Trust. A copy of the agreement setting forth the
terms of the Trust's Everen margin debt is attached hereto as Exhibit 7.2.
Item 4. Purpose of Transaction.
The Trust and the Fund purchased the Shares to acquire a significant
interest in Pacific Gateway for the purposes of investment and to effect the
business strategies and operations of Pacific Gateway. Mr. Osborne has met or
had discussions with several members of the Board of Directors of Pacific
Gateway to discuss its business strategies and opportunities and reserves the
right to acquire additional Shares. Such additional Shares may give Mr.
Osborne effective voting control of Pacific Gateway. Mr. Osborne intends to
request that he and Christopher L. Jarratt be nominated to the Board of
Directors of Pacific Gateway and may, upon review of relevant information about
Pacific Gateway, seek additional seats on the Board of Directors. See Item 6
and Exhibits 7.3 and 7.4 for certain agreements between Mr. Osborne and Mr.
Jarratt.
Pursuant to the instructions for items (a) through (j) of Item 4 of
Schedule 13D and except as set forth above in this Item 4, neither the Trust,
the Fund nor Mr. Osborne presently has plans or proposals that relate to or
would result in any of the following:
(i) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Pacific Gateway;
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CUSIP No. 694329-10-3
(ii) the sale or disposition of a material amount of assets of Pacific
Gateway;
(iii) a material change in the present capitalization or dividend policy
of Pacific Gateway;
(iv) a material change in the business or corporate structure of Pacific
Gateway;
(v) a change to the Articles of Incorporation or Bylaws of Pacific
Gateway or an impediment to the acquisition of control of Pacific Gateway by
any person;
(vi) the delisting from any national securities exchange of the Shares;
(vii) a class of equity securities of Pacific Gateway becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(viii)any action similar to any of those enumerated in (i) through (vii)
above.
Mr. Osborne, the Fund and the Trust reserve the right to modify their
plans and proposals described in this Item 4. Further, subject to applicable
laws and regulations, they may formulate plans and proposals that may result in
the occurrence of an event set forth in (i) through (viii) above or in Item 4
of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) According to the most recently available filing with the Securities
and Exchange Commission by Pacific Gateway, there are 3,892,596 Shares
outstanding.
The Trust beneficially owns 807,500 Shares, or approximately 20.7% of the
outstanding Shares. The Fund beneficially owns 264,800 Shares, or
approximately 6.8% of the outstanding Shares. As sole trustee of the Trust and
sole Manager of the Fund, Mr. Osborne may be deemed to beneficially own all
1,072,300 Shares or approximately 27.5% of the outstanding Shares.
(b) Mr. Osborne, as sole trustee of the Trust and sole Manager of the
Fund, has sole power to vote, or to direct the voting of, and the sole power to
dispose or to direct the disposition of, the Shares owned by the Trust and
Fund.
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CUSIP No. 694329-10-3
(c) During the past 60 days, the Trust purchased, in two negotiated
transactions that were effected on the open market, 285,500 Shares for a price
of $5.00 per Share on April 3, 1997 and 522,000 Shares for a purchase price of
$5.63 per Share on April 10, 1997.
During the past 60 days, the Fund Purchased 264,800 Shares in open market
transactions as set forth below:
<TABLE>
Approximate Per Share Price
Date Number of Shares (Excluding Commissions)
-------------- ---------------- ---------------------------
<S> <C> <C>
March 12, 1997 16,500 $3.99
March 18, 1997 4,000 $3.94
March 19, 1997 3,000 $4.00
March 20, 1997 2,000 $4.00
March 27, 1997 35,500 $4.43
March 31, 1997 9,300 $4.48
April 2, 1997 18,000 $4.30
April 3, 1997 6,000 $4.70
April 7, 1997 12,800 $4.75
April 8, 1997 75,000 $5.13
April 8, 1997 5,000 $5.00
April 8, 1997 5,000 $4.88
April 9, 1997 3,500 $5.38
April 9, 1997 30,000 $5.50
April 9, 1997 500 $5.44
April 9, 1997 8,700 $5.25
April 9, 1997 30,000 $5.38
</TABLE>
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
On March 12, 1997, Mr. Osborne entered into an agreement (the"Warrant
Agreement") with Third Capital, LLC ("Third Capital") pursuant to which Mr.
Osborne is obligated to deliver to Third Capital a warrant in the form attached
hereto as Exhibit 7.3, to purchase 100,000 Shares ten days after Mr. Osborne
(in combination with any of his affiliates) acquires 500,000 Shares.
Accordingly, Mr. Osborne is required to deliver such warrant for 100,000 Shares
on April 19, 1997. The Warrant Agreement further provides that Mr.Osborne is
obligated to deliver to Third Capital a second warrant to purchase an
additional 100,000 shares of Pacific Gateway ten days after Mr. Osborne (in
combination with any of his affiliates) acquires control (as such term is
defined in the Warrant Agreement) of Pacific Gateway. This condition has not
yet been met. The Warrant Agreement is attached hereto as Exhibit 7.4. Mr.
Jarrat is Chief Manager of Third Capital, LLC.
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CUSIP No. 694329-10-3
Item 7. Material to be Filed as Exhibits.
Exhibit 7.1 Smith Barney Client Agreement
Exhibit 7.2 General Account Agreement Letter to Everen from the Richard
M. Osborne Trust
Exhibit 7.3 Agreement Re: Warrants and Directorship, by and between
Third Capital, LLC and Richard M. Osborne
Exhibit 7.4 Form Warrant to Purchase Common Stock of Pacific Gateway
Properties, Inc.
Exhibit 7.5 Joint Filing Agreement
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CUSIP No. 694329-10-3
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 14, 1996 TURKEY VULTURE FUND XIII, LTD.
By: /s/ Richard M. Osborne
------------------------------
Richard M. Osborne, Manager
RICHARD M. OSBORNE TRUST
By: /s/ Richard M. Osborne
-----------------------------
Richard M. Osborne, Trustee
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CUSIP No. 026791-10-3
Exhibit Index
Exhibit 7.1 -- Smith Barney Client Agreement
Exhibit 7.2 -- General Account Agreement Letter to Everen from the Richard
M. Osborne Trust
Exhibit 7.3 -- Agreement Re: Warrants and Directorship, by and between
Third Capital, LLC and Richard M. Osborne
Exhibit 7.4 -- Form Warrant to Purchase Common Stock of Pacific Gateway
Properties, Inc.
Exhibit 7.5 -- Joint Filing Agreement
<PAGE>
Exhibit 7.1
SMITH BARNEY
CLIENT AGREEMENT
Account Number 224-43061-1-0-005
Before you sign this Agreement, please read it carefully. Instructions for the
completion of this Agreement are contained in the accompanying booklet entitled
"Important New Account Information." After you have completed and signed this
Agreement, please return it in the enclosed postage-paid envelope. Note:
Signatures are MANDATORY in either Sections A and C OR Section B and C.
Account Title Turkey Vulture Fund XIII Ltd
Street Address 7001 Center Street
City Mentor
State Ohio
ZIP Code 44060
In consideration of Smith Barney Inc. accepting an account for me, (us), I
(we), hereby acknowledge that I (we) have read, understand and agree to the
terms of this Agreement contained in the sections numbered 1 through 11. If
this is a margin account, I (we) further acknowledge that I (we) have read,
understand and agree to the terms of this Agreement contained in the sections
numbered 15 through 17. If this is a joint account, we further acknowledge
that we have read, understand and agree to the terms of this Agreement
contained in the sections numbered 12 through 14. Note: Texas residents with
joint accounts must also execute a Texas Joint Account Supplement agreement
(form 3882).
