UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No.____)*
Putnam New York Investment Grade Municipal Trust
(Name of Issuer)
Common Stock
(Title of Class of Securities)
746921105
(CUSIP Number)
Stephen C. Miller, Esq.
Joel L. Terwilliger, Esq.
2344 Spruce Street, Suite A
Boulder, Colorado 80302
(303) 442-2156
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 8, 2007
(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 that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 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. 746921105
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Mildred B. Horejsi Trust
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e)
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6. Citizenship or Place of Organization Alaska
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Number of 7. Sole Voting Power 531,263
Shares Bene-
ficially Owned 8. Shared Voting Power 0
by Each
Reporting 9. Sole Dispositive Power 531,263
Person With
10. Shared Dispositive Power 0
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 531,263
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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13. Percent of Class Reported by Amount in Row (11) 19.10%
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14. Type of Reporting Person (See Instructions) OO
CUSIP No. 746921105
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Stewart R. Horejsi
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) Not applicable
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e)
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6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power 0
Shares Bene-
ficially Owned 8. Shared Voting Power 0
by Each
Reporting 9. Sole Dispositive Power 0
Person With
10. Shared Dispositive Power 0
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 0
--------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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13. Percent of Class Reported by Amount in Row (11) 0%
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14. Type of Reporting Person (See Instructions) IN
Statement on Schedule 13D
This statement on Schedule 13D relates to the Common Stock of Putnam New
York Investment Grade Municipal Trust, a Massachusetts business trust (the
"Company").
Item 1. Security of Issuer
This Statement relates to the Common Stock of the Company (the "Shares").
The principal executive offices of the Company are located at One Post Office
Square, Boston, Massachusetts 02109.
Item 2. Identity and Background
(a) This Statement is filed (i) by the Mildred B. Horejsi Trust (the
"Mildred Trust"), as the direct beneficial owner of Shares and (ii) by virtue of
certain relationships described in this statement, by Stewart R. Horejsi. Mr.
Horejsi and the Mildred Trust are collectively referred to herein 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 Mildred Trust are Badlands Trust Company, LLC
("Badlands"), Susan L. Ciciora and Brian Sippy (collectively, the "Trustees").
The Trustees may be deemed to control the Mildred Trust and may be deemed to
possess indirect beneficial ownership of the Shares held by the Mildred Trust.
However, none of the Trustees, acting alone, can vote or exercise dispositive
authority over Shares held by the Mildred Trust. Accordingly, the Trustees
disclaim beneficial ownership of the Shares beneficially owned, directly or
indirectly, by the Mildred Trust.
As a result of his advisory role with the Mildred Trust, Mr. Horejsi may be
deemed to have indirect beneficial ownership over the Shares directly
beneficially owned by the Mildred Trust. However, Mr. Horejsi disclaims
beneficial ownership of the Shares directly beneficially held by the Mildred
Trust.
(b) The business address of the Mildred Trust is c/o Badlands Trust
Company, LLC, 3301 C Street, Suite 100, Anchorage, AK 99503. The business
address of Mr. Horejsi is c/o Stewart Investment Advisers, Bellerive, Queen
Street, St. Peter 26061 Barbados. The business address of Ms. Ciciora is 2344
Spruce Street, Suite A, Boulder, Colorado 80302. The business address of Dr.
Sippy is 7265 Old Grant Creek Road, Missoula, MT 59808.
(c) The Mildred Trust is an irrevocable grantor trust organized by Mr.
Horejsi's mother, Mildred Horejsi, primarily for the benefit of her issue.
Although the Mildred Trust was established under the laws of and originally
domiciled in Kansas, it is now domiciled and administered in Alaska. Badlands is
an Alaskan limited liability company organized to act as a private trust company
to administer the Mildred Trust as well as other family trusts for Mr. Horejsi's
family.
Mr. Horejsi is a private investor and is the portfolio manager for two
registered investment advisers, Boulder Investment Advisers, LLC ("BIA") and
Stewart West Indies Trading Company, Ltd., doing business as Stewart Investment
Advisers ("SIA"). BIA and SIA are co-investment advisers to two closed-end
investment companies, the Boulder Total Return Fund, Inc. ("BTF") and the
Boulder Growth & Income Fund, Inc. ("BIF"). BIA and SIA are owned by other
Horejsi family trusts (directly or indirectly through entities wholly-owned by
such trusts). Dr. Sippy is a licensed physician practicing in Missoula, Montana,
and specializing in ophthalmology and is a trustee of or protector with respect
to other Horejsi family trusts. Ms. Ciciora is Mr. Horejsi's daughter and is a
trustee of several other Horejsi family trusts.
