10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2006

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______________ to _______________.

Commission file number 1-9305

STIFEL FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

DELAWARE	43-1273600
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
501 N. Broadway, St. Louis, Missouri	63102-2188
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code 314-342-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common Stock, Par Value $.15 per share	New York Stock Exchange Chicago Stock Exchange
Preferred Stock Purchase Rights	New York Stock Exchange Chicago Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, 2006 (the last business day of the Registrant's second fiscal quarter), was approximately $386.0 million, based on the closing sale price of the Common Stock on the New York Stock Exchange on that date.

Shares of Common Stock outstanding at February 28, 2007: 14,917,527 shares, par value $.15 per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's Proxy Statement filed with the Securities and Exchange Commission (the "SEC") in connection with the Company's Annual Meeting of Stockholders to be held June 20, 2007, are incorporated by reference in Part III hereof. Exhibit Index located on pages 93 thru 95.

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TABLE OF CONTENTS

PART I
	ITEM I. BUSINESS
	ITEM 1A. RISK FACTORS
	ITEM 1B. UNRESOLVED STAFF COMMENTS
	ITEM 2. PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
PART II
	ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	ITEM 6. SELECTED FINANCIAL DATA
	ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
	ITEM 9A. CONTROLS AND PROCEDURES
	ITEM 9B. OTHER INFORMATION
PART III
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
	ITEM 11. EXECUTIVE COMPENSATION
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
	ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
	ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
	SIGNATURES

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CAUTIONS ABOUT FORWARD-LOOKING INFORMATION

This Form 10-K and the information incorporated by reference in this Form 10-K contain certain forward-looking statements that are based upon our current expectations and projections about current events. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of these safe harbor provisions. You can identify these statements from our use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," and similar expressions. These forward-looking statements include statements relating to:

• Our goals, intentions, and expectations;
• Our ability to integrate acquired businesses, including the Ryan Beck & Co., Inc. ("Ryan Beck") business acquired on February 28, 2007;
• Our ability to close on and integrate the recently announced acquisition of First Service Financial Company("First Service");
• Our business plans and growth strategies; and
• Estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions, and uncertainties, including, among other things, changes in general economic, and business conditions.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our future results. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We will not update these forward-looking statements, even though our situation may change in the future, unless we are obligated to do so under federal securities laws. We qualify all of our forward-looking statements by these cautionary statements.

PART I

ITEM 1. BUSINESS

Stifel Financial Corp. ("Financial" or the "Company"), a Delaware corporation and a holding company for Stifel, Nicolaus & Company, Incorporated ("Stifel Nicolaus"), Ryan Beck and other subsidiaries, was organized in 1983. Stifel Nicolaus is the successor to a partnership founded in 1890. Ryan Beck was founded in 1946. Unless the context requires otherwise, the term "Company" as used herein means Stifel Financial Corp. and its subsidiaries.

On February 28, 2007, the Company closed on the acquisition of Ryan Beck Holdings, Inc. and its wholly-owned broker-dealer subsidiary Ryan Beck from BankAtlantic Bancorp, Inc. Ryan Beck will continue to operate as a free standing subsidiary of the Company until after all existing branches are converted to Stifel Nicolaus. Ryan Beck is headquartered in Florham Park, New Jersey and currently employs 929 employees, including 395 investment executives, in 33 private client branch offices throughout the Mid-Atlantic Region.

On November 20, 2006, the Company and its wholly-owned subsidiary, FSFC Acquisition Co., entered into an Agreement and Plan of Merger with First Service, pursuant to which the Company will acquire First Service and its wholly-owned bank subsidiary, FirstService Bank by means of the merger of FSFC Acquisition Co. with and into First Service. The boards of directors of the Company and First Service have each approved the Agreement and Plan of Merger. Consummation of the merger is subject to a number of customary conditions, including the receipt of all required regulatory approvals and approval of the First Service shareholders. The Company is seeking approval from the Federal Reserve to become a bank holding company and a financial holding company subject to the supervision and regulation of The Board of Governors of the Federal Reserve System. The merger is anticipated to close in the second quarter of 2007.

On December 5, 2006, the Company closed on the acquisition of the private client business and purchased certain assets and assumed certain lease obligations of Miller Johnson Steichen and Kinnard ("MJSK"), a privately held broker dealer. Upon closing, eighty-four former employees of MJSK became employees of the Company.

The Company offers securities-related financial services through its wholly-owned operating subsidiaries, Stifel Nicolaus, Ryan Beck, Century Securities Associates, Inc. ("CSA"), and Stifel Nicolaus Limited ("SN Ltd"). These subsidiaries provide brokerage, trading, investment banking, investment advisory, and related financial services primarily to customers throughout the United States and Europe. The Company's customers include individuals, corporations, municipalities, and institutions. Although the Company has customers throughout the United States, its major geographic area of concentration is in the Midwest and Mid-Atlantic regions.

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Business Segments

The Company's business has four segments: Private Client Group, Equity Capital Markets, Fixed Income Capital Markets, and Other. Financial information for each of the three years ended December 31, 2006, 2005, and 2004 is included in the consolidated financial statements and notes thereto (see Note Q of Notes to Consolidated Financial Statements). Such information is hereby incorporated by reference.

Narrative description of business

As of March 1, 2007, the Company employed 2,809 individuals, including 929 employees from Ryan Beck. In addition, 186 investment executives were affiliated with CSA as independent contractors. Through its broker-dealer subsidiaries, the Company provides securities services to approximately 379,000 client accounts, including 158,000 Ryan Beck accounts. No single client accounts for a material percentage of any segment of the Company's business.

PRIVATE CLIENT GROUP

The Company provides securities transaction and financial planning services to its private clients through the Stifel Nicolaus and Ryan Beck branch systems and its independent contractor firm, CSA. Management has made significant investments in personnel, technology, and market data platforms to grow the private client group over the past five years. At March 1, 2007, the Private Client Group employed 1,726 individuals of which 1,050 were employed by Stifel Nicolaus and 676 by Ryan Beck, including 564 Stifel Nicolaus investment executives, 395 Ryan Beck investment executives, and 186 CSA independent contractors.

Stifel Nicolaus and Ryan Beck Private Client

Stifel Nicolaus and Ryan Beck had 147 private client branches located in 28 states, primarily in the Midwest and Mid-Atlantic region. Its 959 investment executives provide a broad range of services and financial products to their clients. While an increasing number of clients are electing asset-based fee alternatives to the traditional commission schedule, in most cases Stifel Nicolaus and Ryan beck charge commissions on both stock exchange and over-the-counter transactions, in accordance with their commission schedule. In certain cases, varying discounts from the schedule are granted. In addition, both distribute equity securities, through public offerings and secondary markets, and taxable and tax-exempt fixed income products to their private clients, including municipal, corporate, government agency and mortgage-backed securities, preferred stock, and unit investment trusts. In addition, both distribute insurance and annuity products and investment company shares. Stifel Nicolau s and Ryan Beck have dealer-sales agreements with numerous distributors of investment company shares. These agreements generally provide for dealer discounts ranging up to 5.75% of the purchase price, depending upon the size of the transaction.

CSA Private Client

CSA had affiliations with 186 independent contractors in 145 branch offices in 32 states. CSA's independent contractors provide the same types of financial products and services to its private clients as does Stifel Nicolaus. Under their contractual arrangements, these independent contractors may also provide accounting services, real estate brokerage, insurance, or other business activities for their own account. However, all securities transactions must be transacted through CSA. Independent contractors are responsible for all of their direct costs and are paid a larger percentage of commissions to compensate them for their added expenses. CSA is an introducing broker-dealer and, as such, clears its transactions through Stifel Nicolaus.

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Customer Financing

Client securities transactions are effected on either a cash or margin basis. The customer deposits less than the full cost of the security when securities are purchased on a margin basis. The Company makes a loan for the balance of the purchase price. Such loans are collateralized by the securities purchased. The amounts of the loans are subject to the margin requirements of Regulation T of the Board of Governors of the Federal Reserve System, The New York Stock Exchange, Inc. ("NYSE") margin requirements, and the Company's internal policies, which usually are more restrictive than Regulation T or NYSE requirements. In permitting customers to purchase securities on margin, the Company is subject to the risk of a market decline, which could reduce the value of its collateral below the amount of the customers' indebtedness.

EQUITY CAPITAL MARKETS

The Equity Capital Markets segment includes corporate finance, research, syndicate, over-the-counter equity trading, and institutional sales and trading. At March 1, 2007, the Equity Capital Markets segment employed 430 individuals, including 74 from Ryan Beck.

Corporate Finance

The corporate finance group consisted of 141 professionals and support associates; 108 Stifel Nicolaus and 33 Ryan Beck.  Our corporate finance activities include public offerings and private placements of debt and equity securities and the provision of financial advisory services principally with respect to merger and acquisition transactions.  The corporate finance group principally focuses on mid-sized companies as well as on larger companies in targeted industry sectors which include Real Estate, Financial Services, Healthcare, Government and IT Services, Telecommunications, Transportation and Energy, Business & Consumer Services, and Education.

Research

The research department consisted of 149 analysts and support associates, including 32 from Ryan Beck, who publish research on 710 companies. Proprietary research reports are provided to private and institutional clients at no charge and are supplemented by research purchased from outside vendors.

Syndicate

The syndicate department, which consisted of nine professionals and support associates including one from Ryan Beck, coordinates the marketing, distribution, pricing, and stabilization of the Company's lead and co-managed underwritings. In addition, the syndicate department coordinates the firm's syndicate and selling group activities managed by other investment banking firms.

Equity Trading

The Company trades as principal and agent in the over-the-counter market. The over-the-counter equity trading group, which consisted of 42 professionals and support associates, including four from Ryan Beck, acts as both principal and agent to facilitate the execution of customers' orders. The Company makes a market in various securities of interest to its customers through buying, selling, and maintaining an inventory of these securities. At March 1, 2007, Stifel Nicolaus made a market in 761 equity issues in the over-the-counter market. The Company does not engage in a significant amount of trading for its own account.

Institutional Sales and Trading

The institutional equity sales and trading group consisted of 89 professionals and support associates, including four from Ryan Beck, who provide equity products to its institutional accounts in both the primary and secondary markets. Included in Institutional Sales and Trading is SN Ltd, an international subsidiary of the Company. At March 1, 2007, the institutional equity sales and trading department maintains relationships with approximately 1,058 institutional accounts.

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FIXED INCOME CAPITAL MARKETS

The Fixed Income Capital Markets segment includes public finance, institutional sales and competitive underwriting, and trading. At March 1, 2007, the Fixed Income Capital Markets segment employed 234 individuals; 181 Stifel Nicolaus, and 53 Ryan Beck.

Public Finance

Public finance consisted of 44 professionals and support associates. Stifel Nicolaus acts as an underwriter and dealer in bonds issued by states, cities, and other political subdivisions and may act as manager or participant in offerings managed by other firms.

Institutional Sales and Competitive Underwriting and Trading

Institutional sales consisted of 190 professionals and support associates, including 53 from Ryan Beck, and are comprised of taxable and tax-exempt sales departments. Stifel Nicolaus and Ryan Beck buy both tax-exempt and taxable products, primarily municipal, corporate, government agency, and mortgage-backed securities for their own account, maintain an inventory of these products, and resell from that inventory to their institutional accounts. The institutional fixed income sales group maintained relationships with approximately 6,812 accounts at March 1, 2007.

OTHER SEGMENT

In addition to its Private Client Group segment and Capital Markets segments, Stifel Nicolaus clears transactions for another non-affiliated independent introducing broker-dealer. Revenues and costs associated with clearing these transactions are included in the Other segment. The Company also includes unallocated interest expense, interest income from stock borrow activities, and interest income and gains and losses on investments held in the Other segment revenue. The Company includes in the Other segment the unallocated overhead cost associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; acquisition charges related to the Legg Mason Capital Markets business ("LM Capital Markets") acquisition; and general administration. At March 1, 2007, the Company employed 419 persons in this segment; 293 Stifel Nicolaus, and 126 Ryan Beck.

BUSINESS CONTINUITY

The Company has developed a business continuity plan that is designed to permit continued operation of business critical functions in the event of disruptions to its St. Louis headquarters facility. All business critical functions can be supported without the St. Louis headquarters either through our redundant computer capacity in our Denver location or from our branch locations directly to our third party securities processing vendor through its primary or redundant facilities. Systems have been designed so that the Company can route all mission critical processing activity through Denver to alternate locations which can be staffed with relocated personnel as appropriate.

COMPETITION

The Company competes with other securities firms, some of which offer their customers a broader range of brokerage services, have substantially greater resources, and may have greater operating efficiencies. In addition, the Company faces increasing competition from other financial institutions, such as commercial banks, online service providers, and other companies offering financial services. The Financial Modernization Act, signed into law in late 1999, lifted restrictions on banks and insurance companies, permitting them to provide financial services once dominated by securities firms. In addition, recent consolidation in the financial services industry may lead to increased competition from larger, more diversified organizations. Some of these firms generally charge lower commission rates to their customers without offering services such as portfolio valuation, investment recommendations, and research.

Management relies on the expertise acquired in its market area over its 116-year history, its personnel, and its equity capital to operate in the competitive environment.

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REGULATION

The securities industry in the United States is subject to extensive regulation under federal and state laws. The SEC is the federal agency charged with the administration of the federal securities laws. Much of the regulation of broker-dealers, however, has been delegated to self-regulatory organizations ("SRO"), principally the National Association of Securities Dealers, Inc. ("NASD"), the Municipal Securities Rulemaking Board, and the national securities exchanges, such as the NYSE. SROs adopt rules (which are subject to approval by the SEC) that govern the industry and conduct periodic examinations of member broker-dealers. Securities firms are also subject to regulation by state securities commissions in the states in which they are registered.

As a result of federal and state registration and SRO memberships, broker-dealers are subject to overlapping schemes of regulation which cover all aspects of their securities businesses. Such regulations cover matters including capital requirements; uses and safekeeping of clients' funds; conduct of directors, officers, and employees; recordkeeping and reporting requirements; supervisory and organizational procedures intended to assure compliance with securities laws and to prevent improper trading on material nonpublic information; employee-related matters, including qualification and licensing of supervisory and sales personnel; limitations on extensions of credit in securities transactions; clearance and settlement procedures; requirements for the registration, underwriting, sale, and distribution of securities; and rules of the SROs designed to promote high standards of commercial honor and just and equitable principles of trade. A particular focus of the applicable regulations concern s the relationship between broker-dealers and their customers. As a result, many aspects of the broker-dealer customer relationship are subject to regulation, including, in some instances, "suitability" determinations as to certain customer transactions, limitations on the amounts that may be charged to customers, timing of proprietary trading in relation to customers' trades, and disclosures to customers.

Additional legislation, changes in rules promulgated by the SEC and by SROs, and changes in the interpretation or enforcement of existing laws and rules often directly affect the method of operation and profitability of broker-dealers. The SEC and the SROs conduct regular examinations of the broker-dealer subsidiaries of the Company and also initiate targeted and other specific inquiries from time to time, which generally include the investigation of issues involving substantial portions of the securities industry. The SEC and the SROs may determine to take no formal action in certain matters. The SEC and the SROs may conduct administrative proceedings, which can result in censures, fines, suspension, or expulsion of a broker-dealer, its officers, or employees. The principal purpose of regulation and discipline of broker-dealers is the protection of customers and the securities markets rather than the protection of creditors and stockholders of broker-dealers.

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act represents a comprehensive revision of laws affecting corporate governance, accounting obligations, and corporate reporting. The Sarbanes-Oxley Act is applicable to all companies with equity or debt securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In particular, the Sarbanes-Oxley Act established: (1) new requirements for audit committees, including independence, expertise, and responsibilities; (2) the implementation of an internal control structure and procedures for financial reporting; (3) additional responsibilities regarding financial statements for the Chief Executive Officer and Chief Financial Officer of the reporting company and their assessment of the company's internal controls over financial reporting; (4) new standards for auditors and regulation of audits; (5) increased disclosure and reporting obl igations for the reporting company and its directors and executive officers; (6) increased work by the company's independent auditors to audit management's assessment of internal controls over financial reporting; and (7) new and increased civil and criminal penalties for violations of the securities laws. Compliance with these aspects of the Sarbanes-Oxley Act, particularly Section 404, has increased our costs.

As broker-dealers, Stifel Nicolaus, Ryan Beck, and CSA are subject to the Uniform Net Capital Rule (Rule 15c3-1) promulgated by the SEC, which provides that a broker-dealer doing business with the public shall not permit its aggregate indebtedness (as defined) to exceed 15 times its net capital (as defined) or, alternatively, that its net capital shall not be less than two percent of aggregate debit balances (primarily receivables from customers and broker-dealers) computed in accordance with the SEC's Customer Protection Rule (Rule 15c3-3). The Uniform Net Capital Rule is designed to measure the general financial integrity and liquidity of a broker-dealer and the minimum net capital deemed necessary to meet the broker-dealer's continuing commitments to its customers and other broker-dealers. Both methods allow broker-dealers to increase their commitments to customers only to the extent their net capital is deemed adequate to support an increase. Management believes that the a lternative method, which is utilized by most full-service securities firms, is more directly related to the level of customer business. Therefore, Stifel Nicolaus computes its net capital under the alternative method. CSA and Ryan Beck compute their net capital under the aggregate indebtedness method.

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Under SEC rules, a broker-dealer may be prohibited from expanding its business and declaring cash dividends. A broker-dealer that fails to comply with the Uniform Net Capital Rule may be subject to disciplinary actions by the SEC and self-regulatory agencies, such as the NYSE and NASD, including censures, fines, suspension, or expulsion. Stifel Nicolaus had net capital of approximately $134.4 million at December 31, 2006, which was approximately 43.3% of aggregate debit balances and approximately $128.2 million in excess of required net capital. CSA had net capital of approximately $3.0 million at December 31, 2006, which was approximately $2.9 million in excess of the required net capital. Ryan Beck had net capital of approximately $23.0 million at December 31, 2006, which was approximately $22.0 million in excess of required net capital.

The Company's international subsidiary, SN Ltd, is subject to the regulatory supervision and requirements of the Financial Services Authority ("FSA") in the United Kingdom. At December 31, 2006 SN Ltd's capital and reserves was $8.4 million which was $3.7 million in excess of the financial resources requirement under the rules of the FSA.

AVAILABLE INFORMATION

The Company files annual, quarterly, and current reports, proxy statements and other information with the SEC.

The Company's website is http://www.stifel.com. The Company makes available free of charge on its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Forms 3, 4, and 5 filed on behalf of directors and executive officers and any amendments to such reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Also posted on the Company's website are the Company's Executive Committee charter, Audit/Finance Committee charter, Compensation Committee charter, and Nominating/Corporate Governance Committee charter. Copies of the Corporate Governance Guidelines, Complaint Reporting Process, and the Code of Ethics governing our directors, officers, and employees are also posted on the Company's website within the "Corporate Governance" section under the heading "Investor Relations" and are available in print upon request of any stockh older to the Chief Financial Officer or may be requested on the Company's website. Within the time period required by the SEC and the NYSE, the Company will post on its website any modifications to any of the available documents. The Chief Financial Officer can be contacted at Stifel Financial Corp., One Financial Plaza, 501 N. Broadway, St. Louis, MO 63102, telephone: (314) 342-2000.

The public may read and copy the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. This information may also be obtained from the SEC's Website at http://www.sec.gov.

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ITEM 1A - RISK FACTORS

Economic conditions and instability in the U.S. securities markets, including trading volumes and price levels of securities, could adversely affect our business

As a brokerage and investment banking firm, our business depends heavily on conditions in the financial markets and on economic conditions generally, both domestic and abroad. Many factors outside our control may directly affect the securities business, in many cases in an adverse manner. These include but are not necessarily limited to:

• economic and political conditions;
• broad trends in business and finance;
• legislation and regulation affecting the national and international business and financial communities;
• currency values;
• inflation;
• market conditions;
• the availability and cost of short-term or long-term funding and capital;
• the credit capacity or perceived credit worthiness of the securities industry in the market place; and
• the level and volatility of interest rates.

Because a significant portion of our revenue is derived from commissions, margin interest revenue, principal transactions, asset management and service fees and investment banking fees, a decline in stock prices, trading volumes, or liquidity could significantly harm our profitability in the following ways:

• The volume of trades we would execute for our clients may decrease;
• The value of the invested assets we manage for our clients may decline;
• Our customer margin balances may decrease;
• The number and size of transactions for which we provide underwriting and merger and acquisition advisory services may decline;
• The value of the securities we hold in inventory as assets, which we often purchase in connection with market- making and underwriting activities, may decline;
• As a market maker, we may own large positions in specific securities. These undiversified holdings concentrate the risk of market fluctuations and may result in greater losses than would be the case if our holdings were more diversified. In addition, a sizable portion of our inventory is comprised of fixed income securities, which are sensitive to interest rates. As interest rates rise or fall, there is a corresponding increase or decrease in the value of our assets; and
• Th e value of the securities we hold as investments acquired directly through our subsidiaries may decline. In particular, those investments in venture capital and start-up type companies, which by their nature are subject to a high degree of volatility, may be susceptible to significant fluctuations.

To the extent our clients, or counterparties in transactions with us, are more likely to suffer financial setbacks in a volatile stock market environment, our risk of loss during these periods would increase.

We expect to increasingly commit our own capital to engage in proprietary trading, investing and similar activities, and uncertain or unfavorable market or economic conditions may reduce the value of our positions, resulting in reduced revenues.

Declines in the market value of securities can result in the failure of buyers and sellers of securities to fulfill their settlement obligations, and in the failure of our clients to fulfill their credit obligations. During market downturns, counterparties to us in securities transactions may be less likely to complete transactions. Also, we often permit our clients to purchase securities on margin or, in other words, to borrow a portion of the purchase price from us and collateralize the loan with a set percentage of the securities. During steep declines in securities prices, the value of the collateral securing margin purchases may drop below the amount of the purchaser's indebtedness. If the clients are unable to provide additional collateral for these loans, we may lose money on these margin transactions. In addition, particularly during market downturns, we may face additional expense defending or pursuing claims or litigation related to counterparty or client defaults.

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We cannot assure you that we will successfully retain our key personnel or attract, assimilate, or retain other highly qualified personnel in the future, and our failure to do so could materially and adversely affect our business, financial condition, and operating results.

Our people are our most valuable asset. Our ability to develop and retain our client base and to obtain investment banking and advisory engagements depends upon the reputation, judgment, business generation capabilities and project execution skills of highly skilled and often highly specialized employees, including our executive officers. The unexpected loss of services of any of these key employees and executive officers, or the inability to recruit and retain highly qualified personnel in the future, could have an adverse effect on our business and results of operations.

We generally do not enter into written employment agreements with our employees, and employees can stop working with us at any time. Investment executives typically take their clients with them when they leave us to work for a competitor. From time to time, in addition to investment executives, we have lost equity research, investment banking, public finance, and institutional sales and trading professionals to our competitors, and some have taken clients away from us.

Competition for personnel within the financial services industry is intense. The cost of retaining skilled professionals in the financial services industry has escalated considerably, as competition for these professionals has intensified. Employers in the industry are increasingly offering guaranteed contracts, upfront payments, and increased compensation. These can be important factors in an employee's decision to leave us. As competition for skilled professionals in the industry increases, we may have to devote more significant resources to attracting and retaining qualified personnel. In particular, our financial results may be adversely affected by the amortization costs incurred by us in connection with the upfront loans we offer to investment executives.

Moreover, companies in our industry whose employees accept positions with competitors frequently claim that those competitors have engaged in unfair hiring practices. We are currently subject to several such claims and may be subject to additional claims in the future as we seek to hire qualified personnel, some of whom may currently be working for our competitors. Some of these claims may result in material litigation. We could incur substantial costs in defending ourselves against these claims, regardless of their merits. Such claims could also discourage potential employees who currently work for our competitors from joining us.

We may recruit securities professionals, make strategic acquisitions of businesses, engage in joint ventures or divest or exit existing businesses, which could cause us to incur unforeseen expense and have disruptive effects on our business and may strain our resources.

Our growth strategies include the recruitment of securities professionals and future acquisitions or joint ventures with other businesses. Any acquisition or joint venture that we determine to pursue will be accompanied by a number of risks. The growth of our business and expansion of our client base has and will continue to strain our management and administrative resources. Costs or difficulties relating to such transactions, including integration of products, employees, technology systems, accounting systems and management controls, may be greater than expected. Unless offset by a growth of revenues, the costs associated with these investments will reduce our operating margins. We cannot assure investors that we will be able to manage or continue to manage our recent or future growth successfully. The inability to do so could have a material adverse effect on our business, financial condition, and operating results. After we announce or complete an acquisition or joint venture, our shar e price could decline if investors view the transaction as too costly or unlikely to improve our competitive position. We may be unable to retain key personnel after the transaction, and the transaction may impair relationships with customers and business partners. These difficulties could disrupt our ongoing business, increase our expenses and adversely affect our operating results and financial condition. In addition, we may be unable to achieve anticipated benefits and synergies from the transaction as fully as expected or within the expected time frame. Divestitures or elimination of existing businesses or products could have similar effects.

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To the extent we pursue increased expansion to different geographic markets or grow generally through additional strategic acquisitions, we cannot assure you that we will identify suitable acquisition candidates, that acquisitions will be completed on acceptable terms or that we will be able to successfully integrate the operations of any acquired business into our existing business. Such acquisitions could be of significant size and involve firms located in regions of the U.S. where we do not currently operate, or internationally. To acquire and integrate a separate organization would divert management attention from other business activities. This diversion, together with other difficulties we may encounter in integrating an acquired business, could have a material adverse effect on our business, financial condition and results of operations. In addition, we may need to borrow money to finance acquisitions, which would increase our leverage. Such funds might not be available on terms as favorable to us as our current borrowing terms or at all.

We may not realize the expected benefits of our acquisitions.

We may be unable to take advantage of the opportunities we expect to obtain in the acquisitions of Ryan Beck and Legg Mason, including strengthening of our existing private client, equity capital markets, fixed income capital markets and investment banking businesses and the addition of senior personnel and managers from both firms. Additionally, Ryan Beck and the businesses we acquired from Legg Mason are also subject to many, if not all, of the same risks faced by our business described herein. Further, Ryan Beck was acquired in the first quarter of 2007, and the historical data relating to Ryan Beck is not indicative of the results of operations that would have been achieved had the acquisition of Ryan Beck been effected as of an earlier date, or that will be achieved in the future.

The success of our acquisition depends on our ability to retain key personnel from Ryan Beck and Legg Mason. Our business is a service business that depends heavily on highly skilled personnel and the relationship they form with clients.

Like our core business, Ryan Beck and the Legg Mason businesses are service businesses that rely heavily upon highly skilled and highly specialized employees. There is no assurance that all of such employees will remain with Stifel for the long term. As mentioned above, investment executives typically take their clients with them when they leave to work for a competitor of ours. If any of these key employees or other senior management personnel of Ryan Beck or Legg Mason determine that they do not wish to remain with Stifel, it could have an adverse effect on the prospects for our combined business and results of operations in the future.

We may not realize the expected benefits of our acquisition of First Service Financial Company.

We may be unable to take advantage of the opportunities we expect to obtain in the acquisition of First Service Financial Company and its wholly-owned subsidiary, First Service Bank. Our success as a bank holding company and a financial holding company will depend on our ability to comply with extensive regulations and maintain proper levels of capitalization required under the Federal Reserve Act. As stated previously, we rely exclusively on financing activities of our subsidiaries to implement our growth strategies. We cannot assure investors that our internal sources of liquidity will prove sufficient, or if they prove insufficient, that we will be able to successfully obtain outside financing on favorable terms, or at all.

We may not successfully integrate our recent acquisitions into our existing business.

Since December 2005, we have undertaken four significant acquisitions: LM Capital Markets (2005), MJSK (2006) Ryan Beck (first quarter of 2007), and First Service Financial Company (anticipated second quarter 2007). Business combinations of this sort involve the integration of multiple companies that previously have operated independently, which is a complex, costly and time-consuming process. The difficulties of combining the companies' operations include, among other things:

• assimilating and retaining employees with diverse business backgrounds, including key senior management members;
• retaining key customer accounts;
• coordinating regulatory oversight of brokers;
• the necessity of coordinating geographically disparate organizations, systems and facilities;
• consolidating corporate and administrative functions;
• limiting the diversion of management resources necessary to facilitate the integration;
• implementing compatible information and communication systems, as well as common operating procedures;
• creating compatible financial controls and comparable human resource management practices;
• expenses of any undisclosed or potential legal liabilities; and
• preserving the important contractual and other relationships of each company.

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The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of the combined company's business and the loss of key personnel. The diversion of management's attention, any delays or difficulties encountered in connection with the business combination and the integration of the companies' operations or the costs associated with these activities could harm the business, results of operations, financial condition or prospects of the combined company.

We face intense competition in our industry.

Our business will suffer if we do not compete successfully. All aspects of our business and of the securities industry in general are intensely competitive. We expect competition to continue and intensify in the future.

Because many of our competitors have greater resources and offer more services than we do, increased competition could have a material and adverse effect on our profitability.

We compete directly with national full-service broker-dealers, investment banking firms, and commercial banks and, to a lesser extent, with discount brokers and dealers and investment advisors. We also compete indirectly for investment assets with insurance companies, real estate firms, hedge funds, and others.

Many of our competitors have significantly greater capital and financial resources than we do. The financial services industry has recently undergone significant consolidation, which has further concentrated equity capital and other financial resources in the industry and further increased competition. Many of our competitors use their significantly greater financial capital and scope of operations to offer their customers more products and services, broader research capabilities, access to international markets, and other products and services not currently offered by us. These and other competitive pressures may adversely affect our competitive position and, as a result, our operations and financial condition.

We face competition from new entrants into the market and increased use of alternative sales channels by other firms.

Domestic commercial banks and investment banking boutique firms have entered the broker-dealer business, and large international banks have begun serving our markets as well. Legislative and regulatory initiatives intended to ease restrictions on the sale of securities and underwriting activities by commercial banks have increased competition. This increased competition could cause our business to suffer.

The industry of electronic and/or discount brokerage services is continuing to develop. Increased competition from firms using new technology to deliver these products and services may materially and adversely affect our operating results and financial position. Competitors offering internet-based or other electronic brokerage services may have lower costs and offer their customers more attractive pricing and more convenient services than we do. In addition, we anticipate additional competition from underwriters who conduct offerings of securities through electronic distribution channels, bypassing financial intermediaries such as us altogether.

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We have experienced significant pricing pressure in areas of our business, which may impair our revenues and profitability.

 In recent years, our business has experienced significant pricing pressures on trading margins and commissions in debt and equity trading. In the fixed income market, regulatory requirements have resulted in greater price transparency, leading to increased price competition and decreased trading margins. In the equity market, we have experienced increased pricing pressure from institutional clients to reduce commissions, and this pressure has been augmented by the increased use of electronic and direct market access trading, which has created additional competitive downward pressure on trading margins. The trend toward using alternative trading systems is continuing to grow, which may result in decreased commission and trading revenue, reduce our participation in the trading markets and our ability to access market information, and lead to the creation of new and stronger competitors. Institutional clients also have pressured financial services firms to alter "soft dollar" practices under which brokerage firms bundle the cost of trade execution with research products and services. Some institutions are entering into arrangements that separate (or "unbundle") payments for research products or services from sales commissions. These arrangements have increased the competitive pressures on sales commissions and have affected the value our clients place on high-quality research. Additional pressure on sales and trading revenue may impair the profitability of our business. Moreover, our inability to reach agreement regarding the terms of unbundling arrangements with institutional clients who are actively seeking such arrangements could result in the loss of those clients, which would likely reduce our institutional commissions. We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts they are willing to pay, including by reducing the number of brokerage firms they use, and some of our competitors s eek to obtain market share by reducing fees, commissions or margins.

We are subject to an increased risk of legal proceedings, which may result in significant losses to us that we cannot recover. Claimants in these proceedings may be customers, employees, or regulatory agencies, among others, seeking damages for mistakes, errors, negligence or acts of fraud by our employees.

Many aspects of our business subject us to substantial risks of potential liability to customers and to regulatory enforcement proceedings by state and federal regulators. Participants in the securities industry face an increasing amount of litigation and arbitration proceedings. Dissatisfied clients regularly make claims against securities firms and their brokers for, among others, negligence, fraud, unauthorized trading, suitability, churning, failure to supervise, breach of fiduciary duty, employee errors, intentional misconduct, unauthorized transactions by investment executives or traders, improper recruiting activity, and failures in the processing of securities transactions. These types of claims expose us to the risk of significant loss. Acts of fraud are difficult to detect and deter, and we cannot assure investors that our risk management procedures and controls will prevent losses from fraudulent activity. In our role as underwriter and selling agent, we may be liab le if there are material misstatements or omissions of material information in prospectuses and other communications regarding underwritten offerings of securities. At any point in time, the aggregate amount of existing claims against us could be material. While we do not expect the outcome of any existing claims against us to have a material adverse impact on our business, financial condition, or results of operations, we cannot assure you that these types of proceedings will not materially and adversely affect us. We do not carry insurance that would cover payments regarding these liabilities, with the exception of fidelity coverage with respect to fraudulent acts of our employees. In addition, our by-laws provide for the indemnification of our officers, directors, and employees to the maximum extent permitted under Delaware law. In the future, we may be the subject of indemnification assertions under these documents by our officers, directors, or employees who have or may become defendants in litigation. These claims for indemnification may subject us to substantial risks of potential liability.

In addition to the foregoing financial costs and risks associated with potential liability, the defense of litigation has increased costs associated with attorneys' fees. The amount of outside attorneys' fees incurred in connection with the defense of litigation could be substantial and might materially and adversely affect our results of operations as such fees occur. Securities class action litigation in particular is highly complex and can extend for a protracted period of time, thereby substantially increasing the costs incurred to resolve this litigation.

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Terrorist attacks have contributed to economic instability in the United States; continued terrorist attacks, war, or other civil disturbances could lead to further economic instability and adversely affect investor confidence.

The financial markets were beset with volatility and uncertainty after the terrorist attacks of September 11, 2001, escalating tensions in the Middle East, and the war in Afghanistan and in Iraq. These events increased volatility in the prices of securities. We are unable to predict whether the future effects of the ensuing U.S. military and other responsive actions, and the threat of similar future events or responses to such events, will result in long-term commercial disruptions or will have a long-term adverse effect on the financial markets, as well as our business, results of operations, or financial condition.

We continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements, which are important to attract and retain investment executives.

The brokerage and investment banking industry continues to undergo technological change, with periodic introductions of new technology-driven products and services. In addition to better serving clients, the effective use of technology increases efficiency and enables firms to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy their demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We cannot assure you that we will be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients.

Our operations and infrastructure and those of the service providers upon which we rely may malfunction or fail.

Our business is highly dependent on our ability to process, on a daily basis, a large number of transactions across diverse markets, and the transactions we process have become increasingly complex. The inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses. If any of these systems do not operate properly or are disabled, or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer impairments, financial loss, a disruption of our businesses, liability to clients, regulatory intervention or reputational damage.

We have outsourced certain aspects of our technology infrastructure, including trade processing, data centers, disaster recovery systems, and wide area networks, as well as market data servers, which constantly broadcast news, quotes, analytics, and other important information to the desktop computers of our investment executives. We contract with other vendors to produce, batch, and mail our confirmations and customer reports. We are dependent on our technology providers to manage and monitor those functions. A disruption of any of the outsourced services would be out of our control and could negatively impact our business. We have experienced disruptions on occasion, none of which has been material to our operations and results. However, there can be no guarantee that future disruptions with these providers will not occur.

We also face the risk of operational failure or termination of relations with any of the clearing agents, exchanges, clearing houses or other financial intermediaries we use to facilitate our securities transactions. Any such failure or termination could adversely affect our ability to effect transactions and to manage our exposure to risk.

Our operations also rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other events that could have a security impact. If one or more of such events occur, this could jeopardize our or our clients' or counterparties' confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients', our counterparties' or third parties' operations. We may be required to expend significant additional resources to modify our protective measures, to investigate and remediate vulnerabilities or other exposures or to make required notifications, and we may be subject to litigation and financi al losses that are either not insured or not fully covered through any insurance maintained by us.

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Lack of sufficient liquidity or access to capital could impair our business and financial condition.

Liquidity is essential to our business. If we have insufficient liquid assets, we will be forced to curtail our operations, and our business will suffer. The principal source of our liquidity is our assets, consisting mainly of cash or assets readily convertible into cash. These assets are financed primarily by our equity capital, debentures to trusts, client credit balances, short-term bank loans, proceeds from securities lending, and other payables. We currently finance our client accounts and firm trading positions through ordinary course borrowings at floating interest rates from various banks on a demand basis and securities lending, with company-owned and client securities pledged as collateral. Changes in securities market volumes, related client borrowing demands, underwriting activity, and levels of securities inventory affect the amount of our financing requirements.

Our liquidity requirements may change in the event we need to raise more funds than anticipated to increase inventory positions, support more rapid expansion, develop new or enhanced services and products, acquire technologies, or respond to other unanticipated liquidity requirements. Stifel Nicolaus generates substantially all of our revenue. We rely exclusively on financing activities and distributions from our subsidiaries for funds to implement our business and growth strategies, and repurchase our shares. Net capital rules, restrictions under our long-term debt, or the borrowing arrangements of our subsidiaries, as well as the earnings, financial condition, and cash requirements of our subsidiaries, may each limit distributions to us from our subsidiaries.

In the event existing internal and external financial resources do not satisfy our needs, we may have to seek additional outside financing. The availability of outside financing will depend on a variety of factors, such as market conditions, the general availability of credit, the volume of trading activities, the overall availability of credit to the financial services industry, credit ratings, and credit capacity, as well as the possibility that lenders could develop a negative perception of our long-term or short-term financial prospects if we incurred large trading losses or if the level of our business activity decreased due to a market downturn. Similarly, our access to funds may be impaired if regulatory authorities took significant action against us, or if we discovered that one of our employees had engaged in serious unauthorized or illegal activity. We cannot assure investors that our internal sources of liquidity will prove sufficient, or if they prove insufficient, that we will be able to successfully obtain outside financing on favorable terms, or at all.

We are subject to net capital requirements; failure to comply with these rules would significantly harm our business.

The SEC requires broker-dealers to maintain adequate regulatory capital in relation to their liabilities and the size of their customer business. These rules require broker-dealers to maintain a substantial portion of their assets in cash or highly liquid investments. Failure to maintain the required net capital may subject a firm to limitation of its activities, including suspension or revocation of its registration by the SEC and suspension or expulsion by the NASD, the NYSE, and other regulatory bodies, and ultimately may require its liquidation. These rules affect Stifel Nicolaus, Ryan Beck and CSA. Failure to comply with the net capital rules could have material and adverse consequences, such as:

• limiting our operations that require intensive use of capital, such as underwriting or trading activities; or
• restricting us from withdrawing capital from our subsidiaries, even where our broker-dealer subsidiaries have more than the minimum amount of required capital. This, in turn, could limit our ability to implement our business and growth strategies, pay interest on and repay the principal of our debt, and/or repurchase our shares.

In addition, a change in the net capital rules or the imposition of new rules affecting the scope, coverage, calculation, or amount of net capital requirements, or a significant operating loss or any large charge against net capital, could have similar adverse effects.

Our international subsidiary, SN Ltd, is subject to the regulatory supervision and requirements of FSA in the United Kingdom. The FSA also has the power to set minimum capital requirements, which SN Ltd has met.

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Our underwriting and market making activities may place our capital at risk.

We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell securities we purchased as an underwriter at the anticipated price levels. As an underwriter, we also are subject to heightened standards regarding liability for material misstatements or omissions in prospectuses and other offering documents relating to offerings we underwrite. As a market maker, we may own large positions in specific securities, and these undiversified holdings concentrate the risk of market fluctuations and may result in greater losses than would be the case if our holdings were more diversified.

We are subject to increasing governmental and organizational regulation.

Our business and the securities industry generally, is subject to extensive regulation at both the federal and state levels. In addition, SROs, such as the NYSE and the NASD, require compliance with their extensive rules and regulations. Among other things, these regulatory authorities impose restrictions on sales methods, trading practices, use and safekeeping of customer funds and securities, record keeping, and the conduct of principals and employees. The extensive regulatory framework applicable to broker-dealers, the purpose of which is to protect investors and the integrity of the securities markets, imposes significant compliance burdens and attendant costs on us. The regulatory bodies that administer these rules do not attempt to protect the interests of our security holders as such, but rather the public and markets generally. Failure to comply with any of the laws, rules, or regulations of any SRO, state, or federal regulatory authority could result in a fine, in junction, suspension, or expulsion from the industry, which could materially and adversely impact us. Furthermore, amendments to existing state or federal statutes, rules, and regulations or the adoption of new statutes, rules, and regulations (such as the Sarbanes-Oxley Act of 2002) could require us to alter our methods of operation at costs which could be substantial. In addition, our ability to comply with laws, rules, and regulations is highly dependent upon our ability to maintain a compliance system which is capable of evolving with increasingly complex and changing requirements. Moreover, our independent contractor subsidiaries, CSA and SN Ltd, give rise to a higher risk of noncompliance because of the nature of the independent contractor relationships involved.

We may suffer losses if our reputation is harmed.

Our ability to attract and retain customers and employees may be adversely affected to the extent our reputation is damaged. If we fail to deal, or appear to fail to deal, with various issues that may give rise to reputational risk, we could harm our business prospects. These issues include, but are not limited to, appropriately dealing with potential conflicts of interest, legal and regulatory requirements, ethical issues, money-laundering, privacy, record-keeping, sales and trading practices, and the proper identification of the legal, reputational, credit, liquidity, and market risks inherent in our products. Failure to appropriately address these issues could also give rise to additional legal risk to us, which could, in turn, increase the size and number of claims and damages asserted against us or subject us to regulatory enforcement actions, fines, and penalties.

Our stock price has been volatile, in part due to recent acquisitions we have made, and it may continue to be volatile in the future.

The market price of our common stock could be subject to significant fluctuations due to factors such as:

• the success or failure of our recent acquisitions, our operating strategies and our perceived prospects, those of our acquired companies and those of the financial services industry in general;
• actual or anticipated fluctuations in our financial condition or results of operations;
• failure to meet the expectations of securities analysts;
• a decline in the stock prices of peer companies;
• a discount in the trading multiple of our common stock relative to that of common stock of certain of our peer companies due to perceived risks associated with our smaller size; and
• realization of any of the other risks described in this section.

Declines in the price of our common stock may adversely affect our ability to recruit and retain key employees, including our managing directors and other key professional employees and those who have joined us from companies we recently acquired. In addition we may not be able to access the capital markets or use our stock effectively in connection with future acquisition.

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Your interest in our firm may be diluted if we issue additional shares of common stock as a result of the Ryan Beck acquisition, or future offerings or acquisitions where we use our stock.

We have filed a preliminary proxy statement seeking stockholder approval to issue additional shares of our common stock in connection with our acquisition of Ryan Beck. In addition, we are requesting ability to issue equity awards as retention to individuals who were employees of Ryan Beck as of the date of our acquisition of that company. We anticipate receiving approval of both of these items. If we issue additional shares of common stock as a result of approval of those items, or otherwise issue stock in connection with future acquisitions or as a result of a financing, investors ownership interest in our company will be diluted.

Misconduct by our employees or by the employees of our business partners could harm us and is difficult to detect and prevent.

There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry in recent years, and we run the risk that employee misconduct could occur at our firm. For example, misconduct could involve the improper use or disclosure of confidential information, which could result in regulatory sanctions and serious reputational or financial harm. It is not always possible to deter misconduct and the precautions we take to detect and prevent this activity may not be effective in all cases. Our ability to detect and prevent misconduct by entities with whom we do business may be even more limited. We may suffer reputational harm for any misconduct by our employees or those entities with whom we do business.

Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risk.

Although we have developed risk management procedures and policies to identify, monitor, and manage risks, we cannot assure investors that our procedures will be fully effective. Our risk management methods may not effectively predict the risks we will face in the future, which may be different in nature or magnitude than past experiences. In addition, some of our risk management methods are based on an evaluation of information regarding markets, clients, and other matters provided by third parties. This information may not be accurate, complete, up-to-date, or properly evaluated, and our risk management procedures may be correspondingly flawed. Management of operational, legal, and regulatory risk requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and we cannot assure investors that our policies and procedures will be fully effective.

The business operations that we conduct outside of the United States subject us to unique risks.

To the extent we conduct business outside the United States, we are subject to risks including, without limitation, the risk that we will be unable to provide effective operational support to these business activities, the risk of non-compliance with foreign laws and regulations, the general economic and political conditions in countries where we conduct business and currency fluctuations. If we are unable to manage these risks effectively, our reputation and results of operations could be harmed.

Page 17

Provisions in our certificate of incorporation and bylaws and of Delaware law may prevent or delay an acquisition of our company, which could decrease the market value of our common stock.

Our certificate of incorporation and bylaws and Delaware law contain provisions that are intended to deter abusive takeover tactics by making them unacceptably expensive to the raider and to encourage prospective acquirors to negotiate with our board of directors rather than to attempt a hostile takeover. Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15 percent or more of our outstanding common stock. We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal, and are not intended to make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of our company and our shareholders.

ITEM 1B - UNRESOLVED STAFF COMMENTS

Not applicable

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ITEM 2. PROPERTIES

The Company's headquarters, Stifel Nicolaus' headquarters and operations, and CSA's headquarters are located in 96,000 square feet of leased office space in St. Louis. Ryan Beck's headquarters are located in 49,570 square feet of leased office space in Florham Park, New Jersey. The Company leases 43,418 square feet, located in Baltimore, for a significant portion of the LM Capital Markets business. On November 28, 2006, the Company entered into a new lease for 75,724 square feet in Baltimore to replace the existing leased space for the LM Capital Markets business and to provide additional space for the Private Client Group growth. The new space is currently being renovated for anticipated occupancy in the third quarter. The Company leases a total of 182 office locations, of which the Private Client segment maintains 147 leased offices in 28 states, primarily in the Midwest and Mid-Atlantic region. The Equity Capital Markets segment occupies leased space in 26 locations. The Fixed Income Ca pital Markets segment resides in nine leased locations. The Company's management believes that, at the present time, the facilities are suitable and adequate to meet its needs and that such facilities have sufficient productive capacity and are appropriately utilized.

The Company also leases communication and other equipment. Aggregate annual rental expense, for office space and equipment, for the year ended December 31, 2006, was approximately $15.7 million. Further information about the lease obligations of the Company is provided in Note E of the Notes to Consolidated Financial Statements filed with and made a part hereof.

ITEM 3. LEGAL PROCEEDINGS

The Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from its securities business activities, including lawsuits, arbitration claims and regulatory matters. Some of these claims seek substantial or indeterminate damages, and regulatory investigations can result in substantial fines and penalties. Through counsel, the Company has asserted what it believes to be meritorious defenses in all significant litigation, arbitration and regulatory matters pending or threatened against the Company. Management, based on its understanding of the facts and after consultation with counsel, estimates and appropriately records loss reserves that are believed to be reasonable. While the ultimate outcome of pending litigation, claims and regulatory matters cannot be predicted with certainty, based upon information currently known, management believes that resolution of all such matters will not have a material adverse effect on the consolidated Stateme nts of Financial Condition of the Company. However there can be no assurances that the ultimate resolution of these proceedings and claims will not exceed the estimated loss reserves as determined by management, and the outcome and timing of any particular matter may be material to the operating results for any particular period depending on the operating results for that period.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The following information is furnished pursuant to General Instruction G (3) of Form 10-K with respect to the executive officers of Financial:

Name	Age	Positions or Offices With the Company and Stifel Nicolaus
Ronald J. Kruszewski	48	Chairman of the Board of Directors, President, and Chief Executive Officer of the Company and Chairman of the Board of Directors and Chief Executive Officer of Stifel Nicolaus
Scott B. McCuaig	57	Senior Vice President and Director of the Company and President, Co-Chief Operating Officer, and Director of Stifel Nicolaus
James M. Zemlyak	47	Senior Vice President, Chief Financial Officer, and Treasurer of the Company and Executive Vice President, Co-Chief Operating Officer, and Director of Stifel Nicolaus
Richard J. Himelfarb	65	Senior Vice President and Director of the Company and Executive Vice President, Director of Investment Banking, and Director of Stifel Nicolaus
David M. Minnick	50	Senior Vice President and General Counsel of the Company and Stifel Nicolaus
Thomas P. Mulroy	45	Senior Vice President and Director of the Company and Executive Vice President, Director of Equity Capital Markets, and Director of Stifel Nicolaus
David D. Sliney	37	Senior Vice President of the Company and Senior Vice President and Director of Stifel Nicolaus
Joseph A. Sullivan	49	Senior Vice President and Director of the Company and Executive Vice President, Director of Fixed Income Capital Markets, and Director of Stifel Nicolaus

Ronald J. Kruszewski has been President and Chief Executive Officer of the Company and Stifel Nicolaus since September 1997 and Chairman of the Board of Directors of the Company and Stifel Nicolaus since April 2001. Prior thereto, Mr. Kruszewski served as Managing Director and Chief Financial Officer of Baird Financial Corporation and Managing Director of Robert W. Baird & Co. Incorporated, a securities broker-dealer firm, from 1993 to September 1997. Mr. Kruszewski has been a Director of the Company since September 1997.

Scott B. McCuaig has been Senior Vice President and President of the Private Client Group of the Company and Stifel Nicolaus and Director of Stifel Nicolaus since January 1998 and President and Co-Chief Operating Officer of Stifel Nicolaus since August 2002. Prior thereto, Mr. McCuaig served as Managing Director, head of marketing, and regional sales manager of Robert W. Baird & Co. Incorporated from June 1988 to January 1998. Mr. McCuaig has been a Director of the Company since April 2001.

James M. Zemlyak joined Stifel Nicolaus in February 1999. Mr. Zemlyak has been Senior Vice President, Chief Financial Officer, and Treasurer of the Company and a member of the Board of Directors of Stifel Nicolaus since February 1999, Co-Chief Operating Officer of Stifel Nicolaus since August 2002, and Executive Vice President of Stifel Nicolaus since December 1, 2005. Mr. Zemlyak also served as Chief Financial Officer of Stifel Nicolaus from February 1999 to October 2006. Prior to joining the Company, Mr. Zemlyak served as Managing Director and Chief Financial Officer of Baird Financial Corporation from 1997 to 1999 and Senior Vice President and Chief Financial Officer of Robert W. Baird & Co. Incorporated from 1994 to 1999.

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Richard J. Himelfarb has served as Senior Vice President and Director of the Company and Executive Vice President, Director of Investment Banking, and Director of Stifel Nicolaus since December 2005. He is responsible for supervising our corporate finance investment banking activities. Prior to joining the Company, Mr. Himelfarb served as a director of Legg Mason, Inc. from November 1983 and Legg Mason Wood Walker, Inc. from January 2005. Mr. Himelfarb was elected Executive Vice President of Legg Mason and Legg Mason Wood Walker, Inc. in July 1995 and having previously served as Senior Vice President from November 1983.

David M. Minnick has served as Senior Vice President and General Counsel of the Company and Stifel Nicolaus since October 2004. Prior thereto, Mr. Minnick served as Vice President and Counsel for A. G. Edwards & Sons, Inc. from August 2002 through October 2004, Senior Regional Attorney for NASD Regulation, Inc. from November 2000 through July 2002, as an attorney in private law practice from September 1998 through November 2000, and as General Counsel and Managing Director of Morgan Keegan & Company, Inc. from October 1990 through August 1998.

Thomas P. Mulroy has served as Senior Vice President and Director of the Company and Executive Vice President, Director of Equity Capital Markets, and Director of Stifel Nicolaus since December 2005. Mr. Mulroy has responsibility for institutional equity sales, trading, and research. Prior to joining the Company, Mr. Mulroy was elected Executive Vice President of Legg Mason, Inc. in July 2002 and of Legg Mason Wood Walker, Inc. in November 2000. Mr. Mulroy became a Senior Vice President of Legg Mason, Inc. in July 2000 and Legg Mason Wood Walker, Inc. in August 1998.

David D. Sliney has been a Senior Vice President of the Company since May 2003. In 1997, Mr. Sliney began a Strategic Planning and Finance role with Stifel Nicolaus and has served as a Director of Stifel Nicolaus since May 2003. Mr. Sliney is also responsible for the Company's Operations and Technology departments. Mr. Sliney joined Stifel Nicolaus in 1992, and between 1992 and 1995, Mr. Sliney worked as a fixed income trader and later assumed responsibility for the firm's Equity Syndicate Department.

Joseph A. Sullivan has served as Senior Vice President and Director of the Company and Executive Vice President, Director of Fixed Income Capital Markets, and Director of Stifel Nicolaus since December 2005. Mr. Sullivan has responsibility for municipal and taxable fixed income banking, research, and institutional sales and trading. Prior to joining the Company, Mr. Sullivan was elected Executive Vice President of Legg Mason, Inc. in July 2003 and of Legg Mason Wood Walker, Inc. in August 2003. Mr. Sullivan had been Senior Vice President of Legg Mason, Inc. from July 2000 and of Legg Mason Wood Walker, Inc. from August 1994.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

a. Market Information

The common stock of Stifel Financial Corp. is traded on the New York Stock Exchange and Chicago Stock Exchange under the symbol "SF." The high/low sales prices for Stifel Financial Corp. common stock, as reported on the NYSE Consolidated Transactions Reporting System, for each full quarterly period for the calendar years are as follows:

	STOCK PRICE
	HIGH	LOW
YEAR 2006 BY QUARTER
First	$44.15	37.09
Second	43.60	32.45
Third	35.83	29.67
Fourth	42.00	31.26
YEAR 2005 BY QUARTER
First	$22.33	19.40
Second	25.74	19.65
Third	36.51	23.25
Fourth	39.44	34.80

b. Holders

The approximate number of stockholders of record on March 1, 2007, was 5,300.

c. Dividends

See restrictions related to the payment of dividends in "Liquidity and Capital Resources" contained in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and made part hereof.

d. Securities Authorized for Issuance Under Equity Compensation Plans

Information regarding securities authorized for issuance under equity compensation plans is contained in "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," and made part hereof.

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Issuer Purchases of Equity Securities

The following table summarizes the Company's repurchase activity of its common stock during the fourth quarter ended December 31, 2006:

(Periods)	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under the Plans
October 1, 2006 - October 31, 2006	27,047	$	31.98	25,700	1,711,807
November 1, 2006 - November 30, 2006	1,019	$	37.98	- -	1,711,807
December 1, 2006 - December 31, 2006	125,265	$	40.74	- -	1,711,807
Total	153,331	$	39.17	25,700

(1) The total number of shares purchased includes 125,541 shares/units acquired through the surrender of shares/units by unit holders to pay for the employees' tax withholdings on conversions and 2,090 shares/units acquired through the surrender of shares/units by unit holders to pay for employees' note obligations to the Company.

The Company has an ongoing authorization, as amended, from the Board of Directors to repurchase its common stock in the open market or in negotiated transactions. In May 2005, the Company's Board of Directors authorized the repurchase of an additional 2,000,000 shares, of which 1,711,807 shares remain available to be purchased.

Private Placement

In January 2006, the Company entered into subscription agreements with key associates of the LM Capital Markets business acquired by the Company in December 2005 who were able demonstrate to the Company's satisfaction that they were "accredited investors". Pursuant to the offering, the Company sold 1,052,220 shares of its Common Stock (the "New Shares"), for a price of $25.00 per share in a private placement, at a total offering price for the New Shares issued of $26.3 million in cash, with no underwriting discounts or commissions payable. The New Shares were sold in reliance on exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder, based on the following: there was no general solicitation; all investors are "accredited investors" (within the meaning of Regulation D) who are sophisticated about business and financial matters; and all the New Shares issued are subject to restriction on transfer. All net proceeds from the sale of the New Shares went to the Company. The proceeds were used to increase the Company's equity capital required to support the combined capital markets business following completion of the LM Capital Markets Transaction and for general corporate purposes, including future acquisitions.

Page 23

Stockholder Return Performance Graph

The following graph compares the cumulative stockholder returns, including the reinvestment of dividends, of our common stock on an indexed basis with a Peer Group Index, and the Standard and Poor's 500 ("S&P 500") Index for the period beginning December 31, 2001 and ending December 31, 2006. The Peer Group Index consists of six companies, including us, that serve the same markets as us and which compete with us in one or more markets.

	2001	2002	2003	2004	2005	2006
Stifel Financial Corp.	$100	$107	$187	$268	$480	$501
Peer Group	100	78	119	164	164	243
S&P 500 Index	100	78	100	111	117	135

Peer Group Companies

Oppenheimer Holdings, Inc.(1)	SWS Group, Inc.
Sanders Morris Harris Group Inc.	Stifel Financial Corp.
First Albany Companies Inc.	Piper Jaffray Companies
(1) Formerly Fahnestock Viner Holdings, Inc.

* Compound Annual Growth Rate

Page 24

ITEM 6. SELECTED FINANCIAL DATA

FIVE-YEAR FINANCIAL SUMMARY

(in thousands, except per share amounts)		YEARS ENDED DECEMBER 31,
		2006	2005	2004	2003	2002
REVENUES	Commissions	$ 199,056	$ 107,976	$ 95,894	$ 82,232	$ 68,362
	Principal transactions	86,365	44,110	46,163	47,417	39,453
	Investment banking	82,856	55,893	57,768	49,663	45,860
	Asset management and service fees	57,713	43,476	35,504	28,021	25,098
	Interest	35,804	18,022	13,101	12,285	14,602
	Other	9,594	533	2,759	2,002	738
	Total revenues	471,388	270,010	251,189	221,620	194,113
	Less: Interest expense	19,581	6,275	4,366	5,108	6,319
	Net revenues	451,807	263,735	246,823	216,512	187,794
NON-INTEREST EXPENSES	Employee compensation and benefits	329,703	174,765	157,314	140,973	126,726
	Occupancy and equipment rental	30,751	22,625	21,445	19,278	18,631
	Communications and office supplies	26,666	12,087	10,330	10,740	10,737
	Commissions and floor brokerage	6,388	4,134	3,658	3,263	3,373
	Other operating expenses	31,930	17,402	17,459	17,198	23,533
	Total non-interest expenses	425,438	231,013	210,206	191,452	183,000
	Income before income taxes	26,369	32,722	36,617	25,060	4,794
	Provision for income taxes	10,938	13,078	13,469	10,053	2,014
	Net income	$ 15,431	$ 19,644	$ 23,148	$ 15,007	$ 2,780
PER SHARE DATA	Basic earnings	$ 1.34	$ 2.00	$ 2.39	$ 1.63	$ .30
	Diluted earnings	$ 1.11	$ 1.56	$ 1.88	$ 1.37	$ .26
	Cash dividends	--	--	--	--	$ .05
STATEMENT OF FINANCIAL CONDITIONAND OTHERDATA	Total assets	$1,084,774	$ 842,001	$382,314	$412,239	$422,976
	Long-term obligations	$ 98,379	$ 97,182	$ 61,767	$ 61,541	$ 63,227
	Stockholders' equity	$ 220,265	$ 155,093	$131,312	$100,045	$ 79,990
	Net income as % average equity	7.68%	14.16%	19.72%	17.09%	3.44%
	Net income as % total revenues	3.27%	7.28%	9.22%	6.77%	1.43%
	Average common shares and share equivalents used in determining earnings per share:
	Basic	11,513	9,828	9,702	9,233	9,377
	Diluted	13,909	12,586	12,281	10,971	10,892

All share and earnings per share amounts reflect the four-for-three stock split distributed in September 2004.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," made part hereof.

Page 25

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Environment

Stifel Financial Corp. (the "Parent"), through its wholly-owned subsidiaries, principally Stifel, Nicolaus & Company, Incorporated ("Stifel Nicolaus"), collectively referred to as the "Company," is principally engaged in retail brokerage, securities trading, investment banking, investment advisory, and related financial services throughout the United States and three European offices. Although the Company has offices throughout the United States, its major geographic area of concentration is in the Midwest and Mid-Atlantic regions. The Company's principal customers are individual investors, corporations, municipalities, and institutions.

During 2006, the Federal Reserve Board raised the fed funds rate four times increasing the rate from 4.25% at December 31, 2005 to 5.25% at December 31, 2006.

The key indicators of the markets' performances, the Dow Jones Industrial Average ("DJIA"), the Standard and Poor's 500 Index ("S&P 500") and the NASDAQ composite improved from the same period last year. At December 31, 2006, the DJIA, the NASDAQ and the S&P 500 increased 16%, 10%, and 14% respectively, over their December 31, 2005 closing prices.

While the major market indices have signaled increased investor confidence in the markets, concerns over inflation, energy costs and geopolitical issues remain and the current year results may not be indicative of future results.

On December 1, 2005, the Company closed on its acquisition of the Legg Mason Capital Markets business ("LM Capital Markets") from Citigroup Inc. (See Note G of the Notes to Consolidated Financial Statements). The LM Capital Markets business includes the Investment Banking, Equity and Fixed Income Research, Equity Sales and Trading, and Taxable Fixed Income Sales and Trading Departments of Legg Mason, Inc. and employed 429 professional and support staff in 22 offices who became employees of Stifel Nicolaus on December 1, 2005. The Results of Operations for the Company, Equity Capital Markets, and Fixed Income Capital Markets include the acquired LM Capital Markets business results of operations beginning on the date of acquisition.

On December 5, 2006, the Company closed on the acquisition of the private client business and certain assets and limited liabilities of Miller Johnson Steichen Kinnard, Inc. ("MJSK"), a privately held broker dealer. Upon closing, eighty-four former employees of MJSK became employees of the Company. The acquisition was done to further grow the Company's Private Client business in the state of Minnesota. The Results of Operations for the Company and the Private Client Group segment include the acquired MJSK private client business from the date of acquisition.

On February 28, 2007, the Company closed on the acquisition of Ryan Beck Holdings, Inc. and its wholly-owned broker-dealer subsidiary Ryan Beck & Co., Inc. ("Ryan Beck") from BankAtlantic Bancorp, Inc. Ryan Beck will continue to operate as a free standing subsidiary of the Company until after all existing branches are converted to Stifel Nicolaus. Ryan Beck is headquartered in Florham Park, New Jersey and currently employs 929 employees, including 395 investment executives, in 33 private client branch offices throughout the Mid-Atlantic Region.

On November 20, 2006, the Company and its wholly-owned subsidiary, FSFC Acquisition Co., entered into an Agreement and Plan of Merger with First Service Financial Company ("First Service"), pursuant to which the Company will acquire First Service and its wholly-owned bank subsidiary, FirstService Bank, by means of the merger of FSFC Acquisition Co. with and into First Service. The Company is seeking approval from the Federal Reserve to become a bank holding company and financial holding company subject to the supervision and regulation of the Board of Governors of the Federal Reserve System. The merger is expected to close in the second quarter of 2007.

Page 26

Results of Operations for the Company

The following table presents major categories of revenue and expenses for the Company for the respective periods.

	December 31, 2006			December 31, 2005			December 31, 2004
		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue
(in thousands)	Amount			Amount			Amount
Revenues
Commissions and principal transactions	$285,421	63%	88%	$152,086	58%	7%	$142,057	58%
Investment banking	82,856	18	48	55,893	21	(3)	57,768	23
Asset management and service fees	57,713	13	33	43,476	16	22	35,504	14
Interest	35,804	8	99	18,022	7	38	13,101	5
Other	9,594	2	1,700	533	0	(81)	2,759	2
Total revenues	471,388	104	75	270,010	102	7	251,189	102
Less: Interest expense	19,581	4	212	6,275	2	44	4,366	2
Net revenues	451,807	100	71	263,735	100	7	246,823	100
Non-Interest Expenses
Employee compensation and benefits	329,703	73	89	174,765	66	11	157,314	64
Occupancy and equipment rental	30,751	7	36	22,625	8	6	21,445	9
Communication and office supplies	26,666	6	121	12,087	5	17	10,330	4
Commissions and floor brokerage	6,388	1	55	4,134	2	13	3,658	1
Other operating expenses	31,930	7	83	17,402	7	0	17,459	7
Total non-interest expenses	425,438	94	84	231,013	88	10	210,206	85
Income before income taxes	26,369	6	(19)	32,722	12	(11)	36,617	15
Provision for income taxes	10,938	3	(16)	13,078	5	(3)	13,469	5
Net Income	$ 15,431	3%	(21)%	$ 19,644	7%	(15)%	$ 23,148	10%

2006 As Compared To 2005 - Total Company

Year to year changes can be principally attributed to the LM Capital Markets business acquired on December 1, 2005. As a result of the acquisition of the LM Capital Markets business, the Company added 429 employees and 22 offices on December 1, 2005. Except as noted in the following discussion of the year to year comparisons and the ensuing segment results, the underlying reasons for the increase in revenue and expense categories can be attributed principally to the acquisition and increased number of Private Client Group offices and increased number of Private Client Group investment executives.

The Company's total revenues increased $201.4 million to $471.4 million in 2006, a 75% increase over the $270.0 million recorded in 2005. Net revenues (total revenues less interest expense) increased $188.1 million to $451.8 million in 2006, a 71% increase over 2005 net revenues of $263.7 million and represented the Company's eleventh consecutive annual increase in net revenues.

Commissions and principal transactions increased 88% to $285.4 million in 2006 from $152.1 million in 2005 with revenue increases of 14%, 591%, and 365% in the Private Client Group, Equity Capital Markets, and Fixed Income Capital Markets segments, respectively.

Investment banking revenues increased 48% to $82.9 million in 2006 from $55.9 million in 2005. Capital raising revenue increased 4% to $44.0 million from $42.3 million in the prior year. Strategic advisory fees increased 186% to $38.9 million from $13.6 million in 2005.

Asset management and service fees increased 33% to $57.7 million in 2006 from $43.5 million in 2005 as a result of a 35% increase in the number of managed accounts and a 42% increase in the value of assets under management in those accounts (See Assets Under Management in 2006 Compared to 2005 - Private Client Group).

Net interest revenue increased 38% to $16.2 million in 2006 from $11.7 million in 2005 due primarily to increased revenue from stock borrow activities, increased interest charged on customer margin accounts and increased interest earned on fixed income inventory held for sale to customers. These interest revenue increases were partially offset by increased interest expenses associated with carrying higher levels of firm inventory, increased rates charged for bank borrowings and stock loans to finance customer borrowings, and increased interest expense resulting from the issuance in August 2005 of a $35.0 million debenture to Stifel Financial Capital Trust II with interest at 6.38% per annum.

Page 27

Other revenues increased 1700% to $9.6 million in 2006 from $533,000 in 2005 principally as a result of an increase in net gains on investments primarily resulting from a net gain recorded on its NYSE seat membership in the amount of $ 5.5 million as a result of receiving shares of NYSE Group common stock in conjunction with the New York Stock Exchanges merger with Archipelago Holding, Inc.

Total non-interest expenses increased 84% to $425.4 million in 2006 from $231.0 million in 2005. The most significant increase was in employee compensation and benefits which increased 89% to $329.7 million.

Employee compensation and benefits increased 89% to $329.7 million in 2006 from $174.8 million in 2005. As a percentage of net revenue, employee compensation and benefits totaled 73% in 2006 compared to 66% in 2005. A portion of employee compensation and benefits includes transition pay, principally in the form of upfront notes and accelerated payout in connection with the Company's continuing expansion efforts, of $14.0 million (3% of net revenue) and $10.4 million (4% of net revenue) for the twelve months ended December 31, 2006 and December 31, 2005, respectively. The upfront notes are amortized over a five to ten year period. In addition, for the twelve months ended December 31, 2006, employee compensation and benefits includes $39.8 million, primarily stock based compensation, and for the twelve months ended December 31, 2005, $2.3 million, primarily severance, for acquisition related payments in connection with the LM Capital Markets acquisition. Excluding the acquisitio n related charges, employee compensation and benefits as a percentage of net revenues totaled 64% for 2006 compared to 65% in 2005. The Company excludes acquisition related expenses in its analysis of employee compensation and benefits, a non-Generally Accepted Accounting Principle ("GAAP") measure, because it believes exclusion of acquisition related compensation is a more useful tool in measuring compensation as a percentage of net revenues.

A reconciliation of GAAP Employee compensation and benefits to Employee compensation and benefits excluding acquisition related compensation, is included in the table below.

($ in thousands)	December 31, 2006	% of Net Revenue	December 31, 2005	% of Net Revenue
GAAP Compensation and Benefits	$329,703	73%	$174,765	66%
Less: Acquisition related compensation	39,760	9%	2,300	1%
Compensation and Benefits excluding acquisition related charges	$ 289,943	64%	$ 172,465	65%

Occupancy and equipment rental and communication and office supplies increased 36% and 121% to $30.8 million and $26.7 million, respectively, in 2006 from $22.6 million and $12.1 million, respectively, in 2005, primarily as a result of an increase in the number of the Company's Private Client branch offices and the LM Capital Markets acquisition.

Commissions and floor brokerage increased 55% to $6.4 million in 2006 from $4.1 million in 2005 due to increased floor execution costs resulting from the increase in transactions and commission revenues.

Other operating expenses increased 83% to $31.9 million in 2006 compared to $17.4 million in 2005, representing 7% of net revenues for each of the periods.

The provision for income taxes decreased 16% to $10.9 million in 2006 from $13.1 million in 2005 resulting from decreased income before income taxes due to the acquisition related charges incurred in 2006. The effective tax rate was 41% in 2006 compared to 40% in 2005.

Page 28

The current year net income decreased 21% to $15.4 million or $1.11 per diluted share in 2006 compared to $19.6 million or $1.56 per diluted share in 2005. The 2006 results include approximately $41.4 million in pre-tax acquisition related charges, primarily stock based compensation, resulting from the LM Capital Markets acquisition, or $1.74 per diluted share. The 2006 results also include a $5.5 million gain resulting from the sale of NYSE Group shares and the subsequent market adjustment of remaining NYSE Group shares related to our NYSE seat. The 2005 results include approximately $3.3 million in pre-tax acquisition related charges, primarily severance, resulting from the LM Capital Markets acquisition, or approximately $0.16 per diluted share.

2005 As Compared To 2004 - Total Company

Year to year comparisons were impacted by the LM Capital Markets business acquired on December 1, 2005. The Company contributed $13.9 million in net revenues and $2.5 million in income before income taxes.

The Company's total revenues increased $18.8 million, a 7% increase over 2004 and recorded its tenth consecutive annual increase in net revenues (total revenues less interest expense) of $16.9 million, a 7% increase over 2004.

Commissions and principal transactions increased $10.0 million as a result of increased production resulting from an increase in Private Client branch offices and increased production as a result of the LM Capital Markets business.

Investment banking revenues declined $1.9 million principally resulting from a decrease in the number of underwriting participations by the Company.

Asset management and service fees increased $8.0 million resulting from the increase in asset management fees for wrap accounts, which are billed based upon the value of the assets maintained in the account (See Assets Under Management in 2005 Compared to 2004 - Private Client Group).

Net interest increased to $11.7 million principally as a result of increased interest revenue on customer margin accounts, which increased 38% resulting from increased rates charged to those customers. Interest expense increased $1.9 million principally resulting from increased stock loan activity during the year in conjunction with increased bank borrowings and increased interest charges resulting from the issuance of $35.0 million debenture to Stifel Financial Capital Trust II with interest at 6.38% per annum issued in August 2005.

Other revenues decreased 81% to $533,000 principally due to a decrease in net gains on investments.

Total non-interest expenses increased 10% to $231.0 million. The most significant increase was in employee compensation and benefits which increased 11% to $174.8 million.

Compensation and benefits, which comprises 66% of net revenues, up from 64% in 2004, increased 11% to $174.8 million in conjunction with increased productivity and departmental profitability. The current year compensation and benefits includes $2.3 million in severance associated with the acquisition of the LM Capital Markets business. Additionally, benefit expense increased from the prior year due to the reversal in 2004 of previously accrued health benefits due to lower-than-expected utilization. A portion of compensation and benefits includes transition pay, principally in the form of upfront notes and accelerated payout in connection with the Company's continuing expansion efforts, of $10.4 million (4% of net revenue) and $8.9 million (4% of net revenue) for the twelve months ended December 31, 2005 and December 31, 2004, respectively. The upfront notes are amortized over a five to ten year period. Excluding the $2.3 million acquisition related severance pay in 2005, compe nsation as a percentage of net revenues totaled 65% for 2005 compared to 64% in 2004. The Company excludes acquisition related expenses in its analysis of compensation and benefits, a non-GAAP measure, because it believes exclusion of acquisition related compensation is a more useful tool in measuring compensation as a percentage of net revenues.

Occupancy and equipment rental and communication and office supplies increased 6% and 17% to $22.6 million and $12.1 million respectively, primarily as a result of an increase in the number of the Company's Private Client branch offices and the LM Capital Markets acquisition.

Page 29

Commission and floor brokerage increased 13% to $4.1 million due to increased floor execution costs resulting from the increase in transactions and commission revenues.

Other operating expenses were unchanged.

The effective tax rate increased to 40.0% from 36.8% in 2004 as a result of $1.0 million tax benefit in 2004 resulting from the settlement of a state tax matter covering a number of years.

The current year net income decreased 15% to $19.6 million or $1.56 per diluted share. The current year results include $3.3 million, or $0.16 per diluted share in acquisition related costs, primarily severance, resulting from the LM Capital Markets acquisition. The prior year results include a $1.0 million tax benefit or approximately $0.08 per diluted share.

Core Earnings

As a result of the acquisition, the Company reports Core Earnings; a non-GAAP financial measure. Core Earnings represents GAAP net income before acquisition related charges, principally compensation expense recorded for stock based awards offered to key associates of LM Capital Markets and accounted for under Statement of Financial Accounting Standards ("SFAS") No. 123 (Revised 2004), Share-Based Payment ("SFAS No. 123R"). Management believes the supplemental disclosure of Core Earnings helps investors, rating agencies, and financial analysts better understand the performance of their business and enhances the comparison of their performance from period to period. Management uses Core Earnings to evaluate the performance of their business. Core Earnings should not be considered an alternative to any measure of performance as promulgated under GAAP (such as net income), nor should this data be considered an indicator of our overall financial performance or liquidity. Als o, the calculation of Core Earnings used by the Company may not be comparable to similarly titled measures reported by other companies.

