<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 24, 1994
Commission file number 0-16633
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
________________________________________________________________________
(Exact name of registrant as specified in its charter)
MISSOURI 43-1450818
________________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 Progress Parkway
Maryland Heights, Missouri 63043
________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 851-2000
__________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports,
and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
____ ____
As of the filing date, there are no voting
securities held by non-affiliates of the Registrant.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Financial Condition 3
Consolidated Statement of Income 5
Consolidated Statement of Cash Flows 6
Consolidated Statement of Changes in Partnership Capital 7
Notes to Consolidated Financial Statements 8
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II.
OTHER INFORMATION
Item 1.
Legal Proceedings 13
Signatures 14
<PAGE>
<TABLE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ASSETS
<CAPTION>
June 24, December 31,
(Amounts in thousands) 1994 1993
<S> <C> <C>
Cash and cash equivalents $ 29,028 $ 28,798
Receivable from:
Customers 492,773 464,760
Brokers or dealers and clearing
organization deposits 14,447 32,550
Securities owned, at market value:
Trading securities 57,321 60,371
Investment securities 137,138 73,575
Office equipment, property and improvements,
at cost, net of accumulated depreciation and
amortization of $86,258 in 1994 and
$73,920 in 1993 123,329 102,434
Other assets 36,710 37,990
__________ __________
$ 890,746 $ 800,478
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
LIABILITIES AND PARTNERSHIP CAPITAL
<CAPTION>
June 24, December 31,
(Amounts in thousands) 1994 1993
<S> <C> <C>
Bank loans $ 228,000 $ 139,261
Payable to:
Customers 194,681 242,584
Brokers or dealers and clearing
organizations 12,329 8,092
Securities sold but not yet purchased,
at market value 12,734 17,766
Accounts payable and accrued expenses 39,433 37,419
Accrued compensation and employee benefits 45,917 69,264
Long-term debt 44,049 33,317
__________ __________
577,143 547,703
Liabilities subordinated to claims
of general creditors 136,000 73,000
Partnership capital 177,603 179,775
__________ __________
$ 890,746 $ 800,478
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
(Amounts in thousands, June 24, June 25, June 24, June 25,
except per unit information) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Commissions $ 96,530 $108,705 209,248 $207,359
Investment banking 9,251 12,474 17,682 22,941
Principal transactions 39,033 24,044 62,136 49,003
Interest and dividends 12,691 9,310 21,756 17,148
Other 8,618 4,910 16,714 9,816
_________ _________ _________ _________
166,123 159,443 327,536 306,267
_________ _________ _________ _________
Expenses:
Employee and partner
compensation and benefits 98,928 97,797 195,536 186,475
Floor brokerage and
clearance fees 1,519 1,678 2,904 3,273
Occupancy and equipment 16,454 14,559 33,482 28,587
Communications and data
processing 11,788 8,221 21,910 15,858
Interest 6,975 4,633 12,310 8,920
Payroll and other taxes 5,378 4,562 11,896 10,289
Other operating expenses 11,479 11,185 22,161 19,890
_________ _________ _________ _________
152,521 142,635 300,199 273,292
_________ _________ _________ _________
Net income $ 13,602 $ 16,808 $ 27,337 $ 32,975
======= ======= ======= =======
Net income allocated to:
Limited partners $ 2,045 $ 1,978 $ 4,121 $ 3,897
Subordinated limited
partners 1,309 1,575 2,669 3,178
General partners 10,248 13,255 20,547 25,900
_______ _______ _______ _______
$ 13,602 $ 16,808 $ 27,337 $ 32,975
======= ======= ======= =======
Net income per weighted average
$1,000 equivalent partnership
unit outstanding:
Limited partners $ 32.23 $ 49.22 $ 64.75 $ 96.56
======= ======= ======= =======
Subordinated limited partners $ 61.06 $ 94.01 $ 124.42 $ 189.62
======= ======= ======= =======
Weighted average $1,000
equivalent partnership units
outstanding:
Limited partners 63,432 40,183 63,643 40,356
======= ======= ======= =======
Subordinated limited partners 21,440 16,758 21,454 16,758
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
June 24, June 24,
(Amounts in thousands) 1994 1993
<S> <C> <C>
Cash Flows (Used) Provided by Operating Activities:
Net income $ 27,337 $ 32,975
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 8,371 7,958
(Increase) decrease in net receivable
from customers (75,916) 1,241
Change in net receivable from/payable
to brokers and dealers 22,340 (972)
(Increase) decrease in securities
owned, net (65,545) 326
Decrease in accounts payable, accrued
expenses and accrued compensation (21,333) (16,709)
Other, net 1,280 (2,064)
__________ __________
Net cash (used) provided by operating
activities (103,466) 22,755
__________ __________
Cash Flows (Used) by Investing Activities:
Purchase of equipment, property and
improvements (29,266) (14,082)
__________ __________
Net cash (used) by investing activities (29,266) (14,082)
__________ __________
Cash Flows Provided (Used) by Financing
Activities:
Issuance (repayment) of bank loans 88,739 (201)
Issuance of long-term debt 44,859 11,700
Repayment of long-term debt (34,127) (791)
Issuance of subordinated debt 92,000 -
Repayment of subordinated debt (29,000) -
Issuance of partnership interests 4,349 3,900
Redemption of partnership interests (1,180) (590)
Withdrawals and distributions from
partnership capital (32,678) (35,475)
__________ __________
Net cash provided (used) by financing
activities 132,962 (21,457)
__________ __________
Net increase (decrease) in cash and
cash equivalents 230 (12,784)
Cash and Cash Equivalents, beginning
of period 28,798 37,730
__________ __________
Cash and Cash Equivalents, end of period $ 29,028 $ 24,946
========== ==========
</TABLE>
Interest payments for the periods were $7,203 and $8,873
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
SIX MONTHS ENDED JUNE 24, 1994, AND JUNE 25, 1993
(Unaudited)
<CAPTION>
Subordinated
Limited limited General
partnership partnershippartnership
(Amounts in thousands) capital capital capital Total
<S> <C> <C> <C> <C>
Balance, December 31, 1992 $ 47,328 $ 14,716 $ 75,252 $137,296
Issuance of partnership
interests - 3,900 - 3,900
Redemption of partnership
interests (590) - - (590)
Net income 3,896 3,178 25,901 32,975
Withdrawals and distributions (7,046) (4,603) (23,826) (35,475)
________ ________ ________ ________
Balance, June 25, 1993 $ 43,588 $ 17,191 $ 77,327 $138,106
========= ========= ========= =========
Balance, December 31, 1993 $ 71,222 $ 19,163 $ 89,390 $179,775
Issuance of partnership
interests - 4,349 - 4,349
Redemption of partnership
interests (980) (200) - (1,180)
Net income 4,121 2,669 20,547 27,337
Withdrawals and distributions (7,353) (4,267) (21,058) (32,678)
________ ________ ________ _______
Balance, June 24, 1994 $ 67,010 $ 21,714 $ 88,879 $177,603
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of The Jones Financial Companies, A Limited Partnership and
all wholly owned subsidiaries (The "Partnership"), including the
Partnership's principal subsidiary, Edward D. Jones & Co., L.P.,
("EDJ"), a registered broker/dealer.
The financial information included herein is unaudited. However,
in the opinion of management, such information includes all
adjustments, consisting solely of normal recurring accruals, which are
necessary for a fair presentation of the results of interim
operations.
Certain 1993 amounts have been reclassified to conform to 1994
financial statement presentation.
The results of operations for the three and six months ended June
24, 1994, are not necessarily indicative of the results to be expected
for the full year.
NET CAPITAL REQUIREMENTS
As a result of its activities as a registered broker/dealer, EDJ
is subject to the Net Capital requirements of the Securities and
Exchange Commission and the New York Stock Exchange. Under the
alternative method permitted by the rules, EDJ is required to maintain
minimum Net Capital of 2% of aggregate debit items arising from
customer transactions. The Net Capital rules also provide that EDJ
may not expand its business nor may partnership capital be withdrawn
if resulting Net Capital would be less than 5% of aggregate debit
items. At June 24, 1994, EDJ's Net Capital of $165.9 million was 35%
of aggregate debit items and its Net Capital in excess of the minimum
required was $141.9 million.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
MANAGEMENT'S FINANCIAL DISCUSSION
OPERATIONS
QUARTER ENDED JUNE 24, 1994, VERSUS
QUARTER ENDED JUNE 25, 1993
Revenue increased 4% ($6.7 million) to $166.1 million compared to
the quarter ended June 24, 1993. Expenses increased 7% ($9.9 million)
to $152.5 million. As a result, net income decreased by $3.2 million
to $13.6 million. These results were significantly influenced by the
Partnership's strategy of increasing the number of investment
representatives. The number of investment representatives increased
31% (726) to 3,083, and the number of branches increased to 3,014, a
32% increase over last year. The majority of new investment
representatives hired by the Partnership are beginners in the
industry. Successful investment representatives generally achieve
profitability after about 30 months. In the interim, the Partnership
incurs significant training, salary and support costs. Additionally,
the Partnership made significant increases in home office overhead to
support the increased salesforce. The Partnership intends to continue
aggressively expanding its sales force.
Revenues increased in the second quarter as the number of
investment representatives increased significantly. Security sales
per investment representative slowed in the quarter as security
markets became volatile. Retail customers became reluctant to invest
in longer-term fixed income investments and equities.
Overall, commission revenues decreased 11% ($12.2 million).
Mutual fund commissions declined 22% ($15.3 million) while listed and
over-the-counter (O-T-C) agency equity commission revenues decreased
14% ($3.4 million). Annuity revenues increased 44% ($6.9 million) as
investors continued to take advantage of tax deferred investments.
Principal transaction revenues increased 62% ($15.0 million) to
$39.0 million for the period. All categories of fixed income
securities revenues increased with governments increasing 277% ($4.3
million), corporates increasing 46% ($4.6 million) and municipals
increasing 63% ($6.8 million). O-T-C principal stock sales decreased
35% ($5 million). Higher interest rates during the quarter attracted
investors to fixed income securities.
Investment banking revenues decreased 26% ($3.2 million) to $9.3
million for the period. Certificate of deposit revenues increased
substantially 117% ($2.5 million). With volatility and increasing
yields, investors purchased CDs. Debt and equity revenues declined
53% ($2.8 million).
Interest and dividend income increased 36% ($3.4 million) to
$12.7 million primarily due to a 39% ($2.7 million) increase in margin
interest from higher margin balances and interest rates. Customer
margin borrowing increased $79.1 million during the past year to
$492.8 million. U.S. Government and agency interest income increased
41% ($.6 million) from larger investment security positions purchased
with subordinated debt proceeds.
Compensation costs increased 1% ($1.1 million) compared to the
same period last year. Commissions increased due to increased
revenues. However, sales bonuses, sales incentives and profit sharing
provisions were lower due to lower profit margins and net income.
Salaries and wages earned by non-sales personnel were higher during
the period due to increases in personnel necessary to support the
increased sales force.
Of the Partnership's remaining expenses, the most significant
changes were seen in occupancy, equipment, communications and data
processing expenses in order to support an expanding number of branch
offices. Interest expense was higher due to the recent subordinated
debt offering.
SIX MONTHS ENDED JUNE 24, 1994 VERSUS
SIX MONTHS ENDED JUNE 25, 1993
Revenue increased 7% ($21.3 million) to $328 million compared to
the six months ended June 25, 1993. Expenses increased 10% ($26.9
million) to $300.2 million. As a result, net income decreased by 17%
($5.6 million) to $27.3 million.
During 1994, interest rates rose, depressing bond and stock
prices, and adversely impacting commission revenue, investment banking
revenues and net earnings.
Commissions increased 1% ($1.9 million). Mutual fund commissions
decreased 7% ($9.5 million). Listed and agency equity commissions
decreased 11% ($4.0 million). Annuity commissions increased 55%
($16.7 million) as investors continued to take advantage of tax
deferred investments. Rising interest rates caused sales to decrease
in debt mutual funds.
Investment banking revenues decreased 23% ($5.3 million) to $17.7
million for the period. EDJ origination of debt and equity declined
95% ($3.6 million) and CMO revenues fell 97% ($5.8
million). These decreases were offset by a $1.9 million increase in
municipal bond origination revenues. Certificate of deposit revenues
increased 71% ($2.8 million).
Principal transaction revenues increased 27% ($13.1 million) to
$62.1 million for the period. Corporate, municipal and government
bond principal revenues increased 11% ($1.1 million), 20% ($4.8
million) and 86% ($3.6 million), respectively. CMO principal revenues
increased 75% ($5.3 million). This increase was offset by a 41% ($1.3
million) decline in OTC stocks.
Interest and dividend income increased 27% ($4.6 million) to
$21.8 million primarily due to a 35% ($4.3 million) increase in margin
interest due to increased customer margin borrowing.
Compensation costs increased 5% ($9.0 million) compared to the
same period last year. Commissions increased due to increased
revenues. However, sales bonuses, sales incentives and profit sharing
provisions were lower due to lower profit margins and net income.
Salaries and wages earned by non-sales personnel were also higher
during the period due to increases in personnel necessary to support
the increased sales force.
Of the Partnership's remaining expenses, the most significant
changes were seen in occupancy, equipment, communications and data
processing expenses in order to support an expanding branch network.
LIQUIDITY AND CAPITAL ADEQUACY
The Partnership's equity capital at June 24, 1994, was $177.6
million compared to $138.1 as of June 25, 1993. Limited partnership
capital increased $23.4 million due to a limited partnership offering
in August 1993. Subordinated limited partnership capital increased
$4.5 million due to capital contributions. General partnership
capital increased $11.6 million due to retention of earnings and to an
increase in distributable profits.
The Partnership privately placed $92 million of subordinated debt
during the period reducing interest costs and extending the term of
its debt. The proceeds were used to repay $29 million of existing
subordinated debt. The balance was invested in U.S. Government and
agency securities.
At June 24, 1994, the Partnership had a $29.0 million balance of
cash and cash equivalents. Uncommitted lines of credit are in place
at ten banks aggregating $490 million, of which $262 million was
unused at June 24, 1994.
The Partnership believes that the liquidity provided by existing
cash balances and borrowing arrangements will be sufficient to meet
the Partnership's capital and liquidity requirements.
CASH FLOWS
Cash and cash equivalents increased $.2 million from December 31,
1993 to June 24, 1994. Cash flows provided were primarily from net
income, depreciation, increases in receivables to brokers and dealers,
issuance of bank loans, issuance of long-term debt and partnership
interests. Cash flows used were primarily used to fund loans to
customers, purchase fixed assets, purchase securities owned, pay down
accounts payable and subordinated debt and to fund withdrawals and
distributions.
There were no material changes in the partnership's overall
financial condition during the six months ended June 24, 1994,
compared with the six months ended June 25, 1993. The Partnership's
balance sheet is comprised primarily of cash and assets readily
convertible into cash.
Securities inventories are carried at market values and are
readily marketable. Customer margin accounts are collateralized by
marketable securities. Other customer receivables and receivables and
payables with other broker/dealers normally settle on a current basis.
Liabilities, including amounts payable to customers, checks and
accounts payable and accrued expenses are 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 principal subsidiary, Edward D. Jones & Co.,
L.P., ("EDJ") as a securities broker/dealer, is subject to the
Securities and Exchange Commission regulations requiring EDJ to
maintain certain liquidity and capital standards. EDJ has been in
compliance with these regulations at all times.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
Item 1: Legal Proceedings
There have been no material changes in the legal proceedings
previously reported.
Item 5: Other Information
For purposes of complying with the amendments to the rules
governing Form S-8 under the Securities Act of 1933, the registrant
hereby undertakes as follows, which undertaking shall be incorporated
by reference into it, Registration Statement of Form S-8 (File No. 33-
35247):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefor, unenforceable. In the event that claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
Reference is made to the Exhibit Index contained hereinafter..
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended June 24,
1994.
SIGNATURES
Pursuant to the requirements 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.
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
(Registrant)
Dated: August 5, 1994 /s/ John W. Bachmann
_____________________
John W. Bachmann
Managing Partner
Dated: August 5, 1994 /s/ Steven Novik
_____________________
Steven Novik
Principal Financial
Officer
EXHIBIT INDEX
THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP
For the quarter ended June 24, 1994
Exhibit
No. Description Page
3.1 Fifth Amended and Restated Limited
Partnership Agreement of Edward D. Jones &
Co., L.P., dated April 28, 1994.
10.1 Note Purchase Agreement by Edward D. Jones & Co.,
L.P., for $92,000,000 aggregate principal amount
of 7.95% subordinated capital notes due
April 15, 2006.
10.2 Equipment Lease Agreement between IFA Incorporated
and Edward D. Jones & Company, L.P., dated
June 8, 1994.
10.3 Master Lease Agreement and Addendum by and between
Edward D. Jones & Co., L.P. and General Electric
Capital Corporation dated April 21, 1994.
10.4 Equipment Lease by and between Edward D. Jones & Co.,
L.P., and EDJ Leasing Co., L.P., dated April 1, 1994.
10.5 $8,200,000 Promissory Note to Commerce Bank,
National Association by EDJ Leasing Co., L.P.,
dated April 5, 1994.
EXHIBIT 3.1
EDWARD D. JONES & CO., L.P.
FIFTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
Dated: April 28, 1994
EDWARD D. JONES & CO., L.P.
(a Missouri Limited Partnership)
FIFTH AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
THIS FIFTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
entered into this 28th day of April, 1994, 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 amended and restated the Third Restated Agreement
pursuant to the Fourth Amended an Restated Agreement of Limited
Partnership (the "Fourth Restated Agreement") of Edward D. Jones &
Co., L.P. dated November 1, 1993; and
WHEREAS, the parties hereto now desire to amend and restate the Fourth
Restated Agreement to provide for the issuance by the Partnership of
certain Subordinated Capital Notes due 2006 and restate the Fourth
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 Fifth 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. Bachmann), 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 indemnification) 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. and the Note Purchase Agreement dated as of
April 22, 1994 relating to the 7.95% Subordinated Capital Notes Due
2006) [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, the 7.95% Subordinated
Capital Notes due 2006 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, the 8.96% Subordinated
Capital Notes, the 7.95% Subordinated Capital Notes due 2006 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, the 8.96% Subordinated Capital Notes due 2002
and the 7.95% Subordinated Capital Notes due 2006.
(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, the 10.60% Capital Notes Due 1997,
the 8.96% Subordinated Capital Notes due 2002 or the 7.95%
Subordinated Capital Notes due 2006 of the Partnership (the "Capital
Notes") or any indebtedness for money borrowed of the Partnership
ranking on a parity with such Capital 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 Fifth 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
EXHIBIT 10.1
CONFORMED COPY
EDWARD D. JONES & CO., L.P.
NOTE PURCHASE AGREEMENT
Dated as of April 22, 1994
$92,000,000 Aggregate Principal Amount
of
7.95% Subordinated Capital Notes Due April 15, 2006
EXPLANATORY STATEMENT
This is a composite conformed copy of the eighteen (18) separate
Note Agreements, each dated as of April 22, 1994 between Edward D.
Jones & Co., L.P. and the respective purchasers named below. Such
Note Agreements are identical in form except for the signature of
acceptance of the respective purchasers which are set forth below.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
BY CIGNA INVESTMENTS, INC.
By /s/ James F. Coggins, Jr.
Name: James F. Coggins, Jr.
Title: Managing Director
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, on behalf of
one or more separate accounts
BY CIGNA INVESTMENTS, INC.
By /s/ James F. Coggins, Jr.
Name: James F. Coggins, Jr.
Title: Managing Director
LIFE INSURANCE COMPANY OF
NORTH AMERICA
BY CIGNA INVESTMENT, INC.
By /s/ James F. Coggins, Jr.
Name: James F. Coggins, Jr.
Title: Managing Director
FIRST COLONY LIFE INSURANCE COMPANY
By /s/ J. Alden Butler
Name: J. Alden Butler
Title: Senior Vice President
SOUTHERN FARM BUREAU LIFE
INSURANCE COMPANY
By /s/ Carol Robertson
Name: Carol Robertson, CFA
Title: Securities Coordinator
ALLSTATE LIFE INSURANCE COMPANY
By /s/ Patricia W. Wilson
Name: Patricia W. Wilson
By /s/ Gary W. Fridley
Name: Gary W. Fridley
Authorized Signatories
HARTFORD LIFE INSURANCE COMPANY-
SEPARATE ACCOUNT CRC
By /s/ Andrew W. Kohnke
Name: Andrew W. Kohnke
Title: Vice President
HARTFORD LIFE INSURANCE COMPANY
By /s/ Andrew W. Kohnke
Name: Andrew W. Kohnke
Title: Vice President
INTERNATIONAL LIFE INVESTORS
INSURANCE COMPANY
By /s/ Gregory W. Theobald
Name: Gregory W. Theobald
Title: VP & Asst. Secretary
LONDON LIFE INTERNATIONAL REINSURANCE
CORPORATION/INTERNATIONAL LIFE
INVESTORS COMPANY
By /s/ Gregory W. Theobald
Name: Gregory W. Theobald
Title: VP & Asst. Secretary
PFL LIFE INSURANCE COMPANY
By /s/ Gregory W. Theobald
Name: Gregory W. Theobald
Title: VP & Asst. Secretary
AUSA LIFE INSURANCE COMPANY, INC.
By /s/ Gregory W. Theobald
Name: Gregory W. Theobald
Title: VP & Asst. Secretary
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By /s/ Mark A. Ahmed
Name: Mark A. Ahmed
Title: Second Vice President
PROVIDENT LIFE & ACCIDENT
INSURANCE COMPANY
By /s/ James T. Rogers
Name: James T. Rogers
Title: Vice President
PROTECTIVE LIFE INSURANCE
COMPANY
By /s/ Richard J. Bielen
Name: Richard J. Bielen
Title: Vice President, Investments
STATE MUTUAL LIFE ASSURANCE
COMPANY OF AMERICA
By /s/ Jon E. Austad
Name: Jon E. Austad
Title: Second Vice President
SMA LIFE ASSURANCE COMPANY
By /s/ Jon E. Austad
Name: Jon E. Austad
Title: Second Vice President
STATE MUTUAL SECURITIES TRUST
By /s/ Marcel R. Keable
Name: Marcel R. Keable
Title: Vice President
TABLE OF CONTENTS
Page
SECTION 1. THE NOTES. 1
1.1 Authorization of Notes. 1
1.2 Purchase and Sale of Notes. 1
1.3 Use of Proceeds. 2
SECTION 2. GENERAL REPRESENTATIONS AND WARRANTIES. 2
2.1 The Partnership; Partners; Indebtedness for
Money Borrowed; Subsidiaries. 2
2.2 The Partnership and the General Partner:
Organization and Authority. 3
2.3 Business of the Partnership. 4
2.4 Stock Exchange Membership, etc. 4
2.5 Financial Statements and Other Information;
Financial Condition. 5
2.6 No Material Adverse Change. 5
2.7 Licenses, Registrations, etc. 6
2.8 Title to Properties; Leases. 6
2.9 Compliance with Other Instruments, etc. 6
2.10 No Material Adverse Contracts, etc. 7
2.11 Compliance with Law, etc. 7
2.12 SIPC Assessments. 7
2.13 Broker-Dealer Registration; Examining Authority.8
2.14 Compliance with ERISA. 8
2.15 Pending Litigation, etc. 9
2.16 Taxes. 9
2.17 Stock Exchange Approvals. 10
2.18 Governmental Consent, etc. 10
2.19 Outstanding Securities. 10
2.20 No Margin Regulation Violation. 11
2.21 Holding Company Act; Investment Company Act. 11
2.22 No Event of Acceleration or Event of Default. 11
2.23 Full Disclosure. 11
2.24 Partnership Proceedings. 12
2.25 Validity of Agreement and Notes. 12
2.26 Net Capital Requirements. 12
SECTION 3. OTHER PURCHASERS; SECURITIES ACT REPRESENTATIONS; ERISA
REPRESENTATIONS.
3.1 Other Purchasers. 12
3.2 Offerees. 13
3.3 Investment Intent, etc. 13
3.4 ERISA Representations. 13
SECTION 4. CONDITIONS OF OBLIGATION TO PURCHASE NOTES. 14
4.1 Opinion of Special Counsel for You and the Other
Purchasers. 14
4.2 Opinions of Counsel for the Partnership. 14
4.3 Performance of Obligations. 14
4.4 Representations True. 14
4.5 State Financial Responsibility Laws. 14
4.6 Approval of Agreement. 15
4.7 Sale of Notes to Other Purchasers. 15
4.8 Legality. 15
4.9 Proceedings, Instruments, etc. 15
4.10 Consents to Amendment. 15
SECTION 5. EXPENSES. 16
SECTION 6. CERTAIN SPECIAL RIGHTS. 17
6.1 Home Office Payment. 17
6.2 Issue Taxes. 17
SECTION 7. SUBORDINATION OF NOTES. 17
7.1 Subordination to Partnership Senior Debt. 17
7.2 Partnership Agreement Regarding Subordination of
Debt to Partners, etc. 18
7.3 Purpose of the Subordination. 18
7.4 Rank of the Notes. 18
SECTION 8. PARTNERSHIP-SUSPENDED REPAYMENT. 19
SECTION 9. RESTRICTION ON PERMISSIVE PREPAYMENT OF NOTES. 21
SECTION 10. NOTE PREPAYMENTS. 23
10.1 Prepayment Generally; Required Prepayments. 23
10.2 Optional Prepayments. 25
10.3 Notice of Prepayment. 25
10.4 Partial Prepayment Pro Rata. 25
SECTION 11. REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES. 26
11.1 Registration. 26
11.2 Exchange. 26
11.3 Replacement. 26
SECTION 12. CERTAIN COVENANTS. 27
12.1 Maintenance of Office. 27
12.2 ERISA. 27
12.3 Partnership Existence. 27
12.4 General Maintenance of Properties and Business,
etc. 28
12.5 Compliance with Law. 29
12.6 Payment of Taxes and Claims. 30
12.7 Transactions with Affiliates. 30
12.8 Sale of Receivables. 31
12.9 Notice of Certain Events and Conditions. 31
12.10 Tax Consolidation. 31
12.11 Inspection. 31
12.12 Purchase of Notes. 32
12.13 Guaranties of Affiliate Obligations. 32
12.14 Nature of Partnership's Business. 32
12.15 Partnership Net Capital. 33
12.16 Partnership Capital and Restricted
Distributions 33
12.17 Partnership Indebtedness. 34
12.18 Lease Obligations. 35
12.19 Restricted Investments. 35
12.20 Merger, Consolidation or Transfer of Assets. 35
12.21 Limitation on Liabilities. 36
12.22 Change of Examining Authority. 36
SECTION 13. INFORMATION TO BE FURNISHED HOLDERS OF NOTES. 37
13.1 Financial Statements, Reports, etc. 37
13.2 Officer's Certificates. 40
13.3 Accountants' Certificates. 40
13.4 Confidential Treatment, etc. 41
13.5 Restricted Subsidiary Financials. 41
SECTION 14. ACCELERATION OF MATURITY. 42
14.1 Events of Acceleration; Acceleration of Notes. 42
14.2 Events of Default; Acceleration of Notes. 46
14.3 Agreements on Events of Acceleration. 47
14.4 Default Remedies. 48
14.5 No Counterclaim, Abatement, etc. 49
14.6 Intentional Default. 49
14.7 Annulment of Acceleration of Notes. 49
SECTION 15. INTERPRETATION OF AGREEMENT, NOTES AND PARTNERSHIP
NOTES. 50
15.1 Definitions. 50
15.2 Directly or Indirectly. 63
15.3 Accounting Principles. 63
15.4 Governing Law. 63
15.5 Headings. 63
15.6 Independence of Covenants. 63
SECTION 16. NON-LIABILITY OF EXCHANGE. 64
SECTION 17. MISCELLANEOUS. 64
17.1 Notices. 64
17.2 Survival. 65
17.3 Successors and Assigns. 65
17.4 Amendment and Waiver. 65
17.5 Futures Commission Merchants; Set-Off. 66
17.6 Counterparts. 67
17.7 Reproduction of Documents. 67
17.8 Time of the Essence. 67
Schedule I - Names and Addresses of Purchasers
Schedule II - Indebtedness for Money Borrowed of the Partnership
Schedule III - Subsidiaries and Direct Participations of the
Partnership
Schedule IV-A - Opinion of Special Counsel for the Purchasers
Schedule IV-B - Opinion of Counsel for the Partnership
Schedule IV-C - Opinion of Special Counsel for the Partnership
Exhibit A - Form of Note
EDWARD D. JONES & CO., L.P.
201 Progress Parkway
Maryland Heights, Missouri 63043
NOTE PURCHASE AGREEMENT
As of April 22, 1994
To the Purchaser
Named on the Signature Page Hereof:
Dear Purchaser:
The undersigned EDWARD D. JONES & CO., L.P., a Missouri limited
partnership (the "Partnership"), agrees with you as follows:
SECTION 1. THE NOTES.
1.1 Authorization of Notes. The Partnership has authorized the
issue and sale of its 7.95% Subordinated Capital Notes Due April 15,
2006 (the "Notes") in the aggregate principal amount of $92,000,000 to
be dated (except as otherwise set forth in Sections 11.2 and 11.3
hereof) the date of original issue thereof and to be substantially in
the form of Exhibit A attached hereto. Each Note shall bear interest
from the date thereof until such Note shall become due and payable
(whether at maturity, by acceleration or otherwise) at the rate of
7.95% per annum payable semiannually on April 15 and October 15 in
each year, commencing October 15, 1994 (collectively, "Regular
Interest Payment Dates") and shall mature on April 15, 2006. Any
overdue portion of the principal amount of any Note and premium, if
any, and any overdue installment of interest will bear interest, to
the extent permitted by applicable law, at a rate equal to the greater
of (i) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate, or (ii)
8.95% per annum.
1.2 Purchase and Sale of Notes. The Partnership agrees to sell
to you and, upon and subject to the terms and conditions hereof, you
agree to purchase from the Partnership, Notes in the aggregate
principal amount specified opposite your name in Schedule I hereof at
a purchase price equal to 100% of such principal amount. The Notes
are to be sold and delivered at one closing, to be held on April 28,
1994 at 9:00 a.m., or such other date and time as shall be agreed upon
by you, the Partnership and the Other Purchasers (such date and time
being hereinafter called the "Closing Date"), at the offices of Day,
Berry & Howard, CityPlace, Hartford, Connecticut. On the Closing
Date, the Partnership will deliver to you, unless otherwise specified
in Schedule I or you otherwise request, a single Note which shall be
(a) dated the Closing Date, (b) in the principal amount of your
purchase, and (c) registered in your name (or in the name of such
nominee as may be specified in Schedule I). The delivery of such Note
to you shall be made against payment by wire transfer of immediately
available funds to the Partnership's account at Northern Trust
Company.
1.3 Use of Proceeds. The Partnership will use and deal with the
proceeds of the sale of the Notes as part of its capital and shall be
used for general Partnership purposes and for the repayment of up to
$43,000,000 of the Partnership's existing Subordinated Debt. Such
proceeds shall be subject to the risks of the Partnership's business
and may be used for the ordinary and reasonable conduct of its
business. The Partnership shall have the right to deposit such
proceeds in an account or accounts in its own name in any bank or
trust company.
SECTION 2. GENERAL REPRESENTATIONS AND WARRANTIES.
The Partnership hereby represents and warrants to you as follows:
2.1 The Partnership; Partners; Indebtedness for Money Borrowed;
Subsidiaries. (a) The Partnership has one general partner, EDJ
Holding Company, Inc., a Missouri corporation (the "General Partner"),
and one limited partner, The Jones Financial Companies, a Limited
Partnership, a Missouri limited partnership ("JFC"); the General
Partner and JFC are referred to individually as a "Partner" and
collectively as the "Partners". Each Partner has only the rights and
obligations set forth in the Missouri Partnership Act and the
Partnership Agreement executed by the Partners, and no other rights or
obligations, the Partnership Agreement constituting the entire
agreement and all the understandings of the Partners with respect to
the Partnership. At the date hereof, the Partnership has Indebtedness
for Money Borrowed of the types and in the amounts set forth in
Schedule II hereof. Complete and correct copies of all instruments
and agreements relating to such Indebtedness for Money Borrowed have
been delivered to you and your special counsel.
(b) Schedule III hereof correctly sets forth as to each
Subsidiary of the Partnership its name and the jurisdiction of its
formation, if a partnership, or incorporation, if a corporation. Each
Subsidiary is duly organized, as a general or limited partnership
under its partnership agreement, or as a corporation, as the case may
be, and is validly existing and in good standing under the laws of its
jurisdiction of formation or incorporation and has all requisite power
and authority to own (or hold under lease) and operate its properties
and to conduct its business as now conducted and as currently proposed
to be conducted. All of the issued and outstanding general or limited
partnership interests, or capital stock, as the case may be, of each
Subsidiary owned by the Partnership is validly issued and outstanding,
is fully paid and nonassessable and is owned, beneficially and of
record, by the Partnership or another Subsidiary, free of any Lien,
option, claim, warrant or rights of others. Each Subsidiary has duly
qualified as a foreign corporation or partnership, as the case may be,
is authorized to do business and is in good standing in each
jurisdiction in which the character of the material properties owned
(or held under lease) by it or the nature of its activities makes such
qualification necessary. The Partnership has no Restricted
Subsidiaries.
2.2 The Partnership and the General Partner: Organization and
Authority. (a) The Partnership:
(i) has been duly organized and is operating as a limited
partnership under the Partnership Agreement, and is validly existing
and in good standing under the laws of the State of Missouri;
(ii) has all requisite power and authority to own (or hold under
lease) its properties, to conduct its business as currently conducted
and as currently proposed to be conducted, to enter into this
Agreement, to offer, issue, sell and deliver the Notes and to perform
its obligations under this Agreement and the Notes; and
(iii) is qualified as a foreign limited partnership in
jurisdictions in which such qualification is provided for and/or has
filed certificates of doing business in every jurisdiction in which
the material properties owned (or held under lease) by it or the
nature of its activities makes such qualification or filing necessary
in order to comply with applicable laws.
(b) The General Partner:
(i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Missouri;
(ii) has all requisite power and authority (corporate and other)
to enter into this Agreement, to offer, issue, sell and deliver the
Notes on behalf of the Partnership and to perform its obligations
under this Agreement on behalf of the Partnership; and
(iii) is not qualified as a foreign corporation in any
jurisdiction and neither the properties owned (or held under lease) by
it or the nature of its activities makes such qualification necessary
in order to comply with applicable laws.
2.3 Business of the Partnership. (a) The Offering Memorandum
and the Form 10-K Report referred to in Section 2.5 hereof contain an
accurate general description of the business of the Partnership and
its Subsidiaries, as presently conducted and as presently proposed to
be conducted, and the major properties leased by the Partnership.
Neither the Partnership nor any Subsidiary is now engaged in any
material line of business not so disclosed and the Partnership does
not own or lease any significant properties not so disclosed. The
Partnership has delivered to you a true and correct copy of the leases
or form of lease under which it leases its principal offices from an
affiliate, EDJ Leasing Co.
(b) Any and all liabilities of the Partnership that could
possibly arise out of, or in relation to, the Partnership's ownership,
directly or indirectly, of any interest or interests in limited
partnerships or other entities (including any Affiliates or
Subsidiaries of the Partnership) under any circumstances, in the
aggregate, would not exceed $15,000,000.
All such interests owned by the Partnership in such entities are
owned indirectly by it, through a series of affiliated entities
including at least one corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, which corporation is adequately capitalized and as to
which all corporate formalities have been observed. The corporate
integrity of any such corporation has never been questioned or
threatened, nor does there exist any basis for such a question or
threat. Neither the Partnership nor any Affiliate thereof (other than
the General Partner, Conestoga Securities, Inc., a Missouri
corporation, Edward D. Jones & Co. Homeowners, Inc., a Missouri
corporation, LHC, Inc., a Missouri corporation, Unison Capital
Corporation, a Missouri corporation, Patronus, Inc., a Missouri
corporation, CIP Management, Inc., a Missouri corporation, and Edward
D. Jones & Co. Canada Holding Co., Inc., a corporation formed under
the law of the Province of Ontario, Canada) is a general partner of
any general or limited Partnership.
2.4 Stock Exchange Membership, etc. The Partnership is a member
organization in good standing of the Exchange, the American Stock
Exchange, Inc., the Midwest Stock Exchange, Inc., and the NASD, and an
affiliated member organization in good standing of the Pacific Stock
Exchange, Inc.