(d) None of the Reporting Persons, Badlands, Ms. Ciciora, or Dr. Sippy has
been convicted in a criminal proceeding in the past five years (excluding
traffic violations or similar misdemeanors).
(e) During the past five years, none of the Reporting Persons, Badlands,
Ms. Ciciora or Dr. Sippy 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) Mr. Horejsi, Ms. Ciciora and Dr. Sippy are each citizens of the United
States.
Item 3. Source and Amount of Funds or Other Consideration.
The total amount of funds required by the Mildred Trust to purchase the
Shares as reported in Item 5(c) was $7,330,716.96. Such funds were provided by
the Mildred Trust's cash on hand and margin borrowings under an account
maintained by Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch").
The Mildred Trust's margin borrowings from Merrill Lynch bear interest at
the federal funds rate plus 40 basis points and are due on demand. Such margin
borrowings are based on the collateral in the account maintained by the Mildred
Trust. The foregoing description of the Mildred Trust's account agreement with
Merrill Lynch is qualified in its entirety by reference to the cash management
account agreement attached as Exhibit 1.
Item 4. Purpose of Transaction
The Mildred Trust acquired the Shares reported in Item 5(c) in order to
acquire an equity ownership of the Company. The Mildred Trust may seek to
increase its interest so as to acquire control of 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 Company's equity
securities, including the Shares in the market, effective yield on the Shares or
other equity securities, availability of funds, alternative uses of funds,
leveraged assets, money, stock market and general economic conditions), any of
the Reporting Persons or other Horejsi family controlled entities or trusts that
may act with the Reporting Persons (collectively referred to as the "Other
Trusts") may from time to time purchase the Company's equity securities,
including the Shares, and any of the Reporting Persons or other Horejsi family
controlled entities or Other Trusts may from time to time dispose of all or a
portion of the equity securities or Shares held by such person, or cease buying
or selling Shares or other equity securities. Any such additional purchase or
sale of the Shares or equity securities may be in open market, in
privately-negotiated transactions or otherwise.
Historically, when the Mildred Trust and the Other Trusts have taken large
stakes in companies similar to the Company, they have nominated and elected to
the companies' boards directors whom they know, trust, and in whom they have
confidence with regard to company-related business decisions. Consistent with
this, the Mildred Trust may nominate new trustees, reduce the number of overall
trustees from 11 to 5 to ensure a better functioning board of trustees, propose
terminating the existing investment manager, propose replacing the existing
administrator, and propose a change to the Company's investment objective.
In the past, the Mildred Trust and certain of the Other Trusts successfully
gained control of the boards of BTF, BIF and First Financial Fund, Inc. ("FF").
In the case of BTF and BIF, the Ernest Horejsi Trust No. 1B (the "Ernest Trust")
and the Lola Brown Trust No. 1B (the "Lola Trust") recommended, and the
respective boards and a majority of the funds' respective shareholders agreed,
that, among other changes, BIA and SIA should replace the prior investment
advisers of these funds and that the funds' investment objectives or
restrictions should be changed.
The Ernest Trust and the Lola Trust were able to successfully prevent the
renewal of the investment advisory agreement for BIF (which formerly traded
under the name "US Life Income Fund, Inc."), while holding approximately 20% of
the voting shares of this fund.
Subsequent to this, the Ernest Trust's and the Lola Trust's proposals to
change the investment objectives, replace the investment adviser, amend BIF's
fundamental investment restrictions, and implement certain other changes were
adopted by shareholders.
In the case of FF, the Ernest Trust and the Lola Trust concluded that the
incumbent adviser should be retained and the fund's investment objective left
unchanged, and FF's newly elected board concurred.
For BIF, BTF and FF, the respective boards retained Fund Administrative
Services, LLC ("FAS"), which is owned by the Lola Trust and indirectly by
certain other Horejsi family trusts, as administrator for these funds. The
Reporting Persons may propose that the Company replace the current adviser with
BIA and SIA, replace the current administrator with FAS, and may propose a
different or expanded investment objective for the Company. In any decision, the
Reporting Persons would consider market conditions at the time and the
performance of the incumbent adviser. The Reporting Persons oppose proposals to
open-end or merge the Company into an open-end fund, including the Company's
announced proposal to merge into a Putnam open-fund.
Item 5. Interest in Securities of the Issuer.
(a) The Mildred Trust is the direct beneficial owner of 531,263 shares or
approximately 19.10% of the 2,780,987 Shares outstanding as of October 31, 2006
(the "Outstanding Shares"), according to information contained in the Company's
semi-annual report to shareholders. 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 Mildred Trust. Mr. Horejsi
disclaims all such beneficial ownership.
