<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
AMERICAN EAGLE OUTFITTERS, INC.
(Name of Issuer)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
02553D 10 8
(CUSIP Number)
Paul Guez
S.H.D. Investments, LLC
5804 E. Slauson
City of Commerce, California 90040
(213) 890-9660
(Name, address and telephone number of person
authorized to receive notices and communications)
April 6, 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).
CUSIP No. 02553D 10 8 13D Page 1 of 5
<PAGE> 2
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
S.H.D. INVESTMENTS, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC, BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,227,500
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,227,500
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,227,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.2% BASED ON 14,893,725** SHARES OF COMMON STOCK REPORTED AS OUTSTANDING
AS OF NOVEMBER 1, 1997 IN THE ISSUER'S FORM 10-Q QUARTERLY REPORT FOR THE
PERIOD ENDED NOVEMBER 1, 1997.
- --------------------------------------------------------------------------------
14 TYPE OF PERSON REPORTING
OO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
**In all places where the number of common shares is referenced, the amounts
have been adjusted to reflect a 3-for-2 stock split which took effect on
January 5, 1998.
CUSIP No. 02553D 10 8 13D Page 2 of 5
<PAGE> 3
AMERICAN EAGLE OUTFITTERS, INC.
Common Stock
SCHEDULE 13D
In accordance with Rule 13d-2(e), this Amendment No. 1 (the
"Amendment") amends and restates the paper format Schedule 13D filed with the
Securities and Exchange Commission (the "Commission") on February 21, 1995 (the
"Original Schedule 13D").
Item 1. Security and Issuer
This Schedule 13D relates to the common stock, no par value (the
"Common Stock") of American Eagle Outfitters, Inc. (the "Issuer"). The Issuer's
principal executive offices are located at 150 Thorn Hill Drive, Warrendale,
Pennsylvania 15095.
Item 2. Identity and Background
The reporting person is S.H.D. Investments, LLC, a California
limited liability company ("S.H.D."). The principal business of S.H.D. is
investment in the Issuer. The address of the principal business and the
principal office of S.H.D. is 5804 E. Slauson, City of Commerce, California
90040.
The members of S.H.D. (the "Members") and S.H.D.'s executive
officer are identified on Schedule A attached hereto and incorporated herein by
this reference. Neither S.H.D., nor any of its Members, nor its executive
officer has, during the last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of which proceeding 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 or finding any violation
with respect to such laws.
Item 3. Source and Amount of Funds and Other Consideration
The total consideration for the purchase by S.H.D. of Common
Stock reported in the Original Schedule 13D was $12,000,000. The Common Stock
was purchased from Sam Forman in a private transaction in February 1995. To
finance this purchase, the members of S.H.D. through nominees contributed
$3,750,000 of their own funds and borrowed $8,250,000 (the "Borrowed Funds")
from National City Bank of Ohio ("National City"). The Borrowed Funds were
guaranteed by Schottenstein Stores Corporation ("Schottenstein") pursuant to the
terms of a Reimbursement and Security Agreement dated February 8, 1995 between
S.H.D. and Schottenstein (the "Security Agreement"). A copy of the Security
Agreement was attached as Exhibit 1 to the Original Schedule 13D and is
incorporated herein by this reference. The loan from National City was paid and
the security interest released as a result of the application of proceeds from
open market sales of Common Stock by S.H.D. (See Item 5(c)) and the application
of proceeds from a margin loan provided to S.H.D. by Prudential Securities (See
Item 6).
Item 4. Purpose of Transaction.
S.H.D. acquired the Common Stock reported herein for investment
purposes based on S.H.D.'s belief that such stock represents an attractive
investment opportunity. S.H.D. may make additional purchases of Common Stock or
may engage in dispositions (besides those described in this amendment) of all or
a portion of the Common Stock presently owned or hereafter acquired by S.H.D.,
either in the open market or in private transactions, depending on S.H.D.'s
evaluation of the Issuer's business, prospects and financial condition, the
market for the Common Stock, other
CUSIP No. 02553D 10 8 13D Page 3 of 5
<PAGE> 4
investment opportunities, general economic conditions, money and stock market
conditions and other future developments and factors that S.H.D. deems material
to its investment decision.
Item 5. Interest in Securities of the Issuer.
(a) S.H.D. beneficially owns (for purposes of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) an aggregate of 1,227,500
shares of the Common Stock or approximately 8.2% of the outstanding Common Stock
(based on the number of shares outstanding as of November 1, 1997, as set forth
in the Issuer's Form 10-Q for the quarterly period ended November 1, 1997).