2.5 Financial Statements and Other Information; Financial
Condition. The Partnership has heretofore furnished to you copies of:
(a) JFC's Annual Report to the Securities and Exchange Commission (the
"SEC") on Form 10-K for the fiscal year ended December 31, 1993 (the
"Form 10-K") containing a consolidated statement of financial
condition of JFC and its Subsidiaries as of December 31, 1993 and
December 31, 1992 and related consolidated statements of income,
changes in financial position or cash flows (as applicable) and
changes in partnership capital for the fiscal years then ended and the
fiscal year ended December 31, 1991, together with the auditor's
report thereon of Arthur Andersen & Co., Independent Certified Public
Accountants; (b) consolidated statements of financial condition of the
Partnership and its Subsidiaries as of December 31, 1993 and as of the
close of each of the fiscal years 1988 through 1992, inclusive, and
related statements of income, changes in financial position or cash
flows (as applicable), changes in partnership capital and changes in
subordinated liabilities, of the Partnership and its Subsidiaries for
the fiscal years then ended, together with the auditor's report
thereon of Arthur Andersen & Co., Independent Certified Public
Accountants (the "Partnership Financial Statements"); and (c) the
Partnership's Offering Memorandum dated March 11, 1994, furnished
through Dillon Read & Co. Inc. in connection with the direct placement
of the Notes (the "Offering Memorandum"). All financial statements
referred to above, or contained in any document referred to above, are
complete and correct, and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the respective periods. The Partnership Financial Statements
present fairly the financial position of the Partnership as of the
respective dates of the statements of financial condition included
therein and the results of operations of the Partnership for the
respective periods covered by the consolidated statements of income
and changes in financial position included therein. Except as
disclosed in the Form 10-K, neither the Partnership nor any of the
Subsidiaries has any material obligations or liabilities, contingent
or otherwise, not disclosed by the consolidated statement of financial
condition of the Partnership and its Subsidiaries as of December 31,
1993 referred to in clause (b) above.
2.6 No Material Adverse Change. Since December 31, 1993, (a)
there has been no material adverse change in the financial condition
of the Partnership and its Subsidiaries taken as a whole, and (b)
neither the condition, financial or otherwise, business, earnings,
properties or prospects of the Partnership and its Subsidiaries, taken
as a whole, have been materially adversely affected by any occurrence
or development (whether or not insured against).
2.7 Licenses, Registrations, etc. The Partnership and its
Subsidiaries own or possess, and hold free from restrictions or known
conflicts with the rights of others, all material licenses,
registrations, permits, copyrights, trademarks, service marks, trade
names and patents, and all rights with respect to the foregoing,
necessary for the conduct of their respective businesses as now
conducted and as proposed to be conducted.
2.8 Title to Properties; Leases. The Partnership and its
Subsidiaries have good and valid title to their respective material
properties and assets, including all properties and assets reflected
on the consolidated statement of financial condition of the
Partnership and its Subsidiaries as of December 31, 1993 referred to
in clause (b) of Section 2.5 hereof, as well as to property purported
to have been acquired since such date (except property disposed of
since said date in the ordinary course of business), and there are not
now, and there will not be on the Closing Date, any Liens on any such
properties and assets other than Permitted Liens and Liens securing
the bank borrowings listed in Schedule II on the Partnership's
securities held for sale, on its interest in customers' securities and
on government or agency securities held by it as permitted by
paragraphs (iv) and (vi) of the definition of Restricted Investments.
Each of the Partnership and its Subsidiaries has the right to, and
does, enjoy peaceful and undisturbed possession under all leases to
which it is a party or under which it is leasing property. All such
leases are valid, subsisting and in full force and effect, none of
such leases is in default and no event has occurred and is continuing,
and no condition exists, that, after notice or the passage of time or
both, could become a default under any such lease.
2.9 Compliance with Other Instruments, etc. The Partnership is
not in violation of any term of the Partnership Agreement and none of
its Subsidiaries is in violation of any term of its partnership
agreement, certificate of partnership, charter or by-laws, as the case
may be; neither the Partnership nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (a) any evidence of
indebtedness, or any agreement or instrument under or pursuant to
which any evidence of Indebtedness has been issued (or any documents
related thereto) or (b) any other agreement or instrument (including,
without limitation, any issued and outstanding preferred stock) to
which any of them is a party or by which any of them is bound or any
of their properties is affected. Neither the Partnership nor any of
its Subsidiaries has defaulted in, or has failed to make at the time
contemplated, payment of any dividends or partnership distributions,
or any mandatory redemption payments on any preferred stock or any
principal of, or premium or interest on, any Indebtedness for Money
Borrowed. Neither the execution, delivery or performance of this
Agreement, nor the offer, issuance, sale, delivery or performance of
the Notes, does or will (i) conflict with or violate the partnership
agreement, certificate of partnership, charter or by-laws, as the case
may be, of the Partnership or any of its Subsidiaries, (ii) conflict
with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, any evidence of
Indebtedness or other agreement or instrument referred to in this
Section 2.9, (iii) result in the creation of any Lien of any nature
whatsoever upon any of the properties or assets of the Partnership or
any of its Subsidiaries under the terms of any such evidence of
Indebtedness, other agreement or instrument, or (iv) require the
consent of or other action by any trustee, any creditor of, any lessor
to, or any investor in, the Partnership or any of its Subsidiaries.
2.10 No Material Adverse Contracts, etc. Neither the
Partnership, nor any of its Subsidiaries is a party to, and none of
them nor any of their properties is bound or affected by, any
agreement or instrument, or is subject to any order, writ, injunction,
judgment, rule, regulation or decree or other action of any court or
other governmental or public authority or agency, or the award of any
arbitrator or any charter or other corporate, partnership or
contractual restriction, that materially adversely affects, or in the
future may materially adversely affect, the business, prospects,
earnings, properties or condition, financial or other, of any of them.
2.11 Compliance with Law, etc. The Partnership and its
Subsidiaries each is in compliance in all material respects with all
laws and ordinances, and all governmental rules and regulations to
which it is subject and all applicable rules of the Exchange, the NASD
and each other non-governmental association, corporation or body
having authority over it ("Business Association"), the violation of
which, either individually or in the aggregate, might materially
adversely affect its business, prospects, earnings, properties or
condition, financial or other. Neither the execution or delivery of
this Agreement, the offer, issuance, sale or delivery of the Notes,
nor the performance of this Agreement or the Notes does or will cause
the Partnership or any of its Subsidiaries to be in violation in any
material respect of any law or ordinance, or any order of general
application, rule or regulation of any Federal, state, county,
municipal or other governmental or public authority or agency, or any
order, direction or rule of any Business Association, having
jurisdiction or authority over any of them or any of their respective
properties.
2.12 SIPC Assessments. Neither the Partnership nor any
Subsidiary is in arrears with respect to any assessment made upon the
Partnership or any Subsidiary by SIPC.
2.13 Broker-Dealer Registration; Examining Authority. The
Partnership is registered as a broker-dealer with the SEC under the
Securities Exchange Act, and is also registered as a broker-dealer
with the proper authorities, including State Securities Commissions,
of every jurisdiction in which the nature of its activities makes such
registration necessary. The Examining Authority of the Partnership is
the Exchange.
2.14 Compliance with ERISA. (a) As used in this Section 2.14,
the term "employee pension benefit plans" shall have the meaning
assigned to such term in Section 3 of ERISA; and the term "prohibited
transaction" shall have the meaning assigned to such term in Section
4975 of the Code and Section 406 of ERISA.
(b) Neither the Partnership nor any of its Subsidiaries has,
with respect to any employee pension benefit plan established or
maintained by any thereof (collectively, the "Plans" and,
individually, a "Plan"), engaged in a prohibited transaction that
could subject the Partnership or any of its Subsidiaries to a tax or
penalty on prohibited transactions. Neither the Partnership nor any
of its Subsidiaries has contributed to any employee pension benefit
plan to which an employer other than the Partnership or one of its
Subsidiaries contributed.
(c) The execution and delivery of this Agreement and the Notes
and the consummation of the transactions contemplated hereby will not
involve any prohibited transaction. This representation is made in
reliance upon your representations in Section 3.4 of this Agreement.
(d) The Partnership and its "affiliates" (the term "affiliate"
having the meaning assigned to it in Section 407(d) of ERISA, for the
purpose of this Section 2.14(d)) have established and maintain no
employee benefit plans, as such term is defined in Section 3 of ERISA,
except for:
(i) the Edward D. Jones & Co. Profit Sharing Plan (as amended
and restated effective January 1, 1984, qualified under Section 401 of
the Code);
(ii) the Edward D. Jones & Co. Deferred Compensation Plan
(effective on January 1, 1984, qualified under Section 401 of the
Code);
(iii) the Edward D. Jones & Co. Employees Health and Welfare
Trust (effective September 15, 1981); and
(iv) the Benefit Contribution Account Plan of Edward D. Jones &
Co. (effective January 1, 1986).
2.15 Pending Litigation, etc. (a) There is no action at law,
suit in equity or other proceeding or investigation (whether or not
purportedly on behalf of the Partnership or any of its Subsidiaries)
in any court or by or before any other governmental or public
authority or agency or any arbitrator, or before any Business
Association, against or affecting, or (to the best knowledge, upon due
inquiry, of the Partnership) threatened against, the Partnership or
any of its Subsidiaries or any of their respective properties that,
either individually or in the aggregate, (i) questions the validity of
this Agreement or the Notes, or (ii) involves the reasonable
possibility of a material judgment or liability against any of them,
or could materially adversely affect the business, prospects,
earnings, properties or condition, financial or otherwise, of any of
them, other than such judgments or liabilities as to which the
Partnership has established adequate contingency reserves under a
self-insurance program.
(b) Any liability that may result from any action at law, suit
in equity or other proceeding or investigation (whether or not
purportedly on behalf of the Partnership or any of its Subsidiaries)
in any court or by or before any other governmental or public
authority or agency or any arbitrator, or before any Business
Association, against or affecting, or that (to the best knowledge of
the Partnership) is threatened against, the Partnership or any of its
Subsidiaries or any of their respective properties is adequately
reserved against on the books of the Partnership or any such
Subsidiary, as the case may be.
(c) Neither the Partnership nor any of its Subsidiaries is in
default in any respect which could individually or in the aggregate
have a material adverse effect on the Partnership with respect to any
order, writ, injunction, judgment or decree of any court or other
governmental or public authority or agency, or with respect to the
award of any arbitrator, or with respect to the order or direction of
any Business Association.
2.16 Taxes. All Federal, state and other tax returns and
information returns of the Partnership and each of its Subsidiaries
required by law to be filed have been duly filed, and all Federal,
state and other taxes, assessments, fees and other governmental
charges upon the Partnership or any of its Subsidiaries or upon any of
their respective properties or assets that are known (upon due
inquiry) to the Partnership or any such Subsidiary and are due and
payable have been paid. No extensions of time for the assessment of
deficiencies have been granted by the Partnership or any of its
Subsidiaries. There are no Liens on any properties or assets of the
Partnership or any of its Subsidiaries imposed or arising as a result
of the delinquent payment or nonpayment of any such tax, assessment,
fee or other governmental charge. All Federal income tax returns of
the Partnership filed for periods ended on or prior to December 31,
1991 have been accepted by the Internal Revenue Service as filed. The
Federal income tax and information returns filed by any of the
Subsidiaries of the Partnership have never been examined by the
Internal Revenue Service. The Partnership and its Subsidiaries which
are partnerships have filed information returns in those states and
local jurisdictions in which they are required to do so; the
Partnership's Subsidiaries which are corporations have filed tax
returns with respect to state income taxes or state taxes measured by
income in those states and local jurisdictions in which they are
required to do so. No state information or tax return filed by the
Partnership or any of its Subsidiaries has ever been materially
adjusted upon examination by any state agency. The charges, accruals
and reserves, if any, on the books of the Partnership and its
Subsidiaries in respect of Federal and state income taxes for all
fiscal periods to date are adequate and the Partnership does not know
of any unpaid assessments for additional Federal or state income taxes
for any such fiscal period or of any basis therefor. There are no
applicable taxes, fees or other governmental charges payable in
connection with the execution and delivery of this Agreement or in
connection with the offer, issuance, sale or delivery of the Notes.
2.17 Stock Exchange Approvals. The Partnership has obtained such
consents or approvals of the Examining Authority and of such
securities and commodities exchanges of which the Partnership is a
member organization as are necessary for the due execution, delivery
and performance of this Agreement, the offer, issuance, sale and
delivery of the Notes and the consummation of the transactions
contemplated hereby and thereby.
2.18 Governmental Consent, etc. Except for the consents and
approvals referred to in Section 2.17 and the filing with the SEC
pursuant to Appendix D to Rule 15c3-1, no consent, approval or
authorization of, registration, qualification, designation,
declaration or filing with or notice to, any Federal, state or local
governmental or public authority or agency (including any State
Securities Commission) or Business Association is required for the
valid execution, delivery and performance of this Agreement or the
valid offer, issuance, sale, delivery and performance of the Notes or
the valid consummation of any other transaction contemplated hereby or
thereby.
2.19 Outstanding Securities. All outstanding securities (as
defined in the Securities Act) of the Partnership have been offered,
issued, sold and delivered in compliance with, or in accordance with
available exemptions from, all Federal and state laws and the rules
and regulations of all Federal and state governmental or public
authorities and agencies and Business Associations.
2.20 No Margin Regulation Violation. None of the transactions
contemplated by this Agreement (including, without limitation, the
direct or indirect use of the proceeds from the sale of the Notes)
will violate or result in a violation of Section 7 of the Securities
Exchange Act or any regulations issued pursuant thereto, including,
without limitation, Regulation G of the Board of Governors of the
Federal Reserve System (12 C.F.R., Part 207), as amended, Regulation T
(12 C.F.R., Part 220), as amended, of said Board of Governors, and
Regulation X (12 C.F.R., Part 224), as amended, of said Board of
Governors.
2.21 Holding Company Act; Investment Company Act.
(a) Neither the Partnership nor any of its Affiliates is a "holding
company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
(b) Neither the Partnership nor any of its Affiliates is an
"investment company" or an "affiliated person" of an "investment
company" within the meaning of the Investment Company Act, except
insofar as such a relationship may exist by virtue of (i) the
Partnership's ownership of a minority interest, as limited partner
with no rights of management or control, in Passport Research Ltd., a
Pennsylvania limited partnership, that is adviser to an open-end
mutual fund and a closed-end mutual fund and (ii) JFC's 2.7% interest,
with no rights of management or control, in Federated Investors, that
is adviser to an open-end mutual fund and a closed-end mutual fund.
2.22 No Event of Acceleration or Event of Default. No event has
occurred and is continuing, and no condition exists, that, if the
Notes had been issued and were outstanding on the date hereof, would
constitute an Event of Acceleration or Event of Default, or, after
notice or the passage of time or both could become an Event of
Acceleration or Event of Default.
2.23 Full Disclosure. Neither this Agreement (including the
representations, warranties and covenants contained herein) or the
Offering Memorandum, reports or financial statements referred to in
Section 2.5 hereof, nor any certificate, report, statement or other
writing furnished or to be furnished to you by or on behalf of the
Partnership, or any officer, director, agent or employee of or any
counsel to the Partnership, in connection with the negotiation of the
sale, or the sale, of the Notes contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading. There is no fact known to the Partnership that the
Partnership has not disclosed to you in writing that (a) materially
adversely affects or in the future may materially adversely affect the
business, prospects, earnings, properties or condition, financial or
other, of the Partnership or any of its Subsidiaries, or (b) adversely
affects or in the future may adversely affect the ability of the
Partnership to perform its obligations under this Agreement or the
Notes.
2.24 Partnership Proceedings. The Partnership has taken all
action necessary to be taken by it to authorize the execution and
delivery of this Agreement, the issuance and delivery of the Notes and
the performance of all obligations to be performed by it hereunder and
thereunder.
2.25 Validity of Agreement and Notes. This Agreement constitutes
the legal, valid and binding agreement of the Partnership, enforceable
in accordance with its terms, except as enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
from time to time in effect or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); and upon receipt by the Partnership
of payment for the Notes as provided in this Agreement, the Notes will
have been duly issued and will constitute legal, valid and binding
obligations of the Partnership enforceable in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally from time to time in
effect or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.26 Net Capital Requirements. The Partnership is subject to the
Net Capital requirements set forth in Rule 15c3-1 and it has elected
to comply with the Alternative Net Capital Requirement.
SECTION 3. OTHER PURCHASERS; SECURITIES ACT REPRESENTATIONS; ERISA
REPRESENTATIONS.
3.1 Other Purchasers. The Partnership represents that it has
contemporaneously executed and delivered agreements substantially
similar to this Agreement (the "Other Note Agreements"), with the
other purchasers listed in Schedule I (the "Other Purchasers"), who
also are making the representations set forth in Sections 3.3 and 3.4
hereof. The aggregate principal amount of Notes to be sold to you and
the Other Purchasers on the Closing Date is $92,000,000, but each of
the sales to you and the Other Purchasers is to be a separate sale
made by the Partnership to each such purchaser.
3.2 Offerees. The Partnership represents that neither it nor
Dillon Read & Co. Inc. (which is the only Person authorized to act as
agent, broker, dealer or otherwise in connection with the offering or
sale of the Notes or similar securities of the Partnership) has,
either directly or through any agent, offered any of the Notes or
similar securities for sale to, or solicited any offers to buy any
thereof from, or otherwise approached or negotiated in respect thereof
with, any Person or Persons other than you, the Other Purchasers and
not more than 42 other Institutional Investors and each of the
foregoing was offered the right to purchase Notes at private sale for
investment. The Partnership agrees that neither it nor any agent on
its behalf will sell or offer any of the Notes or similar securities
to, or solicit offers to buy any thereof from, or otherwise approach
or negotiate in respect thereof with, any other Person or Persons
whomsoever, or take any other action, so as to bring the issuance and
sale of the Notes within the provisions of Section 5 of the Securities
Act.
3.3 Investment Intent, etc. This Agreement is made with you in
reliance upon your representation to the Partnership, which by your
acceptance hereof you confirm, that you are purchasing the Notes to be
purchased by you hereunder for your own account for investment and not
with a view to the distribution thereof, and that you have no present
intention of distributing any of the same; provided, however, that the
disposition of your property shall be at all times within your own
control, and that your right to sell or otherwise dispose of all or
any part of the Notes purchased by you pursuant to an effective
registration statement under the Securities Act or under an exemption
from such registration available under the Securities Act shall not be
prejudiced.
3.4 ERISA Representations. You represent that no part of the
purchase price for the Notes to be purchased by you will be drawn from
the assets of any separate account maintained by you in which any
employee benefit plan of the Partnership or any Person that is an
affiliate of the Partnership has any interest all of which such
employee benefit plans are identified in Section 2.14. As used in this
Section 3.4, the terms "employee benefit plan" and "separate account"
shall have the respective meanings assigned to them in Subsections (3)
and (17) of Section 3 of ERISA, and the term "affiliate" shall have
the meaning assigned to it in Section 407(d) of ERISA. The
Partnership acknowledges that your representation made in the first
sentence of this Section 3.4 is made in reliance upon, and subject to
the accuracy of the above-mentioned list of employee benefit plans
supplied by the Partnership.
The Partnership represents that it has reviewed the information
furnished to it by the Purchasers identifying purchases of the Notes
to be made for a separate account in which employee benefit plan
monies are invested, and the Partnership represents that it is not a
"party in interest" or a "disqualified person" (as such terms are
defined in ERISA) with respect to any of such plans.
SECTION 4. CONDITIONS OF OBLIGATION TO PURCHASE NOTES.
Your obligation to purchase and pay for the Notes to be purchased
by you hereunder on the Closing Date shall be subject to the
satisfaction, prior to or concurrently with such purchase and payment,
of the following conditions:
4.1 Opinion of Special Counsel for You and the Other Purchasers.
You shall have received from Day, Berry & Howard, who are acting as
special counsel for you and the Other Purchasers in connection with
the transactions contemplated by this Agreement, an opinion, dated the
Closing Date, in form and substance satisfactory to you, to the effect
specified in Schedule IV-A hereof.
4.2 Opinions of Counsel for the Partnership. You shall have
received from Lawrence R. Sobol, Esq., and Bryan Cave, counsel for the
Partnership, opinions, dated the Closing Date, in form and substance
satisfactory to you and your special counsel, to the effect specified
in Schedules IV-B and IV-C, respectively, hereof.
4.3 Performance of Obligations. The Partnership shall have
performed its obligations to be performed hereunder prior to or on the
Closing Date, and you shall have received an Officer's Certificate,
dated the Closing Date, to that effect.
4.4 Representations True. The representations and warranties of
the Partnership contained in Sections 2 and 3
hereof shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of the Closing Date, and you shall have received an Officer's
Certificate, dated the Closing Date, to that effect.
4.5 State Financial Responsibility Laws. At the time of the
closing and after giving effect to the issuance of the Notes, the
incurrence of the indebtedness represented thereby and the retirement
of any indebtedness concurrently being retired therewith, the
Partnership shall be in compliance with all applicable financial
responsibility laws and regulations of each jurisdiction in which the
Partnership is registered as a broker- dealer and the Partnership
shall have delivered or caused to be delivered to you an Officer's
Certificate, dated the Closing Date and satisfactory in form and
substance to you and your special counsel, as to such matters of fact
as you may reasonably request to enable you to determine such
compliance.
4.6 Approval of Agreement. This Agreement shall have been filed
with the SEC, if required, and the Examining Authority in accordance
with Appendix D to Rule 15c3-1, shall have been examined by the SEC's
applicable Regional Office or the Examining Authority and the
Examining Authority shall have found it acceptable, and you shall have
received evidence of such filing and acceptance.
4.7 Sale of Notes to Other Purchasers. On the Closing Date, the
Other Purchasers shall each purchase the aggregate principal amount of
Notes listed in Schedule I to be purchased by it on the Closing Date
4.8 Legality. Notes shall qualify as a legal investment for you
and the Other Purchasers under all applicable laws (without resort to
any so-called "basket clause" of any such law, except with respect to
the laws of the Commonwealth of Massachusetts), and the Partnership
shall have delivered to you, if requested by you, an Officer's
Certificate, dated the Closing Date and satisfactory in form and
substance to you and your special counsel, certifying as to such
matters relevant to such qualification as you may request.
4.9 Proceedings, Instruments, etc. All proceedings and actions
taken on or prior to the Closing Date in connection with the
transactions contemplated by this Agreement, and all instruments
incident thereto, shall be in form and substance satisfactory to you
and your special counsel, and you and said special counsel shall have
received copies of all such documents that you or they may reasonably
request in connection with such proceedings, actions and transactions,
in form and substance satisfactory to you and said special counsel.
4.10 Consents to Amendment. You shall have received from the
holders of at least 65% in aggregate principal amount of the
outstanding 1988 Notes and from the holders of at least 60% in
aggregate principal amount of the outstanding 1992 Notes duly executed
consents to amendments of the 1988 Agreements and the 1992 Agreements,
respectively, to conform the covenants and related provisions therein
to the provisions of this Agreement, and you shall have received from
the holders of at least 65% in aggregate principal amount of the
outstanding 1986 Notes duly executed consents to the amendment of the
definition of "Restricted Investments" in the 1986 Agreements to
conform such definition to the definition in this Agreement.
SECTION 5. EXPENSES.
Whether or not the Notes shall be sold or this Agreement shall be
terminated, the Partnership will pay, and will save you harmless
against liability for, all costs and expenses relating to this
Agreement and the Notes, and to any modification, amendment,
alteration or enforcement of this Agreement or the Notes (whether or
not the same shall have come into effect), including, without
limitation:
(1) the cost of preparing, printing or word processing and
reproducing this Agreement and the Notes, and every instrument of
modification amendment or alteration;
(2) the reasonable fees and disbursements of special counsel for
you and the Other Purchasers, of local counsel for you and the Other
Purchasers, if any, and of all counsel for the Partnership;
(3) your out-of-pocket expenses;
(4) the cost of delivering to your home office, insured to your
satisfaction, the Notes purchased by you on the Closing Date, any Note
surrendered by you to the Partnership pursuant to this Agreement and
any Note issued to you in substitution or replacement for a
surrendered Note;
(5) all costs and expenses (including, without limitation, legal
fees and disbursements) relating to any amendments, waivers or
consents involving the provisions hereof, or of the Notes;
(6) all reasonable costs and expenses (including, without
limitation, legal fees and disbursements) relating to the enforcement
of this Agreement or the Notes; and
(7) the broker's or finder's fees of any Person in connection
with the initial sale of the Notes, it being represented and warranted
by the Partnership that any such Person acted solely as agent for the
Partnership and not as agent for you or the Other Purchasers.
The obligations of the Partnership under this Section 5 shall survive
the payment of or prepayment of the Notes, and the termination of this
Agreement.
SECTION 6. CERTAIN SPECIAL RIGHTS.
6.1 Home Office Payment. Notwithstanding any provision to the
contrary in this Agreement or the Notes, the Partnership will
punctually pay in immediately available funds all amounts payable to
you or any other institutional holder of Notes with respect to any
Notes held by you or it (without the necessity for any presentation or
surrender thereof or any notation of such payment thereon) in the
manner specified in Schedule I or in any other reasonable manner you
or such institutional holder may direct in writing. You agree that,
as promptly as practicable after the payment or prepayment in whole of
any Note held by you or your nominee and receipt by you of a written
request from the Partnership to surrender such Note to the Partnership
for cancellation, you will surrender such Note at the office of the
Partnership maintained pursuant to Section 12.1 hereof. If you or any
other institutional holder which elects the benefit of this Section
sell, assign or transfer any Note, you or it will, prior to any such
sale, assignment or transfer, (i) make a proper notation thereon of
the amount of principal paid thereon as of the date of such sale,
assignment or transfer and (ii) promptly notify the Partnership of the
name and address of the transferee of any Notes so transferred.
6.2 Issue Taxes. The Partnership will pay all taxes in
connection with the execution and delivery of this Agreement, and the
issuance and sale of the Notes, and in connection with any
modification of this Agreement or the Notes and will save you and any
subsequent holder of Notes harmless, without limitation as to time,
against any and all liabilities (including, without limitation, any
interest or penalty for nonpayment or delay in payment, or any income
taxes paid by you in connection with any reimbursement by the
Partnership) with respect to all such taxes.
The obligations of the Partnership under this Section 6.2 shall
survive the payment or prepayment of the Notes, and the termination of
this Agreement.
SECTION 7. SUBORDINATION OF NOTES.
7.1 Subordination to Partnership Senior Debt. The obligations
of the Partnership under the Notes with respect to the payment of
principal and interest thereon are and shall be subordinate in right
of payment and subject to the prior payment or provision for payment
in full of all Senior Claims of all present and future creditors of
the Partnership (claims hereunder shall rank pari passu with all other
subordinated claims except Limited Partnership Interests, General
Partners' Interests and Junior Debt, all of which shall be fully
subordinated to the Notes) arising out of any matter occurring prior
to the date on which the Partnership's obligation to make such payment
matures consistent with the provisions hereof. In the event of the
appointment of a receiver or trustee of the Partnership or in the
event of its insolvency, liquidation pursuant to SIPA or otherwise,
bankruptcy, assignment for the benefit of creditors, reorganization
whether or not pursuant to bankruptcy laws, or any other marshalling
of the assets and liabilities of the Partnership, no holder of Notes
asserting a claim hereunder shall be entitled to participate or share,
ratably or otherwise, in the distribution of the assets of the
Partnership until all Senior Claims of all present and future
creditors of the Partnership have been fully satisfied, or adequate
provision has been made therefor. The holders of the Notes shall, to
the extent of such distributions to such creditors, be subrogated to
the rights of such creditors to further distributions on account
thereof. For the purposes of this Section 7.1, claims under
Indebtedness required to be subordinated to the Notes shall not be
deemed to be claims of creditors.
7.2 Partnership Agreement Regarding Subordination of Debt to
Partners, etc. The Partnership Agreement shall provide that the
Partnership will not, and will not permit any Subsidiary, directly or
indirectly, to 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
heirs or legal representatives of any such Person, with respect to any
Indebtedness related 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 for transactions in securities or
commodities), unless such Indebtedness shall be subordinated to the
Notes to at least the same extent as the Notes are subordinated to the
claims of creditors pursuant to Section 7.1 hereof.
7.3 Purpose of the Subordination. The provisions of this
Section 7 are solely for the purpose of defining the relative rights
of the holders of the Notes and other creditors of the Partnership and
nothing contained in this Section or elsewhere in this Agreement or in
the Notes shall impair, as between the Partnership and the holders of
the Notes, the obligation of the Partnership, which is unconditional
and absolute, to pay to the holders of the Notes the principal of,
premium, if any, and interest on the Notes in accordance with their
terms.
7.4 Rank of the Notes. The Notes rank on a parity with the
Partnership's other Subordinated Debt and all other obligations of the
Company ranking on a parity with such Subordinated Debt, and all
claims under the Notes are and shall be senior in right of payment to
all claims of Partners with respect to Limited Partnership Interests
and General Partners' Interests and to all Junior Debt.
SECTION 8. PARTNERSHIP-SUSPENDED REPAYMENT.
The Partnership's obligation to pay all or part of the principal
amount of the Notes on any Scheduled Maturity Date or Accelerated
Maturity Date shall be suspended and the obligation shall not mature
(except as otherwise provided in Sections 14.1 and 14.2 hereof) for
any period of time during which, after giving effect to such payment
(together with (a) the payment of principal under any other obligation
of the Partnership (except any Limited Partnership Interests, General
Partners' Interests and Junior Debt) payable at or prior to such
payment of the Notes and (b) the return of any Secured Demand Note and
the Collateral therefor held by the Partnership (except for any
Secured Demand Note that constitutes Junior Debt and the Collateral
related thereto) and returnable at or prior to the aforesaid payment
of the Notes):
(i) in the event that the Partnership is not operating pursuant
to the Alternative Net Capital Requirement provided for in paragraph
(a)(1)(ii) of Rule 15c3-l, the Aggregate Indebtedness of the
Partnership would exceed 1200% of its Net Capital at the time payment
is to be made (or such other percentage as may be made applicable to
the Partnership at the time of such payment by the self-regulatory or
governmental agencies or bodies having appropriate authority), or
(ii) in the event that the Partnership is operating pursuant to
the Alternative Net Capital Requirement, the Net Capital of the
Partnership would be less than 5% of aggregate debit items computed in
accordance with Exhibit A to Rule 15c3-3 under the Securities Exchange
Act or any successor rule as in effect at such time (or such other
percentage as may be made applicable to the Partnership at such time
by the self-regulatory or governmental agencies or bodies having
appropriate authority), or
(iii) in the event that the Partnership is registered as a
futures commission merchant under the CEA, the net capital of the
Partnership (as defined in the CEA or the regulations thereunder as in
effect at the time of such payment) would be less than 6% (or such
other percentage as may be applicable to the Partnership at the time
of such payment by the CFTC) of the funds required to be segregated
pursuant to the CEA and the regulations thereunder and the foreign
futures or foreign options secured amounts (less the market value of
commodity options purchased by option customers on or subject to the
rules of a contract market or a foreign Board of Trade, each such
deduction not to exceed the amount of funds in the option customer's
account and the foreign futures or foreign options secured amounts),
or
(iv) the Partnership's Net Capital, as defined in Rule 15c3-1 or
any successor rule as in effect at the time of such payment, would be
less than 120% (or such other percentage as may be made applicable to
the Partnership at the time of such payment by the self-regulatory or
governmental agencies or bodies having appropriate authority) of the
minimum dollar amount required by Rule 15c3-1 as in effect at such
time (or such other dollar amount as may be made applicable to the
Partnership at the time of such payment by the self-regulatory or
governmental agencies or bodies having appropriate authority), or
(v) in the event that the Partnership is registered as a futures
commission merchant under the CEA and if its net capital, as defined
in the CEA or the regulations thereunder as in effect at the time of
such payment, would be less than 120% (or such other percentage as may
be made applicable to the Partnership at the time of such payment by
the CFTC) of the minimum dollar amount required by the CEA or the
regulations thereunder as in effect at such time (or such other dollar
amount as may be made applicable to the Partnership at the time of
such payment by the CFTC), or
(vi) in the event that the Partnership is subject to the
provisions of paragraph (a)(6)(v) or (a)(7)(iv) or (c)(2)(x)(B)(l) of
Rule 15c3-1, the Partnership would not be in compliance with any such
paragraph;
and during any such suspension the Partnership shall, as promptly as
is consistent with the protection of its customers, reduce its
business to a condition whereby the payment of principal amount of the
Notes so suspended could be paid in accordance with the terms of this
Section 8, at which time the Partnership shall repay the aforesaid
principal amount of the Notes plus accrued interest thereon on not
less than five (5) days' prior written notice to the Exchange. The
payment of principal amount of the Notes so suspended shall be due and
payable on the first day on which pursuant to the preceding sentence
the Partnership has an obligation to make such payment. If pursuant
to the terms hereof the Partnership's obligation to pay said principal
amount is suspended, the Partnership and you recognize and agree that
the Partnership may be summarily suspended by the Exchange. The
Partnership agrees that, if its obligation to pay any portion of the
principal amount of the Notes is ever suspended for a period of six
(6) months or more, it will promptly take whatever steps are necessary
to effect a rapid and orderly complete liquidation of its business.
If payment is made of all or any part of the principal of the Notes on
a Scheduled Maturity Date and if as a result of, and immediately after
giving effect to, any such payment the Partnership's Net Capital, or
net capital (as defined in the CEA or regulations thereunder), is less
than would be required to make such payment without suspension
pursuant hereto, you agree (whether or not you had any knowledge or
notice of such fact at the time of any such payment) to repay to the
Partnership, its successors or assigns, the sum of the Notes so paid,
to be held by the Partnership pursuant to the provisions hereof as if
such payment had never been made; provided, however, that any suit for
the recovery of any such payment must be commenced within two (2)
years of the date of such payment. The Partnership shall deliver to
you an Officer's Certificate within ten (10) days after any payment by
it of all or part of the principal amount of the Notes stating whether
or not such payment is subject to repayment as set forth in the
preceding sentence.
In the event the Partnership's obligation to make any principal
payment with respect to the Notes is suspended for any period, or you
or any other holder of the Notes from time to time are required to
repay any principal payment received during any period, pursuant to
this Section, interest shall accrue and be payable with respect to the
Notes at the rate payable on overdue principal pursuant to
Section 1.1, for the period during which the Partnership's obligation
to make principal payments is suspended and continuing until you and
all other holders have received payment in full of all such suspended
or repaid principal payments.
SECTION 9. RESTRICTION ON PERMISSIVE PREPAYMENT OF NOTES.
The Partnership may prepay the Notes at its option only in
accordance with Sections 7.1 and 10.2 hereof and only with the prior
written permission of the Exchange (a "Permissive Prepayment"). No
Permissive Prepayment shall be made, however, if after giving effect
thereto and to all other payments of principal under outstanding
Subordination Agreements of the Partnership, including the return of
any Secured Demand Note and the Collateral therefor held by the
Partnership (but excluding, in any case, Limited Partnership
Interests, General Partners's Interests and Junior Debt), the maturity
or accelerated maturity of which are scheduled to occur (x) within six
(6) months after the date such Permissive Prepayment is to occur
pursuant to the provisions of this Section, or (y) on or prior to
April 15, 2006, whichever date is earlier, without reference to any
projected profit or loss of the Partnership,
(i) in the event that the Partnership is not operating pursuant
to the Alternative Net Capital Requirement provided for in paragraph
(a)(1)(ii) of Rule 15c3-l, the Aggregate Indebtedness of the
Partnership would exceed 1000% of its Net Capital (or such other
percentage as may be made applicable at such time to the Partnership
by the self-regulatory or governmental agencies or bodies having
appropriate authority), or
(ii) in the event that the Partnership is operating pursuant to
such Alternative Net Capital requirement, the Net Capital of the
Partnership would be less than 5% of its aggregate debit items
computed in accordance with Exhibit A to Rule 15c3-3 under the
Securities Exchange Act or any successor rule as in effect at such
time (or such other percentage as may be made applicable to the
Partnership at the time of such Permissive Prepayment by the self-
regulatory or governmental agencies or bodies having appropriate
authority), or
(iii) in the event that the Partnership is registered as a
futures commission merchant under the CEA, the net capital of the
Partnership (as defined in the CEA or the regulations thereunder as in
effect at the time of such Permissive Prepayment) would be less than
7% (or such other percentage as may be made applicable to the
Partnership at the time of such Permissive Prepayment by the CFTC) of
the funds required to be segregated pursuant to the CEA and the
regulations thereunder and the foreign futures or foreign options
secured amounts (less the market value of commodity options purchased
by option customers on or subject to the rules of a contract market or
a foreign Board of Trade, each such deduction not to exceed the amount
of funds in the option customer's account and the foreign futures or
foreign options secured amounts), or
(iv) the Partnership's Net Capital, as defined in Rule 15c3-l or
any successor rule as in effect at the time of such Permissive
Prepayment, would be less than 120% (or such other percentage as may
be made applicable to the Partnership at the time of such Permissive
Prepayment by the self-regulatory or governmental agencies or bodies
having appropriate authority) of the minimum dollar amount required by
Rule 15c3-l as in effect at such time (or such other dollar amount as
may be made applicable to the Partnership at the time of such
Permissive Prepayment by the self-regulatory or governmental agencies
or bodies having appropriate authority), or
(v) in the event that the Partnership is registered as a futures
commission merchant under the CEA, its net capital, as defined in the
CEA or the regulations thereunder as in effect at the time of such
Permissive Prepayment would be less than 120% (or such other
percentage as may be made applicable to the Partnership at the time of
such Permissive Prepayment by the CFTC) of the minimum dollar amount
required by the CEA or the regulations thereunder as in effect at such
time or such other dollar amount as may be made applicable to the
Partnership at the time of such Permissive Prepayment by the CFTC, or
(vi) in the event that the Partnership is subject to the
provisions of paragraph (a)(6)(v) or (a)(7)(iv) or (c)(2)(x)(B)(1) of
Rule 15c3-1, the Partnership would not be in compliance with any of
such paragraphs.