(b) The Mildred Trust has the direct power to vote and direct the
disposition of the Shares held by it. By virtue of the relationships described
in this Statement, Mr. Horejsi and the Trustees may be deemed to share the
indirect power to vote and direct the disposition of the Shares held by the
Mildred Trust or Other Trusts, but each of Mr. Horejsi and the Trustees
disclaims beneficial ownership of the Shares or any other equity securities in
the Company. Based on its previous experiences with other closed-end funds (BIF,
BTF, and FF), the Mildred Trust and Other Trusts believe that its acquisition of
approximately 20% of the outstanding Shares of the Company will enable it to
prevent the merger into another Putnam fund and enable the trust to implement
the purpose of its transaction as discussed in Item 4, above.
(c) The table below sets forth information relating to the purchases of
Shares purchased by the Mildred Trust. Such purchases were effected by the
Mildred Trust on the American Stock Exchange.
Date Shares Purchase Price
1/30/2007 2,000 $12.66
1/30/2007 5,100 $12.65
2/16/2007 600 $13.54
2/16/2007 7,600 $13.55
2/16/2007 7,200 $13.59
2/16/2007 200 $13.48
2/16/2007 11,600 $13.60
2/16/2007 4,500 $13.62
2/16/2007 2,500 $13.58
2/20/2007 12,000 $13.63
2/20/2007 8,600 $13.64
2/20/2007 1,400 $13.62
2/21/2007 400 $13.58
2/21/2007 2,598 $13.63
2/22/2007 4,600 $13.58
2/22/2007 3,000 $13.55
2/22/2007 5,000 $13.54
2/22/2007 4,300 $13.50
2/23/2007 3,400 $13.65
2/23/2007 3,400 $13.56
2/26/2007 1,700 $13.59
2/26/2007 7,000 $13.60
2/27/2007 600 $13.55
2/28/2007 1,200 $13.70
2/28/2007 1,200 $13.71
2/28/2007 1,000 $13.72
2/28/2007 1,000 $13.78
2/28/2007 3,500 $13.80
2/28/2007 100 $13.77
2/28/2007 1,900 $13.79
2/28/2007 700 $13.55
3/1/2007 1,300 $13.74
3/2/2007 3,700 $13.74
3/2/2007 5,300 $13.80
3/5/2007 2,000 $13.85
3/5/2007 200 $13.78
3/6/2007 4,100 $13.76
3/8/2007 11,800 $13.85
3/8/2007 1,000 $13.84
3/8/2007 1,500 $13.86
3/9/2007 300 $13.81
3/9/2007 3,900 $13.82
3/9/2007 11,000 $13.83
3/9/2007 1,000 $13.76
3/12/2007 5,700 $13.81
3/12/2007 2,400 $13.75
3/13/2007 3,400 $13.82
3/13/2007 2,000 $13.83
3/13/2007 2,000 $13.84
3/15/2007 4,000 $13.78
3/16/2007 7,200 $13.74
3/16/2007 2,000 $13.72
3/16/2007 8,900 $13.78
3/16/2007 1,900 $13.70
3/16/2007 200 $13.79
3/16/2007 1,500 $13.77
3/19/2007 2,900 $13.80
3/19/2007 2,300 $13.83
3/19/2007 1,600 $13.84
The table below sets forth information relating to the purchases of Shares
purchased by the Mildred Trust which were effected though privately negotiated
transactions and closed on the dates indicated below.
Date Shares Purchase Price
3/14/2007 228,565 $13.88
3/15/2007 60,000 $13.88
3/16/2007 37,700 $13.88
(d) The Mildred 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.
By virtue of the relationships described in this Statement, Mr. Horejsi and the
Trustees may be deemed to share the indirect right to receive and the power to
direct the receipt from, and proceeds from the sale of, the Shares held by the
Mildred Trust, but each of Mr. Horejsi and the Trustees disclaims beneficial
ownership of the Shares.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
To the extent additional funds are required to purchase Shares, the Trust
will draw from a revolving line of credit between the Mildred Trust and the Lola
Trust (the "Lola Line of Credit"). Borrowings under the Lola Line of Credit will
bear interest at the short term applicable federal rate. The Lola Line of Credit
is a revolving line of credit and is renewable or cancelable at the discretion
of the trustees of the Lola Trust on a 90-day basis. The Mildred Trust does not
intend to use any of the Shares as collateral for the borrowings under the Lola
Line of Credit. As of this date, the Mildred Trust has not drawn from the Lola
Line of Credit. Under the terms of the Lola Line of Credit, the Trust has total
borrowing authority of $50 million without including any shares as collateral.
