-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HcIbDVyXA2jdffjr/noFOooXqFkAzfMB2vtO+kL7bGeKe6+4W6hwQUcIQxzsNcaj dpgDQA1zzQBC9/vDU56/uA== 0001068800-02-000069.txt : 20020415 0001068800-02-000069.hdr.sgml : 20020415 ACCESSION NUMBER: 0001068800-02-000069 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES FINANCIAL COMPANIES LP LLP CENTRAL INDEX KEY: 0000815917 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 431450818 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16633 FILM NUMBER: 02579006 BUSINESS ADDRESS: STREET 1: 12555 MANCHESTER CITY: ST LOUIS STATE: MO ZIP: 63131 BUSINESS PHONE: 3148512000 FORMER COMPANY: FORMER CONFORMED NAME: JONES FINANCIAL COMPANIES L P DATE OF NAME CHANGE: 19920703 10-K 1 jones10k.txt THE JONES FINANCIAL COMPANIES, L.L.L.P. FORM 10-K United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 Commission file number 0-16633 ----------------- ------- THE JONES FINANCIAL COMPANIES, L.L.L.P. - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its Partnership Agreement) MISSOURI 43-1450818 - ----------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 12555 Manchester Road Des Peres, Missouri 63131 - ----------------------------------------------------------------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (314) 515-2000 ------------------ Securities registered pursuant to Section 12(b) of the act: Name of each exchange Title of each class on which registered ---------------------- ----------------------- NONE NONE - ------------------------------------ ------------------------------------- Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests - ----------------------------------------------------------------------------- (Title of Class) 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 / / As of March 19, 2002 there were no voting securities held by non-affiliates of the registrant. DOCUMENTS INCORPORATED BY REFERENCE None 1 PART I ITEM 1. BUSINESS The Jones Financial Companies, L.L.L.P. (the "Registrant" and also referred to herein as the "Partnership") is organized under the Revised Uniform Limited Partnership Act of the State of Missouri. The terms "Registrant" and "Partnership" used throughout, refer to The Jones Financial Companies, L.L.L.P. and any or all of its consolidated subsidiaries. The Partnership is the successor to Whitaker & Co., which was established in 1871 and dissolved on October 1, 1943, said date representing the organization date of Edward D. Jones & Co., L.P. ("EDJ"), the Partnership's principal subsidiary. EDJ was reorganized on August 28, 1987, which date represents the organization date of The Jones Financial Companies, L.L.L.P. The Partnership's principal operating subsidiary, EDJ, is a registered broker/dealer primarily serving individual investors. EDJ derives its revenues from the sale of listed and unlisted securities and insurance products, investment banking, principal transactions and is a distributor of mutual fund shares. EDJ conducts business throughout the United States, Canada and the United Kingdom with its customers, various brokers and dealers, clearing organizations, depositories and banks. The Partnership is a member firm of the New York, American, Chicago, Toronto, Montreal and London exchanges, and is a registered broker/dealer with the National Association of Securities Dealers, Inc. ("NASD"). As of January 25, 2002, the Partnership was comprised of 210 general partners, 5,401 limited partners and 127 subordinated limited partners. At December 31, 2001, the Partnership is organized as follows: The Partnership owns 100% of the outstanding common stock of EDJ Holding Company, Inc., a Missouri corporation and 100% of the outstanding common stock of LHC, Inc. ("LHC"), a Missouri corporation. The Partnership also holds all of the partnership equity of Edward D. Jones & Co., L.P., a Missouri limited partnership and EDJ Leasing Co., L.P., a Missouri limited partnership. EDJ Holding Company, Inc. and LHC, Inc. are the general partners of Edward D. Jones & Co., L.P. and EDJ Leasing Co., L.P., respectively. In addition, the Partnership owns 100% of the outstanding common stock of Conestoga Securities, Inc., a Missouri corporation and also owns, as a limited partner, 49.5% of Passport Research Ltd., a Pennsylvania limited partnership, which acts as an investment advisor to a money market mutual fund. The Partnership owns 100% of the partnership equity of Edward Jones, an Ontario, Canada limited partnership and all of the common stock of Edward D. Jones & Co. Canada Holding Co., Inc., an Ontario, Canada corporation, its general partner. Through its Canadian entities, the Partnership owns all of the partnership equity of Edward Jones Insurance Agency, an Ontario, Canada limited partnership, and all of the common stock of Edward D. Jones & Co. Agency Holding Co., Inc., an Ontario, Canada corporation, its general partner. The Partnership also owns 100% of the equity of Edward Jones Limited, a U.K. private limited company, which owns 100% of the equity of Edward Jones Nominees Limited, Edward Jones Nominees PEP Limited, and Edward Jones Nominees ISA Limited. The Partnership owns 100% of the equity of Boone National Savings and Loan Association, F.A., ("Association"), a federally chartered stock savings and loan association. The Partnership also owns 100% of the equity of EJ Mortgage L.L.C., a Missouri limited liability company. EJ Mortgage L.L.C. owns 50% of Edward Jones Mortgage, a joint venture. The Partnership holds all of the partnership equity in a Missouri limited partnership, EDJ Ventures, Ltd. Conestoga Securities, Inc., is the general partner of EDJ Ventures, Ltd. The Partnership is the sole member of Edward Jones Insurance Agency Holding, L.L.C., a Missouri limited liability company; California Agency Holding, L.L.C., a California limited liability company and Edward Jones Insurance Agency of Nevada, Inc., a Nevada limited liability company and Edward Jones Insurance Agency of New Mexico, L.L.C., a New Mexico limited liability company. Edward Jones 2 PART I Insurance Agency Holding, L.L.C. is the sole member of Edward Jones Insurance Agency of Wyoming, L.L.C., a Wyoming limited liability company and Edward Jones Insurance Agency of Michigan, L.L.C., a Michigan limited liability company. The Partnership and Edward Jones Insurance Agency Holding, L.L.C. are multi-members of Edward Jones Insurance Agency of Massachusetts, L.L.C., a Massachusetts limited liability company; Edward Jones Insurance Agency of Alabama, L.L.C., an Alabama limited liability company; Edward Jones Insurance Agency of Montana, L.L.C., a Montana limited liability company; and EJ Insurance Agency of Ohio, an Ohio limited liability company. Edward Jones Insurance Agency Holding, L.L.C. and California Agency Holding, L.L.C. are multi-members of Edward Jones Insurance Agency of California, L.L.C., a California limited liability company. The Partnership is an affiliate of EDJ Insurance Agency of Texas, Inc. All of the insurance agencies engage in general insurance brokerage activities. The Partnership holds all of the partnership equity of Unison Investment Trusts, L.P., d/b/a Unison Investment Trusts, Ltd., a Missouri limited partnership, which has sponsored unit investment trusts. The general partner of Unison Investment Trusts, L.P., Unison Capital Corp., Inc., a Missouri corporation, is wholly owned by LHC. EDJ owns 100% of the outstanding common stock of Cornerstone Mortgage Investment Group II, Inc., a Delaware limited purpose corporation which has structured and sold secured mortgage bonds. EDJ also owns 50% of issued common stock of S-J Capital Corp., a Missouri corporation. Conestoga owns 100% of the outstanding stock of CIP Management, Inc., which is the managing general partner of CIP Management, L.P. CIP Management, L.P. is the managing general partner of Community Investment Partners II, L.P., Community Investment Partners III, L.P., L.L.L.P., and Community Investment Partners IV, L.P., L.L.L.P., business development companies. During 2001, the Partnership affiliates Patronus, Inc. and EDJ Investment Advisory Services were dissolved. Neither had conducted active businesses. Within the past five years, the Registrant has added several new legal entities. In 1997, Edward Jones Limited, a U.K. private limited company, was organized. During 1998, the Registrant began brokerage operations in the United Kingdom under this entity. During 1998, EJ Mortgage L.L.C. was established. EJ Mortgage L.L.C., a wholly owned subsidiary of EDJ, owns 50% of Edward Jones Mortgage, a joint venture offering residential mortgage lending services to EDJ's customers. Due to state laws and regulations, certain states require separate legal entities to transact insurance business. During 1998, changes were made to certain insurance entities as a result of changes in state laws and regulations. The following entity was added: Edward Jones Insurance Agency of Michigan, L.L.C., a limited liability company. During 2000, Edward Jones Nominees Limited, Edward Jones Nominees PEP Limited, and Edward Jones Nominee ISA Limited, all three which are U.K. private limited companies, were organized. United Kingdom regulations require separate companies for the holding of client investments in firm name. 3 PART I REVENUES BY SOURCE. The following table sets forth, for the past three years, the sources of the Partnership's revenues by dollar amounts (all amounts in thousands):
2001 2000 1999 Commissions Listed $ 219,359 $ 272,260 $ 190,313 Mutual Funds 740,209 749,144 583,444 O-T-C 77,618 170,058 168,177 Insurance 216,009 222,175 205,801 Other 667 837 551 Principal Transactions 370,327 264,361 270,830 Investment Banking 24,676 29,545 20,953 Interest and Dividends 176,277 224,497 149,041 Sub-Transfer Agent Revenue 95,022 69,874 34,254 Mutual Fund & Insurance Revenue 79,107 89,993 64,564 Money Market Revenue 73,594 60,604 52,897 IRA Custodial Service Fees 38,554 30,591 21,965 Other Revenue 30,578 28,021 24,044 ----------- ----------- ----------- Total Revenue $ 2,141,997 $ 2,211,960 $ 1,786,834 ===========================================================================================================
Because of the interdependence of the activities and departments of the Partnership's investment business and the arbitrary assumptions involved in allocating overhead, it is impractical to identify and specify expenses applicable to each aspect of the Partnership's operations. Furthermore, the net income of firms principally engaged in the securities business, including the Partnership's, is affected by interest savings as a result of customer and other credit balances and interest earned on customer margin accounts. LISTED BROKERAGE TRANSACTIONS. A portion of the Partnership's revenue is derived from customer transactions in which the Partnership acts as agent in the purchase and sale of listed corporate securities. These securities include common and preferred stocks and corporate debt securities traded on and off the securities exchanges. Revenue from brokerage transactions is highly influenced by the volume of business and securities prices. Customer transactions in securities are effected on either a cash or a margin basis. In a margin account, the Partnership lends the customer a portion of the purchase price up to the limits imposed by the margin regulations of the Federal Reserve Board ("Regulation T"), New York Stock Exchange ("NYSE") margin requirements, or the Partnership's internal policies, which may be more stringent than the regulatory minimum requirements. Such loans are secured by the securities held in customer margin accounts. These loans provide a source of income to the Partnership since it is able to lend to customers at rates which are higher than the rates at which it is able to borrow on a secured basis. The Partnership is permitted to use as collateral for the borrowings, securities owned by margin customers having an 4 PART I aggregate market value generally up to 140% of the debit balance in margin accounts. The Partnership may also use funds provided by free credit balances in customer accounts to finance customer margin account borrowings. In permitting customers to purchase securities on margin, the Partnership assumes the risk of a market decline which could reduce the value of its collateral below a customer's indebtedness before the collateral is sold. Under the NYSE rules, the Partnership is required in the event of a decline in the market value of the securities in a margin account to require the customer to deposit additional securities or cash so that at all times the loan to the customer is no greater than 75% of the value of the securities in the account (or to sell a sufficient amount of securities in order to maintain this percentage). The Partnership, however, imposes a more stringent maintenance requirement. Variations in revenues from listed brokerage commissions between periods is largely a function of market conditions; however, some portion of the overall increases in 2000 and 1999 were due to the growth in the number of investment representatives over these periods. MUTUAL FUNDS. The Partnership distributes mutual fund shares in continuous offerings and new underwritings. As a dealer in mutual fund shares, the Partnership receives a dealers' discount which generally ranges from 1% to 5 3/4% of the purchase price of the shares, depending on the terms of the dealer agreement and the amount of the purchase. The Partnership also earns service fees which are generally based on 15 to 25 basis points of its customer assets which are held by the mutual funds. The Partnership does not manage any mutual fund, although it is a limited partner of Passport Research, Ltd., an advisor to a money market mutual fund. OVER-THE-COUNTER TRANSACTIONS. Partnership activities in unlisted (over-the-counter) transactions are essentially similar to its activities as a broker in listed securities. In connection with customer orders to buy or sell securities, the Partnership charges a commission for both principal and agency transactions. INSURANCE. The Partnership has executed agency agreements with various national insurance companies. EDJ is able to offer life insurance, long term care insurance, and fixed and variable annuities to its customers through substantially all of its investment representatives who hold insurance sales licenses. As an agent for the insurance company, the Partnership receives commission on the purchase price of the policy. The Partnership also earns service fees which are generally based on its customer assets held by the insurance companies. PRINCIPAL TRANSACTIONS. The Partnership makes a market in over-the-counter corporate securities, municipal obligations, U.S. Government obligations, including general obligations and revenue bonds, unit investment trusts and mortgage-backed securities. The Partnership's market-making activities are conducted with other dealers in the "wholesale" market and "retail" market wherein the Partnership acts as a dealer buying from and selling to its customers. In making markets in principal and over-the-counter securities, the Partnership exposes its capital to the risk of fluctuation in the market value of its security positions. It is the Partnership's policy not to trade for its own account. As in the case of listed brokerage transactions, revenue from over-the-counter and principal transactions is highly influenced by the volume of business and securities prices, as well as by the increasing number of investment representatives employed by the Partnership over the periods indicated. INVESTMENT BANKING. The Partnership's investment banking activities are performed by its Syndicate and Underwriting Departments. The principal service which the Partnership renders as an investment banker is the underwriting and distribution of securities either in a primary distribution on behalf of the issuer of such securities, or in a secondary distribution on behalf of a holder of such securities. The distributions of 5 PART I corporate and municipal securities are, in most cases, underwritten by a group or syndicate of underwriters. Each underwriter has a participation in the offering. Unlike many larger firms against which the Partnership competes, the Partnership does not presently engage in other investment banking activities such as assisting in mergers and acquisitions, arranging private placement of securities issues with institutions or providing consulting and financial advisory services to corporations. The Syndicate and Underwriting Departments are responsible for the largest portion of the Partnership's investment banking business. In the case of an underwritten offering managed by the Partnership, these departments may form underwriting syndicates and work closely with the branch office system for sales of the Partnership's own participation and with other members of the syndicate in the pricing and negotiation of other terms. In offerings managed by others in which the Partnership participates as a syndicate member, these departments serve as active coordinators between the managing underwriter and the Partnership's branch office system. The underwriting activity of the Partnership involves substantial risks. An underwriter may incur losses if it is unable to resell the securities it is committed to purchase or if it is forced to liquidate all or part of its commitment at less than the agreed upon purchase price. Furthermore, the commitment of capital to an underwriting may adversely affect the Partnership's capital position and, as such, its participation in an underwriting may be limited by the requirement that it must at all times be in compliance with the Securities and Exchange Commission's uniform Net Capital Rule. The Securities Act of 1933 and other applicable laws and regulations impose substantial potential liabilities on underwriters for material misstatements or omissions in the prospectus used to describe the offered securities. In addition, there exists a potential for possible conflict of interest between an underwriter's desire to sell its securities and its obligation to its customers not to recommend unsuitable securities. In recent years there has been an increasing incidence of litigation in these areas. These lawsuits are frequently brought for the benefit of large classes of purchasers of underwritten securities. Such lawsuits often name underwriters as defendants and typically seek substantial amounts in damages. INTEREST AND DIVIDENDS. Interest and dividend income is earned primarily on margin account balances, investment securities, and securities held. Interest is also earned by the Association on its loan portfolio. MONEY MARKET FEES, IRA CUSTODIAL SERVICE FEES AND OTHER REVENUES. Other revenue sources include money market management fees, IRA custodial services fees, sub-transfer agent accounting services, revenue sharing, gains from sales of certain assets, and other product and service fees. The Partnership charges a fee to certain mutual funds which it distributes, for sub-accounting services it performs for accounts registered in firm name. Additionally, under certain agreements, non-commission revenue is received from companies whose mutual funds and insurance products the Partnership distributes. The Partnership has an interest in the investment advisor to its money market fund, Daily Passport Cash Trust. Revenue from this source has increased over the periods due to growth in the fund, both in dollars invested and number of accounts. EDJ is also the custodian for its IRA accounts and charges customers an annual fee for its services. The Partnership has registered an investment advisory program with the Securities and Exchange Commission ("SEC") under the Investment Advisors Act of 1940. This service is offered firmwide and involves income and estate tax planning and analysis for clients. Revenues from this source are insignificant and are included under "Other Revenues." 6 PART I The Partnership also offers trust services to its customers through the Edward Jones Trust Company, a division of the Association. The Partnership offers a co-branded credit card with a major credit card company and receives revenue from this service. In 1998, the Partnership began offering mortgage loans to its customers through a joint venture. RESEARCH DEPARTMENT. The Partnership maintains a Research Department to provide specific investment recommendations and market information for retail customers. The Department supplements its own research with the services of various independent research services. The Partnership competes with many other securities firms with substantially larger research staffs in its research activities. CUSTOMER ACCOUNT ADMINISTRATION AND OPERATIONS. Operations associates are responsible for activities relating to customer securities and the processing of transactions with other broker/dealers. These activities include receipt, identification, and delivery of funds and securities, internal financial controls, accounting and personnel functions, office services, storage of customer securities and the handling of margin accounts. The Partnership processes substantially all of its own transactions. It is important that the Partnership maintain current and accurate books and records from both a profit viewpoint as well as for regulatory compliance. To expedite the processing of orders, the Partnership's branch office system is linked to the St. Louis headquarters office through an extensive communications network. Orders for all securities are captured at the branch electronically, routed to St. Louis and forwarded to the appropriate market for execution. The Partnership's processing of paperwork following the execution of a security transaction is automated, and operations are generally on a current basis. There is considerable fluctuation during any one year and from year to year in the volume of transactions the Partnership processes. The Partnership records transactions and posts its books on a daily basis. Operations personnel monitor day-to-day operations to determine compliance with applicable laws, rules and regulations. Failure to keep current and accurate books and records can render the Partnership liable to disciplinary action by governmental and self-regulatory organizations. The Partnership has a computerized branch office communication system which is principally utilized for entry of security orders, quotations, messages between offices, research of various customer account information, and cash and security receipts functions. The Partnership clears and settles virtually all of its listed transactions through the National Securities Clearing Corporation ("NSCC"), New York, New York. NSCC effects clearing of securities on the New York, American and Chicago Stock Exchanges. In conjunction with clearing and settling transactions with NSCC, the Partnership holds customer securities on deposit with the Depository Trust Company ("DTC") in lieu of maintaining physical custody of the certificates. The Partnership also uses Participant Trust Company for custody of Government National Mortgage Association ("GNMA") securities and a major bank for custody of treasury securities. The Partnership's United Kingdom operation clears and settles virtually all of its listed transactions through CREST. CREST effects clearing of securities on the London Stock Exchange. In conjunction with clearing and settling transactions with CREST, the Partnership's United Kingdom operation holds customer securities on deposit with CREST in lieu of maintaining physical custody of the certificates. The Partnership's United Kingdom operation also uses DTC for custody of United States securities, a major independent brokerage firm for custody of non-United Kingdom and non-United States securities, and individual unit trust vendors for custody of unit trust holdings. The Partnership is substantially dependent upon the operational capacity and ability of NSCC/DTC/CREST. Any serious delays in the processing of securities transactions encountered by 7 PART I NSCC/DTC/CREST may result in delays of delivery of cash or securities to the Partnership's customers. These services are performed for the Partnership under contracts which may be changed or terminated at will by either party. Automated Data Processing, Inc., ("ADP") and National Bank of Canada provide automated data processing services for customer account activity and related records for the United States and Canada, respectively. In Canada, the Partnership has entered into an introducing/carrying arrangement with National Bank of Canada. As the carrying broker, National Bank of Canada handles the routing and settlement of customer transactions. Transactions are settled through the Canadian Depository for Securities ("CDS"), of which National Bank of Canada is a member. CDS effects clearing of securities on the Toronto, Montreal, and CDNX stock exchanges. Customer securities on deposit are also held with CDS. The Partnership does not employ its own floor broker for transactions on exchanges. The Partnership has arrangements with other brokers to execute the Partnership's transactions in return for a commission based on the size and type of trade. If, for any reason, any of the Partnership's clearing, settling or executing agents were to fail, the Partnership and its customers would be subject to possible loss. Customers are protected by the Securities Investors Protection Corporation ("SIPC") in the United States, Investors Compensation Scheme ("ICS") in the United Kingdom, and Canadian Investor Protection Fund ("CIPF") in Canada, and through excess insurance coverage maintained by the Partnership in The United States and the United Kingdom. In Canada, excess insurance coverage is maintained by National Bank of Canada. The coverage provided by SIPC, ICS and CIPF, and protection in excess limits thereof, would be available to customers of the Partnership. To the extent that the Partnership would not be able to meet the obligations of the customers, such customers might experience delays in obtaining the protections afforded them. The Partnership believes that its internal controls and safeguards concerning the risks of securities thefts are adequate. Although the possibility of securities thefts is a risk of the industry, the Partnership has not had, to date, a significant problem with such thefts. The Partnership maintains fidelity bonding insurance which, in the opinion of management, provides adequate coverage. EMPLOYEES. Including its 210 general partners, the Partnership has approximately 26,460 full and part-time employees. This includes 8,526 registered salespeople as of January 25, 2002. The Partnership's salespersons are compensated on a commission basis and may, in addition, be entitled to bonus compensation based on their respective branch office profitability and the profitability of the Partnership. The Partnership has no formal bonus plan for its non-registered employees. The Partnership has, however, in the past paid bonuses to its non-registered employees on an informal basis, but there can be no assurance that such bonuses will be paid for any given period or will be within any specific range of amounts. Employees of the Partnership are bonded under a blanket policy as required by NYSE rules. The annual aggregate amount of coverage is $50,000,000 subject to a $2,000,000 deductible provision, per occurrence. The Partnership maintains a training program for prospective salespeople which includes nine weeks of concentrated instruction and on-the-job training in a branch office. During the first phase the trainee spends 60 days studying Series 7 examination materials and taking the examination. Also during this study period, the trainees spend up to 20 hours a week in a branch office to learn the mechanics of running a branch office. After passing the examination, trainees spend one week in a comprehensive training program in St. Louis followed by three weeks at a designated location to conduct market research and prepare for opening the office. The trainee then spends three weeks of on-the-job training in a branch location reviewing investments, office procedures and sales techniques. Next, the trainee returns to his 8 PART I or her designated location for one week to continue building a prospect base. One final week is then spent in a central location to complete the initial training program. Two and four months later, the investment representative attends additional training classes in St. Louis, and subsequently, EDJ offers periodic continuing training to its experienced sales force. EDJ's basic brokerage payout is similar to its competitors. The Partnership considers its employee relations to be good and believes that its compensation and employee benefits which include medical, life, disability insurance plans, profit sharing and deferred compensation retirement plans, are competitive with those offered by other firms principally engaged in the securities business. BRANCH OFFICE NETWORK. The Partnership operates 8,127 branch offices as of January 25, 2002, primarily staffed by a single investment representative. The Partnership operates 7,507 offices in the United States located in all 50 states, predominantly in communities with populations of under 50,000 and metropolitan suburbs. The Partnership also operates in Canada (through 518 offices as of January 25, 2002) and the United Kingdom (through 102 offices as of January 25, 2002). COMPETITION. The Partnership is subject to intensive competition in all phases of its business from other securities firms, many of which are substantially larger than the Partnership in terms of capital, brokerage volume and underwriting activities. In addition, the Partnership encounters competition from other organizations such as banks, insurance companies, and others offering financial services and advice. The Partnership also competes with a number of firms offering discount brokerage services, usually with lower levels of service to individual customers. In recent periods, many regulatory requirements prohibiting non-securities firms from engaging in certain aspects of brokerage firms' business have been eliminated and further removal of such prohibitions is anticipated. With minor exceptions, customers are free to transfer their business to competing organizations at any time. There is intense competition among securities firms for salespeople with good sales production records. In recent periods, the Partnership has experienced increasing efforts by competing firms to hire away its registered representatives although the Partnership believes that its rate of turnover of investment representatives is not higher than that of other firms comparable to the Partnership. REGULATION. The securities industry in the United States is subject to extensive regulation under both federal and state laws. The SEC is the federal agency responsible for the administration of the federal securities laws. The Partnership's principal subsidiary is registered as a broker-dealer and investment advisor with the SEC. Much of the regulation of broker-dealers has been delegated to self-regulatory organizations, principally the NASD and national securities exchanges such as the NYSE, which has been designated by the SEC as the Partnership's primary regulator. These self-regulatory organizations adopt rules (which are subject to approval by the SEC) that govern the industry and conduct periodic examinations of the Partnership's operations. Securities firms are also subject to regulation by state securities administrators in those states in which they conduct business. EDJ or an affiliate is registered as a broker-dealer in 50 states, Puerto Rico, Canada and the United Kingdom. Broker-dealers are subject to regulations which cover all aspects of the securities business, including sales methods, trade practices among broker-dealers, use and safekeeping of customer funds and securities, capital structure of securities firms, record-keeping and the conduct of directors, officers and employees. Additional legislation, changes in rules promulgated by the SEC and self-regulatory organizations, or changes in the interpretation or enforcement of existing laws and rules, may directly affect the mode of operation and profitability of broker-dealers. The SEC, self-regulatory organizations and state securities commissions may conduct administrative proceedings which can result in censure, fine, 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 protection of the 9 PART I creditors and stockholders of broker-dealers. In addition, EDJ conducts business in Canada, through a subsidiary partnership which is regulated by the Investment Dealers Association of Canada and in the United Kingdom which is regulated by The Financial Services Authority. As a federally chartered savings and loan, the Association is subject to regulation by the Office of Thrift Supervision ("OTS"). UNIFORM NET CAPITAL RULE. As a broker-dealer and a member firm of the NYSE, the Partnership is subject to the Uniform Net Capital Rule ("Rule") promulgated by the SEC. The 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. The Rule provides for two methods of computing Net Capital and the Partnership has adopted what is generally referred to as the alternative method. Minimum required Net Capital under the alternative method is equal to 2% of the customer debit balances, as defined. The Rule prohibits withdrawal of equity capital whether by payment of dividends, repurchase of stock or other means, if Net Capital would thereafter be less than 5% of customer debit balances. Additionally, certain withdrawals require the consent of the SEC to the extent they exceed defined levels even though such withdrawals would not cause Net Capital to be less than 5% of aggregate debit items. In computing Net Capital, various adjustments are made to exclude assets which are not readily convertible into cash and to provide a conservative statement of other assets such as a company's inventories. Failure to maintain the required Net Capital may subject a firm to suspension or expulsion by the NYSE, the SEC and other regulatory bodies and may ultimately require its liquidation. The Partnership has, at all times, been in compliance with the Net Capital Rule. The firm has other operating subsidiaries, including the Association and broker/dealer subsidiaries in Canada and the United Kingdom. These wholly owned subsidiaries are required to maintain specified levels of liquidity and capital standards. Each subsidiary is in compliance with the applicable regulations as of December 31, 2001. ITEM 2. PROPERTIES The Partnership conducts its headquarters operations from three locations in St. Louis County, Missouri, and one location in Tempe, Arizona, comprising twenty-three separate buildings. Nineteen buildings are owned by the Partnership and four buildings are leased through long-term operating leases. In addition, the Partnership leases its Canadian headquarters facility in Mississauga, Ontario through an operating lease and has a long-term operating lease for its United Kingdom headquarters located in London, England. The Partnership also maintains facilities in 8,127 branch locations (as of January 25, 2002) which are located in the United States, Canada and the United Kingdom and are rented under predominantly cancelable leases. The Partnership believes that its properties are both suitable and adequate to meet the current and future growth projections of the organization. ITEM 3. LEGAL PROCEEDINGS In recent years there has been an increasing incidence of litigation involving the securities industry. Such suits often seek to benefit large classes of industry customers; many name securities dealers as defendants along with exchanges in which they hold membership and seek large sums as damages under federal and state securities laws, anti-trust laws, and common law. Various legal actions are pending against the Partnership, with certain cases claiming substantial damages. These actions are in various stages and the results of such actions cannot be predicted with certainty. In the opinion of management, after consultation with legal counsel, the ultimate resolution of these actions is not expected to have a material adverse impact on the Partnership's operations or financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 10 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is no established public trading market for the Limited or Subordinated Limited Partnership interests and their assignment is prohibited. ITEM 6. SELECTED FINANCIAL DATA The following information sets forth, for the past five years, selected financial data. (All amounts in thousands, except per unit information.) Summary Income Statement Data:
2001 2000 1999 1998* 1997 Revenue $ 2,141,997 $ 2,211,960 $ 1,786,834 $ 1,449,963 $ 1,135,279 Net income $ 149,186 $ 229,823 $ 187,331 $ 199,209 $ 114,184 Net income per weighted average $1,000 equivalent limited partnership unit outstanding $ 96.89 $ 179.21 $ 173.81 $ 274.30 $ 176.06 Weighted average $1,000 equivalent limited partnership units outstanding 236,696 175,436 150,670 103,747 93,962 Net income per weighted average $1,000 equivalent subordinated limited partnership unit outstanding $ 181.70 $ 333.92 $ 325.21 $ 448.17 $ 320.61 Weighted average $1,000 equivalent subordinated limited partnership units outstanding 82,273 63,770 51,741 44,026 37,332 - -----------------------------------------------------------------------------------------------------------------
11 PART II Item 6. Selected Financial Data Summary Balance Sheet Data:
2001 2000 1999 1998* 1997 Total assets $ 3,158,408 $ 3,170,385 $ 2,693,241 $ 2,118,844 $ 1,554,798 =========== =========== =========== =========== =========== Long-term debt $ 46,285 $ 29,618 $ 34,540 $ 41,825 $ 53,350 Other liabilities, exclusive of subordinated liabilities 2,231,807 2,252,961 1,908,117 1,434,020 979,797 Subordinated liabilities 205,600 232,325 259,050 200,275 216,500 Total partnership capital 674,716 655,481 491,534 442,724 305,151 Total liabilities and partnership capital $ 3,158,408 $ 3,170,385 $ 2,693,241 $ 2,118,844 $ 1,554,798 =========== =========== =========== =========== =========== * Net income for 1998 included a $41.0 million gain on investment in Federated Investors. The Partnership acquired a small interest in Federated in 1989 for $1.0 million as a strategic investment. During 1998, the Partnership sold a significant portion of its investment in Federated's initial public offering.
12 PART II ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table summarizes the increase (decrease) in major categories of revenues and expenses for the last two years (dollar amounts in thousands).
2001 vs. 2000 2000 vs. 1999 -------------------------- ------------------------- Amount Percentage Amount Percentage Net Revenue: Commissions $ (160,612) (11)% $ 266,188 23% Principal transactions 105,966 40 (6,469) (2) Investment banking (4,869) (16) 8,592 41 Interest and dividends (48,220) (21) 75,456 51 Other 37,772 14 81,359 41 ---------- --------- Total revenue (69,963) (3) 425,126 24 Interest expense (21,194) (24) 29,227 50 ---------- --------- Net revenue (48,769) (2) 395,899 23 ---------- --------- Operating Expenses: Compensation and benefits (37,233) (3) 213,135 21 Communications and data processing 21,969 10 34,312 19 Occupancy and equipment 28,726 16 48,159 36 Payroll and other taxes 6,584 10 13,175 24 Floor brokerage and clearance fees (3,208) (18) 5,093 41 Other operating expenses 15,030 8 39,533 29 ---------- --------- Total operating expenses 31,868 2 353,407 23 ---------- --------- Net Income $ (80,637) (35)% $ 42,492 23% ============================================================================================================
13 PART II RESULTS OF OPERATIONS (2001 VERSUS 2000) The Partnership's net revenue and net income for the year ended December 31, 2001 decreased from the prior year due primarily to the impact of market conditions which resulted in lower customer activity, lower customer asset values and lower net interest income. Net revenue decreased 2% ($48.8 million) to $2.076 billion and net income decreased 35% ($80.6 million) to $149.2 million. The Partnership classifies its revenues as trade revenue (revenue from buy or sell transactions on securities) and net fee revenue (sources other than trade revenues, net of interest expense). Trade revenue of $1.372 billion and $1.418 billion comprised 66% and 67% of net revenue for 2001 and 2000. Conversely, net fee revenue sources, such as service fees, management fees, IRA fees and net interest income, of $703.7 million and $706.6 million were 34% and 33% of net revenue for 2001 and 2000. Trade revenue decreased 3% ($45.8 million) during 2001 due primarily to a decrease in customer dollars invested. Total customer dollars underlying buy or sell transactions were $50.8 billion during 2001, a 17% ($10.5 billion) decrease from 2000. The impact of lower customer activity was partially offset by an increase in the margin earned on each $1,000 invested, to $26.30 in 2001 from $22.60 in 2000. Year over year, the composition of the product mix, based on customer dollars invested, has shifted from individual equities and CDs, which have lower margins, to higher margin fixed income, mutual funds, and insurance products. Individual equities decreased to 28% from 44%, and CD's decreased to 6% from 11%. Fixed income increased to 33% from 18%, mutual funds increased to 26% from 22%, and insurance increased to 7% from 5%. The Partnership added 1,082 IRs since December 31, 2000, ending 2001 with 8,516 IRs in the United States, Canada and the United Kingdom, an increase of 15%. The increase in IRs partially mitigated the impact of the market downturn on trade revenues. Net fee revenues (fee revenues less interest expense), which include service fees, sub-transfer agent accounting services, revenue sharing agreements with mutual funds and insurance companies, money market management fees, net interest income, IRA custodial fees and other fees, decreased $3.0 million during 2001. Net interest income decreased 20% ($27.0 million) in 2001 due primarily to the impact of rate reductions in the current year narrowing the interest margins combined with a small decrease in customer loans outstanding. Customer loans were $1.9 billion at December 31, 2001 compared to $2.0 billion at December 31, 2000. Service fees decreased 4% ($11.9 million) during 2001 as the underlying value of customer assets was impacted by market conditions. The average of the aggregate customer assets related to service fees decreased from $117.6 billion at December 31, 2000, to $114.6 billion at December 31, 20001. Other fee revenue sources increased 13% ($35.9 million) for 2001 due primarily to growth in revenue from sub-transfer agent accounting services, money market fees, and IRA fees. Focusing on changes in major revenue categories, commissions revenue, including service fees, decreased 11% ($160.6 million) during 2001. Listed and over-the-counter (OTC) agency commissions decreased 33% ($145.3 million), due to the shift in product mix away from individual equities. Mutual fund commissions decreased 1% ($8.9 million) due to the impact of market conditions on service fees. Mutual 14 PART II Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations fund commissions decreased, even though customer dollars invested in mutual funds increased as a percentage of the product mix. Principal transactions revenue increased 40% ($106.0 million) during 2001. The increase is primarily attributable to an increase in corporate, US government and municipal bonds, and mortgage-backed securities, offset by a decrease in CD sales. Other revenue, comprised of various fee revenue sources, increased 14% ($37.8 million) for 2001. Revenue received from money market and subtransfer agent services increased 13% ($26.7 million). Additionally, the number of IRA accounts increased, resulting in custodial fee revenue growth of 26% ($8.0 million). Interest expense decreased 24% ($21.2 million) during 2001, due to a decrease in bank loans outstanding and lower interest rates. The average of the aggregate short-term bank loans outstanding was $272,000 during 2001, compared to $413,000 during 2000. Operating expenses increased 2% ($31.9 million) to $1.9 billion during 2001. Occupancy and equipment expenses increased 16% ($28.7 million) and communications and data processing expenses increased 10% ($22.0 million) during 2001. The Partnership continues to expand its headquarters, branch locations and communications systems to enable it to continue to increase its number of IRs, locations and customers. Compensation costs decreased 3% ($37.2 million). Variable compensation, including bonuses and profit sharing paid to investment representatives, branch office assistants and headquarters associates, which expands and contracts in relation to revenues, net income and profit margin, decreased 54% ($105.9 million) due to the lower revenue and earning levels. Sales compensation decreased 1% ($6.5 million) due to the decrease in trade revenue and service fees. Offsetting these decreases in compensation expense was a 21% ($81.4 million) increase in compensation expense for existing personnel and additional support personnel at both the headquarters and in the branches due to growth in the sales force. On a full time equivalent basis, the firm had 3,748 headquarters associates and 8,632 branch staff as of December 31, 2001, compared to 3,547 headquarters associates and 7,625 branch staff as of December 31, 2000. RESULTS OF OPERATIONS (2000 VERSUS 1999) The Partnership attained record levels of net revenue and net income for the year ended December 31, 2000 due primarily to active securities markets and growth in its sales force. Net revenues increased 23% ($395.9 million) to $2.124 billion and net income increased 23% ($42.5 million) to $229.8 million. The partnership classifies its revenues as trade revenue (revenue from buy or sell transactions on securities) and net fee revenue (sources other than trade revenues). Trade revenue comprised 67% of net revenue for 2000, down from 70% in 1999. Conversely, net fee revenue sources, such as service fees, management fees, IRA fees and net interest income, were 33% of net revenue for 2000, up from 30% in 1999. Trade revenue increased 17% ($202.5 million) during 2000. Trade revenue increased due to an increase in the number of investment representatives (IRs) and customer dollars invested. The Partnership added 1,495 IRs since December 31, 1999 (25%), ending 2000 with 7,434 IRs in the United States, Canada and the United Kingdom. Total customer dollars invested were $61.3 billion during 2000, representing a 15% ($8.1 billion) increase over 1999. The firm experienced record levels of customer activity, net revenue and net income in the first quarter of 2000. Beginning in the second quarter of 2000, the securities 15 PART II Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations markets began to move lower and customer activity slowed. The firm's revenues and net income slowed in the second, third and fourth quarters even though the Partnership continued to expand its sales force. Net fee revenues, which include service fees, revenue sharing agreements with mutual fund and insurance companies, net interest income, IRA custodial fees, subtransfer agent fees and other fees, increased 38% ($193.4 million) during 2000. Underlying net fee revenue is the value of customer assets. Total customer assets increased 7% ($17.1 billion) year over year to $245.7 billion due to market fluctuations and growth in the number of customers served by the Partnership. Additionally, the Partnership's continued expansion in recent years of its product and service offerings has had a positive impact on net fee revenue sources. Focusing on changes in major revenue categories, commissions revenue, including service fees, increased 23% ($266.2 million) during 2000. Mutual fund commissions increased 28% ($165.7 million) during 2000. Listed commissions increased 43% ($81.9 million). The firm experienced growth in commissions due to the highly active securities markets and growth in the number of IRs. Principal transactions revenue decreased 2% ($6.5 million) during 2000. The decrease is due primarily to a shift away from fixed income products and towards equities and mutual funds. Investment banking revenues increased 41% ($8.6 million), due primarily to an increased number of corporate debt underwritings ($7.0 million or 80%). Interest and dividend revenues increased 51% ($75.5 million) during 2000. Interest from customer loans increased 60% ($74.4 million) as the Partnership's customer loan balances increased 22% ($363.9 million) year over year to $2.0 billion at December 31, 2000. The average of customer loan balances was $1.9 billion during 2000, compared to $1.4 billion during 1999. Interest expense increased 50% ($29.2 million) during 2000, due primarily to an increase in bank loans outstanding to fund customer loan balances. The average of the aggregate short-term bank loans outstanding was $413,000 during 2000, compared to $148,000 during 1999. Other revenue, comprised of various fee revenue sources, increased 41% ($81.4 million) during 2000. Fee revenue received from money market, mutual fund and insurance products increased 49% ($69.6 million). Additionally, the number of IRA accounts increased, resulting in custodial fee revenue growth of 39% ($8.6 million) during the year. Operating expenses increased 23% ($353.4 million) to $1.9 billion during 2000. Compensation costs represent 60% ($213.1 million) of the total expense growth for the year. Sales compensation increased 17% ($103.3 million) due to increased revenue and an increased number of IRs. Variable compensation, including bonuses and profit sharing paid to IRs, branch office assistants (BOAs) and headquarters associates, which expands and contracts in relation to revenues, net income and the firm's profit margin, increased 16% ($26.7 million) due to the increase in the Partnership's revenue and earnings levels. Remaining increases in compensation expense are primarily attributable to increased payroll for existing personnel and additional personnel at both the headquarters and in the branches as the firm grows its sales force. Occupancy and equipment expenses increased 36% ($48.2 million), comprising 14% of the total operating expense increase. Additionally, communications and data processing expenses increased 19% ($34.3 million), accounting for 10% of the total operating expense growth for the year. The Partnership continues to expand its headquarters, branch locations and communications systems to enable it to continue to increase the number of IRs, locations and customers. 16 PART II Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES The Partnership's equity capital at December 31, 2001, excluding the reserve for anticipated withdrawals, was $638.9 million, compared to $603.1 million at December 31, 2000. Equity capital has increased primarily due to retention of General Partner earnings ($30.7 million) and to an increase in Subordinated Limited Partner capital ($12.0 million), offset by redemption of Limited Partner interests ($6.9 million). At December 31, 2001, the Partnership had $196.5 million in cash and cash equivalents. Lines of credit are in place aggregating $1.195 billion ($1.145 billion of which is through uncommitted lines of credit). Actual borrowing availability is based on securities owned and customers' margin securities which serve as collateral for the loans. No amounts were outstanding under these lines at December 31, 2001. The Association had loans from The Federal Home Loan Bank of $13.7 million as of December 31, 2001, which are secured by mortgage loans. The Partnership also participates in securities loaned transactions, under which it receives collateral in the form of cash or other collateral in an amount in excess of the market value of securities loaned. Securities loaned outstanding were $132.2 million at December 31, 2001, for which the Partnership received cash collateral. A substantial portion of the Partnerships' assets are primarily liquid, consisting mainly of cash and assets readily convertible into cash. These assets are financed primarily by customer credit balances, equity capital, bank lines of credit, securities loaned and other payables. The Partnership has $180.7 million in U.S. agency and treasury securities (Investment Securities) which can be sold to meet liquidity needs. The Partnership believes that the liquidity provided by existing cash balances, borrowing arrangements, and investment securities will be sufficient to meet the Partnership's capital and liquidity requirements. In October 2001 the Partnership borrowed $25.0 million in long-term debt, interest paid quarterly at a variable rate (3.67% at December 31, 2001) based on LIBOR plus applicable margin, due in annual installments ranging from $4.0 million to $6.0 million, with a final installment on September 1, 2006. Proceeds were used to fund equipment for the Partnership's regional headquarters and data center in Tempe, Arizona. The Partnership's growth in recent years has been financed through sales of limited partnership interests to its employees, retention of earnings, private placements of subordinated debt, long-term secured debt and operating leases under which the firm rents facilities, furniture, fixtures, computers and communication equipment. Included in the Partnership's operating lease commitments and contingent residual payments are synthetic leasing agreements for two buildings, one in Tempe, Arizona, and one being constructed in St. Louis, Missouri. The lessor of the buildings, along with a group of financial institutions, has committed to fund the construction of the facilities. The total cost of the facilities covered by these leases is estimated to be $62.4 million, of which $52.7 million has been incurred by the lessor as of December 31, 2001. The synthetic leases have initial terms of five years, with renewal options for two additional terms of up to five years by either the lessor or the Partnership, subject to the approval of the other party. The Partnership may, at its option, purchase the buildings during or at the end of the terms of the leases at approximately the amount expended to construct the facilities. If the Partnership does not exercise the purchase option by or at the end of the lease, the Partnership may be obligated to pay up to $27.5 million of the building's cost as determined at the lease inception date for the Tempe, Arizona, facility. Additionally, should the Partnership terminate its obligation during the construction phase of the St. Louis, Missouri, facility, it has a commitment to pay up to $18.2 million of the construction costs incurred as of December 31, 2001. 17 PART II Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations The following table summarizes the Partnership's financing commitments and obligations, excluding customer accounts due on demand.
Payments Due by Period ---------------------- Total 2002 2003-2006 Thereafter -------------- -------------- -------------- -------------- Bank loans $ 13,679 $ - $ 2,100 $ 11,579 Securities loaned 132,231 132,231 - - Long-term debt 46,285 9,776 32,609 3,900 Liabilities subordinated to claims of general creditors 205,600 26,725 130,375 48,500 Rental commitments 437,900 115,800 181,400 140,700 Contingent residual payments 45,700 18,200 27,500 - ---------- ---------- ---------- ---------- Total financing commitments and obligations $ 881,395 $ 302,732 $ 373,984 $ 204,679 ========== ========== ========== ==========
For the year ended December 31, 2001, cash and cash equivalents increased $20.2 million. Cash provided by operating activities was $287.2 million. Sources include net income ($149.2 million) and net receivable from customers ($348.1 million). These sources were partially offset by a decrease in bank loans ($204.6 million). Cash used in investing activities consisted of $127.0 million in capital expenditures primarily attributable to the firm's expansion of its headquarters and branch facilities due to growth in the sales force, and to investment in information technology hardware and software. Cash used in financing activities was $140.0 million, primarily for partnership withdrawals ($135.1 million) and repayment of subordinated debt ($26.7 million), partially offset by issuance of long-term secured debt ($25.0 million) and issuance of Subordinated Limited Partner interests ($12.5 million). For the year ended December 31, 2000, cash and cash equivalents increased $33.8 million. Cash provided by operating activities was $221.5 million. Sources include net income ($229.8 million), increased bank loans ($108.4 million) and securities loaned ($94.4 million) and proceeds from disposition of securities purchased under agreements to resell ($75.0 million). These sources were partially offset by a decrease in securities sold under agreements to repurchase ($163.9 million), and an increase in net receivable from customers ($120.0 million) due primarily to increased customer loan balances. Cash used for investing activities consisted of $90.1 million in capital expenditures primarily attributable to the Partnership's expansion of its headquarters and branch facilities required as the Partnership grows its sales force. Cash used in financing activities was $97.5 million consisting of partnership withdrawals and distributions ($175.0 million) and repayment of subordinated debt ($26.7 million), partially offset by the issuance of Limited Partner and Subordinated Limited Partner interests ($114.0 million). For the year ended December 31, 1999, cash and cash equivalents decreased $1.2 million. Cash flows from operating activities provided $168.1 million. Net income adjusted for depreciation provided $246.7 million, securities sold under agreements to repurchase provided $188.9 million, and borrowings under the Firm's bank lines of credit provided $102.9 million. Receivable from customers, net payables to customers, used $386.3 million. Investing activities used $82.2 million for the purchase of fixed assets. Cash flows from financing activities used $87.0 million for withdrawals and distributions of partnership capital, net of issuance of subordinated limited partnership interests and $75.0 million in subordinated debt. As a result of its activities as a broker/dealer, EDJ, the Partnership's principal subsidiary, is subject to the Net Capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934 and the capital rules of the 18 PART II Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations New York Stock Exchange. Under the alternative method permitted by the rules, EDJ must maintain minimum Net Capital, as defined, equal to the greater of $250 or 2% of aggregate debit items arising from customer transactions. The Net Capital rule also provides that partnership capital may not be withdrawn if resulting Net Capital would be less than 5% of aggregate debit items. Additionally, certain withdrawals require the consent of the SEC to the extent they exceed defined levels even though such withdrawals would not cause Net Capital to be less than 5% of aggregate debit items. At December 31, 2001, EDJ's Net Capital of $395.0 million was 21% of aggregate debit items and its Net Capital in excess of the minimum required was $358.2 million. Net Capital as a percentage of aggregate debits after anticipated withdrawals was 21%. Net capital and the related capital percentage may fluctuate on a daily basis. CRITICAL ACCOUNTING POLICIES The Partnership's financial statements are prepared in accordance with the accounting principles generally accepted in the United States, which may require judgement and involve estimation processes to determine its net assets and which affect its results of operations. Included in management's discussion and analysis of financial condition and results of operations, and in the quantitative and qualitative disclosures about market risk, and in the notes to the financial statements (See Note 1 to the consolidated financial statements), are discussions of the Partnership's critical accounting policies. There were no material changes in the Partnership's overall financial condition during the year ended December 31, 2001, compared with the year ended December 31, 2000. The Partnership's consolidated statement of financial condition is comprised primarily of cash and assets readily convertible into cash. Securities inventories are carried at market value and are readily marketable. Customer margin accounts are collateralized by marketable securities. Other customer receivables and receivables and payables with other broker/dealers normally settle on a current basis. Liabilities, including amounts payable to customers, checks and accounts payable and accrued expenses are sources of funds to the Partnership. These liabilities, to the extent not utilized to finance assets, are available to meet liquidity needs and provide funds for short-term investments, which favorably impacts profitability. THE EFFECTS OF INFLATION The Partnership's net assets are primarily monetary, consisting of cash, securities inventories and receivables less liabilities. Monetary net assets are primarily liquid in nature and would not be significantly affected by inflation. Inflation and future expectations of inflation influence securities prices, as well as activity levels in the securities markets. As a result, profitability and capital may be impacted by inflation and inflationary expectations. Additionally, inflation's impact on the Partnership's operating expenses may affect profitability to the extent that additional costs are not recoverable through increased prices of services offered by the Partnership. NEW ACCOUNTING STANDARDS The Financial Accounting Standards Board ("FASB") has issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), effective for the Partnership in 2002. SFAS 142 addresses how goodwill and other intangible assets should be accounted for in the financial statements. The Partnership does not expect SFAS 142 to have a significant effect on its consolidated financial position, results of operations or cash flows. Also, the FASB has issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), effective for the Partnership in 2002. SFAS 144 addresses financial accounting and reporting for the impairment of long-lived assets and for 19 PART II Item 7. Management's Discussion And Analysis of Financial Condition and Results of Operations long-lived assets to be disposed of. The Partnership does not expect SFAS 144 to have a significant effect on its consolidated financial position, results of operations or cash flows. FORWARD-LOOKING STATEMENTS The Management's Financial Discussion contains forward-looking statements within the meaning of federal securities laws. Actual results are subject to risks and uncertainties, including both those specific to the Partnership and those specific to the industry which could cause results to differ materially from those contemplated. The risks and uncertainties include, but are not limited to, general economic conditions, actions of competitors, regulatory actions, changes in legislation and technology changes. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. The Partnership does not undertake any obligation to publicly update any forward-looking statements. ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The SEC issued market risk disclosure requirements to enhance disclosures of accounting policies for derivatives and other financial instruments and to provide quantitative and qualitative disclosures about market risk inherent in derivatives and other financial instruments. Various levels of management within the Partnership manage the firm's risk exposure. Position limits in trading and inventory accounts are established and monitored on an ongoing basis. Credit risk related to various financing activities is reduced by the industry practice of obtaining and maintaining collateral. The Partnership monitors its exposure to counterparty risk through the use of credit exposure information, the monitoring of collateral values and the establishment of credit limits. The Partnership maintains receivables from customers, and payable to customers, as described in Note 2 to the Consolidated Financial Statements, and inventory securities as detailed in Note 5 to the Consolidated Financial Statements. The Partnership earns interest on customer margin account balances, and pays interest on certain credit balances in customer accounts. At December 31, 2001, amounts receivable from customers were $1.881 billion, amounts payable to customers were $1.603 billion, and the fair value of inventory securities was $118.9 million in long positions and $35.3 million in short positions. The Partnership performed an analysis of its financial instruments and assessed the related interest rate risk and materiality in accordance with the rules. Based on this analysis, in the opinion of management, the risk associated with the Partnership's financial instruments at December 31, 2001 will not have a material adverse effect on the consolidated financial position or results of operations of the Partnership. 20 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements Included in this Item
Page No. Report of Independent Public Accountants...................................... 22 Consolidated Statements of Financial Condition as of December 31, 2001 and 2000.................................................... 23 Consolidated Statements of Income for the years ended December 31, 2001, 2000 and 1999.............................................. 25 Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999.............................................. 26 Consolidated Statements of Changes in Partnership Capital for the years ended December 31, 2001, 2000 and 1999.......................... 27 Notes to Consolidated Financial Statements.................................... 28
21 PART II Item 8. Financial Statements And Supplementary Data REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To The Jones Financial Companies, L.L.L.P. We have audited the accompanying consolidated statements of financial condition of The Jones Financial Companies, L.L.L.P. (a Missouri Limited Liability Limited Partnership) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, cash flows and changes in partnership capital for each of the three years in the period ended December 31, 2001. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the 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, the financial statements referred to above present fairly, in all material respects, the financial position of The Jones Financial Companies, L.L.L.P. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations, cash flows and the changes in their partnership capital for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP St. Louis, Missouri, February 22, 2002 22 PART II Item 8. Financial Statements And Supplementary Data THE JONES FINANCIAL COMPANIES, L.L.L.P. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ASSETS
December 31, December 31, (Amounts in thousands) 2001 2000 Cash and cash equivalents $ 196,508 $ 176,356 Securities purchased under agreements to resell 80,000 - Receivable from: Customers 1,881,021 2,008,469 Brokers, dealers and clearing organizations 80,088 80,626 Mortgages and loans 100,782 98,946 Securities owned, at market value Inventory securities 118,872 118,260 Investment securities 180,719 203,741 Equipment, property and improvements 298,072 248,290 Other assets 222,346 235,697 ----------- ----------- TOTAL ASSETS $ 3,158,408 $ 3,170,385 =========== =========== The accompanying notes are an integral part of these statements.
23 PART II Item 8. Financial Statements And Supplementary Data THE JONES FINANCIAL COMPANIES, L.L.L.P. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION LIABILITIES AND PARTNERSHIP CAPITAL
December 31, December 31, (Amounts in thousands) 2001 2000 Bank loans $ 13,679 $ 218,314 Securities sold under agreements to repurchase - 24,969 Securities loaned 132,231 140,596 Payable to: Customers 1,602,726 1,382,088 Brokers, dealers and clearing organizations 41,990 22,268 Depositors 103,950 87,550 Securities sold, not yet purchased, at market value 35,251 18,064 Accounts payable and accrued expenses 121,558 126,119 Accrued compensation and employee benefits 180,422 232,993 Long-term debt 46,285 29,618 ----------- ----------- 2,278,092 2,282,579 ----------- ----------- Liabilities subordinated to claims of general creditors 205,600 232,325 ----------- ----------- Partnership capital: Limited partners 233,228 240,144 Subordinated limited partners 82,455 70,405 General partners 323,261 292,541 ----------- ----------- 638,944 603,090 Partnership capital reserved for anticipated withdrawals 35,772 52,391 ----------- ----------- TOTAL PARTNERSHIP CAPITAL 674,716 655,481 ----------- ----------- TOTAL LIABILITIES AND CAPITAL $ 3,158,408 $ 3,170,385 =========== =========== The accompanying notes are an integral part of these statements.
24 PART II Item 8. Financial Statements And Supplementary Data THE JONES FINANCIAL COMPANIES, L.L.L.P. CONSOLIDATED STATEMENTS OF INCOME
Years Ended ------------------------------------------- (Amounts in thousands, December 31, December 31, December 31, except per unit information) 2001 2000 1999 Net revenue: Commissions $ 1,253,862 $ 1,414,474 $ 1,148,286 Principal transactions 370,327 264,361 270,830 Investment banking 24,676 29,545 20,953 Interest and dividends 176,277 224,497 149,041 Other 316,855 279,083 197,724 ----------- ----------- ----------- Total revenue 2,141,997 2,211,960 1,786,834 Interest expense 66,468 87,662 58,435 ----------- ----------- ----------- Net revenue 2,075,529 2,124,298 1,728,399 ----------- ----------- ----------- Operating expenses: Compensation and benefits 1,200,225 1,237,458 1,024,323 Communications and data processing 233,224 211,255 176,943 Occupancy and equipment 211,387 182,661 134,502 Payroll and other taxes 74,105 67,521 54,346 Floor brokerage and clearance fees 14,376 17,584 12,491 Other operating expenses 193,026 177,996 138,463 ----------- ----------- ----------- Total operating expenses 1,926,343 1,894,475 1,541,068 ----------- ----------- ----------- Net income $ 149,186 $ 229,823 $ 187,331 =========== =========== =========== Net income allocated to: Limited partners $ 22,935 $ 31,440 $ 26,189 Subordinated limited partners 14,949 21,294 16,827 General partners 111,302 177,089 144,315 ----------- ----------- ----------- $ 149,186 $ 229,823 $ 187,331 =========== =========== =========== Net income per weighted average $1,000 equivalent partnership unit outstanding: Limited partners $ 96.89 $ 179.21 $ 173.81 =========== =========== =========== Subordinated limited partners $ 181.70 $ 333.92 $ 325.21 =========== =========== =========== Weighted average $1,000 equivalent partnership units outstanding: Limited partners 236,696 175,436 150,670 =========== =========== =========== Subordinated limited partners 82,273 63,770 51,741 =========== =========== =========== The accompanying notes are an integral part of these statements.
25 PART II Item 8. Financial Statements And Supplementary Data THE JONES FINANCIAL COMPANIES, L.L.L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended ------------------------------------------- December 31, December 31, December 31, (Amounts in thousands) 2001 2000 1999 CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: Net income $ 149,186 $ 229,823 $ 187,331 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 77,237 66,643 59,356 Changes in assets and liabilities: Securities purchased under agreements to resell (80,000) 75,000 40,000 Securities sold under agreements to repurchase (24,969) (163,911) 188,880 Net receivable from customers 348,086 (120,008) (386,330) Net receivable from brokers, dealers and clearing organizations 20,260 (43,848) 8,236 Receivable from mortgages and loans (1,836) (16,222) (13,902) Securities owned, net 39,597 9,985 (55,099) Other assets 13,351 (87,879) (36,194) Bank loans (204,635) 108,417 102,930 Securities loaned (8,365) 94,385 2,560 Payable to depositors 16,400 10,298 3,100 Accounts payable and other accrued expenses (57,132) 58,792 67,210 ---------- ---------- ---------- Net cash provided by operating activities 287,180 221,475 168,078 ---------- ---------- ---------- CASH FLOWS USED IN INVESTING ACTIVITIES: Purchase of equipment, property and improvements (127,019) (90,141) (82,247) ---------- ---------- ---------- Net cash used in investing activities (127,019) (90,141) (82,247) ---------- ---------- ---------- CASH FLOWS USED IN FINANCING ACTIVITIES: Issuance of long-term debt 25,000 - - Repayment of long-term debt (8,333) (4,922) (7,285) Issuance of subordinated liabilities - - 75,000 Repayment of subordinated liabilities (26,725) (26,725) (16,225) Issuance of partnership interests 12,450 114,014 8,297 Redemption of partnership interests (7,316) (4,937) (4,453) Withdrawals and distributions from partnership capital (135,085) (174,953) (142,365) ---------- ---------- ---------- Net cash used in financing activities (140,009) (97,523) (87,031) ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 20,152 33,811 (1,200) CASH AND CASH EQUIVALENTS, Beginning of year 176,356 142,545 143,745 End of year $ 196,508 $ 176,356 $ 142,545 ========== ========== ========== Cash paid for interest $ 67,523 $ 87,479 $ 55,795 The accompanying notes are an integral part of these statements.
26 PART II Item 8. Financial Statements And Supplementary Data THE JONES FINANCIAL COMPANIES, L.L.L.P. CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Subordinated Limited Limited General Partnership Partnership Partnership (Amounts in thousands) Capital Capital Capital Total Balance, December 31, 1998 $ 152,732 $ 44,896 $ 204,734 $ 402,362 Issuance of partnership interests - 8,297 - 8,297 Redemption of partnership interests (3,723) (730) - (4,453) Net income 26,189 16,827 144,315 187,331 Withdrawals and distributions (10,278) (11,805) (79,920) (102,003) Reserved for anticipated withdrawals (15,911) (5,022) (25,464) (46,397) ---------- ---------- ---------- ----------- Balance, December 31, 1999 149,009 52,463 243,665 445,137 Issuance of partnership interests 95,572 18,442 - 114,014 Redemption of partnership interests (4,437) (500) - (4,937) Net Income 31,440 21,294 177,089 229,823 Withdrawals and distributions (10,867) (15,496) (102,193) (128,556) Reserved for anticipated withdrawals (20,573) (5,798) (26,020) (52,391) ---------- ---------- ---------- ----------- Balance, December 31, 2000 240,144 70,405 292,541 603,090 Issuance of partnership interests - 12,450 - 12,450 Redemption of partnership interests (6,916) (400) - (7,316) Net Income 22,935 14,949 111,302 149,186 Withdrawals and distributions (8,445) (10,750) (63,499) (82,694) Reserved for anticipated withdrawals (14,490) (4,199) (17,083) (35,772) ---------- ---------- ---------- ----------- Balance, December 31, 2001 $ 233,228 $ 82,455 $ 323,261 $ 638,944 ========== ========== ========== =========== The accompanying notes are an integral part of these statements.
27 PART II Item 8. Financial Statements And Supplementary Data THE JONES FINANCIAL COMPANIES, L.L.L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except per unit information) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE PARTNERSHIP'S BUSINESS AND BASIS OF ACCOUNTING. The accompanying consolidated financial statements include the accounts of The Jones Financial Companies, L.L.L.P. and all wholly owned subsidiaries (the "Partnership"). All material intercompany balances and transactions have been eliminated. Investments in nonconsolidated companies which are at least 20% owned are accounted for under the equity method. The Partnership's principal operating subsidiary, Edward D. Jones & Co., L.P. ("EDJ"), is engaged in business as a registered broker/dealer primarily serving individual investors. The Partnership derives its revenues from the sale of listed and unlisted securities, and insurance products, investment banking, principal transactions, and is a distributor of mutual fund shares. The Partnership conducts business throughout the United States, Canada and the United Kingdom with its customers, various brokers, dealers, clearing organizations, depositories and banks. The financial statements have been prepared using the accrual basis of accounting which requires the use of certain estimates by management in determining the Partnership's assets, liabilities, revenues and expenses. TRANSACTIONS. The Partnership's securities activities involve execution, settlement and financing of various securities transactions for customers. The related revenue and expenses are recorded on a trade date basis. The Partnership may be exposed to risk of loss in the event customers, other brokers and dealers, banks, depositories or clearing organizations are unable to fulfill contractual obligations. For transactions in which it extends credit to customers, the Partnership seeks to control the risks associated with these activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. Boone National Savings and Loan Association, F.A. (the "Association"), a wholly owned subsidiary of the Partnership, makes commercial, real estate, and other loans to individuals primarily to customers in Central Missouri. Additionally, the Association offers trust services to EDJ customers through its division, the Edward Jones Trust Co. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE. The Partnership participates in short-term resale agreements and repurchase agreements collateralized by U.S. government and agency securities. The market value of the underlying collateral as determined daily, plus accrued interest thereon, must equal or exceed 102% of the carrying amount of the transaction. It is the Partnership's policy to have such underlying collateral deposited in its accounts at its custodian banks. Repurchase transactions require the Partnership to deposit collateral with the lender. Resale and repurchase agreements are carried at the amount at which the securities will be subsequently resold/repurchased as specified in the agreements. SECURITIES-LENDING ACTIVITIES. Securities borrowed and securities loaned transactions are reported as collateralized financings. Securities borrowed transactions require the Partnership to deposit cash or other collateral with the lender. With respect to securities loaned, the Partnership receives collateral in the form of cash or other collateral in an amount in excess of the market value of securities loaned. The 28 PART II Item 8. Financial Statements And Supplementary Data Partnership monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as necessary. COLLATERAL. The Partnership continues to report as assets collateral it has pledged in secured borrowings and other arrangements when the secured party cannot sell or repledge the assets or the Partnership can substitute collateral or otherwise redeem it on short notice. The Partnership does not report as an asset collateral it has received in secured lending and other arrangements because the debtor typically has the right to redeem or substitute the collateral on short notice. SECURITIES OWNED. Securities owned are valued at current market prices. EQUIPMENT, PROPERTY AND IMPROVEMENTS. Equipment, including furniture and fixtures, is recorded at cost and depreciated using straight-line and accelerated methods over estimated useful lives of five to seven years. Buildings are depreciated using the straight-line method over their useful lives, which are estimated at thirty years. Property improvements are amortized based on the remaining life of the property or economic useful life of the improvement, whichever is less. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged against income as incurred, whereas significant enhancements are capitalized. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be fully recoverable. If impairment is indicated, the asset value is written down to its fair market value. SEGREGATED CASH. Cash of $51 was segregated in a special reserve bank account for the benefit of customers as of December 31, 2001 and 2000, under rule 15c3-3 of the Securities and Exchange Commission. INCOME TAXES. Income taxes have not been provided for in the consolidated financial statements since The Jones Financial Companies, L.L.L.P. is organized as a partnership, and each partner is liable for their own tax payments. NOTE 2 - RECEIVABLE FROM AND PAYABLE TO CUSTOMERS Accounts receivable from and payable to customers include margin balances and amounts due on uncompleted transactions. The value of securities owned by customers and held as collateral for these receivables is not reflected in the financial statements. Substantially all amounts payable to customers are subject to withdrawal upon customer request. The Partnership pays interest on certain credit balances in customer accounts. 29 PART II Item 8. Financial Statements And Supplementary Data NOTE 3 - RECEIVABLE FROM AND PAYABLE TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS The components of receivable from and payable to brokers, dealers and clearing organizations are as follows:
2001 2000 --------- --------- Receivable from clearing organizations $ 50,849 $ 27,070 Securities failed to deliver 17,385 11,921 Dividends receivable 7,843 40,026 Deposits paid for securities borrowed 2,331 235 Other 1,680 1,374 --------- --------- Total receivable from brokers, dealers and clearing organizations $ 80,088 $ 80,626 ========= ========= Securities failed to receive $ 32,071 $ 17,467 Other 9,919 4,801 --------- --------- Total payable to brokers, dealers and clearing organizations $ 41,990 $ 22,268 ========= =========
Receivable from clearing organizations represents balances and deposits with United States clearing organizations and the Partnership's Canadian carrying broker. "Fails" represent the contract value of securities which have not been received or delivered by settlement date. NOTE 4 - RECEIVABLE FROM MORTGAGES AND LOANS Receivable from mortgages and loans is comprised of the Association's primarily adjustable rate mortgage loans, commercial and other loans, net of discounts, deferred origination fees and the allowance for loan losses. The carrying amounts of the receivables approximate their fair values. 30 PART II Item 8. Financial Statements And Supplementary Data NOTE 5 - SECURITIES OWNED Securities owned are summarized as follows (at market value):
2001 2000 -------------------------- -------------------------- Securities Securities Sold, Sold, Securities not yet Securities not yet Owned Purchased Owned Purchased ----------- ----------- ----------- ----------- Inventory Securities: Certificates of deposit $ 4,515 $ 1,553 $ 6,607 $ 3,927 U.S. and Canadian government and U.S. agency obligations 16,849 866 15,561 1,858 State and municipal obligations 58,935 24,577 62,174 233 Corporate bonds and notes 24,540 2,308 27,310 8,829 Equities 2,833 2,810 2,660 1,879 Collateralized Mortgage Obligations 7,368 - 704 - Other 3,832 3,137 3,244 1,338 ----------- ----------- ----------- ----------- $ 118,872 $ 35,251 $ 118,260 $ 18,064 =========== =========== =========== =========== Investment Securities: U.S. government and agency obligations $ 180,719 $ 203,741 =========== ===========
The Partnership attempts to reduce its exposure to market price fluctuations of its inventory securities through the sale of U.S. government securities and, to a limited extent, the sale of fixed income futures contracts. The amount of the securities purchased or sold will fluctuate on a daily basis due to changes in inventory securities owned, interest rates and market conditions. The futures contracts are settled daily, and any gain or loss is recognized in principal transactions revenue. The notional amount of futures contracts sold was $12,000 and $16,000 at December 31, 2001 and 2000, respectively. 31 PART II Item 8. Financial Statements And Supplementary Data NOTE 6 - EQUIPMENT, PROPERTY AND IMPROVEMENTS Equipment, property and improvements are summarized as follows:
2001 2000 ------------ ----------- Land $ 12,749 $ 13,599 Buildings and improvements 211,522 170,059 Equipment, furniture and fixtures 487,957 401,985 ------------ ----------- Total equipment, property and improvements 712,228 585,643 Accumulated depreciation and amortization (414,156) (337,353) ------------ ----------- Equipment, property and improvements, net $ 298,072 $ 248,290 ============ ===========
32 PART II Item 8. Financial Statements And Supplementary Data NOTE 7 - BANK LOANS The Partnership borrows from banks on a short-term basis primarily to finance customer margin balances and inventory securities. As of December 31, 2001, the Partnership had bank lines of credit aggregating $1,195,000 of which $1,145,000 were through uncommitted facilities. Actual borrowing availability is primarily based on the value of securities owned and customers' margin securities. At December 31, 2001, collateral with a market value of $1,487,000 was available to support secured bank loans of EDJ. Total bank loans outstanding under these lines were $0 and $204,000 as of December 31, 2001 and 2000, respectively. Additionally, the Association had loans from The Federal Home Loan Bank of $13,679 and $14,314 as of December 31, 2001 and 2000, respectively, which are secured by mortgage loans. Bank loans outstanding approximate their fair value. Interest is at a fluctuating rate (weighted average rate of 5.8% and 7.1% at December 31, 2001 and 2000, respectively) based on short-term lending rates. The average of the aggregate short-term bank loans outstanding was $272,000, $413,000 and $148,000 and the average interest rate was 4.6%, 7.0%, and 5.9% for the years ended December 31, 2001, 2000 and 1999, respectively. NOTE 8 - PAYABLE TO DEPOSITORS Amounts payable to depositors are comprised of the Association's various savings instruments offered to its customers, which include transaction accounts and certificates of deposit with maturities ranging from 90 days to 72 months. The carrying amounts of the deposits approximate their fair values. NOTE 9 - LONG-TERM DEBT Long-term debt is comprised of the following:
2001 2000 --------- --------- Note payable, interest paid quarterly at a variable rate (3.67% at December 31, 2001) based on LIBOR plus applicable margin, due in annual installments ranging from $4,000 to $6,000, with a final installment on September 1, 2006. $ 25,000 $ - Note payable, secured by equipment, interest paid monthly at a variable rate (8.22% at December 31, 2000) based on LIBOR plus applicable margin, with a final installment on July 30, 2001. - 3,000 Notes payable, secured by real estate, fixed rates of 8.23% and 6.82%, principal and interest due in monthly installments, with a final installment on April 5, 2008. 15,461 17,296 Notes payable, secured by real estate, fixed rates of 8.72% and 6.52%, principal and interest due in monthly installments, with a final installment on June 5, 2003. 5,824 9,322 --------- --------- $ 46,285 $ 29,618 ========= =========
33 PART II Item 8. Financial Statements And Supplementary Data Scheduled annual principal payments, as of December 31, 2001, are as follows:
Principal Year Payment ---------- ----------- 2002 $ 9,776 2003 9,154 2004 7,299 2005 7,480 2006 8,676 Thereafter 3,900 ----------- $ 46,285 ===========
The real estate debt of $21,285 at December 31, 2001 is collateralized by land and buildings with a carrying value of $35,000 at December 31, 2001. Certain agreements contain restrictions that among other things, require maintenance of a fixed charge coverage ratio and minimum net capital. The carrying amounts of the long-term debt approximate their fair value as of December 31, 2001 and 2000. NOTE 10 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS Liabilities subordinated to the claims of general creditors consist of:
2001 2000 ----------- ----------- Capital notes, 8.18%, due in annual installments of $10,500, with a final installment on September 1, 2008. $ 73,500 $ 84,000 Capital notes, 7.95%, due in annual installments of $10,225, with a final installment of $10,200 on April 15, 2006. 51,100 61,325 Capital notes, 8.96%, due in annual installments of $6,000, with a final installment on May 1, 2002. 6,000 12,000 Capital notes, with rates ranging from 7.51% to 7.79%, due in annual installments ranging from $3,700 to $25,000, commencing on August 15, 2005, with a final installment of $3,700 on August 15, 2011. 75,000 75,000 ----------- ----------- $ 205,600 $ 232,325 =========== ===========
34 PART II Item 8. Financial Statements And Supplementary Data Required annual principal payments, as of December 31, 2001, are as follows:
Principal Year Payment ---------- ----------- 2002 $ 26,725 2003 20,725 2004 20,725 2005 43,225 2006 45,700 Thereafter 48,500 ----------- $ 205,600 ===========
The capital note agreements contain restrictions that among other things, require maintenance of certain financial ratios, restrict encumbrance of assets and creation of indebtedness and limit the withdrawal of partnership capital. As of December 31, 2001, the Partnership was required, under the note agreements, to maintain minimum partnership capital of $300,000 and Net Capital as computed in accordance with the uniform Net Capital rule of 5% of aggregate debit items "as defined," or $91,922 (see Note 12). The subordinated liabilities are subject to cash subordination agreements approved by the New York Stock Exchange and, therefore, are included in the Partnership's computation of Net Capital under the Securities and Exchange Commission's uniform Net Capital rule. The Partnership has estimated the fair value of the subordinated capital notes to be approximately $213,000 and $247,000 as of December 31, 2001 and 2000, respectively. NOTE 11 - PARTNERSHIP CAPITAL The limited partnership capital, consisting of 233,228 and 240,144 $1,000 units at December 31, 2001 and 2000, respectively, is held by current and former employees and general partners of the Partnership. Each limited partner receives interest at seven and one-half percent on the principal amount of capital contributed and a varying percentage of the net income of the Partnership. Interest expense includes $17,754, $13,423 and $11,300, for the years ended December 31, 2001, 2000 and 1999, respectively, paid to limited partners on capital contributed. The subordinated limited partnership capital, consisting of 82,455 and 70,405 $1,000 units at December 31, 2001 and 2000, respectively, is held by current and former general partners of the Partnership. Each subordinated limited partner receives a varying percentage of the net income of the Partnership. The subordinated limited partner capital is subordinated to the limited partnership capital. Under the Partnership agreement, a withdrawing limited partner's capital is payable in three equal annual installments; a withdrawing subordinated limited or general partner's capital is payable in four equal annual installments. The repayments of withdrawing limited, subordinated limited and general partners' capital commence at their withdrawal dates. NOTE 12 - NET CAPITAL REQUIREMENTS As a result of its activities as a broker/dealer, EDJ is subject to the Net Capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934 and the capital rules of the New York Stock Exchange. Under the alternative method permitted by the rules, EDJ must maintain minimum Net Capital, as defined, equal to 35 PART II Item 8. Financial Statements And Supplementary Data the greater of $250 or 2% of aggregate debit items arising from customer transactions. The Net Capital rule also provides that partnership capital may not be withdrawn if resulting Net Capital would be less than 5% of aggregate debit items. Additionally, certain withdrawals require the consent of the SEC to the extent they exceed defined levels even though such withdrawals would not cause Net Capital to be less than 5% of aggregate debit items. At December 31, 2001, EDJ's Net Capital of $395,001 was 21% of aggregate debit items and its Net Capital in excess of the minimum required was $358,232. Net Capital as a percentage of aggregate debits after anticipated withdrawals was also 21%. Net Capital and the related capital percentage may fluctuate on a daily basis. The firm has other operating subsidiaries, including the Association and broker/dealer subsidiaries in Canada and the United Kingdom. These wholly owned subsidiaries are required to maintain specified levels of liquidity and capital standards. Each subsidiary is in compliance with the applicable regulations as of December 31, 2001. NOTE 13 - EMPLOYEE BENEFIT PLAN The Partnership maintains a profit sharing plan covering all eligible employees. Contributions to the plan are at the discretion of the Partnership. Additionally, participants may contribute on a voluntary basis. Approximately $36,000, $58,000 and $47,000 were provided by the Partnership for its contributions to the plan for the years ended December 31, 2001, 2000 and 1999, respectively. NOTE 14 - COMMITMENTS The Partnership leases headquarters office space, furniture, computers and communication equipment under various operating leases. Additionally, branch offices are leased generally for terms of three to five years. Rent expense was $162,200, $136,500 and $105,300 for the years ended December 31, 2001, 2000 and 1999, respectively. The Partnership's noncancelable lease commitments greater than one year, and its contingent residual payments, as of December 31, 2001, are summarized below:
Contingent Rental Residual Year Commitments Payments ---------- ------------- ------------- 2002 $ 115,800 $ 18,200 2003 73,500 - 2004 54,500 - 2005 34,200 - 2006 19,200 27,500 Thereafter 140,700 -
Included in the Partnership's operating lease commitments and contingent residual payments are synthetic lease agreements for two buildings, one in Tempe, Arizona, and one building being constructed in St. Louis, Missouri. The lessor of the buildings, along with a group of financial institutions, has committed to fund the construction of the facilities. The total cost of the facilities covered by these leases is estimated to be $62,400, of which $52,700 has been incurred by the lessor as of December 31, 2001. The synthetic leases have initial terms of five years, with renewal options for two additional terms of up to 36 PART II Item 8. Financial Statements And Supplementary Data five years by either the lessor or the Partnership, subject to the approval of the other party. The Partnership may, at its option, purchase the buildings during or at the end of the terms of the leases at approximately the amount expended to construct the facilities. If the Partnership does not exercise the purchase option by or at the end of the lease, the Partnership may be obligated to pay up to $27,500 of the building's cost as determined at the lease inception date for the Tempe, Arizona, facility ("contingent residual payment"). Additionally, should the Partnership terminate its obligation during the construction phase of the St. Louis, Missouri, facility, it has a commitment to pay up to $18,200 of construction costs incurred as of December 31, 2001. EDJ has an equipment acquisition agreement with a financial institution. Under terms of the agreement, equipment is purchased by the lessor and the financial institution is obligated to lease the equipment to EDJ. The amount outstanding under the agreement at December 31, 2001, is $10,500, which is not included in the operating lease commitment table above. NOTE 15 - CONTINGENCIES Various legal actions are pending against the Partnership with certain cases claiming substantial damages. These actions are in various stages and the results of such actions cannot be predicted with certainty. In the opinion of management, after consultation with legal counsel, the ultimate resolution of these actions is not expected to have a material adverse impact on the Partnership's results of operations or financial condition. NOTE 16 - QUARTERLY INFORMATION (Unaudited)
Quarters Ended ----------------------------------------------------------------- March 31, June 30, September 29, December 31, ----------- -------- ------------- ------------ 2000 Total revenue $ 577,879 $ 566,932 $ 531,864 $ 535,285 Net income 68,537 63,228 50,591 47,467 Net income per weighted average $1,000 equivalent partnership unit outstanding: Limited partners $ 53.39 $ 49.28 $ 39.61 $ 36.93 Subordinated limited partners 108.51 95.22 70.20 59.99 March 30, June 29, September 28, December 31, ----------- -------- ------------- ------------ 2001 Total revenue $ 529,032 $ 538,817 $ 528,467 $ 545,681 Net income 37,786 40,703 33,938 36,759 Net income per weighted average $1,000 equivalent partnership unit outstanding: Limited partners $ 24.54 $ 26.44 $ 22.04 $ 23.87 Subordinated limited partners 47.51 50.03 40.79 43.37
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 37 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Jones Financial Companies, L.L.L.P., organized as a partnership, does not have individuals associated with it designated as officers or directors. As of January 25, 2002, the Partnership was comprised of 210 general partners, 5,401 limited partners and 127 subordinated limited partners. Under the terms of the Partnership Agreement, John W. Bachmann is designated Managing Partner and in said capacity has primary responsibility for administering the Partnership's business, determining its policies, controlling the management and conduct of the Partnership's business and has the power to appoint and dismiss general partners of the Partnership and to fix the proportion of their respective interests in the Partnership. Subject to the foregoing, the Partnership is managed by its 210 general partners. The Executive Committee of the Partnership is comprised of John W. Bachmann, Douglas E. Hill, Michael R. Holmes, Richie L. Malone, Steven Novik, Darryl L. Pope and Robert Virgil, Jr. The purpose of the Executive Committee is to provide counsel and advice to the Managing Partner in discharging his functions. Furthermore, in the event the position of Managing Partner is vacant, the Executive Committee shall succeed to all of the powers and duties of the Managing Partner. None of the general partners are appointed for any specific term nor are there any special arrangements or understandings pursuant to their appointment other than as contained in the Partnership Agreement. No general partner is or has been individually, nor in association with any prior business, the subject of any action under any insolvency law or criminal proceeding or has ever been enjoined temporarily or permanently from engaging in any business or business practice. Following is a listing of the names of the Executive Committee, ages, dates of becoming a general partner and area of responsibility for each as of January 25, 2002: Name Age Partner Area of Responsibility John W. Bachmann 63 1970 Managing Partner Douglas E. Hill 57 1974 Product & Sales Division Michael R. Holmes 43 1996 Human Resources Richie L. Malone 53 1979 Information Systems Steven Novik 52 1983 Finance & Accounting Darryl L. Pope 62 1971 Service Division Robert Virgil, Jr. 67 1993 Headquarters Administration Each member of the Executive Committee has been a general partner of the Partnership for more than five preceding years, except for Robert Virgil, Jr. As of December 31, 2000, Robert Virgil, Jr. was no longer a general partner. He is a subordinated limited partner and is still a member of the Executive Committee. John W. Bachmann is a director of AMR Corporation, Fort Worth, Texas. Robert Virgil, Jr. is a director of CPI Corp., St. Louis, Missouri. 38 PART III ITEM 11. EXECUTIVE COMPENSATION The following table identifies the compensation of the firm's Managing Partner and the four highest compensated individuals of the Partnership during the three most recent years (including respective shares of profit participation).
(1) (2) (3) Net Income Deferred Allocated Compen- to General Total Year Salaries sation Partners (1) (2) (3) John W. Bachmann 2001 $200,000 $5,202 $1,014,482 $1,219,684 2000 200,000 8,789 2,192,317 2,401,106 1999 200,000 8,400 2,213,756 2,422,156 Douglas E. Hill 2001 175,000 5,202 2,168,380 2,348,582 2000 175,000 8,789 3,861,752 4,045,541 1999 160,000 8,400 3,372,481 3,540,881 Richie L. Malone 2001 160,000 5,202 2,096,701 2,261,903 2000 160,000 8,789 3,576,640 3,745,429 1999 160,000 8,400 3,137,883 3,306,283 Gary D. Reamey 2001 135,000 5,202 2,078,682 2,218,884 2000 135,000 8,789 3,307,308 3,451,097 1999 135,000 8,400 2,580,572 2,723,972 James D. Weddle 2001 160,000 5,202 1,935,325 2,100,527 2000 160,000 8,789 3,259,964 3,428,753 1999 160,000 8,400 2,860,236 3,028,636 (1) Each non-selling general partner receives a salary generally ranging from $90,000 - $200,000 annually. Selling general partners do not receive a specified salary, rather, they receive the net sales commissions earned by them (none of the five individuals listed above earned any such commissions). Additionally, general partners who are principally engaged in sales are entitled to office bonuses based on the profitability of their respective branch office, on the same basis as the office bonus program established for all investment representative employees. (2) Each general partner is a participant in the Partnership's profit sharing plan which covers all eligible employees. Contributions to the plan, which are within the discretion of the Partnership, are made annually and have historically been determined based on approximately twenty-four percent of the Partnership's net income. Allocation of the Partnership's contribution among participants is 39 PART III determined by each participant's relative level of eligible earnings, including in the case of general partners, their net income participation. (3) Each general partner is entitled to participate in the annual net income of the Partnership based upon the respective percentage interest in the Partnership of each partner. Interests in the Partnership held by each general partner ranged from 0.03% to 3.1% in 2001, 0.05% to 3.4% in 2000, and 0.05% to 3.8% in 1999. At the discretion of the Managing Partner, the partnership agreement provides that, generally, the first eight percent of net income allocable to general partners be distributed on the basis of individual merit or otherwise as determined by the Managing Partner. Thereafter, the remaining net income allocable to general partners is distributed based upon each individual's percentage interest in the Partnership. Amounts herein exclude profits retained as capital. Net income allocated to general partners excludes income required to be reinvested under the Partnership Agreement. Net income allocable to general partners is the amount remaining after payment of interest and earnings on capital invested to limited partners and subordinated limited partners.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Being organized as a limited partnership, management is vested in the general partners thereof and there are no other outstanding "voting" or "equity" securities. It is the opinion of the Partnership that the general partnership interests are not securities within the meaning of federal and state securities laws primarily because each of the general partners participates in the management and conduct of the business. In connection with outstanding limited and subordinated limited partnership interests (non-voting securities), 159 of the general partners also own limited partnership interests and 51 of the general partners also own subordinated limited partnership interests, as noted in the table below. As of January 25, 2002:
Name of Amount of Beneficial Beneficial % of Title of Class Owner Ownership Class Limited Partnership All General Interests Partners as a Group $ 20,523,800 9% Subordinated All General Limited Partnership Partners as Interests a Group $ 49,224,397 52%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In the ordinary course of its business the Partnership has extended credit to certain of its partners and employees in connection with their purchase of securities. Such extensions of credit have been made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for 40 PART III comparable transactions with non-affiliated persons, and did not involve more than the normal risk of collectibility or present other unfavorable features. The Partnership also, from time to time and in the ordinary course of business, enters into transactions involving the purchase or sale of securities from or to partners or employees and members of their immediate families, as principal. Such purchases and sales of securities on a principal basis are effected on substantially the same terms as similar transactions with unaffiliated third parties. 41 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page No. INDEX (a) (1) The following financial statements are included in Part II, Item 8: Report of Independent Public Accountants..................................................22 Consolidated Statements of Financial Condition as of December 31, 2001 and 2000................................................................23 Consolidated Statements of Income for the years ended December 31, 2001, 2000 and 1999..........................................................25 Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999..........................................................26 Consolidated Statements of Changes in Partnership Capital for the years ended December 31, 2001, 2000 and 1999......................................27 Notes to Consolidated Financial Statements ...............................................28 (2) The following financial statements are included in Schedule I: Parent Company Only Condensed Statements of Financial Condition as of December 31, 2001 and 2000.............................................................47 Parent Company Only Condensed Statements of Income for the years ended December 31, 2001, 2000 and 1999....................................................48 Parent Company Only Condensed Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999..............................................49 Report of Independent Public Accountants..................................................50 Schedules are omitted because they are not required, inapplicable, or the information is otherwise shown in the consolidated financial statements or notes thereto. (b) Report on Form 8-K No reports on Form 8-K were filed in the fourth quarter of 2001. (c) Exhibits Reference is made to the Exhibit Index hereinafter contained.
42 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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: (Registrant) THE JONES FINANCIAL COMPANIES, L.L.L.P. --------------------------------------------- By (Signature and Title) /s/ John W. Bachmann --------------------------------------------- John W. Bachmann, Managing Partner Date March 19, 2002 --------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated. By (Signature and Title) /s/ John W. Bachmann --------------------------------------------- John W. Bachmann, Managing Partner Date March 19, 2002 --------------------------------------------- By (Signature and Title) /s/ Steven Novik --------------------------------------------- Steven Novik, Chief Financial Officer Date March 19, 2002 --------------------------------------------- SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT. There have been no annual reports sent to security holders covering the registrant's last fiscal year nor have there been any proxy statements, form of proxy or other proxy soliciting material sent to any of registrant's security holders. 43 EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001
Exhibit Number Page Description 3.1 Twelfth Amended and Restated Agreement of Registered Limited Liability Limited Partnership of The Jones Financial Companies, L.L.L.P., dated as of June 15, 2001. 3.2 * Form of Limited Partnership Agreement of Edward D. Jones & Co., L.P. 10.1 * Form of Cash Subordination Agreement between the Registrant and Edward D. Jones & Co., incorporated herein by reference to Exhibit 10.1 to the Company's registration statement of Form S-1 (Reg. No. 33-14955). 10.2 * Agreements of Lease between EDJ Leasing Company and Edward D. Jones & Co., L.P., dated August 1, 1991, incorporated herein by reference to Exhibit 10.18 to the Company's Annual Report or Form 10-K for the year ended September 27, 1991. 10.3 * Edward D. Jones & Co., L.P. Note Purchase Agreement dated as of May 8, 1992, incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 26, 1992. 10.4 * Purchase and Sale Agreement by and between EDJ Leasing Co., L.P. and the Resolution Trust Corporation incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.5 * Master Lease Agreement between EDJ Leasing Company and Edward D. Jones & Co., L.P., dated March 9, 1993, and First Amendment to Lease dated March 9, 1994, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 25, 1994. 10.6 * Mortgage Note and Amendment to Deed of Trust between EDJ Leasing Co., L.P. and Nationwide Insurance Company dated March 9, 1994, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 25, 1994. 44 10.7 * Mortgage Note; Deed of Trust and Security Agreement; Assignment of Leases, Rents and Profits; and Subordination and Attornment Agreement between EDJ Leasing Co., L.P. and Nationwide Insurance Company dated April 6, 1994, incorporated by reference to exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 25, 1994. 10.8 * Note Purchase Agreement by Edward D. Jones & Co., L.P., for $92,000,000 aggregate principal amount of 7.95% subordinated capital notes due April 15, 2006, incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 24, 1994. 10.9 * Master Lease Agreement and Addendum by and between Edward D. Jones & Co., L.P. and General Electric Capital Corporated dated April 21, 1994, incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 24, 1994. 10.10 * Equipment Lease by and between Edward D. Jones & Co., L.P., and EDJ Leasing Co., L.P. dated April 1, 1994, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 24, 1994. 10.11 * Agreement and Plan of Acquisition between The Jones Financial Companies and Boone National Savings and Loan Association, F.A., incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994. 10.12 * Loan Agreement between Edward D. Jones & Co., L.P. and Boatmen's Bank dated April 28, 1995, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 25, 1995. 10.13 * Mortgage Note; South Second Deed of Trust and Security Agreement between EDJ Leasing Co., L.P. and Nationwide Life Insurance Company dated August 31, 1995, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 29, 1995. 10.14 * Mortgage Note; North Second Deed of Trust and Security Agreement between EDJ Leasing Co., L.P. and Nationwide Life Insurance Company dated August 31, 1995, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 29, 1995. 10.15 * Note Purchase Agreement by Edward D. Jones & Co., L.P. for $94,500,000 aggregate principal amount of 8.18% subordinated capital notes due September 1, 2008, incorporated herein by 45 reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 27, 1996. 10.16 * Note Purchase Agreement by Edward D. Jones & Co., L.P. for $75,000,000 aggregate principal amount of subordinated capital notes with rates ranging from 7.51% to 7.79% due September 15, 2011, incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 24, 1999. 10.17 Lease between Eckelkamp Office Center South, L.L.C., a Missouri Limited Liability Company, as Landlord and Edward D. Jones & Co., L.P., a Missouri Limited Partnership, as Tenant, dated February 3, 2000. 10.18 Master Agreement dated as of November 30, 2000 among Edward D. Jones & Co., L.P., as Lessee, Construction Agent and Guarantor, Atlantic Financial Group, Ltd., (registered to do business in Arizona as AFG Equity, Limited Partnership) as Lessor, Suntrust Bank and Certain Financial Institutions Parties Hereto, as Lenders, and Suntrust Bank as agent, and joined in by the The Jones Financial Companies, L.L.L.P. 10.19 Master Lease Agreement dated as of November 30, 2000 between Atlantic Financial Group, Ltd. (registered to do business in Arizona as AFG Equity, Limited Partnership), as Lessor, and Edward D. Jones & Co., L.P., as Lessee. 10.20 Master Lease Agreement between Edward D. Jones & Co., L.P. and Fleet Capital Corporation dated as of August 22, 2001. 10.21 Credit Agreement dated as of August 27, 2001 between EDJ Leasing Co., L.P. and Soust Bank. 10.22 Master Lease Agreement between EDJ Leasing Co., L.P. and Edward D. Jones & Co., L.P. dated August 27, 2001. 10.23 Master Agreement dated as of September 18, 2001 among Edward D. Jones & Co., L.P., as Lessee, Construction Agent and Guarantor, Atlantic Financial Group, Ltd., (registered to do business in Missouri as Atlantic Financial Group, L.P.) as Lessor, Suntrust Bank and Certain Financial Institutions Parties Hereto, as Lenders, and Suntrust Bank, as Agent and joined in by The Jones Financial Companies, L.L.L.P. 10.24 Master Lease Agreement dated as of September 18, 2001 between Atlantic Financial Group, Ltd. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor, and Edward D. Jones & Co., L.P., as Lessee. 23.1 Consent of Independent Public Accountants, filed herewith. 25 * Delegation of Power of Attorney to Managing Partner contained within Exhibit 3.1 * Incorporated by reference to previously filed exhibits.
46 Schedule I THE JONES FINANCIAL COMPANIES, L.L.L.P. (PARENT COMPANY ONLY) CONDENSED STATEMENTS OF FINANCIAL CONDITION
December 31, December 31, (Amounts in thousands) 2001 2000 ASSETS: Cash and cash equivalents $ 3,678 $ 137 Investment in subsidiaries 667,352 654,592 Other assets 5,256 6,030 ----------- ----------- TOTAL ASSETS $ 676,286 $ 660,759 =========== =========== LIABILITIES AND PARTNERSHIP CAPITAL: Payable to limited partners, accounts payable and accrued expenses $ 1,570 $ 5,278 ----------- ----------- TOTAL LIABILITIES $ 1,570 5,278 TOTAL PARTNERSHIP CAPITAL 674,716 655,481 ----------- ----------- TOTAL LIABILITIES AND CAPITAL $ 676,286 $ 660,759 =========== ===========
These financial statements should be read in conjunction with the notes to the consolidated financial statements of The Jones Financial Companies, L.L.L.P. 47 Schedule I (continued) THE JONES FINANCIAL COMPANIES, L.L.L.P. (PARENT COMPANY ONLY) CONDENSED STATEMENTS OF INCOME
Years Ended --------------------------------------------- December 31, December 31, December 31, (Amounts in thousands) 2001 2000 1999 NET REVENUE: Subsidiary earnings $ 147,835 $ 226,225 $ 185,598 Management fee income 32,876 27,905 24,028 Other 495 2,032 351 ----------- ----------- ----------- Total revenue 181,206 256,162 209,977 ----------- ----------- ----------- Interest expense 17,800 13,501 11,414 ----------- ----------- ----------- Net revenue 163,406 242,661 198,563 ----------- ----------- ----------- OPERATING EXPENSES: Compensation and benefits 14,099 12,584 11,057 Payroll and other taxes 73 84 123 Other operating expenses 48 170 52 ----------- ----------- ----------- Total operating expenses 14,220 12,838 11,232 ----------- ----------- ----------- NET INCOME $ 149,186 $ 229,823 $ 187,331 =========== =========== ===========
These financial statements should be read in conjunction with the notes to the consolidated financial statements of The Jones Financial Companies, L.L.L.P. 48 Schedule I (continued) THE JONES FINANCIAL COMPANIES, L.L.L.P. (PARENT COMPANY ONLY) CONDENSED STATEMENTS OF CASH FLOWS
Years Ended --------------------------------------------- December 31, December 31, December 31, (Amounts in thousands) 2001 2000 1999 CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: Net income $ 149,186 $ 229,823 $ 187,331 Adjustments to reconcile net income to net cash provided by operating activities - Increase in investment in subsidiaries (12,760) (168,753) (49,109) (Increase) decrease in other assets and liabilities, net (2,934) 4,356 1,803 ----------- ----------- ------------ Net cash provided by operating activities 133,492 65,426 140,025 ----------- ----------- ------------ CASH FLOWS USED IN FINANCING ACTIVITIES: Repayment of long-term debt - - (1,493) Issuance of partnership interests 12,450 114,014 8,297 Redemption of partnership interests (7,316) (4,937) (4,453) Withdrawals and distributions from partnership capital (135,085) (174,953) (142,365) ----------- ----------- ------------ Net cash used in financing activities (129,951) (65,876) (140,014) ------------ ----------- ------------ Net increase (decrease) in cash and cash equivalents 3,541 (450) 11 CASH AND CASH EQUIVALENTS, Beginning of year 137 587 576 ------------ ----------- ------------ End of year $ 3,678 $ 137 $ 587 =========== =========== ===========
These financial statements should be read in conjunction with the notes to the consolidated financial statements of The Jones Financial Companies, L.L.L.P. 49 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To The Jones Financial Companies, L.L.L.P. We have audited in accordance with auditing standards generally accepted in the United States, the financial statements included in The Jones Financial Companies, L.L.L.P. Form 10-K for the year ended December 31, 2001, and have issued our report thereon dated February 22, 2002. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. Schedule I listed in the index to Item 14 on Form 10-K for the year ended December 31, 2001, is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. Schedule I has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP St. Louis, Missouri, February 22, 2002 50 EX-3.1 3 exhib3p1.txt 12TH AMENDED AND RESTATED AGREE. OF REG. LIMITED LIABILITY LIMITED PARTNERSHIP Exhibit 3.1 ----------- THE JONES FINANCIAL COMPANIES, L.L.L.P. TWELFTH AMENDED AND RESTATED AGREEMENT OF REGISTERED LIMITED LIABILITY LIMITED PARTNERSHIP Dated as of June 15, 2001 INDEX ----- ARTICLE ONE DEFINED TERMS.........................................................................................3 ARTICLE TWO CONTINUATION, NAME AND OFFICE, PURPOSES, TERM AND DISSOLUTION, REGISTERED AGENT, PARTNER LIST...........................................................................8 2.1 Continuation.........................................................................................8 2.2 Name, Place of Business and Office...................................................................8 2.3 Purposes.............................................................................................8 2.4 Term and Dissolution.................................................................................9 2.5 Registered Office and Agent..........................................................................9 2.6 Amendment to Certificate of Limited Partnership......................................................9 ARTICLE THREE PARTNERS AND CAPITAL................................................................................9 3.1 General Partners.....................................................................................9 3.2 Admission of Additional General Partners............................................................10 3.3 Limiteds and Contained Payments to Limited Partners.................................................10 3.4 Admission of Limiteds...............................................................................10 3.5 Partnership Capital.................................................................................11 3.6 Liability of Limiteds...............................................................................11 3.7 Participation in Partnership Business by Limiteds...................................................11 3.8 Priority Among Limiteds.............................................................................11 ARTICLE FOUR RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNERS...................................................11 4.1 Authorized Acts; Management and Control.............................................................11 4.2 Restrictions on Authority of the Managing Partner and Executive Committee...........................13 4.3 Removal or Dismissal of Certain Partners............................................................13 4.4 Executive Committee.................................................................................13 4.5 Guaranteed Draw; Time and Effort; Independent Activities............................................15 4.6 Duties and Obligations of the Managing Partner......................................................16 4.7 Liability for Acts and Omissions; Indemnification...................................................16 4.8 Dealing with an Affiliate...........................................................................17 4.9 General Partners' Responsibility....................................................................17 4.10 Responsibilities of Partnership Leaders............................................................17 ARTICLE FIVE MEETINGS AND VOTING OF PARTNERS.....................................................................18 5.1 Meetings of General Partners; Voting at Such Meetings...............................................18 5.2 Percentage of Voting Power for Partnership Decisions................................................18 5.3 Robert's Rules to Govern............................................................................18 5.4 Consent of General Partners in Lieu of a Meeting....................................................18 ARTICLE SIX EVENT OF WITHDRAWAL OF A PARTNER AND CONVERSION OF CLASS II SUBORDINATED LIMITED PARTNER CAPITAL TO CLASS I SUBORDINATED LIMITED PARTNER CAPITAL.........................................20 6.1 Voluntary Event of Withdrawal.......................................................................20 6.2 Withdrawal Upon Request.............................................................................20 i 6.3 Return of Capital and Purchase of Interest..........................................................20 6.4 Death of a Limited..................................................................................22 6.5 Death or Disability of a General Partner............................................................22 6.6 General Partner Interest - 56th Birthday............................................................24 6.7 Restriction on Capital Contribution Return..........................................................24 6.8 Liability of a Withdrawn General Partner............................................................25 6.9 Effect of Event of Withdrawal.......................................................................25 6.10 Conversion from Class II to Class I Subordinated Limited Partner...................................25 ARTICLE SEVEN TRANSFERABILITY OF PARTNER INTERESTS...............................................................26 7.1 Restrictions on Transfer............................................................................26 7.2 Substituted Limited Partners........................................................................26 ARTICLE EIGHT DISTRIBUTIONS AND ALLOCATIONS; LIABILITY OF GENERAL PARTNERS.......................................27 8.1 Distribution of Net Income..........................................................................27 8.2 Distributions Upon Dissolution......................................................................29 8.3 Distribution of Frozen Appreciation Amount..........................................................29 8.4 Sale of Assets to Third Party.......................................................................30 8.5 Other Sales or Dispositions to Third Party..........................................................31 8.6 Allocation of Profits and Losses for Tax Purposes...................................................31 8.7 Liability of General Partners.......................................................................33 ARTICLE NINE BOOKS, RECORDS AND REPORTS, ACCOUNTING, TAX ELECTIONS, ETC..........................................33 9.1 Books, Records and Reports..........................................................................33 9.2 Bank Accounts.......................................................................................34 9.3 Depreciation and Elections..........................................................................34 9.4 Fiscal Year.........................................................................................34 ARTICLE TEN MEDIATION/ARBITRATION................................................................................35 10.1 Mediation/Arbitration..............................................................................35 10.2 Forum Selection....................................................................................36 10.3 Statute of Limitations.............................................................................37 10.4 Other Agreements...................................................................................37 ARTICLE ELEVEN GENERAL PROVISIONS................................................................................37 11.1 Appointment of Attorneys-in-Fact...................................................................37 11.2 Word Meanings......................................................................................38 11.3 Binding Provisions.................................................................................38 11.4 Applicable Law.....................................................................................39 11.5 Counterparts.......................................................................................39 11.6 Entire Agreement...................................................................................39 11.7 Separability of Provisions.........................................................................39 11.8 Representations....................................................................................39 11.9 Section Titles.....................................................................................39 11.10 Partition.........................................................................................39 ii 11.11 No Third Party Beneficiaries......................................................................40 11.12 Amendments........................................................................................40 11.13 Revocable Trusts..................................................................................40
iii THE JONES FINANCIAL COMPANIES, L.L.L.P. (a Missouri Registered Limited Liability Limited Partnership) TWELFTH AMENDED AND RESTATED AGREEMENT OF REGISTERED LIMITED LIABILITY LIMITED PARTNERSHIP THIS TWELFTH AMENDED AND RESTATED AGREEMENT OF REGISTERED LIMITED LIABILITY LIMITED PARTNERSHIP of The Jones Financial Companies, L.L.L.P. entered into as of this 15th day of June, 2001, by and among John W. Bachmann as General Partner, and John W. Bachmann as the Attorney-In-Fact for all of the other General Partners, all of the Limited Partners, all of the Class I Subordinated Limited Partners (none at the date of this Agreement) and all of the Class II Subordinated Limited Partners (formerly referred to as the "Subordinated Limited Partners"). W I T N E S S E T H: WHEREAS, the Partnership was formed as a limited partnership under the Missouri Revised Uniform Limited Partnership Act pursuant to an Agreement and Certificate of Limited Partnership dated June 5, 1987; WHEREAS, the Partnership filed on July 15, 1987 its Amended and Restated Agreement and Certificate of Limited Partnership dated July 15, 1987 (the "Restated Agreement"); WHEREAS, the Partnership filed on August 28, 1987, November 16, 1987, August 5, 1988, August 29, 1988, January 31, 1989, March 21, 1989 and August 10, 1989 its Amendments No. 1, 2, 3, 4, 5, 6 and 7 respectively, to its Restated Agreement; WHEREAS, the Partnership filed on June 22, 1989 its Partner List as of May 31, 1989; WHEREAS, the Restated Agreement as amended is hereinafter referred to as the "First Restated Agreement"; WHEREAS, the First Restated Agreement was amended and restated in its entirety pursuant to a Second Amended and Restated Agreement and Certificate of Limited Partnership dated as of January 31, 1990 (the "Second Restated Agreement"); WHEREAS, the Missouri Revised Uniform Limited Partnership Act was amended in August of 1990 and no longer requires certain information in certificates of limited partnership (filed with the Secretary of State) and now requires corresponding amendments to be made to agreements of limited partnership; WHEREAS, the Partnership desired that the aforesaid Second Restated Agreement become two separate documents, namely a Third Amended and Restated Agreement of Limited Partnership (the "Third Restated Agreement") and a separate restated Certificate of Limited Partnership; WHEREAS, the Second Restated Agreement was amended and restated in its entirety pursuant to said Third Restated Agreement dated as of January 31, 1991; WHEREAS, the Third Restated Agreement was amended and restated in its entirety pursuant to the Fourth Amended and Restated Agreement of Limited Partnership (the "Fourth Restated Agreement") dated as of January 1, 1993; WHEREAS, the Fourth Restated Agreement was amended and restated in its entirety pursuant to the Fifth Amended and Restated Agreement of Limited Partnership (the "Fifth Restated Agreement") dated as of May 24, 1993; WHEREAS, the Fifth Restated Agreement was amended and restated in its entirety pursuant to the Sixth Amended and Restated Agreement of Limited Partnership (the "Sixth Restated Agreement") dated as of October 1, 1993; WHEREAS, the Sixth Restated Agreement was amended and restated in its entirety pursuant to the Seventh Amended and Restated Agreement of Limited Partnership (the "Seventh Restated Agreement") dated as of August 31, 1996; WHEREAS, the Seventh Restated Agreement was amended and restated in its entirety to register the Partnership as a registered limited liability partnership pursuant to the Eighth Amended and Restated Agreement of Limited Partnership (the "Eighth Restated Agreement") dated as of November 1, 1996; WHEREAS, the Partnership filed as of February 26, 1998 an Amendment to the Certificate of Limited Partnership changing the Partnership's name from The Jones Financial Companies, L.P., LLP to The Jones Financial Companies, L.L.L.P.; WHEREAS, the Eighth Restated Agreement was amended and restated in its entirety pursuant to the Ninth Amended and Restated Agreement of Registered Limited Liability Limited Partnership (the "Ninth Restated Agreement") dated as of April 1, 1998; and WHEREAS, the Ninth Restated Agreement was amended and restated in its entirety pursuant to the Tenth Amended and Restated Agreement of Registered Limited Liability Limited Partnership (the "Tenth Restated Agreement") dated as of February 25, 1999; and WHEREAS, the Tenth Restated Agreement was amended and restated in its entirety pursuant to the Eleventh Amended and Restated Agreement of Registered Limited Liability Limited Partnership (the "Eleventh Restated Agreement") dated as of May 23, 2000; and 2 WHEREAS, the parties now desire to amend and restate said Eleventh Restated Agreement in its entirety pursuant to this Twelfth Amended and Restated Agreement of Registered Limited Liability Limited Partnership. NOW, THEREFORE, pursuant to the terms, covenants and conditions set forth herein and the mutual promises contained herein, the parties hereto agree as follows: ARTICLE ONE DEFINED TERMS ------------- The defined terms used in this Agreement shall have the meanings specified below: "Affiliate" of a specified person (the "Specified Person") means --------- any Person (a) who directly or indirectly controls, is controlled by, or is under common control with the Specified Person; (b) who owns or controls ten percent (10%) or more of the Specified Person's outstanding voting securities or equity interests; (c) in whom such Specified Person owns or controls ten percent (10%) or more of the outstanding voting securities or equity interests; (d) who is a director, partner, manager, executive officer or trustee of the Specified Person; (e) in whom the Specified Person is a director, partner, manager, executive officer or trustee; or (f) who has any relationship with the Specified Person by blood, marriage or adoption, not more remote than first cousin. "Agreement" means this Twelfth Amended and Restated Agreement of --------- Registered Limited Liability Limited Partnership, as amended from time to time. "Capital Account" means an account established by the Partnership --------------- and maintained for each Partner, for federal income tax purposes, which account shall be credited with: (i) the amount of the Partner's Capital Contributions; and (ii) the amount of Partnership income (including income exempt from federal income tax) and gain (or items thereof) allocated to the Partner pursuant to Article Eight hereof; and which shall be debited by: (iii) the amount of Partnership losses and deductions (or items thereof) allocated to the Partner pursuant to Article Eight hereof; (iv) the amount of Partnership expenditures described in Treasury Regulations Section 1.704-1(b)(2)(iv)(i) allocable to the Partner in the same proportion as that in which the Partner bears the economic burden of those expenditures; and 3 (v) the amount of all distributions to the Partner pursuant to Article Eight hereof. In addition, the Capital Account of each Partner shall be adjusted as necessary to comply with Treasury Regulations Section 1.704-1(b)(2)(iv). In the event the Managing Partner shall determine that it is prudent to modify the manner in which the Capital Accounts or any debits or credits thereto are completed in order to comply with such regulations, the Managing Partner may amend this Agreement to reflect such modification, provided that it is not likely to have a material effect on the amounts distributable to the Partners pursuant to Article Eight upon dissolution of the Partnership. If any Partner would otherwise have a negative balance in his Capital Account, the amount of any such negative balance shall be reduced (but not in excess of such negative balance) by the amount of such Partner's share of Partnership Minimum Gain (determined in accordance with Treasury Regulations Section 1.704-1(b)(4)(iv)(f)) after taking into account all increases and decreases to such Partnership Minimum Gain during the taxable year. In the event that the Partnership is deemed to be terminated for federal income tax purposes due to the sale or exchange of fifty percent (50%) or more of the Partnership interests within a twelve (12) month period, appropriate adjustment shall be made to the Capital Accounts to reflect such termination as required by the Internal Revenue Code and applicable Treasury Regulations. In the event that interests in the Partnership are sold, exchanged or otherwise transferred, and the transfer is recognized under Article Six or Article Seven hereof, or by operation of law, the Capital Account of the transferee will equal the Capital Account of the transferor immediately before the transfer. However, if such a sale or exchange, either alone or in combination with other sales or exchanges within a twelve-month period results in a transfer of fifty percent (50%) or more of the Partnership interests causing a termination of the Partnership for federal income tax purposes, the adjustment required by the immediately preceding paragraph shall be made. "Capital Contribution" means the total amount of cash or property -------------------- contributed as equity to the Partnership by each Partner pursuant to the terms of this Agreement. The Capital Contributions of the Partners have been previously set forth on exhibits to this Agreement. From the date hereof, the Capital Contributions of the Partners shall be reflected in the books and records of the Partnership. "Certificate of Limited Partnership" means the document, as ---------------------------------- amended or restated from time to time, filed as a certificate of limited partnership under the Missouri Limited Partnership Act. 4 "Class I Subordinated Limited Partners" means those persons whose ------------------------------------- names are set forth in the books and records of the Partnership as Class I Subordinated Limited Partners, and any other person who becomes a Class I Subordinated Limited Partner of the Partnership as provided herein. "Class II Subordinated Limited Partners" means those persons whose -------------------------------------- names are set forth in the books and records of the Partnership as Class II Subordinated Limited Partners, and any other person who becomes a Class II Subordinated Limited Partner of the Partnership as provided herein. "Dispute" shall have the meaning set forth in Section 10.1A. ------- "EDJ" shall have the meaning set forth in Section 2.3. --- "Event of Withdrawal" means, as to a General Partner, the ------------------- occurrence of death, adjudication of mental incompetence, bankruptcy, dissolution, or voluntary or involuntary withdrawal or removal from the Partnership or any other event of withdrawal set forth in the Missouri Limited Partnership Act. "Frozen Appreciation Amount" means each General Partner's share of -------------------------- the unrealized appreciation of certain real estate (the "Real Estate") owned by EDJ Leasing Co. on the date such General Partner contributes his general partnership interest in EDJ Leasing Co. to the Partnership plus such General Partner's share of the unrealized appreciation of all stock exchange seats (the "Exchange Seats") owned by or for the benefit of Edward D. Jones & Co., L.P. on the date such General Partner contributes his general partnership interest in Edward D. Jones & Co., L.P. to the Partnership. The Frozen Appreciation Amount shall be maintained in the books and the records of the Partnership. The Real Estate currently consists of the land and improvements located at 201 Progress Parkway, 141 Progress Parkway, 158 Progress Parkway, 115 Progress Parkway, 135 Progress Parkway, 9 American Industrial Dr. and 20 American Industrial Dr., all in St. Louis County, Missouri. The Exchange Seats consists of one (1) seat on the New York Stock Exchange, one (1) seat on the American Stock Exchange and one (1) seat on the Chicago Stock Exchange or any such seats on successor exchanges. Each year, as of December 31, if in the opinion of the Managing Partner there has been a material diminution in the value of the Real Estate, the Partnership shall appraise (to the extent not previously sold) the Real Estate and the shares of unrealized appreciation shall be appropriately and proportionately adjusted for each General Partner on the books of the Partnership. On each Valuation Date, if needed for the purpose of making a calculation for purposes of this Agreement, the Partnership shall appraise (to the extent not previously sold) the Exchange Seats and the shares of unrealized appreciation shall be appropriately and proportionately adjusted for each General Partner on the books of the Partnership. The unrealized appreciation per each separate tract of Real Estate and per each separate Exchange Seat as set forth on the books of the Partnership may never exceed the amount used in making the original calculation even if a given appraised value later exceeds such amount. When, as and if a given tract of Real Estate or Exchange Seat is sold, the unrealized appreciation then attributable to such tract of Real Estate or Exchange Seat shall no longer be included in the calculation of the Frozen Appreciation Amount on the books of the Partnership. 5 "General Partners" means those persons whose names are set forth ---------------- in the books and records of the Partnership as being General Partners, and any other Person who becomes a successor or additional General Partner of the Partnership as provided herein. "General Partner's Adjusted Capital Contribution" means the ----------------------------------------------- Capital Contribution of the General Partner plus all Net Income thereafter allocated to the account of the General Partner minus (a) all Net Loss thereafter allocated to the account of the General Partner, and (b) any cash or property thereafter distributed to (or for the benefit of) the General Partner. Payments of salaries, bonuses or expenses to a General Partner by the Partnership shall not affect such General Partner's Adjusted Capital Contribution. "General Partner Interest" means a General Partner's entire ------------------------ ownership interest in the Partnership. "General Partner Percentage" means a percentage determined by -------------------------- dividing a General Partner's Adjusted Capital Contribution by the Adjusted Capital Contributions of all of the General Partners. "Grantors" shall have the meaning set forth in Section 11.13. -------- "Internal Revenue Code" means the Internal Revenue Code of 1986, --------------------- as amended from time to time. "Limited Partner Withdrawal Notice" shall have the meaning set --------------------------------- forth in Section 6.1B. "Limited Partners" means those persons whose names are set forth ---------------- in the books and records of the Partnership as being Limited Partners, and any other person who becomes a Limited Partner of the Partnership as provided herein. "Limiteds" means those persons whose names are set forth in the -------- books and records of the Partnership as being the Limited Partners, Class I Subordinated Limited Partners and the Class II Subordinated Limited Partners, and any other person who becomes a Limited of the Partnership as provided herein. "Mandatory Withdrawal Notice" shall have the meaning set forth in --------------------------- Section 6.2. "Missouri Limited Partnership Act" means the Missouri Revised -------------------------------- Uniform Limited Partnership Act, as amended from time to time. "Missouri Partnership Act" means the Missouri Uniform Partnership ------------------------ Law, as amended from time to time. "NASD" shall have the meaning set forth in Section 10.1E. ---- 6 "Net Income or Net Loss" means, with respect to any fiscal period, ---------------------- the net income or the net loss of the Partnership, determined in accordance with generally accepted accounting principles; provided, however, there shall be excluded from such net income or net loss (after deduction of the guaranteed payments required by Section 3.3B hereof and the bonus compensation provided for in Section 4.1B(v) hereof) any unrealized gains or losses on securities or rights or options to acquire securities held by the Partnership (or by any entity whose financial statements are consolidated with the financial statements of the Partnership) as (a) a hedge against fixed rate borrowings or (b) as long term passive investments (usually minority interests) (in the case of both (a) and (b), as opposed to other securities held by the Partnership [or by any entity whose financial statements are consolidated with the financial statements of the Partnership] as inventory for resale in the ordinary course of business). "Notice" means a writing, containing the information required by ------ this Agreement to be communicated to a party, delivered personally or sent by U.S. mail, postage prepaid, to such party at the last known address of such party as shown on the records of the Partnership, the date of personal delivery or the date of mailing thereof being deemed the date of receipt thereof. "Partner" means any General Partner or Limited. ------- "Partnership" means the limited partnership (originally formed as ----------- a limited partnership which is now registered as a registered limited liability limited partnership) continued by this Agreement by the parties hereto, as said limited partnership may from time to time be constituted. "Partnership Minimum Gain" means, for Partnership tax purposes, as ------------------------ set forth in Treasury Regulations Section 1.704-1(b)(4)(iv)(c), the amount of gain, if any, that would be realized by the Partnership if it were to sell or dispose of (in a taxable transaction) property subject to a non-recourse liability of the Partnership, in full satisfaction of such liability. "Party" shall have the meaning set forth in Section 10.1A. ----- "Person" means a natural person, partnership, limited partnership ------ (domestic or foreign), limited liability partnership, limited liability limited partnership, limited liability company, trust, estate, association or corporation. "Premium" shall have the meaning set forth in Section 8.4D. ------- "Price" shall have the meaning set forth in Section 6.3A. ----- "Proceeds of Liquidation" shall have the meaning set forth in ----------------------- Section 8.2A. "Profits and Losses For Tax Purposes" means, for Partnership ----------------------------------- accounting and tax purposes, the various items set forth in Section 702(a) of the Internal Revenue Code and all applicable regulations or any successor law, and shall include, but not be limited to, each item of income, gain, deduction, loss, preference or credit. 7 "Reduced Amount" shall have the meaning set forth in -------------- Section 8.1A(iii). "Requested Withdrawal Amount" shall have the meaning set forth in --------------------------- Section 6.3G. "Retiring Interest" shall have the meaning set forth in ----------------- Section 6.6. "Sale" shall have the meaning set forth in Section 8.4A. ---- "Treasury Rate" shall have the meaning set forth in ------------- Section 8.1A(ii). "Trusts" shall have the meaning set forth in Section 11.13. ------ "Withdrawal Notice" shall have the meaning set forth in ----------------- Section 6.3G. "Valuation Date" means as of the last Friday of each month except -------------- for the month of December in which case it means as of the last day of the month. ARTICLE TWO CONTINUATION, NAME AND OFFICE, PURPOSES, ---------------------------------------- TERM AND DISSOLUTION, --------------------- REGISTERED AGENT, PARTNER LIST ------------------------------ 2.1 Continuation. ------------ The parties hereto hereby continue the Partnership as a registered limited liability limited partnership pursuant to the provisions of the Missouri Limited Partnership Act and the Missouri Partnership Act. 2.2 Name, Place of Business and Office. ---------------------------------- The Partnership shall be conducted under the name of "The Jones Financial Companies, L.L.L.P.". The principal office and place of business shall be 12555 Manchester Road, Des Peres, Missouri 63131. The General Partners may at any time change the location of such principal office. Notice of any such change shall be given to the Partners on or before the date of any such change. 2.3 Purposes. -------- The purposes of the Partnership shall be to act as a limited partner in Edward D. Jones & Co., L.P., ("EDJ") to act as a general partner, limited partner, guarantor, stockholder or holding partnership for any other limited partnership, general partnership, limited liability partnership, limited liability limited partnership, limited liability company, corporation or other entity and to engage in such other activities as may be approved by the General Partners. 8 2.4 Term and Dissolution. -------------------- A. The Partnership shall continue in full force and effect until December 31, 2199, or until dissolution prior thereto upon the happening of any of the following events: (i) The sale of all of the assets of the Partnership; (ii) An Event of Withdrawal of a General Partner if no General Partner remains; or (iii) The dissolution of the Partnership by the General Partners. B. Upon dissolution of the Partnership, the General Partners shall cause the cancellation of the Partnership's Certificate of Limited Partnership, liquidate the Partnership's assets and apply and distribute the proceeds thereof in accordance with Section 8.2 hereof. 2.5 Registered Office and Agent. --------------------------- The name and address of the Registered Agent and Registered Office for service of process on the Partnership are as set forth in the Certificate of Limited Partnership. 2.6 Amendment to Certificate of Limited Partnership. ----------------------------------------------- The Certificate of Limited Partnership shall be amended within thirty days of the admission or withdrawal of a General Partner. ARTICLE THREE PARTNERS AND CAPITAL -------------------- 3.1 General Partners. ---------------- A. The name, last known mailing address and current Capital Contribution of each General Partner are reflected in the books and records of the Partnership. B. Any General Partner, in addition to being a General Partner, may also become a Limited by complying with the provisions of Section 3.4 hereof. In such event, said General Partner shall have all the rights and powers and be subject to all the restrictions of a General Partner, except that, in respect to his Capital Contribution as a Limited, he shall have the rights against the other Partners which he would have had if he were not also a General Partner. C. From time to time, the Managing Partner may allow one or more General Partners to increase their Capital Contributions. Such increased Capital Contributions shall be made in such amount and manner and at such time as determined by the Managing Partner and the General Partner's Percentages shall be appropriately adjusted and transferred. All such changes shall be reflected in the books and records of the Partnership. 9 3.2 Admission of Additional General Partners. ---------------------------------------- A. The Managing Partner may at any time designate additional General Partners with such interest in the Partnership as the Managing Partner and such additional General Partners may agree upon. The additional General Partner shall make his Capital Contribution to the Partnership in such manner and at such time as determined by the Managing Partner and the General Partner Percentages shall be appropriately adjusted and transferred. All such changes shall be reflected in the books and records of the Partnership. The Managing Partner may admit additional General Partners to the Partnership at any time without the consent of any current General Partner or Limited. B. Each additional General Partner shall agree, as a condition to becoming an additional General Partner, to be bound by the terms and provisions of this Agreement and any other agreement (including cash subordination agreements) as deemed appropriate by the Managing Partner. 3.3 Limiteds and Contained Payments to Limited Partners. --------------------------------------------------- A. There shall be three classes of Limiteds, namely, Limited Partners, Class I Subordinated Limited Partners and Class II Subordinated Limited Partners. The name, last known mailing address and current Capital Contribution of each Limited Partner, Class I Subordinated Limited Partner and Class II Subordinated Limited Partner are reflected in the books and records of the Partnership. B. Each Limited Partner shall be paid 7-1/2% per annum, on the principal amount of his Capital Contribution. Such payments shall be made yearly or more frequently, as determined by the Managing Partner. All such payments shall be treated as guaranteed payments. 3.4 Admission of Limiteds. --------------------- A. The Managing Partner is authorized to admit to the Partnership Limiteds who may be admitted as Limited Partners, Class I Subordinated Limited Partners or as Class II Subordinated Limited Partners, at the discretion of the Managing Partner. B. The Capital Contributions of the Limiteds shall be made in such manner and at such time as determined by the Managing Partner. All such changes shall be reflected in the books and records of the Partnership. C. Each Limited shall agree, as a condition to becoming a Limited, to be bound by the terms and provisions of this Agreement and any other agreements (including cash subordination agreements) as deemed appropriate by the Managing Partner. 10 3.5 Partnership Capital. ------------------- A. The total capital of the Partnership shall be the aggregate amount of the Capital Contributions of the Partners as provided for herein. B. Except as provided herein, or as otherwise determined by the Managing Partner, no Partner shall be paid interest on any Capital Contribution to the Partnership. C. Except as otherwise provided herein, prior to dissolution of the Partnership, no Partner shall have the right to demand the return of his Capital Contribution. No Partner shall have the right to demand and receive property other than cash in return for his Capital Contribution. D. The General Partners shall have no personal liability for the repayment of the Capital Contribution of any Limited. 3.6 Liability of Limiteds. --------------------- A Limited shall only be liable to make the payment of his Capital Contribution. Except as provided in the Missouri Limited Partnership Act, no Limited shall be liable for any obligations of the Partnership. After his Capital Contributions shall be paid to the Partnership, no Limited shall be required to make any further Capital Contribution or lend any funds to the Partnership, except as otherwise expressly provided in this Agreement. 3.7 Participation in Partnership Business by Limiteds. ------------------------------------------------- No Limited (except one who may also be a General Partner, and then only in his capacity as a General Partner) shall participate in or have any control over the Partnership business (except as required by law) or shall have any authority or right to act for or bind the partnership. The Limiteds hereby consent to the exercise by the Managing Partner and the General Partners of the powers conferred on them by this Agreement. 3.8 Priority Among Limiteds. ----------------------- Priorities as between classes of Limiteds as to distributions are set forth in Article Eight hereof. ARTICLE FOUR RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNERS ------------------------------------------------- 4.1 Authorized Acts; Management and Control. --------------------------------------- A. Subject to the other provisions set forth below, the General Partners have the exclusive right to manage the business of the Partnership and are hereby authorized to take any action (including, but not limited to, the acts authorized by Section 4.1C below) of any kind and to do anything and everything in accordance with the provisions of this Agreement. 11 B. John W. Bachmann is hereby designated by the General Partners as the Managing Partner of the Partnership. As the Managing Partner he shall serve as Chairman of the Executive Committee. As Managing Partner, he shall have the absolute right (subject to Section 4.4C hereof) to manage the business of the Partnership on behalf of the General Partners and is hereby authorized to take on behalf of the Partnership and the General Partners any action (including, but not limited to, the acts authorized by Section 4.1C below) of any kind and to do anything and everything in accordance with the provisions of this Agreement. The Managing Partner shall have all the rights, powers and duties usually vested in the managing partner of a partnership including the administration of this Partnership's business and the determination of its business policies and he shall control the management and conduct of all of the business transacted by the Partnership. In particular, but not in limitation of the foregoing, the Managing Partner for, in the name and on behalf of, the Partnership and the General Partners is hereby specifically authorized (i) to admit to the Partnership any General Partner or Limited; (ii) to dismiss (in accordance with Section 6.2 hereof) from the Partnership any General Partner or Limited; (iii) to determine the General Partner's Adjusted Capital Contribution (and the related General Partner Percentage) that each General Partner (including the Managing Partner) shall be entitled to maintain; (iv) to determine the guaranteed draw (described in Section 4.5A hereof) to be paid to each General Partner (which guaranteed draw shall be set forth on a list to be maintained in the Managing Partner's office which list shall be available for inspection by the General Partners); (v) to determine the amount, if any, of bonus compensation (in addition to the funds provided for in Section 8.1A(iv) to be paid to one or more Partners to assist such Partner(s) in maintaining or making initial or additional Capital Contributions to the Partnership, provided, however, such aggregate bonus compensation in any calendar year shall not exceed $1,500,000; (vi) to determine the amount, if any, of the Capital Contribution that each General Partner or Limited shall be entitled to maintain; (vii) to determine all amounts, if any, to be distributed to the Limiteds pursuant to Section 8.5 hereof; (viii) to convey title to any assets of the Partnership; and (ix) to execute all documents (including, but not limited to, any loan documents or guarantees) on behalf of the Partnership and (x) to sign on behalf of the Partnership and each of its Partners, all documents and forms required by (A) any domestic or foreign jurisdiction where the Partnership is engaged in business so as to qualify as a registered limited liability limited partnership or comparable entity and (B) any governmental agency requiring the Partnership to appoint a registered agent and/or office for service of process in such jurisdictions. C. The General Partners for, in the name and on behalf of, the Partnership are hereby authorized to take any and all actions, and to engage in any kind of activity and to perform and carry out all functions of any kind necessary to, or in connection with, the business of the Partnership (including but not limited to): (i) executing any instruments on behalf of the Partnership; (ii) acquiring or selling assets of the Partnership; (iii) entering into loans, guarantees in connection with the business of the Partnership; (iv) acting as a partner or shareholder of, or adviser to, any other organization; (v) contributing capital, as a limited partner or as a general partner, or purchasing other securities in or otherwise investing in EDJ or any other limited partnership, general partnership, corporation or other entity and taking all actions required as a partner, shareholder or investor in any such entity. D. The special authority granted herein to the Managing Partner shall not be construed to restrict the authority of any General Partner to act as the agent of the Partnership and 12 to execute instruments in the Partnership name for the purpose of carrying on the ordinary business of the Partnership. E. The Managing Partner may delegate to any General Partner the authority from time to time to execute documents or otherwise exercise the authority of the Managing Partner, but such authority shall not include the authority to increase the capital or change the business policies of the Partnership unless such authority is expressly and specifically granted in writing to such General Partner. F. Whenever authority is herein conferred upon the Managing Partner or the General Partners, any person, other than a General Partner, dealing with the Partnership may rely conclusively upon the authority and signature of the Managing Partner or any one other General Partner to exercise such authority without determining that such Managing Partner or such General Partner is acting with the approval of the other General Partners. In addition, third parties dealing with the Partnership may rely upon the certification of the Managing Partner or any other General Partner as to the continued existence of the Partnership, the identity of its current Partners and the authority of any Partner to execute any document. 4.2 Restrictions on Authority of the Managing Partner and ----------------------------------------------------- Executive Committee. - ------------------- In the event that a meeting of General Partners is called by the General Partners in accordance with Section 5.1 hereof to vote upon the removal of the Managing Partner or an Executive Committee member, neither the Managing Partner nor the Executive Committee shall from the time of notice of such meeting until after adjournment thereof: (i) change the General Partner Percentage of any General Partner or (ii) admit or dismiss any General Partner as a Partner. 4.3 Removal or Dismissal of Certain Partners. ---------------------------------------- The Managing Partner may be removed from such office and any General Partner may be dismissed as a General Partner (in accordance with Section 6.2 hereof) by a vote of General Partners holding a majority of the General Partner Percentages in the Partnership. 4.4 Executive Committee. ------------------- A. An Executive Committee is hereby created consisting of the Managing Partner and five (5) to nine (9) additional General Partners, the number thereof to be determined from time to time by the Managing Partner. There shall be maintained in the office of the General Counsel of the Partnership a list, certified by the Managing Partner as being true and correct, of the General Partners, who in addition to the Managing Partner, constitute the current Executive Committee of the Partnership. Among the purposes of the Executive Committee is to provide counsel and advice to the Managing Partner in discharging his functions. B. Each member of the Executive Committee shall have one vote. 13 C. Upon the majority vote of the Executive Committee, the Executive Committee may override any determination made by the Managing Partner as to (i) the General Partner's Adjusted Capital Contribution (and the related General Partner Percentage) that each General Partner (including the Managing Partner) shall be entitled to maintain, (ii) the admission of a new General Partner and (iii) the dismissal of a General Partner. D. Upon the majority vote of the Executive Committee, the Managing Partner may be removed from his office as the Managing Partner. E. At any time during which there is no Managing Partner the Executive Committee shall succeed to all of the powers and duties of the Managing Partner. F. Upon the majority vote of the Executive Committee, a new Managing Partner shall be elected whenever the office of the Managing Partner is vacant. Such vote shall be taken within two (2) weeks after such office becomes vacant. G. If the Executive Committee believes that the office of the Managing Partner may become vacant, for any reason whatsoever, including, but not limited, to retirement or resignation of the current Managing Partner, then the Executive Committee may establish procedures (as it shall determine appropriate, in its sole discretion) to review potential candidates and then to choose from such candidates the person to be the new Managing Partner when the office of the Managing Partner becomes vacant. H. The Managing Partner shall have the right to appoint and dismiss any member of the Executive Committee; provided however that the Managing Partner shall not have the right to dismiss any member of the Executive Committee or increase or decrease the number of General Partners on the Executive Committee from the time Notice is given of a meeting of the Executive Committee until the adjournment thereof if the purpose of such meeting is to vote upon one or more of the matters set forth in Sections 4.4C or 4.4D hereof. I. By a vote of the General Partners holding a majority of the General Partner Percentages in the Partnership, the General Partners may remove any Executive Committee member from his position as an Executive Committee member and elect in his place a new Executive Committee member. J. If the General Partners remove any Executive Committee member from his position as an Executive Committee member, the Managing Partner may not appoint such removed Executive Committee member to the Executive Committee for a period of six (6) months thereafter. Any Executive Committee member elected to the Executive Committee by a vote of the General Partners may not be dismissed as an Executive Committee member by the Managing Partner. K. A meeting of the Executive Committee shall be held (i) at any time on call of the Managing Partner after one (1) day's Notice has been delivered to the Executive 14 Committee members or (ii) on at least ten (10) day's Notice in advance to the Executive Committee members, jointly signed by any two (2) Executive Committee members, specifying the date, place, hour and purpose of the meeting. 4.5 Guaranteed Draw; Time and Effort; Independent Activities. -------------------------------------------------------- A. Each General Partner shall receive a guaranteed draw for his services as determined by the Managing Partner in his sole discretion. Such guaranteed draw shall be treated by the Partnership as a guaranteed payment. Such guaranteed draw shall be reduced by any net commissions earned by any such General Partner (and paid to such General Partner by EDJ) who is principally engaged in the sale of securities to the public. If any such General Partner who is principally engaged in the sale of securities to the public at EDJ incurs any reasonable expenses through usual and ordinary means of generating the sales upon which such General Partner is entitled to receive commissions from EDJ, then such General Partner must personally and individually pay, without reimbursement from the Partnership or from EDJ, such expense but such General Partner shall be entitled to deduct such expenses on his personal income tax return, all as permitted by the Internal Revenue Code. B. Each General Partner shall devote his entire time, energy, skill and ability to the duties of operating the Partnership and the entities it owns. General Partners shall not engage in outside business activities without the prior written consent of the Managing Partner. Each General Partner agrees not to use the name or property of the Partnership or any entity it owns for his own private business, nor for any purpose whatsoever except those that may be incidental to the conduct and management of the Partnership, nor shall any General Partner use the name of the Partnership or any entity it owns for the use or accommodation of any other person. No General Partner shall incur any obligation in the name of the Partnership or transfer Partnership property except in connection with Partnership business. C. Each General Partner agrees that he will not, without the written consent of the Managing Partner (i) become a guarantor or surety for any person, firm or corporation; (ii) in the name of the Partnership or any entity it owns or in his own name buy or sell stocks, securities or commodities on margin, either for the account of the Partnership or for his own account; or (iii) pledge or hypothecate any of the property of the Partnership or any entity it owns for any purpose whatsoever. D. Each General Partner shall submit, upon request by the Managing Partner, a copy of any of his current personal income tax returns (for any time period during which such Partner was a Partner of the Partnership) for inspection by independent accountants selected by the Managing Partner. In addition, each General Partner agrees, if requested by the Managing Partner, to have such General Partner's income tax returns prepared by an entity (which could be the Partnership itself or independent accountants) selected by such General Partner and acceptable to the Managing Partner. E. Each Partner is expected, and it is regarded as such Partner's duty, to supplement expenses reimbursable to such Partner by the Partnership by additional expenditures of such Partner's personal funds in the furtherance of the Partnership's business which expenditures such Partner shall be entitled to deduct on his personal income tax return, all as 15 permitted by the Internal Revenue Code. In this connection, as deemed appropriate under the circumstances, such additional expenditures have included in the past and shall include in the future, but shall not be limited to (a) subscribing to professional and business journals, (b) maintaining active memberships in professional associations, other associations, luncheon clubs and other clubs where the Partner will have an opportunity to further the development of, and to maintain the Partnership's relationship with, its customers, (c) providing space, facilities and telephone equipment in the Partner's home in order that the Partner may work on the Partnership's business while at home, (d) purchasing necessary supplies, books, furniture, computers, fax machines, car telephones and other items, (e) providing for transportation to customers' offices, (f) entertaining customers and prospective customers and (g) continuing the Partner's business-related education, including attendance at seminars and obtaining advanced educational degrees. F. In the event any Partner becomes a party in any lawsuit, arbitration or other similar proceeding, such Partner agrees to notify promptly the Managing Partner of such event. 4.6 Duties and Obligations of the Managing Partner. ---------------------------------------------- A. The Managing Partner shall prepare (or cause to be prepared) and file such amendments to this Agreement or any certificate of limited partnership or any certificate of limited liability partnership as are required by law or as he deems necessary to cause this Agreement or any certificate of limited partnership or any certificate of limited liability partnership to reflect accurately the agreement of the Partners, the identity of the Limiteds or the General Partners and the amounts of their respective Capital Contributions. B. The Managing Partner shall prepare (or cause to be prepared) and file such tax returns and other documents, as are required by law or as he deems necessary, for the operation of the Partnership. In addition, in his discretion, the Managing Partner may prepare (or cause to be prepared) and file composite tax returns in various states for all electing non-resident partners (otherwise not required to file a state income tax return in such state) of those states and cause to be paid out of their draw accounts (or any other of their funds being held by the Partnership) the amount of tax attributable to each such non-resident partner and/or to withhold from distributions of profits, if necessary, all such tax amounts for current and former partners of the Partnership and if reimbursement for such taxes to the Partnership is needed from a former Partner, then each Partner hereby agrees that he will if he is then a former Partner reimburse the Partnership for such tax expense and/or if the Partnership currently then holds any funds belonging to such former Partner, then such tax expense may be offset against such funds being held by the Partnership. 4.7 Liability for Acts and Omissions; Indemnification. ------------------------------------------------- Neither the Managing Partner nor any General Partner shall be liable, responsible or accountable in damages or otherwise to any of the Partners for, and the Partnership shall indemnify and save harmless the Managing Partner and any General Partner from any loss or damage incurred by reason of, any act or omission performed or omitted by him in good faith on 16 behalf of the Partnership and in a manner reasonably believed by him to be within the scope of the authority granted to him by this Agreement and in the best interests of the Partnership, provided that the Managing Partner or the General Partner shall not have been guilty of gross negligence or gross misconduct with respect to such acts or omissions and, further, provided that the satisfaction of any indemnification and any saving harmless shall be paid out of and limited to Partnership assets and no Partner shall have any personal liability on account thereof. 4.8 Dealing with an Affiliate. ------------------------- The Managing Partner may for, in the name of and on behalf of, the Partnership enter into such agreements, contracts or the like with any Affiliate of any General Partner or with any General Partner, in an independent capacity, as distinguished from his capacity (if any) as a Partner, to undertake and carry out the business of the Partnership as if such Affiliate or General Partner were an independent contractor; and the Managing Partner may obligate the Partnership to pay reasonable compensation for and on account of any such services. 4.9 General Partners' Responsibility. -------------------------------- Each General Partner shall be responsible and accountable to the Partnership's customers and clients for the rendering of such General Partner's services. No other General Partner, regardless of title or position with the Partnership shall (a) be responsible, liable or accountable to the Partnership's customers and clients for any other Partner's rendering of services to the Partnership's customers or clients or (b) have the right or obligation of direct supervision and control (except as otherwise mandated by the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder and comparable state securities laws) of another Partner while such other Partner is rendering services on behalf of the Partnership. 4.10 Responsibilities of Partnership Leaders. --------------------------------------- The Partnership's officers and committees, including, but not limited to, the Managing Partner, any member of the Executive Committee (or any other member of any other committee of the Partnership), any chairperson, any departmental manager, and any other departmental or Partnership leader (regardless of title), and the Executive Committee (taken as a whole), shall not have, solely by reason of being such an officer or committee or acting (or omitting to act) in such capacity, (a) any responsibility, liability or accountability for any Partner's rendering of services to the Partnership's customers and clients or (b) the right or obligation of direct supervision and control of a Partner while such Partner is rendering services on behalf of the Partnership. 17 ARTICLE FIVE MEETINGS AND VOTING OF PARTNERS ------------------------------- 5.1 Meetings of General Partners; Voting at Such Meetings. ----------------------------------------------------- A. A meeting of General Partners shall be held (i) on the call of the Managing Partner after five (5) days Notice thereof has been delivered to the General Partners, or (ii) on at least 10 days Notice in advance to the General Partners, jointly signed by any five (5) General Partners, specifying the date, place, hour and purposes of the meeting. B. Except as otherwise expressly provided, at any meeting of the General Partners, each General Partner shall have voting power equal to his General Partner Percentage at the time of the meeting. A quorum for any purpose at any meeting of the General Partners shall exist if General Partners then holding more than 50% of the voting power of all General Partners are present or voting by proxy. Any General Partner may vote on any matter if not present in person, by general or specific written proxy given to another General Partner. No proxy shall be valid after two (2) months from the date of its execution. General Partners may participate in any meeting by means of conference telephone or similar communications equipment whereby all persons participating in such meeting can hear each other. Participation in a meeting in this manner shall constitute presence in person at the meeting. C. Unless otherwise permitted by the Managing Partner, the only matters to be voted upon by the General Partners at any meeting of the General Partners shall be those matters set forth in Sections 4.3 and 4.4 hereof. 5.2 Percentage of Voting Power for Partnership Decisions. ---------------------------------------------------- A. Except as otherwise specifically provided in this Agreement, the affirmative vote of more than 50% of the voting power of all General Partners shall determine all issues at any meeting of the General Partners. B. Any percentage of voting power of the General Partners required by this Agreement shall relate to the percentage of the total voting power of all General Partners entitled to vote on the issue and not to a percentage of the voting power of the General Partners present at a meeting. 5.3 Robert's Rules to Govern. ------------------------ Except as otherwise specifically provided in this Agreement, all matters of parliamentary procedure at meetings of the General Partners shall be governed by Robert's Rule of order Revised. The Managing Partner may appoint a parliamentarian. 5.4 Consent of General Partners in Lieu of a Meeting. ------------------------------------------------ A. Notwithstanding anything to the contrary contained in this Agreement, any action required or permitted by this Agreement to be taken at any meeting of the General Partners may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by Partners having not less than the minimum voting power that would be necessary to authorize or take such action at a meeting of the Partners. 18 B. Prompt Notice of the taking of any action pursuant to this Section 5.4 by less than unanimous written consent of the General Partners shall be given to those General Partners who have not consented in writing. 19 ARTICLE SIX EVENT OF WITHDRAWAL OF A PARTNER AND CONVERSION OF CLASS II ----------------------------------------------------------- SUBORDINATED LIMITED PARTNER CAPITAL TO CLASS I ----------------------------------------------- SUBORDINATED LIMITED PARTNER CAPITAL ------------------------------------ 6.1 Voluntary Event of Withdrawal. ----------------------------- A. Any General Partner shall have the right to retire or voluntarily withdraw from the Partnership upon 30 days prior written notice to the Managing Partner. In the event that there is only one General Partner, he shall give notice to the Limiteds of his intent to withdraw from the Partnership at least 30 days prior to the date of withdrawal. B. Any Limited shall have the right to retire or voluntarily withdraw from the Partnership effective immediately upon written notice to the Managing Partner (a "Limited Partner Voluntary Withdrawal Notice"). 6.2 Withdrawal Upon Request. ----------------------- The Managing Partner or any number of General Partners holding in the aggregate a majority of the General Partner Percentages, may request in writing that any Partner withdraw from the Partnership (a "Mandatory Withdrawal Notice"), and each Partner agrees that he will so withdraw within 30 days of the receipt of such request. 6.3 Return of Capital and Purchase of Interest. ------------------------------------------ A. In the event of any withdrawal by a General Partner from the Partnership pursuant to Section 6.1 or 6.2 hereof or in the event a General Partner wishes to withdraw some of his Capital Contribution as a General Partner, the Managing Partner may designate all or some of the remaining General Partners, to purchase the General Partner Interest (including Frozen Appreciation Amount) of the withdrawing General Partner, subject to the approval of the Managing Partner. Such purchases shall be consummated (retroactively as of the actual date of his withdrawal) within 60 days after the actual date of such withdrawal. The price (the "Price") of the General Partner Interest of the withdrawing General Partner shall be the value (as shown on the books of the Partnership) of his Frozen Appreciation Amount plus the value of such General Partner's Adjusted Capital Contribution, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. Goodwill, if any, and the Partnership name shall not be deemed assets or as having any property value in making the foregoing calculation. B. Unless otherwise determined by the Managing Partner, the Price to be received by the withdrawing General Partner shall be delivered by the withdrawing General Partner to the Partnership and shall (retroactively as of the actual date of his withdrawal) be the Capital Contribution of such former General Partner as that of a Class II Subordinated Limited Partner and such General Partner shall thereupon become or continue to remain a Class II Subordinated Limited Partner as to such Capital Contribution. 20 C. Unless otherwise determined by the Managing Partner, any General Partner Interest (including Frozen Appreciation Amount) not purchased by the remaining General Partners within such 60 day period shall be converted (retroactively as of the actual date of his withdrawal) so as to become the Capital Contribution of such former General Partner as that of a Class II Subordinated Limited Partner and such General Partner shall thereupon become or continue to remain a Class II Subordinated Limited Partner as to such Capital Contribution. D. A withdrawing General Partner shall have no right to become a Limited or to require the conversion of his General Partner Interest (or Price, if applicable) to the Capital Contribution of a Class II Subordinated Limited Partner. The Managing Partner may determine to have the Partnership redeem such General Partner's Interest. In addition the Managing Partner has the right to cause the Partnership to redeem the Capital Contribution of a Class II Subordinated Limited Partner at any time. E. Upon the withdrawal of a General Partner, the General Partner Percentages of the remaining General Partners shall be recalculated (as of the actual date of withdrawal) on the same relative basis so as to aggregate 100% (and the related General Partner Adjusted Capital Contributions shall also be appropriately adjusted). F. In addition, any withdrawing General Partner shall receive (within 75 days after the actual date of his withdrawal) his pro rata share of any cash distributions to which he is entitled as set forth in Section 8.1 hereof, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. G. In the event a Class II Subordinated Limited Partner desires to withdraw all or any part of such Class II Subordinated Limited Partner's Capital Contribution, then such Class II Subordinated Limited Partner shall give written notice ("Withdrawal Notice") to the Managing Partner of the amount of Capital Contribution that such Class II Subordinated Limited Partner wishes to withdraw from the Partnership (the "Requested Withdrawal Amount"). The Requested Withdrawal Amount shall be paid (subject to the provisions of Section 6.7 hereof) to such Class II Subordinated Limited Partner in four (4) equal installments with the first installment being paid on the last business day of the month following the month in which the Managing Partner receives the Withdrawal Notice, with the balance of the Requested Withdrawal Amount being paid in three (3) equal installments on the 12th, 24th and 36th month anniversary of the first installment payment. Until the Requested Withdrawal Amount has been fully paid to such Class II Subordinated Limited Partner the unreturned portion thereof shall continue for all purposes to be subject to all provisions of this Agreement including, without limitation, Article Eight and Section 6.7. The Managing Partner, in his sole discretion, may cause the Partnership to accelerate the return of the Requested Withdrawal Amount with respect to the entire Requested Withdrawal Amount or accelerate the payment of any or all installments thereof with respect to any Class II Subordinated Limited Partner. H. In the event of any withdrawal by a Limited Partner from the Partnership, pursuant to Sections 6.1 or 6.2 hereof, the Limited Partner's Capital Contribution (subject to the 21 provisions of Section 6.7 hereof) shall be paid in three (3) equal installments with the first installment being paid on the last business day of the month following the month in which (a) the Managing Partner receives the Limited Partner Voluntary Withdrawal Notice, or (b) the Limited Partner receives a Mandatory Withdrawal Notice, with the balance of the Capital Contribution being paid in two equal installments on the 1st and 2nd anniversary of the first installment payment. In addition, such Limited Partner shall receive (within 75 days after the actual date of his withdrawal) his pro rata share of any cash distributions to which he was entitled as set forth in Section 8.1 hereof, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. Until a Limited Partner's Capital Contribution is fully returned to him, the unreturned portion thereof shall continue for all purposes to be subject to all provisions of this Agreement, including without limitation, Article Eight and Section 6.7 and such Limited Partner shall continue to receive all sums due him pursuant to Section 3.3B hereof. The Managing Partner, in his sole discretion, may cause the Partnership to accelerate the return of a Limited Partner's Capital Contribution or accelerate the payment of any or all installments thereof. 6.4 Death of a Limited. ------------------ In the event of the death of any Limited, the Capital Contribution of such deceased Limited shall be returned (subject to the provisions of Section 6.7 hereof) to his estate within six (6) months after the actual date of death of the Limited. The provisions of Section 6.3G shall not be applicable to the Capital Contribution of a deceased Class II Subordinated Limited Partner or to the Capital Contribution of a deceased Class I Subordinated Limited Partner and Section 6.3H shall not be applicable to the Capital Contribution of a deceased Limited Partner. In addition such Limited's estate shall receive (within 75 days after the actual date of death of the Limited) the Limited's pro rata share of any cash distributions to which such deceased Limited was entitled as set forth in Section 8.1 hereof, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. Until a deceased Limited's Capital Contribution is returned to his estate, his estate shall continue to receive all sums which would have been due to such Limited pursuant to Section 3.3B hereof. As stated herein, all such payments shall be made to the estate of the deceased Limited unless the Partnership has received evidence, satisfactory to the Partnership, in its sole discretion, that such payments should be made to some other entity or person. 6.5 Death or Disability of a General Partner. ---------------------------------------- A. In the event of the death of a General Partner, the interest of the deceased General Partner in the Partnership shall terminate as of such date. The Managing Partner may designate all or some of the remaining General Partners to purchase the General Partner Interest (including Frozen Appreciation Amount) of the deceased General Partner, subject to the approval of the Managing Partner. Such purchases shall be consummated within 60 days after the date of death of such General Partner. The price of the General Partner Interest of the deceased General Partner shall be the value (as shown on the books of the Partnership) of his Frozen Appreciation Amount plus the value of such General Partner's Adjusted Capital Contribution, calculated as of 22 the previous Valuation Date if such death took place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such death took place on or after the 16th day of a month. Goodwill, if any, and the Partnership name shall not be deemed assets or as having any property value in making the foregoing calculation. In addition, the deceased General Partner shall receive (within 75 days after the date of his death) his pro rata share of any cash distributions to which he is entitled as set forth in Section 8.1 hereof, calculated as of the previous Valuation Date if such death took place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such death took place on or after the 16th day of a month. Any General Partner Interest (including Frozen Appreciation Amount) not purchased by the remaining General Partners within such 60 day period shall be converted (as of the date of his death) to the Capital Contribution of a Class II Subordinated Limited Partner and shall be redeemed (subject to the provisions of Section 6.7 hereof) by the Partnership within six (6) months thereafter, the specific date to be determined by the Managing Partner. The provisions of Section 6.3G shall not be applicable to the Capital Contribution of such deceased Class II Subordinated Limited Partner. Upon the conversion of a General Partner's Interest to that of a Class II Subordinated Limited Partner, the General Partner Percentages of the remaining General Partners shall be recalculated (as of the actual date of withdrawal) on the same relative basis so as to aggregate 100% (and the related General Partner Adjusted Capital Contributions shall also be adjusted). All payments made pursuant to this Section 6.5A shall be made to the estate of the deceased General Partner, unless the Partnership has received evidence, satisfactory to the Partnership, in its sole discretion, that such payments should be made to some other entity or person. B. In the event of full or partial disability (as determined in the absolute discretion of the Managing Partner) of a General Partner under age 65 due to illness, accident, or injury, such General Partner shall be entitled to receive his normal share of Partnership Net Income notwithstanding his inability to perform his normal work functions, for a period of up to six (6) full months following the date he suffered the disability. If the disability continues for a period greater than six (6) months but less than one (1) year, then during such period of time the disabled General Partner shall be entitled to receive one-half (1/2) of his normal share of Partnership Net Income. If the disability continues for a period greater than one (1) year in length, then the disabled General Partner must terminate his status as a General Partner, unless otherwise directed by the Managing Partner. In event of termination, the General Partner Interest (including his Frozen Appreciation Amount) of the disabled General Partner shall be treated in the same manner as that of a deceased General Partner pursuant to Section 6.5A hereof, provided that all such payments required by this Section 6.5B shall be made to the disabled General Partner. 23 6.6 General Partner Interest - 56th Birthday. ---------------------------------------- A General Partner shall not acquire any additional General Partner Interest after he reaches his 56th birthday. His General Partner Interest (including his Frozen Appreciation Amount) as it exists on his 56th birthday is his "Retiring Interest." On the first business day of the calendar year following the year in which a General Partner's 56th birthday falls and on the first business day of each subsequent calendar year, the General Partner shall sell 1/10th of this Retiring Interest to all or some of the other General Partners, as designated by the Managing Partner, who have not attained 56 years of age and who are willing to purchase such additional interest. The sale price of the Retiring Interest shall be determined in the same manner as set forth in Section 6.5A hereof, with the Valuation Date being the first business day of the appropriate calendar year. Upon payment of the sales price to the selling General Partner by the purchasing General Partner, the books of the Partnership shall be adjusted as of the effective date of sale to show the appropriate reductions and increases in the General Partner Adjusted Capital Contributions (and related General Partner Percentages) of the selling and purchasing General Partners. A General Partner can request that such purchased portion be converted (retroactively as of the first calendar day of the appropriate year) so as to become the Capital Contribution of a Class II Subordinated Limited Partner and if such request is approved by the Managing Partner, then such portion of the retiring interest be so converted. If any portion of a Retiring Interest is not purchased by the other General Partners, then such General Partner can request that such unpurchased portion be converted (retroactively as the first calendar day of the appropriate year) so as to become the Capital Contribution of a Class II Subordinated Limited Partner and if such request is approved by the Managing Partner, then such portion of the Retiring Interest shall be so converted, otherwise such portion of the Retiring Interest shall be redeemed by the Partnership, subject to Section 6.7 hereof. Notwithstanding any other provisions of this Section to the contrary, the Managing Partner may exempt any General Partner from the application of this Section or modify the terms of the sale of any Retiring Interest as he deems advisable. 6.7 Restriction on Capital Contribution Return. ------------------------------------------ It is understood and agreed that the Capital Contributions of the Partners to the Partnership will be used, in part, by the Partnership as part of the Partnership's capital contribution to EDJ, a brokerage firm (which is regulated by the Securities and Exchange Commission and the New York Stock Exchange and other regulatory agencies), and that in order for the Partnership to return to any Partner his Capital Contribution (or any part thereof), the Partnership will have to obtain such funds from EDJ. Therefore, notwithstanding any other provision contained in this Agreement to the contrary, without the written consent of the Managing Partner, no Partner shall have returned to him (under any provision of this Agreement) his Capital Contribution or his General Partner's Adjusted Capital Contribution, if after giving effect thereto, the Partnership or any Affiliate thereof (including, but not limited to, EDJ) would, if such payment had been made directly by EDJ, be in violation of (i) any rule of the New York Stock Exchange Inc., (ii) any rule issued under the Securities Exchange Act of 1934, any agreement (cash subordination or otherwise) which has been entered into by the Partnership or any Affiliate thereof (including, but not limited to, EDJ), (iii) any agreement (including, but not limited to, loan agreements) which has been entered into by the Partnership or any Affiliate thereof (including, but not limited to, EDJ) or (iv) any other law, rule or regulation to which the 24 Partnership or any Affiliate thereof (including, but not limited to, EDJ) is subject. In the event there is returned to any Partner all or any portion of his Capital Contribution or his General Partner's Adjusted Capital Contribution and because of such return the Partnership or any Affiliate thereof (including, but not limited to, EDJ) violated any of the aforementioned rules, agreements or regulations, then such Partner hereby irrevocably agrees (whether or not such Partner had any knowledge or notice of such facts at the time of such return) to repay to the Partnership, its successors or assigns, the sum so returned to such Partner to be held by the Partnership pursuant to the provisions hereof as if such return had never been made; provided, however, that any suit for the recovery of any such return must be commenced within two years of the date of such return. 6.8 Liability of a Withdrawn General Partner. ---------------------------------------- If on the Event of Withdrawal of a General Partner the business of the Partnership shall continue, the General Partner who shall have withdrawn shall be and remain liable for all obligations and liabilities incurred by him as General Partner prior to such Event of Withdrawal, but he shall be free of any obligation or liability incurred on account of the activities of the Partnership from and after the time of such Event of Withdrawal. 6.9 Effect of Event of Withdrawal. ----------------------------- Upon the withdrawal (by reason of death or otherwise) of a Partner the Partnership shall not dissolve and the business of the Partnership shall be continued by the remaining General Partners. 6.10 Conversion from Class II to Class I Subordinated Limited -------------------------------------------------------- Partner. - ------- A. In the event a Class II Subordinated Limited Partner has exercised his right pursuant to Section 6.3G, then such Class II Subordinated Limited Partner may request, in writing to the Managing Partner (subject to the other provisions of this Section 6.10), that his Requested Withdrawal Amount be converted to the Capital Contribution of Class I Subordinated Limited Partner and thereafter such Class II Subordinated Limited Partner shall, with respect to such converted amount, be a Class I Subordinated Limited Partner. B. No such conversion shall be permitted unless the Partnership has had Net Income for each of the three (3) proceeding calendar months (for which the Partnership has prepared financial statements) prior to such written request. If a conversion is requested but is not permitted due to the preceding sentence, then such request will be honored (unless withdrawn) as soon as the conditions set forth in the preceding sentence are met by the Partnership. C. The Requested Withdraw Amount of a Class I Subordinated Limited shall be paid to such Class I Subordinated Limited Partner in accordance with the time-table, procedures and restrictions set forth in Section 6.3G which applied to such Requested Withdrawal Amount prior to the conversion referred to in this Section 6.10A. 25 D. On and after the date of conversion of the Requested Withdrawal Amount to the Capital Contribution of a Class I Subordinated Limited Partner, such Requested Withdrawal Amount shall receive Net Income from the Partnership in accordance with Section 8.1A(ii) hereof. E. A Class I Subordinated Limited Partner shall have no right to request the reconversion of his Class I Capital Contribution to the Capital Contribution of a Class II Subordinated Partner. ARTICLE SEVEN TRANSFERABILITY OF PARTNER INTERESTS ------------------------------------ 7.1 Restrictions on Transfer. ------------------------ A. Each Partner agrees that he will not sell, pledge, exchange, transfer or assign his interest in the Partnership to any Person without the express written consent of the Managing Partner. B. Each Partner agrees that he will not sell or exchange any of his interest in the Partnership if the interest sought to be sold or exchanged, when added to the total of all other Partner interests sold or exchanged within the period of 12 consecutive months prior thereto, would, in the opinion of counsel for the Partnership, result in the Partnership being considered to have been terminated within the meaning of Section 708 of the Internal Revenue Code (or any successor statute). C. Each Limited agrees that he will not sell, exchange, transfer or assign any of his interest in the Partnership unless, if required by the Partnership, the Partnership has received an opinion of counsel, satisfactory to the Partnership, that such transfer or assignment may be effected without registration of the Limited's interest under the Securities Act of 1933 or under any applicable state securities law. D. Except as otherwise expressly provided in this Agreement, the death or withdrawal of a Partner shall terminate (as of such date) all his interest in the Partnership and neither the estate of a deceased Partner nor any other third party shall become or have any rights as a Partner. E. Any sale, exchange, assignment or other transfer in contravention of any of the provisions of this Section 7.1 shall be void and ineffectual and shall not bind or be recognized by the Partnership. 