SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one) FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 24, 1999
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number 1-9109
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RAYMOND JAMES FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Florida No. 59-1517485
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
880 Carillon Parkway, St. Petersburg, Florida 33716
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (727) 573-3800
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, $.01 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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(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 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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 14, 1999: $847,330,199
Number of common shares outstanding (December 14, 1999): 46,588,602
DOCUMENTS INCORPORATED BY REFERENCE
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Proxy Statement for Annual Meeting of Shareholders to be held on February 10,
2000. (The Company intends to file with the Commission a definitive proxy
statement pursuant to Regulation 14A prior to January 10, 2000.)
PART I
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ITEM 1. BUSINESS
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(a) General Description of Business
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Raymond James Financial, Inc. ("RJF") is a Florida-based holding company
that was incorporated in 1974 as a successor to the original corporation
founded in 1962. Its principal subsidiaries include Raymond James &
Associates, Inc. ("RJA"), Raymond James Financial Services, Inc. ("RJFS"),
Eagle Asset Management, Inc. ("Eagle"), Heritage Asset Management, Inc.
("Heritage") and Raymond James Bank, FSB ("RJBank"). All of these
subsidiaries are wholly-owned by RJF. RJF and its subsidiaries are
hereinafter collectively referred to as the "Company".
RJF's principal subsidiary, RJA, was organized in Florida in 1962. RJA
is a full service broker-dealer engaged in most aspects of securities
distribution and investment banking. RJA also offers financial planning
services for individuals and provides clearing services for RJFS and several
unaffiliated broker-dealers. The Company is the largest brokerage and
investment firm headquartered in the state of Florida. RJA is a member of
the New York Stock Exchange ("NYSE"), American Stock Exchange, Philadelphia
Stock Exchange, Boston Stock Exchange, Chicago Board Options Exchange, New
York Futures Exchange, Pacific Exchange and Chicago Stock Exchange. It is
also a member of the Securities Industry Association, National Association of
Securities Dealers ("NASD"), and Securities Investors Protection Corporation
("SIPC"). SIPC provides insurance protection for clients' accounts of up to
$500,000 each (limited to $100,000 for claims for cash) in the event of RJA's
liquidation. In addition, RJA carries $49,500,000 per account of excess
client insurance. For the year ended September 24, 1999 the revenues of RJA
accounted for 54% of the consolidated revenues of the Company.
On May 28, 1999 the Company purchased Roney & Co. ("Roney"), a broker-
dealer headquartered in Detroit, Michigan. Immediately subsequent to
fiscal year Roney was contributed and merged into RJA. Roney added 320
Financial Advisors and 28 offices to RJA.
RJFS was formed in January 1999, when the Company merged its two
independent contractor broker-dealer subsidiaries, Investment Management &
Research, Inc. ("IM&R") and Robert Thomas Securities, Inc. ("RTS"). IM&R
was formed in 1973 as an independent contractor financial planning
organization and participates in the distribution of all products and
services offered by RJA to its retail clients. RTS was organized in 1981,
and serves independent contractor brokers who do a majority of their
business in individual securities. RJFS is a member of the NASD and SIPC,
but not of any exchange, as it clears all of its business on a fully-
disclosed basis through RJA.
Eagle was formed in 1984 as a registered investment advisor to serve as
the discretionary manager for individual equity portfolios.
Heritage was organized in 1985 to act as the manager of the Company's
internally sponsored Heritage family of mutual funds.
Raymond James Bank was formed in 1994 in conjunction with the purchase
from the Resolution Trust Corporation of certain branches of a failed thrift.
Its primary purpose is to provide traditional banking products and services
to the
clients of the Company's broker-dealer subsidiaries.
(b) Financial Information - Revenues by Source
The Company's operations consist of various financial services provided
to its clients. The following table shows revenues by source for the last
three years:
Year Ended
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Sept. 24, Sept. 25, Sept. 26,
1999 % 1998 % 1997 %
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(dollar amounts in thousands)
Securities commissions:
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Listed products $ 161,240 13.1 $ 132,211 12.2 $115,818 12.9
Over-the-counter 186,258 15.1 163,410 15.1 148,791 16.6
Mutual funds 169,377 13.7 150,536 13.9 117,748 13.1
Asset-based fees 130,359 10.6 100,055 9.2 61,444 6.8
Annuities and other
insurance products 110,899 9.0 85,322 7.9 70,944 7.9
Other 3 .0 127 .0 219 .1
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Total 758,136 61.5 631,661 58.3 514,964 57.4
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Investment banking:
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Underwriting management
fees 11,852 1.0 27,569 2.5 43,434 4.8
Merger and acquisition
fees 16,304 1.3 20,153 1.9 7,929 .9
New issue sales credits 37,400 3.0 51,446 4.8 47,639 5.3
Limited partnerships and
other 9,192 .8 10,537 1.0 10,086 1.2
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Total 74,748 6.1 109,705 10.2 109,088 12.2
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Investment advisory fees 91,920 7.5 79,485 7.3 55,194 6.2
Interest 229,806 18.6 202,255 18.7 155,746 17.4
Correspondent clearing 4,655 .4 4,429 .4 4,502 .5
Net trading and investment
profits 17,034 1.4 6,300 .6 12,797 1.4
Financial service fees 36,101 2.9 24,797 2.3 20,786 2.3
Other 19,806 1.6 24,275 2.2 23,884 2.6
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1,232,206 100.0 1,082,907 100.0 896,961 100.0
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Gain on sale of Liberty
Investment Mgmt., Inc.* - - 30,646
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Total revenues $1,232,206 $1,082,907 $927,607
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Securities commissions by
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broker-dealer:
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Raymond James & Associates,
Inc. 284,139 37.5 $ 262,966 41.6 $222,771 43.3
Roney & Co. 23,825 3.1 - - - -
Raymond James Financial
Services, Inc. 448,864 59.2 368,695 58.4 292,193 56.7
Raymond James Financial
International, Ltd. 1,308 .2 - - - -
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Total $ 758,136 100.0 $ 631,661 100.0 $514,964 100.0
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* See Note 16 of the Notes to Consolidated Financial Statements for details.
(c) Narrative Description of Business
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At September 24, 1999 the Company employed 4,480 individuals. RJA
employed 4,018 of these individuals, 915 of whom were full-time retail
Financial Advisors. In addition, 2,949 full-time Financial Advisors were
affiliated with the Company as independent contractors. Through its broker-
dealer subsidiaries, the Company provides securities services to more than
one million client accounts. No single client accounts for a material
percentage of the Company's total business.
The Company currently divides its business into five segments based on
the products and services offered. These segments are retail distribution,
institutional distribution, investment banking, asset management, and other.
RETAIL DISTRIBUTION
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The Company provides securities transaction and financial planning
services to its retail clients through the RJA retail branch system, its
independent contractor firm (RJFS), and a general insurance agency.
RJA - Retail Sales
RJA's 79 retail branches and 8 satellites are located primarily in the
southeastern U.S., with a concentration in Florida, and the Midwest, as a
result of the acquisition of Roney. The Roney transaction added 320
Financial Advisors and 28 offices in Indiana, Michigan and Ohio. RJA's 915
retail Financial Advisors provide a broad range of financial products and
services to their clients. In most cases, RJA charges commissions to its
retail clients, on both exchange and over-the-counter equity transactions,
in accordance with its established commission schedule. In certain
instances, varying discounts from the schedule are given, generally based
upon the client's level of business, the trade size and other relevant
factors. RJA also distributes both taxable and tax-exempt fixed income
products to its retail clients, including municipal, corporate, government
agency and mortgage-backed bonds, preferred stock and unit investment
trusts. In addition, a growing number of clients are electing asset-based
fee alternatives to the traditional commission structure.
The retail Financial Advisors sell a number of professionally managed,
load mutual funds and offer, in addition, a selection of no-load funds. RJA
maintains dealer-sales agreements with most major distributors of mutual
fund shares sold through broker-dealers. Commissions on such sales
generally range from 1% to 5% of the dollar value of the transaction.
Alternative sales compensation structures typically include front-end
charges, "back-end" or contingent deferred sales charges, and an annual
charge in the form of a fund expense.
At September 24, 1999, the Company had 14 internally sponsored mutual
funds for which RJA acts as distributor. (See Heritage Asset Management,
Inc. description on page 7.) As the distributor of these funds, RJA has the
right to enter into dealer agreements with other broker-dealers for the sale
of Heritage funds to their clients.
RJFS
RJFS participates in the distribution of all the products and services
offered by RJA to its retail clients through 2,949 independent contractor
Financial Advisors in 1,193 offices and 323 satellite offices in all 50
states.
The Company operates with three separate divisions. The Investment
Management division has 687 offices and 1,597 Financial Advisors and are
better characterized as financial planners than as stock brokers although
they are not required to conduct their business as financial planners. The
Securities Division primarily offers individual securities and investment
advice to individual investors and institutions through 919 Financial
Advisors in 322 branch offices. The Financial Institutions Division offers
securities on a third party basis to customers of financial institutions
such as banks, thrifts and credit unions and has 433 Financial Advisors in
184 locations.
The number of Financial Advisors in all offices ranges from 1 to 26.
Such Financial Advisors devote all or substantially all of their time to the
sale of securities and, while these independent contractors must conduct all
securities business through RJFS, their contracts permit them to conduct
insurance, real estate brokerage, accounting services or other business for
others or for their own account. Independent contractors are responsible
for all of their direct costs and are paid a larger percentage of
commissions and fees to compensate them for their added expenses.
Planning Corporation of America
Planning Corporation of America ("PCA"), a wholly-owned subsidiary of
RJA, is a general insurance agency and represents a number of insurance
companies. Through the Financial Advisors of the Company's broker-dealer
subsidiaries, PCA provides product and marketing support for a broad range
of insurance products, principally fixed and variable annuities, numerous
forms of life insurance, disability insurance and long-term care coverage.
Clients' transactions in securities are effected on either a cash or
margin basis. In margin transactions, the client pays a portion of the
purchase price, and RJA makes a loan to the client for the balance,
collateralized by the securities purchased or by other securities owned by
the client. Interest is charged to clients on the amount borrowed to
finance margin transactions. The financing of margin purchases is an
important source of revenue to RJA, since the interest rate paid by the
client on funds loaned by RJA exceeds RJA's cost of short-term funds. The
interest rate charged to a client on a margin loan depends on the average
loan balance in the client's account and ranges from prime plus 1% to prime
minus .75%.
Typically, broker-dealers utilize secured bank borrowings and equity
capital as the primary sources of funds to finance clients' margin account
borrowings. Since the inception of the Client Interest Program in 1981,
however, the Company's primary source of funds to finance clients' margin
account balances has been cash balances in clients' accounts which are
awaiting investment. In addition, pursuant to written agreements with
clients, broker-dealers are permitted by Securities and Exchange Commission
("SEC") and NYSE rules to lend client securities in margin accounts to other
brokers. SEC regulations, however, restrict the use of clients' funds
derived from pledging and lending clients' securities, as well as funds
awaiting investment, to the financing of margin account balances, and to the
extent not so used, such funds are required to be deposited in a special
account for the benefit of clients. The regulations also require
broker-dealers, within designated periods of time, to obtain possession or
control of, and to segregate, clients' fully paid and excess margin
securities.
INSTITUTIONAL DISTRIBUTION
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The Company's institutional clients are serviced by RJA's
Institutional Equity and Fixed Income Departments.
The 53 domestic professionals in the Institutional Equity Sales and
Sales Trading Departments maintain relationships with 776 institutional clients.
In addition to the Company's headquarters in St. Petersburg, FL, institutional
equity offices are located in New York, Houston, Dallas, Princeton, San Diego,
Toronto, Calgary, Brussels, Brugte, Dusseldorf, Geneva, London (Raymond James
Financial International, Ltd., a UK broker-dealer), Luxembourg,
Milan and Paris.
In addition, RJA distributes to its institutional clients both taxable
and tax-exempt fixed income products, primarily municipal, corporate,
government agency and mortgage-backed bonds. RJA carries inventory
positions of taxable and municipal securities in both the primary and
secondary market. In addition to St. Petersburg, the Fixed Income
Department maintains institutional sales and trading offices in New York,
Chicago, Houston, Boston, Atlanta, Boca Raton, and Dublin, Ohio. To assist
our institutional clients, the department's Fixed Income Research Group
provides value-added analytical services and publishes research reports
containing both specific product information and information on topics of
interest such as market and regulatory developments.
In providing these securities brokerage services to its institutional
clients, RJA discounts its commissions substantially on transactions based
on trade size and the amount of business conducted annually with each
institution.
The revenues and costs of RJA's back office operations are attributable
primarily to the two distribution segments above. RJA's operations
personnel are responsible for the execution of orders, processing of
securities transactions, custody of client securities, receipt,
identification and delivery of funds and securities, compliance with
regulatory and legal requirements, internal financial accounting and
controls and general office administration for most of the Company's
securities brokerage operations.
INVESTMENT BANKING/CAPITAL MARKETS
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Investment Banking activities include both equity and fixed income
products. This segment consists of the departments described below:
Investment Banking Group. The 47 professionals of RJA's Investment
Banking Group, located primarily in St. Petersburg with satellite offices in
New York, Dallas, Houston, Calgary, and Chicago are involved in a variety of
activities including public and private equity financing for corporate
clients, merger and acquisition advisory services, fairness opinions and
evaluations. The Company focuses on specific industry groups or strategic
business units ("SBUs") including Consumer, Financial and Business Services,
Healthcare, Information Technology, Environmental, Real Estate, and Energy.
In addition, RJA acts as an underwriter or selling group member for
corporate bonds, agency bonds, preferred stock and unit investment trusts.
When underwriting new issue securities, RJA agrees to purchase the issue
through a negotiated sale or submits a competitive bid.
Research Department. The 45 analysts in this department publish
research on over 340 companies, primarily focused on emerging growth and mid-
cap companies in a broad range of industries. Approximately 28% of the
companies covered are investment banking clients. Proprietary research
reports are provided to both retail and institutional clients, and are
supplemented by research purchased from outside services to accommodate
retail clients. This department has distinguished itself through its
extremely successful long-term comparative results as reported by Zacks
Investment Research each quarter in the Wall Street Journal.
Over-the-Counter Equity Trading. Trading securities in the over-the-
counter ("OTC") market involves the purchase of securities from, and the
sale of securities to, clients of the Company or other dealers who may be
purchasing or selling securities for their own account or acting as agent
for their clients. Profits and losses are derived from the spreads between
bid and asked prices, as well as market trends for the individual securities
during the holding period. At September 24, 1999, RJA made markets in over
250 common stocks in the OTC market. RJA frequently acts as agent in the
execution of OTC orders for its clients and as such transacts these trades
with other dealers. When RJA receives a client order in a security in which
it makes a market, it may act as principal as long as it matches or improves
upon the best price in the dealer market, plus or minus a mark-up or
mark-down not exceeding the equivalent agency commission charge. Recently
adopted regulations require that client limit orders be satisfied prior to
the brokerage firm buying securities into or selling securities from their
own inventory at the same price.
Syndicate Department. The Syndicate Department coordinates the
marketing, distribution, pricing and stabilization of Raymond James' lead-
and co-managed equity underwritings. In addition to Raymond James' managed
and co-managed offerings, this department coordinates the firm's syndicate
and selling group activities in transactions managed by other investment
banking firms. Marketing and distribution activities are focused on the
firm's institutional and retail clients. The Syndicate Department is also
responsible for the Corporate Client Services group which serves the firm's
Investment Banking and Research clients by providing specialized brokerage
services for corporations and their executives.
Public Finance. The 21 professionals in the Public Finance division
operate out of 7 offices (2 located in the State of Florida, one in
Birmingham, AL, one in New York, NY, one in Pittsburgh, PA, one in Detroit,
MI, and one in San Antonio, TX), acting as Financial Advisor or underwriter
to various municipal agencies or political subdivisions.
Partnership Investment Banking. The Company acts as the general
partner in equipment leasing and real estate limited partnerships. Most
significantly, Raymond James Tax Credit Funds, Inc. is the general partner
in funds that have invested nationwide in properties that qualify for low
income housing tax credits.
ASSET MANAGEMENT
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The Company's asset management segment includes proprietary asset
management operations, internally sponsored mutual funds, outside money
management
alternatives, and other asset-based fee programs.
Eagle Asset Management, Inc.
Eagle is a registered investment advisor with approximately $5.1
billion under management at September 24, 1999. Eagle's clients include
pension and profit sharing plans, retirement funds, foundations, endowments,
trusts, life insurance and mutual fund portfolios and individuals. Accounts
are managed on a discretionary basis in accordance with the investment
objective(s) specified by the client. Eagle manages approximately $1.2
billion for institutional clients and $3.9 billion for retail accounts.
Eagle's investment management fee generally ranges from .30% to 1.0% of
asset balances per year depending upon the size and investment objective of
the account. In addition to the management fees, clients are required to pay
brokerage commissions (or more commonly, a fee in lieu thereof) for
transactions in their accounts.
Heritage Asset Management, Inc.
Heritage Asset Management, Inc. ("Heritage") serves as investment
advisor to the Heritage Family of Mutual Funds. Heritage also serves as
transfer agent or sub-transfer agent for all of the open-end funds and as
fund accountant or sub-fund accountant for all Heritage funds except the
Eagle International Equity Portfolio. Portfolio management for the Income-
Growth Trust, Aggressive Growth Fund, Growth Equity Fund, Mid Cap Growth
Fund, Value Equity Fund, and the First Puerto Rico Growth and Income Fund
are subcontracted. Portfolio management for the Small Cap Stock Fund is
subcontracted to Eagle and the Company's Awad Asset Management subsidiary.
Unaffiliated advisors are employed for the Municipal Money Market Fund,
Capital Appreciation Trust, High Yield Bond Fund and the Eagle International
Equity Portfolio.
Heritage also serves as an advisor to Raymond James Bank to make
recommendations and monitor the Bank's investment portfolio of mortgage-
backed securities.
Net assets at September 24, 1999 were as follows (in thousands):
Heritage Cash Trust:
Money Market Fund $3,197,446
Municipal Money Market Fund 644,679
Heritage Capital Appreciation Trust 228,855
Heritage Income-Growth Trust 93,419
Heritage Income Trust:
High Yield Bond Fund 50,845
Intermediate Government Fund 13,369
Heritage Series Trust:
Small Cap Stock Fund 201,312
Growth Equity Fund 139,028
Eagle International Equity Portfolio 15,127
Value Equity Fund 27,179
Mid Cap Stock Fund 26,535
Aggressive Growth Fund 47,975
Heritage U.S. Govt Income Fund
(closed-end) 35,643
First Puerto Rico Growth & Income Fund
(available to Puerto Rico Residents only) 59,335
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$4,780,747
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Awad Asset Management, Inc.
Awad Asset Management, Inc. ("Awad") is primarily a small and mid-cap
equity portfolio management subsidiary. Clients pay fees and/or commissions
for management of their accounts. Present fees range from .50% to 1.0% of
asset balances annually. In addition to private accounts, Awad also manages
a portion of the Heritage Small Cap Stock Fund Portfolio and other non-
affiliated mutual fund portfolios. Exclusive of the Heritage Small Cap Fund,
Awad had approximately $569 million under management at September 24, 1999.
RJA - Asset Management Services
RJA's Asset Management Services ("AMS") Department manages programs
which offer investment advisory services to clients, as well as certain non-
advisory programs which offer fee-based alternatives to traditional
commission charges for transactions. The primary advisory service offered
by AMS is the Investment Advisory Services ("IAS") program. IAS maintains
an approved list of investment managers, most of which are unaffiliated with
the Company, establishes custodial facilities, monitors performance of
client accounts, provides clients with accounting and other administrative
services and assists investment managers with certain trading management
activities. IAS earns fees generally ranging from .50% to 1.0% of asset
balances per annum, a portion of which is paid to investment managers who
direct the investment of the clients' accounts. At September 24, 1999, this
program had approximately $3.1 billion in assets under management through
agreements with 29 independent investment advisors and Awad.
Passport and a similar program offered by RJFS, known as IMPAC, offer
both a discretionary and non-discretionary advisory fee alternative that
allows clients to pay a quarterly fee plus low transaction charges in lieu
of commissions. Fees are based on the individual account size and are also
dependent on the type of securities in the accounts. In addition, AMS
collects an administrative fee of up to .175% of asset balances annually,
for which clients receive quarterly performance reporting and other
services. As of September 24, 1999, Passport and IMPAC had approximately
$5.23 billion and $1.43 billion in assets, respectively, serviced by
Financial Advisors.
In addition to the foregoing programs, AMS also offers fee based
programs to clients who have contracted for portfolio management services
from outside money managers that are not a part of the IAS program.
Further, AMS administers other less significant asset-based fee programs.
OTHER
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Aside from the retail and institutional distribution, investment
banking and asset management businesses, the Company operates a stock
borrow/stock loan program, offers bank and trust services, and has several
international joint ventures. These operations are grouped in the "other"
segment.
RJA - Stock Borrow/Stock Loan
RJA commenced this program in July 1987, involving the borrowing and
lending of securities from and to other broker-dealers. RJA generally acts
as an intermediary between broker-dealers and other financial institutions,
where it borrows from one party and lends to another. The borrower of the
securities puts up a cash deposit, commonly 102% of the market value of the
securities. This deposit, which is adjusted daily to reflect changes in
current market value, earns interest at a negotiated rate.
Raymond James Bank, FSB
Raymond James Bank, FSB, ("RJBank") received its federal savings bank
charter on May 6, 1994. RJBank provides residential, consumer and commercial
loans as well as FDIC-insured deposit accounts to clients of RJF's broker-
dealer subsidiaries and to the general public nationwide.
Access to RJBank's products and services is available nationwide
through the offices of its affiliated investment firms as well as through
convenient telephonic and electronic banking services, including debit
cards, ATM/point-of-sale, 24-hour TeleDirect automated telephone banking,
Internet Banking with Electronic Bill-Paying, checkwriting, direct deposit
and ACH payments. As of September 24, 1999, RJBank had total assets in
excess of $635 million.
Raymond James Trust Company
Sound Trust Company
Raymond James Trust Company was chartered and opened for business in
1992. This wholly-owned subsidiary of RJF was formed primarily to provide
personal trust services to existing clients of the broker-dealer
subsidiaries. Portfolio management of trust assets is often subcontracted
to the asset management operations of the Company. In October 1993, the
Company acquired a second trust company, Sound Trust Company, in Tacoma,
Washington. This subsidiary provides personal trust services primarily to
broker-dealer clients outside the State of Florida. These two subsidiaries
had a combined total of $548 million in client assets at September 24, 1999.
Raymond James Credit Corporation
Raymond James Credit Corporation ("RJCC") was formed in 1996 as a
regulated finance company. To date, this subsidiary has primarily provided
loans collateralized by control or restricted securities. RJCC is funded
with internal capital and by a $50 million line of credit with a commercial
bank. At September 24, 1999, RJCC had $66 million in outstanding loans to
customers.
Raymond James International Holdings, Inc.
Raymond James International Holdings, Inc. ("RJIH") is a Delaware
corporation formed in 1994 to house the Company's foreign operations. RJIH
now has ownership in unconsolidated joint ventures in Argentina, India,
Turkey and France. These joint ventures operate in securities brokerage,
investment banking and asset management.
COMPETITION
The Company's subsidiaries compete with many larger, better capitalized
providers of financial services, including other securities firms, some of
which are affiliated with major financial services companies, insurance
companies, banking institutions and other organizations. They also compete
with a number of firms offering discount brokerage services, usually with
lower levels of service, to individual clients. The Company's subsidiaries
compete principally on the basis of service, product selection, location and
reputation in local markets.
REGULATION
Most of the Company's operations are subject to regulatory oversight by
governmental agencies and/or self regulatory organizations.
The securities industry in the United States is subject to extensive
regulation under federal and state laws. The SEC is the federal agency
charged with administration of the federal securities laws. Much of the
regulation of broker-dealers, however, has been delegated to self-regulatory
organizations, principally the NASD and the NYSE. These self-regulatory
organizations adopt rules (which are subject to approval by the SEC) for
governing the industry and conduct periodic examinations of member broker-
dealers. Securities firms are also subject to regulation by state
securities commissions in the states in which they are registered. RJA and
RJFS are currently registered in all 50 states.
See Note 13 of the Notes to Consolidated Financial Statements for
further description of certain SEC regulations pertaining to broker-dealer
Net Capital Requirements.
The Company's investment advisory operations, including the Company-
sponsored mutual funds, are also subject to extensive regulation by the SEC.
Raymond James Bank, FSB, is subject to regulation by various federal
banking agencies, including the Office of Thrift Supervision and the Federal
Deposit Insurance Corporation.
The Company's two trust companies are subject to regulation by the
states in which they are chartered.
ITEM 2. PROPERTIES
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The Company owns a 610,000 square foot headquarters complex in St.
Petersburg, FL (three home office buildings, a bank and trust headquarters
building, and a five deck parking garage). The complex covers approximately
forty-five acres, and the Company has the ability to build up to another
460,000 square feet on this site. The Company also leases 70,000 square feet
in a nearby office building, and has committed to lease an additional 30,000
sq. feet as of April 2000. In addition the Company acquired a 45,000 square
foot, eight story building in Detroit, Michigan as part of the Roney
transaction. With the exception of a Company-owned RJA branch office
building in Crystal River, FL, RJA branches are leased with various
expiration dates through 2008. The RJFS Investment Management division
headquarters office in Atlanta and Sound Trust Company facility in Seattle
are also under lease. See Note 9 to Consolidated Financial Statements for
further information regarding the Company's leases.
Leases for branch offices of RJFS are the responsibility of the
respective independent contractor registered representatives.
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Company is a defendant or co-defendant in various lawsuits
incidental to its securities business. The Company is contesting the
allegations of the complaints in these cases and believes that there are
meritorious defenses in each of these lawsuits. In view of the number and
diversity of claims against the Company, the number of jurisdictions in which
litigation is pending and the inherent difficulty of predicting the outcome
of litigation and other claims, the Company cannot state with certainty what
the eventual outcome of pending litigation or other claims will be.
As a result of the extensive regulation of the securities industry, the
Company's broker-dealer subsidiaries are subject to regular reviews and
inspections by regulatory authorities and self regulatory organizations which
can result in imposition of sanctions for regulatory violations, ranging from
non-monetary censure to fines and, in serious cases, temporary or permanent
suspension from business. In addition, from time to time regulatory agencies
and self regulatory organizations institute investigations into industry
practices which can result in the imposition of such sanctions. During the
course of the past fiscal year, the Company's primary broker-dealer
subsidiary resolved a number of regulatory and self regulatory investigations
by payment of fines that were immaterial in amount.
The Securities and Exchange Commission has initiated an investigation of
certain trading practices in the over-the-counter securities market during
1994 and 1995. Along with many other market makers, the Company has
submitted documents and cooperated with the S.E.C. in this investigation. The
Company does not anticipate that the resolution of this proceeding will have
a material effect on its business or operations. The Securities and Exchange
Commission, the Internal Revenue Service, and the National Association of
Securities Dealers, Inc., have been conducting reviews of investment banking
practices in connection with advance refunding transactions for
municipalities. The investigation has focused on the mark-ups charged by
investment banking firms for securities purchased by municipalities in
connection with these refundings. Along with other participants in the
municipal bond market, the Company has been providing documents and
furnishing information to regulators in connection with this investigation,
which is ongoing.
In the opinion of management, based on discussions with counsel, the
outcome of these matters will not result in a material adverse effect on the
financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
----------------------------------------
AND RELATED SHAREHOLDER MATTERS
-------------------------------
The Company's common stock is traded on the NYSE under the symbol "RJF".
The following table sets forth for the periods indicated the high and low
trades for the common stock.
1999 1998
----------------- -----------------
High Low High Low
------ ------ ------ ------
First Quarter $26.25 $16.75 $26.63 $18.00
Second Quarter 22.63 18.00 29.13 21.63
Third Quarter 24.19 18.88 36.50 28.50
Fourth Quarter 25.19 18.81 32.63 17.07
Since the Company initiated payment of a cash dividend in 1985,
there have been 17 increases in the dividend rate, 7 of which were in the
form of stock splits and stock dividends.
The payment of dividends on the Company's common stock is subject to the
availability of funds from the Company's subsidiaries, including the broker-
dealer subsidiaries which may be subject to restrictions under the net
capital rules of the SEC and the NYSE. Such restrictions have never become
applicable with respect to the Company's dividend payments. (See Note 13 of
the Notes to Consolidated Financial Statements.)
At December 14, 1999 there were approximately 11,000 holders of the
Company's common stock.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
(in thousands, except per share data)
Year Ended
-----------------------------------------------------------
Sept. 24, Sept. 25, Sept. 26, Sept. 27, Sept. 29,
1999 1998 1997** 1996 1995
Operating Results: ---------- ---------- ----------- ----------- ----------
- ------------------
Revenues $1,232,206 $1,082,907 $ 927,607 $ 721,752 $ 554,070
Net income $ 85,090 $ 92,704 $ 98,915 $ 65,978 $ 46,141
Net income per
share - basic:* $ 1.79 $ 1.92 $ 2.09 $ 1.41 $ .99
Net income per
share - diluted:* $ 1.76 $ 1.86 $ 2.04 $ 1.39 $ .98
Weighted average
common shares
outstanding - basic:* 47,606 48,160 47,383 46,781 46,607
Weighted average common
and common equivalent
shares outstanding -
diluted:* 48,449 49,951 48,387 47,307 47,083
Cash dividends declared
per share* $ .28 $ .24 $ .21 $ .17 $ .16
Financial Condition:
- --------------------
Total assets $5,030,715 $3,852,737 $3,278,645 $2,566,381 $2,012,715
Long-term debt $ 44,183 $ 44,767 $ 12,715 $ 12,909 $ 13,084
Shareholders' equity$ 558,486 $ 509,898 $ 423,276 $ 326,632 $ 266,193
Shares outstanding* 47,242 48,268 47,695 47,012 46,382
Equity per share
at end of period* $ 11.82 $ 10.56 $ 8.87 $ 6.95 $ 5.74
* Gives effect to the common stock splits paid on April 2, 1998
and April 3, 1997.
** Amounts include the $30.6 million gain on the sale of Liberty
Investment Management, Inc. Excluding this gain, revenues were
$896,961,000, net income was $80,126,000, and basic and diluted
net income per share were $1.69 and $1.66, respectively. See Note
16 of the Notes to Consolidated Financial Statements for details.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
-------------------------------------------------------------
AND FINANCIAL CONDITION
-----------------------
Results of Operations - Three Years Ended September 24, 1999
- ------------------------------------------------------------
Fiscal 1999 was the Company's fifteenth consecutive year of record
revenues, with total revenues of $1,232,206,000 representing an increase of
14% over the prior year. In contrast, net income of $85,090,000 represented a
decline of 8% from the prior year. Earnings were negatively impacted by
costs associated with a corporate branding campaign, the creation of Raymond
James Financial Services, Inc. ("RJFS"), the expansion of the corporate
headquarters, Y2K preparation, and the acquisition of Roney & Co. ("Roney").
Not only did the Company incur the aforementioned expenses, certain of
which will be non-recurring, but operational expenses grew at a rate
exceeding revenue growth and investment banking results were down sharply.
The Company's retail business, the independent contractor portion in
particular, continued its steady growth with exceptionally strong recruiting
results. The Company has also been successful in its focus on non-
transaction dependent fee revenues, such as investment advisory fees,
interest and asset-based commission alternatives. For fiscal 1999, such fee-
based revenues represented approximately 44% of total revenues, up from 31%
five years ago.
Year Ended
------------------------------------------------
Sept. 24, % Incr. Sept. 25, % Incr. Sept. 26,
1999* (Decr.) 1998 (Decr.) 1997
---------- ------- --------- ------- ---------
Revenues: (000's) (000's) (000's)
Securities commissions
and fees $ 758,136 20% $ 631,661 23% $ 514,964
Investment banking 74,748 (32%) 109,705 1% 109,088
Investment advisory fees 91,920 16% 79,485 44% 55,194
Interest 229,806 14% 202,255 30% 155,746
Correspondent clearing 4,655 5% 4,429 (2%) 4,502
Net trading profits 17,034 170% 6,300 (51%) 12,797
Financial service fees 36,101 46% 24,797 19% 20,786
Other 19,806 (18%) 24,275 2% 23,884
---------- ---------- ----------
1,232,206 14% 1,082,907 21% 896,961
Gain on sale of Liberty - - 30,646
---------- ---------- ----------
Total revenues $1,232,206 14% $1,082,907 17% $ 927,607
========== ========== ==========
* Includes $36,177 from Roney.
The record transaction volumes in fiscal years 1999, 1998 and 1997
resulted in increased securities commissions from the sales of all product
lines during the period, with the largest increases occurring in equities and
annuities.
YEAR ENDED
-------------------------------------------------
Sept. 24, %Incr. Sept. 25, Sept. 26,
1999 (Decr.) 1998 %Incr. 1997
----------- ------- --------- ------ ---------
Number of retail Financial
Advisors at yearend* 3,864 24% 3,117 10% 2,825
Retail commission revenues
(000's) $ 631,572 21% $ 523,890 24% $ 422,316
Retail new issue sales credits
(000's) $ 16,345 (35%) $ 24,976 2% $ 24,472
Number of institutional
salesmen at yearend 150 12% 134 9% 123
Institutional commission
revenues (000's) $ 126,564 17% $ 107,771 16% $ 92,648
Institutional new issue sales
credits (000's) $ 21,055 (20%) $ 26,470 14% $ 23,167
Number of trades processed 4,107,000 23% 3,328,000 19% 2,803,000
* Includes Roney. Excluding Roney: 3,548 Financial Advisors, a 14%
increase.
Investment banking revenues, including new issue sales credits,
decreased considerably to $75 million in 1999 from the record $110 million in
the prior year. Fiscal 1997 was a record year for equity underwriting
activity, both in number of new issues and average offering size. This pace
continued only through the first half of fiscal 1998, at which time small and
mid-cap stocks began to weaken, particularly in certain industry sectors,
which severely slowed the new issue deal flow. Investment banking revenues
in fiscal 1999 were well below recent prior years as a result of several of
the Company's major sectors of emphasis (energy, real estate and health care)
being out of favor for most of the year and the Company being behind schedule
in developing a significant technology investment banking and research
effort. The number of managed and co-managed underwritings, the vast
majority of which were equity-related offerings, and the dollar volume of
these transactions were as follows: 1999 - 23 new issues for $3.0 billion;
1998 - 57 new issues for $6.0 billion; and 1997 - 65 new issues for $7.8
billion. Merger and acquisition fees, which have been a consistent revenue
source during the past few years, also declined in fiscal 1999 to $16 million
after reaching a record $20 million in 1998.
Investment advisory fees have risen commensurate with the generally
strong growth in assets under management, which has shown an annual 21%
increase for the period. Asset management growth has benefited from both
overall asset appreciation and net sales during the past two years. For
fiscal 1997, investment advisory fees included $2.6 million in fees from
Liberty, which was sold in January 1997. During 1998, the Company's real
estate portfolio management operation was sold, and its employees were
transferred to the new owner. This transaction generated $3.7 million of
performance fees, which are included in investment advisory fees.
Sept. 24, %Incr. Sept. 25, %Incr. Sept. 26,
1999 (Decr.) 1998 (Decr.) 1997
----------- ------- ----------- ------- ----------
(000's) (000's) (000's)
Eagle Asset Mgmt., Inc.* $ 5,138,064 7% $ 4,804,967 29% $3,714,407
Heritage Family of Mutual
Funds 4,780,747 21% 3,947,394 25% 3,160,910
Investment Advisory Services 3,110,000 73% 1,798,260 25% 1,433,018
Awad Asset Management* 569,000 (13%) 656,336 (19%) 814,315
Carillon Asset Management - - 53,448
----------- ----------- ----------
Total Financial Assets
Under Management $13,597,811 21% $11,206,957 22% $9,176,098
=========== =========== ==========
* Excludes balances included in the Heritage Family of Mutual Funds.
Net interest income continues to be a growing source of recurring
earnings. The components of interest earnings are as follows:
Sept. 24, Sept. 25, Sept. 26,
1999 1998 1997
--------- --------- ---------
(balances in 000's)
Margin balances:
Average balance $ 908,671 $ 701,742 $ 480,203
Average rate 7.6% 8.2% 8.1%
---------- ---------- ----------
$ 69,059 $ 57,697 $39,087
Assets segregated
pursuant to Federal
Regulations:
Average balance 1,063,350 776,768 601,902
Average rate 4.9% 5.6% 5.3%
---------- ---------- ----------
51,630 43,163 32,148
Stock borrowed:
Average balance 1,270,112 1,154,703 1,004,735
Average rate 4.6% 4.9% 4.8%
---------- ---------- ----------
58,209 57,049 48,606
Raymond James Bank, FSB 28,756 22,937 17,739
Other interest revenue 22,152 21,409 18,166
------- ------- -------
Total interest revenue 229,806 202,255 155,746
------- ------- -------
Client interest program:
Average balance 1,540,966 1,201,398 880,026
Average rate 4.3% 4.8% 4.7%
--------- --------- --------
66,260 57,627 41,693
Stock loaned:
Average balance 1,292,791 1,119,287 980,000
Average rate 4.3% 4.7% 4.5%
--------- --------- ---------
55,590 53,200 44,238
Raymond James Bank, FSB 20,270 17,249 12,997
Other interest expense 9,374 2,933 2,413
-------- -------- --------
Total interest expense 151,494 131,009 101,341
-------- -------- --------
Net interest income $ 78,312* +10% $ 71,246 +31% $ 54,405
======== ======== ========
* Includes $2,383 from Roney.
Net trading profits increased dramatically over fiscal 1998, reflecting
improved corporate and government bond trading results in addition to
somewhat improved over-the-counter equity trading results. However, due to
the changes in the over-the-counter equity trading regulations and practices
in fiscal 1998, the Company expects that flat or negative over-the-counter
equity trading results will be the norm, not the exception. Through fiscal
1997, the Company's trading profits had remained relatively consistent,
derived primarily from client order flow in both over-the-counter equity and
fixed income securities.
The growth in the Company's retail client base during the past two
fiscal years has led to increased financial service fees. In the past two
years there has been a 54% increase in the number of IRA accounts, a 61%
increase in money market processing fees, and a 151% increase in transaction
fees arising from retail asset-based fee account programs, an increasingly
popular alternative to the traditional commission-based pricing structure.
Other income is composed predominantly of postage and handling fees and
floor brokerage income. Fiscal 1998's other income also included $1.7
million related to the sale of the real estate portfolio and property
management operations and $2.4 million from the sale of the Company's
specialist operations on the Chicago Exchange. For the first half of 1998
and in previous years, other income included property management fees from
the operations which were sold by the Company in March 1998. These fees had
been increasing substantially through the years as the number of apartment
units under management increased. Other income in fiscal 1997 included a
gain of $2.5 million from the Company's sale of its former headquarters
building.
Year Ended
-----------------------------------------------
Sept. 24, % Incr. Sept. 25, % Incr. Sept. 26,
1999* (Decr.) 1998 (Decr.) 1997
----------- ------- --------- ------- ---------
Expenses: (000's) (000's) (000's)
Employee compensation:
Sales commissions $ 517,280 20% $430,556 24% $346,770
Administrative and
benefit costs 146,254 21% 120,935 25% 96,549
Incentive compensation 91,213 (6%) 96,723 3% 94,091
----------- -------- --------
Total employee compensation 754,747 16% 648,214 21% 537,410
Communications and information
processing 53,071 22% 43,485 16% 37,491
Occupancy and equipment 40,059 21% 33,029 22% 27,175
Clearance and floor brokerage 13,456 16% 11,607 (1%) 11,708
Interest 151,494 16% 131,009 29% 101,341
Business development 38,395 22% 31,514 52% 20,755
Other 43,465 29% 33,813 8% 31,212
---------- -------- --------
$1,094,687 17% $932,671 22% $767,092
========== ======== ========
* Includes $34,625 from Roney.
Sales commission expense again increased at a rate approximately
proportionate to the related revenues. The slightly higher increase in
Financial Advisor compensation in fiscal 1998 over the related revenue
reflects the increase in the proportion of independent contractor versus
employee Financial Advisors.
Administrative and benefit compensation costs had been increasing at a
rate consistent with the growth in total revenues. However, the fiscal 1999
increase exceeded the growth in revenues as a result of continued hiring to
support transaction volume, including the personnel acquired in the Roney
transaction, and the recruiting of investment bankers and research analysts
during a period of decreased investment banking revenues.
