-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IzA55zUj9vzS1wUXathuA6wGMRBMot6eRGW1F78DYwvdxfUO2ya9aUkKAiKjDn74 lttPms8dmLQmo1RQPk5fXQ== 0000720005-99-000025.txt : 19991223 0000720005-99-000025.hdr.sgml : 19991223 ACCESSION NUMBER: 0000720005-99-000025 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990924 FILED AS OF DATE: 19991222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAYMOND JAMES FINANCIAL INC CENTRAL INDEX KEY: 0000720005 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 591517485 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09109 FILM NUMBER: 99779186 BUSINESS ADDRESS: STREET 1: 880 CARILLON PKWY STREET 2: P O BOX 12749 CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 8135733800 FORMER COMPANY: FORMER CONFORMED NAME: RJ FINANCIAL CORP/FL DATE OF NAME CHANGE: 19870303 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark one) FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended September 24, 1999 ------------------ OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from to ----------------- ------------ Commission file number 1-9109 ------ RAYMOND JAMES FINANCIAL, INC. (Exact name of registrant as specified in its charter) Florida No. 59-1517485 ------------------------------ --------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 880 Carillon Parkway, St. Petersburg, Florida 33716 - --------------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (727) 573-3800 ------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ---------------------------- ----------------------------------------- Common Stock, $.01 Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None --------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] Aggregate market value of the voting stock held by non-affiliates of the registrant as of December 14, 1999: $847,330,199 Number of common shares outstanding (December 14, 1999): 46,588,602 DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- Proxy Statement for Annual Meeting of Shareholders to be held on February 10, 2000. (The Company intends to file with the Commission a definitive proxy statement pursuant to Regulation 14A prior to January 10, 2000.) PART I ------ ITEM 1. BUSINESS -------- (a) General Description of Business ------------------------------- Raymond James Financial, Inc. ("RJF") is a Florida-based holding company that was incorporated in 1974 as a successor to the original corporation founded in 1962. Its principal subsidiaries include Raymond James & Associates, Inc. ("RJA"), Raymond James Financial Services, Inc. ("RJFS"), Eagle Asset Management, Inc. ("Eagle"), Heritage Asset Management, Inc. ("Heritage") and Raymond James Bank, FSB ("RJBank"). All of these subsidiaries are wholly-owned by RJF. RJF and its subsidiaries are hereinafter collectively referred to as the "Company". RJF's principal subsidiary, RJA, was organized in Florida in 1962. RJA is a full service broker-dealer engaged in most aspects of securities distribution and investment banking. RJA also offers financial planning services for individuals and provides clearing services for RJFS and several unaffiliated broker-dealers. The Company is the largest brokerage and investment firm headquartered in the state of Florida. RJA is a member of the New York Stock Exchange ("NYSE"), American Stock Exchange, Philadelphia Stock Exchange, Boston Stock Exchange, Chicago Board Options Exchange, New York Futures Exchange, Pacific Exchange and Chicago Stock Exchange. It is also a member of the Securities Industry Association, National Association of Securities Dealers ("NASD"), and Securities Investors Protection Corporation ("SIPC"). SIPC provides insurance protection for clients' accounts of up to $500,000 each (limited to $100,000 for claims for cash) in the event of RJA's liquidation. In addition, RJA carries $49,500,000 per account of excess client insurance. For the year ended September 24, 1999 the revenues of RJA accounted for 54% of the consolidated revenues of the Company. On May 28, 1999 the Company purchased Roney & Co. ("Roney"), a broker- dealer headquartered in Detroit, Michigan. Immediately subsequent to fiscal year Roney was contributed and merged into RJA. Roney added 320 Financial Advisors and 28 offices to RJA. RJFS was formed in January 1999, when the Company merged its two independent contractor broker-dealer subsidiaries, Investment Management & Research, Inc. ("IM&R") and Robert Thomas Securities, Inc. ("RTS"). IM&R was formed in 1973 as an independent contractor financial planning organization and participates in the distribution of all products and services offered by RJA to its retail clients. RTS was organized in 1981, and serves independent contractor brokers who do a majority of their business in individual securities. RJFS is a member of the NASD and SIPC, but not of any exchange, as it clears all of its business on a fully- disclosed basis through RJA. Eagle was formed in 1984 as a registered investment advisor to serve as the discretionary manager for individual equity portfolios. Heritage was organized in 1985 to act as the manager of the Company's internally sponsored Heritage family of mutual funds. Raymond James Bank was formed in 1994 in conjunction with the purchase from the Resolution Trust Corporation of certain branches of a failed thrift. Its primary purpose is to provide traditional banking products and services to the clients of the Company's broker-dealer subsidiaries. (b) Financial Information - Revenues by Source The Company's operations consist of various financial services provided to its clients. The following table shows revenues by source for the last three years: Year Ended ------------------------------------------------------ Sept. 24, Sept. 25, Sept. 26, 1999 % 1998 % 1997 % ---------- ----- ---------- ----- ---------- ----- (dollar amounts in thousands) Securities commissions: - ----------------------- Listed products $ 161,240 13.1 $ 132,211 12.2 $115,818 12.9 Over-the-counter 186,258 15.1 163,410 15.1 148,791 16.6 Mutual funds 169,377 13.7 150,536 13.9 117,748 13.1 Asset-based fees 130,359 10.6 100,055 9.2 61,444 6.8 Annuities and other insurance products 110,899 9.0 85,322 7.9 70,944 7.9 Other 3 .0 127 .0 219 .1 ---------- ----- ---------- ----- -------- ----- Total 758,136 61.5 631,661 58.3 514,964 57.4 ---------- ----- ---------- ----- -------- ----- Investment banking: - ------------------- Underwriting management fees 11,852 1.0 27,569 2.5 43,434 4.8 Merger and acquisition fees 16,304 1.3 20,153 1.9 7,929 .9 New issue sales credits 37,400 3.0 51,446 4.8 47,639 5.3 Limited partnerships and other 9,192 .8 10,537 1.0 10,086 1.2 ---------- ----- ---------- ----- -------- ----- Total 74,748 6.1 109,705 10.2 109,088 12.2 ---------- ----- ---------- ----- -------- ----- Investment advisory fees 91,920 7.5 79,485 7.3 55,194 6.2 Interest 229,806 18.6 202,255 18.7 155,746 17.4 Correspondent clearing 4,655 .4 4,429 .4 4,502 .5 Net trading and investment profits 17,034 1.4 6,300 .6 12,797 1.4 Financial service fees 36,101 2.9 24,797 2.3 20,786 2.3 Other 19,806 1.6 24,275 2.2 23,884 2.6 ---------- ----- ---------- ----- -------- ----- 1,232,206 100.0 1,082,907 100.0 896,961 100.0 ===== ===== ===== Gain on sale of Liberty Investment Mgmt., Inc.* - - 30,646 ---------- ---------- -------- Total revenues $1,232,206 $1,082,907 $927,607 ========== ========== ======== Securities commissions by - ------------------------- broker-dealer: - --------------- Raymond James & Associates, Inc. 284,139 37.5 $ 262,966 41.6 $222,771 43.3 Roney & Co. 23,825 3.1 - - - - Raymond James Financial Services, Inc. 448,864 59.2 368,695 58.4 292,193 56.7 Raymond James Financial International, Ltd. 1,308 .2 - - - - --------- ----- ---------- ----- -------- ----- Total $ 758,136 100.0 $ 631,661 100.0 $514,964 100.0 ========= ===== ========== ===== ======== ===== * See Note 16 of the Notes to Consolidated Financial Statements for details. (c) Narrative Description of Business --------------------------------- At September 24, 1999 the Company employed 4,480 individuals. RJA employed 4,018 of these individuals, 915 of whom were full-time retail Financial Advisors. In addition, 2,949 full-time Financial Advisors were affiliated with the Company as independent contractors. Through its broker- dealer subsidiaries, the Company provides securities services to more than one million client accounts. No single client accounts for a material percentage of the Company's total business. The Company currently divides its business into five segments based on the products and services offered. These segments are retail distribution, institutional distribution, investment banking, asset management, and other. RETAIL DISTRIBUTION ------------------- The Company provides securities transaction and financial planning services to its retail clients through the RJA retail branch system, its independent contractor firm (RJFS), and a general insurance agency. RJA - Retail Sales RJA's 79 retail branches and 8 satellites are located primarily in the southeastern U.S., with a concentration in Florida, and the Midwest, as a result of the acquisition of Roney. The Roney transaction added 320 Financial Advisors and 28 offices in Indiana, Michigan and Ohio. RJA's 915 retail Financial Advisors provide a broad range of financial products and services to their clients. In most cases, RJA charges commissions to its retail clients, on both exchange and over-the-counter equity transactions, in accordance with its established commission schedule. In certain instances, varying discounts from the schedule are given, generally based upon the client's level of business, the trade size and other relevant factors. RJA also distributes both taxable and tax-exempt fixed income products to its retail clients, including municipal, corporate, government agency and mortgage-backed bonds, preferred stock and unit investment trusts. In addition, a growing number of clients are electing asset-based fee alternatives to the traditional commission structure. The retail Financial Advisors sell a number of professionally managed, load mutual funds and offer, in addition, a selection of no-load funds. RJA maintains dealer-sales agreements with most major distributors of mutual fund shares sold through broker-dealers. Commissions on such sales generally range from 1% to 5% of the dollar value of the transaction. Alternative sales compensation structures typically include front-end charges, "back-end" or contingent deferred sales charges, and an annual charge in the form of a fund expense. At September 24, 1999, the Company had 14 internally sponsored mutual funds for which RJA acts as distributor. (See Heritage Asset Management, Inc. description on page 7.) As the distributor of these funds, RJA has the right to enter into dealer agreements with other broker-dealers for the sale of Heritage funds to their clients. RJFS RJFS participates in the distribution of all the products and services offered by RJA to its retail clients through 2,949 independent contractor Financial Advisors in 1,193 offices and 323 satellite offices in all 50 states. The Company operates with three separate divisions. The Investment Management division has 687 offices and 1,597 Financial Advisors and are better characterized as financial planners than as stock brokers although they are not required to conduct their business as financial planners. The Securities Division primarily offers individual securities and investment advice to individual investors and institutions through 919 Financial Advisors in 322 branch offices. The Financial Institutions Division offers securities on a third party basis to customers of financial institutions such as banks, thrifts and credit unions and has 433 Financial Advisors in 184 locations. The number of Financial Advisors in all offices ranges from 1 to 26. Such Financial Advisors devote all or substantially all of their time to the sale of securities and, while these independent contractors must conduct all securities business through RJFS, their contracts permit them to conduct insurance, real estate brokerage, accounting services or other business for others or for their own account. Independent contractors are responsible for all of their direct costs and are paid a larger percentage of commissions and fees to compensate them for their added expenses. Planning Corporation of America Planning Corporation of America ("PCA"), a wholly-owned subsidiary of RJA, is a general insurance agency and represents a number of insurance companies. Through the Financial Advisors of the Company's broker-dealer subsidiaries, PCA provides product and marketing support for a broad range of insurance products, principally fixed and variable annuities, numerous forms of life insurance, disability insurance and long-term care coverage. Clients' transactions in securities are effected on either a cash or margin basis. In margin transactions, the client pays a portion of the purchase price, and RJA makes a loan to the client for the balance, collateralized by the securities purchased or by other securities owned by the client. Interest is charged to clients on the amount borrowed to finance margin transactions. The financing of margin purchases is an important source of revenue to RJA, since the interest rate paid by the client on funds loaned by RJA exceeds RJA's cost of short-term funds. The interest rate charged to a client on a margin loan depends on the average loan balance in the client's account and ranges from prime plus 1% to prime minus .75%. Typically, broker-dealers utilize secured bank borrowings and equity capital as the primary sources of funds to finance clients' margin account borrowings. Since the inception of the Client Interest Program in 1981, however, the Company's primary source of funds to finance clients' margin account balances has been cash balances in clients' accounts which are awaiting investment. In addition, pursuant to written agreements with clients, broker-dealers are permitted by Securities and Exchange Commission ("SEC") and NYSE rules to lend client securities in margin accounts to other brokers. SEC regulations, however, restrict the use of clients' funds derived from pledging and lending clients' securities, as well as funds awaiting investment, to the financing of margin account balances, and to the extent not so used, such funds are required to be deposited in a special account for the benefit of clients. The regulations also require broker-dealers, within designated periods of time, to obtain possession or control of, and to segregate, clients' fully paid and excess margin securities. INSTITUTIONAL DISTRIBUTION -------------------------- The Company's institutional clients are serviced by RJA's Institutional Equity and Fixed Income Departments. The 53 domestic professionals in the Institutional Equity Sales and Sales Trading Departments maintain relationships with 776 institutional clients. In addition to the Company's headquarters in St. Petersburg, FL, institutional equity offices are located in New York, Houston, Dallas, Princeton, San Diego, Toronto, Calgary, Brussels, Brugte, Dusseldorf, Geneva, London (Raymond James Financial International, Ltd., a UK broker-dealer), Luxembourg, Milan and Paris. In addition, RJA distributes to its institutional clients both taxable and tax-exempt