7.2 Substituted Limited Partners. ---------------------------- No Limited shall have a power to grant the right to become a substituted Limited to an assignee of any part of such Limited's Partnership Interest. 26 ARTICLE EIGHT DISTRIBUTIONS AND ALLOCATIONS; LIABILITY OF GENERAL PARTNERS ------------------------------------------------------------ 8.1 Distribution of Net Income. -------------------------- A. All Net Income, if any, of the Partnership for each calendar year shall be distributed in the following order of priority: (i) Each Limited Partner shall be paid at least annually (with respect to such Limited Partner's Capital Contribution), from time to time, a total amount of cash equal to the product of Net Income times a percentage, calculated annually, which shall equal the product of the following three factors: (a) one-fourth of one percent (.0025) multiplied by (b) the quotient of $1,900,000 divided by the sum of the General Partners' Adjusted Capital Contributions multiplied by (c) the quotient of the total Capital Contribution of the respective Limited Partner divided by $25,000. This calculation of percentage of participation shall be made at the end of each calendar year and used in distributing Net Income earned during the following year. Notwithstanding the foregoing, for the year 1987 each Limited Partner shall be paid (with respect to such Limited Partner's Capital Contribution) a total amount of cash equal to the product of Net Income times a percentage which shall equal the product of the following three factors: (a) one-fourth of one percent (.0025) multiplied by (b) the quotient of $1,900,000 divided by $24,251,182 multiplied by (c) the quotient of the total Capital Contribution of the respective Limited Partner divided by $25,000. (ii) Each Class I Subordinated Limited Partner shall be paid within 30 days after the end of each calendar quarter (on a non-cumulative basis) an amount of cash equal to 25% of the product of (a) the one year Constant Maturity Treasury Rate as currently disclosed in the Federal Reserve Statistical Released H.15 (the "Treasury Rate") plus 150 basis points times (b) the current Capital Contribution of the Class I Subordinated Limited Partner. The applicable Treasury Bill Rate shall be the Treasury Bill Rate as stated for the week ended just prior to or on the last business day of the preceding calendar year; provided however that no such payment shall be made to any Class I Subordinated Limited Partner if for the prior calendar quarter the Partnership did not have Net Income sufficient to pay the full amount due all Class I Subordinated Limited Partners pursuant to this Section 8.1A(ii). If any payment is not made, as herein above provided, the Partnership shall never be required to make such missed payment in the future. No payment made pursuant to this Section 8.1A(ii) shall be considered a guaranteed payment. (iii) Each Class II Subordinated Limited Partner shall be paid, from time to time, a total amount of cash in each year equal to the product of (a) the then remaining Net Income times (b) a percentage derived by the following formula: (x) 50% of the Capital Contribution of the Class II Subordinated 27 Limited Partner (excluding any undistributed Net Income allocated to the Class II Subordinated Limited Partner) divided by (y) the sum of (aa) 50% of the Capital Contributions of all the Class II Subordinated Limited Partners plus (bb) the Adjusted Capital Contributions of the General Partners (less any Net Income allocated to the General Partners which is not scheduled to be retained by the Partnership). In the event the Capital Contribution of a Class II Subordinated Limited Partner has been reduced by the operation of Section 8.1B hereof (the "Reduced Amount"), then each Class II Subordinated Limited Partner shall have right to make additional cash Capital Contributions to the Partnership from any cash to be distributed to such Class II Subordinated Limited Partner pursuant to this Section 8.1A(ii) up to the Reduced Amount. (iv) There shall be set apart up to 8% of the remaining Net Income. Of such 8%, if any is set apart, there shall be distributed 62.5% thereof among the General Partners on the basis of individual merit as determined by the Managing Partner. Of such 8%, if any is set apart, there shall be distributed 37.5% thereof among the General Partners on the basis of individual need as determined by the Managing Partner. (v) It is intended that a sum equal to 30% of the remaining Net Income will be retained by the Partnership as capital and shall be credited monthly to the Adjusted Capital Contributions of the General Partners in a proportion equal to their then respective General Partner Percentages. Such amount shall not be withdrawn by the General Partners. Notwithstanding the foregoing, the decision of whether to make this retention of capital in accordance with this Section or whether to vary the amount of capital to be retained in any given year, is vested in the Managing Partner, and it is agreed that his decision in this matter shall be final. (vi) The balance of the Net Income remaining, if any, shall be distributed among the General Partners in proportions to their General Partner Percentages. B. In any year in which there is a Net Loss and the Partnership is not dissolved and liquidated in accordance with Section 8.2 hereof, such Net Loss, on the books of the Partnership, shall be borne by the Class II Subordinated Limited Partners to the extent as set forth in the formula described in Section 8.1A(iii) hereof and the balance shall be borne by the General Partners in proportion to their respective General Partner Percentages. Any such Net Losses borne by the Class II Subordinated Limited Partners shall only be applied against and reduce their respective Capital Contributions. The total amount of all such Net Losses to be borne by the Class II Subordinated Limited Partners may never exceed the total amount of the Capital Contributions of the Class II Subordinated Limited Partners as shown on the books of the Partnership. C. Notwithstanding the foregoing, where losses are caused by the willful neglect or default, the gross negligent conduct, or the intentional negligent conduct of any Partner, those losses shall be borne solely and made good by the Partner so causing the loss. This Section 8.1C is for the benefit of the Partners and no other person shall have any rights hereunder. D. Notwithstanding any other provision of this Agreement to the contrary, the aggregate interest of the General Partners in each material item of Partnership income, gain, loss, 28 deduction, preference or credit shall be equal to at least one percent (1%) of each such item at all times during the existence of the Partnership. 8.2 Distributions Upon Dissolution. ------------------------------ A. Upon the dissolution of the Partnership as a result of the occurrence of any of the events set forth in Section 2.4 hereof, the Managing Partner shall proceed to liquidate the Partnership, and the proceeds of liquidation (the "Proceeds of Liquidation") shall be applied and distributed in the following order of priority: (i) To the payment of debts and liabilities of the Partnership, including the expenses of liquidation, but expressly excluding all Capital Contributions of all Partners (General Partners, Class I Subordinated Limited Partners, Class II Subordinated Limited Partners and Limited Partners), the return of all of such Capital Contributions are provided for below and all of which is equity capital of the Partnership. (ii) To the payment of any accrued but unpaid amounts due under Section 8.1 hereof. (iii) To the repayment of the Capital Contributions of the Limited Partners. (iv) To the repayment of the Capital Contributions of the Class I Subordinated Limited Partners (v) To the repayment of the Capital Contributions of the Class II Subordinated Limited Partners. (vi) To the repayment of the General Partners' Adjusted Capital Contributions. (vii) The balance of the Proceeds of Liquidation, if any, shall be distributed to the General Partners in proportion to their respective General Partner Percentages. B. Notwithstanding the foregoing, in the event the Managing Partner shall determine that an immediate sale of part or all of the Partnership assets would cause undue loss to the Partners, the Managing Partner, in order to avoid such loss, may, after having given Notice to all the Limiteds, either defer liquidation of, and withhold from distribution for a reasonable time, any assets of the Partnership except those necessary to satisfy the Partnership debts and obligations, or distribute the assets to the Partners in kind. C. Net Income generated by transactions in connection with the dissolution and liquidation of the Partnership shall be distributed in accordance with Section 8.1A hereof. 8.3 Distribution of Frozen Appreciation Amount. ------------------------------------------ Notwithstanding the provisions of Section 8.1 or 8.2 hereof, in the event any tract of Real Estate or any Exchange Seat or Edward D. Jones & Co., L.P. or EDJ Leasing Co., L.P. is 29 sold, then there shall be distributed from the net proceeds of such sale (prior to making any distributions pursuant to the provisions of Section 8.1 or 8.2 hereof) to each General Partner an amount equal to his Frozen Appreciation Amount with respect to such tract of Real Estate or Exchange Seat. The balance of any proceeds resulting from any such sale shall then be distributed in accordance with Sections 8.1 or 8.2 hereof or shall otherwise be used or retained by the Partnership as provided herein. 8.4 Sale of Assets to Third Party. ----------------------------- A. In the event the Partnership shall sell or otherwise dispose of, at one time, all, or substantially all, of its assets (a "Sale") to any one Person or to any one Person and its Affiliates and the Partnership is thereafter liquidated within 180 days, then the provisions of Section 8.3 and this Section 8.4 shall be applicable with respect to the order of priority of distribution of the Proceeds of Liquidation. B. For the purposes of this Section 8.4 the term "substantially all" shall be deemed to mean assets of the Partnership or of any of its significant subsidiaries representing 80% or more of the net book value of all of the Partnership's assets (or such significant subsidiary's assets) determined as of the end of the most recently completed fiscal year. C. Prior to making any payments to the General Partners pursuant to Section 8.2A(vii) hereof (but after making all other payments required by Section 8.2A and all payments required by Section 8.3 hereof) the Partnership shall distribute: (i) to the Limited Partners a percentage of the Premium (as hereinafter defined) equal to the same percentage of the Net Income of the Partnership which the Limited Partners shall receive (pursuant to Section 8.1A hereof) from the Partnership for the current fiscal year of the Partnership; and (ii) to the Class II Subordinated Limited Partners an amount equal to the product of the Premium (remaining after the payment required by Section 8.4C(i) hereof) times a fraction the numerator of which is the total Capital Contributions of the Class II Subordinated Limited Partners (on the date of the Sale) and the denominator of which is (X) the total Capital Contributions of the Class II Subordinated Limited Partners (on the date of the Sale) plus (Y) the total of the Adjusted Capital Contributions of the General Partners (on the date of the Sale). No payments shall be made or are intended to be made to Class I Subordinated Limited Partners pursuant to this Section 8.4C. D. "Premium" means the Proceeds of Liquidation remaining after the payment of the items set forth in Sections 8.2A(i), (ii), (iii), (iv), (v) and (vi) hereof. E. Any amounts payable to the Limited Partners and the Class II Subordinated Limited Partners pursuant to this Section 8.4 shall be disbursed pro-rata to the Limited Partners and the Class II Subordinated Limited Partners based on their Capital Contributions on the date of the Sale. F. Neither the Partnership nor the General Partners shall have any obligation to cause a Sale to occur. 30 8.5 Other Sales or Dispositions to Third Party. ------------------------------------------ In the event the Partnership or any of its significant subsidiaries, in a transaction (dealing with all or substantially all of the business of the Partnership or such significant subsidiary) not covered by Section 8.4 hereof (but similar in scope to such a transaction), sells assets, merges or has a public offering, it is hereby stated that it is the intention of the General Partners that the Limited Partners and the Class II Subordinated Limited Partners shall share in any "profit" or "premium" recognized from such transaction. Because it is impossible at this time to foresee all possible factual situations that may occur with respect to a given transaction, it is equally impossible to determine a fair, just and equitable formula at this time to distribute a portion of such "profit" or "premium" to the Limited Partners and the Class II Subordinated Limited Partners. It is stated, however, at this time, as a matter of policy of the Partnership that it is the intention of the General Partners to allow the Limited Partners and the Class II Subordinated Limited Partners to share a portion of such "profit" or "premium" (assuming any "profit" or "premium" is also actually distributed to the General Partners) in a fair, just and equitable manner in such amount, if any, as determined in the sole and absolute discretion of the Managing Partner at the time of such transaction. In making such determination of such amount, if any, the Managing Partner shall not be bound by the formula set forth in Section 8.4 hereof. Neither the Partnership nor the General Partners shall have any obligation, however, to cause such transaction to occur and no Limited Partners and the Class II Subordinated Limited Partners shall have any right to bring any cause of action against the Partnership or its General Partners by reason of any statement made in this Section 8.5. No payments shall be made or are intended to be made to Class I Subordinated Limited Partners pursuant to this Section 8.5. 8.6 Allocation of Profits and Losses for Tax Purposes. ------------------------------------------------- A. Except as provided in Sections 8.6B, C or D hereof, all Profits And Losses For Tax Purposes of the Partnership shall be allocated as follows: (i) In any calendar year in which the Partnership has a net profit for tax purposes, to the Partners with each Partner sharing therein in the proportion that Net Income distributed to the Partner and/or credited to the Adjusted Capital Contribution of the Partner bears to all Net Income of the Partnership for the calendar year. (ii) In any calendar year in which the Partnership has a net loss for tax purposes, first to the Class II Subordinated Limited Partners with each Class II Subordinated Limited Partner bearing an amount of loss to the extent set forth in the formula described in Section 8.1A(ii) hereof; provided, however, that the total amount of losses allocated to a Class II Subordinated Limited Partner shall not reduce such Partner's Capital Account below zero (determined after taking into account all prior or contemporaneous cash distributions and all prior or contemporaneous allocations of income, gain, loss, deduction or credit and as determined at the close of the taxable year in respect of which such loss or deduction is to be allocated); and any remaining losses shall be allocated to the General Partners in proportion to their respective General Partner percentages. 31 B. The Managing Partner is authorized to allocate Profits and Losses For Tax Purposes arising in any calendar year differently than otherwise provided for in this Section 8.6 to the extent that the Managing Partner determines, in his discretion, that such modifications are appropriate to cause the allocations to comply with the principles of Section 704 of the Internal Revenue Code and such modifications are in the overall best interests of the Partners. Any allocation made pursuant to this Section 8.6B shall be deemed to be a complete substitute for any allocation otherwise provided for in this Article Eight and no amendment of this Agreement or approval of any Partner shall be required. C. Notwithstanding any other provisions of this Agreement to the contrary, if the amount of any Partnership Minimum Gain at the end of any taxable year is less than the amount of such Partnership Minimum Gain at the beginning of such taxable year, there shall be allocated to any Partner having a negative Capital Account at the end of such taxable year (determined after taking into account any adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) gross income and gain (in respect of the current taxable year and any future taxable year) in an amount sufficient to eliminate such negative Capital Account in compliance with Treasury Regulations Section 1.704-1(b)(4)(iv)(e). Such allocation of gross income and gain shall be made prior to any other allocation of profits and losses for tax purposes. Any such allocation of gross income or gain pursuant to this Section 8.6C shall be in proportion with such negative Capital Accounts of the Partners and such allocations of gross income and gain shall be taken into account, to the extent feasible, in computing subsequent allocations of Profits and Losses For Tax Purposes of the Partnership so that the net amount of all items allocated pursuant to each Partner pursuant to this Article Eight shall, to the extent possible, be equal to the net amount that would have been allocated to each such Partner pursuant to the provisions of this Article Eight if the allocations made pursuant to the first sentence of this Section 8.6C had not occurred. D. Notwithstanding any other provisions of this Agreement to the contrary, except as provided in Section 8.6C hereof, if any Limited Partner or Class I Subordinated Limited Partner or Class II Subordinated Limited Partner receives any adjustment, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that reduces such Partner's Capital Account below zero or increases the negative balance in such Partner's Capital Account, gross income and gain shall be allocated to such Partner in an amount and manner sufficient to eliminate any negative balance in his Capital Account created by such adjustments, allocations, or distributions as quickly as possible in accordance with Treasury Regulations Section 1.704-1(b)(2)(ii)(d). Any such allocation of gross income or gain pursuant to this Section 8.6D shall be in proportion with such negative Capital Accounts of such Partners. Any allocations of items of gross income or gain pursuant to this Section 8.6D shall (i) not duplicate any allocations of gross income or gain made pursuant to Section 8.6C hereof, and (ii) be taken into account, to the extent feasible, in computing subsequent allocations of Profits and Losses For Tax Purposes of the Partnership, so that the net amount of all items allocated to each Limited Partner, Class I Subordinated Limited Partner and Class II Subordinated Limited Partner pursuant to this Article Eight shall, to the extent possible, be equal to the net amount that would have been allocated to each such Partner pursuant to the provisions of this Article Eight if such adjustments, allocations or distributions had not occurred. 32 E. If and to the extent upon dissolution of the Partnership pursuant to Section 2.4 hereof the allocations under Section 8.6A are inconsistent with the following provision, then such allocations shall be adjusted to conform to the following provision: income and gain (whether ordinary income, gain under Section 1231 of the Internal Revenue Code, or capital gain) from disposition of all remaining Partnership assets shall be allocated among the Partners so that the positive balance of each Partner's Capital Account is equal to the cash to be distributed to such Partner pursuant to Article 8.2 determined after all Capital Accounts have been adjusted to reflect the allocations of Profits and Losses For Tax Purposes of the Partnership and cash distributions made pursuant to Section 8.1 hereof. 8.7 Liability of General Partners. ----------------------------- No General Partner shall be liable or accountable, directly or indirectly (including by way of indemnification, contribution, assessment or otherwise), for any debts, obligations or liabilities of, or chargeable to, the Partnership or each other, whether arising in tort, contract, or otherwise, which are created, incurred or assumed by the Partnership (or owing to creditors or Partners during liquidation of the Partnership) while the Partnership is a registered limited liability limited partnership. ARTICLE NINE BOOKS, RECORDS AND REPORTS, --------------------------- ACCOUNTING, TAX ELECTIONS, ETC. ------------------------------- 9.1 Books, Records and Reports. -------------------------- A. Proper and complete records and books of account shall be kept (or caused to be kept) by the Managing Partner in which shall be entered all transactions and other matters relative to the Partnership's business. The Partnership's books and records shall be prepared in accordance with generally accepted accounting principles, consistently applied. The books and records shall at all times be maintained at the principal office of the Partnership and shall be open for examination and inspection by the Partners or by their duly authorized representatives during reasonable business hours. In particular, the following books and records shall be kept: (i) a current list and a past list of the full name and last known mailing address of each Partner, specifying the General Partners and the Limited Partners, the Class I Subordinated Limited Partners and the Class II Subordinated Limited Partners, in alphabetical order, including the date of admission or withdrawal of each Partner. To the extent provided by the Missouri Limited Partnership Act, these lists shall be provided to the Secretary of State of Missouri, without cost, upon his written request; (ii) a copy of the Certificate of Limited Partnership and all Certificates of Amendment thereto, together with executed copies of any Powers of Attorney pursuant to which any Certificate has been executed; 33 (iii) copies of the Partnership's federal, state and local income tax returns and reports, if any, for the three most recent fiscal years; and (iv) copies of any written Partnership Agreements in effect and any financial statements of the Partnership for the three most recent years. B. The Managing Partner shall have prepared at least annually, at the Partnership's expense, financial statements (balance sheet, statement of income or loss, partners' equity, and changes in financial position) prepared in accordance with generally accepted accounting principles which shall fairly reflect the Partnership's financial position at the date shown and its results of operations for the period indicated. Copies of such statements and report shall be made available to the Partners annually. C. The Managing Partner shall have prepared at least annually, at the Partnership's expense, a report containing Partnership information necessary in the preparation of the Partners' federal income tax returns. Copies of such report shall be distributed to each Partner as promptly as possible. 9.2 Bank Accounts. ------------- The bank accounts of the Partnership shall be maintained in such banking institutions as the Managing Partner shall determine, and withdrawals shall be made only in the regular course of Partnership business on such signature or signatures as the Managing Partner may determine. 9.3 Depreciation and Elections. -------------------------- A. All elections required or permitted to be made by the Partnership under the Internal Revenue Code shall be made by the Managing Partner. B. Notwithstanding anything to the contrary in this Section 9.3, the Managing Partner shall not be responsible for initiating any change in accounting methods from the methods initially chosen. C. The Managing Partner is hereby designated as the "Tax Matters Partner" under Section 6231(a)(7) of the Internal Revenue Code. 9.4 Fiscal Year. ----------- The fiscal year of the Partnership shall be the calendar year for tax purposes. 34 ARTICLE TEN ----------- MEDIATION/ARBITRATION --------------------- THIS AGREEMENT CONTAINS THE FOLLOWING BINDING ARBITRATION PROVISIONS WHICH MAY BE ENFORCED BY THE PARTNERSHIP AND THE PARTNERS 10.1 Mediation/Arbitration. --------------------- A. Any controversy, claim or dispute between the Partnership and any Partner or former Partner or between Partners and/or former Partners (individually a "Party" and collectively the "Parties"), including, but not limited to, any controversy, claim or dispute arising out of or relating to any provision of this Agreement or the breach, termination or validity thereof or any breach of an actual or implied contract of employment between the Partnership and a Party, or any claim of unjust or tortious discharge (including any claim of fraud, negligence, or intentional or negligent infliction of emotional distress) or any document or agreement or policy of the Partnership (including, but not limited to, Partnership benefit and retirement plans, Partnership office manuals, Partnership affirmative action plans and Partnership policies), equal opportunity employer plans and policies or any claims or violations arising under the Civil Rights Act of 1964, as amended and effective November 21, 1991, including amendment to 42 U.S.C. 2000e et seq., 42 U.S.C. 1981, the Age Discrimination in Employment -- ---- Act, 29 U.S.C. 621 et seq., the Fair Labor Standards Act of 1938, 29 U.S.C. -- ---- 201 et seq., the Rehabilitation Act of 1973, 29 U.S.C. 701 et seq., or of -- ---- -- ---- the Missouri Human Rights Act, 213.010 R.S. Mo. et seq., the Missouri -- ---- Workers Compensation statute or any violation of the Missouri Service Letter Statute, 290.140 R.S. Mo., or any other relevant federal, state, or local statutes or ordinances, also including without limitation, the application, interpretation, performance or enforcement of any right, obligation or fiduciary duty under this Agreement or such other documents and agreements whether arising before or after the date of this Agreement (collectively, a "Dispute") as to which a Party otherwise would have the right to pursue litigation will be resolved as provided for in this Article Ten, which shall be the sole and exclusive procedures for the resolution of any Dispute. This Article Ten shall survive termination of the partnership relationship established by the Agreement. These procedures are for the settlement of Disputes only and are not to be used for disagreements concerning Partnership policy, organization or practice management. Nothing contained in this Section 10.1 is intended to expand any substantive rights any Party may have under other Sections of this Agreement, and any action of the Partnership taken by a vote of the Partners or the Executive Committee or by the action of the Managing Partner, when taken in accordance with the terms of this Agreement, shall be final, binding and conclusive as so provided in this Agreement. The Parties intend that the foregoing provisions shall encompass any other statutory and common law rights, obligations or duties, whether or not specifically referred to herein, of a similar or dissimilar nature, which are or may be granted to any Party hereto, by the laws of any state or country in which any Party resides or engages in the business of the Partnership. B. If any Party has a Dispute with any other Party, then (if discussions among the Parties have failed) such Party and the other Party may have the Dispute mediated by one person chosen by agreement of such Parties. The mediator, after consultation with the Parties, will determine the mediation procedures to be followed. The fees and expenses of the mediator shall be paid by the Partnership. If no mutual agreement can be reached to mediate or upon the identity of the mediator, then the Dispute will be settled by binding arbitration under the procedures set forth below. 35 C. All Disputes that cannot be resolved by mediation will be settled by binding arbitration under the procedures set forth below. D. Any Party may, if mediation has failed to resolve the Dispute (or if the Parties fail to agree on a mediator), commence arbitration by written notice to the other Party. Thereafter, arbitration shall be conducted in the manner described in Section 10.1F. E. Except as provided in Section 10.1B arbitration, under the Arbitration Code of the National Association of Securities Dealers, Inc. (the "NASD"), shall be the exclusive remedy for any Dispute. Any Party may apply to the Exclusive Venues (as defined in Section 10.2) for injunctive, specific enforcement or other relief in aid of the arbitration proceedings or to enforce judgment of the award in such arbitration proceeding, but not otherwise. Any award issued by the arbitrators pursuant to these provisions may be entered and enforced in the Exclusive Venues and any other appropriate jurisdiction. F. The Parties agree among themselves that the arbitration proceedings shall be conducted as follows: (i) All proceedings conducted shall be deemed private and confidential and shall not be disclosed to the public by either the arbitrators or the Parties to the arbitration. The Parties acknowledge that the Partnership's administrative offices and the books and records (including accounting data) of the Partnership are all located in the St. Louis, Missouri metropolitan area, and, accordingly, the Parties agree to request that the arbitration proceedings and hearings shall be held in the St. Louis, Missouri metropolitan area (unless otherwise agreed by the Parties or decided by the arbitrators). (ii) The exclusive award for any Dispute shall be recovery of compensatory damages (that is, damages which compensate a party for actual damages suffered), and each Partner hereby waives any and all other forms of damages including multiple, punitive or exemplary damages, damages for emotional distress, mental anguish or suffering and consequential damages. (iii) The applicable substantive law of Missouri or the United States (notwithstanding that a Party to a Dispute may be a resident of another state or country), as the case may be, shall be used in rendering any award. Such award shall be final and binding on all Parties and may be entered as a judgment, under seal, and enforced in the appropriate jurisdiction. 10.2 Forum Selection. --------------- If any court or tribunal of competent jurisdiction shall refuse to enforce Section 10.1 or determine a matter is not a Dispute, then, and only then, shall the alternative provisions of this Section 10.2 be applicable. The Partners acknowledge that the Partnership's administrative offices and the books and records (including accounting data) of the Partnership are all located in the St. Louis, Missouri metropolitan area and, accordingly, the Partners agree that it would be more convenient for, and in the best mutual joint interest of, the Partners and the 36 Partnership that, in the event of a Dispute, venue for litigation shall be laid exclusively in the Circuit Court of the County of St. Louis, Missouri or in the United States District Court for the Eastern District of Missouri. Such Circuit Court and United States District Court are together referred to as the "Exclusive Venues" for litigation. The Partnership and each Partner agree not to institute any litigation except in the Exclusive Venues and further agree that specific enforcement of this covenant with respect to Exclusive Venues may be awarded to the Partnership and each Partner by means of all available legal or equitable remedies, including, without limitation, a temporary restraining order. The Partnership and each Partner hereby submit to the personal jurisdiction of the Exclusive Venues and waive any requirement for setting bond for a temporary restraining order. The Firm and each Partner hereby waive any right it or such Partner may have to a jury trial in any litigation brought in accordance with this Agreement. 10.3 Statute of Limitations. ---------------------- The statute of limitations of the State of Missouri applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration hereunder, except no defenses shall be available based upon the passage of time during any mediation conducted pursuant to this Article Ten. 10.4 Other Agreements. ---------------- Notwithstanding anything to the contrary contained in any other document or agreement requiring arbitration, including, but not limited to, Form U-4, signed by any Party, the Parties agree that if the matter in controversy is, in whole or in part, a Dispute, then the provisions of this Article shall control such arbitration. ARTICLE ELEVEN GENERAL PROVISIONS ------------------ 11.1 Appointment of Attorneys-in-Fact. -------------------------------- A. Each Partner, by the execution hereof, hereby irrevocably constitutes and appoints John W. Bachmann, Lawrence R. Sobol, and the then Managing Partner (at any time the Managing Partner is not John W. Bachmann), his true and lawful attorney-in-fact, and each of them, with full power and authority in his name, place and stead, to execute or acknowledge (on behalf of such Partner and/or the Partnership) under oath, deliver, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Agreement including: (i) All certificates and other instruments (including this Agreement or any certificate of limited partnership or certificate of limited liability partnership and any amendment thereof) which the Managing Partner deems appropriate to qualify or continue the Partnership as a registered limited liability limited partnership under the Missouri Limited Partnership Act and the Missouri Partnership Act (or a partnership in 37 which the Partners will have limited liability comparable to that provided by the Missouri Limited Partnership Act and the Missouri Partnership Act) or under the laws of any other jurisdiction in which the Partnership may conduct business; (ii) All amendments to this Agreement or any certificate of limited partnership or any certificate of limited liability partnership which are required to be filed or which the Managing Partner deems to be advisable to file; (iii) All instruments which the Managing Partner deems appropriate to reflect a change or modification of the Partnership in accordance with the terms of this Agreement; (iv) All conveyances and other instruments which the Managing Partner deems appropriate to reflect the dissolution and termination of the Partnership; and (v) All other instruments, documents or contracts (including, without limiting the foregoing, any deed, lease, mortgage, note, bill of sale, contract, trust agreement, guarantee, partnership agreement, indenture, underwriting agreement or any instrument or documentation which may be required to be filed (or which the Managing Partner deems advisable to file) by the Partnership under the laws of any state or by any governmental agency) requisite to carrying out the intent and purpose of this Agreement and the business of the Partnership and its Affiliates. B. The appointment by all Limited Partners of John W. Bachmann, Lawrence R. Sobol, and the then Managing Partner (at any time the Managing Partner is not John W. Bachmann), as attorney-in-fact, and each of them, shall be deemed to be a power coupled with an interest in recognition of the fact that each of the Partners under this Agreement will be relying upon the power of John W. Bachmann, Lawrence R. Sobol, and the then Managing Partner (at any time the Managing Partner is not John W. Bachmann), and each of them, to act as contemplated by this Agreement in any filing and other action by them on behalf of the Partnership. The foregoing power of attorney shall survive the death, disability or incompetency of a Partner or the assignment by any Partner of the whole or any part of its interest hereunder. 11.2 Word Meanings. ------------- The words such as "herein", "hereinafter", "hereof", and "hereunder" refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. The singular shall include the plural and the masculine gender shall include the feminine and neuter, and vice versa, unless the context ---------- otherwise requires. 11.3 Binding Provisions. ------------------ The covenants and agreements contained herein shall be binding upon, and inure to the benefit of the heirs, executors, administrators, successors and assigns of the respective parties hereto. 38 11.4 Applicable Law. -------------- This Agreement shall be construed and enforced in accordance with the laws of the State of Missouri. 11.5 Counterparts. ------------ This Agreement may be executed in several counterparts, all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties have not signed the same counterpart, except that no counterpart shall be binding unless signed by the Managing Partner. 11.6 Entire Agreement. ---------------- This Agreement contains the entire agreement between the parties and supersedes all prior writings or representations. 11.7 Separability of Provisions. -------------------------- Each provision of this Agreement shall be considered separable and if for any reason any provision or provisions hereby are determined to be invalid or unenforceable such validity or unenforceability shall not impair the operation of or affect any other portion of this Agreement and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted. 11.8 Representations. --------------- Each person who becomes a Limited hereunder does hereby represent and warrant by the signing of a counterpart of this Agreement or an amendment to this Agreement that the Partnership interest acquired by him was acquired for his own account, for investment only, not for the interest of any other person and not for resale to other persons or for further distribution. The Managing Partner has not made and hereby makes no warranties or representations other than those specifically set forth in this Agreement. 11.9 Section Titles. -------------- Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. 11.10 Partition. --------- The Partners agree that the Partnership's assets are not and will not be suitable for partition. Accordingly, each of the Partners hereby irrevocably waives any and all right he may have to maintain any action for partition of any of the Partnership's assets. 39 11.11 No Third Party Beneficiaries. ---------------------------- This Agreement is made solely and specifically for the benefit of the Partners and their respective successors and permitted assigns, and no other person whatsoever shall have any rights, interests or claims hereunder or be entitled to any benefits hereunder or on account of this Agreement as a third party beneficiary or otherwise. 11.12 Amendments. ---------- In addition to the amendments otherwise authorized herein, this Agreement may be amended, from time to time, without the consent or approval of (and without prior notice to) any Limited, by the Managing Partner or by the affirmative vote of General Partners holding an aggregate of at least a majority of the total General Partner Percentages. In particular, but without limiting the foregoing, the interests of the Limited Partners and the Class II Subordinated Limited Partners in the Net Income or the Proceeds of Liquidation of the Partnership or in any other allocation or distribution to be received by them from the Partnership pursuant to Article Eight hereof or otherwise may be reduced or increased or otherwise modified in accordance with this Section 11.12 without the consent or approval of (and without prior notice to) any Limited. 11.13 Revocable Trusts. ---------------- Notwithstanding anything to the contrary herein contained, it is recognized that certain of the Partners are not persons but are revocable trusts ("Trusts"), the grantors of which ("Grantors"), except for the transfer of their partnership interests to (or the designation of) such Trusts created by them, would be the Partners. Thus, when used herein the phrases "General Partner", "Limited Partner", "Limited", "Partner", "Class I Subordinated Limited Partner" or "Class II Subordinated Limited Partner" shall be deemed, when the context hereof so requires (such as, without limiting the generality of the foregoing, death, disability or withdrawal of a Partner, gross negligent conduct of a General Partner, a General Partner receiving a guaranteed draw for services rendered, General Partner required submission of tax returns, sale by a General Partner of Retiring Interests after his 56th birthday) to be a reference to the Grantor of such Trust. In addition, to the extent that any General Partner has obligations or liabilities imposed upon such General Partner pursuant to this Agreement, then, if such General Partner is a Trust, such General Partner, by such General Partner's signature hereto (and the Grantor of such Trust by such Grantor's signature hereto), hereby agrees that said obligations and liabilities are also obligations and liabilities of such Grantor. 40 IN WITNESS WHEREOF, the undersigned has executed this Twelfth Amended and Restated Agreement of Registered Limited Liability Limited Partnership effective as of the day and year first above written. THIS AGREEMENT CONTAINS THE FOLLOWING BINDING ARBITRATION PROVISIONS WHICH MAY BE ENFORCED BY THE PARTNERSHIP AND THE PARTNERS GENERAL PARTNER: --------------------------------------------- GENERAL PARTNERS AS SHOWN IN THE BOOKS AND RECORDS OF THE PARTNERSHIP* LIMITED PARTNERS AS SHOWN IN THE BOOKS AND RECORDS OF THE PARTNERSHIP* CLASS II SUBORDINATED LIMITED PARTNERS AS SHOWN IN THE BOOKS AND RECORDS OF THE PARTNERSHIP* *By: ----------------------------------------- Attorney-In-Fact Note: At the time of the signing of this Agreement there are no Class I Subordinated Limited Partners. 41 EX-10.17 4 exh10p17.txt LEASE Exhibit 10.17 ------------- LEASE BETWEEN ECKELKAMP OFFICE CENTER SOUTH, L.L.C., A MISSOURI LIMITED LIABILITY COMPANY, AS LANDLORD AND EDWARD D. JONES & CO., L.P., A MISSOURI LIMITED PARTNERSHIP, AS TENANT (BUILDING III) (LOT 1) LEASE THIS LEASE AGREEMENT (the "Lease") is made and entered into on the 3rd day of February, 2000, between Eckelkamp Office Center South, L.L.C., a Missouri limited liability company ("Landlord"), and Edward D. Jones & Co., L.P., a Missouri limited partnership ("Tenant"). W I T N E S S E T H ------------------- 1. DEFINITIONS. 1.1. "AAA" shall be as defined in Section 47.1 hereof. ------------ 1.2. "Accounting" shall be as defined in Paragraph 11(b) --------------- of Exhibit A attached hereto and incorporated herein. --------- 1.3. "ADA" shall mean the Americans with Disabilities Act. 1.4. "Additional Rent" shall be as defined in Section 3.4 ----------- hereof. 1.5. "Additional Work" shall be as defined in Section 6.2 ----------- hereof. 1.6. "Adjacent Property" shall mean Lot II and Lot III of the Office Center. 1.7. "Adjacent Property Owner" shall mean the owner or owners from time to time of the Adjacent Property. 1.8. "Advance Occupancy" shall be as defined in Section 2.5 hereof. - ----------- 1.9. "Approved Subcontractors" shall be as defined in Paragraph 6(a) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.10. "Arbitration" shall be as defined under Section 47 ---------- hereof. 1.11. "Architect" shall be as defined in Paragraph 6(a) -------------- of Exhibit A attached hereto and incorporated herein. --------- 1.12. "Base Rent" shall mean those amounts set forth in Section 3.1 hereof, payable in equal monthly installments. - ----------- 1.13. "Base TI Allowance" shall be as defined in Paragraph 7(a) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.14. "Building" or "Building III" shall mean the office building to be constructed as Building III on Lot I of the Office Center, which is calculated to contain 218,057 RSF and to contain 228,000 construction gross square feet. 1.15. "Building I" shall mean that certain office building located on the Adjacent Property known as Building I. 1.16. "Building II" shall mean that certain office building located on the Adjacent Property known as Building II. 1.17. "Building III Option" shall be as defined in Section 44 hereof. - ---------- 1.18. "Building Grade" shall mean the type, brand and/or quality of materials Landlord designates from time to time to be the minimum quality to be used in the Building or the exclusive type, grade or quality of material to be used in the Building. 1.19. "Building Manager" shall be as defined in Section 5.1(b)(vii) hereof. - ------------------- 1.20. "Cafeteria" shall be as defined in Section 5.6 ----------- hereof. 1.21. "Commencement Date" means the day after the date (but no earlier than the Substantial Completion Date) upon which (a) the Premises are Substantially Completed; and (b) St. Louis County has issued any temporary or permanent occupancy permits which are necessary and allow the Tenant to occupy the Premises to conduct the Tenant's business therein; provided, however, if the Architect and the Tenant Architect do not agree as to Substantial Completion, the Tenant shall begin to pay Base Rent at one-half of the required amount until such time as both the Tenant Architect and the Architect agree that the Premises are Substantially Complete; and thereafter, the parties shall attempt to negotiate in good faith to resolve such disagreement. If the parties are unable to negotiate such disagreement, the parties shall submit the issue to Arbitration or a court of competent jurisdiction for a declaratory judgment and, upon completion of such action, the appropriate Commencement Date shall be determined and any appropriate adjustments in Rent shall be made with interest accruing at the Prime Rate for any adjusted amounts from the date such payment should have been paid until the date paid. The Tenant shall begin to pay full Additional Rent at the same time full or partial Base Rent is to be paid. The Commencement Date may be earlier than the date provided in Subparagraphs (a) and (b) above ------------------------- pursuant to Section 2.2(b) hereof. -------------- 1.22. "Construction Period" shall mean that period beginning on the date of execution of this Lease and continuing through 11:59 p.m. on the day immediately prior to the Commencement Date. 1.23. "Contractor" shall be as defined in Paragraph 8 of ----------- Exhibit A attached hereto and incorporated herein. - --------- 1.24. "Construction Schedule" shall be as defined in Paragraph 3 of Exhibit A attached hereto and incorporated herein. - ----------- --------- 2 1.25. "Core and Shell" shall be as defined in Paragraph 1(a) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.26. "Core and Shell Plans" shall be as defined in Paragraph 1(a) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.27. "CPI Index" shall mean the Consumer Price Index for All Urban Consumers, as revised for U.S. City Average, issued by the Bureau of Labor Statistics of the United States Department of Labor or any successor agency, or any other measure hereafter employed by that Bureau or any successor agency in lieu of such CPI Index that measures the cost of living in the United States. If the CPI Index is hereafter converted to a different standard reference base or otherwise revised, the determination of the percentage increase shall be made either with the use of such conversion factor, formula or table converting the CPI Index as may be published by the Bureau or any successor agency, or if no such conversion factor, formula or table is published, then by using such other index as is then generally recognized and accepted for similar determinations of purchasing power in Landlord's reasonable discretion. 1.28. "Cybertel" shall mean Cybertel Cellular Telephone Company, a Missouri partnership. 1.29. "Cybertel Lease" shall mean that certain Lease dated November 30, 1990, executed by Cybertel and Manchester 270 Partnership, as amended by First Amendment to Lease Agreement dated as of July 15, 1996, Second Amendment to Lease Agreement dated as of January 15, 2000 and as it may be later amended. 1.30. "Declining Response" shall be as defined in Section 2.6(c)(ii) hereof. - ------------------ 1.31. "Delay Expenses" shall mean any excess construction period interest, loan related costs, delay in the payment of any Rent, Taxes, additional insurance premiums, utilities, similar costs or other Operating Expenses. 1.32. "Design Team" shall be as defined in Paragraph 6(a) -------------- of Exhibit A attached hereto and incorporated herein. --------- 1.33. "Design Work" shall be as defined in Paragraph 6(a) -------------- of Exhibit A attached hereto and incorporated herein. --------- 1.34. "Evaluation Period" shall be as defined in Section 15.5 hereof. - ------------ 1.35. "Excess TI Costs" shall be as defined in Paragraph 7(a) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.36. "Excluded Costs" shall be as defined in Section 4.1(a) hereof. - -------------- 3 1.37. "Excusable Construction Delay" shall mean any delay in the then current Construction Schedule for the Premises as a result of Force Majeure, changes in Core and Shell Plans or Tenant Work Plans requested by the Tenant which results in a delay of the construction of the Premises, or any act or omission of the Tenant which results in a delay in the construction of the Premises. 1.38. "Execution Date" shall be the date by which both (a) this Lease has been executed by the Tenant and the Landlord and (b) a copy signed by the Tenant has been received by the Landlord. 1.39. "Expense Statement" shall be as defined in Section 4.1(b) hereof. - -------------- 1.40. "Event of Default" shall be as defined in Section 23 ---------- hereof. 1.41. "First Party" shall be as defined in Section 47.4 ------------ hereof. 1.42. "Food Service Contractor" shall be as defined in Section 5.6 hereof. - ----------- 1.43. "Force Majeure" shall be as defined in Section 36.1(a) hereof. - --------------- 1.44. "Hazardous Materials" shall be as defined in Section 37.1 hereof. - ------------ 1.45. "HVAC" shall be as defined in Section 5.1(b)(ii) ------------------ hereof. 1.46. "Initial Period" shall be as defined in Section 4.2 ----------- hereof. 1.47. "Initial Term" shall mean a term of at least twenty (20) years, but less than two hundred forty-one (241) months, beginning on the Commencement Date and ending on the last day of the month in which the twentieth anniversary of the day before the Commencement Date occurs. 1.48. "Insurance Coverage Amount" shall be as defined in Section 10.2 hereof. - ------------ 1.49. "Kelley" shall be as defined in Section 29 hereof. ---------- 1.50. "Landlord Change Order" shall be as defined in Paragraph 9(c)(i) of Exhibit A attached hereto and incorporated herein. - ----------------- --------- 1.51. "Landlord Default" shall be as defined in Section 23.8(b) hereof. - --------------- 1.52. "Landlord Expenses" shall be as defined in Section 4.8 hereof. - ----------- 1.53. "Late Charge" shall be as defined in Section 3.1 ----------- hereof. 1.54. "Late Delivery Payment" shall be as defined in Section 2.3(a)(iii) hereof. - ------------------- 4 1.55. "Lease Year" shall mean a consecutive period of twelve (12) months provided the first Lease Year shall begin on the Commencement Date and end on the last day of the twelfth (12th) full calendar month following thereafter and each subsequent Lease Year shall be twelve (12) full calendar months. 1.56. "Leasehold Deed of Trust" shall be as defined in Section 48 hereof. - ---------- 1.57. "Lender" shall mean the holder of any mortgage or deed of trust lien upon the Premises from time to time. 1.58. "Liability Policy" shall be as defined in Section 10.2 hereof. - ------------ 1.59. "Lot I" or "Lot 1" shall mean Lot I of the Office Center as depicted on Exhibit B-1 attached hereto and incorporated herein. ----------- The landscaped areas that are adjacent to Lot 1 will be maintained by the Landlord at Tenant's expense (as an Operating Expense) and are hachured on Exhibit B-1. - ----------- 1.60. "Major Casualty" shall be as defined in Section 15.2(b) hereof. - --------------- 1.61. "Major Taking" shall be as defined in Section 16.2(a) --------------- hereof. 1.62. "Management Fee" shall mean the following sums: Lease Years 1-5 $ .75 per RSF of the Building Lease Years 6-10 $ .83 per RSF of the Building Lease Years 11-15 $ .93 per RSF of the Building Lease Years 16-20 $1.02 per RSF of the Building Lease Years 21-25 $1.12 per RSF of the Building Lease Years 26-30 $1.23 per RSF of the Building Lease Years 31-35 $1.35 per RSF of the Building Unless adjusted upward pursuant to Section 5.5 ----------- hereof. 1.63. "Monetary Default" shall mean an Event of Default by the Tenant hereunder resulting from the failure to pay Rent which has been outstanding for a period of thirty (30) days or more. 1.64. "Mortgage" shall be as defined in Section 24.1 ------------ hereof. 1.65. "Office Center" shall mean that development on Lot I, Lot II and Lot III of Manchester/270 Office Center. The land upon which the Office Center is situated is legally described on Exhibit B --------- attached hereto and incorporated herein. 1.66. "Operating Expenses" shall be as defined in Section 4.1(a) hereof. - -------------- 5 1.67. "Option Notice" shall be as defined in Section 2.6(b) -------------- hereof. 1.68. "Option Terms" shall be as defined in Section 2.6(a) -------------- hereof. 1.69. "Option TI Allowances" shall be as defined in Section 2.7 hereof. - ----------- 1.70. "Option TI Improvements" shall be as defined in Section 2.7(a)(ii) hereof. - ------------------ 1.71. "Parking Garage" shall mean that parking garage situated on Lot I of the Office Center exclusively serving Building III and possibly Cybertel pursuant to the Cybertel Lease, as described in Section 17 ---------- hereof. 1.72. "Plan Modifications" shall be as defined in Paragraph 1(b) of Exhibit A, attached hereto and incorporated herein. - -------------- --------- 1.73. "Position Paper" shall be as defined in Section 47.5 ------------ hereof. 1.74. "Premises" shall mean Lot I and the improvements to be constructed on Lot I pursuant to this Lease, including the Parking Garage and surface parking provided for in the Core and Shell Plans. 1.75. "Prime Rate" shall mean the from time to time publicly announced prime rate of interest of Bank of America (or any successor bank). 1.76. "Punch-List" shall be as defined in Paragraph 14 ------------ of Exhibit A attached hereto and incorporated herein. --------- 1.77. "Rent" shall be as defined in Section 3.4 hereof. ----------- 1.78. "RSF" shall mean a rentable square foot of the Building as calculated using the definition of ANSI/BOMA Z65.1-1996, STANDARD METHOD FOR MEASURING FLOOR AREA IN OFFICE BUILDINGS, dated: June 7, 1996 and published by the Building Owners and Managers Association International (BOMA), 1201 New York Avenue, N.W., Suite 300, Washington, D.C. 20005. 1.79. "Second Party" shall be as defined in Section 47.4 ------------ hereof. 1.80. "SNDA" shall be as defined in Section 24.1 hereof. ------------ 1.81. "Space Plans" shall be as defined in Paragraph 8(a) -------------- of Exhibit A attached hereto and incorporated herein. --------- 1.82. "Substantially Completed" or "Substantial Completion" shall mean the date upon which the Tenant Architect and the Architect have confirmed in writing to the Landlord and Tenant that the Premises are "substantially completed," as such phrase is defined 6 under AIA Form 704 prepared by the American Institute of Architects, in accordance with the Tenant Work Plans and the Core and Shell Plans. 1.83. "Substantial Completion Date" shall mean December 31, 2001. 1.84. "Tax" or "Taxes" shall be as defined in Section 4.7(a) hereof. - -------------- 1.85. "Tenant Architect" shall be as defined in Paragraph 6(a) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.86. "Tenant Change Order" shall be as defined in Paragraph 9(b) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.87. "Tenant Change Order Cost" shall be as defined in Paragraph 9(b) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.88. "Tenant Engineer" shall be as defined in Paragraph 6(a)(2) of Exhibit A attached hereto and incorporated herein. - ----------------- --------- 1.89. "Tenant Work" shall be as defined in Paragraph 7(b) -------------- of Exhibit A attached hereto and incorporated herein. --------- 1.90. "Tenant Work Plans" shall be as defined in Paragraph 1(c) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.91. "Tenant Work Schedule" shall be as defined in Paragraph 7(c) of Exhibit A attached hereto and incorporated herein. - -------------- --------- 1.92. "Term" shall mean the Initial Term and any Option Term which may be exercised by Tenant pursuant to this Lease. 1.93. "Term Extension" shall be as defined in Section 2.6(g) hereof. - -------------- 1.94. "Work Letter" shall mean the terms and provisions set forth as Exhibit A attached hereto and made a part hereof. --------- 2. LEASE TERM AND TENANT OPTION ALLOWANCES. 2.1. The Landlord hereby leases to the Tenant the Premises subject to the terms, conditions and covenants of this Lease, and the Tenant hereby accepts the leasing of the Premises subject to the terms, conditions and covenants of this Lease. This Lease shall continue in force during a period beginning on the date hereof and continuing until the expiration of the Initial Term, unless this Lease is sooner terminated or extended to a later date under an Option Term or under any other term or provision of this Lease. 7 2.2. (a) The Landlord shall use good faith efforts to deliver initial occupancy of the Premises to the Tenant on or before the Substantial Completion Date pursuant to the Work Letter, subject to Excusable Construction Delays. (b) If the completion of all or any portion of the Premises is delayed due to the failure of Tenant to comply with its obligations hereunder, all obligations of the Tenant under this Lease shall commence, including, without limitation, the obligation to pay Rent at the time the Premises would have been completed, but for Tenant's failure, but in no event earlier than the Substantial Completion Date. If the Tenant's failure results in a delay in Substantial Completion of the Premises, the Commencement Date shall be the date the Commencement Date would have occurred, but for Tenant's failure hereunder, but in no event earlier than the Substantial Completion Date. 2.3. (a) If, however, the Premises are not Substantially Completed (for reasons other than an Excusable Construction Delay) by the Substantial Completion Date, then as Tenant's sole remedy for the delay in Tenant's occupancy of the Premises: (i) The Commencement Date shall be delayed; (ii) Rent hereunder shall not commence until Substantial Completion of the Premises; and (iii) The Landlord shall pay to Tenant an amount equal to Five Thousand and 00/100 Dollars ($5,000.00) for each of the first thirty (30) days that the Commencement Date is delayed, beyond January 31, 2002 and Ten Thousand and 00/100 Dollars ($10,000.00) for each day of the second thirty (30) days thereafter that the Commencement Date is delayed, but in no event shall such payments exceed Four Hundred Fifty Thousand and 00/100 Dollars ($450,000.00) ("Late Delivery Payment"). The Late Delivery Payment shall be paid upon the Commencement Date. In the event of an Excusable Construction Delay, the number of days between January 31, 2002 and the Commencement Date used in calculating the Late Delivery Payment shall be reduced by the number of days of Excusable Construction Delay. The amount of such Late Delivery Payment has been determined by Landlord and Tenant to be reasonable and adequate to compensate Tenant for Landlord's failure to deliver possession of the Premises on the date so provided herein, and shall not be construed as a penalty, it being impossible to ascertain exactly the damages which such failure to deliver may entail. (b) In the event that the Substantial Completion Date has not occurred prior to December 31, 2002, the Tenant may, at any time thereafter (prior to the Substantial Completion Date occurring), terminate this Lease by written notice to the Landlord. (c) Within ten (10) business days after the occurrence of the Commencement Date, Landlord and Tenant shall execute a Declaration of Lease Commencement in the form attached hereto as Exhibit C. --------- 8 (d) Notwithstanding any provision of this Lease or the Work Letter attached as Exhibit A to the Lease to the contrary, the --------- Landlord acknowledges and agrees that it shall be responsible for the payment of any and all costs of the construction of the Core and Shell, the Parking Garage and all associated site work for the Premises as set forth in the Core and Shell Plans, and all costs associated with delays whether due to weather, labor disputes or material shortages and costs associated with loans, insurance and increased interest rates. The Tenant shall have no responsibility for the construction of the Core and Shell improvements, provided Delay Expenses and costs related to Tenant requested change orders to the Core and Shell Plans shall remain the responsibility of the Tenant hereunder. 2.4. There shall be no other remedies against or to Landlord for failure to complete the Premises or deliver possession thereof prior to the Substantial Completion Date. In the event of any Excusable Construction Delay, the Substantial Completion Date shall be automatically extended by the number of days of such Excusable Construction Delay. 2.5. The Landlord shall take reasonable efforts to permit the Tenant to have the right and privilege to enter onto the Premises to complete interior decoration work (i.e. the installation of fixtures, furniture and equipment that is not included within the Tenant Work) and prepare the Premises for occupancy ("Advance Occupancy"), subject to the following terms and conditions: (a) Tenant's Advance Occupancy shall not in any way interfere with or delay the completion of construction of the Core and Shell or the Tenant Work; (b) The Tenant and all contractors employed by the Tenant shall comply with all rules and regulations promulgated by the Landlord and the Contractor; (c) The Tenant and all of its contractors shall maintain and provide evidence to the Landlord of liability insurance in form and amount acceptable to the Landlord; (d) If any of the Tenant's contractors use non-union employees and such employees create any work stoppage or other disruption of construction of the Premises by the Landlord, the Tenant shall immediately terminate the use of such contractor; (e) The Tenant shall be responsible for any additional security costs and any costs of clean-up of trash or rubbish as a result of the Advance Occupancy. In the event that Advance Occupancy results in any delay of the Commencement Date, the Tenant shall indemnify and hold the Landlord harmless from any and all Delay Expenses incurred by the Landlord or the Contractor; (f) The Landlord shall have no responsibility or liability whatsoever for any loss or damage to any of Tenant's leasehold improvements, fixtures, equipment or any other materials installed or left within the Premises, except as a result of the Landlord's gross negligence or willful misconduct; 9 (g) Except as expressly provided herein, no Rent shall be payable or accrue to the Landlord during the period of Tenant's Advance Occupancy; and 2.6. (a) So long as no Monetary Default is outstanding, Tenant shall have three (3) options of five (5) years each to extend the then effective Term of this Lease ("Option Terms") upon written notice to Landlord as provided below. The terms and provisions of this Lease shall apply to any such Option Term. (b) Landlord agrees to give the Tenant eighteen (18) months prior written notice of the expiration of the Initial Term and each of the first two Option Terms that such Term ("Option Notice") shall expire within eighteen (18) months, unless the Tenant exercises its Option Term (and, in the case of the Initial Term, its option to purchase the Premises under the Building III Option) upon the later of: (i) six (6) months after receipt of the Option Notice; or (ii) the first day of the last Lease Year. (c) If the Landlord fails to provide an Option Notice to the Tenant at least eighteen (18) months prior to the expiration of the then current Term: (i) the Tenant's six (6) month period within which to exercise the next Option Term (and the Purchase Option during the Initial Term) shall be extended to the date which is six (6) months from the date of receipt of the Option Notice; and (ii) If the Tenant responds to the Option Notice by written notice to the Landlord declining to exercise the Purchase Option and declining to exercise an Option Term ("Declining Response") on a date upon which there are less than twelve (12) months remaining on the then current Term, such Term shall be extended to a date twelve (12) months from the date of the Declining Response. (d) In the event that the Landlord has failed to provide an Option Notice to the Tenant during the period from the date eighteen (18) months from the end of the then current Term through the date which is six (6) months from the end of the then current Term, the Tenant may, during such period, terminate this Lease by written notice to the Landlord with such termination to be effective upon the end of such current Term. (e) In the event that the Landlord has failed to provide an Option Notice to the Tenant as of the date six (6) months before the end of the current Term, at any time thereafter prior to the receipt of an Option Notice, the Tenant may terminate this Lease by written notice to the Landlord specifying a termination date which is six (6) months from the date of such notice. 10 (f) If the then current Term is extended pursuant to this Section 2.6, the Base Rent shall automatically be adjusted as ----------- provided in Article III. For example, if a Term Extension extends the length ----------- of the Initial Term beyond a period of twenty (20) Lease Years, the Base Rent shall be increased as of the commencement of the twenty-first (21st) Lease Year to the amounts set forth in Section 3.1 next to the phrases ----------- "Lease Years 21-25". (g) Any extension of the Term of this Lease provided in this Section 2.6 is referred to as a "Term Extension". In the event that ----------- the Initial Term or any Option Terms are extended as a result of a Term Extension and subsequently the next Option Term is exercised, the length of the next Option Term shall be reduced by the number of days in the Term Extension. 2.7. In the event that the Tenant exercises any of the Option Terms, the Landlord shall provide to the Tenant the following tenant improvement allowances ("Option TI Allowances"). The Option TI Allowances shall be in the following amounts for each option period: $5.00 per RSF of the Building for the First Option Term $5.50 per RSF of the Building for the Second Option Term $6.05 per RSF of the Building for the Third Option Term (a) The Option TI Allowances shall be paid by the Landlord to the Tenant so long as the following conditions are satisfied: (i) There is no outstanding Event of Default hereunder; (ii) Tenant shall provide to the Landlord a cost breakdown for Option TI Allowances improvements ("Option TI Improvements"); (iii) Any such Option TI Improvements shall be undertaken in accordance with provisions of Section 6 hereof regarding Additional Work; --------- (iv) The Tenant shall submit to the Landlord copies of paid receipts and mechanics lien waivers from all contractors and subcontractors for work previously paid for in conjunction with any request for reimbursement by the Tenant sent to the Landlord; and (v) The Tenant shall provide for a certificate from the Tenant Architect confirming that the work for which payment is requested has been completed. 11 3. RENT. 3.1. Tenant shall, commencing on the Commencement Date, pay to Landlord as Base Rent, in legal tender, at Landlord's office at 200 West Main Street, P.O. Box 269, Washington, Missouri 63090, or as directed from time to time by Landlord's notice, the annual sum specified below, payable in the equal monthly payments specified below (subject to adjustment upon final determination of RSF) on the first day of every calendar month of the Term, without demand, the same being hereby waived, and without any set-off or deduction whatsoever. Notwithstanding the above, in the event the Commencement Date occurs on a date other than the first day of the calendar month, the Tenant shall make a Rent payment on the Commencement Date prorated from the Commencement Date through the end of the calendar month. Annually: Lease Years 1-5 $21.25 per RSF of the Building Lease Years 6-10 $23.38 per RSF of the Building Lease Years 11-15 $25.72 per RSF of the Building Lease Years 16-20 $28.29 per RSF of the Building Lease Years 21-25 $31.12 per RSF of the Building Lease Years 26-30 $34.23 per RSF of the Building Lease Years 31-35 $37.65 per RSF of the Building Annually: Lease Years 1-5 $4,633,711.25 Lease Years 6-10 $5,098,172.66 Lease Years 11-15 $5,608,426.04 Lease Years 16-20 $6,168,832.53 Lease Years 21-25 $6,785,933.84 Lease Years 26-30 $7,464,091.11 Lease Years 31-35 $8,209,846.05 Monthly: Lease Years 1-5 $386,142.60 Lease Years 6-10 $424,847.72 Lease Years 11-15 $467,368.84 Lease Years 16-20 $514,069.38 Lease Years 21-25 $565,494.49 Lease Years 26-30 $622,007.59 Lease Years 31-35 $684,153.84 12 The foregoing payments are based on the Building containing 218,057 RSF. Tenant shall pay a per diem charge calculated at the rate of one and one-half percent (1 1/2%) per month (with interest beginning to accrue as of the sixth (6th) day of the month) of any overdue Rent payment not made by the fifth (5th) day of the calendar month until such overdue Rent is paid in full. In the event any installment of Rent is paid more than five (5) days after the date due, the Tenant shall pay the Landlord a late charge of two and one-half percent (2 1/2%) of the delinquent installment ("Late Charge"). Notwithstanding the above, the two and one-half percent (2 1/2%) Late Charge shall be waived by the Landlord for the first delinquent Rent payment made in any twelve (12) month period, provided the Tenant makes such delinquent payment within five (5) days after receipt of written notice from the Landlord of such delinquency. In the event any subsequent Rent payment is not made by the fifth (5th) day of the calendar month within twelve (12) months after a prior delinquent payment, the two and one-half percent (2 1/2%) Late Charge shall apply with or without notice from the Landlord. Provided, further, in the event of any delinquent Rent payment, the one and one-half percent (1 1/2%) per month interest shall not begin to accrue until the date upon which a Late Charge has become due and payable. 3.2. Within thirty (30) days following the Commencement Date, the RSF shall be calculated by the Architect and certified to the Tenant and Tenant Architect. If the Tenant Architect disagrees with such calculation, within fifteen (15) days after receipt of such calculation, the Tenant shall notify the Landlord and the parties shall work together in order to promptly resolve any differences concerning RSF. In the event that the parties finally conclude that RSF is either greater or less than 218,057 RSF, the annual and monthly Base Rent shall be adjusted and any overpayments or underpayments prior to the date of such calculation shall be adjusted equitably by the parties. Until such time as the parties have concluded that the RSF for the Building is greater or less than 218,057, Base Rent shall be payable assuming that the RSF is 218,057. 3.3. The parties agree that prior to the construction of the Building, the Core and Shell Plans indicate that the Building shall contain not less than 218,057 RSF. In the event that in designing the Tenant Work, the Tenant Work results in a reduction of the RSF of the Building, utilizing the BOMA standards for such items, as a result of changes to such items as interior stairwells, vertical ventilation of the cafeteria and similar items, the final calculation of the RSF of the Building shall ignore any reductions resulting from the Tenant Work. 3.4. In addition to paying the Base Rent hereunder, the Tenant shall pay to the Landlord, as additional rental ("Additional Rent") hereunder, all Operating Expenses during the Initial Term and any Option Terms as provided in Section 4 hereof and any other sums due from --------- Tenant to Landlord hereunder. Base Rent and Additional Rent together shall be referred to herein as "Rent". 13 4. OPERATING EXPENSES. 4.1. For the purposes of this Section, the following definitions and provisions apply: (a) "Operating Expenses" means all direct and indirect costs and expenses whether or not of a capital nature (provided, however, in no event shall any expenses designated as Landlord Expenses in Section 4.8 below, whether or not of a capital nature, be included in the - ----------- definition of Operating Expenses) in each calendar year of the Term of operating, maintaining, insuring, securing, repairing, replacing, restoring, licensing and managing all elements and components of the Premises (including, but not limited to, the cost of the Management Fee to be paid to the Building Manager), real estate and personal property taxes, merchant license taxes and assessments of the Premises, as well as any and all payments in lieu of taxes, other than Landlord Expenses and also excluding the following items ("Excluded Costs"): (i) Any amounts incurred for labor, materials or services that are not employed or used in the performance of Landlord's obligations hereunder; (ii) Any cost or expense for which the Landlord is reimbursed by a third party; (iii) Any income, estate or inheritance taxes of Landlord (provided, however, that the foregoing exclusions shall not release or modify Tenant's obligation to pay Taxes as provided in Section ------- 4.7 hereof); --- (iv) Costs or expenses resulting from the Landlord's negligence or breach of its obligations under this Lease; (v) Interest, principal payments and other costs of any indebtedness encumbering the Premises; (vi) Legal fees, architectural fees, engineering fees, real estate commissions and marketing and advertising expenses incurred in connection with the development, leasing, design and construction of the Core and Shell, and Tenant Work. To the extent the Tenant is obligated to reimburse the Landlord for such items under this Lease, such reimbursement shall not be deemed to be Operating Expenses; (vii) Costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord's interest in the Premises; (viii) Wages of employees who do not devote the majority of their time to the performance of the Landlord's obligations hereunder; 14 provided, however, the costs associated with such employees who do not devote the majority of their time to the Landlord's obligations hereunder may be prorated and an equitable amount shall be included as an Operating Expense to the extent such employees devote their time to the performance of the Landlord's obligations hereunder; (ix) The cost of utility installation and tap-in charges; (x) Any cost or expense arising from or relating to Hazardous Materials existing in, on or under the Premises prior to the Commencement Date or at any time introduced to the Premises by an act or omission of the Landlord; (xi) Any cost or expense to the extent that such cost or expense exceeds the prevailing market rate for such product or service; and (xii) Any fee or mark-up of an Operating Expense for overhead or administrative costs (it being understood that such services are included in the payment of the Management Fee). (b) "Expense Statement" means a statement from the Landlord setting forth the Operating Expenses for the prior calendar year. (c) The Landlord agrees that during the Term, it will take diligent efforts (including pursuing litigation if it is prudent to do so) to require the Contractor or all subcontractors to undertake any repairs, maintenance or replacements covered by warranties obtained during the construction for the Core and Shell and Tenant Work and to the extent Landlord is able to do so, the costs thereof shall not be deemed to be Operating Expenses. In the event that the Landlord brings litigation to pursue any warranty claims for the Core and Shell or Tenant Work, all attorneys' fees and expenses incurred by the Landlord shall be paid for by the Landlord and shall not be Operating Expenses hereunder. Recovery of any funds by the Landlord (other than any portion of a judgment specifically designated as attorneys fees), either in settlement of a claim or as a result of obtaining a judgment against any party providing a warranty, will be credited to the Tenant against future Operating Expenses promptly after the recovery. 4.2. Prior to the Commencement Date, for the period from the Commencement Date through the first December 31 ("Initial Period") of the Term hereof, and on or before November 1 of each subsequent calendar year, Landlord shall deliver to Tenant an estimate of Operating Expenses for such upcoming calendar year, based in part on the Expense Statement for the prior calendar year. Tenant shall have the right to review and approve such estimate, such approval not to be unreasonably withheld, conditioned or delayed. Beginning on the Commencement Date and on January 1 of each subsequent calendar year, Tenant shall pay to Landlord by the first day of each month such estimated amount as amortized over the number of 15 months in such Initial Period or the calendar year (or portion thereof during the last calendar year of the Term). 4.3. If Tenant's obligations for Operating Expenses for a prior calendar year as shown on the Expense Statement is greater than the estimated payments made by the Tenant for that year, then within thirty (30) days following receipt by Tenant of the Expense Statement, Tenant shall pay in full an amount equal to such excess. If Tenant's obligations for Operating Expenses are less than the estimated payments made by Tenant for that year, then Tenant shall receive a cash refund in the amount of such overpayment. 4.4. Landlord may, but only in the month of June each year, send to Tenant a revised estimate of Operating Expenses to be incurred for the then current calendar year, which shall be subject to Tenant's approval, such approval not to be unreasonably withheld, conditioned or delayed. Upon receipt of such revised estimate of Operating Expenses, the amount thereof shall be divided into twelve (12) equal monthly installments, and Tenant shall pay Landlord, at the same time that the next regular monthly Rent payment is due, the sum necessary to bring the Tenant current for the then current calendar year. Subsequent installments shall be payable at the adjusted rate together with the regular Base Rent payments for the balance of such calendar year and shall continue until further adjusted based on the estimate for Operating Expenses for the next year. 4.5. If this Lease terminates before the end of a calendar year, payment of Operating Expenses by the Tenant will be based on the portion of the year prior to the termination of the Term. 4.6. Tenant (or its designated agent), at its expense, shall have the right each calendar year, following prior written notice to Landlord, to audit Landlord's books and records relating to Operating Expenses in St. Louis, Missouri, within twelve (12) months after receipt of the Expense Statement. In the event Operating Expenses for any calendar year are incorrect, appropriate adjustments shall be made promptly by the parties. If such adjustment results in the Landlord reimbursing the Tenant for more than two percent (2%) of the year's Operating Expenses, the Landlord shall pay the reasonable costs of such audit. 4.7. (a) Notwithstanding the above, the payment of Taxes, utilities and insurance premiums for the Premises shall not be included within Operating Expenses nor included in the regular monthly estimated payments of Operating Expenses to be paid by the Tenant. Bills for Taxes, insurance premiums and utilities for the Premises shall be sent to the Tenant at the following address: Edward D. Jones & Co., L.P. 201 Progress Parkway Maryland Heights, Missouri 63043-3042 Attention: Wendy L. Monso 16 The bills for the Taxes shall be paid by the Tenant to the taxing authority on or before December 15 of each calendar year based on tax bills forwarded to the Tenant by the Landlord. In the event that the Landlord does not deliver the bills for the Taxes on or before December 1 of each year, the Tenant agrees that it shall pay such Tax bills within fifteen (15) days after receipt thereof, provided that the Landlord shall be responsible for any penalties or late charges attributable to the Landlord's delay in delivery the Tax bills to the Tenant. Insurance premiums shall be paid by the Tenant at least fifteen (15) days prior to the date such premiums are due and payable, and copies of paid invoices therefor shall be provided by the Tenant to the Landlord. The parties agree to prorate any and all real estate and personal property tax and assessment bills or payments in lieu of taxes from the Commencement Date to the end of the first calendar year of the Term and from January 1 of the last calendar year of this Lease through the termination date of this Lease. Prior to the termination date of this Lease, the Tenant shall pay to the Landlord the prorata share of all real and personal property taxes and assessments or payments in lieu of taxes (collectively, the "Tax" or "Taxes") for the portion of the last calendar year of the Term hereof. (b) The Tenant shall pay all utility bills to the utility company providing utility service to the Premises from and after the Commencement Date, prior to the date delinquent. Prior to the Commencement Date, the parties shall work together to have utility meters read and/or utility service billing transferred to the Tenant as of the Commencement Date. In the event the utility company cannot transfer the billing or read the meter appropriately, the parties shall equitably prorate utility charges. Any utility bills that are received by the Landlord shall immediately be forwarded to the Tenant upon receipt. The Tenant shall have the right to select and change utility service providers and to enter into contracts regarding said service, provided that all such contracts may be terminated by Landlord in the event that this Lease is terminated. (c) Tenant shall be responsible for any interest or penalties incurred as a result of late payment of Taxes and shall defend, indemnify and hold Landlord harmless from and against any and all damage and liability to Landlord arising out of late payment or failure to pay Taxes. Tenant shall deliver to Landlord within ten (10) days after payment of such Taxes, a copy of the paid receipt for such Taxes, unless such receipt is sent directly to the Landlord, in which case, the Landlord shall deliver to the Tenant a copy of said receipt within five (5) days following the Landlord's receipt thereof. (d) The Tenant shall be permitted to contest any assessment for Taxes and the Landlord agrees to provide assistance in such contest provided (i) the Landlord does not incur any expense; (ii) the Tenant pays any and all expenses as a result of such contest; (iii) all bills for Taxes are paid in a manner and time so as to avoid any delinquency or the imposition of any lien against the Premises as a result of such Tax bills; and (iv) the Tenant shall keep the Landlord informed of the status of Tenant's contest. Notwithstanding the above, in the event the Tenant desires to contest any assessment for Taxes at a time when there are less than two (2) years remaining on the then current Term of this Lease, the Tenant shall first obtain the prior 17 written consent of the Landlord, which Landlord may withhold in the event the Landlord reasonably believes that an appeal of the assessment may result in an increase in the Tax bill. (e) All costs and expenses which Tenant assumes or agrees to pay to Landlord pursuant to this Lease shall be deemed Additional Rent and, in the event of non-payment thereof, Landlord shall have all the rights and remedies hereinafter provided for in case of non-payment of Rent. 4.8. Landlord shall be responsible at its sole cost and expense for the following items which are referred to herein as the "Landlord Expenses": (a) the replacement of the roof of the Building to the extent necessary (however, Tenant shall be responsible for the cost and expense of ordinary roof repairs and maintenance); (b) maintenance, repair, and replacement of the foundation, structure, glass and granite walls of the Building and the foundation, structure, floors and walls of the Parking Garage (however, ordinary repair and maintenance of the expansion joints, caulking and glazing of the curtain walls of the Building and Parking Garage and repair and maintenance of the Parking Garage floors, including treatment and coatings for salt damage, shall be Operating Expenses); (c) replacement of the HVAC system (except that Tenant shall be responsible for the cost and expense for maintenance and repair of the HVAC system and replacement of HVAC compressors and fan motors); and (d) any other repair or replacement of portions of the Premises costing in excess of One Hundred Thousand and 00/100 Dollars ($100,000.00) which are required primarily as a result of Landlord's failure to maintain the Premises, consistent with its obligations under this Lease. 4.9. (a) Notwithstanding the above, the Landlord agrees that it shall not expend in excess of One Hundred Thousand and 00/100 Dollars ($100,000.00) for any single maintenance or repair item with respect to the Premises during the last five (5) years of the Initial Term or during any of the Option Terms ("Major Expenditure") without obtaining the approval of the Tenant as to such Major Expenditure. The Tenant agrees that it shall not unreasonably withhold or delay such approval of any such Major Expenditure and that the Tenant shall grant its approval if such Major Expenditure is reasonably necessary in order to maintain the Premises as a first-class office facility. In granting the Tenant's approval of any Major Expenditure, the parties shall negotiate, in good faith, to determine whether the useful life of the Major Expenditure will extend beyond the then current Term. If the useful life of a Major Expenditure will extend beyond the then current Term, the cost thereof shall be amortized at the Prime Rate as an Operating Expense for that portion of the useful life allocable to the remainder of the Term (including any Option Terms that may be exercised). 18 (b) The Landlord agrees that it shall exercise good faith in its performance of repairs and maintenance of the Premises during the last five (5) years of the Term, and the Landlord shall not improperly circumvent the provisions of Section 4.9(a) regarding Major Expenditures. -------------- 4.10. The Landlord agrees that it shall enter into and maintain service contracts for the maintenance of the elevators, HVAC system and major mechanical and electrical components within the Premises. In the event that the Landlord is unwilling or unable to enter into such service contracts, the Landlord shall notify the Tenant thirty (30) days prior to the cancellation of any such service contract and the Tenant may, at its option and expense, enter into a substitute service contract directly. The cost of any service contract obtained by the Landlord shall be deemed to be an Operating Expense hereunder. 5. SERVICES TO BE FURNISHED BY LANDLORD AT TENANT'S COST. 5.1. (a) The parties acknowledge and agree that all costs and expenses of owning, maintaining, repairing, replacing and operating the Premises subsequent to the Commencement Date that are neither Landlord Expenses, nor Excluded Costs, shall be deemed to be Operating Expenses hereunder and shall be subject to the reimbursement by the Tenant to the Landlord consistent with the terms hereof and paid without offset or deduction. (b) Landlord agrees to operate and maintain the Premises, including, but not limited to, the Building, interior and exterior signage and any sidewalks and landscaping on rights of way adjacent to Lot I as depicted on Exhibit B-1, in a first-class condition and repair and in a ----------- manner commensurate with similar first class office buildings in the St. Louis area at Tenant's cost and expense (except for Landlord Expenses) and to furnish (or cause to be furnished) to Tenant the following defined services at Tenant's sole cost and expense (except for Landlord Expenses): (i) Hot and cold water for lavatory and ordinary office purposes and for any private restrooms (and showers) and kitchens; (ii) Central heat, ventilation and air conditioning ("HVAC") services twenty-four hours per day, seven days per week. Tenant shall have the right to install at its expense auxiliary air-conditioning units within the Premises and, at its sole discretion, to operate such units whenever it so desires at Tenant's sole cost and expense; (iii) Routine maintenance and repair service as specified herein; (iv) Nightly janitorial service and cleaning service for the Premises and day porter service if warranted and requested by Tenant (to include vacuuming and waxing of floors, trash removal and window washing (3 times per year)); provided, however, if Tenant's floor 19 coverings or other improvements require special treatment, Tenant shall request such special treatment in writing; (v) All fluorescent and incandescent bulb, transformer, ballast and starter replacements in the Premises; (vi) Electricity for office lighting and use, but not limited to fluorescent and incandescent lighting (including tasks and task ambient lighting systems); office equipment including, but not limited to, duplicating machines, computers, terminals, minicomputers, communications, audiovisual equipment, vending machines, or kitchen equipment; (vii) General management of the Premises by an experienced professional office building manager ("Building Manager") in a first-class and cost- effective manner for first-class buildings in the St. Louis area (subject to the express limitations provided herein), to be retained pursuant to a separate contract between Landlord and the Building Manager. The Management Fee shall be limited to the amount set forth in the definition of "Management Fee" in Article I hereof; provided, however, that --------- in the event Manchester Management, Inc. (the initial Building Manager, or another entity owned by or affiliated with Joseph J. Kelley, Jr.) is unable to provide management services and neither the Landlord nor the Tenant can locate any alternative Building Manager reasonably acceptable to both parties that is willing to provide Building management services for the Premises for the Management Fee as compensation, the Landlord and Tenant shall work together to identify, and the Landlord shall employ, the Building Manager which is reasonably acceptable to both the Landlord and the Tenant which is willing to provide first-class management services for the lowest management fee, and the limitations on the Management Fee hereunder shall be adjusted to accommodate such modified management fees. The Tenant approves of Manchester Management, Inc. as a Building Manager, so long as Joseph J. Kelley, Jr. or Joseph J. Kelley, III is employed by and is actively involved in managing the same. Any change in the Building Manager is subject to the approval of the Tenant, not to be unreasonably withheld or delayed; (viii) Maintenance, repairs and replacements of underground utility lines and facilities; (ix) Removal of rubbish, snow and ice on the exterior portions of the Premises and the Parking Garage; and (x) Automatic elevator service within the Building. 20 5.2. The failure by Landlord to any extent to furnish, or the interruption or termination of the required services in whole or in part, resulting from Landlord's negligent acts or omissions or causes beyond the reasonable control of Landlord shall not render Landlord liable in any respect nor be construed as an eviction (constructive or otherwise) of Tenant, nor cause an offset or abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement of this Lease; provided, however, in the event of any interruption or termination of services, the Landlord shall undertake diligent efforts to promptly restore such services and the Tenant may pursue claims against the Landlord resulting from the Landlord's negligence, but such claims shall be solely limited to the amount payable under the Liability Policy. The foregoing to the contrary notwithstanding: (a) Tenant, at its option and expense, shall have the right to install an uninterrupted power source and/or back-up generators within the Premises at a location reasonably acceptable to the Landlord. Further, the Tenant shall have the right to restore utility services if the Landlord is unable to do so within twenty-four (24) hours after written or telephonic notice from the Tenant. Telephonic notice shall be given to the Building Manager followed promptly by written facsimile notice to the Building Manager. (b) If the Tenant is not satisfied with the quality, quantity and/or frequency of services provided by the Landlord under Section 5.1 hereof, the Tenant shall provide written notice to the ----------- Landlord detailing its objections. The Landlord agrees that it shall promptly address such objections and attempt to provide satisfactory service. If, within thirty (30) days after receipt of such notice by the Landlord, the Landlord has not reasonably satisfied the Tenant's objections, the Tenant may, at its option and expense, upon thirty (30) days prior written notice to the Landlord, arrange for and provide said services. The Landlord, upon receipt of such second notice, shall arrange for the discontinuation of such services concurrently with the Tenant's commencement thereof, and upon the assumption of services by the Tenant, no further charges as Operating Expenses shall accrue for such services, provided the Landlord may submit bills of Operating Expenses for such services incurred prior to such Assumption Date. In the event that the service to which the Tenant objects is being performed under a service contract which cannot be terminated on thirty (30) days notice, the Landlord and Tenant shall work together in order to terminate such service contract at the earliest possible time without penalty to the Landlord, and the assumption of services by the Tenant shall coincide with the termination of such service contract. 5.3. Should any of the equipment or machinery used in the provision by Landlord of the foregoing services for any reason, cease to function properly, Tenant shall have no claim for offset or abatement of Rent or damages on account of an interruption in service occasioned thereby or resulting therefrom. In the event of any failure of any equipment or machinery to operate, the Landlord shall undertake diligent efforts to restore such operation. 5.4. Except as otherwise expressly provided in this Lease, Landlord shall not be required to perform any maintenance on or make any repairs to the Premises. 21 5.5. Notwithstanding anything else contained in this Section 5 or elsewhere in this Lease, the Tenant acknowledges that in the - --------- event the Tenant assigns all or any portion of this Lease or sublets all or any portion of the Premises consisting of less than a whole floor of the Building, the Tenant shall be solely responsible for handling any communications with, requests from or specific services to any subtenant or assignee. Neither the Landlord nor the Building Manager shall be responsible for providing any documentation to or any different services to any assignee or subtenant, unless such subtenant or assignee is occupying one or more than one whole floor of the Building. The Tenant agrees that it shall designate an individual or individuals within its organization who shall be solely responsible for addressing any questions or concerns of subtenants or assignees and with whom the Landlord and/or its Building Manager may communicate with respect to any assignee or subtenant questions or concerns. The Tenant acknowledges and agrees that the Management Fee agreed to by the Landlord and its Building Manager hereunder was agreed to under the assumption that the Building Manager would have no responsibilities with respect to any assignee or subtenant of Tenant of less than a whole floor of the Building. In the event that the Tenant desires that the Building Manager provide any communications or services directly to any assignee or subtenant, the Building Manager shall do so provided that the then current Management Fee shall be increased by an amount equal to twenty-five cents (25(cent)) per RSF of such assignee or subtenant's space within the Building. 5.6. Notwithstanding anything else contained in this Section 5 or elsewhere in this Lease to the contrary, the Tenant agrees that - --------- the Landlord shall have no responsibility with respect to the repair, maintenance or janitorial services for any food service area or cafeteria located within the Premises (other than break rooms) ("Cafeteria"). If the Tenant, in its discretion, installs a Cafeteria within the Building, the Tenant may enter into a food service contract with a third party food service provider ("Food Service Contractor") for the operation of the Cafeteria. The Tenant agrees that it shall undertake and assume the following responsibilities with respect to the Cafeteria and its operation, either directly or through its contract with the Food Service Contractor: (a) The Food Service Contractor shall furnish property and liability insurance, with coverage amounts reasonably acceptable to the Landlord, for the food service operations within the Cafeteria; (b) The Food Service Contractor shall follow such reasonable rules and regulations as may be promulgated by the Landlord hereunder; (c) The Cafeteria shall be maintained in an orderly and hygienic condition and in compliance with all applicable county, state and municipal laws and ordinances; (d) All dumpsters and grease traps in the Cafeteria or used by the Food Service Contractor shall be maintained in good and sanitary condition; and 22 (e) Any outdoor patios that are utilized for food service and all tables and chairs located thereon shall be maintained in sightly and orderly condition, and all paper and other trash shall be promptly disposed of in proper receptacles. 5.7. Notwithstanding anything else contained in this Section 5 or elsewhere in this Lease, the Tenant shall be responsible for - --------- maintaining, controlling and operating the security system within the Premises and providing any desired security guard service. The Tenant shall assume all responsibility for controlling access to the Building and Parking Garage and issuance of any card keys or other means of gaining access to the Building and Parking Garage. Tenant shall cooperate with the Landlord to ensure that the Landlord and Building Manager and their agents have card keys or other means of gaining access to the Premises as necessary from time to time in order to exercise their rights and perform their obligations hereunder. 6. REPAIRS AND ALTERATIONS. 6.1. Promptly after obtaining knowledge thereof, Tenant shall give to Landlord written notice of any damage to, or defective condition in any part or appurtenance of the Building's plumbing, electrical, heating, air-conditioning or other systems serving, located in, or passing through the Premises. Landlord shall not be required to repair any injury or damage by fire or other cause, or to make any repairs or replacements of any panels, decoration, office fixtures, railing, ceiling, floor covering, partitions or any other property installed in the Premises by Tenant, except to the extent provided in Section 15 below. ---------- 6.2. In the event that the Tenant desires to have any modifications or alterations completed within the Premises subsequent to the Commencement Date, the Tenant shall undertake such improvements or alterations ("Additional Work"), all at its cost and expense and using its own architect and contractor, subject to the following conditions: (a) The Tenant shall not make any exterior or structural changes to the Premises without the prior written consent of the Landlord, which consent shall not be unreasonably withheld or delayed; (b) The Tenant shall provide to the Landlord three (3) copies of plans and specifications for any Additional Work for exterior or structural changes to the Premises before undertaking the Additional Work; (c) Tenant shall provide to the Landlord two (2) copies of as-built plans and specifications within sixty (60) days after completion of any Additional Work; (d) All Additional Work shall be done in full compliance with all applicable building codes, regulations, laws, statutes and ordinances; (e) The Landlord shall not unreasonably withhold its approval (if prior written approval is required) of any Additional Work requested by the Tenant, provided, 23 however that such proposed Additional Work does not reduce the value of the Premises and so long as the Landlord can obtain the consent of its Lender for such Additional Work, to the extent such consent is required; (f) Prior to commencing such structural or exterior Additional Work, notice shall be given to Landlord and the Landlord's structural engineer whose address is EQE International, 1848 Lackland Hills Parkway, St. Louis, Missouri 63146-3572, Attention: John P. Miller (or such substitute structural engineer as may be designated by the Landlord in written notice to the Tenant), specifying the work to be done and the area of the Premises affected by such work; (g) Tenant shall obtain all necessary governmental permits prior to commencing such Additional Work; (h) The Tenant shall provide the Landlord a list of the contractors and subcontractors performing the Additional Work and shall provide the Landlord with reasonable assurances that such contractors and subcontractors carry liability and workers compensation insurance reasonably satisfactory to the Landlord; (i) If requested by the Landlord, the Tenant shall provide reasonable assurances to the Landlord that the provisions in this Lease regarding mechanic's liens in Section 31 hereof shall be satisfied ---------- with respect to the Additional Work; (j) The parties shall obtain the written consent of Landlord's Lender to any exterior or structural Additional Work, if so required by the Lender; and (k) Tenant shall pay any out-of-pocket expenses incurred by the Landlord to professionals or to its Lender in reviewing and approving any request for any exterior or structural Additional Work. The out-of-pocket expenses shall be based on reasonable rates for customary services provided by such professionals. The Landlord shall endeavor to use the same professionals used by its Lender for reviewing any proposed exterior or structural Additional Work to the extent the Lender's approval is required therefor. 6.3. Any and all alterations or Additional Work to the Premises shall become the property of Landlord upon termination of this Lease (except trade fixtures, equipment or furniture owned by Tenant). 7. QUIET ENJOYMENT. So long as Tenant observes and performs the covenants and agreements binding on it hereunder, Tenant shall at all times during the term hereof granted, peacefully and quietly have and enjoy possession of the Premises without any encumbrance or hindrance. 8. CERTAIN RIGHTS RESERVED TO LANDLORD. Landlord reserves the following rights: 24 8.1. To constantly have pass keys to the Premises. 8.2. With twenty-four (24) hours notice to the Tenant to exhibit the Premises during business hours to prospective tenants during the last twelve (12) months of the Term, and to any prospective purchaser, mortgagee, or assignee of any mortgage on the Premises and others having a legitimate interest at any time during the Term, along with a representative of the Tenant. 8.3. At any time in the event of an emergency, and otherwise on twenty-four (24) hours notice to the Tenant during business hours with a representative of the Tenant, to take any and all measures, including inspections, repairs, alterations, additions and improvements to the Premises as may be necessary or desirable for the safety, protection or preservation of the Premises or Landlord's interests, or as may be necessary or desirable in the operation or improvement of the Premises or in order to comply with all laws, orders and requirements of governmental or other authority. 9. INDEMNIFICATION AND WAIVER OF CERTAIN CLAIMS. 9.1. Tenant, to the extent permitted by law, waives all claims it may have against Landlord and against Landlord's agents and employees for damage to person or property sustained by Tenant or by any occupant of the Premises, or by any other person, resulting from any part of the Premises or any equipment or appurtenances becoming out of repair, or resulting from any accident in or about the Premises or resulting directly or indirectly from any act or neglect of any tenant or occupant of any part of the Premises or of any other person, unless such damage is a result of the negligent or intentional acts or omissions of Landlord or Landlord's agents or employees, subject, however, to the provisions of Section 9.3 ----------- below. If any damage results from any act or neglect of Tenant, Landlord may, at Landlord's option, repair such damage and Tenant shall thereupon pay to Landlord the total cost of such repair. All personal property belonging to Tenant or any occupant of the Premises that is in or on any part of the Premises shall be there at the risk of Tenant or of such other person only, and Landlord, its agents and employees shall not be liable for any damage thereto or for the theft or misappropriation thereof. Tenant agrees to protect, defend, indemnify and hold Landlord harmless against claims and liability for injuries to all persons and for the damage to or loss of property occurring in or about the Premises, due to any negligent act or failure to act by Tenant, its contractors, agents or employees, or default by Tenant under this Lease. The Landlord agrees that the Tenant's obligations for indemnification in this Section 9.1 (except for intentional ----------- acts or omissions of the Tenant or its agents or employees and as provided in Section 10.7 hereof) shall be limited to the amounts recoverable under ------------ the Liability Policy so long as the Tenant, at all times, maintains the Liability Policy in effect, in the form and with coverage required under this Lease. 9.2. Landlord, to the extent permitted by law, waives all claims it may have against the Tenant and against Tenant's agents and employees for damages to person or property sustained by Landlord or by any occupant of the Premises, or by any other person, resulting from 25 any accident in or about the Premises or resulting directly or indirectly from any act or neglect of any Tenant or occupant of any part of the Premises or any other person, unless such damage is the result of the negligent or intentional acts or omissions of Tenant, Tenant's assignees or subtenants or any of their agents or employees. If any damage results from any act or neglect of Landlord, Tenant may, at Tenant's option, repair such damage and Landlord shall thereupon pay to Tenant the total costs of such repair. Landlord agrees to protect, indemnify and hold Tenant harmless against claims and liabilities for injuries to all persons and for the damage to or loss of property occurring in or about the Premises due to the negligent act or failure to act by Landlord, its contractors, agents or employees, or default by Landlord under this Lease. The Tenant agrees that the Landlord's obligations for indemnification under this Section 9.2 ----------- (except for the intentional acts or omissions of the Landlord or its agents and employees) shall be limited to the amount available under any Liability Policy by the Tenant for the benefit of the Landlord. 9.3. Landlord shall not be liable for any damage or loss to fixtures, equipment, merchandise or other personal property of Tenant located anywhere in or on the Premises caused by theft, fire, water, explosion, sewer backup or any other hazards, regardless of the cause thereof, and Tenant does hereby expressly release Landlord of and from any and all liability for such damage or loss. Landlord shall not be liable for any damage or loss resulting from business interruption at the Premises and Tenant does hereby expressly release Landlord of and from any and all liability for such damage or loss. 9.4. So long as the Tenant maintains in effect all insurance policies required to be maintained under this Lease in the form and with the coverage required hereunder, the Tenant shall not be liable for any damages to the Premises or any part thereof caused by fire or other insurable hazards resulting from the negligent acts or omissions of the Tenant, and the Landlord shall be deemed to expressly release the Tenant of and from any and all liability for such damage or loss. 9.5. The Landlord and the Tenant agree that so long as it is permitted under any insurance policies carried hereunder, such policies shall contain a waiver of subrogation provision with respect to the liabilities of the other party hereunder. 10. PROPERTY AND LIABILITY INSURANCE. 10.1. Subject to the provisions of Section 10.8 hereof, ------------ Tenant shall maintain at Tenant's sole cost and expense (but not as an Operating Expense) all risks insurance (including earthquake and flood endorsements) on the Premises for the full replacement value of the improvements on the Premises (including all improvements, trade fixtures and personal property of Tenant). Tenant shall also maintain at Tenant's sole cost and expense rental insurance for the Premises covering up to a three (3) year period of loss of Base Rent and Additional Rent during such period. Payments for losses under all insurance policies provided by the Tenant under this Section 10.1 shall be made solely to Landlord and/or the Lender ------------ of Landlord as their interests shall appear. Said policy or policies may be issued on a blanket policy basis, so long as such 26 policies shall at all times provide the required insurance coverage and such coverage will not be reduced by claims unrelated to the Premises. 10.2. Subject to the provisions of Section 10.8 hereof, ------------ Tenant shall, at Tenant's expense (but not as an Operating Expense), maintain a policy or policies of commercial general liability insurance ("Liability Policy") with respect to the activities of Tenant within the Office Center and with respect to the Landlord and the Building Manager on the Premises or elsewhere in the Office Center, with the premiums thereon fully paid before the due date, issued by and binding upon an insurance company licensed to do business in the State of Missouri and approved by the Landlord and its Lender, such insurance to afford minimum protection of not less than $50,000,000 ("Insurance Coverage Amount") combined single limit coverage of bodily injury, property damage or combination thereof. The Insurance Coverage Amount shall be increased on the fifth (5th) anniversary of the Commencement Date and every five (5) years thereafter during the Term hereof, to an amount equal to $50,000,000 times the CPI Index on the adjustment date divided by the CPI Index on the Commencement Date. The Landlord, Building Manager and any Lenders shall be additional insureds under the Liability Policy. The parties agree that Fifty Million Dollars ($50,000,000) is the appropriate insurance coverage amount as of the Commencement Date of this Lease, provided, however, if at any time in the future, either the Landlord or the Tenant feels that the Insurance Coverage Amount, as adjusted hereunder, is not providing insurance coverage comparable to that provided as of the Commencement Date by the Fifty Million Dollars ($50,000,000) coverage limit, such party shall notify the other party and the Landlord and Tenant agree to negotiate in good faith to make any adjustments in the then current Insurance Coverage Amount as may be appropriate to retain the same level of coverage as is provided as of the Commencement Date. If the parties are not able to agree as to the appropriate comparable Insurance Coverage Amount, either party may submit such issue to Arbitration hereunder. Pending any final agreement of the parties or the resolution of any Arbitration, the Tenant shall continue to provide a Liability Policy in the amount of the Insurance Coverage Amount, as provided above. Said policy or policies may be issued on a blanket policy basis, so long as such policies shall at all times provide the required insurance coverage and such coverage will not be reduced by claims unrelated to the Premises. 10.3. Tenant shall, at Landlord's request from time to time, provide Landlord with copies of insurance policies necessary to evidence Tenant's compliance with this Section. 10.4. Tenant shall obtain the agreement of Tenant's insurers for Tenant's insurers to notify Landlord at least thirty (30) days prior to cancellation or renewal of any such insurance coverage provided by Tenant. 10.5. Tenant may, in its discretion, maintain insurance against theft or damage to its personal property, fixtures and equipment located within the Premises, provided if the Tenant chooses not to carry such insurance, the Tenant shall hold the Landlord harmless from any and all costs, claims or expenses related to any loss of personal property, fixtures or equipment within the Premises. 27 10.6. All insurance policies, whether or not provided under this Section 10, shall be in full compliance with the requirements of ---------- Exhibit D attached hereto and all commercially reasonable requirements of - --------- the Landlord's Lenders as such requirements may be modified from time to time and shall include such endorsements, coverage, policy amounts and other terms and conditions to the extent reasonably required by the Lenders. 10.7. Notwithstanding anything else contained in this Lease (including, but not limited to, the provisions of Section 9.1 and ----------- Section 9.4 hereof) to the contrary, in the event of any loss, claim or - ----------- damage which is covered by any of the insurance policies carried by the Tenant hereunder, any costs incurred by the Landlord as a result of any deductible under any of the insurance policies carried by the Tenant shall be promptly reimbursed by the Tenant after written notice from the Landlord. 10.8. Responsibility for procurement of any insurance policies required under this Article 10 to be provided by Tenant, may at ---------- Tenant's option, from time to time, but upon sixty (60) days prior written notice to Landlord, be transferred to Landlord (or transferred back from Landlord to Tenant; provided if the Landlord has committed to any insurance contract at the time of such transfer back to the Tenant, the Tenant shall pay any necessary termination fee for such contract or continue such coverage if the contract may not be cancelled). If any of the insurance coverages contemplated by this Article 10 are at any time no longer ---------- available (or are only available at excessive premium levels), Landlord and Tenant shall mutually and in good faith attempt to secure alternative, comparable insurance coverages. Irregardless of the transfer of responsibility for insurance procurement between Landlord and Tenant, Tenant shall at all times during the Term, remain responsible for payment of insurance premiums for coverages under this Article 10. ---------- 11. HOLDING OVER. Unless otherwise agreed to in writing by Landlord and Tenant, if Tenant retains possession of the Premises or any part thereof after the expiration or termination of the Term, Tenant shall pay Landlord Rent at one hundred fifty percent (150%) of the monthly rate in effect immediately prior to the expiration or termination of the Term for the time Tenant remains in possession after the expiration or termination of the Term and, in addition thereto, Tenant shall pay Landlord for all damages, consequential as well as direct, sustained by Landlord by reason of Tenant's retention of possession. The provisions of this Section do not exclude Landlord's rights of re-entry or any other right hereunder. No such holding over shall be deemed to constitute a renewal or extension of the Term hereof. 12. ASSIGNMENT AND SUBLETTING. 12.1. (a) Tenant shall have the right to assign this Lease or to sublet all or any portion of the Premises to any party which will use the Premises in accordance with the terms of this Lease, with the prior written consent of the Landlord which shall not be unreasonably withheld, delayed or conditioned upon payment of additional Rent or other sums. In the event that the Landlord does not respond to Tenant's request within fifteen (15) days following Landlord's receipt of a request for consent, the Landlord shall be deemed to have 28 consented to such request. No commissions or fees shall be due to Landlord or the Building Manager on account of any assignment or subletting. Any such assignment of this Lease or sublease of the Premises shall be and remain subject to all of the terms and conditions of this Lease. No sublease or assignment, in any event, shall release the Tenant from any liability hereunder. (b) In the event of any assignment or subletting of all or a portion of the Premises, the Tenant shall provide written notice to the Landlord of the name of the assignee or subtenant and the portion of the Premises which such assignee or subtenant shall be occupying at least fifteen (15) days prior to the date the subtenant or assignee takes possession of the Premises. (c) If this Lease is assigned or if the Premises or any part thereof is sublet or occupied by anybody other than Tenant, Landlord may, after default by Tenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to the Rent herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of any of Tenant's covenants contained in this Lease or the acceptance of such assignee, subtenant or occupant as Tenant, or a release of Tenant from further performance by Tenant of covenants on the part of Tenant herein contained. (d) Tenant may, without the Landlord's consent, assign this Lease or sublease the Premises or portions thereof to entities controlled, controlling or affiliated with the Tenant, provided Tenant shall, within thirty (30) days following such assignment or subletting, give the Landlord written notice thereof. No such sublease or assignment in any event shall release the Tenant from any liability hereunder. 12.2. Landlord's rights to assign this Lease are and shall remain unqualified. Upon any sale of the Premises, Landlord shall thereupon be entirely freed of all obligations of Landlord hereunder and shall not be subject to any liability from any act, omission or event occurring after such conveyance. 13. CONDITION OF PREMISES. At the expiration or termination of this Lease, Tenant shall return the Premises broom-clean and in such condition as premises of comparable age and construction would normally be, ordinary wear and loss by fire or other casualty and Additional Work approved by the Landlord excepted, failing which Landlord may restore the Premises to such condition and Tenant shall pay the cost thereof on demand. The Tenant shall have no responsibility for removing Additional Work and restoring the Premises so long as the Additional Work which does not materially adversely affect the value or utility of the Premises for future use. 14. USE OF PREMISES. Tenant agrees to comply with the following provisions: 14.1. The Premises may be used by the Tenant for any purpose, provided at all times such use shall be lawful and in compliance with all applicable governmental statutes, 29 ordinances, laws and regulations and all conditions, restrictions and other documents recorded in the Office of the Recorder of St. Louis County, Missouri. 14.2. Tenant will not make or permit to be made any use of the Premises or any part thereof which would violate any of the covenants, agreements, provisions or conditions of this Lease, or which directly or indirectly is forbidden by public law, ordinance or governmental regulation, or which may be dangerous to life, limb or property, or which may invalidate any policy of insurance carried on the Building or covering its operation, or which will suffer or permit the Premises or any part thereof to be used in any manner or anything to be brought into or kept therein which shall in any way impair or tend to impair the character, reputation or appearance of the Premises as a high quality office building, or which will impair or interfere with any of the services performed by Landlord for the Premises. 14.3. Tenant shall not overload any floor. 14.4. Tenant shall not use the Premises for any illegal or immoral purpose. 14.5. Prior to the completion of the Core and Shell and Tenant Work (including the completion of any Punch-List items), Tenant shall not contract for any work or service which might involve the employment of labor incompatible with the Premises employees or employees of contractors doing work or performing services by or on behalf of Landlord, subject to the provisions of Paragraph 15 of the Work Letter. ------------ 15. CASUALTY DAMAGE. 15.1. If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord. 15.2. If the improvements within the Premises shall be damaged: (a) (i) such that substantial alteration or reconstruction of the Premises shall take more than six (6) months to restore after the expiration of the Evaluation Period, in Landlord's reasonable estimate, and (ii) within the last three (3) years of the then current Term hereof (plus any Option Terms previously exercised by the Tenant); or (b) (i) Such that substantial alteration or reconstruction of the Premises shall take more than twenty-four (24) months to restore after the Evaluation Period, in the Landlord's reasonable estimate, and (ii) such casualty materially impairs the Tenant's ability to operate its business within the Premises, in the Tenant's reasonable business judgment (the occurrence of a casualty as described in Section 5.2(a) -------------- or Section 5.2(b) being referred to as a "Major Casualty"); -------------- (c) such that Landlord's Lender should require that the insurance proceeds payable as a result of a casualty be applied to the payment of the mortgage debt; or 30 (d) such that there is material uninsured loss to the Premises in excess of $250,000, Landlord may, at its option, but subject to the provisions of Section 15.3 hereof, terminate this Lease by notifying ------------ Tenant in writing of such termination within ninety (90) days after the date of such damage. 15.3. (a) The Landlord agrees that it shall endeavor to negotiate provisions in its loan documents with its Lender to permit the use of insurance proceeds for restoration of the Premises in the event of a casualty to the Premises. In the event that any Lender does not permit the Landlord to use insurance proceeds for restoration of the Premises, the Landlord shall seek reasonable alternative financing if Landlord does not have sufficient funds to utilize for a restoration in lieu of the insurance proceeds applied by its Lender toward the Lender's mortgage debt. In the event that the Lender retains all or a portion of the insurance proceeds to be applied toward its loan and the Landlord is unable to secure reasonable alternative financing and as a result thereof, the Landlord does not fully restore the Premises after a casualty, the parties shall provide for an equitable reduction in the Rent payable hereunder to reflect the extent to which the Premises were not fully restored directly as a result of the Lender's retention of a portion of the insurance proceeds. If the parties are unable to agree upon an equitable reduction in Rent, then the Landlord may elect to terminate this Lease by written notice to the Tenant. (b) If there is an uninsured loss to the Premises in excess of Two Hundred Fifty Thousand Dollars ($250,000), and the Landlord has given notice of the Landlord's intention to elect to terminate this Lease as a result thereof pursuant to the provisions of Section 15.2 hereof, ------------ the Tenant may, by written notice to the Landlord, within sixty (60) days following the Landlord's notice, elect to retain the Premises in their then current condition, perform such restoration as the Tenant deems appropriate, at Tenant's sole cost and expense, and this Lease shall not terminate, nor shall Rent abate or be reduced on account of damage from such uninsured loss or the cost of such restoration. (c) Any restoration performed by the Tenant, at the Tenant's cost and expense under Subsection (a) or (b) of this Section 15.3, --------------------- ------------ Section 15.6 or Section 15.8 shall be considered Additional Work. - ------------ ------------ 15.4. If there is an occurrence of a Major Casualty, Tenant shall have the right to terminate this Lease upon delivery to Landlord of written notice of such termination within ninety (90) days after such Major Casualty. 15.5. After a casualty to the Premises, the Landlord shall proceed with reasonable diligence to complete consultations with its insurer, to make arrangements for the payment of funds to be used for reconstruction, and to consult with its Lenders, contractors, architects and engineers to evaluate the feasibility of such reconstruction, but in any event within ninety (90) days (such period to be known as the "Evaluation Period"). 31 15.6. If after initial negotiations by the Landlord with the insurance company providing property insurance for any casualty, the Landlord believes that it will be unable to obtain sufficient funds to restore the Premises without bringing a lawsuit against such insurer, the Landlord shall notify the Tenant in writing as to the status of such negotiations, and within twenty (20) days thereafter, the Tenant shall notify the Landlord in writing that it desires to exercise one of the following three options: (a) Have the Landlord accept such reduced amount from the insurance company and proceed with restoration, acknowledging that the Landlord is unlikely to be able to fully complete restoration of the Premises; (b) Provide to the Landlord sufficient funds to restore the Premises to a manner acceptable to the Tenant and have the Landlord assign any claim it may have against the insurance company; or (c) Have the Landlord delay the restoration of the Premises and permit the Tenant to pursue settlement discussions and, if necessary, litigation against the insurance company in order to obtain a satisfactory payment from the insurance company. 15.7. In the event that the Tenant exercises the option under Paragraph 15.6(c) above, the time period of twenty-four (24) months ----------------- under Section 15.2(b) for the completion of restoration shall no longer be --------------- applicable. The parties further agree that notwithstanding the fact that the Landlord may not be able to fully restore the Premises subsequent to a casualty due to the inadequacy of insurance proceeds, such failure to restore shall not excuse the Tenant from paying all Rent provided for herein. Any insurance proceeds payable after a casualty shall be paid directly to the Landlord unless the Tenant has exercised option 15.6(b) ------- above. 15.8. If neither Landlord nor Tenant has the right to or does not elect to terminate this Lease as set forth above, Landlord shall promptly commence and proceed with reasonable diligence after the expiration of the Evaluation Period to restore the Premises to substantially the same condition in which they were immediately prior to the happening of the casualty, except that Landlord's obligation to restore shall not include any personal property of the Tenant, unless and to the extent the Tenant makes funds available to the Landlord for such work, nor shall Landlord be required to spend for such work an amount in excess of the net insurance proceeds (deducting any costs of collection) actually received by Landlord as a result of the casualty. 15.9. Landlord shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof. Following a casualty and damage during the Evaluation Period and any period of restoration of the Premises after any damage or casualty, the Landlord shall be entitled to the proceeds of the rental insurance policy provided under Section 10.1 hereof. If the ------------ rental insurance proceeds do not fully pay Base Rent and Additional Rent (reduced due to any lower Operating Expenses 32 during such periods), the Tenant shall pay such deficiency to the Landlord on the dates upon which such Rent payments are due. 16. CONDEMNATION. 16.1. If the whole of the Premises should be taken for any public or quasi-public use, by right of eminent domain or otherwise, or if it should be sold in lieu of condemnation, then this Lease shall terminate as of the date when physical possession of the Premises is taken by the condemning authority. 16.2. (a) If less than the whole of the Premises is thus taken or sold, but if such portion taken or sold is so substantial that Landlord determines in its reasonable opinion that the reconstruction of the remaining portions is not reasonably practicable (a "Major Taking"), Landlord may terminate this Lease by giving written notice thereof to Tenant, in which event this Lease shall terminate as of the date when physical possession of such portion of the Premises is taken by the condemning authority. (b) If less than the whole of the Premises is taken or sold, and the proposed restoration by the Landlord will render the Premises, in the reasonable business judgment of the Tenant, materially impaired for the continuation of the Tenant's business within the Premises, the Landlord and the Tenant shall work together in good faith to attempt to reach an agreement as to the appropriate restoration. If after sixty (60) days of discussions, in the Tenant's reasonable opinion, the Landlord is still unwilling to agree to a suitable restoration, the Tenant may notify the Landlord within thirty (30) days thereafter that it desires to terminate this Lease effective as of the date of the Major Taking. 16.3. If this Lease is not so terminated upon any such taking or sale, the Base Rent payable hereunder shall be diminished on an equitable basis and the Landlord shall restore the Premises to substantially their former condition to the extent practicable, provided in no event shall Landlord be required to spend for such work an amount in excess of the net amount received by Landlord (deducting any costs of collection) as compensation for such damage. 16.4. Except as provided in Section 16.6 hereof, all ------------ amounts awarded upon a taking of any part or all of the Premises shall belong to the Landlord, and the Tenant shall not be entitled to and expressly waives all claims to any such compensation. 16.5. Tenant shall be entitled to claim independently against the condemning authority any damages expressly referable to Tenant's business, such as relocation expenses, as the same may be permitted by law, provided that such claim shall not reduce any award payable to Landlord. 16.6. In the event of a condemnation which results in termination of this Lease, the Tenant shall be entitled to receive a portion of any condemnation award paid by the 33 condemning authority equal to the sum of the calculations under Subsections ----------- (a) and (b) as modified by Subsection (c): - --- --- -------------- (a) Any out-of-pocket costs incurred by the Tenant and paid to the Landlord for any Tenant Work, multiplied by the number of Lease Years remaining on the Initial Term as of the date of such taking, divided by twenty (20); plus (b) Any out-of-pocket costs incurred by the Tenant for Additional Work within the Premises, multiplied by the number of Lease Years remaining on the Initial Term as of the date of such taking, divided by twenty (20); and (c) Provided the sum calculated pursuant to Subsections (a) and (b) above shall be reduced by multiplying such sum by - --------------- --- the fraction equal to the sum of attorney's fees, costs and expenses and other out-of-pocket costs incurred by the Landlord in conjunction with any such condemnation, divided by the sum of the final condemnation award paid by the condemning authority for the Premises. 16.7. Neither the Landlord nor any entity affiliated with the Landlord or its members shall directly or indirectly initiate or procure any rights or actions which could result in the condemnation of the Premises or this Lease, including without limitation, redevelopment rights under Chapters 99, 100 and/or 353 RSMo. 17. PARKING. 17.1. During the Term of this Lease, Tenant shall have the exclusive use, along with its guests and invitees, of the automobile parking areas situated in the Parking Garage, together with the surface parking within the Premises, driveways, and footways, subject to the Landlord's access rights for permitted purposes hereunder and any rights of Cybertel under the Cybertel Lease. The Landlord agrees that it shall not make any amendments to the Cybertel Lease that would substantive or materially adversely affect the Tenant's use of the Premises without the prior written consent of the Tenant. 17.2. Landlord shall deliver as part of the improvements on the Premises, nine hundred twenty-three (923) parking spaces for cars within the Parking Garage and fourteen (14) surface parking spaces for cars. 17.3. The Parking Garage shall have a security system and access shall be restricted with gated entrance and exit with the use of a card system paid for and supervised by the Tenant. The Building Manager shall be responsible for removal of any unauthorized vehicles within the Parking Garage upon receipt of notice from the Tenant thereof. 18. REASONABLENESS STANDARD. Whenever and wherever in this Lease, one party must consent or approve of a request of the other party, such consent or approval shall in all instances be reasonable and promptly given and shall not be conditioned on other matters or 34 the payment of Additional Rent, fees, expenses or other consideration, unless such payments or other conditions are expressly provided for in this Lease as to such matter. 19. DAMAGES FROM CERTAIN CAUSES. 19.1. Landlord shall not be liable to Tenant for any loss or damage to any property or person occasioned by theft, Force Majeure or by any other cause beyond the control of Landlord, including but not limited to delays from the foregoing, nor shall Landlord be liable for any damage or inconvenience which may arise through repair or alterations of any part of the Premises, provided the Landlord undertakes commercially reasonable efforts to restore such damage or reduce such inconvenience. 20. NO IMPLIED WAIVER. 20.1. The failure of either party to insist at any time upon the strict performance of any covenant or agreement or to exercise any option, right, power or remedy contained in this Lease shall not be construed as a waiver or a relinquishment thereof for the future. 20.2. Tenant's failure to pay or Landlord's receipt of a lesser amount than the monthly installment of Rent due under this Lease shall not be deemed to be other than on account of the earliest Rent due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or pursue any other remedy provided in this Lease. 20.3. No payment by Landlord or receipt by Tenant of a sum less than the amount due from the Landlord to the Tenant shall be deemed to be other than on account of the sum due, nor shall any endorsement or statement on any check or any letter accompanying any check from Landlord to the Tenant be deemed an accord and satisfaction, and Tenant may accept such check or payment without prejudice to Tenant's right to recover the balance of such sum or pursue any other remedy provided in this Lease. 21. PERSONAL LIABILITY. 21.1. The liability of Landlord to Tenant for any default by Landlord under this Lease shall be limited to the interest of Landlord in the Premises and Tenant agrees to look solely to Landlord's interest in the Premises for the recovery of any judgment from the Landlord, it being intended that neither Landlord nor any member of Landlord shall be personally liable for any judgment or deficiency. 22. RELATIONSHIP TO PARTIES. 22.1. Nothing contained in this Lease shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of 35 partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of Rent, nor any other provision contained herein, nor any acts of the parties herein, shall be deemed to create any relationship between the parties hereto other than the relationship of Landlord and Tenant. 23. EVENTS OF DEFAULT AND REMEDIES. All rights and remedies of Landlord herein enumerated shall be cumulative, and none shall exclude any other right or remedy allowed by law. In addition to the other remedies provided in this Lease, Landlord shall be entitled to restrain by injunction the violation or threatened violation of any of the Tenant's covenants, agreements or conditions of this Lease. The occurrence of any of the defaults set forth in Section 23.1 (after the expiration of any ------------ applicable cure period) shall constitute an "Event of Default" hereunder. 23.1. If: (a) Tenant fails to pay any Rent within ten (10) days after the date due or such longer period as may be permitted under applicable cure rights set forth in Section 23.2 below, ------------ (b) Tenant defaults in the prompt and full performance of any provision of this Lease, other than the payment of Rent, and such default continues for thirty (30) days after notice, provided that if such default cannot reasonably be cured within such thirty (30) day period and so long as the Tenant commences to cure such default within such thirty (30) day period and diligently pursues completion of such cure, Tenant shall not be in default hereunder, (c) the leasehold interest of Tenant is levied upon under execution or is attached by process of law, (d) Tenant shall apply for or consent to the appointment of a receiver, trustee or liquidator of Tenant or of all or a substantial part of its assets, (e) Tenant shall file a voluntary petition in bankruptcy, (f) Tenant shall make a general assignment for the benefit of creditors, (g) Tenant shall file a petition or an answer seeking reorganization or arrangement with creditors or to take advantage of any insolvency law, (h) Tenant shall file an answer admitting the material allegations of a petition filed against Tenant in any bankruptcy, reorganization or insolvency proceeding, or if an order, judgment or decree shall be entered by any court of competent jurisdiction adjudicating Tenant bankrupt or insolvent, which is not dismissed within ninety (90) days, or approving a petition seeking reorganization of Tenant or appointing a receiver, trustee or liquidator of Tenant or of all or a substantial part of its assets, or 36 (i) Tenant or any affiliate of Tenant shall default (after the expiration of any applicable cure period) under any other lease between the Tenant or any affiliate of the Tenant and the Landlord or an affiliate of Landlord, for space leased by Tenant or any affiliate of the Tenant in Building I or Building II of the Office Center, then and in any such event Landlord may, at its election, either terminate this Lease and Tenant's right to possession of the Premises or, exercise Landlord's rights hereunder without terminating this Lease or relieving Tenant of any obligation, including the obligation to pay Rent. 23.2. The Landlord agrees that it shall provide to the Tenant notice, not more than once in any twelve (12) month period, of any delinquent Rent payment and the Tenant shall have five (5) days after the receipt of such delinquency notice to pay the delinquent Rent and avoid the occurrence of an Event of Default hereunder. The parties further agree that if: (a) The Landlord alleges that a default (other than one involving the payment of Rent) has occurred; and (b) Tenant in good faith contests the Landlord's claim of an alleged default; and (c) the Landlord or Tenant have instituted an Arbitration proceeding regarding such alleged default, an Event of Default shall not be deemed to have occurred against the Tenant if the arbitrator rules in favor of the Landlord and against the Tenant so long as within thirty (30) days after such ruling, the Tenant has either cured such breach or commences to cure such breach and diligently pursues such cure to completion. 23.3. Upon any termination of this Lease, Tenant shall surrender possession and vacate the Premises immediately, and deliver possession thereof to Landlord, and Tenant hereby grants to Landlord full and free license to enter into and upon the Premises in such event with or without process of law and to repossess the Premises and to expel or remove Tenant and any others who may be occupying or within the Premises and to remove any and all property therefrom, using such force as may be necessary, without being deemed in any manner guilty of trespass, eviction or forcible entry or detainer, and without relinquishing Landlord's right to Rent or any other right given to Landlord hereunder or by operation of law. 23.4. If Landlord elects, without terminating this Lease, to endeavor to relet the Premises, then Landlord may, at Landlord's option, enter into the Premises, remove Tenant's signs and other evidence of tenancy, and take and hold possession thereof as provided herein, without such entry and possession terminating this Lease or releasing Tenant, in whole or in part, from Tenant's obligation to pay the Rent hereunder for the full term as hereinafter provided. Upon and after entry into possession without termination of this Lease, Landlord may relet the Premises or any part thereof for the account of Tenant to any person, firm or corporation other 37 than Tenant for such Rent, for such time and upon such terms as Landlord shall determine to be reasonable. In any such case, Landlord may make repairs, alterations and additions in or to the Premises, and redecorate the same to the extent deemed necessary or desirable by Landlord, and Tenant shall, upon demand, pay the cost thereof, together with Landlord's expenses of the reletting. If the consideration collected by Landlord upon any such reletting for Tenant's account is not sufficient to pay monthly the full amount of the Rent reserved in this Lease, together with the cost of repairs, alterations, additions, redecorating and Landlord expenses, Tenant shall pay to Landlord the amount of each monthly deficiency upon demand, and if the consideration so collected from any such reletting is more than sufficient to pay the full amount of the Rent reserved herein, together with the costs and expenses of Landlord, Landlord, at the end of the stated Term of this Lease, shall account to Tenant. 23.5. Upon the occurrence of an Event of Default, the Landlord may pursue any remedies available to the Landlord under Missouri law. 23.6. Any and all property which may be removed from the Premises by Landlord pursuant to the authority of this Lease or of law, to which Tenant is or may be entitled, may be handled, removed or stored by Landlord at the risk, cost and expense of Tenant and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all expenses incurred in such removal and all storage charges against such property so long as the same shall be in Landlord's possession or under Landlord's control. Any such property of Tenant not removed from the Premises or retaken from storage by Tenant within thirty (30) days after the end of the Term or of Tenant's right to possession of the Premises, however terminated, shall be conclusively deemed to have been forever abandoned by Tenant and either may be retained by Landlord as its property or may be disposed of in such manner as Landlord may see fit. 23.7. Tenant agrees that if it shall at any time fail to make any payment or perform any other act on its part to be made or performed under this Lease, Landlord may, but shall not be obligated to, and after reasonable notice or demand and without waiving or releasing Tenant from any obligation under this Lease, make such payment or perform such other act to the extent Landlord may deem desirable, and in connection therewith to pay expenses and employ counsel. Tenant agrees to pay a reasonable attorneys' fee if legal action is required to enforce performance by Tenant of any condition, obligation or requirement hereunder. All sums so paid by Landlord and all expenses in connection therewith, together with interest thereon at the Prime Rate from the date payment was due, shall be deemed Additional Rent hereunder and payable at the time of any installment of Rent thereafter becoming due and Landlord shall have the same rights and remedies for the nonpayment thereof or of any other Additional Rent, as in the case of default in the payment of Rent. 23.8. (a) The Tenant shall be entitled to restrain by injunction the violation or threatened violation of any of the Landlord's covenants, agreements or conditions of this Lease. 38 (b) If the Landlord defaults in the performance of any covenant, agreement or condition of this Lease on Landlord's part to be performed, or if Tenant's possession or quiet enjoyment of the Premises shall be interfered with or hindered in any way, the Landlord shall promptly, upon written notice from Tenant, cure such default, interference or hindrance and if the same is not cured within thirty (30) days following receipt by Landlord of Tenant's notice (provided if such default cannot reasonably be cured within such thirty (30) day period, the cure period shall be extended so long as Landlord commences to cure such default within such thirty (30) day period and diligently pursues completion of such cure), Landlord shall be in default of this Lease ("Landlord Default") and in such event Tenant may, at its election, pursue the remedies in this Section 23.8. ------------ (c) In the event of a Landlord Default under this Lease, Tenant may, at its option: (i) Upon written notice to Landlord, make payment or take such action as is necessary to cure the Landlord Default and in connection therewith, pay expenses and employ legal counsel and other professionals. Upon so doing, the costs and expenses so incurred by Tenant (including a reasonable attorneys' fee) shall be immediately due and payable together with interest thereon at the Prime Rate from time to time incurred until paid. (ii) Institute an Arbitration proceeding and secure an award for the damages (including, without limitation, consequential and incidental damages) sustained as a result of the Landlord default, which award shall include Tenant's reasonable attorneys' fees and accrue interest at the Prime Rate from the date of the award until paid. (iii) If the Landlord has not paid the sum due to Tenant, within thirty (30) days following the issuance of a final nonappealable award or judgment against the Landlord as a result of a Landlord Default, the Tenant may offset the sum of any final nonappealable judgment or award against the next installments of Rent due hereunder, provided that no such offset shall exceed an amount equal to twelve percent (12%) of the amount payable as Base Rent for each such month. (iv) Exercise such remedies as are available at law or in equity to the Tenant. (d) Notwithstanding anything else contained in Section 23.8(c)(iv) or elsewhere herein or at law or in equity, the Tenant - ------------------- may not offset Rent, except as provided in Section 23.8(iii) nor terminate ----------------- this Lease as a result of a Landlord Default under any circumstances, and the Tenant's remedies for a Landlord Default shall be limited to those set forth in this Section 23.8. ------------ 39 24. SUBORDINATION OF LEASE. 24.1. So long as Tenant's rights hereunder are not disturbed, this Lease shall be subject and subordinate only to deeds of trust (otherwise for the purpose of this Lease known as a "Mortgage"), whether presently existing or hereafter arising upon the Premises or upon the Building, and to any renewals, modifications, refinancings or extensions thereof, but Tenant agrees that any such Lender shall have the right to subordinate such Mortgage to this Lease on such terms and subject to such conditions as such Lender may deem appropriate in its discretion. Any Lender whose Mortgage lien is superior to this Lease shall agree to execute a subordination, non-disturbance and attornment agreement ("SNDA") containing commercially reasonable terms for the benefit of the Tenant and such Lender, and which agreement shall provide for non-disturbance of Tenant by Lender or any successor or assign of Lender so long as Tenant is in compliance with the terms and provisions of this Lease. The first SNDA shall be executed and delivered by the parties thereto in conjunction with the closing of the Landlord's construction loan which will provide a portion of the funds for construction of the Premises. 24.2. Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any Mortgage, now existing or hereafter placed upon the Premises or the Building as a whole provided such party recognizes this Lease and agrees to be bound by the obligations of Landlord hereunder arising from and after the date title transfers, and Tenant agrees upon demand to execute such further instruments subordinating this Lease or attorning to any such Lender as Landlord may reasonably request, on the condition that any such Lender shall execute a non-disturbance agreement in favor of Tenant. 24.3. Tenant shall, within twenty (20) days after written request of Landlord, execute, acknowledge and deliver to Landlord or to Landlord's mortgagee, proposed mortgagee, or proposed purchaser of the Premises or any part thereof, any estoppel certificates reasonably requested by Landlord from time to time, which estoppel certificates shall show whether this Lease is in full force and effect and whether any changes may have been made to the original Lease; whether the Term of this Lease has commenced and full Rent is accruing; whether there are any known defaults by Landlord and, if so, the nature of such defaults; whether possession has been assumed and all improvements to be provided by Landlord have been completed; whether Rent has been paid more than thirty (30) days in advance; and that there are no known liens, charges, or offsets against rental due or to become due; and that the address shown on such estoppel certificate is accurate, and such other statements as may be reasonably requested by the Landlord. 24.4. Tenant agrees that within twenty (20) days after the receipt of any proposed form of SNDA or tenant estoppel provided by the Landlord to the Tenant, the Tenant shall review such form and provide any comments to the Landlord. The Tenant further agrees to review promptly any further revisions of the SNDA or tenant estoppel and to cooperate with the Landlord and the Lender to finalize and execute an SNDA and tenant estoppel in form reasonably acceptable to the Lender so as not to delay the closing of any loan or sale. In the 40 event that the Tenant requests that Landlord execute an estoppel, the Landlord shall promptly review any revisions and cooperate with the Tenant to expedite the execution thereof. 24.5. Tenant shall, in the event of the sale or assignment of Landlord's interest in the Premises or in the event of any proceedings brought for the foreclosure of, or in the event of exercise of the power of sale under, or taking by deed in lieu of foreclosure of, any mortgage made by Landlord covering the Premises, give full and complete attornment to the purchaser and recognize the purchaser as Landlord under this Lease for the balance of the Term of this Lease, including any Option Term, provided such purchaser agrees to assume the obligations of Landlord under this Lease arising from and after the date of such purchaser's acquisition of the Premises. 25. COMMENCEMENT OF POSSESSION. If the Tenant desires to obtain possession of any portion of the Premises prior to the Commencement Date, the Tenant may do so only with the prior written consent of the Landlord, pursuant to the terms of Section 2 hereof. --------- 26. NOTICES AND CONSENTS. The Tenant shall pay the Rent and forward all notices to Landlord at the following address (or at such other place as Landlord may hereafter designate in writing): Eckelkamp Office Center South, L.L.C. 200 West Main Street Washington, MO 63090 Attn: L. B. Eckelkamp, Jr. with a copy of notices to: Kelley Real Estate Advisors, Inc. 12444 Powerscourt Drive, Suite 150 St. Louis, MO 63131 Attention: Joseph J. Kelley, Jr. Sonnenschein Nath & Rosenthal One Metropolitan Square Suite 3000 St. Louis, MO 63102 Attention: Daniel R. Wofsey 26.1. The Landlord shall forward all notices to Tenant at the following address (or at such other place as Tenant may hereafter designate in writing): 41 Edward D. Jones & Co., L.P. 201 Progress Parkway Maryland Heights, MO 63043-3042 Attention: Wendy L. Monso Edward D. Jones & Co., L.P. 12555 Manchester Road Des Peres, MO 63131 Attention: Lawrence R. Sobol, General Counsel Greensfelder, Hemker & Gale 2000 Equitable Building 10 South Broadway St. Louis, MO 63102-1774 Attention: Thomas L. Story 26.2. Any notice provided for in this Lease must, unless otherwise expressly provided herein, be in writing, and may, unless otherwise expressly provided herein, be given or served by depositing the same in the United States mail, postage pre-paid and certified, and addressed to the party to be notified with return receipt requested, by overnight courier which provides a record of receipt, by courier which provides a record of receipt, or by delivering the same in person to an officer of such party. 26.3. Notice deposited in the mail in the manner hereinabove shall be effective upon receipt, unless such mail is unclaimed, in which event notice shall be effective five (5) days after the date of mailing. 26.4. Notices by Tenant shall also be forwarded to the Lender at the address provided by Landlord to Tenant at such time as the Lender has been determined. Except as specifically provided in this Lease, Tenant hereby expressly waives the service of intention to terminate this Lease or re-enter the Premises, of any demand for payment of Rent or possession, and of any other notice or demand prescribed by any statute or other law. 27. CONTINGENCIES. 27.1. This Lease and Tenant's rights and obligations hereunder are contingent upon the following matters which the Landlord shall diligently pursue: (a) The Landlord shall secure a construction loan commitment in an amount which, along with Landlord's equity, is sufficient for the construction of the Premises (other than for Tenant Work to be paid for by the Tenant), which commitment shall contain no provisions which cannot reasonably be expected to be complied with, and provide a copy of such commitment to Tenant on or before sixty (60) days after the Execution Date; 42 (b) The Landlord shall secure all necessary permits to allow the commencement of construction of the Core and Shell within seventy-five (75) days after the Execution Date and deliver copies thereof to the Tenant. The Tenant acknowledges that the initial construction permits will be amended at such time as the appropriate modifications to the Core and Shell Plans have been prepared and approved by the parties pursuant to Exhibit A; - --------- (c) The Landlord shall have entered into a construction contract for construction of the Premises (including an allowance for the Base TI Allowance portion of the Tenant Work) consistent with the obligations of the Landlord hereunder and a copy of such contract is provided to the Tenant within seventy-five (75) days after the Execution Date; and (d) The Landlord shall commence construction of the Premises on or before June 1, 2000. 27.2. In the event the Landlord has not satisfied the foregoing provisions on or before the dates noted (or any extension thereof to which Tenant agrees not to unreasonably withhold its consent therefor), the Tenant may at any time thereafter by written notice to the Landlord terminate this Lease. 28. INVALIDITY OF PARTICULAR PROVISIONS. If any clause or provision of this Lease is or becomes illegal, invalid, or unenforceable because of present or later laws or any rule, decision, or regulation of any governmental body or entity, the intention of the parties hereto is that the remaining parts of this Lease shall not be affected thereby. 29. COMMISSIONS. Landlord hereby represents and warrants to Tenant that it has not retained any broker or agent concerning this Lease other than Kelley Real Estate Advisors, Inc. ("Kelley") and Landlord shall pay any and all broker's fees or commission owed to Kelley because of this Lease or any of the transactions described herein. Tenant hereby represents and warrants to Landlord that it has retained no broker or agent concerning this Lease other than Grubb & Ellis/Krombach Partners, Inc. and Landlord shall pay any and all broker's fees or commissions owed to Grubb & Ellis/Krombach Partners, Inc. because of this Lease or any of the transactions described herein, pursuant to the Listing Agreement executed by Landlord, Tenant, Kelley, Grubb & Ellis/Krombach Partners, Inc., Kelley Real Estate, Inc. and the Adjacent Property Owner. Landlord and Tenant hereby indemnify and agree to defend and hold each other harmless against any loss, claim, expense or liability with respect to any other commissions or broker's fees claimed on account of the execution and/or renewal of this Lease due to any action of the indemnifying party. 30. SPECIAL STIPULATIONS. 30.1. No receipt of money by Landlord from Tenant after the expiration or termination of this Lease, the service of any notice, the commencement of any suit, or final judgment for possession of the Premises shall reinstate, continue, or extend the Term of this 43 Lease or affect any such notice, demand, or suit or imply consent for any action for which Landlord's consent is required. 30.2. No waiver of any default of Tenant hereunder shall be implied from any failure by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and such express waiver shall be only for the time and to the extent therein stated. 30.3. The Premises are located in unincorporated St. Louis County. 30.4. All of the covenants of Tenant and Landlord in this Lease shall be deemed and construed to be "conditions" as well as "covenants", as though the words specifically expressing or importing conditions and covenants were used in each instance. 30.5. This Lease shall not be recorded by either party without the consent of the other. 30.6. Neither party has made any representations or promises, except as contained in this Lease, or in some additional writing signed by the party making such representation or promise. 30.7. Each provision hereof shall extend to and shall, as the case may require, bind and inure to the benefit of Landlord and Tenant and their respective heirs, legal representatives, successors and assigns. 30.8. It is understood and agreed that this Lease shall not be binding until and unless all parties have signed it. 44 31. MECHANICS LIENS. 31.1. If, because of any act or omission of Tenant, its employees, agents, contractors, or subcontractors, any mechanic's lien, other lien, charge or order for the payment of money shall be filed against Landlord or against all or any portion of the Premises, Tenant shall, at its own cost and expense, cause the same to be discharged of record, within thirty (30) days after the filing thereof, and Tenant shall protect, defend, indemnify and hold harmless Landlord against and from all costs, liabilities, suits, penalties, claims and demands, including reasonable attorney's fees resulting therefrom; provided, however, the Tenant shall be permitted to contest any such mechanic's lien, provided that the Tenant provides a bond or other security reasonably satisfactory to the Landlord and to the Landlord's Lender against any such mechanic's lien and provided further that the Tenant promptly pay any judgment related to the mechanic's lien if the Tenant's contest thereof shall fail. Notwithstanding the foregoing, nothing contained herein shall deem Tenant a partner or agent of Landlord, and Tenant shall not, by reason hereof or otherwise, have the right to bind Landlord or the Premises to the payment of any such money. 31.2. The Landlord agrees that in the event any mechanic's lien is filed against the Premises as a result of work contracted for by the Landlord, the Landlord shall take reasonable commercial efforts either to settle the lien or to actively contest it so as to ensure that the Tenant's occupancy and enjoyment of the Premises is not adversely affected by the filing of such lien. In the event that any mechanic's lien is filed as a result of the Landlord's action, and if Landlord is not successful in obtaining a release of such lien within thirty (30) days of the date of filing of such lien, then Landlord shall, within ten (10) days thereafter, provide a bond, title insurance or other reasonable security to the Tenant providing protection to the Tenant for its leasehold estate hereunder. 32. ATTORNEY'S FEES. 32.1. If any person not a party to this Lease shall institute an action against Tenant in which Landlord shall be made a party, arising out of any alleged act or omission of the Tenant or its employees or agents, Tenant shall indemnify and hold Landlord harmless from all liability by reason thereof, and all costs incurred by Landlord in such action, including reasonable attorneys' fees. 32.2. If any person not a party to this Lease shall institute an action against the Landlord in which the Tenant shall be made a party, arising out of any alleged act or omission of the Landlord or its employees or agents, the Landlord shall indemnify and hold the Tenant harmless from all liability by reason thereof, and all costs incurred by the Tenant in such action, including such reasonable attorneys' fees. 32.3. In the event of litigation between the parties hereto, declaratory or otherwise, for the enforcement of any covenants, terms or conditions of this Lease, the nonprevailing party shall pay the costs and expenses, including, without limitation, fees or costs of experts, whether or not used in any proceeding and attorneys' fees actually incurred by the 45 prevailing party, which shall be determined and fixed by the Court as part of the judgment. The parties covenant and agree that they intend by this Section to compensate, for attorney's fees actually incurred by the prevailing party, the particular attorneys involved at such attorneys' then normal hourly rate. This Section shall constitute an instruction to the Court that such rate or rates shall be deemed reasonable. 33. CONSTRUCTION OF LEASE. The language in all parts of this Lease shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either Landlord or Tenant. Time is of the essence of this Lease and of every term, covenant and condition hereof. The words "Landlord" and "Tenant", as used herein, shall include the plural as well as the singular. The neuter gender includes the masculine and feminine. If there is more than one tenant, then the obligations to be performed shall be joint and several. 34. ENTIRE AGREEMENT. This Lease, together with any attached exhibits and any written addenda contains the entire agreement between the parties. 35. INTERPRETATION AND ENFORCEMENT. This Lease shall be interpreted, governed and enforced in all respects under the laws of the State of Missouri. 36. FORCE MAJEURE. 36.1. Whenever a period of time is herein prescribed for the taking of any action by Landlord, Landlord shall not be liable or responsible for, and there shall be excluded from the computation of such period of time, any delays due to strikes, work stoppages, riots, acts of God, natural disasters, weather, governmental imposition of priorities or controls, shortages of labor, materials or fuels, war, governmental laws, regulations or restrictions, or any other cause whatsoever beyond the control of Landlord. All such items in the previous sentence are referred to herein as "Force Majeure." Notwithstanding the above, subsequent to the Commencement Date, unavailability or scarcity of materials shall not constitute a basis for Force Majeure, except in the case of restoration in the event of a fire or other casualty affecting the Premises. 36.2. Whenever a period of time is hereby prescribed by the taking of any action by the Tenant (other than the payment of Rent) subsequent to the Commencement Date, Tenant shall not be liable or responsible for, and there shall be excluded from the computation of such period of time, any delays due to Force Majeure. Notwithstanding anything above, in no event shall any Force Majeure limitations excuse the Tenant from the obligation to promptly pay Rent as and when due hereunder. 37. HAZARDOUS MATERIALS. 37.1. Tenant shall not at any time use or permit the use of any portion of the Premises, or the land beneath any of them, for use in violation of any governmental laws, ordinances, regulations, or orders concerning Hazardous Materials and other environmental conditions, including, but not limited to, asbestos, soil, and ground water conditions. Tenant 46 shall not allow the storage or use of such Hazardous Materials in any manner not sanctioned by law or by the highest standards prevailing in the industry for the storage and use of such Hazardous Materials, nor allow to be brought onto the Premises any such Hazardous Materials except to use in the ordinary course of Tenant's business, to include ordinary household cleaning and maintenance products which are used with due care and in accordance with applicable laws and the instruction of the manufacturer of such products in the reasonable and prudent conduct of Tenant's business. In addition, Tenant shall execute affidavits, representations, and the like from time to time at Landlord's request concerning Tenant's best knowledge and belief regarding the presence of Hazardous Materials on the Premises. Tenant shall defend, indemnify and hold Landlord and Landlord's Lender harmless from and against any and all violations by Tenant or its agents, employees or contractors of the foregoing provisions (including reasonable attorney's fees) or arising from any violation of the foregoing covenant and/or existence of Hazardous Materials that hereinafter become located in, on, or under the Premises, including, but not limited, to the cost to remediate any such violation and abate any such Hazardous Materials and any reasonable costs incurred by the Landlord or Lender for environmental testing, but excluding any such violation, condition or Hazardous Materials to the extent caused by Landlord or any third party which is not an employee, agent, contractor, customer or otherwise affiliated with the Tenant. The foregoing indemnification by Tenant shall survive the expiration or earlier termination of this Lease. "Hazardous Materials" shall include, but not be limited to, substances requiring investigation, removal or remediation under any federal, state or local statute, regulation ordinance or policy including substances defined as "hazardous substances" or "toxic substances" in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C., Section 1802, the Resource Conservation Recovery Act, 42 U.S.C., Section 6901, et seq. or those substances defined as "hazardous waste" in applicable codes of Missouri and in the regulations adopted and publications promulgated for such codes. 37.2. Landlord represents and warrants to the Tenant that to the best of Landlord's knowledge, there are no Hazardous Materials in, on or under the Premises in violation of applicable law. The Landlord has not and shall not use the Premises in violation of any governmental laws, ordinances, regulations or orders concerning Hazardous Materials and other environmental conditions. The Landlord shall defend and hold Tenant, its officers, employees, agents, contractors and lenders harmless from and against any and all violations or breaches of the foregoing warranty and covenant (including reasonable attorneys' fees) and the existence of Hazardous Materials that hereafter become located in, on or under the Premises as a result of the action of the Landlord or its agents or employees, including, but not limited to, the cost to remedy any such violations and abate any such Hazardous Materials, but excluding any such violation or condition or Hazardous Materials to the extent caused by Tenant or any other third party which is not an agent, contractor, employee, customer or otherwise affiliated with the Landlord. The foregoing indemnification by the Landlord shall survive the expiration or earlier termination of this Lease. 37.3. In the event that any third party, which is not an employee, agent, contractor or otherwise affiliated with either the Tenant or the Landlord, causes any release of 47 Hazardous Materials onto the Premises subsequent to the Commencement Date, the Landlord shall be responsible for promptly resolving such release, which may include in Landlord's reasonable discretion, a clean-up of such release and/or the pursuit of legal action against such third party which would cause such third party to promptly remediate such release. The parties agree that a rider or endorsement shall be added to the Liability Policy providing for insurance coverage with respect to any clean-up of the Premises as a result of the release of Hazardous Materials within the Premises protecting the interests of the Landlord, the Tenant and all Lenders. 38. EFFECT OF DELIVERY OF THIS LEASE. Landlord has delivered a copy of this Lease to Tenant for Tenant's review only, and the delivery hereof does not constitute an offer to Tenant or an option to Lease. This Lease shall not be effective until a copy executed by both Landlord and Tenant is delivered to and accepted by Landlord. 39. SECTION HEADINGS. The section or subsection headings are used for convenience of reference only and do not define, limit or expand the scope or intent of the sections. 40. DEFINITIONS. The definitions set forth in Section 1 are --------- hereby made part of this Lease. 41. EXHIBITS. Exhibits A through D are attached hereto and ---------- - incorporated herein and made a part of this Lease for all purposes: Exhibit Number Description -------------- ----------- Exhibit A Work Letter --------- Exhibit A-1 Core and Shell Plans ----------- Exhibit A-2 Core and Shell Plan Modifications ----------- Exhibit A-3 Tenant Work Allocation ----------- Exhibit A-4 Construction Schedule ----------- Exhibit A-5 Exterior Signs ----------- Exhibit A-6 Intentionally Deleted ----------- Exhibit A-7 Tenant Work Schedule ----------- Exhibit B Legal Description of Office Center --------- Exhibit B-1 Site Plan of Lot 1 ----------- Exhibit C Declaration of Lease Commencement --------- Exhibit D Insurance Standards --------- 42. VENDING RIGHTS. The Tenant shall retain exclusive rights to provide all vending services within the Premises provided that upon written request of the Landlord, from time to time, the Tenant shall notify the Landlord of any person or entity providing vending services to the Premises. 48 43. NAMING OF BUILDING. The Tenant shall have the right to name the Building after itself. 44. OPTION TO PURCHASE. Simultaneous with the execution of this Lease, the Landlord and Tenant have entered into an Option and First Offer Agreement ("Building III Option") pursuant to which the Landlord has granted to the Tenant the option to purchase the Premises, as well as a right of first offer to purchase the Premises, as more particularly set forth therein. 45. OPTION TO PURCHASE, RIGHT OF FIRST OFFER AND LEASE OPTION FOR BUILDINGS I AND II. 45.1. Simultaneous with the execution of this Lease, the Tenant and the Adjacent Property Owner have entered into an Option and First Offer Agreement pursuant to which the Adjacent Property Owner grants to the Tenant certain option and first offer rights with respect to Buildings I and II, as more particularly set forth therein. 45.2. Simultaneous with the execution of this Agreement, the Adjacent Property Owner and the Tenant have executed an Option to Lease Agreement for Buildings I and II, pursuant to which the Adjacent Property Owner has granted to the Tenant certain rights to lease portions of Buildings I and II as more particularly set forth therein. 46. NO ESTATE IN LAND. This Lease shall create the relationship of landlord and tenant between Landlord and Tenant and no estate (other than this leasehold) shall pass out of Landlord. 47. ARBITRATION. All disputes between Landlord and Tenant relating to or arising under this Lease shall be resolved by the submission of such disputes to binding arbitration as provided herein ("Arbitration"). 47.1. All Arbitrations shall be conducted in St. Louis County, Missouri, or at another location mutually approved by the parties in writing, pursuant to the Commercial Arbitration Rules of the American Arbitration Association ("AAA"), except as may be herein provided. All Arbitration proceedings shall be undertaken pursuant to the Federal Arbitration Act, 9 U.S.C. Sections 1-16, where applicable, and the award of the arbitrator(s) shall be conformable and enforceable in any court of competent and final jurisdiction. All parties expressly agree to waive their respective rights to appeal from an award of the arbitrator(s) or seek redress in any other court, except as to those grounds set forth in 9 U.S.C. Sections 10, 11 and 16. 47.2. In any dispute where a party seeks $200,000.00 or more in damages or if the dispute involves whether the Landlord or Tenant may terminate the Lease, three (3) arbitrators shall be employed to arbitrate the dispute. In the event the dispute involves less than $200,000.00 or if the dispute does not involve Lease termination issues, there shall be one (1) arbitrator. In the event of any Arbitration or other legal proceeding brought by any party against 49 the other with regard to any matter arising out of or related to this Lease, each party expressly agrees that the final award rendered by the arbitrator(s) shall also provide for an allocation and division between or among parties to the Arbitration, on a basis which the arbitrator(s) deem just and equitable under the circumstances, of all costs and expenses of the dispute, including, but not limited to, court costs, arbitrator's fees and expenses, AAA fees and expenses, reasonable attorneys' fees and expenses, accountants' and expert witness' fees and expenses, stenographic or reporter expenses, and rental expenses for the premises where the Arbitration is held. 47.3. All disputes shall be determined by the arbitrator(s) in accordance with the substantive law of the State of Missouri, except that the parties expressly agree that the Federal Arbitration Act is applicable and takes precedence over Missouri's Uniform Arbitration Act, Chapter 435, Revised Statutes of the State of Missouri. 47.4. The party desiring Arbitration ("First Party") shall give written notice to that effect to the other party ("Second Party"), and shall also apply to the AAA for the appointment of arbitrator(s) in accordance with the appointment procedures of the Commercial Arbitration Rules of the AAA, and the parties shall proceed in accordance with such rules to designate arbitrator(s). A demand for Arbitration is to be made within a reasonable time after the claim or controversy has arisen, but in no event later than the date when institution of legal or equitable proceedings based on such claim or controversy would be barred under the applicable statute of limitations under Missouri law. 47.5. Within twenty (20) days after the arbitrator(s) shall have been designated, each party shall submit a written statement stating and explaining such party's position to the other party and to the arbitrator(s) with respect to the subject matter of the Arbitration, together with its arguments in support of its position ("Position Paper"). 47.6. The arbitrator(s) shall resolve any discovery disputes by prehearing conferences as may be needed. The parties agree that the arbitrator(s) and any counsel of record to the proceeding shall have power of the subpoena process in aid of Arbitration, as provided by law. 47.7. The arbitrator(s) are directed by this Lease to conduct the Arbitration hearing no later than six (6) months from the service of the statement of claim and demand for Arbitration, unless good cause is shown establishing that the hearing cannot fairly and practically be so conducted. 47.8. Notwithstanding any provision regarding Arbitration as provided herein, the Tenant shall not be permitted to submit any issue to Arbitration regarding the payment of Rent and pursue such issue hereunder unless prior to the submission of such issue to Arbitration, the Tenant first pays to the Landlord all amounts of Rent as are alleged by the Landlord to be then due and owing by the Tenant and continue to pay Rent in such amounts during the entire period of Arbitration, until a final decision is rendered. 50 48. FINANCING BY TENANT. The Landlord hereby releases any statutory lien that it may have on the furniture, fixtures and equipment owned by the Tenant which may be located from time to time within the Premises and which the Tenant is permitted to remove at the end of the Term of this Lease under the terms hereof. The Tenant may, at its option, grant a security interest in such furniture, fixtures and equipment. The Tenant may also, at its option, grant a deed of trust in its interest as Tenant under this Lease ("Leasehold Deed of Trust"). Upon the written request of the Tenant, the Landlord shall agree to provide written notice of any default hereunder to the beneficiary under any Leasehold Deed of Trust. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 51 IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease in the County of St. Louis, State of Missouri, the day and year first above written. THIS LEASE CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. LANDLORD: TENANT: ECKELKAMP OFFICE CENTER SOUTH, EDWARD D. JONES & CO., L.P., L.L.C., A MISSOURI LIMITED LIABILITY A MISSOURI LIMITED PARTNERSHIP COMPANY By: Eckelkamp Office Center, Inc., By: Managing Member ---------------------------------- Name: -------------------------------- Title: ------------------------------- By: ----------------------------- L.B. Eckelkamp, Jr., President 52 EXHIBIT A --------- WORK LETTER ----------- 1. CONSTRUCTION OF PREMISES. a. The Landlord and Tenant agree that during the Construction Period, the Landlord shall construct the Premises substantially in accordance with the plans for the core and shell for the Premises ("Core and Shell") which were drawn by Gray Design Group, Inc. dated August 5, 1998, as amended, and which are more particularly described on Exhibit A-1 (Core and Shell Plans) along with ----------- modifications to be prepared in part by Bauer Pankey Architects, Inc. set forth on Exhibit A-2 (25 pages) ----------- dated December 3, 1999 (Core and Shell Plan Modifications) attached hereto and incorporated herein, as supplemented pursuant to Paragraph 1(b) and the Tenant Work Plans (as defined below) for the Premises. As used herein, the phrase "Core and Shell Plans" shall mean the plans referenced on Exhibit A-1 and the modifications to ----------- such plans as contemplated by Exhibit A-2. The process ----------- and procedure for the construction of the Premises is more particularly set forth in this Work Letter. b. The Tenant acknowledges receipt of the Core and Shell Plans and approves of such Core and Shell Plans to the extent completed. The Landlord shall promptly prepare the modifications to the Core and Shell Plans listed on Exhibit A-2 and submit such plans for the ----------- approval of the Tenant ("Plan Modifications"). The Tenant agrees that it shall not unreasonably withhold or delay its approval of the Plan Modifications so long as they are consistent with the provisions of Exhibit A-2. ----------- The Core and Shell Plans shall be subject to the approval of the Landlord's Lender. If the Landlord's Lender requires any reasonable changes to the Core and Shell Plans, the Landlord and Tenant shall work together in good faith to make any reasonable and appropriate changes, but at no cost or expense to the Tenant. Upon approval of the final Core and Shell Plans, the Landlord and Tenant shall amend this Lease to incorporate the final Core and Shell Plans to be a part of this Lease. c. The parties agree that Exhibit A-3 (Tenant Work ----------- Allocation) attached hereto and incorporated herein is a schedule that reflects which items are covered by the Core and Shell Plans and which items are to be included within the future plans for the Tenant Work ("Tenant Work Plans"). 2. APPROVAL RIGHTS AND REVIEW PROCESS. a. It is the intention of the parties to work together in an expeditious, efficient and good faith manner to satisfy the preparation and approval procedures set A-1 forth herein or to be agreed upon by the parties during the construction phase of the Premises. In any circumstance in which the Landlord or the Tenant is required to review and approve any plans, changes to plans, construction completion or other items or issues in conjunction with the design and completion of construction of the Premises pursuant to this Work Letter, the party whose approval is sought shall not unreasonably withhold, delay or condition its consent to any such request, unless the terms of this Work Letter explicitly impose a different standard of review; provided, however, such approval shall not be required to be given in the event that the approval requested shall require the party whose approval is sought to incur material expense or result in material delay in the performance of the obligations of the parties hereunder. b. In the event that any party declines a request for approval related to the Premises design or construction, the declining party shall provide written notice to the other party of the reason for such objection and in the event the requesting party disagrees with such reason, the parties shall promptly seek to remedy such objection to the reasonable satisfaction of the Landlord and Tenant. If appropriate, the parties shall engage the services of an architect, contractor or engineer to resolve any disputes involving the Premises construction, design or suitability. 3. CORE AND SHELL PLANS. The Landlord agrees that it shall promptly commence construction of the Premises and shall pursue the completion of construction of the Premises in accordance with the Core and Shell Plans with due diligence, pursuant to the preliminary schedule set forth on Exhibit A-4 attached hereto ----------- labeled Construction Schedule ("Construction Schedule"). The Construction Schedule shall be further modified pursuant to Paragraph 8 hereof. The Landlord agrees that it shall undertake ----------- good faith efforts to complete the construction of the Premises in accordance with the Construction Schedule, subject to delays as a result of Excusable Construction Delay. The Landlord shall provide the Tenant with a written status report of the progress of construction every month with a detailed update on the projected Construction Schedule. The Landlord currently anticipates having weekly construction meetings within the Office Center for which meeting minutes shall be prepared. The Tenant may send a representative or representatives to participate in such meetings and, in any event, the Landlord shall promptly provide to the Tenant a copy of such meeting minutes. 4. CORE AND SHELL CONSTRUCTION. The Landlord agrees that the Core and Shell shall be constructed in accordance with all applicable laws, codes, rules and regulations, including, but not limited to, the local building code, fire and life safety requirements, the ADA and good practices consistent with national standards and all other local laws of St. Louis County in the State of Missouri. 5. IDENTITY/SIGNAGE. A-2 a. The parties acknowledge and agree that the Premises shall be known as the "Edward Jones Building" or such other name identifying Tenant or any affiliate of Tenant as may be reasonably requested by the Tenant from time to time. The Landlord shall construct and affix upon the Building, three (3) parapet wall signs which shall be exclusive to Tenant and shall be comprised of illuminated individual white letters displaying the name of the Tenant as shown on Exhibit A-5 (Exterior Signs), ----------- and two (2) ground signs at the locations shown on Exhibit B-1 and as depicted on Exhibit A-5 (Exterior ----------- ----------- Signs). All signs, logos or other monuments shall be in full compliance with all applicable laws, statutes and ordinances of St. Louis County, Missouri or other governmental body governing the Premises. The Landlord shall provide an allowance for exterior signs on the Premises of $40,000.00 (which sum shall be in addition to the Base TI Allowance). In the event that the cost of the design, purchase and installation of the exterior signs exceeds $40,000.00, the Tenant shall pay such difference as an Excess TI Cost, as provided for herein. The Landlord agrees that it shall promptly proceed to attempt to obtain any governmental variances or other approvals necessary to allow the construction of a monument sign on the Premises containing a Dow Jones Average indicator, comparable in size to the existing monument signs adjacent to Buildings I and II and containing approximately 175 square feet of surface area. In the event that the Landlord cannot obtain such variances or approvals, such monument sign shall have a surface area of approximately 150 square feet. b. Tenant shall be permitted to request installation of architecturally compatible signage on the walls of elevator lobbies and on entrance doors as Tenant Work. The Landlord shall provide for an allowance for interior signage in the Premises of $20,000 (which shall be in addition to the Base TI Allowance). All acquisition and installation costs for initial interior signage above $20,000 shall be paid for from the Base TI Allowance at Tenant's expense. Maintenance, repair, replacement and restoration of such signage shall be included as an Operating Expense under this Lease. c. The Tenant may, upon the approval of the Landlord, transfer its rights to utilize signs to any assignee or subtenant that is comparable in stature and prestige to those having signage rights in comparable buildings owned by the Landlord or affiliates of the Landlord, or comparable buildings owned by other landlords. 6. DESIGN TEAM AND SUBCONTRACTORS. a. Landlord and Tenant agree that the design team ("Design Team") for the Tenant Work ("Design Work") shall include: A-3 (1) Arcturis, Inc., as Tenant's architect ("Tenant Architect") to prepare drawings and specifications for the Tenant Work through the customary AIA design development phase; (2) Sverdrup/CRSS ("Tenant Engineer") to produce engineering and working drawings for each subcontractor; (3) Bauer Pankey Architects, Inc. ("Architect") to provide assistance and coordination to be sure that the Tenant Work is coordinated with the construction work for the Core and Shell; The Design Team shall also prepare construction drawings and specifications (to be jointly issued) for bid packages that will be complete and suitable for obtaining competitive open-market bids from Kaiser Electric, Inc., Kyhl Plumbing, Inc., Charles E. Jarrell Contracting, Inc., and Fire Assurance, Inc., and from at least three additional reputable, qualified trade subcontractors who customarily bid and perform such categories of Tenant Work in the St. Louis metropolitan area. The foregoing subcontractors ("Approved Subcontractors") allowed to bid shall be mutually identified and agreed to in advance by Landlord, Tenant and Contractor. The Tenant reserves the right to utilize a subcontractor other than the lowest bidder. The Tenant Architect and the Tenant Engineer shall be engaged under contract with Tenant and paid for from the Base TI Allowance, as an expense of the Tenant Work. The expenses of the Architect with respect to the Tenant Work, shall be paid for by the Landlord. b. Prior to the completion of the Core and Shell and Tenant Work (including the completion of any Punch-List items), all Contractors and Subcontractors utilized by the Tenant for Tenant Work or any other services provided to the Tenant within the Premises, shall be affiliated with the AFL/CIO and will not create any labor or work stoppages or strikes affecting the Landlord's construction of the Premises or any other services provided by the Landlord hereunder. In the event that the Tenant desires to utilize a mover that is not affiliated with the AFL/CIO, the Tenant shall do so in accordance with the provisions of Paragraph 15 hereof. ------------ 7. TENANT WORK. a. The Landlord and Tenant acknowledge and agree that the Landlord shall complete the Core and Shell of the Premises in accordance with the Core and Shell Plans. In addition, the Landlord shall undertake the Tenant Work within the Building as requested by the Tenant in accordance with the procedures set forth below. The Landlord shall provide to the Tenant an allowance of Twenty-Five and 00/100 Dollars ($25.00) per RSF of the Building toward Tenant Work, plus an additional allowance of One and 00/100 Dollars ($1.00) per RSF of the Building for architectural and mechanical review of the construction of the Premises by the Tenant Engineer and the Tenant Architect A-4 ("Base TI Allowance"). In the event that the cost of the Tenant Work, as requested by the Tenant, exceeds the Base TI Allowance, the Tenant shall be responsible for payment of such excess sum ("Excess TI Costs"). b. The parties agree that the Tenant may utilize the Base TI Allowance for tenant finish, including, but not limited to, installation of ceiling pads and lighting, furniture (including, but not limited to, work stations), fixtures and equipment and for architects, engineers and other consultants and service providers hired by Tenant in connection with the relocation of Tenant's business to the Premises ("Tenant Work"). Any furniture or trade fixtures purchased by or for Tenant utilizing the Base TI Allowance shall remain the Tenant's property and the Tenant shall have the right to retain and remove such items throughout the Lease Term, so long as no Event of Default is outstanding hereunder. c. Attached hereto as Exhibit A-7 is a schedule for the ----------- preparation, review, approval and bidding for the Tenant Work ("Tenant Work Schedule"). The parties hereto agree to proceed in good faith and with due diligence at all times to respond to and satisfy the Tenant Work Schedule so as to not delay the completion of the Tenant Work and the final Substantial Completion of the Premises. d. Tenant has or will immediately begin space planning for the Building with the Tenant Architect for the preparation of Design Work and working drawings for the interior of the Premises as provided in Exhibit A-7 ----------- (Tenant Work Schedule). e. Any private restrooms (including showers) and kitchens included within Tenant Work shall be paid for out of the Base TI Allowance, other restrooms in the Building shall be included in the Core and Shell, as provided in the Core and Shell Plans. f. The Core and Shell Plans shall include a card reader at six (6) perimeter entrances and exits of the Building. The cost of such card readers shall not be included within the Base TI Allowance provided the cost of any additional security system shall be charged against the Base TI Allowance. The cost of maintaining, operating or replacing the security system within the Premises shall be deemed to be an Operating Expense paid by Tenant under the Lease. g. The Landlord shall undertake its best efforts to provide that Cybertel will only utilize the roof of the Parking Garage as a "Cell Site" in a manner which will be architecturally harmonious with the design of the Parking Garage (with antenna panels next to the wall surface of the Parking Garage and of the same color as the Parking Garage, if reasonably possible). If Cybertel does utilize a portion of the Parking Garage as a Cell Site under the Cybertel Lease, the Landlord and Tenant shall work together to minimize the interference of the A-5 use and enjoyment of the Premises (including, without limitation, no loss of parking spaces) by and as a result of Cybertel's Cell Site. h. The Tenant shall have the exclusive right to use the Building roof, shafts, risers, or conduits for the installation and maintenance of conduits, cables, ducts, flues, pipes and other devices for communications, data processing devices, supplementary HVAC, kitchen air supply and exhaust requirements and other facilities consistent with Tenant's use of the Premises. Any such uses shall be subject to the Landlord's prior approval, not to be unreasonably withheld, conditioned or delayed, and applicable codes, ordinances and laws. i. The Tenant shall have the right to install within the Premises, communications, wiring and cable to provide direct communications with the building currently owned by the Tenant at 12555 Manchester Road, Des Peres, Missouri or other facilities owned or leased by the Tenant. The Tenant shall have the right to install an additional generator or generators, at the Tenant's sole cost and expense, near the location of the life/safety generator located near the Premises as reflected on the Site Plan, provided the installation of such additional generators shall be subject to the consent of the Landlord, which consent shall not be unreasonably withheld. 8. TENANT WORK PLANS. a. The Tenant shall prepare or have prepared preliminary space plans for the Premises ("Space Plans") in accordance with Exhibit A-7 (Tenant Work Schedule). The ----------- Landlord shall provide to the Tenant more detailed construction schedules for the Core and Shell which shall be prepared jointly with the Tenant, and H.B.D. Contracting, Inc. (the "Contractor") within forty-five (45) days from the Execution Date in accordance with Exhibit A-7 (Tenant Work Schedule). The Tenant's ----------- construction drawings shall be completed by October 1, 2000. Such construction schedule shall be prepared using a Microsoft project format, as reasonably requested by Tenant. Promptly after the execution of this Lease, the Landlord, the Tenant, the Tenant Architect, the Tenant Engineer, the Architect, the Contractor and Kelley shall meet and agree upon a competitive bid process and any required revisions to the construction schedule that will provide for the completion of the Core and Shell and the design and construction of the Tenant Work so as to permit the completion of the Premises and occupancy thereof on or before December 31, 2001 ("Substantial Completion Date"). As part of the bid process for the Tenant Work, the Contractor and the Landlord agree that the Contractor shall request bids for each potential subcontract as provided in Paragraph 6(a) hereof and -------------- that the lowest responsive bidder shall be utilized in each case unless the Tenant specifically selects, in its sole discretion, a bidder other than the lowest bidder. The construction contract with the Contractor shall limit the Contractor to a fee for overhead and profit related to the Tenant A-6 Work to an amount equal to seven percent (7%) of the cost of the Tenant Work which shall be processed on an open-book basis using actual substantiated costs incurred with subcontractors. Any self-performed work undertaken by the Contractor shall be charged at actual direct cost without any mark-up, other than the seven percent (7%) fee. The Contractor self-performed work shall be limited to general requirements work as described on Exhibit A-6; and all other Tenant Work ----------- shall be competitively bid. At such time as the Tenant Work Plans are finalized and subcontractor bids are selected, the Contractor shall prepare and deliver to Tenant and Landlord a guaranteed maximum price bid for the Tenant Work, which shall include all subcontract amounts, the Exhibit A-6 Work and the 7% overhead and ----------- profit fee. Any costs for the Tenant Work exceeding the guaranteed maximum price bid (excluding change orders) shall be borne by Contractor. If costs for the Tenant Work are less than the guaranteed maximum price bid, the savings shall be credited either to the Base TI Allowance or the Excess TI Costs, as appropriate. During the course of construction of the Tenant Work and following completion thereof (for a period of six (6) months after the Commencement Date), Tenant shall be given access to Contractor's books and records pertaining to Tenant Work, including specifically records of Contractor self-performed work described in Exhibit A-6. Tenant shall be entitled to audit and ----------- verify said records and costs and if Tenant establishes that: (i) costs invoiced by the Contractor for Tenant Work exceeded subcontract amounts as to subcontracted Tenant Work and/or (ii) costs for Contractor's Exhibit A-6 ----------- work were unreasonable in relation to the type and character of work being performed, resulting in excess costs, then Tenant shall be entitled to a refund of such excess amounts. After establishing the bid process, the modifications to be made to the Construction Contract and a final Construction Schedule for the Tenant Work, the Landlord and Tenant agree that: (1) Both Landlord and Tenant must approve the plans, specifications and working drawings for the Tenant Work as per Exhibit A-7 ----------- (Tenant Work Schedule); and (2) Any third party contractor or subcontractor engaged by the Tenant in conjunction with the Tenant Work shall be a member of and/or affiliated with the AFL/CIO Construction Trades. b. The Landlord and the Contractor acknowledge that the cost of the Tenant Work may be as high as Fifty and 00/100 Dollars ($50.00) per RSF of the Building and that such amount of Tenant Work can be completed within the Exhibit A-4 Schedule for Tenant Work. In the event that ----------- the scope of the Tenant Work proposed by the Tenant and the Tenant Architect is substantially greater than Fifty and 00/100 Dollars ($50.00) per RSF or includes items A-7 which will extend the Tenant Work Construction Schedule beyond that reasonably contemplated by the parties and cannot, in the reasonable opinion of the Contractor, be completed within seven (7) months, the Contractor shall promptly notify the Landlord and the Tenant, providing specific reasons why such schedule cannot be met. The Landlord, the Tenant and the Contractor shall promptly meet in order to attempt to reduce the Tenant Work completion time to seven (7) months, or if not, provide for commencement of the Tenant Work and, if required, the Tenant Work Plans (or "Design Work") at an earlier date. If the Tenant desires to implement Tenant Work costing substantially in excess of Fifty and 00/100 Dollars ($50.00) per RSF or unusual items that cannot be completed in the reasonable opinion of the Contractor on a schedule coinciding with the Substantial Completion Date, prior to agreeing to the scope of the Tenant Work, the Landlord and the Tenant shall modify this Lease in order to provide that the Tenant will pay to the Landlord any and all Delay Expenses that may be incurred by the Landlord or the Contractor as a result of such extended Tenant Work completion schedule. This Lease shall also be amended to adjust the Construction Schedule, the proposed Commencement Date, and the dates used for calculation of any Late Delivery Payment, provided, however, that the Tenant shall have no liability to pay for costs or expenses related to extended performance costs not previously agreed to in writing in conjunction with a revised Construction Schedule if the Contractor fails to conform to the new schedule for Tenant Work, after the Contractor has agreed in writing to do so. 9. TENANT WORK CONSTRUCTION AND CHANGE ORDERS. a. At such time as the Landlord and the Tenant have agreed on the scope of the Tenant Work, the parties shall execute an amendment of this Lease incorporating the Tenant Work Plans into this Lease and confirming the dollar amount of the Excess TI Costs which shall be paid by the Tenant. The Landlord shall also amend its construction contract with the Contractor to provide for the Tenant Work. The Tenant shall pay the Tenant Excess TI Costs (less retained holdbacks provided herein) in periodic installments to the title insurance company or construction Lender disbursing the construction funds in conjunction with the payment of draw requests to the Contractor for the Tenant Work, after such time as the Landlord has disbursed the Base TI Allowance to the Contractor (less the retained holdback share). At such time as Landlord and Tenant have agreed upon the scope of the Tenant Work and subcontractors have been chosen to undertake such work, the Landlord shall diligently pursue to completion the Tenant Work in accordance with the Construction Schedule. The Landlord and the Tenant shall insure that all goods and services contracted to be purchased by the Landlord and/or the Tenant to be included within the scope of the Tenant Work shall be invoiced separately from all the Core and Shell construction costs. The Landlord and A-8 the Tenant shall communicate with each other on a regular basis as to the status of the Tenant Work and the calculation of expenses related thereto. The Landlord and the Tenant shall cooperate and communicate with one another not less than once per month to provide estimates for the costs of the Tenant Work. In conjunction with the design of the Tenant Work, the Landlord shall prepare a budget for the Tenant Work showing the estimated Tenant Work budget and identifying those items that will be paid for directly by the Landlord and those items which will be paid for directly by the Tenant. The Tenant Work budget shall be updated monthly by the Landlord. b. In the event that the Tenant desires any change order ("Tenant Change Order") to the Core and Shell Plans or the Tenant Work Plans, the Tenant or the Tenant Architect shall notify the Landlord, the Contractor and the Architect in writing describing the desired Tenant Change Order. The Contractor, the Architect and the Tenant Architect shall promptly provide to the Landlord and the Tenant information regarding: (1) the cost of implementing such Tenant Change Order, if any; (2) the effect such Tenant Change Order shall have on the Construction Schedule, if any; and (3) any questions or suggestions regarding implementation or clarification of the Tenant Change Order. If the Tenant desires to pursue the Tenant Change Order, Tenant shall promptly notify the Landlord and the Landlord shall seek approval of its Lender for such Tenant Change Order, to the extent required by such Lender. If the Landlord obtains the approval of its Lender for such Tenant Change Order (if such approval is required), the Landlord shall promptly notify the Contractor, the Architect, the Tenant Architect and the Tenant and the construction contract shall be modified to effect the Tenant Change Order. The Tenant agrees that the estimated cost of the Tenant Change Order shall be paid by the Tenant to the Landlord or the Landlord's title company within ten (10) business days, to be utilized for payment for the costs of such Tenant Change Order ("Tenant Change Order Cost") or at Tenant's option, said amount shall be charged against the Base TI Allowance, if not already expended. The Landlord agrees to provide the Tenant with copies of any invoices or other materials reasonably necessary to permit the Tenant to evaluate the cost of any Tenant Change Order. In the event that any proposed Tenant Change Order will adversely affect the Construction Schedule, the Landlord shall notify the Tenant as to the Delay Expenses anticipated to be incurred by the Landlord and Contractor, as a result of such Tenant Change Order with respect to the construction of the Premises and the Tenant shall also deposit such sum with the Landlord at the time of the payment of the A-9 Tenant Change Order Cost, to the extent that such Tenant Change Order Cost will cause the cost of the Tenant Work to exceed the sum of the Base TI Allowance. The parties agree to cooperate with one another in order to implement any and all Tenant Change Orders, but in no event shall any Tenant Change Order result in any increased cost or financial loss to the Landlord. C. (i) In the event that the Landlord desires to make any change order to the Core and Shell Plans ("Landlord Change Order"), the Landlord shall notify the Tenant in writing (which may include communication by facsimile) describing the desired Landlord Change Order the Tenant agrees to notify the Landlord by telephone and/or facsimile giving the Tenant's approval or stating Tenant's objections, in the event that the Tenant objects to any requested Landlord Change Order because it will unacceptably (x) alter the exterior appearance of the Building, or (y) change the RSF or floor plate of the Building, no later than three (3) business days after receipt of such proposed Landlord Change Order. In the event that the Landlord notifies the Tenant that such Change Order must be approved on an expedited basis, the Tenant agrees to undertake its best efforts to review such proposed Landlord Change Order as soon as possible and respond to the Landlord by telephone and/or facsimile confirming whether or not said proposed Change Order is approved. (ii) In the event that the Tenant has not responded to the Landlord within three (3) business days after receipt of a non-expedited Landlord Change Order, the Tenant shall be deemed to have waived its right to object. In the event that the Tenant objects to any proposed Landlord Change Order, the parties shall immediately enter into discussions with the Contractor and the Architect to review the requested Landlord Change Order and determine what, if any, modification can be made to the Landlord Change Order to remedy Tenant's objection and so as not to delay the Substantial Completion of any portion of the Premises. 10. CONSTRUCTION SCHEDULE. The Landlord and Tenant shall endeavor to perform their obligations under the Construction Schedule to avoid any delay in the completion of the Tenant Work or the Core and Shell. In the event that the Tenant fails to meet its obligations under this Construction Schedule for the design of the Tenant Work, the Tenant shall reimburse the Landlord for any and all costs and expenses incurred as a result of such failure. The parties acknowledge and agree that it is critical for each of the parties to endeavor to perform their obligations in a timely manner so that the Construction Schedule for the Premises can be met. 11. REIMBURSEMENT FOR TENANT WORK. A-10 a. If the estimated price for the Tenant Work, plus other funds expended to date or to be expended by the Landlord for other phases of the Tenant Work, exceeds the Base TI Allowance, the Tenant shall pay such Excess TI Costs to the Landlord's title company or construction Lender disbursing construction proceeds as provided in Paragraph 9(a) hereof. In the event changes in the scope -------------- of the Tenant Work which the Landlord will contract to perform will result in the cost of the Tenant Work exceeding the Base TI Allowance, the Tenant shall pay such Excess TI Costs as provided in Paragraph 9(a) -------------- hereof. The construction contract for the Tenant Work with the Contractor shall provide that prior to the completion of fifty percent (50%) of the Tenant Work, there shall be a ten percent (10%) retainage and for the remainder of the Tenant Work completion there shall be a zero percent (0%) retainage. The resulting total five percent (5%) retainage shall be held until Substantial Completion of the Premises, subject to the terms of the construction documents. At such times as the Architect and Tenant Architect determine that the Building and Parking Garage are Substantially Complete, the Architect, Tenant Architect, Landlord and Tenant shall prepare a Punch-List, and 125% of the estimated cost of completing the Punch-List items (as such cost is determined in the reasonable discretion of the Architect) shall be held back pending completion of such Punch-List. Funds in the Punch-List holdback shall be released to the Contractor upon the completion of Punch-List items from time to time, but no more often than once a month. In the event of any dispute as to the completion of any Punch-List items, the Architect and Tenant Architect shall determine whether or not such Punch-List item has been satisfactorily completed. b. Upon the completion of the Tenant Work and the payment of all outstanding invoices therefor, but in no event later than ninety (90) days after the Commencement Date, the Landlord shall provide to the Tenant a full accounting of all of the costs and expenses incurred by the Landlord and the Tenant for the Tenant Work ("Accounting"). In the event that the sum paid by the Landlord for the Tenant Work (less any sums previously reimbursed by the Tenant to the Landlord) exceeds the Base TI Allowance, plus Excess TI Costs paid by the Tenant, the Tenant shall pay such sum to the Landlord within thirty (30) days after receipt of the Accounting. In the event that the sum paid by the Landlord for the Tenant Work (less any sums previously reimbursed by Tenant to the Landlord) is less than the Base TI Allowance, plus Excess TI Costs paid by the Tenant, the Landlord shall forward payment of such difference to the Tenant along with the Accounting. In the event that the Tenant disputes any portions of the Accounting, the Landlord and the Tenant agree to negotiate in good faith to resolve any disputes and make any appropriate adjustments in the payments. In the event that the Tenant seeks credit or reimbursement for costs or expenses incurred directly by the Tenant toward the Base TI Allowance, the Tenant shall provide to the Landlord a A-11 written description of the expense reimbursement requested, a copy of the invoice from the contractor or supplier to whom such cost was paid, and evidence of payment within thirty (30) days after the Commencement Date. c. The Tenant agrees to indemnify and hold the Landlord harmless from any and all costs and expenses incurred by the Landlord as a result of any Tenant Work undertaken by the Tenant for which Tenant is liable for payment. In the event that any mechanic's lien is filed against the Landlord or the Premises as a result of Tenant Work undertaken by the Tenant, the Tenant shall provide reasonable assurances to the Landlord, Landlord's Lender and the Landlord's title insurance company so that the title insurance company will provide title insurance coverage to the Landlord and the Lender over such mechanic's lien. 12. ADDITIONAL PAYMENTS BY TENANT. All sums for Tenant Work to be paid by the Tenant to the Landlord hereunder shall be deemed to be Additional Rent hereunder. 13. ACCESS TO AND INSPECTION OF THE PREMISES. The Tenant, the Tenant Architect and the Tenant's consultants shall have access to the Premises for the purposes of inspecting the construction of the Premises, during the construction of the Core and Shell and Tenant Work, subject to coordinating with the Contractor, and the Landlord, abiding by all appropriate safety rules and regulations established by the Landlord and Contractor, and so as not to unreasonably delay or interfere with construction. The Tenant shall provide to the Landlord certificates of insurance for any third party consultants of the Tenant naming the Landlord and Landlord's Lender as additional insureds on the liability policies, prior to entering upon the Premises. In the event that the Tenant identifies any portion of the construction which the Tenant believes is not substantially in compliance with the approved Core and Shell Plans or Tenant Work Plans, the Tenant shall promptly notify the Landlord of such objection and the parties shall work in good faith to promptly resolve such noncompliant work. The Landlord acknowledges and agrees that the Tenant Architect shall have the primary inspection role with respect to the Tenant Work. 14. COMPLETION OF TENANT WORK. Thirty (30) days prior to the anticipated date of the completion of Tenant Work for each floor of the Building, the Landlord shall notify the Tenant and establish a procedure for review and inspection of the Tenant Work on such floor. The Landlord and the Tenant shall establish inspection procedures pursuant to which the Tenant shall review the status of the Tenant Work on such floor and the parties shall prepare a Punch-List for the Tenant Work, for the items to be finished after the Architect and the Tenant Architect certify that a floor is Substantially Completed ("Punch-List"). The Landlord and the Tenant shall coordinate the completion of any Tenant Work on each floor of the Building in a manner to expedite the Substantial Completion of the Building. Subsequent to the preparation of the Punch-List, the Landlord and the Contractor shall diligently pursue the completion of all Punch-List items to the reasonable satisfaction of the Tenant. A floor of the Building, or the Premises as a whole, shall be "Substantially Complete" on such date as the Architect and the Tenant Architect have delivered to the Landlord and the Tenant a certificate A-12 confirming that such floor is, or the Premises as a whole, are Substantially Complete in accordance with the Core and Shell Plans and Tenant Work Plans and are suitable for occupancy by the Tenant (subject to Punch-List items). The foregoing, to the contrary, notwithstanding, the Tenant may elect initially to complete Tenant Work only on certain selected floors of the Building, in which event when all of the floors so selected by the Tenant for Tenant Work have been Substantially Completed, and whatever Tenant Work is, at a minimum, required for the other floors of the Building to meet building and fire code requirements so as to enable the Tenant to occupy said selected floors is completed, then the Commencement Date shall occur as contemplated by this Lease. Notwithstanding anything else herein contained to the contrary, the Landlord acknowledges that it shall not be permitted to require the Tenant to pay partial Rent based on the Substantial Completion of merely a portion of the floors of the Building. 15. MOVE IN. In the event that the Tenant obtains access to the Premises to make them ready for its occupancy pursuant to the Advance Occupancy provisions of this Lease, the Tenant acknowledges that if it utilizes contractors or movers not affiliated with the AFL/CIO, such use may result in strikes or other work stoppages. The Tenant agrees to work closely with the Contractor and the Landlord to avoid any such strike or work stoppage, provided that if any strike or work stoppage does occur because of the Tenant's use of non-AFL/CIO contractors or movers, the Tenant agrees to indemnify and reimburse the Landlord and the Contractor for any and all costs and expenses resulting from any such strike or work stoppage, including, but not limited to, costs related to delays in the Construction Schedule, increased costs of construction of the Premises, construction period interest or related loan costs, Taxes, utilities, loss or delay of Rent payments and similar costs. 16. CONSTRUCTION CONTRACT. The Landlord shall, prior to execution of the Construction Contract, provide a copy thereof with all exhibits and attachments to the Tenant, for Tenant's approval, which approval shall not be unreasonably withheld or delayed. Tenant shall have a period of ten (10) days following receipt of the form of Construction Contract to review such form to assure itself that the Construction Contract is in conformity with the terms, provisions and procedures of this Lease. Once approved, the Landlord shall not enter into any amendments or modifications, nor waive any default, nor grant any time extensions to the Contractor which are contrary to the terms of the Landlord's obligations under this Lease, without the Tenant's prior written approval, provided that Change Orders in the Construction Contract shall be governed by the procedures set forth in Paragraph 9 hereof. ----------- 17. SETTLEMENT AGREEMENT. The Landlord agrees that the Premises, as initially constructed, shall be in compliance with the settlement agreement dated November 9, 1987 and recorded in Book 8238, page 974 in the Office of the Recorder of Deeds for the County of St. Louis. A-13 EXHIBIT "A-1" ------------- TO -- EXHIBIT A --------- CORE AND SHELL PLANS A1-1 EXHIBIT "A-2" ------------- TO -- EXHIBIT A --------- CORE AND SHELL PLAN MODIFICATIONS A2-1 EXHIBIT "A-3" ------------- TO -- EXHIBIT A --------- TENANT WORK ALLOCATION