The foregoing summary is qualified in its entirely by reference to the attached
Exhibit 2, which is incorporated in this statement by reference.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 Cash Management Account Agreement between the Mildred Trust and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Exhibit 2 Revolving Credit Loan Agreement, Note, and Security Agreement
dated January 18, 2007, between the Mildred Trust and the Lola Trust.
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: March 19, 2007
/s/ Stewart R. Horejsi
Stewart R. Horejsi
/s/ Stephen C. Miller
Stephen C. Miller as President of Badlands Trust
Company, LLC, trustee of the Mildred B. Horejsi Trust
Exhibit 1 - Cash Management Account Agreement with Merrill Lynch
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 SubAccount_ 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 Savings_ 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
CreditLine_ 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 FINANCIAL-SERVICE
2. The CMA Master Financial_ 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 SUBACCOUNT-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. 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, 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 loans 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 I 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 provision 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 and affiliates.
Paragraphs 17 though 25 below apply only if I request that my Securities Account
be established with the Investor Credit line 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 your 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 purchases 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
or 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 the 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 or 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 representations is inaccurate or
becomes inaccurate, I will promptly so advise you in writing.
Paragraphs 26 through 34 below do not apply to CMA SubAccounts.
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 charge 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 accrue
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, with 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 $100,000 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.
Exhibit 2 - Revolving Credit Agreement
REVOLVING CREDIT LOAN AGREEMENT, NOTE, AND SECURITY AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT, NOTE, AND SECURITY AGREEMENT (the
"Agreement") is made this 18th day of January, 2007, by and between the MILDRED
B. HOREJSITRUST (the "Borrower"), a trust domiciled in, and governed by the laws
of, Alaska, and LOLA BROWN TRUST NO. 1B ("Lender"), a trust domiciled in, and
governed by the laws of, Alaska.
RECITALS
WHEREAS, Borrower has requested that Lender provide an independent loan
solely between Borrower and Lender and that said amount be treated as a
revolving line of credit in the maximum amount of $50,000,000; and
WHEREAS, Lender has agreed to extend such revolving line of credit under
the terms and conditions set forth herein.
COVENANTS
In consideration of the hereinafter mutual covenants and consideration, the
receipt of which by each party hereto is acknowledged, the parties agree as
follows:
1. Terms of Revolving Credit. Subject to the terms and conditions of this
Agreement, Lender hereby agrees to establish a revolving credit facility (the
"Revolving Credit") in the maximum amount of FIFTY MILLION AND NO/100THS UNITED
STATES DOLLARS ($50,000,000.00) in favor of Borrower on the following terms and
conditions:
a) The term of the Revolving Credit shall begin on the date hereof and
shall end ninety days thereafter (the "Repayment Date") at which time all
amounts due and owing hereunder shall be due and payable. Notwithstanding
the foregoing, the term of the Revolving Credit may be automatically
renewed for successive periods of three (3) months (each an "Extended
Term") provided such renewal receives the express approval by the Board of
Managers of Lender's administrative trustee, Badlands Trust Company, LLC,
an Alaska private trust company ("Badlands"), which approval shall be in
Badlands' sole, absolute and unfettered discretion.
b) This Agreement shall constitute a promissory note in the face
amount of $50,000,000.00 (the "Note Amount"), payable on or before the
Repayment Date, subject to extensions as provided above.
c) Advances under the Revolving Credit may be made, at the discretion
of Lender in accordance with the terms of this Agreement, at any time prior
to the Repayment Date upon receipt by Lender of written request signed by
Borrower; at no time shall the aggregate obligation of Borrower to Lender
exceed the Note Amount. Borrower may at any time prior to the Repayment
Date repay all or any part of said loans under the Revolving Credit and
subsequently receive further advances, consistent with the terms and
conditions hereof.
d) The principal amounts due under the Revolving Credit shall bear
interest and shall be payable in accordance with the terms set forth below
in Section 4.a) below.
e) Borrower may prepay under this Agreement at any time in any amount
without premium or penalty.
2. Fees and Expenses. Borrower agrees to reimburse Lender for all
out-of-pocket costs and expenses incurred by Lender in connection with this
Revolving Credit and the making, protection, enforcement and collection of all
amounts advanced under the Revolving Credit. These costs are to include the fees
of counsel at any time now or hereafter incurred by Lender, and all costs and
expenses incurred in enforcing the rights of Lender under this Agreement whether
or not upon the occurrence of any Event of Default (hereinafter defined).
3. Promises to Pay. Borrower promises to pay to Lender when due, whether by
normal maturity, acceleration or otherwise, the entire outstanding principal
amount of the Revolving Credit, together with interest, and all other amounts
payable by Borrower to Lender hereunder, including costs of collection.
