<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1993
Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
______________________________________________________________________
(Exact name of registrant as specified in its Partnership Agreement)
MISSOURI 43-1450818
________________________________________________________________________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
201 Progress Parkway
Maryland Heights, Missouri 63043
________________________________________________________________________
(Address and principal executive office) (Zip Code)
Registrant's telephone number, including area code (314) 851-2000
Securities registered pursuant to Section 12(b) of the act:
Name of each exchange
Title of each class on which registered
NONE
_________________________________ __________________________________
Securities registered pursuant to Section 12(g) of the Act:
NONE
________________________________________________________________________
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be file by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days YES X NO
___ ___
As of March 26, 1994 there were no voting securities held by non-
affiliates of the registrant.
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DOCUMENTS INCORPORATED BY REFERENCE
Part 1
None
ITEM 1. BUSINESS
The Jones Financial Companies, a Limited Partnership (the "Registrant"
and also referred to herein as the "Partnership") is organized under
the Revised Uniform Limited Partnership Act of the State of Missouri.
The terms "Registrant" and "Partnership" used throughout, refer to The
Jones Financial Companies, a Limited Partnership and any or all of its
consolidated subsidiaries. The Partnership is the successor to
Whitaker & Co., which was established in 1871 and dissolved on October
1, 1943, said date representing the organization date of Edward D.
Jones & Co., L.P. ("EDJ"), the Partnership's principal subsidiary.
EDJ was reorganized on August 28, 1987, which date represents the
organization date of The Jones Financial Companies, a Limited
Partnership.
The Partnership is engaged in business as a broker/dealer in listed
and unlisted securities, including governmental issues, acts as an
investment banker, and is a distributor of mutual fund shares. In
addition, the Partnership engages in sales of various insurance
products and renders investment advisory services. The Partnership is
heavily oriented towards serving individual retail customers.
The Partnership is a member firm of the New York, American and Midwest
exchanges, and is a registered broker/dealer with the National
Association of Securities Dealers, Inc.
As of February 25, 1994, the Partnership was comprised of 111 general
partners, 2,000 limited partners and 54 subordinated limited partners.
The Partnership employed 8,086 persons, including 2,013 part-time
employees. As of said date, the Partnership employed 2,776 full-time
investment representatives actively engaged in sales in 2,704 offices
in 48 states. The Partnership anticipates opening its first offices
in Hawaii and Ontario, Canada in 1994.
The Partnership owns 100 percent of the outstanding common stock of
EDJ Holding Company, Inc., a Missouri corporation and 100 percent of
the outstanding common stock of LHC, Inc., a Missouri corporation.
The Partnership also holds all of the partnership equity of Edward D.
Jones & Co., L.P., a Missouri limited partnership and EDJ Leasing Co.,
L.P. a Missouri limited partnership. EDJ Holding Company, Inc. and
LHC, Inc. are the general partners of Edward D. Jones & Co., L.P. and
EDJ Leasing Co., L.P., respectively. In addition, the Partnership
owns 100 percent of the outstanding common stock of Conestoga
Securities, Inc., a Missouri corporation and also owns, as a limited
partner, 49.5 percent of Passport Research Ltd., a Pennsylvania
limited partnership, which acts as an investment advisor to a money
market mutual fund. The Partnership owns 100% of the equity of Edward
D. Jones & Co., an Ontario limited partnership and the general partner
is Edward D. Jones & Co. Canada Holding Co. Inc., which is wholly
owned by the Partnership. The Partnership has an equity position in
several entities formed to act as general partners of various direct
participation programs sponsored by the Nooney Corporation as follows:
Nooney Capital Corp. (a Missouri corporation), 66-2/3% of outstanding
Class B non-voting stock; Nooney-Five Capital Corp. (a Missouri Corporation),
100% of outstanding Class B non-voting stock; Nooney-Six Capital Corp.
(a Missouri corporation), 100% of outstanding Class B non-voting stock;
Nooney-Seven Capital Corp. (a Missouri corporation), 100% of outstanding
Class B non-voting stock; Nooney Income Investments, Inc. (a Missouri
corporation), 100% of outstanding Class B non-voting stock; Nooney Income
Investments Two, Inc. (a Missouri corporation), 100% of outstanding Class B
non-voting stock; Nooney Income Investment Three, Inc., (a Missouri
corporation), 100% of outstanding Class B non-voting stock. The
Partnership holds all of the partnership equity in a Missouri limited
partnership, EDJ Ventures, Ltd., which acts as a partner and renders
advisory and other management services to direct participation program
partnerships. Conestoga Securities, Inc. is the general partner of EDJ
Ventures, Ltd. The Partnership is the sole shareholder of Tempus
Corporation, a Missouri corporation, which was formed strictly to
facilitate the issuance of certain debt securities of the Partnership
in a private transaction.
The Partnership is a limited partner of EDJ Insurance Agency of New
Jersey, L.P., a New Jersey limited partnership; EDJ Insurance Agency
of Arkansas, an Arkansas limited partnership; EDJ Insurance Agency of
Montana, a Montana limited partnership; EDJ Insurance Agency of New
Mexico, a New Mexico limited partnership; EDJ Insurance Agency of
Utah, a Utah limited partnership; and is a general partner in EDJ
Insurance Agency of California, a California general partnership; each
of which engage in general insurance brokerage activities. The
Partnership owns all of the outstanding stock of EDJ Insurance Agency
of Ohio, Inc., which is also engaged in insurance brokerage
activities. Affiliates of the partner include EDJ Insurance Agency of
Nevada, EDJ Insurance Agency of Texas, EDJ Insurance Agency of
Alabama, EDJ Insurance Agency of Florida, EDJ Insurance Agency of
Wyoming, EDJ Insurance Agency of Arizona and EDJ Insurance Agency of
Massachusetts. The Partnership holds all of the Partnership equity of
Unison Investment Trusts, L.P., d/b/a Unison Investment Trusts, Ltd.,
a Missouri limited partnership, which sponsors unit investment trust
programs. The general partner of Unison Investment Trusts, L.P. is
Unison Capital Corp., Inc., a Missouri corporation wholly owned by the
Partnership. The Partnership owns 100% of the outstanding common
stock of Edward D. Jones Homeowners, Inc., a Missouri corporation
which, in turn, serves as the general partner of EDJ Residential
Mortgage Services, a Missouri limited partnership wholly owned by the
Partnership, which formerly provided mortgage brokerage and ancillary
services. The Partnership owns 100% of the outstanding common stock
of Cornerstone Mortgage Investment Group, Inc., a Delaware limited
purpose corporation which has issued and sold collateralized mortgage
obligation bonds, and Cornerstone Mortgage Investment Group II, Inc.,
a Delaware limited purpose corporation which has structured and sold
secured mortgage bonds. The Partnership owns 100% of the outstanding
stock of CIP Management, Inc., which is the managing general partner
of CIP Management, L.P. CIP Management, L.P. is the managing general
partner of Community Investment Partners, L.P. and Community
Investment Partners II, L.P., business development companies.
Other affiliates of the Partnership include Patronus, Inc. and EDJ
Investment Advisory Services. Neither has conducted an active
business.
The Partnership owns as a general partner, 1/3 of Commonwealth Pacific
Limited Partnership, a Washington limited partnership, which formerly
operated as a syndicator of various real estate limited partnership
programs, for which the Partnership had served as an underwriter and
distributor.
Revenues by Source. The following table sets forth, for the past
three years the sources of the Partnership's revenues by dollar
amounts, (all amounts in thousands):
1993 1992 1991
Commissions
Listed $ 70,634 $ 59,256 $ 44,115
Mutual Funds 272,020 187,411 110,499
O-T-C 20,786 14,424 10,136
Insurance 64,424 42,585 34,964
Other 596 274 60
Principal Transactions 92,471 131,366 104,426
Investment Banking 45,001 60,635 67,376
Interest & Dividends 38,084 30,520 25,533
Money-Market Fees 10,048 10,751 9,320
IRA Custodial Service Fees 4,387 3,310 999
Other Revenues 13,001 9,080 4,160
_________ _________ _________
Total Revenue $ 631,452 $ 549,612 $411,588
Because of the interdependence of the activities and departments of
the Partnership's investment business and the arbitrary assumptions
involved in allocating overhead, it is impractical to identify and
specify expenses applicable to each aspect of the Partnership's
operations. Furthermore, the net income of firms principally engaged
in the securities business, including the Partnership's, is effected
by interest savings as a result of customer and other credit balances
and interest earned on customer margin accounts.
Listed Brokerage Transactions. A large portion of the Partnership's
revenue is derived from customers' transactions in which the
Partnership acts as agent in the purchase and sale of listed corporate
securities. These securities include common and preferred stocks and
corporate debt securities traded on and off the securities exchanges.
Revenue from brokerage transactions is highly influenced by the volume
of business and securities prices.
Customers' transactions in securities are effected on either a cash or
a margin basis. In a margin account, the Partnership lends the
customer a portion of the purchase price up to the limits imposed by
the margin regulations of the Federal Reserve Board (Regulation T),
New York Stock Exchange (NYSE) margin requirements, or the
Partnership's internal policies, which may be more stringent than the
regulatory minimum requirements. Such loans are secured by the
securities held in customers' margin accounts. These loans provide a
source of income to the Partnership since it is able to lend to
customers at rates which are higher than the rates at which it is able
to borrow on a secured basis. The Partnership is permitted to use as
collateral for the borrowings, securities owned by margin customers
having an aggregate market value generally up to 140 percent of the
debit balance in margin accounts. The Partnership may also use the
interest-free funds provided by free credit balances in customers'
accounts to finance customers' margin account borrowings.
In permitting customers to purchase securities on margin, the
Partnership assumes the risk of a market decline which could reduce
the value of its collateral below a customer's indebtedness before the
collateral is sold. Under the NYSE rules, the Partnership is required
in the event of a decline in the market value of the securities in a
margin account to require the customer to deposit additional
securities or cash so that at all times the loan to the customer is no
greater than 75 percent of the value of the securities in the account
( or to sell a sufficient amount of securities in order to maintain
this percentage). The Partnership, however, imposes a more stringent
maintenance requirement.
Variations in revenues from listed brokerage commissions between
periods is largely a function of market conditions; however, some
portion of the overall increases in recent years is due to the growth
in the number of registered representatives over these periods.
Mutual Funds. The Partnership distributes mutual fund shares in
continuous offerings and new underwritings. As a dealer in mutual
fund shares, the Partnership receives a dealers' discount which
generally ranges from 1 percent to 5 3/4 percent of the purchase price
of the shares, depending on the terms of the dealer agreement and the
amount of the purchase. The Partnership also earns service fees which
are generally based on 15 to 25 basis points of its customers' assets
which are held by the mutual funds. The Partnership does not manage
any mutual fund, although it is a limited partner of Passport
Research, Ltd., an advisor to a money market mutual fund.
Over-the-Counter and Principal Transactions. Partnership activities
in unlisted (over-the-counter) transactions are essentially similar to
its activities as a broker in listed securities. In connection with
customers' orders to buy or sell securities on an agency basis, the
Partnership charges a commission. In dealing on a principal basis,
the Partnership charges its customers a net price approximately equal
to the current inter-dealer market price plus or minus a mark-up or
mark-down from such market price. The National Association of
Securities Dealers (NASD) Rules of Fair Practice require that such
mark-up (or mark-down) be fair and reasonable.
The Partnership has executed several agency agreements with various
national insurance companies. Through its approximately 2,056
investment representatives who hold insurance sales licenses, EDJ is
able to offer term life insurance, health insurance, and fixed and
variable annuities to its customers. The sale of annuities is the
primary product. Revenues from the sale of insurance products
approximated 10% of total revenues in 1993, and this area has
experienced growth in recent years largely as a result of the growth
in the number of representatives licensed to engage in insurance
sales.
The Partnership makes a market in over-the-counter corporate
securities, municipal obligations, including general obligations and
revenue bonds, unit investment trusts and mortgage-backed securities.
The Partnership's market-making activities are conducted with other
dealers in the "wholesale" market and "retail" market wherein the
Partnership acts as a dealer buying from and selling to its customers.
In making markets in over-the-counter securities, the Partnership
exposes its capital to the risk of fluctuation in the market value of
its security positions. It is the Partnership's policy not to trade
for its own account.
As in the case of listed brokerage transactions, revenue from over-
the-counter and principal transactions is highly influenced by the
volume of business and securities prices, as well as by the varying
number of registered representatives employed by the Partnership over
the periods indicated.
Investment Banking. The Partnership's investment banking activities
are carried on through its Syndicate and Underwriting Departments.
The principal service which the Partnership renders as an investment
banker is the underwriting and distribution of securities either in a
primary distribution on behalf of the issuer of such securities or in
a secondary distribution on behalf of a holder of such securities.
The distributions of corporate and municipal securities are, in most
cases, underwritten by a group or syndicate of underwriters. Each
underwriter has a participation in the offering.
Unlike many larger firms against which the Partnership competes, the
Partnership does not presently engage in other investment banking
activities such as assisting in mergers and acquisitions, arranging
private placement of securities issues with institutions or providing
consulting and financial advisory services to corporations.
The Syndicate and Underwriting Departments are responsible for the
largest portion of the Partnership's investment banking business. In
the case of an underwritten offering managed by the Partnership, the
Departments may form underwriting syndicates and work closely with the
branch office system for sales of the Partnership's own participation
and with other members of the syndicate in the pricing and negotiation
of other terms. In offerings managed by others in which the
Partnership participates as a syndicate member, the Departments serve
as active coordinators between the managing underwriter and the
Partnership's branch office system.
The underwriting activity of the Partnership involves substantial
risks. An underwriter may incur losses if it is unable to resell the
securities it is committed to purchase or if it is forced to liquidate
all or part of its commitment at less than the agreed purchase price.
Furthermore, the commitment of capital to underwriting may adversely
affect the Partnership's capital position and, as such, its
participation in an underwriting may be limited by the requirement
that it must at all times be in compliance with the net capital rule.
The Securities Act of 1933 and other applicable laws and regulations
impose substantial potential liabilities on underwriters for material
misstatements or omissions in the prospectus used to describe the
offered securities. In addition, there exists a potential for
possible conflict of interest between an underwriter's desire to sell
its securities and its obligation to its customers not to recommend
unsuitable securities. In recent years there has been an increasing
incidence of litigation in these areas. These lawsuits are frequently
brought for the benefit of large classes of purchasers of underwritten
securities. Such lawsuits often name underwriters as defendants and
typically seek substantial amounts in damages.
Interest and dividend income is earned on securities held and margin
account balances.
Other revenue sources include money market management fees and IRA
custodial services fees, accommodation transfer fees, gains from sales
of certain assets, and other product and service fees. The
Partnership has an interest in the investment advisor to its money
market fund, Daily Passport Cash Trust. Revenue from this source has
increased over the periods due to growth in the fund, both in dollars
invested and number of accounts. In 1991 EDJ became the trustee for
its IRA accounts. Each account is charged an annual service fee for
services rendered to it by the Partnership.
The Partnership has registered an investment advisory program with the
SEC under the Investment Advisors Act of 1940. This service is
offered firmwide and involves income and estate tax planning and
analysis for clients. Revenues from this source are insignificant and
included under "Other Revenues."
Also included in the category "Other Revenues" are accommodation
transfer fees, gains from sales of certain assets, other non-recurring
gains and revenue from management fees charged by mutual funds.
Research Department. The Partnership maintains a Research Department
to provide specific investment recommendations and market information
for retail customers. The Department supplements its own research
with the services of various independent research services. The
Partnership competes with many other securities firms with
substantially larger research staffs in its research activities.
Customer Account Administration and Operations. Operations employees
are responsible for activities relating to customers' securities and
the processing of transactions with other broker/dealers. These
activities include receipt, identification, and delivery of funds and
securities, internal financial controls, accounting and personnel
functions, office services, storage of customer securities and the
handling of margin accounts. The Partnership processes substantially
all of its own transactions. It is important that the Partnership
maintains current and accurate books and records from both a profit
viewpoint as well as for regulatory compliance.
To expedite the processing of orders, the Partnership's branch office
system is linked to the St. Louis headquarters office through an
extensive communications network. Orders for all securities are
centralized in St. Louis and executed there. The Partnership's
processing of paperwork following the execution of a security
transaction is automated, and operations are generally on a current
basis.
There is considerable fluctuation during any one year and from year to
year in the volume of transactions the Partnership processes. The
Partnership records transactions and posts its books on a daily basis.
Operations' personnel monitor day-to-day operations to determine
compliance with applicable laws, rules and regulations. Failure to
keep current and accurate books and records can render the Partnership
liable to disciplinary action by governmental and self-regulatory
organizations.
The Partnership has a computerized branch office communication system
which is principally utilized for entry of security orders,
quotations, messages between offices and cash receipts functions.
The Partnership clears and settles virtually all of its listed
transactions through the National Securities Clearing Corporation
("NSCC"), New York, New York. NSCC effects clearing of securities on
the New York, American and Midwest Stock Exchanges.
In conjunction with clearing and settling transactions with NSCC the
Partnership holds customers' securities on deposit with Depository
Trust Company ("DTC") in lieu of maintaining physical custody of the
certificates.
The Partnership is substantially dependent upon the operational
capacity and ability of NSCC/DTC. Any serious delays in the
processing of securities transactions encountered by NSCC/DTC may
result in delays of delivery of cash or securities to the
Partnership's customers. These services are performed for the
Partnership under contracts which may be changed or terminated at will
by either party.
Automated Data Processing, Inc., ("ADP") provides automated data
processing services for customer account activity and records.
The Partnership does not employ its own floor broker for transactions
on exchanges. The Partnership has arrangements with other brokers to
execute the Partnership's transactions in return for a commission
based on the size and type of trade. If for any reason any of the
Partnership's clearing, settling or executing agents were to fail, the
Partnership and its customers would be subject to possible loss.
While the coverages provided by the Securities Investors Protection
Corporation (SIPC) and protection in excess of SIPC limits would be
available to customers of the Partnership, to the extent that the
Partnership would not be able to meet the obligations of the
customers, such customers might experience delays in obtaining the
protections afforded them by the SIPC and the Partnership's insurance
carrier.
The Partnership believes that its internal controls and safeguards
concerning the risks of securities thefts are adequate. Although the
possibility of securities thefts is a risk of the industry, the
Partnership has not had, to date, a significant problem with such
thefts. The Partnership maintains fidelity bonding insurance which,
in the opinion of management, provides adequate coverage.
Employees. Including its general partners, the Partnership has
approximately 8,086 full and part-time employees, including 2,776 who
are registered salespeople as of February 25, 1994. The Partnership's
salespersons are compensated on a commission basis and may, in
addition, be entitled to bonus compensation based on their respective
branch office profitability and the profitability of the Partnership.
The Partnership has no formal bonus plan for its non-registered
employees. The Partnership has, however, in the past paid bonuses to
its non-registered employees on an informal basis, but there can be no
assurance that such bonuses will be paid for any given period or will
be within any specific range of amounts.
Employees of the Partnership are bonded under a blanket policy as
required by NYSE rules. The annual aggregate amount of coverage is
$30,000,000 subject to a $2,000,000 deductible provision, per
occurrence.
The Partnership maintains a training program for prospective
salespeople which includes eight weeks of concentrated instruction and
on-the-job training in a branch office. The first phase of training
is spent reviewing Series 7 examination materials and preparing for
and taking the examination. The first week of the training after
passing the examination is spent in a comprehensive training program
in St. Louis. The next five weeks include on-the-job training in
branch locations reviewing products, office procedures and sales
techniques. The broker is then sent to a designated location to
establish the EDJ office, conduct market research and prepare for
opening the office. After the salesperson has opened a branch office,
one final week is spent in a central location to complete the initial
training program. Three and nine months later, the investment
representative attends additional training classes in St. Louis, and
subsequently, EDJ offers periodic continuing training mechanisms to
its seasoned sales force. Although the Partnership pays the broker
during the transition period, the broker must fulfill special tasks
before being awarded full branch status. EDJ's basic brokerage payout
is similar to its competitors. A bonus may also be paid based on the
profitability of the branch and the profitability of the Partnership.
The Partnership considers its employee relations to be good and
believes that its compensation and employee benefits which include
medical, life, and disability insurance plans and profit sharing and
deferred compensation retirement plans, are competitive with those
offered by other firms principally engaged in the securities business.
Competition. The Partnership is subject to intensive competition in
all phases of its business from other securities firms, many of which
are substantially larger than the Partnership in terms of capital,
brokerage volume and underwriting activities. In addition, the
Partnership encounters competition from other financially oriented
organizations such as banks, insurance companies, and others offering
financial services and advice. In recent periods, many regulatory
requirements prohibiting non-securities firms from engaging in certain
aspects of brokerage firms' business have been eliminated and further
removal of such prohibitions is anticipated. With minor exceptions,
customers are free to transfer their business to competing
organizations at any time.
There is intense competition among securities firms for salespeople
with good sales production records. In recent periods, the
Partnership has experienced increasing efforts by competing firms to
hire away its registered representatives although the Partnership
believes that its rate of turnover of investment representatives is
not higher than that of other firms comparable to the Partnership.
Regulation. The securities industry in the United States is subject
to extensive regulation under both federal and state laws. The SEC is
the federal agency responsible for the administration of the federal
securities laws. The Partnership's principal subsidiary is registered
as a broker-dealer and investment advisor with the SEC. Much of the
regulation of broker-dealers has been delegated to self-regulatory
organizations, principally the NASD and national securities exchanges
such as the NYSE, which has been designated by the SEC as the
Partnership's primary regulator. These self-regulatory organizations
adopt rules (which are subject to approval by the SEC) that govern the
industry and conduct periodic examinations of the Partnership's
operations. Securities firms are also subject to regulation by state
securities administrators in those states in which they conduct
business. The Partnership is registered as a broker-dealer in 50
states and Puerto Rico.
Broker-dealers are subject to regulations which cover all aspects of
the securities business, including sales methods, trade practices
among broker-dealers, use and safekeeping of customers' funds and
securities, capital structure of securities firms, record-keeping and
the conduct of directors, officers and employees. Additional
legislation, changes in rules promulgated by the SEC and self-
regulatory organizations, or changes in the interpretation or
enforcement of existing laws and rules, may directly affect the mode
of operation and profitability of broker-dealers. The SEC, self-
regulatory organizations and state securities commissions may conduct
administrative proceedings which can result in censure, fine,
suspension or expulsion of a broker-dealer, its officers or employees.
The principal purpose of regulation and discipline of broker-dealers
is the protection of customers and the securities markets, rather than
protection of the creditors and stockholders of broker-dealers.
Uniform Net Capital Rule. As a broker-dealer and a member firm of the
NYSE, the Partnership is subject to the Uniform Net Capital Rule
(Rule) promulgated by the SEC. The Rule is designed to measure the
general financial integrity and liquidity of a broker-dealer and the
minimum net capital deemed necessary to meet the broker-dealer's
continuing commitments to its customers. The Rule provides for two
methods of computing net capital and the Partnership has adopted what
is generally referred to as the alternative method. Minimum required
net capital under the alternative method is equal to 2% of the
customer debit balances, as defined. The Rule prohibits withdrawal of
equity capital whether by payment of dividends, repurchase of stock or
other means, if net capital would thereafter be less than 5% of
customer debit balances. Additionally, certain withdrawals require
the consent of the SEC to the extent they exceed defined levels even
though such withdrawals would not cause net capital to be less than 5%
of aggregate debit items. In computing net capital, various
adjustments are made to exclude assets which are not readily
convertible into cash and to provide a conservative statement of other
assets such as a company's inventories. Failure to maintain the
required net capital may subject a firm to suspension or expulsion by
the NYSE, the SEC and other regulatory bodies and may ultimately
require its liquidation. The Partnership has, at all times, been in
compliance with the net capital rules.
ITEM 2. PROPERTIES
All of its headquarter offices are owned by the Partnership. The
Partnership conducts its headquarters operations from St. Louis
County, Missouri. The headquarters facilities are comprised of 17
separate buildings containing approximately 822,000 usable square
feet. One additional building on the campus is leased. The
Partnership acquired an existing 397,000 square foot building in St.
Louis County in December, 1992, of which 170,000 square feet is
occupied at December 31, 1993. This building was substantially
renovated in 1993. The Partnership plans to use the unoccupied space
for growth in future headquarters personnel which is planned to
parallel the growth of the salesforce. The Partnership also maintains
facilities in 2,655 branch locations which (as of December 31, 1993)
are predominantly rented under cancellable leases.
Further information concerning leased computer equipment, branch
satellite equipment and other obligations of the Partnership is given
in the Notes to the Consolidated Financial Statements appearing
elsewhere herein.
ITEM 3. LEGAL PROCEEDINGS
In recent years there has been an increasing incidence of litigation
involving the securities industry. Such suits often seek to benefit
large classes of industry customers; many name securities dealers as
defendants along with exchanges in which they hold membership and seek
large sums as damages under federal and state securities laws, anti-
trust laws, and common law.
There are various actions pending against the Partnership which have
arisen in the normal course of business. In view of the number and
diversity of claims against the Partnership, the number of
jurisdictions in which litigation is pending and the inherent
difficulty of predicting the outcome of litigation and other claims,
the Partnership cannot definitely state what the eventual outcome of
these pending claims will be. However, in the opinion of management,
after consultation with legal counsel, the impact of this litigation
will not have a material adverse affect on the Partnership's financial
position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no market for the Limited or Subordinated Limited Partnership
interests and their assignment is prohibited.
ITEM 6. SELECTED FINANCIAL DATA
The following information sets forth, for the past five years,
selected financial data. (All amounts in thousands, except per unit
information.)
Summary Income Statement Data:
1993 1992 1991 1990 1989
Revenues $631,452 $549,612 $411,588 $316,503 $280,429
Net income 66,211 62,282 40,875 22,553 15,703
Net income per
weighted average
$1,000 equivalent
limited partnership
unit outstanding $194.62 $238.41 $185.92 $130.52 $82.50
Weighted average
$1,000 equivalent
limited partnership
units outstanding 50,381 41,160 42,616 25,874 27,274
Net income per
weighted average
$1,000 equivalent
subordinated limited
partnership unit
outstanding $350.32 $418.21 $322.38 $212.86 $154.82
Weighted average
$1,000 equivalent
subordinated limited
partnership units
outstanding 16,936 12,941 10,624 10,190 9,779
Summary Balance Sheet Data:
1993 1992 1991 1990 1989
Total assets $800,478 $653,253 $513,730 $422,257 $387,618
======= ======= ======= ======= =======
Long-term debt $ 33,317 $ 23,847 $ 24,769 $ 19,977 $ 20,075
Other liabilities,
exclusive of
subordinated
liabilities 514,386 414,110 326,229 250,772 234,732
Subordinated liabilities 73,000 78,000 48,000 50,400 52,800
Total partnership
capital 179,775 137,296 114,732 101,108 80,011
________ ________ ________ ________ ________
Total liabilities and
partnership capital $800,478 $653,253 $513,730 $422,257 $387,618
======== ======== ======== ======== ========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table summarizes the changes in major categories of
revenues and expenses for the last two years (Dollar amounts in
thousands.)
1993 vs. 1992 1992 vs. 1991
Increase - (Decrease)
Amount % Amount %
Revenues
Commissions $ 124,510 41 $ 104,176 52%
Principal transactions (38,895) (30) 26,940 26
Investment banking (15,634) (26) (6,741) (10)
Interest and dividends 7,564 25 4,987 20
Other 4,295 19 8,662 60
_________ ___ _________ ___
81,840 15 138,024 34
_________ ___ _________ ___
Expenses
Employee and partner
compensation and benefits 53,859 16 88,142 37
Occupancy and equipment 10,069 20 3,867 8
Communications and data
processing 4,898 17 3,556 14
Interest 3,632 23 2,155 16
Payroll and other taxes 1,767 11 3,192 24
Floor brokerage and
clearance fees 781 15 691 15
Other operating expenses 2,905 7 15,014 53
________ ___ ________ ___
77,911 16 116,617 31
________ ___ ________ ___
Net income $ 3,929 6% $ 21,407 52%
======== === ======== ===
RESULTS OF OPERATIONS (1993 VERSUS 1992)
Revenues increased 15% ($82 million) over 1992 to $631 million.
Expenses increased by 16% ($78 million) resulting in net income of $66
million, an increase of 6% ($4 million) over 1992. These results were
significantly influenced by the Partnership's activities in connection
with the expansion of its salesforce. The number of investment
representatives increased 24% in 1993 to 2,745. By comparison, 1992's
growth in investment representatives was 22%. The vast majority of
these new investment representatives are beginners in the industry who
generally achieve profitability after about 30 months. In the
interim, the Partnership incurs significant training, salary and
support costs. The net impact of these direct expenses amounted to
nearly $21 million during 1993 ($14 million in 1992). Additionally,
the Partnership made significant increases in home office overhead to
support the increased salesforce.
Commission revenues increased $125 million fueled by a $85 million
(45%) increase in mutual fund commissions and service fees. Listed
and over-the-counter agency commissions increased $18 million or 24%
over 1992. Insurance commissions increased 51%, with variable annuity
commissions increasing $20.6 million and fixed annuities decreasing by
$5 million. The increasing level of securities prices along with
lower interest rates turned individual investors to equity markets and
equity based investments in search of more attractive returns. The
continued strength of the securities markets led to solid increases in
commission generated from the sales of securities products.
Principal transaction revenues decreased 30% ($39 million).
Collateralized mortgage obligations (CMOs) revenues decreased $11.3
million, government and municipal bond revenues decreased by $9.7
million and $3.7 million, respectively. Prior to 1993, municipal bond
syndicate revenues were included in principal transaction revenues.
In 1993, these revenues, totalling $10.3 million, were included in
investment banking revenues. The majority of the principal
transaction revenue decreases largely resulted from historically low
interest rates and the resulting popularity of equity based
investments.
Investment banking revenues declined $15.6 million resulting from
decreases in certificate of deposit revenues ($8 million), CMO
revenues ($11 million), and equity and debt originations.
Interest and dividend revenues increased 25% or $7.6 million.
Customers' margin loan balances increased 36% in 1993 ($120 million)
ending the year at $451 million. The increase in customers' loan
balances was attributable to higher securities prices, continuation of
marketing efforts targeting individuals to view their securities as
access to a personal line of credit and lower interest rates. The
increase in loan balances more than offset the decline in short term
interest rates during the year resulting in increased interest
earnings.
Other revenues increased $4 million (19%) over 1992. Revenues from
non-bank custodian IRA accounts resulted in an increase of $1 million
in 1993.
Overall expenses increased 16% ($78 million). The Partnership's
compensation structure for its investment representatives is designed
to expand or contract substantially as a result of changes in
revenues, net income and profit margins. Similarly, non-sales
personnel compensation from bonuses and profit sharing contributions
expands and contracts in relation to net income. The Partnership's
non-compensation related expenses are less responsive to changes in
revenues and net income. Rather, these expenses are influenced by the
number of salespeople, growth of the salesforce, the number of
customer accounts and, to a lesser extent, the volume of transactions.
As a result of its expense structure, the Partnership's compensation
expense increase of 16% matched the overall increase in expenses of
16%. The Partnership's expenses other than compensation increased
15%. The increase in other expenses resulted from several items.
Increased expense levels related to supporting a larger number of
investment representatives and branch offices were primarily
responsible for the increase in operating expenses.
RESULTS OF OPERATIONS (1992 VERSUS 1991)
Revenues increased 34% ($138 million) over 1991 to $550 million.
Expenses increased by 31% ($117 million) resulting in net income of
$62 million, an increase of 52% ($21 million) over 1991. The number
of investment representatives increased 22% in 1992 to 2,216. By
comparison, 1991's growth in investment representatives was 9%. The
increased size of the salesforce and higher securities prices along
with a very steeply sloped yield curve were significant factors
contributing to 1992's financial results.
Commission revenues increased $104 million fueled by a $77 million
(70%) increase in mutual fund commissions and service fees. Listed
and over-the-counter agency commissions increased $19 million or 36%
over 1991. Insurance commissions increased 22%, with variable annuity
commissions increasing $10 million and fixed annuities decreasing by
$4 million. The increasing level of securities prices along with
lower interest rates turned individual investors to equity markets and
equity based investments in search of more attractive returns.
Principal transaction revenues increased 26% ($27 million) with
taxable and tax free fixed income securities increasing $21 million.
At the same time, O-T-C principal stock sales increased by $3 million.
Individual investors were attracted to longer term fixed income
products to increase or maintain their returns compared to other
shorter term alternatives. Additionally, tax free bonds experienced
relatively high yields during the year when compared to treasury
securities with similar maturities. The increase in O-T-C stock sales
resulted from higher equity prices and investors directing their
investment dollars into smaller capitalization companies. The returns
experienced during the year from investing in smaller capitalization
companies was higher than the investment returns of larger exchange
listed securities.
Investment banking revenues declined $6.7 million from substantial
decreases in certificate of deposit revenues ($6 million) and CMOs
revenues ($4 million). These decreases were partially offset by
equity originations and syndicate equity participation increases of $3
million. Initial public offerings continued to be popular during the
year along with investor interest in utility unit investment trust
underwritings. The decrease in investment banking CMO revenues was
partially offset by increased sales of CMOs on a principal basis.
Interest and dividend revenues increased 20% or $5 million.
Customers' margin loan balances increased 66% in 1992 ($132 million)
ending the year at $331 million. The increase in customers' loan
balances was attributable to higher securities prices, continuation of
marketing efforts targeting individuals to view their securities as
access to a personal line of credit and lower interest rates. The
increase in loan balances more than offsets the decline in short term
interest rates during the year resulting in increased interest
earnings.
Other revenues increased $9 million (60%) over 1991. During the last
quarter of 1991, the Partnership qualified as a non-bank custodian for
its IRA accounts resulting in an increase of $2.3 million in 1992 from
IRA service fee revenues. Revenues for fees and services received
from the Edward D. Jones & Co. Daily Passport Cash Trust money market
account and a related tax free money market account offered through
Edward D. Jones & Co. increased $1.4 million over 1991.
Overall expenses increased 31% ($117 million). The Partnership's
compensation structure for its investment representatives is designed
to expand or contract substantially as a result of changes in
revenues, net income and profit margins. Similarly, non-sales
personnel compensation from bonuses and profit sharing contributions
expands and contracts in relation to net income. The Partnership's
non-compensation related expenses tend to be less responsive to
changes in revenues and net income. Rather, these expenses tend to be
more influenced by the number of salespeople, growth of the
salesforce, the number of customer accounts and, to a lesser extent,
the volume of transactions. As a result of its expense structure, the
Partnership's compensation expense increase of 37% exceeded the
overall increase in expenses of 31%. The Partnership's expenses other
than compensation increased 22%. Other operating expenses increased
53% or $15 million over 1991. The increase in other operating
expenses resulted from several items. Increased expense levels
related to supporting a larger number of investment representatives
and branch offices were primarily responsible for the increase in
operating expenses.
THE EFFECTS OF INFLATION
The Partnership's net assets are primarily monetary, consisting of
cash, securities inventories and receivables less liabilities.
Monetary net assets are primarily liquid in nature and would not be
significantly affected by inflation. Inflation and future
expectations of inflation influence securities prices, as well as
activity levels in the securities markets. As a result, profitability
and capital may be impacted by inflation and inflationary
expectations. Additionally, inflation's impact on the Partnership's
operating expenses may affect profitability to the extent that
additional costs are not recoverable through increased prices of
services offered by the Partnership.
LIQUIDITY AND CAPITAL ADEQUACY
The Partnership's equity capital at December 31, 1993, was $179.8
million compared to $137.3 million at December 31, 1992. Overall,
equity capital increased 31%, primarily due to the retention of
earnings and issuance of partnership interests. The Partnership
issued additional limited partnership interests in August 1993 of
$24.8 million and additional subordinated limited partnership interest
of $4.4 million in January 1993.
At December 31, 1993, the Partnership had a $28.8 million balance of
cash and cash equivalents. Lines of credit are in place at nine banks
aggregating $445 million ($420 million of which are through
uncommitted lines of credit), of which $310 million was available at
December 31, 1993.
The Partnership believes that the liquidity provided by existing cash
balances and borrowing arrangements will be sufficient to meet the
Partnership capital and liquidity requirements.
As a result of its activities as a broker/dealer, EDJ, the
Partnership's principal subsidiary, is subject to the Net Capital
provisions of Rule 15c3-1 of the Securities Exchange Act of 1934 and
the capital rules of the New York Stock Exchange. Under the
alternative method permitted by the rules, EDJ must maintain minimum
Net Capital, as defined, equal to the greater of $150,000 or 2% of
aggregate debit items arising from customer transactions. The Net
Capital rule also provides the partnership capital may not be
withdrawn if resulting Net Capital would be less than 5% of aggregate
debit items. Additionally, certain withdrawals require the consent of
the SEC to the extent they exceed defined levels even though such
withdrawals would not cause Net Capital to be less than 5% of
aggregate debit items. At December 31, 1993, EDJ's Net Capital of
$89,790,000 was 20% of aggregate debit items and its net capital in
excess of the minimum required was $80,681,000. Net Capital and the
related capital percentage may fluctuate on a daily basis.
CASH FLOWS
Cash and cash equivalents decreased $8,932,000 from December 31, 1992,
to December 31, 1993. Cash flows were primarily provided from net
income, decreases in securities owned, short and long term bank loans
and the issuance of partnership interests. Cash flows were primarily
used to increase net receivables from customers and brokers, purchase
equipment, property and improvements, and fund withdrawals and
distributions.
Cash and cash equivalents increased $5,308,000 from December 31, 1991,
to December 31, 1992. Cash flows were primarily provided from net
income, short term bank loans and the issuance of subordinated debt.
Cash flows were primarily used to increase net receivables from
customers, increase securities owned, purchase equipment, property and
improvements, and fund withdrawals and distributions.
Cash and cash equivalents increased $5,078,000 from December 31, 1990,
to December 31, 1991. Cash flows were primarily provided from net
income, an increase in accounts payable and accrued expenses, short
term bank loans and the issuance of long term debt. Cash flows were
primarily used to increase net receivables from customers, increase
securities owned, purchase equipment, property and improvements, and
fund withdrawals and distributions.
There were no material changes in the Partnership's overall financial
condition during the year ended December 31, 1993, compared with the
year ended December 31, 1992. The Partnership's consolidated
statement of financial condition is comprised primarily of cash and
assets readily convertible into cash. Securities inventories are
carried at market value and are readily marketable. The firm carried
lower trading inventory levels in 1993 as compared to 1992. Customer
margin accounts are collateralized by marketable securities. Other
customer receivables and receivables and payables with other
broker/dealers normally settle on a current basis. Liabilities,
including amounts payable to customers, checks and accounts payable
and accrued expenses are non-interest bearing sources of funds to the
Partnership. These liabilities, to the extent not utilized to finance
assets, are available to meet liquidity needs and provide funds for
short term investments, which favorably impacts profitability.
The Partnership's growth in recent years has been financed through
sales of limited partnership interest to its employees, retention of
earnings and private placements of long-term and subordinated debt.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements Included in this Item
Page No.
Report of Independent Public Accountants
Consolidated Statements of Financial Condition as of
December 31, 1993 and 1992
Consolidated Statements of Income for the years ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in Partnership Capital
for the years ended December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Jones Financial Companies, a Limited Partnership:
We have audited the accompanying consolidated statements of financial
condition of The Jones Financial Companies, a Limited Partnership (a
Missouri limited partnership) and subsidiaries as of December 31, 1993
and 1992, and the related consolidated statements of income, cash
flows and changes in partnership capital for each of the three years
in the period ended December 31, 1993. These financial statements are
the responsibility of the Partnership'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 The Jones
Financial Companies, a Limited Partnership and subsidiaries as of
December 31, 1993 and 1992, and the results of their operations, their
cash flows and the changes in their partnership capital for each of
the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri,
February 22, 1994
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
December 31, December 31,
(Amounts in thousands) 1993 1992
Cash and cash equivalents $ 28,798 $ 37,730
Receivable from:
Customers (Note 2) 464,760 352,686
Brokers or dealers and clearing
organizations (Note 3) 32,550 13,880
Securities owned, at market value (Note 4):
Inventory securities 60,371 67,873
Investment securities 73,575 78,797
Office equipment, property and improvements,
at cost, net of accumulated depreciation and
amortization of $79,903 and $69,989,
respectively 102,434 72,125
Other assets 37,990 30,162
__________ __________
$ 800,478 $ 653,253
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
December 31, December 31,
(Amounts in thousands) 1993 1992
Bank loans (Note 5) $ 139,261 $ 123,000
Payable to:
Customers (Note 2) 242,584 167,884
Brokers or dealers and clearing
organizations (Note 3) 8,092 13,915
Securities sold but not yet purchased, at
market value
(Note 4) 17,766 9,588
Accounts payable and accrued expenses 37,419 37,600
Accrued compensation and employee benefits 69,264 62,123
Long-term debt (Note 6) 33,317 23,847
____________ __________
547,703 437,957
Liabilities subordinated to claims
of general creditors (Note 7) 73,000 78,000
Partnership capital (Notes 8 and 9):
Limited partners 71,222 47,328
Subordinated limited partners 19,163 14,716
General partners 89,390 75,252
____________ __________
179,775 137,296
____________ __________
$ 800,478 $ 653,253
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF INCOME
Years Ended
(Amounts in thousands, Dec. 31, Dec. 31, Dec. 31,
except per unit information) 1993 1992 1991
Revenues:
Commissions $ 428,460 $ 303,950 $199,774
Principal transactions 92,471 131,366 104,426
Investment banking 45,001 60,635 67,376
Interest and dividends 38,084 30,520 25,533
Other 27,436 23,141 14,479
_________ _________ _________
631,452 549,612 411,588
_________ _________ _________
Expenses:
Employee and partner
compensation and benefits
(Note 10) 381,805 327,946 239,804
Occupancy and equipment (Note 11) 59,549 49,480 45,613
Communications and data processing 34,167 29,269 25,713
Interest (Notes 5, 6 and 7) 19,128 15,496 13,341
Payroll and other taxes 18,180 16,413 13,221
Floor brokerage and clearance fees 6,141 5,360 4,669
Other operating expenses 46,271 43,366 28,352
_________ _________ _________
565,241 487,330 370,713
_________ _________ _________
Net income $ 66,211 $ 62,282 $ 40,875
======== ======== ========
Net income allocated to:
Limited partners $ 9,805 $ 9,813 $ 7,923
Subordinated limited partners 5,933 5,412 3,425
General partners 50,473 47,057 29,527
_________ _________ _________
66,211 $ 62,282 $ 40,875
======== ======== ========
Net income per weighted average
$1,000 equivalent partnership
units outstanding:
Limited partners $ 194.62 $ 238.41 $ 185.92
======== ======== ========
Subordinated limited partners $ 350.32 $ 418.21 $ 322.38
======== ======== ========
Weighted average $1,000
equivalent partnership units
outstanding:
Limited partners 50,381 41,160 42,616
======== ======== ========
Subordinated limited partners 16,936 12,941 10,624
======== ======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
Dec. 31, Dec. 31, Dec. 31,
(Amounts in thousands) 1993 1992 1991
CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES:
Net income $ 66,211 $ 62,282 $ 40,875
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 16,800 14,728 11,203
Increase in net receivable
from/payable to customers (37,374) (90,526) (82,200)
(Increase) decrease in net
receivable from/payable to
brokers or dealers and clearing
organizations (24,493) 13,401 9,939
Decrease (increase) in securities
owned, net 20,902 2,573 (27,365)
Increase in accounts payable
and other accrued expenses 6,960 106 37,069
Increase in other assets (7,828) (7,744) (2,700)
_________ _________ _________
Net cash provided (used) by
operating activities 41,178 (5,180) (13,179)
_________ _________ _________
CASH FLOWS USED BY INVESTING
ACTIVITIES:
Purchase of office equipment,
property and improvements (47,109) (28,872) (20,284)
_________ _________ _________
CASH FLOWS (USED) PROVIDED BY
FINANCING ACTIVITIES:
Increase in bank loans, net 16,261 50,000 63,400
Issuance of long-term debt 11,700 - 13,300
Repayment of long-term debt (2,230) (922) (8,508)
(Repayment) issuance of subordinated
liabilities (5,000) 30,000 (2,400)
Issuance of partnership interests 29,195 2,396 802
Redemption of partnership interests (1,193) (1,326) (2,176)
Withdrawals and distributions from
partnership capital (51,734) (40,788) (25,877)
_________ _________ _________
Net cash (used) provided by
financing activities (3,001) 39,360 38,541
Net (decrease) increase in cash _________ _________ _________
and cash equivalents (8,932) 5,308 5,078
CASH AND CASH EQUIVALENTS,
beginning of year 37,730 32,422 27,344
_________ _________ _________
end of year $ 28,798 $ 37,730 $ 32,422
======== ======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL
YEARS ENDED DECEMBER 31, 1993, 1992 and 1991
Subordinated
Limited Limited General
Partnership Partnership Partnership
(Amounts in thousands) Capital Capital Capital Total
Balance, December 31, 1990 $ 46,173 $ 10,635 $ 44,300 $101,108
Issuance of partnership
interests - 802 - 802
Redemption of partnership
interests (2,044) (132) - (2,176)
Net income 7,923 3,425 29,527 40,875
Withdrawals and distributions (5,365) (2,942) (17,570) (25,877)
_________ _________ _________ _________
Balance, December 31, 1991 $ 46,687 $ 11,788 $ 56,257 $114,732
Issuance of partnership
interests - 2,396 - 2,396
Redemption of partnership
interests (1,175) (151) - (1,326)
Net income 9,813 5,412 47,057 62,282
Withdrawals and distributions (7,997) (4,729) (28,062) (40,788)
_________ _________ _________ _________
Balance, December 31, 1992 $ 47,328 $ 14,716 $ 75,252 $137,296
Issuance of partnership
interests 24,763 4,432 - 29,195
Redemption of partnership
interests (1,193) - - (1,193)
Net income 9,805 5,933 50,473 66,211
Withdrawals and distributions (9,481) (5,918) (36,335) (51,734)
_________ _________ _________ _________
Balance, December 31, 1993 $ 71,222 $ 19,163 $ 89,390 $179,775
======== ======== ======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1992 AND 1991
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
The Partnership's Business and Basis of Accounting. The accompanying
consolidated financial statements include the accounts of The Jones
Financial Companies, a Limited Partnership, and all wholly owned
subsidiaries (the "Partnership"). All material intercompany balances
and transactions have been eliminated.
The Partnership conducts business throughout the United States with
its customers, various brokers and dealers, clearing organizations,
depositories and banks. The Partnership's principal operating
subsidiary is Edward D. Jones & Co., L.P. (EDJ), a registered
broker/dealer.
Cash and Cash Equivalents. The Partnership considers all short-term
investments with original maturities of three months or less, which
are not held for sale to customers, to be cash equivalents.
Securities Transactions. The Partnership's securities activities
involve execution, settlement and financing of various securities
transactions for customers. These transactions (and related revenue
and expense) are recorded on a settlement date basis, generally
representing the fifth business day following the transaction date,
which is not materially different than a trade date basis. They may
expose the Partnership to risk in the event customers, other brokers
and dealers, banks, depositories or clearing organizations are unable
to fulfill contractual obligations. For transactions in which it
extends credit to customers, the Partnership seeks to control the
risks associated with these activities by requiring customers to
maintain margin collateral in compliance with various regulatory and
internal guidelines.
Securities Owned. Securities owned are valued at current market
prices. Unrealized gains or losses are reflected in revenues as
"principal transactions."
Office Equipment, Property and Improvements. Office equipment is
depreciated using straight-line and accelerated methods over estimated
useful lives of five to eight years. Buildings are depreciated using
the straight-line method over estimated useful lives approximating
thirty to forty years. Amortization of property improvements is
computed based on the remaining life of the property or economic
useful life of the improvement, whichever is less. When assets are
retired or otherwise disposed of, the cost and related accumulated
depreciation or amortization are removed from the accounts, and any
resulting gain or loss is reflected in income for the period. The
cost of maintenance and repairs is charged to income as incurred,
whereas significant renewals and betterments are capitalized.
Segregated Cash Equivalents and Securities Owned. Rule 15c3-3 of the
Securities and Exchange Commission requires deposits of cash or
securities to a special reserve bank account for the benefit of
customers if total customer related credits exceed total customer
related debits, as defined. No deposits of cash or securities were
required as of December 31, 1993 or 1992.
Income Taxes. Income taxes have not been provided for in the
consolidated financial statements since the Partnership is organized
as a partnership, and each partner is liable for its own tax payments.
Reclassifications. Certain 1992 and 1991 amounts have been
reclassified to conform to the 1993 financial statement presentation.
Fiscal Year End Change. The Partnership changed its year end from the
last Friday in September to December 31, effective December 31, 1992,
for various reporting purposes. The 1991 amounts have been restated
on a calendar year basis.
NOTE 2 - RECEIVABLE FROM AND PAYABLE TO CUSTOMERS
Accounts receivable from and payable to customers include margin
balances and amounts due on uncompleted transactions. Values of
securities owned by customers and held as collateral for these
receivables are not reflected in the financial statements.
Substantially all amounts payable to customers are subject to
withdrawal upon customer request.
NOTE 3 - RECEIVABLE FROM AND PAYABLE TO BROKERS OR DEALERS AND
CLEARING ORGANIZATIONS
The components of receivable from and payable to brokers or dealers
and clearing organizations are as follows:
(Amounts in thousands) 1993 1992
Securities failed to deliver $ 7,030 $ 2,485
Deposits paid for securities borrowed 22,048 9,255
Deposits with clearing organizations 2,446 1,971
Other 1,026 169
__________ __________
Total receivable from brokers or dealers
and clearing organizations $ 32,550 $ 13,880
========== ==========
Securities failed to receive $ 6,580 $ 10,434
Deposits received for securities loaned 1,239 3,481
Other 273 -
__________ __________
Total payable to brokers or dealers and
clearing organizations $ 8,092 $ 13,915
========== ==========
"Fails" represent the contract value of securities which have not been
received or delivered by settlement date.
NOTE 4 - SECURITIES OWNED
Security positions are summarized as follows (at market value):
1993 1992
____________________ ___________________
Securities Securities
Sold but Sold but
Securities not yet Securities not yet
Owned Purchased Owned Purchased
Inventory Securities:
Certificates of deposit $ 3,691 $ 49 $ 2,498 $ 86
U.S. government and agency
obligations 4,123 15,070 5,702 7,299
State and municipal
obligations 34,306 839 45,708 284
Corporate bonds and notes 10,045 818 11,108 566
Corporate stocks 8,206 990 2,857 1,353
_________ _________ _________ _________
$ 60,371 $ 17,766 $ 67,873 $ 9,588
======== ======== ======== ========
Investment Securities:
U.S. government and agency
obligations $ 73,575 $ 78,797
======== ========
NOTE 5 - BANK LOANS
The Partnership borrows from banks primarily to finance customer
margin balances and firm trading securities. Interest is at a
fluctuating rate (weighted average rate of 4.17%, 4.35% and 4.97%at
December 31, 1993, 1992 and 1991, respectively) based on short-term
lending rates.
The average of the aggregate short-term bank loans outstanding was
$99,100,000, $57,794,000, and $23,257,000 and the average interest
rate (computed on the basis of the average aggregate loans
outstanding) was 4.04%, 4.40%, and 6.35% for the years ended December
31, 1993, 1992 and 1991, respectively. The highest month-end
borrowing was $154,500,000, $142,000,000 and $96,200,000 during the
years ended December 31, 1993, 1992 and 1991, respectively.
Short-term bank loans outstanding at December 31, 1993, 1992 and 1991,
consist of $139,261,000, $109,000,000 and $73,000,000 of loans
collateralized by securities owned by the Partnership and customers'
margin securities with a market value of $363,740,000, $197,514,000
and $140,000,000, respectively. At December 31, 1992, the Partnership
had a $14,000,000 short term loan secured by property with a carrying
value of $16,198,000.
Cash paid during the year for interest on bank loans, capital notes
and other liabilities was $14,059,000, $10,956,000, and $8,956,000 for
the years ended December 31, 1993, 1992 and 1991, respectively.
NOTE 6 - LONG-TERM DEBT
Long-term debt is comprised of the following:
(Amounts in thousands) 1993 1992
Note payable, secured by property, interest at
9.0% per annum, interest due in monthly
installments, principal due on June 1, 1994. $ 9,600 $ 9,600
Note payable, secured by property, interest at
9.875% per annum, principal and interest due
in monthly installments of $141,907 with a
final installment of $6,840,192 due on
August 5, 2001. 12,282 12,747
Note payable, secured by property, interest at
8.5% per annum, principal and interest due
in monthly installments of $115,215 through
April 5, 2008. 11,435 -
Note payable, secured by property, interest
at prime rate per annum, interest due in
monthly installments. - 1,500
__________ __________
$ 33,317 $ 23,847
========== ==========
Required annual principal payments, as of December 31, 1993, are as
follows:
Principal Payment
Year (Amounts in thousands)
_____ ___________________
1994 $ 10,540
1995 1,031
1996 1,130
1997 1,239
1998 1,359
Thereafter 18,018
__________
$ 33,317
==========
The Partnership has land and buildings with a carrying value of
$45,971,000 at December 31, 1993, which are subject to security
agreements that collateralize various real estate related notes
payable. The Partnership has estimated the fair value of the long-
term debt to be approximately $36,493,000 and $25,368,000 as of
December 31, 1993 and 1992, respectively.
Subsequent to December 31, 1993, the Partnership arranged to refinance
its long-term debt. After the refinancing is complete, the
Partnership will have a $21,759,000 8.72% note due in monthly
installments of approximately $290,000 through May 5, 2003, and a
$14,900,000 8.23% note due in monthly installments of $150,000 through
April 5, 2008. These notes replace all long-term debt which existed
as of December 31, 1993, and will have the same underlying collateral.