If a Permissive Prepayment is made of all or any part of the principal
of the Notes prior to April 15, 2006 and if, as a result of, and
immediately after giving effect to, such payment of principal, the
Partnership's Net Capital, or net capital (as defined in the CEA or
regulations thereunder) is less than the amount required to permit
such a Permissive Prepayment pursuant to the foregoing provisions of
this Section, you agree (whether or not you had any knowledge or
notice of such fact at the time of such Permissive Prepayment) to
repay the Partnership, its successors or assigns, the principal sum so
paid, to be held by the Partnership pursuant to the provisions hereof
as if such Permissive Prepayment had never been made; provided,
however, that any suit for the recovery by the Partnership, or its
successors or assigns of any such principal sum must be commenced
within two (2) years of the date of such Permissive Prepayment. The
Partnership shall deliver to you an Officer's Certificate within ten
(10) days after any Permissive Prepayment by it stating whether or not
such principal sum is subject to repayment as set forth in the
preceding sentence.
In the event you or any other holder of the Notes from time to time
are required to repay pursuant to this Section the amount of any
Permissive Prepayment, interest shall accrue and be payable with
respect to the Notes at the rate payable on overdue principal pursuant
to Section 1.1., for the period from the date on which such Permissive
Prepayment was made until the Partnership is permitted to make, and
does make, such Permissive Prepayment to you and all other holders
again.
SECTION 10. NOTE PREPAYMENTS.
10.1 Prepayment Generally; Required Prepayments. (a) The
Partnership agrees that no prepayment of the Notes, either in whole or
in part, will be made by it or on its behalf except in accordance with
Section 12.20 hereof or this Section 10. Until the Notes shall have
been paid in full, the Partnership, subject to Section 8 hereof, will,
without notice, prepay, without premium, $10,225,000 aggregate
principal amount of the Notes on April 15 in each of the years 1998
through 2005, inclusive, together, in each case, with interest accrued
on the amount to be prepaid to the date of prepayment and will pay the
remaining principal amount (which will be $10,200,000 if all required
payments are made as scheduled and there are no prepayments) with
accrued interest, at maturity on April 15, 2006. No partial
prepayment made pursuant to Section 10.2 hereof shall reduce or
otherwise affect the obligation of the Partnership to make in full any
scheduled prepayment required by this Section 10.1, and any partial
prepayment made pursuant to Section 10.2 hereof shall be applied
against the required payment of the Notes at maturity, and the
required prepayments of the Notes under this Section 10.1, in inverse
order of maturity.
(b) In the event that:
(i) the General Partner sells or otherwise transfers its
partnership interest in the Partnership, or
(ii) JFC, the sole limited partner of the Partnership and the
owner of all of the equity interest in the Partnership, sells or
otherwise transfers its partnership interest in the Partnership, or
(iii) Persons who are general partners of JFC and devote their
full time to the business of JFC or one of its Subsidiaries no longer
have in the aggregate more than 50% of the partnership voting
interests of all general partners in JFC or one of such general
partners has 20% or more of the aggregate partnership voting interests
of all general partners, or
(iv) JFC ceases to own all of the Voting Stock of the General
Partner, then, upon the occurrence of any of such circumstances (here-
inafter referred to as a "Change of Ownership"), the Partnership shall
promptly give to each holder of the Notes a "Notice of Prepayment
Option." For purposes of this Section 10.1(b), a "Notice of
Prepayment Option" shall mean an Officer's Certificate describing the
Change of Ownership and offering to prepay each holder's Notes on the
date which is 60 days after the date of such Notice of Prepayment
Option, at a prepayment price equal to 100% of the outstanding
principal amount thereof plus (i) interest accrued to the date of
prepayment and (ii) a premium equal to the Make Whole Amount, if any,
applicable to such prepayment, calculated on the amount to be prepaid
on the date of such prepayment but using the Treasury Constant Yield
as of the second Business Day immediately preceding the prepayment
date. Any prepayment option so offered may be exercised by any holder
of a Note by delivery of written notice of such holder's election to
exercise such option to the Partnership within 45 days of the receipt
of such Notice of Prepayment Option. If any holder of a Note so
elects to exercise such option, the Partnership shall prepay such
holder's Notes in accordance with this Section 10.1(b) on the date
which is 60 days after the date of such Notice of Prepayment Option.
10.2 Optional Prepayments. Subject to Section 9, in addition to
the prepayments required by Sections 10.1 and 12.20, upon the terms
and subject to the conditions hereinafter set forth, the Partnership
may, at its option, at any time on or after May 6, 1995, prepay the
Notes in whole, or from time to time in part in multiples of $500,000,
at a prepayment price equal to the aggregate principal amount so to be
prepaid, together with (i) accrued interest thereon to the date of
prepayment, and (ii) a premium equal to the Make Whole Amount, if any,
applicable to such prepayment.
10.3 Notice of Prepayment. Notice of any prepayment of Notes
pursuant to Section 10.2 hereof shall be given to each holder of Notes
not less than 30 nor more than 60 days before the date fixed for
prepayment (the "Optional Prepayment Date") and shall certify (a) the
Optional Prepayment Date, (b) the principal amount of Notes to be
prepaid on such Optional Prepayment Date, (c) the accrued interest
applicable to such prepayment and (d) an estimate of the Make Whole
Amount, if any, applicable to the prepayment and the calculations by
which such estimate was derived, assuming solely for the purpose of
making the estimate that the prepayment date is the second Business
Day immediately succeeding the date of such notice. A second notice
shall be given to each holder on the second Business Day immediately
preceding the Optional Prepayment Date and shall specify the actual
premium, if any, applicable to the prepayment, computed on the amount
to be prepaid on the Optional Prepayment Date but using the Treasury
Constant Yield as of the date such notice is given. Notice of
prepayment having been so given, the aggregate principal amount of
Notes specified in such notice, together with the premium, if any, and
accrued interest thereon, shall become due and payable on the Optional
Prepayment Date fixed for such prepayment.
10.4 Partial Prepayment Pro Rata. The aggregate principal amount
of each partial prepayment of Notes pursuant to Section 10.1(a) or
10.2 hereof shall be allocated among the holders of Notes, in
proportion, as nearly as practicable, to the respective percentages of
the aggregate unpaid principal amount of the Notes then outstanding
represented by the respective principal amount of the Note or Notes
held by each such holder then outstanding, with adjustments, to the
extent practicable, to compensate for any prior prepayments not made
in exactly such proportion.
SECTION 11. REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.
11.1 Registration. The Notes issuable under this Agreement shall
be registered Notes. The Partnership will keep at its office required
to be maintained pursuant to Section 12.1 hereof books for the
registration, and registration of transfer of Notes. Prior to
presentation of any Note for registration of transfer, the Partnership
shall treat the Person in whose name such Note is registered as the
owner and holder of such Note for all purposes whatsoever, whether or
not such Note shall be overdue, and the Partnership shall not be
affected by notice to the contrary.
11.2 Exchange. The holder of any Note, at its option, may
surrender the same for exchange at the office of the Partnership
maintained pursuant to Section 12.1 hereof, and promptly thereafter
and at the Partnership's expense (except as provided below), receive
in exchange therefor a new Note or Notes, as the case may be, each in
the denomination requested by such holder, dated the date to which
interest shall have been paid on the Note so surrendered, or, if no
interest shall have yet been so paid, then dated the date of the Note
so surrendered, and registered in the name of such Person or Persons
as such holder may request, for the same principal amount as the then
unpaid principal amount of the Note so surrendered. The Partnership
may require payment of a sum sufficient to cover any stamp or other
tax or governmental charge imposed in respect of any transfer involved
in such exchange.
11.3 Replacement. Upon receipt by the Partnership of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note and (a) in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it
(provided, however, that if the holder of such Note is you or an
insurance company, or other Institutional Investor with stated capital
and surplus in excess of $50,000,000, its own agreement of indemnity
shall be deemed to be satisfactory) or (b) in the case of mutilation,
upon surrender thereof, the Partnership, at its expense, will execute
and deliver in lieu thereof a new Note in the same principal amount as
the unpaid principal amount of such Note and dated the date to which
interest shall have been paid on such Note, or, if no interest shall
have yet been so paid, then dated the date of such Note.
SECTION 12. CERTAIN COVENANTS.
The Partnership covenants that on and after the date of this
Agreement, until the Notes are paid in full:
12.1 Maintenance of Office. The Partnership will maintain at its
headquarters at 201 Progress Parkway, Maryland Heights, Missouri
63043, an office where notices, presentations and demands in respect
of this Agreement and the Notes may be given to and made upon it;
provided, however, that it may, upon 15 days' prior written notice to
the holders of the Notes, move such office to any other location
within the continental boundaries of the United States. The
Partnership hereby agrees that it will pay, and will save any holder
of a Note harmless against liability for, any stamp or other tax or
governmental charge imposed in respect of any transfer of a Note made
at a time when the books for the registration, and registration of
transfer, of Notes are maintained at an office outside the State of
Missouri, to the extent (if any) that such tax or charge exceeds the
amount that would have been payable had said books been maintained in
the State of Missouri; and said obligation of the Partnership shall
survive the payment or prepayment of the Notes and the termination of
this Agreement.
12.2 ERISA. Neither the Partnership nor any Subsidiary will at
any time permit any Plan maintained by it to:
(i) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Internal Revenue Code of 1986, as
amended, or described in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived; or
(iii) terminate under circumstances which could result in the
imposition of a Lien on the Property of the Partnership or any
Subsidiary pursuant to Section 4068 of ERISA.
12.3 Partnership Existence. The Partnership, subject to Rule
326(b) of the Exchange and Section 8 hereof, will take and fulfill, or
cause to be taken and fulfilled, all actions and conditions necessary
to preserve and keep in full force and effect its existence,
franchises, rights and privileges as a partnership and the existence,
franchises, rights and privileges as a partnership or a corporation,
as the case may be, of each of the Subsidiaries, and will not
liquidate or dissolve, or permit any of the Subsidiaries to liquidate
or dissolve, unless in the case of a Subsidiary its liquidation or
dissolution would not have a material adverse effect on the business,
prospects, earnings, properties or condition, financial or otherwise,
of the Partnership and will take and fulfill, or cause to be taken and
fulfilled, all actions and conditions necessary to qualify, and to
preserve and keep in full force and effect its qualification, and that
of each Subsidiary, to do business as a foreign partnership or
corporation in each jurisdiction in which the character of the
properties owned (or held under lease) by it or any Subsidiary,
respectively, or the nature of their respective activities makes such
qualification necessary.
12.4 General Maintenance of Properties and Business, etc. The
Partnership and each Subsidiary will:
(a) maintain its property in good condition and make all needful
and proper renewals, replacements, additions, betterments and
improvements thereof and thereto, so that the business carried on in
connection therewith may be conducted properly and efficiently at all
times;
(b) maintain, with financially sound insurers of nationally
recognized stature and responsibility, insurance with respect to its
property and business of such a nature, with such terms and in such
amounts as a prudent person would maintain with respect to similar
properties and a similar business, and, in any event, will maintain
insurance on all its property of a character usually insured by
corporations or partnerships engaged in the same or a similar business
similarly situated against loss or damage of the kinds and in the
amounts customarily insured against and for by such corporations or
partnerships and carry, with such insurers in customary amounts, such
other insurance, including public liability insurance, as is usually
carried by corporations or partnerships engaged in the same or a
similar business similarly situated; provided, however, that (i) all
insurance maintained pursuant to this subsection (b) will be carried
in amounts sufficient to prevent the Partnership or any Subsidiary
from incurring liability as a coinsurer under law or the terms of the
applicable policy or policies, and (ii) neither the Partnership nor
any Subsidiary shall self-insure, except that each may selfinsure as
to the types of risks against which it presently self-insures, so long
as such self-insured risks, in the aggregate, do not exceed at any
time 10% of the Partnership's assets as of the end of the then most
recent fiscal quarter of the Partnership; and, provided further, that
for the purposes of clause (ii) of the preceding proviso only, the
term "assets" shall not be deemed to include assets located at any
branch office of the Partnership other than the portion of assets
located at any such branch office carried on the books of the
Partnership at a value in excess of $500,000. The Partnership and any
Subsidiary may self-insure both as to types of risks other than those,
and amount of risk in excess of that, permitted by the preceding
sentence if, and only if, whichever of them undertakes such additional
self-insurance shall establish and maintain on its books adequate
reserves therefor; and provided further, that so long as the
Partnership or any Subsidiary self-insures any risk, the Partnership
shall deliver annually to the holders of the Notes an Officer's
Certificate demonstrating that all necessary and adequate reserves
have been maintained with respect thereto;
(c) keep proper books of record and accounts with respect to all
of its business transactions in accordance with generally accepted
accounting principles in effect in the United States, which books of
record and accounts shall, in all material respects, be true, correct
and complete;
(d) set aside on its books from its earnings for each fiscal
year, in reasonably adequate amounts, all proper accruals and reserves
that, in accordance with generally accepted accounting principles,
should be set aside from such earnings in connection with its
business, including reserves for litigation, depreciation,
obsolescence and/or amortization, and accruals for taxes based on or
measured by income or profits and for all other taxes; and
(e) at all times maintain and keep in full force and effect its
rights and franchises material to its business and its memberships in
such Business Associations as are necessary to enable it to engage (in
the case of those entities presently so engaged) in the business of a
securities broker, dealer or underwriter, or financial services
institution and take all actions necessary to comply with the rules
and regulations, as in effect from time to time, of such Business
Associations and each other association, corporation or governmental
authority to which it is subject.
12.5 Compliance with Law. Neither the Partnership nor any
Subsidiary will, (a) violate any laws, ordinances, governmental rules
or regulations (including, without limitation, environmental and
safety laws and regulations) to which it is or may become subject, or
(b) fail to obtain or maintain any patents, trademarks, service marks,
trade names, copyrights, design patents, licenses, permits, franchises
or other governmental authorizations necessary to the ownership of its
property or to the conduct of its business, if the violation or
failure with respect to clause (a) or (b) of this Section 12.5 might
materially adversely affect the business, prospects, earnings,
properties or condition, financial or other, of the Partnership or any
Subsidiary.
12.6 Payment of Taxes and Claims. (a) The Partnership and each
Subsidiary will pay and discharge promptly:
(i) all taxes, assessments and governmental charges and levies
imposed upon it, its income or profits or any of its properties,
before the same shall become delinquent, and
(ii) all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other similar persons for labor,
materials, supplies and rentals that, if unpaid, might by law become a
Lien upon its property; provided, however, that none of the foregoing
need be paid while the same is being contested in good faith by
appropriate proceedings diligently conducted so long as adequate book
reserves shall have been established in accordance with generally
accepted accounting principles with respect thereto, the owning
Person's title to the particular property is not materially adversely
affected and its right to use the particular property in the ordinary
course of business is not materially interfered with.
(b) The Partnership and each Subsidiary will pay all obligations
not specified in subsection (a) of this Section 12.6 when due, except
such as may be contested in good faith by appropriate proceedings
without materially adversely affecting the Company's or a Subsidiary's
property or interfering with the conduct of its business.
12.7 Transactions with Affiliates. Neither the Partnership nor
any Subsidiary will enter into any transaction (including, without
limitation, the purchase, sale or exchange of any property, the
rendering of any services, and the payment of management fees) with
any Affiliate, except, in each case, in the ordinary course of, and
pursuant to the reasonable requirements of, the business of the
Partnership or such Subsidiary, as the case may be, and in good faith
and upon commercially reasonable terms that are no less favorable to
the Partnership or such Subsidiary, as the case may be, than would
obtain in a comparable arm's length transaction with a Person not an
Affiliate; provided, however, that (i) the Partnership may provide
managerial services and overhead to EDJ Leasing Co., a Missouri
partnership, to the extent the value of such services and overhead
(valued at the higher of cost or fair market value) does not exceed
$100,000 per fiscal year and (ii) the Partnership may pay management
fees to JFC in an aggregate amount not exceeding the sum of (x) the
reasonable salaries of the general partners of JFC and (y) the amounts
paid by JFC to its limited partners representing guaranteed payments
of 7-1/2% per annum on the principal amounts of their respective
capital contributions to JFC.
12.8 Sale of Receivables. Neither the Partnership nor any
Subsidiary will sell with recourse, or sell for less than the greater
of the face value or the fair market value thereof, any of its
accounts, bills or notes receivable, except as required pursuant to
Rule 326(b) of the Exchange or Section 8 hereof.
12.9 Notice of Certain Events and Conditions. The Partnership
will give prompt written notice to each holder of an outstanding Note
of (i) any event of acceleration or event of default (or other event
or condition that, after notice or the passage of time or both, could
become an event of acceleration or event of default) under any
evidence of Indebtedness (including the Notes) of the Partnership or
of any Subsidiary of which the Partnership has knowledge, or under any
indenture, mortgage or other agreement relating to any such evidence
of Indebtedness (including this Agreement) or under any material lease
or any preferred stock, for or in respect of which the Partnership or
any Subsidiary may be liable, or (ii) the giving by any holder of a
Note or any other evidence of Indebtedness or other Security of the
Company or a Subsidiary of notice with respect to a claimed event of
acceleration or event of default or any other such condition or event.
12.10 Tax Consolidation. Neither the Partnership nor any
Subsidiary shall file or consent to the filing of a consolidated tax
return with any Person, unless required to do so by applicable law;
provided, however, that to the extent any such law requiring said tax
consolidation permits those entities joining in a consolidated tax
return discretion as to the sharing of or apportionment of any tax
benefits or liabilities, or in any other respect, the Partnership and
each Subsidiary, or any of them, as the case may be, shall exercise
such discretion only in accordance with the directions of, or
restrictions imposed by, at least 65% of the holders of Notes then
outstanding, and such subsequent directions or restrictions as said
percentage of holders of Notes outstanding may impose.
12.11 Inspection. The Partnership will permit any holder of
an outstanding Note, by its representatives, agents or attorneys, to
examine all books of account, records, reports and other papers of the
Partnership and each Subsidiary (including, without limitation, copies
of all income and other tax returns), to make copies and take extracts
from any thereof, to discuss the affairs, finances and accounts of the
Partnership and each Subsidiary with their respective officers and
independent certified public accountants (and by this provision the
Partnership (as to itself and all its Subsidiaries) hereby authorizes
said accountants to discuss with any such holder the finances and
accounts of the Partnership and each Subsidiary) and to examine the
properties of the Partnership and each Subsidiary. Each such
inspection shall be made at such reasonable times, and as often as
reasonably requested, and shall be at the expense of the Person making
the inspection, unless such inspection shall be made during the
continuance of an Event of Acceleration or Event of Default (in which
event, all expenses incurred by such Person with respect to such
inspection shall be borne by the Partnership). Notwithstanding the
foregoing, all expenses in connection with any such inspection
incurred by the Partnership or any Subsidiary, any officers and
employees of any thereof and the independent certified public
accountants of any thereof shall be expenses payable by the
Partnership and shall not be expenses of the Person making the
inspection.
12.12 Purchase of Notes. Neither the Partnership nor any
Subsidiary or Affiliate, will, directly or indirectly, purchase or
contract to purchase any outstanding Notes, except as a direct result
of prepayments or payments permitted or required by the express terms
of this Agreement.
12.13 Guaranties of Affiliate Obligations. Any other
provision hereof notwithstanding, the Partnership will not cause or
permit Indebtedness permitted by Section 12.17 hereof and attributable
to any guaranty or guaranties by it in respect of any obligations of,
or otherwise in support of, any of its Affiliates to at any time
exceed 10% of Partnership Capital in the aggregate; provided, however,
that the foregoing limitation shall not apply to the 1986 Guarantees
and the 1988 Guarantees.
12.14 Nature of Partnership's Business. The principal
business of the Partnership and its Subsidiaries, taken on a
consolidated basis, shall not include any activities or enterprises
not customarily engaged in by corporations or partnerships in the
retail investment brokerage business; provided, however, that this
Section 12.14 shall not be construed to prevent the Partnership or any
Subsidiary from ceasing to conduct any currently existing business
activities of any thereof if the Partnership shall continue to conduct
such activities and enterprises as are customarily engaged in by
corporations or partnerships in the retail investment brokerage
business. The business of the Partnership and the Subsidiaries shall
continue to be conducted solely in the United States, except that:
(A) the Partnership may conduct business in Canada through a
Subsidiary or Affiliate; provided that the aggregate of (i) the
Partnership's or a Subsidiary's investment in such Subsidiary or
Affiliate and (ii) the amount of any guaranty or guaranties by the
Partnership or a Subsidiary in respect of any obligations of, or
otherwise in support of, such Subsidiary or Affiliate, shall at no
time exceed five percent (5%) of Partnership Capital, and (B) the
Partnership itself may directly conduct business within Canada
provided that the aggregate amount of the Partnership's assets used in
its business in Canada shall at no time exceed ten percent (10%) of
the Partnership's total assets, as would be reflected on a balance
sheet of the Partnership at such time prepared in accordance with
generally accepted accounting principles as in effect at such time;
and provided further that the Partnership may not simultaneously
conduct business in Canada directly itself and indirectly through a
Subsidiary or Affiliate.
12.15 Partnership Net Capital. The Partnership shall
maintain Net Capital in an amount equal to 150% of the greater of (a)
the amount of Net Capital required for expansion of a member
organization's business pursuant to Rule 326(a) of the Rules of the
Board of Directors of the Exchange or (b) the amount so required
pursuant to any parallel regulation of the SEC applicable to the
Partnership, in either case without regard for any grace periods
therein set forth; provided, however, that, should any such rule or
regulation be amended, the amount of Net Capital required for
expansion of business provided in such amended rule or regulation
shall replace the amount in effect on the date hereof as the basis for
the calculation set forth in the preceding clauses only if such amount
is greater than said amount given effect herein, and any succeeding
amendments shall be given effect herein only to the extent that the
amounts set forth therein are greater than the amount given effect
herein immediately prior to the promulgation of such amendment; and,
provided further, that should both such rule and any parallel
regulation of the SEC lapse or be repealed, and should there be no
rule or regulation promulgated by either the Exchange or the SEC in
replacement of either thereof, the Partnership shall maintain its Net
Capital in an amount equal to 150% of the amount so required by the
last such rule or regulation to be given effect herein. This
covenant, as provided in the preceding sentence, shall survive and be
of continuing effect despite the abandonment, if any, by either the
Exchange or the SEC, or both, of regulation of the Net Capital of the
Partnership.
12.16 Partnership Capital and Restricted Distributions.
(a) The Partnership shall maintain Partnership Capital at all
times in an amount at least equal to $110,000,000.
(b) Neither the Partnership nor any Consolidated Subsidiary
will, directly or indirectly, declare or make, or incur any liability
to make, any Restricted Distribution, unless at the time of so
declaring, making or incurring such liability to make such Restricted
Distribution, and after giving effect thereto, no Event of
Acceleration or Event of Default (or condition or event which after
notice or lapse of time would constitute an Event of Acceleration or
Event of Default) shall exist.
12.17 Partnership Indebtedness. Neither the Partnership nor
any Consolidated Subsidiary shall create, incur or assume, or in any
manner otherwise be or become liable, contingently or otherwise, with
respect to, or maintain or suffer to exist, any Indebtedness other
than Junior Debt, except:
(a) Indebtedness evidenced by the Notes, the 1986 Notes, the
1988 Notes and the 1992 Notes and the 1986 Guarantees and the 1988
Guarantees;
(b) Additional Subordinated Debt, if immediately after the
incurrence thereof, and giving effect thereto, total Subordinated Debt
would not exceed 50% of Total Capitalization;
(c) Additional Subordinated Debt in addition to that permitted
by paragraph (b) of this Section 12.17; provided, however, that the
Additional Subordinated Debt permitted by this paragraph (c) shall not
exceed $10,000,000 and shall arise under a revolving credit agreement
or a similar credit facility, maintained in accordance with paragraph
(c)(5)(i) of Appendix D to Rule 15c3-1; and, provided further, that
any funds so drawn shall be used solely for the purpose of the
Partnership's participation as an underwriter of securities as
provided in said regulation;
(d) any short-term Indebtedness resulting from Credit Balances
and similar payables, Day Loans, Street Loans, Unsecured Bank
Overdrafts and other short-term obligations and liabilities to
customers, brokers, banks and others incurred in the ordinary course
of the Partnership's business as such business is described in Item 1
of the Form 10-K; provided, however, that if any such Indebtedness is
subject to regulation in any respect (including, without limitation,
as to security therefor) by the SEC, Board of Governors of the Federal
Reserve System, or any other governmental entity or Business
Association, any such Indebtedness shall be permitted pursuant to this
Section 12.17, if and only if such Indebtedness conforms in all
respects to any applicable regulations, rules, orders or directions of
any thereof; and
(e) Indebtedness secured solely by equipment owned by the
Partnership, provided that (i) any Indebtedness permitted by this
paragraph (e) shall be evidenced by (x) a Capital Lease or (y) a
signed instrument expressly prohibiting recourse in respect of any
such Indebtedness against the Partnership or any Subsidiary thereof,
or against any partner (general or limited), incorporator,
stockholder, officer or director (past, present or future) of any
thereof, and (ii) the aggregate Indebtedness permitted by this
paragraph (e) shall not exceed $20,000,000 or 20% of Net Capital,
whichever is greater.
12.18 Lease Obligations. Neither the Partnership nor any
Consolidated Subsidiary will become liable, renew or extend as lessee
under any Long Term Lease if, after giving effect thereto, the
aggregate rental and other amounts payable in any fiscal year of the
Partnership in respect of all Long Term Leases under which the
Partnership or any Consolidated Subsidiary is lessee or is otherwise
directly or indirectly liable (whether or not contingently) would at
any time exceed 15% of Partnership Revenues for, and as of the end of,
the immediately preceding fiscal year.
12.19 Restricted Investments. At no time will the
Partnership or a Consolidated Subsidiary make, or become obligated to
make, directly or indirectly, a Restricted Investment, if, after
giving effect thereto the aggregate amount of Restricted Investments
(including ones as to which an obligation to make has been incurred,
directly or indirectly) of the Partnership and its Consolidated
Subsidiaries would exceed 15% of Partnership Capital.
12.20 Merger, Consolidation or Transfer of Assets.
(a) The Partnership will not consolidate with or merge into any other
Person (including any of its Affiliates), nor will the Partnership
permit or suffer any other Person (including any of its Affiliates) to
consolidate with or merge into it, nor will the Partnership, directly
or indirectly, in one or more transactions (except in the ordinary
course of its business as described in Item 1 of Part I of the Form
10-K), sell, transfer, assign, lease (as lessor), abandon or otherwise
dispose of all, or substantially all, of its assets or buy, lease or
otherwise acquire all, or substantially all, of the assets of any
other Person unless, in any such case, (i) such combination,
transaction or action shall occur at least 12 months after the Closing
Date and (ii) at least 60 days prior to the effective date of such
combination, transaction or action all of the holders of the Notes
shall have received from the Partnership a "Notice of Prepayment
Option." For purposes of this Section 12.20, a "Notice of Prepayment
Option" shall mean an Officer's Certificate containing the principal
terms and anticipated date of, and describing the parties to, such
combination, transaction or action and offering to prepay each
holder's Notes on a date not less than 46 days after the date upon
which the last holder to do so receives a Notice of Prepayment Option,
but prior to the effective date of such combination, transaction or
action, at a prepayment price equal to 100% of the outstanding
principal amount thereof plus (i) interest accrued to the date of
prepayment and (ii) a premium equal to the Make Whole Amount, if any,
applicable to such prepayment, calculated on the amount to be prepaid
on the date of such prepayment but using the Treasury Constant Yield
as of the second Business Day immediately preceding the prepayment
date. Any prepayment option so offered may be exercised by any holder
of a Note by delivery of written notice of such holder's election to
exercise such option to the Partnership within 45 days of the date the
last holder to do so receives a Notice of Prepayment Option. The
Partnership, or its successor, as the case may be, shall deliver to
each recipient of a Notice of Prepayment Option an Officer's
Certificate reporting any failure to timely consummate the proposed
combination, transaction or action, or if timely consummated,
describing the actual principal terms thereof and reporting the
parties thereto (the "Second Notice"). In the event that such
combination, transaction or action shall not have been timely
consummated, or shall have been consummated on terms substantially
different, or with parties different, from those described or related
in the Notice of Prepayment Option, each recipient of a Second Notice
shall have 45 days in which to affirm or revoke its initial election.
In the event of any such revocation the Partnership shall have 30 days
from notice thereof to, as the case may be, prepay such recipient's
Notes or re-issue and accept reimbursement for any Notes earlier
prepaid in accordance with this Section 12.20. If, following the
receipt of a Notice of Prepayment Option or a Second Notice, more than
one holder elects to have its Notes prepaid, the Notes of all holders
making such election shall be prepaid at the same time.
12.21 Limitation on Liabilities. The Partnership will not
cause or permit the aggregate amount of liabilities of the Partnership
and its Consolidated Subsidiaries that could possibly arise at any
time out of, or in relation to, the Partnership's or a Consolidated
Subsidiary's ownership, directly or indirectly, of any interest or
interests in limited partnerships or other entities which may be
Affiliates or Subsidiaries of the Partnership (other than liabilities
permitted by Section 12.13 and liabilities arising from the 1986
Guarantees or the 1988 Guarantees) to exceed $5,000,000. Any such
interest of the Partnership or a Consolidated Subsidiary acquired by
it after the date of this Agreement shall be owned only indirectly by
it, and only through a series of affiliated entities including at
least one duly organized and validly existing corporation which is in
good standing under the laws of its jurisdiction of incorporation and
is at all times adequately capitalized and as to which all corporate
formalities are at all times observed.
The Partnership shall not be a general partner in any general or
limited partnership.
12.22 Change of Examining Authority. The Partnership shall
promptly give notice to the holders of the Notes of any change in its
Examining Authority, and shall include in its notice the address of
the new Examining Authority.
SECTION 13. INFORMATION TO BE FURNISHED HOLDERS OF NOTES.
13.1 Financial Statements, Reports, etc. The Partnership will
deliver to each holder of a Note:
(a) as soon as practicable and, in any case, within 90 days
after the close of each fiscal year, two copies (together with a
further copy which the Partnership shall deliver directly to the
National Association of Insurance Commissioners, Securities Valuation
Office, 195 Broadway, N.Y., N.Y. 10007) of the consolidated statement
of financial condition of the Partnership and its Consolidated
Subsidiaries setting forth its financial condition as of the end of
such fiscal year, together with consolidated statements of income,
cash flows, changes in partnership capital and changes in liabilities
subordinated to claims of general creditors of the Partnership for
such fiscal year, in each case setting forth, in comparative form, the
figures for the preceding fiscal year, all in reasonable detail, such
financial statements to be accompanied by an opinion with respect
thereto of Arthur Andersen & Co. or another Independent Certified
Public Accountant, which opinion shall state that (x) the examination
of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards,
and, accordingly, included such tests of the accounting records and
such other auditing procedures as were considered necessary in the
circumstances, and (y) such financial statements present fairly the
financial condition of the Partnership and Consolidated Subsidiaries
at such date and the results of operations thereof for such period and
have been prepared in accordance with generally accepted accounting
principles consistently applied, except for noted changes in
application in which such accountants concur;
(b) as soon as practicable and, in any case, within 45 days
after the end of each of the first, second and third quarterly
accounting periods in each fiscal year, two copies of (i) an unaudited
consolidated statement of financial condition of the Partnership and
its Consolidated Subsidiaries as of the end of such accounting period,
and (ii) unaudited consolidated statements of income of the
Partnership and its Consolidated Subsidiaries for the quarterly
accounting period and for the fiscal year to date, setting forth in
each case in comparative form the figures for the corresponding
periods a year earlier, prepared and certified by the principal
financial officer of the Partnership as complete and correct, as
having been prepared in accordance with generally accepted accounting
principles consistently applied and as presenting fairly such
financial condition and results of operations, subject, in each case,
to changes resulting from year-end audit adjustments;
(c) promptly upon receipt thereof, two copies of each report
other than those referred to in paragraph (a) hereof (including,
without limitation, the auditors' comment letter to management)
submitted to JFC, the Partnership or any Subsidiary by independent
certified public accountants in connection with any annual, interim or
special audit;
(d) promptly upon distribution thereof, copies of all such
financial or other statements (including proxy statements) and reports
as JFC, the Partnership or any Subsidiary shall send to any class of
its partners or shareholders, as the case may be, its bank lenders or
holders of any issue of its debt securities;
(e) promptly after filing thereof, copies of all reports, proxy
statements and registration statements that JFC, the Partnership or
any Subsidiary shall file with any securities exchange or the SEC, or
any governmental or public authority or agency substituted therefor;
(f) promptly upon receipt thereof, copies of all notices
received from United States, Canadian, state, provincial or local
governmental or public authorities or agencies relating to any order,
ruling, statute, regulation or other law or directive that might
materially adversely affect the financial condition or business of the
Partnership or any Subsidiary;
(g) promptly after the institution of any suit, action or
proceeding against (or derivatively on behalf of) the Partnership or
any Subsidiary which involves a claim which (i) on its face seeks to
recover actual damages in excess of $500,000 or (ii) presents a
reasonable possibility of success by the claimant(s) of collecting an
amount (including damages, fees and expenses) in excess of $500,000, a
reasonably detailed written report thereof;
(h) promptly, and in any event within 30 days, after the end of
each month, an Officer's Certificate setting forth a Net Capital
computation for the Partnership (or, if the Partnership is operating
pursuant to paragraph (a)(1)(ii) of Rule 15c3-1, an Alternative Net
Capital computation) as at the end of such month, and certifying such
computation as true and correct; provided, however, that so long as
(i) the Partnership shall be required to submit a monthly report on
Part I, II or IIA of Form X-17A-5 (and accompanying information if
any) to the SEC pursuant to Rule 17a-5 of the General Rules and
Regulations of the SEC under the Securities Exchange Act and (ii) such
report shall provide the computation required by this paragraph (h),
the Partnership may submit such report (and accompanying information
if any), certified as set forth above;
(i) as soon as available, a copy of the annual audited report
filed by the Partnership pursuant to paragraph (d)(2) of Rule 17a-5 of
the General Rules and Regulations of the SEC under the Securities
Exchange Act, together with the supporting schedules filed with said
report pursuant to paragraph (d)(3) of said Rule; provided, however,
that should said Rule 17a-5 lapse or be repealed, in whole or in part,
the Partnership shall deliver such other information or reports as it
shall be required to file in its status as a broker or dealer of
securities with the SEC or any successor agency thereto;
(j) immediately upon any partner or officer of the Partnership
obtaining knowledge of any new designation of an Examining Authority,
an Officer's Certificate specifying such new Examining Authority;
(k) immediately upon any partner or officer of the Partnership
obtaining knowledge of any condition or event which constitutes or
which, after notice or lapse of time or both, would constitute an
Event of Acceleration or an Event of Default, an Officer's
Certificate, specifying the nature and period of existence thereof and
what action the Partnership has taken or is taking or proposes to take
with respect thereto;
(l) immediately upon becoming aware of the occurrence of any (i)
"reportable event," as such term is defined in Section 4043 of ERISA,
or (ii) "prohibited transaction," as such term is defined in Section
4975 of the Code and Section 406 of ERISA, in connection with any Plan
or any trust created thereunder, a written notice specifying the
nature thereof, what action the Partnership is taking or proposes to
take with respect thereto, and, when known, any action taken by the
Internal Revenue Service or the Labor Department with respect thereto;
(m) at the time of release thereof, copies of all press releases
of the Partnership or any Subsidiary concerning any event or condition
material to the business, prospects, earnings, properties or
condition, financial or other, of any of them;
(n) promptly after the execution thereof, a copy of each
amendment to the Partnership Agreement, other than an amendment made
solely to reflect additional capital contributions to the Partnership
by a Partner; and
(o) promptly upon request therefor, such other data, filings and
information as any holder may from time to time reasonably request.