A. Cash Accounts.
I (we) acknowledge that I (we) have received a copy of this Agreement which
contains a pre-dispute arbitration clause at section 6.
If this is a joint account, all parties must sign.
Account Owner's Signature /s/ Richard M. Osborne
B. Margin Accounts.
By signing this Agreement, I (we) acknowledge that my (our) securities may be
loaned to you or loaned out to others. I (We) acknowledge that I (we) have
received a copy of this Agreement which contains a pre-dispute arbitration
clause at section 5.
If this is a joint account, all parties must sign.
Account Owner's Signature /s/ Richard M. Osborne
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C. Tax Certification (See Instructions on the last page of this form). Under
penalties of perjury, I certify that the number shown below is my correct
taxpayer identification number or if not, then the number I have entered below
is my correct tax identification number, and that I am not subject to backup
withholding because: (a) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a failure
to report all interest or dividends, or (b) the IRS has notified me that I am
no longer subject to backup withholding (see below), or, (c) I am exempt from
backup withholding (see below). Note: you must cross out (b) above if you are
currently subject to backup withholding because of underreporting interest or
dividends on your tax return.
For those exempt from backup withholding, write the word "EXEMPT" here:
The Social Security Number or Tax Identification Number on Smith Barney's
records is: 341786314
The Social Security Number or Tax Identification Number shown to the left is
incorrect. The CORRECT number is:
Note for joint accounts: The Social Security Number of this account is the
number of the client whose name appears first in the account title. Do not
enter the number of any other account owner.
Account Owner's Signature /s/ Richard M. Osborne
D. Name Disclosure.
Please indicate your choice as to the release or withholding of your name,
address and securities positions to issuing corporations.
[X] NO, I do not want
[ ] YES, I do want
My name, address and securities positions disclosed to any companies, upon
their request, in which I own securities that we are being held for me at Smith
Barney Inc.
E. Money Market Fund Agreement.
Available cash in your account will automatically be invested or "swept" into
the money market fund of your choice. If you do not elect to have the
automatic money market fund sweep, please check the "NO" box below. If you
wish to change your choice of money market fund, please contact your Financial
Consultant.
Note to Wisconsin residents: You must indicate below specifically whether or
not you wish to have a money market sweep for your account.
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[ ] NO, I do not want cash balances in my account to be automatically spent
into a money market fund.
[X] YES, I would like the cash balances in my account to be automatically swept
into the fund of my choice.
F. Tenancy In Common. DO NOT Complete This Section If You Wish To Establish
A Joint Account With Rights of Survivorship. In the event of the death of
either or any of the undersigned, the interest in the account as of the close
of business on the date of the death of the decedent, or on the following
business day if the date of death is not a business day shall be as follows:
Note: Texas residents with joint account must also execute a Texas Joint
Account Supplement agreement (form 3882).
In consideration of your opening one or more accounts for me ("we", "us" and
"our", are each substituted for "I", "me" and "my", respectively, in the case
of multiple account holders, corporations and other entities), and your
agreeing to act as broker/dealer for me for the extension of credit and in the
purchase or sale of securities, commodities, options and other property, it is
agreed in respect to any and all accounts, whether upon margin or otherwise,
which I now have or may at any future time have with Smith Barney Inc. or your
successors (hereinafter referred to as "you" or "your", or "SB"), that;
1. All transactions entered into under this Agreement shall be subject to any
applicable constitution, rules, regulations, customs and usages of the exchange
or market and its clearinghouse, if any, where such transactions are executed
by SB or its agents and to all applicable laws, rules and regulations of
governmental authorities and self-regulatory agencies. Such reference to the
"constitution, rules, regulations, customs and usages of the exchange" shall in
no way be construed to create a cause of action arising from any violation of
such constitution, rules, regulations, customs and usages. If any provision is
enacted that would be inconsistent with any of the provisions of this
Agreement, the provision so affected shall be deemed modified or superseded by
the enactment, but the remaining provisions of this Agreement shall remain in
effect. Except as herein provided, no provision of this Agreement may be
waived, altered, modified or amended unless the same is in writing and signed
by an authorized official of SB.
2. I agree that all property of mine, whether owned individually, jointly or
in the name of another, which at any time may be in your possession or control
for any purpose, including safekeeping, shall be subject to a continuing
security interest, lien and right of set-off for the discharge of all of my
indebtedness and other obligations to SB, and will be held by SB as security
for the payment of any of my indebtedness or obligations to SB. In enforcing
your security interest, you shall have the discretion to determine which
property is to be sold and the order in which it is to be sold and shall have
all the rights and remedies available to a secured party under the New York
Uniform Commercial Code. Without your prior written consent, I will not cause
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or allow any of the collateral held in my account(s), whether now consent, I
will not cause or allow any of the collateral held in my account(s), whether
now owned or hereafter acquired, to be or become subject to any liens, security
interests, mortgages or encumbrances of any nature other than your security
interest.
Without limiting the generality of the foregoing, I hereby authorize SB to
automatically liquidate any money market funds available in my account(s) from
time to time to cover any of my indebtedness or obligations to SB including
non-trade related debts. You are further authorized to liquidate any other
property held in my account(s) to satisfy any such indebtedness or obligations
whenever in your discretion you consider it necessary for your protection.
"Property" as used anywhere in this Agreement shall include, but not be limited
to, securities of all kinds, money, certificates of deposit, bankers'
acceptances, commercial paper, options, commodities, and contracts for the
future delivery of commodities or relating to commodities or securities, and
the distributions, proceeds, products and accessions of any of the above.
3. In case of the sale of any security, commodity, or other property at my
direction and the inability of SB to deliver the same to the purchaser by
reason of my failure to supply them to SB, I authorize SB to borrow any
security, commodity, or other property necessary to make delivery thereof, and
I hereby agree to be responsible for any loss which SB may sustain thereby and
any premiums, interest or other costs which SB may be required to pay as a
result of such borrowing, and for any loss or cost which SB may sustain by
reason of its inability to borrow the security, commodity, or other property
sold.
You may charge my account(s) with such usual and customary charges as you may
determine to cover your services and facilities, including, but not limited to,
custody and transaction fees. I will promptly pay SB any deficiency that might
arise in my account(s). I understand and agree that a finance charge may be
charged on any debit balance in any cash account I have with SB in accordance
with the SB policy described in the accompanying literature regarding new
accounts. You may transfer excess funds between any of my accounts (including
commodity accounts) for any reason not in conflict with the Commodity Exchange
Act or any other applicable law. If any transactions are effected on an
exchange in which a foreign currency is used, any profit or loss as a result of
a fluctuation in the exchange rate will be charged or credited to my
account(s).
4. Communications may be sent to the mailing address on file with you, or at
such other address as I may hereafter give in writing, and all communications
so sent, whether by mail, telegraph, messenger or otherwise, shall be deemed
given to me personally, whether actually received or not. Transactions entered
into for my account(s) shall be confirmed in writing to me where required by
<PAGE>
<PAGE> 5
applicable law or regulation. In addition, SB shall provide me with periodic
statements reflecting activity in such account(s). I agree the transactions
reflected on such confirmations and statements shall be conclusively deemed
accurate as stated unless I notify SB in writing within three (3) days and ten
(10) days of receipt, respectively, that the information contained in such
confirmation or statement is inaccurate. Such notice must be sent by me to SB
by telegram or letter directed to the attention of the Branch Office Manager of
the office servicing the account. Failure to so notify SB shall also preclude
me from asserting at any later date that such transaction was unauthorized.
