Page 1 of 14
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 20)*
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)
April 1, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box .
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
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Page 3 of 21
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Horejsi, 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
South Dakota
NUMBER OF 7 SOLE VOTING POWER
SHARES 2,071,430
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 2,071,430
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,071,430
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.0%
14 TYPE OF REPORTING PERSON*
CO
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Page 4 of 21
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
IN
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Page 5 of 21
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Lola Brown Trust No. 1B
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
SHARES 1,583,765
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,583,765
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,583,765
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.8%
14 TYPE OF REPORTING PERSON*
OO
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Page 7 of 21
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Badlands Trust Company
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
South Dakota
NUMBER OF 7 SOLE VOTING POWER
SHARES 12,735
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 12,735
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,735
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.13%
14 TYPE OF REPORTING PERSON*
CO
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Page 7 of 21
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Stewart R. Horejsi Trust No. 2
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
Kansas
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON*
OO
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Page 7 of 21
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Page 7 of 21
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Ernest Horejsi Trust No. 1B
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
SHARES 252,534
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 252,534
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
252,534
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.68%
14 TYPE OF REPORTING PERSON*
OO
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Page 14 of 14
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Amendment No. 20 to Statement on Schedule 13D
This amended statement on Schedule 13D relates to the Common
Stock, $.01 par value per share (the "Shares"), of Preferred Income
Management Fund Incorporated, a Maryland corporation (the "Company").
Items 3, 4, 5 and 7 of this statement, previously filed by (i) Horejsi,
Inc. ("HI"), The Lola Brown Trust No. 1B (the "Brown Trust") and
Badlands Trust Company ("Badlands"), each as the direct beneficial
owner of Shares, and (ii) Stewart R. Horejsi and the Stewart R. Horejsi
Trust No. 2 (the "Stewart Horejsi Trust"), by virtue of the
relationships described previously in this statement, are hereby
amended as set forth below.
Item 2. Identity and Background
No change except for the addition of the following:
(a) In addition to HI, the Brown Trust, Badlands, the Stewart
Horejsi Trust and Mr. Horejsi, this statement is also filed by the
Ernest Horejsi Trust No. 1B (the "Ernest Horejsi Trust") as the direct
holder of Shares. HI, the Brown Trust, Badlands, the Stewart Horejsi
Trust, the Ernest Horejsi Trust and Mr. Horejsi are referred to in this
statement as the "Reporting Persons." By signing this statement, each
Reporting Person agrees that this statement is filed on its or his
behalf.
The trustees of the Ernest Horejsi Trust are Badlands, Susan
Ciciora and Larry Dunlap. Such trustees may be deemed to control the
Ernest Horejsi Trust and may be deemed to possess indirect beneficial
ownership of the Shares held by the Ernest Horejsi Trust. However, none
of the trustees, acting alone, can vote or exercise dispositive
authority over Shares held by the Ernest Horejsi Trust. Accordingly,
Badlands, Ms. Ciciora and Mr. Dunlap disclaim beneficial ownership of
the Shares beneficially owned, directly or indirectly, by the Ernest
Horejsi Trust.
(b) The business address of the Ernest Horejsi is located at
122 South Phillips Avenue, Suite 220, Sioux Falls, South Dakota 57104.
(c) The Ernest Horejsi Trust is a trust organized by Ernest
Horejsi for the benefit of his children and grandchildren.
(d) The Ernest Horejsi Trust has not been convicted in a
criminal proceeding in the past five years (excluding traffic
violations or similar misdemeanors).
(e) During the past five years, the Ernest Horejsi Trust was
not 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) The Ernest Horejsi Trust is a trust organized under the
laws of Kansas and now domiciled in South Dakota.
Item 3. Source and Amount of Funds or Other Consideration.
No change except for the addition of the following:
The total amount of funds required by the Ernest Horejsi Trust
to purchase the Shares as reported in Item 5(c) was $3,914,277.00. Such
funds were provided by the Ernest Horejsi Trust's cash on hand.
The total amount of funds required by the Brown Trust to
purchase the Shares as reported in Item 5(c) was $31,250. Such funds
were provided by the Brown Trust's cash on hand and margin borrowings
under accounts maintained by the Brown Trust with Merrill Lynch
International Bank Limited, as previously reported in this statement on
Schedule 13D.
