SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
PREFERRED INCOME MANAGEMENT FUND INCORPORATED
(Name of Issuer)
Common Stock
(Title of Class of Securities)
74037Q10
(CUSIP Number)
Thomas R. Stephens, Esq.
Bartlit Beck Herman Palenchar & Scott
511 Sixteenth Street Suite 700
Denver, Colorado 80202
(303) 592-3100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 9, 1996
(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 [ ].
Check the following box if a fee is being paid with the statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
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).
(Continued on following page(s))
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Horejsi Enterprises, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Kansas
NUMBER OF 7 SOLE VOTING POWER
967,300
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
967,300
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
0
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
967,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.27%
14 TYPE OF REPORTING PERSON*
CO
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stewart R. Horejsi
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
0
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
0
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Larry L. Dunlap
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
0
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER
0
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
Item 1. Security and Issuer.
This Statement relates to the Common Stock, $.01 par value per share
(the "Shares") of Preferred Income Management Fund Incorporated, a Maryland
corporation (the "Company"). The principal executive offices of the Company are
located c/o Flaherty & Crumrine Incorporated, 301 E. Colorado Boulevard, Suite
720, Pasadena, California 91101.
Item 2. Identity and Background
(a) This Statement is filed by Horejsi Enterprises, Inc., a Kansas
corporation ( HEI ), as the direct beneficial owners of Shares, and (ii) by
virtue of his positions with certain shareholders of HEI, by Stewart R. Horejsi,
and (iii) by virtue of his positions with HEI and certain shareholders of HEI,
by Larry L. Dunlap (collectively, the "Reporting Persons"). By signing this
Statement, each Reporting Person agrees that this Statement is filed on its or
his behalf.
The Lola Brown Trust No. 1B (the Brown Trust ), Ernest Horejsi
Trust No. 1B (the Ernest Horejsi 1B Trust ), Evergreen Atlantic LLC
( Evergreen ), and Stewart Horejsi Trust No. 2 (the Stewart Horejsi Trust ) are
the holders of approximately 40%, 24%, 18% and 16%, respectively, of the
outstanding shares of HEI. Mr. Horejsi is an agent of HEI, the Manager of
Evergreen and one of three trustees of each of the Brown Trust and the Ernest
Horejsi 1B Trust. Mr. Dunlap is the Chairman, President and Treasurer of HEI,
and one of the three trustees of each of the Brown Trust, the Ernest Horejsi 1B
Trust and the Stewart Horejsi Trust. Susan Ciciora owns approximately 1% of the
outstanding shares of HEI, is a director of HEI and one of the three trustees of
each of the Brown Trust, the Ernest Horejsi 1B Trust and the Stewart Horejsi
Trust. Stephen C. Miller is a director of, and Secretary of, HEI.
By virtue of the relationships described above and his roles with
HEI and the primary stockholders of HEI, Mr. Horejsi may be deemed to control
HEI and may be deemed to possess indirect beneficial ownership of the Shares
held by HEI. However, Mr. Horejsi disclaims such beneficial ownership of the
Shares beneficially owned, directly or indirectly, by HEI.
(b) The principal executive offices of HEI and the business
address of Mr. Horejsi are located at 253 N. Santa Fe, POB 45, Salina, Kansas
67401. The business address of Mr. Dunlap is located at 223 N. Santa Fe, POB
121, Salina, Kansas 67401. The business address of Ms. Ciciora is 1428 Coventry
Court, Darien Illinois 60561 and the business address of Mr. Miller is 4888
Pearl East Circle, #202W, Boulder, Colorado 80301.
(c) HEI is a holding company engaged through its affiliates in the
retail sale of welding consumables, equipment and gases, the wholesale sale of
bulk gases, leasing of cylinders to various wholesale and retail customers, and
the financing of such activities.
(d) Neither any of the Reporting Persons nor, to the best
knowledge of such persons, any officer or director of HEI has been convicted in
a criminal proceeding in the past five years (excluding traffic violations or
similar misdemeanors).
(e) During the past five years, neither any of the Reporting
Persons nor, to the best knowledge of such persons, any officer or director of
HEI, was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws of finding
any violation with respect to such laws.
(f) HEI is a Kansas corporation. Mr. Horejsi and all officers and
directors of HEI are citizens of the United States.
Item 3. Source and Amount of Funds or Other Consideration
The total amount of funds required by HEI to acquire the Shares
reported in Item 5(c) was $12,954,341.50 (including commissions). Such funds
were or will be provided by HEI's cash on hand and margin borrowings under
accounts maintained by HEI with Bear Stearns Securities Corp. and by HEI and
related parties with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Margin
borrowings in the Bear Stearns account bear interest at the federal funds rate
plus three-quarters of one percent and are due on demand. The foregoing
description of HEI s customer agreement with Bear Stearns is qualified in its
entirety by reference to the customer agreement attached as Exhibit 1.
Margin borrowings from Merrill Lynch bear interest at the federal
funds rate plus one half of one percent and are due on demand. Such margin
borrowings are based on the combined collateral in accounts with Merrill Lynch
maintained by each of HEI and the Brown Trust, the Ernest Horejsi 1B Trust, the
Mildred B. Horejsi Trust and the Ernest Horejsi Trust. The foregoing
description of HEI s account agreements with Merrill Lynch is qualified in its
entirety by reference to the cash management account agreement and the working
capital management account agreement attached as Exhibits 2 and 3, respectively.
Item 4. Purpose of Transaction.
HEI purchased the Shares described in Item 5 of this Statement in
order to acquire an equity interest in the Company. Depending upon its
evaluation of the Company's investments and prospects, and upon future
developments (including, but not limited to, performance of the Shares in the
market, the effective yield on the Shares, availability of funds, alternative
uses of funds, and money, stock market and general economic conditions), any of
the Reporting Persons or other entities that may be deemed to be affiliated with
HEI may from time to time purchase Shares, and any of the Reporting Persons or
other entities that may be deemed to be affiliated with HEI may from time to
time dispose of all or a portion of the Shares held by such person, or cease
buying or selling Shares. Any such additional purchases or sales of the Shares
may be in open market or privately-negotiated transactions or otherwise.
In early 1996, a representative of HEI contacted Flaherty & Crumrine
Incorporated ( F&C ), the Company s investment advisor, to discuss the
possibility that HEI might acquire F&C or some of F&C s business, including its
advisory contract with the Company. No agreement or arrangement was reached
between HEI and F&C in this regard.
Except as described in this Item 4, none of the Reporting Persons
nor, to the best knowledge of such persons, any other person named in Schedule B
to this Statement has formulated any plans or proposals which relate to or would
result in any matter required to be disclosed in response to paragraphs (a)
through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) HEI is the direct beneficial owner of 967,300 Shares, or
approximately 10.27% of the 9,416,743 Shares outstanding as of May 23, 1996,
according to information contained in the Company's 1996 proxy statement. By
virtue of the relationships reported under Item 2 of this Statement, Mr. Horejsi
may be deemed to share indirect beneficial ownership of the Shares directly
beneficially owned by HEI. Mr. Horejsi disclaims all such beneficial ownership.
(b) HEI has the direct power to vote and direct the disposition of
the Shares held by it. By virtue of the relationships described in Item 2, Mr.
Horejsi may be deemed to share the indirect power to vote and direct the
disposition of the Shares held by HEI.
(c) The table below sets forth purchases of the Shares by the
Reporting Persons during the last 60 days. All of such purchases were effected
by HEI on the New York Stock Exchange.
<TABLE>
<CAPTION>
Approximate Price
Per Share
Date Amount of Shares (exclusive of commissions)
<S> <C> <C>
07/22/96 20,000 12.875
07/23/96 28,400 12.875
07/24/96 24,800 12.875
07/25/96 4,000 12.875
07/29/96 400 13.000
07/29/96 80,000 13.000
07/31/96 20,000 13.000
07/31/96 80,000 13.125
08/02/96 7,000 13.375
08/02/96 25,000 13.375
08/02/96 15,000 13.250
08/02/96 3,000 13.250
08/05/96 10,000 13.250
09/09/96 27,800 13.250
09/09/96 15,200 13.375
09/09/96 15,000 13.500
09/09/96 68,100 13.625
09/09/96 73,200 13.750
09/10/96 65,000 13.750
09/10/96 13,200 13.625
09/11/96 40,500 13.750
09/11/96 14,500 13.625
09/12/96 15,000 13.750
09/12/96 38,000 13.875
09/16/96 87,500 13.875
09/16/96 300 13.750
09/17/96 12,700 13.875
09/18/96 28,000 13.875
</TABLE>
(d) HEI has the right to receive and the power to direct the
receipt of dividends from, and proceeds from the sale of, the Shares held by it.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
HEI is a party to a Customer Agreement with Bear Stearns Securities
Corp. dated as of January 29, 1995. Margin borrowings under the agreement bear
interest at the federal funds rate plus three quarters of one percent and are
due upon demand. No borrowings are currently outstanding under the agreement.
The foregoing summary of the agreement is qualified in its entirety by reference
to the attached Exhibit 1, which is incorporated herein by this reference.
HEI is a party to a Working Capital Management Account Agreement and
a Cash Management Account Agreement with Merrill Lynch, Pierce, Fenner & Smith
Incorporated. Margin borrowings under the agreements bear interest at the
federal funds rate plus one half of one percent and are due upon demand. Margin
borrowings from Merrill Lynch are based on the combined collateral in accounts
with Merrill Lynch maintained by each of HEI and the Brown Trust, the Ernest
Horejsi 1B Trust, the Mildred B. Horejsi Trust and the Ernest Horejsi Trust. As
of September 18, 1996, $26,673,884.85 in borrowings were outstanding under such
accounts, of which $6,255,219.95 was attributable to borrowings by HEI. The
foregoing summary of HEI s agreements with Merrill Lynch is qualified in its
entirety by reference to the attached Exhibit 2 and 3, which are incorporated
herein by this reference.
Other than set forth above, neither any of the Reporting Persons
nor, to the best knowledge of such persons, any officer or director of HEI has
any contract, arrangement, understanding or relationship (legal or otherwise)
with any person with respect to securities of the Company, including, but not
limited to, transfer or voting of any such securities, finder's fees, joint
ventures, loans or option arrangements, puts or calls, guarantees of profits,
division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1. Customer Agreement dated as of January 29, 1995 between
Horejsi Enterprises Inc. and Bear Stearns Securities Corp.
Exhibit 2. Working Capital Management Account Agreement between
Horejsi Enterprises Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Exhibit 3. Cash Management Account Agreement between Horejsi
Enterprises Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Signature
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.
Date: September 19, 1996
/s/ Stewart R. Horejsi
Stewart R. Horejsi, individually
/s/ Larry L. Dunlap
Larry L. Dunlap, individually and as
Chairman and President of Horejsi
Enterprises, Inc.
Exhibit 1
BEAR STEARNS BEAR, STEARNS SECURITIES CORP.
One Metrotech Center North
Brooklyn, New York 11201-3859
(212) 272-1000
CUSTOMER AGREEMENT
PLEASE READ CAREFULLY, SIGN AND RETURN
This agreement ("Agreement") sets forth the terms and conditions under
which Bear, Stearns Securities Corp., Bear, Stearns & Co. Inc., and their
successors and assigns (collectively "Bear Stearns") will transact business with
you including but not limited to the maintenance of your account(s). If these
accounts are cash accounts and you have fully paid for all securities therein,
the provisions of paragraphs 16 and 17 shall not bind you unless you enter into
a margin transaction.