Incentive compensation expenses, including contributions to qualified
retirement plans, are based on departmental, subsidiary and firm-wide
profitability. Lower investment banking results in fiscal 1999 resulted in
significantly lower incentive compensation accruals for this area.
Simultaneously, improved results in other segments partially offset this
decline, holding the decrease in total incentive compensation expense to a
rate below the decrease in net income. In contrast, strong underwriting
activity in 1998 and 1997 resulted in record investment banking departmental
profits, having a dramatic impact on incentive compensation.
While the costs associated with overall growth continued to affect
communications and information processing, fiscal 1999 also included costs
associated with the integration of Roney, preparation for Y2K, and the merger
creating RJFS. The increases in communications and information processing
expense in fiscal 1998 and 1997 reflected the costs of further enhancement
and expansion of the Company's systems of internal communication and
information dissemination, as well as higher general business volume, which
gave rise to increased costs for telephone, printing and supplies.
The completion and occupancy of the third headquarters building in the
spring of 1998 gave rise to much of the increased occupancy and equipment
expenses for that year. Fiscal 1999 includes the first full annual effect of
this expansion.
For the first time in several years, clearing and floor brokerage
increased, a result of increased transaction volume and higher international
clearing costs. As in the past, clearing and floor brokerage expense
increased at a rate lower than the growth in related revenues due to the
increased productivity of floor brokers and other cost saving measures
implemented.
Several of the Company's branding initiatives impacted business
development in fiscal 1999, such as the first full year of the stadium naming
rights, general image advertising costs (primarily television), and
recruiting-related programs capitalizing on the creation of RJFS. In
addition, certain costs related to the Roney acquisition and subsequent
communication and training are included in this expense. Business
development expenses rose dramatically in 1998 due to increased advertising,
both to recruit Financial Advisors and increase brand name recognition;
increased travel and related expenses, particularly by the larger staff of
investment bankers and research analysts; the inception of the stadium naming
rights contract; and costs associated with larger conferences throughout the
Company's operations.
While the Company was able to hold other expenses relatively constant in
1998, these expenses increased from 1998 to 1999 at a pace exceeding the
growth in revenues. These expenses include fees paid to outside managers in
the Company's investment advisory services program, bank service charges,
legal expenses and provisions, and amortization of goodwill arising from the
Roney acquisition.
Year 2000
- ---------
The widespread use of computer programs that rely on two-digit date
programs to perform computations and decision-making functions may cause
computer systems to malfunction in the Year 2000 and lead to significant
business delays and disruptions in the U.S. and internationally.
The Company has revised all critical information technology (IT)
internal computer code that it has identified as requiring modification for
Year 2000 compliance, and has successfully tested the revised code for the
transition between December 29, 1999 and January 3, 2000; testing will
continue throughout 1999 and may be continued into January 2000 with respect
to other dates that could be affected by this problem. The company will be
limiting the introduction of new computer code during this period to protect
the integrity of the changes made during this year.
All of the Company's securities transactions are processed on software
provided by Securities Industry Software (SIS), a subsidiary of Automatic
Data Processing, Inc., and the Company has closely monitored the progress of
SIS in revising its software. Based on information received to date, the
Company believes that SIS completed revision and testing of its software on a
timely basis. The Company is also monitoring information received from third-
party vendors regarding their progress in modification of other software used
by the Company, as well as the progress of other industry suppliers, in
addressing this issue.
With respect to non-IT systems, primarily those located at its
headquarters campus and those provided by its telecommunications and
satellite service providers, the Company has completed the inventory of all
systems and confirmed the compliance status of its vendors. Most of these
vendors are major national or international companies which have been
addressing the Year 2000 issue for some time.
With the exception of those discussed below, all of the Company's
subsidiaries are substantially dependent upon the Company's Year 2000
compliance program. Raymond James Bank, FSB, Raymond James Trust Company and
Heritage Asset Management, Inc. have received revised computer software from
the third-party vendors on whom they are dependent and have completed testing
of these systems. Eagle Asset Management, Inc. has installed a new portfolio
management system which has been designed to be Year 2000 compliant and
completed testing of its mission critical systems in September 1999.
The Company has developed a contingency plan for mission critical
business functions. In accordance with industry requirements, the company
has established a command center which will operate 24 hours a day between
December 29, 1999 and January 3, 2000 to monitor the functioning of its
systems and processes.
The securities industry conducted a series of industry-wide tests for
Year 2000 compliance between April and July 1999; the Company participated in
all tests and did not experience any material problems relating to its Year
2000 code and data revisions. In general, representatives of the securities
industry were satisfied that the tests confirmed substantial success in
dealing with the Year 2000 issue. The testing process did identify a number
of minor communications problems, most of them unrelated to Year 2000 issues;
these problems were identified and successfully resolved during the course of
the testing.
The Company estimates that its costs for these efforts during this
fiscal year were approximately $2,500,000, an additional $800,000 will be
spent during fiscal 2000. Because many of the Company's basic operating
systems are provided by third party vendors, as indicated above, the
Company's costs for Year 2000 remediation have been substantially less than
the costs incurred by companies which have developed and maintain all their
own operating systems.
The impact of this problem on the securities industry will be material,
however, since virtually every aspect of the sale of securities and the
processing of transactions will be affected. Due to the enormous task facing
the securities industry, the interdependent nature of securities
transactions, and reliance on third parties such as utilities and
telecommunications providers, the Company may be adversely affected by this
problem in the Year 2000 depending on whether it and the entities with whom
it does business address this issue successfully.
Liquidity and Capital Resources
- -------------------------------
Net cash from operating activities during the current year was $250
million. Cash was generated by increased stock loan balances exceeding the
increased stock borrowed balances, increased balances in the client interest
program net of increased customer margin balances, decreased broker-dealer
receivables net of increased trading account securities, and the fluctuations
in various other asset and liability accounts.
Investing activities required $107 million during the year. The cash
used for the purchase of Roney included the $71 million purchase price net of
the $3 million in cash received as part of Roney. Additions to fixed assets
consumed $21 million, predominantly for the purchase of computers, office
furniture and equipment. Net purchases, sales and maturations of investments
required $18 million. These investments were primarily mortgage-backed
securities purchased by Raymond James Bank, FSB ("RJBank").
Financing activities used $33 million, the result of the purchase of
treasury stock and the payment of cash dividends net of the exercise of stock
options and employee stock purchases.
The Company has loans payable consisting of debt in the amount of $39
million in the form of a mortgage on its headquarters office complex, a $5
million Federal Home Loan Bank advance at RJBank, $60 million at Raymond
James Credit Corporation, $65 million in short-term financing of customer
settlements and $33 million at the parent company to fund the Roney
acquisition. Subsequent to yearend the Company secured a $50 million term
loan to repay the $33 million advance on its line of credit.
The parent company has a commitment from a group of commercial banks for
an unsecured $100 million line of credit for general corporate purposes. In
addition, Raymond James & Associates, Inc. has uncommitted bank lines of
credit aggregating $480 million.
The Company's broker-dealer subsidiaries are subject to requirements of
the SEC relating to liquidity and capital standards (see Notes to
Consolidated Financial Statements).
Effects of Recently Issued Accounting Standards
- -----------------------------------------------
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position ("SOP") No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use", effective for fiscal years beginning
after December 15, 1998. SOP 98-1 requires that certain costs of computer
software developed or obtained for internal use be capitalized and amortized
over the useful life of the related software. The Company currently expenses
the costs of all software development in the period in which it is incurred.
The Company intends to adopt this statement beginning in fiscal 2000 and does
not anticipate that it will have a material impact on the financial position,
results of operations, earnings per share or cash flows.
Market Risk
- -----------
During fiscal 1997 the Securities and Exchange Commission 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. The Company manages risk exposure involving
various levels of management. Position limits in trading and inventory
accounts are established and monitored on an ongoing basis. Current and
proposed underwriting, corporate development, merchant banking and other
commitments are subject to due diligence reviews by senior management, as
well as professionals in the appropriate business and support units involved.
Credit risk related to various financing activities is reduced by the
industry practice of obtaining and maintaining collateral. The Company
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 Company maintains inventories as detailed in Note 2 to the
Consolidated Financial Statements. The fair value of these securities at
September 24, 1999, was $181 million in long positions and $33 million in
short positions. The Company performed an entity-wide analysis of the
Company's financial instruments and assessed the related risk and materiality
in accordance with the rules. Based on this analysis, in the opinion of
management, the market risk associated with the Company's financial
instruments at September 24, 1999 will not have a material adverse effect on
the consolidated financial position or results of operations of the Company.
Effects of Inflation
- --------------------
The Company's assets are primarily liquid in nature and are not
significantly affected by inflation. Management believes that the
replacement cost of property and equipment would not materially affect
operating results. However, the rate of inflation affects the Company's
expenses, including employee compensation and benefits, communications and
occupancy, which may not be readily recoverable through charges for services
provided by the Company.
Factors Affecting "Forward-Looking Statements"
- ----------------------------------------------
From time to time, the Company may publish "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities and Exchange Act of 1934, as amended, or
make oral statements that constitute forward-looking statements. These
forward-looking statements may relate to such matters as anticipated
financial performance future revenues or earnings, business prospects,
projected ventures, new products, anticipated market performance, and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. In order to comply with the
terms of the safe harbor, the Company cautions readers that a variety of
factors could cause the Company's actual results to differ materially from
the anticipated results or other expectations expressed in the Company's
forward-looking statements. These risks and uncertainties, many of which are
beyond the Company's control, include, but are not limited to: (i)
transaction volume in the securities markets, (ii) the volatility of the
securities markets, (iii) fluctuations in interest rates, (iv) changes in
regulatory requirements which could affect the cost of doing business, (v)
fluctuations in currency rates, (vi) general economic conditions, both
domestic and international, (vii) changes in the rate of inflation and
related impact on securities markets, (viii) competition from existing
financial institutions and other new participants in the securities markets,
(ix) legal developments affecting the litigation experience of the securities
industry, (x) changes in federal and state tax laws which could affect the
popularity of products sold by the Company, and (xi) disruptions in the
Company's business or general economic conditions caused by computer
malfunctions in 2000. The Company does not undertake any obligation to
publicly update or revise any forward-looking statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
(a) Financial statements, schedules and exhibits filed under this item are
listed in the index appearing on page F-1 of this report.
(b) QUARTERLY FINANCIAL INFORMATION
(In thousands, except per share data)
1999 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
-------- -------- -------- --------
Revenues $264,507 $299,191 $324,390 $344,118
Income before income taxes 28,337 35,319 37,989 35,874
Net income 17,479 21,869 23,490 22,252
Net income per share - basic .36 .46 .50 .47
Net income per share - diluted .36 .45 .49 .46
1998 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
-------- -------- -------- --------
Revenues $252,304 $267,538 $275,791 $287,274
Income before income taxes 36,886 40,534 36,341 36,475
Net income 22,745 24,700 22,791 22,468
Net income per share - basic* .48 .51 .47 .46
Net income per share - diluted* .45 .50 .46 .45
* Gives effect to the 3-for-2 common stock split paid on April 2,
1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Executive officers of the registrant (including its significant
subsidiaries) who are not Directors of the registrant are as follows:
Richard K. Riess 50 Executive Vice President - RJF,
President and CEO of Eagle, and
Managing Director - Asset Management.
Jeffrey P. Julien 43 Vice President - Finance and Chief
Financial Officer, Director and/or
officer of certain RJF subsidiaries.
Barry S. Augenbraun 60 Senior Vice President and
Corporate Secretary.
Jennifer C. Ackart 35 Controller.
The information required by Item 10 relating to Directors of the registrant
is incorporated herein by reference to the registrant's definitive proxy
statement for the 1999 Annual Meeting of Shareholders. Such proxy statement
will be filed with the SEC prior to January 10, 2000.
ITEMS 11,12 AND 13.
The information required by Items 11, 12 and 13 is incorporated herein
by reference to the registrant's definitive proxy statement for the 2000
Annual Meeting of Shareholders. Such proxy statement will be filed with the
SEC prior to January 10, 2000.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
-------------------------------------------
REPORTS ON FORM 8-K
-------------------
(a) Exhibits required by this Item are either listed in the index appearing
on
page F-1 of this report or have been previously filed with the SEC.
(b) Financial statement schedules required by this Item are listed in the
index
appearing on page F-1 of this report.
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, in the City of
St. Petersburg, State of Florida, on the 17th day of December, 1999.
RAYMOND JAMES FINANCIAL, INC.
By /s/ THOMAS A. JAMES
-----------------------------
Thomas A. James, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ THOMAS A. JAMES Chairman and Chief December 17, 1999
- --------------------------
Thomas A. James Executive Officer
/s/ FRANCIS S. GODBOLD President and Director December 17, 1999
- --------------------------
Francis S. Godbold
/s/ M. ANTHONY GREENE Executive Vice President December 17, 1999
- --------------------------
M. Anthony Greene and Director
/s/ J. STEPHEN PUTNAM Executive Vice President December 17, 1999
- --------------------------
J. Stephen Putnam and Director
/s/ ROBERT F. SHUCK Vice Chairman and Director December 17, 1999
- --------------------------
Robert F. Shuck
/s/ JEFFREY P. JULIEN Vice President - Finance December 17, 1999
- --------------------------
Jeffrey P. Julien (Chief Financial Officer)
/s/ JENNIFER C. ACKART Controller (Chief December 17, 1999
- --------------------------
Jennifer C. Ackart Accounting Officer)
/s/ ANGELA M. BIEVER Director December 17, 1999
- --------------------------
Angela M. Biever
/s/ JONATHAN A. BULKLEY Director December 17, 1999
- --------------------------
Jonathan A. Bulkley
/s/ ELAINE L. CHAO Director December 17, 1999
- --------------------------
Elaine L. Chao
/s/ THOMAS S. FRANKE Director December 17, 1999
- --------------------------
Thomas S. Franke
/s/ HARVARD H. HILL, JR. Director December 17, 1999
- --------------------------
Harvard H. Hill, Jr.
/s/ HUNTINGTON A. JAMES Director December 17, 1999
- --------------------------
Huntington A. James
/s/ PAUL W. MARSHALL Director December 17, 1999
- --------------------------
Paul W. Marshall
/s/ DENNIS W. ZANK Director December 17, 1999
- --------------------------
Dennis W. Zank
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
- ----------------------------------------------
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
- -----------------------------------------------------
FINANCIAL STATEMENTS PAGE(S)
- --------------------
Reports and Consents of Independent Accountants F-2-3
Consolidated Statement of Financial Condition
as of September 24, 1999 and September 25, 1998 F-4
Consolidated Statement of Income for the Three Years
Ended September 24, 1999 F-5
Consolidated Statement of Changes in Shareholders' Equity
for the Three Years Ended September 24, 1999 F-6
Consolidated Statement of Cash Flows
for the Three Years Ended September 24, 1999 F-7-8
Summary of Significant Accounting Policies F-9-12
EXHIBITS
- --------
Notes to Consolidated Financial Statements F-13-26
3.1 Amended and restated Articles of Incorporation of Raymond James Financial,
Inc. as filed with the Secretary of State Florida on March 9, 1998, and
as Exhibit 3 of Form 10Q filed on May 11, 1998
3.2 Amended and restated By-Laws of the Company, filed as Exhibit 3
of Form 10Q filed February 9, 1998
10.1 Raymond James Financial, Inc. Amended Stock Option Plan for Outside
Directors, dated December 12, 1986, incorporated by reference to
Exhibit 4.1 (b) to Registration Statement on Form S-8, No. 33-38350
10.2 Raymond James Financial, Inc. 1992 Incentive Stock Option Plan effective
August 20, 1992, incorporated by reference to Exhibit 4.1 to Registration
Statement on Form S-8, No. 33-60608; and amended on Form S-8, No. 333-
59449 filed July 20, 1998
10.3 Raymond James Financial, Inc. Deferred Management Bonus
Plan, effective as of October 1, 1989
10.4 Raymond James Financial, Inc. 1996 Stock Option Plan for
Key Management Personnel, dated November 21, 1996 and Incorporated by
reference as filed with the Company's Form 10-K on December 24, 1998
10.5 Termination and Release Agreement between Liberty
Asset Management, Inc. and Raymond James Financial, Inc. and Incorporated
by reference as filed with the Company's Form 10-K on December 24, 1997
10.6 Raymond James Financial, Inc.'s 1999 Employee Stock
Purchase Plan S-8, No. 333-68821, filed December 14, 1998
10.7 Purchase agreement between BANK ONE CORPORATION as seller, and RAYMOND
JAMES FINANCIAL, INC., filed as Exhibit 10 of Form 10Q filed May 7, 1999
10.8 Term Credit Agreement for $50 million dated as of October 26, 1999
10.9 Revolving Credit Agreement for $100 million dated as of October 26, 1999
11 Computation of Earnings per Share X-1
21 List of Subsidiaries X-2
23 Consent of Independent Accountants F-2-3
27 Financial Data Schedule - EDGAR version only
* Incorporated by reference as filed with the Company's Form 10-K on December
24, 1997.
** Incorporated by reference as filed with the Company's Form 10-K on December
24, 1998.
SCHEDULES AND EXHIBITS EXCLUDED
- -------------------------------
All schedules and exhibits not included are not applicable, not
required or would contain information which is included in the Consolidated
Financial Statements, Summary of Significant Accounting Policies, or the
Notes to Consolidated Financial Statements.
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors and Shareholders of
Raymond James Financial, Inc.
In our opinion, based upon our audits and the report of other auditors, the
accompanying consolidated financial statements listed in the index
appearing on page F-1 present fairly, in all material respects, the
financial position of Raymond James Financial, Inc. and its subsidiaries at
September 24, 1999 and September 25, 1998, and the results of their
operations and their cash flows for each of the three years in the period
ended September 24, 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
did not audit the financial statements of Raymond James Bank, FSB, a wholly-
owned subsidiary, which statements reflect total assets of $638,970,000 and
$510,580,000 at September 24, 1999 and September 25, 1998, respectively,
and total revenues of $29,200,000, $23,199,000 and $17,712,000 for each of
the three years in the period ended September 24, 1999. Those statements
were audited by other auditors whose report thereon has been furnished to
us, and our opinion expressed herein, insofar as it relates to the amounts
included for Raymond James Bank, FSB, is based solely on the report of the
other auditors. We conducted our audits of the consolidated financial
statements in accordance with generally accepted auditing standards, which
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, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits and the report of other auditors provide a reasonable basis
for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
October 19, 1999
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
- ----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 333-68821, 333-59449 and 33-38390) of Raymond
James Financial, Inc. of our report dated October 19, 1999 appearing on
page F-2 of this Form 10-K.
/s/ PricewaterhouseCoopers LLP
December 10, 1999
Independent Auditors' Report
The Board of Directors
Raymond James Bank, FSB (A wholly-owned
subsidiary of Raymond James Financial, Inc.):
We have audited the balance sheets of Raymond James Bank, FSB (A
wholly-owned subsidiary of Raymond James Financial, Inc.) as of September
30, 1999 and 1998, and the related statements of income, stockholder's
equity and comprehensive income, and cash flows for the years then ended.
These financial statements are the responsibility of the Bank's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 Raymond James Bank, FSB
(A wholly-owned subsidiary of Raymond James Financial, Inc.) at September
30, 1999 and 1998, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Tampa, Florida
October 29, 1999
The Board of Directors
Raymond James Bank, FSB:
We consent to the inclusion of our report dated October 29, 1999, with
respect to the balance sheets of Raymond James Bank, FSB as of September 30,
1999 and 1998, and the related statements of income, stockholder's equity
and comprehensive income, and cash flows for each of the years then ended,
which report appears in the Form 10-K of Raymond James Financial, Inc. dated
September 30, 1999.
/s/ KPMG LLP
Tampa, Florida
December 21, 1999
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
---------------------------------------------
(in thousands, except share amounts)
September 24, September 25,
1999 1998
------------- -------------
ASSETS
Cash and cash equivalents $ 250,855 $ 296,817
Assets segregated pursuant to Federal Regulations:
Cash and cash equivalents 9 1
Securities purchased under agreements to resell 1,102,979 946,723
Securities owned:
Trading and investment account securities 180,967 105,892
Available for sale securities 400,143 385,676
Receivables:
Clients, net 1,447,618 893,839
Stock borrowed 1,277,692 852,744
Brokers, dealers and clearing organizations 34,670 112,838
Other 69,339 62,722
Investment in leveraged leases 23,950 23,297
Property and equipment, net 91,335 81,372
Deferred income taxes, net 39,631 32,841
Deposits with clearing organizations 24,634 21,206
Intangible assets 34,866 817
Prepaid expenses and other assets 52,027 35,952
----------- -----------
$5,030,715 $3,852,737
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable $ 201,504 $ 44,767
Payables:
Clients 2,524,352 2,126,699
Stock loaned 1,378,821 828,102
Brokers, dealers and clearing organizations 55,722 43,227
Trade and other 101,772 99,690
Trading account securities sold but not yet
purchased 33,400 30,841
Accrued compensation and commissions 172,066 158,539
Income taxes payable 4,592 10,974
----------- -----------
4,472,229 3,342,839
----------- -----------
Commitments and contingencies (Note 10) - -
Shareholders' equity:
Preferred stock; $.10 par value; authorized
10,000,000 shares; issued and outstanding -0- shares - -
Common stock; $.01 par value; authorized
100,000,000 shares; issued 48,997,995 shares 490 490
Additional paid-in capital 58,023 57,777
Other Comprehensive Income (1,076) 114
Retained earnings 530,885 459,099
----------- -----------
588,322 517,480
Less: 1,755,585 and 730,118 common shares
in treasury, at cost (29,836) (7,582)
----------- -----------
558,486 509,898
----------- -----------
$5,030,715 $3,852,737
=========== ===========
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are integral parts of these financial
statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(in thousands, except per share amounts)
Year Ended
---------------------------------------------
September 24, September 25, September 26,
1999 1998 1997
------------- ------------- -------------
Revenues:
Securities commissions and fees $ 758,136 $ 631,661 $ 514,964
Investment banking 74,748 109,705 109,088
Investment advisory fees 91,920 79,485 55,194
Interest 229,806 202,255 155,746
Correspondent clearing 4,655 4,429 4,502
Net trading profits 17,034 6,300 12,797
Financial service fees 36,101 24,797 20,786
Other 19,806 24,275 23,884
Gain on sale of Liberty
Investment Management, Inc.
(Note 16) - - 30,646
---------- ---------- ---------
1,232,206 1,082,907 927,607
---------- ---------- ---------
Expenses:
Employee compensation and benefits 754,747 648,214 537,410
Communications and information
processing 53,071 43,485 37,491
Occupancy and equipment 40,059 33,029 27,175
Clearance and floor brokerage 13,456 11,607 11,708
Interest 151,494 131,009 101,341
Business development 38,395 31,514 20,755
Other 43,465 33,813 31,212
---------- ---------- ---------
1,094,687 932,671 767,092
---------- ---------- ---------
Income before provision for
income taxes 137,519 150,236 160,515
Provision for income taxes 52,429 57,532 61,600
---------- ---------- ---------
Net income $ 85,090 $ 92,704 $ 98,915
========== ========== =========
Net income per share - basic $ 1.79 $ 1.92 $ 2.09
========== ========== =========
Net income per share - diluted $ 1.76 $ 1.86 $ 2.04
========== ========== =========
Weighted average common shares
outstanding - basic 47,606 48,160 47,383
========== ========== =========
Weighted average common and
common equivalent shares
outstanding - diluted 48,449 49,951 48,387
========== ========== =========
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are integral parts of these financial
statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
---------------------------------------------------------
(in thousands)
Add- Other Treasury Total Total
Common itional Compre- Stock Share- Compre-
Stock Paid-in Retained hensive Common holders' hensive
Shares Amount Capital Earnings Income Shares Amount Equity Income
- --------------------------------------------------------------------------------
Balances at
September
27, 1996 21,777 $217 $50,271 $289,096 $ (791) (883)$(12,161)$326,632
Net income
fiscal
1997 98,915 98,915 $98,915
Cash divi-
dends -
common
stock
($.21
per share) (9,921) (9,921)
Employee
stock
purchases 2,031 145 1,649 3,680
Exercise
of stock
options (11) 211 2,541 2,530
Tax benefit
related to
non-qualified
option
exercises 308 308
3-for-2
stock
split 10,888 109 (109) (342) -
Net
unrealized
gain on
securities
available
for sale 1,132 1,132 1,132
---------------------------------------------------------------------
Balances at
September
26, 1997 32,665 326 52,599 377,981 341 (869) (7,971) 423,276
=====================================================================
Total
Compre-
hensive
Income
fiscal
1997 100,047
========
Net income
fiscal 1998 92,704 92,704 92,704
Cash divi-
dends -
common
stock
($.24
per share) (11,586) (11,586)
Purchase
of trea-
sury shares (292) (5,346) (5,346)
Employee
stock
purchases 4,271 261 2,274 6,545
Exercise
of stock
options 197 403 3,461 3,658
Tax benefit
related to
non-qualified
option exercises 539 539
3-for-2
stock
split 16,333 164 (164) (233) -
Corporate
sale of
RJF put
options 335 335
Net
unrealized
loss on
securities
available
for sale (227) (227) (227)
---------------------------------------------------------------------
Balances at
September
25, 1998 48,998 490 57,777 459,099 114 (730) (7,582) 509,898
=====================================================================
Total
Compre-
hensive
Income
fiscal
1998 92,477
========
Net income
fiscal 1999 85,090 85,090 85,090
Cash divi-
dends -
common
stock
($.28
per share) (13,304) (13,304)
Purchase
of trea-
sury shares (1,652) (31,564) (31,564)
Employee
stock
purchases 385 302 4,826 5,211
Exercise
of stock
options (1,860) 324 4,484 2,624
Tax benefit
related to
non-qualified
option exercises 407 407
Corporate
sale of
RJF put
options 1,314 1,314
Net
unrealized
loss on
securities
available
for sale (1,190) (1,190)(1,190)
---------------------------------------------------------------------
Balances at
September
24, 1999 48,998 $490 $58,023 $530,885$(1,076)(1,756)$(29,836)$558,486
=====================================================================
Total
Compre-
hensive
Income
fiscal
1999 $83,900
=======
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are integral parts of these financial
statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(in thousands)
(continued on next page)
Year Ended
-----------------------------------------
September 24, September 25, September 26,
1999 1998 1997
------------- ------------- -------------
Cash flows from operating activities:
Net income $ 85,090 $ 92,704 $ 98,915
--------- ---------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 19,129 16,321 13,312
Amortization of goodwill 930 487 1,799
Unrealized loss on investment
account securities 2,749 773 2,075
Unrealized loss (gain) and premium
amortization on available for sale
securities 642 1,395 (66)
(Gain)loss on sale of securities (2,227) (1,130) 55
(Gain)loss on sale of property and
equipment 277 (204) 55
Provision for bad debts (2,332) (342) (380)
Provision for other accruals (3,493) (1,825) (6,881)
Decrease (increase) in assets:
Receivables:
Clients (335,975) (207,158) (226,779)
Stock borrowed (424,648) 218,200 (206,804)
Brokers, dealers and clearing
organizations 82,395 (73,194) (15,338)
Other (3,669) (24,604) (9,138)
Trading account securities, net (70,814) (33,549) 25,975
Deferred income taxes (6,790) (8,485) (3,167)
Prepaid expenses and other assets (13,663) (14,259) (8,718)
Increase (decrease) in liabilities:
Payables:
Clients 370,758 639,541 400,752
Stock loaned 543,934 (206,933) 186,440
Brokers, dealers and clearing
organizations 7,055 20,975 (34,676)
Trade and other 4,230 20,298 34,091
Accrued compensation and commissions 3,147 16,758 40,481
Income taxes payable (6,742) (7,439) 8,008
--------- --------- ---------
Total adjustments 164,893 355,626 201,096
--------- --------- ---------
Net cash provided by operating activities 249,983 448,330 300,011
--------- --------- ---------
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are integral parts of these financial
statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(in thousands)
(continued from preceding page)
Year Ended
-----------------------------------------
September 24, September 25, September 26,
1999 1999 1999
------------- ------------- -------------
Cash flows from investing activities:
Additions to property and equipment (20,543) (45,815) (25,456)
Sales of investment account securities 6,545 4,563 4,923
Sales of available for sale securities - - 18,732
Purchases of investment account
securities (8,769) (3,007) (8,636)
Purchases of available for sale
securities (207,907) (187,213) (170,131)
Security maturations and repayments 191,608 113,206 48,153
Acquisition of Roney & Co. (67,597) - -
----------- ----------- -----------
Net cash used in investing activities (106,663) (118,266) (132,415)
----------- ----------- -----------
Cash flows from financing activities:
Repayments on mortgage note (584) (12,948) (193)
Proceeds from mortgage financing - 40,000 -
Other borrowed funds 123,614 5,000 -
Repayments on borrowings (120,736) (1,500) (10,490)
Exercise of stock options and
employee stock purchases 8,242 10,742 6,518
Purchase of treasury stock (31,564) (5,346) -
Sale of stock options 1,314 335 -
Cash dividends on common stock (13,304) (11,586) (9,921)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (33,018) 24,697 (14,086)
----------- ----------- -----------
Net increase in cash and
cash equivalents 110,302 354,761 153,510
Cash and cash equivalents at
beginning of year 1,243,541 888,780 735,270
----------- ----------- -----------
Cash and cash equivalents at end of
year $1,353,843 $1,243,541 $ 888,780
=========== =========== ===========
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 151,295 $ 129,367 $ 100,546
=========== =========== ===========
Cash paid for taxes $ 65,601 $ 73,456 $ 55,382
=========== =========== ===========
The accompanying Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements are integral parts of these financial
statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
----------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Raymond James Financial, Inc. is a holding company which, through its
subsidiaries, is engaged principally in the securities brokerage business,
including the underwriting, distribution, trading and brokerage of equity and
debt securities and the sale of mutual funds and other investment products.
In addition, it provides investment management services for retail and
institutional clients and banking and trust services for retail clients. The
accounting and reporting policies of Raymond James Financial, Inc. and its
subsidiaries (the "Company") conform to generally accepted accounting
principles, the more significant of which are summarized below:
Basis of consolidation
- ----------------------
The consolidated financial statements include the accounts of Raymond
James Financial, Inc. and its subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.
All consolidated subsidiaries are 100% owned by the Company, except for
RJ Properties, Inc., which was 85% owned until August 1999 (see Note 16).
Reporting period
- ----------------
The Company's fiscal year ends on the last Friday in September of each
year.
Recognition of revenues
- -----------------------
Securities transactions and related commission revenues and expenses are
recorded on a trade date basis.
Revenues from investment banking are recorded at the time the
transaction is completed and the related income is reasonably determinable.
Investment banking revenues include sales credits earned in connection with
the distribution of the underwritten securities. Any warrants received in
connection with investment banking transactions are carried at a nominal
value until such time as the warrants are exercisable and the underlying
shares are salable.
The Company earns an advisory fee based on a client's portfolio value on
portfolios managed by its investment advisor subsidiaries. These fees are
recorded under the accrual method.
Management estimates and assumptions
- ------------------------------------
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Segment reporting
- -----------------
In fiscal 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of Enterprise and Related
Information" ("FAS 131"). FAS 131 supersedes FAS 14, "Financial Reporting
for Segments of a Business Enterprise", replacing the "industry segment"
approach with the "management" approach. The management approach designates
the internal organization that is used by management for making operating
decisions and assessing performance as the source of the Company's reportable
segments. FAS 131 also requires disclosures about products and services,
geographic areas, and major customers. The adoption of FAS 131 did not
affect the Company's financial position or results of operations, but did
affect the disclosure of segment information (see Note 15).
Cash and cash equivalents
- -------------------------
The Company considers all highly liquid investments with an initial
maturity of three months or less to be cash equivalents for purposes of the
consolidated statement of cash flows. These consist primarily of shares of
money market funds and of U.S. Treasury Securities purchased under agreements
to resell, some of which are held in special reserve accounts, and are stated
at cost, which approximates market at fiscal yearend.
In accordance with Rule 15c3-3 of the Securities Exchange Act of 1934
the Company, as a broker-dealer carrying client accounts, is subject to
requirements related to maintaining cash or qualified securities in a
segregated reserve account for the exclusive benefit of its clients.
It is the Company's policy to obtain possession and control of
securities purchased under resale agreements. The net fair value of
securities purchased under resale agreements approximates their carrying
value, as such financial instruments are predominantly short-term in nature.
The Company monitors the risk of loss by assessing the market value of the
underlying securities as compared to the related receivable or payable,
including accrued interest, and requests additional collateral where deemed
appropriate. At September 24, 1999 and September 25, 1998, there were no
agreements with any individual counterparties where the risk of loss exceeded
10% of shareholders' equity.
Customer receivables
- --------------------
Customer receivables are reported at their outstanding principal,
adjusted for any allowance for doubtful accounts, write-offs, any deferred
fees or costs on originated bank loans and unamortized premiums or discounts
on purchased loans. Client loans are considered to be impaired when it is
probable that the Company will be unable to collect all amounts due.
Impaired loans are written down or reserved to the extent that the principal
is judged to be uncollectible. In the case of collateral-dependent loans
where repayment is expected to be provided solely by the underlying
collateral value, the loans are written down to the lower of cost or
collateral value. Impairment losses are included in the allowance for
doubtful accounts or reserves through an income statement charge.
Securities owned
- ----------------
The trading and investment account securities held by the brokerage
subsidiaries are classified as trading. Investment account securities not
readily marketable are carried at estimated fair value as determined by
management with unrealized gains and losses included in earnings. Trading
securities are carried at market value with realized and unrealized gains and
losses included in earnings. The Company accounts for other securities owned
in accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt
and Equity Securities" ("FAS 115"). FAS 115 requires investments in debt and
equity securities to be classified as either "held to maturity," "trading,"
or "available for sale." The accounting treatment for unrealized gains and
losses on those securities is then determined by the classification chosen.
Securities available for sale are carried at estimated market value, with
unrealized gains and losses reported as a separate component of shareholders'
equity, net of deferred taxes, and realized gains and losses, determined on a
specific identification basis, included in earnings.
Property and equipment
- ----------------------
Property, equipment and leasehold improvements are stated at cost less
accumulated depreciation. Depreciation of assets is provided principally
using the straight-line method for financial reporting purposes over the
estimated useful lives of the assets, which range from two to seven years for
furniture and equipment and fifteen to thirty-one years for buildings and
land improvements. Leasehold improvements are amortized using the straight-
line method over the shorter of the lease term or the estimated useful lives
of the assets. For income tax purposes,
assets are depreciated using accelerated methods.
Additions, improvements and expenditures for repairs and maintenance
that significantly extend the useful life of an asset are capitalized. Other
expenditures for repairs and maintenance are charged to operations in the
period incurred. Gains and losses on disposals of fixed assets are
reflected in income in the period realized.
Intangible Assets
- -----------------
Goodwill is stated at cost less accumulated amortization and reflected
as an intangible asset. Amortization of goodwill is provided using the
straight-line method for financial reporting purposes over a period ranging
from three to fifteen years.
Correspondent clearing
- ----------------------
Under clearing agreements, the Company clears trades for unaffiliated
correspondent brokers and retains a portion of commissions as a fee for its
services. The Company records clearing charges net of commissions remitted.
Total commissions generated by correspondents were $22,126,000, $22,244,000
and $21,334,000, and commissions remitted totaled $17,471,000, $17,815,000
and $16,832,000 for the years ended September 24, 1999, September 25, 1998
and September 26, 1997, respectively.
Comprehensive Income
- --------------------
The Company adopted SFAS No. 130, Reporting Comprehensive Income in
fiscal 1999. This statement establishes standards for the reporting and
display of comprehensive income and its components. This statement requires
that an enterprise classify items of other comprehensive income by nature in
a financial statement, and display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a balance sheet. The Company's other
comprehensive income represents the unrealized gain (loss) on securities
available for sale in addition to net income.
Derivative Financial Instruments
- --------------------------------
To manage interest rate exposures at Raymond James Bank, FSB ("RJBank"),
this subsidiary uses interest rate swaps. Interest rate swaps are agreements
to exchange interest rate payment streams based on a notional principal
amount. RJBank specifically designates interest rate swaps as hedges of the
fixed rate period of certain purchased loans and recognizes interest
differentials as adjustments to interest income in the period they occur.
Income taxes
- ------------
The Company utilizes the asset and liability approach defined in
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). FAS 109 requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between the financial statement amounts and the tax bases of
assets and liabilities.
Net income per share
- --------------------
Net income per share is computed using weighted average common stock and
common stock equivalents outstanding. Common stock equivalents include
shares issuable under stock options and are determined under the treasury
stock method. All per share amounts have been restated to give retroactive
effect to the common stock dividends paid on April 2, 1998 and April 3, 1997
(see Note 11), as well as the implementation of Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("FAS 128") in fiscal
1998.
Reclassifications
- -----------------
Certain amounts from prior years have been reclassified for consistency
with current year presentation. These reclassifications were not material to
the
consolidated financial statements.
RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES
----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
NOTE 1 - RECEIVABLES FROM AND PAYABLES TO CLIENTS:
- --------------------------------------------------
Receivables from clients include amounts arising from normal cash and
margin transactions, bank loans receivable (see Note 7), and fees receivable.
Securities owned by brokerage clients are held as collateral for margin
receivables. Such collateral is not reflected in the accompanying
consolidated financial statements. The amount receivable from clients is
shown net of an allowance for doubtful accounts of approximately $3,603,000
and $1,166,000 as of September 24, 1999 and September 25, 1998, respectively.
Unsecured receivables are not significant.
Payables to clients include brokerage client funds on deposit awaiting
reinvestment and bank savings accounts and certificates of deposit. The
Company pays interest at varying rates on qualifying brokerage client funds
on deposit. These funds totaled $1,627,629,000 and $1,447,665,000 at
September 24, 1999 and September 25, 1998, respectively. In addition, the
Company pays interest at varying rates on client bank deposits as described
in Note 7.
NOTE 2 - TRADING AND INVESTMENT ACCOUNT SECURITIES (in thousands):
- ------------------------------------------------------------------
September 24, 1999 September 25, 1998
---------------------- ----------------------
Securities Securities
sold but sold but
Securities not yet Securities not yet
owned purchased owned purchased
---------- ---------- ---------- ----------
Marketable:
Stocks and warrants $ 9,891 $ 3,731 $ 9,715 $ 5,000
Municipal obligations 144,597 285 77,697 55
Corporate obligations 9,743 3,488 1,913 1,197
Government obligations 7,894 24,842 10,547 24,589
Other 8,183 1,054 5,530 -
Non-marketable 659 - 490 -
-------- ------- --------- -------
$180,967 $33,400 $105,892 $30,841
======== ======= ======== =======
NOTE 3 - AVAILABLE FOR SALE SECURITIES (in thousands):
- ------------------------------------------------------
The amortized cost and estimated market values of securities available
for sale at September 24, 1999 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
Mortgage-backed securities:
FNMA $126,115 $ 236 $ (460) $125,891
FHLMC 196,917 362 (244) 197,035
GNMA 33,367 - (387) 32,980
Corporate investments 20,521 - (76) 20,445
Other 24,701 14 (923) 23,792
-------- ------- -------- --------
$401,621 $ 612 $(2,090) $400,143
======== ======= ======== ========
The amortized cost and estimated market values of securities available
for sale at September 25, 1998 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
Mortgage-backed securities:
FNMA $178,651 $124 $ (79) $178,696
FHLMC 152,510 212 (1) 152,721
GNMA 13,093 265 - 13,358
Corporate investments 20,527 - (71) 20,456
Other 20,717 96 (368) 20,445
-------- ---- ------ --------
$385,498 $697 $(519) $385,676
======== ==== ====== ========
The U.S. Treasury Securities and U.S. Government Obligations mature
after one year and within ten years.
NOTE 4 - LEVERAGED LEASES (in thousands):
- -----------------------------------------
The Company is the lessor in two leveraged commercial aircraft
transactions with major domestic airlines. The Company's combined equity
investments represented 21% of the aggregate purchase prices; the remaining
79% was funded by public debt issues in the form of equipment trust
certificates. The residual values of the aircrafts at the end of an average
lease term of 20 years are projected to be an average of 10% of the original
cost. The leases expire in September 2013 and June 2016, respectively.