13.2 Officer's Certificates. Each set of financial statements
delivered pursuant to paragraph (a) or (b) of Section 13.1 hereof
shall be accompanied by an Officer's Certificate stating that the
Person signing the Certificate has reviewed the terms of this
Agreement, that a review of the affairs and activities of the
Partnership and the Subsidiaries has been made under such Person's
supervision and that, in such Person's opinion and to the best of such
Person's knowledge and belief, the Partnership and the Subsidiaries
were not upon the date of such certificate or at any time during the
period covered by said financial statements or Officer's Certificate
in default under any of the provisions of this Agreement or the Notes,
as the case may be, and setting forth in reasonable detail the
calculations made as at the end of such period in determining
compliance with the provisions of Sections 12.13 through 12.21 hereof,
inclusive; provided, however, that, in the event that any such default
shall have occurred, such certificate shall so specify and shall state
whether such default has been cured or is continuing and, if
continuing, what steps the Partnership proposes to take to cure such
default and the time necessary so to cure such default. Each such
Officer's Certificate shall also specify, as applicable, either (i)
the percent of Partnership Capital invested in and guaranteeing the
obligation of a Subsidiary or Affiliate doing business in Canada or
(ii) the percent of the Partnership's total assets which were used in
its business in Canada as of the date of the balance sheet included in
the accompanying financial statements.
13.3 Accountants' Certificates. Each set of financial statements
delivered pursuant to paragraph (a) of Section 13.1 hereof shall be
accompanied by a report of the Independent Certified Public
Accountants who shall have certified or reported on such financial
statements, stating such accountants have read this Agreement insofar
as is necessary for such report and that in making the examination
necessary to express an opinion on such financial statements, such
accountants have obtained no knowledge of any condition or event
pertaining to accounting or financial matters, or to the financial
condition of the Partnership or any Subsidiary, as the case may be,
that then constitutes a default under any of the provisions of this
Agreement or the Notes, as the case may be, or, if any such condition
or event then exists specifying the nature and period of existence
thereof, and in any case also stating that they have examined the
Officer's Certificate delivered therewith pursuant to Section 13.2
hereof and confirming the correctness of the calculations set forth
therein.
13.4 Confidential Treatment, etc. You agree that you will use
your best efforts not to disclose without the prior consent of the
Partnership (other than to your directors, employees, auditors or
counsel or to another holder of the Notes) any information with
respect to the Partnership or any Subsidiary which is designated by
the Partnership to you in writing as confidential, provided that you
may disclose any such information (a) as has become generally
available to the public, (b) as may be required or appropriate in any
report, statement or testimony submitted to any municipal, state or
Federal regulatory body having or claiming to have jurisdiction over
you or to the National Association of Insurance Commissioners or
similar organizations or their successors or to any rating agency, (c)
as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation, (d) to the extent that
you believe it appropriate in order to protect your investment in the
Notes or in order to comply with any law, order, regulation or ruling
applicable to you, and (e) to the prospective transferee in connection
with any contemplated transfer of any of the Notes by you, and,
provided further, that the Partnership agrees that you will not be
liable to it or to any Subsidiary in the event that any such
information is disclosed.
13.5 Restricted Subsidiary Financials. If the Partnership shall
have one or more Restricted Subsidiaries, the financial statements
referred to in Sections 13.1(a) and (b) shall be furnished separately
for each such Restricted Subsidiary in addition to those for the
Partnership and its Consolidated Subsidiaries; provided, however,
consolidating financial statements which separately incorporate each
such Restricted Subsidiary may be provided in lieu of separate
financial statements therefor.
SECTION 14. ACCELERATION OF MATURITY.
14.1 Events of Acceleration; Acceleration of Notes. An Event of
Acceleration shall exist if any of the following occurs and is
continuing:
(a) the Partnership shall default in the payment of any
principal of any Note when the same becomes due and payable, whether
on a Scheduled Maturity Date, an Optional Prepayment Date or
otherwise; or
(b) the Partnership shall default in the payment of any interest
or premium on any Note when the same becomes due and payable, whether
on a Regular Interest Payment Date, an Optional Prepayment Date or
otherwise; or
(c) the Partnership or any Subsidiary shall default in the due
and punctual performance of or compliance with any covenant, condition
or agreement to be performed or observed by it under any provision of
Sections 12.7, 12.8, 12.10, 12.11, 12.12, 12.13, 12.15-12.21,
inclusive, or 14.6, or shall use the proceeds of the sales of the
Notes for a purpose other than as stated in Sections 1.3 hereof, and
any such failure or use shall continue unremedied for five (5) days
following the date on which such covenant, condition or agreement
shall have been required to be performed or observed, or such use of
proceeds shall have varied from that stated in Section 1.3 hereof; or
(d) the Partnership or any Subsidiary shall default in the due
and punctual performance of or compliance with any covenant, condition
or agreement to be performed or observed by it under any provision of
Sections 12.3-12.6, inclusive, 12.9 or 12.14 hereof, and any such
failure shall continue unremedied for 10 days following the date on
which such covenant, condition or agreement shall have been required
to be performed or observed; or
(e) the Partnership or any Subsidiary shall default in the due
and punctual performance of or compliance with any covenant, condition
or agreement to be performed or observed by it under any other
provision hereof, and any such failure shall continue unremedied for
30 days following the date on which such covenant, condition or
agreement shall have been required to be performed or observed; or
(f) any representation or warranty of the Partnership made in
this Agreement or in connection herewith or pursuant hereto shall have
been false or inaccurate in any material respect on the date as of
which made; or
(g) the Partnership, JFC, or any Subsidiary (i) shall fail to
make when due or payable any payment required to be made by it in
respect of (x) any Indebtedness for Money Borrowed (other than the
Notes) whether or not subject to a Subordination Agreement, or (y) any
Indebtedness other than Indebtedness for Money Borrowed, whether or
not subject to a Subordination Agreement, if such payment shall be
more than 60 days overdue or (ii) shall fail duly and punctually to
perform or observe any other covenant, condition, or agreement
contained in any evidence of Indebtedness, or any agreement securing
or relating to any Indebtedness, and the effect of such failure is (x)
to cause, or permit the holder of such Indebtedness or a trustee to
cause, such Indebtedness to become due prior to its scheduled maturity
or (y) to permit the holder of such Indebtedness or a trustee to elect
any Person to the Board of Directors of any Subsidiary; provided,
however, that any failure to make a payment that would otherwise be
within the terms of clause (i) of this paragraph (g) shall not (in
spite of the passage of the 60-day period applicable to subclause
(i)(y) hereof) become an Event of Acceleration pursuant to this
paragraph (g) so long as (A) the Partnership or any Subsidiary, as the
case may be, shall be contesting the requirement to make such payment,
in good faith and by appropriate proceedings diligently conducted, and
shall pay into escrow at the time such required payment becomes due
and payable a sum equal in amount to the required payment being
contested and (B) such failure to pay shall not constitute a default,
or constitute an event or condition that with notice or passage of
time or both could become a default, under any other agreement or
instrument to which the Partnership or any Subsidiary is subject, or
otherwise materially adversely affect any thereof; or
(h) a default shall occur under the provisions of any preferred
stock (or any agreement relating thereto) of any Subsidiary, and the
effect of the same shall be (i) to require, or permit the holders
thereof to require, the issuer thereof to redeem the same prior to any
mandatory redemption date or (ii) to permit the holders thereof to
elect any Person to the Board of Directors of such Subsidiary; or
(i) a final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate shall be rendered against the
Partnership and any Subsidiary (or any one or more of such Persons)
and shall remain in force undischarged and unstayed for a period of
more than the longer of (a) 60 days or (b) the shorter of (i) the
period provided for requesting a stay of such judgment or (ii) the
period provided for filing an appeal from such judgment, both as
established for the jurisdiction in which such judgment was rendered
and without regard for any extension or renewal periods applicable to
either thereof; or
(j) the Partnership or any Subsidiary shall commence a voluntary
case under any chapter of the Federal Bankruptcy Code, or shall
consent to (or fail to controvert in a timely manner) the commencement
of an involuntary case against the Partnership or any Subsidiary under
said Code; or
(k) the Partnership or any Subsidiary shall institute
proceedings for liquidation, rehabilitation, readjustment or
composition (or for any related or similar purpose) under any law
(other than the Federal Bankruptcy Code) relating to financially
distressed debtors, their creditors or property, or shall consent to
(or fail to controvert in a timely manner) the institution of any such
proceedings against the Partnership or any Subsidiary; or
(l) the Partnership or any Subsidiary shall be insolvent (within
the meaning of any applicable law), or shall be unable, or shall admit
in writing its inability, to pay its debts generally as they come due,
or shall make an assignment for the benefit of creditors or enter into
any arrangement for the adjustment or composition of debts or claims;
or
(m) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order (i) for the
appointment of a receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Partnership or any
Subsidiary or of any part of the property of such Person, or for the
winding-up or liquidation of the affairs of such Person, and such
decree or order shall remain in force undischarged and unstayed for a
period of more than 30 days, or (ii) for the sequestration or
attachment of any property of the Partnership or any Subsidiary
without its unconditional return to the possession of such Person, or
its unconditional release from such sequestration or attachment,
within 30 days thereafter; or
(n) a court having jurisdiction in the premises shall enter an
order for relief in an involuntary case commenced against the
Partnership or any Subsidiary under the Federal Bankruptcy Code, and
such order shall remain in force undischarged and unstayed for a
period of more than 30 days; or
(o) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order approving
or acknowledging as properly filed or commenced against the
Partnership or any Subsidiary a petition or proceedings for
liquidation pursuant to SIPA or otherwise, rehabilitation,
readjustment or composition (or for any related or similar purpose)
under any law (other than the Federal Bankruptcy Code) relating to
financially distressed debtors, their creditors or property, and any
such decree or order shall remain in force undischarged and unstayed
for a period of more than 30 days; or
(p) the Partnership or any Subsidiary shall take corporate
action for the purpose or with the effect of authorizing,
acknowledging or confirming the taking or existence of any action or
condition specified in paragraph (j), (k) or (1) above; or
(q) the Partnership shall fail to file any report or information
required pursuant to SIPA, or shall fail to pay when due all or any
part of an assessment made upon the Partnership pursuant to SIPA, and
such failure shall not have been cured, by the filing of such report
or information or by the making of such payment, together with
interest thereon, within five days after receipt by the Partnership,
of written notice of such failure given by or on behalf of SIPC
pursuant to Section 10(a) of SIPA; or
(r) the Partnership shall make any payment of principal,
premium, if any, or interest with respect to, or directly or
indirectly redeem, retire, purchase or otherwise acquire, (x) any
Subordinated Debt other than the Notes, without treating the Notes on
a pari passu basis or (y) any Limited Partnership Interest, General
Partner's Interest, or Junior Debt, at a time when, in either case,
either (i) the Partnership's obligation to make any payment of
principal or Permissive Prepayment shall be under suspension pursuant
to Section 8 or Section 9 hereof or (ii) any condition described in
any of clauses (i) through (vi) of either Section 8 or Section 9 would
exist, as a result of such payment or acquisition.
Upon the occurrence of any of the events or conditions set forth in
paragraph (a) or (b) of this Section 14.1, any holder of Notes at the
time outstanding may, in respect to the Notes then held by such
holder, at any time (unless all defaults shall theretofore have been
remedied) at its option, by written notice, delivered no sooner than
six (6) months after the Closing Date, to the Partnership and to the
Examining Authority, and upon the occurrence of any of the foregoing
events or conditions, any holder or holders of 51% in aggregate
principal amount of the Notes at the time outstanding may, in respect
to all the Notes, at any time (unless all defaults shall theretofore
have been remedied) at its or their option, by written notice or
notices, delivered no sooner than six (6) months after the Closing
Date, to the Partnership and to the Examining Authority, declare the
Notes held by such holder or all of the Notes, as the case may be, to
be due and payable, whereupon the same shall mature and become due and
payable on the last Business Day of a calendar month which is not less
than six (6) months after the receipt by the Partnership and the
Examining Authority of such notice or on such earlier day as may then
be permissible under rules or regulations of the self-regulatory or
governmental agencies or bodies having appropriate authority (the last
Business Day of such sixth calendar month after such declaration is
received or such earlier day being herein referred to as the
"Accelerated Maturity Date"), together with interest accrued thereon,
without presentment, demand, protest or notice, all of which are
hereby waived; provided that if on the Accelerated Maturity Date the
obligation of the Partnership to pay the principal amount of any Note
or any installment thereof is suspended by the provisions of Section 8
hereof and liquidation of the Partnership has not commenced on or
prior to the Accelerated Maturity Date, then notwithstanding the
provisions of Section 8 hereof, such Note, such obligations of the
Partnership to pay the principal amount of the Notes so declared due
and payable, and each installment thereof shall be due and payable,
together with interest accrued thereon, and shall mature on the day
after the Accelerated Maturity Date, as will each such installment in
respect of any other Indebtedness of the Partnership subject to
Subordination Agreements then outstanding, but the payment thereof
shall remain subordinate as provided in Section 7.1.
14.2 Events of Default; Acceleration of Notes. In addition to
the provisions of Section 14.1 and notwithstanding the provisions of
Section 8, if any of the following conditions or events ("Events of
Default") shall occur:
(a) the making of an application by SIPC for a decree
adjudicating that customers of the Partnership are in need of
protection under SIPA and the failure of the Partnership to obtain the
dismissal of such application within 30 days; or
(b) Aggregate Indebtedness of the Partnership shall exceed 1500%
of its Net Capital or, if the Partnership has elected to operate under
paragraph (a)(1)(ii) of Rule 15c3-1, its Net Capital computed in
accordance therewith shall be less than 2% of its aggregate debit
items computed in accordance with Exhibit A to Rule 15c3-3 or (if
registered as a futures commission merchant) its net capital (as
defined in the CEA or the regulations then existing thereunder) shall
be less than 4% of the funds required to be segregated pursuant to the
CEA and the regulations thereunder and the foreign futures or foreign
options secured amounts (less the market value of commodity options
purchased by option customers on or subject to the rules of a contract
market or a foreign Board of Trade, each such deduction not to exceed
the amount of funds in the option customer's account and the foreign
futures or foreign options secured amounts), if greater (or, in either
case, such greater or lesser percentage as may be made applicable to
the Partnership by the self-regulatory or governmental agencies or
bodies having appropriate authority), throughout a period of not less
than 15 consecutive business days, commencing on the date the
Partnership first determines and notifies the Examining Authority or
the Examining Authority or the SEC first determines and notifies the
Partnership of such fact; or
(c) the SEC shall revoke the broker-dealer registration of the
Partnership; or
(d) the Examining Authority shall suspend (and not reinstate
within 10 days) or revoke the Partnership's membership as a member of
the Examining Authority; or
(e) there shall be any receivership, insolvency, liquidation
pursuant to SIPA or otherwise, bankruptcy, assignment for the benefit
of creditors, reorganization whether or not pursuant to bankruptcy
laws, or any other marshalling of the assets and liabilities of the
Partnership;
the unpaid principal amount of the Notes shall forthwith mature,
together with interest accrued thereon, as will the unpaid principal
amount of and interest accrued upon, any other Indebtedness of the
Partnership subject to Subordination Agreements then outstanding; but
the payment thereof shall remain subordinate as set forth in
Section 7.1.
14.3 Agreements on Events of Acceleration. The Partnership and
you agree that the occurrence of any of the conditions or events
specified in Section 14.1 (a) would be a significant indication that
the financial position of the Partnership had changed materially and
adversely from the norm set forth in this Agreement or (b) could
materially and adversely affect the ability of the Partnership to
conduct its business as conducted on the date hereof or (c) would be a
significant change in the general business conducted by the
Partnership from that which exists on the date hereof. The
Partnership further agrees that, as to Indebtedness that is not
subject to a Subordination Agreement, $500,000 is a material amount of
aggregate Indebtedness of the Partnership or any Subsidiary to be in
default (in respect of any payment due in respect thereof). If it
shall be determined by the SEC or by any court of competent
jurisdiction that an Event of Acceleration as defined herein is not a
permissible Event of Acceleration under Appendix D to Rule 15c3-1 as
in effect on the date hereof, then such Event of Acceleration shall
not be an Event of Acceleration hereunder, and the rest of this
Agreement, including the remaining Events of Acceleration, shall not
be affected thereby.
If any of the conditions or events specified in Section 14.1
occurs and would constitute an Event of Default as well as an Event of
Acceleration, then such condition or event shall constitute an Event
of Default, unless the holders of at least 65% in aggregate principal
amount of the Notes then outstanding, by written notice to the
Company, choose otherwise.
14.4 Default Remedies. If an Event of Default or Event of
Acceleration shall occur and be continuing, the holder of any Note
then outstanding may exercise any right, power or remedy permitted to
it by law, either by suit in equity or by action at law, or both,
whether for specific performance of any covenant or agreement
contained in this Agreement or in such Note or in aid of the exercise
of any power granted in this Agreement or in such Note, or may proceed
to enforce payment of such Note or to enforce any other legal or
equitable right of the holder of such Note. No remedy herein
conferred upon any holder of a Note is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or
hereafter existing at law, in equity, by statute or otherwise. No
course of dealing on the part of any holder of any Note, or any delay
or failure on the part of any holder of any Note to exercise any right
or power, shall operate as a waiver of such right or power or
otherwise prejudice the rights, powers and remedies of such holder or
of any other holder. No failure to insist upon strict compliance with
any covenant, term, condition or other provision of this Agreement or
the Notes shall constitute a waiver by any holder of any of the Notes
of any such covenant, term, condition or other provision or of any
default or Event of Default or Event of Acceleration in connection
therewith. To the extent effective under applicable law, the
Partnership hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish, the benefit and advantage of any
valuation, stay, appraisement, extension or redemption laws now
existing or that may hereafter exist that, but for this provision,
might be applicable to any sale made under any judgment, order or
decree of any court, or otherwise, based on the Notes or on any claim
for interest on the Notes. If an Event of Default or Event of
Acceleration shall occur, the Partnership will pay to the holders of
the Notes, to the extent not prohibited by applicable law, such
further amount as shall be sufficient to cover the costs and expenses
of collection and of the taking of remedial actions and the
maintenance of enforcement proceedings, including, without limitation,
reasonable attorneys' fees and expenses.
14.5 No Counterclaim, Abatement, etc. Subject to the provisions
of Sections 7 and 8, all sums payable by the Partnership under the
Notes shall be paid without counterclaim, setoff, deduction or defense
and without abatement, suspension, deferment, diminution or reduction
and the obligations and liabilities of the Partnership under the Notes
shall in no way be released, discharged or otherwise affected for any
reason whatsoever.
14.6 Intentional Default. The Partnership shall not purposefully
commit a default in order to avoid the covenant against prepayment or
the covenant to pay a prepayment premium. The Partnership covenants to
the full extent that such a covenant is enforceable under applicable
law, that, if such a default shall occur, it shall (subject to the
provisions of Sections 14.1 and 14.2) forthwith upon demand pay to
each holder of a Note the principal thereof and accrued interest
thereon, together with a premium equal to the Make Whole Amount, if
any, calculated on the amount to be paid on the payment date but using
the Treasury Constant Yield as of the second Business Day immediately
preceding the payment date.
14.7 Annulment of Acceleration of Notes. If notice is given
pursuant to Section 14.1 hereof by any holder or holders of Notes, or
upon the happening of an Event of Default, then the holders of such
Notes as shall have delivered such notice, if less than all the Notes
have been declared due and payable, and in every other such case, the
holders of at least 65% in aggregate unpaid principal amount of the
Notes then outstanding may, by written instrument filed with the
Partnership, rescind and annul such declaration, and the consequences
thereof; provided, however, that at the time such declaration shall be
annulled and rescinded:
(a) no judgment or decree shall have been entered for payment of
any monies due pursuant to the Notes or this Agreement;
(b) all arrears of principal, premium and interest upon all the
Notes and all other sums payable under the Notes and this Agreement
(including costs and expenses of the holders incurred in connection
with such notice under Section 14.1 hereof or annulment under this
Section 14.7, but excluding any principal or interest on the Notes
that shall have become due and payable solely by reason of such notice
under Section 14.1 hereof or happening of such Event of Default) shall
have been duly paid; and
(c) each and every other default hereunder and Event of Default
and Event of Acceleration shall have been waived pursuant to
Section 17.4 hereof or cured; and, provided further, that no such
rescission and annulment shall extend to or affect any subsequent
default or Event of Default or Event of Acceleration or impair any
right or power consequent thereon.
SECTION 15. INTERPRETATION OF AGREEMENT, NOTES AND PARTNERSHIP
NOTES.
15.1 Definitions. As used in this Agreement (including Schedules
and Exhibits), except as the context shall otherwise require, the
following terms have the respective meanings set forth below or in the
Section indicated (the definitions to be applicable to both the
singular and the plural forms of the terms defined, where either such
form is used in this Agreement):
Accelerated Maturity Date -- Section 14.1.
Additional Subordinated Debt -- all Subordinated Debt of the
Partnership other than the Notes, the 1986 Notes, the 1988 Notes and
the 1992 Notes, but not including any Junior Debt.
Affiliate -- when used in relation to a particular Person, means
any other Person (a) which directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with such particular Person, (b) which beneficially owns or
holds of record 5% or more of the shares of any class of Voting Stock
or preferred stock of such particular Person, or (c) 5% or more of the
shares of any class of Voting Stock or preferred stock of which is
beneficially owned or held of record by such particular Person. The
term "control" means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or
otherwise. Any general partner of a Person possesses control thereof
for purposes of this Agreement.
Aggregate Indebtedness -- the meaning specified in paragraph (c)
of Rule 15c3-l, as the same is computed from time to time with respect
to any Person in accordance with such Rule.
Agreement -- this Note Purchase Agreement (including the annexed
Exhibits and Schedules), as it may from time to time be amended,
supplemented or modified, in accordance with its terms.
Alternative Net Capital Requirement -- the requirement relating
to the maintenance of Net Capital set forth in paragraph (a)(1)(ii) of
Rule 15c3-1.
Business Association -- Section 2.11.
Business Day -- any day other than a Saturday, Sunday or a day on
which banks are permitted to close in New York, New York.
Capital Lease -- any lease of property which, in accordance with
generally accepted accounting principles, would be required to be
capitalized on a balance sheet of the lessee.
CEA -- the Commodity Exchange Act, as amended.
CFTC -- the Commodity Futures Trading Commission or any
successor.
Closing Date -- Section 1.2.
Code -- the Internal Revenue Code of 1986, as amended.
Collateral -- the collateral securing a Secured Demand Note in
accordance with Appendix D to Rule 15c3-1.
Consolidated Subsidiary -- any Subsidiary of the Partnership
whose financial statements are prepared on a consolidated basis with
those of the Partnership in accordance with generally accepted
accounting principles.
Credit Balance -- the meaning set forth in Regulation T (12
C.F.R. 220.2(a)) of the Board of Governors of the Federal Reserve
System, as in effect on the date hereof.
Day Loan - - the meaning customary in the investment brokerage
business, that is, a bank's extension of short term credit in support
of a securities underwriter's payment to an issuer of securities of
the purchase price of such securities in advance of the receipt by
said underwriter of payments due it from other members of the
syndicate underwriting the issuer of such securities or from its
customers.
DSRO -- the designated self-regulatory organization (as defined
in Section 1.3(ff) of the regulations of the CFTC (17 C.F.R. 1.3(ff))
under the CEA) of the Partnership.
ERISA -- the Employee Retirement Income Security Act of 1974, as
amended.
Event of Acceleration -- Section 14.1.
Event of Default -- Section 14.2.
Examining Authority -- the Examining Authority (as defined in
Rule 15c3-1) of the Partnership.
Exchange -- the New York Stock Exchange, Inc.
Federal Bankruptcy Code -- the Federal Bankruptcy Code, 11 U.S.C.
S101 et seq., as amended.
Form lO-K -- Section 2.5.
General Partner -- Section 2.1.
General Partner's Interest -- an interest of the general partner
of the Partnership, as such, in the Partnership, which ranks junior
and subordinate in right of payment and upon liquidation to all
Limited Partnership Interests, all Junior Limited Partnership
Interests and all Subordinated Debt of the Partnership (including,
without limitation, the Notes).
guaranty -- with respect to any Person, means, at any date, all
obligations of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend, lease or other obligation or investment of any
other Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, obligations incurred
through an agreement, contingent or otherwise, by such Person (a) to
purchase such Indebtedness, dividend, lease, obligation or investment
or any property or assets constituting security therefor, (b) to
advance or supply funds (i) for the purchase or payment of such
Indebtedness, dividend, lease, obligation or investment or (ii) to
maintain working capital or equity capital or any other balance sheet
condition, or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness, dividend, lease, obligation
or investment, (c) to lease or purchase property, securities or
services primarily for the purpose of assuring the owner of such
Indebtedness, dividend, lease, obligation or investment of the ability
of the primary obligor to make payment of such Indebtedness, dividend,
lease, obligation or investment or (d) otherwise to assure the owner
of such Indebtedness, dividend, lease, obligation or investment
against loss in respect thereof.
holder -- with respect to any Note shall mean the Person in whose
name such Note is registered.
Indebtedness -- with respect to any Person, means all items
(other than capital stock or partners' capital (including Limited
Partnership Interests), surplus and retained earnings) which, in
accordance with generally accepted accounting principles, would be
shown on the liability side of a balance sheet of such Person as of
the date on which Indebtedness is to be determined. The term
"Indebtedness" shall also include, whether or not so shown, (a) debt,
obligations and liabilities secured by any Lien existing on property
owned or held by such Person, whether or not the debt, obligations or
liabilities secured thereby shall have been assumed; (b) obligations
of such Person under any Capital Lease; (c) all guaranties by such
Person; (d) all indebtedness endorsed (otherwise than for collection
or deposit in the ordinary course of business) or discounted with
recourse by such Person; (e) debt, obligations and liabilities of such
Person representing all or part of the deferred purchase price of any
assets; and (f) all obligations of such Person to purchase any
materials, supplies or other property, or to obtain the services of
any other Person, if the relevant contract or other related document
requires that payment for such materials, supplies or other property,
or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered or
such services are ever performed or tendered.
Indebtedness for Money Borrowed -- with respect to any Person,
means all Indebtedness of such Person (whether arising from a guaranty
by such person or otherwise) (a) in respect of money borrowed or
evidenced by a promissory note, debenture or other like written
obligation to pay money, (b) in respect of obligations under any
Capital Lease, (c) representing all or part of the deferred purchase
price of any assets acquired by such Person, or (d) in respect of
obligations to purchase any materials, supplies or other property, or
to obtain the services of any other Person, if the relevant contract
or other related document requires that payment for such materials,
supplies or other property, or for such services, shall be made
regardless of whether delivery of such materials, supplies or other
property is ever made or tendered or such services are ever performed
or tendered.
Independent Certified Public Accountant -- any one of the
following or any successor thereto: Arthur Andersen & Co., Coopers &
Lybrand, Ernst & Young, Deloitte & Touche, KPMG Peat Marwick, and
Price Waterhouse, or any other independent certified public
accountants as shall be approved in writing by the holders of more
than 65% in aggregate principal amount of the Notes then outstanding
Institutional Investor -- any one or more of the following
Persons: (a) any bank, savings institution, trust company or national
banking association, acting for its own account or in a fiduciary
capacity, (b) any charitable foundation, (c) any insurance company or
fraternal benefit association, (d) any pension, retirement or profit-
sharing trust or fund, (e) any investment company, (f) any college or
university, (g) any government, any public employees' pension or
retirement system or any other governmental agency supervising the
investment of public funds or (h) any finance or leasing company
Investment Company Act -- the Investment Company Act of 1940, as
amended.
JFC -- Section 2.1.
Junior Debt -- all Indebtedness of the Partnership that is
subject to a satisfactory subordination agreement for purposes of Rule
15c3-l, and which (i) by the express terms of the instrument creating
or evidencing such indebtedness is subordinated, in right of payment
and upon liquidation, to the Notes at least to the same extent and in
the same manner as the Notes are subordinated to the Senior Claims of
present and future creditors of the Partnership, (ii) matures not
earlier than the final maturity of the Notes, and (iii) has a Weighted
Average Life to Maturity at the time of the issuance thereof which is
more than the Weighted Average Life to Maturity of the Notes at such
time.
Lien -- any interest in property securing an obligation owed to,
or a claim by, any Person other than the owner of the property,
whether such interest shall be based on the common law, statute or
contract, and including the lien or security interest arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt, or
from a lease, consignment or bailment for security purposes. The term
"Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting property. For
the purposes of this Agreement, a Person shall be deemed to be the
owner of any property that such Person shall have acquired or shall
hold subject to a conditional sale agreement or other arrangement
(including a leasing arrangement) pursuant to which title to the
property shall have been retained by or vested in some other Person
for security purposes.
Limited Partnership Interest -- a limited partnership interest in
the Partnership which ranks junior and subordinate, in right of
payment and upon liquidation, to all Subordinated Debt of the
Partnership (including, without limitation, the Notes). On the date
hereof, the only Limited Partnership Interest is the limited
partnership interest of JFC in the Partnership.
Long Term Leases -- at any time, any lease (other than a Capital
Lease) of property having a fixed term (including all extensions and
renewal terms which are at the option of the lessee, whether or not
exercised) expiring more than three years after the date of
determination.
Make Whole Amount -- with respect to optional prepayments of the
Notes pursuant to Section 10.2 or 12.20, or any payment pursuant to
Section 14.6, the excess of (1) the present value of all scheduled
payments of principal and interest (excluding the amount of interest
accrued and unpaid to the date of prepayment or payment) in respect of
the Notes (or portions thereof being prepaid) which, but for such
optional prepayment or required repayment, would be required to be
made following the date of the proposed prepayment, determined by
discounting (on a semi-annual basis), at a rate which is equal to the
Treasury Constant Yield at such time plus 0.50%, the amount of each
such payment (or portion thereof) from the date such payment would be
required to be made to the prepayment date over (2) 100% of the
outstanding principal amount so prepaid. If the amount designated in
clause
(1) above is equal to or less than the amount specified in clause (2)
above, then the Make Whole Amount shall be zero.
NASD -- the National Association of Securities Dealers, Inc.
Net Capital -- the meaning specified in paragraph (c) of Rule
15c3-1, as the same is computed from time to time with respect to any
Person in accordance with such Rule.
Net Earnings -- for any period, means the consolidated net income
(or loss) of the Partnership and Consolidated Subsidiaries for the
period in question (taken as a cumulative whole) after deducting all
operating expenses, provisions for all taxes and reserves (including
reserves for deferred income taxes) payable by the Partnership (but
not deducting for taxes payable by individual partners on income of
the Partnership) and all other proper deductions, all determined in
accordance with generally accepted accounting principles; provided,
however, that there shall be excluded (a) the income (or loss) of any
Person accrued prior to the date it became a Consolidated Subsidiary
or was merged into or consolidated with the Partnership or a
Consolidated Subsidiary, (b) the income (or loss) of any Person (other
than a Consolidated Subsidiary) in which the Partnership or any
Consolidated Subsidiary has an ownership interest, except to the
extent that any such income has been actually received by the
Partnership or such Consolidated Subsidiary in the form of cash
dividends or similar cash distributions, (c) the income (or loss) of
any Consolidated Subsidiary which is not a domestic Subsidiary, except
to the extent that any such income has been actually received by the
Partnership or a domestic Consolidated Subsidiary in the form of cash
dividends or similar cash distributions, (d) all extraordinary or non-
recurring gains (but not losses) and all other items properly
classified as extraordinary in accordance with generally accepted
accounting principles, and (e) earnings resulting from any
reappraisal, revaluation or write-up of assets, or resulting from the
reversal of reserves (except to the extent that provision for such
reserves is made during such period and to the extent that reversal of
such reserves is made during such period because the liabilities for
which such reserves were provided were paid during such period).
1986 Agreements -- the Note Purchase Agreements, as amended,
pursuant to which the 1986 Notes were issued.
1988 Agreements -- the Note Purchase Agreements, as amended,
pursuant to which the 1988 Notes were issued.
1992 Agreements -- the Note Agreements, as amended, pursuant to
which the 1992 Notes were issued.
1986 Guarantees -- the guarantees by the Partnership of the 1986
Notes issued by Tempus Corporation.
1988 Guarantees -- the guarantees by the Partnership of the 1988
Notes issued by Tempus Corporation.
1986 Notes -- the 9.375% capital notes due 1996 issued by the
Partnership in the aggregate principal amount of $20,000,000 and the
counterpart 9.375% secured guaranteed notes due 1996 issued by Tempus
Corporation.
1988 Notes -- the 10.60% capital notes due 1997 issued by the
Partnership in the aggregate principal amount of $28,000,000 and the
counterpart 10.60% secured guaranteed notes due 1997 issued by Tempus
Corporation.
1992 Notes -- the 8.96% capital notes due 2002 issued by the
Partnership in the aggregate principal amount of $30,000,000.
Notes -- Section 1.1.
Offering Memorandum -- Section 2.5.
Officer's Certificate -- a certificate executed on behalf of the
Partnership by the General Partner and on behalf of the General
Partner by any duly authorized officer or attorney- in-fact of it who
shall be serving in the capacity of chief executive officer or chief
financial officer of the Partnership.
Optional Prepayment Date -- Section 10.3.
Other Note Agreements -- Section 3.1.
Other Purchasers -- Section 3.1.
Outstanding -- when used with respect to the Notes, shall mean,
as of the date of determination, all Notes theretofore issued, except
(a) Notes theretofore cancelled or delivered for cancellation,
and
(b) Notes in exchange or replacement for which other Notes have
been delivered pursuant to this Agreement;
provided, however, that, in determining whether the holders of the
requisite aggregate unpaid principal amount of Notes outstanding have
given any notice or taken any action hereunder, Notes held or owned,
directly or indirectly, by the Partnership, any Subsidiary or any
Affiliate of the Partnership shall be disregarded and deemed not to be
outstanding.
Partners -- Section 2.1.
Partnership -- the meaning set forth in the introductory
paragraph of this Agreement.
Partnership Agreement -- the Fifth Amended and Restated Agreement
of Limited Partnership of Edward D. Jones & Co., L.P. dated April 28,
1994 by and between the General Partner and JFC, establishing the
Partnership as a limited partnership under the Missouri Partnership
Act, as in effect on the date of this Agreement.
Partnership Capital -- as of the date of determination thereof,
means the amount at which Limited Partnership Interests and General
Partners' Interest would be shown on a statement of financial
condition of the Partnership at such date.
Partnership Financial Statements -- Section 2.5.
Partnership Revenues -- for any period, means the consolidated
gross income of the Partnership and Consolidated Subsidiaries for such
period without any deductions of operating expenses or other proper
deductions from gross income necessary to determine Net Earnings;
provided, however, that there shall be excluded (a) the gross income
of any Person accrued prior to the date it became a Consolidated
Subsidiary or was merged into or consolidated with the Partnership or
a Consolidated Subsidiary, (b) the gross income of any Person (other
than a Consolidated Subsidiary) in which the Partnership or any
Consolidated Subsidiary has an ownership interest, except to the
extent that any such income has been actually received by the
Partnership or such Consolidated Subsidiary in the form of dividends
or similar distributions, and (c) the gross income of any Consolidated
Subsidiary which is not a domestic Subsidiary, except to the extent
that any such income has been actually received by the Partnership or
a domestic Consolidated Subsidiary in the form of cash dividends or
similar cash distributions.
Permissive Prepayment -- Section 9.
Permitted Lien -- any Lien permitted by Section 12.6.
Person -- any individual, corporation, partnership, joint
venture, association, joint stock company, trust, estate,
unincorporated organization or government (or any agency or political
subdivision thereof).
Plans -- Section 2.14.
Principal Financial Officer -- at the time of determination,
means the individual then (i) so designated in the supervisory manual
required to be maintained by the Partnership by the SEC (or any
Business Association to which appropriate authority has been
delegated), and (ii) authorized, and charged with the duty, to sign in
said capacity all reports of the Partnership to the SEC on Form X-17A-
5, or any successor form.
Regular Interest Payment Date -- Section 1.1.