Net income for the twelve months ending December 31, 2006 and December 31, 2005 was impacted by acquisition related costs, primarily pre-tax stock based compensation, of $41.4 million and severance costs of $3.3 million, respectively, associated with the acquisition of the LM Capital Markets business from Citigroup Inc. Included in these 2006 acquisition related charges are: 1) pre-tax compensation charges of approximately $30.0 million for amortization of units awarded to LM Capital Markets associates, severance, and contractually based compensation above standard performance based compensation; 2) a pre-tax compensation charge of approximately $9.8 million for the difference between the $25.00 per share offering price and the grant date fair value of $34.27 per share for the private placement of Company common stock to key associates of the LM Capital Markets business; and 3) other non-compensation acquisition charges of $1.6 million. These acquisition-related charges reduced the Company 's basic and diluted earnings per share by $2.10 and $1.74, respectively, in 2006 and $0.20 and $0.16, respectively in 2005.

Page 30

A reconciliation of Core Earnings to Net Income, and Core Earnings per Basic and Diluted Share to Net Income per Basic and Diluted Share, the most directly comparable measure under GAAP, is included in the table below.

(in thousands, except per share amounts)	December 31, 2006	December 31, 2005
GAAP Net Income	$ 15,431	$ 19,644
Acquisition related revenues, net of tax	90	- -
Acquisition related charges, net of tax
Private placement compensation	5,692	- -
Acquisition related compensation	17,516	1,370
Other non-compensation charges	861	602
Core Earnings (1)	$ 39,590	$ 21,616
Earnings per Share:
GAAP Earnings Per Basic Share	$ 1.34	$ 2.00
Acquisition related charges	2.10	0.20
Core Earnings Per Basic Share	$ 3.44	$ 2.20
GAAP Earnings Per Diluted Share	$ 1.11	$ 1.56
Acquisition related charges	1.74	0.16
Core Earnings Per Diluted Share	$ 2.85	$ 1.72

(1) Core Earnings for the twelve months ending December 31, 2006 and December 31, 2005 were $39.6 million or $2.85 per diluted share and $21.6 million or $1.72 per diluted share, respectively. Included in the 2006 Core Earnings is $0.16 per diluted share for the gain resulting from the sale of and subsequent market adjustment to the remaining shares of the NYSE Group shares received as a result of the merger of the New York Stock Exchange and Archipelago Holdings Inc.

Segment Analysis

The Company's reportable segments include the Private Client Group, Equity Capital Markets, Fixed Income Capital Markets, and Other. The Private Client Group segment includes branch offices and independent contractor offices of the Company's broker-dealer subsidiaries located throughout the U.S., primarily in the Midwest and Mid-Atlantic regions. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance, to their private clients. The Equity Capital Markets segment includes corporate finance management and participation in underwritings (exclusive of sales credits, which are included in the Private Client Group segment), mergers and acquisitions, institutional sales, trading, research, and market making. The Fixed Income Capital Markets segment includes public finance, institutional sales, and competitive underwriting and trading. The Other segment includes clearing revenue, interest income from stock borrow acti vities, unallocated interest expense, interest income and gains and losses from investments held, and all unallocated overhead cost associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; acquisition charges related to the LM Capital Markets acquisition; and general administration.

Intersegment net revenues and charges are eliminated between segments. The Company evaluates the performance of its segments and allocates resources to them based on various factors, including prospects for growth, return on investment, and return on revenues.

Page 31

Results of Operations for Private Client Group

The following table presents consolidated information for the Private Client Group segment for the respective periods.

	December 31, 2006			December 31, 2005			December 31, 2004
		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue
(in thousands)	Amount			Amount			Amount
Revenues
Commissions and principal transactions	$152,059	66%	14%	$133,428	68%	2%	$130,788	70%
Investment banking	13,294	6	6	12,552	6	(8)	13,709	7
Asset management and service fees	57,657	25	33	43,446	22	22	35,486	19
Interest	20,281	9	42	14,267	7	39	10,290	6
Other	716	- -	179	257	- -	(43)	448	- -
Total revenues	244,007	106	20	203,950	103	7	190,721	102
Less: Interest expense	12,643	6	92	6,594	3	103	3,244	2
Net revenues	231,364	100	17	197,356	100	5	187,477	100
Non-Interest Expenses
Employee compensation and benefits	144,390	62	21	119,056	61	8	110,637	59
Occupancy and equipment rental	14,137	6	13	12,522	7	3	12,134	7
Communication and office supplies	8,014	4	23	6,495	3	10	5,903	3
Commissions and floor brokerage	4,643	2	79	2,596	1	4	2,508	1
Other operating expenses	9,962	4	17	8,530	4	2	8,330	4
Total non-interest expenses	181,146	78	21	149,199	76	7	139,512	74
Income before income taxes	$ 50,218	22%	4%	$ 48,157	24%	- -	$ 47,965	26%

2006 Compared To 2005 - Private Client Group

	December 31, 2006	December 31, 2005	December 31, 2004
Investment Executives	556	467	439
Independent Contractors	179	177	182

Private Client Group total revenues increased 20% to $244.0 million in 2006 compared to $204.0 million in 2005, principally due to increased commissions and principal transactions and increased asset management and service fees.

Commissions and principal transactions increased 14% to $152.0 in 2006 compared to $133.4 million in 2005, primarily due to the increased number branch offices and investment executives.

Investment banking revenues increased 6% to $13.3 million in 2006 compared to $12.6 million in 2005 due to the increased number of equity financing by the Company (See Results of Operations for Equity Capital Markets).

Asset management and service fees increased 33% to $57.7 million in 2006 from $43.4 million in 2005, principally due to increased wrap fees associated with a 35% increase in the number of managed accounts and a 42% increase in the value of managed accounts.

Assets Under Management	December 31, 2006	December 31, 2005	December 31, 2004
Value	$ 3,692,655,000	$ 2,597,276,000	$ 1,379,128,000
Number of accounts	13,010	9,635	7,616

Interest revenue increased 42% to $20.3 million in 2006 from $14.3 million in 2005 as a result of increased rates charged to customers for margin borrowings to finance trading activity. Interest expense increased to $12.6 million from $6.6 million as a result of increased rates from banks to finance those customer borrowings.

Other revenue increased to $716,000 in 2006, a 179% increase over 2005 other revenue of $257,000, principally due to an increase in gains on investments held to hedge investment executives' deferred compensation.

Page 32

Employee compensation and benefits increased 21% to $144.4 million in 2006 from $119.1 million in 2005 as a result of increased variable compensation which increased in conjunction with increased revenue production, and increased fixed compensation which increased due to the firm's continued expansion of the Private Client Group. As a percentage of net revenues employee compensation and benefits increased to 62% from 61% in the prior year. Employee compensation and benefits includes transition pay, principally upfront notes and accelerated payouts, in connection with the Company's expansion efforts, of $11.7 million (2.6% of revenues) and $9.3 million (3.5 % of revenues) from 2006 and 2005, respectively. The upfront notes are amortized over a five to ten year period.

Occupancy and equipment rental increased 13% to $14.1 million from $ $12.5 million in 2005 due to an increase in the number of branch offices.

Communication and office supplies increased 23% to $8.0 million due to the increased number of investment executives and increased number of branch offices.

Commissions and floor brokerage increased 79% to $4.6 million versus $2.6 million in 2005 due to increased transactions and commission revenue.

Other operating expenses increased to $10.0 million in 2006, a 17% increase over the $8.5 million in 2005, principally due to increased advertising and travel and promotion costs associated with the increase in the number of branch offices.

Primarily as a result of the increased production, income before income taxes for the Private Client Group increased 4% to $50.2 million in 2006 compared to the 2005 income before income taxes of $48.2 million.

2005 Compared To 2004 - Private Client Group

	December 31, 2005	December 31, 2004	December 31, 2003
Investment Executives	467	439	412
Independent Contractors	177	182	155

Private Client Group total revenues increased 7% to $204.0 million, principally due to increased commissions and principal transactions and increased asset management and service fees.

Commissions and principal transactions increased 2% to $133.4 million primarily due to the increased number of Investment Executives.

Investment banking revenues declined $1.2 million due to due to decreased number of equity financings by the Company.

Asset management and service fees increased principally due to increased wrap fees resulting from improved market conditions in conjunction with an increase in the number of accounts and increased distribution fees received for money market accounts.

Assets Under Management	December 31, 2005	December 31, 2004	December 31, 2003
Value	$ 2,597,276,000	$ 1,379,128,000	$ 1,000,656,000
Number of accounts	9,635	7,616	6,452

Interest revenue increased as a result of increased rates charged on customer borrowings to finance securities transactions. Interest expense increased as a result of increased rates to finance customer borrowings.

Other revenue decreased principally due to a decrease in gains on investments held to hedge investment executives' deferred compensation.

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Employee compensation and benefits increased due to increased production. As a percentage of net revenues employee compensation and benefits increased to 61% from 59% in the prior year. Employee compensation and benefits includes transition pay in connection with the Company's expansion efforts. Employee compensation and benefits includes transition pay, principally upfront notes and accelerated payouts, in connection with the Company's expansion efforts, of $9.3 million (3.5% of revenues) and $8.2 million (3.3 % of revenues) from 2005 and 2004, respectively. The upfront notes are amortized over a five to ten year period.

Occupancy and equipment rental increased due to an increase in the number of leased offices.

Communication and office supplies increased 10% to $6.5 million resulting primarily from increased number of investment executives and increased number of branch offices.

Commissions and floor brokerage increased with increased production.

Other operating expenses increased due to increased branch offices offset by a decrease in legal settlements.

Primarily as a result of the increased production, income before income taxes for the Private Client Group increased to $48.2 million.

Results of Operations for Equity Capital Markets

The following table presents consolidated information for the Equity Capital Markets Group ("ECM Group") segment for the respective periods.

	December 31, 2006			December 31, 2005			December 31, 2004
		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue
(in thousands)	Amount			Amount			Amount
Revenues
Commissions and principal transactions	$ 91,547	61%	591%	$ 13,252	31%	40%	$ 9,470	24%
Investment banking	57,233	38	90	30,120	69	4	29,046	75
Other	1,462	1	226	448	1	(21)	568	2
Total revenues	150,242	100	243	43,820	101	12	39,084	101
Less: Interest expense	204	- -	(50)	405	1	77	229	1
Net revenues	150,038	100	246	43,415	100	12	38,855	100
Non-Interest Expenses
Employee compensation and benefits	87,840	59	297	22,113	51	14	19,355	50
Occupancy and equipment rental	4,686	3	258	1,308	3	18	1,113	3
Communication and office supplies	11,888	8	375	2,501	6	36	1,838	5
Commissions and floor brokerage	1,655	1	21	1,369	3	34	1,023	3
Other operating expenses	12,010	8	381	2,498	6	(18)	3,046	7
Total non-interest expenses	118,079	79	296	29,789	69	13	26,375	68
Income before income taxes	$ 31,959	21%	135%	$ 13,626	31%	9%	$12,480	32%

2006 Compared to 2005 - Equity Capital Markets

ECM Group net revenues increased 246% to a record $150.0 million in 2006 compared to $43.4 million in 2005, principally due to increased commissions and principal transactions and increased investment banking. Investment banking revenue increased 90% to $57.2 million in 2006, due primarily to advisory fees of $37.1 million, an increase of 200% compared to the prior year, and equity financing revenues of $20.1 million, up 13% compared to 2005.

Other revenue increased 226% to $1.5 million in 2006 compared to $448,000 in 2005 principally due to revenue from sale of research.

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Employee compensation and benefits increased 297% to $87.8 million in 2006 from $22.1 million in the prior year, principally due to an increase in variable compensation associated with increased production. Employee compensation and benefits as a percentage of net revenues increased to 59% in the current year compared to 51% in the prior year as a result of increased productivity and profitability and incrementally higher variable compensation for that increased productivity and profitability.

Occupancy and equipment rental, communication and office supplies, and commissions and floor brokerage increased 258%, 375%, and 21%, respectively over the prior year due to the LM Capital Markets acquisition.

Other operating expenses increased 381% to $12.0 million in 2006 compared to $2.5 million in 2005 principally due to increased professional fees, subscriptions, travel and promotions, advertising, dues and assessments, and insurance associated with increased production and number of employees.

Income before income taxes increased 135% to $32.0 million in 2006 as a result of the 246% increase in net revenue and the leverage in increased production.

2005 Compared to 2004 - Equity Capital Markets

Year to year comparisons were impacted by the LM Capital Markets business acquired on December 1, 2005. The newly acquired business integrated into the ECM Group contributed $11.5 million in net revenues and $2.5 million in income before income taxes.

The ECM Group posted a 12% increase in net revenues to a record $43.4 million over the 2004 record performance.

During the year the ECM Group lead or co-managed, 81 equity, debt, closed-end funds, or trust preferred offerings compared to 87 in 2004. The resultant decrease in underwriting fees was offset by an increase in financial advisory and private placement fees which increased $4.6 million.

Other revenue decreased due to decreased Exchange floor membership leases and floor commissions earned.

Non-interest expenses increased 13% primarily as a result of the increase in employee compensation and benefits, principally variable compensation, which increased in conjunction with increased production. Employee compensation and benefits as a percentage of net revenues increased to 51% from 50% primarily as a result of increased productivity.

Occupancy and equipment rental, communication and office supplies, and commissions and floor brokerage increased due to the LM Capital Markets acquisition.

Other operating expenses decreased principally due to decreased travel and entertainment expenses.

Income before income taxes increased $1.1 million, primarily as a result of increased revenue.

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Results of Operations for Fixed Income Capital Markets

The following table presents consolidated information for the Fixed Income Capital Markets Group ("FICM Group") segment for the respective periods.

	December 31, 2006			December 31, 2005			December 31, 2004
		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue
(in thousands)	Amount			Amount			Amount
Revenues
Commissions and principal transactions	$ 41,816	78%	365%	$ 8,992	49%	34%	$ 6,693	40%
Investment banking	12,330	23	28	9,600	53	(4)	9,976	60
Interest	19,231	36	1,258	1,416	8	76	804	5
Other	4	- -	(84)	25	- -	(31)	36	- -
Total Revenues	73,381	137	266	20,033	110	14	17,509	105
Less: Interest expense	19,811	37	955	1,878	10	114	879	5
Net revenues	53,570	100	195	18,155	100	9	16,630	100
Non-Interest Expenses
Employee compensation and benefits	33,163	62	187	11,565	63	13	10,213	61
Occupancy and equipment rental	2,304	4	157	897	5	29	696	4
Communication and office supplies	3,461	7	231	1,045	6	29	810	5
Commissions and floor brokerage	91	- -	(46)	169	1	33	127	1
Other operating expenses	3,931	7	86	2,118	12	17	1,807	11
Total non-interest expenses	42,950	80	172	15,794	87	16	13,653	82
Income before income taxes	$ 10,620	20%	350%	$ 2,361	13%	(21)%	$ 2,977	18%

2006 Compared To 2005 - Fixed Income Capital Markets

FICM Group net revenues for 2006 increased 195% to a record $53.6 million compared to 2005 net revenues of $18.2 million, principally due to an increase in commissions and principal transactions and investment banking revenue. The increase in investment banking revenues was due to a 32% increase in underwriting fee revenue to $10.6 million compared to $8.0 million in the prior year.

Interest revenue increased due to increased interest and dividends earned on the fixed income products carried in inventory.

Interest expense increased due to increased rates charged to carry inventory.

Employee compensation and benefits increased 187% to $33.2 million in 2006 from $11.6 million in 2005, principally due to increased variable compensation resulting from increased productivity and profitability. Employee compensation and benefits as a percentage of net revenue decreased to 62% in 2006 from 63% in 2005.

Occupancy and equipment rental and communication and office supplies increased 157% and 231%, respectively as compared to the prior year due to the LM Capital Markets acquisition.

Income before income taxes increased 350% to $10.6 million in 2006 compared to $2.4 million in 2005 as a result of the 195% increase in net revenues and the leverage in increased production.

2005 Compared To 2004 - Fixed Income Capital Markets

Year to year comparisons were impacted by the LM Capital Markets business acquired on December 1, 2005. The newly acquired business integrated into the FICM Group contributed $2.3 million in net revenues and $107,500 in income before income taxes.

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During the year the FICM Group senior or co-managed 139 deals, down slightly from 143 deals in 2004. Principal transaction revenues for corporate debt securities and mortgage-backed securities increased approximately $2.3 million as a result of the LM Capital Markets acquisition. As a result, net revenues increased 9% to $18.2 million in 2004 for the FICM Group.

Interest revenue increased due to increased interest earned on the fixed income products carried in inventory.

Interest expense increased due to increased rates charged to carry inventory.

Non-interest expense increased 16% principally due to increased employee compensation and benefits resulting from increased productivity and profitability. Employee compensation and benefits as a percentage of net revenue increased to 63% from 61%.

Occupancy and equipment rental, communication and office supplies, and commissions and floor brokerage increased due to the LM Capital Markets acquisition. As a result, income before income taxes decreased 21% to $2.4 million.

Results of Operations for Other Segment

The following table presents consolidated information for Other Segment for the respective periods.

	December 31, 2006			December 31, 2005			December 31, 2004
		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue	% Increase/ (Decrease)		% of Net Revenue
(in thousands)	Amount			Amount			Amount
Net revenues	$ 16,835	100%	250%	$ 4,809	100%	25%	$ 3,861	100%
Non-Interest Expenses
Employee compensation and benefits	64,310	382	192	22,031	458	29	17,109	443
Other operating expenses	18,953	113	33	14,200	295	5	13,557	351
Total non-interest expenses	83,263	495	130	36,231	753	18	30,666	794
Loss before income taxes	$(66,428)	(395)%	111%	$(31,422)	(653)%	17%	$(26,805)	(694)%

2006 Compared to 2005 - Other Segment

Net revenues increased 250% to $16.8 million in 2006 compared to $4.8 million in 2005, principally as a result of an increase in net interest of 83.9% to $8.8 million and an increase in gains on investments to $6.4 million, primarily from a $5.5 million gain on our NYSE membership seat, compared to a net loss on investment in 2005 of $1.4 million. Interest expense in the Other segment represents interest charged by banks and interest accrued on the debenture securities less internal allocations for use of capital. (See net interest discussion in 2006 as Compared to 2005-Total Company)

Total non-interest expenses increased 130% to $83.3 million in 2006 principally due to acquisition related costs of $41.2 million, primarily stock based compensation, associated with the LM Capital Markets acquisition compared to acquisition related charges in 2005 of $3.3 million, primarily severance.

2005 Compared to 2004 - Other Segment

Net revenues increased 25% as a result of increased net interest. Interest expense in the Other segment represents interest charged by banks and interest accrued on the debenture securities less internal allocations for use of capital.

Total non-interest expenses increased 18% principally due to acquisition related costs of $3.3 million, primarily severance, associated with the LM Capital Markets acquisition. In addition to year over year normal salary increases, employee compensation and benefits increased due to an increase in benefit expense. (See employee compensation and benefit discussion in 2005 as Compared to 2004-Total Company)

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Liquidity and Capital Resources

The Company's assets are principally highly liquid, consisting mainly of cash or assets readily convertible into cash. These assets are financed primarily by the Company's equity capital, debentures to Trusts, customer credit balances, short-term bank loans, proceeds from securities lending, and other payables. Changes in securities market volumes, related customer borrowing demands, underwriting activity, and levels of securities inventory affect the amount of the Company's financing requirements.

The Company's short-term financing is generally obtained through the use of bank loans and securities lending arrangements. Stifel Nicolaus borrows from various banks on a demand basis with company-owned and customer securities pledged as collateral. The value of the customer-owned securities is not reflected in the Consolidated Statements of Financial Condition. Available ongoing credit arrangements with banks totaled $605.0 million at December 31, 2006, of which $409.4 million was unused. There are no compensating balance requirements under these arrangements. At December 31, 2006, short-term borrowings from banks were $195.6 million at an average rate of 5.63%, which were collateralized by company-owned securities valued at $250.4 million. At December 31, 2005, short-term borrowings from banks were $141.0 million at an average rate of 4.40%, of which $18.3 million were collateralized by customer-owned securities of $77.1 million. The remaining short-term borrowings of $122.7 mi llion were collateralized by company-owned securities valued at $135.2 million. The average bank borrowing was $148.7 million, $5.6 million, and $3.7 million in 2006, 2005, and 2004, respectively, at weighted average daily interest rates of 5.36%, 3.09%, and 1.74%, respectively. At December 31, 2006 and 2005, Stifel Nicolaus had a stock loan balance of $86.0 million and $89.0 million, respectively, at weighted average daily interest rates of 5.01% and 4.15%, respectively. The average outstanding securities lending arrangements utilized in financing activities were $114.9 million, $52.2 million, and $81.6 million in 2006, 2005, and 2004, respectively, at weighted average daily effective interest rates of 4.85%, 2.39%, and 1.37%, respectively. Customer owned securities were utilized in these arrangements.

On May 5, 2005, the Company's board of directors authorized the repurchase of up to 2,000,000 additional shares on top of the existing authorization of 1,000,000 shares. These purchases may be made on the open market or in privately negotiated transactions, depending upon market conditions and other factors. Repurchased shares may be used to meet obligations under the Company's employee benefit plans and for general corporate purposes.

On August 12, 2005, the Company completed its private placement of $35.0 million of 6.38% Cumulative Trust Preferred Securities. The Preferred Securities were offered by Stifel Financial Capital Trust II ("the Trust"), a non-consolidated wholly-owned Delaware business trust subsidiary of the Company. The Trust Preferred Securities mature on September 30, 2035, but may be redeemed by the Company and in turn, the Trust would call the debenture beginning September 30, 2010. The Trust requires quarterly distributions of interest to the holder of the Trust Preferred Securities. Distributions will be payable at a fixed interest rate equal to 6.38% per annum from the issue date to September 30, 2010 and then will be payable at a floating interest rate equal to three-month London Interbank Offered Rate ("LIBOR") plus 1.70% per annum.

On December 1, 2005, the Company closed on the acquisition of the LM Capital Markets business from Citigroup Inc. The LM Capital Markets business was part of Legg Mason Wood Walker, Inc. ("LMWW"), which Citigroup Inc. acquired from Legg Mason, Inc. in a substantially simultaneous closing. Under the terms of the agreement, the Company paid Citigroup Inc. an amount equal to the net book value of assets being acquired of $12.2 million plus a premium of $7.0 million paid in cash at closing with the balance of up to an additional $30.0 million in potential earn-out payment by the Company to Citigroup Inc., based on the performance of the combined capital markets business of both the Company's pre-closing Fixed Income and Equity Capital Markets business and LM Capital Markets for calendar years 2006, 2007, and 2008. For calendar year 2006, the Company recorded an earn-out liability of approximately $360,000.

On January 2, 2006, the Company granted 1,807,610 restricted stock units to key associates of the LM Capital Markets. The units were granted in accordance with the Company's 2001 incentive stock award plan as amended with a grant date fair value of $37.59 per unit. The units vest ratably over a three year period, and accordingly, the Company incurred compensation expense of $22.4 million.

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On November 20, 2006, the Company and its wholly-owned subsidiary, FSFC Acquisition Co., entered into an Agreement and Plan of Merger with First Service, pursuant to which the Company will acquire First Service and its wholly-owned bank subsidiary, FirstService Bank, by means of the merger of FSFC Acquisition Co. with and into First Service. The total consideration to be paid for all of the outstanding shares of First Service is approximately $37.9 million cash. The Company is seeking approval from the Federal Reserve to become a bank holding company and financial holding company subject to the supervision and regulation of the Board of Governors of the Federal Reserve System. The merger is expected to close in the second quarter of 2007.

On November 28, 2006, the Company entered into a ten year lease at One South Street in Baltimore's central business district for 75,724 square feet to house the Company's extensive Baltimore operations and support the firm's growth plans. In conjunction with the lease, the Company, on February 1, 2007, entered into a loan agreement and promissory note with the Mayor and City Council of Baltimore, whereby the Company will borrow $750,000 to construct leasehold improvements and purchase furniture, fixtures, and equipment at the leasehold premise. The Company anticipates that leasehold improvements, and furniture, fixtures, and equipment costs will be approximately $6.8 million. The promissory note has a fixed rate interest of 2.0% with interest only payments commencing on March 1, 2007 and continuing through February 1, 2011. Commencing March 1, 2001 and continuing through February 1, 2017, the Company will be required to pay principal and interest payments with a final balloon payment due a t maturity on February 1, 2017 in the amount of $367,000.

On December 5, 2006, the Company closed on the acquisition of the private client business and certain assets and limited liabilities of MJSK, a privately held broker dealer. Under the terms of the agreement the Company paid $7.8 million in cash. In addition the Company issued approximately $4.1 million in upfront notes and approximately $493,000 in restricted stock units to certain investment executives and assumed certain office lease obligations. Eighty-four former employees of MJSK become employees the Company on December 5, 2006. The purchase price of $7.8 million cash was funded primarily from cash from operations.

On February 28, 2007, the Company closed on the acquisition of Ryan Beck Holdings, Inc. and its wholly-owned broker-dealer subsidiary Ryan Beck from BankAtlantic Bancorp, Inc. Ryan Beck will continue to operate as a separate broker-dealer until after all existing branches of Ryan Beck are converted to Stifel Nicolaus. Under the terms of the agreement, the Company paid initial consideration of $2.7 million in cash and issued 2,467,600 shares of Company common stock valued at $41.55 per share which was the five day average closing price of Company common stock for the two days prior to and two days subsequent to the deal announcement date of January 9, 2006 for a total initial consideration of approximately $105.2 million. In addition the Company will issue five-year immediately exerciseable warrants to purchase up to 500,000 shares of Company common stock at an exercise price of $36.00 per share, pending shareholder approval. If shareholder approval is not obtained by June 30, 2007, the Com pany will pay $20.0 million cash in lieu of warrants. The cash portion of the purchase price was funded from cash generated from operations. In addition, a contingent earn-out payment is payable based on defined revenues attributable to specified individuals in Ryan Beck's existing private client division over the two-year period following closing. This earn-out is capped at $40.0 million. A second contingent payment is payable based on defined revenues attributable to specified individuals in Ryan Beck's existing investment banking division. The investment banking earn-out is equal to 25% of the amount of investment banking fees over $25.0 million for each of the two years following closing. Each of the contingent earn-out payments is payable, at the Company's election, in cash or common stock. In addition to the transaction consideration described above, the Company has agreed to establish a retention program for the Private Client associates of Ryan Beck valued at approximately $42.0 million, consisting o f cash and Company common stock and to fund $7.0 million for change of control payments for certain executives of Ryan Beck. The Company has filed a preliminary proxy statement which would seek approval from the holders of its shares of common stock to increase the number of shares of Company common stock available for the retention program, as well as for the warrants and the contingent earn-out payments, in the event the Company elects to make the contingent earn-out payments in shares of its common stock. If shareholders do not approve the additional shares for the issuance of warrants, the Company will make the contingent payments in cash.

Page 39

The Company paid $11.2 million, $12.0 million, and $6.3 million for the issuance of upfront notes to investment executives for transition pay for the years ended December 31, 2006, 2005, and 2004, respectively. The Company amortizes these notes over a five- to ten-year period. Compensation expense related to the amortization of these notes was $7.8 million, $7.3 million, and $5.8 million for the years ended December 31, 2006, 2005, and 2004, respectively.

The Company repurchased 367,304, 332,030, and 472,872 shares for the years ending December 31, 2006, 2005, and 2004, respectively, using existing board authorizations, at average prices of $32.26, $20.94, and $19.38 per share, respectively, to meet obligations under the Company's employee benefit plans and for general corporate purposes. Under existing board authorizations, the Company is permitted to buy an additional 1,711,807 shares. To satisfy the withholding obligations for the conversion of the Company's stock units, the Company withheld 158,267 shares in 2006. The Company reissued 529,887, 924,974, and 942,615 shares for the years ending December 31, 2006, 2005, and 2004, respectively, for employee benefit plans. In 2006, the Company issued 1,729,125 new shares for employee benefit plans.

The Company purchased $7.9 million, $6.5 million, and $3.7 million in fixed assets during 2006, 2005, and 2004, respectively, consisting of information technology equipment, leasehold improvements, and furniture and fixtures.

Management believes that funds from operations, available informal short-term credit arrangements, long-term borrowings, and its ability to raise additional capital will provide sufficient resources to meet its present and anticipated financing needs and fund the Company's continued expansion for the next 12 months. At this time, the Company is currently evaluating additional funding sources which would provide up to $70.0 million. If completed, the current market terms would be more favorable than certain existing credit arrangements of the Company. However, there can be no assurances that such financings will be completed.

Stifel Nicolaus, Ryan Beck and CSA are subject to certain requirements of the SEC with regard to liquidity and capital requirements. At December 31, 2006, Stifel Nicolaus had net capital of approximately $134.4 million, which exceeded the minimum net capital requirements by approximately $128.2 million. CSA had net capital of $3.0 million, which was $2.9 million in excess of minimum required net capital. Ryan Beck had net capital of $23.0 million which was $22.0 million in excess of minimum required. Stifel Nicolaus, Ryan Beck and CSA may not be able to pay cash dividends from its equity capital without prior regulatory approval if doing so would jeopardize their ability to satisfy minimum net capital requirements.

Our international subsidiary, SN Ltd, is subject to the regulatory supervision and requirements of the FSA in the United Kingdom. At December 31, 2006, SN Ltd's capital and reserves were $8.4 million which was $3.7 million in excess of the financial resources requirement under the rules of the FSA.

Inflation

The Company's assets are primarily monetary, consisting of cash, securities inventory, and receivables from customers and brokers and dealers. These monetary assets are generally liquid and turn over rapidly, and consequently, are not significantly affected by inflation. However, the rate of inflation affects various expenses of the Company, such as employee compensation and benefits, communications, and occupancy and equipment, which may not be readily recoverable in the price of its services.

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Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions, and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note A to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2006, describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. The following critical accounting policies and estimates are impacted significantly by judgments, assumptions, and estimates used in the preparation of the consolidated financial statements.

Legal Reserves

The Company records reserves related to legal proceedings resulting from lawsuits and arbitrations, which arise from its business activities. Some of these lawsuits and arbitrations claim substantial amounts, including punitive damage claims. Management has determined that it is likely that ultimate resolution in favor of the claimant will result in losses to the Company on certain of these claims. The Company has, after consultation with outside legal counsel and consideration of facts currently known by management, recorded estimated losses to the extent they believe certain claims are probable of loss and the amount of the loss can be reasonably estimated. Factors considered by management in estimating the Company's liability are the loss and damages sought by the claimant/plaintiff, the merits of the claim, the amount of loss in the client's account, the possibility of wrongdoing on the part of the employee of the Company, the total cost of defending the litigation, the likelihood of a successful defense against the claim, and the potential for fines and penalties from regulatory agencies. Results of litigation and arbitration are inherently uncertain, and management's assessment of risk associated therewith is subject to change as the proceedings evolve. After discussion with counsel, management, based on its understanding of the facts, accrues what they consider appropriate to reserve against probable loss for certain claims, which is included in the Consolidated Statement of Financial Condition under the caption "Accounts payable and accrued expenses."

Reserve for Doubtful Receivables From Former Employees

The Company offers transition pay, principally in the form of upfront loans, to investment executives and certain key revenue producers as part of the Company's overall growth strategy. These loans are generally forgiven over a five- to ten-year period if the individual satisfies certain conditions, usually based on continued employment and certain performance standards. If the individual leaves before the term of the loan expires or fails to meet certain performance standards, the individual is required to repay the balance. In determining the allowance for doubtful receivables from former employees, management considers the facts and circumstances surrounding each receivable, including the amount of the unforgiven balance, the reasons for the terminated employment relationship, and the former employees' overall financial positions.

Valuation of Securities and Investments

Securities for which there is not a quoted market or dealer price, held for investment by the Parent and certain subsidiaries, of $8.5 million and $7.3 million at December 31, 2006 and 2005, respectively, which consist primarily of investments in private equity partnerships, start up companies, and other venture capital investments, are included under the caption "Investments" and carried at fair value. Investment securities of registered broker-dealer subsidiaries are carried at fair value or amounts that approximate fair value. The fair value of investments, for which a quoted market or dealer price is not available, is based on management's estimates. Among the factors considered by management in determining the fair value of investments are the cost of the investment, terms and liquidity, developments since the acquisition of the investment, the sales price of recently issued securities, the financial condition and operating results of the issuer, earnings trends and consistency of ope rating cash flows, the long-term business potential of the issuer, the quoted market price of securities with similar quality and yield that are publicly traded, and other factors generally pertinent to the valuation of investments. The fair value of these investments is subject to a high degree of volatility and may be susceptible to significant fluctuation in the near term.

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Income Tax Matters

The provision for income taxes and related tax reserves is based on management's consideration of known liabilities and tax contingencies for multiple taxing authorities. Known liabilities are amounts that will appear on current tax returns, amounts that have been agreed to in revenue agent revisions as the result of examinations by the taxing authorities and amounts that will follow from such examinations but affect years other than those being examined. Tax contingencies are liabilities that might arise from a successful challenge by the taxing authorities taking a contrary position or interpretation regarding the application of tax law to the Company's tax return filings. Factors considered by management in estimating the Company's liability are results of tax audits, historical experience, and consultation with tax attorneys and other experts.

Dilution

As of December 31, 2006, there were 1,512,674 shares of our common stock issuable on outstanding options, with an average weighted exercise price of $10.92, and 3,780,500 outstanding stock unit grants, with each unit representing the right to receive shares of our common stock at a designated time in the future. The restricted stock units vest on an annual basis over the next five years, and are distributable, if vested, at future specified dates. Of the outstanding restricted stock unit awards, 725,434 shares are currently vested and 3,055,066 are unvested. Assuming vesting requirements are met, the Company anticipates that 1,046,426 shares under these awards will be distributed in 2007, 1,125,348 will be distributed in 2008, 563,350 will be distributed in 2009, and the balance of 1,045,376 will be distributed thereafter. As described below, an employee will realize income as a result of an award of stock units at the time shares are distributed in an amount equal to the fair market v alue of such shares at that time, and the Company is entitled to a corresponding tax deduction in the year of such issuance. Unless an employee elects to satisfy such withholding in another manner, such as by paying the amount in cash or by delivering shares of Stifel Financial Corp. common stock already owned by such person and held by such person for at least six months, the Company may satisfy tax withholding obligations on income associated with such grants by reducing the number of shares otherwise deliverable in connection with such awards, such reduction to be calculated based on a current market price of the Company's common stock. Based on current tax law, the Company anticipates that the shares issued when the awards are paid to the employees will be reduced by approximately 35% to satisfy such withholding obligations, so that approximately 65% of the total restricted stock units that are distributable in any particular year will be converted into issued and outstanding shares.

Goodwill and Intangible Assets

The Company records all assets and liabilities acquired in purchase acquisitions, including goodwill, at fair value as required by SFAS No. 141, Business Combinations. Determining the fair value of assets and liabilities acquired requires certain management estimates. At December 31, 2006 the Company had goodwill of $15.9 million.

The Company is required under SFAS No. 142, Goodwill and Other Intangible Assets, to perform impairment tests of our goodwill and intangible assets at least annually and more frequently if events or changes in circumstances indicate that the carrying value of an asset or asset group may not be fully recoverable. If the impairment tests indicate that the carrying value of goodwill exceeds its fair value then an impairment loss would be required to be recognized in the consolidated statements of operations in an amount equal to the excess carrying value.

The Company utilizes a discounted cash flow analysis in performing its impairment analysis. Assumptions and estimates about future cash flows and discount rates are often subjective and can be affected by a variety of factors, including external and internal factors. Factors that may significantly affect the estimates include, among others, economic trends and market conditions, changes in revenue growth trends or business strategies, unanticipated competition, discount rates, technology, or government regulations. In assessing the fair value of our reporting units, the volatile nature of the securities markets and industry requires us to consider the business and market cycle and assess the stage of the cycle in estimating the timing and extent of future cash flows. In addition to discounted cash flows, we consider other information such as public market comparables and multiples of recent mergers and acquisitions of similar businesses. The Company has elected to perform its annual impair ment test as of July 31. The results of the impairment tests performed at that date did not indicate any impairment. We believe the assumptions used in performing our impairment tests are reasonable and appropriate; however, different assumptions and estimates could potentially affect the results of our impairment analysis.

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Recent Accounting Pronouncements

In June 2005, the Financial Accounting Standards Board ("FASB") issued SFAS No. 154, Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3 ("SFAS No. 154"). SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle. The adoption of SFAS No. 154 did not have a material impact on the Company's Consolidated Financial Statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a Company's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for the Company beginning in the first quarter of 2007. The adoption of FIN 48 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurement. This statement applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. SFAS No. 157 is effective for the fiscal years beginning after November 15, 2007. The Company is currently assessing the impact that SFAS No. 157 will have on the Company's Consolidated Financial Statements.

In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108, Financial Statements - Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108 provides guidance on the consideration of prior misstatements in determining whether the current year's financial statements are materially misstated. In providing this guidance, the SEC staff references both the "iron curtain" and "rollover" approaches to quantifying a current year misstatement for purposes of determining materiality. The iron curtain approach focuses on how the current year's statement of financial condition would be affected in correcting misstatement without considering the year in which the misstatement originated. The rollover approach focuses on the amount of the misstatements that originate d in the current year's statement of operation. The SEC staff indicated that registrants should quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. SAB 108 is effective for fiscal years ending after November 15, 2006. Registrants may either restate their financial for any material misstatements arising from the application of SAB 108 or recognize a cumulative effect of applying SAB 108 within the current year opening balance in retained earnings. The adoption of SAB 108 did not have a material impact on the Company's Consolidated Financial Statements.

In December 2006, the FASB issued FASB Staff Position EITF 00-19-2, Accounting for Registration Payment Arrangements ("FSP EITF 00-19-2") which provides guidance on the accounting for registration payment arrangements. FSP EITF 00-19-2 specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies. A registration payment arrangement is defined in FSP EITF 00-19-2 as an arrangement with both of the following characteristics: (1) the arrangement specifies that the issuer will endeavor (a) to file a registration statement for the resale of specified financial instruments and/or for the resale of equity shares that are issuable upo n exercise or conversion of specified financial instruments and for that registration statement to be declared effective by the Securities and Exchange Commission within a specified grace period, and/or (b) to maintain the effectiveness of the registration statement for a specified period of time (or in perpetuity); and (2) the arrangement requires the issuer to transfer consideration to the counterparty if the registration statement for the resale of the financial instrument or instruments subject to the arrangement is not declared effective or if effectiveness of the registration statement is not maintained. FSP EITF 00-19-2 is effective for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to December 21, 2006. For registration payment arrangements and financial instruments subject to those arrangements that were entered into prior to the issuance of FSP EITF 00-19-2, this guidance shall be ef fective for financial statements issued for fiscal years beginning after December 15, 2006, and interim periods within those fiscal years. The Company does not expect the adoption of FSP EITF 00-19-2 to have a material impact on the Company's Consolidated Financial Statements.

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In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 ("SFAS No. 159"). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157. The choice to adopt early should be made after issuance of this Statement but within 120 days of the beginning of the fiscal year of adoptio n, provided the entity has not yet issued financial statements, including notes to those financial statements, for any interim period of the fiscal year of adoption. The Company is evaluating the impact that the adoption of SFAS No. 159 will have, if any, on the Company's Consolidated Financial Statements.

Off-balance Sheet Arrangements

See Note L of Notes to Consolidated Financial Statements for off-balance sheet arrangements.

Contractual Obligations

The following table sets forth the Company's contractual obligations to make future payments as of December 31, 2006.

(In thousands)	Total	2007	2008	2009	2010	2011	Thereafter
Debenture to Stifel Financial Capital Trust I (1)	$ 34,500	$ 34,500	--	--	--	--	--
Interest on debenture (1)	79,178	3,105	3,105	3,105	3,105	3,105	63,653
Debenture to Stifel Financial Capital Trust II (2)	35,000	--	--	--	35,000	--	--
Interest on debenture (2)	64,199	2,233	2,233	2,233	2,233	2,233	53,034
LLC non-interest bearing notes (3)	24,598	--	4,600	10,600	9,398	--	--
Liabilities subordinated to general creditors	4,325	720	914	1,300	1,391	--	--
Operating leases	83,625	13,000	12,649	11,583	10,597	7,822	27,974
Communication and quote minimum commitments	8,438	4,473	2,786	1,097	77	5	--
Investment-private equity partnership	113	75	38	--	--	--	--
Acquisition of First Service Financial Company and its wholly-owned subsidiary First Service Bank (4)	37,900	37,900	--	--	--	--	--
Total	$371,876	$96,006	$26,325	$29,918	$61,801	$13,165	$144,661

(1) Debenture to Stifel Financial Capital Trust I is callable at par no earlier than June 30, 2007, but no later than June 30, 2032. The interest is payable at a fixed interest rate of 9% per annum.

(2) Debenture to Stifel Financial Capital Trust II is callable at par no earlier than September 30, 2010, but no later than September 30, 2035.The interest is payable at a fixed interest rate equal to 6.38% per annum from the issue date to September 30, 2010 and then will be payable at a floating interest rate equal to three-month London Interbank Offered Rate ("LIBOR") plus 1.70% per annum. Thereafter interest rate assumes no increase.

(3) The Company invested in zero coupon U.S. Government securities in the amount sufficient to accrete to the repayment amount of the notes and are placed in an irrevocable trust. At December 31, 2006, these securities had a carrying value of $20,503 and are included under the caption "Investments" on the Consolidated Statement of Financial Condition.

(4) The Company is seeking approval from the Federal Reserve to become a bank holding company and a financial holding company subject to the supervision and regulation of The Board of Governors of the Federal Reserve System. The merger is anticipated to close in the second quarter of 2007.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management

Risks are an inherent part of the Company's business and activities. Management of these risks is critical to the Company's soundness and profitability. Risk management at the Company is a multi-faceted process that requires communication, judgment, and knowledge of financial products and markets. The Company's senior management takes an active role in the risk management process and requires specific administrative and business functions to assist in the identification, assessment, monitoring, and control of various risks. The principal risks involved in its business activities are: market, interest rate, equity price, credit, operational, and regulatory and legal.

Market Risk

The potential for changes in the value of financial instruments owned by the Company is referred to as "market risk." Market risk is inherent to financial instruments, and accordingly, the scope of the Company's market risk management procedures includes all market risk-sensitive financial instruments.

The Company trades tax-exempt and taxable debt obligations, including U.S. Treasury bills, notes, and bonds; U.S. Government agency and municipal notes and bonds; bank certificates of deposit; mortgage-backed securities; and corporate obligations. The Company is also an active market-maker in over-the-counter equity securities. In connection with these activities, the Company may maintain inventories in order to ensure availability and to facilitate customer transactions.

Changes in value of the Company's financial instruments may result from fluctuations in interest rates, credit ratings, equity prices, and the correlation among these factors, along with the level of volatility.

The Company manages its trading businesses by product and has established trading departments that have responsibility for each product. The trading inventories are managed with a view toward facilitating client transactions, considering the risk and profitability of each inventory position. Position limits in trading inventory accounts are established and monitored on a daily basis. Management monitors inventory levels and results of the trading departments, as well as inventory aging, pricing, concentration, and securities ratings. The following table primarily represents trading inventory associated with our customer facilitation and market-making activities and includes net long and short fair values, which is consistent with the way risk exposure is managed.

	December 31, 2006		December 31, 2005
		Sold, But Not Yet Purchased		Sold, But Not Yet Purchased
Securities, at Fair Value	Owned		Owned
U.S. Government obligations	$ 152,182	$ 190,963	$ 104,435	$ 143,569
State and municipal bonds	54,811	16	55,733	427
Corporate obligations	115,159	10,831	55,686	1,056
Corporate stocks	8,867	1,566	24,871	1,862
	$331,019	$203,376	$240,725	$146,914

The Company is also exposed to market risk based on its other investing activities. These investments consist of investments in private equity partnerships, start up companies, venture capital investments and zero coupon U.S. Government Securities and are included under the caption "Investments" on the Consolidated Statement of Financial Condition.

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Interest Rate Risk

The Company is exposed to interest rate risk as a result of maintaining inventories of interest rate-sensitive financial instruments and from changes in the interest rates on its interest-earning assets (including client loans, stock borrow activities, investments, and inventories) and its funding sources (including client cash balances, stock lending activities, bank borrowings, and resale agreements ), which finance these assets. The collateral underlying financial instruments at the broker-dealer is repriced daily, thus requiring collateral to be delivered as necessary. Interest rates on client balances and stock borrow and lending produce a positive spread to the Company, with the rates generally fluctuating in parallel.

The Company manages its inventory exposure to interest rate risk by setting and monitoring limits and, where feasible, hedging with offsetting positions in securities with similar interest rate risk characteristics. While a significant portion of the Company's securities inventories have contractual maturities in excess of five years, these inventories, on average, turn over several times per year.

Equity Price Risk

The Company is exposed to equity price risk as a consequence of making markets in equity securities. The Company attempts to reduce the risk of loss inherent in its inventory of equity securities by monitoring those security positions constantly throughout each day.

The Company's equity securities inventories are repriced on a regular basis, and there are no unrecorded gains or losses. The Company's activities as a dealer are client-driven, with the objective of meeting clients' needs while earning a positive spread.

Credit Risk

The Company is engaged in various trading and brokerage activities, with the counterparties primarily being broker-dealers. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. The Company manages this risk by imposing and monitoring position limits for each counterparty, monitoring trading counterparties, conducting regular credit reviews of financial counterparties, reviewing security concentrations, holding and marking to market collateral on certain transactions, and conducting business through clearing organizations, which guarantee performance.

The Company's client activities involve the execution, settlement, and financing of various transactions on behalf of its clients. Client activities are transacted on either a cash or margin basis. Credit exposure associated with the Company's private client business consists primarily of customer margin accounts, which are monitored daily and are collateralized. The Company monitors exposure to industry sectors and individual securities and performs analysis on a regular basis in connection with its margin lending activities. The Company adjusts its margin requirements if it believes its risk exposure is not appropriate based on market conditions.

The Company has accepted collateral in connection with resale agreements, securities borrowed transactions, and customer margin loans. Under many agreements, the Company is permitted to sell or repledge these securities held as collateral and use these securities to enter into securities lending arrangements or to deliver to counterparties to cover short positions. At December 31, 2006, the fair value of securities accepted as collateral where the Company is permitted to sell or repledge the securities was $531.5 million, and the fair value of the collateral that had been sold or repledged was $286.5 million.

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The Company is subject to concentration risk if it holds large positions, extends large loans to, or has large commitments with a single counterparty, borrower, or group of similar counterparties or borrowers (i.e., in the same industry). Receivables from and payables to clients and stock borrow and lending activities are both with a large number of clients and counterparties, and any potential concentration is carefully monitored. Stock borrow and lending activities are executed under master netting agreements, which gives the Company right of offset in the event of counterparty default. Inventory and investment positions taken and commitments made, including underwritings, may involve exposure to individual issuers and businesses. The Company seeks to limit this risk through careful review of counterparties and borrowers and the use of limits established by senior management, taking into consideration factors including the financial strength of the counterparty, the size of the position or commitment, the expected duration of the position or commitment, and other positions or commitments outstanding.

Operational Risk

Operational risk generally refers to the risk of loss resulting from the Company's operations, including, but not limited to, improper or unauthorized execution and processing of transactions, deficiencies in the Company's technology or financial operating systems, and inadequacies or breaches in the Company's control processes. The Company operates different businesses in diverse markets and is reliant on the ability of its employees and systems to process a large number of transactions. These risks are less direct than credit and market risk, but managing them is critical, particularly in a rapidly changing environment with increasing transaction volumes. In the event of a breakdown or improper operation of systems or improper action by employees, the Company could suffer financial loss, regulatory sanctions, and damage to its reputation. In order to mitigate and control operational risk, the Company has developed and continues to enhance specific policies and procedures that are designe d to identify and manage operational risk at appropriate levels throughout the organization and within such departments as Accounting, Operations, Information Technology, Legal, Compliance, and Internal Audit. These control mechanisms attempt to ensure that operational policies and procedures are being followed and that the Company's various businesses are operating within established corporate policies and limits. Business continuity plans exist for critical systems, and redundancies are built into the systems as deemed appropriate.

Regulatory and Legal Risk

Legal risk includes the risk of large numbers of Private Client Group customer claims for sales practice violations. While these claims may not be the result of any wrongdoing, the Company does, at a minimum, incur costs associated with investigating and defending against such claims. See further discussion on the Company's legal reserves policy under "Critical Accounting Policies and Estimates"; see also "Legal Proceedings." In addition, the Company is subject to potentially sizable adverse legal judgments or arbitration awards, and non-compliance with applicable legal and regulatory requirements. The Company is generally subject to extensive regulation by the SEC, the NASD, the NYSE, and state securities regulators in the different jurisdictions in which it conducts business. The Company has comprehensive procedures addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds, the extension of credit, including margin lo ans, collection activities, money laundering, and record keeping. The Company acts as an underwriter or selling group member in both equity and fixed income product offerings. Particularly when acting as lead or co-lead manager, the Company has legal exposure. To manage this exposure, a committee of senior executives review proposed underwriting commitments to assess the quality of the offering and the adequacy of due diligence investigation.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Stifel Financial Corporation
St. Louis, Missouri

We have audited the accompanying consolidated statements of financial condition of Stifel Financial Corp. and subsidiaries (the "Company") as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Stifel Financial Corp. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2007 expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP

St. Louis, Missouri
March 16, 2007

Page 48

Consolidated Statements of Financial Condition

	(dollars in thousands)	December 31, 2006	December 31, 2005
Assets	Cash and cash equivalents	$ 20,982	$ 12,529
	Cash segregated under federal and other regulations	18	6
	Securities purchased under agreements to resell	156,145	65,599
	Receivable from brokers and dealers:
	Securities failed to deliver	36,232	9,137
	Deposits paid for securities borrowed	35,646	56,278
	Clearing organizations	62,342	24,553
		134,220	89,968
	Receivable from customers, net of allowance for doubtful receivables of $307 and $204, respectively
		274,269	259,389
	Securities owned, at fair value	80,587	105,514
	Securities owned and pledged, at fair value	250,432	135,211
		331,019	240,725
	Investments	49,465	46,628
	Memberships in exchanges	168	275
	Office equipment and leasehold improvements, at cost, net of allowances for depreciation and amortization of $30,713 and $26,026, respectively
		14,353	11,422
	Goodwill	15,861	3,310
	Intangible assets, net of allowances for amortization of $1,608 and $793, respectively
		5,842	10,539
	Loans and advances to investment executives and other employees, net of allowance for doubtful receivables from former employees of $687 and $767, respectively
		24,517	21,105
	Deferred tax asset	8,988	10,336
	Other assets	48,927	70,170
	TOTAL ASSETS	$1,084,774	$842,001

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Financial Condition (continued)

	(in thousands, except share amounts)	December 31, 2006	December 31, 2005
Liabilities and Stockholders' Equity	Liabilities:
	Short-term borrowings from banks	$195,600	$141,000
	Drafts payable	34,900	29,697
	Payable to brokers and dealers:
	Securities failed to receive	12,973	8,794
	Deposits received from securities loaned	86,018	89,039
	Clearing organizations	10,778	797
		109,769	98,630
	Payable to customers	128,676	78,456
	Securities sold, but not yet purchased, at fair value	203,376	146,914
	Accrued employee compensation	61,862	35,154
	Accounts payable and accrued expenses	31,947	59,875
	Debenture to Stifel Financial Capital Trust I	34,500	34,500
	Debenture to Stifel Financial Capital Trust II	35,000	35,000
	Other	24,598	24,598
		860,228	683,824
	Liabilities subordinated to claims of general creditors	4,281	3,084
	Stockholders' equity:
	Preferred stock -- $1 par value; authorized 3,000,000 shares; none issued
	Common stock -- $.15 par value; authorized 30,000,000 shares; issued 12,025,404 and 10,296,279 shares, respectively	1,804	1,161
	Additional paid-in capital	125,165	75,225
	Retained earnings	94,651	80,279
		221,620	156,665
	Less:
	Treasury stock, at cost, 0 and 4,316 shares, respectively	- -	9
	Unearned employee stock ownership plan shares, at cost, 140,995 and 162,683 shares, respectively	1,355	1,563
		220,265	155,093
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$1,084,774	$842,001

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Operations

		Years Ended December 31,
(in thousands, except per share amounts)		2006	2005	2004
Revenues	Commissions	$ 199,056	$ 107,976	$ 95,894
	Principal transactions	86,365	44,110	46,163
	Investment banking	82,856	55,893	57,768
	Asset management and service fees	57,713	43,476	35,504
	Interest	35,804	18,022	13,101
	Other	9,594	533	2,759
	Total revenues	471,388	270,010	251,189
	Less: Interest expense	19,581	6,275	4,366
	Net revenues	451,807	263,735	246,823
Non-interest Expenses	Employee compensation and benefits	329,703	174,765	157,314
	Occupancy and equipment rental	30,751	22,625	21,445
	Communications and office supplies	26,666	12,087	10,330
	Commissions and floor brokerage	6,388	4,134	3,658
	Other operating expenses	31,930	17,402	17,459
	Total non-interest expenses	425,438	231,013	210,206
	Income before income taxes	26,369	32,722	36,617
	Provision for income taxes	10,938	13,078	13,469
	Net income	$ 15,431	$ 19,644	$ 23,148
Earnings Per Common Share and Share Equivalents
	Net income per share:
	Basic earnings per share	$ 1.34	$ 2.00	$ 2.39
	Diluted earnings per share	$ 1.11	$ 1.56	$ 1.88
	Average common shares and share equivalents used in determining earnings per share:
	Basic shares outstanding	11,513	9,828	9,702
	Diluted shares outstanding	13,909	12,586	12,281

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Stockholders' Equity

					Treasury Stock and Unearned Employee Stock Ownership Plan
			Additional Paid-In Capital
(in thousands,	Common Stock			Retained Earnings
except share amounts)	Shares	Amount			Shares	Amount	Total
Balance at December 31, 2003	7,675,781	$1,152	$56,939	$51,168	(763,185)	$(9,214)	$100,045
Purchase of treasury shares	--	--	--	--	(370,478)	(9,166)	(9,166)
Employee stock ownership plan	--	--	184	--	17,623	208	392
Employee benefit plans	--	--	2,310	(603)	481,252	6,434	8,141
Stock options exercised	--	--	(1,378)	(185)	244,460	3,953	2,390
Units amortization	--	--	6,364	--	--	--	6,364
Dividend reinvestment	--	--	--	--	5	1	1
4-for-3 Stock Split	2,558,419	--	--	(3)	(136,250)	--	(3)
Net income for the year	--	--	--	23,148	--	--	23,148
Balance at December 31, 2004	10,234,200	1,152	64,419	73,525	(526,573)	(7,784)	131,312
Purchase of treasury shares	--	--	--	--	(587,088)	(14,103)	(14,103)
Employee stock ownership plan	--	--	344	--	21,688	208	552
Employee benefit plans	36,958	5	2,246	(9,616)	682,667	14,378	7,013
Stock options exercised	25,121	4	(15)	(3,274)	242,306	5,729	2,444
Units amortization	--	--	8,231	--	--	--	8,231
Net income for the year	--	--	--	19,644	--	--	19,644
Balance at December 31, 2005	10,296,279	1,161	75,225	80,279	(166,999)	(1,572)	155,093
Purchase of treasury shares	--	--	--	--	(525,571)	(17,096)	(17,096)
Employee stock ownership plan	--	--	590	--	21,688	208	798
Employee benefit plans	563,182	468	( 31,915)	(239)	463,650	15,543	(16,143)
Stock options exercised	113,723	17	1,361	(820)	66,237	1,562	2,120
Units amortization	--	--	32,583	--	--	--	32,583
Private Placement	1,052,220	158	35,899	--	--	--	36,057
Excess tax benefit	--	--	11,422	--	--	--	11,422
Net income for the year	--	--	--	15,431	--	--	15,431
Balance at December 31, 2006	12,025,404	$1,804	$125,165	$94,651	(140,995)	$ (1,355)	$220,265

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Cash Flows

		Years Ended December 31,
	(in thousands)	2006	2005	2004
Cash Flows From Operating Activities	Net income	$ 15,431	$ 19,644	$ 23,148
	Noncash items included in earnings:
	Depreciation and amortization	7,257	5,436	4,151
	Loans and advances amortization	7,806	7,476	5,799
	Deferred taxes and other	642	(1,615)	(876)
	Compensation related to the private placement	9,751	- -	- -
	Stock based compensation	33,932	8,785	6,756
	(Gains) losses on investments	(8,696)	1,151	(1,123)
		66,123	40,877	37,855
	Decrease (increase) in operating receivables:
	Customers	(14,880)	(58,086)	54,196
	Brokers and dealers	(44,252)	(51,545)	(3,445)
	(Decrease) increase in operating payables:
	Customers	50,220	17,088	17,265
	Brokers and dealers	13,041	(4,324)	89
	Decrease (increase) in assets:
	Cash segregated under federal and other regulations	(12)	- -	(1)
	Securities purchased under agreements to resell	(90,546)	(65,599)	- -
	Securities owned, including those pledged	(90,294)	(212,705)	(3,605)
	Loans and advancements to investment executives and other employees	(11,218)	(11,976)	(6,352)
	Excess tax benefit associated with stock based awards	(11,422)	- -	- -
	Other assets	32,985	(6,313)	(3,599)
	(Decrease) increase in liabilities:
	Securities sold, not yet purchased	56,462	134,596	6,279
	Drafts payable, accounts payable and accrued expenses, and accrued employee compensation	(10,885)	12,389	4,037
	Cash From Operating Activities	$(54,678)	$(205,598)	$102,719

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

		Years Ended December 31,
	(in thousands)	2006	2005	2004
	Cash From Operating Activities -- From Previous Page
		$(54,678)	$(205,598)	$102,719
Cash Flows From Investing Activities	Proceeds from sale or maturity of other investments	74,444	14,649	3,623
	Payments for:
	Purchase of MJSK	(8,220)	--	--
	Purchase of LM Capital Markets business, net of cash acquired	(1,023)	(21,299)	--
	Purchase of office equipment and leasehold improvements
		(7,572)	(4,797)	(3,729)
	Purchase of investments	(68,620)	(15,388)	(3,895)
	Cash From Investing Activities	(10,991)	(26,835)	(4,001)
Cash Flows From Financing Activities	Net proceeds (payments) for short-term borrowings from banks	54,600	141,000	(5,650)
	Securities loaned, net	(1,902)	61,014	(82,866)
	Reissuance of treasury stock	576	1,371	8,722
	Issuance of stock	995	209	--
	Issuance of debentures to Stifel Financial Capital Trust II	--	35,000	--
	Excess tax benefit associated with stock based awards	11,422	--	--
	Proceeds from private placement	26,306	--	--
	Payments for:
	Purchases of stock for treasury	(17,096)	(14,103)	(9,166)
	Principal payments under capital lease obligation	--	(41)	(151)
	Reduction of subordinated debt	(779)	(633)	(698)
	Cash From Financing Activities	74,122	223,817	(89,809)
	Increase (decrease) in cash and cash equivalents	8,453	(8,616)	8,909
	Cash and cash equivalents - beginning of year	12,529	21,145	12,236
	Cash and cash equivalents - end of year	$ 20,982	$ 12,529	$ 21,145

Supplemental disclosures of cash flow information:
Interest payments	$ 18,729	$ 5,657	$ 4,460
Income tax payments	$ 2,544	$ 15,770	$ 15,817
Schedule of Noncash Investing and Financing Activities:
Units, net of forfeitures	$ 88,091	$ 8,482	$ 6,908
Employee stock ownership shares	$ 208	$ 208	$ 208
Liabilities subordinated to claims of general creditors	- -	$ 1,391	$ 1,300

See Notes to Consolidated Financial Statements.

Page 54

Notes To Consolidated Financial Statements
(in thousands, except share and per share amounts)

NOTE A - Summary of Significant Accounting and Reporting Policies

Nature of Operations

Stifel Financial Corp. (the "Parent"), through its wholly-owned subsidiaries, principally Stifel, Nicolaus & Company, Incorporated ("Stifel Nicolaus"), collectively referred to as the "Company," is principally engaged in retail brokerage, securities trading, investment banking, investment advisory, and related financial services throughout the United States. Although the Company has offices throughout the United States and three European cities, its major geographic area of concentration is in the Midwest, and Mid-Atlantic region. The Company's principal customers are individual investors, corporations, municipalities, and institutions.

Basis of Presentation

The consolidated financial statements include the accounts of the Parent and its wholly-owned subsidiaries, principally Stifel Nicolaus. Stifel Nicolaus is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All material intercompany balances and transactions are eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management considers its significant estimates, which are most susceptible to change, to be the fair value of investments and the accrual for litigation.

Common Stock Split

On August 23, 2004, Stifel Financial Corp. announced a four-for-three stock split in the form of a stock dividend. The additional shares were distributed on September 15, 2004, to shareholders on record as of September 1, 2004. Each shareholder received one additional share for every three shares owned. Cash was distributed in lieu of fractional shares. The number of shares outstanding and amounts per share in the Consolidated Statements of Operations and the Notes to Consolidated Financial Statements have been restated to give retroactive effect to the stock split.

Cash and Cash Equivalents

The Company defines cash equivalents as short-term, highly liquid investments with original maturities of 90 days or less, other than those held for sale in the ordinary course of business.

Security Transactions

Securities owned, and securities sold, but not yet purchased, are carried at fair value, and unrealized gains and losses are included net in principal transaction revenues. Interest and dividends for securities owned and securities sold, but not yet purchased, are included in principal transaction revenues.

Securities failed to deliver and receive represent the contract value of securities that have not been delivered or received by settlement date.

Page 55

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE A - Summary of Significant Accounting and Reporting Policies (continued)

Receivable from customers includes amounts due on cash and margin transactions. The value of securities owned by customers and held as collateral for these receivables is not reflected in the Consolidated Statements of Financial Condition.

Securities purchased under agreements to resell (Resale Agreements) and securities sold under agreements to repurchase are recorded at the contractual amounts that the securities will be resold/repurchased, including accrued interest. The Company's policy is to obtain possession or control of securities purchased under Resale Agreements and to obtain additional collateral when necessary to minimize the risk associated with this activity.

Customer security transactions are recorded on a settlement date basis, with related commission revenues and expenses recorded on a trade date basis. Principal securities transactions are recorded on a trade date basis.

Securities Borrowing and Lending Activities

Securities borrowed and securities loaned are recorded at the amount of cash collateral advanced or received. Securities borrowed transactions require the Company to deposit cash with the lender generally in excess of the market value of securities borrowed. With respect to securities loaned, the Company receives collateral in the form of cash in an amount generally in excess of the market value of securities loaned. The Company monitors the market value of securities borrowed and loaned generally on a daily basis, with additional collateral obtained or refunded as necessary. Substantially all of these transactions are executed under master netting agreements, which give the Company right of offset in the event of counterparty default; however, such receivables and payables with the same counterparty are not set off in the Company's Consolidated Statements of Financial Condition.

Fair Value

Substantially all of the Company's financial instruments are carried at fair value or amounts that approximate fair value. Securities owned, and securities sold, but not yet purchased are valued using quoted market or dealer prices. Customer receivables, primarily consisting of floating-rate loans collateralized by customer-owned securities, are charged interest at rates similar to other such loans made throughout the industry. Other than those separately discussed in the Notes to Consolidated Financial Statements, the Company's remaining financial instruments are generally short-term in nature and their carrying values approximate fair value.

Investments

Investments on the Consolidated Statements of Financial Condition contain the Company's investments in securities that are marketable and securities that are not readily marketable. Marketable securities are carried at fair value, based on either quoted market or dealer prices, or accreted cost. The fair value of investments, for which a quoted market or dealer price is not readily available, is based on management's estimates. Among the factors considered by management in determining the fair value of investments are the cost of the investment, terms and liquidity, developments since the acquisition of the investment, the sales price of recently issued securities, the financial condition and operating results of the issuer, earnings trends and consistency of operating cash flows, the long-term business potential of the issuer, the quoted market price of securities with similar quality and yield that are publicly traded, and other factors generally pertinent to the valuation of in vestments. The fair value of these investments is subject to a high degree of volatility and may be susceptible to significant fluctuation in the near term. These investments were valued at $8,458 and $7,329 at December 31, 2006 and 2005, respectively. The marketable investments carried at fair value were $20,504 and $19,990 at December 31, 2006 and 2005 respectively. Investments carried at accreted cost were $20,503 and $19,309, at December 31, 2006 and 2005, respectively (See Note O).

Page 56

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE A - Summary of Significant Accounting and Reporting Policies (continued)

Loans and Advances

The Company offers transition pay, principally in the form of upfront loans, to investment executives and certain key revenue producers as part of the Company's overall growth strategy. These loans are generally forgiven by a charge to "Employee compensation and benefits" over a five- to ten-year period if the individual satisfies certain conditions, usually based on continued employment and certain performance standards. Management monitors and compares individual investment executive production to each loan issued to ensure future recoverability. If the individual leaves before the term of the loan expires or fails to meet certain performance standards, the individual is required to repay the balance. In determining the allowance for doubtful receivables from former employees, management considers the facts and circumstances surrounding each receivable, including the amount of the unforgiven balance, the reasons for the terminated employment relationship, and the former employees ' overall financial positions.

Investment Banking

Investment banking revenues include advisory fees, management fees, underwriting fees, net of reimbursable expenses, and sales credits earned in connection with the distribution of the underwritten securities. Investment banking management fees are recorded on offering date, sales concessions on trade date, and underwriting fees at the time the underwriting is completed and the income is determinable. Expenses associated with such transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded.

Asset Management and Service Fees

Asset management and service fees are recorded when earned and consist of customer account service fees, per account fees (such as IRA fees), and wrap fees on managed accounts.

Stock-Based Compensation

On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004), Share-Based Payment ("SFAS No. 123R"), using the modified prospective application method, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Under this method, SFAS No. 123R applies to new awards and to awards outstanding on the effective date as well as those that are subsequently modified or cancelled. Compensation expense for outstanding awards for which the requisite service had not been rendered as of the effective date will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"). Accordingly, prior period amounts have not been restated to reflect the impact of SFAS No. 123R .

In the twelve months of 2006, the adoption of SFAS No. 123R resulted in incremental stock-based compensation expense of $551. Additionally, SFAS No. 123R amends SFAS No. 95, Statement of Cash Flows, to require the excess tax benefits to be reported as a financing cash inflow rather than a reduction of taxes paid, which is included within operating cash flows. Accordingly, cash provided by operating activities decreased and cash provided by financing activities increased by $11,422 related to excess tax benefits from stock-based awards.

Prior to the adoption of SFAS No. 123R, the Company applied Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees ("APB Opinion No. 25") and related interpretations to account for its employees' participation in the Company's stock plans. Based on the provisions of the plans, no compensation expense has been recognized for options issued under these plans. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under the Fixed Stock Option and the Employee Stock Purchase Plans consistent with the method of SFAS No. 123, Accounting for Stock-Based Compensation, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below:

Page 57

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE A - Summary of Significant Accounting and Reporting Policies (continued)

	Years Ended December 31,
	2005	2004
Net income
As reported	$19,644	$23,148
Add: Stock-based employee compensation expense included in reported net income, net of related tax	9,273	7,325
Deduct: Total stock-based employee compensation expense determined under SFAS 123 (1)	(9,892)	(7,870)
Pro forma	$19,025	$22,603
Basic earnings per share
As reported	$ 2.00	$ 2.39
Pro forma	$ 1.94	$ 2.33
Diluted earnings per share
As reported	$ 1.56	$ 1.88
Pro forma	$ 1.51	$ 1.85

1. In 2004, the Company amended its Employee Stock Purchase Plan ("ESPP") and under the provisions of FASB Statement No. 123, the amended plan is considered non-compensatory. There was no ESPP in 2005.

For the Company's pro forma computation, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted-average assumptions used for grants in 2005 and 2004, respectively: dividend yield of 0.00% for both years; expected volatility of 32.6% and 28.4%; risk-free interest rates of 3.94% and 3.41%; and expected lives of 5.79 years and 5.66 years.

Income Taxes

The provision for income taxes and related tax reserves is based on management's consideration of known liabilities and tax contingencies for multiple taxing authorities. Known liabilities are amounts that will appear on current tax returns, amounts that have been agreed to in revenue agent revisions as the result of examinations by the taxing authorities and amounts that will follow from such examinations but affect years other than those being examined. Tax contingencies are liabilities that might arise from a successful challenge by the taxing authorities taking a contrary position or interpretation regarding the application of tax law to the Company's tax return filings. Factors considered by management in estimating the Company's liability are results of tax audits, historical experience, and consultation with tax attorneys and other experts. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial reporting and inc ome tax bases of assets and liabilities. Valuation allowances are established when necessary to reduce deferred taxes to amounts expected to be realized.

Comprehensive Income

The Company had no other comprehensive income items; accordingly, net income and other comprehensive income are the same.

Page 58

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE A - Summary of Significant Accounting and Reporting Policies (continued)

Goodwill and Intangible Assets

Goodwill represents the cost of acquired businesses in excess of the fair value of the related net assets acquired. The Company does not amortize goodwill. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill is tested for impairment at least annually or whenever indications of impairment exist. In testing for the potential impairment of goodwill, management estimates the fair value of each of the Company's reporting units (generally defined as the Company's businesses for which financial information is available and reviewed regularly by management), and compares it to their carrying value. If the estimated fair value of a reporting unit is less than its carrying value, management is required to estimate the fair value of all assets and liabilities of the reporting unit, including goodwill. If the carrying value of the reporting unit's goodwill is greater than the estimated fair value, an impairment charge is recognized for the excess. The Company has elected July 31^st as its annual impairment testing date.

Identifiable intangible assets, which are amortized over their estimated useful lives, are tested for potential impairment whenever events or changes in circumstances suggest that the carrying value of an asset or asset group may not be fully recoverable in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets("SFAS No.144").

Office Equipment and Leasehold Improvements

Amortization of assets under capital lease is computed on a straight-line basis over the estimated useful life of the asset. Leasehold improvements are amortized over the remaining term of the lease. Depreciation of office equipment is provided over estimated useful lives of three to seven years using accelerated methods. Office equipment and leasehold improvements are tested for potential impairment whenever events or changes in circumstances suggest that the carrying value of an asset or group may not be fully recoverable in accordance with SFAS No. 144.

Page 59

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE A - Summary of Significant Accounting and Reporting Policies (continued)

Recent Accounting Pronouncements

In June 2005, the Financial Accounting Standards Board ("FASB") issued SFAS No. 154, Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3 ("SFAS No. 154"). SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle. The adoption of SFAS No. 154 did not have a material impact on the Company's Consolidated Financial Statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a Company's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will be effective for the Company beginning in the first quarter of 2007. The adoption of FIN 48 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurement. This statement applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. SFAS No. 157 is effective for the fiscal years beginning after November 15, 2007. The Company is currently assessing the impact that SFAS No. 157 will have on the Company's Consolidated Financial Statements.

Page 60

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE A - Summary of Significant Accounting and Reporting Policies (continued)

In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108 Financial Statements - Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements("SAB 108"). SAB 108 provides guidance on the consideration of prior misstatements in determining whether the current year's financial statements are materially misstated. In providing this guidance, the SEC staff references both the "iron curtain" and "rollover" approaches to quantifying a current year misstatement for purposes of determining materiality. The iron curtain approach focuses on how the current year's statement of financial condition would be affected in correcting misstatement without considering the year in which the misstatement originated. The rollover approach focuses on the amount of the misstatements that originated in the current year's statement of operation. The SEC staff indicated that registrants should quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. SAB 108 is effective for fiscal years ending after November 15, 2006. Registrants may either restate their financial for any material misstatements arising from the application of SAB 108 or recognize a cumulative effect of applying SAB 108 within the current year opening balance in retained earnings. The adoption of SAB 108 did not have a material impact on the Company's Consolidated Financial Statements.

In December 2006, the FASB issued FASB Staff Position EITF 00-19-2, Accounting for Registration Payment Arrangements ("FSP EITF 00-19-2") which provides guidance on the accounting for registration payment arrangements. FSP EITF 00-19-2 specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, "Accounting for Contingencies." A registration payment arrangement is defined in FSP EITF 00-19-2 as an arrangement with both of the following characteristics: (1) the arrangement specifies that the issuer will endeavor (a) to file a registration statement for the resale of specified financial instruments and/or for the resale of equity shares that are issuable u pon exercise or conversion of specified financial instruments and for that registration statement to be declared effective by the Securities and Exchange Commission within a specified grace period, and/or (b) to maintain the effectiveness of the registration statement for a specified period of time (or in perpetuity); and (2) the arrangement requires the issuer to transfer consideration to the counterparty if the registration statement for the resale of the financial instrument or instruments subject to the arrangement is not declared effective or if effectiveness of the registration statement is not maintained. FSP EITF 00-19-2 is effective for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to December 21, 2006. For registration payment arrangements and financial instruments subject to those arrangements that were entered into prior to the issuance of FSP EITF 00-19-2, this guidance shall be effective for financial statements issued for fiscal years beginning after December 15, 2006, and interim periods within those fiscal years. The Company does not expect the adoption of FSP EITF 00-19-2 to have a material impact on the Company's Consolidated Financial Statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 ("SFAS No. 159"). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157. The choice to adopt early should be made after issuance of this Statement but within 120 days of the beginning of the fiscal year of adoptio n, provided the entity has not yet issued financial statements, including notes to those financial statements, for any interim period of the fiscal year of adoption. The Company is evaluating the impact that the adoption of SFAS No. 159 will have, if any, on the Company's Consolidated Financial Statements.

Page 61

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE B - Cash Segregated Under Federal and Other Regulations

At December 31, 2006 and 2005, cash of $17 and $6, respectively, has been segregated in a special reserve bank account for the exclusive benefit of customers pursuant to Rule 15c3-3 under the Exchange Act. Stifel Nicolaus performs a weekly reserve calculation for proprietary accounts of introducing brokers ("PAIB"), for two introducing brokers which includes accounts of an affiliated introducing broker, Century Securities Associates, Inc. ("CSA"). At December 31, 2006 and 2005, no deposit was required. Cash of $1 has been segregated in a reserve account at December 31, 2006 for the exclusive benefit of PAIB.

NOTE C - Securities Owned and Securities Sold, But Not Yet Purchased

The components of securities owned and securities sold, but not yet purchased at December 31, 2006 and 2005, are as follows:

	December 31, 2006		December 31, 2005
		Sold, But Not Yet Purchased		Sold, But Not Yet Purchased
Securities, at fair value	Owned		Owned
U.S. Government obligations	$ 152,182	$ 190,963	$ 104,435	$ 143,569
State and municipal bonds	54,811	16	55,733	427
Corporate obligations	115,159	10,831	55,686	1,056
Corporate stocks	8,867	1,566	24,871	1,862
	$331,019	$203,376	$240,725	$146,914

The Company pledges securities owned as collateral to counterparties, who have the ability to repledge the collateral; therefore, the Company has reported the pledged securities under the caption "Securities owned and pledged, at fair value" in the Consolidated Statements of Financial Condition.