Except for 18,750 shares of Common Stock held by Paul Guez individually and the
shares of Common Stock owned by S.H.D. (as set forth in this Item 5(a)), neither
S.H.D., nor to the best knowledge of S.H.D., any persons named on Schedule A
hereto, owns, beneficially, any Common Stock. Each of the Members hereby
disclaims beneficial ownership of the shares of Common Stock held by S.H.D.
(b) S.H.D. has the sole power to vote and to dispose of the
shares of Common Stock held by S.H.D., provided that any disposition of such
shares of Common Stock is subject to the approval of 75 percent of the aggregate
of the percentage interests of S.H.D. held by the Members. The individual
percentage interests of the six Members of S.H.D. range from 3.34 percent to
22.22 percent.
(c) S.H.D. has not acquired any shares of Common Stock during the
past sixty days. On April 2, 1998, April 6, 1998, April 7, 1998 and April 8,
1998, S.H.D. sold 25,000, 38,000, 28,000 and 75,000 shares of Common Stock,
respectively, in open market transactions, at the prices per share set forth on
Schedule B hereto. In November, 1997, S.H.D. distributed 106,500 shares of
Common Stock to one of its Members (the "Distributed Shares") who subsequently
transferred the Distributed Shares to the Member's spouse.
(d) To the best knowledge of S.H.D., no other person has the
right to receive or the power to direct the receipt of any dividends from the
Common Stock beneficially owned by S.H.D.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
S.H.D. has pledged a portion of its shares of Common Stock as
security for a margin loan from Prudential Securities pursuant to the terms of a
Command Account Margin Agreement dated April 8, 1998, between S.H.D.
Investments, LLC and Prudential Securities, Inc. (the "Margin Loan"). A copy of
the agreement for the Margin Loan is attached as Exhibit 99.3 hereto and is
incorporated herein by this reference.
Item 7. Material to be Filed as Exhibits.
Exhibit 99.1 and Exhibit 99.2 were filed as Exhibit 1 and
Exhibit 2 to the Original Schedule 13D and pursuant to Rule 13d-2(e) are not
required to be attached hereto.
99.1 Reimbursement and Security Agreement, dated February 8, 1995,
between S.H.D. Investments, LLC and Schottenstein Stores
Corporation. This agreement was filed as Exhibit 1 to the
Original Schedule 13D and is incorporated herein by this
reference.
99.2 Master Grid Note dated February 8, 1995 executed by S.H.D.
Investments, LLC in favor of National City Bank of Ohio. This
agreement was filed as Exhibit 2 to the Original Schedule 13D
and is incorporated herein by this reference.
99.3 Command Account Margin Agreement dated April 8, 1998, between
S.H.D. Investments, LLC and Prudential Securities, Inc.
CUSIP No. 02553D 10 8 13D Page 4 of 5
<PAGE> 5
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.
Dated: April 9, 1998
S.H.D. INVESTMENTS, LLC
By: /s/ Paul Guez
----------------------------------------
Name: Paul Guez
Title: President
CUSIP No. 02553D 10 8 13D Page 5 of 5
<PAGE> 6
Schedule A
Members of S.H.D.:
1. (a) Name: Gerard Guez
(b) Residence or business address:
Chief Executive Officer
Fashion Resource, Inc.
3251 East Washington Blvd.
Los Angeles, California 90023
(c)Principal occupation or employment and name, principal
business and address of where such employment is conducted:
Chief Executive Officer
Fashion Resource, Inc.
3251 East Washington Blvd.
Los Angeles, California 90023
(d) Citizenship: USA
2. (a) Name: Roxanne Marie Guez
(b) Residence or business address:
1446 Donhill Drive
Beverly Hills, California 90210
(c) Principal occupation or employment and name, principal
business and address of where such employment is conducted:
Vice President
Azteca Production International
5804 E. Slauson
City of Commerce, California 90040
(d) Citizenship: USA
3. (a) Name: Todd Kay (b) Residence or business address:
Fashion Resource, Inc.
3251 East Washington Blvd.
Los Angeles, California 90023
(c) Principal occupation or employment and name, principal
business and address of where such employment is conducted:
President
Fashion Resource, Inc.
3251 East Washington Blvd.
Los Angeles, California 90023
(d) Citizenship: USA
4. (a) Name: Kamel Nacif
(b) Residence or business address:
231 Edgar Allen Poe
Colonia Bolanco
Mexico D.F.