I authorize you at your discretion to obtain reports and to provide information
to others concerning my credit standing and my business conduct. You may ask
credit reporting agencies for consumer reports of my credit history. Upon my
request you will inform me whether you have obtained any such consumer reports
and if you have, you will inform me of the name and address of the consumer
reporting agency that furnished the reports to you.
5. I hereby represent that I am of the age of majority. Unless I advise you
to the contrary, in writing, and provide you with a letter of approval from my
employer, where required, I represent that I am not an employee of any
exchange, or of any corporation of which any exchange owns a majority of the
capital stock, or of a member of any exchange, or of a member firm or member
corporation registered on any exchange, or of any corporation, firm or
individual engaged in the business of dealing, either as a broker or as
principal, in securities, bills of exchange, acceptances or other forms of
commercial paper. I further represent that no one except those signing this
agreement has an interest in my account.
If my account has been introduced to you and is carried by you only as a
clearing broker, I agree that you are not responsible for the conduct of the
introducing broker and your only responsibilities to me relate to the
execution, clearing and bookkeeping of transactions in my accounts.
6. ARBITRATION.
Arbitration is final and binding on the parties. The parties are waiving their
right to seek remedies in court, including the right to jury trial.
Pre-arbitration discovery is generally more limited than and different from
court proceedings. The arbitrators' award is not required to include factual
findings or legal reasoning, and any party's right to appeal or to seek
modification of rulings by the arbitrators is strictly limited.
The panel of arbitrators will typically include a minority of arbitrators who
were or are affiliated with the securities industry.
I agree that all claims or controversies, whether such claims or controversies
arose prior, on or subsequent to the date hereof, between me and SB and/or any
of its present or former officers, directors, or employees concerning or
arising from (i) any account maintained by me with SB individually or jointly
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<PAGE> 6
with others in any capacity; (ii) any transaction involving SB or any
predecessor firms by merger, acquisition or other business combination and me,
whether or not such transaction occurred in such account or accounts; or (iii)
the construction, performance or breach of this or any other agreement between
us, any duty arising from the business of SB or otherwise, shall be determined
by arbitration before, and only before, any self-regulatory organization or
exchange of which SB is a member. I may elect which of these arbitration
forums shall hear the matter by sending a registered letter or telegram
addressed to Smith Barney Inc. at 388 Greenwich Street, New York, N.Y.
10013-2396, Attn: Law Department. If I fail to make such election before the
expiration of five (5) days after receipt of a written request from SB to make
such election, SB shall have the right to choose the forum.
No person shall bring a putative or certified class action to arbitration, nor
seek to enforce any pre-dispute arbitration agreement against any person who
has initiated in court a putative class action; or who is a member of a
putative class who has not opted out of the class with respect to any claims
encompassed by the putative class action until: (i) the class certification is
denied; (ii) the class is decertified; or (iii) the customer is excluded from
the class by court.
Such forbearance to enforce an agreement to arbitrate shall not constitute a
waiver of any rights under this agreement except to the extent stated herein.
The foregoing agreement to arbitrate does not entitle me to obtain arbitration
of claims that would be barred by the relevant statutes of limitations if such
claims were brought in a court of competent jurisdiction. If, at the time that
a demand for arbitration is made or an election or notice of intention to
arbitrate is served, the claims sought to be arbitrated would have been barred
by the relevant statute of limitations or other time bar, any party to this
Agreement may assert the limitations as a bar to the arbitration by applying to
any court of competent jurisdiction, and I expressly agree that any issues
relating to the application of a statute of limitations or other time bar, are
referable to such court. The failure to assert such bar by application to a
court, however, shall not preclude its assertion before the arbitrators.
7. The provisions of this Agreement shall be continuous, shall cover
individually and collectively all accounts which I may open or reopen with SB,
and shall inure to the benefit of SB's present organization, and any successor
organization or assigns. Should any term or provision of this Agreement be
deemed or held to be invalid or unenforceable, the remaining terms and
provisions shall continue in full force and effect. This Agreement, all the
terms herein, and all controversies described in Paragraph 6 shall be governed
and construed in accordance with the laws of the State of New York, including,
but not limited to, the law of New York regarding the permissible rates of
interest that may be charged and the law of New York regarding damages
recoverable in arbitration, without giving effect to principles of conflicts of
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<PAGE> 7
law. This choice of law clause shall not govern the choice of statues of
limitations applicable to claims and controversies described in Paragraph 6,
and the statute of limitations applicable to claims and controversies described
in Paragraph 6, and the statute of limitations applicable to any such claim or
controversy shall be that which would be applied by the federal district court
for the district in which I reside.
8. I understand that you may in your sole discretion prohibit or restrict
trading of securities or substitution of securities in any of my accounts. You
have the right to terminate any of my accounts (including multiple owner
accounts) at any time by notice to me. The provisions of this agreement shall
survive the termination of any account.
9. Your failure to insist at any time upon strict compliance with any term of
this Agreement, or any delay or failure on your part to exercise any power or
right given to you in this Agreement, or a continued course of such conduct on
your part shall at no time operate as a waiver of such power or right, nor
shall any single or partial exercise preclude any other further exercise. All
rights and remedies given to you in this Agreement are cumulative and not
exclusive of any other rights or remedies which you otherwise have.
10. I understand that SB shall not be liable for loss caused directly or
indirectly by government restrictions, exchange or market rulings, suspension
of trading, war, strikes or other conditions, commonly known as "acts of God,"
beyond SB's control.
11. From time to time you may at your discretion, make loans to me for a
purpose other than purchasing, carrying or trading in securities ("Express
Credit Loans"). Express Credit Loans will be made in a nonsecurities credit
account ("Express Credit Account"). The minimum and maximum amount of any
particular loan may be established by you in your discretion regardless of the
amount of collateral delivered to you and you may change such minimum and
maximum amounts from time to time.
I agree not to use the proceeds of any Express Credit Loan to purchase, carry
or trade in securities, I also agree not to use Express Credit Loan proceeds
directly or indirectly to repay other debt that I incur for the purpose of
purchasing, carrying or trading in securities.
JOINT ACCOUNT AGREEMENT
PARAGRAPHS 12 THROUGH 14 APPLY ONLY TO JOINT ACCOUNT AGREEMENTS
12. If this is a joint account, in consideration of you and your successors
carrying a joint account on margin or otherwise for the undersigned, each of
use agrees to be jointly and severally liable for said account and to pay on
demand any debit balance of losses at any time due in this account. Any of us
has full power and authority to make purchases and sales, including short
sales, to withdraw monies and securities from, or to do anything less with
reference to our account, either individually or in our joint names, and you
<PAGE>
<PAGE> 8
and your successors are authorized and directed to act upon instructions
received from any of us and to accept payment and securities from any of us for
the credit of this account. Any and all notices, communications, or any
demands for margin sent to any of us shall be binding upon all, and may be
given by mail or other means of communication.