fixed income products, primarily municipal, corporate, government agency and mortgage-backed bonds. RJA carries inventory positions of taxable and municipal securities in both the primary and secondary market. In addition to St. Petersburg, the Fixed Income Department maintains institutional sales and trading offices in New York, Chicago, Houston, Boston, Atlanta, Boca Raton, and Dublin, Ohio. To assist our institutional clients, the department's Fixed Income Research Group provides value-added analytical services and publishes research reports containing both specific product information and information on topics of interest such as market and regulatory developments. In providing these securities brokerage services to its institutional clients, RJA discounts its commissions substantially on transactions based on trade size and the amount of business conducted annually with each institution. The revenues and costs of RJA's back office operations are attributable primarily to the two distribution segments above. RJA's operations personnel are responsible for the execution of orders, processing of securities transactions, custody of client securities, receipt, identification and delivery of funds and securities, compliance with regulatory and legal requirements, internal financial accounting and controls and general office administration for most of the Company's securities brokerage operations. INVESTMENT BANKING/CAPITAL MARKETS ---------------------------------- Investment Banking activities include both equity and fixed income products. This segment consists of the departments described below: Investment Banking Group. The 47 professionals of RJA's Investment Banking Group, located primarily in St. Petersburg with satellite offices in New York, Dallas, Houston, Calgary, and Chicago are involved in a variety of activities including public and private equity financing for corporate clients, merger and acquisition advisory services, fairness opinions and evaluations. The Company focuses on specific industry groups or strategic business units ("SBUs") including Consumer, Financial and Business Services, Healthcare, Information Technology, Environmental, Real Estate, and Energy. In addition, RJA acts as an underwriter or selling group member for corporate bonds, agency bonds, preferred stock and unit investment trusts. When underwriting new issue securities, RJA agrees to purchase the issue through a negotiated sale or submits a competitive bid. Research Department. The 45 analysts in this department publish research on over 340 companies, primarily focused on emerging growth and mid- cap companies in a broad range of industries. Approximately 28% of the companies covered are investment banking clients. Proprietary research reports are provided to both retail and institutional clients, and are supplemented by research purchased from outside services to accommodate retail clients. This department has distinguished itself through its extremely successful long-term comparative results as reported by Zacks Investment Research each quarter in the Wall Street Journal. Over-the-Counter Equity Trading. Trading securities in the over-the- counter ("OTC") market involves the purchase of securities from, and the sale of securities to, clients of the Company or other dealers who may be purchasing or selling securities for their own account or acting as agent for their clients. Profits and losses are derived from the spreads between bid and asked prices, as well as market trends for the individual securities during the holding period. At September 24, 1999, RJA made markets in over 250 common stocks in the OTC market. RJA frequently acts as agent in the execution of OTC orders for its clients and as such transacts these trades with other dealers. When RJA receives a client order in a security in which it makes a market, it may act as principal as long as it matches or improves upon the best price in the dealer market, plus or minus a mark-up or mark-down not exceeding the equivalent agency commission charge. Recently adopted regulations require that client limit orders be satisfied prior to the brokerage firm buying securities into or selling securities from their own inventory at the same price. Syndicate Department. The Syndicate Department coordinates the marketing, distribution, pricing and stabilization of Raymond James' lead- and co-managed equity underwritings. In addition to Raymond James' managed and co-managed offerings, this department coordinates the firm's syndicate and selling group activities in transactions managed by other investment banking firms. Marketing and distribution activities are focused on the firm's institutional and retail clients. The Syndicate Department is also responsible for the Corporate Client Services group which serves the firm's Investment Banking and Research clients by providing specialized brokerage services for corporations and their executives. Public Finance. The 21 professionals in the Public Finance division operate out of 7 offices (2 located in the State of Florida, one in Birmingham, AL, one in New York, NY, one in Pittsburgh, PA, one in Detroit, MI, and one in San Antonio, TX), acting as Financial Advisor or underwriter to various municipal agencies or political subdivisions. Partnership Investment Banking. The Company acts as the general partner in equipment leasing and real estate limited partnerships. Most significantly, Raymond James Tax Credit Funds, Inc. is the general partner in funds that have invested nationwide in properties that qualify for low income housing tax credits. ASSET MANAGEMENT - ---------------- The Company's asset management segment includes proprietary asset management operations, internally sponsored mutual funds, outside money management alternatives, and other asset-based fee programs. Eagle Asset Management, Inc. Eagle is a registered investment advisor with approximately $5.1 billion under management at September 24, 1999. Eagle's clients include pension and profit sharing plans, retirement funds, foundations, endowments, trusts, life insurance and mutual fund portfolios and individuals. Accounts are managed on a discretionary basis in accordance with the investment objective(s) specified by the client. Eagle manages approximately $1.2 billion for institutional clients and $3.9 billion for retail accounts. Eagle's investment management fee generally ranges from .30% to 1.0% of asset balances per year depending upon the size and investment objective of the account. In addition to the management fees, clients are required to pay brokerage commissions (or more commonly, a fee in lieu thereof) for transactions in their accounts. Heritage Asset Management, Inc. Heritage Asset Management, Inc. ("Heritage") serves as investment advisor to the Heritage Family of Mutual Funds. Heritage also serves as transfer agent or sub-transfer agent for all of the open-end funds and as fund accountant or sub-fund accountant for all Heritage funds except the Eagle International Equity Portfolio. Portfolio management for the Income- Growth Trust, Aggressive Growth Fund, Growth Equity Fund, Mid Cap Growth Fund, Value Equity Fund, and the First Puerto Rico Growth and Income Fund are subcontracted. Portfolio management for the Small Cap Stock Fund is subcontracted to Eagle and the Company's Awad Asset Management subsidiary. Unaffiliated advisors are employed for the Municipal Money Market Fund, Capital Appreciation Trust, High Yield Bond Fund and the Eagle International Equity Portfolio. Heritage also serves as an advisor to Raymond James Bank to make recommendations and monitor the Bank's investment portfolio of mortgage- backed securities. Net assets at September 24, 1999 were as follows (in thousands): Heritage Cash Trust: Money Market Fund $3,197,446 Municipal Money Market Fund 644,679 Heritage Capital Appreciation Trust 228,855 Heritage Income-Growth Trust 93,419 Heritage Income Trust: High Yield Bond Fund 50,845 Intermediate Government Fund 13,369 Heritage Series Trust: Small Cap Stock Fund 201,312 Growth Equity Fund 139,028 Eagle International Equity Portfolio 15,127 Value Equity Fund 27,179 Mid Cap Stock Fund 26,535 Aggressive Growth Fund 47,975 Heritage U.S. Govt Income Fund (closed-end) 35,643 First Puerto Rico Growth & Income Fund (available to Puerto Rico Residents only) 59,335 ---------- $4,780,747 ========== Awad Asset Management, Inc. Awad Asset Management, Inc. ("Awad") is primarily a small and mid-cap equity portfolio management subsidiary. Clients pay fees and/or commissions for management of their accounts. Present fees range from .50% to 1.0% of asset balances annually. In addition to private accounts, Awad also manages a portion of the Heritage Small Cap Stock Fund Portfolio and other non- affiliated mutual fund portfolios. Exclusive of the Heritage Small Cap Fund, Awad had approximately $569 million under management at September 24, 1999. RJA - Asset Management Services RJA's Asset Management Services ("AMS") Department manages programs which offer investment advisory services to clients, as well as certain non- advisory programs which offer fee-based alternatives to traditional commission charges for transactions. The primary advisory service offered by AMS is the Investment Advisory Services ("IAS") program. IAS maintains an approved list of investment managers, most of which are unaffiliated with the Company, establishes custodial facilities, monitors performance of client accounts, provides clients with accounting and other administrative services and assists investment managers with certain trading management activities. IAS earns fees generally ranging from .50% to 1.0% of asset balances per annum, a portion of which is paid to investment managers who direct the investment of the clients' accounts. At September 24, 1999, this program had approximately $3.1 billion in assets under management through agreements with 29 independent investment advisors and Awad. Passport and a similar program offered by RJFS, known as IMPAC, offer both a discretionary and non-discretionary advisory fee alternative that allows clients to pay a quarterly fee plus low transaction charges in lieu of commissions. Fees are based on the individual account size and are also dependent on the type of securities in the accounts. In addition, AMS collects an administrative fee of up to .175% of asset balances annually, for which clients receive quarterly performance reporting and other services. As of September 24, 1999, Passport and IMPAC had approximately $5.23 billion and $1.43 billion in assets, respectively, serviced by Financial Advisors. In addition to the foregoing programs, AMS also offers fee based programs to clients who have contracted for portfolio management services from outside money managers that are not a part of the IAS program. Further, AMS administers other less significant asset-based fee programs. OTHER ----- Aside from the retail and institutional distribution, investment banking and asset management businesses, the Company operates a stock borrow/stock loan program, offers bank and trust services, and has several international joint ventures. These operations are grouped in the "other" segment. RJA - Stock Borrow/Stock Loan RJA commenced this program in July 1987, involving the borrowing and lending of securities from and to other broker-dealers. RJA generally acts as an intermediary between broker-dealers and other financial institutions, where it borrows from one party and lends to another. The borrower of the securities puts up a cash deposit, commonly 102% of the market value of the securities. This deposit, which is adjusted daily to reflect changes in current market value, earns interest at a negotiated rate. Raymond James Bank, FSB Raymond James Bank, FSB, ("RJBank") received its federal savings bank charter on May 6, 1994. RJBank provides residential, consumer and commercial loans as well as FDIC-insured deposit accounts to clients of RJF's broker- dealer subsidiaries and to the general public nationwide. Access to RJBank's products and services is available nationwide through the offices of its affiliated investment firms as well as through convenient telephonic and electronic banking services, including debit cards, ATM/point-of-sale, 24-hour TeleDirect automated telephone banking, Internet Banking with Electronic Bill-Paying, checkwriting, direct deposit and ACH payments. As of September 24, 1999, RJBank had total assets in excess of $635 million. Raymond James Trust Company Sound Trust Company Raymond James Trust Company was chartered and opened for business in 1992. This wholly-owned subsidiary of RJF was formed primarily to provide personal trust services to existing clients of the broker-dealer subsidiaries. Portfolio management of trust assets is often subcontracted to the asset management operations of the Company. In October 1993, the Company acquired a second trust company, Sound Trust Company, in Tacoma, Washington. This subsidiary provides personal trust services primarily to broker-dealer clients outside the State of Florida. These two subsidiaries had a combined total of $548 million in client assets at September 24, 1999. Raymond James Credit Corporation Raymond James Credit Corporation ("RJCC") was formed in 1996 as a regulated finance company. To date, this subsidiary has primarily provided loans collateralized by control or restricted securities. RJCC is funded with internal capital and by a $50 million line of credit with a commercial bank. At September 24, 1999, RJCC had $66 million in outstanding loans to customers. Raymond James International Holdings, Inc. Raymond James International Holdings, Inc. ("RJIH") is a Delaware corporation formed in 1994 to house the Company's foreign operations. RJIH now has ownership in unconsolidated joint ventures in Argentina, India, Turkey and France. These joint ventures operate in securities brokerage, investment banking and asset management. COMPETITION The Company's subsidiaries compete with many larger, better capitalized providers of financial services, including other securities firms, some of which are affiliated with major financial services companies, insurance companies, banking institutions and other organizations. They also compete with a number of firms offering discount brokerage services, usually with lower levels of service, to individual clients. The Company's subsidiaries compete principally on the basis of service, product selection, location and reputation in local markets. REGULATION Most of the Company's operations are subject to regulatory oversight by governmental agencies and/or self regulatory organizations. The securities industry in the United States is subject to extensive regulation under federal and state laws. The SEC is the federal agency charged with administration of the federal securities laws. Much of the regulation of broker-dealers, however, has been delegated to self-regulatory organizations, principally the NASD and the NYSE. These self-regulatory organizations adopt rules (which are subject to approval by the SEC) for governing the industry and conduct periodic examinations of member broker- dealers. Securities firms are also subject to regulation by state securities commissions in the states in which they are registered. RJA and RJFS are currently registered in all 50 states. See