Mexico 11550
(c) Principal occupation or employment and name, principal
business and address of where such employment is conducted:
Executive Officer
<PAGE> 7
Textiles KN S.A. de C.V.
Calle E Lote 15
Parque Industrial 2000
Puebla, Puebla
Mexico 72220
(d) Citizenship: Mexico
5. (a) Name: Judy Krupp
(b) Residence or business address:
5660 Collins Ave., #20A
Miami Beach, FL 33140
(c) Principal occupation or employment and name, principal
business and address of where such employment is conducted:
Homemaker
5660 Collins Ave., #20A
Miami Beach, FL 33140
(d) Citizenship: USA
6. (a) Name: Paul Guez
(b)Residence or business address:
Azteca Production International
5804 E. Slauson
City of Commerce, California 90040
(c) Principal occupation or employment and name, principal
business and address of where such employment is conducted:
Account Executive
Azteca Production International
5804 E. Slauson
City of Commerce, California 90040
(d) Citizenship: Tunisia
Paul Guez is also the President and sole executive officer of S.H.D.
<PAGE> 8
SCHEDULE B
SALES OF ISSUER'S COMMON STOCK
<TABLE>
<CAPTION>
DATE # OF SHARES SOLD SALES PRICE
- ------ ---------------- -----------
<S> <C> <C>
4/2/98 25,000 $46.7500
4/6/98 38,000 $48.5526
4/7/98 3,000 $48.8750
4/7/98 25,000 $48.6450
4/8/98 30,000 $49.3783
4/8/98 40,000 $49.9087
4/8/98 2,500 $49.9625
4/8/98 2,500 $50.0250
</TABLE>
<PAGE> 1
COMMAND(SM) ACCOUNT
Margin Agreement Prudential Securities
1. COMMAND ACCOUNT(SM). I/we ("Client") hereby requests that Prudential
Securities Incorporated ("PSI") accept a Prudential Securities COMMAND Account
("COMMAND Account") application in Client's name as appears below. This
Agreement sets forth the terms and conditions that govern the COMMAND Account to
be provided to the Client, and in consideration of PSI accepting such COMMAND
Account, Client hereby agrees to abide by all such terms and conditions, as of
the date of execution.
Client understands that a COMMAND Account consists of a PSI margin account
(the "Securities Account") which is linked to a choice of either an investment
fund ("COMMAND Fund") or to the COMMAND Insured Income Account(SM) ("CMIIA"),
plus a Visa(R) Gold Account ("Visa Account") provided by The Prudential Bank
and Trust Company ("PB&T"), with which PSI maintains an agreement. Under the
terms of the Agreement between PB&T and PSI, the Visa Account may be opened,
and one or more Visa Gold Cards (the "Card") may be issued and checks provided
("Checks") for use in the COMMAND Account. Before any COMMAND Account is
provided by PSI, PB&T must specifically accept this Agreement.
Client understands that PSI will charge the Client an annual fee for
services provided hereunder by debiting Client's COMMAND Account. Such fee is
paid in advance and set forth in the COMMAND Program Description, the receipt
of which Client hereby acknowledges. Client will be informed of any fee changes
in advance. Should Client's COMMAND Account be terminated for any reason,
Client will not receive a refund of any portion of that annual fee. Client
understands that by choosing COMMAND Essentials(SM), Client will not receive
the features referenced in Section 3, below. The features of COMMAND Essentials
can be found in the COMMAND Program Description.
PSI investment advisory clients that participate in a PSI sponsored
managed account program ("Advisory clients") and PSI Employee Benefit Plan
clients on whose behalf PSI files Form 1099-R with the Internal Revenue
Service, are restricted to COMMAND Essentials. These clients should discuss
their choice of an investment fund with their Financial Advisor in order to
determine which fund is the most appropriate given their investment objectives.
For Tenancy by the Entirety Accounts: Clients specifically authorize each
other to use the COMMAND Account to buy and sell securities, write checks and
use the Card or otherwise use the assets of the COMMAND Account without the
prior approval of the other.
2. THE SECURITIES ACCOUNT. Client may use Client's Securities Account to
purchase and sell securities, including options, on margin or otherwise.