Restricted Distribution -- any payment or the incurrence of any
liability to make any payment, in cash, property or other assets
(other than any partnership interest in the Partnership), upon or in
respect of or as a return on or of any partnership interest in the
Partnership, including, without limiting the generality of the
foregoing, payments as distributions of earnings or capital, payments
in the nature of bonuses or incentives and payments for the purpose of
purchasing, retiring or redeeming any such partnership interests (or
any options or other securities or interests evidencing a right to
purchase any such partnership interests) or making any other
distribution in respect of any such partnership interests (or any
options or other securities or interests evidencing a right to
purchase any such partnership interests) excluding, however, any
payment on account of the purchase or other acquisition by the
Partnership of any partnership interest in the Partnership in
connection with the withdrawal, in accordance with the Partnership
Agreement, of a partner as a partner in the Partnership, if such
payment is made entirely out of the net cash proceeds received by the
Partnership from a substantially concurrent capital contribution to
the Partnership from one or more of the remaining partners in the
Partnership.
Restricted Investments -- any security (as defined in the
Securities Act) or other investment, direct or indirect, in any
corporation, partnership or other entity, other than a Subsidiary,
which the Partnership or a Consolidated Subsidiary owns or has
obligated itself to acquire other than:
(i) any security (x) held for sale by the Partnership, (y) held
in a firm securities trading account (as such term is used in the
instructions of the SEC applicable to completion of the Statement of
Income (Loss) contained in Part II of Form X-17A-5, as presently in
effect, of the SEC) and (z) that is reported as held in such account
on each report of the Partnership made to the SEC on Form X-17A-5
during the period in which this paragraph (i) otherwise would be
applicable to such security;
(ii) investments by the Partnership or a wholly owned
Consolidated Subsidiary in the capital stock or securities of a
Subsidiary, provided that such investment shall not result in the
involvement of the Partnership or any Subsidiary in any activity or
enterprise not customarily engaged in by corporations or partnerships
in the retail investment brokerage business;
(iii) any nonconvertible Indebtedness which, at the time of
determination, is rated by at least one nationally recognized
statistical rating organization (as that term is defined in paragraph
(c)(2)(vi)(F) of Rule 15c3-1) in one of its three highest generic
rating categories (i.e., a generic rating category comparable to A or
higher for corporate bonds rated by Moody's Investors Service, Inc. at
the date of this Agreement);
(iv) readily marketable obligations of, or obligations fully and
unconditionally guaranteed by, the United States of America and having
a stated maturity not more than one year from the date of acquisition
thereof;
(v) repurchase agreements of a bank or trust company
incorporated under the laws of the United States of America. or a
state thereof with combined capital, surplus and undivided profits of
at least $100,000,000 or Mercantile Trust Co., N.A. or The Boatmen's
National Bank of St. Louis, Missouri with a term of not more than
seven days from the date of acquisition thereof; or
(vi) readily marketable obligations issued or guaranteed by the
United States of America or any agency or instrumentality thereof in
an aggregate principal amount not in excess of $141,000,000; provided,
however, that none of such obligations will have a stated maturity
later than April 15, 2006, that no more than $92,000,000 of such
obligations will have a stated maturity later than May 1, 2002, that
no more than $122,000,000 of such obligations will have a stated
maturity later than March 15, 1997, and that no more than $136,000,000
of such obligations will have a stated maturity later than April 1,
1996; and provided further, that such obligations are purchased in
connection with a bona fide program to hedge, in whole or in part, the
Partnership's obligations in respect of the Notes, the 1986 Notes, the
1988 Notes and the 1992 Notes issued by the Partnership, the 1986
Guarantees and the 1988 Guarantees and are in amounts and of
maturities not in excess of those necessary to anticipate the
Partnership's prepayment obligations under Section 10.1 of this
Agreement, the 1986 Agreements, the 1988 Agreements and the 1992
Agreements and any remaining amount to be paid in respect of the
Notes, the 1986 Notes, the 1988 Notes and the 1992 Notes issued by the
Partnership, the 1986 Guarantees and the 1988 Guarantees upon the
maturity of the Notes or the 1986 Notes or the 1988 Notes or the 1992
Notes; and, provided further, that the sale by the Partnership at any
time of any obligations purchased pursuant to this clause (vi) shall
not be deemed to create any implication that the purchase of such
obligations was not in connection with a bona fide hedging program.
Restricted Subsidiary -- any Subsidiary:
(a) the assets of which exceeded 10% of the consolidated assets
of the Partnership and Consolidated Subsidiaries as shown on the
Partnership's consolidated balance sheet or statement of financial
condition as at the end of its last preceding fiscal quarter; or
(b) the net earnings of which exceeded 10% of the total Net
Earnings of the Partnership and Consolidated Subsidiaries as shown on
the consolidated income statement for the last preceding fiscal
quarter of the Partnership; or
(c) the gross revenues of which exceeded 10% of Partnership
Revenues as shown on the consolidated income statement for the last
preceding fiscal quarter of the Partnership.
Rule 15c3-1 -- Rule 15c3-1, including the appendices thereto, of
the General Rules and Regulations under the Securities Exchange Act,
as in effect from time to time or any successor regulation.
Scheduled Maturity Date -- a date on which a prepayment must be
made in accordance with Section 10.1, or the date on which the Notes
mature according to their terms.
SEC -- Section 2.5.
SEC Reports -- Section 2.5.
Secured Demand Note -- a promissory note issued pursuant to a
"secured demand note agreement," as defined in Appendix D to Rule
15c3-l.
Securities Act -- the Securities Act of 1933, as amended.
Securities Exchange Act -- the Securities Exchange Act of 1934,
as amended.
Security -- shall have the same meaning as in Section 2(1) of the
Securities Act.
Senior Claim -- any claim against the Partnership except (i) a
claim which arises from a Subordination Agreement which ranks on a
parity with the claims of a holder of the Notes or (ii) Limited
Partnership Interests, General Partners' Interests and Junior Debt.
SIPA -- the Securities Investor Protection Act of 1970, as
amended.
SIPC -- the Securities Investor Protection Corporation.
State Securities Commission -- any governmental Authority of any
State of the United States which administers the "blue sky" laws of
such state or regulates brokers or dealers as such.
Street Loans -- any loan to, and in the normal course of business
of, a securities broker-dealer, secured by customer securities,
underwritings and trading positions of said broker- dealer.
Subordinated Debt -- Indebtedness of the Partnership subject to a
Subordination Agreement and otherwise ranking in priority in all
respects, including, without limitation, as to payment and upon
liquidation, pari passu with the Notes pursuant to the terms of this
Agreement. The Notes, the 1986 Notes, the 1988 Notes and the 1992
Notes shall be included in Subordinated Debt.
Subordination Agreement -- a "satisfactory subordination
agreement," as defined in Appendix D to Rule 15c3-1
Subsidiary -- (i) any corporation, partnership, association or
other business entity at least 50% of the outstanding shares of Voting
Stock or similar interests of which are owned, directly or indirectly,
by the Partnership and its Subsidiaries, (ii) any general or limited
partnership of which the Partnership or a Subsidiary shall be a
general partner or as to which such Person otherwise shall have
unlimited liability, or (iii) any general or limited partnership a
general partner of which can be changed or removed by the Partnership
or a Subsidiary (other than removals that could be accomplished by
voluntary withdrawal of such general partner only).
Total Capitalization -- at any date, means the amount at which:
General Partners' Interests, Limited Partnership Interests, Junior
Debt and Subordinated Debt (including the Notes) would be shown on a
consolidated balance sheet or statement of financial condition of the
Partnership and its Consolidated Subsidiaries at such date.
Treasury Constant Yield -- means, at any time with respect to any
optional prepayment of the Notes pursuant to Section 10.2 or
Section 12.20, or any payment pursuant to 14.6, the yield to maturity
at such time of actively traded "On-the Run" United States Treasury
obligations with a remaining life to maturity (as reported by the
Telerate Access Services, page 8003, provided by Telerate Systems
Incorporated, or if such data ceases to be available, such reasonably
comparable source for such data or similar data as may be designated
for such period by the holder or holders of a majority in aggregate
unpaid principal amount of the Notes then outstanding) most nearly
equal to the Weighted Average Life to Maturity of the Notes (or
portions thereof) to be prepaid at the time. If there are United
States Treasury obligations listed in such publication with a
remaining life to maturity equal to the Weighted Average Life to
Maturity of the Notes (or portions thereof) then the yield on such
Treasury obligations shall be the Treasury Constant Yield. If no such
Treasury obligation exists, then the Treasury obligation with the
remaining life to maturity closest to and greater than the Weighted
Average Life to Maturity of the Notes (or portions thereof) to be
prepaid shall be used, along with the Treasury obligation with a
remaining life to maturity closest to and less than the Weighted
Average Life to Maturity of the Notes (or portions thereof) in order
to calculate the Treasury Constant Yield. In this event these two
Treasury obligations will be examined together and the Treasury
Constant Yield will be calculated through interpolation of the yields
on such Treasury obligations.
Unsecured Bank Overdrafts -- those certain reclassifications
required under rules and regulations of the SEC, and by generally
accepted accounting principles, classifying as bank loans temporary
accounting overdrafts which are reflected on the books of the
Partnership only and which result from the release by the Partnership
of checks in advance of the deposit by it of funds to its bank account
or accounts (and excluding, without limitation, any overdrafts of the
Partnership reflected on the books of any bank or other financial
institution, including any such overdrafts resulting from insufficient
funds checks).
Voting Stock -- the stock of a corporation the holders of which
are ordinarily, in the absence of contingencies, entitled to elect
members of the Board of Directors (or other governing body) of such
corporation.
Weighted Average Life to Maturity -- of the Notes or any other
Indebtedness or any portion thereof at the time of the determination
thereof, shall mean the number of years obtained by dividing the then
Remaining Dollar-years of such Notes or other Indebtedness or portion
thereof by the then outstanding principal amount of such Notes or
other Indebtedness or portion thereof. The term "Remaining Dollar-
years" of any indebtedness for borrowed money means the amount
obtained by (1) multiplying (A) the amount of each then remaining
required repayment or redemption (including repayment at final
maturity) by (B) the number of years (calculated at the nearest one-
twelfth) which will elapse between the date as of which the
calculation is made and the date such required repayment is due and
(2) totaling all the products obtained in (1).
15.2 Directly or Indirectly. Any provision in this Agreement
referring to action to be taken by any Person, or that such Person is
prohibited from taking, shall be applicable whether such action is
taken directly or indirectly by such Person.
15.3 Accounting Principles. The character or amount of any asset
or liability or item of income or expense required to be determined
under this Agreement and each consolidation or other accounting
computation required to be made under this Agreement, shall be
determined or made in accordance with generally accepted accounting
principles at the time in effect in the United States, to the extent
applicable, except where such principles are inconsistent with the
requirements of this Agreement.
15.4 Governing Law. This Agreement and the Notes delivered
pursuant hereto shall be governed by and construed in accordance with
the law of the State of Connecticut.
15.5 Headings. The headings of the Sections and other
subdivisions of this Agreement have been inserted for convenience of
reference only, and shall not be deemed to constitute a part hereof.
15.6 Independence of Covenants. Each covenant made by the
Partnership herein is independent of each other covenant so made. The
fact that the operation of any such covenant permits a particular
action to be taken or condition to exist does not mean that such
action or condition is not prohibited, restricted or conditioned by
the operation of the provisions of any other covenant herein.
SECTION 16. NON-LIABILITY OF EXCHANGE.
You agree that the loan evidenced by the Notes is not being made
in reliance upon the standing of the Partnership as a member
organization of the Exchange or upon the Exchange's surveillance of
the Partnership's financial position or its compliance with the
Constitution, Rules and practices of the Exchange. You have made such
investigation of the Partnership and its partners, officers and
directors as you deem necessary and appropriate under the
circumstances. You are not relying upon the Exchange to provide any
information concerning or relating to the Partnership and agree that
the Exchange has no responsibility to disclose to you any information
concerning or relating to the Partnership which it may now, or at any
future time, have. You agree that neither the Exchange, its Special
Trust Fund, nor any director, officer, trustee or employee of the
Exchange or said Trust Fund shall be liable to you with respect to
this Agreement or the Notes or the repayment of the loan evidenced
thereby. The agreements and provisions contained in this Section 16
are made solely for the benefit of the Exchange, its Special Trust
Fund and the directors, officers, trustees and employees of the
Exchange and said Trust Fund, and shall not be deemed to limit or
affect, insofar as any liability of or remedy against the Partnership
is concerned, any representation or warranty of the Partnership
contained in this Agreement or made in writing by or on behalf of the
Partnership in connection with the transactions contemplated hereby,
or any other provision hereof.
SECTION 17. MISCELLANEOUS.
17.1 Notices.
(a) All communications under this Agreement or the Notes shall
be in writing and shall be mailed by certified mail, postage prepaid,
or transmitted by telecopy, with phone confirmation of receipt, (i) if
to you, to you at the address specified for you in Schedule I, marked
for attention as there indicated, or at such other address as you may
have furnished to the Partnership in writing, (ii) if to any other
holder of a Note, to it at its address listed in the books for the
registration, and registration of transfer, of Notes required to be
maintained by the Partnership pursuant to Section 12.1 hereof, or at
such other address as such holder shall have furnished to the
Partnership in writing, (iii) if to the Partnership, to it at its
address shown at the head of this Agreement, or at such other address
as it shall have furnished in writing to you and all other holders of
the Notes at the time outstanding and (iv) if to the Exchange, at 20
Broad Street, N.Y., N.Y. 10005, Attention: Department of Member Firm
Regulation.
(b) Any written communication so addressed and mailed by
certified mail, return receipt requested, shall be deemed to have been
given when so mailed. All other written communications shall be
deemed to have been given upon receipt thereof.
17.2 Survival. All representations, warranties and covenants
made by the Partnership herein or by the Partnership or any Affiliate
in any certificate or other instrument delivered under or in
connection with this Agreement shall be considered to have been relied
upon by you and shall survive the delivery to you of the Notes
regardless of any investigation made by you or on your behalf. All
statements in any such certificate or other instrument shall
constitute representations and warranties of the Partnership
hereunder.
17.3 Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns,
and shall inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns permitted
hereunder; provided, however, that you shall not have any obligation
to purchase Notes of any Person other than the Partnership. Whether
or not expressly so stated therein, the provisions of this Agreement
are intended to be for your benefit and for the benefit of all holders
from time to time of the Notes, and shall be enforceable by you and
any other such holder whether or not an express assignment to such
holder of rights under this Agreement shall have been made by you or
your successors or assigns; and, provided further, that the provisions
of Sections 5 and 6.2, 12.1 and 12.11 hereof shall also be for the
benefit of, and shall be enforceable by, any Person who shall no
longer be a holder of any Note but who shall have incurred any expense
or been subjected to any liability referred to therein while, or on
the basis of being, such a holder.
17.4 Amendment and Waiver. (a) This Agreement and the Notes may
be amended or supplemented, and the observance of any term hereof or
thereof may be waived, with (and only with) the prior written consent
of the Examining Authority (in the case of an amendment), the written
consent of the Partnership, and (a) on or prior to the Closing Date,
you and the Other Purchasers, and (b) after the Closing Date, the
holders of at least 60% in aggregate unpaid principal amount of the
Notes then outstanding; provided, however, that no such amendment,
supplement or waiver shall, without the written consent of the holders
of all the Notes then outstanding, (i) change, with respect to the
Notes, the amount or time of any required prepayment or payment of
principal or premium or the rate or time of payment of interest, or
change the funds in which any prepayment or payment on the Notes is
required to be made; (ii) amend or supplement, or waive any default
arising by reason of the failure of the Partnership to comply with,
Sections 14.1 through 14.5 hereof (except an amendment of
Sections 14.1 or 14.2 hereof for the purpose of adding additional
Events of Acceleration or Events of Default); (iii) amend or
supplement, or waive any default arising by reason of the failure of
the Partnership to comply with, this Section 17.4; or (iv) modify or
otherwise affect the definitions of Limited Partnership Interests,
General Partner's Interest or Junior Debt or the provisions of Section
7 hereof. Any amendment or waiver effected in accordance with this
Section 17.4 shall be binding upon each holder of any Note at the time
outstanding, each future holder of any Note and the Partnership.
(b) The preceding paragraph (a) notwithstanding, this Agreement
shall not be subject to cancellation and the Indebtedness evidenced by
the Notes shall not be repaid and this Agreement shall not be
terminated, rescinded or modified by mutual consent or otherwise if
the effect thereof would be to make this Agreement inconsistent with
the conditions of Rule 15c3-1.
17.5 Futures Commission Merchants; Set-Off. (a) If the
Partnership is a futures commission merchant, as that term is defined
in the CEA, the Partnership agrees, consistent with the requirements
of Section 1.17(h) of the regulations of the CFTC (17 C.F.R. 1.17(h)),
that:
(i) whenever prior written notice by the Partnership to the
Exchange is required pursuant to the provisions of this Agreement, the
same prior written notice shall be given by the Partnership to (A) the
CFTC at its principal office in Washington, D.C., Attention Chief
Accountant of Division of Trading and Markets, and/or (B) the
commodity exchange of which the Partnership is a member and which is
then designated by the CFTC as the Partnership's DSRO, and
(ii) whenever prior written consent, permission or approval of
the Exchange is required pursuant to the provisions of this Agreement,
the Partnership shall also obtain the prior written consent,
permission or approval of the CFTC and/or of the DSRO, and
(iii) whenever the Partnership receives written notice of
acceleration of maturity of the Notes pursuant to the provisions of
this Agreement, the Partnership shall promptly give written notice
thereof to the CFTC at the address above stated and/or to the DSRO.
(b) You agree that you are not taking and will not take or
assert as security for the payment of the Notes any security interest
in or lien upon, whether created by contract, statute or otherwise,
any property of the Partnership or any property in which the
Partnership may have an interest (other than the Notes), which is or
at any time may be in possession or subject to your control. You
hereby waive, and further agree that you will not seek to obtain
payment of the Notes in whole or in any part by exercising, any right
of set-off you may assert or possess, whether created by contract,
statute or otherwise; provided that, notwithstanding the foregoing,
you shall be entitled to seek to obtain payment of any amount due to
you which is unrelated to the Notes by exercising any right of set-off
you may assert or possess. Any agreement between the Partnership and
you (whether in the nature of a general loan and collateral agreement,
a security or pledge agreement or otherwise) shall be deemed amended
hereby to the extent necessary so as not to be inconsistent with the
provisions of this paragraph.
17.6 Counterparts. This Agreement may be executed and delivered
to you simultaneously in two (2) or more counterparts, each of which
shall be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.
17.7 Reproduction of Documents. This Agreement and all documents
relating hereto (other than the Notes), including, without limitation,
(a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the closing of your
purchase of the Notes, and (c) financial statements, certificates and
other information heretofore or hereafter furnished to you, may be
reproduced by you by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and you may
destroy any original document so reproduced. The Partnership agrees
and stipulates that, to the extent permitted by applicable law and
court or agency rules, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or
not such reproduction was made by you in the regular course of
business) and that any enlargement, facsimile or further reproduction
of such reproduction shall be admissible in evidence to the same
extent.
17.8 Time of the Essence. The parties to this Agreement, and
future holders of Notes, by their acceptance thereof, intend and agree
that time is and shall be of the essence in the performance by the
Partnership of its obligations under this Agreement and the Notes.
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
on behalf of one or more separate accounts
By CIGNA Investments, Inc.
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
FIRST COLONY LIFE INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
ALLSTATE LIFE INSURANCE COMPANY
By
Name:
By
Name:
Authorized Signatories
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
HARTFORD LIFE INSURANCE COMPANY-SEPARATE ACCOUNT CRC
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
HARTFORD LIFE INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
INTERNATIONAL LIFE INVESTORS INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
LONDON LIFE INTERNATIONAL REINSURANCE CORPORATION/
INTERNATIONAL LIFE INVESTORS COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
PFL LIFE INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
AUSA LIFE INSURANCE COMPANY, INC.
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
PROTECTIVE LIFE INSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
STATE MUTUAL LIFE ASSURANCE COMPANY
OF AMERICA
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
SMA LIFE ASSURANCE COMPANY
By
Name:
Title:
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement
and return the same to the Partnership, whereupon this Agreement, as
so accepted, shall become a binding contract between you and the
Partnership in accordance with its terms.
Very truly yours,
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.,
General Partner
By
Title:
Accepted:
STATE MUTUAL SECURITIES TRUST
By
Name:
Title:
SCHEDULE I
NAMES AND ADDRESSES OF PURCHASERS
This Schedule to the foregoing Agreement sets forth the principal
amount of the Notes to be purchased by each purchaser, the
denominations and name or names in which such Notes are to be
registered, and the money transfer and notice instructions for each
purchaser.
CONNECTICUT GENERAL LIFE Note R-1 $3,500,000
INSURANCE COMPANY Note R-2 $3,000,000
(Notes registered in the name of Note R-3 $3,000,000
CIG & CO.) Note R-4 $3,000,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
FED ABA# 021000021 CHASE
NYC/CTR/BNF=CIGNA PRIVATE
PLACEMENTS/AC=9009001802
OBI=[ISSUE NAME, PRIVATE PLACEMENT NUMBER, DESCRIPTION OF SECURITY
WITH RATE AND MATURITY, THE AMOUNT OF INTEREST AND/OR PRINCIPAL, THE
AMOUNT OF ANY PREPAYMENT, THE PAYABLE DATE, THE ORIGINATOR'S CONTACT
NAME AND TELEPHONE NUMBER]
Together with a notice of each payment to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508, Bowling Green Station
New York, NY 10081
Attn: CIGNA Private Placements
Fax: 212-552-3107/1005
(2) In the case of all notices in respect of payment:
CIG & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Securities Accounting Department (S-206)
CIG & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Private Securities Division (S-307)
(3) In the case of all other communications:
CIG & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Private Securities Division (S-307)
(4) In the event that notices/communications are sent by courier
(e.g., Federal Express, Airborne, etc.) or Express Mail or messenger
rather than by regular U.S. Postal Service, the address to be used for
CIGNA Investments, Inc. in (2) and (3) above should be changed to:
900 Cottage Grove Road
Bloomfield, CT 06002
(5) Tax Identification No.: 13-3574027
CONNECTICUT GENERAL LIFE Note R-5 $3,000,000
LIFE INSURANCE COMPANY, Note R-6 $3,000,000
on behalf of one or more
separate accounts
(Notes registered in the name of
CIG & CO.)
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
FED ABA# 021000021 CHASE
NYC/CTR/BNF=CIGNA PRIVATE
PLACEMENTS/AC=9009001802
OBI=[ISSUE NAME, PRIVATE PLACEMENT NUMBER, DESCRIPTION OF SECURITY
WITH RATE AND MATURITY, THE AMOUNT OF INTEREST AND/OR PRINCIPAL, THE
AMOUNT OF ANY PREPAYMENT, THE PAYABLE DATE, THE ORIGINATOR'S CONTACT
NAME AND TELEPHONE NUMBER]
Together with a notice of each payment to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508, Bowling Green Station
New York, NY 10081
Attn: CIGNA Private Placements
Fax: 212-552-3107/1005
(2) In the case of all notices in respect of payment:
CIG & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Securities Accounting Department (S-206)
CIG & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Private Securities Division (S-307)
(3) In the case of all other communications:
CIG & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Private Securities Division (S-307)
(4) In the event that notices/communications are sent by courier
(e.g., Federal Express, Airborne, etc.) or Express Mail or messenger
rather than by regular U.S. Postal Service, the address to be used for
CIGNA Investments, Inc. in (2) and (3) above should be changed to:
900 Cottage Grove Road
Bloomfield, CT 06002
(5) Tax Identification No.: 13-3574027
LIFE INSURANCE COMPANY OF Note R-7 $3,000,000
NORTH AMERICA
(Note registered in the name of
ZANDE & CO.)
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Morgan Guaranty Trust Company of New York
ABA# 0210-0023-8
BRT/BNF=CUSTZ/AC-99999024/Z
ATTN: CUST. SVC. ZANDE & CO.
a/c 35001
(2) In the case of all notices in respect of payment:
ZANDE & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Securities Accounting Department (S-206)
ZANDE & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Private Securities Division (S-307)
(3) In the case of all other communications:
ZANDE & CO.
c/o CIGNA Investments, Inc.
Hartford, CT 06152
Attn: Private Securities Division (S-307)
(4) In the event that notices/communications are sent by courier
(e.g., Federal Express, Airborne, etc.) or Express Mail or messenger
rather than by regular U.S. Postal Service, the address to be used for
CIGNA Investments, Inc. in (2) and (3) above should be changed to:
900 Cottage Grove Road
Bloomfield, CT 06002
(5) Tax Identification No.: 13-6020804
FIRST COLONY LIFE INSURANCE Note R-8 $3,000,000
COMPANY
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Crestar Bank
Richmond, Virginia
ABA No. 0510-0002-0
Credit 2111
Attn: Income Processing Unit Number 27955
For credit to First Colony Life Insurance Company's Account
Number 10765400
(2) In the case of all notices in respect of payment:
First Colony Life Insurance Company
700 Main Street
Lynchburg, Virginia 24504
Attn: Mr. J. Alden Butler
(3) In the case of all other communications:
First Colony Life Insurance Company
700 Main Street
Lynchburg, Virginia 24504
Attn: Mr. J. Alden Butler
(4) Tax Identification No.: 540 596 414
SOUTHERN FARM BUREAU Note R-9 $3,000,000
LIFE INSURANCE COMPANY
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Chemical Bank
New York, NY
ABA# 021000128
For the account of:
Southern Farm Bureau Life Insurance Company
DDA Account #325016488
(2) In the case of all notices in respect of payment:
Southern Farm Bureau Life Insurance Company
P.O. Box 78
Jackson, MS 39205
Attn: Carol Robertson
Investment Department
Street address for overnight deliveries:
1401 Livingston Lane
Jackson, MS 39213
(3) In the case of all other communications:
Southern Farm Bureau Life Insurance Company
P.O. Box 78
Jackson, MS 39205
Attn: Carol Robertson
Investment Department
Street address for overnight deliveries:
1401 Livingston Lane
Jackson, MS 39213
(4) Tax Identification No.: 64-0283583
ALLSTATE LIFE INSURANCE COMPANY Note R-10 $5,000,000
Note R-11 $5,000,000
Note R-12 $3,000,000
Note R-13 $2,000,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal immediately
available funds, providing information identifying the name of the
issuer, the caption of the Notes, the Private Placement Number of the
Notes and the allocation of the payment to principal, premium or
interest to:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = Edward D. Jones & Co. L.P.
OBI = DPP - (Enter Private Placement No., if available)
Payment Due Date (MM/DD/YY) -
P (Enter "P" and amount of principal
being remitted, for example, P5000000.00) -
I (Enter "I" and amount of interest
being remitted, for example, I225000.00)
(2) In the case of all notices in respect of payment and written
confirmations of wire transfers:
Allstate Insurance Company
Investment Operations - Private Placements
3075 Sanders Road, STE G4A
Northbrook, IL 60062-7127
Telephone: (708) 402-8709
Telecopy: (708) 402-7331
(3) In the case of all financial reports, compliance certificates and
all other written communications, including notice of prepayments:
Allstate Life Insurance Company
Private Placements Department
3100 Sanders Road, STE J2A
Northbrook, Illinois 60062-7154
(4) Tax Identification No.: 36-2554642
HARTFORD LIFE INSURANCE Note R-14 $5,000,000
COMPANY-SEPARATE ACCOUNT CRC
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Shawmut Bank
777 Main Street
Hartford, Connecticut
ABA No. 011-900-445
For credit to:
Hartford Life Insurance Co. - CRC
Account No. 0069-0730
(2) In the case of all notices in respect of payment and written
confirmation of wire transfers:
Hartford Life Insurance Company
c/o Treasury Services C-4
P.O. Box 2999
Hartford, Connecticut 06104-2999
Telefacsimile: (203) 843-3857
(3) In the case of all other communications:
Hartford Life Insurance Company
c/o Life Investment Group A-4
Private Placements
P.O. Box 2999
Hartford, Connecticut 06104-2999
Telefacsimile: (203) 843-3538
(4) Tax Identification No.: 06-1114815
HARTFORD LIFE INSURANCE COMPANY Note R-15 $5,000,000
Note R-16 $5,000,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Shawmut Bank
777 Main Street
Hartford, Connecticut
ABA No. 011-900-445
For Note R-15, for credit to:
Hartford Life Insurance Co. - LIF
Account No. 0018-1617
For Note R-16, for credit to:
Hartford Life Insurance Co. - ISW
Account No. 5033-5644
(2) In the case of all notices in respect of payment and written
confirmation of wire transfers:
Hartford Life Insurance Company
c/o Treasury Services C-4
P.O. Box 2999
Hartford, Connecticut 06104-2999
Telefacsimile: (203) 843-3857
(3) In the case of all other communications:
Hartford Life Insurance Company
c/o Life Investment Group A-4
Private Placements
P.O. Box 2999
Hartford, Connecticut 06104-2999
Telefacsimile: (203) 843-3538
(4) Tax Identification No.: 06-0974148
INTERNATIONAL LIFE INVESTORS Note R-17 $2,100,000
INSURANCE COMPANY
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Morgan Guaranty Trust Company
ABA# 021000238
For credit to the account of
International Life Investors Insurance Company,
Account No. 600-07-996
(2) In the case of all notices in respect of payment:
AEGON USA Investment Management, Inc.
Attn: Michael Meese
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
(3) In the case of all other communications:
AEGON USA Investment Management, Inc.
Attn: Director of Private Placements
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
Fax #: 319/369-2009
(4) Tax Identification No.: 22-2824743
LONDON LIFE INTERNATIONAL REINSURANCE Note R-18 $1,400,000
CORPORATION/INTERNATIONAL LIFE
INVESTORS COMPANY
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Morgan Guaranty Trust Company
ABA# 021000238
For credit to the account of:
London Life International Reinsurance
Corporation/International Life Investors
Company, Trust account No. 92116
(2) In the case of all notices in respect of payment:
AEGON USA Investment Management, Inc.
Attn: Director of Private Placements
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
(3) In the case of all other communications:
AEGON USA Investment Management, Inc.
Attn: Director of Private Placements
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
FAX #: 319/369-2009
(4) Tax Identification No.: 98-0107498
PFL LIFE INSURANCE COMPANY Note R-19 $1,000,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Firstar Bank of Cedar Rapids
222 Second Street S.E.
Cedar Rapids, IA 52401
ABA# 073900014
For credit to the account of:
PFL Life Insurance Company, Inc.,
Account No. 121-27196-9
(2) In the case of all notices in respect of payment:
AEGON USA Investment Management, Inc.
Attn: Michael Meese
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
(3) In the case of all other communications:
AEGON USA Investment Management, Inc.
Attn: Director of Private Placements
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
Fax #: 319/369-2009
(4) Tax Identification No.: 39-0989781
AUSA LIFE INSURANCE COMPANY, INC. Note R-20 $5,500,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Morgan Guaranty Trust Company
ABA# 021000238
For credit to the account of
AUSA Life Insurance Company, Inc.,
Account No. 001-60-362
(2) In the case of all notices in respect of payment:
AEGON USA Investment Management, Inc.
Attn: Director of Private Placements
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
(3) In the case of all other communications:
AEGON USA Investment Management, Inc.
Attn: Director of Private Placements
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499
Fax #: 319/369-2009
(4) Tax Identification No.: 36-6071399
MASSACHUSETTS MUTUAL LIFE Note R-21 $2,500,000
INSURANCE COMPANY
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
MassMutual Account #B-14
c/o The Bank of New York
ABA No. 021000018, BNF IOC566
Security Income Collection
Attention: P&I Department
With telephone advice of payment to the Securities Custody
and Collection Department of Massachusetts Mutual Life Insurance
Company at (413) 788-8411
(2) In the case of all notices in respect of payment:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Custody and Collection
Department
E-381
(3) In the case of all other communications:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Investment Division
(4) Tax Identification No.: 04-1590850
MASSACHUSETTS MUTUAL LIFE Note R-22 $2,000,000
INSURANCE COMPANY Note R-23 $3,000,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Chemical Bank
ABA No. 021-000128
Institutional Client Services
4 New York Plaza - 4th Floor
New York, NY 10004-2413
For Note R-22, for credit to:
Massachusetts Mutual Life Insurance
Company's Pension Management - GIA
Account No. 321-029-828
For Note R-23, for credit to:
Massachusetts Mutual Life Insurance
Company's Insurance & Financial
Management - Traditional
Account No. 321-029-852
With telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company
at (413) 788-8411
(2) In the case of all notices in respect of payment:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Custody and Collection
Department E-381
(3) In the case of all other communications:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Investment Division
(4) Tax Identification No.: 04-1590850
PROVIDENT LIFE AND ACCIDENT Note R-24 $6,000,000
INSURANCE COMPANY
(Note registered in the name of
PEPA & CO.)
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes, the allocation of the payment to principal,
premium or interest, and confirmation of principal balance to:
PEPA & CO.
c/o Bankers Trust Company
New York, NY
ABA #021 001 033
PVT PLACEMENT PROC #99 911 145
For credit to:
Provident Life and Accident Insurance Company
Account No.: 99296
(2) In the case of all notices in respect of payment:
Provident Life and Accident Insurance Company
Investment Department
One Fountain Square
Chattanooga, Tennessee 37402
Attention: Private Placements
(3) In the case of all other communications:
Provident Life and Accident Insurance Company
Investment Department
One Fountain Square
Chattanooga, Tennessee 37402
Attention: Private Placements
(4) Tax Identification No.: 13-2895637 (PEPA & CO.)
PROTECTIVE LIFE INSURANCE Note R-25 $6,000,000
COMPANY
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
AmSouth B'ham/02/062000019
For the account of Protective Life Insurance Company
For Account #000-575925
(2) In the case of all notices in respect of payment and written
confirmations of wire transfers:
Protective Life Insurance Company
P.O. Box 2606
Birmingham, AL 35202
Attn: Mr. Richard Bielen
(3) In the case of all other communications:
Protective Life Insurance Company
P.O. Box 2606
Birmingham, AL 35202
Attn: Mr. Richard Bielen
(4) Tax Identification No.: 63-0169720
STATE MUTUAL LIFE Note R-26 $2,000,000
ASSURANCE COMPANY OF AMERICA
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Bankers Trust Company
New York, New York 10005
ABA No. 021 001 033
Account No. 99-911-145 of Allmerica
For further credit to:
State Mutual Life Assurance Company
of America
Account No. 90232
(2) In the case of all notices in respect of payment and written
confirmations of wire transfers:
State Mutual Life Assurance Company of America
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: Jon E. Austad, Fixed Income Research
Telefacsimile: (508) 852-6935
(3) In the case of all other communications:
State Mutual Life Assurance Company of America
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: Jon E. Austad, Fixed Income Research
Telefacsimile: (508) 852-6935
(4) Tax Identification No.: 04-1867050
SMA LIFE ASSURANCE COMPANY Note R-27 $2,000,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Bankers Trust Company
New York, New York 10005
ABA No. 021 001 033
Account No. 99-911-145 of Allmerica
For further credit to:
SMA Life Assurance Company
Account No. 90242
(2) In the case of all notices in respect of payment and written
confirmations of wire transfers:
SMA Life Assurance Company
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: Jon E. Austad, Fixed Income Research
Telefacsimile: (508) 852-6935
(3) In the case of all other communications:
SMA Life Assurance Company
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: Jon E. Austad, Fixed Income Research
Telefacsimile: (508) 852-6935
(4) Tax Identification No.: 04-6145677
STATE MUTUAL SECURITIES TRUST Note R-28 $1,000,000
(1) In the case of all payments on account of the Notes in accordance
with Section 6.1:
By crediting in the form of bank wire transfer of Federal or other
immediately available funds, providing information identifying the
name of the issuer, the caption of the Notes, the Private Placement
Number of the Notes and the allocation of the payment to principal,
premium or interest to:
Bankers Trust Company
New York, New York 10005
ABA No. 021 001 033
Account No. 99-911-145 of Allmerica
For further credit to:
State Mutual Securities Trust
Account No. 90244
(2) In the case of all notices in respect of payment and written
confirmations of wire transfers:
State Mutual Securities Trust
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: Jon E. Austad, Fixed Income Research
Telefacsimile: (508) 852-6935
(3) In the case of all other communications:
State Mutual Securities Trust
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: Jon E. Austad, Fixed Income Research
Telefacsimile: (508) 852-6935
(4) Tax Identification No.: 04-2508688
SCHEDULE II
SCHEDULE OF INDEBTEDNESS FOR MONEY BORROWED
AT APRIL 4, 1994
EDWARD D. JONES & CO., L.P.