ITEM SHELL T-I ARCHITECTURAL - ------------- Core wall drywall (taped and sanded) on tenant side X Shaft wall drywall (taped and sanded) on tenant side X Column drywall taped and sanded X Straight through ceiling grid @ 9'-0" (Grid upgrade = T.I.) X X Preselected ceiling pads on floor (Ceiling upgrade = T.I.) X X Inside face drywall at perimeter walls, except at rated columns X Bathroom ceiling, floors and walls (w/material selections) X Exit and Feature stairs (w/material selections) X Elevator cabs (w/material selections) X Elevator lobby ceiling, floors and walls (w/material selections) X Entry lobby floors, walls and ceilings X 2nd floor Atrium walls X 2nd floor balcony rail X Lower level exit corridors, lobby and garage tunnel link X Lower level mechanical, electrical, life safety, generator and fire pump X Lower level receiving, housekeeping and maintenance X Lower level offices, dining, kitchen, mail and supply rooms X Core signage (in owner soft cost budget, see lease) X Building signage (in owner soft cost, shown on civil plans, see lease) X Window blinds X Electrical room with sleeves for telephone/cable and janitor closet X Tenant drywall partitions X Tenant doors, building standard, full height, solid core, frames and hardware X HVAC - ---- Main supply trunk lines in plenum X Final Supply diffuser location X Thermostat zone controls (Per shell drawings) X Additional zones and controls X Tenant specific HVAC for computer rooms X ELECTRICAL - ---------- Service to the building X Distribution from the main service to the floors X Floor distribution to tenant areas X A3-1 ITEM SHELL T-I 2x4 parabolic fixtures @ 1/80 sf stored in warehouse (upgrade-=T.I.) X X 2x4 parabolic fixtures beyond 1/80 sf and installation of all X Exit signs, emergency lighting and strobes, core areas only X Emergency generator for life safety only (BOCA 1996) X Emergency power for tenant X PLUMBING - -------- Wet columns as shown on Kyhl Co. plumbing plans X Tenant lunch rooms, private toilets and showers X Kitchen plumbing including grease trap and fixture hookup X FIRE PROTECTION - --------------- Water service, fire pump, sprinkler mains and branches in plenum X Open area head distribution X Sprinkler heads moved to non-open area tenant plan locations X Fire hydrants, fire dept connections, fire alarm system (BOCA 1996) X SECURITY - -------- Card readers (6 perimeter exterior doors) X Sleeves in the core from the main service to the floors X Service and equipment to the building and/or garage, with floor distribution X
A3-2 EXHIBIT "A-4" ------------- TO -- EXHIBIT A --------- CONSTRUCTION SCHEDULE A4-1 EXHIBIT "A-6" ------------- TO -- EXHIBIT A --------- TO FOLLOW A6-1 EXHIBIT "A-7" ------------- TO -- EXHIBIT A --------- TENANT WORK DESIGN AND SCHEDULE Tenant Work Design shall consist of three items: 1. SCHEMATIC DESIGN DRAWINGS a. CADD drawings depicting the following items: 1. Blocking and stacking layouts of departments within the building. 2. Blocking and stacking layouts of departments on each floor. 3. Floor plan layouts of all walls, rooms and doors. 4. Workstation standards and layout. 5. Notation and labeling of all areas. 2. DESIGN DEVELOPMENT DRAWINGS (refinement of Schematic Design Drawings) a. CADD drawings depicting the following items: 1. Refined floor plan layouts of walls, rooms and doors. 2. Reflected ceiling plans of all floors. 3. Detailed room requirements (lighting, power, HVAC, plumbing, data, security, office equipment, built-ins, other custom items). 4. Kitchen/Cafeteria layout and detailed requirements (per #3 above). 5. Material specifications, color selections and schedules. 3. CONSTRUCTION DRAWINGS a. CADD drawings depicting the following items: 1. Code review information 2. Construction details, schedules and specifications 3. Mechanical, electrical, plumbing and fire protection drawings 4. All final material and equipment selections SCHEDULE ITEM COMPLETION DATE a. Preparation of Schematic Design Drawings by Tenant June 1, 2000 Architect per Item #1. b. Architect review of Schematic Design Drawings and June 15, 2000 feedback to Tenant. A7-1 c. Completion of Design Development Drawings by Tenant August 1, 2000 Architect per Item #2. d. Architect review of Design Development Drawings and August 15, 2000 feedback to Tenant. e. Tenant Architect and Design Team completion of October 1, 2000 Construction Drawings. f. Architect's review of Tenant Architect's Construction October 15, 2000 Drawings prior to final bid issue. Architect to provide Tenant Architect with specific corrections in writing. g. Tenant Architect and Design Team completion of November 30, 2000 Construction Drawings incorporating Architect's comments from Item f. h. Landlord and Contractor bid the Tenant Construction January 15, 2001 Drawings. i. Tenant and Landlord review and approve final plans and February 28, 2001 pricing based on results of item h. j. Obtain permits from St. Louis County and West County May 15, 2001 EMS for Tenant Work to be undertaken by Contractor and Landlord. k. Commence construction of Tenant Work by Contractor June 1, 2001 promptly after obtaining permits pursuant to Item j. A7-2 EXHIBIT B --------- LEGAL DESCRIPTION OF OFFICE CENTER ---------------------------------- The land upon which the Office Center is situated is described as Manchester/270 Office Center, according to the plat thereof recorded in Plat Book 281, page 35 of the St. Louis County Records. B-1 EXHIBIT B-1 ----------- SITE PLAN OF LOT 1 ------------------ B1-1 EXHIBIT C --------- DECLARATION OF LEASE COMMENCEMENT --------------------------------- This DECLARATION is hereby entered into as of the day of ----- , 20 , by and between Eckelkamp Office Center South, L.L.C., a - ----------- --- Missouri limited liability company ("Landlord") and Edward D. Jones & Co., L.P., a Missouri limited partnership ("Tenant"). W I T N E S S E T H ------------------- WHEREAS, Landlord and Tenant entered into a Lease Agreement dated for certain premises ("Premises") being on Lot I of Manchester/270 - ----------- Office Center with an address of 1245 Kelley Memorial Drive, St. Louis, Missouri, 63131, and more fully described in said Lease; and WHEREAS, Landlord and Tenant wish to confirm the Commencement Date and the expiration date of the Initial Term of the Lease, and the date upon which the payments of full Rent for the Lease and use of the Premises shall commence; NOW, THEREFORE, Landlord and Tenant hereby mutually agree and confirm that: (1) the Commencement Date for the Lease is ---------------------- and the Initial Term shall expire on ; (2) the payment of full Rent ------------ under the provisions of the Lease shall commence on the Commencement Date in the amounts set forth in Article III of the Lease; (3) Tenant is in possession of and has accepted the Premises demised by the Lease, and acknowledges that all the work to be performed by Landlord in the Premises as required under the Lease has been satisfactorily completed (subject only to punch list items, if any); and (4) there are RSF within the building located --------------- within the Premises. All other terms and conditions of said Lease and any modifications thereof shall remain unchanged. IN WITNESS WHEREOF, the parties hereto have set their hands to this instrument as of the day and date first above written. LANDLORD: TENANT: ECKELKAMP OFFICE CENTER SOUTH, EDWARD D. JONES & CO., L.P., L.L.C., A MISSOURI LIMITED LIABILITY A MISSOURI LIMITED PARTNERSHIP COMPANY By: Eckelkamp Office Center, Inc., By: Managing Member --------------------------------- Name: ------------------------------- Title: ------------------------------ By: ------------------------------ L.B. Eckelkamp, Jr., President C-1 EXHIBIT D --------- INSURANCE SPECIFICATIONS ------------------------ I. PROPERTY INSURANCE* - All Risk, including Flood (backup of sewers and drains) and Earthquake (subsidence and earth movement) A. Building Limit** $37,500,000. ------------ B. Rents Limit*** $ 6,258,711.($4,633,711 Base rental yr.1+$1,625,000 OE) ------------ C. Extra Expense $ -0- 1. Property Deductible/Rents 2. Flood Deductible 3. Earthquake Deductible * Form should include No Coinsurance provision, Building glass, EDP (hardware & software), Boiler & Machinery, a broadening endorsement (see attached). ** Subject to clause 10.1 ---- *** Subject to Rents Schedule sec.3 and 4 of this Lease & 24 ------------------------- month extended period of indemnity, including the perils of flood and earthquake. II. GENERAL LIABILITY:* General Aggregate Limit: $1,000,000. ----------- Products/Completed operations Aggregate Limit: $1,000,000. ----------- Each Occurrence Limit: $1,000,000. ----------- Personal & Advertising Injury Limit: $1,000,000. ----------- Medical Expense: $ 10,000. ----------- *Form should include a Commercial General Liability Form similar coverages outlined in the Kemper Broadening Liability Endorsement III. UMBRELLA:* Limit of Liability $50,000,000. Each Occurrence ------------ $50,000,000. General Aggregate ------------ $50,000,000. Products/Completed ------------ Operations Aggregate *See Sec.10.2 IV. ENVIRONMENTAL COVERAGE:* (3rd Party Liability) Contingent Environmental Cleanup Limit of Liability $ 5,000,000. ------------- *See Sec.37 D-1 V. INSURANCE CARRIERS REQUIREMENTS: All carriers must have a rating of "A-" or better for claims paying ability assigned by Standard & Poor's Rating Group, or a general rating of "A-" or better; with a financial class VIII, or greater, assigned by A.M. Best Company, Inc. meeting the following criteria: The limit in any one risk is acceptable in an amount up to 10% of the latest Best's Reported Policyholder's Surplus (e.g. if the policyholder's surplus is $200,000,000 only $20,000,000 can be accepted). If coverage is more than the 10% surplus, the policy must be endorsed by a Reinsurance Endorsement by a company meeting these same requirements. D-2 EX-10.18 5 exh10p18.txt MASTER AGREEMENT Exhibit 10.18 ------------- ============================================================================ MASTER AGREEMENT Dated as of November 30, 2000 among EDWARD D. JONES & CO., L.P., as Lessee, Construction Agent and Guarantor, ATLANTIC FINANCIAL GROUP, LTD., (registered to do business in Arizona as AFG Equity, Limited Partnership) as Lessor, SUNTRUST BANK AND CERTAIN FINANCIAL INSTITUTIONS PARTIES HERETO, as Lenders, and SUNTRUST BANK, as Agent and joined in by THE JONES FINANCIAL COMPANIES, L.L.L.P. ============================================================================ TABLE OF CONTENTS -----------------
PAGE ---- ARTICLE I DEFINITIONS; INTERPRETATION.......................................................................1 ARTICLE II ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS; NATURE OF TRANSACTION.............................2 SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease..............................................2 SECTION 2.2 Fundings of Purchase Price, Development Costs and Construction Costs.........................2 SECTION 2.3 Funded Amounts and Interest and Yield Thereon; Facility Fee..................................5 SECTION 2.4 Nature of Transaction........................................................................6 SECTION 2.5 Amounts Due Under Lease......................................................................6 ARTICLE III CONDITIONS PRECEDENT; DOCUMENTS.................................................................7 SECTION 3.1 Conditions to the Obligations of the Funding Parties on the Closing Date.....................7 SECTION 3.2 Additional Conditions for the Closing Date..................................................11 SECTION 3.3 Conditions to the Obligations of Lessee.....................................................14 SECTION 3.4 Conditions to the Obligations of the Funding Parties on each Funding Date...................14 SECTION 3.5 Completion Date Conditions..................................................................15 ARTICLE IV REPRESENTATIONS.................................................................................17 SECTION 4.1 Representations of Lessee...................................................................17 SECTION 4.2 Survival of Representations and Effect of Fundings..........................................31 SECTION 4.3 Representations of the Lessor...............................................................31 SECTION 4.4 Representations of each Lender..............................................................33 ARTICLE V COVENANTS OF LESSEE, JFC AND LESSOR..............................................................34 SECTION 5.1 Affirmative Covenants.......................................................................34 SECTION 5.2 Additional Covenants........................................................................45 SECTION 5.3 Further Assurances..........................................................................53 SECTION 5.4 Additional Required Appraisals..............................................................54 SECTION 5.5 Lessor's Covenants..........................................................................54 ARTICLE VI TRANSFERS BY LESSOR AND LENDERS.................................................................55 SECTION 6.1 Lessor Transfers............................................................................55 SECTION 6.2 Lender Transfers............................................................................55 ARTICLE VII INDEMNIFICATION................................................................................57 SECTION 7.1 General Indemnification.....................................................................57 SECTION 7.2 Environmental Indemnity.....................................................................59 SECTION 7.3 Proceedings in Respect of Claims............................................................60 SECTION 7.4 General Tax Indemnity.......................................................................62 SECTION 7.5 Increased Costs, etc........................................................................68 SECTION 7.6 End of Term Indemnity.......................................................................72 ARTICLE VIII MISCELLANEOUS.................................................................................73 SECTION 8.1 Survival of Agreements.....................................................................73 SECTION 8.2 Notices....................................................................................74 SECTION 8.3 Counterparts...............................................................................74 SECTION 8.4 Amendments.................................................................................74 SECTION 8.5 Headings, etc..............................................................................75 SECTION 8.6 Parties in Interest........................................................................75 SECTION 8.7 GOVERNING LAW..............................................................................76 SECTION 8.8 Expenses...................................................................................76 SECTION 8.9 Severability...............................................................................76 SECTION 8.10 Liabilities of the Funding Parties.........................................................76 SECTION 8.11 Submission to Jurisdiction; Waivers........................................................76 SECTION 8.12 Liabilities of the Agent...................................................................77 SECTION 8.13 Role of SunTrust Equitable Securities Corporation..........................................77 APPENDIX A Definitions and Interpretation SCHEDULES SCHEDULE 2.2 Amount of Each Funding Party's Commitment SCHEDULE 4.1(a)(i) Indebtedness of Lessee SCHEDULE 4.1(a)(ii) Subsidiaries SCHEDULE 4.1(d)(v) Pending Investigations or Inquiries SCHEDULE 4.1(m) Environmental Matters SCHEDULE 4.1(u)(i) Leases SCHEDULE 5.2(a)(i) Existing Permitted Liens SCHEDULE 5.2(a)(xiv) Existing Options, Etc. SCHEDULE 5.2(d) Contingent Obligations SCHEDULE 8.2 Addresses for Notices EXHIBITS EXHIBIT A Form of Funding Request -ii- EXHIBIT B Form of Assignment of Lease and Rents EXHIBIT C Form of Security Agreement and Assignment EXHIBIT D-1 Form of Mortgage EXHIBIT D-2 Form of Deed of Trust EXHIBIT E [Reserved] EXHIBIT F Form of Assignment and Acceptance Agreement EXHIBIT G-1 Form of Opinion of Counsel to Lessee and Guarantor EXHIBIT G-2 Form of Opinion of Local Counsel EXHIBIT G-3 Form of Opinion of Counsel to Lessor EXHIBIT H Form of Certification of Construction Completion EXHIBIT I Form of Payment Date Notice EXHIBIT J Form of Compliance Certificate
-iii- MASTER AGREEMENT THIS MASTER AGREEMENT, dated as of November 30, 2000 (as it may be amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this "Master Agreement"), is among EDWARD D. ---------------- JONES & CO., L.P. a Missouri limited partnership, in its capacity as the Lessee, the "Lessee", in its capacity as the Construction Agent, the - ------ "Construction Agent," and in its capacity as Guarantor (the "Guarantor"), ------------------ --------- ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership) (the "Lessor"), ------ SUNTRUST BANK, a Georgia banking corporation, and certain financial institutions parties hereto as lenders (together with any other financial institution that becomes a party hereto as a lender, collectively referred to as "Lenders" and individually as a "Lender"), and SUNTRUST BANK, a ------- ------ Georgia banking corporation, as agent for the Lenders (in such capacity, the "Agent"), and joined in by THE JONES FINANCIAL COMPANIES, L.L.L.P., a ----- Missouri limited liability limited partnership ("JFC"). PRELIMINARY STATEMENT In accordance with the terms and provisions of this Master Agreement, the Lease, the Loan Agreement and the other Operative Documents, (i) the Lessor has acquired a leasehold interest in the Land identified by the Lessee pursuant to the Bridge Lease and is leasing such Land to the Lessee, (ii) the Lessor and the Lessee desire to restate and amend the Bridge Lease pursuant to which the Lessee will lease the Leased Property from the Lessor, (iii) the Lessee, as Construction Agent for the Lessor, wishes to construct and equip the Building on the Land for the Lessor and, when completed, the Lessee wishes to lease such Buildings from the Lessor as part of the Leased Property under the Lease, (iv) the Lessee, as agent, wishes to obtain, and the Lessor is willing to provide, funding to finance the construction and equipping of the Building, and (v) the Lessor wishes to obtain, and the Lenders are willing to provide, from time to time, financing of the construction and equipping of the Building. In consideration of the mutual agreements contained in this Master Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS; INTERPRETATION Unless the context shall otherwise require, capitalized terms used and not defined herein shall have the meanings assigned thereto in Appendix A ---------- hereto for all purposes hereof; and the rules of interpretation set forth in Appendix A hereto shall apply to this Master Agreement. - ---------- ARTICLE II ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS; NATURE OF TRANSACTION SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease. ----------------------------------------------- (a) Land. Pursuant to the letter agreement dated July 7, 2000 ---- between the Lessor and the Lessee (the "Bridge Lease"), the Lessor acquired ------------ a leasehold interest in the Land identified by the Lessee on the Closing Date and subleased the Land to the Lessee, subject to the Ground Lease. Subject to the terms and conditions of this Master Agreement and the Ground Lease, (i) the Lessor and the Lessee agree to amend and restate the Bridge Lease in its entirety pursuant to the Lease, (ii) the Lessor hereby agrees to sublease the Land to Lessee pursuant to the Lease, and (iii) the Lessee hereby agrees to sublease the Land from the Lessor pursuant to the Lease. (b) Building. Subject to the terms and conditions of this Master -------- Agreement and the Ground Lease, from and after the Closing Date, (i) the Construction Agent agrees, pursuant to the terms of the Construction Agency Agreement, to acquire, construct and install the Building and Equipment on the Land for the Lessor prior to the Scheduled Construction Termination Date, (ii) the Lenders and the Lessor agree to fund the costs of such construction and installation (and interest and yield thereon), (iii) the Lessor shall lease the Building and the Equipment and sublease the Land as part of the Leased Property to the Lessee pursuant to the Lease, and (iv) the Lessee shall lease the Building and the Equipment and sublease the Land from the Lessor pursuant to the Lease. SECTION 2.2 Fundings of Purchase Price, Development Costs and ------------------------------------------------- Construction Costs. - ------------------ (a) Initial Funding and Payment of Purchase Price for Development ------------------------------------------------------------- Costs on Closing Date. Subject to the terms and conditions of this Master - --------------------- Agreement, on the Closing Date, each Lender shall make available to the Lessor its initial Loan in an amount equal to the product of such Lender's Commitment Percentage times the acquisition, development, transaction and closing costs (to the extent permitted to be paid with Advances hereunder) incurred by the Construction Agent, as agent, through such Closing Date, which funds the Lessor shall use, together with the Lessor's own funds in an amount equal to the product of the Lessor's Commitment Percentage times the acquisition, development, transaction and closing costs (to the extent permitted to be paid with Advances hereunder) incurred by the Construction Agent, as agent, through such Closing Date, to pay to the Construction Agent the amount of such acquisition, development, transaction and closing costs, and, subject to the Ground Lease, the Lessor shall sublease such Land to the Lessee, and the Lessee shall sublease the Land from the Lessor, pursuant to the Lease. -2- (b) Subsequent Fundings and Payments of Construction Costs during ------------------------------------------------------------- Construction Term. Subject to the terms and conditions of this Master - ----------------- Agreement on each Funding Date following the Closing Date until the Construction Term Expiration Date (i) each Lender shall make available to the Lessor a Loan in an amount equal to the product of such Lender's Commitment Percentage times the amount of the Funding requested by the Construction Agent for such Funding Date, which funds the Lessor hereby directs each Lender to pay over to the Construction Agent as set forth in paragraph (d), and (ii) the Lessor shall pay over to the Construction Agent - ------------- its own funds (which shall constitute a part of, and an increase in, the Lessor's Invested Amount) in an amount equal to the product of the Lessor's Commitment Percentage times the amount of the Funding requested by the Construction Agent for such Funding Date. (c) Aggregate Limits on Funded Amounts. The aggregate amount that ---------------------------------- the Funding Parties shall be committed to provide as Funded Amounts under this Master Agreement and the Loan Agreement shall not exceed the lesser of (x) the costs of acquisition and construction of the Leased Property and the development, transaction, closing and financing costs (to the extent permitted to be paid with Advances hereunder), or (y) $31,000,000 in the aggregate. The aggregate amount that any Funding Party shall be committed to fund under this Master Agreement and the Loan Agreement shall not exceed the lesser of (i) such Funding Party's Commitment and (ii) such Funding Party's Commitment Percentage of the aggregate Fundings requested under this Master Agreement. (d) Notice, Time and Place of Fundings. With respect to each ---------------------------------- Funding, the Lessee or the Construction Agent, as the case may be, shall give the Lessor and the Agent an irrevocable prior written notice not later than 11:00 a.m., Atlanta, Georgia time, at least three (3) Business Days prior to the Closing Date or other Funding Date, as the case may be, pursuant, in each case, to a Funding Request in the form of Exhibit A (a --------- "Funding Request"), specifying the Closing Date or subsequent Funding Date, --------------- as the case may be, the amount of Funding requested, whether such Funding shall be a LIBOR Advance or a Base Rate Advance or a combination thereof and the Rent Period(s) therefor. At the election of the Lessee, Funding may occur within thirty (30) days of payment of an invoice by the Lessee or the Construction Agent, provided that there shall be no more than two (2) Fundings during any month. All documents and instruments required to be delivered on the Closing Date pursuant to this Master Agreement shall be delivered at the offices of McGuireWoods LLP, One James Center, Richmond, Virginia 23219, or at such other location as may be determined by the Lessor, the Construction Agent and the Agent. Each Funding shall occur on a Business Day, and each Advance (other than the final Advance) shall be in an amount equal to $500,000 or an integral multiple of $100,000 in excess thereof. All remittances made by any Lender and the Lessor for any Funding shall be made in immediately available funds by wire transfer to or, as is directed by, the Construction Agent, not later than 12:00 noon, Atlanta, Georgia time, on the applicable Funding Date, upon satisfaction -3- or waiver of the conditions precedent to such Funding set forth in Article ------- III; such funds shall (1) in the case of the initial Funding on the Closing - --- Date, be used to pay development, transaction and closing costs related to such Land (to the extent permitted to be paid with Advances hereunder), and (2) in the case of each subsequent Funding, be paid to the Construction Agent for the payment or reimbursement of Construction costs incurred through such Funding Date and not previously paid or reimbursed. (e) Deemed Representation for Each Funding. Each Funding Request -------------------------------------- by a Lessee or the Construction Agent shall be deemed a reaffirmation of the Lessee's indemnity obligations in favor of the Indemnitees under the Operative Documents and a representation and warranty to the Lessor, the Agent and the Lenders that on the proposed Closing Date or Funding Date, as the case may be, (i) the amount of the Funding requested represents amounts owing in respect of the acquisition, development, transaction and closing costs (to the extent permitted to be paid with Advances hereunder) in respect of the Leased Property (in the case of the initial Funding) or amounts that are then due to third parties in respect of the Construction, or amounts paid by the Construction Agent to third parties in respect of the Construction for which the Construction Agent has not previously been reimbursed by a Funding (in the case of any Funding), (ii) no Event of Default or Potential Event of Default exists, and (iii) the representations and warranties of the Lessee and JFC set forth in Section 4.1 are true and ----------- correct in all material respects as though made on and as of such Funding Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. (f) Not Joint Obligations. Notwithstanding anything to the --------------------- contrary set forth herein or in the other Operative Documents, each Lender's and the Lessor's Commitments shall be several, and not joint. In no event shall any Funding Party be obligated to fund an amount in excess of such Funding Party's Commitment Percentage of any Funding or to fund amounts in the aggregate in excess of such Funding Party's Commitment. (g) Non-Pro Rata Fundings. Notwithstanding anything to the --------------------- contrary set forth in this Master Agreement, at the Agent's option, Fundings may be made by drawing on the Lessor's Commitment until such Commitment is fully funded before drawing on the Lenders' Commitments. In such event, when the Lessor's Commitment is fully funded, the Lenders will fund, on a pro rata basis as among themselves, 100% of the amount of the Fundings thereafter. In no event shall any Funding Party have any obligation to fund any amount hereunder in excess of the amount of such Funding Party's Commitment. -4- SECTION 2.3 Funded Amounts and Interest and Yield Thereon; Facility Fee. ------------------------------------------------------------ (a) The Lessor's Invested Amount outstanding from time to time shall accrue yield ("Yield") at the Lessor Rate, computed using the actual ----- number of days elapsed and a 360 day year. If all or a portion of the principal amount of or yield on the Lessor's Invested Amount shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall, without limiting the rights of the Lessor under the Lease, to the maximum extent permitted by law, accrue yield at the Overdue Rate, from the date of nonpayment until paid in full (both before and after judgment). (b) Each Lender's Funded Amount outstanding from time to time shall accrue interest as provided in the Loan Agreement. (c) During the Construction Term, in lieu of the payment of accrued interest, on each Payment Date, each Lender's Funded Amount in respect of the Construction Land Interest shall automatically be increased by the amount of interest accrued and unpaid on the Loans pursuant to the Loan Agreement during the Rent Period ending immediately prior to such Payment Date (except to the extent that at any time such increase would cause such Lender's Funded Amount to exceed such Lender's Commitment, in which event the Lessee shall pay such excess amount to such Lender in immediately available funds on such Payment Date). Similarly, in lieu of the payment of accrued Yield, on each Payment Date, the Lessor's Invested Amount in respect of the Construction Land Interest shall automatically be increased by the amount of Yield accrued on the Lessor's Invested Amount in respect of the Leased Property during the Rent Period ending immediately prior to such Payment Date (except to the extent that at any time such increase would cause the Lessor's Invested Amount to exceed the Lessor's Commitment, in which event the Lessee shall pay such excess amount to the Lessor in immediately available funds on such Payment Date). Such increases in Funded Amounts shall occur without any disbursement of funds by the Funding Parties. (d) Three (3) Business Days prior to the last day of each Rent Period, the Lessee, as Construction Agent, shall deliver to the Lessor and the Agent a notice substantially in the form of Exhibit I (each, a "Payment --------- ------- Date Notice"), appropriately completed, specifying the allocation of the - ----------- Funded Amounts related to such Rent Period to LIBOR Advances and Base Rate Advances and the Rent Periods therefor, provided that no such allocation shall be in an amount less than $500,000. Each such Payment Date Notice shall be irrevocable. If no such notice is given, the Funded Amounts shall be allocated to a LIBOR Advance with a Rent Period of three (3) months. (e) The Lessee hereby agrees to pay to each Funding Party a facility fee for each day from the Closing Date until the Lease Termination Date equal to (i) 0.125% per annum -5- times (ii) the amount of such Funding Party's Commitment on such day, times (iii) 1/360. Such facility fee shall be payable in arrears on each Quarterly Payment Date. SECTION 2.4 Nature of Transaction. With respect to the Leased Property, --------------------- it is the intent of the Lessee and the Funding Parties that, (i) for accounting purposes, the Lease shall be treated as an operating lease, and (ii) for federal, state and local tax purposes and for bankruptcy, commercial and regulatory law and all other purposes, the Lease shall be treated as the repayment and security provisions of a loan by the Lessor to the Lessee, that the Lessee shall be treated as the legal and beneficial owner entitled to any and all benefits of ownership of such Leased Property and that all payments of Basic Rent during the Lease Term shall be treated as payments of interest and, if applicable, principal. The Lessee and each Funding Party agree to file tax returns consistent with such intent. Nevertheless, the Lessee acknowledges and agrees that no Funding Party or any other Person has made any representations or warranties concerning the tax, financial, accounting or legal characteristics or treatment of the Operative Documents and that the Lessee has obtained and relied solely upon the advice of its own tax, accounting and legal advisors concerning the Operative Documents and the accounting, tax, financial and legal consequences of the transactions contemplated therein. SECTION 2.5 Amounts Due Under Lease. With respect to the Leased ----------------------- Property, anything else to the contrary notwithstanding, it is the intention of the Lessee and the Funding Parties that: (i) subject to clauses (ii) and (iii) below, the amount and timing of Basic Rent due and payable from time to time from the Lessee under the Lease shall be equal to the aggregate payments due and payable with respect to interest on the Loans and Yield on the Lessor's Invested Amounts on each Payment Date; (ii) if the Lessee elects the Purchase Option or becomes obligated to purchase such Leased Property under the Lease, the Funded Amounts, all interest and Yield thereon and all other obligations of the Lessee owing to the Funding Parties, shall be paid in full by the Lessee, (iii) if the Lessee properly elects the Remarketing Option, the principal amount of, and accrued interest on, the A Loans in respect of the Leased Property will be paid out of the Recourse Deficiency Amount, and the Lessee shall only be required to pay to the Lenders in respect of the principal amount of the B Loans and to the Lessor in respect of the Lessor's Invested Amounts, the proceeds of the sale of the Leased Property in accordance with Section 14.6 of the Lease; and (iv) upon ------------ an Event of Default resulting in an acceleration of the Lessee's obligation to purchase the Leased Property under the Lease, the amounts then due and payable by the Lessee under the Lease shall include all amounts necessary to pay in full the Loans, and accrued interest thereon, the Lessor's Invested Amounts and accrued Yield thereon and all other obligations of the Lessee owing to the Funding Parties pursuant to the Operative Documents. -6- ARTICLE III CONDITIONS PRECEDENT; DOCUMENTS SECTION 3.1 Conditions to the Obligations of the Funding Parties on the ----------------------------------------------------------- Closing Date. The obligations of the Lessor and each Lender to carry out - ------------ their respective obligations under Article II of this Master Agreement to be ---------- performed on the Closing Date shall be subject to the fulfillment to the satisfaction of, or waiver by, each such party hereto (acting directly or through its counsel) on or prior to the Closing Date of the following conditions precedent, provided that the obligations of any Funding Party shall not be subject to any conditions contained in this Section 3.1 which ----------- are required to be performed by such Funding Party: (a) Documents. The following documents shall have been executed --------- and delivered by the respective parties thereto: (i) Ground Lease. A copy of the original Ground Lease, and ------------ a copy of the recorded memorandum thereof duly recorded, together with the original of the assignment of the Ground Lease to the Lessor and a consent and estoppel certificate from the Ground Lessor and the fee owner of the Land, shall have been delivered to the Agent by the Lessee, with copies thereof to each other Funding Party, all of which shall be satisfactory in form and substance to the Agent and the Funding Parties. (ii) Lease Supplement. Counterparts of the Lease ---------------- Supplement, duly executed by the Lessee and the Lessor and in recordable form, shall have been delivered to each Funding Party, and the original, chattel paper copy of the Lease Supplement shall have been delivered to the Agent. (iii) Mortgage or Deed of Trust and Assignment of Lease and ----------------------------------------------------- Rents. Counterparts of the Mortgage or Deed of Trust, as the case ----- may be, (substantially in the form of Exhibit D-1 or D-2, as the ----------- --- case may be, attached hereto), duly executed by the Lessor and in recordable form, shall have been delivered to the Agent (which Mortgage or Deed of Trust, as the case may be, shall secure all of the debt to the Agent) and the Assignment of Lease and Rents (substantially in the form of Exhibit B attached hereto) in --------- recordable form, duly executed by the Lessor, shall have been delivered to the Agent by the Lessor. (iv) Security Agreement and Assignment. Counterparts of the --------------------------------- Security Agreement and Assignment (substantially in the form of Exhibit C attached hereto), duly executed by the Construction --------- Agent, with an acknowledgment and consent thereto satisfactory to the Lessor and the Agent duly executed by the General Contractor, the Architect and the vendor of the Equipment (the -7- "Vendor"), as applicable, and complete copies of the Construction Contract, the Architect's Agreement, any agreement related to the acquisition and/or installation of the Equipment certified by the Construction Agent and all other Construction Documents and payment and performance bonds, shall have been delivered to the Lessor and the Agent. (v) Survey. The Lessee shall have delivered, or shall have ------ caused to be delivered, to the Lessor and the Agent, at such Lessee's expense, an accurate survey of the Land certified to the Lessor and the Agent in a form reasonably satisfactory to the Lessor and the Agent and showing no state of facts unsatisfactory to the Lessor or the Agent and prepared within ninety (90) days of the Closing Date (or such other time period agreed to by the Lessor and the Agent) by a Person reasonably satisfactory to the Lessor and the Agent. Such survey shall (A) be acceptable to the Title Insurance Company for the purpose of providing extended coverage to the Lessor and a lender's comprehensive endorsement to the Agent, (B) show no encroachments on such Land by structures owned by others, and no encroachments from any part of such Leased Property onto any land owned by others, and (C) disclose no state of facts reasonably objectionable to the Lessor, the Agent or the Title Insurance Company, and be reasonably acceptable to each such Person. (vi) Title and Title Insurance. The Lessor shall receive ------------------------- from the Title Insurance Company an ALTA Policy of Title Insurance (which Policy shall be a leasehold owner's policy as to the Land and an Owner's Policy as to the Building and other improvements) issued by the Title Insurance Company and the Agent shall receive from the Title Insurance Company an ALTA Mortgagee's Policy of Title Insurance issued by the Title Insurance Company, in each case, in the amount of the projected cost of acquisition and construction of the Leased Property, reasonably acceptable in form and substance to the Lessor and the Agent, respectively (collectively, the "Title Policy"). The Title Policy shall be dated ------------ as of the Closing Date, and, to the extent permitted under Applicable Law, shall include such affirmative endorsements and other coverages as the Lessor or the Agent shall reasonably request. (vii) Appraisal. Each Funding Party shall have received a --------- report of the Appraiser (an "Appraisal"), paid for by the Lessee, --------- which shall meet the requirements of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, shall be satisfactory to such Funding Party and shall state in a manner satisfactory to such Funding Party the estimated "as vacant" value of the Land and any Building and Equipment to be acquired, constructed and/or installed -8- thereon. Such Appraisal must show that the "as vacant" value of the Leased Property determined as if the Building had already been completed and Equipment installed in accordance with the Plans and Specifications and by excluding from such value the amount of assessments on the Leased Property) is at least 45% of the total cost of the Leased Property, including the trade fixtures, equipment and personal property utilized in connection with the Leased Property and all other costs to be funded by the Funding Parties. (viii) Environmental Audit and Reliance Letter. The Lessor --------------------------------------- and the Agent shall have received an Environmental Audit for the Leased Property, which shall be conducted in accordance with ASTM standards and shall not include a recommendation for further investigation and is otherwise satisfactory to the Lessor and the Agent. The firm that prepared the Environmental Audit for such Leased Property shall have delivered to the Lessor and the Agent a letter in form and substance satisfactory to the Lessor and the Agent stating that the Lessor, the Agent and the Lenders may rely upon such firm's Environmental Audit of the Leased Property, it -- being understood that the Lessor's and the Agent's acceptance of ---------------- any such Environmental Audit shall not release or impair the Lessee's obligations under the Operative Documents with respect to any environmental liabilities relating to the Leased Property. (ix) Evidence of Insurance. The Lessor and the Agent shall --------------------- have received from the Lessee certificates of insurance evidencing compliance with the provisions of Article VIII of the Lease (including the naming of the Lessor, the Agent and the Lenders as additional insureds or loss payee with respect to such insurance, as their interests may appear), in form and substance reasonably satisfactory to the Lessor and the Agent. (x) Officer's Certificates of Lessee and JFC. Each of the ---------------------------------------- Agent and the Lessor shall have received an Officer's Certificate of each of the Lessee and JFC stating that, to the best of such officer's knowledge, (A) each and every representation and warranty of the Lessee and JFC contained in the Operative Documents is true and correct in all material respects on and as of the Closing Date as though made on and as of the Closing Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date; (B) no Event of Default, Potential Event of Default or Construction Force Majeure Event has occurred and is continuing; (C) each Operative Document to which the Lessee and JFC is a party is in full force and -9- effect with respect to it; and (D) no event that could reasonably be expected to have a Material Adverse Effect has occurred since June 30, 2000. (xi) UCC Financing Statement; Recording Fees; Transfer ------------------------------------------------- Taxes. Each Funding Party shall have received satisfactory evidence ----- of (A) the execution and delivery to the Agent of a UCC-1 and, if required by applicable law, UCC-2 financing statement to be filed with the Secretary of State of the applicable State (or other appropriate filing office) and the county where the Land is located, respectively, and such other Uniform Commercial Code financing statements as any Funding Party deems necessary or desirable in order to perfect such Funding Party's interests and (B) the payment of all recording and filing fees and transfer, stamp and other taxes with respect to any recordings or filings made of the Ground Lease (or memorandum thereof), and the assignment of the Ground Lease to the Lessor, the Lease, the Lease Supplement, the Mortgage and the Assignment of Lease and Rents. (xii) Opinions. An opinion of local counsel for the Lessee -------- qualified in the jurisdiction in which the Leased Property is located, substantially in the form set forth in Exhibit G-2 ----------- attached hereto, and containing such other matters as the parties to whom they are addressed shall reasonably request, shall have been delivered and addressed to each of the Lessor, the Agent and the Lenders. (xiii) Officer's Certificate of Lessor. The Agent shall ------------------------------- have received an Officer's Certificate of the Lessor stating that, to the best of such officer's knowledge, (A) each and every representation and warranty of the Lessor contained in the Operative Documents is true and correct in all material respects on and as of the Closing Date as though made on and as of the Closing Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; (B) no Event of Default or Potential Event of Default has occurred and is continuing; (C) each Operative Document to which the Lessor is a party is in full force and effect with respect to it; and (D) no event that could have a Material Adverse Effect has occurred since the date of the most recent financial statements of the Lessor to be delivered or required to the Agent. (xiv) Good Standing Certificates. The Agent shall have -------------------------- received good standing certificates for the Lessor and the Lessee from the appropriate offices of the state where the Land is located. -10- (b) Litigation. No action or proceeding shall have been ---------- instituted or, to the knowledge of any Funding Party, threatened nor shall any governmental action, suit, proceeding or investigation be instituted or threatened before any Governmental Authority, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority, to set aside, restrain, enjoin or prevent the performance of this Master Agreement or any transaction contemplated hereby or by any other Operative Document or which is reasonably likely to materially adversely affect the Leased Property or any transaction contemplated by the Operative Documents or which could reasonably be expected to result in a Material Adverse Effect. (c) Legality. In the opinion of such Funding Party or its -------- counsel, the transactions contemplated by the Operative Documents shall not violate any Applicable Law, and no change shall have occurred or been proposed in Applicable Law that would make it illegal for such Funding Party to participate in any of the transactions contemplated by the Operative Documents. (d) No Events. (i) No Event of Default, Potential Event of --------- Default, Event of Loss or Event of Taking relating to the Leased Property shall have occurred and be continuing, (ii) no action shall be pending or threatened by a Governmental Authority to initiate a Condemnation or an Event of Taking, and (iii) there shall not have occurred any event that could reasonably be expected to have a Material Adverse Effect since June 30, 2000. (e) Representations. Each representation and warranty of the --------------- parties hereto or to any other Operative Document contained herein or in any other Operative Document shall be true and correct in all material respects as though made on and as of the Closing Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. (f) Cutoff Date. No Funding Date shall occur after the Funding ----------- Termination Date. (g) Transaction Expenses. The Lessee shall have paid the -------------------- transaction costs then accrued and invoiced which the Lessee has agreed to pay pursuant to Section 8.8. ----------- SECTION 3.2 Additional Conditions for the Closing Date. The obligations ------------------------------------------ of the Lessor and each Lender to carry out their respective obligations under Article II of this Master Agreement to be performed on the Closing ---------- Date shall be subject to the satisfaction of, or waiver by, each such party hereto (acting directly or through its counsel) on or prior to the Closing Date of the following conditions precedent in addition to those set forth in Section 3.1, provided that - ----------- -11- the obligations of any Funding Party shall not be subject to any conditions contained in this Section 3.2 which are required to be performed by such ----------- Funding Party: (i) Loan Agreement; Guaranty. Counterparts of the Loan ------------------------ Agreement, duly executed by the Lessor, the Agent and each Lender shall have been delivered to each of the Lessor and the Agent. The A Notes and the B Notes, duly executed by the Lessor, shall have been delivered to the Agent. The Guaranty, duly executed by the Guarantor, shall have been delivered to the Agent. (ii) Master Agreement. Counterparts of this Master ---------------- Agreement, duly executed by the parties hereto, shall have been delivered to each of the parties hereto. (iii) Construction Agency Agreement. Counterparts of the ----------------------------- Construction Agency Agreement, duly executed by the parties thereto shall have been delivered to each of the parties hereto. (iv) Lease. Counterparts of the Lease, duly executed by ----- the Lessee and the Lessor shall have been delivered to each Funding Party, and the original, chattel paper copy of the Lease shall have been delivered to the Agent. (v) Lessee's and JFC's Resolutions and Incumbency --------------------------------------------- Certificate, etc. Each of the Agent and the Lessor shall have ---------------- received (w) a certificate of the Lessee's General Partner attaching and certifying as of the Closing Date as to (A) the resolution of the limited partners of the Lessee, if required by the Lessee's Partnership Agreement, duly authorizing the execution, delivery and performance by the Lessee of each Operative Document to which it is or will be a party, (B) the Lessee's Partnership Agreement as in effect as of the Closing Date (which includes all amendments thereto) and (C) the Lessee's partnership certificate, as in effect as of the Closing Date (which includes all amendments thereto), certified within thirty (30) days prior to the Closing Date by the Secretary of State of the state of its organization; (x) good standing certificates for the Lessee dated within thirty (30) days prior to the Closing Date from the appropriate offices of the State of the Lessee's organization and principal place of business; (y) a certificate of the Secretary or an Assistant Secretary of the Lessee's General Partner, attaching and certifying as of the Closing Date as to (A) the Board of Directors' (or appropriate committee's) resolution duly authorizing the execution, delivery and performance by it, as general partner of the Lessee, of each Operative Document to which the Lessee is or will be a party, (B) the incumbency and signatures of persons authorized to execute and deliver such documents on its behalf, (C) the articles or certificate of incorporation of the Lessee's General Partner, certified -12- within thirty (30) days prior to the Closing Date by the Secretary of State of the state of its incorporation and (D) its by-laws; and (z) good standing certificates for the Lessee's General Partner dated within thirty (30) days prior to the Closing Date from the appropriate offices of the State of incorporation and principal place of business of the Lessee's General Partner. Each of the Agent and the Lessor shall have received (w) a certificate of JFC's Managing Partner attaching and certifying as of the Closing Date, as to (A) the resolution or consent of the limited partners of JFC, if and to the extent (if any) required by JFC's Partnership Agreement, duly authorizing the execution, delivery and performance by JFC of each Operative Document to which it is or will be a party, (B) JFC's Partnership Agreement as in effect as of the Closing Date (which includes all amendments thereto) and (C) JFC's partnership certificate, as in effect as of the Closing Date (which includes all amendments thereto), certified within thirty (30) days prior to the Closing Date by the Secretary of State of the state of its organization; (x) good standing certificates for JFC dated within thirty (30) days prior to the Closing Date from the appropriate offices of the State of JFC's organization and principal place of business; (y) a certificate of the Managing Partner of JFC, attaching and certifying as of the Closing Date as to the incumbency and signatures of persons authorized to execute and deliver such documents on its behalf. (vi) Opinions of Counsel. The opinion of counsel to the ------------------- Lessee and JFC and the Guarantor and the opinion of local counsel in the State in which the Leased Property is located, dated the Closing Date, substantially in the forms set forth in Exhibit G-1 ----------- and Exhibit G-2, respectively, attached hereto, and containing such ----------- other matters as the parties to whom it is addressed shall reasonably request, shall have been delivered and addressed to each of the Lessor, the Agent and the Lenders. The opinion of counsel to the Lessor, dated the Closing Date, substantially in the form set forth in Exhibit G-3 attached hereto, and containing such other ----------- matters as the parties to whom it is addressed shall reasonably request, shall have been delivered to each of the Agent and the Lenders and, with respect to the opinion of the Lessor's counsel, the Lessee. (vii) Good Standing Certificate. The Agent and the Lessee ------------------------- shall have received a good standing certificate for the Lessor from the appropriate offices of the State of Texas, dated within thirty (30) days prior to the Closing Date. (viii) Lessor's Resolutions and Incumbency Certificate, ------------------------------------------------ etc. Each of the Agent and the Lessee shall have received (w) a --- certificate of the Lessor's General Partner as of the Closing Date, attaching and certifying as to (A) the resolution of the partners of Lessor, if required, duly authorizing the execution , delivery and -13- performance by Lessor of each Operative Document to which it is or will be a party, (B) the Lessor's Partnership Agreement and all amendments thereto, (C) the Lessor's partnership certificate and all amendments thereto, certified as of a recent date by the Secretary of State of the state of its organization, (x) good standing certificates for the Lessor on the Closing Date from the appropriate offices of the State of the Lessor's organization and principal place of business, (y) a certificate of the Secretary or an Assistant Secretary of the Lessor's General Partner on the Closing Date, attaching and certifying as to (A) the Board of Directors' (or appropriate committee's) resolution duly authorizing the execution, delivery and performance by it, as general partner of the Lessor, of each Operative Document to which the Lessor is or will be a party, (B) the incumbency and signatures of persons authorized to execute and deliver such documents on its behalf, (C) its articles or certificate of incorporation, certified as of a recent date by the Secretary of State of the state of its incorporation and (D) its by-laws, and (z) good standing certificates for the Lessor's General Partner on the Closing Date from the appropriate offices of the State of incorporation and principal place of business of the Lessor's General Partner. SECTION 3.3 Conditions to the Obligations of Lessee. The obligations of --------------------------------------- the Lessee to lease the Leased Property from the Lessor are subject to the fulfillment on the Closing Date to the satisfaction of, or waiver by, the Lessee, of the following conditions precedent: (a) General Conditions. The conditions set forth in Sections 3.1 ------------------ ------------ and 3.2 that require fulfillment by the Lessor or the Lenders shall have - ------- been satisfied, including the execution and delivery of the Operative Documents to be executed by the Lessor or the Lenders in connection with the Leased Property. (b) Legality. In the opinion of the Lessee or its counsel, the -------- transactions contemplated by the Operative Documents shall not violate any Applicable Law, and no change shall have occurred or been proposed in Applicable Law that would make it illegal for the Lessee to participate in any of the transactions contemplated by the Operative Documents. SECTION 3.4 Conditions to the Obligations of the Funding Parties on each ------------------------------------------------------------ Funding Date. The obligations of the Lessor and each Lender to carry out - ------------ their respective obligations under Article II of this Master Agreement to be ---------- performed on each Funding Date shall be subject to the fulfillment to the satisfaction of, or waiver by, each such party hereto (acting directly or through their respective counsel) on or prior to each such Funding Date of the following conditions precedent, provided that the obligations of any Funding Party shall not be subject to any conditions contained in this Section 3.4 which are required to be performed by such Funding Party: - ----------- -14- (a) Funding Request. The Lessor and the Agent shall have received --------------- from the Construction Agent or the Lessee the Funding Request therefor pursuant to Section 2.2(d). -------------- (b) Conditions Fulfilled. As of such Funding Date, the conditions -------------------- set forth in Section 3.1(d) shall have been satisfied. -------------- (c) Representations. As of such Funding Date, both before and --------------- after giving effect to the Funding requested by the Construction Agent or the Lessee on such date, the representations and warranties that the Construction Agent, the Lessee or JFC is deemed to make pursuant to Section ------- 2.2(e) shall be true and correct on and as of such Funding Date as though - ------ made on and as of such Funding Date. (d) No Stop Notice or Filed Mechanic's Lien. As of such Funding --------------------------------------- Date, and as to any Funded Amount requested on such Funding Date, (i) none of the Lessor, the Agent or any Lender has received (with respect to the Leased Property) a notice to withhold Loan funds that has not been discharged by the Lessee or the Construction Agent, and (ii) no mechanic's lien or materialman's lien has been filed against such Leased Property that has not been discharged by the Lessee, bonded over in a manner reasonably satisfactory to the Agent or insured over by the Title Insurance Company. (e) Lease Supplement. If the Funding relates to a Building that ---------------- will be leased under a Lease Supplement separate from the Lease Supplement for the Land, the original of such separate Lease Supplement, duly executed by the Lessee and the Lessor and in recordable form, shall have been delivered to the Agent. SECTION 3.5 Completion Date Conditions. The occurrence of the Completion -------------------------- Date with respect to the Leased Property shall be subject to the fulfillment to the satisfaction of, or waiver by, each party hereto (acting directly or through its counsel) of the following conditions precedent: (a) Title Policy Endorsements; Architect's Certificate. The -------------------------------------------------- Construction Agent shall have furnished to each Funding Party (1) the following endorsements to the related Title Policy (each of which shall be subject to no exceptions other than Permitted Encumbrances approved by the Agent in writing and such other exceptions created in the public records after the Closing Date if and to the extent approved by the Agent in writing): a date-down endorsement (redating and confirming the coverage provided under the Title Policy and each endorsement thereto) and a "Form 9" endorsement (if available in the applicable jurisdiction), in each case, effective as of a date not earlier than the date of completion of the Construction, and (2) a statement of the Architect dated at or about the Completion Date, in form and substance reasonably satisfactory to the Agent, the Lessor and the Lenders, and stating that (i) the Building has been completed substantially in accordance with the Plans and Specifications therefor, and -15- the Leased Property is ready for occupancy, (ii) such Plans and Specifications comply in all material respects with all Applicable Laws in effect at such time, and (iii) to the best of the Architect's knowledge, the Leased Property, as so completed, complies in all material respects with all Applicable Laws in effect at such time. The Construction Agent shall also deliver to the Agent true and complete copies of: (A) an "as built" or "record" set of the Plans and Specifications, (B) a plat of survey of the Leased Property "as built" to a standard reasonably acceptable to the Agent showing all easements, paving, driveways, fences and exterior improvements, and (C) copies of a certificate or certificates of occupancy for the Leased Property or other legally equivalent permission to occupy the Leased Property. (b) Construction Completion. The Construction shall have been ----------------------- completed substantially in accordance with the Plans and Specifications and all Applicable Laws, and the Leased Property shall be ready for occupancy and operation. All fixtures, equipment and other property contemplated under the Plans and Specifications to be incorporated into or installed in the Leased Property shall have been substantially incorporated or installed, free and clear of all Liens except for Permitted Encumbrances. (c) Construction Agent Certification. The Construction Agent -------------------------------- shall have furnished the Lessor, the Agent and each Lender with a certification of the Construction Agent (substantially in the form of Exhibit H) that: - --------- (i) all amounts owing to third parties for the Construction have been paid in full (other than contingent obligations for which the Construction Agent has made adequate reserves), and no litigation or proceedings are pending, or, to the best of the Construction Agent's knowledge, are threatened, against the Leased Property, the Construction Agent or the Lessee which could reasonably be expected to have a Material Adverse Effect; (ii) all material consents, licenses and permits and other governmental authorizations or approvals required for such Construction and operation of the Leased Property have been obtained and are in full force and effect; (iii) the Leased Property has available all services of public facilities and other utilities necessary for the use and operation of the Leased Property for its intended purposes including, without limitation, adequate water, gas and electrical supply, storm and sanitary sewerage facilities, telephone, other required public utilities and means of access between the Building and public highways for pedestrians and motor vehicles; (iv) all material agreements, easements and other rights, public or private, which are necessary to permit the lawful use and operation of the Leased -16- Property as the Lessee intends to use the Leased Property under the Lease and which are necessary to permit the lawful intended use and operation of all then intended utilities, driveways, roads and other means of egress and ingress to and from the same have been obtained and are in full force and effect and neither the Construction Agent nor the Lessee has any knowledge of any pending modification or cancellation of any of the same, and the use of the Leased Property does not depend on any variance, special exception or other municipal approval, permit or consent that has not been obtained and is in full force and effect for its continuing legal use; (v) all of the requirements and conditions set forth in Section 3.5(b) hereof have been completed and fulfilled with -------------- respect to the Leased Property and the Construction; and (vi) to the best of the Construction Agent's knowledge, the Leased Property is in compliance in all material respects with all applicable zoning laws and regulations. ARTICLE IV REPRESENTATIONS SECTION 4.1 Representations of Lessee. Effective as of the date of ------------------------- execution hereof, as of the Closing Date and as of each Funding Date, the Lessee represents and warrants to each of the other parties hereto as follows: (a) Existence; Compliance with Law. ------------------------------ (i) The sole general partner of the Lessee is EDJ Holding Company, Inc., a Missouri corporation (the "General Partner"), and the sole limited partner of the Lessee is JFC (the General Partner and JFC being referred to individually as a "Partner" and collectively as the "Partners.") At the date hereof, the Lessee has Indebtedness for Money Borrowed of the types and in the amounts set forth in Schedule 4.1(a)(i) hereto. A complete and correct summary of all such Indebtedness is attached hereto as Schedule 4.1(a)(i), ------------------ (ii) Schedule 4.1(a)(ii) hereto correctly sets forth as to ------------------- each Subsidiary of the Lessee its name and the jurisdiction of its formation, if a partnership, or incorporation, if a corporation. The Lessee has no Restricted Subsidiaries. Each of the Lessee and each of its Subsidiaries, the General Partner and JFC (x) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (y) has the power and authority, and the legal right, and all -17- governmental licenses, authorizations, consents and approvals, to own and operate its assets and property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged or proposes to be engaged, and (z) is duly qualified as a foreign corporation or partnership and in good standing (A) in the jurisdiction in which the Leased Property is located and (B) under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business or nature of its activities requires such qualification. All of the issued and outstanding general or limited partnership interests, or capital stock, as the case may be, of the Lessee, the Lessee's General Partner and each Subsidiary is validly issued and outstanding, is fully paid and nonassessable and is owned, beneficially and of record, in the case of stock, by the Lessee or another Subsidiary, and in the case of general or limited partnership interests in the Lessee, by the Lessee's General Partner and the limited partners of the Lessee, free of any Lien, option, claim, warrant or rights of others. All of the issued and outstanding are partnership interests of JFC are validly issued and outstanding, are fully paid and nonassessable and are owned beneficially and of record, by JFC's partners, free of any Lien, option, claim, warrant or rights of others. (b) Corporate Power; Authorization; Enforceable Obligations. The ------------------------------------------------------- Lessee, the General Partner and JFC each have the power and authority, and the legal right, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform this Master Agreement and the other Operative Documents to which each such Person is a party and has taken all necessary action to authorize the Transaction on the terms and conditions of this Master Agreement and to authorize the execution, delivery and performance of this Master Agreement and the other Operative Documents to which each such Person is a party. No approval, consent, exemption or authorization of, notice to or filing with or other action by or in respect of, any Governmental Authority, Business Association or any other Person is necessary or required in connection with the Transaction (except construction permits, licenses and approvals that are not yet required), the use of the proceeds thereof or with the execution, delivery, performance, validity or enforceability of this Master Agreement or the other Operative Documents to which each such Person is a party. This Master Agreement has been, and each other Operative Document to which each such Person is a party will be, duly executed and delivered on behalf of the Lessee and JFC. This Master Agreement constitutes, and each other Operative Documents to which the Lessee or JFC is a party when executed and delivered will constitute, a legal, valid and binding obligation of the Lessee and JFC, as applicable, enforceable against the Lessee and JFC, as applicable, in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). -18- (c) No Legal Bar; No Default, Compliance with Other Instruments, ------------------------------------------------------------ etc. Neither the Lessee nor JFC is in violation of any term of its - --- partnership agreement or certificate of partnership and none of its or their Subsidiaries is in violation of any term of its partnership agreement, certificate of partnership, charter or by-laws, as the case may be. No Potential Event of Default or Event of Default has occurred and is continuing. Neither the Lessee, JFC nor any of its or their Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any evidence of Indebtedness, or any agreement or instrument under or pursuant to which any evidence of Indebtedness has been issued (or any documents related thereto), (ii) any other agreement or instrument (including, without limitation, any issued and outstanding preferred stock), or Contractual Obligation to which any of them is a party or by which any of them is bound or any of its or their properties is affected, or (iii) any Requirement of Law by which any of them is bound or any of their properties are affected. Neither the Lessee, JFC nor any of its or their Subsidiaries has defaulted in, or has failed to make at the time contemplated, payment of any dividends or partnership distributions, or any mandatory redemption payments on any preferred stock or any principal of, or premium or interest on, any Indebtedness for Money Borrowed. The execution, delivery and performance of this Master Agreement and the other Operative Documents, the Transaction and the use of the proceeds thereof does or will not (v) conflict with or violate the partnership agreement, certificate of partnership, charter or by-laws, as the case may be, of the Lessee, JFC or any of its or their Subsidiaries and will not violate any Requirement of Law or Contractual Obligation of the Lessee, JFC or any of its or their Subsidiaries, (w) conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, any evidence of Indebtedness or other agreement or instrument referred to in this Section 4.1(c), (x) result in or require the creation or imposition of any Lien of any nature whatsoever upon any of its or their respective properties, revenues or assets of the Lessee, JFC or any of its or their Subsidiaries under the terms of any such evidence of Indebtedness, other agreement or instrument, Requirement of Law or Contractual Obligation, other than the Operative Documents, (y) require the consent of or other action by any Business Association, any trustee, any creditor of, any lessor to, or any investor in, the Lessee, JFC or any of its or their Subsidiaries, or (z) violate any order, injunction, writ or decree of any Governmental Authority or any Business Association to which the Lessee, JFC or any of its or their Subsidiaries is subject. (d) Litigation, Etc. ---------------- (i) There are no actions, suits, proceedings, claims or disputes pending or, to the best knowledge of the Lessee and JFC (after due inquiry), threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, arbitrator or Business Association, against the Lessee, JFC or its or their Subsidiaries or any of their respective properties, individually or in the aggregate: -19- (x) which purport to affect or pertain to this Master Agreement or any other Operative Document, or any of the transactions contemplated hereby or thereby; or (y) as to which there exists a reasonable possibility of an adverse determination against any of them or, which determination could reasonably be expected to have a Material Adverse Effect. (ii) No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Master Agreement or any other Operative Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. (iii) Any liability that may result from any action at law, suit in equity or other proceeding or investigation (whether or not purportedly on behalf of the Lessee, JFC or any of its or their Subsidiaries) in any court or by or before any other Governmental Authority or any arbitrator, or before any Business Association, against or affecting, or that (to the best knowledge of the Lessee and JFC) is threatened against, the Lessee, JFC or any of its or their Subsidiaries or any of their respective properties is adequately reserved against on the books of the Lessee, JFC or such Subsidiary, as the case may be. (iv) Neither the Lessee, JFC nor any of its or their Subsidiaries is in default in any respect which could individually or in the aggregate have a Material Adverse Effect on the Lessee or JFC with respect to any order, writ, injunction, judgment or decree of any court or other Governmental Authority, or with respect to the award of any arbitrator, or with respect to the order or direction of any Business Association. (v) Attached hereto as Schedule 4.1(d)(v) is a true and ------------------ correct summary of all pending investigations or inquiries (other than routine "blue sheet" inquires) by the SEC or any Business Association or State Securities Commission to which the Lessee or any of its Subsidiaries has been asked to respond by delivery of documents or testimony. (e) Taxes. All Federal, state and other tax returns and ----- information returns of the Lessee, JFC and each of its or their Subsidiaries required by law to be filed have been duly filed, and all Federal, state and other taxes, assessments, fees and other governmental charges -20- upon the Lessee, JFC or any of its or their Subsidiaries or upon any of their respective properties or assets that are due and payable have been paid. No extensions of time for the assessment of deficiencies have been granted by the Lessee, JFC or any of its or their Subsidiaries. There are no Liens on any properties or assets of the Lessee, JFC or any of its or their Subsidiaries imposed or arising as a result of the delinquent payment or nonpayment of any such tax, assessment, fee or other governmental charge. All Federal income tax returns of each of the Lessee and JFC filed for periods ended on or prior to December 31, 1996 have been accepted by the IRS as filed. No Federal income tax and information returns filed by any of the Lessee, JFC or the Subsidiaries of the Lessee or JFC have ever been materially adjusted upon examination by the IRS. The Lessee, JFC and its or their Subsidiaries which are partnerships have filed information returns in those states and local jurisdictions in which they are required to do so, and the Subsidiaries of the Lessee or JFC that are corporations have filed tax returns with respect to state income taxes or state taxes measured by income in those states and local jurisdictions in which they are required to do so. No state information or tax return filed by the Lessee, JFC or any of its or their Subsidiaries has ever been materially adjusted upon examination by any state agency. The charges, accruals and reserves, if any, on the books of the Lessee, JFC and its or their Subsidiaries in respect of Federal and state income taxes for all fiscal periods to date are adequate and neither the Lessee nor JFC knows of any unpaid assessments for additional Federal or state income taxes for any such fiscal period or of any basis therefor. There are no applicable taxes, fees or other governmental charges payable in connection with the execution and delivery of this Master Agreement, the Transaction or any of the other Operative Documents. (f) No Margin Regulation Violation. None of the transactions ------------------------------ contemplated by this Master Agreement or any of the other Operative Documents (including, without limitation, the direct or indirect use of any of the proceeds from any Funding) will violate or result in a violation of (i) Sections 7, 10(b) or 15 of the Exchange Act or any regulations promulgated thereunder or (ii) Regulation U, Regulation T and Regulation X of the FRB. (g) ERISA Compliance. ---------------- (i) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and, to the best knowledge of the Lessee and JFC, nothing has occurred which would cause the loss of such qualification. The Lessee, JFC and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. -21- (ii) There are no pending or, to the best knowledge of the Lessee and JFC, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect or that would subject the Lessee, JFC or any of its or their Subsidiaries to a tax or penalty on Prohibited Transactions. Neither the Lessee, JFC nor any of its or their Subsidiaries has contributed to any employee pension benefit plan to which an employer other than the Lessee, JFC or one of their Subsidiaries contributed. (iii) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Lessee, JFC nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability to the PBGC under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Lessee, JFC nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Lessee, JFC nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. (h) Investment Company Act; Other Regulations. None of the ----------------------------------------- Lessee, JFC, any Person controlling the Lessee or JFC, or any of its or their Subsidiaries, is an "Investment Company" within the meaning of the Investment Company Act of 1940, except insofar as such a relationship may exist with respect to the Lessee by virtue of the following interests: (v) the Lessee's ownership of a minority interest, as limited partner with no rights of management or control, in Passport Research Ltd., a Pennsylvania limited partnership, that is adviser to an open-end mutual fund and a closed-end mutual fund, (w) the Lessee's indirect 18.4% interest in Community Investment Partners, L.P., indirect 6% interest in Community Investment Partners II, L.P., and indirect 5.9% interest in Community Investment Partners III, L.P., LLLP, each of which is a business development company formed under the Investment Company Act of 1940, (x) the Lessee's indirect 5.7% interest in Community Investment Partners IV, L.P., LLLP, an employees' securities company, (y) the Lessee's indirect $500,000 investment in Oakwood Medical Investors III, L.L.C. and (x) JFC's ownership of 150,000 shares of common stock, in Federated Investors, that is adviser to an open-end mutual fund and a closed-end mutual fund. Neither the Lessee, JFC nor any of its or their Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce -22- Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness, other than the Net Capital requirements of Section 15 of the Exchange Act. The Lessee and its Subsidiaries are in compliance with the requirements of Rule 206(4)-2 promulgated pursuant to the Investment Advisors Act of 1940. (i) Purpose of Fundings. The proceeds of the Fundings shall be ------------------- used by the Lessee or the Construction Agent for Construction costs for the Building and for acquisition and installation of the Equipment and for transaction, closing and financing costs permitted to be paid with Advances under this Master Agreement. (j) Disclosure. Neither this Master Agreement (including the ---------- representations, warranties and covenants contained herein and all other information contained in the Operative Documents) nor any offering memorandum prepared in connection with the Transaction, nor the reports nor financial statements referred to in Section 4.1(l) hereof, nor any certificate, report, statement or other writing furnished or to be furnished to the Agent by or on behalf of the Lessee, JFC, or any officer, director, agent or employee of or any counsel to the Lessee or JFC, in connection with the negotiation of the Operative Documents or the Transaction, nor any other factual information, including factual information relating to the Lessee, JFC, its or their Subsidiaries or any of its or their assets or its or their financial condition or the Leased Property, furnished or to be furnished in writing to the Agent or any Funding Party, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. There is no fact known to the Partnership that the Partnership has not disclosed to you in writing that (i) materially adversely affects or in the future may materially adversely affect the business, prospects, earnings, properties or condition, financial or other, of the Lessee, JFC or any of its or their Subsidiaries, or (ii) adversely affects or in the future may adversely affect the ability of the Lessee or JFC to perform their respective obligations under this Master Agreement and the other Operative Documents. (k) Title to Properties; Leases. The Lessee, JFC and each of --------------------------- their Subsidiaries have good and valid title to their respective material properties and assets, including all properties and assets reflected on the respective consolidated statements of financial condition of the Lessee and its Subsidiaries and of JFC and its Subsidiaries, each dated as of December 31, 1999 and referred to in clauses (i) and (iii) of Section 4.1(l) hereof, as well as to property purported to have been acquired since such date (except property disposed of since said date in the ordinary course of business), and as of the Closing Date, there are no Liens on any such properties and assets other than Permitted Liens and Liens securing the bank borrowings listed in Schedule 4.1(a)(i) on the Lessee's securities held for sale, on its interest in customers' securities and on government or agency securities held by it as permitted by paragraphs (iv) and (vi) of the definition of Restricted Investments. Each of the Lessee, JFC and their Subsidiaries has the right -23- to, and does, enjoy peaceful and undisturbed possession under all leases to which it is a party or under which it is leasing property. All such leases are valid, subsisting and in full force and effect, none of such leases is in default and no event has occurred and is continuing, and no condition exists, that, after notice or the passage of time or both, could become a default under any such lease. (l) Financial Statements and Other Information; Financial ----------------------------------------------------- Condition. The Lessee and JFC has heretofore furnished to the Agent and each - --------- Funding Party copies of: (i) JFC's Annual Report to the SEC on Form 10-K for the fiscal year ended December 31, 1999 (the "Form 10-K") containing a --------- consolidated statement of financial condition of JFC and its Subsidiaries as of December 31, 1999 and December 31, 1998 and related consolidated statements of income, changes in financial position or cash flows (as applicable) and changes in partnership capital for the fiscal years then ended and the fiscal year ended December 31, 1997, together with the auditor's report thereon of Arthur Andersen LLP, Independent Certified Public Accountants; (ii) JFC's Quarterly Report on Form 10-Q filed with the SEC for the quarter ended June 30, 2000 (the "Form 10-Q"; the Form 10-K and --------- the Form 10-Q are referred to herein as the "SEC Reports"); (iii) ----------- consolidated statements of financial condition of the Lessee and its Subsidiaries as of December 31, 1999 and December 31, 1998, and related statements of income, changes in financial position or cash flows (as applicable), changes in partnership capital and changes in subordinated liabilities, of the Lessee and its Subsidiaries for the fiscal years then ended, together with the auditor's report thereon of Arthur Andersen LLP, Independent Certified Public Accountants; (iv) consolidated statements of financial condition of the Lessee and its Subsidiaries as of the close of the fiscal quarter ended June 30, 2000 and related statements of income of the Lessee and its Subsidiaries for the fiscal quarter then ended (the financial statements referred to, or contained in any document referred to, in this clause (iv) and in clause (iii) above being hereinafter called the "Lessee Financial Statements"); and (v) the Lessee's Broker/Dealer Year 2000 --------------------------- Report on Form BD-Y2K filed with the SEC for June 30, 2000. All financial statements referred to above, or contained in any document referred to above, are complete and correct, and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the respective periods. The Lessee Financial Statements and the SEC Reports present fairly the financial position of the Lessee and JFC, respectively, as of the respective dates of the statements of financial condition included therein and the results of operations of the Lessee and JFC, respectively, for the respective periods covered by the consolidated statements of income and changes in cash flows included therein. Neither the Lessee, JFC nor any of its or their Subsidiaries has any material obligations or liabilities, contingent or otherwise, not disclosed by the consolidated statement of financial condition of the Lessee, JFC and their Subsidiaries as of December 31, 1999 referred to in clauses (i) or (iii) above -24- (m) General Environmental Matters. Except as specifically ----------------------------- disclosed in Schedule 4.1(m): --------------- (i) The on-going operations of the Lessee, JFC and each of their Subsidiaries comply in all material respects with all Environmental Laws. (ii) The Lessee, JFC and each of their Subsidiaries have obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and --------------------- necessary for their respective ordinary course operations, all such Environmental Permits are in good standing, and the Lessee, JFC and each of their Subsidiaries are in compliance with all material terms and conditions of such Environmental Permits. (iii) None of the Lessee, JFC any of their Subsidiaries or any of their respective present properties or operations, is subject to any outstanding written order from or agreement with any Governmental Authority, nor subject to (x) any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material or (y) to the extent that it could reasonably be expected to have a Material Adverse Effect, any claim, proceeding or written notice from any Person regarding any Environmental Law, Environmental Claim or Hazardous Material. (iv) There are no Hazardous Materials or other conditions or circumstances existing with respect to any properties of the Lessee, JFC or any of their Subsidiaries, or arising from operations prior to the Closing Date, of the Lessee, JFC or any of their Subsidiaries that would reasonably be expected to give rise to Environmental Claims which would have a Material Adverse Effect, and there are no Hazardous Materials or other conditions or circumstances existing with respect to the Leased Property that would reasonably be expected to give rise to Environmental Claims. In addition, (A) neither the Lessee, JFC nor any of their Subsidiaries has any underground storage tanks (x) that are not properly registered or permitted under applicable Environmental Laws, (y) that are leaking or disposing of Hazardous Materials off-site, or (z) with respect to the Leased Property, for which the Lessee, JFC or any of their Subsidiaries has not met applicable federal and state financial responsibility requirements, and (B) the Lessee, JFC and their Subsidiaries have met all material notification requirements under applicable Environmental Laws. (n) Labor Relations. There are no strikes, lockouts or other --------------- labor disputes against the Lessee, JFC, or any of their Subsidiaries, or, to the best of the knowledge of the Lessee and JFC, threatened against or affecting the Lessee, JFC or any of their Subsidiaries, and -25- no significant unfair labor practice complaint is pending against the Lessee, JFC or any of their Subsidiaries or, to the best knowledge of the Lessee and JFC, threatened against any of them before any Governmental Authority. (o) No Burdensome Restrictions. Neither the Lessee, JFC, nor any -------------------------- of its or their Subsidiaries is a party to, and none of them nor any of their properties is bound or affected by, any Contractual Obligation, or is subject to any order, writ, injunction, judgment, rule, regulation or decree or other action of any court or other Governmental Authority, or the award of any arbitrator or any charter or other corporate, partnership or contractual restriction, that could reasonably be expected to have a Material Adverse Effect. (p) Copyrights, Patents, Trademarks and Licenses, etc. The ------------------------------------------------- Lessee, JFC and their Subsidiaries own or are licensed or otherwise have the right to use all of the licenses, registrations, permits, patents, trademarks, service marks, trade names, copyrights, franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses as now conducted and as proposed to be conducted, without conflict with the rights of any other Person. To the best knowledge of the Lessee and JFC, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Lessee, JFC or any of their Subsidiaries infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Lessee and JFC, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. (q) Insurance. The properties of the Lessee, JFC and their --------- Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Lessee or JFC or any of their Subsidiaries and are in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and are similarly situated. (r) Swap Obligations. Neither the Lessee, JFC nor any of their ---------------- Subsidiaries has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations. The Lessee and JFC have each undertaken its own independent assessment of its consolidated assets, liabilities and commitments and has considered appropriate means of mitigating and managing risks associated with such matters and has not relied on any swap counterparty or any Affiliate of any swap counterparty in determining whether to enter into any Swap Contract. (s) Solvency. Each of the Lessee and JFC is Solvent, and the -------- Lessee and its Subsidiaries, on a consolidated basis, and JFC and its Subsidiaries, on a consolidated basis, are Solvent. -26- (t) Year 2000 Compliance. The Lessee, JFC and their Subsidiaries -------------------- have conducted a comprehensive review and assessment of its computer applications, and have made inquiry of their material suppliers, vendors and customers, with respect to any defect in computer software, data bases, hardware, controls and peripherals related to the occurrence of the year 2000 or the Year 2000 Problem in connection therewith. Based on the foregoing review, assessment and inquiry, the Lessee and JFC believe that no such defect could reasonably be expected to have a Material Adverse Effect. (u) Business of the Partnership. --------------------------- (i) The SEC Reports referred to in Section 4.1(l) hereof contain an accurate general description of the business of the Lessee, JFC and their Subsidiaries, as presently conducted and as presently proposed to be conducted, and the major properties leased by the Lessee and JFC. Neither the Lessee, JFC nor any of their Subsidiaries is now engaged in any material line of business not so disclosed and neither the Lessee nor JFC owns or leases any significant properties not so disclosed. Attached hereto as Schedule 4.1(u)(i) is a true and correct summary of the leases ------------------ under which the Lessee or JFC leases its or their principal offices and equipment from an Affiliate. (ii) Any and all liabilities of the Lessee and JFC that could reasonably be expected to arise out of, or in relation to, the Lessee's or JFC's ownership, directly or indirectly, of any interest or interests in limited partnerships or other entities (including any Affiliates or Subsidiaries of the Lessee or JFC) under any circumstances, in the aggregate, would not exceed $15,000,000. All such interests owned by the Lessee or JFC in such entities are owned indirectly by it, through a series of affiliated entities, including at least one corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, which corporation is adequately capitalized and as to which all corporate formalities have been observed. The corporate integrity of any such corporation has never been questioned or threatened, nor does there exist any basis for such a question or threat. Neither the Lessee, JFC nor any Affiliate of either of them (other than the General Partner, Conestoga Securities, Inc., a Missouri corporation, LHC, Inc., a Missouri corporation, Unison Capital Corporation, a Missouri corporation, Patronus, Inc., a Missouri corporation, CIP Management, Inc., a Missouri corporation, and Edward D. Jones & Co. Canada Holding Co., Inc., a corporation formed under the law of the Province of Ontario, Canada) is a general partner of any general or limited partnership. -27- (v) Stock Exchange Membership, etc. The Lessee is a member ------------------------------- organization in good standing of the Exchange, the American Stock Exchange, Inc., the Chicago Stock Exchange, Inc., and the NASD. Edward Jones Limited, a corporation organized under the laws of the United Kingdom, is a member in good standing of the London Stock Exchange. Edward D. Jones Co., an Ontario limited partnership, is a member organization in good standing of the Toronto Stock Exchange, Inc. and the Montreal Stock Exchange, Inc. (w) No Material Adverse Change. Since December 31, 1999, (i) -------------------------- there has been no material adverse change in the financial condition of the Lessee and its Subsidiaries taken as a whole, or JFC and its Subsidiaries, taken as a whole, and (ii) neither the condition, financial or otherwise, business, earnings, properties or prospects of the Lessee and its Subsidiaries, taken as a whole, or JFC and its Subsidiaries, taken as a whole, have been materially adversely affected by any occurrence or development (whether or not insured against). (x) Compliance with Law, etc. The Lessee, JFC, the General ------------------------ Partner and their Subsidiaries each is in compliance in all material respects with all Requirements of Law to which it is subject and all applicable rules of the Exchange, the NASD and each other non-governmental association, corporation or body having authority over it ("Business -------- Association"), the violation of which, either individually or in the - ----------- aggregate, might materially adversely affect its business, prospects, earnings, properties or condition, financial or other. Neither the execution or delivery of this Master Agreement or any of the other Operative Documents, nor the performance of this Agreement or the Notes does or will cause the Partnership or any of its Subsidiaries to be in violation in any material respect of any law or ordinance, or any order of general application, rule or regulation of any Federal, state, county, municipal or other governmental or public authority or agency, or any order, direction or rule of any Business Association, having jurisdiction or authority over any of them or any of their respective properties. (y) SIPC Assessments. Neither the Lessee nor any Subsidiary is in ---------------- arrears with respect to any assessment made upon the Lessee or any Subsidiary by SIPC. (z) Broker-Dealer Registration; Examining Authority. The Lessee ----------------------------------------------- is registered as a broker-dealer with the SEC under the Exchange Act, and is also registered as a broker-dealer with the proper authorities, including State Securities Commissions, of every jurisdiction in which the nature of its activities makes such registration necessary. The Examining Authority of the Lessee is the Exchange. (aa) Stock Exchange Approvals. The Lessee has obtained such ------------------------ consents or approvals of the Examining Authority and of such securities and commodities exchanges of which the Lessee is a member organization as are necessary for the due execution, delivery and -28- performance of this Master Agreement and the other Operative Documents and the consummation of the transactions contemplated hereby and thereby. (bb) Governmental Consent, etc. Except for the consents and ------------------------- approvals referred to in Section 4.1(aa) and the filing with the SEC pursuant to Appendix D to Rule 15c3-1, no consent, approval or authorization of, registration, qualification, designation, declaration or filing with, or notice to, any Federal, state or local governmental or public authority or agency (including any State Securities Commission) or Business Association is required for the valid execution, delivery and performance of this Master Agreement or any of the other Operative Documents or the valid consummation of any other transaction contemplated hereby or thereby. (cc) Outstanding Securities. All outstanding Securities of the ---------------------- Lessee have been offered, issued, sold and delivered in compliance with, or in accordance with available exemptions from, all Federal and state laws and the rules and regulations of all Federal and state governmental or public authorities and agencies and Business Associations. (dd) Net Capital Requirements. The Lessee is subject to and in ------------------------ compliance with the Net Capital requirements set forth in Rule 15c3-1 and it has elected to comply with the Alternative Net Capital Requirement. (ee) Hazardous Materials - Leased Property. ------------------------------------- (i) To the best knowledge of the Lessee, except as described in the Environmental Audit, on the Closing Date, there are no Hazardous Materials present at, upon, under or within such Leased Property or released or transported to or from such Leased Property (except in compliance in all material respects with all Applicable Law). (ii) On the Closing Date, no Governmental Actions have been taken or, to the best knowledge of the Lessee, are in process or have been threatened, which could reasonably be expected to subject such Leased Property, any Lender or the Lessor to any Claims or Liens with respect to such Leased Property under any Environmental Law which would have a material adverse effect, or would have a Material Adverse Effect on the Lessor or any Lender. (iii) The Lessee has, or will obtain on or before the date required by Applicable Law, all Environmental Permits necessary to operate the Leased Property, if any, in accordance with Environmental Laws and is complying with and has at all times complied with all such Environmental Permits, except to the extent the failure to obtain such Environmental Permits or to so comply would not have a Material Adverse Effect. -29- (iv) Except as set forth in the Environmental Audit or in any notice subsequently furnished by the Lessee to the Agent and approved by the Agent in writing prior to the respective times that the representations and warranties contained herein are made or deemed made hereunder, no notice, notification, demand, request for information, citations, summons, complaint or order has been issued or filed to or with respect to the Lessee, no penalty has been assessed on the Lessee and no investigation or review is pending or, to its best knowledge, threatened by any Governmental Authority or other Person in each case relating to the Leased Property with respect to any alleged material violation or liability of the Lessee under any Environmental Law. To the best knowledge of the Lessee, no material notice, notification, demand, request for information, citations, summons, complaint or order has been issued or filed to or with respect to any other Person, no material penalty has been assessed on any other Person and no investigation or review is pending or threatened by any Governmental Authority or other Person relating to the Leased Property with respect to any alleged material violation or liability under any Environmental Law by any other Person. (v) The Leased Property and each portion thereof are presently in compliance in all material respects with all Environmental Laws, and, to the best knowledge of the Lessee, there are no present or past facts, circumstances, activities, events, conditions or occurrences regarding the Leased Property (including without limitation the release or presence of Hazardous Materials) that could reasonably be anticipated to (A) form the basis of a material Claim against the Leased Property, any Funding Party or the Lessee, (B) cause the Leased Property to be subject to any material restrictions on ownership, occupancy, use or transferability under any Environmental Law, (C) require the filing or recording of any notice or restriction relating to the presence of Hazardous Materials in the real estate records in the county or other appropriate municipality in which the Leased Property is located, or (D) prevent or materially interfere with the continued operation and maintenance of the Leased Property as contemplated by the Operative Documents. (ff) Leased Property. The present condition of the Leased --------------- Property conforms in all material respects with all conditions or requirements of all existing material permits and approvals issued with respect to the Leased Property, and the Lessee's future intended use of the Leased Property under the Lease does not, in any material respect, violate any Applicable Law. To the best knowledge of the Lessee, no material notices, complaints or orders of violation or non-compliance have been issued or threatened or contemplated by any Governmental Authority with respect to the Leased Property or any present or intended future use thereof. All material agreements, easements and other rights, public or private, which are necessary to permit the -30- lawful use and operation of the Leased Property as the Lessee intends to use such Leased Property under the Lease and which are necessary to permit the lawful intended use and operation of all presently intended utilities, driveways, roads and other means of egress and ingress to and from the same have been, or to the Lessee's best knowledge will be, obtained and are or will be in full force and effect, and the Lessee has no knowledge of any pending material modification or cancellation of any of the same. (gg) Rights in Respect of the Leased Property. The Lessee is not ---------------------------------------- a party to any contract or agreement to sell any interest in the Leased Property or any part thereof, other than pursuant to the Operative Documents. SECTION 4.2 Survival of Representations and Effect of Fundings. --------------------------------------------------- (a) Survival of Representations and Warranties. All ------------------------------------------ representations and warranties made in Section 4.1 shall survive delivery of ----------- the Operative Documents and every Funding and shall remain in effect until all of the Obligations are fully and irrevocably paid. (b) Each Funding a Representation. Each Funding accepted by the ----------------------------- Lessee or the Construction Agent shall be deemed to constitute a representation and warranty by each Lessee to the effect of Section 4.1. ----------- SECTION 4.3 Representations of the Lessor. Effective as of the date of ----------------------------- execution hereof, as of the Closing Date and as of each Funding Date, in each case, with respect to the Leased Property, the Lessor represents and warrants to the Agent, the Lenders and the Lessee as follows: (a) Securities Act. The interest being acquired or to be acquired -------------- by the Lessor in such Leased Property is being acquired for its own account, without any view to the distribution thereof or any interest therein, provided that the Lessor shall be entitled to assign, convey or transfer its interest in accordance with Section 6.1. ----------- (b) Due Organization, etc. The Lessor is a limited partnership ---------------------- duly organized and validly existing in good standing under the laws of Texas and is duly qualified as a foreign limited partnership and in good standing in the state in which the Leased Property is located and has full power, authority and legal right to execute, deliver and perform its obligations under the Lease, this Master Agreement and each other Operative Document to which it is or will be a party. (c) Due Authorization; Enforceability, etc. This Master Agreement --------------------------------------- and each other Operative Document to which the Lessor is or will be a party have been or will be duly authorized, executed and delivered by or on behalf of the Lessor and are, or upon execution and -31- delivery will be, legal, valid and binding obligations of the Lessor enforceable against it in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by general equitable principles. (d) No Conflict. The execution and delivery by the Lessor of the ----------- Lease, this Master Agreement and each other Operative Document to which the Lessor is or will be a party, are not or will not be, and the performance by the Lessor of its obligations under each will not be, inconsistent with its Partnership Agreement, do not and will not contravene any Applicable Law applicable generally to parties providing financing and do not and will not contravene any provision of, or constitute a default under, any Contractual Obligation of Lessor, do not and will not require the consent or approval of, the giving of notice to, the registration with or taking of any action in respect of or by, any Governmental Authority, except such as have been obtained, given or accomplished, and the Lessor possesses all requisite regulatory authority to undertake and perform its obligations under the Operative Documents. (e) Litigation. There are no pending or, to the knowledge of the ---------- Lessor, threatened actions or proceedings against the Lessor before any court, arbitrator or administrative agency with respect to any Operative Document or that would have a material adverse effect upon the ability of the Lessor to perform its obligations under this Master Agreement or any other Operative Documents to which it is or will be a party. (f) Lessor Liens. No Lessor Liens (other than those created by ------------ the Operative Documents) exist on the Closing Date on the Leased Property, or any portion thereof, and the execution, delivery and performance by the Lessor of this Master Agreement or any other Operative Document to which it is or will be a party will not subject the Leased Property, or any portion thereof, to any Lessor Liens (other than those created by the Operative Documents). (g) Employee Benefit Plans. The Lessor is not and will not be ---------------------- making its investment hereunder, and is not performing its obligations under the Operative Documents, with the assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA), or "plan" (as defined in Section 4975(e)(1)) of the Code. (h) General Partner. The sole general partner of the Lessor is --------------- Atlantic Financial Managers, Inc., a Texas corporation. (i) Financial Information. --------------------- (A) The unaudited balance sheet of the Lessor as of December 31, 1999 and the related statements of income, partners' capital and cash flows for the year then ended, copies of which have been delivered to the Agent and the Lessee, fairly present, in -32- conformity with sound accounting principles, the financial condition of the Lessor as of such date and the results of operations and cash flows for such period. (B) Since December 31, 1999, there has been no event, act, condition or occurrence having a material adverse effect upon the financial condition, operations, performance or properties of the Lessor, or the ability of the Lessor to perform in any material respect its obligations under the Operative Documents. (C) The Lessor has no recourse indebtedness, and the Lessor has not entered into any other transactions, purchases, leases or other agreements, other than immaterial transactions, purchases, leases and other agreements entered into by the Lessor in the ordinary course of its business, in which the Lessor has any liability to the other parties to such transactions, purchases, leases or other agreements that is in excess of the Lessor's ownership or other interest in the property subject to such transactions, purchases, leases or other agreements other than liability for required fundings, breach of contract, misrepresentation, gross negligence, willful misconduct, fraud, failure to turn over funds and similar exceptions to limitations on recourse. (j) No Offering. The Lessor has not offered the Notes to any ----------- Person in any manner that would subject the issuance thereof to registration under the Securities Act or any applicable state securities laws. SECTION 4.4 Representations of each Lender. Effective as of the date of ------------------------------ execution hereof, as of the Closing Date and as of each Funding Date, each Lender represents and warrants to the Lessor and to the Lessee as follows: (a) Securities Act. The interest being acquired or to be acquired -------------- by such Lender in the Funded Amounts is being acquired for its own account, without any view to the distribution thereof or any interest therein, provided that such Lender shall be entitled to assign, convey or transfer its interest in accordance with Section 6.2. ----------- (b) Employee Benefit Plans. Such Lender is not and will not be ---------------------- making its investment hereunder, and is not performing its obligations under the Operative Documents, with the assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA), or "plan" (as defined in Section 4975(e)(1)) of the Code. -33- ARTICLE V COVENANTS OF LESSEE, JFC AND LESSOR SECTION 5.1 Affirmative Covenants. Each of the Lessee and JFC covenants --------------------- and agrees that, it shall do, or cause to be done, the following: (a) Maintenance of Office. Each of the Lessee and JFC will --------------------- maintain at its headquarters at 12555 Manchester Road, St. Louis, Missouri 63131, an office where notices, presentations and demands in respect of this Master Agreement and the other Operative Documents may be given to and made upon it; provided, however, that it may, upon 30 days' prior written notice -------- ------- to the Agent and the Funding Parties, move such office to any other location within the continental boundaries of the United States. The Lessee hereby agrees that it will pay, and will save any Lender harmless against liability for, any stamp or other tax or governmental charge imposed in respect of any transfer of a Note made at a time when the books for the registration, and registration of transfer, of Notes are maintained at an office outside the State of Missouri, to the extent (if any) that such tax or charge exceeds the amount that would have been payable had said books been maintained in the State of Missouri, and such obligation of the Lessee shall survive the payment or prepayment of the Notes and the termination of this Master Agreement. (b) ERISA. Neither the Lessee, JFC nor any of their Subsidiaries ----- will at any time permit any Plan to: (i) engage in any Prohibited Transaction; (ii) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA, whether or not waived; or (iii) terminate under circumstances which could result in the imposition of a Lien on any property of the Lessee, JFC or any of their Subsidiaries pursuant to Section 4068 of ERISA. The Lessee and JFC shall, and shall cause each of their ERISA Affiliates to: (x) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (y) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (z) make all required contributions to any Plan subject to Section 412 of the Code. (c) Existence. The Lessee, subject to Rule 326(b) of the --------- Exchange, and JFC shall each take and fulfill, or cause to be taken and fulfilled, all actions and conditions necessary to preserve and keep in full force and effect its existence, franchises, permits, licenses, rights and -34- privileges as a partnership in good standing and the existence, franchises, permits, licenses, rights and privileges as a partnership or a corporation, as the case may be, in good standing, of each of their Subsidiaries, will preserve or renew all of its patents, trademarks, trade names and service marks and goodwill and will not liquidate or dissolve, or permit any of their Subsidiaries to liquidate or dissolve, unless in the case of a Subsidiary its liquidation or dissolution would not have a Material Adverse Effect, and shall take and fulfill, or cause to be taken and fulfilled, all actions and conditions necessary to qualify, and to preserve and keep in full force and effect its qualification, and that of each of their Subsidiaries, to do business as a foreign partnership or corporation in each jurisdiction in which the character of the properties owned (or held under lease) by the Lessee or JFC or any of their Subsidiaries, respectively, or the nature of their respective activities makes such qualification necessary. (d) General Maintenance of Properties and Business, Etc. Each of ---------------------------------------------------- the Lessee, JFC and each of their Subsidiaries, will: (i) maintain its property in good condition and repair and make all needful and proper renewals, repairs, replacements, additions, betterments and improvements thereof and thereto, so that the business carried on in connection therewith may be conducted properly and efficiently at all times; (ii) maintain, with financially sound insurers of nationally recognized stature and responsibility, insurance with respect to its property and business of such a nature, with such terms and in such amounts as a prudent person would maintain with respect to similar properties and a similar business, and, in any event, will maintain insurance on all its property of a character usually insured by corporations or partnerships engaged in the same or a similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against and for by such corporations or partnerships and carry, with such insurers in customary amounts, such other insurance, including public liability insurance, as is usually carried by corporations or partnerships engaged in the same or a similar business similarly situated; provided, however, that (x) all insurance maintained pursuant to -------- ------- this subsection (ii) will be carried in amounts sufficient to prevent the Lessee, JFC or any of their Subsidiaries from incurring liability as a coinsurer under law or the terms of the applicable policy or policies, and (y) neither the Lessee nor any of its Subsidiaries shall self-insure, except that each may self-insure as to the types of risks against which it presently self-insures, so long as such self-insured risks, in the aggregate, do not exceed at any time 10% of the assets of the Lessee as of the end of the then most recent fiscal quarter of such Person; and, provided further, ---------------- that for the purposes of clause (y) of the preceding proviso only, the term "assets" of the Lessee shall not be deemed to -35- include assets located at any branch office of the Lessee other than the portion of assets located at any such branch office carried on the books of the Lessee at a value in excess of $500,000. The Lessee and any of its Subsidiaries may self-insure both as to types of risks other than those, and amount of risk in excess of that, permitted by the preceding sentence if, and only if, whichever of them undertakes such additional self-insurance shall establish and maintain on its books adequate reserves therefor; and provided further, that so long as the Lessee or any ---------------- of its Subsidiaries self-insures any risk, the Lessee shall deliver annually to the Agent and each Funding Party an Officer's Certificate demonstrating that all necessary and adequate reserves have been maintained with respect thereto. Notwithstanding the foregoing, the Lessee shall not self-insure any risks with respect to the Leased Property except as expressly permitted by the Required Lenders. Subject to the conditions set forth in this subsection (ii), the Lessee or any of its Subsidiaries may form a Subsidiary to undertake any activity that the Lessee or any of its Subsidiaries may undertake itself under this subsection (ii); (iii) keep proper books of record and accounts with respect to all of its business transactions in accordance with GAAP in effect in the United States, which books of record and accounts shall, in all material respects, be true, correct and complete; (iv) set aside on its books from its earnings for each fiscal year, in reasonably adequate amounts, all proper accruals and reserves that, in accordance with GAAP, should be set aside from such earnings in connection with its business, including reserves for litigation, depreciation, obsolescence and/or amortization, and accruals for taxes based on or measured by income or profits and for all other taxes; and (v) at all times maintain and keep in full force and effect its rights and franchises material to its business and its memberships in such Business Associations as are necessary to enable it to engage (in the case of those entities presently so engaged) in the business of a securities broker, dealer or underwriter, or financial services institution and take all actions necessary to comply with the rules and regulations, as in effect from time to time, of such Business Associations and each other association, corporation or governmental authority to which it is subject. (e) Compliance with Law. Neither the Lessee, JFC nor any of their ------------------- Subsidiaries will (i) violate or fail to comply with any laws, ordinances, governmental rules or regulations (including, without limitation, environmental and safety laws and regulations and the -36- Net Capital requirements of Section 15 of the Exchange Act and the rules and regulations promulgated thereunder) or any rules and regulations of any Business Association to which it is or may become subject, or (ii) fail to obtain or maintain any patents, trademarks, service marks, trade names, copyrights, design patents, licenses, permits, franchises or other governmental authorizations necessary to the operation and ownership of its property or to the conduct of its business, if the violation or failure with respect to clause (i) or (ii) of this Section 5.1(e) could reasonably be expected to have a Material Adverse Effect. (f) Payment of Taxes and Claims. --------------------------- (i) Each of the Lessee, JFC and each of their Subsidiaries will pay and discharge promptly: (x) all taxes, assessments and governmental charges and levies imposed upon it, its income or profits or any of its properties, before the same shall become delinquent, and (y) all lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and other similar persons for labor, materials, supplies and rentals that, if unpaid, might by law become a Lien upon its property; provided, -------- however, except as otherwise provided in the Operative ------- Documents that none of the foregoing need be paid while the same is being contested in good faith by appropriate proceedings diligently conducted so long as adequate book reserves shall have been established in accordance with GAAP with respect thereto, the owning Person's title to the particular property is not materially adversely affected and its right to use the particular property in the ordinary course of business is not materially interfered with. (ii) The Lessee, JFC and each of their Subsidiaries will pay all obligations not specified in subsection (i) of this Section 5.1(f) when due, except such as may be contested in good faith by appropriate proceedings; provided that, no such Person shall be ------------- permitted to contest any such obligation if such contest could reasonably be expected to have a Material Adverse Effect or is otherwise prohibited or limited under the Operative Documents. (g) Transactions with Affiliates. Neither the Lessee, JFC nor any ---------------------------- of their Subsidiaries will enter into any transaction (including, without limitation, the purchase, sale or exchange of any property, the rendering of any services, and the payment of management fees) with any Affiliate, except, in each case, in the ordinary course of, and pursuant to the reasonable -37- requirements of, the business of the Lessee or such Subsidiary, as the case may be, and in good faith and upon commercially reasonable terms that are no less favorable to the Lessee, JFC or such Subsidiary, as the case may be, than would obtain in a comparable arm's length transaction with a Person not an Affiliate; provided, however, that (x) the Lessee may provide managerial -------- ------- services and overhead to Consolidated Subsidiaries, to EDJ Leasing Co., L.P., a Missouri limited partnership and to Boone National Savings & Loan, F.A., a federal savings and loan, to the extent the value of such services and overhead (valued at the higher of cost or fair market value) provided to EDJ Leasing Co. and to Boone National Savings & Loan, F.A. do not in the aggregate exceed $250,000 per fiscal year and (y) the Lessee may pay management fees to JFC in an aggregate amount not exceeding the sum of (A) the reasonable salaries of the general partners of JFC and (B) the amounts paid by JFC to its limited partners representing guaranteed payments of 7-1/2% per annum on the principal amounts of their respective capital contributions to JFC. (h) Sale of Receivables. Neither the Lessee nor any Subsidiary ------------------- will sell with recourse, or sell for less than the greater of the face value or the fair market value thereof, any of its accounts, bills or notes receivable, except as required pursuant to Rule 326(b) of the Exchange. (i) Notice of Certain Events and Conditions. The Lessee and JFC --------------------------------------- will promptly, and in any event within 5 days, give written notice to the Agent and each Lender of: (x) any event of acceleration or event of default (or other event or condition that, after notice or the passage of time or both, could become an event of acceleration or event of default) under this Master Agreement and the other Operative Documents or under any evidence of Indebtedness of the Lessee or of any Subsidiary of which the Lessee or JFC has knowledge, or under any indenture, mortgage or other agreement relating to any such evidence of Indebtedness or under any material lease or any preferred stock, for or in respect of which the Lessee or any Subsidiary may be liable, (y) the giving by the Agent or any Lender, or by the holder of any other evidence of Indebtedness or other Security of the Lessee, JFC or any of its or their Subsidiaries of notice with respect to a claimed event of acceleration or event of default or any other such condition or event, or (z) any notice given to the SEC pursuant to subsection (e)(1) of Rule 15c3-1 or any notice of noncompliance with Rule 15c3-1. (j) Tax Consolidation. Neither the Lessee, JFC nor any of their ----------------- Subsidiaries shall file or consent to the filing of a consolidated tax return with any Person, unless required to do so by applicable law; provided, however, that to the extent any such law requiring such tax - -------- ------- consolidation permits those entities joining in a consolidated tax return discretion as to the sharing of or apportionment of any tax benefits or liabilities, or in any other respect, the Lessee, JFC and each of their Subsidiaries, or any of them, as the case may be, shall exercise such -38- discretion only in accordance with the directions of, or restrictions imposed by, the Required Lenders, and such subsequent directions or restrictions as the Required Lenders may impose. (k) Inspection. Each of the Lessee and JFC will permit the Agent ---------- and any Funding Party, by its representatives, agents or attorneys, to examine all books of account, records, reports and other papers of the Lessee, JFC and each of their Subsidiaries (including, without limitation, copies of all income and other tax returns, all FOCUS Reports and documentation related thereto), to make copies and take extracts from any thereof, to discuss the affairs, finances and accounts of the Lessee, JFC and each of their Subsidiaries with their respective officers and independent certified public accountants (and by this provision the Lessee (as to itself and all its Subsidiaries) and JFC (as to itself and all of its Subsidiaries) hereby authorizes such accountants to discuss with the Agent and any Funding Party, the finances and accounts of the Lessee, JFC and each of their Subsidiaries) and to examine the properties of the Lessee, JFC and each of their Subsidiaries, each such inspection shall be made at such reasonable times, and as often as reasonably requested (unless an Event of Default shall have occurred), and shall be at the expense of the Lessee, and all expenses in connection with any such inspection incurred by the Lessee, JFC or any of their Subsidiaries, any officers and employees of any thereof and the independent certified public accountants of any thereof shall be expenses payable by the Lessee or JFC, as the case may be, and shall not be expenses of the Person making the inspection. (l) Intentionally Omitted. --------------------- (m) Guaranties of Affiliate and Subsidiary Obligations. Any other -------------------------------------------------- provision hereof notwithstanding, the Lessee will not cause or permit Indebtedness permitted by Section 5.2(j) hereof and attributable to any guaranty or guaranties by it in respect of any obligations of, or otherwise in support of, any of its Affiliates and/or Subsidiaries to at any time exceed 10% of Partnership Capital in the aggregate. (n) Nature of Lessee's Business. The principal business of the --------------------------- Lessee and its Subsidiaries, taken on a consolidated basis, shall not include any activities or enterprises not customarily engaged in by corporations or partnerships in the retail investment brokerage business; provided, however, that this Section 5.1(n) shall not be construed to - -------- ------- prevent the Lessee or any Subsidiary from ceasing to conduct any currently existing business activities of any thereof if the Lessee shall continue to conduct such activities and enterprises as are customarily engaged in by corporations or partnerships in the retail investment brokerage business. The business of the Lessee and the Subsidiaries shall continue to be conducted solely in the United States, except that: (A) the Lessee may conduct business in Canada, Australia, New Zealand and any nation which is a member of the European Economic Community (a "Permitted Nation") directly or ---------------- through a Subsidiary or Affiliate, and (B) the Lessee itself may directly conduct -39- business in countries other than a Permitted Nation provided that the aggregate amount of the assets of the Lessee and its Subsidiaries on a consolidated basis used in business in countries other than a Permitted Nation shall at no time exceed ten percent (10%) of Partnership Capital, as would be reflected on a consolidated balance sheet of the Lessee at such time prepared in accordance with generally accepted accounting principles as in effect at such time; and provided further that the Lessee may not ---------------- simultaneously conduct business in any individual country outside the United States, directly itself and indirectly through a Subsidiary or Affiliate. (o) Change of Examining Authority. The Lessee shall promptly give ----------------------------- notice to the Agent and the Lenders of any change in its Examining Authority and shall include in its notice the address of the new Examining Authority. (p) Financial Statements, Reports, etc. The Lessee and JFC will ----------------------------------- deliver to the Agent with sufficient copies for each Funding Party, in form and substance satisfactory to the Agent and the Required Lenders: (i) as soon as available and, in any case, within 90 days after the close of each fiscal year, two copies of the respective consolidated statements of financial condition of the Lessee and its Subsidiaries and JFC and its Subsidiaries setting forth the financial condition of such entities as of the end of such fiscal year, together with consolidated statements of income, cash flows, changes in partnership capital and changes in liabilities of the Lessee and JFC, respectively, for such fiscal year, in each case setting forth, in comparative form, the figures for the preceding fiscal year, all in reasonable detail, such financial statements to be accompanied by an opinion with respect thereto of Arthur Andersen LLP or another Independent Certified Public Accountant, which opinion shall state that (x) the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and, accordingly, included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances, and (y) such financial statements present fairly the financial condition of the Lessee and its Subsidiaries and JFC and its Subsidiaries, respectively, at such date and the results of operations thereof for such period and have been prepared in accordance with generally accepted accounting principles consistently applied, except for noted changes in application in which such accountants concur; (ii) as soon as practicable and, in any case, within 45 days after the end of each of the first, second and third quarterly accounting periods in each fiscal year, two copies of (x) the respective unaudited consolidated statements of financial condition of the Lessee and its Subsidiaries and JFC and its Subsidiaries -40- as of the end of such accounting period, and (y) the respective unaudited consolidated statements of income of the Lessee and its Subsidiaries and JFC and its Subsidiaries for the quarterly accounting period and for the fiscal year to date, setting forth in each case in comparative form the figures for the corresponding periods a year earlier, prepared and certified by the principal financial officer of the Lessee and JFC, respectively, as complete and correct, as having been prepared in accordance with GAAP consistently applied and as presenting fairly such financial condition and results of operations, subject, in each case, to changes resulting from year-end audit adjustments; (iii) promptly upon receipt thereof, two copies of each report other than those referred to in paragraph (i) hereof (including, without limitation, the auditors' comment letter to management) submitted to JFC, the Lessee or any Subsidiary by independent certified public accountants in connection with any annual, interim or special audit; (iv) promptly upon distribution thereof, copies of all such financial or other statements (including proxy statements) and reports as JFC, the Lessee or any Subsidiary shall send to any class of its partners or shareholders, as the case may be, its bank lenders or holders of any issue of its debt securities; (v) promptly after filing thereof, copies of all reports, proxy statements and registration statements that JFC, the Lessee or any Subsidiary shall file with any securities exchange or the SEC, or any governmental or public authority or agency substituted therefor, or any Business Association, including, without limitation, all Focus Reports (provided that such Focus Reports may be provided on a quarterly basis) and all amendments to any of the foregoing filed by or with respect to the Lessee or any Subsidiary, and promptly after filing of any Form BD, Form ADV or CRD report or any amendment thereto that reflects any material disciplinary action, liability or change in financial position, an Officer's Certificate specifying the nature thereof and what action the Lessee is taking or proposes to take with respect thereto; (vi) promptly upon receipt thereof, copies of all notices received from United States, Canadian or any other Permitted Nation or any state, provincial or local governmental or public authorities or agencies or any Business Association relating to any order, ruling, statute, regulation or other law or directive that might materially adversely affect the financial condition or business of the Lessee or any Subsidiary; -41- (vii) immediately after the occurrence or institution thereof, an Officer's Certificate specifying any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including, to the extent so applicable: (w) any breach or non-performance of, or any default under, a Contractual Obligation of the Lessee, JFC or any of their Subsidiaries; (x) any dispute, litigation, investigation, proceeding or suspension between the Lessee, JFC or any of their Subsidiaries and any Governmental Authority; (y) the commencement of, or any material development in, any litigation or proceeding affecting the Lessee, JFC or any of their Subsidiaries, including pursuant to any applicable Environmental Laws; or (z) any other Environmental Claims, which certificate shall describe what action the Lessee is taking or proposes to take with respect thereto; (viii) promptly, and in any event within 45 days after the end of each of the first, second and third quarterly accounting periods in each fiscal year, and within 90 days after the close of each fiscal year, an Officer's Certificate setting forth a Net Capital computation for the Lessee (or, if the Lessee is operating pursuant to paragraph (a)(1)(ii) of Rule 15c3-1, an Alternative Net Capital computation) as at the end of each quarterly fiscal period, and certifying such computation as true and correct; provided, -------- however, that so long as (x) the Lessee shall be required to submit ------- a report for such quarterly fiscal period on Part I, II or IIA of Form X-17A-5 (and accompanying information if any) to the SEC pursuant to Rule 17a-5 of the General Rules and Regulations of the SEC under the Exchange Act and (y) such report shall provide the computation required by this paragraph (viii), the Lessee may submit such report (and accompanying information if any), certified as set forth above; (ix) as soon as available, a copy of the annual audited report filed by the Lessee pursuant to paragraph (d)(2) of Rule 17a-5 of the General Rules and Regulations of the SEC under the Exchange Act, together with the supporting schedules filed with said report pursuant to paragraph (d)(3) of such Rule, provided, -------- however, that should said Rule 17a-5 lapse or be repealed, in whole ------- or in part, the Lessee shall deliver such other information or reports as it shall be required to file in its status as a broker or dealer of securities with the SEC or any successor agency thereto; (x) immediately upon any partner or officer of the Lessee obtaining knowledge of any new designation of an Examining Authority, an Officer's Certificate specifying such new Examining Authority; -42- (xi) immediately upon any partner or officer of the Lessee obtaining knowledge of any condition or event which constitutes or which, after notice or lapse of time or both, would constitute an Event of Default or Potential Event of Default, an Officer's Certificate, specifying the nature and period of existence thereof and what action the Lessee has taken or is taking or proposes to take with respect thereto; (xii) immediately upon becoming aware of the occurrence of any of the following events affecting the Lessee, JFC or any ERISA Affiliate (but in no event more than 10 days after such event), and deliver to the Agent and each Funding Party a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Lessee, JFC or any ERISA Affiliate with respect to such event: (w) an ERISA Event; (x) a material increase in the Unfunded Pension Liability of any Pension Plan; (y) the adoption of, or the commencement of contributions to, any Plan subject to Section 412 of the Code by the Lessee or any ERISA Affiliate; or (z) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; (xiii) at the time of release thereof, copies of all press releases of the Lessee, JFC or any of their Subsidiaries concerning any event or condition material to the business, prospects, earnings, properties or condition, financial or other, of any of them; (xiv) promptly after the execution thereof, a copy of each amendment to the partnership agreement of the Lessee or JFC, other than an amendment made solely to reflect additional capital contributions to the Lessee or JFC, as the case may be, by a partner; (xv) of any material change in accounting policies or financial reporting practices by the Lessee, JFC or any of their Subsidiaries; -43- (xvi) upon, but in no event later than 15 days after, any officer of the Lessee, JFC or any of their Subsidiaries becoming aware of (x) any and all enforcement, investigation, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Lessee, JFC or any of the Subsidiaries or any of their respective properties pursuant to any applicable Environmental Laws which could reasonably be expected to have a Material Adverse Effect, (y) all other material Environmental Claims, and (z) any environmental or similar condition on any real property adjoining or in the vicinity of the property of the Lessee or any Subsidiary that could reasonably be anticipated to cause such property of the Lessee or such Subsidiary or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws; and (xvii) promptly upon request therefor, such other data, filings and information as the Agent or any Funding Party may from time to time reasonably request. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action the Lessee, JFC or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 5.1(p)(xi) shall describe with ------------------ particularity any and all clauses or provisions of this Master Agreement or other Operative Document that have been (or foreseeably will be) breached or violated. (q) Officer's Certificates. Each set of financial statements ---------------------- delivered pursuant to paragraph (i) or (ii) of Section 5.1(p) hereof shall be accompanied by a Compliance Certificate executed by a Responsible Officer and, unless the following information is contained in such Compliance Certificate, an Officer's Certificate (in form and substance satisfactory to the Agent and the Required Lenders) executed by a Responsible Officer stating that the Person signing the Certificate has reviewed the terms of this Master Agreement, that a review of the affairs and activities of the Lessee, JFC and their Subsidiaries has been made under such Person's supervision and that, in such Person's opinion and to the best of such Person's knowledge and belief, the Lessee, JFC and their Subsidiaries were not upon the date of such certificate or at any time during the period covered by such financial statements or Officer's Certificate in default under any of the provisions of this Master Agreement or any of the other Operative Documents, as the case may be, and setting forth in reasonable detail the calculations made as at the end of such period in determining compliance with the provisions of Sections 5.1(m) and (n) and Sections 5.2(i), (j), (k), (l), (m) and (n) hereof, inclusive; provided, however, -------- ------- that, in the event that any such default shall have occurred, such certificate shall so specify and shall state whether such default has been cured or is continuing and, if continuing, what steps the Lessee or JFC, as the case may be, proposes to take to cure such default and the time necessary so to cure such -44- default. Each such Officer's Certificate shall also specify the percentage of Partnership Capital invested in assets which were used in its business in countries other than Permitted Nations as of the date of the balance sheet included in the accompanying financial statements. (r) Intentionally Omitted. --------------------- (s) Restricted Subsidiary Financials. If the Lessee shall have -------------------------------- one or more Restricted Subsidiaries, the financial statements referred to in Sections 5.1(p)(i) and (ii) shall be furnished separately for each such Restricted Subsidiary in addition to those for the Lessee and its Consolidated Subsidiaries; provided, however, consolidating financial statements which separately incorporate each such Restricted Subsidiary may be provided in lieu of separate financial statements therefor. (t) Environmental Laws. ------------------ (i) The Lessee shall, and shall cause each Subsidiary to, conduct its operations and keep and maintain its property and develop the Leased Property in compliance with all Environmental Laws. (ii) Upon the written request of the Agent or any Lender, the Lessee shall submit and cause each of its Subsidiaries to submit, to the Agent with sufficient copies for each Lender, at the Lessee's sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to Section 5.1(c)(v). ----------------- (iii) The Lessee shall, and cause each Subsidiary to, maintain the Leased Property free from any Release. (u) Use of Proceeds. The Lessee shall use the proceeds of the --------------- Fundings to pay the costs of Construction and the acquisition and installation of the Equipment as permitted hereunder and under the other Operative Documents. SECTION 5.2 Additional Covenants. The Lessee and JFC, covenant and agree -------------------- that, so long as any of the Commitments remain in effect or any Obligation is owing to any Funding Party by the Lessee, the Lessee and JFC shall not, directly or indirectly, without the prior written permission of Agent as directed by the Required Lenders: (a) Limitation on Liens. The Lessee shall not, and shall not ------------------- suffer or permit any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien -45- upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"): --------------- (i) any Lien existing on property of the Lessee or any Subsidiary on the Closing Date and set forth in Schedule 5.2(a)(i) ------------------ securing Indebtedness outstanding on such date; (ii) any Lien created under any Operative Document; (iii) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 5.1(f), provided that no notice of lien has -------------- -------- ---- been filed or recorded under the Code; (iv) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (v) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (vi) Liens on the property of the Lessee or its Subsidiaries securing (x) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (y) Contingent Obligations in connection with performance bonds, surety bonds and appeal bonds, and (z) other non-delinquent obligations of a like nature, in each case, incurred in the ordinary course of business; provided that all such Liens in -------- ---- the aggregate could not reasonably be expected to cause a Material Adverse Effect; (vii) Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively -------- ---- stayed and the obligations secured by all such Liens in the aggregate at any time outstanding for the Lessee and its Subsidiaries could not reasonably be expected to cause a Material Adverse Effect; (viii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, -46- are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Lessee and its Subsidiaries; (ix) Liens on assets of corporations or other entities which become Subsidiaries after the date of this Agreement, provided, however, that such Liens existed at the time the -------- ------- respective corporations or other entities became Subsidiaries and were not created in anticipation thereof and the obligations secured by all such Liens in the aggregate at any time outstanding could not reasonably be expected to cause a Material Adverse Effect; (x) security interests on any property acquired or held by the Lessee or its Subsidiaries, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property; provided that (w) any such Lien attaches -------- ---- to such property concurrently with or within 120 days after the acquisition thereof, (x) such Lien attaches solely to the property so acquired in such transaction and other like assets in respect of which financing was provided by the same lender to the obligor of such Indebtedness, (y) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property, and (z) the principal amount of the Indebtedness secured by any and all such security interests in the aggregate could not reasonably be expected to cause a Material Adverse Effect; (xi) Liens securing obligations in respect of capital leases on assets subject to such leases, provided that such capital -------- ---- leases are otherwise permitted hereunder; (xii) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided -------- that (x) such deposit account is not a dedicated cash collateral ---- account and is not subject to restrictions against access by the Lessee or any Subsidiary in excess of those set forth by regulations promulgated by the FRB, and (y) such deposit account is not intended by the Lessee or any Subsidiary to provide collateral to the depository institution; (xiii) Liens securing other obligations of the Lessee and its Subsidiaries not to exceed in the aggregate at any one time outstanding ten percent (10%) of the total tangible assets of JFC and its Consolidated Subsidiaries, as would be shown in the consolidated financial statements of JFC and its Consolidated -47- Subsidiaries as at the end of the fiscal quarter next preceding the date on which such determination is made; (xiv) Liens encumbering real property acquired after the date of this Master Agreement to the extent acquired pursuant to an option, right of first refusal, right of first offer or other similar contract right existing on the date of this Master Agreement and described on Schedule 5.2(a)(xiv); -------------------- (xv) Liens on the Lessee's interest in its customers' securities, provided, however, that if any such Lien is subject to -------- ------- regulation in any respect (including, without limitation, as to security therefor) by the SEC, FRB, or any other Governmental Authority or Business Association, any such Lien shall be permitted pursuant to this Section 5.2(a), if and only if such Lien confirms -------------- in all respects to any applicable regulations, rules, orders or directions of any thereof; and (xvi) Leases of property entered into with third party lessors in the ordinary course of business by the Lessee or any Subsidiary, as lessee, which are treated as operating leases under GAAP. (b) Intentionally Omitted. --------------------- (c) Use of Proceeds. The Lessee shall not, and shall not suffer --------------- or permit any Subsidiary to, use any portion of the proceeds of any Funding, directly or indirectly, (i) in such a manner as to result in a violation of Regulation T, Regulation U or Regulation X of the FRB, or (ii) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. (d) Contingent Obligations. The Lessee shall not, and shall not ---------------------- suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any Contingent Obligations except: (i) endorsements for collection or deposit in the ordinary course of business; (ii) Permitted Swap Obligations; (iii) Contingent Obligations of the Lessee and its Subsidiaries existing as of the Closing Date and listed in Schedule -------- 5.2(d); ------ -48- (iv) Contingent Obligations with respect to Indebtedness of the Lessee's Wholly-Owned Subsidiaries permitted pursuant to Section 5.2(j); and -------------- (v) other Contingent Obligations not exceeding at any time ten percent (10%) of the Lessee's Partnership Capital. (e) ERISA. The Lessee shall not, and shall not suffer or permit ----- any of its ERISA Affiliates to, (i) terminate any Plan subject to Title IV of ERISA so as to result in any material (in the opinion of the Required Lenders) liability to the Lessee or any ERISA Affiliate, (ii) permit to exist any ERISA Event or any other event or condition, which presents the risk of a material (in the opinion of the Required Lenders) liability to any ERISA Affiliates, (iii) make a complete or partial withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in any material (in the opinion of the Required Lenders) liability to the Lessee or any ERISA Affiliate or, (iv) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder which could result in any material (in the opinion of the Required Lenders) liability to any ERISA Affiliate. (f) Change in Business. The Lessee shall not, and shall not ------------------ suffer or permit any Subsidiary to, engage in any material line of business substantially different from those lines of business carried on by the Lessee and its Subsidiaries on the date hereof. (g) Accounting Changes. The Lessee and JFC shall not, and shall ------------------ not suffer or permit any of their Subsidiaries to, (i) make any significant change in accounting treatment or reporting practices, except as required by GAAP, or (ii) change the fiscal year of the Lessee or JFC or of any of their Subsidiaries; provided, that the fiscal year of the Lessee, JFC and their Subsidiaries may be changed to a year ending December 31. (h) Amendments to Organizational Documents. The Lessee will not, -------------------------------------- nor will it permit any Subsidiary to, and JFC will not (i) make any amendment or modification to any terms or provisions of its partnership agreement, partnership certificate, articles of incorporation or bylaws which is materially adverse to the Agent or the Lenders without the prior written consent of the Required Lenders or (ii) issue any preferred stock. (i) Restricted Distributions. Neither the Lessee nor any ------------------------ Consolidated Subsidiary will, directly or indirectly, declare or make, or incur any liability to make, any Restricted Distribution, unless at the time of so declaring, making or incurring such liability to make such Restricted Distribution, and after giving effect thereto, no Potential Event of Default or Event of Default shall exist. -49- (j) Lessee Indebtedness. Neither the Lessee nor any Consolidated ------------------- Subsidiary shall create, incur or assume, or in any manner otherwise be or become liable, contingently or otherwise, with respect to, or maintain or suffer to exist, any Indebtedness, except: (i) Indebtedness evidenced by the notes issued pursuant to the Subordinated Debt Agreement, the 1992 Notes, the 1994 Notes and the 1996 Notes; (ii) Additional Subordinated Debt, if immediately after the occurrence thereof, and giving effect thereto, total Subordinated Debt would not exceed 50% of Total Capitalization; (iii) Additional Subordinated Debt in addition to that permitted by paragraph (ii) of this Section 5.1(j); provided, -------- however, that the additional Subordinated Debt permitted by this ------- paragraph (iii) shall not exceed $10,000,000 and shall arise under a revolving credit agreement or a similar credit facility, maintained in accordance with paragraph (c)(5)(i) of Appendix D to Rule 15c3-1; and, provided further, that any funds so drawn shall be used solely for the purpose of the Lessee's participation as an underwriter of securities as provided in said regulation; (iv) Any short-term Indebtedness resulting from Credit Balances and similar payables, Day Loans, Street Loans, Unsecured Bank Overdrafts and other short-term obligations and liabilities to customers, brokers, banks and others incurred in the ordinary course of the Lessee's business as such business is described in Item 1 of Part 1 of the Form 10-K; provided, however, that if any -------- ------- such Indebtedness is subject to regulation in any respect (including, without limitation, as to security therefor) by the SEC, FRB, or any other Governmental Authority or Business Association, any such Indebtedness shall be permitted pursuant to this Section 5.2(j), if and only if such Indebtedness conforms in -------------- all respects to any applicable regulations, rules, orders or directions of any thereof and provided further that Lessee shall at its option have the right to convert such Indebtedness to revolving lines of credit; (v) Indebtedness secured solely by property owned by the Lessee, provided that (A) any Indebtedness permitted by this -------- paragraph (v) shall be evidenced by (x) a Capital Lease or (y) a signed instrument expressly prohibiting recourse in respect of any such Indebtedness against the Lessee or any Subsidiary thereof, or any officer or director (past, present or future) of any thereof, and (B) the aggregate Indebtedness permitted by this paragraph (v) shall not exceed $50,000,000 or 20% of the Lessee's Net Capital, whichever is greater; and -50- (vi) Other Indebtedness incurred by Lessee or any Subsidiary from time to time, provided however, the aggregate Indebtedness permitted by this paragraph (vi) shall not exceed $50,000,000 or 20% of Lessee's Net Capital, whichever is greater. (k) Lease Obligations. Neither the Lessee nor any Consolidated ----------------- Subsidiary will become liable, renew or extend as lessee under any Long Term Lease if, after giving effect thereto, the aggregate rental and other amounts payable in any fiscal year of the Lessee in respect of all Long Term Leases under which the Lessee or any Consolidated Subsidiary is lessee or is otherwise directly or indirectly liable (whether or not contingently) would at any time exceed 20% of Partnership Revenues for, and as of the end of, the immediately preceding fiscal year. (l) Restricted Investments. At no time will the Lessee or any of ---------------------- its Consolidated Subsidiaries make, or become obligated to make, directly or indirectly, a Restricted Investment, if, after giving effect thereto the aggregate amount of Restricted Investments (including ones as to which an obligation to make has been incurred, directly or indirectly) of the Lessee and its Consolidated Subsidiaries would exceed 15% of Partnership Capital. (m) Merger, Consolidation or Transfer of Assets. The Lessee will ------------------------------------------- not consolidate with or merge into any other Person (including any of its Affiliates), nor will the Lessee permit or suffer any other Person (including any of its Affiliates) to consolidate with or merge into it, nor will the Lessee, directly or indirectly, in one or more transactions (except in the ordinary course of its business as described in Item 1 of Part 1 of the Form 10-K), sell, transfer, assign, lease (as lessor), abandon or otherwise dispose of all, or substantially all, of its assets or buy, lease or otherwise acquire all, or substantially all, of the equity interest or assets of any other Person; provided, however, that the Lessee may acquire -------- ------- all or substantially all of the equity interest or assets of any Person so long as the aggregate amount of the consideration paid or otherwise given (including the assumption of any liabilities) for the equity interests or assets of such Person acquired by the Lessee (directly or indirectly), whether in a lump sum or in more than one installments, shall not exceed $10,000,000. (n) Limitation on Liabilities. The Lessee will not cause or ------------------------- permit the aggregate amount of liabilities of the Lessee and its Consolidated Subsidiaries that could possibly arise at any time out of, or in relation to, the Lessee's or a Consolidated Subsidiary's ownership, directly or indirectly, of any interest or interests in limited partnerships or other entities which may be Affiliates or Subsidiaries of the Lessee (other than liabilities permitted by Section 5.1(m)) to exceed $15,000,000. Any such interest of the Lessee or a Consolidated Subsidiary acquired by it after the date of this Master Agreement shall be owned only indirectly by it, and only through a series of affiliated entities including at least one duly organized and validly existing corporation which is in good standing under the laws of its jurisdiction of -51- incorporation and is at all times adequately capitalized and as to which all corporate formalities are at all times observed. The Lessee shall not be a general partner in any general or limited partnership. (o) Required Capital Ratio. The Required Capital Ratio as of the ---------------------- last day of each calendar quarter shall not be less than 3:75 to 1.00. (p) Partnership Capital Requirement. The Lessee's End of Period ------------------------------- Partnership Capital shall not as of the last day of any calendar quarter be less than the greater of (i) $300 million or (ii) the Partnership Capital then required to be maintained under the Subordinated Debt Agreement, as such Partnership Capital requirement under the Subordinated Debt Agreement may be increased from time to time. (q) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio --------------------------- on the last day of each fiscal quarter of JFC for the period of four consecutive fiscal quarters ending on such date, in each case taken as a single accounting period, shall not be less than 1.25 to 1.0. (r) Restrictive Agreements. The Lessee shall not, nor shall it ---------------------- permit any of its Subsidiaries to, enter into any indenture, agreement, instrument or other arrangement which directly or indirectly prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the ability of the Lessee or any Subsidiary to (i) pay dividends or make other distributions (x) on its Capital Stock or (y) with respect to any other interest or participation in, or measured by, its profits, (ii) make loans or advances to the Lessee or any Subsidiary, (iii) repay loans or advances from the Lessee or any Subsidiary or (iv) transfer any of its properties or assets to the Lessee or any Subsidiary. (s) Disposition of Assets. The Lessee shall not, and shall not --------------------- suffer or permit any Subsidiary to, directly or indirectly, (x) issue any equity interests in the Lessee or any Subsidiary to any Person which is not the Lessee or a Subsidiary or (y) sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or a series of transactions) any property, including accounts and notes receivable, with or without recourse (each, an "Asset Disposition"), or enter into any agreement to do any of the ----------------- foregoing, except: (i) dispositions of inventory, or used, worn-out or surplus equipment, all in the ordinary course of business; (ii) the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; and -52- (iii) dispositions not otherwise permitted hereunder which are made for fair market value; provided, that (A) at the time of -------- any disposition, no Event of Default shall exist or shall result from such disposition, (B) at least 75% of the aggregate sales price from such dispositions shall be paid in cash, and (C) the aggregate value of all assets so sold by the Lessee and its Subsidiaries after the date hereof, together, shall not (1) represent more than 5% of the total assets of the Lessee and its Subsidiaries, as would be shown in the consolidated financial statements of the Lessee and its Subsidiaries as at the end of the fiscal quarter next preceding the date on which such determination is made, or (2) be responsible for more than 5% of the consolidated net income of the Lessee and its Subsidiaries for the 12-month period ending as of the end of the fiscal quarter next preceding the date of determination. (t) Year 2000. The Lessee will take, and will cause each of its --------- Subsidiaries to take, all such actions as are reasonably necessary to successfully implement a program to assure that the Year 2000 Problem will not have a Material Adverse Effect. At the request of the Agent, the Lessee will provide a description of such program, together with any updates or progress reports with respect thereto. SECTION 5.3 Further Assurances. ------------------ (a) The Lessee shall ensure that all written information, exhibits and reports furnished to the Agent or the Funding Parties do not and will not contain any untrue statement of a material fact and do not and will not omit to state any material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and will promptly disclose to the Agent and the Funding Parties and correct any defect or error that may be discovered therein or in any Operative Document or in the execution, acknowledgment or recordation thereof. (b) Promptly upon request by the Agent or the Funding Parties, the Lessee shall (and shall cause any of its Subsidiaries to) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, certificates, assurances and other instruments the Agent or such Lenders, as the case may be, may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement or any other Operative Document, and (ii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Agent and Lenders the rights granted or now or hereafter intended to be granted to the Lenders under any Loan Document or under any other document executed in connection therewith. (c) Upon the written request of the Lessor or the Agent, the Lessee, at its own cost and expense, will cause all financing statements (including precautionary financing -53- statements), fixture filings and other similar documents, to be recorded or filed at such places and times in such manner, as may be necessary to preserve, protect and perfect the interest of the Lessor, the Agent and the Lenders in the Leased Property as contemplated by the Operative Documents. SECTION 5.4 Additional Required Appraisals. If, as a result of any ------------------------------ change in Applicable Law after the date hereof, an appraisal of the Leased Property is required during the Lease Term under Applicable Law with respect to any Funding Party's interest therein, such Funding Party's Funded Amount with respect thereto or the Operative Documents, then the Lessee shall pay the reasonable cost of such appraisal, provided that, except as otherwise ------------- provided in the Operative Documents, appraisals shall not be requested more than once per year unless required by Applicable Law. SECTION 5.5 Lessor's Covenants. The Lessor covenants and agrees that, ------------------ unless the Agent, the Lessee and the Lenders shall have otherwise consented in writing: (a) the proceeds of the Loans received from the Lenders will be used by the Lessor solely to acquire the Leased Property and to pay the Construction Agent or the Lessee for certain closing, development and transaction costs associated therewith and for the costs of Construction. No portion of the proceeds of the Loans will be used by the Lessor (i) in connection with, whether directly or indirectly, any tender offer for, or other acquisition of, stock of any corporation with a view towards obtaining control of such other corporation or (ii) directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock; (b) it shall not engage in any business or activity, or invest in any Person, except for activities similar to its activities conducted on the date hereof, the Transaction and lease transactions similar to the Transaction; (c) it will maintain tangible net worth in an amount no less than the sum of (i) $100,000 plus (ii) 3% of its total assets (calculated ---- assuming no reduction in the value of the Leased Property from its original cost to the Lessor); (d) it will deliver to the Agent and the Lessee, as soon as available and in any event within 90 days after the end of each fiscal year, a balance sheet of the Lessor as of the end of such fiscal year and the related statements of income, partners' capital and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, together with copies of its tax returns, all certified by an officer of the Lessor's General Partner (and if the Lessor ever prepares audited financial statements, it shall deliver copies thereof to the Agent and the Lessee); -54- (e) it will permit the Agent, the Lessee and their respective representatives to examine, and make copies from, the Lessor's books and records, and to visit the offices and properties of the Lessor for the purpose of examining such materials, and to discuss the Lessor's performance hereunder with any of its, or its general partner's, officers and employees; (f) it shall not consent to the creation of any easement or other restriction against any Leased Property other than as permitted pursuant to Article V of the Lease; (g) it shall promptly discharge each Lessor Lien and shall indemnify the Lenders and the Lessee for any diminution in value of the Leased Property resulting from such Lessor Liens; (h) it shall not enter into any other transactions, leases, purchases or other agreements, other than immaterial transactions, purchases, leases and other agreements entered into by the Lessor in the ordinary course of its business, in which the other parties to said transactions, leases, purchases or other agreements will have any recourse against Lessor which is in addition to Lessor's ownership or other interest in the property subject to such transactions, purchases, leases or other agreements, other than liability for required fundings, breach of contract, misrepresentation, gross negligence, willful misconduct, fraud, failure to turn over funds and similar exceptions to limitations on recourse; (i) it shall not guaranty the liabilities of any other Person; and (j) it shall pay its debts as such debts become due unless such debts are the subject of a bona fide dispute. ARTICLE VI TRANSFERS BY LESSOR AND LENDERS SECTION 6.1 Lessor Transfers. The Lessor shall not assign, convey or ---------------- otherwise transfer all or any portion of its right, title or interest in, to or under the Leased Property or any of the Operative Documents without the prior written consent of the Lenders and the Lessee. Any proposed transferee of the Lessor shall make the representations set forth in Section 4.3 to the ----------- other parties hereto. SECTION 6.2 Lender Transfers. ---------------- (a) Any Lender may make, carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an Affiliate of such Lender. -55- (b) Each Lender may assign all or a portion of its interests, rights and obligations under this Master Agreement and the Loan Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) to any Eligible Assignee; provided, however, that (i) the Agent and, unless a Potential Event of Default or Event of Default shall have occurred, the Lessee must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed) unless such assignment is to another Lender or to an Affiliate of the assigning Lender, (ii) unless such Lender is assigning all of its Commitment, after giving effect to such assignment, the Commitment of both the assignor and the assignee is at least $1,000,000 and (iii) the parties to each such assignment shall execute and deliver to the Agent an Assignment and Acceptance, and, unless such assignment is to another Lender or to an Affiliate of such Lender, a processing and recordation fee of $3,000. Any such assignment of the Loans shall include both the A Loans and the B Loans, on a pro rata basis. The Lessee shall not be responsible for such processing and recordation fee or any costs or expenses incurred by any Lender or the Agent in connection with such assignment. From and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, the assignee thereunder shall be a party hereto and to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Master Agreement and the Loan Agreement. (c) Each Lender may, without the consent of the Lessee, sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Master Agreement and the Loan Agreement (including all or a portion of its Commitment in the Loans owing to it), provided, however, that (i) such Lender's obligations under this Master Agreement and the Loan Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating bank or other entity shall not be entitled to any greater benefit than its selling Lender under the cost protection provisions contained in Section 7.5 of this Master ----------- Agreement, and (iv) each Lessee, the Agent and the other Lenders shall continue to deal solely and directly with each Lender in connection with such Lender's rights and obligations under this Master Agreement and the other Operative Documents, and such Lender shall retain the sole right to enforce the obligations of Lessor relating to the Loans and to approve any amendment, modification or waiver of any provisions of this Master Agreement and the Loan Agreement (except that such Lender may permit the participant to approve any amendment, modification or waiver which would reduce the principal of or the interest rate on its Loan, extend the term of such Lender's Commitment, reduce the amount of any fees to which such participant is entitled or extend the final scheduled payment date of any Loan). Any Lender selling a participation hereunder shall provide prompt written notice to the Agent of the name of such participant. (d) Any Lender or participant may, in connection with the assignment or participation or proposed assignment or participation, pursuant to this Section, disclose to the ------- -56- assignee or participant or proposed assignee or participant any information relating to the Lessee or its Subsidiaries or Affiliates furnished to such Lender by or on behalf of the Lessee. With respect to any disclosure of confidential, non-public, proprietary information, such proposed assignee or participant shall agree to use the information only for the purpose of making any necessary credit judgments with respect to this facility and not to use the information in any manner prohibited by any law, including without limitation, the securities laws of the United States. The proposed participant or assignee shall agree not to disclose any of such information except as permitted by this Master Agreement. The proposed participant or assignee shall further agree to return all documents or other written material and copies thereof received from any Lender, the Agent or the Lessee relating to such confidential information unless otherwise properly disposed of by such entity. (e) Any Lender may at any time assign all or any portion of its rights under this Master Agreement and the Notes to a Federal Reserve Bank, provided that no such assignment shall release such Lender from any of its - -------- obligations hereunder. ARTICLE VII INDEMNIFICATION SECTION 7.1 General Indemnification. The Lessee agrees, whether or not ----------------------- any of the transactions contemplated hereby shall be consummated, to assume liability for, and to indemnify, protect, defend, save and hold harmless each Indemnitee, on an After-Tax Basis, from and against, any and all Claims that may be imposed on, incurred by or asserted, or threatened to be asserted, against such Indemnitee, whether or not such Indemnitee shall also be indemnified as to any such Claim by any other Person and whether or not such Claim arises or accrues prior to the Closing Date or after the Lease Termination Date, or results from such Indemnitee's negligence, in any way relating to or arising out of: (a) any of the Operative Documents or any of the transactions contemplated thereby, and any amendment, modification or waiver in respect thereof; or (b) the Land, the Building or any part thereof or interest therein, including any Ground Lease; (c) the purchase, design, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, ownership, management, possession, operation, rental, lease, sublease, repossession, maintenance, repair, alteration, modification, addition, substitution, storage, transfer of title, redelivery, use, financing, refinancing, disposition, operation, condition, sale (including, without limitation, any sale pursuant to the Lease), return or other disposition of all or any part of any interest in the Leased Property or the imposition of any Lien, other than a Lessor Lien (or incurring of any liability to refund or pay over any amount as a -57- result of any Lien, other than a Lessor Lien) thereon, including, without limitation: (i) Claims or penalties arising from any violation or alleged violation of law or in tort (strict liability or otherwise), (ii) latent or other defects, whether or not discoverable, (iii) any Claim based upon a violation or alleged violation of the terms of any restriction, easement, condition or covenant or other matter affecting title to the Leased Property or any part thereof, (iv) the making of any Alterations in violation of any standards imposed by any insurance policies required to be maintained by the Lessee pursuant to the Lease which are in effect at any time with respect to the Leased Property or any part thereof, (v) any Claim for patent, trademark or copyright infringement, (vi) Claims arising from any public improvements with respect to the Leased Property resulting in any charge or special assessments being levied against the Leased Property or any Claim for utility "tap-in" fees, and (vii) Claims for personal injury or real or personal property damage occurring, or allegedly occurring, on the Land, the Building or otherwise on or with respect to the Leased Property; (d) the breach or alleged breach by the Lessee of any representation or warranty made by it or deemed made by it in any Operative Document or any certificate required to be delivered by any Operative Document; (e) the retaining or employment of any broker, finder or financial advisor by the Lessee to act on its behalf in connection with this Master Agreement, or the incurring of any fees or commissions to which the Lessor, the Agent or any Lender might be subjected by virtue of their entering into the transactions contemplated by this Master Agreement (other than fees or commissions due to any broker, finder or financial advisor retained by the Lessor, the Agent or any Lender); (f) the existence of any Lien on or with respect to the Leased Property, the Construction, any Basic Rent or Supplemental Rent, title thereto, or any interest therein, including any Liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of the Leased Property or by reason of labor or materials furnished or claimed to have been furnished to the Construction Agent, the Lessee, or any of its contractors or agents or by reason of the financing of any personalty or equipment purchased or leased by the Lessee or Alterations constructed by the Lessee; (g) the transactions contemplated hereby or by any other Operative Document, in respect of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA and any prohibited transaction described in Section 4975(c) of the Code; or (h) any act or omission by the Lessee under the Ground Lease or any other Operative Document, and any breach of any requirement, condition, restriction or limitation in the Ground Lease or any other Operative Document; -58- provided, however, the Lessee shall not be required to indemnify any - -------- ------- Indemnitee under this Section 7.1 for any Claim to the extent that such ----------- Claim results from the willful misconduct, gross negligence or misrepresentation of such Indemnitee; and, provided, further, that with -------- ------- respect to the Construction Land Interest, the Lessee's indemnity obligations with respect to such Leased Property shall be governed by Section 3.3 of the Construction Agency Agreement during the Construction - ----------- Term therefor. It is expressly understood and agreed that the indemnity provided for herein shall survive the expiration or termination of, and shall be separate and independent from any other remedy under this Master Agreement, the Lease or any other Operative Document. SECTION 7.2 Environmental Indemnity. In addition to and without ----------------------- limitation of Section 7.1 or Section 3.3 of the Construction Agency ----------- ----------- Agreement, the Lessee agrees to indemnify, hold harmless and defend each Indemnitee on an After-Tax Basis from and against any and all claims (including without limitation third party claims for personal injury or real or personal property damage), losses (including but not limited to any loss of value of the Leased Property), damages, liabilities, fines, penalties, charges, suits, settlements, demands, administrative and judicial proceedings (including informal proceedings and investigations) and orders, judgments, remedial action, requirements, enforcement actions of any kind, and all reasonable costs and expenses actually incurred in connection therewith (including, but not limited to, reasonable attorneys' and/or paralegals' fees and expenses), including, but not limited to, all costs incurred in connection with any investigation or monitoring of site conditions or any clean-up, remedial, removal or restoration work by any federal, state or local government agency, arising directly or indirectly, in whole or in part, out of (i) the presence on or under the Land of any Hazardous Materials, or any releases or discharges of any Hazardous Materials on, under, from or onto the Land, (ii) any activity, including, without limitation, construction, carried on or undertaken on or off the Land, and whether by the Lessee or any predecessor in title or any employees, agents, contractors or subcontractors of the Lessee or any predecessor in title, or any other Person, in connection with the handling, treatment, removal, storage, decontamination, clean-up, transport or disposal of any Hazardous Materials that at any time are located or present on or under or that at any time migrate, flow, percolate, diffuse or in any way move onto or under the Land, (iii) loss of or damage to any property or the environment (including, without limitation, clean-up costs, response costs, remediation and removal costs, cost of corrective action, costs of financial assurance, fines and penalties and -59- natural resource damages), or death or injury to any Person, and all expenses associated with the protection of wildlife, aquatic species, vegetation, flora and fauna, and any mitigative action required by or under Environmental Laws, in each case to the extent related to the Leased Property, (iv) any claim concerning the Leased Property's lack of compliance with Environmental Laws, or any act or omission causing an environmental condition on or with respect to the Leased Property that requires remediation or would allow any governmental agency to record a lien or encumbrance on the land records, or (v) any residual contamination on or under the Land, or affecting any natural resources on the Land, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, storage, transport or disposal of any such Hazardous Materials on or from the Leased Property; in each case irrespective of whether any of such activities were or will be undertaken in accordance with applicable laws, regulations, codes and ordinances; in any case with respect to the matters described in the foregoing clauses ------- (i) through (v) that arise or occur - --- --- (w) prior to or during the Lease Term, (x) at any time during which the Lessee or any Affiliate thereof owns any interest in or otherwise occupies or possesses the Leased Property or any portion