Concurrent with the opening of Client's COMMAND Account. Client will choose one
of the COMMAND Funds ("Primary Fund") or CMIIA as Client's Primary Investment
Vehicle. Free credit cash balances in Client's Securities Account (that is, any
cash that may be transferred out of the Securities Account without giving rise
to interest charges) of $1 or more will be automatically invested or deposited,
on a daily basis, in the Primary Investment Vehicle by means of a purchase
order submitted to the Primary Fund or a deposit in CMIIA by PSI, in accordance
with the terms of the Primary Fund's prospectus or the CMIIA Client Information
Notice. In addition, Client may make manual purchases of shares of another
COMMAND Fund ("Secondary Fund") or manual deposits into CMIIA as a Secondary
Investment Vehicle. The purchase price for shares of the COMMAND Funds will be
the net asset value per share next determined after receipt by a COMMAND Fund
of a
<PAGE> 2
purchase order. Ordinarily, a purchase order or deposit will not be entered
until free credit cash balances or cash in the form of Federal Funds becomes
available to PSI. However, in certain situations, PSI may, without charge,
advance Federal Funds to the COMMAND Funds or CMIIA on Client's behalf to
enable Client to purchase COMMAND Fund shares and earn COMMAND Fund dividends
or earn CMIIA interest prior to final collection of checks deposited to
Client's Securities Account. It is understood, therefore, that PSI may
reasonably withhold access to the redemption proceeds of COMMAND Fund shares
purchased with, or CMIIA balances resulting from, funds so advanced until PSI
is satisfied that any and all checks deposited to Client's Securities Account
have been collected.
It is anticipated that the COMMAND Funds will declare dividends daily, as
earned, on shares of a COMMAND Fund and will reinvest daily any such dividends
in, COMMAND Fund shares. Client understands that an investment in shares of the
COMMAND Funds is not equivalent to a bank deposit. As with any investment in
securities, the value of Client's investment may fluctuate. The shares of
beneficial interest of the COMMAND Funds are maintained on the register of the
COMMAND Fund. Certificates are not physically issued. Securities in Client's
Account are protected by the Securities Investor Protection Corporation and
additional similar protection is provided through insurance purchased by PSI.
CMIIA balances and interest are insured through the depository institution's
Federal Deposit Insurance Corporation coverage.
Shares and cash comprising Client's Primary Investment Vehicle will be
redeemed (at net asset value) or withdrawn, automatically, to satisfy debit
balances in Client's Securities Account. Next, shares and cash comprising
Client's Secondary investment Vehicle will be redeemed (at net asset value) or
withdrawn, automatically, to satisfy debit balances in Client's Securities
Account. Thereafter, Client's shares in other money market funds managed by
Prudential Mutual Fund Management, Inc. ("Prudential Money Funds") or balances
in other insured income accounts will be redeemed at their net asset value or
withdrawn, automatically, to satisfy debit balances in Client's Securities
Account. If Client is eligible and elects the Monthly Automatic Payout feature,
and/or the Cash Transfer Service feature, then the liquidation sequence set
forth below in Section 3 will be applicable. No fee, commission or other charge
will be made with respect to the purchase or redemption of COMMAND Fund or
Prudential Money Fund shares or deposit to and withdrawal from CMIIA or other
insured income accounts. Affiliates of PSI receive fees in connection with the
operation of the COMMAND Funds. Administration, distribution and advisory fees
will be paid by the COMMAND Funds. Administration, distribution and advisory
fees will be paid by the COMMAND Funds as set forth in the COMMAND Fund's
prospectuses. Client acknowledges receipt of the COMMAND Fund's prospectuses,
which more fully describe the COMMAND Funds and the COMMAND Program
Description, which describes the CMIIA.
3. THE PRUDENTIAL BANK AND TRUST COMPANY VISA ACCOUNT. Client hereby applies to
The Prudential Bank and Trust Company ("PB&T") for a Visa Gold Account ("Visa
Account") and requests that checks ("Checks") be provided and, if applicable,
that one or more Visa Gold Cards ("Card") be issued for use with Client's Visa
Account. If a Card is issued, Client requests that a Personal Identification
Number ("PIN") be issued as well so that Client may access Client's COMMAND
Account through the Visa Automated Teller Machine ("ATM") Network. Client
understands that Client's application for a Visa Account is accepted by PB&T
when a Card and PIN are issued to Client or Checks are provided, and is subject
to applicable rules and regulations of Visa USA Inc. and Visa International.