4. This Agreement Constitutes a Note; Agreement to Pay. This Agreement
shall be deemed a promissory note and, in this regard, this Agreement is also
referred to as the "Note". FOR VALUE RECEIVED, the Borrower promises to pay to
the order of Lender at the address listed below or at such other place as the
holder of this Note may from time to time designate, in lawful money of the
United States of America, the Note Amount (or so much thereof as has been
advanced or re-advanced hereunder from time to time), together with interest
thereon at the rate and upon the terms hereinafter provided. The following terms
shall apply to this Note:
a) Interest Rate. For the period from the date of this Note until the
date on which the entire principal balance outstanding is paid in full (at
stated maturity, on acceleration or otherwise), interest shall accrue on
the principal balance from time to time outstanding at a floating rate
equal to the Short-Term, Annual Applicable Federal Rate as advertised by
the Internal Revenue Service from time to time for the particular period to
which the rate is to be applied divided by 365 (the "Interest Rate").
b) Repayment. Interest accrued hereunder on the outstanding principal
amount shall be paid monthly in arrears on the first day of each month,
beginning on the first day of the first calendar month immediately after
Borrower makes any draw hereunder. All principal due hereunder together
with all accrued unpaid interest thereon calculated at the Interest Rate
(in the aggregate, as may change from time to time, the "Indebtedness")
shall be paid on the Repayment Date. Notwithstanding the Repayment Date,
the term of the Note may be automatically renewed for successive Extended
Terms upon satisfaction of the terms set forth in Section 1.a) above.
c) Calculation of Interest. Interest shall be calculated on the basis
of a three hundred sixty (360) days per year factor applied to the actual
days on which there exists an unpaid principal balance. Interest shall be
calculated by Lender and billed to Borrower for each appropriate period;
provided, however, that failure of Lender to bill Borrower shall not
relieve Borrower's payment obligations hereunder.
d) Application of Payments. All payments made hereunder shall be
applied first to late penalties or other sums owing the holder, next to
accrued and unpaid interest, and then to principal.
e) Optional Prepayment. Borrower may prepay this Note in whole or in
part at any time or from time to time without penalty or additional
interest.
f) Late Payment Penalty. Should any payment of interest or principal
and interest due hereunder be received by the holder of this Note more than
ten (10) days after its due date, Borrower shall pay a late payment penalty
equal to five percent (5%) of the amount overdue for each month outstanding
until paid, beginning with the due date of the late payment.
g) Default Rate. Upon the occurrence of an Event of Default, the rate
of interest accruing on the disbursed unpaid principal balance shall
automatically and without further action by Lender be increased by six (6)
percentage points above the rate of interest otherwise applicable (the
"Default Rate"), independent of whether Lender elects to accelerate the
unpaid principal balance as a result of such default.
h) Confession of Judgment. Upon the occurrence of any Event of
Default, Borrower authorizes and empowers any attorney admitted to practice
before any court of record in the United States to appear on behalf of
Borrower and confess judgment on behalf of Borrower against Borrower in the
full amount due under this Agreement plus attorneys' fees of fifteen
percent (15%) of such amount. In any action brought by Lender under this
Agreement, Borrower consents to the exercise of personal jurisdiction over
it by the courts of the State of Colorado and agrees that venue shall be
proper in any County of the State of Colorado, in addition to any other
court where venue may be proper. Borrower waives and releases, to the
extent permitted by law, all errors and all rights of exemption, appeal,
stay of execution, inquisition and extension upon any levy on real estate
or personal property to which Borrower may otherwise be entitled under the
laws of the United States of America now in force or which may hereafter be
passed, as well as the benefit of any or every statute, ordinance, or rule
of court which may be lawfully waived conferring upon Borrower any right or
privilege of exemption, stay of exercise, or supplementary proceedings, or
other relief from the enforcement or immediate enforcement of a judgment or
related proceedings on a judgment. The authority and power to appear for
and enter judgment against Borrower shall be exercisable concurrently in
one or more jurisdictions and shall not be exhausted or extinguished by one
or more exercises thereof, or by any imperfect exercise thereof or by any
judgment entered pursuant thereto. Such authority and power may be
exercised on one or more occasions, from time to time, in the same or
different jurisdictions, as often as Lender shall deem necessary or
desirable, for all of which this Agreement shall be sufficient warrant.
i) Interest Rate After Judgment. If judgment is entered against
Borrower on this Note, the amount of the judgment entered (which may
include principal, interest, default interest, late charges, fees and
costs) shall bear interest at the highest rate authorized under this Note
as of the date of entry of the judgment.