thereof, or (y) during any period after and during the continuance of any Event of Default; provided, however, the Lessee shall not be required to indemnify any - -------- ------- Indemnitee under this Section 7.2 for any Claim to the extent that such ----------- Claim results from the willful misconduct or gross negligence of such Indemnitee. It is expressly understood and agreed that the indemnity provided for herein shall survive the expiration or termination of, and shall be separate and independent from any other remedy under, this Master Agreement, the Lease or any other Operative Document. SECTION 7.3 Proceedings in Respect of Claims. With respect to any amount -------------------------------- that the Lessee is requested by an Indemnitee to pay by reason of Section ------- 7.1 or 7.2, such Indemnitee shall, if so requested by the Lessee and prior - --- --- to any payment, submit such additional information -60- to the Lessee as the Lessee may reasonably request and which is in the possession of, or under the control of, such Indemnitee to substantiate properly the requested payment. In case any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee promptly shall notify the Lessee of the commencement thereof (provided that the failure of such Indemnitee to promptly notify the Lessee shall not affect any Lessee's obligation to indemnify hereunder except to the extent that the Lessee's ability to contest is materially prejudiced by such failure), and the Lessee shall be entitled, at its expense, to participate in, and, to the extent that the Lessee desires to, assume and control the defense thereof with counsel reasonably satisfactory to such Indemnitee; provided, however, that -------- ------- such Indemnitee may pursue a motion to dismiss such Indemnitee from such action, suit or proceeding with counsel of such Indemnitee's choice at the Lessee's expense; and provided further that the Lessee may assume and -------- ------- control the defense of such proceeding only if the Lessee shall have acknowledged in writing its obligations to fully indemnify such Indemnitee in respect of such action, suit or proceeding, shall pay all reasonable costs and expenses related to such action, suit or proceeding as and when incurred and the Lessee shall keep such Indemnitee fully apprised of the status of such action suit or proceeding and shall provide such Indemnitee with all information with respect to such action suit or proceeding as such Indemnitee shall reasonably request; and, provided further, that the Lessee shall not be entitled to assume and control the defense of any such action, suit or proceeding if and to the extent that, (A) in the reasonable opinion of such Indemnitee, (x) such action, suit or proceeding involves any possibility of imposition of criminal liability or any material risk of material civil liability on such Indemnitee or (y) such action, suit or proceeding will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Encumbrance) on the Leased Property or any part thereof unless the Lessee shall have posted a bond or other security satisfactory to the relevant Indemnitees in respect to such risk or (z) the control of such action, suit or proceeding would involve an actual or potential conflict of interest, (B) such proceeding involves Claims not fully indemnified by the Lessee which the Lessee and the Indemnitee have been unable to sever from the indemnified claim(s), or (C) an Event of Default has occurred and is continuing. The Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by the Lessee in accordance with the foregoing. If the Lessee fails to fulfill the conditions to the Lessee's assuming the defense of any claim after receiving notice thereof on or prior to the date that is fifteen (15) days prior to the date that an answer or response is required, the Indemnitee may undertake such defense, at the Lessee's expense. Lessee shall not enter into any settlement or other compromise with respect to any Claim in excess of $25,000 which is entitled to be indemnified under Section 7.1 or 7.2 without the prior written consent of ----------- --- the related Indemnitee, which consent shall not be unreasonably withheld. Unless an Event of Default shall have occurred and be continuing, no Indemnitee shall enter into any settlement or other compromise with respect to any claim which is entitled to be indemnified under Section 7.1 or 7.2 ----------- --- without the prior written consent of the -61- Lessee, which consent shall not be unreasonably withheld, unless such Indemnitee waives its right to be indemnified under Section 7.1 or 7.2 with ----------- --- respect to such Claim. Upon payment in full of any Claim by the Lessee pursuant to Section 7.1 ----------- or 7.2 to or on behalf of an Indemnitee, the Lessee, without any further --- action, shall be subrogated to any and all claims that such Indemnitee may have relating thereto (other than claims in respect of insurance policies maintained by such Indemnitee at its own expense), and such Indemnitee shall execute such instruments of assignment and conveyance, evidence of claims and payment and such other documents, instruments and agreements as may be reasonably necessary to preserve any such claims and otherwise cooperate with the Lessee and give such further assurances as are reasonably necessary or advisable to enable the Lessee vigorously to pursue such claims. Any amount payable to an Indemnitee pursuant to Section 7.1 or 7.2 shall ----------- --- be paid to such Indemnitee promptly upon, but in no event later than thirty (30) days after, receipt of a written demand therefor from such Indemnitee, accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable. If for any reason the indemnification provided for in Section 7.1 or 7.2 ----------- --- is unavailable to an Indemnitee or is insufficient to hold an Indemnitee harmless, then the Lessee agrees to contribute to the amount paid or payable by such Indemnitee as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Indemnitee on the one hand and by the Lessee on the other hand but also the relative fault of such Indemnitee as well as any other relevant equitable considerations. It is expressly understood and agreed that the right to contribution provided for herein shall survive the expiration or termination of and shall be separate and independent from any other remedy under this Master Agreement, the Lease or any other Operative Document. SECTION 7.4 General Tax Indemnity. --------------------- (a) Tax Indemnity. Except as otherwise provided in this Section ------------- ------- 7.4, the Lessee shall pay on an After-Tax Basis, and on written demand shall - --- indemnify and hold each Tax Indemnitee harmless from and against, any and all fees (including, without limitation, documentation, recording, license and registration fees), taxes (including, without limitation, income, franchise, gross receipts, sales, rental, use, turnover, value-added, property, excise and stamp taxes), levies, imposts, duties, charges, assessments or withholdings of any nature whatsoever, together with any penalties, fines or interest thereon or additions thereto (any of the foregoing being referred to herein as "Taxes" and individually as a "Tax" ----- --- (for the purposes of this Section 7.4, the definition of "Taxes" includes ----------- ----- amounts imposed on, incurred by, or asserted against each Tax Indemnitee as the result of any prohibited transaction, within the meaning of Section 406 or 407 of ERISA or Section 4975(c) of the Code, arising out of the transactions contemplated hereby or by any other Operative Document)) imposed on or with respect to any -62- Tax Indemnitee, the Lessee, the Leased Property or any portion thereof, or any sublessee or user thereof, by the United States or by any state or local government or other taxing authority in the United States or any state, local or foreign authority, in connection with or in any way relating to (i) the acquisition, financing, mortgaging, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, purchase, ownership, possession, rental, lease, sublease, maintenance, repair, storage, transfer of title, redelivery, use, operation, condition, sale, return or other application or disposition of all or any part of the Leased Property or the imposition of any Lien (or incurrence of any liability to refund or pay over any amount as a result of any Lien) thereon, (ii) the Notes or other indebtedness with respect to the Leased Property or any part thereof or interest therein, (iii) Basic Rent or Supplemental Rent or the receipts or earnings arising from or received with respect to the Leased Property or any part thereof, or any interest therein or any applications or dispositions thereof, (iv) any other amount paid or payable pursuant to the Notes or any other Operative Documents, (v) the Leased Property or any part thereof or any interest therein (including, without limitation, all assessments payable in respect thereof, including, without limitation, all assessments noted on the related Title Policy), (vi) all or any of the Operative Documents, any other documents contemplated thereby, any amendments and supplements thereto, and (vii) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions from General Tax Indemnity. Section 7.4(a) shall ------------------------------------- not apply to: (i) Taxes on, based on, or measured by or with respect to net income of the Lessor, the Agent and the Lenders (including minimum Taxes, capital gains Taxes, Taxes on or measured by items of tax preference or alternative minimum Taxes) other than (A) any such Taxes that are, or are in the nature of, sales, use, license, rental or property Taxes, and (B) withholding Taxes imposed by the United States or any state in which the Leased Property is located (i) on payments with respect to the Notes, to the extent imposed by reason of a change in Applicable Law occurring after the date on which the holder of such Note became the holder of such Note or (ii) on Rent, to the extent the net payment of Rent after deduction of such withholding Taxes would be less than amounts currently payable with respect to the Funded Amounts provided that this clause (i) shall not prevent a payment from being made on an After-Tax Basis if such payment is otherwise required to be so made; (ii) Taxes on, based on, or in the nature of or measured by Taxes on doing business, business privilege, franchise, capital, capital stock, net worth, or mercantile license or similar taxes other than any Taxes that are or are in the nature of sales, use, rental, license or property Taxes relating to the Leased -63- Property provided that this clause (ii) shall not prevent a payment from being made on an After-Tax Basis if such payment is otherwise required to be so made; (iii) Taxes that are based on, or measured by, the fees or other compensation received by a Person acting as Agent (in its individual capacities) or any Affiliate of any thereof for acting as trustee under the Loan Agreement; (iv) Taxes that result from any act, event or omission, or are attributable to any period of time, that occurs after the earlier of (A) the expiration of the Lease Term with respect to the Leased Property and, if the Leased Property is required to be returned to the Lessor in accordance with the Lease, such return and (B) the discharge in full of the Lessee's obligations to pay the Lease Balance, or any amount determined by reference thereto, with respect to the Leased Property and all other amounts due under the Lease, unless such Taxes relate to acts, events or matters occurring prior to the earlier of such times or are imposed on or with respect to any payments due under the Operative Documents after such expiration or discharge; (v) Taxes imposed on a Tax Indemnitee that result from any voluntary sale, assignment, transfer or other disposition or bankruptcy by such Tax Indemnitee or any related Tax Indemnitee of any interest in any Leased Property or any part thereof, or any interest therein or any interest or obligation arising under the Operative Documents, or from any sale, assignment, transfer or other disposition of any interest in such Tax Indemnitee or any related Tax Indemnitee, it being understood that each of the following shall not be considered a voluntary sale: (A) any assignment, sublease, substitution, replacement or removal of any of the Leased Property by the Lessee, (B) any sale or transfer resulting from the exercise by any Lessee of any termination option, any purchase option or sale option, (C) any sale or transfer while an Event of Default shall have occurred and be continuing under the Lease, (D) a Casualty or Condemnation affecting the Leased Property or any part thereof, and (E) any sale or transfer resulting from the Lessor's exercise of remedies under the Lease; (vi) any Tax which is being contested in accordance with the provisions of Section 7.4(c), during the pendency of such -------------- contest; (vii) any Tax that is imposed on a Tax Indemnitee as a result of such Tax Indemnitee's gross negligence or willful misconduct (other than gross negligence or willful misconduct imputed to such Tax Indemnitee solely by reason of its interest in the Leased Property); -64- (viii) any Tax that results from a Tax Indemnitee engaging, with respect to any Leased Property, in transactions other than those permitted by the Operative Documents; (ix) to the extent any interest, penalties or additions to tax result in whole or in part from the failure of a Tax Indemnitee to file a return or pay a Tax that it is required to file or pay in a proper and timely manner, unless such failure (A) results from the transactions contemplated by the Operative Documents in circumstances where Lessee did not give timely notice to such Tax Indemnitee of such filing or payment requirement that would have permitted a proper and timely filing of such return or payment of such Tax, as the case may be, or (B) results from the failure of the Lessee to supply information necessary for the proper and timely filing of such return or payment of such Tax, as the case may be, that was not in the possession of such Tax Indemnitee; (x) Taxes resulting from the failure of a Tax Indemnitee to comply with subsection 7.5(e) other than as a result of an ----------------- increased cost described in subsection 7.5(b); and ----------------- (xi) as to Lessor, any Tax that results from the breach by the Lessor of its representation and warranty made in Section ------- 4.3(g) or as to any Lender the breach of such Lender of its ------ representation and warranty made in Section 4.4(b). -------------- Notwithstanding the foregoing, the exclusions provided for in clauses (i), (ii) and (v) of this Subsection 7.4(b) shall not apply (but the other exclusions shall apply) to any Taxes or any increase in Taxes imposed on any Tax Indemnitee net of any decrease in Taxes realized by such Tax Indemnitee to the extent that any such Tax increase or decrease would not have occurred if on the date of each Advance the Lessor and the Lenders had advanced funds directly to the Lessee in the form of a loan by such Lessor or Lender secured by the Leased Property in an amount equal to the amounts funded by the Lessor and the Lenders on each such date and a principal balance at the maturity of such loan in an amount equal to the Funded Amounts at the end of the Lease Term. (c) Contests. If any claim shall be made against any Tax -------- Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Taxes as to which the Lessee may have an indemnity obligation pursuant to Section ------- 7.4, or if any Tax Indemnitee shall determine that any Taxes as to which the - --- Lessee may have an indemnity obligation pursuant to Section 7.4 may be ----------- payable, such Tax Indemnitee shall promptly notify the Lessee. The Lessee shall be entitled, at its expense, to participate in, and, to the extent that the Lessee desires to, assume and control the defense thereof; provided, however, that the Lessee shall have acknowledged in writing its - -------- ------- obligation to fully indemnify such Tax -65- Indemnitee in respect of such action, suit or proceeding if the contest is unsuccessful, and, provided further, that the Lessee shall not be entitled -------- ------- to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then control the defense of such contest, at the sole cost and expense of the Lessee, on behalf of the Lessee with representatives reasonably satisfactory to the Lessee) if and to the extent that, (A) in the reasonable opinion of such Tax Indemnitee, such action, suit or proceeding (x) involves any meaningful risk of imposition of criminal liability or any material risk of material civil liability on such Tax Indemnitee or (y) will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Encumbrance) on the Leased Property or any part thereof unless the Lessee shall have posted a bond or other security satisfactory to the relevant Tax Indemnitees in respect to such risk, (B) such proceeding involves Claims not fully indemnified by the Lessee which the Lessee and the Tax Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event of Default has occurred and is continuing, (D) such action, suit or proceeding involves matters which extend beyond or are unrelated to the Transaction and if determined adversely could be materially detrimental to the interests of such Tax Indemnitee notwithstanding indemnification by the Lessee or (E) such action, suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee. With respect to any contests controlled by a Tax Indemnitee, (i) if such contest relates to the federal or any state income tax liability of such Tax Indemnitee, such Tax Indemnitee shall be required to conduct such contest only if the Lessee shall have provided to such Tax Indemnitee an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee stating that a reasonable basis exists to contest such claim or (ii) in the case of an appeal of an adverse determination of any contest relating to any Taxes, an opinion of such counsel to the effect that such appeal is more likely than not to be successful; provided, however, such Tax Indemnitee shall in no -------- event be required to appeal an adverse determination to the United States Supreme Court. The Tax Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by the Lessee in accordance with the foregoing. Each Tax Indemnitee shall, at the Lessee's expense, supply the Lessee with such information and documents in such Tax Indemnitee's possession reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 7.4. Unless an Event of Default shall have ----------- occurred and be continuing, no Tax Indemnitee shall enter into any settlement or other compromise with respect to any Claim which is entitled to be indemnified under this Section 7.4 without the prior written consent ----------- of the Lessee, which consent shall not be unreasonably withheld, unless such Tax Indemnitee waives its right to be indemnified under this Section 7.4 ----------- with respect to such Claim. Notwithstanding anything contained herein to the contrary, (I) a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest except on its own behalf -66- if it is subject thereto) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 7.4 with respect to such claim (and any related claim with respect - ----------- to other taxable years the contest of which is precluded as a result of such waiver) and (II) no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely, unless there has been a change in law which, in the opinion of Tax Indemnitee's counsel, creates substantial authority for the success of such contest. Each Tax Indemnitee and the Lessee shall consult in good faith with each other regarding the conduct of such contest controlled by either. (d) Reimbursement for Tax Savings. If (i) a Tax Indemnitee shall ----------------------------- obtain a credit or refund of any Taxes paid by the Lessee pursuant to this Section 7.4 or (ii) by reason of the incurrence or imposition of any Tax for - ----------- which a Tax Indemnitee is indemnified hereunder or any payment made to or for the account of such Tax Indemnitee by the Lessee pursuant to this Section 7.4, such Tax Indemnitee at any time realizes a reduction in any - ----------- Taxes for which the Lessee is not required to indemnify such Tax Indemnitee pursuant to this Section 7.4, which reduction in Taxes was not taken into ----------- account in computing such payment by the Lessee to or for the account of such Tax Indemnitee, then such Tax Indemnitee shall promptly pay to the Lessee (x) the amount of such credit or refund, together with the amount of any interest received by such Tax Indemnitee on account of such credit or refund or (y) an amount equal to such reduction in Taxes, as the case may be, provided that no such payment shall be made so long as an Event of -------- Default shall have occurred and be continuing (but shall be paid promptly after all Events of Default have been cured) and, provided, further, that -------- ------- the amount payable to the Lessee by any Tax Indemnitee pursuant to this Section 7.4(d) shall not at any time exceed the aggregate amount of all - -------------- indemnity payments made by the Lessee under this Section 7.4 to such Tax ----------- Indemnitee with respect to the Taxes which gave rise to the credit or refund or with respect to the Tax which gave rise to the reduction in Taxes less ---- the amount of all prior payments made to the Lessee by such Tax Indemnitee under this Section 7.4(d). Each Tax Indemnitee agrees to act in good faith -------------- to claim such refunds and other available Tax benefits, and take such other actions as may be reasonable to minimize any payment due from the Lessee pursuant to this Section 7.4. The disallowance or reduction of any credit, ----------- refund or other tax savings with respect to which a Tax Indemnitee has made a payment to the Lessee under this Section 7.4(d) shall be treated as a Tax -------------- for which the Lessee is obligated to indemnify such Tax Indemnitee hereunder without regard to Section 7.4(b) hereof. -------------- (e) Payments. Any Tax indemnifiable under this Section 7.4 shall -------- ----------- be paid by the Lessee directly when due to the applicable taxing authority if direct payment is practicable and permitted. If direct payment to the applicable taxing authority is not permitted or is otherwise not made, any amount payable to a Tax Indemnitee pursuant to this Section 7.4 shall be ----------- paid within thirty (30) days after receipt of a written demand therefor from such Tax Indemnitee accompanied by a written statement describing in reasonable detail the amount so -67- payable, but not before the date that the relevant Taxes are due. Any payments made pursuant to Section 7.4 shall be made to the Tax Indemnitee ----------- entitled thereto or the Lessee, as the case may be, in immediately available funds at such bank or to such account as specified by the payee in written directions to the payor, or, if no such direction shall have been given, by check of the payor payable to the order of the payee by certified mail, postage prepaid at its address as set forth in this Master Agreement. Upon the request of any Tax Indemnitee with respect to a Tax that the Lessee is required to pay, the Lessee shall furnish to such Tax Indemnitee the original or a certified copy of a receipt for the Lessee's payment of such Tax or such other evidence of payment as is reasonably acceptable to such Tax Indemnitee. (f) Reports. If the Lessee knows of any report, return or ------- statement required to be filed with respect to any Taxes that are subject to indemnification under this Section 7.4, the Lessee shall, if the Lessee is ----------- permitted by Applicable Law, timely file such report, return or statement (and, to the extent permitted by law, show ownership of the applicable Leased Property in the Lessee); provided, however, that if the Lessee is not -------- permitted by Applicable Law or does not have access to the information required to file any such report, return or statement, the Lessee will promptly so notify the appropriate Tax Indemnitee, in which case the Tax Indemnitee will file such report. In any case in which the Tax Indemnitee will file any such report, return or statement, the Lessee shall, upon written request of such Tax Indemnitee, prepare such report, return or statement for filing by such Tax Indemnitee or, if such Tax Indemnitee so requests, provide such Tax Indemnitee with such information as is reasonably available to the Lessee. (g) Verification. At the Lessee's request, the amount of any ------------ indemnity payment by the Lessee or any payment by a Tax Indemnitee to the Lessee pursuant to this Section 7.4 shall be verified and certified by an ----------- independent public accounting firm selected by the Lessee and reasonably acceptable to the Tax Indemnitee. Unless such verification shall disclose an error in the Lessee's favor of five percent (5%) or more of the related indemnity payment, the costs of such verification shall be borne by the Lessee. In no event shall the Lessee have the right to review the Tax Indemnitee's tax returns or receive any other confidential information from the Tax Indemnitee in connection with such verification. The Tax Indemnitee agrees to cooperate with the independent public accounting firm performing the verification and to supply such firm with all information reasonably necessary to permit it to accomplish such verification, provided that the information provided to such firm by such Tax Indemnitee shall be for its confidential use. The parties agree that the sole responsibility of the independent public accounting firm shall be to verify the amount of a payment pursuant to this Master Agreement and that matters of interpretation of this Master Agreement are not within the scope of the independent accounting firm's responsibilities. SECTION 7.5 Increased Costs, etc. --------------------- -68- (a) Illegality. Notwithstanding any other provision herein, if ---------- any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Funding Party to make or maintain LIBOR Advances as contemplated by this Master Agreement, (i) the commitment of such Funding Party hereunder to continue LIBOR Advances as such and convert Funded Amounts to LIBOR Advances shall forthwith be canceled and (ii) such Funding Party's Funded Amounts then outstanding as LIBOR Advance, if any, shall be converted automatically to Base Rate Advances on the respective last days of the then current Rent Periods with respect to such Funded Amounts or within such earlier period as required by law. If any such conversion of a LIBOR Advance occurs on a day which is not the last day of the then current Rent Period with respect thereto, the Lessee shall pay to such Funding Party such amounts, if any, as may be required pursuant to Section 7.5(f). - -------------- (b) Requirements of Law. In the event that Eurocurrency Reserve ------------------- Requirements or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Funding Party with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Funding Party to any tax of any kind whatsoever with respect to this Master Agreement, any Note or any LIBOR Advance made by it, or change the basis of taxation of payments to such Funding Party in respect thereof (except for taxes covered by Section 7.5(d) and changes in franchise taxes or the -------------- rate of tax on the overall net income of such Funding Party provided that such exceptions shall not apply to changes that would prevent any Funding Party from being entitled to a complete exemption from withholding taxes as described in Subsection 7.5(e)); ----------------- (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Funding Party which is not otherwise included in the determination of the LIBOR Rate; or (iii) shall impose on such Funding Party any other condition; and the result of any of the foregoing is to increase the cost to such Funding Party, by an amount which such Funding Party deems to be material, of making, converting into, continuing or maintaining LIBOR Advances or to reduce any amount receivable hereunder in respect thereof then, in any such case, the Lessee shall promptly pay such Funding Party, upon its demand, any additional amounts necessary to compensate such Funding Party on an After-Tax Basis for such increased cost or reduced amount receivable. If any Funding Party becomes entitled to claim any -69- additional amounts pursuant to this subsection, it shall promptly notify the Lessee, through the Agent, of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subsection submitted by such Funding Party, through the Agent, to the Lessee in good faith and setting forth in reasonable detail the calculation of such amounts shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Master Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (c) Capital Adequacy. In the event that any Funding Party or ---------------- corporation controlling such Funding Party shall have determined that any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Funding Party or such corporation with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Funding Party's capital as a consequence of its obligations hereunder to a level below that which such Funding Party could have achieved but for such change or compliance (taking into consideration such Funding Party's policies with respect to capital adequacy) by an amount deemed by such Funding Party to be material, then from time to time, after submission by such Funding Party in good faith to the Lessee (with a copy to the Agent) of a written request therefor setting forth in reasonable detail the calculation of such amount (which request shall be conclusive in the absence of manifest error), the Lessee shall pay to such Funding Party such additional amount or amounts as will compensate such Funding Party for such reduction. This covenant shall survive the termination of this Master Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (d) Taxes. Subject to Section 7.5(e), all payments made by the ----- -------------- Lessee under the Lease and the other Operative Documents shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding, in the case of the Agent and each Funding Party, net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Agent or such Funding Party, as the case may be, as a result of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Agent or such Funding Party (other than a connection arising solely from the Agent or such Funding Party having executed, delivered or performed its obligations or received a payment under, or enforced, this Master Agreement or any other Operative Document), provided that this exclusion shall not apply to the extent set forth in Section 7.5(b) or to Taxes described in clause (B) of Subsection 7.4(b)(i) (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Withholding Taxes"). ----------------- If any Withholding Taxes are required to be withheld from any amounts -70- payable to the Agent or any Funding Party hereunder or under any other Operative Document, the amounts so payable to the Agent or such Funding Party (so long as such Funding Party is in compliance with Section 7.5(e), -------------- as appropriate) shall be increased to the extent necessary to yield to the Agent or such Funding Party (after payment of all Withholding Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in the Operative Documents. Whenever any Withholding Taxes are payable by the Lessee, as promptly as possible thereafter the Lessee shall send to the Agent for its own account or for the account of such Funding Party, as the case may be, a certified copy of an original official receipt received by such Lessee showing payment thereof. If the Lessee fails to pay any Withholding Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, each Lessee, jointly and severally, shall indemnify the Agent and the Funding Parties for any incremental taxes, interest or penalties that may become payable by the Agent or any Funding Party as a result of any such failure. The agreements in this subsection shall survive the termination of this Master Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (e) Tax Forms. If any Funding Party or assignee of a Funding --------- Party is organized under the laws of any jurisdiction other than the United States or any State thereof, then such Funding Party or assignee, as applicable, shall (as a condition precedent to acquiring any interest in, to or under the Leased Property or the Operative Documents from a Funding Party and a continuing obligation of each such Funding Party) (i) furnish to Lessee two valid, duly completed, original copies of Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, properly and duly executed, certifying in each case that such party is entitled to receive payments pursuant to the Operative Documents without deduction or withholding of United States federal income tax and is a foreign person thereby entitled to an exemption from United States backup withholding taxes, and any such additional form (or any successor form or forms required) upon the expiration or obsolescence of any previously delivered form and (ii) comply from time to time with all applicable United States laws and regulations with regard to such withholding tax exemptions. By its acceptance of any interest in, to or under the Leased Property or the Operative Documents from a Funding Party, each assignee shall be deemed bound by the provisions set forth in this Subsection 7.5(e). Subject to Subsection 7.5(b), no Funding Party or assignee that fails to comply with the requirements of this Subsection 7.5(e) shall be entitled to the benefit of any tax indemnity under Section 7.4. (f) Indemnity. The Lessee agrees to indemnify each Funding Party --------- and to hold each Funding Party harmless on an After-Tax Basis from any loss or expense which such Funding Party may sustain or incur as a consequence of (i) default by the Lessee in payment when due of the principal amount of or interest on any LIBOR Advance, (ii) default by the Lessee in making a borrowing or conversion into or continuation of LIBOR Advances after the Lessee or the Construction Agent has given (or is deemed to have given) a notice in accordance -71- with this Master Agreement, (iii) default by the Lessee in making a borrowing of, conversion into or continuation of LIBOR Advances after or the Construction Agent or the Lessee has given a notice requesting the same in accordance with the provisions of this Master Agreement, (iv) default by the Lessee in making any prepayment of LIBOR Advances after the Lessee has given a notice thereof in accordance with the provisions of the Operative Documents or (v) the making of a prepayment, payment or conversion, of LIBOR Advances on a day which is not the last day of a Rent Period with respect thereto, including, without limitation, in each case, any such loss (other than non-receipt of the Applicable Margin or, without duplication, anticipated profits) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate the deposits from which such funds were obtained (it being understood that any such calculation will be made on notional amounts as the Funding Parties are not required to show that they matched deposits specifically). A certificate as to any additional amounts payable pursuant to this subsection submitted by such Funding Party, through the Agent, to the Lessee in good faith shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (g) Action of Affected Funding Parties. Each Funding Party agrees ---------------------------------- to use reasonable efforts (including reasonable efforts to change the booking office for its Loans) to avoid or minimize any illegality pursuant to Section 7.5(a) or any amounts which might otherwise be payable pursuant -------------- to Section 7.5(c) or (d); provided, however, that such efforts shall not -------------- --- -------- cause the imposition on such Funding Party of any additional costs or legal or regulatory burdens deemed by such Funding Party to be material and shall not be deemed by such Funding Party to be otherwise contrary to its policies. In the event that such reasonable efforts are insufficient to avoid all such illegality or all amounts that might be payable pursuant to Section 7.5(c) or (d), then such Funding Party (the "Affected Funding - -------------- --- ---------------- Party") shall use its reasonable efforts to transfer to any other Funding - ----- Party (which itself is not then an Affected Funding Party) its Loans and Commitment, subject to the provisions of Section 6.2; provided, however, ----------- -------- that such transfer shall not be deemed by such Affected Funding Party, in its sole discretion, to be disadvantageous to it or contrary to its policies. In the event that the Affected Funding Party is unable, or otherwise is unwilling, so to transfer its Loans and Commitment, the Lessee may designate an alternate lender (reasonably acceptable to the Agent) to purchase the Affected Funding Party's Loans and Commitment, at par and including accrued interest, and, subject to the provisions of Section 6.2, ----------- the Affected Funding Party shall transfer its Commitment to such alternate lender and such alternate lender shall become a Funding Party hereunder. Any fee payable to the Agent pursuant to Section 6.2 in connection with such ----------- transfer shall be for the account of the Lessee. SECTION 7.6 End of Term Indemnity. In the event that at the end of the --------------------- Lease Term for the Leased Property: (i) the Lessee elects the option set forth in Section 14.6 of the Lease, and ------------ -72- (ii) after the Lessor receives the sales proceeds from the Leased Property under Section 14.6 or 14.7 of the Lease, together with the Lessee's payment ------------ ---- of the Recourse Deficiency Amount, the Lessor shall not have received the entire Lease Balance, then, within 90 days after the end of the Lease Term, the Lessor or the Agent may obtain, at the Lessee's sole cost and expense, a report from the Appraiser (or, if the Appraiser is not available, another appraiser reasonably satisfactory to the Lessor or the Agent, as the case may be, and approved by the Lessee, such approval not to be unreasonably withheld) in form and substance satisfactory to the Lessor and the Agent (the "Report") to establish the reason for any decline in value of the ------ Leased Property from the Lease Balance. The Lessee shall promptly reimburse the Lessor for the amount equal to such decline in value to the extent that the Report indicates that such decline was due to: (w) extraordinary use, failure to maintain, to repair, to restore, to rebuild or to replace, failure to comply with all Applicable Laws, failure to use, workmanship, method of installation or removal or maintenance, repair, rebuilding or replacement, or any other cause or condition within the power of the Lessee to control or effect resulting in the Building failing to be of the type and quality contemplated by the Appraisal (excepting in each case ordinary wear and tear), or (x) any Alteration made to, or any rebuilding of, the Leased Property or any part thereof by the Lessee, or (y) any restoration or rebuilding carried out by the Lessee or any condemnation of any portion of the Leased Property pursuant to Article X of the Lease, or (z) any use of the Leased Property or any part thereof by the Lessee other than as permitted by the Lease, or any act or omission constituting a breach of any requirement, condition, restriction or limitation set forth in the Deed or the Purchase Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.1 Survival of Agreements. The representations, warranties, ---------------------- covenants, indemnities and agreements of the parties provided for in the Operative Documents, and the parties' obligations under any and all thereof, shall survive the execution and delivery of this Master Agreement and any of the Operative Documents, the transfer of the leasehold interest in the Land to the Lessor as provided herein (and shall not be merged into the Ground Lease), any disposition of any interest of the Lessor in the Leased Property, the purchase and sale of the Notes, payment therefor and any disposition thereof and shall be and continue in effect notwithstanding any investigation made by any party hereto or to any of the other Operative Documents and the fact that any such party may waive compliance with any of the other terms, -73- provisions or conditions of any of the Operative Documents. Except as expressly set forth in the Operative Documents, including, without limitation, as set forth in Article VII hereof and in Section 17.17 of the ----------- Lease, the representations, warranties, covenants and agreements of the parties provided for in the Operative Documents shall terminate upon the termination or expiration of the Operative Documents. SECTION 8.2 Notices. Unless otherwise specified herein, all notices, ------- requests, demands or other communications to or upon the respective parties hereto shall be addressed to such parties at the addresses therefor as set forth in Schedule 8.2, or such other address as any such party shall specify ------------ to the other parties hereto, and shall be deemed to have been given (i) the Business Day after being sent, if sent by overnight courier service; (ii) the Business Day received, if sent by messenger; (iii) the day sent, if sent by facsimile and confirmed electronically or otherwise during business hours of a Business Day (or on the next Business Day if otherwise sent by facsimile and confirmed electronically or otherwise); or (iv) three Business Days after being sent, if sent by registered or certified mail, postage prepaid. SECTION 8.3 Counterparts. This Master Agreement may be executed by the ------------ parties hereto in separate counterparts (including by facsimile), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 8.4 Amendments. No Operative Document nor any of the terms ---------- thereof may be terminated, amended, supplemented, waived or modified with respect to any Lessee or any Funding Party, except (a) in the case of a termination, amendment, supplement, waiver or modification to be binding on the Lessee, with the written agreement or consent of the Lessee, and (b) in the case of a termination, amendment, supplement, waiver or modification to be binding on the Funding Parties, with the written agreement or consent of the Required Funding Parties; provided, however, that Sections 8.8 and 8.13 -------- may not be terminated, amended, supplemented, waived or modified without the prior written agreement or consent of SunTrust Equitable Securities Corporation, and provided, further, that -------- ------- (x) notwithstanding the foregoing provisions of this Section 8.4 ----------- or clause (y) below, the consent of each Funding Party affected thereby ---------- shall be required for any amendment, modification or waiver directly: (i) modifying any of the provisions of this Section 8.4, ----------- changing the definition of "Required Funding Parties" or "Required ------------------------ -------- Lenders", or increasing the Commitment of such Funding Party; ------- (ii) amending, modifying, waiving or supplementing any of the provisions of Section III of the Loan Agreement or the ----------- representations of -74- such Funding Party in Section 4.3 or 4.4 or the covenants of such ----------- --- Funding Party in Article VI of this Master Agreement; ---------- (iii) reducing any amount payable to such Funding Party under the Operative Documents or extending the time for payment of any such amount, including, without limitation, any Rent, any Funded Amount, any fees, any indemnity, the Lease Balance, any Funding Party Balance, the Recourse Deficiency Amount, interest or Yield; or (iv) consenting to any assignment of the Lease or the extension of the Lease Term, releasing any of the collateral assigned to the Agent and the Lenders pursuant to any Mortgage and any Assignment of Lease and Rents (but excluding a release of any rights that the Lenders may have in the Leased Property, or the proceeds thereof as contemplated in the definition of "Release Date"), releasing the Lessee from its obligations in respect of the payments of Rent and the Lease Balance, releasing any Lessee from its obligations under the Operative Documents or changing the absolute and unconditional character of any such obligation; and (y) no such termination, amendment, supplement, waiver or modification shall, without the written agreement or consent of the Lessor, the Agent and the Required Lenders, be made to the Lease or the Security Agreement and Assignment; and (z) subject to the foregoing clauses (x) and (y), so long as no ----------- --- Event of Default has occurred and is continuing, the Lessor, the Agent and the Lenders may not amend, supplement, waive or modify any terms of the Loan Agreement, the Notes, the Mortgages and the Assignments of Lease and Rents without the consent of the Lessee (such consent not to be unreasonably withheld or delayed); provided that in no event may any -------- Operative Document be amended so as to increase the obligations of any Lessee, or deprive any Lessee of any rights thereunder, without the written consent of the Lessee. SECTION 8.5 Headings, etc. The Table of Contents and headings of the -------------- various Articles and Sections of this Master Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. SECTION 8.6 Parties in Interest. Except as expressly provided herein, ------------------- none of the provisions of this Master Agreement is intended for the benefit of any Person except the parties hereto and their respective successors and permitted assigns. -75- SECTION 8.7 GOVERNING LAW. THIS MASTER AGREEMENT HAS BEEN DELIVERED IN, ------------- AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. SECTION 8.8 Expenses. Whether or not the transactions herein -------- contemplated are consummated, the Lessee agrees to pay, as Supplemental Rent, all actual, reasonable and documented out-of-pocket costs and expenses of the Lessor, the Agent, the Lenders and SunTrust Equitable Securities Corporation in connection with the preparation, execution and delivery of the Operative Documents and the documents and instruments referred to therein and any amendment, waiver or consent relating thereto (including, without limitation, the reasonable fees and disbursements of McGuireWoods LLP, but not including any fees and disbursements for any other outside counsel representing any Lender) and of the Lessor, the Agent, the Lenders and SunTrust Equitable Securities Corporation in connection with endeavoring to enforce the Operative Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees actually incurred and disbursements of counsel for the Lessor, the Agent and the Lenders). All references in the Operative Documents to "attorneys' fees" or "reasonable attorneys fees" shall mean reasonable attorneys' fees actually incurred, without regard to any statutory definition thereof. SECTION 8.9 Severability. Any provision of this Master Agreement that is ------------ prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 8.10 Liabilities of the Funding Parties. No Funding Party shall ---------------------------------- have any obligation to any other Funding Party or to Lessee with respect to the transactions contemplated by the Operative Documents except those obligations of such Funding Party expressly set forth in the Operative Documents or except as set forth in the instruments delivered in connection therewith, and no Funding Party shall be liable for performance by any other party hereto of such other party's obligations under the Operative Documents except as otherwise so set forth. No Lender shall have any obligation or duty to the Lessee, any other Funding Parties or any other Person with respect to the transactions contemplated hereby except to the extent of the obligations and duties expressly set forth in this Master Agreement or the Loan Agreement. SECTION 8.11 Submission to Jurisdiction; Waivers. Each party hereto ----------------------------------- hereby irrevocably and unconditionally: -76- (a) submits for itself and its property in any legal action or proceeding relating to this Master Agreement or any other Operative Document, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of Georgia sitting in Fulton County, the courts of the United States of America for the Northern District of Georgia, and appellate courts from any thereof; (b) consents that any such action or proceedings may be brought to such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth in Schedule 8.2 or at such other ------------ address of which the other parties hereto shall have been notified pursuant to Section 8.2; and ----------- (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law. SECTION 8.12 Liabilities of the Agent. The Agent shall have no duty, ------------------------ liability or obligation to any party to this Master Agreement with respect to the transactions contemplated hereby except those duties, liabilities or obligations expressly set forth in this Master Agreement or the Loan Agreement, and any such duty, liability or obligations of the Agent shall be as expressly limited by this Master Agreement or the Loan Agreement, as the case may be. All parties to this Master Agreement acknowledge that the Agent is not, and will not be, performing any due diligence with respect to documents and information received pursuant to this Master Agreement or any other Operative Agreement including, without limitation, any Environmental Audit, Title Policy or survey. The acceptance by the Agent of any such document or information shall not constitute a waiver by any Funding Party of any representation or warranty of any Lessee even if such document or information indicates that any such representation or warranty is untrue. SECTION 8.13 Role of SunTrust Equitable Securities Corporation. Each ------------------------------------------------- party hereto acknowledges hereby that it is aware of the fact that SunTrust Equitable Securities Corporation ("SESC") is acting as an "arranger" with respect to the transactions contemplated by the Operative Documents and acknowledge and agree that neither SESC nor any of its Affiliates (including SunTrust Bank) has made any representations or warranties concerning, and that they have not relied on SESC as to, the tax, accounting or legal characterization or validity of the Operative Documents or any aspect of the transactions contemplated thereby. The parties acknowledge and agree that SESC has no duties, express or implied, under the Operative -77- Documents in its capacity as "arranger". The parties further agree that Section 2.4, 8.4, 8.8, 8.10 and this Section 8.13 are for the express benefit of SESC, and SESC shall be entitled to rely thereon as if it were a party hereto. -78- IN WITNESS WHEREOF, the parties hereto have caused this Master Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. EDWARD D. JONES & CO., L.P., as Lessee, Construction Agent and Guarantor By: EDJ Holding Company, Inc., its General Partner By: ---------------------------------- Name Printed: ------------------------ Title: ------------------------------- S-1 MASTER AGREEMENT ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Arizona as AFG Equity, Limited Partnership), as Lessor By: Atlantic Financial Managers, Inc., its General Partner By: ----------------------------------- Name Printed: ------------------------- Title: -------------------------------- S-2 MASTER AGREEMENT SUNTRUST BANK, as Agent By: ---------------------------------------- Name Printed: ------------------------------ Title: ------------------------------------- S-3 MASTER AGREEMENT SUNTRUST BANK, as Lender By: ---------------------------------------- Name Printed: ------------------------------ Title: ------------------------------------- S-4 MASTER AGREEMENT BANK OF NEW YORK, as Lender By: ---------------------------------------- Name Printed: ------------------------------ Title: ------------------------------------- S-5 MASTER AGREEMENT FIRSTAR BANK, N.A., as Lender By: ---------------------------------------- Name Printed: ------------------------------ Title: ------------------------------------- S-6 MASTER AGREEMENT The Jones Financial Companies, L.L.L.P. ("JFC") joins in the foregoing Master Agreement for the purpose of acknowledging the terms, conditions and provisions thereof and hereby covenants and agrees to observe, perform and comply with all of the obligations of JFC thereunder. THE JONES FINANCIAL COMPANIES, L.L.L.P. By: ---------------------------------------- Name Printed: ------------------------------ Title: ------------------------------------- S-7 MASTER AGREEMENT SCHEDULE 2.2 Amount of Each Funding Party's Commitment Lessor Commitment Percentage: 3.5% Lessor Commitment $1,085,000.00 Lender Commitment Percentages: SunTrust Bank 28.76% Firstar Bank, N.A. 41.94% Bank of New York 25.81% Lender Commitments: $29,915,000.00 SunTrust Bank $8,915,000.00 Firstar Bank, N.A. $13,000,000.00 Bank of New York $8,000,000.00
SCHEDULE 4.1(a)(i) Indebtedness of Lessee BANK LOANS: The Lessee borrows from banks on a short-term basis primarily to finance customer margin balances and inventory securities. As of June 30, 2000, the Lessee had bank lines of credit aggregating $1,045,000 of which $995,000 was through uncommitted facilities. Actual borrowing availability is primarily based on the value of securities owned and customers' margin securities. At June 30, 2000, collateral, with a market value of $1,654,237, was available to support secured bank loans. Bank loans outstanding approximate their fair value. LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS: Liabilities subordinated to the claims of general creditors consist of:
June 30, 2000 ------------- Capital notes, 8.18%, due in annual installments of $10,500 commencing on September 1, 2000, with a final installment on September 1, 2008. $ 94,500 Capital notes, 7.95%, due in annual installments of $10,225 with a final installment of $10,200 on April 15, 2006. 61,325 Capital notes, 8.96%, due in annual installments of $6,000 with a final installment on May 1, 2002. 12,000 Capital notes, with rates ranging from 7.51% to 7.79% due in annual installments commencing on August 15, 2005 with a final installment on August 15, 2011. 75,000 -------- $242,825 ========
Required annual principal payments, as of June 30, 2000, are as follows:
Year Ending Principal Last Friday of June Payment ------------------- ------- 2001 $ 26,725 2002 26,725 2003 20,725 2004 20,725 2005 20,725 Thereafter 127,200 -------- $242,825 ========
SCHEDULE 4.1(a)(ii) Subsidiaries [TO BE ATTACHED] SCHEDULE 4.1(d)(v) Pending Investigations or Inquiries Securities and Exchange Commission Administrative Proceeding, In the -------------------------------------------------------------------- Matter of Edward D. Jones & Co., Donald E. Walter, Steven T. Roberts, Ronald - ---------------------------------------------------------------------------- L. Gorgen and Charles R. Larimore, File No. 3-9181, filed in 11/1996. - --------------------------------- Allegations of violation of Section 22 of the Investment Company Act of 1940 for improperly permitting the charge of commissions on repurchases of certain unit investment trusts. Without admitting or denying the findings in the Commission's Order, Mr. Walter, on March 12, 1997, executed an offer of settlement with an agreement to cease and desist from future violations of Rule 22 c-1. Without admitting or denying the findings in the Commission's Order, the Applicant, on April 1, 1997, executed an offer of settlement with an agreement to cease and desist from future violations of Rule 22 c-1, received a censure, and agreed to the payment of a $50,000 civil penalty. On April 15, 1998, the SEC's request for an order against Steven Roberts, Ronald Gorgen and Charles Larimore was denied in favor of these Respondents. On June 21, 1995, New York Stock Exchange Division of Enforcement brought a case against Edward D. Jones & Co. entitled New York Stock -------------- Exchange Division of Enforcement vs. Edward D. Jones & Co., Cause No: - ---------------------------------------------------------- 95-171. The NYSE alleged failure to reasonably supervise former representative Michael Leamnson in connection with unauthorized trades resulting in violations of Rule 342 and Rule 405. On January 23, 1996, New York Stock Exchange Hearing Panel unanimously found in favor of Edward D. Jones & Co. on all counts and dismissed charges. The Division of Enforcement filed an appeal. On September 10, 1996, the Committee for Review affirmed the decision of the New York Stock Exchange Hearing panel. National Association of Securities Dealers, Inc. vs. Edward Jones and --------------------------------------------------------------------- Thomas William Jack, Case No. E07980030 TC, filed in 01/2000. Preliminary - ------------------- Determination was filed to recommend that disciplinary action be brought against Edward Jones and Thomas William Jack. Allegations of inadequate written supervisory procedures pertaining to the review and monitoring of a customer's account activity in violation of NASD Conduct Rule 3010 thereby preventing unsuitable recommendations and bond trading on margin. Without admitting to or denying the allegations, Edward Jones agreed to pay $5,000. Thomas Jack was dismissed from the proceedings. New York Stock Exchange, Inc. vs. Edward Jones, Case No. not given, ---------------------------------------------- filed in 02/2000. Allegations of failure to reasonably supervise, conduct inconsistent with just and equitable principals of trades in distribution of callable CDs, and violation of NYSE Rule 472.40 relating to inaccurate capacity disclosures in research reports. Still pending. SCHEDULE 4.1(m) Environmental Matters None, except as otherwise set forth in that certain Phase One Environmental Site Assessment and Limited Phase Two Assessment report prepared by Liesch Companies dated March 31, 2000. SCHEDULE 4.1(u)(i) Leases [TO BE ADDED] SCHEDULE 5.2(a)(i) Existing Permitted Liens [TO BE ATTACHED] SCHEDULE 5.2(a)(xiv) Existing Options, Etc. JFC and Subsidiaries has the right to purchase the building at 1245 Kelley Memorial Drive, St. Louis, MO 63131, in the 20th year of the lease, or if the building is offered for sale during the lease term which commenced January 1, 2002. Additionally, JFC and Subsidiaries has the option to purchase the adjacent buildings at 12444 Powerscourt Drive and 12412 Powerscourt Drive if and when the space is offered. JFC and Subsidiaries has the right to purchase the building at 700 Maryville Centre, St. Louis, MO 63141, between the 25th month and 31st month of the lease which commenced March 1, 2000. SCHEDULE 5.2(d) Contingent Obligations CONTINGENCIES: Lessee's guarantee of Edward Jones Limited (UK) GBP 1,000,000 credit facility with the Royal Bank of Scotland. Lessee's guarantee of Edward Jones Limited (UK) $500,000 USD foreign exchange line with Wells Fargo Bank, N.A., currently under negotiation. Various legal actions are pending against the Lessee with certain cases claiming substantial damages. These actions are in various stages and the results of such actions cannot be predicted with certainty. In the opinion of management, after consultation with legal counsel, the ultimate resolution of these actions is not expected to have a material adverse impact on the Lessee's results of operations or financial condition. SCHEDULE 8.2 Addresses for Notices Lessee: Edward D. Jones & Co., L.P. 12555 Manchester Road St. Louis, Missouri 63131-3729 Attn: Kenneth E. Schutte Lessor: Atlantic Financial Group, Ltd. 2305 Cedar Springs Road Suite 415 Dallas, Texas 75201 Attn: Stephen S. Brookshire Agent for Lender: SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attn: Linda L. Dash JFC: The Jones Financial Companies, L.L.L.P. 12555 Manchester Road St. Louis, Missouri 63131-3729 Attn: Lawrence R. Sobol EXHIBIT A TO MASTER AGREEMENT FORM OF FUNDING REQUEST TO: The Lessor, the Agent and each Lender (as defined in the Master Agreement referred to below) Reference is hereby made to the Master Agreement dated as of November , -- 2000 (as heretofore amended, the "Master Agreement") among Edward D. ----------------- Jones & Co., L.P., as Lessee, Guarantor and Construction Agent, Atlantic Financial Group, Ltd., as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by The Jones Financial Companies, L.L.L.P. Capitalized terms not otherwise defined are used herein as defined in the Master Agreement. The undersigned, as Construction Agent, hereby notifies you that it requests a Funding in the amount of $ on [INSERT REQUESTED --------------- FUNDING DATE] in respect of the Leased Property [owing in respect of the Land, if applicable, and development, hard and/or soft transaction and closing costs in respect of the Leased Property or in respect of the purchase of personal property to be used in connection with the Leased Property (collectively, "Project Costs")] [amounts that are due or will ------------- become due within 30 days from the date hereof to third parties in respect of the Construction, or amounts paid by the Construction Agent to third parties in respect of the Construction for which the Construction Agent has not been previously reimbursed]. The undersigned, as Construction Agent, requests that the Funding be [a LIBOR Advance with a Rent Period of ---- months] [a Base Rate Advance] [allocated as follows: $ to a LIBOR ----------- Advance with a Rent Period of months and $ to a Base Rate --- --------------- Advance]. In connection with such requested Funding, the undersigned, hereby represents and warrants to you as follows: 1. on the requested Funding Date the representations and warranties of the Lessee contained in Section 4.1 of the Master Agreement shall be true and correct in all material respects on and as of such Funding Date as though made on and as of such Funding Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; 2. there shall not have occurred any Event of Default or Potential Event of Default; 3. the amount of the requested Funding represents costs of Construction and transaction permitted to be funded pursuant to the Operative Documents as more particularly described as set forth on Schedule 1 attached hereto and made a part hereof; ---------- A-1 4. the amount expended by the Construction Agent to date for the construction of the Building does not exceed the amount budgeted to be expended for the percentage of construction completed to date and, in the good faith judgment of the undersigned, the construction of the Building will be completed within the Construction Budget; 5. there has not occurred may event that could reasonably be expected to have a Material Adverse Effect since , 2000; ------------ 6. no Event of Default, Potential Event of Default, Event of Loss, or Event of Taking has occurred, and no action is pending or, to the knowledge of the undersigned, threatened by a Governmental Authority to initiate a Condemnation or an Event of Taking with respect to the Leased Property; and 7. all of the conditions precedent to such Funding set forth in Article III of the Master Agreement have been satisfied, or will be ----------- satisfied or waived on or prior to the requested Funding Date. Please wire transfer the proceeds of the Funding to . ----------------- The undersigned has caused this Funding Request to be executed and delivered by its duly authorized officer this day of , ------- -------------- 2000 [TO BE DELIVERED NOT LATER THAN 12:00 NOON, THREE (3) BUSINESS DAYS PRIOR TO THE REQUESTED FUNDING DATE]. EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, Inc., its sole general partner By: --------------------------------- Name: ------------------------------- Title: --------------------------- A-2 SCHEDULE 1 TO FUNDING REQUEST Description of Costs -------------------- EXHIBIT B TO MASTER AGREEMENT FORM OF ASSIGNMENT OF LEASE AND RENTS This instrument was prepared by and upon recordation should be returned to: McGuireWoods LLP One James Center Richmond, Virginia 23219 Attention: Edmund S. Pittman, Esq. ============================================================================ ASSIGNMENT OF LEASE AND RENTS Dated as of November 30, 2000 between ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Arizona as AFG Equity, Limited Partnership), as Lessor and Assignor and SUNTRUST BANK, as Agent and Assignee Tempe, Arizona ============================================================================ TABLE OF CONTENTS
Page ---- Section 1 Collateral Assignment of Lease and Guaranty Agreement..........2 Section 2 Assignment as Collateral Security..............................3 Section 3 Payments Under Lease...........................................3 Section 4 Power of Attorney in Respect of Lease..........................4 Section 5 Assignee Designated Recipient..................................4 Section 6 Allocation Pursuant to Loan Agreement..........................4 Section 7 Irrevocability; Supplemental Instruments.......................5 Section 8 Amendments or Termination of Lease.............................5 Section 9 Lessee's Consent and Agreement.................................5 Section 10 Remedies Cumulative............................................5 Section 11 Miscellaneous..................................................5 Consents and Agreement of Lessee EXHIBITS - -------- EXHIBIT A - Description of Land
THIS ASSIGNMENT OF LEASE AND RENTS dated as of November 30, 2000 (as the same may be amended, supplemented or otherwise modified from time to time, this "Assignment Agreement"), is between ATLANTIC FINANCIAL GROUP, LTD., a ---------- --------- Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership), as Lessor and Assignor (the "Lessor"), having ------ an office at 2305 Cedar Springs Road, Suite 415, Dallas, Texas 75201 and SUNTRUST BANK, a Georgia banking corporation, as Agent for the benefit of the hereinafter described Lenders (the "Assignee"), having an office at 303 -------- Peachtree Street, 3rd Floor, Atlanta, Georgia 30308. Capitalized terms not otherwise defined in this Assignment Agreement shall have the respective meanings assigned thereto in the Appendix A to the ---------- Master Agreement (as amended, supplemented or otherwise modified from time to time, the "Master Agreement"), dated as of the date hereof among Edward ------ --------- D. Jones & Co., L.P., a Missouri limited partnership, as Lessee, Construction Agent and Guarantor (the "Lessee"), the Lessor, the Assignee, ------ as Agent, and the Lenders parties thereto (the "Lenders"), and the rules of ------- interpretation set forth in Appendix A shall apply to this Assignment ---------- Agreement. Copies of the Master Agreement, the Lease (as defined below) and the other Operative Documents (as defined in the Master Agreement) are on file at the office of the Agent. RECITALS: Pursuant to a Master Lease Agreement, dated as of the date hereof, between the Lessor and the Lessee (as restated, amended, supplemented or otherwise modified from time to time, the "Lease"), the Lessor has leased to ----- the Lessee (a) the land described on Exhibit A attached hereto and --------- incorporated herein, together with the following appurtenant rights (the "Appurtenant Rights"): (i) all agreements, easements, rights of way or use, ----------- ------ rights of ingress or egress, privileges, appurtenances, tenements, hereditaments, reversions, remainders, water rights and other rights and benefits at any time belonging or pertaining to the land or the improvements thereon, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the land and (ii) all permits, licenses and rights, whether or not of record, appurtenant to the land (such land and Appurtenant Rights being referred to as the "Land") and (b) the buildings, structures and ---- improvements located or to be located on the Land, along with all fixtures used or useful in connection with the operation thereof or of the Land, including, without limitation, all furnaces, boilers, compressors, elevators, fittings, pipings, connectives, conduits, ducts, partitions, equipment and apparatus of every kind and description now or hereafter affixed or attached to the building and all Alterations (including all restorations, repairs, replacements and rebuilding of such buildings, improvements and structures) thereto (the "Building"), and all Equipment (the Land, the Building and the Equipment being referred to hereinafter as the "Leased Property"). --------------- The Lessor has entered into the Master Agreement with the Assignee, the Lessee, the Lenders and the Assignee providing, among other things, for the commitment of the Lenders to assist in financing or refinancing, as applicable, the Lessor's acquisition of the Land and the construction of the Building thereon, and the acquisition and installation of the Equipment, by making Loans to be evidenced by the respective Notes. Such Loans as evidenced by the Notes bear interest on the unpaid principal amount thereof from time to time outstanding at the interest rate per annum determined as provided in and --- ----- payable as specified in the Loan Agreement. NOW, THEREFORE, the Lessor hereby agrees for the benefit of Assignee as follows: Section 1. Collateral Assignment of Lease and Guaranty Agreement. The ----------------------------------------------------- Lessor, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged, and as security for the payment of the principal of, and all interest and all other sums payable on, the Notes and all other sums payable by the Lessor to the Assignee under the Loan Agreement or under any of the other Operative Documents and the performance and observance by the Lessor for the benefit of the Assignee, as Agent for the Lenders, of the provisions of each thereof, whether contained therein or incorporated therein by reference, has assigned, transferred, conveyed and set over, and by these presents does assign, transfer, convey and set over, to the Assignee, for the benefit of the Lenders, all of the Lessor's interest in, to and under the Lease and the Guaranty and all of the Lessor's estate, right, title, interest, claim and demand as the Lessor under the Lease and the Guaranty, and all existing or future restatements, amendments, supplements or modifications of the Lease and Guaranty and any other lease, sublease or other occupancy agreement or arrangement with respect to the Leased Property; TOGETHER WITH all rights, powers, privileges, options and other benefits of the Lessor under the Lease, including, without limitation (a) the right --------- to receive and collect all Rent, income, revenues, issues, profits, Loss Proceeds, Awards, bankruptcy claims, liquidated damages, purchase price proceeds (pursuant to Article XIV of the Lease or otherwise), the Recourse ----------- Deficiency Amount and other payments, tenders and security payable to or receivable by the Lessor under the Lease, to be applied in accordance with Section III of the Loan Agreement; (b) the right, subject to the provisions - ----------- of Section 8.4 of the Master Agreement, to give and withhold all waivers, ----------- consents, modifications, amendments and agreements under or with respect to the Lease; (c) the right to give and receive copies of all notices and other instruments or communications under or pursuant to the Lease; (d) the right to take such action upon the occurrence and during the continuance of an Event of Default as shall be permitted by the Lease or any of the other Operative Documents or by Applicable Law; and (e) the right to do any and all other things whatsoever which the Lessor or any lessor under the Lease, as the case may be, is or may be entitled to do thereunder; TOGETHER WITH the right and power to execute and deliver as agent and attorney-in-fact of the Lessor under the Lease an appropriate deed, bill of sale or other instruments of transfer necessary or appropriate for the conveyance and transfer to the Lessee of the Leased Property pursuant to Articles XIV or XV of the Lease, and all interests of the Lessor therein and - ------------ -- to perform in the name and for and on behalf of the Lessor, as such agent and attorney-in-fact, any and all other necessary or appropriate acts with respect to any such purchase, conveyance and transfer; TOGETHER WITH the right to inspect the Leased Property and all records relating thereto and to enforce performance or observance by the Lessee of any of such rights by the exercise of the right to proceed by appropriate court action or actions, either at law or in equity, 2 to enforce performance by the Lessee of the applicable covenants and terms or to recover damages for the breach thereof. TO HAVE AND TO HOLD the same unto the Assignee, for the benefit of the Lenders, and its successors and assigns forever. Section 2. Assignment as Collateral Security. The assignment made hereby --------------------------------- is executed as collateral security, and the execution and delivery of this Assignment Agreement shall not in any way impair or diminish any obligations of the Lessor as lessor under the Lease or of the Lessor, the Assignee, the Guarantor or any Lender under any of the other Operative Documents, nor impair, affect or modify any of the terms and conditions of the Notes or the Loan Agreement or any of the other Operative Documents securing the Notes, nor shall any of the obligations of the Lessor or of any other Person under any of the Operative Documents (other than the express obligations of the Assignee) be imposed upon the Assignee, including, but not limited to, collecting Rent or enforcing performance by the Lessee or the Guarantor. Without limiting the generality of the foregoing, the Assignee shall not be obligated to perform or discharge, nor does the Assignee hereby undertake to perform or discharge, any obligation, duty or liability of the Lessor under the Lease, or of the Lessor under any of the other Operative Documents, or under or by reason of this Assignment Agreement, and the Lessor does hereby waive any and all liability, loss or damage which may or might be asserted against the Assignee by reason of any alleged obligations or undertakings on its or their part to perform or discharge any of the terms, covenants or agreements contained in the Lease to be performed or discharged by the Lessor thereunder; provided, however, that if the Assignee -------- ------- does undertake any such action pursuant to the terms, conditions and restrictions contained in this Assignment Agreement and the other Operative Documents, the Lessor shall retain any rights it may have with respect thereto under the Operative Documents or by law or in equity, and the Assignee shall be liable for its gross negligence or willful misconduct. It is further understood and agreed that this Assignment Agreement shall not operate to (i) place responsibility for the control, care, management or repair of the Leased Property upon the Assignee, nor for the carrying out of any of the terms and conditions of the Lease or of any of the other Operative Documents (except to the extent expressly provided therein), in any such case binding upon or applicable to the Lessor, or (ii) make the Assignee responsible or liable for any waste with respect to the Land or the other Leased Property by the Lessee or any Person other than by the Assignee, or for any dangerous or defective condition of the Land or the other Leased Property, or for any negligence of the management, upkeep, or repair or control of the Land or the other Leased Property resulting in loss or injury or death to the Lessee, any sublessee, sublessor, licensee, employee or stranger other than for gross negligence or willful misconduct by the Assignee. Section 3. Payments Under Lease. The Lessor will direct the Lessee to -------------------- pay directly to the Assignee, as and when due pursuant to the Lease, the Recourse Deficiency Amount, all Basic Rent, all Supplemental Rent and all payments pursuant to Articles III, X, XIV and XV of the Lease, purchase ------------ - --- -- proceeds or avails, income, Awards, Loss Proceeds, and other sums payable to the Lessor pursuant to the Lease and the other Operative Documents (but excluding any indemnity payments or reimbursements to the Lessor from the Lessee pursuant to the Lease or otherwise). 3 The Assignee may, at its option, although it shall not be obligated to do so, and without waiving or releasing any obligation or Loan Event of Default, at any time perform any Lease covenant required to be performed by the Lessor for and on behalf of the Lessor and may recover any money advanced for any such purpose from the Lessor on demand, with interest at the Overdue Rate from the date of advancement; and (b) the Assignee is authorized to endorse, in the name of the Lessor, any item, howsoever received by it, representing any payment on or other proceeds (including Loss Proceeds) of the Lease (including, without limitation, all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV and XV of the ------------ - --- -- Lease, purchase proceeds or avails, income, Awards, Loss Proceeds and other sums paid or payable to the Lessor pursuant to the Lease and the other Operative Documents) and to endorse and deliver, in the name of the Lessor, any instrument or other item of the Rent held by the Assignee hereunder, in connection with the sale or collection of the Rent. Section 4. Power of Attorney in Respect of Lease. The Lessor does hereby ------------------------------------- irrevocably constitute and appoint the Assignee its true and lawful attorney with an interest and full power of substitution, for it and in its name, place and stead to do any or all of the following (a) ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV and XV of ------------ - --- -- the Lease, purchase proceeds or avails, income, Awards, Loss Proceeds and other sums paid or payable to the Lessor pursuant to the Lease and the other Operative Documents and other sums which are assigned under Section 1 --------- hereof, and (b) without limiting the provisions of the foregoing clause (a) ---------- hereof, during the continuance of any Event of Default under the Lease, sue for, compound and give acquittance for, or settle, adjust or compromise any claim for any and all such Rent, purchase proceeds or avails, income, Awards, Loss Proceeds and other sums which are assigned under Section 1 --------- hereof as fully as the Lessor could itself do, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Lessor or otherwise, which the Assignee may deem necessary or appropriate to protect and preserve the right, title and interest of the Assignee in and to such Rent and other sums and security intended to be afforded hereby. Section 5. Assignee Designated Recipient. The Lessor hereby directs the ----------------------------- Lessee to deliver or remit directly to the Assignee at its address set forth in the Master Agreement all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV and XV of the Lease, purchase proceeds or avails, ------------ - --- -- income, Awards, Loss Proceeds and other sums payable to the Lessor pursuant to the Lease and the other Operative Documents by wire transfer of Federal or other funds current and immediately available to the Assignee on the due date thereof. Section 6. Allocation Pursuant to Loan Agreement. Notwithstanding ------------------------------------- anything contained herein to the contrary, any and all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV and XV of the ------------ - --- -- Lease, purchase proceeds or avails, income, Awards, Loss Proceeds and other sums paid to or received or collected by or on behalf of the Assignee shall be paid, allocated and distributed pursuant to the terms of, and in the order of priority provided for in, Section III of the Loan Agreement. ----------- Section 7. Irrevocability; Supplemental Instruments. The Lessor agrees ---------------------------------------- that the assignment made hereby and the designation and direction to the Lessee hereinabove set forth are irrevocable, and that the Lessor will not, while such assignment is in effect or thereafter until 4 the Lessee has received from the Assignee written notice of the termination of such assignment, make any other assignment, designation or direction inconsistent therewith, and that any assignment, designation or direction inconsistent therewith shall be void. The Lessor will from time to time, upon request of the Assignee, execute all instruments of further assurance and all such supplemental instruments as the Assignee may reasonably specify. Section 8. Amendments or Termination of Lease. Except as otherwise ---------------------------------- permitted under Section 8.4 of the Master Agreement, the Lessor agrees that ----------- it will not enter into any agreement amending, supplementing, hypothecating, waiving, discharging or terminating the Lease. Section 9. Lessee's Consent and Agreement. The consent and agreement by ------------------------------ the Lessee to the provisions of this Assignment Agreement is attached hereto. Section 10. Remedies Cumulative. Each right, power and remedy of the ------------------- Assignee provided for in this instrument 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 Assignment Agreement or in any other Operative Document 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 Assignee or the Lenders of any one or more of such rights, powers or remedies shall not preclude the further exercise thereof or the simultaneous or later exercise by the Assignee or the Lenders of any or all such other rights, powers or remedies. No failure or delay on the part of the Assignee or the Lenders to exercise any such right, power or remedy (including, without limitation, the granting by the Assignee or the Lenders of consent to any action by the Lessor) shall operate as a waiver thereof. The Lessor stipulates that the remedies at law in respect of any default or threatened default by the Lessor in the performance of or compliance with any of the terms of this Assignment Agreement are not and will not be adequate, and that any of such terms may be specifically enforced by a decree for specific performance or by an injunction against the violation of any terms or otherwise. Section 11. Miscellaneous. ------------- (a) All notices, requests, offers, consents and other instruments given pursuant to this Assignment Agreement shall be delivered in accordance with Section 8.2 of the Master Agreement. ----------- (b) This Assignment Agreement shall be binding upon, inure to the benefit of and be enforceable by, the respective successors and assigns of the parties hereto. The headings to the various paragraphs of this Assignment Agreement have been inserted for convenience reference only and shall not modify, define, limit or expand the express provisions of this Assignment Agreement. Neither this Assignment Agreement nor any provision hereof may be amended, modified, waived, discharged or terminated orally, but only by an instrument signed by the parties hereto. If any provision of this Assignment Agreement or any application thereof shall be invalid or unenforceable, the remainder of this Assignment Agreement and any other application of such provision shall not be affected thereby. (c) This Assignment Agreement may be executed in counterparts, each of which shall be deemed an original, and such counterparts shall together constitute but one and the same 5 Assignment Agreement. It shall not be necessary in making proof of this Assignment Agreement to produce or account for more than one such counterpart signed by the party against which enforcement of this Assignment Agreement is sought. (d) THIS ASSIGNMENT AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE LIEN HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH THE LAND IS LOCATED. (e) Upon payment in full of all indebtedness secured by this Assignment Agreement and the Loan Agreement and performance of all other obligations secured hereby and thereby, this Assignment Agreement and the Lien created hereby shall terminate and be of no further force or effect. The Assignee shall, at the Lessee's expense, do, execute, acknowledge and deliver each and every deed, conveyance, transfer and release necessary or proper to evidence the release of record of this Assignment Agreement. (f) Notwithstanding anything to the contrary set forth herein, in the event of any conflict between any provision of this Assignment Agreement and the Loan Agreement, the terms and provisions of the Loan Agreement shall control. (g) All amounts paid by the Lessee to the Assignee hereunder shall be fully credited against amounts payable by the Lessee to the Lessor under the Lease. (h) To the extent that the Lease and/or the Lease Supplement are characterized as a deed of trust, mortgage, deed to secure debt, security agreement or other financing document for any reason (including, without limitation, as a result of the Lease being treated as a financing transaction as provided in Article XI of the Lease for purposes other than ---------- accounting purposes), this Assignment Agreement shall be an assignment to the Assignee of such deed of trust (and all beneficial rights, title and interests thereunder), mortgage, deed to secure debt, security agreement or other financing document and of the indebtedness secured thereby to the Assignee, for the benefit of the Lenders, as security for the Loans made by the Lenders pursuant to the Loan Agreement and for all amounts owed to the Lenders by the Lessee or the Lessor pursuant to, and all other Obligations of the Lessee or the Lessor under, the Operative Documents. 6 IN WITNESS WHEREOF, the Lessor and the Assignee have each caused this Assignment Agreement to be duly executed and delivered, in its respective name and behalf, all as of the date and year first above written. ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership), as Lessor and Assignor By: Atlantic Financial Managers, Inc., a Texas corporation. its general partner By: ---------------------------------- Name: --------------------------------- Title: -------------------------------- STATE OF ------------------ ) COUNTY OF ) ss. ---------------- ) The foregoing instrument was acknowledged before me this day of ---- November, 2000, by , the of ------------------------ ----------------------- Atlantic Financial Managers, Inc., a Texas corporation, general partner of ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership, on behalf of the limited partnership. ------------------------------- Notary Public My Commission Expires: - ---------------------- 7 ASSIGNMENT OF LEASE AND RENTS SUNTRUST BANK, a Georgia banking corporation, as Agent and Assignee By: ---------------------------------- Name: --------------------------------- Title: -------------------------------- STATE OF ------------------ ) COUNTY OF ) ss. ---------------- ) The foregoing instrument was acknowledged before me this day of ---- November, 2000, by the of -------------------- -------------------- SUNTRUST BANK, a Georgia banking corporation, on behalf of the corporation. ------------------------------- Notary Public My Commission Expires: - ---------------------- 8 ASSIGNMENT OF LEASE AND RENTS CONSENT AND AGREEMENT OF LESSEE THIS CONSENT AND AGREEMENT dated as of November 30, 2000, by EDWARD D. JONES & CO., L.P., a Missouri limited partnership (the "Lessee"), for the ------ benefit of SUNTRUST BANK, a Georgia banking corporation, as Agent for the Lenders (the "Assignee"), to the assignments made under the Assignment of -------- Lease and Rents, dated as of the date hereof (the "Assignment Agreement") -------------------- between ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership), as assignor (the "Lessor") and the Assignee. Capitalized terms not otherwise ------ defined herein shall have the meanings set forth in the Assignment Agreement. 1. The Lessee hereby consents to the terms and provisions of the Assignment Agreement and agrees it will deliver or remit, as and when payable pursuant to the Operative Documents directly to Assignee, the Recourse Deficiency Amount, all Basic Rent, all Supplemental Rent and all payments pursuant to Articles III, X, XIV and XV of the Lease, purchase ------------ - --- -- proceeds or avails, income, Awards, Loss Proceeds and other sums paid or payable to the Lessor pursuant to the Lease and the other Operative Documents (but excluding any indemnity payments or reimbursements to the Lessor from the Lessee pursuant to the Lease or otherwise, and, so long as no Loan Event of Default has occurred, the Lessor Basic Rent), in each case, to the extent provided in the Lease, without any offset, deduction, defense, abatement, suspension, deferment, diminution or reduction for any reason so that said funds shall at all times be available for payment of interest and principal due on the Notes, except in each case as expressly provided in the Lease. 2. Notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceeding affecting the Lessor under the Lease, (ii) any action with respect to the Lease which may be taken by any trustee or receiver of the Lessor, or by any court in such proceeding, and (iii) the exercise by the Agent or the Lenders of any rights and remedies under the Assignment Agreement, the Lessee agrees that it will remain obligated under the Lease in accordance with its terms and that it will not take any action to terminate (other than pursuant to its express rights under the Lease and the Master Agreement to do so), rescind or avoid the Lease. 3. To the extent that the Lessee may acquire any indebtedness of the Lessor or any other party to the Master Agreement, or any claim against the Lessor or any other party to the Master Agreement, by way of subrogation or otherwise, all such indebtedness and claims are hereby subordinated and made fully subject in right of payment thereof to the prior payment in full of the Notes. 4. In addition to (and not in limitation of) all of the Lessee's reimbursement and indemnity obligations set forth in the Operative Documents, the Lessee agrees to pay promptly all reasonable and documented costs and expenses incurred by the Lessor, pursuant to the Assignment Agreement, for the release of the Assignment Agreement. IN WITNESS WHEREOF, the Lessee has caused this Consent and Agreement to be duly executed and delivered, in its name and behalf, all as of the date and year first above written. EDWARD D. JONES & CO., L.P., a Missouri limited partnership, as Lessee By: EDJ Holding Company, Inc., a Missouri corporation, its sole general partner By: ---------------------------------- Name: --------------------------------- Title: -------------------------------- STATE OF ------------------ ) COUNTY OF ) ss. ---------------- ) The foregoing instrument was acknowledged before me this day of ---- November, 2000, by , the of EDJ ------------------ ---------------------- Holding Company, Inc., a Missouri corporation, general partner of EDWARD D. JONES & CO., L.P., a Missouri limited partnership, on behalf of the limited partnership. ------------------------------- Notary Public My Commission Expires: - ---------------------- ASSIGNMENT OF LEASE AND RENTS EXHIBIT A Description of Land ------------------- [TO BE ADDED] ASSIGNMENT OF LEASE AND RENTS EXHIBIT C TO MASTER AGREEMENT FORM OF SECURITY AGREEMENT AND ASSIGNMENT SECURITY AGREEMENT AND ASSIGNMENT (Construction Contract, Architect's Agreement, Permits, Licenses and Governmental Approvals, and Plans, Specifications and Drawings) FOR VALUE RECEIVED, and to secure the performance by Edward D. Jones & Co., L.P., a Missouri limited partnership (the "Assignor"), of all of its -------- obligations under (i) that certain Master Lease Agreement, by and among the Assignor and Atlantic Financial Group, Ltd. (registered to do business in Arizona as AFG Equity, Limited Partnership) (herein, together with its successors and assigns, called the "Secured Party"), dated as of the date ------------- hereof (as the same may be amended, supplemented or otherwise modified from time to time, and together with all substitutions therefor and replacements thereof, the "Lease"), (ii) the Construction Agency Agreement, dated as of ----- the date hereof (as the same may be amended, supplemented or otherwise modified from time to time, and together with all substitutions therefor and replacements thereof, the "Construction Agency Agreement"), between the ----------------------------- Assignor and the Secured Party, and (iii) the other Operative Documents (as defined in the Lease), the Assignor does hereby quitclaim, sell, assign, transfer and set over unto the Secured Party, its successors and assigns, all of its rights, title and interests in and to the following (referred to collectively herein as the "Collateral"): ---------- 1. that certain construction contract described on Schedule 1 attached ---------- hereto and made a part hereof (the "Construction Contract"); --------------------- 2. that certain architect's agreement described in Schedule 1 attached ---------- hereto and made a part hereof (the "Architect's Agreement"); --------------------- 3. all other Construction Documents, including contracts and agreements relating to the acquisition and installation of the Equipment; 4. all plans, specifications and drawings of any and every kind heretofore or hereafter prepared for use in connection with the Construction, and any supplements, amendments or modifications thereto (collectively, the "Plans and Specifications"); and ------------------------ 5. all building and other permits, licenses and governmental approvals that are necessary or useful to the commencement and completion of the Construction, or that otherwise relate in any way to the Construction or the occupancy of the Building, or the acquisition, installation and use of the Equipment, heretofore or hereafter obtained or applied for by or on behalf of the Assignor or the Contractor or the Architect or any of the architects, engineers, vendors, contractors or subcontractors working on any aspect of the Construction, and any deposits made in connection therewith (referred to collectively herein as the "Permits"); ------- provided, however, that, except to the extent expressly set forth in the - -------- ------- Consent and Acknowledgment of the General Contractor, the Architect and the Vendor(s), the Secured Party shall have no obligation or liability of any kind under or with respect to the Construction Contract, the Architect's Agreement, and the Construction Documents, the Permits or the Plans and Specifications, either before or after its exercise of any rights hereby granted to it, and the Assignor agrees to save and hold the Secured Party harmless of and from, and to indemnify it against, any and all such obligations and liabilities, contingent or otherwise and provided, further, -------- ------- any assignment, pledge or security in the collateral is subject to any required consents of Governmental Authorities or public utilities. This assignment shall inure to the benefit of the Secured Party and its successors and assigns, and shall be binding upon the Assignor and its successors and assigns, and shall continue in full force and effect until all obligations, liabilities and indebtedness of any kind now or hereafter due the Secured Party from the Assignor under or with respect to the Lease or any of the other Operative Documents, or which are otherwise secured hereby, whether now existing or hereafter arising or incurred (collectively, the "Liabilities"), have been fully paid, performed and satisfied, and until ----------- Construction is complete with respect to the Leased Property or returned to the Secured Party pursuant to the Construction Agency Agreement, at which time this assignment will terminate. The Assignor shall be entitled to the benefit of, and to exercise all rights under, the Collateral, and the Secured Party will not exercise any of its rights hereunder, until there occurs an Event of Default (which term is defined for purposes hereof as it is defined in the Lease) or a Construction Agency Event of Default (which term is defined for purposes hereof as it is defined in the Construction Agency Agreement) or until the Leased Property is returned to the Secured Party pursuant to the Construction Agency Agreement. The Assignor hereby acknowledges that the Secured Party will assign all of its rights hereunder to SunTrust Bank, as agent (the "Agent") for the benefit of the Lenders, to ----- secure the Loans and agrees that the Agent may exercise all of the rights of the Secured Party hereunder. For purposes of completing the Construction following the occurrence of an Event of Default or a Construction Agency Event of Default, the Secured Party may, at its option, further assign its right, title and interest in the Collateral without the consent of the Assignor, the Contractor, the Architect or any other contractor or vendor, but shall promptly thereupon notify the Contractor and the Architect, and upon exercise by such assignee of its rights to complete the Construction pursuant hereto, only such assignee, and not the Secured Party, shall become liable to pay or perform the Secured Party's obligations under the Construction Contract, the Architect's Agreement and the other Construction Documents. This assignment is a present, perfected and absolute assignment, provided that the Secured Party shall not have the right to undertake completion of the Construction or directly to enforce the provisions of the Construction Contract or the Architect's Agreement until an Event of Default shall occur under the Lease or a Construction Agency Event of Default shall occur under the Lease or a Construction Agency Event of Default shall occur under the Construction Agency Agreement or until the Leased Property is returned to the Secured Party pursuant to the 2 Construction Agency Agreement. Following the occurrence of any such Event of Default or Construction Agency Event of Default, the Secured Party may, without affecting any other right or remedy available to it, exercise its rights under this assignment as provided herein in any manner permitted by law. If any notice to the Assignor is required by law, such notice shall be deemed commercially reasonable if given at least ten (10) days prior to the date of intended action. If the Assignor returns the Leased Property to the Secured Party pursuant to the Construction Agency Agreement, the Secured Party may (subject to any necessary third party consents) exercise all of the Assignor's rights, and assert all of the Assignor's claims, under and with respect to the Construction Contract, the Architect's Agreement, the other Construction Documents and the other Collateral. This assignment may be effectively waived, modified, amended or terminated only by a written instrument executed by the Secured Party. Any waiver by the Secured Party shall be effective only with respect to the specific instance described therein. Delay or course of conduct shall not constitute a waiver of any right or remedy of the Secured Party. THIS ASSIGNMENT HAS BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. All terms capitalized herein and not specifically defined herein which are capitalized and defined in the Lease shall have the same respective meanings for purposes hereof as for purposes of the Lease. 3 IN WITNESS WHEREOF, the undersigned have executed and delivered this assignment as of November 30, 2000, pursuant to proper authority duly granted. EDWARD D. JONES & CO., L.P., a Missouri limited partnership By: EDJ Holding Company, Inc., a Missouri corporation, its sole general partner By: --------------------------------- Name: ------------------------------- Title: ------------------------------ 4 SECURITY AGREEMENT ACCEPTANCE ---------- Atlantic Financial Group, Ltd., (registered to do business in Arizona as AFG Equity, Limited Partnership)being the Secured Party as described in the foregoing Security Agreement and Assignment, hereby acknowledges receipt of the foregoing instrument as of this 30th day of November, 2000, and hereby assigns all of its rights under such agreement to SunTrust Bank, as Agent. ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership) By: Atlantic Financial Managers, Inc., a Texas corporation, its General Partner By: --------------------------------- Name: ------------------------------- Title: ------------------------------ 5 SECURITY AGREEMENT SCHEDULE 1 1. that certain agreement entitled "General Conditions of the Contract for Construction", dated June 14, 2000, between Edward D. Jones & Co., L.P. and Ryan Companies U.S., Inc. (the "Contractor"), having an address at 3131 ---------- East Camelback Road, Suite 220, Phoenix, AZ 85016 (as it may hereafter be supplemented, modified or amended, the "Construction Contract"). ---------------------- 2. that certain agreement entitled "Standard Form of Agreement Between Owner and Architect with Standard Form of Architect's Services", dated April 1, 2000, between Edward D. Jones & Co., L.P. and Arcturis, Inc. (the "Architect") having an address at 1910 Pine Street, St. Louis, MO 63103 pertaining to the Construction (as such agreement may hereafter be supplemented, modified or amended, the "Architect's Agreement"). --------------------- CONSENT AND ACKNOWLEDGMENT BY THE CONTRACTOR -------------------------------------------- The undersigned hereby acknowledges receipt of a counterpart original of, and consents to, the foregoing Security Agreement and Assignment. 1. The undersigned certifies that the Construction Contract is in full force and effect and constitutes the entire agreement between the Assignor and the undersigned, and that there have been no modifications, supplements, amendments or except for change orders (copies of which are attached hereto) which do not increase the contract price under the construction contract and do not diminish the fair market value, useful life or utility of the Leased Property addenda thereto from the form thereof dated , a true, correct and complete copy of which is ------------------ attached hereto, and that the Assignor is not in default under the Construction Contract. 2. The undersigned agrees to look solely to the Assignor for the performance of all of the obligations of the Assignor under the Construction Contract, and not to look to Secured Party for such performance, except only as provided below. However, if the Secured Party exercises, with respect to the Construction Contract, the rights and privileges conferred upon it by the Security Agreement and Assignment and asserts (by written election as specified in the immediately succeeding two sentences) the present right to have the benefits of the Construction Contract and to enforce the same against the undersigned in the place and stead of the Assignor, the undersigned agrees to perform for, and for the benefit of, the Secured Party all of the undersigned's obligations under and pursuant to the Construction Contract if the balance due under the Construction Contract (being the portion of the total price which is then or thereafter due and payable as provided therein, less the total of all portions thereof theretofore paid to or for the benefit of the Contractor) has been paid or is then paid (or for portions thereof not then due under the Construction Contract, such amounts are paid as and when due under the Construction Contract). Prior to the Secured Party's express written election (if any) to succeed to the Assignor's rights and to assume the Assignor's obligations (to the extent provided in the immediately succeeding sentence) under the Construction Contract, the Contractor agrees that the Secured Party shall have no personal obligations or liabilities of any kind under the Construction Contract, the Security Agreement and Assignment, or otherwise. In the event that the Secured Party shall so expressly elect in writing to succeed to the Assignor's rights and to assume the Assignor's obligations under the Construction Contract, the sole obligations that the Secured Party shall assume and be liable for are (i) obligations to pay the Contractor the amounts due under the Construction Contract as provided in the second sentence of this paragraph (whether due before or after such election), and (ii) other obligations of the Assignor under the Construction Contract first accruing after such election by the Secured Party, and the Secured Party shall not be liable or obligated for any other obligations. 3. The Contractor hereby agrees to send to the Secured Party copies of all notices of any pending or threatened default, nonperformance or termination to the Assignor under the Construction Contract by courier or certified mail, return receipt requested, to the following address (or at such other address as the Secured Party shall, from time to time, notify the undersigned in writing): SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Such notices of any pending or threatened default, nonperformance or termination shall be sent at the same time as any such notices are sent to the Assignor. 4. The Contractor agrees that it shall not voluntarily terminate the Construction Contract except in accordance with the following provisions of this paragraph. The Contractor agrees that if the Contractor is entitled to terminate the Construction Contract by reason of defaults of the Assignor, the Contractor shall not terminate the Construction Contract until it has provided the Secured Party with a written notice of its election to so terminate the Construction Contract by virtue of any such default thereunder by the Assignor and the Secured Party has not assumed the Assignor's obligations under the Construction Contract and cured the defaults as (but only to the extent) required in Section 2 of this Consent --------- and Acknowledgment within thirty days after Secured Party's receipt of said written notice. 5. Notices to the Contractor hereunder shall be sent by courier or certified mail, return receipt requested, to the following: Ryan Companies U.S., Inc. 3131 East Camelback Road, Suite 220 Phoenix, Arizona 85016 Attention: Steve Kingery 6. In the event the Construction Contract is terminated, the Secured Party shall be entitled to use, as required for the Construction (as defined in the Lease), without any additional cost or fee, any and all Permits and all Plans and Specifications and final plans, drawings and specifications ("Plans Permits") developed in connection therewith for the Construction, but in no event will such Plans and Permits be used for any project other than the current project. The foregoing is furnished for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by the undersigned, and the undersigned understands and intends that the Secured Party will rely on the foregoing and that the undersigned will be legally bound by the foregoing. This Consent and Acknowledgment shall inure to the benefit of the Secured Party and its successors and assigns. The Contractor hereby acknowledges that the Secured Party will assign all of its rights hereunder to SunTrust Bank, as Agent for the benefit of the Lenders, and agrees that the Agent may exercise all rights of the Secured Party hereunder. All capitalized terms used herein and not otherwise specifically defined shall have the meanings provided therefor in the Security Agreement and Assignment. ii IN WITNESS WHEREOF, the undersigned has executed and delivered this Consent and Acknowledgment as of November , 2000 pursuant to proper --- authority duly granted. RYAN COMPANIES U.S., INC. By: --------------------------------- Name: ------------------------------- Title: ------------------------------ iii Attach copy of Construction Contract iv CONSENT AND ACKNOWLEDGMENT OF ARCHITECT --------------------------------------- The undersigned hereby acknowledges receipt of a counterpart original of, and consents to, the foregoing Security Agreement and Assignment. 1. The undersigned certifies that the Architect's Agreement is in full force and effect and constitutes the entire agreement between the Assignor and the Architect, that there have been no modifications, supplements, amendments or addenda to the Architect's Agreement from the form thereof dated , a true, correct and complete copy of ------------------ which is attached hereto, and that the Assignor is not in default under the Architect's Agreement. 2. The undersigned agrees to look solely to the Assignor for the performance of all of the obligations of the Assignor under the Architect's Agreement, and not to look to Secured Party for such performance. However, if the Secured Party exercises, with respect to the Architect's Agreement, the rights and privileges conferred upon it by the Security Agreement and Assignment and asserts (by written election as specified in the immediately succeeding two sentences) the present right to have the benefits of the Architect's Agreement and to enforce the same against the undersigned in the place and stead of the Assignor, the undersigned agrees to perform for, and for the benefit of, the Secured Party all of the undersigned's obligations under and pursuant to the Architect's Agreement if the balance due under the Architect's Agreement (being the portion of the total price which is then or thereafter due and payable as provided therein, less the total of all portions thereof theretofore paid to or for the benefit of the Architect) has been paid or is then paid (or for portions thereof not then due under the Architect's Agreement, such amounts are paid as and when due under the Architect's Agreement). Prior to the Secured Party's express written election (if any) to succeed to the Assignor's rights and to assume the Assignor's obligations (to the extent provided in the immediately succeeding sentence) under the Architect's Agreement, the Architect agrees that the Secured Party shall have no personal obligations or liabilities of any kind under the Architect's Agreement, the Security Agreement and Assignment or otherwise. In the event that the Secured Party shall so expressly elect in writing to succeed to the Assignor's rights and to assume the Assignor's obligations under the Architect Agreement, the sole obligations which the Secured Party shall assume and be liable for are (i) obligations to pay the Architect the amounts due under the Architect's Agreement as provided in the second sentence of this paragraph (whether due before or after such election), and (ii) other obligations of the Assignor under the Architect's Agreement first accruing after such election by the Secured Party, and the Secured Party shall not be liable or obligated for any other obligations. 3. The Architect hereby agrees to send to the Secured Party copies of all notices to the Assignor under the Architect's Agreement by courier or certified mail, return receipt requested, to the following address (or at such other address as the Secured Party shall, from time to time, notify the undersigned in writing): D-1-1 SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Such notices shall be sent at the same time as any notices to the Assignor. 4. The Architect agrees that it shall not voluntarily terminate the Architect's Agreement except in accordance with the following provisions of this paragraph. The Architect agrees that if the Architect is entitled to terminate the Architect's Agreement by reason of defaults of the Assignor, the Architect shall not terminate the Architect's Agreement until it has provided the Secured Party with a written notice of its election to so terminate the Architect's Agreement by virtue of any such default thereunder by the Assignor and the Secured Party has not assumed the Assignor's obligations under the Architect's Agreement and cured the defaults as (but only to the extent) required in Section 2 of this Consent and Acknowledgment --------- within thirty days after Secured Party's receipt of said written notice. 5. The Architect agrees to deliver to the Secured Party, upon completion of the Construction (as defined in the Lease), a certificate of the Architect, in form and substance reasonably satisfactory to the Secured Party, and stating, if such be the case, that (i) the Building has been completed substantially in accordance with the Plans and Specifications therefor, and the Leased Property is ready for occupancy, (ii) such Plans and Specifications comply in all material respects with all Applicable Laws in effect at such time, and (iii) to the best of the Architect's knowledge, the Leased Property, as so completed, complies in all material respects with all Applicable Laws in effect at such time (capitalized terms in this sentence having the meanings set forth in the Lease). If the Architect cannot deliver such certificate because the facts do not support the foregoing requested certification, the Architect agrees that it will deliver a modified certificate or other written notice to the Secured Party specifying the reason(s) the certificate cannot be given as requested. 6. Notices to the Architect hereunder shall be sent by courier or certified mail, return receipt requested, to the following: ---------------------------------------------- ---------------------------------------------- ---------------------------------------------- Attention: ----------------------------------- 7. In the event the Architect's Agreement is terminated, the Secured Party shall be entitled to use, as required for the Construction (as defined in the Lease), without any additional cost or fee, any and all Permits and all Plans and Specifications and final plans, drawings and specifications developed in connection therewith for the Construction. The foregoing is furnished for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by the undersigned, and the undersigned D-1-2 understands and intends that Secured Party will rely on the foregoing and that the undersigned will be legally bound by the foregoing. This Consent and Acknowledgment shall inure to the benefit of the Secured Party and its successors and assigns. The Architect hereby acknowledges that the Secured Party will assign all of its rights hereunder to SunTrust Bank, as Agent for the benefit of the Lenders, and agrees that the Agent may exercise all rights of the Secured Party hereunder. All capitalized terms used herein and not otherwise specifically defined shall have the meanings provided therefor in the Security Agreement and Assignment. IN WITNESS WHEREOF, the undersigned has executed and delivered this Consent and Acknowledgment as of November , 2000 pursuant to proper --- authority duly granted. [NAME OF ARCHITECT] By: -------------------------------- Name: ------------------------- Title: ------------------------ D-1-3 Attach copy of Architect's Agreement D-1-4 EXHIBIT D-2 TO MASTER AGREEMENT FORM OF DEED OF TRUST This instrument prepared by and when recorded return to: McGuireWoods LLP One James Center Richmond, Virginia 23219 Attention: Edmund S. Pittman, Esq. ============================================================================ DEED OF TRUST AND SECURITY AGREEMENT (INCLUDES FIXTURE FILING UNDER THE UNIFORM COMMERCIAL CODE) dated as of November , 2000 --- from ATLANTIC FINANCIAL GROUP, LTD., as Grantor to , Trustee -------------------------------- for the use and benefit of SUNTRUST BANK, as Agent Tempe, Arizona ============================================================================ THIS INSTRUMENT IS INTENDED ALSO TO BE A FIXTURE FILING TO BE FILED IN THE REAL ESTATE RECORDS OF MARICOPA COUNTY, ARIZONA. TABLE OF CONTENTS
Page ---- 1. Definitions................................................................4 2. Payment of Obligations.....................................................4 3. Other Covenants............................................................4 4. Default: Remedies..........................................................4 5. Remedies Not Exclusive.....................................................5 6. Perforance by the Trustee or the Agent of the Grantor's Obligations........6 7. Duty of the Trustee........................................................6 8. Powers Coupled with an Interest............................................6 9. Execution of Financing Statements..........................................7 10. Security Agreement Under Uniform Commercial Code...........................7 11. Notices....................................................................8 12. Severability...............................................................8 13. Amendments in Writing; No Wavier; Cumulative Remedies......................8 14. Section Headings...........................................................8 15. Successors and Assigns.....................................................9 16. Grantor's Waiver of Rights.................................................9 17. GOVERNING LAW..............................................................9 18. Partial Release; Full Release..............................................9 19. Miscellaneous..............................................................9 20. Future Advances; Revolving Credit.........................................11 EXHIBITS: - --------- EXHIBIT A - Description of Land EXHIBIT B - Schedule of Equipment
i DEED OF TRUST AND SECURITY AGREEMENT ------------------ DEED OF TRUST AND SECURITY AGREEMENT, dated as of November 30, 2000 (as the same may be amended, supplemented or otherwise modified from time to time, this "Deed of Trust"), made by ATLANTIC FINANCIAL GROUP, LTD. ------------- (registered to do business in Arizona as AFG Equity, Limited Partnership), (the "Grantor"), a Texas limited partnership, with an address of 2305 Cedar Springs Road, Suite 415, Dallas, Texas 75201 to oLD REPUBLIC TITLE INSURANCE AGENCY, INC., an Arizona corporation ("Trustee"), with an address of 3200 ------- North Central Avenue, Suite 100, Phoenix, Arizona 85012, for the benefit of SUNTRUST BANK, with an address at 303 Peachtree Street, 3rd Floor, Atlanta, Georgia, 30308, in its capacity as Agent for the benefit of the hereinafter described Lenders (in such capacity, the "Agent"), under the Loan Agreement, ----- dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the "Loan Agreement"), between the Grantor, the Agent and ---- --------- the Lenders party thereto (the "Lenders"). ------- Preliminary Statement --------------------- Pursuant to the Loan Agreement, the Lenders have agreed to make Loans to the Grantor in an aggregate amount not to exceed $31,000,000 upon the terms and subject to the conditions set forth therein, to be evidenced by the notes ("Notes") issued by the Grantor under the Loan Agreement. The ----- Notes bear interest as set forth in the Notes. The rate of interest on the Notes varies from time to time pursuant to a formula as set forth in the Notes, the Loan Agreement and the other Operative Documents. The Grantor is the legal and beneficial owner of the Trust Property (as defined below), other than the Land (as defined below), in which the Grantor holds a leasehold interest pursuant to the Ground Lease. It is a condition, among others, to the obligation of the Lenders to make the Loans to the Grantor under the Loan Agreement that the Grantor shall have executed and delivered this Deed of Trust to the Trustee for the benefit of the Agent on behalf of the Lenders. NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make the Loans under the Loan Agreement, the Grantor hereby agrees with the Trustee and the Agent, for the benefit of the Lenders, as follows: TO SECURE PAYMENT OF ALL THE AMOUNTS ADVANCED UNDER THE LOAN AGREEMENT AND THE NOTES AND THE OTHER OPERATIVE DOCUMENTS AND PAYMENT AND PERFORMANCE OF ALL OF THE OTHER OBLIGATIONS UNDER THE OPERATIVE DOCUMENTS, THE GRANTOR HEREBY CONVEYS TO THE TRUSTEE AND HEREBY BARGAINS, SELLS, CONVEYS, CONFIRMS, GRANTS, ASSIGNS, TRANSFERS, WARRANTS AND SETS OVER TO THE TRUSTEE, WITH POWER OF SALE, IN TRUST FOR THE USE AND BENEFIT OF THE AGENT, FOR THE BENEFIT OF THE LENDERS, AND GRANTS THE AGENT, FOR THE BENEFIT OF THE LENDERS, A SECURITY INTEREST IN: D-2-1 (A) the Grantor's leasehold interest in parcel(s) of real property described on Exhibit A (the "Land"), created pursuant to the Ground Lease, --------- ---- and all of the Grantor's other rights and interests under the Ground Lease; all buildings, structures, Fixtures (as defined herein), Equipment (as defined herein), and other improvements of every kind existing at any time and from time to time on or under the Land, together with any and all appurtenances to such buildings, structures or improvements, including sidewalks, utility pipes, conduits and lines, parking areas and roadways, and including all modifications, alterations, renovations, restorations, repairs, replacements and rebuilding, improvements and other additions to or changes in any of the foregoing at any time ("Improvements"); all ------------ agreements, easements, rights of way or use, rights of ingress or egress, privileges, appurtenances, tenements, hereditaments, reversions, remainders water rights, and other rights and benefits at any time belonging or pertaining to the Land or the Improvements, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the Land or the Improvements and all permits, licenses and rights, whether or not of record, appurtenant to the Land or the Improvements (the "Appurtenant Rights"; the Land, Improvements, ------------------ Appurtenant Rights, Fixtures and Equipment relating thereto being collectively referred to as the "Property"); -------- (B) all the estate, right, title, claim or demand whatsoever of the Grantor, in possession or expectancy, in and to the Property or any part thereof; (C) all right, title and interest of the Grantor in and to all of the fixtures, furnishings and fittings of every kind and nature whatsoever, and all appurtenances and additions thereto and substitutions or replacements thereof (together with, in each case, attachments, components, parts and accessories) currently owned or subsequently acquired by the Grantor and now or subsequently attached to, or contained in or used or usable in any way in connection with any operation or letting of the Property (all of the foregoing in this paragraph being referred to as the "Fixtures"); -------- (D) all right, title and interest of the Grantor in and to all of the following "Equipment": all fixtures, personal property, chattels, business machines, machinery, apparatus, equipment, furnishings, fittings and all appurtenances and additions thereto and substitutions or replacements thereof (together with, in each case, attachments, components, parts and accessories) currently owned or subsequently acquired by the Grantor or the Lessee and now or subsequently affixed or attached to, or contained in or used or usable in any way in connection with any operation or letting of the Property, including but without limiting the generality of the foregoing, all personal property and equipment described on Exhibit B --------- attached hereto and made a part hereof, all signs, screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs, storm doors and windows, furniture and furnishings, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus, furnaces, boilers, compressors, elevators, refrigerating, and incinerating equipment, escalators, refrigerators, display cases, shelving, racking, movable and demountable partitions, elevators, loading and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus), snow removal and lawn maintenance equipment, motorized vehicles, telephones, communication systems (including satellite dishes and antennae), televisions, computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, D-2-2 pumps, tanks, connectives, conduits, ducts, partitions, appliances, equipment, apparatus, fittings and fixtures of every kind and description but excluding the Lessee's inventory (all of the foregoing in this paragraph being referred to as the "Equipment"); --------- (E) all right, title and interest of the Grantor in and to all substitutes and replacements of, and all additions and improvements to, the Improvements and the Fixtures and Equipment, subsequently acquired by the Grantor or constructed, assembled or placed by the Grantor on the Land, immediately upon such acquisition, release, construction, assembling or placement, including, without limitation, any and all building materials whether stored at the Property or offsite, and, in each such case, without any further conveyance, mortgage, assignment or other act by the Grantor; (F) all right, title and interest of the Grantor in, to and under all trade names, trade marks, logos, copyrights, good will and books and records relating to or used in connection with the Property or any part thereof or the operation thereof and all general intangibles related to the operation of the Improvements now existing or hereafter arising; (G) all right, title and interest of the Grantor in and to all unearned premiums under insurance policies now or subsequently obtained by the Lessee or Grantor relating to the Property or any part thereof and the Grantor's interest in and to all proceeds of any such insurance policies (including title insurance policies) including the right to collect and receive such proceeds and all awards and other compensation, including the interest payable thereon and the right to collect and receive the same, made to the present or any subsequent owner of the Property for the taking by eminent domain, condemnation or otherwise, of all or any part of the Property or the use thereof or any easement or other right therein; (H) all right, title and interest of the Grantor in and to (i) all consents, licenses, building permits, certificates of occupancy and other governmental approvals relating to construction, completion, occupancy, use or operation of the Property or any part thereof, (ii) all Plans and Specifications relating to the Property, (iii) the Construction Contract, (iv) the Architect's Agreement, (v) all contracts and agreements relating to the acquisition and installation of the Equipment and (vi) the Construction Agency Agreement; (I) the Guaranty, the Master Lease Agreement, dated as of the date hereof, between the Grantor, as Lessor, and the Lessee described below (as restated, amended, supplemented or otherwise modified from time to time, the "Lease"), all Rent and all other rents, payments, purchase prices or ----- proceeds, receipts, revenues, income avails, Awards, Loss Proceeds, issues and profits payable under the Lease or any of the Operative Documents (including, without limitation, the Recourse Deficiency Amount) or pursuant to any other lease, sublease, license or other use or occupancy agreement or arrangement with respect to the Property; (J) all right, title and interest of the Grantor under completion bonds, performance bonds payment bonds and other similar bonds and surety agreements and arrangements related to the Property or any party thereof; and (K) all proceeds, both cash and noncash, of the foregoing; D-2-3 (All of the foregoing property and rights and interests now owned or held or subsequently acquired by the Grantor and described in the foregoing clauses (A) through (K) are collectively referred to as the "Trust ----- Property"). - -------- TO HAVE AND TO HOLD the Trust Property and the rights and privileges hereby granted unto the Trustee, its successors and assigns for the uses and purposes set forth, until all amounts owed by and all other obligations of the Grantor to the Lenders or the Agent, on behalf of the Lenders, under the Notes, the Loan Agreement and the other Operative Documents (collectively, the "Obligations") are indefeasibly paid and ----------- performed in full. 1. Definitions. Capitalized terms not otherwise defined in this ----------- Deed of Trust shall have the respective meanings assigned thereto in the Appendix A to the Master Agreement (as amended, supplemented or otherwise - ---------- modified from time to time the "Master Agreement"), dated as of the date ------ --------- hereof among Regis Corporation, as Lessee, Construction Agent and Guarantor (the "Lessee"), the Lessor, the Assignee, as Agent, and the Lenders parties ------ thereto (the "Lenders"), and the rules of interpretation set forth in ------- Appendix A shall apply to this Deed of Trust. Copies of the Master - ---------- Agreement, the Lease and the other Operative Documents (as defined in the Master Agreement) are on file at the office of the Agent. 2. Payment of Obligations. The Grantor shall pay the Obligations ---------------------- in accordance with the terms of the Loan Agreement, the Notes and the other Operative Documents and perform each term to be performed by it under the Loan Agreement, the Notes and the other Operative Documents. 3. Other Covenants. At any time and from time to time, upon the --------------- written request of the Agent or the Trustee, and at the sole expense of the Grantor (but only to the extent the Grantor has been reimbursed by the Lessee), the Grantor will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Agent or the Trustee reasonably may request for the purposes of obtaining or preserving the full benefits of this Deed of Trust and of the rights and powers granted by this Deed of Trust. 4. Default: Remedies. ----------------- (A) If a Loan Event of Default has occurred and is continuing and the Loans have been accelerated pursuant to Section 5 of the Loan Agreement: --------- (B) The Agent or its agents may enter and take possession of the Trust Property by actual physical possession or by written notice served personally upon or sent by registered or certified mail, postage prepaid, to the Grantor, and the Grantor shall surrender possession upon request, and the Agent may take possession without further authorization required and may let the Trust Property and sue for and otherwise collect and receive the rents, issues and profits thereof, make repairs and apply said rentals and profits, after payment of all necessary or proper charges and expenses, on account of the amounts hereby secured. (C) The Agent shall, as a matter of contract right, at the option of the Agent, be entitled to the appointment of a receiver for the Trust Property, and the Grantor hereby D-2-4 consents to such appointment without the posting of a bond or undertaking without regard to the value of the Trust Property and waives notice of any application therefor. (D) The Trustee may foreclose this Deed of Trust as a mortgage pursuant to the applicable laws of the State of Arizona, or the Trustee, at the direction of the Agent, and without demand on the Grantor, may sell the Trust Property at public auction, as a whole or in such parcels, for cash or credit and, in addition to the requirements imposed by state law, upon any terms as the Trustee deems appropriate. Before such sale at public auction is made, there shall first be such notice of default and such notice or advertisement of the time, place and terms of sale as required by Applicable Law. Such sale may be postponed for any reason, from time to time, to the extent permitted by Applicable Law. In the event the sale is postponed, the Trustee shall advertise or give notice of any subsequent sale in the same manner as the original advertisement or notice of the sale provided above or otherwise as may be permitted by Applicable Law. The Trustee shall execute and deliver to the purchaser its Trustee's deed conveying that portion of the Trust Property so sold, but without any covenant or warranty, express or implied. The recitals in the Trustee's deed of any matters or facts shall be conclusive proof of the truthfulness thereof. The Agent or any Lender may become the purchaser of the Trust Property so sold, and no purchaser shall be required to see to the proper application of the purchase money. Unless otherwise required by Applicable Law, the Trustee shall apply the proceeds of sale as directed by the Agent. The Grantor agrees to surrender possession of the Trust Property so sold to the purchaser at the sale immediately after such sale. (a) The Grantor hereby waives the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws (whether equitable or statutory) now or hereafter in force and all rights of marshaling in the event of any sale of the Trust Property or any interest therein. (b) In the event of a trustee's or other foreclosure sale hereunder and if at the time of such sale the Grantor or any other party (other than a tenant under the Lease to the extent the Agent shall have expressly subordinated the lien of this Deed of Trust or a tenant with whom the Agent has entered into a written covenant of nondisturbance to the extent provided in such covenant) occupies the portion of the Trust Property so sold or any part thereof, such occupant shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day, terminable at the will of such purchaser, at a reasonable rental per day based upon the value of the portion of the Trust Property so occupied (but not less than any rental theretofore paid by such tenant, computed on a daily basis). An action of forcible detainer shall lie if any such tenant holds over after a demand in writing for possession of such portion of the Trust Property. 2. Remedies Not Exclusive. The Trustee shall be entitled to ---------------------- enforce payment of the indebtedness and performance of the Obligations and to exercise all rights and powers under this Deed of Trust or under any of the other Operative Documents or other agreement or any laws now or hereafter in force, notwithstanding some or all of the Obligations may now or hereafter be otherwise secured, whether by deed of trust, deed to secure debt, mortgage, security D-2-5 agreement, pledge, lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement, shall prejudice or in any manner affect the Trustee's right to realize upon or enforce any other security now or hereafter held by the Trustee, it being agreed that the Trustee shall be entitled to enforce this Deed of Trust and any other security now or hereafter held by the Trustee in such order and manner as the Trustee or the Agent may determine in its or their absolute discretion. No remedy herein conferred upon or reserved to the Trustee or the Agent is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Operative Documents to the Trustee or the Agent or to which they may otherwise be entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Agent. In no event shall the Trustee, in the exercise of the remedies provided in this Deed of Trust (including, without limitation, in connection with the assignment of Rent to the Agent, or the appointment of a receiver and the entry of such receiver on to all or any part of the Trust Property), be deemed a "mortgagee in possession," and the Trustee shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies. 3. Performance by the Trustee or the Agent of the Grantor's -------------------------------------------------------- Obligations. If the Grantor fails to perform or comply with any of its - ----------- agreements contained herein, the Trustee or the Agent, at its or their option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement. The expenses of the Trustee and the Agent incurred in connection with actions undertaken as provided in this Section, together with interest thereon at a rate per annum equal to the Overdue Rate, from the date of payment by the Trustee or the Agent, as applicable, to the date reimbursed by the Grantor, shall be payable by the Grantor to the Trustee or the Agent on demand (but only to the extent the Grantor has been reimbursed by the Lessee). 4. Duty of the Trustee. The Trustee's sole duty with respect to ------------------- the custody, safekeeping and physical preservation of any Trust Property in its possession, under Section 9-207 of the Uniform Commercial Code as in effect in the state in which the Trust Property is located (the "UCC") or otherwise, shall be to deal with it in the same manner as the Trustee, acting with reasonable care, deals with the preservation and custody of similar property for its own account. Neither the Trustee, the Agent nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Trust Property or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Trust Property upon the request of the Grantor or any other Person or to take any other action whatsoever with regard to the Trust Property or any part thereof. 5. Powers Coupled with an Interest. All powers, authorizations ------------------------------- and agencies contained in this Deed of Trust are coupled with an interest and are irrevocable until this Deed of Trust is terminated and the lien created hereby is released. 6. Execution of Financing Statements. Pursuant to Section 9-402 --------------------------------- of the UCC, the Grantor authorizes the Trustee or the Agent to file financing statements with respect to the Trust Property without the signature of the Grantor in such form and in such filing offices as D-2-6 the Trustee or the Agent reasonably determines appropriate to perfect the security interests of the Trustee and the Agent under this Deed of Trust. A carbon, photographic or other reproduction of this Deed of Trust shall be sufficient as a financing statement for filing in any jurisdiction. 7. Security Agreement under Uniform Commercial Code. ------------------------------------------------ (a) It is the intention of the parties hereto that this Deed of Trust shall constitute a security agreement within the meaning of the UCC, and the Grantor hereby grants the Agent, for the benefit of the Lenders, a security interest in the Fixtures, Equipment, Lease (including, without limitation, the Rents therefrom) and all other Trust Property which is personal property, including, without limitation, all proceeds, both cash and noncash, of any of the foregoing (collectively, the "Personal Property"). ----------------- (b) If a Loan Event of Default shall occur and is continuing and the Loans have been accelerated pursuant to Section 5 of the Loan Agreement, --------- then in addition to having any other right or remedy available at law or in equity, the Trustee, at the direction of the Agent, shall have the option of either (i) proceeding under the UCC and exercising such rights and remedies as may be provided to a secured party by the UCC with respect to all or any portion of the Trust Property which is personal property (including, without limitation, taking possession of and selling such property) or (ii) treating such property as real property and proceeding with respect to both the real and personal property constituting the Trust Property in accordance with the Trustee's rights, powers and remedies with respect to the real property (in which event the default provisions of the UCC shall not apply). If the Trustee, at the direction of the Agent, shall elect to proceed under the UCC, then five (5) days' notice of sale of the personal property shall be deemed reasonable notice and the reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by the Trustee or the Agent shall include, but not be limited to, attorneys' fees and legal expenses. At the Trustee's request, the Grantor shall assemble the personal property and make it available to the Trustee and the Agent at a place designated by the Trustee or the Agent which is reasonably convenient to both parties. The Grantor stipulates and agrees that a sale of the Personal Property in conjunction with the Trust Property is a commercially reasonable manner of disposing of the Personal Property. The Agent also may (x) require the Grantor to, and the Grantor hereby agrees that the Grantor will at the Grantor's expense and upon request of the Agent forthwith, assemble all or part of the Personal Property as directed by the Agent and make it available to the Agent at a place to be designated by the Agent which is reasonably convenient to the parties, and (y) sell the Personal Property or any part thereof in one or more parcels at public or private sale for cash or credit or for future delivery, and at such price or prices and upon such other terms as the Agent may deem commercially reasonable. The Agent shall not be obligated to make any sale of the Personal Property regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (c) The Grantor, the Trustee and the Agent agree, to the extent permitted by law, that this Deed of Trust upon recording or registration in the real estate records of the proper office shall constitute a financing statement filed as a "fixture filing" within the meaning of Sections 9-313 and 9-402 of the UCC. D-2-7 (d) The Grantor, upon request by the Trustee or the Agent from time to time, shall execute, acknowledge and deliver to the Trustee or the Agent one or more separate security agreements, in form satisfactory to the Trustee and the Agent, covering all or any part of the Trust Property and will further execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as the Trustee or the Agent may request in order to perfect, preserve, maintain, continue or extend the security interest under and the priority of this Deed of Trust and such security instrument. The Grantor further agrees to pay to the Trustee and the Agent on demand all costs and expenses incurred by the Trustee or the Agent in connection with the preparation, execution, recording, filing and re-filing of any such document and all reasonable costs and expenses of any record searches for financing statements the Trustee or the Agent shall reasonably require; provided, however, that the Grantor shall not be liable -------- ------- for payment of any amount under this Section to the extent Lessee is responsible for payment of such amount under the Lease or the Master Agreement. If the Grantor shall fail to furnish any financing or continuation statement within ten (10) days after request by the Trustee or the Agent, then pursuant to the provisions of the UCC, the Grantor hereby authorizes the Trustee and the Agent, without the signature of the Grantor, to execute and file any such financing and continuation statements. The filing of any financing or continuation statements in the records relating to personal property or chattels shall not be construed as in any way impairing the right of the Trustee to proceed against any personal property encumbered by this Deed of Trust as real property, as set forth above. 8. Notices. All notices, requests and demands to or upon the ------- Trustee, the Agent or the Grantor shall be given in accordance with Section ------- 8.2 of the Master Agreement. - --- 9. Severability. Any provision of this Deed of Trust which is ------------ prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. 10. Amendments in Writing; No Waiver; Cumulative Remedies. ----------------------------------------------------- (a) None of the terms or provisions of this Deed of Trust may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Grantor, the Trustee and the Agent in accordance with the terms of the Loan Agreement. (b) No failure to exercise, nor any delay in exercising, on the part of the Trustee or the Agent, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Trustee or the Agent would otherwise have on any future occasion. (c) The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. D-2-8 11. Section Headings. The section headings used in this Deed of ---------------- Trust are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 12. Successors and Assigns. This Deed of Trust shall run with the ---------------------- land and be binding upon the successors and assigns of the Grantor and shall inure to the benefit of the Trustee, the Agent, on behalf of the Lenders, and their respective successors and assigns. 13. Grantor's Waiver of Rights. Except as otherwise set forth -------------------------- herein, to the fullest extent permitted by law, the Grantor waives the benefit of all laws now existing or that may subsequently be enacted providing for (i) any appraisement before sale of any portion of the Trust Property, (ii) any extension of the time for the enforcement of the collection of the indebtedness or the creation or extension of a period of redemption from any sale made in collecting such debt and (iii) exemption of the Trust Property from attachment, levy or sale under execution or exemption from civil process. Except as otherwise set forth herein, to the full extent the Grantor may do so, the Grantor agrees that the Grantor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, exemption, extension, reinstatement or redemption, or requiring foreclosure of this Deed of Trust before exercising any other remedy granted hereunder, and the Grantor, for the Grantor and its successors and assigns, and for any and all Persons ever claiming any interest in the Trust Property, to the extent permitted by law, hereby waives and releases all rights of reinstatement, redemption, valuation, appraisement stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshaling in the event of foreclosure of the liens hereby created. 14. GOVERNING LAW. THIS DEED OF TRUST SHALL BE GOVERNED BY, AND ------------- CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ARIZONA. NOTWITHSTANDING THE FOREGOING, THE MASTER AGREEMENT, LOAN AGREEMENT, AND NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. 15. Partial Release; Full Release. The Agent, may release, for ----------------------------- such consideration or none, as it may require, any portion of the Trust Property without, as to the remainder of the Trust Property, in any way impairing or affecting the lien, security interest and priority herein provided for the Trustee compared to any other lien holder or secured party. 16. Miscellaneous. ------------- (a) If (a) the Trust Property shall consist of one or more parcels, whether or not contiguous and whether or not located in the same city or county, or (b) in addition to this instrument, the Trustee and the Agent shall now or hereafter hold one or more additional mortgages, liens, deeds of trust or other security (directly or indirectly) for the obligations secured hereby upon other property in the state in which the Trust Property is located (whether or not such property is owned by the Grantor or by others) or (c) both the circumstances described D-2-9 in clauses (a) and (b) shall be true, then to the fullest extent permitted by law, the Trustee and the Agent may, in their discretion, commence or consolidate in a single foreclosure action all foreclosure proceedings against all such collateral securing the Obligations (including the Trust Property), which action may be brought or consolidated in the courts of any county in which any of such collateral is located. The Grantor acknowledges that the right to maintain a consolidated foreclosure action is a specific inducement to the Agent to extend the Obligations, and the Grantor expressly and irrevocably waives any objections to the commencement or consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may ----- --- ---------- now or hereafter have. The Grantor further agrees that if the Trustee or the Agent shall be prosecuting one or more foreclosure or other proceedings against a portion of the Trust Property or against any collateral other than the Trust Property, which collateral directly or indirectly secures the Obligations, or if the Trustee or the Agent shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral, then, whether or not such proceedings are being maintained or judgments were obtained in or outside the state in which the Trust Property is located, the Trustee and the Agent may commence or continue foreclosure proceedings and exercise its other remedies granted in this instrument against all or any part of the Trust Property, and the Grantor waives any objections to the commencement or continuation of a foreclosure of this instrument or exercise of any other remedies hereunder based on such other proceedings or judgments and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this instrument or such other proceedings on such basis. Neither the commencement nor continuation of proceedings to foreclose this instrument nor the exercise of any other rights hereunder nor the recovery of any judgment by the Trustee and the Agent in any such proceedings shall prejudice, limit or preclude the Trustee's and the Agent's rights to commence or continue one or more foreclosure or other proceedings or obtain a judgment against any other collateral (either in or outside the state in which the Trust Property is located) which directly or indirectly secures the obligations secured hereby. The Grantor hereby waives (i) any objections to the commencement or continuation of an action to foreclose this Deed of Trust or exercise of any other remedies hereunder based on any action being prosecuted or any judgment entered with respect to the Obligations or any liens or security interests that secure payment and performance of the Obligations and (ii) any objections to the commencement of, continuation of, or entry of a judgment in any such other action based on any action or judgment connected to this Deed of Trust. The Grantor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this instrument based on any action or judgment connected to this instrument. It is expressly understood and agreed that to the fullest extent permitted by law, the Trustee may, at its election, cause the sale of all collateral which is the subject of a single foreclosure action at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the obligations secured hereby (directly or indirectly) in the most economical and least time-consuming manner. In case of a foreclosure sale, the Trust Property may be sold, at the Trustee's election, in one parcel or in more than one parcel and the Trustee is specifically empowered (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Trust Property to be held. D-2-10 (b) Except as expressly provided in the Operative Documents, the Agent and the Trustee, with the express written consent of the Grantor, may at any time or from time to time renew or extend this Deed of Trust, or alter or modify the same in any way. The Agent may waive any of the terms, covenants or conditions hereof in whole or in part and may release any portion of the Trust Property or any other security, and grant such extensions and indulgences in relation to the Obligations secured hereby as the Agent may determine without the consent of any other Person (including, without limitation, the Grantor) and without any obligation to give notice of any kind thereto and without in any manner affecting the priority of the lien hereof on any part of the Trust Property. (c) The Trustee shall be under no duty to take any action hereunder except as expressly required, to perform any act which would involve it in expense or liability, or to institute or defend any suit in respect hereof, unless properly indemnified to its satisfaction. All reasonable expenses, charges, counsel fees and other disbursements incurred by Trustee from and after the occurrence of a Loan Event of Default in and about the administration and execution of the trust created hereby, and the performance of its duties and powers hereunder shall be secured by this Deed of Trust prior to the indebtedness represented by the Notes and shall bear interest at the Overdue Rate set forth in the Operative Documents. The Agent, with or without cause, is hereby authorized and empowered to substitute and appoint, at any time and from time to time, by an instrument recorded wherever this Deed of Trust is recorded, a trustee in the place of any Trustee hereunder. (d) Reserved. (e) The Grantor agrees to indemnify, defend and hold the Trustee harmless from and against any and all liability, loss, damage and expense, including reasonable attorneys' fees, which it may incur by reason of this Deed of Trust or by reason of any action taken by the Trustee hereunder, and from and against any and all claims and demands whatsoever which may be asserted against the Trustee by reason of any alleged obligation or undertaking on its part to perform or discharge any of the terms, covenants or conditions contained herein, unless caused by the gross negligence or willful misconduct of the Trustee. Should the Trustee incur any such liability, loss, damage or expense, the amount thereof, together with interest thereon at the Overdue Rate set forth in the Operative Documents, shall be secured by this Deed of Trust and shall be payable by the Grantor to the Trustee within ten (10) days after demand therefor. (f) Nothing contained in this Deed of Trust shall operate or be construed to obligate the Trustee, the Agent or any Lender to perform any of the terms, covenants or conditions contained in any lease of the Trust Property or otherwise to impose any obligation upon the Trustee, the Agent or any Lender with respect to any such lease. This Deed of Trust shall not operate to place upon the Trustee, the Agent or any Lender any responsibility for the operation, control, care, management or repair of the Trust Property prior to the Trustee, the Agent or any Lender taking possession thereof, and the execution of this Deed of Trust by the Grantor shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Trust Property prior to the Trustee, the Agent or any such Lender taking possession thereof is and shall be that of the Grantor. D-2-11 17. Future Advances; Revolving Credit. This Deed of Trust is --------------------------------- given to secure not only existing indebtedness, but also future advances made pursuant to or as provided in the Loan Agreement and the other Operative Documents, whether such advances are obligatory or to be made at the option of the Lenders, or otherwise, to the same extent as if such future advances were made on the date of execution of this Deed of Trust, although there may be no advance made at the time of execution hereof, and although there may be no indebtedness outstanding at the time any advance is made. To the fullest extent permitted by law, the lien of this Deed of Trust shall be valid as to all such indebtedness, including all revolving credit and future advances, from the time this Deed of Trust is recorded. D-2-12 IN WITNESS WHEREOF, the undersigned has caused this Deed of Trust to be duly executed and delivered as of the date first above written. ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership), as Grantor By: Atlantic Financial Managers, Inc., a Texas corporation, its General Partner By: ---------------------------------- Name: --------------------------------- Title: -------------------------------- STATE OF -------------------- ) COUNTY OF ) ss. ------------------- ) The foregoing instrument was acknowledged before me this day ----- of November, 2000, by , the --------------------------------- , of Atlantic Financial Managers, Inc., a - --------------------------------- Texas corporation, general partner of ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership, on behalf of the limited partnership. ------------------------------------------- Notary Public My Commission Expires: - --------------------------- D-2-N-1 EXHIBIT A Description of Land ------------------- [TO BE ADDED] EXHIBIT B Schedule of Equipment --------------------- [TO BE ADDED] D-2-1 EXHIBIT F TO MASTER AGREEMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT To: SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Re: EDWARD D. JONES & CO., L.P. --------------------------- Ladies and Gentlemen: We refer to Section 6.2 of the Master Agreement, dated as of ----------- November , 2000 (as heretofore or hereafter amended, the "Master --- ------ Agreement"), among Edward D. Jones & Co., L.P., as Lessee, Guarantor and - --------- Construction Agent, Atlantic Financial Group, Ltd., as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Master Agreement. This agreement is delivered to you pursuant to Section 6.2 of the ----------- Master Agreement and also constitutes notice to you, of the assignment to (the "Assignee") of % of (i) its Commitment and (ii) the - --------------- -------- ---- A Loans and B Loans of (the "Assignor") outstanding -------------------- -------- under the Loan Agreement and Master Agreement on the date hereof, which assignment shall be effective as of , . After giving ------------- --- ----- effect to the foregoing assignment, the Assignor's and the Assignee's Commitment Percentage for the purposes of the Loan Agreement and Master Agreement are set forth opposite such Person's name on the signature pages hereof. [Add paragraph dealing with accrued interest and fees with respect to Loans assigned.] The Assignee hereby acknowledges and confirms that it is an Eligible Assignee and that it has received a copy of each of the Operative Documents. The Assignee further confirms and agrees that in becoming a Lender and in making its Loans under the Loan Agreement, such actions have and will be made without recourse to, or representation or warranty by, the Agent, the Assignor or the Lessor. Except as otherwise provided in the Master Agreement, effective as of the date of acceptance hereof by the Agent and the Lessee: F-1 (a) the Assignee ------------ (i) shall be deemed automatically to have become a party to the Master Agreement and the Loan Agreement, have all the rights and obligations of a "Lender" under the Master Agreement, the Loan Agreement and the other Operative Documents as if it were an original signatory thereto to the extent specified in the second paragraph hereof; and (ii) agrees to be bound by the terms and conditions set forth in the Master Agreement, the Loan Agreement and the other Operative Documents that are applicable to a Lender, and makes the representations and warranties of a Lender therein, as if it were an original signatory thereto; and (b) the Assignor shall be released from its obligations under the Master Agreement, the Loan Agreement and the other Operative Documents to the extent of the interest assigned hereby as specified in the second paragraph hereof; provided, that the Assignor shall not be relieved of any such obligation arising prior to the date specified in the second paragraph hereof. The Assignor and the Assignee hereby agree that the [Assignor] [Assignee] will pay to the Agent the processing fee referred to in Section ------- 6.2 of the Master Agreement upon the delivery hereof. - --- The Assignee hereby advises you of the following administrative details with respect to the assigned Loans and requests the Agent to acknowledge receipt of this document: A. Address for Notices: Institution Name: Attention: Telephone: Facsimile: B. Payment Instructions: This Agreement may be executed by the Assignor and Assignee in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. F-2 Adjusted Commitment Percentage [ASSIGNOR] - ------------------------------ % By: ------- ----------------------------- Title: -------------------------- Commitment Percentage % [ASSIGNEE] ------- By: ----------------------------- Name Printed: --------------- Title: ---------------------- Accepted and Acknowledged this day of , ---- ------------ ---- SUNTRUST BANK, as Agent By: -------------------------------------- Name Printed: ---------------------------- Title: ----------------------------------- EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, Inc., its sole general partner By: -------------------------------------- Name Printed: --------------------------- Title: ---------------------------------- F-3 EXHIBIT H TO MASTER AGREEMENT FORM OF COMPLETION DATE CERTIFICATE TO: Lessor, Agent and each Lender (as defined in the Master Agreement referred to below) Reference is hereby made to the Master Agreement, dated as of November , 2000 (as heretofore amended, the "Master Agreement"), among --- ---------------- Edward D. Jones & Co., L.P., as Lessee, Guarantor and Construction Agent, Atlantic Financial Group, Ltd., as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by The Jones Financial Companies, L.L.L.P. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Master Agreement. This Certificate is being delivered pursuant to Section 3.5(c) of the Master Agreement. The Construction Agent hereby certifies to you that as of , (the "Completion Date") with respect to the Leased - ----------------- ---- Property: 3. All amounts owing to third parties for the Construction have been paid in full (other than contingent obligations for which the Construction Agent has made adequate reserves), and no litigation or proceedings are pending, or to the best of the Construction Agent's knowledge, are threatened, against the Leased Property, the Construction Agent or the Lessee which could reasonably be expected to have a Material Adverse Effect. 4. All material consents, licenses and permits and other governmental authorizations or approvals required for the Construction and operation of the Leased Property have been obtained and are in full force and effect. 5. The Leased Property has available all services of public facilities and other utilities necessary for the use and operation of the Leased Property for its intended purposes, including, without limitation, adequate water, gas and electrical supply, storm and sanitary sewerage facilities, telephone, other required public utilities and means of access between the Building and public highways for pedestrians and motor vehicles. 6. All material agreements, easements and other rights, public or private, which are necessary to permit the lawful use and operation of the Leased Property as the Lessee intends to use the Leased Property under the Lease and which are necessary to permit the lawful intended use and operation of all then intended utilities, driveways, roads and other means of egress and ingress to and from the same have been obtained and are in full force and effect and neither the Construction Agent nor the Lessee has any knowledge of any pending modification or cancellation of any of the same, and the use of the Leased Property does not depend on any H-1 variance, special exception or other municipal approval, permit or consent that has not been obtained and is in full force and effect for its continuing legal use. 7. All of the requirements and conditions set forth in Section ------- 3.5(b) of the Master Agreement have been completed and fulfilled with - ------ respect to the Leased Property and the Construction. 8. To the best of the Construction Agent's knowledge, the Leased Property is in compliance in all material respects with all applicable zoning laws and regulations. The Construction Agent has caused this Completion Date Certificate to be executed and delivered by its duly authorized officer this , . - -------------- ----- EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, Inc., its sole general partner By: -------------------------------- Name Printed: ---------------------- Title: ----------------------------- H-2 EXHIBIT I TO MASTER AGREEMENT PAYMENT DATE NOTICE Atlantic Financial Group, Ltd. 2305 Cedar Springs Road Suite 415 Dallas, Texas 75201 Attention: Stephen S. Brookshire SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Re: EDWARD D. JONES & CO., L.P. --------------------------- Ladies and Gentlemen: This Payment Date Notice is delivered to you pursuant to Section 2.3(d) of the Master Agreement, dated as of November , 2000 (together --- with all amendments, if any, from time to time made thereto, the "Master ------ Agreement"), among Edward D. Jones & Co., L.P., as Lessee, Guarantor and - --------- Construction Agent, Atlantic Financial Group, Ltd., as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by The Jones Financial Companies, L.L.L.P. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Master Agreement. Edward D. Jones & Co., L.P., as Construction Agent, hereby requests that on : ----------- 1. $ of the presently outstanding Funded Amounts ----------- originally made on , [and $ of the ------------ --- ----- ------------- presently outstanding Funded Amounts originally made on , --------------- ], - ----- 2. and all presently being maintained as (1)[LIBOR Advances] [Base Rate Advances], 3. be [converted into] [continued as], 4. (2)[LIBOR Advances having a Rent Period of _____ months] [Base Rate Advances]. - --------------- (1) Select appropriate interest rate option. I-1 Edward D. Jones & Co., L.P., as Lessee, Guarantor and Construction Agent, hereby certifies and warrants that no Potential Event of Default or Event of Default has occurred and is continuing. Edward D. Jones & Co., L.P. has caused this Payment Date Notice to be executed and delivered, and the certification and warranty contained herein to be made, by its authorized officer this day of ----- , 2000. - -------------- EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, its sole general partner By: ------------------------------- Name Printed: --------------------- Title: ---------------------------- - --------------- (2) Insert appropriate interest rate option. I-2 EX-10.19 6 exh10p19.txt MASTER LEASE AGREEMENT Exhibit 10.19 ------------- ============================================================================== MASTER LEASE AGREEMENT Dated as of November 30, 2000 between ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Arizona as AFG Equity, Limited Partnership), as Lessor, and EDWARD D. JONES & CO., L.P., as Lessee ============================================================================== TABLE OF CONTENTS (Lease Agreement)
Page ARTICLE I DEFINITIONS...................................................................................1 ----------- ARTICLE II LEASE OF LEASED PROPERTY......................................................................1 ------------------------ Section 2.1 Restatement of Bridge Lease; Acceptance and Lease of Property.................................1 Section 2.2 Acceptance Procedure..........................................................................2 ARTICLE III RENT..........................................................................................2 ---- Section 3.1 Basic Rent....................................................................................2 Section 3.2 Supplemental Rent.............................................................................2 Section 3.3 Method of Payment.............................................................................2 Section 3.4 Late Payment..................................................................................3 Section 3.5 Net Lease; No Setoff, Etc.....................................................................3 Section 3.6 Certain Taxes.................................................................................4 Section 3.7 Utility Charges...............................................................................5 ARTICLE IV WAIVERS.......................................................................................5 ------- ARTICLE V LIENS; EASEMENTS; PARTIAL CONVEYANCES.........................................................6 ------------------------------------- ARTICLE VI MAINTENANCE AND REPAIR; ALTERATIONS, MODIFICATIONS AND ADDITIONS..............................7 ---------------------------------------------------------------- Section 6.1 Maintenance and Repair; Compliance With Law...................................................7 Section 6.2 Improvements and Alterations..................................................................8 Section 6.3 Title to Alterations..........................................................................9 Section 6.4 Lessee's Personal Property...................................................................10 ARTICLE VII USE..........................................................................................10 --- ARTICLE VIII INSURANCE....................................................................................10 --------- ARTICLE IX ASSIGNMENT AND SUBLEASING....................................................................12 ------------------------- ARTICLE X LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE....................................................12 ----------------------------------------- Section 10.1 Event of Loss................................................................................12 Section 10.2 Event of Taking..............................................................................13 Section 10.3 Casualty.....................................................................................13 Section 10.4 Condemnation.................................................................................14 Section 10.5 Verification of Restoration and Rebuilding...................................................14 i Section 10.6 Application of Payments......................................................................14 Section 10.7 Prosecution of Awards........................................................................15 Section 10.8 Application of Certain Payments Not Relating to an Event of Taking...........................16 Section 10.9 Other Dispositions...........................................................................16 Section 10.10 No Rent Abatement............................................................................16 ARTICLE XI INTEREST CONVEYED TO LESSEE..................................................................16 --------------------------- ARTICLE XII EVENTS OF DEFAULT............................................................................17 ----------------- ARTICLE XIII ENFORCEMENT..................................................................................22 ----------- Section 13.1 Remedies.....................................................................................22 Section 13.2 Remedies Cumulative; No Waiver; Consents.....................................................24 Section 13.3 Purchase Upon an Event of Default............................................................25 ARTICLE XIV SALE, RETURN OR PURCHASE OF LEASED PROPERTY; RENEWAL........................................25 ----------------------------------------------------- Section 14.1 Lessee's Option to Purchase..................................................................25 Section 14.2 Conveyance to Lessee.........................................................................26 Section 14.3 Acceleration of Purchase Obligation..........................................................26 Section 14.4 Determination of Purchase Price..............................................................26 Section 14.5 Purchase Procedure...........................................................................26 Section 14.6 Option to Remarket...........................................................................27 Section 14.7 Rejection of Sale............................................................................29 Section 14.8 Return of Leased Property....................................................................30 Section 14.9 Renewal......................................................................................30 Section 14.10 Environmental Report.........................................................................31 ARTICLE XV LESSEE'S EQUIPMENT...........................................................................31 ------------------ ARTICLE XVI RIGHT TO PERFORM FOR LESSEE..................................................................32 --------------------------- ARTICLE XVII MISCELLANEOUS................................................................................32 ------------- Section 17.1 Reports......................................................................................32 Section 17.2 Binding Effect; Successors and Assigns.......................................................33 Section 17.3 Quiet Enjoyment..............................................................................33 Section 17.4 Notices......................................................................................33 Section 17.5 Severability.................................................................................34 Section 17.6 Amendment; Complete Agreements...............................................................34 Section 17.7 Construction.................................................................................34 Section 17.8 Headings.....................................................................................34 Section 17.9 Counterparts.................................................................................34 Section 17.10 GOVERNING LAW................................................................................34 Section 17.11 Reserved.....................................................................................35 ii Section 17.12 Liability of the Lessor Limited..............................................................35 Section 17.13 Estoppel Certificates........................................................................35 Section 17.14 No Joint Venture.............................................................................36 Section 17.15 No Accord and Satisfaction...................................................................36 Section 17.16 No Merger....................................................................................36 Section 17.17 Survival.....................................................................................36 Section 17.18 Chattel Paper................................................................................36 Section 17.19 Time of Essence..............................................................................36 Section 17.20 Recordation of Lease.........................................................................36 Section 17.21 Investment of Security Funds.................................................................36 Section 17.22 Ground Leases................................................................................37 Section 17.23 Land and Building............................................................................37 EXHIBIT A Lease Supplement