Item 4. Purpose of Transaction.
No change except for the addition of the following:
On March 17, 1998, the Reporting Persons mailed to
shareholders of the Company the letter to shareholders and proxy
statement in opposition to management attached as Exhibit 8 and
incorporated herein in its entirety by this reference. On March 26,
1998, in connection with their solicitation of proxies for the
Company's annual meeting on April 17, 1998, the Reporting Persons
mailed to shareholders of the Company the letter attached as Exhibit 9
and incorporated herein by this reference.
HI divested the Shares described in Item 5(c) of this
statement in order to resolve any possible question as to whether the
acquisition of such Shares in December 1997 was permitted under
applicable law. The Brown Trust acquired the Shares described in Item
5(c) of this statement in order to increase its equity interest in the
Company. The Ernest Horejsi Trust acquired the Shares described in Item
5(c) of this statement in order to acquire an equity position in the
Company.
Depending upon their 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 HI,
the Brown Trust, Badlands, the Stewart Horejsi Trust or the Ernest
Horejsi Trust may from time to time purchase Shares, and any of the
Reporting Persons or other entities that may be deemed to be affiliated
with HI, the Brown Trust, Badlands, the Stewart Horejsi Trust or the
Ernest Horejsi Trust 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. However, if
the Reporting Persons acquire additional Shares, the Reporting Persons
do not, at this time, intend to purchase more Shares than would be
necessary to acquire control of the Company, which the Reporting
Persons believe is less than 50% of the outstanding Shares.
Item 5. Interest in Securities of the Issuer.
No change except for the addition of the following:
(a) HI is the direct beneficial owner of 2,071,430 Shares, or
approximately 22.0% of the 9,416,743 Shares outstanding as of January
20, 1998, according to information contained in the Company's 1998
proxy statement. By virtue of the relationships reported in this
statement, Mr. Horejsi may be deemed to share indirect beneficial
ownership of the Shares directly beneficially owned by HI. Mr. Horejsi
disclaims all such beneficial ownership.
The Brown Trust is the direct beneficial owner of 1,583,765
Shares, or approximately 16.8% of the 9,416,743 Shares outstanding as
of January 20, 1998, according to information contained in the
Company's 1998 proxy statement. By virtue of the relationships reported
in this statement, Mr. Horejsi may be deemed to share indirect
beneficial ownership of the Shares directly beneficially owned by the
Brown Trust. Mr. Horejsi disclaims all such beneficial ownership.
The Ernest Horejsi Trust is the direct beneficial owner of
252,534 Shares, or approximately 2.68% of the 9,416,743 Shares
outstanding as of January 20, 1998, according to information contained
in the Company's 1998 proxy statement. By virtue of the relationships
reported in this statement, Mr. Horejsi may be deemed to share indirect
beneficial ownership of the Shares directly beneficially owned by the
Ernest Horejsi Trust. Mr. Horejsi disclaims all such beneficial
ownership.
By virtue of the relationships and transactions described in
this statement, the Reporting Persons may be deemed to constitute a
group. HI disclaims beneficial ownership of Shares directly
beneficially owned by the Brown Trust, Badlands and the Ernest Horejsi
Trust; the Brown Trust disclaims beneficial ownership of Shares
directly beneficially owned by the HI, Badlands and the Ernest Horejsi
Trust; Badlands and the Stewart Horejsi Trust each disclaim beneficial
ownership of Shares directly beneficially owned by the Brown Trust, HI
and the Ernest Horejsi Trust; and the Ernest Horejsi Trust disclaims
beneficial ownership of Shares directly beneficially owned by HI, the
Brown Trust and Badlands.
(b) The Ernest Horejsi Trust 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, Badlands, Ms. Ciciora and Mr. Dunlap
may be deemed to share the indirect power to vote and direct the
disposition of the Shares held by the Ernest Horejsi Trust.
(c) On February 23, 1998, HI transferred 2,000 Shares to the
Brown Trust in a privately negotiated transaction at a price of $15.625
per Share.
On March 31, the Ernest Horejsi Trust purchased 15,434 Shares
in a privately negotiated transaction at a price of $15.50 per Share.