NOTE D - Short-Term Financing

The Company's short-term financing is generally obtained through the use of bank loans and securities lending arrangements. Stifel Nicolaus borrows from various banks on a demand basis with company-owned and customer securities pledged as collateral. The value of the customer-owned securities is not reflected in the Consolidated Statements of Financial Condition. Available ongoing credit arrangements with banks totaled $605,000 at December 31, 2006, of which $409,400 was unused. There are no compensating balance requirements under these arrangements. At December 31, 2006, short-term borrowings from banks were $195,600 at an average rate of 5.63%, which were collateralized by company-owned securities valued at $250,432. At December 31, 2005, short-term borrowings from banks were $141,000 at an average rate of 4.40%, of which $18,250 were collateralized by customer-owned securities of $77,095. The remaining short-term borrowings of $122,750 were collateralized by company-owned securities val ued at $135,211. The average bank borrowing was $148,683, $5,607, and $3,672 in 2006, 2005, and 2004, respectively, at weighted average daily interest rates of 5.36%, 3.09%, and 1.74%, respectively. At December 31, 2006 and 2005, Stifel Nicolaus had a stock loan balance of $86,018 and $89,039, respectively, at weighted average daily interest rates of 5.01% and 4.15%, respectively. The average outstanding securities lending arrangements utilized in financing activities were $114,913, $52,193, and $81,635 in 2006, 2005, and 2004, respectively, at weighted average daily effective interest rates of 4.85%, 2.39%, and 1.37%, respectively. Customer owned securities were utilized in these arrangements.

Page 62

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE E - Commitments and Contingencies

In the normal course of business, the Company enters into underwriting commitments. Settlement of transactions relating to such underwriting commitments, which were open December 31, 2006, had no material effect on the consolidated financial statements.

In connection with margin deposit requirements of The Options Clearing Corporation ("OCC"), the Company had pledged customer-owned securities valued at $31,505, at December 31, 2006. The amounts on deposit satisfied the minimum margin deposit requirement of $27,205.

In connection with margin deposit requirements of the National Securities Clearing Corporation, the Company had deposited $5,400 in cash, at December 31, 2006. The amounts on deposit satisfied the minimum margin deposit requirement of $4,101.

The Company also provides guarantees to securities clearing houses and exchanges under their standard membership agreement, which requires members to guarantee the performance of other members. Under the agreement, if another member becomes unable to satisfy its obligations to the clearing house, other members would be required to meet shortfalls. The Company's liability under these agreements is not quantifiable and may exceed the cash and securities it has posted as collateral. However, the potential requirement for the Company to make payments under these arrangements is remote. Accordingly, no liability has been recognized for these transactions.

The future minimum rental and third-party vendor service commitments at December 31, 2006, with initial or remaining non-cancelable terms in excess of one year, some of which contain escalation clauses and renewal options, are as follows:

Year Ended December 31	Operating Leases and Service Agreements
2007	$17,473
2008	15,435
2009	12,680
2010	10,674
2011	7,827
Thereafter	27,974
Minimum Commitments	$92,063

Rental expense for the years ended December 31, 2006, 2005, and 2004, approximated $15,197, $10,508, and $11,025, respectively. The Company amortizes office lease incentives and rent escalations on a straight-line basis over the life of the lease.

Amortization and depreciation expense of owned furniture and equipment, leasehold improvements, and assets under capital lease for 2006, 2005, and 2004 was $4,948, $3,723, and $2,931, respectively.

Page 63

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE F - Net Capital Requirements

As a registered broker-dealer, Stifel Nicolaus is subject to the Uniform Net Capital Rule, Rule 15c3-1 under the Exchange Act (the "Rule"), which requires the maintenance of minimum net capital, as defined. Stifel Nicolaus has elected to use the alternative method permitted by the Rule that requires maintenance of minimum net capital equal to the greater of $1,000 or 2% of aggregate debit items arising from customer transactions, as defined. The Rule also provides that equity capital may not be withdrawn or cash dividends paid if resulting net capital would be less than 5% of aggregate debit items. Another subsidiary, CSA, is also subject to minimum capital requirements that may restrict the payment of cash dividends and advances to the Company. CSA has consistently operated in excess of their capital adequacy requirements. The only restriction with regard to the payment of cash dividends by the Company is its ability to obtain cash through dividends and advances from its subsidiaries, if needed.

At December 31, 2006, Stifel Nicolaus had net capital of $134,369, which was 43.32% of aggregate debit items and $128,166 in excess of minimum required net capital. CSA had net capital of $3,036, which was $2,871 in excess of minimum required net capital.

The Company's international subsidiary, Stifel Nicolaus Limited ("SN Ltd"), is subject to the regulatory supervision and requirements of the Financial Services Authority ("FSA") in the United Kingdom. At December 31, 2006, SN Ltd's capital and reserves were $8,405 which was $3,728 in excess of the financial resources requirement under the rules of the FSA.

NOTE G - Acquisitions

On December 1, 2005, the Company closed on the acquisition of the LM Capital Markets, whose results have been included in the Company's Consolidated Financial Statements since that date, from Citigroup Inc. The LM Capital Markets business was part of Legg Mason Wood Walker, Inc. ("LMWW"), which Citigroup Inc. acquired from Legg Mason, Inc. in a substantially simultaneous closing. The LM Capital Markets business acquired by the Company includes the Investment Banking, Equity and Fixed Income Research, Equity Sales and Trading, and Taxable Fixed Income Sales and Trading Departments of LMWW and employed 429 professional and support staff who became employees of the Company on December 1, 2005. The acquisition was made to grow the Company's business and in particular the Company's Capital Markets business leveraging the skill set of the LM Capital Markets associates. Under the terms of the agreement, the Company paid Citigroup Inc. an amount equal to the net book value of assets being acquired of $12,178 plus a premium of $7,000 paid in cash at closing with the balance of up to an additional $30,000 in potential earn-out payment by the Company to Citigroup Inc., based on the performance of the combined capital markets business of both the Company's pre-closing Fixed Income and Equity Capital Markets business and LM Capital Markets for calendar years 2006, 2007, and 2008. Such payments, if any, will be accounted for as additional purchase price. Additionally, the Company assumed $34,191 in Accrued Employee Compensation for which a receivable, from Citigroup Inc., for the same amount was included in Other Assets on the Consolidated Statement of Financial Condition as of December 31, 2005. In addition in December of 2005, the Company acquired $45,900 in net securities inventories associated with the LM Capital Markets in a broker to broker trade with LMWW. For calendar year 2006, the Company recorded an earn-out liability of $360.

Page 64

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE G - Acquisitions (continued)

The following is unaudited pro forma financial data for the combined operations, assuming the transaction had taken place on January 1 of each year.

Years Ended	December 31, 2005 (unaudited)	December 31, 2004 (unaudited)
Total revenues	$460,260	$494,513
Net income	$ 13,147	$ 30,069
Diluted earnings per share	$0.85	$2.07
Diluted weighted average shares outstanding	15,446	14,538

The above unaudited pro forma data excludes reductions of certain administrative allocations by Legg Mason which as a result of synergies of the combined operations, management believes, will be significantly reduced. In addition, for each period presented, the Company included compensation expense of $22,443 and $9,751 associated with the issuance of restricted stock units and the discounted offering price on its private placement respectively to key associates of the LM Capital Markets. These results do not purport to be indicative of the results which actually would have occurred.

A summary of the fair values of the net assets acquired as of December 1, 2005, based upon the final purchase price allocation, is as follows:

Cash	$ 325
Investments	12,275
Furniture & fixtures	1,513
Accounts receivables	35,123
Prepaid expenses	623
Goodwill	8,202
Intangible assets	2,255
Total assets acquired	60,316
Accounts payables	2,643
Accrued expenses	35,026
Total liabilities assumed	37,669
Net assets acquired	$ 22,647

The goodwill and intangible assets of $10,457 were assigned to the Equity Capital Markets and Fixed Income Capital Markets in the amounts of $8,366 and $2,091, respectively. The total amount of goodwill and intangible assets of $10,457 is deductible for tax purposes.

Page 65

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE G - Acquisitions (continued)

On December 5, 2006, the Company closed on the acquisition of the private client business and purchased certain assets and assumed certain lease obligations of Miller Johnson Steichen and Kinnard ("MJSK"), a privately held broker dealer. Under the terms of the agreement the Company paid $7,780 in cash. In addition the Company paid $440 for transfer and legal fees. Eighty-four former employees of MJSK became employees of the Company on December 5, 2006. The acquisition was made to continue to grow the Company's Private Client business. In addition in January 2007, Stifel Nicolaus issued approximately $4,133 in upfront notes and approximately $493 in Company restricted stock units to certain investment executives. The summary of the fair values of the net assets acquired as of December 5, 2006, based upon the current valuation estimate, is as follows: Customer list of $2,296, goodwill of $4,846, non-compete agreements of $734, and fixed assets of $344. The customer list will be amortized ov er a ten-year period and the non-compete agreements will be amortized over a five-year period.

Supplemental pro forma information is not presented because the acquisition is not considered to be material. The results of operations of MJSK are included in the Company's Consolidated Statements of Operations from the date of acquisition.

NOTE H - Goodwill and Intangible Assets

The Company completed an annual goodwill impairment test as of July 31 in each of the years ended December 31, 2006, 2005, and 2004 in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. The Company's testing did not indicate any impairment of the carrying value of goodwill.

As a result of the finalization of the LM Capital Markets purchase price allocation, $7,178 classified as intangible assets at December 31, 2005 was transferred to goodwill in the current year.

The carrying amount of goodwill and intangible assets attributable to each of the Company's reportable segments is presented in the following table:

	Private Client Group	Equity Capital Markets	Fixed Income Capital Markets	Total
Goodwill
Balance at December 31, 2005	$ 454	$ 1,676	$ 1,180	$ 3,310
Acquisitions/purchase price adjustments	4,846	818	205	5,869
Transfers	- -	5,743	1,435	7,178
Sale/disposal	- -	(496)	- -	(496)
Impairment losses	- -	- -	- -	- -
Balance at December 31, 2006	5,300	7,741	2,820	15,861
Intangible Assets
Balance at December 31, 2005	566	8,086	1,887	10,539
Net additions	2,934	362	- -	3,296
Transfers	- -	(5,743)	(1,435)	(7,178)
Amortization of intangible assets	(212)	(570)	(33)	(815)
Impairment losses	- -	- -	- -	- -
Balance at December 31, 2006	3,288	2,135	419	5,842
Total goodwill and intangible assets	$ 8,588	$ 9,876	$ 3,239	$ 21,703

Page 66

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE H - Goodwill and Intangible Assets (continued)

The changes in goodwill during the year ended December 31, 2006 include adjustments due to the finalization of the allocation of purchase price related to the LM Capital Markets acquisition, the acquisition of MJSK, and the sale of Macroeconomic Advisors LLC.

Intangible assets consist of acquired customer lists and non-compete agreements that are amortized to expense over their contractual or determined useful lives. The gross and accumulated amortization balances of intangibles are as follows:

	December 31, 2006			December 31, 2005
	Gross Carrying Amount	Accumulated Amortization	Net	Gross Carrying Amount	Accumulated Amortization	Net
Amortized intangible assets
Customer lists	$5,914	$1,022	$4,892	$10,647	$647	$10,000
Non-compete agreements	1,536	586	950	685	146	539
Total amortized intangible assets	$7,450	$1,608	$5,842	$11,332	$793	$10,539

Aggregate amortization expense related to intangible assets was $815, $291, and $93 for each of the years ended December 31, 2006, 2005, and 2004 respectively. Estimated annual amortization expense for the next five years is: 2007 - $1,178; 2008 - $1,119; 2009 - $704; 2010 - $582; and 2011 - $519.

NOTE I - Employee Benefit Plans

The Company has a profit sharing 401(k) plan (the "PSP") covering qualified employees as defined in the plan. Effective January 1, 2006, contributions to the PSP were based upon a Company match of 50% of the employees' first two thousand dollars in annual contributions. For 2005 and 2004, the company match was 50% of the employees' first one thousand dollars in annual contributions. Additional contributions by the Company are discretionary. Under the PSP, participants can purchase up to 333,333 shares of the Company's common stock. The amounts charged to employee compensation and benefits for the PSP were $1,233, $626, and $419, for 2006, 2005, and 2004, respectively.

The Company has an employee stock ownership plan (the "ESOP") covering qualified employees as defined in the plan. Employer contributions are made to the ESOP as determined by the Compensation Committee of the Board of Directors of the Company on behalf of all eligible employees based upon the relationship of individual compensation (up to a maximum of $175) to total compensation. In 1997, the Company purchased 330,750 shares for $3,178 and contributed these shares to the ESOP. The unallocated shares are being released for allocation to the participants based upon employer contributions to fund an internal loan between the Company and the ESOP. At December 31, 2006, the plan held 451,622 shares, of which 140,995 shares, with a fair value of $5,531, were unallocated. The Company charged to employee compensation and benefits $798, $553, and $392 for the ESOP contributions for 2006, 2005, and 2004, respectively.

Page 67

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE J - Stock-Based Compensation Plans

The Company has several stock-based compensation plans, which are described below. All stock-based compensation plans are administered by the Compensation Committee of the Board of Directors of the Parent, which has the authority to interpret the Plans, determine to whom awards may be granted under the Plans, and determine the terms of each award.

Stock Option/Incentive Award Plans

The Company has four incentive stock award plans. Under the Company's 1997 and 2001 Incentive Stock Plans, the Company may grant incentive stock options, stock appreciation rights, restricted stock, performance awards, and stock units up to an aggregate of 8,748,659 shares. Options under these plans are generally granted at market value at the date of the grant and expire ten years from the date of grant. The options generally vest ratably over a three- to five-year vesting period. The Company has also granted stock options to external board members under a non-qualified plan and the "Equity Incentive Plan for Non-Employee Directors." Under the Equity Incentive Plan for Non-Employee Directors, the Company may grant stock options and stock units up to 200,000 shares. The exercise price of the option is equal to market value at the date of the grant and are exercisable six months to one year from date of grant and expire ten years from date of grant. Under the Stifel, Nicolaus & Company, Incorporated Wealth Accumulation Plan ("SWAP"), a deferred compensation plan for Investment Executives, the Company authorized 933,333 stock units to be granted under the plan.

As of December 31, 2006, there was $1,671 of total unrecognized compensation cost related to non-vested option awards. That cost is expected to be recognized over a weighted average period of 2.39 years.

Page 68

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE J - Stock-Based Compensation Plans (continued)

The summary of the status of the Company's stock option plans as of December 31, 2006, 2005, and 2004, and changes during the years ended on those dates is presented below:

	2006		2005		2004
		Weighted Average Exercise Price		Weighted Average Exercise Price		Weighted Average Exercise Price
Options	Shares		Shares		Shares
Outstanding at beginning of year	1,665,363	$ 9.95	1,869,121	$ 8.85	2,204,187	$ 8.50
Granted	45,000	39.06	93,208	26.90	55,164	19.24
Exercised	(179,960)	8.73	(267,426)	8.12	(317,795)	8.09
Forfeited	(17,729)	12.96	(29,540)	10.37	(72,435)	9.56
Outstanding at end of year	1,512,674	$ 10.92	1,665,363	$ 9.95	1,869,121	$ 8.85
Options exercisable at year-end	1,237,310		1,243,972		1,195,395
Weighted-average fair value of options granted during the year	$15.61		$10.51		$6.54

The total intrinsic value of options exercised was $5,119, $5,285 and $3,376, for 2006, 2005 and 2004 respectively. The total fair value of options vested during the years ended December 31, 2006, 2005, and 2004 was $6,611, $7,581, and $6,605, respectively.

The following table summarizes information about stock options outstanding at December 31, 2006:

	Options Outstanding			Options Exercisable
Range of Exercise Price	Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price	Number Exercisable	Weighted-Average Exercise Price
$4.70 $7.46	246,831	2.13	$ 7.09	246,831	$ 7.09
7.50 - 7.80	214,597	4.76	7.78	181,673	7.78
7.83 - 8.12	246,519	2.64	7.95	246,519	7.95
8.16 - 8.69	319,447	5.09	8.48	258,803	8.45
8.70 - 11.48	219,217	3.41	9.67	189,915	9.67
13.89 - 22.23	186,855	7.57	17.52	106,727	17.57
37.59 - 39.23	79,208	9.47	38.42	6,842	37.59
$4.70 - $39.23	1,512,674	4.45	$ 10.92	1,237,310	$ 9.11

The weighted-average fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the following weighted-average assumptions: dividend yield of 0.00%; expected volatility of 34.7%; risk-free interest rates of 4.71%; and expected lives of 5.37 years.

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time outstanding) of options granted was estimated using the historical exercise behavior of employees. The expected volatility was based on historical volatility for a period equal to the stock option's expected life.

Page 69

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE J - Stock-Based Compensation Plans (continued)

The total option compensation cost recognized during 2006 was $551. There was no option compensation costs recognized during 2005 or 2004. The Company received cash in the amounts of $1,571, $2,165 and $2,572 from the exercise of stock options during 2006, 2005, and 2004, respectively. The total tax benefit related thereto was $2,004, $2,110, and $1,594 for 2006, 2005, and 2004, respectively.

Employee Stock Purchase Plan

Under the 2003 Employee Stock Purchase Plan ("ESPP"), the Company was authorized to issue up to 266,667 shares of common stock, to its full-time employees, nearly all of whom were eligible to participate. Under the terms of the ESPP, employees could choose each year to have a specified percentage of their compensation withheld in 1% increments not to exceed 10%. The participant could also specify a maximum dollar amount to be withheld. At the beginning of every year, each participant was granted an option to purchase up to 1,333 shares of common stock at a price equal to the lower of 85% of the beginning-of-year or end-of-year fair market value of the common stock. In 2004, the 2003 ESPP was amended and the employees elected monthly to purchase a minimum of 5 shares to a maximum of 1,333 shares, not to exceed 1,333 shares for the calendar year. At the beginning of every month, each participant was granted an option to purchase up to 1,333 shares of common stock at a price equal to the lower of 95% of the beginning-of-month or end-of-month fair market value of the common stock. On January 1, 2005 the Company cancelled the ESPP. Approximately 32% to 36% of eligible employees participated in the ESPP in 2004. Under the ESPP, the Company granted 266,661 shares to employees in 2004.

Stock Units

A stock unit represents the right to receive a share of common stock from the Company at a designated time in the future without cash payment by the employee and is issued in lieu of cash incentive. A deferred compensation plan is provided to certain revenue producers, officers, and key administrative employees, whereby a certain percentage of their incentive compensation is deferred as defined by the plan into Company stock units with a 25% matching contribution by the Company. Participants may elect to defer up to an additional 15% of their incentive compensation with a 25% matching contribution by the Company. Units generally vest over a three- to five-year period and are distributable upon vesting or at future specified dates. Deferred compensation costs are amortized on a straight-line basis over the vesting period. As of December 31, 2006, there were 1,993,386 units outstanding under this deferred compensation plan. The Company charged $26,214, $3,644, and $2,766 to employee compensation and benefits relating to units granted under this plan for 2006, 2005, and 2004, respectively.

Stifel Nicolaus has a deferred compensation plan for its investment executives ("I.E.s") who achieve certain levels of production, whereby a certain percentage of their earnings is deferred as defined by the plan, of which 50% is deferred into Company stock units with a 25% matching contribution and 50% earns a return based on optional investments chosen by the I.E.s. Investment executives may choose to base their return on the performance of an index mutual fund as designated by the Company or a fixed income option. I.E.s have no ownership in the mutual funds. Included on the Consolidated Statements of Financial Condition under the caption "Investments" are $6,149 in 2006 and $4,539 in 2005 in mutual funds that were purchased by the Company to economically hedge its liability to the I.E.s that choose to base the performance of their return on the index mutual fund option. I.E.s may elect to defer an additional 1% of earnings into Company stock units with a 25% matching contribution. In ad dition, certain I.E.s, upon joining the firm, may receive Company stock units in lieu of transition cash payments. Deferred compensation for both plans cliff vests over a five-year period. Deferred compensation costs are amortized on a straight-line basis over the deferral period. As of December 31, 2006, there were 1,700,073 units outstanding under this deferred compensation plan. Charges to employee compensation and benefits related to these plans were $7,506, $5,308, and $4,300 for 2006, 2005, and 2004, respectively.

Page 70

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE J - Stock-Based Compensation Plans (continued)

Under the Equity Incentive Plan for Non-Employee Directors, the Company granted stock units to non-employee directors that elected to defer their director compensation. Participants that elected to defer their compensation were given a 25% matching contribution by the Company. Beginning in May 2004, all directors' compensation is deferred without a matching contribution by the Company. These units are 100% vested and are distributable after five full calendar years. Directors' fees are expensed on the grant date. As of December 31, 2006, there were 87,041 units outstanding under this plan. The Company charged $498, $320, and $259 to directors' fees relating to units granted under this plan for 2006, 2005, and 2004, respectively.

The summary of the status of the Company's stock units as of December 31, 2006, 2005, and 2004, and changes during the years ending on those dates is presented below:

	2006		2005		2004
		Average Grant Price		Average Grant Price		Average Grant Price
Stock Units	Shares		Shares		Shares
Outstanding at beginning of year	2,943,496		3,305,802		2,925,751
Granted	2,419,848	$ 37.34	511,103	$26.90	549,513	$19.24
Converted	(1,450,950)		(675,972)		(81,418)
Cancelled	(131,894)		(197,437)		(88,044)
Outstanding at end of year	3,780,500		2,943,496		3,305,802

On January 2, 2006, the Company granted 1,807,610 restricted stock units to key associates of the LM Capital Markets. The units were granted in accordance with the Company's 2001 incentive stock award plan as amended with a grant date fair value of $37.59 per unit. The units vest ratably over a three year period, and accordingly, the Company incurred compensation expense of $22,443 net of forfeitures in 2006.

The total tax benefit for 2006, 2005, and 2004 related thereto was $9,419, $5,765 and $213, respectively.

Page 71

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE K - Legal Proceedings

The Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from its securities business activities, including lawsuits, arbitration claims and regulatory matters. Some of these claims seek substantial or indeterminate damages, and regulatory investigations can result in substantial fines and penalties. Through counsel, the Company has asserted what it believes to be meritorious defenses in all significant litigation, arbitration and regulatory matters pending or threatened against the Company. Management, based on its understanding of the facts and after consultation with counsel, reasonably estimates and appropriately records loss reserves. While the ultimate outcome of pending litigation, claims and regulatory matters cannot be predicted with certainty, based upon information currently known, management believes that resolution of all such matters will not have a material adverse effect on the cons olidated Statements of Financial Condition of the Company. However, there can be no assurances that the ultimate resolution of these proceedings and claims will not exceed the estimated loss reserves as determined by management, and the outcome and timing of any particular matter may be material to the operating results for any particular period depending on the operating results for that period.

NOTE L - Off-Balance Sheet Credit Risk

The Company clears and executes transactions for three introducing broker-dealers. Pursuant to the clearing agreement, the introducing broker-dealer guarantees the performance of its customers to the Company. To the extent the introducing broker-dealer is unable to satisfy its obligations under the terms of the clearing agreement, the Company would be secondarily liable. However, the potential requirement for the Company to fulfill these obligations under this arrangement is remote. Accordingly, no liability has been recognized for these transactions.

In the normal course of business, the Company executes, settles, and finances customer and proprietary securities transactions. These activities expose the Company to off-balance sheet risk in the event that customers or other parties fail to satisfy their obligations.

In accordance with industry practice, securities transactions generally settle three business days after trade date. Should a customer or broker fail to deliver cash or securities as agreed, the Company may be required to purchase or sell securities at unfavorable market prices.

The Company borrows and lends securities to finance transactions and facilitate the settlement process, utilizing customer margin securities held as collateral. The Company monitors the adequacy of collateral levels on a daily basis. The Company periodically borrows from banks on a collateralized basis utilizing firm and customer margin securities in compliance with SEC rules. Should the counterparty fail to return customer securities pledged, the Company is subject to the risk of acquiring the securities at prevailing market prices in order to satisfy its customer obligations. The Company controls its exposure to credit risk by continually monitoring its counterparties' positions, and, where deemed necessary, the Company may require a deposit of additional collateral and/or a reduction or diversification of positions. The Company sells securities it does not currently own (short sales) and is obligated to subsequently purchase such securities at prevailing market prices. The Company is ex posed to risk of loss if securities prices increase prior to closing the transactions. The Company controls its exposure to price risk for short sales through daily review and setting position and trading limits.

The Company manages its risks associated with the aforementioned transactions through position and credit limits, and the continuous monitoring of collateral. Additional collateral is required from customers and other counterparties when appropriate.

Page 72

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE L - Off-Balance Sheet Credit Risk (continued)

The Company has accepted collateral in connection with resale agreements, securities borrowed transactions, and customer margin loans. Under many agreements, the Company is permitted to sell or repledge these securities held as collateral and use these securities to enter into securities lending arrangements or to deliver to counterparties to cover short positions. At December 31, 2006, the fair value of securities accepted as collateral where the Company is permitted to sell or repledge the securities was $531,545, and the fair value of the collateral that had been sold or repledged was $286,470.

Concentrations of Credit Risk

The Company maintains margin and cash security accounts for its customers located throughout the United States. The majority of the Company's customer receivables are serviced by branch locations in the Midwest.

NOTE M - Debenture to Stifel Financial Capital Trusts

On April 25, 2002, Stifel Financial Capital Trust I (the "Trust I"), a Delaware Trust and non-consolidated wholly- owned subsidiary of the Company, completed the offering of 1,380,000 shares of 9% Cumulative Trust Preferred Securities for $34,500 (net proceeds of approximately $32,900 after offering expenses and underwriting commissions). The trust preferred securities represent an indirect interest in a junior subordinated debenture purchased from the Company by the Trust I. The debenture bears the same terms as the trust preferred securities. The trust preferred securities may be redeemed by the Company, and in turn, the Trust would call the debenture no earlier than June 30, 2007, but no later than June 30, 2032. The interest payments on the debenture will be made quarterly, and undistributed payments will accumulate interest of 9% per annum compounded quarterly.

As of December 31, 2003, the Company elected to apply the provisions of FIN 46R to the Trust. The adoption resulted in the deconsolidation of the Trust and the trust preferred securities are now presented as "Debenture to Stifel Financial Capital Trust I" in the Consolidated Statements of Financial Condition.

On August 12, 2005, the Company completed its private placement of $35,000 of 6.38% Cumulative Trust Preferred Securities. The Preferred Securities were offered by Stifel Financial Capital Trust II (the "Trust II"), a non-consolidated wholly-owned Delaware business trust subsidiary of the Company. The Trust Preferred Securities mature on September 30, 2035, but may be redeemed by the Company and in turn, the Trust II would call the debenture beginning September 30, 2010. The Trust II requires quarterly distributions of interest to the holder of the Trust Preferred Securities. Distributions will be payable at a fixed interest rate equal to 6.38% per annum from the issue date to September 30, 2010 and then will be payable at a floating interest rate equal to three-month London Interbank Offered Rate ("LIBOR") plus 1.70% per annum. The trust preferred securities represent an indirect interest in a junior subordinated debenture purchased from the Company by the Trust II. The debenture bears th e same terms as the trust preferred securities and is presented as "Debenture to Stifel Financial Capital Trust II" in the Consolidated Statements of Financial Condition.

Page 73

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE N - Liabilities Subordinated to Claims of General Creditors

The Company has a deferred compensation plan available to I.E.s who achieve a certain level of production, whereby a certain percentage of their earnings is deferred as defined by the plan, a portion of which is deferred in stock units and the balance into optional investment choices. The Company obtained approval from the New York Stock Exchange to subordinate the liability for future payments to I.E.s for that portion of compensation not deferred in stock units. The Company issued cash subordination agreements to participants in the plan pursuant to provisions of Appendix D of Exchange Act Rule 15c3-1 and included in its computation of net capital the following:

	Distribution January 31,
Plan Year		Amount
2001	2007	$ 720
2002	2008	914
2003	2009	1,300
2004	2010	1,391
		4,325
	Unamortized expense	(44)
		$ 4,281

At December 31, 2006, the fair value of the liabilities subordinated to claims of general creditors using interest rates commensurate with borrowings of similar terms was $3,600.

NOTE O - Investments in Qualified Missouri Businesses

The Company formed two Limited Liability Corporations, referred to collectively as the "LLC," to be certified capital companies under the statutes of the State of Missouri, which provide venture capital for qualified Missouri businesses, as defined. The LLC issued $4,600 non-interest bearing notes due May 15, 2008, $10,600 non-interest bearing notes due February 15, 2009, $8,417 non-interest bearing notes due February 15, 2010, and $981 non-interest bearing participating debentures due December 31, 2010, which are included in the Company's Consolidated Statements of Financial Condition under the caption "Other" liabilities. Proceeds from the notes are first invested in zero coupon U.S. Government securities in an amount sufficient to accrete to the repayment amount of the notes and are placed in an irrevocable trust. These securities, carried at accreted cost of $20,503 and $19,309 at December 31, 2006 and 2005, respectively, are held to maturity and are included under the caption "Investm ents." The fair value of the securities is $21,187 and $20,445 at December 31, 2006 and 2005, respectively. The remaining proceeds were invested in qualified Missouri businesses.

The LLC invests in qualified Missouri businesses in the form of debt, preferred, and/or common equity. These securities, valued at approximately $2,425 and $2,531 at December 31, 2006 and 2005, respectively, are included under the caption "Investments." Due to the structure of the LLC and under the statutes of the State of Missouri, the Company participates in a portion of the appreciation of these investments. Management monitors these investments on a continuous basis.

Page 74

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE P - Income Taxes

The Company's provision (benefit) for income taxes consists of:

	Years Ended December 31,
	2006	2005	2004
Current:
Federal	$ 7,904	$ 13,163	$ 12,669
State	1,686	2,614	2,912
	9,590	15,777	15,581
Deferred:
Federal	1,111	(2,252)	(1,717)
State	237	(447)	(395)
	1,348	(2,699)	(2,112)
	$10,938	$13,078	$13,469

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes for the following reasons:

	Years Ended December 31,
	2006	2005	2004
Federal tax computed at statutory rates	$ 9,229	$ 11,452	$ 12,816
State income taxes, net of federal income tax benefit	1,247	1,409	1,514
Settlement of a state tax matter	- -	- -	(1,000)
Other, net	462	217	139
Provision for income taxes	$10,938	$13,078	$13,469

The effective tax rates for the years ended December 31, 2006, 2005, and 2004 were 41.5%, 40.0%, and 36.8%, respectively. The change in 2004 was due to a $1,000 tax benefit recorded in that year resulting from the settlement of a state tax matter covering a number of years. Excluding the $1,000 tax benefit, the Company's effective tax rate for the year ending December 31, 2004 was 39.5%.

Page 75

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE P - Income Taxes (continued)

The net deferred tax asset consists of the following temporary differences:

		December 31, 2006	December 31, 2005
Deferred Tax Asset	Accruals not currently deductible	$ 973	$ 2,140
	Deferred compensation	9,263	6,439
	Acquired net operating loss	417	520
	Deferred revenue	25	32
	Office equipment and leasehold improvements	490	112
	Investment valuation	- -	1,530
	Reserve for bad debt	432	381
	Deferred Tax Asset	11,600	11,154
Deferred Tax Liability	Investment valuation	(1,304)	--
	Prepaid expenses	(1,192)	(789)
	Intangible assets and goodwill amortization	(116)	(29)
	Deferred Tax Liability	(2,612)	(818)
	Net Deferred Tax Asset	$8,988	$10,336

During 2006, the Company utilized gains from its investment portfolio to extinguish a capital loss carry forward of $2,200. The Company also has acquired a net operating loss that is utilized for tax purposes over ten years and will expire in 2010.

The Company believes that a valuation allowance with respect to the realization of the total gross deferred tax asset is not necessary. Based on the Company's historical earnings and taxes previously paid, future expectations of taxable income, and the future reversals of gross deferred tax liability, management believes it is more likely than not that the Company will realize the gross deferred tax asset.

Page 76

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE Q - Segment Reporting

The Company's reportable segments include the Private Client Group, Equity Capital Markets, Fixed Income Capital Markets, and Other. The Private Client Group segment includes branch offices and independent contractor offices of the Company's broker-dealer subsidiaries located throughout the U.S., primarily in the Midwest and Mid-Atlantic regions. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance, to their private clients. The Equity Capital Markets segment includes corporate finance management and participation in underwritings (exclusive of sales credits, which are included in the Private Client Group segment), mergers and acquisitions, institutional sales, trading, research, and market making. The Fixed Income Capital Markets segment includes public finance, institutional sales and competitive underwriting, and trading. The "Other" segment includes clearing revenue, interest income from stock borrow ac tivities, unallocated interest expense, interest income and gains and losses from investments held, and all unallocated overhead cost associated with the execution of orders; processing of securities transactions; custody of client securities; receipt, identification, and delivery of funds and securities; compliance with regulatory and legal requirements; internal financial accounting and controls; acquisition charges related to the LM Capital Markets acquisition; and general administration.

Intersegment revenues and charges are eliminated between segments. The Company evaluates the performance of its segments and allocates resources to them based on various factors, including prospects for growth, return on investment, and return on revenues.

Information concerning operations in these segments of business is as follows:

	Years ended December 31,
	2006	2005	2004
Net Revenues
Private Client Group	$231,364	$197,356	$187,477
Equity Capital Markets	150,038	43,415	38,855
Fixed Income Capital Markets	53,570	18,155	16,630
Other	16,835	4,809	3,861
Total Net Revenues	$451,807	$263,735	$246,823
Operating Contributions
Private Client Group	$ 50,218	$ 48,157	$ 47,965
Equity Capital Markets	31,959	13,626	12,480
Fixed Income Capital Markets	10,620	2,361	2,977
Other/Unallocated Overhead	(66,428)	(31,422)	(26,805)
Income before income taxes	$ 26,369	$ 32,722	$ 36,617

Information regarding net revenue by geographic area for 2006, 2005 and 2004 is as follows:

	Years ended December 31,
	2006	2005	2004
Net Revenues
United States	$435,894	$263,033	$246,823
United Kingdom	10,602	417	- -
Other European	5,311	285	- -
Total Net Revenues	$451,807	$263,735	$246,823

Our foreign operations are conducted through our wholly-owned subsidiary, SN Ltd. Net revenues in the preceding table are attributable to the country or territory in which our subsidiaries are located.

Page 77

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE R - Earnings per Share

Basic earnings per share of common stock is computed by dividing income available to shareholders by the weighted average number of common shares outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted earnings per share include dilutive stock options and stock units under the treasury stock method.

The following table reflects a reconciliation between Basic Earnings Per Share and Diluted Earnings Per Share:

	Years Ended December 31,
	2006			2005			2004
			Per Share Amount			Per Share Amount			Per Share Amount
	Income	Shares		Income	Shares		Income	Shares
Basic Earnings Per Share
Income available to shareholders	$15,431	11,513,290	$1.34	$19,644	9,827,734	$2.00	$23,148	9,701,699	$2.39
Effect of Dilutive Securities
Employee benefits plans	--	2,395,226	--	--	2,758,200	--	--	2,579,794	--
Diluted Earnings Per Share
Income available to common stockholders and assumed conversions
	$15,431	13,908,516	$1.11	$19,644	12,585,934	$1.56	$23,148	12,281,493	$1.88

NOTE S - Stockholders' Equity

On May 5, 2005, the Company's board of directors authorized the repurchase of up to 2,000,000 additional shares on top of an existing authorization of 1,000,000 shares. These purchases may be made on the open market or in privately negotiated transactions, depending upon market conditions and other factors. Repurchased shares may be used to meet obligations under the Company's employee benefit plans and for general corporate purposes.

The Company repurchased 367,304, 332,030, and 472,872 shares for the years ending December 31, 2006, 2005, and 2004, respectively, using existing board authorizations, at average prices of $32.26, $20.94 and $19.38 per share, respectively, to meet obligations under the Company's employee benefit plans and for general corporate purposes. To satisfy the withholding obligations for the conversion of the Company's stock units, the Company withheld 158,267 shares in 2006. The Company reissued 529,887, 924,974, and 942,615 shares for the years ending December 31, 2006, 2005, and 2004, respectively, for employee benefit plans. In 2006, the Company issued 1,729,125 new shares for employee benefit plans. Under existing board authorizations, the Company is permitted to buy an additional 1,711,807 shares.

On January 23, 2006, the Company completed a private placement of 1,052,220 shares of its common stock at $25.00 per share. The shares were purchased by key associates of the LM Capital Markets business. The Company was required to charge to compensation the difference of $25.00 per share and the grant date fair value, as determined in accordance with SFAS No. 123R, of $34.27 per share. As a result, the Company incurred a compensation charge of $9,751 in January 2006.

Page 78

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE T - Impact of the NYSE/Archipelago Merger

On March 7, 2006, the New York Stock Exchange ("NYSE") and Archipelago Holdings Inc. ("Archipelago") completed the combination of their businesses through a series of mergers into a new holding company, NYSE Group, Inc. ("NYSE Group"). As a result of the merger, the Company received $370 in cash, and 80,177 shares of NYSE Group common stock for its NYSE seat membership. The shares are subject to certain transfer restrictions that expire ratably over a three-year period, unless the NYSE Group board of directors elects to remove or reduce the restrictions. On May 5, 2006, the Company sold 51,900 shares of NYSE Group through a secondary public offering. The Company received cash proceeds of $3,128 or $60.27 per share which represented the fixed offering price.

The Company recorded a net gain of $5,520 which is included in Other revenues in the Consolidated Statements of Operations for the year ended December 31, 2006. The gain was impacted by a valuation adjustment for the transfer restrictions on the shares received. Subsequent gains and losses will be recorded as the share price of NYSE Group stock fluctuates and the transfer restrictions lapse.

NOTE U - Subsequent Events

On February 28, 2007, the Company closed on the acquisition of Ryan Beck Holdings, Inc. and its wholly-owned broker-dealer subsidiary Ryan Beck & Company, Inc. ("Ryan Beck") from BankAtlantic Bancorp, Inc. Ryan Beck will continue to operate as a separate broker-dealer until after all existing branches of Ryan Beck are converted to Stifel Nicolaus. Under the terms of the agreement, the Company paid initial consideration of $2,653 in cash and issued 2,467,600 shares of Company common stock valued at $41.55 per share which was the five day average closing price of Company common stock for the two days prior to and two days subsequent to the deal announcement date of January 9, 2006 for a total initial consideration of $105,181. In addition the Company will issue five-year immediately exercisable warrants to purchase up to 500,000 shares of Company common stock at an exercise price of $36.00 per share, pending shareholder approval. If shareholder approval is not obtained by June 30, 2007, the Company will pay $20,000 cash in lieu of the warrants. The estimated value of the warrants on date of announcement using the Black-Scholes pricing model was $8,530. The cash portion of the purchase price was funded from cash generated from operations. In addition, a contingent earn-out payment is payable based on defined revenues attributable to specified individuals in Ryan Beck's existing private client division over the two-year period following closing. This earn-out is capped at $40,000. A second contingent payment is payable based on defined revenues attributable to specified individuals in Ryan Beck's existing investment banking division. The investment banking earn-out is equal to 25% of the amount of investment banking fees over $25,000 for each of the next two years. Each of the contingent earn-out payments is payable, at the Company's election, in cash or common stock. In addition to the transaction consideration described above, the Company has agreed to establish a retention program for the certain associates of Ryan Beck valued at approximately $42,000 consisting of cash and Company common stock and to fund $7,000 of change in control payments for certain executives of Ryan Beck. The Company has filed a preliminary proxy statement which would seek approval from the holders of its shares of common stock to increase the number of shares of Company common stock available for the retention program, as well as for the warrants and the contingent earn-out payments, in the event the Company elects to make the contingent earn-out payments in shares of its common stock. If shareholders do not approve the additional shares for the issuance of warrants, the Company will make the contingent payments in cash.

On February 1, 2007, the Company entered into a loan agreement and promissory note with the Mayor and City Council of Baltimore, whereby the Company will borrow $750 to construct leasehold improvements and purchase furniture, fixtures, and equipment at the leasehold premises in downtown Baltimore for the Company's Baltimore operations. The promissory note has a fixed rate interest of 2.0% with interest only payments commencing on March 1, 2007 and continuing through February 1, 2011. Commencing March 1, 2011 and continuing through February 1, 2017, the Company will be required to pay principal and interest payments with a final balloon payment due at maturity on February 1, 2017 in the amount of $367.

Page 79

Notes To Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

NOTE U - Subsequent Events (continued)

On November 20, 2006, the Company, and its wholly-owned subsidiary, FSFC Acquisition Co., entered into an Agreement and Plan of Merger with First Service Financial Company, ("First Service"), pursuant to which the Company will acquire First Service and its wholly-owned bank subsidiary, FirstService Bank, by means of the merger of FSFC Acquisition Co. with and into First Service. The total consideration payable by the Company in the merger for all of the outstanding shares of First Service is approximately $37,900. The Company is seeking approval from the Federal Reserve to become a bank holding company and financial holding company subject to the supervision and regulation of the Board of Governors of the Federal Reserve System. The merger is anticipated to close in the second quarter of 2007.

* * * * *

Page 80

Quarterly Results

Quarterly Operating Results (Unaudited)
			Earnings Before Income Taxes	Net Income	Basic Earnings Per Share	Diluted Earnings Per Share
		Net Revenues
(in thousands, except per share amounts)	Revenue
Year 2006 By Quarter
First(1)	$113,594	$109,531	$783	$476	$0.04	$0.04
Second(1)	107,351	102,667	3,973	2,298	0.20	0.16
Third(1)	115,238	109,816	9,241	5,424	0.47	0.39
Fourth(1)	135,205	129,793	12,372	7,233	0.63	0.51
Year 2005 By Quarter
First	$61,293	$60,188	$7,264	$4,358	$0.44	$0.35
Second	65,211	63,971	9,305	5,620	0.58	0.46
Third	65,400	63,858	8,149	4,896	0.50	0.39
Fourth(2)	78,106	75,718	8,004	4,770	0.48	0.38

(1) Quarterly results in 2006 include pre-tax acquisition related charges, principally stock based compensation, related to the LM Capital Markets acquisition of $17.8 million, $8.3 million, $7.3 million, and $8.0 million in the first, second, third, and fourth quarters, respectively.

(2) Fourth quarter 2005 results include $3.3 million in pre-tax acquisition related charges, primarily severance, related to the LM Capital Markets acquisition.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

Page 81

ITEM 9A. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As of December 31, 2006, the management of the Company, including Mr. Ronald J. Kruszewski as Chief Executive Officer and Mr. James M. Zemlyak as Chief Financial Officer, evaluated the Company's disclosure controls and procedures as specified in the SEC's rules and forms. Under rules promulgated by the SEC, disclosure controls and procedures are defined as those "controls or other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Commission's rules and forms." Based on the evaluation of the Company's disclosure controls and procedures, Messrs. Kruszewski and Zemlyak determined that such controls and procedures were effective in alerting them to material information, on a timely basis, required to be included in the Company's periodic SEC filings.

Management's Report on Internal Control over Financial Reporting

Management of Stifel Financial Corp. and subsidiaries (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company's internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2006. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, management believes that, as of December 31, 2006, the Company's internal control over financial reporting is effective based on those criteria.

On December 5, 2006, the Company closed on the acquisition of the private client business and purchased certain assets and assumed certain lease obligations of Miller Johnson Steichen and Kinnard ("MJSK"), a privately held broker-dealer. As permitted under Section 404 of the Sarbanes-Oxley Act, the Company excluded MJSK from the scope of the internal control evaluation. MJSK represented less than 1% of the Company's consolidated net revenues for the year ended December 31, 2006.

The Company's independent registered public accounting firm, Deloitte & Touche LLP, has audited management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2006, as stated in their report, appearing on page 83, which expresses unqualified opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting as of December 31, 2006.

March 15, 2007

Page 82

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Stifel Financial Corporation
St. Louis, Missouri

We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that Stifel Financial Corp. and subsidiaries (the "Company")] maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Page 83

In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2006 of the Company and our report dated March 16, 2007 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

St. Louis, Missouri
March 16, 2007

Page 84

Changes in Internal Control Over Financial Reporting

Further, other than described above, there were no significant changes in the Company's internal controls over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None

Page 85

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding directors and the Company's Code of Ethics is contained in "Election of Directors," included in the Registrant's Proxy Statement for the 2007 Annual Meeting of Stockholders, which information is incorporated herein by reference.

Information regarding the executive officers is contained in "Item 4a. Executive Officers of the Registrant," hereof. There is no family relationship between any of the directors or named executive officers.

Under Section 303A.12 (a) NYSE Listed Company Manual, the CEO certification was submitted to the NYSE after the 2006 Annual Meeting of Stockholders.

The Company has adopted a code of business conduct that applies to the directors, officers and associates that is referred to as the Code of Ethics. The Company makes the Code of Ethics and Corporate Governance Guidelines available free of charge, through its Internet site (http://www.stifel.com). These documents are also available without charge in print upon written request to Stifel Financial Corp., Attn: Investor Relations, One Financial Plaza, 501 N. Broadway, St. Louis, MO 63102. Any amendment to, or waiver of, the Code of Ethics and Corporate Governance Guidelines will be posted on its internet site within the time period required by the SEC and the NYSE.

Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 is contained in "Section 16(a) Beneficial Ownership Reporting Compliance" in the Registrant's Proxy Statement for the 2007 Annual Meeting of Stockholders, which information is incorporated herein by reference.

There have been no material changes to the procedures by which stockholders may recommend nominees to the Company's Board of Directors. Information regarding nominating director candidates is contained in "Nominating/Corporate Governance" included in the Registrant's Proxy Statement for the 2007 Annual Meeting of Stockholders, which information is incorporated herein by reference.

The Company has a separately-designated standing Audit Committee/Finance Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit Committee/Finance Committee are Bruce A. Beda (Chairman), Robert J. Baer, John P. Dubinsky, Richard F. Ford, and James. M. Oates, each of whom is independent as independence for audit committee members is defined under New York Stock Exchange listing standards applicable to the Company. The Company's Board of Directors has determined that Bruce A. Beda is an audit committee financial expert as defined in Item 407(d)(5) of Regulation S-K of the Securities and Exchange Act of 1934.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding compensation of certain executive officers and directors ("Executive Compensation"), as well as "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report" is contained in the Registrant's Proxy Statement for the 2007 Annual Meeting of Stockholders, which information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information regarding security ownership of certain beneficial owners and management is contained in "Voting Securities and Principal Holders Thereof," included in the Registrant's Proxy Statement for the 2007 Annual Meeting of Stockholders, which information is incorporated herein by reference.

Page 86

The following table provides information as of December 31, 2006 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.

Plan Category	Number of securities to be issued upon exercise of outstanding options and units	Weighted-average exercise price of outstanding options and units	Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by stockholders	4,700,052	$ 19.38	1,459,159
Equity compensation plans not approved by stockholders	593,122	$ 16.39	N/A
Total	5,293,174	$ 19.04	1,459,159

On December 31, 2006, the total number of securities to be issued upon exercise of options and units consisted of 1,512,674 options and 3,780,500 units for a total of 5,293,174 shares. The equity compensation plans approved by the stockholders contained 1,491,764 options and 3,208,288 units for a total of 4,700,052 shares. The equity compensation plan not approved by the stockholders contained 20,910 options and 572,212 units for a total of 593,122 shares.

Equity compensation plans approved by stockholders

The total options granted as of December 31, 2006 for equity compensation plans approved by the stockholders consists of 663,335 shares subject to options granted under the 1997 Stock Incentive Plan, 762,506 shares subject to options granted under the 2001 Incentive Stock Plan, and 65,923 shares subject to options granted under the Equity Incentive Plan for Non-Employee Directors.

The total units granted as of December 31, 2006 for equity compensation plans approved by the stockholders consists of 89,221 shares that are subject to stock units granted under the 1997 Stock Incentive Plan, 3,032,026 shares that are subject to stock units granted under the 2001 Incentive Stock Plan, and 87,041 shares that are subject to stock units granted under the Equity Incentive Plan for Non-Employee Directors.

As of December 31, 2006, the remaining shares available for future grants or awards under equity compensation plans approved by the stockholders consist of 220,381 shares under the 1997 Stock Incentive Plan, 1,213,778 shares under the 2001 Incentive Stock Plan and 25,000 shares under the Equity Incentive Plan for Non-Employee Directors for a total of 1,459,159 shares.

Equity compensation plans not approved by stockholders

The totals as of December 31, 2006 for equity compensation plans not approved by the stockholders include 572,212 shares that are subject to stock units granted to our investment executives and administrative employees who are not executive officers pursuant to a Wealth Accumulation Plan that was not approved by our stockholders nor funded by another stock-based compensation plan approved by our stockholders. There were no shares reserved for future grants or awards under this plan as of December 31, 2006.

The December 31, 2006 totals for plans not approved by the stockholders also include 20,910 shares that are subject to stock options granted to non-employee directors. These options were granted prior to the adoption of the Equity Incentive Plan for Non-Employee Directors. There were no shares reserved for future grants or awards under this plan as of December 31, 2006.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information regarding certain relationships and related transactions and director independence is contained in "Certain Relationships and Related Transactions," and "Director Independence" included in the Registrant's Proxy Statement for the 2007 Annual Meeting of Stockholders, which information is incorporated herein by reference.

Page 87

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information regarding principal accounting fees and services is contained in "Independent Registered Public Accounting Firm," included in the Registrant's Proxy Statement for the 2007 Annual Meeting of Stockholders, which information is incorporated herein by reference.

Page 88

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1)	Consolidated Financial Statements are contained in Item 8 and made part hereof.
(2)	Consolidated Financial Statement Schedules:
		Page
	Schedule II - Valuation and Qualifying Accounts	92
	All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
(3)	Exhibits: See Exhibit Index on pages 93, 94 and 95 hereof.

Page 89

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Louis, State of Missouri, on the 15^th day of March 2007.

STIFEL FINANCIAL CORP.

(Registrant)

By /s/ Ronald J. Kruszewski

Ronald J. Kruszewski
Chairman of the Board, President,
Chief Executive Officer, and Director

Page 90

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant on March 15, 2007, in the capacities indicated.

/s/	Ronald J. Kruszewski Ronald J. Kruszewski	Chairman of the Board, President, Chief Executive Officer, and Director (Principal Executive Officer)
/s/	James M. Zemlyak James M. Zemlyak	Senior Vice President, Chief Financial Officer, Treasurer, and Director (Principal Financial and Accounting Officer)
/s/	Robert J. Baer Robert J. Baer	Director
/s/	Bruce A. Beda Bruce A. Beda	Director
/s/	Charles A. Dill Charles A. Dill	Director
/s/	John P. Dubinsky John P. Dubinsky	Director
/s/	Richard F. Ford Richard F. Ford	Director
/s/	Frederick O. Hanser Frederick O. Hanser	Director
/s/	Richard J. Himelfarb Richard J. Himelfarb	Director
/s/	Robert E. Lefton Robert E. Lefton	Director
/s/	Scott B. McCuaig Scott B. McCuaig	Director
/s/	Thomas P. Mulroy Thomas P. Mulroy	Director
/s/	James M. Oates James M. Oates	Director
/s/	Joseph A. Sullivan Joseph A. Sullivan	Director

Page 91

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
STIFEL FINANCIAL CORP. AND SUBSIDIARIES

(In Thousands)

Description	Balance at Beginning Of Period	Additions Charged to Costs And Expenses	Deductions (1)	Balance At End Of Period
Year Ended December 31, 2006
Deducted from asset account:
Allowances for doubtful accounts	$ 204	$ 143	$ 40	$ 307
Deducted from asset account:
Allowances for doubtful notes receivables	767	243	323	687
Year Ended December 31, 2005
Deducted from asset account:
Allowances for doubtful accounts	47	203	46	204
Deducted from asset account:
Allowances for doubtful notes receivables	782	242	257	767
Year Ended December 31, 2004
Deducted from asset account:
Allowances for doubtful accounts	82	41	76	47
Deducted from asset account:
Allowances for doubtful notes receivables	1,397	142	757	782

1. Uncollected notes written off and recoveries.
   

Page 92

EXHIBIT INDEX

STIFEL FINANCIAL CORP. AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2006

Exhibit No.		Description
3.	(a)	Restated Certificate of Incorporation and as amended of Financial filed with the Secretary of State of Delaware on May31, 2001, incorporated herein by reference to Exhibit 3.(a) to Financial's Quarterly Report on Form 10-Q (File No. 001-9305) for the quarterly period ended June 30, 2001.
	(b)	Amended and Restated By-Laws of Financial, incorporated herein by reference to Exhibit 3. (b)(1) to Financial's Annual Report on Form 10-K (File No. 1-9305) for fiscal year ended July 30, 1993.
4.		Registration Rights Agreement dated February 28, 2007 of Financial, incorporated herein by reference to Financial's Current Report on Form 8-K/A (File No. 1-09305) filed March 6, 2007.
10.	(a)	Form of Indemnification Agreement with directors dated as of June 30, 1987, incorporated herein by reference to Exhibit10.2 to Financial's Current Report on Form 8-K (date of earliest event reported - June 22, 1987) filed July 14, 1987.
	(b)	Dividend Reinvestment and Stock Purchase Plan of Financial, incorporated herein by reference to Financial's Registration Statement on Form S-3 (Registration File No. 33-53699) filed May 18, 1994.
	I	Amended and Restated 1997 Incentive Plan of Financial, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-84717) filed on August 6, 1999. *
	(d)(1)	Employment Letter with Ronald J. Kruszewski, incorporated herein by reference to Exhibit 10.(l) to Financial's Annual Report on Form 10-K (File No. 1-9305) for the year ended December 31, 1997.*
	(d)(2)	Stock Unit Agreement with Ronald J. Kruszewski, incorporated herein by reference to Exhibit 10.(j)(2) to Financial's Annual Report on Form 10-K (File No. 1-9305) for the year ended December 31, 1998. *
	(e)	1999 Executive Incentive Performance Plan of Financial, incorporated herein by reference to Annex B of Financial's Proxy Statement for the 1999 Annual Meeting of Stockholders filed March 26, 1999. *
	(f)	Equity Incentive Plan for Non-Employee Directors of Financial, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-52694) filed December 22, 2000. *
	(g)(1)	Stifel, Nicolaus & Company, Incorporated Wealth Accumulation Plan, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-60506) filed May 9, 2001. *
	(g)(2)	Stifel, Nicolaus & Company, Incorporated Wealth Accumulation Plan Amendment No. 1, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-105759) filed June 2, 2003. *
	(h)	Stifel Nicolaus Profit Sharing 401(k) Plan, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-60516) filed May 9, 2001. *
	(i)(1)	Stifel Financial Corp. 2001 Incentive Plan, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-82328) filed February 7, 2002. *
	(i)(2)	Stifel Financial Corp. 2001 Incentive Plan Amendment No. 1, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-105756) filed June 2, 2003. *
	(i)(3)	Stifel Financial Corp. 2001 Incentive Plan Amendment No. 2, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-140662) filed February 13, 2007. *
	(j)	Stock Unit Agreement with James M. Zemlyak dated January 11, 2000, incorporated herein by reference to Exhibit 10.(s) to Financial's Annual Report on Form 10-K / A Amendment No. 1(File No. 1-9305) for the year ended December 31, 2001, filed on April 9, 2002. *
	(k)	Stock Unit Agreement with Scott B. McCuaig dated December 20, 1998, incorporated herein by reference to Exhibit 10.(t) to Financial's Annual Report on Form 10-K / A Amendment No. 1(File No. 1-9305) for the year ended December 31, 2001, filed on April 9, 2002. *
	(l)	Amended and Restated Promissory Note dated December 21, 1998, from Ronald J. Kruszewski payable to Financial, incorporated herein by reference to Exhibit 10.(u) to Financial's Annual Report on Form 10-K / A Amendment No. 1 (File No. 1-9305) for the year ended December 31, 2001, filed on April 9, 2002. *
	(m)(1)	Third Amendment to Lease by and among EBS Building, L.L.C., Stifel Financial Corp., and Stifel, Nicolaus & Company, Incorporated, dated September 1, 1999, incorporated herein by reference to EBS Building, L.L.C.'s Annual Report on Form 10-K(File No. 000-24167) for the year ended December 31, 2001.
	(m)(2)	Fourth Amendment to Lease by and among EBS Building, L.L.C., Stifel Financial Corp., and Stifel, Nicolaus & Company, Incorporated, dated November 1, 1999, incorporated herein by reference to EBS Building, L.L.C.'s Annual Report on Form 10-K(File No. 000-24167) for the year ended December 31, 2001.
	(m)(3)	Fifth Amendment to Lease by and among EBS Building, L.L.C., Stifel Financial Corp., and Stifel, Nicolaus & Company, Incorporated dated June 11, 2001, incorporated herein by reference to EBS Building, L.L.C.'s Annual Report on Form 10-K(File No. 000-24167) for the year ended December 31, 2001.
	(n)	Stifel Financial Corp. 2003 Employee Stock Purchase Plan, incorporated herein by reference to Financial's Registration Statement on Form S-8 (Registration File No. 333-100414) filed October 8, 2002. *
	(o)(1)	Acquisition agreement by and between Stifel Financial Corp. and Citigroup Inc., incorporated herein by reference to Exhibit 10 to Financial's quarterly report on Form 10-Q/A No. 1 (File No. 1-9305) for the quarterly period ended September 30, 2005.
	(o)(2)	Amendment No.1 to Acquisition Agreement by and between Stifel Financial Corp. and Citigroup Inc., incorporated herein by reference to Exhibit 10.(v)(2) to Financial's Annual Report on Form 10-K (File No. 1-9305) for the year ended December 31, 2005, filed on March 16, 2006. .
	(o)(3)	Amendment No.2 to Acquisition Agreement by and between Stifel Financial Corp. and Citigroup Inc., incorporated herein by reference to Exhibit 10.(v)(3) to Financial's Annual Report on Form 10-K (File No. 1-9305) for the year ended December 31, 2005, filed on March 16, 2006.
	(p)	Employment Agreement with Richard Himelfarb dated September 6, 2005, incorporated herein by reference to Exhibit 10.(p) to Financial's Annual Report on Form 10-K/A Amendment No. 1 (File No. 1-9305) for the year ended December 31, 2005, filed on January 26, 2007. *
	(q)	Employment Agreement with Thomas Mulroy dated September 7, 2005, incorporated herein by reference to Exhibit 10.(q) to Financial's Annual Report on Form 10-K/A Amendment No. 1 (File No. 1-9305) for the year ended December 31, 2005, filed on January 26, 2007. *
	(r)	Employment Agreement with Joseph Sullivan dated September 6, 2005, incorporated herein by reference to Exhibit 10.(r) to Financial's Annual Report on Form 10-K/A Amendment No. 1 (File No. 1-9305) for the year ended December 31, 2005, filed on January 26, 2007. *
	(s)	Agreement and Plan of Merger, dated as of November 20, 2006, by and among Stifel Financial Corp., FSFC Acquisition Co. and First Service Financial Company incorporated herein by reference to Exhibit 2.1 to Financial's Current Report on Form 8-K (date of earliest event reported-November 20, 2006) filed on November 20, 2006).
	(t)(1)	Office Sublease Agreement by and between Deutsch Bank Securities, Inc. (Lessor) and Stifel, Nicolaus & Company, Incorporated (Lessee), filed herewith.
	(t)(2)	Office Lease Agreement by and between ABB South Street Associates, LLC (Landlord) and Stifel, Nicolaus & Company, Incorporated (Tenant), filed herewith.
	(u)	Agreement and Plan of Merger, dated as of January 8, 2007 by and among Stifel Financial Corp., SF RB Merger Sub, Inc., BankAtlantic Bancorp, Inc. and Ryan Beck Holdings, Inc. incorporated herein by reference to Exhibit 2.1 to Financial's Current Report on Form 8-K / A (date of earliest event reported-January 8, 2007) filed on January 12, 2007.
	(v)(1)	Promissory Note dated as of February 1, 2007 by and between Stifel Financial Corp. and the Mayor and City Council of Baltimore, a body politic and corporate and political subdivision of the State of Maryland, by and through the Department of Housing and Community Development, c/o City of Baltimore Development Corporation, filed herewith.
	(v)(2)	Loan Agreement dated as of February 1, 2007 by and between Stifel Financial Corp. and the Mayor and City Council of Baltimore, a body politic and corporate and political subdivision of the State of Maryland, by and through the Department of Housing and Community Development, c/o City of Baltimore Development Corporation, filed herewith.
21.		List of Subsidiaries of Stifel Financial Corp., filed herewith.
23.		Consent of Independent Registered Public Accounting Firm, filed herewith.
31(i).1		Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31(i).2		Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.		Certification pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit is furnished to the SEC.

* Management contract or compensatory plan or arrangement.

Page 95

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EXHIBIT 21

STIFEL FINANCIAL CORP. AND SUBSIDIARIES
SUBSIDIARIES OF STIFEL FINANCIAL CORP.⁽¹⁾

Name	State (Jurisdiction) of Incorporation or Organization	Names Under Which Subsidiary Does Business
Stifel, Nicolaus & Company, Incorporated	Missouri	Stifel, Nicolaus & Company, Incorporated
Stifel Nicolaus Insurance Agency, Incorporated (2)	Missouri	Stifel Nicolaus Insurance Agency, Incorporated
Century Securities Associates, Inc.	Missouri	Century Securities Associates, Inc.
CSA Insurance Agency, Incorporated (3)	Missouri	CSA Insurance Agency, Incorporated
Stifel Venture Corp.	Missouri	Stifel Venture Corp.
Stifel Asset Management Corp.	Missouri	Stifel Asset Management Corp.
Stifel CAPCO, L.L.C.	Missouri	Stifel CAPCO, L.L.C.
Stifel CAPCO II, L.L.C.	Missouri	Stifel CAPCO II, L.L.C.
Hanifen, Imhoff Inc.	Colorado	Hanifen, Imhoff Inc.
Stifel Nicolaus Limited	England and Wales	Stifel Nicolaus Limited
Ryan Beck Holdings, Inc. (4)	New Jersey	Ryan Beck Holdings, Inc.
Ryan Beck & Co., Inc. (4)	New Jersey	Ryan Beck & Co., Inc.

(1) Does not include corporations in which registrant owns 50% or less of the stock.
⁽²⁾ Wholly-owned subsidiary of Stifel, Nicolaus & Company, Incorporated.
⁽³⁾ Wholly-owned subsidiary of Century Securities Associates, Inc.
⁽⁴⁾ On February 28, 2007, the Company closed on the acquisition of Ryan Beck Holdings, Inc. and its wholly- owned broker-dealer subsidiary Ryan Beck & Company, Inc. from BankAtlantic Bancorp, Inc.

Stifel Financial Capital Trust I and Stifel Financial Capital Trust II are wholly-owned subsidiaries of Stifel Financial Corp; however, they are considered Special Purpose Entities under the provisions of the Financial Accounting Standards Board Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities, and not consolidated.

EX-21

Stifel Financial Corp.-2006 Form 10-K Exh. 21

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the registration statements of Stifel Financial Corp. and Subsidiaries on Form S-8 (File Numbers 333-37805, 333-37807, 333-84717, 333-52694, 333-60506, 333-60516, 333-100414, 333-105756, 333-105759, and 333-140662) and on Form S-3 (File Numbers 33-53699, 333-41304, and 333-84952) of our reports dated March 16, 2007, relating to the consolidated financial statements and financial statement schedule of Stifel Financial Corp. and Subsidiaries and management's report on the effectiveness of the internal control over financial reporting, appearing in this Annual Report on Form 10-K of Stifel Financial Corp. and Subsidiaries for the year ended December 31, 2006.

/s/ Deloitte & Touche LLP

St. Louis, Missouri
March 16, 2007

EX-31.1

EXHIBIT 31(i).1
CERTIFICATION

I, Ronald J. Kruszewski, certify that:

1. I have reviewed this annual report on Form 10-K of Stifel Financial Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
3. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
4. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2007	By /s/ Ronald J. Kruszewski
	Ronald J. Kruszewski President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31(i).2
CERTIFICATION

I, James M. Zemlyak, certify that:

1. I have reviewed this annual report on Form 10-K of Stifel Financial Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
3. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
4. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2007	By /s/ James M. Zemlyak
	James M. Zemlyak Chief Financial Officer (Principal Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 *

In connection with the Annual Report of Stifel Financial Corp. and subsidiaries on Form 10-K for the year ending December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

	STIFEL FINANCIAL CORP.
	(Registrant)
Date: March 15, 2007	By /s/ Ronald J. Kruszewski
	Ronald J. Kruszewski President and Chief Executive Officer (Principal Executive Officer)
Date: March 15, 2007	By /s/ James M. Zemlyak
	James M. Zemlyak Chief Financial Officer (Principal Financial Officer)

* A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Commission or its staff upon request.

EX-10

OFFICE LEASE AGREEMENT

By and Between

ABB SOUTH STREET ASSOCIATES, LLC
("Landlord")

and

STIFEL, NICOLAUS & COMPANY, INCORPORATED

("Tenant")

* * * * * *

Alex Brown Building

One South Street

Baltimore, Maryland 21202

Table of Contents		Page
1.	Basic Lease Terms	1
2.	Premises	2
3.	Term and Commencement of Term	3
4.	Rent	4
5.	Intentionally omitted	5
6.	Use	6
7.	Assignment and Subletting	7
8.	Improvements and Fixtures	8
9.	Utilities and Services	9
10.	Rights of Landlord	10
11.	Liability	11
12.	Insurance	12
13.	Fire or Casualty	13
14.	Eminent Domain	14
15.	Subordination and Estoppel Certificates	15
16.	Default and Remedies	16
17.	Bankruptcy	17
18.	Payment of Tenant's Obligations by Landlord and Unpaid Rent	18
19.	Voluntary Surrender	19
20.	Abandonment of Personal Property	20
21.	Hold-Over	21
22.	Options to extend term	22
23.	Parking	23
24.	Notices	24
25.	Brokers	25
26.	Environmental Concerns	26
27.	Landlord's Lien	27
28.	Rules and Regulations	28
29.	Quiet Enjoyment	29
30.	USA Patriot act and anti-terrorism laws	30
31.	Right of First Offer	31
32.	Exterior Signage	32
33.	Rooftop Communication Equipment	33
34.	Supplemental HVAC System	34
35.	Miscellaneous Provisions	35

OFFICE LEASE AGREEMENT

THIS OFFICE LEASE AGREEMENT (this "Lease") is made as of the _____ day of ________, 2006 (the "Effective Date"), by and between ABB SOUTH STREET ASSOCIATES, LLC, a Maryland limited liability company ("Landlord"), and STIFEL, NICOLAUS & COMPANY, INCORPORATED, a Missouri corporation ("Tenant"), who agree as follows:

1. Basic Lease Terms.

The following terms shall have the following meanings in this Lease:

Premises:	Approximately 75,724 rentable square feet of space comprising the entire fifteenth (15th), sixteenth (16th), seventeenth (17th) and thirtieth (30th) floors of the Building (described in Section 1.b., below), as outlined on the floor plan attached hereto as Exhibit A.
Building:	Alex Brown Building, One South Street, Baltimore, Maryland (the "Building").
Commencement Date:	January 1, 2012
Term:	Six (6) years
Initial Annual Base Rent*:	$2,129,400.96 per annum $177,450.08 per month
[*subject to escalation as provided for in this Lease]
Base Year (Operating Expenses): Base Year (Real Estate Taxes):	Calendar Year 2011 The period July 1, 2010 thorough June 30, 2011, inclusive
Tenant's Pro Rata Share (Operating Expenses):	16.65%*
Tenant's Pro Rata Share (Real Estate Taxes):	15.86%*
[*subject to adjustments provided for in this Lease]
Address for Notices:
To Landlord: With a copy to:	ABB South Street Associates, LLC 444 Brickell Avenue Suite 900 Miami, Florida 33131 Attention: Chief Operating Officer ABB South Street Associates, LLC c/o ACP Mid-Atlantic, LLC, as Agent 2350 Corporate Park Drive Suite 110 Herndon, Virginia 20171 Attention: Asset Manager
And a copy to:	Holland & Knight llp 2099 Pennsylvania Avenue, N.W. Suite 100 Washington, D.C. 20006 Attention: David S. Kahn, Esquire
To Tenant:	At the Premises
With a copy to:	Stifel, Nicolaus & Company, Incorporated One Financial Plaza 501 N. Broadway St. Louis, MO 63102 Attention: Chief Financial Officer
And a copy to:	Stifel, Nicolaus & Company, Incorporated One Financial Plaza 501 N. Broadway St. Louis, MO 63102 Attention: Office of General Counsel
Extension Options:	Two (2) five (5) year options

2. Premises.

1. Premises. In consideration of Tenant's agreement to pay Annual Base Rent (hereinafter defined) and Additional Rent (hereinafter defined) and subject to the covenants and conditions hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby hires and leases from Landlord, upon the terms and conditions set forth herein, those certain premises described in Section 1.a. hereof and located in the Building (the "Premises"). The Premises are located in the Building described in Section 1.b. hereof. The lease of the Premises to Tenant includes the non-exclusive right, together with other tenants of the Building and members of the public, to use the common public areas of the Building (including the interior stairwells) and the land on which the Building is situated (the "Land"), but includes no other rights not specifically set forth.
2. Improvements. Landlord shall deliver the Premises to Tenant in its "as-is" condition without (i) any obligation on Landlord's part to undertake or, except for the Improvement Allowance (as defined in the Work Agreement (hereinafter defined)) to be provided by Landlord pursuant to the Work Agreement, pay for, any improvements or alterations therein; or (ii) any representations or warranties regarding the condition thereof. After the Commencement Date (hereinafter defined), Tenant shall, at Tenant's sole cost and expense, subject to the application of the Improvement Allowance, construct in the Premises the Tenant Improvements (defined in the Work Agreement) described in the Work Agreement attached hereto as Exhibit B (the "Work Agreement"), in substantial accordance with the terms and conditions of the Work Agreement. In the event that Landlord and Tenant have not finally agreed upon the scope and details of the Tenant Improvements as of the Commencement Date, Tenant's submission to Landlord of plans and specifications detailing such work shall be subject to Landlord's written approval in accordance with the Work Agreement. The Tenant Improvements shall be subject to Landlord's prior written approval, which approval shall be granted or denied in accordance with the terms and conditions of the Work Agreement, shall comply with all applicable building codes, laws and regulations (including without limitation the Americans with Disabilities Act), shall not require any changes to or modifications of any of the mechanical, electrical, plumbing or other systems of the Building, and shall otherwise be constructed in strict accordance with the terms of the Work Agreement. The cost of all design, architectural and engineering work, demolition costs, construction costs, contractors' overhead and profit, licenses and permits, and all other costs and expenses incurred in connection with the Tenant Improvements shall be at Tenant's sole cost and expense, subject to the application of the Improvement Allowance. Landlord shall disburse the Improvement Allowance as provided in the Work Agreement, provided, however, that Landlord shall have no obligation to disburse any portion of the Improvement Allowance prior to the Commencement Date. All costs incurred with respect to the Tenant Improvements in excess of the Improvement Allowance shall be paid by Tenant as provided in the Work Agreement. Except as otherwise expressly set forth in the Work Agreement, any portion of the Improvement Allowance not expended by Tenant in undertaking the Tenant Improvements within twelve (12) months after the Commencement Date shall be retained by Landlord.
3. Deutsche Bank Sublease. Landlord and Tenant hereby expressly acknowledge and agree that: (i) Tenant is currently in possession of (or, shortly after the Effective Date, will be in possession of) the Premises pursuant to that certain Sublease dated November __, 2006 (the "DB Sublease") by and between Deutsche Bank Securities, Inc. ("Deutsche Bank"), as sublandlord, and Tenant, as subtenant, the term of which expires on the date (the "Sublease Expiration Date") immediately preceding the Commencement Date; (ii) the terms and conditions contained herein shall govern Tenant's occupancy of: (a) the Premises from and after the Sublease Expiration Date, and (b) any Available Space (hereinafter defined) from and after the applicable ROFO Space Commencement Date (hereinafter defined) pursuant to the terms of Section 31, below; and (iii) Landlord has evidenced its consent to the DB Sublease pursuant to that certain consent letter by and among Landlord, Deutsche Bank and Tenant (the "Landl ord Consent Agreement").
4. Riser Access. In connection with Tenant's leasing of the Premises, Landlord hereby grants to Tenant, at no additional cost, the right to (i) continue to use space in the risers of the Building which Tenant utilized pursuant to the DB Sublease to install such cabling and wiring (collectively, the "Existing Cabling") therein as was necessary for Tenant to provide telecommunications access services to the Premises; and (ii) from and after the Commencement Date, use additional space in the risers of the Building to install additional cabling and wiring (the "Additional Cabling") therein as necessary for Tenant to provide telecommunications access services to the Premises. As used herein, the Existing Cabling and the Additional Cabling shall sometimes be hereinafter collectively referred to as the "Telecom Cabling". Landlord shall have the right from time to time to promulgate reasonable rules and regulations governing Tenant's use of the Telecom Cabling. Tenant shall be permitte d to install the Telecom Cabling provided that Landlord has previously approved plans and specifications prepared by Tenant indicating the locations of such Telecom Cabling in the Building, and provided further that such Telecom Cabling (1) does not affect the structure or safety of the Building; (2) does not affect the electrical, mechanical or any other system of the Building or the functioning thereof; and (3) does not interfere with the operation of the Building or the provision of services or utilities to Tenant or any other tenant of the Building. Notwithstanding the foregoing, in no event shall Tenant be entitled to use more than the greater of (x) Tenant's proportionate share of space in the Building risers, or (y) the riser space occupied by the Existing Cabling, for the installation of Telecom Cabling. Tenant shall install and maintain the Telecom Cabling in compliance with all present and future laws, rules and regulations of any local, State or Federal authority having jurisdiction with respect thereto, including, without limitation, the laws, rules and regulations of the FCC, the State of Maryland and any other governmental and quasi-governmental authorities having appropriate jurisdiction over the Building or Tenant's use of the Telecom Cabling. Tenant shall obtain all permits, licenses, variances, authorizations and approvals that may be required in order to install and maintain such Telecom Cabling. Tenant shall, at its sole cost and expense, be responsible for the insurance and maintenance of the Telecom Cabling and its compliance with all applicable laws, rules and regulations. At the expiration or earlier termination of the Lease, at Tenant's sole cost, the Telecom Cabling shall be removed from the Building (including from the Building risers) and the area where the Telecom Cabling was located shall be restored to its condition existing prior to such installation in a manner and with materials determined by Landlord. Tenant hereby authorizes Landlord to remove and dispose of the Telecom Cabling and charge Tenant for all reasonable costs and expenses incurred. Tenant agrees that Landlord shall not be liable for any property disposed of or removed by Landlord. Tenant's obligation to perform and observe this covenant shall survive the expiration or earlier termination of the Term of the Lease. Tenant shall indemnify and save Landlord harmless from and against any and all loss, costs, liabilities, damages, judgements, and expenses (including reasonable attorney's fees) arising in connection with the installation, operation, removal and maintenance of the Telecom Cabling. Subject to the terms of this Section 2d, upon reasonable prior notice to Landlord, Tenant shall have access to the risers of the Building during normal business hours as may be reasonably necessary for the installation, maintenance, removal and/or restoration of the Telecom Cabling.