September 24, September 25,
1999 1998
------------- -------------
Rents receivable (net of principal and
interest on the non-recourse debt $ 21,056 $ 21,056
Unguaranteed residual values 10,719 10,719
Unearned income (7,825) (8,478)
---------- ---------
Investment in leveraged leases 23,950 23,297
Deferred taxes arising from leveraged leases (25,777) (23,049)
---------- ---------
Net investment in leveraged leases $ (1,827) $ 248
========== =========
NOTE 5 - PROPERTY AND EQUIPMENT (in thousands):
- -----------------------------------------------
September 24, September 25,
1999 1998
------------- -------------
Land $ 12,612 $ 9,612
Buildings and improvements 66,062 60,059
Furniture, fixtures, equipment
and leasehold improvements 100,134 83,904
--------- ---------
178,808 153,575
Less: accumulated depreciation
and amortization $(87,473) (72,203)
--------- ---------
$ 91,335 $ 81,372
========= =========
NOTE 6 - BORROWINGS:
- --------------------
The Company has a mortgage note payable of $39.2 million related to the
refinancing of two existing buildings at the headquarters complex and
additional financing for a third building and adjacent parking garage
completed during fiscal year 1998. The mortgage requires monthly principal
and interest payments of approximately $291,000 with a balloon payment due
January 1, 2008. The mortgage bears interest at 7.37% and is secured by
land, buildings and improvements with a net book value of $48.75 million at
September 24, 1999. Principal maturities under this mortgage note payable
for the succeeding five years are as follows: $624,000 in 2000, $671,000 in
2001, $722,000 in 2002, $777,000 in 2003, $837,000 in 2004 and $35,601,000
thereafter.
The Company had a $50 million committed, unsecured line of credit with a
commercial bank. Borrowings under the line bore interest at the lesser of
prime rate, Fed Funds plus .5%, or LIBOR plus .375%. The line of credit
required that the Company maintain certain net worth levels, limited other
leases and debt, and required the Company to follow certain other sound
business practices. The Company paid $26,000, $63,000 and $63,000 in loan
commitment fees on this line during fiscal years 1999, 1998 and 1997,
respectively. During fiscal 1999, the Company renewed this line on an
uncommitted basis with the same terms and the same bank. Subsequent to
yearend, the Company replaced this line with a three year term loan for $50
million and a $100 million committed line of credit through a group of
commercial banks. The term loan bears interest at LIBOR plus .75%, while any
draws on the line of credit would bear interest at the Company's option, at
LIBOR plus .5%, or the higher of prime or Fed Funds plus .5%. There is a
.125% loan commitment fee on the $100 million line of credit.
The Company's Raymond James Credit Corp. subsidiary has a $50 million
line of credit, under which borrowings are collateralized by customer
securities, which bears interest at a rate of one month LIBOR plus .75%.
There were borrowings of $60 million under this facility at September 24,
1999. The interest rate on these borrowings ranged from 4.8% to 6.3%.
The Company's broker-dealer subsidiaries also maintain uncommitted lines
of credit aggregating $480 million with commercial banks ($235 million
secured and $245 million unsecured). Borrowings under the lines of credit
bear interest, at the Company's option, at the bank's prime rate, Fed Funds
rate plus .25% to .5%, or LIBOR plus .75%. Unsecured short-term borrowings
at September 24, 1999, totaled $65 million with an average interest rate of
5.66%. The interest rate on these borrowings ranged from 4.50% to 8.50% in
1999, and 5.58% to 6.84% in 1998. Loans on the secured, uncommitted lines of
credit are collateralized by firm or client margin securities.
RJBank has a $5 million FHLB advance outstanding which bears interest at
a fixed rate of 5.67% and matures May 27, 2008. Securities with a carrying
value of $19,917,000 are pledged as collateral for this and future borrowing.
The Bank's borrowing availability related to FHLB advances is 10% of RJBank's
total assets.
NOTE 7 - BANK OPERATIONS AND DEPOSITS:
On May 6, 1994, the Company chartered RJBank in conjunction with the
purchase of the deposits of certain branches of a federal savings bank from
the Resolution Trust Corporation for a nominal purchase price.
A summary of client deposit accounts and weighted average interest rates
follows:
September 24, 1999 September 25, 1998
------------------------ ------------------------
(dollar amounts in thousands)(dollar amounts in thousands)
Weighted Weighted
Balance Average Rate Balance Average Rate
-------- ------------ -------- ------------
Demand deposits:
Non-interest bearing $ 936 - $ 646 -
Interest bearing 2,963 1.66% 2,229 2.19%
Money market accounts 15,784 3.70% 12,211 3.85%
Savings accounts 469,097 4.24% 382,767 4.53%
Certificates of deposit
(3.85% - 7.25%) 106,848 5.73% 52,705 5.67%
-------- ----- -------- -----
$595,628 4.47% $450,558 4.62%
======== ===== ======== =====
The certificates of deposit mature as follows: $34,824,000 in 2000,
$35,407,000 in 2001, $11,692,000 in 2002, $2,523,000 in 2003 and $22,402,000
in 2004 and thereafter. Certificates of deposit in amounts of $100,000 or
more at September 24, 1999 and September 25, 1998 were approximately
$21,567,000 and $6,089,000, respectively.
A summary of RJBank's loan distribution is as follows:
September 24, September 25,
1999 1998
------------- -------------
(000's) (000's)
Residential mortgage loans $138,840 $60,173
Consumer and commercial loans 30,665 2,111
--------- --------
169,505 62,284
Allowance for loan losses (1,799) (642)
Purchase premium 455 362
Purchase discount (303) -
Deferred origination fees
and costs, net (75) 22
--------- --------
$167,783 $62,026
========= ========
Activity in the allowance for loan losses for 1999 and 1998 consists
solely of the provision for loan losses. There were no actual loan losses in
1999, 1998 or 1997. There was no recorded investment or interest income
recognized on impaired loans during 1999, 1998 and 1997, as there were no
impaired loans during these periods.
Generally, mortgage loans are secured by either first or second
mortgages on residential property, consumer loans are secured by securities
and time deposit accounts, and commercial loans are generally secured by real
property or the general assets of the borrower. As of September 24, 1999 and
September 25, 1998, 97% and 100%, respectively, of RJBank's loan portfolio
was secured.
RJBank is subject to various regulatory and capital requirements and was
in compliance with all requirements throughout the fiscal years.
Pursuant to the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), RJBank is subject to rules limiting brokered deposits and
related interest rates. Under these rules, banks that are deemed "well-
capitalized" may accept brokered deposits without restriction, and banks
deemed "adequately capitalized" may do so with a waiver from the FDIC. An
"undercapitalized" bank is not eligible for a waiver and may not accept
brokered deposits. As of September 24, 1999, the most recent notification
from the Office of Thrift Supervision categorized RJBank as "well
capitalized" under the regulatory framework for prompt corrective action.
At September 24, 1999 and September 25, 1998, RJBank exceeded the
tangible capital, core capital, core/leverage capital, Tier I/risk-based
capital and total risk-based capital levels mandated by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 and FDICIA. At
September 24, 1999 and September 25, 1998, RJBank's Tier I capital to average
assets ratio was 5.8% and 8.2%, respectively.
NOTE 8 - Derivative Financial Instruments
- -----------------------------------------
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The derivative
financial instruments are used to manage well-defined interest rate risk at
RJBank.
RJBank uses interest rate swap agreements to hedge against the potential
impact of increases in interest rates during the fixed rate period of certain
purchased loan pools. Under the interest rate swap agreements, RJBank
receives or makes payments, on a monthly basis, based on the differential
between a specified interest rate and one month LIBOR. At September 24,
1999, RJBank was party to two interest rate swap agreements, one of $20
million and one of $32 million, expiring on July 17, 2004 and August 17,
2004, respectively. There were no swap agreements outstanding at September
24, 1998. RJBank recognized a reduction of interest income of approximately
$71,000 for the year ended September 24, 1999 as a result of these swap
agreements.
The fair aggregate value of the Company's interest rate swap agreements
approximated $159,000 at September 24, 1999. This positive fair value
represents the estimated amount the other party would have to pay the Company
at each date to cancel the contracts or transfer them to other parties.
The Company is exposed to credit losses in the event of nonperformance
by the counterparties to its interest rate swap agreements. The Company
anticipates, however, that the counterparties will be able to fully satisfy
its obligation under the agreements. The Company does not obtain collateral
to support their financial instruments but monitors the credit standing of
the counterparties.
NOTE 9 - FEDERAL AND STATE INCOME TAXES (in thousands):
- -------------------------------------------------------
The provision (benefit) for income taxes consists of:
Year Ended
-----------------------------------------
September 24, September 25, September 26,
1999 1998 1997
------------- ------------- -------------
Current provision:
Federal $ 49,841 $ 56,151 $ 55,864
State 8,588 9,774 9,655
--------- --------- ---------
58,429 65,925 65,519
Deferred benefit: --------- --------- ---------
Federal (5,110) (7,120) (3,306)
State (890) (1,273) (613)
--------- --------- ---------
(6,000) (8,393) (3,919)
--------- --------- ---------
$ 52,429 $57,532 $61,600
========= ========= =========
The Company's effective tax rate on pre-tax income differs from the
statutory federal income tax rate due to the following:
Year Ended
-----------------------------------------
September 24, September 25, September 26,
1999 1998 1997
------------- ------------- -------------
Provision calculated at
statutory rates $ 48,145 $ 52,637 $ 56,230
State income taxes, net
of federal benefit 5,003 5,526 5,877
Other (719) (631) (507)
--------- --------- ---------
$ 52,429 $ 57,532 $ 61,600
========= ========= =========
The major deferred tax asset (liability) items, as computed under FAS
109, are as follows:
September 24, September 25,
1999 1998
------------- -------------
Deferred tax assets:
Deferred compensation $ 38,156 $ 35,216
Accrued expenses 20,843 17,376
Other 17,021 13,063
--------- ---------
Total deferred tax assets 76,020 65,655
--------- ---------
Deferred tax liabilities:
Aircraft leases (25,779) (23,049)
Other (10,610) (9,765)
--------- ---------
Total deferred tax liabilities (36,389) (32,814)
--------- ---------
Net deferred tax assets $ 39,631 $ 32,841
========= =========
NOTE 10 - COMMITMENTS AND CONTINGENCIES:
- ----------------------------------------
Long-term lease agreements expire at various times through 2004.
Minimum annual rentals under such agreements for the succeeding five fiscal
years are approximately: $14,545,000 in 2000, $13,196,000 in 2001,
$11,024,000 in 2002, $7,600,000 in 2003, $4,817,000 in 2004 and $3,558,000
thereafter. Rental expense incurred under all leases, including equipment
under short-term agreements, aggregated $13,154,000, $11,085,000, and
$8,802,000 in 1999, 1998 and 1997, respectively.
The Company has committed to lend to, or guarantee other debt for,
Raymond James Tax Credit Funds, Inc. ("RJ Tax Credit") up to $45 million upon
request. Any borrowings bear interest at broker call plus 1% per annum. RJ
Tax Credit is charged 1% for amounts guaranteed. The borrowings are secured
by properties under development. At September 24, 1999, balances of
$8,553,000 were loaned to RJ Tax Credit and $440,000 were guaranteed. At
September 25, 1998, balances of $5,267,000 were loaned to RJ Tax Credit and
$2,420,000 were guaranteed. The commitment expired in November 1999 at which
time any outstanding balances were due and payable. On November 18, 1999, the
Board of Directors renewed the commitment until November 2000.
At September 24, 1999, RJBank had letters of credit of $1,182,000
outstanding. In addition, RJBank had commitments to fund loans at fixed and
variable rates of $1,039,000 and $2,992,000, respectively, at September 24,
1999.
As part of an effort to increase brand awareness, the Company entered
into a stadium naming rights contract in July 1998. The contract has a
thirteen-year term with a five-year renewal option and a 4% annual escalator.
Expense of $2,719,000 and $921,000 was recognized in fiscal 1999 and 1998,
respectively.
In the normal course of business, the Company enters into underwriting
commitments. Transactions relating to such commitments that were open at
September 24, 1999 and were subsequently settled had no material effect on
the consolidated financial statements as of that date.
The Company utilizes a letter of credit and deposits with clearing
organizations to satisfy margin deposit requirements. At September 24, 1999
and September 25, 1998, the Company had a letter of credit outstanding of
$100,000 and client margin securities valued at $86,277,000 and $62,912,000,
respectively, on deposit with a clearing organization.
The Company has guaranteed lines of credit for its various foreign joint
ventures as follows: two letters of guaranty totaling $6 million in Turkey,
two letters of guaranty not to exceed $8 million in Argentina and a $5
million letter of guaranty and $325,000 letter of credit in India.
In the normal course of business, certain subsidiaries of the Company,
as general partner, are contingently liable for the obligations of various
limited partnerships engaged primarily in securities investments and real
estate activities. In the opinion of the Company, such liabilities, if any,
for the obligations of the partnerships will not in the aggregate have a
material adverse effect on the Company's consolidated financial position.
As a result of the extensive regulation of the securities industry, the
Company's broker-dealer subsidiaries are subject to regular reviews and
inspections by regulatory authorities and self-regulatory organizations,
which can result in imposition of sanctions for regulatory violations,
ranging from non-monetary censure to fines and, in serious cases, temporary
or permanent suspension from business. In addition, from time to time
regulatory agencies and self-regulatory organizations institute
investigations into industry practices, which can result in the imposition of
such sanctions. Current proceedings in which the Company is one of the named
defendants include the combined SEC, Internal Revenue Service and National
Association of Securities Dealers, Inc. review of investment banking
practices in connection with advance refunding transactions for
municipalities.
The Company is also a defendant or co-defendant in various lawsuits
incidental to its securities business. The Company is contesting the
allegations of the complaints in these cases and believes that there are
meritorious defenses in each of these lawsuits. In view of the number and
diversity of claims against the Company, the number of jurisdictions in which
litigation is pending and the inherent difficulty of predicting the outcome
of litigation and other claims, the Company cannot state with certainty what
the eventual outcome of pending litigation or other claims will be. In the
opinion of management, based on discussions with counsel, the outcome of
these matters will not result in a material adverse effect on the
consolidated financial position or results of operations of the Company.
NOTE 11 - CAPITAL TRANSACTIONS:
- -------------------------------
The Company's Board of Directors has, from time to time, adopted
resolutions authorizing the Company to repurchase its common stock for
general corporate purposes. At September 24, 1999, pursuant to prior
authorizations from the Board of Directors, 2,275,000 shares were available
to be repurchased.
In February 1998 and 1997, the Company's Board of Directors declared a 3-
for-2 stock split in the form of a dividend. The additional shares were
distributed on April 2, 1998 and April 3, 1997, respectively, to shareholders
of record on March 10, 1998 and March 7, 1997, respectively. All references
(unless otherwise noted) in the consolidated financial statements and
accompanying notes to amounts per share and to the number of common shares
have been restated to give retroactive effect to the stock dividends.
The Company sold equity put options in October 1998 and August 1999 that
entitle the holder, at the expiration date, to sell 239,000 and 400,000
shares of common stock to the Company at exercise prices of $18.31 and $20.24
per share, respectively. The $1,314,000 in premiums has been accounted for
as additional paid-in capital. At September 24, 1999, put options covering
400,000 shares were outstanding, with an aggregate exercise price of
$8,096,000 and an expiration date of February 9, 2000. In the event the
options are exercised, the Company may elect to pay the holder in cash for
the difference between the exercise price and the market price of the
Company's shares, in lieu of repurchasing the stock.
NOTE 12 - EMPLOYEE BENEFIT PLANS:
- ---------------------------------
The Company's profit sharing plan and employee stock ownership plan
provide certain death, disability or retirement benefits for all employees
who meet certain service requirements. Such benefits become fully vested
after seven years of qualified service. The Company also offers a plan
pursuant to section 401(k) of the Internal Revenue Code, which provides for
the Company to match 100% of the first $500 and 50% of the next $500 of
compensation deferred by each participant annually. Roney also offers a plan
pursuant to section 401(k) of the Internal Revenue Code. This plan will be
merged into the Company's plan on January 1, 2000. The Company's deferred
management bonus plan is a non-qualified plan that provides retirement
benefits for employees who meet certain length of service and compensation
requirements. Contributions to these plans are made in amounts approved
annually by the Board of Directors. Compensation expense includes aggregate
contributions to these plans of $16,240,000, $17,299,000 and $15,462,000, for
1999, 1998 and 1997, respectively.
Stock Compensation Plans
At September 24, 1999, the Company has six stock-based compensation
plans, which are described below. In accordance with the provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" ("FAS 123"),the Company applies APB Opinion 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for these plans.
If the Company had elected to recognize compensation expense based on
the fair value at the grant dates for awards under these plans consistent
with the methodology prescribed by FAS 123, the Company's net income and net
income per share would have been reduced to the pro forma amounts indicated
below:
Year Ended
-----------------------------
Sept. 24, Sept. 25, Sept. 26,
1999 1998 1997
--------- --------- ---------
Net income (in thousands) As reported $85,090 $92,704 $98,915
Pro forma $80,372 $88,278 $95,936
Net income per share - basic As reported $ 1.79 $ 1.92 $ 2.09
Pro forma $ 1.69 $ 1.83 $ 2.02
Net income per share - diluted As reported $ 1.76 $ 1.86 $ 2.04
Pro forma $ 1.66 $ 1.77 $ 1.98
These pro forma amounts may not be representative of future disclosures
since the estimated fair value of stock options is amortized to expense over
the vesting period and additional options may be granted in future years.
For disclosure purposes, the fair value of each fixed option grant is
estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted average assumptions used for stock option grants
in 1999, 1998 and 1997, respectively: dividend yields of 1.3%, 1.1% and 1.1%;
expected volatility of 42.6%, 44.1% and 32.2%, risk-free interest rates of
4.96%, 5.85% and 6.28%, and expected lives of 5.61, 5.32 and 5.99 years.
Fixed Stock Option Plans
The Company has one qualified and three non-qualified fixed stock option
plans. Under the 1992 Incentive Stock Option Plan, the Company may grant
options to its management personnel for up to 4,612,500 shares of common
stock. The 1992 Plan was established to replace, on substantially the same
terms and conditions, the 1982 Plan. Options are granted to key
administrative employees and registered representatives of Raymond James &
Associates, Inc. who achieve certain gross commission levels. Options are
exercisable in the 36th to 72nd months following the date of grant and only
in the event that the grantee is an employee of the Company at that time.
Under one of the Company's non-qualified stock option plans, the Company
may grant up to 2,278,125 shares of common stock to independent contractor
registered representatives. Options are exercisable five years after grant
date provided that the representative is still associated with the Company.
Under the Company's second non-qualified stock option plan, the Company may
grant up to 379,688 shares of common stock to the Company's outside
directors. Options vest over a five-year period from grant date provided
that the director is still serving on the Board of the Company. Under the
Company's third non-qualified stock option plan, the Company may grant up to
1,125,000 shares of common stock to key management personnel. Option terms
are specified in individual agreements and expire on a date no later than the
tenth anniversary of the grant date. Under all plans, the exercise price of
each option equals the market price of the Company's stock on the date of
grant and an option's maximum term is 10 years.
A summary of the status of the Company's four fixed stock option plans
as of September 24, 1999, September 25, 1998 and September 26, 1997, and
changes during the years ending on those dates is presented below:
1999 1998 1997
------------------ ------------------ ------------------
Shares Weighted Shares Weighted Shares Weighted
Average Average Average
Exercise Exercise Exercise
Price Price Price
------------------ ------------------ ------------------
Outstanding at
beginning of year 2,738,045 $14.00 2,539,220 $ 9.37 2,366,094 $ 7.66
Granted 258,785 21.24 831,340 23.15 779,876 12.55
Canceled (190,902) 14.33 (84,516) 12.32 (191,130) 7.17
Exercised (324,240) 8.09 (547,999) 6.66 (415,620) 4.41
---------- ------ ---------- ------ ---------- ------
Outstanding at
yearend 2,481,688 $15.52 2,738,045 $14.00 2,539,220 $ 9.37
========== ====== ========== ====== ========== ======
Options exercisable
at yearend 299,350 215,878 360,691
Weighted average
fair value of
options granted
during the year $ 8.89 $10.26 $ 9.62
The following table summarizes information about fixed stock options
outstanding at September 24, 1999:
Options Outstanding Options Exercisable
---------------------------------------------------------------
Range of Number Weighted- Weighted- Number Weighted-
Exercise Outstanding Average Average Exercisable Average
Prices at 9/24/99 Remaining Exercise at 9/24/99 Exercise
Contractual Price Price
Life
- --------------------------------------------------------------------------------
$ 3.16 - 6.33 107,982 .9 $ 6.15 42,501 $ 6.11
$ 6.33 - 9.49 174,788 1.3 7.73 39,714 6.86
$ 9.49 - 12.65 1,077,244 2.2 11.10 217,135 9.86
$12.65 - 15.81 90,000 3.3 13.39 - -
$15.81 - 18.98 30,000 4.8 17.94 - -
$18.98 - 22.14 196,500 5.5 20.57 - -
$22.14 - 25.30 683,774 3.5 22.56 - -
$25.30 - 28.46 97,350 4.1 26.36 - -
$28.46 - 31.63 24,050 3.9 31.49 - -
--------- --- ------ ------- ------
2,481,688 2.9 $15.52 299,350 $ 8.93
========= === ====== ======= ======
Employee Stock Purchase Plan
Under the 1994 and 1998 Employee Stock Purchase Plans, the Company is
authorized to issue up to 1,125,000 and 1,500,000 shares of common stock,
respectively, to its full-time employees, nearly all of whom are eligible to
participate. Under the terms of the Plans, employees can choose each year to
have up to 20% of their annual compensation specified to purchase the
Company's common stock. Share purchases in any calendar year are limited to
the lesser of 1,000 shares or shares with a market value of $25,000. The
purchase price of the stock is 85% of the market price on the day prior to
the purchase date. Under the Plans, the Company sold 301,837, 314,114 and
268,607 shares to employees in fiscal years 1999, 1998 and 1997,
respectively. The compensation cost which would have been recognized for the
fair value of the employees' purchase rights was calculated as the value of
the 15% discount from market value.
Employee Investment Fund
Certain key employees of the Company participate in a limited
partnership arrangement in which the Company makes a non-recourse loan to
these employees for two thirds of the purchase price per unit of the Raymond
James Employee Investment Fund I, L.P. The loan plus interest is intended to
be paid back from the earnings of the fund. The fund is invested in the
merchant banking activities of the Company and other venture capital limited
partnerships.
NOTE 13- NET CAPITAL REQUIREMENTS:
- ----------------------------------
The broker-dealer subsidiaries of the Company are subject to the
requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the
Securities Exchange Act of 1934 and the rules of the securities exchanges of
which Raymond James & Associates, Inc. ("RJA") is a member, whose
requirements are substantially the same. This Rule requires that aggregate
indebtedness, as defined, not exceed fifteen times net capital, as defined.
Rule 15c3-1 also provides for an "alternative net capital requirement" which,
if elected, requires that net capital be equal to the greater of $250,000 or
two percent of aggregate debit items computed in applying the formula for
determination of reserve requirements. The New York Stock Exchange, Inc. may
require a member organization to reduce its business if its net capital is
less than four percent of aggregate debit items and may prohibit a member
firm from expanding its business and declaring cash dividends if its net
capital is less than five percent of aggregate debit items. As of January 1,
1999 the Company merged its independent contractor broker-dealers, Investment
Management & Research, Inc. and Robert Thomas Securities, Inc. into Raymond
James Financial Services, Inc. In addition, on May 28, 1999, the Company
purchased Roney & Co., a broker-dealer. The net capital position of the
Company's clearing broker-dealer subsidiary was as follows:
September 24, September 25,
1999 1998
------------- -------------
Raymond James & Associates, Inc.: (dollar amounts in thousands)
- ---------------------------------
(alternative method elected)
Net capital as a percent of aggregate
debit items 19% 17%
Net capital $218,456 $149,284
Required net capital 22,848 17,862
--------- ---------
Excess net capital $195,608 $131,422
========= =========
All other broker-dealer subsidiaries were in compliance during all years
presented.
NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
- ------------------------------------------------------------
In the normal course of business, the Company purchases and sells
securities as either principal or agent on behalf of its clients. If either
the client or a counterparty fails to perform, the Company may be required to
discharge the obligations of the nonperforming party. In such circumstances,
the Company may sustain a loss if the market value of the security or futures
contract is different from the contract value of the transaction.
The Company also acts as an intermediary between broker-dealers and
other financial institutions whereby the Company borrows securities from one
broker-dealer and then lends them to another. Securities borrowed and
securities loaned are carried at the amounts of cash collateral advanced and
received in connection with the transactions. The Company measures the
market value of the securities borrowed and loaned against the cash
collateral on a daily basis. The market value of securities borrowed and
securities loaned was $1,242,224,000 and $1,344,366,000, respectively, at
September 24, 1999 and $824,726,000 and $796,504,000, respectively, at
September 25, 1998. Additional cash is obtained as necessary to ensure such
transactions are adequately collateralized. If another party to the
transaction fails to perform as agreed (such as failure to deliver a security
or failure to pay for a security), the Company may incur a loss if the market
value of the security is different from the contract amount of the
transaction.
The Company has also loaned, to brokers and dealers, securities owned by
clients and others for which it has received cash or other collateral. If a
borrowing institution or broker-dealer does not return a security, the
Company may be obligated to purchase the security in order to return it to
the owner. In such circumstances, the Company may incur a loss equal to the
amount by which the market value of the security on the date of
nonperformance exceeds the value of the loan from the institution or the
collateral from the broker or dealer.
The Company has sold securities that it does not currently own and will,
therefore, be obligated to purchase such securities at a future date. The
Company has recorded $33.4 million and $30.8 million, at September 24, 1999
and September 25, 1998, respectively, which represents the market value of
the related securities at such dates. The Company is subject to loss if the
market price of those securities not covered by a hedged position increases
subsequent to fiscal yearend. The Company utilizes short government
obligations and equity securities to hedge long proprietary inventory
positions. At September 24, 1999, the Company had $24,670,000 in short
government obligations and $1,275,000 in short equity securities which
represented hedge positions. At September 25, 1998, the Company had
$24,245,000 in short government obligations and $571,000 in short equity
securities, which represented hedge positions.
The Company enters into security transactions involving forward
settlement. The Company has recorded transactions with a contract value of
$61,353,000 and $311,252,000 and a market value of $62,257,000 and
$315,104,000 as of September 24, 1999 and September 25, 1998, respectively.
Transactions involving future settlement give rise to market risk, which
represents the potential loss that can be caused by a change in the market
value of a particular financial instrument. The Company's exposure to market
risk is determined by a number of factors, including the size, composition
and diversification of positions held, the absolute and relative levels of
interest rates, and market volatility.
The majority of the Company's transactions and, consequently, the
concentration of its credit exposure is with clients, broker-dealers and
other financial institutions in the United States. These activities
primarily involve collateralized arrangements and may result in credit
exposure in the event that the counterparty fails to meet its contractual
obligations. The Company's exposure to credit risk can be directly impacted
by volatile securities markets, which may impair the ability of
counterparties to satisfy their contractual obligations. The Company seeks
to control its credit risk through a variety of reporting and control
procedures, including establishing credit limits based upon a review of the
counterparties' financial condition and credit ratings. The Company monitors
collateral levels on a daily basis for compliance with regulatory and
internal guidelines and requests changes in collateral levels as appropriate.
NOTE 15 - SEGMENT ANALYSIS:
- ---------------------------
The Company's reportable segments are: retail distribution, institutional
distribution, investment banking, asset management and other. The retail
distribution segment includes the retail branches of the Company's broker-
dealer subsidiaries located throughout the U.S. These branches provide
securities brokerage services including the sale of equities, mutual funds,
fixed income products and insurance to their retail clients. The
institutional distribution segment includes institutional sales offices in
the U.S. and Europe providing securities brokerage services emphasizing the
sale of U.S. equities and fixed income products to institutions. The
investment banking segment includes management and participation in
underwritings (exclusive of sales credits, which are included in the
distribution segments), mergers and acquisitions, public finance, trading,
research and market making. The asset management segment includes investment
portfolio management services of Eagle Asset Management, Inc., Awad Asset
Management and RJA's Asset Management Services division and mutual fund
management by Heritage Asset Management, Inc. In the various programs
offered by these entities, clients' funds are professionally managed either
in individual accounts or in mutual funds. RJBank and the trust companies,
the results of operations of international joint ventures, stock loan/stock
borrow and earnings on firm capital are included in the segment entitled
"other."
The financial results of the Company's segments are the same as those
described in the "Summary of Significant Accounting Policies". Segment data
includes charges allocating corporate overhead to each segment. Intersegment
revenues and charges are eliminated between segments. The Company evaluates
the performance of its segments and allocates resources to them based on
return on investment.
The Company has not disclosed asset information by segment as the
information is not produced internally. All long-lived assets are located in
the U.S.
The Company's business is predominantly in the U.S., with only 3% of
revenues and 4% of net income coming from international operations.
Information concerning operations in these segments of business is as
follows:
1999 1998 1997
---------- ---------- ----------
Revenue: (amounts in thousands)
Retail distribution $ 847,783 $ 704,598 $ 572,807
Institutional distribution 158,596 146,590 121,411
Investment banking 36,155 57,180 64,192
Asset management 95,055 86,221 61,602
Other 94,617 88,318 76,949
---------- ---------- ----------
$1,232,206 $1,082,907 $ 896,961
Gain on sale of Liberty * - - 30,646
---------- ---------- ----------
Total $1,232,206 $1,082,907 $ 927,607
========== ========== ==========
Pre-tax income:
Retail distribution $ 90,564 $ 79,062 $ 71,088
Institutional distribution 12,782 15,747 13,892
Investment banking 3,636 25,405 28,217
Asset management 21,603 22,002 14,935
Other 8,934 8,020 1,737
---------- ---------- ----------
137,519 150,236 129,869
Gain on sale of Liberty * - - 30,646
---------- ---------- ----------
Total $ 137,519 $ 150,236 $ 160,515
========== ========== ==========
* see Note 16
NOTE 16 - RELATED PARTIES:
- --------------------------
Pursuant to a separation agreement between the Company and the former
President and Chief Investment Officer of its Eagle Asset Management, Inc.
("Eagle") subsidiary, Liberty Investment Management, Inc. ("Liberty") assumed
responsibility for providing portfolio management services to institutional
growth equity accounts
formerly managed by Eagle. Eagle was to receive 50% of the revenues from
these accounts through December 31, 1999, while bearing none of the expenses.
In addition, the Company was granted an option to purchase 20% of Liberty in
the Year 2000 at a predetermined price. For the year ended September 26,
1997, Eagle recognized $2,569,000 in fees from Liberty, which are included in
investment advisory fees in the consolidated statement of income.
On January 2, 1997, Liberty sold substantially all of its assets to
Goldman Sachs Asset Management, Inc. Accordingly, the Company received a lump
sum settlement of $30.6 million for its remaining three years' interest in
Liberty's revenue stream and the Company's option to purchase 20% of Liberty
at a future date.
A Director and a former employee of the Company, each owned 7.5% of the
outstanding shares of common stock of RJ Properties, Inc. ("RJP"), a
subsidiary of the Company, until August 1999 when the shares were purchased
by RJP for an adjusted book value totaling $517,000 and notes payable of
$200,000. They will receive payments on the notes as RJP collects on certain
receivables, which were excluded from the adjusted book value calculation.
Such shares were acquired for nominal consideration in connection with the
organization of RJP in 1980.
NOTE 17- ACQUISITION OF RONEY & CO.:
- ------------------------------------
On May 28, 1999, the Company purchased Roney from Bank One Corporation
for $71.3 million and the assumption of approximately $10 million in deferred
compensation liabilities. For consolidated financial statement purposes the
acquisition was accounted for as a purchase and, accordingly, Roney's results
are included in the consolidated financial statements since the date of
acquisition. The aggregate purchase price, which was financed through
available cash resources and the Company's line of credit (subsequently
replaced by a 3 year term note), has been allocated to the assets of Roney
based on their respective fair market values. The excess of the purchase
price over assets acquired (goodwill) approximated $35 million and is being
amortized over 15 years.
The pro forma unaudited consolidated results of operations as though
Roney had been acquired as of the beginning of fiscal 1999 and 1998 are as
follows:
1999 1998
---------- ----------
Revenues (000's) $1,349,130 $1,195,153
Net Income (000's) $ 85,831 $ 94,257
Net Income per share:
Basic $1.80 $1.96
Diluted $1.77 $1.89
EXHIBIT 11
- ----------
RAYMOND JAMES FINANCIAL, INC.
-----------------------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
(in thousands, except per share amounts)
Year Ended
-------------------------------------------
September 24, September 25, September 26,
1999 1998 1997
------------- ------------- -------------
Net income $85,090 $92,704 $98,915(3)
Weighted average common
shares outstanding during the
period (1) 47,606 48,160 47,383
Additional shares assuming
exercise of stock options
and warrants (1)(2) 843 1,791 1,004
------- ------- -------
Weighted average diluted common
shares (1) 48,449 49,951 48,387
======= ======= =======
Net income per share - basic (1) $ 1.79 $ 1.92 $ 2.09
======= ======= =======
Net income per share - diluted (1) $ 1.76 $ 1.86 $ 2.04
======= ======= =======
(1) Gives effect to the 3-for-2 common stock splits paid on April 2, 1998
and April 3, 1997.
(2) Represents the number of shares of common stock issuable on the exercise
of dilutive employee stock options less the number of shares of common
stock which could have been purchased with the proceeds from the
exercise of such options. These purchases were assumed to have been
made at the average market price of the common stock during the period,
or that part of the period for which the option was outstanding.
(3) Amount includes the gain on the sale of Liberty Investment Management,
Inc. Excluding this gain net income was $80,126,000 and basic and diluted
net income per share were $1.69 and $1.66, respectively. See Note 16 of
the Notes to Consolidated Financial Statements for details.
EXHIBIT 21
- ----------
RAYMOND JAMES FINANCIAL, INC.
-----------------------------
LIST OF SUBSIDIARIES
--------------------
The following listing includes the registrant's subsidiaries, all of
which are included in the consolidated financial statements:
State of
Name of Company Incorporation Subsidiary of
Raymond James & Associates, Inc. ("RJA") Florida Raymond James
Financial, Inc.
("RJF")
Awad Asset Management, Inc. Florida RJF
Eagle Asset Management, Inc. Florida RJF
Gateway Assignor Corporation, Inc. Florida RJF
Geovest Energy, Inc. Florida RJF
Heritage Asset Management, Inc. Florida RJF
Investment Management & Research, Inc. Florida RJF
Planning Corporation of America ("PCA") Florida RJA
PCAF, Inc. Florida PCA
Raymond James Bank, FSB Florida RJF
Raymond James Capital, Inc. Delaware RJF
Raymond James Credit Corporation Delaware RJF
RJEIF, Inc. Delaware RJF
Raymond James Financial Services, Inc. Florida RJF
Raymond James International Holdings, Inc.("RJIH")Delaware RJF
Raymond James Partners, Inc. Florida RJF
Raymond James Trust Company Florida RJF
RJC Partners, Inc. Delaware RJF
RJ Communication, Inc. Florida RJF
Raymond James Tax Credit Funds, Inc. Florida RJF
RJ Equities, Inc. Florida RJF
RJ Equities-2, Inc. Florida RJF
RJ Government Securities, Inc. Florida RJF
RJ Health Properties, Inc. Florida RJF
RJ Leasing, Inc. Florida RJF
RJ Leasing-2, Inc. Florida RJF
RJ Medical Investors, Inc. Florida RJF
RJ Mortgage Acceptance Corporation Delaware RJF
RJ Partners, Inc. Florida RJF
RJ Properties, Inc. ("RJP") Florida RJF
RJ Properties Acquisition Corp. Florida RJP
RJ Realty, Inc. Florida RJF
RJ Specialist Corp. Florida RJF
RJA Structured Finance, Inc. Delaware RJF
Robert Thomas Securities, Inc. Florida RJF
Roney & Co. Delaware RJF
Sound Trust Company Washington RJF
Value Partners, Inc. Florida RJF
Heritage International, Ltd. Mauritius RJIH
Raymond James & Associates, Ltd. Bermuda RJIH
Raymond James Dublin, Ltd. Ireland RJIH
Raymond James Financial International, Ltd. United KingdomRJIH
Raymond James European Holdings, Inc. Florida RJIH
Raymond James South American Holdings, Inc. Florida RJIH
571746.5
[Execution]
$50,000,000
TERM CREDIT AGREEMENT
Dated as of October 26, 1999
among
RAYMOND JAMES FINANCIAL, INC.,
as Borrower,
THE LENDERS NAMED HEREIN,
BANK ONE, NA,
as Administrative Agent,
CITIBANK, N.A.,
as Syndication Agent,
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Co-Documentation Agent,
and
THE CHASE MANHATTAN BANK,
as Co-Documentation Agent
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS 1
ARTICLE II
THE CREDITS 12
2.1. Term Loan 12
2.2. Types of Advances 12
2.3. Minimum Amount of Each Advance 12
2.4. Mandatory Principal Payment 12
2.5. Optional Principal Payments 13
2.6. Permanent Reduction 13
2.7. Upfront Fee 13
2.8. Conversion and Continuation of Outstanding Advances 13
2.9. Changes in Interest Rate, etc 13
2.10. Rates Applicable After Default 14
2.11. Method of Payment 14
2.12. Telephonic Notices 14
2.13. Interest Payment Dates; Interest and Fee Basis 14
2.14. Notification of Interest Rates and Prepayments 15
2.15. Lending Installations 15
2.16. Non-Receipt of Funds by the Agent 15
2.17. Noteless Agreement; Evidence of Indebtedness 15
2.18. Extension of Maturity Date 16
2.19. Replacement of Lender 17
ARTICLE III
YIELD PROTECTION; TAXES 17
3.1. Yield Protection 17
3.2. Changes in Capital Adequacy Regulations 18
3.3. Availability of Types of Advances 18
3.4. Funding Indemnification 19
3.5. Taxes 19
3.6. Lender Statements; Survival of Indemnity 20
ARTICLE IV
CONDITIONS PRECEDENT 21
4.1. The Loans 21
ARTICLE V
REPRESENTATIONS AND WARRANTIES 22
5.1. Corporate Existence; Conduct of Business 22
5.2. Authorization and Validity 23
5.3. Compliance with Laws and Contracts 23
5.4. Governmental Consents 24
5.5. Financial Statements 24
5.6. Material Adverse Change 24
5.7. Taxes 24
5.8. Litigation and Contingent Obligations 25
5.9. Subsidiaries 25
5.10. ERISA 25
5.11. Defaults 25
5.12. Federal Reserve Regulations 25
5.13. Investment Company; Public Utility Holding Company 25
5.14. Ownership of Properties 25
5.15. Material Agreements 26
5.16. Year 2000 26
5.17. Insurance 26
5.18. Disclosure 26
ARTICLE VI
COVENANTS 26
6.1. Financial Reporting 27
6.2. Use of Proceeds 28
6.3. Notice of Default 28
6.4. Conduct of Business 28
6.5. Taxes 28
6.6. Insurance 28
6.7. Compliance with Laws 29
6.8. Maintenance of Properties 29
6.9. Inspection 29
6.10. Year 2000 29
6.11. Ownership of Subsidiaries 29
6.12. Indebtedness 29
6.13. Merger 30
6.14. Sale of Assets 30
6.15. Investments and Acquisitions 30
6.16. Contingent Obligations 31
6.17. Liens 31
6.18. Affiliates 32
6.19. Change in Corporate Structure; Fiscal Year 32
6.20. Inconsistent Agreements 32
6.21. Financial Covenants. 32
6.21.1 Minimum Tangible Net Worth 32
6.21.2 Double Leverage Ratio 32
6.21.3 RJA Net Capital 32
6.21.4 RJFS Net Capital 33
6.21.5 RJA/RJFS Excess Net Capital 33
ARTICLE VII
DEFAULTS 33
7.1. Representation or Warranty 33
7.2. Non-Payment 33
7.3. Specific Defaults 33
7.4. Other Defaults 33
7.5. Cross-Default 33
7.6. Insolvency; Voluntary Proceedings 33
7.7. Involuntary Proceedings 34
7.8. Condemnation 34
7.9. Judgments 34
7.10. Change in Control 34
7.11. SIPC 34
7.12. Broker-Dealer License 34
7.13. ERISA 35
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 35
8.1. Acceleration 35
8.2. Amendments 35
8.3. Preservation of Rights 36
ARTICLE IX
GENERAL PROVISIONS 36
9.1. Survival of Representations 36
9.2. Governmental Regulation 36
9.3. Headings 36
9.4. Entire Agreement 36
9.5. Several Obligations; Benefits of this Agreement 36
9.6. Expenses; Indemnification 36
9.7. Numbers of Documents 37
9.8. Accounting 37
9.9. Severability of Provisions 37
9.10. Nonliability of Lenders 37
9.11. Confidentiality 38
9.12. Nonreliance 38
9.13. Disclosure 38
9.14. CHOICE OF LAW 38
9.15. CONSENT TO JURISDICTION 38
9.16. WAIVER OF JURY TRIAL 38
ARTICLE X
THE AGENT 39
10.1. Appointment; Nature of Relationship 39
10.2. Powers 39
10.3. General Immunity 39
10.4. No Responsibility for Loans, Recitals, etc 39
10.5. Action on Instructions of Lenders 40
10.6. Employment of Agents and Counsel 40
10.7. Reliance on Documents; Counsel 40
10.8. Agent's Reimbursement and Indemnification 40
10.9. Notice of Default 41
10.10. Rights as a Lender 41
10.11. Lender Credit Decision 41
10.12. Successor Agent 41
10.13. Agent's Fee 42
10.14. Delegation to Affiliates 42
10.15. Syndication Agent, Co-Documentation Agents, etc 42
ARTICLE XI
SETOFF; RATABLE PAYMENTS 43
11.1. Setoff 43
11.2. Ratable Payments 43
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 43
12.1. Successors and Assigns 43
12.2. Participations. 44
12.2.1 Permitted Participants; Effect 44
12.2.2 Voting Rights 44
12.2.3 Benefit of Setoff 44
12.3. Assignments. 44
12.3.1 Permitted Assignments 44
12.3.2 Effect; Effective Date 45
12.4. Dissemination of Information 45
12.5. Tax Treatment 45
ARTICLE XIII
NOTICES 45
13.1. Notices 45
13.2. Change of Address 46
EXHIBITS
Exhibit A Compliance Certificate
Exhibit B Assignment Agreement
SCHEDULES
Schedule I - Material Subsidiaries
Schedule II - Existing Indebtedness
TERM CREDIT AGREEMENT
This TERM CREDIT AGREEMENT, dated as of October 26, 1999, is
among RAYMOND JAMES FINANCIAL, INC., a Florida corporation, the
Lenders (as hereinafter defined), BANK ONE, NA, a national banking
association having its headquarters in Chicago, Illinois,
individually and as administrative agent (the "Agent"), CITIBANK,
N.A., individually and as syndication agent (the "Syndication
Agent"), BANK OF AMERICA, NATIONAL ASSOCIATION, individually and
as co-documentation agent ("Co-Documentation Agent") and THE CHASE
MANHATTAN BANK, individually and as co-documentation agent ("Co-
Documentation Agent").