j) Expenses of Collection. Should this Note be referred to an attorney
for collection, whether or not judgment has been confessed or suit has been
filed, Borrower shall pay all of Lender's actual costs, fees (including
reasonable attorneys' fees) and expenses resulting from such referral.
k) Waiver of Protest. Borrower hereby waives presentment, notice of
dishonor and protest.
l) Waiver. No failure or delay by the holder hereof to insist upon the
strict performance of any term, provision, or agreement of this Note, or to
exercise any right, power or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, provision or agreement or of any such
breach, or preclude the holder hereof from exercising any such right, power
or remedy at any later time or times. By accepting payment after the due
date of any amount payable under this Note, the holder hereof shall not be
deemed to have waived the right either to require prompt payment when due
of all other amounts due under this Note, or to declare a default
hereunder.
5. No Partnership. Nothing contained in this Agreement or otherwise
inferred in its structure and operation is intended to create a security,
investment contract, partnership, joint venture, common enterprise or other
association among the Borrower and Lender or any other parties, or in any way
make any party a co-principal or co-venturer with any other party with respect
to other endeavors in which such other party may be involved. Any inferences to
the contrary of the foregoing statements are expressly negated.
6. Events of Default; Acceleration.
a) Event of Default. Each of the following shall constitute an Event
of Default ("Event of Default") hereunder:
i) The Borrower fails to pay within ten (10) days of when due any
installment of principal or of interest or any other sum payable
pursuant to the terms of the Note;
ii) the insolvency of Borrower or the filing of any bankruptcy,
reorganization, debt arrangement or other proceeding or case against
Borrower under any bankruptcy or insolvency law or commencement of any
dissolution or liquidation proceeding against Borrower, any of which
is either consented to or acquiesced in by Borrower, or the
commencement by Borrower of a voluntary case under the federal
bankruptcy laws or any state insolvency or similar laws, or the
consent by Borrower to the appointment of a receiver, liquidator,
assignee, trustee, custodian or similar official for Borrower or any
of its property or the making by Borrower of any assignment for the
benefit of creditors or the failure by Borrower generally to pay
Borrower's debts as they come due;
iii) any representation or warranty by Borrower hereunder is not
complete or accurate at any time that any advances are outstanding
hereunder;
iv) issuance of any injunction or of an attachment or judgment
against any property of Borrower which is not discharged within thirty
(30) days after issuance;
v) a change in the condition or affairs (financial or otherwise)
of Borrower which in the opinion of the Lender increases Lender's risk
in connection with the Revolving Credit or impairs the prospect of
timely payment of the Revolving Credit; or
vi) default in the performance of any obligation, covenant or
agreement contained or referred to herein.
b) Acceleration.
i) Upon the occurrence of any Event of Default described in
subparagraphs (i) and (ii) above, the entire principal amount of the
Indebtedness then outstanding (if not then due and payable), and
accrued and unpaid interest thereon, and all other sums or payments
required hereunder shall be and become immediately due and payable,
and the Indebtedness shall thereafter bear interest at the Default
Rate from the due date until paid.
ii) Upon the occurrence of any Event of Default other than those
described in subparagraphs (i) and (ii) above, the Lender may declare
the entire principal amount of the Indebtedness then outstanding (if
not then due and payable), and accrued and unpaid interest thereon,
and all other sums or payments required thereunder, to be due and
payable immediately, and notwithstanding the stated maturity in the
Note, the principal amount of the Indebtedness and the accrued and
unpaid interest thereon and all other sums or payments required
thereunder shall thereupon become and be immediately due and payable,
and the Indebtedness shall thereafter bear interest at the Default
Rate.
7. Waivers. Borrower waives demand, notice, protest, service of legal
process pursuant to Colorado Rules of Civil Procedure Rule 4(i), notice of
acceptance of this Agreement, notice of loans made, credit extended, and all
other action taken in reliance hereon and all other demands and notices of any
type.
8. Borrower's Representations and Warranties. To induce Lender to enter
into this Agreement, Borrower makes the following representations and
warranties, all of which shall be true and correct as of the date of this
Agreement and shall continue to be true and correct upon each advance under 1.c)
above:
a) Existence; Power; Authority. Borrower (a) is a trust duly
organized, validly existing and in good standing under the laws of the
State of Alaska, and (b) has the power to own its property and to carry on
its business and is qualified to do business and is in good standing in
each jurisdiction in which the character of properties owned by it or the
transaction of its business makes such qualification necessary. Borrower is
duly and validly authorized by all necessary trustee action and has full
power and authority to enter into this Agreement, to make the borrowings
hereunder, to execute and deliver this Agreement and to perform and comply
with the terms, conditions, and agreements set forth herein and therein.