On March 31, the Ernest Horejsi Trust purchased 237,100 Shares in a
privately negotiated transaction at a price of $15.50 per Share.
(d) The Ernest Horejsi Trust 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.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer. No change except for the addition of the following:
The Ernest Horejsi Trust and Van Dellen Steel Inc. entered
into a letter agreement, dated as of March 27, 1998, and attached
irrevocable proxy pursuant to which on March 31, 1998 the Ernest
Horejsi Trust acquired 15,434 Shares from Van Dellen Steel, Inc. The
foregoing summary of the such agreement is qualified in its entirety by
reference to the form of such agreement, which is attached as Exhibit
10 to this statement and incorporated herein by this reference.
The Ernest Horejsi Trust and Commerce Bancshares Inc. entered
into a letter agreement, dated as of March 27, 1998, and attached
irrevocable proxy pursuant to which on March 31, 1998 the Ernest
Horejsi Trust acquired 237,100 Shares from Commerce Bancshares Inc. The
foregoing summary of the such agreement is qualified in its entirety by
reference to the form of such agreement, which is attached as Exhibit
11 to this statement and incorporated herein by this reference.
Item 7. Material to be Filed as Exhibits.
No change except for the addition of the following:
Exhibit 8 Form of letter to shareholders and proxy statement
in opposition to the management of Preferred Income Management
Fund Incorporated, incorporated by reference to the letter to
shareholders and form of proxy statement filed with the
Securities and Exchange Commission by Horejsi, Inc. and other
persons on March 17, 1998
Exhibit 9 Form of letter to shareholders in connection with
the proxy solicitation in opposition to the management of
Preferred Income Management Fund Incorporated, incorporated by
reference to the letter to shareholders filed with the
Securities and Exchange Commission by Horejsi, Inc. and other
persons on March 26, 1998
Exhibit 10 Letter Agreement, dated as of March 27, 1998,
between the Ernest Horejsi Trust No. 1B and Van Dellen Steel
Inc.
Exhibit 11 Letter Agreement, dated as of March 27,
1998, between the Ernest Horejsi Trust No. 1B and Commerce
Bancshares Inc.
<PAGE>
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: April 1, 1998
/s/ Stewart R. Horejsi
Stewart R. Horejsi
/s/ Stephen C. Miller
Stephen C. Miller, as Vice President of Horejsi, Inc.
and as Vice President of Badlands Trust Company, trustee
of The Lola Brown Trust No. 1B, trustee of the
Stewart R. Horejsi Trust No. 2, and trustee of the
Ernest Horejsi Trust No. 1B.
<PAGE>
EXHIBIT 10
Ernest Horejsi Trust No. 1B
122 South Phillips Avenue, Suite 220
Sioux Falls, South Dakota 57104
March 27, 1998
Van Dellen Steel Inc.
6945 Dutton Industrial Park
Dutton, MI 49316
Attention: Mr. Casey Van Dellen
Re: Purchase of Shares of Preferred Income Management Fund Incorporated
Dear Mr. Van Dellen:
Upon the terms and subject to the conditions set forth in this letter
agreement, the Ernest Horejsi Trust No. 1B (the "Purchaser") agrees to purchase
from Van Dellen Steel Inc. (the "Seller"), and the Seller agrees to sell and
assign to the Purchaser, all of the Seller's right, title and interest in the
15,434 shares (the "Shares") of Common Stock, par value $0.01 per share, of
Preferred Income Management Fund Incorporated (the "Fund") owned of record, free
and clear of any liens or encumbrances, by the Seller. The Seller acknowledges
and agrees that the sale and assignment of all of its rights, title and interest
in the Shares shall include the Seller's right, as the holder of such Shares on
the January 20, 1998 record date, to vote at the April 17, 1998 Annual Meeting
of Shareholders of the Fund, and any adjournments or postponements thereof (the
"Annual Meeting"), and the Seller shall take all such ministerial steps,
including granting an irrevocable proxy (the "Irrevocable Proxy") (in the form
attached as Exhibit A hereto) necessary to effectuate such transfer of voting
rights. The Seller represents and warrants that it has not previously executed a
proxy card in respect of the Annual Meeting and it will not execute a proxy card
or otherwise attempt to vote at the Annual Meeting, unless so requested by the
Purchaser.