iii THIS MASTER LEASE AGREEMENT (as from time to time amended, supplemented, or otherwise modified from time to time, this "Lease"), dated ----- as of November 30, 2000, is among ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership) (together with its successors and assigns hereunder, "Lessor"), as Lessor, and EDWARD D. JONES & CO., L.P., a Missouri limited ------ partnership (the "Lessee"), as Lessee. ------ PRELIMINARY STATEMENT A. Pursuant to the Bridge Lease, the Lessor acquired a leasehold interest in the Land specified by the Construction Agent and is subleasing the same to the Lessee, subject to the Ground Lease. B. Pursuant to this Lease, the Lessor and the Lessee desire to restate and amend the Bridge Lease, and the Lessor desires to lease to the Lessee, and the Lessee desires to lease from the Lessor, the Land, as described in the Lease Supplement. C. The Construction Agent will construct, or cause to be constructed, the Building on the Land, and the Building, as constructed, will be the property of the Lessor and will become part of such property subject to the terms of this Lease. In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the Lessor and the Lessee hereby agree as follows: ARTICLE I DEFINITIONS ----------- Terms used herein and not otherwise defined shall have the meanings assigned thereto in Appendix A hereto for all purposes hereof, and the rules ---------- of interpretation set forth in Appendix A shall apply to this Lease. ---------- ARTICLE II LEASE OF LEASED PROPERTY ------------------------ Section 2.1 Restatement of Bridge Lease; Acceptance and Lease of ---------------------------------------------------- Property. On the Closing Date, the Lessor, subject to the satisfaction or - -------- waiver of the conditions set forth in Article 3 of the Master Agreement, and the Lessee hereby agree that the Bridge Lease is amended, restated and replaced in its entirety by the terms, conditions and provisions of this Lease, and the Lessor shall simultaneously sublease to the Lessee for the Lease Term, the Lessor's interest in such Land, subject to the Ground Lease, and Lease to the Lessee the Building and Equipment which thereafter may be constructed and installed thereon pursuant to the Construction Agency Agreement. The Lessee hereby agrees, expressly for the direct benefit of the Lessor, commencing on the Closing Date, for the Lease Term, to sublease from the Lessor the Lessor's interest in such Land, subject to the Ground Lease, and to lease the Lessor's interest in the Building and Equipment which thereafter may be constructed and installed thereon pursuant to the Construction Agency Agreement. Section 2.2 Acceptance Procedure. The Lessor hereby authorizes -------------------- one or more employees of the Lessee, to be designated by the Lessee, as the authorized representative or representatives of the Lessor to accept delivery on behalf of the Lessor of the Leased Property. The Lessee hereby agrees that such acceptance of delivery by such authorized representative or representatives and the execution and delivery by the Lessee on the Closing Date for property to be leased hereunder of the Lease Supplement in substantially the form of Exhibit A hereto, appropriately completed (the --------- "Lease Supplement"), shall, without further act, constitute the irrevocable ---------------- acceptance by the Lessee of the Leased Property for all purposes of this Lease and the other Operative Documents on the terms set forth therein and herein, and that the Leased Property, together with the Building to be constructed thereon pursuant to the Construction Agency Agreement, shall be deemed to be included in the leasehold estate of this Lease and shall be subject to the terms and conditions of this Lease as of the Closing Date. The demise and lease of the Land and the Building pursuant to this Section 2.2 shall include any additional right, title or interest in the - ----------- Land and the Building which may at any time be acquired by the Lessor, the intent being that all right, title and interest of the Lessor in and to the Land and the Building shall at all times be demised and leased to the Lessee hereunder. ARTICLE III RENT ---- Section 3.1 Basic Rent. Beginning with and including the first ---------- Payment Date occurring after the Closing Date, the Lessee shall pay to the Agent the Basic Rent for the Leased Property, in installments, payable in arrears on each Payment Date during the Lease Term, subject to Section 2.3(c) of the Master Agreement. Section 3.2 Supplemental Rent. The Lessee shall pay to the Agent, ----------------- or to whomever shall be entitled thereto as expressly provided herein or in any other Operative Document, any and all Supplemental Rent on the date the same shall become due and payable and in the event of any failure on the part of the Lessee to pay any Supplemental Rent, the Agent shall have all rights, powers and remedies provided for herein or by law or in equity or otherwise in the case of nonpayment of Basic Rent. All Supplemental Rent to be paid pursuant to this Section 3.2 shall be payable in the type of funds ----------- and in the manner set forth in Section 3.3. ----------- Section 3.3 Method of Payment. Basic Rent shall be paid to the ----------------- Agent, and Supplemental Rent (including amounts due under Article XIV ----------- hereof) shall be paid to the Agent (or to such Person as may be entitled thereto) or, in each case, to such Person as the Agent (or such other Person) shall specify in writing to the Lessee, and at such place as the Agent (or such other Person) shall specify in writing to the Lessee, which specifications by the Agent shall be given by the Agent at least five (5) Business Days prior to the due date therefor. Each payment of Rent (including payments under Article XIV hereof) shall be made by the Lessee ----------- prior to 2 12:00 p.m. (noon) Atlanta, Georgia time at the place of payment in funds consisting of lawful currency of the United States of America which shall be immediately available on the scheduled date when such payment shall be due, unless such scheduled date shall not be a Business Day, in which case such payment shall be made on the next succeeding Business Day. Section 3.4 Late Payment. If any Basic Rent shall not be paid on ------------ the date when due, the Lessee shall pay to the Agent, as Supplemental Rent, interest (to the maximum extent permitted by law) on such overdue amount from and including the due date thereof to but excluding the Business Day of payment thereof at the Overdue Rate. Section 3.5 Net Lease; No Setoff, Etc. This Lease is a net lease ------------------------- and notwithstanding any other provision of this Lease, the Lessee shall pay all Basic Rent and Supplemental Rent, and all costs, charges, taxes (other than taxes covered by the exclusion described in Section 7.4(b) of the Master Agreement), assessments and other expenses foreseen or unforeseen, for which the Lessee or any Indemnitee is or shall become liable by reason of the Lessee's or such Indemnitee's estate, right, title or interest in the Leased Property, or that are connected with or arise out of the acquisition (except the initial costs of purchase by the Lessor of its interest in the Leased Property, which costs, subject to the terms of the Master Agreement, shall be funded by the Funding Parties pursuant to the Master Agreement), construction (except costs to be funded under the Construction Agency Agreement), installation, possession, use, occupancy, maintenance, ownership, leasing, repairs and rebuilding of, or addition to, the Leased Property or any portion thereof, and any other amounts payable hereunder and under the other Operative Documents without counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the Lessee's obligation to pay all such amounts throughout the Lease Term, including the Construction Term, is absolute and unconditional. The obligations and liabilities of the Lessee hereunder shall in no way be released, discharged or otherwise affected for any reason, including without limitation: (a) any defect in the condition, merchantability, design, quality or fitness for use of the Leased Property or any part thereof, or the failure of the Leased Property to comply with all Applicable Laws, including any inability to occupy or use the Leased Property by reason of such non-compliance; (b) any damage to, removal, abandonment, salvage, loss, contamination of or Release from, scrapping or destruction of or any requisition or taking of the Leased Property or any part thereof; (c) any restriction, prevention or curtailment of or interference with any use of the Leased Property or any part thereof including eviction; (d) any defect in title to or rights to the Leased Property or any Lien on such title or rights or on the Leased Property; (e) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by the Lessor, the Agent or any Lender; (f) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to the Lessee, the Lessor, any Lender, the Agent or any other Person, or any action taken with respect to this Lease by any trustee or receiver of the Lessee, the Lessor, any Lender, the Agent or any other Person, or by any court, in any such proceeding; (g) any claim that the Lessee has or might have against any Person, including without limitation, the Lessor, any vendor, manufacturer, contractor of or for the Leased Property or any part thereof, the Agent, any 3 Governmental Authority, or any Lender; (h) any failure on the part of the Lessor to perform or comply with any of the terms of this Lease, any other Operative Document or of any other agreement; (i) any invalidity or unenforceability or illegality or disaffirmance of this Lease against or by the Lessee or any provision hereof or any of the other Operative Documents or any provision of any thereof whether or not related to the Transaction; (j) the impossibility or illegality of performance by the Lessee, the Lessor or both; (k) any action by any court, administrative agency or other Governmental Authority; (l) any restriction, prevention or curtailment of or interference with the Construction or any use of the Leased Property or any part thereof; or (m) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not the Lessee shall have notice or knowledge of any of the foregoing. Except as specifically set forth in Articles X or XIV of this Lease, this Lease shall be noncancellable by the Lessee in any circumstance whatsoever and the Lessee, to the extent permitted by Applicable Law, waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Lease, or to any diminution, abatement or reduction of Rent payable by the Lessee hereunder. Each payment of Rent made by the Lessee hereunder shall be final and the Lessee shall not seek or have any right to recover all or any part of such payment from the Lessor, the Agent, any Lender or any party to any agreements related thereto for any reason whatsoever. The Lessee assumes the sole responsibility for the condition, use, operation, maintenance, and management of the Leased Property leased by it, and the Lessor shall have no responsibility in respect thereof and shall have no liability for damage to the property of either the Lessee or any subtenant of the Lessee on any account or for any reason whatsoever, other than solely by reason of the Lessor's willful misconduct or gross negligence. Section 3.6 Certain Taxes. Without limiting the generality of ------------- Section 3.5, the Lessee agrees to pay when due all real estate taxes, - ----------- personal property taxes, gross sales taxes, including any sales or lease tax imposed upon the rental payments hereunder or under any sublease permitted hereunder, occupational license taxes, water charges, sewer charges, assessments of any nature and all other governmental impositions and charges of every kind and nature whatsoever (the "tax(es)"), when the same shall be due and payable without penalty or interest; provided, however, that this -------- ------- Section shall not apply to any of the taxes covered by the exclusion described in Section 7.4(b) of the Master Agreement. It is the intention of the parties hereto that, insofar as the same may lawfully be done, the Lessor shall be, except as specifically provided for herein, free from all expenses in any way related to the Leased Property and the use and occupancy thereof. The Lessee covenants to furnish the Lessor and the Agent, upon the Agent's written request, within thirty (30) days after the last date when any tax must be paid by the Lessee as provided in this Section 3.6, official receipts of the appropriate taxing, authority or other proof satisfactory to the Lessor, evidencing the payment thereof. So long as no Event of Default has occurred and is continuing, the Lessee may defer payment of a tax so long as the validity or the amount thereof is being contested by the Lessee with diligence and in good faith; provided, however, that the Lessee shall furnish to the Lessor and the - -------- ------- Agent, if requested in writing by either the Lessor or the Agent, a bond or other adequate security in an amount and on terms reasonably satisfactory to the Lessor and the Agent and shall 4 pay the tax in sufficient time to prevent delivery of a tax deed. Such contest shall be at the Lessee's sole cost and expense. The Lessee covenants to indemnify and save harmless the Lessor, the Agent and each Lender from any actual and reasonable costs or expenses incurred by the Lessor, the Agent or any Lender as a result of such contest, which indemnification shall survive the termination of this Lease. Section 3.7 Utility Charges. The Lessee agrees to pay or cause to --------------- be paid as and when the same are due and payable all charges for gas, water, sewer, electricity, lights, heat, power, telephone or other communication service and all other utility services used, rendered or supplied to, upon or in connection with the Leased Property. ARTICLE IV WAIVERS ------- During the Lease Term, the Lessor's interest in the Leased Property, including the Building (whether or not completed) and the Land, is demised and let by the Lessor "AS IS" subject to (a) the rights of any parties in possession thereof, (b) the state of the title thereto existing at the time the Lessor acquired its interest in the Leased Property, (c) any state of facts which an accurate survey or physical inspection might show (including the survey delivered on the Closing Date), (d) all Applicable Laws, and (e) any violations of Applicable Laws which may exist upon or subsequent to the commencement of the Lease Term. THE LESSEE ACKNOWLEDGES THAT, ALTHOUGH THE LESSOR WILL OWN AND HOLD LEASEHOLD TITLE TO THE LEASED PROPERTY, THE LESSOR IS NOT RESPONSIBLE FOR THE DESIGN, DEVELOPMENT, BUDGETING AND CONSTRUCTION OF THE BUILDING OR ANY ALTERATIONS. NEITHER THE LESSOR, THE AGENT NOR ANY LENDER HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE, MERCHANTABILITY, TITLE, HABITABILITY, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE LEASED PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY (OR ANY PART THEREOF), ALL SUCH WARRANTIES BEING HEREBY DISCLAIMED, AND NEITHER THE LESSOR, THE AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE LEASED PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAW, except that the Lessor hereby represents and warrants that the Leased Property is and shall be free of the Lessor Liens. As between the Lessor and the Lessee, each Lessee has been afforded full opportunity to inspect the Leased Property, is satisfied with the results of its inspections of the Leased Property and is entering into this Lease solely on the basis of the results of its own inspections and all risks incident to the matters discussed in the two preceding sentences, as between the Lessor, the Agent or the Lenders on the one hand, and the Lessee, on the other, are to be borne by the Lessee. The provisions of this Article IV have been negotiated, and, except to the extent - ---------- 5 otherwise expressly stated, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties by the Lessor, the Agent or the Lenders, express or implied, with respect to the Leased Property, that may arise pursuant to any law now or hereafter in effect, or otherwise. ARTICLE V LIENS; EASEMENTS; PARTIAL CONVEYANCES ------------------------------------- The Lessee shall not directly or indirectly create, incur or assume, any Lien on or with respect to the Leased Property, the title thereto, or any interest therein, including any Liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of the Leased Property or by reason of labor or materials furnished or claimed to have been furnished to the Lessee, or any of its contractors or agents or Alterations constructed by the Lessee, except, in all cases, Permitted Encumbrances. Notwithstanding the foregoing paragraph, at the request of the Lessee, the Lessor shall, from time to time during the Lease Term and upon reasonable advance written notice from the Lessee given in accordance with Section 8.2 of the Master Agreement and receipt of the materials specified in the next succeeding sentence, consent to and join in any (i) grant of easements, licenses, rights of way and other rights in the nature of easements, including, without limitation, utility easements to facilitate the Lessee's use, development and construction of the Leased Property, (ii) release or termination of easements, licenses, rights of way or other rights in the nature of easements which are for the benefit of the Land or the Building or any portion thereof, (iii) dedication or transfer of portions of the Lessor's interest in the Land, not improved with the Building, for road, highway or other public purposes, (iv) execution of agreements for ingress and egress and amendments to any covenants and restrictions affecting the Land or the Building or any portion thereof and (v) request to any Governmental Authority for platting or subdivision or replatting or resubdivision approval with respect to the Land or any portion thereof or any parcel of land of which the Land or any portion thereof forms a part or a request for rezoning or any variance from zoning or other governmental requirements. The Lessor's obligations pursuant to the preceding sentence shall be subject to the requirements that: (a) any such action shall be at the sole cost and expense of the Lessee, and the Lessee shall pay all actual and reasonable out-of-pocket costs of the Lessor, the Agent and the Lenders in connection therewith (including, without limitation, the reasonable fees of attorneys, architects, engineers, planners, appraisers and other professionals reasonably retained by the Lessor, the Agent or any Lender in connection with any such action, and, when practicable, the Lessor will endeavor to utilize the services of the same architect(s), engineer(s), planner(s) and appraiser(s) used by the Agent and the Lenders, in connection with the review of such requests), (b) the requesting Lessee shall have delivered to the Lessor and the Agent a certificate of a Responsible Officer of the Lessee stating that: 6 (i) such action will not cause the Leased Property, the Land or the Building or any portion thereof to fail to comply in any material respect with the provisions of this Lease or any other Operative Documents, or in any material respect with Applicable Laws; and (ii) such action will not materially reduce the Fair Market Sales Value, utility or useful life of the Leased Property, the Land or the Building nor the Lessor's interest therein; and (c) in the case of any release or conveyance, if the Lessor, the Agent or any Lender so reasonably requests, the Lessee will cause to be issued and delivered to the Lessor and the Agent by the Title Insurance Company an endorsement to the Title Policy pursuant to which the Title Insurance Company agrees that its liability for the payment of any loss or damage under the terms and provisions of the Title Policy will not be affected by reason of the fact that a portion of the real property referred to in Schedule A of the Title Policy has been released or conveyed by the Lessor. ARTICLE VI MAINTENANCE AND REPAIR; ALTERATIONS, MODIFICATIONS AND ADDITIONS ---------------------------------------- Section 6.1 Maintenance and Repair; Compliance With Law. The ------------------------------------------- Lessee, at its own expense, shall at all times (a) maintain the Leased Property leased by it in good repair and condition (subject to ordinary wear and tear), in accordance with prudent industry standards and, in any event, in the same manner as other similar property owned or leased by the Lessee or its Affiliates, (b) make all Alterations in accordance with, and maintain (whether or not such maintenance requires structural modifications or Alterations) and operate and otherwise keep the Leased Property in compliance in all material respects with, all Applicable Laws and requirements of the Lessee's underwriters, and (c) make all material repairs, replacements and renewals of the Leased Property or any part thereof which may be required to keep the Leased Property in the condition required by the preceding clauses (a) and (b). The Lessee shall perform the foregoing maintenance obligations regardless of whether the Leased Property is occupied or unoccupied. The Lessee waives any right that it may now have or hereafter acquire to (i) require the Lessor, the Agent or any Lender to maintain, repair, replace, alter, remove or rebuild all or any part of the Leased Property or (ii) make repairs at the expense of the Lessor, the Agent or any Lender pursuant to any Applicable Law or other agreements or otherwise. NEITHER THE LESSOR, THE AGENT NOR ANY LENDER SHALL BE LIABLE TO THE LESSEE OR TO ANY CONTRACTORS, SUBCONTRACTORS, LABORERS, MATERIALMEN, SUPPLIERS OR VENDORS FOR SERVICES PERFORMED OR MATERIAL PROVIDED ON OR IN CONNECTION WITH THE LEASED PROPERTY OR ANY PART THEREOF. Neither the Lessor, the Agent nor any Lender shall be required to maintain, alter, repair, rebuild or replace the Leased Property in any way. 7 Section 6.2 Improvements and Alterations. ---------------------------- (a) In addition to the Lessee's obligations as Construction Agent under the Construction Agency Agreement, on and after the completion of Construction (i) the Lessee, at the Lessee's sole cost and expense, shall make alterations, renovations, improvements and additions to the Leased Property or any part thereof and substitutions and replacements therefor (collectively, "Alterations") which are (A) necessary to repair or maintain ----------- the Leased Property in the condition required by this Lease and the other Operative Documents; (B) necessary in order for the Leased Property to be in compliance with Applicable Laws; or (C) necessary to restore the Leased Property in all material respects to its condition existing prior to a Casualty or Condemnation to the extent required pursuant to Article X; and --------- (ii) so long as no Potential Event of Default or Event of Default has occurred, the Lessee, at the Lessee's sole cost and expense, may undertake Alterations to the Leased Property so long as such Alterations comply with Applicable Laws and with Section 6.1 and subsection (b) of this Section 6.2. ----------- -------------- ----------- (b) The making of any Alterations must be in compliance with the following requirements: (i) No Structural Alterations or Alterations with a cost exceeding Two Hundred Fifty Thousand Dollars ($250,000) shall be made or undertaken without the prior written consent of the Lessor and the Agent (which consent shall not be unreasonably withheld or delayed), except for Alterations required by Applicable Laws (provided that except in the case of an emergency, the Lessee shall give the Lessor and the Agent at least thirty (30) days prior written notice of such Alterations). If the Lessee reasonably expects the cost of any Alterations to exceed $250,000, the Lessee shall deliver to the Lessor and the Agent a brief written narrative of the work to be performed prior to undertaking any such Alteration. (ii) No Alterations shall be undertaken in violation of the terms of any restriction, easement, condition, covenant or other similar agreement (including, without limitation, the Ground Lease) affecting title to or binding on the Leased Property. The Lessee shall procure when required and pay for, so far as the same may be required from time to time, all permits and authorizations with regard to such Alterations from all Governmental Authorities having jurisdiction. The Lessor, at the Lessee's expense, and without any liability on the part of the Lessor, shall join in the application for any such permit or authorization and execute and deliver any document in connection therewith, whenever such joinder is necessary or advisable. (iii) The Alterations shall be completed in a good and workmanlike manner and in compliance with all Applicable Laws then in effect and the standards imposed by any insurance policies required to be maintained hereunder or by any vendor, supplier or manufacturer in order to maintain all warranties, and all Alterations must be located solely on the Land or other property used in connection with the Leased Property as to which the Lessor has an easement, license, lease, sublease or other right or interest in real property reasonably satisfactory to Agent for a term not less than the useful life of such Alterations. 8 (iv) All Alterations shall, when completed, be of such a character as to not adversely affect the Fair Market Sales Value, utility, remaining economic useful life or residual value of the Leased Property from the Fair Market Sales Value, utility, remaining economic useful life or residual value thereof immediately prior to the making thereof or, in the case of Alterations being made by virtue of a Casualty or Condemnation, immediately prior to the occurrence of such Casualty or Condemnation. If such Modifications have a cost exceeding Two Hundred Fifty Thousand Dollars ($250,000), the Lessor or the Agent may obtain a report from an independent engineer or engage an appraiser of nationally recognized standing, at the Lessee's sole cost and expense, to determine (by appraisal or other methods satisfactory to the Agent) the projected Fair Market Sales Value of such item of Leased Property as of the completion of the Alterations relating thereto. (v) The Lessee shall have made adequate arrangements for payment of the cost of all Alterations when due so that the Leased Property shall at all times be free of Liens for labor and materials supplied or claimed to have been supplied to the Leased Property, other than Permitted Liens. Section 6.3 Title to Alterations. Title to the following described -------------------- Alterations shall, without further act, vest in the Lessor and shall be deemed to constitute a part of the Leased Property and be subject to this Lease: (a) Alterations that are in replacement of or in substitution for a portion of any item of Leased Property; (b) Alterations that are required to be made pursuant to the terms of Section 6.2(a)(i) hereof; or ----------------- (c) Alterations that, notwithstanding any repairs, replacements or modifications by or on behalf of Lessee, are nonseverable or that cannot be removed without damaging the Leased Property or any part thereof. The Lessee, at the Lessor's reasonable request, shall execute and deliver any deeds, bills of sale, assignments or other documents of conveyance reasonably necessary to evidence the vesting of title in and to such Alterations to the Lessor. If such Alterations are not within any of the categories set forth in clauses (a) through (c) of this Section 6.3, then title to such ----------- --- ----------- Alterations shall vest in the Lessee and such Alterations shall not be deemed to be Alterations that are part of the Leased Property. All Alterations to which the Lessee shall have title may be removed at any time by the Lessee, so long as removal thereof shall not result in the violation of any Applicable Laws or give rise to a Potential Event of Default or an Event of Default, and no Potential Event of Default or Event of Default then exists. The Lessee agrees to notify Lessor in writing at least 30 days before it removes any such Alterations which individually or in the aggregate had an original 9 cost exceeding Two Hundred Fifty Thousand Dollars ($250,000), and the Lessee shall at its expense repair any damage to any item of Leased Property caused by the removal of such Alterations. The Lessor (or the purchaser of the Leased Property) may purchase from the Lessee any such Alterations (if not already owned by the Lessor) that the Lessee intends to remove from the Leased Property prior to the return of the Leased Property to the Lessor or sale of the Leased Property, which purchase shall be at the Fair Market Sales Value of such Alterations as determined by the Appraiser at the time of such purchase. Title to any such Alterations shall vest in the Lessor (or the purchaser of the applicable Leased Property) if not removed from the Leased Property by the Lessee prior to the return of the Leased Property to the Lessor or sale of the Leased Property. Severable Alterations, title to which is vested in the Lessee, shall be made available to the Lessor or its designee without cost during the Lease Term and thereafter if the Leased Property is sold pursuant to the Remarketing Option and the use thereof is necessary or useful for the operation of the Leased Property in the manner and capacity operated at or prior to the expiration of the Lease Term. Section 6.4 Lessee's Personal Property. During the Lease Term, -------------------------- the Lessee may from time to time own or hold under lease or other arrangement from Persons other than the Lessor the Lessee's Personal Property that is not subject to this Lease and does not constitute a portion of the Leased Property. The Lessor shall from time to time during the Lease Term, upon the reasonable request, and at the cost and expense of the Lessee, acknowledge in writing to the Lessee or other Persons that the Lessee's Personal Property is the property of the Lessee or such other Person and is not part of the Leased Property and that the Lessor has waived any present or future landlord's or other Lien Lessor may have thereon. ARTICLE VII USE --- The Lessee may use the Leased Property leased by it or any part thereof for any lawful purpose, and in a manner consistent with the standards applicable to properties of a similar nature in the geographic area in which the Leased Property is located, provided that such use does -------- not materially adversely affect the Fair Market Sales Value, utility, remaining useful life or residual value of the Leased Property, and does not materially violate or conflict with, or constitute or result in a material default under, any Applicable Law or any insurance policy required hereunder. The Lessee shall not commit or permit any waste of the Leased Property or any material part thereof. ARTICLE VIII INSURANCE --------- (a) At any time during which any part of the Building or any Alteration is under construction and as to any part of the Building or any Alteration under construction, the Lessee 10 shall maintain, or cause to be maintained, at its sole cost and expense, as a part of its blanket policies or otherwise, "all risk" non-reporting completed value form of builder's risk insurance. (b) During the Lease Term, the Lessee shall maintain, at its sole cost and expense, as a part of its blanket policies or otherwise, insurance against loss or damage to the Building by fire and other risks, including comprehensive boiler and machinery coverage, on terms and in amounts no less favorable than insurance covering other similar properties owned or leased by the Lessee and that are in accordance with prudent industry practice, but in no event less than the replacement cost of the Building from time to time. (c) During the Lease Term, the Lessee shall maintain, at its sole cost and expense, commercial general liability insurance with respect to the Leased Property, as is ordinarily procured by prudent Persons who own or operate similar properties in the same geographic area. Such insurance shall be on terms and in amounts that are no less favorable than insurance maintained by the Lessee or its Affiliates with respect to similar properties that it owns or leases and that are in accordance with prudent industry practice. Such insurance policies shall also provide that the Lessee's insurance shall be considered primary insurance. Nothing in this Article VIII shall prohibit the Lessor, the Agent or any Lender from - ------------ carrying at its own expense other insurance on or with respect to the Leased Property, provided that any insurance carried by the Lessor, the Agent or -------- any Lender shall not prevent the Lessee from carrying the insurance required hereby. (d) Each policy of insurance maintained by the Lessee pursuant to clauses (a) and (b) of this Article VIII shall provide that all insurance - ----------- --- ------------ proceeds in respect of any loss or occurrence shall be adjusted by the Lessee, except if, and for so long as an Event of Default exists, all losses shall be adjusted solely by, and all insurance proceeds shall be paid solely to, the Agent (or the Lessor if the Loans have been fully paid) for application pursuant to this Lease. (e) On the Closing Date, on the Completion Date for the Leased Property and on each anniversary of the Closing Date, the Lessee shall furnish the Lessor with certificates showing the insurance required under this Article VIII to be in effect and naming the Lessor, the Agent and the ------------ Lenders as additional insureds. Such certificates shall include a provision for thirty (30) days' advance written notice by the insurer to the Lessor and the Agent in the event of cancellation or expiration or nonpayment of premium with respect to such insurance, and shall include a customary breach of warranty clause. The Lessee shall provide evidence to the Lessor and the Agent that each insurance policy required by this Article VIII has been ------------ renewed or replaced prior to the scheduled expiration date therefor. (f) Each policy of insurance maintained by the Lessee pursuant to this Article VIII shall (i) contain the waiver of any right of subrogation ------------ of the insurer against the Lessor, the Agent and the Lenders, and (ii) provide that in respect of the interests of the Lessor, the Agent and the Lenders, such policies shall not be invalidated by any fraud, action, inaction or misrepresentation of the Lessee or any other Person acting on behalf of the Lessee. 11 (g) All insurance policies carried in accordance with this Article VIII shall be maintained with insurers rated at least "A" by A.M. - ------------ Best & Company, and in all cases the insurer shall be qualified to insure risks in the State where the Leased Property is located. ARTICLE IX ASSIGNMENT AND SUBLEASING ------------------------- The Lessee may not assign any of its right, title or interest in, to or under this Lease, except as set forth in the following sentence. The Lessee may assign its right under this Lease or sublease all or any portion of the Leased Property, provided that (a) all obligations of the Lessee -------- shall continue in full effect as obligations of a principal and not of a guarantor or surety, as though no assignment or sublease had been made; (b) such assignment or sublease shall be expressly subject and subordinate to this Lease, the Loan Agreement and the other Operative Documents; and (c) each such assignment or sublease shall terminate on or before the Lease Termination Date. The Lessee shall give the Agent and the Lessor prompt written notice of any such assignment or sublease. Except pursuant to an Operative Document, this Lease shall not be mortgaged or pledged by the Lessee, nor shall the Lessee mortgage or pledge any interest in the Leased Property or any portion thereof. Any such mortgage or pledge shall be void. ARTICLE X LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE ----------------------------------------- Section 10.1 Event of Loss. Any event (i) which would otherwise ------------- constitute a Casualty during the Base Term, and (ii) which, in the good faith judgment of the Lessee, renders repair and restoration of the Leased Property impossible or impractical, or requires repairs to the Leased Property that would cost in excess of fifty percent (50%) of the original cost of the Leased Property, and (iii) as to which the Lessee, within sixty (60) days after the occurrence of such event, delivers to the Lessor an Officer's Certificate notifying the Lessor of such event and of such judgment, shall constitute an "Event of Loss". In the case of any other ------------- event which constitutes a Casualty, the Lessee shall restore the Leased Property pursuant to Section 10.3. If an Event of Loss other than an Event ------------ of Taking shall occur, the Lessee shall pay to the Lessor on the later of (i) the thirtieth day (30th) and (ii) the next Payment Date following delivery of the Officer's Certificate pursuant to clause (iii) above an amount equal to the Lease Balance. Upon the Lessor's receipt of the Lease Balance on such date, the Lessor shall cause the Lessor's interest in the Leased Property to be conveyed to the Lessee in accordance with and subject to the provisions of Section 14.5 hereof; upon completion of such purchase, ------------ but not prior thereto, this Lease with respect to the Leased Property and all obligations hereunder with respect to the Leased Property shall terminate, except with respect to obligations and liabilities hereunder, actual or contingent, that have arisen or relate to events occurring on or prior to such date of purchase, or which are expressly stated herein to survive termination of this Lease. 12 Upon the consummation of the purchase of the Leased Property pursuant to this Section 10.1, any proceeds derived from insurance required ------------ to be maintained by the Lessee pursuant to this Lease for the Leased Property remaining after payment of such purchase price shall be paid over to, or retained by, the Lessee or as it may direct, and the Lessor shall assign to the Lessee, without warranty, all of the Lessor's rights to and interest in such insurance required to be maintained by the Lessee pursuant to this Lease. Section 10.2 Event of Taking. Any event (i) which constitutes a --------------- Condemnation of all of, or substantially all of, the Leased Property, or (ii) (A) which would otherwise constitute a Condemnation, (B) which, in the good faith judgment of the Lessee, renders restoration and rebuilding of the Leased Property impossible or impractical, or requires repairs to the Leased Property that would cost in excess of fifty percent (50%) of the original cost of the Leased Property, and (C) as to which the Lessee, within sixty (60) days after the occurrence of such event, delivers to the Lessor an Officer's Certificate notifying the Lessor of such event and of such judgment, shall constitute an "Event of Taking". In the case of any other --------------- event which constitutes a Condemnation, the Lessee shall restore and rebuild the Leased Property pursuant to Section 10.4. If an Event of Taking shall ------------ occur, the Lessee shall pay to the Lessor (1) on the later of (A) the thirtieth (30th) day and (B) the next Payment Date following the occurrence of such Event of Taking, in the case of an Event of Taking described in clause (i) above, or (2) on the later of (A) the thirtieth (30th) day and (B) the next Payment Date following delivery of the Officer's Certificate pursuant to clause (ii) above, in the case of an Event of Taking described in clause (ii) above, an amount equal to the Lease Balance. Upon the Lessor's receipt of the Lease Balance on such date, the Lessor shall cause the Lessor's interest in the Leased Property to be conveyed to the Lessee in accordance with and subject to the provisions of Section 14.5 hereof ------------ (provided that such conveyance shall be subject to all rights of the condemning authority); upon completion of such purchase, but not prior thereto, this Lease with respect to the Leased Property and all obligations hereunder with respect to the Leased Property shall terminate, except with respect to obligations and liabilities hereunder, actual or contingent, that have arisen or relate to events occurring on or prior to such date of purchase, or which are expressly stated herein to survive termination of this Lease. Upon the consummation of the purchase of the Leased Property pursuant to this Section 10.2, all Awards received by the Lessor, after ------------ deducting any reasonable costs incurred by the Lessor in collecting such Awards, received or payable on account of an Event of Taking with respect to the Leased Property during the Lease Term shall be paid to the Lessee, and all rights of the Lessor in Awards not then received shall be assigned to the Lessee by the Lessor. Section 10.3 Casualty. If a Casualty shall occur which is not an -------- Event of Loss, the Lessee shall rebuild and restore the Leased Property in accordance with the terms of this Lease and the other Operative Documents, will complete the same prior to the Lease Termination Date, and will cause the condition set forth in Section 3.5(c) of the Master Agreement to be fulfilled with respect to such restoration and rebuilding prior to the Lease Termination Date, regardless of whether insurance proceeds received as a result of such Casualty are sufficient for such purpose. 13 Section 10.4 Condemnation. If a Condemnation shall occur which is ------------ not an Event of Taking, the Lessee shall rebuild and restore the Leased Property in accordance with the terms of this Lease and the other Operative Documents, will complete the same prior to the Lease Termination Date, and will cause the condition set forth in Section 3.5(c) of the Master Agreement to be fulfilled with respect to such restoration and rebuilding prior to the Lease Termination Date. Section 10.5 Verification of Restoration and Rebuilding. In the ------------------------------------------ event of Casualty or Condemnation, to verify the Lessee's compliance with the foregoing Section 10.3 or 10.4, as appropriate, the Lessor, the Agent, ------------ ---- the Lenders and their respective authorized representatives may, upon five (5) Business Days' notice to the Lessee, make inspections of the Leased Property with respect to (i) the extent of the Casualty or Condemnation and (ii) the restoration and rebuilding of the Building and the Land. All actual and reasonable out-of-pocket costs of such inspections incurred by the Lessor, the Agent or any Lender will be paid by the Lessee promptly after written request. No such inspection shall unreasonably interfere with the Lessee's operations or the operations of any other occupant of the Leased Property. None of the inspecting parties shall have any duty to make any such inspection or inquiry and none of the inspecting parties shall incur any liability or obligation by reason of making or not making any such inspection or inquiry. Section 10.6 Application of Payments. All proceeds (except for ----------------------- payments under insurance policies maintained other than pursuant to Article VIII of this Lease) received at any time by the Lessor, the Lessee - ------------ or the Agent from any Governmental Authority or other Person with respect to any Condemnation or Casualty to the Leased Property or any part thereof or with respect to an Event of Loss or an Event of Taking, plus the amount of any payment that would have been due from an insurer but for the Lessee's self-insurance or deductibles ("Loss Proceeds"), shall (except to the extent ------------- Section 10.9 applies) be applied as follows: - ------------ (a) In the event the Lessee purchases the Leased Property pursuant to Section 10.1 or Section 10.2, such Loss Proceeds shall be applied as set ------------ ------------ forth in Section 10.1 or Section 10.2, as the case may be; ------------ ------------ (b) In the event of a Casualty at such time when no Potential Event of Default or Event of Default has occurred and the Lessee is obligated to repair and rebuild the Leased Property pursuant to Section 10.3, the Lessee ------------ may, in good faith and subsequent to the date of such Casualty, certify to the Lessor, the Lenders and the Agent and to the applicable insurer that no Potential Event of Default or Event of Default has occurred, in which event the applicable insurer shall pay the Loss Proceeds to the Lessee, unless the estimated cost of restoration exceeds the lesser of $250,000 and fifty percent (50%) of the original cost of the Leased Property in which case the Loss Proceeds shall be paid to the Agent (or the Lessor if the Loans have been paid in full), and shall be promptly released to the Lessee upon certification by the Lessee to the Lessor and the Agent that the Lessee has incurred costs in the amount requested to be released for the repair and rebuilding of the Leased Property and satisfaction of such other requirements 14 as may be reasonably requested by the Lessor and the Agent (including, without limitation, satisfaction of conditions to release of such funds to the Lessee comparable to the conditions precedent to Advances under the Operative Documents); (c) In the event of a Condemnation at such time when no Potential Event of Default or Event of Default has occurred and the Lessee is obligated to repair and rebuild the Leased Property pursuant to Section 10.4, the Lessee may, in good faith and subsequent to the date of such - ------------ Condemnation, certify to the Lessor and the Agent that no Potential Event of Default or Event of Default has occurred and shall satisfy such other requirements as may be reasonably requested by the Lessor or the Agent, in which event the applicable Award shall be paid over to the Lessee provided that, if such Award exceeds the lesser of $250,000 and fifty percent (50%) of the original cost of the Leased Property, such Award shall be paid to the Agent (or the Lessor if the Loans have been paid in full), and shall be promptly released to the Lessee upon receipt by the Lessor and the Agent of a certification as described above and satisfaction of such other requirements as may reasonably be requested by the Lessor and the Agent (including, without limitation, satisfaction of conditions to release of such funds to the Lessee comparable to the conditions precedent to Advances under the Operative Documents); and (d) As provided in Section 10.8, if such section is applicable. ------------ During any period of repair or rebuilding pursuant to this Article X, this Lease will remain in full force and effect and Basic Rent - --------- shall continue to accrue and be payable without abatement or reduction. The Lessee shall maintain records setting forth information relating to the receipt and application of payments in accordance with this Section 10.6. ------------ Such records shall be kept on file by the Lessee at its offices and shall be made available to the Lessor, the Lenders and the Agent upon request. Section 10.7 Prosecution of Awards. --------------------- (a) If any Condemnation shall occur, the party receiving the notice of such Condemnation shall give to the other party and the Agent promptly, but in any event within thirty (30) days after the occurrence thereof, written notice of such occurrence and the date thereof, generally describing the nature and extent of such Condemnation. With respect to any Event of Taking or any Condemnation, the Lessee shall control the negotiations with the relevant Governmental Authority as to any proceeding in respect of which Awards are required, under Section 10.6, to be assigned ------------ or released to the Lessee, unless a Potential Event of Default or Event of Default shall have occurred, in which case (i) the Agent (or the Lessor if the Loans have been fully paid) shall control such negotiations; and (ii) the Lessee hereby irrevocably assigns, transfers and sets over to the Agent (or the Lessor if the loans have been fully paid) all rights of the Lessee to any Award on account of any Event of Taking or any Condemnation and, if there will not be separate Awards to the Lessor and the Lessee on account of such Event of Taking or Condemnation, irrevocably authorizes and empowers the Agent (or the Lessor if the Loans have been fully paid), with full power of substitution, in the name of the Lessee or otherwise (but without limiting the obligations of the Lessee under this Article X), to file and --------- prosecute what 15 would otherwise be the Lessee's claim for any such Award and to collect, receipt for and retain the same. In any event the Lessor and the Agent may participate in such negotiations, and no settlement will be made without the prior consent of the Agent (or the Lessor if the Loans have been fully paid), not to be unreasonably withheld. (b) Notwithstanding the foregoing, the Lessee may prosecute, and the Lessor shall have no interest in, any claim with respect to the Lessee's personal property and equipment not financed by or otherwise property of the Lessor, business interruption or similar award and the Lessee's relocation expenses. Section 10.8 Application of Certain Payments Not Relating to an -------------------------------------------------- Event of Taking. In case of a requisition for temporary use of all or a - --------------- portion of the Leased Property which is not an Event of Taking, this Lease shall remain in full force and effect with respect to the Leased Property, without any abatement or reduction of Basic Rent, and the Awards for the Leased Property shall, unless a Potential Event of Default or Event of Default has occurred, be paid to the Lessee. Section 10.9 Other Dispositions. Notwithstanding the foregoing ------------------ provisions of this Article X, if a Potential Event of Default or an Event of --------- Default shall have occurred, any amount that would otherwise be payable to or for the account of, or that would otherwise be retained by, the Lessee pursuant to this Article X shall be paid to the Agent (or the Lessor if the --------- Loans have been fully paid) as security for the obligations of the Lessee under this Lease and, at such time thereafter as no Potential Event of Default or Event of Default shall be continuing, such amount shall be paid promptly to the Lessee to the extent not previously applied by the Lessor or the Agent in accordance with the terms of this Lease or the other Operative Documents. Section 10.10 No Rent Abatement. Rent shall not abate hereunder by ----------------- reason of any Casualty, any Event of Loss, any Event of Taking or any Condemnation of the Leased Property, and the Lessee shall continue to perform and fulfill all of the Lessee's obligations, covenants and agreements hereunder notwithstanding such Casualty, Event of Loss, Event of Taking or Condemnation until the Lease Termination Date. ARTICLE XI INTEREST CONVEYED TO LESSEE --------------------------- The Lessee and the Lessor intend that this Lease be treated, for accounting purposes, as an operating lease. For all other purposes, the Lessee and the Lessor intend that the transaction represented by this Lease be treated as a financing transaction, and for such purposes, it is the intention of the parties hereto (i) that this Lease be treated as a mortgage, security deed or deed of trust (whichever is applicable in the jurisdiction in which the Leased Property is located) and security agreement, encumbering the Leased Property, and that the Lessee, as grantor, hereby grants to the Lessor, as mortgagee or beneficiary and secured party, or any successor thereto, a first and paramount Lien on the Leased Property in which the Lessee has an interest, (ii) that the 16 Lessor shall have, as a result of such determination, all of the rights, powers and remedies of a mortgagee, deed of trust beneficiary or secured party available under Applicable Law to take possession of and sell (whether by foreclosure or otherwise) the Leased Property, (iii) that the effective date of such mortgage, security deed or deed of trust shall be the effective date of this Lease, or the Lease Supplement, if later, (iv) that the recording of this Lease or the Lease Supplement shall be deemed to be the recording of such mortgage, security deed or deed of trust, and (v) that the obligations secured by such mortgage, security deed or deed of trust shall include the Funded Amount and all Basic Rent and Supplemental Rent hereunder and all other obligations of and amounts due from the Lessee hereunder and under the Operative Documents. ARTICLE XII EVENTS OF DEFAULT ----------------- Each of the following events shall constitute an Event of Default (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Authority): (a) The Lessee shall fail to make any payment of Basic Rent when due; or (b) (i) The Lessee shall fail to make any payment of Rent (other than Basic Rent and other than as set forth in clause (c) or any other ---------- amount payable hereunder or under any of the other Operative Documents (other than Basic Rent and other than as set forth in clause (c)), and such ----------- failure shall continue for a period of five (5) days after the same becomes due; or (ii) the Lessee shall fail to pay the Funded Amount or Lease Balance when due pursuant to Sections 10.1, 10.2, 14.1 or 14.2, or the Lessee shall ------------- ---- ---- ---- fail to pay the Recourse Deficiency Amount when required pursuant to Article XIV or the Construction Agent shall fail to make any payment when - ----------- due under the Construction Agency Agreement; or (c) The Lessee or JFC or any of their Subsidiaries fails to perform or observe any term, covenant or agreement contained in Section 5.1(p)(vii), (xi), (xii), (xv) or (xvi) or in Section 5.2 of the Master Agreement; or (d) The Lessee shall fail to maintain insurance as required by Article VIII hereof, and such failure shall continue until the earlier of - ------------ (i) fifteen (15) days after written notice thereof from the Lessor and (ii) the day immediately preceding the date on which any applicable insurance coverage would otherwise lapse or terminate; or (e) The Lessee, JFC or any of their Subsidiaries shall default in the due and punctual performance of or compliance with any covenant, condition or agreement to be performed or observed by it under any provision of Sections 5.1(g), (h), (j), (k) or (m), inclusive, of the Master Agreement or shall use the proceeds of the Fundings for a purpose other than as stated in Section 5.1(u) of the Master Agreement, and any such failure or use shall continue unremedied for five 17 (5) days following the date on which such covenant, condition or agreement shall have been required to be performed or observed, or such use of proceeds shall have varied from that stated in Section 5.1(u) of the Master Agreement; or (f) The Lessee, JFC or any of their Subsidiaries shall default in the due and punctual performance of or compliance with any covenant, condition or agreement to be performed or observed by it under any provision of Sections 5.1(c)-(f), inclusive, 5.1(i) or 5.1(n) of the Master Agreement and any such failure shall continue unremedied for ten (10) days following the date on which such covenant, condition or agreement shall have been required to be performed or observed; or (g) The Lessee, JFC or any of their Subsidiaries shall default in the due and punctual performance of or compliance with any covenant, condition or agreement to be performed or observed by it under any other provision of this Lease or any of the other Operative Documents and any such failure shall continue unremedied for thirty (30) days after the earlier of (x) the date upon which any senior officer of the Lessee or JFC knew or reasonably should have known of such default or (y) the date on which such covenant, condition or agreement shall have been required to be performed or observed; or (h) Any representation or warranty of the Lessee or JFC made in any of the Operative Documents or in any certificate, document or financial or other statement or in connection with the Transaction or pursuant to the Operative Documents shall have been false or inaccurate in any material respect on the date as of which made or deemed made; or (i) The Lessee, JFC, or any of their Subsidiaries (A) shall fail to make when due or payable any payment required to be made by it in respect of (x) any Indebtedness for Money Borrowed (other than pursuant to the Operative Documents) whether or not subject to a Subordination Agreement, or (y) any Indebtedness other than Indebtedness for Money Borrowed, whether or not subject to a Subordination Agreement, if such failure extends beyond the applicable grace period (if any) specified in the relevant document on the date of such failure or (B) shall fail duly and punctually to perform or observe any other covenant, condition, or agreement contained in, or any other event shall occur or condition shall exist under, any evidence of Indebtedness, or any agreement securing or relating to any Indebtedness, and the effect of such failure is (x) to cause, or permit the holder of such Indebtedness or a trustee to cause, such Indebtedness to become due or to be required to be repurchased, prior to its scheduled maturity or such Indebtedness to become payable or cash collateral in respect thereof to be demanded or (y) to permit the holder of such Indebtedness or a trustee to elect any Person to the Board of Directors of any Subsidiary; provided, that -------- any Event of Default arising under clause (B) in respect of Indebtedness ---------- shall be determined without regard to any amendment to or waiver of any provision of the document or instrument evidencing such indebtedness or any related document or instrument entered into by the parties thereto in anticipation of, concurrent with or subsequent to the occurrence of any such event or circumstance, including, without limitation, the occurrence of any event or condition that (x) results in any such Indebtedness 18 becoming due prior to its scheduled maturity or (y) enables or permits the lenders under such Indebtedness (as amended, modified, supplemented or replaced from time to time), or any agent on their behalf, to cause the loans thereunder to become due or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; or (j) A default shall occur under the provisions of any preferred stock (or any agreement relating thereto) of any Subsidiary, and the effect of the same shall be (i) to require, or permit the holders thereof to require, the issuer thereof to redeem the same prior to any mandatory redemption date or (ii) to permit the holders thereof to elect any Person to the Board of Directors of such Subsidiary; or (k) A final judgment or judgments for the payment of money in excess of $500,000 in the aggregate shall be rendered against the Lessee, JFC and any Subsidiary (or any one or more of such Persons) and shall remain in force undischarged and unstayed for a period of more than the longer of (x) 60 days or (y) the shorter of (i) the period provided for requesting a stay of such judgment or (ii) the period provided for filing an appeal from such judgment, both as established for the jurisdiction in which such judgment was rendered and without regard for any extension or renewal periods applicable to either thereof; or (l) The Lessee, JFC or any of their Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Lessee, JFC or any of their Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Lessee, JFC or any of their Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which ---------- (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the Lessee, JFC or any of their Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the Lessee, JFC or any of their Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Lessee, JFC or any of their - ---------- ---- ----- Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due or there shall be any receivership, insolvency, or liquidation pursuant to SIPA; or 19 (m) (i) An ERISA Event shall occur with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Lessee, JFC or any ERISA Affiliate under Title IV of ERISA to such Pension Plan or Multiemployer Plan or to the PBGC in an aggregate amount for all such Pension Plans and Multiemployer Plans in excess of $500,000, less any outstanding amounts under clauses (ii) and (iii); (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans and Multiemployer Plans at any time exceeds $500,000, less any outstanding amounts under clauses (i) and (iii) (determined, in respect of Multiemployer Plans, by reference to the Unfunded Pension Liability for which the Lessee, JFC or any ERISA Affiliate may be liable); or (iii) the Lessee, JFC or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $500,000, less any outstanding amounts under clauses (i) and (ii); or (n) Intentionally Omitted. (o) The Guarantor fails in any material respect to perform or observe any term, covenant or agreement in the Guaranty, or the Guaranty is for any reason partially (including with respect to future advances) or wholly revoked or invalidated, or otherwise ceases to be in full force and effect, or the Guarantor or any other Person contests in any manner the validity or enforceability thereof or denies that it has any further liability or obligation thereunder; or any event described at subsection (l) -------------- of this Section occurs with respect to the Guarantor or the Guarantor shall ------- repudiate or terminate the Guaranty, or the Guaranty shall at any time cease to be in full force and effect or cease to be the legal, valid and binding obligation of the Guarantor; or (p) Any non-monetary judgment, order or decree is entered against the Lessee or any Subsidiary which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of fifteen (15) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (q) There occurs any Change of Control; or (r) Any Governmental Authority or any Business Association revokes or fails to renew any material license, permit or franchise of the Lessee, JFC or any Subsidiary, or the Lessee, JFC or any Subsidiary for any reason loses any material license, permit or franchise, or the Lessee, JFC or any Subsidiary suffers the imposition of any restraining order, escrow, suspension or impound of funds in connection with any proceeding (judicial or administrative) with respect to any material license, permit or franchise which, in the case of any restraining order, escrow or impound of funds is not dismissed or released within thirty (30) days after filing or imposition; or (s) The occurrence of a Construction Agency Event of Default; or 20 (t) There shall have been asserted against the Lessee or any of its Subsidiaries an environmental claim that, in the reasonable judgment of the Lenders, is reasonably likely to be determined adversely to the Lessee or any of its Subsidiaries, and the amount thereof (either individually or in the aggregate) is reasonably likely to have a Material Adverse Effect (insofar as such amount is payable by the Lessee or any of its Subsidiaries but after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons jointly and severally liable therefor); or (u) The Lessee, JFC or the Lessee's General Partner shall be terminated, dissolved or liquidated (as a matter of law or otherwise) or proceedings shall be commenced by any Person (including the Lessee, JFC or the Lessee's General Partner) seeking the termination, dissolution or liquidation of the Lessee, JFC or the Lessee's General Partner, as the case may be, and such proceedings are not dismissed within twenty (20) days after filing; or (v) The Liens created by the Operative Documents shall at any time not constitute a valid and perfected Lien on the collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required herein or therein) in favor of the Agent, free and clear of all other Liens (other than Permitted Liens), or, except for expiration in accordance with its terms, any of the Operative Documents shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by the Lessee or any other obligor; or (w) A court or other Governmental Authority or agency or Business Association having jurisdiction shall enter a decree or order approving or acknowledging as properly filed or commenced against the Lessee or any Subsidiary a petition or proceedings for liquidation pursuant to SIPA or otherwise, rehabilitation, readjustment or composition (or for any related or similar purpose) under any law (other than the Bankruptcy Code) relating to financially distressed debtors, their creditors or property, and any such decree or order shall remain in force undischarged and unstayed for a period of more than 30 days; or (x) The Lessee, JFC or any of their Subsidiaries shall take corporate action for the purpose or with the effect of authorizing, acknowledging or confirming the taking or existence of any action or condition specified in paragraph (l) above; or (y) The Lessee shall fail to file any report or information required pursuant to SIPA, or shall fail to pay when due all or any part of an assessment made upon the Lessee pursuant to SIPA, and such failure shall not have been cured, by the filing of such report or information or by the making of such payment, together with interest thereon, within five days after receipt by the Lessee, of written notice of such failure given by or on behalf of SIPC pursuant to Section 10(a) of SIPA; or (z) The making of an application by SIPC for a decree adjudicating that customers of the Lessee are in need of protection under SIPA and the failure of the Lessee to obtain the dismissal of such application within 30 days; 21 (aa) Aggregate Indebtedness of the Lessee shall exceed 1500% of its Net Capital or, if the Lessee has elected to operate under paragraph (a)(1)(ii) of Rule 15c3-1, its Net Capital computed in accordance therewith shall be less than 2% of its aggregate debit items computed in accordance with Exhibit A to Rule 15c3-3 or (if registered as a futures commission merchant) its net capital (as defined in the CEA or the regulations then existing thereunder) shall be less than 4% of the funds required to be segregated pursuant to the CEA and the regulations thereunder and the foreign futures or foreign options secured amounts (less the market value of commodity options purchased by option customers on or subject to the rules of a contract market or a foreign Board of Trade, each such deduction not to exceed the amount of funds in the option customer's account and the foreign futures or foreign options secured amounts), if greater (or, in either case, such greater or lesser percentage as may be made applicable to the Lessee by the self-regulatory or governmental agencies or bodies having appropriate authority), throughout a period of not less than fifteen (15) consecutive Business Days, commencing on the date the Lessee first determines and notifies the Examining Authority or the Examining Authority or the SEC first determines and notifies the Lessee of such fact; or (bb) The SEC or any State Securities Commission shall revoke the broker-dealer registration of the Lessee; or (cc) The Examining Authority or any Business Association shall suspend (and not reinstate within 10 days) or revoke the Lessee's membership as a member of such Examining Authority or any Business Association. ARTICLE XIII ENFORCEMENT ----------- Section 13.1 Remedies. Upon the occurrence and during the -------- continuance of any Event of Default, the Lessor may do one or more of the following as the Lessor in its sole discretion shall determine, without limiting any other right or remedy the Lessor may have on account of such Event of Default (including, without limitation, the obligation of the Lessee to purchase the Leased Property as set forth in Section 14.3): ------------ (a) The Lessor may, by notice to the Lessee, rescind or terminate this Lease as of the date specified in such notice; however, (i) no reletting, reentry or taking of possession of the Leased Property by the Lessor will be construed as an election on the Lessor's part to terminate this Lease unless a written notice of such intention is given to the Lessee, (ii) notwithstanding any reletting, reentry or taking of possession, the Lessor may at any time thereafter elect to terminate this Lease for a continuing Event of Default, and (iii) no act or thing done by the Lessor or any of its agents, representatives or employees and no agreement accepting a surrender of the Leased Property shall be valid unless the same be made in writing and executed by the Lessor; 22 (b) The Lessor may (i) demand that the Lessee, and the Lessee shall upon the written demand of the Lessor, return the Leased Property promptly to the Lessor in the manner and condition required by, and otherwise in accordance with all of the provisions of, Articles VI and XIV ----------- --- hereof as if the Leased Property were being returned at the end of the Lease Term, and the Lessor shall not be liable for the reimbursement of the Lessee for any costs and expenses incurred by the Lessee in connection therewith and (ii) without prejudice to any other remedy which the Lessor may have for possession of the Leased Property, and to the extent and in the manner permitted by Applicable Law, enter upon the Leased Property and take immediate possession of the Leased Property or any part thereof (to the exclusion of the Lessee) and expel or remove the Lessee and any other person who may be occupying the Leased Property, by summary proceedings or otherwise, all without liability to the Lessee for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise and, in addition to the Lessor's other damages, the Lessee shall be responsible for the actual and reasonable costs and expenses of reletting, including brokers' fees and the reasonable costs of any alterations or repairs made by the Lessor; (c) The Lessor may (i) sell all or any part of the Leased Property at public or private sale, as the Lessor may determine, free and clear of any rights of the Lessee and without any duty to account to the Lessee with respect to such action or inaction or any proceeds with respect thereto (except to the extent required by clause (ii) below if the Lessor ----------- shall elect to exercise its rights thereunder) in which event the Lessee's obligation to pay Basic Rent for the Leased Property hereunder for periods commencing after the date of such sale shall be terminated or proportionately reduced, as the case may be; and (ii) if the Lessor shall so elect, demand that the Lessee pay to the Lessor, and the Lessee shall pay to the Lessor, on the date of such sale, as liquidated damages for loss of a bargain and not as a penalty (the parties agreeing that the Lessor's actual damages would be difficult to predict, but the aforementioned liquidated damages represent a reasonable approximation of such amount) (in lieu of Basic Rent due for periods commencing on or after the Payment Date coinciding with such date of sale (or, if the sale date is not a Payment Date, the Payment Date next preceding the date of such sale)), an amount equal to (a) the excess, if any, of (1) the sum of (A) all Rent due and unpaid to and including such Payment Date and (B) the Funded Amount with respect to the Leased Property, computed as of such date, over (2) the net proceeds of such sale (that is, after deducting all costs and expenses incurred by the Lessor, the Agent or any Lender incident to such conveyance (including, without limitation, all costs, expenses, fees, premiums and taxes described in Section 14.5); plus (b) interest at the Overdue Rate on ------------ ---- the foregoing amount from such Payment Date until the date of payment; (d) The Lessor may, at its option, not terminate this Lease, and continue to collect all Basic Rent, Supplemental Rent, and all other amounts (including, without limitation, the Funded Amount) due to the Lessor (together with all costs of collection) and enforce the Lessee's obligations under this Lease as and when the same become due, or are to be performed, and, at the option of the Lessor, upon any abandonment of the Leased Property by the Lessee or re-entry of same by the Lessor, the Lessor may, in its sole and absolute discretion, elect not to terminate 23 this Lease with respect thereto and may make such reasonable alterations and necessary repairs in order to relet the Leased Property, and relet the Leased Property or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as the Lessor in its reasonable discretion may deem advisable, and upon each such reletting all rentals actually received by the Lessor from such reletting shall be applied to the Lessee's obligations hereunder in such order, proportion and priority as the Lessor may elect in the Lessor's sole and absolute discretion. If such rentals received from such reletting during any Rent Period are less than the Rent to be paid during that Rent Period by the Lessee hereunder, the Lessee shall pay any deficiency, as calculated by the Lessor, to the Lessor on the Payment Date for such Rent Period; (e) If the Leased Property has not been sold, the Lessor may, whether or not the Lessor shall have exercised or shall thereafter at any time exercise any of its rights under paragraphs (a), (b), (c) or (d) of -------------- --- --- --- this Article XIII with respect to the Leased Property, demand, by written ------------ notice to the Lessee specifying a date (the "Final Rent Payment Date") not ----------------------- earlier than thirty (30) days after the date of such notice, that the Lessee purchase, on the Final Rent Payment Date, the Leased Property in accordance with the provisions of Sections 14.2, 14.4 and 14.5; provided, however, that ------------- ---- ---- -------- ------- (i) such purchase shall occur on the date set forth in such notice, notwithstanding the provision in Section 14.2 calling for such purchase to ------------ occur on the Lease Termination Date, and (ii) the Lessor's obligations under Section 14.5(a) shall be limited to delivery of a special warranty deed and - --------------- quit claim bill of sale of the Leased Property, without recourse or warranty, but free and clear of Lessor Liens; (f) The Lessor may exercise any other right or remedy that may be available to it under Applicable Law, or proceed by appropriate court action (legal or equitable) to enforce the terms hereof or to recover damages for the breach hereof. Separate suits may be brought to collect any such damages for any Rent Period(s), and such suits shall not in any manner prejudice the Lessor's right to collect any such damages for any subsequent Rent Period(s), or the Lessor may defer any such suit until after the expiration of the Lease Term, in which event such suit shall be deemed not to have accrued until the expiration of the Lease Term; or (g) The Lessor may retain and apply against the Lessor's damages (but only to the extent thereof) all sums which the Lessor would, absent such Event of Default, be required to pay to, or turn over to, the Lessee pursuant to the terms of this Lease. Section 13.2 Remedies Cumulative; No Waiver; Consents. To the ---------------------------------------- extent permitted by, and subject to the mandatory requirements of, Applicable Law, each and every right, power and remedy herein specifically given to the Lessor or otherwise in this Lease shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Lessor, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the 24 right to exercise at the same time or thereafter any right, power or remedy. No delay or omission by the Lessor in the exercise of any right, power or remedy or in the pursuit of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Lessee or to be an acquiescence therein. The Lessor's consent to any request made by the Lessee shall not be deemed to constitute or preclude the necessity for obtaining the Lessor's consent, in the future, to all similar requests. No express or implied waiver by the Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Potential Event of Default or Event of Default. To the extent permitted by Applicable Law, the Lessee hereby waives any rights now or hereafter conferred by statute or otherwise that may require the Lessor to sell, lease or otherwise use the Leased Property or part thereof in mitigation of the Lessor's damages upon the occurrence of any Potential Event of Default or Event of Default or that may otherwise limit or modify any of the Lessor's rights or remedies under this Article XIII. ------------ Section 13.3 Purchase Upon an Event of Default. Upon the --------------------------------- occurrence of an Event of Default, until the date that is thirty (30) days after the Lessee receives written notice of such Event of Default, the Lessee may purchase all, but not less than all, of the Leased Property for the Lease Balance, plus any amounts due pursuant to Section 7.5 of the Master Agreement. Such purchase shall be made in accordance with Section 14.5 (except that the Lessor's obligations under Section 14.5(a) shall be --------------- limited to delivery of a special warranty deed and quit claim bill of sale of the Leased Property, without recourse or warranty (other than those contained in such special warranty deed), but free and clear of Lessor Liens), upon not less than five (5) Business Days' written notice (which shall be irrevocable) to the Lessor, which notice shall set forth the date of purchase (which shall be a date no later than ten (10) Business Days from the date of such notice). ARTICLE XIV SALE, RETURN OR PURCHASE OF LEASED PROPERTY; RENEWAL --------------------------- Section 14.1 Lessee's Option to Purchase. --------------------------- (a) Subject to the terms, conditions and provisions set forth in this Article XIV, the Lessee shall have the option (the "Purchase Option"), ----------- --------------- to be exercised as set forth below, to purchase from the Lessor, the Lessor's interest in all of the Leased Property. Such option must be exercised by written notice to the Lessor not later than six (6) months prior to the Lease Termination Date which notice shall be irrevocable; such notice shall specify the date that such purchase shall take place, which date shall be a date occurring not less than thirty (30) days after such notice or the Lease Termination Date (whichever is earlier). If the Purchase Option is exercised pursuant to the foregoing, then, subject to the provisions set forth in this Article XIV, on the applicable purchase date or ----------- the Lease Termination Date, as the case may be, the Lessor shall convey to the Lessee, without recourse or warranty (other than as set forth in the special 25 warranty deed and as to the absence of Lessor Liens), and the Lessee shall purchase from the Lessor, the Lessor's interest in the Leased Property leased by the Lessee. (b) [Reserved] Section 14.2 Conveyance to Lessee. Unless (a) the Lessee shall have -------------------- properly exercised the Purchase Option and purchased the Leased Property pursuant to Section 14.1(a), or (b) the Lessee shall have properly exercised --------------- the Remarketing Option and shall have fulfilled all of the conditions of Section 14.6 hereof, then, subject to the terms, conditions and provisions - ------------ set forth in this Article XIV, the Lessee shall purchase from the Lessor, ----------- and the Lessor shall convey to the Lessee, on the Lease Termination Date all of the Lessor's interest in the Leased Property leased to the Lessee. The Lessee may designate, in a notice given to the Lessor not less than ten (10) Business Days prior to the closing of such purchase, or any purchase pursuant to Section 14.1(a), (time being of the essence), the transferee to --------------- whom the conveyance shall be made (if other than to the Lessee), in which case such conveyance shall (subject to the terms and conditions set forth herein) be made to such designee; provided, however, that such designation -------- ------- of a transferee shall not cause the Lessee to be released, fully or partially, from any of its obligations under this Lease. Section 14.3 Acceleration of Purchase Obligation. The Lessee shall ----------------------------------- be obligated to purchase the Lessor's interest in the Leased Property immediately, automatically and without notice upon the occurrence of any Event of Default specified in clause (l) of Article XII, for the purchase ----------- price set forth in Section 14.4. Upon the occurrence of any other Event of ------------ Default, the Lessee shall be obligated to purchase the Lessor's interest in the Leased Property for the purchase price set forth in Section 14.4 upon ------------ notice of such obligation from the Lessor. Section 14.4 Determination of Purchase Price. Upon the purchase by ------------------------------- the Lessee of the Lessor's interest in the Leased Property upon the exercise of the Purchase Option or pursuant to Section 14.2 or 14.3, the aggregate ------------ ---- purchase price for the Leased Property shall be an amount equal to the Lease Balance as of the closing date for such purchase, plus any amount due pursuant to Section 7.5(f) of the Master Agreement as a result of such purchase. Section 14.5 Purchase Procedure. ------------------ (a) If the Lessee shall purchase the Lessor's interest in the Leased Property pursuant to any provision of this Lease, (i) the Lessee shall accept from the Lessor, and the Lessor shall convey, the Leased Property by a duly executed and acknowledged special warranty deed and quit claim bill of sale of such the Leased Property in recordable form, and a quitclaim bill of sale of such Leased Property, (ii) upon the date fixed for any purchase of the Lessor's interest in the Leased Property hereunder, the Lessee shall pay to the order of the Agent (or the Lessor if the Loans have been paid in full) the Lease Balance, plus any amount due pursuant to Section 7.5 of the Master Agreement as a result of such purchase, by wire transfer of immediately available funds, (iii) the Lessor will execute and deliver to the Lessee such other documents, including releases, affidavits, termination agreements and termination statements, as may be legally 26 required or as may be reasonably requested by the Lessee in order to effect such conveyance, free and clear of Lessor Liens and the Liens of the Operative Documents and (iv) if reasonably requested by the Lessee, the Lessor will execute and deliver to the Lessee an assignment or termination of the Ground Lease (if the same is still in effect), in such form as may be reasonably requested by the Lessee, and the Lessee shall pay any amounts due with respect thereto under the Ground Lease. (b) The Lessee shall, at the Lessee's sole cost and expense, obtain all required governmental and regulatory approvals and consents and, in connection therewith, shall make such filings as required by Applicable Law. In the event that the Lessor is required by Applicable Law to take any action in connection with such purchase and sale, the Lessee shall pay prior to transfer all costs incurred by the Lessor in connection therewith. Without limiting the foregoing, all costs incident to such conveyance, including, without limitation, the Lessee's attorneys' fees, the Lessor's attorneys' fees, commissions, the Lessee's and the Lessor's escrow fees, recording fees, title insurance premiums and all applicable documentary transfer or other transfer taxes and other taxes required to be paid in order to record the transfer documents that might be imposed by reason of such conveyance and the delivery of such deed shall be borne entirely by and paid by the Lessee. (c) Upon expiration or termination of this Lease resulting in conveyance of the Lessor's interest in the title to the Leased Property to the Lessee, there shall be no apportionment of rents (including, without limitation, water rents and sewer rents), taxes, insurance, utility charges or other charges payable with respect to the Leased Property, all of such rents, taxes, insurance, utility or other charges due and payable with respect to the Leased Property prior to termination being payable by the Lessee hereunder and all due after such time being payable by the Lessee as the then owner of the Leased Property. Section 14.6 Option to Remarket. Subject to the fulfillment of ------------------ each of the conditions set forth in this Section 14.6, the Lessee shall have ------------ the option to market all of the Leased Property for the Lessor (the "Remarketing Option"). The Lessee's effective exercise and consummation of ------------------ the Remarketing Option shall be subject to the due and timely fulfillment of each of the following provisions, the failure of any of which, unless waived in writing by the Lessor, the Agent and the Lenders, shall render the Remarketing Option and the Lessee's exercise thereof null and void, in which event, the Lessee shall be obligated to perform its obligations under Section 14.2. - ------------ (a) Not later than twelve (12) months prior to the Lease Termination Date, the Lessee shall give to the Lessor and the Agent written notice of the Lessee's exercise of the Remarketing Option. (b) Not later than ten (10) Business Days prior to the Lease Termination Date, the Lessee shall deliver to the Lessor and the Agent an environmental assessment of the Leased Property leased by it dated not earlier than forty-five (45) days prior to the Lease Termination Date. Such environmental assessment shall be prepared by an environmental consultant selected 27 by the Required Funding Parties, shall be in form, detail and substance reasonably satisfactory to the Required Funding Parties and shall otherwise indicate the environmental condition of the Leased Property to be the same as described in the Environmental Audit. (c) On the date of the Lessee's notice to the Lessor and the Agent of the Lessee's exercise of the Remarketing Option, each of the Construction Conditions shall have been timely satisfied and no Event of Default or Potential Event of Default shall exist, and thereafter, no Event of Default or Potential Event of Default shall exist under this Lease. (d) The Lessee shall have completed all Alterations, restoration and rebuilding of the Leased Property leased by it pursuant to Sections 6.1, ------------ 6.2, 10.3 and 10.4 (as the case may be) and shall have fulfilled all of the - --- ---- ---- conditions and requirements in connection therewith pursuant to such Sections or otherwise as required hereunder or under the other Operative - -------- Documents, in each case, by the date on which the Lessor and the Agent receive the Lessee's notice of the Lessee's exercise of the Remarketing Option (time being of the essence), regardless of whether the same shall be within the Lessee's control. If any use of the Leased Property has substantially changed the character of the Leased Property (without implying any consent to such use by the Lessor or the Agent), the Lessee shall, if requested by the Lessor or the Agent, restore the Leased Property to its general character as of the commencement of this Lease, except for normal wear and tear. (e) The Lessee shall promptly provide any maintenance records relating to the Leased Property leased by it to the Lessor, the Agent and any potential purchaser upon request and shall otherwise do all things necessary to deliver possession of the Leased Property to the potential purchaser. The Lessee shall allow the Lessor, the Agent and any potential purchaser access to the Leased Property for the purpose of inspecting the same. (f) On the Lease Termination Date, the Lessee shall surrender the Leased Property leased by it in accordance with Section 14.8 hereof. ------------ (g) In connection with any such sale of the Leased Property, the Lessee will provide to the purchaser all customary "seller's" indemnities requested by the potential purchaser, representations and warranties regarding title, absence of Liens (except Lessor Liens) and the condition of the Leased Property, including, without limitation, a customary environmental indemnity. The Lessee shall fulfill all of the requirements set forth in clause (b) of Section 14.5, and such requirements are ---------- ------------ incorporated herein by reference. As to the Lessor, any such sale shall be made on an "as is, with all faults" basis without representation or warranty by the Lessor, other than the absence of Lessor Liens. (h) In connection with any such sale of the Leased Property, the Lessee shall pay directly, and not from the sale proceeds, all prorations, credits, costs and expenses of the sale of the Leased Property leased by it, whether incurred by the Lessor, any Lender, the Agent or the Lessee, including without limitation, the cost of all title insurance, surveys, environmental reports, appraisals, transfer taxes, the Lessor's and the Agent's attorneys' fees, the Lessee's 28 attorneys' fees, commissions, escrow fees, recording fees and all applicable documentary and other transfer taxes. (i) The Lessee shall pay to the Agent on the Lease Termination Date (or to such other Person as the Agent shall notify the Lessee in writing, or in the case of Supplemental Rent, to the Person entitled thereto) an amount equal to the Recourse Deficiency Amount, plus all accrued ---- and unpaid Basic Rent and Supplemental Rent, and all other amounts hereunder which have accrued prior to or as of such date, in the type of funds specified in Section 3.3 hereof. ----------- If the Lessee has exercised the Remarketing Option, the following additional provisions shall apply: During the period commencing on the date twelve (12) months prior to the scheduled expiration of the Lease Term, the Lessee shall, as nonexclusive agent for the Lessor, use commercially reasonable efforts to sell the Lessor's interest in the Leased Property and will attempt to obtain the highest purchase price therefor. All such marketing of the Leased Property shall be at the Lessee's sole expense. Lessee promptly shall submit all bids to the Lessor and the Agent, and the Lessor and the Agent will have the right to review the same and the right to submit any one or more bids. All bids shall be on an all-cash basis. In no event shall such bidder be the Lessee or any Subsidiary or Affiliate of the Lessee. The written offer must specify the Lease Termination Date as the closing date. If, and only if, the aggregate selling price (net of closing costs and prorations, as reasonably estimated by the Agent) is less than the difference between the Lease Balance at such time minus the Recourse Deficiency Amount, then the Lessor or the Agent may, in its sole and absolute discretion, by notice to the Lessee, reject such offer to purchase, in which event the parties will proceed according to the provisions of Section 14.7 ------------ hereof. If neither the Lessor nor the Agent rejects such purchase offer as provided above, the closing of such purchase of the Leased Property by such purchaser shall occur on the Lease Termination Date, contemporaneously with the Lessee's surrender of the Leased Property in accordance with Section 14.8 ------------ hereof, and the gross proceeds of the sale (i.e., without deduction for any marketing, closing or other costs, prorations or commissions) shall be paid directly to the Agent (or the Lessor if the Funded Amount has been fully paid); provided, however, that if the sum of the gross proceeds from such -------- ------- sale plus the Recourse Deficiency Amount paid by the Lessee on the Lease ---- Termination Date pursuant to Section 14.6(i), minus any and all costs and --------------- expenses (including broker fees, appraisal costs, legal fees and transfer taxes) incurred by the Agent or the Lessor in connection with the marketing of the Leased Property or the sale thereof exceeds the Lease Balance as of such date, then the excess shall be paid to the Lessee on the Lease Termination Date. The Lessee shall not have the right, power or authority to bind the Lessor in connection with any proposed sale of the Leased Property. Section 14.7 Rejection of Sale. Notwithstanding anything contained ----------------- herein to the contrary, if the Lessor or the Agent rejects the purchase offer for the Leased Property as provided in Section 14.6, then (a) the ------------ Lessee shall pay to the Agent the Recourse Deficiency Amount pursuant to Section 14.6(i), (b) the Lessor shall retain title to the Leased Property, - --------------- and (c) in addition to the Lessee's other obligations hereunder, the Lessee will reimburse the Lessor and the Agent, within ten (10) Business Days after written request, for all reasonable costs and 29 expenses incurred by the Lessor or Agent during the period ending on the first anniversary of the Lease Termination Date in connection with the marketing, sale, closing or transfer of the Leased Property, which obligation shall survive the Lease Termination Date and the termination or expiration of this Lease. Section 14.8 Return of Leased Property. If the Lessor retains title ------------------------- to the Leased Property pursuant to Section 14.7 hereof, then the Lessee ------------ shall, on the Lease Termination Date, and at its own expense, return possession of the Leased Property leased by it to the Lessor for retention by the Lessor or, if the Lessee properly exercises the Remarketing Option and fulfills all of the conditions of Section 14.6 hereof and neither the ------------ Lessor nor the Agent rejects such purchase offer pursuant to Section 14.6, ------------ then the Lessee shall, on such Lease Termination Date, and at its own cost, transfer possession of the Leased Property leased by it to the independent purchaser thereof, in each case by surrendering the same into the possession of the Lessor or such purchaser, as the case may be, free and clear of all Liens other than the Lessor Liens, in as good condition as it was on the Completion Date therefor in the case of new Construction, or the Funding Date (as modified by Alterations permitted by this Lease), ordinary wear and tear excepted, and in compliance with all Applicable Laws and all other requirements of this Lease and the other Operative Documents. The Lessee shall, on and within a reasonable time before and after the Lease Termination Date, cooperate with the Lessor and the independent purchaser of the Leased Property leased by the Lessee in order to facilitate the ownership and operation by such purchaser of the Leased Property after the Lease Termination Date, which cooperation shall include the following, all of which the Lessee shall do on or before the Lease Termination Date: providing all books and records regarding the maintenance and ownership of the Leased Property and all know-how, data and technical information relating thereto, providing a copy of the Plans and Specifications, granting or assigning all licenses necessary for the operation and maintenance of the Leased Property and cooperating in seeking and obtaining all necessary Governmental Actions. The Lessee shall have also paid the cost of all Alterations commenced prior to the Lease Termination Date. The obligations of the Lessee under this Article XIV shall survive the expiration or ----------- termination of this Lease. Section 14.9 Renewal. ------- (a) Subject to the conditions set forth herein, the Lessee may by written notice to the Lessor and the Agent given not later than ninety (90) days prior to the Construction Term Expiration Date, request the renewal of this Lease for a renewal period equal to the Construction Term, but in no event in excess of twelve (12) months, commencing on the date following the Lease Termination Date. No later than the date that is forty-five (45) days after the date the request to renew has been delivered to each of the Lessor and the Agent, the Agent will notify the Lessee whether or not the Lessor's and the Lenders' consent (which consent, in the case of the Lessor and the Lenders, may be granted or denied in their sole discretion) to such renewal request (which renewal shall require the unanimous consent of the Lessor and the Lenders and may be conditioned on such conditions precedent as may be specified by the Lessor and the Lenders). If the Agent fails to respond within such timeframe, such failure shall be a rejection of 30 such request. If the Agent notifies the Lessee of the Lessor's and the Lenders' consent to such renewal, such renewal shall be effective as of the Lease Termination Date. (b) Subject to the conditions set forth herein, the Lessee may, by written notice to the Lessor and the Agent given not later than twelve (12) months and not earlier than sixteen (16) months prior to the then scheduled Lease Termination Date, request the renewal of this Lease, for five (5) years in the case of the first renewal term and up to five years in the case of the second renewal term, provided that in no event shall the term of this Lease exceed fifteen (15) years from the date of this Lease, in each case commencing on the date following such Lease Termination Date. No later than the date that is forty-five (45) days after the date the request to renew has been delivered to each of the Lessor and the Agent, the Agent will notify the Lessee whether or not the Lessor and the Lenders consent (such consent, in the case of the Lessor and the Lenders, may be granted or denied in their sole discretion) to such renewal request (which renewal shall require the unanimous consent of the Lessor and the Lenders, and may be conditioned on such conditions precedent as may be specified by the Lessor and the Lenders). If the Agent fails to respond within such time frame, such failure shall be deemed to be a rejection of such request. If the Agent notifies the Lessee of the Lessor's and the Lenders' consent to such renewal, such renewal shall be effective as of the then scheduled Lease Termination Date. The Lessee, at its sole cost and expense, shall be permitted to replace any Lender that rejects or is deemed to have rejected such request, provided that such replacement Lender is an Eligible Assignee, -------- the replacement complies with Section 6.2 of the Master Agreement and the replacement occurs at least twelve (12) months prior to the then scheduled Lease Termination Date; provided, however, that, in the event that the -------- ------- Lessee shall have irrevocably elected to purchase the Leased Property pursuant to the terms of this Lease if this Lease is not renewed as provided for herein and written notice of such election shall have been delivered to the Lessor and the Agent at least twelve (12) months prior to the then scheduled Lease Termination Date, then such replacement shall occur at lease six (6) months prior to the then scheduled Lease Termination Date. Section 14.10 Environmental Report. Upon termination of this Lease, -------------------- unless the Lessee have exercised the Remarketing Option and complied with Section 14.6, the Lessee shall deliver, at the Lessee's expense, to the - ------------ Lessor and the Agent an environmental assessment of the Leased Property leased by it at any time during the Lease Term. Such environmental assessment shall be prepared by an environmental consultant, and shall be in a form, reasonably satisfactory to the Lessor and the Agent. ARTICLE XV LESSEE'S EQUIPMENT ------------------ After any repossession of the Leased Property (whether or not this Lease has been terminated), the Lessee, at its sole cost and expense and so long as such removal of such trade fixtures, personal property or equipment shall not result in a violation of Applicable Law, shall, within a reasonable time after such repossession or within sixty (60) days after the Lessee's 31 receipt of the Lessor's written request (whichever shall first occur), remove all of the Lessee's trade fixtures, personal property and equipment from the Leased Property (to the extent that the same can be readily removed from the Leased Property without causing material damage to the Leased Property); provided, however, that the Lessee shall not remove any such -------- ------- trade fixtures, personal property or equipment that has been financed by the Lessor under the Operative Documents or otherwise constituting Leased Property (or that constitutes a replacement of such property). Any of the Lessee's trade fixtures, personal property and equipment not so removed by the Lessee within such period shall be considered abandoned by the Lessee, and title thereto shall without further act vest in the Lessor, and may be appropriated, sold, destroyed or otherwise disposed of by the Lessor without notice to the Lessee and without obligation to account therefor and the Lessee will pay the Lessor, upon written demand, all reasonable costs and expenses incurred by the Lessor in removing, storing or disposing of the same and all costs and expenses incurred by the Lessor to repair any damage to the Leased Property caused by such removal. The Lessee will immediately repair at its expense all damage to the Leased Property caused by any such removal (unless such removal is effected by the Lessor, in which event the Lessee shall pay all reasonable costs and expenses incurred by the Lessor for such repairs). The Lessor shall have no liability in exercising the Lessor's rights under this Article XV, nor shall the Lessor be responsible ---------- for any loss of or damage to the Lessee's personal property and equipment. ARTICLE XVI RIGHT TO PERFORM FOR LESSEE --------------------------- If the Lessee shall fail to perform or comply with any of its agreements contained herein, the Lessor, upon ten (10) days' prior notice to the Lessee (except in the case of an emergency), may perform or comply with such agreement, and the Lessor shall not thereby be deemed to have waived any default caused by such failure, and the amount of such payment and the amount of the expenses of the Lessor (including actual and reasonable attorneys' fees and expenses) incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, shall be deemed Supplemental Rent, payable by the Lessee to the Lessor within ten (10) days after written demand therefor. ARTICLE XVII MISCELLANEOUS ------------- Section 17.1 Reports. To the extent required under Applicable Law ------- and to the extent it is reasonably practical for the Lessee to do so, the Lessee shall prepare and file in timely fashion, or, where such filing is required to be made by the Lessor or it is otherwise not reasonably practical for the Lessee to make such filing, Lessee shall prepare and deliver to the Lessor (with a copy to the Agent) within a reasonable time prior to the date for filing and the Lessor shall file, any material reports with respect to the condition or operation of the Leased Property that shall be required to be filed with any Governmental Authority. 32 Section 17.2 Binding Effect; Successors and Assigns. The terms and -------------------------------------- provisions of this Lease, and the respective rights and obligations hereunder of the Lessor and the Lessee, shall be binding upon their respective successors, legal representatives and assigns (including, in the case of the Lessor, any Person to whom the Lessor may transfer the Leased Property or any interest therein in accordance with the provisions of the Operative Documents), and inure to the benefit of their respective permitted successors and assigns, and the rights granted hereunder to the Agent and the Lenders shall inure to the benefit of their respective permitted successors and assigns. The Lessee hereby acknowledges that the Lessor has assigned all of its right, title and interest to, in and under this Lease to the Agent and the Lenders pursuant to the Loan Agreement and related Operative Documents and that all of the Lessor's rights hereunder may be exercised by the Agent and all notices, deliveries or communications to or with the Lessor shall be provided to or be made with the Agent. Section 17.3 Quiet Enjoyment. The Lessor covenants that it will --------------- not interfere in the Lessee's or any of its permitted sublessees' quiet enjoyment of the Leased Property in accordance with this Lease during the Lease Term, so long as no Potential Event of Default or Event of Default has occurred. Such right of quiet enjoyment is independent of, and shall not affect, the Lessor's rights otherwise to initiate legal action to enforce the obligations of the Lessee under this Lease. Section 17.4 Notices. Unless otherwise specified herein, all ------- notices, offers, acceptances, rejections, consents, requests, demands or other communications to or upon the respective parties hereto shall be in writing and shall be deemed to have been given as set forth in Section 8.2 of the Master Agreement. All such notices, offers, acceptances, rejections, consents, requests, demands or other communications shall be addressed as follows or to such other address as any of the parties hereto may designate by written notice: If to the Lessor: Atlantic Financial Group, Ltd. c/o Grogan & Brawner 2305 Cedar Springs Road, Suite 415 Dallas, Texas 75201 Attn: Stephen S. Brookshire If to the Lessee: Edward D. Jones & Co., L.P. 12555 Manchester Road St. Louis, Missouri 63131-3729 Attn: Kenneth E. Schutte If to the Agent: SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attn: Linda L. Dash 33 If to a Lender, to the address provided in the Master Agreement. Section 17.5 Severability. Any provision of this Lease that shall ------------ be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and the Lessee shall remain liable to perform its obligations hereunder except to the extent of such unenforceability. To the extent permitted by Applicable Law, the Lessee hereby waives any provision of law that renders any provision hereof prohibited or unenforceable in any respect. Section 17.6 Amendment; Complete Agreements. Neither this Lease nor ------------------------------ any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, except by an instrument in writing signed by the Lessor and the Lessee in accordance with the provisions of Section 8.4 of the Master Agreement. This Lease, together with the Lease Supplement and the other Operative Documents, is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of the terms thereof, all negotiations, considerations and representations between the parties having been incorporated herein and therein. No course of prior dealings between the parties or their officers, employees, agents or Affiliates shall be relevant or admissible to supplement, explain or vary any of the terms of this Lease or any other Operative Document. Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement between the parties or their Affiliates shall not be relevant or admissible to determine the meaning of any of the terms of this Lease or any other Operative Document. No representations, undertakings or agreements have been made or relied upon in the making of this Lease other than those specifically set forth in the Operative Documents. Section 17.7 Construction. This Lease shall not be construed more ------------ strictly against any one party, it being recognized that both of the parties hereto have contributed substantially and materially to the preparation and negotiation of this Lease. Section 17.8 Headings. The Table of Contents and headings of the -------- various Articles and Sections of this Lease are for convenience of reference only and shall not modify, define or limit any of the terms or provisions hereof. Section 17.9 Counterparts. This Lease may be executed by the ------------ parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 17.10 GOVERNING LAW. THIS LEASE SHALL IN ALL RESPECTS BE ------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING 34 TO THE CREATION OF THE LEASEHOLD OR MORTGAGE ESTATES HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH ESTATES ARE LOCATED. Section 17.11 Reserved. -------- Section 17.12 Liability of the Lessor Limited. Except as otherwise ------------------------------- expressly provided below in this Section 17.12, it is expressly understood ------------- and agreed by and between the Lessee, the Lessor and their respective successors and assigns that nothing herein contained shall be construed as creating any liability of the Lessor or any of its Affiliates or any of their respective officers, directors, employees or agents, individually or personally, for any failure to perform any covenant, either express or implied, contained herein, all such liability (other than that resulting from the Lessor's gross negligence or willful misconduct, except to the extent imputed to the Lessor by virtue of the Lessee's action or failure to act), if any, being expressly waived by the Lessee and by each and every Person now or hereafter claiming by, through or under the Lessee, and that, so far as the Lessor or any of its Affiliates or any of their respective officers, directors, employees or agents, individually or personally, is concerned, the Lessee and any Person claiming by, through or under the Lessee shall look solely to the right, title and interest of the Lessor in and to the Leased Property and any proceeds from the Lessor's sale or encumbrance thereof (provided, however, that the Lessee shall not be -------- ------- entitled to any double recovery) for the performance of any obligation under this Lease and under the Operative Documents and the satisfaction of any liability arising therefrom (other than that resulting from the Lessor's gross negligence or willful misconduct, except to the extent imputed to the Lessor by virtue of the Lessee's action or failure to act). Section 17.13 Estoppel Certificates. Each party hereto agrees that --------------------- at any time and from time to time during the Lease Term, it will promptly, but in no event later than thirty (30) days after request by the other party hereto, execute, acknowledge and deliver to such other party or to any prospective purchaser (if such prospective purchaser has signed a commitment or letter of intent to purchase the Leased Property or any part thereof or any Note), assignee or mortgagee or third party designated by such other party, a certificate stating (a) that this Lease is unmodified and in force and effect (or if there have been modifications, that this Lease is in force and effect as modified, and identifying the modification agreements); (b) the date to which Basic Rent has been paid; (c) whether or not there is any existing default by the Lessee in the payment of Basic Rent or any other sum of money hereunder, and whether or not there is any other existing default by either party with respect to which a notice of default has been served, and, if there is any such default, specifying the nature and extent thereof; (d) whether or not, to the knowledge of the signer after due inquiry and investigation, there are any setoffs, defenses or counterclaims against enforcement of the obligations to be performed hereunder existing in favor of the party executing such certificate and (e) other items that may be reasonably requested; provided that no such certificate may be requested -------- unless the requesting party has a good faith reason for such request. 35 Section 17.14 No Joint Venture. Any intention to create a joint ---------------- venture, partnership or other fiduciary relationship between the Lessor and the Lessee is hereby expressly disclaimed. Section 17.15 No Accord and Satisfaction. The acceptance by the -------------------------- Lessor of any sums from the Lessee (whether as Basic Rent or otherwise) in amounts which are less than the amounts due and payable by the Lessee hereunder is not intended, nor shall be construed, to constitute an accord and satisfaction of any dispute between the Lessor and the Lessee regarding sums due and payable by the Lessee hereunder, unless the Lessor specifically deems it as such in writing. Section 17.16 No Merger. In no event shall the leasehold interests, --------- estates or rights of the Lessee hereunder, or of the holder of any Notes secured by a security interest in this Lease, merge with any interests, estates or rights of the Lessor in or to the Leased Property, it being understood that such leasehold interests, estates and rights of the Lessee hereunder, and of the holder of any Notes secured by a security interest in this Lease, shall be deemed to be separate and distinct from the Lessor's interests, estates and rights in or to the Leased Property, notwithstanding that any such interests, estates or rights shall at any time or times be held by or vested in the same person, corporation or other entity. Section 17.17 Survival. The obligations of the Lessee to be -------- performed under this Lease prior to the Lease Termination Date and the obligations of Lessee pursuant to Articles III, IV, X, XI, XIII, Sections ------------ -- - -- ---- -------- 6.3, 14.2, 14.3, 14.4, 14.5, 14.6(f), (g), (h), and (i), 14.7, 14.8, 14.10, - --- ---- ---- ---- ---- ------- --- --- --- ---- ---- ----- Articles XV and XVI, and Sections 17.1, 17.10 and 17.12 shall survive the - ----------- --- ------------- ----- ----- expiration or termination of this Lease. The extension of any applicable statute of limitations by the Lessor, the Lessee, the Agent or any Indemnitee shall not affect such survival. Section 17.18 Chattel Paper. To the extent that this Lease ------------- constitutes chattel paper (as such term is defined in the Uniform Commercial Code in any applicable jurisdiction), no security interest in this Lease may be created through the transfer or possession of any counterpart other than the sole original counterpart, which shall be identified as the original counterpart by the receipt of the Agent. Section 17.19 Time of Essence. Time is of the essence of this Lease. --------------- Section 17.20 Recordation of Lease. The Lessee will, at its -------------------- expense, cause this Lease or a memorandum of lease in form and substance reasonably satisfactory to the Lessor and the Lessee (if permitted by Applicable Law) to be recorded in the proper office or offices in the State(s) and the municipalities in which the Land is located. Section 17.21 Investment of Security Funds. The parties hereto ---------------------------- agree that any amounts not payable to the Lessee pursuant to any provision of Article VIII, X or XIV or this Section 17.21 shall be held by the Agent ------------ - --- ------------- (or the Lessor if the Loans have been fully paid) as security for the obligations of the Lessee under this Lease and the Master Agreement and of the Lessor under the Loan Agreement. At such time as such amounts are payable to the Lessee, such 36 amounts, net of any amounts previously applied to the Lessee's obligations hereunder or under the Master Agreement (which application is hereby agreed to by the Lessee), shall be paid to the Lessee. Any such amounts which are held by the Agent (or the Lessor if the Loans have been fully paid) pending payment to the Lessee shall until paid to the Lessee, as provided hereunder or until applied against the Lessee's obligations herein and under the Master Agreement and the other Operative Documents and distributed as provided in the Loan Agreement (or herein after the Loan Agreement is no longer in effect) in connection with any exercise of remedies hereunder, be invested by the Agent or the Lessor, as the case may be, as directed from time to time in writing by the Lessee (provided, however, if a Potential -------- ------- Event of Default or an Event of Default has occurred, it will be directed by the Agent or, if the Loans have been fully paid, the Lessor) and at the expense and risk of the Lessee, in investments permitted by the Required Lenders. Any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other expenses, if any, incurred in connection with such investment) shall be applied in the same manner as the principal invested. The Lessee upon demand shall pay to the Agent or the Lessor, as appropriate, the amount of any loss incurred in connection with all such investments and the liquidation thereof. Section 17.22 Ground Leases. The Lessee will, at its expense, ------------- timely perform all of the obligations of the Lessor, in its capacity as ground lessee, under the Ground Lease and all obligations under any and all documents, instruments and agreements related thereto, and, if requested by the Lessor, shall provide satisfactory evidence to the Lessor of such performance. Section 17.23 Land and Building. If the Building and the Land on ----------------- which the Building is located are subject to separate Lease Supplements, at any time that the Lessee exercises an option to purchase the Lessor's interest in the Building or the Land, or to renew this Lease with respect to the Building or the Land, or is obligated to purchase the Lessor's interest in the Building or the Land as a result of an Event of Loss, an Event of Taking or an Event of Default, such purchase or renewal shall be made simultaneously with respect to all of the Lessor's interest in the Building and the Land. [Signature page follows] 37 IN WITNESS WHEREOF, the undersigned have each caused this Lease Agreement to be duly executed and delivered and attested by their respective officers thereunto duly authorized as of the day and year first above written. EDWARD D. JONES & CO., L.P., a Missouri limited partnership, as the Lessee By: EDJ Holdings Company, Inc., a Missouri corporation, its sole general partner By: ------------------------------- Name: ----------------------------- Title: ----------------------------- S-1 MASTER LEASE AGREEMENT ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership), as the Lessor By: Atlantic Financial Managers, Inc., its General Partner By: ------------------------------- Name: ----------------------------- Title: ---------------------------- S-2 MASTER LEASE AGREEMENT EXHIBIT A LEASE SUPPLEMENT This instrument prepared by and when recorded return to: McGuireWoods LLP One James Center Richmond, Virginia 23219 Attention: Edmund S. Pittman, Esq. ============================================================================= LEASE SUPPLEMENT, MEMORANDUM OF LEASE AND DEED OF TRUST AND SECURITY AGREEMENT Dated as of November 30, 2000 among ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Arizona as AFG Equity, Limited Partnership), as Lessor EDWARD D. JONES & CO., L.P., as Lessee, and OLD REPUBLIC TITLE INSURANCE AGENCY, INC., Trustee, for the use and benefit of Lessor Tempe, Arizona ============================================================================= THIS INSTRUMENT IS INTENDED ALSO TO BE A FIXTURE FILING TO BE FILED IN THE REAL ESTATE RECORDS OF MARICOPA COUNTY, ARIZONA. TABLE OF CONTENTS Page ---- SECTION 1. DEFINITIONS; INTERPRETATION..................................2 SECTION 2. THE SUBJECT PROPERTY.........................................2 SECTION 3. NATURE OF TRANSACTION; DEED OF TRUST.........................2 SECTION 4. RATIFICATION; INCORPORATION.................................10 SECTION 5. ORIGINAL LEASE SUPPLEMENT...................................10 SECTION 6. GOVERNING LAW...............................................10 SECTION 7. COUNTERPART EXECUTION.......................................10 EXHIBITS: - --------- EXHIBIT A - Description of Land EXHIBIT B - Schedule of Equipment i LEASE SUPPLEMENT, MEMORANDUM OF LEASE AND DEED OF TRUST AND SECURITY AGREEMENT ---------------------------------------- THIS LEASE SUPPLEMENT, MEMORANDUM OF LEASE AND DEED OF TRUST AND SECURITY AGREEMENT (this "Lease Supplement") dated as of November 30, 2000 ---------------- between ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Arizona as AFG Equity, Limited Partnership), having an address of 2305 Cedar Springs Road, Suite 415, Dallas, Texas 75201, as the lessor (the "Lessor"), and EDWARD D. JONES & CO., L.P., a ------ Missouri limited partnership, having an address of 12555 Manchester Road, St. Louis, Missouri 63131-3729, as lessee (the "Lessee") and OLD REPUBLIC ------ TITLE INSURANCE AGENCY, INC., an Arizona corporation, as trustee (the "Trustee"), having an address of 3200 North Central Avenue, Suite 100, ------- Phoenix, Arizona 85012, for the benefit of the Lessor. RECITALS: The Lessor and the Lessee have entered into a Master Lease Agreement, dated as of the date hereof (as restated, amended, supplemented or otherwise modified from time to time, the "Lease"). The Lessor desires to lease to the Lessee, and the Lessee desires to lease from the Lessor, (a) the Lessor's leasehold interest in the land described on Exhibit A attached --------- hereto and incorporated herein, created pursuant to the Ground Lease, together with the following appurtenant rights (the "Appurtenant Rights"): ------------------ (i) all agreements, easements, rights of way or use, rights of ingress or egress, privileges, appurtenances, tenements, hereditaments, reversions, remainders, water rights and other rights and benefits at any time belonging or pertaining to the land or the improvements thereon, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the land, (ii) all permits, licenses and rights, whether or not of record, appurtenant to the land (such land and Appurtenant Rights being referred to as the "Land") and (b) the ---- buildings, structures and improvements located or to be located on the Land, along with all fixtures used or useful in connection with the operation thereof or of the Land, including, without limitation, all furnaces, boilers, compressors, elevators, fittings, pipings, connectives, conduits, ducts, partitions, equipment and apparatus of every kind and description now or hereafter affixed or attached to the building and all Alterations (including all restorations, repairs, replacements and rebuilding of such buildings, improvements and structures) thereto (the "Building") and all of -------- the following equipment (the "Equipment"): all fixtures, personal property, --------- chattels, business machines, machinery, apparatus, equipment, furnishings, fittings and all appurtenances and additions thereto and substitutions or replacements thereof (together with, in each case, attachments, components, parts and accessories) currently owned or subsequently acquired by the Lessor or the Lessee and now or subsequently affixed or attached to, or contained in or used or usable in any way in connection with any operation or letting of the Land, Building or Equipment, including but without limiting the generality of the foregoing, all personal property and equipment described on Exhibit B attached hereto and made a part hereof, all --------- signs, screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs, storm doors and windows, furniture and furnishings, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus, furnaces, boilers, compressors, elevators, refrigerating, and incinerating equipment, escalators, refrigerators, display cases, shelving, racking, movable and demountable partitions, elevators, loading and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus), snow removal and lawn maintenance equipment, motorized vehicles, telephones, communication systems (including satellite dishes and antennae), televisions, computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, connectives, conduits, ducts, partitions, appliances, equipment, apparatus, fittings and fixtures of every kind and description but excluding the Lessee's inventory (the Land, and the Building and the Equipment being referred to hereinafter as the "Subject Property"). ---------------- NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions; Interpretation. Capitalized terms not --------------------------- otherwise defined in this Lease Supplement shall have the respective meanings assigned thereto in the Appendix A to the Master Agreement (as ---------- amended, supplemented or otherwise modified from time to time the "Master ------ Agreement"), dated as of the date hereof among the Lessee, the Lessor, - --------- SunTrust Bank, as Agent, and the Lenders parties thereto (the "Lenders"), ------- and the rules of interpretation set forth in Appendix A shall apply to this ---------- Lease Supplement. Copies of the Master Agreement, the Lease and the other Operative Documents (as defined in the Master Agreement) are on file at the office of the Agent. SECTION 2. The Subject Property. Effective upon the execution and -------------------- delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Lease, and the Lessor hereby leases the Subject Property to the Lessee, and the Lessee hereby hires and leases the Subject Property from the Lessor. The term of the Lease with respect to the Subject Property begins on the date hereof and ends on November 30, 2005, subject to the right of the Lessee to extend the Lease in accordance with the terms and conditions set forth in the Lease and the other Operative Documents. The Lease contains certain purchase rights and options during the term of the Lease pursuant to which the Lessee may acquire the Subject Property, all as more fully set forth in the Lease. SECTION 3. Nature of Transaction; Deed of Trust. The Lessor and the ------------------------------------ Lessee intend that the Lease and this Lease Supplement be treated, for accounting purposes, as an operating lease. For federal, state and local tax purposes and for bankruptcy, commercial and regulatory law and all other purposes, the Lessee and the Lessor intend that the transaction represented by the Lease and this Lease Supplement be treated as a financing transaction. For such purposes, it is the intention of the parties hereto (i) that the Lease and this Lease Supplement be treated as a deed of trust and security agreement, encumbering the Subject Property, and that the Lessee, as grantor, hereby grants to the Trustee, with power of sale, as trustee for the benefit of the Lessor, as beneficiary and secured party, or any successor thereto, the Subject Property and a first and paramount Lien thereon, (ii) that the Lessor shall have, as a result of such determination, all of the rights, powers and remedies of a mortgagee, deed of trust beneficiary or secured party available under Applicable Law to take possession of and sell (whether by foreclosure or otherwise) the Subject Property, (iii) the Trustee shall have the customary powers of a trustee under a leasehold deed of trust encumbering a leasehold interest in real property, (iv) that the effective date of such deed of trust shall be the effective date of this Lease Supplement, (v) that 2 the recording of this Lease Supplement shall be deemed to be the recording of such deed of trust, and (vi) that the obligations secured by such deed of trust shall include the Funded Amounts and all Basic Rent and Supplemental Rent hereunder and all other obligations of and all amounts due from the Lessee hereunder and under the Operative Documents. In furtherance of the foregoing, the Lessor (for the remainder of this Section called "Loan ---- Party"), and the Lessee (for the remainder of this Section called "Grantor") - ----- ------- agree as follows: A. This instrument shall constitute a Deed of Trust and Security Agreement dated as of November 30, 2000 (this "Deed of ------- Trust"), made by the Lessee (the "Grantor"), having an address at ----- ------- 12555 Manchester Road, St. Louis, Missouri 63131-3729, to Old Republic Title Insurance Agency, Inc., having an address of 3200 North Central Avenue, Suite 100, Phoenix, Arizona 85012, as trustee ("the Trustee"), for the benefit of Atlantic Financial Group, Ltd., ------- a Texas limited partnership, having an address of 2305 Cedar Springs Road, Suite 415, Dallas, Texas 75201 (the "Loan Party"). ---------- B. TO SECURE PAYMENT OF ALL AMOUNTS OWING BY THE GRANTOR UNDER THE LEASE AND THE OTHER OPERATIVE DOCUMENTS AND THE PAYMENT AND PERFORMANCE OF ALL OTHER OBLIGATIONS UNDER THE OPERATIVE DOCUMENTS, THE GRANTOR HEREBY CONVEYS TO THE TRUSTEE AND HEREBY BARGAINS, SELLS, CONVEYS, CONFIRMS, GRANTS, ASSIGNS, TRANSFERS, WARRANTS AND SETS OVER TO THE TRUSTEE, WITH POWER OF SALE, THE SUBJECT PROPERTY AND ALL RENTS, LEASES, ISSUES AND PROCEEDS THEREOF (INCLUDING AWARDS AND INSURANCE, CONDEMNATION AND OTHER LOSS PROCEEDS), WITH GENERAL WARRANTY OF TITLE, IN TRUST FOR THE USE AND BENEFIT OF THE LOAN PARTY, AND GRANTS THE LOAN PARTY A SECURITY INTEREST IN THE SUBJECT PROPERTY AND ALL RENTS, LEASES, ISSUES AND PROCEEDS THEREOF (INCLUDING AWARDS AND INSURANCE, CONDEMNATION AND OTHER LOSS PROCEEDS), TO HAVE AND TO HOLD the Subject Property and the rights and privileges hereby granted unto the Trustee, its successors and assigns for the uses and purposes set forth, until all amounts owed by and all other obligations to be paid or performed by the Grantor under the Lease and the other Operative Documents are indefeasibly paid and performed in full. C. If an Event of Default has occurred and is continuing under the Lease, at the direction of the Loan Party: (i) The Loan Party or its agents may enter and take possession of the Subject Property by actual physical possession or by written notice served personally upon or sent by registered or certified mail, postage prepaid, to the Grantor, and the Grantor shall surrender possession upon request and the Loan Party may take possession without further authorization required, and may let the Subject Property and receive the rents, issues and profits thereof, make repairs and apply said rentals and profits, after payment of all necessary or proper charges and expenses, on account of the amounts hereby secured. 3 (ii) The Loan Party, shall, as a matter of contract right, at the option of the Loan Party, be entitled to the appointment of a receiver for the Subject Property, and the Grantor hereby consents to such appointment without the posting of a bond or undertaking without regard to the value of the Subject Property and waives notice of any application therefor. (iii) The Trustee may foreclose this Deed of Trust as a mortgage pursuant to the applicable laws of the State of Arizona, or the Trustee may proceed to sell the Subject Property at public auction, as a whole or in such parcels, for cash or credit and, in addition to the requirements imposed by state law, upon any terms as the Trustee deems appropriate. Before such sale at public auction is made, there shall first be such notice of default and such notice or advertisement of the time, place and terms of sale as required by Applicable Law. Such sale may be postponed for any reason, from time to time, to the extent permitted by Applicable Law. In the event the sale is postponed, the Trustee shall advertise or give notice of any subsequent sale in the same manner as the original advertisement or notice of sale provided for above or otherwise as may be permitted by Applicable Law. The Trustee shall execute and deliver to the purchaser its Trustee's deed conveying that portion of the Subject Property so sold, but without any covenant or warranty, express or implied. The recitals in the Trustee's deed of any matters or facts shall be conclusive proof of the truthfulness thereof. The Loan Party may become the purchaser of the Subject Property so sold, and no purchaser shall be required to see to the proper application of the purchase money. Unless otherwise required by Applicable Law, the Trustee shall apply the proceeds of sale as directed by the Loan Party. The Grantor agrees to surrender possession of the Subject Property so sold to the purchaser at the sale immediately after such sale. D. The Grantor hereby waives the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws (whether equitable or statutory) now or hereafter in force and all rights of marshaling in the event of any sale of the Subject Property or any interest therein. E. The Trustee shall be entitled to enforce payment of the indebtedness and performance of the Lessee's obligations and to exercise all rights and powers under this instrument or under any of the other Operative Documents or other agreement or any laws now or hereafter in force, notwithstanding some or all of the Lessee's obligations may now or hereafter be otherwise secured, whether by deed of trust, deed to secure debt, mortgage, security agreement, pledge, lien, assignment or otherwise. Neither the acceptance of this instrument nor its enforcement, shall prejudice or in any manner affect the Trustee's right to realize upon or enforce any other security now or hereafter held by the Trustee, it being agreed that the Trustee shall be entitled to enforce this instrument and any other security now or hereafter held by the Trustee in such order and manner as the Trustee or the Loan Party may determine in its or their absolute discretion. No remedy herein conferred upon or reserved to the Trustee or the Loan Party is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Operative Documents to the Trustee or the Loan Party or to which they may 4 otherwise be entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Loan Party. In no event shall the Trustee, in the exercise of the remedies provided in this instrument (including, without limitation, the appointment of a receiver and the entry of such receiver on to all or any part of the Subject Property), be deemed a "mortgagee in possession," and the Trustee shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies. F. The Trustee's sole duty with respect to the custody, safekeeping and physical preservation of any Subject Property in its possession, under Section 9-207 of the UCC as in effect in the state in which the Subject Property is located (the "UCC") or --- otherwise, shall be to deal with it in the same manner as the Trustee deals with similar property for its own account. Neither the Trustee, the Loan Party nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Subject Property or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Subject Property upon the request of the Grantor or any other Person or to take any other action whatsoever with regard to the Subject Property or any part thereof. G. All powers, authorizations and agencies contained in this Deed of Trust are coupled with an interest and are irrevocable until this instrument is terminated and the lien created hereby is released. H. Pursuant to Section 9-402 of the UCC, the Grantor authorizes the Trustee or the Loan Party to file financing statements with respect to the Subject Property with the signature of the Grantor in such form and in such filing offices as the Trustee or the Loan Party reasonably determines appropriate to perfect the security interests of the Trustee and the Loan Party under this Deed of Trust. A carbon, photographic or other reproduction of this Deed of Trust shall be sufficient as a financing statement for filing in any jurisdiction. I. It is the intention of the parties hereto that this instrument shall constitute a Security Agreement within the meaning of the UCC, and the Grantor hereby grants the Loan Party a security interest in all Subject Property which is personal property, including, without limitation, all proceeds, both cash and noncash, of any of the foregoing (the "Personal Property"). If an Event of ----------------- Default shall occur, then in addition to having any other right or remedy available at law or in equity, the Trustee, at the direction of the Loan Party, shall have the option of either (i) proceeding under the UCC and exercising such rights and remedies as may be provided to a secured party by the UCC with respect to all or any portion of the Subject Property which is personal property (including, without limitation, taking possession of and selling such property) or (ii) treating such property as real property and proceeding with respect to both the real and personal property constituting the Subject Property in accordance with the Trustee's rights, powers and remedies with respect to the real property (in which event the default provisions of the UCC shall not apply). If the Trustee, at the direction of the Loan Party, shall elect to proceed under the UCC, then five (5) days' notice of sale of the personal property shall be deemed reasonable notice and the reasonable expenses of retaking, 5 holding, preparing for sale, selling and the like incurred by the Trustee or the Loan Party shall include, but not be limited to, attorneys' fees and legal expenses. At the Trustee's request, the Grantor shall assemble the personal property and make it available to the Trustee and the Loan Party at a place designated by the Trustee or the Loan Party which is reasonably convenient to both parties. The Grantor stipulates and agrees that a sale of the Personal Property in conjunction with the Subject Property is a commercially reasonable manner of disposing of the Personal Property. The Loan Party also may (x) require the Grantor to, and the Grantor hereby agrees that the Grantor will at the Grantor's expense and upon request of the Loan Party forthwith, assemble all or part of the Personal Property as directed by the Loan Party and make it available to the Loan Party at a place to be designated by the Loan Party which is reasonably convenient to the parties, and (y) sell the Personal Property or any part thereof in one or more parcels at public or private sale for cash or credit or for future delivery, and at such price or prices and upon such other terms as the Loan Party may deem commercially reasonable. The Loan Party shall not be obligated to make any sale of the Personal Property regardless of notice of sale having been given. The Loan Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Grantor, the Trustee and the Loan Party further agree, to the extent permitted by law, that this instrument upon recording or registration in the real estate records of the proper office shall constitute a financing statement filed as a "fixture filing" within the meaning of Sections 9-313 and 9-402 of the UCC. The Grantor, upon request by the Trustee or the Loan Party from time to time, shall execute, acknowledge and deliver to the Trustee or the Loan Party one or more separate security agreements, in form satisfactory to the Trustee and the Loan Party, covering all or any part of the Subject Property and will further execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as the Trustee or the Loan Party may request in order to perfect, preserve, maintain, continue or extend the security interest under and the priority of this instrument. The Grantor further agrees to pay to the Trustee and the Loan Party on demand all costs and expenses incurred by the Trustee or the Loan Party in connection with the preparation, execution, recording, filing and refiling of any such document and all reasonable costs and expenses of any record searches for financing statements the Trustee or the Loan Party shall reasonably require. If the Grantor shall fail to furnish any financing or continuation statement within ten (10) days after request by the Trustee or the Loan Party, then pursuant to the provisions of the UCC, the Grantor hereby authorizes the Trustee and the Loan Party, without the signature of the Grantor, to execute and file any such financing and continuation statements. The filing of any financing or continuation statements in the records relating to personal property or chattels shall not be construed as in any way impairing the right of the Trustee to proceed against any personal property encumbered by this Deed of Trust as real property, as set forth above. 6 J. The Grantor acknowledges that in connection with the rights and responsibilities of the Trustee under this instrument with respect to any action taken by the Trustee or the exercise or non-exercise by the Trustee of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this instrument, as between the Grantor and the Loan Party, the Trustee shall be conclusively presumed to be acting as agent for the Loan Party with full and valid authority so to act or refrain from acting, and the Grantor shall be under no obligation, or entitlement, to make any inquiry respecting such authority. K. Except as otherwise set forth herein, to the fullest extent permitted by law, the Grantor waives the benefit of all laws now existing or that may subsequently be enacted providing for (i) any appraisement before sale of any portion of the Subject Property, (ii) any extension of the time for the enforcement of the collection of the indebtedness or the creation or extension of a period of redemption from any sale made in collecting such debt and (iii) exemption of the Subject Property from attachment, levy or sale under execution or exemption from civil process. Except as otherwise set forth herein, to the full extent the Grantor may do so, the Grantor agrees that the Grantor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, exemption, extension, reinstatement or redemption, or requiring foreclosure of this instrument before exercising any other remedy granted hereunder, and the Grantor, for the Grantor and its successors and assigns, and for any and all Persons ever claiming any interest in the Subject Property, to the extent permitted by law, hereby waives and releases all rights of reinstatement, redemption, valuation, appraisement stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshaling in the event of foreclosure of the liens hereby created. L. If (a) the Subject Property shall consist of one or more parcels, whether or not contiguous and whether or not located in the same city or county, or (b) in addition to this instrument, the Trustee and the Loan Party shall now or hereafter hold one or more additional mortgages, liens, deeds of trust or other security (directly or indirectly) for the obligations secured hereby upon other property in the state in which the Subject Property is located (whether or not such property is owned by the Grantor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by law, the Trustee and the Loan Party may, in their discretion, commence or consolidate in a single foreclosure action all foreclosure proceedings against all such collateral securing the Obligations (including the Subject Property), which action may be brought or consolidated in the courts of any county in which any of such collateral is located. The Grantor acknowledges that the right to maintain a consolidated foreclosure action is a specific inducement to the Loan Party to extend the Obligations, and the Grantor expressly and irrevocably waives any objections to the commencement or consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have. --------- ---------- The Grantor further agrees that if the Trustee or the Loan Party shall be prosecuting one or more foreclosure or other proceedings against a portion of the Subject Property or against any collateral other than the Subject Property, which collateral directly or indirectly secures the Obligations, or if the Trustee or the Loan Party shall 7 have obtained a judgment of foreclosure and sale or similar judgment against such collateral, then, whether or not such proceedings are being maintained or judgments were obtained in or outside the state in which the Subject Property is located, the Trustee and the Loan Party may commence or continue foreclosure proceedings and exercise its other remedies granted in this instrument against all or any part of the Subject Property and the Grantor waives any objections to the commencement or continuation of a foreclosure of this instrument or exercise of any other remedies hereunder based on such other proceedings or judgments and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this instrument or such other proceedings on such basis. Neither the commencement nor continuation of proceedings to foreclose this instrument nor the exercise of any other rights hereunder nor the recovery of any judgment by the Trustee and the Loan Party in any such proceedings shall prejudice, limit or preclude the Trustee's and the Loan Party's rights to commence or continue one or more foreclosure or other proceedings or obtain a judgment against any other collateral (either in or outside the state in which the Subject Property is located) which directly or indirectly secures the obligations secured hereby. The Grantor hereby waives (i) any objections to the commencement or continuation of an action to foreclose this Deed of Trust or exercise of any other remedies hereunder based on any action being prosecuted or any judgment entered with respect to the Obligations or any liens or security interests that secure payment and performance of the Obligations and (ii) any objections to the commencement of, continuation of, or entry of a judgment in any such other action based on any action or judgment connected to this Deed of Trust. The Grantor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this instrument based on any action or judgment connected to this instrument. It is expressly understood and agreed that to the fullest extent permitted by law, the Trustee may, at its election, cause the sale of all collateral which is the subject of a single foreclosure action at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the obligations secured hereby (directly or indirectly) in the most economical and least time-consuming manner. In case of a foreclosure sale, the Trust Property may be sold, at the Trustee's election, in one parcel or in more than one parcel and the Trustee is specifically empowered (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Subject Property to be held. M. Except as expressly provided in the Operative Documents, the Trustee and the Loan Party, with the express written consent of the Grantor, may at any time or from time to time renew or extend this instrument, or alter or modify the same in any way. The Trustee may waive any of the terms, covenants or conditions hereof in whole or in part and may release any portion of the Subject Property or any other security, and grant such extensions and indulgences in relation to the obligations secured hereby as the Loan Party may determine without the consent of any other Person (including, without limitation, the Grantor) and without any obligation to give notice of any kind thereto and without in any manner affecting the priority of the lien hereof on any part of the Subject Property. N. If Trustee shall be made a party to or shall intervene in any action or proceeding, whether in court or before any governmental agency, affecting the Subject 8 Property or the title thereto or the interest of Trustee under this instrument, including, without limitation, any form of condemnation or eminent domain proceeding, Trustee shall be reimbursed by the Grantor upon demand for all costs, charges and reasonable attorneys' fees incurred by it in any such case. All such sums shall be secured hereby, are due and payable within ten (10) days after demand, and if not paid within ten (10) days after demand, shall bear interest at the Overdue Rate set forth in the Operative Documents. The Trustee shall be under no duty to take any action hereunder except as expressly required, to perform any act which would involve it in expense or liability, or to institute or defend any suit in respect hereof, unless properly indemnified to its satisfaction. All reasonable expenses, charges, counsel fees and other disbursements incurred by Trustee from and after the occurrence of an Event of Default in and about the administration and execution of the trust created hereby, and the performance of its duties and powers hereunder shall be secured by this instrument prior to the indebtedness represented by the Lease and shall bear interest at the Overdue Rate set forth in the Operative Documents. The Loan Party, with or without cause, is hereby authorized and empowered to substitute and appoint, at any time and from time to time, by an instrument recorded wherever this instrument is recorded, a trustee in the place of any Trustee hereunder. The Grantor agrees to indemnify, defend and hold the Trustee harmless from and against any and all liability, loss, damage and expense, including reasonable attorneys' fees, which it may incur by reason of this instrument or by reason of any action taken by the Trustee hereunder, and from and against any and all claims and demands whatsoever which may be asserted against the Trustee by reason of any alleged obligation or undertaking on its part to perform or discharge any of the terms, covenants or conditions contained herein, unless caused by the gross negligence or willful misconduct of the Trustee. Should the Trustee incur any such liability, loss, damage or expense, the amount thereof, together with interest thereon at the Overdue Rate set forth in the Operative Documents, shall be secured by this instrument and shall be payable by the Grantor to the Trustee within ten (10) days after demand therefor. O. Nothing in this instrument shall operate or be construed to obligate the Trustee or the Loan Party to perform any obligations of the Grantor contained in any lease of the Subject Property. This instrument shall not operate to place upon the Loan Party or the Trustee any responsibility for the operation, control, care, management or repair of the Subject Property prior to the Trustee or the Loan Party taking possession thereof, and the execution of this Deed of Trust by the Grantor shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Subject Property prior to the Trustee or the Loan Party taking possession thereof is and shall be that of Grantor. P. This instrument is given to secure not only existing indebtedness, but also future advances made pursuant to or as provided in the Operative Documents, whether 9 such advances are obligatory or to be made at the option of the Loan Party, or otherwise, to the same extent as if such future advances were made on the date of execution of this instrument, although there may be no advance made at the time of execution hereof, and although there may be no indebtedness outstanding at the time any advance is made. To the fullest extent permitted by law, the lien of this instrument shall be valid as to all such indebtedness, including all revolving credit and future advances, from the time this instrument is recorded. SECTION 4. Ratification; Incorporation. Except as specifically --------------------------- modified hereby, the terms and provisions of the Lease are hereby ratified and confirmed and remain in full force and effect. The terms of the Lease (as amended by this Lease Supplement) are by this reference incorporated herein and made a part hereof. SECTION 5. Original Lease Supplement. The single executed ------------------------- original of this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and containing the receipt of the Agent therefor on or following the signature page thereof shall be the original executed counterpart of this Lease Supplement (the "Original Executed Counterpart"). To the extent that this Lease Supplement ----------------------------- constitutes chattel paper, as such term is defined in the UCC as in effect in any applicable jurisdiction, no security interest in this Lease Supplement may be created through the transfer or possession of any counterpart other than the Original Executed Counterpart. SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED ------------- BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES OF SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE LEASEHOLD ESTATE HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH SUCH ESTATE IS LOCATED. SECTION 7. Counterpart Execution. This Lease Supplement may be --------------------- executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. 10 IN WITNESS WHEREOF, each of the parties hereto has caused this Lease Supplement to be duly executed by an officer thereunto duly authorized as of the date and year first above written. ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Arizona as AFG Equity, Limited Partnership), as the Lessor By: Atlantic Financial Managers, Inc., its General Partner By: ------------------------------- Name: ----------------------------- Title: ---------------------------- N-1 LEASE SUPPLEMENT EDWARD D. JONES & CO., L.P., as the Lessee By: EDJ Holding Company, Inc., a Missouri corporation, its sole general partner By: ------------------------------- Name: ------------------------------ Title: ---------------------------- N-2 LEASE SUPPLEMENT STATE OF --------------------------- ) ) ss. COUNTY OF ) -------------------------- The foregoing instrument was acknowledged before me this day ------ of November , 2000, by , the --------------- --------------------------------- , of Atlantic Financial Managers, Inc., a - -------------------------------- Texas corporation, general partner of ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership, on behalf of the limited partnership. --------------------------------- Notary Public My Commission Expires: - --------------------- STATE OF --------------------------- ) ) ss. COUNTY OF ) -------------------------- The foregoing instrument was acknowledged before me this day ------ of November , 2000, by , the ---------------- --------------------------------- , of EDJ Holdings Company, Inc., a - ------------------------------ Missouri corporation, general partner of EDWARD D. JONES & CO., L.P., a Missouri limited partnership, on behalf of the limited partnership. --------------------------------- Notary Public My Commission Expires: - --------------------- N-1 LEASE SUPPLEMENT Receipt of this original counterpart of the foregoing Lease Supplement is hereby acknowledged as of the date hereof. SUNTRUST BANK, as the Agent By: -------------------------------- Name: ------------------------------ Title: ----------------------------- LEASE SUPPLEMENT EXHIBIT A Description of Land ------------------- [TO BE ADDED] EXHIBIT B Schedule of Equipment --------------------- None EX-10.20 7 exh10p20.txt MASTER LEASE AGREEMENT Exhibit 10.20 ------------- MASTER EQUIPMENT LEASE AGREEMENT NO. 34293 ----- LESSOR: FLEET CAPITAL CORPORATION LESSEE: EDWARD D. JONES & CO., L.P. a Rhode Island corporation a Missouri Limited Partnership ADDRESS: One Financial Plaza ADDRESS: 12555 Manchester Road Providence, Rhode Island St. Louis, MO 02903-2448 63131 1. LEASE OF EQUIPMENT Subject to the terms and conditions set forth herein (the "MASTER LEASE") and in any Lease Schedule incorporating the terms of this Master Lease (each, a "LEASE SCHEDULE"), Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the items and units of personal property described in each such Lease Schedule, together with all replacements, parts, additions, accessories and substitutions therefor (collectively, the "EQUIPMENT"). As used in this Lease, the term "ITEM OF EQUIPMENT" shall mean each functionally integrated and separately marketable group or unit of Equipment subject to this Lease. Each Lease Schedule shall constitute a separate, distinct and independent lease of Equipment and contractual obligation of Lessee. References to "THE LEASE," "THIS LEASE" or "ANY LEASE" shall mean and refer to any Lease Schedule which incorporates the terms of this Master Lease, together with all exhibits, addenda, schedules, certificates, riders and other documents and instruments executed and delivered in connection with such Lease Schedule or this Master Lease, all as the same may be amended or modified from time to time. The Equipment is to be delivered and installed at the location specified or referred to in the applicable Lease Schedule. The Equipment shall be deemed to have been accepted by Lessee for all purposes under this Lease upon Lessor's receipt of an Acceptance Certificate with respect to such Equipment, executed by Lessee after receipt of all other documentation required by Lessor with respect to such Equipment. Lessor shall not be liable or responsible for any failure or delay in the delivery of the Equipment to Lessee for whatever reason. As used in this Lease, "ACQUISITION COST" shall mean (a) with respect to all Equipment subject to a Lease Schedule, the amount set forth as the Acquisition Cost in the Lease Schedule and the Acceptance Certificate applicable to such Equipment; and (b) with respect to any item of Equipment, the total amount of all vendor or seller invoices (including Lessee invoices, if any) for such item of Equipment, together with all acquisition fees and costs of delivery, installation, testing and related services, accessories, supplies or attachments procured or financed by Lessor from vendors or suppliers thereof (including items provided by Lessee) relating or allocable to such item of Equipment ("RELATED EXPENSES"). Provided no event of Default has occurred and remains uncured hereunder and upon the satisfaction of all preconditions deemed necessary by Lessor, Lessor shall satisfy the obligation to pay the Acquisition Cost within thirty (30) days of the Lease Term Commencement Date. As used in this Lease with respect to any Equipment, the terms "ACCEPTANCE DATE," "RENTAL PAYMENT(S)," "RENTAL PAYMENT DATE(S)," "RENTAL PAYMENT NUMBERS," "RENTAL PAYMENT COMMENCEMENT DATE," "LEASE TERM" and "LEASE TERM COMMENCEMENT DATE" shall have the meanings and values assigned to them in the Lease Schedule and the Acceptance Certificate applicable to such Equipment. 2. TERM AND RENT The Lease Term for any Equipment shall be as specified in the applicable Lease Schedule. Rental Payments shall be in the amounts and shall be due and payable as set forth in the applicable Lease Schedule. Lessee shall, in addition, pay interim rent to Lessor as provided in the Lease Schedule from the Acceptance Date to the Lease Term Commencement Date set forth in the applicable Acceptance Certificate, payable on such Lease Term Commencement Date. If any rent or other amount payable hereunder shall not be paid within 10 days of the date when due, Lessee shall pay as an administrative and late charge overdue interest on any delinquent payment or other amounts due under the Lease (by reason of acceleration or otherwise) from the due date until paid at the rate of 1 1/2% per month or the maximum amount permitted by applicable law, whichever is lower. All payments to be made to Lessor shall be made to Lessor in immediately available funds at the address shown above or at such other place, as Lessor shall specify in writing. THIS IS A NON-CANCELABLE, NON-TERMINABLE LEASE OF EQUIPMENT FOR THE ENTIRE LEASE TERM PROVIDED IN EACH LEASE SCHEDULE HERETO. 3. POSSESSION; PERSONAL PROPERTY No right, title or interest in the Equipment shall pass to Lessee other than the right to maintain possession and use of the Equipment for the Lease Term (provided no Event of Default has occurred) free from interference by any person claiming by, through, or under Lessor. The Equipment shall always remain personal property even though the Equipment may hereafter become attached or affixed to real property. Lessee agrees to give and record such notices and to take such other action at its own expense as may be necessary to prevent any third party (other than an assignee of Lessor) from acquiring or having the right under any circumstances to acquire any interest in the Equipment or this Lease. Provided no Event of Default has occurred and remains uncured hereunder, Lessor warrants that neither Lessor nor persons or entities claiming through Lessor shall interfere with Lessee's quiet use and possession of the Equipment in accordance with the terms of this Lease. 4. DISCLAIMER OF WARRANTIES LESSOR IS NOT THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, NOR THE AGENT THEREOF, AND MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT, ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS CAPACITY OR DURABILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE MANUFACTURE OR ASSEMBLY OF THE EQUIPMENT, OR THE CONFORMITY OF THE EQUIPMENT TO THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER RELATING THERETO, OR PATENT INFRINGEMENTS, AND LESSOR HEREBY DISCLAIMS ANY SUCH WARRANTY. LESSOR IS NOT RESPONSIBLE FOR ANY REPAIRS OR SERVICE TO THE EQUIPMENT, DEFECTS THEREIN OR FAILURES IN THE OPERATION THEREOF. Lessee has made the selection of each item of Equipment and the manufacturer and/or supplier thereof based on its own judgment and expressly disclaims any reliance upon any statements or representations made by Lessor. For so long as no Event of Default (or event or condition which, with the passage of time or giving of notice, or both, would become such an Event of Default) has occurred and is continuing, Lessee shall be the beneficiary of, and shall be entitled to, all rights under any applicable manufacturer's or vendor's warranties with respect to the Equipment, to the extent permitted by law. 1 If the Equipment is not delivered, is not properly installed, does not operate as warranted, becomes obsolete, or is unsatisfactory for any reason whatsoever, Lessee shall make all claims on account thereof solely against the manufacturer or supplier and not against Lessor, and Lessee shall nevertheless pay all rentals and other sums payable hereunder. Lessee acknowledges that neither the manufacturer or supplier of the Equipment, nor any sales representative or agent thereof, is an agent of Lessor, and no agreement or representation as to the Equipment or any other matter by any such sales representative or agent of the manufacturer or supplier shall in any way affect Lessee's obligations hereunder. 5. REPRESENTATIONS, WARRANTIES AND COVENANTS Lessee represents and warrants to and covenants with Lessor that: (a) Lessee has the form of business organization indicated above and is duly organized and existing in good standing under the laws of the state listed in the caption of this Master Lease and is duly qualified to do business wherever necessary to carry on its present business and operations and to own its property; (b) this Lease has been duly authorized by all necessary action on the part of Lessee consistent with its form of organization, does not require any further shareholder or partner approval, does not require the approval of, or the giving notice to, any federal, state, local or foreign governmental authority and does not contravene any law binding on Lessee or contravene any certificate or articles of incorporation or by-laws or partnership certificate or agreement, or any agreement, indenture, or other instrument to which Lessee is a party or by which it may be bound; (c) this Lease has been duly executed and delivered by authorized officers or partners of Lessee and constitutes a legal, valid and binding obligation of Lessee enforceable in accordance with its terms; (d) Lessee has not and will not, directly or indirectly, create, incur or permit to exist any lien, encumbrance, mortgage, pledge, attachment or security interest on or with respect to the Equipment or this Lease (except those of persons claiming by, through or under Lessor); (e) the Equipment will be used solely in the conduct of Lessee's business and will remain in the location shown on the applicable Lease Schedule unless Lessee provides Lessor with prior written notice of its intention to relocate the Equipment and has completed all other notifications, filings, recordings and other actions in such new location as Lessor may reasonably request to protect Lessor's interest in the Equipment; (f) there are no pending or threatened actions or proceedings before any court or administrative agency which materially adversely affect Lessee's financial condition or operations, and all credit, financial and other information provided by Lessee or at Lessee's direction is, and all such information hereafter furnished will be, true, correct and complete in all material respects; (g) Lessor has not selected, manufactured or supplied the Equipment to Lessee and has acquired any Equipment subject hereto solely in connection with this Lease and Lessee has received and approved the terms of any purchase order or agreement with respect to the Equipment; (h) until all obligations of Lessee under all Leases hereunder shall have been paid and/or performed in full, Lessee covenants and agrees to provide to Lessor a copy of Lessee's FOCUS Report (or successor applicable form) as of the end of each calendar quarter as soon as such FOCUS Report is available, but in no case later than thirty (30) from the end of such calendar quarter; and (i) Lessee shall maintain a Required Capital Ratio as of the end of each calendar quarter of not less than 3.75 to 1.00. "Required Capital Ratio" means, at any date with respect to the Lessee, the ratio of (i) its Net Capital to (ii) its Minimum Net Capital Requirement. "Net Capital" means, at any date, the net capital of Lessee as (i) computed from time to time in accordance with paragraph (c) of Rule 15c3-1 and reported on line 3750 of Lessee's FOCUS Report (or successor applicable form) as of such date or (ii) in the event Lessee's Net Capital is no longer reported in its FOCUS Report (or successor applicable form), computed in a manner consistent with the methodology used to calculate Net Capital for Lessee's last available FOCUS Report and as otherwise acceptable to Lessor and Lessee and certified as true and correct by Lessee's Chief Financial Officer on a quarterly basis ("Compliance Certificate"). "Minimum Net Capital Requirement" means, at any date, the minimum Net Capital required for Lessee and its affiliates (i) computed in accordance with, and reported on line 3760 of Lessee's FOCUS Report (or successor applicable form) as of such date or (ii) in the event Lessee's Minimum Net Capital Requirement is no longer reported in Lessee's FOCUS Report (or successor applicable form), computed in a manner consistent with the methodology used to calculate Minimum Net Capital Requirement for Lessee's last available FOCUS Report and as otherwise acceptable to Lessor and Lessee and as certified as true and correct by Lessee's Chief Financial Officer on a quarterly basis in the Compliance Certificate. 6. INDEMNITY Lessee assumes the risk of liability for, and hereby agrees to indemnify and hold safe and harmless on an after tax basis, and covenants to defend, Lessor, its employees, servants and agents from and against: (a) any and all liabilities, losses, damages, claims and expenses (including legal expenses of every kind and nature) arising out of the manufacture, purchase, shipment and delivery of the Equipment to Lessee, acceptance or rejection, ownership, titling, registration, leasing, possession, operation, use, return or other disposition of the Equipment, including, without limitation, any liabilities that may arise from patent or latent defects in the Equipment (whether or not discoverable by Lessee), any claims based on absolute tort liability or warranty and any claims based on patent, trademark or copyright infringement; (b) any and all loss or damage of or to the Equipment; and (c) any obligation or liability to the manufacturer or any supplier of the Equipment arising under any purchase orders issued by or assigned to Lessor. 7. TAXES AND OTHER CHARGES Lessee agrees to comply with all laws, regulations and governmental orders related to this Lease and to the Equipment and its use or possession, and to pay when due, and to defend and indemnify Lessor against liability for all license fees, assessments, and sales, use, property, excise, privilege and other taxes (including any related interest or penalties) or other charges or fees now or hereafter imposed by any governmental body or agency upon any Equipment, or with respect to the manufacturing, ordering, shipment, purchase, ownership, delivery, installation, leasing, operation, possession, use, return, or other disposition thereof or the rentals hereunder (other than taxes on or measured solely by the net income of Lessor). Any fees, taxes or other lawful charges paid by Lessor upon failure of Lessee to make such payments shall at Lessor's option become immediately due from Lessee to Lessor. Provided no Event of Default has occurred and remains uncured, Lessee shall prepare, pay and file all personal property tax returns with respect to the Equipment on or before the due date therefor and shall indemnify and hold Lessor harmless from and against any and all claims, costs, penalties, interest arising as a result of Lessee assuming responsibility for such property taxes. 8. DEFAULT Lessee shall be in default of this Lease upon the occurrence of any one or more of the following events (each an "EVENT OF DEFAULT"): (a) Lessee shall fail to make any payment, of rent or otherwise, under any Lease within 10 days of the date when due (provided Lessor is not restricted under applicable law in its ability to provide notice to Lessee, Lessor shall provide notice to Lessee of the failure to pay an amount when due hereunder prior to declaring an Event of Default); or (b) Lessee shall fail to obtain or maintain any of the insurance required under any Lease; 2 or (c) Lessee shall fail to perform or observe any covenant, condition or agreement under any Lease, and such failure continued for 30 days after notice thereof to Lessee; or (d) Lessee shall default in the payment or performance of any indebtedness or obligation to Lessor having a principal balance of $5,000,000 or more under any loan, note, security agreement, lease, guaranty, title retention or conditional sales agreement or any other instrument or agreement evidencing such indebtedness with Lessor; or (e) any representation or warranty made by Lessee herein or in any certificate, agreement, statement or document hereto or hereafter furnished to Lessor in connection herewith, including without limitation, any financial information disclosed to Lessor, shall prove to be false or incorrect in any material respect; or (f) death or judicial declaration of incompetence of Lessee, if an individual; the commencement of any bankruptcy, insolvency, arrangement, reorganization, receivership, liquidation or other similar proceeding by Lessee or any of its properties or businesses, or the appointment of a trustee, receiver, liquidator or custodian for Lessee or any of its properties of business, or if Lessee suffers the entry of an order for relief under Title 11 of the United States Code; or the making by Lessee of a general assignment or deed of trust for the benefit of creditors; or the commencement of any bankruptcy, insolvency, arrangement, reorganization, receivership, liquidation or other similar proceeding against Lessee or any of its properties or businesses, or the appointment of a trustee, receiver, liquidator or custodian for Lessee or any of its properties of business, or if Lessee suffers the entry of an order for relief under Title 11 of the United States Code and in each case such involuntary proceeding is not dismissed with sixty (60) days of the filing thereof; or (g) Lessee shall default in any payment or other obligation under a material agreement (original principal amount of $5,000,000 or more) and any applicable grace or cure period with respect thereto has expired; or (h) Lessee shall terminate its existence by merger, consolidation, sale of substantially all of its assets or otherwise, unless otherwise consented to by Lessor, such consent not to be unreasonably withheld or delayed; or (i) if Lessee is a privately held entity, and during any rolling twelve month period more than 50% of Lessee's voting capital stock or other equivalent ownership interest, or effective control of such stock or interest in Lessee, issued and outstanding from time to time, is not retained by the holders of such stock or interest as of the beginning of such rolling twelve month period, unless otherwise consented to by Lessor, such consent not to be unreasonably withheld or delayed; or (j) if Lessee is a publicly held corporation, there shall be a change in the ownership of Lessee's stock such that Lessee is no longer subject to the reporting requirements of the Securities Exchange Act of 1934, or no longer has a class of equity securities registered under Section 12 of the Securities Act of 1933, unless otherwise consented to by Lessor, such consent not to be unreasonably withheld or delayed; or (k) any event or condition set forth in subsections (b) through (k) of this Section 8 shall occur with respect to any guarantor or other person responsible, in whole or in part, for payment or performance of this Lease; or (l) any event or condition set forth in subsections (d) through (j) shall occur with respect to any affiliated firm or entity controlling, controlled by or under common control with Lessee. Lessee shall promptly notify Lessor of the occurrence of any Event of Default or the occurrence or existence of any event or condition, which, upon the giving of notice of lapse of time, or both, may become an Event of Default. 9. REMEDIES; MANDATORY PREPAYMENT Upon the occurrence of any Event of Default, Lessor may, at its sole option and discretion, exercise one or more of the following remedies with respect to any or all of the Equipment: (a) cause Lessee to promptly return, at Lessee's expense, any or all Equipment to such location as Lessor may designate in accordance with the terms of Section 18 of this Master Lease, or Lessor, at its option, may enter upon the premises where the Equipment is located and take immediate possession of and remove the same by summary proceedings or otherwise and at all times in compliance with applicable law, all without liability to Lessor for or by reason of damage to property or such entry or taking possession except for Lessor's gross negligence or willful misconduct; (b) sell any or all Equipment at public or private sale or otherwise dispose of, hold, use, operate, lease to others or keep idle the Equipment, all as Lessor in its sole discretion may determine and all free and clear of any rights of Lessee and otherwise in compliance with applicable law; (c) remedy such default, including making repairs or modifications to the Equipment, for the account and expense of Lessee, and Lessee agrees to reimburse Lessor for all of Lessor's costs and expenses; (d) by written notice to Lessee, cancel the Lease with respect to any or all Lease Schedules and the Equipment subject thereto, as such notice shall specify, and, with respect to such cancelled Lease Schedules and Equipment, declare immediately due and payable and recover from Lessee, as liquidated damages for loss of Lessor's bargain and not as a penalty, an amount equal to the Stipulated Loss Value, calculated as of the next following Rental Payment Date; (e) apply any deposit or other cash collateral or sale or remarketing proceeds of the Equipment at any time to reduce any amounts due to Lessor, and (f) exercise any other right or remedy which may be available to Lessor under applicable law, or proceed by appropriate court action to enforce the terms hereof or to recover damages for the breach hereof, including reasonable attorneys' fees and court costs. Notice of Lessor's intention to accelerate, notice of acceleration, notice of nonpayment, presentment, protest, notice of dishonor, or any other notice whatsoever are hereby waived by Lessee and any endorser, guarantor, surety or other party liable in any capacity for any of the Lessee's obligations under or in respect of the Lease. No remedy referred to in this Section 9 shall be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity. The exercise or pursuit by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise or pursuit by Lessor of any or all such other remedies, and all remedies hereunder shall survive termination of this Lease. At any sale of the Equipment pursuant to this Section 9, Lessor may bid for the Equipment. Notice required, if any, of any sale or other disposition hereunder by Lessor shall be satisfied by the mailing of such notice to Lessee at least seven (7) days prior to such sale or other disposition. In the event Lessor takes possession and disposes of the Equipment, the proceeds of any such disposition shall be applied in the following order: (1) to all of Lessor's costs, charges and expenses incurred in taking, removing, holding, repairing and selling or leasing the Equipment; (2) to the extent not previously paid by Lessee, to pay Lessor for any damages then remaining unpaid hereunder; (3) to reimburse Lessee for any sums previously paid by Lessee as damages hereunder; and (4) the balance, if any, shall be retained by Lessor. A cancellation shall occur only upon written notice by Lessor and only with respect to such Equipment, as Lessor shall specify in such notice. Cancellation under this Section 9 shall not affect Lessee's duty to perform Lessee's obligations hereunder to Lessor in full. Lessee agrees to reimburse Lessor on demand for any and all costs and expenses incurred by Lessor in enforcing its rights and remedies hereunder following the occurrence of an Event of Default, including, without limitation, reasonable attorney's fees, and the costs of repossession, storage, insuring, reletting, selling and disposing of any and all Equipment. The term "STIPULATED LOSS VALUE" with respect to any item of Equipment shall mean the Stipulated Loss Value as set forth in any Schedule of Stipulated Loss Values attached to and made a part of the applicable Lease Schedule. If there is no such Schedule of Stipulated Loss Values, then the Stipulated Loss Value with respect to any item of Equipment on any Rental Payment Date during the Lease Term shall be an amount equal to the sum of: (a) all Rental Payments and other amounts then due and owing to Lessor under the Lease, together with all accrued interest and late charges thereon calculated through and including the date of payment; plus (b) the net ---- present value of: (i) all Rental Payments then remaining unpaid for the Lease Term, plus (ii) the amount of any purchase obligation with respect to ---- such item of Equipment or, if there is no such obligation, then the fair market value of such item of Equipment at the end of the Lease Term, as estimated by Lessor in its sole discretion (accounting for the amount of any unpaid Related Expenses for such item of Equipment and, with respect to any such item of Equipment that has been attached to or installed on or in any other property leased or owned by Lessee, such value shall be determined on an installed basis, in place 3 and in use), all discounted to net present value at a discount rate equal to the 1-year Treasury Constant Maturity rate as published in the Selected Interest Rates table of the Federal Reserve statistical release H.15(519) for the week ending immediately prior to the original Acceptance Date for such Equipment, plus fifty basis points. Lessee is or may become indebted under or in respect of one or more leases, loans, notes, credit agreements, reimbursement agreements, security agreements, title retention or conditional sales agreements, or other documents, instruments or agreements, whether now existing or hereafter arising, evidencing Lessee's obligations for the payment of borrowed money or other financial accommodations ("OBLIGATIONS") owing to FCC, or to one or more affiliated persons, firms or entities controlling, controlled by or under common control with Lessor ("AFFILIATES"). If Lessee pays or prepays all or substantially all of its Obligations owing to any Affiliate, whether or not such payment or prepayment is voluntarily or involuntarily made by Lessee before or after any default or acceleration of such Obligations, then Lessee shall pay, at Lessor's option and immediately upon notice from Lessor, all or any part of Lessee's Obligations owing to Lessor, including but not limited to Lessee's payment of Stipulated Loss Value for all or any Lease Schedules as set forth in such notice from Lessor. 10. ADDITIONAL SECURITY For so long as any obligations of Lessee shall remain outstanding under any Lease, Lessee hereby grants to Lessor a security interest in all of Lessee's rights in and to Equipment subject to such Lease from time to time, to secure the prompt payment and performance when due (by reason of acceleration or otherwise) of each and every indebtedness, obligation or liability of Lessee, or any affiliated person, firm, or entity controlling, controlled by, or under common control with Lessee, owing to Lessor, whether now existing or hereafter arising, including but not limited to all of such obligations under or in respect of any Lease. The extent to which Lessor shall have a purchase money security interest in any item of Equipment under a Lease which is deemed to create a security interest under Section 1-201(37) of the Uniform Commercial Code shall be determined by reference to the Acquisition Cost of such item financed by Lessor. In order to more fully secure its rental payments and all other obligations to Lessor hereunder, Lessee hereby grants to Lessor a security interest in any deposit of Lessee to Lessor under Section 3(d) of any Lease Schedule hereto. Such security deposit shall not bear interest, may be commingled with other funds of Lessor and shall be immediately restored by Lessee if applied under Section 9. Upon expiration of the Lease Term of this Lease and satisfaction of all of Lessee's obligations, the security deposit shall be returned to Lessee. The term "LESSOR" as used in this Section 10 shall include any affiliated person, firm or entity controlling, controlled by or under common control with Lessor. 11. NOTICES Any notices or demands required or permitted to be given under this Lease shall be given in writing and by regular mail and shall become effective when deposited in the United States mail with postage prepaid to Lessor to the attention of Customer Accounts, and to Lessee at the address set forth above and to the attention Steve Novik, or to such other address as the party to receive notice hereafter designates by such written notice. 12. USE; MAINTENANCE; INSPECTION; LOSS AND DAMAGE During the Lease Term for each item of Equipment, Lessee shall, unless Lessor shall otherwise consent in writing: (a) permit each item of Equipment to be used only within the United States by qualified personnel solely for business purposes and the purpose for which it was designed and shall, at its sole expense, service, repair, overhaul and maintain each item of Equipment in the same condition as when received, ordinary wear and tear excepted, in good operating order, consistent with prudent industry practice (but, in no event less than the same extent to which Lessee maintains other similar equipment in the prudent management of its assets and properties) and in compliance with all applicable laws, ordinances, regulations, and conditions of all insurance policies required to be maintained by Lessee under the Lease and all manuals, orders, recommendations, instructions and other written requirements as to the repair and maintenance of such item of Equipment issued at any time by the vendor and/or manufacturer thereof; (b) furnish to Lessor such information concerning the condition, location, use and operation of the Equipment as Lessor may request; (c) permit any person designated by Lessor to visit and inspect any Equipment and any records maintained in connection therewith, provided, however, that the failure of Lessor to -------- ------- inspect the Equipment or to inform Lessee of any noncompliance shall not relieve Lessee of any of its obligations hereunder; (d) if any Equipment does not comply with the requirements of this Lease, Lessee shall, within 30 days of written notice from Lessor, bring such Equipment into compliance; (e) not use any Equipment, nor allow the same to be used, for any unlawful purpose, nor in connection with any property or material that would subject the Lessor to any liability under any state or federal statute or regulation pertaining to the production, transport, storage, disposal or discharge of hazardous or toxic waste or materials; and (f) make no additions, alterations, modifications or improvements (collectively, "IMPROVEMENTS") to any item of Equipment that are not readily removable without causing material damage to such item of Equipment or which will cause the value, utility or useful life of such item of Equipment to materially decline. If any such Improvement is made and cannot be removed without causing material damage or decline in value, utility or useful life (a "NON-SEVERABLE IMPROVEMENT"), then Lessee warrants that such Non-Severable Improvement shall immediately become Lessor's property upon being installed and shall be free and clear of all liens and encumbrances and shall become Equipment subject to all of the terms and conditions of the Lease. All such Improvements that are not Non-Severable Improvements shall be removed by Lessee prior to the return of the item of Equipment hereunder or such Improvements shall also become the sole and absolute property of Lessor without any further payment by Lessor to Lessee and shall be free and clear of all liens and encumbrances whatsoever. Lessee shall repair all damage to any item of Equipment caused by the removal of any Improvement so as to restore such item of Equipment to the same condition which existed prior to its installation and as required by this Lease. Notwithstanding any provision contained herein to the contray, provided no Event of Default has occurred and remains uncured, Lessee may during the Term of a Lease Schedule, exchange items of Equipment subject thereto for items of equipment which are identical to such items of Equipment (same manufacturer, model number, model year, features, capacity, year of manufacture and as otherwise required by Lessor, "Substitute Equipment"), provided such Substitute Equipment is not then subject to any other financing by Lessor and can be made subject to the applicable Lease Schedule in the condition required hereunder. Immediately upon such exchange, title to the Substitute Equipment shall be conveyed to Lessor free from all liens and encumbrances, and such Substitute Equipment shall be deemed items of Equipment for the purposes of such Lease Schedule. Lessee shall promptly notify Lessor of any and all exchanges and shall provide Lessor with any and all bills of sale and/or other documentation as Lessor may deem necessary or prudent in order to perfect Lessor's interest in the Substitute Equipment and confirm that the Substitute Equipment is subject to the appropriate Lease Schedule. Upon confirmation that the Substitute Equipment has been made subject to the Lease Schedule and provided no Event of Default has occurred and remains uncured, Lessor shall release its interest in the items of Equipment which were the subject of the exchange. Lessee hereby assumes all risk of loss, damage or destruction for whatever reason to the Equipment from and after the earlier of the date (i) on which the Equipment is ordered or (ii) Lessor pays the purchase price of the Equipment, and continuing until the Equipment has been returned to, and accepted by, Lessor in the condition required by Section 18 hereof upon the expiration of the Lease Term. If during the Lease Term all or 4 any portion of an item of Equipment shall become lost, stolen, destroyed, damaged beyond repair or rendered permanently unfit for use for any reason, or in the event of any condemnation, confiscation, theft or seizure or requisition of title to or use of such item, Lessee shall immediately pay to Lessor an amount equal to the Stipulated Loss Value of such item of Equipment, as of the next following Rental Payment Date. 13. INSURANCE Lessee shall procure and maintain insurance in such amounts and upon such terms and with such companies as Lessor may approve, such approval not to be unreasonably withheld or delayed, during the entire Lease Term and until the Equipment has been returned to, and accepted by, Lessor in the condition required by Section 18 hereof, at Lessee's expense, provided that in no event shall such insurance be less than the following coverages and amounts: (a) Worker's Compensation and Employer's Liability Insurance, in the full statutory amounts provided by law; (b) Comprehensive General Liability Insurance including product/completed operations and contractual liability coverage, with minimum limits of $1,000,000 each occurrence, and Combined Single Limit Body Injury and Property Damage, $1,000,000 aggregate, where applicable; and (c) All Risk Physical Damage Insurance, including earthquake and flood, on each item of Equipment, in an amount not less than the greater of the Stipulated Loss Value of the Equipment or (if available) its full replacement value. Lessor will be included as an additional insured and loss payee as its interest may appear. Such policies shall be endorsed to provide that the coverage afforded to Lessor shall not be rescinded, impaired or invalidated by any act or neglect of Lessee. Lessee agrees to waive Lessee's right and its insurance carrier's rights of subrogation against Lessor for any and all loss or damage. Provided no Event of Default has occurred and remains uncured hereunder, Lessee may, except as set forth below, self-insure for the risk of loss and/or damage to the Equipment described in Section 13(c) above, to the extent it self insures similar equipment which it owns or leases against loss and damage, and provided further that such self-insurance program (i) is consistent with prudent industry practice with respect to equipment similar to the Equipment, (ii) is primary, without right of contribution from any insurance carried by Lessor and (iii) Lessee guarantees payment to Lessor for any loss or damage to any item of Equipment. Lessee agrees that if items of Equipment having an original cost of $1,000,000 are located in one facility at any time ("Equipment Concentration"), Lessee shall procure the risk of loss insurance coverage described in (c) above for such Equipment Concentration through an insurance provider acceptable to Lessor and shall provide Lessor with evidence of such insurance coverage. All policies shall be endorsed or contain a clause requiring the insurer to use best efforts to furnish Lessor with at least 30 days' prior written notice of any material change, cancellation or non-renewal of coverage. Upon execution of this Lease, Lessee shall furnish Lessor with a certificate of insurance or other evidence satisfactory to Lessor that such insurance coverage is in effect, provided, however, that Lessor shall be under no duty -------- ------- either to ascertain the existence of or to examine such insurance coverage or to advise Lessee in the event such insurance coverage should not comply with the requirements hereof. In case of failure of Lessee to procure or maintain insurance, Lessor may at its option obtain such insurance, the actual cost of which will be paid by the Lessee as additional rentals. Lessee hereby irrevocably appoints Lessor, as Lessee's attorney-in-fact to file, settle or adjust, and receive payment of claims under any such insurance policy and to endorse Lessee's name on any checks, drafts or other instruments on payment of such claims, provided, however, so long as no Event of Default has occurred and remains uncured hereunder, Lessor shall permit Lessee to settle, adjust and otherwise resolve insurance claims with respect to items of Equipment. Lessee further agrees to give Lessor prompt notice of any damage to or loss of, the Equipment, or any part thereof. 14. LIMITATION OF LIABILITY Lessor shall have no liability in connection with or arising out of the ownership, leasing, furnishing, performance or use of the Equipment (except to the extent directly caused by Lessor's gross negligence or willful misconduct) or any special, indirect, incidental or consequential damages of any character, including, without limitation, loss of use of production facilities or equipment, loss of profits, property damage or lost production, whether suffered by Lessee or any third party. 15. FURTHER ASSURANCES Lessee shall promptly execute and deliver to Lessor such further documents and take such further action as Lessor may require in order to more effectively carry out the intent and purpose of this Lease. Lessee shall provide to Lessor, within 120 days after the close of each of Lessee's fiscal years, and, upon Lessor's request, within 45 days of the end of each quarter of Lessee's fiscal year, a copy of its financial statements prepared in accordance with generally accepted accounting principles and, in the case of annual financial statements, audited by independent certified public accountants, and in the case of quarterly financial statements certified by Lessee's chief financial officer. Lessee shall execute and deliver to Lessor upon Lessor's request any and all schedules, forms and other reports and information as Lessor may deem necessary or appropriate to respond to requirements or regulations imposed by any governmental authorities. Lessee shall execute and deliver to Lessor upon Lessor's request such further and additional documents, instruments and assurances as Lessor reasonably deems necessary (a) to acknowledge and confirm, for the benefit of Lessor or any assignee or transferee of any of Lessor's rights, title and interests hereunder (an "ASSIGNEE"), all of the terms and conditions of all or any part of this Lease and Lessor's or Assignee's rights with respect thereto, and Lessee's compliance with all of the terms and provisions hereof and (b) to preserve, protect and perfect Lessor's or Assignee's right, title or interest hereunder and in any Equipment, including, without limitation, such UCC financing statements or amendments, corporate resolutions, certificates of compliance, notices of assignment or transfers of interests, and restatements and reaffirmations of Lessee's obligations and its representations and warranties with respect thereto as of the dates requested by Lessor from time to time. In furtherance thereof, Lessor may file or record this Lease or a memorandum or a photocopy hereof (which for the purposes hereof shall be effective as a financing statement) so as to give notice to third parties, and Lessee hereby appoints Lessor as its attorney-in-fact to execute, sign, file and record UCC financing statements and other lien recordation documents with respect to the Equipment where Lessee fails or refuses to do so after Lessor's written request, and Lessee agrees to pay or reimburse Lessor for any filing, recording or stamp fees or taxes arising from any such filings. Lessor may file or record a memorandum of this Lease so as to give notice to third parties. 16. ASSIGNMENT This Lease and all rights of Lessor hereunder shall be assignable by Lessor absolutely or as security, without notice to Lessee, subject to the rights of Lessee hereunder for the use and possession of the Equipment for so long as no Event of Default has occurred and is continuing hereunder. Any such assignment shall not relieve Lessor of its obligations hereunder unless specifically assumed by the assignee, and LESSEE AGREES IT SHALL NOT ASSERT ANY DEFENSE, RIGHTS OF SET-OFF OR COUNTERCLAIM AGAINST ANY ASSIGNEE TO WHICH LESSOR SHALL HAVE ASSIGNED ITS RIGHTS AND INTERESTS HEREUNDER, NOR HOLD OR ATTEMPT TO HOLD SUCH ASSIGNEE LIABLE FOR ANY OF LESSOR'S OBLIGATIONS HEREUNDER. No such assignment shall materially increase Lessee's obligations hereunder. LESSEE SHALL NOT ASSIGN OR DISPOSE OF ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR ENTER INTO ANY SUBLEASE WITH RESPECT TO ANY OF THE EQUIPMENT WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF LESSOR WHICH WILL NOT BE UNREASONABLY WITHHELD OR DELAYED. 5 17. LESSEE'S OBLIGATION UNCONDITIONAL This Lease is a net lease and Lessee hereby agrees that it shall not be entitled to any abatement of rents or of any other amounts payable hereunder by Lessee, and that its obligation to pay all rent and any other amounts owing hereunder shall be absolute and unconditional under all circumstances, including, without limitation, the following circumstances: (i) any claim by Lessee to any right of set-off, counterclaim, recoupment, defense or other right which Lessee may have against Lessor, any seller or manufacturer of any Equipment or anyone else for any reason whatsoever; (ii) the existence of any liens, encumbrances or rights of others whatsoever with respect to any Equipment, whether or not resulting from claims against Lessor not related to the ownership of such Equipment; or (iii) any other event or circumstances whatsoever. Each Rental Payment or other amount paid by Lessee hereunder shall be final and Lessee will not seek to recover all or any part of such payment from Lessor for any reason whatsoever. 18. RETURN OF EQUIPMENT Upon the expiration or earlier termination of the Lease Term with respect to any Equipment, and provided that Lessee has not validly exercised any purchase option with respect thereto, Lessee shall: (a) return the Equipment to a location and in the manner designated by the Lessor within the continental United States and no more than 1,000 miles from the location of such Equipment while being used by Lessee, including, as reasonably required by Lessor, securing arrangements for the disassembly and packing for shipment by an authorized representative of the manufacturer of the Equipment, shipment with all parts and pieces on a carrier designated or approved by Lessor, and then reassembly (including, if necessary, repair and overhaul) by such representative at the return location in the condition the Equipment is required to be maintained by the Lease and in such condition as will make the Equipment immediately able to perform all functions for which the Equipment was originally designed (or as upgraded during the Lease Term), and immediately qualified for the manufacturer's (or other authorized servicing representative's) then-available service contract or warranty; (b) cause the Equipment to qualify for all applicable licenses or permits necessary for its operation for its intended purpose and to comply with all specifications and requirements of applicable federal, state and local laws, regulations and ordinances; (c) upon Lessor's request, provide suitable storage, acceptable to Lessor, for the Equipment for a period not to exceed 90 days from the date of return; (d) cooperate with Lessor in attempting to remarket the Equipment, including display and demonstration of the Equipment to prospective purchasers or lessees, and allowing Lessor to conduct any private or public sale or auction of the Equipment on Lessee's premises. All costs incurred in connection with any of the foregoing shall be the sole responsibility of the Lessee. During any period of time from the expiration or earlier termination of the Lease until the Equipment is returned in accordance with the provisions hereof or until Lessor has been paid the applicable purchase option price if any applicable purchase option is exercised, Lessee agrees to pay to Lessor additional per diem rent ("HOLDOVER RENT"), payable promptly on demand in an amount equal to 100% of the highest monthly Rental Payment payable during the Lease Term divided by 30, provided, however, that nothing -------- ------- contained herein and no payment of Holdover Rent hereunder shall relieve Lessee of its obligation to return the Equipment upon the expiration or earlier termination of the Lease. 19. RELATED LEASE SCHEDULES "RELATED LEASE SCHEDULES" means and refers to Leases covering Equipment intended to be or which otherwise becomes attached to, affixed to, or used in connection with other Equipment subject to any other Lease hereunder. Lessee agrees that if: (a) if Lessee elects to exercise any purchase option, early termination option, renewal option, purchase obligation or early purchase option under any Related Lease Schedule; or (b) Lessee elects to return the Equipment under any Related Lease Schedule in accordance therewith, then, in ---- either case, Lessor shall have the right, in its sole discretion, to require Lessee to elect the same or similar disposition for all Equipment subject and pursuant to the terms and provisions of one or more other Related Lease Schedules. 20. TAX INDEMNIFICATION 20.1 This Lease has been entered into by Lessor and Lessee under the assumption that Lessor or its affiliated group ("Affiliated Group"), as defined in Section 1504 of the Internal Revenue Code of 1986, as amended, (the "Code") will be treated as the owner of the Equipment and will be entitled to such deductions and other benefits that are provided by the Code including, without limitation, deductions for the recovery of the Acquisition Cost of the Equipment, over the recovery period ("Recovery Period") set forth on the applicable Equipment Schedule, using the Modified Accelerated Cost Recovery System as provided by Section 168 of the Code ("MACRS Deductions"). Notwithstanding such assumption, Lessee shall not be liable to Lessor in the event that such assumption (or any part thereof) is determined to be incorrect, except as provided in Section 20.3(a) hereof. 20.2 Lessee represents, covenants and warrants the following: (a) Neither Lessee, nor any affiliate of Lessee, nor any other party since the Lease Term Commencement Date (i) has claimed or will claim any MACRS Deductions, or any other deductions in the nature of cost recovery or depreciation with respect to the Equipment, or (ii) has made or will make any election under the Code regarding the method or the period for cost recovery or deductions for personal property which will be binding upon Lessor and which will adversely affect the assumptions set forth in Section 20.1 above with respect to the Equipment or (iii) shall, at any time, take any action or file any returns or other documents inconsistent with the assumptions set forth in Section 20.1 above, provided that entering into this Lease shall not be construed as an inconsistent action within the meaning of this Subsection (iii). (b) In the event the Equipment has been sold to Lessor by Lessee and leased back from Lessor by Lessee, such Equipment does not constitute property placed in service in a churning transaction within the meaning of Section 168(f)(5) of the Code. (c) The Equipment has not been manufactured or produced in any foreign country which is subject to an Executive Order of the President of the United States that would deny the availability of MACRS Deductions to Lessor. (d) The Acquisition Cost of the Equipment does not exceed the fair market value of the Equipment. (e) When delivered and accepted under the Lease, the Equipment will not require any improvements, modifications, or additions (other than ancillary or incidental items of removable equipment) in order to be rendered complete for its intended use by Lessee. (f) At the time the Equipment is accepted under the Lease, Lessee and, if applicable, any member of its Affiliated Group shall have been fully reimbursed for any portion of the Acquisition Cost of the Equipment which it may have furnished; furthermore, on the applicable Lease Term Commencement Date and during the Lease Term, neither Lessee nor any member of its Affiliated Group shall have any investment in the Equipment. (g) The Equipment will be placed in service on the applicable Lease Term Commencement Date and will be used in a trade or business or will be held for the production of income within the meaning of Section 167 of the Code. (h) From the applicable Lease Term Commencement Date and during the Lease Term, the Equipment will constitute and will be treated as (i) "recovery property" within the meaning of Section 168 of the Code, and (ii) property with the Recovery Period set forth in the applicable Equipment Schedule determined in accordance with Section 168(c) of the Code. (i) From the applicable Lease Term Commencement Date and during the Lease Term, the Equipment will not constitute, or be treated as, (i) "tax exempt use property" within the meaning of Section 168(h) of the Code which would cause Lessor to fail to realize, lose, or suffer diminution, deferral, or recapture of any of the MACRS Deductions described in Section 18.1 above, or (ii) "limited use property" within the meaning of Rev. Proc. 2001-26, 2001-19 I.R.B. (j) During the Lease Term, the Equipment will not be used "predominantly 6 outside the United States" within the meaning of Section 168(g)(4) of the Code. (k) During the Lease Term, Lessor shall not be required to include in its gross income for Federal income tax purposes any amount derived from the cost of any alteration, addition, improvement, modification, replacement, or substitution of the Equipment (unless such alteration, addition, improvement, modification, replacement or substitution is required by the provisions of this Lease) or from any refund or credit from the manufacturer or supplier of the Equipment. 20.3 A tax loss ("Tax Loss") shall be deemed to have occurred under this Section 18 if Lessor or its Affiliated Group, for Federal income tax purposes, shall not be entitled to, shall not be allowed, shall suffer recapture of or shall lose any of the MACRS Deductions, as a result of: (a) Lessee's breach of, or its failure to comply with, any representation, covenant, or warranty set forth in Section 20.2 above, or the inaccuracy of any such representation; (b) the occurrence of an Event of Default as defined in Section 8 of the Master Lease; (c) the replacement, substitution, loss, seizure, condemnation, destruction or governmental requisitioning of the Equipment; or (d) any act (whether or not permitted or required under this Master Lease) or any omission of Lessee, any affiliate of Lessee, any sublessee or assignee of Lessee, or any entity, other than Lessor, having possession control or use of the Equipment (whether or not such possession, control or use may be authorized or unauthorized). 20.4 (a) Except as provided in Sections 20.4(b), if a Tax Loss occurs, then Lessee shall pay to Lessor, upon demand a sum to be computed by Lessor in the following manner. Such sum, after deduction of all Federal, state and local income taxes payable by Lessor as a result of the receipt of such sum, shall be sufficient to restore Lessor or its Affiliated Group to substantially the same position, on an after-tax basis, as it would have been in but for the loss of such MACRS Deductions. In making its computation, Lessor or its Affiliated Group shall consider, but shall not be limited to, the following factors: (i) the amounts and timing of any net loss of tax benefits resulting from any such lack of entitlement to or loss, recapture, or disallowance of MACRS Deductions but offset by any tax benefits derived from any depreciation or other capital recovery deductions or exclusions from income allowed to Lessor or its Affiliated Group with respect to the same Equipment; (ii) penalties, interest or other charges imposed; (iii) difference in tax years involved; and (iv) the time value of money at a reasonable rate determined, in `good faith', by Lessor. For purposes of computation only, the amount of indemnification payments hereunder shall be calculated on the assumption that Lessor and its Affiliated Group have or will have, in all tax years involved, sufficient taxable income and tax liability to realize all tax benefits and incur all losses of tax benefits at the highest marginal Federal corporate income tax rate in each year. Upon request, Lessor shall provide Lessee with the methods of computation used in determining any sum that may be due and payable by Lessee under this Section 20. (b) If Lessor shall suffer a Tax Loss with respect to the Equipment, Lessee shall not be required to make any indemnity payment to Lessor provided for in this Section 20 unless Lessor shall have received either (i) written advice from the Internal Revenue Service of a proposed disallowance or adjustment which gives rise to an indemnity obligation under this Section 20 and, in the event Lessee has requested Lessor to contest such disallowance or adjustment pursuant to Section 20.5 and except for any provisional payment required thereunder, the expiration or abandonment of any such contest shall have occurred, or (ii) an opinion of independent tax counsel selected by Lessor and reasonably acceptable to Lessee which opinion provides that there is no reasonable basis to claim such MACRS Deductions, or to avoid reporting such recapture income. In the case of a Tax Loss arising by reason of any refund or credit described in Section 20.2(k), Lessor agrees, on the date on which a tax adjustment is made, to adjust the Monthly Rent payable by Lessee under this Lease to reflect the decreased Acquisition Cost resulting from such credit or refund (including any refund due on prior rents paid by Lessee hereunder). 20.5(a) Upon receipt by Lessor of written advice from the Internal Revenue Service of a proposed disallowance or adjustment which gives rise to an indemnity obligation under this Section 18 (the "Claim"), Lessor will notify Lessee in writing. Upon the written request of Lessee which must be received by Lessor within 45 days of such notice, Lessor shall contest the Claim provided that (i) an Event of Default under Section 8 of this Master Lease has not occurred and is continuing, (ii) Lessee has furnished Lessor with a written opinion of independent tax counsel acceptable to Lessor to the effect that there is a meritorious defense to the Claim, and (iii) Lessee shall have agreed, in writing, to pay Lessor, on demand and regardless of the outcome, all expenses which Lessor may incur in contesting the Claim including, without limitation, legal and accounting fees. Lessor shall, thereupon, contest the Claim in any permissible forum selected by Lessor either by resisting payment of the Claim or by making payment of the Claim and suing for a refund. If Lessor determines to pay the Claim and sue for a refund, Lessee shall, within 10 days of Lessor's written request, pay to Lessor an amount equal to the sum, on an after-tax basis, of the Claim which the Internal Revenue Service requires to be paid. During any proceedings in connection with the Claim, Lessor shall control all negotiations and litigation but shall, from time to time, consult with Lessee or its counsel. Upon any adverse decision on the Claim in the forum chosen by Lessor, Lessor shall institute an appeal if requested to do so by Lessee provided that independent tax counsel acceptable to Lessor furnishes Lessor with a written opinion to the effect that there is a meritorious basis for an appeal. Notwithstanding the foregoing, Lessor shall not be obligated to appeal any such adverse decision beyond the United States District Courts or the United States Tax Court. (b) A "Final Determination" of the Claim means a final decision of the Internal Revenue Service or a court of competent jurisdiction after all contests or appeals requested by Lessee pursuant to Section 20.5(a) have been either exhausted or terminated as may be agreed upon by Lessor and Lessee. If the Final Determination of the Claim is all or partly adverse to Lessor, the liability, of Lessee to indemnify Lessor shall be fixed and payable as provided in Section 20.4 provided, however, that Lessor shall credit Lessee with any amounts previously paid by Lessee under Section 20.5(a) above. If the Final Determination of the Claim is all or partly in favor of Lessor, then Lessor, upon receipt of any refund from the Internal Revenue Service, shall reimburse Lessee the portion of such refund which exceeds the indemnity obligation of Lessee under this Section 20 with respect to any portion of the Claim not resolved in favor of Lessor. (c) Notwithstanding the provisions of this Section 20.5, Lessor may decline to contest all or any portion of the Claim upon written notice to Lessee and Lessee shall thereupon be relieved of its obligation to indemnify Lessor under this Section 20 with respect to the portion of the Claim described in the notice. (d) Nothing in this Section 20.5 shall be construed as granting any right to Lessee to request a contest of any lack of entitlement to, or any loss, disallowance or recapture of MACRS Deductions arising in connection with events described in the second paragraph of Section 12 of the Master Lease, or from a sale or other disposition of the Equipment upon an Event of Default as set forth in Section 8 of the Master Lease. 20.6 The representations, obligations and indemnities of Lessee under this Section 20 shall continue in full force and effect, notwithstanding the expiration or other termination of this Lease. 21. MISCELLANEOUS; ENFORCEABILITY AND GOVERNING LAW The term "LESSEE" as used in the Lease shall mean and include any and all Lessees who sign below, each of whom shall be jointly and severally liable under the Lease. This Master Lease will not be binding on Lessor until accepted and executed by Lessor, notice of which is hereby waived by Lessee. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. Time is of the essence in the payment and performance of all of Lessee's obligations under the Lease. The captions in this Lease are for convenience only and shall not define or limit any of the terms hereof. Any provisions of this Lease which are unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not render unenforceable such provisions in any other jurisdiction. To the extent permitted by applicable law, Lessee hereby waives; (a) any provisions of law which render any provision hereof unenforceable in any respect; (b) all rights and remedies under Rhode Island General Laws Sections 6A-2.1-508 through 522 or corresponding provisions of the Uniform Commercial Code article or division pertaining to personal property leasing in any jurisdiction in which enforcement of this Lease is sought. THIS LEASE AND THE LEGAL RELATIONS OF THE PARTIES HERETO SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND, WITHOUT REGARD TO PRINCIPLES REGARDING THE CHOICE OF LAW. LESSEE HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF RHODE ISLAND AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ITS OBLIGATIONS HEREUNDER, AND EXPRESSLY WAIVES ANY OBJECTIONS THAT IT MAY HAVE TO THE VENUE OF SUCH COURTS. LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS LEASE. Any action by Lessee against Lessor for any cause of action relating to this Lease shall be brought within one year after any such cause of action first arises. THIS LEASE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES CONCERNING THE LEASE OF THE EQUIPMENT AND CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES SUPERSEDING ANY AND ALL CONFLICTING TERMS OR PROVISIONS OF ANY PRIOR PROPOSALS, COMMITMENT LETTERS, TERM SHEETS OR OTHER AGREEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES. THIS LEASE MAY NOT BE CONTRADICTED BY EVIDENCE OF (i) ANY PRIOR WRITTEN OR ORAL AGREEMENTS OR UNDERSTANDINGS, OR (ii) ANY CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES, AND LESSEE ACKNOWLEDGES AND CERTIFIES THAT NO SUCH ORAL OR WRITTEN AGREEMENTS OR UNDERSTANDINGS EXIST AS OF THE DATE OF THIS LEASE. THIS LEASE MAY NOT BE AMENDED, NOR MAY ANY RIGHTS UNDER THE LEASE BE WAIVED, EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTY CHARGED WITH SUCH AMENDMENT OR WAIVER. Executed and delivered by duly authorized representatives of the parties hereto as of the date set forth below. DATED AS OF: AUGUST 22, 2001 --------------- FLEET CAPITAL CORPORATION EDWARD D. JONES & CO., L.P. By: /s/ Michael Kelleher By: /s/ Steven Novik ----------------------------- ----------------------------- Name: Michael Kelleher Name: Steven Novik ----------------------------- ----------------------------- Title: Vice-President Title: Principal ----------------------------- ----------------------------- Lessee's Taxpayer ID #:43-0345811 -------------- 7 EX-10.21 8 exh10p21.txt CREDIT AGREEMENT Exhibit 10.21 ------------- ============================================================================ CREDIT AGREEMENT ---------------- DATED AS OF AUGUST 27, 2001 ============================================================================ EDJ LEASING CO., L.P. and SOUTHTRUST BANK ============================================================================ TABLE OF CONTENTS ARTICLE PAGE - ------- ---- ARTICLE I 1 1. DEFINITIONS 1 1.1 Defined Terms 1 ------------- 1.2 Accounting Terms 13 ---------------- 1.3 Construction of Terms 13 --------------------- 1.4 Computation of Time Periods 13 --------------------------- ARTICLE II 14 2. THE LOAN 14 2.1 General Terms 14 ------------- 2.2 Disbursement of the Loan 14 ------------------------ 2.3 The Note 14 -------- 2.4 Interest Rate 14 ------------- 2.5 Payments of Principal and Interest 15 ---------------------------------- 2.6 Use of Proceeds of Loan 15 ----------------------- ARTICLE III 15 3. PAYMENTS, ADDITIONAL COSTS, ETC. 15 3.1 Payment to Bank 15 --------------- 3.2 Late Payments 16 ------------- 3.3 Prepayment 16 ---------- 3.4 Default Rate 16 ------------ 3.5 No Setoff or Deduction 16 ---------------------- 3.6 Payment on Non-Business Day; Payment Computations 17 ------------------------------------------------- 3.7 Indemnification 17 --------------- 3.8 360-Day Year 17 ------------ 3.9 No Requirement to Actually Obtain Funds 17 --------------------------------------- 3.10 Usury Limitation 17 ---------------- ARTICLE IV 18 4. CONDITIONS PRECEDENT 18 4.1 Documents Required for the Closing 18 ---------------------------------- 4.2 Certain Events Required for Closing and for all Advances 19 -------------------------------------------------------- 4.3 Legal Matters 20 ------------- 4.4 Election to Make Advances Prior to ---------------------------------- Satisfaction of Conditions Precedent 20 ------------------------------------ ARTICLE V 20 5. COLLATERAL SECURITY 20 5.1 Grant of Lien and Security Interest 20 ----------------------------------- 5.2 Maintenance of Lien 20 ------------------- ii ARTICLE VI 21 6. REPRESENTATIONS AND WARRANTIES 21 6.1 Borrower's Existence 21 -------------------- 6.2 Borrower's Authority 21 -------------------- 6.3 Borrower's General Partner 21 -------------------------- 6.4 Borrower's Name 22 --------------- 6.5 Consents or Approvals 22 --------------------- 6.6 Violations or Actions Pending 22 ----------------------------- 6.7 Existing Indebtedness 22 --------------------- 6.8 Tax Returns 22 ----------- 6.9 Financial Statements 22 -------------------- 6.10 Good and Marketable Title 23 ------------------------- 6.11 Solvency 23 -------- 6.12 Priority of Liens 23 ----------------- 6.13 Accuracy of Documents 23 --------------------- 6.14 Environmental Matters 23 --------------------- 6.15 EDJ Lease 23 --------- 6.16 Continuing Effectiveness 23 ------------------------ ARTICLE VII 23 7. BORROWER'S COVENANTS 23 7.1 Affirmative Covenants 24 --------------------- 7.2 Negative Covenants 26 ------------------ 7.3 Financial Covenants 26 ------------------- 7.4 Insurance Covenants 27 ------------------- 7.5 EDJ Lease Covenants 27 ------------------- 7.6 Borrower's General Covenants and Agreements ------------------------------------------- Pertaining to the Collateral 27 ---------------------------- 7.7 Visitation 28 ---------- 7.8 Filing Fees and Taxes 28 --------------------- 7.9 Further Assurances 28 ------------------ ARTICLE VIII 29 8. DEFAULT 29 8.1 Events of Default 29 ----------------- 8.2 No Advances After Default 30 ------------------------- 8.3 Acceleration 30 ------------ 8.4 General Remedies 31 ---------------- 8.5 Bank's Additional Rights and Remedies 31 ------------------------------------- 8.6 Right of Set-Off 31 ---------------- 8.7 No Limitation on Rights and Remedies 32 ------------------------------------ 8.8 Application of Proceeds 32 ----------------------- 8.9 Attorney-in-Fact 32 ---------------- ARTICLE IX 33 9. MISCELLANEOUS 33 iii 9.1 Termination of Bank's Lien 33 -------------------------- 9.2 Construction 33 ------------ 9.3 Further Assurance 33 ----------------- 9.4 Indemnity 33 --------- 9.5 Bank's Consent 34 -------------- 9.6 Enforcement and Waiver by Bank 34 ------------------------------ 9.7 No Representation, Assumption, or Duty 34 -------------------------------------- 9.8 Expenses of Bank 35 ---------------- 9.9 Attorneys' Fees 35 --------------- 9.10 Exclusiveness 35 ------------- 9.11 Waiver and Release by Borrower 35 ------------------------------ 9.12 Limitation on Waiver of Notice, Etc. 35 ------------------------------------ 9.13 Additional Costs 35 ---------------- 9.14 Illegality and Impossibility 36 ---------------------------- 9.15 Participation 36 ------------- 9.16 Binding Effect, Assignment 37 -------------------------- 9.17 Entire Agreement, Amendments 37 ---------------------------- 9.18 Severability 37 ------------ 9.19 Headings 37 -------- 9.20 Counterparts 37 ------------ 9.21 Seal 37 ---- ARTICLE X 37 10. SUBMISSION TO JURISDICTION, GOVERNING LAW AND NOTICES 37 10.1 Notices 37 ------- 10.2 Governing Law 38 ------------- 10.3 SUBMISSION TO JURISDICTION; --------------------------- WAIVER OF JURY TRIAL, ETC. 39 -------------------------- SCHEDULE 6.4 LIST OF NAMES USED BY BORROWER IN LAST SIX YEARS SCHEDULE 7.6 BORROWER'S PRINCIPAL PLACE OF BUSINESS/ LOCATION OF RECORDS iv CREDIT AGREEMENT ---------------- THIS CREDIT AGREEMENT (this "Agreement"), dated as of August 27, 2001, -- is made by and between EDJ LEASING CO., L.P., a Missouri limited partnership (the "Borrower"), and SOUTHTRUST BANK, an Alabama banking corporation (the "Bank"). As used herein, capitalized words and phrases shall have the meanings ascribed thereto in Article I of this Agreement. W I T N E S S E T H: - - - - - - - - - - WHEREAS, Borrower has requested that Bank extend credit to Borrower and Bank is willing to do so on the condition that, among other things, Borrower enters into this Agreement, and Bank has agreed to extend a certain line of credit loan of up to Twenty-Five Million and 00/100 Dollars ($25,000,000.00). NOW THEREFORE, in consideration of the promises herein contained, and each intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I. 1. DEFINITIONS. 