1. APPLICABLE LAW AND REGULATIONS. All transactions shall be subject
to all applicable law and the rules and regulations of all federal, state and
self-regulatory agencies, including, but not limited to, the Board of Governors
of the Federal Reserve System and the constitution, rules and customs of the
exchange or market (and clearing house) where executed.
2. SECURITY INTEREST AND LIEN. As security for the payment of all of
your obligations and liabilities to Bear Stearns, Bear Stearns shall have a
continuing security interest in all property in which you have an interest held
by or through Bear Stearns or its affiliates, including, but not limited to,
securities, commodity futures contracts, commercial paper, monies and any after-
acquired property. In addition, in order to satisfy any such outstanding
liabilities or obligations, Bear Stearns may, at any time and without prior
notice to you, use, apply or transfer any such securities or property
interchangeably. In the event of a breach or default under this Agreement, Bear
Stearns shall have all rights and remedies available to a secured creditor under
any applicable law in addition to the rights and remedies provided herein.
3. DEPOSITS ON TRANSACTIONS. Whenever Bear Stearns, in its sole
discretion, considers it necessary for its protection, it may require you to
deposit cash or collateral immediately in your account(s) prior to any
applicable settlement date in order to assure due performance of your open
contractual commitments.
4. BREACH, BANKRUPTCY OR DEFAULT. Any breach of this Agreement or the
filing of a petition or other proceeding in bankruptcy, insolvency, or for the
appointment of a receiver by or against you, the levy of an attachment against
your account(s) with Bear Stearns, or your death, mental incompetence or
dissolution, or any other grounds for insecurity, as determined by Bear Stearns
in its sole discretion, shall constitute, at Bear Stearns' election, a default
by you under all agreements Bear Stearns may then have with you, whether
heretofore or hereafter entered into. In the event of default, Bear Stearns
reserves the right to sell, without prior notice to you, any and all property in
which you have an interest, held by or through Bear Stearns or any of its
affiliates, to buy any or all property which may have been sold short, to cancel
any or all outstanding transactions and/or to purchase or sell any other
securities or property to offset market risk, and to offset any indebtedness you
may have (either individually or jointly with others), after which you shall be
liable to Bear Stearns for any remaining deficiency, loss, costs or expenses
sustained by Bear Stearns in connection therewith. Such purchases and/or sales
may be effected publicly or privately without notice or advertisement in such
manner as Bear Stearns may in its sole discretion determine. At any such sale
or purchase, Bear Stearns may purchase or sell the property free of any right of
redemption. In addition, Bear Stearns shall have the right to set off and apply
any amount owing from Bear Stearns or any of its affiliates to you against any
indebtedness in your accounts, whether matured or unmatured.
5. FEES AND CHARGES. You understand that Bear Stearns may charge
commissions and other fees for execution, custody or any other service furnished
to you, and you agree to pay such commissions and fees at Bear Stearns' then
prevailing rates. You understand that such commissions and fees may be changed
from time to time, upon thirty days' prior written notice to you, and you agree
to be bound thereby.
6. TRANSACTION REPORTS AND ACCOUNT STATEMENTS. Reports of the
execution of orders and statements of your account(s) shall be conclusive if not
objected to in writing within five days in the case of reports of execution, and
ten days in the case of account statements, after such documents have been
transmitted to you by mail or otherwise.
7. DEBIT BALANCES/TRUTH-IN-LENDING. You hereby acknowledge receipt of
Bear Stearns' Truth-in-Lending disclosure statement. You understand that
interest will be charged on any debit balances in your account(s), in accordance
with the methods described in such statement or in any amendment or revision
thereto which may be provided to you. Any debit balance which is not paid at
the close of an interest period will be added to the opening balance for the
next interest period.
8. CLEARANCE ACCOUNTS. Bear, Stearns Securities Corp. carries your
account(s) as clearing agent for your broker. Unless Bear, Stearns Securities
Corp. receives from you prior written notice to the contrary, Bear, Stearns
Securities Corp. may accept from such other broker, without any inquiry or
investigation (a) orders for the purchase or sale of securities and other
property in your account(s) on margin or otherwise and (b) any other
instructions concerning your account(s) or the property therein. You understand
and agree that Bear Stearns shall have no responsibility or liability to you for
any acts or omissions of such broker, its officers, employees or agents. You
agree that your broker and its employees are third-party beneficiaries of this
Agreement, and that the terms and conditions hereof, including the arbitration
provision, shall be applicable to all matters between or among any of you, your
broker and its employees, and Bear Stearns and its employees.
9. COSTS OF COLLECTION. You hereby authorize Bear Stearns to charge
you for any reasonable direct or indirect costs of collection, including, but
not limited to, attorneys' fees, court costs and other expenses.
10. IMPARTIAL LOTTERY ALLOCATION. You agree that, in the event Bear
Stearns holds on your behalf bonds or preferred stocks in street name or bearer
form which are callable in part, you will participate in the impartial lottery
allocation system of the called securities in accordance with the rules of the
New York Stock Exchange, Inc. or any other appropriate self-regulatory
organization. When any such call is favorable, no allocation will be made to
any account(s) in which Bear Stearns has actual knowledge that its officers,
directors or employees have any financial interest until all other customers are
satisfied on an impartial lottery basis.
11. WAIVER, ASSIGNMENT AND NOTICES. Neither Bear Stearns' failure to
insist at any time upon strict compliance with this Agreement or with any of the
terms hereof nor any continued course of such conduct on its part shall
constitute or be considered a waiver by Bear Stearns of any of its rights or
privileges hereunder. Any assignment of your rights and obligations hereunder
or interest in any property held by or through Bear Stearns without obtaining
the prior written consent of an authorized representative of Bear Stearns shall
be null and void. Notices or other communications, including margin calls,
delivered or mailed to the address provided by you, shall, until Bear Stearns
has received notice in writing of a different address, be deemed to have been
personally delivered to you.
12. FREE CREDIT BALANCES. You hereby direct Bear Stearns to use any
free credit balance awaiting investment or reinvestment in your account(s)
in accordance with all applicable rules and regulations and to pay interest
thereon at such rate or rates and under such conditions as are established from
time to time by Bear Stearns for such account(s) and for the amounts of cash so
used.
13. RESTRICTIONS ON ACCOUNT. You understand that Bear Stearns, in its
sole discretion, may restrict or prohibit trading of securities or other
property in your account(s).
14. CREDIT INFORMATION AND INVESTIGATION. You authorize Bear Stearns
and your broker, in their discretion, to make and obtain reports concerning your
credit standing and business conduct. You may make a written request within a
reasonable period of time for a description of the nature and scope of the
reports made or obtained by Bear Stearns.
15. SHORT AND LONG SALES. In placing any sell order for a short
account, you will designate the order as such and hereby authorize Bear Stearns
to make the order as being "short." In placing any sell order for a long
account, you will designate the order as such and hereby authorize Bear Stearns
to make the order as being "long." The designation of a sell order as being for
a long account shall constitute a representation that you own the security with
respect to which the order has been placed, that such security may be sold
without restriction in the open market and that, if Bear Stearns does not have
the security in its possession at the time you place the order, you shall
deliver the security by settlement date in good deliverable form or pay to Bear
Stearns any losses or expenses incurred as a result of your failure to make
delivery.
16. MARGIN ACCOUNTS. You hereby agree to deposit and maintain such
margin in your margin account(s) as Bear Stearns may in its sole discretion
require, and you agree to pay forthwith on demand any debit balance owing with
respect to any of your margin account(s). Upon your failure to pay, or at any
time Bear Stearns, in its discretion, deems necessary for its protection,
whether with or without prior demand, call or notice, Bear Stearns shall be
entitled to exercise all rights and remedies provided in paragraphs 2 and 4
above. No demand, calls, tenders or notices that Bear Stearns may have made or
given in the past in any one or more instances shall invalidate your waiver of
the requirements to make or give the same in the future. Unless you advise Bear
Stearns to the contrary, you represent that you are not an affiliate (as defined
in Rule 144(a)(I) under the Securities Act of 1933) of the issuer of any
security held in your account(s).
17. CONSENT TO LOAN OR PLEDGE OF SECURITIES. Within the limits of
applicable law and regulations, you hereby authorize Bear Stearns to lend either
to itself or to others any securities held by Bear Stearns in your account(s),
together with all attendant rights of ownership, and to use all such property as
collateral for its general loans. Any such property, together with all
attendant rights of ownership, may be pledged, repledged, hypothecated or
rehypothecated either separately or in common with other such property for any
amounts due to Bear Stearns thereon or for a greater sum, and Bear Stearns shall
have no obligation to retain a like amount of similar property in its possession
and control.
18. LEGALLY BINDING. You hereby agree that this Agreement and all the
terms hereof shall be binding upon you and your estate, heirs, executors,
administrators, personal representatives, successors and assigns. You agree
that all purchases and sales shall be for your account(s) in accordance with
your oral or written instructions. You hereby waive any and all defenses that
any such instruction was not in writing as may be required by the Statute of
Frauds or any other similar law, rule or regulation.
19. AMENDMENT; ENTIRE AGREEMENT. You agree that Bear Stearns may modify
the terms of this Agreement at any time upon prior written notice. By
continuing to accept services from Bear Stearns, you will have indicated your
acceptance of any such modifications. If you do not accept such modifications,
you must notify Bear Stearns in writing; your account may then be terminated by
Bear Stearns, after which you will remain liable to Bear Stearns for all
remaining liabilities or obligations. Otherwise, this Agreement may not be
waived or modified absent a written instrument signed by an authorized
representative of Bear Stearns. Except as set forth above, this Agreement
represents the entire agreement and understanding between you and Bear Stearns
concerning the subject matter hereof.
20. NEW YORK LAW TO GOVERN. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF NEW YORK AND SHALL BE CONSTRUED, AND THE RIGHTS AND
LIABILITIES OF THE PARTIES DETERMINED, IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK.
21. 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.
- 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 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 THE 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.
YOU AGREE, AND BY MAINTAINING AN ACCOUNT FOR YOU BEAR STEARNS
AGREES, THAT CONTROVERSIES ARISING BETWEEN YOU AND BEAR STEARNS, ITS CONTROL
PERSONS, PREDECESSORS, SUBSIDIARIES AND AFFILIATES AND ALL RESPECTIVE
SUCCESSORS, ASSIGNS AND EMPLOYEES, WHETHER ARISING PRIOR TO, ON OR SUBSEQUENT TO
THE DATE HEREOF, SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS
AGREEMENT SHALL BE HELD AT THE FACILITIES AND BEFORE AN ARBITRATION PANEL
APPOINTED BY THE NEW YORK STOCK EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE,
INC., OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (AND ONLY BEFORE
SUCH EXCHANGES OR ASSOCIATION). YOU MAY ELECT ONE OF THE FOREGOING FORUMS FOR
ARBITRATION, BUT IF YOU FAIL TO MAKE SUCH ELECTION BY REGISTERED MAIL OR
TELEGRAM ADDRESSED TO BEAR, STEARNS SECURITIES CORP., 245 PARK AVENUE, NEW YORK,
NEW YORK 10167, ATTENTION: CHIEF LEGAL OFFICER (OR ANY OTHER ADDRESS OF WHICH
YOU ARE ADVISED IN WRITING), BEFORE THE EXPIRATION OF TEN DAYS AFTER RECEIPT OF
A WRITTEN REQUEST FROM BEAR STEARNS TO MAKE SUCH ELECTION, THEN BEAR STEARNS MAY
MAKE SUCH ELECTION. FOR ANY ARBITRATION SOLELY BETWEEN YOU AND A BROKER FOR
WHICH BEAR STEARNS ACTS AS CLEARING AGENT, SUCH ELECTION SHALL BE MADE BY
REGISTERED MAIL TO SUCH BROKER AT ITS PRINCIPAL PLACE OF BUSINESS. THE AWARD OF
THE ARBITRATORS, OR OF THE MAJORITY OF THEM, SHALL BE FINAL, AND JUDGMENT UPON
THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING
JURISDICTION.
