EXHIBIT 1
MARGIN ACCOUNT APPLICATION AND AGREEMENT
Title of account Account Number
----------------------------- ----------------
NO MARGIN ACCOUNT WILL BE ESTABLISHED FOR THE CUSTOMER UNLESS AND UNTIL THE
ACCOUNT IS APPROVED FOR MARGIN TRANSACTIONS BY X.X. XXXXXX SECURITIES INC.
To: X.X. Xxxxxx Securities Inc.
Gentlemen:
This agreement sets forth our respective rights and obligations in connection
with the acceptance by X.X. Xxxxxx Securities Inc. ("JPMS") of a margin
account or accounts for the undersigned ("Customer"). JPMS and Customer
hereby agree to the following with respect to any of Customer's accounts with
JPMS for the purchase and sale of securities:
1. All transactions under this agreement shall be in accordance with the
rules and customs of the exchange or market, and its clearing house, if any,
where the transactions are executed and in conformity with applicable law and
regulations of governmental authorities and future amendments or supplements
thereto.
2. Customer agrees that all securities and other property which JPMS or any
of JPMS' affiliates may hold for Customer (either individually or jointly
with others), and the proceeds thereof, shall be subject to a general lien
and security interest for the discharge of all Customer's obligations to JPMS
or any of JPMS' affiliates. JPMS may in JPMS' discretion and without notice
to Customer, apply or transfer any of Customer's securities and other
property interchangeably between any of Customer's accounts.
3. Customer agrees to maintain margins for Customer's account as JPMS may
require from time to time. Customer agrees to pay interest charges which are
imposed, in accordance with JPMS' usual custom with respect to Customer's
account and to pay on demand any debit balance owing with respect to
Customer's account. Customer acknowledges receipt of the enclosed document
entitled "Interest Charges to Customers."
4. Customer agrees to designate all sell orders for securities as either
"long" or "short". The designation of a sale of a security as "long"
constitutes a certification that the securities to be sold are owned by
Customer and, if such securities are not in JPMS' possession, the placing of
such order shall constitute a warranty by Customer that Customer shall
deliver such securities to JPMS on or before settlement date.
5. In the event of a default of any obligation to JPMS or any of JPMS'
affiliates, or if for any reason JPMS may deem it advisable for the
protection of JPMS or any of its affiliates, JPMS may, without notice or
demand to Customer, and at such time and place as JPMS may reasonably
determine, sell any securities or other property which JPMS or any of JPMS'
affiliates may hold for Customer (either individually or jointly with others)
and apply the proceeds to the discharge of the obligation, or buy in or
borrow any securities or other property sold for Customer's account buy
undelivered by Customer, and cancel any outstanding orders and take such
other action as JPMS deems appropriate. Customer shall remain liable for any
deficiency and shall
Page 8 of 16 Pages
promptly reimburse JPMS for any loss or expense incurred thereby, including
losses sustained by reason of JPMS' inability to borrow any securities or
other property sold for Customer's account.
6. Customer agrees that securities and other property in Customer's account
may be used as collateral for JPMS' general loans and may be pledged,
repledged, hypothecated or rehypothecated separately or in common with other
securities and any other property for the sum due to JPMS thereon or for a
greater sum and without retaining in JPMS' possession and control for
delivery a like amount of similar securities or other property. Customer
understands that when JPMS holds on Customer's behalf bonds or preferred
stocks which are callable in part by the issuer, such securities will be
subject to JPMS' impartial lottery allocation system in which the
probability of Customer's securities being selected as called is proportional
to the holdings of all customers of such securities held in bulk by JPMS or
for JPMS; and that JPMS will withdraw such securities from any depository
prior to the first date on which such securities may be called unless such
depository has adopted an impartial lottery system which is applicable to all
participants. Customer may withdraw uncalled securities prior to a partial
call subject to compliance with applicable margin requirements and the terms
of this agreement and any other agreements between JPMS and Customer. JPMS is
authorized to withdraw securities sold or otherwise disposed of, and to
credit Customer's account with the proceeds thereof or to make such other
disposition thereof as Customer may direct or as provided for in the agreement.