NOTE 7 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
Liabilities subordinated to the claims of general creditors consist
of:
(Amounts in thousands) 1993 1992
Capital notes, 10.6%, due in annual
installments of $7,000,000 commencing on
March 15, 1994, with a final installment on
March 15, 1997 $ 28,000 $ 28,000
Capital notes, 9.375%, due in annual
installments of $5,000,000 commencing on
July 1, 1993, with a final installment on
April 1, 1996 15,000 20,000
Capital notes, 8.96%, due in annual
installments of $6,000,000 commencing on
May 1, 1998, with a final installment on
May 1, 2002 30,000 30,000
__________ __________
$ 73,000 $ 78,000
========== ==========
The capital note agreements contain restrictions which, among other
things, require maintenance of certain financial ratios, restrict
encumbrance of assets and creation of indebtedness and limit the
withdrawal of partnership capital. As of December 31, 1993, the
Partnership was required, under the note agreements, to maintain
minimum partnership capital of $65,000,000 and Net Capital as computed
in accordance with the uniform Net Capital rule of 7.5% of aggregate
debit items (See Note 9).
The subordinated liabilities are subject to cash subordination
agreements approved by the New York Stock Exchange and, therefore, are
included in the Partnership's computation of Net Capital under the
Securities and Exchange Commission's uniform Net Capital rule. The
Partnership has estimated the fair value of the subordinated capital
notes to be approximately $76,726,000 and $81,300,000 as of December
31, 1993 and 1992, respectively. Subsequent to year end the
Partnership intends to exercise its right to repay $17,000,000 of the
capital notes prior to maturity.
NOTE 8 - PARTNERSHIP CAPITAL
The limited partnership capital, consisting of 64,280 and 40,710
$1,000 units at December 31, 1993 and 1992, respectively, is held by
current and former employees and general partners. Each limited
partner receives interest at seven and one-half percent on the
principal amount of capital contributed and a varying percentage of
the net income of the Partnership. Interest expense includes $
3,781,000, $3,090,000, and $3,198,000 for the years ended December
31, 1993, 1992 and 1991, respectively, paid to limited partners on
capital contributed.
The subordinated limited partnership capital, consisting of 17,290 and
12,858 $1,000 units at December 31, 1993 and 1992, respectively, is
held by current and former general partners. Each subordinated
limited partner receives a varying percentage of the net income of the
Partnership. The subordinated limited partner capital is subordinated
to the limited partnership capital.
Included in partnership capital at December 31, 1993 and 1992, are
undistributed profits of $17,964,000 and $18,438,000, respectively,
that will be withdrawn by the partners.
NOTE 9 - NET CAPITAL REQUIREMENTS
As a result of its activities as a broker/dealer, EDJ, is subject to
the Net Capital provisions of Rule 15c3-1 of the Securities Exchange
Act of 1934 and the capital rules of the New York Stock Exchange.
Under the alternative method permitted by the rules, EDJ must maintain
minimum Net Capital, as defined, equal to the greater of $150,000 or
2% of aggregate debit items arising from customer transactions. The
Net Capital rule also provides that partnership capital may not be
withdrawn if resulting Net Capital would be less than 5% of aggregate
debit items. Additionally, certain withdrawals require the consent of
the SEC to the extent they exceed defined levels even though such
withdrawals would not cause Net Capital to be less than 5% of
aggregate debit items. At December 31, 1993, EDJ's Net Capital of
$89,790,000 was 20% of aggregate debit items and its Net Capital in
excess of the minimum required was $80,681,000. Net Capital as a
percentage of aggregate debits after anticipated capital withdrawals
was 17%. Net Capital and the related capital percentage may fluctuate
on a daily basis. EDJ's Net Capital excludes $19,782,000 of
undistributed profits which will be withdrawn by the partners and
$27,254,000 of cash capital contributions that were pending New York
Stock Exchange approval.
Subsequent to December 31, 1993, EDJ received approval from the New
York Stock Exchange to add $27,254,000 of cash capital contributions
that were made during 1993 as allowable Net Capital. EDJ also
received permission to prepay in advance of its scheduled maturity
$17,000,000 of subordinated debt. The effect of these approvals would
have been to increase Net Capital to $117,044,000 and excess Net
Capital to $107,935,000 as of December 31, 1993. The percentage of
Net Capital to aggregate debits and the percentage of Net Capital to
aggregate debits after anticipated capital withdrawals, would have
been 26% and 19%, respectively. Net Capital in excess of 5% of
aggregate debit items would have been $94,272,000.
NOTE 10 - EMPLOYEE BENEFIT PLAN
The Partnership maintains a profit sharing plan covering all eligible
employees. Contributions to the plan are at the discretion of the
Partnership. However, participants may contribute on a voluntary
basis. Approximately $16,716,000, $15,625,000, and $10,347,000 were
provided by the Partnership for its contributions to the plan for the
years ended December 31, 1993, 1992 and 1991, respectively. No post
retirement benefits are provided.
NOTE 11 - COMMITMENTS
Branch office facilities, computer system equipment and branch
satellite equipment are rented under various operating leases.
Additionally, branch offices are leased on a three to five year basis,
and are cancellable at the option of the Partnership. The
Partnership's computer system equipment and branch satellite equipment
lease commitments are $10,823,000 in 1994, $5,321,000 in 1995,
$3,661,000 in 1996, and $2,770,000 in 1997 and $1,221,000 in 1998 and
thereafter.
Rent expense was $28,385,000, $24,837,000, and $24,703,000 for the
years ended December 31, 1993, 1992 and 1991, respectively.
NOTE 12 - CONTINGENCIES
Various legal actions, primarily relating to the distribution of
securities, are pending against the Partnership. Certain cases are
class actions (or purported class actions) claiming substantial
damages. These actions are in various stages and the results of such
actions cannot be predicted with certainty. In the opinion of
management, after consultation with legal counsel, the ultimate
resolution of these actions will not have a material adverse impact on
the Partnership's financial condition.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Jones Financial Companies, a Limited Partnership, being organized
as a partnership, does not have individuals associated with it
designated as officers or directors. Presently, the Partnership is
comprised of 111 general partners, 2,000 limited partners and 54
subordinated limited partners. Under the terms of the Partnership
Agreement, John W. Bachmann is designated Managing Partner and in said
capacity has primary responsibility for administering its business,
determining its policies, controlling the management and conduct of
the Partnership's business and has the power to appoint and dismiss
general partners of the Partnership and to fix the proportion of their
respective interests in the Partnership. Subject to the foregoing,
the Partnership is managed by its 111 general partners.
The Executive Committee of the Partnership is comprised of John W.
Bachmann, James W. Harrod, Douglas E. Hill, Charles R. Larimore,
Richie L. Malone, Darryl L. Pope, Ray L. Robbins, Jr., Edward Soule
and James D. Weddle. The purpose of the Executive Committee is to
provide counsel and advice to the Managing Partner in discharging his
functions. Furthermore, in the event the position of Managing Partner
is vacant, the Executive Committee shall succeed to all of the powers
and duties of the managing partner.
None of the general partners are appointed for any specific term nor
are there any special arrangements or understandings pursuant to their
appointment other than as contained in the Partnership Agreement.
No general partner is or has been individually, nor in association
with any prior business, the subject of any action under any
insolvency law or criminal proceeding or has ever been enjoined
temporarily or permanently from engaging in any business or business
practice.
A listing of the names, ages, dates of becoming a general partner and
area of responsibility for each general partner follows:
BECAME
NAME AGE G.P. AREA OF RESPONSIBILITY
Warren K. Akerson 51 1974 Sales
Allan J. Anderson 51 1992 Sales Management
John W. Bachmann 55 1970 Managing Partner
Thomas M. Bartow 44 1989 Sales Training
James D. Bashor 39 1990 Regional Sales Leader
Robert J. Beck 39 1983 Municipal Trading
John D. Beuerlein 40 1979 Sales Management
John S. Borota 53 1978 Sales Hiring
William H. Broderick, III 41 1986 Syndicate
Morton L. Brown 47 1978 Managed Investments
Alan J. Bubalo 40 1984 Regional Sales Leader
Spencer B. Burke 45 1987 Investment Banking
Daniel A. Burkhardt 46 1979 Investment Banking
Jack L. Cahill 44 1980 Sales Management
Brett A. Campbell 35 1993 Marketing
Donald H. Carter 50 1994 Regional Sales Leader
John J. Caruso 47 1988 Data Processing
Guy R. Cascella 36 1992 Regional Sales Leader
Craig E. Christell 37 1994 Regional Sales Leader
Richard A. Christensen, Jr.46 1978 Mutual Funds Processing
Robert J. Ciapciak 38 1988 Market Research
David W. Clapp 44 1978 Sales Management
Stephen P. Clement 44 1990 Video Communications
Loyola A. Cronin 36 1987 Branch Staff Training
Harry J. Daily, Jr. 47 1985 Regional Sales Leader
A. Randal Dickinson 42 1984 Regional Sales Leader
Terry A. Doyle 44 1992 Regional Sales Leader
William T. Dwyer, Jr. 38 1994 Regional Sales Leader
Abe W. Dye 49 1984 Sales Management
Allen R. Eaker 47 1989 Regional Sales Leader
Norman L. Eaker 37 1984 Securities Processing
Kevin Eberle 43 1993 Regional Sales Leader
Michael J. Esser 45 1983 Advanced Sales Training
Kevin N. Flatt 45 1989 Fixed Income/Equity Trading
John A. Fowler 46 1979 Customer Tax Support
Steve Fraser 38 1993 Securities Processing
Chris A. Gilkison 40 1994 Branch Locations
Barbara G. Gilman 55 1988 Trust Marketing
Steven L. Goldberg 35 1987 Central Services
James R. Gonso 38 1986 Regional Sales Leader
Ronald Gorgen 44 1993 Field Services
Robert L. Gregory 51 1974 Sales Hiring
Patricia F. Hannum 33 1988 Financial Services
Stephen P. Harrison 45 1990 Regional Sales Leader
James W. Harrod 58 1974 Sales Training
David L. Hayes 38 1994 Regional Sales Leader
Randy K. Haynes 38 1994 Operations
John M. Hess 46 1992 Regional Sales Leader
Mary Beth Heying 36 1994 Communications
Douglas E. Hill 49 1974 Product Management
Stephen M. Hull 49 1994 Regional Sales Leader
Earl H. Hull, Jr. 48 1990 Regional Sales Leader
Glennon D. Hunn 51 1984 Data Processing
Gary R. Hunziker 53 1994 Regional Sales Leader
Paul C. Husted 40 1990 Regional Sales Leader
Thomas G. Iorio 33 1994 Regional Sales Leader
Mellany F. Isom 40 1984 Sales Hiring
Myles P. Kelly 40 1989 Accounting
Loren G. Kolpin 48 1985 Regional Sales Leader
Charles R. Larimore 53 1981 Branch Administration
Ronald E. Lemonds 57 1972 Equity Marketing
Michele Liebman 37 1994 Data Processing
Steven F. Litchfield 38 1983 Regional Sales Leader
Richie L. Malone 45 1979 Data Processing
Richard G. McCarty 54 1990 Regional Sales Leader
James A. McKenzie 49 1977 Regional Sales Leader
Thomas Migneron 33 1993 Internal Audit
Richard G. Miller, Jr. 38 1991 Regional Sales Leader
Thomas W. Miltenberger 46 1985 Mutual Funds Marketing
Merry L. Mosbacher 35 1986 Investment Banking
Joseph M. Mott, III 36 1989 Insurance/Annuities Marketing
William D. Murphy 53 1980 Regional Sales Leader
Matt B. Myre 37 1988 Regional Sales Leader
Rodger W. Naugle 52 1992 Regional Sales Leader
Steven Novik 44 1983 Accounting
Cynthia Paquette 33 1993 Data Processing
Robert K. Pearce 44 1989 Human Resources
Darryl L. Pope 54 1971 Operations
Gary D. Reamey 38 1984 Canada Division
James L. Regnier 36 1994 Sales Training
Ray L. Robbins, Jr. 49 1975 Research
Stephen T. Roberts 41 1981 Compliance
Wann V. Robinson 43 1992 Regional Sales Leader
Douglas Rosen 33 1993 Regional Sales Leader
Harry John Sauer, III 36 1988 Dividend Processing
Philip R. Schwab 45 1978 Syndicate
Darrell G. Seibel 59 1985 Regional Sales Leader
Robert D. Seibel 59 1974 Regional Sales Leader
Festus W. Shaughnessy, III 38 1988 Sales Training
Connie M. Silverstein 38 1988 Sales Hiring
Alan F. Skrainka 32 1989 Research
John S. Sloop 45 1990 Sales Management
Ronald H. Smith 54 1984 Regional Sales Leader
Lawrence R. Sobol 43 1977 General Counsel
Edward Soule 41 1986 Accounting
Lawrence E. Thomas 38 1983 Government Bond Trading
Terry R. Tucker 39 1988 Data Processing
Richard G. Unnerstall 38 1989 Data Processing
Robert Virgil, Jr. 59 1994 Headquarters Administration
JoAnn Von Bergen 44 1986 Cash Processing
John R. Wagner 46 1987 Regional Sales Leader
Donald E. Walter 48 1983 Compliance Director
Bradley T. Wastler 41 1989 Sales Management
James D. Weddle 40 1984 Sales Management
Vicki Westall 34 1993 Product Review
Thomas J. Westphal 35 1989 Customer Statements
Heidi Whitfield 33 1993 Product Review
Robert D. Williams 32 1994 Regional Sales Leader
A. Thomas Woodward 47 1985 Sales Management
Price P. Woodward 31 1993 Regional Sales Leader
Alan T. Wright 47 1994 Investment Banking
Except as indicated below, each of the General Partners has been a
general partner of the Partnership for more than the preceding five
years.
Allan J. Anderson, joined the Partnership in 1984 as a registered
representative and became a general partner in 1992.
James D. Bashor, joined the Partnership in 1983 as a registered
representative and became a general partner in 1990.
Brett A. Campbell, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1993.
Donald H. Carter, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Guy Cascella, joined the Partnership in 1983 as a registered
representative and became a general partner in 1992.
Stephen P. Clement, joined the Partnership in 1987 as Video manager
and became a general partner in 1990. Prior to this, he was a news
director for an ABC affiliate television station.
Craig E. Christell, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Terry Doyle, joined the Partnership in 1981 as a registered
representative and became a general partner in 1992.
William T. Dwyer, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Kevin Eberle, joined the Partnership in 1985 as a registered
representative and became a general partner in 1993.
Steve Fraser, joined the Partnership in 1985 in the Operations
Department and became a general partner in January, 1993. Prior to
this, he was employed by Automated Data Processing Inc.
Chris A. Gilkison, joined the Partnership in 1987 as a registered
representative and became a general partner in January 1994.
Ron Gorgen, joined the Partnership in 1980 as a registered
representative and became a general partner in January 1993.
David L. Hayes, joined the Partnership in 1977 active in hiring and
training and became a general partner in January 1994.
Stephen P. Harrison, joined the Partnership in 1978 as a registered
representative and became a general partner in 1990.
Randy K. Haynes, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1994.
John Hess, joined the Partnership in 1982 as a registered
representative and became a general partner in 1992.
Mary Beth Heying, joined the Partnership in 1984 in the Communications
Department and became a general partner in January 1994.
Earl H. Hull, Jr., joined the Partnership in 1975 as a registered
representative and became a general partner in 1990.
Steven M. Hull, joined the Partnership in 1973 as a registered
representative and became a general partner in 1994.
Gary R. Hunziker, joined the Partnership in 1986 as a registered
representative and became a general partner in January 1994.
Paul C. Husted, joined the Partnership in 1982 as a registered
representative and became a general partner in 1990.
Thomas G. Iorio, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1994.
Michele M. Liebman, joined the Partnership in 1985 in the Data
Processing Department and became a general partner in January 1994.
Richard G. McCarty, joined the Partnership in 1980 as a registered
representative and became a general partner in 1990.
Thomas Migneron, joined the Partnership in 1985 as an internal auditor
and became a general partner in January, 1993.
Richard G. Miller, Jr., joined the Partnership in 1981 as a registered
representative and became a general partner in 1991.
Rodger Naugle, joined the Partnership in 1981 as a registered
representative and became a general partner in 1992.
Cynthia Paquette, joined the Partnership in 1985 in the Data
Processing Department and became a general partner in January 1993.
James L. Regnier, joined the Partnership in 1983 as a registered
representative and became a general partner in January 1994.
Wann V. Robinson, joined the Partnership in 1985 as a registered
representative and became a general partner in 1992.
Douglas Rosen, joined the Partnership in 1982 as a registered
representative and became a general partner in January 1993.
John S. Sloop, joined the Partnership in 1983 as a registered
representative and became a general partner in 1990.
Robert Virgil, Jr., joined the Partnership in 1993 as a general
partner. Prior to this, he served as dean of the John M. Olin School
of Business at Washington University.
Vicki Westall, joined the Partnership in 1984 in the Product Review
Department and became a general partner in January, 1993. Prior to
this, she was an accountant with Peat, Marwick, Mitchell & Co.
Heidi Whitfield, joined the Partnership in 1982 as an equity analyst
and became a general partner in January 1993.
Robert D. Williams, joined the Partnership in 1986 as a registered
representative and became a general partner in 1994.
Price P. Woodward, joined the Partnership in 1984 as a registered
representative and became a general partner in January 1993.
Alan T. Wright, joined the Partnership in 1985 in Investment Banking
Department and became a general partner in January 1994.
Daniel A. Burkhardt is a director of Essex County Gas Company,
Amsebury, Massachusetts; Galaxy Cablevision Management, Inc.,
Sikeston, Missouri; Dial Reit, Omaha, Nebraska; Met Life Farm & Ranch
Properties, Kansas City, Missouri; Southeastern MI Gas Enterprises,
Port Huron, Michigan; and Community Investment Partners, L.P. John C.
Heisler, Philip R. Schwab and John D. Beuerlein are directors of
Cornerstone Mortgage Investment Group, Inc. and Cornerstone Mortgage
Investment Group II, Inc. Ray L. Robbins, Jr. is a director of
Community Investment Partners, L.P. Robert Virgil, Jr. is a director
of CPI Corp., St. Louis, Missouri; Angelica Corp., St. Louis,
Missouri; and Allied Healthcare Products, Inc., St. Louis, Missouri.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the
Partnership during the three most recent years to the five general
partners receiving the greatest compensation (including respective
shares of profit participation).
Returns to General
Partner Capital
_____________________
(1) (2) (3) & (4)
General
Net income Partner
Deferred allocated invested Total
Compen-to General Capital at (1) (2)
Year Salaries sation Partners 12/31/93 (3)
John W. Bachmann1993 120,000 10,707 2,350,562 3,213,597 2,481,269
1992 120,000 11,306 2,298,834 3,408,360 2,430,140
1991 120,000 10,111 1,556,853 2,752,555 1,686,964
Douglas E. Hill 1993 118,000 10,707 1,994,416 2,726,688 2,123,123
1992 118,000 11,306 1,948,536 2,888,991 2,077,842
1991 115,000 10,111 1,318,416 2,330,993 1,443,527
Ron Larimore 1993 118,000 10,707 1,994,416 2,726,688 2,123,123
1992 118,000 11,306 1,992,323 2,953,912 2,121,629
1991 115,000 10,111 1,346,468 2,380,588 1,471,579
Richie L. Malone1993 118,000 10,707 1,899,444 2,596,846 2,028,151
1992 118,000 11,306 1,810,493 2,596,846 1,939,799
1991 115,000 10,111 1,122,057 1,983,823 1,247,168
Darryl W. Pope 1993 118,000 10,707 1,994,416 2,726,688 2,123,123
1992 118,000 11,306 1,926,642 2,856,530 2,055,948
1991 115,000 10,111 1,304,391 2,306,195 1,429,502
(1) Each non-selling general partner receives a salary presently
ranging from $78,000 - $120,000 annually. Selling general partners do
not receive a specified salary, rather, they receive the net sales
commissions earned by them (none of the five individuals listed above
earned any such commissions). Additionally, general partners who are
principally engaged in sales are entitled to office bonuses based on
the profitability of their respective branch office, on the same basis
as the office bonus program established for all investment
representative employees.
(2) Each general partner is a participant in the Partnership's profit
sharing plan which covers all eligible employees. Contributions to
the plan, which are within the discretion of the Partnership, are made
annually and have historically been determined based on approximately
twenty-four percent of the Partnership's net income. Allocation of
the Partnership's contribution among participants is determined by
each participant's relative level of eligible earnings, including in
the case of general partners, their profit participation.
(3) Each general partner is entitled to participate in the annual net
income of the Partnership based upon the respective percentage
interest in the Partnership of each partner. These interests in the
Partnership held by each general partner currently range from 1/10 of
1% to 4.95% in 1993. (1/10 of 1% to 5.25% in 1992 and 1/10 of 1% to
5.55% in 1991). At the discretion of the Managing Partner, the
partnership agreement provides that, generally, the first five percent
of net income allocable to general partners be distributed on the
basis of individual merit as determined by the Managing Partner.
Thereafter, the remaining net income allocable to general partners is
distributed based upon each individual's percentage interest in the
Partnership. In 1993, 6% of net income was distributed on the basis
of individual merit.
(4) Net income allocable to general partners is the amount remaining
after payment of interest and earnings on capital invested to limited
partners and subordinated limited partners.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Being organized as a limited partnership, management is vested in the
general partners thereof and there are no other outstanding "voting"
or "equity" securities. It is the opinion of the Partnership that the
general partnership interests are not securities within the meaning of
federal and state securities laws primarily because each of the
general partners participates in the management and conduct of the
business.
In connection with outstanding limited and subordinated limited
partnership interests (non-voting securities), 82 of the general
partners also own limited partnership interests and 37 of the general
partners also own subordinated limited partnership interests, as noted
in the table below.
As of February 25, 1994:
Name of Amount of
Beneficial Beneficial Percent of
Title of Class Owner Ownership Class
Limited Partnership All General
Interests Partners as
a Group $ 5,448,000 8%
Subordinated All General
Limited Partnership Partners as
Interests a Group $13,715,000 64%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of its business the Partnership has extended
credit to certain of its partners and employees in connection with
their purchase of securities. Such extensions of credit have been
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with non-affiliated persons, and did not involve more
than the normal risk of collectibility or present other unfavorable
features. The Partnership also, from time to time and in the ordinary
course of business, enters into transactions involving the purchase or
sale of securities from or to partners or employees and members of
their immediate families, as principal. Such purchases and sales of
securities on a principal basis are effected on substantially the same
terms as similar transactions with unaffiliated third parties.
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
INDEX
(a) (1) The following financial statements are included in Part II,
Item 8:
Page No.
Report of Independent Public Accountants
Consolidated Statements of Financial Condition as of
December 31, 1993 and 1992
Consolidated Statements of Income for the years ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in Partnership Capital
for the years ended December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
All schedules are omitted because they are not
required, inapplicable, or the information is otherwise
shown in the financial statements or notes thereto.
(b) Report on Form 8-K
No reports on Form 8-K were filed in the fourth quarter of
1993.
(c) Exhibits
Reference is made to the Exhibit Index hereinafter contained.
<PAGE>
EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1993
Exhibit Number Page Description
3.1 * Amended and Restated Agreement and Certificate
of Limited Partnership of Registrant dated
October 1, 1993.
3.2 * Form of Limited Partnership Agreement of
Edward D. Jones & Co., L.P., dated November 1,
1993
10.1 * Form of Cash Subordination Agreement between
the Registrant and Edward D. Jones & Co.,
incorporated herein by reference to Exhibit
10.1 to the Company's registration statement
of Form S-1 (Reg. No. 33-14955).
10.2(a) * Note Purchase Agreement between Tempus
Corporation and Edward D. Jones & Co. dated
as of April 15, 1986, incorporated herein by
reference to Exhibit 10(a) to the Company's
Quarterly Report on Form 10-Q for the quarter
ended March 28, 1986.
10.2(b) * Note Purchase Agreement between Tempus
Corporation and Edward D. Jones & Co., L.P.
dated as of March 15, 1988, incorporated herein
by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended March 25, 1988.
10.3 * Complaint for Permanent Injunction and Other
Equitable Relief and Final Judgment of
Permanent Injunction in re: SEC v. Edward D.
Jones & Co. (U.S. Dist. Ct. for Dist. of Columbia;
Civil Action No. 85-3078), incorporated herein by
reference to Exhibit 10(i) to the Company's current
report on Form 8-K dated September 24, 1985.
10.4 * Volume Discount Agreement dated May 27, 1987,
between Digital Equipment Corporation and
Edward D. Jones & Co., incorporated herein by
reference to Exhibit 10.13(c) to the Company's
registration statement on Form S-1
(Reg. No. 33-14955).
10.5 * Master Lease Agreement dated as of May 29,
1987, between Digital Equipment Corporation
and Edward D. Jones & Co., incorporated herein
by reference to Exhibit 10.13(b) to the Company's
registration statement on Form S-1
(Reg. No. 33-14955).
10.6 * Master Lease Agreement dated as of October 17,
1988, between Edward D. Jones & Co., L.P., and
BancBoston Leasing, incorporated herein
by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended
September 30, 1988.
10.7 * Satellite Communications Agreement dated as
of September 12, 1988, between Hughes
Network Systems and Edward D. Jones & Co., L.P.,
incorporated herein by reference to Exhibit
10.1 to the Company's Annual Report on Form
10-K for the year ended September 30, 1988.
10.8 * Agreements of Lease between EDJ Leasing
Company and Edward D. Jones & Co., L.P.,
dated August 1, 1991, incorporated herein by
reference to Exhibit 10.18 to the Company's
Annual Report or Form 10-K for the year ended
September 27, 1991.
10.9 * Loan Agreement between EDJ Leasing Co., L.P.
and Nationwide Insurance Company dated August
2, 1991, incorporated herein by reference to
Exhibit 10.19 to the Company's Annual Report
or Form 10-K for the year ended September 27,
1991.
10.10 * Edward D. Jones & Co., L.P. Note Purchase
Agreement dated as of May 8, 1992,
incorporated herein by reference to Exhibit
10.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 26, 1992.
10.11 * Purchase and Sale Agreement by and between
EDJ Leasing Co., L.P. and the Resolution
Trust Corporation incorporated herein by
reference to Exhibit 10.21 to the Company's Annual
Report or Form 10-K for the year ended
December 31, 1992.
10.12 Master Lease Agreement between EDJ Leasing
Company and Edward D. Jones & Co., L.P.,
dated March 9, 1993, and First Amendment
to Lease dated March 9, 1994.
10.13 Purchase Agreement by and between Edward D.
Jones & Co., L.P. and Genicom Corporation
dated November 25, 1992.
10.14 Mortgage Note and Deed of Trust and Security
Agreement between EDJ Leasing Co., L.P. and
Nationwide Insurance Company dated March 9,
1993.
10.15 Mortgage Note and Amendment to Deed of Trust
between EDJ Leasing Co., L.P. and Nationwide
Insurance Company dated March 9, 1994.
24.1 Consent of Independent Public Accountants
25 * Delegation of Power of Attorney to Managing
Partner contained within Exhibit 3.1.
________________________________________________________________________
* - Incorporated by reference.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized:
(Registrant) THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
___________________________________________________
By (Signature and Title) /s/ John W. Bachmann
__________________________________
John W. Bachmann, Managing Partner
Date March 28, 1994
__________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of
the registrant and in the capacity and on the date indicated.
(Registrant) THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
___________________________________________________
By (Signature and Title) /s/ John W. Bachmann
__________________________________
John W. Bachmann, Managing Partner
Date March 28, 1994
__________________________________
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
There have been no annual reports sent to security holders covering
the registrant's last fiscal year nor have there been any proxy
statements, form of proxy or other proxy soliciting material sent to
any of registrant's security holders.
THE JONES FINANCIAL COMPANIES,
a Limited Partnership
SIXTH
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated as of October 1, 1993
THE JONES FINANCIAL COMPANIES,
a Limited Partnership
(a Missouri Limited Partnership)
SIXTH
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
THIS SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
entered into as of this first day of October, 1993, by and among John
W. Bachmann as General Partner, and John W. Bachmann as the Attorney-
In-Fact for all of the other General Partners, all of the Limited
Partners and all of the Subordinated Limited Partners.
W I T N E S S E T H:
WHEREAS, the Partnership was formed as a limited partnership under the
Missouri Revised Uniform Limited Partnership Act pursuant to an
Agreement and Certificate of Limited Partnership dated June 5, 1987;
WHEREAS, the Partnership filed on July 15, 1987 its Amended and
Restated Agreement and Certificate of Limited Partnership dated July
15, 1987 (the "Restated Agreement");
WHEREAS, the Partnership filed on August 28, 1987, November 16, 1987,
August 5, 1988, August 29, 1988, January 31, 1989, March 21, 1989 and
August 10, 1989 its Amendments No. 1, 2, 3, 4, 5, 6 and 7
respectively, to its Restated Agreement;
WHEREAS, the Partnership filed on June 22, 1989 its Partner List as of
May 31, 1989;
WHEREAS, the Restated Agreement as amended is hereinafter referred to
as the "First Restated Agreement";
WHEREAS, the First Restated Agreement was amended and restated in its
entirety pursuant to a Second Amended and Restated Agreement and
Certificate of Limited Partnership dated as of January 31, 1990 (the
"Second Restated Agreement");
WHEREAS, the Missouri Revised Uniform Limited Partnership Act was
amended in August of 1990 and no longer requires certain information
in certificates of limited partnership (filed with the Secretary of
State) and now requires corresponding amendments to be made to
agreements of limited partnership;
WHEREAS, the Partnership desired that the aforesaid Second Restated
Agreement become two separate documents, namely a Third Amended and
Restated Agreement of Limited Partnership (the "Third Restated
Agreement") and a separate restated Certificate of Limited
Partnership;
WHEREAS, the Second Restated Agreement was amended and restated in its
entirety pursuant to said Third Restated Agreement dated as of January
31, 1991; and
WHEREAS, the Third Restated Agreement was amended and restated in its
entirety pursuant to the Fourth Amended and Restated Agreement of
Limited Partnership (the "Fourth Restated Agreement") dated as of
January 1, 1993; and
WHEREAS, the Fourth Restated Agreement was amended and restated in its
entirety pursuant to the Fifth Amended and Restated Agreement of
Limited Partnership (the "Fifth Restated Agreement") dated as of May
24, 1993; and
WHEREAS, the parties now desire to amend and restate said Fifth
Restated Agreement pursuant to this Sixth Amended and Restated
Agreement of Limited Partnership;
NOW, THEREFORE, pursuant to the terms, covenants and conditions set
forth herein and the mutual promises contained herein, the parties
hereto agree as follows:
ARTICLE ONE
DEFINED TERMS
The defined terms used in this Agreement shall have the meanings
specified below:
"Affiliate" means (1) any Person directly or indirectly controlling,
controlled by or under common control with another Person, (2) any
Person owning or controlling ten percent (10%) or more of the
outstanding voting securities of such other Person, (3) any officer,
director or partner of such Person, or (4) if such other Person is an
officer, director or partner, any company for which such Person acts
in any such capacity.
"Agreement" means this Sixth Amended and Restated Agreement of Limited
Partnership, as amended from time to time.
"Capital Account" means an account established by the Partnership and
maintained for each Partner, for federal income tax purposes, which
account shall be credited with:
(i)the amount of the Partner's Capital Contributions; and
(ii)the amount of Partnership income (including income exempt from
federal income tax) and gain (or items thereof) allocated to the
Partner pursuant to Article Eight hereof;
and which shall be debited by:
(iii)the amount of Partnership losses and deductions (or items
thereof) allocated to the Partner pursuant to Article Eight hereof;
(iv)the amount of Partnership expenditures described in Treasury
Regulations Section 1.704-1(b)(2)(iv)(i) allocable to the Partner in
the same proportion as that in which the Partner bears the economic
burden of those expenditures; and
(v)the amount of all distributions to the Partner pursuant to Article
Eight hereof.
In addition, the Capital Account of each Partner shall be adjusted as
necessary to comply with Treasury Regulations Section 1.704-
1(b)(2)(iv). In the event the Managing Partner shall determine that
it is prudent to modify the manner in which the Capital Accounts or
any debits or credits thereto are completed in order to comply with
such regulations, the Managing Partner may amend this Agreement to
reflect such modification, provided that it is not likely to have a
material effect on the amounts distributable to the Partners pursuant
to Article Eight upon dissolution of the Partnership.
If any Partner would otherwise have a negative balance in his Capital
Account, the amount of any such negative balance shall be reduced (but
not in excess of such negative balance) by the amount of such
Partner's share of Partnership Minimum Gain (determined in accordance
with Treasury Regulations Section 1.704-1(b)(4)(iv)(f)) after taking
into account all increases and decreases to such Partnership Minimum
Gain during the taxable year.
In the event that the Partnership is deemed to be terminated for
federal income tax purposes due to the sale or exchange of fifty
percent (50%) or more of the Partnership interests within a twelve
(12) month period, appropriate adjustment shall be made to the Capital
Accounts to reflect the constructive liquidation and reformation
deemed to occur upon a termination.
In the event that interests in the Partnership are sold, exchanged or
otherwise transferred, and the transfer is recognized under Article
Six or Article Seven hereof, or by operation of law, the Capital
Account of the transferee will equal the Capital Account of the
transferor immediately before the transfer. However, if such a sale
or exchange, either alone or in combination with other sales or
exchanges within a twelve-month period results in a transfer of fifty
percent (50%) or more of the Partnership interests causing a
termination of the Partnership for federal income tax purposes, the
adjustment required by the immediately preceding paragraph shall be
made.
"Capital Contribution" means the total amount of cash or property
contributed to the Partnership by each Partner pursuant to the terms
of this Agreement. The Capital Contributions of the Partners have
been previously set forth on exhibits to this Agreement. From the
date hereof, the Capital Contributions of the Partners shall be
reflected in the books and records of the Partnership.
"Certificate of Limited Partnership" means the document, as amended or
restated from time to time, filed as a certificate of limited
partnership under the Missouri Act.
"Event of Withdrawal" means, as to a General Partner, the occurrence
of death, adjudication of mental incompetence, bankruptcy,
dissolution, or voluntary or involuntary withdrawal or removal from
the Partnership or any other event of withdrawal set forth in the
Missouri Act.
"Frozen Appreciation Amount" means each General Partner's share of the
unrealized appreciation of certain real estate (the "Real Estate")
owned by EDJ Leasing Co. on the date such General Partner contributes
his general partnership interest in EDJ Leasing Co. to the Partnership
plus such General Partner's share of the unrealized appreciation of
all stock exchange seats (the "Exchange Seats") owned by or for the
benefit of Edward D. Jones & Co. on the date such General Partner
contributes his general partnership interest in Edward D. Jones & Co.
to the Partnership., The Frozen Appreciation Amount shall be
maintained in the books and the records of Partnership. The Real
Estate currently consists of the land and improvements located at 201
Progress Parkway, 141 Progress Parkway, 158 Progress Parkway, 115
Progress Parkway, 135 Progress Parkway, 9 American Industrial Dr. and
20 American Industrial Dr., all in St. Louis County, Missouri. The
Exchange Seats consists of one (1) seat on the New York Stock
Exchange, one (1) seat on the American Stock Exchange, one (1) seat on
the Midwest Stock Exchange and two (2) seats on the New York Futures
Exchange. Each year, as of December 31, the Partnership shall
appraise (to the extent not previously sold) the Real Estate and the
shares of unrealized appreciation shall be appropriately and
proportionately adjusted for each General Partner on the books of the
Partnership. on the each Valuation Date, if needed for the purpose of
making a calculation for purposes of this Agreement, the Partnership
shall appraise (to the extent not previously sold) the Exchange Seats
and the shares of unrealized appreciation shall be appropriately and
proportionately adjusted for each General Partner on the books of the
Partnership. The unrealized appreciation per each separate tract of
Real Estate and per each separate Exchange Seat as set forth on the
books of the Partnership may never exceed the amount used in making
the original calculation even if a given appraised value later
exceeds such amount. When, as and if a given tract of Real Estate or
Exchange Seat is sold, the unrealized appreciation then attributable
to such tract of Real Estate or Exchange Seat shall no longer be
included in the calculation of the Frozen Appreciation Amount on the
books of the Partnership.
"General Partners" means those persons who have executed this
Agreement and whose names are set forth in the books and records of
the Partnership as being General Partners, and any other Person who
becomes a successor or additional General Partner of the Partnership
as provided herein.
"General Partner's Adjusted Capital Contribution" means the Capital
Contribution of the General Partner plus all Net Income thereafter
allocated to the account of the General Partner minus (a) all Net Loss
thereafter allocated to the account of the General Partner, and
(b) any cash or property thereafter distributed to (or for the benefit
of) the General Partner. Payments of salaries, bonuses or expenses to
a General Partner by the Partnership shall not affect such General
Partner's Adjusted Capital Contribution.
"General Partner Interest" means a General Partner's entire ownership
interest in the Partnership.
"General Partner Percentage" means a percentage determined by dividing
a General Partner's Adjusted Capital Contribution by the Adjusted
Capital Contributions of all of the General Partners.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Limited Partners" means those persons who have executed this
Agreement and whose names are set forth in the books and records of
the Partnershipas being Limited Partners, and any other person who
becomes a Limited Partner of the Partnership as provided herein.
"Limiteds" means those persons whose names are set forth in the books
and records of the Partnership as being the Limited Partners and the
Subordinated Limited Partners, and any other person who becomes a
Limited of the Partnership as provided herein.
"Missouri Act" means the Missouri Revised Uniform Limited Partnership
Act, as amended from time to time.
"Net Income or Net Loss" means, with respect to any fiscal period, the
net income or the net loss of the Partnership, determined in
accordance with generally accepted accounting principles; provided,
however, there shall be excluded from such net income or net loss any
unrealized gains or losses on securities held (whether at the
discretion of the Partnership or otherwise) by the Partnership (or by
any entity whose financial statements are consolidated with the
financial statements of the Partnership) as a hedge against fixed rate
borrowings (as opposed to other securities held by the Partnership [or
by any entity whose financial statements are consolidated with the
financial statements of the Partnership] as inventory for resale in
the ordinary course of business).
"Notice" means a writing, containing the information required by this
Agreement to be communicated to a party, delivered personally or sent
by U.S. mail, postage prepaid, to such party at the last known address
of such party as shown on the records of the Partnership, the date of
personal delivery or the date of mailing thereof being deemed the date
of receipt thereof.
"Partner" means any General Partner or Limited.
"Partnership" means the limited partnership formed by this Agreement
by the parties hereto, as said limited partnership may from time to
time be constituted.
"Partnership Minimum Gain" means, for Partnership tax purposes, as set
forth in Treasury Regulations Section 1.704-1(b)(4)(iv)(c), the amount
of gain, if any, that would be realized by the Partnership if it were
to sell or dispose of (in a taxable transaction) property subject to a
non-recourse liability of the Partnership, in full satisfaction of
such liability.
"Person" means a natural person, partnership, limited partnership
(domestic or foreign), trust, estate, association or corporation.
"Profits and Losses For Tax Purposes" means, for Partnership
accounting and tax purposes, the various items set forth in Section
702(a) of the Internal Revenue Code and all applicable regulations or
any successor law, and shall include, but not be limited to, each item
of income, gain, deduction, loss, preference or credit.
"Subordinated Limited Partners" means those persons who have executed
this Agreement and whose names are set forth in the books and records
of the Partnership as Subordinated Limited Partners, and any other
person who becomes a Subordinated Limited Partner of the Partnership
as provided herein.
"Valuation Date" means as of the last Friday of each month except for
the month of December in which case it means as of the last day of the
month.
ARTICLE TWO
CONTINUATION, NAME AND OFFICE, PURPOSES,
TERM AND DISSOLUTION,
REGISTERED AGENT, PARTNER LIST
2.1 Continuation.
The parties hereto hereby continue the Partnership as a limited
partnership pursuant to the provisions of the Missouri Act.
2.2 Name, Place of Business and Office.
The Partnership shall be conducted under the name of "The Jones
Financial Companies, a Limited Partnership". The principal office and
place of business shall be 201 Progress Parkway, Maryland Heights,
Missouri 63043. The General Partners may at any time change the
location of such principal office. Notice of any such change shall be
given to the Partners on or before the date of any such change.
2.3 Purposes.
The purposes of the Partnership shall be to act as a limited partner
in Edward D. Jones & Co., L.P., ("EDJ") to act as a general partner,
limited partner, guarantor, stockholder or holding partnership for any
other limited partnership, general partnership, corporation or other
entity and to engage in such other activities as may be approved by
the General Partners.
2.4 Term and Dissolution.
A. The Partnership shall continue in full force and effect until
December 31, 2087, or until dissolution prior thereto upon the
happening of any of the following events:
(i) The sale of all of the assets of the Partnership;
(ii) An Event of Withdrawal of a General Partner if no General Partner
remains; or
(iii) The dissolution of the Partnership by the General Partners.
B. Upon dissolution of the Partnership, the General Partners shall
cause the cancellation of the Partnership's Certificate of Limited
Partnership, liquidate the Partnership's assets and apply and
distribute the proceeds thereof in accordance with Section 8.2 hereof.
2.5 Registered Office and Agent.
The name and address of the Registered Agent and Registered Office for
service of process on the Partnership are as set forth in the
Certificate of Limited Partnership.
2.6 Amendment to Certificate of Limited Partnership.
The Certificate of Limited Partnership shall be amended within thirty
days of the admission or withdrawal of a General Partner.
ARTICLE THREE
PARTNERS AND CAPITAL
3.1 General Partners.
A. The name, last known mailing address and current Capital
Contribution of each General Partner are reflected in the books and
records of the Partnership.
B. Any General Partner, in addition to being a General Partner, may
also become a Limited by complying with the provisions of Section 3.4
hereof. In such event, said General Partner shall have all the rights
and powers and be subject to all the restrictions of a General
Partner, except that, in respect to its Capital Contribution as a
Limited, he shall have the rights against the other Partners which he
would have had if he were not also a General Partner.
C. Any General Partner may, with the consent of the Managing Partner,
increase his Capital Contribution from time to time. Such increased
Capital Contribution shall be made in such manner and at such time as
determined by the Managing Partner and the General Partner Percentages
shall be appropriately adjusted and transferred. All such changes
shall be reflected in the books and records of the Partnership.
3.2 Admission of Additional General Partners.
A. The Managing Partner may at any time designate additional General
Partners with such interest in the Partnership as the Managing Partner
and such additional General Partners may agree upon. The additional
General Partner shall make his Capital Contribution to the Partnership
in such manner and at such time as determined by the Managing General
Partner and the General Partner Percentages shall be appropriately
adjusted and transferred. All such changes shall be reflected in the
books and records of the Partnership. The Managing Partner may admit
additional General Partners to the Partnership at any time without the
consent of any current General Partner or Limited.
B. Each additional General Partner shall agree, as a condition to
becoming an additional General Partner, to be bound by the terms and
provisions of this Agreement and any other agreement (including cash
subordination agreements) as deemed appropriate by the Managing
Partner.
3.3 Limiteds.
A. There shall be two classes of Limiteds, namely, Limited Partners
and Subordinated Limited Partners. The name, last known mailing
address and current Capital Contribution of each Limited Partner are
reflected in the books and records of the Partnership. The name, last
known mailing address and current Capital Contribution of each
Subordinated Limited Partner are reflected in the books and records of
the Partnership.
B. Each Limited Partner shall be paid 7-1/2% per annum, on the
principal amount of his Capital Contribution. Such payments shall be
made yearly or more frequently, as determined by the Managing Partner.
All such payments shall be treated as guaranteed payments.
3.4 Admission of Limiteds.
A. The Managing Partner is authorized to admit to the Partnership
Limiteds who may be admitted as Limited Partners or as Subordinated
Limited Partners, at the discretion of the Managing Partner.
B. The Capital Contributions of the Limiteds shall be made in such
manner and at such time as determined by the Managing Partner. All
such changes shall be reflected in the books and records of the
Partnership.
C. Each Limited shall agree, as a condition to becoming a Limited, to
be bound by the terms and provisions of this Agreement and any other
agreements (including cash subordination agreements) as deemed
appropriate by the Managing Partner.
3.5 Partnership Capital.
A. The total capital of the Partnership shall be the aggregate amount
of the Capital Contributions of the Partners as provided for herein.
B. Except as provided herein, or as otherwise determined by the
Managing Partner, no Partner shall be paid interest on any Capital
Contribution to the Partnership.
C. Except as otherwise provided herein, prior to dissolution of the
Partnership, no Partner shall have the right to demand the return of
his Capital Contribution. No Partner shall have the right to demand
and receive property other than cash in return for his Capital
Contribution.
D. The General Partners shall have no personal liability for the
repayment of the Capital Contribution of any Limited.
3.6 Liability of Limiteds.
A Limited shall only be liable to make the payment of his Capital
Contribution. Except as provided in the Missouri Act, no Limited
shall be liable for any obligations of the Partnership. After his
Capital Contributions shall be paid to the Partnership, no Limited
shall be required to make any further Capital Contribution or lend any
funds to the Partnership, except as otherwise expressly provided in
this Agreement..
3.7 Participation in Partnership Business by Limiteds.
No Limited (except one who may also be a General Partner, and then
only in his capacity as a General Partner) shall participate in or
have any control over the Partnership business (except as required by
law) or shall have any authority or right to act for or bind the
Partnership. The Limiteds hereby consent to the exercise by the
Managing Partner and the General Partners of the powers conferred on
them by this Agreement.
3.8 Priority Among Limiteds.
Priorities as between classes of Limiteds as to distributions are set
forth in Article Eight hereof.
ARTICLE FOUR
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNERS
4.1 Authorized Acts; Management and Control.
A. Subject to the other provisions set forth below, the General
Partners have the exclusive right to manage the business of the
Partnership and are hereby authorized to take any action (including,
but not limited to, the acts authorized by Section 4.1C below) of any
kind and to do anything and everything in accordance with the
provisions of this Agreement.
B. John W. Bachmann is hereby designated by the General Partners as
the Managing Partner of the Partnership. As the Managing Partner he
shall serve as Chairman of the Executive Committee. As Managing
Partner, he shall have the absolute right (subject to Section 4.4C
hereof) to manage the business of the Partnership on behalf of the
General Partners and is hereby authorized to take on behalf of the
Partnership and the General Partners any action (including, but not
limited to, the acts authorized by Section 4.1C below) of any kind and
to do anything and everything in accordance with the provisions of
this Agreement. The Managing Partner shall have all the rights,
powers and duties usually vested in the managing partner of a
partnership including the administration of this Partnership's
business and the determination of its business policies and he shall
control the management and conduct of all of the business transacted
by the Partnership. In particular, but not in limitation of the
foregoing, the Managing Partner for, in the name and on behalf of, the
Partnership and the General Partners is hereby specifically authorized
(i) to admit to the Partnership any General Partner or Limited;
(ii) to dismiss (in accordance with Section 6.2 hereof) from the
Partnership any General Partner or Limited; (iii) to determine the
General Partner's Adjusted Capital Contribution (and the related
General Partner Percentage) that each General Partner (including the
Managing Partner) shall be entitled to maintain; (iv) to determine the
guaranteed draw (described in Section 4.5A hereof) to be paid to each
General partner (which guaranteed draw shall be set forth on a list to
be maintained in the Managing Partner's office which list shall be
available for inspection by the General Partners; (v) to fix the
Capital Contribution that each Limited shall be entitled to maintain;
(vi) to determine all amounts, if any, to be distributed to the
Limiteds pursuant to Section 8.5 hereof; (vii) to convey title to any
assets of the Partnership; and (viii) to execute all documents
(including, but not limited to, any loan documents or guarantees) on
behalf of the Partnership.
C. The General Partners for, in the name and on behalf of, the
Partnership are hereby authorized to take any and all actions, and to
engage in any kind of activity and to perform and carry out all
functions of any kind necessary to, or in connection with, the
business of the Partnership (including but not limited to):
(i) executing any instruments on behalf of the Partnership;
(ii) acquiring or selling assets of the Partnership; (iii) entering
into loans, guarantees in connection with the business of the
Partnership; (iv) acting as a partner or shareholder of, or adviser
to, any other organization; (v) contributing capital, as a limited
partner or as a general partner, or purchasing other securities in or
otherwise investing in EDJ or any other limited partnership, general
partnership, corporation or other entity and taking all actions
required as a partner, shareholder or investor in any such entity.
D. The special authority granted herein to the Managing Partner shall
not be construed to restrict the authority of any General Partner to
act as the agent of the Partnership and to execute instruments in the
Partnership name for the purpose of carrying on the ordinary business
of the Partnership.
E. The Managing Partner may delegate to any General Partner the
authority from time to time to execute documents or otherwise exercise
the authority of the Managing Partner, but such authority shall not
include the authority to increase the capital or change the business
policies of the Partnership unless such authority is expressly and
specifically granted in writing to such General Partner.
F. Whenever authority is herein conferred upon the Managing Partner or
the General Partners, any person, other than a General Partner,
dealing with the Partnership may rely conclusively upon the authority
and signature of the Managing Partner or any one other General Partner
to exercise such authority without determining that such Managing
Partner or such General Partner is acting with the approval of the
other General Partners. In addition, third parties dealing with the
Partnership may rely upon the certification of the Managing Partner or
any other General Partner as to the continued existence of the
Partnership, the identity of its current Partners and the authority of
any Partner to execute any document.
4.2 Restrictions on Authority of the Managing Partner and Executive
Committee.
In the event that a meeting of General Partners is called by the
General Partners in accordance with Section 5.1 hereof to vote upon
the removal of the Managing Partner or an Executive Committee member,
neither the Managing Partner nor the Executive Committee shall from
the time of notice of such meeting until after adjournment thereof:
(i) change the General Partner Percentage of any General Partner or
(ii) admit or dismiss any General Partner as a Partner.
4.3 Removal or Dismissal of Certain Partners.
The Managing Partner may be removed from such office and any General
Partner may be dismissed as a General Partner (in accordance with
Section 6.2 hereof) by a vote of General Partners holding a majority
of the General Partner Percentages in the Partnership.
4.4 Executive Committee.
A. An Executive Committee is hereby created consisting of the Managing
Partner and nine (9) additional General Partners. Among the purposes
of the Executive Committee is to provide counsel and advice to the
Managing Partner in discharging his functions.
B. Each member of the Executive Committee shall have one vote.
C. Upon the majority vote of the Executive Committee, the Executive
Committee may override any determination made by the Managing Partner
as to (i) the General Partner's Adjusted Capital Contribution (and the
related General Partner Percentage) that each General Partner
(including the Managing Partner) shall be entitled to maintain, (ii)
the admission of a new General Partner and (iii) the dismissal of a
General Partner.
D. Upon the majority vote of the Executive Committee, the Managing
Partner may be removed from his office as the Managing Partner. Upon
the majority vote of the Executive Committee a new Managing Partner
may be elected whenever the office of Managing Partner is vacant.
E. At any time during which there is no Managing Partner the Executive
Committee shall succeed to all of the powers and duties of the
Managing Partner.
F. The Managing Partner shall have the right to appoint and dismiss
any member of the Executive Committee; provided however that the
Managing Partner shall not have the right to dismiss any member of the
Executive Committee from the time Notice is given of a meeting of the
Executive Committee until the adjournment thereof if the purpose of
such meeting is to vote upon one or more of the matters set forth in
Sections 4.4C or 4.4D hereof.
G. By a vote of the General Partners holding a majority of the General
Partner Percentages in the Partnership, the General Partners may
remove any Executive Committee member from his position as an
Executive Committee member and elect in his place a new Executive
Committee member.
H. If the General Partners remove any Executive Committee member from
his position as an Executive Committee member, the Managing Partner
may not appoint such removed Executive Committee member to the
Executive Committee for a period of six (6) months thereafter. Any
Executive Committee member elected to the Executive Committee by a
vote of the General Partners may not be dismissed as an Executive
Committee member by the Managing Partner.
I. A meeting of the Executive Committee shall be held (i) at any time
on call of the Managing Partner after one (1) day's Notice has been
delivered to the Executive Committee members or (ii) on at least ten
(10) day's Notice in advance to the Executive Committee members,
jointly signed by any two (2) Executive Committee members, specifying
the date, place, hour and purpose of the meeting.
4.5 Guaranteed Draw; Time and Effort; Independent Activities.
A. Each General Partner shall receive a guaranteed draw for his
services as determined by the Managing Partner in his sole discretion.
Such guaranteed draw shall be treated by the Partnership as a
guaranteed payment. Such guaranteed draw shall be reduced by any net
commissions earned by any such General partner (and paid to such
General Partner by EDJ) who is principally engaged in the sale of
securities to the public. If any such General Partner who is
principally engaged in the sale of securities to the public at EDJ
incurs any reasonable expenses through usual and ordinary means of
generating the sales upon which such General Partner is entitled to
receive commissions from EDJ, then such General Partner must
personally and individually pay, without reimbursement from the
Partnership or from EDJ, such expense but such General Partner shall
be entitled to deduct such expenses on his personal income tax return.
B. Each General Partner shall devote his entire time, energy, skill
and ability to the duties of operating the Partnership and the
entities it owns. General Partners shall not engage in outside
business activities without the prior written consent of the Managing
Partner. Each General Partner agrees not to use the name or property
of the Partnership or any entity it owns for his own private business,
nor for any purpose whatsoever except those that may be incidental to
the conduct and management of the Partnership, nor shall any General
Partner use the name of the Partnership or any entity it owns for the
use or accommodation of any other person. No General Partner shall
incur any obligation in the name of the Partnership or transfer
Partnership property except in connection with Partnership business.
C. Each General Partner agrees that he will not, without the written
consent of the Managing Partner (i) become a guarantor or surety for
any person, firm or corporation; (ii) in the name of the Partnership
or any entity it owns or in his own name buy or sell stocks,
securities or commodities on margin, either for the account of the
Partnership or for his own account; or (iii) pledge or hypothecate any
of the property of the Partnership or any entity it owns for any
purpose whatsoever.
D. Each General Partner shall submit annually for inspection a copy of
his personal federal income tax return to the independent accountants
selected by the Managing Partner.
E. Each Partner is expected, and it is regarded as such Partner's
duty, to supplement expenses reimbursable to such Partner by the
Partnership by additional expenditures of such Partner's personal
funds in the furtherance of the Partnership's business which
expenditures such Partner shall be entitled to deduct on his personal
income tax return; in this connection, as deemed appropriate under the
circumstances, such additional expenditures have included in the past
and shall include in the future, but shall not be limited to (a)
subscribing to professional journals, (b) maintaining active
memberships in professional associations, other associations, luncheon
clubs and other clubs where the Partner will have an opportunity to
further the development of, and to maintain the Partnership's
relationship with, its customers, (c) providing space and facilities
in the Partner's home in order that the Partner may work on the
Partnership's business while at home, (e) providing for transportation
to customers' offices, (f) entertaining customers and prospective
customers and (g) continuing the Partner's business-related education,
including attendance at seminars and obtaining advanced educational
degrees.