22. SEVERABILITY. If any provision herein is or should become
inconsistent with any present or future law, rule or regulation of any sovereign
government or regulatory body having jurisdiction over the subject matter of
this Agreement, such provision shall be deemed to be rescinded or modified in
accordance with any such law, rule or regulation. In all other respects, this
Agreement shall continue to remain in full force and effect.
23. CAPACITY TO CONTRACT; CUSTOMER AFFILIATION. You represent that you
are of legal age and that, unless you have notified Bear Stearns to the
contrary, neither you nor any member of your immediate family is an employee of
any exchange or member thereof, the National Association of Securities Dealers,
Inc., or a member thereof, or of any corporation, firm or individual engaged in
the business of dealing, as broker or principal, in securities, options or
futures, or of any bank, trust company or insurance company.
24. EXTRAORDINARY EVENTS. Bear Stearns shall not be liable for losses
caused directly or indirectly by government restrictions, exchange or market
rulings, suspension of trading, war, strikes or other conditions beyond its
control.
25. HEADINGS. The headings of the provisions hereof are for descriptive
purposes only and shall not modify or qualify any of the rights or obligations
set forth in such provisions.
26. TELEPHONE CONVERSATIONS. For the protection of both you and Bear
Stearns, and as a tool to correct misunderstandings, you hereby authorize Bear
Stearns at Bear Stearns' discretion and without prior notice to you, to monitor
and/or record any or all telephone conversations, between you, Bear Stearns and
any of Bear Stearns' employees or agents.
If this is a Joint Account, both parties must sign. Persons signing on behalf
of others should indicate the titles or capacities in which they are signing.
BY SIGNING THIS AGREEMENT YOU ACKNOWLEDGE THAT:
1. THE SECURITIES IN YOUR MARGIN ACCOUNT(S) AND ANY SECURITIES FOR
WHICH YOU HAVE NOT FULLY PAID, TOGETHER WITH ALL ATTENDANT OWNERSHIP RIGHTS, MAY
BE LOANED TO BEAR STEARNS OR LOANED OUT TO OTHERS; AND
2. YOU HAVE RECEIVED A COPY OF THIS AGREEMENT.
THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AT PARAGRAPH 21.
THIS AGREEMENT IS DATED AS OF JANUARY 29, 1996.
LARRY L. DUNLAP
(Typed or Printed Name)
/S/ LARRY L. DUNLAP
(Signature)
LAURA RHODENBAUGH
(Typed or Printed Name)
/S/ LAURA RHODENBAUGH
(Signature)
Accepted By:__________________________
(Bear, Stearns Securities Corp.)
______________________________________
______________________________________
(Mailing Address)
ACCOUNT NO:___________________________
DATE:_________________________________
DATE:_________________________________
Exhibit 2
WORKING CAPITAL MANAGEMENTSM ACCOUNT AGREEMENT
This agreement ("WCMA Agreement") sets forth the terms and conditions governing
the Working Capital Management account ("WCMA Account") financial service ("WCMA
Service"). The Customer agrees to read this WCMA Agreement and keep it for its
records because, by signing the WCMA Agreement ("WCMA Application"), the
Customer is agreeing to its terms.
It is understood that before the WCMA program, as hereinafter described, is
provided, it will be necessary: (a) for MLPF&S to open a conventional Cash
Securities Account or, Margin Securities Account (please check one) for the
Customer (the "Securities Account").
DEFINITIONS
In this WCMA Agreement, "Customer" means the business or organization on whose
behalf the WCMA Application, which incorporates the WCMA Agreement by reference,
is signed. "MLPF&S" means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"MLB&T" means Merrill Lynch Bank & Trust Co. "MLNF" means Merrill Lynch National
Financial. "Bank One" means Bank One, Columbus, N.A. "Chase" means Chase
Manhattan Bank, N.A. MLB&T, MLNF, Bank One and Chase are referred to collec-
tively as "Banks."
"WCMA Check/Card Account" means the account(s) established by MLPF&S for
Customer with one or more of the Banks. "WCMA Checks" means issued by Bank One
to Customer for use with the WCMA Check/Card Account. "Card(s)" means one or
more Visa cards issued by MLB&T or MLNF for use with the WCMA Check/ Card
Account. "Money Funds" means the CMA(R) money market funds. "Money Accounts"
means the Money Funds and any FDIC insured money market deposit accounts opened
for the Customer through the Insured Savings" Account ("ISA") program. "Securi-
ties Account" means an MLPF&S securities account established for the Customer,
which is either a cash account, or if the Customer elects the WCMA Investor
CreditLine service in its WCMA Application, a margin account.
For purposes of this WCMA Agreement, "securities and other property" means, but
is not limited to, money, securities, financial instruments and commodities of
every kind and nature and all contracts and options relating thereto, whether
for present or future delivery.
The Customer hereby acknowledges that the WCMA Program will operate
substantially as follows, and consents and agrees to the following terms and
conditions:
1. DESCRIPTION OF THE WCMA SERVICE
The WCMA Service is an integrated financial service linking three components:
the Securities Account, a choice of several Money Accounts and the WCMA
Check/Card Account.
(A) SECURITIES ACCOUNT. The Securities Account may be used to purchase, sell and
hold securities and other investments available from or through MLPF&S. If the
Securities Account includes the WCMA Investor CreditLine service, it may also be
utilized to purchase and sell securities on credit or to obtain loans based on
the current margin loan value of securities in the Securities Account.
The Customer agrees to pay normal brokerage fees for securities transactions in
the Securities Account.
(B) MONEY ACCOUNTS. The Customer acknowledges receipt of copies of the
Prospectuses of the CMA no-load money market mutual funds (the "CMA Funds") and
the Insured Savings Account Fact Sheet which contain a more complete description
of the CMA Money Accounts and of the "Merrill Lynch Cash Management Account(R)
Program Description for the Working Capital Managements Account," which
documents, as amended from time to time, are incorporated herein by reference
and made a part hereof.
(C) MONEY ACCOUNT INVESTMENTS/DEPOSITS. Available free credit balances (i.e.,
any cash that may be transferred out of the Securities Account without giving
rise to interest charges) will be automatically invested or deposited in the
Money Account designated by the Customer as its "Primary Money Account" on each
Business Day (as defined below), except as otherwise provided in this WCMA
Agreement with respect to the application of funds to: (i) repay advances made,
if applicable, from the WCMA Investor CreditLine service; (ii) reestablish the
Minimum Money Account Balance under the WCMA Directed Reserve program; or (iii)
pay other charges. Investments in Money Fund shares will be made at their
current net asset value under the circumstances described in the Prospectuses of
the Money Funds under "Purchase and Redemption of Shares."
Free credit balances become available for investment or deposit through the
Primary Money Account in the following manner: (i) with respect to (x) the
proceeds of sales of securities, (y) deposits made by wire transfer or the
Funds Transfer Service provided to Customers by MLPF&S ("FTS"), or (z) dividend
or interest receipts, on the next Business Day following receipt; and, (ii) with
respect to deposits from any other source, on the second Business Day following
receipt, unless the deposit is made after the cut-off time for such deposits, in
which case, on the third Business Day following receipt.
The Customer agrees that its Money Account balances may be automatically
redeemed or withdrawn to satisfy obligations arising in the Customer's
Securities Account. If the Customer establishes an account with the WCMA
Investor CreditLine service this will include shares constituting its Minimum
Money Account Balance and amounts necessary to satisfy minimum equity
requirements.
If the Money Account designated by the Customer as its Primary Money Account is
unavailable for any reason, MLPF&S is authorized, but not obligated to cause
available free credit balances in the Securities Account to be invested in
shares of the CMA Money Fund.
Customers with the WCMA Investor CreditLine service may designate a Minimum
Money Account Balance under the WCMA Directed ReserveSM program. Under certain
circumstances, Money Account Balances representing the Minimum Money Account
Balance may be redeemed or withdrawn by MLPF&S.
(D) WCMA CHECK/CARD ACCOUNT. The Customer authorizes MLPF&S to open a WCMA
Check/Card Account for the Customer with the Banks and agrees that WCMA Checks
and Cards, if any, issued by the Banks shall be used solely in conjunction with
the WCMA Service and subject to the terms and conditions of this WCMA Agreement.
The representatives of the Customer designated in The WCMA Check and Card
Instructions (the "Instructions") are authorized to write WCMA Checks on the
Customer's WCMA Check/Card Account.
The Customer shall, on a continuing basis, be responsible for the care and
safekeeping of WCMA Checks provided by the Bank and for the review of the
monthly statements provided by MLPF&S, in order promptly to discover and report
to MLPF&S the possible unauthorized use of said checks. The customer shall
permit only those persons authorized in the WCMA Application to sign checks on
behalf of the company, to prepare, complete or issue WCMA Checks on the
company's behalf or to have access to unissued WCMA Checks. The Customer shall
be responsible for any and all losses and damages, indirect or consequential,
that arise from or are attributable to the breach of the Customer's undertaking
to safeguard its WCMA Checks, to review its monthly statements or to permit only
designated persons to have access to or prepare, complete or issue WCMA Checks.
The Customer agrees to notify MLPF&S immediately if it believes or has reason to
believe that the Customer's WCMA Checks have been used or signed by an
unauthorized person.
If the Customer requests that WCMA Checks be printed with two or more signature
lines for counter signature purposes, the Customer agrees that the requirement
for more than one signature is for the Customer's internal purposes only, and
neither MLPF&S nor the Bank shall have any responsibility or liability for the
payment of any check without a counter signature or with an unauthorized counter
signature.
(E) CUSTODY OF SECURITIES. MLPF&S will hold all securities for the Customer's
Securities Account either: (i) with an SEC-approved securities depository, where
deposited securities are held in fungible bulk in the nominee name of such
depository with any other securities of the same class of the same issuer
belonging to other MLPF&S customers; or (ii) with a Federal Reserve member bank,
where deposited securities are commingled in a book-entry account with
securities belonging to other MLPF&S customers. The Customer's securities will
at all times be separately identified on the books and records of MLPF&S as
belonging to the Customer, and MLPF&S will exercise the due care expected of a
professional custodian with respect to such securities. Notwithstanding the
foregoing, MLPF&S shall not be responsible for any loss or damage with respect
to the Customer's securities that may occur as a result of war, civil commotion,
enemy action, or governmental acts or any other causes beyond the control of
MLPF&S or such depository.