R E C I T A L S:
A. The Borrower has requested the Lenders to provide a term
credit facility to it in the aggregate principal amount of
$50,000,000, the proceeds of which the Borrower will use for
general corporate purposes, including without limitation the
refinancing of certain existing indebtedness, friendly
acquisitions, share repurchases and asset purchases; and
B. The Lenders are willing to extend such credit facility
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Lenders and the Agent hereby agree
as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement,
by which the Borrower or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any
firm, corporation or limited liability company, or division or
line of business thereof, whether through purchase of assets,
merger or otherwise, or (b) directly or indirectly acquires (in
one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority
(by percentage or voting power) of the outstanding ownership
interests of a partnership or limited liability company.
"Advance" means a portion of the outstanding Term Loan the
interest rate for which is of the same Type and, in the case of
Eurodollar Advances, for the same Interest Period.
"Advisers Act" means the Investment Advisers Act of 1940, as
amended.
"Affected Lender" is defined in Section 2.19.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person
if the controlling Person owns 10% or more of any class of voting
securities (or other ownership interests) of the controlled Person
or possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of the controlled
Person, whether through ownership of stock, by contract or
otherwise.
"Agent" means Bank One in its capacity as administrative
agent for the Lenders pursuant to Article X, and not in its
individual capacity as a Lender, and any successor administrative
agent appointed pursuant to Article X.
"Agents" means and includes the Agent, the Syndication Agent
and the Co-Documentation Agents.
"Aggregate Commitment" means the aggregate of the Commitments
of all the Lenders hereunder, which is $50,000,000.
"Aggregate Debit Items" means, at any time, "aggregate debit
items" computed in accordance with Rule 15c3-1.
"Aggregate Indebtedness" means, at any time, "aggregate
indebtedness" computed in accordance with Rule 15c3-1.
"Agreement" means this Term Credit Agreement, as it may be
amended, modified or restated and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, applied in a
manner consistent with those used in preparing the Financial
Statements.
"Alternate Base Rate" means, for any day, a rate of interest
per annum equal to the higher of (a) the Corporate Base Rate for
such day, or (b) the sum of the Federal Funds Effective Rate for
such day plus 1/2% per annum.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Authorized Officer" means any of the chief executive
officer, president, chief financial officer or controller of the
Borrower, acting singly.
"Bank One" means Bank One, NA, a national banking association
having its principal office in Chicago, Illinois, in its
individual capacity, and its successors.
"Bankruptcy Code" means Title 11, United States Code,
sections 1 et seq., as the same may be amended from time to time,
and any successor thereto or replacement therefor which may be
hereafter enacted.
"Borrower" means Raymond James Financial, Inc., a Florida
corporation, and its successors and assigns.
"Business Day" means (a) with respect to any borrowing,
payment or rate selection of Eurodollar Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in
Chicago and New York for the conduct of substantially all of their
commercial lending activities, interbank wire transfers can be
made on the Fedwire system and dealings in United States dollars
are carried on in the London interbank market, and (b) for all
other purposes, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.
"CEA" means the Commodity Exchange Act, as amended from time
to time.
"CFTC" means the Commodities Future Trading Commission and
any successor entity.
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Change" is defined in Section 3.2.
"Change in Control" means (a) the acquisition by any Person,
or two or more Persons acting in concert, including without
limitation any acquisition effected by means of a merger or
consolidation, of beneficial ownership (within the meaning of Rule
13d-3 of the Commission under the Exchange Act) of 30% or more of
the outstanding shares of voting stock of the Borrower, or (b)
during any period of 25 consecutive calendar months, commencing on
the date of this Agreement, the ceasing of those individuals (the
"Continuing Directors") who (i) were directors of the Borrower on
the first day of each such period or (ii) subsequently became
directors of the Borrower and whose initial election or initial
nomination for election subsequent to that date was approved by a
majority of the Continuing Directors then on the board of
directors of the Borrower, to constitute a majority of the board
of directors of the Borrower. For purposes of making the
calculation in clause (a) above, an "acquisition" shall not
include a transfer of shares by a shareholder or his estate to
members of his immediate family (spouse, children, grandchildren,
spouses of children or grandchildren) or to trusts for the benefit
of the shareholder or members of his immediate family.
"Closing Date" is defined in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commission" means the Securities and Exchange Commission and
any successor entity.
"Commitment" means, for each Lender, the obligation of such
Lender to make a single Loan not exceeding the amount set forth
opposite its signature below.
"Compliance Certificate" means a certificate executed by an
Authorized Officer substantially in the form of Exhibit A hereto.
"Consolidated" or "consolidated", when used in connection
with any calculation, means a calculation to be determined on a
consolidated basis for the Borrower and its Subsidiaries in
accordance with Agreement Accounting Principles.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay
contract or the obligations of any such Person as a general
partner of a partnership with respect to the liabilities of the
partnership.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or
businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.8.
"Corporate Base Rate" means a rate per annum equal to the
corporate base rate or prime rate of interest announced by Bank
One or by its parent, Bank One Corporation, from time to time,
changing when and as said corporate base rate or prime rate
changes.
"Default" means an event described in Article VII.
"Double Leverage Ratio" means, at any time, as calculated for
the Borrower on a parent-only basis in accordance with Agreement
Accounting Principles, the ratio of (a) investment in Subsidiaries
to (b) the shareholders' equity of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to (a) the protection of
the environment, (b) the effect of the environment on human
health, (c) emission, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water,
ground water or land, or (d) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"Eurodollar Advance" means an Advance which, except as
otherwise provided in Section 2.10, bears interest at the
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the applicable British
Bankers' Association Interest Settlement Rate for deposits in U.S.
dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, and having a maturity equal to such Interest Period,
provided that, (i) if Reuters Screen FRBD is not available to the
Agent for any reason, the applicable Eurodollar Base Rate for the
relevant Interest Period shall instead be the applicable British
Bankers' Association Interest Settlement Rate for deposits in U.S.
dollars as reported by any other generally recognized financial
information service as of 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period and having a
maturity equal to such Interest Period, and (ii) if no such
British Bankers' Association Interest Settlement Rate is available
to the Agent, the applicable Eurodollar Base Rate for the relevant
Interest Period shall instead be the rate determined by the Agent
to be the rate at which Bank One or one of its Affiliate banks
offers to place deposits in U.S. dollars with first-class banks in
the London interbank market at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, in the approximate amount of Bank One's relevant
Eurodollar Loan and having a maturity equal to such Interest
Period.
"Eurodollar Loan" means a Loan or a portion thereof which,
except as otherwise provided in Section 2.10, bears interest at
the Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance
for the relevant Interest Period, the sum of (a) the quotient of
(i) the Eurodollar Base Rate applicable to such Interest Period,
divided by (ii) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Interest Period, plus (b) 0.75% per
annum (or 0.875% if any extension of the Maturity Date shall
become effective pursuant to Section 2.18).
"Excess Net Capital" means, at any time, "excess net capital"
computed in accordance with Rule 15c3-1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" means, in the case of each Lender or
applicable Lending Installation and the Agent, taxes imposed on
its overall net income, and franchise taxes imposed on it by (a)
the jurisdiction under the laws of which such Lender or the Agent
is incorporated or organized or (b) any jurisdiction in which such
Lender or the Agent maintains a lending office.
"Extension Date" is defined in Section 2.18.
"Extension Period" is defined in Section 2.18.
"Extension Request" is defined in Section 2.18.
"FOCUS Report" means, for any Person, the Financial and
Operational Combined Uniform Single Report required to be filed on
a monthly or quarterly basis, as the case may be, with the
Commission or the NYSE, or any report that is required in lieu of
such report.
"Federal Funds Effective Rate" means, for any day, an
interest rate per annum equal to the weighted average of the rates
on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations at
approximately 10:00 a.m. (Chicago time) on such day on such
transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent in its sole
discretion.
"Financial Statements" is defined in Section 5.5.
"Fiscal Quarter" means one of the four three-month accounting
periods comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period ending
on the last Friday in September of each year.
"Floating Rate Advance" means an Advance which, except as
otherwise provided in Section 2.10, bears interest at the
Alternate Base Rate.
"Floating Rate Loan" means a Loan or a portion thereof which,
except as otherwise provided in Section 2.10, bears interest at
the Alternate Base Rate.
"Governmental Authority" means any government (foreign or
domestic) or any state or other political subdivision thereof or
any governmental body, agency, authority, department or commission
(including without limitation any taxing authority or political
subdivision) or any instrumentality or officer thereof (including
without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government and any corporation, partnership or
other entity directly or indirectly owned or controlled by or
subject to the control of any of the foregoing.
"Indebtedness" of a Person means such Person's (a)
obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than
accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from Property now or hereafter
owned or acquired by such Person, (d) obligations which are
evidenced by notes, acceptances, or other instruments, (e)
Capitalized Lease Obligations, (f) Contingent Obligations, (g)
obligations for which such Person is obligated pursuant to or in
respect of a Letter of Credit, and (h) any other obligation for
borrowed money which in accordance with Agreement Accounting
Principles would be shown as a liability on the consolidated
balance sheet of such Person.
"Interest Period" means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on a
Business Day selected by the Borrower pursuant to this Agreement.
Such Interest Period shall end on the day which corresponds
numerically to such date one, two, three or six months thereafter;
provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding
month, such Interest Period shall end on the last Business Day of
such next, second, third or sixth succeeding month. If an
Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next
succeeding Business Day; provided, however, that if said next
succeeding Business Day falls in a new calendar month, such
Interest Period shall end on the immediately preceding Business
Day.
"Investment" of a Person means any (a) loan, advance (other
than commission, travel and similar advances to officers and
employees made in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary
course of business on terms customary in the trade) or
contribution of capital by such Person; (b) stocks, bonds, mutual
funds, partnership interests, notes, debentures or other
securities owned by such Person; (c) any deposit accounts and
certificate of deposit owned by such Person; and (d) structured
notes, derivative financial instruments and other similar
instruments or contracts owned by such Person; provided, however,
that in regard to clauses (b), (c) and (d), "Investment" shall not
include any such securities, accounts or instruments owned or
acquired by the Borrower or its Subsidiaries in the ordinary
course of its business as heretofore conducted, including but not
limited to the market making activities of RJA.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors
and assigns.
"Lending Installation" means, with respect to a Lender or the
Agent, the office, branch, subsidiary or affiliate of such Lender
or the Agent listed on the signature pages hereof or otherwise
selected by such Lender or the Agent pursuant to Section 2.15.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such
Person or upon which such Person is an account party or for which
such Person is in any way liable.
"Lien" means any security interest, lien (statutory or
other), mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement).
"Loan" means, with respect to a Lender, such Lender's term
loan made pursuant to Section 2.1.
"Loan Documents" means this Agreement, any Notes issued
pursuant to Section 2.17 and the other documents and agreements
contemplated hereby and executed by the Borrower in favor of the
Agent or any Lender.
"MSRB" means the Municipal Securities Rulemaking Board and
any successor entity.
"Margin Stock" has the meaning assigned to that term under
Regulation U.
"Material Adverse Effect" means a material adverse effect on
(a) the business, Property, condition (financial or otherwise) or
results of operations of the Borrower and its Subsidiaries taken
as a whole, (b) the ability of the Borrower to perform its
obligations under the Loan Documents, or (c) the validity or
enforceability of any of the Loan Documents or the rights or
remedies of the Agent or the Lenders thereunder.
"Material Subsidiary" means (a) any of the Subsidiaries
listed on Schedule I hereto and (b) in the case of any specified
condition or event, any other Subsidiary or group of other
Subsidiaries (i) each of which has suffered such condition or
event to occur and (ii) that in the aggregate represents five
percent (5%) or more of the net revenues or the consolidated
assets of the Borrower and its Subsidiaries, as reflected in the
then most recent financial statements delivered pursuant to
Section 6.1(a) or (b).
"Maturity Date" means October 26, 2002 or such later date as
and if extended pursuant to Section 2.18.
"NASD" means the National Association of Securities Dealers,
Inc.
"NYSE" means the New York Stock Exchange, Inc.
"Net Capital" means, at any time, "net capital" computed in
accordance with Rule 15c3-1.
"Net Income" means, for any computation period, with respect
to the Borrower on a consolidated basis with its Subsidiaries
(other than any Subsidiary which is restricted from declaring or
paying dividends or otherwise advancing funds to its parent
whether by contract or otherwise), cumulative net income earned
during such period as determined in accordance with Agreement
Accounting Principles.
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" means any promissory note issued at the request of a
Lender pursuant to Section 2.17.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Loans, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent or any
indemnified party arising under the Loan Documents.
"Other Taxes" is defined in Section 3.5(ii).
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June,
September and December.
"Person" means any natural person, corporation, firm, joint
venture, partnership, limited liability company, association,
enterprise, trust or other entity or organization, or any
Governmental Authority.
"Plan" means an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code as to which the Borrower
or any member of the Controlled Group may have any liability.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person.
"pro-rata" means, when used with respect to a Lender, and any
described aggregate or total amount, an amount equal to such
Lender's pro-rata share or portion based on its percentage of the
Aggregate Commitment or, if the Aggregate Commitment has been
terminated, its percentage of the aggregate principal amount of
outstanding Advances.
"Purchasers" is defined in Section 12.3.1.
"RJA" means Raymond James & Associates, Inc. and any
successor entity.
"RJFS" means Raymond James Financial Services, Inc. and any
successor entity.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to depositary institutions.
"Regulation T" means Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and
shall include any successor or other regulation or official
interpretation of such Board of Governors relating to the
extension of credit by securities brokers and dealers for the
purpose of purchasing or carrying margin stocks applicable to such
Persons.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and
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 such Persons.
"Regulation X" means Regulation X of the Board of Governors
of the Federal Reserve System as from time to time 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 the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event; provided, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section
302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
"Required Lenders" means Lenders in the aggregate having at
least 51% of the aggregate unpaid principal amount of the
outstanding Loans.
"Reserve Requirement" means, with respect to an Interest
Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed
under Regulation D on Eurocurrency liabilities.
"Revolving Credit Agreement" means the $100,000,000 Revolving
Credit Agreement of even date herewith among the Borrower, the
Agent and the Lenders providing for a revolving credit facility,
as such agreement may be amended, modified or restated and in
effect from time to time.
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"Rule 15c3-1" means Rule 15c3-1 of the General Rules and
Regulations as promulgated by the Commission under the Exchange
Act, as such rule may be amended from time to time, or any rule or
regulation of the Commission which replaces Rule 15c3-1.
"Rule 15c3-3" means Rule 15c3-3 of the General Rules and
Regulations as promulgated by the Commission under the Exchange
Act, as such rule may be amended from time to time, or any rule or
regulation of the Commission which replaces Rule 15c3-3.
"SIPA" means the Security Investor Protection Act of 1970, as
amended.
"SIPC" means the Securities Investor Protection Corporation
or any successor entity.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Self-Regulatory Organization" has the meaning assigned to
such term in Section 3(a)(26) of the Exchange Act.
"Single Employer Plan" means a Plan maintained by the
Borrower or any member of the Controlled Group for employees of
the Borrower or any member of the Controlled Group.
"Subsidiary" of a Person means (a) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, (b) any
partnership, limited liability company, association, joint venture
or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time
be so owned or controlled, or (c) any other corporation or entity
which for financial reporting purposes is consolidated with the
Borrower in accordance with Agreement Accounting Principles.
Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of
the Borrower and its Subsidiaries, Property which (a) represents
more than 10% of the consolidated assets of the Borrower and its
Subsidiaries as would be shown in the consolidated financial
statements of the Borrower and its Subsidiaries as at the
beginning of the twelve-month period ending with the month in
which such determination is made, or (b) is responsible for more
than 15% of the consolidated net sales or Net Income of the
Borrower and its Subsidiaries as reflected in the financial
statements referred to in clause (a) above.
"Tangible Net Worth" means, at any date, the consolidated
stockholders' equity of the Borrower and its consolidated
Subsidiaries determined in accordance with Agreement Accounting
Principles, less their consolidated Intangible Assets, all
determined as of such date. For purposes of this definition,
"Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business
made within twelve months after the acquisition of such business)
subsequent to June 30, 1999 in the book value of any asset owned
by the Borrower or a consolidated Subsidiary, and (ii) all
unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, organization or developmental expenses and
other intangible items.
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and
all liabilities with respect to the foregoing, but excluding
Excluded Taxes.
"Term Loan" means, collectively, all of the Loans.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a
Floating Rate Advance or a Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the
present value of all vested and unvested accrued benefits under
all Single Employer Plans exceeds the fair market value of all
such Plan assets allocable to such benefits, all determined as of
the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Upfront Fee" is defined in Section 2.7.
"Wholly-Owned Subsidiary" of a Person means (a) any
Subsidiary all of the outstanding voting securities of which shall
at the time be owned or controlled, directly or indirectly, by
such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, limited
liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
"Year 2000 Issues" means anticipated costs, problems and
uncertainties associated with the inability of certain computer
applications to effectively handle data including dates on and
after January 1, 2000, as such inability affects the business,
operations and financial condition of the Borrower and its
Subsidiaries and of the Borrower's and its Subsidiaries' material
customers, suppliers and vendors.
"Year 2000 Program" is defined in Section 5.16.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Term Loan. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make a Loan to the
Borrower on the Closing Date in the amount of its respective
Commitment. Not later than noon (Chicago time) on the Closing
Date, each Lender shall make available funds equal to its
Commitment in immediately available funds in Chicago to the Agent
at its address specified pursuant to Article XIII. The Agent
shall promptly make the funds so received from the Lenders
available to the Borrower by wire transfer to such account as the
Borrower may designate.
2.2. Types of Advances. The Term Loan may be a Floating Rate
Advance or a Eurodollar Advance, or a combination thereof selected
by the Borrower in accordance with Section 2.8. Until converted
or continued pursuant to Section 2.8, the Term Loan shall be a
Eurodollar Advance with a one month Interest Period.
2.3. Minimum Amount of Each Advance. Each Eurodollar Advance
shall be in the minimum amount of $5,000,000 (and multiples of
$1,000,000 if in excess thereof), and each Floating Rate Advance
shall be in the minimum amount of $5,000,000 (and in multiples of
$1,000,000 if in excess thereof); provided, however, that in no
event shall more than three (3) Eurodollar Advances be permitted
to be outstanding at any time.
2.4. Mandatory Principal Payment. The aggregate outstanding
principal balance of the Term Loan shall be due and payable in
full in immediately available funds on the Maturity Date, if not
sooner paid in full.
2.5. Optional Principal Payments. Subject to the payment of any
funding indemnification amounts required by Section 3.4 but
without penalty or premium, the Borrower may from time to time pay
all outstanding Loans, or, in a minimum aggregate amount of
$5,000,000 or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Loans upon three (3)
Business Days' prior notice to the Agent.
2.6. Permanent Reduction. No amount of the Term Loan which is
repaid or prepaid by the Borrower may be reborrowed hereunder.
2.7. Upfront Fee. The Borrower agrees to pay to the Agent for the
account of each Lender an upfront fee (the "Upfront Fee") in an
amount equal to 0.10% of such Lender's Commitment, payable on the
Closing Date.
2.8. Conversion and Continuation of Outstanding Advances.
Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted into
Eurodollar Advances pursuant to this Section 2.8 or are repaid in
accordance with Section 2.5. Each Eurodollar Advance shall
continue as a Eurodollar Advance until the end of the then
applicable Interest Period therefor, at which time such Eurodollar
Advance shall be automatically converted into a Floating Rate
Advance unless (x) such Eurodollar Advance is or was repaid in
accordance with Section 2.5 or (y) the Borrower shall have given
the Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Interest Period, such
Eurodollar Advance continue as a Eurodollar Advance for the same
or another Interest Period. Subject to the terms of Section 2.3,
the Borrower may elect from time to time to convert all or any
part of a Floating Rate Advance into a Eurodollar Advance. The
Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Floating
Rate Advance into a Eurodollar Advance or of the continuation of a
Eurodollar Advance not later than 10:00 a.m. (Chicago time) at
least three Business Days prior to the date of the requested
conversion or continuation, specifying:
(a)the requested date of such conversion or
continuation, which shall be a Business Day;
(b)the aggregate amount and Type of the Advance which
is to be converted or continued; and
(c)the amount of such Advance which is to be converted
into or continued as a Eurodollar Advance and the duration of the
Interest Period applicable thereto, which shall end on or prior to
the Maturity Date.
2.9. Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof,
for each day from and including the date such Advance is made or
is automatically converted from a Eurodollar Advance into a
Floating Rate Advance pursuant to Section 2.8, to but excluding
the date it is paid or is converted into a Eurodollar Advance
pursuant to Section 2.8, at a rate per annum equal to the
Alternate Base Rate. Changes in the rate of interest on that
portion of any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Alternate Base
Rate. Each Eurodollar Advance shall bear interest on the
outstanding principal amount thereof from and including the first
day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest
rate determined by the Agent as applicable to such Eurodollar
Advance based upon the Borrower's selections under Section 2.8 and
otherwise in accordance with the terms hereof. No Interest Period
may end after the Maturity Date.
2.10. Rates Applicable After Default. Notwithstanding
anything to the contrary contained in Section 2.8, during the
continuance of a Default or Unmatured Default the Required Lenders
may, at their option, by notice to the Borrower, declare that no
Advance may be made as, converted into or continued as a
Eurodollar Advance. During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower
(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous
consent of the Lenders to changes in interest rates), declare that
each Eurodollar Advance and Floating Rate Advance shall bear
interest (for the remainder of the applicable Interest Period in
the case of Eurodollar Advances) at a rate per annum equal to the
Alternate Base Rate plus two percent (2%) per annum; provided,
however, that such increased rate shall automatically and without
action of any kind by the Lenders become and remain applicable
until revoked by the Required Lenders in the event of a Default
described in Section 7.6 or 7.7.
2.11. Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction or
counterclaim, in immediately available funds to the Agent at the
Agent's address specified pursuant to Article XIII, or at any
other Lending Installation of the Agent specified in writing by
the Agent to the Borrower, by noon (Chicago time) on the date when
due and shall be applied ratably by the Agent among the Lenders.
Each payment delivered to the Agent for the account of any Lender
shall be delivered promptly by the Agent to such Lender in the
same type of funds that the Agent received at its address
specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender. The
Agent is hereby authorized to charge the account of the Borrower
maintained with Bank One for each payment of principal, interest
and fees as it becomes due hereunder.
2.12. Telephonic Notices. The Borrower hereby authorizes the
Lenders and the Agent to extend, convert or continue Advances,
effect selections of Types of Advances and to transfer funds based
on telephonic notices made by any person or persons the Agent or
any Lender in good faith believes to be acting on behalf of the
Borrower, it being understood that the foregoing authorization is
specifically intended to allow Conversion/Continuance Notices to
be given telephonically. The Borrower agrees to deliver promptly
to the Agent a written confirmation, if such confirmation is
requested by the Agent or any Lender, of each telephonic notice
signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Agent
and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.
2.13. Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each Floating Rate Advance shall be payable on
each Payment Date, commencing with the first such date to occur
after the date hereof, on any date on which a Floating Rate
Advance is prepaid, whether due to acceleration or otherwise, and
at maturity. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a
Eurodollar Advance on a day other than a Payment Date shall be
payable on the date of conversion. Interest accrued on each
Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurodollar Advance having an
Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest
Period. Interest shall be calculated for actual days elapsed on
the basis of a 360-day year. Interest shall be payable for the
day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to noon (Chicago time) at
the place of payment. If any payment of principal of or interest
on an Advance shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business
Day and, in the case of a principal payment, such extension of
time shall be included in computing interest in connection with
such payment.
2.14. Notification of Interest Rates and Prepayments.
Promptly after receipt thereof, the Agent will notify each Lender
of the contents of each Conversion/Continuation Notice and
repayment notice received by it hereunder. The Agent will notify
each Lender of the interest rate applicable to each Eurodollar
Advance promptly upon determination of such interest rate and will
give each Lender prompt notice of each change in the Alternate
Base Rate.
2.15. Lending Installations. Each Lender may book its Loan at
any Lending Installation selected by such Lender and may change
its Lending Installation from time to time. All terms of this
Agreement shall apply to any such Lending Installation and the
Loan and any Note issued hereunder shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender
may, by written notice to the Agent and the Borrower in accordance
with Article XIII, designate replacement or additional Lending
Installations for whose account Loan payments are to be made.
2.16. Non-Receipt of Funds by the Agent. Unless the Borrower
or a Lender, as the case may be, notifies the Agent prior to the
date on which it is scheduled to make payment to the Agent of (a)
in the case of a Lender, the amount of a Loan, or (b) in the case
of the Borrower, a payment of principal, interest or fees to the
Agent for the account of the Lenders, that it does not intend to
make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the
amount of such payment available to the intended recipient in
reliance upon such assumption. If such Lender or the Borrower, as
the case may be, has not in fact made such payment to the Agent,
the recipient of such payment shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the
date such amount was so made available by the Agent until the date
the Agent recovers such amount at a rate per annum equal to (x) in
the case of payment by a Lender, the Federal Funds Effective Rate
for such day for the first three days and thereafter, the interest
rate applicable to the Loans, or (y) in the case of payment by the
Borrower, the interest rate applicable to the Loans.
2.17. Noteless Agreement; Evidence of Indebtedness. (a) Each
Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from the Loan made by such Lender, including
the amounts of principal and interest payable and paid to such
Lender from time to time hereunder.
(b) The Agent shall also maintain accounts in which
it will record (i) the amount of each Loan made hereunder and the
Type thereof, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each
Lender hereunder, and (iii) the amount of any sum received by the
Agent hereunder from the Borrower and each Lender's share thereof.
(c) The entries maintained in the accounts maintained
pursuant to paragraphs (a) and (b) above shall be prima facie
evidence of the existence and amounts of the Obligations therein
recorded (and, in the case of any inconsistency between the
records of the Agent and any Lender, the records of the Agent
shall be the prima facie evidence that controls with respect to
the Borrower); provided, however, that the failure of the Agent or
any Lender to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay
the Obligations in accordance with their terms.
(d) Any Lender may request that its Loan be evidenced
by a promissory note (a "Note"). In such event, the Borrower
shall prepare, execute and deliver to such Lender a Note payable
to the order of such Lender in a form incorporating the terms of
this Agreement supplied by the Agent. Thereafter, the Loan
evidenced by such Note and interest thereon shall at all times
(including after any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee
named therein or any assignee pursuant to Section 12.3, except to
the extent that any such Lender or assignee subsequently returns
any such Note for cancellation and requests that the Loan once
again be evidenced as described in paragraphs (a) and (b) above.
The execution and delivery of each Note shall take place at the
principal office of the Agent in Chicago or such other place
agreed to by the parties.
2.18. Extension of Maturity Date. The Borrower may request an
extension of the Maturity Date for two additional one-year periods
by submitting a request for an extension to the Agent (an
"Extension Request") no more than 45 days, but no less than 30
days, prior to the then effective Maturity Date. Each extension
effected pursuant to this Section 2.18 shall commence on the then
effective Maturity Date (the "Extension Date") and shall specify
the new Maturity Date requested by the Borrower, which date shall
be one year (the "Extension Period") after the Extension Date.
Promptly upon receipt of an Extension Request, the Agent shall
notify each Lender of the contents thereof and shall request each
Lender to approve the Extension Request. Each Lender approving
the Extension Request shall deliver its written consent to the
Agent no earlier than 30 days prior to the then effective Maturity
Date and no later than 20 days after receipt of the Extension
Request. In the event that a Lender shall fail to notify the
Agent within such period as to whether it agrees to the Extension
Request, such Lender shall be deemed to have refused the Extension
Request. If the consent of the Required Lenders is timely
received by the Agent, the new Maturity Date specified in the
Extension Request shall become effective on the Extension Date as
to such consenting Lenders only (and not as to any Lender which
has not consented to such extension), and the Agent shall promptly
notify the Borrower and each consenting Lender of the new Maturity
Date and new Term Loan amount; provided, however, that in no event
shall the new Maturity Date become effective unless a minimum of
two Lenders shall have consented to the Extension Request.
Notwithstanding anything contained in this Agreement to the
contrary, (a) all Obligations hereunder owing to the non-extending
Lenders shall be due and payable on the Maturity Date without
giving effect to any requested extension, (b) the Term Loan as of
the commencement of the Extension Period shall be reduced to an
amount equal to the sum of the Loans of the Lenders ultimately
consenting to the Extension Request, and (c) each Lender may, in
its sole discretion, grant or deny its consent with respect to any
proposed Extension Request. Any Lender not granting the Extension
Request shall, if the Borrower has selected an assignee for such
Lender reasonably acceptable to the Agent prior to the Extension
Date, promptly assign to such assignee its rights and obligations
hereunder in respect of all or that portion of such Lender's Loan
as such assignee is willing to accept, all in accordance with
Section 12.3.
2.19. Replacement of Lender. If the Borrower is required
pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment
to any Lender or if any Lender's obligation to make or continue,
or to convert Floating Rate Advances into, Eurodollar Advances
shall be suspended pursuant to Section 3.3 (any Lender so affected
an "Affected Lender"), the Borrower may elect, if such amounts
continue to be charged or such suspension is still effective, to
replace such Affected Lender as a Lender party to this Agreement,
provided that no Default or Unmatured Default shall have occurred
and be continuing at the time of such replacement, and provided
further that, concurrently with such replacement, (a) another bank
or other entity which is reasonably satisfactory to the Borrower
and the Agent shall agree, as of such date, to purchase for cash
the Loan and other Obligations due to the Affected Lender pursuant
to an assignment substantially in the form of Exhibit B at par and
to become a Lender for all purposes under this Agreement and to
assume all obligations of the Affected Lender to be terminated as
of such date and to comply with the requirements of Section 12.3
applicable to assignments, and (b) the Borrower shall pay to such
Affected Lender in same day funds on the day of such replacement
all interest, fees and other amounts then accrued but unpaid to
such Affected Lender by the Borrower hereunder to and including
the date of termination, including without limitation payments due
to such Affected Lender under Sections 3.l, 3.2 and 3.5, and an
amount, if any, equal to the payment which would have been due to
such Lender on the day of such replacement under Section 3.4 had
the Loan of such Affected Lender been prepaid on such date rather
than sold to the replacement Lender.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection. If, on or after the date of this
Agreement, the adoption of any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change
in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender or applicable
Lending Installation with any request or directive (whether or not
having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or any applicable Lending
Installation to any Taxes, or changes the basis of
taxation of payments (other than with respect to
Excluded Taxes) to any Lender in respect of its
Eurodollar Loans, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than the amount
of reserves and assessments taken into account in
determining the interest rate applicable to Eurodollar
Advances), or
(iii) imposes any other condition the result of which is
to increase the cost to any Lender or any applicable
Lending Installation of making, funding or maintaining
its Eurodollar Loans or reduces any amount receivable by
any Lender or any applicable Lending Installation in
connection with its Eurodollar Loans, or requires any
Lender or any applicable Lending Installation to make
any payment calculated by reference to the amount of
Eurodollar Loans held or interest received by it, by an
amount deemed material by such Lender,
and the result of any of the foregoing is to increase the cost to
such Lender or applicable Lending Installation of making or
maintaining its Eurodollar Loans or Commitment or to reduce the
return received by such Lender or applicable Lending Installation
in connection with such Eurodollar Loans or Commitment, then,
within 15 days of demand by such Lender, the Borrower shall pay
such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction in amount
received.
3.2. Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender
or any corporation controlling such Lender is increased as a
result of a Change, then, within 15 days of demand by such Lender,
the Borrower shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender determines is
attributable to this Agreement, its Loans or its Commitment to
make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "Change" means (i) any change
after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the
force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any
Lender or any Lending Installation or any corporation controlling
any Lender. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on
the date of this Agreement, including transition rules, and (ii)
the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to the
date of this Agreement.
3.3. Availability of Types of Advances. If any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation,
or directive, whether or not having the force of law, or if the
Required Lenders determine that (i) deposits of a type and
maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to Eurodollar
Advances does not accurately reflect the cost of making or
maintaining Eurodollar Advances, then the Agent shall suspend the
availability of Eurodollar Advances and require any affected
Eurodollar Advances to be repaid or converted to Floating Rate
Advances, subject to the payment of any funding indemnification
amounts required by Section 3.4.
3.4. Funding Indemnification. If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the
applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Eurodollar Advance is not made on
the date specified by the Borrower for any reason other than
default by the Lenders, the Borrower will indemnify each Lender
for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or
employing deposits acquired to fund or maintain such Eurodollar
Advance.
3.5. Taxes. (i) All payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any Note
shall be made free and clear of and without deduction for any and
all Taxes. If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, (a) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 3.5) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no
such deductions been made, (b) the Borrower shall make such
deductions, (c) the Borrower shall pay the full amount deducted to
the relevant authority in accordance with applicable law and (d)
the Borrower shall furnish to the Agent the original copy of a
receipt evidencing payment thereof within 30 days after such
payment is made.
(ii) In addition, the Borrower hereby agrees to pay any
present or future stamp or documentary taxes and any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or under any Note or from the execution or
delivery of, or otherwise with respect to, this Agreement or any
Note ("Other Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent and
each Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed
on amounts payable under this Section 3.5) paid by the Agent or
such Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payments due
under this indemnification shall be made within 30 days of the
date the Agent or such Lender makes demand therefor pursuant to
Section 3.6.
(iv) Each Lender that is not incorporated under the laws of
the United States of America or a state thereof (each a "Non-U.S.
Lender") agrees that it will, not less than ten Business Days
after the date of this Agreement, (i) deliver to each of the
Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes, and (ii) deliver to each of the Borrower and
the Agent a United States Internal Revenue Form W-8 or W-9, as the
case may be, and certify that it is entitled to an exemption from
United States backup withholding tax. Each Non-U.S. Lender
further undertakes to deliver to each of the Borrower and the
Agent (x) renewals or additional copies of such form (or any
successor form) on or before the date that such form expires or
becomes obsolete, and (y) after the occurrence of any event
requiring a change in the most recent forms so delivered by it,
such additional forms or amendments thereto as may be reasonably
requested by the Borrower or the Agent. All forms or amendments
described in the preceding sentence shall certify that such Lender
is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form or amendment with
respect to it and such Lender advises the Borrower and the Agent
that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.
(v) For any period during which a Non-U.S. Lender has
failed to provide the Borrower with an appropriate form pursuant
to clause (iv), above (unless such failure is due to a change in
treaty, law or regulation, or any change in the interpretation or
administration thereof by any governmental authority, occurring
subsequent to the date on which a form originally was required to
be provided), such Non-U.S. Lender shall not be entitled to
indemnification under this Section 3.5 with respect to Taxes
imposed by the United States; provided that, should a Non-U.S.
Lender which is otherwise exempt from or subject to a reduced rate
of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (iv), above, the Borrower
shall take such steps as such Non-U.S. Lender shall reasonably
request to assist such Non-U.S. Lender to recover such Taxes.
(vi) Any Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this
Agreement or any Note pursuant to the law of any relevant
jurisdiction or any treaty shall deliver to the Borrower (with a
copy to the Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed
by applicable law as will permit such payments to be made without
withholding or at a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other
governmental authority of the United States or any other country
or any political subdivision thereof asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not
delivered or properly completed, because such Lender failed to
notify the Agent of a change in circumstances which rendered its
exemption from withholding ineffective, or for any other reason),
such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax, withholding therefor,
or otherwise, including penalties and interest, and including
taxes imposed by any jurisdiction on amounts payable to the Agent
under this subsection, together with all costs and expenses
related thereto (including attorneys fees and time charges of
attorneys for the Agent, which attorneys may be employees of the
Agent). The obligations of the Lenders under this Section
3.5(vii) shall survive the payment of the Obligations and
termination of this Agreement.
3.6. Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its Eurodollar Loans to
reduce any liability of the Borrower to such Lender under Sections
3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar
Advances under Section 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each
Lender shall deliver a written statement of such Lender to the
Borrower (with a copy to the Agent) as to the amount due, if any,
under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall
set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection
with a Eurodollar Loan shall be calculated as though each Lender
funded its Eurodollar Loan through the purchase of a deposit of
the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise
provided herein, the amount specified in the written statement of
any Lender shall be payable on demand after receipt by the
Borrower of such written statement. The obligations of the
Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. The Loans. The Lenders shall not be required to make the
Loans unless the Borrower has furnished the following to the Agent
with sufficient copies for the Lenders and the other conditions
set forth below have been satisfied, in each case on a date (the
"Closing Date") on or before October 30, 1999:
(a)Charter Documents; Good Standing Certificates.
Copies of the certificate of incorporation of the Borrower,
together with all amendments thereto, certified by the Secretary
of State of Florida, together with good standing certificates (i)
as to the Borrower, from the State of Florida and (ii) as to RJA,
from the States of Florida, New York and Michigan.
(b)By-Laws and Resolutions. Copies, certified by the
Secretary or Assistant Secretary of the Borrower, of its by-laws
and of its Board of Directors' resolutions authorizing the
execution, delivery and performance of the Loan Documents to which
the Borrower is a party.
(c)Secretary's Certificate. An incumbency
certificate, executed by the Secretary or Assistant Secretary of
the Borrower, which shall identify by name and title and bear the
signature of the officers of the Borrower authorized to sign the
Loan Documents and to make borrowings hereunder, upon which
certificate the Agent and the Lenders shall be entitled to rely
until informed of any change in writing by the Borrower.
(d)Officer's Certificate. A certificate, dated the
date of this Agreement, signed by the chief financial officer of
the Borrower, in form and substance satisfactory to the Agent, to
the effect that: (i) on such date (both before and after giving
effect to the making of any Loans hereunder) no Default or
Unmatured Default has occurred and is continuing and (ii) each of
the representations and warranties set forth in Article V of this
Agreement is true and correct on and as of such date.
(e)Legal Opinion. A favorable written opinion of Paul
Matecki, Esq., Senior Vice President and Corporate Counsel to the
Borrower, addressed to the Agent and the Lenders in form and
substance acceptable to the Agent and its counsel.