13. Each of us agrees to hold SB harmless from and indemnify SB against any
losses, causes of action, damages and expenses arising from or as the result of
SB following the instructions of either or any of us. SB, in its sole
discretion, may at any time suspend all activity in the joint account pending
instructions from a court of competent jurisdiction or require that
instructions pertaining to the joint account or the property therein be in
writing signed by both or all of us. SB shall be entitled to recover from the
account or from any of us prior to distribution of the funds or property
therein such costs as it may incur, including reasonable attorney's fees, as
the result of any dispute between or among us relating to or arising from the
account.
14. Each of us agrees that, in the event of the death of either or any of us,
the survivor or survivors shall immediately give you written notice thereof,
and you may, before or after receiving such notice, take such actions, require
such papers, inheritance or estate tax waivers, retain such portion of the
account as you may deem advisable to protect you against any tax, liability,
penalty or loss under any present or future laws or otherwise. The estate of
either or any of us who shall have died shall be liable and each survivor shall
continue liable, jointly and severally, to you for any net debit balance or
loss in said account in any way resulting from the completion of transactions
initiated prior to the receipt by you of the written notice of the death of the
decedent, or incurred in the liquidation of the account or the adjustment of
the interests of the respective parties.
If this account is a joint tenancy account with rights of survivorship, and not
a tenancy in common, in the event of the death of either or any of us, the
entire interest in the joint tenancy account shall be vested in the survivor or
survivors on the same terms and conditions as previously held, without in any
manner releasing the decedent's estate from the liability provided for herein.
If this account is a tenancy in common, in the event of the death of either or
any of us, the interests in the account shall be determined as specified on the
signature section of this Agreement and shall be held upon the same terms and
conditions as previously held, without in any manner releasing the decedent's
estate from the liability provided for herein.
SB will assume that our account is a joint account with right of survivorship
unless we elect a tenancy in common by completing Section F on Page 1 of this
Agreement.
<PAGE>
<PAGE> 9
MARGIN AGREEMENT
PARAGRAPHS 15 THROUGH 17 APPLY ONLY TO MARGIN ACCOUNTS
15. You are hereby authorized, without notice to me, and without regard as to
whether or not you have in your possession or under your control at the time
thereof other property of the same kind and amount, to pledge, repledge,
hypothecate or rehypothecate my property or any part thereof, either separately
or together with other property of other clients, either for the amount due you
from me or for a greater sum.
16. I agree to pay ON DEMAND any balance owing with respect to any of my
accounts including interest and commissions and any costs of collection
(including attorneys' fees if incurred by you). I understand that you may
demand full payment of the balance due my account plus any interest charges
accrued thereon, at your sole option, at any time without cause and whether or
not such demand is made for your protection. I understand that all loans made
are not for any specific term or duration but are due and payable at your
discretion upon a demand for payment made to me. I agree that all payments
received from my account(s) including interest, dividends, premiums, principal
or other payments may be applied by you to any balances due in my account(s).
If I maintain both a cash and a margin account with you, you are authorized in
your discretion to utilize the equity in either type of account in satisfaction
of any maintenance margin requirement without the actual transference of funds
or securities between such accounts.
Whenever you deem it necessary or appropriate for your protection, you are
authorized in your sole discretion, to sell, assign, transfer and deliver all
or any part of my property which may be in your possession or control in any
manner you deem appropriate, make any necessary purchases to cover short sales
and/or any open commodity contract position and/or to cancel any outstanding
orders in order to close out the account. Without limiting the generality of
the foregoing, such sale, purchase or cancellation may be made, in your sole
discretion, on the exchange or other market where such business is then usually
transacted, at public auction or at private sale without advertising the same.
All of the above may be done without demand for margin or notice of purchase,
sale or cancellation to me. No demand for margin, or notice given to me of
intent to purchase or sell property or to cancel orders in my account, shall
impose on you any obligation to make such demand or provide such notice to me.
Any such notice or demand is hereby expressly waived, and no specific demand or
notice shall invalidate this waiver. After deducting all costs and expenses of
the purchase and/or sale and deliveries, including, but not limited to,
commissions and transfer and stamp taxes, you shall apply the residue of the
proceeds to the payment of any and all of my liabilities to you, and I shall
remain liable for an deficiency. Upon any such sale, you may purchase the
whole or any part thereof free from any right of redemption. In the event of
my death or incompetency, the authority given by this Paragraph shall continue
effective and shall be binding upon my personal representatives and heirs.
<PAGE>
<PAGE> 10
17. I will at all times maintain such margin for my account maintained by SB,
as SB may require from time to time, and any debit balances arising in such
account shall be charged interest in accordance with the SB policy described in
the accompanying literature regarding new accounts provided by you under Rule
10b-16 of the Securities Exchange Act of 1934, as amended from time to time. I
am aware that interest charges, if not paid, will be added to the debit balance
in my account for the next interest period. I am aware and agree that you may
impose, for my account(s), margin requirements more stringent than those
required by law or exchange regulations. I further understand and agree that
such margin requirements may be changed and modified by you from time to time
without prior notice to me. I further agree that any waiver by your or failure
to promptly enforce, as to my account or that of others, such margin
requirements shall not in any way prevent you from subsequently enforcing said
margin requirements with regard to my account.
<PAGE>
Exhibit 7.2
GENERAL ACCOUNT AGREEMENT
To: Everen Securities, Inc.
in account with Everen Clearing Corp.
Gentlemen:
In consideration of your accepting one or more accounts of the undersigned, it
is agreed as follows:
1. All transactions under this Agreement shall be subject to the
constitution, rules, regulations, customs, usages, rulings and interpretations
of the exchange or market and its clearing house, if any, where executed, and
to all governmental acts and statutes and to rules and regulations made
thereunder insofar as applicable. Whenever any act or statute shall be
enacted, or any regulation shall be made under any act or statute or any rule
or regulation shall be made by any exchange or market of which you are a
member, which shall be applicable to and affect in any manner or be
inconsistent with any of the provisions hereof, the provisions of this
Agreement so affected shall be deemed modified or superseded, as the case may
be, by such act, statute, rule or regulation and all other provisions of this
Agreement and the provisions as so modified shall in all respects continue and
be in full force and effect.
2. All orders for the purchase or sale of any property are given by the
undersigned and executed with the express understanding that an actual purchase
or sale is intended and that it is the undersigned's intention and obligation
in every case to deliver certificates or commodities to cover any and all of
the undersigned's sales and in the case of purchases to receive and pay for
certificates or commodities and that the undersigned will do so in compliance
with all applicable regulations.
3. Except as herein otherwise expressly provided, no provision of this
Agreement may be waived, altered, modified, or amended unless such waiver,
alteration, modification or amendment is in writing and signed by a duly
authorized officer of your corporation.
4. All monies, securities, commodities or other property which you may
at any time be carrying for the undersigned or which may at any time be in your
possession for any purpose, including safekeeping, shall be held by you as
security for the payment of any liability of the undersigned to you,
irrespective of whether or not you have made advances in connection with such
securities, commodities or other property, and irrespective of the number of
accounts the undersigned may have with you.
5. All securities and commodities or any other property, now or
hereafter held by you, or carried by you for the undersigned (either
individually or jointly with others) or deposited to secure the same, may be
held in your name or that of any nominee, and may from time to time and without
notice to the undersigned, be carried in your general loans and may be pledged,
re-pledged, hypothecated, or re-hypothecated, or loaned by you to either
yourselves as brokers or to others, separately or in common with other
<PAGE>
<PAGE> 2
securities and commodities or any other property, for the sum due to you from
the undersigned or for a greater sum and without retaining in your possession
and control for delivery a like amount of similar securities, commodities, or
other property.