(F) RESTRICTION ON SECURITIES TRANSACTIONS. The Customer agrees that under no
circumstances shall the WCMA Check/Card Account be used to purchase shares of
the Money Accounts or to effect transactions in the Securities Account or other
MLPF&S accounts.
2. WCMA AVAILABILITY AND PAYMENT PROCEDURES
For purposes of this WCMA Agreement, the total of: (i) any available free credit
balances in the Securities Account; (ii) the available redemption value of
shares or deposit balance of the Customer's Money Accounts (including any
applicable Minimum Money Account Balance), subject to any delays in availability
as previously described; and (iii)if applicable, the available margin loan value
of the Customer's WCMA Investor CreditLine service constitutes the Customer's
"WCMA Availability." (WCMA Availability may be referred to in some documents
provided to the Customer as "Purchasing Power.") The Customer's WCMA
Availability is used determine the total amount available to the Customer for
the payment of WCMA Checks, Card transactions and other transfers of funds.
MLPF&S may delay increasing WCMA Availability for up to 10 business days after
the receipt of checks or other negotiable instruments used to reduce any
applicable margin loan balance of the WCMA Investor CreditLine service.
(A) TRANSACTIONS EXCEEDING WCMA AVAILABILITY. If a transaction exceeds the
Customer's WCMA Availability, Chase or any successor to or assign of Chase may
accept such transaction as an overdraft and advance funds to MLPF&S or the Banks
in the amount exceeding the Customer's WCMA Availability. Any overdraft,
together with any finance charges ("Finance Charge(s)") incurred, is immediately
due and payable to Chase.
In each overdraft statement cycle, Finance Charges are figured by applying a
daily periodic rate of .049315% (18% ANNUAL PERCENTAGE RATE) to the Average
Daily Balance of overdrafts and by multiplying the resulting figure by the
number of days in that statement cycle. A daily overdraft balance is calculated
each day by starting with the beginning balance of amounts owed, adding any new
overdrafts and subtracting any payments or credits received that day and unpaid
Finance Charges. The Average Daily Balance is then calculated by adding all of
the daily balances of overdrafts in that statement cycle and dividing the total
by the number of days in the overdraft statement cycle. Finance Charges accrue
from the date Chase accepts an overdraft until the date payment is made.
(B) PERIODIC OVERDRAFT BILLING STATEMENT. The Customer will receive periodic
overdraft billing statement from Chase which will detail among other disclosures
any overdraft(s) plus Finance Charges on the overdraft(s), payments and credits
and the balance due.
MLPF&S will promptly upon receipt of notice, make payment to the Bank for any
WCMA Check or Card transactions, or initiate other transfers on the Customer's
behalf to the extent of the Customer's WCMA Availability. Payments, including
without limitations any fees payable in connection with the WCMA Service will be
made in the following order: first, from any available free credit balances in
the Securities Account; second, from the proceeds of redemption withdrawal
beginning with the Primary Money Account and continuing in the order in which
the Customer established its non-primary Money Accounts, if any, but excluding
any applicable Minimum Money Account Balance; third, any applicable margin loans
up to the available margin loan value of the Customer's WCMA Investor
CreditLine; and fourth, from the proceeds of redemption of shares or withdrawals
of any applicable Minimum Money Account Balance.
3. FUNDS TRANSFERS
(A) GENERAL. Requests for wire transfers of funds will be transmitted to banks
selected by MLPF&S as agent for the Customer. Such banks and any subsequent
banks involved in the transfer may use various wire transfer systems, including
the Fedwire system, when carrying out the Customer's request. The rights and
obligations of the Customer, MLPF&S and any banks involved in carrying out the
Customer's wire transfer requests are governed by Article 4A of the Uniform
Commercial Code, and by applicable rules of automated clearing house
associations or, for Fedwires, by Subpart B of Regulation J of the Federal
Reserve Board of Governors.
Transfers of funds throughout the banking system and related funds transfer and
communications systems, including the Fedwire system, involve various risks
which the Customer assumes in requesting wire transfers. Such risks include, but
are not limited to the following: 1 ) the liability of banks with respect to
wire transfers may be limited by law and by contract; in particular, their
responsibility for processing transfers may be limited to relying upon
identifying (e.g., account) numbers rather than account party names; 2) Customer
may not be able to cancel or amend a wire transfer request once transmitted to a
bank for processing; and 3) Fedwires are irreversible once transmitted by a bank
and may not be recoverable.
The Customer agrees that MLPF&S is acting as the Customer's agent in
transmitting wire transfer requests to banks selected by MLPF&S and the Customer
shall be regarded as the "sender" of such wire transfers. In addition to
applicable law, the Customer's rights and obligations shall be governed by
contracts that MLPF&S enters into with banks from time to time for wire
transfers of its own and the Customer's funds.
The Customer agrees that MLPF&S's security procedures, which include a
confidential password to initiate transfers through the WCMA Funds Transfer
Service, and the security procedures of banks that MLPF&S contracts with for
transfers of funds are commercially reasonable. If MLPF&S notifies the Customer
of changes in its own security procedures or if MLPF&S agrees to modified
security procedures of such banks from time to time, the Customer's continued
use of the Service to request wire transfers shall constitute the Customer's
agreement that such changed security procedures are commercially reasonable. The
Customer has a right to request information about applicable security procedures
at any time.
(B) WCMA FUNDS TRANSFER SERVICE. The Customer may elect to enroll in FTS by
completing the WCMA Funds Transfer Service Enrollment Form ("FTS Enrollment
Form"), which document, as amended from time to time, is hereby incorporated by
reference and made a part hereof. If the Customer so elects, the Customer
authorizes MLPF&S to initiate the transfer of funds on its behalf in accordance
with instructions reasonably believed by MLPF&S to have been given from time to
time by those persons designated by the Customer in its FTS Enrollment Form,
which persons are deemed to be the Customer's agents and attorneys-in-fact.
All FTS transfer requests must be accompanied by the number of the Securities
Account and the confidential password ("FTS Password") selected by the Customer.
Such transfers may be made by initiating credit or debit transfers to or from
accounts at MLPF&S or at one or more financial institutions designated by the
Customer in its FTS Enrollment Form, and the institutions participating in such
transfers are hereby authorized to accept such debit or credit transfer
instructions communicated by MLPF&S and to transfer funds in accordance
therewith.
In the event that erroneous transfers are made pursuant to FTS, MLPF&S is
authorized to initiate debit or credit transfers to correct such erroneous
transfers, provided that any such correction is made in accordance with
applicable laws, rules, or regulations.
For purposes of this WCMA Agreement, a FTS Password shall cease to be effective
at the commencement of business by MLPF&S on the first Business Day following
receipt of written or telephone notice of cancellation of the Customers FTS
Password, directed to MLPF&S. The Customer shall not disclose its FTS Password
to any person other than those persons that it has designated as authorized to
initiate FTS transfers.
The Customer understands that it shall be liable for all transfers of funds,
whether or not actually authorized by the Customer, which are initiated by
instructions which include the FTS Password of the Customer then in effect, as
well as any and all losses and damages, direct, indirect or consequential, that
arise from or are attributable to such transfers. The Customer understands and
agrees that MLPF&S may accept debit and/or credit instructions to debit and/or
credit an account in which the person(s) named in the FTS Enrollment Form may
have an interest and MLPF&S shall have no obligation to ascertain the propriety
of any such instructions.
4. TERMINATION OF THE CUSTOMER'S SUBSCRIPTION TO THE WCMA SERVICE
MLPF&S may terminate the Customer's subscription to the WCMA Service at any time
in its sole discretion. The Customer may terminate its subscription to the WCMA
Service at any time upon notice to MLPF&S. Without limiting MLPF&S's rights in
this regard, the deposit of checks followed by the prompt withdrawal of funds,
for the primary purpose of earning dividends or interest on Money Account
balances from the time MLPF&S advances funds on the Customer's behalf until
checks so deposited are collected, is inconsistent with the WCMA Service. MLPF&S
may terminate the Customer's subscription to the WCMA Service if, in its sole
judgment, it appears to MLPF&S that the Customer is so acting.
Should the Customer's subscription to the WCMA Service be terminated, MLPF&S may
and is hereby authorized to redeem all shares of the Money Funds and unless
otherwise directed at the time withdraw all ISA deposits owned by the Customer
(including, if applicable, any shares and/or deposits representing the Minimum
Money Account Balance), and to direct the liquidation of any securities or
investments held by MLPF&S on behalf of the Customer, and apply the proceeds
thereof to repay any amount payable by the Customer pursuant to this WCMA
Agreement. MLPF&S shall have the right to set off any amount owing under this
WCMA Agreement against any monies due to the Customer and any monies held in an
account of the Customer with MLPF&S or any of its affiliates.
All rights and remedies of MLPF&S existing at termination of the Customer's
subscription to the WCMA Service shall survive and shall be in addition to all
other rights and remedies available at law or equity.
Upon termination of the Customer's subscription to the WCMA Service, the
Customer shall promptly return all Cards and unused WCMA Checks to MLPF&S.
Failure to return the Cards or such WCMA Checks to MLPF&S may result in a delay
in complying with the Customer's instructions as to the disposition of the
proceeds from the redemption or withdrawal of the Customer's Money Account
balances and its Securities Account assets.
5. AUTHORIZATION WITH RESPECT TO CREDIT INFORMATION
The Customer hereby authorizes MLPF&S and the Banks to obtain and disclose any
and all financial and other information relating to the Customer to each other,
to MLPF&S and to any affiliates of MLPF&S.
6. PERIODIC STATEMENTS AND NOTICES
The Customer will receive a statement on a monthly basis from MLPF&S on its own
behalf and as agent for the Banks, and any ISA participating depository
institutions, which statement will describe transactions relating to the
Customer's subscription to the WCMA Service. The statement of account, as
stated, shall be deemed conclusive as to the Customer if not objected to within
ten (10) days of mailing. It is therefore understood that the Customer should
carefully and promptly review each monthly statement.
Any notices or other communications by MLPF&S to the Customer's address listed
in the WCMA Application or to such other address as may be designated from time
to time in writing by the Customer, and all notices and other communications so
sent by whatever means, shall be deemed to have been given personally to the
Customer, upon such sending, whether or not actually received.
7. LIMITATIONS ON LIABILITY
MLPF&S, the Banks, and any third parties providing services pursuant to this
WCMA Agreement make no representations, warranties, or guarantees, express or
implied, with respect to the WCMA Service or any services provided in accordance
therewith, except as otherwise set forth in this WCMA Agreement. In no event
shall MLPF&S, the Banks, or any third party providing services pursuant to this
WCMA Agreement be liable for lost profits or any special, consequential, or
exemplary damages of any nature resulting from the conduct of the WCMA Service,
even if MLPF&S, the Banks, or any such third party has been notified of the
possibility of such losses or damages, provided, however, that this shall not
limit any party's liability for compensation damages due to negligence or
willful misconduct.
8. EXTRAORDINARY EVENTS
MLPF&S shall have no obligation to provide services in connection with the WCMA
Service when and to the extent that MLPF&S or any party that provides services
or facilities to MLPF&S in connection with the WCMA Service is prevented from
doing so by government restrictions, exchange or market rulings, suspension of
trading, electronic or telephone failures, labor dispute, war, or any other
cause not within MLPF&S's or such other party's reasonable control.