Client agrees that by signing, using, or permitting another to use the Checks,
Card or PIN, Client will be bound by the following terms and conditions. The
Card remains the property of PB&T and may be cancelled by PB&T at any time
without prior notice. Client will surrender any unused Checks and Card(s) and
discontinue utilization of Client's Visa Account immediately upon request of
PB&T or PSI. Client understands that PB&T will open Client's Visa Account in the
name supplied to it by PSI, that information concerning transactions in Client's
Visa Account or the status of such account will be furnished to Client by
<PAGE> 3
PSI, and that billing error disputes or inquiries are to be directed to PB&T
through PSI. Client also understands that Client's Card transaction receipts
will not be returned to Client. Client may write Checks on the Visa Account
with PB&T. The Visa Card may be used by client to make purchases of merchandise
and services. To obtain cash advances (which a bank may limit to $5,000 or
less per account per day), and to obtain cash through the Visa ATM Network
(which is limited to 5 withdrawals per day and a maximum total withdrawal of
$1,000 per day; some institutions may have a lower limit). The aggregate amount
available for such purposes (the "Authorization Limit") will be a total of (i)
the uninvested free credit cash balance, if any, in the Securities Account
pending investment in shares of the Primary Fund or deposit into CMIIA; (ii)
the net asset value of Client's shares in the Primary Fund and Secondary Fund,
the balance in CMIIA, the net asset value of Client's shares in Prudential
Money Funds and balances in other insured income accounts, if any; and (iii)
where applicable, the available margin loan value of any securities in Client's
Security Account. All Visa Account transactions within Client's Securities
Account, as provided by this Agreement and hereby authorized by Client. Since
the amount so available is dependent upon the status of clearance of checks
deposited by Client in the Securities Account as well as securities prices and
the status of transactions in the Securities Account and the Visa Account, it
will fluctuate from day to day.
Whenever Client uses the Card to pay for merchandise or services, or to
obtain a cash advance, Client will be required to sign a transaction draft as
evidence of the transaction, which will be forwarded through card processing
systems to PB&T for payment. In addition, each time Client writes a Check
against the Visa Account, the Check will be forwarded to PB&T for payment.
PB&T will notify PSI daily as to the amount of all Card purchases, cash
advances and Check usage in Client's Visa Account received and paid by PB&T,
and PSI will promptly make payment to PB&T on Client's behalf for all Card
purchases, cash advance and Check usage posted to Client's Visa Account.
However, PSI will not debit Client's Securities Account until the twenty-fifth
day of each month or the prior business day if the twenty-fifth falls on a
weekend or holiday for all Card purchases. Client understands that Client's
Authorization Limit is instantaneously reduced (by the amount of all Card
purchases, cash advance and Check usage) at the time PB&T is notified of any
such use of the Card. However, shares in the COMMAND Funds, balances in CMIIA,
shares in Prudential Money Funds or balances in other insured income accounts
are not redeemed or withdrawn until PSI is notified of the Check or cash
advance charge or until the monthly debit to Client's Securities Account for
Card purchases is made. PSI will make payment to PB&T to the extent that
sufficient funds may be provided first, from the free credit cash balance, if
any, held in the Securities Account; and second, from the proceeds of redemption
of Client's shares in the COMMAND Funds, or withdrawal of balance in CMIIA, or
from the proceeds of redemption of Client's shares in the Prudential Money
Funds or withdrawal of balances in other insured income accounts; and third, if
applicable, should such sources prove insufficient, from margin loans made by
PSI for Client's Securities Account within the available margin loan value of
the securities in the account. If PSI does advance such monies, such amount
will be a loan by PSI to Client and will be secured by securities in any PSI
account in which Client may have an interest. If PSI extends credit to Client,
interest will be charged from the day it makes payment to PB&T on Client's
behalf at the same rate PSI generally charges for margin loans. Client
acknowledges receipt of PSI's standard written statement of margin interest
charges and other terms and conditions for margin accounts. Should these sources
prove to be insufficient to satisfy all charges owing in the Visa Account, PB&T
may advance the balance of funds and will charge interest at a rate to be
determined from time to time by PB&T for the time such Visa Account is
overdrawn. Any such amount, including interest, will be due and payable by
Client to PB&T immediately.
<PAGE> 4
Pending delayed debiting of Card purchases, Client may continue to trade
securities in Client's Securities Account. However, Client may not dispose of
assets in Client's COMMAND Account or any other account Client may have with PSI
if such disposal will negatively affect Client's obligation to pay PSI for Card
purchases.