4.6 Duties and Obligations of the Managing Partner.
A. The Managing Partner shall prepare (or cause to be prepared) and
file such amendments to this Agreement or any certificate of limited
partnership as are required by law or as he deems necessary to cause
this Agreement or any certificate of limited partnership to reflect
accurately the agreement of the Partners, the identity of the Limiteds
or the General Partners and the amounts of their respective Capital
Contributions.
B. The Managing Partner shall prepare (or cause to be prepared) and
file such tax returns and other documents, as are required by law or
as he deems necessary, for the operation of the Partnership.
4.7 Liability for Acts and Omissions; Indemnification.
Neither the Managing Partner nor any General Partner shall be liable,
responsible or accountable in damages or otherwise to any of the
Partners for, and the Partnership shall indemnify and save harmless
the Managing Partner and any General Partner from any loss or damage
incurred by reason of, any act or omission performed or omitted by him
in good faith on behalf of the Partnership and in a manner reasonably
believed by him to be within the scope of the authority granted to him
by this Agreement and in the best interests of the Partnership,
provided that the Managing Partner or the General Partner shall not
have been guilty of gross negligence or gross misconduct with respect
to such acts or omissions and, further, provided that the
satisfaction of any indemnification and any saving harmless shall be
paid out of and limited to Partnership assets and no Partner shall
have any personal liability on account thereof.
4.8 Dealing with an Affiliate.
The Managing Partner may for, in the name of and on behalf of, the
Partnership enter into such agreements, contracts or the like with any
Affiliate of any General Partner or with any General Partner, in an
independent capacity, as distinguished from his capacity (if any) as a
Partner, to undertake and carry out the business of the Partnership as
if such Affiliate or General Partner were an independent contractor;
and the Managing Partner may obligate the Partnership to pay
reasonable compensation for and on account of any such services.
ARTICLE FIVE
MEETINGS AND VOTING OF PARTNERS
5.1 Meetings of General Partners; Voting at Such Meetings.
A. A meeting of General Partners shall be held (i) on the call of the
Managing Partner after five (5) days Notice thereof has been delivered
to the General Partners, or (ii) on at least 10 days Notice in advance
to the General Partners, jointly signed by any five (5) General
Partners, specifying the date, place, hour and purposes of the
meeting.
B. Except as otherwise expressly provided, at any meeting of the
General Partners, each General Partner shall have voting power equal
to his General Partner Percentage at the time of the meeting. A
quorum for any purpose at any meeting of the General Partners shall
exist if General Partners then holding more than 50% of the voting
power of all General Partners are present or voting by proxy. Any
General Partner may vote on any matter if not present in person, by
general or specific written proxy given to another General Partner.
No proxy shall be valid after two (2) months from the date of its
execution. General Partners may participate in any meeting by means
of conference telephone or similar communications equipment whereby
all persons participating in such meeting can hear each other.
Participation in a meeting in this manner shall constitute presence in
person at the meeting.
C. Unless otherwise permitted by the Managing Partner, the only
matters to be voted upon by the General Partners at any meeting of the
General Partners shall be those matters set forth in Sections 4.3 and
4.4 hereof.
5.2 Percentage of Voting Power for Partnership Decisions.
A. Except as otherwise specifically provided in this Agreement, the
affirmative vote of more than 50% of the voting power of all General
Partners shall determine all issues at any meeting of the General
Partners.
B. Any percentage of voting power of the General Partners required by
this Agreement shall relate to the percentage of the total voting
power of all General Partners entitled to vote on the issue and not to
a percentage of the voting power of the General Partners present at a
meeting.
5.3 Robert's Rules to Govern.
Except as otherwise specifically provided in this Agreement, all
matters of parliamentary procedure at meetings of the General Partners
shall be governed by Robert's Rule of order Revised. The Managing
Partner may appoint a parliamentarian.
5.4 Consent of General Partners in Lieu of a Meeting.
A. Notwithstanding anything to the contrary contained in this
Agreement, any action required or permitted by this Agreement to be
taken at any meeting of the General Partners may be taken without a
meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by
Partners having not less than the minimum voting power that would be
necessary to authorize or take such action at a meeting of the
Partners.
B. Prompt Notice of the taking of any action pursuant to this Section
5.4 by less than unanimous written consent of the General Partners
shall be given to those General Partners who have not consented in
writing.
ARTICLE SIX
EVENT OF WITHDRAWAL OF A PARTNER
6.1 Voluntary Event of Withdrawal.
Any General Partner shall have the right to retire or voluntarily
withdraw from the Partnership upon 30 days prior written notice to the
Managing Partner. In the event that there is only one General
Partner, he shall give notice to the Limiteds of his intent to
withdraw from the Partnership at least 30 days prior to the date of
withdrawal. Any Limited shall have the right to retire or voluntarily
withdraw from the Partnership upon six (6) months prior written notice
to the Managing Partner.
6.2 Withdrawal Upon Request.
The Managing Partner or any number of General Partners holding in the
aggregate a majority of the General Partner Percentages, may request
in writing that any Partner withdraw from the Partnership, and each
Partner agrees that he will so withdraw within 30 days of the receipt
of such request.
6.3 Return of Capital and Purchase of Interest.
A. In the event of any withdrawal by a Limited from the Partnership,
pursuant to Sections 6.1 or 6.2 hereof, there shall be returned
(subject to the provisions of Section 6.7 hereof) to the withdrawing
Limited, within six (6) months after the actual date of his
withdrawal, his Capital Contribution to the Partnership. In addition,
such Limited shall receive (within 75 days after the actual date of
his withdrawal) his pro rata share of any cash distributions to which
he was entitled as set forth in Section 8.1 hereof, calculated as of
the previous Valuation Date if such withdrawal takes place on or prior
to the 15th day of a month or calculated as of the next Valuation Date
if such withdrawal takes place on or after the 16th day of a month.
Until a Limited Partner's Capital Contribution is returned to him, he
shall continue to receive all sums due him pursuant to Section 3.3B
hereof.
B. In the event of any withdrawal by a General Partner from the
Partnership, pursuant to Section 6.1 or 6.2 hereof (and subject to the
provisions of Section 6.7 hereof), the remaining General Partners, or
any of them shall have the option to purchase the General Partner
Interest (including his Frozen Appreciation Amount) of the withdrawing
General Partner, subject to the approval of the Managing Partner.
Such purchases shall be consummated within 60 days after the actual
date of such withdrawal. The price of the General Partner Interest of
the withdrawing General Partner shall be the value (as shown on the
books of the Partnership) of his Frozen Appreciation Amount plus the
value of such General Partner's Adjusted Capital Contribution,
calculated as of the previous Valuation Date if such withdrawal takes
place on or prior to the 15th day of a month or calculated as of the
next Valuation Date if such withdrawal takes place on or after the
16th day of a month. Goodwill, if any, and the Partnership name shall
not be deemed assets or as having any property value in making the
foregoing calculation. In addition, any withdrawing General Partner
shall receive (within 75 days after the actual date of his withdrawal)
his pro rata share of any cash distributions to which he is entitled
as set forth in Section 8.1 hereof, calculated as of the previous
Valuation Date if such withdrawal takes place on or prior to the 15th
day of a month or calculated as of the next Valuation Date if such
withdrawal takes place on or after the 16th day of a month. Any
General Partner Interest (including his Frozen Appreciation Amount)
not purchased by the remaining General Partners within such 60 day
period shall be converted (as of the actual date of his withdrawal) to
that of a Subordinated Limited Partner interest and shall be redeemed
by the Partnership within one (1) year, the specific date to be
determined by the Managing Partner. Upon the conversion of a General
Partner's Interest to that of a Subordinated Limited Partner, the
General Partner Percentages of the remaining General Partners shall be
recalculated (as of the actual date of withdrawal) on the same
relative basis so as to aggregate 100% (and the related General
Partner Adjusted Capital Contributions shall also be appropriately
adjusted).
6.4 Death of a Limited.
In the event of the death of any Limited, the Capital Contribution of
such deceased Limited shall be returned (subject to the provisions of
Section 6.7 hereof) to his estate within six (6) months after the
actual date of death of the Limited. In addition such Limited's
estate shall receive (within 75 days after the actual date of death of
the Limited) the Limited's pro rata share of any cash distributions to
which such deceased Limited was entitled as set forth in Section 8.1
hereof, calculated as of the previous Valuation Date if such
withdrawal takes place on or prior to the 15th day of a month or
calculated as of the next Valuation Date if such withdrawal takes
place on or after the 16th day of a month. Until a deceased Limited's
Capital Contribution is returned to his estate, his estate shall
continue to receive all sums which would have been due to such Limited
pursuant to Section 3.3B hereof. As stated herein, all such payments
shall be made to the estate of the deceased Limited unless the
Partnership has received evidence, satisfactory to the Partnership, in
its sole discretion, that such payments should be made to some other
entity or person.
6.5 Death or Disability of a General Partner.
A. In the event of the death of a General Partner, the interest of the
deceased General Partner in the Partnership shall terminate as of such
date. The General Partner Interest (including his Frozen Appreciation
Amount) of the deceased General Partner shall be treated in the same
manner as that of a withdrawing General Partner pursuant to Section
6.3B hereof and subject to the provisions of 6.7 hereof with payment
therefor being made, however, to the estate of the deceased General
Partner. As stated herein, all such payments shall be made to the
estate of the deceased General Partner unless the Partnership has
received evidence, satisfactory to the Partnership, in its sole
discretion, that such payments should be made to some other entity or
person.
B. In the event of full or partial disability (as determined in the
absolute discretion of the Managing Partner) of a General Partner
under age 65 due to illness, accident, or injury, such General Partner
shall be entitled to receive his normal share of Partnership Net
Income notwithstanding his inability to perform his normal work
functions, for a period of up to six (6) full months following the
date he suffered the disability. If the disability shall continue for
a period greater than six (6) months but less than one (1) year, then
during such period of time the disabled General Partner shall be
entitled to receive one-half (1/2) of his normal share of Partnership
Net Income. If the disability shall continue for a period greater
than one (1) year in length, then the disabled General Partner must
terminate his status as a General Partner, unless otherwise directed
by the Managing Partner. In event of termination, the General Partner
Interest (including his Frozen Appreciation Amount) of the disabled
General Partner shall be treated in the same manner as that of a
withdrawing General Partner pursuant to Section 6.3B hereof.
6.6 General Partner Interest - 56th Birthday.
A General Partner shall not acquire any additional General Partner
Interest after he reaches his 56th birthday. His General Partner
Interest (including his Frozen Appreciation Amount) as it exists on
his 56th birthday is his "Retiring Interest." On the first day of the
calendar year following the year in which a General Partner's 56th
birthday falls and on the first day of each subsequent calendar year,
the General Partner shall sell 1/10th of this Retiring Interest to
such other General Partners who have not attained 56 years of age, who
are willing to purchase such additional interest, and who have
received approval from the Managing Partner to make such purchase.
The sale price of the Retiring Interest shall be determined in the
same manner as set forth in Section 6.3B hereof. Upon payment of the
sales price to the selling General Partner by the purchasing General
Partner, the books of the Partnership shall be adjusted as of the
effective date of sale to show the appropriate reductions and
increases in the General Partner Adjusted Capital Contributions (and
related General Partner Percentages) of the selling and purchasing
General Partners. Notwithstanding any other provisions of this Section
to the contrary, the Managing Partner may exempt any General Partner
from the application of this Section or modify the terms of the sale
of any Retiring Interest as he deems advisable.
6.7 Restriction on Capital Contribution Return.
It is understood and agreed that the Capital Contributions of the
Partners to the Partnership will be used, in part, by the Partnership
as part of the Partnership's capital contribution to EDJ, a brokerage
firm (which is regulated by the Securities and Exchange Commission and
the New York Stock Exchange and other regulatory agencies), and that
in order for the Partnership to return to any Partner his Capital
Contribution (or any part thereof), the Partnership will have to
obtain such funds from EDJ. Therefore, notwithstanding any other
provision contained in this Agreement to the contrary, without the
written consent of the Managing Partner, no Partner shall have
returned to him (under any provision of this Agreement) his Capital
Contribution or his General Partner's Adjusted Capital Contribution,
if after giving effect thereto, the Partnership or any Affiliate
thereof (including, but not limited to, EDJ) would, if such payment
had been made directly by EDJ, be in violation of (i) any rule of the
New York Stock Exchange Inc., (ii) any rule issued under the
Securities Exchange Act of 1934, any agreement (cash subordination or
otherwise) which has been entered into by the Partnership or any
Affiliate thereof (including, but not limited to, EDJ) or (iv) any
other law, rule or regulation to which the Partnership or any
Affiliate thereof (including, but not limited to, EDJ) is subject. In
the event there is returned to any Partner all or any portion of his
Capital Contribution or his General Partner's Adjusted Capital
Contribution and because of such return the Partnership or any
Affiliate thereof (including, but not limited to, EDJ) violated any of
the aforementioned rules, agreements or regulations, then such Partner
hereby irrevocably agrees (whether or not such Partner had any
knowledge or notice of such facts at the time of such return) to repay
to the Partnership, its successors or assigns, the sum so returned to
such Partner to be held by the Partnership pursuant to the provisions
hereof as if such return had never been made; provided, however, that
any suit for the recovery of any such return must be commenced within
two years of the date of such return.
6.8 Liability of a Withdrawn General Partner.
If on the Event of Withdrawal of a General Partner the business of the
Partnership shall continue, the General Partner who shall have
withdrawn shall be and remain liable for all obligations and
liabilities incurred by him as General Partner prior to such Event of
Withdrawal, but he shall be free of any obligation or liability
incurred on account of the activities of the Partnership from and
after the time of such Event of Withdrawal.
6.9 Effect of Event of Withdrawal.
Upon the withdrawal (by reason of death or otherwise) of a Partner the
Partnership shall not dissolve and the business of the Partnership
shall be continued by the remaining General Partners.
ARTICLE SEVEN
TRANSFERABILITY OF PARTNER INTERESTS
7.1 Restrictions on Transfer.
A. Each Partner agrees that he will not sell, pledge exchange,
transfer or assign his interest in the Partnership to any Person
without the express written consent of the Managing Partner.
B. Each Partner agrees that he will not sell or exchange any of his
interest in the Partnership if the interest sought to be sold or
exchanged, when added to the total of all other Partner interests sold
or exchanged within the period of 12 consecutive months prior thereto,
would, in the opinion of counsel for the Partnership, result in the
Partnership being considered to have been terminated within the
meaning of Section 708 of the Internal Revenue Code (or any successor
statute).
C. Each Limited agrees that he will not sell, exchange, transfer or
assign any of his interest in the Partnership unless, if required by
the Partnership, the Partnership has received an opinion of counsel,
satisfactory to the Partnership, that such transfer or assignment may
be effected without registration of the Limited's interest under the
Securities Act of 1933 or under any applicable state securities law.
D. Except as otherwise expressly provided in this Agreement, the death
or withdrawal of a Partner shall terminate (as of such date) all his
interest in the Partnership and neither the estate of a deceased
Partner nor any other third party shall become or have any rights as a
Partner.
E. Any sale, exchange, assignment or other transfer in contravention
of any of the provisions of this Section 7.1 shall be void and
ineffectual and shall not bind or be recognized by the Partnership.
7.2 Substituted Limited Partners.
No Limited shall have a power to grant the right to become a
substituted Limited to an assignee of any part of such Limited's
Partnership Interest.
ARTICLE EIGHT
DISTRIBUTIONS AND ALLOCATIONS
8.1 Distribution of Net Income.
A. All Net Income, if any, of the Partnership for each calendar year
(except for Net Income generated in any transaction in connection with
the dissolution and liquidation of the Partnership) shall be
distributed in the following order of priority:
(i)Each Limited Partner shall be paid at least annually (with respect
to such Limited Partner's Capital Contribution), from time to time, a
total amount of cash equal to the product of Net Income times a
percentage, calculated annually, which shall equal the product of the
following three factors: (a) one-fourth of one percent (.0025)
multiplied by (b) the quotient of $1,900,000 divided by the sum of the
General Partners' Adjusted Capital Contributions multiplied by (c) the
quotient of the total Capital Contribution of the respective Limited
Partner divided by $25,000. This calculation of percentage of
participation shall be made at the end of each calendar year and used
in distributing Net Income earned during the following year.
Notwithstanding the foregoing, for the year 1987 each Limited Partner
shall be paid (with respect to such Limited Partner's Capital
Contribution) a total amount of cash equal to the product of Net
Income times a percentage which shall equal the product of the
following three factors: (a) one-fourth of one percent (.0025)
multiplied by (b) the quotient of $1,900,000 divided by $24,251,182
multiplied by (c) the quotient of the total Capital Contribution of
the respective Limited Partner divided by $25,000.
(ii) Each Subordinated Limited Partner shall be paid, from time to
time, a total amount of cash in each year equal to the product of (a)
the then remaining Net Income times (b) a percentage derived by the
following formula: (x) 50% of the Capital Contribution of the
Subordinated Limited Partner (excluding any undistributed Net Income
allocated to the Subordinated Limited Partner) divided by (y) the sum
of (aa) 50% of the Capital Contributions of all the Subordinated
Limited Partners plus (bb) the Adjusted Capital Contributions of the
General Partners (less any Net Income allocated to the General
Partners which is not scheduled to be retained by the Partnership).
In the event the Capital Contribution of a Subordinated Limited
Partner has been reduced by the operation of Section 8.1B hereof (the
"Reduced Amount"), then each Subordinated Limited Partner shall have
right to make additional cash Capital Contributions to the
Partnership from any cash to be distributed to such Subordinated
Limited Partner pursuant to this Section 8.lA(ii) up to the Reduced
Amount.
(iii)There shall be set apart a sum equal up to 8% of the remaining
Net Income. Of such 8%, if any is set apart, there shall be
distributed 62.5% thereof among the General Partners on the basis of
individual merit as determined by the Managing Partner. Of such 8%,
if any is set apart, there shall be distributed 37.5% thereof among
the General Partners on the basis of individual need as determined by
the Managing Partner.
(iv)It is intended that a sum equal to 30% of the remaining Net Income
will be retained by the Partnership as capital and shall be credited
to the Adjusted Capital Contributions of the General Partners in a
proportion equal to their then respective General Partner Percentages.
Such amount shall not be withdrawn by the General Partners.
Notwithstanding the foregoing, the decision of whether to make this
retention of capital in accordance with this Section or whether to
vary the amount of capital to be retained in any given year, is vested
in the Managing Partner, and it is agreed that his decision in this
matter shall be final.
(v)The balance of the Net Income remaining, if any, shall be
distributed among the General Partners in proportions to their General
Partner Percentages.
B. In any year in which there is a Net Loss and the Partnership is not
dissolved and liquidated in accordance with Section 8.2 hereof, such
Net Loss, on the books of the Partnership, shall be borne by the
Subordinated Limited Partners to the extent as set forth in the
formula described in Section 8.lA(ii) hereof and the balance shall be
borne by the General Partners in proportion to their respective
General Partner Percentages. Any such Net Losses borne by the
Subordinated Limited Partners shall only be applied against and reduce
their respective Capital Contributions. The total amount of all such
Net Losses to be borne by the Subordinated Limited Partners may never
exceed the total amount of the Capital Contributions of the
Subordinated Limited Partners as shown on the books of the
Partnership.
C. Notwithstanding the foregoing, where losses are caused by the
willful neglect or default, the gross negligent conduct, or the
intentional negligent conduct of any Partner, those net cash losses
shall be borne solely and made good by the Partner so causing the net
cash loss.
D. Notwithstanding any other provision of this Agreement to the
contrary, the aggregate interest of the General Partners in each
material item of Partnership income, gain, loss, deduction, preference
or credit shall be equal to at least one percent (1%) of each such
item at all times during the existence of the Partnership.
8.2 Distributions Upon Dissolution.
A. Upon the dissolution of the Partnership as a result of the
occurrence of any of the events set forth in Section 2.4 hereof, the
Managing Partner shall proceed to liquidate the Partnership, and the
proceeds of liquidation (the "Proceeds of Liquidation") shall be
applied and distributed in the following order of priority:
(i)To the payment of debts and liabilities of the Partnership,
including the expenses of liquidation.
(ii)To the payment of any accrued but unpaid amounts due under Section
8.1 hereof.
(iii)To the repayment of the Capital Contributions of the Limited
Partners.
(iv)To the repayment of the Capital Contributions of the Subordinated
Limited Partners.
(v)To the repayment of the General Partners' Adjusted Capital
Contributions.
(vi)The balance of the Proceeds of Liquidation, if any, shall be
distributed to the General Partners in proportion to their respective
General Partner Percentages.
B. Notwithstanding the foregoing, in the event the Managing Partner
shall determine that an immediate sale of part or all of the
Partnership assets would cause undue loss to the Partners, the
Managing Partner, in order to avoid such loss, may, after having given
Notice to all the Limiteds, either defer liquidation of, and withhold
from distribution for a reasonable time, any assets of the Partnership
except those necessary to satisfy the Partnership debts and
obligations, or distribute the assets to the Partners in kind.
C. Net Income generated by transactions in connection with the
dissolution and liquidation of the Partnership shall be allocated in
accordance with Section 8.2A hereof.
8.3 Distribution of Frozen Appreciation Amount.
Notwithstanding the provisions of Section 8.1 or 8.2 hereof, in the
event any tract of Real Estate or any Exchange Seat is sold, then
there shall be distributed from the net proceeds of such sale (prior
to making any distributions pursuant to the provisions of Section 8.1
or 8.2 hereof) to each General Partner an amount equal to his Frozen
Appreciation Amount with respect to such tract of Real Estate or
Exchange Seat. The balance of any proceeds resulting from any such
sale shall then be distributed in accordance with Sections 8.1 or 8.2
hereof or shall otherwise be used or retained by the Partnership as
provided herein.
8.4 Sale of Assets to Third Party.
A. In the event the Partnership shall sell or otherwise dispose of, at
one time, all, or substantially all, of its assets (a "Sale") to any
one Person or to any one Person and its Affiliates and the Partnership
is thereafter liquidated within 180 days, then the provisions of this
Section 8.4 shall be applicable with respect to the order of priority
of distribution of the Proceeds of Liquidation.
B. For the purposes of this Section 8.4 the term "substantially all"
shall be deemed to mean assets of the. Partnership representing 80% or
more of the net book value of all of the Partnership's assets
determined as of the end of the most recently completed fiscal year.
C. Prior to making any payments to the General Partners pursuant to
Section 8.2A(vi) hereof (but after making all other payments required
by Section 8.2A and all payments required by Section 8.3 hereof) the
Partnership shall distribute: (i) to the Limited Partners a
percentage of the Premium (as hereinafter defined) equal to the same
percentage of the Net Income of the Partnership which the Limited
Partners shall receive (pursuant to Section 8.lA hereof) from the
Partnership for the current fiscal year of the Partnership; and (ii)
to the Subordinated Limited Partners an amount equal to the product of
the Premium (remaining after the payment required by Section 8.4C(i)
hereof) times a fraction the numerator of which is the total Capital
Contributions of the Subordinated Limited Partners (on the date of the
Sale) and the denominator of which is (X) the total Capital
Contributions of the Subordinated Limited Partners (on the date of the
Sale) plus (Y) the total of the Adjusted Capital Contributions of the
General Partners (on the date of the Sale).
D. "Premium" means the Proceeds of Liquidation remaining after the
payment of the items set forth in Sections 8.2A(i), (ii), (iii), (iv)
and (v) hereof.
E. Any amounts payable to the Limiteds pursuant to this Section 8.4
shall be disbursed pro-rata to the Limiteds based on their Capital
Contributions on the date of the Sale.
F. Neither the Partnership nor the General Partners shall have any
obligation to cause a Sale to occur.
8.5 Other Sales or Dispositions to Third Party.
In the event the Partnership, in a transaction (dealing with all or
substantially all of the business of the Partnership) not covered by
Section 8.4 hereof (but similar in scope to such a transaction), sells
assets, merges or has a public offering, it is hereby stated that it
is the intention of the General Partners that the Limiteds shall share
in any "profit" or "premium" recognized from such transaction.
Because it is impossible at this time to foresee all possible factual
situations that may occur with respect to a given transaction, it is
equally impossible to determine a fair, just and equitable formula at
this time to distribute a portion such "profit" or "premium" to the
Limiteds. It is stated, however, at this time, as a matter of policy
of the Partnership that it is the intention of the General Partners to
allow the Limiteds to share a portion of such "profit" or "premium"
(assuming any "profit" or "premium" is also actually distributed to
the General Partners) in a fair, just and equitable manner in such
amount, if any, as determined in the sole and absolute discretion of
the Managing Partner at the time of such transaction. In making such
determination of such amount, if any, the Managing Partner shall not
be bound by the formula set forth in Section 8.4 hereof. Neither the
Partnership nor the General Partners shall have any obligation,
however, to cause such transaction to occur and no Limited shall have
any right to bring any cause of action against the Partnership or its
General Partners by reason of any statement made in this Section 8.5.
8.6 Allocation of Profits and Losses for Tax Purposes.
A. Except as provided in Sections 8.6B, C or D hereof, all Profits And
Losses For Tax Purposes of the Partnership shall be allocated as
follows:
(i)In any calendar year in which the Partnership has a net profit for
tax purposes, to the Partners with each Partner sharing therein in the
proportion that Net Income distributed to the Partner and/or credited
to the Adjusted Capital Contribution of the Partner bears to all Net
Income of the Partnership for the calendar year.
(ii)In any calendar year in which the Partnership has a net loss for
tax purposes, first to the Subordinated Limited Partners with each
Subordinated Limited Partner bearing an amount of loss to the extent
set forth in the formula described in Section 8.lA(ii) hereof;
provided, however, that the total amount of losses allocated to a
Subordinated Limited Partner shall not reduce such Partner's Capital
Account below zero (determined after taking into account all prior or
contemporaneous cash distributions and all prior or contemporaneous
allocations of income, gain, loss, deduction or credit and as
determined at the close of the taxable year in respect of which such
loss or deduction is to be allocated); and any remaining losses shall
be allocated to the General Partners in proportion to their respective
General Partner percentages.
B. The Managing Partner is authorized to allocate Profits and Losses
For Tax Purposes arising in any calendar year differently than
otherwise provided for in this Section 8.6 to the extent that the
Managing Partner determines, in his discretion, that such
modifications are appropriate to cause the allocations to comply with
the principles of Section 704 of the Internal Revenue Code and such
modifications are in the overall best interests of the Partners. Any
allocation made pursuant to this Section 8.6B shall be deemed to be a
complete substitute for any allocation otherwise provided for in this
Article Eight and no amendment of this Agreement or approval of any
Partner shall be required.
C. Notwithstanding any other provisions of this Agreement to the
contrary, if the amount of any Partnership Minimum Gain at the end of
any taxable year is less than the amount of such Partnership Minimum
Gain at the beginning of such taxable year, there shall be allocated
to any Partner having a negative Capital Account at the end of such
taxable year (determined after taking into account any adjustments,
allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) gross income and gain
(in respect of the current taxable year and any future taxable year)
in an amount sufficient to eliminate such negative Capital Account in
compliance with Treasury Regulations Section 1.704-1(b)(4)(iv)(e).
Such allocation of gross income and gain shall be made prior to any
other allocation of profits and losses for tax purposes. Any such
allocation of gross income or gain pursuant to this Section 8.6C shall
be in proportion with such negative Capital Accounts of the Partners
and such allocations of gross income and gain shall be taken into
account, to the extent feasible, in computing subsequent allocations
of Profits and Losses For Tax Purposes of the Partnership so that the
net amount of all items allocated pursuant to each Partner pursuant to
this Article Eight shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Partner pursuant to
the provisions of this Article Eight if the allocations made pursuant
to the first sentence of this Section 8.6C had not occurred.
D. Notwithstanding any other provisions of this Agreement to the
contrary, except as provided in Section 8.6C hereof, if any Limited
Partner or Subordinated Limited Partner receives any adjustment,
allocations, or distributions described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that reduces such
Partner's Capital Account below zero or increases the negative balance
in such Partner's Capital Account, gross income and gain shall be
allocated to such Partner in an amount and manner sufficient to
eliminate any negative balance in his Capital Account created by such
adjustments, allocations, or distributions as quickly as possible in
accordance with Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
Any such allocation of gross income or gain pursuant to this Section
8.6D shall be in proportion with such negative Capital Accounts of
such Partners. Any allocations of items of gross income or gain
pursuant to this Section 8.6D shall (i) not duplicate any allocations
of gross income or gain made pursuant to Section 8.6C hereof, and
(ii) be taken into account, to the extent feasible, in computing
subsequent allocations of Profits and Losses For Tax Purposes of the
Partnership, so that the net amount of all items allocated to each
Limited Partner and Subordinated Limited Partner pursuant to this
Article Eight shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Partner pursuant to
the provisions of this Article Eight if such adjustments, allocations
or distributions had not occurred.
E. If and to the extent upon dissolution of the Partnership pursuant
to Section 2.4 hereof the allocations under Section 8.6A are
inconsistent with the following provision, then such allocations shall
be adjusted to conform to the following provision: income and gain
(whether ordinary income, gain under Section 1231 of the Internal
Revenue Code, or capital gain) from disposition of all remaining
Partnership assets shall be allocated among the Partners so that the
positive balance of each Partner's Capital Account is equal to the
cash to be distributed to such Partner pursuant to Article 8.2
determined after all Capital Accounts have been adjusted to reflect
the allocations of Profits and Losses For Tax Purposes of the
Partnership and cash distributions made pursuant to Section 8.1
hereof.
ARTICLE NINE
BOOKS, RECORDS AND REPORTS,
ACCOUNTING, TAX ELECTIONS, ETC.
9.1 Books, Records and Reports.
A. Proper and complete records and books of account shall be kept (or
caused to be kept) by the Managing Partner in which shall be entered
all transactions and other matters relative to the Partnership's
business. The Partnership's books and records shall be prepared in
accordance with generally accepted accounting principles, consistently
applied. The books and records shall at all times be maintained at
the principal office of the Partnership and shall be open for
examination and inspection by the Partners or by their duly authorized
representatives during reasonable business hours. In particular, the
following books and records shall be kept:
(i)a current list and a past list of the full name and last known
mailing address of each Partner, specifying the General Partners and
the Limited Partners and the Subordinated Limited Partners, in
alphabetical order, including the date of admission or withdrawal of
each Partner. To the extent provided by the Missouri Act, these lists
shall be provided to the Secretary of State of Missouri, without cost,
upon his written request;
(ii)a copy of the Certificate of Limited Partnership and all
Certificates of Amendment thereto, together with executed copies of
any Powers of Attorney pursuant to which any Certificate has been
executed;
(iii)copies of the Partnership's federal, state and local income tax
returns and reports, if any, for the three most recent fiscal years;
and
(iv)copies of any written Partnership Agreements in effect and any
financial statements of the Partnership for the three most recent
years.
B. The Managing Partner shall have prepared at least annually, at the
Partnership's expense, financial statements (balance sheet, statement
of income or loss, partners' equity, and changes in financial
position) prepared in accordance with generally accepted accounting
principles which shall fairly reflect the Partnership's financial
position at the date ' shown and its results of operations for the
period indicated. Copies of such statements and report shall be made
available to the Partners annually.
C. The Managing Partner shall have prepared at least annually, at the
Partnership's expense, a report containing Partnership information
necessary in the preparation of the Partners' federal income tax
returns. Copies of such report shall be distributed to each Partner as
promptly as possible.
9.2 Bank Accounts.
The bank accounts of the Partnership shall be maintained in such
banking institutions as the Managing Partner shall determine, and
withdrawals shall be made only in the regular course of Partnership
business on such signature or signatures as the Managing Partner may
determine.
9.3 Depreciation and Elections.
A. All elections required or permitted to be made by the Partnership
under the Internal Revenue Code shall be made by the Managing Partner.
B. Notwithstanding anything to the contrary in this Section 9.3, the
Managing Partner shall not be responsible for initiating any change in
accounting methods from the methods initially chosen.
C. The Managing Partner is hereby designated as the "Tax Matters
Partner" under Section 6231(a)(7) of the Internal Revenue Code.
9.4 Fiscal Year.
The fiscal year of the Partnership shall be the calendar year for tax
purposes.
ARTICLE TEN
GENERAL PROVISIONS
10.1 Appointment of Attorneys-in-Fact.
A. Each Partner, by the execution hereof, hereby irrevocably
constitutes and appoints John W. Bachmann, Lawrence R. Sobol, and the
then Managing Partner (at any time the Managing Partner is not John W.
Bachmann), his true and lawful attorney-in-fact, and each of them,
with full power and authority in his name, place and stead, to execute
or acknowledge under oath, deliver, file and record at the appropriate
public offices such documents as may be necessary or appropriate to
carry out the provisions of this Agreement including:
(i)All certificates and other instruments (including this Agreement or
any certificate of limited partnership and any amendment thereof)
which the Managing Partner deems appropriate to qualify or continue
the Partnership as a limited partnership under the Missouri Act (or a
partnership in which the Limited Partners will have limited liability
comparable to that provided by the Missouri Act) or under the laws of
any other jurisdiction in which the Partnership may conduct business;
(ii)All amendments to this Agreement or any certificate of limited
partnership which are required to be filed or which the Managing
Partner deems to be advisable to file;
(iii)All instruments which the Managing Partner deems appropriate to
reflect a change or modification of the Partnership in accordance with
the terms of this Agreement;
(iv)All conveyances and other instruments which the Managing Partner
deems appropriate to reflect the dissolution and termination of the
Partnership; and
(v)All other instruments, documents or contracts (including, without
limiting the foregoing, any deed, lease, mortgage, note, bill of sale,
contract, trust agreement, guarantee, partnership agreement,
indenture, underwriting agreement or any instrument or documentation
which may be required to be filed (or which the Managing Partner deems
advisable to file) by the Partnership under the laws of any state or
by any governmental agency) requisite to carrying out the intent and
purpose of this Agreement and the business of the Partnership and its
Affiliates.
B. The appointment by all Limited Partners of John W. Bachmann,
Lawrence R. Sobol, and the then Managing Partner (at any time the
Managing Partner is not John W. Bachmann), as attorney-in-fact, and
each of them, shall be deemed to be a power coupled with an interest
in recognition of the fact that each of the Partners under this
Agreement will be relying upon the power of John W. Bachmann, Lawrence
R. Sobol, and the then Managing Partner (at any time the Managing
Partner is not John W. Bachmann), and each of them, to act as
contemplated by this Agreement in any filing and other action by them
on behalf of the Partnership. The foregoing power of attorney shall
survive the death, disability or incompetency of a Partner or the
assignment by any Partner of the whole or any part of its interest
hereunder.
10.2 Word Meanings.
The words such as "herein", "hereinafter", "hereof", and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in
which such words appear unless the context otherwise requires. The
singular shall include the plural and the masculine gender shall
include the feminine and neuter, and vice versa, unless the context
otherwise requires.
10.3 Binding Provisions.
The covenants and agreements contained herein shall be binding upon,
and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
10.4 Applicable Law.
This Agreement shall be construed and enforced in accordance with the
laws of the State of Missouri.
10.5 Counterparts.
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same
counterpart, except that no counterpart shall be binding unless signed
by the Managing Partner.
10.6 Entire Agreement.
This Agreement contains the entire agreement between the parties and
supersedes all prior writings or representations.
10.7 Separability of Provisions.
Each provision of this Agreement shall be considered separable and if
for any reason any provision or provisions hereby are determined to be
invalid or unenforceable such validity or unenforceability shall not
impair the operation of or affect any other portion of this Agreement
and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision was omitted.
10.8 Representations.
Each person who becomes a Limited hereunder does hereby represent and
warrant by the signing of a counterpart of this Agreement or an
amendment to this Agreement that the Partnership interest acquired by
him was acquired for his own account, for investment only, not for the
interest of any other person and not for resale to other persons or
for further distribution. The Managing Partner has not made and hereby
makes no warranties or representations other than those specifically
set forth in this Agreement.
10.9 Section Titles.
Paragraph titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the
text.
10.10 Partition
The Partners agree that the Partnership's assets are not and will not
be suitable for partition. Accordingly, each of the Partners hereby
irrevocably waives any and all right he may have to maintain any
action for partition of any of the Partnership's assets.
10.11 No Third Party Beneficiaries
This Agreement is made solely and specifically for the benefit of the
Partners and their respective successors and permitted assigns, and no
other person whatsoever shall have any rights, interests or claims
hereunder or be entitled to any benefits hereunder or on account of
this Agreement as a third party beneficiary or otherwise.
10.12 Arbitration
Any dispute hereunder shall be settled by arbitration in St. Louis
County, Missouri, in accordance with the Code of Arbitration Procedure
of the National Association of Securities Dealers, Inc., as then in
effect. The parties consent to the jurisdiction of the Supreme Court
of the State of Missouri and of the United States District Court for
the Eastern District of the State of Missouri for all purposes in
connection with arbitration. The award entered by the arbitrator(s)
shall be final and binding on all parties to the arbitration. Each
party shall bear its respective arbitration expenses and shall each
pay fifty percent (50%) of the arbitrator's charges and expenses.
10.13 Amendments.
In addition to the amendments otherwise authorized herein, this
Agreement may be amended, from time to time, without the consent or
approval of (and without prior notice to) any Limited, by the Managing
Partner or by the affirmative vote of General Partners.holding an
aggregate of at least a majority of the total General Partner
Percentages. In particular, but without limiting the foregoing, the
interests of the Limited Partners and the Subordinated Limited
Partners in the Net Income or the Proceeds of Liquidation of the
Partnership or in any other allocation or distribution to be received
by them from the Partnership pursuant to Article Eight hereof or
otherwise may be reduced or increased or otherwise modified in
accordance with this Section 10.13 without the consent or approval of
(and without prior notice to) any Limited.
10.14 Revocable Trusts.
Notwithstanding anything to the contrary herein contained, it is
recognized that certain of the Partners are not persons but are
revocable trusts ("Trusts"), the grantors of which ("Grantors"),
except for the transfer of their partnership interests to (or the
designation of) such Trusts created by them, would be the Partners.
Thus, when used herein the phrases "General Partner", "Limited
Partner", "Limited", "Partner" or "Subordinated Limited Partner" shall
be deemed, when the context hereof so requires (such as, without
limiting the generality of the foregoing, death, disability or
withdrawal of a Partner, gross negligent conduct of a General Partner,
a General Partner receiving a guaranteed draw for services rendered,
General Partner required submission of tax returns, sale by a General
Partner of Retiring Interests after his 56th birthday) to be a
reference to the Grantor of such Trust. In addition, to the extent
that any General Partner has obligations or liabilities imposed upon
such General Partner pursuant to this Agreement, then, if such General
Partner is a Trust, such General Partner, by such General Partner's
signature hereto (and the Grantor of such Trust by such Grantor's
signature hereto), hereby agrees that said obligations and liabilities
are also obligations and liabilities of such Grantor.
IN WITNESS WHEREOF, the undersigned has executed this Sixth Amended
and Restated Agreement of Limited Partnership as of the day and year
first above written.
GENERAL PARTNER:
John W. Bachmann
GENERAL PARTNERS AS SHOWN IN
THE BOOKS AND RECORDS OF THE
PARTNERSHIP*
*By
John W. Bachmann
Attorney-In-Fact
LIMITED PARTNERS AS SHOWN IN THE
BOOKS AND RECORDS OF THE PARTNERSHIP*
*By
John W. Bachmann
Attorney-In-Fact
SUBORDINATED LIMITED PARTNERS AS
SHOWN IN THE BOOKS AND RECORDS OF
THE PARTNERSHIP*
*By
John W. Bachmann
Attorney-In-Fact
EDWARD D. JONES & CO., L.P.
FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated: November 1, 1993
EDWARD D. JONES & CO., L.P.
(a Missouri Limited Partnership)
FOURTH AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
entered into this first day of November, 1993, by and between EDJ
Holding Company, Inc., a Missouri corporation, as the General Partner,
and The Jones Financial Companies, a Limited Partnership, as the
Limited Partner, as provided herein.
W I T N E S S E T H:
WHEREAS, the Partnership was formed as a limited partnership under The
Uniform Limited Partnership Law of the State of Missouri on May 23,
1969; and
WHEREAS, the Partnership elected to be governed by the provisions of
the Missouri Revised Uniform Limited Partnership Act on August 28,
1987; and
WHEREAS, the parties restated in full Amendment No. 40 dated August
28, 1987 and the Agreement of Limited Partnership dated as of May 23,
1969 of Edward D. Jones & Co., L.P. and the related Certificate of
Limited Partnership dated August 28, 1987 into the Amended and
Restated Agreement and Certificate of Limited Partnership (the "First
Restated Agreement") of Edward D. Jones & Co., L.P. dated August 28,
1987; and
WHEREAS, the parties amended and restated the First Restated Agreement
pursuant to the Second Amended and Restated Agreement of Limited
Partnership (the "Second Restated Agreement") of Edward D.
Jones & Co., L.P. dated January 31, 1991; and
WHEREAS, the parties amended and restated the Second Restated
Agreement pursuant to the Third Amended and Restated Agreement of
Limited Partnership (the "Third Restated Agreement") of Edward D.
Jones & Co., L.P. dated May 7, 1992; and
WHEREAS, the parties hereto now desire to amend Section 8.1D of the
Third Restated Agreement by the addition of a second paragraph thereto
and restate the Third Restated Agreement in its entirety;
NOW, THEREFORE, pursuant to the terms, covenants and conditions set
forth herein and the mutual promises contained herein, the parties
hereto agree as follows:
ARTICLE ONE
DEFINED TERMS
The defined terms used in this Agreement shall have the meanings
specified below:
"Affiliate" means (l) any Person directly or indirectly controlling,
controlled by or under common control with another Person, (2) any
Person owning or controlling ten percent (l0%) or more of the
outstanding voting securities of such other Person, (3) any officer,
director or partner of such Person, or (4) if such other Person is an
officer, director or partner, any company for which such Person acts
in any such capacity.
"Agreement" means this Fourth Amended and Restated Agreement of
Limited Partnership, as amended from time to time.
"Capital Account" means an account established by the Partnership and
maintained for each Partner, for federal income tax purposes, which
account shall be credited with:
(i) the amount of the Partner's Capital Contributions; and
(ii) the amount of Partnership income (including income exempt from
federal income tax) and gain (or items thereof) allocated to the
Partner pursuant to Article Eight hereof;
and which shall be debited by:
(iii) the amount of Partnership losses and deductions (or items
thereof) allocated to the Partner pursuant to Article Eight hereof;
(iv) the amount of Partnership expenditures described in Treasury
Regulations Section l.704-l(b)(2)(iv)(i) allocable to the Partner in
the same proportion as that in which the Partner bears the economic
burden of those expenditures; and
(v) the amount of all distributions to the Partner pursuant to Article
Eight hereof.
In addition, the Capital Account of each Partner shall be adjusted as
necessary to comply with Treasury Regulations Section l.704-
l(b)(2)(iv). In the event the General Partner shall determine that it
is prudent to modify the manner in which the Capital Accounts or any
debits or credits thereto, are completed in order to comply with such
regulations, the General Partner may amend this Agreement to reflect
such modification, provided that it is not likely to have a material
effect on the amounts distributable to the partners pursuant to
Article Eight upon dissolution of the Partnership.
If any Partner would otherwise have a negative balance in his Capital
Account, the amount of any such negative balance shall be reduced (but
not in excess of such negative balance) by the amount of such
Partner's share of Partnership Minimum Gain (determined in accordance
with Treasury Regulations Section l.704-l(b)(4)(iv)(f)) after taking
into account all increases and decreases to such Partnership Minimum
Gain during the taxable year.
In the event that the Partnership is deemed to be terminated for
federal income tax purposes due to the sale or exchange of fifty
percent (50%) or more of the Partnership interests in the capital or
profits of the Partnership (the "Partnership Interests") within a
twelve (l2) month period, appropriate adjustment shall be made to the
Capital Accounts to reflect the constructive liquidation and
reformation deemed to occur upon a termination.
In the event that interests in the Partnership are sold, exchanged or
otherwise transferred, and the transfer is recognized under Article
Seven hereof, or by operation of law, the Capital Account of the
transferee will equal the Capital Account of the transferor
immediately before the transfer. However, if such a sale or exchange,
either alone or in combination with other sales or exchanges within a
twelve-month period results in a transfer of fifty percent (50%) or
more of the Partnership Interests causing a termination of the
Partnership for federal income tax purposes, the adjustment required
by the immediately preceding paragraph shall be made.
"Capital Contribution" means the total amount of cash or property
contributed to the Partnership by each Partner (and not thereafter
returned to such Partner by the Partnership) pursuant to the terms of
this Agreement. The Capital Contributions of the Partners have been
previously set forth on exhibits to this Agreement. From the date
hereof, the Capital Contributions of the Partners shall be reflected
in the books and records of the Partnership.
"Certificate of Limited Partnership" means the document, as amended or
restated, filed as a certificate of limited partnership under the
Missouri Act.
"General Partner" means EDJ Holding Company, Inc., a Missouri
corporation.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Limited Partner" means The Jones Financial Company, a Limited
Partnership, a Missouri limited partnership.
"Missouri Act" means the Missouri Revised Uniform Limited Partnership
Act, as amended from time to time.
"Net Income or Net Loss" means, with respect to any fiscal period, the
net income or the net loss of the Partnership, determined in
accordance with generally accepted accounting principles; provided,
however, there shall be excluded from such net income or net loss any
unrealized gains or losses on securities held (whether at the
discretion of the Partnership or otherwise) by the Partnership in
Trading Account Number 001-00103-12 (or any successor account) as a
hedge against fixed rate Partnership borrowings (as opposed to other
securities held by the Partnership in trading accounts as inventory
for resale in the ordinary course of business).
"Notice" means a writing, containing the information required by this
Agreement to be communicated to a party, delivered personally or sent
by U.S. mail, postage prepaid, to such party at the last known address
of such party as shown on the records of the Partnership, the date of
personal delivery or the date of mailing thereof being deemed the date
of receipt thereof.
"Partner" means the General Partner or the Limited Partner.
"Partnership" means the limited partnership continued by this
Agreement by the parties hereto, as said limited partnership may from
time to time be constituted.
"Partnership Minimum Gain" means, for Partnership tax purposes, as set
forth in Treasury Regulations Section l.704-l(b)(4)(iv)(c), the amount
of gain, if any, that would be realized by the Partnership if it were
to sell or dispose of (in a taxable transaction) property subject to a
non-recourse liability of the Partnership, in full satisfaction of
such liability.
"Person" means a natural person, partnership, limited partnership
(domestic or foreign), trust, estate, association or corporation.
"Profits and Losses For Tax Purposes" means, for Partnership
accounting and tax purposes, the various items set forth in Section
702(a) of the Internal Revenue Code and all applicable regulations or
any successor law, and shall include, but not be limited to, each item
of income, gain, deduction, loss, preference or credit.
ARTICLE TWO
CONTINUATION, NAME AND OFFICE,
PURPOSES, TERM AND DISSOLUTION
2.1 Continuation.
The parties hereto hereby continue the Partnership as a limited
partnership pursuant to the provisions of the Missouri Act.
2.2 Name, Place of Business and Office.
The name of the Partnership shall be "Edward D. Jones & Co., L.P".
The principal office and place of business shall be 201 Progress
Parkway, Maryland Heights, Missouri 63043. The General Partner may
at any time change the location of such principal office. Notice of
any such change shall be given to the Limited Partner on or before the
date of any such change.
2.3 Purposes.
The Partnership shall continue to conduct its business under the firm
name of Edward D. Jones & Co., L.P. (or under the name of
Edward D. Jones & Co. if such name is registered as a fictitious name
with the State of Missouri) and shall engage in a general brokerage
and commission business including without limitation the purchase of,
sale of, and dealing in stocks, bonds, notes and evidences of
indebtedness of any person, firm, enterprise, corporation or
association domestic or foreign, and bonds and any other political
subdivision thereof, domestic or foreign, and bills of exchange and
commercial papers, and any and all securities of any kind, nature or
description whatsoever; and any kind of commodities and provisions
usually dealt with on exchanges, or upon the over-the-counter market,
or any option contracts upon any of the foregoing, or otherwise as
principals, brokers, agents, or otherwise to act as investment adviser
under the Investment Advisers Act of 1940, as amended and the rules
and regulations thereunder; the general conduct of any securities
transfer business; the general conduct of any trustee service
business; the general conduct of any insurance business, including but
not limited to acting in the capacity of an insurance agency, to act
as a depositor under any and all forms of trust indentures providing
for the deposit of bonds, stocks, debentures, and any other type of
security and the issuance of beneficial interests in the securities so
deposited and to perform any and all acts necessary or incidental
thereto; to conduct through itself or any associated enterprise in
which it has an interest, a mortgage processing and lending business;
and in general, without limitation of the foregoing, such business as
is usually conducted in the City of New York by so-called stock
exchange and commodity exchange brokers or such business as is
permitted under the Missouri Act. The Partnership may enter into such
financing arrangements and guarantees as the General Partner may deem
appropriate in connection with the business of the Partnership. The
Partnership may act as a partner or shareholder of, or act as an
advisor to, any other organization as the General Partner may deem
advisable. No business, however, shall be conducted which shall be
forbidden by, or be contrary to, any applicable law, or any lawful
rules and regulations, promulgated thereunder, including without
limitation any of the provisions of the Securities Exchange Act of
1934, as amended, or any of the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, or any of
the rules and regulations of the National Association of Securities
Dealers, Inc., or of the constitution, rules, regulations, and
practices of the New York Stock Exchange, Inc. or any other exchange
or exchanges in which the Partnership or its Affiliates may hold a
membership.
2.4 Term and Dissolution.
A. The Partnership shall continue in full force and effect until
December 3l, 2087, or until dissolution prior thereto upon the
happening of any of the following events:
(i) The sale of all of the assets of the Partnership;
(ii) The withdrawal of either Partner; or
(iii) The dissolution of the Partnership by the General Partner.
B. Upon dissolution of the Partnership, the General Partner shall
cause the cancellation of the Partnership's Certificate of Limited
Partnership, liquidate the Partnership's assets and apply and
distribute the proceeds thereof in accordance with Section 8.2 hereof.
2.5 Registered Office and Agent.
The name and address of the Registered Agent and Registered Office for
service of process on the Partnership are set forth in the Certificate
of Limited Partnership.
2.6 Amendment to Certificate of Limited Partnership.
The Certificate of Limited Partnership shall be amended within thirty
days of the admission or withdrawal of a General Partner.
ARTICLE THREE
PARTNERS, CAPITAL AND DEMAND NOTES
3.1 General Partner.
A. The name, last known mailing address and Capital Contribution of
the General Partner are reflected in the books and records of the
Partnership.
B. The General Partner may increase or decrease its Capital
Contribution from time to time.
3.2 Limited Partner.
A. The name, last known mailing address and Capital Contribution of
the Limited Partner are reflected in the books and records of the
Partnership.
B. The Limited Partner shall, if requested by the General Partner,
increase or decrease its capital contribution from time to time.
3.3 Partnership Capital.
A. The total capital of the Partnership shall be the aggregate amount
of the Capital Contributions of the Partners as provided for herein.
B. No Partner shall be paid interest on any Capital Contribution to
the Partnership.
C. Except as otherwise provided herein, prior to dissolution of the
Partnership, no Partner shall have the right to demand the return of
its Capital Contribution. No Partner shall have the right to demand
and receive property other than cash in return for its Capital
Contribution.
D. The General Partner shall have no personal liability for the
repayment of the Capital Contribution of the Limited Partner.
E. The Limited Partner shall contribute its Capital Contribution in
the form of cash or pursuant to a subordination agreement in a form
acceptable to the New York Stock Exchange.
3.4 Liability of the Limited Partner.
The Limited Partner shall only be liable to make the payment of its
Capital Contribution. Except as provided in the Missouri Act, the
Limited Partner shall not be liable for any obligations of the
Partnership.
3.5 Participation in Partnership Business by the Limited Partner.
The Limited Partner shall neither participate in or have any control
over the Partnership business (except as required by law) nor have any
authority or right to act for or bind the Partnership. The Limited
Partner hereby consent to the exercise by the General Partner of the
powers conferred on it by this Agreement.
3.6 Demand Notes and Cash Subordination Agreements.
The General Partner or the Limited Partner may, from time to time,
upon prior approval from the General Partner, execute and deliver a
Secured Demand Note (together with a Secured Demand Note Collateral
Agreement) or a Cash Subordination Agreement to the Partnership in the
form and under the terms and conditions presented by Rule 325 of the
New York Stock Exchange or shall deliver to the Partnership such other
documents as are acceptable to the New York Stock Exchange, and such
Secured Demand Note (together with the Secured Demand Note Collateral
Agreement) or Cash Subordination Agreement or such other documents
shall be treated as a contribution of additional capital (for
regulatory purposes) to the Partnership by the Partner executing and
delivering the same to the Partnership. In conjunction with any such
Secured Demand Notes (and related Secured Demand Note Collateral
Agreements) or Cash Subordination Agreements or such other documents,
the General Partner or Limited Partner may also execute and deliver to
the Partnership in the form and under the conditions and terms
prescribed by Rule 326.13 of the New York Stock Exchange, a
subordination agreement for the purpose of enabling the Partnership to
include in its "net worth", the prescribed value of the securities
held by the Partnership under the Secured Demand Note Collateral
Agreement or such other documents of the General Partner or the
Limited Partner.
ARTICLE FOUR
RIGHTS, POWERS, AND DUTIES OF THE GENERAL PARTNER
4.1 Authorized Acts; Management and Control.
A. The General Partner has the exclusive right to manage the business
of the Partnership and is hereby authorized to take any action
(including, but not limited to, the acts authorized by Section 4.1B
below) of any kind and to do anything and everything in accordance
with the provisions of this Agreement.