In consideration of the sale of the Shares and obtaining the assignment
of voting rights for the Annual Meeting, the Purchaser shall deliver to the
Seller at the closing referred to below, by wire transfer of same day funds to
the account designated by the Seller, an amount equal to $15.50 per Share, or
$239,227.00 in the aggregate, against delivery of the Shares (duly endorsed in
blank or accompanied by appropriate stock powers, together with any applicable
transfer tax stamps affixed thereon) and the Irrevocable Proxy (duly executed by
the Seller). The closing shall take place on March 30, 1998 or on such other
date as shall be mutually agreed by the Purchaser and the Seller. In the event
that certificates for all the Shares are not available at the closing, the
Seller undertakes to take any and all action as may be necessary or desirable to
effect the delivery of such certificates (in proper form for transfer) to the
Purchaser as promptly as possible following the closing.
<PAGE>
If this letter agreement is acceptable to you, please sign and return
the duplicate enclosed copy of this letter agreement to the undersigned, c/o
Bartlit Beck Herman Palenchar & Scott, 511 Sixteenth Street, Denver, Colorado
80202, Attention: Thomas Stephens.
Sincerely,
ERNEST HOREJSI TRUST NO.1B
By: Badlands Trust Company, as Trustee
By: /s/ STEPHEN C. MILLER
Stephen C. Miller
Vice President
Accepted and agreed to this 30th day of March, 1998
VAN DELLEN STEEL INC.
By: /s/ JAMES VANDEN BERGE
Name: James Vanden Berge
Title: Treasurer
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
Pursuant to the letter agreement dated March 27, 1998 between Van
Dellen Steel Inc. (the "Shareholder") and the Ernest Horejsi Trust No. 1B (the
"Trust"), the Shareholder does hereby appoint the Trust, the trustees of the
Trust, Stephen C. Miller and Stewart R. Horejsi, and each of them, with full
power of substitution in the premises, to vote all of the 15,434 shares (the
"Shares") of Common Stock, par value $0.01 per share, of Preferred Income
Management Fund Incorporated (the "Fund") which the Shareholder is entitled to
vote at the April 17, 1998 Annual Meeting of Shareholders (and any postponements
or adjournments thereof) or any other meeting, general or special, of the
shareholders of the Fund that is held after the date hereof and the record date
for which was prior to the date hereof.
The proxy granted herein shall be irrevocable, shall be deemed to be
coupled with an interest and shall revoke all prior proxies granted by the
Shareholder with respect to the Shares.
The Shareholder shall not grant any proxy to any person which conflicts
with the proxy granted herein and any attempt to do so shall be void.
Dated: March 30, 1998
VAN DELLEN STEEL INC.
By: __________________
Name:
Title:
<PAGE>
EXHIBIT 11
ERNEST HOREJSI TRUST NO. 1B
122 South Phillips Avenue, Suite 220
Sioux Falls, South Dakota 57104
March 27, 1998
Commerce Bancshares, Inc.
1000 Walnut Street
Kansas City, Missouri
Attention: Mr. Jeff Aberdeen, Controller
Re: Purchase of Shares of Preferred Income Management Fund Incorporated
Dear Mr. Aberdeen:
Upon the terms and subject to the conditions set forth in this letter
agreement, the Ernest Horejsi Trust No. 1B (the "Purchaser") agrees to purchase
from Commerce Bancshares, Inc. (the "Seller"), and the Seller agrees to sell and
assign to the Purchaser, all of the Seller's right, title and interest in the
237,100 shares (the "Shares") of Common Stock, par value $0.01 per share, of
Preferred Income Management Fund Incorporated (the "Fund") owned of record, free
and clear of any liens or encumbrances, by the Seller. The Seller acknowledges
and agrees that the sale and assignment of all of its rights, title and interest
in the Shares shall include the Seller's right, as the holder of such Shares on
the January 20, 1998 record date, to vote at the April 17, 1998 Annual Meeting
of Shareholders of the Fund, and any adjournments or postponements thereof (the
"Annual Meeting"). Seller agrees to take all such ministerial steps, including
(i) executing a blue proxy card solicited by Horejsi, Inc. and others in
opposition to the management of the Fund, and (ii) granting an irrevocable proxy
(the "Irrevocable Proxy") (in the form attached hereto) necessary to effectuate
such transfer of voting rights. The Seller has previously executed a proxy card
in respect of the Annual Meeting, and Purchaser acknowledges that Seller has so
advised Purchaser. Seller represents and warrants it will not execute any
additional proxy card or otherwise attempt to vote at the Annual Meeting, except
as set forth in this letter agreement or unless so requested by the Purchaser.