Note 13 of the Notes to Consolidated Financial Statements for further description of certain SEC regulations pertaining to broker-dealer Net Capital Requirements. The Company's investment advisory operations, including the Company- sponsored mutual funds, are also subject to extensive regulation by the SEC. Raymond James Bank, FSB, is subject to regulation by various federal banking agencies, including the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. The Company's two trust companies are subject to regulation by the states in which they are chartered. ITEM 2. PROPERTIES ---------- The Company owns a 610,000 square foot headquarters complex in St. Petersburg, FL (three home office buildings, a bank and trust headquarters building, and a five deck parking garage). The complex covers approximately forty-five acres, and the Company has the ability to build up to another 460,000 square feet on this site. The Company also leases 70,000 square feet in a nearby office building, and has committed to lease an additional 30,000 sq. feet as of April 2000. In addition the Company acquired a 45,000 square foot, eight story building in Detroit, Michigan as part of the Roney transaction. With the exception of a Company-owned RJA branch office building in Crystal River, FL, RJA branches are leased with various expiration dates through 2008. The RJFS Investment Management division headquarters office in Atlanta and Sound Trust Company facility in Seattle are also under lease. See Note 9 to Consolidated Financial Statements for further information regarding the Company's leases. Leases for branch offices of RJFS are the responsibility of the respective independent contractor registered representatives. ITEM 3. LEGAL PROCEEDINGS ----------------- The Company is a defendant or co-defendant in various lawsuits incidental to its securities business. The Company is contesting the allegations of the complaints in these cases and believes that there are meritorious defenses in each of these lawsuits. In view of the number and diversity of claims against the Company, the number of jurisdictions in which litigation is pending and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot state with certainty what the eventual outcome of pending litigation or other claims will be. As a result of the extensive regulation of the securities industry, the Company's broker-dealer subsidiaries are subject to regular reviews and inspections by regulatory authorities and self regulatory organizations which can result in imposition of sanctions for regulatory violations, ranging from non-monetary censure to fines and, in serious cases, temporary or permanent suspension from business. In addition, from time to time regulatory agencies and self regulatory organizations institute investigations into industry practices which can result in the imposition of such sanctions. During the course of the past fiscal year, the Company's primary broker-dealer subsidiary resolved a number of regulatory and self regulatory investigations by payment of fines that were immaterial in amount. The Securities and Exchange Commission has initiated an investigation of certain trading practices in the over-the-counter securities market during 1994 and 1995. Along with many other market makers, the Company has submitted documents and cooperated with the S.E.C. in this investigation. The Company does not anticipate that the resolution of this proceeding will have a material effect on its business or operations. The Securities and Exchange Commission, the Internal Revenue Service, and the National Association of Securities Dealers, Inc., have been conducting reviews of investment banking practices in connection with advance refunding transactions for municipalities. The investigation has focused on the mark-ups charged by investment banking firms for securities purchased by municipalities in connection with these refundings. Along with other participants in the municipal bond market, the Company has been providing documents and furnishing information to regulators in connection with this investigation, which is ongoing. In the opinion of management, based on discussions with counsel, the outcome of these matters will not result in a material adverse effect on the financial position or results of operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- None. PART II ------- ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK ---------------------------------------- AND RELATED SHAREHOLDER MATTERS ------------------------------- The Company's common stock is traded on the NYSE under the symbol "RJF". The following table sets forth for the periods indicated the high and low trades for the common stock. 1999 1998 ----------------- ----------------- High Low High Low ------ ------ ------ ------ First Quarter $26.25 $16.75 $26.63 $18.00 Second Quarter 22.63 18.00 29.13 21.63 Third Quarter 24.19 18.88 36.50 28.50 Fourth Quarter 25.19 18.81 32.63 17.07 Since the Company initiated payment of a cash dividend in 1985, there have been 17 increases in the dividend rate, 7 of which were in the form of stock splits and stock dividends. The payment of dividends on the Company's common stock is subject to the availability of funds from the Company's subsidiaries, including the broker- dealer subsidiaries which may be subject to restrictions under the net capital rules of the SEC and the NYSE. Such restrictions have never become applicable with respect to the Company's dividend payments. (See Note 13 of the Notes to Consolidated Financial Statements.) At December 14, 1999 there were approximately 11,000 holders of the Company's common stock. ITEM 6. SELECTED FINANCIAL DATA ----------------------- (in thousands, except per share data) Year Ended ----------------------------------------------------------- Sept. 24, Sept. 25, Sept. 26, Sept. 27, Sept. 29, 1999 1998 1997** 1996 1995 Operating Results: ---------- ---------- ----------- ----------- ---------- - ------------------ Revenues $1,232,206 $1,082,907 $ 927,607 $ 721,752 $ 554,070 Net income $ 85,090 $ 92,704 $ 98,915 $ 65,978 $ 46,141 Net income per share - basic:* $ 1.79 $ 1.92 $ 2.09 $ 1.41 $ .99 Net income per share - diluted:* $ 1.76 $ 1.86 $ 2.04 $ 1.39 $ .98 Weighted average common shares outstanding - basic:* 47,606 48,160 47,383 46,781 46,607 Weighted average common and common equivalent shares outstanding - diluted:* 48,449 49,951 48,387 47,307 47,083 Cash dividends declared per share* $ .28 $ .24 $ .21 $ .17 $ .16 Financial Condition: - -------------------- Total assets $5,030,715 $3,852,737 $3,278,645 $2,566,381 $2,012,715 Long-term debt $ 44,183 $ 44,767 $ 12,715 $ 12,909 $ 13,084 Shareholders' equity$ 558,486 $ 509,898 $ 423,276 $ 326,632 $ 266,193 Shares outstanding* 47,242 48,268 47,695 47,012 46,382 Equity per share at end of period* $ 11.82 $ 10.56 $ 8.87 $ 6.95 $ 5.74 * Gives effect to the common stock splits paid on April 2, 1998 and April 3, 1997. ** Amounts include the $30.6 million gain on the sale of Liberty Investment Management, Inc. Excluding this gain, revenues were $896,961,000, net income was $80,126,000, and basic and diluted net income per share were $1.69 and $1.66, respectively. See Note 16 of the Notes to Consolidated Financial Statements for details. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS ------------------------------------------------------------- AND FINANCIAL CONDITION ----------------------- Results of Operations - Three Years Ended September 24, 1999 - ------------------------------------------------------------ Fiscal 1999 was the Company's fifteenth consecutive year of record revenues, with total revenues of $1,232,206,000 representing an increase of 14% over the prior year. In contrast, net income of $85,090,000 represented a decline of 8% from the prior year. Earnings were negatively impacted by costs associated with a corporate branding campaign, the creation of Raymond James Financial Services, Inc. ("RJFS"), the expansion of the corporate headquarters, Y2K preparation, and the acquisition of Roney & Co. ("Roney"). Not only did the Company incur the aforementioned expenses, certain of which will be non-recurring, but operational expenses grew at a rate exceeding revenue growth and investment banking results were down sharply. The Company's retail business, the independent contractor portion in particular, continued its steady growth with exceptionally strong recruiting results. The Company has also been successful in its focus on non- transaction dependent fee revenues, such as investment advisory fees, interest and asset-based commission alternatives. For fiscal 1999, such fee- based revenues represented approximately 44% of total revenues, up from 31% five years ago. Year Ended ------------------------------------------------ Sept. 24, % Incr. Sept. 25, % Incr. Sept. 26, 1999* (Decr.) 1998 (Decr.) 1997 ---------- ------- --------- ------- --------- Revenues: (000's) (000's) (000's) Securities commissions and fees $ 758,136 20% $ 631,661 23% $ 514,964 Investment banking 74,748 (32%) 109,705 1% 109,088 Investment advisory fees 91,920 16% 79,485 44% 55,194 Interest 229,806 14% 202,255 30% 155,746 Correspondent clearing 4,655 5% 4,429 (2%) 4,502 Net trading profits 17,034 170% 6,300 (51%) 12,797 Financial service fees 36,101 46% 24,797 19% 20,786 Other 19,806 (18%) 24,275 2% 23,884 ---------- ---------- ---------- 1,232,206 14% 1,082,907 21% 896,961 Gain on sale of Liberty - - 30,646 ---------- ---------- ---------- Total revenues $1,232,206 14% $1,082,907 17% $ 927,607 ========== ========== ========== * Includes $36,177 from Roney. The record transaction volumes in fiscal years 1999, 1998 and 1997 resulted in increased securities commissions from the sales of all product lines during the period, with the largest increases occurring in equities and annuities. YEAR ENDED ------------------------------------------------- Sept. 24, %Incr. Sept. 25, Sept. 26, 1999 (Decr.) 1998 %Incr. 1997 ----------- ------- --------- ------ --------- Number of retail Financial Advisors at yearend* 3,864 24% 3,117 10% 2,825 Retail commission revenues (000's) $ 631,572 21% $ 523,890 24% $ 422,316 Retail new issue sales credits (000's) $ 16,345 (35%) $ 24,976 2% $ 24,472 Number of institutional salesmen at yearend 150 12% 134 9% 123 Institutional commission revenues (000's) $ 126,564 17% $ 107,771 16% $ 92,648 Institutional new issue sales credits (000's) $ 21,055 (20%) $ 26,470 14% $ 23,167 Number of trades processed 4,107,000 23% 3,328,000 19% 2,803,000 * Includes Roney. Excluding Roney: 3,548 Financial Advisors, a 14% increase. Investment banking revenues, including new issue sales credits, decreased considerably to $75 million in 1999 from the record $110 million in the prior year. Fiscal 1997 was a record year for equity underwriting activity, both in number of new issues and average offering size. This pace continued only through the first half of fiscal 1998, at which time small and mid-cap stocks began to weaken, particularly in certain industry sectors, which severely slowed the new issue deal flow. Investment banking revenues in fiscal 1999 were well below recent prior years as a result of several of the Company's major sectors of emphasis (energy, real estate and health care) being out of favor for most of the year and the Company being behind schedule in developing a significant technology investment banking and research effort. The number of managed and co-managed underwritings, the vast majority of which were equity-related offerings, and the dollar volume of these transactions were as follows: 1999 - 23 new issues for $3.0 billion; 1998 - 57 new issues for $6.0 billion; and 1997 - 65 new issues for $7.8 billion. Merger and acquisition fees, which have been a consistent revenue source during the past few years, also declined in fiscal 1999 to $16 million after reaching a record $20 million in 1998. Investment advisory fees have risen commensurate with the generally strong growth in assets under management, which has shown an annual 21% increase for the period. Asset management growth has benefited from both overall asset appreciation and net sales during the past two years. For fiscal 1997, investment advisory fees included $2.6 million in fees from Liberty, which was sold in January 1997. During 1998, the Company's real estate portfolio management operation was sold, and its employees were transferred to the new owner. This transaction generated $3.7 million of performance fees, which are included in investment advisory fees. Sept. 24, %Incr. Sept. 25, %Incr. Sept. 26, 1999 (Decr.) 1998 (Decr.) 1997 ----------- ------- ----------- ------- ---------- (000's) (000's) (000's) Eagle Asset Mgmt., Inc.* $ 5,138,064 7% $ 4,804,967 29% $3,714,407 Heritage Family of Mutual Funds 4,780,747 21% 3,947,394 25% 3,160,910 Investment Advisory Services 3,110,000 73% 1,798,260 25% 1,433,018 Awad Asset Management* 569,000 (13%) 656,336 (19%) 814,315 Carillon Asset Management - - 53,448 ----------- ----------- ---------- Total Financial Assets Under Management $13,597,811 21% $11,206,957 22% $9,176,098 =========== =========== ========== * Excludes balances included in the Heritage Family of Mutual Funds. Net interest income continues to be a growing source of recurring earnings. The components of interest earnings are as follows: Sept. 24, Sept. 25, Sept. 26, 1999 1998 1997 --------- --------- --------- (balances in 000's) Margin balances: Average balance $ 908,671 $ 701,742 $ 480,203 Average rate 7.6% 8.2% 8.1% ---------- ---------- ---------- $ 69,059 $ 57,697 $39,087 Assets segregated pursuant to Federal Regulations: Average balance 1,063,350 776,768 601,902 Average rate 4.9% 5.6% 5.3% ---------- ---------- ---------- 51,630 43,163 32,148 Stock borrowed: Average balance 1,270,112 1,154,703 1,004,735 Average rate 4.6% 4.9% 4.8% ---------- ---------- ---------- 58,209 57,049 48,606 Raymond James Bank, FSB 28,756 22,937 17,739 Other interest revenue 22,152 21,409 18,166 ------- ------- ------- Total interest revenue 229,806 202,255 155,746 ------- ------- ------- Client interest program: Average balance 1,540,966 1,201,398 880,026 Average rate 4.3% 4.8% 4.7% --------- --------- -------- 66,260 57,627 41,693 Stock loaned: Average balance 1,292,791 1,119,287 980,000 Average rate 4.3% 4.7% 4.5% --------- --------- --------- 55,590 53,200 44,238 Raymond James Bank, FSB 20,270 17,249 12,997 Other interest expense 9,374 2,933 2,413 -------- -------- -------- Total interest expense 151,494 131,009 101,341 -------- -------- -------- Net interest income $ 78,312* +10% $ 71,246 +31% $ 54,405 ======== ======== ======== * Includes $2,383 from Roney. Net trading profits increased dramatically over fiscal 1998, reflecting improved corporate and government bond trading results in addition to somewhat improved over-the-counter equity trading results. However, due to the changes in the over-the-counter equity trading regulations and practices in fiscal 1998, the Company expects that flat or negative over-the-counter equity trading results will be the norm, not the exception. Through fiscal 1997, the Company's trading profits had remained relatively consistent, derived primarily from client order flow in both over-the-counter equity and fixed income securities. The growth in the Company's retail client base during the past two fiscal years has led to