6. You are authorized to make such advances and to expend such monies as
in your opinion may be required in respect of all transactions hereunder. The
undersigned agrees to pay customary brokerage and commission charges. Debit
balances of the accounts of the undersigned shall be charged with interest in
accordance with your usual custom, and with any increases in rates caused by
money market conditions, and with such other charges as you may make to cover
your facilities and extra services. Credit balances shall not earn interest.
It is understood and agreed that the interest charge made to the undersigned's
account at the close of one charge period will be compounded, that is, added to
the opening balance for the next charge period unless paid, thereby becoming
part of the principal amount and bearing like interest. A statement disclosing
your credit terms currently applicable to margin transactions is set forth as
part of this Agreement, but is subject to change from time to time as set forth
therein.
7. All securities, other property and collateral deposited for the
protection of the undersigned's collateral and/or margin account may be
deposited with the Depository Trust Company or any other recognized clearing
corporation or depository trust company, and may be held in street name and
used there by you until the undersigned shall demand and become entitled to
delivery thereof; you shall have a reasonable time after such a demand for
delivery to ship securities, other property or collateral from New York or from
any other place where they may be to the place where the same are to be
delivered to the undersigned, and shall only be required to deliver securities,
other property or collateral of the same kind and character as originally
deposited.
8. You shall not be responsible for delays in the transmission of orders
due to breakdown or failure of transmission or communication facilities, and
you shall not be liable for loss caused directly or indirectly by governmental
restrictions, war, strikes, or any other cause or causes beyond your reasonable
control or anticipation.
9. All orders given by the undersigned for the purchase or sale of
securities or other property, which may be listed on more than one exchange or
market, may be executed on any exchange or market selected by you.
10. Whenever in your discretion you consider it necessary for your
protection, or in the event that one or more of the undersigned by judicially
declared incompetent, or dies, or a petition in bankruptcy or for the
appointment of a receiver is filed by or against one or more of the
undersigned, or an assignment is made by one or more of the undersigned for the
benefit of creditors, or an attachment is levied against one or more of the
undersigned's accounts, or the collateral deposited to protect the
undersigned's account is determined by you in your absolute and uncontrolled
discretion, and regardless of current market quotations, to be inadequate to
properly secure the account, then, in any such case, any one of which shall be
<PAGE>
<PAGE> 3
a default hereunder, you are authorized to close out the account in whole or in
part and in connection therewith you may sell any or all the securities and
commodities or other property which may be in your possession, or which you may
be carrying for the undersigned, or you may buy in any securities, commodities
or property of which the account or accounts of the undersigned may be short,
or cancel any outstanding orders in order to close out the account or accounts
of the undersigned in whole or in part in order to close out any commitment
made on behalf of the undersigned. Such sale, purchase or cancellation may be
made according to your judgement and may be made, at your discretion, on the
exchange or other market where such business is then usually transacted, or at
public auction or at private sale without advertising the same and without
notice to the undersigned or to the personal representatives of the
undersigned, and without prior tender, demand or call of any kind upon the
undersigned or upon the personal representative of the undersigned, and you may
purchase the whole or any part thereof free from any right of redemption, and
the undersigned shall remain liable for any deficiency; it being understood
that a prior tender, demand or call of any kind from you, or prior notice from
you, of the time and place of such sale or purchase shall not be considered a
waiver of your right to sell or buy any securities and/or commodities and/or
other property held by you, or owed you by the undersigned, at any time without
prior tender, demand, call or notice. All costs and expenses of such
transaction(s), including commissions and transfer and stamp taxes, shall be
charged to the undersigned.
11. The undersigned understands that you require the maintenance of
certain margin levels in said accounts and that you may, in your discretion,
periodically increase or decrease such requirements. The undersigned will at
all times maintain margins for said accounts in accordance with the then
existing maintenance requirements.
12. You may at any time terminate any accounts of the undersigned with
you and thereupon all amounts advanced by you and other balances owing, with
interest at the current rate, and any and all commissions due under your
current rate schedule, shall be immediately due and payable upon demand. The
undersigned undertakes, at any time upon your demand, to discharge obligations
of the undersigned to you, including obligations with respect to any account
guaranteed by the undersigned, or, in the event of a closing of any account of
the undersigned in whole or in part by you or the undersigned, and/or a similar
closing of any account guaranteed by the undersigned, to pay the deficiency, if
any, and the undersigned agrees to reimburse you for any costs or expenses
incurred by you in collecting such amounts, including reasonable attorney's
fees. No oral agreement or instructions to the contrary shall be recognized.
13. All transactions for or in connection with the account of the
undersigned shall be deemed to be included in a single account notwithstanding
the fact that such transactions may be segregated on your records into separate
accounts, either severally or jointly with others; and at any time and from
time to time, in your discretion, you may without notice to the undersigned,
apply and/or transfer any or all monies, securities, commodities and/or other
property of the undersigned interchangeably between any accounts of the
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<PAGE> 4
undersigned or from any of the undersigned's accounts to any account guaranteed
by the undersigned (other than from Regulated Commodity Accounts.)
14. When placing with you any sell order for short account, the
undersigned will designate it as such and hereby authorizes you to mark such
order as being "short", and when placing with you any order for long account,
will designate it as such and hereby authorizes you to mark such order as being
"long". Any sell order which the undersigned shall designate as being for long
account as above provided, is for securities then owned by the undersigned and,
if such securities are not then deliverable by you from any account of the
undersigned, the placing of such an order shall constitute a representation by
the undersigned that he will deliver them forthwith. Further, in case of the
sale of any security, commodity or other property by you at the direction of
the undersigned and your inability to deliver the same to the purchaser by
reason of failure of the undersigned to supply you therewith in deliverable
form subject to no restrictions on transfer, then and in such event the
undersigned authorizes you, in your discretion to borrow or buy in any
security, commodity, or other property necessary to make delivery thereof, and
the undersigned hereby agrees to be responsible for any loss which you may
sustain thereby and any premiums which you may be required to pay thereon, and
for any loss which you may sustain by reason of your inability to borrow or as
a result of your buy in of such security, commodity or other property sold.
15. In all transactions between you and the undersigned, the undersigned
understands that you are acting as the brokers of the undersigned, except when
you disclose to the undersigned by your formal confirmation or otherwise in
writing that you are acting, with respect to a particular transaction, as
dealers for your own account or as broker for some other person. You may
employ sub-brokers or other agents, as your agents or as agents of the
undersigned, in connection with the execution of any order or the consummation
of any other transaction hereunder, and you shall be responsible only for
reasonable care in their selection.
16. Reports of the execution of orders and statements of the accounts of
the undersigned shall be conclusive if not objected to in writing at once.
17. Communications may be sent to the undersigned at the address of the
undersigned indicated on the last page of this Agreement or at such other
address as the undersigned may hereafter give you in writing, and all
communications so sent, whether by mail, telegraph, messenger or otherwise,
shall be deemed given to the undersigned personally, whether actually received
or not.
18. The provisions of this Agreement shall in all respects be construed
according to, and the rights and liabilities of the parties hereto shall in all
respects be governed by the laws of the State of Illinois.
19. The provisions of this Agreement shall be continuous and shall cover
individually and collectively all accounts which the undersigned may open or
reopen with you and shall enure to the benefit of yourselves, your successors
and assigns and shall be binding upon the undersigned, and/or the estate,
executors, administrators and assigns of the undersigned.