4. DISCLAIMER. Client understands that if Client is eligible and elects to
receive a Card, Client will be provided with services and benefits outlined in
the COMMAND Program Description furnished to Client (the "COMMAND Card
Services"). Client acknowledges and agrees that these COMMAND Card Services are
provided by Visa USA's third-party providers, by United Bank Club Association,
Inc.'s ("UBCA") third-party providers, or other service providers, over which
PSI has no responsibility or control. Therefore, PSI expressly disclaims
liability, and Client agrees that PSI shall have no liability, for any acts,
omissions, claims, costs, losses, or damages arising from or relating to use by
Client of the COMMAND Card Services or Visa USA's and UBCA's agents, employees
and third-party providers or other service providers. In addition, Client
understands that Client is responsible for the cost of certain COMMAND Card
Services including, medical, legal, transportation or other travel assistance
services or goods provided.
5. LIABILITY. Client acknowledges that the Checks and/or Card(s) or PIN issued
pursuant to this Agreement are for Client's exclusive possession and accordingly
agrees to use reasonable care to safeguard them and limit access to them.
Neither Client nor any person authorized to act on Client's behalf will incur
any charge by use of the Checks and/or Card(s) or PIN in excess of the
Authorization Limit. Client agrees to assume liability for all transactions made
by Client, or by any authorized person, through the use of the Checks and/or
Card(s) or PIN in connection with Client's Visa Account. Client also agrees to
pay the reasonable costs and expenses of collection of any unpaid balance due on
Client's COMMAND Account, including, but not limited to, attorneys' fees
involved in such collection, to the extent provided by law.
It is understood that, in the event of any unauthorized use of Client's
Checks in connection with Client's Account. Client's Account will not be
credited with interest on these misused funds for the period prior to
reimbursement of these funds to PSI by PB&T.
6. PERIODIC REPORTS AND STATEMENTS. Client understands that each month Client
will receive and review a transaction statement from PSI, which will detail: all
purchases and cash advances that were made with the Card; Checks drawn against
Client's Visa Account; electronic funds transfers; securities bought or sold in
Client's Securities Account, whether on margin or on a fully paid basis; margin
interest charges, if any; the number of shares of the COMMAND Funds that were
purchased or redeemed for Client; and deposits to and withdrawals from CMIIA.
The amount of the annual fee that PSI charges for making the COMMAND Account
available and any additional fees with respect to the operation of Client's
Account will be indicated on the statement. Client authorizes PSI to act on
Client's behalf to accept reorders for Checks and requests to stop payment on
Checks, for which fees will be charged to Client's COMMAND Account. Fees may
also be charged for Checks processed, as indicated in the prospectuses, and such
fees will be indicated on the statement.
If there is no transaction activity in Client's COMMAND Account, PSI
reserves the right to send only quarterly transaction statements.
PSI will not send out confirmations following purchases and redemptions of
shares in the COMMAND Funds or receipts following deposits in or withdrawals
from CMIIA. The statement, however, will describe all such transactions which
took place during the preceding month.
Client agrees to pay interest and service charges upon Client's accounts
monthly at the prevailing rate as determined by PSI. Client understands that
Client must carefully review the statements promptly after receipt and notify
PSI of any errors in writing addressed to the Branch Manager of the Branch
Office servicing Client's COMMAND Account within ten days after transmittal by
PSI of the statement, or such statements shall be deemed conclusive.
<PAGE> 5
7. TERMINATION OF COMMAND ACCOUNT. Client may terminate Client's COMMAND
Account, including the Securities and Visa Account, by notice at any time.
Client will remain responsible for any charges to Client's Securities Account
or Visa Account whether arising before or after termination. Client understands
that PSI may by notice terminate Client's COMMAND Account, including the
Securities and Visa Accounts, at any time at its discretion, including for
reasons of Client's insolvency or any breach or default of this Agreement by
Client. If Client's COMMAND Account is terminated either by Client or PSI,
Client will promptly return all unused Checks and Card(s) to PSI. Failure to
return such Checks and Card(s) to PSI may result in a delay in complying with
Client's instructions as to the disposition of assets in Client's COMMAND
Account. Client also understands that upon termination of Client's COMMAND
Account, all pending Card purchases will be paid for by automatic debit of
Client's COMMAND Account on the next business day, and any other Card usage or
Checks presented for payment will be automatically paid from Client's COMMAND
Account upon receipt by PSI. If Client's COMMAND Account is terminated, PSI
may, and is hereby authorized to, redeem all shares of the COMMAND Funds owned
by Client in Client's COMMAND Account and to withdraw any balance in CMIIA.