(f)Loan Documents. Executed originals of this
Agreement, each of the other Loan Documents (including any Notes
requested by a Lender pursuant to Section 2.17 payable to the
order of such requesting Lender), and the Revolving Credit
Agreement, which shall be in full force and effect, together with
all schedules, exhibits, certificates, instruments, opinions,
documents and financial statements required to be delivered
pursuant hereto and thereto.
(g)Financial Statements. Copies of the Financial
Statements and the RJA/RJFS FOCUS Reports referred to in Section
5.5.
(h)Letter of Direction. Written money transfer
instructions with respect to the initial Advance and, until
otherwise instructed, as to future Advances in form and substance
acceptable to the Agent signed by an Authorized Officer, together
with such other related money transfer authorizations as the Agent
may have reasonably requested.
(i)Year 2000 Program. Information satisfactory to the
Agent regarding the Borrower's Year 2000 Program.
(j)Payment of Fees. The Borrower shall have paid all
accrued and unpaid fees, costs and expenses to the extent due and
payable on or prior to the execution of this Agreement, including,
but not limited to, the fees referred to in Section 2.7 and 10.13
and, to the extent invoiced, the attorneys' fees, time charges and
disbursements referred to in Section 9.6.
(k)Payoff Letter. A bank payoff letter in form and
substance acceptable to the Agent from Bank of America to the
effect that the total amount due under the Borrower's $50 million
loan facility with such lender shall be satisfied (and the related
agreement terminated) upon payment of an amount certain, together
with such lien releases and other documents as the Agent shall
require.
(l)Other. Such other documents as the Agent, any
Lender or their counsel may have reasonably requested.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence; Conduct of Business. Each of the
Borrower and each Material Subsidiary (a) is a corporation duly
incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (b) is duly qualified and in
good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where failure to be
so qualified will not have a Material Adverse Effect, and (c) has
all requisite corporate power, and possesses all licenses,
registrations and authorizations from and with any Governmental
Authority, Self-Regulatory Organization or securities exchange,
necessary or material to the conduct of its business as now or
presently proposed to be conducted. RJA and RJFS each is (i) duly
registered with the Commission as a broker-dealer under the
Exchange Act, (ii) a member in good standing of the NASD and, as
to RJA, a member organization in good standing of the NYSE, (iii)
not in arrears in regard to any assessment made upon it by the
SIPC, and (iv) has received no notice from the Commission, NASD,
MSRB, CFTC or any other Governmental Authority, Self-Regulatory
Organization or securities exchange of any alleged rule violation
or other circumstance which could reasonably be expected to have a
Material Adverse Effect, except as disclosed in the Financial
Statements.
5.2. Authorization and Validity. The Borrower has all requisite
power and authority (corporate and otherwise) and legal right to
execute and deliver each of the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its
obligations thereunder have been duly authorized by proper
corporate proceedings and the Loan Documents constitute legal,
valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally or
by general principles of equity limiting the availability of
equitable remedies.
5.3. Compliance with Laws and Contracts. The Borrower and its
Subsidiaries (including RJA and RJFS) have complied in all
material respects with all applicable laws, statutes, and rules,
regulations, orders and decrees or restrictions of any
Governmental Authority, Self-Regulatory Organization or securities
exchange having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties
(including, without limitation, the Exchange Act, the Advisers
Act, the Investment Company Act, the CEA, and the applicable rules
and regulations of the Commission, NASD, NYSE, MSRB and CFTC),
except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Without limiting the
foregoing, the Borrower and its Material Subsidiaries are in
compliance with all applicable capital requirements of all
Governmental Authorities (including, without limitation, Rule 15c3-
1). Neither the execution and delivery by the Borrower of the
Loan Documents, the application of the proceeds of the Loans, the
consummation of any transaction contemplated by the Loan
Documents, nor compliance with the provisions of the Loan
Documents will, or at the relevant time did, (a) violate any law,
rule, regulation (including Regulations T, U and X), order, writ,
judgment, injunction, decree or award binding on the Borrower or
any Subsidiary, (b) violate or conflict with the Borrower's or any
Subsidiary's charter, articles or certificate of incorporation or
by-laws, (c) violate the provisions of or require the approval or
consent of any party to any indenture, instrument or agreement to
which the Borrower or any Subsidiary is a party or is subject, or
by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or
imposition of any Lien (other than Liens permitted by Section
6.17) in, of or on the Property of the Borrower or any Subsidiary
pursuant to the terms of any such indenture, instrument or
agreement, or (d) require the consent or approval of any Person,
except for any violation of, or failure to obtain an approval or
consent required under, any such indenture, instrument or
agreement that could not have a Material Adverse Effect.
5.4. Governmental Consents. No order, consent, approval,
qualification, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other
action in respect of, any Governmental Authority, Self-Regulatory
Organization or securities exchange is necessary or required in
connection with the execution, delivery, consummation or
performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents, the application of
the proceeds of the Loans, or the consummation of any other
transaction contemplated by the Loan Documents. Neither the
Borrower nor any Subsidiary is in default under or in violation of
any foreign, Federal, state or local law, rule, regulation, order,
writ, judgment, injunction, decree or award binding upon or
applicable to the Borrower or such Subsidiary, in each case the
consequence of which default or violation could reasonably be
expected to have a Material Adverse Effect.
5.5. Financial Statements. The Borrower has heretofore furnished
to each of the Lenders (a) the September 25, 1998 audited
consolidated financial statements of the Borrower and its
Subsidiaries and (b) the June 25, 1999 unaudited consolidated
financial statements of the Borrower and its Subsidiaries
(collectively, the "Financial Statements"). The Borrower has also
heretofore furnished to each of the Lenders the December 25, 1998,
March 25, 1999, June 25, 1999 and September 24, 1999 quarterly
FOCUS Reports of RJA and RJFS (the "RJA/RJFS FOCUS Reports").
Each of the Financial Statements was prepared in accordance with
Agreement Accounting Principles and fairly presents the
consolidated financial condition, results of operations, changes
in shareholders' equity and cash flows of the Borrower and its
Subsidiaries at such dates and for the respective periods then
ended (except, in the case of the unaudited statements, for normal
year-end audit adjustments). The RJA/RJFS FOCUS Reports are
correct and complete in all material respects and conform in all
material respects to Exchange Act requirements and applicable
Commission rules and regulations.
5.6. Material Adverse Change. No material adverse change in the
business, Property, condition (financial or otherwise) or results
of operations of the Borrower and its Subsidiaries taken as a
whole has occurred since June 25, 1999.
5.7. Taxes. The Borrower and its Subsidiaries have filed or
caused to be filed on a timely basis and in correct form all
United States Federal and applicable state tax returns and all
other material tax returns which are required to be filed and have
paid all material taxes due pursuant to said returns or pursuant
to any assessment received by the Borrower or any Subsidiary,
except such taxes, if any, as are being contested in good faith
and as to which adequate reserves have been provided in accordance
with Agreement Accounting Principles and as to which no Lien
exists. As of the date hereof, the United States income tax
returns of the Borrower on a consolidated basis have been audited
by the Internal Revenue Service through its Fiscal Year ending
September 29, 1995. There are no pending audits or investigations
regarding the Borrower's or its Subsidiaries' Federal, state or
local tax returns which could reasonably be expected to have a
Material Adverse Effect. No tax liens have been filed and no
claims are being asserted with respect to any such taxes which
could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of any taxes or other governmental
charges are in accordance with Agreement Accounting Principles.
5.8. Litigation and Contingent Obligations. There is no
litigation, arbitration, proceeding, inquiry or investigation by
any Governmental Authority, Self-Regulatory Organization or
securities exchange pending or, to the knowledge of any of the
Borrower's officers, threatened against or affecting the Borrower
or any Subsidiary or any of their respective Properties which
could reasonably be expected to have a Material Adverse Effect or
to prevent, enjoin or unduly delay the making of the Loans or the
consummation of the transactions contemplated by this Agreement.
The Borrower and its Subsidiaries have no material contingent
obligations not provided for or disclosed in the Financial
Statements.
5.9. Subsidiaries. Schedule I hereto contains an accurate list of
all of the Borrower's Material Subsidiaries as of the date of this
Agreement, setting forth their respective jurisdictions of
organization and the percentage of their respective capital stock
or other ownership interests owned by the Borrower or other
Subsidiaries. All of the outstanding shares of capital stock and
other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable, and all such shares
and other equity interests owned by the Borrower or a Subsidiary
are owned, beneficially and of record, by the Borrower or such
Subsidiary free and clear of all Liens.
5.10. ERISA. There are no Unfunded Liabilities relating to
any Single Employer Plan. Each Plan complies in all material
respects with all applicable requirements of law and regulations,
no Reportable Event has occurred with respect to any Plan, neither
the Borrower nor any other member of the Controlled Group has
withdrawn from any Plan or initiated steps to do so, and no steps
have been taken to reorganize or terminate any Plan. The Borrower
is not an entity deemed to hold "plan assets" within the meaning
of 29 C.F.R. 2510.3-101 of an employee benefit plan (as defined
in Section 3(3) of ERISA) which is subject to Title I of ERISA or
any plan (within the meaning of Section 4975 of the Code), and
neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
5.11. Defaults. No Default or Unmatured Default has occurred
and is continuing.
5.12. Federal Reserve Regulations. Neither the making of any
Advance hereunder or the use of the proceeds thereof will violate
or be inconsistent with the provisions of Regulation T, Regulation
U or Regulation X. Following the application of the proceeds of
the Loans, less than 25% of the value of the assets of the
Borrower and its Subsidiaries which are subject to any limitation
on sale, pledge or other restriction hereunder taken as a whole
have been, and will continue to be, represented by Margin Stock.
5.13. Investment Company; Public Utility Holding Company.
Neither the Borrower nor any Subsidiary is, or after giving effect
to any Advance will be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Neither the Borrower
nor any Subsidiary is a "holding company" within the meaning of,
or subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.
5.14. Ownership of Properties. The Borrower and its
Subsidiaries have a subsisting leasehold interest in, or good and
marketable title to, free of all Liens, other than those permitted
by Section 6.17, all of the properties and assets reflected in the
Financial Statements as being owned by it, except for assets sold,
transferred or otherwise disposed of in the ordinary course of
business since the date thereof.
5.15. Material Agreements. Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject to
any charter or other corporate restriction which could reasonably
be expected to have a Material Adverse Effect or which restricts
or imposes conditions upon the ability of any Material Subsidiary
to (a) pay dividends or make other distributions on its capital
stock, (b) make loans or advances to the Borrower, (c) repay loans
or advances from the Borrower or (d) grant Liens to the Agent to
secure the Obligations. Neither the Borrower nor any Material
Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in (i) any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse
Effect or (ii) any agreement or instrument evidencing or governing
Indebtedness.
5.16. Year 2000. The Borrower has made a full and complete
assessment of the Year 2000 Issues and has a realistic and
achievable program for remediating the Year 2000 Issues on a
timely basis (the "Year 2000 Program"). Based on such assessment
and on the Year 2000 Program, the Borrower does not reasonably
anticipate that Year 2000 Issues will have a Material Adverse
Effect, except as the securities industry or securities markets
may be affected generally.
5.17. Insurance. The Borrower and its Subsidiaries maintain
with financially sound and reputable insurance companies insurance
on their Property in such amounts and covering such risks as is
consistent with sound business practice.
5.18. Disclosure. None of the (a) information, exhibits or
reports furnished by the Borrower or any Subsidiary to the Agent
or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents, or (b) representations or
warranties of the Borrower or any Subsidiary contained in this
Agreement, the other Loan Documents or any other document,
certificate or written statement furnished to the Agent or the
Lenders by or on behalf of the Borrower or any Subsidiary pursuant
to this Agreement, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements contained herein or therein not misleading in
light of the circumstances in which they were made. There is no
fact known to any Authorized Officer (other than matters generally
affecting the economy or the financial services industry) that has
had or could reasonably be expected to have a Material Adverse
Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders
for use in connection with the transactions contemplated by this
Agreement.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required
Lenders shall otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and
administered in accordance with Agreement Accounting Principles,
consistently applied, and will furnish to the Lenders:
(a)As soon as practicable and in any event within 90
days after the close of each of its Fiscal Years, an unqualified
audit report from PricewaterhouseCoopers LLP or other independent
certified public accountants acceptable to the Lenders, prepared
in accordance with Agreement Accounting Principles on a
consolidated and consolidating basis (consolidating statements
need not be certified by such accountants) for itself and its
Subsidiaries, including balance sheets as of the end of such
period and related statements of income, changes in shareholders'
equity and cash flows, and accompanied by (i) any management
letter prepared by said accountants (when available) and (ii) a
certificate of said accountants that, in the course of the
examination necessary for the preparation of their audit report,
they have obtained no knowledge of any Default or Unmatured
Default, or if, in the opinion of such accountants, any Default or
Unmatured Default shall exist, stating the nature and status
thereof.
(b)As soon as practicable and in any event within 45
days after the close of the first three Fiscal Quarters of each of
its Fiscal Years, for itself and its Subsidiaries, consolidated
and consolidating unaudited balance sheets as at the close of each
such period and consolidated and consolidating statements of
income, changes in shareholders' equity and cash flows for the
period from the beginning of such Fiscal Year to the end of such
quarter, all certified by its chief financial officer.
(c)As soon as practicable and in any event within 25
days after the close of each Fiscal Quarter, the FOCUS Report for
such Fiscal Quarter filed by RJA and RJFS with the Commission.
(d)Together with the financial statements required by
clauses (a) and (b) above, a Compliance Certificate signed by its
chief financial officer showing the calculations necessary to
determine compliance with this Agreement and stating that no
Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof.
(e)Within 270 days after the close of each Fiscal
Year, a statement of the Unfunded Liabilities of each Single
Employer Plan, if any, certified as correct by an actuary enrolled
under ERISA.
(f)As soon as possible and in any event within 10 days
after any Authorized Officer of the Borrower learns thereof,
notice of the assertion or commencement of any claim, action,
litigation, suit or proceeding against or affecting the Borrower
or any Subsidiary, including any investigation or proceeding
commenced by the Commission, NASD, MSRB, NYSE or any other
Governmental Authority, Self-Regulatory Organization or securities
exchange, which could reasonably be expected to have a Material
Adverse Effect.
(g)Promptly upon the furnishing thereof to the
shareholders of the Borrower, copies of all financial statements,
reports and proxy statements so furnished.
(h)Within 15 days after the filing thereof, copies of
all registration statements and annual, quarterly, monthly or
other regular reports which the Borrower files with the Commission
and, upon request, any such reports filed by any Subsidiary.
(i)Such other information (including non-financial
information) as the Agent or any Lender may from time to time
reasonably request.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Advances for general
corporate purposes, including without limitation the refinancing
of certain existing indebtedness, friendly acquisitions, share
repurchases and asset purchases. The Borrower will not, nor will
it permit any Subsidiary to, use any of the proceeds of the
Advances to (i) purchase or carry any Margin Stock in violation of
Regulation T, Regulation U or Regulation X, (ii) finance the
Acquisition of any Person which has not been approved and
recommended by the board of directors (or functional equivalent
thereof) of such Person, or (iii) fund subordinated loans from the
Borrower to any of its Subsidiaries.
6.3. Notice of Default. Within 10 days after any Authorized
Officer of the Borrower has knowledge thereof, the Borrower will
give notice in writing to the Lenders of the occurrence of (a) any
Default or Unmatured Default or (b) any other event or
development, financial or otherwise (including, without
limitation, developments with respect to Year 2000 Issues), which
could reasonably be expected to have a Material Adverse Effect
other than matters generally affecting the economy or the
financial services industry.
6.4. Conduct of Business. The Borrower will, and will cause each
Material Subsidiary to, (a) subject to Section 6.13(c), preserve
and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, (b) maintain
all registrations, licenses, consents, approvals and
authorizations from and with any Governmental Authority, Self-
Regulatory Organization or securities exchange necessary or
material to the conduct of its business, and (c) qualify and
remain qualified as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where failure to
qualify could not have a Material Adverse Effect. The Borrower
will not, and will not permit any of its Material Subsidiaries to,
engage in any material line of business substantially different
from those lines of business carried on by it on the date hereof.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States Federal and
applicable foreign, state and local tax returns required by
applicable law and pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or
Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate
reserves have been set aside in accordance with Agreement
Accounting Principles.
6.6. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance
companies insurance in such amounts and covering such risks as is
consistent with sound business practice, and the Borrower will
furnish to the Agent and any Lender upon request full information
as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, statutes (including, without
limitation, the Exchange Act, the Advisers Act, the Investment
Company Act and applicable Environmental Laws), rules,
regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject.
6.8. Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve,
protect and keep its Property in good repair, working order and
condition, and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection
therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Agent and the Lenders, by their
respective representatives and agents, to inspect any of the
Property, corporate books and financial records of the Borrower
and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each
Subsidiary, and to discuss the affairs, finances and accounts of
the Borrower and each Subsidiary with, and to be advised as to the
same by, their respective officers at such reasonable times and
intervals as the Agent or any Lender may designate. The Borrower
will keep or cause to be kept, and cause each Subsidiary to keep
or cause to be kept, appropriate records and books of account in
which complete entries are to be made reflecting its and their
business and financial transactions, such entries to be made in
accordance with Agreement Accounting Principles consistently
applied.
6.10. Year 2000. The Borrower will take, and will cause each
of its Subsidiaries to take, all such actions as are reasonably
necessary to successfully implement the Year 2000 Program as to
assure that Year 2000 Issues will not have a Material Adverse
Effect. At the request of the Agent, the Borrower will provide a
description of the Year 2000 Program, together with any updates or
progress reports with respect thereto.
6.11. Ownership of Subsidiaries. The Borrower will continue
to own, directly or indirectly, beneficially and of record, free
and clear of all Liens and restrictions, 75% of the outstanding
shares of capital stock each of RJA and RJFS.
6.12. Indebtedness. The Borrower will not, nor will it permit
any Subsidiary to, create, incur or suffer to exist any
Indebtedness, except:
(a)The Term Loan hereunder and Indebtedness under the
Revolving Credit Agreement;
(b)Existing Indebtedness described on Schedule II
hereto;
(c)Securities sold under agreements to repurchase (to
the extent such obligations constitute Indebtedness);
(d)Contingent Obligations permitted by Section 6.16;
(e)Capital Lease Obligations and purchase money
Indebtedness not exceeding $10,000,000 in the aggregate at any
time outstanding;
(f)(i) Moneys due to counterparties under stock loan
transactions, (ii) liabilities to customers for cash on deposit,
and (iii) liabilities to brokers, dealers and clearing
organizations relating to the settlement of securities
transactions;
(g)Indebtedness of Raymond James Credit Corporation in
an aggregate principal amount not exceeding $100,000,000 used to
finance loans collateralized by public company restricted or
control shares;
(h)Indebtedness of any Subsidiary for borrowed money
from the Borrower which represents unsubordinated Indebtedness of
such Subsidiary; and
(i) Unsecured Indebtedness not otherwise permitted
by this Section 6.12 in an aggregate principal amount not
exceeding $5,000,000.
6.13. Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person,
except that (a) a Wholly-Owned Subsidiary may merge into the
Borrower or any Wholly-Owned Subsidiary of the Borrower, (b) the
Borrower or any Subsidiary may merge or consolidate with any other
Person so long as the Borrower or such Subsidiary is the
continuing or surviving corporation and, prior to and after giving
effect to such merger or consolidation, no Default or Unmatured
Default shall exist, and (c) any Subsidiary may enter into a
merger or consolidation as a means of effecting a disposition
permitted by Section 6.14.
6.14. Sale of Assets. The Borrower will not, nor will it
permit any Subsidiary to, lease, sell, transfer or otherwise
dispose of its Property, to any other Person except for (a) sales
of securities sold in the ordinary course of business, and (b)
leases, sales, transfers or other dispositions of its Property
that, together with all other Property of the Borrower and its
Subsidiaries previously leased, sold or disposed of (other than
sales of securities sold in the ordinary course of business) as
permitted by this Section 6.14 during the twelve-month period
ending with the month in which any such lease, sale or other
disposition occurs, do not constitute a Substantial Portion of the
Property of the Borrower and its Subsidiaries.
6.15. Investments and Acquisitions. The Borrower will not,
nor will it permit any Subsidiary to, make or suffer to exist any
Investments (including, without limitation, loans and advances to,
and other Investments in, Subsidiaries), or commitments therefor,
or to create any Subsidiary or to become or remain a partner in
any partnership or joint venture, or to make any Acquisition of
any Person, except:
(a)Existing Investments in Subsidiaries and
Affiliates;
(b)Obligations of, or fully guaranteed by, the United
States of America; commercial paper and other short-term notes
and securities rated investment grade by a national securities
rating agency; demand deposit accounts maintained in the ordinary
course of business; and certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000;
(c)Publicly-traded securities and private equity
participations;
(d)Acquisitions of or Investments in Subsidiaries or
the capital stock, assets, obligations or other securities of or
interest in other Persons provided that (i) each such Person shall
be (x) in regard to Material Subsidiaries, incorporated, organized
or otherwise formed under the laws of any state of the United
States, and (y) engaged in a line of business not substantially
different from those lines of business carried on by the Borrower
and its Subsidiaries on the date hereof, (ii) the transaction (or
any tender offer commencing a proposed transaction) shall have
been approved and recommended by the board of directors (or
functional equivalent thereof) of such Person, and (iii) no
Default or Unmatured Default shall have occurred and be continuing
either immediately before or after giving effect to such
transaction and no Material Adverse Effect would result therefrom;
and
(e)Repurchases of up to 5,000,000 shares of the
Borrower's common stock to fund the Borrower's incentive stock
option and stock purchase plans and other corporate purposes.
6.16. Contingent Obligations. The Borrower will not, nor will
it permit any Subsidiary to, make or suffer to exist any
Contingent Obligation (including, without limitation, any
Contingent Obligation with respect to the obligations of a
Subsidiary), except (a) by endorsement of instruments for deposit
or collection in the ordinary course of business, (b) guarantees
by the Borrower of the Indebtedness of Raymond James Credit
Corporation in an aggregate principal amount not exceeding
$100,000,000 referred to in Section 6.12(g) and guarantees by the
Borrower (or any Subsidiary) of the Indebtedness of any other
Subsidiaries in an aggregate principal amount not exceeding
$10,000,000, (c) guarantees by the Borrower with respect to
settlement of securities transactions by its Affiliates extended
to customers of, lenders to, or clearing agencies for, such
Affiliates, and (d) guarantees by the Borrower of up to
$45,000,000 with respect to the activities of Raymond James Tax
Credit Funds, Inc. or any of its Subsidiaries.
6.17. Liens. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of
or on the Property of the Borrower or any of its Subsidiaries,
except:
(a)Liens for taxes, assessments or governmental
charges or levies on its Property if the same shall not at the
time be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books;
(b)Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens
arising in the ordinary course of business which secure the
payment of obligations not more than 60 days past due or which are
being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books;
(c)Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits, or
similar legislation;
(d)Utility easements, building restrictions and such
other encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the
business of the Borrower or its Subsidiaries;
(e)Liens securing the Indebtedness permitted by
Sections 6.12(b) and (c); and
(f)Liens incurred in the ordinary course of the
settlement of securities transactions.
6.18. Affiliates. The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with,
or make any payment or transfer to, any Affiliate except (a) in
the ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms and (b) transactions among the
Borrower and Wholly-Owned Subsidiaries of the Borrower.
6.19. Change in Corporate Structure; Fiscal Year. The
Borrower shall not, nor shall it permit any Material Subsidiary
to, (a) permit any amendment or modification to be made to its
certificate or articles of incorporation or by-laws which is
materially adverse to the interests of the Lenders (provided that
the Borrower shall notify the Agent of any other amendment or
modification thereto as soon as practicable thereafter) or (b)
change its Fiscal Year to end on any date other than the last
Friday in September of each year.
6.20. Inconsistent Agreements. The Borrower shall not, nor
shall it permit any Subsidiary to, enter into any indenture,
agreement, instrument or other arrangement which (a) directly or
indirectly prohibits or restrains, or has the effect of
prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the amending
of the Loan Documents or the ability of any Subsidiary to (i) pay
dividends or make other distributions on its capital stock, (ii)
make loans or advances to the Borrower, or (iii) repay loans or
advances from the Borrower or (b) contains any provision which
would be violated or breached by the making of Advances or by the
performance by the Borrower or any Subsidiary of any of its
obligations under any Loan Document.
6.21. Financial Covenants.
6.21.1 Minimum Tangible Net Worth. The Borrower on a
consolidated basis with its Subsidiaries at all times after the
date hereof shall maintain Tangible Net Worth of not less than (i)
$400,000,000 plus (ii) 50% of cumulative Net Income earned after
September 24, 1999.
6.21.2 Double Leverage Ratio. The Borrower on a parent-only
basis at all times after the date hereof shall maintain a Double
Leverage Ratio of not more than 1.15 to 1.0.
6.21.3 RJA Net Capital. The Borrower shall cause RJA at all
times after the date hereof to maintain a ratio (computed in
accordance with Exhibit A to Rule 15c3-3, "Formula for
Determination of Reserve Requirements for Brokers and Dealers") of
Net Capital to Aggregate Debt Items of not less than 10%.
6.21.4 RJFS Net Capital. The Borrower shall cause RJFS at all
times after the date hereof to maintain a ratio (computed in
accordance with Exhibit A to Rule 15c3-3, "Formula for
Determination of Reserve Requirements for Brokers and Dealers") of
Aggregate Indebtedness to Net Capital of not more than 9.0 to 1.0.
6.21.5 RJA/RJFS Excess Net Capital. The Borrower shall cause
RJA and RJFS at all times to have combined Excess Net Capital of
not less than $100,000,000.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1. Representation or Warranty. Any representation or warranty
made or deemed made by or on behalf of the Borrower or any of its
Subsidiaries to the Lenders or the Agent under or in connection
with this Agreement, any other Loan Document, any Loan, or any
certificate or information delivered in connection with this
Agreement or any other Loan Document shall be false in any
material respect on the date as of which made or deemed made.
7.2. Non-Payment. (a) Nonpayment of any principal of any Loan
when due, or (b) nonpayment of any interest upon any Loan or of
any fee or other obligation under any of the Loan Documents within
five days after the same becomes due.
7.3. Specific Defaults. The breach by the Borrower of any of the
terms or provisions of Section 6.2, Section 6.3(a), Section 6.4
(second sentence only) or Sections 6.10 through 6.21.
7.4. Other Defaults. The breach by the Borrower (other than a
breach which constitutes a Default under another Section of this
Article VII) of any of the terms or provisions of this Agreement
which is not remedied within 30 days after written notice from the
Agent or any Lender.
7.5. Cross-Default. Failure of the Borrower or any of its
Material Subsidiaries to pay when due any Indebtedness aggregating
in excess of $5,000,000; or the default by the Borrower or any of
its Subsidiaries in the performance of any term, provision or
condition contained in any agreement or agreements under which any
such Indebtedness was created or is governed (or the occurrence of
any other event or existence of any other condition) the effect of
any of which is to cause, or to permit the holder or holders of
such Indebtedness to cause, such Indebtedness to become due prior
to its stated maturity; or any such Indebtedness of the Borrower
or any of its Material Subsidiaries shall be declared to be due
and payable or required to be prepaid or repurchased (other than
by a regularly scheduled payment) prior to the stated maturity
thereof; or the Borrower or any of its Material Subsidiaries shall
not pay, or admit in writing its inability to pay, its debts
generally as then become due.
7.6. Insolvency; Voluntary Proceedings. The Borrower or any of
its Material Subsidiaries shall (a) have an order for relief
entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (b) make an assignment for the benefit
of creditors, (c) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any Substantial Portion
of its Property, (d) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed
against it, (e) take any corporate or partnership action to
authorize or effect any of the foregoing actions set forth in this
Section 7.6, or (f) fail to contest in good faith any appointment
or proceeding described in Section 7.7.
7.7. Involuntary Proceedings. Without the application, approval
or consent of the Borrower or any of its Material Subsidiaries, a
receiver, trustee, examiner, liquidator or similar official shall
be appointed for the Borrower or any of its Material Subsidiaries
or any Substantial Portion of its Property, or a proceeding
described in Section 7.6(d) shall be instituted against the
Borrower or any of its Material Subsidiaries and such appointment
continues undischarged or such proceeding continues undismissed or
unstayed for a period of 30 consecutive days.
7.8. Condemnation. Any court, government or governmental agency
shall condemn, seize or otherwise appropriate, or take custody or
control of, all or any portion of the Property of the Borrower and
its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned,
seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action
occurs, constitutes a Substantial Portion.
7.9. Judgments. (a) The Borrower or any of its Material
Subsidiaries shall fail within 30 days to pay, bond or otherwise
discharge one or more judgments or orders for the payment of money
in excess of $10,000,000 in the aggregate, or (b) the Borrower or
any of its Subsidiaries shall fail to pay, bond or otherwise
discharge one or more nonmonetary judgments or orders which,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, which judgment(s), in any such
case of clauses (a) and (b), is/are not stayed on appeal or
otherwise being appropriately contested in good faith.
7.10. Change in Control. Any Change in Control shall occur.
7.11. SIPC. The Commission or any Self-Regulatory
Organization has notified the SIPC pursuant to Section 5(a)(1) of
the SIPA of facts which indicate that the Borrower, RJA or RJFS is
in or is approaching financial difficulty, or the SIPC shall file
an application for a protective decree with respect to the
Borrower, RJA or RJFS under Section 5(a)(3) of the SIPA.
7.12. Broker-Dealer License. The Commission or other
Governmental Authority shall revoke or suspend the license or
authorization of RJA and RJFS under Federal or state law to
conduct business as a securities broker-dealer (and such license
or authorization shall not be reinstated within 5 days), or RJA or
RJFS shall be suspended or expelled from membership in the NASD,
NYSE or any other Self-Regulatory Organization or securities
exchange.
7.13. ERISA. The Unfunded Liabilities of all Single Employer
Plans shall exceed in the aggregate $1,000,000 or any Reportable
Event shall occur in connection with any Plan that could have a
Material Adverse Effect.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the Obligations shall
immediately become due and payable without any election or action
on the part of the Agent or any Lender. If any other Default
occurs, the Required Lenders (or the Agent with the consent of the
Required Lenders) may declare the Obligations to be due and
payable, whereupon the Obligations shall become immediately due
and payable, without presentment, demand, protest or notice of any
kind, all of which the Borrower hereby expressly waives.
If, within 30 Business Days after acceleration of the
maturity of the Obligations as a result of any Default (other than
any Default as described in Section 7.6 or 7.7 with respect to the
Borrower) and before any judgment or decree for the payment of the
Obligations due shall have been obtained or entered, the Required
Lenders (in their sole discretion) shall so direct, the Agent
shall, by notice to the Borrower, rescind and annul such
acceleration.
8.2. Amendments. Subject to the provisions of this Article VIII,
the Required Lenders (or the Agent with the consent in writing of
the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the
rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of all of the Lenders:
(a)Extend the Maturity Date (otherwise than as
provided in Section 2.18).
(b)Forgive all or any portion of the principal amount
of any Loan or reduce the rate or extend the time of payment of
interest or fees thereon.
(c)Reduce the percentage specified in the definition
of Required Lenders.
(d)Permit the Borrower to assign its Obligations or
rights under this Agreement.
(e)Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the Agent.
The Agent may waive payment of the fee required under Section
12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders
or the Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or
an acquiescence therein, and the making of a Loan notwithstanding
the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Loan shall not constitute
any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or
the exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by
the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Agent and the Lenders
until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall
survive the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the
Lenders and supersede all prior agreements and understandings
among the Borrower, the Agent and the Lenders relating to the
subject matter thereof other than the fee letter described in
Section 10.13.
9.5. Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any other
(except to the extent to which the Agent is authorized to act as
such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective
successors and assigns.
9.6. Expenses; Indemnification. The Borrower shall reimburse the
Agent for any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent, which attorneys may be employees of the
Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review,
syndication, amendment, modification, and administration of the
Loan Documents. The Borrower also agrees to reimburse the Agent
and the Lenders for any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent and the Lenders, which
attorneys may be employees of the Agent or the Lenders) paid or
incurred by the Agent or any Lender in connection with the
collection and enforcement of the Loan Documents. The Borrower
further agrees to indemnify the Agent and each Lender, their
respective affiliates, and each of their directors, officers and
employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor
whether or not the Agent or any Lender or any affiliate is a party
thereto) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan
hereunder, except to the extent that (i) they are determined in a
final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct
of the party seeking indemnification or (ii) they relate solely to
a claim or claims between or among the Lenders unrelated to any
alleged act or omission of the Borrower. The obligations of the
Borrower under this Section 9.6 shall survive the termination of
this Agreement.
9.7. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent
with sufficient counterparts so that the Agent may furnish one to
each of the Lenders.
9.8. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance
with Agreement Accounting Principles.
9.9. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid
in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
9.10. Nonliability of Lenders. The relationship between the
Borrower on the one hand and the Lenders and the Agent on the
other hand shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities
to the Borrower. Neither the Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of
any matter in connection with any phase of the Borrower's business
or operations. The Borrower agrees that neither the Agent nor any
Lender shall have liability to the Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower
in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-
appealable judgment by a court of competent jurisdiction that such
losses resulted from the gross negligence or willful misconduct of
the party from which recovery is sought. Neither the Agent nor
any Lender shall have any liability with respect to, and the
Borrower hereby waives, releases and agrees not to sue for, any
special, indirect or consequential damages suffered by the
Borrower in connection with, arising out of, or in any way related
to the Loan Documents or the transactions contemplated thereby.
9.11. Confidentiality. Each Lender agrees to hold any
confidential information which it may receive from the Borrower
pursuant to this Agreement in confidence, except for disclosure
(i) to its Affiliates and to other Lenders and their respective
Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to such Lender or to a Transferee (which
Transferee has agreed to be bound by this Section 9.11), (iii) to
regulatory officials, (iv) to any Person as required by law,
regulation, or legal process, (v) to any Person in connection with
any legal proceeding to which such Lender is a party, (vi) to such
Lender's direct or indirect contractual counterparties in swap
agreements (which counterparties have agreed to be bound by this
Section 9.11) or to legal counsel, accountants and other
professional advisors to such counterparties, and (vii) permitted
by Section 12.4. The obligations of the Lenders under this
Section 9.11 shall survive the termination of this Agreement.
9.12. Nonreliance. Each Lender hereby represents that it is
not relying on or looking to any Margin Stock for the repayment of
the Loans provided for herein.
9.13. Disclosure. The Borrower and each Lender hereby (i)
acknowledge and agree that Bank One and/or its Affiliates from
time to time may hold investments in, make other loans to or have
other relationships with the Borrower and its Affiliates, and (ii)
waive any liability of Bank One or such Affiliate of Bank One to
the Borrower or any Lender, respectively, arising out of or
resulting from such investments, loans or relationships other than
liabilities arising out of the gross negligence or willful
misconduct of Bank One or its Affiliates.
9.14. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO
CONFLICT OF LAWS PROVISIONS, OF THE STATE OF NEW YORK, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.15. CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE
OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK
CITY.
9.16. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship. Bank One, NA is
hereby appointed by each of the Lenders as its contractual
representative (herein referred to as the "Agent") hereunder and
under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents. The Agent
agrees to act as such contractual representative upon the express
conditions contained in this Article X. Notwithstanding the use
of the defined term "Agent," it is expressly understood and agreed
that the Agent shall not have any fiduciary responsibilities to
any Lender by reason of this Agreement or any other Loan Document
and that the Agent is merely acting as the contractual
representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan
Documents. In its capacity as the Lenders' contractual
representative, the Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the
Lenders within the meaning of Section 9-105 of the Uniform
Commercial Code and (iii) is acting as an independent contractor,
the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the
Lenders hereby agrees to assert no claim against the Agent on any
agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives.
10.2. Powers. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to
the Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to
take any action thereunder except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the
Borrower, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith except to the
extent such action or inaction is determined in a final non-
appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such
Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire
into, or verify (a) any statement, warranty or representation made
in connection with any Loan Document or any borrowing hereunder;
(b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any
condition specified in Article IV, except receipt of items
required to be delivered solely to the Agent; (d) the existence or
possible existence of any Default or Unmatured Default; (e) the
validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; (f) the value,
sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the
Borrower or any guarantor of any of the Obligations or of any of
the Borrower's or any such guarantor's respective Subsidiaries.
The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower
to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its
individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in
all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance
with written instructions signed by the Required Lenders, and such
instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. The Lenders
hereby acknowledge that the Agent shall be under no duty to take
any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Required Lenders.
The Agent shall be fully justified in failing or refusing to take
any action hereunder and under any other Loan Document unless it
shall first be indemnified to its satisfaction by the Lenders pro-
rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders, except as to money or
securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled
to advice of counsel concerning the contractual arrangement
between the Agent and the Lenders and all matters pertaining to
the Agent's duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed
by it to be genuine and correct and to have been signed or sent by
the proper person or persons, and, in respect to legal matters,
upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion
to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior
to such termination) (i) for any amounts not reimbursed by the
Borrower for which the Agent is entitled to reimbursement by the
Borrower under the Loan Documents, (ii) for any other expenses
incurred by the Agent on behalf of the Lenders, in connection with
the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation,
for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of
the Lenders) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection
with any dispute between the Agent and any Lender or between two
or more of the Lenders), or the enforcement of any of the terms of
the Loan Documents or of any such other documents, provided that
(i) no Lender shall be liable for any of the foregoing to the
extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Agent and
(ii) any indemnification required pursuant to Section 3.5(vii)
shall, notwithstanding the provisions of this Section 10.8, be
paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8
shall survive payment of the Obligations and termination of this
Agreement.
10.9. Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or
Unmatured Default hereunder unless the Agent has received written
notice from a Lender or the Borrower referring to this Agreement
describing such Default or Unmatured Default and stating that such
notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof
to the Lenders.
10.10. Rights as a Lender. In the event the Agent is a Lender,
the Agent shall have the same rights and powers hereunder and
under any other Loan Document with respect to its Commitment and
its Loans as any Lender and may exercise the same as though it
were not the Agent, and the term "Lender" or "Lenders" shall, at
any time when the Agent is a Lender, unless the context otherwise
indicates, include the Agent in its individual capacity. The
Agent and its Affiliates may accept deposits from, lend money to,
and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement
or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
10.11. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any
other Lender and based on the financial statements prepared by the
Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance
upon the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents.
10.12. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower,
such resignation to be effective upon the appointment of a
successor Agent or, if no successor Agent has been appointed,
forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or
without cause by written notice received by the Agent from the
Required Lenders, such removal to be effective on the date
specified by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may
appoint, on behalf of the Borrower and the Lenders, a successor
Agent. Notwithstanding the previous sentence, the Agent may at
any time without the consent of the Borrower or any Lender,
appoint any of its Affiliates which is a commercial bank as a
successor Agent hereunder. If the Agent has resigned or been
removed and no successor Agent has been appointed, the Lenders may
perform all the duties of the Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the
applicable Lender and for all other purposes shall deal directly
with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the
appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and
duties of the resigning or removed Agent. Upon the effectiveness
of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness
of the resignation or removal of an Agent, the provisions of this
Article X shall continue in effect for the benefit of such Agent
in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the Agent by
merger, or the Agent assigns its duties and obligations to an
Affiliate pursuant to this Section 10.12, then the term "Corporate
Base Rate" as used in this Agreement shall mean the prime rate,
base rate or other analogous rate of the new Agent.
10.13. Agent's Fee. The Borrower agrees to pay to the Agent,
for its own account, the fees agreed to by the Borrower and the
Agent pursuant to that certain letter agreement dated August 3,
1999, or as otherwise agreed from time to time.
10.14. Delegation to Affiliates. The Borrower and the Lenders
agree that the Agent may delegate any of its duties under this
Agreement to any of its Affiliates. Any such Affiliate (and such
Affiliate's directors, officers, agents and employees) which
performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and
other protective provisions to which the Agent is entitled under
Articles IX and X.