Original Outstanding Date
Principal Principal of Maturity Interest
Lender Amount Amount Note Date Rate
Connecticut General Life $ 8,000,000 $2,000,000 4/15/86 4/1/96* 9.375%
Insurance Company 15,000,000 7,500,000 3/15/88 3/15/97** 10.600%
Lincoln National Pension
Insurance Company -
Separate Account No. 16 7,000,000 1,750,000 4/15/86 4/1/96* 9.375%
State Mutual Life Assurance3,000,000 750,000 4/15/86 4/1/96* 9.375%
Company of America 3,000,000 3,000,000 5/8/92 5/1/02 8.960%
Congen Five & Co. 2,000,000 500,000 4/15/86 4/1/96* 9.375%
Life Insurance Company of
North America 3,000,000 1,500,000 3/15/88 3/15/97** 10.600%
INA Life Insurance Co. of
New York 1,000,000 500,000 3/15/88 3/15/97** 10.600%
Investors Life Insurance
Company of North America 1,000,000 500,000 3/15/88 3/15/97** 10.600%
Investors Insurance
Company of America 4,500,000 2,250,000 3/15/88 3/15/97** 10.600%
NN Investors Life Insurance
Co. 2,500,000 1,250,000 3/15/88 3/15/97** 10.600%
* The Company intends to call this debt on 6/1/94.
** The Company intends to call this debt on or prior to 9/15/95.
Page Two
SCHEDULE OF INDEBTEDNESS FOR MONEY BORROWED
AT APRIL 4, 1994
EDWARD D. JONES & CO., L.P.
Original Outstanding Date
Principal Principal of Maturity Interest
Lender Amount Amount Note Date Rate
Pacific Fidelity Life
Insurance Co. 500,000 250,000 3/15/883/15/97** 10.600%
General Services Life
Insurance 500,000 250,000 3/15/883/15/97** 10.600%
Massachusetts Mutual Life
Insurance Co. 12,000,000 12,000,000 5/8/92 5/1/02 8.960%
Allstate Life Insurance
Company 8,000,000 8,000,000 5/8/92 5/1/02 8.960%
Allstate Life Insurance
Company of New York 2,000,000 2,000,000 5/8/92 5/1/02 8.960%
SMA Life Assurance
Company 1,000,000 1,000,000 5/8/92 5/1/02 8.960%
Life Investors Insurance
Company of America 4,000,000 4,000,000 5/8/92 5/1/02 8.960%
Mercantile Trust Co.,
N.A. (1) 60,000,000 37,500,000 1/23/91N/A Variable
Boatmen's Bank (1) 75,000,000 30,000,000 3/31/92N/A Variable
* The Company intends to call this debt on 6/1/94.
** The Company intends to call this debt on or prior to 9/15/95.
(1) Represents short-term borrowing arrangements. Original
principal amount represents approximate borrowing capacity based
on the market value of collateral held (firm and customer
securities). Outstanding principal amount represents amounts
borrowed as of April 4, 1994.
Page Three
SCHEDULE OF INDEBTEDNESS FOR MONEY BORROWED
AT APRIL 4, 1994
EDWARD D. JONES & CO., L.P.
Original Outstanding Date
Principal Principal of Maturity Interest
Lender Amount Amount Note Date Rate
The Northern Trust
Co. (1) 50,000,000 15,000,000 12/13/91 N/A Variable
First Chicago (1) 25,000,000 0 3/5/92 N/A Variable
Trust Company Bank (1) 30,000,000 30,000,000 2/20/92 N/A Variable
Chemical Bank (1) 50,000,000 26,000,000 3/24/92 N/A Variable
Bank of New York (1) 95,000,000 15,000,000 N/A N/A Variable
Banque Paribas -
New York (1) 30,000,000 0 8/26/93 N/A Variable
Banque Nationale de
Paris - Chicago (1) 25,000,000 20,000,000 9/30/93 N/A Variable
Commerce Bank
of St. Louis (1) 30,000,000 20,000,000 6/1/93 N/A Variable
________________________
$548,000,000$242,500,000
* The Company intends to call this debt on 6/1/94.
** The Company intends to call this debt on or prior to 9/15/95.
(1) Represents short-term borrowing arrangements. Original
principal amount represents approximate borrowing capacity based
on the market value of collateral held (firm and customer
securities). Outstanding principal amount represents amounts
borrowed as of April 4, 1994.
SCHEDULE III
Book Values as of March 25, 1994
DIRECT PARTICIPATIONS OF THE PARTNERSHIP
JURISDICTION OF
NAME OF FORMATION OR BOOK
ENTITY INCORPORATION VALUE
S-J Capital Corp. Missouri (Corporation) (A)
Conestoga Securities, Inc. (B)Missouri (Corporation) $ 28,280
Nooney Capital Corp. Missouri (Corporation) (A)
Nooney-Five Capital Corp. Missouri (Corporation) (A)
Nooney-Six Capital Corp. Missouri (Corporation) (A)
Nooney-Seven Capital Corp. Missouri (Corporation) (A)
Nooney Income Investments,
Inc. Missouri (Corporation) (A)
Nooney Income Investments Two,
Inc. Missouri (Corporation) (A)
Tempus Corp. (B) Missouri (Corporation) $ 1,000
Edward D. Jones Homeowners,
Inc. (B) Missouri (Corporation) $ 13,198
Edward D. Jones & Co. Canada
Holding Co., Inc. CBCA Corporation $ 76,319
LIMITED PARTNERSHIP PARTICIPATION
Edward D. Jones & Co. An Ontario Limited
Partnership $2,359,840
Passport Research, Ltd. A Pennsylvania Limited $ 853,982
Partnership
EDJ Ventures, Ltd. (B) A Missouri Limited $ 587,514
Partnership
EDJ Insurance Agency of An Arkansas Limited $ 980
Arkansas (B) Partnership
EDJ Residential Mortgage A Missouri Limited $ 8,705
Services (B) Partnership
(A) The total book value of all Nooney entities is 0.
(B) Also a subsidiary of the Partnership in which the Partnership
holds at least 50% of the outstanding shares of Voting Stock of
the entity or is a general partner in (or has the power to
remove a general partner of) a general or limited partnership.
JURISDICTION OF
NAME OF FORMATION OR BOOK
ENTITY INCORPORATION VALUE
Patronus, Inc. (B) Missouri (Corporation) -0-
Cornerstone Mortgage Investment
Group, Inc. (B) Delaware (Corporation) $ 41,430
Cornerstone Mortgage Investment
Group, Inc. II (B) Delaware (Corporation) $ 500
Limited Partnership Interests:
EDJ Investment Advisory
Services (B) Missouri -0-
EDJ Insurance Agency of
Montana (B) Montana $ 980
EDJ Insurance Agency of New
Mexico New Mexico -0-
EDJ Insurance Agency of Utah,
a limited partnership (B) Utah -0-
EDJ Insurance Agency of
New Jersey New Jersey -0-
General Partnership Interests:
EDJ Insurance Agency of
California (B) California $ 100
SCHEDULE
IV-A
OPINION OF SPECIAL COUNSEL
FOR THE PURCHASER
The opinion of Day, Berry & Howard, your special counsel, shall
be to the effect that:
1. The General Partner is a corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri;
and the Partnership is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Missouri
and has all requisite power and authority to enter into the Agreement
and to issue and sell the Notes and to carry out the terms thereof.
2. This Agreement (and the performance hereof) has been duly
authorized by all necessary action on the part of, and duly executed
and delivered by, the Partnership, and constitutes a legal, valid and
binding agreement of the Partnership, enforceable in accordance with
its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally from time to time in
effect, and by general principles of equity.
3. The Notes (and the performance thereof) have been duly authorized
by all necessary action on the part of the Partnership, have been duly
executed, issued and delivered by the Partnership and constitute
legal, valid and binding obligations of the Partnership, enforceable
in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights from time
to time in effect and by general principles of equity.
4. Neither the execution, delivery or performance of this Agreement,
nor the offer, issuance, sale, delivery or performance of the Notes,
does or will conflict with or violate the Partnership Agreement.
5. On the basis of the representations contained in Sections 3.2 and
3.3 of this Agreement, it is not necessary, in connection with the
issuance and delivery of the Notes to you and the Other Purchasers,
under the circumstances contemplated by this Agreement, to register
the Notes under the Securities Act, or to qualify an indenture with
respect thereto under the Trust Indenture Act of 1939, as amended.
Said opinion may contain such reasonable limitations as are
acceptable to you. The opinion shall state that the opinion of
counsel for the Partnership, referred to in Schedule IV-B hereof, is
satisfactory in scope and form to such special counsel and that in
their opinion you and they are justified in relying thereon.
Such special counsel shall, in addition, opine as to such other
matters as you may reasonably request.
SCHEDULE
IV-B
OPINION OF COUNSEL FOR THE PARTNERSHIP
TO THE PURCHASER
The opinion of Lawrence R. Sobol, Esq., counsel for the
Partnership, shall be to the effect that:
1. The Partnership is a limited partnership duly organized,
operating under the Partnership Agreement, validly existing and in
good standing under the laws of the State of Missouri, and has all
requisite power and authority to own (or hold under lease) its
properties, to conduct its business as currently conducted and as
currently proposed to be conducted, to enter into this Agreement, to
offer, issue, sell and deliver the Notes, and to perform its
obligations under this Agreement and the Notes. The Partnership is
duly qualified as a foreign limited partnership in all jurisdictions
in which such qualification is provided for and/or has filed
certificates of doing business in every jurisdiction in which the
properties owned (or held under lease) by it or the nature of its
activities makes such qualification or filing necessary in order to
comply with applicable laws.
2. The General Partner is a corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri
and has all requisite power and authority (corporate and other) to
enter into this Agreement, to offer, issue, sell and deliver the
Notes, and to perform its obligations under this Agreement and the
Notes on behalf of the Partnership. The General Partner is not
qualified as a foreign corporation in any jurisdiction and neither the
properties owned (or held under lease) by it nor the nature of its
activities makes such qualification necessary in order to comply with
applicable laws.
3. This Agreement (and the performance hereof) has been duly
authorized by all necessary action on the part of, and duly executed
and delivered by, the Partnership and constitutes the legal, valid and
binding agreement of the Partnership, enforceable in accordance with
its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally from time to time in
effect or by general principles of equity.
4. The Notes (and the performance thereof) have been duly
authorized by all necessary action on the part of the Partnership,
have been duly executed, issued and delivered by the Partnership and
constitute legal, valid and binding obligations of the Partnership
enforceable in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting the enforcement of
creditors' rights generally from time to time in effect or by general
principles of equity. The Notes have been delivered to you and the
Other Purchasers, in the principal amounts indicated in Schedule I, by
the Partnership pursuant to the provisions of this Agreement.
5. On the basis of the representations contained in Sections
3.2 and 3.3 of this Agreement, it is not necessary, in connection with
the issuance and delivery of the Notes to you, under the circumstances
contemplated by the Agreements, to register the Notes under the
Securities Act or to qualify an indenture with respect to any thereof
under the Trust Indenture Act of 1939, as amended.
6. None of the transactions contemplated by this Agreement
(including, without limitation, the direct or indirect use of the
proceeds from the sale of the Notes) will violate or result in a
violation of Section 7 of the Securities Exchange Act or any
regulations issued pursuant thereto, including, without limitation,
Regulation G (12 C.F.R., Part 207), as amended, Regulation T (12
C.F.R., Part 220), as amended, and Regulation X (12 C.F.R., Part 224),
as amended, of the Board of Governors of the Federal Reserve System.
7. Except for the consents and approvals referred to in Section
2.17 of this Agreement and the filing with the SEC pursuant to
Appendix D to Rule 15c3-l, no consent, approval or authorization of,
registration, qualification, designation, declaration or filing with
or notice to any Federal, state or local government or public
authority or agency (including any State Securities Commission) or
Business Association is required for the valid execution, delivery and
performance of this Agreement or the valid offer, issuance, sale,
delivery and performance of the Notes or the valid consummation of any
other transaction contemplated hereby or thereby.
8. Neither the execution or delivery of this Agreement, the
offer, issuance, sale or delivery of the Notes, nor the performance of
this Agreement or the Notes, does or will cause the Partnership or any
of its Subsidiaries to be in violation in any material respect of any
law or ordinance, or any order of general application, rule or
regulation of any Federal, state, county, municipal or other
governmental or public authority or agency, or any order, direction or
rule of any Business Association, having jurisdiction or authority
over any of them or any of their respective properties
9. Neither the execution, delivery or performance of this
Agreement, nor the offer, issuance, sale, delivery or performance of
the Notes, does or will (i) conflict with or violate the partnership
agreement, certificate of partnership, charter or bylaws, as the case
may be, of the Partnership or any of its Subsidiaries, (ii) conflict
with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, any evidence of
Indebtedness or other agreement or instrument referred to in Section
2.9 of this Agreement, (iii) result in the creation of any Lien of any
nature whatsoever upon any of the properties or assets of the
Partnership or any of its Subsidiaries under the terms of any such
evidence of Indebtedness, other agreement or instrument, or (iv)
require the consent of or other action by any trustee, any creditor
of, any lessor to, or any investor in, the Partnership or any of its
Subsidiaries.
10. There is no action at law, suit in equity or other
proceeding or investigation (whether or not purportedly on behalf of
the Partnership or any of its Subsidiaries in any court or by or
before any other governmental or public agency or any arbitrator, or
before any Business Association, against or affecting, or (to the best
knowledge of such counsel) threatened against, the Partnership or any
of its Subsidiaries or any of their respective properties that, either
individually or in the aggregate, (i) involves the reasonable
possibility of a material judgment or liability against any of them or
could materially adversely affect the business, prospects, earnings,
properties or condition, financial or otherwise, of any of them, or
(ii) questions the validity of this Agreement or the Notes. Neither
the Partnership nor any of its Subsidiaries is in default with respect
to any order, writ, injunction, judgment or decree of any court or
other governmental or public authority or agency, with respect to the
award of any arbitrator, or with respect to the order or direction of
any Business Association.
11. Neither the Partnership nor any Partnership Subsidiary is an
"investment company" or a company "controlled" by an "investment
company" (as such terms are defined in the Investment Company Act of
1940, as amended)
12. The Partnership is registered as a broker-dealer with the
SEC under the Securities Exchange Act, and is also registered as a
broker-dealer with the proper authorities, including State Securities
Commissions, of every jurisdiction in which the nature of its
activities makes such registration necessary.
13. There are no applicable taxes, fees or other governmental
charges payable in connection with the execution and delivery of this
Agreement or in connection with the offer, issuance, sale or delivery
of the Notes.
Such counsel shall, in addition, opine as to such other matters
as you or your special counsel may reasonably request. Said opinion
may contain such reasonable limitations as are acceptable to you and
your special counsel.
SCHEDULE
IV-C
OPINION OF SPECIAL COUNSEL FOR THE
PARTNERSHIP
The opinion of Bryan Cave, special counsel for the Partnership,
shall be to the effect that:
1. This Agreement (and the performance hereof) has been duly
authorized by all necessary action on the part of, and duly executed
and delivered by, the Partnership and constitutes the legal, valid and
binding agreement of the Partnership, enforceable in accordance with
its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally from time to time in
effect or by general principles of equity.
2. The Notes (and the performance thereof) have been duly authorized
by all necessary action on the part of the Partnership, have been duly
executed, issued and delivered by the Partnership and constitute
legal, valid and binding obligations of the Partnership enforceable in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, or
other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect or by general principles of
equity.
3. On the basis of the representations contained in Sections 3.2 and
3.3 of this Agreement, it is not necessary, in connection with the
issuance and delivery of the Notes to you, under the circumstances
contemplated by the Agreements, to register the Notes under the
Securities Act or to qualify an indenture with respect to any thereof
under the Trust Indenture Act of 1939, as amended.
4. None of the transactions contemplated by this Agreement
(including, without limitation, the direct or indirect use of the
proceeds from the sale of the Notes) will violate or result in a
violation of Section 7 of the Securities Exchange Act or any
regulations issued pursuant thereto, including, without limitation,
Regulation G (C.F.R., Part 207), as amended, Regulation T (12 C.F.R.,
Part 220), as amended, and Regulation X (12 C.F.R., Part 224), as
amended, of the Board of Governors of the Federal Reserve System.
5. Except for the consents and approvals referred to in Section 2.17
of this Agreement and the filing with the SEC pursuant to Appendix D
to Rule 15c3-l, no consent, approval or authorization of,
registration, qualification, designation, declaration or filing with
or notice to any Federal, or any Missouri state or local, governmental
or public authority or agency (including the State Securities
Commission for the State of Missouri) or Business Association is
required for the valid execution, delivery and performance of this
Agreement or the valid offer, issuance, sale, delivery and performance
of the Notes or the valid consummation of any other transaction
contemplated hereby or thereby.
6. Neither the execution or delivery of this Agreement, the offer,
issuance, sale or delivery of the Notes, nor the performance of this
Agreement or the Notes, does or will cause the Partnership or any of
its Subsidiaries to be in violation in any material respect of any law
or ordinance, or any order of general application, rule or regulation
of any Federal, or any Missouri state, county or municipal,
governmental or public authority or agency.
Such counsel shall, in addition, opine as to such other matters
as you or your special counsel may reasonably request. Said opinion
may contain such reasonable limitations as are acceptable to you and
your special counsel.
EXHIBIT
A
EDWARD D. JONES & CO., L.P.
7.95% Subordinated Capital Note Due April 15, 2006
No. _______ [Place of Issue]
$ _________ [Date of Issue]
EDWARD D. JONES & CO., L.P., a Missouri limited partnership (the
"Partnership"), for value received, hereby promises to pay to
or registered assigns, the principal sum of
DOLLARS ($ on April 15, 2006; and to pay
interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid principal balance thereof from the date of this
Note at the rate of 7.95% per annum, semiannually on April 15 and
October 15 in each year, commencing October 15, 1994, until the
principal amount hereof shall become due and payable, and to pay, on
demand, interest on any overdue principal (including any overdue
prepayment of principal) and premium, if any, and (to the extent
permitted by applicable law) on any overdue installment of interest,
at a rate equal to the greater of (i) the rate of interest announced
publicly by Citibank in New York, New York, from time to time, as
Citibank's base rate, or (ii) 8.95% per annum.
Payments of principal, premium and interest shall be made in such
coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts by
check mailed and addressed to the registered holder hereof at the
address shown in the register maintained by the Partnership for such
purpose, or, at the option of the holder hereof, in such manner and at
such other place in the United States of America as the holder hereof
shall have designated to the Partnership in writing.
This Note is one of an issue of Notes of the Partnership issued
in an aggregate principal amount limited to $92,000,000 pursuant to
the Note Purchase Agreements, dated as of April 22, 1994, between the
Partnership and the original purchasers of the Notes, and is entitled
to the benefits thereof.
As and to the extent provided in said Agreements, this Note is
subject to prepayment, in whole or in part, in certain cases without
premium and in other cases with premium. The Partnership agrees to
make required prepayments on account of this Note in accordance with
the provisions of said Agreements.
Under certain circumstances, as specified in said Agreements, the
principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in said Agreements.
This Note is a registered Note. Transfers of this Note shall be
registered upon registration books maintained for such purpose by or
on behalf of the Partnership as provided in such Agreements. Prior to
presentation of this Note for registration of transfer, the
Partnership shall treat the registered holder hereof as the owner and
holder of this Note for the purpose of receiving all payments of
principal and interest hereon and for all other purposes whatsoever,
whether or not this Note shall be overdue and the Partnership shall
not be affected by notice to the contrary. The obligation of the
Partnership with respect to any payment in respect of this Note,
together with accrued interest, is subordinated to all claims of
certain other present and future creditors of the Partnership as and
to the extent provided in such Agreements. Such payments are subject
to suspension under certain circumstances set forth in such
Agreements.
This Note shall be governed by and construed in accordance with
the law of the State of Connecticut.
EDWARD D. JONES & CO., L.P.
By EDJ Holding Company, Inc.
General Partner
By[--- Unable To Translate ** ---]
Title
EXHIBIT 10.2
LEASE AGREEMENT
This Lease Agreement is made the 8th day of June, 1994, between IFA
Incorporated with its office at 1901 Roselle Road, Suite 950,
Schaumburg, Illinois 60195 ("Lessor") and Edward D. Jones & Company,
L.P. with an office at 201 Progress Parkway, Maryland Heights, MO
63043-3003 ("Lessee"). In consideration of the mutual covenants
herein contained, the parties agree as follows:
1. Lease
Lessor agrees to lease to Lessee and Lessee agrees to lease from
Lessor, the equipment and/or features ("Equipment") described in the
Equipment Supplement(s) ("Supplement") attached hereto. Each
Supplement constitutes a separate lease. In the event of a conflict
between the terms and conditions of this Lease Agreement and the terms
and conditions of any Supplement or any amendment, addendum or rider
thereto, the terms and conditions of any Supplement, amendment,
addendum or rider shall prevail. Any reference to "Lease" shall mean
this Lease Agreement, the Supplement(s), and any amendments(s),
addenda or rider(s) thereto.
This Lease and each Supplement thereto is non-cancellable and Lessee's
obligation to pay all amounts due shall be absolute and unconditional
and shall not be subject to any delay, set-off, defense, counterclaim
or recoupment for any reason, whatsoever, including any failure of the
Equipment or any representations of the manufacturer.
Lessor has the authority to insert the serial numbers and other
description of the Equipment governed by this Lease into a Supplement
thereto.
2. Term
The term of this Lease with respect to the Equipment described in a
particular Supplement shall commence on the date set forth on the
applicable Supplement ("Commencement Date") for such Equipment and
shall continue for such number of months thereafter as is specified on
such Supplement ("Initial Term"). Where no date is specified, the
Commencement Date shall be :(a) in the case of Equipment which is the
subject of a sale and leaseback between Lessor and Lessee, the first
day of the month following the date upon which Lessor purchases such
Equipment; or (b) in the case of Equipment requiring installation, the
first day of the month following the date upon which the Equipment is
certified as ready for use by the manufacturer ("Installation Date")
and subject to acceptance by Lessee.
This Lease may be terminated as to a Supplement at the expiration of
its Initial Term by written notice of termination given by either
party to the other not less than three (3) months prior to the date of
termination designated in such notice which date shall be the last day
of a calendar month. Lessor will give Lessee notice of lease
termination four (4) months prior to the date of termination. Lessee
will respond to Lessor within 30 days thereafter as to its intent.
Notice of termination given in accordance with this Section shall not
be effective unless it is applicable to all items of Equipment
described in a Supplement. The terms of this Lease Agreement do not
provide for interim rent, however, the Lessee will pay Lessor interest
at the rate of the then current prime rate at Citicorp based upon the
average daily balance outstanding for any monies advance by Lessor for
the purchase of equipment prior to the Commencement Date of any
Supplement.
3. Rental
The monthly rental ("Monthly Rental") and other charges due hereunder
for each item of Equipment shall begin to accrue on the Commencement
Date and shall be due and payable by Lessee in advance on the first
day of each month. In addition to the Monthly Rental set forth in the
Supplement, Lessee shall pay to Lessor an amount equal to all taxes
paid, payable or required to be collected by Lessor, however
designated, which are levied or based on the rental, on the Lease or
on the Equipment or its purchase, sale, ownership, delivery,
possession, use, lease operation, control or value (including, without
limitation, state and local privilege or excise taxes based on gross
revenue, all license and registration fees, any other governmental
charges), any penalties or interest in connection therewith not
arising from negligence on the part of Lessor or taxes or amounts in
lieu thereof paid or payable by Lessor in respect of the foregoing,
but excluding taxes on Lessor's net income. Such sums due under the
Lease, in addition to the monthly rental amounts, will be deemed
Additional Rent due.
Lessee shall file timely all necessary personal property returns or
declarations and pay all personal property taxes levied on or assessed
against the Equipment during the Initial Term of the applicable
Supplement, and all renewals or extensions therof, before such taxes
become delinquent, without any proration whatsoever. Lessee shall
promptly (a) provide evidence satisfactory to Lessor of the timely
filing of the returns or declarations and the payment of such taxes,
or (b) notify Lessor in sufficient time for Lessor to file same
timely, when by law or local custom Lessee cannot file same, and
promptly pay the amount of such taxes to Lessor.
Interest on any past due payments shall accrue at the rate of 1-1/2%
per month, or if such rate shall exceed the maximum rate allowed by
law, than at such maximum rate, and shall be payable on demand.
Charges for taxes, penalties and interest shall be promptly paid by
Lessee when invoiced by Lessor.
4. Quiet Enjoyment
Provided Lessee is not in default under this Lease, neither Lessor nor
anyone claiming through Lessor shall interfere with Lessee's right of
exclusive possession, quiet enjoyment an unlimited use of the
Equipment.
5. Installation, Maintenance and Discontinuance of Equipment
(a) Lessee shall have the sole right, unless otherwise notified by
lessor, and option to make all the arrangements for (i) the
transportation of each Item of Equipment to, and the installation of,
each Item of Equipment at the Equipment Location stated in the
applicable Supplement, and (ii) the discontinuance, disassembly,
packing and transportation of each Item of Equipment from the
Equipment Location to a location of Lessor's choice within the
continental United States upon the termination of the applicable
Supplement (by expiration or otherwise) as to each Item of Equipment.
(b) Lessee shall (i) make all arrangements for rigging and drayage, if
applicable, with respect to the Equipment, and (ii) furnish suitable
electric current required to operate the Equipment and a specific area
in the Equipment Location which is suitable for the operation of the
Equipment and complies with the applicable directives issued by the
manufacturer thereof and by Lessor. All transportation (including
insurance), rigging and drayage costs with respect to the Equipment,
both on delivery to the Equipment Location and redelivery to a
location of Lessor's choice within the continental United State, and
all installation, discontinuance, disassembly and packing costs shall
be paid by Lessee.
(c) Any equipment, cards, disks, tapes or other items not specified in
the Supplement(s) which are used on or in connection with the
Equipment must meet the specifications of the manufacturer and shall
be acquired by Lessee as its own expense.
(d) Lessee will at all times keep the Equipment in its sole possession
and control. Lessee will provide Lessor with a 15 day prior written
notice of any equipment move. Lessee agrees to execute such
documentation required by Lessor for relocation.
(e) After prior written notice to Lessor and with Lessor's prior
written consent, which consent will not be unreasonably withheld,
Lessee may, at its own expense, make alterations in or add attachments
to the Equipment, provided such alterations or attachments do not
interfere with the normal and satisfactory operation or maintenance of
the Equipment or with Lessee's ability to obtain and maintain the
maintenance contract required by Section 5(f) hereof and are removable
at any time without material damage to the equipment.
(f) Lessee shall, during the term of this Lease, at its own expense,
enter into and maintain in force a contract with the manufacturer or
the Maintenance Organization covering at least prime shift maintenance
of each Item of Equipment provided that such maintenance contracts are
available and of a commercially reasonable cost. If at any time the
Equipment is not being maintained to Lessor's satisfaction, Lessor
shall have the right to require Lessee to have another company of
Lessor's choice maintain the Equipment. Such maintenance contract
shall commence upon expiration of the manufacturer's warranty period,
if any, relating to such Item of Equipment. At Lessor's request
Lessee shall furnish Lessor with an executed copy of such maintenance
contract and all renewals and extension thereof and amendments
thereto.
(g) At the termination of this Lease as to the applicable Supplement
(by expiration or otherwise), Lessee shall, at its expense, return the
Equipment to Lessor in the same operating order, repair, condition and
appearance as on the Commencement Date, subject only to reasonable
wear and tear. Lessee shall be responsible to have the Equipment
certified as acceptable for the manufacturer's standard maintenance
contract prior to redelivery to Lessor. Lessee shall enter into a
contract with the manufacturer of the Equipment to prepare it for
redelivery to Lessor using manufacturer's standard packing materials.
All charges of complying with the provisions of this section shall be
at Lessee's sole expense.
6. Ownership and Inspection
(a) This is a contract of lease only and Lessee shall have no equity
or property interest in the Equipment other than the rights acquired
as a Lessee hereunder and the Equipment shall remain personal property
regardless of the manner in which it may be installed or attached.
Lessee shall not, without Lessor's prior written consent, install or
use the Equipment in such a manner or in such circumstances that any
part of the Equipment is deemed to be an accession to other personal
property. The Lessee shall, at Lessor's request, affix to the
Equipment tags, decals or plates furnished by Lessor indicating
Lessor's ownership and Lessee shall not permit the removal or
concealment thereof. In any event, Lessee may upgrade the equipment
with Lessor's prior to written consent, such consent to be not
unreasonably withheld by lessor.
(b) Lessee shall keep the Equipment free and clear of all liens and
encumbrances except liens or encumbrances arising through the actions
or omissions of Lessor. Lessee shall discharge, at its own expense,
any liens or encumbrances filed against the Equipment, except liens
and encumbrances created by Lessor. Lessee shall not assign or
otherwise encumber this Lease or any of its right hereunder or the
Equipment, except that Lessee, at its expense and upon prior written
notice to Lessor, may assign this Lease or sublease the Equipment to
its parent or any subsidiary corporation or to a corporation or
partnership or a corporation or partnership which shall have acquired
all or substantially all of the property of Lessee by merger,
consolidation or purchase. Upon any permitted assignment or sublease,
Lessee shall execute and deliver to Lessor, or any assignee of Lessor,
at Lessee's expense, such documentation as Lessor or such assignee may
require, including but not limited to documentation to evidence and
put third parties on notice of Lessor's or its assignee's interest in
the Equipment. No permitted assignment or sublease shall relieve
Lessee of any of its obligations hereunder.
(c) Lessor or its agents shall have free access within 24 hours of
written notice to the Equipment and any maintenance records kept by
the Lessee which pertain to the Equipment at all reasonable times for
the purpose of inspection and for any other purpose contemplated in
this Lease.
(d) Lessee shall immediately notify Lessor of all details concerning
any damage to, or loss of, the Equipment arising out of any event or
occurrence whatsoever, including, but no limited to, the alleged or
apparent improper manufacture, functioning or operation of the
Equipment
7. Warranties and Disclaimer of Warranties
(a) Lessee represents that, as of the date of the Equipment is
installed, it shall have (i) thoroughly inspected the Equipment, (ii)
determined for itself that all Items of Equipment are of a size,
design, capacity and manufacture selected by it, and (iii) satisfied
itself that the Equipment is suitable for Lessee purposes. Lessee
authorizes Lessor to insert in each Supplement the serial numbers and
other identifying data of the Equipment from the manufacturer's
invoice.
(b) Lessee hereby covenants, represents and warrants with respect to
this Lease and each Supplement executed hereunder that:
(i) the execution, delivery and performance thereof by Lessee have
been duly approved and authorized by all necessary corporate action;
(ii) The individual executing such was duly authorized to do so;
(iii) the Lease and each Equipment supplemental constitute legal,
valid and binding agreements of Lessee enforceable in accordance with
their respective terms; and,
(iv) the Equipment is personal property and when subjected to use by
Lessee will not be or become a fixture under applicable law.
(v) Lessee is a valid partnership and is properly authorized to do
business in the jurisdictions relevant to the Lease.
(vi) Lessee maintains a chief office in the city and state listed on
page 1 of this Lease.
(vii) The transaction does not require shareholder approval, or
approval by any other holders of indebtedness.
(viii) The transaction does not violate any laws and does not
constitute a default under any of it other obligations.
(ix) The consummation of the Lease agreement does not require the
consent or approval of any branch of government, or authority.
(x) There are no suits pending against the Lessee with a potential
material adverse effect to the lease, and no further action, aside
from the filing of financing statements is required to perfect the
Lessor's title and interest in the Equipment.
(xi) No event of default has occurred under the Lease and the
financial statements furnished by the Lessee to the Lessor prior to
the date of the Lease fairly represent the financial condition of the
Lessee.
(xii) AS of the date of this Lease, the Lessee does not contemplate
any material change to its business organization, or sale, of its
assets with any other entity.
(xiii) In the event of a "sale and leaseback":
(aa) Lessor will receive good and marketable title to the Equipment
free and clear of all liens, except as to the rights of Lessee and
liens and encumbrances created by Lessor;
(bb) All taxes associated with the Lease have been paid (other than
such taxes which are being contested by Lessee in good faith); and
(cc) Lessee is solvent and will not be rendered insolvent by the sale
of the Equipment.
(c) LESSOR SUPPLIES THE EQUIPMENT "AS IS" AND NOT BEING THE
MANUFACTURER OF THE EQUIPMENT, THE MANUFACTURER'S AGENT OF THE
SUPPLIER'S AGENT, MAKE NO WARRANTY OR REPRESENTATION, EITHER EXPRESS
OR IMPLIED, AS TO THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL OR
WARKMANSHIP, OR AS TO PATENT INFRINGEMENT OR THE LIKE, it being agreed
that all such risks, as between Lessor and Lessee, are to be borne by
Lessee. Lessor disclaims any warranty that the Equipment is in
compliance with any applicable governmental regulations or
requirements. Lessor has no familiarity with the Equipment. Lessee
agrees to look solely to the manufacturer or the supplier of the
Equipment for any and all warranty claims and any and all warranties
made by the manufacturer or the supplier to Lessor are hereby assigned
to Lessee, to the extent permitted by the manufacturer or the
supplier, for the term of the applicable Supplement. Lessee agrees
that Lessor shall not be responsible for the delivery, installation,
maintenance, operation or service of the Equipment or for delay or
inadequacy of any or all of the foregoing. Lessor shall not be
responsible for any direct, indirect, special or consequential loss or
damage resulting from installation (including strict liability in
tor). Lessee (and any guarantor of Lessee's performance under the
Lease) shall defend, indemnify and hold Lessor harmless from and
against any and all claims, actions, damages, demands, obligations,
liabilities and liens and all costs and expenses, including but no
limited to reasonable attorney's and accountants' fees and court
costs, incurred by Lessor in connection therewith, arising out of the
Lease including but not limited to the purchase, ownership, leasing,
licensing, possession, maintenance, design, manufacture, condition,
use or return of the Equipment, or arising by operation of law or on
account of personal injury, strict liability in tort, negligence or
patent, trade secret, trademark, or copyright infringement excluding,
however, any of the foregoing to the extent they result from the gross
negligence or willful misconduct of Lessor.
8. Risk of Loss
(a) Lessee shall bear the risk of the Equipment being lost, damaged,
destroyed, stolen, confiscated, or condemned ("Event of Loss") from
any source, arising from the date of delivery of the Equipment to
Lessee through and including the date upon which the Equipment is
returned to Lessor or such person as Lessor may designate. In the
event any item of Equipment is lost, destroyed, damaged, stole,
confiscated or condemned, Lessee will promptly repair, restore, or
replace such item of Equipment with like items reasonably acceptable
to Lessor, and having a fair market value equal to that of the
affected item prior to its being so affected, at Lessee's sole cost
and expense; provided, however, the Lessee shall not be required to
make any repair, restoration or replacement to the Equipment if Lessee
shall elect to terminate this Lease and pay the Stipulated Loss Value
in accordance with Schedule A to the Supplement describing such item
of Equipment.
(b) Lessee shall defend, indemnify and hold Lessor harmless against
any and all claims, demands and liabilities, including attorneys' fees
of Lessor, with respect to any loss or damages to the Equipment.
(c) Lessee shall obtain, pay for and maintain at all times until the
Equipment has been returned to Lessor pursuant to the provisions
hereof, public liability, property damage, all risk, and fire and in
such amounts extended coverage insurance with respect to the
Equipment, in each case in such form as shall be reasonably
satisfactory to lessor. However, Lessee will have the right to self-
insure in accordance with its normal business practice for equipment
located at locations other than its headquarters. Such property
damage insurance shall be in an amount at least equal to the greater
of the replacement value of such Equipment or the Stipulated Loss
Value of such Equipment, determined as of the date of the occurrence
of an Event of Loss, in accordance with Schedule A to the Supplement
describing such item of Equipment. All policies shall be issued by
insurers of recognized responsibility, reasonably satisfactory to
Lessor, and shall name as insured parties and/or loss payees Lessor,
Lessee and Lessor's assignees as their interests may appear and
provide that they cannot be cancelled or modified except on at least
thirty (30) days' prior written notice to Lessor. Evidence of such
insurance shall be delivered to Lessor no later than the Commencement
Date of the applicable Supplement and from time to time thereafter as
Lessor may request and in the case of renewals at least thirty (3)
days prior to the expiration of the current policy.
(d) If Lessee fails to perform any of its obligations under this
Lease, including but not limited to, the maintenance of insurance on
the Equipment, or the discharge of any encumbrances created by the
Lessee, Lessor has the right, but not the obligation, to substitute
performance, in which case Lessee shall pay Lessor the cost thereof.
The performance by the Lessor of any of Lessee's obligations shall not
be considered a waiver of any sort by Lessor of his rights under the
agreement.