9. REPRESENTATIONS, ADDITIONAL TERMS AND AMENDMENTS
The Customer acknowledges receipt of copies of the Money Funds' prospectuses,
the Insured Savings Account Fact Sheet and the Program Description of the
Working Capital Management Account, which shall be referred to as the
"Documents" for purposes of this WCMA Agreement. The Documents, which contain
additional terms governing the WCMA Service, are incorporated into this WCMA
Agreement and made a part hereof. MLPF&S and the Banks shall have the right to
amend the Documents as provided in the next paragraph. Unless the context
otherwise requires, the term "WCMA Agreement" shall include the Documents, as
amended from time to time.
The Customer agrees that MLPF&S shall have the right to amend this WCMA
Agreement, by modifying or rescinding any of its existing provisions or by
adding any new provision, by sending written notice at least 30 days before the
effective date of the amendment.
The Customer understands that there may be additional documentation required by
applicable law or the policies and procedures of MLPF&S or the Banks. The
Customer agrees to promptly comply with any such requests for additional
documents.
10. MISCELLANEOUS
(A) SEPARABILITY. If any provisions of this WCMA Agreement are held to be
invalid, illegal, void or unenforceable by reason of any law, rule,
administrative order, or judicial decision, all other provisions of this WCMA
Agreement shall nevertheless remain in full force and effect.
(B) JOINT AND SEVERAL LIABILITY. If there is more than one Customer signing this
WCMA Agreement, their obligations under this WCMA Agreement shall be joint and
several.
(C) COSTS OF COLLECTION. To the extent permitted by applicable law the Customer
agrees to pay the reasonable costs and expenses of collection, including
attorneys' fees, for any unpaid balance in the Securities Account or other
amounts owed by the Customer to MLPF&S or the Bank pursuant to this WCMA
Agreement.
(D) BUSINESS DAY. For purposes of this WCMA Agreement, "Business Day" means any
day on which MLPF&S is open to the public for carrying on substantially all its
business functions.
(E) CAPTIONS AND HEADINGS. Captions and headings of this WCMA Agreement are not
part of this WCMA Agreement and shall not be considered in its interpretation.
(F) INTEGRATION. This WCMA Agreement, together with all other documents
incorporated herein by reference or required by MLPF&S in connection herewith
constitutes the entire understanding of the parties with respect to the subject
matter hereof and may not be modified or altered except by a writing signed by
the party/parties against which such modification or alteration is sought to be
enforced.
(G) APPLICABLE RULES AND REGULATIONS. All transactions in the Securities Account
and all WCMA Investor CreditLine service transactions shall be subject to the
constitution, rules, regulations, customs and usages of the exchange or market
and its clearing house, if any, on which such transactions are executed by
MLPF&S or its agents, including subsidiaries and affiliates of MLPF&S.
PARAGRAPH 11 APPLIES ONLY WHEN THE CARD PORTION OF THE CARD/CHECK ACCOUNT IS
USED, INCLUDING WHEN CARDS ARE OBTAINED.
11. In connection with the Customer's subscription to the WCMA financial
service, the Customer hereby requests that MLNF or MLB&T issue one or more
Visa(R) cards to the Customer for use in conjunction with the Customer's
subscription to the WCMA financial service (the "Card"). The Application will be
considered accepted by MLB&T or MLNF when a Card is issued to the Customer, and
the Customer agrees to be bound by the following terms and conditions:
(A) OWNERSHIP. The Card remains the property of MLB&T or MLNF and may be
canceled by MLB&T or MLNF at any time without prior notice. The Customer agrees
to surrender the Card immediately upon the request of MLB&T, MLNF or MLPF&S.
(B) LIABILITY. The Customer will be liable for all transactions made by the
Customer, or by any person authorized to act on the Customer's behalf, through
the use of the Card.
(C) UNAUTHORIZED VISA CARD USE. The Customer may be liable for the unauthorized
use of its Card in an amount up to $50. The Customer will not be liable for any
unauthorized use which occurs after MLPF&S, MLNF or MLB&T has been notified
orally or in writing of loss, theft or possible unauthorized use. Notice should
be directed to the address or the phone number set forth in the Program
Description for the Working Capital Management Account.
(D) CASH MACHINE SERVICE. The Customer may elect to enroll in the Merrill Lynch
Cash Machine Service. If the Customer has requested such service and a Personal
Identification Number (the "PIN") chosen by the Customer has been approved by
MLPF&S, MLNF or MLB&T, the Customer may obtain cash, subject to WCMA
Availability (as that term is defined in this WCMA Agreement), at the machines
designated by MLPF&S from time to time. during the hours that these machines are
accessible to the general public. The Customer shall not disclose its PIN to any
person other than those persons it has authorized to use the Cash Machine
Service.
(E) TERMINATION OF ACCOUNT. The Customer's right to use the Card will
automatically be terminated if the Customer's subscription to the WCMA financial
service is terminated by the Customer or MLPF&S. It is also understood that
MLB&T or MLNF may terminate the Customer's right to use the Card at any time in
its discretion without prior notice. If the Customer's right to use the Card is
terminated for any reason, the Customer shall promptly return the Card to MLB&T,
MLNF or MLPF&S.
(F) ACCOUNT INQUIRIES. It is understood that inquiries and error allegations
concerning the Card Account and the monthly statement should be directed through
MLPF&S.
(G) DESIGNATION. Certain individuals are designated in the WCMA Application as
authorized to use Cards, execute sales drafts, or cash advances and use the Cash
Machine Service, and each individually can do anything that the Customer can do
under this WCMA Agreement. Any of these persons 'whose name and signature appear
in the WCMA Application are each authorized to empower any person(s) whom he or
she deems proper at any time to do any and all things that he or she is
authorized to do. The designations and authorizations shall remain effective
until MLB&T or MLNF receives notification in writing to the contrary.
PARAGRAPH 12 APPLIES ONLY IF THE CUSTOMER REQUESTS THAT THE SECURITIES ACCOUNT
BE ESTABLISHED WITH THE WCMA INVESTOR CREDITLINE SERVICE.
12. WCMA INVESTOR/CREDITLINE SERVICE
The WCMA Investor CreditLine service permits the Customer to obtain loans from
MLPF&S secured by eligible marginable and exempt securities.
(A) MARGIN REQUIREMENTS AND CREDIT CHARGES. The Customer will maintain such
securities and other property in the Securities Account for margin purposes as
MLPF&S shall require from time to time; and the monthly debit balance of the
Securities Account shall be charged, in accordance with MLPF&S's usual custom,
with interest at a rate permitted by the laws of the State of New York. It is
understood that the interest charge made to the Customer's Securities Account at
the close of a charge period will, unless paid, be added to the opening balance
for the next charge period and that interest will be charged upon such opening
balance, including all interest so added.
(B) SECURITY INTEREST. All securities or other property now or hereafter held,
carried or maintained by MLPF&S or by any of its affiliates in MLPF&S's
possession and control, or in the possession and control of any such affiliate,
for any purpose, in or for any account of the Customer, now or hereafter opened,
including any account in which the Customer may have an interest, shall be
subject to a lien for the discharge of all the indebtedness and other
obligations of the Customer to MLPF&S and are to be held by MLPF&S as security
for the payment of any liability or indebtedness of the Customer to MLPF&S in
any of said accounts. MLPF&S shall have the right to transfer securities and
other property so held by MLPF&S from or to any of the accounts of the Customer
whenever in its judgment MLPF&S considers such a transaction necessary for its
protection. In enforcing its lien, MLPF&S shall have the discretion to determine
which securities and property are to be sold and which contracts are to be
closed.
(C) REPRESENTATIONS AS TO BENEFICIAL OWNERSHIP AND CONTROL. The Customer
represents that with respect to securities against which margin credit is or may
be extended by MLPF&S: (i) the Customer is not the beneficial owner of more than
three percent (3%) of the number of outstanding shares of any class of equity
securities; and (ii) does not control, is not controlled by and is not under
common control with, the issuer of any such securities. In the event that any of
the foregoing representations is inaccurate or becomes inaccurate, the Customer
will promptly so advise MLPF&S in writing.
(D) CALLS FOR ADDITIONAL COLLATERAL--LIQUIDATION RIGHTS.
(I) MLPF&S, IN ADDITION TO AND NOT IN LIEU OF ANY OTHER RIGHTS OR REMEDIES IT
MAY HAVE UNDER THIS WCMA AGREEMENT, SHALL HAVE THE RIGHT TO REQUIRE ADDITIONAL
COLLATERAL:
(A) IN ACCORDANCE WITH ITS GENERAL POLICIES REGARDING ITS MARGIN MAINTENANCE AND
REQUIREMENTS, AS SUCH MAY BE MODIFIED, AMENDED OR SUPPLEMENTED FROM TIME TO
TIME; OR
(B) IF IN ITS DISCRETION MLPF&S CONSIDERS IT NECESSARY FOR ITS PROTECTION AT AN
EARLIER OR LATER POINT IN TIME THAN CALLED FOR BY SAID GENERAL POLICIES; OR
(C) IN THE EVENT THAT A PETITION IN BANKRUPTCY OR FOR AN APPOINTMENT OF A
RECEIVER IS FILED BY OR AGAINST THE CUSTOMER; OR
(D) IF AN ATTACHMENT IS LEVIED AGAINST THE ACCOUNTS OF THE CUSTOMER; OR
(E) IN THE EVENT OF THE DEATH OR DISSOLUTION OF THE CUSTOMER.
(II) IF THE CUSTOMER DOES NOT PROVIDE MLPF&S WITH ADDITIONAL COLLATERAL AS
MLPF&S MAY REQUIRE LN ACCORDANCE WITH (A) OR (B), OR SHOULD AN EVENT DESCRIBED
IN (C), (D) OR (E) OCCUR (WHETHER OR NOT MLPF&S ELECTS TO REQUIRE ADDITIONAL
COLLATERAL), MLPF&S SHALL HAVE THE RIGHT:
(A) TO SELL ANY OR ALL SECURITIES AND OTHER PROPERTY IN THE ACCOUNTS OF THE
CUSTOMER WITH MLPF&S OR WITH ANY OF ITS AFFILIATES, WHETHER CARRIED INDIVIDUALLY
OR JOINTLY WITH OTHERS;
(B) TO BUY ANY OR ALL SECURITIES AND OTHER PROPERTY WHICH MAY BE SHORT IN SUCH
ACCOUNTS; AND
(C) TO CANCEL ANY OPEN ORDERS AND TO CLOSE ANY OR ALL OUTSTANDING CONTRACTS.
MLPF&S MAY EXERCISE ANY OR ALL OF ITS RIGHTS UNDER (II)(A), (B) AND (C) WITHOUT
FURTHER DEMAND FOR ADDITIONAL COLLATERAL, OR NOTICE OF SALE OR PURCHASE, OR
OTHER NOTICE OR ADVERTISEMENT. ANY SUCH SALES OR PURCHASES MAY BE MADE AT THE
DISCRETION OF MLPF&S ON ANY EXCHANGE OR OTHER MARKET WHERE SUCH BUSINESS IS
USUALLY TRANSACTED, OR AT PUBLIC AUCTION OR PRIVATE SALE AND MLPF&S MAY NOT BE
THE PURCHASER FOR ITS OWN ACCOUNT. IT IS UNDERSTOOD THAT THE GIVING OF ANY PRIOR
DEMAND OR CALL OR PRIOR NOTICE OF THE TIME AND PLACE OF SUCH SALE OR PURCHASE BY
MLPF&S SHALL NOT BE CONSIDERED A WAIVER OF ITS RIGHT TO SELL OR BUY WITHOUT ANY
SUCH DEMAND, CALL OR NOTICE AS HEREIN PROVIDED.