b) Binding Agreement. This Agreement constitutes the valid and legally
binding obligations of Borrower, enforceable in accordance with their
respective terms.
c) Litigation. There are no proceedings pending or, to the knowledge
of Borrower, threatened before any court, administrative body or other
tribunal which could materially adversely affect the financial condition or
operations of Borrower.
d) No Conflicting Agreements. The execution of and performance under
this Agreement and the borrowings hereunder by the Borrower will not
violate: (A) any statute, regulation or other provision of law; (B) any
order of a court or instrumentality of government having jurisdiction over
the Borrower; (C) any provision of the Trust Agreement of the Borrower; and
(D) any indenture, contract, agreement or other instrument to which the
Borrower is a party or by which the Borrower or any of its property is
bound. There are no provisions of any existing mortgage, deed of trust,
contract, lease, or other agreement of any kind binding on the Borrower or
affecting its business or property which would conflict with or in any way
restrict or prohibit the execution, delivery or performance of the terms of
this Agreement or the Note.
e) Information. All information, whether provided orally or contained
in any financial statement, report, certificate, opinion, letter or any
other written document, given to Lender by Borrower or by any other person
in connection with the Revolving Credit at any time during the term hereof
is and shall constitute a representation and warranty by Borrower
hereunder. Borrower hereby represents and warrants that all such
information is in all material respects true, complete, and accurate, and
does not and shall not fail to state any material fact or any fact
necessary to make such information not misleading.
f) Assets and Properties. Borrower has provided Lender with its most
recent unaudited balance sheet dated September 30, 2006, showing assets of
approximately $64.7 million, liabilities of approximately $1 million
(including the Indebtedness evidenced under this Agreement), and total
equity of approximately $64 million (the "Financial Statements"). Borrower
represents that, as of the date of this Agreement, the Financial Statements
are true and correct in all material respects. Borrower has good and
marketable title to all of its assets and properties, free and clear of any
security interests, liens, or encumbrances of any type or kind whatsoever
except as shown in the Financial Statements.
g) Violation of Laws, etc. (1) Neither the consummation of this
Agreement nor the use, directly or indirectly, of all or any portion of the
proceeds of the Revolving Credit will violate or result in a violation of
any provision of any applicable law or of any applicable order of, or
restriction imposed by, any applicable governmental or regulatory entity or
authority.
9. Borrower's Covenants. Until all obligations and liabilities of Borrower
to Lender under this Agreement have been paid and performed in full, Borrower
shall keep and perform the following covenants, and does hereby covenant, agree
and promise to Lender as follows:
a) General Covenants. Borrower shall, at all times during the term of
the Revolving Credit and at all times that any advances hereunder are
outstanding, do (or refrain from doing, as the case may be) the following:
i) Books, Records, and Inspections. At all times (a) maintain
complete and accurate books and records and (b) permit any person
designated by Lender to enter, examine, audit, and inspect all
properties, books, operations and records of Borrower at any
reasonable time and from time to time wherever such properties, books,
and records are located.
ii) Litigation. Promptly notify Lender of any litigation
instituted or threatened against Borrower and of the entry of any
judgment or lien against any of Borrower's assets or properties.
iii) Compliance with Laws. At all times comply with all
applicable laws and orders of any court or other governmental
authority, and all regulations and standards of any applicable
regulatory entity.
iv) Maintain Existence. At all times maintain in full force and
effect its legal existence, rights, privileges, and qualify and remain
qualified in all jurisdictions where qualification is required.
v) Events of Default. Promptly inform Lender of the occurrence of
any Event of Default or the occurrence of any condition, event or act
which, with the giving of notice or lapse of time or both, would
constitute an Event of Default hereunder.
vi) Negative Covenant for Borrowing. Without the prior written
consent of Lender, Borrower shall not incur any indebtedness, directly
or indirectly, or create or suffer or permit to be created or to stand
against all or any part of the Pledged Assets (as defined below), any
lien or charge prior to, subordinate to, or on a parity with the
security interest granted hereunder.