1.1 Defined Terms. As used herein: ------------- "Advance" means each loan of money or credit made or extended to ------- or for the benefit of Borrower by Bank pursuant to this Agreement. "Advancement Termination Date" means the earlier of (i) the date ---------------------------- eighteen (18) months from the date of this Agreement (viz., February __, 2003), (ii) the date on which the aggregate Advances equal the Loan Amount, or (iii) the date of the occurrence of an Event of Default. "Affiliate" means, as to any Person, each other Person that --------- directly or indirectly through one or more intermediaries, controls, or is controlled by, or under common control with, such Person. "Agreement" means this Credit Agreement, as amended or --------- supplemented from time to time. "Amortization Expense" means the amortization expense of Borrower -------------------- for the applicable period (to the extent included in the computation of Net Income), according to Generally Accepted Accounting Principles. "Applicable Margin" means one and three-quarters percent (1.75%). ----------------- "Bank" means SouthTrust Bank, an Alabama banking corporation. ---- "Bankruptcy Law" means Title 11, U.S. Code, or any similar Laws of -------------- any Jurisdiction for the relief of debtors, and "Bankruptcy" means the ---------- commencement of any case or other action for relief under Bankruptcy Law. "Base Rate" means the rate of interest periodically designated by --------- Bank as its Base Rate. The Base Rate is not necessarily the lowest interest ---------------------------------------------------- rate charged by Bank. - -------------------- "Borrower" means EDJ Leasing Co., L.P., a Missouri limited -------- partnership. "Borrower Parties" means, collectively, Borrower, Guarantor, and ---------------- any other Person that hereafter becomes a party to this Agreement and/or any other Loan Document, and which Person is responsible in whole or in part for any of the Obligations; and "Borrower Party" means any one of the Borrower -------------- Parties, singularly. "Borrower's Representatives" means, collectively, the president, -------------------------- chief executive officer, chief financial officer, and controller of Borrower, and any other person designated by Borrower as Borrower's Representatives under this Agreement, and "Borrower's Representative" means ------------------------- any one of the Borrower's Representatives, singularly. "Borrower's Closing Affidavit" means an affidavit in form and ---------------------------- substance acceptable to Bank, and signed by a duly authorized representative of Borrower. "Borrower's Interest" means all the right, title and interest of ------------------- Borrower of whatever kind, nature and description, whether now existing or hereafter arising. "Business Day" means any day of the year, other than Saturday or ------------ Sunday, on which dealings in United States Dollars are carried on in the London interbank market and banks open for business in Birmingham, Alabama are not required or authorized to close. "Closing" means the time and place of actual execution and ------- delivery of this Agreement, the Note, and except as waived by Bank, the other documents, instruments, and things required by Section 4.1 hereof. "Collateral" means the following: ---------- (A) All of Borrower's Interest in and to the EDJ Lease, including without limitation the right to receive and collect the Rents, and any and all other amounts payable with respect to the Leased Equipment (including any purchase price payable by EDJ with respect thereto) and all proceeds, products, rents, royalties, issues and profits thereof; (B) All Records pertaining to any of the Collateral; and (C) any and all other assets of Borrower of any kind, nature, or description and which are intended to serve as collateral for the Loan under any one or more of the Security Documents. 2 "Default" means the occurrence of an event described in Section ------- 8.1 hereof regardless of whether there shall have occurred any passage of time or giving of notice that would be necessary in order to constitute such event as an Event of Default. "Default Costs" means all Indemnified Losses incurred by Bank by ------------- reason of a Default. "Default Rate" means a variable per annum rate of interest equal ------------ to the lesser of (1) five percent (5%) in excess of any Interest Rate otherwise payable hereunder, or (2) the maximum rate allowed by applicable Laws. "Depreciation Expense" means the depreciation expense of Borrower -------------------- for the applicable period (to the extent included in the computation of Net Income), according to Generally Accepted Accounting Principles. "EDJ" means Edward D. Jones & Co., L.P., a Missouri limited --- partnership. "EDJ Lease" means that certain Master Lease dated _______________, --------- 2001, between Borrower, as lessor, and EDJ, as lessee, providing for the leasing of certain equipment by Borrower to EDJ. "Environmental Laws" means all Laws of any Jurisdiction relating ------------------ to the governance or protection of the environment, including without limitation, the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"), as amended (42 U.S.C. Sections 9601, et -- seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. - --- Sections 1801, et seq.), the Resource Conservation and Recovery Act ("RCRA"), ------ as amended (42 U.S.C. Sections 6901, et seq.), the Clean Water Act, as ------ amended (42 U.S.C. Sections 7401, et seq.), the Toxic Substances Control Act, ------ as amended (15 U.S.C. Sections 2601, et seq.). ------ "Equity Interests" means any and all ownership or other equitable ---------------- interests in the applicable Person, including any interest represented by any capital stock, membership interest, partnership interest, or similar interest, but specifically excluding any interest of any Person solely as a creditor of the applicable Person. "Equity Owner" means any Person owning an Equity Interest. ------------ "Equity Owners' Equity" means, as of an applicable time, the sum --------------------- of the following accounts set forth in a balance sheet of Borrower and prepared in accordance with Generally Accepted Accounting Principles consistently applied: (A) The par or stated value of all outstanding Equity Interests; (B) Capital surplus; and (C) Retained earnings. 3 "Estoppel Certificate" means an estoppel certificate in form -------------------- satisfactory to Bank and executed by Borrower's and EDJ's respective presidents or principal financial officers, certifying that to his or her knowledge, each of Borrower and EDJ have observed and performed each and every undertaking contained in the EDJ Lease and is not at the time in default in the observance or performance of any of the terms and conditions thereof, or if there shall be such a default, specifying all such defaults and events of which he or she may have knowledge. "Event of Default" means the occurrence of an event described in ---------------- Section 8.1 hereof provided that there shall have occurred any passage of time or giving of notice that would be necessary in order to constitute such event as an Event of Default under Section 8.1 "Existing Indebtedness" means Indebtedness of Borrower as --------------------- reflected on the Financial Statements as of the date of this Agreement. "Extraordinary Receipt" means any cash received by or paid to or --------------------- for the account of any Person not in the Ordinary Course of Business, including, without limitation, tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof) and indemnity payments. "Financial Statements" means the most recent balance sheet and -------------------- income statement of Borrower delivered to Bank. "Financing Statements" means the UCC-1 financing statements -------------------- (including any amendments and continuations) and UCC-3 financing statements required hereunder or under any other Security Document. "Fiscal Year" means a twelve-month period of time commencing on ----------- the first day of January. "Fiscal Year-End" means the end of each Fiscal Year. --------------- "Fixed Charge Coverage" means (A) in the case of any entity other --------------------- than a Non-Taxable Entity, the quotient which is obtained by dividing (i) the sum of the Net Income of Borrower (after provision for federal and state taxes) for the 12-month period preceding the applicable date plus the interest, lease and rental expenses of Borrower for the same period plus the sum of non-cash expenses or allowances for such period (including, without limitation, amortization or write-down of intangible assets, depreciation, and depletion) by (ii) the sum of the current portion of the long-term debt of Borrower as of the applicable date plus the interest, lease and rental expenses for the 12-month period preceding the applicable date; and (B) in the case of a Non-Taxable Entity, the quotient which is obtained by dividing (i) the sum of (x) the Net Income of Borrower for the 12-month period preceding the applicable date, less (y) distributions made to the Equity Owners as equity owners for the payment of taxes during such 12-month period, plus (ii) the interest, lease and rental expenses of Borrower for the same period plus the sum of non-cash expenses or allowances for such period (including, without limitation, amortization or write-down of intangible assets, depreciation, and depletion) by (ii) the sum of the current portion of the long-term debt of Borrower as of the 4 applicable date plus the interest, lease and rental expenses for the 12-month period preceding the applicable date; provided, however, that (a) for the Quarter ending September 30, 2001, the Fixed Charge Coverage Requirement shall not be applicable; and (b) for the Quarter-End (i) December 31, 2001, the foregoing computation shall be made by annualizing the net income and interest, lease and rental expenses for such Quarter (viz., the amount for the Quarter-End December 31, 2001 multiplied by 4); (ii) March 31, 2002, the foregoing computation shall be made by annualizing the net income and interest, lease and rental expenses for such Quarter and the immediately preceding Quarter (viz., the amount for the period October 1, 2001 through March 31, 2002 multiplied by 2); and (iii) June 30, 2002, the foregoing computation shall be made by annualizing the net income and interest, lease and rental expenses for such Quarter and the immediately preceding two Quarters (viz., the amount for the period October 1, 2001 through June 30, 2002 multiplied by 1.333). "Generally Accepted Accounting Principles" means generally ---------------------------------------- accepted principles of accounting in effect from time to time in the United States applied in a manner consistent with those used in preparing such financial statements as have theretofore been furnished to Bank by the applicable Person. "Governing Body" means the board of directors of a Person (or any -------------- Person or group of Persons exercising similar authority). "Governmental Approvals" means all authorizations, consents, ---------------------- approvals, licenses and exemptions of, registrations and filings with, and reports to, any Governmental Authority. "Governmental Authority" means any nation or government and any ---------------------- political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining thereto, which has or asserts jurisdiction over Bank, Borrower, or any property of any of them. "Guarantor" means The Jones Financial Companies, L.L.L.P., a --------- Missouri limited liability limited partnership. "Guarantor's Closing Affidavit" means an affidavit in form and ----------------------------- substance acceptable to Bank, and signed by Guarantor. "Guaranty" means that certain Guaranty dated of even date herewith -------- from Guarantor in favor of Bank, as the same may be amended or supplemented from time to time. "Income Tax Expense" means the income tax expense of Borrower for ------------------ the applicable period (to the extent included in the computation of Net Income), determined in accordance with Generally Accepted Accounting Principles. "Indebtedness" means all items of indebtedness, obligation or ------------ liability, whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, including, but without limitation or duplication: 5 (A) All indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other than for collection or deposit in the Ordinary Course of Business) or discounted with recourse; (B) All indebtedness in effect guaranteed, directly or indirectly, through agreements, contingent or otherwise: (1) to purchase such indebtedness; or (2) to purchase, sell or lease (as lessee or lessor) property, products, materials or supplies or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such indebtedness or to assure the owner of the indebtedness against loss; or (3) to supply funds to or in any other manner invest in the debtor; (C) All indebtedness secured by (or which the holder of such indebtedness has a right, contingent or otherwise, to be secured by) any Lien upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have been assumed; and (D) All indebtedness incurred as the lessee of goods or services under leases that, in accordance with Generally Accepted Accounting Principles, should not be reflected on the lessee's balance sheet. "Indemnified Losses" means all damages, dues, penalties, fines, ------------------ costs, amounts paid in settlement, taxes, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses. "Interest Expense" means the interest expense of Borrower for the ---------------- applicable period (to the extent included in the computation of Net Income), determined in accordance with Generally Accepted Accounting Principles. "Interest-Only Period" means a period from the date of this -------------------- Agreement to the Advancement Termination Date. "Interest Payment Due Date" means each Quarter-End during the term ------------------------- of this Agreement. "Interest Rate" means the actual interest rate at which the ------------- outstanding principal amount of the Note bears interest from time to time during the term of the Note. "Jurisdiction" means each and every nation or any political ------------ subdivision thereof. "Laws" means each and all laws, treaties, ordinances, statutes, ---- rules, regulations, orders, injunctions, writs or decrees of any Governmental Authority, or any court or similar entity established by any thereof, whether now in effect or hereafter enacted. 6 "Leased Equipment" means all equipment leased by Borrower to EDJ ---------------- pursuant to the EDJ Lease. "LIBOR Rate Interest Period" means any 30-Day LIBOR Rate Interest -------------------------- Period, 60-Day LIBOR Rate Interest Period, or 90-Day LIBOR Rate Interest Period. "LIBOR Rate Notice" means any 30-Day LIBOR Rate Notice, 60-Day ----------------- LIBOR Rate Notice, or 90-Day LIBOR Rate Notice. "Lien" means any mortgage, pledge, encumbrance, charge, security ---- interest, assignment or other preferential arrangement of any nature whatsoever, including any conditional sale agreement or other title retention agreement. "Loan" means the loan which Bank has agreed to advance to Borrower ---- in accordance with the terms of Article 2 of this Agreement. "Loan Amount" means Twenty-Five Million and No/100 Dollars ----------- ($25,000,000.00). "Loan Documents" means this Agreement, the Note, the Guaranty, -------------- each of the Security Documents, the Borrower's Closing Affidavit, the Guarantor's Closing Affidavit, and any and all other agreements, documents and instruments of any kind executed or delivered in connection with, or evidencing, securing, guaranteeing or relating to, the Loan, whether heretofore, simultaneously herewith or hereafter delivered, together with any and all extensions, revisions, modifications or amendments at any time made to any of the foregoing. "Material Adverse Change" means, (A) with respect to EDJ or ----------------------- Guarantor, if the partnership capital (the sum of the limited partnership interests and the general partnership interest as shown on a statement of financial condition) of Guarantor or of EDJ falls below $300,000,000; (B) with respect to EDJ, if EDJ fails to maintain net capital (as defined in paragraph (c) of Rule 15 c 3-1 of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934) in an amount equal to 150% of the amount of such net capital required for expansion of a member organization's business pursuant to Rule 326(a) of the Rules of the Board of Directors of the New York Stock Exchange; and (C) with respect to Borrower, a material adverse change in (i) the business, condition (financial or otherwise), operations, performance, properties or prospects of Borrower, or (ii) the ability of Borrower to perform its Obligations under any Loan Document. "Maturity Date" means the earlier of (i) the date sixty (60) ------------- months from the commencement of the Term Period, or (ii) the occurrence of an Event of Default. "Net Income" means the net income of Borrower for the applicable ---------- period as determined in accordance with Generally Accepted Accounting Principles, but excluding for purposes of determining any financial ratios under this Agreement, all Extraordinary Receipts and any Income Tax Expense on such Extraordinary Receipts and any tax deductions or credits on account of such Extraordinary Receipts. 7 "Non-Taxable Entity" means any entity which has properly elected ------------------ its classification for federal income tax purposes to be classified as a partnership or to be disregarded as an entity separate from its owner. "Note" means that certain Promissory Note of even date herewith in ---- the principal amount of $25,000,000.00 given by Borrower in favor of Bank to evidence Borrower's obligation to repay the Loan and the interest thereon, together with any and all extensions, revisions, modifications or amendments at any time made thereto. "Obligations" means the obligations (including obligations of ----------- performance) and liabilities of any Borrower Party to Bank of every kind and description whatsoever, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, contracted or arising, or acquired by Bank from any source, joint or several, liquidated or unliquidated, whether incurred as maker, endorser, surety, guarantor, general partner, drawer, tort-feasor, indemnitor, account party with respect to a letter of credit or otherwise, and arising under, pursuant to, and/or in connection with this Agreement, the Note, and any of the other Loan Documents, and any and all extensions and renewals of any of the same, including but not limited to the obligation: (A) To pay the principal of and interest on the Note in accordance with the terms hereof and thereof, including any and all extensions, modifications, and renewals thereof and substitutions therefor; (B) To repay to Bank all amounts advanced by Bank hereunder, under any of the Loan Documents or otherwise, including, but without limitation, advances for principal or interest payments to prior secured parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, or repairs to or maintenance or storage of, any of the Collateral; and (C) To reimburse Bank, on demand, for all of Bank's expenses and costs, including the reasonable fees and expenses of its counsel, in connection with the preparation, administration, amendment, modification, or enforcement of this Agreement and the documents required hereunder, including, without limitation, any proceeding brought or threatened to enforce payment of any of the obligations referred to in the foregoing paragraphs (A) and (B). "Ordinary Course of Business" means an action taken by a Person --------------------------- only if: (A) Such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person; (B) Such action is not required to be authorized by the Governing Body of such Person; and (C) Such action is similar in nature and magnitude to actions customarily taken, without any authorization by any Governing Body, in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person. 8 "Organizational Documents" means (i) the articles of incorporation ------------------------ and the bylaws of a corporation, (ii) the partnership agreement and any statement of partnership of a general partnership, (iii) the limited partnership agreement and the certificate of limited partnership of a limited partnership, (iv) the articles of organization and the operating agreement of a limited liability company, (v) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person, and (vi) any amendment to any of the foregoing. "Participant" means any bank, financial institution, Affiliate of ----------- Bank, or other entity which enters into a participation agreement with Bank and/or to whom Bank assigns all or a portion of its rights and obligations under this Agreement. "Person" means any individual, corporation, partnership, ------ association, joint-stock company, trust, unincorporated organization, joint venture, court or Governmental Authority. "Place for Payment" means a place for payment as from time to time ----------------- designated by Bank, which place for payment currently is at the address of Bank as hereinafter provided for with respect to notices. "Principal Payment Due Date" means each September 30 during the -------------------------- term of this Agreement, commencing on the first December 31 during the Term Period. "Quarter" means a period of time of three consecutive calendar ------- months. "Quarter-End" means the last day of each of March, June, ----------- September, and December. "Records" means correspondence, memoranda, tapes, discs, ------- microfilm, microfiche, papers, books and other documents, or transcribed information of any type, whether expressed in ordinary or machine language, and all filing cabinets and other containers in which any of the foregoing is stored or maintained. "Regulation D" means Regulation D of the Board of Governors of the ------------ Federal Reserve System from time to time in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. "Regulation "G", Regulation "T", Regulation "U", and Regulation -------------------------------------------------------------- "X"" means Regulation G, Regulation T, Regulation U, and Regulation X, - --- respectively, of the Board of Governors of the Federal Reserve System as now or from time to time hereafter in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. "Rents" means all the rents, issues, and profits now due and which ----- may hereafter become due under or by virtue of the EDJ Lease, together with all claims and rights to the payment of money at any time arising in connection with any rejection or breach of the EDJ Lease. 9 "Reserve Requirement" with respect to a LIBOR Rate Interest Period ------------------- means the weighted average during the LIBOR Rate Interest Period of the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during the LIBOR Rate Interest Period) which is imposed under Regulation D. "Security Documents" means all documents or instruments of any ------------------ kind executed or delivered in connection with the Loan, whether delivered prior to, at, or after the Closing, wherein Bank is granted a Lien in Borrower's assets, and all documents and instruments executed and delivered in connection with any of the foregoing, together with any and all extensions, revisions, modifications or amendments at any time made to any of such documents or instruments, including but not limited to this Agreement and the Financing Statements. "Solvent" and "Solvency" mean, with respect to any Person on a ------- -------- particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Tangible Net Worth" mean, at any time, Equity Owners' Equity, ------------------ less the sum of: (A) Any surplus resulting from any write-up of assets subsequent to the date of Closing (other than any write-up of assets made on account of changes in and consistent with Generally Accepted Accounting Principles); (B) Goodwill, including any amounts, however designated on a balance sheet of Borrower, representing the excess of the purchase price paid for assets or stock acquired over the value assigned thereto on the books of Borrower; (C) Patents, trademarks, trade names and copyrights; (D) Any amount at which shares of capital stock of Borrower appear as an asset on Borrower's balance sheet; (E) Loans and advances by Borrower to Affiliates, stockholders, directors, officers or employees; (F) Deferred expenses; 10 (G) Equity Investment(s) by Borrower in Affiliates of any nature; and (H) Any other amount in respect of an intangible that, in accordance with Generally Accepted Accounting Principles, should be classified as an asset on a balance sheet of Borrower. "Term Period" means the period of time from the expiration of the ----------- Interest-Only Period through the Maturity Date. "Third Party" means a Person not a party to this Agreement. ----------- "Uniform Commercial Code" means the Uniform Commercial Code as in ----------------------- effect from time to time in the State of Alabama and\or any other Jurisdiction where any Collateral may from time to time be located. "Unused Fee" means the fee payable by Borrower to Bank on each ---------- Quarter-End during the Interest-Only Period, as determined by Bank as of such Quarter-End in an amount equal to the product of (A) one-quarter of one percent (.25%) multiplied by (B) the daily average of the difference between (i) the Loan Amount and (ii) the sum of the aggregate principal amount of all Advances on each day during such Quarter. "Voting Power" means, with respect to any Person, the right to ------------ vote for the election of the Governing Body of such Person under ordinary circumstances. "Without Notice" means without demand of performance or other -------------- demand, advertisement, or notice of any kind to or upon the applicable Person except as required by applicable Law. "30-Day Adjusted LIBOR Rate" means, for each respective 30-Day -------------------------- LIBOR Rate Interest Period, an interest rate equal to the sum of (i) the applicable 30-Day LIBOR Rate, plus (ii) the Applicable Margin. "30-Day LIBOR Rate" means, as applicable to each respective 30-Day ----------------- LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient obtained (stated as an annual percentage rate rounded upward to the next higher 100th of 1%) by dividing (A) the London Interbank Offered Rate ("LIBOR") for a period of thirty (30) days as determined by Bank from Telerate (or such other source as Bank may select if such a rate index is not available from Telerate), by (B) 1.00 minus any Reserve Requirement for the 30-Day LIBOR Rate Interest Period (expressed as a decimal). "30-Day LIBOR Rate Interest Period" means a period of one month --------------------------------- from the first day of the applicable 30-Day LIBOR Rate Interest Period to the date one month thereafter, and with respect to which a 30-Day LIBOR Rate Notice has been given. "30-Day LIBOR Rate Notice" means a written notice given to Bank by ------------------------ a Borrower's Representative providing for Borrower's election for the outstanding principal balance of the Note 11 to bear interest at the applicable 30-Day Adjusted LIBOR Rate for a 30-Day LIBOR Rate Interest Period, such notice to be given at least two (2) Business Days prior to and specifying the date of the commencement of the applicable 30-Day LIBOR Rate Interest Period; provided, however, that, except as may be waived by Bank in Bank's discretion, in no event may any 30-Day LIBOR Rate Interest Period begin until the expiration of any current LIBOR Rate Interest Period and in no event may a 30-Day Adjusted LIBOR Rate be elected at any time when the corresponding 30-Day LIBOR Rate Interest Period would extend beyond the Maturity Date, and if any such 30-Day LIBOR Rate Notice is not timely received or is otherwise not properly made, such 30-Day LIBOR Rate Notice, at Bank's election, shall not be effective. "60-Day Adjusted LIBOR Rate" means, for each respective 60-Day -------------------------- LIBOR Rate Interest Period, an interest rate equal to the sum of (i) the applicable 60-Day LIBOR Rate, plus (ii) the Applicable Margin. "60-Day LIBOR Rate" means, as applicable to each respective 60-Day ----------------- LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient obtained (stated as an annual percentage rate rounded upward to the next higher 100th of 1%) by dividing (A) the London Interbank Offered Rate ("LIBOR") for a period of sixty (60) days as determined by Bank from Telerate (or such other source as Bank may select if such a rate index is not available from Telerate), by (B) 1.00 minus any Reserve Requirement for the 60-Day LIBOR Rate Interest Period (expressed as a decimal). "60-Day LIBOR Rate Interest Period" means a period of two months --------------------------------- from the first day of the applicable 60-Day LIBOR Rate Interest Period to the date two months thereafter, and with respect to which a 60-Day LIBOR Rate Notice has been given. "60-Day LIBOR Rate Notice" means a written notice given to Bank ------------------------ by a Borrower's Representative providing for Borrower's election for the outstanding principal balance of the Note to bear interest at the applicable 60-Day Adjusted LIBOR Rate for a 60-Day LIBOR Rate Interest Period, such notice to be given at least two (2) Business Days prior to and specifying the date of the commencement of the applicable 60-Day LIBOR Rate Interest Period; provided, however, that, except as may be waived by Bank in Bank's discretion, in no event may any 60-Day LIBOR Rate Interest Period begin until the expiration of any current LIBOR Rate Interest Period and in no event may a 60-Day Adjusted LIBOR Rate be elected at any time when the corresponding 60-Day LIBOR Rate Interest Period would extend beyond the Maturity Date, and if any such 60-Day LIBOR Rate Notice is not timely received or is otherwise not properly made, such 60-Day LIBOR Rate Notice, at Bank's election, shall not be effective. "90-Day Adjusted LIBOR Rate" means, for each respective 90-Day -------------------------- LIBOR Rate Interest Period, an interest rate equal to the sum of (i) the applicable 90-Day LIBOR Rate, plus (ii) the Applicable Margin. "90-Day LIBOR Rate" means, as applicable to each respective 90-Day ----------------- LIBOR Rate Interest Period, a per annum rate of interest equal to the quotient obtained (stated as an annual percentage rate rounded upward to the next higher 100th of 1%) by dividing (A) the London Interbank Offered Rate ("LIBOR") for a period of ninety (90) days as determined by Bank from 12 Telerate (or such other source as Bank may select if such a rate index is not available from Telerate), by (B) 1.00 minus any Reserve Requirement for the 90-Day LIBOR Rate Interest Period (expressed as a decimal). "90-Day LIBOR Rate Interest Period" means a period of three months --------------------------------- from the first day of the applicable 90-Day LIBOR Rate Interest Period to the date three months thereafter, and with respect to which a 90-Day LIBOR Rate Notice has been given. "90-Day LIBOR Rate Notice" means a written notice given to Bank by ------------------------ a Borrower's Representative providing for Borrower's election for the outstanding principal balance of the Note to bear interest at the applicable 90-Day Adjusted LIBOR Rate for a 90-Day LIBOR Rate Interest Period, such notice to be given at least two (2) Business Days prior to and specifying the date of the commencement of the applicable 90-Day LIBOR Rate Interest Period; provided, however, that, except as may be waived by Bank in Bank's discretion, in no event may any 90-Day LIBOR Rate Interest Period begin until the expiration of any current LIBOR Rate Interest Period and in no event may a 90-Day Adjusted LIBOR Rate be elected at any time when the corresponding 90-Day LIBOR Rate Interest Period would extend beyond the Maturity Date, and if any such 90-Day LIBOR Rate Notice is not timely received or is otherwise not properly made, such 90-Day LIBOR Rate Notice, at Bank's election, shall not be effective. 1.2 Accounting Terms. Accounting terms used and not otherwise defined ---------------- in this Agreement have the meanings determined by, and all calculations with respect to accounting or financial matters unless otherwise provided herein shall be computed in accordance with, Generally Accepted Accounting Principles. 1.3 Construction of Terms. Whenever used in this Agreement, the --------------------- singular number shall include the plural and the plural the singular, pronouns of one gender shall include all genders, and use of the terms "herein", "hereof", and "hereunder" shall be deemed to be references to this Agreement in its entirety unless otherwise specifically provided. 1.4 Computation of Time Periods. For purposes of computation of --------------------------- periods of time hereunder, the word "from" means "from and including", the words "to" and "until" each mean "to but excluding", and the word "through" means "through and including". ARTICLE II. 2. THE LOAN 2.1 General Terms. Subject to the terms hereof, Bank will lend ------------- Borrower, from time to time until the Advancement Termination Date, such amounts as a Borrower's Representative may request by not less than three (3) Business Day's notice to Bank, but which shall not exceed, in the aggregate principal amount at any one time outstanding, the Loan Amount. If at any time the unpaid principal balance of the Loan exceeds the amount Borrower could borrow at such time as set forth herein, Borrower shall immediately and Without Notice pay or cause to be paid such sums to Bank, to the extent necessary to reduce the Loan to an amount which Borrower could borrow at that time. 13 2.2 Disbursement of the Loan. ------------------------ (A) Bank will credit or pay the proceeds of each Advance of the Loan to Borrower's deposit account with Bank, or in such other manner as Borrower and Bank may agree. (B) In order to obtain an Advance under the Loan, a Borrower's Representative shall notify Bank not later than 1:00 p.m. (Birmingham, Alabama time) on the day three (3) Business Days prior to the day such Advance is sought, specifying: (i) the date on which such Advance is sought; (ii) the requested amount of the Advance; (iii) if required by Bank, a copy of an invoice and cost breakdown showing the cost for which the Advance is requested; (iv) if requested by Bank, evidence as may be required by Bank reflecting that Borrower is or will be the owner of all the Leased Equipment being purchased with the proceeds of the Advance, and a copy of any schedule to be attached to the EDJ Lease pertaining to the Leased Equipment being purchased or such other evidence as may be required by Bank that such property shall be leased by Borrower to EDJ pursuant to the EDJ Lease; and (v) if required by Bank, an Estoppel Certificate. Notwithstanding anything contained herein to the contrary, Bank shall not be required to make advancements more than once each calendar month, and Borrower shall not be entitled to receive, and Bank shall not be required to disburse, any Advance of the Loan after the Advancement Termination Date, or upon the occurrence and during the continuance of a Default. 2.3 The Note. Borrower's obligation to repay the Loan shall be -------- evidenced by the Note. 2.4 Interest Rate. Interest on the Loan shall be calculated as ------------- follows: (A) During the entire term of the Note, except during any applicable 30-Day LIBOR Rate Interest Period, 60-Day LIBOR Rate Interest Period, or 90-Day LIBOR Rate Interest Period, the outstanding principal balance of the Note shall bear interest at the Base Rate. (B) A Borrower's Representative may from time to time deliver to Bank (i) a 30-Day LIBOR Rate Notice, in which case the outstanding principal balance of the Note shall bear interest at the 30-Day Adjusted LIBOR Rate during the applicable 30-Day LIBOR Rate Interest Period, (ii) a 60-Day LIBOR Rate Notice, in which case the outstanding principal balance of the Note shall bear interest at the 60-Day Adjusted LIBOR Rate during the applicable 60-Day LIBOR Rate Interest Period, and (iii) a 90-Day LIBOR Rate Notice, in which case the outstanding principal balance of the Note shall bear interest at the 90-Day Adjusted LIBOR Rate during the applicable 90-Day LIBOR Rate Interest Period. Following the expiration of any applicable LIBOR Rate Interest Period, if a Borrower's Representative shall not have timely and properly delivered a LIBOR Rate Notice for a LIBOR Rate Interest Period to commence as of the expiration of the applicable expiring LIBOR Rate Interest Period, then the outstanding principal balance of the Note shall automatically bear interest at the Base Rate until the commencement of the next LIBOR Rate Interest Period, if any. 2.5 Payments of Principal and Interest. Principal and interest on the ---------------------------------- Loan shall be payable as follows: 14 (A) On the first Interest Payment Due Date following the date of the Note, on each successive Interest Payment Due Date thereafter during the Interest-Only Period, and on the last day of the Interest-Only Period, Borrower shall pay to Bank all accrued and unpaid interest on the outstanding principal balance of the Note. (B) On the first Interest Payment Due Date during the Term Period, and on each successive Interest Payment Due Date thereafter, Borrower shall pay to Bank all accrued and unpaid interest on the outstanding principal balance of the Note. (C) On the first Principal Payment Due Date, and on each successive Principal Payment Due Date thereafter, Borrower shall pay to Bank a principal payment in an amount of (i) on the first Principal Payment Due Date, $4,000,000.00, and (ii) thereafter, $5,000,000.00. (D) In addition, promptly upon the receipt thereof, Borrower shall pay to Bank as a prepayment of principal all monies received with respect to the Collateral and/or the Leased Equipment, other than monthly rents received under the EDJ Lease. (E) If not earlier demanded pursuant to Section 8.3 hereof, the outstanding principal balance of the Loan, together with all accrued and unpaid interest thereon, shall be due and payable to Bank on the Maturity Date. 2.6 Use of Proceeds of Loan. The proceeds of the Loan shall be used to ----------------------- finance the purchase of the Leased Equipment. ARTICLE III. 3. PAYMENTS, ADDITIONAL COSTS, ETC. 3.1 Payment to Bank. --------------- (A) All monies payable to Bank under this Agreement or under the Note shall be paid directly to Bank in immediately available funds at the Place for Payment. If Bank shall send Borrower statements of amounts due hereunder, such statements shall be considered correct and conclusively binding on Borrower in absence of manifest error. Alternatively, at its discretion, Bank may charge against any deposit account of Borrower all or any part of any amount owed by Borrower hereunder. (B) All payments to be made by Borrower hereunder will be made to Bank not later than 1:00 p.m. at the Place for Payment. Payments received after 1:00 p.m. at the Place for Payment shall be deemed to be payments made prior to 1:00 p.m. at the Place for Payment on the next succeeding Business Day. Borrower hereby authorizes Bank to charge its accounts with Bank in order to cause timely payment of amounts due hereunder to be made. (C) At the time of making each such payment, Borrower shall, subject to the other terms and conditions of this Agreement, specify to Bank the Loan or other obligations of Borrower hereunder to which such payment is to be applied. In the event that Borrower fails to so specify the 15 relevant Loan or if an Event of Default shall have occurred and be continuing, Bank shall apply such payments first to any expenses or fees then owing, then to interest then owing, and then to principal of the Loan. 3.2 Late Payments. If any scheduled payment, whether principal, ------------- interest or principal and interest, is late ten (10) days or more, Borrower agrees to pay a late charge equal to five percent (5%) of the amount of the payment which is late, but not more than the maximum amount allowed by applicable Laws. The foregoing provision shall not be deemed to excuse a late payment or be deemed a waiver of any other rights Bank may have under this Agreement, including, subject to the terms hereof, the right to declare the entire unpaid principal and interest immediately due and payable. 3.3 Prepayment. Borrower may prepay or cause to be prepaid the ---------- principal of the Loan in whole or, from time to time, in part, without premium or penalty. All partial prepayments, whether voluntary or mandatory, shall (except as may be directed by a Borrower's Representative to the contrary) be applied first to any expenses for fees then owing, then against interest then owing, and then to principal of the Loan, provided that no prepayment shall entitle Borrower to cease making any payment as otherwise scheduled hereunder. 3.4 Default Rate. Notwithstanding any provision herein or in any other ------------ Loan Document to the contrary, upon the occurrence and during the continuance of an Event of Default, the Interest Rate payable on the Loan shall be the Default Rate. 3.5 No Setoff or Deduction. All payments of principal of and interest ---------------------- on the Loan and other amounts payable by Borrower hereunder shall be made by Borrower without setoff or counterclaim, and, subject to the next succeeding sentence, free and clear of, and without deduction or withholding for, or on account of, any present or future taxes, levies, imposts, duties, fees, assessments, or other charges of whatever nature, imposed by any Governmental Authority, or by any department, agency or other political subdivision or taxing authority. If any such taxes, levies, imposts, duties, fees, assessments, or other charges are imposed, Borrower will pay such additional amounts as may be necessary so that payment of principal of and interest on the Loan and other amounts payable hereunder, after withholding or deduction for or on account thereof, will not be less than any amount provided to be paid hereunder and, in any such case, Borrower will furnish to Bank certified copies of all tax receipts evidencing the payment of such amounts within 30 days after the date any such payment is due pursuant to applicable Laws. 3.6 Payment on Non-Business Day; Payment Computations. Except as ------------------------------------------------- otherwise provided in this Agreement to the contrary, whenever any installment of principal of, or interest on, the Loan or other amount due hereunder becomes due and payable on a day which is not a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, in the case of any installment of principal, interest shall be payable thereon at the rate per annum determined in accordance with this Agreement during such extension. 3.7 Indemnification. If Borrower makes any payment of principal with --------------- respect to the Loan on any other date than the last day of an interest period applicable thereto, or if Borrower fails to borrow the Loan after notice has been given to Bank in accordance with this Agreement, or if Borrower fails to make any payment of principal or interest in respect of the Loan when due, 16 Borrower shall reimburse Bank on demand for any resulting actual loss or expense incurred by Bank, including without limitation any loss incurred in obtaining, liquidating or employing deposits from third parties, whether or not Bank shall have funded or committed to fund the Loan. A statement as to the amount of such loss or expense, prepared in good faith and in reasonable detail by Bank and submitted by Bank to Borrower, shall be conclusive and binding for all purposes absent manifest error in computation. Calculation of all amounts payable to Bank under this Section shall be made as though Bank shall have actually funded or committed to fund the Loan through the purchase of an underlying deposit in an amount equal to the amount of the Loan in the relevant market and having a maturity comparable to the related interest period and through the transfer of such deposit to a domestic office of Bank in the United States; provided, however, that Bank may fund ----------------- the Loan in any manner it sees fit and the foregoing assumption shall be utilized only for the purpose of calculation of amounts payable under this Section. 3.8 360-Day Year. All interest payable under the Note shall be ------------ calculated on the basis of a 360-day year by multiplying the outstanding principal amount by the applicable per annum rate, multiplying the product thereof by the actual number of days elapsed, and dividing the product so obtained by 360. 3.9 No Requirement to Actually Obtain Funds. Notwithstanding the fact --------------------------------------- that the Interest Rate pursuant to the Loan may be calculated based upon Bank's cost of funds, Borrower agree that Bank shall not be required actually to obtain funds from such source at any time. 3.10 Usury Limitation. If, at any time, the Interest Rate payable on ---------------- the Loan shall be deemed by any competent court of law or any Governmental Authority to exceed the maximum rate of interest permitted by any applicable Laws, then, for such time as the Interest Rate would be deemed excessive, its application shall be suspended and there shall be charged instead the maximum rate of interest permissible under such Laws, and any excess interest actually collected by Bank shall be credited as a partial prepayment of principal. ARTICLE IV. 4. CONDITIONS PRECEDENT The obligation of Bank to make the Loan and any Advance hereunder is subject to the following conditions precedent: 4.1 Documents Required for the Closing. Prior to or concurrently with ---------------------------------- the Closing, the following instruments and documents, duly executed by all proper Persons shall have been delivered to Bank: (A) This Agreement; (B) The Note; (C) The Guaranty; 17 (D) The Borrower's Closing Affidavit; (E) The Guarantor's Closing Affidavit; (F) The Financing Statements, together with evidence that the Financing Statements have been duly recorded in all filing or recording offices that Bank may deem necessary or desirable in order to create a valid Lien on the Collateral described therein, and that all filing and recording taxes and fees have been paid; (G) With respect to each Borrower Party (other than a Borrower Party that is an individual), a certificate of an officer or other representative acceptable to Bank dated as of the date of this Agreement, certifying as to the incumbency and signatures of the representative(s) of such Borrower Party signing, as applicable, this Agreement and each of the other Loan Documents, and each other document to be delivered pursuant hereto, together with the following documents attached thereto: (1) A copy of the resolutions of such applicable Person's Governing Body authorizing the execution, delivery and performance of this Agreement, each of the Loan Documents, and each other document to be delivered pursuant hereto, as applicable; (2) A copy, certified as of the most recent date practicable by the secretary of state (or similar Governmental Authority) of the state, province, or other Jurisdiction where such Person is organized, of such Person's Organizational Documents filed with such secretary of state (or similar Governmental Authority); (3) A copy of such Person's other Organizational Documents; (H) A certificate, as of the most recent date practicable, of the secretary of state (or similar appropriate Governmental Authority) and department of revenue or taxation (or similar appropriate Governmental Authority) of each Jurisdiction in which each Borrower Party (other than a Borrower Party that is an individual) is organized as to the existence and good standing of each such Person within such Jurisdiction, and a certificate, as of the most recent date practicable, of the secretary of state (or similar appropriate Governmental Authority) of each state where any of the Collateral is located as to the qualification and good standing of each Borrower Party (other than a Borrower Party that is an individual) as a foreign entity doing business in each such state; (I) A written opinion of counsel to the Borrower Parties, dated as of the date of Closing and addressed to Bank, in form and substance acceptable to Bank; (J) The Financial Statements; (K) Letters and certificates, in form and substance satisfactory to Bank, attesting to the Solvency of Borrower after giving effect to the transactions contemplated hereby, from the chief financial officer of Borrower; 18 (L) UCC-11 reports showing no Liens superior to the Liens granted by Borrower under the Security Documents; (M) An Estoppel Certificate; (N) The EDJ Lease, in form and substance satisfactory to Bank; and (O) Receipt and approval by Bank of all items otherwise reasonably required to be provided to Bank, and not otherwise set forth above. 4.2 Certain Events Required for Closing and for all Advances. At the -------------------------------------------------------- time of the Closing and at the time of each Advance, Bank shall be satisfied that: (A) No Default shall have occurred and be continuing; (B) No Material Adverse Change shall have occurred; (C) All of the Loan Documents shall have remained in full force and effect; (D) Borrower shall have paid all fees, expenses, costs, and other amounts then owing to Bank, including but not limited to the Unused Fee; (E) All Indebtedness to be prepaid, redeemed or defeased with the proceeds of any Advance shall have been satisfied and extinguished; (F) There shall exist no action, suit, investigation, litigation or proceeding affecting any Borrower Party pending or threatened before any court, governmental agency or arbitrator that (i) could give rise to a Material Adverse Change or (ii) purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the consummation of the transactions contemplated hereby; (G) All Governmental Approvals necessary in connection with the Loan Documents and the transactions contemplated hereby and thereby shall have been obtained (without the imposition of any conditions that are not acceptable to Bank) and shall remain in effect; all applicable waiting periods shall have expired without any action being taken by any competent authority; and no Law shall be applicable that restrains, prevents or imposes materially adverse conditions upon the Loan Documents and the transactions contemplated hereby and thereby; and (H) Insurance required under the EDJ Lease is in full force and effect. 4.3 Legal Matters. At the time of Closing, and the disbursement of ------------- each Advance, all legal matters incidental thereto shall be satisfactory to Gordon, Silberman, Wiggins & Childs, P.C., counsel to Bank. 4.4 Election to Make Advances Prior to Satisfaction of Conditions ------------------------------------------------------------- Precedent. In the event Bank, at its option, elects to make one or more - --------- Advances prior to receipt and approval of all 19 items required by this Article, such election shall not constitute any commitment or agreement of Bank to make any subsequent Advance until all items required by this Article have been delivered. ARTICLE V. 5. COLLATERAL SECURITY 5.1 Grant of Lien and Security Interest. ----------------------------------- (A) To secure all the Obligations, including the compliance by Borrower with Borrower's obligations under this Agreement, Borrower hereby assigns, transfers and sets over to Bank all of Borrower's Interest in and to, and grants Bank a Lien upon, on and in the Collateral. (B) No submission by Borrower to Bank of a schedule or other particular identification of Collateral shall be necessary to vest in Bank security title to and a security interest in each and every item of Collateral now existing or hereafter created and acquired, but rather such title and security interest shall vest in Bank immediately upon the creation or acquisition or any item of Collateral hereafter created or acquired, without the necessity for any other or further action by Borrower or by Bank. 5.2 Maintenance of Lien. ------------------- (A) In connection with any Lien granted to Bank as provided for herein or in any Security Document, Borrower will: (1) Execute such documents and instruments, including amendments to the Security Documents and Financing Statements (including amendments thereto and continuation statements thereof) in form reasonably satisfactory to Bank as Bank, from time to time, may specify, and pay, or reimburse Bank upon demand for paying, all costs and taxes of filing or recording the same in such Jurisdictions as Bank may reasonably designate; and (2) Take such other steps as Bank, from time to time, may reasonably direct to protect, perfect, and maintain Bank's Lien on the Collateral; and (B) In addition to the foregoing, and not in limitation thereof, Borrower agrees that: (1) A carbon, photographic, or other reproduction of this Agreement shall be sufficient as a Financing Statement and may be filed in any appropriate office in lieu thereof; and (2) Borrower hereby appoints Bank as its attorney-in-fact (without requiring Bank to act as such) to execute any Financing Statement in the name of Borrower, and to perform all other acts that Bank reasonably deems appropriate to perfect and continue its Lien upon, on and in, and to protect and preserve, the Collateral; provided, however, that 20 Bank agrees not to perform any such act unless Borrower has failed to perform such act within fifteen (15) days of Bank's written demand therefor. ARTICLE VI. 6. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Bank, knowing that Bank will rely on such representations and warranties as an inducement to make the Loan, that: 6.1 Borrower's Existence. Borrower is a duly organized and existing -------------------- Missouri limited partnership in good standing and has full power and authority to consummate the transactions contemplated by this Agreement. 6.2 Borrower's Authority. The execution, delivery and performance of -------------------- all of the Loan Documents have been duly authorized by all requisite action by Borrower. All of the Loan Documents have been duly executed and delivered and constitute valid and binding obligations of each Borrower Party a party thereto, enforceable in accordance with their respective terms (except as may be limited by applicable Bankruptcy Laws and general principles of equity), and Bank will be entitled to the benefits of all of the Loan Documents. 6.3 Borrower's General Partner. Borrower's General Partner is LHC, -------------------------- Inc., a Missouri corporation. 6.4 Borrower's Name. Set forth on Schedule 6.4 is a complete and --------------- ------------ accurate list of all names under which Borrower has done business in the last six years. 6.5 Consents or Approvals. No consent of any Third Party and no --------------------- authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or other Third Party is required either (i) for the due execution, delivery, recordation, filing or performance by Borrower of this Agreement or any other Loan Document or for the consummation of the transaction contemplated hereby, (ii) for the mortgage, pledge, assignment, or grant by Borrower of the Lien granted pursuant to the Security Documents, (iii) for the perfection or maintenance of the Lien created by the Security Documents, except for the recording of the Financing Statements, (iv) for the exercise by Bank of its rights or remedies provided for in this Agreement or in any of the other Loan Documents, except as may be required by applicable Laws in connection with the foreclosure and disposition of the Collateral, or (v) for the operation of Borrower's businesses. All applicable waiting periods, if any, in connection with the transactions contemplated hereby have expired without any action having been taken by any Person restraining, preventing or imposing materially adverse conditions upon the rights of Borrower to enter into and perform its obligations under this Agreement. 6.6 Violations or Actions Pending. There are no actions, suits, or ----------------------------- proceedings pending or, to the best of Borrower's knowledge, threatened, which might give rise to a Material Adverse Change or which might impair the value of the Collateral. Borrower is not in violation of any agreement the violation of which will or might reasonably be expected to give rise to a Material 21 Adverse Change, and Borrower is not in violation of any order, judgment, or decree of any court, or any statute or governmental regulation to which Borrower is subject. The execution and performance of this Agreement by Borrower will not result in any breach of any mortgage, lease, credit or loan agreement or any other instrument which may bind or affect Borrower. 6.7 Existing Indebtedness. Borrower is not in default with respect to --------------------- any of the Existing Indebtedness. 6.8 Tax Returns. Except as may otherwise be permitted herein, all ----------- federal, state, local and other tax returns and reports of Borrower required by Laws have been completed in full and have been duly filed, and all taxes, assessments and withholdings shown on such returns or billed to Borrower have been paid, and Borrower maintains adequate provisions and accruals in respect of all such federal, state, local and other taxes, assessments and withholdings. There are no unpaid assessments pending against Borrower for any taxes or withholdings, and Borrower knows of no basis therefor. 6.9 Financial Statements. All financial statements of the Borrower -------------------- Parties heretofore given and hereafter to be given to Bank are and will be true and complete in all material respects as of their respective dates and prepared in accordance with Generally Accepted Accounting Principles, and fairly represent and will fairly represent the financial conditions of the Persons to which they pertain in all material respects, and no Material Adverse Change has or will have occurred in the financial conditions reflected therein after the respective date thereof upon delivery to Bank, except as may be disclosed in writing to Bank. 6.10 Good and Marketable Title. Borrower has good and marketable title ------------------------- to the Collateral and, upon the acquisition thereof, will have good and marketable title to the Leased Equipment, and neither the Collateral nor the Leased Equipment is or shall be subject to any Lien other than the Lien granted pursuant to this Agreement. 6.11 Solvency. Borrower is Solvent. -------- 6.12 Priority of Liens. The Liens granted by this Agreement and the ----------------- Security Documents constitute a first Lien against the Collateral, prior to all other Liens and encumbrances, including those which may hereafter accrue. 6.13 Accuracy of Documents. All documents furnished to Bank by or on --------------------- behalf of Borrower as part of or in support of the application for the Loan or this Agreement are true, correct, complete and accurately represent the matters to which they pertain in all material respects. 6.14 Environmental Matters. Borrower is not in violation of or subject --------------------- to any existing, pending or threatened investigation or inquiry by any Governmental Authority or any remedial obligations under any applicable Environmental Laws, and there are no facts, conditions or circumstances known to it which could result in any such investigation or inquiry if such facts, conditions and circumstances, if any, were fully disclosed to the applicable Governmental Authority, and Borrower will promptly notify Bank if Borrower becomes aware of any such facts, conditions or circumstances or any such investigation or inquiry. 22 6.15 EDJ Lease. --------- (A) Borrower is the sole owner and holder of Borrower's Interest in the EDJ Lease and the Rents, and Borrower has not transferred or otherwise assigned Borrower's Interest in the EDJ Lease and/or the Rents. (B) The EDJ Lease is valid and enforceable and in full force and effect, and has not been altered, modified or amended in any manner whatsoever except as permitted in this Agreement. 6.16 Continuing Effectiveness. All representations and warranties ------------------------ contained herein shall be deemed continuing and in effect at all times while Borrower remains indebted to Bank pursuant to the Loan and shall be deemed to be incorporated by reference in each requisition for an Advance by Borrower. ARTICLE VII. 7. BORROWER'S COVENANTS Borrower does hereby covenant and agree with Bank that, so long as any of the Obligations remain unsatisfied or any commitments hereunder remain outstanding, Borrower at all times will comply or cause to be complied with the following covenants: 7.1 Affirmative Covenants. --------------------- (A) Borrower will duly and promptly pay and perform all of Borrower's Obligations to Bank according to the terms of this Agreement and the other Loan Documents, and will cause each other Borrower Party to perform such other Borrower Party's Obligations to Bank according to the terms of this Agreement and the other Loan Documents. (B) Borrower will use the proceeds of the Loan only for the purposes set forth in Section 2.6, and Borrower will furnish Bank such evidence as it may reasonably require with respect to such uses. (C) Borrower will furnish or cause to be furnished to Bank: (1) Within forty-five (45) days after each Quarter-End, an unaudited (management-prepared) balance sheet and consolidated statements of income and cash flow of the Borrower Parties for such Quarter, all in reasonable detail with Bank having full access to all supporting schedules and comments, and certified by Borrower's president or principal financial officer to have been prepared in accordance with Generally Accepted Accounting Principles consistently applied by Borrower, except for any inconsistencies explained in such certificate; (2) Within ninety (90) days after each Fiscal Year-End (a) a statement of Equity Owners' Equity and a statement of cash flows of Borrower for such Fiscal Year, (b) an income statement of each Borrower Party for such Fiscal Year, and (c) a balance sheet 23 of each Borrower Party as of the end of such Fiscal Year, all in reasonable detail, including all supporting schedules and comments; the statements and balance sheets of Borrower to be audited by an independent certified public accountant selected by Borrower, and certified by such accountants to have been prepared in accordance with Generally Accepted Accounting Principles consistently applied by Borrower, except for any inconsistencies explained in such certificate. (3) Contemporaneously with each quarterly and year-end financial report required by the foregoing paragraphs, a certificate of the president or principal financial officer of Borrower stating that he or she has individually reviewed the provisions of this Agreement and that a review of the activities of Borrower during such year or monthly period, as the case may be, has been made by or under the supervision of the signers of such certificate with a view to determining whether Borrower has kept, observed, performed and fulfilled all of its obligations under this Agreement, and that, to the best of his or her knowledge, Borrower has observed and performed each and every undertaking contained in this Agreement and is not at the time in default in the observance or performance of any of the terms and conditions hereof or, if Borrower shall be so in default, specifying all such defaults and events of which he or she may have knowledge and setting forth financial data and computation evidencing Borrower's compliance with the financial covenants set forth in this Agreement; and (4) Promptly after sending or making available or filing of the same, copies of all reports, proxy statements and financial statements that Borrower sends or makes available to its Equity Owners and all registration statements and reports that Borrower file with the Securities and Exchange Commission (or any other similar Governmental Authority) or any successor Person. (5) Within forty-five (45) days of each Quarter-End, an Estoppel Certificate. (D) Borrower will duly and promptly perform all of Borrower's obligations under the EDJ Lease according to the terms thereof. (E) Borrower will furnish to Bank, if Bank so requests, the contracts, bills of sale, receipted vouchers, and agreements, or any of them, under which Borrower claims title to the Leased Equipment. (F) Borrower will certify to Bank upon request by Bank that: (1) Borrower has complied with and is in compliance with all terms, covenants and conditions of this Agreement which are binding upon it in all material respects; (2) there exists no Default; or, if such is not the case, that one or more specified Defaults have occurred; and 24 (3) the representations and warranties contained in this Agreement are true with the same effect as though made on the date of such certificate. (G) Borrower will, when requested so to do, make available for inspection and audit by duly authorized representatives of Bank any of its Records pertaining to the Collateral, and will furnish Bank any information regarding its business affairs and financial condition as reasonably requested by Bank and within a reasonable time after written request therefor. Borrower shall reimburse Bank for all costs associated with such audit if the audit reveals a material discrepancy in any financial report, statement or other document provided to Bank pursuant to this Agreement. (H) Borrower will keep accurate and complete Records, consistent with sound business practices. (I) Within ten (10) days of Bank's request therefor, Borrower will furnish or cause to be furnished to Bank copies of income tax returns filed by any Borrower. (J) Borrower will pay when due (or within applicable grace periods) all Indebtedness due Third Persons, unless the failure so to pay such Indebtedness would not give rise to a Material Adverse Change. (K) Borrower will notify Bank thirty (30) days in advance of any change in the location of any place of business or the chief executive office of Borrower or of the establishment of any new place of business or new chief executive office, the discontinuance of any existing place of business or chief executive office, or the state of organization of Borrower. (L) Borrower will notify Bank immediately if it becomes aware of the occurrence of any Default, or if it becomes aware of any Material Adverse Change or the occurrence of any event that might give rise to a Material Adverse Change. 7.2 Negative Covenants. ------------------ (A) Borrower will not, without Bank's prior written consent (which consent Bank agrees shall not be unreasonably withheld or delayed), change its name, enter into any merger, consolidation, liquidation, reorganization or recapitalization, or dissolve. (B) Except as provided under the EDJ Lease, Borrower will not, without Bank's prior written consent, sell, transfer, lease or otherwise dispose of, or enter into any agreement to sell, lease, transfer, assign or otherwise dispose of, the Collateral and/or the Leased Equipment. (C) Borrower will not permit any changes to the EDJ Lease, unless there is first obtained the prior written approval of Bank, such approval not to be unreasonably withheld. (D) Borrower will not furnish Bank any certificate or other document that will contain any untrue statement of material fact or that will omit to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished. 25 (E) Borrower will not directly or indirectly apply any part of the proceeds of the Loan to the purchasing or carrying of any "margin stock" within the meaning of Regulation G, Regulation T, Regulation U, or Regulation X, or any regulations, interpretations or rulings thereunder. 7.3 Financial Covenants. ------------------- (A) Borrower will maintain or cause to be maintained: (1) A Fixed Charge Coverage of not less than 1.0 to 1.0; provided that if the Fixed Charge Coverage is less than 1.0 to 1.0 at any Quarter-End, an additional calculation shall be made including the amount of Borrower's cash on hand and United States Government securities, valued at the lower of cost or market, in the numerator of the ratio in determining Fixed Charge Coverage for such Quarter and, if such additional calculation results in a ratio of not less than 1.0 to 1.0, Borrower shall not be deemed in violation of this covenant; and (2) Tangible Net Worth of, at minimum, $14,000,000.00. (B) Borrower will not declare or pay any dividends, or make any other payment or distribution on account of its Equity Interests in an amount such that such payment or other distribution shall cause the violation of any other covenant or agreement of Borrower set forth herein. 7.4 Insurance Covenants. Borrower will maintain, or cause to be ------------------- maintained, insurance as required under the EDJ Lease. Borrower will, upon request, furnish to Bank a certificate of insurance, duly executed by an authorized agent, and other such evidence of insurance as Bank may require. 7.5 EDJ Lease Covenants. ------------------- (A) Except as may be agreed to by Bank in writing or otherwise be expressly provided for in this Agreement, including the immediately following paragraph, Borrower shall (a) observe and perform all the obligations imposed upon Borrower under the EDJ Lease; (b) not do, or permit to be done, anything to impair the security of the EDJ Lease; (c) promptly send to Bank copies of each notice of default which Borrower shall send or receive under the EDJ Lease; (d) enforce the performance and observance of the provisions of the EDJ Lease; (e) not collect any amounts under the EDJ Lease unless such amounts are immediately paid to Bank as a prepayment of principal; (f) not grant any rights or Liens with respect to the EDJ Lease and/or the Leased Equipment, or permit, consent, or agree to the same; (g) not alter, modify or change the terms of the EDJ Lease, nor give any consent to exercise any option required or permitted by such terms; (h) not cancel or terminate the EDJ Lease, or accept a surrender of the EDJ Lease; (i) not convey or transfer, and shall not suffer or permit a conveyance or transfer of, the Leased Equipment, or of any interest in the Leased Equipment, except as permitted by the EDJ Lease; and (j) execute and deliver, at the request of Bank, all other further assurances, confirmations and assignments in the EDJ Lease as Bank shall, from time to time, reasonably require in order to evidence or secure the rights of Bank hereunder. 26 (B) Notwithstanding the provisions of the immediately preceding paragraph, so long as there shall not exist any Event of Default, then Borrower shall have the right to continue to exercise all its rights and perform its obligations under the EDJ Lease, including the right to collect each payment of monthly Rents as provided in the EDJ Lease and retain such payments for its own use. 7.6 Borrower's General Covenants and Agreements Pertaining to the ------------------------------------------------------------- Collateral. Borrower covenants and agrees that: - ---------- (A) The address of Borrower's principal place of business (or chief executive office if more than one), the office where Borrower keeps and will keep Borrower's Records, including without limitation, those Records concerning the Collateral, are correctly set forth on Schedule -------- 7.6(A); and Borrower shall immediately advise Bank in writing of any change - ------ in any of said addresses. No Borrower shall remove such Records from the place or places set forth on Schedule 7.6(A), nor shall any Borrower keep --------------- any of such Records or the Collateral at any other locations unless (i) Borrower gives Bank at least 10 days' written notice thereof and of the new location, and (ii) the new location is within the continental United States of America. Borrower shall give Bank at least 10 days' prior written notice of Borrower's opening of any new office or place of business or of its closing of any existing office or place of business, and any such office or place of business shall be within the continental United States of America. (B) Bank may correct any and all patent errors in this Agreement or any financing statements or other documents executed in connection herewith. (C) Borrower shall furnish to Bank from time to time statements and schedules and such other reports in connection with the Collateral and/or the Leased Equipment as Bank may reasonably request. (D) Borrower shall keep and maintain at its own cost and expense satisfactory and complete Records of the Collateral and the Leased Equipment at its principal place of business, including without limitation, a record of all payments received and all other dealings with the Collateral. After the occurrence of and during the continuance of any Event of Default, Borrower shall deliver and turn over to Bank any such Records at any time on demand of Bank. (E) Promptly after Borrower's learning thereof, Borrower shall inform Bank in writing of any material delay or default in Borrower's or EDJ's performance of any of their respective obligations under the EDJ Lease, if such delay or default may give rise to any Material Adverse Change. 7.7 Visitation. Borrower agrees to permit representatives of Bank from ---------- time to time to visit and inspect all Records related to the Collateral and/or the Leased Equipment, and to discuss the affairs and finances of Borrower with and be advised as to the same by the officers of Borrower and EDJ, as applicable. 7.8 Filing Fees and Taxes. Borrower covenants and agrees to pay all --------------------- recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution 27 and delivery to Bank of this Agreement and the other Loan Documents, and the recording, filing, satisfaction, continuation and release of any financing statements or other instruments filed or recorded in connection herewith or therewith. 7.9 Further Assurances. Borrower covenants and agrees that, at ------------------ Borrower's cost and expense, upon request of Bank, Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to Bank such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of Bank or its counsel to carry out more effectively the provisions and purposes of this Agreement. ARTICLE VIII. 8. DEFAULT 8.1 Events of Default. The occurrence of any one or more of the ----------------- following events shall constitute an Event of Default hereunder: (A) Borrower shall fail to pay any installment of principal or interest or fee payable hereunder or under the Note within five (5) days of the due date thereof. (B) Any Borrower Party shall fail to observe or perform any other obligations to be observed or performed by it hereunder or under any of the Loan Documents, and such failure shall continue for ten (10) days after: (1) Written notice of such failure from Bank; or (2) Bank is notified of such failure or should have been so notified pursuant to Section 7.1(K), 7.1(L), 7.6(A), or 7.6(E), whichever is earlier. (C) Failure by any Borrower Party to perform any other term, condition or covenant contained in this Agreement or any other Loan Document, which failure is not cured after the giving of any required notice set forth in such document and the expiration of any applicable cure period. (D) There shall occur any Event of Default as defined and provided under any other Loan Document. (E) The validity or enforceability of this Agreement, the Note, or any of the other Loan Documents shall be contested by any Borrower Party, and/or any Borrower Party shall deny that it has any or further liability or obligation hereunder or thereunder. (F) The validity or enforceability of the EDJ Lease shall be contested by EDJ, and/or EDJ shall deny that it has any or further liability or obligation thereunder. 28 (G) At Bank's election and upon ten (10) days' prior written notice from Bank to Borrower, the occurrence of any default (after any applicable grace and cure period) under the EDJ Lease (as provided for therein) and/or the termination of the EDJ Lease. (H) Assignment or attempted assignment by any Borrower Party of this Agreement, any rights hereunder, or any Advance to be made hereunder, or the conveyance, lease, mortgage, or any other alienation or encumbrance of the Collateral or any interest therein without the prior written consent of Bank, except for transfers permitted hereunder or under any other Loan Document. (I) The institution of a foreclosure or other possessory action against the Collateral, the Leased Equipment, or any part thereof. (J) Any financial statement, representation, warranty or certificate made or furnished by any Borrower Party to Bank in connection with this Agreement, or as inducement to Bank to enter into this Agreement, or in any separate statement or document to be delivered hereunder to Bank, shall be materially false, incorrect, or incomplete when made. (K) Any Material Adverse Change arising under paragraph (A) or (B) of the definition thereof. (L) Any Borrower Party or EDJ shall admit its inability to pay its debts as they mature, or shall make an assignment for the benefit of itself or any of its creditors. (M) The dissolution of any Borrower Party or EDJ. (N) Proceedings in Bankruptcy, or for reorganization of any Borrower Party or EDJ, or for the readjustment of any of their debts, under the Bankruptcy Code, as amended, or any part thereof, or under any other Laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced by any Borrower Party or EDJ, or shall be commenced against any Borrower Party or EDJ and shall not be discharged within sixty (60) days of commencement. (O) A receiver or trustee shall be appointed for any Borrower Party or EDJ, or for any substantial part of their respective assets, or any proceedings shall be instituted for the dissolution or the full or partial liquidation of any Borrower Party or EDJ, and such receiver or trustee shall not be discharged within thirty (30) days of his appointment, or such proceedings shall not be discharged within sixty (60) days of its commencement, or any Borrower Party or EDJ shall discontinue business or materially change the nature of its business. (P) A judgment creditor shall obtain possession of any of the Collateral or the Leased Equipment by any means, including, without limitation, levy, distraint, replevin or self-help. Provided that with respect to any of the foregoing, such Event of Default will be deemed to have occurred upon the occurrence of such event Without Notice if Bank is prevented from giving notice by Bankruptcy or other applicable Law. 29 8.2 No Advances After Default. Upon the occurrence and during the ------------------------- continuance of any Default, and notwithstanding any provision contained herein or in any other Loan Document to the contrary, Bank shall have the absolute right to refuse to make, and shall be under no obligation to make, any further Advances. 8.3 Acceleration. All Obligations shall, at the option of Bank, become ------------ immediately due and payable, Without Notice, upon the occurrence of an Event of Default without further action of any kind. 8.4 General Remedies. Upon the occurrence of any Event of Default, ---------------- Bank shall have, in addition to the rights and remedies given it by this Agreement and the other Loan Documents, all those allowed by all applicable Laws, including but without limitation, the Uniform Commercial Code. Without limiting the generality of the foregoing, Bank may immediately, Without Notice (but in accordance with applicable Law), sell at public or private sale or otherwise realize upon, the whole or, from time to time, any part of the Collateral. 8.5 Bank's Additional Rights and Remedies. Upon the occurrence of any ------------------------------------- Event of Default and except as may otherwise be prohibited or expressly provided for to the contrary under applicable Law, in addition to any rights or remedies Bank may otherwise have under this Agreement, any other Loan Documents, or under applicable Laws, Without Notice (but in accordance with applicable Law), Bank shall have the right to take any or all of the following actions at the same or different times: (A) To cancel Bank's obligations arising under this Agreement; (B) To institute appropriate proceedings to specifically enforce performance of the terms and conditions of this Agreement; (C) To proceed to perform any and all of the duties and obligations and exercise all the rights and remedies of Borrower contained in the EDJ Lease as fully as Borrower could itself; (D) To collect the Rents and have, hold, manage, lease and operate the Leased Equipment pursuant to the EDJ Lease as if Bank were the lessor thereunder and an original party thereto. In connection with the foregoing, Borrower hereby authorizes EDJ, upon receipt from Bank of written notice to the effect that an Event of Default exists, to perform all of its obligations under the EDJ Lease as directed by Bank, and to continue to do as so directed until otherwise notified by Bank. (E) To send any written notice to Borrower required by Law or this Agreement in the manner set forth in Section 10.1 of this Agreement; and any notice sent by Bank in such manner at least five (5) Business Days (counting the date of sending) prior to the date of a proposed disposition of the Collateral shall be deemed to be reasonable notice (provided, however, that nothing contained herein shall be deemed to require 10 days' notice if, under the applicable circumstances, a shorter period of time would be allowed under applicable Law); and 30 (F) To exercise, in addition to all other rights which it has under this Agreement or other applicable Law, all of the rights and remedies of a secured party upon default under the Uniform Commercial Code or other applicable Law. 8.6 Right of Set-Off. Upon the occurrence of and during the ---------------- continuance of any Event of Default, Bank may, and is hereby authorized by Borrower, at any time and from time to time, to the fullest extent permitted by applicable Laws, and Without Notice to Borrower, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and any other Indebtedness at any time owing by Bank to, or for the credit or the account of, Borrower against any or all of the Obligations of Borrower now or hereafter existing whether or not such Obligations have matured and irrespective of whether Bank has exercised any other rights that it has or may have with respect to such Obligations, including without limitation any acceleration rights. The aforesaid right of set-off may be exercised by Bank against Borrower or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of the creditors, receiver, or execution, judgment or attachment creditor of Borrower, or such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by Bank prior to the making, filing or issuance, or service upon Bank of, or of notice of, any such petition; assignment for the benefit of creditors; appointment or application for the appointment of a receiver; or issuance of execution, subpoena, order or warrant. Bank agrees to promptly notify Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of Bank under this Section are in addition to the other rights and remedies (including, without limitation, other rights of set-off) which Bank may have. 8.7 No Limitation on Rights and Remedies. The enumeration of the ------------------------------------ powers, rights and remedies in this Article shall not be construed to limit the exercise thereof to such time as an Event of Default occurs if, under applicable Law or any other provision of this Agreement or any other Loan Document, Bank has any of such powers, rights and remedies regardless of whether an Event of Default has occurred, and any limitation contained herein or in any of the other Loan Documents as to Bank's exercise of any power, right or remedy for a period of time only during the continuance of an Event of Default shall only be applicable at such time as Bank shall have actual knowledge that such Event of Default is no longer continuing and for a reasonable time thereafter as may be necessary for Bank to cease the exercise of such powers, rights and remedies (it being expressly understood and agreed that until such time as Bank shall obtain such knowledge and after the expiration of such reasonable time, Bank shall have no liability whatsoever for the commencement of or continuing exercise of any such power, right or remedy). 8.8 Application of Proceeds. Except as otherwise expressly required to ----------------------- the contrary by applicable Law or any other Loan Document, the net cash proceeds resulting from the exercise of any of the rights and remedies of Bank under this Agreement, after deducting all charges, expenses, costs and attorneys' fees relating thereto, shall be applied by Bank to the payment of the Obligations, whether due or to become due, in such order and in such proportions as Bank may elect; and Borrower shall remain liable to Bank for any deficiency. 8.9 Attorney-in-Fact. Borrower hereby appoints Bank (and Bank's ---------------- agents) as Borrower's attorney-in-fact for the purpose of and with the right and power to do all acts and things necessary, 31 in Bank's reasonable discretion, to fulfill Borrower's obligations under this Agreement and the EDJ Lease, and to otherwise carry out the purposes of this Agreement and the EDJ Lease; provided, however, that Bank agrees not to exercise such rights and powers until the occurrence of an Event of Default. ARTICLE IX. 9. MISCELLANEOUS 9.1 Termination of Bank's Lien. This Agreement and any Lien granted to -------------------------- Bank under this Agreement or any other Loan Document in the Collateral will not be terminated until one of Bank's officers signs a written termination or satisfaction agreement to such effect. Even if all of the Obligations owing to Bank at any time should be paid, Bank's Lien will continue to secure any amount Borrower should later owe Bank pursuant to this Agreement or the other Loan Documents until the written termination or satisfaction agreement referred to above has been executed by Bank. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements, covenants, obligations, duties and Obligations of any Borrower Party or the powers, rights, and remedies of Bank under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination. Except as may otherwise expressly be provided herein to the contrary, in no event shall Bank be obligated to terminate any Lien granted to Bank under this Agreement or any other Loan Document or return or release the Collateral or any portion thereof to Borrower (a) until indefeasible payment in full of the Obligations, or (b) if Bank is obligated to extend credit to Borrower under this Agreement. 9.2 Construction. The provisions of this Agreement shall be in ------------ addition to those of any other Loan Document and any guaranty, pledge or security agreement, mortgage, deed of trust, security deed, note or other evidence of liability given by Borrower to Bank to or for the benefit of, all of which shall be construed as complementary to each other, and all existing liabilities and obligations of Borrower to Bank and any Liens heretofore granted to or for the benefit of Bank shall, except and only to the extent expressly provided herein to the contrary, remain in full force and effect, and shall not be released, impaired, diminished, or in any other way modified or amended as a result of the execution and delivery of this Agreement or any other Loan Document or by the agreements and undertaking of Borrower contained herein and therein. Nothing herein contained shall prevent Bank from enforcing any or all other notes, guaranties, pledges or security agreements, mortgages, deeds of trust, or security deeds in accordance with their respective terms. In the event of a conflict between any of the provisions of this Agreement, the Note, any one or more of the Security Documents or any other Loan Document, the provisions most favorable to Bank shall control. 9.3 Further Assurance. From time to time, Borrower will execute and ----------------- deliver to Bank such additional documents and will provide such additional information as Bank may reasonably require to carry out the terms of this Agreement and be informed of the status and affairs of Borrower. 9.4 Indemnity. --------- 32 (A) Borrower hereby agrees to indemnify Bank and its officers, directors, agents, and attorneys against, and to hold Bank and all such other Persons harmless from all Indemnified Losses resulting from any representation or warranty made by any Borrower Party or on Borrower's behalf pursuant to this Agreement having been false when made, or resulting from Borrower's breach of any of the covenants set forth in this Agreement, which indemnification is in addition to, and not in derogation of, any statutory, equitable, or common law right or remedy Bank may have for breach of representation, warranty, statement or covenant or otherwise may have under any of the Loan Documents. This agreement of indemnity shall be a continuing agreement and shall survive payment of the Loan and termination of this Agreement. (B) With respect to any claim for indemnification under paragraph (A) or any matter with respect to which a claim may arise, if such claim or matter involves a claim of any Person other than Borrower and Bank (a "Third Party Claim"), then Borrower shall have the right, at its sole cost and expense, and through counsel of its choice (which counsel shall be reasonably satisfactory to Bank), to litigate, defend, settle or otherwise attempt to resolve such Third Party Claim; provided, however, that if in Bank's reasonable judgment a conflict of interest may exist between Bank and Borrower with respect to such Third Party Claim, then Bank shall be entitled to select counsel of its own choosing, reasonably satisfactory to Borrower, in which event Borrower shall be obligated to pay the fees and expenses of such counsel. If Borrower fails or refuses to provide a defense to any Third Party Claim, then Bank shall have the right to undertake the defense, compromise or settlement of such Third Party Claim, through counsel of its choice, on behalf of and for the account and at the risk of Borrower, and Borrower shall be obligated to pay the costs, expenses and attorney's fees incurred by Bank in connection with such Third Party Claim. In any event, Borrower and Bank shall fully cooperate with each other and their respective counsel in connection with any such litigation, defense, settlement or other attempted resolution. 9.5 Bank's Consent. Except where otherwise expressly provided in the -------------- Loan Documents, in any instance where the approval, consent, or the exercise of Bank's judgment or discretion is required or permitted, the granting or denial of such approval or consent and the exercise of such judgment or discretion shall be (a) within the sole discretion of Bank; and (b) deemed to have been given only by a specific writing intended for the purpose given and executed by Bank. 9.6 Enforcement and Waiver by Bank. Bank shall have the right at all ------------------------------ times to enforce the provisions of this Agreement and each of other Loan Documents in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of Bank in refraining from so doing at any time or times. The failure of Bank at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. All rights and remedies of Bank are cumulative and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy. 9.7 No Representation, Assumption, or Duty. Nothing, including any -------------------------------------- Advance or acceptance of any document or instrument, shall be construed as a representation or warranty, express or implied, to any Person by Bank. Any inspection or audit of the Collateral or the Records of Borrower, or the procuring of documents and financial and other information, by or on behalf of 33 Bank shall be for Bank's protection only, and shall not constitute any assumption of responsibility by Bank with respect thereto or relieve Borrower of any of Borrower's obligations. 9.8 Expenses of Bank. Borrower will, on demand, reimburse Bank for all ---------------- expenses incurred by Bank in connection with the preparation, administration, amendment, modification or enforcement of this Agreement and the other Loan Documents and/or in the collection of any amounts owing from Borrower or any other Person to Bank under this Agreement or any other Loan Document and, until so paid, the amount of such expenses shall be added to and become part of the amount of the Obligations. 9.9 Attorneys' Fees. If at any time or times hereafter Bank employs --------------- counsel to advise or provide other representation with respect to this Agreement, any Loan Document, or any other agreement, document or instrument heretofore, now or hereafter executed by Borrower and delivered to Bank with respect to the Obligations, or to commence, defend or intervene, file a petition, complaint, answer, motion or other pleadings or to take any other action in or with respect to any suit or proceeding relating to this Agreement, any Loan Document, or any other agreement, instrument or document heretofore, now or hereafter executed by Borrower and delivered to Bank with respect to the Obligations, or to represent Bank in any litigation with respect to the affairs of Borrower, or to enforce any rights of Bank or obligations of Borrower or any other Person which may be obligated to Bank by virtue of this Agreement, any Loan Document, or any other agreement, document or instrument heretofore, now or hereafter delivered to Bank by or for the benefit of Borrower with respect to the Obligations, or to collect from Borrower any amounts owing hereunder, then in any such event, all of the reasonable attorneys' fees incurred by Bank arising from such services and any expenses, costs and charges relating thereto shall constitute additional obligations of Borrower payable on demand and, until so paid, shall be added to and become part of the Obligations. 9.10 Exclusiveness. This Agreement and the other Loan Documents are ------------- made for the sole protection of the Borrower Parties, Bank, and Bank's successors and assigns, and no other Person shall have any right of action hereunder. 9.11 Waiver and Release by Borrower. To the extent not prohibited by ------------------------------ applicable Law, unless and only to the extent as may be expressly provided for herein or in any other Loan Document to the contrary, Borrower (A) waives protest of all commercial paper at any time held by Bank on which Borrower is any way liable; (B) waives notice of acceleration and of intention to accelerate; (C) waives notice and opportunity to be heard, after acceleration, before exercise by Bank of the remedies of self-help, set-off, or of other summary procedures permitted by any applicable Laws or by any agreement with Borrower, and except where required hereby or by any applicable Laws which requirement cannot be waived, notice of any other action taken by Bank; and (D) releases Bank and its officers, attorneys, agents and employees from all claims for loss or damage caused by any act or omission on the part of any of them except willful misconduct. 9.12 Limitation on Waiver of Notice, Etc. Notwithstanding any provision ------------------------------------ of this Agreement to the contrary, to the extent that any applicable Law expressly limits any waiver of any right contained herein or in any other Loan Document (including any waiver of any notice or other demand), such waiver shall be ineffective to such extent. 34 9.13 Additional Costs. In the event that any applicable Law now or ---------------- hereafter in effect and whether or not presently applicable to Bank, or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Bank with any guideline, request or directive of any such Governmental Authority (whether or not having the force of law), shall (i) affect the basis of taxation of payments to Bank of any amounts payable by Borrower under this Agreement (other than taxes imposed on the overall net income of Bank by the Jurisdiction in which Bank has its principal office), or (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank, or (iii) impose any other condition with respect to this Agreement, the Note or the Loan, or (iv) affect the amount of capital required or expected to be maintained by Bank, and the result of any of the foregoing is to increase the cost to Bank of making, funding or maintaining the Loan or to reduce the amount of any amount receivable by Bank thereon, then Borrower shall pay to Bank from time to time, upon request by Bank, additional amounts sufficient to compensate Bank for such increased cost or reduced amount receivable to the extent Bank is not compensated therefor in the computation of the interest rate applicable to the Loan. A statement as to the amount of such increased cost or reduced amount receivable, prepared in good faith and in reasonable detail by Bank and submitted by Bank to Borrower, shall be conclusive and binding for all purposes absent manifest error in computation. 9.14 Illegality and Impossibility. In the event that any applicable Law ---------------------------- now or hereafter in effect and whether or not presently applicable to Bank, or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Bank with any guideline, request or directive of such Governmental Authority (whether or not having the force of law), including without limitation exchange controls, shall make it unlawful or impossible for Bank to maintain the Loan under this Agreement, Borrower shall upon receipt of notice thereof from Bank repay in full the then outstanding principal amount of the Loan, together with all accrued interest thereon to the date of payment and all amounts owing to Bank, (a) on the last day of the then current interest period applicable to the Loan if Bank may lawfully continue to maintain the Loan to such day, or (b) immediately if Bank may not continue to maintain the Loan to such day. 9.15 Participation. Notwithstanding any other provision of this ------------- Agreement, Borrower understands and agrees that Bank may enter into participation or other agreements with Participants whereby Bank will allocate certain percentages of its commitment to them and/or assign all or a portion of its rights and obligations under this Agreement. Borrower acknowledges and agrees that, for the convenience of all parties, this Agreement is being entered into with Bank only and that its obligations under this Agreement are undertaken for the benefit of, and as an inducement to each such Participant as well as Bank, and Borrower hereby agrees that, at Bank's election and if consistent with the terms of any such participation or other agreement, upon notice from Bank to Borrower, each such Participant shall have the same rights and/or obligations as if it were an original party to this Agreement, subject only to any contrary provision in such participation or other agreement, and Borrower hereby grants to each such Participant, the right to set off deposit accounts maintained by Borrower with such Participant. Borrower authorizes Bank to disclose financial and other information regarding Borrower to Participants and potential Participants. Notwithstanding the preceding, Bank agrees (i) not to enter into any participation or other agreements with Participants unless Bank gives at least thirty (30) days prior written notice to Borrower of the same, and 35 Borrower reserves the right, by written notice to Bank within such 30-day period, to disapprove any such participation if such participation is with any financial institution then extending credit to Borrower, and (ii) unless Borrower agrees to the contrary, Borrower will only be required to continue to deal with Bank and not any Participant. 9.16 Binding Effect, Assignment. This Agreement shall inure to the -------------------------- benefit of, and shall be binding upon, the respective successors and permitted assigns of the parties hereto. Borrower has no right to assign any of its rights or obligations hereunder without the prior written consent of Bank. 9.17 Entire Agreement, Amendments. This Agreement, including the ---------------------------- Exhibits hereto, all of which are hereby incorporated herein by reference, and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties, and may be amended only by a writing signed on behalf of each party. 9.18 Severability. If any provision of this Agreement, the Note, or any ------------ of the other Loan Documents shall be held invalid under any applicable Laws, such invalidity shall not affect any other provision of this Agreement or such other instrument or agreement that can be given effect without the invalid provision, and, to this end, the provisions hereof are severable. 9.19 Headings. The section and paragraph headings hereof are inserted -------- for convenience of reference only, and shall not alter, define, or be used in construing the text of such sections and paragraphs. 9.20 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. 9.21 Seal. This Agreement is intended to take effect as an instrument ---- under seal. ARTICLE X. 10. SUBMISSION TO JURISDICTION, GOVERNING LAW AND NOTICES 10.1 Notices. Any notices or consents required or permitted by this ------- Agreement shall be in writing and shall be deemed delivered if delivered in person or if sent by certified mail, postage prepaid, return receipt requested, or telegraph, or facsimile, as follows, unless such address is changed by written notice hereunder: (A) If to Borrower: -------------- EDJ Leasing Co., L.P. 201 Progress Parkway St. Louis, Missouri 63043-3042 Attention: Mr. Ken Schutte Facsimile #(314) 515-4969 36 with a copy to: -------------- M. Spencer Garland, Esq. Greensfelder, Hemker & Gale, P.C. 2000 Equitable Building, 10 South Broadway St. Louis, Missouri 63102 Facsimile #(314) 421-0831 (B) If to Guarantor: --------------- The Jones Financial Companies, L.L.L.P. 201 Progress Parkway St. Louis, Missouri 63043-3042 Attention: Mr. Ken Schutte Facsimile #(314) 515-4969 with a copy to: -------------- M. Spencer Garland, Esq. Greensfelder, Hemker & Gale, P.C. 2000 Equitable Building, 10 South Broadway St. Louis, Missouri 63102 Facsimile #(314) 421-0831 (C) If to Bank: ---------- SouthTrust Bank 230 Fourth Avenue North Nashville, Tennessee 37219 Attention: Regional Corporate Banking Department Facsimile #(615) 880-4004 with a copy to: -------------- Ray D. Gibbons, Esq. Gordon, Silberman, Wiggins & Childs, P.C. 1400 South Trust Tower Birmingham, Alabama 35203 Facsimile #(205) 254-1500 10.2 Governing Law. This Agreement is entered into and performable in ------------- Jefferson County, Alabama, and the substantive Laws, without giving effect to principles of conflict of laws, of the United States and the State of Alabama shall govern the construction of this Agreement and the documents executed and delivered pursuant hereto, and the rights and remedies of the parties hereto and thereto, except to the extent that the location of any Collateral in a state or Jurisdiction other than Alabama requires that the perfection of Bank's Lien hereunder, and the enforcement of certain of 37 Bank's remedies with respect to the Collateral, be governed by the Laws of such other state or Jurisdiction. 10.3 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL, ETC. ----------------------------------------------------- (A) TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: (1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF ALABAMA, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ALABAMA, AND APPELLATE COURTS FROM ANY THEREOF; (2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH IN THIS AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH BANK SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; AND (4) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION. (B) TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, BORROWER AND BANK HEREBY: (1) IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT, THE NOTE, ANY OF THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH; AND (2) AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, 38 VOLUNTARY AND BARGAINED FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 39 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized representatives as of the day and year first above written. BORROWER: EDJ LEASING CO., L.P., a Missouri limited partnership By: LHC, INC., a Missouri corporation, its General Partner By: /s/ Steven Novik --------------------------------- Its: Treasurer -------------------------------- BANK: SOUTHTRUST BANK By: /s/ Marcy A. Harris -------------------------------------- Its: Vice President ------------------------------------- STATE OF Missouri ) ----------- COUNTY OF St. Louis ) ---------- I, the undersigned, a Notary Public in and for said County in said State, hereby certify that Steven Novik, whose name as Treasurer of LHC, ------------ --------- Inc., a Missouri corporation, in its capacity as General Partner of EDJ Leasing Co., L.P., a Missouri limited partnership, is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of said instrument, he/she, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation, in its capacity as general partner as aforesaid. Given under my hand and official seal, this the 27th day of August, ---- 2001. /s/ Valerie E. Evans (SEAL) ---------------------- Notary Public My Commission Expires: March 3, 2004 -------------------- ----------------------------------- VALERIE E. EVANS Notary Public - Notary Seal STATE OF MISSOURI ST. LOUIS COUNTY MY COMMISSION EXP. MAR. 3, 2004 ----------------------------------- 40 STATE OF TENNESSEE ----------- ) COUNTY OF DAVIDSON ) ---------- I, the undersigned, a Notary Public in and for said County in said State, hereby certify that Marcy Harris, whose name as Vice President of ------------ -------------- SouthTrust Bank, an Alabama banking corporation, is signed to the foregoing instrument, and who is known to me, acknowledged before me that, being informed of the contents of such instrument, he/she, as such officer and with full authority, executed the same voluntarily for and as the act of said banking corporation. Given under my hand and official seal, this the 29th day of August, 2001. ---- /s/ Phyllis Michael (SEAL) ---------------------- Notary Public My Commission Expires: 5/29/05 ------------------- 41 SCHEDULE 6.4 LIST OF NAMES USED BY BORROWER IN LAST SIX YEARS EDJ Leasing Co., L.P. 42 SCHEDULE 7.6 BORROWER'S PRINCIPAL PLACE OF BUSINESS/LOCATION OF RECORDS EDJ Leasing Co., L.P. 201 Progress Parkway St. Louis, Missouri 63043 43 EX-10.22 9 exh10p22.txt MASTER LEASE AGREEMENT Exhibit 10.22 ------------- MASTER LEASE ------------ MASTER LEASE NUMBER: __________ THIS MASTER LEASE is made as of August 27, 2001, by and between --------- EDJ LEASING CO., L.P., a Missouri limited partnership, 12555 Manchester Road, St. Louis, Missouri 63131 ("Lessor") and EDWARD D. JONES & CO., L.P., a Missouri limited partnership, 12555 Manchester Road, St. Louis, Missouri 63131 ("Lessee"). WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease from Lessor, certain equipment pursuant to the provisions hereof and applicable lease schedules ("Lease Schedules") which shall be executed by the parties from time to time in the form attached hereto as Exhibit A, and which shall be made a part hereof. NOW, THEREFORE, in consideration of the premises, the parties, intending to be legally bound, agree as follows: 1. LEASE. Lessor hereby agrees to lease to Lessee, and Lessee hereby agrees to lease from Lessor, the equipment ("Equipment") described in Lease Schedules which shall be executed between the parties from time to time, and which shall be attached to and become a part of this Master Lease. The provisions of this Master Lease and the Lease Schedules shall constitute the entire agreement between the parties with regard to the subject matter hereof and shall supersede all prior negotiations, agreements, and understandings, whether oral or written, unless specifically incorporated by reference. The lease of Equipment described in each particular Lease Schedule shall be considered a separate Lease pursuant to the terms of the Master Lease and each Lease Schedule the same as if a single lease containing such terms had been executed covering such items; except that, any provision of any Lease Schedule shall supersede any conflicting provision of this Master Lease. 2. TERM. The term of the lease with respect to the Equipment listed on a Lease Schedule shall begin on the date such Equipment is accepted by Lessee and shall continue for the number of consecutive months from the "Rent Commencement Date" shown in the related Lease Schedule (the "Initial Term") unless earlier terminated as provided herein. Any advance rentals shall not be refundable if this Master Lease with respect to any or all Lease Schedules is duly terminated by Lessor. 3. RENT. Lessee shall pay as rent for the initial term of this Master Lease as to each Lease Schedule, the amount reflected in each Lease Schedule as Base Rent. Base Rent installments shall be payable monthly in arrears, the first such payment being due on the Rent Commencement Date, or such later date as Lessor designates in writing, and subsequent payments due on the same day of each successive month thereafter during the term hereof. (a) TAXES. As additional rent, Lessee shall pay all sales, use, excise, personal property, stamp, documentary and ad valorem taxes, license and registration fees, assessments, fines, penalties and similar charges imposed on the ownership, possession or use of the Equipment during the term of this Master Lease as to any Lease Schedule as and when due, and shall pay all taxes (except Lessor's Federal or State net income taxes) imposed on Lessor or Lessee with respect to the rental payments hereunder. Lessee shall reimburse Lessor upon demand for all taxes paid by or advanced by Lessor. Lessee shall file all returns required therefor and furnish copies to Lessor. (b) ADJUSTMENTS IN RENT. Base Rent reflected in all Lease Schedules shall increase or decrease with changes in the Initial Index Rate in the manner described in the applicable Lease Schedule. (c) NET LEASE. This Master Lease is a net lease and all payments of Base Rent and additional rent hereunder are net to Lessor. 4. DISCLAIMER OF WARRANTIES AND WAIVER OF DEFENSES. (a) NO WARRANTIES BY LESSOR. LESSOR, BEING NEITHER THE MANUFACTURER, NOR SUPPLIER, NOR A DEALER IN THE EQUIPMENT, MAKES NO WARRANTY AND HEREBY DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, TO ANYONE, AS TO THE FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, DESIGN, CONDITION, CAPACITY, PERFORMANCE OR ANY OTHER ASPECT OF THE EQUIPMENT OR ITS MATERIAL OR WORKMANSHIP. Lessor further disclaims any liability for loss, damages, or injury to Lessee or third parties as a result of any defects, latent or otherwise, in the Equipment whether arising from Lessor's negligence or application of the laws of strict liability. As to Lessor, Lessee leases the Equipment "as is." Lessee has selected the supplier of the Equipment and acknowledges that Lessor has not recommended the supplier. Lessor shall have no obligation to install, maintain, erect, test, adjust, or service the Equipment. Lessee agrees to install, maintain, and service the Equipment or cause the same to be performed by qualified third parties. If the Equipment is unsatisfactory for any reason, Lessee shall make claim on account thereof solely against the supplier, and any of the supplier's vendors, and shall nevertheless pay Lessor all rent payable under the Lease. (b) ASSIGNMENT FOR BREACH OF WARRANTY. Lessor hereby assigns to Lessee, solely for the purpose of prosecuting such a claim, all of the rights which Lessor may have against any supplier and any of the suppliers' vendors for breach of warranty or other representations respecting the Equipment. (c) LESSOR'S ASSIGNMENT, WAIVER OF DEFENSES. Lessee acknowledges Lessor's intent to assign or pledge this Master Lease and/or the rentals due hereunder and Lessee agrees that no assignee or pledgee of Lessor shall be bound to perform any duty, covenant or condition, or warranty (express or implied) attributable to Lessor and Lessee further agrees not to raise any claim or defense arising out of this Master Lease or otherwise against Lessor as a defense, counterclaim, or offset to any action by any assignee or pledgee for the unpaid balance of rentals due under the Master Lease or for possession of the Equipment. (d) WAIVER OF INDIRECT DAMAGES. Regardless of cause, Lessee shall not assert and Lessor shall not be responsible for any claim whatsoever against Lessor for loss of anticipatory profits or any other indirect, special, punitive or consequential damages, nor shall 2 Lessor be responsible for any damages or costs which may be assessed against Lessee in any action for infringement of any intellectual property rights of third parties. Lessor makes no warranty as to the treatment of this Master Lease, for tax or accounting purposes. (e) AGENCY DISCLAIMER. Notwithstanding any fees that may be paid by Lessor to a supplier or any agent of a supplier, Lessee acknowledges that no supplier or any agent of a supplier is or shall be deemed an agent of Lessor or is authorized to waive or alter any term or condition of this Master Lease. 5. NONCANCELLABLE LEASE. NEITHER THIS MASTER LEASE NOR ANY LEASE SCHEDULE CAN BE CANCELLED BY LESSEE DURING THE TERM PROVIDED IN THIS MASTER LEASE. LESSEE'S OBLIGATION TO PAY BASE RENT AND ADDITIONAL RENT ARE ABSOLUTE. 6. TITLE, PERSONAL PROPERTY. The Equipment is, and shall at all times remain, Lessor's property, and Lessee shall have no right, title, or interest therein, except as herein set forth. If Lessor supplies Lessee with labels indicating that the Equipment is owned by Lessor, Lessee shall affix such labels to and keep them in a prominent place on the Equipment. Lessee shall at its expense protect and defend Lessor's title against all persons claiming against or through Lessee, at all times keeping the Equipment free from any legal process or encumbrance whatsoever including but not limited to liens, attachments, levies and executions, and shall give Lessor immediate written notice thereof and shall indemnify Lessor from any loss caused thereby. Lessee shall execute and deliver to Lessor, upon Lessor's request, such further instruments and assurances as Lessor deems necessary or advisable for the confirmation or perfection of Lessor's rights hereunder. The Equipment is, and shall at all times be and remain, personal property notwithstanding that the Equipment or any part thereof may now be, or hereafter become, in any manner affixed or attached to real property or any improvements thereon. 7. CARE, USE AND LOCATION. Lessee, at its own cost and expense, shall maintain and keep the Equipment in good repair, condition and working order, and shall use the Equipment lawfully. At all times during the term of any Lease Schedule or extensions thereof, the Equipment shall be located at any one or more of the locations listed on Exhibit B attached hereto; provided, however, Lessee shall have the right, at any time and from time to time, upon at least forty (40) days advance written notice, to move any item of Equipment to any of Lessee's various locations. Lessor shall have the right to inspect the Equipment where it is located at any reasonable time. 8. REDELIVERY. Upon expiration or earlier termination of this Master Lease as to any Lease Schedule, Lessee shall return the Equipment listed in that Lease Schedule, freight prepaid, to Lessor in good repair, condition, and working order, ordinary wear and tear resulting from proper use thereof only excepted, in a manner and to a location reasonably designated by Lessor. If, upon expiration or termination of this Master Lease as to any Lease Schedule the Lessee does not immediately return the Equipment listed in that Lease Schedule to the Lessor, it shall continue to be held and leased hereunder, and this Master Lease shall thereupon be extended indefinitely as to term at the same monthly rental provided in that Lease Schedule, subject to the 3 right of either party to terminate the Master Lease as to that Lease Schedule upon 90 days' written notice, whereupon the Lessee shall forthwith deliver the Equipment to the Lessor as set forth in this paragraph. 9. OPTION TO PURCHASE. At the expiration of the term set forth in each applicable Lease Schedule, notwithstanding the Redelivery provision set forth in paragraph 8 hereof, Lessor hereby grants to Lessee the option to purchase all, but not less than all, Equipment listed on such Lease Schedule. To exercise such option as to Equipment listed in an applicable Lease Schedule, Lessee, at least thirty (30) days prior to the expiration of this Master Lease in respect of such Lease Schedule, shall advise Lessor in writing of its intent to purchase all, but not less than all, of the Equipment listed therein. Lessee shall pay, as the purchase price for such Equipment ("Purchase Price"), cash in an amount equal to the then fair market value of the Equipment, which value Lessor and Lessee agree will not be less than the Minimum Option Percentage times the Acquisition Value, nor more than the Maximum Option Percentage time the Acquisition Value, as such terms are defined in the applicable Lease Schedule and the products of which are reflected as the Minimum Option Value and Maximum Value on the applicable Lease Schedule. Fair market value shall be determined by Lessor in good faith. In the event Lessee does not agree with the Lessor's calculation of fair market value, Lessee may, within five (5) days of Lessor's determination, request, in writing, that the fair market value be determined as Lessee's cost by a qualified independent appraiser who is not the manufacturer of the Equipment and is chosen by Lessee. The decision of the appraiser shall be binding on both parties; provided, however, Lessee shall not be required to pay greater than the Maximum Option Value nor permitted to pay less than the Minimum Option Value. Such purchase shall be closed within thirty (30) days of the date of final determination of the Equipment's fair market value at Lessor's office or as otherwise agreed by the parties. At closing, Lessee shall pay, in cash, the Purchase Price, any sales, use or other taxes payable in respect of such purchase and all accrued and unpaid Base Rent or additional rent. Upon such payment, the Equipment listed in the applied Lease Schedule shall be deemed transferred to Lessee at its then location. 10. RISK OF LOSS. Lessee shall bear all risks of loss of and damage to the Equipment from any cause; occurrence of such loss or damage shall not relieve Lessee of any obligation hereunder. In the event of loss or damage, Lessee, at Lessor's option, shall: (a) place the damaged Equipment in good repair, condition and working order; or (b) replace lost or damaged Equipment with like Equipment in good repair, condition and working order with documentation creating clear title thereto in Lessor; or (c) pay to Lessor the then unpaid balances of the aggregate rent reserved under the Master Lease and applicable Lease Schedule plus the value of Lessor's residual interest in the Equipment (based on the Minimum Option Value). Upon Lessor's receipt of such payment, Lessee and/or Lessee's insurer shall be entitled to Lessor's interest in said item for salvage purposes, in its then condition and location, as is, without warranty, express or implied. 11. INSURANCE. Lessee shall keep the Equipment insured against all risks of loss or damage from every cause whatsoever for not less than the full replacement value thereof, and shall carry public liability and property damage insurance covering the Equipment and its use. All such insurance shall be in form and amount reasonably acceptable to Lessor and consistent 4 with any requirements imposed on Lessor to by its lenders. The foregoing notwithstanding, Lessee may elect to self-insure in accordance with its customary business practices in lieu of obtaining the insurance required hereunder. If Lessee self-insures, Lessee shall so notify Lessor, and, in any event, Lessor shall be deemed an additional insured. Insurance or self-insurance proceeds shall be applied toward the replacement, restoration or repair of the Equipment. 12. INDEMNITY. Lessee shall indemnify and hold Lessor harmless against, any and all claims, actions, suits, proceedings costs, expenses, damages, and liabilities, including attorney's fees, arising out of, connected with, or resulting from the Equipment or the Master Lease, including without limitation, the manufacture, selection, delivery, possession, use, operation, or return of the Equipment. 13. DEFAULT AND REMEDIES. If Lessee ceases doing business as a going concern, of if a petition in bankruptcy, arrangement, insolvency, or reorganization is filed by or against Lessee and is not dismissed within sixty (60) days, or if Lessee makes an assignment for the benefit of creditors, or if on or prior to the expiration of thirty (30) days after written notice to Lessee from Lessor of any other breach of this Master Lease (whether monetary or non-monetary) Lessee fails to cure said breach, Lessor may exercise any one or more of the following remedies: (a) To declare the entire balance of rent hereunder discounted to present value at the Index Rate then in effect immediately due and payable as to any or all Lease Schedules of Equipment covered hereby. (b) To sue for and recover all rents, and other movies due, with respect to any or all items of Equipment listed on any or all Lease Schedules to the extent permitted by law. (c) To require Lessee to assemble all Equipment at Lessee's expense, at a place reasonably designated by Lessor. (d) Pursuant to applicable law and after demand, to remove any physical obstructions for removal of the Equipment from the place where the Equipment is located and take possession of any or all items of Equipment wherever same may be located, disconnecting, and separating all such Equipment from any other property. Lessor may, at its option, use, ship, store, repair, or lease all Equipment so removed and sell or otherwise dispose of any such Equipment at a private or public sale. Lessor may exhibit and resell the Equipment at Lessee's premises at reasonable business hours without being required to remove the Equipment. If Lessor takes possession of the Equipment, Lessor shall give Lessee credit for any sums received by Lessor from the sale or rental of the Equipment after deduction of the expenses of sale or rental and Lessor's residual interest in the Equipment. Lessee shall also be liable for and shall pay to Lessor all expenses incurred by Lessor in connection with the enforcement of any of Lessor's remedies, including all expenses of repossessing, storing, shipping, repairing, and selling the Equipment. Lessor and Lessee acknowledge the difficulty in establishing a value for the unexpired Lease term and owing to such difficulty agree that the provisions of this paragraph represent an agreed measure of damages and are not to be deemed a forfeiture or penalty. 5 If any payment is not made by Lessee within fifteen (15) days of the date due provided in any Lease Schedule, Lessee shall pay to Lessor, not later than one month thereafter, an amount calculated at the rate of five cents per one dollar of each such delayed payment, but only to the extent allowed by law. Such amount shall be payable in addition to all amounts payable by Lessee as a result of exercise of any of the remedies herein provided. All of Lessor's remedies hereunder are cumulative, are in addition to any other remedies provided for by law, and may, to the extent permitted by law, be exercised concurrently or separately. The exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy. No failure on the part of the Lessor to exercise and no delay in exercising any right or remedy shall operate as a waiver thereof or modify the terms of this Lease. 14. PERFORMANCE BY LESSOR OF LESSEE'S OBLIGATIONS. If Lessee fails to comply with any provision of this Master Lease with respect to any Lease Schedule, Lessor may effect such compliance on behalf of Lessee upon fifteen (15) days' prior written notice to Lessee. In such event, all movies expended by, and all expenses of Lessor in effecting such compliance shall be deemed to be additional rental, and shall be paid by Lessee to Lessor at the time of the next monthly payment of rent set forth in such Schedule. 15. LESSEE'S ASSIGNMENT; QUIET ENJOYMENT. Without Lessor's prior written consent which consent shall not be unreasonably withheld or delayed, Lessee shall not assign, transfer, pledge, hypothecate, or otherwise dispose of the Equipment or any interest therein. Notwithstanding any assignment by Lessor, providing Lessee is not in default hereunder, Lessee shall quietly enjoy use of the Equipment, subject to the terms and conditions of this Master Lease and all Lease Schedules. 16. NOTICES. Service of all notices under this Master Lease shall be sufficient if given personally or mailed by first class U.S. mail postage prepaid to the party involved, Attention: General Counsel, at its respective address set forth herein, or at such other address as said party may provide in writing from time to time. Any such notice mailed to said address shall be effective when deposited in the United States mail, duly addressed and with postage prepaid, or personally delivered. 17. CAPTIONS. Captions are used in this Master Lease for convenience only, and are not intended to be used in construction or interpretation of this Master Lease. 18. TIME OF ESSENCE. Time is of the essence in this Master Lease. 19. ENTIRE AGREEMENT; MODIFICATION. This Master Lease, together with any Lease Schedules executed by the parties and Exhibits A and B, contains the entire agreement between the Lessor and Lessee. No modification of this Master Lease, or any Lease Schedule, shall be effective unless in writing and executed by an executive officer of the Lessor. 20. NON-WAIVER. No delay or failure by the Lessor or Lessee to exercise any right under this Master Lease, and no partial or single exercise of that right, shall constitute a waiver 6 of that or any other right, unless otherwise expressly provided herein. A waiver of default shall not be a waiver of any other or subsequent default. 21. GOVERNING LAW. This Master Lease shall be construed in accordance with and governed by the laws of the State of Missouri. 22. COUNTERPARTS. This Master Lease may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 23. BINDING EFFECT. The provisions of this Master Lease shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legatees, personal representatives, successors, and assigns. IN WITNESS WHEREOF, this Master Lease has been executed as of the day and year first above written. LESSOR: LESSEE: EDJ LEASING CO., L.P. EDWARD D. JONES & CO., L.P. BY: LHC, INC., BY: EDJ HOLDING COMPANY, INC. GENERAL PARTNER GENERAL PARTNER By: /s/ Steven Novik By: /s/ Lawrence R. Sobol -------------------------- --------------------------------- Name: Steven Novik Name: Lawrence R. Sobol ------------------------ ------------------------------- Title: Treasurer Title: General Counsel ----------------------- ------------------------------ 7 EX-10.23 10 exh10p23.txt MASTER AGREEMENT Exhibit 10.23 ------------- ============================================================================== MASTER AGREEMENT Dated as of September 18, 2001 among EDWARD D. JONES & CO., L.P., as Lessee, Construction Agent and Guarantor, ATLANTIC FINANCIAL GROUP, LTD., (registered to do business in Missouri as Atlantic Financial Group, L.P.) as Lessor, SUNTRUST BANK AND CERTAIN FINANCIAL INSTITUTIONS PARTIES HERETO, as Lenders, and SUNTRUST BANK, as Agent and joined in by THE JONES FINANCIAL COMPANIES, L.L.L.P. ============================================================================== TABLE OF CONTENTS ----------------- PAGE ---- ARTICLE I DEFINITIONS; INTERPRETATION ....................................... 1 ARTICLE II ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS; NATURE OF TRANSACTION ............................................................ 2 SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease ............... 2 SECTION 2.2 Fundings of Purchase Price, Development Costs and Construction Costs ........................................................ 2 SECTION 2.3 Funded Amounts and Interest and Yield Thereon; Facility Fee; Additional Fees; Bond Trustee's Fee .................................. 4 SECTION 2.4 Nature of Transaction ......................................... 6 SECTION 2.5 Amounts Due Under Lease ....................................... 6 ARTICLE III CONDITIONS PRECEDENT; DOCUMENTS ................................. 7 SECTION 3.1 Conditions to the Obligations of the Funding Parties on the Closing Date .......................................................... 7 SECTION 3.2 Additional Conditions for the Closing Date ................... 12 SECTION 3.3 Conditions to the Obligations of Lessee ...................... 14 SECTION 3.4 Conditions to the Obligations of the Funding Parties on each Funding Date ............................................................. 14 SECTION 3.5 Completion Date Conditions ................................... 15 ARTICLE IV REPRESENTATIONS ................................................. 17 SECTION 4.1 Representations of Lessee .................................... 17 SECTION 4.2 Survival of Representations and Effect of Fundings ........... 30 SECTION 4.3 Representations of the Lessor ................................ 31 SECTION 4.4 Representations of each Lender ............................... 33 ARTICLE V COVENANTS OF LESSEE, JFC AND LESSOR .............................. 33 SECTION 5.1 Affirmative Covenants ........................................ 33 SECTION 5.2 Additional Covenants ......................................... 45 SECTION 5.3 Further Assurances ........................................... 52 SECTION 5.4 Additional Required Appraisals ............................... 53 SECTION 5.5 Lessor's Covenants ........................................... 53 ARTICLE VI TRANSFERS BY LESSOR AND LENDERS ................................. 55 SECTION 6.1 Lessor Transfers ............................................. 55 SECTION 6.2 Lender Transfers ............................................. 55 ARTICLE VII INDEMNIFICATION ................................................ 56 SECTION 7.1 General Indemnification ...................................... 56 SECTION 7.2 Environmental Indemnity ...................................... 58 SECTION 7.3 Proceedings in Respect of Claims ............................. 60 SECTION 7.4 General Tax Indemnity ........................................ 61 SECTION 7.5 Increased Costs, etc. ........................................ 67 SECTION 7.6 End of Term Indemnity ........................................ 71 ARTICLE VIII MISCELLANEOUS ................................................. 72 SECTION 8.1 Survival of Agreements ....................................... 72 SECTION 8.2 Notices ...................................................... 72 SECTION 8.3 Counterparts ................................................. 73 SECTION 8.4 Amendments ................................................... 73 SECTION 8.5 Headings, etc. ............................................... 74 SECTION 8.6 Parties in Interest .......................................... 74 SECTION 8.7 GOVERNING LAW ................................................ 74 SECTION 8.8 Expenses ..................................................... 74 SECTION 8.9 Severability ................................................. 75 SECTION 8.10 Liabilities of the Funding Parties .......................... 75 SECTION 8.11 Submission to Jurisdiction; Waivers ......................... 75 SECTION 8.12 Liabilities of the Agent .................................... 76 SECTION 8.13 Role of SunTrust Equitable Securities Corporation ........... 76 APPENDIX A Definitions and Interpretation SCHEDULES SCHEDULE 2.2 Amount of Each Funding Party's Commitment SCHEDULE 4.1(a)(i) Indebtedness of Lessee SCHEDULE 4.1(a)(ii) Subsidiaries SCHEDULE 4.1(d)(v) Pending Investigations or Inquiries SCHEDULE 4.1(m) Environmental Matters SCHEDULE 4.1(u)(i) Leases SCHEDULE 5.2(a)(i) Existing Permitted Liens SCHEDULE 5.2(a)(xiv) Existing Options, Etc. SCHEDULE 5.2(d) Contingent Obligations SCHEDULE 8.2 Addresses for Notices -ii- EXHIBITS EXHIBIT A Form of Funding Request EXHIBIT B Form of Assignment of Lease and Rents EXHIBIT C Form of Security Agreement and Assignment EXHIBIT D-1 Form of Mortgage EXHIBIT D-2 Form of Deed of Trust EXHIBIT E [Reserved] EXHIBIT F Form of Assignment and Acceptance Agreement EXHIBIT G-1 Form of Opinion of Counsel to Lessee and Guarantor EXHIBIT G-2 Form of Opinion of Counsel to Lessor EXHIBIT H Form of Certification of Construction Completion EXHIBIT I Form of Payment Date Notice EXHIBIT J Form of Compliance Certificate -iii- MASTER AGREEMENT THIS MASTER AGREEMENT, dated as of September 18, 2001 (as it may be amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this "Master Agreement"), is among EDWARD D. ---------------- JONES & CO., L.P. a Missouri limited partnership, in its capacity as the Lessee, the "Lessee", in its capacity as the Construction Agent, the ------ "Construction Agent," and in its capacity as Guarantor (the "Guarantor"), ------------------ --------- ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.) (the "Lessor"), ------ SUNTRUST BANK, a Georgia banking corporation, and certain financial institutions parties hereto as lenders (together with any other financial institution that becomes a party hereto as a lender, collectively referred to as "Lenders" and individually as a "Lender"), and SUNTRUST BANK, a ------- ------ Georgia banking corporation, as agent for the Lenders (in such capacity, the "Agent"), and joined in by THE JONES FINANCIAL COMPANIES, L.L.L.P., a ----- Missouri limited liability limited partnership ("JFC"). PRELIMINARY STATEMENT In accordance with the terms and provisions of this Master Agreement, the Lease, the Loan Agreement and the other Operative Documents, (i) pursuant to the Bond Lease, the Lessor has acquired a leasehold interest in the Leased Property identified by the Lessee pursuant to the Bridge Lease and is subleasing such Leased Property to the Lessee, (ii) the Lessor and the Lessee desire to restate and amend the Bridge Lease pursuant to which the Lessee will sublease the Leased Property from the Lessor, (iii) the Lessee, as Construction Agent for the Lessor, wishes to construct and equip the Building on the Land for the Lessor and, when completed, such Building shall be part of the Leased Property under the Lease, (iv) the Lessee, as agent, wishes to obtain, and the Lessor is willing to provide, funding to finance the construction and equipping of the Building, and (v) the Lessor wishes to obtain, and the Lenders are willing to provide, from time to time, financing of the construction and equipping of the Building. In consideration of the mutual agreements contained in this Master Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS; INTERPRETATION Unless the context shall otherwise require, capitalized terms used and not defined herein shall have the meanings assigned thereto in Appendix A ---------- hereto for all purposes hereof; and the rules of interpretation set forth in Appendix A hereto shall apply to this Master Agreement. - ---------- ARTICLE II ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS; NATURE OF TRANSACTION SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease. ------------------------------------------------ (a) Land. Pursuant to the letter agreement dated December 1, 2000 ---- between the Lessor and the Lessee, as amended by letter agreements dated April 12, 2001, May 8, 2001, June 28, 2001 and August 28, 2001, respectively (collectively the "Bridge Lease"), the Lessor acquired, pursuant to the Bond ------------ Lease, a leasehold interest in the Leased Property identified by the Lessee on the Closing Date and subleased the Leased Property to the Lessee, subject to the Bond Lease. Subject to the terms and conditions of this Master Agreement and the Bond Lease, (i) the Lessor and the Lessee agree to amend and restate the Bridge Lease in its entirety pursuant to the Lease, (ii) the Lessor hereby agrees to sublease the Leased Property to Lessee pursuant to the Lease, and (iii) the Lessee hereby agrees to sublease the Leased Property from the Lessor pursuant to the Lease. (b) Building. Subject to the terms and conditions of this Master -------- Agreement and the Bond Lease, from and after the Closing Date, (i) the Construction Agent agrees, pursuant to the terms of the Construction Agency Agreement, to acquire, construct and install the Building and Equipment on the Land for the Lessor prior to the Scheduled Construction Termination Date, (ii) the Lenders and the Lessor agree to fund the costs of such construction and installation (and interest and yield thereon), (iii) the Lessor shall sublease the Building, the Equipment and the Land as part of the Leased Property to the Lessee pursuant to the Lease, and (iv) the Lessee shall sublease the Building, the Equipment and the Land from the Lessor pursuant to the Lease. SECTION 2.2 Fundings of Purchase Price, Development Costs and ------------------------------------------------- Construction Costs. - ------------------- (a) Initial Funding and Payment of Purchase Price for Development ------------------------------------------------------------- Costs on Closing Date. Subject to the terms and conditions of this Master - --------------------- Agreement, on the Closing Date, each Lender shall make available to the Lessor its initial Loan in an amount equal to the product of such Lender's Commitment Percentage times the acquisition, development, transaction and closing costs (to the extent permitted to be paid with Advances hereunder) incurred by the Construction Agent, as agent, through such Closing Date, which funds the Lessor shall use, together with the Lessor's own funds in an amount equal to the product of the Lessor's Commitment Percentage times the acquisition, development, transaction and closing costs (to the extent permitted to be paid with Advances hereunder) incurred by the Construction Agent, as agent, through such Closing Date, to pay to the Construction Agent the amount of such acquisition, development, transaction and closing costs, and, subject to the Bond Lease, the Lessor shall sublease the Leased Property to the Lessee, and the Lessee shall sublease the Leased Property from the Lessor, pursuant to the Lease. -2- (b) Subsequent Fundings and Payments of Construction Costs during ------------------------------------------------------------- Construction Term. Subject to the terms and conditions of this Master - ----------------- Agreement on each Funding Date following the Closing Date until the Construction Term Expiration Date (i) each Lender shall make available to the Lessor a Loan in an amount equal to the product of such Lender's Commitment Percentage times the amount of the Funding requested by the Construction Agent for such Funding Date, which funds the Lessor hereby directs each Lender to pay over to the Construction Agent as set forth in paragraph (d), and (ii) the Lessor shall pay over to the Construction Agent - ------------- its own funds (which shall constitute a part of, and an increase in, the Lessor's Invested Amount) in an amount equal to the product of the Lessor's Commitment Percentage times the amount of the Funding requested by the Construction Agent for such Funding Date. (c) Aggregate Limits on Funded Amounts. The aggregate amount that ---------------------------------- the Funding Parties shall be committed to provide as Funded Amounts under this Master Agreement and the Loan Agreement shall not exceed the lesser of (x) the costs of acquisition and construction of the Leased Property and the development, transaction, closing and financing costs (to the extent permitted to be paid with Advances hereunder), or (y) $24,000,000 in the aggregate. The aggregate amount that any Funding Party shall be committed to fund under this Master Agreement and the Loan Agreement shall not exceed the lesser of (i) such Funding Party's Commitment and (ii) such Funding Party's Commitment Percentage of the aggregate Fundings requested under this Master Agreement. (d) Notice, Time and Place of Fundings. With respect to each ---------------------------------- Funding, the Lessee or the Construction Agent, as the case may be, shall give the Lessor and the Agent an irrevocable prior written notice not later than 11:00 a.m., Atlanta, Georgia time, at least three (3) Business Days prior to the Closing Date or other Funding Date, as the case may be, pursuant, in each case, to a Funding Request in the form of Exhibit A (a --------- "Funding Request"), specifying the Closing Date or subsequent Funding Date, --------------- as the case may be, the amount of Funding requested, whether such Funding shall be a LIBOR Advance or a Base Rate Advance or a combination thereof and the Rent Period(s) therefor. At the election of the Lessee, Funding may occur within thirty (30) days of payment of an invoice by the Lessee or the Construction Agent, provided that there shall be no more than two (2) Fundings during any month. All documents and instruments required to be delivered on the Closing Date pursuant to this Master Agreement shall be delivered at the offices of McGuireWoods LLP, One James Center, Richmond, Virginia 23219, or at such other location as may be determined by the Lessor, the Construction Agent and the Agent. Each Funding shall occur on a Business Day, and each Advance (other than the final Advance) shall be in an amount equal to $500,000 or an integral multiple of $100,000 in excess thereof. All remittances made by any Lender and the Lessor for any Funding shall be made in immediately available funds by wire transfer to or, as is directed by, the Construction Agent, not later than 12:00 noon, Atlanta, Georgia time, on the applicable Funding Date, upon satisfaction or waiver of the conditions precedent to such Funding set forth in Article III; such ----------- funds shall (1) in the case of the initial Funding on the Closing Date, be used to pay development, -3- transaction and closing costs related to such Land (to the extent permitted to be paid with Advances hereunder), and (2) in the case of each subsequent Funding, be paid to the Construction Agent for the payment or reimbursement of Construction costs incurred through such Funding Date and not previously paid or reimbursed. (e) Deemed Representation for Each Funding. Each Funding Request by -------------------------------------- a Lessee or the Construction Agent shall be deemed a reaffirmation of the Lessee's indemnity obligations in favor of the Indemnitees under the Operative Documents and a representation and warranty to the Lessor, the Agent and the Lenders that on the proposed Closing Date or Funding Date, as the case may be, (i) the amount of the Funding requested represents amounts owing in respect of the acquisition, development, transaction and closing costs (to the extent permitted to be paid with Advances hereunder) in respect of the Leased Property (in the case of the initial Funding) or amounts that are then due to third parties in respect of the Construction, or amounts paid by the Construction Agent to third parties in respect of the Construction for which the Construction Agent has not previously been reimbursed by a Funding (in the case of any Funding), (ii) no Event of Default or Potential Event of Default exists, and (iii) the representations and warranties of the Lessee and JFC set forth in Section 4.1 are true and ----------- correct in all material respects as though made on and as of such Funding Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. (f) Not Joint Obligations. Notwithstanding anything to the contrary --------------------- set forth herein or in the other Operative Documents, each Lender's and the Lessor's Commitments shall be several, and not joint. In no event shall any Funding Party be obligated to fund an amount in excess of such Funding Party's Commitment Percentage of any Funding or to fund amounts in the aggregate in excess of such Funding Party's Commitment. (g) Non-Pro Rata Fundings. Notwithstanding anything to the contrary --------------------- set forth in this Master Agreement, at the Agent's option, Fundings may be made by drawing on the Lessor's Commitment until such Commitment is fully funded before drawing on the Lenders' Commitments. In such event, when the Lessor's Commitment is fully funded, the Lenders will fund, on a pro rata basis as among themselves, 100% of the amount of the Fundings thereafter. In no event shall any Funding Party have any obligation to fund any amount hereunder in excess of the amount of such Funding Party's Commitment. SECTION 2.3 Funded Amounts and Interest and Yield Thereon; Facility ------------------------------------------------------- Fee; Additional Fees; Bond Trustee's Fee. - ---------------------------------------- (a) The Lessor's Invested Amount outstanding from time to time shall accrue yield ("Yield") at the Lessor Rate, computed using the actual ----- number of days elapsed and a 360 day year. If all or a portion of the principal amount of or yield on the Lessor's Invested Amount shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such -4- overdue amount shall, without limiting the rights of the Lessor under the Lease, to the maximum extent permitted by law, accrue yield at the Overdue Rate, from the date of nonpayment until paid in full (both before and after judgment). (b) Each Lender's Funded Amount outstanding from time to time shall accrue interest as provided in the Loan Agreement. (c) During the Construction Term, in lieu of the payment of accrued interest, on each Payment Date, each Lender's Funded Amount in respect of the Construction Land Interest shall automatically be increased by the amount of interest accrued and unpaid on the Loans pursuant to the Loan Agreement during the Rent Period ending immediately prior to such Payment Date (except to the extent that at any time such increase would cause such Lender's Funded Amount to exceed such Lender's Commitment, in which event the Lessee shall pay such excess amount to such Lender in immediately available funds on such Payment Date). Similarly, in lieu of the payment of accrued Yield, on each Payment Date, the Lessor's Invested Amount in respect of the Construction Land Interest shall automatically be increased by the amount of Yield accrued on the Lessor's Invested Amount in respect of the Leased Property during the Rent Period ending immediately prior to such Payment Date (except to the extent that at any time such increase would cause the Lessor's Invested Amount to exceed the Lessor's Commitment, in which event the Lessee shall pay such excess amount to the Lessor in immediately available funds on such Payment Date). Such increases in Funded Amounts shall occur without any disbursement of funds by the Funding Parties. (d) Three (3) Business Days prior to the last day of each Rent Period, the Lessee, as Construction Agent, shall deliver to the Lessor and the Agent a notice substantially in the form of Exhibit I (each, a "Payment --------- ------- Date Notice"), appropriately completed, specifying the allocation of the - ----------- Funded Amounts related to such Rent Period to LIBOR Advances and Base Rate Advances and the Rent Periods therefor, provided that no such allocation shall be in an amount less than $500,000. Each such Payment Date Notice shall be irrevocable. If no such notice is given, the Funded Amounts shall be allocated to a LIBOR Advance with a Rent Period of three (3) months. (e) The Lessee hereby agrees to pay to each Funding Party a facility fee for each day from the Closing Date until the Lease Termination Date equal to (i) 0.125% per annum times (ii) the amount of such Funding Party's Commitment on such day, times (iii) 1/360. Such facility fee shall be payable in arrears on each Quarterly Payment Date. During the Construction Term, in lieu of payment of the facility fee on each Quarterly Payment Date, each Lender's Funded Amount shall automatically be increased by the amount of the facility fee accrued during the three months immediately prior to such Quarterly Payment Date. (f) In addition to the facility fee referenced in subparagraph (e) above, the Lessee hereby agrees to pay on the Closing Date the structuring fee and the Lender up-front fees set forth in the Term Sheet. The Lessee hereby further agrees to pay on the Closing Date and -5- annually thereafter until the Lease Termination Date the Agent's fees and the Lessor's fees set forth in the Term Sheet (the structuring fee, the Lender up-front fees, the Agent's fees and the Lessor's fees, as set forth in the Term Sheet, being hereinafter collectively referred to as the "Additional Fees"). During the Construction Term, the proceeds of Advances may be used to pay the Additional Fees (which fees shall be included in the Construction Budget); thereafter, all such fees shall be payable by the Lessee. (g) In accordance with that certain letter agreement by and between the Lessee and the Bond Trustee dated June 26, 2001, the Lessee hereby agrees to pay to the Bond Trustee an annual trustee's fee in an amount not to exceed $4,000.00, commencing on the Closing Date and continuing thereafter on each anniversary of the Closing Date until the Lease Termination Date. SECTION 2.4 Nature of Transaction. With respect to the Leased Property, --------------------- it is the intent of the Lessee and the Funding Parties that, (i) for accounting purposes, the Lease shall be treated as an operating lease, and (ii) for federal, state and local tax purposes and for bankruptcy, commercial and regulatory law and all other purposes, the Lease shall be treated as the repayment and security provisions of a loan by the Lessor to the Lessee, that the Lessee shall be treated as the legal and beneficial owner entitled to any and all benefits of ownership of such Leased Property and that all payments of Basic Rent during the Lease Term shall be treated as payments of interest and, if applicable, principal. The Lessee and each Funding Party agree to file tax returns consistent with such intent. Nevertheless, the Lessee acknowledges and agrees that no Funding Party or any other Person has made any representations or warranties concerning the tax, financial, accounting or legal characteristics or treatment of the Operative Documents and that the Lessee has obtained and relied solely upon the advice of its own tax, accounting and legal advisors concerning the Operative Documents and the accounting, tax, financial and legal consequences of the transactions contemplated therein. SECTION 2.5 Amounts Due Under Lease. With respect to the Leased ----------------------- Property, anything else to the contrary notwithstanding, it is the intention of the Lessee and the Funding Parties that: (i) subject to clauses (ii) and (iii) below, the amount and timing of Basic Rent due and payable from time to time from the Lessee under the Lease shall be equal to the aggregate payments due and payable with respect to interest on the Loans and Yield on the Lessor's Invested Amounts on each Payment Date; (ii) if the Lessee elects the Purchase Option or becomes obligated to purchase such Leased Property under the Lease, the Funded Amounts, all interest and Yield thereon and all other obligations of the Lessee owing to the Funding Parties, shall be paid in full by the Lessee, (iii) if the Lessee properly elects the Remarketing Option, the principal amount of, and accrued interest on, the A Loans in respect of the Leased Property will be paid out of the Recourse Deficiency Amount, and the Lessee shall only be required to pay to the Lenders in respect of the principal amount of the B Loans and to the Lessor in respect of the Lessor's Invested Amounts, the proceeds of the sale of the Leased Property in accordance with Section 14.6 of the Lease; and (iv) upon ------------ an Event of Default resulting in an acceleration of the -6- Lessee's obligation to purchase the Leased Property under the Lease, the amounts then due and payable by the Lessee under the Lease shall include all amounts necessary to pay in full the Loans, and accrued interest thereon, the Lessor's Invested Amounts and accrued Yield thereon and all other obligations of the Lessee owing to the Funding Parties pursuant to the Operative Documents. ARTICLE III CONDITIONS PRECEDENT; DOCUMENTS SECTION 3.1 Conditions to the Obligations of the Funding Parties on the ----------------------------------------------------------- Closing Date. The obligations of the Lessor and each Lender to carry out - ------------ their respective obligations under Article II of this Master Agreement to be ---------- performed on the Closing Date shall be subject to the fulfillment to the satisfaction of, or waiver by, each such party hereto (acting directly or through its counsel) on or prior to the Closing Date of the following conditions precedent, provided that the obligations of any Funding Party shall not be subject to any conditions contained in this Section 3.1 which ----------- are required to be performed by such Funding Party: (a) Documents. The following documents shall have been executed and --------- delivered by the respective parties thereto: (i) Bond Lease. Counterparts of the Bond Lease and a ---------- memorandum thereof, duly executed by the Issuer and the Lessor and, in the case of the memorandum, in recordable form, shall have been delivered to the Agent. (ii) Assignment of Bonds. The Bonds shall have been assigned ------------------- to the Agent by the Lessee, as evidenced by an executed assignment satisfactory in form and substance to the Agent and the Funding Parties, and the Bonds shall have been registered in the name of the Agent on the bond registration books required to be maintained by the Bond Trustee pursuant to the Trust Indenture. (iii) Bond Deed of Trust. Counterparts of the Bond Deed of Trust, ------------------ duly executed by the Issuer and in recordable form, shall have been delivered to the Agent. (iv) Trust Indenture. Counterparts of the Trust Indenture, duly --------------- executed by the Issuer and the Bond Trustee shall have been delivered to the Agent. (v) Approval of Bond Documents. The Lessee shall have -------------------------- delivered, or shall have caused to be delivered, to the Lessor and the Agent a certified copy of the Ordinance adopted by the Council of the County of St. Louis, Missouri, authorizing the issuance of the Bonds by the Issuer and approving the execution and delivery of the Bond Documents by the Issuer. -7- (vi) Consent and Estoppel Agreement. The Lessee shall have ------------------------------ delivered, or shall have caused to be delivered, to the Agent a consent and estoppel agreement executed by the Issuer and in a form reasonably acceptable to the Agent. (vii) Lease Supplement. Counterparts of the Lease Supplement, ---------------- duly executed by the Lessee and the Lessor and in recordable form, shall have been delivered to each Funding Party, and the original, chattel paper copy of the Lease Supplement shall have been delivered to the Agent. (viii) Mortgage or Deed of Trust and Assignment of Lease and ----------------------------------------------------- Rents. Counterparts of the Mortgage or Deed of Trust, as the case ----- may be, (substantially in the form of Exhibit D-1 or D-2, as the ----------- --- case may be, attached hereto), duly executed by the Lessor and in recordable form, shall have been delivered to the Agent (which Mortgage or Deed of Trust, as the case may be, shall secure all of the debt to the Agent) and the Assignment of Lease and Rents (substantially in the form of Exhibit B attached hereto) in --------- recordable form, duly executed by the Lessor, shall have been delivered to the Agent by the Lessor. (ix) Security Agreement and Assignment. Counterparts of the --------------------------------- Security Agreement and Assignment (substantially in the form of Exhibit C attached hereto), duly executed by the Construction --------- Agent, with an acknowledgment and consent thereto satisfactory to the Lessor and the Agent duly executed by the General Contractor, the Architect and the vendor of the Equipment (the "Vendor"), as applicable, and complete copies of the Construction Contract, the Architect's Agreement, any agreement related to the acquisition and/or installation of the Equipment certified by the Construction Agent and all other Construction Documents and payment and performance bonds, shall have been delivered to the Lessor and the Agent. (x) Survey. The Lessee shall have delivered, or shall have ------ caused to be delivered, to the Lessor and the Agent, at such Lessee's expense, an accurate survey of the Land certified to the Lessor and the Agent in a form reasonably satisfactory to the Lessor and the Agent and showing no state of facts unsatisfactory to the Lessor or the Agent and prepared within ninety (90) days of the Closing Date (or such other time period agreed to by the Lessor and the Agent) by a Person reasonably satisfactory to the Lessor and the Agent. Such survey shall (A) be acceptable to the Title Insurance Company for the purpose of providing extended coverage to the Lessor and a lender's comprehensive endorsement to the Agent, (B) show no encroachments on such Land by structures owned by others, and no encroachments from any part of such Leased Property onto any land owned by others, and (C) disclose no state of facts -8- reasonably objectionable to the Lessor, the Agent or the Title Insurance Company, and be reasonably acceptable to each such Person. (xi) Title and Title Insurance. The Lessor shall receive from ------------------------- the Title Insurance Company an ALTA Leasehold Owner's Policy of Title Insurance issued by the Title Insurance Company and the Agent shall receive from the Title Insurance Company an ALTA Leasehold Mortgagee's Policy of Title Insurance issued by the Title Insurance Company, in each case, in the amount of the projected cost of acquisition and construction of the Leased Property, reasonably acceptable in form and substance to the Lessor and the Agent, respectively (collectively, the "Title Policy"). The Title Policy ------------ shall be dated as of the Closing Date, and, to the extent permitted under Applicable Law, shall include such affirmative endorsements and other coverages as the Lessor or the Agent shall reasonably request. (xii) Appraisal. Each Funding Party shall have received a --------- report of the Appraiser (an "Appraisal"), paid for by the Lessee, --------- which shall meet the requirements of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, shall be satisfactory to such Funding Party and shall state in a manner satisfactory to such Funding Party the estimated "as vacant" value of the Land and any Building and Equipment to be acquired, constructed and/or installed thereon. Such Appraisal must show that the "as vacant" value of the Leased Property determined as if the Building had already been completed and Equipment installed in accordance with the Plans and Specifications and by excluding from such value the amount of assessments on the Leased Property) is at least 45% of the total cost of the Leased Property, including the trade fixtures, equipment and personal property utilized in connection with the Leased Property and all other costs to be funded by the Funding Parties. (xiii) Environmental Audit and Reliance Letter. The Lessor and --------------------------------------- the Agent shall have received an Environmental Audit for the Leased Property, which shall be conducted in accordance with ASTM standards and shall not include a recommendation for further investigation and is otherwise satisfactory to the Lessor and the Agent. The firm that prepared the Environmental Audit for such Leased Property shall have delivered to the Lessor and the Agent a letter in form and substance satisfactory to the Lessor and the Agent stating that the Lessor, the Agent and the Lenders may rely upon such firm's Environmental Audit of the Leased Property, it being understood that the Lessor's and the Agent's acceptance of ------------------- any such Environmental Audit shall not release or impair the Lessee's obligations under the Operative Documents with respect to any environmental liabilities relating to the Leased Property. -9- (xiv) Evidence of Insurance. The Lessor and the Agent shall --------------------- have received from the Lessee certificates of insurance evidencing compliance with the provisions of Article VIII of the Lease (including the naming of the Lessor, the Agent and the Lenders as additional insureds or loss payee with respect to such insurance, as their interests may appear), in form and substance reasonably satisfactory to the Lessor and the Agent. (xv) Officer's Certificates of Lessee and JFC. Each of the ---------------------------------------- Agent and the Lessor shall have received an Officer's Certificate of each of the Lessee and JFC stating that, to the best of such officer's knowledge, (A) each and every representation and warranty of the Lessee and JFC contained in the Operative Documents is true and correct in all material respects on and as of the Closing Date as though made on and as of the Closing Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date; (B) no Event of Default, Potential Event of Default or Construction Force Majeure Event has occurred and is continuing; (C) each Operative Document to which the Lessee and JFC is a party is in full force and effect with respect to it; and (D) no event that could reasonably be expected to have a Material Adverse Effect has occurred since June 30, 2001. (xvi) UCC Financing Statement; Recording Fees; Transfer Taxes. ------------------------------------------------------- Each Funding Party shall have received satisfactory evidence of (A) the execution and delivery to the Agent of a UCC-1 and, if required by applicable law, UCC-2 financing statement to be filed with the Secretary of State of the applicable State (or other appropriate filing office) and the county where the Land is located, respectively, and such other Uniform Commercial Code financing statements as any Funding Party deems necessary or desirable in order to perfect such Funding Party's interests and (B) the payment of all recording and filing fees and transfer, stamp and other taxes with respect to any recordings or filings made of the Bond Lease (or memorandum thereof), the Bond Deed of Trust, the Lease, the Lease Supplement, the Mortgage and the Assignment of Lease and Rents. (xvii) Officer's Certificate of Lessor. The Agent shall have ------------------------------- received an Officer's Certificate of the Lessor stating that, to the best of such officer's knowledge, (A) each and every representation and warranty of the Lessor contained in the Operative Documents is true and correct in all material respects on and as of the Closing Date as though made on and as of the Closing Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; (B) no Event of Default or Potential Event of Default has occurred and is continuing; (C) each -10- Operative Document to which the Lessor is a party is in full force and effect with respect to it; and (D) no event that could have a Material Adverse Effect has occurred since the date of the most recent financial statements of the Lessor to be delivered or required to the Agent. (xviii) Good Standing Certificates. The Agent shall have received -------------------------- good standing certificates for the Lessor and the Lessee from the appropriate offices of the state where the Land is located. (b) Litigation. No action or proceeding shall have been instituted ---------- or, to the knowledge of any Funding Party, threatened nor shall any governmental action, suit, proceeding or investigation be instituted or threatened before any Governmental Authority, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority, to set aside, restrain, enjoin or prevent the performance of this Master Agreement or any transaction contemplated hereby or by any other Operative Document or which is reasonably likely to materially adversely affect the Leased Property or any transaction contemplated by the Operative Documents or which could reasonably be expected to result in a Material Adverse Effect. (c) Legality. In the opinion of such Funding Party or its counsel, -------- the transactions contemplated by the Operative Documents shall not violate any Applicable Law, and no change shall have occurred or been proposed in Applicable Law that would make it illegal for such Funding Party to participate in any of the transactions contemplated by the Operative Documents. (d) No Events. (i) No Event of Default, Potential Event of Default, --------- Event of Loss or Event of Taking relating to the Leased Property shall have occurred and be continuing, (ii) no action shall be pending or threatened by a Governmental Authority to initiate a Condemnation or an Event of Taking, and (iii) there shall not have occurred any event that could reasonably be expected to have a Material Adverse Effect since June 30, 2001. (e) Representations. Each representation and warranty of the --------------- parties hereto or to any other Operative Document contained herein or in any other Operative Document shall be true and correct in all material respects as though made on and as of the Closing Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date. (f) Cutoff Date. No Funding Date shall occur after the Funding ----------- Termination Date. (g) Transaction Expenses. The Lessee shall have paid the transaction -------------------- costs then accrued and invoiced which the Lessee has agreed to pay pursuant to Section 8.8. ----------- -11- SECTION 3.2 Additional Conditions for the Closing Date. The obligations ------------------------------------------ of the Lessor and each Lender to carry out their respective obligations under Article II of this Master Agreement to be performed on the Closing ---------- Date shall be subject to the satisfaction of, or waiver by, each such party hereto (acting directly or through its counsel) on or prior to the Closing Date of the following conditions precedent in addition to those set forth in Section 3.1, provided that the obligations of any Funding Party shall not be - ----------- subject to any conditions contained in this Section 3.2 which are required ----------- to be performed by such Funding Party: (i) Loan Agreement; Guaranty. Counterparts of the Loan ------------------------ Agreement, duly executed by the Lessor, the Agent and each Lender shall have been delivered to each of the Lessor and the Agent. The A Notes and the B Notes, duly executed by the Lessor, shall have been delivered to the Agent. The Guaranty, duly executed by the Guarantor, shall have been delivered to the Agent. (ii) Master Agreement. Counterparts of this Master Agreement, ---------------- duly executed by the parties hereto, shall have been delivered to each of the parties hereto. (iii) Construction Agency Agreement. Counterparts of the ----------------------------- Construction Agency Agreement, duly executed by the parties thereto shall have been delivered to each of the parties hereto. (iv) Lease. Counterparts of the Lease, duly executed by the ----- Lessee and the Lessor shall have been delivered to each Funding Party, and the original, chattel paper copy of the Lease shall have been delivered to the Agent. (v) Bond Documents. Counterparts of the Bond Documents, duly -------------- executed by the Issuer, the Bond Trustee and the Lessor, as the case may be, shall have been delivered to the Agent. (vi) Lessee's and JFC's Resolutions and Incumbency --------------------------------------------- Certificate, etc. Each of the Agent and the Lessor shall have ---------------- received (w) a certificate of the Lessee's General Partner attaching and certifying as of the Closing Date as to (A) the resolution of the limited partners of the Lessee, if required by the Lessee's Partnership Agreement, duly authorizing the execution, delivery and performance by the Lessee of each Operative Document to which it is or will be a party, (B) the Lessee's Partnership Agreement as in effect as of the Closing Date (which includes all amendments thereto) and (C) the Lessee's partnership certificate, as in effect as of the Closing Date (which includes all amendments thereto), certified within thirty (30) days prior to the Closing Date by the Secretary of State of the state of its organization; (x) good standing certificates for the Lessee dated within thirty (30) days prior to the Closing Date from the appropriate offices of the State of the Lessee's organization and principal place of business; (y) a certificate of -12- the Secretary or an Assistant Secretary of the Lessee's General Partner, attaching and certifying as of the Closing Date as to (A) the Board of Directors' (or appropriate committee's) resolution duly authorizing the execution, delivery and performance by it, as general partner of the Lessee, of each Operative Document to which the Lessee is or will be a party, (B) the incumbency and signatures of persons authorized to execute and deliver such documents on its behalf, (C) the articles or certificate of incorporation of the Lessee's General Partner, certified within thirty (30) days prior to the Closing Date by the Secretary of State of the state of its incorporation and (D) its by-laws; and (z) good standing certificates for the Lessee's General Partner dated within thirty (30) days prior to the Closing Date from the appropriate offices of the State of incorporation and principal place of business of the Lessee's General Partner. Each of the Agent and the Lessor shall have received (w) a certificate of JFC's Managing Partner attaching and certifying as of the Closing Date, as to (A) the resolution or consent of the limited partners of JFC, if and to the extent (if any) required by JFC's Partnership Agreement, duly authorizing the execution, delivery and performance by JFC of each Operative Document to which it is or will be a party, (B) JFC's Partnership Agreement as in effect as of the Closing Date (which includes all amendments thereto) and (C) JFC's partnership certificate, as in effect as of the Closing Date (which includes all amendments thereto), certified within thirty (30) days prior to the Closing Date by the Secretary of State of the state of its organization; (x) good standing certificates for JFC dated within thirty (30) days prior to the Closing Date from the appropriate offices of the State of JFC's organization and principal place of business; (y) a certificate of the Managing Partner of JFC, attaching and certifying as of the Closing Date as to the incumbency and signatures of persons authorized to execute and deliver such documents on its behalf. (vii) Opinions of Counsel. The opinion of counsel to the ------------------- Lessee and JFC and the Guarantor, dated the Closing Date, substantially in the form set forth in Exhibit G-1 attached hereto, ----------- and containing such other matters as the parties to whom it is addressed shall reasonably request, shall have been delivered and addressed to each of the Lessor, the Agent and the Lenders. The opinion of counsel to the Lessor, dated the Closing Date, substantially in the form set forth in Exhibit G-2 attached hereto, ----------- and containing such other matters as the parties to whom it is addressed shall reasonably request, shall have been delivered to each of the Agent and the Lenders and, with respect to the opinion of the Lessor's counsel, the Lessee. (viii) Good Standing Certificate. The Agent and the Lessee ------------------------- shall have received a good standing certificate for the Lessor from the appropriate offices of the State of Texas, dated within thirty (30) days prior to the Closing Date. -13- (ix) Lessor's Resolutions and Incumbency Certificate, etc. ---------------------------------------------------- Each of the Agent and the Lessee shall have received (w) a certificate of the Lessor's General Partner as of the Closing Date, attaching and certifying as to (A) the resolution of the partners of Lessor, if required, duly authorizing the execution , delivery and performance by Lessor of each Operative Document to which it is or will be a party, (B) the Lessor's Partnership Agreement and all amendments thereto, (C) the Lessor's partnership certificate and all amendments thereto, certified as of a recent date by the Secretary of State of the state of its organization, (x) good standing certificates for the Lessor on the Closing Date from the appropriate offices of the State of the Lessor's organization and principal place of business, (y) a certificate of the Secretary or an Assistant Secretary of the Lessor's General Partner on the Closing Date, attaching and certifying as to (A) the Board of Directors' (or appropriate committee's) resolution duly authorizing the execution, delivery and performance by it, as general partner of the Lessor, of each Operative Document to which the Lessor is or will be a party, (B) the incumbency and signatures of persons authorized to execute and deliver such documents on its behalf, (C) its articles or certificate of incorporation, certified as of a recent date by the Secretary of State of the state of its incorporation and (D) its by-laws, and (z) good standing certificates for the Lessor's General Partner on the Closing Date from the appropriate offices of the State of incorporation and principal place of business of the Lessor's General Partner. SECTION 3.3 Conditions to the Obligations of Lessee. The obligations of --------------------------------------- the Lessee to sublease the Leased Property from the Lessor are subject to the fulfillment on the Closing Date to the satisfaction of, or waiver by, the Lessee, of the following conditions precedent: (a) General Conditions. The conditions set forth in Sections 3.1 ------------------ ------------ and 3.2 that require fulfillment by the Lessor or the Lenders shall have - ------- been satisfied, including the execution and delivery of the Operative Documents to be executed by the Lessor or the Lenders in connection with the Leased Property. (b) Legality. In the opinion of the Lessee or its counsel, the -------- transactions contemplated by the Operative Documents shall not violate any Applicable Law, and no change shall have occurred or been proposed in Applicable Law that would make it illegal for the Lessee to participate in any of the transactions contemplated by the Operative Documents. SECTION 3.4 Conditions to the Obligations of the Funding Parties on ------------------------------------------------------- each Funding Date. The obligations of the Lessor and each Lender to carry - ----------------- out their respective obligations under Article II of this Master Agreement ---------- to be performed on each Funding Date shall be subject to the fulfillment to the satisfaction of, or waiver by, each such party hereto (acting directly or through their respective counsel) on or prior to each such Funding Date of the following conditions precedent, provided that the obligations of any Funding Party shall not be subject to -14- any conditions contained in this Section 3.4 which are required to be ----------- performed by such Funding Party: (a) Funding Request. The Lessor and the Agent shall have received --------------- from the Construction Agent or the Lessee the Funding Request therefor pursuant to Section 2.2(d). -------------- (b) Conditions Fulfilled. As of such Funding Date, the conditions set -------------------- forth in Section 3.1(d) shall have been satisfied. -------------- (c) Representations. As of such Funding Date, both before and after --------------- giving effect to the Funding requested by the Construction Agent or the Lessee on such date, the representations and warranties that the Construction Agent, the Lessee or JFC is deemed to make pursuant to Section 2.2(e) shall be true and correct on and as of such Funding Date as - -------------- though made on and as of such Funding Date. (d) No Stop Notice or Filed Mechanic's Lien. As of such Funding --------------------------------------- Date, and as to any Funded Amount requested on such Funding Date, (i) none of the Lessor, the Agent or any Lender has received (with respect to the Leased Property) a notice to withhold Loan funds that has not been discharged by the Lessee or the Construction Agent, and (ii) no mechanic's lien or materialman's lien has been filed against such Leased Property that has not been discharged by the Lessee, bonded over in a manner reasonably satisfactory to the Agent or insured over by the Title Insurance Company. (e) Lease Supplement. If the Funding relates to a Building that ---------------- will be leased under a Lease Supplement separate from the Lease Supplement for the Land, the original of such separate Lease Supplement, duly executed by the Lessee and the Lessor and in recordable form, shall have been delivered to the Agent. SECTION 3.5 Completion Date Conditions. The occurrence of the -------------------------- Completion Date with respect to the Leased Property shall be subject to the fulfillment to the satisfaction of, or waiver by, each party hereto (acting directly or through its counsel) of the following conditions precedent: (a) Title Policy Endorsements; Architect's Certificate. The -------------------------------------------------- Construction Agent shall have furnished to each Funding Party (1) the following endorsements to the related Title Policy (each of which shall be subject to no exceptions other than Permitted Encumbrances approved by the Agent in writing and such other exceptions created in the public records after the Closing Date if and to the extent approved by the Agent in writing): a date-down endorsement (redating and confirming the coverage provided under the Title Policy and each endorsement thereto) and a "Form 9" endorsement (if available in the applicable jurisdiction), in each case, effective as of a date not earlier than the date of completion of the Construction, and (2) a statement of the Architect dated at or about the Completion Date, in form and substance reasonably satisfactory to the Agent, the Lessor and the Lenders, and stating that (i) the Building -15- has been completed substantially in accordance with the Plans and Specifications therefor, and the Leased Property is ready for occupancy, (ii) such Plans and Specifications comply in all material respects with all Applicable Laws in effect at such time, and (iii) to the best of the Architect's knowledge, the Leased Property, as so completed, complies in all material respects with all Applicable Laws in effect at such time. The Construction Agent shall also deliver to the Agent true and complete copies of: (A) an "as built" or "record" set of the Plans and Specifications, (B) a plat of survey of the Leased Property "as built" to a standard reasonably acceptable to the Agent showing all easements, paving, driveways, fences and exterior improvements, and (C) copies of a certificate or certificates of occupancy for the Leased Property or other legally equivalent permission to occupy the Leased Property. (b) Construction Completion. The Construction shall have been ----------------------- completed substantially in accordance with the Plans and Specifications and all Applicable Laws, and the Leased Property shall be ready for occupancy and operation. All fixtures, equipment and other property contemplated under the Plans and Specifications to be incorporated into or installed in the Leased Property shall have been substantially incorporated or installed, free and clear of all Liens except for Permitted Encumbrances. (c) Construction Agent Certification. The Construction Agent shall -------------------------------- have furnished the Lessor, the Agent and each Lender with a certification of the Construction Agent (substantially in the form of Exhibit H) that: --------- (i) all amounts owing to third parties for the Construction have been paid in full (other than contingent obligations for which the Construction Agent has made adequate reserves), and no litigation or proceedings are pending, or, to the best of the Construction Agent's knowledge, are threatened, against the Leased Property, the Construction Agent or the Lessee which could reasonably be expected to have a Material Adverse Effect; (ii) all material consents, licenses and permits and other governmental authorizations or approvals required for such Construction and operation of the Leased Property have been obtained and are in full force and effect; (iii) the Leased Property has available all services of public facilities and other utilities necessary for the use and operation of the Leased Property for its intended purposes including, without limitation, adequate water, gas and electrical supply, storm and sanitary sewerage facilities, telephone, other required public utilities and means of access between the Building and public highways for pedestrians and motor vehicles; (iv) all material agreements, easements and other rights, public or private, which are necessary to permit the lawful use and operation of the Leased Property as the Lessee intends to use the Leased Property under the Lease and -16- which are necessary to permit the lawful intended use and operation of all then intended utilities, driveways, roads and other means of egress and ingress to and from the same have been obtained and are in full force and effect and neither the Construction Agent nor the Lessee has any knowledge of any pending modification or cancellation of any of the same, and the use of the Leased Property does not depend on any variance, special exception or other municipal approval, permit or consent that has not been obtained and is in full force and effect for its continuing legal use; (v) all of the requirements and conditions set forth in Section 3.5(b) hereof have been completed and fulfilled with -------------- respect to the Leased Property and the Construction; and (vi) to the best of the Construction Agent's knowledge, the Leased Property is in compliance in all material respects with all applicable zoning laws and regulations. (d) Bond Document Certifications. The Construction Agent shall have ---------------------------- provided to the Issuer and the Bond Trustee such evidence of completion of construction as may be required pursuant to the Bond Documents, if any, including, without limitation, any certifications or schedules required pursuant thereto. ARTICLE IV REPRESENTATIONS SECTION 4.1 Representations of Lessee. Effective as of the date of ------------------------- execution hereof, as of the Closing Date and as of each Funding Date, the Lessee represents and warrants to each of the other parties hereto as follows: (a) Existence; Compliance with Law. ------------------------------ (i) The sole general partner of the Lessee is EDJ Holding Company, Inc., a Missouri corporation (the "General Partner"), and the sole limited partner of the Lessee is JFC (the General Partner and JFC being referred to individually as a "Partner" and collectively as the "Partners.") At the date hereof, the Lessee has Indebtedness for Money Borrowed of the types and in the amounts set forth in Schedule 4.1(a)(i) hereto. A complete and correct summary of all such Indebtedness is attached hereto as Schedule 4.1(a)(i), ------------------ (ii) Schedule 4.1(a)(ii) hereto correctly sets forth as to each ------------------- Subsidiary of the Lessee its name and the jurisdiction of its formation, if a partnership, or incorporation, if a corporation. The Lessee has no Restricted Subsidiaries. Each of the Lessee and each of its Subsidiaries, the General Partner and JFC (x) is duly -17- organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (y) has the power and authority, and the legal right, and all governmental licenses, authorizations, consents and approvals, to own and operate its assets and property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged or proposes to be engaged, and (z) is duly qualified as a foreign corporation or partnership and in good standing (A) in the jurisdiction in which the Leased Property is located and (B) under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business or nature of its activities requires such qualification. All of the issued and outstanding general or limited partnership interests, or capital stock, as the case may be, of the Lessee, the Lessee's General Partner and each Subsidiary is validly issued and outstanding, is fully paid and nonassessable and is owned, beneficially and of record, in the case of stock, by the Lessee or another Subsidiary, and in the case of general or limited partnership interests in the Lessee, by the Lessee's General Partner and the limited partners of the Lessee, free of any Lien, option, claim, warrant or rights of others. All of the issued and outstanding are partnership interests of JFC are validly issued and outstanding, are fully paid and nonassessable and are owned beneficially and of record, by JFC's partners, free of any Lien, option, claim, warrant or rights of others. (b) Corporate Power; Authorization; Enforceable Obligations. The ------------------------------------------------------- Lessee, the General Partner and JFC each have the power and authority, and the legal right, and all governmental licenses, authorizations, consents and approvals, to execute, deliver and perform this Master Agreement and the other Operative Documents to which each such Person is a party and has taken all necessary action to authorize the Transaction on the terms and conditions of this Master Agreement and to authorize the execution, delivery and performance of this Master Agreement and the other Operative Documents to which each such Person is a party. No approval, consent, exemption or authorization of, notice to or filing with or other action by or in respect of, any Governmental Authority, Business Association or any other Person is necessary or required in connection with the Transaction (except construction permits, licenses and approvals that are not yet required), the use of the proceeds thereof or with the execution, delivery, performance, validity or enforceability of this Master Agreement or the other Operative Documents to which each such Person is a party. This Master Agreement has been, and each other Operative Document to which each such Person is a party will be, duly executed and delivered on behalf of the Lessee and JFC. This Master Agreement constitutes, and each other Operative Documents to which the Lessee or JFC is a party when executed and delivered will constitute, a legal, valid and binding obligation of the Lessee and JFC, as applicable, enforceable against the Lessee and JFC, as applicable, in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). -18- (c) No Legal Bar; No Default, Compliance with Other Instruments, etc. ---------------------------------------------------------------- Neither the Lessee nor JFC is in violation of any term of its partnership agreement or certificate of partnership and none of its or their Subsidiaries is in violation of any term of its partnership agreement, certificate of partnership, charter or by-laws, as the case may be. No Potential Event of Default or Event of Default has occurred and is continuing. Neither the Lessee, JFC nor any of its or their Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any evidence of Indebtedness, or any agreement or instrument under or pursuant to which any evidence of Indebtedness has been issued (or any documents related thereto), (ii) any other agreement or instrument (including, without limitation, any issued and outstanding preferred stock), or Contractual Obligation to which any of them is a party or by which any of them is bound or any of its or their properties is affected, or (iii) any Requirement of Law by which any of them is bound or any of their properties are affected. Neither the Lessee, JFC nor any of its or their Subsidiaries has defaulted in, or has failed to make at the time contemplated, payment of any dividends or partnership distributions, or any mandatory redemption payments on any preferred stock or any principal of, or premium or interest on, any Indebtedness for Money Borrowed. The execution, delivery and performance of this Master Agreement and the other Operative Documents, the Transaction and the use of the proceeds thereof does or will not (v) conflict with or violate the partnership agreement, certificate of partnership, charter or by-laws, as the case may be, of the Lessee, JFC or any of its or their Subsidiaries and will not violate any Requirement of Law or Contractual Obligation of the Lessee, JFC or any of its or their Subsidiaries, (w) conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, any evidence of Indebtedness or other agreement or instrument referred to in this Section 4.1(c), (x) result in or require the creation or imposition of any Lien of any nature whatsoever upon any of its or their respective properties, revenues or assets of the Lessee, JFC or any of its or their Subsidiaries under the terms of any such evidence of Indebtedness, other agreement or instrument, Requirement of Law or Contractual Obligation, other than the Operative Documents, (y) require the consent of or other action by any Business Association, any trustee, any creditor of, any lessor to, or any investor in, the Lessee, JFC or any of its or their Subsidiaries, or (z) violate any order, injunction, writ or decree of any Governmental Authority or any Business Association to which the Lessee, JFC or any of its or their Subsidiaries is subject. (d) Litigation, Etc. --------------- (i) There are no actions, suits, proceedings, claims or disputes pending or, to the best knowledge of the Lessee and JFC (after due inquiry), threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, arbitrator or Business Association, against the Lessee, JFC or its or their Subsidiaries or any of their respective properties, individually or in the aggregate: -19- (x) which purport to affect or pertain to this Master Agreement or any other Operative Document, or any of the transactions contemplated hereby or thereby; or (y) as to which there exists a reasonable possibility of an adverse determination against any of them or, which determination could reasonably be expected to have a Material Adverse Effect. (ii) No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Master Agreement or any other Operative Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. (iii) Any liability that may result from any action at law, suit in equity or other proceeding or investigation (whether or not purportedly on behalf of the Lessee, JFC or any of its or their Subsidiaries) in any court or by or before any other Governmental Authority or any arbitrator, or before any Business Association, against or affecting, or that (to the best knowledge of the Lessee and JFC) is threatened against, the Lessee, JFC or any of its or their Subsidiaries or any of their respective properties is adequately reserved against on the books of the Lessee, JFC or such Subsidiary, as the case may be. (iv) Neither the Lessee, JFC nor any of its or their Subsidiaries is in default in any respect which could individually or in the aggregate have a Material Adverse Effect on the Lessee or JFC with respect to any order, writ, injunction, judgment or decree of any court or other Governmental Authority, or with respect to the award of any arbitrator, or with respect to the order or direction of any Business Association. (v) Attached hereto as Schedule 4.1(d)(v) is a true and ------------------ correct summary of all pending investigations or inquiries (other than routine "blue sheet" inquires) by the SEC or any Business Association or State Securities Commission to which the Lessee or any of its Subsidiaries has been asked to respond by delivery of documents or testimony. (e) Taxes. All Federal, state and other tax returns and information ----- returns of the Lessee, JFC and each of its or their Subsidiaries required by law to be filed have been duly filed, and all Federal, state and other taxes, assessments, fees and other governmental charges upon the Lessee, JFC or any of its or their Subsidiaries or upon any of their respective properties or assets that are due and payable have been paid. No extensions of time for the assessment of -20- deficiencies have been granted by the Lessee, JFC or any of its or their Subsidiaries. There are no Liens on any properties or assets of the Lessee, JFC or any of its or their Subsidiaries imposed or arising as a result of the delinquent payment or nonpayment of any such tax, assessment, fee or other governmental charge. All Federal income tax returns of each of the Lessee and JFC filed for periods ended on or prior to December 31, 1996 have been accepted by the IRS as filed. No Federal income tax and information returns filed by any of the Lessee, JFC or the Subsidiaries of the Lessee or JFC have ever been materially adjusted upon examination by the IRS. The Lessee, JFC and its or their Subsidiaries which are partnerships have filed information returns in those states and local jurisdictions in which they are required to do so, and the Subsidiaries of the Lessee or JFC that are corporations have filed tax returns with respect to state income taxes or state taxes measured by income in those states and local jurisdictions in which they are required to do so. No state information or tax return filed by the Lessee, JFC or any of its or their Subsidiaries has ever been materially adjusted upon examination by any state agency. The charges, accruals and reserves, if any, on the books of the Lessee, JFC and its or their Subsidiaries in respect of Federal and state income taxes for all fiscal periods to date are adequate and neither the Lessee nor JFC knows of any unpaid assessments for additional Federal or state income taxes for any such fiscal period or of any basis therefor. There are no applicable taxes, fees or other governmental charges payable in connection with the execution and delivery of this Master Agreement, the Transaction or any of the other Operative Documents. (f) No Margin Regulation Violation. None of the transactions ------------------------------ contemplated by this Master Agreement or any of the other Operative Documents (including, without limitation, the direct or indirect use of any of the proceeds from any Funding) will violate or result in a violation of (i) Sections 7, 10(b) or 15 of the Exchange Act or any regulations promulgated thereunder or (ii) Regulation U, Regulation T and Regulation X of the FRB. (g) ERISA Compliance. ---------------- (i) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and, to the best knowledge of the Lessee and JFC, nothing has occurred which would cause the loss of such qualification. The Lessee, JFC and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (ii) There are no pending or, to the best knowledge of the Lessee and JFC, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited -21- transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect or that would subject the Lessee, JFC or any of its or their Subsidiaries to a tax or penalty on Prohibited Transactions. Neither the Lessee, JFC nor any of its or their Subsidiaries has contributed to any employee pension benefit plan to which an employer other than the Lessee, JFC or one of their Subsidiaries contributed. (iii) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Lessee, JFC nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability to the PBGC under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Lessee, JFC nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Lessee, JFC nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. (h) Investment Company Act; Other Regulations. None of the Lessee, ----------------------------------------- JFC, any Person controlling the Lessee or JFC, or any of its or their Subsidiaries, is an "Investment Company" within the meaning of the Investment Company Act of 1940, except insofar as such a relationship may exist with respect to the Lessee by virtue of the following interests: (v) the Lessee's ownership of a minority interest, as limited partner with no rights of management or control, in Passport Research Ltd., a Pennsylvania limited partnership, that is adviser to an openend mutual fund and a closed-end mutual fund, (w) the Lessee's indirect 18.4% interest in Community Investment Partners, L.P., indirect 6% interest in Community Investment Partners II, L.P., and indirect 5.9% interest in Community Investment Partners III, L.P., LLLP, each of which is a business development company formed under the Investment Company Act of 1940, (x) the Lessee's indirect 5.7% interest in Community Investment Partners IV, L.P., LLLP, an employees' securities company, (y) the Lessee's indirect $500,000 investment in Oakwood Medical Investors III, L.L.C. and (x) JFC's ownership of 150,000 shares of common stock, in Federated Investors, that is adviser to an open-end mutual fund and a closed-end mutual fund. Neither the Lessee, JFC nor any of its or their Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness, other than the Net Capital requirements of Section 15 of the Exchange Act. The Lessee and its Subsidiaries are in compliance with the requirements of Rule 206(4)-2 promulgated pursuant to the Investment Advisors Act of 1940. -22- (i) Purpose of Fundings. The proceeds of the Fundings shall be used ------------------- by the Lessee or the Construction Agent for Construction costs for the Building and for acquisition and installation of the Equipment and for transaction, closing and financing costs permitted to be paid with Advances under this Master Agreement. (j) Disclosure. Neither this Master Agreement (including the ---------- representations, warranties and covenants contained herein and all other information contained in the Operative Documents) nor any offering memorandum prepared in connection with the Transaction, nor the reports nor financial statements referred to in Section 4.1(l) hereof, nor any certificate, report, statement or other writing furnished or to be furnished to the Agent by or on behalf of the Lessee, JFC, or any officer, director, agent or employee of or any counsel to the Lessee or JFC, in connection with the negotiation of the Operative Documents or the Transaction, nor any other factual information, including factual information relating to the Lessee, JFC, its or their Subsidiaries or any of its or their assets or its or their financial condition or the Leased Property, furnished or to be furnished in writing to the Agent