(E) PAYMENT OF INDEBTEDNESS UPON DEMAND. The Customer shall at all times be
liable for the payment upon demand of any debit balance or other obligation
owing in any of the accounts of the Customer with MLPF&S and the Customer shall
be liable to MLPF&S for any deficiency remaining in any such accounts in the
event of the liquidation thereof, in whole or in part, by MLPF&S or the
Customer, and Customer shall make payment of such obligations upon demand.
(F) PLEDGE OF SECURITIES AND OTHER PROPERTY. All securities and other property
now or hereafter held, carried or maintained by MLPF&S in its possession or
control in any of the accounts of the Customer may be pledged and repledged by
MLPF&S from time to time, without notice to the Customer either separately or in
common with other such securities and other property, for any amount due in the
accounts of the Customer; or for any greater amount, and MLPF&S may do so
without retaining in its possession or under its control for delivery a like
amount of similar securities or other property.
(G) LENDING AGREEMENT. Within the limitations imposed by applicable laws, rules
and regulations, MLPF&S is hereby authorized to lend itself, as principal or
otherwise, or to others, any securities held by MLPF&S on margin for any
accounts of the Customer as collateral therefore either separately or with other
securities. It is recognized that any losses or other detriment, or gains or
other benefits, arising from any such lending of securities shall not accrue to
the account of the Customer.
13. REPRESENTATION AS TO OWNERSHIP OF CUSTOMER
The Customer represents that no one except the Customer has an interest in the
account or accounts of the Customer with MLPF&S. The Customer represents that no
person having an ownership interest in Customer is 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 an exchange, or of a bank, trust company, insurance
company or any corporation, firm or individual engaged in the business of
dealing either as broker or as principal in securities, bills of exchange,
acceptances or other forms of commercial paper. If any of foregoing
representations is inaccurate or becomes inaccurate, the Customer will promptly
so advise in writing.
14. APPLICABLE LAWS
THIS WCMA AGREEMENT, WITH RESPECT TO ALL ASPECTS OF THE WCMA SERVICE, INCLUDING
MARGIN INTEREST CHARGES, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK EXCEPT AS FOLLOWS: THE TERMS OF THE CUSTOMER'S
AGREEMENT WITH MLB&T INCLUDING THOSE RELATING TO THE ISSUANCE OF THE CARD ARE
GOVERNED BY FEDERAL AND NEW JERSEY LAW. THE TERMS OF THE CUSTOMER'S AGREEMENT
WITH MLNF, INCLUDING THOSE RELATING TO THE ISSUANCE OF THE CARD ARE GOVERNED BY
FEDERAL AND UTAH LAW. THE TERMS OF TITLE CUSTOMER'S AGREEMENT WITH CHASE,
INCLUDING THOSE RELATING TO FINANCE CHARGES, ARE GOVERNED BY FEDERAL AND NEW
YORK LAW. THE TERMS OF THE CUSTOMER'S AGREEMENT WITH BANK ONE ARE GOVERNED BY
OHIO LAW.
15. ARBITRATION OF CONTROVERSIES WITH MLPF&S
- - 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.
THE CUSTOMER AGREES THAT ALL CONTROVERSIES WHICH MAY ARISE BETWEEN THE CUSTOMER
AND MLPF&S, INCLUDING, BUT NOT LIMITED TO, THOSE INVOLVING ANY TRANSACTION OR
THE CONSTRUCTION, PERFORMANCE, OR BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN
THE CUSTOMER AND MLPF&S, WHETHER ENTERED INTO PRIOR, ON OR SUBSEQUENT TO THE
DATE HEREOF, SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS
AGREEMENT SHALL BE CONDUCTED ONLY BEFORE THE NEW YORK STOCK EXCHANGE, INC., THE
AMERICAN STOCK EXCHANGE, INC., OR AN ARBITRATION FACILITY PROVIDED BY ANY OTHER
EXCHANGE OF WHICH MLPF&S IS A MEMBER, THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC., OR THE MUNICIPAL SECURITIES RULEMAKING BOARD, AND IN ACCORDANCE
WITH ITS ARBITRATION RULES THEN IN FORCE. THE CUSTOMER MAY ELECT IN THE FIRST
INSTANCE WHETHER ARBITRATION SHALL BE CONDUCTED BEFORE THE NEW YORK STOCK
EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE, INC., OTHER EXCHANGE OF WHICH
MLPF&S IS A MEMBER, THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., OR THE
MUNICIPAL SECURITIES RULEMAKING BOARD, BUT IF THE CUSTOMER FAILS TO MAKE SUCH AN
ELECTION, BY REGISTERED LETTER OR TELEGRAM ADDRESSED TO MLPF&S AT THE OFFICE
WHERE THE CUSTOMER MAINTAINS THE ACCOUNT, BEFORE THE EXPIRATION OF FIVE DAYS
AFTER RECEIPT OF A WRITTEN REQUEST FROM MLPF&S TO MAKE SUCH ELECTION, THEN
MLPF&S MAY MAKE SUCH ELECTION. JUDGMENT UPON THE AWARD OF ARBITRATORS MAY BE
ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION.
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
THE 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.
BY SIGNING THIS AGREEMENT, THE UNDERSIGNED CUSTOMER CONSENTS AND AGREES TO ALL
OF THE FOREGOING TERMS AND CONDITIONS AND ACKNOWLEDGES (1)THAT, IN ACCORDANCE
WITH PARAGRAPH 15 ON PAGE 7, THE CUSTOMER IS AGREEING IN ADVANCE TO ARBITRATE
ANY CONTROVERSIES WHICH MAY ARISE WITH MLPF&S; (2) THAT, IF THE ACCOUNT IS BEING
ESTABLISHED WITH THE INVESTOR CREDITLINE SERVICE, THEN PURSUANT TO PARAGRAPH 12
(G) CERTAIN OF THE CUSTOMER'S SECURITIES MAY BE LOANED TO MLPF&S OR LOANED OUT
TO OTHERS, AND (3) RECEIPT OF A COPY OF THIS AGREEMENT.
Name of Business: Horejsi Enterprises, Inc.
Signature: /s/ Larry L. Dunlap
Printed Name: Larry L. Dunlap
Title (Examples: Chairman, President, Vice President, Managing Director, all
General Partners, Sole Owner): Chairman
Note: If this agreement is with a Partnership, all general partners must sign
this page (continue below if necessary).
Address_____________________________________
____________________________________________
Note:
1 ) Check here if you want your WCMA account processed to request automatic
borrowing power through the WCMA Investor CreditLine service.
2) Check here if you request MLB&Tor MLNF to issue one or more Visa Cards.
Exhibit 3
CASH MANAGEMENT ACCOUNT(R) AGREEMENT
INTRODUCTION
This Agreement contains the terms governing the Cash Management Account(R)
financial service ("CMA(R) Service"). I will read this Agreement and keep it
for my records because I know that by signing the CMA Application and Agreement
form or the CMA SubAccountSM Application and Agreement form (the "Application
and Agreement form(s)") I am agreeing to its terms.
DEFINITIONS
In this Agreement, "I," "me," "my" or "accountholder" means each person who
signs the CMA Application and Agreement form or the CMA SubAccount Application
and Agreement form. "You," "your" or "MLPF&S" means Merrill Lynch, Pierce,
Fenner & Smith Incorporated. "MLB&T" means Merrill Lynch Bank & Trust Co.
"BANK ONE" means BANK ONE, COLUMBUS, N.A. "MLNF" means Merrill Lynch National
Financial. "CHASE" means the Chase Manhattan Bank, N.A. MLB&T, MLNF, CHASE and
BANK ONE are referred to collectively as "Banks." The "Issuer" means MLB&T or
MLNF, whichever issues the Visa Cards from time to time.
"Card/Check Account" means the account(s) established for me by the Banks.
"Checks" means checks issued to me by BANK ONE for use with my Card/Check
Account. "Card" or "Cards" means one or more Classic Visa(R) cards issued to me
for use with my Card/Check Account. Unless the context requires otherwise,
"Card" or "Cards" also means one or more CMA Visa Gold Program cards issued to
me for use with my Card/Check Account if I subscribe to and am approved for the
CMA Visa Gold Program. The name of the issuer will appear on the Card. The
Card(s) issued to me if I subscribe to the CMA Visa Gold Program will also be
referred to as the"Visa Gold Program Card(s)." "Money Funds" means the CMA
money market funds. "Money Accounts" means the Money Funds and any FDIC-insured
money market deposit accounts opened for me through the Insured SavingsSM
Account program.
For purposes of this Agreement, "securities and other property" means, but is
not limited to, money, securities, financial instruments and commodities of
every kind and nature and related contracts and options. This definition
includes securities or other property currently or hereafter held, carried or
maintained by you or by any of your affiliates, in your possession and control,
or in the possession and control of any such affiliate, for any purpose, in and
for any of my accounts now or hereafter opened, including any account in which I
may have an interest.
DESCRIPTION OF THE CMA(R) SERVICE
1. The CMA Service consists of: (1) an MLPF&S securities account (referred to
as the "Securities Account"), which is either a cash account, or with the
Investor CreditLineSM service, a margin account, (2) a choice of Money Accounts,
(3) if applicable, a Card/Check Account provided by the Banks and (4) in
applicable, optional CMA services as described in the Cash Management Account
Program Description.
DESCRIPTION OF THE CMA MASTER FINANCIALSM SERVICE
2. The CMA Master FinancialSM Service consists of: (1) a master account
("Master CMA Account") established with the full CMA Service as described above
and (2) one or more related CMA SubAccounts established by or with the consent
of a Master CMA Accountholder. Each CMA SubAccount is entitled to partial CMA
service consisting of: (1) a Securities Account, which is either a cash account
or, with the Investor CreditLine Service, a margin account, (2) a choice of
Money Accounts and (3) optional CMA services to the extent eligible. A CMA
SubAccount is not eligible for a Card/Check Account.
CMA SUBACCOUNTSM AUTHORIZATIONS
3. By signing the CMA SubAccount Application and Agreement form, each CMA
SubAccountholder designates the Master CMA Accountholder as his or her agent for
the purpose of receiving monthly CMA account statements and any notices or other
communications and authorizes MLPF&S to mail them to the address designated by
the Master CMA Accountholder from time to time. If applicable, each CMA
SubAccountholder also authorizes MLPF&S (subject to account eligibility
requirements) to accept telephonic instructions from the Master CMA
Accountholder for the transfer of funds through the CMA Funds Transfer Service
to such CMA SubAccount from the Master CMA Account and/or from such CMA
SubAccount to the Master CMA Account, as selected in the CMA SubAccount
Application and Agreement form. In the event any erroneous transfers are made,
the Master CMA Accountholder and the SubAccountholder authorize MLPF&S to
initiate appropriate corrections. The foregoing authorizations shall remain in
full force and effect until written notice of revocation is delivered to MLPF&S,
after which the CMA SubAccount shall remain subject to the terms of this
Agreement to the extent it receives the CMA Service in accordance with the
policies of MLPF&S.