In consideration of the sale of the Shares and the transfer of voting
rights for the Annual Meeting, the Purchaser shall deliver to the Seller at the
closing referred to below, by wire transfer of same day funds to the account
designated by the Seller, an amount equal to $15.50 per Share, or $3,675,050 in
the aggregate, against delivery of the Shares (duly endorsed in blank or
accompanied by appropriate stock powers) and the Irrevocable Proxy (duly
executed by the Seller). The closing shall take place on March 30, 1998 or on
such other date as shall be mutually agreed by the Purchaser and the Seller. In
the event that certificates for all the Shares are not available at the closing,
the Seller undertakes to take any and all action as may be necessary or
desirable to effect the delivery of such certificates (in proper form for
transfer) to the Purchaser as promptly as possible following the closing.
Except with respect to any express agreements, representations and
warranties set forth in this letter agreement, Seller disclaims any and all
other agreements, representations and warranties of any kind or nature
concerning the Shares and voting rights incident thereto. This letter agreement
shall be governed by the laws of the State of Missouri.
If this letter agreement is acceptable to you, please sign and return
the duplicate enclosed copy of this letter agreement to the undersigned, c/o
Bartlit Beck Herman Palenchar & Scott, 511 Sixteenth Street, Denver, Colorado
80202, Attention: Thomas Stephens.
Sincerely,
ERNEST HOREJSI TRUST NO.1B
By: Badlands Trust Company, as Trustee
By: /s/ STEPHEN C. MILLER
Stephen C. Miller
Vice President
Accepted and agreed to this 27th day of March, 1998
COMMERCE BANCSHARES, INC.
By: /s/ JEFFREY ABERDEEN
Name: Jeffrey Aberdeen
Title: Controller
<PAGE>
IRREVOCABLE PROXY
Pursuant to the letter agreement dated March 27, 1998 between Commerce
Bancshares, Inc. (the "Shareholder") and the Ernest Horejsi Trust No. 1B (the
"Trust"), the Shareholder does hereby appoint Stewart R. Horejsi, Stephen C.
Miller, the Trust and the trustees of the Trust, and each of them, with full
power of substitution in the premises, to vote all of the 237,100 shares (the
"Shares") of Common Stock, par value $0.01 per share, of Preferred Income
Management Fund Incorporated (the "Fund") which the Shareholder is entitled to
vote at the April 17, 1998 Annual Meeting of Shareholders (and any postponements
or adjournments thereof) or any other meeting, general or special, of the
shareholders of the Fund that is held after the date hereof and the record date
for which was prior to the date hereof.
The proxy granted herein shall be irrevocable, shall be deemed to be
coupled with an interest and shall revoke all prior proxies granted by the
Shareholder with respect to the Shares.
The Shareholder shall not, on or after the date of this irrevocable
proxy, grant any proxy to any person which conflicts with the proxy granted
herein and any attempt to do so shall be void.
Dated: March 31, 1998
COMMERCE BANCSHARES, INC.
By: __________________________
Name:
Title:
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, COMMERCE BANCSHARES, INC. contributes,
assigns and transfers unto the ERNEST HOREJSI TRUST NO. 1B 237,100
shares of the common stock, par value $.01 per share, of Preferred
Income Management Fund, Incorporated, a Maryland corporation (the
"Company"), standing in the name of the undersigned on the books of the
Company, represented by certificate number(s) ___________ herewith and
does irrevocably constitute and appoint
___________________________________________________________ attorney to
transfer the said stock on the books of the within named Company with
full power of substitution in the premises.
Executed __________________ __, 1998.
COMMERCE BANCSHARES, INC.
--------------------------------
By: _________________________
Title: _________________________
IN PRESENCE OF
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