(e) Lessee shall notify Lessor within 10 days of the date when Lessee
becomes aware or should have become aware of an Event of Loss. In the
event that Lessee has not elected to repair, replace or restore such
item(s) of Equipment pursuant to this Section 8, Lessee shall then
have the obligation to pay Lessor, on the due date of the next
installment of Monthly Rental, an amount equal to the Stipulated Loss
Value of the item(s) of Equipment computed as of the due date of such
payment plus any rent or other charges payable by Lessee accrued
thereon and unpaid as of the date on which such Event of Loss
occurred. Stipulated loss payments shall be made only to the extent
that Lessor has not received adequate insurance proceeds to cover the
charges due under the Lease. The stipulated loss value, once it
becomes payable to Lessor, shall accrue interest at a rate of 1-1/2%
per month. Upon payment of such Stipulated Loss Value, this Lease
shall terminate with respect to such item(s) of Equipment (but not
with respect to the remaining Equipment) and Lessee's obligation to
pay rent hereunder shall terminate with respect only to such item(s)
of Equipment.
(f) If Lessee is not in default hereunder, the proceeds of any
property damage insurance or condemnation award or other payment in
respect of a requisition or taking by any governmental authority,
received by Lessor with respect to an Event of Loss shall be applied
by Lessor as a credit against, or a reimbursement of, such payment of
Stipulated Loss Value by Lessee, and the excess of such payment over
the Stipulated Loss Value shall be retained by Lessee.
9. Tax Benefits and Indemnification
(a) This Lease has been entered into on the basis that Lessor or any
assignee of Lessor intends to claim such depreciation, interest
deductions and deductions for transaction costs as are provided to an
owner of Equipment under the Internal Revenue Code of 1986, as
amended. If, as a direct result of any act or omission of Lessee, all
or any portion of the above tax benefits are lost, may not be claimed,
are disallowed, or are recaptured with respect to Lessor or any
assignee of Lessor, Lessee shall, upon demand, indemnify Lessor or
Lessor's assignee on an after-tax basis so as to compensate Lessor or
Lessor's assignee for such tax loss.
(b) Prior to the Commencement Date, Lessor reserves the right to
terminate this Lease or any Supplement hereto in the event that any
change in the tax law, including retroactive application of such
change, results in the loss, disallowance, or recapture of any
portions of the depreciation, deductions, or other benefits described
in Section 9(a) above. Lessor disclaims any representation or
warranty regarding the characterization of the Lease for tax,
accounting or other purposes.
10. Events of Default and Remedies
A. Events of Default. The occurrence of any of the following shall
constitute and Event of Default under this Lease:
(a) Lessee shall fail o pay all or any portion of any installment of
Monthly Rental or other payment hereunder when and as the same shall
become due and payable after 10 days and written notice from Lessor.
(b) Any representation or warranty made in this Lease, or in any
report, financial statement or other statement furnished pursuant to
the provisions of this Lease or otherwise shall prove to have been
false or misleading in any material respect as of the date on which
the same was made.
(c) Lessee shall fail to duly observe or perform any covenant,
condition or agreement made by it hereunder and shall continue to fail
to do so for a period of fifteen (15) days after written notice from
Lessor and Lessee's inability to diligently pursue corrective action.
(d) Lessee shall seek the protection of any federal or state
bankruptcy or insolvency law or a proceeding under any such law shall
be instituted against Lessee or all or any part of its property under
such laws and, if against Lessee, it shall fail to cause the same to
be dismissed within thirty (30) days;
(e) The insolvency, cessation of business, or termination of existence
of the Lessee or any guarantor of this Lease;
(f) A material adverse change in the financial condition of the Lessee
or any guarantor of this Lease that results in Lessee's inability to
perform under the Lease.
B. Remedies. If an Event of Default shall occur, Lessor may exercise
(a) or (b) and all of (c), (d) and (e) in the following remedies:
(a) Terminate this Lease and Lessee's rights hereunder, in which event
an amount equal to unpaid rentals to the date of termination, plus, as
liquidated damages for loss of the bargain and not as a penalty, the
Stipulated Loss Value determined in accordance with Schedule A to each
Supplement describing each of the items of Equipment, computed as of
the rental payment date preceding the date of such termination, shall
be payable by Lessee to Lessor;
(b) Recover from Lessee, as liquidated damages for loss of bargain and
not as a penalty, an amount equal to the present value of all monies
to be paid by Lessee during the remaining Initial Term or any
successive period then in effect, discounted at a rate of six percent
which payment shall become immediately due and payable.
(c) Proceed, by appropriate court action(s) either at law or in
equity, to enforce performance by Lessee of the applicable covenants
of this Lease or to recover damages for the breach thereof;
(d) Subject always to any mandatory requirements of applicable law
then in effect:
(i) retake possession of the Equipment without liability to return to
Lessee any rentals or other payments theretofore made, free from all
claims by Lessee, by directing Lessee at any place or places at which
Lessor then maintains facilities for the maintenance or storage of
equipment similar to the Equipment or to any other place or places at
which Lessor then maintains facilities for the maintenance or storage
of equipment similar to the Equipment or to any other place or places
which may be reasonably convenient to Lessee and Lessor in which event
Lessee shall at its own expense forthwith cause the same to be moved
to the place or places so designated by Lessor and there delivered to
Lessor, it being understood (x) that Lessee's obligation to so deliver
the Equipment is of the essence to this Lease and that, accordingly,
upon application to a court of equity having jurisdiction, Lessor
shall be entitled to a decree requiring specific performance by Lessee
or such obligation and (y) that Lessor may, without charge, keep any
of the Equipment repossessed by Lessor pursuant to this clause on the
premises of Lessee pending further action by Lessor as hereinafter
provided; or
(ii) If Lessee shall fail to deliver the Equipment pursuant to the
foregoing Section 10(B)(d)(i) hereof, personally or by agents, retake
possession of the Equipment from Lessee (and any items in or on the
Equipment at the time or repossession, wherever such items may be,
which items shall be held temporarily for Lessee without liability on
the part of Lessor), after giving notice by process of law or
otherwise, without liability to return to Lessee any rental or other
payments heretofore made, free from all claims by Lessee, and for that
purpose Lessor may enter upon Lessee's premises where any of the
Equipment is located and remove the same without liability.
(e) In the event Lessor repossesses the Equipment as herein provided,
release the Equipment in such a manner, for such time and upon such
terms as Lessor may determine, or sell the Equipment upon such terms
and conditions as Lessor may determine.
C. Application of Release and Sale Proceeds.
(a) Any amount received by Lessor pursuant to a release of Equipment
as provided in Section 10(B)(d) above, shall be applied, in the
following order, to the payment of (i) any expenses and fees
(including reasonable attorneys' and accountants' fees and court
costs) incurred by Lessor in retaking possession of, and removing,
storing and leasing the Equipment; (ii) any costs and expenses
incurred by Lessor in overhauling or repairing the Equipment; (iii)
any rental then remaining unpaid under this Lease; and (iv) any other
sums then owing to Lessor by Lessee hereunder.
(b) Any amount received by Lessor pursuant to a sale or other
disposition of Equipment pursuant to Section 10(B)(d), above, shall be
applied, in the following order, to the payment of: (i) the amounts
set forth in Sections (a)(i), (ii) and (iv) above; (ii) the rentals
accrued under this Lease but unpaid up to the time of such sale or
other dispositions; and (iii) the Stipulated Loss Value of the
Equipment determined as of the date of such sale or other
dispositions, with the balance of the proceeds, if any, retained by
Lessor.
(c) Lessee shall remain liable to Lessor to the extent that the
aggregated amounts received by Lessor in connection with the release,
the sale or other disposition of Equipment is insufficient to satisfy
in full those items described in this Sections 10(C)(a)(i), (ii),
(iii) and (iv) and (b)(i), (ii) and (iii) above.
D. General
(a) Lessor's remedies are cumulative and are not exclusive of other
remedies allowed at law or in equity, and the exercise of one remedy
will not be deemed to be an election or waiver of remedies.
(b) Lessee shall pay to Lessor, upon demand, all costs and expenses
(including reasonable attorney's fees and disbursements, all expenses
associated with repossessing, reconditioning, selling or leasing the
Equipment or otherwise enforcing the provisions of this Lease) which
are incurred by Lessor as a result of an Event of Default and the
exercise of any remedy under the Lease.
(c) No action taken by Lessor under the Lease will result in a
"termination" of the Lease and, in any event, a termination of the
Lease will not relieve Lessee from any obligations under the Lease.
(d) Lessor is entitled to damages from Lessee in the amount of any
lost tax benefit to Lessor due to the occurrence of an Event of
Default caused by Lessee that has a material adverse effect on the
Lessor.
(e) Any sale or re-lease of the Equipment by Lessor will not relieve
Lessee of its liability for damages and will be free and clear of any
interest of Lessee.
11. Net Lease
Except as otherwise specifically provided in the Lease, it is
understood and agreed that each Supplement constitutes a net lease,
and that, as between Lessor and Lessee, Lessee shall be responsible
for all costs and expenses of every nature whatsoever arising out of
or in connection with or related to this Lease or the Equipment.
Lessee hereby agrees that in the event that Lessee fails to pay or
perform any obligation under this Lease, Lessor may, at its option,
pay or perform said obligation, and any payment made or expense
incurred by Lessor in connection therewith shall become additional
rent which shall be due and payable by Lessee upon demand. All
amounts payable by Lessee under this Lease shall be absolute and
unconditional and shall not be subject to any abatement, reduction,
offset, defense, counterclaim, interruption, deferment or recoupment
for any reason, whatsoever, and such amounts shall be and continue to
be payable in all events. All amounts due under the Lease are payable
without demand, notice or grace periods, and shall accrue interest at
a rate of 1-1/2% per month from the date due until fully paid.
12. Assignment
(a) Lessee agrees that Lessor may transfer or assign all or any part
of Lessor's right, title and interest in, under or to the Equipment
and this Lease and any Supplement and any or all sums due or to become
due pursuant any of the above, to any third party ("Assignee") for any
reason. Lessee agrees that upon receipt of written notice from Lessor
or Assignee, Lessee shall perform all of its obligations hereunder for
the benefit of Assignee and, if so desire, shall pay all sums due or
to become due hereunder directly to Assignee or to any other party
designated by Assignee. Lessee hereby covenants, represents and
warrants as follows and agrees that Assignee shall be entitled to rely
on and shall be considered a third party beneficiary of the following
covenants, representations and warranties: (i) Lessee's obligations
to Assignee hereunder are absolute and unconditional and are not
subject to any abatement, reduction, offset, defense, counterclaim,
interruption, deferment or recoupment available to Lessee for any
reason whatsoever including, but not limited to, operation of law,
defect in the Equipment, failure of Lessor to perform any of its
obligations hereunder or for any other cause or reason whatsoever,
whether similar or dissimilar to the foregoing; (ii) Lessee shall not
look to Assignee to perform any of Lessor's obligations hereunder;
(iii) Lessee will not amend or modify this Lease without the prior
written consent of Assignee; and (iv) Lessee will send a copy to
Assignee of each notice which Lessee sends to Lessor.
(b) Upon receipt of notice of such transfer or assignment, Lessee
agrees to promptly execute and deliver to Lessor such documentation as
Assignee may reasonably require to secure and/or complete such
transfer or assignment, including, but not limited to, the following:
(i) an acknowledgement of, or consent to, the assignment which may
require Lessee to make certain representations or reaffirmations as to
some of the basic terms and covenants contained in this Lease; (ii) a
certified copy of resolutions of Lessee; (iii) an opinion of counsel
stating that the Lessee is validly organized and that it may enter
into this Lease Agreement and that the execution of this Lease is
valid and binding; (iv) Financing Statements; and (v) a Certificate of
Delivery and Acceptance. Nothing contained in such documentation
required by Assignee shall be in derogation of any of the rights
granted to Lessee hereunder. Notwithstanding such assignment, Lessor
shall not be relieved of any of its obligations hereunder, and the
rights of Lessee hereunder shall not be impaired.
13. Miscellaneous
(a) Neither this Lease, any Supplement nor any consent or approval
provided for herein shall not be binding upon Lessor unless signed on
its behalf by duly authorized officers at this home office. This
Lease shall be deemed to have been made in the State of Illinois and
shall be governed in all respects by its laws. Without reference,
however, to choice of law provisions.
(b) This Lease and each Supplement constitute the entire agreement and
understanding of the parties with respect to the lease of Equipment
listed on each Supplement (notwithstanding any contrary provision
contained in any instrument submitted by Lessee), and supersedes any
or all prior agreements and understanding related to the subject
matter hereof, and may not be changed orally but only by an agreement
in writing signed by both parties. Lessee's purchase order, if any,
shall be used for accounting purposes only.
(c) All notices hereunder shall be in writing and shall be delivered
in person or sent by certified mail, postage prepaid, by facsimile
transmission, or by private courier, to the address of the other party
as set forth herein or to such other address as such party shall have
designated by proper notice.
(d) This Lease shall be binding upon and insure to the benefit of
Lessor and Lessee and their respective successors and assigns
(including any subsequent assignee of an Assignee).
(e) No representation or statement made by either party not contained
herein shall be binding upon such party. No provision of this Lease
or any Supplement which may be deemed unenforceable shall any way
invalidate any other provision or provisions hereof, all of which
shall remain in full force and effect. Neither any failure nor any
delay on the part of either party in exercising any of its rights
hereunder shall operate as a waiver thereof, nor shall a single or
partial exercise of any other right hereunder.
(f) A waiver of any of the terms and conditions hereof shall not be
effective unless in writing and signed by the party against whom such
waiver is sought to be enforced. Any waiver of the terms hereof shall
be effective only in the specific instance and for the specific
purpose given.
(g) Lessor is hereby authorized by Lessee to cause this Lease and
other instruments, including financing statements, to be filed or
recorded for the purposes of evidencing and putting third parties on
notice of Lessor's or Assignee's interest in the Equipment and Lessee
agrees that Lessor or Assignee may execute such instruments for and on
behalf of Lessee. If for any reason whatsoever Lessee is determined
to have an interest in the Equipment, other than a purely leasehold
interest, Lessee agrees to and does hereby expressly subordinate such
interest to the interests of the owner of the Equipment and to any
security interest presently in existence or hereafter acquired.
Lessee shall execute all documents requested by an owner of the
Equipment, Lessor, or any Assignee to evidence such subordination.
(h) During the term of this Lease, Lessee agrees to deliver to Lessor
a copy of Lessee's annual audited financial statements within a
reasonable time after said statements are available.
(i) Lessee's covenants, representations and warranties shall survive
the expiration or other termination of this Lease.
(j) If Equipment delivered pursuant to any Supplement contains any
features not specified therein, Lessor reserves the right to remove
any such features at any reasonable time without liability for any
downtime occasioned thereby.
(k) The Lease and any Supplement thereto may be executed in any number
of counterparts, each of which shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument. To the extent that this Lease constitutes chattel paper,
no security interest in this Lease may be created through the transfer
or possession of any counterpart other than an executed counterpart or
a photostatic copy of an executed counterpart of this Lease together
with an executed Supplement marked "Duplicate Original No. 1 of.
(l) The invalidity of any provision of this Lease shall not affect any
other provision.
(m) If this Lease is deemed a financing arrangement or a loan, nothing
contained herein requires the Lessee to make any such deemed interest
payments which would subject the Lessor to penalty under the
applicable law.
(n) Time is of the essence under the Lease.
Lessor: IFA Incorporated
By:
Title: Keith E. King, Senior Vice President
Lessee: Edward D. Jones & Company, L.P.
By: Steve Novik
Title: Principal
EXHIBIT 10.3
MASTER LEASE AGREEMENT
This MASTER LEASE AGREEMENT, dated as of April 21, 1994,
("Agreement"), between General Electric Capital Corporation, with an
office at 1415 West 22 Street Suite 300, Oak Brook, Illinois 60521
(hereinafter called, together with its successors and assigns, if any,
"Lessor"), and Edward D. Jones & Co., L.P., organized and existing
under the laws of the State of Missouri with its mailing address and
chief place of business at 201 Progress Parkway, Maryland Heights, MO
63043-3042 (hereinafter called "Lessee").
WITNESSETH:
I. Leasing:
(a) Subject to the terms and conditions set forth below, Lessor
agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the
equipment ("equipment") described in Annex A to any schedule hereto
("Schedule"). Terms defined in a Schedule and not otherwise defined
herein shall have the meanings ascribed to them in such Schedule.
(b) The obligation of Lessor to purchase Equipment from the
manufacturer or supplier thereof ("Supplier") and to lease the same to
Lessee under any Schedule shall be subject to receipt by Lessor, prior
to the Lease Commencement Date (with respect to such Equipment), of
each of the following documents in form and substance satisfactory to
Lessor: (i) a Schedule relating to the Equipment then to be leased
hereunder, (ii) a Purchase Order Assignment and Consent in the form of
Annex B to the applicable Schedule, unless Lessor shall have delivered
its purchase order for such Equipment, (iii) evidence of insurance
which complies with the requirements of Section X, and (iv) such other
documents as Lessor may reasonably request. As a further condition to
such obligations of Lessor, Lessee shall, upon delivery of such
Equipment (but not later than the Last Delivery Date specified in the
applicable Schedule) execute and deliver to Lessor a Certificate of
Acceptance (in the form of Annex C to the applicable Schedule)
covering such Equipment, and deliver to Lessor a bill of sale
therefore (in form and substance satisfactory to Lessor). Lessor
hereby appoints Lessee its agent for inspection and acceptance of the
Equipment from the Supplier. Upon execution by Lessee of any
Certificate of Acceptance, the Equipment described thereon shall be
deemed to have been delivered to, and irrevocably accepted by, Lessee
for lease hereunder.
II. Term, Rent and Payment:
(a) The rent payable hereunder and Lessee's right to use the
Equipment shall commence on the date of execution by Lessee of the
Certificate of Acceptance for such Equipment ("Lease Commencement
Date"). The term of this Agreement shall be the period specified in
the applicable Schedule. If any term is extended, the word "term"
shall be deemed to refer to all extended terms, and all provisions of
this Agreement shall apply during any extended terms, except as may be
otherwise specifically provided in writing.
(b) Rent shall be paid to Lessor at its address stated above, except
as otherwise directed by Lessor. Payments of rent shall be in the
amount set forth in, and due in accordance with, the provisions of the
applicable Schedule. If one or more Advance Rentals are payable, such
Advance Rental shall be (i) set forth on the applicable Schedule, (ii)
due upon acceptance by Lessor such Schedule, and (iii) when received
by Lessor, applied to the first rent payment and the balance, if any,
to the final rental payment(s) under such Schedule. In no event shall
any Advance Rental or any other rent payments be refunded to Lessee.
If rent is not paid within ten days of its due date, Lessee agrees to
pay a late charge of five cents ($.05) per dollar on, and in addition
to, the amount of such rent but not exceeding the lawful maximum, if
any.
III. Rent Adjustment:
(a) The periodic rent payments in each Schedule have been calculated
on the assumption (which, as between Lessor and Lessee, is mutual)
that the maximum effective corporate income tax rate (exclusive of any
minimum tax rate) for calendar-year taxpayers ("Effective Rate") will
be thirty-five percent (35%) each year during the lease term.
(b) If, solely as a result of Congressional enactment of any
law(Including, without limitation, any modification of, or amendment
or addition to, the Internal Revenue Code of 1986, as amended, (the
"Code")), the Effective Rate is higher than thirty-five (35%) for any
year during the lease term, then Lessor shall have the right to
increase such rent payments by requiring payment of a single
additional sum equal to the product of (i) the Effective Rate
(expressed as a decimal) for such year less .35 (or, in the event that
any adjustment has been made hereunder for any previous year, the
Effective Rate (expressed as a decimal) used in calculating the next
previous adjustment) times (ii) the adjusted Termination Value. The
adjusted Termination Value shall be the Termination Value (calculated
as of the first rental due in the year for which such adjustment is
being made) less the product of the Tax Benefits that would be
allowable under Section 168 of the Code (as of the first day of the
year for which such adjustment is being made and all subsequent years
of the lease term) times the Effective Rate (expressed as a decimal)
(in the year for which such adjustments is being made). Lessee shall
pay to Lessor the full amount of the additional rent payment on the
later of (i) receipt of notice or (ii) the first day of the year for
which such adjustment is being made.
(c) Lessee's obligations under this Section II shall survive any
expiration or termination of this Agreement.
IV. Taxes:
Except as provided in Sections III and XV(c), Lessee shall have no
liability for taxes imposed by the United State of American or any
State or political subdivision thereof which are on or measured by the
net income of Lessor. Lessee shall report (to the extent that it is
legally permissible) and pay promptly all other taxes, fees and
assessments due, imposed, assessed or levied against any Equipment (or
the purchase, ownership, delivery, leasing, possession, use or
operation thereof), this Agreement (or any rentals or receipts
hereunder), any Schedule, Lessor or Lessee by any foreign, federal,
state or local government or taxing authority during or related to the
term of this Agreement, including, without limitation, all license and
registration fees, and all sales, use, personal property, excise,
gross receipts, franchise, stamp or other taxes, imposts, duties and
charges, together with any penalties, fines or interest thereon (all
hereinafter called "Taxes"). Lessee shall (i) reimburse Lessor upon
receipt of written request for reimbursement for any Taxes charged to
or assessed against Lessor, (ii) on request of Lessor, submit to
Lessor written evidence of Lessee's payment of Taxes, (iii) on all
reports or returns show the ownership of the Equipment by Lessor, and
(iv) send a copy thereof to Lessor.
V. Reports:
(a) Lessee will notify Lessor in writing, within ten (10) days after
any tax or other lien shall attach to any Equipments, of the full
particulars thereof and of the location of such Equipment on the date
of such notification.
(b) Lessee will within (90) days of the close of each fiscal year of
Lessee, deliver to Lessor, Lessee's balance sheet and profit and loss
statement, certified by a recognized firm of certified public
accountants. Upon request Lessee will deliver to Lessor quarterly,
within (90) days of the close of each fiscal quarter of Lessee, in
reasonable detail, copies of Lessee's quarterly financial report
certified by the chief financial officer of Lessee.
(c) Lessee will permit Lessor to inspect any Equipment during normal
business hours.
(d) Lessee will keep the Equipment at the Equipment Location
(specified in the applicable Schedule) and will promptly notify Lessor
of any relocation of Equipment. Upon the written request of Lessor,
Lessee will notify Lessor forthwith in writing of the location of any
Equipment as of the date of such notification.
(e) Lessee will promptly and fully report to Lessor in writing if any
Equipment is lost or damaged (where the estimated repair costs would
exceed ten percent (10%) of its then fair market value), or is
otherwise involved in an accident causing personal injury or property
damage.
(f) Within sixty (60) days after any request by Lessor, Lessee will
furnish a certificate of an authorized officer of Lessee stating that
he has reviewed the activities of Lessee and that, to the best of his
knowledge, there exists no default (as described in Section Xii) or
event which with notice or lapse of time (or both) would become such a
default.
VI. Delivery, Use and Operation:
(a) All Equipment shall be shipped directly from the Supplier to
Lessee.
(b) Lessee agrees that the Equipment will be used by Lessee solely in
the conduct of its business and in a manner complying with all
applicable federal, state, and local laws and regulations.
(c) Lessee shall not assign, mortgage, sublet or hypothecate any
equipment, or the interest of Lessee hereunder, nor shall Lessee
remove any equipment from the continental United States, without the
prior written consent of the Lessor.
(d) Lessee will keep the Equipment free and clear of all liens and
encumbrances other than those which result from acts of Lessor.
VII. Service:
(a) Lessee will, at its sole expense, maintain each unit of Equipment
in good operating order, repair, condition and appearance in
accordance with manufacturer's recommendations, normal wear and tear
excepted. Lessee shall, if at any time requested by Lessor, affix in
a prominent position on each unit of Equipment plates, tags or other
identifying labels showing ownership thereof by Lessor.
(b) Lessee will not, without the prior consent of Lessor, affix or
install any accessory, equipment or device on any Equipment if such
additional will impair the originally intended function or use of such
Equipment. All additions, repairs, parts, supplies, accessories,
equipment and devices furnished, attached or affixed to any Equipment
which are not readily removable shall be made only in compliance with
applicable law, including Internal Revenue Service guidelines, and
shall become the property of Lessor. Lessee will not, without the
prior written consent of Lessor and subject to such conditions as
Lessor may impose for its protection, affix or install any Equipment
to or in any other personal or real property.
(c) Any alterations or modifications to the Equipment that may, at
any time during the term of this Agreement, be required to comply with
any applicable law, rule or regulation shall be made at the expense of
Lessee.
VIII. Stipulated Loss Value:
Lessee shall promptly and fully notify Lessor in writing if any unit
of Equipment shall be or become worn out, lost, stolen, destroyed,
irreparably damaged in the reasonable determination of Lessee, or
permanently rendered unfit for use from any cause whatsoever (such
occurrences being hereinafter called "Casualty Occurrences"). On the
rental payment date next succeeding a Casualty Occurrence (the
"Payment Date"), Lessee shall pay Lessor the sum of (x) the Stipulated
Loss Value of such unit calculated as of the rental next preceding
such Casualty Occurrence ("Calculation Date"); and (y) all rental and
other amounts which are due hereunder as of the Payment Date. Upon
payment of all sums due hereunder, the term of this lease as to such
unit shall terminated and (except in the case of the loss, theft or
complete destruction of such unit) Lessor shall be entitled to recover
possession of such unit.
IX. Loss or Damage:
Lessee hereby assumes and shall bear the entire risk of any loss,
theft, damage to, or destruction of, any unit of Equipment from any
cause whatsoever from e time the Equipment is shipped to Lessee.
X. Insurance:
Lessee agrees, at its own expense, to keep all Equipment insured for
such amounts and against such hazards as Lessor may require,
including, but not limited to, insurance for damage to or loss of such
Equipment and liability coverage for personal injuries, death or
property damage, with Lessor named as additional insured and with a
loss payable clause in favor of Lessor, as its interest may appear,
irrespective of any breach of warranty or other act or omission of
Lessee. All such policies shall be with companies, and on terms,
satisfactory to Lessor. Lessee agrees to deliver to Lessor evidence
of insurance satisfactory to Lessor. No insurance shall be subject to
any co-insurance clause. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make proof of loss and claim for insurance, and to
make adjustments with insurers and to receive payment of an execute or
endorse all documents, checks or drafts in connection with payments
made as a result of such insurance policies. Any expense of Lessor in
adjusting or collecting insurance shall be borne by Lessee. Lessee
will not make adjustments with insurers except (i) with respect to
claims for damage to any unit of Equipment where the repair costs do
not exceed ten percent (10%) of such unit's fair market value, or (ii)
with Lessor's written consent. Said policies shall provide that the
insurance may not be altered or cancelled by the insurer until after
thirty (30) days written notice to Lessor. Lessor may, at its option,
apply proceeds of insurance, in whole or in part, to (i) repair or
replace Equipment or any portion thereof, or (ii) satisfy any
obligation of Lessee to Lessor hereunder.
XI. Return of Equipment:
(a) Upon any expiration or termination of this Agreement or any
Schedule, Lessee shall promptly, at its own cost and expense: (i)
perform any testing and repairs required to place the affected units
of Equipment in the same condition and appearance as when received by
Lessee (reasonable war and tear excepted) and in good working order
for their originally intended purpose: (ii) if deinstallation,
disassembly or crating is required, cause such units to be
deinstalled, disassembled and crated by an authorized manufacturer's
representative or such other service person as is satisfactory to
Lessor; and (iii) return such units to a location within the
continental United States as Lessor shall direct.
(b) Until Lessee has fully complied with the requirements of Section
XI(A) above, Lessee's rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the lease term.
Lessor may terminate such continued leasehold interest upon ten (10)
days notice to Lessee.
XII. Default:
(a) Lessor may in writing declare this Agreement in default if:
Lessee breaches its obligation to pay rent or any other sum when due
and fails to cure the breach within ten (10) days; Lessee breaches any
of its insurance obligations under Section X; Lessee breaches any of
its other obligations and fails to cure that breach within thirty (30)
days after written notice thereof; any representation or warranty made
by Lessee in connection with this Agreement shall be false or
misleading in any material respect; Lessee becomes insolvent or ceases
to do business as a going concern; any Equipment is illegally used; or
a petition is filed by or against Lessee or any guarantor of Lessee's
obligations to Lessor under any bankruptcy or insolvency laws. Such
declaration shall apply to all Schedules except as specifically
excepted by Lessor.
(b) After default, at the request of Lessor, Lessee shall comply with
the provisions of Section XI(a). Lessee hereby authorizes Lessor to
enter, with or without legal process, any premises where any Equipment
is believed to be and take possession thereof. Lessee shall, without
further demand, forthwith pay to Lessor (i) as liquidated damages for
loss of a bargain and not as a penalty, the Stipulated Loss Value of
the Equipment (calculated as of the rental next preceding the
declaration of default), and (ii) all rentals and other sums then due
hereunder. Lessor may, but shall not be required to, sell Equipment
at private or public sale, in bulk or in parcels, with or without
notice, and without having the Equipment present at the place of sale;
or Lessor may, but shall not be required to, lease, otherwise dispose
of or keep idle all or part of the Equipment; and Lessor may use
Lessee's premises for any or all of the foregoing without liability
for rent, costs, damages or otherwise. The proceeds of sale, lease or
other disposition, if any, shall be applied in the following order of
priorities: (1) to pay all of Lessor's costs, charges and expenses
incurred in taking, removing, holding, repairing and selling, leasing
or otherwise disposing of Equipment; then, (2) to the extent no
previously paid by Lessee, to pay Lessor all sums due from Lessee
hereunder; then (3) to reimburse to Lessee any sums previously paid by
Lessee as liquidated damages; and (4) any surplus shall be retained by
Lessor. Lessee shall pay any deficiency in (1) and (2) forthwith.
(c) The foregoing remedies are cumulative, and any or all thereof may
be exercised in lieu of or in addition to each other or any remedies
at law, in equity, or under statute. Lessee waives notice of sale or
other disposition (and the time and place thereof), and the manner and
place of any advertising. Lessee shall pay Lessor's actual attorney's
fees incurred in connection with the enforcement, assertion, defense
or preservation of Lessor's rights and remedies hereunder, or if
prohibited by law, such lesser sum as may be permitted. Waiver of any
default shall not be a waiver of any other or subsequent default.
(d) Any default under the terms of this or any other agreement
between Lessor and Lessee may be declared by Lessor a default under
this and any such other agreement.
XIII. Assignment:
Lessor may, without the consent of Lessee, assign this Agreement or
any Schedule. Lessee agrees that if Lessee receives written notice of
an assignment from Lessor, Lessee will pay all rent and all other
amounts payable under any assigned Equipment Schedule to such assignee
or as instructed by Lessor. Lessee further agrees to confirm in
writing receipt of the notice of assignment as may be reasonably
requested by assignee. Lessee hereby waives and agrees not to assert
against any such assignee any defense, set-off, recoupment claim or
counterclaim which Lessee has or may at any time have against Lessor
for any reason whatsoever.
XIV. Net Lease; No Set-Off, Etc:
This Agreement is a net lease. Lessee's obligation to pay rent and
other amounts due hereunder shall be absolute and unconditional.
Lessee shall not be entitled to any abatement or reductions of, or
set-offs against, said rent or other amounts, including, without
limitation, those arising or allegedly arising out of claims (present
or future, alleged or actual, and including claims arising out of
strict tort or negligence of Lessor) or Lessee against Lessor under
this Agreement or otherwise. Nor shall this Agreement terminate or
the obligations of Lessee be affected by reason of any defect in or
damage to, or loss of possession, use or destruction of, any Equipment
from whatsoever cause. It is the intention of the parties that rents
and other amounts due hereunder shall continue to be payable in all
events in the manner and at the times set forth herein unless the
obligation to do so shall have been terminated pursuant to the express
terms hereof.
XV. Indemnification:
(a) Lessee hereby agrees to indemnify, save and keep harmless Lessor,
its agents, employees, successors and assigns from and against any and
all losses, damages, penalties, injuries, claims, actions and suits,
including legal expenses, of whatsoever kind and nature, in contract
or tor, whether caused by the active or passive negligence of Lessor
or otherwise, and including, but not limited to, Lessor's strict
liability in tort, arising out of (i) the selection, manufacture,
purchase, acceptance or rejection of Equipment, the ownership of
Equipment during the term of this Agreement, and whether or not
discoverable by Lessor or Lessee and any claim for patent, trademark
or copyright infringement or environmental damage) or (ii) the
condition of Equipment sold or disposed of after use by Lessee, any
sublessee or employees of Lessee. Lessee shall, upon request, defend
any actions based on, or arising out of, any of the foregoing.
(b) Lessee hereby represents, warrants and covenants that (i) on the
Lease Commencement Date for any unit of Equipment, such unit will
qualify for all of the items of deduction and credit specified in
Section C of the applicable Schedule ("Tax Benefits") in the hands of
Lessor (all references to Lessor in this Section XV include Lessor and
the consolidated taxpayer group of which Lessor is a member), and (ii)
at no time during the term of this Agreement will Lessee take or omit
to take, nor will it permit any sublessee or assignee to take or omit
to take, any action (whether or not such act or omission is otherwise
permitted by Lessor or the terms of this Agreement), which will result
in the disqualification of any Equipment for, or recapture of, all or
any portion of such Tax Benefits.
(c) If as a result of a breach of an representation, warranty or
covenant of the Lessee contained in this Agreement or any Schedule (x)
tax counsel of Lessor shall determine that Lessor is not entitled to
claim on its Federal income tax return all or any portion of the Tax
Benefits with respect to any Equipment, or (y) any such Tax Benefit
claimed on the Federal income tax return of Lessor is disallowed or
adjusted by the Internal Revenue Service, or (z) any such Tax Benefit
is recomputed or recaptures (any such determination, disallowance,
adjustment, recomputation or recapture being hereinafter called a
"Loss"), then Lessee shall pay to Lessor as an indemnity and as
additional rent, such amount as shall, in the reasonable opinion of
Lessor, cause Lessor's after-tax economic yields and cash flows,
computed on the same assumptions, including tax rates (unless any
adjustment has been made under Section III hereof, in which case the
Effective Rate used in the next preceding adjustment shall be
substituted), as were utilized by Lessor in originally evaluating the
transaction (such yields and flows being hereinafter called the "Net
Economic Return"_ to equal the Net Economic Return that would have
been realized by Lessor if such Loss had not occurred. Such amount
shall be payable upon demand accompanied by a statement describing in
reasonable detail such Loss and the computation of such amount.
(d) All of Lessor's rights, privileges and indemnities contained in
this Section XV shall survive the expiration or other termination of
this Agreement and the rights, privileges and indemnities contained
herein are expressly made for the benefit of, and shall be enforceable
by Lessor, its successors and assigns.
XVI. Disclaimer:
Lessee acknowledges that it has selected the equipment without any
assistance from Lessor, its agents or employees. Lessor does not
make, has not made, nor shall be deemed to make or have made, any
warranty or representation, either express or implied, written or
oral, with respect to the equipment leased hereunder or any component
thereof, including, without limitation, any warranty as to design,
compliance with specifications, quality of materials or workmanship,
merchantability, fitness for any purpose, use or operation, safety,
patent, trademark or copyright infringement, or title. All such
risks, as between Lessor and Lessee, are to be borne by Lessee.
Without limiting the foregoing, Lessor shall have no responsibility or
liability to Lessee or any other person with respect to any of the
following, regardless of any negligence of Lessor (i) and liability,
loss or damage caused or alleged to be caused directly or indirectly
by any Equipment, any inadequacy thereof, any deficiency or defect
(latent or otherwise) therein, or any other circumstance in connection
therewith; (ii) the use, operation or performance of any Equipment or
any risks relating thereto; (iii) any interruption of service, loss of
business or anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement or
replacement of any Equipment. If, and so long as, no default exists
under this Lease, Lessee shall be, and hereby is, authorized during
the term of this lease to assert and enforce, at Lessee's sole cost
and expense, from time to time, in the name of and for the account of
Lessor and/or Lessee, as their interests may appear, whatever claims
and rights Lessor may have against any Supplier of the Equipment.
XVII. Representations and Warranties of Lessee:
Lessee hereby represents and warrants to Lessor that on the date
hereof and on the date of executive of each Schedule:
(a) Lessee has adequate power and capacity to enter into, and perform
under, this Agreement and all related documents (together, the
"Documents") and is duly qualified to do business wherever necessary
to carry on its present business and operations, including the
jurisdiction(s) where the Equipment is or is to be located.
(b) The Documents have been duly authorized, executed and delivered
by Lessee and constitute valid, legal and binding agreements,
enforceable in accordance with their terms, except to the extent that
the enforcement of remedies therein provided may be limited under
applicable bankruptcy and insolvency laws.
(c) No approval, consent or withholding of objections is required
from any governmental authority or instrumentality with respect to the
entry into or performance by Lessee of the Documents except such as
have already been obtained.
(d) The entry into and performance by Lessee of the Documents will
not: (k) violate any judgment, order, law or regulation applicable to
Lessee or any provision of Lessee's Certificate of Incorporation or
By-Laws; or (ii) result in any breach of, constitute a default under
or result in the creation of any lien, charge, security interest or
other encumbrance upon any Equipment pursuant to any indenture,
mortgage, deed of trust, bank loan or credit agreement or other
instrument( other than this Agreement) to which Lessee is a party.