B. The General Partner through any of its officers for, in the name
and on behalf of, the Partnership is hereby authorized to take any and
all actions, and to engage in any kind of activity and to perform and
carry out all functions of any kind necessary to, or in connection
with, the business of the Partnership including, but not limited to:
(i) executing any instruments on behalf of the Partnership; (ii)
acquiring or selling assets of the Partnership; (iii) entering into
loans or guarantees in connection with the business of the
Partnership; (iv) acting as a partner or shareholder of, or adviser
to, any other organization; (v) contributing capital, as a limited
partner or as a general partner, or purchasing other securities in or
otherwise investing any limited partnership, general partnership,
corporation or other entity and taking all actions required as a
partner, shareholder or investor in any such entity; or (vi) doing any
other act in furtherance of the purposes of the Partnership
4.2 Time and Effort; Independent Activities.
The General Partner shall devote its full time to the business of the
Partnership. The Limited Partner may engage independently or with
others in other business ventures of every nature and description,
including, without limitation, the ownership, operation, management,
syndication and development of business ventures related to or
competitive with the business of the Partnership. The General Partner
may also, indirectly through subsidiaries or affiliated entities, or
directly, simultaneously independently engage in other related or
unrelated activities. Neither the Partnership nor the other Partner
shall have any rights in or to such independent ventures or the income
or profits derived therefrom.
4.3 Duties and Obligations of the General Partner.
A. The General Partner shall prepare (or cause to be prepared) and
file such amendments to this Agreement or any certificate of limited
partnership as are required by law or as it deems necessary to cause
this Agreement or any certificate of limited partnership to reflect
accurately the agreement of the Partners the identity of the Partners
and the amounts of their respective Capital Contributions.
B. The General Partner shall prepare (or cause to be prepared) and
file such tax returns and other documents, as are required by law or
as it deems necessary, for the operation of the Partnership.
4.4 Liability for Acts and Omissions; Indemnification.
The General Partner shall not be liable, responsible or accountable in
damages or otherwise to the Limited Partner for, and the Partnership
shall indemnify and save harmless the General Partner from any loss or
damage incurred by reason of, any act or omission performed or omitted
by it in good faith on behalf of the Partnership and in a manner
reasonably believed by it to be within the scope of the authority
granted to it by this Agreement and in the best interests of the
Partnership, provided that the General Partner shall not have been
guilty of gross negligence or gross misconduct with respect to such
acts or omissions and, further, provided that the satisfaction of any
indemnification and any saving harmless shall be paid out of and
limited to Partnership assets and no Partner shall have any personal
liability on account thereof.
4.5 Dealing with an Affiliate.
The General Partner may for, in the name of and on behalf of, the
Partnership enter into such agreements, contracts or the like with any
Affiliate of the General Partner or with the General Partner, in an
independent capacity, as distinguished from its capacity (if any) as a
Partner, to undertake and carry out the business of the Partnership as
if such Affiliate or General Partner were an independent contractor;
and the General Partner may obligate the Partnership to pay reasonable
compensation for and on account of any such services.
4.6 Appointment of Special Committee.
Pursuant to rights granted to the General Partner pursuant to Section
4.1 hereof, the General Partner hereby appoints John W. Bachmann,
Darryl L. Pope and the then Managing Partner of The Jones Financial
Companies, a Limited Partnership (at any time the Managing Partner
thereof is not John W. Bahcmann), as committee members of a special
committee of the Partnership, which committee (acting through one or
more of its members) shall have full power and authority on behalf of
the General Partner, at any time and from time to time, (a) to
designate one or more Persons (i) to assign securities registered in
the name of the Partnership, (ii) to execute powers of substitution,
(iii) to guarantee the signatures of others to assignments of
securities and (iv) to make any certification or guarantee of any
signature or document submitted in support of the transfer of any
securities, all with the same effect as if the name of the Partnership
had been signed under like circumstanced by the General Partner, (b)
to adopt and authorize the use of a mechanically reproduced facsimile
signature of the Partnership in connection with (i) the assignment of
securities registered in the name of the Partnership and (ii) the
execution of powers of substitution and (c) to designate one or more
Persons to sign written contracts covering "seller's option," "when
issued," and "when distributed" transactions in the name of the
Partnership with the same effect as if the name of the Partnership had
been signed under like circumstances the General Partner, any and all
such powers of attorney, agreements, and other instruments (including
agreements of idemnification) as may be required to evidence or
support action under (a), (b), or (c) above.
ARTICLE FIVE
WITHDRAWAL OF A PARTNER
Neither Partner shall have the right to retire or voluntarily withdraw
from the Partnership without the prior written consent of the other
Partner.
ARTICLE SIX
RESTRICTIONS ON RETURN OF CAPITAL CONTRIBUTIONS
AND CERTAIN OTHER TRANSACTIONS
A. The Limited Partner may by written notice to the General Partner
request that all or a portion of its Capital Contribution be returned
prior to the maturity of its Cash Subordination Agreement; however,
the General Partner may, in its absolute discretion, refuse to return
all or any portion of such Capital Contribution to the Limited Partner
until the Partnership is dissolved pursuant to Section 2.4 hereof.
B. It is understood and agreed that the Capital Contributions of the
Partners to the Partnership will be used, in part, by the Partnership
as part of the Partnership's required capital as a brokerage firm
regulated by the Securities and Exchange Commission and the New York
Stock Exchange and other regulatory agencies. Therefore,
notwithstanding any other provision contained in this Agreement to the
contrary, no Partner shall have returned to it (under any provision of
this Agreement) its Capital Contribution, if after giving effect
thereto, the Partnership be in violation of (i) any rule of the New
York Stock Exchange Inc., (ii) any rule issued under the Securities
Exchange Act of 1934, (iii) any agreement (cash subordination or
otherwise) which has been entered into by the Partnership or (iv) any
other law, rule or regulation to which the Partnership is subject. In
the event there is returned to any Partner all or any portion of its
Capital Contribution and because of such return the Partnership
violated any of the aforementioned rules, agreements or regulations,
then such Partner hereby irrevocably agrees (whether or not such
Partner had any knowledge or notice of such facts at the time of such
return) to repay to the Partnership, its successors or assigns, the
sum so returned to such Partner to be held by the Partnership pursuant
to the provisions hereof as if such return had never been made;
provided, however, that any suit for the recovery of any such return
must be commenced within two years of the date of such return.
C. Notwithstanding any other provision contained herein, no Partner
shall, without the prior written approval of the New York Stock
Exchange, Inc. and without the prior written approval of the General
Partner, withdraw its Capital Contribution to the Partnership on less
than six (6) months written notice, given no sooner than six (6)
months after such contribution was first made, of its intent to
withdraw such Capital Contribution; provided, however, that the
Capital Contribution of any Partner may not be withdrawn nor may any
unsecured advance or loan to the Partnership which qualifies as
capital under Rule 15c3-1 promulgated under the Securities Exchange
Act of 1934 be withdrawn nor may any unsecured advance or loan be made
to a Partner or employee or any Affiliate hereof, if, after giving
effect thereto and to any other withdrawals, advances, or loans which
are scheduled to occur within six (6) months following such
withdrawal, advance, or loan, the Partnership would be in violation of
said Rule.
D. Notwithstanding anything to the contrary contained in this
Agreement, in the event of the termination of the Partnership on the
expiration of the term of this Agreement, or any extension or renewal
thereof, each Partner agrees if withdrawals of Capital Contributions
on any such termination would cause the Partnership's capital position
to violate Rules 326(a) and 326(b) of the Rules of the Board of
Directors of the New York Stock Exchange, Inc. during the six (6)
months immediately preceding the date of termination, such withdrawals
may be postponed for a period of up to six (6) months from the state
date of termination, as the General Partner may deem necessary to
insure compliance with said Rules and any such Capital Contributions
so retained by the Partnership after the date of termination shall
continue to be subject to all debts and obligations of the
Partnership.
E. The Partnership will not, and it will not permit any Subsidiary of
the Partnership (as defined in the Note Purchase Agreement as of April
15, 1986 relating to the 9-3/8% Secured Guaranteed Notes due 1996 of
Tempus Corporation and the 9-3/8% Capital Notes due 1996 of Edward D.
Jones & Co., the Note Purchase Agreement dated as of March 15, 1988
relating to the 10.60% Secured Guaranteed Notes due 1997 of Tempus
Corporation and the 10.60% Capital Notes due 1997 of Edward D. Jones &
Co., L.P. and the Note Purchase Agreement dated as of May 1992
relating to the 8.96% Subordinated Capital Notes due 2002 of Edward D.
Jones & Co., L.P.) [referred to herein collectively as the "Note
Agreements"] to, directly or indirectly, incur, assume or otherwise
become or be or remain liable to any partner, officer or director, or
any former partner, officer or director, of the Partnership or any
subsidiary, or to the heir or legal representatives of any such
person, with respect to any Indebtedness (as defined in the Note
Agreements) relating to such person's status as a partner, director or
officer of the Partnership or any subsidiary (but excluding in any
event Indebtedness with respect to any account of such person or such
heirs or legal representatives or transactions and securities or
commodities), unless such Indebtedness shall be subordinated to the 9-
3/8% Capital Notes due 1996, the 10.60% Capital Notes due 1997, the
8.96% Subordinated Capital Notes due 2002, the 9-3/8% Secured
Guaranteed Notes due 1996, the 10.60% Secured Guaranteed Notes due
1997 and the Guarantees (as contained in the Note Agreements) to at
least the same extent as the 9-3/8% Capital Notes due 1996, the 10.60%
Capital Notes due 1997 and the 8.96% Subordinated Capital Notes and
the related Guarantees, are subordinated to the claims of general
creditors as contained in the Note Agreements.
ARTICLE SEVEN
TRANSFERABILITY OF PARTNER INTERESTS
7.1 Restrictions on Transfer.
A. Each Partner agrees that it will not sell, pledge exchange,
transfer or assign its interest in the Partnership to any Person
without the express written consent of the other Partner.
B. Any sale, exchange, assignment or other transfer in contravention
of any of the provisions of this Section 7.l shall be void and
ineffectual and shall not bind or be recognized by the Partnership.
7.2 Substituted Limited Partners.
No Limited Partner shall have a power to grant the right to become a
substituted Limited Partner to an assignee of any part of such Limited
Partner's Partnership interest.
ARTICLE EIGHT
DISTRIBUTIONS AND ALLOCATIONS
8.1 Distribution of Net Income.
A. All Net Income, if any, of the Partnership for each calendar year
shall (except for Net Income generated in any transaction in
connection with the dissolution and liquidation of the Partnership) be
distributed 99% to the Limited Partner and 1% to the General Partner.
B. In any year in which there is a Net Loss and the Partnership is not
dissolved and liquidated in accordance with Section 8.2 hereof, such
Net Loss, on the books of the Partnership, shall be borne 99% by the
Limited Partner and 1% by the General Partner. Any such Net Losses
borne by the Limited Partner shall only be applied against and reduce
its Capital Contribution. The total amount of all such Net Losses to
be borne by the Limited Partner may never exceed the total amount of
the Capital Contributions of the Limited Partner as shown on the books
of the Partnership.
C. Notwithstanding any other provision of this Agreement to the
contrary, the aggregate interest of the General Partner in each
material item of Partnership income, gain, loss, deduction, preference
or credit shall be equal to at least one percent (1%) of each such
item at all times during the existence of the Partnership.
D. Notwithstanding any other provision of this Agreement to the
contrary, the General Partner, in its sole and absolute discretion,
may withhold cash distributions to the Partners if the General Partner
determined that such cash should be retained by the Partnership for
working capital or other purposes.
It is intended that a sum ranging between 15%-35% of the Net Income of
the Partnership will be retained by the Partnership as additional
equity for qualified net capital and shall be credited as additions to
the capital accounts of the General Partner and Limited Partner in the
same proportion equal to their entitled share of distributions
described above. Notwithstanding the foregoing, the decision of
whether to make this retention of capital in accordance with this
Section or whether to vary the amount of capital to be retained in any
year, is vested in the General Partner, and it is agreed that its
decision in this matter shall be final.
8.2 Cash Distributions Upon Dissolution.
A. Upon the dissolution of the Partnership as a result of the
occurrence of any of the events set forth in Section 2.4 hereof, the
General Partner shall proceed to liquidate the Partnership, and the
proceeds of liquidation (the "Proceeds of Liquidation") shall be
applied and distributed in the following order of priority:
(i) To the payment of debts and liabilities of the Partnership,
including accrued salaries and the expenses of liquidation.
(ii) To the repayment of the 9-3/8% Capital Notes due 1996, the 10.60%
Capital Notes due 1997 and the 8.96% Subordinated Capital Notes due
2002.
(iii) To the payment of any accrued but unpaid amounts due under
Section 8.1 hereof.
(iv) To the repayment of the Capital Contribution of the Limited
Partner.
(v) To the repayment of the Capital Contribution of the General
Partner.
(vi) The balance of the Proceeds of Liquidation, if any, shall be
distributed 99% to the Limited Partner and 1% to the General Partner.
B. Notwithstanding the foregoing, in the event the General Partner
shall determine that an immediate sale of part or all of the
Partnership assets would cause undue loss to the Partners, the General
Partner, in order to avoid such loss, may either defer liquidation of,
and withhold from distribution for a reasonable time, any assets of
the Partnership except those necessary to satisfy the Partnership
debts and obligations, or distribute the assets to the Partners in
kind.
C. Net Income generated by transactions in connection with the
dissolution and liquidation of the Partnership shall be allocated in
accordance with Section 8.2A hereof.
8.3 Allocation of Profits and Losses for Tax Purposes.
A. Except as provided in Sections 8.3B,C or D hereof, all Profits And
Losses For Tax Purposes of the Partnership shall be allocated 99% to
the Limited Partner and l% to the General Partner, provided however,
if any allocation of loss or deduction would reduce the Limited
Partner's Capital Account below zero (determined after taking into
account all prior or contemporaneous cash distributions and all prior
or contemporaneous allocations of income, gain, loss, deduction or
credit and as determined at the close of the taxable year in respect
of which such loss or deduction is to be allocated), such excess
losses or deductions shall be allocated to the General Partner; and
provided further however, that the General Partner shall not be
allocated any income, gain or loss with respect to the amount of the
Partnership's unrealized receivables (within the meaning of Section
751(c) of the Internal Revenue Code) or inventory items which have
appreciated substantially in value (within the meaning of Section
751(d) of the Internal Revenue Code) on the date such General Partner
first became a Partner hereof. For purposes of this provision, the
term "Partnership" shall include any subsidiary partnerships.
B. The General Partner is authorized to allocate Profits and Losses
For Tax Purposes arising in any calendar year differently than
otherwise provided for in this Article Eight to the extent the General
Partner determines, in his discretion, that such modifications are
appropriate to cause the allocations to comply with the principles of
Section 704 of the Internal Revenue Code and such modifications are in
the overall best interests of the Partners. Any allocation made
pursuant to this Section 8.3B shall be deemed to be a complete
substitute for any allocation otherwise provided for in this Article
Eight and no amendment of this Agreement or approval of any Partner
shall be required.
C. Notwithstanding any other provisions of this Agreement to the
contrary, if the amount of any Partnership Minimum Gain at the end of
any taxable year is less than the amount of such Partnership Minimum
Gain at the beginning of such taxable year, there shall be allocated
to any Partner having a negative Capital Account at the end of such
taxable year (determined after taking into account any adjustments,
allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) gross income and gain
(in respect of the current taxable year and any future taxable year)
in an amount sufficient to eliminate such negative Capital Account in
compliance with Treasury Regulations Section 1.704-1(b)(4)(iv)(e).
Such allocation of gross income and gain shall be made prior to any
other allocation of profits and losses for tax purposes. Any such
allocation of gross income or gain pursuant to this Section 8.3C shall
be in proportion with such negative Capital Accounts of the Partners
and such allocations of gross income and gain shall be taken into
account, to the extent feasible, in computing subsequent allocations
of Profits and Losses For Tax Purposes of the Partnership so that the
net amount of all items allocated pursuant to each Partner pursuant to
this Article Eight shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Partner pursuant to
the provisions of this Article Eight if the allocations made pursuant
to the first sentence of this Section 8.3C had not occurred.
D. Notwithstanding any other provisions of this Agreement to the
contrary, except as provided in Section 8.6C hereof, if any Partner
receives any adjustment, allocations, or distributions described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that
reduces any Partner's Capital Account below zero or increases the
negative balance in such Partner's Capital Account, gross income and
gain shall be allocated to such Partner in an amount and manner
sufficient to eliminate any negative balance in his Capital Account
created by such adjustments, allocations, or distributions as quickly
as possible in accordance with Treasury Regulations Section 1.704-
1(b)(2)(ii)(d). Any such allocation of gross income or gain pursuant
to this Section 8.3D shall be in proportion with such negative Capital
Accounts of the Partners. Any allocations of items of gross income or
gain pursuant to this Section 8.3D shall (i) not duplicate any
allocations of gross income or gain made pursuant to Section 8.3C
hereof, and (ii) be taken into account, to the extent feasible, in
computing subsequent allocations of Profits and Losses For Tax
Purposes of the Partnership, so that the net amount of all items
allocated to each Partner pursuant to this Article Eight shall, to the
extent possible, be equal to the net amount that would have been
allocated to each such partner pursuant to the provisions of this
Article Eight if such adjustments, allocations or distributions had
not occurred.
E. If and to the extent upon dissolution of the Partnership pursuant
to Section 2.4 hereof the allocations under Section 8.3A are
inconsistent with the following provision, then such allocations shall
be adjusted to conform to the following provision: income and gain
(whether ordinary income, gain under Section 1231 of the Code, or
capital gain) from disposition of all remaining Partnership assets
shall be allocated among the Partners so that the positive balance of
each Partner's Capital Account is equal to the cash to be distributed
to such Partner pursuant to Article 8.2 determined after all Capital
Accounts have been adjusted to reflect the allocations of Profits and
Losses For Tax Purposes of the Partnership and cash distributions made
pursuant to Section 8.1 hereof.
ARTICLE NINE
BOOKS, RECORDS AND REPORTS,
ACCOUNTING, TAX ELECTIONS, ETC.
9.1 Books, Records and Reports.
A. Proper and complete records and books of account shall be kept (or
caused to be kept) by the General Partner in which shall be entered
all transactions and other matters relative to the Partnership's
business. The Partnership's books and records shall be prepared in
accordance with generally accepted accounting principles, consistently
applied. The books and records shall at all times be maintained at
the principal office of the Partnership and shall be open for
examination and inspection by the Partners or by their duly authorized
representatives during reasonable business hours. In particular, the
following books and records shall be kept:
(i) a current list and a past list of the full names and last known
mailing address of each Partner, specifying the General Partners and
the Limited Partners in alphabetical order, including the date of
admission or withdrawal of each Partner. To the extent provided by
the Missouri Act, these lists shall be provided to the Secretary of
State of Missouri, without cost, upon his written request;
(ii) a copy of the Certificate of Limited Partnership and all
Certificates of Amendment thereto, together with executed copies of
any Powers of Attorney pursuant to which any Certificate has been
executed;
(iii) copies of the Partnership's federal, state and local income tax
returns and reports, if any, for the three most recent fiscal years;
and
(iv) copies of any written Partnership Agreements in effect and any
financial statements of the Partnership for the three most recent
years.
B. The General Partner shall have prepared at least annually, at the
Partnership's expense, financial statements (balance sheet, statement
of income or loss, partners' equity, and changes in financial
position) prepared in accordance with generally accepted accounting
principles which shall fairly reflect the Partnership's financial
position at the date shown and its results of operations for the
period indicated. Copies of such statements and report shall be made
available to the Partners annually.
C. The General Partner shall have prepared at least annually, at the
Partnership's expense, a report containing Partnership information
necessary in the preparation of the Partners' federal income tax
return. Copies of such report shall be distributed to each Partner as
promptly as possible.
9.2 Bank Accounts.
The bank accounts of the Partnership shall be maintained in such
banking institutions as the General Partner shall determine, and
withdrawals shall be made only in the regular course of Partnership
business on such signature or signatures as the General Partner may
determine.
9.3 Depreciation and Elections.
A. All elections required or permitted to be made by the Partnership
under the Internal Revenue Code shall be made by the General Partner.
B. Notwithstanding anything to the contrary in this Section 9.3, the
General Partner shall not be responsible for initiating any change in
accounting methods from the methods initially chosen.
C. The General Partner is hereby designated as the "Tax Matters
Partner" under Section 6231(a)(7) of the Internal Revenue Code.
9.4 Fiscal Year.
The fiscal year of the Partnership shall be the calendar year for tax
purposes.
ARTICLE TEN
GENERAL PROVISIONS
10.1 Appointment of Attorneys-in-Fact.
A. The Limited Partner, by the execution hereof, hereby irrevocably
constitutes and appoints the General Partner its true and lawful
attorney-in-fact, with full power and authority in its name, place and
stead, to execute or acknowledge under oath, deliver, file and record
at the appropriate public offices such documents as may be necessary
or appropriate to carry out the provisions of this Agreement
including:
(i) All certificates and other instruments (including this Agreement
or any certificate of limited partnership and any amendment thereof)
which the General Partner deems appropriate to qualify or continue the
Partnership as a limited partnership under the Missouri Act (or a
partnership in which the Limited Partner will have limited liability
comparable to that provided by the Missouri Act) or under the laws of
any other jurisdiction in which the Partnership may conduct business;
(ii) All amendments to this Agreement or any certificate of limited
partnership which are required to be filed or which the General
Partner deems to be advisable to file;
(iii) All instruments which the General Partner deems appropriate to
reflect a change or modification of the Partnership in accordance with
the terms of this Agreement;
(iv) All conveyances and other instruments which the General Partner
deems appropriate to reflect the dissolution and termination of the
Partnership; and
(v) All other instruments, documents or contracts (including, without
limiting the foregoing, any deed, lease, mortgage, note, bill of sale,
contract, trust agreement, guarantee, partnership agreement,
indenture, underwriting agreement or any instrument or documentation
which may be required to be filed (or which the General Partner deems
advisable to file) by the Partnership under the laws of any state or
by any governmental agency) requisite to carrying out the intent and
purpose of this Agreement and the business of the Partnership and its
Affiliates.
B. The appointment by the Limited Partner of the General Partner as
attorney-in-fact shall be deemed to be a power coupled with an
interest in recognition of the fact that each of the Partners under
this Agreement will be relying upon the power of the General Partner
to act as contemplated by this Agreement in any filing and other
action by them on behalf of the Partnership.
10.2 Word Meanings.
The words such as "herein", "hereinafter", "hereof", and "hereunder"
refer to this Agreement as a whole and not merely to a subdivision in
which such words appear unless the context otherwise requires. The
singular shall include the plural and the masculine gender shall
include the feminine and neuter, and vice versa, unless the context
otherwise requires.
10.3 Binding Provisions.
The covenants and agreements contained herein shall be binding upon,
and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
10.4 Applicable Law.
This Agreement shall be construed and enforced in accordance with the
laws of the State of Missouri.
10.5 Counterparts.
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same
counterpart, except that no counterpart shall be binding unless signed
by the General Partner.
10.6 Entire Agreement.
This Agreement contains the entire agreement between the parties and
supersedes all prior writings or representations.
10.7 Separability of Provisions.
Each provision of this Agreement shall be considered separable and if
for any reason any provision or provisions hereby are determined to be
invalid or unenforceable such validity or unenforceability shall not
impair the operation of or affect any other portion of this Agreement
and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision was omitted.
10.8 Section Titles.
Paragraph titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the
text.
10.9 Amendments.
This Agreement may be amended, from time to time by the written
agreement of the Limited Partner and the General Partner provided,
however, that the provisions of Section 10.10 hereof shall not be
amended without the prior written consent of the holders of 66-2/3% in
aggregate principal amount of the Capital Notes.
10.10 Payments Prohibited.
The Partnership shall not (i) return to either Partner all or any
portion of its Capital Contribution or (ii) make any distribution of
Net Income at any time when a default in the payment of the principal
of or premium or interest on any of the 15% Capital Notes Due 1992,
the 9-3/8% Capital Notes Due 1996 or the 10.60% Capital Notes Due 1997
of the Partnership (the "Capital Notes") or any indebtedness for money
borrowed of the Partnership ranking on a parity with such Notes shall
have occurred and be continuing; and any such act shall constitute a
violation of this Agreement prohibited by Article Six (B)(iii).
IN WITNESS WHEREOF, the undersigned has executed this Fourth Amended
and Restated Agreement of Limited Partnership as of the day and year
first above written.
GENERAL PARTNER:
EDJ HOLDING COMPANY, INC.
By:
Vice President
LIMITED PARTNER:
THE JONES FINANCIAL COMPANIES,
a Limited Partnership
By: John W. Bachmann
Managing Partner
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT ("Lease") is made and entered into by and
between EDJ LEASING CO., a Missouri limited partnership, hereinafter
referred to as "Landlord" and EDWARD D. JONES & CO., a Missouri
limited partnership, hereinafter referred to as "Tenant".
WITNESSETH:
1. Premises and Term.
In consideration of the obligation of Tenant to pay rent as herein
provided, and in consideration of the other terms,provisions and
covenants hereof, Landlord hereby demises and leases to Tenant and
Tenant hereby accepts and leases from Landlord certain Premises
situated in Des Peres, Missouri, and more particularly described on
Exhibit "A" attached hereto and incorporated herein by reference,
together with all rights, privileges, easements, appurtenances and
immunities belonging to or in any way pertaining to the Premises and
together with the buildings and other improvements situated upon said
Premises (said real property, buildings and improvements hereinafter
referred to as the "Premises").
Landlord hereby assigns to Tenant and Tenant hereby assumes and agrees
to take the Premises subject to all existing Tenant leases in the
Premises (collectively referred to as "Space Leases") and Landlord
shall simultaneously with the execution of this Lease, deliver to
Tenant the original copies of all Space Leases and Tenant shall have
the right to collect all rents and charges arising therefrom. Landlord
hereby transfers to Tenant all security deposits for all Space Leases
and Tenant agrees to assume the Landlord's duties and liabilities
arising under the Space Leases from and after the date hereof.
TO HAVE AND TO HOLD the same for a term commencing and ending as
described on Exhibit "B". Tenant acknowledges that it has inspected
and accepts the Premises, and specifically the buildings and
improvements comprising the same, in their present condition as
suitable for the purpose for which the Premises are leased. Taking of
possession by Tenant shall be deemed conclusively to establish that
said buildings and other improvements are in good and satisfactory
condition as of when possession was taken. Tenant further acknowledges
that no representations as to the repair of the Premises nor promises
to alter, remodel or improve the Premises have been made by Landlord
unless such are expressly set forth in this Lease.
2. Rent.
Tenant agrees to pay to Landlord rent for the Premises, in advance,
without demand, deduction or set-off, for the entire term hereof as
set forth on Exhibit "B". An $132,500.00 installment shall be due and
payable on the date hereof ("Commencement Date") and a like
$132,500.00 installment shall be due and payable on or before the
first day of each calendar month succeeding the Commencement Date
recited above during the hereby demised term, except that the rental
payment for any fractional month at the commencement or end of the
Lease period shall be prorated.
3. Use and Governmental Compliance.
The demised Premises may be used for any lawful purpose. Tenant shall
at its own cost and expense obtain any and all licenses and permits
necessary for any such use. Tenant shall comply with all governmental
laws, ordinances and regulations applicable to the use of the
Premises, and shall promptly comply with all governmental orders and
directives for the correction, prevention and abatement of nuisances
in or upon or connected with, the Premises, all at Tenant's sole
expense. Tenant shall not permit any objectionable or unpleasant
odors, smoke, dust, gas, noise or vibrations to emanate from the
Premises, nor take any other action which would constitute a nuisance
or would disturb or endanger any other tenants of the building in
which the Premises are situated or unreasonably interfere with their
use of their respective Premises. Without Landlord's prior written
consent, Tenant will not permit the Premises to be used for any
purpose or in any manner (including without limitation any method of
storage) that would render the insurance thereon void or the insurance
risk more hazardous.
4. Taxes.
A. Tenant agrees to pay as additional rental, before they become
delinquent, all taxes, assessments and governmental charges of any
kind and nature whatsoever (hereinafter collectively referred to as
"taxes") lawfully levied or assessed against the building and the
grounds, parking areas, driveways and alleys around the building.
B. Tenant shall have the right to employ at Tenant's expense, a tax
consulting firm to attempt to assure a fair tax burden on the building
and grounds within the applicable taxing jurisdiction.
C. Tenant shall have the right to contest the amount or validity of
any tax by appropriate legal proceedings, but such right shall not be
deemed or construed in any way as relieving Tenant of its covenant to
pay any such tax. Landlord shall join in any such proceeding to the
extent necessary to permit Tenant to properly prosecute the same,
provided, however, that Landlord shall not be subjected to any such
proceeding brought by Tenant, and Tenant hereby covenants to defend,
indemnify and hold Landlord harmless from any such costs or expenses.
D. Any payment to be made pursuant to this Section 4 with respect to
the real estate tax year in which this Lease commences or terminates
shall be prorated.
E. Nothing contained in this Lease shall require Tenant to pay any
franchise, estate, inheritance, succession, capital levy or transfer
tax of Landlord, of any income, excess profits or revenue tax or any
other tax, assessment, charge or levy upon the rent payable by Tenant
under this Lease.
5. Tenant's Repairs.
A. Tenant shall promptly make all necessary repairs and replacements
to the Premises at Tenant's own cost and expense, including but not
limited to, the roof, exterior walls, foundation, structural
components, windows, glass and plate glass, doors, any special office
entry, interior walls and finish work, floors and floor covering,
downspouts, gutters, heating and air conditioning systems, dock
boards, truck doors, dock bumpers, paving, plumbing work and fixtures,
termite and pest extermination, regular removal of trash and debris,
regular mowing of any grass, trimming, weed removal and general
landscape maintenance, including rail spur areas, keeping the parking
areas, driveways, alleys and the whole of the Premises in a clean and
sanitary condition and Tenant shall be responsible for all management
services for the Premises. Tenant may hire a reputable, established
property manager acceptable to Landlord.
B. Tenant shall not damage any demising wall or disturb the integrity
and support provided by any demising wall and shall, at its sole cost
and expense, promptly repair any damage or injury to any demising wall
caused by Tenant or its employees, agents or invitees.
C. The Premises constitute a portion of a multiple occupancy Real
Property and accordingly Tenant and its employees, customers and
licensees shall have the non-exclusive right to use all of the parking
areas and drives described in Exhibit A,subject to such reasonable
rules and regulations as Landlord may from time to time prescribe and
subject to rights of ingress and egress of other tenants. Landlord
shall not be responsible for enforcing Tenant's parking rights against
any third parties. Further, in multiple occupancy buildings, Landlord
reserves the right to perform the paving and landscape maintenance,
exterior painting and common sewage line plumbing that are otherwise
Tenant's obligations under subsection A above, and Tenant shall, in
lieu of the obligations set forth under subsection A above with
respect to such items, be liable for its proportionate share of the
cost and expense of the care of the common areas of the Real Property,
including but not limited to the mowing of grass, care of shrubs,
general landscaping, maintenance of parking areas, driveways and
alleys, exterior repainting and common sewage line plumbing; provided,
however, that Landlord shall have the right to require Tenant to pay
such other reasonable proportion of said mowing, shrub care and
general landscaping costs as may be determined by Landlord in its
reasonable discretion. Tenant shall pay when due its share, determined
as aforesaid, of such costs and expenses along with the other tenants
of the Real Property to Landlord upon demand, as additional rent for
the amount of its share as aforesaid of such costs and expenses in the
event Landlord elects to perform or cause to be performed such work.
D. Landlord shall, and hereby does, assign to Tenant all warranties
and guarantees involving the Premises or its components available to
the Landlord from any contractors, subcontractors, materialmen and
suppliers involved in the construction of the Premises.
6. Alterations.
A. Tenant may, at Tenant's sole expense, make any and all alterations,
additions or improvements to the Premises (including but not limited
to roof and wall penetrations) without the prior consent of Landlord
(all referred to as "Alterations"); provided that no Alteration shall
at any time be made which (1) shall impair the structural soundness or
diminish the value of the Buildings or the Premises, or (2) shall
cause any default under the Deed of Trust described on Exhibit B,
affecting the Premises, said Deed of Trust hereinafter referred to as
"Mortgage".
B. Except as provided in subsection C, all Alterations made on or to
the Premises by or on behalf of Tenant and in existence upon the
termination of this Lease shall immediately upon such termination be
and become the property of Landlord without payment therefor by
Landlord.
C. All machinery and equipment, trade fixtures, movable partitions,
furniture, machinery and furnishings installed by Tenant or subtenants
or licensees of Tenant (in this Subsection collectively referred to as
"owner") shall remain the property of the owner thereof with the right
of removal, whether or not affixed and/or attached to the real estate
and the owner thereof shall be entitled to remove the same or any part
thereof during the term or at the end of the term provided herein, or
if the term shall end prior to the date specifically fixed for such
termination, then within a reasonable time thereafter.
D. Tenant shall indemnify and hold Landlord harmless against any and
all costs and expenses which Tenant may incur in connection with any
construction of any Alterations effected by Tenant or subtenants and
licensees of Tenant on or at the Premises. All such work shall be done
in a good and workmanlike manner in compliance with all applicable
building, zoning and/or other laws, ordinances, governmental
regulations or requirements.
7. Inspections.
Landlord and Landlord's agents and representatives shall have the
right to enter and inspect the Premises at any reasonable time during
business hours, for the purpose of ascertaining the condition of the
Premises. During the period that is three months prior to the end of
the term hereof, Landlord and Landlord's agents and representatives
shall have the right to enter the Premises at any reasonable time
during business hours for the purpose of showing the Premises and
shall have the right to erect on the Premises a suitable sign
indicating the Premises are available. Tenant shall give written
notice to Landlord at least 45 days prior to vacating the Premises and
shall arrange to meet with Landlord for a joint inspection of the
Premises prior to vacating. In the event of Tenant's failure to give
such notice or arrange such joint inspection, Landlord's inspection at
or after Tenant's vacating the Premises shall be conclusively deemed
correct for purposes of determining Tenant's responsibility for
repairs and restoration.
8. Utilities.
Tenant shall pay for all sewer, water, gas, electricity, telephone,
sprinkler charges and other utilities and services used on or from the
Premises, together with any taxes, penalties, surcharges or the like
pertaining thereto and any maintenance charges for utilities. If any
such services are not separately metered to Tenant, Tenant shall pay a
reasonable proportion as determined by Landlord of all charges jointly
metered with other premises under the Space Leases. Landlord shall in
no event be liable for any interruption or failure of utility services
on the Premises.
9. Subletting.
Tenant shall have the right to sublet the whole or any part of the
Premises without the prior consent of Landlord but subject to the
lender's rights pursuant to the Mortgage. But no such sublease shall
release the Tenant of its obligations.
10. Fire, Casualty and Liability Insurance.
A. All fire, casualty and liability insurance shall be maintained in
compliance with the Mortgage. All costs and payments incurred as a
result of maintaining said insurance shall be borne by the Tenant.
B. Landlord may with Tenant's consent, procure and maintain the
insurance coverages described above and may do so by way of blanket
insurance policies, subject to 10A. above. In such event, Tenant
agrees to pay to Landlord, as additional rental, Tenant's full
proportionate share of such insurance cost. Said payments shall be
made to Landlord within 10 days after presentation to Tenant of
Landlord's statement setting forth the amount due. Any payment to be
made pursuant to this Subsection with respect to the year in which
this Lease commences or terminates shall bear the same ratio to the
payment that would be required to be made for the full year as the
part of such year covered by the term of this Lease bears to a full
year.
11. Liability and Indemnity.
A. Landlord shall not be liable to Tenant or Tenant's employees,
agents, patrons or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the Premises,
resulting from and/or caused in part or whole by the negligence or
misconduct of Tenant, its agents, servants or employees, or of any
other person entering upon the Premises, including claims arising from
a lack of or insufficient security to protect invitees of the Premises
from the criminal acts of third parties, or caused by the buildings
and improvements located on the Premises becoming out of repair, or
caused by leakage of gas, oil, water or steam or by electricity
emanating from the Premises, or due to any cause whatsoever, and
Tenant hereby covenants and agrees that it will at all times indemnify
and hold safe and harmless the property, Landlord (including without
limitation the trustee and beneficiaries if Landlord is a trust),
Landlord's agents and employees from any loss, liability, claims,
suits, costs, expenses, including without limitation attorneys' fees
and damages, both real and alleged, arising out of any such damage or
injury; except injury to persons or damage to property the sole cause
of which is the negligence of Landlord.
B. Landlord hereby releases Tenant and Tenant hereby releases Landlord
from and against any and all claims, demands, liabilities or
obligations whatsoever for damage to the Premises or loss of rents or
profits of either Landlord or Tenant resulting from or in any way
connected with any fire or accident or other casualty whether or not
such fire, accident or other casualty shall have been caused by the
negligence or contributory negligence of any of Landlord or Tenant or
by any agent, associate, employee or invitee of any of them, to the
extent that such damage or loss is covered under any insurance policy
which at the time of such damage or loss permits waiver of subrogation
rights prior to a loss thereunder. Landlord and Tenant agree to use
due diligence to obtain any necessary endorsement on any insurance
policies in order to obtain the result desired under Section 11.
12. Damage or Destruction.
A. If the building or improvements situated upon the Premises should
be damaged or destroyed by fire, tornado or other casualty, Tenant
shall give immediate written notice thereof to Landlord.
B. Except as may be otherwise specifically provided in this section,
this Lease shall not be terminated or affected in any way by any
damage or destruction to the Premises. In the event of any damage or
destruction to the Premises, by fire or other casualty, rent due
hereunder shall not be abated in any manner and Tenant (subject to the
availability of insurance proceeds and other funds under the
provisions of Subsection E hereof) shall diligently proceed to repair
any damage or destruction and to rebuild and replace the Premises to
the condition in which it existed prior to said damage or destruction.
Provided, however, that in the event any amount is paid to Landlord or
its mortgagee from any rental insurance policy maintained by Tenant,
the amount of rental insurance proceeds payable to landlord or its
mortgagee shall be credited against rental payments required to be
made by Tenant hereunder and the rent paid by Tenant shall be reduced
by such amount.
C. Subject to any contrary provisions of the Mortgage subsequently
placed upon the Premises, which shall take precedence over the
following clause (but only so long as said Mortgage is in effect), and
notwithstanding the foregoing, in the event that 15% or more of the
Building is damaged or destroyed during the term of this Lease or any
extension, then either party may terminate this Lease by giving the
other party written notice of its election to terminate on or before
30 days following the date of such damage or destruction. The
effective date of such termination shall be the date of notice
provided that a later time may be specified in Tenant's notice of
termination to Landlord. Notwithstanding the foregoing, any such
election by Landlord to terminate this Lease shall be null and void
and of no force or effect if Tenant, within 30 days after receipt of
Landlord's notice to so terminate, exercises one or more options to
extend the term of this Lease in which event, Tenant shall rebuild and
repair pursuant to this Section 12. In the event of such termination,
Tenant shall assign all insurance and other proceeds payable as a
result of such damage or destruction to the Landlord and Tenant shall
have no further rights in any such insurance proceeds (other than
those proceeds payable to Tenant as a result of any damage or
destruction to any personal property or trade fixtures or machinery or
equipment belonging to Tenant and allowed to be removed from the
Premises by Tenant under the terms of this Lease) and this Lease shall
thereafter terminate and be of no further force or effect.
D. Landlord shall make all insurance proceeds available for repair and
rebuilding of the Premises and shall cooperate with Tenant in order to
obtain such proceeds from any insurer; provided that Landlord and
Tenant shall be subject to the terms and conditions on the
availability and use of said insurance proceeds imposed by the holder
of any such Mortgage.
E. Subject to any additional requirements, conditions or approvals
contained in the Mortgage which shall control as long as said Mortgage
is in effect, proceeds of insurance or amounts in lieu thereof paid by
Landlord for rebuilding or repair of the Premises shall be paid from
time to time as the work progresses subject to the following
conditions:
(1) Tenant shall not be in default under this Lease;
(2) Tenant shall pay the cost of such repairs in excess of the amount
of insurance proceeds and deposit the difference between the cost of
repairs and amount of insurance proceeds with Landlord so that there
are sufficient funds on deposit at all times with Landlord to complete
the repairs as certified by an architect approved by Landlord provided
that so long as the Mortgage is in effect Tenant shall continue its
payment without any reduction for said credit;
(3) Tenant shall provide suitable completion and performance bonds and
builder's all-risk insurance;
(4) Such other conditions as would customarily be required by a local
construction lender, or are otherwise reasonable.
F. Tenant assumes all risks of any damage to Tenant's property that
may occur by reason of water or the bursting or the leakage of any
pipes or waste water upon the Premises or from any act of negligence
of any other person, or fire or hurricane or other act of God or from
any cause whatsoever.
13. Condemnation.
A. Condemnation means the taking of all or any part of the Premises or
possession thereof under the power of eminent domain; or the voluntary
sale of all or any part of the Premises to any person having the power
of eminent domain, provided that the Premises or a portion thereof is
then under the threat of condemnation.
B. Subject to any contrary provisions in the Mortgage which shall
control as long as said Mortgage is in effect, if during the term of
this Lease, 15% or more of the building on the Premises is taken by
condemnation or if the parking spaces on the Premises are reduced by
more than 15% as a result of condemnation then at the option of Tenant
this Lease shall terminate and the rent shall be abated during the
unexpired portion of the term, effective on the date of vesting of
title in the condemning authority. The option to terminate in this
section must be exercised within 30 days following the date of vesting
of title in the condemning authority or shall be deemed to be waived.
C. If during the term of this Lease, less than 15% of the buildings on
the Premises are taken by condemnation or parking spaces on the
Premises are reduced by 15% or less as a result of condemnation or if
Tenant does not elect to terminate this Lease as provided in Section B
above, then this Lease shall not terminate, but shall remain in full
force and effect and the Tenant (subject to the provisions of Section
G hereof) shall reconstruct the Premises to a complete architectural
unit.
D. If all or any portion of the Premises is taken by condemnation for
a limited period of time, this Lease shall not terminate and Tenant
shall continue to perform its obligations hereunder, including but not
limited to the payment of rent, as though such taking had not occurred
except to the extent that it may be prevented from so doing pursuant
to the terms of the order of the authority which made the
condemnation. In the event of such a temporary taking, Tenant shall be
entitled to the entire award made for such taking (whether paid by way
of damages, rent or otherwise), subject to the rights of the
Mortgagee, unless the period of governmental occupancy extends beyond
the termination of the term, in which case the award shall be
apportioned between Landlord and Tenant as of the date of such
termination, subject to the rights of the Mortgagee.
E. Upon any termination of this Lease as a result of a condemnation,
all rent, impositions and charges of all types shall be adjusted and
prorated to the date of such termination and all other rights and
obligations of the parties hereunder shall cease to accrue after said
date except for the distribution of any award or compensation for such
taking, and provided that Tenant shall be allowed a reasonable time to
remove its property from the Premises.
F. In the event of any condemnation, except as may be specifically
provided herein, Tenant shall not be entitled to any part of the award
paid for such condemnation and Landlord shall receive the full amount
of such award. Notwithstanding the foregoing, Tenant shall have the
right to claim and recover from the condemning authority, but not from
Landlord, such compensation as may be separately awarded or
recoverable by Tenant for Tenant's own right on account of any and all
damage to Tenant's business by reason of the condemnation and for or
on account of any cost or loss to which Tenant might be put in
removing Tenant's furniture, fixtures, Leasehold improvements and
equipment, and for the Leasehold improvements made by Tenant, provided
that any compensation therefor shall not reduce the award payable to
Landlord.
G. (1) Landlord shall make all condemnation proceeds available for
repair and rebuilding of the Premises and shall cooperate with Tenant
in order to obtain such proceeds from the condemning authority;
provided that Landlord and Tenant shall be subject to the terms and
conditions on the availability and use of said condemnation proceeds
imposed by the holder of any Mortgage.
(2) In the event that any condemnation proceeds are not available to
Tenant for repair and rebuilding of the Premises as a result of any
default or action by Landlord or the payment of such proceeds to any
holder of a lien or security interest in the Premises (except a lien
or security interest made by Tenant) then Tenant may (unless Landlord
elects to provide the funds for such repair and rebuilding): (a)
cancel this Lease by giving Landlord notice of such election within 30
days following Tenant's demand for payment and in such event no rental
shall be payable from and after 60 days after Tenant's demand for
payment; or (b) repair and rebuilding the Premises and keep this Lease
in full force and effect except that Tenant's base rent as specified
in Exhibit B hereof shall be abated until such time as the total
amount of abated rent is equal to the amount of condemnation proceeds
plus interest (determined by first applying abated rent to interest
and then principal) and if the remaining term is not long enough to
allow for
Tenant to cover the full amount of the condemnation proceeds plus
interest at the rate of 8-1/2 (eight and one-half) percent, and if the
remaining term is not long enough to allow for Tenant to cover the
full amount of the condemnation proceeds plus interest, then at
Tenant's option, the initial term or extended term during which such
damage or destruction occurred shall be extended until the total
amount plus interest can be recovered, provided that the foregoing
provisions of (a) and (b) shall be abated so long as the Mortgage is
in effect.
H. Subject to any additional requirements, conditions or approvals
contained in the Mortgage which shall control as long as the Mortgage
is in effect, condemnation proceeds or amounts in lieu thereof paid by
Landlord for rebuilding or repair of the Premises shall be paid from
time to time as the work progresses subject to the following
conditions:
(1) Tenant shall not be in default under this Lease;
(2) Tenant shall pay the cost of such repairs in excess of the amount
of condemnation proceeds and deposit the difference between the cost
of repairs and amount of condemnation proceeds with landlord so that
there are sufficient funds on deposit at all times with Landlord to
complete the repairs as certified by an architect approved by Landlord
and so long as the Mortgage is in effect, Tenant shall continue
payments without any reduction for said credit;
(3) Tenant shall provide suitable completion and performance bonds and
builder's all-risk insurance;
(4) Such other conditions as would customarily be required by a local
construction lender or are otherwise reasonable.
14. Holding Over.
Tenant will, at the termination of this Lease by lapse of time or
otherwise, yield up immediate possession to Landlord. If Landlord
agrees in writing to the terms of such holding over, the holder-over
tenancy shall be subject to termination by Landlord at any time upon
not less than 15 days advance written notice, or by Tenant at any time
upon not less than 15 days advance written notice and all of the other
terms and provisions of this Lease shall be applicable during that
period, except that Tenant shall pay Landlord from time to time upon
demand, as rental for the period of any hold over, an amount equal to
one and one-half (1-1/2) times the rent in effect on the termination
date, computed on a daily basis for each day of the hold-over period.
No holding over by Tenant, whether with or without consent of
Landlord, shall operate to extend this Lease except as otherwise
expressly provided. The preceding provisions of this Section 14 shall
not be construed as Landlord's consent for Tenant to hold over.
15. Quiet Enjoyment.
Landlord covenants that it now has, or will acquire before Tenant
takes possession of the Premises, good title to the Premises, free and
clear of all liens and encumbrances, excepting only the lien for
current taxes not yet due, zoning ordinances and other building and
fire ordinances and governmental regulations relating to the use of
such property, and easements, restrictions and other conditions of
record. In the event this Lease is a sublease, then Tenant agrees to
take the Premises subject to the provisions of the prior Leases.
Landlord represents and warrants that it has full right and authority
to enter into this Lease and that Tenant, upon payment of the rental
herein set forth and performing its other covenants and agreements
herein set forth, shall peaceably and quietly have hold and enjoy the
Premises for the term hereof without hindrance or molestation from
Landlord, subject to the terms and provisions of this Lease.
16. Subordination.
This Lease shall be subordinate to the Mortgage.
17. Events of Default.
The following events shall be deemed to be events of default by Tenant
under this Lease:
(a) Tenant shall fail to pay any installation of the rent herein
reserved when due, or any payment with respect to taxes hereunder when
due, or any other payment or reimbursement to Landlord required herein
when due, and such failure shall continue for a period of 10 days
after written notice thereof from Landlord.
(b) Tenant shall become insolvent, or shall make a transfer in fraud
of creditors, or shall make an assignment for the benefit of
creditors.
(c) Tenant shall file a petition under any section or chapter of the
United States Bankruptcy Code, as amended, or under any similar law or
statute of the United States or any state thereof, or Tenant shall be
adjudged bankrupt or insolvent in proceedings filed against Tenant
thereunder.
(d) Tenant shall fail to comply with any terms, provision or covenant
of this Lease (other than the foregoing in this Section 17), and shall
not cure such failure within 10 days after written notice thereof to
Tenant, or, if such failure cannot reasonably be cured within 10 days,
then the failure of Tenant to commence to perform the same within 30
days after notice thereof and to thereafter diligently pursue the
appropriate action to cure same.
18. Remedies.
A. Upon the occurrence of any of the events of default described in
Section 17 hereof, Landlord shall have the option, without any notice
or demand whatsoever, to enter upon the Premises by force, if
necessary, without being liable for prosecution or any claim for
damages therefor, and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord on demand
for any expenses that Landlord may incur in thus effecting compliance
with Tenant's obligations under this Lease, and Tenant further agrees
that Landlord shall not be liable for any damages resulting to the
Tenant from such action, whether caused by the negligence of Landlord
or otherwise.
B. Upon regaining possession of the Premises, Landlord shall utilize
reasonable efforts to relet the Premises. Landlord may relet the
Premises at such rental and upon such terms as may be reasonably
obtained under the circumstances. Landlord is authorized to make all
necessary repairs and alterations in or to the Premises for the new
lessee and to charge the cost thereof to Tenant. The net amount of
rent received by Landlord from such reletting, after deduction of any
and all costs and expenses incurred in connection with such
repossession and reletting, shall be credited upon Tenant's
obligations to Landlord. If the net rent collected by Landlord is not
sufficient to pay the full amount of rent, additional rent, damages,
attorneys' fees, expenses and other amounts required to be paid by
Tenant under this Lease, then Tenant shall pay the amount of such
deficiency to Landlord upon demand.
C. In the event Tenant fails to pay any installment of rent hereunder
as and when such installment is due, to help defray the additional
cost to Landlord for processing such late payments Tenant shall pay to
Landlord interest on demand on such installments; and the failure to
pay such amount within 10 days after demand therefor shall be an event
of default hereunder. The provision for interest shall be in addition
to all of Landlord's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Landlord's
remedies in any manner.
D. Any and all of Tenant's property, including, without limitation,
machinery, equipment, fixtures, furniture, furnishings, stock and
inventory remaining on or in the Premises for more than 30 days after
termination of this Lease, shall be conclusively deemed to have been
forever abandoned by Tenant, and at the option of Landlord, shall
become the sole and absolute property of Landlord. Landlord may
handle, remove, store, sell or otherwise dispose of said property, at
the cost and expense of tenant and without liability to Landlord.
E. In the event of any default under this Lease by Tenant, Landlord
may, after 15 days written notice to Tenant, cure such default for the
account and at the expense of Tenant. Any money spent or cost or
expenses incurred by Landlord in curing such a default for the account
of Tenant shall be deemed additional rental due from Tenant to
Landlord, payable upon demand and shall bear interest from the date
incurred until paid.
F. If either party should default under the terms of this Lease and
such default is not cured in accordance with the terms hereof, the
other party shall be entitled to recover from the defaulting party all
reasonable costs, charges, expenses and attorneys' fees incurred in
connection therewith and in connection with the other party's remedies
undertaken on account of such default and any negotiations in regard
thereto.
G. Pursuit of the foregoing remedy shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided
by law, nor shall pursuit of any remedy herein provided constitute a
forfeiture or waiver of any rent due to Landlord hereunder or of any
damages accruing to Landlord by reason of the violation of any of the
terms, provisions and covenants herein contained. No act or things
done by Landlord or its agents during the term hereby granted shall be
deemed a termination of this Lease or any acceptance of surrender of
the Premises.
19. Landlord's Default.
In the event Landlord should become in default in any payments due on
any such mortgage described in Section 16 hereof or in the payment of
taxes or any other items that might become a lien upon the Premises
and that Tenant is not obligated to pay under the terms and provisions
of this Lease, Tenant is authorized and empowered after giving
Landlord 15 days prior written notice of such default and Landlord's
failure to cure such default, to pay any such items for and on behalf
of Landlord, and the amount of any item so paid by Tenant for or on
behalf of Landlord. In the event Tenant pays any mortgage debt in
full, in accordance with this section, it shall, at its election be
entitled to the mortgage security by assignment or subrogation.
20. Mechanic's Liens.
Tenant shall have no authority, express or implied, to create or place
any lien or encumbrance of any kind or nature whatsoever upon, or in
any manner to bind, the interest of Landlord in the Premises or to
charge the rentals payable hereunder for any claim in favor of any
person dealing with Tenant, including those who may furnish materials
or perform labor for any construction or repairs, and each such claim
shall affect and each such lien shall attach to, if at all, only the
leasehold interest granted to Tenant by this instrument. Tenant
covenants and agrees that it will pay or cause to be paid all sums
legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the
Premises on which any lien is or can be validly and legally asserted
against its leasehold interest in the Premises or the improvements
thereon and that it will save and hold Landlord harmless from any and
all loss, cost or expense based on or arising out of asserted claims
or liens against the leasehold estate or against the right, title and
interest of the Landlord in the Premises or under the terms of this
Lease.
21. Notices.
Each provision of this instrument or of any applicable governmental
laws, ordinances, regulations and other requirements with reference to
the sending, mailing, or delivery of any notice or the making of any
payment by Landlord to Tenant or with reference to the sending,
mailing or delivery of any notices of the making of any payment by
Tenant to Landlord shall be deemed to be complied with when and if the
following steps are taken:
A. All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address set
forth below or at such other address as Landlord may specify from time
to time by written notice delivered in accordance herewith. Tenant's
obligation to pay rent and any other amounts to Landlord under the
terms of this Lease shall not be deemed satisfied until such rent and
other amounts actually have been received by Landlord, and the
Mortgagee, if required by the Mortgage.
B. All notices required to be delivered by Landlord to Tenant
hereunder shall be delivered to Tenant at the address set forth below,
or at such other address within the continental United States as
Tenant may specify from time to time by written notice delivered in
accordance herewith.
C. Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered, whether actually received
or not when deposited in the United States Mail, postage prepaid,
Certified or Registered Mail, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they
have theretofore specified by written notice delivered in accordance
herewith.