increased financial service fees. In the past two years there has been a 54% increase in the number of IRA accounts, a 61% increase in money market processing fees, and a 151% increase in transaction fees arising from retail asset-based fee account programs, an increasingly popular alternative to the traditional commission-based pricing structure. Other income is composed predominantly of postage and handling fees and floor brokerage income. Fiscal 1998's other income also included $1.7 million related to the sale of the real estate portfolio and property management operations and $2.4 million from the sale of the Company's specialist operations on the Chicago Exchange. For the first half of 1998 and in previous years, other income included property management fees from the operations which were sold by the Company in March 1998. These fees had been increasing substantially through the years as the number of apartment units under management increased. Other income in fiscal 1997 included a gain of $2.5 million from the Company's sale of its former headquarters building. Year Ended ----------------------------------------------- Sept. 24, % Incr. Sept. 25, % Incr. Sept. 26, 1999* (Decr.) 1998 (Decr.) 1997 ----------- ------- --------- ------- --------- Expenses: (000's) (000's) (000's) Employee compensation: Sales commissions $ 517,280 20% $430,556 24% $346,770 Administrative and benefit costs 146,254 21% 120,935 25% 96,549 Incentive compensation 91,213 (6%) 96,723 3% 94,091 ----------- -------- -------- Total employee compensation 754,747 16% 648,214 21% 537,410 Communications and information processing 53,071 22% 43,485 16% 37,491 Occupancy and equipment 40,059 21% 33,029 22% 27,175 Clearance and floor brokerage 13,456 16% 11,607 (1%) 11,708 Interest 151,494 16% 131,009 29% 101,341 Business development 38,395 22% 31,514 52% 20,755 Other 43,465 29% 33,813 8% 31,212 ---------- -------- -------- $1,094,687 17% $932,671 22% $767,092 ========== ======== ======== * Includes $34,625 from Roney. Sales commission expense again increased at a rate approximately proportionate to the related revenues. The slightly higher increase in Financial Advisor compensation in fiscal 1998 over the related revenue reflects the increase in the proportion of independent contractor versus employee Financial Advisors. Administrative and benefit compensation costs had been increasing at a rate consistent with the growth in total revenues. However, the fiscal 1999 increase exceeded the growth in revenues as a result of continued hiring to support transaction volume, including the personnel acquired in the Roney transaction, and the recruiting of investment bankers and research analysts during a period of decreased investment banking revenues. Incentive compensation expenses, including contributions to qualified retirement plans, are based on departmental, subsidiary and firm-wide profitability. Lower investment banking results in fiscal 1999 resulted in significantly lower incentive compensation accruals for this area. Simultaneously, improved results in other segments partially offset this decline, holding the decrease in total incentive compensation expense to a rate below the decrease in net income. In contrast, strong underwriting activity in 1998 and 1997 resulted in record investment banking departmental profits, having a dramatic impact on incentive compensation. While the costs associated with overall growth continued to affect communications and information processing, fiscal 1999 also included costs associated with the integration of Roney, preparation for Y2K, and the merger creating RJFS. The increases in communications and information processing expense in fiscal 1998 and 1997 reflected the costs of further enhancement and expansion of the Company's systems of internal communication and information dissemination, as well as higher general business volume, which gave rise to increased costs for telephone, printing and supplies. The completion and occupancy of the third headquarters building in the spring of 1998 gave rise to much of the increased occupancy and equipment expenses for that year. Fiscal 1999 includes the first full annual effect of this expansion. For the first time in several years, clearing and floor brokerage increased, a result of increased transaction volume and higher international clearing costs. As in the past, clearing and floor brokerage expense increased at a rate lower than the growth in related revenues due to the increased productivity of floor brokers and other cost saving measures implemented. Several of the Company's branding initiatives impacted business development in fiscal 1999, such as the first full year of the stadium naming rights, general image advertising costs (primarily television), and recruiting-related programs capitalizing on the creation of RJFS. In addition, certain costs related to the Roney acquisition and subsequent communication and training are included in this expense. Business development expenses rose dramatically in 1998 due to increased advertising, both to recruit Financial Advisors and increase brand name recognition; increased travel and related expenses, particularly by the larger staff of investment bankers and research analysts; the inception of the stadium naming rights contract; and costs associated with larger conferences throughout the Company's operations. While the Company was able to hold other expenses relatively constant in 1998, these expenses increased from 1998 to 1999 at a pace exceeding the growth in revenues. These expenses include fees paid to outside managers in the Company's investment advisory services program, bank service charges, legal expenses and provisions, and amortization of goodwill arising from the Roney acquisition. Year 2000 - --------- The widespread use of computer programs that rely on two-digit date programs to perform computations and decision-making functions may cause computer systems to malfunction in the Year 2000 and lead to significant business delays and disruptions in the U.S. and internationally. The Company has revised all critical information technology (IT) internal computer code that it has identified as requiring modification for Year 2000 compliance, and has successfully tested the revised code for the transition between December 29, 1999 and January 3, 2000; testing will continue throughout 1999 and may be continued into January 2000 with respect to other dates that could be affected by this problem. The company will be limiting the introduction of new computer code during this period to protect the integrity of the changes made during this year. All of the Company's securities transactions are processed on software provided by Securities Industry Software (SIS), a subsidiary of Automatic Data Processing, Inc., and the Company has closely monitored the progress of SIS in revising its software. Based on information received to date, the Company believes that SIS completed revision and testing of its software on a timely basis. The Company is also monitoring information received from third- party vendors regarding their progress in modification of other software used by the Company, as well as the progress of other industry suppliers, in addressing this issue. With respect to non-IT systems, primarily those located at its headquarters campus and those provided by its telecommunications and satellite service providers, the Company has completed the inventory of all systems and confirmed the compliance status of its vendors. Most of these vendors are major national or international companies which have been addressing the Year 2000 issue for some time. With the exception of those discussed below, all of the Company's subsidiaries are substantially dependent upon the Company's Year 2000 compliance program. Raymond James Bank, FSB, Raymond James Trust Company and Heritage Asset Management, Inc. have received revised computer software from the third-party vendors on whom they are dependent and have completed testing of these systems. Eagle Asset Management, Inc. has installed a new portfolio management system which has been designed to be Year 2000 compliant and completed testing of its mission critical systems in September 1999. The Company has developed a contingency plan for mission critical business functions. In accordance with industry requirements, the company has established a command center which will operate 24 hours a day between December 29, 1999 and January 3, 2000 to monitor the functioning of its systems and processes. The securities industry conducted a series of industry-wide tests for Year 2000 compliance between April and July 1999; the Company participated in all tests and did not experience any material problems relating to its Year 2000 code and data revisions. In general, representatives of the securities industry were satisfied that the tests confirmed substantial success in dealing with the Year 2000 issue. The testing process did identify a number of minor communications problems, most of them unrelated to Year 2000 issues; these problems were identified and successfully resolved during the course of the testing. The Company estimates that its costs for these efforts during this fiscal year were approximately $2,500,000, an additional $800,000 will be spent during fiscal 2000. Because many of the Company's basic operating systems are provided by third party vendors, as indicated above, the Company's costs for Year 2000 remediation have been substantially less than the costs incurred by companies which have developed and maintain all their own operating systems. The impact of this problem on the securities industry will be material, however, since virtually every aspect of the sale of securities and the processing of transactions will be affected. Due to the enormous task facing the securities industry, the interdependent nature of securities transactions, and reliance on third parties such as utilities and telecommunications providers, the Company may be adversely affected by this problem in the Year 2000 depending on whether it and the entities with whom it does business address this issue successfully. Liquidity and Capital Resources - ------------------------------- Net cash from operating activities during the current year was $250 million. Cash was generated by increased stock loan balances exceeding the increased stock borrowed balances, increased balances in the client interest program net of increased customer margin balances, decreased broker-dealer receivables net of increased trading account securities, and the fluctuations in various other asset and liability accounts. Investing activities required $107 million during the year. The cash used for the purchase of Roney included the $71 million purchase price net of the $3 million in cash received as part of Roney. Additions to fixed assets consumed $21 million, predominantly for the purchase of computers, office furniture and equipment. Net purchases, sales and maturations of investments required $18 million. These investments were primarily mortgage-backed securities purchased by Raymond James Bank, FSB ("RJBank"). Financing activities used $33 million, the result of the purchase of treasury stock and the payment of cash dividends net of the exercise of stock options and employee stock purchases. The Company has loans payable consisting of debt in the amount of $39 million in the form of a mortgage on its headquarters office complex, a $5 million Federal Home Loan Bank advance at RJBank, $60 million at Raymond James Credit Corporation, $65 million in short-term financing of customer settlements and $33 million at the parent company to fund the Roney acquisition. Subsequent to yearend the Company secured a $50 million term loan to repay the $33 million advance on its line of credit. The parent company has a commitment from a group of commercial banks for an unsecured $100 million line of credit for general corporate purposes. In addition, Raymond James & Associates, Inc. has uncommitted bank lines of credit aggregating $480 million. The Company's broker-dealer subsidiaries are subject to requirements of the SEC relating to liquidity and capital standards (see Notes to Consolidated Financial Statements). Effects of Recently Issued Accounting Standards - ----------------------------------------------- In March 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", effective for fiscal years beginning after December 15, 1998. SOP 98-1 requires that certain costs of computer software developed or obtained for internal use be capitalized and amortized over the useful life of the related software. The Company currently expenses the costs of all software development in the period in which it is incurred. The Company intends to adopt this statement beginning in fiscal 2000 and does not anticipate that it will have a material impact on the financial position, results of operations, earnings per share or cash flows. Market Risk - ----------- During fiscal 1997 the Securities and Exchange Commission issued market risk disclosure requirements to enhance disclosures of accounting policies for derivatives and other financial instruments and to provide quantitative and qualitative disclosures about market risk inherent in derivatives and other financial instruments. The Company manages risk exposure involving various levels of management. Position limits in trading and inventory accounts are established and monitored on an ongoing basis. Current and proposed underwriting, corporate development, merchant banking and other commitments are subject to due diligence reviews by senior management, as well as professionals in the appropriate business and support units involved. Credit risk related to various financing activities is reduced by the industry practice of obtaining and maintaining collateral. The Company monitors its exposure to counterparty risk through the use of credit exposure information, the monitoring of collateral values and the establishment of credit limits. The Company maintains inventories as detailed in Note 2 to the Consolidated Financial Statements. The fair value of these securities at September 24, 1999, was $181 million in long positions and $33 million in short positions. The Company performed an entity-wide analysis of the Company's financial instruments and assessed the related risk and materiality in accordance with the rules. Based on this analysis, in the opinion of management, the market risk associated with the Company's financial instruments at September 24, 1999 will not have a material adverse effect on the consolidated financial position or results of operations of the Company. Effects of Inflation - -------------------- The Company's assets are primarily liquid in nature and are not significantly affected by inflation. Management believes that the replacement cost of property and equipment would not materially affect operating results. However, the rate of inflation affects the Company's expenses, including employee compensation and benefits, communications and occupancy, which may not be readily recoverable through charges for services provided by the Company. Factors Affecting "Forward-Looking Statements" - ---------------------------------------------- From time to time, the Company may publish "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, or make oral statements that constitute forward-looking statements. These forward-looking statements may relate to such matters as anticipated financial performance future revenues or earnings, business prospects, projected ventures, new products, anticipated market performance, and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company cautions readers that a variety of factors could cause the Company's actual results to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. These risks and uncertainties, many of which are beyond the Company's control, include, but are not limited to: (i) transaction volume in the securities markets, (ii) the volatility of the securities markets, (iii) fluctuations in interest rates, (iv) changes in regulatory requirements which could affect the cost of doing business, (v) fluctuations in currency rates, (vi) general economic conditions, both domestic and international, (vii) changes in the rate of inflation and related impact on securities markets, (viii) competition from existing financial institutions and other new participants in the securities markets, (ix) legal developments affecting the litigation experience of the securities industry, (x) changes in federal and state tax laws which could affect the popularity of products sold by the Company, and (xi) disruptions in the Company's business or general economic conditions caused by computer malfunctions in 2000. The Company does not undertake any obligation to publicly update or revise any forward-looking statements. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------------------------------------------- (a) Financial statements, schedules and exhibits filed under this item are listed in the index appearing on page F-1 of this report. (b) QUARTERLY FINANCIAL INFORMATION (In thousands, except per share data) 1999 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. -------- -------- -------- -------- Revenues $264,507 $299,191 $324,390 $344,118 Income before income taxes 28,337 35,319 37,989 35,874 Net income 17,479 21,869 23,490 22,252 Net income per share - basic .36 .46 .50 .47 Net income per share - diluted .36 .45 .49 .46 1998 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. -------- -------- -------- -------- Revenues $252,304 $267,538 $275,791 $287,274 Income before income taxes 36,886 40,534 36,341 36,475 Net income 22,745 24,700 22,791 22,468 Net income per share - basic* .48 .51 .47 .46 Net income per share - diluted* .45 .50 .46 .45 * Gives effect to the 3-for-2 common stock split paid on April 2, 1998. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND --------------------------------------------------------------- FINANCIAL DISCLOSURE -------------------- None. PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -------------------------------------------------- Executive officers of the registrant (including its significant subsidiaries) who are not Directors of the registrant are as follows: Richard K. Riess 50 Executive Vice President - RJF, President and CEO of Eagle, and Managing Director - Asset Management. Jeffrey P. Julien 43 Vice President - Finance and Chief Financial Officer, Director and/or officer of certain RJF subsidiaries. Barry S. Augenbraun 60 Senior Vice President and Corporate Secretary. Jennifer C. Ackart 35 Controller. The information required by Item 10 relating to Directors of the registrant is incorporated herein by reference to the registrant's definitive proxy statement for the 1999 Annual Meeting of Shareholders. Such proxy statement will be filed with the SEC prior to January 10, 2000. ITEMS 11,12 AND 13. The information required by Items 11, 12 and 13 is incorporated herein by reference to the registrant's definitive proxy statement for the 2000 Annual Meeting of Shareholders. Such proxy statement will be filed with the SEC prior to January 10, 2000. PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND ------------------------------------------- REPORTS ON FORM 8-K ------------------- (a) Exhibits required by this Item are either listed in the index appearing on page F-1 of this report or have been previously filed with the SEC. (b) Financial statement schedules required by this Item are listed in the index appearing on page F-1 of this report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Petersburg, State of Florida, on the 17th day of December, 1999. RAYMOND JAMES FINANCIAL, INC. By /s/ THOMAS A. JAMES ----------------------------- Thomas A. James, Chairman Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ THOMAS A. JAMES Chairman and Chief December 17, 1999 - -------------------------- Thomas A. James Executive Officer /s/ FRANCIS S. GODBOLD President and Director December 17, 1999 - -------------------------- Francis S. Godbold /s/ M. ANTHONY GREENE Executive Vice President December 17, 1999 - -------------------------- M. Anthony Greene and Director /s/ J. STEPHEN PUTNAM Executive Vice President December 17, 1999 - -------------------------- J. Stephen Putnam and Director /s/ ROBERT F. SHUCK Vice Chairman and Director December 17, 1999 - -------------------------- Robert F. Shuck /s/ JEFFREY P. JULIEN Vice President - Finance December 17, 1999 - -------------------------- Jeffrey P. Julien (Chief Financial Officer) /s/ JENNIFER C. ACKART Controller (Chief December 17, 1999 - -------------------------- Jennifer C. Ackart Accounting Officer) /s/ ANGELA M. BIEVER Director December 17, 1999 - -------------------------- Angela M. Biever /s/ JONATHAN A. BULKLEY Director December 17, 1999 - -------------------------- Jonathan A. Bulkley /s/ ELAINE L. CHAO Director December 17, 1999 - -------------------------- Elaine L. Chao /s/ THOMAS S. FRANKE Director December 17, 1999 - -------------------------- Thomas S. Franke /s/ HARVARD H. HILL, JR. Director December 17, 1999 - -------------------------- Harvard H. Hill, Jr. /s/ HUNTINGTON A. JAMES Director December 17, 1999 - -------------------------- Huntington A. James /s/ PAUL W. MARSHALL Director December 17, 1999 - -------------------------- Paul W. Marshall /s/ DENNIS W. ZANK Director December 17, 1999 - -------------------------- Dennis W. Zank RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES - ---------------------------------------------- INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS - ----------------------------------------------------- FINANCIAL STATEMENTS PAGE(S) - -------------------- Reports and Consents of Independent Accountants F-2-3 Consolidated Statement of Financial Condition as of September 24, 1999 and September 25, 1998 F-4 Consolidated Statement of Income for the Three Years Ended September 24, 1999 F-5 Consolidated Statement of Changes in Shareholders' Equity for the Three Years Ended September 24, 1999 F-6 Consolidated Statement of Cash Flows for the Three Years Ended September 24, 1999 F-7-8 Summary of Significant Accounting Policies F-9-12 EXHIBITS - -------- Notes to Consolidated Financial Statements F-13-26 3.1 Amended and restated Articles of Incorporation of Raymond James Financial, Inc. as filed with the Secretary of State Florida on March 9, 1998, and as Exhibit 3 of Form 10Q filed on May 11, 1998 3.2 Amended and restated By-Laws of the Company, filed as Exhibit 3 of Form 10Q filed February 9, 1998 10.1 Raymond James Financial, Inc. Amended Stock Option Plan for Outside Directors, dated December 12, 1986, incorporated by reference to Exhibit 4.1 (b) to Registration Statement on Form S-8, No. 33-38350 10.2 Raymond James Financial, Inc. 1992 Incentive Stock Option Plan effective August 20, 1992, incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8, No. 33-60608; and amended on Form S-8, No. 333- 59449 filed July 20, 1998 10.3 Raymond James Financial, Inc. Deferred Management Bonus Plan, effective as of October 1, 1989 10.4 Raymond James Financial, Inc. 1996 Stock Option Plan for Key Management Personnel, dated November 21, 1996 and Incorporated by reference as filed with the Company's Form 10-K on December 24, 1998 10.5 Termination and Release Agreement between Liberty Asset Management, Inc. and Raymond James Financial, Inc. and Incorporated by reference as filed with the Company's Form 10-K on December 24, 1997 10.6 Raymond James Financial, Inc.'s 1999 Employee Stock Purchase Plan S-8, No. 333-68821, filed December 14, 1998 10.7 Purchase agreement between BANK ONE CORPORATION as seller, and RAYMOND JAMES FINANCIAL, INC., filed as Exhibit 10 of Form 10Q filed May 7, 1999 10.8 Term Credit Agreement for $50 million dated as of October 26, 1999 10.9 Revolving Credit Agreement for $100 million dated as of October 26, 1999 11 Computation of Earnings per Share X-1 21 List of Subsidiaries X-2 23 Consent of Independent Accountants F-2-3 27 Financial Data Schedule - EDGAR version only * Incorporated by reference as filed with the Company's Form 10-K on December 24, 1997. ** Incorporated by reference as filed with the Company's Form 10-K on December 24, 1998. SCHEDULES AND EXHIBITS EXCLUDED - ------------------------------- All schedules and exhibits not included are not applicable, not required or would contain information which is included in the Consolidated Financial Statements, Summary of Significant Accounting Policies, or the Notes to Consolidated Financial Statements. REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Shareholders of Raymond James Financial, Inc. In our opinion, based upon our audits and the report of other auditors, the accompanying consolidated financial statements listed in the index appearing on page F-1 present fairly, in all material respects, the financial position of Raymond James Financial, Inc. and its subsidiaries at September 24, 1999 and September 25, 1998, and the results of their operations and their cash flows for each of the three years in the period ended September 24, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Raymond James Bank, FSB, a wholly- owned subsidiary, which statements reflect total assets of $638,970,000 and $510,580,000 at September 24, 1999 and September 25, 1998, respectively, and total revenues of $29,200,000, $23,199,000 and $17,712,000 for each of the three years in the period ended September 24, 1999. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for Raymond James Bank, FSB, is based solely on the report of the other auditors. We conducted our audits of the consolidated financial statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP October 19, 1999 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS - ---------------------------------- We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-68821, 333-59449 and 33-38390) of Raymond James Financial, Inc. of our report dated October 19, 1999 appearing on page F-2 of this Form 10-K. /s/ PricewaterhouseCoopers LLP December 10, 1999 Independent Auditors' Report The Board of Directors Raymond James Bank, FSB (A wholly-owned subsidiary of Raymond James Financial, Inc.): We have audited the balance sheets of Raymond James Bank, FSB (A wholly-owned subsidiary of Raymond James Financial, Inc.) as of September 30, 1999 and 1998, and the related statements of income, stockholder's equity and comprehensive income, and cash flows for the years then ended. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Raymond James Bank, FSB (A wholly-owned subsidiary of Raymond James Financial, Inc.) at September 30, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG LLP Tampa, Florida October 29, 1999 The Board of Directors Raymond James Bank, FSB: We consent to the inclusion of our report dated October 29, 1999, with respect to the balance sheets of Raymond James Bank, FSB as of September 30, 1999 and 1998, and the related statements of income, stockholder's equity and comprehensive income, and cash flows for each of the years then ended, which report appears in the Form 10-K of Raymond James Financial, Inc. dated September 30, 1999. /s/ KPMG LLP Tampa, Florida December 21, 1999 RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED STATEMENT OF FINANCIAL CONDITION --------------------------------------------- (in thousands, except share amounts) September 24, September 25, 1999 1998 ------------- ------------- ASSETS Cash and cash equivalents $ 250,855 $ 296,817 Assets segregated pursuant to Federal Regulations: Cash and cash equivalents 9 1 Securities purchased under agreements to resell 1,102,979 946,723 Securities owned: Trading and investment account securities 180,967 105,892 Available for sale securities 400,143 385,676 Receivables: Clients, net 1,447,618 893,839 Stock borrowed 1,277,692 852,744 Brokers, dealers and clearing organizations 34,670 112,838 Other 69,339 62,722 Investment in leveraged leases 23,950 23,297 Property and equipment, net 91,335 81,372 Deferred income taxes, net 39,631 32,841 Deposits with clearing organizations 24,634 21,206 Intangible assets 34,866 817 Prepaid expenses and other assets 52,027 35,952 ----------- ----------- $5,030,715 $3,852,737 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Loans payable $ 201,504 $ 44,767 Payables: Clients 2,524,352 2,126,699 Stock loaned 1,378,821 828,102 Brokers, dealers and clearing organizations 55,722 43,227 Trade and other 101,772 99,690 Trading account securities sold but not yet purchased 33,400 30,841 Accrued compensation and commissions 172,066 158,539 Income taxes payable 4,592 10,974 ----------- ----------- 4,472,229 3,342,839 ----------- ----------- Commitments and contingencies (Note 10) - - Shareholders' equity: Preferred stock; $.10 par value; authorized 10,000,000 shares; issued and outstanding -0- shares - - Common stock; $.01 par value; authorized 100,000,000 shares; issued 48,997,995 shares 490 490 Additional paid-in capital 58,023 57,777 Other Comprehensive Income (1,076) 114 Retained earnings 530,885 459,099 ----------- ----------- 588,322 517,480 Less: 1,755,585 and 730,118 common shares in treasury, at cost (29,836) (7,582) ----------- ----------- 558,486 509,898 ----------- ----------- $5,030,715 $3,852,737 =========== =========== The accompanying Summary of Significant Accounting Policies and Notes to Consolidated Financial Statements are integral parts of these financial statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED STATEMENT OF INCOME -------------------------------- (in thousands, except per share amounts) Year Ended --------------------------------------------- September 24, September 25, September 26, 1999 1998 1997 ------------- ------------- ------------- Revenues: Securities commissions and fees $ 758,136 $ 631,661 $ 514,964 Investment banking 74,748 109,705 109,088 Investment advisory fees 91,920 79,485 55,194 Interest 229,806 202,255 155,746 Correspondent clearing 4,655 4,429 4,502 Net trading profits 17,034 6,300 12,797 Financial service fees 36,101 24,797 20,786 Other 19,806 24,275 23,884 Gain on sale of Liberty Investment Management, Inc. (Note 16) - - 30,646 ---------- ---------- --------- 1,232,206 1,082,907 927,607 ---------- ---------- --------- Expenses: Employee compensation and benefits 754,747 648,214 537,410 Communications and information processing 53,071 43,485 37,491 Occupancy and equipment 40,059 33,029 27,175 Clearance and floor brokerage 13,456 11,607 11,708 Interest 151,494 131,009 101,341 Business development 38,395 31,514 20,755 Other 43,465 33,813 31,212 ---------- ---------- --------- 1,094,687 932,671 767,092 ---------- ---------- --------- Income before provision for income taxes 137,519 150,236 160,515 Provision for income taxes 52,429 57,532 61,600 ---------- ---------- --------- Net income $ 85,090 $ 92,704 $ 98,915 ========== ========== ========= Net income per share - basic $ 1.79 $ 1.92 $ 2.09 ========== ========== ========= Net income per share - diluted $ 1.76 $ 1.86 $ 2.04 ========== ========== ========= Weighted average common shares outstanding - basic 47,606 48,160 47,383 ========== ========== ========= Weighted average common and common equivalent shares outstanding - diluted 48,449 49,951 48,387 ========== ========== ========= The accompanying Summary of Significant Accounting Policies and Notes to Consolidated Financial Statements are integral parts of these financial statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY --------------------------------------------------------- (in thousands) Add- Other Treasury Total Total Common itional Compre- Stock Share- Compre- Stock Paid-in Retained hensive Common holders' hensive Shares Amount Capital Earnings Income Shares Amount Equity Income - -------------------------------------------------------------------------------- Balances at September 27, 1996 21,777 $217 $50,271 $289,096 $ (791) (883)$(12,161)$326,632 Net income fiscal 1997 98,915 98,915 $98,915 Cash divi- dends - common stock ($.21 per share) (9,921) (9,921) Employee stock purchases 2,031 145 1,649 3,680 Exercise of stock options (11) 211 2,541 2,530 Tax benefit related to non-qualified option exercises 308 308 3-for-2 stock split 10,888 109 (109) (342) - Net unrealized gain on securities available for sale 1,132 1,132 1,132 --------------------------------------------------------------------- Balances at September 26, 1997 32,665 326 52,599 377,981 341 (869) (7,971) 423,276 ===================================================================== Total Compre- hensive Income fiscal 1997 100,047 ======== Net income fiscal 1998 92,704 92,704 92,704 Cash divi- dends - common stock ($.24 per share) (11,586) (11,586) Purchase of trea- sury shares (292) (5,346) (5,346) Employee stock purchases 4,271 261 2,274 6,545 Exercise of stock options 197 403 3,461 3,658 Tax benefit related to non-qualified option exercises 539 539 3-for-2 stock split 16,333 164 (164) (233) - Corporate sale of RJF put options 335 335 Net unrealized loss on securities available for sale (227) (227) (227) --------------------------------------------------------------------- Balances at September 25, 1998 48,998 490 57,777 459,099 114 (730) (7,582) 509,898 ===================================================================== Total Compre- hensive Income fiscal 1998 92,477 ======== Net income fiscal 1999 85,090 85,090 85,090 Cash divi- dends - common stock ($.28 per share) (13,304) (13,304) Purchase of trea- sury shares (1,652) (31,564) (31,564) Employee stock purchases 385 302 4,826 5,211 Exercise of stock options (1,860) 324 4,484 2,624 Tax benefit related to non-qualified option exercises 407 407 Corporate sale of RJF put options 1,314 1,314 Net unrealized loss on securities available for sale (1,190) (1,190)(1,190) --------------------------------------------------------------------- Balances at September 24, 1999 48,998 $490 $58,023 $530,885$(1,076)(1,756)$(29,836)$558,486 ===================================================================== Total Compre- hensive Income fiscal 1999 $83,900 ======= The accompanying Summary of Significant Accounting Policies and Notes to Consolidated Financial Statements are integral parts of these financial statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (in thousands) (continued on next page) Year Ended ----------------------------------------- September 24, September 25, September 26, 1999 1998 1997 ------------- ------------- ------------- Cash flows from operating activities: Net income $ 85,090 $ 92,704 $ 98,915 --------- ---------- ---------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,129 16,321 13,312 Amortization of goodwill 930 487 1,799 Unrealized loss on investment account securities 2,749 773 2,075 Unrealized loss (gain) and premium amortization on available for sale securities 642 1,395 (66) (Gain)loss on sale of securities (2,227) (1,130) 55 (Gain)loss on sale of property and equipment 277 (204) 55 Provision for bad debts (2,332) (342) (380) Provision for other accruals (3,493) (1,825) (6,881) Decrease (increase) in assets: Receivables: Clients (335,975) (207,158) (226,779) Stock borrowed (424,648) 218,200 (206,804) Brokers, dealers and clearing organizations 82,395 (73,194) (15,338) Other (3,669) (24,604) (9,138) Trading account securities, net (70,814) (33,549) 25,975 Deferred income taxes (6,790) (8,485) (3,167) Prepaid expenses and other assets (13,663) (14,259) (8,718) Increase (decrease) in liabilities: Payables: Clients 370,758 639,541 400,752 Stock loaned 543,934 (206,933) 186,440 Brokers, dealers and clearing organizations 7,055 20,975 (34,676) Trade and other 4,230 20,298 34,091 Accrued compensation and commissions 3,147 16,758 40,481 Income taxes payable (6,742) (7,439) 8,008 --------- --------- --------- Total adjustments 164,893 355,626 201,096 --------- --------- --------- Net cash provided by operating activities 249,983 448,330 300,011 --------- --------- --------- The accompanying Summary of Significant Accounting Policies and Notes to Consolidated Financial Statements are integral parts of these financial statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (in thousands) (continued from preceding page) Year Ended ----------------------------------------- September 24, September 25, September 26, 1999 1999 1999 ------------- ------------- ------------- Cash flows from investing activities: Additions to property and equipment (20,543) (45,815) (25,456) Sales of investment account securities 6,545 4,563 4,923 Sales of available for sale securities - - 18,732 Purchases of investment account securities (8,769) (3,007) (8,636) Purchases of available for sale securities (207,907) (187,213) (170,131) Security maturations and repayments 191,608 113,206 48,153 Acquisition of Roney & Co. (67,597) - - ----------- ----------- ----------- Net cash used in investing activities (106,663) (118,266) (132,415) ----------- ----------- ----------- Cash flows from financing activities: Repayments on mortgage note (584) (12,948) (193) Proceeds from mortgage financing - 40,000 - Other borrowed funds 123,614 5,000 - Repayments on borrowings (120,736) (1,500) (10,490) Exercise of stock options and employee stock purchases 8,242 10,742 6,518 Purchase of treasury stock (31,564) (5,346) - Sale of stock options 1,314 335 - Cash dividends on common stock (13,304) (11,586) (9,921) ----------- ----------- ----------- Net cash provided by (used in) financing activities (33,018) 24,697 (14,086) ----------- ----------- ----------- Net increase in cash and cash equivalents 110,302 354,761 153,510 Cash and cash equivalents at beginning of year 1,243,541 888,780 735,270 ----------- ----------- ----------- Cash and cash equivalents at end of year $1,353,843 $1,243,541 $ 888,780 =========== =========== =========== Supplemental disclosures of cash flow information: Cash paid for interest $ 151,295 $ 129,367 $ 100,546 =========== =========== =========== Cash paid for taxes $ 65,601 $ 73,456 $ 55,382 =========== =========== =========== The accompanying Summary of Significant Accounting Policies and Notes to Consolidated Financial Statements are integral parts of these financial statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Raymond James Financial, Inc. is a holding company which, through its subsidiaries, is engaged principally in the securities brokerage business, including the underwriting, distribution, trading and brokerage of equity and debt securities and the sale of mutual funds and other investment products. In addition, it provides investment management services for retail and institutional clients and banking and trust services for retail clients. The accounting and reporting policies of Raymond James Financial, Inc. and its subsidiaries (the "Company") conform to generally accepted accounting principles, the more significant of which are summarized below: Basis of consolidation - ---------------------- The consolidated financial statements include the accounts of Raymond James Financial, Inc. and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. All consolidated subsidiaries are 100% owned by the Company, except for RJ Properties, Inc., which was 85% owned until August 1999 (see Note 16). Reporting period - ---------------- The Company's fiscal year ends on the last Friday in September of each year. Recognition of revenues - ----------------------- Securities transactions and related commission revenues and expenses are recorded on a trade date basis. Revenues from investment banking are recorded at the time the transaction is completed and the related income is reasonably determinable. Investment banking revenues include sales credits earned in connection with the distribution of the underwritten securities. Any warrants received in connection with investment banking transactions are carried at a nominal value until such time as the warrants are exercisable and the underlying shares are salable. The Company earns an advisory fee based on a client's portfolio value on portfolios managed by its investment advisor subsidiaries. These fees are recorded under the accrual method. Management estimates and assumptions - ------------------------------------ The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Segment reporting - ----------------- In fiscal 1998, the Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of Enterprise and Related Information" ("FAS 131"). FAS 131 supersedes FAS 14, "Financial Reporting for Segments of a Business Enterprise", replacing the "industry segment" approach with the "management" approach. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company's reportable segments. FAS 131 also requires disclosures about products and services, geographic areas, and major customers. The adoption of FAS 131 did not affect the Company's financial position or results of operations, but did affect the disclosure of segment information (see Note 15). Cash and cash equivalents - ------------------------- The Company considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents for purposes of the consolidated statement of cash flows. These consist primarily of shares of money market funds and of U.S. Treasury Securities purchased under agreements to resell, some of which are held in special reserve accounts, and are stated at cost, which approximates market at fiscal yearend. In accordance with Rule 15c3-3 of the Securities Exchange Act of 1934 the Company, as a broker-dealer carrying client accounts, is subject to requirements related to maintaining cash or qualified securities in a segregated reserve account for the exclusive benefit of its clients. It is the Company's policy to obtain possession and control of securities purchased under resale agreements. The net fair value of securities purchased under resale agreements approximates their carrying value, as such financial instruments are predominantly short-term in nature. The Company monitors the risk of loss by assessing the market value of the underlying securities as compared to the related receivable or payable, including accrued interest, and requests additional collateral where deemed appropriate. At September 24, 1999 and September 25, 1998, there were no agreements with any individual counterparties where the risk of loss exceeded 10% of shareholders' equity. Customer receivables - -------------------- Customer receivables are reported at their outstanding principal, adjusted for any allowance for doubtful accounts, write-offs, any deferred fees or costs on originated bank loans and unamortized premiums or discounts on purchased loans. Client loans are considered to be impaired when it is probable that the Company will be unable to collect all amounts due. Impaired loans are written down or reserved to the extent that the principal is judged to be uncollectible. In the case of collateral-dependent loans where repayment is expected to be provided solely by the underlying collateral value, the loans are written down to the lower of cost or collateral value. Impairment losses are included in the allowance for doubtful accounts or reserves through an income statement charge. Securities owned - ---------------- The trading and investment account securities held by the brokerage subsidiaries are classified as trading. Investment account securities not readily marketable are carried at estimated fair value as determined by management with unrealized gains and losses included in earnings. Trading securities are carried at market value with realized and unrealized gains and losses included in earnings. The Company accounts for other securities owned in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115"). FAS 115 requires investments in debt and equity securities to be classified as either "held to maturity," "trading," or "available for sale." The accounting treatment for unrealized gains and losses on those securities is then determined by the classification chosen. Securities available for sale are carried at estimated market value, with unrealized gains and losses reported as a separate component of shareholders' equity, net of deferred taxes, and realized gains and losses, determined on a specific identification basis, included in earnings. Property and equipment - ---------------------- Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Depreciation of assets is provided principally using the straight-line method for financial reporting purposes over the estimated useful lives of the assets, which range from two to seven years for furniture and equipment and fifteen to thirty-one years for buildings and land improvements. Leasehold improvements are amortized using the straight- line method over the shorter of the lease term or the estimated useful lives of the assets. For income tax purposes, assets are depreciated using accelerated methods. Additions, improvements and expenditures for repairs and maintenance that significantly extend the useful life of an asset are capitalized. Other expenditures for repairs and maintenance are charged to operations in the period incurred. Gains and losses on disposals of fixed assets are reflected in income in the period realized. Intangible Assets - ----------------- Goodwill is stated at cost less accumulated amortization and reflected as an intangible asset. Amortization of goodwill is provided using the straight-line method for financial reporting purposes over a period ranging from three to fifteen years. Correspondent clearing - ---------------------- Under clearing agreements, the Company clears trades for unaffiliated correspondent brokers and retains a portion of commissions as a fee for its services. The Company records clearing charges net of commissions remitted. Total commissions generated by correspondents were $22,126,000, $22,244,000 and $21,334,000, and commissions remitted totaled $17,471,000, $17,815,000 and $16,832,000 for the years ended September 24, 1999, September 25, 1998 and September 26, 1997, respectively. Comprehensive Income - -------------------- The