3. Term and Commencement of Term.

This Lease shall be in full force and effect from the Effective Date. The term of this Lease (the "Term") shall commence on January 1, 2012 (the "Commencement Date") and shall expire on December 31, 2017 (the "Lease Expiration Date"), unless otherwise extended or terminated in accordance with the terms hereof. As used herein, the term "Lease Year" means (i) each twelve (12)-month period commencing on the Commencement Date, and (ii) each successive period of twelve (12) calendar months thereafter during the Term. Reference is made to the form of Declaration of Commencement Date (the "Declaration") attached hereto as Exhibit C. After the Commencement Date, Landlord shall complete the Declaration and deliver the completed Declaration to Tenant. Within ten (10) business days after Tenant receives the completed Declaration from Landlord, Tenant shall execute and return the Declaration to Landlord to confirm the Commencement Date and the Term. Failure to execute t he Declaration shall not affect the commencement or expiration of the Term. No delay by Tenant in completing the Tenant Improvements shall delay or otherwise affect the Commencement Date or Tenant's obligation to pay Rent from and after such date.

4. Rent.

Subject to Section 4a(iii), below, beginning on the Commencement Date, Tenant covenants and agrees to pay as Rent (hereinafter defined) for the Premises the following amounts set forth in this Section 4 and as otherwise provided in this Lease. "Additional Rent" shall mean such costs, expenses, charges and other payments to be made by (or on behalf of) Tenant to Landlord (or to a third party if required under this Lease), whether or not the same be designated as such. "Rent" or "rent" shall mean all Annual Base Rent and Additional Rent due hereunder.

1. Annual Base Rent.
1. Subject to Section 4a(iii), during each Lease Year, Tenant shall pay annual base rent in the amounts set forth immediately below (the "Annual Base Rent"), which amounts shall be payable in equal monthly installments (the "Monthly Base Rent") as set forth immediately below:

Lease Year	Annual Base Rent	Monthly Base Rent
1	$2,129,400.96	$177,450.08
2	$2,182,636.08	$181,886.34
3	$2,237,201.88	$186,433.49
4	$2,293,131.96	$191,094.33
5	$2,350,460.28	$195,871.69
6	$2,409,221.76	$200,768.48

The Annual Base Rent and Monthly Base Rent amounts set forth in the foregoing chart are based on the Premises containing 75,724 rentable square feet of office space. Landlord and Tenant hereby acknowledge and agree that if the number of rentable square feet of office space comprising the Premises changes prior to the Commencement Date, the Annual Base Rent and Monthly Base Rent amounts set forth in the foregoing chart shall be adjusted pursuant to lease amendment(s) or other documentation entered into by and between Landlord and Tenant.

2. In addition to the payment of Annual Base Rent, Tenant shall be responsible for the payment of Tenant's Pass-Through Costs (hereinafter defined) pursuant to Section 4.b. hereof.
3. Notwithstanding any other provision of this Section 4 to the contrary, provided that Tenant is not in default of this Lease at any time during the Abatement Period (hereinafter defined), Landlord hereby agrees to abate Monthly Base Rent for the period (the "Abatement Period") beginning on the Commencement Date and ending on the date which is the earlier to occur of: (1) June 30, 2012; or (2) the date first occurring after the Commencement Date on which there occurs a monetary default by Tenant under this Lease or a non-monetary default by Tenant under this Lease beyond any applicable notice or cure period. On the day immediately following the last day of the Abatement Period, and thereafter throughout the Term, Tenant shall pay Landlord full Annual Base Rent in the amounts set forth in this Section 4.
2. Tenant's Pass-Through Costs.
1. As used in this Lease:
1. "Operating Expenses" shall mean any and all expenses, costs and disbursements (but not specific costs billed to and paid by specific tenants) of every kind and nature incurred by Landlord in connection with the ownership, management, operation, maintenance, servicing and repair of the Building and appurtenances thereto, including, without limitation, the common areas thereof, and the Land, including, but not limited to, employees' wages, salaries, welfare and pension benefits and other fringe benefits; payroll taxes; telephone service; painting of common areas of the Building; exterminating service; detection and security services; concierge services; sewer rents and charges; premiums for fire and casualty, liability, rent, workmen's compensation, sprinkler, water damage and other insurance; repairs and maintenance; building supplies; uniforms and dry cleaning; snow removal; the cost of obtaining and providing electricity, water and other public utilities to all areas of the Bui lding; trash removal; janitorial and cleaning supplies; and janitorial and cleaning services; window cleaning; service contracts for the maintenance of elevators, boilers, HVAC and other mechanical, plumbing and electrical equipment; fees for all licenses and permits required for the ownership and operation of the Building; business license fees and taxes, including those based on Landlord's rental income from the Building; the rental value of the management office maintained in the Building, if any (provided, however, to the extent that the management office maintained in the Building serves other building(s) owned or managed by Landlord, then Operating Expenses shall include only the rental value of the management office that Landlord reasonably allocates to the Building); all costs of operating, maintaining and replacing equipment in the health and fitness facility located in the Building (which costs shall be reduced by the amount of monthly user fees actuall y collected by Landlord with respect to the use of such fitness facility by tenants and occupants of the Building); sales, use and personal property taxes payable in connection with tangible personal property and services purchased for the management, operation, maintenance, repair, cleaning, safety and administration of the Building; legal fees; accounting fees relating to the determination of Operating Expenses and the tenants' share thereof and the preparation of statements required by tenant's leases; management fees, whether or not paid to any person having an interest in or under common ownership with Landlord, provided that such management fees are comparable to the management fees charged in connection with the management of comparable first-class/trophy office buildings in downtown Baltimore, Maryland providing services similar to, and to the same level as, those provided at the Building, however, in no event shall such management fees exceed four percent (4%) of the gross rentals of the Building; p urchase and installation of indoor plants in the common areas; and landscaping maintenance and the purchase and replacement of landscaping services, plants and shrubbery. If Landlord makes an expenditure for a capital improvement to the Building (or any portion thereof) by installing energy conservation or labor-saving devices to reduce Operating Expenses, or to comply with any law, ordinance or regulation pertaining to the Building which was not in effect on the Commencement Date (each, a "Permitted Capital Expenditure"), and if, under generally accepted accounting principles, such expenditure is not a current expense, then the cost thereof shall be amortized over a period equal to the useful life of such improvement, determined in accordance with generally accepted accounting principles, and the amortized costs allocated to each calendar year during the Term, together with an imputed interest amount calculated on the unamortized portion thereof using an interest rate of the Prime Rate (hereinaft er defined) plus four percent (4%) per annum, shall be treated as an Operating Expense. In the event that any costs with respect to the operation and management of more than one building are allocated among the Building and any other building owned by Landlord, the actual costs so allocated to the Building shall be included in the calculation of Operating Expenses. Notwithstanding anything to the contrary contained in this Section 4.b(i)(1), Operating Expenses shall not include (i) costs of capital improvements or capital expenditures determined under generally accepted accounting principles, except for Permitted Capital Expenditures; (ii) interest, principal, late charges, prepayment penalties or premiums on any debt owed by Landlord (including any mortgage debt) and depreciation; (iii) legal fees, space planners' fees, real estate brokers' leasing commissions and advertising expenses incurred in connection with the leasing of space in the Building; (iv) costs for which Landlord is reimbursed by insurance (by Landlord's carrier, Tenant's carrier or by any third party's insurance carrier); (v) attorneys' fees, costs and expenses incurred by Landlord in connection with disputes with tenants or prospective tenants of the Building; (vi) any bad debt loss, rent loss, or reserves for replacements; (vii) costs associated with the operation of the limited liability company which constitutes Landlord, as opposed to costs associated with the operation of the Building; (viii) costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord's interest in the Building; (ix) litigation costs relating to suits filed by or against Landlord and/or the Building (expressly excluding tax assessment appeals); (x) fines and penalties arising out of the late payment by Landlord of Real Estate Taxes or other amounts or charges relating to the Building; (xi) amounts paid as ground rent by Landlord; (xii) the portion of any costs paid to affiliates of Landlord for services at the Building to the extent that such costs exceed the cost of such services if rendered by unaffiliated third parties on an arms-length basis; (xiii) the cost of all items and services with respect to which Landlord receives reimbursement (excluding reimbursement by way of Tenant's Pass-Through Costs paid by Tenant or other tenants); (xiv) costs incurred by Landlord due to the violation by Landlord of the terms and conditions of any space lease in the Building, provided that such costs would not have been incurred by Landlord but for such violation; (xv) costs incurred in connection with the sale, financing, refinancing, mortgaging or sale of the Building, including brokerage commissions, attorneys' and accountants' fees, closing costs, title insurance premiums, transfer taxes and interest charges; (xvi) costs of correcting any violations of law applicable to the Building, which violations existed on the Effective Date; or (xvii) that portion of the operating expenses of the Building that Landlord reasonably allocates to the retail portion of the Building, or the amount of operating expenses paid by retail tenants of the Building, whichever is less.
2. "Real Estate Taxes" shall mean all taxes, assessments and charges levied upon or with respect to the Land (or any portion thereof), the Building, and any improvements adjacent thereto (computed as payable in installments as permitted by law regardless of whether so paid), including, without limitation, vault rents, if any, franchise taxes, any tax, fee or excise on rents, on the square footage of the Premises, on the act of entering into this Lease, on the occupancy of Tenant, on account of the rent hereunder or the business of renting space now or hereafter levied or assessed against Landlord by the United States of America or the state, county, city or town in which the Building are located, or any political subdivision, public corporation, district or other political or public entity; and shall also include any other tax to the extent that such tax is imposed in lieu of or in addition to such Real Estate Taxes. Reasonable legal fees, costs and disbursements incurred by Landl ord in connection with any proceedings for appeal or reduction of any Real Estate Taxes shall also be considered Real Estate Taxes for the year in question. In the event that Real Estate Taxes for the Land and the Building are not separately assessed, Landlord shall allocate to the Land and the Building the portion of the total Real Estate Tax assessment that fairly represents the relative values of all properties that have been assessed together. Real Estate Taxes shall not include federal, state or local income taxes or estate, inheritance, franchise, capital gain, capital stock or transfer or recordation taxes.
3. "Tenant's Pro Rata Share (Operating Expenses)," as of the date hereof, shall be as provided in Section 1.g., representing the ratio that the rentable area of the Premises bears to the total rentable area of office space in the Building. If either the rentable area of the Premises or the total rentable area of the Building, shall be increased or decreased, as reasonably determined by Landlord, Tenant's Pro Rata Share (Operating Expenses) shall be adjusted accordingly.
4. "Tenant's Pro Rata Share (Real Estate Taxes)," as of the date hereof, shall be as provided in Section 1.g., representing the ratio that the rentable area of the Premises bears to the total rentable area of the Building. If either the rentable area of the Premises or the total rentable area of the Building, shall be increased or decreased, as reasonably determined by Landlord, Tenant's Pro Rata Share (Real Estate Taxes) shall be adjusted accordingly.
5. "Base Year (Operating Expenses)" means calendar year 2011.
6. "Base Year (Real Estate Taxes)" means the period July 1, 2010 through June 30, 2011, inclusive.
2. If, in any calendar year during the Term, the total amount of Operating Expenses for the Building exceed the amount of Operating Expenses in the Base Year (Operating Expenses), then Tenant shall pay to Landlord, as Additional Rent, an amount which is the product of (1) the amount of such increase in Operating Expenses, multiplied by (2) Tenant's Pro Rata Share (Operating Expenses). Tenant's Pro Rata Share (Operating Expenses) of increases in Operating Expenses for any partial calendar year during the Term shall be determined by multiplying the amount of Tenant's Pro Rata Share (Operating Expenses) of increases in Operating Expenses for the full calendar year by a fraction, the numerator of which is the number of days during such calendar year falling within the Term and the denominator of which is three hundred sixty-five (365). If in any calendar year during the Term, the amount of Real Estate Taxes exceeds the amount of Real Estate Taxes for the Base Year (Real Estate Tax es), then Tenant shall pay, as Additional Rent, an amount which is the product of (x) the amount of such increase in Real Estate Taxes, multiplied by (y) Tenant's Pro Rata Share (Real Estate Taxes). Tenant's Pro Rata Share (Real Estate Taxes) of increases in Real Estate Taxes for any partial calendar year during the Term shall be determined by multiplying the amount of Tenant's Pro Rata Share (Real Estate Taxes) of increases in Real Estate Taxes for the full calendar year by a fraction, the numerator of which is the number of days during such calendar year falling within the Term and the denominator of which is three hundred sixty-five (365).
3. If at any time during the Base Year (Operating Expenses), or during any subsequent calendar year ("Subsequent Year"), less than ninety-five percent (95%) of the total rentable square feet of office space in the Building is occupied by tenants, the amount of Operating Expenses for the Base Year (Operating Expenses), or for any such Subsequent Year, as the case may be, shall be deemed to be the amount of Operating Expenses as reasonably estimated by Landlord that would have been incurred if the percentage of occupancy of the Building during the Base Year (Operating Expenses) or any such Subsequent Year was ninety-five percent (95%). If at any time during any calendar year, any part of the Building is leased to a tenant (hereinafter referred to as a "Special Tenant") who, in accordance with the terms of its lease, provides its own utilities, cleaning or janitorial services or other services or is not otherwise required to pay a share of Operating Expenses in accordance with the methodolo gy set forth in this Section 4.b., and Landlord does not incur the cost of such services, Operating Expenses for such calendar year shall be increased by the additional costs for cleaning and janitorial services and such other applicable expenses as reasonably estimated by Landlord that would have been incurred by Landlord if Landlord had furnished and paid for cleaning and janitorial services and such other services for the space occupied by the Special Tenant, or if Landlord had included such costs in "operating expenses" as defined in the Special Tenant's lease. In no event shall Landlord collect from tenants of the Building more than one hundred percent (100%) of the actual Operating Expenses incurred by Landlord in any calendar year during the Term.
4. During the month of December, 2012 (or as soon thereafter as is reasonably practicable), and thereafter during the month of December of each Lease Year (or as soon thereafter as is reasonably practicable), Landlord shall use reasonable efforts to furnish to Tenant a statement of Landlord's estimate of Tenant's Pass-Through Costs for the next calendar year. "Tenant's Pass-Through Costs" shall be an amount equal to the sum of (1) Tenant's Pro Rata Share (Operating Expenses) multiplied by the difference between Operating Expenses incurred during any calendar year during the Term, and Operating Expenses incurred in the Base Year (Operating Expenses); plus (2) Tenant's Pro Rata Share (Real Estate Taxes) multiplied by the difference between Real Estate Taxes for any calendar year during the Term and Real Estate Taxes incurred during the Base Year (Real Estate Taxes). Such statement shall show the amount of Tenant's Pass-Through Costs, if any, payable by Tenant for such calendar y ear pursuant to this Section 4.b. on the basis of Landlord's estimate. Subject to Section 4b(v), below, commencing on January 1, 2012, and continuing on each monthly rent payment date thereafter until further adjustment pursuant to this Section 4b(iv), Tenant shall pay to Landlord one-twelfth (1/12) of the amount of said estimated Tenant's Pass-Through Costs. Within one hundred and twenty (120) days after the expiration of each calendar year during the Term, Landlord shall furnish to Tenant a statement (the "Expense Statement") showing the actual Operating Expenses and Real Estate Taxes for such calendar year. The Expense Statement shall be conclusive and binding on Tenant, unless objected to in writing by Tenant within ninety (90) days following Tenant's receipt thereof. In case of an underpayment, Tenant shall, within thirty (30) days after the receipt of such statement, pay to Landlord an amount equal to such underpayment. In case of an overpayment, Landlord shall credit the next month ly rental payment(s) by Tenant with an amount equal to such overpayment. Additionally, if this Lease shall have expired, Landlord shall apply such excess against any sums due from Tenant to Landlord and shall refund any remainder to Tenant within one hundred and twenty (120) days after the expiration of the Term, or as soon thereafter as possible.
5. Notwithstanding any other provision of this Section 4b to the contrary, provided that Tenant is not in monetary default of this Lease (or is not in non-monetary default of this Lease beyond any applicable notice and cure period) at any time prior to or during the Additional Rent Abatement Period (hereinafter defined), Landlord hereby agrees to abate Tenant's Pass-Through Costs for the period (the "Additional Rent Abatement Period") beginning on Commencement Date and ending on the date which is the earlier to occur of: (1) December 31, 2012; or (2) the date first occurring after the Commencement Date on which there occurs a default by Tenant under this Lease. On the day immediately following the last day of the Additional Rent Abatement Period, and thereafter throughout the Term, Tenant shall pay Landlord Tenant's Pass-Through Costs pursuant to the terms of this Section 4b.
6. Tenant shall be entitled to the following audit right with respect to a Expense Statement delivered by Landlord. Such audit right shall be exercisable by Tenant's providing Landlord with written notice of Tenant's exercise of such audit right within ninety (90) days of Tenant's receipt of such Expense Statement, time being of the essence. Tenant's notice shall contain a statement of Tenant's reasonable objections to such Expense Statement. If, within forty-five (45) days after Landlord's receipt of Tenant's written notice, Landlord and Tenant are unable to resolve Tenant's objections, then not later than fifteen (15) days after the expiration of such forty-five (45)-day period Tenant shall deliver to Landlord written notice (the "Audit Notice") that it wishes to employ on an hourly rate (and not a contingency fee) basis an independent certified public accounting firm approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, t hat no such consent shall be required it Tenant employs on an hourly rate, and not on a contingency fee basis, a "Big Four" accounting firm) to inspect and audit Landlord's books and records at the Building relating to the objections raised in Tenant's notice. If Tenant elects to employ such accounting firm as set forth above, then Tenant shall deliver to Landlord a confidentiality and nondisclosure agreement reasonably satisfactory to Landlord executed by Tenant and such accounting firm, and provide Landlord not less than fifteen (15) days' notice of the date on which the accounting firm desires to examine Landlord's books and records at the Building during regular business hours; provided, however, that such date shall be between thirty (30) and ninety (90) days after Tenant delivers to Landlord the Audit Notice. Such audit shall be limited to a determination of whether the Expense Statement properly sets forth the Operating Expenses incurred by Landlord in accordance with the terms and conditions of thi s Lease. Except as otherwise expressly set forth below, all costs and expenses of any such audit shall be paid by Tenant. Notwithstanding anything contained herein to the contrary, Tenant shall be entitled to exercise its right to audit pursuant to this Section 4.b(vi) only in strict accordance with the foregoing procedures and each such audit shall relate only to the calendar year covered by the Expense Statement, except as may otherwise be expressly set forth below. As a condition precedent to exercising its audit rights, Tenant shall pay to Landlord all monies which Landlord claims are owing by Tenant, as shown on the Expense Statement. If on account of any demonstrated errors in the Expense Statement under audit, Tenant is entitled to a refund of the amount paid by Tenant for Tenant's Pass-Through Costs for the calendar year under audit because such Expense Statement overstated the amounts to which Landlord was entitled hereunder, Landlord shall credit the next monthly rental payment(s) by Tenant wit h an amount equal to such refund. If the Expense Statement under audit overstated Operating Expenses by more than four percent (4%), then Landlord shall promptly reimburse Tenant for its reasonable costs and expenses incurred in such audit (not to exceed Seven Thousand Five Hundred Dollars ($7,500.00)). In the event the audit reveals an underpayment by Tenant for Tenant's Pass-Through Costs, Tenant shall pay to Landlord an amount equal to such underpayment within thirty (30) days. Notwithstanding anything to the contrary contained in this Section 4.b(vi), if the Expense Statement under audit overstated the amount of Operating Expenses incurred by Landlord by more than four percent (4%) during the calendar year under audit (the "Audited Calendar Year"), Tenant shall have the right, pursuant to the terms of this Section 4.b(vi), to audit Landlord's books and records with respect to the Expense Statement delivered by Landlord for the calendar year which immediately preceded the Audited Calendar Year.
7. All monies received from Tenant as Tenant's Pass-Through Costs shall be received by Landlord to pay Operating Expenses and Real Estate Taxes of the Building and the Land. Notwithstanding the foregoing, Landlord shall have the right to commingle Tenant's Pass-Through Costs with other funds collected by Landlord.
8. Tenant's obligation to pay Tenant's Pass-Through Costs pursuant to the provisions of this Section 4.c. shall survive the expiration or other termination of this Lease with respect to any period during the Term hereof and with respect to any holdover period of occupancy following the expiration of the Term.
3. Payment of Rent. All Rent shall be paid in lawful money of the United States of America without deduction, diminution, set-off, counterclaim or prior notice or demand, at the office of Landlord as provided in Section 1.i. hereof or at such other place as Landlord may hereafter designate in writing, on the first day of every calendar month during the Term. All such payments shall be made by good checks (or by electronic transfer) payable to Landlord or such other person, firm or corporation as Landlord may hereafter designate in writing. No payment by Tenant or receipt and acceptance by Landlord of a lesser amount than the Monthly Base Rent or Additional Rent shall be deemed to be other than partial payment of the full amount then due and payable; nor shall any endorsement or statement on any check or any letter accompanying any check, payment of Rent or other payment, be deemed an accord and satisfaction; and Landlord may accept, but is not obligated to accept, such part ial payment without prejudice to the Landlord's right to recover the balance due and payable or to pursue any other remedy provided in this Lease or by law. If Landlord shall at any time or times accept Rent after it becomes due and payable, such acceptance shall not excuse a subsequent delay or constitute a waiver of Landlord's rights hereunder. Any Rent owed by Tenant to Landlord, including, without limitation, Annual Base Rent, Additional Rent, Tenant's Pass-Through Costs and Late Charges, which is not paid within five (5) business days after the date such payment is due shall bear interest from the due date at a rate equal to the prime rate on corporate loans quoted in the Wall Street Journal (the "Prime Rate") plus four percent (4%). In addition, if any amount of Rent required to be paid by Tenant to Landlord under the terms of this Lease is not paid within five (5) days after the date such payment is due, then in addition to paying the amount of Rent then due, Tenant shall pay to Landlord a l ate charge (the "Late Charge") equal to five percent (5%) of the amount of Rent then required to be paid; provided, however, that Landlord agrees to waive the first (1^st) such Late Charge in any Lease Year during the Term, provided that Tenant pays the Rent then due within five (5) days after Tenant's receipt of written notice from Landlord that such Rent is past-due. Payment of such Late Charge will not excuse the untimely payment of Rent. In the event Tenant makes any payment of Rent by check and said check is returned by the bank unpaid, Tenant shall pay to Landlord the sum of One Hundred Dollars ($100.00) to cover the costs and expenses of processing the returned check, in addition to the Rent payment and any other charges provided for herein. Any interest, Late Charge and other amounts charged hereunder shall constitute Additional Rent.
4. Separate Metering and Rent Reduction. Landlord may elect to discontinue the distribution or furnishing of electricity and/or water to the Premises if such services may feasibly be furnished directly to Tenant by the utility company supplying same. In the event of any such election by Landlord: (i) Landlord agrees to give reasonable advance notice of such discontinuance to Tenant; (ii) Landlord agrees to permit Tenant to receive electricity and/or water directly from the utilities supplying such service to the Building and to permit the existing feeders, risers, wiring, pipes and other facilities serving the Premises to be used by Tenant for such purpose to the extent they are suitable and safely capable of carrying Tenant's requirements; (iii) Landlord agrees to pay such charges and costs, if any, as such public utility may impose in connection with the installation of Tenant's meters; and (iv) the amount of Additional Rent payable in respect to the Operat ing Expenses shall be decreased appropriately to reflect such discontinuance. This Lease shall remain in full force and effect and such discontinuance shall not constitute an actual or constructive eviction, in whole or in part, or relieve Tenant from any of its obligations under this Lease.

5. INTENTIONALLY OMITTED.

6. Use.

1. Tenant covenants with the Landlord not to use the Premises for any purpose other than general office use for the conduct of the Tenant's business and for the Specific Authorized Uses (hereinafter defined), provided such Specific Authorized Uses are permitted under and are in compliance with all federal, state and municipal laws, ordinances, rules and regulations, including without limitation all zoning laws, ordinances and rules and regulations applicable to the Building. As used herein, the term "Specific Authorized Uses" shall mean the following uses: investment banking, securities brokerage, capital market investment activities, trading, investment advisory and related financial services and disaster recovery and data center. Tenant shall not use the Premises or allow the Premises to be used for any other purpose without the prior written consent of the Landlord. Tenant, at Tenant's expense, shall comply with all laws, codes, rules, orders, ordinances, directions, re gulation, and requirements of federal, state, county, and municipal authorities, now in force or which may hereafter be in force, which shall impose any duty upon Landlord or Tenant with respect to the condition, maintenance, use, occupation, operation or alteration of the Premises, or the conduct of Tenant's business therein, including, without limitation, the Americans With Disabilities Act, as amended and all applicable zoning, recycling and environmental laws and regulations. Tenant hereby agrees to indemnify and hold harmless Landlord and its agents, officers, directors and employees from and against any cost, damage, claim, liability and expense (including attorneys' fees) arising out of claims or suits brought by third parties against Landlord, its agents, officers, directors and employees alleging or relating to the failure of the Premises to comply with the terms of the Americans With Disabilities Act, as amended, or any other law or regulation applicable to the Premises and/or its occupancy by Ten ant. Tenant shall not use or permit the Premises or any part thereof to be used in any manner that constitutes waste, nuisance or unreasonable disturbances to other tenants of the Building or for any disorderly, unlawful or hazardous purpose and will not store or maintain therein any hazardous, toxic or highly combustible items other than usual and customary office supplies intended for Tenant's use and in such event, only in such amounts as permitted by applicable law. Tenant covenants not to change Tenant's use of the Premises without the prior written approval of Landlord.
2. Tenant shall not put the Premises to any use, the effect of which use is reasonably likely to cause cancellation of any insurance covering the Premises or the Building, or an increase in the premium rates for such insurance. In the event that Tenant performs or commits any act, the effect of which is to raise the premium rates for such insurance, Tenant shall pay Landlord the amount of the additional premium, as Additional Rent payable by Tenant upon demand therefor by Landlord. The Premises shall not be used for any illegal purpose or in violation of any regulation of any governmental body or the regulations or directives of Landlord's insurance carriers, or in any manner which interferes with the quiet enjoyment of any other tenant of the Building. Tenant will not install and connect to the base Building electrical system any electrical or other equipment, other than such equipment as is commonly used in modern offices, without first obtaining the prior written consent of Landlord , who may condition such consent upon the payment by Tenant of Additional Rent in compensation for excess consumption of water, electricity and/or other utilities, excess wiring and other similar requirements, and any changes, replacements or additions to any base building system, as may be occasioned by the operation of said equipment or machinery. All voice, data, video, audio, and other low-voltage control transport system cabling and/or cable bundles installed in the Building shall be (a) plenum rated and/or have a composition makeup suited for its environmental use in accordance with NFPA 70/National Electrical Code; (b) labeled every 3 meters with the Tenant's name and origination and destination points; (c) installed in accordance with all EIA/TIA standards and the National Electric Code; (d) installed and routed in accordance with a routing plan showing "as built" or "as installed" configurations of cable pathways, outlet identification numbers, locations of all wall, ceiling and floor penetrations, riser cable routing and conduit routing if applicable, and such other information as Landlord may request. The routing plan shall be available to Landlord and its agents at the Building upon request.
3. Unless such maintenance is the responsibility of Landlord pursuant to the terms of Section 9c, below, Tenant agrees to maintain the Premises, and the Tenant Improvements and other Alterations (hereinafter defined) therein, in good order, repair and condition during the Term at Tenant's sole cost and expense, and Tenant will, at the expiration or other termination of the Term, surrender and deliver the same and all keys in Tenant's possession, locks and other fixtures connected therewith (excepting only Tenant's personal property) in good order, repair and condition, as the same shall be at the commencement date of the DB Sublease, except as repaired, rebuilt, restored, altered or added to pursuant to this Lease, and except for ordinary wear and tear and casualty damage which Landlord is obligated to restore pursuant to the terms of this Lease. Landlord shall have no obligation to Tenant to make any repairs in or to the Premises, the Tenant Improvements or any Alterations. Any and all damage or injury to the Premises (including, but not limited to, the Tenant Improvements or any Alterations), the Building or the Land caused by Tenant, or by any employee, agent, contractor, assignee, subtenant, invitee or customer of Tenant shall be promptly reported to Landlord and repaired by Tenant at Tenant's sole cost; provided, however, that Landlord shall, after providing Tenant with notice thereof and five (5) days within which to repair such damage or injury (except in the case of any emergency or if any of the Building systems or structures or the provision of services to any part of the Building are thereby affected, in which case no prior notice or cure period shall be required), have the option of repairing any such damage, in which case Tenant shall reimburse Landlord for all reasonable costs incurred by Landlord in respect thereof as Additional Rent within thirty (30) days after Tenant receives Landlord's notice of such costs.
4. Tenant shall not place a load upon the floor of the Premises exceeding the designated floor load capacity of the Building (e.g. 100 pounds per square foot: 80 pounds per square foot, live load, and 20 pounds per square foot, dead load) without Landlord's prior written consent. Business machines, mechanical equipment and materials belonging to Tenant which cause vibration, noise, cold, heat or fumes that may be transmitted to the Building or to any other leased space therein to such a degree as to be objectionable to Landlord or to any other tenant in the Building shall be placed, maintained, isolated, stored and/or vented by Tenant at its sole expense so as to absorb and prevent such vibration, noise, cold, heat or fumes.

7. Assignment and Subletting.

1. Tenant shall not, without the prior written consent of Landlord (which consent may be granted or withheld by Landlord in its sole discretion except as expressly set forth below) in each instance: (i) assign or otherwise transfer this Lease or any of Tenant's rights hereunder, (ii) sublet the Premises or any part thereof, or permit the use of the Premises or any part thereof by any persons other than Tenant or its employees, agent and invitees, or (iii) permit the assignment or other transfer of this Lease or any of Tenant's rights hereunder by operation of law. Landlord's consent to a proposed assignment or sublease shall not be unreasonably withheld, conditioned or delayed, provided Landlord determines that the proposed assignee or subtenant (A) is of a type and quality consistent with the first-class nature of the Building, (B) in the event of an assignment, has the financial capacity and creditworthiness to undertake and perform the obligations of this Lease, (C) is not a party by whom any suit or action could be defended on the ground of sovereign immunity or diplomatic immunity and (D) will not impose any additional material burden upon Landlord in the operation of the Building (to an extent greater than the burden to which Landlord would have been had Tenant continued to use such part of the Premises). In addition, the following conditions must be satisfied at the time Tenant requests Landlord's consent to an assignment or sublease:
1. at the time Tenant requests Landlord's consent to an assignment or sublease (or otherwise notifies Landlord in accordance with the terms of this Lease that Tenant desires to assign this Lease or sublet all or a portion of the Premises) no Event of Default (hereinafter defined) exists and no event has occurred which, with notice and/or the passage of time, would constitute an Event of Default if not cured within the time, including any applicable grace period, specified herein;
2. Landlord receives at least thirty (30) days prior written notice of Tenant's intention to assign this Lease or sublet any portion of the Premises ("Tenant's Transfer Notice");
3. the proposed use of the Premises is not inconsistent with the terms of Section 6.a, above;
4. Tenant submits to Landlord at least thirty (30) days prior to the proposed date of subletting or assignment whatever information Landlord reasonably requests in order to permit Landlord to make a judgment on the proposed subletting or assignment, including, without limitation, the name, business experience, financial history, net worth and business references of the proposed assignee or subtenant (and each of its principals), an in-depth description of the transaction, and the consideration delivered to Tenant for the assignment or sublease; and
5. Tenant has paid to Landlord an administrative fee in the amount of Seven Hundred Fifty Dollars ($750.00) which shall be retained by Landlord whether or not such consent is granted.
2. All proposed subleases and assignments shall be on a form reasonably acceptable to Landlord; and shall contain, inter alia, the following provisions: (i) any such assignment or sublease shall include an assumption by the assignee or subtenant, from and after the effective date of such assignment or sublease, of the performance and observance of the covenants and conditions to be performed and observed on the part of Tenant as contained in this Lease, and (ii) any such sublease or assignment shall specify that this Lease or sublease shall not be further assigned nor the Premises further sublet and shall specify that the term of such sublease shall not extend beyond one (1) day prior to the expiration of this Lease. The consent by Landlord to any assignment, transfer or subletting to any person or entity shall not be construed as a waiver or release of Tenant from any provision of this Lease, unless expressly agreed to in writing by Landlord (it being understood that T enant shall remain primarily liable as a principal and not as a guarantor or surety), nor shall the collection or acceptance of rent from any such assignee, transferee, subtenant or occupant constitute a waiver or release of Tenant from any such provision. No consent by Landlord to any such assignment, transfer or subletting in any one instance shall constitute a waiver of the necessity for such consent in a subsequent instance.
3. In the event that Tenant assigns this Lease or sublets all or any portion of the Premises (other than to an Affiliate (hereinafter defined) or a Permitted Transferee (hereinafter defined)), Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of the difference between (i) all sums paid to Tenant or its agent by or on behalf of such assignee or subtenant under the assignment or sublease after deducting Tenant's reasonable, actual expenses of obtaining such assignment or subleasing, including, but not limited to, brokerage commissions, rental abatements, tenant improvement or other allowances or concessions granted and actually paid out by Tenant, advertising and marketing costs incurred, and legal fees, and (ii) the Annual Base Rent and Additional Rent paid by Tenant under this Lease and attributable to the portion of the Premises assigned or sublet.
4. For purposes of this Section, a transfer, conveyance, grant or pledge, directly or indirectly, in one or more transactions, of an interest in Tenant (whether stock, partnership interest or other form of ownership or control, or the issuance of new interests) by which an aggregate of fifty percent (50%) or more than of the beneficial interest in Tenant shall be vested in a party or parties who are not holders of such interest(s) as of the date hereof) shall be deemed an assignment of this Lease; provided, however, that this limitation shall not apply to an Affiliate, a Permitted Transferee or any corporation, all of the outstanding voting stock of which is listed on a national securities exchange as defined in the Securities Exchange Act of 1934. Except with respect to a Permitted Transferee, the merger or consolidation of Tenant into or with any other entity, the sale of all or substantially all of Tenant's assets, or the dissolution of Tenant shall each be deemed to be an assignment within the meaning of this Section.
5. Any assignment or subletting not in conformance with the terms of this Lease shall be void ab initio and shall, subject to the provisions of Section 16, constitute a default under the Lease.
6. Except in connection with a proposed assignment of this Lease or a proposed sublease of all or any portion of the Premises to a Permitted Transferee, upon receipt of the notice referred to in Section 7.a.(2), above, Landlord may, at its option, in lieu of approving or rejecting the proposed assignment or subletting, exercise all or any of the following rights by written notice to Tenant of Landlord's intent to do so ("Landlord's Recapture Notice") within fifteen (15) business days of Landlord's receipt of Tenant's notice:
1. with respect to a proposed assignment of this Lease, the right to terminate this Lease on the effective date of proposed assignment as though it were the Lease Expiration Date;
2. with respect to a proposed sublease of the entire Premises for a sublease term ending during the last Lease Year of the Term, the right to terminate this Lease on the effective date of the sublease as though it were the Lease Expiration Date; or
3. with respect to a proposed sublease of fifty percent (50%) or more of the Premises (but less than the entire Premises) for a sublease term ending during the last six (6) months of the Term, the right to terminate this Lease as to the portion of the Premises affected by such sublease on the effective date of the sublease, as though it were the Lease Expiration Date, in which case Tenant shall execute and deliver to Landlord an appropriate modification of this Lease, in form satisfactory to Landlord in all respects within ten (10) days of Landlord's notice of partial termination, which modification of this Lease shall provide that the number of rentable square feet of the Premises shall be decreased by, and the Monthly Base Rent and Additional Rent payable by Tenant hereunder shall be adjusted in proportion to, the number of rentable square feet of the Premises affected by such termination, as determined by Landlord.
7. Notwithstanding anything to the contrary contained in Section 7.f, above, if Tenant delivers written notice to Landlord within five (5) business days after receipt of Landlord's Recapture Notice that Tenant elects to rescind its request to assign the Lease or sublet all or any portion of the Premises, as applicable, the lease termination effectuated with respect to such Landlord's Recapture Notice shall be null and void and this Lease shall continue in full force and effect in accordance with its terms.
8. Upon any assignment of this Lease or sublease of fifty percent (50%) or more of the Premises (except any assignment of this Lease or any sublease of all or any portion of the Premises to a Permitted Transferee), any and all rights of Tenant to extend the Term shall terminate, it being understood that any and all such rights are personal to Tenant (and not to any assignee or subtenant) and are not appurtenant to the Premises or this Lease. Upon any assignment of this Lease or sublease of twenty-five percent (25%) or more of the Premises (except any assignment of this Lease or any sublease of all or any portion of the Premises to a Permitted Transferee), any and all rights of first refusal, rights of first negotiation, and expansion rights of Tenant shall terminate, it being understood that any and all such rights are personal to Tenant (and not to any assignee or subtenant) and are not appurtenant to the Premises or this Lease. In addition to the administrative fee described in Sectio n 7.a.(7), above, Tenant shall reimburse Landlord for its reasonable attorneys' fees and other third party expenses incurred in reviewing any requested consent whether or not such consent is granted. Tenant shall not collaterally assign, mortgage, pledge, hypothecate or otherwise encumber this Lease or any of Tenant's rights hereunder without the prior written consent of Landlord, which consent Landlord may withhold in its sole discretion.
9. Notwithstanding any consent by Landlord to an assignment or subletting, Tenant shall remain primarily liable for the performance of all covenants and obligations contained in this Lease. Each approved assignee or subtenant shall also automatically become liable for the obligations of Tenant hereunder. Landlord shall be permitted to enforce the provisions of this Lease directly against Tenant and/or against any assignee or sublessee without proceeding in any way against any other person. Collection or acceptance of Annual Base Rent or Additional Rent from any such assignee, subtenant or occupant shall not constitute a waiver or release of Tenant from the terms of any covenant or obligation contained in this Lease, nor shall such collection or acceptance in any way be construed to relieve Tenant from obtaining the prior written consent of Landlord to such assignment or subletting or any subsequent assignment or subletting.
10. Notwithstanding anything contained herein to the contrary, the consent requirement set forth in Section 7a, above, shall not be applicable to any assignment of this Lease or subletting of the Premises to an Affiliate of Tenant; provided, however, that in each instance, Tenant shall give Landlord at least thirty (30) days prior written notice of any proposed sublease or assignment to an Affiliate (the "Affiliate Transfer Notice"), which Affiliate Transfer Notice shall contain information and documentation reasonably acceptable to Landlord evidencing to Landlord's reasonable satisfaction that the proposed assignee or subtenant is an Affiliate, and a copy of the proposed assignment or sublease document. As used herein, the term "Affiliate" shall refer to a person or entity that controls (hereinafter defined), is controlled by, or is under common control with Tenant. "Control" as used herein shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the entity in question, whether through ownership of voting securities or by contract.

k. Notwithstanding anything to the contrary contained in this Section 7, Tenant shall also have the right, without Landlord's consent, but upon thirty (30) days advance written notice to Landlord (the "Permitted Transferee Notice"), to assign this Lease or sublet all or any portion of the Premises to the following (each a "Permitted Transferee"):

(i) Any entity in which or with which Tenant, or its corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions regarding merger and consolidation of entities, so long as:

(1) Tenant's obligations hereunder are assumed in writing (or by operation of applicable law) by the entity surviving such merger or created by such consolidation;

(2) The net worth and general creditworthiness of the surviving or created entity are not less than the net worth and general creditworthiness of Tenant as of the date hereof; and

(3) Landlord is provided complete, accurate and up-to-date financial statements for such surviving or created entity.

(ii) Any corporation that acquires all or substantially all of Tenant's assets or stock, if such corporation's net worth and general creditworthiness after such acquisition is not less than the net worth and general creditworthiness of Tenant as of the date hereof, provided Tenant's obligations hereunder are assumed in writing by such corporation.

Tenant shall provide a copy of the document creating such transfer within ten (10) days after the transfer, or as soon thereafter as Tenant is permitted to provide such document pursuant to applicable law or pursuant to the terms of any confidentiality agreement to which Tenant may be bound. Tenant may require that Landlord to enter into a confidentiality and nondisclosure agreement reasonably satisfactory to Landlord prior to delivering such document to Landlord.

8. Improvements and Fixtures.

1. Tenant shall neither make nor allow any alterations, decorations, replacements, changes, additions or improvements (collectively referred to as "Alterations") to the Premises or any part thereof that will or may adversely affect the mechanical, electrical, plumbing, HVAC or other systems or which will or may affect the exterior or structure of the Building, without the prior written consent of Landlord, which may be withheld by Landlord in its sole discretion. Tenant shall not make or allow any other kind of Alterations to the Premises or any part thereof without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. All of such Alterations, structural or otherwise, must conform to (i) the Construction Rules and Regulations (hereinafter defined); and (ii) such other rules and regulations as are established from time to time by Landlord. All Alterations must be performed in a good and workmanlike manner, must compl y with all applicable building codes, laws and regulations (including, without limitation, the Americans With Disabilities Act, as amended), shall not require any changes to or modifications of any of the mechanical, electrical, plumbing, HVAC or other systems or the exterior or structure of the Building, and shall otherwise be constructed in strict accordance with the terms and conditions of this Section 8. If any Alterations made by or on behalf of Tenant requires Landlord to make any alterations or improvements to any part of the Building in order to comply with applicable law (including without limitation the Americans With Disabilities Act, as amended), Tenant shall pay all reasonable costs and expenses incurred by Landlord in connection with such alterations or improvements. Prior to undertaking any Alterations in the Premises, Tenant shall furnish to Landlord duplicate original policies or certificates thereof of worker's compensation insurance (covering all persons to be employed by Tenant, an d Tenant's contractors and subcontractors in connection with such Alteration), builder's all-risk insurance, and comprehensive public liability insurance (including property damage coverage) in such form, with such companies, for such periods and in such amounts as Landlord may reasonably require, including Landlord and its agents, and any mortgagee as additional insureds.
2. It is understood and agreed by Landlord and Tenant that any Alterations undertaken in the Premises shall be constructed at Tenant's sole expense. The costs of Alterations shall include, without limitation, the cost of all architectural work, engineering studies, materials, supplies, plans, permits and insurance. If requested by Landlord, Tenant shall provide to Landlord evidence reasonably satisfactory to Landlord of Tenant's ability to pay for such Alterations (including, but not limited to, a payment or performance bond). No consent by Landlord to any Alterations shall be deemed to be an agreement or consent by Landlord to subject Landlord's interest in the Premises, the Building or the Land to any mechanic's or materialman's liens which may be filed in respect to such Alterations made by or on behalf of Tenant. If Landlord gives its consent as specified in Section 8.a. above, Landlord may impose as a condition to such consent such requirements as Landlord may deem necessary or desirable, in its sole discretion exercised in good faith, including, without limitation, the right to approve the plans and specifications for any work, supervision of the work by Landlord or its agents or by Landlord's architect or contractor and the payment to Landlord or its agents, architect or contractor of a reasonable construction supervision fee in connection therewith (the "Alteration Supervision Fee"), the right to require reasonable security for the full payment of any work and the right to impose reasonable requirements as to the manner in which or the time or times at which work may be performed. Notwithstanding the foregoing, if an Alteration does not take a building permit to undertake and could not affect the structure or safety of the Building or adversely affect the electrical, plumbing or mechanical systems of the Building, then Landlord shall waive such Alteration Supervision Fee with respect to such Alteration. Landlord shall also have the right to approve the contractor or contra ctors who shall perform any Alterations, repairs in, to or about the Premises, which approval shall not be unreasonably withheld, conditioned or delayed, and to post notices of non-responsibility and similar notices, as appropriate. In addition, immediately after completion of any Alterations, Tenant shall assign to Landlord any and all warranties applicable to such Alterations and shall provide Landlord with as-built plans of the Premises depicting such Alterations.
3. Tenant shall keep the Premises free from any liens arising out of any work performed on, or materials furnished to, the Premises, or arising from any other obligation incurred by Tenant. If any mechanic's or materialmen's lien is filed against the Premises, the Building and/or the Land for work claimed to have been done for or materials claimed to have been furnished to Tenant, such lien shall be discharged by Tenant within thirty (30) days thereafter, at Tenant's sole cost and expense, by the payment thereof or by filing any bond required by law. If Tenant shall fail to timely discharge any such mechanic's or materialman's lien, Landlord may, at its option and upon written notice to Tenant, discharge the same and treat the cost thereof as Additional Rent payable with the installment of rent next becoming due; it being expressly covenanted and agreed that such discharge by Landlord shall not be deemed to waive or release the default of Tenant in not discharging the same. Tenant shal l indemnify and hold harmless Landlord, the Premises and the Building from and against any and all expenses, liens, claims, actions or damages to person or property in connection with any such lien or the performance of such work or the furnishing of such materials. Tenant shall be obligated to, and Landlord reserves the right to, post and maintain on the Premises at any time such notices as shall in the reasonable judgment of Landlord be necessary to protect Landlord against liability for all such liens or actions.
4. Any Alterations of any kind to the Premises or any part thereof, except Tenant's furniture and moveable trade fixtures, shall at once become part of the realty and belong to Landlord and shall be surrendered with the Premises, as a part thereof, at the end of the Term hereof; provided, however, that Landlord may, by written notice to Tenant at least sixty (60) days prior to the end of the Term, require Tenant to remove any Removal Alterations (hereinafter defined) and to repair any damage to the Building and/or the Premises caused by such removal, all at Tenant's sole expense. As used herein, the term "Removal Alterations" shall mean any Alterations: (i) which Landlord, in response to a Removal Inquiry (hereinafter defined) by Tenant, indicated to Tenant must be removed by Tenant at the end of the Term; and (ii) with respect to which Tenant did not make inquiry of Landlord at the time Tenant sought Landlord's approval of such Alteration (in accordance with the provisions of Section 8.a, above). As used herein, the term "Removal Inquiry" shall mean an inquiry by Tenant, made to Landlord contemporaneously with Tenant's request for approval of an Alteration, as to whether or not such Alteration need be removed by Tenant at the end of the Term. Any article of personal property, including business and trade fixtures, not attached to or built into the Premises (or personal property temporarily affixed to the Premises by bolts or screws that can be removed without damage to the Premises or the Building), which were installed or placed in the Premises by Tenant at its sole expense, shall be and remain the property of Tenant and may be removed by Tenant at any time during the Term as long as Tenant is not in default hereunder and provided that Tenant repairs any damage to the Premises or the Building caused by such removal. Notwithstanding anything to the contrary contained herein, Tenant hereby expressly acknowledges and agrees that Tenant shall, pr ior to the end of the Term or the earlier termination of this Lease, as applicable, remove from the Premises (including the plenum) and the Building all wiring, cabling, conduit and appurtenant hardware installed by, or for the benefit of, Tenant (or any assignee of the Lease or any sublessee of any portion of the Premises) and repair any damage to the Premises and/or Building caused by such removal, all at Tenant's sole expense.

9. Utilities and Services.

1. Landlord shall furnish the following utilities and services to the Premises: electric current furnished by the base Building electrical system twenty-four (24) hours a day; hot and cold water twenty-four (24) hours a day; lavatory supplies; heat and air-conditioning during the appropriate seasons of the year as reasonably required; elevator service; and trash removal, cleaning and char service (after Normal Business Hours (herein defined) Monday through Friday, excluding Holidays (hereinafter defined)). Landlord shall not diminish the electrical capacity furnished by the base Building electrical system as of the Effective Date. Heating and air conditioning shall be provided to the Premises only during Normal Business Hours (i.e., Monday through Friday 7:00 a.m. to 7:00 p.m., and Saturday 8:00 a.m. to 2:00 p.m., excluding Holidays ("Normal Business Hours"). As used herein, the term "Holidays" shall mean New Year's Day, Memorial Day, Independenc e Day, Labor Day, Thanksgiving Day and Christmas Day. At times other than the Normal Business Hours and days aforesaid, central air conditioning and heating shall be provided to Tenant upon at least twenty-four (24) hours prior notice from Tenant, and upon payment by Tenant of the hourly charge established by Landlord from time to time for each hour (or a portion thereof) of after-hours usage. The current hourly charge for each hour (or any portion thereof) of after-hours usage of central air conditioning and heating is Forty-Five Dollars ($45.00) per hour (or any portion thereof) per floor (or any portion thereof) of the Building. Landlord shall use reasonable efforts to ensure that at least one (1) passenger elevator is operating in the Building twenty-four (24) hours per day, seven (7) days per week. All Building standard light bulbs and tubes in the Premises shall be replaced by Landlord and the reasonable cost thereof shall be included in Operating Expenses. In addition, Landlord may, upon written n otice to Tenant and the expiration of a five (5) day cure period within which Tenant may cure the Unusual Condition (hereinafter defined), impose a reasonable additional charge for any additional or unusual services required to be provided by Landlord to Tenant because of the carelessness of Tenant, the nature of Tenant's business or the removal of any refuse and rubbish from the Premises (the "Unusual Condition"), except for discarded material placed in wastepaper baskets and left for emptying as an incident to Tenant's normal cleaning of the Premises. In the event that Landlord must temporarily suspend or curtail services because of accident and repair, Landlord shall provide Tenant with reasonable prior notice thereof (except in the event of an emergency, in which case no prior notice shall be required), and Landlord shall have no liability to Tenant for such suspension or curtailment or due to any restrictions on use arising therefrom or relating thereto, and Landlord shall proceed diligently to restore such service. In connection with Landlord's activities to restore such service, Landlord shall use reasonable efforts not to materially and adversely interfere with Tenant's business operations in the Premises. No interruption or malfunction of any such services shall constitute an actual or constructive eviction or disturbance of Tenant's use and possession of the Premises, the Building or the parking garage or parking areas in or around the Building or constitute a breach by Landlord of any of its obligations hereunder or render Landlord liable for damages or entitle Tenant to be relieved from any of Tenant's obligations hereunder (including the obligation to pay rent) or grant Tenant any right of setoff or claim against Landlord or constitute a constructive or other eviction of Tenant. Notwithstanding the foregoing, in the event that the interruption or cessation of any essential service(s) or utilities required to be provided by Landlord hereunder: (i) results from Landlord's negligence or willful m isconduct; (ii) is not caused by Tenant, its agents, employees, contractors, assignees, subtenants or invitees; (iii) renders any or all of the Premises untenantable for Tenant's business use therein; and (iv) exists for more than five (5) consecutive business days, then, provided Tenant in fact ceases to use the Premises (or portion thereof) during the entirety of such period of cessation or interruption, commencing on the sixth (6^th) business day after such interruption, Monthly Base Rent hereunder shall be abated until such services or utilities are restored or Tenant commences to use the untenantable portion of the Premises. The foregoing abatement of Monthly Base Rent shall be Tenant's sole and exclusive remedy resulting from such interruption or cessation. In the event of any such interruption, Landlord shall use reasonable diligence to restore such services.
2. Tenant will not, without the prior written consent of Landlord, use any apparatus or device in the Premises, including, without limitation, electric data processing machines, punch card machines and machines using current in excess of 220 volts (or in excess of .60 kilowatt hours per square foot of usable area in the Premises per month, as determined by Landlord) which will in any way increase the amount of the electricity or water which would otherwise be furnished or supplied for the intended use of the Premises under this Section 9; and Tenant will not connect to electric current any apparatus or device for the purpose of using electric current or water, except through existing electrical outlets in the Premises or water pipes. Notwithstanding anything to the contrary contained herein, Landlord shall not require Tenant to remove any apparatus or device installed by Tenant in the Premises pursuant to the DB Sublease if, prior to such installation by Tenant, Landlord consented t o such installation in writing. If Tenant shall require water or electricity in excess of that which would otherwise be furnished or supplied for the intended use of the Premises, Tenant shall first secure the written consent of Landlord for the use thereof, which consent Landlord may refuse in its absolute discretion. Landlord may condition its consent upon the requirement that a water meter or electric current meter be installed in the Premises, so as to measure the amount of water and electric current consumed for any such excess use. The cost of such meters and installation, maintenance and repair thereof, the cost of any such excess utility use as shown by said meter, the cost of any new or additional utility installations, including, without limitation, wiring and plumbing, resulting from such excess utility use, and the cost of any additional expenses incurred in keeping count of such excess utility use shall be paid by Tenant promptly upon demand by Landlord or, if Tenant is billed separately ther efor, promptly upon receipt of a bill for same. Whenever heat generating machines or equipment are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install supplementary air conditioning units in the Premises and the cost thereof, including the cost of installation, operation and maintenance thereof, shall be paid by Tenant to Landlord upon demand by Landlord.
3. Landlord and Tenant hereby acknowledge and agree that, prior to the Commencement Date (or, if earlier, prior the ROFO Space Commencement Date with respect to any Available Space leased by Landlord to Tenant), Tenant shall install (if separate meters (and/or submeters) have not previously been installed), at Tenant's sole cost and expense, separate meters (or submeters) to measure the electric current consumed by all Tenant equipment which requires above Building standard electrical capacity. Throughout the Term, Tenant shall pay for all electricity consumed by such equipment, as measured by such meters or submeters. At Landlord's sole option, Tenant shall pay for such utility usage directly to the utility supplying same or Tenant shall reimburse Landlord for such cost within thirty (30) days after Tenant's receipt of an invoice therefor. Unless Tenant is paying for such electricity directly to the utility company supplying same, Tenant shall permit Landlord, or Landlord's agent, dur ing normal business hours, to access the Premises in order to read any such meter or submeter. Tenant acknowledges that Landlord has the right to install, at Tenant's sole cost and expense, electrical usage monitoring equipment selected by Landlord to ensure that Tenant's electrical usage does not exceed the connected load allocable to the Premises.
4. Tenant hereby expressly acknowledges and agrees that for so long as Deutsche Bank is a tenant or occupant of the Building: (i) Deutsche Bank shall be responsible for the operation, repair and maintenance of the Supplemental Electrical System (hereinafter defined), unless Landlord notifies Tenant that Landlord is assuming responsibility for the operation, repair and maintenance of such system, in which event the terms of Section 9.f, below, shall apply; and (ii) Tenant shall contract with Deutsche Bank for the use of the Supplemental Electrical System. As used herein, the term "Supplemental Electrical System" means the electrical utility service (including but not limited to all feeder and distribution cables, busses and buss ducts, switchboards, transfer switches, disconnects, panel boards, circuit breakers, fuses, transformers, battery chargers, uninterruptible power supply ("UPS") units, PDU's, and generator sets) installed in the Building and on the roof of the Building. Tena nt hereby expressly acknowledges that Tenant may not be the sole user of the Supplemental Electrical System and that other tenants in the Building may utilize same.
5. Notwithstanding anything to the contrary contained in this Section 9, Tenant hereby expressly acknowledges and agrees that if, at any point during the Term, Deutsche Bank is not a tenant or occupant of the Building that Tenant shall be solely responsible, at Tenant's sole cost and expense, for the operation, repair and maintenance of the Supplemental Electrical System. If Tenant is solely responsible for the operation, repair and maintenance of the Supplemental Electrical System pursuant to the terms of this Section 9.e, throughout the Term, Tenant shall (i) cause the Supplemental Electrical System to comply with all applicable laws, statutes and ordinances, including the Environmental Laws (hereinafter defined); (ii) cause engineers, including environmental engineers, acceptable to Landlord to inspect the Supplemental Electrical System at least once a year to insure that such system is functioning properly and that no Hazardous Materials (hereinafter defined) are emanating therefrom; (iii) maintain the Supplemental Electrical System in good order and repair; (iv) maintain insurance coverages with respect thereto as are required by Landlord from time to time; and (v) maintain all permits and governmental approvals necessary for the operation of the Supplemental Electrical System. Tenant shall immediately report to Landlord if Tenant determines that the Supplemental Electrical System is not functioning properly, is leaking or is in violation of any applicable laws, including the Environmental Laws. Tenant shall immediately repair all equipment malfunctions or violations of law arising out of the operation of the Supplemental Electrical System. At Landlord's request, Tenant shall enter into annual service contracts with reputable engineering firms approved by Landlord in Landlord's reasonable discretion, including environmental engineering firms, for the inspection, maintenance and repair of the Supplemental Electrical System, and Tenant shall provide such servi ce contracts to Landlord on demand. Should Tenant fail to properly maintain or repair such equipment or, upon Landlord's request, to enter into the service contracts described above, Landlord may, but shall not be obligated to, undertake such maintenance or repairs or enter into such service contracts, and all such costs shall constitute Additional Rent hereunder.
6. Notwithstanding anything to the contrary contained in this Section 9, if (i) Tenant shall be solely responsible, at Tenant's sole cost and expense, for the operation, repair and maintenance of the Supplemental Electrical System pursuant to the terms of Section 9.e, above, and (ii) a third-party tenant or occupant of the Building leases or occupies space in the Building which is connected to the Supplemental Electrical System, then Landlord may, by the delivery of written notice to Tenant, elect to assume the responsibility for the operation, repair and maintenance of the Supplemental Electrical System in accordance with the terms of this Section 9.f. If Landlord assumes the responsibility for the operation, repair and maintenance of the Supplemental Electrical System pursuant to the terms of this Section 9.f, Tenant shall be responsible for paying its SESM Proportionate Share (hereinafter defined) of all out-of-pocket costs incurred by Landlord in operating, repairing and maintaining the Supplemental Electrical System (the "Supplemental Electrical System Maintenance Costs") in accordance with the terms and conditions set forth below. As used herein, the term "SESM Proportionate Share" means the percentage of the total distributed electrical capacity of the Supplemental Electrical System which is being utilized by Tenant (on a connected load basis), as reasonably estimated by Landlord. For each calendar year (or partial calendar year) during the Term in which Landlord is responsible for the operation, repair and maintenance of the Supplemental Electrical System, Landlord shall estimate Tenant's SESM Proportionate Share of the Supplemental Electrical System Maintenance Costs and Tenant shall pay Landlord one-twelfth (1/12) of such amount on each monthly payment date of Monthly Base Rent under this Lease. Within one hundred twenty (120) days after the expiration of each calendar year (or partial calendar year) during the Term (or as soon as reasonably practicable thereafter) in which Lan dlord is responsible for the operation, repair and maintenance of the Supplemental Electrical System, Landlord shall furnish to Tenant a statement showing the actual Supplemental Electrical System Maintenance Costs for such calendar year. In the case of an underpayment, Tenant shall, within thirty (30) days after the receipt of such statement, pay to Landlord an amount equal to such underpayment or, in the case of an overpayment, Landlord shall credit the next payment of Monthly Base Rent by Tenant with an amount equal to such overpayment, or, if this Lease shall have expired, Landlord shall apply such excess against any sums due from Tenant to Landlord and shall refund any remainder to Tenant within thirty (30) days after the expiration of the Term, or as soon thereafter as reasonably practicable. The obligations of Landlord and Tenant set forth in this Section 9.f shall survive the expiration or earlier termination of this Lease.
7. After the Commencement Date (or, if earlier, after the ROFO Space Commencement Date with respect to any Available Space leased by Landlord to Tenant), Tenant shall not install equipment of any kind or nature whatsoever nor engage in any practice or use which will or may necessitate any changes (other than diminimus changes), replacements or additions to, or in the use of, the water system, heating system, plumbing system, air conditioning system, electrical system, floor load capacities, or other mechanical or structural system of the Premises or the Building (including the Supplemental Electrical System and the Supplemental HVAC System (hereinafter defined)) without first obtaining the prior written consent of Landlord, which consent may be conditioned upon, but not limited to, Tenant first securing at its expense additional capacity for any said service in the Building; provided, however, Tenant shall be responsible for paying for any excess utility consumption arising from any such change, replacement, use or addition, such payments to be based on Landlord's reasonable estimate or, at Landlord's option, a submeter or similar device to measure such usage (said device to be installed at Tenant's expense). Additionally, in the event that Landlord reasonably determines that Tenant's electrical consumption exceeds standard office use, Tenant shall pay the amount of such excess electrical consumption, as reasonably determined by Landlord, within thirty (30) days after demand therefor. Machines, equipment and materials belonging to Tenant which cause vibration, noise, cold, heat, fumes or odors that may be transmitted outside of the Premises to such a degree as to be reasonably objectionable to Landlord or to any other tenant in the Building shall be treated by Tenant at its sole expense so as to eliminate such objectionable condition, and shall not be allowed to operate until such time as the objectionable condition is remedied to Landlord's satisfaction.
8. Tenant shall comply, at its sole cost and expense, with all orders, requirements and conditions now or hereafter imposed by any ordinances, laws, orders and/or regulations (hereinafter collectively called "regulations") of any governmental body having jurisdiction over the Premises or the Building, regarding the collection, sorting, separation and recycling of waste products, garbage, refuse and trash (hereinafter collectively called "waste products") including, but not limited to, the separation of such waste products into receptacles reasonably approved by Landlord and the removal of such receptacles in accordance with any collection schedules prescribed by such regulations. Landlord reserves the right (i) to refuse to accept from Tenant any waste products that are not prepared for collection in accordance with any such regulations, (ii) to require Tenant to arrange for waste product collection at Tenant's sole cost and expense, utilizing a contractor reasonably satisfacto ry to Landlord, and (iii) to require Tenant to pay all costs, expenses, fines, penalties, or damages that may be imposed on Landlord or Tenant by reason of Tenant's failure to comply with any such regulations. Notwithstanding the foregoing, if Tenant is unable to comply with Landlord's standard procedures regarding the internal collection, sorting, separation and recycling of waste products, Landlord, upon written notice to Tenant and the expiration of a five (5) day cure period, shall use reasonable efforts to arrange for alternative procedures for Tenant, and Tenant shall pay Landlord all additional costs incurred by Landlord with respect thereto.
9. Throughout the Term, Tenant shall be provided with access to the Building, the Parking Facility (hereinafter defined) and the Premises twenty-four (24) hours a day, 365 days a year, subject to applicable law and events of force majeure. The Building's main entrance doors and elevators shall be equipped with a card reader security system or other similar security access system. Tenant shall be permitted to retain the access cards received by Tenant from Deutsche Bank in order to provide Tenant with continued access to the Premises from and after the Commencement Date. Tenant shall be responsible for the cost of any additional or replacement access cards requested by Tenant. Except in the event of the negligence or willful misconduct of Landlord, Landlord shall not be responsible for the quality, action or inaction of the Building's or Premises' access system or for any damage or injury to Tenant, its employees, agents, invitees or their respective property resulting from any failure, action or inaction of the Building's and/or Premises' access systems. As of the Effective Date, at least two (2) security officers are stationed in the Building at all times; provided, however, Landlord reserves the right from time to time, upon prior written notice to Tenant, to reduce (or eliminate) the days and/or the time(s) of day on which security officers are stationed in the Building.
10. During the Term, Tenant shall have the right to continue to display the Interior Signage (hereinafter defined). Tenant shall be solely responsible for repairing and maintaining the Interior Signage installed by Tenant in a first-class condition throughout the Term. Tenant shall remove the Interior Signage at the end of the Term and shall restore the portions of the Building affected by such removal to their condition immediately prior to the installation of such signage. If Tenant fails to remove all Interior Signage at the expiration of the Term or fails to restore the portions of the Building affected by such removal, Landlord may, but shall not be obligated to remove such Interior Signage and/or restore the portion of the Building affected thereby, and Tenant shall reimburse Landlord for all reasonable costs and expenses incurred by Landlord with respect to such removal and/or restoration immediately upon demand therefor. As used herein, the term "Interior Signage" shall mean an y and all signage located in or upon the interior common areas (including the main elevator lobby) of the Building (or in or upon the elevator lobbies on the floors of the Building which contain portions of the Premises) depicting Tenant's name and/or Tenant's logo, which signage (and the installation and location thereof) has been previously approved in writing by Landlord prior to the Commencement Date in connection with the DB Sublease. Notwithstanding anything to the contrary contained herein, Tenant hereby expressly acknowledges and agrees that if at any time during the Term Tenant is not then leasing and in occupancy (i.e. Tenant has not sublet or vacated such space) of at least fifty thousand (50,000) rentable square feet of office space in the Building pursuant to the Lease, then, at Landlord's option, Tenant shall remove all Interior Signage (except for Interior Signage located in or upon the elevator lobbies on the floors of the Building on which Tenant is the sole occupant) and shall restore the portions of the Building affected by such removal to their condition immediately prior to the installation of such signage (which removal and restoration shall be undertaken by Tenant in accordance with the terms and conditions of this Section 9.j within thirty (30) days after receipt of notice from Landlord).
11. During the Term, Landlord shall continue to display the directory strips bearing Tenant's name in the directory board located in the main lobby of the Building which exist as of the Commencement Date; provided, however, that in no event shall Tenant be entitled to more than Tenant's proportionate share of such directory strips.
12. Landlord shall maintain the common areas of the Building, the roof, foundation and structural walls of the Building, the base Building systems (including the base Building mechanical, electrical, plumbing and HVAC systems serving the Premises), the fire and life safety system and the Parking Facility, unless Tenant is otherwise responsible for such maintenance pursuant any provision of this Lease, or unless the need for such maintenance arose as the result of (i) any act or omission of Tenant, its agents, contractors, employees, invitees, assignees or subtenants or (ii) Tenant's particular use of the Premises.
13. Landlord shall provide, no later than January 1, 2008, a fitness facility in the Building (the "Fitness Facility"), the size, location and other attributes (including equipment and personnel) of which shall be determined by Landlord in its sole discretion. Landlord and Tenant hereby acknowledge and agree that (1) Landlord shall permit Tenant's employees to use the Fitness Facility, subject to such rules and regulations as Landlord may promulgate from time to time with respect to the use of the Fitness Facility, (2) Landlord may charge each of Tenant's employees who want to use the Fitness Facility a commercially reasonable monthly fee for such privilege, provided that such fee shall not exceed the lowest monthly fee offered by Landlord to employees of other tenants of the Building, (3) any use of the Fitness Facility by Tenant, or its employees, shall be at their sole risk and Landlord reserves the right to require that Tenant and any of its employees who want to use the Fitness Facil ity (a) obtain medical clearances from their physicians, and (b) sign waivers of liability acceptable to Landlord, and (4) Landlord shall not be responsible for any injury, loss or damage suffered by Tenant, or its employees, arising out of or in any way connected with or related to their use of the Fitness Facility. All costs of operating and maintaining the Fitness Facility, including any and all costs associated with staffing the Fitness Facility, shall be included in Operating Expenses.

10. Rights of Landlord.

1. Landlord reserves the following rights:
1. subject to the terms of Section 10.f, below, to change the name or street address of the Building with thirty (30) days prior notice to Tenant;
2. to approve the design, location, number, size and color of all signs or lettering on the Premises or visible from the exterior of the Premises;
3. to have pass keys and/or access cards to the Premises and key codes or cards for the telephone access system installed by Tenant;
4. to grant to anyone the exclusive right to conduct any particular business or undertaking in the Building, provided that the granting of such exclusive right shall not materially and adversely affect Tenant's business operations in the Premises;
5. to enter the Premises at any reasonable time for inspection upon reasonable prior notice to Tenant (which notice may be oral), or at any time, without prior notice, in the event of any emergency; to supply any service to be provided by Landlord hereunder; to submit the Premises to prospective purchasers or tenants; to post notices of non-responsibility; and to make repairs, alterations, additions or improvements to the Premises or the Building; and
6. to approve the design, location, number, size and color of all signs located on the exterior of the Building.
2. Without limiting the generality of the provisions of Section 10.a., above, at any time during the Term of this Lease, Landlord shall have the right to remove, alter, improve, renovate or rebuild the common areas of the Building (including, but not limited to, the lobby, hallways and corridors thereof), and to install, repair, replace, alter, improve or rebuild in the Premises, other tenants' premises and/or the common areas of the Building (including the lobby, hallways and corridors thereof), any mechanical, electrical, water, sprinkler, plumbing, heating, air conditioning and ventilating systems, at any time during the Term of this Lease. In connection with making any such installations, repairs, replacements, alterations, additions and improvements under the terms of this Section 10, Landlord shall have the right to access through the Premises as well as the right to take into and upon and through the Premises or any other part of the Building, all materials that may be r equired to make any such repairs, replacements, alterations, additions or improvements, as well as the right in the course of such work to close entrances, doors, corridors, elevators or other facilities located in the Building or temporarily to cease the operations of any services or facilities therein or to take portion(s) of the Premises reasonably necessary in connection with such work, without being deemed or held guilty of an eviction of Tenant; provided, however that Landlord agrees to use all reasonable efforts not to interfere with or interrupt Tenant's business operation in the Premises. Landlord shall have the right to install, use and maintain pipes and conduits in and through the Premises, including, without limitation, telephone and computer installations, provided that they do not permanently materially adversely affect (i) Tenant's access to or use of the Premises, or (ii) the aesthetic appearance of the Premises. In connection with Landlord's (or its agent's) entry into the Premises pursua nt to the terms of this Section 10, Tenant shall have the right to have a representative of Tenant present during such entry (except in the event of an emergency), provided that Tenant makes such representative present at the time of Landlord's (or its agent's) entry to the Premises. In connection with Landlord's activities pursuant to this Section 10.b, Landlord will use reasonable efforts not to materially and adversely interfere with Tenant's business operations in the Premises for a prolonged period of time. Notwithstanding anything to the contrary contained herein, if as a direct result of Landlord's activities pursuant to this Section 10.b, the Premises or any portion thereof are rendered untenantable for five (5) consecutive business days and Tenant ceases to use the Premises (or the untenantable portion thereof), then Monthly Base Rent hereunder shall abate proportionately (based on the number of square feet rendered untenantable) as of the sixth (6^th) business day after the Premises (or any portion thereof) are rendered untenantable until the Premises or such portion thereof are again tenantable or are again used by Tenant, unless such work performed by Landlord is requested by, or is for the benefit of, Tenant or is required to comply with any applicable law or as a result of any damage caused by Tenant or any employee, contractor, subtenant, assignee or agent of Tenant, in which case no Monthly Base Rent shall abate.
3. Except for injury or death to persons or damage to property caused by the negligence or willful misconduct of Landlord, its agents or employees, Landlord shall not be liable to Tenant for any expense, injury, loss or damage resulting from Landlord's exercise of any rights under this Section 10, all claims against Landlord for any and all such liability being hereby expressly released by Tenant. Landlord shall not be liable to Tenant for damages by reason of interference with the business of Tenant or inconvenience or annoyance to Tenant or the customers of Tenant. The Rent reserved herein shall not abate while the Landlord's rights under this Section 10 are exercised (except as otherwise expressly set forth in Section 10.b, above), and Tenant shall not be entitled to any set-off or counterclaims for damages of any kind against Landlord by reason thereof, all such claims being hereby expressly released by Tenant.
4. Landlord shall have the right to use any and all means which Landlord may deem proper to open all of the doors in, upon and about the Premises, excluding Tenant's vaults and safes, in any emergency in order to obtain entry to the Premises. Any entry to the Premises obtained by Landlord by any of said means shall not be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof.
5. Notwithstanding anything to the contrary contained herein, in connection with any entry by Landlord into the Premises pursuant to this Section 10 (except for any entry necessitated by emergency), Tenant shall have the right to have a Tenant representative accompany Landlord during its entry into the Premises, provided that Tenant makes such representative available at such time.
6. Notwithstanding anything to the contrary contained herein, provided that (i) Tenant (and not any assignee, subtenant or licensee of Tenant (other than a Permitted Transferee)) leases and occupies (i.e. Tenant has not sublet or vacated such space) the entire Premises, and (ii) Tenant is not in default of the Lease, Landlord shall not permit the Building to be named for any other tenant of the Building without Tenant's prior consent. Tenant hereby expressly acknowledges and agrees that the terms of this Section 10.f are for the benefit of Stifel, Nicolaus & Company Incorporated only and shall not be applicable to any assignee, subtenant or licensee of Tenant (other than a Permitted Transferee).

11. Liability.

1. Landlord and its agents, officers, directors and employees assume no liability or responsibility whatsoever with respect to the conduct or operation of the business to be conducted in the Premises and shall have no liability for any claim of loss of business or interruption of operations (or any claim related thereto). Landlord and its agents, officers, directors and employees shall not be liable for any accident to or injury to any person or persons or property in or about the Premises which are caused by the conduct and operation of said business or by virtue of equipment or property of Tenant in said Premises. Tenant agrees to hold Landlord and its agents, officers, directors and employees harmless against all such claims, except to the extent resulting from Landlord's negligence or willful misconduct. Landlord and its agents, officer, directors and employees shall not be liable to Tenant, its employees, agents, business invitees, licensees, customers, clients, family members or guests for any damage, compensation or claim arising out of or related to managing the Premises or the Building, repairing any portion of the Premises or the Building, the interruption in the use of the Premises, accident or damage resulting from the use or operation (by Landlord and its agents, officers, directors and employees, Tenant, or any other person or persons whatsoever) or failure of elevators, or heating, cooling, electrical or plumbing equipment or apparatus, or the termination of this Lease by reason of the destruction of the Premises, or from any fire, robbery, theft, mysterious disappearance and/or any other casualty, or from any leakage in any part of portion of the Premises or the Building, or from water, rain or snow that may leak into or flow from any part of the Premises or the Building, or from any other cause whatsoever, unless occasioned by the willful misconduct or acts of negligence of Landlord. In no event shall Landlord be liable for punitive or consequential damages, nor, except as otherwise expressly set forth herein, shall Landlord be liable with respect to utilities furnished to the Premises, or the lack of any utilities. Any goods, property or personal effects, stored or placed by Tenant in or about the Premises or in the Building, shall be at the sole risk of Tenant, and Landlord and its agents, officers, directors and employees shall not in any manner be held responsible therefor, except if such injury or damage results from Landlord's negligence or willful misconduct. The agents and employees of Landlord are prohibited from receiving any packages or other articles delivered to the Building for Tenant, and if any such agent or employee receives any such package or articles, such agent or employee shall be the agent of Tenant for such purposes and not of Landlord.
2. Tenant hereby agrees to indemnify and hold Landlord and its agents, officers, directors and employees harmless from and against any cost, damage, claim, liability or expense (including reasonable attorneys' fees) incurred by or claimed against Landlord and its agents, officers, directors and employees, directly or indirectly, as a result of or in any way arising from (i) Tenant's use and occupancy of the Premises or in any other manner which relates to the business of Tenant, including, but not limited to, any cost, damage, claim, liability or expense arising from any violation of any zoning, health, environmental or other law, ordinance, order, rule or regulation of any governmental body or agency; (ii) the negligence or willful misconduct of Tenant, its officers, directors, employees and agents; or (iii) injury or death to individuals or damage to property sustained in or about the Premises.
3. Except as may be the result of the negligence or willful misconduct of Tenant or its employees, contractors, invitees, subtenants, licensees or agents, and subject to the terms of Sections 11.d and 12.d, below, Landlord shall, and hereby does, indemnify, hold harmless and defend Tenant against any and all claims, loss, damages, liabilities, costs or expenses (including reasonable attorneys' fees) incurred by Tenant and relating to bodily injury or property damage arising from the negligence or willful misconduct of Landlord or any agent or employee of Landlord, in connection with the use, management or operation of the Building. Notwithstanding anything contained in this Lease to the contrary, in no event shall Landlord be liable to Tenant on account of any claims for any lost business or profits or indirect or consequential losses or damages or any punitive damages.
4. Notwithstanding any other provision of this Lease to the contrary, Landlord and Tenant agree that in the event that the Building, the Premises or the contents thereof are damaged or destroyed by fire or other casualty, each party hereto waives its rights, if any, against the other party with respect to such damage or destruction to the extent such damage or destruction is covered under the property insurance policy(ies) of the party waiving such rights (or would have been covered had the party waiving such rights carried the property insurance required hereunder to be carried by such party). All policies of fire and/or extended coverage or other insurance covering the Premises or the contents thereof obtained by Landlord or Tenant shall contain a clause or endorsement providing in substance that (i) such insurance shall not be prejudiced if the insureds thereunder have waived in whole or in part the right of recovery from any person or persons prior to the date and time of loss o r damage, if any, and (ii) the insurer waives any rights of subrogation against Landlord (in the case of Tenant's insurance policy) or Tenant (in the case of Landlord's insurance policy), as the case may be.