Client agrees to pay PSI the reasonable costs and expenses of collection,
including, but not limited to attorneys' fees for any debit balance in Client's
Securities Account.
8. MARGIN MAINTENANCE/LIQUIDATION. Client will maintain such margins, in
Client's margin account, if applicable, as PSI may in its discretion require
from time to time and will pay on demand any debit balance owing with respect to
any of Client's accounts. Whenever in PSI's discretion it may deem it desirable
for its protection (and without the necessity of a margin call, (including but
not limited to any instance where a petition in bankruptcy or for the
appointment of a receiver is filed by or against Client, or an attachment is
levied against any of Client's accounts, or in the event of notice of Client's
death or incapacity, or in compliance with the orders of any Exchange, PSI may,
without prior demand, tender, and without any notice of the time or place of
sale, all of which are expressly waived, sell any or all securities, or
commodities or contracts relating thereto of which Client's Securities Account
or any other PSI account may be short, in order to close out in whole or in part
any commitment on Client's behalf, and PSI may place stop orders with respect to
such securities or commodities. Such sale or purchase may be made at PSI's
discretion on any Exchange or other market where such business is then
transacted, or at public auction or private sale with or without advertising.
Neither any demands, calls, tenders or notices which PSI may make or give any
one or more instances, nor any prior course of conduct or dealings between the
parties, shall invalidate the aforesaid waivers on Client's part. PSI shall have
the right to purchase for PSI's own account any or all of the aforesaid property
at any such sale, discharged of any right of redemption, which is hereby waived.
All transactions in any of Client's accounts are to be paid for or required
margin deposited no later than 2:00 p.m. (ET) on the settlement date or at such
earlier time as PSI shall require.
9. SHORT SALES/DELIVERIES. Client agrees that in giving orders to sell, all
"short" sale orders will be designated as "short" by Client and all "long" sales
orders will be designated as "long" by Client, and that the designation of a
sell order as "long" is a representation on Client's part that Client owns the
security and, if the security is not in PSI's possession, that it is not then
possible to deliver the security to PSI forthwith, and Client will deliver it on
or before the settlement date.
<PAGE> 6
10. SECURITY INTEREST/HYPOTHECATION (PLEDGE). Any and all credit balances,
monies, securities, commodities or contracts relating thereto, and all other
property of whatsoever kind, including but not limited to, property belonging
to Client, owed to Client, or in which Client may have an interest, held by PSI
or carried for Client's accounts ("Client Property"), shall be subject to a
general lien for the discharge of Client's obligations to PSI (including
unmatured and contingent obligations) however arising and without regard to
whether or not PSI has made advances with respect to such property. The Client
Property without notice to Client may be carried in PSI's general loans and all
securities may be pledged, repledged, hypothecated or re-hypothecated,
separately or in common with other securities or any other property, for the
sum due to PSI thereon or for a greater sum and without retaining in Client's
possession and control for delivery a like amount of similar securities or
other property. At any time and from time to time PSI may, in its discretion,
without notice to Client, apply and/or transfer the Client Property, freely
interchangeable between any accounts or in any account in which Client may have
an interest. PSI is specifically authorized to transfer to Client's cash
account on the settlement day following a purchase made in that account, excess
funds available in any of Client's other accounts, including but not limited to
any free balances in any margin account or in any non-regulated commodities
account sufficient to make full payment of this cash purchase. Client agrees
that any debit occurring in Client's Account or in any account in which Client
may have an interest may be transferred by PSI at its option to Client's margin
account. In return for PSI's extension or maintenance of credit in connection
with Client's account, Client acknowledges that PSI and any succeeding firm are
hereby authorized from time to time to land separately or together with the
property of others, either to PSI or to others, any property, together with any
attendant rights of ownership, which PSI may be carrying for Client on margin.
In connection with such loans, PSI may receive and retain certain benefits to
which Client is entitled. In certain circumstances, such loan may limit, in
whole or in part, Client's ability to exercise voting rights of the securities
loans. This authorization shall apply to all accounts carried by PSI for Client
and shall remain in full force until written notice is received by PSI at PSI's
principal office in New York.
By signing this agreement, Client acknowledges that Client's securities
may be loaned to PSI or loaned out to others. By signing this agreement, Client
further acknowledges that Client has received a copy of this agreement.