AGREEMENT REGARDING CASH, MONEY ACCOUNT BALANCES AND OTHER ASSETS AND FEES
4. Available free credit balances in my Securities Account will automatically
be invested or deposited at least once a week into the Money Account that I have
designated as my Primary Money Account. I understand that you may reasonably
withhold access to my Money Account balances until you are satisfied that checks
credited to my Securities Account have been collected. You may satisfy amounts
that I owe in connection with my CMA Service account (such as debit balances in
the Securities Account, amounts owing in my Card/Check Account, or investments
or deposits made for me that are later reversed), from the assets in my Money
Accounts (including funds obtained by redeeming Money Funds shares) or from my
Securities Account (including, if applicable, by making loans to me). Certain
fees, including an annual fee, which are subject to change, will be charged to
my account for the financial services provided to me.
REPRESENTATIONS, ADDITIONAL TERMS AND AMENDMENTS
5. I have received a copy of the Money Funds' prospectuses, the Insured
Savings Account Fact Sheet and the Cash Management Account Program Description.
These documents shall be referred to in this Agreement as the "Documents." The
Documents contain additional terms governing the CMA Service. I agree that
these Documents are incorporated into this Agreement as though they were fully
set out in the Agreement. Subject to applicable law, you and the Banks also
have the right to amend the Documents by so notifying me in writing. Unless the
context otherwise requires, the term "Agreement" shall include the Documents, as
amended from time to time.
I agree that you and the Banks shall have the right to amend this Agreement, by
modifying or rescinding any of its existing provisions or by adding any new
provision, at any time by sending notice of the amendment to me. Any such
amendment shall be effective as of a date to be established by you and the
Banks, subject to applicable law.
I understand there may be additional documentation required by applicable law or
the policies and procedures of MLPF&S or the Banks. I agree to promptly comply
with any such requests for additional documents.
HEADINGS ARE DESCRIPTIVE
6. The heading of each provision of this Agreement is for descriptive
purposes only and shall not be deemed to modify or qualify any of the rights or
obligations set forth in each such provision.
JOINT ACCOUNTS AND JOINT AND SEVERAL LIABILITY
7. If more than one person signs this Agreement, each person shall be an
accountholder and their obligations under this Agreement shall be joint and
several. The legal ownership of the account shall be in such form as the
accountholders shall designate in the Application and Agreement form and as
reflected in the account title. In the event no designation is made, MLPF&S is
authorized to deal with the accountholders as tenants in common (without rights
of survivorship).
Notwithstanding the choice of law provisions of Paragraph 11, which shall govern
the contractual obligations of the parties under this Agreement, the legal
ownership of the account shall be governed by and interpreted under the internal
laws of the state of permanent residence of accountholders who are U.S.
citizens. Non-resident aliens agree that the form of joint ownership designated
for the account shall be governed (notwithstanding the laws of any other
jurisdiction to the contrary) by the internal laws of the State of New York and,
for purposes of determining all matters with regard to the account, agree to
submit to the jurisdiction of the courts of New York and the Federal Courts in
the Southern District of New York and consent to service of process by certified
mail to the account's address of record.
All accountholders agree that each accountholder has authority to transact any
business on behalf of the account as fully and completely as if each
accountholder were the sole owner of the account. Subject to MLPF&S policies,
MLPF&S may accept orders and instructions, written or oral, with respect to the
account from each accountholder, without notice to any other accountholder, for
the receipt, transfer and withdrawal of funds by check, wire transfer or
otherwise and for the purchase, sale, exchange, transfer or other disposition of
securities and other property (including margin transactions and short sales if
the accountholders have selected the Investor CreditLine service). All
accountholders further agree that all securities and other property that MLPF&S
may be holding for any of them, either in this account or otherwise, shall be
subject to a lien for the discharge of the obligations of this account to
MLPF&S, such lien to be in addition to any rights and remedies MLPF&S may
otherwise have.
In the event of the death of an accountholder, divorce of married
accountholders, assignment of an accountholder's interest or other event that
causes a change in ownership of the account, all accountholders or the surviving
accountholder(s) as the case may be shall immediately give MLPF&S written notice
thereof, and MLPF&S may, in such event, take such action, including requiring
such documents or imposing such restrictions on the account, as MLPF&S may deem
necessary in the circumstances. The estate of a deceased accountholder and a
departing accountholder by assignment or divorce shall remain liable, jointly
and severally, with the remaining or surviving accountholder(s), for any
obligations of the account arising before MLPF&S receives such notice, or
incurred in liquidation of the account or the adjustment of the interests of the
accountholders.
In the event of any such change in ownership of the account, MLPF&S is
authorized to divide or retitle the account in accordance with the form of legal
ownership of the account as reflected on the records of MLPF&S, or by written
instructions of the remaining or surviving accountholder(s), or by obtaining a
court order, as MLPF&S may reasonably determine is appropriate in the
circumstances. Unless agreed otherwise among the account holders in a writing
provided to MLPF&S, joint accounts designed "with right of survivorship" (e.g.,
JTWROS) shall vest the interest of a deceased accountholder in the surviving
accountholder(s) and accounts designated "without right of survivorship" (e.g.,
TIC) shall entitle the estate of a deceased accountholder and the surviving
accountholder(s) to equal shares of the account. All accountholders agree to
indemnify MLPF&S against any liability, loss or expense incurred from acting in
accordance with this Agreement in the event of a change in ownership of the
account.
All statements, notices or other communications sent or given to one
accountholder by MLPF&S shall be considered notice to all accountholders. In
the event MLPF&S receives inconsistent instructions from two or more
accountholders, reasonably believes instructions received from one accountholder
are not mutually agreeable to all accountholders, or receives a court order with
respect to the account, MLPF&S may, but is not obligated to, restrict activities
in the account, require that all instructions be in writing signed by all
accountholders, suspend or terminate the CMA Service and/or file an interpleader
action in an appropriate court at the expense of the accountholders.
TERMINATION OF THE CMA SERVICE
8. The Banks, you or I may terminate my subscription to the CMA Service,
including the use of my Checks or Cards, if applicable, at any time. I shall
remain responsible for authorized charges which arise before or after
termination.
If my subscription is terminated, you may redeem all my Money Fund shares and,
unless I advise you otherwise, withdraw all my Money Account deposit balances.
Also, I shall promptly return all unused Checks and any Cards to you or the
Banks. My failure to do so may result in a delay in your complying with my
instructions regarding the disposition of my assets with you.
CREDIT INFORMATION
9. I authorize you, each of your affiliates, and the Banks, to request a
consumer report about me from one or more consumer reporting agencies for the
purposes of considering my subscription to the CMA Service, reviewing or
collecting any account opened for me, or for any other legitimate business
purpose. Upon my request, you will inform me of the name and address of each
consumer reporting agency from which you obtained a consumer report, if any, in
connection with my subscription or accounts. I also authorize you, each of your
affiliates, and the Banks to share any information you may have or obtain about
me for any legitimate business purpose.
AGREEMENT TO ARBITRATE CONTROVERSIES WITH MLPF&S
10. - 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 CONTROVERSIES WHICH MAY ARISE BETWEEN US, INCLUDING BUT NOT
LIMITED TO THOSE INVOLVING ANY TRANSACTION OR THE CONSTRUCTION, PERFORMANCE, OR
BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN US, WHETHER ENTERED INTO PRIOR, ON
OR SUBSEQUENT TO THE DATE HEREOF, SHALL BE DETERMINED BY ARBITRATION. ANY
ARBITRATION UNDER THIS AGREEMENT SHALL BE CONDUCTED ONLY BEFORE THE NEW YORK
STOCK EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE, INC., OR AN ARBITRATION
FACILITY PROVIDED BY ANY OTHER EXCHANGE, THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC., OR THE MUNICIPAL SECURITIES RULEMAKING BOARD, AND IN ACCORDANCE
WITH ITS ARBITRATION RULES THEN IN FORCE. I MAY ELECT IN THE FIRST INSTANCE
WHETHER ARBITRATION SHALL BE CONDUCTED BEFORE THE NEW YORK STOCK EXCHANGE, INC.,
THE AMERICAN STOCK EXCHANGE, INC., OTHER EXCHANGES, THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC., OR THE MUNICIPAL SECURITIES RULEMAKING BOARD, BUT IF I
FAIL TO MAKE SUCH ELECTION, BY REGISTERED LETTER OR TELEGRAM ADDRESSED TO YOU AT
THE OFFICE WHERE I MAINTAIN MY ACCOUNT, BEFORE THE EXPIRATION OF FIVE DAYS AFTER
RECEIPT OF A WRITTEN REQUEST FROM YOU TO MAKE SUCH ELECTION, THEN YOU MAY MAKE
SUCH ELECTION. JUDGMENT UPON THE AWARD OF THE ARBITRATORS MAY BE ENTERED IN ANY
COURT, STATE OR FEDERAL, HAVING JURISDICTION. 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 THE COURT. SUCH FORBEARANCE TO
ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS
UNDER THIS AGREEMENT TO THE EXTENT STATED HEREIN.
APPLICABLE LAWS
11. This Agreement, with respect to all portions of the CMA Service, including
interest charges on loan you may make to me, will be governed by and interpreted
under the laws of the State of New York. The terms of my agreement with MLB&T
are governed by the federal and New Jersey law. The terms of my agreement with
MLNF are governed by federal and Utah law. The terms of my agreement with CHASE,
including those relating to finance charges on overdrafts, are governed by
federal and New York law. The terms of my agreement with BANKONE are governed by
Ohio law.
PRESUMPTION OF RECEIPT OF COMMUNICATIONS
12. Communications may be sent to me at my address or at such other address as
I give you in writing. All communications so sent, whether by mail, telegraph,
messenger or otherwise, will be considered to have been given to me personally
upon such sending, whether or not actually receive them.
EXTRAORDINARY EVENTS
13. I agree that you and the Banks 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 beyond your and the
Banks control.
SEPARABILITY
14. If any provisions of this Agreement is held to be invalid, illegal, void
or unenforceable , by reason of any law, rule, administrative order or judicial
decision, such determination will not affect the validity of the remaining
provisions of this Agreement.
LIABILITY FOR COSTS OF COLLECTION
15. To the extent permitted by the laws of the State of New York, I agree to pay
you the reasonable costs and expenses of collection including attorney's fees,
for any debit balance and any unpaid deficiency, that I owe.
APPLICABLE RULES AND REGULATIONS
16. All transactions in my Securities Account shall be subject to the
constitution, rules, regulations, customs and usages of the exchange or market
and its clearing house, if any, on which such transactions are executed by you
or your agents, including your subsidiaries affiliates.
PARAGRAPHS 17 THOUGH 25 BELOW APPLY ONLY IF I REQUEST THAT MY SECURITIES ACCOUNT
BE ESTABLISHED WITH THE INVESTOR CREDITLINESM SERVICE
COLLATERAL REQUIREMENTS AND CREDIT CHARGES
17. I will maintain such securities and other property in my accounts as you
shall require from time to time. In accordance with your usual custom, the
monthly debit balance of such accounts shall be charged interest at a rate
permitted by the laws of the State of New York. Unless I pay the interest
charged to my Securities Account at the close of a charge period, it will be
added to the opening balance for the next charge period. Interest will the be
charged upon the entire opening balance of that next charge period which will,
therefore include any such unpaid interest from the previous charge period.