Company adopted SFAS No. 130, Reporting Comprehensive Income in fiscal 1999. This statement establishes standards for the reporting and display of comprehensive income and its components. This statement requires that an enterprise classify items of other comprehensive income by nature in a financial statement, and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a balance sheet. The Company's other comprehensive income represents the unrealized gain (loss) on securities available for sale in addition to net income. Derivative Financial Instruments - -------------------------------- To manage interest rate exposures at Raymond James Bank, FSB ("RJBank"), this subsidiary uses interest rate swaps. Interest rate swaps are agreements to exchange interest rate payment streams based on a notional principal amount. RJBank specifically designates interest rate swaps as hedges of the fixed rate period of certain purchased loans and recognizes interest differentials as adjustments to interest income in the period they occur. Income taxes - ------------ The Company utilizes the asset and liability approach defined in Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). FAS 109 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement amounts and the tax bases of assets and liabilities. Net income per share - -------------------- Net income per share is computed using weighted average common stock and common stock equivalents outstanding. Common stock equivalents include shares issuable under stock options and are determined under the treasury stock method. All per share amounts have been restated to give retroactive effect to the common stock dividends paid on April 2, 1998 and April 3, 1997 (see Note 11), as well as the implementation of Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128") in fiscal 1998. Reclassifications - ----------------- Certain amounts from prior years have been reclassified for consistency with current year presentation. These reclassifications were not material to the consolidated financial statements. RAYMOND JAMES FINANCIAL, INC. AND SUBSIDIARIES ---------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ NOTE 1 - RECEIVABLES FROM AND PAYABLES TO CLIENTS: - -------------------------------------------------- Receivables from clients include amounts arising from normal cash and margin transactions, bank loans receivable (see Note 7), and fees receivable. Securities owned by brokerage clients are held as collateral for margin receivables. Such collateral is not reflected in the accompanying consolidated financial statements. The amount receivable from clients is shown net of an allowance for doubtful accounts of approximately $3,603,000 and $1,166,000 as of September 24, 1999 and September 25, 1998, respectively. Unsecured receivables are not significant. Payables to clients include brokerage client funds on deposit awaiting reinvestment and bank savings accounts and certificates of deposit. The Company pays interest at varying rates on qualifying brokerage client funds on deposit. These funds totaled $1,627,629,000 and $1,447,665,000 at September 24, 1999 and September 25, 1998, respectively. In addition, the Company pays interest at varying rates on client bank deposits as described in Note 7. NOTE 2 - TRADING AND INVESTMENT ACCOUNT SECURITIES (in thousands): - ------------------------------------------------------------------ September 24, 1999 September 25, 1998 ---------------------- ---------------------- Securities Securities sold but sold but Securities not yet Securities not yet owned purchased owned purchased ---------- ---------- ---------- ---------- Marketable: Stocks and warrants $ 9,891 $ 3,731 $ 9,715 $ 5,000 Municipal obligations 144,597 285 77,697 55 Corporate obligations 9,743 3,488 1,913 1,197 Government obligations 7,894 24,842 10,547 24,589 Other 8,183 1,054 5,530 - Non-marketable 659 - 490 - -------- ------- --------- ------- $180,967 $33,400 $105,892 $30,841 ======== ======= ======== ======= NOTE 3 - AVAILABLE FOR SALE SECURITIES (in thousands): - ------------------------------------------------------ The amortized cost and estimated market values of securities available for sale at September 24, 1999 are as follows: Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- --------- Mortgage-backed securities: FNMA $126,115 $ 236 $ (460) $125,891 FHLMC 196,917 362 (244) 197,035 GNMA 33,367 - (387) 32,980 Corporate investments 20,521 - (76) 20,445 Other 24,701 14 (923) 23,792 -------- ------- -------- -------- $401,621 $ 612 $(2,090) $400,143 ======== ======= ======== ======== The amortized cost and estimated market values of securities available for sale at September 25, 1998 are as follows: Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- --------- Mortgage-backed securities: FNMA $178,651 $124 $ (79) $178,696 FHLMC 152,510 212 (1) 152,721 GNMA 13,093 265 - 13,358 Corporate investments 20,527 - (71) 20,456 Other 20,717 96 (368) 20,445 -------- ---- ------ -------- $385,498 $697 $(519) $385,676 ======== ==== ====== ======== The U.S. Treasury Securities and U.S. Government Obligations mature after one year and within ten years. NOTE 4 - LEVERAGED LEASES (in thousands): - ----------------------------------------- The Company is the lessor in two leveraged commercial aircraft transactions with major domestic airlines. The Company's combined equity investments represented 21% of the aggregate purchase prices; the remaining 79% was funded by public debt issues in the form of equipment trust certificates. The residual values of the aircrafts at the end of an average lease term of 20 years are projected to be an average of 10% of the original cost. The leases expire in September 2013 and June 2016, respectively. September 24, September 25, 1999 1998 ------------- ------------- Rents receivable (net of principal and interest on the non-recourse debt $ 21,056 $ 21,056 Unguaranteed residual values 10,719 10,719 Unearned income (7,825) (8,478) ---------- --------- Investment in leveraged leases 23,950 23,297 Deferred taxes arising from leveraged leases (25,777) (23,049) ---------- --------- Net investment in leveraged leases $ (1,827) $ 248 ========== ========= NOTE 5 - PROPERTY AND EQUIPMENT (in thousands): - ----------------------------------------------- September 24, September 25, 1999 1998 ------------- ------------- Land $ 12,612 $ 9,612 Buildings and improvements 66,062 60,059 Furniture, fixtures, equipment and leasehold improvements 100,134 83,904 --------- --------- 178,808 153,575 Less: accumulated depreciation and amortization $(87,473) (72,203) --------- --------- $ 91,335 $ 81,372 ========= ========= NOTE 6 - BORROWINGS: - -------------------- The Company has a mortgage note payable of $39.2 million related to the refinancing of two existing buildings at the headquarters complex and additional financing for a third building and adjacent parking garage completed during fiscal year 1998. The mortgage requires monthly principal and interest payments of approximately $291,000 with a balloon payment due January 1, 2008. The mortgage bears interest at 7.37% and is secured by land, buildings and improvements with a net book value of $48.75 million at September 24, 1999. Principal maturities under this mortgage note payable for the succeeding five years are as follows: $624,000 in 2000, $671,000 in 2001, $722,000 in 2002, $777,000 in 2003, $837,000 in 2004 and $35,601,000 thereafter. The Company had a $50 million committed, unsecured line of credit with a commercial bank. Borrowings under the line bore interest at the lesser of prime rate, Fed Funds plus .5%, or LIBOR plus .375%. The line of credit required that the Company maintain certain net worth levels, limited other leases and debt, and required the Company to follow certain other sound business practices. The Company paid $26,000, $63,000 and $63,000 in loan commitment fees on this line during fiscal years 1999, 1998 and 1997, respectively. During fiscal 1999, the Company renewed this line on an uncommitted basis with the same terms and the same bank. Subsequent to yearend, the Company replaced this line with a three year term loan for $50 million and a $100 million committed line of credit through a group of commercial banks. The term loan bears interest at LIBOR plus .75%, while any draws on the line of credit would bear interest at the Company's option, at LIBOR plus .5%, or the higher of prime or Fed Funds plus .5%. There is a .125% loan commitment fee on the $100 million line of credit. The Company's Raymond James Credit Corp. subsidiary has a $50 million line of credit, under which borrowings are collateralized by customer securities, which bears interest at a rate of one month LIBOR plus .75%. There were borrowings of $60 million under this facility at September 24, 1999. The interest rate on these borrowings ranged from 4.8% to 6.3%. The Company's broker-dealer subsidiaries also maintain uncommitted lines of credit aggregating $480 million with commercial banks ($235 million secured and $245 million unsecured). Borrowings under the lines of credit bear interest, at the Company's option, at the bank's prime rate, Fed Funds rate plus .25% to .5%, or LIBOR plus .75%. Unsecured short-term borrowings at September 24, 1999, totaled $65 million with an average interest rate of 5.66%. The interest rate on these borrowings ranged from 4.50% to 8.50% in 1999, and 5.58% to 6.84% in 1998. Loans on the secured, uncommitted lines of credit are collateralized by firm or client margin securities. RJBank has a $5 million FHLB advance outstanding which bears interest at a fixed rate of 5.67% and matures May 27, 2008. Securities with a carrying value of $19,917,000 are pledged as collateral for this and future borrowing. The Bank's borrowing availability related to FHLB advances is 10% of RJBank's total assets. NOTE 7 - BANK OPERATIONS AND DEPOSITS: On May 6, 1994, the Company chartered RJBank in conjunction with the purchase of the deposits of certain branches of a federal savings bank from the Resolution Trust Corporation for a nominal purchase price. A summary of client deposit accounts and weighted average interest rates follows: September 24, 1999 September 25, 1998 ------------------------ ------------------------ (dollar amounts in thousands)(dollar amounts in thousands) Weighted Weighted Balance Average Rate Balance Average Rate -------- ------------ -------- ------------ Demand deposits: Non-interest bearing $ 936 - $ 646 - Interest bearing 2,963 1.66% 2,229 2.19% Money market accounts 15,784 3.70% 12,211 3.85% Savings accounts 469,097 4.24% 382,767 4.53% Certificates of deposit (3.85% - 7.25%) 106,848 5.73% 52,705 5.67% -------- ----- -------- ----- $595,628 4.47% $450,558 4.62% ======== ===== ======== ===== The certificates of deposit mature as follows: $34,824,000 in 2000, $35,407,000 in 2001, $11,692,000 in 2002, $2,523,000 in 2003 and $22,402,000 in 2004 and thereafter. Certificates of deposit in amounts of $100,000 or more at September 24, 1999 and September 25, 1998 were approximately $21,567,000 and $6,089,000, respectively. A summary of RJBank's loan distribution is as follows: September 24, September 25, 1999 1998 ------------- ------------- (000's) (000's) Residential mortgage loans $138,840 $60,173 Consumer and commercial loans 30,665 2,111 --------- -------- 169,505 62,284 Allowance for loan losses (1,799) (642) Purchase premium 455 362 Purchase discount (303) - Deferred origination fees and costs, net (75) 22 --------- -------- $167,783 $62,026 ========= ======== Activity in the allowance for loan losses for 1999 and 1998 consists solely of the provision for loan losses. There were no actual loan losses in 1999, 1998 or 1997. There was no recorded investment or interest income recognized on impaired loans during 1999, 1998 and 1997, as there were no impaired loans during these periods. Generally, mortgage loans are secured by either first or second mortgages on residential property, consumer loans are secured by securities and time deposit accounts, and commercial loans are generally secured by real property or the general assets of the borrower. As of September 24, 1999 and September 25, 1998, 97% and 100%, respectively, of RJBank's loan portfolio was secured. RJBank is subject to various regulatory and capital requirements and was in compliance with all requirements throughout the fiscal years. Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), RJBank is subject to rules limiting brokered deposits and related interest rates. Under these rules, banks that are deemed "well- capitalized" may accept brokered deposits without restriction, and banks deemed "adequately capitalized" may do so with a waiver from the FDIC. An "undercapitalized" bank is not eligible for a waiver and may not accept brokered deposits. As of September 24, 1999, the most recent notification from the Office of Thrift Supervision categorized RJBank as "well capitalized" under the regulatory framework for prompt corrective action. At September 24, 1999 and September 25, 1998, RJBank exceeded the tangible capital, core capital, core/leverage capital, Tier I/risk-based capital and total risk-based capital levels mandated by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and FDICIA. At September 24, 1999 and September 25, 1998, RJBank's Tier I capital to average assets ratio was 5.8% and 8.2%, respectively. NOTE 8 - Derivative Financial Instruments - ----------------------------------------- The Company has only limited involvement with derivative financial instruments and does not use them for trading purposes. The derivative financial instruments are used to manage well-defined interest rate risk at RJBank. RJBank uses interest rate swap agreements to hedge against the potential impact of increases in interest rates during the fixed rate period of certain purchased loan pools. Under the interest rate swap agreements, RJBank receives or makes payments, on a monthly basis, based on the differential between a specified interest rate and one month LIBOR. At September 24, 1999, RJBank was party to two interest rate swap agreements, one of $20 million and one of $32 million, expiring on July 17, 2004 and August 17, 2004, respectively. There were no swap agreements outstanding at September 24, 1998. RJBank recognized a reduction of interest income of approximately $71,000 for the year ended September 24, 1999 as a result of these swap agreements. The fair aggregate value of the Company's interest rate swap agreements approximated $159,000 at September 24, 1999. This positive fair value represents the estimated amount the other party would have to pay the Company at each date to cancel the contracts or transfer them to other parties. The Company is exposed to credit losses in the event of nonperformance by the counterparties to its interest rate swap agreements. The Company anticipates, however, that the counterparties will be able to fully satisfy its obligation under the agreements. The Company does not obtain collateral to support their financial instruments but monitors the credit standing of the counterparties. NOTE 9 - FEDERAL AND STATE INCOME TAXES (in thousands): - ------------------------------------------------------- The provision (benefit) for income taxes consists of: Year Ended ----------------------------------------- September 24, September 