D. If and when included within the term "Landlord" as used in this
instrument, there are more than one person, firm or corporation, all
shall jointly arrange among themselves for their joint execution of
such a notice specifying some individual at some specific address for
the receipt of notice and payments to Landlord. If and when included
within the term "Tenant", as used in this instrument, here are more
than one person, firm or corporation, all shall jointly arrange among
themselves for their joint execution of such a notice specifying some
individual at some specific address within the continental United
States for the receipt of notices and payments to Tenant. All parties
included with the terms "Landlord" and "Tenant", respectively, shall
be bound by notices given in accordance with the provision of the
section to the same effect as if each had received such notice.
22. Miscellaneous.
A. Words of any gender used in this Lease shall be held and construed
to include any other gender, and words in the singular number shall be
held to include the plural unless the context otherwise requires.
B. The terms, provisions, covenants and conditions contained in this
Lease shall apply to,inure to the benefit of, and be binding upon, the
parties permitted assigns, except as otherwise herein expressly
provided. Landlord shall have the right to assign any of its rights
and obligations under this Lease. Each party agrees to furnish to the
other, promptly upon demand, a corporate resolution proof of due
authorization by partners, or other appropriate documentation evidence
the due authorization of such party to enter into this Lease.
C. The captions inserted in this Lease are for convenience only and in
no way define, limit or otherwise describe the scope of intent of this
Lease or any provision hereof, or in any way affect the interpretation
of this Lease.
D. Tenant agrees from time to time within 30 days after request of
Landlord, to deliver to Landlord, or Landlord's designee an estoppel
certificate in the form of Exhibit C, attached hereto and made a part
hereof by this reference. It is understood and agreed that Tenant's
obligation to furnish such estoppel certificates in a timely fashion
is a material inducement for Landlord's execution of this Lease.
E. This Lease may not be altered, changed or amended except by an
instrument in writing signed by both parties herein and approved by
Landlord's mortgagee, if any.
F. All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall
survive the expiration or earlier termination of the term hereof,
including without limitation payment obligations with respect to taxes
and insurance and all obligations concerning the condition of the
Premises. Upon the expiration or earlier termination of the term
hereof, and prior to Tenant vacating the Premises, Tenant shall pay to
Landlord any amount reasonably estimated by Landlord as necessary to
put the Premises, including without limitation all heating and air
conditioning systems and equipment herein, in good condition and
repair. Tenant also, prior to vacating the Premises, shall pay to
Landlord the amount, as estimated by Landlord, of Tenant's obligation
hereunder for real estate taxes and insurance premiums for the year in
which the Lease expires or terminates. All such amounts shall be used
and held by Landlord for payment of such obligations of Tenant
hereunder, with Tenant being liable for any additional costs therefor
upon demand by Landlord, or with any excess to be returned to Tenant
after all such obligations have been determined and satisfied as the
case may be. Tenant hereby waives any notice of default and non-
payment thereof.
G. If any clause or provision of this Lease is illegal, invalid or
unenforceable under present or future laws effective during the term
of this Lease, then and in that event, it is the intention of the
parties hereto that the remainder of this Lease shall not be affected
thereby, and it is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is
illegal, invalid or unenforceable, there be added as a part of this
Lease contract a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provisions as may be
possible and be legal, valid and enforceable.
H. All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the last date on which all
parties hereto have executed this Lease.
23. Notice of Default.
Upon the occurrence of any event of default, Tenant hereby waives any
notice or demand whatsoever.
24. Additional Provisions.
Any additional provisions are set forth on Exhibit "B" attached hereto
and incorporated hereby this reference.
25. Subject to Deed of Trust.
To the extent of any inconsistencies between the terms of this Lease
and the terms of the Mortgage, the terms of the Mortgage shall govern
and further provided that this Lease shall not be cancelled so long as
the Mortgage is in effect.
EXECUTED AS OF THIS day of , 19 .
TENANT: LANDLORD:
EDWARD D. JONES & CO., L.P. EDJ LEASING CO., L.P.
By: EDJ Holding Company, Inc., By: LHC, Inc., General Partner
General Partner
By: By:
Edward Soule Edward Soule
Treasurer Treasurer
EXHIBIT A
The Premises are known as 12555 Manchester and are located in Des
Peres, Missouri and consist of the following:
(a) That certain building and improvements containing approximately
397,058 gross square feet and any additions or expansions thereto (all
hereinafter referred to as the "Buildings") together with the non-
exclusive rights to use all drives, parking areas, sidewalks and other
improvements, located on the real property described on Attachment 1
("Real Property"). The Buildings, drives, parking areas, sidewalks and
other improvements are collectively referred to herein as the
"Improvements".
(b) All rights, easements and privileges of record, if any,
appurtenant to the Real Property, as to which Tenant agrees to be
bound and comply.
The foregoing (a) and (b) are herein collectively referred to as the
"Premises".
EXHIBIT B
TERM OF LEASE
1. The "Initial Term" of this Lease shall be for a period of 15 years
which shall commence on March 9, 1993 ("Commencement Date") and end on
April 8, 2008.
2. Tenant shall have the option to extend the term of this Lease under
the same terms and conditions (including rent) of this Lease in
existence at the time of renewal for two additional, separate and
consecutive terms of five years ("Extended Term" or "Extended Terms").
The first five year Extended Term, if exercised, will commence at the
expiration of the Initial Term, and each succeeding Extended Term will
commence at the expiration of the immediately preceding Extended Term.
Failure to exercise any option to extend shall terminate Tenant's
option to extend for any subsequent Extended Terms. Landlord agrees to
give Tenant notice of Tenant's option to extend at least six months
and no more than nine months prior to the expiration of the Initial
Term and each Extended Term. Tenant shall exercise its option by
giving Landlord notice thereof within three months following the date
that Landlord gives Tenant notice of its option to extend.
3. For the purposes of this Lease whenever the word "term" or the
phrase "term hereof" or any similar phrase is used in this document,
it shall be deemed to include the Initial Term as well as any and all
Extended Terms unless a contrary interpretation is clearly expressed.
RENT.
1. For and during the term of this Lease (including any Extended
Term), Tenant agrees to pay to Landlord, at Landlord's address for
notices, as set forth herein, or to such other address or such other
person as may be directed from time to time by notice to Tenant from
Landlord, and without deduction or offset, rent as provided in this
Exhibit B.
2. Beginning on the Commencement Date of this Lease and thereafter
throughout the term of this Lease including any Extended Term, Tenant
shall pay to Landlord annual base rent at the rate of $1,590,000.00
per year payable in equal monthly installments of $132,500.00 on the
1st day of each month during the term of this Lease. Rent for any
partial month shall be prorated based on 30 days to the month.
MORTGAGE.
1. The Mortgage referred to in this Lease is that certain Deed of
Trust entered into as of March 9, 1993 by and between EDJ Leasing Co.,
L.P. ("Mortgagor"), Robert C. Graham III Trustee, and Nationwide Life
Insurance Company ("Mortgagee").
ATTACHMENT 1
LEGAL DESCRIPTION
The land located in the County of St. Louis, State of Missouri and
described as follows:
A tract of land being lot 1 of "Community Federal Subdivision", a
subdivision according to the plat thereof recorded in Plat Book 240
page 75 of the St. Louis County Records, in Sections 27 and 34,
Township 45 North-Range 5 East, St. Louis County, Missouri and being
more particularly described as:
Beginning at the Northwest corner of said Lot 1 of "Community Federal
Subdivision"; said point being also the Southwest corner of Lot 2 of
said Subdivision; thence Eastwardly and Northwardly along the line
dividing Lots 1 and 2 South 89 degrees 17 minutes 50 seconds East
1111.06 feet and North 00 degrees 42 minutes 41 seconds East 10.00
feet to a point in the North line of said Lot 1; thence Eastwardly
along said North line of Lot 1 South 89 degrees 15 minutes 08 seconds
East 178.36 feet to a point in the West line of Ballas Road as
widened; thence Southwardly along said West line of Ballas Road South
00 degrees 42 minutes 41 seconds West 380.81 feet to a point in the
North line of property conveyed to Reproco, Inc., as described in the
deed recorded in book 6562, page 2239 of the St. Loius County Records;
thence along the boundary line of said Reproco, Inc. property North 89
degrees 16 minutes 29 seconds West 288.00 feet, and South 00 degrees
28 minutes 31 seconds West 99.57 feet to a point in the North line of
Manchester Road, as widened; thence along the right-of-way line of
Manchester Road, as widened, the following courses and distances;
North 89 degrees 16 minutes 29 seconds West 178.49 feet, North 88
degrees 18 minutes 59 seconds West 94.01 feet North 30 degrees 34
minutes 38 seconds West 114.69 feet, North 89 degrees 16 minutes 29
seconds West 60.00 feet, South 36 degrees 25 minutes 32 seconds West
117.60 feet, North 89 degrees 16 minutes 29 seconds West 55.47 feet,
along a curve to the left whose radius point bears South 00 degrees 43
minutes 31 seconds West 867.90 feet from the last mentioned point, a
distance of 346.38 feet, South 67 degrees 51 minutes 31 seconds West
80.21 feet, North 22 degrees 08 minutes 29 seconds West 61.02 feet,
South 88 degrees 12 minutes 27 seconds West 34.28 feet, and South 67
degrees 51 minutes 31 seconds West 17.15 feet to a point in the East
line of J.J. Kelly Memorial Drive, 60 feet wide; thence Northwardly
along said East line, being also along the West line of aforesaid Lot
1 of "Community Federal Subdivision" North 00 degrees 28 minutes 18
seconds East 146.83 feet and North 00 degrees 41 minutes 41 seconds
East 370.44 feet to the point of beginning according to a survey by
Volz Engineering & Surveying, Inc. dated November 4, 1992.
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE, made and entered into as of the 9th day
of March , 1994, by and between EDJ LEASING CO., L.P., a Missouri
limited partnership ("Landlord") and EDWARD D. JONES & CO., L.P., a
Missouri limited partnership ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant entered into a certain Master Lease
Agreement dated March 9, 1993 ("Master Lease"), demising the premises
commonly known and numbered as 12555 Manchester Road, Des Peres,
Missouri as more particularly described in the Master Lease;
WHEREAS, Landlord and Tenant desire to amend the Master Lease in
certain respects as a result of certain financing transactions entered
into by Landlord which will benefit Tenant;
NOW, THEREFORE, in consideration of $10.00 and other good and valuable
considerations, the parties hereto stipulate and agree as follows:
1. The Master Lease is hereby amended as follows: (i) commencing April
1, 1994, the annual base rent payable to Landlord as set forth in
Exhibit B to the Master Lease shall be increased from $1,590,000 to
$2,065,000, and (ii) commencing with the rent payment due April 1,
1994, the monthly rent payable to Landlord as set forth in Exhibit B
and Section 2 of the Master Lease shall be increased from $132,500 to
$172,083.34.
2. To the extent that any of the provisions of this First Amendment
conflict with the provisions of the Master Lease, the provisions of
this First Amendment shall govern. All other provisions of the Master
Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Master Lease as of the day and year first above written.
LANDLORD: TENANT:
EDJ LEASING CO., L.P. EDWARD D. JONES & CO., L.P.
By: LHC, Inc., general partner By: EDJ Holding Company, Inc.,
general partner
By: By:
Edward Soule, Treasurer Edward Soule, Treasurer
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made and entered into this
Twenty-fifth (25th) day of November, 1992, by and between EDWARD D.
JONES & CO., L.P., a limited partnership organized and existing under
the laws of the State of Missouri, with its principal place of
business located at 201 Progress Parkway, Maryland Heights, Missouri
63043 ("EDJ") and GENICOM Corporation, a corporation organized and
existing under the laws of the State of Delaware, with its principal
place of business located at One Genicom Drive, Waynesboro, Virginia
22980-1999 ("GCC") (EDJ and GCC are each individually referred to as a
"Party" and collectively as the "Parties").
RECITALS
WHEREAS, GCC is in the business of designing, manufacturing, selling,
reselling and servicing certain computer printers; and
WHEREAS, EDJ desires to purchase certain computer printers from GCC in
order to supply EDJ's existing and anticipated needs, provided that
certain modifications and improvements are made by GCC to such
printers in order that such printers meet EDJ's specific and unique
business needs;
NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants contained herein, the Parties hereby agree as follows:
1. Definitions: For the purposes of this Agreement, the following are
defined terms:
1.1 The term "Branch Office" shall mean any office (other than the
Headquarters (as hereinafter defined in paragraph 1.5)) owned, leased
or maintained by EDJ.
1.2 The term "Confidential Information" shall mean any information
which either Party designates as confidential, proprietary, restricted
or otherwise as not to be disclosed generally, in accordance with the
provisions contained herein. Except as otherwise expressly provided
hereinbelow, to be considered Confidential Information, all tangible
information must be marked with the words "proprietary" or
"confidential" or words of similar import.
Non-tangible information must be (i) reduced to a writing by the
disclosing Party, which must describe the information as confidential
or proprietary and (ii) delivered to the recipient Party within thirty
(30) days after the date of disclosure. Confidential Information may
include, but is not limited to, copyrighted material, notes,
memoranda, writings, records, files, working papers, reports,
opinions, drawings, schematics, specifications, computer programs,
documentation, data, technical data, ideas, concepts, plans, models,
samples, calculations, tables, methods, processes, applications,
technology, know-how, techniques, and any other material relating to
the Equipment (as hereinafter defined in paragraph 1.4), Firmware (as
hereinafter defined in paragraph 1.7), or Documentation (as
hereinafter defined in paragraph 1.3) or to a Party's business methods
or customers, in whatever form, manner or medium recorded, including
any and all copies thereof. Notwithstanding anything contained herein
to the contrary, Confidential Information shall include all tangible
and intangible information related to EDJ's present, former or
prospective customers, its existing or prospective office locations
(including, without limitation, branch names and addresses of such
offices) and its business methods and practices, whether or not such
information is marked as "confidential" or "proprietary" and whether
or not such information is reduced to writing. Confidential
Information shall not include the following:
1.2.1 information which is in the public domain at the time of
disclosure;
1.2.2 information which is published after disclosure to a Party
pursuant to this Agreement, unless such publication is a breach of
this Agreement or other obligation of confidence;
1.2.3 information which, prior to disclosure to a Party pursuant to
this Agreement, was already lawfully in that Party's possession as
evidenced by written records kept in the ordinary course of business
or by proof of such actual, prior, rightful use by that Party; and
1.2.4 information which, subsequent to the disclosure to a Party
pursuant to this Agreement, is obtained by that Party from a third
party who is lawfully in possession of such information, and not in
violation of any contractual, legal or fudiciary obligation with
respect to such information and who does not require that Party to
refrain from disclosing such information to others.
1.3 The term "Documentation" shall mean the product specification, the
user manual or other user materials, and any installation
instructions, specifications or service manuals applicable to the
Equipment (as hereinafter defined in paragraph 1.4) or Firmware and
any written or other materials relating to use of the Equipment or
Firmware which are specified in Schedule A attached hereto.
1.4 The term "Equipment" shall mean all laser printers and/or
accessories shown in Schedule B hereto for delivery to EDJ, as
specified by the Documentation shown in Schedule A and including the
Modifications (as hereinafter defined in paragraph 1.6) shown in
Schedule C.
1.5 The term "Headquarters" shall mean any and all office buildings or
structures owned or occupied by EDJ at or adjacent to 201 Progress
Parkway, Maryland Heights, Missouri 63043 or, should EDJ move or
expand its administrative offices, then at such new or expansion
locations as well.
1.6 The term "Modifications" shall mean those changes or alterations
to the Equipment, Firmware or Documentation which are specified in
Schedule C attached hereto including, without limitation, the back
channel and the custom font firmware containing the fonts defined in
Schedule H.
1.7 The term "Firmware" shall mean the computer code contained in the
Programmable Read Only Memory chips ("PROM's") internal to the
Equipment listed in Schedule B hereto (and compliant with the
specifications contained in Schedules A, C and H hereof).
1.8 The term "Printer" shall mean and refer to an individual laser
printer specified in Schedule B hereto, including a 7170 printer
incorporating the Modifications as defined in Schedule C, duplexer,
exit gate, 4MB memory, and custom EDJ font card containing the fonts
defined in Schedule H.
1.9 The term "Spare Parts" shall mean spare parts used to support the
Printers purchased under this Agreement. The Recommended Spare Parts
List ("RSPL") is shown in Schedule F.
1.10 The term "Supplies" refers to items listed in Schedule B which
may be used by EDJ to support the Equipment.
1.11 The term "Specifications" shall mean all parts of the
Documentation and Modifications which provide functional and/or
performance specifications for any or all of the items covered by this
Agreement and all Schedules attached hereto.
2. Sale
2.1 GCC hereby agrees to sell to EDJ the products specified in
Schedule B attached hereto on the terms and conditions contained
herein.
2.2 Quarterly during the term hereof, EDJ shall provide GCC with a
non-binding rolling forecast of its Equipment requirements for the
ensuing twelve (12) month period.
2.3 Subject to EDJ's rights to terminate this Agreement as set forth
in paragraphs 6.1, 13.2, 13.3 and 16.12 hereof, EDJ hereby commits to
the following:
A.) To issue a purchase order for an initial one hundred (100)
Printers, to be delivered by 12/31/92. GCC hereby acknowledges receipt
of this order.
B.)To issue a purchase order concurrent with the execution of this
Agreement for an additional quantity of one thousand four hundred
(1,400) Printers to be scheduled for delivery within twelve (12)
months after the Test 7170 has been accepted by EDJ pursuant to and as
defined in paragraph 6.1 hereof.
(C.) To pay one hundred fifty thousand dollars ($150,000.00) towards
the non-recurring engineering development costs to develop the back
channel interface portion of the Modifications, payable in increments
of twenty-five thousand dollars ($ 25,000.00) on October 1, 1992,
fifty thousand dollars ($ 50,000.00) on December 1, 1992 and twenty-
five thousand dollars ($ 25,000.00) on January 1, 1993 and with a
final payment of fifty thousand dollars ($ 50,000.00) due upon EDJ's
acceptance of the Test 7170. GCC hereby acknowledges receipt of the
initial $25,000 payment from EDJ.
EDJ further commits that, in addition to the fifteen hundred (1,500)
Printers indicated above, EDJ intends to purchase during the term of
this Agreement an additional total of two thousand one hundred and
eight (2,108) Printers. GCC acknowledges that this intent is dependent
on the continuation of favorable market conditions for EDJ and is not
a firm committment to purchase, but EDJ agrees that any such
requirement shall in fact be purchased from GCC provided that GCC
maintains performance in accordance with the terms and conditions of
this Agreement and market conditions remain favorable as determined by
EDJ.
In addition to the above committments, EDJ hereby commits that it
intends to purchase all Supplies for Printers from GCC. This
committment is understood by both Parties to be contingent upon GCC
maintaining competitive pricing, quality and delivery in accordance
with the terms and conditions of this Agreement.
2.4 Equipment, and other products listed on Schedule B, shall be
ordered by EDJ from GCC by purchase orders referencing this Agreement.
The purchase orders shall state the quantities, description,
applicable prices, requested monthly delivery schedules and shipping
instructions. Within seven (7) working days after GCC's receipt of
such purchase order, GCC will issue and mail a sales order
acknowledgement ("SOA") to EDJ acknowledging acceptance of EDJ's
purchase order and advising EDJ of GCC's delivery date(s). The
delivery date contained in the SOA will not be more than fourteen (14)
working days later than the delivery date requested by EDJ in EDJ's
purchase order. Delivery dates for large unforecasted orders will be
negotiated by the Parties in good faith. All purchase orders must be
received by GCC prior to the expiration of the term of this Agreement
and all Equipment shall be delivered no later than ninety (90) days
after expiration of the term of this Agreement. The terms and
conditions of this Agreement shall remain in full force and effect
until all deliveries have been made, and thereafter with regard to any
continuing obligations of either Party.
2.5 Equipment and other products sold hereunder shall be invoiced in
accordance with the prices set forth in Schedule B. The prices listed
therein shall be firm for all Equipment shipments through December 31,
1993. Commencing January 1, 1994, the Parties hereby agree to
negotiate in good faith to mutually share any lncrease or decrease in
unit costs to GCC from Toshiba Corporation which are associated with
the fluctuation in the exchange rates between the U.S. dollar and the
Japanese Yen. Notwithstanding the foregoing, the Parties agree to
negotiate new prices for shipments during the period beginning January
1, 1995 and ending December 31, 1995. Such prices shall be determined
based on thencurrent market conditions. GCC hereby commits that such
prices shall be competitive and shall not exceed pricing offered to
any of its other commercial customers purchasing similar quantities of
comparable equipment.
GCC further agrees that, on or before August 1, 1994, it shall provide
EDJ with notice relative to any anticipated price change from Toshiba
to become effective January 1, 1995. EDJ may, based on such notice,
place an order on or before September 1, 1994, regardless of quantity,
for delivery no later than December 31, 1994 at the then-current price
for Equipment.
2.6 If, during the term of this Agreement, GCC develops and/or is
marketing a product which is functionally similar, more efficient
and/or less expensive than the Equipment sold hereunder (all as
determined by EDJ in EDJ's sole and absolute discretion), EDJ shall
have the option of substituting such product for some or all of the
Equipment at a price that is equal to the lowest price charged by GCC
to any of GCC's customers for such product under substantially similar
terms and conditions and at the same or lower volume requirements.
2.7 A. At any time during the term of this Agreement EDJ may request,
and GCC shall comply with, changes in the Equipment configuration by
providing written notice to GCC at least fifteen
(15) days prior to the scheduled delivery date(s) of the next order of
Equipment; however, if such configuration changes result in an
increase in price and/or a delay in delivery of Equipment, GCC shall
be under no obligation to implement such changes nor to delay the
delivery of Equipment until an equitable price adjustment has been
agreed upon in writing by EDJ.
B. GCC reserves the right to change the Equipment and/or Supplies, at
GCC's sole cost and expense, at any time prior to delivery of a
specific order of Equipment and/or Supplies in order to include
electrical, mechanical or other such improvements deemed appropriate
by GCC but without incurring any liability to so modify or change any
Equipment or Supplies previously delivered; provided, however, that if
such changes affect the form, fit or function of such Equipment or
Supplies, GCC will provide fifteen (15) days advance written notice of
such change(s) to EDJ using GCC's Engineering Change Notification
("ECN") process. Unless EDJ gives GCC written notice to the contrary
within fifteen (15) days from the date of receipt of GCC's ECN, EDJ
shall be conclusively presumed to have accepted such change(s). If EDJ
does notify GCC, in writing and within such fifteen (15) day period,
that EDJ does not accept the change(s), GCC shall not make the
change(s).
EDJ hereby agrees to withhold approval only where there is impact on
form, fit or function and will not unreasonably withhold such
approval, provided however that GCC agrees to the following:
In the event GCC elects not to notify EDJ of a change which GCC does
not deem to affect form, fit or function but which change upon
implementation is found by EDJ to affect its cost or ability to
utilize the Equipment and/or Supplies in its computer system
environment in the same manner as prior to the change, GCC shall (i)
immediately cancel the change for all new Equipment and/or Supplies to
be shipped to EDJ, (ii) immediately retrofit or replace all Equipment
and/or Supplies previously shipped to EDJ, at GCC's sole cost and
expense, to eliminate the effects of such change, and (iii) reimburse
EDJ for its reasonable costs and expenses incurred directly as a
result of such change; provided, however, that this provision shall in
no way expand GCC's limitation of liability as stated in paragraph
16.17 hereof.
It is expressly agreed that changes to Supplies affecting packaging
(with the exception of package markings and/or labeling), storage or
shipping requirements, user instructions, or chemical composition
shall be presumed to affect form, fit and function and shall require
written approval from EDJ prior to implementation.
2.8 GCC reserves the right, at any time during the term of this
Agreement, to implement a remanufacturing program for the Process
Units specified in Schedule B hereof. The Parties acknowledge that all
Process Units supplied to EDJ (or to EDJ's third party maintenance
provider, for exclusive use with EDJ Equipment) are recycleable and
EDJ hereby commits to use its reasonable best efforts to return
substantially all of such Process Units to GCC upon end of life.
Accordingly, GCC agrees to credit EDJ with two dollars ($ 2.00) for
each Process Unit returned to GCC. The cost of shipping to GCC shall
be paid by GCC via GCC's mutually agreeable return program parameters.
Prior to shipment of any such remanufactured Process Units to EDJ, GCC
shall (i) provide to EDJ a complete summary of its remanufacturing
process to include necessary quality control procedures, (ii) provide
to EDJ a reasonable quantity of such remanufactured Process Units to
allow EDJ to test and verify such units meet all performance
specifications for new Process Units, and (iii) secure written
approval from EDJ, which approval shall not be unreasonably withheld,
to provide such remanufactured Process Units against any subsequent
purchase orders issued by EDJ for such Process Units.
GCC hereby commits that it has estimated an approximate cost for such
remanufacturing of Process Units, which cost is proprietary to GCC. On
the six (6) month anniversary of the implementation of such
remanufacturing program, EDJ may request a written verification from
GCC that its actual cost is not more than ten percent
(10%) below said cost estimate. In the event such actual cost is more
than ten percent (10%) below said cost estimate, GCC agrees to
renegotiate the price for Process Units shown in Schedule B to provide
an equitable sharing of the cost savings with EDJ. The Parties will
thereafter, on each anniversary date of this Agreement or any
extension(s) thereof, review such costs and related Supplies pricing
to insure that the pricing afforded EDJ hereunder for Supplies shall
remain competitive and, based on such agreement between the Parties,
EDJ shall continue to purchase such Supplies exclusively from GCC.
3. Delivery and Installation
3.1 Shipment of Equipment ordered under this Agreement shall be
scheduled in accordance with EDJ's purchase order and GCC's
acknowledgement of such purchase order. Quantities scheduled for
delivery shall be mutually agreed to. GCC's delivery lead time for
Equipment is normally thirty (30) days for forecasted orders. Lead
time will be negotiated in good faith for large unforecasted orders.
3.2 Delivery shall be F.O.B. GCC's designated facility within the
continental United States. Freight will be prepaid and billed to EDJ
unless otherwise instructed in writing by EDJ and, provided that EDJ
allows GCC to specify the freight carrier, the cost of such shipment
shall include insurance coverage for the full replacement value of
each shipment. The Equipment shall be shipped to the location
specified in EDJ's purchase order or as otherwise directed by EDJ in
writing.
3.3 EDJ shall be responsible, at no cost to GCC, for preparing prior
to the scheduled install date a suitable installation site in
accordance with GCC's reasonable written site preparation procedures
as set forth in the Documentation. GCC will install all Equipment
delivered hereunder, unless notified by EDJ to the contrary in
writing, either at no charge if an LZR 1230 printer is traded in per
paragraph 3.4 below or at the installation price of one hundred
ninety-eight ($198.00) per Printer.
Provided that EDJ utilizes GCC's service organization to install
Printers, GCC commits that all items included in the definition of the
Printer shall be installed at the user site and made ready for use as
part of the standard installation process. Such installation shall
further include removal of any reference manuals or other
documentation from the user location.
Provided that EDJ notifies GCC of its intent to have GCC install
Equipment at a specific location no later than the ship date for such
Equipment, GCC shall use its reasonable best efforts to install
Equipment within two (2) working days of its receipt by EDJ at the
installation site.
3.4 For a period of twelve (12) months after the Test 7170 (as
hereinafter defined in paragraph 6.1) has been accepted pursuant to
paragraph 6.1 hereof, EDJ may trade in the LZR 1230 printer at the
time GCC installs the replacement Printer, on a one for one basis. EDJ
may trade in such LZR 1230 printer(s) by notifying GCC in writing at
any time prior to the scheduled installation date of the Printer that
is intended to replace the particular LZR 1230. In such event, GCC
shall, at the time it installs the Printer(s) pursuant to 3.3 above,
de-install, at GCC's sole cost and expense, the LZR 1230 printer(s).
Additionally, GCC shall pack and ship, at GCC's sole cost and expense,
the LZR 1230 printer(s) to a GCC facility. GCC will credit EDJ with
one hundred dollars ($100.00) against the purchase of the replacement
Printer for each such trade-in. Installation under such trade in
program will be at GCC's sole cost and expense.
3.5 GCC shall at all times during the term of this Agreement and for a
period of five (5) years after the date of the last shipment of
Equipment hereunder accord EDJ most-favored customer treatment with
respect to delivery of Equipment, Spare Parts and Supplies. If at any
time during said term there is an insufficient supply of printers,
accessories, spare parts and/or supplies identical or functionally
equivalent to the Equipment, Spare Parts and/or Supplies such that it
is not possible for GCC to deliver these items in a timely manner in
accordance with EDJ's requested delivery dates, and provided that EDJ
has provided the forecasts required by paragraph 2.2 hereof and that
such requested delivery dates are reasonably consistent with said
forecast(s), GCC commits that it will allocate the available items on
the basis of a "first-in, first-out" sequence of all purchase orders
placed, including GCC's other customers. GCC specifically agrees that
it will not accept and ship new orders for such items while it is
delinquent to any previously existing EDJ orders. GCC shall, upon
request, make available to EDJ personnel all documentation reasonably
necessary to determine that GCC has complied with its obligations
hereunder.
GCC further agrees that in such event, provided that the shortage is
not due to causes beyond GCC's reasonable control (which is understood
by the Parties to include failure by GCC's engine supplier to perform
in a timely manner to orders placed by GCC with such supplier in
accordance with the leadtimes and terms of GCC's written contractual
agreement with such supplier), and provided that GCC is not able to
correct such situation within thirty (30) days of the first scheduled
delivery date GCC is unable to meet, then (i) EDJ shall be relieved of
any and all of its obligations under paragraph 2.2 hereof, and (ii)
EDJ may secure replacement items from other source(s) until such time
as GCC is again able to deliver such items in accordance with EDJ's
requested schedule(s) as noted above. In the event EDJ elects to
secure such items from other source(s) and if such action results in
an increase in cost to EDJ, then GCC agrees to negotiate a reasonable
reimbursement to EDJ for such increased cost incurred by EDJ. Both
Parties agree that any such settlement shall be specifically subject
to the arbitration provisions of paragraph 16.8 hereof.
GCC agrees, in the event that any such delays are indicated by GCC to
have been caused by the failure of GCC's engine supplier to deliver as
noted above, and if requested by EDJ, to allow EDJ personnel access to
its internal records to any extent deemed reasonably necessary by EDJ
to verify such claim.
GCC hereby agrees to maintain a thirty (30) day strategic buffer
inventory of Equipment based on EDJ's forecast provided pursuant to
paragraph 2.2 hereof to minimize the probability of any such
shortage(s). EDJ agrees that any delivery requests for which GCC is
unable to respond that exceed such forecasts shall not be subject to
the provisions of this paragraph 3.5.
4. Title and Risk of Loss
4.1 Title to and risk of loss or damage to the Equipment, Spare Parts
and Supplies shall pass to EDJ upon delivery to the carrier. EDJ shall
notify GCC in writing relative to any shortages within ten (10)
business days after receipt of shipment to a Branch Office or within
twenty (20) business days after receipt of shipment to the
Headquarters. GCC shall not be obligated to consider any such claims
made after that period. Equipment will be packaged to conform with the
standard commercial practices of GCC and, in the absence of special
instructions, GCC will ship by what it considers to be an appropriate
method.
4.2 EDJ shall be responsible for filing claims for any damage and/or
loss incurred subsequent to delivery by GCC to the freight carrier.
GCC agrees, if requested by EDJ, to render all reasonable assistance
to help EDJ perfect any such claim against said carrier.
4.3 GCC shall not be liable for delays in delivery or failure to
manufacture due to causes beyond its reasonable control, such as acts
of God, acts or omissions of EDJ, acts or omissions of civil or
military authority, fire, flood, epidemics, quarantine, riots, or war.
In the event of any such delay, the date of delivery shall be extended
for a period equal to the time lost by reason of the delay.
5 Firmware and Documentation Rights
5.1 GCC hereby grants to EDJ the non-exclusive and perpetual right to
distribute and use the Firmware and Documentation solely in connection
with the Equipment wherever the Equipment is located. EDJ shall not
alter or remove any copyright, legend, logo, trademark or other notice
or identifying sign associated with and/or appearing in or upon the
Firmware and/or Documentation. FIRMWARE IS AND SHALL REMAIN THE
EXCLUSIVE PROPERTY OF GCC AND/OR ITS LICENSORS, AND NO TITLE TO OR
OWNERSHIP OF THE FIRMWARE IS HEREBY TRANSFERRED.
5.2 GCC agrees that, except as defined in paragraph 11.5 hereof, the
right to use any portion of the Firmware related to the Modifications,
including without limitation any firmware related to EDJ's custom
fonts, shall be exclusive to EDJ.
5.3 GCC UNDERSTANDS THAT EDJ IS PURCHASING EQUIPMENT HEREUNDER FOR ITS
OWN USE. GCC FURTHER UNDERSTANDS THAT EDJ MAY WISH TO TRANSFER USED
EQUIPMENT TO THIRD PARTIES. IN THE EVENT EDJ TRANSFERS USED EQUIPMENT
TO ANY THIRD PARTY, GCC AGREES THAT THE RIGHT TO DISTRIBUTE AND USE
THE FIRMWARE AND DOCUMENTATION GRANTED ABOVE SHALL AUTOMATICALLY BE
TRANSFERRED TO SUCH THIRD PARTY, PROVIDED THAT EDJ AGREES TO GIVE AND
HAS GIVEN SUCH THIRD PARTY WRITTEN NOTICE OF THE ABOVE PROVISIONS.
5.4 GCC grants to EDJ the limited non-exclusive right and license to
reproduce all or any part of the Documentation for use by EDJ
employees in the use or maintenance of Equipment. GCC further grants
EDJ the right to distribute such information to its third party
maintenance organization, provided that (i) any such distribution is
made for the purpose of allowing such third party maintenance
organization to service Equipment purchased pursuant to this
Agreement, and (il) EDJ gives written notice to such third party
service organization of the provisions of this Agreement related to
the confidentiality and limits of useof such information.
5.5 In the event that GCC, during the term of this Agreement, makes
improvements in the Equipment (excluding the Modifications) which are
not subject to the provisions of paragraph 2.7 B. regarding affecting
form, fit or function but which changes improve the efficiency or
effectiveness of the Equipment, then GCC shall notify EDJ of such
improvements, EDJ shall have the option of requesting that such
improvements be incorporated into all future deliveries of Equipment
hereunder, and such improvements will then be included in such
deliveries; provided, however, that if such improvements increase
GCC's cost the Parties agree to negotiate a mutually agreeable
adjustment to EDJ's prices for the affected Equipment prior to any
such incorporation, and provided further that EDJ shall have no
obligation to accept any such change or price increase. GCC shall have
no obligation to incorporate such improvements in Equipment previously
delivered to EDJ, however EDJ shall have the option of requesting that
such previously delivered Equipment be upgraded to include such
improvements and, if practicable, GCC shall provide a reasonable
estimate of EDJ's cost for such upgrade.
5.6 GCC hereby grants EDJ the perpetual right to use the Firmware,
source code and/or related documentation defined as the "Escrow
Materials" in Schedule E hereto (the "Escrow Agreement"); provided,
however, that EDJ shall have complied fully with the terms of Schedule
E before receiving the Escrow Materials from the Escrow Agent (as
defined in the Escrow Agreement). GCC shall, within thirty (30) days
of acceptance by EDJ of the Test 7170 defined in paragraph 6.1 below,
place a copy of the Escrow Materials defined in Schedule E and listed
in Schedule D hereto in escrow pursuant to the Escrow Agreement. GCC
shall improve, add to, or otherwise modify the Escrow Materials at
such time as any modifications are made such that the Escrow Materials
shall be maintained at the same level of functionality as for any of
GCC's other commercial customers.
The Parties agree to cooperate with the Escrow Agent with regard to
any reasonable changes to Escrow Agreement requested by the Escrow
Agent prior to its execution of the Escrow Agreement.
6. Acceptance
6.1 GCC shall, on or before January 31, 1993, provide EDJ with a
preproduction prototype Printer (the "Test 7170") for preliminary
acceptance testing. EDJ shall have thirty (30) days from receipt of
the Test 7170 to conduct acceptance tests. Such acceptance test shall
include, without limitation, tests which evaluate the Test 7170's
conformity to the Specifications. If the Test 7170 conforms to such
Specifications, as reasonably determined by EDJ, EDJ shall notify GCC
in writing within such thirty (30) day period and the date such notice
is sent shall be the date the Test 7170 is accepted. If EDJ reasonably
determines that the Test 7170 does not conform to the Specifications,
it shall so notify GCC in writing within such thirty (30) day period
and shall provide particulars as to all nonconformities. In such
event, GCC shall correct all such nonconformities and deliver a
revised Test 7170 to EDJ within thirty (30) days. EDJ shall have
thirty (30) days from the receipt of the revised Test 7170 to conduct
acceptance tests. If the revised Test 7170 conforms to the
Specifications, as reasonably determined by EDJ, EDJ shall notify GCC
in writing within such thirty (30) day period and the date such notice
is sent shall be the date the Test 7170 is accepted. If the revised
Test 7170 does not conform to the Specifications, as reasonably
determined by EDJ, EDJ shall, within such thirty (30) day period
either (i) terminate this Agreement by providing written notice to
GCC, or (ii) notify GCC in writing that the revised Test 7170 does not
conform to the Specifications, in which case GCC shall immediately
correct such nonconformities and notify EDJ in writing that such
corrections were made and the date such notice is sent shall be the
date the Test 7170 is accepted. If EDJ fails to give notice to GCC
during any acceptance period as set forth in this paragraph, the Test
7170 shall be deemed accepted by EDJ at the expiration of such period.
If this Agreement is terminated pursuant to the foregoing contingency
after certain Equipment, Documentation, and/or Firmware has been
delivered to EDJ, EDJ shall have the option of returning all or some
of such Equipment, Documentation and/or Firmware within thirty (30)
days after such termination. In the event EDJ elects to return any
such Equipment, Documentation and/or Firmware, the Parties shall
determine a mutually agreeable dollar amount of value for any such
returned items, which amount shall be based on the price paid by EDJ
to GCC less a reasonable amount for the actual usage of such items by
EDJ, and GCC shall immediately refund said amounts to EDJ for such
returned items. The provisons of this Agreement will continue with
respect to any items retained by EDJ.
The Parties further agree that in the event this Agreement is
terminated pursuant to the foregoing contingency, GCC shall
immediately repay to EDJ all or any portion of the non-recurring
engineering development costs previously paid by EDJ pursuant to
paragraph 2.3 C. hereof.
6.2 After installation of each order of Equipment by GCC, EDJ may
inspect and test the Equipment for conformance to the Specifications
referred to herein and set forth in the schedules attached hereto. The
period during which EDJ may inspect and test each order of Equipment
and notify GCC of any nonconformities (the "Acceptance Period") shall
be as follows: for Equipment ordered at any time before the Test 7170
has been tested and accepted and for a period of twelve (12) months
after the first production lot of Equipment is installed after the
Test 7170 has been tested and accepted, the Acceptance Period shall be
ninety (90) days from the date of shipment by GCC; and for Equipment
delivered on any subsequent order placed by EDJ, the Acceptance Period
shall be thirty (30) days from the date of shipment by GCC. If a
particular order of Equipment conforms in all material respects to the
Specifications set forth in all schedules attached hereto, EDJ shall
notify GCC within the applicable Acceptance Period that the Equipment
is accepted. If EDJ fails to give notice to GCC to the contrary within
the applicable Acceptance Period, the order of Equipment at issue
shall be deemed accepted by EDJ at the expiration of such period.
In the event that any item of Equipment delivered to EDJ does not
conform to the Specifications, EDJ shall attempt to isolate and
correct the problem. If EDJ is unable to accomplish the correction,
EDJ shall contact GCC's technical services department for telephonic
assistance. Should these steps prove unsuccessful, EDJ shall contact
either GCC's maintenance organization or its third party service
organization to correct the defect.
In the event EDJ elects to use GCC's service organization, GCC hereby
commits to comply with the average response times by location shown in
Schedule G hereto with respect to the initial service call placed by
EDJ. GCC shall repair or replace on a best effort basis on the
following schedule:
(a) For those locations having an average four (4) hour response time,
GCC will repair or replace the Equipment within twenty-four (24) hours
(excluding weekends and GCC designated holidays) of the initial call
from EDJ.
(b) For those locations having an average eight (8) hour or next day
response time, GCC will repair or replace the Equipment within fourty-
eight (48) hours (excluding weekends and GCC designated holidays) of
the initial call from EDJ.
All costs for such repair or replacement shall be borne by GCC
provided, however, that if the Equipment in question is reasonably
found not to be non-conforming then EDJ shall reimburse GCC for all
reasonable labor, travel and other expenses incurred by GCC. In such
event, GCC will provide EDJ with documentation to support its claim
that the Equipment in question is found not to be nonconforming.
7. Payment
7.1 Terms of payment for any invoice issued under this Agreement shall
be payment in full net thirty (30) days from invoice date, which date
shall be no earlier than the date of shipment. The place of payment
shall be as specified on GCC's invoice.
7.2 As of the effective date hereof, EDJ's credit limit with GCC is
one million U.S. dollars ($ 1,000,000.00). Provided that EDJ is not in
material default of its obligations hereunder, shipments of all items
to be supplied hereunder will continue up to such established credit
limit. In the event EDJ fails to make payments when due hereunder, or
if in GCC's reasonable judgement EDJ's financial position materially
changes, or if EDJ otherwise commits a material breach hereunder, GCC
shall provide EDJ written notice of credit suspension. If EDJ is
unable to correct such condition within seven (7) days of said notice,
GCC may without further notice (i) suspend credit, adjust the credit
limit and/or delay shipment until such terms are met, (ii) alter the
terms of payment, (iii) cancel any order then outstanding and receive
reimbursement in accordance with the cancellation charges set forth
Schedule B hereof, and/or (iv) pursue any other remedies available at
law or equity. GCC may charge the lesser of one percent (1%) per month
or the highest lawful amount on delinquent accounts.
Notwithstanding the foregoing, the seven (7) day notice period in the
preceeding paragraph shall not apply in the event EDJ declares
bankruptcy or enters into insolvency proceedings.
Should EDJ withold payment beyond the above payment terms due to a
bona fide claim of defective or non-conforming Equipment, and provided
that EDJ has notified GCC of such, affected invoices will not be
considered delinquent or subject to the above stated remedies until
the Equipment is repaired or replaced with conforming Equipment in
accordance with GCC's obligations hereunder. Equipment which GCC
elects to defer shipment of or reassign as a result of EDJ's failure
to make payments when due shall be deemed to have been rescheduled or
reassigned for the convenience of EDJ and GCC may invoice EDJ and EDJ
agrees to pay reasonable rescheduling charges at the rate of one and
one half percent (1-1/2%) of the purchase price of the Equipment for
each month that shipment is deferred as may be reasonably determined
by GCC. In case of partial shipments, pro rata payments shall become
due on each shipment in accordance with the payment terms set forth
herein.
7.3 All fees and charges hereunder are exclusive of local, state or
federal sales, use, excise, personal property or other similar taxes
or duties, all of which shall be paid by EDJ.
8. Confidentiality
8.1 The Parties acknowledge that any Confidential Information they may
receive is a special, valuable and unique asset and agree at all times
to keep in confidence and trust all Confidential Information.
Each Party agrees that it will not directly or indirectly disclose
Confidential Information to any other person (other than such Party's
own employees or suppliers who must have such information for the
performance of such Party's obligations under this Agreement) or
entity except as expressly authorized in writing by the other Party to
this Agreement.
8.2 Each Party shall refrain from doing any act which may in any way
prejudice, endanger or otherwise weaken the legal protection of any
Confidential Information, as well as any patent, copyright, trademark,
service mark or trade secret belonging to the other Party.
8.3 Each party agrees that it will protect Confidential Information
from disclosure in the same manner and to the same extent as it
protects its own comparable confidential information.
8.4 All tangible Confidential Information shall, immediately upon the
disclosing Party's request, be returned to the disclosing Party,
including any and all copies, translations, interpretations and
adaptations thereof. This paragraph 8.4 shall not be construed to
limit or interfere with the rights granted to EDJ under the provisions
set forth in paragraphs 5.1 and 5.4 above.
8.5 All title, right and interest in Confidential Information shall at
all times be in the disclosing Party.
8.6 With respect to each item of Confidential Information disclosed,
the obligations of the Parties shall expire five (5) years from the
date of each such disclosure or the maximum period permitted by law if
such period is less than five (5) years.
9. Warranties
9.1 GCC warrants that it (i) has the right to enter into this
Agreement, (ii) owns all right, title and interest in and to the
Equipment, and (iii) has full power and authority to grant the rights
herein granted without the consent of any other person (including
without limitation the right for EDJ to use the Firmware and
Documentation and any copyrights related thereto).
9.2 GCC hereby warrants and represents that the use of the Equipment,
Firmware and Documentation pursuant to this Agreement and the
performance of any services hereunder will not in any way constitute
an infringement or other violation of any copyright, trade secret,
trademark, patent, invention, proprietary information, nondisclosure
or other rights of any third party.
9.3 GCC warrants that this Agreement is not subject or subordinate to
any right of GCC's creditors and that all goods sold hereunder are
free and clear of all liens and encumbrances.
9.4 GCC warrants that (i) all Equipment, Spare Parts and Supplies
delivered pursuant to this Agreement shall conform to the
Specifications attached hereto in Schedules A, C and H, (ii) all
Equipment delivered hereunder shall be new and in good working order,
(iii) all Spare Parts and Supplies delivered hereunder shall be in
good working order and shall be new or remanufactured to meet
Specification requirements (and further provided that any
remanufactured Supplies must conform to the requirements of paragraph
9.5(B.)(ii) hereof), and (iv) it maintains, and shall continue to
maintain for a period of five (5) years after the date of the last
shipment of Equipment under this Agreement, an adequate supply of
Spare Parts for the Equipment.
9.5 A. Equipment Warranties
GCC warrants the Equipment under normal use and service, which shall
include operation in accordance with the duty cycle limititations and
operating conditions indicated in the Specifications, and when
installed and maintained in accordance with GCC's written recommended
procedures, will be free from defects in material and workmanship for
a period of twelve (12) months. The date such warranty coverage begins
with respect to Printers shall be the date each Printer is installed
at the EDJ location provided, however, that such warranty period shall
in no event commence later than (i) ten (10) days from the date of
shipment of each Printer to EDJ for Printers shipped directly from GCC
to EDJ's Branch Office(s) or (ii) fourty-five (45) days from the date
of shipment of Printers to EDJ's Headquarters. The date such warranty
period begins with respect to any accessory shall be the date any such
accessory is installed in the Printer and shall end on the same date
as the Printer it was installed in. In the event any Equipment is
believed by EDJ to be defective within such warranty period(s), EDJ
shall give GCC's Service Dispatch verbal notice of such problem. GCC
shall respond in accordance with response times by location defined in
Schedule G and according to the provisions of paragraph 6.2 hereof;
provided, however, that the defective Equipment has not been subject
to excessive duty cycle, misuse or abnormal operation, improper
alteration, improper installation, repair or improper maintenance by
EDJ or its agent in a manner which GCC reasonably determines to have
adversely affected the performance or reliability of the Equipment. If
the same problem occurs in ten percent (10%) or more of the Equipment
within the warranty period, GCC agrees to use its best efforts to
ensure that the problem does not occur in future Equipment sold
hereunder and to inform EDJ in writing as to what steps GCC has taken
to correct such problems.
THE UTILIZATION OF SUPPLIES NOT PURCHASED FROM GCC AND/OR NOT STORED,
HANDLED OR USED IN ACCORDANCE WITH GCC'S RECOMMENDED PROCEDURES (AS
SPECIFIED IN WRITING TO EDJ) MAY IMPAIR PERFORMANCE OR DAMAGE THE
EQUIPMENT. EQUIPMENT DAMAGED DUE TO THE FAILURE TO ACT IN ACCORDANCE
WITH SUCH PROCEDURES SHALL BE EXCLUDED FROM WARRANTY COVERAGE.
B. Spare Parts and Supplies Warranties
(i) GCC warrants that all Spare Parts shall be free from defects in
materials and workmanship for a period of ninety (90) days from the
date of shipment thereof to EDJ. GCC agrees to promptly repair or
replace defective Spare Parts (normal wear and tear excluded) which
are returned to GCC F.O.B. factory of origin (or other GCC repair
facility as may be designated by GCC) and marked "Defective" within
such warranty period, provided the Spare Part has not been damaged,
subjected to excessive duty cycle, misuse or abnormal operation, or
altered or improperly installed, repaired or maintained by EDJ or its
agent in a manner which GCC reasonably determines to have adversely
affected performance or reliability.
(ii) Supplies
GCC warrants that Supplies sold hereunder, whether new or
remanufactured, will be free from defects in material and workmanship
and wlll meet or exceed the following service life when used in
Equipment maintained in accordance with GCC's recommended procedures
set forth in the Documentation, and provided such Supplies are stored,
handled and used in accordance with such procedures:
Supplies Item Guaranteed Page Life
(At 5% Print Density)
Process Kit 13,000 pages
PM Kit 150,000 pages
PM Kit 240,000 pages
(availability TBD)
In the event that EDJ follows GCC's recommended procedures and a
Supplies item purchased by EDJ hereunder fails to meet the page life
specified above, EDJ shall so notify GCC and GCC shall credit EDJ, on
a pro rata basis, for the difference in cost between the page life
provided by the Supply item in question and the specified page life
above. GCC reserves the right to test, at its sole cost and expense,
such nonconforming Supply items to determine if possible the cause of
such nonconformity and, if such testing reasonably indicates that such
Supply item was subjected to procedures outside those recommended by
GCC, to suspend any such credit on that basis.
In the event GCC determines that an excessive number of Supply items
are failing to meet the guaranteed page life specified above, GCC
shall have the right to request that both GCC and EDJ re-test the
benchmark print samples to determine if EDJ's average print density
has increased from the initial benchmark of three and nine-tenths
percent (3.9%). EDJ's approval for such testing shall not be
unreasonably witheld, and the cost and expense for such testing shall
be borne by each of the testing Parties. If such testing indicates the
average print density has increased by more than thirty percent (30%)
from that benchmark, the Parties agree to negotiate a reasonable
modification to the guaranteed page life specified above.
In the event more than five percent (5%) of a particular production
lot of Supplies delivered to EDJ fails to meet the guaranteed page
life shown above, EDJ may request that GCC replace any Supplies from
such production lot remaining in EDJ's inventory, and GCC will comply
with such request. GCC reserves the right to make a reasonable
investigation to determine the cause of such failures, but agrees that
it's approval to replace such Supplies shall not be unreasonably
witheld. GCC further agrees that it shall pay all shipping costs
resulting from any such replacement.
9.6 GCC warrants that all services performed hereunder including,
without limitation, the maintenance services provided in Article 10
hereof, shall be rendered in accordance with the Specifications stated
herein, and shall be performed in a timely, reasonable and workmanlike
manner by qualified professional personnel, consistent with the
standards prevailing in the industry.
9.7 Except as otherwise provided herein, the above warranties extend
solely to EDJ and its subsidiaries and affiliates and all warranty
claims must be made by EDJ and not by customers or other third
parties.
9.8 The Parties agree that EDJ may hire a third party to provide
maintenance services on all or some of the Equipment purchased under
this Agreement. In the event such third party is hired to provide
maintenance on any Equipment during the time in which such is covered
by any warranty specified herein, GCC agrees that (i) such third party
may fulfill GCC's warranty and maintenance obligations hereunder, (ii)
GCC will reimburse such third party for reasonable labor costs;
provided, however, that such costs shall be negotiated and agreed to
by GCC prior to any such service, and further provided that EDJ shall
assist GCC by participating with GCC in negotiating such labor costs,
and (iii) GCC will provide such third party with all products that GCC
is obligated to provide to EDJ hereunder on the same terms and
conditions provided to EDJ; provided, however, that any such third
party shall agree in writing that any such products shall be used
solely and exclusively to provide the aforementioned service for
Equipment purchased by EDJ hereunder. The Parties acknowledge and
agree that EDJ's third party maintenance provider, if any, may, upon
EDJ's direction, return defective material and GCC shall return
repaired material to said third party maintenance provider.
9.9 THE WARRANTIES CONTAINED IN THIS AGREEMENT ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT
LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY AND SET FORTH EDJ'S EXCLUSIVE REMEDIES IN CONNECTION
WITH SUCH WARRANTIES.
10. Maintenance
10.1 Subject to paragraphs 9.5(A), 9.5(B) and 9.8 hereof, during the
warranty period(s) defined in Article 9 of this Agreement, GCC shall
provide maintenance services on the Equipment free of charge. After
the warranty period and at any time thereafter during the term of this
Agreement, GCC shall, upon the written request of EDJ, provide on-site
maintenance service on the Equipment at the rates set forth in
Schedule F hereto, provided however that such rates shall be subject
to the same provisions as Equipment prices as stated in paragraph 2.5
hereof.
Optionally, GCC reserves the right to provide an alternative bid for
service and support of the entire EDJ Branch Office equipment
configuration utilizing the capabilities of a GCC business partner,
and EDJ hereby agrees to give reasonable consideration to any such
bid.
Subsequent to the term of this Agreement and for a period of five (5)
years after delivery of the last Equipment hereunder, GCC agrees, at
EDJ's request, to provide on-site maintenance services at it's then-
current maintenance prices. GCC agrees that, during any such extended
maintenance period, it shall extend to EDJ its then current most
favored customer rates for such services.
10.2 Maintenance shall include providing new releases, enhancements
and improvements (including but not limited to, extensions and other
changes to the Equipment developed by GCC which GCC has provided free
of charge to any of its customers using equipment similar to the
Equipment) and all corrections to the Equipment.
GCC will provide all reasonable telephone assistance and consultation
to assist EDJ in resolving problems with the function of the
Equipment. GCC will provide a designated technician in St. Louis,
Missouri to work directly with EDJ to assure the performance of the
Equipment.
10.3 GCC will provide on-site maintenance on Equipment after receipt
of verbal notice from EDJ. Maintenance service will be available
Monday through Friday, 8:00 AM through 5:00 PM local time except for
GCC designated holidays. GCC on-site response times will be in
accordance with the list of locations and response times shown in
Schedule G hereof. GCC designated holidays shall be as shown on GCC's
most current fiscal calendar, which may be changed by GCC from year to
year and which is incorporated herein by reference as Schedule I.