10.15. Syndication Agent, Co-Documentation Agents, etc. None
of the Lenders identified in this Agreement as a "Syndication
Agent" or a "Co-Documentation Agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without
limiting the foregoing, none of such Lenders shall have or be
deemed to have a fiduciary relationship with any Lender. Each
Lender hereby makes the same acknowledgments with respect to such
Lenders as it makes with respect to the Agent in Section 10.11.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower
becomes insolvent, however evidenced, or any Default occurs, any
and all deposits (including all account balances, whether
provisional or final and whether or not collected or available)
and any other Indebtedness at any time held or owing by any Lender
or any Affiliate of any Lender to or for the credit or account of
the Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations,
or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loan (other than
payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a
greater proportion than that received by any other Lender, such
Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender,
whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of
the Borrower and the Lenders and their respective successors and
assigns, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents and (ii)
any assignment by any Lender must be made in compliance with
Section 12.3. The parties to this Agreement acknowledge that
clause (ii) of this Section 12.1 relates only to absolute
assignments and does not prohibit assignments creating security
interests, including, without limitation, any pledge or assignment
by any Lender of all or any portion of its rights under this
Agreement and any Note to a Federal Reserve Bank; provided,
however, that no such pledge or assignment creating a security
interest shall release the transferor Lender from its obligations
hereunder unless and until the parties thereto have complied with
the provisions of Section 12.3. The Agent may treat the Person
which made any Loan or which holds any Note as the owner thereof
for all purposes hereof unless and until such Person complies with
Section 12.3; provided, however, that the Agent may in its
discretion (but shall not be required to) follow instructions from
the Person which made any Loan or which holds any Note to direct
payments relating to such Loan or Note to another Person. Any
assignee of the rights to any Loan or any Note agrees by
acceptance of such assignment to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or
giving such authority or consent is the owner of the rights to any
Loan (whether or not a Note has been issued in evidence thereof),
shall be conclusive and binding on any subsequent holder or
assignee of the rights to such Loan.
12.2. Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, such Lender shall remain
the owner of its Loans and the holder of any Note issued to it in
evidence thereof for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be
determined as if such Lender had not sold such participating
interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents
other than any amendment, modification or waiver with respect to
any Loan or Commitment in which such Participant has an interest
which forgives principal, interest or fees or reduces the interest
rate or fees payable with respect to any such Loan or Commitment,
extends the Maturity Date, postpones any date fixed for any
regularly-scheduled payment of principal of, or interest or fees
on, any such Loan or Commitment, releases any guarantor of any
such Loan or releases all or substantially all of the collateral,
if any, securing any such Loan.
12.2.3 Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided
in Section 11.1 in respect of its participating interest in
amounts owing under the Loan Documents to the same extent as if
the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender
shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant,
and each Participant, by exercising the right of setoff provided
in Section 11.1, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such
amounts to be shared in accordance with Section 11.2 as if each
Participant were a Lender.
12.3. Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at
any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations under
the Loan Documents. Such assignment shall be substantially in the
form of Exhibit B hereto or in such other form as may be agreed to
by the parties thereto. The consent of the Borrower and the Agent
shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required.
Such consent shall not be unreasonably withheld or delayed. Each
such assignment with respect to a Purchaser which is not a Lender
or an Affiliate thereof shall (unless each of the Borrower and the
Agent otherwise consents) be in an amount not less than the lesser
of (i) $5,000,000 or (ii) the remaining amount of the assigning
Lender's outstanding Loan (calculated as at the date of such
assignment).
12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent
of an assignment, together with any consents required by Section
12.3.1, and (ii) payment of a $4,000 fee to the Agent for
processing such assignment (unless such fee is waived by the
Agent), such assignment shall become effective on the effective
date specified in such assignment. The assignment shall contain a
representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and
Loans under the applicable assignment agreement constitutes "plan
assets" as defined under ERISA and that the rights and interests
of the Purchaser in and under the Loan Documents will not be "plan
assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender
party to this Agreement and any other Loan Document executed by or
on behalf of the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Lenders or the Agent shall
be required to release the transferor Lender with respect to the
percentage of the Aggregate Commitment and Term Loan assigned to
such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 12.3.2, the transferor Lender,
the Agent and the Borrower shall, if the transferor Lender or the
Purchaser desires that its Loan be evidenced by a Note, make
appropriate arrangements so that a new Note or, as appropriate, a
replacement Note is issued to such transferor Lender and a new
Note or, as appropriate, a replacement Note, is issued to such
Purchaser, in each case in a principal amount reflecting its
outstanding Loan, as adjusted pursuant to such assignment.
12.4. Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any
other Person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective
Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its
Subsidiaries; provided that each Transferee and prospective
Transferee agrees to be bound by Section 9.11 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of
any jurisdiction other than the United States or any State
thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 3.5(iv).
ARTICLE XIII
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.12
with respect to borrowing notices, all notices, requests and other
communications to any party hereunder shall be in writing
(including electronic transmission, facsimile transmission or
similar writing) and shall be given to such party: (x) in the case
of the Borrower or the Agent, at its address or facsimile number
set forth on the signature pages hereof, (y) in the case of any
Lender, at its address or facsimile number set forth below its
signature hereto or (z) in the case of any party, at such other
address or facsimile number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower in
accordance with the provisions of this Section 13.1. Each such
notice, request or other communication shall be effective (i) if
given by facsimile transmission, when transmitted to the facsimile
number specified in this Section and confirmation of receipt is
received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when
delivered (or, in the case of electronic transmission, received)
at the address specified in this Section; provided that notices to
the Agent under Article II shall not be effective until received.
13.2. Change of Address. The Borrower, the Agent and any
Lender may each change the address for service of notice upon it
by a notice in writing to the other parties hereto.
[signature pages to follow]
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agents
have executed this Agreement as of the date first above written.
RAYMOND JAMES FINANCIAL, INC.
By:
Title:
Address for Notices:
880 Carillon Parkway
St. Petersburg, Florida
33716
Attention: Jeffrey P.
Julien
Telephone: (727) 573-
3800
Facsimile: (727) 573-
8365
Commitment: BANK ONE, NA,
$12,500,000 Individually and as
Administrative Agent
By:
Title:
Address for Notices:
1 Bank One Plaza
Suite 0159, 16th Floor
Chicago, Illinois 60670
Attention: Glenyss
Gilliam
Telephone: (312) 732-
3642
Facsimile: (312) 732-
3246
Commitment: CITIBANK, N.A.,
$12,500,000 Individually and as
Syndication Agent
By:
Title:
Address for Notices:
399 Park Avenue
12th Floor, Zone 11
New York, New York 10043
Attention: Peter G. Nealon
Telephone: (212) 559-
8621
Facsimile: (212) 371-
6309
Commitment: BANK OF AMERICA, NATIONAL
$12,500,000 ASSOCIATION,
Individually and as Co-
Documentation Agent
By:
Title:
Address for Notices:
335 Madison Avenue
5th Floor
New York, New York 10017
Attention: James F. Dever
Telephone: (212) 503-
7986
Facsimile: (212) 503-
7013
Commitment: THE CHASE MANHATTAN BANK,
$12,500,000 Individually and as Co-
Documentation Agent
By:
Title:
Address for Notices:
One Chase Manhattan Plaza
21st Floor
New York, New York 10081
Attention: Richard Cassa
Telephone: (212) 552-
6259
Facsimile: (212) 552-
5142
Exhibit
A
COMPLIANCE CERTIFICATE
I, certify that I am the
of RAYMOND JAMES FINANCIAL, INC. (the "Borrower"),
and that as such I am authorized to execute this Compliance
Certificate on behalf of the Borrower, and DO HEREBY FURTHER
CERTIFY on behalf of the Borrower that:
1. I have reviewed the terms of that certain Term Credit
Agreement dated as of October 26, 1999 among the Borrower, the
financial institutions named therein (the "Lenders") and Bank One,
NA, as administrative agent (the "Agent") (as amended,
supplemented or modified from time to time, the "Credit
Agreement") and I have made, or have caused to be made by
employees or agents under my supervision, a detailed review of the
transactions and conditions of the Borrower during the accounting
period covered by the attached financial statements;
2. The examinations described in paragraph 1 did not
disclose, and I have no knowledge of, the existence of any
condition or event which constitutes a Default or Unmatured
Default during or at the end of the accounting period covered by
the attached financial statements or as of the date of this
Compliance Certificate, except as set forth below; and
3. Schedule I attached hereto sets forth financial data and
computations evidencing compliance with the covenants set forth in
Sections 6.14, 6.21.1, 6.21.2, 6.21.3, 6.21.4 and 6.21.5 of the
Credit Agreement, all of which data and computations are true,
complete and correct. Capitalized terms not defined herein are
defined in the Credit Agreement.
Described below are the exceptions, if any, to
paragraph 2 by listing, in detail, the nature of the condition or
event, the period during which it has existed and the action which
the Borrower has taken, is taking, or proposes to take with
respect to each such condition or event:
_____________________________________________________________
_____
_____________________________________________________________
_____
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements
delivered with this Compliance Certificate in support hereof, are
made and delivered this ______ day of ______________, _____.
RAYMOND JAMES FINANCIAL, INC.
By:
Title:
Schedule I
Section 6.14 - Sale of Assets
Asset Dispositions for twelve-month period ending with month
in which disposition occurs:
(a) Permitted asset dispositions:
10% of consolidated assets of the Borrower at beginning
of such twelve-month period* $
(b) Actual asset dispositions for such period $
*Note: must also demonstrate (to the extent calculable)
that total asset dispositions for such period do not involve
Property which is responsible for more than 15% of the
consolidated net sales or Net Income of the Borrower for
such twelve-month period.
Section 6.21.1 - Minimum Tangible Net Worth
1. Required Tangible Net Worth: $400,000,000
* plus 50%
of cumulative Net Income earned after $
$
September 24, 1999
Total
2. Actual Tangible Net Worth: $
Section 6.21.2 - Maximum Double Leverage Ratio
1. Maximum Double Leverage Ratio 1.15 to 1.0
2. Actual Double Leverage Ratio
(a) Investment in Subsidiaries $
(b) Shareholders equity (parent only) $
(c) Ratio of (a) to (b) ____ to 1.0
Section 6.21.3 - RJA Net Capital Ratio
10%
1. Minimum RJA Net Capital Ratio
2. Actual RJA Net Capital Ratio
$
(a) Net Capital
$
(b) Aggregate Debit Items
____%
(c) Ratio of (a) to (b)
Section 6.21.4 - RJFS Net Capital Ratio
1. Maximum RJFS Net Capital Ratio 9.0 to 1.0
2. Actual RJFS Net Capital Ratio
(a) Aggregate Indebtedness $
(b) Net Capital $
(c) Ratio of (a) to (b) ____ to
1.0
Section 6.21.5 - RJA/RJFS Excess Net Capital
1. Minimum combined RJA/RJFS Excess Net Capital
$100,000,000
2. Actual combined RJA/RJFS Excess Net Capital
$
Exhibit B
FORM OF
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement")
between ______________________ (the "Assignor") and
_______________________________ (the "Assignee") is dated as of
____________________, ____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a
Credit Agreement (which, as it may be amended, modified, renewed
or extended from time to time is herein called the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto
("Schedule 1"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to them in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, an interest in and to the
Assignor's rights and obligations under the Credit Agreement and
the other Loan Documents, such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this
Assignment Agreement the percentage interest specified in Item 3
of Schedule 1 of all outstanding rights and obligations under the
Credit Agreement and the other Loan Documents relating to the
facilities listed in Item 3 of Schedule 1. The aggregate
Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in
Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment
Agreement (the "Effective Date") shall be the later of the date
specified in Item 5 of Schedule 1 or two Business Days (or such
shorter period agreed to by the Agent) after this Assignment
Agreement, together with any consents required under the Credit
Agreement, are delivered to the Agent. In no event will the
Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date are not made on
the proposed Effective Date.
4. PAYMENT OBLIGATIONS. In consideration for the sale and
assignment of Loans hereunder, the Assignee shall pay the
Assignor, on the Effective Date, the amount agreed to by the
Assignor and Assignee. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments
of principal, interest and fees with respect to the interest
assigned hereby. The Assignee will promptly remit to the
Assignor any interest on Loans and fees received from the Agent
which relate to the portion of the Commitment or Loans assigned
to the Assignee hereunder for periods prior to the Effective Date
and not previously paid by the Assignee to the Assignor. In the
event that either party hereto receives any payment to which the
other party hereto is entitled under this Assignment Agreement,
then the party receiving such amount shall promptly remit it to
the other party hereto.
5. RECORDATION FEE. The Assignor and Assignee each agree
to pay one-half of the recordation fee required to be paid to the
Agent in connection with this Assignment Agreement unless
otherwise specified in Item 6 of Schedule 1.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that
(i) it is the legal and beneficial owner of the interest being
assigned by it hereunder, (ii) such interest is free and clear of
any adverse claim created by the Assignor, (iii) the execution
and delivery of this Assignment Agreement by the Assignor is duly
authorized. It is understood and agreed that the assignment and
assumption hereunder are made without recourse to the Assignor
and that the Assignor makes no other representation or warranty
of any kind to the Assignee. Neither the Assignor nor any of its
officers, directors, employees, agents or attorneys shall be
responsible for (a) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of any
Loan Document, including, without limitation, documents granting
the Assignor and the other Lenders a security interest in assets
of the Borrower or any guarantor, (b) any representation,
warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness
of the Borrower or any guarantor, (d) the performance of or
compliance with any of the terms or provisions of any of the Loan
Documents, (e) inspecting any of the property, books or records
of the Borrower, (f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral
securing or purporting to secure the Loans, or (g) any mistake,
error of judgment, or action taken or omitted to be taken in
connection with the Loans or the Loan Documents.
7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The
Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements
requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement,
(ii) agrees that it will, independently and without reliance upon
the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under the Loan Documents, (iii) appoints and
authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto, (iv) confirms that
the execution and delivery of this Assignment Agreement by the
Assignee is duly authorized, (v) agrees that it will perform in
accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as
a Lender, (vi) agrees that its payment instructions and notice
instructions are as set forth in the attachment to Schedule 1,
(vii) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption
hereunder are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents
will not be "plan assets" under ERISA, (viii) agrees to indemnify
and hold the Assignor harmless against all losses and expenses
(including, without limitation, reasonable attorneys' fees) and
liabilities incurred by the Assignor in connection with or
arising in any manner from the Assignee's non-performance of the
obligations assumed under this Assignment Agreement, and (ix) if
applicable, attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is
entitled to receive payments under the Loan Documents without
deduction or withholding of any United States federal income
taxes.
8. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE
GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF NEW YORK.
9. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For
the purpose hereof, the addresses of the parties hereto (until
notice of a change is delivered) shall be the address set forth
in the attachment to Schedule 1.
10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment
Agreement may be executed in counterparts. Transmission by
facsimile of an executed counterpart of this Assignment Agreement
shall be deemed to constitute due and sufficient delivery of such
counterpart and such facsimile shall be deemed to be an original
counterpart of this Assignment Agreement.
IN WITNESS WHEREOF, the duly authorized officers of the
parties hereto have executed this Assignment Agreement by
executing Schedule 1 hereto as of the date first above written.
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement:
That certain Term Credit Agreement dated as
of October 26, 1999 among Raymond James
Financial, Inc., the Lenders named therein
and Bank One, NA, as administrative agent
(the "Agent").
2. Date of Assignment Agreement: , ______.
3. Amounts (as of Date of Item 2 above):
(a) Assignee's percentage of Term Loan purchased
under the Assignment Agreement*
_________%
(b) Amount of Term Loan purchased
under the Assignment Agreement
$__________
4. Assignee's Loan:
$__________
5. Proposed Effective Date:
___________
6. Non-standard Recordation Fee Arrangement
N/A**
[Assignor/Assignee to
pay 100% of fee]
[Fee waived by
Agent]
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:_________________________
By:_________________________
Title:________________________
Title:________________________
Accepted and Consented to *** by: Accepted and
Consented to *** by:
RAYMOND JAMES FINANCIAL, INC. BANK ONE, NA
By:_________________________
By:_________________________
Title:________________________
Title:________________________
* Percentage taken to 10 decimal places.
** If fee is split 50-50, pick N/A as option.
*** Delete if not required by Credit Agreement.
ATTACHMENT TO SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
569053.5
[Execution]
$100,000,000
REVOLVING CREDIT AGREEMENT
Dated as of October 26, 1999
among
RAYMOND JAMES FINANCIAL, INC.,
as Borrower,
THE LENDERS NAMED HEREIN,
BANK ONE, NA,
as Administrative Agent,
CITIBANK, N.A.,
as Syndication Agent,
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Co-Documentation Agent,
and
THE CHASE MANHATTAN BANK,
as Co-Documentation Agent
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS 1
ARTICLE II
THE CREDITS 12
2.1. Advances 12
2.2. Ratable Loans 12
2.3. Types of Advances 12
2.4. Facility Fee; Reductions in Aggregate Commitment 12
2.5. Minimum Amount of Each Advance 13
2.6. Optional Principal Payments 13
2.7. Method of Selecting Types and Interest Periods for New
Advances 13
2.8. Conversion and Continuation of Outstanding Advances 13
2.9. Changes in Interest Rate, etc 14
2.10. Rates Applicable After Default 14
2.11. Method of Payment 15
2.12. Telephonic Notices 15
2.13. Interest Payment Dates; Interest and Fee Basis 15
2.14.Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions 15
2.15. Lending Installations 16
2.16. Non-Receipt of Funds by the Agent 16
2.17. Noteless Agreement; Evidence of Indebtedness 16
2.18. Extension of Facility Termination Date 17
2.19. Replacement of Lender 17
ARTICLE III
YIELD PROTECTION; TAXES 18
3.1. Yield Protection 18
3.2. Changes in Capital Adequacy Regulations 19
3.3. Availability of Types of Advances 19
3.4. Funding Indemnification 19
3.5. Taxes 19
3.6. Lender Statements; Survival of Indemnity 21
ARTICLE IV
CONDITIONS PRECEDENT 22
4.1. Initial Loans 22
4.2. Each Future Advance 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES 23
5.1. Corporate Existence; Conduct of Business 23
5.2. Authorization and Validity 24
5.3. Compliance with Laws and Contracts 24
5.4. Governmental Consents 24
5.5. Financial Statements 25
5.6. Material Adverse Change 25
5.7. Taxes 25
5.8. Litigation and Contingent Obligations 25
5.9. Subsidiaries 26
5.10. ERISA 26
5.11. Defaults 26
5.12. Federal Reserve Regulations 26
5.13. Investment Company; Public Utility Holding Company 26
5.14. Ownership of Properties 26
5.15. Material Agreements 26
5.16. Year 2000 27
5.17. Insurance 27
5.18. Disclosure 27
ARTICLE VI
COVENANTS 27
6.1. Financial Reporting 27
6.2. Use of Proceeds 28
6.3. Notice of Default 29
6.4. Conduct of Business 29
6.5. Taxes 29
6.6. Insurance 29
6.7. Compliance with Laws 29
6.8. Maintenance of Properties 29
6.9. Inspection 29
6.10. Year 2000 30
6.11. Ownership of Subsidiaries 30
6.12. Indebtedness 30
6.13. Merger 30
6.14. Sale of Assets 31
6.15. Investments and Acquisitions 31
6.16. Contingent Obligations 31
6.17. Liens 32
6.18. Affiliates 32
6.19. Change in Corporate Structure; Fiscal Year 32
6.20. Inconsistent Agreements 33
6.21. Financial Covenants. 33
6.21.1 Minimum Tangible Net Worth 33
6.21.2 Double Leverage Ratio 33
6.21.3 RJA Net Capital 33
6.21.4 RJFS Net Capital 33
6.21.5 RJA/RJFS Excess Net Capital 33
ARTICLE VII
DEFAULTS 33
7.1. Representation or Warranty 33
7.2. Non-Payment 34
7.3. Specific Defaults 34
7.4. Other Defaults 34
7.5. Cross-Default 34
7.6. Insolvency; Voluntary Proceedings 34
7.7. Involuntary Proceedings 34
7.8. Condemnation 34
7.9. Judgments 35
7.10. Change in Control 35
7.11. SIPC 35
7.12. Broker-Dealer License 35
7.13. ERISA 35
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 35
8.1. Acceleration 35
8.2. Amendments 36
8.3. Preservation of Rights 36
ARTICLE IX
GENERAL PROVISIONS 36
9.1. Survival of Representations 36
9.2. Governmental Regulation 37
9.3. Headings 37
9.4. Entire Agreement 37
9.5. Several Obligations; Benefits of this Agreement 37
9.6. Expenses; Indemnification 37
9.7. Numbers of Documents 37
9.8. Accounting 38
9.9. Severability of Provisions 38
9.10. Nonliability of Lenders 38
9.11. Confidentiality 38
9.12. Nonreliance 38
9.13. Disclosure 38
9.14. CHOICE OF LAW 39
9.15. CONSENT TO JURISDICTION 39
9.16. WAIVER OF JURY TRIAL 39
ARTICLE X
THE AGENT 39
10.1. Appointment; Nature of Relationship 39
10.2. Powers 40
10.3. General Immunity 40
10.4. No Responsibility for Loans, Recitals, etc 40
10.5. Action on Instructions of Lenders 40
10.6. Employment of Agents and Counsel 41
10.7. Reliance on Documents; Counsel 41
10.8. Agent's Reimbursement and Indemnification 41
10.9. Notice of Default 41
10.10. Rights as a Lender 41
10.11. Lender Credit Decision 42
10.12. Successor Agent 42
10.13. Agent's Fee 43
10.14. Delegation to Affiliates 43
10.15. Syndication Agent, Co-Documentation Agents, etc 43
ARTICLE XI
SETOFF; RATABLE PAYMENTS 43
11.1. Setoff 43
11.2. Ratable Payments 43
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 44
12.1. Successors and Assigns 44
12.2. Participations. 44
12.2.1 Permitted Participants; Effect 44
12.2.2 Voting Rights 44
12.2.3 Benefit of Setoff 45
12.3. Assignments. 45
12.3.1 Permitted Assignments 45
12.3.2 Effect; Effective Date 45
12.4. Dissemination of Information 46
12.5. Tax Treatment 46
ARTICLE XIII
NOTICES 46
13.1. Notices 46
13.2. Change of Address 46
EXHIBITS
Exhibit A Compliance Certificate
Exhibit B Assignment Agreement
SCHEDULES
Schedule I - Material Subsidiaries
Schedule II - Existing Indebtedness
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT, dated as of October 26,
1999, is among RAYMOND JAMES FINANCIAL, INC., a Florida
corporation, the Lenders (as hereinafter defined), BANK ONE, NA, a
national banking association having its headquarters in Chicago,
Illinois, individually and as administrative agent (the "Agent"),
CITIBANK, N.A., individually and as syndication agent (the
"Syndication Agent"), BANK OF AMERICA, NATIONAL ASSOCIATION,
individually and as co-documentation agent ("Co-Documentation
Agent"), and THE CHASE MANHATTAN BANK, individually and as co-
documentation agent ("Co-Documentation Agent").
R E C I T A L S:
A. The Borrower has requested the Lenders to provide a
revolving credit facility to it in the aggregate principal amount
of $100,000,000, the proceeds of which the Borrower will use for
general corporate purposes, including without limitation friendly
acquisitions, share repurchases and asset purchases; and
B. The Lenders are willing to extend such credit facility
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Lenders and the Agent hereby agree
as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement,
by which the Borrower or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any
firm, corporation or limited liability company, or division or
line of business thereof, whether through purchase of assets,
merger or otherwise, or (b) directly or indirectly acquires (in
one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority
(by percentage or voting power) of the outstanding ownership
interests of a partnership or limited liability company.
"Advance" means a borrowing pursuant to Section 2.1
consisting of the aggregate amount of the several Loans made on
the same Borrowing Date by the Lenders to the Borrower of the same
Type and, in the case of Eurodollar Advances, for the same
Interest Period.
"Advisers Act" means the Investment Advisers Act of 1940, as
amended.
"Affected Lender" is defined in Section 2.19.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person
if the controlling Person owns 10% or more of any class of voting
securities (or other ownership interests) of the controlled Person
or possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of the controlled
Person, whether through ownership of stock, by contract or
otherwise.
"Agent" means Bank One in its capacity as administrative
agent for the Lenders pursuant to Article X, and not in its
individual capacity as a Lender, and any successor administrative
agent appointed pursuant to Article X.
"Agents" means and includes the Agent, the Syndication Agent
and the Co-Documentation Agents.
"Aggregate Commitment" means the aggregate of the Commitments
of all the Lenders hereunder. The initial Aggregate Commitment is
$100,000,000.
"Aggregate Debit Items" means, at any time, "aggregate debit
items" computed in accordance with Rule 15c3-1.
"Aggregate Indebtedness" means, at any time, "aggregate
indebtedness" computed in accordance with Rule 15c3-1.
"Agreement" means this Revolving Credit Agreement, as it may
be amended, modified or restated and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, applied in a
manner consistent with those used in preparing the Financial
Statements.
"Alternate Base Rate" means, for any day, a rate of interest
per annum equal to the higher of (a) the Corporate Base Rate for
such day, or (b) the sum of the Federal Funds Effective Rate for
such day plus 1/2% per annum.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Authorized Officer" means any of the chief executive
officer, president, chief financial officer or controller of the
Borrower, acting singly.
"Bank One" means Bank One, NA, a national banking association
having its principal office in Chicago, Illinois, in its
individual capacity, and its successors.
"Bankruptcy Code" means Title 11, United States Code,
sections 1 et seq., as the same may be amended from time to time,
and any successor thereto or replacement therefor which may be
hereafter enacted.
"Borrower" means Raymond James Financial, Inc., a Florida
corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Borrowing Notice" is defined in Section 2.7.
"Business Day" means (a) with respect to any borrowing,
payment or rate selection of Eurodollar Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in
Chicago and New York for the conduct of substantially all of their
commercial lending activities, interbank wire transfers can be
made on the Fedwire system and dealings in United States dollars
are carried on in the London interbank market, and (b) for all
other purposes, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.
"CEA" means the Commodity Exchange Act, as amended from time
to time.
"CFTC" means the Commodities Future Trading Commission and
any successor entity.
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Change" is defined in Section 3.2.
"Change in Control" means (a) the acquisition by any Person,
or two or more Persons acting in concert, including without
limitation any acquisition effected by means of a merger or
consolidation, of beneficial ownership (within the meaning of Rule
13d-3 of the Commission under the Exchange Act) of 30% or more of
the outstanding shares of voting stock of the Borrower, or (b)
during any period of 25 consecutive calendar months, commencing on
the date of this Agreement, the ceasing of those individuals (the
"Continuing Directors") who (i) were directors of the Borrower on
the first day of each such period or (ii) subsequently became
directors of the Borrower and whose initial election or initial
nomination for election subsequent to that date was approved by a
majority of the Continuing Directors then on the board of
directors of the Borrower, to constitute a majority of the board
of directors of the Borrower. For purposes of making the
calculation in clause (a) above, an "acquisition" shall not
include a transfer of shares by a shareholder or his estate to
members of his immediate family (spouse, children, grandchildren,
spouses of children or grandchildren) or to trusts for the benefit
of the shareholder or members of his immediate family.
"Closing Date" is defined in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commission" means the Securities and Exchange Commission and
any successor entity.
"Commitment" means, for each Lender, the obligation of such
Lender to make Loans not exceeding the amount set forth opposite
its signature below and as set forth in any assignment which has
become effective pursuant to Section 12.3.2, as such amount may be
modified from time to time pursuant to the terms hereof.
"Compliance Certificate" means a certificate executed by an
Authorized Officer substantially in the form of Exhibit A hereto.
"Consolidated" or "consolidated", when used in connection
with any calculation, means a calculation to be determined on a
consolidated basis for the Borrower and its Subsidiaries in
accordance with Agreement Accounting Principles.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay
contract or the obligations of any such Person as a general
partner of a partnership with respect to the liabilities of the
partnership.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or
businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.8.
"Corporate Base Rate" means a rate per annum equal to the
corporate base rate or prime rate of interest announced by Bank
One or by its parent, Bank One Corporation, from time to time,
changing when and as said corporate base rate or prime rate
changes.
"Default" means an event described in Article VII.
"Double Leverage Ratio" means, at any time, as calculated for
the Borrower on a parent-only basis in accordance with Agreement
Accounting Principles, the ratio of (a) investment in Subsidiaries
to (b) the shareholders' equity of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to (a) the protection of
the environment, (b) the effect of the environment on human
health, (c) emission, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water,
ground water or land, or (d) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"Eurodollar Advance" means an Advance which, except as
otherwise provided in Section 2.10, bears interest at the
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the applicable British
Bankers' Association Interest Settlement Rate for deposits in U.S.
dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, and having a maturity equal to such Interest Period,
provided that, (i) if Reuters Screen FRBD is not available to the
Agent for any reason, the applicable Eurodollar Base Rate for the
relevant Interest Period shall instead be the applicable British
Bankers' Association Interest Settlement Rate for deposits in U.S.
dollars as reported by any other generally recognized financial
information service as of 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period and having a
maturity equal to such Interest Period, and (ii) if no such
British Bankers' Association Interest Settlement Rate is available
to the Agent, the applicable Eurodollar Base Rate for the relevant
Interest Period shall instead be the rate determined by the Agent
to be the rate at which Bank One or one of its Affiliate banks
offers to place deposits in U.S. dollars with first-class banks in
the London interbank market at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period, in the approximate amount of Bank One's relevant
Eurodollar Loan and having a maturity equal to such Interest
Period.
"Eurodollar Loan" means a Loan which, except as otherwise
provided in Section 2.10, bears interest at the Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance
for the relevant Interest Period, the sum of (a) the quotient of
(i) the Eurodollar Base Rate applicable to such Interest Period,
divided by (ii) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Interest Period, plus (b) 0.50% per
annum.
"Excess Net Capital" means, at any time, "excess net capital"
computed in accordance with Rule 15c3-1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" means, in the case of each Lender or
applicable Lending Installation and the Agent, taxes imposed on
its overall net income, and franchise taxes imposed on it by (a)
the jurisdiction under the laws of which such Lender or the Agent
is incorporated or organized or (b) any jurisdiction in which such
Lender or the Agent maintains a lending office.
"Extension Date" is defined in Section 2.18.
"Extension Period" is defined in Section 2.18.
"Extension Request" is defined in Section 2.18.
"FOCUS Report" means, for any Person, the Financial and
Operational Combined Uniform Single Report required to be filed on
a monthly or quarterly basis, as the case may be, with the
Commission or the NYSE, or any report that is required in lieu of
such report.
"Facility Fee" is defined in Section 2.4.
"Facility Termination Date" means October 24, 2000 or any
later date as may be specified as the Facility Termination Date in
accordance with Section 2.18 or any earlier date on which the
Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an
interest rate per annum equal to the weighted average of the rates
on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations at
approximately 10:00 a.m. (Chicago time) on such day on such
transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent in its sole
discretion.
"Financial Statements" is defined in Section 5.5.
"Fiscal Quarter" means one of the four three-month accounting
periods comprising a Fiscal Year.
"Fiscal Year" means the twelve-month accounting period ending
on the last Friday in September of each year.
"Floating Rate Advance" means an Advance which, except as
otherwise provided in Section 2.10, bears interest at the
Alternate Base Rate.
"Floating Rate Loan" means a Loan which, except as otherwise
provided in Section 2.10, bears interest at the Alternate Base
Rate.
"Governmental Authority" means any government (foreign or
domestic) or any state or other political subdivision thereof or
any governmental body, agency, authority, department or commission
(including without limitation any taxing authority or political
subdivision) or any instrumentality or officer thereof (including
without limitation any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government and any corporation, partnership or
other entity directly or indirectly owned or controlled by or
subject to the control of any of the foregoing.
"Indebtedness" of a Person means such Person's (a)
obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than
accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from Property now or hereafter
owned or acquired by such Person, (d) obligations which are
evidenced by notes, acceptances, or other instruments, (e)
Capitalized Lease Obligations, (f) Contingent Obligations, (g)
obligations for which such Person is obligated pursuant to or in
respect of a Letter of Credit, and (h) any other obligation for
borrowed money which in accordance with Agreement Accounting
Principles would be shown as a liability on the consolidated
balance sheet of such Person.
"Interest Period" means, with respect to a Eurodollar
Advance, a period of one, two or three months commencing on a
Business Day selected by the Borrower pursuant to this Agreement.
Such Interest Period shall end on the day which corresponds
numerically to such date one, two or three months thereafter;
provided, however, that if there is no such numerically
corresponding day in such next, second or third succeeding month,
such Interest Period shall end on the last Business Day of such
next, second or third succeeding month. If an Interest Period
would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day;
provided, however, that if said next succeeding Business Day falls
in a new calendar month, such Interest Period shall end on the
immediately preceding Business Day.
"Investment" of a Person means any (a) loan, advance (other
than commission, travel and similar advances to officers and
employees made in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary
course of business on terms customary in the trade) or
contribution of capital by such Person; (b) stocks, bonds, mutual
funds, partnership interests, notes, debentures or other
securities owned by such Person; (c) any deposit accounts and
certificate of deposit owned by such Person; and (d) structured
notes, derivative financial instruments and other similar
instruments or contracts owned by such Person; provided, however,
that in regard to clauses (b), (c) and (d), "Investment" shall not
include any such securities, accounts or instruments owned or
acquired by the Borrower or its Subsidiaries in the ordinary
course of its business as heretofore conducted, including but not
limited to the market making activities of RJA.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors
and assigns.
"Lending Installation" means, with respect to a Lender or the
Agent, the office, branch, subsidiary or affiliate of such Lender
or the Agent listed on the signature pages hereof or otherwise
selected by such Lender or the Agent pursuant to Section 2.15.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such
Person or upon which such Person is an account party or for which
such Person is in any way liable.
"Lien" means any security interest, lien (statutory or
other), mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan
made pursuant to Article II (or any conversion or continuation
thereof).
"Loan Documents" means this Agreement, any Notes issued
pursuant to Section 2.17 and the other documents and agreements
contemplated hereby and executed by the Borrower in favor of the
Agent or any Lender.
"MSRB" means the Municipal Securities Rulemaking Board and
any successor entity.
"Margin Stock" has the meaning assigned to that term under
Regulation U.
"Material Adverse Effect" means a material adverse effect on
(a) the business, Property, condition (financial or otherwise) or
results of operations of the Borrower and its Subsidiaries taken
as a whole, (b) the ability of the Borrower to perform its
obligations under the Loan Documents, or (c) the validity or
enforceability of any of the Loan Documents or the rights or
remedies of the Agent or the Lenders thereunder.
"Material Subsidiary" means (a) any of the Subsidiaries
listed on Schedule I hereto and (b) in the case of any specified
condition or event, any other Subsidiary or group of other
Subsidiaries (i) each of which has suffered such condition or
event to occur and (ii) that in the aggregate represents five
percent (5%) or more of the net revenues or the consolidated
assets of the Borrower and its Subsidiaries, as reflected in the
then most recent financial statements delivered pursuant to
Section 6.1(a) or (b).
"NASD" means the National Association of Securities Dealers,
Inc.
"NYSE" means the New York Stock Exchange, Inc.
"Net Capital" means, at any time, "net capital" computed in
accordance with Rule 15c3-1.
"Net Income" means, for any computation period, with respect
to the Borrower on a consolidated basis with its Subsidiaries
(other than any Subsidiary which is restricted from declaring or
paying dividends or otherwise advancing funds to its parent
whether by contract or otherwise), cumulative net income earned
during such period as determined in accordance with Agreement
Accounting Principles.
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" means any promissory note issued at the request of a
Lender pursuant to Section 2.17.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Loans, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent or any
indemnified party arising under the Loan Documents.
"Other Taxes" is defined in Section 3.5(ii).
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June,
September and December.
"Person" means any natural person, corporation, firm, joint
venture, partnership, limited liability company, association,
enterprise, trust or other entity or organization, or any
Governmental Authority.
"Plan" means an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code as to which the Borrower
or any member of the Controlled Group may have any liability.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person, or
other assets owned, leased or operated by such Person.
"pro-rata" means, when used with respect to a Lender, and any
described aggregate or total amount, an amount equal to such
Lender's pro-rata share or portion based on its percentage of the
Aggregate Commitment or, if the Aggregate Commitment has been
terminated, its percentage of the aggregate principal amount of
outstanding Advances.
"Purchasers" is defined in Section 12.3.1.
"RJA" means Raymond James & Associates, Inc. and any
successor entity.
"RJFS" means Raymond James Financial Services, Inc. and any
successor entity.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to depositary institutions.
"Regulation T" means Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and
shall include any successor or other regulation or official
interpretation of such Board of Governors relating to the
extension of credit by securities brokers and dealers for the
purpose of purchasing or carrying margin stocks applicable to such
Persons.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and
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 such Persons.
"Regulation X" means Regulation X of the Board of Governors
of the Federal Reserve System as from time to time 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 the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event; provided, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section
302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
"Required Lenders" means Lenders in the aggregate having at
least 51% of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding
at least 51% of the aggregate unpaid principal amount of the
outstanding Advances.
"Reserve Requirement" means, with respect to an Interest
Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed
under Regulation D on Eurocurrency liabilities.
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"Rule 15c3-1" means Rule 15c3-1 of the General Rules and
Regulations as promulgated by the Commission under the Exchange
Act, as such rule may be amended from time to time, or any rule or
regulation of the Commission which replaces Rule 15c3-1.
"Rule 15c3-3" means Rule 15c3-3 of the General Rules and
Regulations as promulgated by the Commission under the Exchange
Act, as such rule may be amended from time to time, or any rule or
regulation of the Commission which replaces Rule 15c3-3.
"SIPA" means the Security Investor Protection Act of 1970, as
amended.
"SIPC" means the Securities Investor Protection Corporation
or any successor entity.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Self-Regulatory Organization" has the meaning assigned to
such term in Section 3(a)(26) of the Exchange Act.
"Single Employer Plan" means a Plan maintained by the
Borrower or any member of the Controlled Group for employees of
the Borrower or any member of the Controlled Group.
"Subsidiary" of a Person means (a) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, (b) any
partnership, limited liability company, association, joint venture
or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time
be so owned or controlled, or (c) any other corporation or entity
which for financial reporting purposes is consolidated with the
Borrower in accordance with Agreement Accounting Principles.
Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of
the Borrower and its Subsidiaries, Property which (a) represents
more than 10% of the consolidated assets of the Borrower and its
Subsidiaries as would be shown in the consolidated financial
statements of the Borrower and its Subsidiaries as at the
beginning of the twelve-month period ending with the month in
which such determination is made, or (b) is responsible for more
than 15% of the consolidated net sales or Net Income of the
Borrower and its Subsidiaries as reflected in the financial
statements referred to in clause (a) above.
"Tangible Net Worth" means, at any date, the consolidated
stockholders' equity of the Borrower and its consolidated
Subsidiaries determined in accordance with Agreement Accounting
Principles, less their consolidated Intangible Assets, all
determined as of such date. For purposes of this definition,
"Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business
made within twelve months after the acquisition of such business)
subsequent to June 30, 1999 in the book value of any asset owned
by the Borrower or a consolidated Subsidiary, and (ii) all
unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, organization or developmental expenses and
other intangible items.
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and
all liabilities with respect to the foregoing, but excluding
Excluded Taxes.
"Term Credit Agreement" means the $50,000,000 Term Credit
Agreement of even date herewith among the Borrower, the Agent and
the Lenders providing for a three-year term loan, subject to
extension, as such agreement may be amended, modified or restated
and in effect from time to time.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a
Floating Rate Advance or a Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the
present value of all vested and unvested accrued benefits under
all Single Employer Plans exceeds the fair market value of all
such Plan assets allocable to such benefits, all determined as of
the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (a) any
Subsidiary all of the outstanding voting securities of which shall
at the time be owned or controlled, directly or indirectly, by
such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, limited
liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
"Year 2000 Issues" means anticipated costs, problems and
uncertainties associated with the inability of certain computer
applications to effectively handle data including dates on and
after January 1, 2000, as such inability affects the business,
operations and financial condition of the Borrower and its
Subsidiaries and of the Borrower's and its Subsidiaries' material
customers, suppliers and vendors.
"Year 2000 Program" is defined in Section 5.16.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Advances. (a) From and including the date of this Agreement
and prior to the Facility Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement,
to make Loans to the Borrower from time to time in amounts not to
exceed in the aggregate at any one time outstanding the amount of
its Commitment. Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow Advances at any time prior
to the Facility Termination Date. The Commitments to lend
hereunder shall expire on the Facility Termination Date.
(b)The Borrower hereby agrees that if at any time, as
a result of reductions in the Aggregate Commitment pursuant to
Section 2.4 or otherwise, the aggregate balance of the Loans
exceeds the Aggregate Commitment, the Borrower shall repay
immediately its then outstanding Loans in such amount as may be
necessary to eliminate such excess.