<PAGE>
<PAGE> 5
20. Any order given to you by the undersigned shall be binding upon the
undersigned and his personal representative until you have actual notice of his
death and notice thereof shall not in any way affect your rights under this
Agreement to take any action which you could have taken if the undersigned had
not died.
21. You shall not be liable for refusing to obey any orders given by or
for the undersigned with respect to an account(s) which has or have been the
subject of attachment or sequestration in any legal proceeding against the
undersigned, and you shall be under no obligation to contest the validity of
any such attachment or sequestration.
22. The undersigned agrees to indemnify and to hold you harmless from any
loss, damage or liability arising out of any transaction in which you act,
directly or indirectly as agent of the undersigned, absent any willful or
grossly negligent conduct.
23. Should any valid federal or state law or final determination of any
administrative agency or court of competent jurisdiction affect any provision
of this Agreement, the provision or provisions so affected shall be
automatically conformed to the law or determination and otherwise this
Agreement shall continue in full force and effect.
24. The undersigned understands in connection with this Agreement an
investigation may be made whereby information is obtained through personal
interviews with neighbors, friends or others with whom he is acquainted. This
inquiry includes information as to his character, general reputation, personal
characteristics and mode of living. The undersigned has the right to make a
written request within a reasonable period of time for a complete and accurate
disclosure of additional information concerning the nature and scope of this
investigation.
25. Arbitration Disclosures
Arbitration is final and binding on all parties.
The parties are waiving their right to seek remedies in court, including the
right to jury trial.
Pre-arbitration discovery is generally more limited than and different from
court proceedings.
The arbitrator's award is not required to include factual findings or legal
reasoning and any party's right to appeal or seek modification of rulings by
the arbitrators is strictly limited.
The panel of arbitrators will typically include a minority of arbitrators who
were or are affiliated with the securities industry.
It is agreed that any claim, dispute or controversy between us or involving any
affiliate of Everen Securities, Inc. shall be submitted to arbitration
<PAGE>
<PAGE> 6
conducted under (i) the provisions of the Constitution and Rules of the Board
of Governors of the New York Stock Exchange, Incorporated as to any matter, or
(ii) with respect to transactions effected on any other stock exchanges, under
the arbitration rules of such stock exchange, or (iii) pursuant to the code of
Arbitration procedures of the National Association of Securities Dealers,
Incorporated, as the undersigned may elect. The award of the arbitrators will
be final and judgement upon the award rendered may be entered in any court,
state or federal, having jurisdiction. Copies of such arbitration rules may be
obtained from Everen Securities, Inc., or any such organization.
Arbitration must be commenced by service upon the other party of a written
demand for arbitration or a written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the undersigned does not much
such election within five (5) days of such demand notice, then the undersigned
authorizes you to do so on behalf of the undersigned.
Credit Terms in Margin Transactions
A finance charge is made by Everen Clearing Corp. ("KCC") for extensions
of credit to its customers for the purposes of enabling them to purchase, carry
or trade in any security. These finance charges are described in KCC's monthly
statements as "interest". The following is a statement concerning the method
of computation of total finance charges on credit extended to customers.
A. The annual rate of the interest charged on net debit balances is computed
at a select rate above the brokers call money rate. The brokers call
money rate is the rate banks charge securities brokers. A higher charge
may be levied against an account depending on various factors such as the
evaluation of the commission income generated by the account, the service
required for the account, etc.
B. Interest charges will be calculated monthly on the adjusted debit balance
in an account using a 360 day year basis. Interest charged is calculated
on a settlement date basis.
C. Interest rates will be changed without notice to the customer in
accordance with changes in the brokers call money rate. Interest is
charged monthly, just prior to the statement date.
D. The daily net balance is determined by combining the daily closing
statement balances in all general (margin) accounts with any free credit
balance in cash accounts.
E. Any mark-to-the-market as a result of a short position, i.e. any credit
that appears in a statement due to short sales (including short sales
against the box) will be used to reduce any debit balance. Since KCC must
borrow the same security in order to deliver it to the buying broker, this
credit is not available to the customer. Therefore, on a daily basis, the
market value of a short sale is debited against the margin balance in
order to arrive at the adjusted debit balance for interest purposes. The
daily closing price is used to determine any appreciation or depreciation
of a security sold short which will, in turn, adjust the daily net
balance. This practice is known as "marking-to-the-market".
<PAGE>
<PAGE> 7
F. The amount of interest charges is based on the following formula:
Adjusted Debit Balance Rate Number of Days
---------------------- ---- --------------
1 X 100 X 360
G. An interest charge (as described in A.) will be charged on all prepayments
resulting from proceeds of sales which are paid to the customer prior to
settlement date of the trade for which negotiable securities have been
received.
H. To the extent permitted by applicable law, all securities in all accounts
are collateral for any debit balances in account with KCC. A lien is
created by these debits to secure the amount of money owed KCC. In
accordance with the terms of the General Account Agreement which is signed
below, securities in accounts can be sold to reduce or liquidate entirely
any debit balances in accounts. The customer may be required to deposit
additional collateral in accordance with the rules and regulations of the
appropriate regulatory bodies and internal requirements. KCC reserves the
right to require additional collateral at any time it is deemed desirable.
I. The net debit balance in an account may be paid in full at any time,
thereby avoiding further interest charges.
J. The undersigned has read the foregoing in its entirety before signing.
Questions about interest charges should be directed to the Investment
Broker.
<PAGE>
<PAGE> 8
BY SIGNING THIS AGREEMENT, I ACKNOWLEDGE THAT MY SECURITIES MAY BE LOANED TO
YOU OR LOANED OUT TO OTHERS TO THE EXTENT PERMITTED BY APPLICABLE LAWS AND
REGULATIONS.
THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE SET FORTH IN PARAGRAPH
25 ABOVE. BY MY SIGNATURE BELOW, I ACKNOWLEDGE THAT I HAVE READ AND AGREE TO
BE BOUND BY ALL THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THAT I HAVE
RECEIVED A COPY OF THIS AGREEMENT.
/s/ Richard M. Osborne
- --------------------------- ----------------------
Dated Signature
/s/ E. Tammy Daye /s/ Richard M. Osborne
- --------------------------- ----------------------
Witness Signature
Richard M. Osborne TTEE,
- ---------------------------
Richard M. Osborne Trust WYO7-5999-0411
- --------------------------- -----------------------------
Account Name Branch I. D. & Account Number
7001 Center Street, Mentor, Ohio 44060
- ----------------------------------------------------------------
Home Address
/s/ David Van Duesen
- -----------------------------
Investment Broker's Signature
<PAGE>
EXHIBIT 7.3
THIRD CAPITAL, LLC
NINTH FLOOR
314 CHURCH STREET
NASHVILLE, TENNESSEE 37201
FAX: 615.255.3190
615.255.3199
Agreement Re: Warrants and Directorship
This Agreement dated as of March 12, 1997, is executed by and between Third
Capital, LLC ("Third Capital") and Richard M. Osborne ("Osborne").
Now therefore, in consideration of good and valuable consideration the receipt
and adequacy of which is hereby acknowledged, the parties agree as follows:
1. Osborne agrees that, within 10 days after the purchase by Osborne or his
affiliates of 500,000 shares of the common stock of Pacific Gateway Properties,
Inc. ("PGP"), Osborne shall execute and deliver to Third Capital a warrant
agreement (the "Warrant") to purchase 100,000 shares of PGP common stock
substantially in the same form as the attached warrant agreement. Such Warrant
shall be executed and delivered by Osborne or any affiliate capable of
performing all of the obligations specified therein.