GCC shall designate the phone number(s) to be used by EDJ for
notification of such problems and shall provide such telephone
availability from 8:00 AM(EST) to 8:00 PM(EST). GCC shall also
designate specific contact persons that EDJ may contact for
maintenance. For the purpose of maintenance as required herein, GCC
shall, at its own expense, correct such defect, error or non-
conformity comprising a problem by, among other things, suppplying to
EDJ and installing such corrective materials and making such
additions, modifications or adjustments to the Equipment as may be
necessary to keep the Equipment in conformity with the Specifications
and warranties contained in this Agreement.
GCC shall respond to EDJ's request for maintenance notwithstanding
GCC's opinion that the problem is due to software or hardware not
supplied by GCC. In the event GCC responds and the problem is
reasonably determined to be due to software and/or hardware not
supplied by GCC, operator errors, operator responsibility tasks,
interconnect defects, telecommunication problems, abuse,
misapplicaton, customer damage, negligence, utilities malfunction,
natural or civil disaster, and/or acts of God, then EDJ will reimburse
GCC for GCC's reasonable expenses.
10.4 GCC assumes all risk for injuries to or death of its employees
and for damage to its property while on the premises of, or traveling
to or from, EDJ's offices, caused by the negligent acts or omissions
of GCC, its employees, or agents.
11. Modifications
11.1 Modifications shall be incorporated into and are to be considered
an integral part of the Printers shown in Schedule B hereof.
11.2 After the Test 7170 is accepted by EDJ pursuant to paragraph 6.1
hereof, the Modifications shall beprovided for all Equipment shipped
to EDJ. Beforethe Test 7170 is accepted by EDJ pursuant to paragraph
6.1 hereof, the Equipment will be shipped without the Modifications.
Within thirty (30) days after the Test 7170 has been accepted by EDJ,
GCC technicians will install the Modifications in all Equipment
previously
delivered to EDJ. Such installation shall be performed at the sole
cost and expense of GCC and shall be performed at each location of
EDJ's where any Equipment is installed.
11.3 GCC shall provide EDJ with detailed written documentation for
each custom font created in accordance with the Modifications. This
documentation shall be incorporated herein as Schedule H and shall
include, but not be limited to, font spacing tables and character
maps.
11.4 Notwithstanding anything herein to the contrary, EDJ and/or its
service/maintenance provider shall have the right (and GCC hereby
grants EDJ the perpetual right) to copy, modify and make derivative
works of all software included in the Modifications including, without
limitation, the back channel and custom font firmware.
11.5 GCC hereby agrees that in the event GCC should make the EDJ back
channel interface (as defined in Schedule C, Modifications)
commercially available, GCC shall reimburse EDJ the one hundred fifty
thousand dollar ($ 150,000.00) NRE cost previously paid by EDJ. GCC
further agrees that in the event such back channel interface is used
for the purpose of meeting an individual customer's requirements
(other than EDJ), then GCC will so advise EDJ and the Parties agree to
negotiate in good faith a reasonable reimbursement to EDJ relative to
the incremental profit GCC is able to realize from the use of such
back channel interface for said customer(s). In no event would any
such reimbursement exceed the total NRE previously paid by EDJ.
GCC further agrees that if, in the process of offering an industry-
standard back channel interface in any of its current or future
products, it utilizes any portion of the Firmware or Modifications
which was paid for by EDJ as part of the aforementioned NRE, GCC will
so advise EDJ and the Parties agree to negotiate a reasonable
reimbursement to EDJ based on such usage and the commercial value
realized therefrom. In the event GCC offers such industry-standard
back channel interface, EDJ reserves the right to request written
verification from GCC of its use or nonuse of said Firmware and/or
Modifications in such interface, and such written verification shall
not be unreasonably withheld by GCC.
12. Spare Parts
12.1 At all times during the term of this Agreement, EDJ and/or its
third party maintenance provider shall be entitled to order Spare
Parts and Supplies directly from GCC and GCC shall supply such Spare
Parts and Supplies. Any such third party maintenance provider of EDJ
may purchase such items solely and exclusively for use in maintaining
and servicing Equipment purchased by EDJ hereunder, and EDJ shall so
advise any such third party maintenance provider in writing. EDJ must
notify GCC of the existence of any such third party maintenance
provider, in writing, in advance of GCC's acceptance of any purchase
order(s) from any such third party maintenance provider for such
purpose.
12.2 GCC will provide EDJ with a Recommended Spare Parts List (RSPL)
for Equipment covered by this Agreement. Spare Parts shall be
available from GCC for a period of five (5) years from the last
shipment of Equipment under this Agreement. The Spare Parts may be
either original or remanufactured, provided they meet Specifications
requirements. The price for Spare Parts for the initial term of this
Agreement shall be as set forth in Schedule F. The price of Spare
Parts subsequent to the initial term of this Agreement shall be
negotiated by the Parties, however GCC hereby commits that such
pricing shall not exceed pricing offered to any of its other
commercial customers purchasing similar quantities of like equipment.
12.3 GCC is developing a database that will contain (i) GCC's 7170
printer inventory, (ii) GCC's spare parts inventory, and (iii) the
status of all shipments of Equipment and Spare Parts to EDJ. GCC
agrees to allow EDJ to access (and GCC hereby grants EDJ the right and
license to use) such database via an on-line real-time interface. GCC
shall provide EDJ with written instructions explaining in full detail
how to access and use the database and shall supply EDJ with the
appropriate communications protocol. Until such time as the database
is available (or if at any time during the term of this Agreement the
database is unavailable), within ten (10) days after GCC receives a
written request from EDJ, GCC shall prepare and send to EDJ a report
listing, as of the date of the report, (a) GCC's 7170 printer
inventory, (b) GCC's spare parts inventory, and (c) the status of all
shipments of Equipment and Spare Parts to EDJ.
EDJ agrees to hold all such information confidential, as defined by
this Agreement, and agrees that all information contained in this
database is available only to EDJ personnel and is not to be made
available to any other party or agent.
12.4 GCC agrees that the Spare Parts supplied hereunder will conform
to GCC's published specifications. Any changes made to such Spare
Parts that would affect their functional performance shall be subject
to the provisions of paragraph 2.7 B. hereof.
13. Term and Termination
13.1 This Agreement is effective upon the date first written above and
shall continue for a term of thirty-six (36) months unless earlier
terminated or canceled pursuant to the terms of this Agreement. This
Agreement may be extended for additional one (1) year terms by mutual
written agreement of the Parties.
13.2 In the event either Party fails to perform, observe or comply
with any material term, covenant or condition of this Agreement, then
the other Party shall have the right to declare a default. A Party may
declare default by giving the Party it claims is in default written
notice of such claim (such notice shall set forth the manner by which
the defaulting Party may cure the default) and affording the
defaulting Party thirty (30) days after such written notice to cure
the default. If the defaulting Party fails to cure the default within
such thirty (30) day period, the Party claiming default may terminate
this Agreement upon thirty (30) days written notice to the defaulting
Party.
13.3 Each Party shall have the right to terminate this Agreement
thirty (30) days after giving written notice of termination after the
occurrence of any of the following events (and this Agreement shall
automatically terminate at the expiration of such thirty (30) day
period):
13.3.1 a judicial finding that the other is insolvent or bankrupt;
13.3.2 the filing of a petition in bankruptcy by the other or the
filing of any such petition against the other if not dismissed or
withdrawn within sixty (60) days thereafter;
13.3.3 appointment of a receiver, trustee or other custodian for all
or substantially all of the property of the other or for any lesser
portion of such property if the result is materially and adversely to
affect the ability of the other to fulfill its duties hereunder;
13.3.4 an assignment by the other for the benefit of creditors;
13.3.5 the dissolution or liquidation of the other, other than in
consequence of a merger, amalgamation or other corporate
reorganization to which it is a party.
13.4 If any Party hereto should suffer any event of the type
enumerated in paragraph 13.3 above, such Party shall immediately
notify the other Party hereto of the occurrence of such event.
13.5 Notwithstanding anything to the contrary herein, all
confidentiality obligations of this Agreement shall survive
termination, cancellation or expiration of the Agreement, and continue
for the period specified hereinabove. Cancellation of this Agreement
by EDJ shall not terminate the Firmware use and/or reproduction rights
granted hereunder. Cancellation of the Agreement for default shall not
release either of the Parties hereto from any liability, obligation or
agreement which at said time has already accrued to the other Party
hereto, nor affect in any way the survival of any other right, duty or
obligation of either of the Parties hereto which is explicitly stated
in this Article or elsewhere in the Agreement to survive such
cancellation. Further, the cancellation of this Agreement for default
shall not be deemed to be a waiver or release of, or otherwise
prejudice or adversely affect any right, remedies or claims, whether
for damages or otherwise, which either Party hereto may then or
hereafter possess under this Agreement.
14. Indemnity
14.1 GCC agrees to (i) settle and/or defend EDJ, EDJ's affiliates,
and/or any of EDJ's agents or employees (collectively, the
"Indemnified Parties") at GCC's sole cost and expense, against all
liabilities, expenses, losses, damages, claims and demands to the
extent arising from (a) the gross negligence of GCC or any of its
agents or employees and/or (b) the use of the Equipment, the Firmware
and/or the Documentation (provided that said use is in accordance with
the Specifications contained in this Agreement) by any of the
Indemnified Parties including, without limitation and except as noted
in the last sentence of this paragraph 14.1 below, the violation (or
alleged violation) by any of the Indemnified Parties of any third
party trade secrets, proprietary information, trade mark, copyright or
patent rights, (ii) indemnify and hold all Indemnified Parties
harmless from and against any of the foregoing liabilities (or similar
claims), and (iii) pay damages awarded against any of the Indemnified
Parties attributable to any of the foregoing liabilities (or similar
claims); provided, however, that (I) GCC is notified in writing of any
such claim and is furnished with all papers received in connection
therewith within a reasonable time after GCC has received actual
notice of such claim, (II) GCC shall have direction and control of any
negotiations or of any suit which may be brought, and (III) EDJ shall
assist GCC in GCC's defense in any way reasonably requested by GCC's
attorneys. With regard to the indemnities contained in this paragraph
14.1, no warranty against infringement and no patent or copyright
indemnity whatever against foreign patents or copyrights, excluding
Canada, is granted by GCC, and GCC does not agree to hold EDJ harmless
for use by EDJ of the Equipment abroad, excluding Canada.
14.2 If EDJ's quiet enjoyment or use of the Equipment, Firmware and/or
Documentation is seriously endangered or disrupted by reason of any
claim stated in paragraph 14.1 above, GCC shall, at its option, (i)
modify the Equipment, Firmware and/or Documentation to make it non-
infringing, (ii) substitute for the Equipment, Firmware and/or the
Documentation other functionally equivalent noninfringing equipment,
firmware and/or documentation, or (iii) obtain for EDJ the right and
license to continue to use the Equipment, Firmware and/or
Documentation and pay any applicable fees in connection with such
license. If GCC is unable to accomplish any of the foregoing
alternatives, then, at EDJ's option, GCC shall (a) remove the
particular item at issue and refund to EDJ the then-current value of
such item (such value to be determined by the Parties based on the
original purchase price paid by EDJ less a reasonable amount for use
or damage), or (b) remove all of the items delivered hereunder and
refund to EDJ the entire amounts paid under this Agreement. To the
extent any character sets, fonts or font software or any portion of
the backchannel interface are developed by GCC to meet EDJ's
particular specifications, GCC shall have no liability under this
provision for any claim that such character sets, fonts or backchannel
interface infringe the rights of a third party and EDJ agrees to
defend, protect and save harmless GCC against all suits at law or in
equity and from and against all expenses, loss, liability, damage,
claims and demands arising from such actual or alleged infringement.
14.3 GCC's obligations hereunder shall not apply to any use of the
Equipment and/or Firmware not authorized by this Agreement. If
infringement is alleged prior to completion of delivery, GCC may
decline to make further shipments without being in breach of this
Agreement. GCC's liability under this Article 14 shall be limited to
(i) the amounts paid by EDJ to GCC hereunder and/or (ii) the extent of
any personal injury claims as finally settled.
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY OF ITS
COLLATERAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR EXEMPLARY DAMAGES
ARISING OUT OF PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT OR
MISAPPROPRIATIONS OF TRADE SECRETS.
THE FOREGOING STATES THE SOLE AND EXCLUSIVE LIABILITY OF EDJ AND GCC
FOR PATENT OR COPYRIGHT INFRINGEMENT OR MISAPPROPRIATIONS OF TRADE
SECRETS AND IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, IN
REGARD THERETO.
15. Notice
Any notice required or permitted pursuant to this Agreement shall be
made by first class mail or by private courier capable of delivering
messages with comparable speed. Notices given as herein provided shall
be considered to have been given upon receipt.
15.2 Routine and special communications shall be deemed sufficient if
sent to the following addresses:
Notice to GCC:
Dept. of Contracts Administration
Copy: Sr. V.P., Sales
GENICOM Corporation
Waynesboro, VA 22980-1999
Notice to EDJ:
Edward D. Jones & Co., L.P.
201 Progress Parkway
Maryland Heights, MO 63043
ATTN: Rich Malone
15.3 Notices of change of address may be made at any time and shall be
effective upon receipt.
16. Miscellaneous Provisions
16.1 GCC shall provide EDJ with summaries of all testing results of
the Equipment including, without limitation, the results of testing
performed by SSS in Japan. The latter results will be provided as
received by GCC, and will be provided to EDJ written in the English
language.
16.2 EDJ acknowledges that part of the Equipment is manufactured by
Toshiba Corporation. For the duration of this Agreement, GCC agrees to
provide to EDJ, within thirty (30) days of their availability to GCC,
complete and total written results of all quality engineer audits of
all parts of the Equipment manufactured by Toshiba Corporation. Such
results shall be provided to EDJ written in the English language.
16.3 GCC agrees not to contact any of EDJ's Branch Offices, or
employees thereof, without the prior written consent of EDJ; provided,
however, that GCC can contact such offices and employees in the normal
performance of warranty and maintenance of Equipment.
16.4 Beginning on the date of execution of this Agreement, GCC agrees
to supply EDJ with written reports every month for (i) all of GCC's
customers using 7170 printers and (ii) all of EDJ's facilities using
the Equipment. Such reports shall set forth all problem calls on the
7170 printer and the Equipment, respectively, for the previous month.
The reports will explain, among other things, the nature of the
problem and the solution.
16.5 GCC acknowledges that some of the Equipment may be used by non-
EDJ personnel and at non-EDJ locations such as, but not limited to,
homes of EDJ employees or third party mutual fund offices.
Accordingly, GCC agrees that, notwithstanding anything contained
herein to the contrary, such use will not invalidate any warranty or
other right granted hereunder.
16.6 To the extent that any of the covenants set forth herein, or any
word, phrase, clause or sentence thereof, shall be found to be illegal
or unenforceable for any reason, such covenants, word, phrase, clause
or sentence shall be modified or deleted in such manner so as to make
the Agreement as modified legal and enforceable under applicable laws,
and the balance of the Agreement or part thereof shall not be affected
thereby, the balance being construed as severable and independent.
16.7 This Agreement represents the entire agreement between EDJ and
GCC with respect to the subject matter hereof, superseding all other
previous oral or written communications, representations, or
agreements with respect to the subject matter herein. This Agreement
may be modified only by a writing duly authorized and executed by both
Parties. Any terms and conditions contained on EDJ's purchase orders
or GCC's SOA's which add to or conflict with the terms and conditions
of this Agreement shall not be binding on either Party.
16.8 Any controversy or claim related to or arising out of the matters
addressed in this Agreement shall be finally settled by binding
arbitration conducted on a confidential basis pursuant to the
Commercial Arbitration Rules of the American Arbitration Association.
Any decision or award as a result of any arbitration proceeding shall
include the assessment of costs, expenses and reasonable attorneys'
fees and shall be final, binding and enforceable in any court of
competent jurisdiction. Absent agreement to the contrary, any
arbitration shall be conducted by three arbitrators, at least one of
whom shall be knowledgeable in data processing and business
information systems and at least one of whom shall be an attorney. The
arbitration shall be conducted at a mutually agreed location. If the
Parties cannot agree upon a location, then the arbitrators shall
select a site for the arbitration which is, in the discretion of the
arbitrators, approximately equally convenient for both Parties.
Neither Party shall be precluded hereby from seeking provisional
remedies in the courts with jurisdiction including, but not limited
to, temporary restraining orders and preliminary injunctions, to
protect its rights and interests, but such shall not be sought as a
means to avoid or stay arbitration.
16.9 No waiver of any right or breach of any provision of this
Agreement shall constitute a waiver of any other right or breach of
any other provisions, nor shall it be deemed to be a general waiver of
such provision by that Party or to sanction any subsequent breach
thereof by the other Party. Should legal action become necessary to
enforce any of the terms and conditions set forth herein, the losing
Party shall pay to the prevailing Party all costs and expenses
incurred in connection with such action, including reasonable
attorney's fees.
16.10 Headings in the Agreement are included for convenience only and
are not to be used in construing or interpreting this Agreement.
16.11 Each Party hereto shall execute and deliver all such further
instruments and documents as may reasonably be requested by the other
Party in order to carry out fully the intent and accomplish the
purposes of this Agreement and transactions referred to herein.
16.12 This Agreement shall be binding on the Parties and their
successors and permitted assigns. Neither Party may assign this
Agreement or delegate rights, powers, duties or obligations hereunder
without the prior written consent of the other Party. Any assignment
made contrary to this paragraph 16.12 shall be void and the
nonassigning Party may immediately terminate this Agreement by sending
written notice to the other Party.
In the event that GCC, during any term of this Agreement, consumates
the sale of (i) stock of GCC which changes the control of GCC or (ii)
all or substantially all of the assets of GCC (whether or not there is
also an attempted assignment of this Agreement), then EDJ shall have
the right, at its option, to terminate this Agreement and any
outstanding orders previously placed with GCC.
16.13 This is a contract for the sale of goods.
16.14 This Agreement may be executed in separate counterparts and, if
so executed, shall have the same force and effect as though all
signatures were on the same document.
16.15 In the event EDJ exports or re-exports the Equipment, EDJ shall
have full responsibility for obtaining all necessary approvals,
licenses, permits and the like which may be required by regulatory or
government body. EDJ agrees to abide by the rules and regulations of
the U.S. Department of Commerce, Office of Export Administration, when
exporting or re-exporting the Equipment or Spare Parts thereof.
16.16 EDJ shall have no right to use GCC's trademarks, trade names,
logos or other GCC indicia in EDJ's advertising or promotional
material in such a manner as might convey to the reader or viewer that
EDJ is a distributor or representative of GCC. Absent another express
written agreement between GCC and EDJ, EDJ is not and shall in no way
hold itself out as a distributor or representative of GCC.
16.17 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY COLLATERAL,
CONSEQUENTIAL, INDIRECT, INCIDENTAL OR EXEMPLARY DAMAGES ARISING OUT
OF, OR CONNECTED IN ANY WAY WITH, THIS AGREEMENT OR ANY GOODS SOLD
PURSUANT HERETO.
16.18 EDJ agrees that the Equipment purchased hereunder will be used
by EDJ as a constituent part of an integrated system or systems for
use by EDJ in its business either on its premises or the premises of
EDJ's customers or vendors.
GCC represents that as of the effective date hereof, it intends to
market, sell and otherwise make commercially available equipment
substantially similar to the Equipment (excluding the Modifications
that contain any custom font software) as part of its standard product
offering. GCC agrees that, except as provided in paragraph 11.6
hereof, it shall not market, sell or otherwise make commercially
available any product incorporating any part of the Modifications. GCC
further agrees that, irrespective of the provisions of paragraph 11.6
hereof, it shall not market, sell or otherwise make available to any
other customer any software or firmware incorporating any portion of
EDJ's custom fonts as defined in Schedule H hereof.
16.19 In the event of any work by GCC on the premises of EDJ or EDJ'S
customers, EDJ shall take (or cause its customers to take) reasonable
precautions to prevent the occurrence of any injury to person or
property, including personnel and property of GCC, during the progress
of such work; and except as and to the extent that such injury is due
solely and directly to the negligence of a GCC employee while on the
premises of EDJ or EDJ' s customers, EDJ hereby indemnifies GCC
against all claims, demands, liabilities or loss which may result in
any way from any act or omission of EDJ, its customers or their
agents, employees or subcontractors.
16.20 Time is of the essence with respect to GCC's obligations
hereunder.
16.21 This Agreement shall be governed by the laws of the State of
Missouri.
16.22 No right or remedy conferred herein is exclusive of any other
right or remedy conferred herein or by law, but all such remedies are
cumulative of every other right or remedy conferred hereunder or at
law or in equity, by statute or otherwise, and may be exercised
concurrently or separately from time to time.
16.23 Schedules
The following Schedules attached hereto are hereby incorporated into
this Agreement (in the event of a conflict between the terms contained
in this Agreement and any of the terms contained in any of the
Schedules or amendments thereto, the terms of this Agreement shall
control):
Schedule Referenced Paragraph
Schedule A - Printer 1.3, 1.7, 2.3, 9.4
Specification
Schedule B - Equipment 1.4, 1.7, 1.8, 1.10,
Upgrades & 2.4, 2.5, 2.8, 11.1
Pricing
Schedule C - Modifications 1.6, 1.7, 1.8, 2.1,
2.3, 9.4, 11.1, 11.5
Schedule D - Firmware 5.6
Schedule E - Firmware 5.6
Escrow Agreement
Schedule F - Maintenance 1.9, 3.3, 10.1, 12.2
Schedule G - Service 6.2
Response Times
Schedule H - Specification 1.7, 1.8, 9.4
Schedule I - GCC Holidays 10.3
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed in duplicate by their duly authorized representatives as
of the day and year above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
ENFORCED BY THE PARTIES.
"EDJ"
EDWARD D. JONES & COMPANY, L.P.
By:
"GCC"
GENICOM CORPORATION
By:
DEED OF TRUST AND SECURITY AGREEMENT
(With Future Advances and Future Obligations
Governed by Section 443.055 R.S.Mo.)
THIS DEED OF TRUST AND SECURITY AGREEMENT (hereinafter referred to as
the "Mortgage") is made and executed this 9th day of March, 1993, by
and among EDJ LEASING CO., L.P., a Missouri limited partnership having
its principal address at 201 Progress Parkway, Maryland Heights,
Missouri 63043, Attention: Edward Soule (hereinafter referred to as
"Mortgagor"), and Robert C. Graham III of the County of St. Louis,
Missouri hereinafter referred to as "Trustee"), and NATIONWIDE LIFE
INSURANCE COMPANY, an Ohio corporation, its successors and assigns,
having its principal office at One Nationwide Plaza, Columbus, Ohio
43216, Attention: Real Estate Investments, or at such other place
either within or without the State of Ohio, as it may from time to
time designate (hereinafter referred to as "Mortgagee");
W I T N E S S E T H:
WHEREAS, Mortgagor is justly indebted to Mortgagee in the principal
sum of Eleven Million Seven Hundred Thousand and 00/100 Dollars
($11,700,000.00) with interest thereon, which indebtedness is
evidenced and represented by a certain Mortgage Note of even date
herewith in the sum of Eleven Million Seven Hundred Thousand and
00/100 Dollars ($11,700,000.00) payable to Nationwide Life Insurance
Company (said Mortgage Note being hereinafter referred to as the
"Note"), which Note shall be due and payable on April 5, 2008, and all
other notes given in substitution therefor or in modification,
increase, renewal or extension thereof, in whole or in part; and
WHEREAS, Mortgagee, as a condition precedent to the extension of
credit and the making of the loan evidenced by the Note, has required
that Mortgagor provide Mortgagee with security for the repayment of
the indebtedness evidenced by the Note as well as for the performance,
observance and discharge by Mortgagor of various covenants, conditions
and agreements made by Mortgagor to, with, in favor of and for the
benefit of Mortgagee with respect to said indebtedness and such
security;
NOW THEREFORE, in consideration of and in order to secure the
repayment of the indebtedness evidenced and represented by the Note,
together with interest on such indebtedness, as well as the payment of
all other sums of money secured hereby, as hereinafter provided; and
to secure the observance, performance and discharge by Mortgagor of
all covenants, conditions and agreements set forth in the Note, this
Mortgage and in all other documents and instruments executed and
delivered by Mortgagor to and in favor of Mortgagee for the purpose of
further securing the repayment of the indebtedness evidenced and
represented by the Note; and in order to charge the properties,
interests and rights hereinafter described with such payment,
observance, performance and discharge; and in consideration of the sum
of One Dollar paid by Trustee to Mortgagor and the trust hereinafter
mentioned and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor does hereby
Grant, Bargain and Sell, Convey and Confirm, and alien, remise,
release, assign, transfer, pledge, deliver, set over, hypothecate, and
warrant unto Trustee forever, all of Mortgagor's right, title and
interest in and to the following described properties, rights and
interests and all replacements of, substitutions for, and additions
thereto (all of which are hereinafter together referred to as the
"Property"), to wit:
ALL THAT certain piece, parcel or tract of land or real property of
which Mortgagor is now seized and in actual or constructive
possession, situate in St. Louis County, Missouri, more particularly
described on Exhibit A attached hereto and by this reference made a
part hereof (hereinafter referred to as the "Real Property");
TOGETHER WITH all buildings, structures and other improvements of any
kind, nature or description now or hereafter erected, constructed,
placed or located upon said Real Property (which buildings, structures
and other improvements are hereinafter sometimes together referred to
as the "Improvements"), including, without limitation, any and all
additions to, substitutions for or replacements of such Improvements;
TOGETHER WITH all minerals, royalties, gas rights, water, water
rights, water stock, flowers, shrubs, lawn plants, crops, trees,
timber and other emblements now or hereafter located on, under or
above all or any part of the Real Property;
TOGETHER WITH all and singular, the tenements, hereditaments, strips
and gores, rights-of-way, easements, privileges and other
appurtenances now or hereafter belonging or in any way appertaining to
the Real Property, including, without limitation, all right, title and
interest of the Mortgagor in any after-acquired right, title,
interest, remainder or reversion, in and to the beds of any ways,
streets, avenues, roads, alleys, passages and public places, open or
proposed, in front of, running through, adjoining or adjacent to said
Real Property (hereinafter sometimes together referred to as
"Appurtenances");
TOGETHER WITH any and all leases, contracts, rents, royalties,
issues, revenues, profits, proceeds, income and other benefits,
including accounts receivable, of, accruing to or derived from said
Real Property, Improvements and Appurtenances and any business or
enterprise presently situated or hereafter operated thereon and
therewith (hereinafter sometimes referred to as the "Rents");
TOGETHER WITH any and all awards or payments, including interest
thereon, and the right to receive the same, as a result of (a) the
exercise of the right of eminent domain, (b) the alteration of the
grade of any street, or (c) any other injury to, taking of, or
decrease in the value of, the Property, to the extent of all amounts
which may be secured by this Mortgage at the date of any such award or
payment including but not limited to the Reasonable Attorneys' Fees
(as hereinafter defined), costs and disbursements incurred by the
Mortgagee in connection with the collection of such award or payment.
AS WELL AS all of the right, title and interest of Mortgagor in and
to all fixtures, goods, inventory, chattels, construction supplies and
materials, fittings, furniture, furnishings, equipment, machinery,
apparatus, appliances, and other items of personal property, whether
tangible or intangible, of any kind, nature or description, whether
now owned or hereafter acquired by Mortgagor, including, without
limitation, all signs and displays, all heating, air conditioning,
water, gas, lighting, incinerating and power equipment; all engines,
compressors, pipes, pumps, tanks, motors, conduits, wiring, and
switchboards; all plumbing, lifting, cleaning, fire prevention, fire
extinguishing, sprinkling, refrigerating, ventilating, waste removal
and communications equipment and apparatus; all boilers, furnaces,
oil burners, vacuum cleaning systems, elevators, and escalators; all
stoves, ovens, ranges, disposal units, dishwashers, water heaters,
exhaust systems, refrigerators, cabinets and partitions; all rugs,
attached floor coverings, curtains, rods, draperies, and carpets; all
building materials, tools, shades, awnings, blinds, screens, storm
doors and windows; and all other general intangibles, contract
rights, accounts receivable, chattel paper, documents and business
records, of every kind, including, without limitation, any and all
licenses, permits, or franchises; any of which is, are or shall
hereafter be, attached, affixed to or used or useful, either directly
or indirectly, in connection with the complete and comfortable use,
occupancy and operation of the Real Property and Improvements and
Appurtenances as an office building, or any other business, enterprise
or operation as may hereafter be conducted upon or within said Real
Property, Improvements and Appurtenances, as well as the proceeds
thereof or therefrom regardless of form (hereinafter sometimes
together referred to as the "Fixtures and Personal Property," which
term expressly excludes any toxic wastes or substances deemed
hazardous under federal, state, regional or local laws). Mortgagor
hereby expressly grants to Mortgagee a present security interest in
and a lien and encumbrance upon the Fixtures and Personal Property
(Notwithstanding anything herein to the contrary, nothing contained
herein shall be deemed to grant Mortgagee a security interest in any
furnishings, furniture, or computer equipment owned by any tenant
including, but without limitation, Jones [as herein defined], under
any lease affecting the Property and used by such tenant, with respect
to the conduct of its business on the Property and the term Fixtures
and Personal Property shall not be deemed to include any such
furnishings, fixtures or computer equipment.);
TO HAVE AND TO HOLD the foregoing Property and the rights hereby
granted for the use and benefit of the Trustee and the Trustee's
successors and assigns forever in trust, for the uses and purposes set
forth, possession of the Property being hereby granted and conveyed to
the Trustee;
AND Mortgagor covenants and warrants with and to Mortgagee that
Mortgagor is indefeasibly seized of the Property and has good right,
full power, and lawful authority to convey and encumber all of the
same as aforesaid; that Mortgagor hereby fully warrants the title to
the Property and will defend the same and the validity and priority of
the lien and encumbrance of this Mortgage against the lawful claims of
all persons whomsoever; and Mortgagor further warrants that the
Property is free and clear of all liens and encumbrances of any kind,
nature or description, save and except only (with respect to said Real
Property, Improvements and Appurtenances) for real property taxes for
years subsequent to 1992 (which are not yet due and payable) and those
matters set forth in the title insurance policy issued to Mortgagee
insuring the first lien priority of this Mortgage (hereinafter
referred to as the "Permitted Exceptions");
PROVIDED ALWAYS, however, that if Mortgagor shall pay unto Mortgagee
the indebtedness evidenced by the Note, and if Mortgagor shall duly,
promptly and fully perform, discharge, execute, effect, complete and
comply with and abide by each and every one of the agreements,
conditions and covenants of the Note, this Mortgage and all other
documents and instruments executed as further evidence of or as
security for the indebtedness secured hereby, then this Mortgage and
the estates and interests hereby granted and created shall cease,
terminate and be null and void, and shall be discharged of record by a
proper deed of release furnished by the Mortgagee and executed in
recordable form, at the request and expense of Mortgagor, which
expense Mortgagor agrees to pay;
AND Mortgagor, for the benefit of Mortgagee and Trustee does hereby
expressly covenant and agree:
PAYMENT OF PRINCIPAL AND INTEREST
1. To pay the principal of the indebtedness evidenced by the Note,
together with all interest thereon, in accordance with the terms of
the Note, promptly at the times, at the place and in the manner that
said principal and interest shall become due, and to promptly and
punctually pay all other sums required to be paid by Mortgagor
pursuant to the terms of the Note, this Mortgage and all other
documents and instruments executed as further evidence of, as
additional security for or in connection with the indebtedness
evidenced by the Note and secured by this Mortgage (hereinafter
together referred to as the "Loan Documents").
PERFORMANCE OF OTHER OBLIGATIONS
2. To perform, comply with and abide by each and every one of the
covenants, agreements and conditions contained and set forth in the
Note, this Mortgage and the other Loan Documents and to comply with
all laws, ordinances, rules, regulations and orders of governmental
authorities now or hereafter affecting the Property or requiring any
alterations or improvements to be made thereon, and perform all of its
obligations under any covenant, condition, restriction or agreement
of record affecting the Property and to insure that at all times the
Property constitutes one or more legal lots capable of being conveyed
without violation of any subdivision or platting laws, ordinances,
rules or regulations, or other laws relating to the division or
separation of real property.
PRESERVATION AND MAINTENANCE OF PROPERTY; ACCESSIBILITY; HAZARDOUS
WASTE
3. To keep all Improvements now existing or hereafter erected on
the Real Property in good order and repair and not to do or permit any
waste impairment or deterioration thereof or thereon, nor to alter,
remove or demolish any of the Improvements or any Fixtures or Personal
Property attached or appertaining thereto, without the prior written
consent of Mortgagee (provided, however, this provision shall not
apply to any repair, remodeling or renovation work, structural or
otherwise), nor to initiate, join in or consent to any change in any
private restrictive covenant, zoning ordinance or other public or
private restrictions limiting or defining the uses which may be made
of the Property or any part thereof, nor to do or permit any other act
whereby the Property shall become less valuable, be used for purposes
contrary to applicable law or used in any manner which will increase
the premium for or result in a termination or cancellation of the
insurance hereinafter required to be kept and maintained on the
Property. In furtherance of, and not by way of limitation upon the
foregoing covenant, Mortgagor shall effect such repairs as Mortgagee
may reasonably require, and from time to time make all needful and
proper replacements so that the Improvements, Appurtenances, Fixtures
and Personal Property will, at all times, be in good condition, fit
and proper for the respective purposes for which they were originally
erected or installed. Mortgagor at all times shall maintain the
Property in full compliance with all federal, state or municipal laws,
ordinances, rules and regulations currently in existence or
hereinafter enacted or rendered governing accessibility for the
disabled, including but not limited to The Architectural Barriers Act
of 1968, The Rehabilitation Act of 1973, The Fair Housing Act of 1988,
and The Americans with Disabilities Act (hereinafter collectively
called the "Accessibility Laws"). Mortgagor at all times shall keep
the Property and ground water of the Property free of Hazardous
Materials (as hereinafter defined) in excess of limits prescribed by
Hazardous Waste Laws (hereinafter defined). Mortgagor shall not
knowingly permit its tenants or any third party requiring the consent
of Mortgagor to enter the Property, to use, generate, manufacture,
treat, store, release, threaten release, or dispose of Hazardous
Materials in, on or about the Property or the ground water of the
Property in violation of any federal, state or municipal law,
decision, statute, rule, ordinance or regulation currently in
existence or hereinafter enacted or rendered (hereinafter collectively
referred to as "Hazardous Waste Laws"). Mortgagor shall give
Mortgagee prompt written notice of any claim by any person, entity, or
governmental agency that a significant release or disposal of
Hazardous Materials has occurred on the Property. Mortgagor, through
its professional engineers and at its cost, shall promptly and
thoroughly investigate suspected Hazardous Materials contamination of
the Property. Mortgagor shall forthwith remove, repair, clean up,
and/or detoxify any Hazardous Materials in excess of limits prescribed
by Hazardous Waste Laws from the Property or the ground water of the
Property whether or not such actions are required by law, and whether
or not Mortgagor was responsible for the existence of the Hazardous
Materials in, on or about the Property or the ground water of the
Property. Hazardous Materials shall include but not be limited to
substances defined as "hazardous substances," "hazardous materials,"
or "toxic substances" in The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by The Superfund
Amendments and Reauthorization Act of 1986, The Hazardous Materials
Transportation Act, The Resource Conservation and Recovery Act of
1976, as amended by The Used Oils Recycling Act of 1980, The Solid
Waste Disposal Act amendment of 1984, The Toxic Substances Control
Act, The Clean Air Act, The Clean Water Act, the Missouri Hazardous
Waste Management Law (Mo. Rev. Stat. SS 260.350-260.434), the Missouri
Abandoned or Uncontrolled Sites Law (Mo. Rev. Stat. SS 260.435-
260.546), the Missouri Air Conservation Law (Mo. Rev. Stat. Chapter
643), the Missouri Clean Water Law (Mo. Rev. Stat. Chapter 644), the
Missouri Underground Storage Tank Law (Mo. Rev. Stat. SS 319.100-
319.137) or in any other Hazardous Waste Laws.
Mortgagor and the general partner of Mortgagor, LHC, Inc., and any
other current or future general partner of Mortgagor ("General
Partner") hereby agree to indemnify Mortgagee and Trustee and hold
Mortgagee and Trustee harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses and claims of any and
every kind whatsoever paid, incurred or suffered by, or asserted
against Mortgagee or Trustee for, with respect to, or as a direct or
indirect result of, the non-compliance of the Property with the
Accessibility Laws and/or the presence in, on or under, or the escape,
seepage, leakage, spillage, discharge, emission, discharging or
release from, the Property of any Hazardous Materials in excess of
limits prescribed by Hazardous Waste Laws (including, without
limitation, any losses, liabilities, damages, injuries, costs,
expenses or claims asserted or arising under any Hazardous Waste
Laws), regardless of the source of origination and whether or not
caused by, or within the control of, Mortgagor.
Mortgagee, and/or its agents, shall have the right and shall be
permitted, but shall not be required, at all reasonable times, to
enter upon and inspect the Property to insure compliance with the
foregoing covenants and any and all other covenants, agreements and
conditions set forth in this Mortgage.
Liability under this Paragraph shall extend beyond repayment of the
Note and compliance with the terms of this Mortgage; provided,
however, Mortgagor and General Partner shall have no liability under
this Paragraph 3 regarding Hazardous Materials if (a) the Property
becomes contaminated subsequent to Mortgagee's acquisition of the
Property by foreclosure, acceptance by Mortgagee of a deed in lieu
thereof, or subsequent to any transfer of ownership of the Property
which was approved or authorized by Mortgagee in writing, provided
that such transferee assumes all obligations of Mortgagor with respect
to Hazardous Materials or (b) at such time Mortgagor provides
Mortgagee with an environmental assessment report acceptable to
Mortgagee, in its sole discretion, showing the Property to be free of
Hazardous Materials and not in violation of any Hazardous Waste Laws.
The burden of proof under this paragraph with regard to establishing
the date upon which any Hazardous Material was placed or appeared in,
on or under the Property shall be upon Mortgagor.
PAYMENT OF TAXES, ASSESSMENTS AND OTHER CHARGES
4. To pay all and singular such taxes, assessments and public
charges as already levied or assessed or that may be hereafter levied
or assessed upon or against the Property, when the same shall become
due and payable according to law, before the same become delinquent,
and before any interest or penalty shall attach thereto, and to
deliver official receipts evidencing the payment of the same to
Mortgagee not later than thirty (30) days following the payment of the
same. Mortgagor shall have the right to contest, in good faith, the
proposed assessment of ad valorem taxes or special assessments by
governmental authorities having jurisdiction over the Property;
provided, however, Mortgagor shall give written notice thereof to
Mortgagee and Mortgagee may, in its sole discretion, require Mortgagor
to post a bond or other collateral satisfactory to Mortgagee in
connection with any such action by Mortgagor.
PAYMENT OF LIENS, CHARGES AND ENCUMBRANCES
5. To immediately pay and discharge from time to time when the same
shall become due all lawful claims and demands of mechanics,
materialmen, laborers and others which, if unpaid, might result in, or
permit the creation of, a lien, charge or encumbrance upon the
Property or any part thereof, or on the rents, issues, income,
revenues, profits and proceeds arising therefrom and, in general, to
do or cause to be done everything necessary so that the lien of this
Mortgage shall be fully preserved, at the cost of Mortgagor, without
expense to Mortgagee. Mortgagor shall have the right to contest, in
good faith and in accordance with applicable laws and procedures,
mechanics' and materialmens' liens filed against the Property;
provided however, that Mortgagor shall give written notice thereof to
Mortgagee, and Mortgagee may, at its sole option, require Mortgagor to
post a bond or other collateral satisfactory to Mortgagee (and
acceptable to the title company insuring the Mortgage) in connection
with any such action by Mortgagor.
PAYMENT OF JUNIOR ENCUMBRANCES
6. To permit no default or delinquency under any other lien,
imposition, charge or encumbrance against the Property, even though
junior and inferior to the lien of this Mortgage; provided however,
the foregoing shall not be construed to permit any other lien or
encumbrance against the Property.
PAYMENT OF MORTGAGE TAXES
7. To pay any and all taxes which may be levied or assessed
directly or indirectly upon the Note and this Mortgage (except for
income taxes payable by Mortgagee) or the debt secured hereby, without
regard to any law which may be hereafter enacted imposing payment of
the whole or any part thereof upon Mortgagee, its successors or
assigns. Upon violation of this agreement to pay such taxes levied or
assessed upon the Note and this Mortgage, or upon the rendering by any
court of competent jurisdiction of a decision that such an agreement
by Mortgagor is legally inoperative, or if any court of competent
jurisdiction shall render a decision that the rate of said tax when
added to the rate of interest provided for in the Note exceeds the
then maximum rate of interest allowed by law, then, and in any such
event, the debt hereby secured shall, at the option of Mortgagee, its
successors or assigns, become immediately due and payable, anything
contained in this Mortgage or in the Note secured hereby
notwithstanding, without the imposition of a Prepayment Premium (as
defined in the Note). The additional amounts which may become due and
payable hereunder shall be part of the debt secured by this Mortgage.
HAZARD INSURANCE
8. To continuously, during the term hereof, keep the Improvements,
the Fixtures and Personal Property, now or hereafter existing,
erected, installed and located in or upon the Real Property, insured
with extended coverage insurance against loss or damage resulting from
fire, windstorm, flood, sinkhole and such other hazards, casualties,
contingencies and perils including, without limitation, other risks
insured against by persons operating like properties in the locality
of the Property, or otherwise deemed necessary by Mortgagee, on such
forms as may be required by Mortgagee, covering the Property in the
amount of the full replacement cost thereof, less excavating and
foundation costs (provided however, in no case shall the amount of
insurance be less than the difference between the amount of the Note
and eighty percent (80%) of the appraised value of the Real Property)
and covering loss by flood (if the Property lies in a specified Flood
Hazard Area as designated on the Department of Housing and Urban
Development Maps, or other flood prone designation) in an amount equal
to the outstanding principal balance of the indebtedness secured
hereby or such other amount as approved by Mortgagee. All such
insurance shall be carried with a company or companies acceptable to
Mortgagee, which company or companies shall have a rating at the time
this Mortgage is executed equivalent to at least A:VIII as shown in
the most recent Best's Key Rating Guide, and the original policy or
policies and renewals thereof (or, at the sole option of Mortgagee,
duplicate originals or certified copies thereof), together with
receipts evidencing payment of the premium therefor, shall be
deposited with, held by and are hereby assigned to Mortgagee as
additional security for the indebtedness secured hereby. Each such
policy of insurance shall contain a non- contributing loss payable
clause in favor of and in form acceptable to Mortgagee and shall
provide for not less than thirty (30) days' prior written notice to
Mortgagee of any intent to modify, cancel or terminate the policy or
policies, or the expiration of, such policies of insurance. If the
insurance required under this Paragraph 8 or any portion thereof is
maintained pursuant to a blanket policy, Mortgagor shall furnish to
Mortgagee a certified copy of such policy, together with an original
certificate indicating that Mortgagee is an insured under such policy
in regard to the Property and showing the amount of coverage
apportioned to the Property which coverage shall be in an amount
sufficient to satisfy the requirements hereof. Not less than fifteen
(15) days prior to the expiration dates of each policy required of
Mortgagor hereunder, Mortgagor will deliver to Mortgagee a renewal
policy or policies marked "premium paid" or accompanied by other
evidence of payment and renewal satisfactory to Mortgagee; and in the
event of foreclosure of this Mortgage, any purchaser or purchasers of
the Property shall succeed to all rights of Mortgagor, including any
rights to unearned premiums, in and to all insurance policies assigned
and delivered to Mortgagee pursuant to the provisions of this
Paragraph 8.
In the event of loss by reason of hazards, casualties, contingencies
and perils for which insurance has been required by Mortgagee
hereunder, Mortgagor shall give immediate notice thereof to Mortgagee,
and Mortgagee is hereby irrevocably appointed attorney-in-fact coupled
with an interest, for Mortgagee to, at its option, make proof of loss
if not made promptly by Mortgagor, and each insurance company
concerned is hereby notified, authorized and directed to make payment
for such loss directly to Mortgagee, instead of to Mortgagor and
Mortgagee jointly. Provided Mortgagor is not in default hereunder or
under any other Loan Documents, Mortgagor and Mortgagee shall jointly
adjust and compromise any losses for which insurance proceeds are
payable under any of the aforesaid insurance policies; provided that
if Mortgagor and Mortgagee cannot agree on such adjustment within
thirty (30) days, Mortgagee shall adjust and compromise any losses in
its sole discretion, which Mortgagor authorizes Mortgagee to do.
Mortgagor authorizes Mortgagee, after deducting the costs of
collection, to apply the proceeds of such insurance, at its option, as
follows: (a) to the restoration or repair of the insured
Improvements, Fixtures and Personal Property, provided that, in the
opinion and sole discretion of Mortgagee, such restoration or repair
is reasonably practical and, provided further, that, in the opinion
and sole discretion of Mortgagee, either: (i) the insurance proceeds
so collected are sufficient to cover the cost of such restoration or
repair of the damage or destruction with respect to which such
proceeds were paid, or (ii) the insurance proceeds so collected are
not sufficient alone to cover the cost of such restoration or repair,
but are sufficient therefor when taken together with funds provided
and made available by Mortgagor from other sources; in which event
Mortgagee shall make such insurance proceeds available to Mortgagor
for the purpose of effecting such restoration or repair; but Mortgagee
shall not be obligated to see to the proper application of such
insurance proceeds nor shall the amount of funds so released or used
be deemed to be payment of or on account of the indebtedness secured
hereby, or (b) to the reduction of the indebtedness secured hereby,
notwithstanding the fact that the amount owing thereon may not then be
due and payable or that said indebtedness is otherwise adequately
secured, in which event such proceeds shall be applied at par against
the indebtedness secured hereby and the monthly payment due on account
of such indebtedness shall be reduced accordingly. None of such
actions taken by Mortgagee shall be deemed to be or result in a waiver
or impairment of any equity, lien or right of Mortgagee under and by
virtue of this Mortgage, nor will the application of such insurance
proceeds to the reduction of the indebtedness serve to cure any
default in the payment thereof. In the event of foreclosure of this
Mortgage or other transfer of title to the Property in extinguishment
of the indebtedness secured hereby, all right, title and interest of
Mortgagor in and to any insurance policies then in force and insurance
proceeds then payable shall pass to the purchaser or grantee.
In case of Mortgagor's failure to keep the Property so insured,
Mortgagee or its assigns, may, at its option (but shall not be
required to) effect such insurance at Mortgagor's expense.
Notwithstanding anything set forth in this Paragraph 8 to the
contrary, in the event of loss or damage to the Property by fire or
other casualty for which insurance has been required by Mortgagee and
provided by Mortgagor, Mortgagee hereby agrees to allow the proceeds
of insurance to be used for the restoration of the Property and to
release such insurance proceeds to Mortgagor as such restoration
progresses, provided:
(a) Mortgagor is not in default under any of the terms,
covenants and conditions of this Mortgage, the Note or any of the
other Loan Documents;
(b) The Improvements, after such restoration, shall be at least
eighty percent (80%) leased pursuant to leases approved in writing by
Mortgagee;
(c) The plans and specifications for the restoration of the
Property are approved in writing by Mortgagee;
(d) Mortgagor has deposited with Mortgagee funds which, when
added to insurance proceeds received by Mortgagee, are sufficient to
complete the restoration of the Property in accordance with the
approved plans and specifications, all applicable building codes,
zoning ordinances and regulations, and further, that the funds
retained by Mortgagee are sufficient to complete the restoration of
the Property as certified to Mortgagee by Mortgagee's inspecting
architect/engineer;
(e) Mortgagor provides completion, payment and performance
bonds and builders' all risk insurance for such restoration in form
and amount acceptable to Mortgagee (provided, however, that Mortgagor
may guarantee completion of construction to Mortgagee in lieu of
completion and performance bonds);
(f) The insurer under such policies of fire or other casualty
insurance does not assert any defense to payment under such policies
against Mortgagee, Mortgagor or any tenant of the Property;
(g) Mortgagee shall have the option, upon the completion of
such restoration of the Property, to apply any surplus insurance
proceeds remaining after the completion of such restoration, at par,
to the reduction of the outstanding principal balance of the Note;
notwithstanding the fact that the amount owing thereon may not then be
due and payable or that said indebtedness is otherwise adequately
secured;
(h) The funds held by Mortgagee shall be disbursed no more
often than once per month and in amounts of not less than Fifty
Thousand and No/100 Dollars ($50,000.00) each (except the final
disbursement of such funds which may be in an amount less than Fifty
Thousand and No/100 Dollars ($50,000.00);
(i) Mortgagee's obligation to make any such disbursement shall
be conditioned upon Mortgagee's receipt of written certification from
Mortgagee's inspecting architect/engineer (whose fees shall be paid by
Mortgagor) that all construction and work for which such disbursement
is requested has been completed in accordance with the approved plans
and specifications and in accordance with all applicable building
codes, zoning ordinances and all other local or federal governmental
regulations, and, further, that Mortgagor has deposited with Mortgagee
sufficient funds to complete such restoration in accordance with
subparagraph 8(d) above; and
(j) Mortgagee shall be entitled to require and to impose such
other conditions to the release of such funds as would be customarily
or reasonably required and imposed by local construction lenders for a
project of similar nature and cost.
LIABILITY INSURANCE
9. To carry and maintain such comprehensive general liability
insurance as may from time to time be required by Mortgagee, taking
into consideration the type of property being insured and the
corresponding liability exposure, on forms, in amounts and with such
company or companies as may be acceptable to Mortgagee. All such
comprehensive general liability insurance shall be carried with a
company or companies which have a rating at the time this Mortgage is
executed equivalent to at least A:VIII as shown in the most recent
Best's Key Rating Guide. Such policy or policies of insurance shall
name Mortgagee as an additional insured and shall provide for not less
than thirty (30) days' prior written notice to Mortgagee of the intent
to modify, cancel, or terminate the policy or policies or the
expiration of such policy or policies of insurance. Not less than
fifteen (15) days prior to the expiration dates of such policy or
policies, Mortgagor will deliver to Mortgagee a renewal policy or
policies marked "premium paid" or accompanied by other evidence of
payment and renewal satisfactory to Mortgagee. The original policy or
policies and all renewals thereof (or, at the sole option of
Mortgagee, duplicate originals or certified copies thereof), together
with receipts evidencing payment of the premium therefor, shall be
deposited with, held by and are hereby assigned to Mortgagee as
additional security for the indebtedness secured hereby.
COMPLIANCE WITH LAWS
10. To observe, abide by and comply with all statutes, ordinances,
laws, orders, requirements or decrees relating to the Property
enacted, promulgated or issued by any federal, state, county or
municipal authority or any agency or subdivision thereof having
jurisdiction over Mortgagor or the Property, and to observe and comply
with all conditions and requirements necessary to preserve and extend
any and all rights, licenses, permits (including, but not limited to,
zoning, variances, special exceptions and nonconforming uses),
privileges, franchises and concessions which are applicable to the
Property or which have been granted to or contracted for by Mortgagor
in connection with any existing, presently contemplated or future use
of the Property.
MAINTENANCE OF PERMITS
11. To obtain, keep and constantly maintain in full force and effect
during the entire term of this Mortgage, all certificates, licenses
and permits necessary to keep the Property operating as an office
building and, except as specifically provided for in this Mortgage,
not to assign, transfer or in any manner change such certificates,
licenses or permits without first receiving the written consent of
Mortgagee.
OBLIGATIONS OF MORTGAGOR AS LESSOR
12. To perform every obligation of Mortgagor (as the lessor) and
enforce every obligation of the lessee in that certain Master Lease
Agreement dated of even date herewith, between Mortgagor and Edward D.
Jones & Co., L.P., a Missouri limited partnership ("Jones"), as tenant
(the "Master Lease") and cause Jones to perform every obligation of
the lessor and enforce every obligation of the lessee in any and every
lease or other occupancy agreement of or affecting the Property or any
part thereof (hereinafter referred to as the "Occupancy Leases"), and
not to modify, alter, waive, or cancel the Master Lease to allow Jones
to modify, waive, or cancel any such Occupancy Leases or any part
thereof, without the prior written consent of Mortgagee (but such
consent shall not be required for such action as to Occupancy Leases
of 10,000 square feet or less if such action is in the ordinary course
of business of owning and operating the Property in a prudent manner),
nor collect for more than thirty (30) days in advance any rents that
may be collectible under the Master Lease, or allow Jones to do so
with respect to any such Occupancy Leases and, except as provided for
in this Mortgage, not to assign the Master Lease or rents thereunder
or allow Jones to assign any such Occupancy Lease or any such rents to
any party other than Mortgagee, without the prior written consent of
Mortgagee. In the event of default under the Master Lease or any such
Occupancy Lease by reason of failure of the Mortgagor or Jones, as the
case may be, to keep or perform one or more of the covenants,
agreements or conditions thereof, Mortgagee is hereby authorized and
empowered, and may, at its sole option, remedy, remove or cure any
such default, and further, Mortgagee may, at its sole option and in
its sole discretion, but without obligation to do so, pay any sum of
money deemed necessary by it for the performance of said covenants,
agreements and conditions, or for the curing or removal of any such
default, and incur all expenses and obligations which it may consider
necessary or reasonable in connection therewith, and Mortgagor shall
repay on demand all such sums so paid or advanced by Mortgagee
together with interest thereon until paid at the lesser of either (i)
the highest rate of interest then allowed by the laws of the State of
Missouri or, if controlling, the laws of the United States, or (ii)
the then applicable interest rate of the Note plus five hundred (500)
basis points; all of such sums, if unpaid, shall be added to and
become part of the indebtedness secured hereby. Except as set forth
below, all such Occupancy Leases hereafter made shall be subject to
the approval of Mortgagee and (a) shall be at competitive market
rental rates then prevailing in the geographic area for an office
building comparable to the Property, (b) shall have lease terms of not
less than three (3) years, and (c) at Mortgagee's option, shall be
superior or subordinate in all respects to the lien of this Mortgage.