JPMS is further authorized to collect all income and other payments which may
become due on Customer's securities, to surrender for payment maturing
obligations and those called for redemption and to exchange certificates in
temporary form for like certificates in definitive form, or if the par value
of any shares is changed, to effect the exchange for new certificates. It is
understood and agreed by Customer that although JPMS will use reasonable
efforts to effect the authorization set forth in the preceding sentence, JPMS
will incur no liability for JPMS' failure to effect the same.
7. Reports of the execution of orders and statements of Customer's account
shall be conclusive if not objected to in writing, the former within two
days, and the latter within ten days, after forwarding by JPMS to Customer by
mail or otherwise.
8. This agreement and its enforcement shall be governed by the laws of the
State of New York and its provisions shall cover individually and
collectively all accounts which Customer may maintain with JPMS. This
agreement is binding upon and inures to the benefit of JPMS, Customer, and
our respective legal representatives, successors and assigns. 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.
All waivers must be in writing.
9. Arbitration:
(i) Arbitration is final and binding on the parties
(ii) The parties are waiving their right to seek remedies in court,
including the right to jury trial.
(iii) Pre-arbitration discovery is generally more limited than and
different from court proceedings.
(iv) 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.
Page 9 of 16 Pages
(v) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
Customer agrees, and by carrying an account for customer JPMS agrees that all
controversies which may arise between us concerning any transaction or the
construction, performance, or breach of this or any other agreement between
us pertaining to securities and other property, whether entered into prior,
on or subsequent to the date hereof, shall be determined by arbitration. Any
arbitration under this agreement shall be conducted pursuant to the Federal
Arbitration Act and the laws of the State of New York, before the American
Arbitration Association, or before the New York Stock Exchange, Inc. or an
arbitration facility provided by any other exchange of which JPMS is a
member, or the national Association of Securities Dealers, Inc. or the
Municipal Securities Rulemaking Board and in accordance with the rules
obtaining of the selected organization. Customer may elect in the first
instance whether arbitration shall be by the American Arbitration
Association, or by an exchange or self-regulatory organization of which JPMS
is a member, but if customer fails to make such election, by registered
letter or telegram addressed to JPMS at the address shown above, before the
expiration of ten days after receipt of a written request from JPMS to make
such election, then JPMS may make such election. The award of the
arbitrators, or of the majority of them, shall be final, and judgment upon
the award rendered may be entered in any court, state or federal, having
jurisdiction.
10. Customer, if an individual, represents that he or she is of legal age,
and is not an employee of any corporation, firm or individual engaged in the
business of dealing, either as a broker or as principal, in securities,
options, commodity futures, bills of exchange, acceptances or other forms of
commercial paper. Customer further represents that neither Customer nor any
member of his or her immediate family is associated with a firm that is a
member of the NASD, and that Customer is not an employee of an exchange or of
any corporation of which any exchange owns a majority of the capital stock or
of the NASD. Customer further represents that no one except Customer has an
interest in the account or accounts of Customer with JPMS.
11. Communications may be sent to Customer at the address of Customer given
below, or at such other address as Customer may hereafter give to JPMS in
writing, and all communication so sent, whether by mail, telegraph, messenger
or otherwise, shall be deemed given to Customer personally, whether actually
received or not.
12. Customer understands that JPMS may be required to disclose to securities
issuers the name, address and securities positions with respect to securities
held in the subject account in JPMS' name or JPMS' nominee's name unless JPMS
is notified that Customer objects. Customer hereby notifies JPMS that
Customer wishes such disclosure to be made.
Customer should strike out and initial the immediately preceding sentence if
Customer does not consent to such disclosure.
Customer acknowledges that
(i) the securities in Customer's margin account may be loaned to JPMS
or to others, and
(ii) Customer has received a copy of this agreement.
This agreement contains a predispute arbitration clause in paragraph 9 on
page 2.