11. APPLICABLE RULES AND REGULATIONS. The COMMAND Account will be maintained
pursuant to all applicable Federal and State laws, including the rules and
regulations of the Securities and Exchange Commission, the Board of Governors
of the Federal Reserve System, the New York Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc., as well as to the policies of
PSI. All transactions for Client's COMMAND Account will be subject to the
constitution, rules, regulations, customs and usages, as the same may be
constituted from time to time, of the Exchange or market (and its clearing
house, if any) where executed. No waiver of any provision of this Agreement
shall be deemed a waiver of any other provision, nor a continuing waiver of the
provision or provisions so waived.
If any provision hereof is or at any time should become inconsistent with
any present or future law, rule or regulation of any securities or commodities
exchange or any sovereign government or a regulatory body thereof and if any of
these bodies have jurisdiction over the subject matter of this Agreement, said
provision shall be deemed to be superseded or modified to conform to such law,
rule or regulation, but in all other respects this Agreement shall continue and
remain in full force and effect.
12. COMMUNICATIONS. All notices and other communications pursuant to this
Agreement, including reports, statements and margin calls, may be sent to
Client at Client's address last given to PSI, or at such other address as
Client may hereafter give PSI in writing, or to PSI, at its Branch Office
servicing Client's Account.
All notices and other communications shall be deemed given, if by personal
delivery or facsimile transmission, on the date of such delivery or, if by
mail, on the date of postmark when deposited, prepaid, in a US Post Office
Box.
13. REPRESENTATIONS. Client is of full age and represents that Client is not an
employee of any Exchange or of a Member Firm of any Exchange or the NASD, or of
a bank, trust company, or insurance company, and that Client will promptly
notify PSI in writing if Client becomes so employed.
<PAGE> 7
14. ACTS OF GOD. Client understands that PSI will not be liable for loss caused
directly or indirectly by government restrictions, exchange or market rulings,
suspension of trading, war, strikes, "Acts of God" or conditions beyond PSI's
control.
15. CAPTIONS. Section captions have been inserted solely for the purpose of
convenience in description and under no circumstances shall be deemed to
qualify any of the rights set forth in the provisions.
16. ARBITRATION/GOVERNING LAW.
o Arbitration is final and binding on the parties.
o The parties are waiving their right to seek remedies in court, including the
right to jury trial.
o Pre-arbitration discovery is generally more limited than and different from
court proceedings.
o 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.
o 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 concerning any
transactions (whether executed or to be executed within or outside of the United
States), my account or this or any other agreement between us, whether entered
into prior, on or subsequent to the date indicated on the signature page, shall
be determined by arbitration. The arbitration may be before either the New York
Stock Exchange, Inc. or the National Association of Securities Dealers, Inc. or
any other self-regulatory organization of which PSI is a member, as I may elect
and shall be governed by the laws of the State of New York. If I do not make
such election by registered mail addressed to you at your main office within
five (5) days after demand by you that I make such election, then you may make
the election. Any notice in connection with such arbitration proceeding, may be
sent to me by mail, and I hereby waive personal service. Judgment upon any award
rendered by the arbitrators may be entered in any court having jurisdiction,
without notice to me. 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; or (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. This Agreement shall be governed
by the laws of the State of New York, and shall inure to the benefit of PSI's
successors and assigns, and shall be binding on the undersigned, Client's
representatives, attorneys-in-fact, heirs, executors, administrators and
assigns.
<PAGE> 8
17. SIGNATURE. Client hereby consents and agrees to all of the terms and
conditions of the Agreement appearing above and as continued on the reverse
side.
FOR CORPORATE ACCOUNTS ONLY: A resolution of Client's Board of Directors
authorizing the opening of the COMMAND Account must be attached. Client further
warrants to PSI that the officers signing below are authorized and empowered,
for and on behalf of the corporation, pursuant to the resolution of the Board
of Directors of the corporation (a certified copy of which is attached hereto),
to establish and maintain a margin COMMAND Account with PSI with complete and
full authority to act on behalf of the corporation, to receive and distribute
funds, write and sign Checks, and make charges on Client's Visa Card on or
against Client's Corporate COMMAND Account.
THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE ON PAGE 2, IN SECTION
16 ABOVE.
S.H.D. Investments, LLC
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Account Name (Please Print)
X /s/ Paul Guez
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Signature
President
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Title (If Corporate COMMAND Account)
- ----------------------------------------
Account Name (If Joint Account)
X
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Signature
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(C)1996 Prudential Securities Incorporated