The Master Lease shall, at the option of the Mortgagee, be
subordinated to the lien of this Mortgage by an agreement in form and
content acceptable to the Mortgagee. In the event of any default by a
tenant under any occupancy lease under which the net rentable area,
including expansion options, is less than 10,000 square feet,
Mortgagor or Jones shall be entitled to enforce the terms of such
Occupancy Lease (provided such Occupancy Lease has been approved by
the Mortgagee or is not required to be so approved) against such
tenant by any appropriate action at law or in equity, or as otherwise
permitted thereunder, provided, Jones notifies Mortgagee regarding any
such action (provided however, that so long as the failure so to
notify Mortgagee arises out of the negligence of Jones, such failure
shall not be a default under this Mortgage). Mortgagee shall not
require approval in advance of any Occupancy Leases which conform to
the Mortgagor's Form Lease (as hereinafter defined) as previously
approved by Mortgagee, except as set forth below. Neither the right
nor the exercise of the right herein granted unto Mortgagee to keep or
perform any such covenants, agreements or conditions as aforesaid
shall preclude Mortgagee from exercising its option to cause the whole
indebtedness secured hereby to become immediately due and payable by
reason of Mortgagor's default under the Master Lease or Jones' default
under the Master Lease with respect to its obligations to Mortgagor,
or Jones' default under any Occupancy Lease (in each instance, after
the expiration of any applicable cure period, if any) in keeping or
performing any such covenants, agreements or conditions as hereinabove
required (except with respect to any Occupancy Lease under which the
net rentable area, including expansion options, is less than 10,000
square feet).
Mortgagee has heretofore approved a form of Occupancy Lease to be
used with respect to subtenants under the Mater Lease in connection
with the Property without Mortgagee's prior consent (hereinafter
referred to as the "Form Lease"). Neither Mortgagor nor Jones shall,
without the prior written consent of Mortgagee, modify or alter the
Form Lease in any material respect. In addition, neither Mortgagor
nor Jones shall, without the prior written consent of Mortgagee,
surrender or terminate, either orally or in writing, any Occupancy
Lease now existing or hereafter made with any Major Tenant (as
hereinafter defined) for all or part of the Property, permit an
assignment or sublease (except on account of the Master Lease) of any
such Occupancy Lease, or request or consent to the subordination of
any Occupancy Lease to any lien subordinate to this Mortgage.
Mortgagor shall furnish Mortgagee with copies of all executed
Occupancy Leases of all or any part of the Property now existing or
hereafter made, and Mortgagor shall assign to Mortgagee the Master
Lease and Mortgagor and Jones, to the extent of their respective
interests, shall assign, as additional security for the Note, all
Occupancy Leases now existing or hereafter made for all or any part of
the Property (which assignments shall be in form and content
acceptable to Mortgagee).
Notwithstanding the foregoing approval by Mortgagee of Mortgagor's
Form Lease, Mortgagee hereby specifically reserves the right to
approve all prospective tenants under all Occupancy Leases hereafter
proposed to be made if: (i) the term thereof, excluding options to
renew the same, exceeds five (5) years; or (ii) the net rentable area
to be occupied thereunder, including expansion options, exceeds ten
percent (10%) of the net leasable area of the Improvements (the
tenants under such leases being hereinafter referred to as "Major
Tenants"). Mortgagor shall notify Mortgagee in writing of all
prospective Major Tenants and shall deliver to Mortgagee, at
Mortgagor's sole cost and expense, a copy of the prospective Major
Tenant's current financial statement and the most recent Dun &
Bradstreet credit report on said prospective Major Tenant. Said
financial statement shall be certified as true and correct by the
Major Tenant, or, if available, by a certified public accountant.
MAINTENANCE OF PARKING AND ACCESS; PROHIBITION AGAINST ALTERATION
13. To construct, keep and constantly maintain, as the case may be,
all curbs, drives, parking areas and the number of parking spaces
heretofore approved by Mortgagee or heretofore or hereafter required
by any governmental body, agency or authority having jurisdiction over
Mortgagor or the Property, and as required by the terms of the
Occupancy Leases, and not to alter, erect, build or construct upon any
portion of the Property, any building or structure of any kind
whatsoever, the erection, building or construction of which has not
been previously approved by Mortgagee in writing, which approval shall
be at the sole discretion of Mortgagee; provided, however, that this
provision does not apply to any repair, remodeling, or renovation
work, structural or otherwise.
EXECUTION OF ADDITIONAL DOCUMENTS
14. To do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers, assurances and other instruments, including
security agreements and financing statements, as Mortgagee shall from
time to time require for the purpose of better assuring, conveying,
assigning, transferring and confirming unto Mortgagee the Property and
rights hereby encumbered, created, conveyed, assigned or intended now
or hereafter so to be encumbered, created, conveyed or assigned or
which Mortgagor may now be or may hereafter become bound to encumber,
create, convey, or assign to Mortgagee, or for the purpose of carrying
out the intention or facilitating the performance of the terms of this
Mortgage, or for filing, registering, or recording this Mortgage, and
to pay all filing, registration, or recording fees and all taxes,
costs and other expenses, including Reasonable Attorneys' Fees (as
defined in Paragraph 40), incident to the preparation, execution,
acknowledgment, delivery, and recordation of any of the same.
AFTER-ACQUIRED PROPERTY SECURED
15. It is understood and agreed that all right, title and interest
of Mortgagor in and to all extensions, improvements, betterments,
renewals, substitutions and replacements of, and all additions and
appurtenances to, the Property hereinabove described, hereafter
acquired by or released to Mortgagor, or constructed, assembled or
placed by Mortgagor on the Real Property, and all conversions of the
security constituted thereby, immediately upon such acquisition,
release, construction, assembling, placement or conversion, as the
case may be, and in each such case, without any further mortgage,
encumbrance, conveyance, assignment or other act by Mortgagor, shall
become subject to the lien of this Mortgage as fully and completely
and with the same effect as though now owned by Mortgagor and
specifically described herein, but at any and all times Mortgagor will
execute and deliver to Mortgagee any and all such further assurances,
mortgages, conveyances, or assignments thereof or security interests
therein as Mortgagee may reasonably require for the purpose of
expressly and specifically subjecting the same to the lien of this
Mortgage.
PAYMENTS BY MORTGAGEE ON BEHALF OF MORTGAGOR
16. Should Mortgagor or Jones, as the case may be, fail to make
payment of any taxes, assessments or public charges on or with respect
to the Property before the same shall become delinquent, or shall
Mortgagor or Jones, as the case may be, fail to make payment of any
insurance premiums or other charges, impositions, or liens herein or
elsewhere required to be paid by Mortgagor, then Mortgagee, at its
sole option, but without obligation to do so, may make payment or
payments of the same and also may redeem the Property from tax sale
without any obligation to inquire into the validity of such taxes,
assessments and tax sales. In the case of any such payment by
Mortgagee, Mortgagor agrees to reimburse Mortgagee, upon demand
therefor, the amount of such payment and of any fees and expenses
attendant in making the same, together with interest thereon at the
lesser of either (i) the highest rate of interest then allowed by the
laws of the State of Missouri or, if controlling, the laws of the
United States, or (ii) the then applicable interest rate of the Note
plus five hundred (500) basis points; and until paid such amounts and
interest shall be added to and become part of the debt secured hereby
to the same extent that this Mortgage secures the repayment of the
indebtedness evidenced by the Note. In making payments hereby
authorized by the provisions of this Paragraph 16, Mortgagee may do so
whenever, in its sole judgment and discretion, such advance or
advances are necessary or desirable to protect the full security
intended to be afforded by this instrument. Neither the right nor the
exercise of the right herein granted unto Mortgagee to make any such
payments as aforesaid shall preclude Mortgagee from exercising its
option to cause the whole indebtedness secured hereby to become
immediately due and payable by reason of Mortgagor's default in making
such payments as hereinabove required.
FUNDS HELD BY MORTGAGEE FOR TAXES, ASSESSMENTS, INSURANCE PREMIUMS,
AND OTHER CHARGES
17. In order to more fully protect the security of this Mortgage,
Mortgagor shall deposit with Mortgagee, together with and in addition
to each monthly payment due on account of the indebtedness evidenced
by the Note, an amount equal to one-twelfth (1/12) of the annual total
of such taxes, assessments, insurance premiums, and other charges (all
as estimated by Mortgagee in its sole discretion) so that, at least
thirty (30) days prior to the due date thereof, Mortgagee shall be
able to pay in full all such taxes, assessments, insurance premiums,
and other charges as the same shall become due, and Mortgagee may hold
without paying interest and commingle with its general funds the sums
so deposited and apply the same to the payment of said taxes,
assessments, insurance premiums, or other charges as they become due
and payable. If at any time the funds so held by Mortgagee are
insufficient to pay such taxes, assessments, insurance premiums, or
other charges as they become due and payable Mortgagor shall
immediately, upon notice and demand by Mortgagee, deposit with
Mortgagee the amount of such deficiency, and the failure on the part
of Mortgagor to do so shall entitle Mortgagee, at its sole option, to
make such payments in accordance with its right and pursuant to the
conditions elsewhere provided in this Mortgage. Whenever any default
exists under this Mortgage, Mortgagee may, at its sole option but
without an obligation so to do, apply any funds so held by it pursuant
to this Paragraph 17 toward the payment of the indebtedness secured
hereby, notwithstanding the fact that the amount owing thereon may not
then be due and payable or that said indebtedness may otherwise be
adequately secured in such order and manner of application as
Mortgagee may elect.
CONDEMNATION; EMINENT DOMAIN
18. All awards and other compensation heretofore or hereafter made
to Mortgagor and all subsequent owners of the Property in any taking
by eminent domain or recovery for inverse condemnation, either
permanent or temporary, of all or any part of the Property or any
easement or any appurtenance thereto, including severance and
consequential damages and change in grade of any street, are hereby
assigned to Mortgagee. Provided Mortgagor is not in default hereunder
or under any of the other Loan Documents, Mortgagor and Mortgagee
shall jointly adjust and compromise the claim for any such award,
provided that if Mortgagor and Mortgagee cannot agree on such
adjustment within thirty (30) days, Mortgagee shall adjust and
compromise the claim for any such award in its sole discretion.
Subject to the foregoing, Mortgagor hereby irrevocably appoints
Mortgagee as its attorney-in-fact, coupled with an interest, and
authorizes, directs and empowers such attorney, at the option of said
attorney, on behalf of Mortgagor, its successors and assigns, to
adjust or compromise the claim for any such award and alone to collect
and receive the proceeds thereof, to give proper receipts and
acquittances therefor and, after deducting any expenses of collection,
at its sole option:
(i) to apply the net proceeds as a credit upon any portion of
the indebtedness secured hereby, as selected by Mortgagee,
notwithstanding the fact that the amount owing thereon may not then be
due and payable or that said indebtedness is otherwise adequately
secured. In the event Mortgagee applies such awards to the reduction
of the outstanding indebtedness evidenced by the Note, such proceeds
shall be applied at par and the monthly installments due and payable
under the Note shall be reduced accordingly; however no such
application shall serve to cure an existing default in the payment of
the Note;
or
(ii) to hold said proceeds without any allowance of interest and
make the same available for restoration or rebuilding the
Improvements. In the event that Mortgagee elects to make said
proceeds available to reimburse Mortgagor for the cost of the
restoration or rebuilding of the buildings or improvements on the
Property, such proceeds shall be made available in the manner and
under the conditions that Mortgagee may require as provided under
Paragraph 8 hereof. If the proceeds are made available by Mortgagee
to reimburse Mortgagor for the cost of said restoration or rebuilding,
any surplus which may remain out of said award after payment of such
cost of restoration or rebuilding shall be applied on account of the
indebtedness secured hereby at par notwithstanding the fact that the
amount owing thereon may not then be due and payable or that said
indebtedness may otherwise be adequately secured.
Mortgagor further covenants and agrees to give Mortgagee immediate
notice of the actual or threatened commencement of any proceedings
under eminent domain and to deliver to Mortgagee copies of any and all
papers served in connection with any proceedings. Mortgagor further
covenants and agrees to make, execute and deliver to Mortgagee, at any
time or times, upon request, free, clear and discharged of any
encumbrance of any kind whatsoever, any and all further assignments
and/or other instruments deemed necessary by Mortgagee for the purpose
of validly and sufficiently assigning all such awards and other
compensation heretofore or hereafter made to Mortgagee (including the
assignment of any award from the United States government at any time
after the allowance of the claim therefor, the ascertainment of the
amount thereof and the issuance of the warrant for payment thereof).
It shall be a default hereunder if any part of any of the
Improvements situated on the Property shall be condemned by any
governmental authority having jurisdiction, or if lands constituting a
portion of the Property shall be condemned by any governmental
authority having jurisdiction, such that the Property is in violation
of applicable parking, zoning, platting, or other ordinances, or fails
to comply with the terms of the Master Lease or the Occupancy Leases
with Major Tenants, and in either of said events, Mortgagee shall be
entitled to exercise any or all remedies provided or referenced in
this Mortgage, including the application of condemnation proceeds to
the outstanding principal balance of the Note at par and the right to
accelerate the maturity date of the Note and require payment in full
without the imposition of a Prepayment Premium.
COSTS OF COLLECTION
19. In the event that the Note secured hereby is placed in the hands
of an attorney for collection, or in the event that Mortgagee shall
become a party either as plaintiff or as defendant, in any action,
suit, appeal or legal proceeding (including, without limitation,
foreclosure, condemnation, bankruptcy, administrative proceedings or
any proceeding wherein proof of claim is by law required to be filed),
hearing, motion or application before any court or administrative body
in relation to the Property or the lien and security interest granted
or created hereby or herein, or for the recovery or protection of said
indebtedness or the Property, or for the foreclosure of this Mortgage,
Mortgagor shall save and hold Mortgagee harmless from and against any
and all costs and expenses incurred by Mortgagee on account thereof,
including, but not limited to, Reasonable Attorneys' Fees, title
searches and abstract and survey charges, at all trial and appellate
levels, and Mortgagor shall repay, on demand, all such costs and
expenses, together with interest thereon until paid at the lesser of
either (i) the highest rate of interest then allowed by the laws of
the State of Missouri, or, if controlling, the laws of the United
States, or (ii) the then applicable rate of interest of the Note plus
five hundred (500) basis points; all of which sums, if unpaid, shall
be added to and become a part of the indebtedness secured hereby.
DEFAULT RATE
20. Any sums not paid when due, whether maturing by lapse of time or
by reason of acceleration under the provisions of the Note or this
Mortgage, and whether principal, interest or money owing for
advancements pursuant to the terms of this Mortgage or any other Loan
Document, shall bear interest until paid at the lesser of either (i)
the highest rate of interest then allowed by the laws of the State of
Missouri or, if controlling, the laws of the United States, or (ii)
the then applicable rate of interest of the Note plus five hundred
(500) basis points; all of which sums shall be added to and become a
part of the indebtedness secured hereby.
SAVINGS CLAUSE; SEVERABILITY
21. Notwithstanding any provisions in the Note or in this Mortgage
to the contrary, the total liability for payments in the nature of
interest including but not limited to Prepayment Premiums, default
interest and late fees shall not exceed the limits imposed by the laws
of the State of Missouri or, if controlling, the United States of
America relating to maximum allowable charges of interest. Mortgagee
shall not be entitled to receive, collect or apply, as interest on the
indebtedness evidenced by the Note, any amount in excess of the
maximum lawful rate of interest permitted to be charged by applicable
law. In the event Mortgagee ever receives, collects or applies as
interest any such excess, such amount which would be excessive
interest shall be applied to reduce the unpaid principal balance of
the indebtedness evidenced by the Note. If the unpaid principal
balance of such indebtedness is paid in full, any remaining excess
shall be forthwith paid to Mortgagor.
If any clauses or provisions herein contained shall operate or would
prospectively operate to invalidate this Mortgage, then such clauses
or provisions only shall be held for naught, as though not herein
contained and the remainder of this Mortgage shall remain operative
and in full force and effect.
BANKRUPTCY, REORGANIZATION OR ASSIGNMENT
22. It shall be a default hereunder if Mortgagor or General Partner
shall: (a) elect to dissolve and liquidate its business organization
and windup its business affairs without prior written approval of
Mortgagee, or (b) consent to the appointment of a receiver, trustee or
liquidator of all or a substantial part of Mortgagor's assets, or
General Partner's assets, or (c) be adjudicated as bankrupt or
insolvent, or file a voluntary petition in bankruptcy, or admit in
writing its inability to pay its debts as they become due, or (d) make
a general assignment for the benefit of creditors, or (e) file a
petition under or take advantage of any insolvency law, or (f) file an
answer admitting the material allegations of a petition filed against
Mortgagor or General Partner in any bankruptcy, reorganization or
insolvency proceeding or fail to cause the dismissal of such petition
within thirty (30) days after the filing of said petition, or (g) take
action for the purpose of effecting any of the foregoing, or (h) if
any order, judgment or decree shall be entered upon an application of
a creditor of Mortgagor or General Partner by a court of competent
jurisdiction approving a petition seeking appointment of a receiver or
trustee of all or a substantial part of Mortgagor's assets or General
Partner's assets and such order, judgment or decree shall continue
unstayed and in effect for a period of thirty (30) days.
TIME IS OF THE ESSENCE; MONETARY AND NON-MONETARY DEFAULTS
23. It is understood by Mortgagor that time is of the essence hereof
in connection with all obligations of Mortgagor herein, in the Note,
the Assignment (as defined in Paragraph 34) and any of the other Loan
Documents evidencing or securing the Note.
If default be made in the payment of any installment of the Note,
whether of principal or interest, or both (and it is hereby understood
that if such payment is postmarked by the United States Postal Service
on or before the due date for such payment, is correctly addressed and
bears adequate first class postage, Mortgagor shall not be considered
to have defaulted in making such payment), or in the payment of any
other sums of money referred to herein or in the Note, promptly and
fully when the same shall be due without notice or demand from
Mortgagee to Mortgagor in regard to such Monetary Default (as
hereinafter defined), or in the event a breach or default be made by
Mortgagor in any one of the agreements, conditions and covenants of
the Note, this Mortgage, the Assignment or any other Loan Documents
evidencing or securing the Note, or in the event that each and every
one of said agreements, conditions and covenants are not otherwise
duly, promptly and fully discharged or performed, and any such Non-
Monetary Default (as hereinafter defined) remains uncured for a period
of thirty (30) days after written notice thereof from Mortgagee to
Mortgagor, has been delivered in the manner prescribed in Paragraph 41
hereof, unless such Non-Monetary Default cannot be cured within said
thirty (30) day period, in which event Mortgagor shall have an
extended period of time to complete cure, provided that action to cure
such Non- Monetary Default is commenced within said thirty (30) day
period, and Mortgagor is, not substantially diminishing or impairing
the value of the Property, and is diligently pursuing a cure to
completion, Mortgagee, at its sole option, may thereupon or thereafter
declare the indebtedness evidenced by the Note, as well as all other
monies secured hereby, including, without limitation, all Prepayment
Premiums (to the extent permitted by the laws of the State of
Missouri) and late payment charges, to be forthwith due and payable,
whereupon the principal of and the interest accrued on the
indebtedness evidenced by the Note and all other sums secured by this
Mortgage, at the option of Mortgagee, shall immediately become due and
payable as if all of said sums of money were originally stipulated to
be paid on such day, and thereupon, Mortgagee may avail itself of all
rights and remedies provided by law and may foreclose or prosecute a
suit at law or in equity as if all monies secured hereby had matured
prior to its institution, anything in this Mortgage or in the Note to
the contrary notwithstanding. Mortgagee shall have no obligation to
give Mortgagor notice of, or any period to cure, any Monetary Default
or any Incurable Default (as hereinafter defined) prior to exercising
its right, power and privilege to accelerate the maturity of the
indebtedness secured hereby.
As used herein, the term "Monetary Default" shall mean any default
which can be cured by the payment of money such as, but not limited
to, the payment of principal and interest due under the Note, taxes,
assessments and insurance premiums when due as provided in this
Mortgage. As used herein, the term "Non-Monetary Default" shall mean
any default which is not a Monetary Default or an Incurable Default.
As used herein, the term "Incurable Default" shall mean (i) any
voluntary or involuntary sale, assignment, mortgaging, encumbering or
transfer in violation of the covenants contained herein; or (ii) if
Mortgagor, or any person or entity comprising Mortgagor, should make
an assignment for the benefit of creditors, become insolvent, or file
a petition in bankruptcy (including but not limited to, a petition
seeking a rearrangement or reorganization).
Mortgagee may institute an action to foreclose this Mortgage as to
the amount so declared due and payable, and this Mortgage shall remain
in force, and thereupon the Trustee shall, after receiving notice of
the election and demand for sale from the Mortgagee, proceed to sell
the Property as one parcel in its entirety or any part thereof, either
in mass or in parcels, at the absolute discretion of the Trustee, at
public vendue at the door of the Court House or other location then
customarily employed for the purpose, in the County where the Property
is located, to the highest bidder for cash, first making or causing to
be made or given such demands or notices of the time, terms, and place
of sale, and a description of the property to be sold, by
advertisement published and as is provided by the laws of the State of
Missouri then in effect, and upon sale, the Trustee shall (subject to
any applicable statutory periods and rights of redemption) execute and
deliver a deed of conveyance of the property sold to the purchaser or
purchasers thereof, and any statement or recital of fact in such deed,
in relation to the non-payment of the indebtedness secured hereby,
existence of the indebtedness secured hereby, notice of advertisement,
sale, and receipt of the proceeds of sale, shall be presumptive
evidence of the truth of such statements or recitals, and the Trustee
shall receive the proceeds of such sale out of which the Trustee shall
pay the following in any order Mortgagee shall elect: (1) the cost
and expenses of executing this trust, including compensation to the
Trustee for services as provided by law and Reasonable Attorneys' Fees
to any attorneys employed by the Trustee or the Mortgagee for their
services; (2) upon the usual vouchers therefor, all amounts paid by
the Mortgagee for insurance, taxes, lien claims, and other payments
made by Mortgagee as provided herein, with interest thereon until paid
at the lesser of either (i) the highest rate of interest then allowed
by the laws of the State of Missouri or, if controlling, the laws of
the United States, or (ii) the then applicable rate of interest of the
Note plus five hundred (500) basis points; (3) the amount due on the
indebtedness secured hereby then due and unpaid; (4) the amount due on
any junior encumbrances, with interest. The remainder of such
proceeds, if any, shall be paid to Mortgagor. The Mortgagee may bid
and become purchaser at any sale under this Mortgage. Any sale of the
Property under this Mortgage shall, without further notice, create the
relation of landlord and tenant at sufferance between the purchaser
and Mortgagor or any person holding possession of the Property through
Mortgagor, and upon failure of Mortgagor or such person to surrender
possession thereof immediately, Mortgagor or such person may be
removed by a writ of possession of the purchaser in any Court having
venue.
The Trustee or Substitute Trustee covenants to faithfully to perform
the trust herein created.
The Trustee may sell and convey the Property under the power
aforesaid, although the Trustee has been, may now be or may hereafter
be attorney or agent of the Mortgagee in respect to the loan made by
the Mortgagee evidenced by the Note or any part thereof or this
Mortgage or in respect to any matter of business whatsoever.
The Trustee hereby lets the Property to the Mortgagor until a sale be
had under the foregoing provisions, upon the following terms and
conditions, such letting being to-wit: The Mortgagor and every and all
persons claiming or possessing the Property, or any part thereof, by,
through or under Mortgagor shall pay rent therefor during said term at
the rate of one cent per month, payable monthly upon demand, and
without notice or demand shall surrender immediate peaceable
possession of said premises, to the purchaser thereof, under such
sale. Should possession not be surrendered as provided for herein the
purchaser shall be entitled to institute proceedings for possession as
aforesaid.
Except to the extent contrary to law, Grantor waives the benefit of
all laws now existing or that hereafter may be enacted providing for
(i) any appraisement before sale of any portion of the Property, (ii)
any exemption, under and by virtue of any statute of the State of
Missouri, and (iii) the benefit of all laws that may be hereafter
enacted in any way extending the time for the enforcement and
collection of the indebtedness secured hereby or creating or extending
a period of redemption from any sale made in collecting the
indebtedness secured hereby.
In any action or proceeding to foreclose this Mortgage, Mortgagee
shall be at liberty to apply, without notice, for the appointment of a
receiver for the rents and profits of the Property, and shall be
entitled to the appointment of such a receiver as a matter of right
without regard to the value of the Property as security for the
indebtedness due Mortgagee or the solvency of any person, or
corporation, liable for the payment of such indebtedness.
If the indebtedness secured hereby is paid after the beginning of
publication of notice of sale, as herein provided, or in the event the
Mortgagee shall, at its sole option, permit Mortgagor to pay any part
of the indebtedness secured hereby after the beginning of publication
of notice of sale, as herein provided, then Mortgagor shall pay on
demand all expenses incurred by the Trustee and Mortgagee in
connection with said publication, including fees to the attorneys for
the Trustee and for the Mortgagee, and a reasonable fee to the
Trustee, and this Mortgage shall be security for all such expenses and
fees.
The failure or omission on the part of Mortgagee to exercise the
option for acceleration of maturity of the Note and foreclosure of
this Mortgage following any default as aforesaid or to exercise any
other option or remedy granted hereunder to Mortgagee when entitled to
do so in any one or more instances, or the acceptance by Mortgagee of
partial payment of the indebtedness secured hereby, whether before or
subsequent to Mortgagor's default hereunder, shall not constitute a
waiver of any such default or the right to exercise any such option or
remedy, but such option or remedy shall remain continuously in force.
Acceleration of maturity of the Note, once claimed hereunder by
Mortgagee, at the option of Mortgagee, may be rescinded by written
acknowledgment to that effect by Mortgagee, but the tender and
acceptance of partial payments alone shall not in any way affect or
rescind such acceleration of maturity.
PROTECTION OF MORTGAGEE'S SECURITY
24. At any time after default hereunder and the expiration of the
applicable cure periods, if any, expressly provided for herein,
Mortgagee is authorized, without notice and in its sole discretion, to
enter upon and take possession of the Property or any part thereof and
to perform any acts which Mortgagee deems necessary or proper to
conserve the security herein intended to be provided by the Property,
to operate any business or businesses conducted thereon and to collect
and receive all rents, issues and profits thereof and therefrom,
including those past due as well as those accruing thereafter.
APPOINTMENT OF RECEIVER
25. If, at any time after a default hereunder and the expiration of
the applicable cure periods, if any, expressly provided for herein, in
the sole discretion of Mortgagee, a receivership may be necessary to
protect the Property or its rents, issues, revenue, profits or
proceeds, whether before or after maturity of the Note and whether
before or at the time of or after the institution of foreclosure or
suit to collect such indebtedness, or to enforce this Mortgage,
Mortgagee, as a matter of strict right and regardless of the value of
the Property or the amounts due hereunder or secured hereby, or of the
solvency of any party bound for the payment of such indebtedness,
shall have the right, upon ex parte application and without notice to
anyone, and by any court having jurisdiction, to the appointment of a
receiver to take charge of, manage, preserve, protect and operate the
Property, to collect the rents, issues, revenues, profits, proceeds
and income thereof, to make all necessary and needful repairs, and to
pay all taxes, assessments and charges against the Property and all
premiums for insurance thereon, and to do such other acts as may by
such court be authorized and directed, and after payment of the
expenses of the receivership and the management of the Property, to
apply the net proceeds of such receivership in reduction of the
indebtedness secured hereby or in such other manner as the said court
shall direct notwithstanding the fact that the amount owing thereon
may not then be due and payable or the said indebtedness is otherwise
adequately secured. Such receivership shall, at the option of
Mortgagee, continue until full payment of all sums hereby secured or
until title to the Property shall have passed by sale under this
Mortgage. Mortgagor hereby specifically waives its right to object to
the appointment of a receiver as aforesaid and hereby expressly agrees
that such appointment shall be made as an admitted equity and as a
matter of absolute right to Mortgagee.
RIGHTS AND REMEDIES CUMULATIVE; FORBEARANCE NOT A WAIVER
26. The rights and remedies herein provided are cumulative and
Mortgagee, as the holder of the Note and of every other obligation
secured hereby, may recover judgment thereon, issue execution therefor
and resort to every other right or remedy available at law or in
equity, without first exhausting any right or remedy available to
Mortgagee and without affecting or impairing the security of any right
or remedy afforded hereby, and no enumeration of special rights or
powers by any provisions hereof shall be construed to limit any grant
of general rights or powers, or to take away or limit any and all
rights granted to or vested in Mortgagee by law, and Mortgagor further
agrees that no delay or omission on the part of Mortgagee to exercise
any rights or powers accruing to it hereunder shall impair any such
right or power or shall be construed to be a waiver of any such event
of default hereunder or an acquiescence therein; and every right,
power and remedy granted herein or by law to Mortgagee may be
exercised from time to time as often as may be deemed expedient by
Mortgagee.
MODIFICATION NOT AN IMPAIRMENT OF SECURITY
27. Mortgagee, without notice and without regard to the
consideration, if any, paid therefor, and notwithstanding the
existence at that time of any inferior mortgages or other liens
thereon, may release any part of the security described herein or may
release any person or entity liable for any indebtedness secured
hereby without in any way affecting the priority of this Mortgage, to
the full extent of the indebtedness remaining unpaid hereunder, upon
any part of the security not expressly released. Mortgagee may, at
its option and within its sole discretion, also agree with any party
obligated on said indebtedness, or having any interest in the security
described herein, to extend the time for payment of any part or all of
the indebtedness secured hereby, and such agreement shall not, in any
way, release or impair this Mortgage, but shall extend the same as
against the title of all parties having any interest in said security,
which interest is subject to this Mortgage.
PROPERTY MANAGEMENT AND LEASING
28. The exclusive manager of the Property shall be Mortgagor or such
other manager as may be first approved in writing by Mortgagee (and
Mortgagee hereby approves Turley Martin Company as such manager). The
exclusive leasing agent of the Property, if other than the foregoing
party, shall be first approved in writing by Mortgagee. The governing
management and leasing contracts (or in the absence of any such
written contract, a letter so stating and further identifying the name
of the person or entity charged with the responsibility for managing
and/or leasing the Property) shall be subordinate to this Mortgage and
satisfactory to and subject to the written approval of Mortgagee
throughout the term of the indebtedness secured hereby. Upon default
in either of these requirements after the expiration of applicable
cure periods, if any, then the whole of the indebtedness hereby
secured shall, at the election of Mortgagee, become immediately due
and payable, together with any default premium and late payment
charges required by the Note, and Mortgagee shall be entitled to
exercise any or all remedies provided for or referenced in this
Mortgage.
MODIFICATION NOT A WAIVER
29. In the event Mortgagee: (a) releases, as aforesaid, any part of
the security described herein or any person or entity liable for any
indebtedness secured hereby, or (b) grants an extension of time for
the payment of the Note, or (c) takes other or additional security for
the payment of the Note, or (d) waives or fails to exercise any rights
granted herein, in the Note, or any of the other Loan Documents, any
said act or omission shall not release Mortgagor, subsequent
purchasers of the Property or any part thereof, or makers, sureties,
endorsers or guarantors of the Note, if any, from any obligation or
any covenant of this Mortgage, the Note, or any of the other Loan
Documents, nor preclude Mortgagee from exercising any right, power or
privilege herein granted or intended to be granted in the event of any
other default then made, or any subsequent default.
TRANSFER OF PROPERTY OR CONTROLLING INTEREST IN MORTGAGOR; ASSUMPTION
30. Except as set forth in Paragraph 36(b) hereof, without the prior
written consent of Mortgagee, the sale, transfer, assignment or
conveyance of all or any portion of the Property or the transfer,
assignment or conveyance of a controlling interest in Mortgagor,
whether voluntarily or by operation of law, without the prior written
consent of Mortgagee, shall constitute a default under the terms of
this Mortgage and entitle Mortgagee, at its sole option, to accelerate
all sums due on the Note together with any Prepayment Premiums (to the
extent permitted by the laws of the State of Missouri), late payment
charges, or any other amounts secured hereby (provided, however, that
said prohibitions shall not apply to changes among partners of The
Jones Financial Companies, a Limited Partnership). Mortgagee may,
however, elect to waive the option to accelerate granted hereunder if,
prior to any such sale, transfer, assignment or conveyance of the
Property, the following conditions shall be fully satisfied: (a)
Mortgagee acknowledges in writing that, in its sole discretion, the
creditworthiness of the proposed transferee and the ability and
experience of the proposed transferee to operate the Property are
satisfactory to Mortgagee, and (b) Mortgagee and the proposed
transferee shall enter into an agreement in writing that (i) the
interest payable on the indebtedness secured hereby shall be at such
rate as Mortgagee shall determine, (ii) the repayment schedule as set
forth in the Note shall be modified by Mortgagee, in its sole
discretion, to initiate amortization or modify the existing
amortization schedule in order to amortize the then remaining unpaid
principal balance of the Note secured hereby over a period of time as
determined by Mortgagee in its sole discretion without a change in the
maturity date of the Note, and (iii) the proposed transferee shall
assume all obligations under the Note, this Mortgage and the other
Loan Documents and an assumption fee equal to one percent (1%) of the
outstanding principal balance of the Note shall be charged by
Mortgagee in its sole discretion, (c) Mortgagee shall receive for its
review and approval copies of all transfer documents, and (d)
Mortgagor or the transferee shall pay all costs and expenses in
connection with such transfer and assumption, including, without
limitation, all fees and expenses incurred by Mortgagee. Mortgagor
and any subsequent owner of the Property or any portion thereof shall
do all things necessary to preserve and keep in full force and effect
its and their existence, franchises, rights and privileges as a
corporation or partnership, as the case may be, under the laws of the
state of its formation and its right to own property and transact
business in the State of Missouri.
It shall be a default hereunder if Mortgagor or any subsequent owner
of the Property or any portion thereof shall amend, modify, transfer,
assign or terminate the partnership agreement, certificate of
partnership or articles of incorporation, as the case may be, of
Mortgagor or such subsequent owner and, in the reasonable
determination of Mortgagee, such amendment, modification, transfer,
assignment or termination shall have a material adverse effect on
Mortgagee, the Property or the security value thereof; provided that
any amendment, modification, transfer, assignment or termination of
Mortgagor's partnership agreement or any other action pursuant to
which LHC, Inc. shall (A) cease to be the managing general partner of
Mortgagor, or (B) except to the extent permitted herein, cease to own
or maintain a partnership interest in Mortgagor equal to or greater
than its partnership interest at the time this Mortgage is executed
shall be deemed to have a material adverse effect upon Mortgagee and
the Property and shall be a default hereunder. Mortgagor or such
subsequent owner of the Property shall provide Mortgagee with copies
of any proposed amendment to its partnership agreement, certificate of
partnership or articles of incorporation, as the case may be, so that
Mortgagee may, in its reasonable discretion, determine whether such
amendment materially adversely affects Mortgagee, the Property or the
security value thereof.
In the event the ownership of the Property, or any part thereof,
shall become vested in a person or entity other than Mortgagor,
whether with or without the prior written consent of Mortgagee,
Mortgagee may, without notice to Mortgagor, deal with such successor
or successors in interest with reference to the Property, this
Mortgage and the Note in the same manner and to the same extent as
with Mortgagor without in any way vitiating or discharging Mortgagor's
liability hereunder or under the Note. No sale, transfer or
conveyance of the Property, no forbearance on the part of Mortgagee
and no extension of the time for the payment of the Note hereby
secured given by Mortgagee to Mortgagor shall operate to release,
discharge, modify, change, or affect the original liability of
Mortgagor, either in whole or in part, unless expressly set forth in
writing executed by Mortgagee. Notwithstanding anything contained
herein to the contrary, Mortgagor hereby waives any right it now has
or may hereafter have to require Mortgagee to prove an impairment of
its security as a condition to exercise Mortgagee's rights under this
Paragraph 30.
FURTHER ENCUMBRANCE PROHIBITED; SUBROGATION
31. So long as the Note remains unpaid, Mortgagor shall neither
voluntarily nor involuntarily permit the Property or any part thereof
to become subject to any secondary lien, mortgage, security interest
or encumbrance of any kind whatsoever without the prior written
consent of Mortgagee, and the imposition of any such secondary lien,
mortgage, security interest or encumbrance without the approval of
Mortgagee shall constitute an event of default hereunder and entitle
Mortgagee, at its sole option, to declare all sums due in accordance
with the terms of the Note to be and become immediately due and
payable. In the event that Mortgagee shall hereafter give its written
consent to the imposition of any such secondary lien, mortgage,
security interest or other encumbrance upon the Property, Mortgagee,
at its sole option, shall be entitled to accelerate the maturity of
the Note and exercise any and all remedies provided and available to
Mortgagee hereunder in the event that the holder of any such
secondary lien or encumbrance shall institute foreclosure or other
proceedings to enforce the same; it being understood and agreed that a
default under any instrument or document evidencing, securing or
secured by any such secondary lien or encumbrance shall be and
constitute an event of default hereunder. In the event all or any
portion of the proceeds of the loan secured hereby are used for the
purpose of retiring debt or debts secured by prior liens on the
Property, Mortgagee shall be subrogated to the rights and lien
priority of the holder of the lien so discharged.
Notwithstanding the above, secondary financing of the Property shall
be permitted as long as (i) the quotient of the aggregate amount of
indebtedness placed on the Property (which indebtedness shall include
the indebtedness secured hereby) divided by the current market value
of the Property does not exceed 0.90; (ii) the net operating income
generated by the Property (defined as annual rental income, minus
annual taxes and all annual operating expenses) covers the annual debt
service on the loan evidenced by the Note and on such secondary
financing at least 1.1 times; and (iii) Mortgagor is not in default
under the terms, conditions and provisions of the Note, this Mortgage,
the Assignment or any of the other Loan Documents. Mortgagee shall
have the right to approve the lender under any proposed secondary
financing, and to review and approve any and all documentation with
respect to such secondary financing such approval not to be
unreasonably withheld. All costs incurred in connection with such
secondary financing shall be borne by Mortgagor.
CONVEYANCE OF MINERAL RIGHTS PROHIBITED
32. Mortgagor agrees that the making of any oil, gas or mineral
lease or the sale or conveyance of any mineral interest or right to
explore for minerals under, through or upon the Property would impair
the value of the Property securing the Note; and that Mortgagor shall
have no right, power or authority to lease the Property, or any part
thereof, for oil, gas or other mineral purposes, or to grant, assign
or convey any mineral interest of any nature, or the right to explore
for oil, gas and other minerals, without first obtaining from
Mortgagee express written permission therefor, which permission shall
not be valid until recorded among the Public Records of St. Louis
County, Missouri. Mortgagor further agrees that if Mortgagor shall
make, execute, or enter into any such lease or attempt to grant any
such mineral rights without such prior written permission of
Mortgagee, then Mortgagee shall have the option, without notice, to
declare the same to be a default hereunder and to declare the
indebtedness hereby secured immediately due and payable. Whether or
not Mortgagee shall consent to such lease or grant of mineral rights,
Mortgagee shall receive the entire consideration to be paid for such
lease or grant of mineral rights, with the same to be applied to the
indebtedness hereby secured notwithstanding the fact that the amount
owing thereon may not then be due and payable or the said indebtedness
is otherwise adequately secured; provided, however, that the
acceptance of such consideration shall in no way impair the lien of
this Mortgage on the Property.
ESTOPPEL CERTIFICATION BY MORTGAGOR
33. Mortgagor, upon request therefor made either personally or by
mail, shall certify in writing to Mortgagee (or any party designated
by Mortgagee) in form satisfactory to Mortgagee the amount of
principal and interest then outstanding under the terms of the Note
and any other sums due and owing under this Mortgage or any of the
other Loan Documents and whether any offsets or defenses exist against
the Mortgage debt. Such certification shall be made by Mortgagor
within ten (10) days if the request is made personally, or within
twenty (20) days if the request is made by mail.
CROSS-DEFAULT
34. The Note is also secured by the terms, conditions and provisions
of an Assignment of Leases, Rents and Profits (hereinafter referred to
as the "Assignment") recorded among the Public Records of St. Louis
County, Missouri and, additionally, may be secured by contracts or
agreements of guaranty or other security instruments. The terms,
conditions and provisions of each security instrument shall be
considered a part hereof as fully as if set forth herein verbatim.
Any default under this Mortgage or the Note secured hereby shall
constitute an event of default under the Assignment and any of the
other Loan Documents, and any default under the Assignment or other
Loan Documents shall likewise constitute a default hereunder and under
the Note. Notwithstanding the foregoing, the enforcement or attempted
enforcement of this Mortgage or any of the other Loan Documents now or
hereafter held by Mortgagee shall not prejudice or in any manner
affect the right of Mortgagee to enforce any other Loan Document; it
being understood and agreed that Mortgagee shall be entitled to
enforce this Mortgage and any of the other Loan Documents now or
hereafter held by it in such order and manner as Mortgagee, in its
sole discretion, shall determine.
EXAMINATION OF MORTGAGOR'S RECORDS
35. Mortgagor will maintain complete and accurate books and records
showing in detail the income and expenses of the Property, and will
permit Mortgagee and its representatives to examine said books and
records and all supporting vouchers and data during normal business
hours and from time to time upon request by Mortgagee, in such place
as such books and records are customarily kept, and will furnish to
Mortgagee, within one hundred twenty (120) days after the close of
each fiscal year of Mortgagor, a balance sheet and profit and loss
statement for Mortgagor and the Property, which shall also include a
rent roll, certified by Mortgagor to be true and correct and showing
in detail all income derived from and expenses incurred in connection
with the ownership of the Property. In the event Mortgagor fails to
provide such statements to Mortgagee within the time prescribed above,
Mortgagor shall pay Mortgagee the sum of Two Hundred and No/100
Dollars ($200.00) for each successive month for which statements are
delinquent. In the event of default hereunder, Mortgagee shall have
the right to require that said financial statements be audited and
certified by a certified public accountant acceptable to Mortgagee, at
the sole cost and expense of Mortgagor.
ALTERATION, REMOVAL AND CHANGE IN USE OF PROPERTY PROHIBITED
36. Mortgagor covenants and agrees to permit or suffer none of the
following without the prior written consent of Mortgagee:
(a) Any structural alteration of, or addition to, the
Improvements now or hereafter situated upon the Real Property or the
addition of any new buildings or other structure(s) thereto, other
than erection or removal of non-load bearing interior walls (provided,
however, this provision shall not apply to any repair, remodeling or
renovation work, structural or otherwise); or
(b) The removal, transfer, sale or lease of the Property,
except that the renewal, replacement or substitution of fixtures,
equipment, machinery, apparatus and articles of personal property
(replacement or substituted items must be of like or better quality
than the removed items in their original condition) encumbered hereby
may be made in the normal course of business; or
(c) The use of any of the Improvements now or hereafter
situated on the Real Property for any purpose other than as an office
building and related facilities.
FUTURE ADVANCES SECURED
37. This Mortgage shall secure not only existing indebtedness, but
also future advances, whether such advances are obligatory or to be
made at the option of Mortgagee. Upon request of Mortgagor, and at
Mortgagee's option prior to release of this Mortgage, Mortgagee may
make future advances to Mortgagor. All future advances with interest
thereon shall be secured by this Mortgage to the same extent as if
such future advances were made on the date of the execution of this
Mortgage unless the parties shall agree otherwise in writing Any
advances or disbursements made for the benefit or protection of or the
payment of taxes, assessments, levies or insurance upon the Property,
with interest on such disbursements as provided herein, shall be added
to the principal balance of the Note and collected as a part thereof.
To the extent that this Mortgage may secure more than one mortgage
note, a default in the payment of any such mortgage note shall
constitute a default in the payment of all such mortgage notes.
The total amount outstanding at any one time which is secured by this
Mortgage, excluding any interest and any amounts advanced by Mortgagee
for the protection of the security interest herein granted or amounts
advanced or obligations incurred for the completion of a contemplated
improvement under a construction loan agreement, shall not exceed
Twenty-Three Million Dollars ($23,000,000.00). This Mortgage shall be
governed by all provisions of Section 443.055 of the Revised Statutes
of Missouri.
EFFECT OF SECURITY AGREEMENT
38. Mortgagor does hereby grant and this Mortgage is and shall be
deemed to create, grant, give and convey a mortgage of, a lien and
encumbrance upon, and a present security interest in both real and
personal property, including all improvements, goods, chattels,
furniture, furnishings, fixtures, equipment, apparatus, appliances and
other items of tangible or intangible personal property, hereinabove
particularly or generally described and conveyed, whether now or
hereafter affixed to, located upon, necessary for or used or useful,
either directly or indirectly, in connection with the operation of the
Property as an office building, and this Mortgage shall also serve as
a "security agreement" within the meaning of that term as used in the
Uniform Commercial Code as adopted and in force from time to time in
the State of Missouri, and shall be operative and effective as a
security agreement in addition to, and not in substitution for, any
other security agreement executed by Mortgagor in connection with the
extension of credit transaction secured hereby (Notwithstanding
anything herein to the contrary, nothing herein shall be deemed to
grant or create a security interest in any furnishings, furniture or
computer equipment owned by any tenant [including, without limitation,
Jones] under the Master Lease affecting the Property and used by such
tenant with respect to the conduct of its business on the Property).
Mortgagor agrees to and shall, upon the request of Mortgagee, execute
and deliver to Mortgagee, in form and content satisfactory to
Mortgagee, such financing statements, descriptions of property and
such further assurances as Mortgagee, in its sole discretion, may from
time to time consider necessary to create, perfect, continue and
preserve the lien and encumbrances hereof and the security interest
granted herein upon and in such real and personal property and
fixtures described herein, including all buildings, improvements,
goods, chattels, furniture, furnishings, fixtures, equipment,
apparatus, appliances, and other items of tangible and intangible
personal property herein specifically or generally described and
intended to be the subject of the security interest, lien and
encumbrance hereby created, granted and conveyed. Without the prior
written consent of Mortgagee, Mortgagor shall not create or suffer to
be created, pursuant to the Uniform Commercial Code, any other
security interest in such real and personal property and fixtures
described herein. Upon the occurrence of a default hereunder and the
expiration of the applicable cure periods, if any, or Mortgagor's
breach of any other covenants or agreements between the parties
entered into in conjunction herewith, Mortgagee shall have the
remedies of a secured party under the Uniform Commercial Code and, at
Mortgagee's option, the remedies provided for in this Mortgage.
Mortgagee, at the expense of Mortgagor, may or shall cause such
statements, descriptions and assurances, as herein provided in this
Paragraph 38, and this Mortgage to be recorded and re-recorded, filed
and refiled, at such times and in such places as may be required or
permitted by law to so create, perfect and preserve the lien and
encumbrance hereof upon all of the Property.
Upon the occurrence of a default hereunder Mortgagee shall, at its
option and without notice or demand, be entitled to enter upon the
Real Property to take immediate possession of the Fixtures and
Personal Property. Upon request, Mortgagor shall assemble and make
the Fixtures and Personal Property available to Mortgagee at a place
designated by Mortgagee which is reasonably convenient to both
parties. Mortgagee may sell all or any portion of the Fixtures and
Personal Property at public or private sale in accordance with the
Uniform Commercial Code as adopted in the State of Missouri or in
accordance with the foreclosure advertisement and sale provisions
under this Mortgage. Mortgagor agrees that a commercially reasonable
manner of disposition of the Fixtures and Personal Property upon the
occurrence of a default shall include, without limitation and at the
option of Mortgagee, the sale of the Fixtures and Personal Property,
in whole or in part, concurrently with a foreclosure sale of the Real
Property in accordance with the provisions of this Mortgage. In the
event the Mortgagee shall dispose of any or all of the Fixtures and
Personal Property after the occurrence of a default, the proceeds of
disposition shall be applied in the following order: (a) to the
expenses of retaking, holding, preparing for sale, selling, and the
like; (b) to the attorneys' fees and legal expenses incurred by
Mortgagee; (c) to the satisfaction of the indebtedness secured hereby;
and (d) the balance, if any to subordinate lien holders and Mortgagor
as their interests may appear. Mortgagor hereby waives any right of
redeeming the Fixtures and Personal Property.
TERMS OF CONTRACT SURVIVE CLOSING
39. The terms and provisions of the Application/Contract for
Mortgage Loan dated November 18, 1992, and any subsequent amendments
thereto (hereinafter referred to as the "Contract"), executed by and
between Mortgagor as Applicant and Mortgagee as Nationwide are
incorporated herein by reference. All terms and conditions of the
Contract not expressly set forth in this Mortgage, the Note, the
Assignment and any other Loan Documents additionally securing the Note
shall survive the closing hereof and remain in full force and effect.
In the event any conflict exists between the terms, conditions and
provisions of the Contract and the Loan Documents, the terms,
conditions and provisions of the Loan Documents shall prevail.
SUCCESSORS AND ASSIGNS; TERMINOLOGY
40. The provisions hereof shall be binding upon Mortgagor and the
heirs, personal representatives, successors and assigns of Mortgagor,
and shall inure to the benefit of Mortgagee and its successors and
assigns. Where more than one Mortgagor is named herein, the
obligations and liabilities of said Mortgagor shall be joint and
several.
Wherever used in this Mortgage, unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein,
the word "Mortgagor" shall mean Mortgagor and/or any subsequent owner
or owners of the Property, the word "Mortgagee" shall mean Mortgagee
or any subsequent holder or holders of this Mortgage, the word "Note"
shall mean Note(s) secured by this Mortgage, and the word "person"
shall mean an individual, trustee, trust, corporation, partnership or
unincorporated association. As used herein, the phrase "Reasonable
Attorneys' Fees" shall mean fees charged by attorneys selected by
Mortgagee based upon such attorneys' then prevailing hourly rates as
opposed to any statutory presumption specified by any statute then in
effect in the State of Missouri.
NOTICES
41. All notices hereunder shall be deemed to have been duly given if
mailed by United States registered or certified mail, with return
receipt requested, postage prepaid, to the parties at the following
addresses (or at such other addresses as shall be given in writing by
any party to the others), and shall be deemed complete three (3) days
after any such mailing:
TO MORTGAGOR: EDJ Leasing Co., L.P.
201 Progress Parkway
Maryland Heights, Missouri 63043
Attention: Edward Soule
TO MORTGAGEE: NATIONWIDE LIFE INSURANCE COMPANY
One Nationwide Plaza
Columbus, Ohio 43216
Attention: Real Estate Investments
TO TRUSTEE: Robert C. Graham III
Armstrong, Teasdale, Schlafly & Davis
1 Metropolitan Square, Suite 2600
St. Louis, Missouri 63102-2740
GOVERNING LAW
42. This Mortgage is to be governed by and construed in accordance
with the laws of the State of Missouri and, if controlling, by the
laws of the United States and shall be binding upon Mortgagor and
shall inure to the benefit of Mortgagee.
RIGHTS OF MORTGAGEE CUMULATIVE
43. The rights of Mortgagee arising under the clauses and covenants
contained in this Mortgage shall be separate, distinct and cumulative
and none of them shall be in exclusion of the others; and no act of
Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provisions, anything
herein or otherwise to the contrary notwithstanding.
MODIFICATIONS
44. This Mortgage cannot be changed, altered, amended or modified
except by an agreement in writing and in recordable form, executed by
both Mortgagor and Mortgagee.
EXCULPATION
45. The liability of Mortgagor and General Partner with respect to
the payment of principal and interest under the Note shall be "non-
recourse" and, accordingly, Mortgagee's source of satisfaction of said
indebtedness and Mortgagor's other obligations hereunder and under the
other Loan Documents shall be limited to the Property and Mortgagee's
receipt of the rents, issues and profits from the Property and
Mortgagee shall not seek to procure payment out of any other assets of
Mortgagor or any person or entity comprising Mortgagor, or to seek
judgment for any sums which are or may be payable under the Note, this
Mortgage or any of the other Loan Documents, as well as any claim or
judgment (except as hereafter provided) for any deficiency remaining
after foreclosure of this Mortgage. Notwithstanding the above,
nothing herein contained shall be deemed to be a release or impairment
of the indebtedness evidenced by the Note or the security therefor
intended by this Mortgage and the other Loan Documents, or be deemed
to preclude Mortgagee from exercising its rights to foreclose this
Mortgage or to enforce any of its other rights or remedies under the
Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or
apply to Mortgagor's and General Partner's continued personal
liability for all sums due to:
(1) fraud or misrepresentation made in or in connection with the
Note or any of the other Loan Documents;
(2) failure to pay taxes, or assessments prior to delinquency, or to
pay charges for labor, materials or other charges which can create
liens on any portion of the Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property; or (ii) proceeds of the sale or condemnation
of any portion of the Property; or (iii) rentals received by or on
behalf of Mortgagor subsequent to the date on which Mortgagee makes
written demand therefor pursuant to any Loan Document;
(4) causing or permitting waste to occur in, on or about the
Property and failure to maintain the Property, excepting ordinary wear
and tear;
(5) the return to Mortgagee of all unearned advance rentals and
security deposits paid by tenants of the Property and not refunded to
or forfeited by such tenants;
(6) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Mortgagee;
(7) the return of, or reimbursement for, all Fixtures and Personal
Property owned by Mortgagor taken from the Property by or on behalf of
Mortgagor, out of the ordinary course of business, and not replaced by
items of equal or greater value than the original value of the
Fixtures and Personal Property so removed;
(8) (i) any and all costs incurred in order to cause the Property to
comply with the Accessibility Laws, and (ii) any indemnity or other
agreement to hold Mortgagee and Trustee harmless from and against any
and all losses, liabilities, damages, injuries, costs or expenses of
any kind arising under Paragraph 3 of this Mortgage regarding
accessibility for the disabled or handicapped, or under the separate
Indemnity Agreement from Mortgagor and General Partner to Mortgagee;
(9) all court costs and Reasonable Attorneys' Fees actually incurred
which are provided for in the Note or in any other Loan Document;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Federal, State,
County, Regional or Local Authority which may or could pose a hazard
to the health and safety of the occupants of the Property, regardless
of the source of origination; (ii) the restoration of the Property to
comply with all governmental regulations pertaining to hazardous waste
found in, on or under the Property, regardless of the source of
origination; and (iii) any indemnity or other agreement to hold the
Mortgagee and Trustee harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses of any and every kind
arising under paragraph 3 of this Mortgage and/or the Indemnity
Agreement of even date herewith executed by Mortgagor and General
Partner. Mortgagor shall not be liable hereunder if the Property
becomes contaminated subsequent to Mortgagee's acquisition of the
Property by foreclosure or acceptance of a deed in lieu thereof or
subsequent to any transfer of ownership which was approved or
authorized by Mortgagee pursuant to this Mortgage, provided that such
transferee assumes all obligations pertaining to Hazardous Materials
pursuant to the Loan Documents.