2. Additionally, Osborne agrees that, within 10 days of Osborne or his
affiliates obtaining control' of PGP (as herein defined), Osborne shall
execute and deliver to Third Capital a warrant agreement (the "Warrant") to
purchase an additional 100,000 shares of PGP common stock substantially in the
same form as the attached warrant agreement. Such Warrant shall be executed
and delivered by Osborne or any affiliate capable of performing all of the
obligations specified therein.
3. For purposes of this agreement, Osborne shall be deemed to have obtained
control' of PGP upon the occurrence of any of the following events:
(a) Osborne, either directly or indirectly through one or more of his
affiliated entities, owns or controls 50% of the outstanding voting interests
in PGP; or
(b) Osborne, either directly or indirectly through one or more of his
affiliated entities, elects, nominates, or otherwise appoints a majority of
individuals to PGP's Board of Directors; or
(c) An affiliate of, or an individual selected by, Osborne is appointed
by the Board of Directors of PGP to serve as the PGP's President, Chief
Executive Officers, or similar executive capacity; or
<PAGE>
<PAGE> 2
(d) Osborne is elected or appointed as the Chairman of the Board of
Directors of PGP; or
(e) PGP changes the location of its principal executive offices from the
State of California to another state (unless Osborne can show that such change
of location was not at the request or direction of Osborne).
4. This agreement shall evidence our discussion concerning Osborne's desire
for C. L. Jarratt to become a Director of PGP and shall be an indication of
Osborne's commitment to use his best efforts to nominate C. L. Jarratt as a
Director in the event Osborne is able to nominate 2 individuals to the Board of
Directors of PGP and shall indicate Jarratt's willingness to serve as a
Director if so elected.
5. The parties agree that the normal rules of construction interpreting
documents against the drafter thereof shall not apply to this agreement since
both parties have been represented by legal counsel with respect to the
negotiation and drafting of this agreement. Provided, further, the parties
agree that this document shall be governed by the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
date first above written.
WITNESSES: THIRD CAPITAL:
/s/ Henry B. Freeman Third Capital, LLC
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/s/ James G. Lewis By: /s/ C.L. Jarratt
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C. L. Jarratt
Chief Manager
WITNESSES: OSBORNE:
/s/ Nathan Osborne
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/s/ John L. Cessna /s/ Richard M. Osborne
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Richard M. Osborne
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EXHIBIT 7.4
THIS WARRANT WAS ORIGINALLY GRANTED ON ________, 1997 AND SUCH ISSUANCE WAS NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS
WARRANT MAY NOT BE TRANSFERRED IN VIOLATION OF SECTION 3 HEREOF. THIS WARRANT
MAY ONLY BE TRANSFERRED IF REGISTERED UNDER THE ACT UNLESS, IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE TRUST, SUCH REGISTRATION IS UNNECESSARY
FOR SUCH TRANSFER TO COMPLY WITH THE ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
PACIFIC GATEWAY PROPERTIES, INC.
FOR VALUE RECEIVED, the Richard M. Osborne Trust (the "Trust") hereby grants to
Third Capital, LLC, a Tennessee limited liability company ("Holder") the right
to purchase from the Trust up to One Hundred Thousand (100,000) shares of the
fully registered common stock (the "Common Stock") of Pacific Gateway
Properties, Inc. (the "Company") which are owned by the Trust, or entities
controlled by him, at a price per share of Five Dollars and Thirty Cents
($5.30) (the "Exercise Price").
This Warrant is subject to the following provisions:
1. Exercise Period. The Holder may exercise, in whole or in part, the
purchase rights represented by this Warrant at any time on or before March 20,
2007.
2. Exercise Procedure.
2.1 This Warrant shall be deemed to have been exercised when the Trust
has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, in the form set forth in Exhibit
A attached hereto, executed by the person exercising all or any part of the
purchase rights represented by the Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in Exhibit B attached hereto
evidencing the assignment of this Warrant to the Purchaser, in which case the
Holder shall have complied with the provisions set forth in Sections 6 and 7
hereof; and
2.2 Certificates for Common Stock purchased upon exercise of this Warrant
shall be delivered by the Trust to an escrow agent of the Trust's choice within
thirty (30) business days after the date of the Exercise Time, duly endorsed in
all manner necessary to transfer such shares to the Purchaser. The Trust and
escrow agent shall notify Purchaser in writing
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immediately upon the delivery of the Common Stock to the escrow agent. Within
five (5) days after receipt of such notice from the escrow agent, Purchaser
shall wire transfer immediately available funds to an account designated by the
escrow agent in an amount equal to the product of the number of shares being
purchased upon such exercise multiplied by the Exercise Price (the "Aggregate
Exercise Price"). Simultaneously with the receipt of the Aggregate Exercise
Price by the escrow agent, escrow agent shall deliver the Common Stock to the
Purchaser. Unless this Warrant has expired or all of the purchase rights
represented hereby have been exercised, the Trust shall prepare a new Warrant,
substantially identical hereto, representing the rights formerly represented by
this Warrant which have not expired or been exercised and shall within such
five (5) day period, deliver such new Warrant to the Holder.
2.3 The Common Stock transferred upon exercise of this Warrant shall be
deemed to have been transferred to the Purchaser at the Exercise Time, and the
Purchaser shall be deemed for all purposes to have become the holder of such
Common Stock at the Exercise Time.
2.4 The transfer of certificates for Common Stock upon exercise of this
Warrant shall be made without charge to the Holder or the Purchaser for costs
incurred by the Trust in connection with such exercise. Each share of Common
Stock transferable upon exercise of this Warrant shall upon payment of the
Exercise Price therefor, be fully paid and nonassessable and free from all
taxes, liens and charges with respect to the transfer thereof.
2.5 The Trust shall assist and cooperate with the Holder or any Purchaser
required to make any governmental filings or obtain any governmental approvals
prior to or in connection with any exercise of this Warrant.
3. Warrant Transferability. This Warrant and all rights hereunder are
transferable, in whole or in part, by either party hereunder, but only upon the
prior written consent of the other party, which consent shall not be
unreasonably withheld. Upon such consent, any transfer of this Warrant, in
whole or in part, shall be effected upon surrender of this Warrant with a
properly executed assignment (in a form reasonably acceptable to counsel) and
issuance of one or more new warrants reflecting the appropriate parties
thereto. Each transferee of all or any part of this Warrant, by taking and
holding the same, consents to and agrees to be bound by the provisions of this
Warrant.
4. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder at the principal office
of the Trust, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants shall represent such
portion of such rights as is designated by the Holder at the time of such
surrender. All Warrants representing portions of the rights hereunder are
referred to herein as the "Warrants".
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5. Representations and Warranties of the Trust. The Trust hereby represents
and warrants as follows: (i) the Trust has the full power and authority to
enter into and perform this Warrant, (ii) the Trust is not a party to any
contract or subject to any legal restriction that would prevent or restrict
complete fulfillment by the Trust of all of the terms and conditions of this
Warrant or compliance with any of the Trust's obligations under it, (iii) the
Trust has taken all necessary actions to authorize and approve the execution,
delivery and performance of this Warrant, and (iv) this Warrant constitutes a
legal, valid and binding obligation of the Trust, enforceable against the Trust
in accordance with its terms.