Page 10 of 16 Pages
Signature Additional signature(if necessary)
------------------------------------ ------------------------------------
Print name Print name
------------------------------------ ------------------------------------
Date Date
------------------------------------ ------------------------------------
For. X.X. Xxxxxx Securities Inc. use only
Registered Representative
Receiving Account Principal approval by
------------------------------------ ------------------------------------
Date Date
------------------------------------ ------------------------------------
SPN:
-------------------------------
Page 11 of 16 Pages
Interest Charges to Customers
Until further notice and except as set forth below, the annual rate of
interest which is charged customers on credit extended to or maintained for
them by X.X. Xxxxxx Securities Inc. ("JPMSI") will be dependent upon the
amount of the debit balance and will be based on the prime broker's loan rate
plus a percentage as shown below:
Debit balance Percentage premium over
Prime broker's loan rate
---------------------------------------------------------
Under $75,000 1 1/4%
$75,001 - $1 million 3/4%
Above $1 million 1/2%
---------------------------------------------------------
The "prime brokers' loan rate" will be computed on a daily basis and
determined by JPMSI for this purpose, in its sole discretion, in accordance
with prevailing money market conditions. In making such determination, JPMSI
will consider, among other things, the rates quoted for brokers' loans by one
or more New York banks which are members of the New York Clearing House
Association. Credit "extended to or maintained" for a customer is any net
debit balance resulting from aggregating the balances in all margin accounts
of the customer and any free credit balances in the cash accounts of the
customer. Credit balances in short accounts are not included in such
computation. Since the foregoing charges are dependent upon the prime
brokers' loan rate, they will change automatically without prior notice to
customers in accordance with changes in the prime brokers' loan rate.
Interest on the basis of the charges described above is computed daily using
a 360 day base year. At the close of each month in which interest is charged
to a customer, the charges will appear on the monthly statement which JPMSI
will mail to the customer. Information with respect to the balances from
which the interest charge is derived will be maintained by JPMSI and will be
made available to the customer upon request.
JPMSI may, but does not necessarily, credit interest on prepayments in cash
accounts (i.e., the payment or crediting to customers of the proceeds of sale
prior to settlement date or prior to the receipt by JPMSI of the item sold in
good deliverable form) at the rate charged on net debit balances in general
margin accounts. Similarly, JPMSI may, but does not necessarily, charge
interest on late payments by customers for securities purchased in cash
accounts at the rate charged on net debit balances in general margin accounts.
Short positions will be "marked to the market" daily. If the aggregate value
of all the securities sold short by the customer appreciates, an amount equal
to such appreciation will be transferred from the customer's general margin
account to his short account resulting in a debit entry in the general margin
account. If the aggregate value of all securities sold short depreciates, an
amount equal to such decline in value will be transferred from the customer's
short account to his general margin account resulting in a credit entry in
the general margin account. The closing price from the previous business day
is used to determine any appreciation or depreciation in the market value of
any security sold short.
You have agreed in your Margin Account Application and Agreement to maintain
at all times margins for your accounts as required by JPMSI from time to
time. JPMSI's general policy is to require the deposit of cash or collateral
on initial transactions as prescribed under Regulation T of the Board of
Governors of the Federal Reserve System. JPMSI will also require the deposit
of cash or additional eligible collateral at such times as may be necessary
to prevent the equity in your accounts from dropping below 35%. The initial
and minimum equity requirement for corporate debt securities which are
determined by JPMSI to be margin eligible will be 30% of the current market
value thereof. For direct U.S. Government obligations and agencies, the
initial margin requirement will be 10% of the principal amount
Page 12 of 16 Pages
on maturities of one year or greater, and 5% of the principal amount on
maturities of less than one year. Should your equity fall below 5% of the
principal amount on maturities of one year or greater, you will be required
to restore the equity on such positions to 5% of the principal amount. JPMSI
may in any individual case make exceptions to its general policy by requiring
more or less cash or collateral at such time as under the circumstances
appear necessary or appropriate to JPMSI. JPMSI's determination of the
eligibility of collateral and the valuation thereof shall be conclusive.
Page 13 of 16 Pages