12. Insurance.

1. Tenant shall maintain at all times during the Term hereof and at its sole cost and expense, broad-form commercial general liability insurance for bodily injury and property damage including Landlord as an additional insured, in such amounts as are adequate to protect Landlord and Landlord's managing agents against liability for injury to or death of any person in connection with the use, operation or condition of the Premises. Such insurance at all times shall be in an amount of not fewer than Five Million Dollars ($5,000,000) combined single limit aggregate for bodily injury or death or damage to property. If, in the reasonable opinion of the insurance broker retained by Landlord, the amount of public liability and property damage insurance coverage at any time during the Term is not adequate, Tenant shall increase the insurance coverage as reasonably required by Landlord's insurance broker; provided, however, that in no event must such insurance amount be increased if, at the time of such proposed increase, Tenant is carrying public liability and property damage insurance in amounts comparable to the amounts of public liability and property damage insurance being carried by comparable office tenants in office buildings comparable in age, size and location to the Building; provided, however, in no event shall Tenant be required to increase Tenant's insurance coverage pursuant to the terms of this sentence more than once in any two (2) year period. In no event shall the limits of such policy be considered as limiting the liability of Tenant under this Lease.
2. Tenant shall at all times during the Term hereof maintain in effect policies of insurance covering the Leasehold Improvements (including any Alterations, additions or improvements as may be made by Tenant after the Commencement Date (or, if Tenant leases any Available space from Landlord, after any ROFO Space Commencement Date), interior plate glass, trade fixtures, merchandise and all other personal property from time to time in or on the Premises, in an amount not less than ninety percent (90%) of their actual replacement cost, providing protection against all risks covered by standard form of "Fire and Extended Coverage Insurance," together with insurance against vandalism and malicious mischief. Tenant shall also maintain at its sole cost and expense workman's compensation insurance in the maximum amount required by law.
3. All insurance required to be carried by Tenant shall be issued by responsible insurance companies, qualified to do business in the State of Maryland and reasonably acceptable to Landlord. Each policy shall include Landlord, Landlord's mortgagee and the property management company retained by Landlord at the Building, as additional insureds, and shall contain a provision that the same may not be cancelled, permitted to lapse or reduced without providing Tenant (who will then forward to Landlord) not fewer than thirty (30) days prior written notice. Certificates of insurance (ACORD 28 only) evidencing the existence and amounts of said insurance shall be delivered to Landlord no later than five (5) days prior to the Commencement Date (or, if Tenant leases any Available space from Landlord, no later than five (5) days prior to any ROFO Space Commencement Date), and renewals thereof shall be delivered to Landlord at least thirty (30) days prior to the expiration of any such policy. If Te nant fails to adhere to the requirements of this Section 12, Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be deemed Additional Rent hereunder and shall be payable by Tenant upon demand. Tenant's failure to provide and keep in force the aforementioned insurance shall be regarded as a material default hereunder, entitling Landlord to exercise any or all of the remedies provided in this Lease. Any policy may be carried under so-called "blanket coverage" form of insurance policies. Tenant shall obtain and furnish evidence to Landlord of the waiver by Tenant's insurance carriers of any right of subrogation against Landlord and Landlord's management company at the Building.
4. Each party hereby waives any and every right or cause of action for any and all loss of, or damage to, any of its property (whether or not such loss or damage is caused by the fault or negligence of the other party or anyone for whom said other party may be responsible), which loss or damage is covered by valid and collectible fire, extended coverage, "All Risk" or similar policies, maintained by such party or required to be maintained by such party under this Lease, but only to the extent that such loss or damage is covered under said insurance policies (if such policy or policies have been obtained) or would have been covered if such party had obtained the required insurance coverage hereunder. Written notice of the terms of said mutual waivers shall be given to each insurance carrier and said insurance policies shall be properly endorsed, if necessary, to prevent the invalidation of said insurance coverages by reason of said waivers.
5. During the Term, Landlord shall maintain a policy of casualty insurance covering the Building in such amounts and with such other coverages as are normally and customarily carried by prudent owners of comparable office buildings located in the Baltimore, Maryland area.

13. Fire or Casualty.

1. If the Premises or any part thereof shall be damaged by fire or any other cause, Tenant shall give prompt notice thereof to Landlord, or Landlord shall give prompt notice thereof to Tenant. If, in the reasonable judgment of Landlord's architect, restoration of the Premises is feasible within a period of nine (9) months from the date of the damage, Landlord shall restore the Premises to the condition existing as of the Commencement Date (or, if Tenant leases any Available space from Landlord, on the applicable ROFO Space Commencement Date), provided that adequate insurance proceeds are made available to Landlord. Within sixty (60) days after the date of the damage (or as soon thereafter as is reasonably practicable), Landlord shall provide written notice to Tenant of the amount of time that Landlord's architect reasonably determines will be necessary to restore the Premises in accordance with the terms of this Section 13. Tenant agrees to make all proceeds of Tenant's ins urance policies available to Landlord in accordance with Tenant's insurance obligations set forth in Section 12, above. In addition, Tenant shall repair and restore, at Tenant's sole expense, all Alterations, furniture, fixtures and other property of Tenant located in the Premises prior to such casualty. If the Premises are unusable (or Tenant is not able to access the Premises by any reasonable means of ingress or egress), in whole or in part, during such restoration, the Monthly Base Rent and Additional Rent hereunder shall be abated to the extent and for the period that the Premises are unusable (or inaccessible).
2. If restoration is not feasible in the reasonable judgment of Landlord's architect within the aforesaid nine (9) month period, Landlord shall so notify Tenant (in accordance with the terms of Section 13.a, above), and Landlord and Tenant shall each have the right to terminate this Lease by giving written notice thereof to the other party within sixty (60) days after the occurrence of such damage, in which event this Lease and the tenancy hereunder shall terminate as of the date of such damage or destruction and the Monthly Base Rent and Additional Rent will be apportioned as of the date of such damage or destruction. If neither party exercises its right of termination, the Premises shall be restored as provided above.
3. In case the Building is so severely damaged by fire or other casualty (although the Premises may not be affected) that Landlord shall decide in its sole discretion not to rebuild or reconstruct such Building, then this Lease and the tenancy hereunder shall terminate on the date specified by Landlord in a notice given no later than sixty (60) days after the date of such casualty.
4. If (i) neither party terminates this Lease pursuant to the terms of this Section 13, and (ii) Landlord fails to restore the Premises in accordance with the terms of this Section 13 within twelve (12) months from the date such work is commenced, which twelve (12) month period shall be extended on a day for day basis, as the result of an event of force majeure or a delay caused by Tenant or any of its employees, contractors or agents, then Tenant shall have the right, during the thirty (30) day period immediately following the expiration of such twelve (12) month period (as such period may be extended as the result of an event of force majeure or a delay caused by Tenant or any of its employees, contractors or agents), to terminate this Lease by delivering a termination notice to Landlord, in which event this Lease shall terminate as of the date of the casualty.

14. Eminent Domain.

If the Premises or any part thereof shall be taken by any governmental or quasi-governmental authority pursuant to the power of eminent domain, Tenant shall make no claim for compensation in such proceedings and shall have no right to participate in any condemnation proceedings under any statutes, laws or ordinances of the State of Maryland. All sums awarded or agreed upon between Landlord and the condemning authority for the taking of the interest of Landlord or Tenant, whether as damages or as compensation, will be the property of Landlord. In the event of such taking, Rent shall be paid to the date of vesting of title in the condemning authority. Notwithstanding the foregoing, Tenant may assert any claim that it may have against the condemning authority and receive such award therefor as may be allowed in the condemnation proceedings, if such award shall be made in addition to, and stated separately from, the award made for the Land and the Building or the part thereof so taken, and shall not reduce any award otherwise payable to Landlord.

15. Subordination and Estoppel Certificates.

1. This Lease shall be subject and subordinate at all times to all ground or underlying leases which now exist or may hereafter be executed affecting the Building or any part thereof or the Land, and to the lien of any mortgages or deeds of trust in any amount or amounts whatsoever now or hereafter placed on or against the Building or any part thereof or the Land, or on or against Landlord's interest or estate therein or on or against any ground or underlying lease without the necessity of having further instruments on the part of Tenant to effect such subordination. Upon request of Landlord, Tenant will execute any further written instrument necessary to subordinate its rights hereunder to any such underlying leases or liens. If, at any time, or from time to time during the Term, any mortgagee shall request that this Lease have priority over the lien of such mortgage, and if Landlord consents thereto, this Lease shall have priority over the lien of such mortgage and all ren ewals, modifications, replacements, consolidations and extensions thereof and all advances made thereunder and interest thereon, and Tenant shall, within fifteen (15) days after receipt of a request therefor from Landlord, execute, acknowledge and deliver any and all documents and instruments confirming the priority of this Lease. In any event, however, if this Lease shall have priority over the lien of a first mortgage, this Lease shall not become subject or subordinate to the lien of any subordinate mortgage, and Tenant shall not execute any subordination documents or instruments for any subordinate mortgagee, without the written consent of the first mortgagee. Notwithstanding the foregoing, the subordination of the Lease pursuant to this Section 15.a shall be conditioned upon the receipt by Tenant from the current mortgagee(s) of the Building (as of the Commencement Date) of a subordination non-disturbance and attornment agreement(s) ("SNDA") for Tenant's benefit on such mortgagee's standard form of SND A. Throughout the Term, upon Tenant's written request, Landlord shall use reasonable efforts to obtain from any future mortgagee an SNDA for Tenant's benefit on such mortgagee's standard form of SNDA. Tenant shall pay for (or reimburse Landlord for) all costs (including reasonable attorneys' fees) incurred by Landlord or any such mortgagee in connection with the negotiation and drafting of any such SNDA.
2. In the event of: (i) a transfer of Landlord's interest in the Building, (ii) the termination of any ground or underlying lease of the Building, or the Land, or both, or (iii) the purchase or other acquisition of the Building, or Landlord's interest therein in a foreclosure sale or by deed in lieu of foreclosure under any mortgage or deed of trust, or pursuant to a power of sale contained in any mortgage or deed of trust, then in any of such events Tenant shall, at the request of Landlord or Landlord's successor in interest, attorn to and recognize the transferee or purchaser of Landlord's interest or the interest of the lessor under the terminated ground or underlying lease, as the case may be, as "Landlord" under this Lease for the balance then remaining of the Term, and thereafter this Lease shall continue as a direct lease between such person or entity, as "Landlord," and Tenant, as "Tenant," except that such lessor, transferee or purchaser shall not be liable for any act or omissi on of Landlord before such lease termination or before such person's succession to title, nor be subject to any offset, defense or counterclaim accruing before such lease termination or before such person's succession to title, nor be bound by any payment of Monthly Base Rent or Additional Rent before such lease termination or before such person's succession to title for more than one month in advance.
3. Tenant agrees, at any time, and from time to time, upon not fewer than thirty (30) days prior notice by Landlord, to execute, acknowledge and deliver to Landlord, a statement in writing certifying that (i) this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications); (ii) the Term of the Lease has commenced and the full rental is now accruing hereunder; (iii) Tenant has accepted possession of the Premises and is presently occupying the same; (iv) all improvements required by the terms of the Lease to be made by Landlord have been completed and all tenant improvement allowances have been paid in full; (v) there are no offsets, counterclaims, abatements or defenses against or with respect to the payment of any rent or other charges due under the Lease; (vi) no rent under the Lease has been paid more than thirty (30) days in advance of its due date; (vii) to the best of the knowledge of the Tenant, Landlord is not in default in the performance of any covenant, agreement, provision or condition contained in the Lease or, if so, specifying each such default of which Tenant may have knowledge; (viii) the address for notices to be sent to Tenant; (ix) the only security deposit tendered by Tenant is as set forth in the Lease, and such security deposit has been paid to Landlord; and (x) any other information reasonably requested by Landlord or any mortgagee or ground lessor of the Building and/or the Land it being intended that any such statement delivered pursuant hereto may be relied upon by any prospective purchaser or lessee of the Building or any part thereof, any mortgagee or prospective mortgagee thereof, any prospective assignee of any mortgage thereof, any ground lessor or prospective ground lessor of the Land and/or the Building, or any prospective assignee of any such ground lease. Tenant also agrees to execute and deliver from time to time such estoppel certificates as a n institutional lender may require with respect to this Lease. Landlord agrees that within thirty (30) days after receipt of written notice from Tenant, Landlord shall deliver to Tenant, an estoppel certificate containing the same type of factual information that Tenant is required to provide to Landlord pursuant to the foregoing, with appropriate "best of knowledge" qualifications.

16. Default and Remedies.

1. If Tenant shall (i) fail to pay any installment of Monthly Base Rent within five (5) days of written notice from Landlord that such sum was due, or (ii) fail to make any payment of Additional Rent or any other payment required by the terms and provisions hereof, within five (5) days after written notice or demand therefor; or (iii) convey, assign, mortgage or sublet this Lease, the Premises or any part thereof, or Tenant's interest therein, or attempt any of the foregoing, without the prior written consent of Landlord; or (iv) abandon the Premises for a period of ten (10) consecutive calendar days (coupled with the non-payment of Rent); or (v) commit or suffer to exist an Event of Bankruptcy (hereinafter defined), or (vi) fail to maintain the insurance coverage required by Section 12, above, or (vii) violate or fail to perform any of the other terms, conditions, covenants, or agreements herein made by Tenant and fails to cure such default within fifteen (15) calendar days a fter notice, provided, however, that if the nature of Tenant's failure is such that more than fifteen (15) days are reasonably required for its cure, then Tenant shall not be in default if it begins such cure within the fifteen (15) day period described above and thereafter diligently prosecutes such cure to completion within an additional fifteen (15) days; then there shall be deemed to have been committed an "Event of Default". Notwithstanding the foregoing cure periods, in the event that Tenant breaches its covenant set forth in Section 6.a. hereof on more than two (2) occasions in any twelve (12) consecutive month period, then any subsequent breach of such covenant during the Term of this Lease shall be deemed to be an immediate Event of Default. Upon an Event of Default, at Landlord's option, this Lease shall terminate, without prejudice however, to the right of Landlord to recover from Tenant all rent and any other sums accrued up to the later of: (1) the date of termination of this Lease or (2) the date Landlord recovers possession of the Premises, and without release of Tenant from any indemnification obligations to Landlord under this Lease, which indemnification obligations arose or accrued prior to the later of: (a) the date of termination of this Lease or (b) the date Landlord recovers possession of the Premises. The foregoing is not intended to, and shall not, limit Landlord in the exercise of any other remedy for such immediate Event of Default.
2. In the event of any Event of Default by Tenant as defined in Section 16.a., Landlord may at any time thereafter, without notice and demand and without limiting Landlord in the exercise of any other right or remedy which Landlord may have by reason of such default or breach do any of the following:
1. Landlord may terminate this Lease, by giving written notice of such termination to Tenant, whereupon this Lease shall automatically cease and terminate and Tenant shall be immediately obligated to quit the Premises. Any other notice to quit or notice of Landlord's intention to re-enter the Premises is hereby expressly waived. If Landlord elects to terminate this Lease, everything contained in this Lease on the part of Landlord to be done and performed shall cease without prejudice, subject, however, to the right of Landlord to recover from Tenant all rent and any other sums accrued up to the time of termination or recovery of possession by Landlord, whichever is later.
2. With or without the termination of this Lease, Landlord may proceed to recover possession of the Premises under and by virtue of the provisions of the laws of the jurisdiction in which the Building is located, or by such other proceedings, including re-entry and possession, as may be applicable. If this Lease is terminated or Landlord recovers possession of the Premises before the expiration of the Term by reason of Tenant's default as hereinabove provided, or if Tenant shall abandon or vacate the Premises before the Lease Expiration Date without having paid the full rental for the remainder of such Term, Landlord shall have the option to take reasonable steps to relet the Premises for such rent and upon such terms as are not unreasonable under the circumstances and, if the full rental reserved under this Lease (and any of the costs, expenses or damages indicated below) shall not be realized by Landlord, Tenant shall be liable for all damages sustained by Landlord, including, without limitation, deficiency in rent during any period of vacancy or otherwise; the costs of removing and storing the property of Tenant or of any other occupant; all reasonable expenses incurred by Landlord in enforcing Landlord's remedies, including, without limitation, reasonable attorneys' fees and Late Charges as provided herein, and advertising, brokerage fees and expenses of placing the Premises in first class rentable condition. Landlord, in putting the Premises in good order or preparing the same for rerental may, at Landlord's option, make such alterations, repairs, or replacements in the Premises as Landlord, in its sole judgment, considers advisable and necessary for the purpose of reletting the Premises, and the making of such alterations, repairs, or replacements shall not operate or be construed to release Tenant from liability hereunder as aforesaid.
3. Any damage or loss of rent sustained by Landlord may be recovered by Landlord, at Landlord's option, at the time of termination of this Lease, the time of the reletting, or in separate actions, from time to time, as said damage shall have been made more easily ascertainable by successive relettings, or at Landlord's option in a single proceeding deferred until the expiration of the Term (in which event Tenant hereby agrees that the cause of action shall not be deemed to have accrued until the date of expiration of said Term) or in a single proceeding prior to either the time of reletting or the expiration of the Term. If the Landlord elects to repossess the Premises without terminating this Lease, then Tenant shall be liable for and shall pay to Landlord all Rent and other indebtedness accrued to the date of such repossession, plus Rent required to be paid by Tenant to Landlord during the remainder of this Lease until the date of expiration of the Term, diminished by any net sums ther eafter received by Landlord through reletting the Premises during such period (after deducting expenses incurred by Landlord as provided in Section 16.b.(ii), above). In no event shall Tenant be entitled to any excess of any Rent obtained by reletting over and above the Rent herein reserved. Actions to collect amounts due from Tenant as provided in this Section 16.a.(iii) may be brought from time to time, on one or more occasions, without the necessity of Landlord's waiting until expiration of this Lease term. Upon termination of this Lease or repossession of the Premises following a default hereunder, Landlord shall have no obligation to relet or attempt to relet the Premises or any portion thereof or to collect rental after reletting; and in the event of reletting Landlord may relet the whole or any portion of the Premises for any period, to any tenant, and for any use and purpose on such terms and at such rentals as Landlord in its exclusive judgment may determine.
3. Notwithstanding the foregoing, if Landlord terminates this Lease pursuant to Section 16.b.(i), above, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord on demand, as and for liquidated and agreed final damages for Tenant's default, an amount equal to the difference between (i) all Monthly Base Rent, Additional Rent and other sums which would be payable under this Lease from the date of such demand (or, if it is earlier, the date to which Tenant shall have satisfied in full its obligations under Section 16.b.(ii), above) for what would be the then unexpired Term in the absence of such termination, and (ii) the fair market rental value of the Premises over the same period (net of all expenses and all vacancy periods reasonably projected by Landlord to be incurred in connection with the reletting of the Premises), with such differential discounted at the rate of seven percent (7%) per annum. Nothing herein shall be construed to affect or prejudice Landlo rd's right to prove, and claim in full, unpaid Rent or any other amounts accrued prior to termination of this Lease.
4. Notwithstanding anything herein to the contrary, upon the occurrence of an Event of Default hereunder, Landlord, with or without terminating the Lease, may immediately reenter and take possession of the Premises and evict Tenant therefrom, without legal process of any kind, using such force as may be necessary, without being liable for or guilty of trespass, forcible entry or any other tort. Landlord's right to exercise such "self-help" remedy shall be in addition to, and not in limitation of, Landlord's other rights and remedies hereunder for a breach by Tenant of its obligations under the Lease.
5. Tenant hereby expressly waives any and all rights of redemption granted by or under any present of future laws in the event Tenant is evicted or dispossessed for any cause, or in the event Landlord obtains possession of the Premises, by reason of the violation by Tenant of any of the covenants and conditions of this Lease or otherwise. In addition, Tenant hereby expressly waives any and all rights to bring any action whatsoever against any tenant taking possession after Tenant has been dispossessed or evicted hereunder, or to make any such tenant or party to any action brought by Tenant against Landlord.
6. Landlord and Tenant shall and each does hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Lease or its termination, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises or any claim of injury or damage and any emergency statutory or any other statutory remedy. In the event Landlord commences any summary proceeding for nonpayment of Rent or Additional Rent, or commences any other action or proceeding against Tenant in connection with this Lease, Tenant will interpose no counterclaim of whatever nature or description in any such proceeding.
7. Nothing contained herein shall prevent the enforcement of any claim Landlord may have against Tenant for anticipatory breach of the unexpired Term. In the event of a breach or anticipatory breach by Tenant of any of the covenants or provisions hereof, Landlord shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if reentry, summary proceedings and other remedies were not provided for herein.
8. In the event of any default by Landlord, Tenant's exclusive remedy shall be an action for damages, but prior to any such action Tenant will give Landlord notice specifying such default with particularity, and Landlord shall have thirty (30) days after receipt of such notice in which to cure any such default; provided, however, that if such default cannot, by its nature, be cured within such period, Landlord shall not be deemed in default if Landlord shall within such period commence to cure such default and shall diligently prosecute the same to completion. Unless and until Landlord fails so to cure any default after notice, Tenant shall have no remedy or cause of action by reason thereof. All obligations of Landlord hereunder will be construed as covenants, not conditions; all such obligations will be binding upon Landlord only during the period of its ownership of the Building and not thereafter; and no default or alleged default by Landlord shall relieve or delay performance by Te nant of its obligations to continue to pay Annual Base Rent and Additional Rent hereunder as and when the same shall be due.

17. Bankruptcy.

1. For purposes of this Lease, the following shall be deemed "Events of Bankruptcy": (i) if a receiver or custodian is appointed for any or all of Tenant's property or assets, or if there is instituted a foreclosure action on any of Tenant's property; or (ii) if Tenant files a voluntary petition under 11 U.S.C. Article 101, et seq., as amended (the "Bankruptcy Code"), or under the insolvency laws of any jurisdiction (the "Insolvency Laws"); or (iii) if there is filed an involuntary petition against Tenant as the subject debtor under the Bankruptcy Code or Insolvency Laws, which is not dismissed within sixty (60) days of filing; or (iv) if Tenant makes or consents to an assignment of its assets, in whole or in part, for the benefit of creditors, or a common law composition of creditors; or (v) if Tenant generally is not paying its debts as its debts become due.
2. Upon the occurrence of an Event of Bankruptcy, Landlord, at its option and sole discretion, may terminate this Lease by written notice to Tenant (subject, however, to applicable provisions of the Bankruptcy Code or Insolvency Laws during the pendency of any action thereunder). If this Lease is terminated under this Section 17, Tenant shall immediately surrender and vacate the Premises, waives all statutory or other notice to quit, and agrees that Landlord shall have all rights and remedies against Tenant provided in Section 16 in case of an Event of Default by Tenant.
3. If Tenant becomes the subject debtor in a case pending under the Bankruptcy Code (the "Bankruptcy Case"), Landlord's right to terminate this Lease under this Section 17 shall be subject to the applicable rights (if any) of the debtor-in-possession or the debtor's trustee in bankruptcy (collectively, the "Trustee") to assume or assign this Lease as then provided for in the Bankruptcy Code, however, the Trustee must give to Landlord, and Landlord must receive, proper written notice of the Trustee's assumption or rejection of this Lease, within sixty (60) days (or such other applicable period as is provided pursuant to the Bankruptcy Code, it being agreed that sixty (60) days is a reasonable period of time for election of an assumption or rejection of this Lease) after the commencement of the Bankruptcy Case; it being agreed that failure of the Trustee to give notice of such assumption hereof within said period shall conclusively and irrevocably constitute the Trustee's rejection of this Lease and waiver of any right of the Trustee to assume or assign this Lease. The Trustee shall not have the right to assume or assign this Lease unless said Trustee (i) promptly and fully cures all defaults under this Lease, (ii) promptly and fully compensates Landlord and any third party (including other tenants) for all monetary damages incurred as a result of such default, and (iii) provides to Landlord "adequate assurance of future performance." Landlord and Tenant (which term may include the debtor or any permitted assignee of debtor) hereby agree in advance that "adequate assurance of performance" as used in this paragraph, shall mean that all of the following minimum criteria must be met: (1) the source of Monthly Base Rent, Additional Rent, and other consideration due under this Lease, and the financial condition and operating performance of Tenant, and its guarantor, if any, shall be similar to the financial condition and operating performance of Tenant as of the Commencement Date; (2) Trustee or Tenant must pay to Landlord all Monthly Base Rent and Additional Rent payable by Tenant hereunder in advance, (3) Trustee or Tenant must agree (by writing delivered to Landlord) that the use of the Premises shall be used only for the permitted use as stated in this Lease, and that any assumption or assignment of this Lease is subject to all of the provisions thereof and will not violate or affect the rights or agreements of any other tenants or occupants in the Building or of Landlord (including any mortgage or other financing agreement for the Building, (4) Trustee or Tenant must pay to Landlord at the time the next Monthly Base Rent is due under this Lease, in addition to such installment of Monthly Base Rent, an amount equal to the installments of Monthly Base Rent and Additional Rent due under this Lease for the next six (6) months of this Lease, said amount to be held by Landlord in escrow until either Trustee or Tenant defaults in its payment of Monthly Base Rent and Additional Rent or other obligatio ns under this Lease (whereupon Landlord shall have the right to draw on such escrowed funds) or until the expiration of this Lease (whereupon the funds shall be returned to Trustee or Tenant except to the extent the funds have been drawn and not replaced); and (5) Trustee or Tenant must agree to pay to Landlord at any time Landlord is authorized to and does draw on the escrow account the amount necessary to restore such escrow account to the original level required by clause (4), above. The criteria stated above are not intended to be exhaustive or all-inclusive and Landlord may determine that the circumstances of Tenant or of this Lease require other or further assurances of future performance. In the event Tenant is unable to: (a) cure its defaults, (b) reimburse Landlord for its monetary damages, (c) pay the Monthly Base Rent and Additional Rent due under this Lease on time, or (d) meet that criteria and obligations imposed by (1) through (5), above, then Tenant hereby agrees in advance that it has not met its burden to provide adequate assurance of future performance, and this Lease may be terminated by Landlord in accordance with Section 17.b., above.

18. Payment of Tenant's Obligations by Landlord and Unpaid Rent.

All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant's sole cost and expense. If Tenant shall fail to pay any sum of money, other than Rent, required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder, and such failure shall continue beyond receipt by Tenant of notice from Landlord of such failure and the expiration of any applicable grace period set forth in this Lease, Landlord may, without waiving or releasing Tenant from any of its obligations hereunder, make any such payment or perform any such other required act on Tenant's part. All sums so paid by Landlord, and all necessary incidental costs, together with interest thereon at three percentage points (3%) over the Prime Rate then in effect, from the date of such payment by Landlord, shall be payable by Tenant to Landlord as Additional Rent hereunder, on demand, and Tenant covenants and agrees to pay any such sums. Landlord shall have (in addition to any other right or remedy of Landlord hereunder or at law) the same rights and remedies in the event of the nonpayment thereof by Tenant as in the case of default by Tenant in the payment of Additional Rent. In addition, any Rent, including, without limitation, Annual Base Rent, Additional Rent, Tenant's Pass-Through Costs and/or Late Charges, which is not paid timely will accrue interest per annum at three percentage points (3%) over the Prime Rate from the date such payment is due until the date paid in full (including all accrued interest).

19. Voluntary Surrender.

The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the sole option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the sole option of Landlord, operate as an assignment to Landlord of any or all such subleases or subtenancies; provided however, that if Landlord elects to treat such termination as an assignment of any such sublease, Landlord shall have no obligation or liability to the subtenant thereunder for any claim, damage or injury which accrued prior to the date of surrender or mutual cancellation hereunder.

20. Abandonment of Personal Property.

Upon the expiration of the Term or earlier termination of this Lease, Tenant shall forthwith remove Tenant's goods and effects and those of any other persons claiming through or under Tenant, or subtenancies assigned to it, and quit and deliver the Premises to the Landlord peaceably and quietly. Goods and effects not removed by Tenant after termination of this Lease (or within forty-eight (48) hours after a termination by reason of Tenant's default) shall be considered abandoned. Landlord shall give Tenant written notice of right to reclaim abandoned property pursuant to applicable local law and may thereafter dispose of the same as Landlord deems expedient, including public or private sale and/or storage in a public warehouse or elsewhere at the sole cost, and for the account, of Tenant, and Tenant shall promptly upon demand reimburse Landlord for any reasonable expenses incurred by Landlord in connection therewith, including reasonable attorneys' fees.

21. Hold-Over.

If Tenant shall not immediately surrender the Premises at the expiration of the Term then Tenant shall, by virtue of the provisions of this Section 21, become a tenant by the month. In such event Tenant shall be required to pay (unless Landlord and Tenant are negotiating in good faith to extend the Term of the Lease) one hundred fifty percent (150%) (which percentage shall be increased to two hundred percent (200%) as of the sixty-first (61^st) day of such holdover) of the amount of the Monthly Base Rent then in effect and as subsequently escalated in accordance with the provisions hereof (but in no event less than the then-current fair market rental value for the Premises), together with all Additional Rent in effect during the last month of the Term commencing said monthly tenancy with the first day next after the end of the Term; and said Tenant, as a month-to-month tenant, shall be subject to all of the conditions and covenants of this Lease as though the same had originally been a monthly tenancy, except as otherwise provided above with respect to the payment of Rent. Each party hereto shall give to the other at least thirty (30) days written notice to quit the Premises, except in the event of non-payment of Rent provided for herein when due, or of the breach of any other covenant by the said Tenant, in which event, Tenant shall not be entitled to any notice to quit, the usual thirty (30) days notice to quit being expressly waived; provided, however, that in the event that Tenant shall hold over after expiration of the Term, and if Landlord shall desire to regain possession of said Premises promptly at the expiration of the Term, then at any time prior to the acceptance of the Rent by Landlord from Tenant, as a monthly tenant hereunder, Landlord, at its election or option, may reenter and take possession of the Premises forthwith by any legal action or process in the State of Maryland.

22. Options to extend term.

a. Tenant shall have and is hereby granted the option to extend the Term hereof for two (2) periods of five (5) years each (each, an "Extension Period"), commencing on the date immediately following the Lease Expiration Date or the last day of the first Extension Period, as applicable, provided that: (i) Tenant delivers written notice (the "Extension Notice") to Landlord, not more than fifteen (15), or less than twelve (12), months prior to the Lease Expiration Date or the last day of the first Extension Period, as applicable, time being of the essence, of Tenant's irrevocable election to exercise such extension option; (ii) no Event of Default has occurred during the Term (including, if applicable, the first Extension Period) and no event exists at the time of the exercise of such option or arises subsequent thereto, which event by notice and/or the passage of time would constitute an Event of Default if not cured within the applicable cure period; and (iii) Tenant has no t assigned its interest in the Lease or sublet more than fifty percent (50%) of the Premises (other than to a Permitted Transferee).

b. All terms and conditions of the Lease, including without limitation all provisions governing the payment of Additional Rent and annual increases in Annual Base Rent, shall remain in full force and effect during the applicable Extension Period, except that (i) Annual Base Rent (on a per rentable square foot basis) payable during each Extension Period shall equal the Fair Market Rental Rate (hereinafter defined) at the time of the commencement of the applicable Extension Period; (ii) Landlord shall provide an improvement allowance, rental abatement and other tenant concessions comparable to those concessions then being offered in connection with lease renewals involving comparable space in comparable buildings in downtown Baltimore for a comparable term; and (iii) the "Base Year" for determining Tenant's Pass-Through Costs shall be the calendar year in which occurs the first day of the applicable Extension Period. As used in this Lease, the term "Fair Market Rental Rate" shall mean the fair market rental rate that would be agreed upon between a landlord and a tenant entering into a lease renewal for comparable space as to location, configuration, size and use, in a comparable building as to quality, reputation and age which is located in downtown Baltimore with a comparable build-out and a comparable term assuming the following: (A) the landlord and tenant are informed and well-advised and each is acting in what it considers its own best interests; (B) the landlord shall provide an improvement allowance, free rent period and other tenant concessions as set forth in subjection (ii), above; and (C) the tenant will continue to pay Tenant's Pass-Through Costs using a Base Year as described in subsection (iii), above.

c. Landlord and Tenant shall negotiate in good faith to determine the Annual Base Rent for the applicable Extension Period, for a period of thirty (30) days after the date on which Landlord receives the Extension Notice. In the event Landlord and Tenant are unable to agree upon the Annual Base Rent for the applicable Extension Period within said thirty (30)-day period, the Fair Market Rental Rate for the Premises shall be determined by a board of three (3) licensed real estate brokers, one of whom shall be named by the Landlord, one of whom shall be named by Tenant, and the two so appointed shall select a third (the "Third Broker"). Each real estate broker so selected shall be licensed in the State of Maryland as a real estate broker specializing in the field of office leasing in downtown Baltimore, having no fewer than ten (10) years experience in such field, and recognized as ethical and reputable within the field. Landlord and Tenant agree to make their appointmen ts promptly within ten (10) days after the expiration of the thirty (30)-day period, or sooner if mutually agreed upon. The two (2) brokers selected by Landlord and Tenant shall select the Third Broker within ten (10) days after they both have been appointed, and all three (3) brokers shall, within fifteen (15) days after the Third Broker is selected, submit his or her determination of the Fair Market Rental Rate. The Third Broker shall determine which determination of Fair Market Rental Rate made by Landlord's broker or Tenant's broker is closest to the determination of Fair Market Rental Rate made by the Third Broker (the "Closest Determination"). The Fair Market Rental Rate hereunder shall be the mean of the Closest Determination and the determination of Fair Market Rental Value made by the Third Broker. Landlord and Tenant shall each pay the fee of the broker selected by it, and they shall equally share the payment of the fee of the Third Broker.

d. Should the Term of the Lease be extended hereunder, Tenant shall, if required by Landlord, execute a mutually agreeable amendment modifying the Lease within ten (10) business days after Landlord presents same to Tenant, which agreement shall accurately set forth the Annual Base Rent for each year of the applicable Extension Period and the other economic terms and provisions in effect during the applicable Extension Period. Should Tenant fail to execute the amendment (which amendment accurately sets forth the economic terms and provisions in effect during the applicable Extension Period) within ten (10) business days after presentation of same by Landlord, time being of the essence, Tenant's right to extend the Term of the Lease shall, at Landlord's sole option, terminate, and Landlord shall be permitted to lease such space to any other person or entity upon whatever terms and conditions are acceptable to Landlord in its sole discretion.

23. Parking.

1. After the Commencement Date, Tenant shall have the right to obtain, and pay for, seventy-seven (77) unreserved parking spaces (the "Spaces") located in the parking facility serving the Building (the "Parking Facility"). Tenant shall pay the operator of the Parking Facility the then-prevailing monthly charge established by Landlord or such operator for each of the Spaces. In the event Tenant subsequently relinquishes in any manner use of such Spaces, Landlord shall be under no obligation to obtain replacement Spaces. Subject to availability, Tenant shall have the right to contract with the operator of the Parking Facility for the use of additional parking spaces in the Parking Facility.
2. Tenant agrees that it and its employees shall observe reasonable safety precautions in the use of the Parking Facility, and shall at all times abide by all rules and regulations promulgated by Landlord or the operator of the Parking Facility governing the use of the Parking Facility. Tenant understands and agrees that Landlord does not assume any responsibility for any damage or loss to any automobiles parked in the Parking Facility, or to any personal property located therein or thereon, or for any injury sustained by any person in or about the Parking Facility.

24. Notices.

Any and all notices or demands required or permitted herein shall be in writing and served (a) personally, (b) by certified mail, return receipt requested, or (c) by guaranteed overnight courier, at the addresses provided in Section 1.h. above. If served personally, service shall be conclusively deemed made at the time of such delivery. If served by certified mail or overnight courier, service shall be conclusively deemed made upon receipt or at the time delivery is refused. Either party may specify a different address according to the terms of this Section 24 by providing written notice to the other party in accordance with the terms of this Section 24.

25. Brokers.

Landlord and Tenant recognize ACP Mid-Atlantic, LLC, as Landlord's broker, and Trammell Crow Services, Inc. and Colliers Pinkard, as Tenant's brokers (collectively, the "Brokers") as the sole brokers with respect to this Lease and Landlord agrees to be responsible for the payment of any leasing commissions owed to the aforesaid Brokers in accordance with the terms of separate commission agreements entered into between Landlord and each of said Brokers. Landlord and Tenant each represents and warrants to the other that, except for the Brokers, no other broker has been employed in carrying on any negotiations relating to this Lease and shall each indemnify and hold harmless the other from any claim for brokerage or other commission arising from or out of any breach of the foregoing representation and warranty.

26. Environmental Concerns.

1. Except as otherwise expressly set forth in the rules and regulations attached hereto as Exhibit D, Tenant, its agents, employees, contractors or invitees shall not (i) cause or permit any Hazardous Materials (hereinafter defined) to be brought upon, stored, used or disposed on, in or about the Premises and/or the Building, or (ii) knowingly permit the release, discharge, spill or emission of any Hazardous Material in or from the Premises.
2. Tenant hereby agrees that it is and shall be fully responsible for all costs, expenses, damages or liabilities (including, but not limited to those incurred by Landlord and/or its mortgagee) which may occur from the use, storage, disposal, release, spill, discharge or emissions of Hazardous Materials by Tenant whether or not the same may be permitted by this Lease. Tenant shall defend, indemnify and hold harmless Landlord, its mortgagee and its agents from and against any claims, demands, administrative orders, judicial orders, penalties, fines, liabilities, settlements, damages, costs or expenses (including, without limitation, reasonable attorney and consultant fees, court costs and litigation expenses) of whatever kind or nature, known or unknown, contingent or otherwise, arising out of or in any way related to the use, storage, disposal, release, discharge, spill or emission of any Hazardous Material, or the violation of any Environmental Laws (hereinafter defined), by Tenant, its agents, employees, contractors or invitees. The provisions of this Section 26 shall be in addition to any other obligations and liabilities Tenant may have to Landlord at law or in equity and shall survive the transactions contemplated herein or any termination of this Lease.
3. As used in this Lease, the term "Hazardous Materials" shall include, without limitation:
1. those substances included within the definitions of "hazardous substances", "hazardous materials," toxic substances," or "solid waste" in the Comprehensive Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. sec.9601 et seq.) ("CERCLA"), as amended by Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Resource Conservation and Recovery Act of 1976 ("RCRA"), and the Hazardous Materials Transportation Act, and in the regulations promulgated pursuant to said laws, all as amended;
2. those substances listed in the United States Department of Transportation Table (49 CFR 172.101 and amendments thereto) or by the Environmental Protection Agency (of any successor agency) as hazardous substances (40 CFR Part 302 and amendments thereto); and
3. any material, waste or substance which is (A) petroleum, (B) asbestos, (C) polychlorinated biphenyl, (D) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. sec.1251 et seq. (33 U.S.C. sec.1321) or listed pursuant to Section of the Clean Water Act (33 U.S.C. sec.1317); (E) flammables or explosives; or (F) radioactive materials.
4. All federal, state or local laws, statutes, regulations, rules, ordinances, codes, standards, orders, licenses and permits of any governmental authority or issued or promulgated thereunder shall be referred to as the "Environmental Laws".
5. Landlord represents to Tenant that as of the Effective Date, except as may have been previously disclosed to Tenant in writing, to the best of Landlord's knowledge (without investigation or inquiry), the Building is free from Hazardous Materials in violation of any Environmental Laws. In the event that there exists in the Building after the Commencement Date any Hazardous Materials in violation of any Environmental Laws, except for Hazardous Materials introduced by Tenant, its agents, contractors, employees, assignees or subtenants, and, if an order (after all final appeals have been exhausted) of any court or governmental entity requires that such violation be cured, then Landlord shall promptly cure such violation, or cause such violation to be cured.

27. Landlord's Lien.

Intentionally Omitted.

28. Rules and Regulations.

Tenant shall at all times comply with the rules and regulations set forth in Exhibit D attached hereto and with any reasonable additions thereto and modifications thereof adopted from time to time by Landlord; Tenant shall be given five (5) days written notice of any such additions and modifications. Each such rule or regulation shall be deemed to be a covenant of this Lease to be performed and observed by Tenant. Landlord shall not discriminate against Tenant in its enforcement of the rules and regulations..

29. Quiet Enjoyment.

Landlord covenants that, so long as no Event of Default exists, Tenant shall at all times during the Term peaceably and quietly have, hold and enjoy the Premises without disturbance from Landlord, subject to the terms of this Lease and to the rights of the parties presently or hereinafter secured by any deed of trust or mortgage against the Building.

30. USA Patriot act and anti-terrorism laws.

1. Tenant represents and warrants to, and covenants with, Landlord that neither Tenant nor any of its respective constituent owners or affiliates currently are, or shall be at any time during the Term hereof, in violation of any laws relating to terrorism or money laundering (collectively, the "Anti-Terrorism Laws"), including without limitation Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the "Executive Order") and/or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the "USA Patriot Act").
2. Tenant covenants with Landlord that neither Tenant nor any of its respective constituent owners or affiliates is or shall be during the Term hereof a "Prohibited Person," which is defined as follows: (i) a person or entity that is listed in the Annex to, or is otherwise subject to, the provisions of the Executive Order; (ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity with whom Landlord is prohibited from dealing with or otherwise engaging in any transaction by any Anti-Terrorism Law, including without limitation the Executive Order and the USA Patriot Act; (iv) a person or entity who commits, threatens or conspires to commit or support "terrorism" as defined in Section 3(d) of the Executive Order; (v) a person or entity that is named as a "specially designated national and blocked person" on the then-m ost current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf, or at any replacement website or other replacement official publication of such list; and (vi) a person or entity who is affiliated with a person or entity listed in items (i) through (v), above.
3. At any time and from time-to-time during the Term, Tenant shall deliver to Landlord, within ten (10) business days after receipt of a written request therefor, a written certification or such other evidence reasonably acceptable to Landlord evidencing and confirming Tenant's compliance with this Section 30.

31. RIGHT OF FIRST OFFER.

a. From and after the Effective Date, and subject to (i) any expansion rights, renewal rights, rights of first offer or refusal or other rights possessed by any tenant in the Building with respect to the Right of First Offer Space (hereinafter defined) or any portion thereof existing as of the Effective Date, and (ii) any renewal rights granted by Landlord after the Effective Date to any tenant of all or any portion of the Right of First Offer Space, Tenant shall be granted the following rights with respect to the Right of First Offer Space. As used herein, the term "Right of First Offer Space" shall mean any space on the fourteenth (14^th), eighteenth (18^th), nineteenth (19^th) or twentieth (20^th) floors of the Building which becomes available for lease by third parties, subject to the terms of this Section 31. Notwithstanding any provision of the Lease to the contrary, Tenant shall have no rights with respect to the Right of First Offe r Space or any other rights of first offer or refusal, or first right to negotiate, or any other expansion rights whatsoever, except as expressly provided in this Section 31.

b. In the event that any Right of First Offer Space becomes or is reasonably anticipated by Landlord to become vacant and available to lease by Tenant after the Effective Date, then, except as provided below, Landlord shall notify Tenant in writing (the "ROFO Notice"), and Landlord shall set forth in the ROFO Notice: (i) a description of the portion of the Right of First Offer Space that is reasonably anticipated by Landlord to become available for lease by Tenant (the "Available Space"), (ii) the base rent, tenant concessions and other terms and conditions pursuant to which Landlord would agree to lease the Available Space to Tenant (which base rent and tenant concessions shall be comparable to the base rent and tenant concessions then being offered by landlords to tenants leasing comparable space in comparable buildings in downtown Baltimore), and (iii) the date on which Landlord anticipates that the Available Space would become available for lease by Tenant (th e "ROFO Availability Date"). Provided that (A) no Event of Default then exists under the Lease (or, if Landlord delivers the ROFO Availability Notice prior to the Commencement Date, no default by Tenant, as sublessee, then exists under the DB Sublease); (B) Tenant has not assigned the Lease (or, if Landlord delivers the ROFO Availability Notice prior to the Commencement Date, Tenant has not assigned its interest, as sublessee, under the DB Sublease), or sublet twenty-five percent (25%) or more of the Premises (other than to a Permitted Transferee) (or, if Landlord delivers the ROFO Availability Notice prior to the Commencement Date, Tenant has not sub-sublet twenty-five percent (25%) or more of the premises demised to Tenant, as sublessee, under the DB Sublease (other than to a Permitted Transferee)); (C) not less than thirty-six (36) months remain in the Term as of the ROFO Availability Date; and (D) Tenant notifies Landlord, in writing, within ten (10) business days after Ten ant receives the ROFO Notice, time being of the essence, of Tenant's irrevocable election to lease all (but not less than all) of the Available Space described in the ROFO Notice on the terms and conditions set forth in the ROFO Notice (the "ROFO Tenant Election Notice"), Tenant shall have the right to lease all, but not less than all, of the Available Space described in the ROFO Notice on the terms and conditions set forth in the ROFO Notice.

c. In the event that Tenant timely delivers a ROFO Tenant Election Notice to Landlord, Landlord shall prepare an amendment modifying the Lease to incorporate the Available Space (the "ROFO Amendment"), which amendment shall set forth, among other things: (i) the amount of Annual Base Rent for the Available Space (based on the per rentable square foot rental rate set forth in the ROFO Notice); and (ii) the adjustments to Tenant's obligation to pay Additional Rent caused by the addition of the Available Space. The term of the demise of the Available Space (the "Right of First Offer Space Term") shall commence on the date on which Landlord delivers such Available Space to Tenant (the "ROFO Space Commencement Date"), at which time all of Tenant's obligations with respect to the Available Space shall commence; provided, however, that Tenant's obligation to pay Annual Base Rent with respect to the Available Space shall commence on the date which is the earlier to occur of ( 1) the date which is ninety (90) days after the ROFO Space Commencement Date, or (2) the date on which Tenant commences business operations in the Available Space. The Right of First Offer Space Term shall be coterminous with the Term of the Lease. Notwithstanding anything to the contrary contained in this Lease, Landlord and Tenant hereby acknowledge and agree that: (A) the Improvement Allowance shall only be utilized by Tenant with respect to Tenant Improvements made by or on behalf of Tenant in the Premises pursuant to the terms of the Work Agreement; and (B) the terms of Section 4.a(iii) and Section 4.b(v), above, shall not apply with respect to the leasing by Tenant of any Available Space.

d. In the event that Landlord and Tenant enter in a ROFO Amendment, and Landlord is unable to deliver to Tenant possession of the Available Space demised thereunder on the ROFO Availability Date for any reason whatsoever, including without limitation the failure of an existing tenant to vacate such space, Landlord shall not be liable or responsible for any claims, damages or liabilities in connection therewith or by reason thereof, provided that (i) Landlord shall use reasonable efforts to obtain possession of such space and deliver same to Tenant as soon as reasonably practicable thereafter; and (ii) rent with respect to the Available Space shall abate until Landlord delivers the Available Space to Tenant.

e. In the event Tenant fails timely to deliver a ROFO Tenant Election Notice to Landlord or, having done so, Tenant fails to execute the ROFO Amendment tendered by Landlord within ten (10) business days after Landlord tenders such amendment to Tenant: (i) Landlord may lease the Available Space (or any portion thereof) described in the ROFO Notice to any person or entity of Landlord's choice, on whatever terms and conditions are selected by Landlord in its sole discretion; and (ii) this Section 31 shall terminate automatically, and Tenant shall have no further right to lease any Right of First Offer Space.

32. EXTERIOR SIGNAGE.

a. During the Term, Tenant shall have the right to continue to display the Existing Exterior Signage (hereinafter defined) on the exterior of the Building, subject to the terms and conditions set forth in this Section 32. As used herein, the term "Existing Exterior Signage" shall collectively mean (i) that certain exterior building sign bearing Tenant's name located on the top level of the exterior of the Building, and (ii) that certain exterior building sign bearing Tenant's name located adjacent to the main entrance to the Building, which signage (and the installation and location thereof) has been previously approved in writing by Landlord prior to the Commencement Date in connection with the DB Sublease. The Existing Exterior Signage shall remain in the location approved in writing by Landlord.

b. From and after the Commencement Date, and provided that Deutsche Bank has removed all signage bearing Deutsche Bank's name and/or logo from the top level of the exterior of the Building ("DB Exterior Signage") and Tenant is then leasing and in occupancy (i.e. Tenant has not sublet or vacated such space) of at least seventy thousand (70,000) rentable square feet of office space in the Building pursuant to the Lease, Tenant shall have the right to install, at Tenant's sole cost and expense, an additional sign bearing Tenant's name (the "Additional Exterior Sign") on the top level of the exterior of the Building, in the location shown on the attached Exhibit E. All attributes of the Additional Exterior Sign, including without limitation size, materials and color, shall be subject to Landlord's prior approval, which approval shall not be unreasonably withheld, conditioned or delayed by Landlord. Prior to installing the Additional Exterior Sign, Tenant shall submit to Landlord for its approval a drawing of the Additional Exterior Sign, which drawing shall specify the dimensions, materials, color and other attributes of the Additional Exterior Sign which Tenant desires to install. Tenant's right to install the Additional Exterior Sign shall be subject to Tenant's receipt of all necessary permits and governmental approvals for such installation; provided that the failure to obtain such permits or approvals shall not affect the Lease (or Tenant's obligations hereunder) in any way. Tenant shall be responsible for repairing and maintaining the Existing Exterior Signage and the Additional Exterior Sign in a first-class condition throughout the Term and shall pay for the cost of all electricity consumed by the Existing Exterior Signage and the Additional Exterior Sign. The Additional Exterior Sign shall be installed by a licensed contractor reasonably acceptable to Landlord using a mounting procedure approved by Landlord in its sole discretion. Tenant shall cause its insura nce carrier to include the Existing Exterior Signage and the Additional Exterior Sign in the coverage required to be obtained by Tenant pursuant to Section 12, above. The right to install and maintain the Existing Exterior Signage and the Additional Exterior Sign shall be personal to Stifel, Nicolaus & Company, Incorporated and shall not be applicable to any sublessee of Tenant, or any assignee of Tenant (except any assignee which is also a Permitted Transferee). Tenant agrees to indemnify Landlord and hold it harmless from and against all claims, damage or liability (including attorneys' fees) sustained or suffered by Landlord arising out of or related to the installation, maintenance, repair or removal of the Existing Exterior Signage and the Additional Exterior Sign. Tenant shall remove the Existing Exterior Signage and the Additional Exterior Sign at the end of the Term (or earlier if such removal is required prior to the expiration of the Term pursuant to the terms of this Lease) and shall r estore the portions of the Building affected by such removal to their condition immediately prior to the installation of such signage, ordinary wear and tear excepted. If Tenant fails to remove the Existing Exterior Signage and/or the Additional Exterior Sign at the expiration of the Term (or earlier if such removal is required prior to the expiration of the Term pursuant to the terms of this Lease) or fails to restore the portions of the Building affected by such removal, Landlord may, but shall not be obligated to remove the Existing Exterior Signage and/or the Additional Exterior Sign, as applicable, and/or restore the portion of the Building affected thereby, and Tenant shall reimburse Landlord for all reasonable costs and expenses incurred by Landlord with respect to such removal and/or restoration immediately upon demand therefor. Notwithstanding anything to the contrary contained herein, Tenant hereby expressly acknowledges and agrees that if at any time during the Term Tenant is not then leasing an d in occupancy (i.e. Tenant has not sublet or vacated such space) of at least fifty thousand (50,000) rentable square feet of office space in the Building pursuant to the Lease, then, at Landlord's option, Tenant shall remove the Existing Exterior Signage and the Additional Signage and shall restore the portions of the Building affected by such removal to their condition immediately prior to the installation of such signage, ordinary wear and tear excepted (which removal and restoration shall be undertaken by Tenant in accordance with the terms and conditions of this Section 32.b within thirty (30) days after receipt of notice from Landlord).

c. Subject to the terms of this Section 32.c, Landlord and Tenant hereby expressly acknowledge and agree that, from and after the Commencement Date, so long as Tenant then leases and occupies (i.e. Tenant has not sublet or vacated such space) at least seventy-five thousand (75,000) rentable square feet of space in the Building, and provided that (i) Deutsche Bank has removed all DB Exterior Signage and (ii) no other tenant in the Building leases more space in the Building than Tenant, Landlord shall not permit any tenant of the Building (other than Tenant) to install exterior signage on the top level of the exterior of the Building. Notwithstanding anything in the Lease to the contrary, at any time during the Term, Landlord shall have the right to permit a Larger Tenant (hereinafter defined) to install an exterior sign on the east or west side of the top level of the exterior of the Building (the "Larger Tenant Exterior Sign"); provided that before permitting such Larger Tenant to install its exterior sign on the east or west side of the top level of the Building, Landlord shall permit Tenant to select the side (i.e. the east or west side) of the top level of the exterior of the Building on which the Larger Tenant shall install the Larger Tenant Exterior Sign, which selection shall be made by Tenant within ten (10) business days after notice from Landlord, time being of the essence. If Tenant fails to timely select a side of the building for the location of the Larger Tenant Exterior Sign, the Larger Tenant shall select the side (i.e. the east or west side) of the top of the exterior of the Building on which to install the Larger Tenant Exterior Sign without regard to Tenant's rights hereunder. In the event Landlord permits a Larger Tenant to install a Larger Tenant Exterior Sign, Tenant shall promptly remove Tenant's exterior sign located on the side of the Building on which the Larger Tenant Exterior Sign shall be located, and restore the portions of the Building affected by su ch removal in accordance with the terms of Section 32.b, above. As used herein, the term "Larger Tenant" shall mean a tenant of the Building which leases, at a minimum, rentable square footage in the Building equal to the greater of (1) ninety thousand (90,000) rentable square feet; or (2) the then-current number of rentable square feet in the Building which is leased and occupied (i.e. Tenant has not sublet or vacated such space) by Tenant. Tenant hereby acknowledges and agrees that, subject to the terms of this Section 32, Tenant shall only have the right during the Term of this Lease to have a maximum of two (2) exterior signs on the top level of the exterior of the Building.

33. ROOFTOP COMMUNICATIONS EQUIPMENT.

a. During the Term, Tenant shall have the right to continue to operate, repair and maintain, at no additional cost to Tenant, the Existing Communications Equipment (hereinafter defined), subject to the terms of this Section 33. As used herein, the term "Existing Communications Equipment" shall mean Tenant's telecommunications antennae, satellite dishes and associated equipment located on the roof of the Building (the "Roof"), if any, which equipment (and the installation and location thereof) has been previously approved in writing by Landlord in connection with the DB Sublease.

b. From and after the Commencement Date, Tenant shall have the non-exclusive right to use a portion of the Roof mutually selected by Landlord and Tenant, the area of which shall not exceed sixty-four (64) square feet, for the installation of additional telecommunications antennae and/or satellite dishes (and equipment associated therewith) (collectively, the "Additional Communications Equipment"), provided that (i) the Additional Communications Equipment sought to be installed by Tenant is permitted under, and conforms to the requirements of, the laws, rules and regulations of the City of Baltimore, the State of Maryland, any other governmental or quasi-governmental authorities having appropriate jurisdiction over the Building, and any restrictive covenants or other documents governing the use of the Building; (ii) Tenant obtains and maintains all permits, licenses, variances, authorizations and approvals that may be required in order to install such Additional Communic ations Equipment; (iii) Tenant shall obtain insurance coverages required by Landlord relating to the installation and operation of such Additional Communications Equipment; (iv) Tenant shall install any screen or other covering for the Additional Communications Equipment that Landlord may reasonably require in order to camouflage or conceal the Additional Communications Equipment; (v) Landlord shall have approved in its sole discretion the exact number, dimensions and specifications for the Additional Communications Equipment, and the proposed method of attaching the Additional Communications Equipment to the Roof; and (vi) Landlord's engineer determines that the portion of the Roof on which Tenant desires to install the Additional Communications Equipment is capable of bearing the weight of the Additional Communications Equipment.

c. Prior to or contemporaneous with requesting Landlord's approval of the installation of the Additional Communications Equipment, Tenant shall provide to Landlord: (i) plans and specifications for the Additional Communications Equipment; (ii) copies of all required governmental and quasi-governmental permits, licensees, special zoning variances, and authorizations for the installation and operation of the Additional Communications Equipment, all of which Tenant shall obtain at its own cost and expense; and (iii) a policy or certificate of insurance evidencing such insurance coverage as may be required by Landlord for the installation, operation and maintenance of the Additional Communications Equipment and sufficient to cover, inter alia, the indemnities from Tenant to Landlord provided in the Lease relating to the installation, maintenance, operation and removal of the Additional Communications Equipment. Landlord may withhold its approval of the install ation of the Additional Communications Equipment if the installation, operation or removal of the Additional Communications Equipment may (A) damage the structural integrity of the Building or void any warranty or guaranty applicable to the Roof or the Building; or (B) cause the violation of any zoning ordinance or other governmental or quasi-governmental law, rule or regulation applicable to the Building. Landlord may require as a precondition to its approval of the installation of the Additional Communications Equipment that Tenant (or, at Landlord's option, Landlord), at Tenant's sole cost and expense, install additional structural support (in a manner determined by Landlord's engineer in its sole discretion) to the portion of the Roof on which Tenant desires to install the Additional Communications Equipment. Tenant shall not be entitled to rely on any such approval as being a representation by Landlord that such installation and operation is permitted by or in accordance with any zoning ordi nance or other governmental or quasi-governmental law, rule or regulation applicable to the Building.

d. Commencing on the date on which Tenant begins to install the Additional Communications Equipment, and thereafter on the first day of each and every month during the balance of the Term, Tenant shall pay Landlord, concurrently with Tenant's payment to Landlord of Monthly Base Rent, as Additional Rent, a market fee (the "Communications Equipment Fee"), as reasonably determined by Landlord, for the right to install, maintain and operate the Additional Communications Equipment on the Roof (it being expressly understood that no fee shall be payable with respect to the Existing Communications Equipment). Tenant hereby acknowledges and agrees that the Communications Equipment Fee shall be subject to reasonable annual increases, as determined by Landlord in its reasonable discretion.

e. Landlord shall be provided with access to the Roof, including the portion of the Roof on which the Existing Communications Equipment and the Additional Communications Equipment are located, in order to inspect such equipment and Roof to determine, inter alia, if the Existing Communications Equipment and/or the Additional Communications Equipment is causing damage to the Roof or any other part of the Building and/or to repair the Roof or remove or relocate any such equipment. Landlord, at its sole option and discretion, may require Tenant, at any time prior to the expiration of the Lease, to terminate the operation of the Existing Communications Equipment and/or the Additional Communications Equipment, as applicable, if it is causing physical damage to the structural integrity of the Building or voids any warranty or guaranty applicable to the Roof or the Building, or is interfering with any satellite dish, antennae or other telecommunications device being operated on t he Roof or elsewhere in the Building by any tenant in the Building or other licensee authorized by Landlord, or causing the violation of any condition or provision of the Lease or any governmental or quasi-governmental law, rule or regulation (now or hereafter in effect) applicable to the Building. Notwithstanding the foregoing, if Tenant can correct the damage or prevent said interference caused by the Existing Communications Equipment and/or the Additional Communications Equipment, as applicable, to Landlord's satisfaction within thirty (30) days, Tenant may restore its operation so long as Tenant promptly commences to cure such damage and diligently pursues such cure to completion. Landlord and Tenant hereby acknowledge and agree that Tenant may be able to cure such damage or interference by moving the Existing Communications Equipment and/or Additional Communications Equipment, as applicable, to another portion of the roof mutually agreeable to Landlord and Tenant. If the Existing Communications Equip ment and/or the Additional Communications Equipment, as applicable is not completely corrected and restored to operation within thirty (30) days, Landlord, at its sole option, may require that the Antenna be removed at Tenant's expense.

f. Tenant acknowledges that the rights contained in this Section 33 are non-exclusive, and that Landlord may grant such rights to any other tenant in the Building or any other licensee of Landlord's choice (whether or not such licensee is a tenant of the Building). Tenant expressly acknowledges that it may not (i) license or otherwise permit third parties to install on the Roof of the Building or anywhere else in the Premises, any telecommunications equipment; (ii) permit any third party to use any portion of the Roof for any purpose whatsoever; or (iii) utilize the Existing Communications Equipment or the Additional Communications Equipment as a direct means of generating revenue. The breach of this provision shall constitute an Event of Default under this Lease.

g. At the expiration or earlier termination of the Lease, Tenant, at Tenant's sole cost, shall remove the Existing Communications Equipment and the Additional Communications Equipment (and all cabling and other equipment relating thereto) from the Building, and Tenant shall restore the area where the Existing Communications Equipment and the Additional Communications Equipment was located to its condition existing prior to such installation in a manner and with materials reasonably determined by Landlord. In the event Tenant fails to promptly do so, Tenant hereby authorizes Landlord to remove the Existing Communications Equipment and the Additional Communications Equipment (and all cabling and other equipment relating thereto) and restore the area of the roof and the other portions of the Building affected thereby, and charge Tenant for all reasonable costs and expenses incurred in connection therewith. Tenant's obligation to perform and observe this covenant shall survive the expiration or earlier termination of the Term of the Lease.

h. Tenant covenants and agrees that the installation, operation and removal of the Existing Communications Equipment and the Additional Communications Equipment shall be at its sole cost and risk. Except in the event of Landlord's negligence or willful misconduct, Tenant covenants and agrees absolutely and unconditionally to indemnify, defend and hold Landlord harmless from and against all claims, actions, damages, liability, judgments, settlements, costs and expenses (including attorneys' fees and expenses) suffered or sustained by Landlord arising out of the installation, operation, maintenance or removal of the Existing Communications Equipment and the Additional Communications Equipment, including without limitation any loss or injury resulting from transmissions from the Existing Communications Equipment and the Additional Communications Equipment.

i. The rights contained in this Section 33 are personal to Stifel, Nicolaus & Company, Incorporated and may not be exercised by any assignee, subtenant or licensee of Tenant (other than a Permitted Transferee).

j. Tenant shall be entitled to connect the Additional Communications Equipment to the Building's electric power source; provided, however, that: (i) the method of connecting any component of the Additional Communications Equipment to the Building's electric power source and the specific location in the Building at which such connection shall be effected, shall be subject to Landlord's prior approval; and (ii) such connection shall be undertaken by licensed contractor(s) approved by Landlord. The cost of connecting the Additional Communications Equipment to the Building's electric power source and the cost of all electricity consumed by the Additional Communications Equipment shall be borne solely by Tenant. Tenant hereby agrees to indemnify and hold Landlord and its agents, officers, directors and employees harmless from and against any cost, damage, claim, liability or expense (including attorneys' fees) incurred by or claimed against Landlord and its agents, office rs, directors and employees, directly or indirectly, as a result of or in any way relating to the connection of any component of the Additional Communications Equipment to, or the removal of any component of the Additional Communications Equipment from, the Building's electric power source.

34. SUPPLEMENTAL HVAC SYSTEM.

a. Landlord and Tenant acknowledge and agree that as of the Effective Date, there are supplemental HVAC units in the Premises (the "Supplemental HVAC Units") which are available for Tenant's use, and which are sometimes referred to herein as "Liebert Units". Throughout the Term, Tenant shall be solely responsible for repairing, maintaining and replacing all of the Supplemental HVAC Units.

b. Tenant shall enter into and maintain in force throughout the Term, at Tenant's sole cost and expense, a contract with Landlord's HVAC service contractor to provide for the repair, replacement and maintenance of all Supplemental HVAC Units in the Premises, and Tenant shall submit such contract to Landlord upon Landlord's request to evidence that Tenant is complying with the requirements of this Section 34. If Landlord believes such contractor is not properly repairing, replacing or maintaining any or all of such supplemental units, Landlord may require that Tenant change contractors.

c. Landlord and Tenant hereby expressly acknowledges and agrees that for so long as Deutsche Bank is a tenant or occupant of the Building: (i) Deutsche Bank shall be responsible for the operation, repair and maintenance of the Supplemental Common Equipment (hereinafter defined), unless Landlord notifies Tenant that Landlord is assuming responsibility for the operation, repair and maintenance of such system, in which event the terms of Section 34.e, below, shall apply; and (ii) Tenant shall contract with Deutsche Bank for the use of the Supplemental Common Equipment. As used herein, the term "Supplemental Common Equipment" shall mean the supplemental HVAC units which are not located in the Premises, which shall include, but not be limited to, the cooling tower(s) that generally serve(s) the supplemental HVAC units presently located in the Building and the UPS and switch gear modules currently located in the garage of the Building. The Supplemental HVAC Units and the Supplementa l Common Equipment are together called the "Supplemental HVAC System".

d. Notwithstanding anything to the contrary contained in this Section 34, Tenant hereby expressly acknowledges and agrees that if, at any point during the Term, Deutsche Bank is not a tenant or occupant of the Building that Tenant shall be solely responsible, at Tenant's sole cost and expense, for the operation, repair and maintenance of the Supplemental Common Equipment. If Tenant is solely responsible for the operation, repair and maintenance of the Supplemental Common Equipment pursuant to the terms of this Section 34.d, throughout the Term, Tenant shall (i) cause the Supplemental Common Equipment to comply with all applicable laws, statutes and ordinances, including the Environmental Laws; (ii) cause engineers, including environmental engineers, acceptable to Landlord to inspect the Supplemental Common Equipment at least once a year to insure that such system is functioning properly and that no Hazardous Materials are emanating therefrom; (iii) maintain the Su pplemental Common Equipment in good order and repair; (iv) maintain insurance coverages with respect thereto as are required by Landlord from time to time; and (v) maintain all permits and governmental approvals necessary for the operation of the Supplemental Common Equipment. Tenant shall immediately report to Landlord if Tenant determines that the Supplemental Common Equipment is not functioning properly, is leaking or is in violation of any applicable laws, including the Environmental Laws. Tenant shall immediately repair all equipment malfunctions or violations of law arising out of the operation of the Supplemental Common Equipment. At Landlord's request, Tenant shall enter into annual service contracts with reputable engineering firms approved by Landlord in Landlord's reasonable discretion, including environmental engineering firms, for the inspection, maintenance and repair of the Supplemental Common Equipment, and Tenant shall provide such service contracts to Landlord on demand. Shoul d Tenant fail to properly maintain or repair such equipment or, upon Landlord's request, to enter into the service contracts described above, Landlord may, but shall not be obligated to, undertake such maintenance or repairs or enter into such service contracts, and all such costs shall constitute Additional Rent hereunder.

e. Notwithstanding anything to the contrary contained in this Section 34, if (i) Tenant shall be solely responsible, at Tenant's sole cost and expense, for the operation, repair and maintenance of the Supplemental Common Equipment pursuant to the terms of Section 34.d, above, and (ii) a third-party tenant or occupant of the Building leases or occupies space in the Building which is connected to the Supplemental HVAC System, then Landlord shall, by the delivery of written notice to Tenant, assume the responsibility for the operation, repair and maintenance of the Supplemental Common Equipment in accordance with the terms of this Section 34.e. If Landlord assumes the responsibility for the operation, repair and maintenance of the Supplemental Common Equipment pursuant to the terms of this Section 34.e, Tenant shall pay Landlord Tenant's Supplemental Share (hereinafter defined) of all actual costs (without markup for overhead or profit) incurred by Landlord in connection with the o rdinary maintenance and emergency and non-emergency repairs and replacements of the Supplemental Common Equipment (whether for parts, labor, warranty coverage or otherwise) (the "Supplemental Common Costs") in accordance with the terms and conditions set forth below. As used herein, the term "Tenant's Supplemental Share" means a fraction, the numerator of which shall be the tonnage rating of the Supplemental HVAC Units and the denominator of which shall be the tonnage rating of all operating supplemental HVAC units in the Building from time to time. For each calendar year (or partial calendar year) during the Term in which Landlord is responsible for the operation, repair and maintenance of the Supplemental Common Equipment, Landlord shall estimate Tenant's Supplemental Share of Supplemental Common Costs and Tenant shall pay Landlord one-twelfth (1/12) of such amount on each monthly rent payment date under this Lease. Within ninety (90) days after the expiration of each calendar year ( or partial calendar year during the Term (or as soon as reasonably practicable thereafter) in which Landlord is responsible for the operation, repair and maintenance of the Supplemental Common Equipment, Landlord shall furnish to Tenant a statement showing the actual Supplemental Common Costs for such calendar year. In the case of an underpayment, Tenant shall, within thirty (30) days after the receipt of such statement, pay to Landlord an amount equal to such underpayment and, in the case of an overpayment, Landlord shall credit the next monthly payment by Tenant with an amount equal to such overpayment, or, if this Lease shall have expired, Landlord shall apply such excess against any sums due from Tenant to Landlord and shall refund any remainder to Tenant within thirty (30) days after the expiration of the Term, or as soon thereafter as possible. In addition, Landlord will be entitled to an administrative charge equal to five percent (5%) of all costs payable by Tenant under this Section 34.e, which ad ministrative charge shall be payable monthly by Tenant. Landlord's and Tenant's obligations under this Section 34.e shall expressly survive the expiration or earlier termination of the Term of the Lease. All sums payable by Tenant to Landlord under this Section 34.e shall constitute Additional Rent.

f. Except to the extent arising from the negligence or willful misconduct of Landlord, its employees, agents, or contractors, in maintaining those portions of the Supplemental HVAC System which Landlord is required to maintain (provided Landlord is obligated to perform such maintenance pursuant to the terms of this Lease), Landlord shall have no liability arising from any failure of the Supplemental HVAC System or any component thereof to operate properly or at all at any time including, without limitation, no liability if any such failure results in the Premises not being reasonably comfortable or useable at all, any of Tenant's equipment not functioning or not functioning fully or properly, Tenant missing or being delayed in meeting any business or other deadlines, or Tenant incurring any other costs or damages.

g. Tenant shall cooperate with Landlord and shall abide by the rules and regulations which Landlord may reasonably prescribe for the proper functioning and protection of the Supplemental HVAC System.