(c)Any outstanding Advances and all other unpaid
Obligations shall be paid in full by the Borrower on the Facility
Termination Date.
2.2. Ratable Loans. Each Advance hereunder shall consist of Loans
made from the several Lenders ratably in proportion to the ratio
that their respective Commitments bear to the Aggregate
Commitment.
2.3. Types of Advances. The Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof,
selected by the Borrower in accordance with Sections 2.7 and 2.8.
2.4. Facility Fee; Reductions in Aggregate Commitment. (a) The
Borrower agrees to pay to the Agent for the account of each Lender
a facility fee (the "Facility Fee") in an amount equal to 0.125%
per annum times the daily average Commitment of such Lender
(regardless of usage) from the date hereof to and including the
Facility Termination Date, payable quarterly in arrears on the
last Business Day of each calendar quarter hereafter and on the
Facility Termination Date. All accrued Facility Fees shall be
payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder.
(b)The Borrower may permanently reduce the Aggregate
Commitment in whole, or in part ratably among the Lenders in a
minimum aggregate amount of $5,000,000 or any integral multiple of
$1,000,000 in excess thereof, upon at least five Business Days'
written notice to the Agent, which notice shall specify the amount
of any such reduction; provided, however, that the amount of the
Aggregate Commitment may not be reduced below the aggregate
principal amount of the outstanding Advances.
2.5. Minimum Amount of Each Advance. Each Eurodollar Advance
shall be in the minimum amount of $5,000,000 (and in multiples of
$1,000,000 if in excess thereof), and each Floating Rate Advance
shall be in the minimum amount of $5,000,000 (and in multiples of
$1,000,000 if in excess thereof); provided, however, that (a) any
Floating Rate Advance may be in the amount of the unused Aggregate
Commitment and (b) in no event shall more than five (5) Eurodollar
Advances be permitted to be outstanding at any time.
2.6. Optional Principal Payments. The Borrower may from time to
time pay, without penalty or premium, all outstanding Floating
Rate Advances, or, in a minimum aggregate amount of $5,000,000 or
any integral multiple of $1,000,000 in excess thereof, any portion
of the outstanding Floating Rate Advances upon two Business Days'
prior notice to the Agent. The Borrower may from time to time
pay, subject to the payment of any funding indemnification amounts
required by Section 3.4 but without penalty or premium, all
outstanding Eurodollar Advances, or, in a minimum aggregate amount
of $5,000,000 or any integral multiple of $1,000,000 in excess
thereof, any portion of the outstanding Eurodollar Advances upon
three Business Days' prior notice to the Agent.
2.7. Method of Selecting Types and Interest Periods for New
Advances. The Borrower shall select the Type of Advance and, in
the case of each Eurodollar Advance, the Interest Period
applicable to each Advance from time to time. The Borrower shall
give the Agent irrevocable notice (a "Borrowing Notice") not later
than 10:00 a.m. (Chicago time) at least one Business Day before
the Borrowing Date of each Floating Rate Advance and three
Business Days before the Borrowing Date for each Eurodollar
Advance, specifying:
(a)the Borrowing Date of such Advance, which shall be
a Business Day;
(b)the aggregate amount of such Advance;
(c)the Type of Advance selected; and
(d)in the case of each Eurodollar Advance, the
Interest Period applicable thereto, which shall end on or prior to
the Facility Termination Date.
Not later than noon (Chicago time) on each Borrowing Date, each
Lender shall make available its Loan or Loans, in funds
immediately available in Chicago, to the Agent at its address
specified pursuant to Article XIII. The Agent will make the funds
so received from the Lenders available to the Borrower at the
Agent's aforesaid address.
2.8. Conversion and Continuation of Outstanding Advances.
Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted into
Eurodollar Advances pursuant to this Section 2.8 or are repaid in
accordance with Section 2.6. Each Eurodollar Advance shall
continue as a Eurodollar Advance until the end of the then
applicable Interest Period therefor, at which time such Eurodollar
Advance shall be automatically converted into a Floating Rate
Advance unless (x) such Eurodollar Advance is or was repaid in
accordance with Section 2.6 or (y) the Borrower shall have given
the Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Interest Period, such
Eurodollar Advance continue as a Eurodollar Advance for the same
or another Interest Period. Subject to the terms of Section 2.5,
the Borrower may elect from time to time to convert all or any
part of a Floating Rate Advance into a Eurodollar Advance. The
Borrower shall give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of a Floating
Rate Advance into a Eurodollar Advance or of the continuation of a
Eurodollar Advance not later than 10:00 a.m. (Chicago time) at
least three Business Days prior to the date of the requested
conversion or continuation, specifying:
(a)the requested date of such conversion or
continuation, which shall be a Business Day;
(b)the aggregate amount and Type of the Advance which
is to be converted or continued; and
(c)the amount of such Advance which is to be converted
into or continued as a Eurodollar Advance and the duration of the
Interest Period applicable thereto, which shall end on or prior to
the Facility Termination Date.
2.9. Changes in Interest Rate, etc. (a) Each Floating Rate
Advance shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Advance is
made or is automatically converted from a Eurodollar Advance into
a Floating Rate Advance pursuant to Section 2.8, to but excluding
the date it is paid or is converted into a Eurodollar Advance
pursuant to Section 2.8, at a rate per annum equal to the
Alternate Base Rate. Changes in the rate of interest on that
portion of any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Alternate Base
Rate. Each Eurodollar Advance shall bear interest on the
outstanding principal amount thereof from and including the first
day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest
rate determined by the Agent as applicable to such Eurodollar
Advance based upon the Borrower's selections under Sections 2.7
and 2.8 and otherwise in accordance with the terms hereof. No
Interest Period may end after the Facility Termination Date.
(b) Notwithstanding anything to the contrary contained
in this Agreement, any Advances made or converted into Floating
Rate Advances during the period from and including December 1,
1999 through and including January 31, 2000 will bear interest at
a rate per annum during such period equal to the highest of (i)
the Corporate Base Rate for each day during such period, (ii) the
sum of the Federal Funds Effective Rate for each day during such
period plus .50% per annum, or (iii) the sum of the then current
Federal Reserve Board Open Market Committee's "Target Fed Funds
Rate" for each day during such period plus 1.50% per annum.
2.10. Rates Applicable After Default. Notwithstanding
anything to the contrary contained in Section 2.7 or 2.8, during
the continuance of a Default or Unmatured Default the Required
Lenders may, at their option, by notice to the Borrower, declare
that no Advance may be made as, converted into or continued as a
Eurodollar Advance. During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower
(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous
consent of the Lenders to changes in interest rates), declare that
each Eurodollar Advance and Floating Rate Advance shall bear
interest (for the remainder of the applicable Interest Period in
the case of Eurodollar Advances) at a rate per annum equal to the
Alternate Base Rate plus two percent (2%) per annum; provided,
however, that such increased rate shall automatically and without
action of any kind by the Lenders become and remain applicable
until revoked by the Required Lenders in the event of a Default
described in Section 7.6 or 7.7.
2.11. Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction or
counterclaim, in immediately available funds to the Agent at the
Agent's address specified pursuant to Article XIII, or at any
other Lending Installation of the Agent specified in writing by
the Agent to the Borrower, by noon (Chicago time) on the date when
due and shall be applied ratably by the Agent among the Lenders.
Each payment delivered to the Agent for the account of any Lender
shall be delivered promptly by the Agent to such Lender in the
same type of funds that the Agent received at its address
specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender. The
Agent is hereby authorized to charge the account of the Borrower
maintained with Bank One for each payment of principal, interest
and fees as it becomes due hereunder.
2.12. Telephonic Notices. The Borrower hereby authorizes the
Lenders and the Agent to extend, convert or continue Advances,
effect selections of Types of Advances and to transfer funds based
on telephonic notices made by any person or persons the Agent or
any Lender in good faith believes to be acting on behalf of the
Borrower, it being understood that the foregoing authorization is
specifically intended to allow Borrowing Notices and
Conversion/Continuance Notices to be given telephonically. The
Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or
any Lender, of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material
respect from the action taken by the Agent and the Lenders, the
records of the Agent and the Lenders shall govern absent manifest
error.
2.13. Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each Floating Rate Advance shall be payable on
each Payment Date, commencing with the first such date to occur
after the date hereof, on any date on which a Floating Rate
Advance is prepaid, whether due to acceleration or otherwise, and
at maturity. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a
Eurodollar Advance on a day other than a Payment Date shall be
payable on the date of conversion. Interest accrued on each
Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest and Facility Fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest
shall be payable for the day an Advance is made but not for the
day of any payment on the amount paid if payment is received prior
to noon (Chicago time) at the place of payment. If any payment of
principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the
next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing
interest in connection with such payment.
2.14. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions. Promptly after receipt thereof, the
Agent will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by
it hereunder. The Agent will notify each Lender of the interest
rate applicable to each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.
2.15. Lending Installations. Each Lender may book its Loans
at any Lending Installation selected by such Lender and may change
its Lending Installation from time to time. All terms of this
Agreement shall apply to any such Lending Installation and the
Loans and any Notes issued hereunder shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender
may, by written notice to the Agent and the Borrower in accordance
with Article XIII, designate replacement or additional Lending
Installations through which Loans will be made by it and for whose
account Loan payments are to be made.
2.16. Non-Receipt of Funds by the Agent. Unless the Borrower
or a Lender, as the case may be, notifies the Agent prior to the
date on which it is scheduled to make payment to the Agent of (a)
in the case of a Lender, the amount of a Loan, or (b) in the case
of the Borrower, a payment of principal, interest or fees to the
Agent for the account of the Lenders, that it does not intend to
make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the
amount of such payment available to the intended recipient in
reliance upon such assumption. If such Lender or the Borrower, as
the case may be, has not in fact made such payment to the Agent,
the recipient of such payment shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the
date such amount was so made available by the Agent until the date
the Agent recovers such amount at a rate per annum equal to (x) in
the case of payment by a Lender, the Federal Funds Effective Rate
for such day for the first three days and thereafter, the interest
rate applicable to the relevant Loan, or (y) in the case of
payment by the Borrower, the interest rate applicable to the
relevant Loan.
2.17. Noteless Agreement; Evidence of Indebtedness. (a) Each
Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender from time
to time, including the amounts of principal and interest payable
and paid to such Lender from time to time hereunder.
(b) The Agent shall also maintain accounts in which
it will record (i) the amount of each Loan made hereunder and the
Type thereof, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each
Lender hereunder, and (iii) the amount of any sum received by the
Agent hereunder from the Borrower and each Lender's share thereof.
(c) The entries maintained in the accounts maintained
pursuant to paragraphs (a) and (b) above shall be prima facie
evidence of the existence and amounts of the Obligations therein
recorded (and, in the case of any inconsistency between the
records of the Agent and any Lender, the records of the Agent
shall be the prima facie evidence that controls with respect to
the Borrower); provided, however, that the failure of the Agent or
any Lender to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay
the Obligations in accordance with their terms.
(d) Any Lender may request that its Loans be evidenced
by a promissory note (a "Note"). In such event, the Borrower
shall prepare, execute and deliver to such Lender a Note payable
to the order of such Lender in a form incorporating the terms of
this Agreement supplied by the Agent. Thereafter, the Loans
evidenced by such Note and interest thereon shall at all times
(including after any assignment pursuant to Section 12.3) be
represented by one or more Notes payable to the order of the payee
named therein or any assignee pursuant to Section 12.3, except to
the extent that any such Lender or assignee subsequently returns
any such Note for cancellation and requests that such Loans once
again be evidenced as described in paragraphs (a) and (b) above.
The execution and delivery of each Note shall take place at the
principal office of the Agent in Chicago or such other place
agreed to by the parties.
2.18. Extension of Facility Termination Date. The Borrower
may request an extension of the Facility Termination Date by
submitting a request for an extension to the Agent (an "Extension
Request") no more than 45 days, but no less than 30 days, prior to
the then effective Facility Termination Date. Each extension
effected pursuant to this Section 2.18 shall commence on the then
effective Facility Termination Date (the "Extension Date"). The
Extension Request must specify the new Facility Termination Date
requested by the Borrower, which date shall be no more than 364
days (the "Extension Period") after the Extension Date, including
the Extension Date as one of the days in the calculation of the
days elapsed. Promptly upon receipt of an Extension Request, the
Agent shall notify each Lender of the contents thereof and shall
request each Lender to approve the Extension Request. Each Lender
approving the Extension Request shall deliver its written consent
to the Agent no earlier than 30 days prior to the then effective
Facility Termination Date and no later than 20 days after receipt
of the Extension Request. In the event that a Lender shall fail
to notify the Agent within such period as to whether it agrees to
the Extension Request, such Lender shall be deemed to have refused
the Extension Request. If the consent of the Required Lenders is
timely received by the Agent, the new Facility Termination Date
specified in the Extension Request shall become effective on the
Extension Date as to such consenting Lenders only (and not as to
any Lender which has not consented to such extension), and the
Agent shall promptly notify the Borrower and each consenting
Lender of the new Facility Termination Date and new Aggregate
Commitment. Notwithstanding anything contained in this Agreement
to the contrary, (a) all Obligations hereunder owing to the non-
extending Lenders shall be due and payable on the Facility
Termination Date without giving effect to any requested extension,
(b) the Aggregate Commitment as of the commencement of the
Extension Period shall be reduced to an amount equal to the sum of
the Commitments of the Lenders ultimately consenting to the
Extension Request, and (c) each Lender may, in its sole
discretion, grant or deny its consent with respect to any proposed
Extension Request. Any Lender not granting the Extension Request
shall, if the Borrower has selected an assignee for such Lender
reasonably acceptable to the Agent prior to the Extension Date,
promptly assign to such assignee its rights and obligations
hereunder in respect of all or that portion of such Lender's
Commitment as such assignee is willing to accept, all in
accordance with Section 12.3.
2.19. Replacement of Lender. If the Borrower is required
pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment
to any Lender or if any Lender's obligation to make or continue,
or to convert Floating Rate Advances into, Eurodollar Advances
shall be suspended pursuant to Section 3.3 (any Lender so affected
an "Affected Lender"), the Borrower may elect, if such amounts
continue to be charged or such suspension is still effective, to
replace such Affected Lender as a Lender party to this Agreement,
provided that no Default or Unmatured Default shall have occurred
and be continuing at the time of such replacement, and provided
further that, concurrently with such replacement, (a) another bank
or other entity which is reasonably satisfactory to the Borrower
and the Agent shall agree, as of such date, to purchase for cash
the Advances and other Obligations due to the Affected Lender
pursuant to an assignment substantially in the form of Exhibit B
at par and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Affected Lender to
be terminated as of such date and to comply with the requirements
of Section 12.3 applicable to assignments, and (b) the Borrower
shall pay to such Affected Lender in same day funds on the day of
such replacement all interest, fees and other amounts then accrued
but unpaid to such Affected Lender by the Borrower hereunder to
and including the date of termination, including without
limitation payments due to such Affected Lender under Sections
3.l, 3.2 and 3.5, and an amount, if any, equal to the payment
which would have been due to such Lender on the day of such
replacement under Section 3.4 had the Loans of such Affected
Lender been prepaid on such date rather than sold to the
replacement Lender.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection. If, on or after the date of this
Agreement, the adoption of any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any change
in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender or applicable
Lending Installation with any request or directive (whether or not
having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or any applicable Lending
Installation to any Taxes, or changes the basis of
taxation of payments (other than with respect to
Excluded Taxes) to any Lender in respect of its
Eurodollar Loans, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than the amount
of reserves and assessments taken into account in
determining the interest rate applicable to Eurodollar
Advances), or
(iii) imposes any other condition the result of which is
to increase the cost to any Lender or any applicable
Lending Installation of making, funding or maintaining
its Eurodollar Loans or reduces any amount receivable by
any Lender or any applicable Lending Installation in
connection with its Eurodollar Loans, or requires any
Lender or any applicable Lending Installation to make
any payment calculated by reference to the amount of
Eurodollar Loans held or interest received by it, by an
amount deemed material by such Lender,
and the result of any of the foregoing is to increase the cost to
such Lender or applicable Lending Installation of making or
maintaining its Eurodollar Loans or Commitment or to reduce the
return received by such Lender or applicable Lending Installation
in connection with such Eurodollar Loans or Commitment, then,
within 15 days of demand by such Lender, the Borrower shall pay
such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction in amount
received.
3.2. Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender
or any corporation controlling such Lender is increased as a
result of a Change, then, within 15 days of demand by such Lender,
the Borrower shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender determines is
attributable to this Agreement, its Loans or its Commitment to
make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "Change" means (i) any change
after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the
force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any
Lender or any Lending Installation or any corporation controlling
any Lender. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on
the date of this Agreement, including transition rules, and (ii)
the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to the
date of this Agreement.
3.3. Availability of Types of Advances. If any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation,
or directive, whether or not having the force of law, or if the
Required Lenders determine that (i) deposits of a type and
maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to Eurodollar
Advances does not accurately reflect the cost of making or
maintaining Eurodollar Advances, then the Agent shall suspend the
availability of Eurodollar Advances and require any affected
Eurodollar Advances to be repaid or converted to Floating Rate
Advances, subject to the payment of any funding indemnification
amounts required by Section 3.4.
3.4. Funding Indemnification. If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the
applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Eurodollar Advance is not made on
the date specified by the Borrower for any reason other than
default by the Lenders, the Borrower will indemnify each Lender
for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or
employing deposits acquired to fund or maintain such Eurodollar
Advance.
3.5. Taxes. (i) All payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any Note
shall be made free and clear of and without deduction for any and
all Taxes. If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, (a) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 3.5) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no
such deductions been made, (b) the Borrower shall make such
deductions, (c) the Borrower shall pay the full amount deducted to
the relevant authority in accordance with applicable law and (d)
the Borrower shall furnish to the Agent the original copy of a
receipt evidencing payment thereof within 30 days after such
payment is made.
(ii) In addition, the Borrower hereby agrees to pay any
present or future stamp or documentary taxes and any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or under any Note or from the execution or
delivery of, or otherwise with respect to, this Agreement or any
Note ("Other Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent and
each Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed
on amounts payable under this Section 3.5) paid by the Agent or
such Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payments due
under this indemnification shall be made within 30 days of the
date the Agent or such Lender makes demand therefor pursuant to
Section 3.6.
(iv) Each Lender that is not incorporated under the laws of
the United States of America or a state thereof (each a "Non-U.S.
Lender") agrees that it will, not less than ten Business Days
after the date of this Agreement, (i) deliver to each of the
Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes, and (ii) deliver to each of the Borrower and
the Agent a United States Internal Revenue Form W-8 or W-9, as the
case may be, and certify that it is entitled to an exemption from
United States backup withholding tax. Each Non-U.S. Lender
further undertakes to deliver to each of the Borrower and the
Agent (x) renewals or additional copies of such form (or any
successor form) on or before the date that such form expires or
becomes obsolete, and (y) after the occurrence of any event
requiring a change in the most recent forms so delivered by it,
such additional forms or amendments thereto as may be reasonably
requested by the Borrower or the Agent. All forms or amendments
described in the preceding sentence shall certify that such Lender
is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from
duly completing and delivering any such form or amendment with
respect to it and such Lender advises the Borrower and the Agent
that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.
(v) For any period during which a Non-U.S. Lender has
failed to provide the Borrower with an appropriate form pursuant
to clause (iv), above (unless such failure is due to a change in
treaty, law or regulation, or any change in the interpretation or
administration thereof by any governmental authority, occurring
subsequent to the date on which a form originally was required to
be provided), such Non-U.S. Lender shall not be entitled to
indemnification under this Section 3.5 with respect to Taxes
imposed by the United States; provided that, should a Non-U.S.
Lender which is otherwise exempt from or subject to a reduced rate
of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (iv), above, the Borrower
shall take such steps as such Non-U.S. Lender shall reasonably
request to assist such Non-U.S. Lender to recover such Taxes.
(vi) Any Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this
Agreement or any Note pursuant to the law of any relevant
jurisdiction or any treaty shall deliver to the Borrower (with a
copy to the Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed
by applicable law as will permit such payments to be made without
withholding or at a reduced rate.
(vii) If the U.S. Internal Revenue Service or any other
governmental authority of the United States or any other country
or any political subdivision thereof asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not
delivered or properly completed, because such Lender failed to
notify the Agent of a change in circumstances which rendered its
exemption from withholding ineffective, or for any other reason),
such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax, withholding therefor,
or otherwise, including penalties and interest, and including
taxes imposed by any jurisdiction on amounts payable to the Agent
under this subsection, together with all costs and expenses
related thereto (including attorneys fees and time charges of
attorneys for the Agent, which attorneys may be employees of the
Agent). The obligations of the Lenders under this Section
3.5(vii) shall survive the payment of the Obligations and
termination of this Agreement.
3.6. Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its Eurodollar Loans to
reduce any liability of the Borrower to such Lender under Sections
3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar
Advances under Section 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each
Lender shall deliver a written statement of such Lender to the
Borrower (with a copy to the Agent) as to the amount due, if any,
under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall
set forth in reasonable detail the calculations upon which such
Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection
with a Eurodollar Loan shall be calculated as though each Lender
funded its Eurodollar Loan through the purchase of a deposit of
the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise
provided herein, the amount specified in the written statement of
any Lender shall be payable on demand after receipt by the
Borrower of such written statement. The obligations of the
Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Loans. The Lenders shall not be required to make the
initial Advance hereunder unless the Borrower has furnished the
following to the Agent with sufficient copies for the Lenders and
the other conditions set forth below have been satisfied, in each
case on a date (the "Closing Date") on or before October 30, 1999:
(a)Charter Documents; Good Standing Certificates.
Copies of the certificate of incorporation of the Borrower,
together with all amendments thereto, certified by the Secretary
of State of Florida, together with good standing certificates (i)
as to the Borrower, from the State of Florida and (ii) as to RJA,
from the States of Florida, New York and Michigan.
(b)By-Laws and Resolutions. Copies, certified by the
Secretary or Assistant Secretary of the Borrower, of its by-laws
and of its Board of Directors' resolutions authorizing the
execution, delivery and performance of the Loan Documents to which
the Borrower is a party.
(c)Secretary's Certificate. An incumbency
certificate, executed by the Secretary or Assistant Secretary of
the Borrower, which shall identify by name and title and bear the
signature of the officers of the Borrower authorized to sign the
Loan Documents and to make borrowings hereunder, upon which
certificate the Agent and the Lenders shall be entitled to rely
until informed of any change in writing by the Borrower.
(d)Officer's Certificate. A certificate, dated the
date of this Agreement, signed by the chief financial officer of
the Borrower, in form and substance satisfactory to the Agent, to
the effect that: (i) on such date (both before and after giving
effect to the making of any Loans hereunder) no Default or
Unmatured Default has occurred and is continuing and (ii) each of
the representations and warranties set forth in Article V of this
Agreement is true and correct on and as of such date.
(e)Legal Opinion. A favorable written opinion of Paul
Matecki, Esq., Senior Vice President and Corporate Counsel to the
Borrower, addressed to the Agent and the Lenders in form and
substance acceptable to the Agent and its counsel.
(f)Loan Documents. Executed originals of this
Agreement, each of the other Loan Documents (including any Notes
requested by a Lender pursuant to Section 2.17 payable to the
order of such requesting Lender), and the Term Credit Agreement,
which shall be in full force and effect, together with all
schedules, exhibits, certificates, instruments, opinions,
documents and financial statements required to be delivered
pursuant hereto and thereto.
(g)Financial Statements. Copies of the Financial
Statements and the RJA/RJFS FOCUS Reports referred to in Section
5.5.
(h)Letter of Direction. Written money transfer
instructions with respect to the initial Advance and, until
otherwise instructed, as to future Advances in form and substance
acceptable to the Agent signed by an Authorized Officer, together
with such other related money transfer authorizations as the Agent
may have reasonably requested.
(i)Year 2000 Program. Information satisfactory to the
Agent regarding the Borrower's Year 2000 Program.
(j)Payment of Fees. The Borrower shall have paid all
accrued and unpaid fees, costs and expenses to the extent due and
payable on or prior to the execution of this Agreement, including,
but not limited to, the fees referred to in Section 10.13 and, to
the extent invoiced, the attorneys' fees, time charges and
disbursements referred to in Section 9.6.
(k)Other. Such other documents as the Agent, any
Lender or their counsel may have reasonably requested.
4.2. Each Future Advance. The Lenders shall not be required to
make any Advance unless on the applicable Borrowing Date:
(a)There exists no Default or Unmatured Default and
none would result from such Advance;
(b)The representations and warranties contained in
Article V are true and correct as of such Borrowing Date,
including the representations and warranties set forth in Section
5.6 and the first sentence of Section 5.8; and
(c)A Borrowing Notice shall have been properly
submitted.
Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the
conditions contained in Section 4.2 have been satisfied. Any
Lender may require a duly completed Compliance Certificate as a
condition to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence; Conduct of Business. Each of the
Borrower and each Material Subsidiary (a) is a corporation duly
incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (b) is duly qualified and in
good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where failure to be
so qualified will not have a Material Adverse Effect, and (c) has
all requisite corporate power, and possesses all licenses,
registrations and authorizations from and with any Governmental
Authority, Self-Regulatory Organization or securities exchange,
necessary or material to the conduct of its business as now or
presently proposed to be conducted. RJA and RJFS each is (i) duly
registered with the Commission as a broker-dealer under the
Exchange Act, (ii) a member in good standing of the NASD and, as
to RJA, a member organization in good standing of the NYSE, (iii)
not in arrears in regard to any assessment made upon it by the
SIPC, and (iv) has received no notice from the Commission, NASD,
MSRB, CFTC or any other Governmental Authority, Self-Regulatory
Organization or securities exchange of any alleged rule violation
or other circumstance which could reasonably be expected to have a
Material Adverse Effect, except as disclosed in the Financial
Statements.
5.2. Authorization and Validity. The Borrower has all requisite
power and authority (corporate and otherwise) and legal right to
execute and deliver each of the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its
obligations thereunder have been duly authorized by proper
corporate proceedings and the Loan Documents constitute legal,
valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally or
by general principles of equity limiting the availability of
equitable remedies.
5.3. Compliance with Laws and Contracts. The Borrower and its
Subsidiaries (including RJA and RJFS) have complied in all
material respects with all applicable laws, statutes, and rules,
regulations, orders and decrees or restrictions of any
Governmental Authority, Self-Regulatory Organization or securities
exchange having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties
(including, without limitation, the Exchange Act, the Advisers
Act, the Investment Company Act, the CEA, and the applicable rules
and regulations of the Commission, NASD, NYSE, MSRB and CFTC),
except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Without limiting the
foregoing, the Borrower and its Material Subsidiaries are in
compliance with all applicable capital requirements of all
Governmental Authorities (including, without limitation, Rule 15c3-
1). Neither the execution and delivery by the Borrower of the
Loan Documents, the application of the proceeds of the Loans, the
consummation of any transaction contemplated by the Loan
Documents, nor compliance with the provisions of the Loan
Documents will, or at the relevant time did, (a) violate any law,
rule, regulation (including Regulations T, U and X), order, writ,
judgment, injunction, decree or award binding on the Borrower or
any Subsidiary, (b) violate or conflict with the Borrower's or any
Subsidiary's charter, articles or certificate of incorporation or
by-laws, (c) violate the provisions of or require the approval or
consent of any party to any indenture, instrument or agreement to
which the Borrower or any Subsidiary is a party or is subject, or
by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or
imposition of any Lien (other than Liens permitted by Section
6.17) in, of or on the Property of the Borrower or any Subsidiary
pursuant to the terms of any such indenture, instrument or
agreement, or (d) require the consent or approval of any Person,
except for any violation of, or failure to obtain an approval or
consent required under, any such indenture, instrument or
agreement that could not have a Material Adverse Effect.
5.4. Governmental Consents. No order, consent, approval,
qualification, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other
action in respect of, any Governmental Authority, Self-Regulatory
Organization or securities exchange is necessary or required in
connection with the execution, delivery, consummation or
performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents, the application of
the proceeds of the Loans, or the consummation of any other
transaction contemplated by the Loan Documents. Neither the
Borrower nor any Subsidiary is in default under or in violation of
any foreign, Federal, state or local law, rule, regulation, order,
writ, judgment, injunction, decree or award binding upon or
applicable to the Borrower or such Subsidiary, in each case the
consequence of which default or violation could reasonably be
expected to have a Material Adverse Effect.
5.5. Financial Statements. The Borrower has heretofore furnished
to each of the Lenders (a) the September 25, 1998 audited
consolidated financial statements of the Borrower and its
Subsidiaries and (b) the June 25, 1999 unaudited consolidated
financial statements of the Borrower and its Subsidiaries
(collectively, the "Financial Statements"). The Borrower has also
heretofore furnished to each of the Lenders the December 25, 1998,
March 25, 1999, June 25, 1999 and September 24, 1999 quarterly
FOCUS Reports of RJA and RJFS (the "RJA/RJFS FOCUS Reports").
Each of the Financial Statements was prepared in accordance with
Agreement Accounting Principles and fairly presents the
consolidated financial condition, results of operations, changes
in shareholders' equity and cash flows of the Borrower and its
Subsidiaries at such dates and for the respective periods then
ended (except, in the case of the unaudited statements, for normal
year-end audit adjustments). The RJA/RJFS FOCUS Reports are
correct and complete in all material respects and conform in all
material respects to Exchange Act requirements and applicable
Commission rules and regulations.
5.6. Material Adverse Change. No material adverse change in the
business, Property, condition (financial or otherwise) or results
of operations of the Borrower and its Subsidiaries taken as a
whole has occurred since June 25, 1999.
5.7. Taxes. The Borrower and its Subsidiaries have filed or
caused to be filed on a timely basis and in correct form all
United States Federal and applicable state tax returns and all
other material tax returns which are required to be filed and have
paid all material taxes due pursuant to said returns or pursuant
to any assessment received by the Borrower or any Subsidiary,
except such taxes, if any, as are being contested in good faith
and as to which adequate reserves have been provided in accordance
with Agreement Accounting Principles and as to which no Lien
exists. As of the date hereof, the United States income tax
returns of the Borrower on a consolidated basis have been audited
by the Internal Revenue Service through its Fiscal Year ending
September 29, 1995. There are no pending audits or investigations
regarding the Borrower's or its Subsidiaries' Federal, state or
local tax returns which could reasonably be expected to have a
Material Adverse Effect. No tax liens have been filed and no
claims are being asserted with respect to any such taxes which
could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of any taxes or other governmental
charges are in accordance with Agreement Accounting Principles.
5.8. Litigation and Contingent Obligations. There is no
litigation, arbitration, proceeding, inquiry or investigation by
any Governmental Authority, Self-Regulatory Organization or
securities exchange pending or, to the knowledge of any of the
Borrower's officers, threatened against or affecting the Borrower
or any Subsidiary or any of their respective Properties which
could reasonably be expected to have a Material Adverse Effect or
to prevent, enjoin or unduly delay the making of the Loans or the
consummation of the transactions contemplated by this Agreement.
The Borrower and its Subsidiaries have no material contingent
obligations not provided for or disclosed in the Financial
Statements.
5.9. Subsidiaries. Schedule I hereto contains an accurate list of
all of the Borrower's Material Subsidiaries as of the date of this
Agreement, setting forth their respective jurisdictions of
organization and the percentage of their respective capital stock
or other ownership interests owned by the Borrower or other
Subsidiaries. All of the outstanding shares of capital stock and
other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable, and all such shares
and other equity interests owned by the Borrower or a Subsidiary
are owned, beneficially and of record, by the Borrower or such
Subsidiary free and clear of all Liens.
5.10. ERISA. There are no Unfunded Liabilities relating to
any Single Employer Plan. Each Plan complies in all material
respects with all applicable requirements of law and regulations,
no Reportable Event has occurred with respect to any Plan, neither
the Borrower nor any other member of the Controlled Group has
withdrawn from any Plan or initiated steps to do so, and no steps
have been taken to reorganize or terminate any Plan. The Borrower
is not an entity deemed to hold "plan assets" within the meaning
of 29 C.F.R. 2510.3-101 of an employee benefit plan (as defined
in Section 3(3) of ERISA) which is subject to Title I of ERISA or
any plan (within the meaning of Section 4975 of the Code), and
neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
5.11. Defaults. No Default or Unmatured Default has occurred
and is continuing.
5.12. Federal Reserve Regulations. Neither the making of any
Advance hereunder or the use of the proceeds thereof will violate
or be inconsistent with the provisions of Regulation T, Regulation
U or Regulation X. Following the application of the proceeds of
the Loans, less than 25% of the value of the assets of the
Borrower and its Subsidiaries which are subject to any limitation
on sale, pledge or other restriction hereunder taken as a whole
have been, and will continue to be, represented by Margin Stock.
5.13. Investment Company; Public Utility Holding Company.
Neither the Borrower nor any Subsidiary is, or after giving effect
to any Advance will be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Neither the Borrower
nor any Subsidiary is a "holding company" within the meaning of,
or subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.
5.14. Ownership of Properties. The Borrower and its
Subsidiaries have a subsisting leasehold interest in, or good and
marketable title to, free of all Liens, other than those permitted
by Section 6.17, all of the properties and assets reflected in the
Financial Statements as being owned by it, except for assets sold,
transferred or otherwise disposed of in the ordinary course of
business since the date thereof.
5.15. Material Agreements. Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject to
any charter or other corporate restriction which could reasonably
be expected to have a Material Adverse Effect or which restricts
or imposes conditions upon the ability of any Material Subsidiary
to (a) pay dividends or make other distributions on its capital
stock, (b) make loans or advances to the Borrower, (c) repay loans
or advances from the Borrower or (d) grant Liens to the Agent to
secure the Obligations. Neither the Borrower nor any Material
Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in (i) any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse
Effect or (ii) any agreement or instrument evidencing or governing
Indebtedness.
5.16. Year 2000. The Borrower has made a full and complete
assessment of the Year 2000 Issues and has a realistic and
achievable program for remediating the Year 2000 Issues on a
timely basis (the "Year 2000 Program"). Based on such assessment
and on the Year 2000 Program, the Borrower does not reasonably
anticipate that Year 2000 Issues will have a Material Adverse
Effect, except as the securities industry or securities markets
may be affected generally.
5.17. Insurance. The Borrower and its Subsidiaries maintain
with financially sound and reputable insurance companies insurance
on their Property in such amounts and covering such risks as is
consistent with sound business practice.
5.18. Disclosure. None of the (a) information, exhibits or
reports furnished by the Borrower or any Subsidiary to the Agent
or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents, or (b) representations or
warranties of the Borrower or any Subsidiary contained in this
Agreement, the other Loan Documents or any other document,
certificate or written statement furnished to the Agent or the
Lenders by or on behalf of the Borrower or any Subsidiary pursuant
to this Agreement, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements contained herein or therein not misleading in
light of the circumstances in which they were made. There is no
fact known to any Authorized Officer (other than matters generally
affecting the economy or the financial services industry) that has
had or could reasonably be expected to have a Material Adverse
Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders
for use in connection with the transactions contemplated by this
Agreement.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required
Lenders shall otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and
administered in accordance with Agreement Accounting Principles,
consistently applied, and will furnish to the Lenders:
(a)As soon as practicable and in any event within 90
days after the close of each of its Fiscal Years, an unqualified
audit report from PricewaterhouseCoopers LLP or other independent
certified public accountants acceptable to the Lenders, prepared
in accordance with Agreement Accounting Principles on a
consolidated and consolidating basis (consolidating statements
need not be certified by such accountants) for itself and its
Subsidiaries, including balance sheets as of the end of such
period and related statements of income, changes in shareholders'
equity and cash flows, and accompanied by (i) any management
letter prepared by said accountants (when available) and (ii) a
certificate of said accountants that, in the course of the
examination necessary for the preparation of their audit report,
they have obtained no knowledge of any Default or Unmatured
Default, or if, in the opinion of such accountants, any Default or
Unmatured Default shall exist, stating the nature and status
thereof.
(b)As soon as practicable and in any event within 45
days after the close of the first three Fiscal Quarters of each of
its Fiscal Years, for itself and its Subsidiaries, consolidated
and consolidating unaudited balance sheets as at the close of each
such period and consolidated and consolidating statements of
income, changes in shareholders' equity and cash flows for the
period from the beginning of such Fiscal Year to the end of such
quarter, all certified by its chief financial officer.
(c)As soon as practicable and in any event within 25
days after the close of each Fiscal Quarter, the FOCUS Report for
such Fiscal Quarter filed by RJA and RJFS with the Commission.
(d)Together with the financial statements required by
clauses (a) and (b) above, a Compliance Certificate signed by its
chief financial officer showing the calculations necessary to
determine compliance with this Agreement and stating that no
Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof.
(e)Within 270 days after the close of each Fiscal
Year, a statement of the Unfunded Liabilities of each Single
Employer Plan, if any, certified as correct by an actuary enrolled
under ERISA.
(f)As soon as possible and in any event within 10 days
after any Authorized Officer of the Borrower learns thereof,
notice of the assertion or commencement of any claim, action,
litigation, suit or proceeding against or affecting the Borrower
or any Subsidiary, including any investigation or proceeding
commenced by the Commission, NASD, MSRB, NYSE or any other
Governmental Authority, Self-Regulatory Organization or securities
exchange, which could reasonably be expected to have a Material
Adverse Effect.
(g)Promptly upon the furnishing thereof to the
shareholders of the Borrower, copies of all financial statements,
reports and proxy statements so furnished.
(h)Within 15 days after the filing thereof, copies of
all registration statements and annual, quarterly, monthly or
other regular reports which the Borrower files with the Commission
and, upon request, any such reports filed by any Subsidiary.
(i)Such other information (including non-financial
information) as the Agent or any Lender may from time to time
reasonably request.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Advances for general
corporate purposes, including without limitation friendly
acquisitions, share repurchases and asset purchases. The Borrower
will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Advances to (i) purchase or carry any Margin Stock
in violation of Regulation T, Regulation U or Regulation X, (ii)
finance the Acquisition of any Person which has not been approved
and recommended by the board of directors (or functional
equivalent thereof) of such Person, or (iii) fund subordinated
loans from the Borrower to any of its Subsidiaries.
6.3. Notice of Default. Within 10 days after any Authorized
Officer of the Borrower has knowledge thereof, the Borrower will
give notice in writing to the Lenders of the occurrence of (a) any
Default or Unmatured Default or (b) any other event or
development, financial or otherwise (including, without
limitation, developments with respect to Year 2000 Issues), which
could reasonably be expected to have a Material Adverse Effect
other than matters generally affecting the economy or the
financial services industry.
6.4. Conduct of Business. The Borrower will, and will cause each
Material Subsidiary to, (a) subject to Section 6.13(c), preserve
and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, (b) maintain
all registrations, licenses, consents, approvals and
authorizations from and with any Governmental Authority, Self-
Regulatory Organization or securities exchange necessary or
material to the conduct of its business, and (c) qualify and
remain qualified as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, except where failure to
qualify could not have a Material Adverse Effect. The Borrower
will not, and will not permit any of its Material Subsidiaries to,
engage in any material line of business substantially different
from those lines of business carried on by it on the date hereof.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States Federal and
applicable foreign, state and local tax returns required by
applicable law and pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or
Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate
reserves have been set aside in accordance with Agreement
Accounting Principles.
6.6. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance
companies insurance in such amounts and covering such risks as is
consistent with sound business practice, and the Borrower will
furnish to the Agent and any Lender upon request full information
as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, statutes (including, without
limitation, the Exchange Act, the Advisers Act, the Investment
Company Act and applicable Environmental Laws), rules,
regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject.
6.8. Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve,
protect and keep its Property in good repair, working order and
condition, and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection
therewith may be properly conducted at all times.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Agent and the Lenders, by their
respective representatives and agents, to inspect any of the
Property, corporate books and financial records of the Borrower
and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each
Subsidiary, and to discuss the affairs, finances and accounts of
the Borrower and each Subsidiary with, and to be advised as to the
same by, their respective officers at such reasonable times and
intervals as the Agent or any Lender may designate. The Borrower
will keep or cause to be kept, and cause each Subsidiary to keep
or cause to be kept, appropriate records and books of account in
which complete entries are to be made reflecting its and their
business and financial transactions, such entries to be made in
accordance with Agreement Accounting Principles consistently
applied.
6.10. Year 2000. The Borrower will take, and will cause each
of its Subsidiaries to take, all such actions as are reasonably
necessary to successfully implement the Year 2000 Program as to
assure that Year 2000 Issues will not have a Material Adverse
Effect. At the request of the Agent, the Borrower will provide a
description of the Year 2000 Program, together with any updates or
progress reports with respect thereto.