(e) There are no suits or proceedings pending or threatened in court
or before any commission, board or other administrative agency against
or affecting Lessee, which will have a material adverse effect on the
ability of Lessee to fulfill its obligations under this Agreement.
(f) The Equipment accepted under any Certificate of Acceptance is and
will remain tangible personal property.
(g) Each Balance Sheet and Statement of Income delivered to Lessor
has been prepared in accordance with generally accepted accounting
principles, and since the date of the most recent such Balance Sheet
and Statement of Income, there has been no material adverse change.
(h) Lessee is and will be at all times validly existing and in good
standing under the laws of the State of its incorporation (specified
in the first sentence of this Agreement).
(i) The Equipment will at all times be used for commercial or
business purposes.
XVIII. Early Termination:
(a) On or after the First Termination Date (specified in the
applicable Schedule), Lessee may, so long as no default exist
hereunder, terminate this Agreement as to all (but not less than all)
of the Equipment on such Schedule as of a rent payment date
("Termination Date") upon at least ninety (90) days prior written
notice to Lessor.
(b) Lessee shall, and Lessor may, solicit cash bids for the Equipment
on an as is, where is basis without recourse to or warranty from
Lessor, express or implied ("as is basis"). Prior to the Termination
Date, Lessee shall (i) certify to Lessor any bids received by Lessee
and (ii) pay to Lessor (A) the Termination Value (calculated as of the
rental due on the Termination Date) for the Equipment, and (b) all
rent and other sums due and unpaid as of the Termination Date.
(c) Provided that all amounts due hereunder have been paid on the
Termination Date, Lessor shall (i) sell the Equipment as is basis for
cash to the highest bidder and (ii) refund the proceeds of such sale
(net of any related expenses) to Lessee up to the amount of the
Termination Value. If such sale is not consummated, no termination
shall occur and Lessor shall refund the Termination Value (less any
expenses incurred by Lessor) to Lessee.
(d) Notwithstanding the foregoing, Lessor may elect by written
notice, at any time prior to the Termination Date, not to sell the
Equipment. In that event, on the Termination Date Lessee shall (i)
return the Equipment (in accordance with Section XI) and (ii) pay to
Lessor all amounts required under Section XVIII(b) less the amount of
the highest bid certified by Lessee to Lessor.
XIX. Purchase Option
(a) So long as no default exists hereunder and the lease has not been
earlier terminated, Lessee may at lease expiration, upon at least one
hundred eighty (180) days prior written notice to Lessor, purchase all
(but not less than all) of the Equipment in any Schedule on an as is
basis for cash equal to its then Fair Market Value (plus all
applicable sales taxes).
(b) "Fair Market Value" shall mean the price which a willing buyer
(who is neither a lessee in possession nor a used equipment dealer)
would pay for the Equipment in an arm's-length transaction to a
willing seller under no compulsion to sell; provided, however, that in
such determination: (i) the Equipment shall be assumed to be in the
condition in which it is required to be maintained and returned under
this Agreement; (ii) in the case of any installed Equipment, that
Equipments shall be valued on an installed basis; and (iii) costs of
removal from current location shall not be a deduction from such
valuation. I Lessor and Lessee are unable to agree on the Fair Market
Value at least one hundred thirty-five (135) days before lease
expiration, Lessor shall appoint an independent appraiser (reasonably
acceptable to Lessee) to determine Fair Market Value, and that
determination shall be final, binding and conclusive. Lessee shall
bear all costs associated with any such appraisal.
(c) Lessee shall be deemed to have waived this option unless it
provides Lessor with written notice of its irrevocable election to
exercise the same within fifteen (15) days after Fair Market Value is
determined (by agreement or appraisal).
XX. Miscellaneous:
(a) Lessee hereby unconditionally waives its right to a jury trial of
any claim or cause of action based upon or arising out of, directly or
indirectly, this lease, any of the related documents, any dealings
between Lessee and Lessor relating to the subject matter of this
transaction or any related transactions, and/or the relationship that
is being established between Lessee and Lessor. The cope of this
waiver is intended to be all encompassing of any and all disputes that
may be filed in any court (including, without limitation, contract
claims, tort claims, breach of duty claims, and all other common law
and statutory claims). This waiver is irrevocable meaning that it may
not be modified either orally or in writing, and the waiver shall
apply to any subsequent amendments, renewals, supplements or
modifications to this lease, any related documents, or to any other
documents or agreements relating to this transaction or any related
transaction. In the event of litigation, this lease may be filed as a
written consent to a trial by the court.
(b) Unless and until Lessee exercise its rights under Section XIX
above, nothing herein contained shall give or convey to Lessee any
right, title or interest in and to any Equipment except as a lessee.
Any cancellation or termination by Lessor, pursuant to the provision
of this Agreement, any Schedule, supplement or amendment hereto, or
the lease of any Equipment hereunder, shall not release Lessee from
any then outstanding obligations to Lessor hereunder. All Equipment
shall at all times remain personal property of Lessor regardless of
the degree of its annexation to any real property and shall not by
reason of any installation in, or affixation to, real or personal
property become a part thereof.
(c) Time is of the essence of this Agreement. Lessor's failure at
any time to require strict performance by Lessee of any of the
provisions hereof shall not waive or diminish Lessor's right
thereafter to demand strict compliance therewith. Lessee agrees, upon
Lessor's request, to execute any instrument necessary or expedient for
filing, recording or perfecting the interest of Lessor. All notices
required to be given hereunder shall be deemed adequately given if
sent by registered or certified mail to the addressee at its address
stated herein, or at such other place as such addressee may have
designated in writing. This Agreement and any Schedule and Annexes
thereto constitute the entire agreement of the parties with respect to
the subject matter hereof. No variation or modification of this
agreement or any waiver of any of its provisions or conditions, shall
be valid unless in writing and signed by an authorized representative
of the parties hereto.
(d) In case of a failure of Lessee to comply with any provision of
this Agreement, Lessor shall have the right, but shall not be
obligated to, effect such compliance, in whole or in part; and all
moneys spent and expenses and obligations incurred or assumed by
Lessor in effecting such compliance shall constitute additional rent
due to Lessor within five days after the date Lessor sends notice to
Lessee requesting payment. Lessor's effecting such compliance shall
not be a waiver of Lessee's default.
(e) Any rent or other amount not paid to Lessor when due hereunder
shall bear interest, both before and after any judgment or termination
hereof, at the lesser of eighteen percent (18%) per annum or the
maximum rate allowed by law. Any provisions in this Agreement and any
Schedule which are in conflict with any statue, law or applicable rule
shall be deemed omitted, modified or altered to conform thereto.
In witness whereof, Lessee and Lessor have caused this Agreement to be
executed by their duly authorized representatives as of the date first
above written.
Lessor: Lessee:
General Electric Capital Corporation Edward D. Jones & Co., L.P.
By: By:
Title: Title:
ADDENDUM TO MASTER LEASE AGREEMENT
DATES AS OF APRIL 21, 1994
This Addendum (This "Addendum") amends and supplements the above
referenced Master Lease Agreement (The "Agreement"), between General
Electric Capital Corporation ("Lessor") and Edward D. Jones & Co.,
L.P. ("Lessee") and is hereby incorporated into the Lease as though
fully set forth therein. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Lease. This Addendum
shall be deemed to have been entered into contemporaneously with the
Lease.
The Agreement is hereby amended as follows:
1. In Section V(c), add "upon twenty four (24) hours prior notice" to
the end thereof.
2. In Section XII(b), delete "with or without legal process" from the
second line and replace it with "without legal process (unless
required by law)".
3. In Section XII (c), in the third sentence, replace "actual" with
"reasonable" and add the following to the end of the sentence:
, provided Lessor is the prevailing party.
4. In Section XIII add the following after the second sentence:
Lessee shall have no obligation to any assignee unless and until is
has received written notice of the assignment.
5. In Section XV(a), add the following to the end of subsection
(ii):
, except to the extent such condition was created by the negligence or
willful misconduct of Lessor.
6. In Section XVI, replace the last sentence with the following:
The benefit of any representations or warranties (express or implied)
made to Lessor by a Supplier shall extend to Lessee to the extent of
Lessee's leasehold interest.
7. In Section XVII(h), replace "incorporation" with "formation".
8. Section XVIII shall be replaced with the following:
XVIII. Early Termination:
(a) On any rent payment date after the First Termination Date (each a
"Termination Date"), but in no event more than once in any three month
period, and provided no default exists hereunder, Lessee may, upon
ninety (90) days prior written notice, terminate this Agreement as to
all (but not less than all) of the Equipment at one or more Equipment
Locations listed on one or more Schedules which have the same or an
earlier First Termination Date, provided that, in any twelve (12)
month period, the number of Equipment Locations involved in any such
termination may not exceed thirty (30).
(b) Lessee shall, and Lessor may, solicit cash bids for the Equipment
on an as is, where is basis without recourse to or warranty from
Lessor, express or implied ("as is basis"). Prior to the Termination
Date, Lessee shall (i) certify to Lessor any bids received by Lessee
and (ii) pay to Lessor (A) the Termination Value (calculated as of the
rental due on the Termination Date) for the Equipment, and (B) all
rent and other sums due and unpaid as of the Termination Date.
Neither Lessee nor its agents shall be permitted to bid.
(c) Provided that all amounts due hereunder have been paid on the
Termination Date, Lessor shall (i) sell the Equipment on an as is
basis for cash to the highest bidder and (ii) refund the proceeds of
such sale (net of related expense) to Lessee up to the amount of the
Termination Value. If such sale is not consummated, no termination
shall occur and Lessor shall refund the Termination Value (less any
expenses incurred by Lessor) to Lessee.
Except as expressly modified hereby, all terms and provisions of the
Agreement shall remain in full force and effect. This Addendum is not
binding nor effective with respect to the Agreement or the Equipment
until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee.
In witness whereof, Lessee and Lessor have caused this Addendum to be
executed by their duly authorized representatives as of the date first
above written.
Lessor: Lessee:
General Electric Capital Corporation Edward D. Jones & Co., L.P.
By: By:
Name: Name: Steve Novik
Title: Title: Principal
ADDENDUM TO SCHEDULE NO. 0001
DATED APRIL 21, 1994
TO MASTER LEASE AGREEMENT
DATED AS OF APRIL 21, 1994
This Addendum (this "Addendum") amends and supplements the above
referenced schedule "the "Schedule") to the above referenced Master
Lease Agreement (the "Agreement"), between General Electric Capital
Corporation ("Lessor") and Edward D. Jones & Co., L.P. ("Lessee") and
is hereby incorporated into the Schedule as though fully set forth
therein. Capitalized terms not otherwise defined herein shall have
the meanings set forth in the Lease. This Addendum shall be deemed to
have been entered into contemporaneously with the Schedule.
For purposes of this Schedule only, the Agreement is hereby amended as
follows:
1. Section III (Rent Adjustment) is deleted in its entirety.
2. In Section XI (Return of Equipment), add the following to the end
of the subsection (a):
In addition to the foregoing provisions, and provided Lessee has not
elected to exercise its option to purchase the Equipment, Lessee
shall, at its sole cost and expense:
(1) at least one hundred eighty (180) days and not more than two
hundred forty (240) days prior to the expiration or termination of
this Agreement or any Schedule, provide to lessor a detailed inventory
of all components of the Equipment, including, but not limited to, a
listing of model, serial numbers, and size description (length, width,
height, diameter) for all items of Equipment;
(2) at least one hundred twenty (120) days prior to the expiration or
termination of this Agreement or any Schedule, upon reasonable notice
by Lessor, make the Equipment available for on site operational
inspections by potential purchasers;
(3) at least ninety (90) days prior to the return of the Equipment,
properly remove all Lessee installed markings which are not necessary
for the installation, operation, maintenance or repair of the
Equipment, and have a manufacturer's representative or a qualified
equipment maintenance provider (the "Authorized Inspector"),
reasonably acceptable to Lessor, perform a comprehensive physical
inspection to ensure the equipment is clean and cosmetically
acceptable, and in such condition so that it may be immediately
installed and placed into use in a similar office environment.
Specifically, with respect to the Equipment: (i) there shall be no
missing screws, bolts, fasteners, etc; (ii) it will be free from all
large scratches, marks, gouges, dents, discoloration or stains; (iii)
all drawers, runners, and locks will be in good working condition,
(iv) all keys will be included with their respective locking
mechanism, and (v) there shall be no evidence of extreme use or
overloading, ie.e bowed or sagging shelves, etc. If the Authorized
Inspector finds the Equipment not in compliance with the foregoing
conditions, then Lessee shall repair or replace any such Equipment
with identical or better quality and, after corrective measure are
completed, Lessee will provide for a follow-up inspection of the
Equipment by the Authorized Inspector; and (4) at Lessor's choice,
either (i) allow Lessor, at Lessor's expense, and provided Lessor has
provided reasonable notice to Lessee, to arrange for an on-site
auction of the Equipment in an assembled and functional state, to be
conducted no more than sixty (60) days prior to the expiration or
termination of this Agreement or the Schedule and to be conducted in a
manner which will not interfere with Lessee's business operations, or
(2) provide for the deinstallation, packing, and transporting of the
Equipment in accordance with, but not limited to, the following
provisions: (a) the manufacturer's representative or other person
acceptable to Lessor, shall de-install all Equipment including all
wire, cable, and mounting hardware; (b) if applicable, the Lessee
shall ensure all necessary permits and labor are obtained to redeliver
the Equipment; (c) the Equipment shall be packed properly and in
accordance to the manufacturer's recommendations; (d) the Lessee shall
transport the Equipment in a manner consistent with the manufacturer's
recommendations and practices to any location within the continental
United States as Lessor shall direct; and shall have the equipment
unloaded at such location; (e) Lessee shall obtain and pay for a
policy(ies) of transit insurance for the Equipment in an amount equal
to the replacement value of the Equipment and Lessor shall be named as
the loss payee on all such policies of insurance, or (3) provide free
safe storage for the Equipment for a period not to exceed forty-five
(45) days from the expiration or termination of this Agreement or the
Schedule.
3. Section XIX(a) shall be replaced with the following:
(a) Provided no default exists hereunder and the Schedule has not been
earlier terminated, and provided that during the month of November for
the calendar year preceding the calendar year in which the Schedule is
due to expire Lessee has given Lessor written notice of its intent to
exercise the purchase option granted by this Section, Lessee may at
lease expiration purchase all (but not less than all) of the Equipment
in any Schedule on an as is basis, for cash equal to its then Fair
Market Value (plus all applicable sales taxes).
4. The following shall be added as Section XXI:
XXI. Early Purchase Option:
(a) Provided no default exists hereunder or under any other agreement
between Lessor and Lessee and the Schedule has not been earlier
terminated, an provided that during the month of November for the
calendar year preceding the calendar year in which the Early Purchase
Date (as defined below) occurs Lessee has given Lessor written notice
of its intent to exercise the purchase option granted by this Section,
Lessee may purchase all (nut not less than all) of the Equipment
listed and described in the Schedule on the rent payment date (the
"Early Purchase Date") which is forty eight (48) months from the Basic
Term Commencement Date of the Schedule for a price equal to
$335,000.000 (the "FMV Early Option Price"), plus all applicable sales
taxes on an as is basis. Lessor and Lessee agree that the FMV Early
Option Price is a reasonable prediction of the Fair Market Value (as
such term is defined in Section XIX(b) hereof) of the Equipment at the
time the option is exercisable. Lessor and Lessee agree that if
Lessee make any non-severable improvement to the Equipment which
increases the value of the Equipment and is not required or permitted
by Sections VII or XI of the Agreement prior to expiration of the
Schedule, then at the time of such option being exercised, Lessor and
Lessee shall adjust the purchase price to reflect any addition to the
price anticipated to result from such improvement. (The purchase
option granted by this subsection shall be referred to herein as the
"Early Purchase Option".)
(b) If Lessee exercises its Early Purchase Option with respect to the
Equipment leased hereunder, then on the Early Purchase Option Date,
Lessee shall pay to Lessor any Rent and other sums due and unpaid on
the Early Purchase Option Date and Lessee shall pay the MFMV Early
Option Price, plus all applicable sales taxes, to Lessor in cash.
5. The following shall be added as Section XXII:
XXII. Special Termination Option:
(a) On the First Termination Date (the "Termination Date") specified
in the Schedule, Lessee may, so long as no default exists hereunder,
terminate this Agreement as to all (but not less than all) of the
Equipment on such Schedule upon at least ninety (90) days prior
written notice to Lessor.
(b) Lessee shall, and Lessor may, solicit cash bids for the Equipment
on an as is, where is basis without recourse to or warranty from
Lessor, express or implied ("as is basis"). Prior to the Termination
Date, Lessee shall (i) certify to Lessor any bids received by Lessee
and (ii) pay to Lessor (A) the Termination Value (calculated as of the
rental due on the Termination Date) for the Equipment, and (b) all
rent and other sums due and unpaid as of the Termination Date.
Neither Lessee nor its agents shall be permitted to bid.
(c) Provided that all amounts due hereunder have been paid on the
Termination Date, Lessor shall (i) sell the Equipment on an as is
basis for cash to the highest bidder and (ii) refund to Lessee and
amount equal to the greater of (a) the proceeds of such sale (net of
any related expenses) not to exceed the Termination Value or (b) the
Termination Value minus 38% of the Capitalized Lessor's Cost for the
equipment. If such sale is not consummated, no termination shall
occur and Lessor shall refund the Termination Value (less any expenses
incurred by Lessor) to Lessee.
Except as expressly modified hereby, all terms and provisions of the
Agreement and Schedule shall remain in full force and effect. This
Addendum is not binding nor effective with respect to the Agreement,
Schedule or the Equipment until executed on behalf of Lessor and
Lessee by authorized representatives of Lessor and Lessee.
In witness whereof, Lessee and Lessor have caused this Addendum to be
executed by their duly authorized representatives as of the date first
above written.
Lessor: Lessee:
General Electric Capital Corporation Edward D. Jones & Co., L
By: By:
Name: Name: Steve Novik
Title: Title: Principal
EXHIBIT 10.4
EQUIPMENT LEASE
THIS EQUIPMENT LEASE made as of April 1, 1994, by and
between EDJ LEASING CO., L.P., a Missouri limited partnership,
201 Progress Parkway, Maryland Heights, Missouri 63043 ("Lessor")
and EDWARD D. JONES & CO., L.P., a Missouri limited partnership,
201 Progress Parkway, Maryland Heights, Missouri 63043
("Lessee").
WHEREAS, Lessee desires to lease certain equipment listed in
Schedule A attached hereto for a term of 36 months at the rental
specified in Schedule A;
NOW, THEREFORE, in consideration of the premises, the
parties intending to be legally bound, agree as follows:
1. Lease. Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor, the equipment described in Schedule A
(herein with all replacement parts, repairs, additions and
accessories called "Equipment") on the terms and conditions set
forth in this Lease.
2. Disclaimer of Warranties and Waiver of Defenses.
(a) No Warranties by Lessor. LESSOR, BEING NEITHER
THE MANUFACTURER, NOR A SUPPLIER, NOR A DEALER IN THE EQUIPMENT,
MAKES NO WARRANTY, EXPRESS OR IMPLIED, TO ANYONE, AS TO THE
FITNESS, MERCHANTABILITY, DESIGN, CONDITION, CAPACITY,
PERFORMANCE OR ANY OTHER ASPECT OF THE EQUIPMENT OR ITS MATERIAL
OR WORKMANSHIP. Lessor further disclaims any liability for
loss, damager or injury to Lessee or third parties as a result of
any defects, latent or otherwise, in the Equipment whether
arising from Lessor's negligence or application of the laws of
strict liability. As to Lessor, Lessee leases the Equipment "as
is." Lessee has selected the supplier of the Equipment and
acknowledges that Lessor has not recommended the supplier.
Lessor shall have no obligation to install, maintain, erect,
test, adjust, or service the Equipment. Lessee agrees to
install, maintain, and service the Equipment or cause the same to
be performed by qualified third parties. If the Equipment is
unsatisfactory for any reason, Lessee shall make claim on account
thereof solely against the supplier, and any of the supplier's
vendors, and shall nevertheless pay Lessor all rent payable under
the Lease.
(b) Assignment for Breach of Warranty. Lessor hereby
assigns to Lessee, solely for the purpose of prosecuting such a
claim, all of the rights which Lessor may have against any
supplier and any of the suppliers' vendors for breach of warranty
or other representations respecting the Equipment.
(c) Lessor's Assignment, Waiver of Defenses. Lessee
acknowledges Lessor's intent to assign or pledge this Lease
and/or the rentals due hereunder and Lessee agrees that no
assignee or pledgee of Lessor shall be bound to perform any duty,
covenant or condition, or warranty (express or implied)
attributable to Lessor and Lessee further agrees not to raise any
claim or defense arising out of this Lease or otherwise against
Lessor as a defense, counterclaim, or offset to any action by any
assignee or pledgee for the unpaid balance of rentals due under
the Lease or for possession of the Equipment.
(d) Waiver of Indirect Damages. Regardless of causer
Lessee shall not assert and Lessor shall not be responsible for
any claim whatsoever against Lessor for loss of anticipatory
profits or any other indirect, special, or consequential damages,
nor shall Lessor be responsible for any damages or costs which
may be assessed against Lessee in any action for infringement of
any United States Letters Patent. Lessor makes no warranty as to
the treatment of this Lease, for tax or accounting purposes.
(e) Agency Disclaimer. Notwithstanding any fees that
may be paid by Lessor to a supplier or any agent of a supplier,
Lessee acknowledges that no supplier or any agent of a supplier
is or shall be deemed an agent of Lessor or is authorized to
waive or alter any term or condition of this Lease.
3. Noncancellable Lease. THIS LEASE CANNOT BE CANCELLED BY
LESSEE DURING THE TERM PROVIDED IN THIS LEASE.
4. Term and Rent. The term of the Lease shall commence as
of April 1, 1994 ("Commencement Date"). The term shall continue
until March 31, 1997. Advance rentals shall not be refundable if
this Lease is duly terminated by Lessor. Rent installments shall
be payable monthly in advance, the first such payment being due
on the Commencement Date, or such later date as Lessor designates
in writing, and subsequent payments due on the same day of each
successive month thereafter during the term hereof.
5. Title, Personal Property. The Equipment is, and shall
at all times remain, Lessor's property, and Lessee shall have no
right, title, or interest therein, except as herein set forth.
If Lessor supplies Lessee with labels indicating that the
Equipment is owned by Lessor, Lessee shall affix such labels to
and keep them in a prominent place on the Equipment. Lessee
shall at its expense protect and defend Lessor's title against
all persons claiming against or through Lessee, at all times
keeping the Equipment free from any legal process or encumbrance
whatsoever including but not limited to liens, attachments,
levies and executions, and shall give Lessor immediate written
notice thereof and shall indemnify Lessor from any loss caused
thereby. Lessee shall execute and deliver to Lessor, upon
Lessor's request, such further instruments and assurances as
Lessor deems necessary or advisable for the confirmation or
perfection of Lessor's rights hereunder.
The Equipment is, and shall at all times be and remain,
personal property notwithstanding that the Equipment or any part
thereof may now be, or hereafter become, in any manner affixed or
attached to real property or any improvements thereon.
6. Care, Use and Location. Lessee, at its own cost and
expense, shall maintain and keep the Equipment in good repair,
condition and working order, and shall use the Equipment
lawfully. Lessor shall have the right to inspect the Equipment
where it is located at any reasonable time. Lessee shall have
the right, at any time and from time to time, to move any item of
Equipment to any of Lessee's various locations.
7. Redelivery. (a) Upon expiration or earlier termination
of this Lease as to any Equipment, Lessee shall return the
Equipment, freight prepaid, to Lessor in good repair, condition
and working order, ordinary wear and tear resulting from proper
use thereof only excepted, in a manner and to a location
reasonably designated by Lessor. If upon such expiration or
termination the Lessee does not immediately return the Equipment
to the Lessor, it shall continue to be held and leased hereunder,
and this Lease shall thereupon be extended indefinitely as to
term at the same monthly rental, subject to the right of either
party to terminate the Lease upon 30 days' written notice,
whereupon the Lessee shall forthwith deliver the Equipment to the
Lessor as set forth in this Paragraph.
(b) The foregoing notwithstanding Lessor hereby grants
to Lessee the option to purchase all, but not less than all,
Equipment leased pursuant to this Lease, at the expiration of
this Lease. To exercise such option, Lessee, at least thirty
(30) days prior to the expiration of this Lease, shall advise
Lessor in writing of its intent to purchase all, but not less
than all, of the Equipment. Any such purchase shall be for cash
in an amount equal to the then fair market value of the
Equipment, which value Lessor and Lessee agree shall not be less
than 15% of the Acquisition Value nor more than 25% of the
Acquisition Value. For purposes of this Lease, the Acquisition
Value of the Equipment is $8,000,000.00. Fair market value
shall be determined by Lessor in good faith. In the event Lessee
does not agree with the fair market value as determined by
Lessor, Lessee may request, in writing, that the fair market
value be determined by a qualified independent appraiser who is
not the manufacturer of the Equipment and is chosen by Lessee.
The decision of the appraiser shall be binding on both parties;
provided, however, Lessee shall not be required to pay greater
than 25% nor less than 15% of the Acquisition Value.
8. Risk of Loss. Lessee shall bear all risks of loss of
and damage to the Equipment from any cause; occurrence of such
loss or damage shall not relieve Lessee of any obligation
hereunder. In the event of loss or damage, Lessee, at Lessor's
option, shall: (a) place the damaged Equipment in good repair,
condition and working order; or (b) replace lost or damaged
Equipment with like Equipment in good repair, condition and
working order with documentation creating clear title thereto in
Lessor; or (c) pay to Lessor the then unpaid balances of the
aggregate rent reserved under the Lease plus the value of
Lessor's residual interest in the Equipment. Upon Lessor's
receipt of such payment, Lessee and/or Lessee's insurer shall be
entitled to Lessor's interest in said item for salvage purposes,
in its then condition and location, as is, without warranty,
express or implied.
9. Insurance. Lessee shall keep the Equipment insured
against all risks of loss or damage from every cause whatsoever
for not less than the full replacement value thereof, and shall
carry public liability and property damage insurance covering the
Equipment and its use. All such insurance shall be in form and
amount reasonably acceptable to Lessor. The foregoing
notwithstanding, Lessee may elect to self-insure in accordance
with its customary business practices in lieu of obtaining the
insurance required hereunder. If Lessee self-insures, Lessee
shall so notify Lessor, and, in any event, Lessor shall be deemed
an additional insured. If Lessee procures insurance, Lessee
shall deliver a certificate of such insurance to Lessor.
Insurance or self-insurance proceeds shall be applied toward the
replacement, restoration or repair of the Equipment.
10. Net Lease, Taxes. The rental payments hereunder shall
be net to Lessor. Lessee shall pay all sales, use, excise,
personal property, stamp, documentary and ad valorem taxes,
license and registration fees, assessments, fines, penalties and
similar charges imposed on the ownership, possession or use of
the Equipment during the term of this Lease, and shall pay all
taxes (except Lessor's Federal or State net income taxes) imposed
on Lessor or Lessee with respect to the rental payments
hereunder. Lessee shall reimburse Lessor upon demand for all
taxes paid by or advanced by Lessor. Lessee shall file all
returns required therefor and furnish copies to Lessor.
11. Indemnity. Lessee shall indemnify and hold Lessor
harmless against, any and all claims, actions, suits, proceedings
costs, expenses, damages, and liabilities, including attorney's
fees, arising out of, connected with, or resulting from the
Equipment or the Lease, including without limitation, the
manufacture, selection, delivery, possession, use, operation, or
return of the Equipment.
12. Default and Remedies. If Lessee ceases doing business
as a going concern, or if a petition in bankruptcy, arrangement,
insolvency, or reorganization is filed by or against Lessee and
is not dismissed within sixty (60) days, or if Lessee makes an
assignment for the benefit of creditors or if after the
expiration of thirty (30) days after written notice to Lessee
from Lessor of a breach of this Lease Lessee fails to cure said
breach, Lessor may exercise any one or more of the following
remedies:
(a) To declare the entire balance of rent hereunder
discounted to present value at the rate then published by,
Northern Trust Company, N.A. as its prime or base rate
immediately due and payable as to any or all schedules of
Equipment covered hereby.
(b) To sue for and recover all rents, and other monies
due, with respect to any or all items of Equipment to the extent
permitted by law.
(c) To require Lessee to assemble all Equipment at
Lessee's expense, at a place reasonably designated by Lessor.
(d) Pursuant to applicable law and after demand, to
remove any physical obstructions for removal of the Equipment
from the place where the Equipment is located and take possession
of any or all items of Equipment wherever same may be located,
disconnecting, and separating all such Equipment from any other
property. Lessor may, at its option, use, ship, store, repair,
or Lease all Equipment so removed and sell or otherwise dispose
of any such Equipment at a private or public sale.
Lessor may exhibit and resell the Equipment at Lessee's
premises at reasonable business hours without being required to
remove the Equipment. If Lessor takes possession of the
Equipment, Lessor shall give Lessee credit for any sums received
by Lessor from the sale or rental of the Equipment after
deduction of the expenses of sale or rental and Lessor's residual
interest in the Equipment. Lessee shall also be liable for and
shall pay to Lessor all expenses incurred by Lessor in connection
with the enforcement of any of Lessor's remedies, including all
expenses of repossessing, storing, shipping, repairing, and
selling the Equipment. Lessor and Lessee acknowledge the
difficulty in establishing a value for the unexpired Lease term
and owing to such difficulty agree that the provisions of this
paragraph represent an agreed measure of damages and are not to
be deemed a forfeiture or penalty.
If any payment is not made by Lessee within fifteen (15)
days of the date due hereunder, Lessee shall pay to Lessor, not
later than one month thereafter, an amount calculated at the rate
of five cents per one dollar of each such delayed payment, but
only to the extent allowed by law. Such amount shall be payable
in addition to all amounts payable by Lessee as a result of
exercise of any of the remedies herein provided.
All of Lessor's remedies hereunder are cumulative, are in
addition to any other remedies provided for by law, and may, to
the extent permitted by law, be exercised concurrently or
separately. The exercise of any one remedy shall not be deemed
to be an election of such remedy or to preclude the exercise of
any other remedy. No failure on the part of the Lessor to
exercise and no delay in exercising any right or remedy shall
operate as a waiver thereof or modify the terms of this Lease.
13. Performance by Lessor of Lessee's Obligations. If
Lessee fails to comply with any provision of this Lease, Lessor
may effect such compliance on behalf of Lessee upon fifteen (15)
days' prior written notice to Lessee. In such event, all monies
expended by, and all expenses of Lessor in effecting such
compliance shall be deemed to be additional rental, and shall be
paid by Lessee to Lessor at the time of the next monthly payment
of rent.
14. Lessee's Assignment; Quiet Enjoyment. Without Lessor's
prior written consent which consent shall not be unreasonably
withheld or delayed, Lessee shall not assign, transfer, pledge,
hypothecate, or otherwise dispose of the Equipment or any
interest therein. Notwithstanding any assignment by Lessor,
providing Lessee is not in default hereunder, Lessee shall
quietly enjoy use of the Equipment, subject to the terms and
conditions of this Lease.
15. Notices. Service of all notices under this Lease shall
be sufficient if given personally or mailed by first class U.S.
mail postage prepaid to the party involved, Attention: General
Counsel at its respective address set forth herein, or at such
other address as said party may provide in writing from time to
time. Any such notice mailed to said address shall be effective
when deposited in the United States mail, duly addressed and with
postage prepaid.
16. Captions. Captions are used in this Lease for
convenience only, and are not intended to be used in construction
or interpretation of this Lease.
17. Time of Essence. Time is of the essence in this Lease.
18. Entire Agreement; Modification. This Lease contains
the entire agreement between the Lessor and Lessee. No
modification of this Lease shall be effective unless in writing
and executed by an executive officer of the Lessor.
19. Non-Waiver. No delay or failure by the Lessor or
Lessee to exercise any right under this Lease, and no partial or
single exercise of that right, shall constitute a waiver of that
or any other right, unless otherwise expressly provided herein.
A waiver of default shall not be a waiver of any other or
subsequent default.
20. Governing Law. This Lease shall be construed in
accordance with and governed by the laws of the State of
Missouri.
21. Counterparts. This Lease may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
22. Binding Effect. The provisions of this Lease shall be
binding upon and inure to the benefit of the parties hereto and
their respective heirs, legatees, personal representatives,
successors, and assigns.
LESSOR: LESSEE:
EDJ LEASING CO., L.P. EDWARD D. JONES & CO., L.P.
BY: LHC, Inc., By: EDJ Holding Company,Inc.
General Partner General Partner
By:____________________ By:_________________________
Name: Edward Soule Name: Lawrence R. Sobol
Title: Treasurer Title: Secretary
EXHIBIT 10.5
PROMISSORY NOTE
COMMERCE BANK
$8,200,000.00 and interest St. Louis (Clayton), Missouri
April 5, 1994
The undersigned EDJ Leasing Co., L.P., a Missouri Limited
Partnership promises to pay to the order of Commerce Bank,
National Association, ("Bank") the principal sum of Eight Million
Two Hundred Thousand and no/100 Dollars at its office, with
accrued interest from date thereon at the per annum rate equal to
the Prime Rate of Bank, payable as follows:
Monthly payments of $194,444.44 principal plus accrued interest,
beginning on the 1st day of May, 1994 and on the 1st day of each
month thereafter until May 1, 1997, when all principal and
accrued interest shall be due and payable in full.
Interest on this note shall be calculated on the actual
number of days on the basis of a year of 360 days. Payments will
be applied first to interest then to principal. The amount of
the final payment may vary depending on the timeliness and
amounts of the preceding payments.
Acceptance of payments after a date on which Bank may demand
payment in full shall not constitute a waiver of the Bank's right
to demand payment in full thereafter. This note shall bear
interest after maturity at the rate of 3% over the stated rate
but not exceeding the maximum rate allowed by law; and if not
paid annually, such interest shall be compounded annually. As
used herein, "Prime Rate" shall mean the per annum rate of
interest established from time to time by Bank and designated as
such for its internal convenience, and no representation is made
that the Prime Rate is the lowest, the best or a favored rate of
interest. The rate of interest charged on this note, shall
change with, and be effective on the date of each change in the
Prime Rate.
Any one or more of the following events shall constitute a
default hereunder: failure of the undersigned to comply with any
of the provisions contained in this note or in any security
instrument securing the same or in any other agreement between
the undersigned and Bank, failure of any guarantor, indemnitor,
or surety of this note to comply with any of the provisions of
any guaranty or other agreement relating thereto (including any
security instrument securing the same), or any event (such as
transfer of collateral) under any security instrument securing
this note or in any other agreement in respect of borrowed money
to which the undersigned is a party which allows Bank or any
other person to declare any indebtedness owing by the undersigned
due and payable in full, dissolution, termination of existence,
insolvency, failure to pay debts as they mature, appointment of a
receiver of any part of the property of, an assignment for the
benefit of creditors, or the commencement of any proceedings
under bankruptcy or insolvency laws by or against any of the
undersigned or any guarantors or endorsers of this note, or if
the Bank in good faith believes that its prospect of payment is
impaired. Upon the occurrence of an event of default, then or at
any time thereafter, this note and all other obligations of each
of the undersigned, shall at the option of Bank, become due and
payable without notice or demand, unless notice or demand be
required by applicable law or regulation.
Unless prohibited by law, the undersigned will pay on demand
all reasonable costs of collection, reasonable legal expenses and
reasonable attorney's fees incurred or paid in collecting and/or
enforcing this note, including any and all fees incurred by Bank
for representation in any insolvency or bankruptcy proceedings
related to the undersigned, any guarantor or obligor under any
security or other agreement held by Bank as collateral for this
Note. Furthermore, Bank reserves the right to offset without
notice all funds held by Bank against matured debts owing to Bank
by the undersigned.
The Undersigned reserves the right to prepay, in whole or in
part, at any time and from time to time, without penalty or
premium of any kind.
All without notice to and without affecting the
liability to Bank of any of the undersigned, (1) each of the
undersigned waives presentment, protest, demand, notice of
dishonor or default, and consents to the release of any
party or parties directly or indirectly liable for payment
hereof or the release, subordination or substitution of any
collateral securing this obligation; and (2) each co-maker,
indorser, accommodation party, or guarantor, if any,
consents to any and all amendments, modifications (including
changes in interest rate), and/or renewals and extensions
(including successive renewals or extensions and whether for
the same term or such shorter or longer term as Bank may
require) provided such amendment, modification, renewal
and/or extension is executed by at least one of the
undersigned.