35. Miscellaneous Provisions.

1. Time is of the essence with respect to all of Tenant's obligations under this Lease.
2. The waiver by Landlord or Tenant of any term, covenant or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition of any prior or subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any prior breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord's knowledge of such prior breach at the time of acceptance of such rent.
3. In the event of any action or proceeding brought by either party against the other under this Lease, the prevailing party shall be entitled to recover from the other party the fees of its attorneys in such action or proceeding in such amount as the court may judge to be reasonable for such attorneys' fees.
4. Except as expressly otherwise provided in this Lease, all of the provisions of this Lease shall bind and inure to the benefit of the parties hereto and to their heirs, successors, representatives, executors, administrators, transferees and assigns. The term "Landlord," as used herein, shall mean only the owner of the Building and the Land or of a lease of the Building and the Land, at the time in question, so that in the event of any transfer or transfers of title to the Building and the Land, or of Landlord's interest in a lease of the Building and the Land, the transferor shall be and hereby is relieved and freed of all obligations of Landlord under this Lease accruing before such transfer, and it shall be deemed, without further agreement, that such transferee has assumed and agreed to perform and observe all obligations of Landlord herein during the period it is the holder of Landlord's interest under this Lease.
5. At Landlord's request, Tenant will execute a memorandum of this Lease in recordable form setting forth such provisions hereof as Landlord deems desirable. Further, at Landlord's request, Tenant shall acknowledge before a notary public its execution of this Lease, so that this Lease shall be in form for recording. The cost of recording this Lease or memorandum thereof shall be borne by Landlord.
6. Notwithstanding any provision to the contrary herein, Tenant shall look solely to the estate and property of Landlord in and to the Land and the Building in the event of any claim against Landlord arising out of or in connection with this Lease, the relationship of Landlord and Tenant, or Tenant's use of the Premises, and Tenant agrees that the liability of Landlord arising out of or in connection with this Lease, the relationship of Landlord and Tenant, or Tenant's use of the Premises, shall be limited to such estate and property of Landlord in and to the Land and the Building. No properties or assets of Landlord other than the estate and property of Landlord in and to the Building and no property owned by any partner of Landlord shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) or for the satisfaction of any other remedy of Tenant arising out of or in connection with this Lease, the relationship of La ndlord and Tenant or Tenant's use of the Premises.
7. Landlord and Landlord's agents have made no representations or promises with respect to the Building, the Land or the Premises except as herein expressly set forth.
8. Landlord and Tenant shall be excused from performing an obligation or undertaking provided for in this Lease so long as such performance is prevented or delayed, retarded or hindered by an Act of God, force majeure, fire, earthquake, flood, explosion, action of the elements, war, invasion, insurrection, riot, mob violence, sabotage, inability to procure or a general shortage of labor, equipment, facilities, materials or supplies in the open market, failure of transportation, strike, lockout, action of labor unions, a taking by eminent domain, requisition, laws, orders of government, or of civil, military or naval authorities, inability to obtain, or delays in obtaining, permits or other governmental approvals, or any other cause whether similar or dissimilar to the foregoing, not within the reasonable control of Landlord or Tenant, as applicable, including reasonable delays for adjustments of insurance (collectively, "Force Majeure"); provided, however, that no such event or cause shall relieve Tenant of its obligations hereunder to make full and timely payments of Rent as provided herein.
9. Intentionally Omitted.
10. Landlord shall not be liable to Tenant for any damage caused by other tenants or persons in the Building or caused by operations of others in the construction of any private, public or quasi-public work.
11. If in this Lease it is provided that Landlord's consent or approval as to any matter will not be unreasonably withheld or delayed, and it is established by a court or body having final jurisdiction thereover that Landlord has been unreasonable, the sole effect of such finding shall be that Landlord shall be deemed to have given its consent or approval, but Landlord shall not be liable to Tenant in any respect for money damages or expenses incurred by Tenant by reason of Landlord having withheld its consent. Nothing contained in this paragraph shall be deemed to limit Landlord's right to give or withhold consent unless such limitation is expressly contained in the paragraph to which such consent pertains.
12. If any governmental entity or authority hereafter imposes a tax or assessment upon or against any of the rent or other charges payable by Tenant to Landlord hereunder (whether such tax takes the form of a lease tax, sales tax or other tax and is not otherwise included in Real Estate Taxes or is a tax on the income of Landlord), Tenant shall be responsible for the timely payment thereof. Unless Landlord and Tenant otherwise agree in writing with respect to the payment thereof, Tenant shall pay the applicable tax to Landlord in monthly installments on the date upon which Tenant pays to Landlord the installments of Monthly Base Rent due under this Lease.
13. This Lease and the Exhibits hereto constitute the entire agreement between the parties, and supersedes any prior agreements or understandings between them. This Lease is not effective until executed and delivered by Landlord and Tenant and approved by any current mortgagee of the Building and/or the Land. The provisions of this Lease may not be modified in any way except by written agreement signed by both parties.
14. This Lease shall be subject to and construed in accordance with the laws of the State of Maryland.
15. Tenant (and any guarantor of this Lease), within fifteen (15) days after Landlord delivers to Tenant (or such guarantor) written request therefor ("Landlord Financial Statement Request"), will provide Landlord with a copy of its most recent financial statements, consisting of a Balance Sheet, Earnings Statement, Statement of Changes in Financial Position, Statement of Changes in Owner's Equity, and related footnotes, prepared in accordance with generally accepted accounting principles. Such financial statements must be either certified by a certified public accountant or sworn to as to their accuracy by Tenant's (or the guarantor's, if applicable) chief financial officer. The financial statements provided must be as of a date not more than twelve (12) months prior to the date of request. Landlord shall retain such statements in confidence, but may provide copies to lenders and potential lenders as required. Notwithstanding the foregoing, Landlord shall not deliver more than two (2) Landlord Financial Statement Requests to Tenant during any twelve (12) month period during the Term, unless such Landlord Financial Statement Request was delivered (i) at the request of Landlord's lender, a potential lender or purchaser of the Building, or (ii) in response to a Tenant default under the Lease. Notwithstanding the foregoing the provisions of this Section 35.o shall not apply for so long as Tenant is subject to, and is in compliance with, all of the then-current reporting requirements of the Securities Exchange Act of 1934 and all rules and regulations promulgated thereunder.

IN WITNESS WHEREOF, duly authorized representatives of Landlord and Tenant have executed this Office Lease Agreement under seal on the day and year first above written.

WITNESS: ________________________________	LANDLORD: ABB SOUTH STREET ASSOCIATES, LLC, a Maryland limited liability company By: ABB South Street, L.P., a Pennsylvania limited partnership, its managing member By: ABB Associates I, Inc., a Delaware corporation, its general partner By: ________________________________ Name: Title:
WITNESS:	TENANT: STIFEL, NICOLAUS & COMPANY, INCORPORATED, a Missouri corporation
_____________________________	By: ______________________________________ Name: Title:

LIST OF EXHIBITS

EXHIBIT A: Floor Plan of Premises

EXHIBIT B: Work Agreement
EXHIBIT C: Declaration of Commencement Date
EXHIBIT D: Rules and Regulations

EXHIBIT E: Location of Additional Exterior Sign

EXHIBIT A

FLOOR PLAN OF PREMISES

[Diagram of One South Street 15^th and 16^th Floor plan]

[Diagram of One South Street 17^th Floor plan]

[Diagram of One South Street 30^th Floor plan]

EXHIBIT B

WORK AGREEMENT

This Work Agreement (the "Work Agreement") is attached to and made a part of that certain Deed of Lease (the "Lease") dated ___________, 2006 by and between ABB SOUTH STREET ASSOCIATES, LLC, as landlord ("Landlord"), and STIFEL, NICOLAUS & COMPANY, INCORPORATED, as tenant ("Tenant"), for the premises (the "Premises") described therein in the building having a street address of One South Street, Baltimore, Maryland (the "Building"). It is the intent of this Work Agreement that Tenant shall be permitted freedom in the design and layout of the Premises, consistent with applicable building codes and requirements of law, including without limitation the Americans with Disabilities Act, and with sound architectural and construction practice in first-class office buildings, provided that neither the design nor the implementation of the Tenant Improvements (hereinafter defined) shall cause any interference to the operation of the Building's HVAC, mechanical, plumbing, life s afety, electrical or other systems or to other Building operations or functions, nor shall they increase maintenance or utility charges for operating the Building. Capitalized terms not otherwise defined in this Work Agreement shall have the meanings set forth in the Lease. In the event of any conflict between the terms hereof and the terms of the Lease, the terms hereof shall prevail for the purposes of design and construction of the Tenant Improvements.

A. TENANT IMPROVEMENTS.

As-Is Condition. Landlord shall have no obligation to perform or cause the performance or construction of any improvements in or to the Premises and Landlord shall deliver the Premises to Tenant in its "as is" condition. Tenant hereby acknowledges that Landlord has made no representations or warranties to Tenant with respect to the condition of the Premises or the working order of any systems or improvements therein existing as of the date of delivery.

Tenant Improvements. After the Commencement Date, Tenant, at its sole cost and expense, shall furnish and install in the Premises whatever improvements or alterations Tenant desires. In the event that Tenant desires to install improvements which require a building permit to undertake, such improvements shall be undertaken by Tenant in accordance with the terms of this Work Agreement, which improvements shall be set forth in the Tenant's Plans (hereinafter defined) which are subject to Landlord's approval in accordance with Paragraph B.3, below (the "Tenant Improvements"). All costs of all design, space planning, and architectural and engineering work for or in connection with the Tenant Improvements, including without limitation all drawings, plans, specifications, licenses, permits or other approvals relating thereto, and all insurance and other requirements and conditions hereunder, and all costs of construction, including supervision thereof, shall be at Tenant's sole cost and expense, subject to the application of the Improvement Allowance in accordance with the terms of this Work Agreement.

B. PLANS AND SPECIFICATIONS

1. Space Planner. In the event that Tenant desires to install in the Premises any Tenant Improvements which require a building permit to undertake, Tenant shall retain the services of an architectural firm reasonably acceptable to Landlord (the "Space Planner") to design the Tenant Improvements in the Premises and prepare the Final Space Plan (hereinafter defined) and the Contract Documents (hereinafter defined). The Space Planner shall meet with the Landlord and/or Landlord's building manager from time to time to obtain information about the Building and to insure that the improvements envisioned in the Contract Documents do not interfere with and/or affect the Building or any systems therein. The Space Planner shall prepare all space plans, working drawings, and plans and specifications described in Paragraph B.3, below, in conformity with the base Building plans and systems, and the Space Planner shall coordinate its plans and specifications with the Engineers (hereinaf ter defined) and Landlord. All fees of the Space Planner shall be borne solely by Tenant, subject to application of the Improvement Allowance as hereinafter provided.

2. Engineers. In the event that Tenant desires to install in the Premises any Tenant Improvements which require a building permit to undertake, Tenant shall retain the services of mechanical, electrical, plumbing and structural engineers approved by Landlord (the "Engineers") to (i) design the type, number and location of all mechanical systems in the Premises, including without limitation the heating, ventilating and air conditioning system therein, fire alarm system and to prepare all of the mechanical plans, (ii) to assist Tenant and the Space Planner in connection with the electrical design of the Premises, including the location and capacity of light fixtures, electrical receptacles and other electrical elements, and to prepare all of the electrical plans, (iii) to assist Tenant and the Space Planner in connection with plumbing-related issues involved in designing the Premises and to prepare all of the plumbing plans and (iv) assist Tenant and the Space Planner in connectio n with the structural elements of the Space Planner's design of the Premises and to prepare all of the structural plans. All fees of the Engineers shall be borne solely by Tenant, subject to application of the Improvement Allowance as hereinafter provided.

3. Time Schedule.

a. In the event that Tenant desires to install in the Premises any Tenant Improvements which require a building permit to undertake, Tenant shall furnish to Landlord for its review and approval a proposed detailed space plan for the Tenant Improvements (the "Final Space Plan") prepared by the Space Planner, in consultation with Landlord and the Engineers. The Final Space Plan shall contain the information and otherwise comply with the requirements therefor described in Schedule B-1 attached hereto. Landlord shall advise Tenant of Landlord's approval or disapproval of the Final Space Plan within ten (10) business days after Tenant submits the Final Space Plan to Landlord. Tenant shall promptly revise the proposed Final Space Plan to meet Landlord's objections, if any, and resubmit the Final Space Plan to Landlord for its review and approval within seven (7) days of Tenant's receipt of Landlord's objections, if any. Landlord will advise Tenant of Landlord's approval or disapproval of the revised Final Space Plan within five (5) business days after Tenant submits same to Landlord.

b. Promptly after Landlord approves the Final Space Plan, Tenant shall furnish to Landlord for its review and approval, all architectural plans, working drawings and specifications (the "Contract Documents") necessary and sufficient (i) for the construction of the Tenant Improvements; and (ii) to enable Tenant to obtain a building permit for the construction of the Tenant Improvements by the Contractor (hereinafter defined). The Contract Documents shall contain the information and otherwise comply with the requirements therefore described in Schedule B-2 attached hereto and shall set forth the location of any core drilling by Tenant (the approval of same shall be subject to Landlord's approval in its sole discretion). Landlord shall advise Tenant of Landlord's approval or disapproval of the Contract Documents, or any of them, within fifteen (15) business days after Tenant submits the Contract Documents to Landlord. Tenant shall promptly revise the Contract Documents to meet La ndlord's objections, if any, and resubmit the Contract Documents to Landlord for its review and approval within ten (10) days of Tenant's receipt of Landlord's objections, if any. Landlord shall advise Tenant of Landlord's approval or disapproval of the revised Contract Documents within ten (10) business days after Tenant submits same to Landlord. Notwithstanding anything herein to the contrary, approval by Landlord of the Contract Documents shall not constitute an assurance by Landlord that the Contract Documents: (a) satisfy Legal Requirements (hereinafter defined), (b) are sufficient to enable Tenant to obtain a building permit for the undertaking of the Tenant Improvements in the Premises, or (c) will not interfere with, and/or otherwise affect, base Building or base Building systems.

c. The Final Space and the Contract Documents are referred to collectively herein as the "Tenant's Plans."

d. The Tenant Improvements shall be of first-class quality, commensurate with the level of improvements for a first-class tenant in a first-class office building in the Baltimore, Maryland area. The Tenant's Plans shall be prepared in accordance with a Data Cadd or convertible DXF format for working drawings (using 1/8" reproducible drawings) in conformity with the base Building plans and Building systems and with information furnished by and in coordination with Landlord and Engineers. Tenant's Plans shall comply with all applicable building codes, laws and regulations (including without limitation the Americans with Disabilities Act), shall not contain any improvements which interfere with or require any changes to or modifications of the Building's HVAC, mechanical, electrical, plumbing, life safety or other systems or to other Building operations or functions, and, unless Tenant agrees in writing to pay all such excess costs or charges, shall not increase maintenance or utility ch arges for operating the Building in excess of the standard requirements for normal first-class office buildings in the Baltimore, Maryland area. Notwithstanding anything to the contrary contained in this Work Agreement, Landlord shall have the right to disapprove, in its sole discretion, any portion of the Tenant's Plans that Landlord believes will or may affect the exterior or structure of the Building or will or may affect the mechanical, electrical, plumbing, life safety, HVAC or other base Building systems.

4. Base Building Changes. If Tenant requests work to be done in the Premises or for the benefit of the Premises that necessitates revisions or changes in the design or construction of the base Building or affect Building systems, any such changes shall be subject to the prior written approval of Landlord, in its sole discretion. Tenant shall be responsible for all costs and delays resulting from such design revisions or construction changes, including architectural and engineering charges, and any special permits or fees attributed thereto.

5. Changes.

a. In the event that Tenant requests any changes to the Contract Documents or the Final Space Plan after Landlord has approved same, or if it is determined that the Contract Documents prepared in accordance with the Final Space Plan do not conform to the plans for the base Building, deviate from applicable Legal Requirements or contain improvements which will or may interfere with and/or affect the base Building or any of the base Building systems, or in the event of any change orders, Tenant shall be responsible for all costs and expenses and all delay resulting therefrom, including without limitation costs or expenses relating to (i) any additional architectural or engineering services and related design expenses, (ii) any changes to materials in process of fabrication, (iii) cancellation or modification of supply or fabricating contracts, (iv) removal or alteration of work or plans completed or in process, or (v) delay claims made by any subcontractor.

b. No changes shall be made to the Contract Documents without the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, provided, however, that Landlord shall have the right to disapprove, in its sole discretion, any such change that Landlord believes will affect the exterior or structure of the Building or will adversely affect the mechanical, electrical, plumbing, life safety, HVAC or other base Building systems. Landlord shall not be responsible for delay in occupancy by Tenant because of any changes to the Final Space Plan or the Contract Documents after approval by Landlord, or because of delay caused by or attributable to any deviation by the Contract Documents from applicable Legal Requirements. Tenant shall be required to pay to Landlord the reasonable costs incurred by Landlord in connection with any changes to the Contract Documents or Final Space Plan, in full, within thirty (30) days after invoice. As used herein, t he term "Legal Requirements" shall mean any laws, ordinances, regulations and orders of the United States of America, the State of Maryland and any other governmental authority with jurisdiction over the Building or the construction of the Tenant Improvements.

C. COST OF TENANT IMPROVEMENTS/ALLOWANCES

1. Construction Costs. All costs of design and construction of the Tenant Improvements, including without limitation the costs of all space planning, architectural and engineering work related thereto, all governmental and quasi-governmental approvals and permits required therefor, any costs incurred by Landlord because of changes to the base Building or the base Building systems, all construction costs, contractors' overhead and profit, insurance and other requirements and all other costs and expenses incurred in connection with the Tenant Improvements (collectively, "Construction Costs"), shall be paid by Tenant, subject, however, to the application of the Improvement Allowance in accordance with Paragraph C.2, below, not previously disbursed pursuant to this Work Agreement (the "Available Allowance").

2 Improvement Allowance. Provided Tenant is not in default of the Lease, Landlord agrees to provide to Tenant an allowance (the "Improvement Allowance") in an amount up to Six Hundred Fifty-Five Thousand Seven Hundred Sixty-Nine and 84/100 Dollars ($655,796.84) (or Eight and 66/100 Dollars ($8.66) per rentable square foot of the Premises) to be applied solely to the Construction Costs. Provided that Tenant has fully performed all of its obligations under the Lease and this Work Agreement, Construction Costs shall be disbursed by Landlord from the Available Allowance, as and when such costs are actually incurred by Tenant. Tenant shall submit to Landlord, from time to time, but not more often then once per calendar month, requests for direct payments to third parties, of or for reimbursement to Tenant for Construction Costs incurred by Tenant out of the Available Allowance, which requests shall be accompanied by (a) paid receipts or invoices substantiating the costs for which p ayment is requested; (b) a signed statement from Tenant certifying that the costs were actually incurred for the stated amount; (c) lien waivers from the party supplying the services or materials for which payment is sought; and (d) such other information as Landlord reasonably requires. Provided Tenant delivers to Landlord an approved draw request, prepared as set forth above, Landlord shall pay the costs covered by such payment request within thirty (30) days following receipt thereof (but Landlord shall not be obligated to make more than one (1) such payment in any calendar month). Notwithstanding the foregoing, in no event shall Landlord be obligated to pay, in the aggregate, an amount in excess of ninety percent (90%) of the Improvement Allowance until satisfaction of the following conditions: (A) receipt by Landlord of appropriate paid receipts or invoices and a final lien waiver from each subcontractor and supplier covering all work performed by the subcontractors and all materials used in connectio n with the construction of the Tenant Improvements; and (B) Tenant's delivery to Landlord of all receipts, invoices or other documentation necessary to substantiate all costs payable by Landlord hereunder. If Tenant does not expend all of the Improvement Allowance for Construction Costs as permitted hereunder on or before the date which is twelve (12) months after the Commencement Date, any unused portion of the Improvement Allowance not so used shall be retained by Landlord. Notwithstanding the foregoing, Tenant may elect to use all or any portion of the unused Improvement Allowance to defray Annual Base Rent payable by Tenant pursuant to the Lease, provided that Tenant gives written notice to Landlord of Tenant's election to utilize such credit at least sixty (60) days prior to the due date of any installment of Annual Base Rent for which Tenant elects to use such credit.

Costs Exceeding Available Allowance. All Construction Costs in excess of the Available Allowance shall be paid solely by Tenant on or before the date such costs are due and payable (or if previously paid by Landlord, shall be reimbursed to Landlord by Tenant within ten (10) days of receipt by Tenant of invoices therefor from Landlord), and Tenant agrees to indemnify Landlord from and against any such costs. All amounts payable by Tenant pursuant to this Work Agreement shall be deemed to be Additional Rent for purposes of the Lease. If required by Landlord, Tenant shall provide evidence satisfactory to Landlord that Tenant has sufficient funds available to pay all Construction Costs in excess of the Improvement Allowance.

D. CONSTRUCTION

1. General Contractor. Tenant shall retain a general contractor licensed in the State of Maryland and approved by Landlord to undertake construction of the Tenant Improvements (the "Contractor"). The Contractor shall be responsible for obtaining, at Tenant's cost, all permits and approvals required for the construction of the Tenant Improvements.

2. Construction By The Contractor. In undertaking the Tenant Improvements, Tenant and the Contractor shall strictly comply with the following conditions:

a. No work involving or affecting the Building's structure or the plumbing, mechanical, electrical or life/safety systems of the Building shall be undertaken without (i) the prior written approval of Landlord in its sole discretion, whether pursuant to its approval of Tenant's Plans or otherwise, (ii) the supervision of Landlord's building engineer, the actual cost of which shall be borne by Tenant if more than one (1) hour of such engineer's time is spent in connection with the Tenant Improvements during any single day; (iii) compliance by Tenant with the insurance requirements set forth in Paragraph D.2(c), below; and (iv) compliance by Tenant with all of the terms and provisions of this Work Agreement;

b. All Tenant Improvement work shall be performed in strict conformity with (i) the final approved Tenant's Plans; (ii) all applicable codes and regulations of governmental authorities having jurisdiction over the Building and the Premises; (iii) valid building permits and other authorizations from appropriate governmental agencies, when required, which shall be obtained by Tenant, at Tenant's expense; and (iv) Landlord's construction policies, rules and regulations attached hereto as Schedule B-3, as the same may be reasonably modified by Landlord from time to time ("Construction Rules"). Any work not acceptable to the appropriate governmental agencies or not reasonably satisfactory to Landlord shall be promptly replaced at Tenant's sole expense. Notwithstanding any failure by Landlord to object to any such work, Landlord shall have no responsibility therefor; and

c. Before any work is commenced or any of Tenant's, Contractor's or any subcontractor's equipment is moved onto any part of the Building, Tenant shall deliver to Landlord policies or certificates evidencing the following types of insurance coverage in the following minimum amounts, which policies shall be issued by companies approved by Landlord, shall be maintained by Tenant at all times during the performance of the Tenant Improvements, and which shall name Landlord as additional insured:

Worker's compensation coverage in the maximum amount required by law and employer's liability insurance in an amount not less than $500,000.00 and $500,000.00 per disease;

Comprehensive general liability policy to include products/completed operations, premises/operations, blanket contractual broad form property damage and contractual liability with limits in an amount per occurrence of not less than $1,000,000.00 Combined Single Limit for bodily injury and property damage and $1,000,000.00 for personal injury; and

Automobile liability coverage, with bodily injury limits of at least $1,000,000.00 per accident.

E. PERMITS AND LICENSES. Tenant shall be solely responsible for procuring, at its sole cost and expense, all permits and licenses necessary to undertake the Tenant Improvements and, upon completion of the Tenant Improvements, to occupy the Premises. Tenant's inability to obtain, or delay in obtaining, any such license or permit shall not delay or otherwise affect the Commencement Date or any of Tenant's obligations under this Lease.

F. INSPECTION. Landlord is authorized, at its sole cost and expense, to make such inspections of the Premises during construction as it deems reasonably necessary or advisable.

G. INDEMNIFICATION. Tenant shall indemnify Landlord and hold it harmless from and against all claims, injury, damage or loss (including reasonable attorneys' fees) sustained by Landlord as a result of the construction of the Tenant Improvements in the Premises.

LIST OF SCHEDULES

Schedule B-1 Requirements for Final Space Plan

Schedule B-2 Requirements for Contract Documents

Schedule B-3 Construction Rules and Regulations

SCHEDULE B-1

REQUIREMENTS FOR FINAL SPACE PLAN

Floor plans, together with related information for mechanical, electrical and plumbing design work, showing partition arrangement and reflected ceiling plans (three (3) sets), including without limitation the following information:

a. identify the location of conference rooms and density of occupancy;

b. indicate the density of occupancy for all rooms;

c. identify the location of any food service areas or vending equipment rooms;

d. identify areas, if any, requiring twenty-four (24) hour air conditioning;

e. indicate those partitions that are to extend from floor to underside of structural slab above or require special acoustical treatment;

f. identify the location of rooms for, and layout of, telephone equipment other than building core telephone closet;

g. identify the locations and types of plumbing required for toilets (other than core facilities), sinks, drinking fountains, etc.;

h. indicate light switches in offices, conference rooms and all other rooms in the Premises;

i. indicate the layouts for specially installed equipment, including computer and duplicating equipment, the size and capacity of mechanical and electrical services required and heat rejection of the equipment;

j. indicate the dimensioned location of: (A) electrical receptacles (one hundred twenty (120) volts), including receptacles for wall clocks, and telephone outlets and their respective locations (wall or floor), (B) electrical receptacles for use in the operation of Tenant's business equipment which requires two hundred eight (208) volts or separate electrical circuits, (C) electronic calculating and CRT systems, etc., and (D) special audio-visual requirements;

k. indicate proposed layout of sprinkler and other life safety and fire protection equipment, including any special equipment and raised flooring;

l. indicate the swing of each door;

m. indicate a schedule for doors and frames, complete with hardware, if applicable; and

n. indicate any special file systems to be installed.

SCHEDULE B-2

REQUIREMENTS FOR CONTRACT DOCUMENTS

Final architectural detail and working drawings, finish schedules and related plans (three (3) reproducible sets) including without limitation the following information and/or meeting the following conditions:

a. materials, colors and designs of wallcoverings, floor coverings and window coverings and finishes;

b. paintings and decorative treatment required to complete all construction;

c. complete, finished, detailed mechanical, electrical, plumbing and structural plans and specifications for the Tenant Improvements, including but not limited to the fire and life safety systems and all work necessary to connect any special or non-standard facilities to the Building's base mechanical systems;

d. all final drawings and blueprints must be drawn to a scale of one-eighth (l/8) inch to one (l) foot. Any architect or designer acting for or on behalf of Tenant shall be deemed to be Tenant's agent and authorized to bind Tenant in all respects with respect to the design and construction of the Premises; and

e. notwithstanding anything to the contrary set forth herein, in the Work Agreement or in the Lease, Tenant shall not request any work which would: (1) require changes to structural components of the Building or the exterior design of the Building; (2) require any material modification to the Building's mechanical installations or installations outside the Premises; (3) not comply with all applicable laws, rules, regulations and requirements of any governmental department having jurisdiction over the construction of the Building and/or the Premises, including specifically, but without limitation, the Americans with Disabilities Act; (4) be incompatible with the building plans filed with the appropriate governmental agency from which a building permit is obtained for the construction of the Tenant Improvements or with the occupancy of the Building as a first-class office building; or (5) delay the completion of the Premises or any part thereof. Tenant shall not oppose or delay changes r equired by any governmental agency affecting the construction of the Building and/or the Tenant Improvements in the Premises.

SCHEDULE B-3

CONSTRUCTION RULES AND REGULATIONS

1. Tenant and/or the general contractor will supply Landlord with a copy of all permits (if applicable) prior to the start of any work.

2. Tenant and/or the general contractor will post the building permit (if applicable) on a wall of the construction site while work is being performed.

3. Public area corridor, and carpet, is to be protected by plastic runners or a series of walk-off mats from the elevator to the suite under reconstruction.

4. Walk-off mats are to be provided at entrance doors.

5. Contractors will remove their trash and debris daily, or as often as necessary to maintain cleanliness in the Building. Building trash containers are not to be used for construction debris. Landlord reserves the right to bill Tenant for any cost incurred to clean up debris left by the general contractor or any subcontractor. Further, the Building staff is instructed to hold the driver's license of any employee of the contractor while using the freight elevator to ensure that all debris is removed from the elevator.

6. No utilities (electricity, water, gas, plumbing) or services to the tenants are to be cut off or interrupted without first having requested, in writing, and secured, in writing, the permission of Landlord.

7. No electrical services are to be put on the emergency circuit, without specific written approval from Landlord.

8. When utility meters are installed, the general contractor must provide the property manager with a copy of the operating instructions for that particular meter.

9. Landlord will be notified of all work schedules of all workmen on the job and will be notified, in writing, of names of those who may be working in the building after "normal" business hours.

10. Passenger elevators shall not be used for moving building materials and shall not be used for construction personnel except in the event of an emergency. The designated freight elevator is the only elevator to be used for moving materials and construction personnel. This elevator may be used only when it is completely protected as determined by Landlord's Building engineer.

11. Contractors or personnel will use loading dock area for all deliveries and will not use loading dock for vehicle parking.

12. Contractors will be responsible for daily removal of waste foods, milk and soft drink containers, etc. to trash room and will not use any building trash receptacles but trash receptacles supplied by them.

13. No building materials are to enter the Building by way of main lobby, and no materials are to be stored in any lobbies at any time.

14. Construction personnel are not to eat in the lobby or in front of Building nor are they to congregate in the lobby or in front of Building.

15. Landlord is to be contacted by Tenant when work is completed for inspection. All damage to the Building will be determined at that time.

16. All key access, fire alarm work, or interruption of security hours must be arranged with Landlord's Building engineer.

17. There will be no radios allowed on job site.

18. All workers are required to wear a shirt, shoes, and full length trousers.

19. Protection of hallway carpets, wall coverings, and elevators from damage with masonite board, carpet, cardboard, or pads is required.

20. Public spaces -- corridors, elevators, bathrooms, lobby, etc. -- must be cleaned immediately after use. Construction debris or materials found in public areas will be removed at Tenant's cost.

21. There will be no smoking, eating, or open food containers in the elevators, carpeted areas or public lobbies.

22. There will be no yelling or boisterous activities.

23. All construction materials or debris must be stored within the project confines or in an approved lock-up.

24. There will be no alcohol or controlled substances allowed or tolerated.

25. The general contractor and Tenant shall be responsible for all loss of their materials and tools and shall hold Landlord harmless for such loss and from any damages or claims resulting from the work.

EXHIBIT C

DECLARATION OF COMMENCEMENT DATE

This Declaration of Commencement Date is made as of ___________________, 2006, by ABB SOUTH STREET ASSOCIATES, LLC ("Landlord"), and STIFEL, NICOLAUS & COMPANY, INCORPORATED ("Tenant"), who agree as follows:

1. Landlord and Tenant entered into a Office Lease Agreement dated _______________, 2006, in which Landlord leased to Tenant, and Tenant leased from Landlord, certain Premises described therein in the office building located at One South Street, Baltimore, Maryland (the "Building"). All capitalized terms herein are as defined in the Lease.
2. Pursuant to the Lease, Landlord and Tenant agreed to and do hereby confirm the following matters as of the Commencement Date of the Term:
1. the Commencement Date of the Lease is January 1, 2012;
2. the Lease Expiration Date of the Lease is December 31, 2017;
3. the number of rentable square feet of the Premises is 75,724;
4. Tenant's Pro Rata Share (Operating Expenses) is 17.44%; and
5. Tenant's Pro Rata Share (Real Estate Taxes) is 16.66%.
3. Tenant confirms that:
1. it has accepted possession of the Premises as provided in the Lease;
2. Landlord is not required to perform any work or furnish any improvements to the Premises under the Lease;
3. Landlord has fulfilled all of its obligations under the Lease as of the date hereof;
4. the Lease is in full force and effect and has not been modified, altered, or amended, except as follows: __________________________________; and
5. there are no set-offs or credits against Rent, and no Security Deposit or prepaid Rent has been paid except as provided by the Lease.
4. The provisions of this Declaration of Commencement Date shall inure to the benefit of, or bind, as the case may require, the parties and their respective successors and assigns, and to all mortgagees of the Building, subject to the restrictions on assignment and subleasing contained in the Lease, and are hereby attached to and made a part of this Lease.

WITNESS: _____________________________	LANDLORD: ABB SOUTH STREET ASSOCIATES, LLC, a Maryland limited liability company By: ABB South Street, L.P., a Pennsylvania limited partnership, its managing member By: ABB Associates I, Inc., a Delaware corporation, its general partner By: ________________________ Name: Title:
WITNESS: _____________________________	TENANT: STIFEL, NICOLAUS & COMPANY, INCORPORATED, a Missouri corporation By: ______________________________________ Name: Title:

EXHIBIT D

RULES & REGULATIONS

1. The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags or other substances (including, without limitation, coffee grounds) shall be thrown therein. All damages resulting from misuse of the fixtures shall be borne by Tenant if Tenant or its servants, employees, agents, visitors or licensees shall have caused the same.
2. No cooking (except for hot-plate and microwave cooking by Tenants' employees for their own consumption, the location and equipment of which is first approved by Landlord), sleeping or lodging shall be permitted by any tenant on the Premises. No tenant shall cause or permit any unusual or objectionable odors to be produced upon or permeate from the Premises.
3. No inflammable, combustible, or explosive fluid, material, chemical or substance shall be brought or kept upon, in or about the Premises, except that Tenant shall be permitted to use and keep in the Premises such cleaning, copier and other supplies as are reasonable and customary for office use, provided that Tenant uses, stores and disposes of same in accordance with all applicable law. Fire protection devices, in and about the Building, shall not be obstructed or encumbered in any way.
4. Canvassing, soliciting and peddling in the Building is prohibited and each tenant shall cooperate to prevent the same.
5. There shall not be used in any space, or in the public halls of the Building, either by any tenant or by its agents, contractors, jobbers or others, in the delivery or receipt of merchandise, freight, or other matters, any hand trucks or other means of conveyance except those equipped with rubber tires, rubber side guards, and such other safeguards as Landlord may require, and Tenant shall be responsible to Landlord for any loss or damage resulting from any deliveries to Tenant in the Building. Deliveries of mail, freight or bulky packages shall be made through the freight entrance or through doors specified by Landlord for such purpose.
6. Mats, trash or other objects shall not be placed in the public corridors. The sidewalks, entries, passages, elevators, public corridors and staircases and other parts of the Building which are not occupied by Tenant shall not be obstructed or used for any other purpose than ingress or egress.
7. Tenant shall not install or permit the installation of any awnings, shades, draperies and/or other similar window coverings, treatments or like items visible from the exterior of the Premises other than those approved by the Landlord in writing.
8. Tenant shall not construct, maintain, use or operate within said Premises or elsewhere in the Building or on the outside of the Building, any equipment or machinery which produces music, sound or noise which is audible beyond the Premises.
9. Bicycles, motor scooters or any other type of vehicle shall not be brought into the lobby or elevators of the Building or into the Premises except for those vehicles which are used by a physically disabled person in the Premises.
10. All blinds for exterior windows shall be building standard and shall be maintained by Tenant.
11. No additional locks shall be placed upon doors to or within the Premises except as shall be necessary adequately to safeguard United States Government security classified documents stored with the Premises. The doors leading to the corridors or main hall shall be kept closed during business hours, except as the same may be used for ingress or egress.
12. Tenant shall maintain and clean all areas or rooms within the Premises in which security classified work is being conducted or in which such work is stored; Landlord shall not provide standard janitorial service to such areas, the provisions of Section 9 of this Lease notwithstanding.
13. Upon reasonable prior notice (except in the event of an emergency in which case no prior notice shall be required), Landlord reserves the right to shut down the air conditioning, electrical systems, heating, plumbing and/or elevators when necessary by reason of accident or emergency, or for repair, alterations, replacements or improvement.
14. No carpet, rug or other article shall be hung or shaken out of any window of the Building; and Tenant shall not sweep or throw or permit to be swept or thrown from the Premises any dirt or other substances into any of the corridors or halls, elevator, or out of the doors or windows or stairways of the Building. Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors and/or vibrations, or interfere in any way with other tenants or those having business therein, nor shall any animals or birds be kept in or about the Building, except for service animals assisting persons with disabilities. Smoking or carrying lighted cigars or cigarettes in the elevators of the Building is prohibited.
15. Landlord reserves the right to exclude from the Building on weekdays between the hours of 6:00 p.m. and 8:00 a.m. and at all hours on weekends and legal holidays, all persons who do not present a pass to the Building signed by Landlord; provided, however, that reasonable access for Tenant's employees and customers shall be accorded. Landlord will furnish passes to persons for whom Tenant requires same in writing. Tenant shall be responsible for all persons for whom it requests such passes and shall be liable to Landlord for all acts of such persons.
16. Tenant agrees to keep all windows closed at all times and to abide by all rules and regulations issued by Landlord with respect to the Building's air conditioning and ventilation systems.
17. Tenant will replace all broken or cracked plate glass windows and doors at its own expense, with glass of like kind and quality, provided that such windows and doors are not broken or cracked by Landlord, its employees, agents or contractors.
18. In the event it becomes necessary for the Landlord to gain access to the underfloor electric and telephone distribution system for purposes of adding or removing wiring, then upon request by Landlord, Tenant agrees to temporarily remove the carpet over the access covers to the underfloor ducts for such period of time until work to be performed has been completed. The cost of such work shall be borne by Landlord except to the extent such work was requested by or is intended to benefit Tenant or the Premises, in which case the cost shall be borne by Tenant.
19. Violation of these rules, or any amendments thereof or additions thereto, may be considered a default of Tenant's lease and shall be sufficient cause for termination of this Lease at the option of Landlord.

EXHIBIT E

LOCATION OF ADDITIONAL EXTERIOR SIGN

[Exterior photograph of One South Street building showing location of additional exterior sign]

# 4077370_v7

EX-10

AGREEMENT OF SUBLEASE

AGREEMENT OF SUBLEASE made as of the 7th day of December, 2006, by and between DEUTSCHE BANK SECURITIES, INC., a Delaware corporation, (hereinafter called "Sublandlord"), and STIFEL, NICOLAUS & COMPANY, INCORPORATED, a Missouri corporation (hereinafter called "Subtenant").

W I T N E S S E T H :

WHEREAS:

A. By Office Space Lease dated September 29, 1995, by and between ABB South Street Associates, LLC, a Maryland limited liability company, (successor-in-interest to Harlan-KDC Associates), ("Overlandlord"), as "landlord" thereunder, and Sublandlord (successor-in-interest to Alex. Brown & Sons Incorporated), as "tenant" thereunder, as now amended by the First Amendment to Lease dated March 19, 1997, the Second Amendment to Lease dated August 18, 1988, the Third Amendment to Lease dated October 6, 2000 and the Fourth Amendment to Lease dated April 3, 2001, Sublandlord leased certain space (the "Premises") in that certain office building having a street address of One South Street, Baltimore, Maryland (the "Building"), a redacted copy of which is Exhibit A annexed hereto.

B. Sublandlord and Subtenant desire to consummate a subleasing of a portion of the Premises consisting of approximately 75,724 rentable square feet, as shown hatched on Exhibit B annexed hereto and made a part hereof (the "Subleased Premises"), consisting of the entire 15^th floor (20,766 rentable square feet), 16^th floor (20,766 rentable square feet), 17^th floor (20,766 rentable square feet) and 30^th floor (13,426 rentable square feet) in the Building, on the terms and conditions contained in this agreement (hereinafter called the "Sublease").

C. Capitalized terms used herein without definition which are defined in the Overlease shall have the same meaning herein as given to such terms in the Overlease.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, it is hereby agreed as follows:

1. Subleased Premises, Term and Sublease Fixed Rent.

1.1 (a) Sublandlord hereby leases to Subtenant and Subtenant hereby hires from Sublandlord the Subleased Premises for a term (the "Sublease Term") to commence as to the 15th floor of the Building (the "15th Floor Subleased Premises"), on the later of (x) the date which is sixty (60) days from the date hereof or the date on which Sublandlord delivers vacant possession to Subtenant, if earlier, and (y) the date that Overlandlord's consent to this Sublease has been obtained pursuant to Section 1.5 hereof (the "15th Floor Sublease Commencement Date"), and as to the 16th, 17th and 30th floors of the Building (the "Office Floor Subleased Premises"), on the later of (x) the date which is fourteen (14) days from the date hereof and (y) the date that Overlandlord's consent to this Sublease has been obtained pursuant to Section 1.5 hereof (the "Office Floor Sublease Commencement Date"), and to en d on December 30, 2011 or on such earlier date on which this Sublease may be cancelled or terminated pursuant to any of the provisions of this Sublease or the Overlease or pursuant to law (hereinafter called the "Sublease Expiration Date"). At Sublandlord's or Subtenant's request, Subtenant and Sublandlord shall execute and deliver to the other an agreement in the form attached hereto as Exhibit E setting forth the respective Sublease Commencement Dates. Any failure of the parties to execute such written agreement shall not affect the validity of the respective Sublease Commencement Dates as fixed in accordance with the applicable provisions of this Sublease.

(b) Subject to and in accordance with the provisions of Section 1.1(c) below, the Subtenant shall pay to Sublandlord annual fixed rent (the "Sublease Fixed Rent") at the annual amounts set forth on Exhibit C annexed hereto.

(c) Sublease Fixed Rent shall be paid to Sublandlord at Sublandlord's office provided therefor in Section 7.1 hereof (or such other location as Sublandlord shall designate in writing) in advance in equal monthly installments of each annual amount as set forth in Exhibit C hereof, without prior demand, offset, abatement or deduction, except as expressly provided in this Sublease, on or before the first day of each month during the Sublease Term, commencing (i) as to the 15^th Floor Subleased Premises, on the earlier of (x) the date which is one hundred twenty (120) days after the 15^th Floor Sublease Commencement Date and (y) the date on which Subtenant shall occupy any portion of the 15^th Floor Subleased Premises for the conduct of business therein (such earlier dates, the "15^th Floor Rent Commencement Date"), and (ii) as to the Office Floor Subleased Premises, on the earlier of ( x) the date which is one hundred twenty (120) days after the Office Floor Sublease Commencement Date and (y) the date on which Subtenant shall occupy any portion of the Office Floor Subleased Premises for the conduct of business therein (such earlier dates, the "Office Floor Rent Commencement Date"), except that Subtenant shall pay the first monthly installment of Sublease Fixed Rent to Sublandlord on the date of execution and delivery hereof. Sublease Fixed Rent shall be paid, notwithstanding anything herein to the contrary, by check (subject to collection) drawn on a New York Clearing House Association member bank or, if Sublandlord shall elect, by federal funds via wire transfer.

(d) Provided Subtenant shall not then be in default under this Sublease, Subtenant shall be entitled to an abatement (i) of Sublease Fixed Rent due hereunder as to the Office Floor Subleased Premises only, for the first full calendar month occurring after the Office Floor Rent Commencement Date and (ii) of Sublease Fixed Rent due hereunder as to the 15^th Floor Subleased Premises only, for the first full calendar month occurring after the 15^th Floor Rent Commencement Date.

1.2 If the first day for the payment of Sublease Fixed Rent as to any portion of the Subleased Premises is not the first day of a month, then the Sublease Fixed Rent shall be prorated on a per diem basis, and Subtenant agrees to pay the amount thereof for such partial month on the applicable Rent Commencement Date and the Sublease Fixed Rent paid on execution and delivery hereof shall be applied to the following month's Sublease Fixed Rent.

1.3 Commencing on the respective Sublease Commencement Dates, Subtenant shall also pay to Sublandlord, as Sublease Additional Charges under this Sublease, Subtenant's Proportionate Share of all other additional rent and other charges payable by Sublandlord to Overlandlord pursuant to the Overlease, pertaining to or which benefit or affect the Subleased Premises and incurred at the request of or by reason of the act or omission of Subtenant, or of any right of Subtenant hereunder or obligation of Overlandlord under the Overlease as to which Subtenant is entitled to the benefit pursuant to this Sublease, or as otherwise expressly provided in this Sublease, provided, however, Subtenant shall pay one hundred (100%) percent of all charges (i) for work, utilities, services and/or labor provided to the Subleased Premises by Overlandlord at the request of Subtenant during any time that is not normal business hours or in excess of work, serv ices, utilities and/or labor provided for in the Overlease to be without charge or fee to the Subleased Premises or (ii) incurred at the request of Subtenant or otherwise pertaining solely to the Subleased Premises, or (iii) with respect to Subtenant Alterations to the Subleased Premises by or for the account of Subtenant, except that Sublease Additional Charges for Sublease Escalation Rent (as defined in Article 4 hereof) shall be payable as provided in Article 4 hereof, and except that Sublease Additional Charges for electric energy shall be payable as provided in Section 2.1(h) hereof. Subtenant's Proportionate Share shall be based on a fraction (expressed as a percentage), the numerator of which is the aggregate rentable square feet of the Subleased Premises as of the date hereof and the denominator of which is the aggregate rentable square feet of the Premises. For purposes hereof, Subtenant's Proportionate Share shall be as follows: (a) from the Office Floor Sublease Commencement Date through the da y immediately preceding the 15^th Floor Sublease Commencement Date, 19.89%, based upon the aggregate rentable square feet of the Office Floor Subleased Premises and 276,368 rentable square feet contained in the Premises, (b) from the 15^th Floor Sublease Commencement Date through December 31, 2006, 27.40%, based upon the aggregate rentable square feet of the Subleased Premises and 276,368 rentable square feet contained in the Premises, and (c) from and after January 1, 2007 and throughout the Term, 32.37%, based upon the aggregate rentable square feet of the Subleased Premises and 233,952 rentable square feet contained in the Premises. If at any time after the first determination of Subtenant's Proportionate Share rentable square feet shall be added to or subtracted from the Subleased Premises or the Premises, Subtenant's Proportionate Share shall be proportionately adjusted. In the event of such adjustment, Sublandlord and Subtenant shall, at either party's request, execute an instrum ent confirming such adjustment and making the appropriate change in Subtenant's Proportionate Share, but no such instrument shall be necessary to make the same effective.

1.4 All Sublease Additional Charges so payable by Subtenant shall be paid within thirty (30) days after Subtenant's receipt of a bill therefor, without offset, abatement or deduction, except as expressly provided in Section 2.6 of this Sublease. If Subtenant shall default in the payment of any Sublease Additional Charges or any Sublease Escalation Rent, Sublandlord, in addition to any other right or remedy, shall have the same rights and remedies as in the case of a default by Subtenant in the payment of Sublease Fixed Rent. Sublease Fixed Rent, Sublease Escalation Rent, Sublease Additional Charges and all other amounts due hereunder are sometimes hereinafter referred to as "Sublease Rent".

1.5 This Sublease is conditioned upon the consent thereto by Overlandlord (the "Overlandlord Consent"), which Overlandlord Consent shall be evidenced by Overlandlord's signature appended hereto or a separate consent in the standard form utilized by Overlandlord for such purposes so long as such form of consent does not materially and adversely affect either of the parties' respective rights and obligations hereunder (unless such requirement be waived by the party adversely affected thereby). Sublandlord agrees promptly to request such consent and to use reasonable commercial efforts to obtain such consent (without being obligated to make any payment to Overlandlord not required by the Overlease, nor to amend or waive any provision of the Overlease, nor commence any arbitration or litigation), but Sublandlord shall have no responsibility or liability whatsoever if such consent is refused or not obtained for any reason whatsoever or f or no reason. Subtenant agrees to cooperate with Sublandlord with respect thereto and to furnish all financial statements, references and other data and documents with respect to Subtenant as Overlandlord may request in accordance with the provisions of the Overlease and execute and deliver such Overlandlord Consent form provided by Overlandlord conforming to the provisions of this Section 1.5. In the event that Overlandlord notifies Sublandlord that Overlandlord will not give such consent, Sublandlord will so notify Subtenant and this Sublease shall be deemed to be canceled and without force or effect. In the event that the previous sentence does not apply but Sublandlord does not receive such consent of Overlandlord by a date which is forty-five (45) days after the date of this Sublease, then, upon written notice to the other, Sublandlord or Subtenant (except to the extent such failure is caused by Subtenant) may cancel this Sublease, and upon the giving of such notice, this Sublease shall be deemed can celed and of no further force or effect. If either of the two (2) previous sentences shall be applicable, Sublandlord and Subtenant shall have no further obligations or liabilities to the other with respect to this Sublease and Sublandlord shall promptly return to Subtenant any rent heretofore paid hereunder.

2. Provisions of Overlease, etc.

2.1 All of the terms, covenants, conditions and provisions in the Overlease are hereby incorporated in, and made a part of this Sublease, except as herein otherwise expressly provided, and except those which by their nature or purport are inapplicable to the subleasing of the Subleased Premises pursuant to this Sublease or are inconsistent with or modified by any of the terms, covenants or conditions of this Sublease or modifications or amendments to the Overlease made after the date thereof, and except for the obligation to pay rent and additional rent under the Overlease; and such rights and obligations as are contained in the Overlease are hereby imposed upon the respective parties hereto with the same force and effect as if (i) references in the Overlease to the "Lease" and to the "Premises" were references, respectively, to this Sublease and the Subleased Premises, and (ii) references in the Overlease to "Landlord" and "Tenant " were references, respectively, to Sublandlord and Subtenant; provided, however, with reference to this Sublease:

(a) For the purposes of this Sublease, Sections 3.3, 3.4, 4.1, 5.1, 5.3, 6.1, 6.2, 6.3, 7, 8.1 (first paragraph), 10.2(c), 10.5, 10.6, 10.7(a), (b) & (e), 11.1(e), 11.5 (b) (last two sentences and, from "without first obtaining" to the end of the third to last sentence), (c), (d) and (e), 11.6 (last sentence), 11.13, 14.1(a) (second paragraph), 14.1(b) (fourth and ninth sentences), 14.1(d) (last sentence), 14.2, 14.6, 14.7, 15.5, 16.1(a) (references to abatement of rents), 16.2(a) and (c), 16.4 (second sentence), 17.2 (references to reduction of Basic Rent and Additional Rent), 19.1, 19.2, 19.5(b), 21.2, 23.1, 23.4, 24, 25(a) (proviso in first sentence), 25(c), 29, 31.10, 31.11, 32, 33, 34, 35, 36, 37, 38, 39, 40 and 41 of the Overlease, Exhibits A, C and X to the Overlease, any and all amendments to the Overlease except the Second Amendment to Lease dated August 18, 1998, shall not be deemed incorporated in or made a part hereof.

(b) References to "Landlord" in Sections 8.3 (second, fourth and fifth paragraphs), 9, 10.2(b), 10.3, 10.4, 10.7(c) & (f), 11 (first paragraph), 11.1(a), (b) & (c), 11.2, 11.3, 11.4, 11.5(a), 11.6, 11.8, 11.10, 11.12, 13, 15.6, 16.1(a) and (d), 16.2, 16.4 (first sentence), 17.3, 23.3, and 30 of the Overlease shall, notwithstanding the incorporation herein pursuant to clause (ii), mean "Overlandlord".

(c) References to "Landlord" in Sections 8.1 (second paragraph), 8.3 (first paragraph), 8.5, 10.2(a), 10.7(c) & (g), 11.9, 12, 14.4, 14.5, 15.1, 15.3, 16.1(b) and (c), 17.5, 18, 21.1, 22, 23.2, 28 (except last paragraph) and 31.13 of the Overlease shall, notwithstanding the incorporation herein pursuant to clause (ii), mean both "Overlandlord" and "Sublandlord" or either "Overlandlord" or "Sublandlord", whichever construction shall afford Sublandlord greater rights.

(d) References in the Overlease as incorporated herein to "Basic Rent" shall mean "Sublease Fixed Rent" herein, to "Increased Operating Costs" and "Increased Taxes" shall mean "Sublease Escalation Rent" herein, and to "Tenant's Share" shall mean "Subtenant's Proportionate Share" herein.

(e) Subtenant's covenant to pay Sublease Rent shall be independent of every other covenant in this Sublease. Sublandlord's failure to prepare and deliver any statements or notice set forth in Article 4 hereof or elsewhere in this Sublease, or Sublandlord's failure to make a demand, shall not in any way cause Sublandlord to forfeit or surrender its rights to collect any items of Sublease Rent which may have become due during the Sublease Term. Subtenant's liability for such amounts shall survive the expiration of the Sublease Term, provided, Subtenant shall not be liable to Sublandlord for any Sublease Additional Charges payable under this Sublease which are not billed to Subtenant within 12 months after receipt by Sublandlord of the corresponding bill from Overlandlord.

(f) Subtenant agrees that the Subleased Premises shall be occupied only for those uses permitted by Section 8.1 of the Overlease as incorporated into this Sublease.

(g) References in the Overlease to work or repairs to be performed or services, utilities or maintenance to be supplied by "Landlord" in respect of the Building and/or Premises and/or Subleased Premises shall continue to mean and provide that such work or repairs shall be performed and services, utilities, facilities or maintenance provided by Overlandlord (and not by Sublandlord) pursuant to the terms, covenants and conditions of the Overlease relating thereto. Subtenant shall be entitled to receive all of the services, utilities, facilities, repairs, maintenance and work from the Overlandlord to the extent that Sublandlord is entitled to receive same under the Overlease with respect to the Subleased Premises, unless Overlandlord is excused therefrom by reason of acts or omissions of Subtenant.

(h) Electricity shall be furnished to the Subleased Premises on a sub-metered basis and Subtenant will pay to Sublandlord as Sublease Additional Charges for such electricity amounts determined by multiplying (A) a fraction, the numerator of which is the difference between (i) the kilowatt hours of consumption recorded on the sub-meter or sub-meters for the Subleased Premises (collectively, "Subtenant's Meter") during any billing period and averaged for the Business Days during such period and (ii) 5,050 kwh (the base kilowatt hours per Business Day included in the Sublease Fixed Rent), and the denominator of which is such kilowatt hours of consumption recorded on Subtenant's Meter during such billing period and averaged for the Business Days during such period, by (B) the total charges actually billed to Sublandlord by Overlandlord, without mark-up by Sublandlord, pursuant to such meter reading during such billing period at the same rates charged to Sublandlord by Overlandlord for such consumption, plus any additional sales or use taxes, surcharges or other incremental amounts which may be imposed on Sublandlord by Overlandlord, any taxing authority, utility or other body for sub-submetered electricity. Sublandlord shall be responsible for installing Subtenant's Meter and keeping Subtenant's Meter in good working order and repair, at Sublandlord's sole cost and expense. Bills for such sub-metered electricity shall be rendered at such time as Sublandlord receives a bill for the same from Overlandlord and shall be payable by Subtenant within thirty (30) days after receipt thereof. If the amount billed by Overlandlord, or the public utility company providing electricity to the Building shall be retroactively increased or decreased for any billing period for which Subtenant shall have paid Additional Sublease Charges pursuant to this Section, then such Additional Sublease Charges shall be accordingly, adjusted, and Subtenant sh all pay any deficiency therein within thirty (30) days of demand therefor, or if there shall have been an overpayment, Sublandlord shall credit the amount thereof against the next succeeding payments of Additional Sublease Charges. Subtenant agrees that its use of electric current shall not exceed an aggregate of 5.7 watts of demand load per rentable square foot of each floor of the Subleased Premises plus an additional 7.0 watts per rentable square foot of the 15^th floor of the Subleased Premises. The additional electric capacity on the 15^th floor shall be available by Subtenant's use of an additional 120,000 watt and a 24,000 watt transformer currently fed from Sublandlord's uninterruptible power supply ("Sublandlord's UPS") and backed up by base building power. These two additional transformers shall be disconnected from Sublandlord's UPS and left connected to base building power only for Subtenant's use. Sublandlord makes no representations or warranties express or implied as to the two such additional transformers, nor shall Sublandlord be responsible for any defects in the design, condition or operation thereof, nor obligated to maintain, repair or replace such transformers. Unless Subtenant notifies Sublandlord in writing prior to the 15^th Floor Sublease Commencement Date that it elects not to, and does not in fact, use such transformers, Subtenant shall be responsible, at its sole cost and expense, for the necessary replacement, maintenance and repair of the two such additional transformers. Subtenant shall not use or install any electric equipment which, in Sublandlord's reasonable judgment, could overload the installations in the Subleased Premises or interfere with the use thereof by Sublandlord. Subject to the provisions of Section 8.2 below, Subtenant shall not be responsible for removing, at the end of the Term, any transformers or other electrical or data equipment installed by Sublandlord in the Subleased Premises.

(i) Sublandlord shall, promptly after the date hereof, identify vertical risers within the Subleased Premises which will be available for Subtenant's installation of telecommunications cable and conduit, provided that in no event shall Subtenant be entitled to more than Subtenant's Proportionate Share of such riser space and Subtenant shall be solely responsible, at Subtenant's sole cost and expense, for making the necessary connections to the appropriate telecommunications providers and for obtaining the necessary consents from Overlandlord under the Overlease to install such telecommunications cabling. Subtenant's installations shall be subject to Sublandlord's approval. No installations by Subtenant under this Section shall adversely affect or reduce or interrupt Sublandlord's telecommunications cabling. Any work performed under this section shall be deemed a Subtenant Alteration hereunder. Sublandlord shall, at no co st to Sublandlord, cooperate with Subtenant in meeting its electrical requirements so long as Sublandlord shall have no obligation or liability with respect thereto, and any failure of Subtenant to obtain additional electrical capacity shall not affect Subtenant's obligations hereunder.

(j) Subject to Overlandlord's consent and Sublandlord's rights and obligations under the Overlease, Subtenant may use fifteen (15) tons of condenser water to be provided by Overlandlord to the existing supplemental air conditioning units which are now installed in the Subleased Premises or which Subtenant may, as a Subtenant Alteration, install in the Subleased Premises. Subject to Overlandlord's consent and Sublandlord's consent (which consent Sublandlord shall not unreasonably withhold, condition or delay) and Sublandlord's rights and obligations under the Overlease, Subtenant shall have the right, at its sole cost and expense, to install supplemental air conditioning units in the Subleased Premises, provided, however, Subtenant shall not be entitled to any additional condenser water allocation under the Overlease by reason thereof. Subtenant shall have the right to request from Overlandlord additional condenser water allocation required by Subtenant by reason of such supplemental units, provided Overlandlord shall agree that Sublandlord shall have no liability for the payment of any costs with respect thereto. Subtenant shall be responsible, at its sole cost and expense, for the necessary tap-in-charges, replacement, maintenance and repair of any supplemental air conditioning systems (whether installed by Sublandlord or Subtenant), including, without limitation, systems that are installed to service Subtenant's data processing, computer, trading operations or telephone operations, and Subtenant shall contract with reputable HVAC contractors to perform such replacement, maintenance and repairs. Sublandlord makes no representations or warranties as to such supplemental air conditioning systems nor shall Sublandlord or Overlandlord be responsible for defects in design, condition or operation thereof.

(k) Subject to Overlandlord's consent and Sublandlord's rights and obligations under the Overlease, Subtenant shall have the right to request from Overlandlord the use of a portion of the roof of the Building, other than within Sublandlord's designated Roof Area, for the installation of telecommunications antennae, microwave dishes and other communications equipment servicing the Subleased Premises, and to install and maintain wires and/or conduit from such roof space to the Subleased Premises, provided that Subtenant's indemnity obligations in Section 2.2(c) and 2.12 and all other applicable provisions hereof shall apply thereto, and provided, further, such requests shall not be obtained pursuant to the Overlease and Overlandlord shall so agree and further agree that Sublandlord shall have no liability therefor, for the payment of any charges therefor, for the removal or restoration thereof at the expiration or earlier te rmination of the Overlease or for any damages or liability related thereto or any work or equipment associated therewith.

(l) Subtenant shall be entitled to Subtenant's Proportionate Share of Sublandlord's permitted number of listings pursuant to the Overlease on the Building Directory, subject to the applicable terms and conditions of the Overlease. Subject to Overlandlord's and Sublandlord's consent and Sublandlord's prior rights and obligations under the Overlease, Subtenant shall have the right to request from Overlandlord the right to install identifying signs containing Subtenant's corporate name and logo in and on the Building as shown on Exhibit F attached hereto and made a part hereof, provided that Overlandlord shall agree that Sublandlord shall have no liability therefor, for the payment of any costs and expenses therefor, for the removal or restoration thereof at the expiration or earlier termination of the Overlease or for any damages or liability related thereto or any work or equipment associated therewith. Subtenant's exterior sign age at the top of the Building shall be located on the west side in the location of Sublandlord's existing signage on such side of the Building as shown and described on Exhibit F hereto, provided, however, Subtenant's exterior signage shall in no event be more prominent than Sublandlord's exterior signage.

(m) Subtenant shall have the use of one (1) parking permit per 1,000 rentable square feet of the Subleased Premises (currently seventy-six (76) parking permits) and an additional twelve (12) parking permits for an initial total of eighty-eight (88) parking permits ("Subtenant's Parking Spaces") in the Building parking garage, for which Subtenant shall pay a charge, without mark-up by Sublandlord, at the monthly rate for each of Subtenant's Parking Spaces as provided in the Overlease (the "Subtenant's Parking Charge"), which Subtenant's Parking Charge shall be paid in advance to Sublandlord (or at Sublandlord's option, to either Overlandlord or the operator of the parking facility) on or before the last day of each month during the Sublease Term in respect of the next succeeding month as a Sublease Additional Charge. Subtenant shall have no right to reduce the number of Subtenant's Parking Spaces. The designation of Subtenant's Parking Spaces shall be allocated by Sublandlord from the parking spaces available to Sublandlord under the Overlease, as Sublandlord shall determine in its reasonable discretion. Sublandlord shall, at no cost to Sublandlord, cooperate with Subtenant in locating up to an additional 200 available parking spaces in the Building parking garage or in the garage located at across the street from the Building (the "City Garage"), provided such additional parking shall not result in a reduction in Sublandlord's parking spaces therein. Subject to Sublandlord's parking requirements, Sublandlord will use commercially reasonable efforts, at no cost to Sublandlord, to assist in transferring to Subtenant for its use Sublandlord's unused and available parking spaces which are not reserved by Sublandlord for its future use in the City Garage. Subtenant's rights as to and its use of the Subtenant's Parking Spaces is subject to the terms and conditions of the Overlease and rules and regulations of the Overlandlord, and S ubtenant shall comply therewith.

(n) Except as otherwise expressly set forth herein, all notice or cure periods of Subtenant provided for herein or other time limits for Subtenant to give notice or perform any act, condition or covenant, or exercise any right or remedy, shall be the same as those provided for in the Overlease, but (i) as to monetary obligations, reduced by two (2) days; and (ii) as to non-monetary obligations, reduced by 20% (rounded to the greatest reduction), if notice is required, measured from the earlier of the date on which notice is given to Subtenant by either Overlandlord or Sublandlord. Notwithstanding the above, any notice periods shall commence on the date Subtenant receives notice from Overlandlord or Sublandlord.

(o) Supplementing the Overlease, if a separate Overlandlord Consent to this Sublease is signed by Subtenant, the term "Overlease" and "Sublease" as used herein shall each be deemed to include such Overlandlord Consent, and it shall be a default under this Sublease (subject to applicable notice and cure periods) if Subtenant shall default in the full and timely performance of any of its covenants and other agreements set forth in such Overlandlord Consent. For purposes of this Sublease, as between Sublandlord and Subtenant, in the event of a conflict between the terms of the Overlease and the terms of the Overlandlord Consent, the provisions of the Overlandlord Consent shall govern and control.

(p) Sublandlord may, in its sole discretion, elect to exercise any or all of its self-help rights as Tenant under the Overlease pursuant to Section 19.5(b) thereof. Subtenant agrees that if Sublandlord elects to exercise any such rights, (a) Subtenant shall, if requested by Sublandlord, reimburse Sublandlord for Subtenant's Proportionate Share of the reasonable and actual cost incurred by Sublandlord therefor (including by reason of any indemnity of Overlandlord in connection therewith but excluding any reimbursement therefor which has at such time been paid by Overlandlord to Sublandlord), or if such self-help rights pertain to only a portion of the Premises a proportionate percentage thereof, which shall be 100% if pertaining only to the Subleased Premises, such reimbursement to be made by Subtenant within thirty (30) days after demand therefor, provided that if Overlandlord shall after such payment by Subtenant reimburse Subl andlord for all or any portion of such costs, and Subtenant is not in monetary default under the provisions of this Sublease or material non-monetary default beyond any applicable notice and cure period under the provisions of this Sublease, Sublandlord will reimburse Subtenant for the amounts paid to Sublandlord by Subtenant pursuant to this sentence to the extent of the applicable percentage thereof (in accordance with this sentence) of such costs so reimbursed to Sublandlord from Overlandlord, (b) Subtenant understands that after Sublandlord exercises such self-help rights, Sublandlord might thereafter not be entitled to a rent abatement under Section 11.6 of the Overlease and, accordingly, Subtenant may not thereafter be entitled to a corresponding rent abatement under this Sublease if Subtenant would otherwise be entitled thereto pursuant to Section 2.6 hereof. If, however, Sublandlord elects not to exercise any of or all such self-help rights, Sublandlord shall not be liable to Subtenant for any costs , liabilities or expenses, all of which are hereby released by Subtenant. Sublandlord agrees, however, that if it does exercise such self-help rights, it shall use commercially reasonable efforts to commence and complete such cure in a timely manner. In the event that Sublandlord notifies Subtenant that Sublandlord elects not to exercise its self-help rights pursuant to Section 19.5(b) of the Overlease, or has not given such notice but does not commence to utilize its self-help rights pursuant to Section 19.5(b) of the Overlease within five (5) Business Days (or a shorter period as may be necessary in case of an emergency) after the time Sublandlord is permitted to do so under the Overlease, or Sublandlord commences to do so but does not diligently prosecute such right, and Overlandlord's failure materially interferes with Subtenant's use of the Subleased Premises for the conduct of its business (and does not affect (other than to a de minimis extent) any portion of the Premises other than the Subleased Premises), Sublandlord agrees that Subtenant may exercise such right under said Section 19.5(b) in the name, place and stead of Sublandlord provided that Subtenant's indemnity obligations in Section 2.2(c) and 2.12 hereof shall apply thereto. In such event, Sublandlord shall use reasonable good faith efforts to obtain reimbursement therefor from Overlandlord pursuant to Subsection 19.5(b) of the Overlease.

(q) Sublandlord agrees that, except in cases of emergency, Sublandlord shall only access certain areas of the Subleased Premises designated by Subtenant used for housing of Subtenant's client files and records when accompanied by a representative of Subtenant (provided Subtenant shall make such representative available), and upon not less than twenty-four hours' notice (if possible under the circumstances and which notice may be oral or telephonic), provided that (i) Subtenant shall deliver floor plans of the Subleased Premises designating such areas, and (ii) such designation shall be reasonable in light of Subtenant's business. Subtenant acknowledges that Overlandlord shall continue to have access to such areas, subject to and in accordance with the Overlease.

2.2 (a) This Sublease and all rights of Subtenant hereunder are and shall be subject and subordinate in all respects to the Overlease, and all of the terms, covenants, agreements, provisions and conditions of the Overlease, and to all modifications, amendments and extensions of the Overlease and to all of Sublandlord's obligations under the Overlease. Sublandlord agrees with Subtenant that, so long as Subtenant is not in default hereunder beyond any applicable notice and/or cure period, Sublandlord shall not enter into any modification or amendment to the Overlease which will prevent or materially adversely affect the use by Subtenant of the Subleased Premises in accordance with the terms of this Sublease, or increase the obligations of Subtenant or decrease its rights under the Sublease in any way materially adversely affecting Subtenant.

(b) Subtenant shall duly and fully keep, observe and perform each and every term, covenant, provision and condition on Sublandlord's part to be kept, observed and performed pursuant to the Overlease as incorporated herein, including, without limitation, the Rules and Regulations adopted by Overlandlord pursuant thereto, except as may otherwise be specifically provided in this Sublease. In furtherance of the foregoing and notwithstanding anything herein to the contrary, Subtenant shall not (i) take or permit any action inconsistent with the terms of the Overlease or, (ii) do or permit to be done anything which Sublandlord is prohibited from doing or permitting under the Overlease, or otherwise do or suffer to permit anything to be done which would result in a default under the Overlease or cause the Overlease to be terminated or forfeited, or (iii) take any action or do or permit anything to be done which could result in any addi tional cost or other liability to Sublandlord under or pursuant to the Overlease.

(c) Subtenant hereby agrees that Subtenant shall indemnify and hold Sublandlord harmless from and against all claims, liabilities, penalties and expenses, including, without limitation, reasonable attorneys' fees and disbursements, arising from or in connection with (i) Subtenant's failure to perform any of the terms, covenants, conditions or agreements contained in or incorporated into this Sublease (or any consents hereto) which, by the terms of this Sublease (or such consents), Subtenant is obligated to perform, and (ii) any acts or omissions of Subtenant or Subtenant's employees, invitees, agents or other representatives, or any occurrence in or about the Subleased Premises; provided, that the foregoing indemnity shall not apply to the extent such claim results from the negligence or willful misconduct of Sublandlord and/or Overlandlord and/or other subtenants of Sublandlord, provided, however, Sublandlord acknowledges and a grees that, except as provided in Sections 2.12 and 8 hereof, Subtenant shall in no event be liable for consequential or special damages in connection with such indemnity. All amounts payable by Subtenant to Sublandlord on account of such indemnity shall be deemed to be Sublease Rent hereunder and shall be payable upon demand.

(d) Sublandlord agrees to indemnify Subtenant and to hold Subtenant harmless from and against any and all claims, losses or damages, including, without limitation, reasonable attorneys' fees and disbursements, resulting from or arising out of (i) Sublandlord's failure to perform any of the terms, covenants, conditions or agreements contained in or incorporated into this Sublease which, by the terms of this Sublease, Sublandlord is obligated to perform, except for defaults arising out of the acts or omissions of Subtenant, its agents, contractors, employees invitees or licensees, and (ii) any willful misconduct or gross negligence of Sublandlord, its employees, agents, contractors or invitees; provided, however, Subtenant acknowledges and agrees that the Sublandlord shall in no event be liable for consequential or special damages in connection with such indemnity.

2.3 If for any reason whatsoever the Overlease is terminated, by either the Overlandlord or by Sublandlord, including, without limitation, in the event of any damage, destruction or condemnation with respect to all or part of the Premises, this Sublease shall thereupon be terminated, and Sublandlord shall not be liable to Subtenant by reason thereof for any loss, cost or expense incurred by Subtenant in connection therewith, unless said termination shall have been effected because of the breach or default of Sublandlord under the Overlease (and Subtenant is not in default hereunder) or voluntary surrender of the Overlease by Sublandlord to Overlandlord (which shall not be deemed to include a right of termination by reason of casualty or condemnation, provided that in no event shall Sublandlord be liable to Subtenant for any loss, cost or expense incurred by Subtenant if Overlandlord shall accept an attornment by Subtenant to Overlandlord upon substantially the same (or more favorable to Subtenant) terms as provided in this Sublease (or if such attornment shall not be accepted with Subtenant being in default hereunder) and provided further that in no event shall Sublandlord be liable for any special, consequential or punitive damage to Subtenant.

2.4 In the case of any issue hereunder between Sublandlord and Subtenant on a matter which is also being arbitrated (or may thereafter become the subject of an arbitration) between Overlandlord and Sublandlord under the Overlease, Subtenant shall not be a party to the arbitration between Overlandlord and Sublandlord, but Sublandlord agrees that if such arbitration affects the terms and provisions of this Sublease, Sublandlord will advise and consult with Subtenant in connection with such arbitration, but any determination or settlement of the matter arbitrated between Overlandlord and Sublandlord shall be binding upon Subtenant. Notwithstanding the foregoing, Sublandlord agrees that Sublandlord shall not settle such proceeding without the prior written consent of Subtenant (not to be unreasonably withheld, conditioned or delayed), if such settlement would prevent or materially adversely affect the use by Subtenant of the Subleased Premises in accordance with the terms of this Sublease, or increase the obligations of Subtenant or decrease its rights under this Sublease in any way materially adversely affecting Subtenant.

2.5 (a) Notwithstanding anything to the contrary herein or contained in the consent of the Overlandlord to this Sublease, except as provided in this Section 2.5(a), Subtenant is not authorized to request any work, services, utilities, parking facilities, maintenance or repairs by Overlandlord for which Overlandlord may charge Sublandlord under the Overlease, unless Sublandlord has specifically consented thereto in writing (not to be unreasonably withheld, conditioned or delayed). Sublandlord agrees, however, that subject to the consent of Overlandlord, Subtenant may request directly from Overlandlord ordinary work, services, utilities (to the extent such request does not affect utilities provided to Sublandlord under the Overlease), maintenance and repairs which Overlandlord is obligated to perform in the Subleased Premises pursuant to the Overlease, but such right of Subtenant shall be conditioned on Subtenant not being in defau lt beyond any applicable notice and/or cure periods in payment for any such work, services, utilities, maintenance and repairs previously so provided to the Subleased Premises or otherwise under this Sublease. In the event Subtenant desires any additional services from Overlandlord which are not provided in the Overlease and require an additional charge, Subtenant may request such additional services from Overlandlord, provided such services shall not be obtained pursuant to the Overlease and Overlandlord so agrees and further agrees that Sublandlord shall have no liability therefor.

(b) Sublandlord shall in no event be liable to Subtenant, except to the extent caused by the willful misconduct or breach of this Sublease or the Overlease by Sublandlord (excluding defaults arising out of Subtenant's acts or omissions or those claiming by, through or under Subtenant or its agents, contractors, employees, invitees or licensees), nor, shall the obligations of Subtenant hereunder be impaired or abated or the performance hereof by Subtenant be excused because of (i) any failure or delay on Overlandlord's part in furnishing any services, utilities, parking facilities, or maintenance or in doing such repairs or work, including those which may be contemplated by this Sublease, (ii) any other failure of Overlandlord to observe and perform its covenants and agreements pursuant to the Overlease, or (iii) the acts or omissions of Overlandlord, its agents, contractors, servants, employees, invitees, or licensees. If Overla ndlord shall default in any of its obligations to Sublandlord with respect to the Subleased Premises, Sublandlord will use reasonable commercial efforts to cause Overlandlord to perform and observe such obligations (except that Sublandlord shall not be obligated to commence any legal, arbitration or audit proceedings against Overlandlord, except as provided in Section 2.5(d), or utilize any self-help rights, or make any payment of money or other consideration), but Sublandlord shall have no liability for failure to obtain the observance or performance of such obligations by Overlandlord or by reason of any default of Overlandlord under the Overlease, of any failure of Overlandlord to act or to grant any consent or approval under the Overlease or guaranty thereof, or from any misfeasance or nonfeasance of Overlandlord, nor shall the obligations of Subtenant hereunder be excused or abated in any manner by reason thereof, except as provided in this Sublease. If Sublandlord elects, or Sublandlord is required he reby, to commence legal, arbitration or audit or other proceedings against the Overlandlord to enforce, or otherwise enforces, Sublandlord's rights under the Overlease which are applicable to Subtenant or the Subleased Premises as well as to the Sublandlord as tenant as to the remainder of the Premises, Subtenant shall be responsible to reimburse Sublandlord for the reasonable costs of such proceedings, including, without limitation, reasonable attorneys' fees incurred by Sublandlord at the following rates: (a) one hundred (100%) percent thereof if such pertain only to the Subleased Premises; (b) Subtenant's Proportionate Share if such pertain to the entire Premises; or (c) a proportionate percentage if such pertain to the Subleased Premises or any part thereof and to a portion of the Premises other than the Subleased Premises, such reimbursement to be made by Subtenant within thirty (30) days after demand therefor.

(c) If Sublandlord elects not to institute legal, arbitration or audit proceedings (which election shall be made by Sublandlord within a reasonable time taking into consideration the time limits contained in the Overlease with respect thereto) against Overlandlord in the name of Sublandlord to enforce Sublandlord's rights as Tenant under the Overlease which are applicable to Subtenant and the Subleased Premises, but Subtenant shall, nevertheless request Sublandlord to do so, Sublandlord shall, at Sublandlord's option (which election shall be made by Sublandlord within a reasonable time taking into consideration the time limits contained in the Overlease with respect thereto), either (i) assign to Subtenant its causes of action or rights against Overlandlord to the extent applicable to Subtenant or the Subleased Premises or Subtenant's rights under this Sublease and shall permit Subtenant to institute such legal, arbitration or au dit proceeding against Overlandlord in the name of Subtenant or, if necessary in order to effectuate the benefit of such assignment, in the name of Sublandlord, provided Subtenant shall use counsel reasonably approved by Sublandlord and Subtenant shall not settle such proceeding without the prior written consent of Sublandlord, which shall not be unreasonably withheld, conditioned or delayed; provided that Sublandlord shall not require Subtenant to utilize the assignment provisions of this subsection (i) unless such assignment shall be effectual to enable Subtenant to have the benefit of such rights, or (ii) institute legal, arbitration or audit proceedings against Overlandlord at the request of Subtenant in the name of Sublandlord, provided in either of (i) or (ii) that (A) in Sublandlord's commercially reasonable judgment, such proceedings will not reduce or impair any claims Sublandlord may have against Overlandlord, (B) Sublandlord shall reasonably determine that there are no other practical bona fide me thods for obtaining performance of Overlandlord's obligations under the Overlease, (C) Subtenant shall not then be in default under this Sublease in any monetary or material non-monetary respect, (D) such proceeding shall be prosecuted at the sole cost and expense of Subtenant and Subtenant shall agree to indemnify and hold harmless Sublandlord from any claims, liabilities, damages, costs and expenses, including any reasonable attorneys' fees incurred by Sublandlord as a result of Subtenant exercising its rights under this subsection; and (E) Subtenant's rights under this Sublease or use and enjoyment of the Subleased Premises have been materially and adversely affected.