6. Representations and Warranties of Holder. The Holder understands that the
grant of this Warrant is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by virtue of
Sections 3(b) and 4(2) of the Securities Act, and Holder represents and
warrants that:
(a) Holder has been advised that this Warrant has not been registered
under the Securities Act and, therefore, cannot be resold unless it is
registered under the Securities Act or unless an exemption from registration
is available and the certificates representing this Warrant will be legended
accordingly. Holder is aware that no market exists for the resale of the
Warrant nor is it anticipated that a market will develop and that it may be
required to hold the Warrant indefinitely. Holder is purchasing the Warrant
and the Common Stock for its own account for investment and not with a view to,
or for resale in connection with, the distribution thereof, and Holder has no
present intention of distributing or reselling the Warrant or the Common Stock.
Holder represents and warrants that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of such investment and is able to bear the economic risk of such
investment.
Further, Holder has been advised that certain of the Common
Stock owned by the Trust may not be registered. In the event such Common Stock
is not registered, the Holder understands that it cannot be resold unless such
stock is registered under the Securities Act or unless an exemption from
registration is available and the certificates representing the Common Stock
transferred hereunder will be legended accordingly. Notwithstanding the
foregoing, the Trust agrees to use its best efforts to transfer to the Holder
fully registered Common Stock which is freely transferable by the Holder.
Further, the Trust agrees that in the event unregistered Common Stock is
transferred to the Holder, then Holder shall have the right to demand that the
Trust immediately register such Common Stock in order that such stock shall be
freely transferable; and, immediately upon such demand, the Trust shall use all
commercially reasonable efforts to cause the Company to register such Common
Stock.
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In making the above representation, Holder is aware that it must
bear the economic risk of such investment for a n indefinite period of time
since, in the view of the Securities and Exchange Commission, the statutory
basis for exemption from registration under the Securities Act would not be
present if such present intention is to hold the Warrant only for the long-term
capital gains period of the Internal Revenue Code of 1986, as amended (the
"Code"), or for a deferred sale, or for any fixed period in the future.
(b) Holder has made a complete and thorough investigation of the affairs
and prospects of the Company including its public filings to date and has had a
reasonable opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning this investment, and all
such questions have been answered to the full satisfaction of Holder.
(c) Holder acknowledges that the Trust is entering into this agreement in
reliance upon the representations and warranties of the Holder contained
herein.
(d) All of the equity owners of the Holder are, and each of them
individually is, an "accredited investor" as such term is defined in Rule
501(a) of Regulation D.
(e) Holder is a duly organized and validly existing limited liability
company validly organized and existing under the laws of the State of
Tennessee, and is authorized, qualified and empowered to execute and deliver
this Warrant and perform the obligations hereunder, and to purchase and hold
this Warrant.
(f) The execution, delivery and performance of this Warrant by Holder
does not and with the lapse of time will not violate or conflict with, or
result in a breach of any term or provision, or constitute a default under
Holder's governing instruments and does not and with the lapse of time will not
conflict with, result in a breach of, give rise to a right of termination of,
or accelerate the performance requested by, the terms of any agreement,
indenture, contract, obligation, instrument, judgment or decree to which Holder
is a party or by which Holder or any of Holder's assets are bound.
7. Adjustment of Exercise Price/Shares. The Exercise Price and number of
shares to be issued upon the exercise of each Warrant shall be subject to
adjustment from time to time upon the happening of certain events while the
Warrants remain outstanding, as follows:
7.1 Merger, Sale of Assets, Etc. If the Company at any time shall
consolidate with or merge into or sell or convey all or substantially all its
assets to any other corporation, this Agreement shall thereafter evidence the
right to purchase such number and kind of securities and property have been
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issued or distributed to the Trust on account of such consolidation, merger,
sale or conveyance, upon or with respect to such consolidation, merger, sale or
conveyance. The foregoing provision shall similarly apply to successive
transactions of a similar nature.
7.2 Reclassification, Etc. If the Company by subdivision, combination,
reclassification of securities or otherwise, changes any of the securities then
purchasable upon the exercise of the rights contained in this Warrant into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter evidence the right to purchase such number and kind of
securities as have been issued to the Trust as the result of such change with
respect to the securities which were subject to the conversion or purchase
right immediately prior to such subdivision, combination, reclassification, or
other change. If shares of Common Stock are subdivided or combined into a
greater or smaller number of shares of Common Stock, the Exercise Price shall
be proportionately reduced in case of subdivision of shares or proportionately
increased in the case of combination of shares; in both cases by the ratio
which the total number of shares of Common Stock to be outstanding immediately
after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.
8. Use of Accountants. The Trust may retain a firm of independent public
accountants of recognized national standing to make any computation required
under this Warrant, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Warrant.
9. Replacement. Upon receipt of evidence reasonably satisfactory to the
Trust (an affidavit of the Holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing this
Warrant, and in the case of any such loss, theft or destruction, upon receipt
of an indemnity reasonably satisfactory to the Trust, or in the case of any
such mutilation upon surrender of such certificate, the Trust shall (at his
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the same rights represented by such lost, stolen,
destroyed, or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
10. Redemption of Warrants. The Warrants are not subject to redemption by the
Trust.
11. Notices. Except as otherwise expressly provided herein, all notices
referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service or sent by registered
or certified mail, return receipt requested, postage prepaid and shall be
deemed to have been delivered when so delivered, sent or three days after being
deposited in the U. S. Mail: (i) to the Trust, at 7001 Center Street, Mentor,
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Ohio 77060 Attention: Richard M. Osborne, and (ii) to the Holder, at 314 Church
Street, Ninth Floor, Nashville, Tennessee 37210 Attention: C. L. Jarratt
(unless otherwise indicated by the Holder.)
12. Amendment and Waiver. Except as otherwise provided herein, the provisions
of this Warrant may be not be amended without the prior written consent of the
Trust and all of the Holders of Warrants.
13. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by the
internal law of the State of Ohio, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Ohio or any other
jurisdictions) that would cause the application of the laws of any jurisdiction
other than the State of Ohio.
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IN WITNESS WHEREOF, Richard M. Osborne, as duly authorized representative
of the Richard M. Osborne Trust has executed this Warrant this ____ day of
__________, 1997.
TRUST:
RICHARD M. OSBORNE TRUST
Richard M. Osborne, Sole Trustee
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Exhibit A
EXERCISE AGREEMENT
To:______________
Dated:___________
The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby agrees to subscribe for and purchase _________ shares of Common
Stock covered by such Warrant and makes payment herewith in full therefor at
the price per share provided by such Warrant.
Signature: _____________________
Address: _____________________
_____________________
_____________________
_____________________
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EXHIBIT 7.5
AGREEMENT OF JOINT FILING
Pursuant to Rule 13d-1(f) promulgated under the Securities Exchange Act of
1934, as amended, the undersigned persons hereby agree to file with the
Securities and Exchange Commission, the Statement on Schedule 13D (the
"Statement") to which this Agreement is attached as an exhibit, and agree that
such Statement, as so filed, is filed on behalf of each of them.
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original, and all of which together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
Dated: April 14, 1997 TURKEY VULTURE FUND XIII, LTD.
By: /s/ Richard M. Osborne
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Richard M. Osborne, Manager
RICHARD M. OSBORNE TRUST
By: /s/ Richard M. Osborne
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Richard M. Osborne, Trustee