10. Security Agreement and Financing Statement.
a) Security Agreement. This Agreement shall constitute a security
agreement as contemplated under the Uniform Commercial Code as adopted by
the State of Alaska ("UCC"). To secure the payment and performance of the
Indebtedness, Borrower grants, sells, conveys, assigns, transfers and
pledges unto the Lender a first and prior security interest under the UCC
in and to, and a general first lien upon and right of set-off against, all
of Borrower's right, title and interest in and to the Pledged Assets. The
term "Pledged Assets" shall mean all of the Corporate Stock currently shown
in the Financial Statements. The parties contemplate and agree that the
security interest granted hereunder shall cover all increases in the
Indebtedness (e.g., future advances), notwithstanding Borrower's paying
down the Indebtedness from time to time. The parties also agree that this
Note is not a margin loan with respect to which the securities purchased
with the proceeds of this Note will become Pledged Assets.
b) Financing Statement. Contemporaneously with the execution and
delivery of this Agreement, Borrower shall deliver to the Lender a fully
executed UCC-1 financing statement pursuant to which Borrower acknowledges
its grant of a security interest. Upon such execution, such UCC-1 shall be
filed in the records of the Secretary of State of Alaska.
c) Remedies. Lender shall have all of the rights, remedies and
recourses with respect to the Pledged Assets as are afforded a secured
party by the UCC, which rights, remedies and recourses shall be in addition
to, and not in limitation of, the other rights, remedies and recourses
afforded to the Agent by the terms of this Agreement and applicable law.
Lender shall continuously hold the security interest granted hereunder,
pending full performance by Borrower of its obligations hereunder.
11. Notices. All notices, consents, approvals, requests, demands and other
communications which are required or may be given hereunder shall be in writing
and shall be duly given if personally delivered, sent by facsimile, telegram or
overnight courier or posted by U.S. registered or certified mail, return receipt
requested, postage prepaid and addressed to the other parties at the addresses
provided below:
Lender Borrower
Lola Brown Trust No. 1B Mildred B. Horejsi Trust
c/o Badlands Trust Company, LLC c/o Badlands Trust Company, LLC
Attention: Ron Kukes Attention: Ron Kukes
3301 C. Street 3301 C. Street
Anchorage, AK 99501 Anchorage, AK 99501
Phone (907) 561-5250 Phone (907) 561-5250
Fax (907) 644-1240 Fax (907) 644-1240
Any party may from time to time change the address to which notices to it are to
be sent by giving notice of such change to the other parties in the manner set
forth herein. Notices shall be deemed given on the next business day following
the day such notice is posted or sent by courier in the manner described above,
and if sent by telefax or telegram, on the date such notice is sent, and if
delivered in person, on the date so delivered. Any notice period shall commence
on the day such notice is deemed given. For the purposes of this Agreement, the
term "business day" shall include all days other than Saturdays, Sundays and
federal banking holidays.
12. Miscellaneous.
a) No Waiver. No failure or delay of any party hereto to exercise any
right given to it hereunder, or to insist on strict compliance with any
provision hereunder, shall constitute a waiver of such provision or of any
other provision hereof, or a waiver of any breach, and no waiver of any
provision or breach of any provision shall constitute a waiver of any other
provision or breach or of any subsequent breach of the same provision. No
waiver shall be effective unless in writing and signed by the party having
the right to waive such provision.
b) Survival. All covenants, agreements, representations, and
warranties made herein and in any other instruments or documents delivered
pursuant hereto shall survive the execution and delivery of this Agreement
and shall continue in full force and effect so long as any of the amounts
due hereunder are outstanding and unpaid.
c) Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof, superseding all prior negotiations, correspondence,
understandings and agreements, if any, between the parties; no amendment or
modification of this Agreement shall be binding on the parties unless made
in writing and duly executed by all parties. There are no oral or implied
agreements and no oral or implied warranties between the parties hereto
other than those expressed herein.
d) Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement shall not be assignable by the
Borrower without the prior written consent of Lender.
e) Headings. The section and other headings in this Agreement are for
reference only, and shall not limit or otherwise affect any of the terms
hereof.
f) Further Assurances and Corrective Instruments. The parties hereto
agree to execute, acknowledge, seal and deliver, after the date hereof,
without additional consideration, such further assurances, instruments and
documents, and to take such further actions, as the parties hereto shall
request in order to fulfill the intent of this Agreement and the
transactions contemplated hereby.
g) Severability. Any provision in this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
h) Governing Law. This Agreement is made in and shall be governed by
and construed and interpreted in accordance with the laws of the State of
Colorado.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal, with the intention of making it a sealed instrument, as of
the day and year first above written.
LENDER
LOLA BROWN TRUST NO. 1B, a trust domiciled and administered in Alaska
By: BADLANDS TRUST COMPANY, LLC, an Alaska limited liability company, Trustee
By: ________________________________
Stephen C. Miller
Its: President
BORROWER
MILDRED B. HOREJSI TRUST, a trust domiciled and administered in Alaska
By: BADLANDS TRUST COMPANY, LLC, an Alaska limited liability company, Trustee
By: ________________________________
Stephen C. Miller
Its: President