or any Funding Party, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. There is no fact known to the Partnership that the Partnership has not disclosed to you in writing that (i) materially adversely affects or in the future may materially adversely affect the business, prospects, earnings, properties or condition, financial or other, of the Lessee, JFC or any of its or their Subsidiaries, or (ii) adversely affects or in the future may adversely affect the ability of the Lessee or JFC to perform their respective obligations under this Master Agreement and the other Operative Documents. (k) Title to Properties; Leases. The Lessee, JFC and each of their --------------------------- Subsidiaries have good and valid title to their respective material properties and assets, including all properties and assets reflected on the respective consolidated statements of financial condition of the Lessee and its Subsidiaries and of JFC and its Subsidiaries, each dated as of December 31, 1999 and referred to in clauses (i) and (iii) of Section 4.1(l) hereof, as well as to property purported to have been acquired since such date (except property disposed of since said date in the ordinary course of business), and as of the Closing Date, there are no Liens on any such properties and assets other than Permitted Liens and Liens securing the bank borrowings listed in Schedule 4.1(a)(i) on the Lessee's securities held for sale, on its interest in customers' securities and on government or agency securities held by it as permitted by paragraphs (iv) and (vi) of the definition of Restricted Investments. Each of the Lessee, JFC and their Subsidiaries has the right to, and does, enjoy peaceful and undisturbed possession under all leases to which it is a party or under which it is leasing property. All such leases are valid, subsisting and in full force and effect, none of such leases is in default and no event has occurred and is continuing, and no condition exists, that, after notice or the passage of time or both, could become a default under any such lease -23- (l) Financial Statements and Other Information; Financial Condition. --------------------------------------------------------------- The Lessee and JFC has heretofore furnished to the Agent and each Funding Party copies of: (i) JFC's Annual Report to the SEC on Form 10- K for the fiscal year ended December 31, 2000 (the "Form 10-K") containing a --------- consolidated statement of financial condition of JFC and its Subsidiaries as of December 31, 2000 and December 31, 1999 and related consolidated statements of income, changes in financial position or cash flows (as applicable) and changes in partnership capital for the fiscal years then ended and the fiscal year ended December 31, 1999, together with the auditor's report thereon of Arthur Andersen LLP, Independent Certified Public Accountants; (ii) JFC's Quarterly Report on Form 10-Q filed with the SEC for the quarter ended June 30, 2001 (the "Form 10-Q"; the Form 10-K and --------- the Form 10-Q are referred to herein as the "SEC Reports"); (iii) ----------- consolidated statements of financial condition of the Lessee and its Subsidiaries as of December 31, 2000]and December 31, 1999, and related statements of income, changes in financial position or cash flows (as applicable), changes in partnership capital and changes in subordinated liabilities, of the Lessee and its Subsidiaries for the fiscal years then ended, together with the auditor's report thereon of Arthur Andersen LLP, Independent Certified Public Accountants; (iv) consolidated statements of financial condition of the Lessee and its Subsidiaries as of the close of the fiscal quarter ended June 30, 2001 and related statements of income of the Lessee and its Subsidiaries for the fiscal quarter then ended (the financial statements referred to, or contained in any document referred to, in this clause (iv) and in clause (iii) above being hereinafter called the "Lessee Financial Statements"); and (v) the Lessee's Broker/Dealer Year 2000 --------------------------- Report on Form BD-Y2K filed with the SEC for June 30, 2001. All financial statements referred to above, or contained in any document referred to above, are complete and correct, and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the respective periods. The Lessee Financial Statements and the SEC Reports present fairly the financial position of the Lessee and JFC, respectively, as of the respective dates of the statements of financial condition included therein and the results of operations of the Lessee and JFC, respectively, for the respective periods covered by the consolidated statements of income and changes in cash flows included therein. Neither the Lessee, JFC nor any of its or their Subsidiaries has any material obligations or liabilities, contingent or otherwise, not disclosed by the consolidated statement of financial condition of the Lessee, JFC and their Subsidiaries as of December 31, 2000 referred to in clauses (i) or (iii) above (m) General Environmental Matters. Except as specifically disclosed ----------------------------- in Schedule 4.1(m): --------------- (i) The on-going operations of the Lessee, JFC and each of their Subsidiaries comply in all material respects with all Environmental Laws. (ii) The Lessee, JFC and each of their Subsidiaries have obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and --------------------- necessary for their respective -24- ordinary course operations, all such Environmental Permits are in good standing, and the Lessee, JFC and each of their Subsidiaries are in compliance with all material terms and conditions of such Environmental Permits. (iii) None of the Lessee, JFC any of their Subsidiaries or any of their respective present properties or operations, is subject to any outstanding written order from or agreement with any Governmental Authority, nor subject to (x) any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material or (y) to the extent that it could reasonably be expected to have a Material Adverse Effect, any claim, proceeding or written notice from any Person regarding any Environmental Law, Environmental Claim or Hazardous Material. (iv) There are no Hazardous Materials or other conditions or circumstances existing with respect to any properties of the Lessee, JFC or any of their Subsidiaries, or arising from operations prior to the Closing Date, of the Lessee, JFC or any of their Subsidiaries that would reasonably be expected to give rise to Environmental Claims which would have a Material Adverse Effect, and there are no Hazardous Materials or other conditions or circumstances existing with respect to the Leased Property that would reasonably be expected to give rise to Environmental Claims. In addition, (A) neither the Lessee, JFC nor any of their Subsidiaries has any underground storage tanks (x) that are not properly registered or permitted under applicable Environmental Laws, (y) that are leaking or disposing of Hazardous Materials off-site, or (z) with respect to the Leased Property, for which the Lessee, JFC or any of their Subsidiaries has not met applicable federal and state financial responsibility requirements, and (B) the Lessee, JFC and their Subsidiaries have met all material notification requirements under applicable Environmental Laws. (n) Labor Relations. There are no strikes, lockouts or other labor --------------- disputes against the Lessee, JFC, or any of their Subsidiaries, or, to the best of the knowledge of the Lessee and JFC, threatened against or affecting the Lessee, JFC or any of their Subsidiaries, and no significant unfair labor practice complaint is pending against the Lessee, JFC or any of their Subsidiaries or, to the best knowledge of the Lessee and JFC, threatened against any of them before any Governmental Authority. (o) No Burdensome Restrictions. Neither the Lessee, JFC, nor any of -------------------------- its or their Subsidiaries is a party to, and none of them nor any of their properties is bound or affected by, any Contractual Obligation, or is subject to any order, writ, injunction, judgment, rule, regulation or decree or other action of any court or other Governmental Authority, or the award of any arbitrator or any charter or other corporate, partnership or contractual restriction, that could reasonably be expected to have a Material Adverse Effect. -25- (p) Copyrights, Patents, Trademarks and Licenses, etc. The Lessee, ------------------------------------------------- JFC and their Subsidiaries own or are licensed or otherwise have the right to use all of the licenses, registrations, permits, patents, trademarks, service marks, trade names, copyrights, franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses as now conducted and as proposed to be conducted, without conflict with the rights of any other Person. To the best knowledge of the Lessee and JFC, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Lessee, JFC or any of their Subsidiaries infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Lessee and JFC, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. (q) Insurance. The properties of the Lessee, JFC and their --------- Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Lessee or JFC or any of their Subsidiaries and are in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and are similarly situated. (r) Swap Obligations. Neither the Lessee, JFC nor any of their ---------------- Subsidiaries has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations. The Lessee and JFC have each undertaken its own independent assessment of its consolidated assets, liabilities and commitments and has considered appropriate means of mitigating and managing risks associated with such matters and has not relied on any swap counterparty or any Affiliate of any swap counterparty in determining whether to enter into any Swap Contract. (s) Solvency. Each of the Lessee and JFC is Solvent, and the Lessee -------- and its Subsidiaries, on a consolidated basis, and JFC and its Subsidiaries, on a consolidated basis, are Solvent. (t) Year 2000 Compliance. The Lessee, JFC and their Subsidiaries -------------------- have conducted a comprehensive review and assessment of its computer applications, and have made inquiry of their material suppliers, vendors and customers, with respect to any defect in computer software, data bases, hardware, controls and peripherals related to the occurrence of the year 2000 or the Year 2000 Problem in connection therewith. Based on the foregoing review, assessment and inquiry, the Lessee and JFC believe that no such defect could reasonably be expected to have a Material Adverse Effect. (u) Business of the Partnership. --------------------------- (i) The SEC Reports referred to in Section 4.1(l) hereof contain an accurate general description of the business of the Lessee, JFC and their -26- Subsidiaries, as presently conducted and as presently proposed to be conducted, and the major properties leased by the Lessee and JFC. Neither the Lessee, JFC nor any of their Subsidiaries is now engaged in any material line of business not so disclosed and neither the Lessee nor JFC owns or leases any significant properties not so disclosed. Attached hereto as Schedule 4.1(u)(i) ------------------ is a true and correct summary of the leases under which the Lessee or JFC leases its or their principal offices and equipment from an Affiliate. (ii) Any and all liabilities of the Lessee and JFC that could reasonably be expected to arise out of, or in relation to, the Lessee's or JFC's ownership, directly or indirectly, of any interest or interests in limited partnerships or other entities (including any Affiliates or Subsidiaries of the Lessee or JFC) under any circumstances, in the aggregate, would not exceed $15,000,000. All such interests owned by the Lessee or JFC in such entities are owned indirectly by it, through a series of affiliated entities, including at least one corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, which corporation is adequately capitalized and as to which all corporate formalities have been observed. The corporate integrity of any such corporation has never been questioned or threatened, nor does there exist any basis for such a question or threat. Neither the Lessee, JFC nor any Affiliate of either of them (other than the General Partner, Conestoga Securities, Inc., a Missouri corporation, LHC, Inc., a Missouri corporation, Unison Capital Corporation, a Missouri corporation, Patronus, Inc., a Missouri corporation, CIP Management, Inc., a Missouri corporation, and Edward D. Jones & Co. Canada Holding Co., Inc., a corporation formed under the law of the Province of Ontario, Canada) is a general partner of any general or limited partnership. (v) Stock Exchange Membership, etc. The Lessee is a member ------------------------------ organization in good standing of the Exchange, the American Stock Exchange, Inc., the Chicago Stock Exchange, Inc., and the NASD. Edward Jones Limited, a corporation organized under the laws of the United Kingdom, is a member in good standing of the London Stock Exchange. Edward D. Jones Co., an Ontario limited partnership, is a member organization in good standing of the Toronto Stock Exchange, Inc. and the Montreal Stock Exchange, Inc. (w) No Material Adverse Change. Since December 31, 2000, (i) there -------------------------- has been no material adverse change in the financial condition of the Lessee and its Subsidiaries taken as a whole, or JFC and its Subsidiaries, taken as a whole, and (ii) neither the condition, financial or otherwise, business, earnings, properties or prospects of the Lessee and its Subsidiaries, taken as a whole, or JFC and its Subsidiaries, taken as a whole, have been materially adversely affected by any occurrence or development (whether or not insured against) -27- (x) Compliance with Law, etc. The Lessee, JFC, the General Partner ------------------------ and their Subsidiaries each is in compliance in all material respects with all Requirements of Law to which it is subject and all applicable rules of the Exchange, the NASD and each other nongovernmental association, corporation or body having authority over it ("Business Association"), the -------------------- violation of which, either individually or in the aggregate, might materially adversely affect its business, prospects, earnings, properties or condition, financial or other. Neither the execution or delivery of this Master Agreement or any of the other Operative Documents, nor the performance of this Agreement or the Notes does or will cause the Partnership or any of its Subsidiaries to be in violation in any material respect of any law or ordinance, or any order of general application, rule or regulation of any Federal, state, county, municipal or other governmental or public authority or agency, or any order, direction or rule of any Business Association, having jurisdiction or authority over any of them or any of their respective properties. (y) SIPC Assessments. Neither the Lessee nor any Subsidiary is in ---------------- arrears with respect to any assessment made upon the Lessee or any Subsidiary by SIPC. (z) Broker-Dealer Registration; Examining Authority. The Lessee is ----------------------------------------------- registered as a broker-dealer with the SEC under the Exchange Act, and is also registered as a broker-dealer with the proper authorities, including State Securities Commissions, of every jurisdiction in which the nature of its activities makes such registration necessary. The Examining Authority of the Lessee is the Exchange. (aa) Stock Exchange Approvals. The Lessee has obtained such ------------------------ consents or approvals of the Examining Authority and of such securities and commodities exchanges of which the Lessee is a member organization as are necessary for the due execution, delivery and performance of this Master Agreement and the other Operative Documents and the consummation of the transactions contemplated hereby and thereby. (bb) Governmental Consent, etc. Except for the consents and ------------------------- approvals referred to in Section 4.1(aa) and the filing with the SEC pursuant to Appendix D to Rule 15c3- 1, no consent, approval or authorization of, registration, qualification, designation, declaration or filing with, or notice to, any Federal, state or local governmental or public authority or agency (including any State Securities Commission) or Business Association is required for the valid execution, delivery and performance of this Master Agreement or any of the other Operative Documents or the valid consummation of any other transaction contemplated hereby or thereby. (cc) Outstanding Securities. All outstanding Securities of the ---------------------- Lessee have been offered, issued, sold and delivered in compliance with, or in accordance with available exemptions from, all Federal and state laws and the rules and regulations of all Federal and state governmental or public authorities and agencies and Business Associations -28- (dd) Net Capital Requirements. The Lessee is subject to and in ------------------------ compliance with the Net Capital requirements set forth in Rule 15c3-1 and it has elected to comply with the Alternative Net Capital Requirement. (ee) Hazardous Materials - Leased Property. ------------------------------------- (i) To the best knowledge of the Lessee, except as described in the Environmental Audit, on the Closing Date, there are no Hazardous Materials present at, upon, under or within such Leased Property or released or transported to or from such Leased Property (except in compliance in all material respects with all Applicable Law). (ii) On the Closing Date, no Governmental Actions have been taken or, to the best knowledge of the Lessee, are in process or have been threatened, which could reasonably be expected to subject such Leased Property, any Lender or the Lessor to any Claims or Liens with respect to such Leased Property under any Environmental Law which would have a material adverse effect, or would have a Material Adverse Effect on the Lessor or any Lender. (iii) The Lessee has, or will obtain on or before the date required by Applicable Law, all Environmental Permits necessary to operate the Leased Property, if any, in accordance with Environmental Laws and is complying with and has at all times complied with all such Environmental Permits, except to the extent the failure to obtain such Environmental Permits or to so comply would not have a Material Adverse Effect. (iv) Except as set forth in the Environmental Audit or in any notice subsequently furnished by the Lessee to the Agent and approved by the Agent in writing prior to the respective times that the representations and warranties contained herein are made or deemed made hereunder, no notice, notification, demand, request for information, citations, summons, complaint or order has been issued or filed to or with respect to the Lessee, no penalty has been assessed on the Lessee and no investigation or review is pending or, to its best knowledge, threatened by any Governmental Authority or other Person in each case relating to the Leased Property with respect to any alleged material violation or liability of the Lessee under any Environmental Law. To the best knowledge of the Lessee, no material notice, notification, demand, request for information, citations, summons, complaint or order has been issued or filed to or with respect to any other Person, no material penalty has been assessed on any other Person and no investigation or review is pending or threatened by any Governmental Authority or other Person relating to the Leased Property with respect to any alleged material violation or liability under any Environmental Law by any other Person. -29- (v) The Leased Property and each portion thereof are presently in compliance in all material respects with all Environmental Laws, and, to the best knowledge of the Lessee, there are no present or past facts, circumstances, activities, events, conditions or occurrences regarding the Leased Property (including without limitation the release or presence of Hazardous Materials) that could reasonably be anticipated to (A) form the basis of a material Claim against the Leased Property, any Funding Party or the Lessee, (B) cause the Leased Property to be subject to any material restrictions on ownership, occupancy, use or transferability under any Environmental Law, (C) require the filing or recording of any notice or restriction relating to the presence of Hazardous Materials in the real estate records in the county or other appropriate municipality in which the Leased Property is located, or (D) prevent or materially interfere with the continued operation and maintenance of the Leased Property as contemplated by the Operative Documents. (ff) Leased Property. The present condition of the Leased Property --------------- conforms in all material respects with all conditions or requirements of all existing material permits and approvals issued with respect to the Leased Property, and the Lessee's future intended use of the Leased Property under the Lease does not, in any material respect, violate any Applicable Law. To the best knowledge of the Lessee, no material notices, complaints or orders of violation or non-compliance have been issued or threatened or contemplated by any Governmental Authority with respect to the Leased Property or any present or intended future use thereof. All material agreements, easements and other rights, public or private, which are necessary to permit the lawful use and operation of the Leased Property as the Lessee intends to use such Leased Property under the Lease and which are necessary to permit the lawful intended use and operation of all presently intended utilities, driveways, roads and other means of egress and ingress to and from the same have been, or to the Lessee's best knowledge will be, obtained and are or will be in full force and effect, and the Lessee has no knowledge of any pending material modification or cancellation of any of the same. (gg) Rights in Respect of the Leased Property. The Lessee is not a ---------------------------------------- party to any contract or agreement to sell any interest in the Leased Property or any part thereof, other than pursuant to the Operative Documents. SECTION 4.2 Survival of Representations and Effect of Fundings. -------------------------------------------------- (a) Survival of Representations and Warranties. All representations ------------------------------------------ and warranties made in Section 4.1 shall survive delivery of the Operative ----------- Documents and every Funding and shall remain in effect until all of the Obligations are fully and irrevocably paid. (b) Each Funding a Representation. Each Funding accepted by the ----------------------------- Lessee or the Construction Agent shall be deemed to constitute a representation and warranty by each Lessee to the effect of Section 4.1. ----------- -30- SECTION 4.3 Representations of the Lessor. Effective as of the date of ----------------------------- execution hereof, as of the Closing Date and as of each Funding Date, in each case, with respect to the Leased Property, the Lessor represents and warrants to the Agent, the Lenders and the Lessee as follows: (a) Securities Act. The interest being acquired or to be acquired -------------- by the Lessor in such Leased Property is being acquired for its own account, without any view to the distribution thereof or any interest therein, provided that the Lessor shall be entitled to assign, convey or transfer its interest in accordance with Section 6.1. ----------- (b) Due Organization, etc. The Lessor is a limited partnership duly --------------------- organized and validly existing in good standing under the laws of Texas and is duly qualified as a foreign limited partnership and in good standing in the state in which the Leased Property is located and has full power, authority and legal right to execute, deliver and perform its obligations under the Lease, this Master Agreement and each other Operative Document to which it is or will be a party. (c) Due Authorization; Enforceability, etc. This Master Agreement -------------------------------------- and each other Operative Document to which the Lessor is or will be a party have been or will be duly authorized, executed and delivered by or on behalf of the Lessor and are, or upon execution and delivery will be, legal, valid and binding obligations of the Lessor enforceable against it in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors' rights generally and by general equitable principles. (d) No Conflict. The execution and delivery by the Lessor of the ----------- Lease, this Master Agreement and each other Operative Document to which the Lessor is or will be a party, are not or will not be, and the performance by the Lessor of its obligations under each will not be, inconsistent with its Partnership Agreement, do not and will not contravene any Applicable Law applicable generally to parties providing financing and do not and will not contravene any provision of, or constitute a default under, any Contractual Obligation of Lessor, do not and will not require the consent or approval of, the giving of notice to, the registration with or taking of any action in respect of or by, any Governmental Authority, except such as have been obtained, given or accomplished, and the Lessor possesses all requisite regulatory authority to undertake and perform its obligations under the Operative Documents. (e) Litigation. There are no pending or, to the knowledge of the ---------- Lessor, threatened actions or proceedings against the Lessor before any court, arbitrator or administrative agency with respect to any Operative Document or that would have a material adverse effect upon the ability of the Lessor to perform its obligations under this Master Agreement or any other Operative Documents to which it is or will be a party. -31- (f) Lessor Liens. No Lessor Liens (other than those created by the ------------ Operative Documents) exist on the Closing Date on the Leased Property, or any portion thereof, and the execution, delivery and performance by the Lessor of this Master Agreement or any other Operative Document to which it is or will be a party will not subject the Leased Property, or any portion thereof, to any Lessor Liens (other than those created by the Operative Documents). (g) Employee Benefit Plans. The Lessor is not and will not be ---------------------- making its investment hereunder, and is not performing its obligations under the Operative Documents, with the assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA), or "plan" (as defined in Section 4975(e)(1)) of the Code. (h) General Partner. The sole general partner of the Lessor is --------------- Atlantic Financial Managers, Inc., a Texas corporation. (i) Financial Information. --------------------- (A) The unaudited balance sheet of the Lessor as of December 31, 2000 and the related statements of income, partners' capital and cash flows for the year then ended, copies of which have been delivered to the Agent and the Lessee, fairly present, in conformity with sound accounting principles, the financial condition of the Lessor as of such date and the results of operations and cash flows for such period. (B) Since December 31, 2000, there has been no event, act, condition or occurrence having a material adverse effect upon the financial condition, operations, performance or properties of the Lessor, or the ability of the Lessor to perform in any material respect its obligations under the Operative Documents. (C) The Lessor has no recourse indebtedness, and the Lessor has not entered into any other transactions, purchases, leases or other agreements, other than immaterial transactions, purchases, leases and other agreements entered into by the Lessor in the ordinary course of its business, in which the Lessor has any liability to the other parties to such transactions, purchases, leases or other agreements that is in excess of the Lessor's ownership or other interest in the property subject to such transactions, purchases, leases or other agreements other than liability for required fundings, breach of contract, misrepresentation, gross negligence, willful misconduct, fraud, failure to turn over funds and similar exceptions to limitations on recourse. (j) No Offering. The Lessor has not offered the Notes to any Person ----------- in any manner that would subject the issuance thereof to registration under the Securities Act or any applicable state securities laws. -32- SECTION 4.4 Representations of each Lender. Effective as of the date of ------------------------------ execution hereof, as of the Closing Date and as of each Funding Date, each Lender represents and warrants to the Lessor and to the Lessee as follows: (a) Securities Act. The interest being acquired or to be acquired -------------- by such Lender in the Funded Amounts is being acquired for its own account, without any view to the distribution thereof or any interest therein, provided that such Lender shall be entitled to assign, convey or transfer its interest in accordance with Section 6.2. ----------- (b) Employee Benefit Plans. Such Lender is not and will not be ---------------------- making its investment hereunder, and is not performing its obligations under the Operative Documents, with the assets of an "employee benefit plan" (as defined in Section 3(3) of ERISA), or "plan" (as defined in Section 4975(e)(1)) of the Code. ARTICLE V COVENANTS OF LESSEE, JFC AND LESSOR SECTION 5.1 Affirmative Covenants. Each of the Lessee and JFC covenants --------------------- and agrees that, it shall do, or cause to be done, the following: (a) Maintenance of Office. Each of the Lessee and JFC will maintain --------------------- at its headquarters at 12555 Manchester Road, St. Louis, Missouri 63131, an office where notices, presentations and demands in respect of this Master Agreement and the other Operative Documents may be given to and made upon it; provided, however, that it may, upon 30 days' prior written notice to -------- ------- the Agent and the Funding Parties, move such office to any other location within the continental boundaries of the United States. The Lessee hereby agrees that it will pay, and will save any Lender harmless against liability for, any stamp or other tax or governmental charge imposed in respect of any transfer of a Note made at a time when the books for the registration, and registration of transfer, of Notes are maintained at an office outside the State of Missouri, to the extent (if any) that such tax or charge exceeds the amount that would have been payable had said books been maintained in the State of Missouri, and such obligation of the Lessee shall survive the payment or prepayment of the Notes and the termination of this Master Agreement. (b) ERISA. Neither the Lessee, JFC nor any of their Subsidiaries will ----- at any time permit any Plan to: (i) engage in any Prohibited Transaction; (ii) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA, whether or not waived; or -33- (iii) terminate under circumstances which could result in the imposition of a Lien on any property of the Lessee, JFC or any of their Subsidiaries pursuant to Section 4068 of ERISA. The Lessee and JFC shall, and shall cause each of their ERISA Affiliates to: (x) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (y) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (z) make all required contributions to any Plan subject to Section 412 of the Code. (c) Existence. The Lessee, subject to Rule 326(b) of the Exchange, --------- and JFC shall each take and fulfill, or cause to be taken and fulfilled, all actions and conditions necessary to preserve and keep in full force and effect its existence, franchises, permits, licenses, rights and privileges as a partnership in good standing and the existence, franchises, permits, licenses, rights and privileges as a partnership or a corporation, as the case may be, in good standing, of each of their Subsidiaries, will preserve or renew all of its patents, trademarks, trade names and service marks and goodwill and will not liquidate or dissolve, or permit any of their Subsidiaries to liquidate or dissolve, unless in the case of a Subsidiary its liquidation or dissolution would not have a Material Adverse Effect, and shall take and fulfill, or cause to be taken and fulfilled, all actions and conditions necessary to qualify, and to preserve and keep in full force and effect its qualification, and that of each of their Subsidiaries, to do business as a foreign partnership or corporation in each jurisdiction in which the character of the properties owned (or held under lease) by the Lessee or JFC or any of their Subsidiaries, respectively, or the nature of their respective activities makes such qualification necessary. (d) General Maintenance of Properties and Business, Etc. Each of the --------------------------------------------------- Lessee, JFC and each of their Subsidiaries, will: (i) maintain its property in good condition and repair and make all needful and proper renewals, repairs, replacements, additions, betterments and improvements thereof and thereto, so that the business carried on in connection therewith may be conducted properly and efficiently at all times; (ii) maintain, with financially sound insurers of nationally recognized stature and responsibility, insurance with respect to its property and business of such a nature, with such terms and in such amounts as a prudent person would maintain with respect to similar properties and a similar business, and, in any event, will maintain insurance on all its property of a character usually insured by corporations or partnerships engaged in the same or a similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against and for by such corporations or partnerships and carry, with such insurers in customary amounts, such other insurance, including public liability -34- insurance, as is usually carried by corporations or partnerships engaged in the same or a similar business similarly situated; provided, however, that (x) all insurance maintained pursuant to -------- ------- this subsection (ii) will be carried in amounts sufficient to prevent the Lessee, JFC or any of their Subsidiaries from incurring liability as a coinsurer under law or the terms of the applicable policy or policies, and (y) neither the Lessee nor any of its Subsidiaries shall self-insure, except that each may self-insure as to the types of risks against which it presently selfinsures, so long as such self-insured risks, in the aggregate, do not exceed at any time 10% of the assets of the Lessee as of the end of the then most recent fiscal quarter of such Person; and, provided further, ---------------- that for the purposes of clause (y) of the preceding proviso only, the term "assets" of the Lessee shall not be deemed to include assets located at any branch office of the Lessee other than the portion of assets located at any such branch office carried on the books of the Lessee at a value in excess of $500,000. The Lessee and any of its Subsidiaries may selfinsure both as to types of risks other than those, and amount of risk in excess of that, permitted by the preceding sentence if, and only if, whichever of them undertakes such additional self-insurance shall establish and maintain on its books adequate reserves therefor; and provided -------- further, that so long as the Lessee or any of its Subsidiaries ------- self-insures any risk, the Lessee shall deliver annually to the Agent and each Funding Party an Officer's Certificate demonstrating that all necessary and adequate reserves have been maintained with respect thereto. Notwithstanding the foregoing, the Lessee shall not self-insure any risks with respect to the Leased Property except as expressly permitted by the Required Lenders. Subject to the conditions set forth in this subsection (ii), the Lessee or any of its Subsidiaries may form a Subsidiary to undertake any activity that the Lessee or any of its Subsidiaries may undertake itself under this subsection (ii); (iii) keep proper books of record and accounts with respect to all of its business transactions in accordance with GAAP in effect in the United States, which books of record and accounts shall, in all material respects, be true, correct and complete; (iv) set aside on its books from its earnings for each fiscal year, in reasonably adequate amounts, all proper accruals and reserves that, in accordance with GAAP, should be set aside from such earnings in connection with its business, including reserves for litigation, depreciation, obsolescence and/or amortization, and accruals for taxes based on or measured by income or profits and for all other taxes; and (v) at all times maintain and keep in full force and effect its rights and franchises material to its business and its memberships in such Business Associations as are necessary to enable it to engage (in the case of those entities -35- presently so engaged) in the business of a securities broker, dealer or underwriter, or financial services institution and take all actions necessary to comply with the rules and regulations, as in effect from time to time, of such Business Associations and each other association, corporation or governmental authority to which it is subject. (e) Compliance with Law. Neither the Lessee, JFC nor any of their ------------------- Subsidiaries will (i) violate or fail to comply with any laws, ordinances, governmental rules or regulations (including, without limitation, environmental and safety laws and regulations and the Net Capital requirements of Section 15 of the Exchange Act and the rules and regulations promulgated thereunder) or any rules and regulations of any Business Association to which it is or may become subject, or (ii) fail to obtain or maintain any patents, trademarks, service marks, trade names, copyrights, design patents, licenses, permits, franchises or other governmental authorizations necessary to the operation and ownership of its property or to the conduct of its business, if the violation or failure with respect to clause (i) or (ii) of this Section 5.1(e) could reasonably be expected to have a Material Adverse Effect. (f) Payment of Taxes and Claims. --------------------------- (i) Each of the Lessee, JFC and each of their Subsidiaries will pay and discharge promptly: (x) all taxes, assessments and governmental charges and levies imposed upon it, its income or profits or any of its properties, before the same shall become delinquent, and (y) all lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and other similar persons for labor, materials, supplies and rentals that, if unpaid, might by law become a Lien upon its property; provided, however, except as -------- ------- otherwise provided in the Operative Documents that none of the foregoing need be paid while the same is being contested in good faith by appropriate proceedings diligently conducted so long as adequate book reserves shall have been established in accordance with GAAP with respect thereto, the owning Person's title to the particular property is not materially adversely affected and its right to use the particular property in the ordinary course of business is not materially interfered with. (ii) The Lessee, JFC and each of their Subsidiaries will pay all obligations not specified in subsection (i) of this Section 5.1(f) when due, except such as may be contested in good faith by appropriate proceedings; provided that, no such Person shall be ------------- permitted to contest any such obligation if such contest -36- could reasonably be expected to have a Material Adverse Effect or is otherwise prohibited or limited under the Operative Documents. (g) Transactions with Affiliates. Neither the Lessee, JFC nor any ---------------------------- of their Subsidiaries will enter into any transaction (including, without limitation, the purchase, sale or exchange of any property, the rendering of any services, and the payment of management fees) with any Affiliate, except, in each case, in the ordinary course of, and pursuant to the reasonable requirements of, the business of the Lessee or such Subsidiary, as the case may be, and in good faith and upon commercially reasonable terms that are no less favorable to the Lessee, JFC or such Subsidiary, as the case may be, than would obtain in a comparable arm's length transaction with a Person not an Affiliate; provided, however, that (x) the Lessee may -------- ------- provide managerial services and overhead to Consolidated Subsidiaries, to EDJ Leasing Co., L.P., a Missouri limited partnership and to Boone National Savings & Loan, F.A., a federal savings and loan, to the extent the value of such services and overhead (valued at the higher of cost or fair market value) provided to EDJ Leasing Co. and to Boone National Savings & Loan, F.A. do not in the aggregate exceed $250,000 per fiscal year and (y) the Lessee may pay management fees to JFC in an aggregate amount not exceeding the sum of (A) the reasonable salaries of the general partners of JFC and (B) the amounts paid by JFC to its limited partners representing guaranteed payments of 7-1/2% per annum on the principal amounts of their respective capital contributions to JFC. (h) Sale of Receivables. Neither the Lessee nor any Subsidiary will ------------------- sell with recourse, or sell for less than the greater of the face value or the fair market value thereof, any of its accounts, bills or notes receivable, except as required pursuant to Rule 326(b) of the Exchange. (i) Notice of Certain Events and Conditions. The Lessee and JFC --------------------------------------- will promptly, and in any event within 5 days, give written notice to the Agent and each Lender of: (x) any event of acceleration or event of default (or other event or condition that, after notice or the passage of time or both, could become an event of acceleration or event of default) under this Master Agreement and the other Operative Documents or under any evidence of Indebtedness of the Lessee or of any Subsidiary of which the Lessee or JFC has knowledge, or under any indenture, mortgage or other agreement relating to any such evidence of Indebtedness or under any material lease or any preferred stock, for or in respect of which the Lessee or any Subsidiary may be liable, (y) the giving by the Agent or any Lender, or by the holder of any other evidence of Indebtedness or other Security of the Lessee, JFC or any of its or their Subsidiaries of notice with respect to a claimed event of acceleration or event of default or any other such condition or event, or (z) any notice given to the SEC pursuant to subsection (e)(1) of Rule 15c3-1 or any notice of noncompliance with Rule 15c3-1. (j) Tax Consolidation. Neither the Lessee, JFC nor any of their ----------------- Subsidiaries shall file or consent to the filing of a consolidated tax return with any Person, unless required to -37- do so by applicable law; provided, however, that to the extent any such law -------- ------- requiring such tax consolidation permits those entities joining in a consolidated tax return discretion as to the sharing of or apportionment of any tax benefits or liabilities, or in any other respect, the Lessee, JFC and each of their Subsidiaries, or any of them, as the case may be, shall exercise such discretion only in accordance with the directions of, or restrictions imposed by, the Required Lenders, and such subsequent directions or restrictions as the Required Lenders may impose. (k) Inspection. Each of the Lessee and JFC will permit the Agent ---------- and any Funding Party, by its representatives, agents or attorneys, to examine all books of account, records, reports and other papers of the Lessee, JFC and each of their Subsidiaries (including, without limitation, copies of all income and other tax returns, all FOCUS Reports and documentation related thereto), to make copies and take extracts from any thereof, to discuss the affairs, finances and accounts of the Lessee, JFC and each of their Subsidiaries with their respective officers and independent certified public accountants (and by this provision the Lessee (as to itself and all its Subsidiaries) and JFC (as to itself and all of its Subsidiaries) hereby authorizes such accountants to discuss with the Agent and any Funding Party, the finances and accounts of the Lessee, JFC and each of their Subsidiaries) and to examine the properties of the Lessee, JFC and each of their Subsidiaries, each such inspection shall be made at such reasonable times, and as often as reasonably requested (unless an Event of Default shall have occurred), and shall be at the expense of the Lessee, and all expenses in connection with any such inspection incurred by the Lessee, JFC or any of their Subsidiaries, any officers and employees of any thereof and the independent certified public accountants of any thereof shall be expenses payable by the Lessee or JFC, as the case may be, and shall not be expenses of the Person making the inspection. (l) Intentionally Omitted. --------------------- (m) Guaranties of Affiliate and Subsidiary Obligations. Any other -------------------------------------------------- provision hereof notwithstanding, the Lessee will not cause or permit Indebtedness permitted by Section 5.2(j) hereof and attributable to any guaranty or guaranties by it in respect of any obligations of, or otherwise in support of, any of its Affiliates and/or Subsidiaries to at any time exceed 10% of Partnership Capital in the aggregate. (n) Nature of Lessee's Business. The principal business of the --------------------------- Lessee and its Subsidiaries, taken on a consolidated basis, shall not include any activities or enterprises not customarily engaged in by corporations or partnerships in the retail investment brokerage business; provided, however, that this Section 5.1(n) shall not be construed to - -------- ------- prevent the Lessee or any Subsidiary from ceasing to conduct any currently existing business activities of any thereof if the Lessee shall continue to conduct such activities and enterprises as are customarily engaged in by corporations or partnerships in the retail investment brokerage business. The business of the Lessee and the Subsidiaries shall continue to be conducted solely in the United States, except that: (A) the Lessee may conduct business in Canada, Australia, New Zealand and -38- any nation which is a member of the European Economic Community (a "Permitted Nation") directly or through a Subsidiary or Affiliate, and (B) ---------------- the Lessee itself may directly conduct business in countries other than a Permitted Nation provided that the aggregate amount of the assets of the Lessee and its Subsidiaries on a consolidated basis used in business in countries other than a Permitted Nation shall at no time exceed ten percent (10%) of Partnership Capital, as would be reflected on a consolidated balance sheet of the Lessee at such time prepared in accordance with generally accepted accounting principles as in effect at such time; and provided further that the Lessee may not simultaneously conduct business in - ---------------- any individual country outside the United States, directly itself and indirectly through a Subsidiary or Affiliate. (o) Change of Examining Authority. The Lessee shall promptly give ----------------------------- notice to the Agent and the Lenders of any change in its Examining Authority and shall include in its notice the address of the new Examining Authority. (p) Financial Statements, Reports, etc. The Lessee and JFC will ---------------------------------- deliver to the Agent with sufficient copies for each Funding Party, in form and substance satisfactory to the Agent and the Required Lenders: (i) as soon as available and, in any case, within 90 days after the close of each fiscal year, two copies of the respective consolidated statements of financial condition of the Lessee and its Subsidiaries and JFC and its Subsidiaries setting forth the financial condition of such entities as of the end of such fiscal year, together with consolidated statements of income, cash flows, changes in partnership capital and changes in liabilities of the Lessee and JFC, respectively, for such fiscal year, in each case setting forth, in comparative form, the figures for the preceding fiscal year, all in reasonable detail, such financial statements to be accompanied by an opinion with respect thereto of Arthur Andersen LLP or another Independent Certified Public Accountant, which opinion shall state that (x) the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and, accordingly, included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances, and (y) such financial statements present fairly the financial condition of the Lessee and its Subsidiaries and JFC and its Subsidiaries, respectively, at such date and the results of operations thereof for such period and have been prepared in accordance with generally accepted accounting principles consistently applied, except for noted changes in application in which such accountants concur; (ii) as soon as practicable and, in any case, within 45 days after the end of each of the first, second and third quarterly accounting periods in each fiscal year, two copies of (x) the respective unaudited consolidated statements of financial condition of the Lessee and its Subsidiaries and JFC and its Subsidiaries -39- as of the end of such accounting period, and (y) the respective unaudited consolidated statements of income of the Lessee and its Subsidiaries and JFC and its Subsidiaries for the quarterly accounting period and for the fiscal year to date, setting forth in each case in comparative form the figures for the corresponding periods a year earlier, prepared and certified by the principal financial officer of the Lessee and JFC, respectively, as complete and correct, as having been prepared in accordance with GAAP consistently applied and as presenting fairly such financial condition and results of operations, subject, in each case, to changes resulting from year-end audit adjustments; (iii) promptly upon receipt thereof, two copies of each report other than those referred to in paragraph (i) hereof (including, without limitation, the auditors' comment letter to management) submitted to JFC, the Lessee or any Subsidiary by independent certified public accountants in connection with any annual, interim or special audit; (iv) promptly upon distribution thereof, copies of all such financial or other statements (including proxy statements) and reports as JFC, the Lessee or any Subsidiary shall send to any class of its partners or shareholders, as the case may be, its bank lenders or holders of any issue of its debt securities; (v) promptly after filing thereof, copies of all reports, proxy statements and registration statements that JFC, the Lessee or any Subsidiary shall file with any securities exchange or the SEC, or any governmental or public authority or agency substituted therefor, or any Business Association, including, without limitation, all Focus Reports (provided that such Focus Reports may be provided on a quarterly basis) and all amendments to any of the foregoing filed by or with respect to the Lessee or any Subsidiary, and promptly after filing of any Form BD, Form ADV or CRD report or any amendment thereto that reflects any material disciplinary action, liability or change in financial position, an Officer's Certificate specifying the nature thereof and what action the Lessee is taking or proposes to take with respect thereto; (vi) promptly upon receipt thereof, copies of all notices received from United States, Canadian or any other Permitted Nation or any state, provincial or local governmental or public authorities or agencies or any Business Association relating to any order, ruling, statute, regulation or other law or directive that might materially adversely affect the financial condition or business of the Lessee or any Subsidiary; (vii) immediately after the occurrence or institution thereof, an Officer's Certificate specifying any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including, to the extent so -40- applicable: (w) any breach or non-performance of, or any default under, a Contractual Obligation of the Lessee, JFC or any of their Subsidiaries; (x) any dispute, litigation, investigation, proceeding or suspension between the Lessee, JFC or any of their Subsidiaries and any Governmental Authority; (y) the commencement of, or any material development in, any litigation or proceeding affecting the Lessee, JFC or any of their Subsidiaries, including pursuant to any applicable Environmental Laws; or (z) any other Environmental Claims, which certificate shall describe what action the Lessee is taking or proposes to take with respect thereto; (viii) promptly, and in any event within 45 days after the end of each of the first, second and third quarterly accounting periods in each fiscal year, and within 90 days after the close of each fiscal year, an Officer's Certificate setting forth a Net Capital computation for the Lessee (or, if the Lessee is operating pursuant to paragraph (a)(1)(ii) of Rule 15c3-1, an Alternative Net Capital computation) as at the end of each quarterly fiscal period, and certifying such computation as true and correct; provided, however, -------- ------- that so long as (x) the Lessee shall be required to submit a report for such quarterly fiscal period on Part I, II or IIA of Form X-17A-5 (and accompanying information if any) to the SEC pursuant to Rule 17a-5 of the General Rules and Regulations of the SEC under the Exchange Act and (y) such report shall provide the computation required by this paragraph (viii), the Lessee may submit such report (and accompanying information if any), certified as set forth above; (ix) as soon as available, a copy of the annual audited report filed by the Lessee pursuant to paragraph (d)(2) of Rule 17a-5 of the General Rules and Regulations of the SEC under the Exchange Act, together with the supporting schedules filed with said report pursuant to paragraph (d)(3) of such Rule, provided, however, that -------- ------- should said Rule 17a-5 lapse or be repealed, in whole or in part, the Lessee shall deliver such other information or reports as it shall be required to file in its status as a broker or dealer of securities with the SEC or any successor agency thereto; (x) immediately upon any partner or officer of the Lessee obtaining knowledge of any new designation of an Examining Authority, an Officer's Certificate specifying such new Examining Authority; (xi) immediately upon any partner or officer of the Lessee obtaining knowledge of any condition or event which constitutes or which, after notice or lapse of time or both, would constitute an Event of Default or Potential Event of Default, an Officer's Certificate, specifying the nature and period of existence -41- thereof and what action the Lessee has taken or is taking or proposes to take with respect thereto; (xii) immediately upon becoming aware of the occurrence of any of the following events affecting the Lessee, JFC or any ERISA Affiliate (but in no event more than 10 days after such event), and deliver to the Agent and each Funding Party a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Lessee, JFC or any ERISA Affiliate with respect to such event: (w) an ERISA Event; (x) a material increase in the Unfunded Pension Liability of any Pension Plan; (y) the adoption of, or the commencement of contributions to, any Plan subject to Section 412 of the Code by the Lessee or any ERISA Affiliate; or (z) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; (xiii) at the time of release thereof, copies of all press releases of the Lessee, JFC or any of their Subsidiaries concerning any event or condition material to the business, prospects, earnings, properties or condition, financial or other, of any of them; (xiv) promptly after the execution thereof, a copy of each amendment to the partnership agreement of the Lessee or JFC, other than an amendment made solely to reflect additional capital contributions to the Lessee or JFC, as the case may be, by a partner; (xv) of any material change in accounting policies or financial reporting practices by the Lessee, JFC or any of their Subsidiaries; (xvi) upon, but in no event later than 15 days after, any officer of the Lessee, JFC or any of their Subsidiaries becoming aware of (x) any and all enforcement, investigation, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Lessee, JFC or any of the Subsidiaries or any of their respective properties pursuant to any applicable Environmental Laws which could reasonably be expected to have a Material Adverse Effect, (y) all other material Environmental Claims, and (z) any -42- environmental or similar condition on any real property adjoining or in the vicinity of the property of the Lessee or any Subsidiary that could reasonably be anticipated to cause such property of the Lessee or such Subsidiary or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws; and (xvii) promptly upon request therefor, such other data, filings and information as the Agent or any Funding Party may from time to time reasonably request. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action the Lessee, JFC or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 5.1(p)(xi) shall describe with ------------------ particularity any and all clauses or provisions of this Master Agreement or other Operative Document that have been (or foreseeably will be) breached or violated. (q) Officer's Certificates. Each set of financial statements ---------------------- delivered pursuant to paragraph (i) or (ii) of Section 5.1(p) hereof shall be accompanied by a Compliance Certificate executed by a Responsible Officer and, unless the following information is contained in such Compliance Certificate, an Officer's Certificate (in form and substance satisfactory to the Agent and the Required Lenders) executed by a Responsible Officer stating that the Person signing the Certificate has reviewed the terms of this Master Agreement, that a review of the affairs and activities of the Lessee, JFC and their Subsidiaries has been made under such Person's supervision and that, in such Person's opinion and to the best of such Person's knowledge and belief, the Lessee, JFC and their Subsidiaries were not upon the date of such certificate or at any time during the period covered by such financial statements or Officer's Certificate in default under any of the provisions of this Master Agreement or any of the other Operative Documents, as the case may be, and setting forth in reasonable detail the calculations made as at the end of such period in determining compliance with the provisions of Sections 5.1(m) and (n) and Sections 5.2(i), (j), (k), (l), (m) and (n) hereof, inclusive; provided, however, -------- ------- that, in the event that any such default shall have occurred, such certificate shall so specify and shall state whether such default has been cured or is continuing and, if continuing, what steps the Lessee or JFC, as the case may be, proposes to take to cure such default and the time necessary so to cure such default. Each such Officer's Certificate shall also specify the percentage of Partnership Capital invested in assets which were used in its business in countries other than Permitted Nations as of the date of the balance sheet included in the accompanying financial statements. (r) Intentionally Omitted. --------------------- (s) Restricted Subsidiary Financials. If the Lessee shall have one or -------------------------------- more Restricted Subsidiaries, the financial statements referred to in Sections 5.1(p)(i) and (ii) shall be furnished separately for each such Restricted Subsidiary in addition to those for the Lessee and -43- its Consolidated Subsidiaries; provided, however, consolidating financial statements which separately incorporate each such Restricted Subsidiary may be provided in lieu of separate financial statements therefor. (t) Environmental Laws. ------------------ (i) The Lessee shall, and shall cause each Subsidiary to, conduct its operations and keep and maintain its property and develop the Leased Property in compliance with all Environmental Laws. (ii) Upon the written request of the Agent or any Lender, the Lessee shall submit and cause each of its Subsidiaries to submit, to the Agent with sufficient copies for each Lender, at the Lessee's sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to Section 5.1(c)(v). ----------------- (iii) The Lessee shall, and cause each Subsidiary to, maintain the Leased Property free from any Release. (u) Use of Proceeds. The Lessee shall use the proceeds of the --------------- Fundings to pay the costs of Construction and the acquisition and installation of the Equipment as permitted hereunder and under the other Operative Documents. (v) Compliance with Bond Documents. The Lessee shall promptly ------------------------------ perform any and all obligations of the Lessee under the Bond Documents, and, in the event the Lessee receives any notice of a default by the Lessee under the Bond Documents, the Lessee shall promptly provide a copy of such notice to the Agent. (w) Payment of Fees and Costs under Bond Documents. The Lessee ---------------------------------------------- shall promptly pay as and when the same become due and owing under the Bond Documents any and all fees and costs incurred by the Lessor, the Bond Trustee or the Bond Owners, pursuant to the terms of the Bond Documents. (x) Evidence of Tax Abatement. The Lessee shall, annually during ------------------------- the Lease Term, obtain from the appropriate Governmental Authority having jurisdiction over the Leased Property evidence reasonably acceptable to the Agent that the Leased Property will, as a result of the fee title thereto being vested in the Issuer, be exempt from real estate taxes and assessments for the calendar year in question. It is hereby acknowledged and agreed by the parties hereto that the Lessee shall be deemed to have satisfied its obligations hereunder if the Lessee annually submits to the Agent a copy of any and all tax bills issued by the appropriate Governmental Authority having jurisdiction over the Leased Property indicating that there are no real estate -44- taxes and assessments due and owing on the Leased Property for the period covered by such tax bill(s). SECTION 5.2 Additional Covenants. The Lessee and JFC, covenant and -------------------- agree that, so long as any of the Commitments remain in effect or any Obligation is owing to any Funding Party by the Lessee, the Lessee and JFC shall not, directly or indirectly, without the prior written permission of Agent as directed by the Required Lenders: (a) Limitation on Liens. The Lessee shall not, and shall not suffer ------------------- or permit any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"): --------------- (i) any Lien existing on property of the Lessee or any Subsidiary on the Closing Date and set forth in Schedule 5.2(a)(i) ------------------ securing Indebtedness outstanding on such date; (ii) any Lien created under any Operative Document; (iii) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section ------- 5.1(f), provided that no notice of lien has been filed or recorded ------ -------- ---- under the Code; (iv) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (v) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (vi) Liens on the property of the Lessee or its Subsidiaries securing (x) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (y) Contingent Obligations in connection with performance bonds, surety bonds and appeal bonds, and (z) other nondelinquent obligations of a like nature, in each case, incurred in the ordinary course of business; provided that all such Liens in -------- ---- the aggregate could not reasonably be expected to cause a Material Adverse Effect; -45- (vii) Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively -------- ---- stayed and the obligations secured by all such Liens in the aggregate at any time outstanding for the Lessee and its Subsidiaries could not reasonably be expected to cause a Material Adverse Effect; (viii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Lessee and its Subsidiaries; (ix) Liens on assets of corporations or other entities which become Subsidiaries after the date of this Agreement, provided, -------- however, that such Liens existed at the time the respective ------- corporations or other entities became Subsidiaries and were not created in anticipation thereof and the obligations secured by all such Liens in the aggregate at any time outstanding could not reasonably be expected to cause a Material Adverse Effect; (x) security interests on any property acquired or held by the Lessee or its Subsidiaries, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property; provided that (w) any such Lien attaches -------- ---- to such property concurrently with or within 120 days after the acquisition thereof, (x) such Lien attaches solely to the property so acquired in such transaction and other like assets in respect of which financing was provided by the same lender to the obligor of such Indebtedness, (y) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property, and (z) the principal amount of the Indebtedness secured by any and all such security interests in the aggregate could not reasonably be expected to cause a Material Adverse Effect; (xi) Liens securing obligations in respect of capital leases on assets subject to such leases, provided that such capital leases -------- ---- are otherwise permitted hereunder; (xii) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided -------- that (x) such deposit account is not a dedicated cash collateral ---- account and is not subject to restrictions against access by the Lessee or any Subsidiary in excess of those set forth by regulations promulgated by the FRB, and (y) such deposit account is not intended by the Lessee or any Subsidiary to provide collateral to the depository institution; -46- (xiii) Liens securing other obligations of the Lessee and its Subsidiaries not to exceed in the aggregate at any one time outstanding ten percent (10%) of the total tangible assets of JFC and its Consolidated Subsidiaries, as would be shown in the consolidated financial statements of JFC and its Consolidated Subsidiaries as at the end of the fiscal quarter next preceding the date on which such determination is made; (xiv) Liens encumbering real property acquired after the date of this Master Agreement to the extent acquired pursuant to an option, right of first refusal, right of first offer or other similar contract right existing on the date of this Master Agreement and described on Schedule 5.2(a)(xiv); -------------------- (xv) Liens on the Lessee's interest in its customers' securities, provided, however, that if any such Lien is subject to -------- ------- regulation in any respect (including, without limitation, as to security therefor) by the SEC, FRB, or any other Governmental Authority or Business Association, any such Lien shall be permitted pursuant to this Section 5.2(a), if and only if such Lien confirms -------------- in all respects to any applicable regulations, rules, orders or directions of any thereof; and (xvi) Leases of property entered into with third party lessors in the ordinary course of business by the Lessee or any Subsidiary, as lessee, which are treated as operating leases under GAAP. (b) Intentionally Omitted. --------------------- (c) Use of Proceeds. The Lessee shall not, and shall not suffer or --------------- permit any Subsidiary to, use any portion of the proceeds of any Funding, directly or indirectly, (i) in such a manner as to result in a violation of Regulation T, Regulation U or Regulation X of the FRB, or (ii) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. (d) Contingent Obligations. The Lessee shall not, and shall not suffer ---------------------- or permit any Subsidiary to, create, incur, assume or suffer to exist any Contingent Obligations except: (i) endorsements for collection or deposit in the ordinary course of business; (ii) Permitted Swap Obligations; (iii) Contingent Obligations of the Lessee and its Subsidiaries existing as of the Closing Date and listed in Schedule 5.2(d); --------------- -47- (iv) Contingent Obligations with respect to Indebtedness of the Lessee's Wholly-Owned Subsidiaries permitted pursuant to Section 5.2(j); and -------------- (v) other Contingent Obligations not exceeding at any time ten percent (10%) of the Lessee's Partnership Capital. (e) ERISA. The Lessee shall not, and shall not suffer or permit any ----- of its ERISA Affiliates to, (i) terminate any Plan subject to Title IV of ERISA so as to result in any material (in the opinion of the Required Lenders) liability to the Lessee or any ERISA Affiliate, (ii) permit to exist any ERISA Event or any other event or condition, which presents the risk of a material (in the opinion of the Required Lenders) liability to any ERISA Affiliates, (iii) make a complete or partial withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in any material (in the opinion of the Required Lenders) liability to the Lessee or any ERISA Affiliate or, (iv) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder which could result in any material (in the opinion of the Required Lenders) liability to any ERISA Affiliate. (f) Change in Business. The Lessee shall not, and shall not suffer ------------------ or permit any Subsidiary to, engage in any material line of business substantially different from those lines of business carried on by the Lessee and its Subsidiaries on the date hereof. (g) Accounting Changes. The Lessee and JFC shall not, and shall not ------------------ suffer or permit any of their Subsidiaries to, (i) make any significant change in accounting treatment or reporting practices, except as required by GAAP, or (ii) change the fiscal year of the Lessee or JFC or of any of their Subsidiaries; provided, that the fiscal year of the Lessee, JFC and their Subsidiaries may be changed to a year ending December 31. (h) Amendments to Organizational Documents. The Lessee will not, -------------------------------------- nor will it permit any Subsidiary to, and JFC will not (i) make any amendment or modification to any terms or provisions of its partnership agreement, partnership certificate, articles of incorporation or bylaws which is materially adverse to the Agent or the Lenders without the prior written consent of the Required Lenders or (ii) issue any preferred stock. (i) Restricted Distributions. Neither the Lessee nor any ------------------------ Consolidated Subsidiary will, directly or indirectly, declare or make, or incur any liability to make, any Restricted Distribution, unless at the time of so declaring, making or incurring such liability to make such Restricted Distribution, and after giving effect thereto, no Potential Event of Default or Event of Default shall exist. (j) Lessee Indebtedness. Neither the Lessee nor any Consolidated ------------------- Subsidiary shall create, incur or assume, or in any manner otherwise be or become liable, contingently or otherwise, with respect to, or maintain or suffer to exist, any Indebtedness, except: -48- (i) Indebtedness evidenced by the notes issued pursuant to the Subordinated Debt Agreement, the 1992 Notes, the 1994 Notes and the 1996 Notes; (ii) Additional Subordinated Debt, if immediately after the occurrence thereof, and giving effect thereto, total Subordinated Debt would not exceed 50% of Total Capitalization; (iii) Additional Subordinated Debt in addition to that permitted by paragraph (ii) of this Section 5.1(j); provided, -------- however, that the additional Subordinated Debt permitted by this ------- paragraph (iii) shall not exceed $10,000,000 and shall arise under a revolving credit agreement or a similar credit facility, maintained in accordance with paragraph (c)(5)(i) of Appendix D to Rule 15c3-1; and, provided further, that any funds so drawn shall be used solely for the purpose of the Lessee's participation as an underwriter of securities as provided in said regulation; (iv) Any short-term Indebtedness resulting from Credit Balances and similar payables, Day Loans, Street Loans, Unsecured Bank Overdrafts and other short-term obligations and liabilities to customers, brokers, banks and others incurred in the ordinary course of the Lessee's business as such business is described in Item 1 of Part 1 of the Form 10-K; provided, however, that if any -------- ------- such Indebtedness is subject to regulation in any respect (including, without limitation, as to security therefor) by the SEC, FRB, or any other Governmental Authority or Business Association, any such Indebtedness shall be permitted pursuant to this Section 5.2(j), if and only if such Indebtedness conforms in -------------- all respects to any applicable regulations, rules, orders or directions of any thereof. Lessee shall at its option have the right to convert such Indebtedness to revolving lines of credit; (v) Indebtedness secured solely by property owned by the Lessee, provided that (A) any Indebtedness permitted by this -------- paragraph (v) shall be evidenced by (x) a Capital Lease or (y) a signed instrument expressly prohibiting recourse in respect of any such Indebtedness against the Lessee or any Subsidiary thereof, or any officer or director (past, present or future) of any thereof, and (B) the aggregate Indebtedness permitted by this paragraph (v) shall not exceed $50,000,000 or 20% of the Lessee's Net Capital, whichever is greater; (vi) Other Indebtedness incurred by Lessee or any Subsidiary from time to time, provided however, the aggregate Indebtedness permitted by this paragraph (vi) shall not exceed $50,000,000 or 20% of Lessee's Net Capital, whichever is greater; and -49- (vii) Indebtedness evidenced by that certain Master Agreement dated as of November 30, 2000, among Edward D. Jones & Co., L.P., as Lessor, Construction Agent and Guarantor, Atlantic Financial Group, Ltd. as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by The Jones Financial Companies, L.L.L.P. (viii) Indebtedness that may be incurred by Lessee in the event Lessee elects to complete the purchase of the property located at 8333 South River Parkway, Tempe, Arizona pursuant to a letter of intent between Lessee and Motorola, Inc. dated August 8, 2001. (k) Lease Obligations. Neither the Lessee nor any Consolidated ----------------- Subsidiary will become liable, renew or extend as lessee under any Long Term Lease if, after giving effect thereto, the aggregate rental and other amounts payable in any fiscal year of the Lessee in respect of all Long Term Leases under which the Lessee or any Consolidated Subsidiary is lessee or is otherwise directly or indirectly liable (whether or not contingently) would at any time exceed 20% of Partnership Revenues for, and as of the end of, the immediately preceding fiscal year. (l) Restricted Investments. At no time will the Lessee or any of ---------------------- its Consolidated Subsidiaries make, or become obligated to make, directly or indirectly, a Restricted Investment, if, after giving effect thereto the aggregate amount of Restricted Investments (including ones as to which an obligation to make has been incurred, directly or indirectly) of the Lessee and its Consolidated Subsidiaries would exceed 15% of Partnership Capital. (m) Merger, Consolidation or Transfer of Assets. The Lessee will ------------------------------------------- not consolidate with or merge into any other Person (including any of its Affiliates), nor will the Lessee permit or suffer any other Person (including any of its Affiliates) to consolidate with or merge into it, nor will the Lessee, directly or indirectly, in one or more transactions (except in the ordinary course of its business as described in Item 1 of Part 1 of the Form 10-K), sell, transfer, assign, lease (as lessor), abandon or otherwise dispose of all, or substantially all, of its assets or buy, lease or otherwise acquire all, or substantially all, of the equity interest or assets of any other Person; provided, however, that the Lessee may acquire -------- ------- all or substantially all of the equity interest or assets of any Person so long as the aggregate amount of the consideration paid or otherwise given (including the assumption of any liabilities) for the equity interests or assets of such Person acquired by the Lessee (directly or indirectly), whether in a lump sum or in more than one installments, shall not exceed $10,000,000. (n) Limitation on Liabilities. The Lessee will not cause or permit ------------------------- the aggregate amount of liabilities of the Lessee and its Consolidated Subsidiaries that could possibly arise at any time out of, or in relation to, the Lessee's or a Consolidated Subsidiary's ownership, directly or indirectly, of any interest or interests in limited partnerships or other entities which may be Affiliates or Subsidiaries of the Lessee (other than liabilities permitted by -50- Section 5.1(m)) to exceed $15,000,000. Any such interest of the Lessee or a Consolidated Subsidiary acquired by it after the date of this Master Agreement shall be owned only indirectly by it, and only through a series of affiliated entities including at least one duly organized and validly existing corporation which is in good standing under the laws of its jurisdiction of incorporation and is at all times adequately capitalized and as to which all corporate formalities are at all times observed. The Lessee shall not be a general partner in any general or limited partnership. (o) Required Capital Ratio. The Required Capital Ratio as of the last ---------------------- day of each calendar quarter shall not be less than 3:75 to 1.00. (p) Partnership Capital Requirement. The Lessee's End of Period ------------------------------- Partnership Capital shall not as of the last day of any calendar quarter be less than the greater of (i) $300 million or (ii) the Partnership Capital then required to be maintained under the Subordinated Debt Agreement, as such Partnership Capital requirement under the Subordinated Debt Agreement may be increased from time to time. (q) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio on --------------------------- the last day of each fiscal quarter of JFC for the period of four consecutive fiscal quarters ending on such date, in each case taken as a single accounting period, shall not be less than 1.25 to 1.0. (r) Restrictive Agreements. The Lessee shall not, nor shall it ---------------------- permit any of its Subsidiaries to, enter into any indenture, agreement, instrument or other arrangement which directly or indirectly prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the ability of the Lessee or any Subsidiary to (i) pay dividends or make other distributions (x) on its Capital Stock or (y) with respect to any other interest or participation in, or measured by, its profits, (ii) make loans or advances to the Lessee or any Subsidiary, (iii) repay loans or advances from the Lessee or any Subsidiary or (iv) transfer any of its properties or assets to the Lessee or any Subsidiary. (s) Disposition of Assets. The Lessee shall not, and shall not --------------------- suffer or permit any Subsidiary to, directly or indirectly, (x) issue any equity interests in the Lessee or any Subsidiary to any Person which is not the Lessee or a Subsidiary or (y) sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or a series of transactions) any property, including accounts and notes receivable, with or without recourse (each, an "Asset Disposition"), or enter into any agreement to do any of the ----------------- foregoing, except: (i) dispositions of inventory, or used, worn-out or surplus equipment, all in the ordinary course of business; (ii) the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, -51- or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; and (iii) dispositions not otherwise permitted hereunder which are made for fair market value; provided, that (A) at the time of any -------- disposition, no Event of Default shall exist or shall result from such disposition, (B) at least 75% of the aggregate sales price from such dispositions shall be paid in cash, and (C) the aggregate value of all assets so sold by the Lessee and its Subsidiaries after the date hereof, together, shall not (1) represent more than 5% of the total assets of the Lessee and its Subsidiaries, as would be shown in the consolidated financial statements of the Lessee and its Subsidiaries as at the end of the fiscal quarter next preceding the date on which such determination is made, or (2) be responsible for more than 5% of the consolidated net income of the Lessee and its Subsidiaries for the 12-month period ending as of the end of the fiscal quarter next preceding the date of determination. (t) Year 2000. The Lessee will take, and will cause each of its --------- Subsidiaries to take, all such actions as are reasonably necessary to successfully implement a program to assure that the Year 2000 Problem will not have a Material Adverse Effect. At the request of the Agent, the Lessee will provide a description of such program, together with any updates or progress reports with respect thereto. SECTION 5.3 Further Assurances. ------------------ (a) The Lessee shall ensure that all written information, exhibits and reports furnished to the Agent or the Funding Parties do not and will not contain any untrue statement of a material fact and do not and will not omit to state any material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and will promptly disclose to the Agent and the Funding Parties and correct any defect or error that may be discovered therein or in any Operative Document or in the execution, acknowledgment or recordation thereof. (b) Promptly upon request by the Agent or the Funding Parties, the Lessee shall (and shall cause any of its Subsidiaries to) do, execute, acknowledge, deliver, record, rerecord, file, re-file, register and re-register, any and all such further acts, certificates, assurances and other instruments the Agent or such Lenders, as the case may be, may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement or any other Operative Document, and (ii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Agent and Lenders the rights granted or now or hereafter intended to be granted to the Lenders under any Loan Document or under any other document executed in connection therewith. -52- (c) Upon the written request of the Lessor or the Agent, the Lessee, at its own cost and expense, will cause all financing statements (including precautionary financing statements), fixture filings and other similar documents, to be recorded or filed at such places and times in such manner, as may be necessary to preserve, protect and perfect the interest of the Lessor, the Agent and the Lenders in the Leased Property as contemplated by the Operative Documents. SECTION 5.4 Additional Required Appraisals. If, as a result of any ------------------------------ change in Applicable Law after the date hereof, an appraisal of the Leased Property is required during the Lease Term under Applicable Law with respect to any Funding Party's interest therein, such Funding Party's Funded Amount with respect thereto or the Operative Documents, then the Lessee shall pay the reasonable cost of such appraisal, provided that, except as otherwise ------------- provided in the Operative Documents, appraisals shall not be requested more than once per year unless required by Applicable Law. SECTION 5.5 Lessor's Covenants. The Lessor covenants and agrees that, ------------------ unless the Agent, the Lessee and the Lenders shall have otherwise consented in writing: (a) the proceeds of the Loans received from the Lenders will be used by the Lessor solely to acquire the Leased Property and to pay the Construction Agent or the Lessee for certain closing, development and transaction costs associated therewith and for the costs of Construction. No portion of the proceeds of the Loans will be used by the Lessor (i) in connection with, whether directly or indirectly, any tender offer for, or other acquisition of, stock of any corporation with a view towards obtaining control of such other corporation or (ii) directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock; (b) it shall not engage in any business or activity, or invest in any Person, except for activities similar to its activities conducted on the date hereof, the Transaction and lease transactions similar to the Transaction; (c) it will maintain tangible net worth in an amount no less than the sum of (i) $100,000 plus (ii) 3% of its total assets (calculated ---- assuming no reduction in the value of the Leased Property from its original cost to the Lessor); (d) it will deliver to the Agent and the Lessee, as soon as available and in any event within 90 days after the end of each fiscal year, a balance sheet of the Lessor as of the end of such fiscal year and the related statements of income, partners' capital and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, together with copies of its tax returns, all certified by an officer of the Lessor's General Partner (and if the Lessor ever prepares audited financial statements, it shall deliver copies thereof to the Agent and the Lessee); -53- (e) it will permit the Agent, the Lessee and their respective representatives to examine, and make copies from, the Lessor's books and records, and to visit the offices and properties of the Lessor for the purpose of examining such materials, and to discuss the Lessor's performance hereunder with any of its, or its general partner's, officers and employees; (f) it shall not consent to the creation of any easement or other restriction against any Leased Property other than as permitted pursuant to Article V of the Lease; (g) it shall promptly discharge each Lessor Lien and shall indemnify the Lenders and the Lessee for any diminution in value of the Leased Property resulting from such Lessor Liens; (h) it shall not enter into any other transactions, leases, purchases or other agreements, other than immaterial transactions, purchases, leases and other agreements entered into by the Lessor in the ordinary course of its business, in which the other parties to said transactions, leases, purchases or other agreements will have any recourse against Lessor which is in addition to Lessor's ownership or other interest in the property subject to such transactions, purchases, leases or other agreements, other than liability for required fundings, breach of contract, misrepresentation, gross negligence, willful misconduct, fraud, failure to turn over funds and similar exceptions to limitations on recourse; (i) it shall not guaranty the liabilities of any other Person; (j) it shall pay its debts as such debts become due unless such debts are the subject of a bona fide dispute; (k) it shall not appoint a successor trustee or co-trustee to replace or serve with Bond Trustee, as the case may be (provided the Lessee's consent shall not be required so long as the fees of such successor trustee or co-trustee do not exceed the then current fees charged by the Bond Trustee for serving in such capacity); (l) it shall not exercise any rights under the Bond Documents or grant any approvals or consents required to be granted pursuant to the Bond Documents (provided, except as otherwise set forth in (n) below, the Lessee's consent shall not be required as a prerequisite to the Lessor exercising any of its rights under the Bond Documents or granting any approvals or consents required to be granted pursuant thereto); (m) it will promptly deliver to the Agent copies of any and all notices received pursuant to the Bond Documents; and (n) it shall not exercise its option to purchase fee simple title to the Leased Property from the Issuer pursuant to Bond Lease until the occurrence of an Event of Default or a Potential Event of Default (provided, however, if at any time prior to the Lease Termination Date -54- the Issuer's credit or bond rating is downgraded below either A by S&P or A1 by Moody's, the Lessor, with the consent of the Agent and the Lender, may, after first giving the Lessee forty-five (45) days prior written notice and the right and opportunity to exercise the Lessee's option to purchase the Lessor's interest in the Leased Property in accordance with the terms of Article XIV of the Lease, exercise such purchase option without the necessity of obtaining the Lessee's consent thereto, in which case the Lessee shall promptly reimburse the Lessor for any and all costs incurred by the Lessor in exercising such option and the Lease shall continue in full force and effect as a direct lease by the Lessor to the Lessee so long as no Event of Default or Potential Event of Default then exists). ARTICLE VI TRANSFERS BY LESSOR AND LENDERS SECTION 6.1 Lessor Transfers. The Lessor shall not assign, convey or ---------------- otherwise transfer all or any portion of its right, title or interest in, to or under the Leased Property or any of the Operative Documents without the prior written consent of the Lenders and the Lessee. Any proposed transferee of the Lessor shall make the representations set forth in Section 4.3 to the ----------- other parties hereto. SECTION 6.2 Lender Transfers. ---------------- (a) Any Lender may make, carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an Affiliate of such Lender. (b) Each Lender may assign all or a portion of its interests, rights and obligations under this Master Agreement and the Loan Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) to any Eligible Assignee; provided, however, that (i) the Agent and, unless a Potential Event of Default or Event of Default shall have occurred, the Lessee must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed) unless such assignment is to another Lender or to an Affiliate of the assigning Lender, (ii) unless such Lender is assigning all of its Commitment, after giving effect to such assignment, the Commitment of both the assignor and the assignee is at least $1,000,000 and (iii) the parties to each such assignment shall execute and deliver to the Agent an Assignment and Acceptance, and, unless such assignment is to another Lender or to an Affiliate of such Lender, a processing and recordation fee of $3,000. Any such assignment of the Loans shall include both the A Loans and the B Loans, on a pro rata basis. The Lessee shall not be responsible for such processing and recordation fee or any costs or expenses incurred by any Lender or the Agent in connection with such assignment. From and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, the assignee thereunder shall be a party hereto and to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Master Agreement and the Loan Agreement. -55- (c) Each Lender may, without the consent of the Lessee, sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Master Agreement and the Loan Agreement (including all or a portion of its Commitment in the Loans owing to it), provided, however, that (i) such Lender's obligations under this Master Agreement and the Loan Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating bank or other entity shall not be entitled to any greater benefit than its selling Lender under the cost protection provisions contained in Section 7.5 of this Master ----------- Agreement, and (iv) each Lessee, the Agent and the other Lenders shall continue to deal solely and directly with each Lender in connection with such Lender's rights and obligations under this Master Agreement and the other Operative Documents, and such Lender shall retain the sole right to enforce the obligations of Lessor relating to the Loans and to approve any amendment, modification or waiver of any provisions of this Master Agreement and the Loan Agreement (except that such Lender may permit the participant to approve any amendment, modification or waiver which would reduce the principal of or the interest rate on its Loan, extend the term of such Lender's Commitment, reduce the amount of any fees to which such participant is entitled or extend the final scheduled payment date of any Loan). Any Lender selling a participation hereunder shall provide prompt written notice to the Agent of the name of such participant. (d) Any Lender or participant may, in connection with the assignment or participation or proposed assignment or participation, pursuant to this Section, disclose to the assignee or participant or ------- proposed assignee or participant any information relating to the Lessee or its Subsidiaries or Affiliates furnished to such Lender by or on behalf of the Lessee. With respect to any disclosure of confidential, non-public, proprietary information, such proposed assignee or participant shall agree to use the information only for the purpose of making any necessary credit judgments with respect to this facility and not to use the information in any manner prohibited by any law, including without limitation, the securities laws of the United States. The proposed participant or assignee shall agree not to disclose any of such information except as permitted by this Master Agreement. The proposed participant or assignee shall further agree to return all documents or other written material and copies thereof received from any Lender, the Agent or the Lessee relating to such confidential information unless otherwise properly disposed of by such entity. (e) Any Lender may at any time assign all or any portion of its rights under this Master Agreement and the Notes to a Federal Reserve Bank, provided that no such assignment shall release such Lender from any of its - -------- obligations hereunder. ARTICLE VII INDEMNIFICATION SECTION 7.1 General Indemnification. The Lessee agrees, whether or not ----------------------- any of the transactions contemplated hereby shall be consummated, to assume liability for, and to -56- indemnify, protect, defend, save and hold harmless each Indemnitee, on an After-Tax Basis, from and against, any and all Claims that may be imposed on, incurred by or asserted, or threatened to be asserted, against such Indemnitee, whether or not such Indemnitee shall also be indemnified as to any such Claim by any other Person and whether or not such Claim arises or accrues prior to the Closing Date or after the Lease Termination Date, or results from such Indemnitee's negligence, in any way relating to or arising out of: (a) any of the Operative Documents or any of the transactions contemplated thereby, and any amendment, modification or waiver in respect thereof; or (b) the Land, the Building or any part thereof or interest therein, including the Bond Lease; (c) the purchase, design, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, ownership, management, possession, operation, rental, lease, sublease, repossession, maintenance, repair, alteration, modification, addition, substitution, storage, transfer of title, redelivery, use, financing, refinancing, disposition, operation, condition, sale (including, without limitation, any sale pursuant to the Lease), return or other disposition of all or any part of any interest in the Leased Property or the imposition of any Lien, other than a Lessor Lien (or incurring of any liability to refund or pay over any amount as a result of any Lien, other than a Lessor Lien) thereon, including, without limitation: (i) Claims or penalties arising from any violation or alleged violation of law or in tort (strict liability or otherwise), (ii) latent or other defects, whether or not discoverable, (iii) any Claim based upon a violation or alleged violation of the terms of any restriction, easement, condition or covenant or other matter affecting title to the Leased Property or any part thereof, (iv) the making of any Alterations in violation of any standards imposed by any insurance policies required to be maintained by the Lessee pursuant to the Lease which are in effect at any time with respect to the Leased Property or any part thereof, (v) any Claim for patent, trademark or copyright infringement, (vi) Claims arising from any public improvements with respect to the Leased Property resulting in any charge or special assessments being levied against the Leased Property or any Claim for utility "tap-in" fees, and (vii) Claims for personal injury or real or personal property damage occurring, or allegedly occurring, on the Land, the Building or otherwise on or with respect to the Leased Property; (d) the breach or alleged breach by the Lessee of any representation or warranty made by it or deemed made by it in any Operative Document or any certificate required to be delivered by any Operative Document; (e) the retaining or employment of any broker, finder or financial advisor by the Lessee to act on its behalf in connection with this Master Agreement, or the incurring of any fees or commissions to which the Lessor, the Agent or any Lender might be subjected by virtue of their entering into the transactions contemplated by this Master Agreement (other than fees or -57- commissions due to any broker, finder or financial advisor retained by the Lessor, the Agent or any Lender); (f) the existence of any Lien on or with respect to the Leased Property, the Construction, any Basic Rent or Supplemental Rent, title thereto, or any interest therein, including any Liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of the Leased Property or by reason of labor or materials furnished or claimed to have been furnished to the Construction Agent, the Lessee, or any of its contractors or agents or by reason of the financing of any personalty or equipment purchased or leased by the Lessee or Alterations constructed by the Lessee; (g) the transactions contemplated hereby or by any other Operative Document, in respect of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA and any prohibited transaction described in Section 4975(c) of the Code; or (h) any act or omission by the Lessee under the Bond Lease or any other Operative Document, and any breach of any requirement, condition, restriction or limitation in the Bond Lease or any other Operative Document; provided, however, the Lessee shall not be required to indemnify any - -------- ------- Indemnitee under this Section 7.1 for any Claim to the extent that such ----------- Claim results from the willful misconduct, gross negligence or misrepresentation of such Indemnitee; and, provided, further, that with -------- ------- respect to the Construction Land Interest, the Lessee's indemnity obligations with respect to such Leased Property shall be governed by Section 3.3 of the Construction Agency Agreement during the Construction - ----------- Term therefor. It is expressly understood and agreed that the indemnity provided for herein shall survive the expiration or termination of, and shall be separate and independent from any other remedy under this Master Agreement, the Lease or any other Operative Document. SECTION 7.2 Environmental Indemnity. In addition to and without ----------------------- limitation of Section 7.1 or Section 3.3 of the Construction Agency ----------- ----------- Agreement, the Lessee agrees to indemnify, hold harmless and defend each Indemnitee on an After-Tax Basis from and against any and all claims (including without limitation third party claims for personal injury or real or personal property damage), losses (including but not limited to any loss of value of the Leased Property), damages, liabilities, fines, penalties, charges, suits, settlements, demands, administrative and judicial proceedings (including informal proceedings and investigations) and orders, judgments, remedial action, requirements, enforcement actions of any kind, and all reasonable costs and expenses actually incurred in connection therewith (including, but not limited to, reasonable attorneys' and/or paralegals' fees and expenses), including, but not limited to, all costs incurred in connection with any investigation or monitoring of site conditions or any clean- up, remedial, removal or restoration work by any federal, state or local government agency, arising directly or indirectly, in whole or in part, out of -58- (i) the presence on or under the Land of any Hazardous Materials, or any releases or discharges of any Hazardous Materials on, under, from or onto the Land, (ii) any activity, including, without limitation, construction, carried on or undertaken on or off the Land, and whether by the Lessee or any predecessor in title or any employees, agents, contractors or subcontractors of the Lessee or any predecessor in title, or any other Person, in connection with the handling, treatment, removal, storage, decontamination, clean-up, transport or disposal of any Hazardous Materials that at any time are located or present on or under or that at any time migrate, flow, percolate, diffuse or in any way move onto or under the Land, (iii) loss of or damage to any property or the environment (including, without limitation, clean-up costs, response costs, remediation and removal costs, cost of corrective action, costs of financial assurance, fines and penalties and natural resource damages), or death or injury to any Person, and all expenses associated with the protection of wildlife, aquatic species, vegetation, flora and fauna, and any mitigative action required by or under Environmental Laws, in each case to the extent related to the Leased Property, (iv) any claim concerning the Leased Property's lack of compliance with Environmental Laws, or any act or omission causing an environmental condition on or with respect to the Leased Property that requires remediation or would allow any governmental agency to record a lien or encumbrance on the land records, or (v) any residual contamination on or under the Land, or affecting any natural resources on the Land, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, storage, transport or disposal of any such Hazardous Materials on or from the Leased Property; in each case irrespective of whether any of such activities were or will be undertaken in accordance with applicable laws, regulations, codes and ordinances; in any case with respect to the matters described in the foregoing clauses ------- (i) through (v) that arise or occur - --- --- (w) prior to or during the Lease Term, (x) at any time during which the Lessee or any Affiliate thereof owns any interest in or otherwise occupies or possesses the Leased Property or any portion thereof, or -59- (y) during any period after and during the continuance of any Event of Default; provided, however, the Lessee shall not be required to indemnify any - -------- ------- Indemnitee under this Section 7.2 for any Claim to the extent that such ----------- Claim results from the willful misconduct or gross negligence of such Indemnitee. It is expressly understood and agreed that the indemnity provided for herein shall survive the expiration or termination of, and shall be separate and independent from any other remedy under, this Master Agreement, the Lease or any other Operative Document. SECTION 7.3 Proceedings in Respect of Claims. With respect to any -------------------------------- amount that the Lessee is requested by an Indemnitee to pay by reason of Section 7.1 or 7.2, such Indemnitee shall, if so requested by the Lessee and - ----------- --- prior to any payment, submit such additional information to the Lessee as the Lessee may reasonably request and which is in the possession of, or under the control of, such Indemnitee to substantiate properly the requested payment. In case any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee promptly shall notify the Lessee of the commencement thereof (provided that the failure of such Indemnitee to promptly notify the Lessee shall not affect any Lessee's obligation to indemnify hereunder except to the extent that the Lessee's ability to contest is materially prejudiced by such failure), and the Lessee shall be entitled, at its expense, to participate in, and, to the extent that the Lessee desires to, assume and control the defense thereof with counsel reasonably satisfactory to such Indemnitee; provided, however, that such -------- ------- Indemnitee may pursue a motion to dismiss such Indemnitee from such action, suit or proceeding with counsel of such Indemnitee's choice at the Lessee's expense; and provided further that the Lessee may assume and control the defense of such proceeding only if the Lessee shall have acknowledged in writing its obligations to fully indemnify such Indemnitee in respect of such action, suit or proceeding, shall pay all reasonable costs and expenses related to such action, suit or proceeding as and when incurred and the Lessee shall keep such Indemnitee fully apprised of the status of such action suit or proceeding and shall provide such Indemnitee with all information with respect to such action suit or proceeding as such Indemnitee shall reasonably request; and, provided further, that the Lessee -------- ------- shall not be entitled to assume and control the defense of any such action, suit or proceeding if and to the extent that, (A) in the reasonable opinion of such Indemnitee, (x) such action, suit or proceeding involves any possibility of imposition of criminal liability or any material risk of material civil liability on such Indemnitee or (y) such action, suit or proceeding will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Encumbrance) on the Leased Property or any part thereof unless the Lessee shall have posted a bond or other security satisfactory to the relevant Indemnitees in respect to such risk or (z) the control of such action, suit or proceeding would involve an actual or potential conflict of interest, (B) such proceeding involves Claims not fully indemnified by the Lessee which the Lessee and the Indemnitee have been unable to sever from the indemnified claim(s), or (C) an Event of Default has occurred and is continuing. The Indemnitee may participate in a -60- reasonable manner at its own expense and with its own counsel in any proceeding conducted by the Lessee in accordance with the foregoing. If the Lessee fails to fulfill the conditions to the Lessee's assuming the defense of any claim after receiving notice thereof on or prior to the date that is fifteen (15) days prior to the date that an answer or response is required, the Indemnitee may undertake such defense, at the Lessee's expense. Lessee shall not enter into any settlement or other compromise with respect to any Claim in excess of $25,000 which is entitled to be indemnified under Section 7.1 or 7.2 without the prior written consent of ----------- --- the related Indemnitee, which consent shall not be unreasonably withheld. Unless an Event of Default shall have occurred and be continuing, no Indemnitee shall enter into any settlement or other compromise with respect to any claim which is entitled to be indemnified under Section 7.1 or 7.2 ----------- --- without the prior written consent of the Lessee, which consent shall not be unreasonably withheld, unless such Indemnitee waives its right to be indemnified under Section 7.1 or 7.2 with respect to such Claim. ----------- --- Upon payment in full of any Claim by the Lessee pursuant to Section 7.1 ----------- or 7.2 to or on behalf of an Indemnitee, the Lessee, without any further --- action, shall be subrogated to any and all claims that such Indemnitee may have relating thereto (other than claims in respect of insurance policies maintained by such Indemnitee at its own expense), and such Indemnitee shall execute such instruments of assignment and conveyance, evidence of claims and payment and such other documents, instruments and agreements as may be reasonably necessary to preserve any such claims and otherwise cooperate with the Lessee and give such further assurances as are reasonably necessary or advisable to enable the Lessee vigorously to pursue such claims. Any amount payable to an Indemnitee pursuant to Section 7.1 or 7.2 ----------- --- shall be paid to such Indemnitee promptly upon, but in no event later than thirty (30) days after, receipt of a written demand therefor from such Indemnitee, accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable. If for any reason the indemnification provided for in Section 7.1 or ----------- 7.2 is unavailable to an Indemnitee or is insufficient to hold an Indemnitee - --- harmless, then the Lessee agrees to contribute to the amount paid or payable by such Indemnitee as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Indemnitee on the one hand and by the Lessee on the other hand but also the relative fault of such Indemnitee as well as any other relevant equitable considerations. It is expressly understood and agreed that the right to contribution provided for herein shall survive the expiration or termination of and shall be separate and independent from any other remedy under this Master Agreement, the Lease or any other Operative Document. SECTION 7.4 General Tax Indemnity. --------------------- (a) Tax Indemnity. Except as otherwise provided in this Section 7.4, ------------- ----------- the Lessee shall pay on an After-Tax Basis, and on written demand shall indemnify and hold each -61- Tax Indemnitee harmless from and against, any and all fees (including, without limitation, documentation, recording, license and registration fees), taxes (including, without limitation, income, franchise, gross receipts, sales, rental, use, turnover, value-added, property, excise and stamp taxes), levies, imposts, duties, charges, assessments or withholdings of any nature whatsoever, together with any penalties, fines or interest thereon or additions thereto (any of the foregoing being referred to herein as "Taxes" and individually as a "Tax" (for the purposes of this Section 7.4, ----- --- ----------- the definition of "Taxes" includes amounts imposed on, incurred by, or ----- asserted against each Tax Indemnitee as the result of any prohibited transaction, within the meaning of Section 406 or 407 of ERISA or Section 4975(c) of the Code, arising out of the transactions contemplated hereby or by any other Operative Document)) imposed on or with respect to any Tax Indemnitee, the Lessee, the Leased Property or any portion thereof, or any sublessee or user thereof, by the United States or by any state or local government or other taxing authority in the United States or any state, local or foreign authority, in connection with or in any way relating to (i) the acquisition, financing, mortgaging, construction, preparation, installation, inspection, delivery, non-delivery, acceptance, rejection, purchase, ownership, possession, rental, lease, sublease, maintenance, repair, storage, transfer of title, redelivery, use, operation, condition, sale, return or other application or disposition of all or any part of the Leased Property or the imposition of any Lien (or incurrence of any liability to refund or pay over any amount as a result of any Lien) thereon, (ii) the Notes or other indebtedness with respect to the Leased Property or any part thereof or interest therein, (iii) Basic Rent or Supplemental Rent or the receipts or earnings arising from or received with respect to the Leased Property or any part thereof, or any interest therein or any applications or dispositions thereof, (iv) any other amount paid or payable pursuant to the Notes or any other Operative Documents, (v) the Leased Property or any part thereof or any interest therein (including, without limitation, all assessments payable in respect thereof, including, without limitation, all assessments noted on the related Title Policy), (vi) all or any of the Operative Documents, any other documents contemplated thereby, any amendments and supplements thereto, and (vii) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents. (b) Exclusions from General Tax Indemnity. Section 7.4(a) shall not ------------------------------------- -------------- apply to: (i) Taxes on, based on, or measured by or with respect to net income of the Lessor, the Agent and the Lenders (including minimum Taxes, capital gains Taxes, Taxes on or measured by items of tax preference or alternative minimum Taxes) other than (A) any such Taxes that are, or are in the nature of, sales, use, license, rental or property Taxes, and (B) withholding Taxes imposed by the United States or any state in which the Leased Property is located (i) on payments with respect to the Notes, to the extent imposed by reason of a change in Applicable Law occurring after the date on which the holder of such Note became the holder of such Note or (ii) on Rent, to the extent the net payment of Rent after deduction of such withholding Taxes would be less than amounts currently payable with respect to the Funded Amounts provided that this clause (i) shall not -62- prevent a payment from being made on an After-Tax Basis if such payment is otherwise required to be so made; (ii) Taxes on, based on, or in the nature of or measured by Taxes on doing business, business privilege, franchise, capital, capital stock, net worth, or mercantile license or similar taxes other than any Taxes that are or are in the nature of sales, use, rental, license or property Taxes relating to the Leased Property provided that this clause (ii) shall not prevent a payment from being made on an After-Tax Basis if such payment is otherwise required to be so made; (iii) Taxes that are based on, or measured by, the fees or other compensation received by a Person acting as Agent (in its individual capacities) or any Affiliate of any thereof for acting as trustee under the Loan Agreement; (iv) Taxes that result from any act, event or omission, or are attributable to any period of time, that occurs after the earlier of (A) the expiration of the Lease Term with respect to the Leased Property and, if the Leased Property is required to be returned to the Lessor in accordance with the Lease, such return and (B) the discharge in full of the Lessee's obligations to pay the Lease Balance, or any amount determined by reference thereto, with respect to the Leased Property and all other amounts due under the Lease, unless such Taxes relate to acts, events or matters occurring prior to the earlier of such times or are imposed on or with respect to any payments due under the Operative Documents after such expiration or discharge; (v) Taxes imposed on a Tax Indemnitee that result from any voluntary sale, assignment, transfer or other disposition or bankruptcy by such Tax Indemnitee or any related Tax Indemnitee of any interest in any Leased Property or any part thereof, or any interest therein or any interest or obligation arising under the Operative Documents, or from any sale, assignment, transfer or other disposition of any interest in such Tax Indemnitee or any related Tax Indemnitee, it being understood that each of the following shall not be considered a voluntary sale: (A) any assignment, sublease, substitution, replacement or removal of any of the Leased Property by the Lessee, (B) any sale or transfer resulting from the exercise by any Lessee of any termination option, any purchase option or sale option, (C) any sale or transfer while an Event of Default shall have occurred and be continuing under the Lease, (D) a Casualty or Condemnation affecting the Leased Property or any part thereof, and (E) any sale or transfer resulting from the Lessor's exercise of remedies under the Lease; (vi) any Tax which is being contested in accordance with the provisions of Section 7.4(c), during the pendency of such contest; -------------- -63- (vii) any Tax that is imposed on a Tax Indemnitee as a result of such Tax Indemnitee's gross negligence or willful misconduct (other than gross negligence or willful misconduct imputed to such Tax Indemnitee solely by reason of its interest in the Leased Property); (viii) any Tax that results from a Tax Indemnitee engaging, with respect to any Leased Property, in transactions other than those permitted by the Operative Documents; (ix) to the extent any interest, penalties or additions to tax result in whole or in part from the failure of a Tax Indemnitee to file a return or pay a Tax that it is required to file or pay in a proper and timely manner, unless such failure (A) results from the transactions contemplated by the Operative Documents in circumstances where Lessee did not give timely notice to such Tax Indemnitee of such filing or payment requirement that would have permitted a proper and timely filing of such return or payment of such Tax, as the case may be, or (B) results from the failure of the Lessee to supply information necessary for the proper and timely filing of such return or payment of such Tax, as the case may be, that was not in the possession of such Tax Indemnitee; (x) Taxes resulting from the failure of a Tax Indemnitee to comply with subsection 7.5(e) other than as a result of an ----------------- increased cost described in subsection 7.5(b); and ----------------- (xi) as to Lessor, any Tax that results from the breach by the Lessor of its representation and warranty made in Section 4.3(g) or -------------- as to any Lender the breach of such Lender of its representation and warranty made in Section 4.4(b). -------------- Notwithstanding the foregoing, the exclusions provided for in clauses (i), (ii) and (v) of this Subsection 7.4(b) shall not apply (but the other exclusions shall apply) to any Taxes or any increase in Taxes imposed on any Tax Indemnitee net of any decrease in Taxes realized by such Tax Indemnitee to the extent that any such Tax increase or decrease would not have occurred if on the date of each Advance the Lessor and the Lenders had advanced funds directly to the Lessee in the form of a loan by such Lessor or Lender secured by the Leased Property in an amount equal to the amounts funded by the Lessor and the Lenders on each such date and a principal balance at the maturity of such loan in an amount equal to the Funded Amounts at the end of the Lease Term. (c) Contests. If any claim shall be made against any Tax -------- Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for any Taxes as to which the Lessee may have an indemnity obligation pursuant to Section 7.4, ----------- or if any Tax Indemnitee shall determine that any Taxes as to which the Lessee may have an indemnity obligation pursuant to Section 7.4 may be ----------- payable, such Tax Indemnitee shall -64- promptly notify the Lessee. The Lessee shall be entitled, at its expense, to participate in, and, to the extent that the Lessee desires to, assume and control the defense thereof; provided, however, that the Lessee shall have -------- ------- acknowledged in writing its obligation to fully indemnify such Tax Indemnitee in respect of such action, suit or proceeding if the contest is unsuccessful, and, provided further, that the Lessee shall not be entitled -------- ------- to assume and control the defense of any such action, suit or proceeding (but the Tax Indemnitee shall then control the defense of such contest, at the sole cost and expense of the Lessee, on behalf of the Lessee with representatives reasonably satisfactory to the Lessee) if and to the extent that, (A) in the reasonable opinion of such Tax Indemnitee, such action, suit or proceeding (x) involves any meaningful risk of imposition of criminal liability or any material risk of material civil liability on such Tax Indemnitee or (y) will involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Encumbrance) on the Leased Property or any part thereof unless the Lessee shall have posted a bond or other security satisfactory to the relevant Tax Indemnitees in respect to such risk, (B) such proceeding involves Claims not fully indemnified by the Lessee which the Lessee and the Tax Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event of Default has occurred and is continuing, (D) such action, suit or proceeding involves matters which extend beyond or are unrelated to the Transaction and if determined adversely could be materially detrimental to the interests of such Tax Indemnitee notwithstanding indemnification by the Lessee or (E) such action, suit or proceeding involves the federal or any state income tax liability of the Tax Indemnitee. With respect to any contests controlled by a Tax Indemnitee, (i) if such contest relates to the federal or any state income tax liability of such Tax Indemnitee, such Tax Indemnitee shall be required to conduct such contest only if the Lessee shall have provided to such Tax Indemnitee an opinion of independent tax counsel selected by the Tax Indemnitee and reasonably satisfactory to the Lessee stating that a reasonable basis exists to contest such claim or (ii) in the case of an appeal of an adverse determination of any contest relating to any Taxes, an opinion of such counsel to the effect that such appeal is more likely than not to be successful; provided, however, such Tax Indemnitee shall in no -------- event be required to appeal an adverse determination to the United States Supreme Court. The Tax Indemnitee may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by the Lessee in accordance with the foregoing. Each Tax Indemnitee shall, at the Lessee's expense, supply the Lessee with such information and documents in such Tax Indemnitee's possession reasonably requested by the Lessee as are necessary or advisable for the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section 7.4. Unless an Event of Default shall have ----------- occurred and be continuing, no Tax Indemnitee shall enter into any settlement or other compromise with respect to any Claim which is entitled to be indemnified under this Section 7.4 without the prior written consent ----------- of the Lessee, which consent shall not be unreasonably withheld, unless such Tax Indemnitee waives its right to be indemnified under this Section 7.4 ----------- with respect to such Claim. -65- Notwithstanding anything contained herein to the contrary, (I) a Tax Indemnitee will not be required to contest (and the Lessee shall not be permitted to contest except on its own behalf if it is subject thereto) a claim with respect to the imposition of any Tax if such Tax Indemnitee shall waive its right to indemnification under this Section 7.4 with respect to ----------- such claim (and any related claim with respect to other taxable years the contest of which is precluded as a result of such waiver) and (II) no Tax Indemnitee shall be required to contest any claim if the subject matter thereof shall be of a continuing nature and shall have previously been decided adversely, unless there has been a change in law which, in the opinion of Tax Indemnitee's counsel, creates substantial authority for the success of such contest. Each Tax Indemnitee and the Lessee shall consult in good faith with each other regarding the conduct of such contest controlled by either. (d) Reimbursement for Tax Savings. If (i) a Tax Indemnitee shall ----------------------------- obtain a credit or refund of any Taxes paid by the Lessee pursuant to this Section 7.4 or (ii) by reason of the incurrence or imposition of any Tax for - ----------- which a Tax Indemnitee is indemnified hereunder or any payment made to or for the account of such Tax Indemnitee by the Lessee pursuant to this Section 7.4, such Tax Indemnitee at any time realizes a reduction in any - ----------- Taxes for which the Lessee is not required to indemnify such Tax Indemnitee pursuant to this Section 7.4, which reduction in Taxes was not taken into ----------- account in computing such payment by the Lessee to or for the account of such Tax Indemnitee, then such Tax Indemnitee shall promptly pay to the Lessee (x) the amount of such credit or refund, together with the amount of any interest received by such Tax Indemnitee on account of such credit or refund or (y) an amount equal to such reduction in Taxes, as the case may be, provided that no such payment shall be made so long as an Event of -------- Default shall have occurred and be continuing (but shall be paid promptly after all Events of Default have been cured) and, provided, further, that -------- ------- the amount payable to the Lessee by any Tax Indemnitee pursuant to this Section 7.4(d) shall not at any time exceed the aggregate amount of all - -------------- indemnity payments made by the Lessee under this Section 7.4 to such Tax ----------- Indemnitee with respect to the Taxes which gave rise to the credit or refund or with respect to the Tax which gave rise to the reduction in Taxes less ---- the amount of all prior payments made to the Lessee by such Tax Indemnitee under this Section 7.4(d). Each Tax Indemnitee agrees to act in good faith -------------- to claim such refunds and other available Tax benefits, and take such other actions as may be reasonable to minimize any payment due from the Lessee pursuant to this Section 7.4. The disallowance or reduction of any credit, ----------- refund or other tax savings with respect to which a Tax Indemnitee has made a payment to the Lessee under this Section 7.4(d) shall be treated as a Tax -------------- for which the Lessee is obligated to indemnify such Tax Indemnitee hereunder without regard to Section 7.4(b) hereof. -------------- (e) Payments. Any Tax indemnifiable under this Section 7.4 shall be -------- ----------- paid by the Lessee directly when due to the applicable taxing authority if direct payment is practicable and permitted. If direct payment to the applicable taxing authority is not permitted or is otherwise not made, any amount payable to a Tax Indemnitee pursuant to this Section 7.4 shall be ----------- paid within thirty (30) days after receipt of a written demand therefor from such Tax Indemnitee accompanied by a written statement describing in reasonable detail the amount so -66- payable, but not before the date that the relevant Taxes are due. Any payments made pursuant to Section 7.4 shall be made to the Tax Indemnitee ----------- entitled thereto or the Lessee, as the case may be, in immediately available funds at such bank or to such account as specified by the payee in written directions to the payor, or, if no such direction shall have been given, by check of the payor payable to the order of the payee by certified mail, postage prepaid at its address as set forth in this Master Agreement. Upon the request of any Tax Indemnitee with respect to a Tax that the Lessee is required to pay, the Lessee shall furnish to such Tax Indemnitee the original or a certified copy of a receipt for the Lessee's payment of such Tax or such other evidence of payment as is reasonably acceptable to such Tax Indemnitee. (f) Reports. If the Lessee knows of any report, return or statement ------- required to be filed with respect to any Taxes that are subject to indemnification under this Section 7.4, the Lessee shall, if the Lessee is ----------- permitted by Applicable Law, timely file such report, return or statement (and, to the extent permitted by law, show ownership of the applicable Leased Property in the Lessee); provided, however, that if the Lessee is not -------- permitted by Applicable Law or does not have access to the information required to file any such report, return or statement, the Lessee will promptly so notify the appropriate Tax Indemnitee, in which case the Tax Indemnitee will file such report. In any case in which the Tax Indemnitee will file any such report, return or statement, the Lessee shall, upon written request of such Tax Indemnitee, prepare such report, return or statement for filing by such Tax Indemnitee or, if such Tax Indemnitee so requests, provide such Tax Indemnitee with such information as is reasonably available to the Lessee. (g) Verification. At the Lessee's request, the amount of any ------------ indemnity payment by the Lessee or any payment by a Tax Indemnitee to the Lessee pursuant to this Section 7.4 shall be verified and certified by an ----------- independent public accounting firm selected by the Lessee and reasonably acceptable to the Tax Indemnitee. Unless such verification shall disclose an error in the Lessee's favor of five percent (5%) or more of the related indemnity payment, the costs of such verification shall be borne by the Lessee. In no event shall the Lessee have the right to review the Tax Indemnitee's tax returns or receive any other confidential information from the Tax Indemnitee in connection with such verification. The Tax Indemnitee agrees to cooperate with the independent public accounting firm performing the verification and to supply such firm with all information reasonably necessary to permit it to accomplish such verification, provided that the information provided to such firm by such Tax Indemnitee shall be for its confidential use. The parties agree that the sole responsibility of the independent public accounting firm shall be to verify the amount of a payment pursuant to this Master Agreement and that matters of interpretation of this Master Agreement are not within the scope of the independent accounting firm's responsibilities. -67- SECTION 7.5 Increased Costs, etc. -------------------- (a) Illegality. Notwithstanding any other provision herein, if any ---------- change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Funding Party to make or maintain LIBOR Advances as contemplated by this Master Agreement, (i) the commitment of such Funding Party hereunder to continue LIBOR Advances as such and convert Funded Amounts to LIBOR Advances shall forthwith be canceled and (ii) such Funding Party's Funded Amounts then outstanding as LIBOR Advance, if any, shall be converted automatically to Base Rate Advances on the respective last days of the then current Rent Periods with respect to such Funded Amounts or within such earlier period as required by law. If any such conversion of a LIBOR Advance occurs on a day which is not the last day of the then current Rent Period with respect thereto, the Lessee shall pay to such Funding Party such amounts, if any, as may be required pursuant to Section 7.5(f). - -------------- (b) Requirements of Law. In the event that Eurocurrency Reserve ------------------- Requirements or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Funding Party with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Funding Party to any tax of any kind whatsoever with respect to this Master Agreement, any Note or any LIBOR Advance made by it, or change the basis of taxation of payments to such Funding Party in respect thereof (except for taxes covered by Section 7.5(d) and changes in franchise taxes or the -------------- rate of tax on the overall net income of such Funding Party provided that such exceptions shall not apply to changes that would prevent any Funding Party from being entitled to a complete exemption from withholding taxes as described in Subsection 7.5(e)); ----------------- (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Funding Party which is not otherwise included in the determination of the LIBOR Rate; or (iii) shall impose on such Funding Party any other condition; and the result of any of the foregoing is to increase the cost to such Funding Party, by an amount which such Funding Party deems to be material, of making, converting into, continuing or maintaining LIBOR Advances or to reduce any amount receivable hereunder in respect thereof then, in any such case, the Lessee shall promptly pay such Funding Party, upon its demand, any additional amounts necessary to compensate such Funding Party on an After- Tax Basis for such increased cost or reduced amount receivable. If any Funding Party becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Lessee, through the Agent, of the event by reason of which it has become so entitled. A certificate as to any -68- additional amounts payable pursuant to this subsection submitted by such Funding Party, through the Agent, to the Lessee in good faith and setting forth in reasonable detail the calculation of such amounts shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Master Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (c) Capital Adequacy. In the event that any Funding Party or ---------------- corporation controlling such Funding Party shall have determined that any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Funding Party or such corporation with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Funding Party's capital as a consequence of its obligations hereunder to a level below that which such Funding Party could have achieved but for such change or compliance (taking into consideration such Funding Party's policies with respect to capital adequacy) by an amount deemed by such Funding Party to be material, then from time to time, after submission by such Funding Party in good faith to the Lessee (with a copy to the Agent) of a written request therefor setting forth in reasonable detail the calculation of such amount (which request shall be conclusive in the absence of manifest error), the Lessee shall pay to such Funding Party such additional amount or amounts as will compensate such Funding Party for such reduction. This covenant shall survive the termination of this Master Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (d) Taxes. Subject to Section 7.5(e), all payments made by the ----- -------------- Lessee under the Lease and the other Operative Documents shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding, in the case of the Agent and each Funding Party, net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Agent or such Funding Party, as the case may be, as a result of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Agent or such Funding Party (other than a connection arising solely from the Agent or such Funding Party having executed, delivered or performed its obligations or received a payment under, or enforced, this Master Agreement or any other Operative Document), provided that this exclusion shall not apply to the extent set forth in Section 7.5(b) or to Taxes described in clause (B) of Subsection 7.4(b)(i) (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Withholding Taxes"). ----------------- If any Withholding Taxes are required to be withheld from any amounts payable to the Agent or any Funding Party hereunder or under any other Operative Document, the amounts so payable to the Agent or such Funding Party (so long as such Funding Party is in compliance with Section 7.5(e), -------------- as appropriate) shall be increased to the extent necessary to yield to the Agent or such Funding Party (after payment of all Withholding Taxes) interest or any such -69- other amounts payable hereunder at the rates or in the amounts specified in the Operative Documents. Whenever any Withholding Taxes are payable by the Lessee, as promptly as possible thereafter the Lessee shall send to the Agent for its own account or for the account of such Funding Party, as the case may be, a certified copy of an original official receipt received by such Lessee showing payment thereof. If the Lessee fails to pay any Withholding Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, each Lessee, jointly and severally, shall indemnify the Agent and the Funding Parties for any incremental taxes, interest or penalties that may become payable by the Agent or any Funding Party as a result of any such failure. The agreements in this subsection shall survive the termination of this Master Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (e) Tax Forms. If any Funding Party or assignee of a Funding Party --------- is organized under the laws of any jurisdiction other than the United States or any State thereof, then such Funding Party or assignee, as applicable, shall (as a condition precedent to acquiring any interest in, to or under the Leased Property or the Operative Documents from a Funding Party and a continuing obligation of each such Funding Party) (i) furnish to Lessee two valid, duly completed, original copies of Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, properly and duly executed, certifying in each case that such party is entitled to receive payments pursuant to the Operative Documents without deduction or withholding of United States federal income tax and is a foreign person thereby entitled to an exemption from United States backup withholding taxes, and any such additional form (or any successor form or forms required) upon the expiration or obsolescence of any previously delivered form and (ii) comply from time to time with all applicable United States laws and regulations with regard to such withholding tax exemptions. By its acceptance of any interest in, to or under the Leased Property or the Operative Documents from a Funding Party, each assignee shall be deemed bound by the provisions set forth in this Subsection 7.5(e). Subject to Subsection 7.5(b), no Funding Party or assignee that fails to comply with the requirements of this Subsection 7.5(e) shall be entitled to the benefit of any tax indemnity under Section 7.4. (f) Indemnity. The Lessee agrees to indemnify each Funding Party --------- and to hold each Funding Party harmless on an After-Tax Basis from any loss or expense which such Funding Party may sustain or incur as a consequence of (i) default by the Lessee in payment when due of the principal amount of or interest on any LIBOR Advance, (ii) default by the Lessee in making a borrowing or conversion into or continuation of LIBOR Advances after the Lessee or the Construction Agent has given (or is deemed to have given) a notice in accordance with this Master Agreement, (iii) default by the Lessee in making a borrowing of, conversion into or continuation of LIBOR Advances after or the Construction Agent or the Lessee has given a notice requesting the same in accordance with the provisions of this Master Agreement, (iv) default by the Lessee in making any prepayment of LIBOR Advances after the Lessee has given a notice thereof in accordance with the provisions of the Operative Documents or (v) the making of a prepayment, payment or conversion, of LIBOR Advances on a day which is not the last day -70- of a Rent Period with respect thereto, including, without limitation, in each case, any such loss (other than non- receipt of the Applicable Margin or, without duplication, anticipated profits) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate the deposits from which such funds were obtained (it being understood that any such calculation will be made on notional amounts as the Funding Parties are not required to show that they matched deposits specifically). A certificate as to any additional amounts payable pursuant to this subsection submitted by such Funding Party, through the Agent, to the Lessee in good faith shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable under the Operative Documents. (g) Action of Affected Funding Parties. Each Funding Party agrees ---------------------------------- to use reasonable efforts (including reasonable efforts to change the booking office for its Loans) to avoid or minimize any illegality pursuant to Section 7.5(a) or any amounts which might otherwise be payable pursuant -------------- to Section 7.5(c) or (d); provided, however, that such efforts shall not -------------- --- -------- cause the imposition on such Funding Party of any additional costs or legal or regulatory burdens deemed by such Funding Party to be material and shall not be deemed by such Funding Party to be otherwise contrary to its policies. In the event that such reasonable efforts are insufficient to avoid all such illegality or all amounts that might be payable pursuant to Section 7.5(c) or (d), then such Funding Party (the "Affected Funding - -------------- --- ---------------- Party") shall use its reasonable efforts to transfer to any other Funding - ----- Party (which itself is not then an Affected Funding Party) its Loans and Commitment, subject to the provisions of Section 6.2; provided, however, ----------- -------- that such transfer shall not be deemed by such Affected Funding Party, in its sole discretion, to be disadvantageous to it or contrary to its policies. In the event that the Affected Funding Party is unable, or otherwise is unwilling, so to transfer its Loans and Commitment, the Lessee may designate an alternate lender (reasonably acceptable to the Agent) to purchase the Affected Funding Party's Loans and Commitment, at par and including accrued interest, and, subject to the provisions of Section 6.2, ----------- the Affected Funding Party shall transfer its Commitment to such alternate lender and such alternate lender shall become a Funding Party hereunder. Any fee payable to the Agent pursuant to Section 6.2 in connection with such ----------- transfer shall be for the account of the Lessee. SECTION 7.6 End of Term Indemnity. In the event that at the end of the --------------------- Lease Term for the Leased Property: (i) the Lessee elects the option set forth in Section 14.6 of the Lease, and (ii) after the Lessor receives the ------------ sales proceeds from the Leased Property under Section 14.6 or 14.7 of the ------------ ---- Lease, together with the Lessee's payment of the Recourse Deficiency Amount, the Lessor shall not have received the entire Lease Balance, then, within 90 days after the end of the Lease Term, the Lessor or the Agent may obtain, at the Lessee's sole cost and expense, a report from the Appraiser (or, if the Appraiser is not available, another appraiser reasonably satisfactory to the Lessor or the Agent, as the case may be, and approved by the Lessee, such approval not to be unreasonably withheld) in form and substance satisfactory to the Lessor and the Agent (the "Report") to establish the reason for any ------ decline in value of the Leased Property from the Lease -71- Balance. The Lessee shall promptly reimburse the Lessor for the amount equal to such decline in value to the extent that the Report indicates that such decline was due to: (w) extraordinary use, failure to maintain, to repair, to restore, to rebuild or to replace, failure to comply with all Applicable Laws, failure to use, workmanship, method of installation or removal or maintenance, repair, rebuilding or replacement, or any other cause or condition within the power of the Lessee to control or effect resulting in the Building failing to be of the type and quality contemplated by the Appraisal (excepting in each case ordinary wear and tear), or (x) any Alteration made to, or any rebuilding of, the Leased Property or any part thereof by the Lessee, or (y) any restoration or rebuilding carried out by the Lessee or any condemnation of any portion of the Leased Property pursuant to Article X of the Lease, or (z) any use of the Leased Property or any part thereof by the Lessee other than as permitted by the Lease, or any act or omission constituting a breach of any requirement, condition, restriction or limitation set forth in the Deed or the Purchase Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.1 Survival of Agreements. The representations, warranties, ---------------------- covenants, indemnities and agreements of the parties provided for in the Operative Documents, and the parties' obligations under any and all thereof, shall survive the execution and delivery of this Master Agreement and any of the Operative Documents, the transfer of the leasehold interest in the Land to the Lessor as provided herein (and shall not be merged into the Bond Lease), any disposition of any interest of the Lessor in the Leased Property, the purchase and sale of the Notes, payment therefor and any disposition thereof and shall be and continue in effect notwithstanding any investigation made by any party hereto or to any of the other Operative Documents and the fact that any such party may waive compliance with any of the other terms, provisions or conditions of any of the Operative Documents. Except as expressly set forth in the Operative Documents, including, without limitation, as set forth in Article VII hereof and in Section 17.17 of the ----------- Lease, the representations, warranties, covenants and agreements of the parties provided for in the Operative Documents shall terminate upon the termination or expiration of the Operative Documents. SECTION 8.2 Notices. Unless otherwise specified herein, all notices, ------- requests, demands or other communications to or upon the respective parties hereto shall be addressed to such parties at the addresses therefor as set forth in Schedule 8.2, or such other address as any such party shall specify ------------ to the other parties hereto, and shall be deemed to have been given (i) the -72- Business Day after being sent, if sent by overnight courier service; (ii) the Business Day received, if sent by messenger; (iii) the day sent, if sent by facsimile and confirmed electronically or otherwise during business hours of a Business Day (or on the next Business Day if otherwise sent by facsimile and confirmed electronically or otherwise); or (iv) three Business Days after being sent, if sent by registered or certified mail, postage prepaid. SECTION 8.3 Counterparts. This Master Agreement may be executed by the ------------ parties hereto in separate counterparts (including by facsimile), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 8.4 Amendments. No Operative Document nor any of the terms ---------- thereof may be terminated, amended, supplemented, waived or modified with respect to any Lessee or any Funding Party, except (a) in the case of a termination, amendment, supplement, waiver or modification to be binding on the Lessee, with the written agreement or consent of the Lessee, and (b) in the case of a termination, amendment, supplement, waiver or modification to be binding on the Funding Parties, with the written agreement or consent of the Required Funding Parties; provided, however, that Sections 8.8 and 8.13 -------- may not be terminated, amended, supplemented, waived or modified without the prior written agreement or consent of SunTrust Equitable Securities Corporation, and provided, further, that -------- ------- (x) notwithstanding the foregoing provisions of this Section 8.4 or ----------- clause (y) below, the consent of each Funding Party affected thereby shall be required for any amendment, modification or waiver directly: (i) modifying any of the provisions of this Section 8.4, ----------- changing the definition of "Required Funding Parties" or "Required ------------------------ -------- Lenders", or increasing the Commitment of such Funding Party; ------- (ii) amending, modifying, waiving or supplementing any of the provisions of Section III of the Loan Agreement or the ----------- representations of such Funding Party in Section 4.3 or 4.4 or the ----------- --- covenants of such Funding Party in Article VI of this Master ---------- Agreement; (iii) reducing any amount payable to such Funding Party under the Operative Documents or extending the time for payment of any such amount, including, without limitation, any Rent, any Funded Amount, any fees, any indemnity, the Lease Balance, any Funding Party Balance, the Recourse Deficiency Amount, interest or Yield; or (iv) consenting to any assignment of the Lease or the extension of the Lease Term, releasing any of the collateral assigned to the Agent -73- and the Lenders pursuant to any Mortgage and any Assignment of Lease and Rents (but excluding a release of any rights that the Lenders may have in the Leased Property, or the proceeds thereof as contemplated in the definition of "Release Date"), releasing the Lessee from its obligations in respect of the payments of Rent and the Lease Balance, releasing any Lessee from its obligations under the Operative Documents or changing the absolute and unconditional character of any such obligation; and (y) no such termination, amendment, supplement, waiver or modification shall, without the written agreement or consent of the Lessor, the Agent and the Required Lenders, be made to the Lease or the Security Agreement and Assignment; and (z) subject to the foregoing clauses (x) and (y), so long as no ----------- --- Event of Default has occurred and is continuing, the Lessor, the Agent and the Lenders may not amend, supplement, waive or modify any terms of the Loan Agreement, the Notes, the Mortgages and the Assignments of Lease and Rents without the consent of the Lessee (such consent not to be unreasonably withheld or delayed); provided that in no event may any -------- Operative Document be amended so as to increase the obligations of any Lessee, or deprive any Lessee of any rights thereunder, without the written consent of the Lessee. SECTION 8.5 Headings, etc. The Table of Contents and headings of the ------------- various Articles and Sections of this Master Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. SECTION 8.6 Parties in Interest. Except as expressly provided herein, ------------------- none of the provisions of this Master Agreement is intended for the benefit of any Person except the parties hereto and their respective successors and permitted assigns. SECTION 8.7 GOVERNING LAW. THIS MASTER AGREEMENT HAS BEEN DELIVERED IN, ------------- AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. SECTION 8.8 Expenses. Whether or not the transactions herein -------- contemplated are consummated, the Lessee agrees to pay, as Supplemental Rent, all actual, reasonable and documented out-of-pocket costs and expenses of the Lessor, the Agent, the Lenders, SunTrust Equitable Securities Corporation and the Bond Trustee in connection with the preparation, execution and delivery of the Operative Documents and the documents and instruments referred to therein and any amendment, waiver or consent relating thereto (including, without limitation, the reasonable fees and disbursements of (i) counsel to the Bond Trustee (whose fees shall not exceed $5,000 in connection with the initial preparation, execution and delivery of the Operative -74- Documents and the documents and instruments referred to therein), and (ii) McGuireWoods LLP, but not including any fees and disbursements for any other outside counsel representing any Lender) and of the Lessor, the Agent, the Lenders, SunTrust Equitable Securities Corporation and the Bond Trustee in connection with endeavoring to enforce the Operative Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees actually incurred and disbursements of counsel for the Lessor, the Agent, the Lenders and the Bond Trustee). All references in the Operative Documents to "attorneys' fees" or "reasonable attorneys fees" shall mean reasonable attorneys' fees actually incurred, without regard to any statutory definition thereof. During the Construction Term, the foregoing costs and expenses of the Lessor, the Agent, the Lenders, SunTrust Equitable Securities Corporation and the Bond Trustee may be paid using the proceeds of Advances (which costs and expenses shall be included in the Construction Budget); thereafter, all such costs and expenses shall be paid by the Lessee. SECTION 8.9 Severability. Any provision of this Master Agreement that ------------ is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 8.10 Liabilities of the Funding Parties. No Funding Party shall ---------------------------------- have any obligation to any other Funding Party or to Lessee with respect to the transactions contemplated by the Operative Documents except those obligations of such Funding Party expressly set forth in the Operative Documents or except as set forth in the instruments delivered in connection therewith, and no Funding Party shall be liable for performance by any other party hereto of such other party's obligations under the Operative Documents except as otherwise so set forth. No Lender shall have any obligation or duty to the Lessee, any other Funding Parties or any other Person with respect to the transactions contemplated hereby except to the extent of the obligations and duties expressly set forth in this Master Agreement or the Loan Agreement. SECTION 8.11 Submission to Jurisdiction; Waivers. Each party hereto ----------------------------------- hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Master Agreement or any other Operative Document, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of Georgia sitting in Fulton County, the courts of the United States of America for the Northern District of Georgia, and appellate courts from any thereof; (b) consents that any such action or proceedings may be brought to such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; -75- (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth in Schedule 8.2 or at such other address of which ------------ the other parties hereto shall have been notified pursuant to Section 8.2; ----------- and (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law. SECTION 8.12 Liabilities of the Agent. The Agent shall have no duty, ------------------------ liability or obligation to any party to this Master Agreement with respect to the transactions contemplated hereby except those duties, liabilities or obligations expressly set forth in this Master Agreement or the Loan Agreement, and any such duty, liability or obligations of the Agent shall be as expressly limited by this Master Agreement or the Loan Agreement, as the case may be. All parties to this Master Agreement acknowledge that the Agent is not, and will not be, performing any due diligence with respect to documents and information received pursuant to this Master Agreement or any other Operative Agreement including, without limitation, any Environmental Audit, Title Policy or survey. The acceptance by the Agent of any such document or information shall not constitute a waiver by any Funding Party of any representation or warranty of any Lessee even if such document or information indicates that any such representation or warranty is untrue. SECTION 8.13 Role of SunTrust Equitable Securities Corporation. Each ------------------------------------------------- party hereto acknowledges hereby that it is aware of the fact that SunTrust Equitable Securities Corporation ("SESC") is acting as an "arranger" with respect to the transactions contemplated by the Operative Documents and acknowledge and agree that neither SESC nor any of its Affiliates (including SunTrust Bank) has made any representations or warranties concerning, and that they have not relied on SESC as to, the tax, accounting or legal characterization or validity of the Operative Documents or any aspect of the transactions contemplated thereby. The parties acknowledge and agree that SESC has no duties, express or implied, under the Operative Documents in its capacity as "arranger". The parties further agree that Section 2.4, 8.4, 8.8, 8.10 and this Section 8.13 are for the express benefit of SESC, and SESC shall be entitled to rely thereon as if it were a party hereto. -76- IN WITNESS WHEREOF, the parties hereto have caused this Master Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. EDWARD D. JONES & CO., L.P., as Lessee, Construction Agent and Guarantor By: EDJ Holding Company, Inc., its General Partner By: ------------------------------------- Name Printed: --------------------------- Title: ---------------------------------- S-1 MASTER AGREEMENT ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor By: Atlantic Financial Managers, Inc., its General Partner By: ------------------------------------- Name Printed: --------------------------- Title: ---------------------------------- S-2 MASTER AGREEMENT SUNTRUST BANK, as Agent By: ------------------------------------- Name Printed: --------------------------- Title: ---------------------------------- S-3 MASTER AGREEMENT SUNTRUST BANK, as Lender By: ------------------------------------- Name Printed: --------------------------- Title: ---------------------------------- S-4 MASTER AGREEMENT BRANCH BANKING AND TRUST COMPANY, as Lender By: ------------------------------------- Name Printed: --------------------------- Title: ---------------------------------- S-5 MASTER AGREEMENT The Jones Financial Companies, L.L.L.P. ("JFC") joins in the foregoing Master Agreement for the purpose of acknowledging the terms, conditions and provisions thereof and hereby covenants and agrees to observe, perform and comply with all of the obligations of JFC thereunder. THE JONES FINANCIAL COMPANIES, L.L.L.P. By: ------------------------------------- Name Printed: --------------------------- Title: ---------------------------------- S-6 MASTER AGREEMENT SCHEDULE 2.2 Amount of Each Funding Party's Commitment Lessor Commitment Percentage: 3.5% Lessor Commitment $840,000.00 Lender Commitment Percentages: SunTrust Bank ____% Branch Banking and Trust Company ____% Lender Commitments: $23,160,000.00 SunTrust Bank $______________ Branch Banking and Trust Company $______________ SCHEDULE 4.1(a)(i) Indebtedness of Lessee BANK LOANS: The Lessee borrows from banks on a short-term basis primarily to finance customer margin balances and inventory securities. As of June 30, 2001, the Lessee had bank lines of credit aggregating $1,145,000 of which $1,095,000 was through uncommitted facilities. Actual borrowing availability is primarily based on the value of securities owned and customers' margin securities. At June 30, 2001, collateral, with a market value of $1,330,723, was available to support secured bank loans. Bank loans outstanding approximate their fair value. LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS: Liabilities subordinated to the claims of general creditors consist of: June 30, 2001 ------------- Capital notes, 8.18%, due in annual installments of $10,500 commencing on September 1, 2000, with a final installment on September 1, 2008. $ 84,000 Capital notes, 7.95%, due in annual installments of $10,225 with a final installment of $10,200 on April 15, 2006. 51,100 Capital notes, 8.96%, due in annual installments of $6,000 with a final installment on May 1, 2002. 6,000 Capital notes, with rates ranging from 7.51% to 7.79% due in annual installments commencing on August 15, 2005 with a final installment on August 15, 2011. 75,000 -------- $216,100 ======== Required annual principal payments, as of June 30, 2001, are as follows: Year Ending Principal Last Friday of June Payment ------------------- ------- 2002 $ 26,725 2003 20,725 2004 20,725 2005 20,725 2006 43,225 Thereafter 84,000 -------- $216,100 SCHEDULE 4.1(a)(ii) Subsidiaries [TO BE ATTACHED] SCHEDULE 4.1(d)(v) Pending Investigations or Inquiries 1. Internal Controls Investigation. (SEC File No. MC-2193) Over recent ------------------------------- periods, the New York Stock Exchange, Inc. had informally expressed some concerns over certain internal control systems within the Company which resulted in inappropriate conversion of client assets. During the most recent regularly scheduled examination by the Chicago Regional Office of the Securities and Exchange Commission, the same issues were noted. On December 15, 1998, the Securities and Exchange Commission through correspondence summarized its concerns and requested a summary of the Company's corrective action with copies to be noted to the New York Stock Exchange and the National Association of Securities Dealers. On January 5, 1999, the Company issued its response summarizing corrective actions. Upon receipt of this correspondence on January 15, 1999, the Securities and Exchange Commission issued a letter for the Company urging it to give immediate attention to the internal control issues. Subsequently, on January 26, 1999, a telephone conference call was conducted between representatives of the Securities and Exchange Commission and the Company reviewing the changes in internal control systems. On November 10, 1999, a formal document request for certain items relating to internal controls and conversion cases was issued, for which responsive information has been issued. Since November 10, 1999 substantial discovery has been conducted and the Company has been notified that the staff will recommend to the Commission that an enforcement action be instituted regarding instances that occurred during 1996 through early 1998. On March 26, 2001 the Company filed a Wells Submission outlining its reasons why such an enforcement action is not warranted. 2. Callable Certificate of Deposit Investigations/Litigation. Another case --------------------------------------------------------- was initiated by the New York Stock Exchange ("NYSE"), against the Company alleging deficiencies with the distribution of certain certificates of deposits ("CDs") by the Company during 1994 through 1997. A definitive settlement of the matter was reached wherein the Company stipulated to certain findings and agreed to a censure and fine of $200,000 along with certain procedural undertakings. Over the past several months various regulatory bodies, including the Securities and Exchange Commission, Minnesota Attorney General, Texas Securities Board, Texas Insurance Commission, Oklahoma Department of Securities, Arkansas Securities Department, Indiana Securities Division and the Office of the Secretary of the Massachusetts Commonwealth, have launched investigations of the Company's sales of CDs through the present. Moreover, during this same time period, adverse publicity in national media include Newsweek, NBC Nightly News, and the Wall -------- ---- Street Journal, have appeared criticizing the sale of such CDs by -------------- brokers. In addition to the foregoing, an action was filed on January 12, 2001 against the Company and eleven other brokerage firms seeking restitution and disgorgement and injunctive relief concerning sales of callable CDs under a state statute governing unfair or deceptive business practices. No responsive answer has been filed on behalf of the Company and no discovery has been undertaken. Although the scope of intended purchasers of this action is uncertain, there are presently approximately $3 billion of outstanding forms of callable CDs sold by the Company. (John P. Lippitt, On Behalf of the General Public v. --------------------------------------------------- Raymond James Financial Services, Inc., et al; Cause No. 318075, --------------------------------------------- Superior Court of the State of California, City and County of San Francisco). In addition to the foregoing, a purported class action against certain bank issuers of callable CDs was recently filed. (Theresa Morgan-Vaughn, ---------------------- et al. v. ABN Amro Bank N.V., et al. Civil Action No. 01L493; ------------------------------------ Circuit Court of the 3rd Judicial Circuit of Madison County, Illinois). Although the Company is not a named defendant to this case, one of the class representatives purchased a CD from the Company and substantial reference to the Company's settlement with the NYSE discussed above is contained therein. SCHEDULE 4.1(m) Environmental Matters None. SCHEDULE 4.1(u)(i) Leases [TO BE ADDED] SCHEDULE 5.2(a)(i) Existing Permitted Liens Those liens encumbering the property located at 8640 S. River Parkway, Tempe, Arizona and created in connection with the transactions contemplated by that certain Master Agreement dated as of November 30, 2000, among Edward D. Jones & Co., L.P., as Lessee, Construction Agent and Guarantor, Atlantic Financial Group, Ltd., as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by the Jones Financial Companies, L.L.L.P. Those liens created to perfect purchase money indebtedness which will encumber the property located at 8333 South River Parkway, Tempe, Arizona to the extent Lessee elects to complete the purchase of such real property pursuant to a non-binding letter of intent between Lessee and Motorola, Inc. dated August 8, 2001. SCHEDULE 5.2(a)(xiv) Existing Options, Etc. JFC and Subsidiaries has the right to purchase the building at 1245 Kelley Memorial Drive, St. Louis, MO 63131, in the 20th year of the lease, or if the building is offered for sale during the lease term which commenced January 1, 2002. Additionally, JFC and Subsidiaries has the option to purchase the adjacent buildings at 12444 Powerscourt Drive and 12412 Powerscourt Drive if and when the space is offered. JFC and Subsidiaries has the right to purchase the building at 700 Maryville Centre, St. Louis, MO 63141, between the 25th month and 31st month of the lease which commenced March 1, 2000. JFC and Subsidiaries has the right to purchase the building at 8640 S. River Parkway, Tempe, Arizona 85284, at the end of the initial five year lease term which commenced on November 30, 2000, and at the end of each of the five year lease renewals. Edward D. Jones & Co., L.P. will have the right to purchase an interest in a ground lease, building and personal property located at 8333 South River Parkway, Tempe, Arizona following a sixty (60) day due diligence period and a thirty (30) day closing period following acceptance of an offer dated August 8, 2001 from the seller of such property. SCHEDULE 5.2(d) Contingent Obligations CONTINGENCIES: Lessee's guarantee of Edward Jones Limited (UK) GBP 1,000,000 credit facility with the Royal Bank of Scotland. Lessee's guarantee of Edward Jones Limited (UK) $500,000 USD foreign exchange line with Wells Fargo Bank, N.A., currently under negotiation. Various legal actions are pending against the Lessee with certain cases claiming substantial damages. These actions are in various stages and the results of such actions cannot be predicted with certainty. In the opinion of management, after consultation with legal counsel, the ultimate resolution of these actions is not expected to have a material adverse impact on the Lessee's results of operations or financial condition. SCHEDULE 8.2 Addresses for Notices Lessee: Edward D. Jones & Co., L.P. 12555 Manchester Road St. Louis, Missouri 63131-3729 Attn: Kenneth E. Schutte Lessor: Atlantic Financial Group, Ltd. 2808 Fairmount, Suite 250 Dallas, Texas 75201 Attn: Stephen S. Brookshire Agent for Lender: SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attn: Linda L. Dash JFC: The Jones Financial Companies, L.L.L.P. 12555 Manchester Road St. Louis, Missouri 63131-3729 Attn: Lawrence R. Sobol EXHIBIT A TO MASTER AGREEMENT FORM OF FUNDING REQUEST TO: The Lessor, the Agent and each Lender (as defined in the Master Agreement referred to below) Reference is hereby made to the Master Agreement dated as of September 18, 2001 (as heretofore amended, the "Master Agreement") among Edward D. Jones & ---------------- Co., L.P., as Lessee, Guarantor and Construction Agent, Atlantic Financial Group, Ltd. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by The Jones Financial Companies, L.L.L.P. Capitalized terms not otherwise defined are used herein as defined in the Master Agreement. The undersigned, as Construction Agent, hereby notifies you that it requests a Funding in the amount of $ on [INSERT REQUESTED --------------- FUNDING DATE] in respect of the Leased Property [owing in respect of the Land, if applicable, and development, hard and/or soft transaction and closing costs in respect of the Leased Property or in respect of the purchase of personal property to be used in connection with the Leased Property (collectively, "Project Costs")] [amounts that are due or will ------------- become due within 30 days from the date hereof to third parties in respect of the Construction, or amounts paid by the Construction Agent to third parties in respect of the Construction for which the Construction Agent has not been previously reimbursed]. The undersigned, as Construction Agent, requests that the Funding be [a LIBOR Advance with a Rent Period of ---- months] [a Base Rate Advance] [allocated as follows: $ to a LIBOR ----------- Advance with a Rent Period of months and $ to a Base Rate --- --------------- Advance]. In connection with such requested Funding, the undersigned, hereby represents and warrants to you as follows: 1. on the requested Funding Date the representations and warranties of the Lessee contained in Section 4.1 of the Master Agreement shall be true and correct in all material respects on and as of such Funding Date as though made on and as of such Funding Date, except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; 2. there shall not have occurred any Event of Default or Potential Event of Default; 3. the amount of the requested Funding represents costs of Construction and transaction permitted to be funded pursuant to the Operative Documents as more A-1 particularly described as set forth on Schedule 1 attached hereto and ---------- made a part hereof; 4. the amount expended by the Construction Agent to date for the construction of the Building does not exceed the amount budgeted to be expended for the percentage of construction completed to date and, in the good faith judgment of the undersigned, the construction of the Building will be completed within the Construction Budget; 5. there has not occurred may event that could reasonably be expected to have a Material Adverse Effect since , 2001; ------------ 6. no Event of Default, Potential Event of Default, Event of Loss, or Event of Taking has occurred, and no action is pending or, to the knowledge of the undersigned, threatened by a Governmental Authority to initiate a Condemnation or an Event of Taking with respect to the Leased Property; and 7. all of the conditions precedent to such Funding set forth in Article III of the Master Agreement have been satisfied, or will be ----------- satisfied or waived on or prior to the requested Funding Date. Please wire transfer the proceeds of the Funding to . -------------------- The undersigned has caused this Funding Request to be executed and delivered by its duly authorized officer this day of , ------- -------------- 2001 [TO BE DELIVERED NOT LATER THAN 12:00 NOON, THREE (3) BUSINESS DAYS PRIOR TO THE REQUESTED FUNDING DATE]. EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, Inc., its sole general partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- A-2 SCHEDULE 1 TO FUNDING REQUEST Description of Costs -------------------- EXHIBIT B TO MASTER AGREEMENT FORM OF ASSIGNMENT OF LEASE AND RENTS This instrument prepared by and when recorded return to: McGuireWoods LLP, One James Center, Richmond, Virginia 23219, Attention: Edmund S. Pittman, Esquire ============================================================================ ASSIGNMENT OF LEASE AND RENTS Dated as of September 18, 2001 between ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor and Assignor and SUNTRUST BANK, as Agent and Assignee St. Louis County, Missouri ============================================================================ TABLE OF CONTENTS Page ---- SECTION 1. COLLATERAL ASSIGNMENT OF LEASE AND GUARANTY AGREEMENT..... 2 SECTION 2. ASSIGNMENT AS COLLATERAL SECURITY......................... 3 SECTION 3. PAYMENTS UNDER LEASE...................................... 3 SECTION 4. POWER OF ATTORNEY IN RESPECT OF LEASE..................... 4 SECTION 5. ASSIGNEE DESIGNATED RECIPIENT............................. 4 SECTION 6. ALLOCATION PURSUANT TO LOAN AGREEMENT..................... 4 SECTION 7. IRREVOCABILITY; SUPPLEMENTAL INSTRUMENTS.................. 4 SECTION 8. AMENDMENTS OR TERMINATION OF LEASE........................ 5 SECTION 9. LESSEE'S CONSENT AND AGREEMENT............................ 5 SECTION 10. REMEDIES CUMULATIVE....................................... 5 SECTION 11. MISCELLANEOUS............................................. 5 Consent and Agreement of Lessee EXHIBITS - -------- EXHIBIT A - Description of Land THIS ASSIGNMENT OF LEASE AND RENTS dated as of September 18, 2001 (as the same may be amended, supplemented or otherwise modified from time to time, this "Assignment Agreement"), is between ATLANTIC FINANCIAL GROUP, -------------------- LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor and Assignor (the "Lessor"), ------ having an office at 2305 Cedar Springs Road, Suite 415, Dallas, Texas 75201 and SUNTRUST BANK, a Georgia banking corporation, as Agent for the benefit of the hereinafter described Lenders (the "Assignee"), having an office at -------- 303 Peachtree Street, 3rd Floor, Atlanta, Georgia 30308. Capitalized terms not otherwise defined in this Assignment Agreement shall have the respective meanings assigned thereto in the Appendix A to the ---------- Master Agreement (as amended, supplemented or otherwise modified from time to time, the "Master Agreement"), dated as of the date hereof among Edward ------ --------- D. Jones & Co., L.P., a Missouri limited partnership, as Lessee, Construction Agent and Guarantor (the "Lessee"), the Lessor, the Assignee, ------ as Agent, and the Lenders parties thereto (the "Lenders") and joined in by ------- The Jones Financial Companies, L.L.L.P., and the rules of interpretation set forth in Appendix A shall apply to this Assignment Agreement. Copies of the ---------- Master Agreement, the Lease (as defined below) and the other Operative Documents (as defined in the Master Agreement) are on file at the office of the Agent. RECITALS: Pursuant to a Master Lease Agreement, dated as of the date hereof, between the Lessor and the Lessee (as restated, amended, supplemented or otherwise modified from time to time, the "Lease"), the Lessor has leased to ----- the Lessee (a) the land described on Exhibit A attached hereto and --------- incorporated herein, together with the following appurtenant rights (the "Appurtenant Rights"): (i) all agreements, easements, rights of way or use, ------------------ rights of ingress or egress, privileges, appurtenances, tenements, hereditaments, reversions, remainders, water rights and other rights and benefits at any time belonging or pertaining to the land or the improvements thereon, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the land and (ii) all permits, licenses and rights, whether or not of record, appurtenant to the land (such land and Appurtenant Rights being referred to as the "Land") and (b) the buildings, structures and ---- improvements located or to be located on the Land, along with all fixtures used or useful in connection with the operation thereof or of the Land, including, without limitation, all furnaces, boilers, compressors, elevators, fittings, pipings, connectives, conduits, ducts, partitions, equipment and apparatus of every kind and description now or hereafter affixed or attached to the building and all Alterations (including all restorations, repairs, replacements and rebuilding of such buildings, improvements and structures) thereto (the "Building"), and all Equipment (the Land, the Building and the Equipment being referred to hereinafter as the "Leased Property"). --------------- The Lessor has entered into the Master Agreement with the Assignee, the Lessee, the Lenders and the Assignee providing, among other things, for the commitment of the Lenders to assist in financing or refinancing, as applicable, the Lessor's acquisition of the Land and the construction of the Building thereon, and the acquisition and installation of the Equipment, by making Loans to be evidenced by the respective Notes. Such Loans as evidenced by the Notes bear interest on the unpaid principal amount thereof from time to time outstanding at the interest rate per annum determined as provided in and --- ----- payable as specified in the Loan Agreement. NOW, THEREFORE, the Lessor hereby agrees for the benefit of Assignee as follows: Section 1. Collateral Assignment of Lease and Guaranty Agreement. The ----------------------------------------------------- Lessor, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged, and as security for the payment of the principal of, and all interest and all other sums payable on, the Notes and all other sums payable by the Lessor to the Assignee under the Loan Agreement or under any of the other Operative Documents and the performance and observance by the Lessor for the benefit of the Assignee, as Agent for the Lenders, of the provisions of each thereof, whether contained therein or incorporated therein by reference, has assigned, transferred, conveyed and set over, and by these presents does assign, transfer, convey and set over, to the Assignee, for the benefit of the Lenders, all of the Lessor's interest in, to and under the Lease and the Guaranty and all of the Lessor's estate, right, title, interest, claim and demand as the Lessor under the Lease and the Guaranty, and all existing or future restatements, amendments, supplements or modifications of the Lease and Guaranty and any other lease, sublease or other occupancy agreement or arrangement with respect to the Leased Property; TOGETHER WITH all rights, powers, privileges, options and other benefits of the Lessor under the Lease, including, without limitation (a) --------- the right to receive and collect all Rent, income, revenues, issues, profits, Loss Proceeds, Awards, bankruptcy claims, liquidated damages, purchase price proceeds (pursuant to Article XIV of the Lease or otherwise), ----------- the Recourse Deficiency Amount and other payments, tenders and security payable to or receivable by the Lessor under the Lease, to be applied in accordance with Section III of the Loan Agreement; (b) the right, subject to ----------- the provisions of Section 8.4 of the Master Agreement, to give and withhold ----------- all waivers, consents, modifications, amendments and agreements under or with respect to the Lease; (c) the right to give and receive copies of all notices and other instruments or communications under or pursuant to the Lease; (d) the right to take such action upon the occurrence and during the continuance of an Event of Default as shall be permitted by the Lease or any of the other Operative Documents or by Applicable Law; and (e) the right to do any and all other things whatsoever which the Lessor or any lessor under the Lease, as the case may be, is or may be entitled to do thereunder; TOGETHER WITH the right and power to execute and deliver as agent and attorney-infact of the Lessor under the Lease an appropriate deed, bill of sale or other instruments of transfer necessary or appropriate for the conveyance and transfer to the Lessee of the Leased Property pursuant to Articles XIV or XV of the Lease, and all interests of the Lessor therein and - ------------ -- to perform in the name and for and on behalf of the Lessor, as such agent and attorney-in-fact, any and all other necessary or appropriate acts with respect to any such purchase, conveyance and transfer; TOGETHER WITH the right to inspect the Leased Property and all records relating thereto and to enforce performance or observance by the Lessee of any of such rights by the exercise of the right to proceed by appropriate court action or actions, either at law or in equity, 2 to enforce performance by the Lessee of the applicable covenants and terms or to recover damages for the breach thereof. TO HAVE AND TO HOLD the same unto the Assignee, for the benefit of the Lenders, and its successors and assigns forever. Section 2. Assignment as Collateral Security. The assignment made --------------------------------- hereby is executed as collateral security, and the execution and delivery of this Assignment Agreement shall not in any way impair or diminish any obligations of the Lessor as lessor under the Lease or of the Lessor, the Assignee, the Guarantor or any Lender under any of the other Operative Documents, nor impair, affect or modify any of the terms and conditions of the Notes or the Loan Agreement or any of the other Operative Documents securing the Notes, nor shall any of the obligations of the Lessor or of any other Person under any of the Operative Documents (other than the express obligations of the Assignee) be imposed upon the Assignee, including, but not limited to, collecting Rent or enforcing performance by the Lessee or the Guarantor. Without limiting the generality of the foregoing, the Assignee shall not be obligated to perform or discharge, nor does the Assignee hereby undertake to perform or discharge, any obligation, duty or liability of the Lessor under the Lease, or of the Lessor under any of the other Operative Documents, or under or by reason of this Assignment Agreement, and the Lessor does hereby waive any and all liability, loss or damage which may or might be asserted against the Assignee by reason of any alleged obligations or undertakings on its or their part to perform or discharge any of the terms, covenants or agreements contained in the Lease to be performed or discharged by the Lessor thereunder; provided, however, that if the Assignee -------- ------- does undertake any such action pursuant to the terms, conditions and restrictions contained in this Assignment Agreement and the other Operative Documents, the Lessor shall retain any rights it may have with respect thereto under the Operative Documents or by law or in equity, and the Assignee shall be liable for its gross negligence or willful misconduct. It is further understood and agreed that this Assignment Agreement shall not operate to (i) place responsibility for the control, care, management or repair of the Leased Property upon the Assignee, nor for the carrying out of any of the terms and conditions of the Lease or of any of the other Operative Documents (except to the extent expressly provided therein), in any such case binding upon or applicable to the Lessor, or (ii) make the Assignee responsible or liable for any waste with respect to the Land or the other Leased Property by the Lessee or any Person other than by the Assignee, or for any dangerous or defective condition of the Land or the other Leased Property, or for any negligence of the management, upkeep, or repair or control of the Land or the other Leased Property resulting in loss or injury or death to the Lessee, any sublessee, sublessor, licensee, employee or stranger other than for gross negligence or willful misconduct by the Assignee. Section 3. Payments Under Lease. The Lessor will direct the Lessee to -------------------- pay directly to the Assignee, as and when due pursuant to the Lease, the Recourse Deficiency Amount, all Basic Rent, all Supplemental Rent and all payments pursuant to Articles III, X, XIV and XV of the Lease, purchase ------------ - --- -- proceeds or avails, income, Awards, Loss Proceeds, and other sums payable to the Lessor pursuant to the Lease and the other Operative Documents (but excluding any indemnity payments or reimbursements to the Lessor from the Lessee pursuant to the Lease or otherwise). 3 The Assignee may, at its option, although it shall not be obligated to do so, and without waiving or releasing any obligation or Loan Event of Default, at any time perform any Lease covenant required to be performed by the Lessor for and on behalf of the Lessor and may recover any money advanced for any such purpose from the Lessor on demand, with interest at the Overdue Rate from the date of advancement; and (b) the Assignee is authorized to endorse, in the name of the Lessor, any item, howsoever received by it, representing any payment on or other proceeds (including Loss Proceeds) of the Lease (including, without limitation, all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV and XV of the ------------ - --- -- Lease, purchase proceeds or avails, income, Awards, Loss Proceeds and other sums paid or payable to the Lessor pursuant to the Lease and the other Operative Documents) and to endorse and deliver, in the name of the Lessor, any instrument or other item of the Rent held by the Assignee hereunder, in connection with the sale or collection of the Rent. Section 4. Power of Attorney in Respect of Lease. The Lessor does ------------------------------------- hereby irrevocably constitute and appoint the Assignee its true and lawful attorney with an interest and full power of substitution, for it and in its name, place and stead to do any or all of the following (a) ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV ------------ - --- and XV of the Lease, purchase proceeds or avails, income, Awards, Loss -- Proceeds and other sums paid or payable to the Lessor pursuant to the Lease and the other Operative Documents and other sums which are assigned under Section 1 hereof, and (b) without limiting the provisions of the foregoing - --------- clause (a) hereof, during the continuance of any Event of Default under the - ---------- Lease, sue for, compound and give acquittance for, or settle, adjust or compromise any claim for any and all such Rent, purchase proceeds or avails, income, Awards, Loss Proceeds and other sums which are assigned under Section 1 hereof as fully as the Lessor could itself do, and in its - --------- discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Lessor or otherwise, which the Assignee may deem necessary or appropriate to protect and preserve the right, title and interest of the Assignee in and to such Rent and other sums and security intended to be afforded hereby. Section 5. Assignee Designated Recipient. The Lessor hereby directs the ----------------------------- Lessee to deliver or remit directly to the Assignee at its address set forth in the Master Agreement all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV and XV of the Lease, purchase proceeds or avails, ------------ - --- -- income, Awards, Loss Proceeds and other sums payable to the Lessor pursuant to the Lease and the other Operative Documents by wire transfer of Federal or other funds current and immediately available to the Assignee on the due date thereof. Section 6. Allocation Pursuant to Loan Agreement. Notwithstanding ------------------------------------- anything contained herein to the contrary, any and all Basic Rent, Supplemental Rent, payments pursuant to Articles III, X, XIV and XV of the ------------ - --- -- Lease, purchase proceeds or avails, income, Awards, Loss Proceeds and other sums paid to or received or collected by or on behalf of the Assignee shall be paid, allocated and distributed pursuant to the terms of, and in the order of priority provided for in, Section III of the Loan Agreement. ----------- Section 7. Irrevocability; Supplemental Instruments. The Lessor agrees ---------------------------------------- that the assignment made hereby and the designation and direction to the Lessee hereinabove set forth are irrevocable, and that the Lessor will not, while such assignment is in effect or thereafter until 4 the Lessee has received from the Assignee written notice of the termination of such assignment, make any other assignment, designation or direction inconsistent therewith, and that any assignment, designation or direction inconsistent therewith shall be void. The Lessor will from time to time, upon request of the Assignee, execute all instruments of further assurance and all such supplemental instruments as the Assignee may reasonably specify. Section 8. Amendments or Termination of Lease. Except as otherwise ---------------------------------- permitted under Section 8.4 of the Master Agreement, the Lessor agrees that ----------- it will not enter into any agreement amending, supplementing, hypothecating, waiving, discharging or terminating the Lease. Section 9. Lessee's Consent and Agreement. The consent and agreement by ------------------------------ the Lessee to the provisions of this Assignment Agreement is attached hereto. Section 10. Remedies Cumulative. Each right, power and remedy of the ------------------- Assignee provided for in this instrument 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 Assignment Agreement or in any other Operative Document 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 Assignee or the Lenders of any one or more of such rights, powers or remedies shall not preclude the further exercise thereof or the simultaneous or later exercise by the Assignee or the Lenders of any or all such other rights, powers or remedies. No failure or delay on the part of the Assignee or the Lenders to exercise any such right, power or remedy (including, without limitation, the granting by the Assignee or the Lenders of consent to any action by the Lessor) shall operate as a waiver thereof. The Lessor stipulates that the remedies at law in respect of any default or threatened default by the Lessor in the performance of or compliance with any of the terms of this Assignment Agreement are not and will not be adequate, and that any of such terms may be specifically enforced by a decree for specific performance or by an injunction against the violation of any terms or otherwise. Section 11. Miscellaneous. ------------- (a) All notices, requests, offers, consents and other instruments given pursuant to this Assignment Agreement shall be delivered in accordance with Section 8.2 of the Master Agreement. ----------- (b) This Assignment Agreement shall be binding upon, inure to the benefit of and be enforceable by, the respective successors and assigns of the parties hereto. The headings to the various paragraphs of this Assignment Agreement have been inserted for convenience reference only and shall not modify, define, limit or expand the express provisions of this Assignment Agreement. Neither this Assignment Agreement nor any provision hereof may be amended, modified, waived, discharged or terminated orally, but only by an instrument signed by the parties hereto. If any provision of this Assignment Agreement or any application thereof shall be invalid or unenforceable, the remainder of this Assignment Agreement and any other application of such provision shall not be affected thereby. 5 (c) This Assignment Agreement may be executed in counterparts, each of which shall be deemed an original, and such counterparts shall together constitute but one and the same Assignment Agreement. It shall not be necessary in making proof of this Assignment Agreement to produce or account for more than one such counterpart signed by the party against which enforcement of this Assignment Agreement is sought. (d) THIS ASSIGNMENT AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE LIEN HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH THE LAND IS LOCATED. (e) Upon payment in full of all indebtedness secured by this Assignment Agreement and the Loan Agreement and performance of all other obligations secured hereby and thereby, this Assignment Agreement and the Lien created hereby shall terminate and be of no further force or effect. The Assignee shall, at the Lessee's expense, do, execute, acknowledge and deliver each and every deed, conveyance, transfer and release necessary or proper to evidence the release of record of this Assignment Agreement. (f) Notwithstanding anything to the contrary set forth herein, in the event of any conflict between any provision of this Assignment Agreement and the Loan Agreement, the terms and provisions of the Loan Agreement shall control. (g) All amounts paid by the Lessee to the Assignee hereunder shall be fully credited against amounts payable by the Lessee to the Lessor under the Lease. (h) To the extent that the Lease and/or the Lease Supplement are characterized as a deed of trust, mortgage, deed to secure debt, security agreement or other financing document for any reason (including, without limitation, as a result of the Lease being treated as a financing transaction as provided in Article XI of the Lease for purposes other than ---------- accounting purposes), this Assignment Agreement shall be an assignment to the Assignee of such deed of trust (and all beneficial rights, title and interests thereunder), mortgage, deed to secure debt, security agreement or other financing document and of the indebtedness secured thereby to the Assignee, for the benefit of the Lenders, as security for the Loans made by the Lenders pursuant to the Loan Agreement and for all amounts owed to the Lenders by the Lessee or the Lessor pursuant to, and all other Obligations of the Lessee or the Lessor under, the Operative Documents. 6 IN WITNESS WHEREOF, the Lessor and the Assignee have each caused this Assignment Agreement to be duly executed and delivered, in its respective name and behalf, all as of the date and year first above written. ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor and Assignor By: Atlantic Financial Managers, Inc., a Texas corporation. its general partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- STATE OF TEXAS ) ) ss. COUNTY OF ) ---------------- On this day of September, 2001, before me, , a ---- -------------------- Notary Public in and for said County and State, personally appeared , to me personally known, who being by me duly sworn - --------------------- did say that (s)he is the of Atlantic Financial ------------------- Managers, Inc., a Texas corporation, and the general partner of Atlantic Financial Group, Ltd., a Texas limited partnership, and that the foregoing instrument was signed on behalf of said corporation by authority of its Board of Directors, and said acknowledged said instrument ---------------- to be the free act and deed of said corporation as general partner of Atlantic Financial Group, Ltd. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written. ------------------------------------- Notary Public - State of Texas My Commission Expires: --------------- (notary seal) S-1 ASSIGNMENT OF LEASE AND RENTS SUNTRUST BANK, a Georgia banking corporation, as Agent and Assignee By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- STATE OF GEORGIA ) ) ss. COUNTY OF ) --------------- On this day of September, 2001, before me, , --- ---------------------- a Notary Public in and for said County and State, personally appeared , to me personally known, who being by me duly sworn, - ---------------------- did say that (s)he is the of SunTrust Bank, a Georgia ------------------ banking corporation, and that the foregoing instrument was signed on behalf of said corporation by authority of its Board of Directors, and said acknowledged said instrument to be the free act and deed of - ---------------- said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written. ---------------------------------- Notary Public - State of Georgia My Commission Expires: ------------- (notary seal) S-2 ASSIGNMENT OF LEASE AND RENTS CONSENT AND AGREEMENT OF LESSEE THIS CONSENT AND AGREEMENT dated as of September 18, 2001, by EDWARD D. JONES & CO., L.P., a Missouri limited partnership (the "Lessee"), for the ------ benefit of SUNTRUST BANK, a Georgia banking corporation, as Agent for the Lenders (the "Assignee"), to the assignments made under the Assignment of -------- Lease and Rents, dated as of the date hereof (the "Assignment Agreement") -------------------- between ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.), as assignor (the "Lessor") and the Assignee. Capitalized terms not otherwise ------ defined herein shall have the meanings set forth in the Assignment Agreement. 1. The Lessee hereby consents to the terms and provisions of the Assignment Agreement and agrees it will deliver or remit, as and when payable pursuant to the Operative Documents directly to Assignee, the Recourse Deficiency Amount, all Basic Rent, all Supplemental Rent and all payments pursuant to Articles III, X, XIV and XV of the Lease, purchase ------------ - --- -- proceeds or avails, income, Awards, Loss Proceeds and other sums paid or payable to the Lessor pursuant to the Lease and the other Operative Documents (but excluding any indemnity payments or reimbursements to the Lessor from the Lessee pursuant to the Lease or otherwise, and, so long as no Loan Event of Default has occurred, the Lessor Basic Rent), in each case, to the extent provided in the Lease, without any offset, deduction, defense, abatement, suspension, deferment, diminution or reduction for any reason so that said funds shall at all times be available for payment of interest and principal due on the Notes, except in each case as expressly provided in the Lease. 2. Notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceeding affecting the Lessor under the Lease, (ii) any action with respect to the Lease which may be taken by any trustee or receiver of the Lessor, or by any court in such proceeding, and (iii) the exercise by the Agent or the Lenders of any rights and remedies under the Assignment Agreement, the Lessee agrees that it will remain obligated under the Lease in accordance with its terms and that it will not take any action to terminate (other than pursuant to its express rights under the Lease and the Master Agreement to do so), rescind or avoid the Lease. 3. To the extent that the Lessee may acquire any indebtedness of the Lessor or any other party to the Master Agreement, or any claim against the Lessor or any other party to the Master Agreement, by way of subrogation or otherwise, all such indebtedness and claims are hereby subordinated and made fully subject in right of payment thereof to the prior payment in full of the Notes. 4. In addition to (and not in limitation of) all of the Lessee's reimbursement and indemnity obligations set forth in the Operative Documents, the Lessee agrees to pay promptly all reasonable and documented costs and expenses incurred by the Lessor, pursuant to the Assignment Agreement, for the release of the Assignment Agreement. IN WITNESS WHEREOF, the Lessee has caused this Consent and Agreement to be duly executed and delivered, in its name and behalf, all as of the date and year first above written. EDWARD D. JONES & CO., L.P., a Missouri limited partnership, as Lessee By: EDJ Holding Company, Inc., a Missouri corporation, its sole general partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- STATE OF MISSOURI ) ) ss. COUNTY OF ) -------------- On this day of September, 2001, before me, , ---- ------------------------ a Notary Public in and for said County and State, personally appeared , to me personally known, who being by me duly sworn, - -------------------- did say that (s)he is the of EDJ Holding Company, Inc., ------------------- a Missouri corporation, and the general partner of Edward D. Jones & Co., L.P., a Missouri limited partnership, and that the foregoing instrument was signed on behalf of said corporation by authority of its Board of Directors, and said acknowledged said instrument to be the free act ---------------- and deed of said corporation as general partner of Edward D. Jones & Co., L.P. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written. ------------------------------------- Notary Public - State of Missouri My Commission Expires: -------------- (notary seal) EXHIBIT A Description of Land ------------------- [TO BE ADDED] EXHIBIT C TO MASTER AGREEMENT SECURITY AGREEMENT AND ASSIGNMENT (Construction Contract, Architect's Agreement, Permits, Licenses and Governmental Approvals, and Plans, Specifications and Drawings) FOR VALUE RECEIVED, and to secure the performance by Edward D. Jones & Co., L.P., a Missouri limited partnership (the "Assignor"), of all of its -------- obligations under (i) that certain Master Lease Agreement, by and among the Assignor and Atlantic Financial Group, Ltd. (registered to do business in Missouri as Atlantic Financial Group, L.P.) (herein, together with its successors and assigns, called the "Secured Party"), dated as of the date ------------- hereof (as the same may be amended, supplemented or otherwise modified from time to time, and together with all substitutions therefor and replacements thereof, the "Lease"), (ii) the Construction Agency Agreement, dated as of ----- the date hereof (as the same may be amended, supplemented or otherwise modified from time to time, and together with all substitutions therefor and replacements thereof, the "Construction Agency Agreement"), between the ----------------------------- Assignor and the Secured Party, and (iii) the other Operative Documents (as defined in the Lease), the Assignor does hereby quitclaim, sell, assign, transfer and set over unto the Secured Party, its successors and assigns, subject to the provisions of the Bond Documents, all of its rights, title and interests in and to the following (referred to collectively herein as the "Collateral"): ---------- 1. that certain construction contract described on Schedule 1 attached ---------- hereto and made a part hereof (the "Construction Contract"); --------------------- 2. that certain architect's agreement described in Schedule 1 attached ---------- hereto and made a part hereof (the "Architect's Agreement"); --------------------- 3. all other Construction Documents, including contracts and agreements relating to the acquisition and installation of the Equipment; 4. all plans, specifications and drawings of any and every kind heretofore or hereafter prepared for use in connection with the Construction, and any supplements, amendments or modifications thereto (collectively, the "Plans and Specifications"); and ------------------------ 5. all building and other permits, licenses and governmental approvals that are necessary or useful to the commencement and completion of the Construction, or that otherwise relate in any way to the Construction or the occupancy of the Building, or the acquisition, installation and use of the Equipment, heretofore or hereafter obtained or applied for by or on behalf of the Assignor or the Contractor or the Architect or any of the architects, engineers, vendors, contractors or subcontractors working on any aspect of the Construction, and any deposits made in connection therewith (referred to collectively herein as the "Permits"); ------- provided, however, that, except to the extent expressly set forth in the - -------- ------- Consent and Acknowledgment of the General Contractor, the Architect and the Vendor(s), the Secured Party shall have no obligation or liability of any kind under or with respect to the Construction Contract, the Architect's Agreement, and the Construction Documents, the Permits or the Plans and Specifications, either before or after its exercise of any rights hereby granted to it, and the Assignor agrees to save and hold the Secured Party harmless of and from, and to indemnify it against, any and all such obligations and liabilities, contingent or otherwise and provided, further, any assignment, pledge or -------- ------- security in the collateral is subject to any required consents of Governmental Authorities or public utilities. This assignment shall inure to the benefit of the Secured Party and its successors and assigns, and shall be binding upon the Assignor and its successors and assigns, and shall continue in full force and effect until all obligations, liabilities and indebtedness of any kind now or hereafter due the Secured Party from the Assignor under or with respect to the Lease or any of the other Operative Documents, or which are otherwise secured hereby, whether now existing or hereafter arising or incurred (collectively, the "Liabilities"), have been fully paid, performed and satisfied, and until ----------- Construction is complete with respect to the Leased Property or returned to the Secured Party pursuant to the Construction Agency Agreement, at which time this assignment will terminate. The Assignor shall be entitled to the benefit of, and to exercise all rights under, the Collateral, and the Secured Party will not exercise any of its rights hereunder, until there occurs an Event of Default (which term is defined for purposes hereof as it is defined in the Lease) or a Construction Agency Event of Default (which term is defined for purposes hereof as it is defined in the Construction Agency Agreement) or until the Leased Property is returned to the Secured Party pursuant to the Construction Agency Agreement. The Assignor hereby acknowledges that the Secured Party will assign all of its rights hereunder to SunTrust Bank, as agent (the "Agent") for the benefit of the Lenders, to ----- secure the Loans and agrees that the Agent may exercise all of the rights of the Secured Party hereunder. For purposes of completing the Construction following the occurrence of an Event of Default or a Construction Agency Event of Default, the Secured Party may, at its option, further assign its right, title and interest in the Collateral without the consent of the Assignor, the Contractor, the Architect or any other contractor or vendor, but shall promptly thereupon notify the Contractor and the Architect, and upon exercise by such assignee of its rights to complete the Construction pursuant hereto, only such assignee, and not the Secured Party, shall become liable to pay or perform the Secured Party's obligations under the Construction Contract, the Architect's Agreement and the other Construction Documents. This assignment is a present, perfected and absolute assignment, provided that the Secured Party shall not have the right to undertake completion of the Construction or directly to enforce the provisions of the Construction Contract or the Architect's Agreement until an Event of Default shall occur under the Lease or a Construction Agency Event of Default shall occur under the Lease or a Construction Agency Event of Default shall occur under the Construction Agency Agreement or until the Leased Property is returned to the Secured Party pursuant to the Construction Agency Agreement. Following the occurrence of any such Event of Default or Construction Agency Event of Default, the Secured Party may, without affecting any other right or remedy available to it, exercise its rights under this assignment as provided herein in any manner permitted by law. If any notice to the Assignor is required by law, such notice shall be deemed commercially reasonable if given at least ten (10) days prior to the date of intended 2 action. If the Assignor returns the Leased Property to the Secured Party pursuant to the Construction Agency Agreement, the Secured Party may (subject to any necessary third party consents) exercise all of the Assignor's rights, and assert all of the Assignor's claims, under and with respect to the Construction Contract, the Architect's Agreement, the other Construction Documents and the other Collateral. This assignment may be effectively waived, modified, amended or terminated only by a written instrument executed by the Secured Party. Any waiver by the Secured Party shall be effective only with respect to the specific instance described therein. Delay or course of conduct shall not constitute a waiver of any right or remedy of the Secured Party. THIS ASSIGNMENT HAS BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. All terms capitalized herein and not specifically defined herein which are capitalized and defined in the Lease shall have the same respective meanings for purposes hereof as for purposes of the Lease. 3 IN WITNESS WHEREOF, the undersigned have executed and delivered this assignment as of September ___, 2001, pursuant to proper authority duly granted. EDWARD D. JONES & CO., L.P., a Missouri limited partnership By: EDJ Holding Company, Inc., a Missouri corporation, its sole general partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- 4 SECURITY AGREEMENT ACCEPTANCE ---------- Atlantic Financial Group, Ltd. (registered to do business in Missouri as Atlantic Financial Group, L.P.), being the Secured Party as described in the foregoing Security Agreement and Assignment, hereby acknowledges receipt of the foregoing instrument as of this day of September, 2001, and ---- hereby assigns all of its rights under such agreement to SunTrust Bank, as Agent. ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.) By: Atlantic Financial Managers, Inc., a Texas corporation, its General Partner By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- 5 SECURITY AGREEMENT SCHEDULE 1 [TO BE PROVIDED] CONSENT AND ACKNOWLEDGMENT BY THE CONTRACTOR -------------------------------------------- The undersigned hereby acknowledges receipt of a counterpart original of, and consents to, the foregoing Security Agreement and Assignment. 1. The undersigned certifies that the Construction Contract is in full force and effect and constitutes the entire agreement between the Assignor and the undersigned, and that there have been no modifications, supplements, amendments or except for change orders (copies of which are attached hereto) which do not increase the contract price under the construction contract and do not diminish the fair market value, useful life or utility of the Leased Property addenda thereto from the form thereof dated , a ------------------ true, correct and complete copy of which is attached hereto, and that the Assignor is not in default under the Construction Contract. 2. The undersigned agrees to look solely to the Assignor for the performance of all of the obligations of the Assignor under the Construction Contract, and not to look to Secured Party for such performance, except only as provided below. However, if the Secured Party exercises, with respect to the Construction Contract, the rights and privileges conferred upon it by the Security Agreement and Assignment and asserts (by written election as specified in the immediately succeeding two sentences) the present right to have the benefits of the Construction Contract and to enforce the same against the undersigned in the place and stead of the Assignor, the undersigned agrees to perform for, and for the benefit of, the Secured Party all of the undersigned's obligations under and pursuant to the Construction Contract if the balance due under the Construction Contract (being the portion of the total price which is then or thereafter due and payable as provided therein, less the total of all portions thereof theretofore paid to or for the benefit of the Contractor) has been paid or is then paid (or for portions thereof not then due under the Construction Contract, such amounts are paid as and when due under the Construction Contract). Prior to the Secured Party's express written election (if any) to succeed to the Assignor's rights and to assume the Assignor's obligations (to the extent provided in the immediately succeeding sentence) under the Construction Contract, the Contractor agrees that the Secured Party shall have no personal obligations or liabilities of any kind under the Construction Contract, the Security Agreement and Assignment, or otherwise. In the event that the Secured Party shall so expressly elect in writing to succeed to the Assignor's rights and to assume the Assignor's obligations under the Construction Contract, the sole obligations that the Secured Party shall assume and be liable for are (i) obligations to pay the Contractor the amounts due under the Construction Contract as provided in the second sentence of this paragraph (whether due before or after such election), and (ii) other obligations of the Assignor under the Construction Contract first accruing after such election by the Secured Party, and the Secured Party shall not be liable or obligated for any other obligations. 3. The Contractor hereby agrees to send to the Secured Party copies of all notices of any pending or threatened default, nonperformance or termination to the Assignor under the Construction Contract by courier or certified mail, return receipt requested, to the following address (or at such other address as the Secured Party shall, from time to time, notify the undersigned in writing): SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Such notices of any pending or threatened default, nonperformance or termination shall be sent at the same time as any such notices are sent to the Assignor. 4. The Contractor agrees that it shall not voluntarily terminate the Construction Contract except in accordance with the following provisions of this paragraph. The Contractor agrees that if the Contractor is entitled to terminate the Construction Contract by reason of defaults of the Assignor, the Contractor shall not terminate the Construction Contract until it has provided the Secured Party with a written notice of its election to so terminate the Construction Contract by virtue of any such default thereunder by the Assignor and the Secured Party has not assumed the Assignor's obligations under the Construction Contract and cured the defaults as (but only to the extent) required in Section 2 of this Consent and Acknowledgment --------- within thirty days after Secured Party's receipt of said written notice. 5. Notices to the Contractor hereunder shall be sent by courier or certified mail, return receipt requested, to the following: ------------------- ------------------- ------------------- Attention: ---------------- 6. In the event the Construction Contract is terminated, the Secured Party shall be entitled to use, as required for the Construction (as defined in the Lease), without any additional cost or fee, any and all Permits and all Plans and Specifications and final plans, drawings and specifications ("Plans Permits") developed in connection therewith for the Construction, but in no event will such Plans and Permits be used for any project other than the current project. The foregoing is furnished for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by the undersigned, and the undersigned understands and intends that the Secured Party will rely on the foregoing and that the undersigned will be legally bound by the foregoing. This Consent and Acknowledgment shall inure to the benefit of the Secured Party and its successors and assigns. The Contractor hereby acknowledges that the Secured Party will assign all of its rights hereunder to SunTrust Bank, as Agent for the benefit of the Lenders, and agrees that the Agent may exercise all rights of the Secured Party hereunder. All capitalized terms used herein and not otherwise specifically defined shall have the meanings provided therefor in the Security Agreement and Assignment. ii IN WITNESS WHEREOF, the undersigned has executed and delivered this Consent and Acknowledgment as of September , 2001 pursuant to proper --- authority duly granted. [INSERT NAME OF CONTRACTOR] By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- iii Attach copy of Construction Contract iv CONSENT AND ACKNOWLEDGMENT OF ARCHITECT --------------------------------------- The undersigned hereby acknowledges receipt of a counterpart original of, and consents to, the foregoing Security Agreement and Assignment. 1. The undersigned certifies that the Architect's Agreement is in full force and effect and constitutes the entire agreement between the Assignor and the Architect, that there have been no modifications, supplements, amendments or addenda to the Architect's Agreement from the form thereof dated , a true, correct and complete copy of which is ------------------ attached hereto, and that the Assignor is not in default under the Architect's Agreement. 2. The undersigned agrees to look solely to the Assignor for the performance of all of the obligations of the Assignor under the Architect's Agreement, and not to look to Secured Party for such performance. However, if the Secured Party exercises, with respect to the Architect's Agreement, the rights and privileges conferred upon it by the Security Agreement and Assignment and asserts (by written election as specified in the immediately succeeding two sentences) the present right to have the benefits of the Architect's Agreement and to enforce the same against the undersigned in the place and stead of the Assignor, the undersigned agrees to perform for, and for the benefit of, the Secured Party all of the undersigned's obligations under and pursuant to the Architect's Agreement if the balance due under the Architect's Agreement (being the portion of the total price which is then or thereafter due and payable as provided therein, less the total of all portions thereof theretofore paid to or for the benefit of the Architect) has been paid or is then paid (or for portions thereof not then due under the Architect's Agreement, such amounts are paid as and when due under the Architect's Agreement). Prior to the Secured Party's express written election (if any) to succeed to the Assignor's rights and to assume the Assignor's obligations (to the extent provided in the immediately succeeding sentence) under the Architect's Agreement, the Architect agrees that the Secured Party shall have no personal obligations or liabilities of any kind under the Architect's Agreement, the Security Agreement and Assignment or otherwise. In the event that the Secured Party shall so expressly elect in writing to succeed to the Assignor's rights and to assume the Assignor's obligations under the Architect Agreement, the sole obligations which the Secured Party shall assume and be liable for are (i) obligations to pay the Architect the amounts due under the Architect's Agreement as provided in the second sentence of this paragraph (whether due before or after such election), and (ii) other obligations of the Assignor under the Architect's Agreement first accruing after such election by the Secured Party, and the Secured Party shall not be liable or obligated for any other obligations. 3. The Architect hereby agrees to send to the Secured Party copies of all notices to the Assignor under the Architect's Agreement by courier or certified mail, return receipt requested, to the following address (or at such other address as the Secured Party shall, from time to time, notify the undersigned in writing): D-1-1 SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Such notices shall be sent at the same time as any notices to the Assignor. 4. The Architect agrees that it shall not voluntarily terminate the Architect's Agreement except in accordance with the following provisions of this paragraph. The Architect agrees that if the Architect is entitled to terminate the Architect's Agreement by reason of defaults of the Assignor, the Architect shall not terminate the Architect's Agreement until it has provided the Secured Party with a written notice of its election to so terminate the Architect's Agreement by virtue of any such default thereunder by the Assignor and the Secured Party has not assumed the Assignor's obligations under the Architect's Agreement and cured the defaults as (but only to the extent) required in Section 2 of this Consent and Acknowledgment --------- within thirty days after Secured Party's receipt of said written notice. 5. The Architect agrees to deliver to the Secured Party, upon completion of the Construction (as defined in the Lease), a certificate of the Architect, in form and substance reasonably satisfactory to the Secured Party, and stating, if such be the case, that (i) the Building has been completed substantially in accordance with the Plans and Specifications therefor, and the Leased Property is ready for occupancy, (ii) such Plans and Specifications comply in all material respects with all Applicable Laws in effect at such time, and (iii) to the best of the Architect's knowledge, the Leased Property, as so completed, complies in all material respects with all Applicable Laws in effect at such time (capitalized terms in this sentence having the meanings set forth in the Lease). If the Architect cannot deliver such certificate because the facts do not support the foregoing requested certification, the Architect agrees that it will deliver a modified certificate or other written notice to the Secured Party specifying the reason(s) the certificate cannot be given as requested. 6. Notices to the Architect hereunder shall be sent by courier or certified mail, return receipt requested, to the following: --------------------- --------------------- --------------------- Attention: --------------------- 7. In the event the Architect's Agreement is terminated, the Secured Party shall be entitled to use, as required for the Construction (as defined in the Lease), without any additional cost or fee, any and all Permits and all Plans and Specifications and final plans, drawings and specifications developed in connection therewith for the Construction. The foregoing is furnished for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by the undersigned, and the undersigned D-1-2 understands and intends that Secured Party will rely on the foregoing and that the undersigned will be legally bound by the foregoing. This Consent and Acknowledgment shall inure to the benefit of the Secured Party and its successors and assigns. The Architect hereby acknowledges that the Secured Party will assign all of its rights hereunder to SunTrust Bank, as Agent for the benefit of the Lenders, and agrees that the Agent may exercise all rights of the Secured Party hereunder. All capitalized terms used herein and not otherwise specifically defined shall have the meanings provided therefor in the Security Agreement and Assignment. IN WITNESS WHEREOF, the undersigned has executed and delivered this Consent and Acknowledgment as of September , 2001 pursuant to proper --- authority duly granted. [NAME OF ARCHITECT] By: --------------------------- Name: ---------------------- Title: --------------------- D-1-3 Attach copy of Architect's Agreement D-1-4 EXHIBIT F TO MASTER AGREEMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT To: SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Re: EDWARD D. JONES & CO., L.P. --------------------------- Ladies and Gentlemen: We refer to Section 6.2 of the Master Agreement, dated as of September 18, ----------- 2001 (as heretofore or hereafter amended, the "Master Agreement"), among ---------------- Edward D. Jones & Co., L.P., as Lessee, Guarantor and Construction Agent, Atlantic Financial Group, Ltd. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Master Agreement. This agreement is delivered to you pursuant to Section 6.2 of the ----------- Master Agreement and also constitutes notice to you, of the assignment to (the "Assignee") of % of (i) its Commitment and (ii) the - --------------- -------- ---- A Loans and B Loans of (the "Assignor") outstanding -------------------- -------- under the Loan Agreement and Master Agreement on the date hereof, which assignment shall be effective as of , . After giving ------------- --- ----- effect to the foregoing assignment, the Assignor's and the Assignee's Commitment Percentage for the purposes of the Loan Agreement and Master Agreement are set forth opposite such Person's name on the signature pages hereof. [Add paragraph dealing with accrued interest and fees with respect to Loans assigned.] The Assignee hereby acknowledges and confirms that it is an Eligible Assignee and that it has received a copy of each of the Operative Documents. The Assignee further confirms and agrees that in becoming a Lender and in making its Loans under the Loan Agreement, such actions have and will be made without recourse to, or representation or warranty by, the Agent, the Assignor or the Lessor. Except as otherwise provided in the Master Agreement, effective as of the date of acceptance hereof by the Agent and the Lessee: F-1 (a) the Assignee ------------ (i) shall be deemed automatically to have become a party to the Master Agreement and the Loan Agreement, have all the rights and obligations of a "Lender" under the Master Agreement, the Loan Agreement and the other Operative Documents as if it were an original signatory thereto to the extent specified in the second paragraph hereof; and (ii) agrees to be bound by the terms and conditions set forth in the Master Agreement, the Loan Agreement and the other Operative Documents that are applicable to a Lender, and makes the representations and warranties of a Lender therein, as if it were an original signatory thereto; and (b) the Assignor shall be released from its obligations under the Master Agreement, the Loan Agreement and the other Operative Documents to the extent of the interest assigned hereby as specified in the second paragraph hereof; provided, that the Assignor shall not be relieved of any such obligation arising prior to the date specified in the second paragraph hereof. The Assignor and the Assignee hereby agree that the [Assignor] [Assignee] will pay to the Agent the processing fee referred to in Section 6.2 ----------- of the Master Agreement upon the delivery hereof. The Assignee hereby advises you of the following administrative details with respect to the assigned Loans and requests the Agent to acknowledge receipt of this document: A. Address for Notices: Institution Name: Attention: Telephone: Facsimile: B. Payment Instructions: This Agreement may be executed by the Assignor and Assignee in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. F-2 Adjusted Commitment Percentage [ASSIGNOR] - ------------------------------ % By: ------- ------------------------------ Title: --------------------------- Commitment Percentage % [ASSIGNEE] ----- By: ------------------------------ Name Printed: -------------------- Title: --------------------------- Accepted and Acknowledged this day of , ---- ------------ ---- SUNTRUST BANK, as Agent By: -------------------------------- Name Printed: ---------------------- Title: ----------------------------- EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, Inc., its sole general partner By: -------------------------------- Name Printed: ---------------------- Title: ----------------------------- F-3 EXHIBIT H TO MASTER AGREEMENT FORM OF COMPLETION DATE CERTIFICATE TO: Lessor, Agent and each Lender (as defined in the Master Agreement referred to below) Reference is hereby made to the Master Agreement, dated as of September 18, 2001 (as heretofore amended, the "Master Agreement"), among Edward D. Jones ---------------- & Co., L.P., as Lessee, Guarantor and Construction Agent, Atlantic Financial Group, Ltd. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by The Jones Financial Companies, L.L.L.P. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Master Agreement. This Certificate is being delivered pursuant to Section 3.5(c) of the Master Agreement. The Construction Agent hereby certifies to you that as of , (the "Completion Date") with respect to the Leased - ----------------- ---- --------------- Property: 1. All amounts owing to third parties for the Construction have been paid in full (other than contingent obligations for which the Construction Agent has made adequate reserves), and no litigation or proceedings are pending, or to the best of the Construction Agent's knowledge, are threatened, against the Leased Property, the Construction Agent or the Lessee which could reasonably be expected to have a Material Adverse Effect. 2. All material consents, licenses and permits and other governmental authorizations or approvals required for the Construction and operation of the Leased Property have been obtained and are in full force and effect. 3. The Leased Property has available all services of public facilities and other utilities necessary for the use and operation of the Leased Property for its intended purposes, including, without limitation, adequate water, gas and electrical supply, storm and sanitary sewerage facilities, telephone, other required public utilities and means of access between the Building and public highways for pedestrians and motor vehicles. 4. All material agreements, easements and other rights, public or private, which are necessary to permit the lawful use and operation of the Leased Property as the Lessee intends to use the Leased Property under the Lease and which are necessary to permit the lawful intended use and operation of all then intended utilities, driveways, roads and other means of egress and ingress to and from the same have been obtained and are in full force and effect and neither the Construction Agent nor the Lessee has any knowledge of any pending modification or cancellation of any of the same, and the use of the Leased Property does not depend on any H-1 variance, special exception or other municipal approval, permit or consent that has not been obtained and is in full force and effect for its continuing legal use. 5. All of the requirements and conditions set forth in Section 3.5(b) -------------- of the Master Agreement have been completed and fulfilled with respect to the Leased Property and the Construction. 6. To the best of the Construction Agent's knowledge, the Leased Property is in compliance in all material respects with all applicable zoning laws and regulations. The Construction Agent has caused this Completion Date Certificate to be executed and delivered by its duly authorized officer this , . - -------------- ----- EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, Inc., its sole general partner By: -------------------------------- Name Printed: ---------------------- Title: ----------------------------- H-2 EXHIBIT I TO MASTER AGREEMENT PAYMENT DATE NOTICE Atlantic Financial Group, Ltd. 2808 Fairmont, Suite 250 Dallas, Texas 75201 Attention: Stephen S. Brookshire SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Linda L. Dash Re: EDWARD D. JONES & CO., L.P. --------------------------- Ladies and Gentlemen: This Payment Date Notice is delivered to you pursuant to Section 2.3(d) of the Master Agreement, dated as of September 18, 2001 (together with all amendments, if any, from time to time made thereto, the "Master Agreement"), ---------------- among Edward D. Jones & Co., L.P., as Lessee, Guarantor and Construction Agent, Atlantic Financial Group, Ltd. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor, SunTrust Bank and certain financial institutions parties thereto, as Lenders, and SunTrust Bank, as Agent, and joined in by The Jones Financial Companies, L.L.L.P. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Master Agreement. Edward D. Jones & Co., L.P., as Construction Agent, hereby requests that on : ----------- 1. $ of the presently outstanding Funded Amounts originally ----------- made on , [and $ of the presently ------------ --- ----- ------------- outstanding Funded Amounts originally made on , ], --------------- ----- 2. and all presently being maintained as (1)[LIBOR Advances] [Base Rate Advances], 3. be [converted into] [continued as], 4. (2)[LIBOR Advances having a Rent Period of months] ----- [Base Rate Advances]. - ------ (1) Select appropriate interest rate option. I-1 Edward D. Jones & Co., L.P., as Lessee, Guarantor and Construction Agent, hereby certifies and warrants that no Potential Event of Default or Event of Default has occurred and is continuing. Edward D. Jones & Co., L.P. has caused this Payment Date Notice to be executed and delivered, and the certification and warranty contained herein to be made, by its authorized officer this day of , ----- -------------- 2001. EDWARD D. JONES & CO., L.P. By: EDJ Holding Company, its sole general partner By: -------------------------------- Name Printed: ---------------------- Title: ----------------------------- - ------ (2) Insert appropriate interest rate option. I-2 EXHIBIT J TO MASTER AGREEMENT FORM OF COMPLIANCE CERTIFICATE SEE ATTACHED J-1 EX-10.24 11 exh10p24.txt MASTER LEASE AGREEMENT Exhibit 10.24 ------------- ============================================================================= MASTER LEASE AGREEMENT Dated as of September 18, 2001 between ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor, and EDWARD D. JONES & CO., L.P., as Lessee ============================================================================= TABLE OF CONTENTS (Lease Agreement) Page ARTICLE I DEFINITIONS................................................ 1 ----------- ARTICLE II LEASE OF LEASED PROPERTY.................................. 1 ------------------------ Section 2.1 Restatement of Bridge Lease; Acceptance and Lease of Property ................................................ 1 Section 2.2 Acceptance Procedure..................................... 2 ARTICLE III RENT .................................................... 2 ---- Section 3.1 Basic Rent .............................................. 2 Section 3.2 Supplemental Rent........................................ 2 Section 3.3 Method of Payment........................................ 3 Section 3.4 Late Payment ............................................ 3 Section 3.5 Net Lease; No Setoff, Etc. .............................. 3 Section 3.6 Certain Taxes ........................................... 4 Section 3.7 Utility Charges ......................................... 5 ARTICLE IV WAIVERS .................................................. 5 ------- ARTICLE V LIENS; EASEMENTS; PARTIAL CONVEYANCES...................... 6 ------------------------------------- ARTICLE VI MAINTENANCE AND REPAIR; ALTERATIONS, MODIFICATIONS AND ------------------------------------------------------ ADDITIONS............................................... 7 --------- Section 6.1 Maintenance and Repair; Compliance With Law.............. 7 Section 6.2 Improvements and Alterations............................. 8 Section 6.3 Title to Alterations .................................... 9 Section 6.4 Lessee's Personal Property .............................. 10 ARTICLE VII USE...................................................... 11 --- ARTICLE VIII INSURANCE............................................... 11 --------- ARTICLE IX ASSIGNMENT AND SUBLEASING................................. 12 ------------------------- ARTICLE X LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE.................. 13 ----------------------------------------- Section 10.1 Event of Loss ......................................... 13 Section 10.2 Event of Taking........................................ 13 Section 10.3 Casualty............................................... 14 Section 10.4 Condemnation........................................... 14 Section 10.5 Verification of Restoration and Rebuilding............. 14 Section 10.6 Application of Payments................................ 15 Section 10.7 Prosecution of Awards.................................. 16 Section 10.8 Application of Certain Payments Not Relating to an Event of Taking........................................ 16 Section 10.9 Other Dispositions .................................... 17 Section 10.10 No Rent Abatement...................................... 17 ARTICLE XI INTEREST CONVEYED TO LESSEE............................... 17 --------------------------- ARTICLE XII EVENTS OF DEFAULT ....................................... 17 ----------------- ARTICLE XIII ENFORCEMENT ............................................ 23 ----------- Section 13.1 Remedies................................................ 23 i Section 13.2 Remedies Cumulative; No Waiver; Consents................ 25 Section 13.3 Purchase Upon an Event of Default....................... 26 ARTICLE XIV SALE, RETURN OR PURCHASE OF LEASED PROPERTY; RENEWAL..... 26 ---------------------------------------------------- Section 14.1 Lessee's Option to Purchase............................ 26 Section 14.2 Conveyance to Lessee................................... 26 Section 14.3 Acceleration of Purchase Obligation ................... 27 Section 14.4 Determination of Purchase Price ....................... 27 Section 14.5 Purchase Procedure..................................... 27 Section 14.6 Option to Remarket..................................... 28 Section 14.7 Rejection of Sale ..................................... 30 Section 14.8 Return of Leased Property ............................. 30 Section 14.9 Renewal................................................ 31 Section 14.10 Environmental Report................................... 32 ARTICLE XV LESSEE'S EQUIPMENT........................................ 32 ------------------ ARTICLE XVI RIGHT TO PERFORM FOR LESSEE ............................. 33 --------------------------- ARTICLE XVII MISCELLANEOUS........................................... 33 ------------- Section 17.1 Reports ............................................... 33 Section 17.2 Binding Effect; Successors and Assigns................. 33 Section 17.3 Quiet Enjoyment ....................................... 33 Section 17.4 Notices ............................................... 34 Section 17.5 Severability .......................................... 34 Section 17.6 Amendment; Complete Agreements......................... 34 Section 17.7 Construction........................................... 35 Section 17.8 Headings .............................................. 35 Section 17.9 Counterparts........................................... 35 Section 17.10 GOVERNING LAW.......................................... 35 Section 17.11 Reserved............................................... 35 Section 17.12 Liability of the Lessor Limited ....................... 35 Section 17.13 Estoppel Certificates ................................. 36 Section 17.14 No Joint Venture ...................................... 36 Section 17.15 No Accord and Satisfaction ............................ 36 Section 17.16 No Merger.............................................. 36 Section 17.17 Survival .............................................. 37 Section 17.18 Chattel Paper.......................................... 37 Section 17.19 Time of Essence........................................ 37 Section 17.20 Recordation of Lease .................................. 37 Section 17.21 Investment of Security Funds .......................... 37 Section 17.22 Bond Lease............................................. 38 Section 17.23 Land and Building...................................... 38 EXHIBIT A Lease Supplement ii THIS MASTER LEASE AGREEMENT (as from time to time amended, supplemented, or otherwise modified from time to time, this "Lease"), ----- dated as of September 18, 2001, is among ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.) (together with its successors and assigns hereunder, "Lessor"), as Lessor, and EDWARD D. JONES & CO., ------ L.P., a Missouri limited partnership (the "Lessee"), as Lessee. ------ PRELIMINARY STATEMENT A. Pursuant to the Bridge Lease, the Lessor acquired a leasehold interest in the Leased Property specified by the Construction Agent and is subleasing the same to the Lessee, subject to the Bond Lease. B. Pursuant to this Lease, the Lessor and the Lessee desire to restate and amend the Bridge Lease, and the Lessor desires to sublease to the Lessee, and the Lessee desires to sublease from the Lessor, the Leased Property, as described in the Lease Supplement. C. The Construction Agent will construct, or cause to be constructed, the Building on the Land, and the Building, as constructed, will become part of the property subject to the Bond Lease and will, likewise, become part of the property subject to the terms of this Lease. In consideration of the mutual agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the Lessor and the Lessee hereby agree as follows: ARTICLE I DEFITIONS --------- Terms used herein and not otherwise defined shall have the meanings assigned thereto in Appendix A hereto for all purposes hereof, ---------- and the rules of interpretation set forth in Appendix A shall apply to ---------- this Lease. ARTICLE II LEASE OF LEASED PROPERTY ------------------------ Section 2.1 Restatement of Bridge Lease; Acceptance and Lease of ---------------------------------------------------- Property. On the Closing Date, the Lessor, subject to the satisfaction - -------- or waiver of the conditions set forth in Article 3 of the Master Agreement, and the Lessee hereby agree that the Bridge Lease is amended, restated and replaced in its entirety by the terms, conditions and provisions of this Lease, and the Lessor shall simultaneously sublease to the Lessee for the Lease Term, the Lessor's interest in the Leased Property, subject to the Bond Lease. The Lessee hereby agrees, expressly for the direct benefit of the Lessor, commencing on the Closing Date, for the Lease Term, to sublease from the Lessor the Lessor's interest in the Leased Property, subject to the Bond Lease. Section 2.2 Acceptance Procedure. The Lessor hereby authorizes one -------------------- or more employees of the Lessee, to be designated by the Lessee, as the authorized representative or representatives of the Lessor to accept delivery on behalf of the Lessor of the Leased Property. The Lessee hereby agrees that such acceptance of delivery by such authorized representative or representatives and the execution and delivery by the Lessee on the Closing Date for property to be subleased hereunder of the Lease Supplement in substantially the form of Exhibit A hereto, --------- appropriately completed (the "Lease Supplement"), shall, without further ---------------- act, constitute the irrevocable acceptance by the Lessee of the Leased Property for all purposes of this Lease and the other Operative Documents on the terms set forth therein and herein, and that the Leased Property, together with the Building to be constructed thereon pursuant to the Construction Agency Agreement, shall be deemed to be included in the leasehold estate of this Lease and shall be subject to the terms and conditions of this Lease as of the Closing Date. The demise and sublease of the Land and the Building pursuant to this Section 2.2 shall include ----------- any additional right, title or interest in the Land and the Building which may at any time be acquired by the Lessor, the intent being that all right, title and interest of the Lessor in and to the Land and the Building shall at all times be demised and leased to the Lessee hereunder. ARTICLE III RENT ---- Section 3.1 Basic Rent. Beginning with and including the first ---------- Payment Date occurring after the Closing Date, the Lessee shall pay to the Agent the Basic Rent for the Leased Property, in installments, payable in arrears on each Payment Date during the Lease Term, subject to Section 2.3(c) of the Master Agreement. Section 3.2 Supplemental Rent. The Lessee shall pay to the Agent, ----------------- or to whomever shall be entitled thereto as expressly provided herein or in any other Operative Document, any and all Supplemental Rent on the date the same shall become due and payable and in the event of any failure on the part of the Lessee to pay any Supplemental Rent, the Agent shall have all rights, powers and remedies provided for herein or by law or in equity or otherwise in the case of nonpayment of Basic Rent. Without limiting the generality of the foregoing, the Lessor and the Lessee acknowledge and agree that, in accordance with the Bond Lease, the Lessee, on behalf of the Lessor, shall pay to the Bond Trustee, as Supplemental Rent, as and when the same become due under the Bond Lease all Rental Payments (as defined in the Bond Lease), and, to the extent such Rental Payments are received by the Bond Trustee on or before 11:00 a.m., Bond Trustee's local time, on the same Business Day, otherwise on the next succeeding Business Day following receipt of such Rental Payments by the Bond Trustee, the Bond Trustee, at the direction of the Bond Owner, shall disburse the interest component (and the principal component to the extent the same is paid in immediately available funds as provided in Section 5.1(a) of the Bond Lease) of such Rental Payments to the Lessee. All Supplemental Rent to be paid pursuant to this Section 3.2 shall be payable in the type of funds and in the ----------- manner set forth in Section 3.3, provided, however, Rental Payments due ----------- under the Bond Lease shall be payable in the manner set forth in Section ------- 5.1 of the Bond Lease. - --- 2 Section 3.3 Method of Payment. Basic Rent shall be paid to the ----------------- Agent, and Supplemental Rent (including amounts due under Article XIV ----------- hereof, but excluding the Rental Payments under the Bond Lease which shall be payable in the manner set forth in Section 5.1 of the Bond ----------- Lease and Section 3.2 hereof) shall be paid to the Agent (or to such ----------- Person as may be entitled thereto) or, in each case, to such Person as the Agent (or such other Person) shall specify in writing to the Lessee, and at such place as the Agent (or such other Person) shall specify in writing to the Lessee, which specifications by the Agent shall be given by the Agent at least five (5) Business Days prior to the due date therefor. Each payment of Rent (including payments under Article XIV ----------- hereof, but excluding the Rental Payments under the Bond Lease which shall be payable in the manner set forth in Section 5.1 of the Bond ----------- Lease and Section 3.2 hereof) shall be made by the Lessee prior to 12:00 ----------- p.m. (noon) Atlanta, Georgia time at the place of payment in funds consisting of lawful currency of the United States of America which shall be immediately available on the scheduled date when such payment shall be due, unless such scheduled date shall not be a Business Day, in which case such payment shall be made on the next succeeding Business Day. Section 3.4 Late Payment. If any Basic Rent shall not be paid on ------------ the date when due, the Lessee shall pay to the Agent, as Supplemental Rent, interest (to the maximum extent permitted by law) on such overdue amount from and including the due date thereof to but excluding the Business Day of payment thereof at the Overdue Rate. Section 3.5 Net Lease; No Setoff, Etc. This Lease is a net lease -------------------------- and notwithstanding any other provision of this Lease, the Lessee shall pay all Basic Rent and Supplemental Rent, and all costs, charges, taxes (other than taxes covered by the exclusion described in Section 7.4(b) of the Master Agreement), assessments and other expenses foreseen or unforeseen, for which the Lessee or any Indemnitee is or shall become liable by reason of the Lessee's or such Indemnitee's estate, right, title or interest in the Leased Property, or that are connected with or arise out of the acquisition (except the initial costs of purchase by the Lessor of its interest in the Leased Property, which costs, subject to the terms of the Master Agreement, shall be funded by the Funding Parties pursuant to the Master Agreement), construction (except costs to be funded under the Construction Agency Agreement), installation, possession, use, occupancy, maintenance, ownership, leasing, repairs and rebuilding of, or addition to, the Leased Property or any portion thereof, and any other amounts payable hereunder and under the other Operative Documents without counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the Lessee's obligation to pay all such amounts throughout the Lease Term, including the Construction Term, is absolute and unconditional. The obligations and liabilities of the Lessee hereunder shall in no way be released, discharged or otherwise affected for any reason, including without limitation: (a) any defect in the condition, merchantability, design, quality or fitness for use of the Leased Property or any part thereof, or the failure of the Leased Property to comply with all Applicable Laws, including any inability to occupy or use the Leased Property by reason of such non-compliance; (b) any damage to, removal, abandonment, salvage, loss, contamination of or Release from, scrapping or destruction of or any requisition or taking of the Leased Property or any part 3 thereof; (c) any restriction, prevention or curtailment of or interference with any use of the Leased Property or any part thereof including eviction; (d) any defect in title to or rights to the Leased Property or any Lien on such title or rights or on the Leased Property; (e) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by the Lessor, the Agent or any Lender; (f) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to the Lessee, the Lessor, any Lender, the Agent or any other Person, or any action taken with respect to this Lease by any trustee or receiver of the Lessee, the Lessor, any Lender, the Agent or any other Person, or by any court, in any such proceeding; (g) any claim that the Lessee has or might have against any Person, including without limitation, the Lessor, any vendor, manufacturer, contractor of or for the Leased Property or any part thereof, the Agent, any Governmental Authority, or any Lender; (h) any failure on the part of the Lessor to perform or comply with any of the terms of this Lease, any other Operative Document or of any other agreement; (i) any invalidity or unenforceability or illegality or disaffirmance of this Lease against or by the Lessee or any provision hereof or any of the other Operative Documents or any provision of any thereof whether or not related to the Transaction; (j) the impossibility or illegality of performance by the Lessee, the Lessor or both; (k) any action by any court, administrative agency or other Governmental Authority; (l) any restriction, prevention or curtailment of or interference with the Construction or any use of the Leased Property or any part thereof; or (m) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not the Lessee shall have notice or knowledge of any of the foregoing. Except as specifically set forth in Articles X or XIV of this Lease, this Lease shall be noncancellable by the Lessee in any circumstance whatsoever and the Lessee, to the extent permitted by Applicable Law, waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Lease, or to any diminution, abatement or reduction of Rent payable by the Lessee hereunder. Except as otherwise provided in Section 3.2 hereof with ----------- respect to the Rental Payments due under the Bond Lease, each payment of Rent made by the Lessee hereunder shall be final and the Lessee shall not seek or have any right to recover all or any part of such payment from the Lessor, the Agent, any Lender or any party to any agreements related thereto for any reason whatsoever. The Lessee assumes the sole responsibility for the condition, use, operation, maintenance, and management of the Leased Property leased by it, and the Lessor shall have no responsibility in respect thereof and shall have no liability for damage to the property of either the Lessee or any subtenant of the Lessee on any account or for any reason whatsoever, other than solely by reason of the Lessor's willful misconduct or gross negligence. Section 3.6 Certain Taxes. Without limiting the generality of ------------- Section 3.5, the Lessee agrees to pay when due all real estate taxes, - ----------- personal property taxes, gross sales taxes, including any sales or lease tax imposed upon the rental payments hereunder or under any sublease permitted hereunder, occupational license taxes, water charges, sewer charges, assessments of any nature and all other governmental impositions and charges of every kind and nature whatsoever (the "tax(es)"), when the same shall be due and payable without penalty or interest; provided, however, that this Section shall not apply to any of -------- ------- the taxes covered by the exclusion described in Section 7.4(b) of the Master Agreement. It is the intention of the parties hereto that, 4 insofar as the same may lawfully be done, the Lessor shall be, except as specifically provided for herein, free from all expenses in any way related to the Leased Property and the use and occupancy thereof. The Lessee covenants to furnish the Lessor and the Agent, upon the Agent's written request, within thirty (30) days after the last date when any tax must be paid by the Lessee as provided in this Section 3.6, official receipts of the appropriate taxing, authority or other proof satisfactory to the Lessor, evidencing the payment thereof. So long as no Event of Default has occurred and is continuing, the Lessee may defer payment of a tax so long as the validity or the amount thereof is being contested by the Lessee with diligence and in good faith; provided, however, that the Lessee shall furnish to the Lessor -------- ------- and the Agent, if requested in writing by either the Lessor or the Agent, a bond or other adequate security in an amount and on terms reasonably satisfactory to the Lessor and the Agent and shall pay the tax in sufficient time to prevent delivery of a tax deed. Such contest shall be at the Lessee's sole cost and expense. The Lessee covenants to indemnify and save harmless the Lessor, the Agent and each Lender from any actual and reasonable costs or expenses incurred by the Lessor, the Agent or any Lender as a result of such contest, which indemnification shall survive the termination of this Lease. Section 3.7 Utility Charges. The Lessee agrees to pay or cause to --------------- be paid as and when the same are due and payable all charges for gas, water, sewer, electricity, lights, heat, power, telephone or other communication service and all other utility services used, rendered or supplied to, upon or in connection with the Leased Property. ARTICLE IV WAIVERS ------- During the Lease Term, the Lessor's interest in the Leased Property, including the Building (whether or not completed) and the Land, is demised and let by the Lessor "AS IS" subject to (a) the terms and conditions of the Bond Lease and the Bond Deed of Trust, (b) the rights of any parties in possession thereof, (c) the state of the title thereto existing at the time the Lessor acquired its interest in the Leased Property, (d) any state of facts which an accurate survey or physical inspection might show (including the survey delivered on the Closing Date), (e) all Applicable Laws, and (f) any violations of Applicable Laws which may exist upon or subsequent to the commencement of the Lease Term. THE LESSEE ACKNOWLEDGES THAT, ALTHOUGH THE LESSOR WILL OWN AND HOLD LEASEHOLD TITLE TO THE LEASED PROPERTY, THE LESSOR IS NOT RESPONSIBLE FOR THE DESIGN, DEVELOPMENT, BUDGETING AND CONSTRUCTION OF THE BUILDING OR ANY ALTERATIONS. NEITHER THE LESSOR, THE AGENT NOR ANY LENDER HAS MADE, OR SHALL BE DEEMED TO HAVE MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE, MERCHANTABILITY, TITLE, HABITABILITY, CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE LEASED PROPERTY (OR ANY PART THEREOF), OR ANY OTHER REPRESENTATION OR 5 WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY (OR ANY PART THEREOF), ALL SUCH WARRANTIES BEING HEREBY DISCLAIMED, AND NEITHER THE LESSOR, THE AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE LEASED PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAW, except that the Lessor hereby represents and warrants that the Leased Property is and shall be free of the Lessor Liens. As between the Lessor and the Lessee, each Lessee has been afforded full opportunity to inspect the Leased Property, is satisfied with the results of its inspections of the Leased Property and is entering into this Lease solely on the basis of the results of its own inspections and all risks incident to the matters discussed in the two preceding sentences, as between the Lessor, the Agent or the Lenders on the one hand, and the Lessee, on the other, are to be borne by the Lessee. The provisions of this Article IV have been negotiated, and, except to the ---------- extent otherwise expressly stated, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties by the Lessor, the Agent or the Lenders, express or implied, with respect to the Leased Property, that may arise pursuant to any law now or hereafter in effect, or otherwise. ARTICLE V LIENS; EASEMENTS; PARTIAL CONVEYANCES ------------------------------------- The Lessee shall not directly or indirectly create, incur or assume, any Lien on or with respect to the Leased Property, the title thereto, or any interest therein, including any Liens which arise out of the possession, use, occupancy, construction, repair or rebuilding of the Leased Property or by reason of labor or materials furnished or claimed to have been furnished to the Lessee, or any of its contractors or agents or Alterations constructed by the Lessee, except, in all cases, Permitted Encumbrances. Notwithstanding the foregoing paragraph, at the request of the Lessee, and subject to the terms and conditions of the Bond Lease, the Lessor shall, from time to time during the Lease Term and upon reasonable advance written notice from the Lessee given in accordance with Section 8.2 of the Master Agreement and receipt of the materials specified in the next succeeding sentence, consent to and join in any (i) grant of easements, licenses, rights of way and other rights in the nature of easements, including, without limitation, utility easements to facilitate the Lessee's use, development and construction of the Leased Property, (ii) release or termination of easements, licenses, rights of way or other rights in the nature of easements which are for the benefit of the Land or the Building or any portion thereof, (iii) dedication or transfer of portions of the Lessor's interest in the Land, not improved with the Building, for road, highway or other public purposes, (iv) execution of agreements for ingress and egress and amendments to any covenants and restrictions affecting the Land or the Building or any portion thereof and (v) request to any Governmental Authority for platting or subdivision or replatting or resubdivision approval with respect to the Land or any portion thereof or any parcel of land of which the Land or any portion thereof forms a part or a request for rezoning or any variance from 6 zoning or other governmental requirements. The Lessor's obligations pursuant to the preceding sentence shall be subject to the requirements that: (a) any such action shall be at the sole cost and expense of the Lessee, and the Lessee shall pay all actual and reasonable out-of-pocket costs of the Lessor, the Agent and the Lenders in connection therewith (including, without limitation, the reasonable fees of attorneys, architects, engineers, planners, appraisers and other professionals reasonably retained by the Lessor, the Agent or any Lender in connection with any such action, and, when practicable, the Lessor will endeavor to utilize the services of the same architect(s), engineer(s), planner(s) and appraiser(s) used by the Agent and the Lenders, in connection with the review of such requests), (b) the requesting Lessee shall have delivered to the Lessor and the Agent a certificate of a Responsible Officer of the Lessee stating that: (i) such action will not cause the Leased Property, the Land or the Building or any portion thereof to fail to comply in any material respect with the provisions of this Lease or any other Operative Documents, or in any material respect with Applicable Laws; and (ii) such action will not materially reduce the Fair Market Sales Value, utility or useful life of the Leased Property, the Land or the Building nor the Lessor's interest therein; and (c) in the case of any release or conveyance, if the Lessor, the Agent or any Lender so reasonably requests, the Lessee will cause to be issued and delivered to the Lessor and the Agent by the Title Insurance Company an endorsement to the Title Policy pursuant to which the Title Insurance Company agrees that its liability for the payment of any loss or damage under the terms and provisions of the Title Policy will not be affected by reason of the fact that a portion of the real property referred to in Schedule A of the Title Policy has been released or conveyed by the Lessor. ARTICLE VI MAINTENANCE AND REPAIR; ALTERATIONS, MODIFICATIONS AND ADDITIONS ---------------------------------------- Section 6.1 Maintenance and Repair; Compliance With Law. The ------------------------------------------- Lessee, at its own expense, shall at all times (a) maintain the Leased Property leased by it in good repair and condition (subject to ordinary wear and tear), in accordance with prudent industry standards and, in any event, in the same manner as other similar property owned or leased by the Lessee or its Affiliates, (b) make all Alterations in accordance with, and maintain (whether or not such maintenance requires structural modifications or Alterations) and operate and otherwise keep the Leased Property in compliance in all material respects with, all Applicable Laws and requirements of the Lessee's underwriters, and (c) make all material repairs, replacements and renewals of the Leased Property or any part thereof which may be required to keep the Leased 7 Property in the condition required by the preceding clauses (a) and (b). The Lessee shall perform the foregoing maintenance obligations regardless of whether the Leased Property is occupied or unoccupied. The Lessee waives any right that it may now have or hereafter acquire to (i) require the Lessor, the Agent or any Lender to maintain, repair, replace, alter, remove or rebuild all or any part of the Leased Property or (ii) make repairs at the expense of the Lessor, the Agent or any Lender pursuant to any Applicable Law or other agreements or otherwise. NEITHER THE LESSOR (EXCEPT WITH RESPECT TO ANY LESSOR LIENS), THE AGENT NOR ANY LENDER SHALL BE LIABLE TO THE LESSEE OR TO ANY CONTRACTORS, SUBCONTRACTORS, LABORERS, MATERIALMEN, SUPPLIERS OR VENDORS FOR SERVICES PERFORMED OR MATERIAL PROVIDED ON OR IN CONNECTION WITH THE LEASED PROPERTY OR ANY PART THEREOF. Neither the Lessor, the Agent nor any Lender shall be required to maintain, alter, repair, rebuild or replace the Leased Property in any way. Section 6.2 Improvements and Alterations. ---------------------------- (a) In addition to the Lessee's obligations as Construction Agent under the Construction Agency Agreement, on and after the completion of Construction (i) the Lessee, at the Lessee's sole cost and expense, shall make alterations, renovations, improvements and additions to the Leased Property or any part thereof and substitutions and replacements therefor (collectively, "Alterations") which are (A) ----------- necessary to repair or maintain the Leased Property in the condition required by this Lease and the other Operative Documents; (B) necessary in order for the Leased Property to be in compliance with Applicable Laws; or (C) necessary to restore the Leased Property in all material respects to its condition existing prior to a Casualty or Condemnation to the extent required pursuant to Article X; and (ii) so long as no --------- Potential Event of Default or Event of Default has occurred, the Lessee, at the Lessee's sole cost and expense, may undertake Alterations to the Leased Property so long as such Alterations comply with Applicable Laws and with Section 6.1 and subsection (b) of this Section 6.2. ----------- -------------- ----------- (b) The making of any Alterations must be in compliance with the following requirements: (i) No Structural Alterations or Alterations with a cost exceeding Two Hundred Fifty Thousand Dollars ($250,000) shall be made or undertaken without the prior written consent of the Lessor and the Agent (which consent shall not be unreasonably withheld or delayed), except for Alterations required by Applicable Laws (provided that except in the case of an emergency, the Lessee shall give the Lessor and the Agent at least thirty (30) days prior written notice of such Alterations). If the Lessee reasonably expects the cost of any Alterations to exceed $250,000, the Lessee shall deliver to the Lessor and the Agent a brief written narrative of the work to be performed prior to undertaking any such Alteration. (ii) No Alterations shall be undertaken in violation of the terms of any restriction, easement, condition, covenant or other similar agreement (including, without limitation, the Bond Lease) affecting title to or binding on the Leased Property. The Lessee shall 8 procure when required and pay for, so far as the same may be required from time to time, all permits and authorizations with regard to such Alterations from all Governmental Authorities having jurisdiction. The Lessor, at the Lessee's expense, and without any liability on the part of the Lessor, shall join in the application for any such permit or authorization and execute and deliver any document in connection therewith, whenever such joinder is necessary or advisable. (iii) The Alterations shall be completed in a good and workmanlike manner and in compliance with all Applicable Laws then in effect and the standards imposed by any insurance policies required to be maintained hereunder or by any vendor, supplier or manufacturer in order to maintain all warranties, and all Alterations must be located solely on the Land or other property used in connection with the Leased Property as to which the Lessor has an easement, license, lease, sublease or other right or interest in real property reasonably satisfactory to Agent for a term not less than the useful life of such Alterations. (iv) All Alterations shall, when completed, be of such a character as to not adversely affect the Fair Market Sales Value, utility, remaining economic useful life or residual value of the Leased Property from the Fair Market Sales Value, utility, remaining economic useful life or residual value thereof immediately prior to the making thereof or, in the case of Alterations being made by virtue of a Casualty or Condemnation, immediately prior to the occurrence of such Casualty or Condemnation. If such Modifications have a cost exceeding Two Hundred Fifty Thousand Dollars ($250,000), the Lessor or the Agent may obtain a report from an independent engineer or engage an appraiser of nationally recognized standing, at the Lessee's sole cost and expense, to determine (by appraisal or other methods satisfactory to the Agent) the projected Fair Market Sales Value of such item of Leased Property as of the completion of the Alterations relating thereto. (v) The Lessee shall have made adequate arrangements for payment of the cost of all Alterations when due so that the Leased Property shall at all times be free of Liens for labor and materials supplied or claimed to have been supplied to the Leased Property, other than Permitted Liens. Section 6.3 Title to Alterations. Pursuant to the Bond Lease, -------------------- title to the following described Alterations shall, without further act, vest in the Issuer, shall be deemed to be leased by the Issuer to the Lessor pursuant to the Bond Lease and shall be deemed to constitute a part of the Leased Property and be subject to this Lease: (a) Alterations that are in replacement of or in substitution for a portion of any item of Leased Property; (b) Alterations that are required to be made pursuant to the terms of Section 6.2(a)(i) hereof; or ----------------- 9 (c) Alterations that, notwithstanding any repairs, replacements or modifications by or on behalf of Lessee, are nonseverable or that cannot be removed without damaging the Leased Property or any part thereof. The Lessee, at the Lessor's reasonable request, shall execute and deliver any deeds, bills of sale, assignments or other documents of conveyance reasonably necessary to evidence the vesting of title in and to such Alterations to the Issuer. Subject to the terms and conditions of the Bond Documents, if such Alterations are not within any of the categories set forth in clauses ------- (a) through (c) of this Section 6.3, then title to such Alterations - --- --- ----------- shall vest in the Lessee and such Alterations shall not be deemed to be Alterations that are part of the Leased Property. Subject to the terms and conditions of the Bond Lease, all Alterations to which the Lessee shall have title may be removed at any time by the Lessee, so long as removal thereof shall not result in the violation of any Applicable Laws or give rise to a Potential Event of Default or an Event of Default, and no Potential Event of Default or Event of Default then exists. The Lessee agrees to notify Lessor in writing at least 30 days before it removes any such Alterations which individually or in the aggregate had an original cost exceeding Two Hundred Fifty Thousand Dollars ($250,000), and the Lessee shall at its expense repair any damage to any item of Leased Property caused by the removal of such Alterations. The Lessor (or the purchaser of the Leased Property) may purchase from the Lessee any such Alterations (if not already owned by the Lessor) that the Lessee intends to remove from the Leased Property prior to the return of the Leased Property to the Lessor or sale of the Leased Property, which purchase shall be at the Fair Market Sales Value of such Alterations as determined by the Appraiser at the time of such purchase. Title to any such Alterations shall vest in the Lessor (or the purchaser of the applicable Leased Property) if not removed from the Leased Property by the Lessee prior to the return of the Leased Property to the Lessor or sale of the Leased Property. Severable Alterations, title to which is vested in the Lessee, shall be made available to the Lessor or its designee without cost during the Lease Term and thereafter if the Leased Property is sold pursuant to the Remarketing Option and the use thereof is necessary or useful for the operation of the Leased Property in the manner and capacity operated at or prior to the expiration of the Lease Term. Section 6.4 Lessee's Personal Property. During the Lease Term, the -------------------------- Lessee may from time to time own or hold under lease or other arrangement from Persons other than the Lessor the Lessee's Personal Property that is not subject to this Lease and does not constitute a portion of the Leased Property. The Lessor shall from time to time during the Lease Term, upon the reasonable request, and at the cost and expense of the Lessee, acknowledge in writing to the Lessee or other Persons that the Lessee's Personal Property is the property of the Lessee or such other Person and is not part of the Leased Property and that the Lessor has waived any present or future landlord's or other Lien Lessor may have thereon. 10 ARTICLE VII USE --- Subject to the terms and conditions of the Bond Lease, the Lessee may use the Leased Property leased by it or any part thereof for any lawful purpose, and in a manner consistent with the standards applicable to properties of a similar nature in the geographic area in which the Leased Property is located, provided that such use does not materially -------- adversely affect the Fair Market Sales Value, utility, remaining useful life or residual value of the Leased Property, and does not materially violate or conflict with, or constitute or result in a material default under, any Applicable Law or any insurance policy required hereunder. The Lessee shall not commit or permit any waste of the Leased Property or any material part thereof. ARTICLE VIII INSURANCE --------- (a) At any time during which any part of the Building or any Alteration is under construction and as to any part of the Building or any Alteration under construction, the Lessee shall maintain, or cause to be maintained, at its sole cost and expense, as a part of its blanket policies or otherwise, "all risk" non-reporting completed value form of builder's risk insurance. (b) During the Lease Term, the Lessee shall maintain, at its sole cost and expense, as a part of its blanket policies or otherwise, insurance against loss or damage to the Building by fire and other risks, including comprehensive boiler and machinery coverage, on terms and in amounts no less favorable than insurance covering other similar properties owned or leased by the Lessee and that are in accordance with prudent industry practice, but in no event less than the replacement cost of the Building from time to time. (c) During the Lease Term, the Lessee shall maintain, at its sole cost and expense, commercial general liability insurance with respect to the Leased Property, as is ordinarily procured by prudent Persons who own or operate similar properties in the same geographic area. Such insurance shall be on terms and in amounts that are no less favorable than insurance maintained by the Lessee or its Affiliates with respect to similar properties that it owns or leases and that are in accordance with prudent industry practice. Such insurance policies shall also provide that the Lessee's insurance shall be considered primary insurance. Nothing in this Article VIII shall prohibit the Lessor, the ------------ Agent or any Lender from carrying at its own expense other insurance on or with respect to the Leased Property, provided that any insurance -------- carried by the Lessor, the Agent or any Lender shall not prevent the Lessee from carrying the insurance required hereby. (d) Each policy of insurance maintained by the Lessee pursuant to clauses (a) and (b) of this Article VIII shall provide that all ----------- --- ------------ insurance proceeds in respect of any loss or occurrence shall be adjusted by the Lessee, except if, and for so long as an Event of Default exists, all losses 11 shall be adjusted solely by, and all insurance proceeds shall be paid solely to, the Agent (or the Lessor if the Loans have been fully paid) for application pursuant to this Lease. (e) On the Closing Date, on the Completion Date for the Leased Property and on each anniversary of the Closing Date, the Lessee shall furnish the Lessor with certificates showing the insurance required under this Article VIII to be in effect and naming the Lessor, the Agent ------------ and the Lenders as additional insureds. Such certificates shall include a provision for thirty (30) days' advance written notice by the insurer to the Lessor and the Agent in the event of cancellation or expiration or nonpayment of premium with respect to such insurance, and shall include a customary breach of warranty clause. The Lessee shall provide evidence to the Lessor and the Agent that each insurance policy required by this Article VIII has been renewed or replaced prior to the scheduled ------------ expiration date therefor. (f) Each policy of insurance maintained by the Lessee pursuant to this Article VIII shall (i) contain the waiver of any right of ------------ subrogation of the insurer against the Lessor, the Agent and the Lenders, and (ii) provide that in respect of the interests of the Lessor, the Agent and the Lenders, such policies shall not be invalidated by any fraud, action, inaction or misrepresentation of the Lessee or any other Person acting on behalf of the Lessee. (g) All insurance policies carried in accordance with this Article VIII shall be maintained with insurers rated at least "A" by - ------------ A.M. Best & Company, and in all cases the insurer shall be qualified to insure risks in the State where the Leased Property is located. (h) During the Lease Term, the Lessee, on behalf of the Lessor, shall maintain, at the Lessee's sole cost and expense, any and all insurance coverages required pursuant to the Bond Documents, including, without limitation, the Bond Lease and the Bond Deed of Trust, and otherwise comply at the Lessee's sole cost and expense, with any provisions relating thereto in the Bond Documents, including, without limitation, the Bond Lease and the Bond Deed of Trust. ARTICLE IX ASSIGNMENT AND SUBLEASING ------------------------- The Lessee may not assign any of its right, title or interest in, to or under this Lease, except as set forth in the following sentence. Subject to the terms and conditions of the Bond Lease, the Lessee may assign its right under this Lease or sublease all or any portion of the Leased Property, provided that (a) all obligations of the Lessee shall -------- continue in full effect as obligations of a principal and not of a guarantor or surety, as though no assignment or sublease had been made; (b) such assignment or sublease shall be expressly subject and subordinate to this Lease, the Loan Agreement and the other Operative Documents; and (c) each such assignment or sublease shall terminate on or before the Lease Termination Date. The Lessee shall give the Agent, the Lessor and the Issuer prompt written notice of any such assignment or sublease. 12 Except pursuant to an Operative Document, this Lease shall not be mortgaged or pledged by the Lessee, nor shall the Lessee mortgage or pledge any interest in the Leased Property or any portion thereof. Any such mortgage or pledge shall be void. ARTICLE X LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE ----------------------------------------- Section 10.1 Event of Loss. Any event (i) which would otherwise ------------- constitute a Casualty during the Base Term, and (ii) which, in the good faith judgment of the Lessee, renders repair and restoration of the Leased Property impossible or impractical, or requires repairs to the Leased Property that would cost in excess of fifty percent (50%) of the original cost of the Leased Property, and (iii) as to which the Lessee, within sixty (60) days after the occurrence of such event, delivers to the Lessor an Officer's Certificate notifying the Lessor of such event and of such judgment, shall constitute an "Event of Loss". In the case ------------- of any other event which constitutes a Casualty, the Lessee shall restore the Leased Property pursuant to Section 10.3. If an Event of ------------ Loss other than an Event of Taking shall occur, the Lessee shall pay to the Lessor on the later of (i) the thirtieth day (30th) and (ii) the next Payment Date following delivery of the Officer's Certificate pursuant to clause (iii) above an amount equal to the Lease Balance. Upon the Lessor's receipt of the Lease Balance on such date, the Lessor shall cause the Lessor's interest in the Leased Property to be conveyed to the Lessee in accordance with and subject to the provisions of Section 14.5 hereof; upon completion of such purchase, but not prior - ------------ thereto, this Lease with respect to the Leased Property and all obligations hereunder with respect to the Leased Property shall terminate, except with respect to obligations and liabilities hereunder, actual or contingent, that have arisen or relate to events occurring on or prior to such date of purchase, or which are expressly stated herein to survive termination of this Lease. Upon the consummation of the purchase of the Leased Property pursuant to this Section 10.1, any proceeds derived from insurance ------------ required to be maintained by the Lessee pursuant to this Lease for the Leased Property remaining after payment of such purchase price shall be paid over to, or retained by, the Lessee or as it may direct, and the Lessor shall assign to the Lessee, without warranty, all of the Lessor's rights to and interest in such insurance required to be maintained by the Lessee pursuant to this Lease. Section 10.2 Event of Taking. Any event (i) which constitutes a --------------- Condemnation of all of, or substantially all of, the Leased Property, or (ii) (A) which would otherwise constitute a Condemnation, (B) which, in the good faith judgment of the Lessee, renders restoration and rebuilding of the Leased Property impossible or impractical, or requires repairs to the Leased Property that would cost in excess of fifty percent (50%) of the original cost of the Leased Property, and (C) as to which the Lessee, within sixty (60) days after the occurrence of such event, delivers to the Lessor an Officer's Certificate notifying the Lessor of such event and of such judgment, shall constitute an "Event of -------- Taking". In the case of any other event which constitutes a - ------ Condemnation, the Lessee shall restore and rebuild the Leased Property pursuant to Section 10.4. If an Event of Taking shall occur, the Lessee ------------ shall pay to the Lessor (1) on the 13 later of (A) the thirtieth (30th) day and (B) the next Payment Date following the occurrence of such Event of Taking, in the case of an Event of Taking described in clause (i) above, or (2) on the later of (A) the thirtieth (30th) day and (B) the next Payment Date following delivery of the Officer's Certificate pursuant to clause (ii) above, in the case of an Event of Taking described in clause (ii) above, an amount equal to the Lease Balance. Upon the Lessor's receipt of the Lease Balance on such date, the Lessor shall cause the Lessor's interest in the Leased Property to be conveyed to the Lessee in accordance with and subject to the provisions of Section 14.5 hereof (provided that such ------------ conveyance shall be subject to all rights of the condemning authority); upon completion of such purchase, but not prior thereto, this Lease with respect to the Leased Property and all obligations hereunder with respect to the Leased Property shall terminate, except with respect to obligations and liabilities hereunder, actual or contingent, that have arisen or relate to events occurring on or prior to such date of purchase, or which are expressly stated herein to survive termination of this Lease. Upon the consummation of the purchase of the Leased Property pursuant to this Section 10.2, all Awards received by the Lessor, after ------------ deducting any reasonable costs incurred by the Lessor in collecting such Awards, received or payable on account of an Event of Taking with respect to the Leased Property during the Lease Term shall be paid to the Lessee, and all rights of the Lessor in Awards not then received shall be assigned to the Lessee by the Lessor. Section 10.3 Casualty. If a Casualty shall occur which is not an -------- Event of Loss, the Lessee shall rebuild and restore the Leased Property in accordance with the terms of this Lease and the other Operative Documents, will complete the same prior to the Lease Termination Date, and will cause the condition set forth in Section 3.5(c) of the Master Agreement to be fulfilled with respect to such restoration and rebuilding prior to the Lease Termination Date, regardless of whether insurance proceeds received as a result of such Casualty are sufficient for such purpose. Section 10.4 Condemnation. If a Condemnation shall occur which is ------------ not an Event of Taking, the Lessee shall rebuild and restore the Leased Property in accordance with the terms of this Lease and the other Operative Documents, will complete the same prior to the Lease Termination Date, and will cause the condition set forth in Section 3.5(c) of the Master Agreement to be fulfilled with respect to such restoration and rebuilding prior to the Lease Termination Date. Section 10.5 Verification of Restoration and Rebuilding. In the ------------------------------------------ event of Casualty or Condemnation, to verify the Lessee's compliance with the foregoing Section 10.3 or 10.4, as appropriate, the Lessor, the ------------ ---- Agent, the Lenders and their respective authorized representatives may, upon five (5) Business Days' notice to the Lessee, make inspections of the Leased Property with respect to (i) the extent of the Casualty or Condemnation and (ii) the restoration and rebuilding of the Building and the Land. All actual and reasonable out-of-pocket costs of such inspections incurred by the Lessor, the Agent or any Lender will be paid by the Lessee promptly after written request. No such inspection shall unreasonably interfere with the Lessee's operations or the operations of any other occupant of the Leased Property. None of the 14 inspecting parties shall have any duty to make any such inspection or inquiry and none of the inspecting parties shall incur any liability or obligation by reason of making or not making any such inspection or inquiry. Section 10.6 Application of Payments. All proceeds (except for ----------------------- payments under insurance policies maintained other than pursuant to Article VIII of this Lease) received at any time by the Lessor, the - ------------ Lessee or the Agent from any Governmental Authority or other Person with respect to any Condemnation or Casualty to the Leased Property or any part thereof or with respect to an Event of Loss or an Event of Taking, plus the amount of any payment that would have been due from an insurer but for the Lessee's self-insurance or deductibles ("Loss Proceeds"), ------------- shall (except to the extent Section 10.9 applies) be applied as follows: ------------ (a) In the event the Lessee purchases the Leased Property pursuant to Section 10.1 or Section 10.2, such Loss Proceeds shall be ------------ ------------ applied as set forth in Section 10.1 or Section 10.2, as the case may ------------ ------------ be; (b) In the event of a Casualty at such time when no Potential Event of Default or Event of Default has occurred and the Lessee is obligated to repair and rebuild the Leased Property pursuant to Section ------- 10.3, the Lessee may, in good faith and subsequent to the date of such - ---- Casualty, certify to the Lessor, the Lenders and the Agent and to the applicable insurer that no Potential Event of Default or Event of Default has occurred, in which event the applicable insurer shall pay the Loss Proceeds to the Lessee, unless the estimated cost of restoration exceeds the lesser of $250,000 and fifty percent (50%) of the original cost of the Leased Property in which case the Loss Proceeds shall be paid to the Agent (or the Lessor if the Loans have been paid in full), and shall be promptly released to the Lessee upon certification by the Lessee to the Lessor and the Agent that the Lessee has incurred costs in the amount requested to be released for the repair and rebuilding of the Leased Property and satisfaction of such other requirements as may be reasonably requested by the Lessor and the Agent (including, without limitation, satisfaction of conditions to release of such funds to the Lessee comparable to the conditions precedent to Advances under the Operative Documents); (c) In the event of a Condemnation at such time when no Potential Event of Default or Event of Default has occurred and the Lessee is obligated to repair and rebuild the Leased Property pursuant to Section 10.4, the Lessee may, in good faith and subsequent to the ------------ date of such Condemnation, certify to the Lessor and the Agent that no Potential Event of Default or Event of Default has occurred and shall satisfy such other requirements as may be reasonably requested by the Lessor or the Agent, in which event the applicable Award shall be paid over to the Lessee provided that, if such Award exceeds the lesser of $250,000 and fifty percent (50%) of the original cost of the Leased Property, such Award shall be paid to the Agent (or the Lessor if the Loans have been paid in full), and shall be promptly released to the Lessee upon receipt by the Lessor and the Agent of a certification as described above and satisfaction of such other requirements as may reasonably be requested by the Lessor and the Agent (including, without 15 limitation, satisfaction of conditions to release of such funds to the Lessee comparable to the conditions precedent to Advances under the Operative Documents); and (d) As provided in Section 10.8, if such section is applicable. ------------ During any period of repair or rebuilding pursuant to this Article ------- X, this Lease will remain in full force and effect and Basic Rent shall - - continue to accrue and be payable without abatement or reduction. The Lessee shall maintain records setting forth information relating to the receipt and application of payments in accordance with this Section ------- 10.6. Such records shall be kept on file by the Lessee at its offices - ---- and shall be made available to the Lessor, the Lenders and the Agent upon request. Section 10.7 Prosecution of Awards. --------------------- (a) If any Condemnation shall occur, the party receiving the notice of such Condemnation shall give to the other party and the Agent promptly, but in any event within thirty (30) days after the occurrence thereof, written notice of such occurrence and the date thereof, generally describing the nature and extent of such Condemnation. With respect to any Event of Taking or any Condemnation, the Lessee shall control the negotiations with the relevant Governmental Authority as to any proceeding in respect of which Awards are required, under Section ------- 10.6, to be assigned or released to the Lessee, unless a Potential Event - ---- of Default or Event of Default shall have occurred, in which case (i) the Agent (or the Lessor if the Loans have been fully paid) shall control such negotiations; and (ii) the Lessee hereby irrevocably assigns, transfers and sets over to the Agent (or the Lessor if the loans have been fully paid) all rights of the Lessee to any Award on account of any Event of Taking or any Condemnation and, if there will not be separate Awards to the Lessor and the Lessee on account of such Event of Taking or Condemnation, irrevocably authorizes and empowers the Agent (or the Lessor if the Loans have been fully paid), with full power of substitution, in the name of the Lessee or otherwise (but without limiting the obligations of the Lessee under this Article X), to file --------- and prosecute what would otherwise be the Lessee's claim for any such Award and to collect, receipt for and retain the same. In any event the Lessor and the Agent may participate in such negotiations, and no settlement will be made without the prior consent of the Agent (or the Lessor if the Loans have been fully paid), not to be unreasonably withheld. (b) Notwithstanding the foregoing, the Lessee may prosecute, and the Lessor shall have no interest in, any claim with respect to the Lessee's personal property and equipment not financed by or otherwise property of the Lessor, business interruption or similar award and the Lessee's relocation expenses. Section 10.8 Application of Certain Payments Not Relating to an -------------------------------------------------- Event of Taking. In case of a requisition for temporary use of all or a - --------------- portion of the Leased Property which is not an Event of Taking, this Lease shall remain in full force and effect with respect to the Leased Property, without any abatement or reduction of Basic Rent, and the Awards for the Leased 16 Property shall, unless a Potential Event of Default or Event of Default has occurred, be paid to the Lessee. Section 10.9 Other Dispositions. Notwithstanding the foregoing ------------------ provisions of this Article X, if a Potential Event of Default or an --------- Event of Default shall have occurred, any amount that would otherwise be payable to or for the account of, or that would otherwise be retained by, the Lessee pursuant to this Article X shall be paid to the Agent (or --------- the Lessor if the Loans have been fully paid) as security for the obligations of the Lessee under this Lease and, at such time thereafter as no Potential Event of Default or Event of Default shall be continuing, such amount shall be paid promptly to the Lessee to the extent not previously applied by the Lessor or the Agent in accordance with the terms of this Lease or the other Operative Documents. Section 10.10 No Rent Abatement. Rent shall not abate hereunder by ----------------- reason of any Casualty, any Event of Loss, any Event of Taking or any Condemnation of the Leased Property, and the Lessee shall continue to perform and fulfill all of the Lessee's obligations, covenants and agreements hereunder notwithstanding such Casualty, Event of Loss, Event of Taking or Condemnation until the Lease Termination Date. ARTICLE XI INTEREST CONVEYED TO LESSEE --------------------------- The Lessee and the Lessor intend that this Lease be treated, for accounting purposes, as an operating lease. For all other purposes, the Lessee and the Lessor intend that the transaction represented by this Lease be treated as a financing transaction, and for such purposes, it is the intention of the parties hereto (i) that this Lease be treated as a mortgage, security deed or deed of trust (whichever is applicable in the jurisdiction in which the Leased Property is located) and security agreement, encumbering the Leased Property, and that the Lessee, as grantor, hereby grants to the Lessor, as mortgagee or beneficiary and secured party, or any successor thereto, a first and paramount Lien on the Leased Property in which the Lessee has an interest, (ii) that the Lessor shall have, as a result of such determination, all of the rights, powers and remedies of a mortgagee, deed of trust beneficiary or secured party available under Applicable Law to take possession of and sell (whether by foreclosure or otherwise) the Leased Property, (iii) that the effective date of such mortgage, security deed or deed of trust shall be the effective date of this Lease, or the Lease Supplement, if later, (iv) that the recording of this Lease or the Lease Supplement shall be deemed to be the recording of such mortgage, security deed or deed of trust, and (v) that the obligations secured by such mortgage, security deed or deed of trust shall include the Funded Amount and all Basic Rent and Supplemental Rent hereunder and all other obligations of and amounts due from the Lessee hereunder and under the Operative Documents. 17 ARTICLE XII EVENTS OF DEFAULT ----------------- Each of the following events shall constitute an Event of Default (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Authority): (a) The Lessee shall fail to make any payment of Basic Rent when due; or (b) (i) The Lessee shall fail to make any payment of Rent (other than Basic Rent and other than as set forth in clause (c) or any other ---------- amount payable hereunder or under any of the other Operative Documents (other than Basic Rent and other than as set forth in clause (c)), and ---------- such failure shall continue for a period of five (5) days after the same becomes due; or (ii) the Lessee shall fail to pay the Funded Amount or Lease Balance when due pursuant to Sections 10.1, 10.2, 14.1 or 14.2, or ------------- ---- ---- ---- the Lessee shall fail to pay the Recourse Deficiency Amount when required pursuant to Article XIV or the Construction Agent shall fail to ----------- make any payment when due under the Construction Agency Agreement; or (c) The Lessee or JFC or any of their Subsidiaries fails to perform or observe any term, covenant or agreement contained in Section 5.1(p)(vii), (xi), (xii), (xv) or (xvi) or in Section 5.2 of the Master Agreement; or (d) The Lessee shall fail to maintain insurance as required by Article VIII hereof, and such failure shall continue until the earlier - ------------ of (i) fifteen (15) days after written notice thereof from the Lessor and (ii) the day immediately preceding the date on which any applicable insurance coverage would otherwise lapse or terminate; or (e) The Lessee, JFC or any of their Subsidiaries shall default in the due and punctual performance of or compliance with any covenant, condition or agreement to be performed or observed by it under any provision of Sections 5.1(g), (h), (j), (k) or (m), inclusive, of the Master Agreement or shall use the proceeds of the Fundings for a purpose other than as stated in Section 5.1(u) of the Master Agreement, and any such failure or use shall continue unremedied for five (5) days following the date on which such covenant, condition or agreement shall have been required to be performed or observed, or such use of proceeds shall have varied from that stated in Section 5.1(u) of the Master Agreement; or (f) The Lessee, JFC or any of their Subsidiaries shall default in the due and punctual performance of or compliance with any covenant, condition or agreement to be performed or observed by it under any provision of Sections 5.1(c)-(f), inclusive, 5.1(i) or 5.1(n) of the Master Agreement and any such failure shall continue unremedied for ten (10) days following the date on which such covenant, condition or agreement shall have been required to be performed or observed; or (g) The Lessee, JFC or any of their Subsidiaries shall default in the due and punctual performance of or compliance with any covenant, condition or agreement to be performed or observed by it under any other provision of this Lease or any of the other Operative Documents 18 and any such failure shall continue unremedied for thirty (30) days after the earlier of (x) the date upon which any senior officer of the Lessee or JFC knew or reasonably should have known of such default or (y) the date on which such covenant, condition or agreement shall have been required to be performed or observed; or (h) Any representation or warranty of the Lessee or JFC made in any of the Operative Documents or in any certificate, document or financial or other statement or in connection with the Transaction or pursuant to the Operative Documents shall have been false or inaccurate in any material respect on the date as of which made or deemed made; or (i) The Lessee, JFC, or any of their Subsidiaries (A) shall fail to make when due or payable any payment required to be made by it in respect of (x) any Indebtedness for Money Borrowed (other than pursuant to the Operative Documents) whether or not subject to a Subordination Agreement, or (y) any Indebtedness other than Indebtedness for Money Borrowed, whether or not subject to a Subordination Agreement, if such failure extends beyond the applicable grace period (if any) specified in the relevant document on the date of such failure or (B) shall fail duly and punctually to perform or observe any other covenant, condition, or agreement contained in, or any other event shall occur or condition shall exist under, any evidence of Indebtedness, or any agreement securing or relating to any Indebtedness, and the effect of such failure is (x) to cause, or permit the holder of such Indebtedness or a trustee to cause, such Indebtedness to become due or to be required to be repurchased, prior to its scheduled maturity or such Indebtedness to become payable or cash collateral in respect thereof to be demanded or (y) to permit the holder of such Indebtedness or a trustee to elect any Person to the Board of Directors of any Subsidiary; provided, that any -------- Event of Default arising under clause (B) in respect of Indebtedness ---------- shall be determined without regard to any amendment to or waiver of any provision of the document or instrument evidencing such indebtedness or any related document or instrument entered into by the parties thereto in anticipation of, concurrent with or subsequent to the occurrence of any such event or circumstance, including, without limitation, the occurrence of any event or condition that (x) results in any such Indebtedness becoming due prior to its scheduled maturity or (y) enables or permits the lenders under such Indebtedness (as amended, modified, supplemented or replaced from time to time), or any agent on their behalf, to cause the loans thereunder to become due or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; or (j) A default shall occur under the provisions of any preferred stock (or any agreement relating thereto) of any Subsidiary, and the effect of the same shall be (i) to require, or permit the holders thereof to require, the issuer thereof to redeem the same prior to any mandatory redemption date or (ii) to permit the holders thereof to elect any Person to the Board of Directors of such Subsidiary; or (k) A final judgment or judgments for the payment of money in excess of $500,000 in the aggregate shall be rendered against the Lessee, JFC and any Subsidiary (or any one or more of such Persons) and shall remain in force undischarged and unstayed for a period of more than 19 the longer of (x) 60 days or (y) the shorter of (i) the period provided for requesting a stay of such judgment or (ii) the period provided for filing an appeal from such judgment, both as established for the jurisdiction in which such judgment was rendered and without regard for any extension or renewal periods applicable to either thereof; or (l) The Lessee, JFC or any of their Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Lessee, JFC or any of their Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Lessee, JFC or any of their Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of ---------- an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the Lessee, JFC or any of their Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the Lessee, JFC or any of their Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Lessee, ---------- ---- ----- JFC or any of their Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due or there shall be any receivership, insolvency, or liquidation pursuant to SIPA; or (m) (i) An ERISA Event shall occur with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Lessee, JFC or any ERISA Affiliate under Title IV of ERISA to such Pension Plan or Multiemployer Plan or to the PBGC in an aggregate amount for all such Pension Plans and Multiemployer Plans in excess of $500,000, less any outstanding amounts under clauses (ii) and (iii); (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans and Multiemployer Plans at any time exceeds $500,000, less any outstanding amounts under clauses (i) and (iii) (determined, in respect of Multiemployer Plans, by reference to the Unfunded Pension Liability for which the Lessee, JFC or any ERISA Affiliate may be liable); or (iii) the Lessee, JFC or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $500,000, less any outstanding amounts under clauses (i) and (ii); or (n) Intentionally Omitted. 20 (o) The Guarantor fails in any material respect to perform or observe any term, covenant or agreement in the Guaranty, or the Guaranty is for any reason partially (including with respect to future advances) or wholly revoked or invalidated, or otherwise ceases to be in full force and effect, or the Guarantor or any other Person contests in any manner the validity or enforceability thereof or denies that it has any further liability or obligation thereunder; or any event described at subsection (l) of this Section occurs with respect to the Guarantor or - -------------- ------- the Guarantor shall repudiate or terminate the Guaranty, or the Guaranty shall at any time cease to be in full force and effect or cease to be the legal, valid and binding obligation of the Guarantor; or (p) Any non-monetary judgment, order or decree is entered against the Lessee or any Subsidiary which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of fifteen (15) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (q) There occurs any Change of Control; or (r) Any Governmental Authority or any Business Association revokes or fails to renew any material license, permit or franchise of the Lessee, JFC or any Subsidiary, or the Lessee, JFC or any Subsidiary for any reason loses any material license, permit or franchise, or the Lessee, JFC or any Subsidiary suffers the imposition of any restraining order, escrow, suspension or impound of funds in connection with any proceeding (judicial or administrative) with respect to any material license, permit or franchise which, in the case of any restraining order, escrow or impound of funds is not dismissed or released within thirty (30) days after filing or imposition; or (s) The occurrence of a Construction Agency Event of Default; or (t) There shall have been asserted against the Lessee or any of its Subsidiaries an environmental claim that, in the reasonable judgment of the Lenders, is reasonably likely to be determined adversely to the Lessee or any of its Subsidiaries, and the amount thereof (either individually or in the aggregate) is reasonably likely to have a Material Adverse Effect (insofar as such amount is payable by the Lessee or any of its Subsidiaries but after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons jointly and severally liable therefor); or (u) The Lessee, JFC or the Lessee's General Partner shall be terminated, dissolved or liquidated (as a matter of law or otherwise) or proceedings shall be commenced by any Person (including the Lessee, JFC or the Lessee's General Partner) seeking the termination, dissolution or liquidation of the Lessee, JFC or the Lessee's General Partner, as the case may be, and such proceedings are not dismissed within twenty (20) days after filing; or (v) The Liens created by the Operative Documents shall at any time not constitute a valid and perfected Lien on the collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required herein or therein) in favor of the 21 Agent, free and clear of all other Liens (other than Permitted Liens), or, except for expiration in accordance with its terms, any of the Operative Documents shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by the Lessee or any other obligor; or (w) A court or other Governmental Authority or agency or Business Association having jurisdiction shall enter a decree or order approving or acknowledging as properly filed or commenced against the Lessee or any Subsidiary a petition or proceedings for liquidation pursuant to SIPA or otherwise, rehabilitation, readjustment or composition (or for any related or similar purpose) under any law (other than the Bankruptcy Code) relating to financially distressed debtors, their creditors or property, and any such decree or order shall remain in force undischarged and unstayed for a period of more than 30 days; or (x) The Lessee, JFC or any of their Subsidiaries shall take corporate action for the purpose or with the effect of authorizing, acknowledging or confirming the taking or existence of any action or condition specified in paragraph (l) above; or (y) The Lessee shall fail to file any report or information required pursuant to SIPA, or shall fail to pay when due all or any part of an assessment made upon the Lessee pursuant to SIPA, and such failure shall not have been cured, by the filing of such report or information or by the making of such payment, together with interest thereon, within five days after receipt by the Lessee, of written notice of such failure given by or on behalf of SIPC pursuant to Section 10(a) of SIPA; or (z) The making of an application by SIPC for a decree adjudicating that customers of the Lessee are in need of protection under SIPA and the failure of the Lessee to obtain the dismissal of such application within 30 days; (aa) Aggregate Indebtedness of the Lessee shall exceed 1500% of its Net Capital or, if the Lessee has elected to operate under paragraph (a)(1)(ii) of Rule 15c3-1, its Net Capital computed in accordance therewith shall be less than 2% of its aggregate debit items computed in accordance with Exhibit A to Rule 15c3-3 or (if registered as a futures commission merchant) its net capital (as defined in the CEA or the regulations then existing thereunder) shall be less than 4% of the funds required to be segregated pursuant to the CEA and the regulations thereunder and the foreign futures or foreign options secured amounts (less the market value of commodity options purchased by option customers on or subject to the rules of a contract market or a foreign Board of Trade, each such deduction not to exceed the amount of funds in the option customer's account and the foreign futures or foreign options secured amounts), if greater (or, in either case, such greater or lesser percentage as may be made applicable to the Lessee by the self- regulatory or governmental agencies or bodies having appropriate authority), throughout a period of not less than fifteen (15) consecutive Business Days, commencing on the date the Lessee first determines and notifies the Examining Authority or the Examining Authority or the SEC first determines and notifies the Lessee of such fact; or 22 (bb) The SEC or any State Securities Commission shall revoke the broker-dealer registration of the Lessee; (cc) The Examining Authority or any Business Association shall suspend (and not reinstate within 10 days) or revoke the Lessee's membership as a member of such Examining Authority or any Business Association; or (dd) The Lessee shall default in the due and punctual performance of or compliance with any covenant, condition or agreement to be performed or observed by the Lessee or the Lessor under the Bond Documents, and any such default shall continue unremedied beyond any applicable cure period provided for in the Bond Documents. ARTICLE XIII ENFORCEMENT ----------- Section 13.1 Remedies. Upon the occurrence and during the -------- continuance of any Event of Default, the Lessor may do one or more of the following as the Lessor in its sole discretion shall determine, without limiting any other right or remedy the Lessor may have on account of such Event of Default (including, without limitation, the obligation of the Lessee to purchase the Leased Property as set forth in Section 14.3): - ------------ (a) The Lessor may, by notice to the Lessee, rescind or terminate this Lease as of the date specified in such notice; however, (i) no reletting, reentry or taking of possession of the Leased Property by the Lessor will be construed as an election on the Lessor's part to terminate this Lease unless a written notice of such intention is given to the Lessee, (ii) notwithstanding any reletting, reentry or taking of possession, the Lessor may at any time thereafter elect to terminate this Lease for a continuing Event of Default, and (iii) no act or thing done by the Lessor or any of its agents, representatives or employees and no agreement accepting a surrender of the Leased Property shall be valid unless the same be made in writing and executed by the Lessor; (b) The Lessor may (i) demand that the Lessee, and the Lessee shall upon the written demand of the Lessor, return the Leased Property promptly to the Lessor in the manner and condition required by, and otherwise in accordance with all of the provisions of, Articles VI and ----------- XIV hereof as if the Leased Property were being returned at the end of - --- the Lease Term, and the Lessor shall not be liable for the reimbursement of the Lessee for any costs and expenses incurred by the Lessee in connection therewith and (ii) without prejudice to any other remedy which the Lessor may have for possession of the Leased Property, and to the extent and in the manner permitted by Applicable Law, enter upon the Leased Property and take immediate possession of the Leased Property or any part thereof (to the exclusion of the Lessee) and expel or remove the Lessee and any other person who may be occupying the Leased Property, by summary proceedings or otherwise, all without liability to the Lessee for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such 23 taking or otherwise and, in addition to the Lessor's other damages, the Lessee shall be responsible for the actual and reasonable costs and expenses of reletting, including brokers' fees and the reasonable costs of any alterations or repairs made by the Lessor; (c) The Lessor may (i) sell all or any part of the Leased Property at public or private sale, as the Lessor may determine, free and clear of any rights of the Lessee and without any duty to account to the Lessee with respect to such action or inaction or any proceeds with respect thereto (except to the extent required by clause (ii) below if ----------- the Lessor shall elect to exercise its rights thereunder) in which event the Lessee's obligation to pay Basic Rent for the Leased Property hereunder for periods commencing after the date of such sale shall be terminated or proportionately reduced, as the case may be; and (ii) if the Lessor shall so elect, demand that the Lessee pay to the Lessor, and the Lessee shall pay to the Lessor, on the date of such sale, as liquidated damages for loss of a bargain and not as a penalty (the parties agreeing that the Lessor's actual damages would be difficult to predict, but the aforementioned liquidated damages represent a reasonable approximation of such amount) (in lieu of Basic Rent due for periods commencing on or after the Payment Date coinciding with such date of sale (or, if the sale date is not a Payment Date, the Payment Date next preceding the date of such sale)), an amount equal to (a) the excess, if any, of (1) the sum of (A) all Rent due and unpaid to and including such Payment Date and (B) the Funded Amount with respect to the Leased Property, computed as of such date, over (2) the net proceeds of such sale (that is, after deducting all costs and expenses incurred by the Lessor, the Agent or any Lender incident to such conveyance (including, without limitation, all costs, expenses, fees, premiums and taxes described in Section 14.5); plus (b) interest at the Overdue Rate ------------ ---- on the foregoing amount from such Payment Date until the date of payment; (d) The Lessor may, at its option, not terminate this Lease, and continue to collect all Basic Rent, Supplemental Rent (excluding the Rental Payments due under the Bond Lease which the Lessee shall continue to pay in the manner set forth in Section 5.1 of the Bond Lease), and ----------- all other amounts (including, without limitation, the Funded Amount) due to the Lessor (together with all costs of collection) and enforce the Lessee's obligations under this Lease as and when the same become due, or are to be performed, and, at the option of the Lessor, upon any abandonment of the Leased Property by the Lessee or re-entry of same by the Lessor, the Lessor may, in its sole and absolute discretion, elect not to terminate this Lease with respect thereto and may make such reasonable alterations and necessary repairs in order to relet the Leased Property, and relet the Leased Property or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as the Lessor in its reasonable discretion may deem advisable, and upon each such reletting all rentals actually received by the Lessor from such reletting shall be applied to the Lessee's obligations hereunder in such order, proportion and priority as the Lessor may elect in the Lessor's sole and absolute discretion. If such rentals received from such reletting during any Rent Period are less than the Rent to be paid during that Rent Period by the Lessee hereunder, the Lessee shall pay any deficiency, as calculated by the Lessor, to the Lessor on the Payment Date for such Rent Period; 24 (e) If the Leased Property has not been sold, the Lessor may, whether or not the Lessor shall have exercised or shall thereafter at any time exercise any of its rights under paragraphs (a), (b), (c) or ------------------- --- (d) of this Article XIII with respect to the Leased Property, demand, by - --- ------------ written notice to the Lessee specifying a date (the "Final Rent Payment ------------------ Date") not earlier than thirty (30) days after the date of such notice, - ---- that the Lessee purchase, on the Final Rent Payment Date, the Lessor's interest in the Leased Property in accordance with the provisions of Sections 14.2, 14.4 and 14.5; provided, however, that (i) such purchase - ------------- ---- ---- -------- ------- shall occur on the date set forth in such notice, notwithstanding the provision in Section 14.2 calling for such purchase to occur on the ------------ Lease Termination Date, and (ii) the Lessor's obligations under Section ------- 14.5(a) shall be limited to delivery of a duly executed and acknowledged - ------- assignment of the Bond Lease and a release of the Bond Deed of Trust, both of which shall be in a form reasonably acceptable to the Lessor and the Lessee; (f) The Lessor may exercise any other right or remedy that may be available to it under Applicable Law, or proceed by appropriate court action (legal or equitable) to enforce the terms hereof or to recover damages for the breach hereof. Separate suits may be brought to collect any such damages for any Rent Period(s), and such suits shall not in any manner prejudice the Lessor's right to collect any such damages for any subsequent Rent Period(s), or the Lessor may defer any such suit until after the expiration of the Lease Term, in which event such suit shall be deemed not to have accrued until the expiration of the Lease Term; or (g) The Lessor may retain and apply against the Lessor's damages (but only to the extent thereof) all sums which the Lessor would, absent such Event of Default, be required to pay to, or turn over to, the Lessee pursuant to the terms of this Lease. Section 13.2 Remedies Cumulative; No Waiver; Consents. To the ---------------------------------------- extent permitted by, and subject to the mandatory requirements of, Applicable Law, each and every right, power and remedy herein specifically given to the Lessor or otherwise in this Lease shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Lessor, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any right, power or remedy. No delay or omission by the Lessor in the exercise of any right, power or remedy or in the pursuit of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Lessee or to be an acquiescence therein. The Lessor's consent to any request made by the Lessee shall not be deemed to constitute or preclude the necessity for obtaining the Lessor's consent, in the future, to all similar requests. No express or implied waiver by the Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Potential Event of Default or Event of Default. To the extent permitted by Applicable Law, the Lessee hereby waives any rights now or hereafter conferred by statute or otherwise that may require the Lessor to sell, lease or otherwise use the Leased Property or part thereof in mitigation 25 of the Lessor's damages upon the occurrence of any Potential Event of Default or Event of Default or that may otherwise limit or modify any of the Lessor's rights or remedies under this Article XIII. ------------ Section 13.3 Purchase Upon an Event of Default. Upon the --------------------------------- occurrence of an Event of Default, until the date that is thirty (30) days after the Lessee receives written notice of such Event of Default, the Lessee may purchase all, but not less than all, of the Lessor's interest in the Leased Property for the Lease Balance, plus any amounts due pursuant to Section 7.5 of the Master Agreement. Such purchase shall be made in accordance with Section 14.5 (except that the Lessor's obligations under Section 14.5(a) shall be limited to delivery of a duly --------------- executed and acknowledged assignment of the Bond Lease and a release of the Bond Deed of Trust, both of which shall be in a form reasonably acceptable to the Lessor and the Lessee), upon not less than five (5) Business Days' written notice (which shall be irrevocable) to the Lessor, which notice shall set forth the date of purchase (which shall be a date no later than ten (10) Business Days from the date of such notice). ARTICLE XIV SALE, RETURN OR PURCHASE OF LEASED PROPERTY; RENEWAL --------------------------- Section 14.1 Lessee's Option to Purchase. --------------------------- (a) Subject to the terms, conditions and provisions set forth in this Article XIV, the Lessee shall have the option (the "Purchase ----------- -------- Option"), to be exercised as set forth below, to purchase from the - ------ Lessor, the Lessor's interest in all of the Leased Property. Such option must be exercised by written notice to the Lessor not later than six (6) months prior to the Lease Termination Date which notice shall be irrevocable; such notice shall specify the date that such purchase shall take place, which date shall be a date occurring not less than thirty (30) days after such notice or the Lease Termination Date (whichever is earlier). If the Purchase Option is exercised pursuant to the foregoing, then, subject to the provisions set forth in this Article XIV, on the ----------- applicable purchase date or the Lease Termination Date, as the case may be, the Lessor shall convey to the Lessee, without recourse or warranty (other than as to the absence of Lessor Liens), and the Lessee shall purchase from the Lessor, the Lessor's interest in the Leased Property leased by the Lessee. (b) [Reserved] Section 14.2 Conveyance to Lessee. Unless (a) the Lessee shall -------------------- have properly exercised the Purchase Option and purchased the Leased Property pursuant to Section 14.1(a), or (b) the Lessee shall have --------------- properly exercised the Remarketing Option and shall have fulfilled all of the conditions of Section 14.6 hereof, then, subject to the terms, ------------ conditions and provisions set forth in this Article XIV, the Lessee ----------- shall purchase from the Lessor, and the Lessor shall convey to the Lessee, on the Lease Termination Date all of the Lessor's interest in the Leased Property 26 leased to the Lessee. The Lessee may designate, in a notice given to the Lessor not less than ten (10) Business Days prior to the closing of such purchase, or any purchase pursuant to Section 14.1(a), (time being of --------------- the essence), the transferee to whom the conveyance shall be made (if other than to the Lessee), in which case such conveyance shall (subject to the terms and conditions set forth herein) be made to such designee; provided, however, that such designation of a transferee shall not cause - -------- ------- the Lessee to be released, fully or partially, from any of its obligations under this Lease. Section 14.3 Acceleration of Purchase Obligation. The Lessee shall ----------------------------------- be obligated to purchase the Lessor's interest in the Leased Property immediately, automatically and without notice upon the occurrence of any Event of Default specified in clause (l) of Article XII, for the ----------- purchase price set forth in Section 14.4. Upon the occurrence of any ------------ other Event of Default, the Lessee shall be obligated to purchase the Lessor's interest in the Leased Property for the purchase price set forth in Section 14.4 upon notice of such obligation from the Lessor. ------------ Section 14.4 Determination of Purchase Price. Upon the purchase by ------------------------------- the Lessee of the Lessor's interest in the Leased Property upon the exercise of the Purchase Option or pursuant to Section 14.2 or 14.3, the ------------ ---- aggregate purchase price for the Leased Property shall be an amount equal to the Lease Balance as of the closing date for such purchase, plus any amount due pursuant to Section 7.5(f) of the Master Agreement as a result of such purchase. Section 14.5 Purchase Procedure. ------------------ (a) If the Lessee shall purchase the Lessor's interest in the Leased Property pursuant to any provision of this Lease, (i) the Lessee shall accept from the Lessor, and the Lessor shall convey, its interest in the Leased Property by a duly executed and acknowledged assignment of the Bond Lease, in a form reasonably acceptable to the Lessor and the Lessee, (ii) upon the date fixed for any purchase of the Lessor's interest in the Leased Property hereunder, the Lessee shall pay to the order of the Agent (or the Lessor if the Loans have been paid in full) the Lease Balance, plus any amount due pursuant to Section 7.5 of the Master Agreement as a result of such purchase, by wire transfer of immediately available funds, and (iii) the Lessor will execute and deliver to the Lessee such other documents, including releases, affidavits, termination agreements and termination statements, as may be legally required or as may be reasonably requested by the Lessee in order to effect such conveyance, free and clear of Lessor Liens and the Liens of the Operative Documents. (b) The Lessee shall, at the Lessee's sole cost and expense, obtain all required governmental and regulatory approvals and consents and, in connection therewith, shall make such filings as required by Applicable Law. In the event that the Lessor is required by Applicable Law to take any action in connection with such purchase and sale, the Lessee shall pay prior to transfer all costs incurred by the Lessor in connection therewith. Without limiting the foregoing, all costs incident to such conveyance, including, without limitation, the Lessee's attorneys' fees, the Lessor's attorneys' fees, commissions, the Lessee's and the Lessor's escrow fees, recording fees, title insurance premiums and all applicable documentary transfer or other transfer taxes and 27 other taxes required to be paid in order to record the transfer documents that might be imposed by reason of such conveyance and the delivery of such assignment of Bond Lease shall be borne entirely by and paid by the Lessee. (c) Upon expiration or termination of this Lease resulting in conveyance of the Lessor's interest in the title to the Leased Property to the Lessee, there shall be no apportionment of rents (including, without limitation, water rents and sewer rents), taxes, insurance, utility charges or other charges payable with respect to the Leased Property, all of such rents, taxes, insurance, utility or other charges due and payable with respect to the Leased Property prior to termination being payable by the Lessee hereunder and all due after such time being payable by the Lessee as the then owner of the Leased Property. Section 14.6 Option to Remarket. Subject to the fulfillment of ------------------ each of the conditions set forth in this Section 14.6, the Lessee shall ------------ have the option to market all of the Leased Property for the Lessor (the "Remarketing Option"). The Lessee's effective exercise and consummation ------------------ of the Remarketing Option shall be subject to the due and timely fulfillment of each of the following provisions, the failure of any of which, unless waived in writing by the Lessor, the Agent and the Lenders, shall render the Remarketing Option and the Lessee's exercise thereof null and void, in which event, the Lessee shall be obligated to perform its obligations under Section 14.2. ------------ (a) Not later than twelve (12) months prior to the Lease Termination Date, the Lessee shall give to the Lessor and the Agent written notice of the Lessee's exercise of the Remarketing Option. (b) Not later than ten (10) Business Days prior to the Lease Termination Date, the Lessee shall deliver to the Lessor and the Agent an environmental assessment of the Leased Property leased by it dated not earlier than forty-five (45) days prior to the Lease Termination Date. Such environmental assessment shall be prepared by an environmental consultant selected by the Required Funding Parties, shall be in form, detail and substance reasonably satisfactory to the Required Funding Parties and shall otherwise indicate the environmental condition of the Leased Property to be the same as described in the Environmental Audit. (c) On the date of the Lessee's notice to the Lessor and the Agent of the Lessee's exercise of the Remarketing Option, each of the Construction Conditions shall have been timely satisfied and no Event of Default or Potential Event of Default shall exist, and thereafter, no Event of Default or Potential Event of Default shall exist under this Lease. (d) The Lessee shall have completed all Alterations, restoration and rebuilding of the Leased Property leased by it pursuant to Sections -------- 6.1, 6.2, 10.3 and 10.4 (as the case may be) and shall have fulfilled - --- --- ---- ---- all of the conditions and requirements in connection therewith pursuant to such Sections or otherwise as required hereunder or under the other -------- Operative Documents, in each case, by the date on which the Lessor and the Agent receive the Lessee's notice of the Lessee's exercise of the Remarketing Option (time being of the essence), regardless of whether 28 the same shall be within the Lessee's control. If any use of the Leased Property has substantially changed the character of the Leased Property (without implying any consent to such use by the Lessor or the Agent), the Lessee shall, if requested by the Lessor or the Agent, restore the Leased Property to its general character as of the commencement of this Lease, except for normal wear and tear. (e) The Lessee shall promptly provide any maintenance records relating to the Leased Property leased by it to the Lessor, the Agent and any potential purchaser upon request and shall otherwise do all things necessary to deliver possession of the Leased Property to the potential purchaser. The Lessee shall allow the Lessor, the Agent and any potential purchaser access to the Leased Property for the purpose of inspecting the same. (f) On the Lease Termination Date, the Lessee shall surrender the Leased Property leased by it in accordance with Section 14.8 hereof. ------------ (g) In connection with any such sale of the Lessor's interest in the Leased Property, the Lessee will provide to the purchaser all customary "seller's" indemnities requested by the potential purchaser, representations and warranties regarding title, absence of Liens (except Lessor Liens) and the condition of the Leased Property, including, without limitation, a customary environmental indemnity. The Lessee shall fulfill all of the requirements set forth in clause (b) of Section ---------- ------- 14.5, and such requirements are incorporated herein by reference. As to - ---- the Lessor, any such sale shall be made on an "as is, with all faults" basis without representation or warranty by the Lessor, other than the absence of Lessor Liens. (h) In connection with any such sale of the Lessor's interest in the Leased Property, the Lessee shall pay directly, and not from the sale proceeds, all prorations, credits, costs and expenses of the sale of the Leased Property leased by it, whether incurred by the Lessor, any Lender, the Agent or the Lessee, including without limitation, the cost of all title insurance, surveys, environmental reports, appraisals, transfer taxes, the Lessor's and the Agent's attorneys' fees, the Lessee's attorneys' fees, commissions, escrow fees, recording fees and all applicable documentary and other transfer taxes. (i) The Lessee shall pay to the Agent on the Lease Termination Date (or to such other Person as the Agent shall notify the Lessee in writing, or in the case of Supplemental Rent, to the Person entitled thereto) an amount equal to the Recourse Deficiency Amount, plus all ---- accrued and unpaid Basic Rent and Supplemental Rent, and all other amounts hereunder which have accrued prior to or as of such date, in the type of funds specified in Section 3.3 hereof. ----------- If the Lessee has exercised the Remarketing Option, the following additional provisions shall apply: During the period commencing on the date twelve (12) months prior to the scheduled expiration of the Lease Term, the Lessee shall, as nonexclusive agent for the Lessor, use commercially reasonable efforts to sell the Lessor's interest in the Leased Property and will attempt to obtain the highest purchase price therefor. All such marketing of the Leased Property shall be at the Lessee's sole expense. Lessee promptly shall submit all bids to the Lessor and the 29 Agent, and the Lessor and the Agent will have the right to review the same and the right to submit any one or more bids. All bids shall be on an all-cash basis. In no event shall such bidder be the Lessee or any Subsidiary or Affiliate of the Lessee. The written offer must specify the Lease Termination Date as the closing date. If, and only if, the aggregate selling price (net of closing costs and prorations, as reasonably estimated by the Agent) is less than the difference between the Lease Balance at such time minus the Recourse Deficiency Amount, then the Lessor or the Agent may, in its sole and absolute discretion, by notice to the Lessee, reject such offer to purchase, in which event the parties will proceed according to the provisions of Section 14.7 ------------ hereof. If neither the Lessor nor the Agent rejects such purchase offer as provided above, the closing of such purchase of the Leased Property by such purchaser shall occur on the Lease Termination Date, contemporaneously with the Lessee's surrender of the Leased Property in accordance with Section 14.8 hereof, and the gross proceeds of the sale ------------ (i.e., without deduction for any marketing, closing or other costs, prorations or commissions) shall be paid directly to the Agent (or the Lessor if the Funded Amount has been fully paid); provided, however, -------- ------- that if the sum of the gross proceeds from such sale plus the Recourse ---- Deficiency Amount paid by the Lessee on the Lease Termination Date pursuant to Section 14.6(i), minus any and all costs and expenses --------------- (including broker fees, appraisal costs, legal fees and transfer taxes) incurred by the Agent or the Lessor in connection with the marketing of the Leased Property or the sale thereof exceeds the Lease Balance as of such date, then the excess shall be paid to the Lessee on the Lease Termination Date. The Lessee shall not have the right, power or authority to bind the Lessor in connection with any proposed sale of the Leased Property. Section 14.7 Rejection of Sale. Notwithstanding anything contained ----------------- herein to the contrary, if the Lessor or the Agent rejects the purchase offer for the Leased Property as provided in Section 14.6, then (a) the ------------ Lessee shall pay to the Agent the Recourse Deficiency Amount pursuant to Section 14.6(i), (b) the Lessor shall retain its interest in the Leased - --------------- Property, and (c) in addition to the Lessee's other obligations hereunder, the Lessee will reimburse the Lessor and the Agent, within ten (10) Business Days after written request, for all reasonable costs and expenses incurred by the Lessor or Agent during the period ending on the first anniversary of the Lease Termination Date in connection with the marketing, sale, closing or transfer of the Leased Property, which obligation shall survive the Lease Termination Date and the termination or expiration of this Lease. Section 14.8 Return of Leased Property. If the Lessor retains its ------------------------- interest in the Leased Property pursuant to Section 14.7 hereof, then ------------ the Lessee shall, on the Lease Termination Date, and at its own expense, return possession of the Leased Property leased by it to the Lessor for retention by the Lessor or, if the Lessee properly exercises the Remarketing Option and fulfills all of the conditions of Section 14.6 ------------ hereof and neither the Lessor nor the Agent rejects such purchase offer pursuant to Section 14.6, then the Lessee shall, on such Lease ------------ Termination Date, and at its own cost, transfer possession of the Leased Property leased by it to the independent purchaser thereof, in each case by surrendering the same into the possession of the Lessor or such purchaser, as the case may be, free and clear of all Liens other than the Lessor Liens, in as good condition as it was on the Completion Date therefor in the case of new Construction, or the 30 Funding Date (as modified by Alterations permitted by this Lease), ordinary wear and tear excepted, and in compliance with all Applicable Laws and all other requirements of this Lease and the other Operative Documents. The Lessee shall, on and within a reasonable time before and after the Lease Termination Date, cooperate with the Lessor and the independent purchaser of the Leased Property leased by the Lessee in order to facilitate the ownership and operation by such purchaser of the Leased Property after the Lease Termination Date, which cooperation shall include the following, all of which the Lessee shall do on or before the Lease Termination Date: providing all books and records regarding the maintenance and ownership of the Leased Property and all know-how, data and technical information relating thereto, providing a copy of the Plans and Specifications, granting or assigning all licenses necessary for the operation and maintenance of the Leased Property and cooperating in seeking and obtaining all necessary Governmental Actions. The Lessee shall have also paid the cost of all Alterations commenced prior to the Lease Termination Date. The obligations of the Lessee under this Article XIV shall survive the expiration or termination of this ----------- Lease. Section 14.9 Renewal. ------- (a) Subject to the conditions set forth herein, the Lessee may by written notice to the Lessor and the Agent given not later than ninety (90) days prior to the Construction Term Expiration Date, request the renewal of this Lease for a renewal period equal to the Construction Term, but in no event in excess of twelve (12) months, commencing on the date following the Lease Termination Date. No later than the date that is forty-five (45) days after the date the request to renew has been delivered to each of the Lessor and the Agent, the Agent will notify the Lessee whether or not the Lessor's and the Lenders' consent (which consent, in the case of the Lessor and the Lenders, may be granted or denied in their sole discretion) to such renewal request (which renewal shall require the unanimous consent of the Lessor and the Lenders and may be conditioned on such conditions precedent as may be specified by the Lessor and the Lenders). If the Agent fails to respond within such timeframe, such failure shall be a rejection of such request. If the Agent notifies the Lessee of the Lessor's and the Lenders' consent to such renewal, such renewal shall be effective as of the Lease Termination Date. (b) Subject to the conditions set forth herein and the terms and conditions of the Bond Lease, the Lessee may, by written notice to the Lessor and the Agent given not later than twelve (12) months and not earlier than sixteen (16) months prior to the then scheduled Lease Termination Date, request the renewal of this Lease, for five (5) years in the case of the first renewal term and up to five years in the case of the second renewal term, provided that in no event shall the term of this Lease exceed fifteen (15) years from the date of this Lease, in each case commencing on the date following such Lease Termination Date. No later than the date that is forty-five (45) days after the date the request to renew has been delivered to each of the Lessor and the Agent, the Agent will notify the Lessee whether or not the Lessor and the Lenders consent (such consent, in the case of the Lessor and the Lenders, may be granted or denied in their sole discretion) to such renewal request (which renewal shall require the unanimous consent of the Lessor and the Lenders, and may be conditioned on such conditions precedent as may be 31 specified by the Lessor and the Lenders). If the Agent fails to respond within such time frame, such failure shall be deemed to be a rejection of such request. If the Agent notifies the Lessee of the Lessor's and the Lenders' consent to such renewal, such renewal shall be effective as of the then scheduled Lease Termination Date. The Lessee, at its sole cost and expense, shall be permitted to replace any Lender that rejects or is deemed to have rejected such request, provided that such -------- replacement Lender is an Eligible Assignee, the replacement complies with Section 6.2 of the Master Agreement and the replacement occurs at least twelve (12) months prior to the then scheduled Lease Termination Date; provided, however, that, in the event that the Lessee shall have -------- ------- irrevocably elected to purchase the Leased Property pursuant to the terms of this Lease if this Lease is not renewed as provided for herein and written notice of such election shall have been delivered to the Lessor and the Agent at least twelve (12) months prior to the then scheduled Lease Termination Date, then such replacement shall occur at lease six (6) months prior to the then scheduled Lease Termination Date. Section 14.10 Environmental Report. Upon termination of this -------------------- Lease, unless the Lessee have exercised the Remarketing Option and complied with Section 14.6, the Lessee shall deliver, at the Lessee's ------------ expense, to the Lessor and the Agent an environmental assessment of the Leased Property leased by it at any time during the Lease Term. Such environmental assessment shall be prepared by an environmental consultant, and shall be in a form, reasonably satisfactory to the Lessor and the Agent. ARTICLE XV LESSEE'S EQUIPMENT ------------------ After any repossession of the Leased Property (whether or not this Lease has been terminated), the Lessee, at its sole cost and expense and so long as such removal of such trade fixtures, personal property or equipment shall not result in a violation of Applicable Law, shall, within a reasonable time after such repossession or within sixty (60) days after the Lessee's receipt of the Lessor's written request (whichever shall first occur), remove all of the Lessee's trade fixtures, personal property and equipment from the Leased Property (to the extent that the same can be readily removed from the Leased Property without causing material damage to the Leased Property); provided, -------- however, that the Lessee shall not remove any such trade fixtures, - ------- personal property or equipment that has been financed by the Lessor under the Operative Documents or otherwise constituting Leased Property (or that constitutes a replacement of such property). Any of the Lessee's trade fixtures, personal property and equipment not so removed by the Lessee within such period shall be considered abandoned by the Lessee, and title thereto shall without further act vest in the Lessor, and may be appropriated, sold, destroyed or otherwise disposed of by the Lessor without notice to the Lessee and without obligation to account therefor and the Lessee will pay the Lessor, upon written demand, all reasonable costs and expenses incurred by the Lessor in removing, storing or disposing of the same and all costs and expenses incurred by the Lessor to repair any damage to the Leased Property caused by such removal. The Lessee will immediately repair at its expense all damage to the Leased Property caused by any such removal (unless such removal is effected by the Lessor, in which event the 32 Lessee shall pay all reasonable costs and expenses incurred by the Lessor for such repairs). The Lessor shall have no liability in exercising the Lessor's rights under this Article XV, nor shall the ---------- Lessor be responsible for any loss of or damage to the Lessee's personal property and equipment. ARTICLE XVI RIGHT TO PERFORM FOR LESSEE --------------------------- If the Lessee shall fail to perform or comply with any of its agreements contained herein, the Lessor, upon ten (10) days' prior notice to the Lessee (except in the case of an emergency), may perform or comply with such agreement, and the Lessor shall not thereby be deemed to have waived any default caused by such failure, and the amount of such payment and the amount of the expenses of the Lessor (including actual and reasonable attorneys' fees and expenses) incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, shall be deemed Supplemental Rent, payable by the Lessee to the Lessor within ten (10) days after written demand therefor. ARTICLE XVII MISCELLANEOUS ------------- Section 17.1 Reports. To the extent required under Applicable Law ------- and to the extent it is reasonably practical for the Lessee to do so, the Lessee shall prepare and file in timely fashion, or, where such filing is required to be made by the Lessor or it is otherwise not reasonably practical for the Lessee to make such filing, Lessee shall prepare and deliver to the Lessor (with a copy to the Agent) within a reasonable time prior to the date for filing and the Lessor shall file, any material reports with respect to the condition or operation of the Leased Property that shall be required to be filed with any Governmental Authority. Section 17.2 Binding Effect; Successors and Assigns. The terms and -------------------------------------- provisions of this Lease, and the respective rights and obligations hereunder of the Lessor and the Lessee, shall be binding upon their respective successors, legal representatives and assigns (including, in the case of the Lessor, any Person to whom the Lessor may transfer the Leased Property or any interest therein in accordance with the provisions of the Operative Documents), and inure to the benefit of their respective permitted successors and assigns, and the rights granted hereunder to the Agent and the Lenders shall inure to the benefit of their respective permitted successors and assigns. The Lessee hereby acknowledges that the Lessor has assigned all of its right, title and interest to, in and under this Lease to the Agent and the Lenders pursuant to the Loan Agreement and related Operative Documents and that all of the Lessor's rights hereunder may be exercised by the Agent and all notices, deliveries or communications to or with the Lessor shall be provided to or be made with the Agent. Section 17.3 Quiet Enjoyment. Subject to the terms and conditions --------------- of the Bond Lease and the Bond Deed of Trust, the Lessor covenants that it will not interfere in the Lessee's or any of its permitted sublessees' quiet enjoyment of the Leased Property in accordance with this Lease 33 during the Lease Term, so long as no Potential Event of Default or Event of Default has occurred. Such right of quiet enjoyment is independent of, and shall not affect, the Lessor's rights otherwise to initiate legal action to enforce the obligations of the Lessee under this Lease. Section 17.4 Notices. Unless otherwise specified herein, all ------- notices, offers, acceptances, rejections, consents, requests, demands or other communications to or upon the respective parties hereto shall be in writing and shall be deemed to have been given as set forth in Section 8.2 of the Master Agreement. All such notices, offers, acceptances, rejections, consents, requests, demands or other communications shall be addressed as follows or to such other address as any of the parties hereto may designate by written notice: If to the Lessor: Atlantic Financial Group, Ltd. c/o Grogan & Brawner 2808 Fairmount, Suite 250 Dallas, Texas 75201 Attn: Stephen S. Brookshire If to the Lessee: Edward D. Jones & Co., L.P. 12555 Manchester Road St. Louis, Missouri 63131-3729 Attn: Kenneth E. Schutte If to the Agent: SunTrust Bank 303 Peachtree Street, 3rd Floor Mail Code 1928 Atlanta, Georgia 30308 Attn: Linda L. Dash If to a Lender, to the address provided in the Master Agreement. Section 17.5 Severability. Any provision of this Lease that shall ------------ be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and the Lessee shall remain liable to perform its obligations hereunder except to the extent of such unenforceability. To the extent permitted by Applicable Law, the Lessee hereby waives any provision of law that renders any provision hereof prohibited or unenforceable in any respect. Section 17.6 Amendment; Complete Agreements. Neither this Lease ------------------------------ nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, except by an instrument in writing signed by the Lessor and the Lessee in accordance with the provisions of Section 8.4 of the Master Agreement. This Lease, together with the Lease Supplement and 34 the other Operative Documents, is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of the terms thereof, all negotiations, considerations and representations between the parties having been incorporated herein and therein. No course of prior dealings between the parties or their officers, employees, agents or Affiliates shall be relevant or admissible to supplement, explain or vary any of the terms of this Lease or any other Operative Document. Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement between the parties or their Affiliates shall not be relevant or admissible to determine the meaning of any of the terms of this Lease or any other Operative Document. No representations, undertakings or agreements have been made or relied upon in the making of this Lease other than those specifically set forth in the Operative Documents. Section 17.7 Construction. This Lease shall not be construed more ------------ strictly against any one party, it being recognized that both of the parties hereto have contributed substantially and materially to the preparation and negotiation of this Lease. Section 17.8 Headings. The Table of Contents and headings of the -------- various Articles and Sections of this Lease are for convenience of reference only and shall not modify, define or limit any of the terms or provisions hereof. Section 17.9 Counterparts. This Lease may be executed by the ------------ parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 17.10 GOVERNING LAW. THIS LEASE SHALL IN ALL RESPECTS BE ------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE LEASEHOLD OR MORTGAGE ESTATES HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH ESTATES ARE LOCATED. Section 17.11 Reserved. -------- Section 17.12 Liability of the Lessor Limited. Except as otherwise ------------------------------- expressly provided below in this Section 17.12, it is expressly ------------- understood and agreed by and between the Lessee, the Lessor and their respective successors and assigns that nothing herein contained shall be construed as creating any liability of the Lessor or any of its Affiliates or any of their respective officers, directors, employees or agents, individually or personally, for any failure to perform any covenant, either express or implied, contained herein, all such liability (other than that resulting from the Lessor's gross negligence or willful misconduct, except to the extent imputed to the Lessor by virtue of the Lessee's action or failure to act), if any, being expressly waived by the Lessee and by each and every Person now or hereafter claiming by, through or under the Lessee, and that, so far as the Lessor or any of its Affiliates or any of their respective officers, directors, 35 employees or agents, individually or personally, is concerned, the Lessee and any Person claiming by, through or under the Lessee shall look solely to the right, title and interest of the Lessor in and to the Leased Property and any proceeds from the Lessor's sale or encumbrance thereof (provided, however, that the Lessee shall not be entitled to any -------- ------- double recovery) for the performance of any obligation under this Lease and under the Operative Documents and the satisfaction of any liability arising therefrom (other than that resulting from the Lessor's gross negligence or willful misconduct, except to the extent imputed to the Lessor by virtue of the Lessee's action or failure to act). Section 17.13 Estoppel Certificates. Each party hereto agrees that --------------------- at any time and from time to time during the Lease Term, it will promptly, but in no event later than thirty (30) days after request by the other party hereto, execute, acknowledge and deliver to such other party or to any prospective purchaser (if such prospective purchaser has signed a commitment or letter of intent to purchase the Leased Property or any part thereof or any Note), assignee or mortgagee or third party designated by such other party, a certificate stating (a) that this Lease is unmodified and in force and effect (or if there have been modifications, that this Lease is in force and effect as modified, and identifying the modification agreements); (b) the date to which Basic Rent has been paid; (c) whether or not there is any existing default by the Lessee in the payment of Basic Rent or any other sum of money hereunder, and whether or not there is any other existing default by either party with respect to which a notice of default has been served, and, if there is any such default, specifying the nature and extent thereof; (d) whether or not, to the knowledge of the signer after due inquiry and investigation, there are any setoffs, defenses or counterclaims against enforcement of the obligations to be performed hereunder existing in favor of the party executing such certificate and (e) other items that may be reasonably requested; provided that no such -------- certificate may be requested unless the requesting party has a good faith reason for such request. Section 17.14 No Joint Venture. Any intention to create a joint ---------------- venture, partnership or other fiduciary relationship between the Lessor and the Lessee is hereby expressly disclaimed. Section 17.15 No Accord and Satisfaction. The acceptance by the -------------------------- Lessor of any sums from the Lessee (whether as Basic Rent or otherwise) in amounts which are less than the amounts due and payable by the Lessee hereunder is not intended, nor shall be construed, to constitute an accord and satisfaction of any dispute between the Lessor and the Lessee regarding sums due and payable by the Lessee hereunder, unless the Lessor specifically deems it as such in writing. Section 17.16 No Merger. In no event shall the leasehold --------- interests, estates or rights of the Lessee hereunder, or of the holder of any Notes secured by a security interest in this Lease, merge with any interests, estates or rights of the Lessor in or to the Leased Property, it being understood that such leasehold interests, estates and rights of the Lessee hereunder, and of the holder of any Notes secured by a security interest in this Lease, shall be deemed to be separate and distinct from the Lessor's interests, estates and rights in or to the Leased Property, 36 notwithstanding that any such interests, estates or rights shall at any time or times be held by or vested in the same person, corporation or other entity. Section 17.17 Survival. The obligations of the Lessee to be -------- performed under this Lease prior to the Lease Termination Date and the obligations of Lessee pursuant to Articles III, IV, X, XI, XIII, ------------ -- - -- ---- Sections 6.3, 14.2, 14.3, 14.4, 14.5, 14.6(f), (g), (h), and (i), 14.7, - ------------ ---- ---- ---- ---- ------- --- --- --- ---- 14.8, 14.10, Articles XV and XVI, and Sections 17.1, 17.10 and 17.12 - ---- ----- ----------- --- ------------- ----- ----- shall survive the expiration or termination of this Lease. The extension of any applicable statute of limitations by the Lessor, the Lessee, the Agent or any Indemnitee shall not affect such survival. Section 17.18 Chattel Paper. To the extent that this Lease ------------- constitutes chattel paper (as such term is defined in the Uniform Commercial Code in any applicable jurisdiction), no security interest in this Lease may be created through the transfer or possession of any counterpart other than the sole original counterpart, which shall be identified as the original counterpart by the receipt of the Agent. Section 17.19 Time of Essence. Time is of the essence of this --------------- Lease. Section 17.20 Recordation of Lease. The Lessee will, at its -------------------- expense, cause this Lease or a memorandum of lease in form and substance reasonably satisfactory to the Lessor and the Lessee (if permitted by Applicable Law) to be recorded in the proper office or offices in the State(s) and the municipalities in which the Land is located. Section 17.21 Investment of Security Funds. The parties hereto ---------------------------- agree that any amounts not payable to the Lessee pursuant to any provision of Article VIII, X or XIV or this Section 17.21 shall be held ------------ - --- ------------- by the Agent (or the Lessor if the Loans have been fully paid) as security for the obligations of the Lessee under this Lease and the Master Agreement and of the Lessor under the Loan Agreement. At such time as such amounts are payable to the Lessee, such amounts, net of any amounts previously applied to the Lessee's obligations hereunder or under the Master Agreement (which application is hereby agreed to by the Lessee), shall be paid to the Lessee. Any such amounts which are held by the Agent (or the Lessor if the Loans have been fully paid) pending payment to the Lessee shall until paid to the Lessee, as provided hereunder or until applied against the Lessee's obligations herein and under the Master Agreement and the other Operative Documents and distributed as provided in the Loan Agreement (or herein after the Loan Agreement is no longer in effect) in connection with any exercise of remedies hereunder, be invested by the Agent or the Lessor, as the case may be, as directed from time to time in writing by the Lessee (provided, however, if a Potential Event of Default or an Event of -------- ------- Default has occurred, it will be directed by the Agent or, if the Loans have been fully paid, the Lessor) and at the expense and risk of the Lessee, in investments permitted by the Required Lenders. Any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other expenses, if any, incurred in connection with such investment) shall be applied in the same manner as the principal invested. The Lessee upon demand shall pay to the Agent or the Lessor, as appropriate, the amount of any loss incurred in connection with all such investments and the liquidation thereof. 37 Section 17.22 Bond Lease. The Lessee will, at its expense, timely ---------- perform all of the obligations of the Lessor, in its capacity as lessee, under the Bond Lease and all obligations of the Lessor and the Lessee under any and all documents, instruments and agreements related thereto, including, without limitation, the other Bond Documents, and, if requested by the Lessor, shall provide satisfactory evidence to the Lessor of such performance. Section 17.23 Land and Building. If the Building and the Land on ----------------- which the Building is located are subject to separate Lease Supplements, at any time that the Lessee exercises an option to purchase the Lessor's interest in the Building or the Land, or to renew this Lease with respect to the Building or the Land, or is obligated to purchase the Lessor's interest in the Building or the Land as a result of an Event of Loss, an Event of Taking or an Event of Default, such purchase or renewal shall be made simultaneously with respect to all of the Lessor's interest in the Building and the Land. [Signature page follows] 38 IN WITNESS WHEREOF, the undersigned have each caused this Lease Agreement to be duly executed and delivered and attested by their respective officers thereunto duly authorized as of the day and year first above written. EDWARD D. JONES & CO., L.P., a Missouri limited partnership, as the Lessee By: EDJ Holdings Company, Inc., a Missouri corporation, its sole general partner By:__________________________________________ Name:________________________________________ Title:_______________________________________ S-1 MASTER LEASE AGREEMENT ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.), as the Lessor By: Atlantic Financial Managers, Inc., its General Partner By:____________________________________________ Name:__________________________________________ Title:_________________________________________ S-2 MASTER LEASE AGREEMENT EXHIBIT A This instrument prepared by and when recorded return to: McGuireWoods LLP, One James Center, Richmond, Virginia 23219, Attention: Edmund S. Pittman, Esquire ============================================================================ LEASE SUPPLEMENT, MEMORANDUM OF LEASE AND FUTURE ADVANCE DEED OF TRUST AND SECURITY AGREEMENT Dated as of September 18, 2001 among ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as Lessor EDWARD D. JONES & CO., L.P., as Lessee, and , Trustee, --------------------------- for the use and benefit of Lessor St. Louis County, Missouri ============================================================================ THIS INSTRUMENT IS INTENDED ALSO TO BE A FIXTURE FILING TO BE FILED IN THE REAL ESTATE RECORDS OF ST. LOUIS COUNTY, MISSOURI. THIS FUTURE ADVANCE DEED OF TRUST AND SECURITY AGREEMENT SECURES FUTURE ADVANCES AND FUTURE OBLIGATIONS AND SHALL BE GOVERNED BY SECTION 443.055 RSMO, AS AMENDED. THE TOTAL PRINCIPAL AMOUNT OF THE PRESENT AND FUTURE OBLIGATIONS WHICH MAY BE SECURED HEREBY IS $24,000,000. TABLE OF CONTENTS Page ---- SECTION 1. DEFINITIONS; INTERPRETATION............................... 2 SECTION 2. THE SUBJECT PROPERTY...................................... 2 SECTION 3. NATURE OF TRANSACTION; DEED OF TRUST ..................... 2 SECTION 4. RATIFICATION; INCORPORATION .............................. 10 SECTION 5. ORIGINAL LEASE SUPPLEMENT................................. 10 SECTION 6. GOVERNING LAW............................................. 10 SECTION 7. COUNTERPART EXECUTION..................................... 10 EXHIBITS: - --------- EXHIBIT A - Description of Land EXHIBIT B - Schedule of Equipment i LEASE SUPPLEMENT, MEMORANDUM OF LEASE AND FUTURE ADVANCE DEED OF TRUST AND SECURITY AGREEMENT ------------------------------------------------------- THIS FUTURE ADVANCE DEED OF TRUST AND SECURITY AGREEMENT SECURES FUTURE ADVANCES AND FUTURE OBLIGATIONS AND SHALL BE GOVERNED BY SECTION 443.055 RSMO, AS AMENDED. THE TOTAL PRINCIPAL AMOUNT OF THE PRESENT AND FUTURE OBLIGATIONS WHICH MAY BE SECURED HEREBY IS $24,000,000. THIS LEASE SUPPLEMENT, MEMORANDUM OF LEASE AND FUTURE ADVANCE DEED OF TRUST AND SECURITY AGREEMENT (this "Lease Supplement") dated as of ---------------- September 18, 2001 between ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.), having an address of 2305 Cedar Springs Road, Suite 415, Dallas, Texas 75201, as the lessor (the "Lessor"), and EDWARD ------ D. JONES & CO., L.P., a Missouri limited partnership, having an address of 12555 Manchester Road, St. Louis, Missouri 63131-3729, as lessee (the "Lessee") and , a , as trustee ------ ------------------------ -------------------- (the "Trustee"), having an address of , for ------- ----------------------------- the benefit of the Lessor. RECITALS: The Lessor and the Lessee have entered into a Master Lease Agreement, dated as of the date hereof (as restated, amended, supplemented or otherwise modified from time to time, the "Lease"). The Lessor desires to lease to the Lessee, and the Lessee desires to lease from the Lessor, (a) the Lessor's leasehold interest in the land described on Exhibit A attached hereto and incorporated herein, created --------- pursuant to the Bond Lease, together with the following appurtenant rights (the "Appurtenant Rights"): (i) all agreements, easements, rights ------------------ of way or use, rights of ingress or egress, privileges, appurtenances, tenements, hereditaments, reversions, remainders, water rights and other rights and benefits at any time belonging or pertaining to the land or the improvements thereon, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the land, (ii) all permits, licenses and rights, whether or not of record, appurtenant to the land (such land and Appurtenant Rights being referred to as the "Land") and (b) the ---- buildings, structures and improvements located or to be located on the Land, along with all fixtures used or useful in connection with the operation thereof or of the Land, including, without limitation, all furnaces, boilers, compressors, elevators, fittings, pipings, connectives, conduits, ducts, partitions, equipment and apparatus of every kind and description now or hereafter affixed or attached to the building and all Alterations (including all restorations, repairs, replacements and rebuilding of such buildings, improvements and structures) thereto (the "Building") and all of the following equipment -------- (the "Equipment"): all fixtures, personal property, chattels, business --------- machines, machinery, apparatus, equipment, furnishings, fittings and all appurtenances and additions thereto and substitutions or replacements thereof (together with, in each case, attachments, components, parts and accessories) currently owned or subsequently acquired by the Lessor or the Lessee and now or subsequently affixed or attached to, or contained in or used or usable in any way in connection with any operation or letting of the Land, Building or Equipment, including but without limiting the generality of the foregoing, all personal property and equipment described on Exhibit B attached hereto and made a part hereof, --------- all signs, screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs, storm doors and windows, furniture and furnishings, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus, furnaces, boilers, compressors, elevators, refrigerating, and incinerating equipment, escalators, refrigerators, display cases, shelving, racking, movable and demountable partitions, elevators, loading and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus), snow removal and lawn maintenance equipment, motorized vehicles, telephones, communication systems (including satellite dishes and antennae), televisions, computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, connectives, conduits, ducts, partitions, appliances, equipment, apparatus, fittings and fixtures of every kind and description but excluding the Lessee's Personal Property (the Land, and the Building and the Equipment being referred to hereinafter as the "Subject Property"). ---------------- NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions; Interpretation. Capitalized terms not --------------------------- otherwise defined in this Lease Supplement shall have the respective meanings assigned thereto in the Appendix A to the Master Agreement (as ---------- amended, supplemented or otherwise modified from time to time the "Master Agreement"), dated as of the date hereof among the Lessee, the ---------------- Lessor, SunTrust Bank, as Agent, and the Lenders parties thereto (the "Lenders") and joined in by The Jones Financial Companies, L.L.L.P., and ------- the rules of interpretation set forth in Appendix A shall apply to this ---------- Lease Supplement. Copies of the Master Agreement, the Lease and the other Operative Documents (as defined in the Master Agreement) are on file at the office of the Agent. SECTION 2. The Subject Property. Effective upon the execution and -------------------- delivery of this Lease Supplement by the Lessor and the Lessee, the Subject Property shall be subject to the terms and provisions of the Lease, and the Lessor hereby leases the Subject Property to the Lessee, and the Lessee hereby hires and leases the Subject Property from the Lessor. The term of the Lease with respect to the Subject Property begins on the date hereof and ends on September 18, 2006, subject to the right of the Lessee to extend the Lease in accordance with the terms and conditions set forth in the Lease and the other Operative Documents. The Lease contains certain purchase rights and options during the term of the Lease pursuant to which the Lessee may acquire the Subject Property, all as more fully set forth in the Lease. SECTION 3. Nature of Transaction; Deed of Trust. The Lessor and ------------------------------------ the Lessee intend that the Lease and this Lease Supplement be treated, for accounting purposes, as an operating lease. For federal, state and local tax purposes and for bankruptcy, commercial and regulatory law and all other purposes, the Lessee and the Lessor intend that the transaction represented by the Lease and this Lease Supplement be treated as a financing transaction. For such purposes, it is the intention of the parties hereto (i) that the Lease and this Lease Supplement be treated as a deed of trust and security agreement, encumbering the Subject Property, and that the Lessee, as grantor, hereby grants to the Trustee, with power of sale, as trustee for the benefit of the Lessor, as beneficiary and secured party, or any successor thereto, the Subject Property and a first and paramount Lien thereon, (ii) that the Lessor shall have, as a result of such determination, all of 2 the rights, powers and remedies of a mortgagee, deed of trust beneficiary or secured party available under Applicable Law to take possession of and sell (whether by foreclosure or otherwise) the Subject Property, (iii) the Trustee shall have the customary powers of a trustee under a leasehold deed of trust encumbering a leasehold interest in real property, (iv) that the effective date of such deed of trust shall be the effective date of this Lease Supplement, (v) that the recording of this Lease Supplement shall be deemed to be the recording of such deed of trust, and (vi) that the obligations secured by such deed of trust shall include the Funded Amounts and all Basic Rent and Supplemental Rent hereunder and all other obligations of and all amounts due from the Lessee hereunder and under the Operative Documents. In furtherance of the foregoing, the Lessor (for the remainder of this Section called "Loan Party"), and the Lessee (for the remainder of this Section called ---------- "Grantor") agree as follows: ------- A. This instrument shall constitute a Future Advance Deed of Trust and Security Agreement dated as of September 18, 2001 (this "Deed of ------- Trust"), made by the Lessee (the "Grantor"), having an address at 12555 ----- ------- Manchester Road, St. Louis, Missouri 63131-3729, to , ---------------- having an address of , as trustee ("the --------------------------- Trustee"), for the benefit of Atlantic Financial Group, Ltd., a Texas ------- limited partnership (registered to do business in Missouri as Atlantic Financial Group, L.P.), having an address of 2305 Cedar Springs Road, Suite 415, Dallas, Texas 75201 (the "Loan Party"). ---------- B. TO SECURE PAYMENT OF ALL AMOUNTS OWING BY THE GRANTOR UNDER THE LEASE AND THE OTHER OPERATIVE DOCUMENTS AND THE PAYMENT AND PERFORMANCE OF ALL OTHER OBLIGATIONS UNDER THE OPERATIVE DOCUMENTS, THE GRANTOR HEREBY CONVEYS TO THE TRUSTEE AND HEREBY BARGAINS, SELLS, CONVEYS, CONFIRMS, GRANTS, ASSIGNS, TRANSFERS, WARRANTS AND SETS OVER TO THE TRUSTEE, WITH POWER OF SALE, THE SUBJECT PROPERTY AND ALL RENTS, LEASES, ISSUES AND PROCEEDS THEREOF (INCLUDING AWARDS AND INSURANCE, CONDEMNATION AND OTHER LOSS PROCEEDS), WITH GENERAL WARRANTY OF TITLE, IN TRUST FOR THE USE AND BENEFIT OF THE LOAN PARTY, AND GRANTS THE LOAN PARTY A SECURITY INTEREST IN THE SUBJECT PROPERTY AND ALL RENTS, LEASES, ISSUES AND PROCEEDS THEREOF (INCLUDING AWARDS AND INSURANCE, CONDEMNATION AND OTHER LOSS PROCEEDS), TO HAVE AND TO HOLD the Subject Property and the rights and privileges hereby granted unto the Trustee, its successors and assigns for the uses and purposes set forth, until all amounts owed by and all other obligations to be paid or performed by the Grantor under the Lease and the other Operative Documents are indefeasibly paid and performed in full. C. If an Event of Default has occurred and is continuing under the Lease, at the direction of the Loan Party: (i) The Loan Party or its agents may enter and take possession of the Subject Property by actual physical possession or by written notice served personally upon or sent by registered or certified mail, postage prepaid, to the Grantor, and the Grantor shall surrender possession upon request and the Loan Party may take possession 3 without further authorization required, and may let the Subject Property and receive the rents, issues and profits thereof, make repairs and apply said rentals and profits, after payment of all necessary or proper charges and expenses, on account of the amounts hereby secured. (ii) The Loan Party, shall, as a matter of contract right, at the option of the Loan Party, be entitled to the appointment of a receiver for the Subject Property, and the Grantor hereby consents to such appointment without the posting of a bond or undertaking without regard to the value of the Subject Property and waives notice of any application therefor. (iii) The Trustee may proceed to sell the Subject Property at public auction, as a whole or in such parcels, for cash or credit and, in addition to the requirements imposed by state law, upon any terms as the Trustee deems appropriate. Before such sale at public auction is made, there shall first be such notice of default and such notice or advertisement of the time, place and terms of sale as required by Applicable Law. Such sale may be postponed for any reason, from time to time, to the extent permitted by Applicable Law. In the event the sale is postponed, the Trustee shall advertise or give notice of any subsequent sale in the same manner as the original advertisement or notice of sale provided for above or otherwise as may be permitted by Applicable Law. The Trustee shall execute and deliver to the purchaser its Trustee's deed conveying that portion of the Subject Property so sold, but without any covenant or warranty, express or implied. The recitals in the Trustee's deed of any matters or facts shall be conclusive proof of the truthfulness thereof. The Loan Party may become the purchaser of the Subject Property so sold, and no purchaser shall be required to see to the proper application of the purchase money. Unless otherwise required by Applicable Law, the Trustee shall apply the proceeds of sale as directed by the Loan Party. The Grantor agrees to surrender possession of the Subject Property so sold to the purchaser at the sale immediately after such sale. D. The Grantor hereby waives the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws (whether equitable or statutory) now or hereafter in force and all rights of marshaling in the event of any sale of the Subject Property or any interest therein. E. The Trustee shall be entitled to enforce payment of the indebtedness and performance of the Lessee's obligations and to exercise all rights and powers under this instrument or under any of the other Operative Documents or other agreement or any laws now or hereafter in force, notwithstanding some or all of the Lessee's obligations may now or hereafter be otherwise secured, whether by deed of trust, deed to secure debt, mortgage, security agreement, pledge, lien, assignment or otherwise. Neither the acceptance of this instrument nor its enforcement, shall prejudice or in any manner affect the Trustee's right to realize upon or enforce any other security now or hereafter held by the Trustee, it being agreed that the Trustee shall be entitled to enforce this instrument and any other security now or hereafter held by the Trustee in such order and manner as the Trustee or the Loan Party may determine in its or their absolute discretion. No remedy herein conferred upon or reserved to the Trustee or the Loan Party is intended to 4 be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Operative Documents to the Trustee or the Loan Party or to which they may otherwise be entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by the Loan Party. In no event shall the Trustee, in the exercise of the remedies provided in this instrument (including, without limitation, the appointment of a receiver and the entry of such receiver on to all or any part of the Subject Property), be deemed a "mortgagee in possession," and the Trustee shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies. F. The Trustee's sole duty with respect to the custody, safekeeping and physical preservation of any Subject Property in its possession, under Section 9-207 of the UCC as in effect in the state in which the Subject Property is located (the "UCC") or otherwise, shall be to deal --- with it in the same manner as the Trustee deals with similar property for its own account. Neither the Trustee, the Loan Party nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Subject Property or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Subject Property upon the request of the Grantor or any other Person or to take any other action whatsoever with regard to the Subject Property or any part thereof. G. All powers, authorizations and agencies contained in this Deed of Trust are coupled with an interest and are irrevocable until this instrument is terminated and the lien created hereby is released. H. Pursuant to Section 9-402 of the UCC as in effect in the state in which the Subject Property is located, the Grantor authorizes the Trustee or the Loan Party to file financing statements with respect to the Subject Property with the signature of the Grantor in such form and in such filing offices as the Trustee or the Loan Party reasonably determines appropriate to perfect the security interests of the Trustee and the Loan Party under this Deed of Trust. A carbon, photographic or other reproduction of this Deed of Trust shall be sufficient as a financing statement for filing in any jurisdiction. I. It is the intention of the parties hereto that this instrument shall constitute a Security Agreement within the meaning of the UCC, and the Grantor hereby grants the Loan Party a security interest in all Subject Property which is personal property, including, without limitation, all proceeds, both cash and noncash, of any of the foregoing (the "Personal Property"). If an Event of Default shall occur, then in ----------------- addition to having any other right or remedy available at law or in equity, the Trustee, at the direction of the Loan Party, shall have the option of either (i) proceeding under the UCC and exercising such rights and remedies as may be provided to a secured party by the UCC with respect to all or any portion of the Subject Property which is personal property (including, without limitation, taking possession of and selling such property) or (ii) treating such property as real property and proceeding with respect to both the real and 5 personal property constituting the Subject Property in accordance with the Trustee's rights, powers and remedies with respect to the real property (in which event the default provisions of the UCC shall not apply). If the Trustee, at the direction of the Loan Party, shall elect to proceed under the UCC, then five (5) days' notice of sale of the personal property shall be deemed reasonable notice and the reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by the Trustee or the Loan Party shall include, but not be limited to, attorneys' fees and legal expenses. At the Trustee's request, the Grantor shall assemble the personal property and make it available to the Trustee and the Loan Party at a place designated by the Trustee or the Loan Party which is reasonably convenient to both parties. The Grantor stipulates and agrees that a sale of the Personal Property in conjunction with the Subject Property is a commercially reasonable manner of disposing of the Personal Property. The Loan Party also may (x) require the Grantor to, and the Grantor hereby agrees that the Grantor will at the Grantor's expense and upon request of the Loan Party forthwith, assemble all or part of the Personal Property as directed by the Loan Party and make it available to the Loan Party at a place to be designated by the Loan Party which is reasonably convenient to the parties, and (y) sell the Personal Property or any part thereof in one or more parcels at public or private sale for cash or credit or for future delivery, and at such price or prices and upon such other terms as the Loan Party may deem commercially reasonable. The Loan Party shall not be obligated to make any sale of the Personal Property regardless of notice of sale having been given. The Loan Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Grantor, the Trustee and the Loan Party further agree, to the extent permitted by law, that this instrument upon recording or registration in the real estate records of the proper office shall constitute a financing statement filed as a "fixture filing" within the meaning of Sections 9-313 and 9-402 of the UCC as in effect in the state in which the Subject Property is located. The Grantor, upon request by the Trustee or the Loan Party from time to time, shall execute, acknowledge and deliver to the Trustee or the Loan Party one or more separate security agreements, in form satisfactory to the Trustee and the Loan Party, covering all or any part of the Subject Property and will further execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as the Trustee or the Loan Party may request in order to perfect, preserve, maintain, continue or extend the security interest under and the priority of this instrument. The Grantor further agrees to pay to the Trustee and the Loan Party on demand all costs and expenses incurred by the Trustee or the Loan Party in connection with the preparation, execution, recording, filing and refiling of any such document and all reasonable costs and expenses of any record searches for financing statements the Trustee or the Loan Party shall reasonably require. If the Grantor shall fail to furnish any financing or continuation statement within ten (10) days after request by the Trustee or the Loan Party, then pursuant to the provisions of the UCC, the Grantor hereby authorizes the Trustee and the Loan Party, without the signature of the Grantor, to execute and file any 6 such financing and continuation statements. The filing of any financing or continuation statements in the records relating to personal property or chattels shall not be construed as in any way impairing the right of the Trustee to proceed against any personal property encumbered by this Deed of Trust as real property, as set forth above. J. The Grantor acknowledges that in connection with the rights and responsibilities of the Trustee under this instrument with respect to any action taken by the Trustee or the exercise or non-exercise by the Trustee of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this instrument, as between the Grantor and the Loan Party, the Trustee shall be conclusively presumed to be acting as agent for the Loan Party with full and valid authority so to act or refrain from acting, and the Grantor shall be under no obligation, or entitlement, to make any inquiry respecting such authority. K. Except as otherwise set forth herein, to the fullest extent permitted by law, the Grantor waives the benefit of all laws now existing or that may subsequently be enacted providing for (i) any appraisement before sale of any portion of the Subject Property, (ii) any extension of the time for the enforcement of the collection of the indebtedness or the creation or extension of a period of redemption from any sale made in collecting such debt and (iii) exemption of the Subject Property from attachment, levy or sale under execution or exemption from civil process. Except as otherwise set forth herein, to the full extent the Grantor may do so, the Grantor agrees that the Grantor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, exemption, extension, reinstatement or redemption, or requiring foreclosure of this instrument before exercising any other remedy granted hereunder, and the Grantor, for the Grantor and its successors and assigns, and for any and all Persons ever claiming any interest in the Subject Property, to the extent permitted by law, hereby waives and releases all rights of reinstatement, redemption, valuation, appraisement stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshaling in the event of foreclosure of the liens hereby created. L. If (a) the Subject Property shall consist of one or more parcels, whether or not contiguous and whether or not located in the same city or county, or (b) in addition to this instrument, the Trustee and the Loan Party shall now or hereafter hold one or more additional mortgages, liens, deeds of trust or other security (directly or indirectly) for the obligations secured hereby upon other property in the state in which the Subject Property is located (whether or not such property is owned by the Grantor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by law, the Trustee and the Loan Party may, in their discretion, commence or consolidate in a single foreclosure action all foreclosure proceedings against all such collateral securing the Obligations (including the Subject Property), which action may be brought or consolidated in the courts of any county in which any of such collateral is located. The Grantor acknowledges that the right to maintain a consolidated foreclosure action is a specific inducement to the Loan Party to extend the Obligations, and the Grantor expressly and irrevocably waives any objections to the commencement or 7 consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non --------- conveniens which it may now or hereafter have. The Grantor further ---------- agrees that if the Trustee or the Loan Party shall be prosecuting one or more foreclosure or other proceedings against a portion of the Subject Property or against any collateral other than the Subject Property, which collateral directly or indirectly secures the Obligations, or if the Trustee or the Loan Party shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral, then, whether or not such proceedings are being maintained or judgments were obtained in or outside the state in which the Subject Property is located, the Trustee and the Loan Party may commence or continue foreclosure proceedings and exercise its other remedies granted in this instrument against all or any part of the Subject Property and the Grantor waives any objections to the commencement or continuation of a foreclosure of this instrument or exercise of any other remedies hereunder based on such other proceedings or judgments and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this instrument or such other proceedings on such basis. Neither the commencement nor continuation of proceedings to foreclose this instrument nor the exercise of any other rights hereunder nor the recovery of any judgment by the Trustee and the Loan Party in any such proceedings shall prejudice, limit or preclude the Trustee's and the Loan Party's rights to commence or continue one or more foreclosure or other proceedings or obtain a judgment against any other collateral (either in or outside the state in which the Subject Property is located) which directly or indirectly secures the obligations secured hereby. The Grantor hereby waives (i) any objections to the commencement or continuation of an action to foreclose this Deed of Trust or exercise of any other remedies hereunder based on any action being prosecuted or any judgment entered with respect to the Obligations or any liens or security interests that secure payment and performance of the Obligations and (ii) any objections to the commencement of, continuation of, or entry of a judgment in any such other action based on any action or judgment connected to this Deed of Trust. The Grantor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this instrument based on any action or judgment connected to this instrument. It is expressly understood and agreed that to the fullest extent permitted by law, the Trustee may, at its election, cause the sale of all collateral which is the subject of a single foreclosure action at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the obligations secured hereby (directly or indirectly) in the most economical and least time-consuming manner. In case of a foreclosure sale, the Trust Property may be sold, at the Trustee's election, in one parcel or in more than one parcel and the Trustee is specifically empowered (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Subject Property to be held. M. Except as expressly provided in the Operative Documents, the Trustee and the Loan Party, with the express written consent of the Grantor, may at any time or from time to time renew or extend this instrument, or alter or modify the same in any way. The Trustee may waive any of the terms, covenants or conditions hereof in whole or in part and may release any portion of the Subject Property or any other security, and grant such extensions and indulgences in relation to the obligations secured hereby as the Loan 8 Party may determine without the consent of any other Person (including, without limitation, the Grantor) and without any obligation to give notice of any kind thereto and without in any manner affecting the priority of the lien hereof on any part of the Subject Property. N. If Trustee shall be made a party to or shall intervene in any action or proceeding, whether in court or before any governmental agency, affecting the Subject Property or the title thereto or the interest of Trustee under this instrument, including, without limitation, any form of condemnation or eminent domain proceeding, Trustee shall be reimbursed by the Grantor upon demand for all costs, charges and reasonable attorneys' fees incurred by it in any such case. All such sums shall be secured hereby, are due and payable within ten (10) days after demand, and if not paid within ten (10) days after demand, shall bear interest at the Overdue Rate set forth in the Operative Documents. The Trustee shall be under no duty to take any action hereunder except as expressly required, to perform any act which would involve it in expense or liability, or to institute or defend any suit in respect hereof, unless properly indemnified to its satisfaction. All reasonable expenses, charges, counsel fees and other disbursements incurred by Trustee from and after the occurrence of an Event of Default in and about the administration and execution of the trust created hereby, and the performance of its duties and powers hereunder shall be secured by this instrument prior to the indebtedness represented by the Lease and shall bear interest at the Overdue Rate set forth in the Operative Documents. The Loan Party, with or without cause, is hereby authorized and empowered to substitute and appoint, at any time and from time to time, by an instrument recorded wherever this instrument is recorded, a trustee in the place of any Trustee hereunder. The Grantor agrees to indemnify, defend and hold the Trustee harmless from and against any and all liability, loss, damage and expense, including reasonable attorneys' fees, which it may incur by reason of this instrument or by reason of any action taken by the Trustee hereunder, and from and against any and all claims and demands whatsoever which may be asserted against the Trustee by reason of any alleged obligation or undertaking on its part to perform or discharge any of the terms, covenants or conditions contained herein, unless caused by the gross negligence or willful misconduct of the Trustee. Should the Trustee incur any such liability, loss, damage or expense, the amount thereof, together with interest thereon at the Overdue Rate set forth in the Operative Documents, shall be secured by this instrument and shall be payable by the Grantor to the Trustee within ten (10) days after demand therefor. O. Nothing in this instrument shall operate or be construed to obligate the Trustee or the Loan Party to perform any obligations of the Grantor contained in any lease of the Subject Property. This instrument shall not operate to place upon the Loan Party or the Trustee any responsibility for the operation, control, care, management or repair of the Subject Property prior to the Trustee or the Loan Party taking possession 9 thereof, and the execution of this Deed of Trust by the Grantor shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Subject Property prior to the Trustee or the Loan Party taking possession thereof is and shall be that of Grantor. P. This instrument is given to secure not only existing indebtedness, but also future advances made pursuant to or as provided in the Operative Documents, whether such advances are obligatory or to be made at the option of the Loan Party, or otherwise, to the same extent as if such future advances were made on the date of execution of this instrument, although there may be no advance made at the time of execution hereof, and although there may be no indebtedness outstanding at the time any advance is made. To the fullest extent permitted by law, the lien of this instrument shall be valid as to all such indebtedness, including all revolving credit and future advances, from the time this instrument is recorded. SECTION 4. Ratification; Incorporation. Except as specifically --------------------------- modified hereby, the terms and provisions of the Lease are hereby ratified and confirmed and remain in full force and effect. The terms of the Lease (as amended by this Lease Supplement) are by this reference incorporated herein and made a part hereof. SECTION 5. Original Lease Supplement. The single executed original ------------------------- of this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and containing the receipt of the Agent therefor on or following the signature page thereof shall be the original executed counterpart of this Lease Supplement (the "Original Executed Counterpart"). To the extent that this Lease ----------------------------- Supplement constitutes chattel paper, as such term is defined in the UCC as in effect in any applicable jurisdiction, no security interest in this Lease Supplement may be created through the transfer or possession of any counterpart other than the Original Executed Counterpart. SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED ------------- BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES OF SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF THE LEASEHOLD ESTATE HEREUNDER, AND THE EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH SUCH ESTATE IS LOCATED. SECTION 7. Counterpart Execution. This Lease Supplement may be --------------------- executed in any number of counterparts and by each of the parties hereto in separate counterparts, all such counterparts together constituting but one and the same instrument. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT GRANTOR AND LOAN PARTY FROM MISUNDERSTANDING OR DISAPPOINTMENT, 10 ANY AGREEMENTS GRANTOR AND LOAN PARTY REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT BETWEEN GRANTOR AND LOAN PARTY, EXCEPT AS GRANTOR AND LOAN PARTY MAY LATER AGREE IN WRITING TO MODIFY IT. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 11 IN WITNESS WHEREOF, each of the parties hereto has caused this Lease Supplement to be duly executed by an officer thereunto duly authorized as of the date and year first above written. ATLANTIC FINANCIAL GROUP, LTD. (registered to do business in Missouri as Atlantic Financial Group, L.P.), as the Lessor By: Atlantic Financial Managers, Inc., its General Partner By:__________________________________ Name:________________________________ Title: ______________________________ N-1 LEASE SUPPLEMENT EDWARD D. JONES & CO., L.P., as the Lessee By: EDJ Holding Company, Inc., a Missouri corporation, its sole general partner By:_______________________________ Name:_____________________________ Title:____________________________ N-2 LEASE SUPPLEMENT STATE OF TEXAS ) ) ss. COUNTY OF ) On this _____ day of September, 2001, before me, _______________, a Notary Public in and for said County and State, personally appeared __________________, to me personally known, who being by me duly sworn, did say that (s)he is the ___________________ of Atlantic Financial Managers, Inc., a Texas corporation, and the general partner of Atlantic Financial Group, Ltd., a Texas limited partnership, and that the foregoing instrument was signed on behalf of said corporation by authority of its Board of Directors, and said _____________________ acknowledged said instrument to be the free act and deed of said corporation as general partner of Atlantic Financial Group, Ltd. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written. ____________________________________ Notary Public - State of Texas My Commission Expires:______________ (notary seal) N-1 LEASE SUPPLEMENT STATE OF MISSOURI ) ) ss. COUNTY OF ) On this ____ day of September, 2001, before me ____________________, a Notary Public in and for said County and State, personally appeared __________________, to me personally known, who being by me duly sworn, did say that (s)he is the ______________________ of EDJ Holding Company, Inc., a Missouri corporation, and the general partner of Edward D. Jones & Co., L.P., a Missouri limited partnership, and that the foregoing instrument was signed on behalf of said corporation by authority of its Board of Directors, and said __________________ acknowledged said instrument to be the free act and deed of said corporation as general partner of Edward D. Jones & Co., L.P. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written. ____________________________________ Notary Public - State of Missouri My Commission Expires:______________ (notary seal) N-2 LEASE SUPPLEMENT Receipt of this original counterpart of the foregoing Lease Supplement is hereby acknowledged as of the date hereof. SUNTRUST BANK, as the Agent By:______________________________ Name:____________________________ Title:___________________________ STATE OF GEORGIA ) ) COUNTY OF ____________ ) On this _____ day of September, 2001, before me, _________________, a Notary Public in and for said County and State, personally appeared _____________________, to me personally known, who being by me duly sworn, did say that (s)he is the ____________________ of SunTrust Bank, a Georgia banking corporation, and that the foregoing instrument was signed on behalf of said corporation by authority of its Board of Directors, and said ____________________ acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written. ________________________________________ Notary Public - State of Georgia My Commission Expires: _________________ (notary seal) LEASE SUPPLEMENT EXHIBIT A Description of Land ------------------- [TO BE ADDED] LEASE SUPPLEMENT EXHIBIT B Schedule of Equipment --------------------- [TO BE ADDED] LEASE SUPPLEMENT EX-23.1 12 ex23p1.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K, into The Jones Financial Companies, L.L.L.P.'s previously filed Form S-2 Registration Statement File No. 33-61049 and Form S-8 Registration Statements File No. 333-48233, No. 333-36258, 333-55729, No. 33-35247 and No. 33-62734. ARTHUR ANDERSEN LLP St. Louis, Missouri March 19, 2002 -----END PRIVACY-ENHANCED MESSAGE-----