6.11. Ownership of Subsidiaries. The Borrower will continue
to own, directly or indirectly, beneficially and of record, free
and clear of all Liens and restrictions, 75% of the outstanding
shares of capital stock each of RJA and RJFS.
6.12. Indebtedness. The Borrower will not, nor will it permit
any Subsidiary to, create, incur or suffer to exist any
Indebtedness, except:
(a)The Loans hereunder and Indebtedness under the Term
Credit Agreement;
(b)Existing Indebtedness described on Schedule II
hereto;
(c)Securities sold under agreements to repurchase (to
the extent such obligations constitute Indebtedness);
(d)Contingent Obligations permitted by Section 6.16;
(e)Capital Lease Obligations and purchase money
Indebtedness not exceeding $10,000,000 in the aggregate at any
time outstanding;
(f)(i) Moneys due to counterparties under stock loan
transactions, (ii) liabilities to customers for cash on deposit,
and (iii) liabilities to brokers, dealers and clearing
organizations relating to the settlement of securities
transactions;
(g)Indebtedness of Raymond James Credit Corporation in
an aggregate principal amount not exceeding $100,000,000 used to
finance loans collateralized by public company restricted or
control shares;
(h)Indebtedness of any Subsidiary for borrowed money
from the Borrower which represents unsubordinated Indebtedness of
such Subsidiary; and
(i) Unsecured Indebtedness not otherwise permitted
by this Section 6.12 in an aggregate principal amount not
exceeding $5,000,000.
6.13. Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person,
except that (a) a Wholly-Owned Subsidiary may merge into the
Borrower or any Wholly-Owned Subsidiary of the Borrower, (b) the
Borrower or any Subsidiary may merge or consolidate with any other
Person so long as the Borrower or such Subsidiary is the
continuing or surviving corporation and, prior to and after giving
effect to such merger or consolidation, no Default or Unmatured
Default shall exist, and (c) any Subsidiary may enter into a
merger or consolidation as a means of effecting a disposition
permitted by Section 6.14.
6.14. Sale of Assets. The Borrower will not, nor will it
permit any Subsidiary to, lease, sell, transfer or otherwise
dispose of its Property, to any other Person except for (a) sales
of securities sold in the ordinary course of business, and (b)
leases, sales, transfers or other dispositions of its Property
that, together with all other Property of the Borrower and its
Subsidiaries previously leased, sold or disposed of (other than
sales of securities sold in the ordinary course of business) as
permitted by this Section 6.14 during the twelve-month period
ending with the month in which any such lease, sale or other
disposition occurs, do not constitute a Substantial Portion of the
Property of the Borrower and its Subsidiaries.
6.15. Investments and Acquisitions. The Borrower will not,
nor will it permit any Subsidiary to, make or suffer to exist any
Investments (including, without limitation, loans and advances to,
and other Investments in, Subsidiaries), or commitments therefor,
or to create any Subsidiary or to become or remain a partner in
any partnership or joint venture, or to make any Acquisition of
any Person, except:
(a)Existing Investments in Subsidiaries and
Affiliates;
(b)Obligations of, or fully guaranteed by, the United
States of America; commercial paper and other short-term notes
and securities rated investment grade by a national securities
rating agency; demand deposit accounts maintained in the ordinary
course of business; and certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000;
(c)Publicly-traded securities and private equity
participations;
(d)Acquisitions of or Investments in Subsidiaries or
the capital stock, assets, obligations or other securities of or
interest in other Persons provided that (i) each such Person shall
be (x) in regard to Material Subsidiaries, incorporated, organized
or otherwise formed under the laws of any state of the United
States, and (y) engaged in a line of business not substantially
different from those lines of business carried on by the Borrower
and its Subsidiaries on the date hereof, (ii) the transaction (or
any tender offer commencing a proposed transaction) shall have
been approved and recommended by the board of directors (or
functional equivalent thereof) of such Person, and (iii) no
Default or Unmatured Default shall have occurred and be continuing
either immediately before or after giving effect to such
transaction and no Material Adverse Effect would result therefrom;
and
(e)Repurchases of up to 5,000,000 shares of the
Borrower's common stock to fund the Borrower's incentive stock
option and stock purchase plans and other corporate purposes.
6.16. Contingent Obligations. The Borrower will not, nor will
it permit any Subsidiary to, make or suffer to exist any
Contingent Obligation (including, without limitation, any
Contingent Obligation with respect to the obligations of a
Subsidiary), except (a) by endorsement of instruments for deposit
or collection in the ordinary course of business, (b) guarantees
by the Borrower of the Indebtedness of Raymond James Credit
Corporation in an aggregate principal amount not exceeding
$100,000,000 referred to in Section 6.12(g) and guarantees by the
Borrower (or any Subsidiary) of the Indebtedness of any other
Subsidiaries in an aggregate principal amount not exceeding
$10,000,000, (c) guarantees by the Borrower with respect to
settlement of securities transactions by its Affiliates extended
to customers of, lenders to, or clearing agencies for, such
Affiliates, and (d) guarantees by the Borrower of up to
$45,000,000 with respect to the activities of Raymond James Tax
Credit Funds, Inc. or any of its Subsidiaries.
6.17. Liens. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of
or on the Property of the Borrower or any of its Subsidiaries,
except:
(a)Liens for taxes, assessments or governmental
charges or levies on its Property if the same shall not at the
time be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books;
(b)Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens
arising in the ordinary course of business which secure the
payment of obligations not more than 60 days past due or which are
being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books;
(c)Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits, or
similar legislation;
(d)Utility easements, building restrictions and such
other encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the
business of the Borrower or its Subsidiaries;
(e)Liens securing the Indebtedness permitted by
Sections 6.12(b) and (c); and
(f)Liens incurred in the ordinary course of the
settlement of securities transactions.
6.18. Affiliates. The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with,
or make any payment or transfer to, any Affiliate except (a) in
the ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms and (b) transactions among the
Borrower and Wholly-Owned Subsidiaries of the Borrower.
6.19. Change in Corporate Structure; Fiscal Year. The
Borrower shall not, nor shall it permit any Material Subsidiary
to, (a) permit any amendment or modification to be made to its
certificate or articles of incorporation or by-laws which is
materially adverse to the interests of the Lenders (provided that
the Borrower shall notify the Agent of any other amendment or
modification thereto as soon as practicable thereafter) or (b)
change its Fiscal Year to end on any date other than the last
Friday in September of each year.
6.20. Inconsistent Agreements. The Borrower shall not, nor
shall it permit any Subsidiary to, enter into any indenture,
agreement, instrument or other arrangement which (a) directly or
indirectly prohibits or restrains, or has the effect of
prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the amending
of the Loan Documents or the ability of any Subsidiary to (i) pay
dividends or make other distributions on its capital stock, (ii)
make loans or advances to the Borrower, or (iii) repay loans or
advances from the Borrower or (b) contains any provision which
would be violated or breached by the making of Advances or by the
performance by the Borrower or any Subsidiary of any of its
obligations under any Loan Document.
6.21. Financial Covenants.
6.21.1 Minimum Tangible Net Worth. The Borrower on a
consolidated basis with its Subsidiaries at all times after the
date hereof shall maintain Tangible Net Worth of not less than (i)
$400,000,000 plus (ii) 50% of cumulative Net Income earned after
September 24, 1999.
6.21.2 Double Leverage Ratio. The Borrower on a parent-only
basis at all times after the date hereof shall maintain a Double
Leverage Ratio of not more than 1.15 to 1.0.
6.21.3 RJA Net Capital. The Borrower shall cause RJA at all
times after the date hereof to maintain a ratio (computed in
accordance with Exhibit A to Rule 15c3-3, "Formula for
Determination of Reserve Requirements for Brokers and Dealers") of
Net Capital to Aggregate Debt Items of not less than 10%.
6.21.4 RJFS Net Capital. The Borrower shall cause RJFS at all
times after the date hereof to maintain a ratio (computed in
accordance with Exhibit A to Rule 15c3-3, "Formula for
Determination of Reserve Requirements for Brokers and Dealers") of
Aggregate Indebtedness to Net Capital of not more than 9.0 to 1.0.
6.21.5 RJA/RJFS Excess Net Capital. The Borrower shall cause
RJA and RJFS at all times to have combined Excess Net Capital of
not less than $100,000,000.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1. Representation or Warranty. Any representation or warranty
made or deemed made by or on behalf of the Borrower or any of its
Subsidiaries to the Lenders or the Agent under or in connection
with this Agreement, any other Loan Document, any Loan, or any
certificate or information delivered in connection with this
Agreement or any other Loan Document shall be false in any
material respect on the date as of which made or deemed made.
7.2. Non-Payment. (a) Nonpayment of any principal of any Loan
when due, or (b) nonpayment of any interest upon any Loan or of
any Facility Fee or other obligation under any of the Loan
Documents within five days after the same becomes due.
7.3. Specific Defaults. The breach by the Borrower of any of the
terms or provisions of Section 6.2, Section 6.3(a), Section 6.4
(second sentence only) or Sections 6.10 through 6.21.
7.4. Other Defaults. The breach by the Borrower (other than a
breach which constitutes a Default under another Section of this
Article VII) of any of the terms or provisions of this Agreement
which is not remedied within 30 days after written notice from the
Agent or any Lender.
7.5. Cross-Default. Failure of the Borrower or any of its
Material Subsidiaries to pay when due any Indebtedness aggregating
in excess of $5,000,000; or the default by the Borrower or any of
its Subsidiaries in the performance of any term, provision or
condition contained in any agreement or agreements under which any
such Indebtedness was created or is governed (or the occurrence of
any other event or existence of any other condition) the effect of
any of which is to cause, or to permit the holder or holders of
such Indebtedness to cause, such Indebtedness to become due prior
to its stated maturity; or any such Indebtedness of the Borrower
or any of its Material Subsidiaries shall be declared to be due
and payable or required to be prepaid or repurchased (other than
by a regularly scheduled payment) prior to the stated maturity
thereof; or the Borrower or any of its Material Subsidiaries shall
not pay, or admit in writing its inability to pay, its debts
generally as then become due.
7.6. Insolvency; Voluntary Proceedings. The Borrower or any of
its Material Subsidiaries shall (a) have an order for relief
entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (b) make an assignment for the benefit
of creditors, (c) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any Substantial Portion
of its Property, (d) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed
against it, (e) take any corporate or partnership action to
authorize or effect any of the foregoing actions set forth in this
Section 7.6, or (f) fail to contest in good faith any appointment
or proceeding described in Section 7.7.
7.7. Involuntary Proceedings. Without the application, approval
or consent of the Borrower or any of its Material Subsidiaries, a
receiver, trustee, examiner, liquidator or similar official shall
be appointed for the Borrower or any of its Material Subsidiaries
or any Substantial Portion of its Property, or a proceeding
described in Section 7.6(d) shall be instituted against the
Borrower or any of its Material Subsidiaries and such appointment
continues undischarged or such proceeding continues undismissed or
unstayed for a period of 30 consecutive days.
7.8. Condemnation. Any court, government or governmental agency
shall condemn, seize or otherwise appropriate, or take custody or
control of, all or any portion of the Property of the Borrower and
its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned,
seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such action
occurs, constitutes a Substantial Portion.
7.9. Judgments. (a) The Borrower or any of its Material
Subsidiaries shall fail within 30 days to pay, bond or otherwise
discharge one or more judgments or orders for the payment of money
in excess of $10,000,000 in the aggregate, or (b) the Borrower or
any of its Subsidiaries shall fail to pay, bond or otherwise
discharge one or more nonmonetary judgments or orders which,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, which judgment(s), in any such
case of clauses (a) and (b), is/are not stayed on appeal or
otherwise being appropriately contested in good faith.
7.10. Change in Control. Any Change in Control shall occur.
7.11. SIPC. The Commission or any Self-Regulatory
Organization has notified the SIPC pursuant to Section 5(a)(1) of
the SIPA of facts which indicate that the Borrower, RJA or RJFS is
in or is approaching financial difficulty, or the SIPC shall file
an application for a protective decree with respect to the
Borrower, RJA or RJFS under Section 5(a)(3) of the SIPA.
7.12. Broker-Dealer License. The Commission or other
Governmental Authority shall revoke or suspend the license or
authorization of RJA and RJFS under Federal or state law to
conduct business as a securities broker-dealer (and such license
or authorization shall not be reinstated within 5 days), or RJA or
RJFS shall be suspended or expelled from membership in the NASD,
NYSE or any other Self-Regulatory Organization or securities
exchange.
7.13. ERISA. The Unfunded Liabilities of all Single Employer
Plans shall exceed in the aggregate $1,000,000 or any Reportable
Event shall occur in connection with any Plan that could have a
Material Adverse Effect.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the
Lenders to make Loans hereunder shall automatically terminate and
the Obligations shall immediately become due and payable without
any election or action on the part of the Agent or any Lender. If
any other Default occurs, the Required Lenders (or the Agent with
the consent of the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the
Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which
the Borrower hereby expressly waives.
If, within 30 Business Days after acceleration of the
maturity of the Obligations or termination of the obligations of
the Lenders to make Loans hereunder as a result of any Default
(other than any Default as described in Section 7.6 or 7.7 with
respect to the Borrower) and before any judgment or decree for the
payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so
direct, the Agent shall, by notice to the Borrower, rescind and
annul such acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII,
the Required Lenders (or the Agent with the consent in writing of
the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the
rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of all of the Lenders:
(a)Extend the final maturity of any Loan or forgive
all or any portion of the principal amount thereof, or reduce the
rate or extend the time of payment of interest or fees thereon.
(b)Reduce the percentage specified in the definition
of Required Lenders.
(c)Extend the Facility Termination Date (other than as
provided in Section 2.18), or reduce the amount or extend the
payment date for, the mandatory payments required under Section
2.1, or increase the amount of the Commitment of any Lender
hereunder, or permit the Borrower to assign its Obligations or
rights under this Agreement.
(d)Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the Agent.
The Agent may waive payment of the fee required under Section
12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders
or the Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or
an acquiescence therein, and the making of a Loan notwithstanding
the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Loan shall not constitute
any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or
the exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by
the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Agent and the Lenders
until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall
survive the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.4. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the
Lenders and supersede all prior agreements and understandings
among the Borrower, the Agent and the Lenders relating to the
subject matter thereof other than the fee letter described in
Section 10.13.
9.5. Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any other
(except to the extent to which the Agent is authorized to act as
such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective
successors and assigns.
9.6. Expenses; Indemnification. The Borrower shall reimburse the
Agent for any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent, which attorneys may be employees of the
Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review,
syndication, amendment, modification, and administration of the
Loan Documents. The Borrower also agrees to reimburse the Agent
and the Lenders for any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent and the Lenders, which
attorneys may be employees of the Agent or the Lenders) paid or
incurred by the Agent or any Lender in connection with the
collection and enforcement of the Loan Documents. The Borrower
further agrees to indemnify the Agent and each Lender, their
respective affiliates, and each of their directors, officers and
employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor
whether or not the Agent or any Lender or any affiliate is a party
thereto) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan
hereunder, except to the extent that (i) they are determined in a
final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct
of the party seeking indemnification or (ii) they relate solely to
a claim or claims between or among the Lenders unrelated to any
alleged act or omission of the Borrower. The obligations of the
Borrower under this Section 9.6 shall survive the termination of
this Agreement.
9.7. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent
with sufficient counterparts so that the Agent may furnish one to
each of the Lenders.
9.8. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance
with Agreement Accounting Principles.
9.9. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid
in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
9.10. Nonliability of Lenders. The relationship between the
Borrower on the one hand and the Lenders and the Agent on the
other hand shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities
to the Borrower. Neither the Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of
any matter in connection with any phase of the Borrower's business
or operations. The Borrower agrees that neither the Agent nor any
Lender shall have liability to the Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower
in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-
appealable judgment by a court of competent jurisdiction that such
losses resulted from the gross negligence or willful misconduct of
the party from which recovery is sought. Neither the Agent nor
any Lender shall have any liability with respect to, and the
Borrower hereby waives, releases and agrees not to sue for, any
special, indirect or consequential damages suffered by the
Borrower in connection with, arising out of, or in any way related
to the Loan Documents or the transactions contemplated thereby.
9.11. Confidentiality. Each Lender agrees to hold any
confidential information which it may receive from the Borrower
pursuant to this Agreement in confidence, except for disclosure
(i) to its Affiliates and to other Lenders and their respective
Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to such Lender or to a Transferee (which
Transferee has agreed to be bound by this Section 9.11), (iii) to
regulatory officials, (iv) to any Person as required by law,
regulation, or legal process, (v) to any Person in connection with
any legal proceeding to which such Lender is a party, (vi) to such
Lender's direct or indirect contractual counterparties in swap
agreements (which counterparties have agreed to be bound by this
Section 9.11) or to legal counsel, accountants and other
professional advisors to such counterparties, and (vii) permitted
by Section 12.4. The obligations of the Lenders under this
Section 9.11 shall survive the termination of this Agreement.
9.12. Nonreliance. Each Lender hereby represents that it is
not relying on or looking to any Margin Stock for the repayment of
the Loans provided for herein.
9.13. Disclosure. The Borrower and each Lender hereby (i)
acknowledge and agree that Bank One and/or its Affiliates from
time to time may hold investments in, make other loans to or have
other relationships with the Borrower and its Affiliates, and (ii)
waive any liability of Bank One or such Affiliate of Bank One to
the Borrower or any Lender, respectively, arising out of or
resulting from such investments, loans or relationships other than
liabilities arising out of the gross negligence or willful
misconduct of Bank One or its Affiliates.
9.14. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO
CONFLICT OF LAWS PROVISIONS, OF THE STATE OF NEW YORK, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.15. CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE
OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK
CITY.
9.16. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship. Bank One, NA is
hereby appointed by each of the Lenders as its contractual
representative (herein referred to as the "Agent") hereunder and
under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents. The Agent
agrees to act as such contractual representative upon the express
conditions contained in this Article X. Notwithstanding the use
of the defined term "Agent," it is expressly understood and agreed
that the Agent shall not have any fiduciary responsibilities to
any Lender by reason of this Agreement or any other Loan Document
and that the Agent is merely acting as the contractual
representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Loan
Documents. In its capacity as the Lenders' contractual
representative, the Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the
Lenders within the meaning of Section 9-105 of the Uniform
Commercial Code and (iii) is acting as an independent contractor,
the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the
Lenders hereby agrees to assert no claim against the Agent on any
agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives.
10.2. Powers. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to
the Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Agent shall have no
implied duties to the Lenders, or any obligation to the Lenders to
take any action thereunder except any action specifically provided
by the Loan Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the
Borrower, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith except to the
extent such action or inaction is determined in a final non-
appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such
Person.
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire
into, or verify (a) any statement, warranty or representation made
in connection with any Loan Document or any borrowing hereunder;
(b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any
condition specified in Article IV, except receipt of items
required to be delivered solely to the Agent; (d) the existence or
possible existence of any Default or Unmatured Default; (e) the
validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; (f) the value,
sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the
Borrower or any guarantor of any of the Obligations or of any of
the Borrower's or any such guarantor's respective Subsidiaries.
The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower
to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its
individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in
all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance
with written instructions signed by the Required Lenders, and such
instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. The Lenders
hereby acknowledge that the Agent shall be under no duty to take
any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Required Lenders.
The Agent shall be fully justified in failing or refusing to take
any action hereunder and under any other Loan Document unless it
shall first be indemnified to its satisfaction by the Lenders pro-
rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders, except as to money or
securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled
to advice of counsel concerning the contractual arrangement
between the Agent and the Lenders and all matters pertaining to
the Agent's duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed
by it to be genuine and correct and to have been signed or sent by
the proper person or persons, and, in respect to legal matters,
upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion
to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior
to such termination) (i) for any amounts not reimbursed by the
Borrower for which the Agent is entitled to reimbursement by the
Borrower under the Loan Documents, (ii) for any other expenses
incurred by the Agent on behalf of the Lenders, in connection with
the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation,
for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of
the Lenders) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection
with any dispute between the Agent and any Lender or between two
or more of the Lenders), or the enforcement of any of the terms of
the Loan Documents or of any such other documents, provided that
(i) no Lender shall be liable for any of the foregoing to the
extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Agent and
(ii) any indemnification required pursuant to Section 3.5(vii)
shall, notwithstanding the provisions of this Section 10.8, be
paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8
shall survive payment of the Obligations and termination of this
Agreement.
10.9. Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or
Unmatured Default hereunder unless the Agent has received written
notice from a Lender or the Borrower referring to this Agreement
describing such Default or Unmatured Default and stating that such
notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof
to the Lenders.
10.10. Rights as a Lender. In the event the Agent is a Lender,
the Agent shall have the same rights and powers hereunder and
under any other Loan Document with respect to its Commitment and
its Loans as any Lender and may exercise the same as though it
were not the Agent, and the term "Lender" or "Lenders" shall, at
any time when the Agent is a Lender, unless the context otherwise
indicates, include the Agent in its individual capacity. The
Agent and its Affiliates may accept deposits from, lend money to,
and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement
or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
10.11. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any
other Lender and based on the financial statements prepared by the
Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance
upon the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents.
10.12. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower,
such resignation to be effective upon the appointment of a
successor Agent or, if no successor Agent has been appointed,
forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or
without cause by written notice received by the Agent from the
Required Lenders, such removal to be effective on the date
specified by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may
appoint, on behalf of the Borrower and the Lenders, a successor
Agent. Notwithstanding the previous sentence, the Agent may at
any time without the consent of the Borrower or any Lender,
appoint any of its Affiliates which is a commercial bank as a
successor Agent hereunder. If the Agent has resigned or been
removed and no successor Agent has been appointed, the Lenders may
perform all the duties of the Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the
applicable Lender and for all other purposes shall deal directly
with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the
appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and
duties of the resigning or removed Agent. Upon the effectiveness
of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness
of the resignation or removal of an Agent, the provisions of this
Article X shall continue in effect for the benefit of such Agent
in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the Agent by
merger, or the Agent assigns its duties and obligations to an
Affiliate pursuant to this Section 10.12, then the term "Corporate
Base Rate" as used in this Agreement shall mean the prime rate,
base rate or other analogous rate of the new Agent.
10.13. Agent's Fee. The Borrower agrees to pay to the Agent,
for its own account, the fees agreed to by the Borrower and the
Agent pursuant to that certain letter agreement dated August 3,
1999, or as otherwise agreed from time to time.
10.14. Delegation to Affiliates. The Borrower and the Lenders
agree that the Agent may delegate any of its duties under this
Agreement to any of its Affiliates. Any such Affiliate (and such
Affiliate's directors, officers, agents and employees) which
performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and
other protective provisions to which the Agent is entitled under
Articles IX and X.
10.15. Syndication Agent, Co-Documentation Agents, etc. None
of the Lenders identified in this Agreement as a "Syndication
Agent" or a "Co-Documentation Agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without
limiting the foregoing, none of such Lenders shall have or be
deemed to have a fiduciary relationship with any Lender. Each
Lender hereby makes the same acknowledgments with respect to such
Lenders as it makes with respect to the Agent in Section 10.11.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower
becomes insolvent, however evidenced, or any Default occurs, any
and all deposits (including all account balances, whether
provisional or final and whether or not collected or available)
and any other Indebtedness at any time held or owing by any Lender
or any Affiliate of any Lender to or for the credit or account of
the Borrower may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations,
or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than
payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a
greater proportion than that received by any other Lender, such
Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender,
whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of
the Borrower and the Lenders and their respective successors and
assigns, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents and (ii)
any assignment by any Lender must be made in compliance with
Section 12.3. The parties to this Agreement acknowledge that
clause (ii) of this Section 12.1 relates only to absolute
assignments and does not prohibit assignments creating security
interests, including, without limitation, any pledge or assignment
by any Lender of all or any portion of its rights under this
Agreement and any Note to a Federal Reserve Bank; provided,
however, that no such pledge or assignment creating a security
interest shall release the transferor Lender from its obligations
hereunder unless and until the parties thereto have complied with
the provisions of Section 12.3. The Agent may treat the Person
which made any Loan or which holds any Note as the owner thereof
for all purposes hereof unless and until such Person complies with
Section 12.3; provided, however, that the Agent may in its
discretion (but shall not be required to) follow instructions from
the Person which made any Loan or which holds any Note to direct
payments relating to such Loan or Note to another Person. Any
assignee of the rights to any Loan or any Note agrees by
acceptance of such assignment to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or
giving such authority or consent is the owner of the rights to any
Loan (whether or not a Note has been issued in evidence thereof),
shall be conclusive and binding on any subsequent holder or
assignee of the rights to such Loan.
12.2. Participations.
12.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations, such Lender shall remain
the owner of its Loans and the holder of any Note issued to it in
evidence thereof for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be
determined as if such Lender had not sold such participating
interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
12.2.2 Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents
other than any amendment, modification or waiver with respect to
any Loan or Commitment in which such Participant has an interest
which forgives principal, interest or fees or reduces the interest
rate or fees payable with respect to any such Loan or Commitment,
extends the Facility Termination Date, postpones any date fixed
for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan or Commitment, releases any guarantor of
any such Loan or releases all or substantially all of the
collateral, if any, securing any such Loan.
12.2.3 Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided
in Section 11.1 in respect of its participating interest in
amounts owing under the Loan Documents to the same extent as if
the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender
shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant,
and each Participant, by exercising the right of setoff provided
in Section 11.1, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such
amounts to be shared in accordance with Section 11.2 as if each
Participant were a Lender.
12.3. Assignments.
12.3.1 Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at
any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations under
the Loan Documents. Such assignment shall be substantially in the
form of Exhibit B hereto or in such other form as may be agreed to
by the parties thereto. The consent of the Borrower and the Agent
shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required.
Such consent shall not be unreasonably withheld or delayed. Each
such assignment with respect to a Purchaser which is not a Lender
or an Affiliate thereof shall (unless each of the Borrower and the
Agent otherwise consents) be in an amount not less than the lesser
of (i) $10,000,000 or (ii) the remaining amount of the assigning
Lender's Commitment (calculated as at the date of such assignment)
or outstanding Loans (if the applicable Commitment has been
terminated).
12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent
of an assignment, together with any consents required by Section
12.3.1, and (ii) payment of a $4,000 fee to the Agent for
processing such assignment (unless such fee is waived by the
Agent), such assignment shall become effective on the effective
date specified in such assignment. The assignment shall contain a
representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and
Loans under the applicable assignment agreement constitutes "plan
assets" as defined under ERISA and that the rights and interests
of the Purchaser in and under the Loan Documents will not be "plan
assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender
party to this Agreement and any other Loan Document executed by or
on behalf of the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Lenders or the Agent shall
be required to release the transferor Lender with respect to the
percentage of the Aggregate Commitment and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3.2, the transferor Lender, the Agent
and the Borrower shall, if the transferor Lender or the Purchaser
desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement
Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their respective
Commitments, as adjusted pursuant to such assignment.
12.4. Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any
other Person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective
Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its
Subsidiaries; provided that each Transferee and prospective
Transferee agrees to be bound by Section 9.11 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of
any jurisdiction other than the United States or any State
thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 3.5(iv).
ARTICLE XIII
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.12
with respect to borrowing notices, all notices, requests and other
communications to any party hereunder shall be in writing
(including electronic transmission, facsimile transmission or
similar writing) and shall be given to such party: (x) in the case
of the Borrower or the Agent, at its address or facsimile number
set forth on the signature pages hereof, (y) in the case of any
Lender, at its address or facsimile number set forth below its
signature hereto or (z) in the case of any party, at such other
address or facsimile number as such party may hereafter specify
for the purpose by notice to the Agent and the Borrower in
accordance with the provisions of this Section 13.1. Each such
notice, request or other communication shall be effective (i) if
given by facsimile transmission, when transmitted to the facsimile
number specified in this Section and confirmation of receipt is
received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when
delivered (or, in the case of electronic transmission, received)
at the address specified in this Section; provided that notices to
the Agent under Article II shall not be effective until received.
13.2. Change of Address. The Borrower, the Agent and any
Lender may each change the address for service of notice upon it
by a notice in writing to the other parties hereto.
[signature pages to follow]
IN WITNESS WHEREOF, the Borrower, the Lenders and the
Agents have executed this Agreement as of the date first above
written.
RAYMOND JAMES FINANCIAL, INC.
By:
Title:
Address for Notices:
880 Carillon Parkway
St. Petersburg, Florida
33716
Attention: Jeffrey P.
Julien
Telephone: (727) 573-
3800
Facsimile: (727) 573-
8365
Commitment: BANK ONE, NA,
$25,000,000 Individually and as
Administrative Agent
By:
Title:
Address for Notices:
1 Bank One Plaza
Suite 0159, 16th Floor
Chicago, Illinois 60670
Attention: Glenyss
Gilliam
Telephone: (312) 732-
3642
Facsimile: (312) 732-
3246
Commitment: CITIBANK, N.A.,
$25,000,000 Individually and as
Syndication Agent
By:
Title:
Address for Notices:
399 Park Avenue
12th Floor, Zone 11
New York, New York 10043
Attention: Peter G. Nealon
Telephone: (212) 559-
8621
Facsimile: (212) 371-
6309
Commitment: BANK OF AMERICA, NATIONAL
$25,000,000 ASSOCIATION,
Individually and as Co-
Documentation Agent
By:
Title:
Address for Notices:
335 Madison Avenue
5th Floor
New York, New York 10017
Attention: James F. Dever
Telephone: (212) 503-
7986
Facsimile: (212) 503-
7013
Commitment: THE CHASE MANHATTAN BANK,
$25,000,000 Individually and as Co-
Documentation Agent
By:
Title:
Address for Notices:
One Chase Manhattan Plaza
21st Floor
New York, New York 10081
Attention: Richard Cassa
Telephone: (212) 552-
6259
Facsimile: (212) 552-
5142
Exhibit
A
COMPLIANCE CERTIFICATE
I, certify that I am the
of RAYMOND JAMES FINANCIAL, INC. (the "Borrower"),
and that as such I am authorized to execute this Compliance
Certificate on behalf of the Borrower, and DO HEREBY FURTHER
CERTIFY on behalf of the Borrower that:
1. I have reviewed the terms of that certain Revolving
Credit Agreement dated as of October 26, 1999 among the Borrower,
the financial institutions named therein (the "Lenders") and Bank
One, NA, as administrative agent (the "Agent") (as amended,
supplemented or modified from time to time, the "Credit
Agreement") and I have made, or have caused to be made by
employees or agents under my supervision, a detailed review of the
transactions and conditions of the Borrower during the accounting
period covered by the attached financial statements;
2. The examinations described in paragraph 1 did not
disclose, and I have no knowledge of, the existence of any
condition or event which constitutes a Default or Unmatured
Default during or at the end of the accounting period covered by
the attached financial statements or as of the date of this
Compliance Certificate, except as set forth below; and
3. Schedule I attached hereto sets forth financial data and
computations evidencing compliance with the covenants set forth in
Sections 6.14, 6.21.1, 6.21.2, 6.21.3, 6.21.4 and 6.21.5 of the
Credit Agreement, all of which data and computations are true,
complete and correct. Capitalized terms not defined herein are
defined in the Credit Agreement.
Described below are the exceptions, if any, to
paragraph 2 by listing, in detail, the nature of the condition or
event, the period during which it has existed and the action which
the Borrower has taken, is taking, or proposes to take with
respect to each such condition or event:
_____________________________________________________________
_____
_____________________________________________________________
_____
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements
delivered with this Compliance Certificate in support hereof, are
made and delivered this ______ day of ______________, _____.
RAYMOND JAMES FINANCIAL, INC.
By:
Title:
Schedule I
Section 6.14 - Sale of Assets
Asset Dispositions for twelve-month period ending with month
in which disposition occurs:
(a) Permitted asset dispositions:
10% of consolidated assets of the Borrower at beginning
of such twelve-month period* $
(b) Actual asset dispositions for such period $
*Note: must also demonstrate (to the extent calculable)
that total asset dispositions for such period do not involve
Property which is responsible for more than 15% of the
consolidated net sales or Net Income of the Borrower for
such twelve-month period.
Section 6.21.1 - Minimum Tangible Net Worth
1. Required Tangible Net Worth: $400,000,000
* plus 50%
of cumulative Net Income earned after $
September 24, 1999 $
Total
2. Actual Tangible Net Worth: $
Section 6.21.2 - Maximum Double Leverage Ratio
1. Maximum Double Leverage Ratio 1.15 to 1.0
2. Actual Double Leverage Ratio
(a) Investment in Subsidiaries $
(b) Shareholders equity (parent only) $
(c) Ratio of (a) to (b) ____ to 1.0
Section 6.21.3 - RJA Net Capital Ratio
1. Minimum RJA Net Capital Ratio 10%
2. Actual RJA Net Capital Ratio
$
(a) Net Capital
$
(b) Aggregate Debit Items
____%
(c) Ratio of (a) to (b)
Section 6.21.4 - RJFS Net Capital Ratio
1. Maximum RJFS Net Capital Ratio 9.0 to 1.0
2. Actual RJFS Net Capital Ratio
(a) Aggregate Indebtedness $
(b) Net Capital $
(c) Ratio of (a) to (b) ____ to
1.0
Section 6.21.5 - RJA/RJFS Excess Net Capital
1. Minimum combined RJA/RJFS Excess Net Capital
$100,000,000
2. Actual combined RJA/RJFS Excess Net Capital
$
Exhibit B
FORM OF
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement")
between ______________________ (the "Assignor") and
_______________________________ (the "Assignee") is dated as of
____________________, ____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a
Credit Agreement (which, as it may be amended, modified, renewed
or extended from time to time is herein called the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto
("Schedule 1"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to them in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, an interest in and to the
Assignor's rights and obligations under the Credit Agreement and
the other Loan Documents, such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this
Assignment Agreement the percentage interest specified in Item 3
of Schedule 1 of all outstanding rights and obligations under the
Credit Agreement and the other Loan Documents relating to the
facilities listed in Item 3 of Schedule 1. The aggregate
Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in
Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment
Agreement (the "Effective Date") shall be the later of the date
specified in Item 5 of Schedule 1 or two Business Days (or such
shorter period agreed to by the Agent) after this Assignment
Agreement, together with any consents required under the Credit
Agreement, are delivered to the Agent. In no event will the
Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date are not made on
the proposed Effective Date.
4. PAYMENT OBLIGATIONS. In consideration for the sale and
assignment of Loans hereunder, the Assignee shall pay the
Assignor, on the Effective Date, the amount agreed to by the
Assignor and Assignee. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments
of principal, interest and fees with respect to the interest
assigned hereby. The Assignee will promptly remit to the
Assignor any interest on Loans and fees received from the Agent
which relate to the portion of the Commitment or Loans assigned
to the Assignee hereunder for periods prior to the Effective Date
and not previously paid by the Assignee to the Assignor. In the
event that either party hereto receives any payment to which the
other party hereto is entitled under this Assignment Agreement,
then the party receiving such amount shall promptly remit it to
the other party hereto.
5. RECORDATION FEE. The Assignor and Assignee each agree
to pay one-half of the recordation fee required to be paid to the
Agent in connection with this Assignment Agreement unless
otherwise specified in Item 6 of Schedule 1.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that
(i) it is the legal and beneficial owner of the interest being
assigned by it hereunder, (ii) such interest is free and clear of
any adverse claim created by the Assignor, (iii) the execution
and delivery of this Assignment Agreement by the Assignor is duly
authorized. It is understood and agreed that the assignment and
assumption hereunder are made without recourse to the Assignor
and that the Assignor makes no other representation or warranty
of any kind to the Assignee. Neither the Assignor nor any of its
officers, directors, employees, agents or attorneys shall be
responsible for (a) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of any
Loan Document, including, without limitation, documents granting
the Assignor and the other Lenders a security interest in assets
of the Borrower or any guarantor, (b) any representation,
warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness
of the Borrower or any guarantor, (d) the performance of or
compliance with any of the terms or provisions of any of the Loan
Documents, (e) inspecting any of the property, books or records
of the Borrower, (f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral
securing or purporting to secure the Loans, or (g) any mistake,
error of judgment, or action taken or omitted to be taken in
connection with the Loans or the Loan Documents.
7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The
Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements
requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement,
(ii) agrees that it will, independently and without reliance upon
the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under the Loan Documents, (iii) appoints and
authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto, (iv) confirms that
the execution and delivery of this Assignment Agreement by the
Assignee is duly authorized, (v) agrees that it will perform in
accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as
a Lender, (vi) agrees that its payment instructions and notice
instructions are as set forth in the attachment to Schedule 1,
(vii) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption
hereunder are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents
will not be "plan assets" under ERISA, (viii) agrees to indemnify
and hold the Assignor harmless against all losses and expenses
(including, without limitation, reasonable attorneys' fees) and
liabilities incurred by the Assignor in connection with or
arising in any manner from the Assignee's non-performance of the
obligations assumed under this Assignment Agreement, and (ix) if
applicable, attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is
entitled to receive payments under the Loan Documents without
deduction or withholding of any United States federal income
taxes.
8. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE
GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF NEW YORK.
9. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For
the purpose hereof, the addresses of the parties hereto (until
notice of a change is delivered) shall be the address set forth
in the attachment to Schedule 1.
10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment
Agreement may be executed in counterparts. Transmission by
facsimile of an executed counterpart of this Assignment Agreement
shall be deemed to constitute due and sufficient delivery of such
counterpart and such facsimile shall be deemed to be an original
counterpart of this Assignment Agreement.
IN WITNESS WHEREOF, the duly authorized officers of the
parties hereto have executed this Assignment Agreement by
executing Schedule 1 hereto as of the date first above written.
SCHEDULE 1
TO ASSIGNMENT AGREEMENT
1. Description and Date of Credit Agreement:
That certain Revolving Credit Agreement dated
as of October 26, 1999 among Raymond James
Financial, Inc., the Lenders named therein
and Bank One, NA, as administrative agent
(the "Agent").
2. Date of Assignment Agreement: , ______.
3. Amounts (as of Date of Item 2 above):
(a) Assignee's percentage of revolving credit facility
purchased
under the Assignment Agreement*
_________%
(b) Amount of revolving credit facility purchased
under the Assignment Agreement
$_________
4. Assignee's Commitment (or Loans with respect to terminated
Commitments): $__________
5. Proposed Effective Date:
___________
6. Non-standard Recordation Fee Arrangement
N/A**
[Assignor/Assignee to
pay 100% of fee]
[Fee waived by
Agent]
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:_________________________
By:_________________________
Title:________________________
Title:________________________
Accepted and Consented to *** by: Accepted and
Consented to *** by:
RAYMOND JAMES FINANCIAL, INC. BANK ONE, NA
By:_________________________
By:_________________________
Title:________________________
Title:________________________
* Percentage taken to 10 decimal places.
** If fee is split 50-50, pick N/A as option.
*** Delete if not required by Credit Agreement.
ATTACHMENT TO SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> SEP-24-1999 SEP-24-1999
<PERIOD-END> SEP-24-1999 SEP-24-1999
<CASH> 221250000 221250000
<RECEIVABLES> 1551627000 1551627000
<SECURITIES-RESALE> 1132593000 1132593000
<SECURITIES-BORROWED> 1277692000 1277692000
<INSTRUMENTS-OWNED> 581110000 581110000
<PP&E> 91335000 91335000
<TOTAL-ASSETS> 5030715000 5030715000
<SHORT-TERM> 157321000 157321000
<PAYABLES> 2681846000 2681846000
<REPOS-SOLD> 0 0
<SECURITIES-LOANED> 1378821000 1378821000
<INSTRUMENTS-SOLD> 33400000 33400000
<LONG-TERM> 44183000 44183000
0 0
0 0
<COMMON> 490000 490000
<OTHER-SE> 557996000 557996000
<TOTAL-LIABILITY-AND-EQUITY> 5030715000 5030715000
<TRADING-REVENUE> 1771000 17034000
<INTEREST-DIVIDENDS> 66872000 229806000
<COMMISSIONS> 204979000 758136000
<INVESTMENT-BANKING-REVENUES> 28428000 74748000
<FEE-REVENUE> 35917000 128021000
<INTEREST-EXPENSE> 43990000 151494000
<COMPENSATION> 210450000 754747000
<INCOME-PRETAX> 35874000 137519000
<INCOME-PRE-EXTRAORDINARY> 35874000 137519000
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 22252000 85090000
<EPS-BASIC> .47 1.79
<EPS-DILUTED> .46 1.76
</TABLE>