2.6 If, as a result of the provisions of (x) Section 11.6, (y) Section 16.1(a), or (z) Section 17.2 of the Overlease, Overlandlord has actually abated (or Sublandlord shall obtain a credit) as to any of the Basic Rent and Additional Rent payable by Sublandlord as Tenant of the Subleased Premises under the Overlease, with respect to the Subleased Premises, Sublandlord shall, without duplication of any other provision of this Sublease, correspondingly abate (or Subtenant shall be entitled to a credit as to) the Sublease Fixed Rent and/or Sublease Additional Charges payable under this Sublease during the Sublease Term as to all or part of the Subleased Premises, as applicable under the Overlease as to which such Rent is abated (or credited) under the Overlease and for as long as such abatement (or credit) shall continue under the Overlease.

2.7 If in this Sublease, Subtenant is required to obtain Sublandlord's consent or approval, Subtenant understands that Sublandlord may be required to first obtain the consent or approval of Overlandlord pursuant to the Overlease, which Sublandlord agrees to promptly seek from Overlandlord so that the time period for granting such consent or approval by Sublandlord shall to the extent reasonably practicable occur concurrently with that of Overlandlord. Sublandlord will cooperate with Subtenant in requesting any such consent or approval. Subtenant shall reimburse Sublandlord for any reasonable, out-of-pocket costs or expenses payable under the Overlease or otherwise reasonably incurred by Sublandlord in connection with requesting Overlandlord's consent or approval on behalf of Subtenant with respect to any matter as to which Overlandlord's consent or approval is required under the Overlease or hereunder. If Overlandlord s hould refuse such consent or approval, Sublandlord shall be released of any obligation to grant its consent or approval with respect to such matter whether or not Overlandlord's refusal, in Subtenant's opinion, is arbitrary or unreasonable.

2.8 (a) The rights of Subtenant hereunder are subject and subordinate to all ground and underlying leases and to all mortgages to which the Overlease may be subject and subordinate to, or to which the Overlease may now or hereafter be subjected or subordinated, whether now or hereafter affecting such leases or the real property of which the Subleased Premises are a part. This clause shall be self-operative and no further instrument shall be required by any such superior interest. However, in confirmation of such subordination, Subtenant, within ten (10) days after Subtenant's receipt of a written request to execute and deliver such a confirmation, shall execute any commercially reasonable certificate or other instrument that either or both of Overlandlord and Sublandlord may request, provided same does not increase the obligations, or diminish the rights, of Subtenant hereunder other than to a de minimis extent. Sublandlord is hereby vested with full power and authority to subordinate Subtenant's interest hereunder to any mortgage, deed of trust, ground or underlying lease, or other lien or interest hereafter placed on the Subleased Premises, and Subtenant agrees, upon demand, to execute such further instruments subordinating this Sublease, as Sublandlord may request.

(b) Subtenant expressly agrees that if, for any reason, the Overlease should be terminated prior to the expiration date therein set forth or if Overlandlord shall succeed to Sublandlord's estate in the Subleased Premises, then at Overlandlord's election Subtenant shall attorn to and recognize Overlandlord as Subtenant's landlord under this Sublease, subject to the provisions of Section 23.4(f) of the Overlease, any provision of law to the contrary notwithstanding. Subtenant shall promptly execute and deliver to Overlandlord any commercially reasonable certificate or other instrument Overlandlord may request to evidence such attornment. If the Overlandlord has accepted such attornment and entered into a direct lease with Subtenant, each party shall have no further liability to the other under this Sublease, except for any claims or liability which may have arisen or accrued prior to such attornment, and the parties shall enter i nto an agreement releasing each other pursuant to the terms of this Section, but the failure to do so shall in no way affect the release set forth in this sentence.

2.9 Sublandlord agrees to forward to Subtenant, upon receipt thereof by Sublandlord, a copy of each and every notice of default from Overlandlord, received by Sublandlord in its capacity as Tenant under the Overlease. Subtenant agrees to forward to Sublandlord, upon receipt thereof, copies of any notices received by Subtenant with respect to the Subleased Premises from Overlandlord or from any governmental authorities.

2.10 If Subtenant shall default under any of the provisions of this Sublease on its part to be performed, and Subtenant shall not have commenced diligently to cure such default within five (5) days after receipt of notice thereof by Subtenant (except in the case of what Sublandlord reasonably believes to be an emergency situation in which case no such prior notice need be given), Sublandlord may, in addition to any other remedy provided in this Sublease, by law or otherwise, cure such default and the cost thereof, together with interest thereon from the date incurred until paid at the interest rate provided in Article 11 hereof, shall be payable by Subtenant within twenty (20) days following written demand therefor, and in the event Subtenant fails to pay the same, Sublandlord may recover such costs, including interest, as Sublease Additional Charges, in an action brought against Subtenant.

2.11 Sublandlord represents that (a) it is the holder of the interest of the tenant under the Overlease, (b) the Overlease is in full force and effect, (c) Subtenant has been provided with a true and complete copy of the Overlease and all amendments thereto (with certain economic provisions redacted), and (d) to Sublandlord's knowledge, there are no uncured defaults by Overlandlord or Sublandlord under the Overlease.

2.12 Subtenant agrees to indemnify Sublandlord and hold Sublandlord harmless from all losses, damages, liabilities and expenses (including, without limitation, reasonable attorneys' fees and expenses) that Sublandlord may incur, or for which Sublandlord may be liable, to the Overlandlord, arising from the acts or omissions of Subtenant, Subtenant's agents, contractors, employees, invitees, or licensees, that are the subject matter of any indemnity or hold harmless of Sublandlord to Overlandlord under the Overlease, and all amounts payable by Subtenant to Sublandlord on account of such indemnity shall be deemed to be Sublease Rent hereunder and shall be payable upon demand or otherwise.

3. "As Is"

3.1 Except as expressly provided in this Sublease, Subtenant agrees to take the same broom clean and "as is" in its condition on the respective Sublease Commencement Dates with the understanding that, except as provided in Section 5.8 hereof, there shall be no obligation on the part of Sublandlord to incur any other expense whatsoever in connection with the preparation of the Subleased Premises for Subtenant's occupancy thereof. Neither Sublandlord nor Sublandlord's agents or other representatives have made, nor has Subtenant relied upon, any representations, warranties, or promises, express or implied, with respect to the Subleased Premises or the equipment and improvements therein situated or serving the same or the physical condition thereof or Overlandlord's title thereto, or compliance with laws or governmental regulations with respect thereto or with respect to any other matter or thing relating to the Subl eased Premises.

3.2 Sublandlord hereby transfers to Subtenant, as of the respective Sublease Commencement Dates, all of Sublandlord's right, title and interest in and to the existing (i) improvements in the Premises consisting of all ceilings, floors, partitions, duct work, wall and floor coverings, cabinetry and all other tenant improvements ("Tenant Improvements"), and (ii)⁸furniture, fixtures and equipment located in the Subleased Premises on the respective Sublease Commencement Dates substantially as shown on the inventory annexed as Exhibit D hereto and made a part hereof (the "FF&E"). Such Tenant Improvements andFF&E shall be left by Sublandlord in the Subleased Premises on the respective Sublease Commencement Dates in their "as is" "where is" condition. The parties (a) acknowledge that the Tenant Improvements and FF&E have an inherent value to Subtenant of One Million Eight Hundred Thousand ($1,800,000.00) Dollars, based upon the inherent valuation letter dated November 10, 2006 as estimated by Total Site Solutions, which inherent value is a material inducement for Subtenant to enter into this Sublease, and (b) have accordingly attributed $360,000.00 per year of such amount to the Sublease Rent payable by Subtenant to Sublandlord during each year of the Sublease Term (which annual attribution is already reflected in the amount of annual Sublease Rent due and payable as set forth elsewhere in this Sublease). 10Sublandlord makes no representations or warranties, express or implied, regarding the condition of such Tenant Improvements and 11FF&E. Upon the expiration or earlier termination of this Sublease, Subtenant shall remove the FF &E from the Subleased Premises.12, but the Tenant Improvements shall remain in the Subleased Premises and shall not be removed by Subtenant, except as otherwise required under this Sublease. Subtenant shall be responsible for, and shall indemnify Sublandlord against, the payment of any sales or other taxes which may arise due to the transfer of the Tenant Improvements and FF&E hereunder.

4. Escalation.

4.1 In the event any additional rent or other amounts are payable with respect to any time period falling after the Commencement Date but within the term of this Sublease which are attributable to the provisions of Article 7 of the Overlease (such additional rent payable by Sublandlord pursuant to Article 7 of the Overlease being hereinafter called "Escalation Rent") then Subtenant shall pay as Sublease Additional Charges pursuant to this Sublease an amount equal to Subtenant's Proportionate Share of Escalation Rent ("Sublease Escalation Rent"). At any time after receipt by Sublandlord of any statement for any Escalation Rent, or if Sublandlord is at any time obligated to pay any Escalation Rent, Sublandlord may deliver to Subtenant a statement with respect to the payment of Subtenant's Proportionate Share of the Escalation Rent (which may be Overlandlord's statement) and, within ten (10) days after delivery of s uch statement, Subtenant shall pay to Sublandlord the Sublease Escalation Rent determined as aforesaid in this Article 4.

4.2 Notwithstanding anything to the contrary contained in this Article 4, (i) the term "Base Taxes" for purposes hereof shall be deemed to be an amount equal to the "Taxes" (as such terms are defined in the Overlease) for the real estate fiscal tax year of the taxing authority ending June 30, 2006 and (ii) the term "Base Operating Costs" for purposes hereof shall be an amount equal to the "Operating Costs" for the 2006 Operating Year (as such terms are defined in the Overlease).

4.3 If an annual Tax Statement and/or Operating Cost Statement is furnished by Overlandlord to Sublandlord which shows that there has been an overpayment by Subtenant of Sublease Escalation Rent or if Overlandlord shall notify Sublandlord that Sublandlord is entitled to a credit against subsequent rent due to a refund of Taxes and/or Operating Costs (each as defined in the Overlease) as to which Subtenant paid Sublease Escalation Rent, and if Overlandlord shall actually give Sublandlord credit therefor under the Overlease, Sublandlord shall permit Subtenant to credit Subtenant's portion of such refund or credit paid by Subtenant against the next subsequent Sublease Escalation Rent payments under this Sublease. After the termination of this Sublease and the payment to Sublandlord of the balance, if any, of all rent due hereunder, Sublandlord shall promptly pay to Subtenant the amount of any such refund or credit not previ ously applied by Subtenant. In the event that on or after the Sublease Expiration Date any Sublease Escalation Rent is due under the Overlease with respect to any period during the Sublease Term, Subtenant's obligations hereunder on account of such Sublease Escalation Rent shall be appropriately prorated and Subtenant shall pay the same as Sublease Additional Charges under this Sublease. Subtenant's obligations pursuant to the preceding sentence shall survive termination or expiration of this Sublease.

4.4 Subject to the provisions of Section 2.5(c) hereof, Subtenant shall not have the right to question the propriety of or the basis for any such statement rendered by Overlandlord and Sublandlord shall be under no obligation to challenge, object to or contest any such statement, any allocations or determinations made by Overlandlord pursuant to such Escalation Rent, although Sublandlord may do so in its sole and absolute discretion. If Subtenant shall timely request Sublandlord to do so, Sublandlord shall diligently exercise such rights in its commercially reasonable judgment or permit Subtenant to do so in accordance with and subject to the provisions of Section 2.5(c) hereof and to Sublandlord's rights and obligations under the Overlease.

4.5 In the event that overpayment of Escalation Rent is determined after contest of any statement, Sublandlord shall promptly notify Subtenant thereof, and if Overlandlord has actually credited Sublandlord therefor under the Overlease for the period occurring during the Sublease Term, Sublandlord shall permit Subtenant to credit Subtenant's Proportionate Share of such overpayment, but less the Subtenant's Proportionate Share of all costs and expenses incurred by Sublandlord in connection with such dispute (to the extent not reimbursed by Overlandlord to Sublandlord) against the next subsequent Sublease Escalation Rent payments under this Sublease. After the termination of this Sublease and the payment to Sublandlord of the balance, if any, of all Sublease Fixed Rent, Sublease Escalation Rent and other Sublease Additional Charges due hereunder, Sublandlord shall promptly pay to Subtenant the amount described in the previo us sentence to the extent not previously applied by Subtenant.

5. Subtenant's Initial Construction; Sublandlord's Contribution.

5.1 Subtenant may make no changes, alterations, additions, improvements or decorations in, to or about the Subleased Premises ("Subtenant Alterations") without Sublandlord's prior written consent as provided in this Sublease, which shall not be unreasonably withheld subject to the terms and conditions of the Overlease as incorporated herein, and, if required by the Overlease, Overlandlord's prior written consent as provided in the Overlease. All Subtenant Alterations, including those necessary for Subtenant's initial fit-out and occupancy of the Subleased Premises ("Subtenant's Initial Construction"), shall be performed at Subtenant's cost in accordance with the terms and provisions of the Overlease, except as may be inconsistent with the express provisions of this Sublease, but Subtenant shall be responsible to pay all fees, costs and expenses to Overlandlord in connection therewith as and when required by the O verlease. Subtenant's Initial Construction shall be performed in accordance with the plans and specifications as approved by Sublandlord and Overlandlord, other than insignificant field changes which do not affect any Building system and are in compliance with all applicable laws.

5.2 Sublandlord agrees to reimburse Subtenant $1,893,100.00 ($25.00 per rentable square foot of the Subleased Premises) ("Sublandlord's Contribution") for costs ("Reimbursable Costs") incurred by Subtenant for leasehold improvements made to the Subleased Premises as part of Subtenant's Initial Construction, architectural and design services, furniture, equipment (including telecommunication, any supplemental HVAC or electrical equipment), signage, cabling and any other purpose directly related to the preparation of the Subleased Premises for Subtenant's initial occupancy. Sublandlord agrees to disburse Sublandlord's Contribution in up to two installments (as elected by Subtenant), within thirty (30) days of receipt of such request, as shown in Subtenant's requisition for Reimbursable Costs, provided, however, that Sublandlord will not be obligated to make any payment of Sublandlord's Contribution or a ny portion thereof if, and for so long as, Subtenant is either in monetary default under this Sublease or in non-monetary default under this Sublease beyond any applicable notice and cure period. Sublandlord will make such advance upon (a) substantial completion of Subtenant's Initial Construction in accordance with Subtenant's approved plans, in the case of Subtenant's final requisition of Sublandlord's Contribution, or such portion of Subtenant's Initial Construction as covered by Subtenant's requisition, in the case of an interim requisition of Sublandlord's Contribution, (b) Subtenant's compliance with all of the conditions set forth in this Section 5.2, (c) delivery of itemized statements of all such costs, and (d) receipt by Sublandlord of a request for Sublandlord's Contribution (or such portion thereof) from Subtenant and the submission by Subtenant of the following:

1. A certificate signed by Subtenant and Subtenant's architect certifying to substantial completion of Subtenant's Initial Construction or, in the event of an interim requisition of Sublandlord's Contribution, such portion of Subtenant's Initial Construction as covered by Subtenant's requisition in accordance with Subtenant's approved plans; and
2. A certificate signed by Subtenant and Subtenant's architect dated not more than ten (10) days prior to such request setting forth (A) the names of all contractors, subcontractors and materialmen who furnished labor, supplies and materials to the Subleased Premises and the aggregate amount of monies that each contractor, subcontractor and materialman received up to the date of the request, (B) that the sum then requested has been paid to persons who have rendered services or furnished materials for the work therein specified, and giving a brief description of such services and materials and the amounts due to each of said persons in respect thereof, (C) that there is no outstanding indebtedness known to the persons signing such certificate, which is then due for labor, wages, materials, supplies or services in connection with Subtenant's Initial Construction (or such portion thereof) which, if unpaid, might become the basis of a vendors, mechanic's, laborer's or ma terialmen's statutory or similar lien upon such work or upon the land and building or any part thereof or upon Subtenant's leasehold interest, together with partial (or, in the case of a final requisition of Sublandlord's Contribution), final lien releases from all such vendors, mechanics, laborers and materialmen in respect of Subtenant's Initial Construction or such portion thereof covered by Subtenant's requisition, provided that, if any amount owed to a vendor, mechanic, laborer or materialmen as shown therein is in dispute, such amount shall be identified in such certificate and Sublandlord shall have the right to withhold from payment an amount equal to 150% of such disputed amount, and (D) that there has not been filed with respect to the Subleased Premises or the Building or any part thereof or any improvements thereon, any vendor's, mechanic's, laborer's, materialmen's or other like liens arising out of Subtenant's Initial Construction which have not been bonded or discharged of record.

5.3 It is expressly understood and agreed that Subtenant shall expeditiously complete, at its sole cost and expense, Subtenant's Initial Construction, whether or not Sublandlord's Contribution is sufficient to fund such completion and notwithstanding the provisions of Section 5.2. Any costs to complete Subtenant's Initial Construction in excess of Sublandlord's Contribution shall be the sole responsibility and obligation of Subtenant.

5.4 If Subtenant shall comply with subsections (a), (b), (c) and (d) of Section 5.2 and submit to Sublandlord the certificates and documents required by Sections 5.2(c) and 5.2(d) (A) and (B), but the amount payable to Subtenant for Reimbursable Costs pursuant to Section 5.2 shall be less than Sublandlord's Contribution (the "Unfunded Sublandlord's Contribution"), then upon notice received from Subtenant, as of the first day of each month thereafter so long as Subtenant is not in default hereunder, Subtenant may credit the Unfunded Sublandlord's Contribution against Sublease Fixed Rent payable hereunder until the Unfunded Sublandlord's Contribution has been fully so credited.

5.5 Intentionally Omitted.

5.6 Sublandlord agrees to reimburse Subtenant, upon Subtenant's compliance with all of the conditions set forth in Section 5.2 and the Overlease regarding alterations to the Subleased Premises, for the reasonable, out-of-pocket cost of removing the kitchen facility located on the 30^th floor of the Subleased Premises, up to a maximum amount of $10,000.00. Sublandlord agrees to disburse, within thirty (30) days of receipt of Subtenant's itemized request, such amounts to the extent set forth in Subtenant's requisition, provided, however, that Sublandlord will not be obligated to make any advance if, and for so long as, Subtenant is in default under this Sublease.

5.7 Subject to the terms and conditions of the Overlease, all Subtenant Alterations made and installed by Subtenant, including as part of Subtenant's Initial Construction, shall be deemed the property of Subtenant as of the date installed in the Subleased Premises by Subtenant, but shall remain upon and be surrendered with the Subleased Premises as a part thereof at the end of the Sublease Term except as otherwise provided in Article 8 hereof. Notwithstanding the foregoing, in the event Subtenant enters into a direct lease with Overlandlord for the Subleased Premises for a term commencing after the expiration of the Sublease Term, such Subtenant Alterations shall remain part of the Subleased Premises at the end of the Sublease Term except as otherwise provided in Article 8 hereof or as otherwise agreed or required in writing by Overlandlord.

5.8 Subtenant hereby grants Sublandlord an irrevocable license to access Sublandlord's technology rooms and telecommunications closets located in the Sublease Premises for the purpose of decommissioning same. Sublandlord shall, except in an emergency, give Subtenant reasonable prior notice (which may be oral or written) concerning any such access by Sublandlord, its agents, employees, contractors and/or subcontractors. Sublandlord shall use commercially reasonable efforts not to interfere with Subtenant's Initial Construction and its use and occupancy of the Subleased Premises in connection with such access. Once Sublandlord notifies Subtenant in writing that same have been decommissioned and are so available for use, Subtenant shall have the right to use any communications infrastructure and any data and telecommunications closets located in the Subleased Premises, provided such use does not interfere with Sublandlord 's use of and operations at the Premises.

5.9 It is expressly understood and agreed that, in no event shall Subtenant locate its data center, UPS, supplemental air conditioning systems, electrical, switchgear, water lines, drain pipes or other similar systems or equipment on any floor of the Subleased Premises (whether on the 15^th Floor Subleased Premises or the Office Floor Subleased Premises) in a location directly above Sublandlord's data center in the Premises ("Sublandlord's Data Center"). In the event installation of such water lines or drain pipes over Sublandlord's Data Center is required with the consent of Sublandlord, in order to prevent leaks and other water intrusion into Sublandlord's Data Center, such lines and pipes shall be installed by Subtenant with drip pans, a leak detection alarm system and such other preventative measures as Sublandlord may require in connection therewith.

6. Broker.

6.1 Subtenant and Sublandlord each covenant, represent and warrant to the other that it has had no dealings or communications with any broker or agent in connection with the consummation of this Sublease other than Trammell Crow Services, Inc. (which is representing Sublandlord), and Trammell Crow Services, Inc. (which is representing Subtenant) (collectively, the "Brokers"), and Subtenant and Sublandlord each covenant and agree to pay, hold harmless and indemnify the other from and against any and all cost, expense (including reasonable attorneys' fees and disbursements) or liability for any compensation, commissions or charges claimed by any broker or agent other than the Brokers with respect to this Sublease or the negotiation thereof which the party making such representation and indemnity has so dealt. Sublandlord shall pay to the Brokers a commission in accordance with separate agreements between Sublandlor d and such Brokers.

7. Notices.

7.1 Any notice, demand or communication which, under the terms of this Sublease or under any statute or municipal regulation must or may be given or made by the parties hereto, shall be in writing and given or made by delivering the same by nationally recognized overnight courier or mailing the same by registered or certified mail, return receipt requested, addressed to Sublandlord at: 60 Wall Street, NYC60-3430, New York, New York 10005, Attn: Lease Administration; and to Subtenant at: One Financial Plaza, 501 North Broadway, St. Louis, Missouri 63102, Attn: Chief Financial Officer. Either party, however, may designate such new or other address to which such notices, demands or communications thereafter shall be given, made or mailed by notice given in the manner prescribed herein. Any such notice, demand or communication shall be deemed given or served, as the case may be, on the date of receipt or if receipt is refused, on the date so refused.

8. End of Sublease Term; Holdover.

8.1 At the expiration or earlier termination of this Sublease for any reason, Subtenant shall, except as otherwise expressly set forth in the Overlandlord Consent, remove all Subtenant Alterations required by the Overlease and Overlandlord to be removed from the Subleased Premises at the expiration of the Term of this Sublease or of the Overlease and restore such portions of the Subleased Premises to the condition as required by the Overlease upon the expiration of the term thereof, and shall surrender and deliver up the Subleased Premises in good condition and repair, reasonable wear and tear and damage by fire or other casualty and condemnation excepted. Notwithstanding the foregoing, Subtenant shall not be responsible for removing at the end of the Sublease Term any transformers or other electrical or data equipment installed in the Subleased Premises by Sublandlord prior to the Sublease Commencement Date. If the Subleased Premises are not vacated and surrendered in such condition at the Sublease Expiration Date, Subtenant shall and hereby agrees to indemnify and hold Sublandlord harmless from and against any and all claims, losses, expenses or damages, including, without limitation, reasonable attorneys' fees and disbursements, arising out of or resulting from any delay by Subtenant in so surrendering the Subleased Premises, or any portion thereof, including, without limitation, any claims made by any succeeding tenant or prospective tenant founded upon such delay and the loss of the benefit of the bargain should such successive sublease be terminated by reason of such holding over and, including, without limitation, any amounts payable by Sublandlord to Overlandlord pursuant to the Overlease in respect of the Subleased Premises. In the event Subtenant remains in possession of the Subleased Premises, or any portion thereof, after the Sublease Expiration Date, the parties recognize and agree that the damage to Sublandlord resulting therefrom will be substantial and will exceed the amount of the monthly installments of the Sublease Rent payable hereunder. Subtenant therefore agrees that in addition to any other right or remedy Sublandlord may have hereunder or at law or in equity, Subtenant, at the option of Sublandlord, shall be deemed to be occupying the Subleased Premises as a subtenant from month-to-month, at a monthly rental equal to the Applicable Percentage of the monthly Sublease Rent and Sublease Additional Charges and other charges payable during the last month of the scheduled term hereof or the fair market value for the Subleased Premises, whichever is greater, subject to all of the other terms of this Sublease and the Overlease insofar as the same are applicable to a month-to-month tenancy. The provisions of the preceding sentence shall not be construed to limit any other rights or remedies which might be available to Sublandlord as a result of Subtenant's failure to surrender possession of the Suble ased Premises or any portion thereof on the Sublease Expiration Date, including, without limitation, prosecuting a holdover or summary dispossess proceeding. "Applicable Percentage" means 150% for the first 30 days of such holdover and 200% thereafter.

8.2 If the term of this Sublease expires at or about the date of the expiration of the Overlease, and if Sublandlord is required under or pursuant to the terms of the Overlease to remove any Uncommon Alterations installed in the Subleased Premises by Sublandlord prior to the Sublease Commencement Date, Subtenant shall permit Sublandlord to enter the Subleased Premises for a reasonable period of time prior to the expiration of this Sublease for the purpose of removing such Uncommon Alterations and restoring the Subleased Premises as required by the Overlease, provided Sublandlord shall use commercially reasonable efforts to minimize interference with Subtenant's use and occupancy of the Subleased Premises. In the event Subtenant enters into a direct lease with Overlandlord for the Subleased Premises or any portion thereof for a term commencing after the expiration of the Sublease Term, and Overlandlord agrees, in writing, that any such Uncommon Alterations located therein need not be removed by Sublandlord at the end of the term of the Overlease, Sublandlord shall not have the obligation to remove such Uncommon Alterations from the Subleased Premises.

9. EPS System / Subtenant's UPS System and Subtenant's EPS System.

9.1 Sublandlord will permit Subtenant to connect to the Sublandlord's two (2) back-up emergency generators and associated fuel facilities (the "EPS"), at Subtenant's sole cost and expense, in an amount equal to 250 kw demand for non-redundant EPS power, provided in Sublandlord's reasonable determination, Subtenant's use of such system would not interfere with the use of such system by other subtenants or occupants (including Sublandlord) of the Premises. "Non-redundant" shall be understood to mean that, in the event of a power outage, Subtenant's emergency loads will be automatically and immediately disconnected from the EPS upon the occurrence of the following events: (i) a failure of either one of the two generators for any reason, (ii) Subtenant's emergency demand load is between 251 kw and 275 kw for more than 15 minutes, (iii) Subtenant's emergency demand load is over 275 kw for more than 30 seconds, or (iv) the EPS experiences an internal malfunction or "under frequency" condition. Sublandlord will provide Subtenant with a connection point in the existing UPS Room (Basement Level) for non-redundant emergency power. Sublandlord shall have the option to leave any unneeded existing electric power equipment physically in place in the Subleased Premises, but shall disconnect the equipment in such a manner that it is electrically de-energized and isolated. Any such equipment shall be appropriately labeled. Subtenant will have to install its electrical wiring from the connection point up to the point of utilization. At Subtenant's option, Subtenant shall provide the necessary "start signal" to automatically start the generator plant. Sublandlord will provide Subtenant with a connection point to the start signal in the existing UPS Room (Basement Level). Alternatively, Subtenant must rely on the generators being started up by another of Sublandlord's ATS (automatic transfer switch) connected to the EPS, in whic h case a local outage on the Subleased Premises will not automatically start the EPS. All connections made by Subtenant hereunder in the existing UPS Room (Basement Level) shall be performed in accordance with Sublandlord's requirements therefor and under Sublandlord's supervision. Subtenant's emergency load will be monitored via real-time load monitoring by Sublandlord. Subtenant shall be responsible for managing and operating non-base building infrastructure components on the Subleased Premises. Although one base building cooling tower cell will continue to be connected to the EPS generator, the Subleased Premises shall be disconnected therefrom so that the EPS shall not operate the base building HVAC in the Subleased Premises in the event of a base building power interruption. However, any Subtenant supplemental HVAC equipment may be connected to the EPS, but such connection shall be Subtenant's sole responsibility. In any event, Subtenant's connected load to the EPS must not exceed its allocated sh are.

9.2 From and after the Office Floor Sublease Commencement Date, Subtenant shall pay its EPS Share of Sublandlord's reasonable costs to maintain, operate and repair the EPS. Subtenant's EPS Share shall be 16.67% (being the agreed Subtenant's applicable share of the right of utilization of the EPS (250kw/1500 kw)); it being understood that such percentage shall change if upon replacement thereof Subtenant's share based on its rights of utilization thereof shall change due to increased or decreased size of such replacement system. Sublandlord shall bill Subtenant from time to time and Subtenant shall pay Sublandlord Subtenant's share of costs as aforesaid within thirty (30) days after being billed therefor.

9.3 Sublandlord shall be solely responsible for management and operation of the EPS. Sublandlord may perform periodic testing and maintenance shutdowns of the EPS. Sublandlord shall reserve the right to perform at least three (3) generator tests per year lasting about 4 hours each, which will cause a momentary power interruption at the beginning and at the end of the test. These tests will be performed on weekends. Sublandlord shall reserve the right to perform at least one (1) maintenance shutdown per year lasting about 16 - 18 hours. If Subtenant chooses not to participate in this shutdown, Subtenant understands that the emergency power will not be available for the duration of this shutdown. This shutdown will be performed on weekends. Sublandlord reserves the right to perform quarterly maintenance inspections of the EPS. Sublandlord shall make commercially reasonable efforts to inform Subtenant in advance of s cheduled system tests and maintenance shutdowns and shall make commercially reasonable efforts to reduce the extent of the interruptions in service. Sublandlord reserves the right to take the EPS out of service as necessary during the Sublease Term for an extended period for system replacement. Sublandlord shall provide reasonable notice to Subtenant in advance of any such action. The above provisions apply only to regular, scheduled maintenance or repair of the EPS. It is acknowledged that in the event of any emergency or accident, unscheduled repair or replacement may be commenced without the notification indicated above and that Sublandlord will make reasonable efforts to notify and advise Subtenant of the unscheduled repair or replacement. In the event of any interruption in service, Sublandlord will proceed diligently with the work necessary to resume such service as promptly as possible and in a manner so as to minimize interference with Subtenant's use of the EPS. Notwithstanding the foregoing, the exercise of such rights or such failure by Sublandlord to comply with such obligation shall not constitute an actual or constructive eviction, in whole or in part, or entitle Subtenant to any compensation or to any abatement or diminution of rent, or relieve Subtenant from any of its obligations under this Sublease, or impose any liability upon Sublandlord or its agents by reason of inconvenience or annoyance to Subtenant, or injury to or interruption of Subtenant's business, or otherwise.

9.4 Subject to Overlandlord's and Sublandlord's consent and Sublandlord's rights and obligations under the Overlease, Subtenant shall have the right, at its sole cost and expense, to install within the Subleased Premises its own uninterrupted power system ("Subtenant's UPS") and/or emergency generator ("Subtenant's EPS") to service the Subleased Premises provided (i) Subtenant's use of such system(s) does not cause damage to Building systems or to the structure of the Building, and (ii) in Sublandlord's reasonable judgment, the operation of the Building and the Premises shall not, and will not, be adversely affected thereby (except to a de minimis extent), such installation by Subtenant to be subject to Subtenant's compliance with Article 5 hereof and the Overlease. Subtenant shall install and maintain Subtenant's UPS and Subtenant's EPS in compliance with all laws and in such manner as to absorb and prevent noise and vi bration.

9.5 Sublandlord shall not be liable or responsible to Subtenant in any way for any loss, damage or expense which Subtenant may sustain or incur as a result of any failure or defect in any of the EPS furnished to Subtenant pursuant to this Article 9 or in Subtenant's UPS or in Subtenant's EPS, except if and to the extent the same is caused by or results solely from the gross negligence or willful misconduct of Sublandlord. In no event shall Sublandlord be liable for special, consequential or punitive damages for any breach or failure arising under this Article 9.

9.6 The rights granted under this Article 9 are personal to Stifel, Nicolaus & Company, Incorporated and its Successors (as hereinafter defined) and may not be assigned or transferred to any party (including a subtenant or assignee of Subtenant).

10. Assignment and Sublet.

10.1 Subtenant shall not, whether voluntarily, involuntarily or by operation of law, in any manner or by reason of any act or omission on the part of Subtenant or any party acting by or through Subtenant (w) assign or otherwise transfer this Sublease or the term or estate hereby granted, nor (x) sublet or underlet all or any part of the Subleased Premises, nor (y) permit the Subleased Premises or any desk space therein to be occupied by any person(s), nor (z) mortgage, pledge or encumber this Sublease or all or part of the Subleased Premises without first obtaining:

(i) Overlandlord's consent and all other required consents to such assignment or subletting as set forth in and pursuant to the terms of the Overlease, after Subtenant shall have complied with the provisions of the Overlease as if it were an assignment or subletting by Sublandlord thereunder, and

(ii) Sublandlord's consent.

10.2 If Subtenant is a corporation, partnership, or limited liability entity or other entity, then the transfer in one or more transactions of 50% or more of the voting stock, membership or equity interest of Subtenant, whether accomplished by merger, operation of law or otherwise, shall constitute an assignment for purposes of this Sublease, requiring that Subtenant obtain the consent of the Sublandlord.

10.3 Notwithstanding anything hereinbefore contained in Section 10.1 hereof, in the event Subtenant desires Sublandlord's consent to an assignment of this Sublease or an underletting of all or any part of the Subleased Premises, Subtenant by notice in writing shall notify Sublandlord of the name of the proposed assignee or undertenant, furnish such information as to the proposed assignee's or undertenant's financial responsibility and standing as Sublandlord may require, and advise Sublandlord of the covenants, agreements, terms, provisions and conditions contained in the proposed assignment or underlease. All reasonable costs and expenses of Sublandlord incurred in connection with any actual or proposed assignment or underletting, including, without limitation, reasonable attorneys fees and disbursements, allocable administrative costs, and any amounts payable under the Overlease as a result of such actual or proposed a ssignment or underletting, shall be paid by Subtenant, as Sublease Additional Charges hereunder, within thirty (30) days after demand.

10.4 Sublandlord covenants not to unreasonably withhold its consent to such proposed assignment or underletting by Subtenant of the Subleased Premises to the proposed assignee or undertenant on said covenants, agreements, terms, provisions and conditions set forth in the notice to Sublandlord referred to in Section 10.2 hereof; provided, however, that Sublandlord shall not in any event be obligated to consent to any such proposed assignment or underletting unless:

(a) the proposed assignee or undertenant has adequate financial net worth and credit considering the responsibilities involved and is engaged in a business permitted pursuant to the terms of this Sublease;

(b) the proposed assignee or undertenant is not a competitor of Sublandlord and, in Sublandlord's reasonable judgment, is a reputable party; provided that the requirement that the proposed assignee or undertenant not be a competitor of Sublandlord shall not apply to any Successor to Subtenant permitted pursuant to Section 10.8 below;

(c) there shall be no default by Subtenant beyond any applicable notice and cure period under any of the terms, covenants and conditions of this Sublease at the time that Sublandlord's consent to any such assignment or underletting is requested and on the effective date of the assignment or the proposed underlease;

(d) Subtenant shall reimburse Sublandlord for any reasonable expenses that may be incurred by Sublandlord in connection with the proposed assignment or underlease, including without limitation the reasonable costs of making investigations as to the acceptability of a proposed assignee or undertenant, any amounts payable under the Overlease as a result of such actual or proposed assignment or underletting and reasonable legal expenses incurred in connection with the granting of any requested consent to the assignment or underlease;

(e) such proposed subletting will result in there being no more than four (4) occupants on any single floor of the Subleased Premises, including Subtenant;

(f) Subtenant and such assignee shall be jointly and severally liable for all obligations to be performed thereafter under this Sublease; and

(g) any such sublessee of Subtenant shall have no right to further sublet the Subleased Premises and/or to assign its sublease of the Subleased Premises and any such assignee of Subtenant shall have no further right to assign this Sublease, except as set forth in Section 10.8 hereof.

10.5 Intentionally Omitted.

10.6 Sublandlord shall be entitled to receive from Subtenant (as and when received by Subtenant) as an item of Sublease Additional Charges fifty percent (50%) of all amounts received by Subtenant from any sub-subtenant or assignee in excess of the amounts payable by Subtenant to Sublandlord hereunder (hereinafter the "Transfer Premium"), as and when paid by such assignee or undertenant. The Transfer Premium shall be reduced by the reasonable transaction costs actually paid by Subtenant in order to assign this Sublease or to sub-sublet a portion of the Subleased Premises, provided that Subtenant provides Sublandlord with a detailed breakdown of all transaction costs associated with such assignment or subletting at the time Subtenant obtains Sublandlord's consent and Sublandlord consents to such costs, which consent shall not be unreasonably withheld, conditioned or delayed (Sublandlord acknowledges that the following cons titute transaction costs but are not limited to: work allowances, alteration expenses, reasonable attorney's fees, customary brokerage fees, reasonable marketing costs and other expenses reasonably incurred by Subtenant in connection therewith). "Transfer Premium" shall mean all Sublease Fixed Rent, Sublease Escalation Rent, Sublease Additional Charges or other consideration of any type whatsoever payable by the assignee or sub-subtenant in excess of the Sublease Fixed Rent, Sublease Escalation Rent and Sublease Additional Charges payable by Subtenant under this Sublease. Transfer Premium shall also include, but not be limited to, key money and bonus money paid by the assignee or sub-subtenant to Subtenant in connection with such assignment or sub-subletting, and any payment in excess of fair market value for services rendered by Subtenant to the assignee or sub-subtenant or for physical assets, fixtures, inventory, equipment, or furniture transferred by Subtenant to the assignee or sub-subtenant in connect ion with therewith. For purposes of calculating the Transfer Premium, expenses will be deducted from any assignment proceeds or the sublet rents first due to Subtenant.

10.7 Notwithstanding anything to the contrary in this Article, provided Stifel, Nicolaus & Company, Incorporated is the subtenant hereunder and subject to the terms and conditions hereinafter set forth, Subtenant shall have the right upon notice to Sublandlord, but not contingent upon the consent of Sublandlord, to sub-sublet all or any portion of the Subleased Premises or to assign this Sublease to a "Subtenant Related Entity", which shall mean a corporation, partnership, limited liability company or other entity which shall have at least fifty-one percent (51%) of the voting securities or equity interests of such sub-subtenant or assignee, directly or indirectly, owned, beneficially or of record, by Stifel, Nicolaus & Company, Incorporated, and management of which shall be controlled, directly or indirectly, by Stifel, Nicolaus & Company, Incorporated (or its Successor), but only for so long as such entity remains a Subtenant Related Entity of Subtenant. Any permitted subletting or assignment to a Subtenant Related Entity shall be upon the condition that (i) Overlandlord's consent is obtained and delivered to Sublandlord prior to the commencement date of any such sublease or assignment; (ii) any such assignee or sub-subtenant shall use the Subleased Premises or such portion thereof only as permitted under this Sublease and (iii) such Subtenant Related Entity shall be of a character, be engaged in a business, and propose to use the Subleased Premises in a manner in keeping with the standards of the other tenancies in the Building. Subtenant shall, within ten (10) business days after execution thereof, deliver to Sublandlord, (A) if an assignment, instruments, duly executed by the assignee and Subtenant, in which such assignee shall assume the observance and performance of, and agree to be personally bound by, all of the obligations of Subtenant under this Sublease, (B) if a sub-sublease, a duplicate original sub-sublease, duly executed by Subtenant and the sub-subtenant and (C) a copy of Overlandlord's written consent to such assignment or sub-sublease, to the extent required under the Overlease. The provisions of Section 10.5 of this Sublease shall not apply to transactions with Subtenant Related Entities.

10.8 Notwithstanding anything contained in this Section to the contrary, Subtenant shall have the right, without Sublandlord's consent but otherwise subject to the provisions of this Sublease and the Overlease, to assign this Sublease to any entity (a) into which or with which Subtenant is merged or consolidated, in accordance with applicable statutory provisions for the merger or consolidation, provided that by operation of law or by the instruments of merger or consolidation, the liabilities of the entities participating in such merger or consolidation are assumed by the entity surviving such merger or consolidation, or (b) which is purchaser of all or substantially all of Subtenant's assets (provided such purchaser shall have assumed all or substantially all of Subtenant's liabilities including those under this Sublease) (each a "Successor"), provided that no monetary or material non-monetary default shall have occurr ed and be continuing and further provided that, in either case, such transaction be for a valid corporate purpose and not to circumvent the other provisions of this Sublease, and immediately after giving effect thereto, the Successor shall have a net worth, as determined in accordance with generally accepted accounting principles, at least equal to the net worth, similarly determined, of Subtenant immediately prior to such transaction. Notice of such assignment or sub-sublease shall be given to Sublandlord within ten (10) business days after the effective date thereof. The provisions of Section 10.5 of this Sublease shall not apply to transactions with Successors.

10.9 If the Subleased Premises be sub-sublet (whether or not Sublandlord or Overlandlord shall have consented thereto), Sublandlord, after default by Subtenant in its obligations hereunder, may collect rent from the subtenant and apply the net amount collected to the rental herein reserved, but no such sub-subletting or collection of rent shall be deemed a waiver of the covenant set forth in this Article, or the acceptance of the subtenant as a tenant. No such subletting or any assignment of this Sublease (whether or not Sublandlord or Overlandlord shall have consented thereto) shall release Subtenant from the performance and observance by Subtenant of the covenants, obligations and agreements on the part of Subtenant to be performed or observed herein and in the case of an assignment, Subtenant and the assignee shall be jointly and severally liable for all obligations to be performed thereafter under this Sublease. Th e consent by Sublandlord or Overlandlord to an assignment, sale, pledge, transfer, mortgage or sub-subletting shall not in any way be construed to relieve Subtenant from obtaining the express consent in writing, to the extent required by this Sublease, to any further assignment, sale, pledge, transfer, mortgage or sub-subletting.

11. Late Charge.

To cover the additional expense incurred by the Sublandlord in the handling of delinquent payment of Sublease Fixed Rent, Sublease Escalation Rent, Sublease Additional Charges, and other sums payable to Sublandlord by Subtenant pursuant hereto, the Subtenant will pay on demand if and to the extent permitted by applicable Law, (i) if such failure shall continue for five (5) business days, a "late charge" in an amount equal to 3% of such delinquent payment to cover the administrative expenses of handling such late payment, and (ii) for each dollar of such Sublease Fixed Rent, Sublease Escalation Rent, Sublease Additional Charges and other sums due hereunder received after its due date, interest to accrue from the date such amounts of Sublease Fixed Rent, Sublease Escalation Rent, Sublease Additional Charges and other sums due hereunder first became due hereunder at the lesser of (A) the "Prime Rate" (as such term is defined in th e Overlease) or (B) the maximum rate permitted by law.

12. Quiet Enjoyment.

So long as Subtenant pays all of the Sublease Rent due under this Sublease and performs all of Subtenant's other obligations hereunder, Subtenant shall peacefully and quietly have, hold and enjoy the Subleased Premises during the term of this Sublease, without hindrance or molestation by Sublandlord or by anyone claiming by or through Sublandlord, subject, however, to the terms, provisions and obligations of this Sublease and the Overlease.

13. Insurance.

13.1 Subtenant shall, at its sole cost and expense, comply with all of the insurance provisions of the Overlease which are binding on Sublandlord, and Subtenant shall include Sublandlord as an additional insured or loss payee, as its interest may appear, as appropriate, as well as each of those parties set forth in the Overlease as required to be included as additional insureds or loss payee. Subtenant shall furnish Sublandlord with all certificates required to be delivered to Overlandlord pursuant to the Overlease.

13.2 Notwithstanding anything to the contrary contained in this Sublease, Subtenant, on behalf of itself and on behalf of anyone claiming under or through it by way of subrogation or otherwise, waives all rights and causes of action against the Sublandlord and Overlandlord, and the respective directors, shareholders, officers, employees, members, agents and invitees of the Sublandlord and Overlandlord, for any liability arising out of any loss or damage in or to the Subleased Premises, its contents and other property located thereon and caused by any peril normally covered under all-risk or equivalent policies (whether or not Subtenant actually carries such insurance policies). The release and waiver shall be complete and total even if such loss or damage may have been caused by the negligence of the Sublandlord or Overlandlord or their respective officers, directors, shareholders, employees, members, agents or invitees , and shall not be affected or limited by the amount of insurance proceeds available to the Subtenant, regardless of the reason for such deficiency in proceeds. Subtenant covenants that from and after the date possession of the Subleased Premises is delivered to Subtenant, its casualty insurance policies will contain waiver of subrogation endorsements, and that if such endorsements, for any reason whatsoever, are about to become unavailable, it will give the Sublandlord not less than thirty (30) days prior written notice of such impending unavailability.

13.3 Notwithstanding anything to the contrary contained in this Sublease, Sublandlord, on behalf of itself and on behalf of anyone claiming under or through it by way of subrogation or otherwise, waives all rights and causes of action against the Subtenant and the directors, shareholders, officers, employees, members, agents and invitees of the Subtenant, for any liability arising out of any loss or damage in or to the Subleased Premises, its contents and other property located thereon and caused by any peril normally covered under all-risk or equivalent policies (whether or not Sublandlord actually carries such insurance policies). The release and waiver shall be complete and total even if such loss or damage may have been caused by the negligence of the Subtenant or its respective officers, directors, shareholders, employees, members, agents or invitees, and shall not be affected or limited by the amount of insurance proceeds available to the Sublandlord, regardless of the reason for such deficiency in proceeds. Sublandlord covenants that from and after the date possession of the Premises is delivered to Sublandlord, its casualty insurance policies will contain waiver of subrogation endorsements, and that if such endorsements, for any reason whatsoever, are about to become unavailable, it will give the Subtenant not less than thirty (30) days prior written notice of such impending unavailability.

14. Intentionally Omitted.

15. Intentionally Omitted

16. Right of First Offer.

16.1 For purposes of this Article, the "First Offer Space" shall mean any Available space in the Premises not part of the Subleased Premises. "Available" means, as to any such space, that such space is vacant and free of any present or future possessory right now or hereafter existing in favor of any third party. No space in the Premises shall be deemed Available until at any time hereafter such space is first subleased by Sublandlord to a third party (other than Sublandlord or an Affiliate of Sublandlord or Overlandlord or an Affiliate of Overlandlord) and such space thereafter becomes vacant and free of rights of occupancy of third parties and not required by Sublandlord for occupancy by Sublandlord or an Affiliate. Sublandlord shall have the right to renew or extend any subtenant's lease (whether not such sublease contains a renewal or extension option) and grant to any subtenant (whether in its initial sub lease or thereafter) any expansion options or rights to space in the Building, but so long as this Section 16 is in full force and effect, Sublandlord shall not grant any right of first offer or right of first refusal to another subtenant in the Premises which is superior to Subtenant's rights under this Section 16. Sublandlord shall have the right to surrender any portion of the First Offer Space to Overlandlord and cause the Overlease to be terminated as to such portion prior to Subtenant's valid delivery of an "Acceptance Notice" (as such term is hereinafter defined) with respect thereto, notwithstanding that such space might have otherwise become Available hereunder. "Offer Period" means the period commencing on the Office Floor Sublease Commencement Date to and including the date which is twenty four (24) months prior to the Sublease Expiration Date.

16.2 Provided Subtenant is not in default beyond any applicable notice and cure period as of the date of the "Acceptance Notice" (as such term is hereinafter defined) or as of the applicable commencement date for such Offer Space, if at any time during the Offer Period, any Offer Space becomes, or Sublandlord reasonably anticipates that within the following 12 months (but not later than the last day of the Offer Period) any Offer Space will become Available, Sublandlord shall give to Subtenant notice (an "Offer Notice") thereof, specifying (A) the fair market value for such Offer Space which Sublandlord is then considering for the lease of such Offer Space; (B) the floor of the Premises on which the Offer Space is located; (C) the amount of rentable square footage contained in the Offer Space and a floor plan marked to show the location of the Offer Space; (D) the date or estimated date that such Offer Space has or shall become Available; and (E) any work allowance, work letter or free rent specified by Sublandlord in such Offer Notice (all in its sole discretion). Subtenant shall have the option (the "Offer Space Option"), exercisable by notice (an "Acceptance Notice") given to Sublandlord on or before the date that is ten (10) business days after receipt by Subtenant of the Offer Notice, TIME BEING OF THE ESSENCE, to include all such Offer Space in the Subleased Premises.

16.3 If Subtenant timely delivers the Acceptance Notice with respect to any Offer Space, then, on the date on which Sublandlord delivers vacant possession of such Offer Space to Subtenant as provided below (the "Offer Space Inclusion Date"), such Offer Space shall become part of the Subleased Premises for the then remaining Sublease Term, upon all of the terms and conditions set forth in this Sublease, except (i) Sublease Fixed Rent for such Offer Space shall be the fair market value for such Offer Space as set forth in the applicable Offer Notice, (ii) Subtenant's Proportionate Share therefor shall be increased based upon the addition of the rentable square footage of such Offer Space into the Subleased Premises, (iii) Sublandlord shall not be required to perform any work, pay any amount (except as may otherwise be set forth in the Offer Notice), or render any services to make such Offer Space ready for Subtenant's use or occupancy, and Subtenant shall accept such Offer Space in its "as is" condition on the Offer Space Inclusion Date, (iv) Section 5.2 hereof shall be inapplicable, and (v) as may be otherwise set forth in the Offer Notice.

16.4 If there is a holdover tenancy in all or any part of any Offer Space, then Sublandlord shall use reasonable efforts to terminate such holdover, including, to the extent advisable in Sublandlord's good faith business judgment, instituting and prosecuting holdover or other appropriate proceedings against any occupant of such Offer Space. If Sublandlord is unable to deliver possession of any Offer Space to Subtenant for any reason on or before the date on which Sublandlord anticipates that such Offer Space shall be Available as set forth in the Offer Notice, the Offer Space Inclusion Date shall be the date on which Sublandlord is able to so deliver possession and Sublandlord shall have no liability to Subtenant for any delay and this Sublease shall not in any way be impaired. If Sublandlord shall be unable to deliver possession of the Offer Space within one hundred twenty (120) days of the original Offer Space Inclus ion Date, as such date shall be extended by force majeure, Subtenant may, within ten (10) business days thereafter by notice to Sublandlord, rescind its delivery of the Acceptance Notice. This Section 16.4 constitutes "an express provision to the contrary" within the meaning of any applicable law now or hereafter in effect.

16.5 Promptly after Subtenant's exercise of the Offer Space Option with respect to any Offer Space, Sublandlord and Subtenant shall confirm the occurrence thereof and the inclusion of such Offer Space in the Subleased Premises by executing an instrument reasonably satisfactory to Sublandlord and Subtenant; provided, that failure by Sublandlord or Subtenant to execute such instrument shall not affect the inclusion of such Offer Space in the Subleased Premises in accordance with this Article 16.

16.6 Notwithstanding the foregoing, Subtenant's Offer Space Option and Acceptance Notice shall be null and void and of no force and effect if Overlandlord shall fail to consent to Subtenant's subleasing of the Offer Space in accordance with the provisions of the Overlease.

16.7 If Subtenant fails timely to give an Acceptance Notice with respect to any Offer Space, or if the provisions of this Section shall operate to make the Offer Space Option null and void, then, at Sublandlord' election, exercisable in writing, (i) the Offer Space Option with respect to such Offer Space shall be null and void and of no further force and effect and Sublandlord shall have no further obligation to offer such Offer Space to Subtenant pursuant to this Article 16, (ii) Sublandlord may at its option in its sole discretion, enter into one or more such subleases of such Offer Space with third parties on such terms and conditions as Sublandlord shall determine, and (iii) Subtenant shall, upon demand by Sublandlord, execute an instrument confirming Subtenant's waiver, or the voiding and extinguishing, of the Offer Space Option with respect to such Offer Space, but the failure by Subtenant to execute any such instr ument shall not affect the provisions of this Section; provided, however, that if Sublandlord (A) wishes to enter into a sublease for such Offer Space at a rental of less than 90% of the rental contained in the Offer Notice with respect to such Offer Space, or (B) shall not have entered into a sublease for such Offer Space within nine (9) months after the giving of the Offer Notice, then the Offer Space Option shall be reinstated as to such Offer Space and the provisions of this Article must again be complied with by Sublandlord and Subtenant with respect to such Offer Space.

16.8 Each party represents and warrants to the other party hereto that, with respect to the leasing of such Offer Space in question, it has not dealt with any brokers or finders for which a fee or commission may be payable, other than the Brokers, and each party hereto does hereby indemnify the other party and agrees to hold it harmless from and against any liability, loss, cost and/or expense, including, without limitation, reasonable attorneys' fees and disbursements, arising out of any inaccuracy in the foregoing representation. Sublandlord agrees to pay any commission which may be payable to the Brokers pursuant to separate agreements with said Brokers.

17. Miscellaneous.

17.1 This Sublease may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

17.2 This Sublease shall not be binding upon Sublandlord unless and until it is signed by Sublandlord and delivered to Subtenant.

17.3 This Sublease constitutes the entire agreement between the parties and all representations and understandings have been merged herein.

17.4 This Sublease shall inure to the benefit of all of the parties hereto, their successors and (subject to the provisions hereof) their assigns.

17.5 Neither this Sublease nor a memorandum thereof may be recorded by Subtenant.

17.6 Notwithstanding anything to the contrary provided in this Sublease, neither Sublandlord nor Subtenant shall be liable to the other for any special, consequential or punitive damage arising under or pursuant to this Sublease, except as may be expressly provided in this Sublease.

17.7 Any reference in this Sublease, whether expressly or by incorporation, to attorney's fees of Sublandlord or Subtenant, shall be deemed to include (without duplication of services) Sublandlord's or Subtenant's in-house counsel whose fees shall be reasonable and determined at market rates for outside counsel.

17.8 Each party shall, at any time and from time to time, within ten (10) Business Days after request by the other party, execute and deliver to the requesting party (or to such person or entity as the requesting party may designate) a statement certifying that this Sublease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), certifying the Commencement Date, the Sublease Expiration Date and the dates to which the Sublease Fixed Rent and Sublease Additional Charges have been paid and stating whether or not, to the best knowledge of such party, the other party is in default in performance of any of its obligations under this Sublease, and, if so, specifying each such default of which such party has knowledge, it being intended that any such statement shall be deemed a representation and warranty to be relied upon by the party or other person or entity to whom such statement is addressed. Each party also shall include or confirm in any such statement such other information concerning this Sublease as the other party may reasonably request.

17.9 This Sublease may be executed in multiple counterparts, all of which when taken together shall constitute one and the same instrument.

17.10 The respective rights and obligations of Sublandlord and Subtenant hereunder shall be governed by and construed and enforced in accordance with the internal substantive laws of the State of Maryland applicable to contracts made and to be performed entirely within said State, without reference to choice or conflict of laws principles or provisions which might be otherwise applicable, and Subtenant hereby irrevocably submits and consents to the jurisdiction of any such court over the person of Subtenant and hereby waives (a) any claim that any such court is an inconvenient forum and any objection to the laying of venue in any such court, and (b) personal service of any summons and complaint. Nothing herein shall preclude Sublandlord from initiating any such action, suit or proceeding in any other appropriate forum or jurisdictions, whether concurrently or not.

[REST OF PAGE INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the parties have hereunto set their hands as of the day and year first above written.

ATTEST:		DEUTSCHE BANK SECURITIES, INC.,
	a Delaware corporation, Sublandlord
__________________________	By: _/s/ Howard Becker_____________
	Name: Howard Becker
	Title: Attorney in Fact
	By: _/s/ A Scott_____________________
	Name: A Scott
	Title: Attorney in Fact
ATTEST:	STIFEL, NICOLAUS & COMPANY, INCORPORATED, a Missouri corporation,
	Subtenant
_/s/ Forrest M. Smith__	By: /s/ James M. Zemlyak____________
	Title: Senior Vice President & COO

EXHIBITS TO SUBLEASE
A.	Overlease
B.	Subleased Premises (cross-hatch)
C	Sublease Fixed Rent
D	FF&E Inventory
E	Sublease Commencement Date Agreement
F	Subtenant's Exterior Signage

EX-10 10 rballloanagree.htm LOAN AGRREMENT DATED 02/01/07 EXHIBIT 10 (V) 2

LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Agreement") is made as of this 1st day of February, 2007, by and between STIFEL FINANCIAL CORP., a Delaware corporation (the "Borrower"), and the MAYOR AND CITY COUNCIL OF BALTIMORE, a body politic and corporate and a political subdivision of the State of Maryland, by and through the DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT, c/o CITY OF BALTIMORE DEVELOPMENT CORPORATION ("BDC"), its successors and assigns (the "Lender").

R E C I T A L S

1. The Borrower has applied to the Lender for a term loan (the "Loan") in the principal amount of $750,000.00 (the "Principal Amount"), and the Lender is willing to accommodate the Borrower upon and subject to the terms, conditions, and provisions of this Agreement.

NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:

SECTION 1. Recitals.

The Recitals are hereby incorporated as a part of this Agreement.

SECTION 2. Definitions.

All accounting terms not specifically defined herein shall have the meanings assigned to them as determined by generally acceptable accounting principles in the United States of America, consistently applied. Unless the context otherwise requires, when used herein, the following terms shall have the following meanings:

2.1. "Events of Default" means those events set forth in Section 7 hereof.

2.2. "Expense Payment" means a payment advanced by the Lender pursuant to the provisions of Section 6.10 hereof, each such payment being called an "Expense Payment" and collectively the "Expense Payments."

2.3. "Liabilities" means the obligation of the Borrower to pay (a) the unpaid principal amount of the Note, plus all accrued and unpaid interest thereon, (b) all other charges, interest, and expenses chargeable by the Lender to the Borrower under this Agreement and the other Loan Documents.

2.4. "Lien" means any mortgage, deed of trust, pledge, security interest, assignment, encumbrance, lien, or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction.

2.5. "Liquidation Costs" means all expenses, charges, costs, and fees (including, without limitation, attorneys' fees and expenses) of any nature whatsoever paid or incurred by or on behalf of the Lender in connection with (a) the collection or enforcement of any of the Liabilities and (b) the collection or enforcement of any of the Loan Documents.

2.6. "Loan" has the meaning set forth in the Recitals.

2.7. "Loan Documents" means collectively the Note, this Agreement, and any other instrument, document, and agreement now and hereafter evidencing, securing, guarantying, indemnifying, and given by the Borrower or any third party in connection with the Loan or any of the other Liabilities (including those documents set forth in Section 4.1 hereof) and any and all amendments thereto and modifications thereof.

2.8. "Note" means that Promissory Note described in Section 3.2 hereof and any and all amendments thereto and modifications thereof.

2.9. "Person" includes a corporation, an association, a partnership, an organization, a business, an individual, or a government or political subdivision thereof or governmental agency.

2.10. "Stifel, Nicolaus" means Stifel, Nicolaus & Company, Incorporated, a subsidiary of the Borrower.

2.11. "Taxes" means all taxes and assessments whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all penalties or interest thereon), which at any time may be assessed, levied, confirmed, or imposed on the Borrower or any of its properties or assets or any part thereof or in respect of any of its franchises, businesses, income, or profits, and all claims for sums which by law have or might have become a lien or charge upon any of its properties or assets.

SECTION 3. Loan.

3.1. Purpose. The proceeds of the Loan shall be contributed by Borrower to Stifel, Nicolaus, which shall use such amounts to construct leasehold improvement, purchase machinery and equipment and for related matters at its leasehold premises at 1 South Street located in Baltimore City (the "Work").

3.2. Loan. The Loan shall be evidenced and repaid in accordance with the terms of the Note to the Lender, of even date herewith, duly executed by the Borrower, and of the Proposal Letter which is incorporated herein. To the extent any of the terms and provisions of this Agreement conflict with any of the terms and conditions of the Proposal Letter, this Agreement controls.

SECTION 4. Conditions of Lending.

4.1. Conditions Precedent to the Loan. The obligation of the Lender to make the Loan is subject to the following express conditions precedent:

A. Loan Documents. The Borrower shall have delivered to the Lender the following:

1. Note. The executed Note;

2. Borrower's Incumbency Certificate. A certificate as to the incumbency and signatures of the officers of the Borrower signing the Loan Documents;

3. Borrower's Consent. A certified copy of resolutions of the Board of Directors of the Borrower authorizing the execution, delivery, and performance of this Agreement, the Notes, and the other Loan Documents;

4. Borrower's Organizational Documents. A certified copy of the Borrower's articles of incorporation and by-laws;

5. Miscellaneous. Such other documents, instruments, opinions, and agreements as the Lender and its counsel may require in their discretion.

B. Lender's Counsel. All legal matters incident to this Agreement shall be satisfactory to counsel for the Lender, and the Borrower shall have reimbursed the Lender for the reasonable fees and expenses of Lender's counsel in connection with the preparation of this Agreement and all matters incident thereto.

SECTION 5. Representations and Warranties.

To induce the Lender to make the Loan hereunder, the Borrower hereby makes the following representations and warranties to the Lender:

5.1. Good Standing. The Borrower (a) is a corporation duly organized, existing, and in good standing under the laws of the State of Delaware, 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, except where the failure to be so qualified would not have a material adverse effect on Borrower's ability to comply with its obligations under this Agreement.

5.2. Authority. The Borrower has full power and authority to enter into this Agreement, to make the borrowings hereunder, to execute and deliver the Note and the other Loan Documents to which it is a party, and to perform and comply with the terms, conditions, and agreements set forth herein and therein, all of which have been duly authorized by all proper and necessary corporate action of the Borrower. No consent or approval of the members of the Borrower or of any governmental authority is required as a condition to the validity of this Agreement, the Note, or the other Loan Documents.

5.3. Binding Agreement. This Agreement constitutes, and the Note and the other Loan Documents constitute or will constitute when issued and delivered for value received, the valid and legally binding obligations of the Borrower enforceable in accordance with their respective terms, except as may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity.

5.4. Litigation. There are no proceedings pending or, so far as any person signing below as or on behalf of the Borrower knows, threatened before any court or administrative agency which will materially adversely affect the financial condition or operations of the Borrower.

5.5. No Conflicting Agreements. There are no provisions of the Borrower's charter and bylaws and no provisions of any existing mortgage, deed of trust, indenture, contract, lease, or agreement binding on the Borrower or affecting its property which would conflict with or in any way prevent the execution, delivery, or carrying out of the terms of this Agreement, the Note, or the other Loan Documents.

5.6. Financial Condition. The Borrower's financial statements, copies of which have been furnished to the Lender, were prepared in accordance with generally accepted accounting principles in the United States of America consistently applied and are complete and correct and fairly and accurately present the financial condition of the Borrower as of their date and the results of its operations for the period then ended. There has been no material adverse change in the financial condition of the Borrower or the results of its operations since the date of such financial statements.

5.7. Information. All information contained in any financial statement, application, schedule, report, certificate, opinion, or any other document given by the Borrower or by any other person in connection with the Loan or with any of the Loan Documents is in all material respects true and accurate, and the Borrower or such other person has not omitted to state any material fact or any facts necessary to make such information not materially misleading.

5.8. Assets and Properties. The Borrower has good and merchantable title to all of its assets and properties, except the real property locations where it does business, including the Premises, which such locations are leased to the Borrower pursuant to valid leases, and there are no Liens against the Borrower outstanding against any of these assets and properties.

5.9. Taxes. All Taxes imposed upon the Borrower and its properties, operations, and income have been paid and discharged prior to the date when any interest or penalty would accrue for the nonpayment thereof except for those Taxes being contested in good faith and by appropriate proceedings by the Borrower.

5.10. Violation of Laws, etc. Neither the consummation of the Loan nor the use, directly or indirectly, of all or any portion of the proceeds of the Loan hereunder will violate or result in a violation of any provision of any applicable statute, regulation or order of, or any restriction imposed by, the United States of America or by any authorized official, board, department, instrumentality, or agency thereof.

5.11. Commercial Purpose. The Loan is being used strictly for commercial purposes as set forth in the Commercial Law Article of the Annotated Code of Maryland, as amended from time to time.

5.12. Existence of Defaults. The Borrower is not in default upon any of its existing indebtedness or under any agreement or obligation under which the Borrower may be bound, nor will the Borrower's entering into this Agreement or any other Loan Document (in and of itself) immediately or with the passage of time, the giving of notice, or both, cause the Borrower to violate or be in default under any other agreements or obligations.

5.13. Status of Borrower. The Borrower is a Delaware corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and its operations and affairs have been effectively and validly commenced. The Borrower has the power to own its properties, conduct its business and affairs, and enter into the Loan and perform the obligations thereunder. The Borrower's entry in the Loan with the Lender has been validly and effectively approved by its Board of Directors as may be required by its organization documents, and any applicable laws. All copies of the consent and incumbency certificates of the Borrower delivered to the Lender in connection with this Loan Agreement are true, accurate, and complete and no action has been taken in diminution or abrogation thereof.

SECTION 6. Borrower's Covenants

Until payment in full of all of the Liabilities:

6.1. Use of Loan Proceeds. The Borrower will use the proceeds of the Loan only as set forth in this Agreement.

6.2. Annual Financials. Within 120 days after the end of each calendar year (or fiscal year if different from the calendar year), if requested by the Lender, the Borrower will furnish promptly to the Lender audited financial statements of the Borrower prepared by an independent Certified Public Accountant in accordance with generally accepted accounting principles, including balance sheet, statement of income, statement of shareholder equity and statement of changes in financial position, certified by independent certified public accountants satisfactory to the Lender.

6.3. Other Information. The Borrower will furnish to the Lender, promptly from time to time, such information concerning the operations, business, affairs, and financial condition of the Borrower as the Lender may reasonably request.

6.4. Books, Records, and Inspections. The Borrower will at all times (a) maintain complete and accurate books and records and (b) permit any person designated by the Lender, to enter, examine, audit, and inspect all properties, books, operations, and records of the Borrower at any reasonable time and from time to time, during normal business hours after reasonable prior notice to Borrower, wherever such properties, books, and records are located.

6.5. Litigation. The Borrower will promptly notify the Lender of any litigation instituted or threatened against its Baltimore operations and of the entry of any judgment of Lien against its Baltimore operations or its Baltimore assets or properties which would be required to be described or included in any filing by the Borrower with the Securities and Exchange Commission.

6.6. Preservation of Properties. The Borrower will at all times (a) maintain its properties, whether owned or leased, in good operating condition, and from time to time will make all proper repairs, renewals, replacements, additions, and improvements thereto needed to maintain such properties in good operating condition, (b) comply with the provisions of all material leases to which it is a party or under which it occupies property so as to prevent any loss of forfeiture thereof or thereunder, and (c) comply with all laws, rules, regulations, and orders applicable to the properties or any part thereof; provided, however, that nothing contained in this section shall require the making of any repair, renewal, replacement, addition, or improvement of or to a particular property or the continued maintenance of any property which would not be required in the exercise of sound business judgment.

6.7. Workers' Compensation Insurance. If applicable, Borrower, shall at all times during the Loan term maintain workers' compensation insurance in accordance with applicable State law, and upon request, shall supply the Lender with copies of such policies and receipts evidencing payment of premiums due thereon.

6.8. Taxes. Except to the extent that the validity or amount thereof is being contested in good faith and by appropriate proceedings, the Borrower will pay and discharge all Taxes prior to the date when any interest or penalty would accrue for the nonpayment thereof.

6.9. Compliance with Laws. The Borrower will at all times comply with all applicable federal, state, and local laws, rules, and regulations, and final, non-appealable orders of any court or other governmental authority having jurisdiction.

6.10. Expense Payments. If the Borrower shall fail to make any payment or otherwise fail to perform, observe, or comply with any of the conditions, covenants, terms, stipulations, or agreements contained herein, the Lender with five (5) days' written notice to the Borrower and without waiving or releasing any obligation or any Event of Default may (but shall be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of the Borrower, and may enter upon any premises of the Borrower for that purpose and take all such action thereon as the Lender may consider necessary or appropriate for such purpose. All sums so paid or advanced by the Lender (the "Expense Payments"), together with interest thereon from the date paid, advanced, or incurred until repaid in full at a per annum rate of interest charged on the principal of any of the Liabilities, plus two percent (2%) per annum, shall be paid by the Borrower to the Lender upon demand by the Lender.

6.11. Notice of Existence of Default. The Borrower shall promptly advise the Lender of the existence of a condition or event which is an Event of Default under this Agreement or a violation or event of default under any of the Loan Documents after Borrower first becomes aware of any such condition or event.

6.12. Work. The Borrower shall use the Loan proceeds in accordance with Section 3.1 of this Agreement.

6.13. Insurance.

(a) If applicable, Borrower, shall at all times during the Loan term maintain workers' compensation insurance in accordance with applicable State law, and upon request, shall supply the Lender with copies of such policies and receipts evidencing payment of premiums due thereon.

(b) The Borrower will at all times maintain insurance with responsible insurance companies on such of its assets and properties, in such amounts, and against such risks as is required in the Loan Documents and furnish to the Lender promptly upon request certificates evidencing such insurance.

The policies described above must provide for thirty (30) days' prior written notice to the Lender of any change in, or cancellation of, coverage.

SECTION 7. Events of Default.

The occurrence of any one or more of the following events (the "Events of Default") shall constitute an event of default hereunder:

7.1. Failure to Pay Interest. If the Borrower shall fail to pay any interest on any of the Liabilities, including, without limitation, the Note and the Loan within fifteen (15) days of when due and payable; or

7.2. Failure to Pay Principal, etc. If the Borrower shall fail to pay the principal of any of the Liabilities, including, without limitation, the Notes and the Loan, or any of the other Liabilities within fifteen (15) days of when due and payable; or

7.3. Terms, Conditions, and Covenants of This Agreement. If the Borrower shall fail to duly perform, comply with, or observe any of the other terms, conditions, or covenants contained in this Agreement, and such failure shall remain uncured for a period of thirty (30) days after the date of Borrower's receipt of written notice from the Lender to the Borrower; or

7.4. Representations and Warranties. If any representation and warranty or any statement or representation made in any report, opinion, schedule, officer's certificate, or other certificate or any other information given by the Borrower or furnished in connection with the Loan shall prove to be false or incorrect in any material respect on the date as of which made and the same shall remain uncured for a period of thirty (30) days after the date of Borrower's receipt of written notice from the Lender to the Borrower unless such Event of Default cannot be cured within thirty (30) days, in which case the Borrower shall have a greater period of time if diligently pursuing such cure but in no event longer than ninety (90) days; or

7.5. Default under Loan Documents. If an event of default (as described or defined therein) shall occur or exist under the provisions of any of the other Loan Documents; or

7.6. Bankruptcy, Insolvency, etc. If the Borrower becomes insolvent or generally does not pay its debts as they become due, or if a petition for relief in a bankruptcy court is filed by the Borrower, or if the Borrower applies for, consents to, or acquiesces in the appointment of a trustee, custodian, or receiver for the Borrower or any of its assets and property, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent, or acquiescence, a trustee, custodian, or receiver is appointed for the Borrower or for a substantial part of the assets and property of the Borrower and is not discharged within ninety (90) days; or any bankruptcy, reorganization, debt arrangement, or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against the Borrower and is consented to or acquiesced in by the Borrower or remains for ninety (90) days undisguised; or the Borrower takes any action to authorize any of the actions described in this subsection; or

7.7. Failure to Give Notice of Default. A failure by the Borrower to promptly advise the Lender of the existence of any condition or event, which is known or which reasonably should be known to the Borrower, which is or which will be with the passage of time, the giving of notice, or both, a default under this Agreement or any Loan Document; or

7.8. Financial Statements. The failure of the Borrower to furnish or cause to be furnished, when and as due, the financial statements and reports required to be furnished to the Lender under this Agreement, and any other Loan Document; or

7.9. Cross Default. A breach or a default by the Borrower under the terms, conditions, or provisions of any loans, guarantees or other transactions of the Borrower with the Lender.

7.10. Relocation. Relocation by the Borrower of its Baltimore Capital Markets headquarters operations outside the boundaries of the City of Baltimore, provided that the creation or establishment of satellite offices in the Baltimore metropolitan area (e.g. Towson or Annapolis) shall not constitute an Event of Default provided that the Borrower continues to maintain its Capital Markets headquarters operations with the boundaries of the City of Baltimore.

7.11. Work. Failure to complete the Work in a good and workmanlike manner.

SECTION 8. Rights and Remedies.

If any one or more Events of Default shall occur, then in each and every such case, the Lender at its option may at any time thereafter exercise and/or enforce any or all of the following rights and remedies:

8.1. Acceleration. Declare without notice to the Borrower all of the Liabilities to be immediately due and payable, whereupon the same shall become due and payable, together with accrued and unpaid interest thereon, without presentment, demand, protest, or notice, all of which the Borrower hereby waives.

8.2. Exercise of Rights and Remedies. Exercise any rights and remedies available, to the Lender under this Agreement, the Note, the other Loan Documents, and under applicable laws.

8.3. Liquidation Costs. The Borrower shall reimburse and pay to the Lender upon demand all costs and expenses (the "Liquidation Costs"), including, without limitation, reasonable attorneys' fees and expenses, advanced, incurred by, or on behalf of the Lender in collecting and enforcing the Liabilities and/or the Loan Documents. All Liquidation Costs shall bear interest payable by the Borrower to the Lender upon demand from the date advanced or incurred until paid in full at a per annum rate of interest equal at all times to the then highest rate of interest charged on the principal of any of the Liabilities, plus two percent (2%) per annum. Exercise of the Lender's rights and remedies include, without limitation, the following:

A. Confess judgment against the Borrower on the Note;

B. File suit against the Borrower on the Note, this Agreement, or any other Loan Document; and

C. Set off any amounts in any account or certificate with the Lender in the name of the Borrower or the Guarantor or in which the Borrower has an interest.

8.4. Remedies, etc., Cumulative. Each right, power, and remedy of the Lender as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by the Lender of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by the Lender of any or all such other rights, powers, or remedies.

8.5. No Waiver, etc. No failure or delay by the Lender to insist upon the strict performance of any term, condition, covenant, or agreement of this Agreement or of any of the other Loan Documents, or to exercise any right, power, or remedy consequent upon a breach thereof, shall constitute a waiver of any such term, condition, covenant, or agreement or of any such breach, or preclude the Lender 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 Agreement or under the Note or under any of the other Loan Documents, the Lender shall not be deemed to waive the right either to require prompt payment when due of all other amounts payable under this Agreement, the Note, or any of the other Loan Documents, or to declare an Event of Default for failure to effect such prompt payment of any such other amount.

SECTION 9. Extension.