Liability under this subparagraph shall extend beyond repayment of
the Note and compliance with the terms of this Mortgage unless at such
time Mortgagor provides Mortgagee with an environmental assessment
report acceptable to Mortgagee showing the Property to be free of
Hazardous Materials and not in violation of Hazardous Waste Laws. The
burden of proof under this subparagraph with regard to establishing
the date upon which such chemical, material or substance was placed or
appeared in, on or under the Property shall be upon Mortgagor.
The obligations of Mortgagor in subparagraphs (1) through (10) above,
except as specifically provided in subparagraph (10), shall survive
the repayment of the Note and satisfaction of this Mortgage.
TRUSTEE
46. Mortgagor agrees that the Trustee and any successor or
substitute trustee may be an officer, agent, attorney, or employee of
the Mortgagee and any objections to such fact which might be made by
the Grantor, its heirs, successors, or assigns, are hereby waived.
SUBSTITUTE TRUSTEE
47. In case of the death, inability, refusal to act, resignation, or
absence of the Trustee from the State of Missouri, or in case the
holder of the Note shall desire for any reason to remove the Trustee
or any substitute trustee hereunder and to appoint a new trustee in
his place and stead, the holder of the Note is hereby granted full
power to appoint in writing a substitute trustee for said Trustee, and
the substitute trustee shall, when appointed, become successor to the
title to the Property and the same shall become vested in him in trust
for the purpose and objects of this Mortgage with all the powers,
duties, and obligations herein conferred on the Trustee. In the event
any foreclosure advertisement is running or has run at the time of
such appointment of a substitute Trustee, the substitute Trustee may
consummate the advertised sale without the necessity of republishing
such advertisement. The making of oath or giving of bond by Trustee or
any successor Trustee is expressly waived.
CAPTIONS
48. The captions set forth at the beginning of the various
paragraphs of this Mortgage are for convenience only and shall not be
used to interpret or construe the provisions of this Mortgage.
ORAL COMMITMENTS
49. The following is added pursuant to Section 432.045 R.S.Mo.; as
used below "borrower(s)" shall mean Mortgagor and "creditor" shall
mean Mortgagee:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
IN WITNESS WHEREOF, the undersigned have executed this Mortgage the
day and year first above written.
EDJ LEASING CO., L.P., a Missouri
By: LHC, Inc.
By:________________________________
Name:______________________________
Title:_____________________________
STATE OF MISSOURI )
) SS.
COUNTY OF ST. LOUIS )
On this ____ day of _________________________, 19__, before me
appeared ___________________________________, to me personally known,
who, by me being duly sworn did say that he is the _________________
of LHC, Inc., a corporation and the said seal affixed to the foregoing
instrument is the corporate seal of said corporation, and the said
corporation is the general partner of EDJ Leasing Co., L.P., a limited
partnership and said _________________________ acknowledged that he
executed and sealed the same in behalf of said corporation and said
limited partnership by authority of the Board of Directors of the
corporation and said _________________________ acknowledged said
instrument to be the free act and deed of said corporation and said
limited partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal at my office in the county or city and state aforesaid,
the day and year last above written.
___________________________________
Notary Public
My Term Expires: __________________
MORTGAGE NOTE
$11,700,000.00 St. Louis, Missouri
March 9, 1993
FOR VALUE RECEIVED, THE UNDERSIGNED EDJ LEASING CO., L.P., a Missouri
limited partnership (the "Maker") promises to pay to the order of
NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its successors
and assigns (the "Holder") the principal sum of Eleven Million Seven
Hundred Thousand Dollars ($11,700,000.00), together with interest on
the principal balance of this Mortgage Note (the "Note"), from time to
time remaining unpaid, from the date of disbursement by Holder hereof
at the applicable interest rate hereinafter set forth, together with
all other sums due hereunder or under the terms of the Mortgage (as
hereinafter defined) in lawful money of the United States of America
which shall be legal tender in payment of all debts at the time of
such payment. Both principal and interest and all other sums due
hereunder shall be payable at the office of Holder at One Nationwide
Plaza, Columbus, Ohio 43216, Attention: Real Estate Investment
Department, or at such other place either within or without the State
of Ohio, as Holder hereof may from time to time designate. Said
principal and interest shall be paid over a term, at the times, and in
the manner set forth below, to wit:
Payment Provision:
(i) Interest accrued on the unpaid principal balance of this Note
from the date of disbursement hereof at the rate of eight and one-half
percent (8.5%) per annum shall be due and payable (a) on the fifth
(5th) day of the calendar month of the date of disbursement, if such
date of disbursement is before the fifth (5th) day of the month, or
(b) on the fifth (5th) day of the first calendar month following the
date of disbursement, if such date of disbursement is after the fifth
(5th) day of the month. In the event that disbursement occurs on the
fifth (5th) day of the month, then there shall be no payment of
interim interest and the first payment due from Maker hereunder shall
be in accordance with subparagraph (ii) below.
(ii) Thereafter, installments of principal and interest on the unpaid
principal balance of this Note at the rate of eight and one-half
percent (8.5%) per annum, shall be due and payable in one hundred and
seventy-nine (179) consecutive monthly installments commencing on the
fifth day of the second calendar month following the date of
disbursement hereof and continuing on the fifth day of each calendar
month thereafter, with each such installment to be in the sum of One
Hundred and Fifteen Thousand Two Hundred and Fourteen and 53/100
Dollars ($115,214.53).
Maturity:
The unpaid principal balance of this Note and all accrued unpaid
interest thereon, if not sooner paid, shall be due and payable in full
on April 5, 2008 (the "Maturity Date").
Application of Payments:
All payments shall be applied first to the payment of accrued unpaid
interest on this Note and the balance, if any, shall be applied to the
reduction of the outstanding principal balance of this Note. Interest
due hereunder shall be calculated on the basis of a 360-day year
composed of twelve 30-day months; provided however in no event shall
such calculation cause the interest payable under the terms of this
Note to exceed the maximum rate of interest permitted under applicable
law.
Late Payment Charge:
The Holder of this Note may collect a late payment charge, prior to
the acceleration of this Note, in an amount equal to five percent (5%)
of the aggregate monthly installment which is not paid on the due
date, for the purpose of covering the extra expenses involved in
handling delinquent installments. Any full payment of principal
and/or interest which is correctly addressed, bears adequate first
class postage and is postmarked by the United States Postal Service on
or before the due date shall not be considered delinquent and a late
payment charge shall not be assessed.
Prepayment:
(A) Except as hereinafter provided, Maker shall not have the right
to prepay all or any part of the obligation evidenced by this Note at
any time. Maker shall have the right to prepay, in full but not in
part, the obligation evidenced by this Note upon giving (i) not less
than thirty (30) days' prior written notice to Holder of Maker's
intention to so prepay this Note, and (ii) payment to Holder of the
Prepayment Premium (as hereinafter defined), if any, then due to
Holder as hereinafter provided. As used herein, the term "Prepayment
Premium" shall mean the greater of (i) one percent (1%) of the
outstanding principal balance of this Note at the time of prepayment
or (ii) an amount equal to the sum of (a) the present value of the
scheduled monthly payments on this Note from the date of prepayment to
the Maturity Date and (b) the present value of the amount of principal
and interest of this Note due on the Maturity Date (assuming all
scheduled monthly payments due prior to the Maturity Date were made
when due), minus (c) the outstanding principal balance of this Note as
of the date of prepayment. The present values described in (a) and
(b) shall be computed on a monthly basis as of the date of prepayment
discounted at the yield-to-maturity rate of the U.S. Treasury Note or
Bond closest in maturity to the Maturity Date of this Note as reported
in the Wall_Street Journal (or, if the Wall Street Journal is no
longer published, as reported in such other daily financial
publication of national circulation which shall be designated by
Holder) on the fifth (5th) business day preceding the date of
prepayment, expressed as a decimal equivalent. Maker shall be
obligated to prepay this Note on the date set forth in the notice to
Holder required hereinabove, after such notice has been delivered to
Holder. Notwithstanding the foregoing or any other provision herein to
the contrary, if Holder elects to apply insurance proceeds,
condemnation awards, or any escrowed amounts, if applicable, to the
reduction of the principal balance of this Note in the manner provided
in the Mortgage (as hereinafter defined), no Prepayment Premium shall
be due or payable as a result of such application and the monthly
installments due and payable hereunder shall be reduced accordingly.
(B) In the event the Maturity Date of the indebtedness evidenced by
this Note is accelerated by Holder hereof at any time due to a
default, continuing beyond the expiration of any applicable cure
periods, by Maker in the terms, covenants or conditions contained in
this Note, the Mortgage or any of the other Loan Documents (as
hereinafter defined), then a tender of payment in an amount necessary
to satisfy the entire outstanding principal balance and all accrued
unpaid interest on this Note made by Maker, or by anyone on behalf of
Maker, at any time prior to, at, or as a result of, a foreclosure sale
or sale pursuant to power of sale, shall constitute a voluntary
prepayment hereunder prior to the contracted Maturity Date of this
Note thus requiring the payment to Holder of a Prepayment Premium
equal to the applicable Prepayment Premium as set forth in paragraph
(A) above; provided, however, that in the event such Prepayment
Premium is construed to be interest under the laws of the State of
Missouri in any circumstance, such payment shall not be required to
the extent that the amount thereof, together with other interest
payable hereunder, exceeds the maximum rate of interest that may be
lawfully charged under applicable law.
(C) Notwithstanding anything contained herein to the contrary,
during the ninety (90) day period immediately preceding the Maturity
Date, the entire outstanding principal balance and all accrued unpaid
interest on this Note may be prepaid in whole, but not in part,
without incurring a Prepayment Premium.
Additional Conditions:
This Note is secured by a Deed of Trust and Security Agreement
containing provisions for future advances and future obligations
governed by Section 443.055 R.S.Mo. (as amended) and which is a lien
on the property therein described executed of even date herewith
(hereinafter referred to as the "Mortgage") and by an Assignment of
Leases, Rents and Profits (hereinafter referred to as the
"Assignment") of even date herewith each encumbering certain real
property located in St. Louis County, Missouri and other property as
more particularly described in the Mortgage (hereinafter collectively
referred to as the "Property"). The Mortgage and the Assignment
contain terms and provisions which provide grounds for acceleration of
the indebtedness evidenced by this Note together with additional
remedies in the event of default hereunder or thereunder. Failure on
the part of Holder hereof to exercise any right granted herein or in
the aforesaid Mortgage or the Assignment shall not constitute a waiver
of such right or preclude the subsequent exercise and enforcement
thereof. This Note, the Mortgage, the Assignment and all other
documents and instruments executed as further evidence of, as
additional security for, or executed in connection with the
indebtedness evidenced by this Note are hereinafter collectively
referred to as the "Loan Documents".
Except as herein otherwise provided, all parties to this Note,
including endorsers, sureties and guarantors, hereby jointly and
severally waive presentment for payment, demand, protest, notice of
protest, notice of demand and of nonpayment or dishonor and of
protest, and any and all other notices and demands whatsoever, and
agree to remain bound hereby until the principal and interest of this
Note are paid in full, notwithstanding any extensions of time for
payment which may be granted by Holder, even though the period of
extension be indefinite, and notwithstanding any inaction by, or
failure to assert any legal rights available to Holder of this Note.
If the obligations evidenced by this Note, or any part thereof, are
placed in the hands of an attorney for collection, whether by suit or
otherwise, at any time, or from time to time, Maker shall be liable to
Holder, in each instance, for all costs and expenses incurred in
connection therewith, including, without limitation, Reasonable
Attorneys' Fees (as hereinafter defined).
Default:
If default shall be made in the payment of principal and/or interest
as stipulated above or in the payment of any other sums due hereunder
or under any of the other Loan Documents, or should any default be
made in the performance of any of the terms, covenants and conditions
contained herein or in any of the other Loan Documents, then in any or
all of such events, at the option of Holder, the entire outstanding
principal balance of this Note, together with all accrued unpaid
interest thereon and all other sums advanced by Holder on behalf of
Maker shall become and be immediately due and payable then or
thereafter as Holder may elect, regardless of the Maturity Date
hereof. All such amounts shall bear interest after maturity, by
acceleration or otherwise, at the lesser of either (i) the highest
rate of interest then allowed by the laws of the State of Missouri or,
if controlling, the laws of the United States, or (ii) the then
applicable interest rate of this Note plus five hundred (500) basis
points.
During the existence of any default, Holder may apply any sums
received, including but not limited to, insurance proceeds or
condemnation awards, to any amount then due and owing hereunder or
under the terms of any of the other Loan Documents as Holder may
determine. Neither the right nor the exercise of the right herein
granted unto Holder to apply such proceeds as aforesaid shall preclude
Holder from exercising its option to cause the entire indebtedness
evidenced by this Note to become immediately due and payable by reason
of Maker's default under the terms of this Note or any of the other
Loan Documents.
Notwithstanding any provisions herein to the contrary, Holder's
right, power and privilege to accelerate the maturity of the
indebtedness evidenced hereby shall be conditioned upon, with respect
to any Non-Monetary Default (as hereinafter defined), Holder giving
Maker written notice of such Non-Monetary Default and a thirty (30)
day period after the date of such notice within which to cure such
Non-Monetary Default, unless such Non-Monetary Default cannot
reasonably be cured within said thirty (30) day period, in which event
Maker shall have an extended period of time to complete cure, provided
that action to cure such Non-Monetary Default is commenced within said
thirty (30) day period and Maker is not substantially diminishing or
impairing the value of the Property, and is diligently pursuing a cure
to completion. Any notice required hereunder shall be given as
provided in the Mortgage. Holder shall have no obligation to give
Maker notice of, or any period to cure any Monetary Default (as
hereinafter defined) or any Incurable Default (as hereinafter defined)
prior to exercising its right, power and privilege to accelerate the
maturity of the indebtedness evidenced hereby and to declare the same
to be immediately due and payable and exercise all other rights and
remedies herein granted or otherwise available to Holder at law or in
equity. As used herein, the term "Monetary Default" shall mean any
default which can be cured by the payment of money including, but not
limited to, the payment of principal and interest due under this Note
and the payment of taxes, assessments and insurance premiums when due
as provided in the Mortgage. As used herein, the term "Non-Monetary
Default" shall mean any default which is not a Monetary Default or an
Incurable Default. As used herein, the term "Incurable Default" shall
mean (i) any voluntary or involuntary sale, assignment, mortgaging or
transfer in violation of the covenants of the Mortgage; or (ii) if
Maker, or any person or entity comprising Maker, should make an
assignment for the benefit of creditors, become insolvent, or file a
petition in bankruptcy (including but not limited to, a petition
seeking a rearrangement or reorganization).
Savings Clause; Severability:
Notwithstanding any provisions herein or in the Mortgage to the
contrary, the total liability for payments in the nature of interest
including but not limited to Prepayment Premiums, default interest and
late fees shall not exceed the limits imposed by the laws of the State
of Missouri or the United States of America relating to maximum
allowable charges of interest. Holder shall not be entitled to
receive, collect or apply, as interest on the indebtedness evidenced
hereby, any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as amended
or enacted from time to time. In the event Holder ever receives,
collects or applies, as interest, any such excess, such amount which
would be excessive interest shall be applied to reduce the unpaid
principal balance of the indebtedness evidenced by this Note. If the
unpaid principal balance of such indebtedness is paid in full, any
remaining excess shall be forthwith paid to Maker.
If any clauses or provisions herein contained operate or would
prospectively operate to invalidate this Note, then such clauses or
provisions only shall be held for naught, as though not herein
contained and the remainder of this Note shall remain operative and in
full force and effect.
Exculpation:
The liability of Maker and the general partner of Maker, LHC, Inc.,
and any other current or future general partner of Maker ("General
Partner") with respect to the payment of principal and interest
hereunder shall be "non-recourse" and, accordingly, Holder's source of
satisfaction of said indebtedness and Maker's other obligations
hereunder and under the other Loan Documents shall be limited to the
Property and Holder's receipt of the rents, issues, and profits from
the Property and Holder shall not seek to procure payment out of any
other assets of Maker, or any person or entity comprising Maker, or to
seek judgment for any sums which are or may be payable under this Note
or under any of the other Loan Documents, as well as any claim or
judgment (except as hereafter provided) for any deficiency remaining
after foreclosure of the Mortgage. Notwithstanding the above, nothing
herein contained shall be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the security therefor intended
by the other Loan Documents or be deemed to preclude Holder from
exercising its rights to foreclose the Mortgage or to enforce any of
its other rights or remedies under the Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or
apply to Maker's and General Partner's continued personal liability
for all sums due to:
(1) fraud or misrepresentation made in or in connection with this
Note or any of the other Loan Documents;
(2) failure to pay taxes or assessments prior to delinquency, or to
pay charges for labor, materials or other charges which can create
liens on any portion of the Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property; or (ii) proceeds of the sale or condemnation
of any portion of the Property; or (iii) rentals received by or on
behalf of Maker subsequent to the date on which Holder makes written
demand therefor pursuant to any Loan Document;
(4) causing or permitting waste to occur in, on or about the
Property and failure to maintain the Property, excepting ordinary wear
and tear;
(5) the return to Holder of all unearned advance rentals and
security deposits paid by tenants of the Property and not refunded to
or forfeited by such tenants;
(6) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Holder;
(7) the return of, or reimbursement for, all Fixtures and Personal
Property (as defined in the Mortgage) owned by Maker taken from the
Property by or on behalf of Maker, out of the ordinary course of
business, and not replaced by items of equal or greater value than the
original value of the Fixtures and Personal Property so removed;
(8) (i) any and all costs incurred in order to cause the Property to
comply with the Accessibility Laws (as defined in the Mortgage) and
(ii) any indemnity or other agreement to hold Holder harmless from and
against any and all losses, liabilities, damages, injuries, costs or
expenses of any kind arising under Paragraph 3 of the Mortgage
regarding accessibility for the disabled or handicapped, or under the
separate Indemnity Agreement from Maker and General Partner to Holder;
(9) all court costs and Reasonable Attorneys' Fees (as hereinafter
defined) actually incurred which are provided for in this Note or in
any other Loan Documents;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited, or regulated by any Federal, State,
County, Regional or Local Authority which may or could pose a hazard
to the health and safety of the occupants of the Property, regardless
of the source of origination; (ii) the restoration of the Property to
comply with all governmental regulations pertaining to hazardous waste
found in, on or under the Property, regardless of the source of
origination; and (iii) any indemnity or other agreement to hold the
Holder harmless from and against any and all losses, liabilities,
damages, injuries, costs, expenses of any and every kind arising under
paragraph 3 of the Mortgage and/or the Indemnity Agreement of even
date herewith executed by Maker and General Partner. Maker shall not
be liable hereunder if the Property becomes contaminated subsequent to
Holder's acquisition of the Property by foreclosure or acceptance of a
deed in lieu thereof or subsequent to any transfer of ownership which
was approved or authorized by Holder pursuant to the Mortgage,
provided that such transferee assumes all obligations pertaining to
Hazardous Materials (as defined in the Mortgage) pursuant to the Loan
Documents.
Liability under this subparagraph shall extend beyond repayment of
this Note and compliance with the terms of the Mortgage unless at such
time Maker provides Holder with an environmental assessment report
acceptable to Holder showing the Property to be free of Hazardous
Materials and not in violation of Hazardous Waste Laws (as defined in
the Mortgage). The burden of proof under this subparagraph with
regard to establishing the date upon which such chemical, material or
substance was placed or appeared in, on or under the Property shall be
upon Maker.
The obligations of Maker in subparagraphs (1) through (10), except as
specifically provided in this subparagraph (10), shall survive the
repayment and satisfaction of this Note.
As used herein, the phrase "Reasonable Attorneys' Fees" shall mean
fees charged by attorneys selected by Holder based upon such
attorneys' then prevailing hourly rates as opposed to any statutory
presumption specified by any statute then in effect in the State of
Missouri.
THE PROVISIONS of this Note shall be governed by and construed in
accordance with the laws of the State of Missouri and if controlling,
by the laws of the United States and shall be binding upon Maker, its
heirs, personal representatives, successors and assigns and shall
inure to the benefit of Holder.
IN WITNESS WHEREOF, Maker has executed this Note under seal as of the
day and year first above written.
EDJ LEASING CO., L.P., a Missouri
By: LHC, Inc.
By:________________________________
Name:______________________________
Title:_____________________________
AMENDMENT TO DEED OF TRUST
THIS AMENDMENT is made and executed this 9th day of March, 1994, by
and among EDJ LEASING CO., L.P., a Missouri limited partnership having
its principal address at 201 Progress Parkway, Maryland Heights,
Missouri 63043, Attention: Edward Soule (hereinafter referred to as
"Mortgagor"), and Robert C. Graham III of the County of St. Louis,
Missouri hereinafter referred to as "Trustee"), and NATIONWIDE LIFE
INSURANCE COMPANY, an Ohio corporation, its successors and assigns,
having its principal office at One Nationwide Plaza, Columbus, Ohio
43216, Attention: Real Estate Investments, or at such other place
either within or without the State of Ohio, as it may from time to
time designate (hereinafter referred to as "Mortgagee");
WITNESSETH:
WHEREAS, Mortgagee has extended certain credit accommodations to
Mortgagor , which credit accommodations are secured by a deed of trust
executed by Mortgagor dated March 9, 1993, and recorded in Book 9634
beginning at Page 2171 in the Office of the Recorder of Deeds for St.
Louis County, Missouri (the "Mortgage") which is a lien upon the real
estate described on Exhibit A attached hereto and made a part hereof
(the "Real Estate"); and
WHEREAS, Mortgagee has agreed to extend additional credit
accomodations to the Mortgagor;
WHEREAS, the Mortgagor and the Mortgagee desire to make certain
modifications to the Mortgage in connection with the extension of
additional credit accomodations;
NOW, THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by
Mortgagor and the mutual terms, covenants and conditions contained
herein, Mortgagor hereby agrees to and with Mortgagee and its
successors and assigns as follows:
1. Mortgagor is the current owner of the Real Estate, and there has
not been any change in the title to the Real Estate since the date of
the Mortgage.
2. The Mortgage is hereby amended in the following respects:
a. The last paragraph of Paragraph 3 of the Mortgage is hereby
deleted and the following inserted in lieu thereof:
Liability under this Paragraph shall extend beyond repayment of the
Note and compliance with the terms of this Mortgage; provided,
however, Mortgagor and General Partner shall have no liability under
this Paragraph 3 regarding: (1) Hazardous Materials if (a) the
Property becomes contaminated subsequent to Mortgagee's acquisition of
the Property by foreclosure, acceptance by Mortgagee of a deed in lieu
thereof, or subsequent to any transfer of ownership of the Property
which was approved or authorized by Mortgagee in writing, provided
that such transferee assumes all obligations of Mortgagor with respect
to Hazardous Materials or (b) at such time Mortgagor provides
Mortgagee with an environmental assessment report acceptable to
Mortgagee, in its sole discretion, showing the Property to be free of
Hazardous Materials and not in violation of any Hazardous Waste Laws,
or (2) Accessibility Laws that first become effective, or for any
violation of any Accessibility Laws resulting from alterations or
improvements to the Property that are performed subsequent to
Mortgagee's acquisition of the Property by foreclosure or acceptance
of a deed in lieu thereof or subsequent to any transfer of ownership
which was approved or authorized by Mortgagee pursuant to this
Mortgage, provided that such transferee assumes all obligations
pertaining to Accessibility Laws pursuant to the Loan Documents.
The burden of proof under this paragraph with regard to establishing
the date upon which any Hazardous Material was placed or appeared in,
on or under the Property shall be upon Mortgagor.
b. Subparagraph (c) of Paragraph 8 of the Mortgage is hereby deleted
and the following inserted in lieu thereof:
(c) The plans and specifications for the restoration of
the Property are approved in writing by Mortgagee, such approval not
to be unreasonably withheld;
c. The second paragraph of Paragraph 31 of the Mortgage is hereby
deleted and the following inserted in lieu thereof:
Notwithstanding the above, secondary financing of the Property shall
be permitted as long as (i) the quotient of the aggregate amount of
indebtedness placed on the Property (which indebtedness shall include
the indebtedness secured hereby) divided by the current market value
of the Property does not exceed 0.90; (ii) the net operating income
generated by the Property (defined as annual rental income, minus
annual taxes and all annual operating expenses) covers the annual debt
service on the loan evidenced by the Note and on such secondary
financing at least 1.2 times; (iii) such secondary financing must
provide for a fixed rate of interest to be charged on the loan; and
(iv) Mortgagor is not in default under the terms, conditions and
provisions of the Note, this Mortgage, the Assignment or any of the
other Loan Documents. Mortgagee shall have the right to approve the
lender under any proposed secondary financing, and to review and
approve any and all documentation with respect to such secondary
financing such approval not to be unreasonably withheld. All costs
incurred in connection with such secondary financing shall be borne by
Mortgagor.
d. Paragraph 35 of the Mortgage is hereby deleted and the following
inserted in lieu thereof:
35. Mortgagor will maintain complete and accurate books and records
showing in detail the income and expenses of the Property, and will
permit Mortgagee and its representatives to examine said books and
records and all supporting vouchers and data during normal business
hours and from time to time upon request by Mortgagee, in such place
as such books and records are customarily kept, and will furnish to
Mortgagee, within one hundred twenty (120) days after the close of
each fiscal year of Mortgagor, a balance sheet and profit and loss
statement for Mortgagor, Jones, General Partner, and the Property,
which shall also include a rent roll, certified by Mortgagor to be
true and correct and showing in detail all income derived from and
expenses incurred in connection with the ownership of the Property.
In the event Mortgagor fails to provide such statements to Mortgagee
within the time prescribed above, Mortgagor shall pay Mortgagee the
sum of Two Hundred and No/100 Dollars ($200.00) for each successive
month for which statements are delinquent. In the event of default
hereunder, Mortgagee shall have the right to require that said
financial statements be audited and certified by a certified public
accountant acceptable to Mortgagee, at the sole cost and expense of
Mortgagor.
e. Paragraph 39 of the Mortgage is hereby deleted and the following
inserted in lieu thereof:
39. The terms and provisions of the Application/Contract for
Mortgage Loan dated December 30, 1993, and any subsequent amendments
thereto (hereinafter referred to as the "Contract"), executed by and
between Mortgagor as Applicant and Mortgagee as Nationwide are
incorporated herein by reference. All terms and conditions of the
Contract not expressly set forth in this Mortgage, the Note, the
Assignment and any other Loan Documents additionally securing the Note
shall survive the closing hereof and remain in full force and effect.
In the event any conflict exists between the terms, conditions and
provisions of the Contract and the Loan Documents, the terms,
conditions and provisions of the Loan Documents shall prevail.
f. Paragraph 45 of the Mortgage is hereby deleted and the following
inserted in lieu thereof:
45. The liability of Mortgagor and General Partner with respect to
the payment of principal and interest under the Note shall be "non-
recourse" and, accordingly, Mortgagee's source of satisfaction of said
indebtedness and Mortgagor's other obligations hereunder and under the
other Loan Documents shall be limited to the Property and Mortgagee's
receipt of the rents, issues and profits from the Property and
Mortgagee shall not seek to procure payment out of any other assets of
Mortgagor or any person or entity comprising Mortgagor, or to seek
judgment for any sums which are or may be payable under the Note, this
Mortgage or any of the other Loan Documents, as well as any claim or
judgment (except as hereafter provided) for any deficiency remaining
after foreclosure of this Mortgage. Notwithstanding the above,
nothing herein contained shall be deemed to be a release or impairment
of the indebtedness evidenced by the Note or the security therefor
intended by this Mortgage and the other Loan Documents, or be deemed
to preclude Mortgagee from exercising its rights to foreclose this
Mortgage or to enforce any of its other rights or remedies under the
Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or
apply to Mortgagor's and General Partner's continued personal
liability for all sums due to:
(1) fraud or misrepresentation made in or in connection with the
Note or any of the other Loan Documents;
(2) failure to pay taxes, or assessments prior to delinquency, or to
pay charges for labor, materials or other charges which can create
liens on any portion of the Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property; or (ii) proceeds of the sale or condemnation
of any portion of the Property; or (iii) rentals received by or on
behalf of Mortgagor subsequent to the date on which Mortgagee makes
written demand therefor pursuant to any Loan Document;
(4) causing or permitting waste to occur in, on or about the
Property and failure to maintain the Property, excepting ordinary wear
and tear;
(5) the return to Mortgagee of all unearned advance rentals and
security deposits paid by tenants of the Property and not refunded to
or forfeited by such tenants;
(6) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Mortgagee;
(7) the return of, or reimbursement for, all Fixtures and Personal
Property owned by Mortgagor taken from the Property by or on behalf of
Mortgagor, out of the ordinary course of business, and not replaced by
items of equal or greater value than the original value of the
Fixtures and Personal Property so removed;
(8) (i) any and all costs incurred in order to cause the Property to
comply with the Accessibility Laws, and (ii) any indemnity or other
agreement to hold Mortgagee and Trustee harmless from and against any
and all losses, liabilities, damages, injuries, costs or expenses of
any kind arising under Paragraph 3 of this Mortgage regarding
accessibility for the disabled or handicapped, or under the separate
Indemnity Agreement from Mortgagor and General Partner to Mortgagee.
Mortgagor shall not be liable hereunder for compliance with any
Accessibility Laws that first become effective, or for any violation
of any Accessibility Laws resulting from alterations or improvements
to the Property that are performed subsequent to Mortgagee's
acquisition of the Property by foreclosure or acceptance of a deed in
lieu thereof or subsequent to any transfer of ownership which was
approved or authorized by Mortgagee pursuant to this Mortgage,
provided that such transferee assumes all obligations pertaining to
Accessibility Laws pursuant to the Loan Documents;
(9) all court costs and Reasonable Attorneys' Fees actually incurred
which are provided for in the Note or in any other Loan Document;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited or regulated by any Federal, State,
County, Regional or Local Authority which may or could pose a hazard
to the health and safety of the occupants of the Property, regardless
of the source of origination; (ii) the restoration of the Property to
comply with all governmental regulations pertaining to hazardous waste
found in, on or under the Property, regardless of the source of
origination; and (iii) any indemnity or other agreement to hold the
Mortgagee and Trustee harmless from and against any and all losses,
liabilities, damages, injuries, costs, expenses of any and every kind
arising under paragraph 3 of this Mortgage and/or the Indemnity
Agreement of even date herewith executed by Mortgagor and General
Partner. Mortgagor shall not be liable hereunder if the Property
becomes contaminated subsequent to Mortgagee's acquisition of the
Property by foreclosure or acceptance of a deed in lieu thereof or
subsequent to any transfer of ownership which was approved or
authorized by Mortgagee pursuant to this Mortgage, provided that such
transferee assumes all obligations pertaining to Hazardous Materials
pursuant to the Loan Documents. Liability under this subparagraph
shall extend beyond repayment of the Note and compliance with the
terms of this Mortgage unless at such time Mortgagor provides
Mortgagee with an environmental assessment report acceptable to
Mortgagee showing the Property to be free of Hazardous Materials and
not in violation of Hazardous Waste Laws. The burden of proof under
this subparagraph with regard to establishing the date upon which such
chemical, material or substance was placed or appeared in, on or under
the Property shall be upon Mortgagor.
The obligations of Mortgagor in subparagraphs (1) through (10) above,
except as specifically provided in subparagraphs (8) and (10), shall
survive the repayment of the Note and satisfaction of this Mortgage.
3. The lien of the Mortgage and the covenants and agreements
therein, except as modified herein, shall be and remain in full force
and effect, subject to all the conditions and provisions contained in
the Mortgage.
IN WITNESS WHEREOF, Mortgagor and Mortgagee have caused this
Amendment to be executed as of the day and year first above written.
EDJ LEASING CO., L.P., a Missouri
By: LHC, Inc.
By:________________________________
Name:______________________________
Title:_____________________________
NATIONWIDE LIFE INSURANCE COMPANY
By: ____________________________________
Name: __________________________________
Title: _________________________________
STATE OF MISSOURI )
) SS.
COUNTY OF ST. LOUIS )
On this ____ day of _________________________, 19__, before me
appeared ___________________________________, to me personally known,
who, by me being duly sworn did say that he is the _________________
of LHC, Inc., a corporation and the said seal affixed to the foregoing
instrument is the corporate seal of said corporation, and the said
corporation is the general partner of EDJ Leasing Co., L.P., a limited
partnership and said _________________________ acknowledged that he
executed and sealed the same in behalf of said corporation and said
limited partnership by authority of the Board of Directors of the
corporation and said _________________________ acknowledged said
instrument to be the free act and deed of said corporation and said
limited partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal at my office in the county or city and state aforesaid,
the day and year last above written.
___________________________________
Notary Public
My Term Expires: __________________
STATE OF OHIO )
) SS.
COUNTY OF _________ )
On this ____ day of _________________________, 19__, before me
appeared ___________________________________, to me personally known,
who, by me being duly sworn did say that he is the _________________
of Nationwide Life Insurance Company, a corporation and the said seal
affixed to the foregoing instrument is the corporate seal of said
corporation, and said _________________________ acknowledged that he
executed and sealed the same in behalf of said corporation by
authority of the Board of Directors of the corporation and said
_____________ acknowledged said instrument to be the free act and deed
of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal at my office in the county or city and state aforesaid,
the day and year last above written.
___________________________________
Notary Public
My Term Expires: __________________
EXHIBIT A
A tract of land being Lot 1 of "Community Federal Subdivision", a
subdivision according to the plat thereof recorded in Plat Book 240
page 75 of the St. Louis County Records, in Sections 27 and 34,
Township 45 North-Range 5 East, St. Louis County, Missouri and being
more particularly described as:
Beginning at the Northwest corner of said Lot 1 of "Community Federal
Subdivision"; said point being also the Southwest corner of Lot 2 of
said subdivision; thence Eastwardly and Northwardly along the line
dividing Lots 1 and 2 South 89 degrees 17 minutes 50 seconds East
1111.06 feet and North 00 degrees 42 minutes 41 seconds East 10.00
feet to a point in the North line of said Lot 1; thence Eastwardly
along said North line of Lot 1 South 89 degrees 15 minutes 08 seconds
East 178.36 feet to a point in the West line of Ballas Road as
widened; thence Southwardly along said West line of Ballas Road South
00 degrees 42 minutes 41 seconds West 380.81 feet to a point in the
North line of property conveyed to Reproco, Inc., as described in the
deed recorded in book 6562, page 2239 of the St. Louis County Records;
thence along the boundary line of said Reproco, Inc. property North 89
degrees 16 minutes 29 seconds West 288.00 feet, and South 00 degrees
28 minutes 31 seconds West 99.57 feet to a point in the North line of
Manchester Road, as widened; thence along the right-of-way line of
Manchester Road, as widened, the following courses and distances;
North 89 degrees 16 minutes 29 seconds West 178.49 feet, North 88
degrees 18 minutes 59 seconds West 94.01 feet North 30 degrees 34
minutes 38 seconds West 114.69 feet, North 89 degrees 16 minutes 29
seconds West 60.00 feet, South 36 degrees 25 minutes 32 seconds West
117.60 feet, North 89 degrees 16 minutes 29 seconds West 55.47 feet,
along a curve to the left whose radius point bears South 00 degrees 43
minutes 31 seconds West 867.90 feet from the last mentioned point, a
distance of 346.38 feet, South 67 degrees 51 minutes 31 seconds West
80.21 feet, North 22 degrees 08 minutes 29 seconds West 61.02 feet,
South 88 degrees 12 minutes 27 seconds West 34.28 feet, and South 67
degrees 51 minutes 31 seconds West 17.15 feet to a point in the East
line of J. J. Kelly Memorial Drive, 60 feet wide; thence Northwardly
along said East line, being also along the West line of aforesaid Lot
1 of "Community Federal Subdivision" North 00 degrees 28 minutes 18
seconds East 146.83 feet and North 00 degrees 41 minutes 41 seconds
East 370.44 feet to the point of beginning according to a survey by
Volz Engineering & Surveying, Inc. dated July 14, 1992.
MORTGAGE NOTE
$14,900,000.00 St. Louis, Missouri
March 9, 1994
FOR VALUE RECEIVED, THE UNDERSIGNED EDJ LEASING CO., L.P.
limited partnership (the "Maker") promises to pay to the order of
NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its successors
and assigns (the "Holder") the principal sum of Fourteen Million Nine
Hundred Thousand Dollars ($14,900,000.00), together with interest on
the principal balance of this Mortgage Note (the "Note"), from time to
time remaining unpaid, from the date of disbursement by Holder hereof
at the applicable interest rate hereinafter set forth, together with
all other sums due hereunder or under the terms of the Mortgage (as
hereinafter defined) in lawful money of the United States of America
which shall be legal tender in payment of all debts at the time of
such payment. Both principal and interest and all other sums due
hereunder shall be payable at the office of Holder at One Nationwide
Plaza, Columbus, Ohio 43216, Attention: Real Estate Investment
Department, or at such other place either within or without the State
of Ohio, as Holder hereof may from time to time designate. Said
principal and interest shall be paid over a term, at the times, and in
the manner set forth below, to wit:
Payment Provision:
(i) Interest accrued on the unpaid principal balance of this Note
from the date of disbursement hereof at the rate of eight and twenty-
three one-hundredths percent (8.23%) per annum shall be due and
payable (a) on the fifth (5th) day of the calendar month of the date
of disbursement, if such date of disbursement is before the fifth
(5th) day of the month, or (b) on the fifth (5th) day of the first
calendar month following the date of disbursement, if such date of
disbursement is after the fifth (5th) day of the month. In the event
that disbursement occurs on the fifth (5th) day of the month, then
there shall be no payment of interim interest and the first payment
due from Maker hereunder shall be in accordance with subparagraph (ii)
below.
(ii) Thereafter, installments of principal and interest on the unpaid
principal balance of this Note at the rate of eight and twenty-three
one-hundredths percent (8.23%) per annum, shall be due and payable in
one hundred and sixty-seven (167) consecutive monthly installments
commencing on the fifth day of the next calendar month and continuing
on the fifth day of each calendar month thereafter, with each such
installment to be in the sum of One Hundred and Forty-Nine Thousand
Six Hundred and Fifty-Eight and 87/100 Dollars ($149,658.87).
Maturity:
The unpaid principal balance of this Note and all accrued unpaid
interest thereon, if not sooner paid, shall be due and payable in full
on April 5, 2008 (the "Maturity Date").
Application of Payments:
All payments shall be applied first to the payment of accrued unpaid
interest on this Note and the balance, if any, shall be applied to the
reduction of the outstanding principal balance of this Note. Interest
due hereunder shall be calculated on the basis of a 360-day year
composed of twelve 30-day months; provided however in no event shall
such calculation cause the interest payable under the terms of this
Note to exceed the maximum rate of interest permitted under applicable
law.
Late Payment Charge:
The Holder of this Note may collect a late payment charge, prior to
the acceleration of this Note, in an amount equal to five percent (5%)
of the aggregate monthly installment which is not paid on the due
date, for the purpose of covering the extra expenses involved in
handling delinquent installments. Any full payment of principal
and/or interest which is correctly addressed, bears adequate first
class postage and is postmarked by the United States Postal Service on
or before the due date shall not be considered delinquent and a late
payment charge shall not be assessed.
Prepayment:
(A) Except as hereinafter provided, Maker shall not have the right
to prepay all or any part of the obligation evidenced by this Note at
any time. Maker shall have the right to prepay, in full but not in
part, the obligation evidenced by this Note upon giving (i) not less
than thirty (30) days' prior written notice to Holder of Maker's
intention to so prepay this Note, and (ii) payment to Holder of the
Prepayment Premium (as hereinafter defined), if any, then due to
Holder as hereinafter provided. As used herein, the term "Prepayment
Premium" shall mean the greater of (i) one percent (1%) of the
outstanding principal balance of this Note at the time of prepayment
or (ii) an amount equal to the sum of (a) the present value of the
scheduled monthly payments on this Note from the date of prepayment to
the Maturity Date and (b) the present value of the amount of principal
and interest of this Note due on the Maturity Date (assuming all
scheduled monthly payments due prior to the Maturity Date were made
when due), minus (c) the outstanding principal balance of this Note as
of the date of prepayment. The present values described in (a) and
(b) shall be computed on a monthly basis as of the date of prepayment
discounted at the yield-to-maturity rate of the U.S. Treasury Note or
Bond closest in maturity to the Maturity Date of this Note as reported
in the Wall_Street Journal (or, if the Wall Street Journal is no
longer published, as reported in such other daily financial
publication of national circulation which shall be designated by
Holder) on the fifth (5th) business day preceding the date of
prepayment, expressed as a decimal equivalent. Maker shall be
obligated to prepay this Note on the date set forth in the notice to
Holder required hereinabove, after such notice has been delivered to
Holder. Notwithstanding the foregoing or any other provision herein to
the contrary, if Holder elects to apply insurance proceeds,
condemnation awards, or any escrowed amounts, if applicable, to the
reduction of the principal balance of this Note in the manner provided
in the Mortgage (as hereinafter defined), no Prepayment Premium shall
be due or payable as a result of such application and the monthly
installments due and payable hereunder shall be reduced accordingly.
(B) In the event the Maturity Date of the indebtedness evidenced by
this Note is accelerated by Holder hereof at any time due to a
default, continuing beyond the expiration of any applicable cure
periods, by Maker in the terms, covenants or conditions contained in
this Note, the Mortgage or any of the other Loan Documents (as
hereinafter defined), then a tender of payment in an amount necessary
to satisfy the entire outstanding principal balance and all accrued
unpaid interest on this Note made by Maker, or by anyone on behalf of
Maker, at any time prior to, at, or as a result of, a foreclosure sale
or sale pursuant to power of sale, shall constitute a voluntary
prepayment hereunder prior to the contracted Maturity Date of this
Note thus requiring the payment to Holder of a Prepayment Premium
equal to the applicable Prepayment Premium as set forth in paragraph
(A) above; provided, however, that in the event such Prepayment
Premium is construed to be interest under the laws of the State of
Missouri in any circumstance, such payment shall not be required to
the extent that the amount thereof, together with other interest
payable hereunder, exceeds the maximum rate of interest that may be
lawfully charged under applicable law.
(C) Notwithstanding anything contained herein to the contrary,
during the ninety (90) day period immediately preceding the Maturity
Date, the entire outstanding principal balance and all accrued unpaid
interest on this Note may be prepaid in whole, but not in part,
without incurring a Prepayment Premium.
Additional Conditions:
This Note is secured by a Deed of Trust and Security Agreement
containing provisions for future advances and future obligations
governed by Section 443.055 R.S.Mo. (as amended) and which is a lien
on the property therein described executed on March 9, 1993, and
amended by Amendment to Deed of Trust dated of even date herewith
(hereinafter referred to as the "Mortgage") and by an Assignment of
Leases, Rents and Profits (hereinafter referred to as the
"Assignment") of even date herewith each encumbering certain real
property located in St. Louis County, Missouri and other property as
more particularly described in the Mortgage (hereinafter collectively
referred to as the "Property"). The Mortgage and the Assignment
contain terms and provisions which provide grounds for acceleration of
the indebtedness evidenced by this Note together with additional
remedies in the event of default hereunder or thereunder. Failure on
the part of Holder hereof to exercise any right granted herein or in
the aforesaid Mortgage or the Assignment shall not constitute a waiver
of such right or preclude the subsequent exercise and enforcement
thereof. This Note, the Mortgage, the Assignment and all other
documents and instruments executed as further evidence of, as
additional security for, or executed in connection with the
indebtedness evidenced by this Note are hereinafter collectively
referred to as the "Loan Documents".
Except as herein otherwise provided, all parties to this Note,
including endorsers, sureties and guarantors, hereby jointly and
severally waive presentment for payment, demand, protest, notice of
protest, notice of demand and of nonpayment or dishonor and of
protest, and any and all other notices and demands whatsoever, and
agree to remain bound hereby until the principal and interest of this
Note are paid in full, notwithstanding any extensions of time for
payment which may be granted by Holder, even though the period of
extension be indefinite, and notwithstanding any inaction by, or
failure to assert any legal rights available to Holder of this Note.
If the obligations evidenced by this Note, or any part thereof, are
placed in the hands of an attorney for collection, whether by suit or
otherwise, at any time, or from time to time, Maker shall be liable to
Holder, in each instance, for all costs and expenses incurred in
connection therewith, including, without limitation, Reasonable
Attorneys' Fees (as hereinafter defined).
Default:
If default shall be made in the payment of principal and/or interest
as stipulated above or in the payment of any other sums due hereunder
or under any of the other Loan Documents, or should any default be
made in the performance of any of the terms, covenants and conditions
contained herein or in any of the other Loan Documents, then in any or
all of such events, at the option of Holder, the entire outstanding
principal balance of this Note, together with all accrued unpaid
interest thereon and all other sums advanced by Holder on behalf of
Maker shall become and be immediately due and payable then or
thereafter as Holder may elect, regardless of the Maturity Date
hereof. All such amounts shall bear interest after maturity, by
acceleration or otherwise, at the lesser of either (i) the highest
rate of interest then allowed by the laws of the State of Missouri or,
if controlling, the laws of the United States, or (ii) the then
applicable interest rate of this Note plus five hundred (500) basis
points.
During the existence of any default, Holder may apply any sums
received, including but not limited to, insurance proceeds or
condemnation awards, to any amount then due and owing hereunder or
under the terms of any of the other Loan Documents as Holder may
determine. Neither the right nor the exercise of the right herein
granted unto Holder to apply such proceeds as aforesaid shall preclude
Holder from exercising its option to cause the entire indebtedness
evidenced by this Note to become immediately due and payable by reason
of Maker's default under the terms of this Note or any of the other
Loan Documents.
Notwithstanding any provisions herein to the contrary, Holder's
right, power and privilege to accelerate the maturity of the
indebtedness evidenced hereby shall be conditioned upon, with respect
to any Non-Monetary Default (as hereinafter defined), Holder giving
Maker written notice of such Non-Monetary Default and a thirty (30)
day period after the date of such notice within which to cure such
Non-Monetary Default, unless such Non-Monetary Default cannot
reasonably be cured within said thirty (30) day period, in which event
Maker shall have an extended period of time to complete cure, provided
that action to cure such Non-Monetary Default is commenced within said
thirty (30) day period and Maker is not substantially diminishing or
impairing the value of the Property, and is diligently pursuing a cure
to completion. Any notice required hereunder shall be given as
provided in the Mortgage. Holder shall have no obligation to give
Maker notice of, or any period to cure any Monetary Default (as
hereinafter defined) or any Incurable Default (as hereinafter defined)
prior to exercising its right, power and privilege to accelerate the
maturity of the indebtedness evidenced hereby and to declare the same
to be immediately due and payable and exercise all other rights and
remedies herein granted or otherwise available to Holder at law or in
equity. As used herein, the term "Monetary Default" shall mean any
default which can be cured by the payment of money including, but not
limited to, the payment of principal and interest due under this Note
and the payment of taxes, assessments and insurance premiums when due
as provided in the Mortgage. As used herein, the term "Non-Monetary
Default" shall mean any default which is not a Monetary Default or an
Incurable Default. As used herein, the term "Incurable Default" shall
mean (i) any voluntary or involuntary sale, assignment, mortgaging or
transfer in violation of the covenants of the Mortgage; or (ii) if
Maker, or any person or entity comprising Maker, should make an
assignment for the benefit of creditors, become insolvent, or file a
petition in bankruptcy (including but not limited to, a petition
seeking a rearrangement or reorganization).
Savings Clause; Severability:
Notwithstanding any provisions herein or in the Mortgage to the
contrary, the total liability for payments in the nature of interest
including but not limited to Prepayment Premiums, default interest and
late fees shall not exceed the limits imposed by the laws of the State
of Missouri or the United States of America relating to maximum
allowable charges of interest. Holder shall not be entitled to
receive, collect or apply, as interest on the indebtedness evidenced
hereby, any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as amended
or enacted from time to time. In the event Holder ever receives,
collects or applies, as interest, any such excess, such amount which
would be excessive interest shall be applied to reduce the unpaid
principal balance of the indebtedness evidenced by this Note. If the
unpaid principal balance of such indebtedness is paid in full, any
remaining excess shall be forthwith paid to Maker.
If any clauses or provisions herein contained operate or would
prospectively operate to invalidate this Note, then such clauses or
provisions only shall be held for naught, as though not herein
contained and the remainder of this Note shall remain operative and in
full force and effect.
Exculpation:
The liability of Maker and the general partner of Maker, LHC, Inc.,
and any other current or future general partner of Maker ("General
Partner") with respect to the payment of principal and interest
hereunder shall be "non-recourse" and, accordingly, Holder's source of
satisfaction of said indebtedness and Maker's other obligations
hereunder and under the other Loan Documents shall be limited to the
Property and Holder's receipt of the rents, issues, and profits from
the Property and Holder shall not seek to procure payment out of any
other assets of Maker, or any person or entity comprising Maker, or to
seek judgment for any sums which are or may be payable under this Note
or under any of the other Loan Documents, as well as any claim or
judgment (except as hereafter provided) for any deficiency remaining
after foreclosure of the Mortgage. Notwithstanding the above, nothing
herein contained shall be deemed to be a release or impairment of the
indebtedness evidenced by this Note or the security therefor intended
by the other Loan Documents or be deemed to preclude Holder from
exercising its rights to foreclose the Mortgage or to enforce any of
its other rights or remedies under the Loan Documents.
Notwithstanding the foregoing, it is expressly understood and agreed
that the aforesaid limitation on liability shall in no way affect or
apply to Maker's and General Partner's continued personal liability
for all sums due to:
(1) fraud or misrepresentation made in or in connection with this
Note or any of the other Loan Documents;
(2) failure to pay taxes or assessments prior to delinquency, or to
pay charges for labor, materials or other charges which can create
liens on any portion of the Property;
(3) the misapplication of (i) proceeds of insurance covering any
portion of the Property; or (ii) proceeds of the sale or condemnation
of any portion of the Property; or (iii) rentals received by or on
behalf of Maker subsequent to the date on which Holder makes written
demand therefor pursuant to any Loan Document;
(4) causing or permitting waste to occur in, on or about the
Property and failure to maintain the Property, excepting ordinary wear
and tear;
(5) the return to Holder of all unearned advance rentals and
security deposits paid by tenants of the Property and not refunded to
or forfeited by such tenants;
(6) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Holder;
(7) the return of, or reimbursement for, all Fixtures and Personal
Property (as defined in the Mortgage) owned by Maker taken from the
Property by or on behalf of Maker, out of the ordinary course of
business, and not replaced by items of equal or greater value than the
original value of the Fixtures and Personal Property so removed;
(8) (i) any and all costs incurred in order to cause the Property to
comply with the Accessibility Laws (as defined in the Mortgage) and
(ii) any indemnity or other agreement to hold Holder harmless from and
against any and all losses, liabilities, damages, injuries, costs or
expenses of any kind arising under Paragraph 3 of the Mortgage
regarding accessibility for the disabled or handicapped, or under the
separate Indemnity Agreement executed by Maker and General Partner.
Maker shall not be liable hereunder for compliance with any
Accessibility Laws that first become effective, or for any violation
of any Accessibility Laws resulting from alterations or improvements
to the Property that are performed subsequent to Holder's acquisition
of the Property by foreclosure or acceptance of a deed in lieu thereof
or subsequent to any transfer of ownership which was approved or
authorized by Holder pursuant to the Mortgage, provided that such
transferee assumes all obligations pertaining to Accessibility Laws
pursuant to the Loan Documents;
(9) all court costs and Reasonable Attorneys' Fees (as hereinafter
defined) actually incurred which are provided for in this Note or in
any other Loan Documents;
(10) (i) the removal of any chemical, material or substance, exposure
to which is prohibited, limited, or regulated by any Federal, State,
County, Regional or Local Authority which may or could pose a hazard
to the health and safety of the occupants of the Property, regardless
of the source of origination; (ii) the restoration of the Property to
comply with all governmental regulations pertaining to hazardous waste
found in, on or under the Property, regardless of the source of
origination; and (iii) any indemnity or other agreement to hold the
Holder harmless from and against any and all losses, liabilities,
damages, injuries, costs, expenses of any and every kind arising under
paragraph 3 of the Mortgage and/or the Indemnity Agreement of even
date herewith executed by Maker and General Partner. Maker shall not
be liable hereunder if the Property becomes contaminated subsequent to
Holder's acquisition of the Property by foreclosure or acceptance of a
deed in lieu thereof or subsequent to any transfer of ownership which
was approved or authorized by Holder pursuant to the Mortgage,
provided that such transferee assumes all obligations pertaining to
Hazardous Materials (as defined in the Mortgage) pursuant to the Loan
Documents. Liability under this subparagraph shall extend beyond
repayment of this Note and compliance with the terms of the Mortgage
unless at such time Maker provides Holder with an environmental
assessment report acceptable to Holder showing the Property to be free
of Hazardous Materials and not in violation of Hazardous Waste Laws
(as defined in the Mortgage). The burden of proof under this
subparagraph with regard to establishing the date upon which such
chemical, material or substance was placed or appeared in, on or under
the Property shall be upon Maker.
The obligations of Maker in subparagraphs (1) through (10), except as
specifically provided in subparagraphs (8) and (10), shall survive the
repayment and satisfaction of this Note.
As used herein, the phrase "Reasonable Attorneys' Fees" shall mean
fees charged by attorneys selected by Holder based upon such
attorneys' then prevailing hourly rates as opposed to any statutory
presumption specified by any statute then in effect in the State of
Missouri.
THE PROVISIONS of this Note shall be governed by and construed in
accordance with the laws of the State of Missouri and if controlling,
by the laws of the United States and shall be binding upon Maker, its
heirs, personal representatives, successors and assigns and shall
inure to the benefit of Holder.
IN WITNESS WHEREOF, Maker has executed this Note under seal as of the
day and year first above written.
EDJ LEASING CO., L.P., a Missouri
By: LHC, Inc.
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
Exhibit 24.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into The Jones
Financial Companies, A Limited Partnership's previously filed S-8
Registration Statements File No. 33-35247 and No. 33-62734.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri,
March 28, 1994