CALLS FOR ADDITIONAL COLLATERAL-LIQUIDATION RIGHTS
18. a. You should have the right require additional Collateral:
(1) in accordance with your general policies regarding your maintenance
requirements for the Investor CreditLine service, as such may be modified
amended or supplemented from time to time; or
(2) if in your discretion you consider it necessary for you protection at
an earlier or later point in time than called for by said general policies; or
(3) in the event that a petition in bankruptcy or for appointment of a
receiver is filed by or against me; or
(4) if an attachment is levied against my accounts; or
(5) in the event of my death.
b. If I do not provide you with additional collateral as you may require
in accordance with (a)(1) or (2), or should an event described in (a) (3), (4)
or (5) occur ( whether or not you elect to require additional collateral), you
shall have the right:
(1) to sell any or all securities and other property in my accounts with
you or with any of your affiliates, whether carried individually or jointly with
others;
(2) to buy any or all securities and other property which may be short in
such accounts; and
(3) to cancel any open orders and to close any or all outstanding
contracts.
You may exercise any or all of your rights under (b)(1), (2) and (3) without
further demand for additional collateral, or notice of sale or purchase, or
other notice or advertisement. Any such sales or purchase may be made at your
discretion on any exchange or other market where such business is usually
transacted, or at public auction or private sale, and you may be the purchaser
of your own account. I understand that your giving of any prior demand or call
or prior notice of the time and place of such sale or purchase shall not be
considered a waiver of your right to sell or buy without any such demand, call
notice as provided in this Agreement.
PURPOSE OF CREDIT
19. I understand and agree that any credit extended by you to me in connection
with my Securities Account is primarily for investment or business purposes
REPRESENTATIONS AS TO BENEFICIAL OWNERSHIP AND CONTROL
20. I represent that, with respect to securities against which credit is or
may be extended by you: (a) I am not beneficial owner of more than three percent
(3%) of the number of outstanding shares of any class equity securities, and (b)
I do not control, am not controlled by and am not under common control with the
issuer of any such securities. In the event that any of the foregoing
representatives is inaccurate or becomes inaccurate i will promptly so advise
you in writing.
SECURITY INTEREST IN FAVOR OF MLPF&S
21. All securities and other property shall be subject to a lien for the
discharge of all my indebtedness and any other obligations that I may owe to
you, and are to be held by you as security for the payment of any such
obligations or indebtedness to you in any account you maintain for me, including
any accounts in which I may have an interest. You shall have the right to
transfer securities and other property so held by you from or to any other of
such accounts whenever in your judgment you consider such a transfer necessary
for your protection. In enforcing your lien, you shall have the discretion to
determine which securities and property are to be sold and which contracts are
to be closed.
PAYMENT OF INDEBTEDNESS UPON DEMAND
22. I shall at all times be liable for the payment upon demand of any debit
balance or other obligations owing in any of my accounts with you. I shall be
liable to you for any deficiency remaining in any such accounts in the event of
the liquidation thereof, in whole or in part, by you or by me. I will pay such
obligations and indebtedness upon demand.
PLEDGE OF SECURITIES AND OTHER PROPERTY
23. Within the limitations imposed by applicable laws, rules and regulations,
all securities and other property may be pledged and repledged by you from time
to time, without notice to me, either separately or in common with other such
securities and other property, for any amount due in my accounts, of for any
greater amount. You may do so without retaining in your possession or under
your control for delivery a like amount of similar securities or other property.
LENDING AGREEMENT
24. In return for your extension or maintenance of any credit in my account, I
acknowledge and agree that the securities in my account together with all
attended rights of ownership, may be lent to you or lent out to others to the
extent not prohibited by applicable laws, rules and regulations. In connection
with such securities loans, you may receive and retain certain benefits to which
I will not be entitled. I understand that, in certain circumstances such loans
could limit my ability to exercise voting rights, in whole part, with respect to
the securities lent.
REPRESENTATION AS TO CAPACITY TO ENTER INTO AGREEMENT
25. I represent that no one except the person(s) signing this Agreement has an
interest in my account or accounts with you. If a natural person, I represent
that I am of full age, am not an employee of any exchange, nor of any
corporation of which any exchange owns a majority of the capital stock, nor of a
member of any exchange, nor of a member firm or member corporation registered on
any exchange nor of a bank, trust company, insurance company or any corporation,
firm or individual engaged in the business of dealing either as broker or as
principal in securities, bills of exchange, acceptances or other forms of
commercial paper. If any of the foregoing representatives is inaccurate or
becomes inaccurate, I will promptly so advise you in writing.
PARAGRAPHS 26 THROUGH 31 BELOW APPLY ONLY WHEN THE CARD/CHECK ACCOUNT IS USED,
INCLUDING WHEN CHECKS AND/OR CARDS ARE OBTAINED.
CARD OWNERSHIP
26. I certify that all information I have provided in the CMA Application and
Agreement, including in the CMA Check and Visa information form, is true and
correct and that you and the Banks may rely on and verify such information. The
card remains the property of the issuer and may be canceled by the issuer at any
time without prior notice.
LIABILITY
27. I will be liable for all authorized transactions arising through the use
of the Card(s) and checks in connection with my Card/Check Account. I will be
responsible, on a continuing basis, for the safekeeping of my Card(s) and Checks
and shall not permit unauthorized persons to have access to my Card(s) or
Checks. I will also be responsible for reviewing my CMA Monthly Statement in
order to discover and report to MLPF&S the possible unauthorized use of my
Card(s) or Checks. I agree to notify MLPF&S immediately if I believe or have
reason to believe that my Card(s) or Checks have been or may be used by an
unauthorized person. Unless limited by law, I will be responsible for any and
all losses and damages that arise from any breach of my undertakings to
safeguard my Card(s) and Checks, to review my CMA Monthly statement for possible
unauthorized activity and to promptly report such to MLPF&S.
I also agree to pay the reasonable costs and expenses of collection of any
unpaid balance due, including any accrued finance charges, as a result of any
overdraft(s), including but not limited to attorneys fees, to the extent allowed
by law, involved in such collection. I understand that the banks have not taken
a security interest in any of the assets in my Securities Account or Money
Accounts pursuant to this Agreement.
PURCHASING POWER
28. I agree that I will not incur charges to my Card/Check account in excess
of my Purchasing Power. The Purchasing Power for my Card/Check Account will be
the total of any available free credit balance in my Securities Account, the
available balances in my Money Accounts, and, if applicable, the available loan
value of my securities in my Securities Account. I understand that my
Purchasing Power my fluctuate from day to day.
TRANSACTIONS EXCEEDING PURCHASING POWER
29. I understand that I will be in default if I incur charges in my Card/Check
Account that exceed my Purchasing Power. If I am in default, you may, among
other things terminate my subscription to the CMA Service. If I exceed my
Purchasing Power, Chase may accept the transaction amount exceeding my
Purchasing Power and an overdraft, and advance funds to you or the Banks in the
amount exceeding my Purchasing Power. If CHASE does so, I will be notified and
agree that I will immediately pay CHASE the amount of the overdraft and any
applicable finance charges which is computed as described in this section
In each overdraft statement cycle, finance charges are figured by applying a
Daily Periodic Rate to the Average Daily Balance of overdrafts and multiplying
the resulting figure by the number of days in that statement cycle. The Average
Daily Balance of overdrafts is calculated each day by starting with the
beginning balance of amounts I owe, adding any new overdrafts and subtracting
any payments or credits received that day and unpaid finance charges. This
gives CHASE the daily balance of overdrafts. The Average Daily Balance is
calculated by adding all of the daily balances of overdrafts in that statement
cycle and dividing the total by the number of days in the overdraft statement
cycle. The Daily Periodic Rate that is applied is disclosed in the Cash
Management Account Program Description and is Subject to change upon notice.
Finance charges accrued from the date CHASE accepts an overdraft until the day
payment is made.
Any payments that I make will be applied, as of the day of receipt by Chase,
first to any accrued and unpaid finance charges and then to the balance of
overdrafts in the order in which the were incurred.
OVERDRAFT NOTICES
30. If Chase extends an overdraft to me, I will be notified in writing. The
initial overdraft notice will inform me of the overdraft(s), which is due and
payable by me immediately, together with any accrued finance charges Subsequent
overdraft notices from CHASE will detail, among other disclosures, any
overdraft(s) plus finance charges imposed on such overdraft(s). payments and
credits and the balance due.
ACCOUNT INJURIES
31. I understand that inquires and error allegations concerning my Card/Check
Account, any overdraft notices and my monthly statement should be directed
through MLPF&S.
PARAGRAPHS 32 THROUGH 34 BELOW APPLY ONLY IF I SUBSCRIBE TO THE CMA VISA GOLD
PROGRAM
AGREEMENT TO THE CMA VISA GOLD PROGRAM
32. In addition to the following paragraphs, I understand that paragraphs 1
through 16, 26 through 31 and, if my account is established with the investor
CreditLine service, 17 through 25 also apply to the CMA Visa Gold Program.
In the event I am applying for the CMA Visa Gold Program but I am not approved
for the participation in that program, I apply for and authorize the issuance of
one more Classic Visa cards and checks for use with my CMA account. In
addition, if upon expiration of the Visa Gold Program Card(s) issued to me, I do
not qualify for reissue of such Card(s), I apply for and authorize the issuance
of Classic Visa Card(s) and checks. If a Classic Visa Card(s) and Checks are
issued to me, I understand that this Agreement, either the exception of
paragraphs 32 through 34 remain in full force and effect.
LIMITATIONS AND DIRECT DEBITING OF MY ACCOUNT
33. I agree to pay MLNF for the Card purchases posted to my Card/Check
Account. I authorize MLPF&S to pay MLNF from the assets in my Money Accounts (
including by redeeming Money Fraud shares or withdrawing ISA account balances,
if any), and/or from my Securities Account (including, if applicable, by making
loans to me). On my behalf, MLPF&S will pay MLNF, pursuant to the terms of this
Agreement and the Documents, on the fourth Wednesday of each month for all Card
purchases posted to my Card/Check Account for that monthly period. However, if
MLNF has not received and accepted my signed Statement of Purpose form (Federal
Reserved Form FR U-1), I understand that the entire amount of the charges posted
to my Card/Check account will be debited from my account once the sum of my Visa
card purchases exceeds $100,000 in any monthly cycle. In addition, any
subsequent charges not exceeding $100,00 posted to my Card/Check account during
the same monthly cycle will be paid by direct debit to my account on the fourth
Wednesday of the month. I acknowledge that I have the right under applicable
federal law to receive advance notice to the varying amounts of the debit
described above but waive my right to do so, as long as the amount does not
exceed five hundred thousand dollars. If I choose, I may elect to have this
payment made by another means which is not otherwise incompatible with MLPF&S'
operations. If I choose to have this payment made by such other means I will
notify MLPF&S in writing of my desire to do so.
AGREEMENT NOT TO DISPOSE OF ASSETS
34. By subscribing to the CMA Visa Gold Program I agree that I will not
dispose of my assets in my CMA Service account or any other account I may have
with wither MLPF&S or MLNF, if such disposal will negatively affect my ability
to pay MLNF for Card transactions. However, I may continue to trade securities
in my Securities Account.