Stifel Nicolaus has executed an approximately 5 year sub-lease with Deutsche Bank Securities, Inc. and an additional 6 year lease with the landlord at 1 South Street, Baltimore City, Maryland. If Stifel Nicolaus should choose to exercise its initial 5 year lease renewal option to extend its lease with the landlord at 1 South Street, at any time during the 6 year initial lease term with the landlord, and Borrower provides written notice to the Lender on or before December 31, 2016, the Lender will continue to amortize the loan through year 15, with all remaining sums due to the Lender on February 1, 2022 as pursuant to Section 2 of the Note.

SECTION 10 Miscellaneous

10.1. 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 the Note and shall continue in full force and effect so long as any of the Liabilities are outstanding and unpaid.

10.2. Notices. All notices, demands, requests, consents, or approvals required under this Agreement to be in writing hall be deemed to have been properly given if and when mailed by first class certified mail, return receipt requested, postage prepaid, if to the Lender at, 36 South Charles Street, Suite 1600, Baltimore, Maryland 21201, to the attention of Jeffrey P. Pillas, and if to the Borrower at One Financial Plaza, 501 North Broadway, St. Louis, Missouri 63102, to the attention of Chief Financial Officer, or such other address as the Borrower or the Lender shall have furnished to the other in writing.

10.3. Change, etc. Neither this Agreement nor any term, condition, representation, warranty, covenant, or agreement hereof may be changed, waived, discharged, or terminated orally but only by an instrument in writing by the party against whom such change, waiver, discharge, or termination is sought.

10.4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland.

10.5. Terms Binding. All of the terms, conditions, stipulations, warranties, representations, and covenants of this Agreement shall apply to and be binding upon, and shall inure to the benefit of, the Borrower and the Lender and each of their respective heirs, personal representatives, successors, and assigns.

10.6. Gender, etc. Whenever used herein, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine, or neuter gender shall include all genders.

10.7. Headings. The section and subsection headings in this Agreement are for convenience only and shall not limit or otherwise affect any of the terms hereof.

10.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument.

10.9. Consent to Jurisdiction Service of Process. Borrower hereby agrees and consents that any action or proceeding arising out of or brought to enforce the provisions of this Agreement and/or any of the other Loan Documents may be brought in any appropriate court in the State of Maryland or in any other court having jurisdiction over the subject matter, all at the sole election of the Lender, and by the execution of this Agreement the Borrower irrevocably consents to the jurisdiction of each such court.

10.10. Further Assurances and Corrective Instruments. The parties hereto agree that they will, from time to time, execute and deliver, or cause to be executed and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of the parties to, or facilitating the performance of, this Agreement.

10.11. Estoppel Certificate. The Borrower will, upon not less than ten (10) business days' request by the Lender or any other party to this transaction, execute, acknowledge, and deliver to such person a statement in writing, certifying (a) that this Agreement is unmodified and in full force and effect and the payments required by this Agreement to be paid by the Borrower have been paid, and (b) the then unpaid principal balance of the Note; and stating whether or not to the knowledge of the signer of such certificate any party to any of the Loan Documents is in default in the performance of any covenant, agreement, or condition contained therein and, if so, specifying each such default of which the signer may have knowledge, it being intended that any such statement delivered pursuant to this section may be relied upon by the Lender and the other parties to this transaction.

10.12. Prior Agreements Cancelled. Except for (a) the other Loan Documents, (b) or any other document or agreement to the extent specifically provided therein, (i) this Agreement shall completely and fully supersede all other prior agreements, both written and oral, by and among the Borrower, the Lender, and the other parties to this transaction (and any prior agreements by and between any two or more of the foregoing), and (ii) none of the parties to this Agreement shall hereafter have any rights thereunder, but shall look solely to this Agreement and the other Loan Documents for definitions and determination of all of their respective rights, obligations, and responsibilities relating to the Liabilities.

10.13. Illegality. If fulfillment of any provision hereof or any transaction related hereto or to the other Loan Documents, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or provision herein contained operates or would prospectively operate to invalidate this Agreement in whole or in part, then such clause or provision only shall be void, as though not herein contained, and the remainder of this Agreement shall remain operative and in full force and effect; provided, however, that if any such provision pertains to the repayment of the Liabilities, the occurrence of any such invalidity shall constitute an Event of Default hereunder.

10.14. Assignment. This Agreement and the other Loan Documents may not be assigned, in whole or in part, by the Borrower without the prior written consent of the Lender.

10.15. Good Faith. The Lender shall act reasonably and in good faith as applicable to all of the Loan Documents.

10.16. Reasonableness. The Lender acknowledges and agrees that in all instances when the Lender's consent is required, the Lender shall at all times act in a reasonable manner, and such consent shall not be unreasonably withheld, conditioned or delayed.

10.17. MBE/WBE Compliance. During the term of the Loan, Stifel Nicolaus shall at all times comply with Article 5 Subtitle 28 of the Baltimore City Code (2000 Edition, online update July 31, 2006) regarding Minority Business and Women's Business Enterprises and any other guidelines promulgated by the City of Baltimore guidelines with respect to the development and any construction and/or rehabilitation of the Work undertaken by the Borrower. The Borrower shall sign such certificates as may be required by the Lender and shall demonstrate compliance with such requirements prior to commencement of with such requirements priority commencement of construction.

10.18. Employment. During the term of the Loan, Stifel Nicolaus shall use the Baltimore City Office of Employment Development ("OED") as a "first source" for training and recruitment of employees, such that the Borrower will notify OED of employment opportunities, giving OED an opportunity to present qualified candidates to the Borrower for consideration in accordance with the First Source Hiring Guidelines (the "Guidelines") currently in effect. The Borrower will also use its best efforts to hire, for all available positions, residents of Baltimore City who meet the Guidelines.

10.19. Relocation. The Borrower shall maintain its Baltimore Capital Markets headquarters operations within the boundaries of the City of Baltimore for the entire term of the Loan. Failure to comply with this requirement shall be an additional default under the Loan Documents. Notwithstanding the foregoing, the creation or establishment of satellite offices in the Baltimore metropolitan area (e.g. Towson or Annapolis) shall not constitute a breach of this section provided that the Borrower continues to maintain its Capital Markets headquarters operations with the boundaries of the City of Baltimore.

10.20. Publicity. The Lender and the Borrower agree to cooperate in the preparation and release of all publicity with respect to the funding hereunder. All press releases and signage relating to such matters shall be preapproved, in writing, by any agent appointed by the Lender and the Borrower and shall reflect the joint effort of the Lender and the Borrower. Notwithstanding anything in the foregoing to the contrary, however, either party may respond to telephone calls and other inquiries from the press of a general naturesubsequent to the initial public announcement thereof provided any such responses are substantially consistent with such initial public announcement.

10.21. Conflicts of Interest; City Representatives not Individually Liable. No member, official, representative or employee of the City of Baltimore or the BDC shall have any personal interest, direct or indirect, in the Borrower, nor shall any member, official, representative or employee participate in any decision relating to this transaction which affects his/her personal interest or the interest of any corporation, partnership or association in which he/she is directly or indirectly interested. No member, official, representative or employee of the City of Baltimore or the BDC shall be personally liable to the City of Baltimore or the BDC, as the case may be (or any successor in interest) in the event of any default or breach by the City of Baltimore or the BDC for any amount which may become due to the other party or successor or on any obligation under the terms of this Promissory Note. The parties acknowledge and agree that the membership an d participation of Francis X. Gallagher, Jr., an employee of Stifel Nicolaus, on the BDC's Board of Directors shall not constitute a breach of this section provided that Mr. Gallagher recuses himself from any specific deliberations of the BDC regarding the Borrower or Stifel Nicolaus.

10.22. Ancillary Documents and Further Assurances. The Lender is hereby authorized to execute any and all ancillary, corrective, or confirmatory documents necessary to effectuate this transaction, provided such documents do not (a) increase the anticipated expenditure of funds or (b) materially alter the relationship of the parties or the principal elements of this Promissory Note.

[SIGNATURES ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the Lender and the Borrower have each caused this Agreement to be executed under seal as of the day and year first above written.

WITNESS/ATTEST:	BORROWER:
	STIFEL FINANCIAL CORP.
/s/ David Minnick	By: /s/ James M. Zemlyak
David Minnick	Name: James M Zemlyak
	Time:
	BENEFICIARY:
	THE MAYOR AND CITY COUNCIL OF BALTIMORE
Custodian of the City Seal	By: [SEAL]
	Name:
	Title:
Approved as to Form and Legal Sufficiency this 8th day of November 2006.
	/s/ William Stifler
	William Stifler, Chief Solicitor
Approved: Board of Estimates of the Mayor and City Council of Baltimore
Clerk:
Date: ___________________

EX-10 11 rbaltpromnote.htm PROMISSORY NOTE DATED 02/01/07 EXHIBIT 10 (V) 1

PROMISSORY NOTE

$750,000.00

Baltimore, Maryland

February 1, 2007

FOR VALUE RECEIVED, STIFEL FINANCIAL CORP., a Delaware corporation (the "Borrower"), promises to pay to the order of THE MAYOR AND CITY COUNCIL OF BALTIMORE, a body politic and corporate and a political subdivision of the State of Maryland, by and through the DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT, its successors and assigns c/o CITY OF BALTIMORE DEVELOPMENT CORPORATION (hereafter, the "Lender"), the principal sum of Seven Hundred and Fifty Thousand Dollars ($750,000.00) (the "Principal Loan Amount") to be advanced to Borrower (the "Loan") in accordance with the terms and conditions contained in the Loan Agreement of even date herewith (the "Loan Agreement"). (The Loan Agreement and this Note collectively referred to as the "Loan Documents.")

Said principal and interest shall be payable as set forth herein below.

1. Interest.

A. Beginning on the date hereof, interest shall accrue on the Principal Loan Amount at the rate of two percent (2%) per annum (the "Fixed Rate").

B. Interest shall be calculated on the basis of a 360-day year, for the actual number of days the principal is outstanding.

C. Should an Event of Default (beyond any applicable notice and cure period or periods) occur under this Note or the Loan Agreement, interest shall accrue from the date of the Event of Default at the prime rate of interest as published in The Wall Street Journal on the date of the Event of Default, plus four percent (4%) (the "Default Rate").

D. Notwithstanding the above provisions as to interest payable, under no circumstances shall interest accrue or be payable at a rate in excess of the maximum rate allowed by applicable laws. If the Lender has collected interest in excess of such maximum rate, then the Borrower's only remedy shall be that the Lender will apply such excess interest as a full or partial prepayment of the unpaid balance of the principal amount to the extent of the unpaid principal balance and refund any additional excess amount to the Borrower.

2. Repayment and Maturity Date.

A. Commencing on March 1, 2007, and continuing on the same calendar day of each calendar month through February 1, 2011, the Borrower shall pay to the holder monthly installments of interest only in the amount of One Thousand Two Hundred Fifty Dollars ($1,250.00) per month.

B. Commencing on March 1, 2011, and continuing on the same calendar day of each month thereafter until February 1, 2017, the Borrower shall pay the holder monthly installments of principal and interest in the amount of Six Thousand Three Hundred Thirty Four Dollars and Forty Three Cents ($6,334.43) per month.

C. Maturity Date. The maturity date of the Loan shall be February 1, 2017 (the " Maturity Date") and unless extended by the terms of section 2.D, the Borrower shall make on the Maturity Date a final balloon payment of Three Hundred Sixty-Seven Thousand One Hundred and Sixteen Dollars and Eighty Five Cents ($367,116.85) plus all unpaid principal and accrued but unpaid interest, late charges and other fees and charges being due and payable pursuant to the Loan Documents.

D. Extension. The Maturity Date may be extended to February 1, 2022 (the "Extended Maturity Date") if Stifel, Nicolaus & Company, Incorporated, a subsidiary of the Borrower ("Stifel Nicolaus") agrees in writing to exercise at least one five-year renewal option (the "Renewal") pursuant to the terms of its lease (the "Lease") at 1 South Street, Baltimore, Maryland (the "Property") and the Borrower gives the Lender written notice of the Renewal prior to December 31, 2016. Upon the satisfaction of such conditions precedent:

(i) Commencing on March 1, 2017, and continuing on the same calendar day of each month thereafter until February 1, 2022, Borrower shall pay the holder monthly installments of principal and interest in the amount of Six Thousand Three Hundred Thirty Four Dollars and Forty Three Cents ($6,334.43) per month, which date is the final and absolute maturity date of this Promissory Note, at which time all sums due hereunder, including principal, interest, charges and fees, shall be paid in full.

3. Project.

The proceeds of the Loan shall be contributed by the Borrower to Stifel Nicolaus which shall use such amounts to construct leasehold improvements, purchase machinery and equipment, and for related matters at the Property (the "Project").

4. Repayment.

A. The entire principal balance of the Loan, together with all accrued interest and any other sums pursuant to the Loan Documents, become immediately due and payable at the option of the Lender on the occurrence of any of the following:

(i) The Maturity Date, unless extended to the Extended Maturity Date pursuant to Section 2.D, supra; or

(ii) An Event of Default (beyond any applicable notice and cure period or periods) as defined in the Loan Documents.

B. Failure to exercise the option to accelerate in Section 4(A)(ii), supra, shall not constitute a waiver of the right to exercise this option in the event of any subsequent default or occurrence allowing for acceleration, after any applicable notice and cure periods in any of the Loan Documents.

5. Prepayment. The Borrower, upon five (5) calendar days advance notice to the Lender, may prepay the Loan, in whole or in part, at any time from time to time without penalty. All repayments under this Note shall be applied to the outstanding principal balance in the inverse order of scheduled maturity.

6. Default. An event of default under this Note (an "Event of Default") shall be deemed to exist upon the occurrence of any of the following: (1) failure to pay any principal, late charges, interest, or undisputed expenses within ten (10) days when due, or failure to perform any other obligations hereunder, after any applicable notice and cure periods in any of the Loan Documents; (2) a default in any of the requirements of Borrower, or any other person providing security for this loan, under any Loan Document referred to above, after any applicable notice and cure periods in any of the Loan Documents; (3) a default in any other agreement between Borrower and the Lender or any affiliate of the Lender, whether previously, simultaneously, or hereafter entered into, after any applicable notice and cure periods therein; (4) voluntary bankruptcy, insolvency, or receivership proceedings being instituted in any state or federal court by the Borr ower or an involuntary bankruptcy, insolvency, or receivership proceedings being instituted in any state or federal court against the Borrower, in which case the Borrower may receive a grace period as set forth in subsection (ii), infra; (5) any warranty, representation, or statement to the Lender by or on behalf of the Borrower proving to have been incorrect in any material respect when made or furnished; (6) a dissolution or liquidation of the Borrower without prior written consent of Lender; (7) failure of Borrower to furnish to the Lender such information as the Lender may require from time to time and as set forth in any of the Loan Documents; (8) default under any obligation or indebtedness owed by the Borrower to the Lender under any other loan or to any other lender, regardless of when created or whether secured or unsecured, after any applicable notice and cure period(s) therein; (9) failure to comply with applicable federal, state and local regulations relating to use of the source of f unds of the Loan; and (10) failure to use the proceeds of the Loan for such purposes as contemplated in the Loan Documents. The contrary, notwithstanding, no Event of Default shall be deemed to have occurred with respect to the following events until after the expiration of the applicable grace or curative period, time being of the essence:

i. Thirty (30) calendar days after receipt of written notice from the Lender to the Borrower, as to a failure to perform an affirmative nonmonetary covenant, a violation of a negative covenant, a breach of warranty or representation, or any other event not previously addressed in this Paragraph, unless such Event of Default cannot be cured within thirty (30) calendar days after Borrower's receipt of such written notice, in which case the Borrower shall have a greater period of time if diligently pursuing such cure.

ii. Except as provided above, in no event shall this Note be deemed to provide a grace period applicable to an Event of Default based upon (i) the filing of a voluntary or involuntary bankruptcy petition, except as stated in this Note with respect to an Event of Default based upon the filing of an involuntary bankruptcy petition, for which a period of ninety (90) calendar days shall be permitted for the Borrower to obtain an unconditional dismissal of any petition filed in connection with any involuntary case, (ii) any Event of Default for which a specific period for the cure thereof is specified in this Paragraph, describing such Event of Default, other than as specified in this Subparagraph, or (iii) any payment of principal due under this Note by scheduled maturity of acceleration, in Event of Default.

7. Remedies,. Upon the occurrence of an Event of Default, and the expiration of any applicable cure period, the Borrower shall pay the Lender all expenses incurred by the Lender in collecting the amounts due under this Note. Those expenses include actual attorney's (and paralegal) fees and court costs. If an Event of Default occurs, after the expiration of any applicable cure period, the Lender has the right to declare the entire unpaid balance of principal of this Note, and all accrued but unpaid interest, immediately due and payable without notice or demand. The Borrower agrees that an Event of Default shall be a default under all other liabilities and obligations of Borrower to the Lender, and that the Lender has the right to declare immediately due and payable all such other liabilities and obligations. If not then paid, the principal balance, accrued but unpaid interest, late charges, and any expenses, shall thereafter bear interes t at the Default Rate (but not more than the maximum rate allowed by applicable laws). If a final, non-appealable judgment is entered against the Borrower for any sum due under this Note, the Borrower shall pay the Lender upon demand from time to time interest at the statutory interest rate on the judgment, plus an additional amount equal to interest calculated at the rate provided in the next preceding sentence in effect as of the date of judgment, minus any interest actually paid at the statutory rate on the judgment.

8. Confession of Judgment. If an Event of Default occurs, the Borrower authorizes any attorney admitted to practice before any court of record, or any clerk of any court, to appear on behalf of the Borrower in any court in one or more proceedings or before any clerk thereof, without giving prior notice to or serving process on such person or persons, and confess judgment against Borrower in favor of the Lender for such amount as may appear to be unpaid on this Note, including interest, late charges, expenses, court costs and attorney's (and paralegal) fees equal to fifteen percent (15%) of the amount in controversy. In addition to all other courts where jurisdiction and venue would be proper, the Borrower consents to the jurisdiction and venue of the courts of any county of the State of Maryland or Baltimore City, Maryland or the United States District Court for the District of Maryland for the entry of said judgment. Borrower hereby waiv es and releases, to the extent not prohibited by law, all errors and rights of appeal, exemptions and stays of execution upon any real or personal property to which such person or persons might otherwise by entitled, under any present or future law. The Borrower waives the benefit of any and every statute, ordinance or rule of court which may be lawfully waived conferring upon the Borrower any right or privilege of exemption or other relief from the enforcement or immediate enforcement of a judgment or related proceeding on a judgment. The authority and power to appear for and enter judgment against Borrower shall not be exhausted by one or more exercises hereof or by any imperfect exercises hereof, and shall not be extinguished by any judgment entered pursuant thereto; this 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 Note shall be sufficient authority.

9. Transfer. In the event that any holder of this Note transfers this Note for value, the Borrower agrees that no subsequent non-affiliated holder of this Note shall be subject to any claims or defenses which the Borrower may have against a prior holder, all of which are waived as to the subsequent non-affiliated holder, and that all subsequent holders shall have all of the rights of a holder in due course with respect to the Borrower even though the subsequent holder may not qualify, under applicable law, absent this paragraph, as a holder in due course.

10. Waivers. The Borrower, all endorsers and guarantors hereof, and all others who may become liable for all or any part of the obligation evidenced hereby, agree to be jointly and severally bound hereby, all covenants, obligations and liabilities hereunder shall be joint and several, and they do jointly and severally waive presentment, demand, protest, notice of nonpayment, and any and all lack of diligence or delays in collection or enforcement hereof. The Borrower and all endorsers and guarantors hereof further jointly and severally agree with the Lender that the Lender may, without notice, in such manner, on such terms and for such time as the Lender may see fit, (a) agree with the Borrower to alter, extend, or renew this Note, and/or (b) release any maker, endorser, or guarantor hereof, and/or substitute or add guarantors, and/or substitute or release collateral or any part thereof, all without in any way affecting, releasing, or fore going the joint and several liability of the Borrower and all endorsers and guarantors hereof.

11. No Counterclaim. Any action brought by the Borrower against the Lender which is based, directly or indirectly, or in whole or in part on this Note or any matter in or related to this Note or any other Loan Document, including but not limited to the making of the Loan or the administration or collection thereof shall be brought only in the courts of the State of Maryland. The Borrower may not file a counterclaim against the Lender in a suit brought by the Lender against the Borrower in a state other than the State of Maryland unless under the rules of procedure of the court in which the Lender brought the action the counterclaim is mandatory and will be considered waived unless filed as a counterclaim in the action instituted by the Lender.

12. Successors and Assigns. This Note shall inure to the benefit of and be enforceable by the Lender and the Lender's successors and assigns and any other person to whom the Lender may grant an interest in the Borrower's obligations to the Lender, and shall be binding and enforceable against the Borrower and the Borrower's successors and assigns.

13. Commercial Loan. Borrower hereby represents and warrants to Lender that the loan evidenced by this Note was made and transacted solely for the purpose of carrying on or acquiring a business or commercial enterprise within the meaning of Title 12, Commercial Law Article, Section 12-101(c) (1), Annotated Code of Maryland (1983 Repl. Vol.), and that the funds evidenced by this Note will be used for commercial purposes only and solely in connection with such an enterprise.

14. Notice. All notices required to be given hereunder shall be in writing and shall be deemed duly given if and when such notice is either personally delivered or mailed by certified or registered U.S. mail, return receipt requested, postage prepaid, first class, to the respective addresses as set forth in Section 10.2 of the Loan Agreement.

15. Conflicts; Venue; Service. This Note shall be construed and enforced according to and be governed by the laws of the State of Maryland without regard to principles of conflict of laws. As part of the consideration for the Lender's advance of funds to the Borrower, Borrower agrees that any and all actions or proceedings arising directly or indirectly from this Note shall, at the Lender's option, be litigated in courts having a primary jurisdiction within the State of Maryland; consents to the jurisdiction of any State or Federal Court located within the State of Maryland; agrees that they are subject to service of process under Section 6-103 of the Courts and Judicial Proceedings Article of the Maryland Code; and agrees to accept such service as is authorized by the statute and prescribed in the Maryland Rules of Procedure.

16. Cumulative Rights. Each right, power and remedy under this Note, under any Loan Document, and under applicable law, shall be cumulative and concurrent and the exercise of any one or more of them shall not preclude the simultaneous or later exercise by the Lender of any or all such other rights, powers or remedies. No waiver by the Lender of any default shall be effective unless made in writing nor operate as a waiver of any other or future default.

17. Severable. If any part of this Note shall be adjudged invalid or not enforceable then such partial invalidity or unenforceability shall not cause the remainder of the Note to be or to become invalid or unenforceable, and if a provision hereof is held invalid or unenforceable in one or more of its applications, the parties hereto agree that said provisions shall remain in effect in all valid or enforceable applications that are severable from the invalid or unenforceable application or applications.

18. Singular/Plural. The use of the singular herein may also refer to the plural, and vice versa, and the use of the neuter or any gender shall be applicable to any other gender or the neuter.

19. Assignment. This Note may be assigned by the Lender or any holder at any time or from time to time. The word "Lender" as used herein shall include all future holders of the Note, by assignment and otherwise. This Note may be assigned to any successor to Borrower by merger, consolidation, reorganization, asset sale or similar transaction provided such successor agrees to be bound by the terms of this Note and the other Loan Agreements to the same extent as Borrower.

20. Waiver of Jury Trial. Each of the Lender and the Borrower agrees that any suit, action, or proceeding, whether claim or counterclaim, brought or instituted by either party or any of their respective successors or assigns on or with respect to this Note or any other Loan Document or which in any way relates, directly or indirectly, to the obligations of either party to the other party under this Note or any other Loan Document, or the dealings of the parties with respect thereto, shall be tried only by a court and not by a jury. Each of the Lender and the Borrower hereby expressly waives any right to a trial by jury in any such suit, action, or proceeding. Each of the parties acknowledges and agrees that this provision is a specific and material aspect of the agreement between the parties and that the other party would not enter into the transaction with the other party if this provision were not part of their agreement.

21. MBE/WBE Compliance. Stifel Nicolaus shall at all times during the term of this Note use minority and women's business enterprises in connection with the development of the Project, consistent with the procedures established by the Lender and the obligations set forth in the Loan Documents. The Borrower shall comply with Article 5, Subtitle 28 of the Baltimore City Code (2000 Edition, online update 31 July 2006) regarding participation by Minority Business and Women's Business Enterprises in its development of the Project as set forth in the Loan Agreement. Lender and its affiliates shall cooperate with, and assist, Stifel Nicolaus and Borrower in their efforts in this regard.

22. Employment. During the term of this Note, Stifel Nicolaus shall use the Baltimore City Office of Employment Development ("OED") as a "first source" for training and recruitment of employees, such that the Borrower will notify OED of employment opportunities, giving OED an opportunity to present qualified candidates to the Borrower for consideration in accordance with the First Source Hiring Guidelines (the "Guidelines") currently in effect. The Borrower will also use its best efforts to hire, for all available positions, residents of Baltimore City who meet the Guidelines.

23. Relocation. The Borrower shall maintain its Baltimore Capital Markets headquarters operations within the boundaries of the City of Baltimore for the entire term of the Loan. Failure to comply with this requirement shall be an additional default under the Loan Documents. Notwithstanding anything to the contrary contained in this Note, if Borrower relocates its Baltimore operations outside the boundaries of the City of Baltimore at any time during the term of the Loan, then, upon such event, the Default Rate as calculated at the time of the relocation shall be substituted as the Fixed Rate and shall relate back to the commencement of the amortization period and continue through the Maturity Date. Borrower shall be liable for any difference in the amortization payments as recomputed due to the change in interest rate. Notwithstanding the foregoing, the creation or establishment of satellite offices in the Baltimore metropolitan area (e .g. Towson or Annapolis) shall not constitute a breach of this section provided that the Borrower continues to maintain its Capital Markets headquarters operations with the boundaries of the City of Baltimore.

24. Publicity. The Lender and the Borrower agree to cooperate in the preparation and release of all publicity with respect to the funding hereunder. All press releases and signage relating to such matters shall be pre-approved, in writing, by any agent appointed by the Lender and the Borrower and shall reflect the joint effort of the Lender and the Borrower. Notwithstanding anything in the foregoing to the contrary, however, either party may respond to telephone calls and other inquiries from the press of a general nature subsequent to the initial public announcement thereof provided any such responses are substantially consistent with such initial public announcement.

25. Conflicts of Interest; City Representatives Not Individually Liable. No member, official, representative or employee of the City of Baltimore or the City of Baltimore Development Corporation (the "BDC") shall have any personal interest, direct or indirect, in the Borrower, nor shall any member, official, representative or employee participate in any decision relating to this transaction which affects his/her personal interest or the interest of any corporation, partnership or association in which he/she is directly or indirectly interested. No member, official, representative, or employee of the City of Baltimore or the BDC shall be personally liable to the City of Baltimore or the BDC, as the case may be (or any successor in interest) in the event of any default or breach by the City of Baltimore or the BDC for any amount which may become due to the other party or successor or on any obligation under the terms of this Promis sory Note. The parties acknowledge and agree that the membership and participation of Francis X. Gallagher, Jr., an employee of Stifel Nicolaus, on the BDC's Board of Directors shall not constitute a breach of this section provided that Mr. Gallagher recuses himself from any specific deliberations of the BDC regarding the Borrower or Stifel Nicolaus.

26. Ancillary Documents and Further Assurances. The Mayor and the Commissioner of the Department of Housing and Commercial Development, without the further approval of the Baltimore City Board of Estimates, are each hereby authorized to execute any and all ancillary, corrective, or confirmatory documents necessary to effectuate this transaction, provided such documents do not (a) increase the anticipated expenditure of funds or (b) materially alter the relationship of the parties or the principal elements of this Promissory Note.

SIGNATURES APPEAR ON THE FOLLOWING PAGE

IN WITNESS WHEREOF, the Borrower has executed and delivered under seal this note as of the day and year first above written.

WITNESS:	BORROWER:
	STIFEL FINANCIAL CORP.
_/s/ David Minnick	By /s/ James M. Zemlyak (SEAL)
	Name James M Zemlyak
	Title Senior Vice President
Approved as to Form and Legal Sufficiency this 8th day of November, 2006.
/s/ William Stifler
William Stifler, Chief Solicitor
Approved: Board of Estimates of the Mayor and City Council of Baltimore.
Clerk: ______________________
Date: _______________________

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10

LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Agreement") is made as of this 1st day of February, 2007, by and between STIFEL FINANCIAL CORP., a Delaware corporation (the "Borrower"), and the MAYOR AND CITY COUNCIL OF BALTIMORE, a body politic and corporate and a political subdivision of the State of Maryland, by and through the DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT, c/o CITY OF BALTIMORE DEVELOPMENT CORPORATION ("BDC"), its successors and assigns (the "Lender").

R E C I T A L S

1. The Borrower has applied to the Lender for a term loan (the "Loan") in the principal amount of $750,000.00 (the "Principal Amount"), and the Lender is willing to accommodate the Borrower upon and subject to the terms, conditions, and provisions of this Agreement.

NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:

SECTION 1. Recitals.

The Recitals are hereby incorporated as a part of this Agreement.

SECTION 2. Definitions.

All accounting terms not specifically defined herein shall have the meanings assigned to them as determined by generally acceptable accounting principles in the United States of America, consistently applied. Unless the context otherwise requires, when used herein, the following terms shall have the following meanings:

2.1. "Events of Default" means those events set forth in Section 7 hereof.

2.2. "Expense Payment" means a payment advanced by the Lender pursuant to the provisions of Section 6.10 hereof, each such payment being called an "Expense Payment" and collectively the "Expense Payments."

2.3. "Liabilities" means the obligation of the Borrower to pay (a) the unpaid principal amount of the Note, plus all accrued and unpaid interest thereon, (b) all other charges, interest, and expenses chargeable by the Lender to the Borrower under this Agreement and the other Loan Documents.

2.4. "Lien" means any mortgage, deed of trust, pledge, security interest, assignment, encumbrance, lien, or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction.

2.5. "Liquidation Costs" means all expenses, charges, costs, and fees (including, without limitation, attorneys' fees and expenses) of any nature whatsoever paid or incurred by or on behalf of the Lender in connection with (a) the collection or enforcement of any of the Liabilities and (b) the collection or enforcement of any of the Loan Documents.

2.6. "Loan" has the meaning set forth in the Recitals.

2.7. "Loan Documents" means collectively the Note, this Agreement, and any other instrument, document, and agreement now and hereafter evidencing, securing, guarantying, indemnifying, and given by the Borrower or any third party in connection with the Loan or any of the other Liabilities (including those documents set forth in Section 4.1 hereof) and any and all amendments thereto and modifications thereof.

2.8. "Note" means that Promissory Note described in Section 3.2 hereof and any and all amendments thereto and modifications thereof.

2.9. "Person" includes a corporation, an association, a partnership, an organization, a business, an individual, or a government or political subdivision thereof or governmental agency.

2.10. "Stifel, Nicolaus" means Stifel, Nicolaus & Company, Incorporated, a subsidiary of the Borrower.

2.11. "Taxes" means all taxes and assessments whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all penalties or interest thereon), which at any time may be assessed, levied, confirmed, or imposed on the Borrower or any of its properties or assets or any part thereof or in respect of any of its franchises, businesses, income, or profits, and all claims for sums which by law have or might have become a lien or charge upon any of its properties or assets.

SECTION 3. Loan.

3.1. Purpose. The proceeds of the Loan shall be contributed by Borrower to Stifel, Nicolaus, which shall use such amounts to construct leasehold improvement, purchase machinery and equipment and for related matters at its leasehold premises at 1 South Street located in Baltimore City (the "Work").

3.2. Loan. The Loan shall be evidenced and repaid in accordance with the terms of the Note to the Lender, of even date herewith, duly executed by the Borrower, and of the Proposal Letter which is incorporated herein. To the extent any of the terms and provisions of this Agreement conflict with any of the terms and conditions of the Proposal Letter, this Agreement controls.

SECTION 4. Conditions of Lending.

4.1. Conditions Precedent to the Loan. The obligation of the Lender to make the Loan is subject to the following express conditions precedent:

A. Loan Documents. The Borrower shall have delivered to the Lender the following:

1. Note. The executed Note;

2. Borrower's Incumbency Certificate. A certificate as to the incumbency and signatures of the officers of the Borrower signing the Loan Documents;

3. Borrower's Consent. A certified copy of resolutions of the Board of Directors of the Borrower authorizing the execution, delivery, and performance of this Agreement, the Notes, and the other Loan Documents;

4. Borrower's Organizational Documents. A certified copy of the Borrower's articles of incorporation and by-laws;

5. Miscellaneous. Such other documents, instruments, opinions, and agreements as the Lender and its counsel may require in their discretion.

B. Lender's Counsel. All legal matters incident to this Agreement shall be satisfactory to counsel for the Lender, and the Borrower shall have reimbursed the Lender for the reasonable fees and expenses of Lender's counsel in connection with the preparation of this Agreement and all matters incident thereto.

SECTION 5. Representations and Warranties.

To induce the Lender to make the Loan hereunder, the Borrower hereby makes the following representations and warranties to the Lender:

5.1. Good Standing. The Borrower (a) is a corporation duly organized, existing, and in good standing under the laws of the State of Delaware, 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, except where the failure to be so qualified would not have a material adverse effect on Borrower's ability to comply with its obligations under this Agreement.

5.2. Authority. The Borrower has full power and authority to enter into this Agreement, to make the borrowings hereunder, to execute and deliver the Note and the other Loan Documents to which it is a party, and to perform and comply with the terms, conditions, and agreements set forth herein and therein, all of which have been duly authorized by all proper and necessary corporate action of the Borrower. No consent or approval of the members of the Borrower or of any governmental authority is required as a condition to the validity of this Agreement, the Note, or the other Loan Documents.

5.3. Binding Agreement. This Agreement constitutes, and the Note and the other Loan Documents constitute or will constitute when issued and delivered for value received, the valid and legally binding obligations of the Borrower enforceable in accordance with their respective terms, except as may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and subject to general principles of equity.

5.4. Litigation. There are no proceedings pending or, so far as any person signing below as or on behalf of the Borrower knows, threatened before any court or administrative agency which will materially adversely affect the financial condition or operations of the Borrower.

5.5. No Conflicting Agreements. There are no provisions of the Borrower's charter and bylaws and no provisions of any existing mortgage, deed of trust, indenture, contract, lease, or agreement binding on the Borrower or affecting its property which would conflict with or in any way prevent the execution, delivery, or carrying out of the terms of this Agreement, the Note, or the other Loan Documents.

5.6. Financial Condition. The Borrower's financial statements, copies of which have been furnished to the Lender, were prepared in accordance with generally accepted accounting principles in the United States of America consistently applied and are complete and correct and fairly and accurately present the financial condition of the Borrower as of their date and the results of its operations for the period then ended. There has been no material adverse change in the financial condition of the Borrower or the results of its operations since the date of such financial statements.

5.7. Information. All information contained in any financial statement, application, schedule, report, certificate, opinion, or any other document given by the Borrower or by any other person in connection with the Loan or with any of the Loan Documents is in all material respects true and accurate, and the Borrower or such other person has not omitted to state any material fact or any facts necessary to make such information not materially misleading.

5.8. Assets and Properties. The Borrower has good and merchantable title to all of its assets and properties, except the real property locations where it does business, including the Premises, which such locations are leased to the Borrower pursuant to valid leases, and there are no Liens against the Borrower outstanding against any of these assets and properties.

5.9. Taxes. All Taxes imposed upon the Borrower and its properties, operations, and income have been paid and discharged prior to the date when any interest or penalty would accrue for the nonpayment thereof except for those Taxes being contested in good faith and by appropriate proceedings by the Borrower.

5.10. Violation of Laws, etc. Neither the consummation of the Loan nor the use, directly or indirectly, of all or any portion of the proceeds of the Loan hereunder will violate or result in a violation of any provision of any applicable statute, regulation or order of, or any restriction imposed by, the United States of America or by any authorized official, board, department, instrumentality, or agency thereof.

5.11. Commercial Purpose. The Loan is being used strictly for commercial purposes as set forth in the Commercial Law Article of the Annotated Code of Maryland, as amended from time to time.

5.12. Existence of Defaults. The Borrower is not in default upon any of its existing indebtedness or under any agreement or obligation under which the Borrower may be bound, nor will the Borrower's entering into this Agreement or any other Loan Document (in and of itself) immediately or with the passage of time, the giving of notice, or both, cause the Borrower to violate or be in default under any other agreements or obligations.

5.13. Status of Borrower. The Borrower is a Delaware corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and its operations and affairs have been effectively and validly commenced. The Borrower has the power to own its properties, conduct its business and affairs, and enter into the Loan and perform the obligations thereunder. The Borrower's entry in the Loan with the Lender has been validly and effectively approved by its Board of Directors as may be required by its organization documents, and any applicable laws. All copies of the consent and incumbency certificates of the Borrower delivered to the Lender in connection with this Loan Agreement are true, accurate, and complete and no action has been taken in diminution or abrogation thereof.

SECTION 6. Borrower's Covenants

Until payment in full of all of the Liabilities:

6.1. Use of Loan Proceeds. The Borrower will use the proceeds of the Loan only as set forth in this Agreement.

6.2. Annual Financials. Within 120 days after the end of each calendar year (or fiscal year if different from the calendar year), if requested by the Lender, the Borrower will furnish promptly to the Lender audited financial statements of the Borrower prepared by an independent Certified Public Accountant in accordance with generally accepted accounting principles, including balance sheet, statement of income, statement of shareholder equity and statement of changes in financial position, certified by independent certified public accountants satisfactory to the Lender.

6.3. Other Information. The Borrower will furnish to the Lender, promptly from time to time, such information concerning the operations, business, affairs, and financial condition of the Borrower as the Lender may reasonably request.

6.4. Books, Records, and Inspections. The Borrower will at all times (a) maintain complete and accurate books and records and (b) permit any person designated by the Lender, to enter, examine, audit, and inspect all properties, books, operations, and records of the Borrower at any reasonable time and from time to time, during normal business hours after reasonable prior notice to Borrower, wherever such properties, books, and records are located.

6.5. Litigation. The Borrower will promptly notify the Lender of any litigation instituted or threatened against its Baltimore operations and of the entry of any judgment of Lien against its Baltimore operations or its Baltimore assets or properties which would be required to be described or included in any filing by the Borrower with the Securities and Exchange Commission.

6.6. Preservation of Properties. The Borrower will at all times (a) maintain its properties, whether owned or leased, in good operating condition, and from time to time will make all proper repairs, renewals, replacements, additions, and improvements thereto needed to maintain such properties in good operating condition, (b) comply with the provisions of all material leases to which it is a party or under which it occupies property so as to prevent any loss of forfeiture thereof or thereunder, and (c) comply with all laws, rules, regulations, and orders applicable to the properties or any part thereof; provided, however, that nothing contained in this section shall require the making of any repair, renewal, replacement, addition, or improvement of or to a particular property or the continued maintenance of any property which would not be required in the exercise of sound business judgment.

6.7. Workers' Compensation Insurance. If applicable, Borrower, shall at all times during the Loan term maintain workers' compensation insurance in accordance with applicable State law, and upon request, shall supply the Lender with copies of such policies and receipts evidencing payment of premiums due thereon.

6.8. Taxes. Except to the extent that the validity or amount thereof is being contested in good faith and by appropriate proceedings, the Borrower will pay and discharge all Taxes prior to the date when any interest or penalty would accrue for the nonpayment thereof.

6.9. Compliance with Laws. The Borrower will at all times comply with all applicable federal, state, and local laws, rules, and regulations, and final, non-appealable orders of any court or other governmental authority having jurisdiction.

6.10. Expense Payments. If the Borrower shall fail to make any payment or otherwise fail to perform, observe, or comply with any of the conditions, covenants, terms, stipulations, or agreements contained herein, the Lender with five (5) days' written notice to the Borrower and without waiving or releasing any obligation or any Event of Default may (but shall be under no obligation to) at any time thereafter make such payment or perform such act for the account and at the expense of the Borrower, and may enter upon any premises of the Borrower for that purpose and take all such action thereon as the Lender may consider necessary or appropriate for such purpose. All sums so paid or advanced by the Lender (the "Expense Payments"), together with interest thereon from the date paid, advanced, or incurred until repaid in full at a per annum rate of interest charged on the principal of any of the Liabilities, plus two percent (2%) per annum, shall be paid by the Borrower to the Lender upon demand by the Lender.

6.11. Notice of Existence of Default. The Borrower shall promptly advise the Lender of the existence of a condition or event which is an Event of Default under this Agreement or a violation or event of default under any of the Loan Documents after Borrower first becomes aware of any such condition or event.

6.12. Work. The Borrower shall use the Loan proceeds in accordance with Section 3.1 of this Agreement.

6.13. Insurance.

(a) If applicable, Borrower, shall at all times during the Loan term maintain workers' compensation insurance in accordance with applicable State law, and upon request, shall supply the Lender with copies of such policies and receipts evidencing payment of premiums due thereon.

(b) The Borrower will at all times maintain insurance with responsible insurance companies on such of its assets and properties, in such amounts, and against such risks as is required in the Loan Documents and furnish to the Lender promptly upon request certificates evidencing such insurance.

The policies described above must provide for thirty (30) days' prior written notice to the Lender of any change in, or cancellation of, coverage.

SECTION 7. Events of Default.

The occurrence of any one or more of the following events (the "Events of Default") shall constitute an event of default hereunder:

7.1. Failure to Pay Interest. If the Borrower shall fail to pay any interest on any of the Liabilities, including, without limitation, the Note and the Loan within fifteen (15) days of when due and payable; or

7.2. Failure to Pay Principal, etc. If the Borrower shall fail to pay the principal of any of the Liabilities, including, without limitation, the Notes and the Loan, or any of the other Liabilities within fifteen (15) days of when due and payable; or

7.3. Terms, Conditions, and Covenants of This Agreement. If the Borrower shall fail to duly perform, comply with, or observe any of the other terms, conditions, or covenants contained in this Agreement, and such failure shall remain uncured for a period of thirty (30) days after the date of Borrower's receipt of written notice from the Lender to the Borrower; or

7.4. Representations and Warranties. If any representation and warranty or any statement or representation made in any report, opinion, schedule, officer's certificate, or other certificate or any other information given by the Borrower or furnished in connection with the Loan shall prove to be false or incorrect in any material respect on the date as of which made and the same shall remain uncured for a period of thirty (30) days after the date of Borrower's receipt of written notice from the Lender to the Borrower unless such Event of Default cannot be cured within thirty (30) days, in which case the Borrower shall have a greater period of time if diligently pursuing such cure but in no event longer than ninety (90) days; or

7.5. Default under Loan Documents. If an event of default (as described or defined therein) shall occur or exist under the provisions of any of the other Loan Documents; or

7.6. Bankruptcy, Insolvency, etc. If the Borrower becomes insolvent or generally does not pay its debts as they become due, or if a petition for relief in a bankruptcy court is filed by the Borrower, or if the Borrower applies for, consents to, or acquiesces in the appointment of a trustee, custodian, or receiver for the Borrower or any of its assets and property, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent, or acquiescence, a trustee, custodian, or receiver is appointed for the Borrower or for a substantial part of the assets and property of the Borrower and is not discharged within ninety (90) days; or any bankruptcy, reorganization, debt arrangement, or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against the Borrower and is consented to or acquiesced in by the Borrower or remains for ninety (90) days undisguised; or the Borrower takes any action to authorize any of the actions described in this subsection; or

7.7. Failure to Give Notice of Default. A failure by the Borrower to promptly advise the Lender of the existence of any condition or event, which is known or which reasonably should be known to the Borrower, which is or which will be with the passage of time, the giving of notice, or both, a default under this Agreement or any Loan Document; or

7.8. Financial Statements. The failure of the Borrower to furnish or cause to be furnished, when and as due, the financial statements and reports required to be furnished to the Lender under this Agreement, and any other Loan Document; or

7.9. Cross Default. A breach or a default by the Borrower under the terms, conditions, or provisions of any loans, guarantees or other transactions of the Borrower with the Lender.

7.10. Relocation. Relocation by the Borrower of its Baltimore Capital Markets headquarters operations outside the boundaries of the City of Baltimore, provided that the creation or establishment of satellite offices in the Baltimore metropolitan area (e.g. Towson or Annapolis) shall not constitute an Event of Default provided that the Borrower continues to maintain its Capital Markets headquarters operations with the boundaries of the City of Baltimore.

7.11. Work. Failure to complete the Work in a good and workmanlike manner.

SECTION 8. Rights and Remedies.

If any one or more Events of Default shall occur, then in each and every such case, the Lender at its option may at any time thereafter exercise and/or enforce any or all of the following rights and remedies:

8.1. Acceleration. Declare without notice to the Borrower all of the Liabilities to be immediately due and payable, whereupon the same shall become due and payable, together with accrued and unpaid interest thereon, without presentment, demand, protest, or notice, all of which the Borrower hereby waives.

8.2. Exercise of Rights and Remedies. Exercise any rights and remedies available, to the Lender under this Agreement, the Note, the other Loan Documents, and under applicable laws.

8.3. Liquidation Costs. The Borrower shall reimburse and pay to the Lender upon demand all costs and expenses (the "Liquidation Costs"), including, without limitation, reasonable attorneys' fees and expenses, advanced, incurred by, or on behalf of the Lender in collecting and enforcing the Liabilities and/or the Loan Documents. All Liquidation Costs shall bear interest payable by the Borrower to the Lender upon demand from the date advanced or incurred until paid in full at a per annum rate of interest equal at all times to the then highest rate of interest charged on the principal of any of the Liabilities, plus two percent (2%) per annum. Exercise of the Lender's rights and remedies include, without limitation, the following:

A. Confess judgment against the Borrower on the Note;

B. File suit against the Borrower on the Note, this Agreement, or any other Loan Document; and

C. Set off any amounts in any account or certificate with the Lender in the name of the Borrower or the Guarantor or in which the Borrower has an interest.

8.4. Remedies, etc., Cumulative. Each right, power, and remedy of the Lender as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by the Lender of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by the Lender of any or all such other rights, powers, or remedies.

8.5. No Waiver, etc. No failure or delay by the Lender to insist upon the strict performance of any term, condition, covenant, or agreement of this Agreement or of any of the other Loan Documents, or to exercise any right, power, or remedy consequent upon a breach thereof, shall constitute a waiver of any such term, condition, covenant, or agreement or of any such breach, or preclude the Lender 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 Agreement or under the Note or under any of the other Loan Documents, the Lender shall not be deemed to waive the right either to require prompt payment when due of all other amounts payable under this Agreement, the Note, or any of the other Loan Documents, or to declare an Event of Default for failure to effect such prompt payment of any such other amount.

SECTION 9. Extension.

Stifel Nicolaus has executed an approximately 5 year sub-lease with Deutsche Bank Securities, Inc. and an additional 6 year lease with the landlord at 1 South Street, Baltimore City, Maryland. If Stifel Nicolaus should choose to exercise its initial 5 year lease renewal option to extend its lease with the landlord at 1 South Street, at any time during the 6 year initial lease term with the landlord, and Borrower provides written notice to the Lender on or before December 31, 2016, the Lender will continue to amortize the loan through year 15, with all remaining sums due to the Lender on February 1, 2022 as pursuant to Section 2 of the Note.

SECTION 10 Miscellaneous

10.1. 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 the Note and shall continue in full force and effect so long as any of the Liabilities are outstanding and unpaid.

10.2. Notices. All notices, demands, requests, consents, or approvals required under this Agreement to be in writing hall be deemed to have been properly given if and when mailed by first class certified mail, return receipt requested, postage prepaid, if to the Lender at, 36 South Charles Street, Suite 1600, Baltimore, Maryland 21201, to the attention of Jeffrey P. Pillas, and if to the Borrower at One Financial Plaza, 501 North Broadway, St. Louis, Missouri 63102, to the attention of Chief Financial Officer, or such other address as the Borrower or the Lender shall have furnished to the other in writing.

10.3. Change, etc. Neither this Agreement nor any term, condition, representation, warranty, covenant, or agreement hereof may be changed, waived, discharged, or terminated orally but only by an instrument in writing by the party against whom such change, waiver, discharge, or termination is sought.

10.4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland.

10.5. Terms Binding. All of the terms, conditions, stipulations, warranties, representations, and covenants of this Agreement shall apply to and be binding upon, and shall inure to the benefit of, the Borrower and the Lender and each of their respective heirs, personal representatives, successors, and assigns.

10.6. Gender, etc. Whenever used herein, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine, or neuter gender shall include all genders.

10.7. Headings. The section and subsection headings in this Agreement are for convenience only and shall not limit or otherwise affect any of the terms hereof.

10.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument.

10.9. Consent to Jurisdiction Service of Process. Borrower hereby agrees and consents that any action or proceeding arising out of or brought to enforce the provisions of this Agreement and/or any of the other Loan Documents may be brought in any appropriate court in the State of Maryland or in any other court having jurisdiction over the subject matter, all at the sole election of the Lender, and by the execution of this Agreement the Borrower irrevocably consents to the jurisdiction of each such court.

10.10. Further Assurances and Corrective Instruments. The parties hereto agree that they will, from time to time, execute and deliver, or cause to be executed and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of the parties to, or facilitating the performance of, this Agreement.

10.11. Estoppel Certificate. The Borrower will, upon not less than ten (10) business days' request by the Lender or any other party to this transaction, execute, acknowledge, and deliver to such person a statement in writing, certifying (a) that this Agreement is unmodified and in full force and effect and the payments required by this Agreement to be paid by the Borrower have been paid, and (b) the then unpaid principal balance of the Note; and stating whether or not to the knowledge of the signer of such certificate any party to any of the Loan Documents is in default in the performance of any covenant, agreement, or condition contained therein and, if so, specifying each such default of which the signer may have knowledge, it being intended that any such statement delivered pursuant to this section may be relied upon by the Lender and the other parties to this transaction.

10.12. Prior Agreements Cancelled. Except for (a) the other Loan Documents, (b) or any other document or agreement to the extent specifically provided therein, (i) this Agreement shall completely and fully supersede all other prior agreements, both written and oral, by and among the Borrower, the Lender, and the other parties to this transaction (and any prior agreements by and between any two or more of the foregoing), and (ii) none of the parties to this Agreement shall hereafter have any rights thereunder, but shall look solely to this Agreement and the other Loan Documents for definitions and determination of all of their respective rights, obligations, and responsibilities relating to the Liabilities.

10.13. Illegality. If fulfillment of any provision hereof or any transaction related hereto or to the other Loan Documents, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or provision herein contained operates or would prospectively operate to invalidate this Agreement in whole or in part, then such clause or provision only shall be void, as though not herein contained, and the remainder of this Agreement shall remain operative and in full force and effect; provided, however, that if any such provision pertains to the repayment of the Liabilities, the occurrence of any such invalidity shall constitute an Event of Default hereunder.

10.14. Assignment. This Agreement and the other Loan Documents may not be assigned, in whole or in part, by the Borrower without the prior written consent of the Lender.

10.15. Good Faith. The Lender shall act reasonably and in good faith as applicable to all of the Loan Documents.

10.16. Reasonableness. The Lender acknowledges and agrees that in all instances when the Lender's consent is required, the Lender shall at all times act in a reasonable manner, and such consent shall not be unreasonably withheld, conditioned or delayed.

10.17. MBE/WBE Compliance. During the term of the Loan, Stifel Nicolaus shall at all times comply with Article 5 Subtitle 28 of the Baltimore City Code (2000 Edition, online update July 31, 2006) regarding Minority Business and Women's Business Enterprises and any other guidelines promulgated by the City of Baltimore guidelines with respect to the development and any construction and/or rehabilitation of the Work undertaken by the Borrower. The Borrower shall sign such certificates as may be required by the Lender and shall demonstrate compliance with such requirements prior to commencement of with such requirements priority commencement of construction.

10.18. Employment. During the term of the Loan, Stifel Nicolaus shall use the Baltimore City Office of Employment Development ("OED") as a "first source" for training and recruitment of employees, such that the Borrower will notify OED of employment opportunities, giving OED an opportunity to present qualified candidates to the Borrower for consideration in accordance with the First Source Hiring Guidelines (the "Guidelines") currently in effect. The Borrower will also use its best efforts to hire, for all available positions, residents of Baltimore City who meet the Guidelines.

10.19. Relocation. The Borrower shall maintain its Baltimore Capital Markets headquarters operations within the boundaries of the City of Baltimore for the entire term of the Loan. Failure to comply with this requirement shall be an additional default under the Loan Documents. Notwithstanding the foregoing, the creation or establishment of satellite offices in the Baltimore metropolitan area (e.g. Towson or Annapolis) shall not constitute a breach of this section provided that the Borrower continues to maintain its Capital Markets headquarters operations with the boundaries of the City of Baltimore.

10.20. Publicity. The Lender and the Borrower agree to cooperate in the preparation and release of all publicity with respect to the funding hereunder. All press releases and signage relating to such matters shall be preapproved, in writing, by any agent appointed by the Lender and the Borrower and shall reflect the joint effort of the Lender and the Borrower. Notwithstanding anything in the foregoing to the contrary, however, either party may respond to telephone calls and other inquiries from the press of a general naturesubsequent to the initial public announcement thereof provided any such responses are substantially consistent with such initial public announcement.

10.21. Conflicts of Interest; City Representatives not Individually Liable. No member, official, representative or employee of the City of Baltimore or the BDC shall have any personal interest, direct or indirect, in the Borrower, nor shall any member, official, representative or employee participate in any decision relating to this transaction which affects his/her personal interest or the interest of any corporation, partnership or association in which he/she is directly or indirectly interested. No member, official, representative or employee of the City of Baltimore or the BDC shall be personally liable to the City of Baltimore or the BDC, as the case may be (or any successor in interest) in the event of any default or breach by the City of Baltimore or the BDC for any amount which may become due to the other party or successor or on any obligation under the terms of this Promissory Note. The parties acknowledge and agree that the membership an d participation of Francis X. Gallagher, Jr., an employee of Stifel Nicolaus, on the BDC's Board of Directors shall not constitute a breach of this section provided that Mr. Gallagher recuses himself from any specific deliberations of the BDC regarding the Borrower or Stifel Nicolaus.

10.22. Ancillary Documents and Further Assurances. The Lender is hereby authorized to execute any and all ancillary, corrective, or confirmatory documents necessary to effectuate this transaction, provided such documents do not (a) increase the anticipated expenditure of funds or (b) materially alter the relationship of the parties or the principal elements of this Promissory Note.

[SIGNATURES ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the Lender and the Borrower have each caused this Agreement to be executed under seal as of the day and year first above written.

WITNESS/ATTEST:	BORROWER:
	STIFEL FINANCIAL CORP.
/s/ David Minnick	By: /s/ James M. Zemlyak
David Minnick	Name: James M Zemlyak
	Time:
	BENEFICIARY:
	THE MAYOR AND CITY COUNCIL OF BALTIMORE
Custodian of the City Seal	By: [SEAL]
	Name:
	Title:
Approved as to Form and Legal Sufficiency this 8th day of November 2006.
	/s/ William Stifler
	William Stifler, Chief Solicitor
Approved: Board of Estimates of the Mayor and City Council of Baltimore
Clerk:
Date: ___________________

EX-10

PROMISSORY NOTE

$750,000.00

Baltimore, Maryland

February 1, 2007

FOR VALUE RECEIVED, STIFEL FINANCIAL CORP., a Delaware corporation (the "Borrower"), promises to pay to the order of THE MAYOR AND CITY COUNCIL OF BALTIMORE, a body politic and corporate and a political subdivision of the State of Maryland, by and through the DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT, its successors and assigns c/o CITY OF BALTIMORE DEVELOPMENT CORPORATION (hereafter, the "Lender"), the principal sum of Seven Hundred and Fifty Thousand Dollars ($750,000.00) (the "Principal Loan Amount") to be advanced to Borrower (the "Loan") in accordance with the terms and conditions contained in the Loan Agreement of even date herewith (the "Loan Agreement"). (The Loan Agreement and this Note collectively referred to as the "Loan Documents.")

Said principal and interest shall be payable as set forth herein below.

1. Interest.

A. Beginning on the date hereof, interest shall accrue on the Principal Loan Amount at the rate of two percent (2%) per annum (the "Fixed Rate").

B. Interest shall be calculated on the basis of a 360-day year, for the actual number of days the principal is outstanding.

C. Should an Event of Default (beyond any applicable notice and cure period or periods) occur under this Note or the Loan Agreement, interest shall accrue from the date of the Event of Default at the prime rate of interest as published in The Wall Street Journal on the date of the Event of Default, plus four percent (4%) (the "Default Rate").

D. Notwithstanding the above provisions as to interest payable, under no circumstances shall interest accrue or be payable at a rate in excess of the maximum rate allowed by applicable laws. If the Lender has collected interest in excess of such maximum rate, then the Borrower's only remedy shall be that the Lender will apply such excess interest as a full or partial prepayment of the unpaid balance of the principal amount to the extent of the unpaid principal balance and refund any additional excess amount to the Borrower.

2. Repayment and Maturity Date.

A. Commencing on March 1, 2007, and continuing on the same calendar day of each calendar month through February 1, 2011, the Borrower shall pay to the holder monthly installments of interest only in the amount of One Thousand Two Hundred Fifty Dollars ($1,250.00) per month.

B. Commencing on March 1, 2011, and continuing on the same calendar day of each month thereafter until February 1, 2017, the Borrower shall pay the holder monthly installments of principal and interest in the amount of Six Thousand Three Hundred Thirty Four Dollars and Forty Three Cents ($6,334.43) per month.

C. Maturity Date. The maturity date of the Loan shall be February 1, 2017 (the " Maturity Date") and unless extended by the terms of section 2.D, the Borrower shall make on the Maturity Date a final balloon payment of Three Hundred Sixty-Seven Thousand One Hundred and Sixteen Dollars and Eighty Five Cents ($367,116.85) plus all unpaid principal and accrued but unpaid interest, late charges and other fees and charges being due and payable pursuant to the Loan Documents.

D. Extension. The Maturity Date may be extended to February 1, 2022 (the "Extended Maturity Date") if Stifel, Nicolaus & Company, Incorporated, a subsidiary of the Borrower ("Stifel Nicolaus") agrees in writing to exercise at least one five-year renewal option (the "Renewal") pursuant to the terms of its lease (the "Lease") at 1 South Street, Baltimore, Maryland (the "Property") and the Borrower gives the Lender written notice of the Renewal prior to December 31, 2016. Upon the satisfaction of such conditions precedent:

(i) Commencing on March 1, 2017, and continuing on the same calendar day of each month thereafter until February 1, 2022, Borrower shall pay the holder monthly installments of principal and interest in the amount of Six Thousand Three Hundred Thirty Four Dollars and Forty Three Cents ($6,334.43) per month, which date is the final and absolute maturity date of this Promissory Note, at which time all sums due hereunder, including principal, interest, charges and fees, shall be paid in full.

3. Project.

The proceeds of the Loan shall be contributed by the Borrower to Stifel Nicolaus which shall use such amounts to construct leasehold improvements, purchase machinery and equipment, and for related matters at the Property (the "Project").

4. Repayment.

A. The entire principal balance of the Loan, together with all accrued interest and any other sums pursuant to the Loan Documents, become immediately due and payable at the option of the Lender on the occurrence of any of the following:

(i) The Maturity Date, unless extended to the Extended Maturity Date pursuant to Section 2.D, supra; or

(ii) An Event of Default (beyond any applicable notice and cure period or periods) as defined in the Loan Documents.

B. Failure to exercise the option to accelerate in Section 4(A)(ii), supra, shall not constitute a waiver of the right to exercise this option in the event of any subsequent default or occurrence allowing for acceleration, after any applicable notice and cure periods in any of the Loan Documents.

5. Prepayment. The Borrower, upon five (5) calendar days advance notice to the Lender, may prepay the Loan, in whole or in part, at any time from time to time without penalty. All repayments under this Note shall be applied to the outstanding principal balance in the inverse order of scheduled maturity.

6. Default. An event of default under this Note (an "Event of Default") shall be deemed to exist upon the occurrence of any of the following: (1) failure to pay any principal, late charges, interest, or undisputed expenses within ten (10) days when due, or failure to perform any other obligations hereunder, after any applicable notice and cure periods in any of the Loan Documents; (2) a default in any of the requirements of Borrower, or any other person providing security for this loan, under any Loan Document referred to above, after any applicable notice and cure periods in any of the Loan Documents; (3) a default in any other agreement between Borrower and the Lender or any affiliate of the Lender, whether previously, simultaneously, or hereafter entered into, after any applicable notice and cure periods therein; (4) voluntary bankruptcy, insolvency, or receivership proceedings being instituted in any state or federal court by the Borr ower or an involuntary bankruptcy, insolvency, or receivership proceedings being instituted in any state or federal court against the Borrower, in which case the Borrower may receive a grace period as set forth in subsection (ii), infra; (5) any warranty, representation, or statement to the Lender by or on behalf of the Borrower proving to have been incorrect in any material respect when made or furnished; (6) a dissolution or liquidation of the Borrower without prior written consent of Lender; (7) failure of Borrower to furnish to the Lender such information as the Lender may require from time to time and as set forth in any of the Loan Documents; (8) default under any obligation or indebtedness owed by the Borrower to the Lender under any other loan or to any other lender, regardless of when created or whether secured or unsecured, after any applicable notice and cure period(s) therein; (9) failure to comply with applicable federal, state and local regulations relating to use of the source of f unds of the Loan; and (10) failure to use the proceeds of the Loan for such purposes as contemplated in the Loan Documents. The contrary, notwithstanding, no Event of Default shall be deemed to have occurred with respect to the following events until after the expiration of the applicable grace or curative period, time being of the essence:

i. Thirty (30) calendar days after receipt of written notice from the Lender to the Borrower, as to a failure to perform an affirmative nonmonetary covenant, a violation of a negative covenant, a breach of warranty or representation, or any other event not previously addressed in this Paragraph, unless such Event of Default cannot be cured within thirty (30) calendar days after Borrower's receipt of such written notice, in which case the Borrower shall have a greater period of time if diligently pursuing such cure.

ii. Except as provided above, in no event shall this Note be deemed to provide a grace period applicable to an Event of Default based upon (i) the filing of a voluntary or involuntary bankruptcy petition, except as stated in this Note with respect to an Event of Default based upon the filing of an involuntary bankruptcy petition, for which a period of ninety (90) calendar days shall be permitted for the Borrower to obtain an unconditional dismissal of any petition filed in connection with any involuntary case, (ii) any Event of Default for which a specific period for the cure thereof is specified in this Paragraph, describing such Event of Default, other than as specified in this Subparagraph, or (iii) any payment of principal due under this Note by scheduled maturity of acceleration, in Event of Default.

7. Remedies,. Upon the occurrence of an Event of Default, and the expiration of any applicable cure period, the Borrower shall pay the Lender all expenses incurred by the Lender in collecting the amounts due under this Note. Those expenses include actual attorney's (and paralegal) fees and court costs. If an Event of Default occurs, after the expiration of any applicable cure period, the Lender has the right to declare the entire unpaid balance of principal of this Note, and all accrued but unpaid interest, immediately due and payable without notice or demand. The Borrower agrees that an Event of Default shall be a default under all other liabilities and obligations of Borrower to the Lender, and that the Lender has the right to declare immediately due and payable all such other liabilities and obligations. If not then paid, the principal balance, accrued but unpaid interest, late charges, and any expenses, shall thereafter bear interes t at the Default Rate (but not more than the maximum rate allowed by applicable laws). If a final, non-appealable judgment is entered against the Borrower for any sum due under this Note, the Borrower shall pay the Lender upon demand from time to time interest at the statutory interest rate on the judgment, plus an additional amount equal to interest calculated at the rate provided in the next preceding sentence in effect as of the date of judgment, minus any interest actually paid at the statutory rate on the judgment.

8. Confession of Judgment. If an Event of Default occurs, the Borrower authorizes any attorney admitted to practice before any court of record, or any clerk of any court, to appear on behalf of the Borrower in any court in one or more proceedings or before any clerk thereof, without giving prior notice to or serving process on such person or persons, and confess judgment against Borrower in favor of the Lender for such amount as may appear to be unpaid on this Note, including interest, late charges, expenses, court costs and attorney's (and paralegal) fees equal to fifteen percent (15%) of the amount in controversy. In addition to all other courts where jurisdiction and venue would be proper, the Borrower consents to the jurisdiction and venue of the courts of any county of the State of Maryland or Baltimore City, Maryland or the United States District Court for the District of Maryland for the entry of said judgment. Borrower hereby waiv es and releases, to the extent not prohibited by law, all errors and rights of appeal, exemptions and stays of execution upon any real or personal property to which such person or persons might otherwise by entitled, under any present or future law. The Borrower waives the benefit of any and every statute, ordinance or rule of court which may be lawfully waived conferring upon the Borrower any right or privilege of exemption or other relief from the enforcement or immediate enforcement of a judgment or related proceeding on a judgment. The authority and power to appear for and enter judgment against Borrower shall not be exhausted by one or more exercises hereof or by any imperfect exercises hereof, and shall not be extinguished by any judgment entered pursuant thereto; this 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 Note shall be sufficient authority.

9. Transfer. In the event that any holder of this Note transfers this Note for value, the Borrower agrees that no subsequent non-affiliated holder of this Note shall be subject to any claims or defenses which the Borrower may have against a prior holder, all of which are waived as to the subsequent non-affiliated holder, and that all subsequent holders shall have all of the rights of a holder in due course with respect to the Borrower even though the subsequent holder may not qualify, under applicable law, absent this paragraph, as a holder in due course.

10. Waivers. The Borrower, all endorsers and guarantors hereof, and all others who may become liable for all or any part of the obligation evidenced hereby, agree to be jointly and severally bound hereby, all covenants, obligations and liabilities hereunder shall be joint and several, and they do jointly and severally waive presentment, demand, protest, notice of nonpayment, and any and all lack of diligence or delays in collection or enforcement hereof. The Borrower and all endorsers and guarantors hereof further jointly and severally agree with the Lender that the Lender may, without notice, in such manner, on such terms and for such time as the Lender may see fit, (a) agree with the Borrower to alter, extend, or renew this Note, and/or (b) release any maker, endorser, or guarantor hereof, and/or substitute or add guarantors, and/or substitute or release collateral or any part thereof, all without in any way affecting, releasing, or fore going the joint and several liability of the Borrower and all endorsers and guarantors hereof.

11. No Counterclaim. Any action brought by the Borrower against the Lender which is based, directly or indirectly, or in whole or in part on this Note or any matter in or related to this Note or any other Loan Document, including but not limited to the making of the Loan or the administration or collection thereof shall be brought only in the courts of the State of Maryland. The Borrower may not file a counterclaim against the Lender in a suit brought by the Lender against the Borrower in a state other than the State of Maryland unless under the rules of procedure of the court in which the Lender brought the action the counterclaim is mandatory and will be considered waived unless filed as a counterclaim in the action instituted by the Lender.

12. Successors and Assigns. This Note shall inure to the benefit of and be enforceable by the Lender and the Lender's successors and assigns and any other person to whom the Lender may grant an interest in the Borrower's obligations to the Lender, and shall be binding and enforceable against the Borrower and the Borrower's successors and assigns.

13. Commercial Loan. Borrower hereby represents and warrants to Lender that the loan evidenced by this Note was made and transacted solely for the purpose of carrying on or acquiring a business or commercial enterprise within the meaning of Title 12, Commercial Law Article, Section 12-101(c) (1), Annotated Code of Maryland (1983 Repl. Vol.), and that the funds evidenced by this Note will be used for commercial purposes only and solely in connection with such an enterprise.

14. Notice. All notices required to be given hereunder shall be in writing and shall be deemed duly given if and when such notice is either personally delivered or mailed by certified or registered U.S. mail, return receipt requested, postage prepaid, first class, to the respective addresses as set forth in Section 10.2 of the Loan Agreement.

15. Conflicts; Venue; Service. This Note shall be construed and enforced according to and be governed by the laws of the State of Maryland without regard to principles of conflict of laws. As part of the consideration for the Lender's advance of funds to the Borrower, Borrower agrees that any and all actions or proceedings arising directly or indirectly from this Note shall, at the Lender's option, be litigated in courts having a primary jurisdiction within the State of Maryland; consents to the jurisdiction of any State or Federal Court located within the State of Maryland; agrees that they are subject to service of process under Section 6-103 of the Courts and Judicial Proceedings Article of the Maryland Code; and agrees to accept such service as is authorized by the statute and prescribed in the Maryland Rules of Procedure.

16. Cumulative Rights. Each right, power and remedy under this Note, under any Loan Document, and under applicable law, shall be cumulative and concurrent and the exercise of any one or more of them shall not preclude the simultaneous or later exercise by the Lender of any or all such other rights, powers or remedies. No waiver by the Lender of any default shall be effective unless made in writing nor operate as a waiver of any other or future default.

17. Severable. If any part of this Note shall be adjudged invalid or not enforceable then such partial invalidity or unenforceability shall not cause the remainder of the Note to be or to become invalid or unenforceable, and if a provision hereof is held invalid or unenforceable in one or more of its applications, the parties hereto agree that said provisions shall remain in effect in all valid or enforceable applications that are severable from the invalid or unenforceable application or applications.

18. Singular/Plural. The use of the singular herein may also refer to the plural, and vice versa, and the use of the neuter or any gender shall be applicable to any other gender or the neuter.

19. Assignment. This Note may be assigned by the Lender or any holder at any time or from time to time. The word "Lender" as used herein shall include all future holders of the Note, by assignment and otherwise. This Note may be assigned to any successor to Borrower by merger, consolidation, reorganization, asset sale or similar transaction provided such successor agrees to be bound by the terms of this Note and the other Loan Agreements to the same extent as Borrower.

20. Waiver of Jury Trial. Each of the Lender and the Borrower agrees that any suit, action, or proceeding, whether claim or counterclaim, brought or instituted by either party or any of their respective successors or assigns on or with respect to this Note or any other Loan Document or which in any way relates, directly or indirectly, to the obligations of either party to the other party under this Note or any other Loan Document, or the dealings of the parties with respect thereto, shall be tried only by a court and not by a jury. Each of the Lender and the Borrower hereby expressly waives any right to a trial by jury in any such suit, action, or proceeding. Each of the parties acknowledges and agrees that this provision is a specific and material aspect of the agreement between the parties and that the other party would not enter into the transaction with the other party if this provision were not part of their agreement.

21. MBE/WBE Compliance. Stifel Nicolaus shall at all times during the term of this Note use minority and women's business enterprises in connection with the development of the Project, consistent with the procedures established by the Lender and the obligations set forth in the Loan Documents. The Borrower shall comply with Article 5, Subtitle 28 of the Baltimore City Code (2000 Edition, online update 31 July 2006) regarding participation by Minority Business and Women's Business Enterprises in its development of the Project as set forth in the Loan Agreement. Lender and its affiliates shall cooperate with, and assist, Stifel Nicolaus and Borrower in their efforts in this regard.

22. Employment. During the term of this Note, Stifel Nicolaus shall use the Baltimore City Office of Employment Development ("OED") as a "first source" for training and recruitment of employees, such that the Borrower will notify OED of employment opportunities, giving OED an opportunity to present qualified candidates to the Borrower for consideration in accordance with the First Source Hiring Guidelines (the "Guidelines") currently in effect. The Borrower will also use its best efforts to hire, for all available positions, residents of Baltimore City who meet the Guidelines.

23. Relocation. The Borrower shall maintain its Baltimore Capital Markets headquarters operations within the boundaries of the City of Baltimore for the entire term of the Loan. Failure to comply with this requirement shall be an additional default under the Loan Documents. Notwithstanding anything to the contrary contained in this Note, if Borrower relocates its Baltimore operations outside the boundaries of the City of Baltimore at any time during the term of the Loan, then, upon such event, the Default Rate as calculated at the time of the relocation shall be substituted as the Fixed Rate and shall relate back to the commencement of the amortization period and continue through the Maturity Date. Borrower shall be liable for any difference in the amortization payments as recomputed due to the change in interest rate. Notwithstanding the foregoing, the creation or establishment of satellite offices in the Baltimore metropolitan area (e .g. Towson or Annapolis) shall not constitute a breach of this section provided that the Borrower continues to maintain its Capital Markets headquarters operations with the boundaries of the City of Baltimore.

24. Publicity. The Lender and the Borrower agree to cooperate in the preparation and release of all publicity with respect to the funding hereunder. All press releases and signage relating to such matters shall be pre-approved, in writing, by any agent appointed by the Lender and the Borrower and shall reflect the joint effort of the Lender and the Borrower. Notwithstanding anything in the foregoing to the contrary, however, either party may respond to telephone calls and other inquiries from the press of a general nature subsequent to the initial public announcement thereof provided any such responses are substantially consistent with such initial public announcement.

25. Conflicts of Interest; City Representatives Not Individually Liable. No member, official, representative or employee of the City of Baltimore or the City of Baltimore Development Corporation (the "BDC") shall have any personal interest, direct or indirect, in the Borrower, nor shall any member, official, representative or employee participate in any decision relating to this transaction which affects his/her personal interest or the interest of any corporation, partnership or association in which he/she is directly or indirectly interested. No member, official, representative, or employee of the City of Baltimore or the BDC shall be personally liable to the City of Baltimore or the BDC, as the case may be (or any successor in interest) in the event of any default or breach by the City of Baltimore or the BDC for any amount which may become due to the other party or successor or on any obligation under the terms of this Promis sory Note. The parties acknowledge and agree that the membership and participation of Francis X. Gallagher, Jr., an employee of Stifel Nicolaus, on the BDC's Board of Directors shall not constitute a breach of this section provided that Mr. Gallagher recuses himself from any specific deliberations of the BDC regarding the Borrower or Stifel Nicolaus.

26. Ancillary Documents and Further Assurances. The Mayor and the Commissioner of the Department of Housing and Commercial Development, without the further approval of the Baltimore City Board of Estimates, are each hereby authorized to execute any and all ancillary, corrective, or confirmatory documents necessary to effectuate this transaction, provided such documents do not (a) increase the anticipated expenditure of funds or (b) materially alter the relationship of the parties or the principal elements of this Promissory Note.

SIGNATURES APPEAR ON THE FOLLOWING PAGE

IN WITNESS WHEREOF, the Borrower has executed and delivered under seal this note as of the day and year first above written.

WITNESS:	BORROWER:
	STIFEL FINANCIAL CORP.
_/s/ David Minnick	By /s/ James M. Zemlyak (SEAL)
	Name James M Zemlyak
	Title Senior Vice President
Approved as to Form and Legal Sufficiency this 8th day of November, 2006.
/s/ William Stifler
William Stifler, Chief Solicitor
Approved: Board of Estimates of the Mayor and City Council of Baltimore.
Clerk: ______________________
Date: _______________________