25, September 26, 1999 1998 1997 ------------- ------------- ------------- Current provision: Federal $ 49,841 $ 56,151 $ 55,864 State 8,588 9,774 9,655 --------- --------- --------- 58,429 65,925 65,519 Deferred benefit: --------- --------- --------- Federal (5,110) (7,120) (3,306) State (890) (1,273) (613) --------- --------- --------- (6,000) (8,393) (3,919) --------- --------- --------- $ 52,429 $57,532 $61,600 ========= ========= ========= The Company's effective tax rate on pre-tax income differs from the statutory federal income tax rate due to the following: Year Ended ----------------------------------------- September 24, September 25, September 26, 1999 1998 1997 ------------- ------------- ------------- Provision calculated at statutory rates $ 48,145 $ 52,637 $ 56,230 State income taxes, net of federal benefit 5,003 5,526 5,877 Other (719) (631) (507) --------- --------- --------- $ 52,429 $ 57,532 $ 61,600 ========= ========= ========= The major deferred tax asset (liability) items, as computed under FAS 109, are as follows: September 24, September 25, 1999 1998 ------------- ------------- Deferred tax assets: Deferred compensation $ 38,156 $ 35,216 Accrued expenses 20,843 17,376 Other 17,021 13,063 --------- --------- Total deferred tax assets 76,020 65,655 --------- --------- Deferred tax liabilities: Aircraft leases (25,779) (23,049) Other (10,610) (9,765) --------- --------- Total deferred tax liabilities (36,389) (32,814) --------- --------- Net deferred tax assets $ 39,631 $ 32,841 ========= ========= NOTE 10 - COMMITMENTS AND CONTINGENCIES: - ---------------------------------------- Long-term lease agreements expire at various times through 2004. Minimum annual rentals under such agreements for the succeeding five fiscal years are approximately: $14,545,000 in 2000, $13,196,000 in 2001, $11,024,000 in 2002, $7,600,000 in 2003, $4,817,000 in 2004 and $3,558,000 thereafter. Rental expense incurred under all leases, including equipment under short-term agreements, aggregated $13,154,000, $11,085,000, and $8,802,000 in 1999, 1998 and 1997, respectively. The Company has committed to lend to, or guarantee other debt for, Raymond James Tax Credit Funds, Inc. ("RJ Tax Credit") up to $45 million upon request. Any borrowings bear interest at broker call plus 1% per annum. RJ Tax Credit is charged 1% for amounts guaranteed. The borrowings are secured by properties under development. At September 24, 1999, balances of $8,553,000 were loaned to RJ Tax Credit and $440,000 were guaranteed. At September 25, 1998, balances of $5,267,000 were loaned to RJ Tax Credit and $2,420,000 were guaranteed. The commitment expired in November 1999 at which time any outstanding balances were due and payable. On November 18, 1999, the Board of Directors renewed the commitment until November 2000. At September 24, 1999, RJBank had letters of credit of $1,182,000 outstanding. In addition, RJBank had commitments to fund loans at fixed and variable rates of $1,039,000 and $2,992,000, respectively, at September 24, 1999. As part of an effort to increase brand awareness, the Company entered into a stadium naming rights contract in July 1998. The contract has a thirteen-year term with a five-year renewal option and a 4% annual escalator. Expense of $2,719,000 and $921,000 was recognized in fiscal 1999 and 1998, respectively. In the normal course of business, the Company enters into underwriting commitments. Transactions relating to such commitments that were open at September 24, 1999 and were subsequently settled had no material effect on the consolidated financial statements as of that date. The Company utilizes a letter of credit and deposits with clearing organizations to satisfy margin deposit requirements. At September 24, 1999 and September 25, 1998, the Company had a letter of credit outstanding of $100,000 and client margin securities valued at $86,277,000 and $62,912,000, respectively, on deposit with a clearing organization. The Company has guaranteed lines of credit for its various foreign joint ventures as follows: two letters of guaranty totaling $6 million in Turkey, two letters of guaranty not to exceed $8 million in Argentina and a $5 million letter of guaranty and $325,000 letter of credit in India. In the normal course of business, certain subsidiaries of the Company, as general partner, are contingently liable for the obligations of various limited partnerships engaged primarily in securities investments and real estate activities. In the opinion of the Company, such liabilities, if any, for the obligations of the partnerships will not in the aggregate have a material adverse effect on the Company's consolidated financial position. As a result of the extensive regulation of the securities industry, the Company's broker-dealer subsidiaries are subject to regular reviews and inspections by regulatory authorities and self-regulatory organizations, which can result in imposition of sanctions for regulatory violations, ranging from non-monetary censure to fines and, in serious cases, temporary or permanent suspension from business. In addition, from time to time regulatory agencies and self-regulatory organizations institute investigations into industry practices, which can result in the imposition of such sanctions. Current proceedings in which the Company is one of the named defendants include the combined SEC, Internal Revenue Service and National Association of Securities Dealers, Inc. review of investment banking practices in connection with advance refunding transactions for municipalities. The Company is also a defendant or co-defendant in various lawsuits incidental to its securities business. The Company is contesting the allegations of the complaints in these cases and believes that there are meritorious defenses in each of these lawsuits. In view of the number and diversity of claims against the Company, the number of jurisdictions in which litigation is pending and the inherent difficulty of predicting the outcome of litigation and other claims, the Company cannot state with certainty what the eventual outcome of pending litigation or other claims will be. In the opinion of management, based on discussions with counsel, the outcome of these matters will not result in a material adverse effect on the consolidated financial position or results of operations of the Company. NOTE 11 - CAPITAL TRANSACTIONS: - ------------------------------- The Company's Board of Directors has, from time to time, adopted resolutions authorizing the Company to repurchase its common stock for general corporate purposes. At September 24, 1999, pursuant to prior authorizations from the Board of Directors, 2,275,000 shares were available to be repurchased. In February 1998 and 1997, the Company's Board of Directors declared a 3- for-2 stock split in the form of a dividend. The additional shares were distributed on April 2, 1998 and April 3, 1997, respectively, to shareholders of record on March 10, 1998 and March 7, 1997, respectively. All references (unless otherwise noted) in the consolidated financial statements and accompanying notes to amounts per share and to the number of common shares have been restated to give retroactive effect to the stock dividends. The Company sold equity put options in October 1998 and August 1999 that entitle the holder, at the expiration date, to sell 239,000 and 400,000 shares of common stock to the Company at exercise prices of $18.31 and $20.24 per share, respectively. The $1,314,000 in premiums has been accounted for as additional paid-in capital. At September 24, 1999, put options covering 400,000 shares were outstanding, with an aggregate exercise price of $8,096,000 and an expiration date of February 9, 2000. In the event the options are exercised, the Company may elect to pay the holder in cash for the difference between the exercise price and the market price of the Company's shares, in lieu of repurchasing the stock. NOTE 12 - EMPLOYEE BENEFIT PLANS: - --------------------------------- The Company's profit sharing plan and employee stock ownership plan provide certain death, disability or retirement benefits for all employees who meet certain service requirements. Such benefits become fully vested after seven years of qualified service. The Company also offers a plan pursuant to section 401(k) of the Internal Revenue Code, which provides for the Company to match 100% of the first $500 and 50% of the next $500 of compensation deferred by each participant annually. Roney also offers a plan pursuant to section 401(k) of the Internal Revenue Code. This plan will be merged into the Company's plan on January 1, 2000. The Company's deferred management bonus plan is a non-qualified plan that provides retirement benefits for employees who meet certain length of service and compensation requirements. Contributions to these plans are made in amounts approved annually by the Board of Directors. Compensation expense includes aggregate contributions to these plans of $16,240,000, $17,299,000 and $15,462,000, for 1999, 1998 and 1997, respectively. Stock Compensation Plans At September 24, 1999, the Company has six stock-based compensation plans, which are described below. In accordance with the provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation" ("FAS 123"),the Company applies APB Opinion 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for these plans. If the Company had elected to recognize compensation expense based on the fair value at the grant dates for awards under these plans consistent with the methodology prescribed by FAS 123, the Company's net income and net income per share would have been reduced to the pro forma amounts indicated below: Year Ended ----------------------------- Sept. 24, Sept. 25, Sept. 26, 1999 1998 1997 --------- --------- --------- Net income (in thousands) As reported $85,090 $92,704 $98,915 Pro forma $80,372 $88,278 $95,936 Net income per share - basic As reported $ 1.79 $ 1.92 $ 2.09 Pro forma $ 1.69 $ 1.83 $ 2.02 Net income per share - diluted As reported $ 1.76 $ 1.86 $ 2.04 Pro forma $ 1.66 $ 1.77 $ 1.98 These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period and additional options may be granted in future years. For disclosure purposes, the fair value of each fixed option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for stock option grants in 1999, 1998 and 1997, respectively: dividend yields of 1.3%, 1.1% and 1.1%; expected volatility of 42.6%, 44.1% and 32.2%, risk-free interest rates of 4.96%, 5.85% and 6.28%, and expected lives of 5.61, 5.32 and 5.99 years. Fixed Stock Option Plans The Company has one qualified and three non-qualified fixed stock option plans. Under the 1992 Incentive Stock Option Plan, the Company may grant options to its management personnel for up to 4,612,500 shares of common stock. The 1992 Plan was established to replace, on substantially the same terms and conditions, the 1982 Plan. Options are granted to key administrative employees and registered representatives of Raymond James & Associates, Inc. who achieve certain gross commission levels. Options are exercisable in the 36th to 72nd months following the date of grant and only in the event that the grantee is an employee of the Company at that time. Under one of the Company's non-qualified stock option plans, the Company may grant up to 2,278,125 shares of common stock to independent contractor registered representatives. Options are exercisable five years after grant date provided that the representative is still associated with the Company. Under the Company's second non-qualified stock option plan, the Company may grant up to 379,688 shares of common stock to the Company's outside directors. Options vest over a five-year period from grant date provided that the director is still serving on the Board of the Company. Under the Company's third non-qualified stock option plan, the Company may grant up to 1,125,000 shares of common stock to key management personnel. Option terms are specified in individual agreements and expire on a date no later than the tenth anniversary of the grant date. Under all plans, the exercise price of each option equals the market price of the Company's stock on the date of grant and an option's maximum term is 10 years. A summary of the status of the Company's four fixed stock option plans as of September 24, 1999, September 25, 1998 and September 26, 1997, and changes during the years ending on those dates is presented below: 1999 1998 1997 ------------------ ------------------ ------------------ Shares Weighted Shares Weighted Shares Weighted Average Average Average Exercise Exercise Exercise Price Price Price ------------------ ------------------ ------------------ Outstanding at beginning of year 2,738,045 $14.00 2,539,220 $ 9.37 2,366,094 $ 7.66 Granted 258,785 21.24 831,340 23.15 779,876 12.55 Canceled (190,902) 14.33 (84,516) 12.32 (191,130) 7.17 Exercised (324,240) 8.09 (547,999) 6.66 (415,620) 4.41 ---------- ------ ---------- ------ ---------- ------ Outstanding at yearend 2,481,688 $15.52 2,738,045 $14.00 2,539,220 $ 9.37 ========== ====== ========== ====== ========== ====== Options exercisable at yearend 299,350 215,878 360,691 Weighted average fair value of options granted during the year $ 8.89 $10.26 $ 9.62 The following table summarizes information about fixed stock options outstanding at September 24, 1999: Options Outstanding Options Exercisable --------------------------------------------------------------- Range of Number Weighted- Weighted- Number Weighted- Exercise Outstanding Average Average Exercisable Average Prices at 9/24/99 Remaining Exercise at 9/24/99 Exercise Contractual Price Price Life - -------------------------------------------------------------------------------- $ 3.16 - 6.33 107,982 .9 $ 6.15 42,501 $ 6.11 $ 6.33 - 9.49 174,788 1.3 7.73 39,714 6.86 $ 9.49 - 12.65 1,077,244 2.2 11.10 217,135 9.86 $12.65 - 15.81 90,000 3.3 13.39 - - $15.81 - 18.98 30,000 4.8 17.94 - - $18.98 - 22.14 196,500 5.5 20.57 - - $22.14 - 25.30 683,774 3.5 22.56 - - $25.30 - 28.46 97,350 4.1 26.36 - - $28.46 - 31.63 24,050 3.9 31.49 - - --------- --- ------ ------- ------ 2,481,688 2.9 $15.52 299,350 $ 8.93 ========= === ====== ======= ====== Employee Stock Purchase Plan Under the 1994 and 1998 Employee Stock Purchase Plans, the Company is authorized to issue up to 1,125,000 and 1,500,000 shares of common stock, respectively, to its full-time employees, nearly all of whom are eligible to participate. Under the terms of the Plans, employees can choose each year to have up to 20% of their annual compensation specified to purchase the Company's common stock. Share purchases in any calendar year are limited to the lesser of 1,000 shares or shares with a market value of $25,000. The purchase price of the stock is 85% of the market price on the day prior to the purchase date. Under the Plans, the Company sold 301,837, 314,114 and 268,607 shares to employees in fiscal years 1999, 1998 and 1997, respectively. The compensation cost which would have been recognized for the fair value of the employees' purchase rights was calculated as the value of the 15% discount from market value. Employee Investment Fund Certain key employees of the Company participate in a limited partnership arrangement in which the Company makes a non-recourse loan to these employees for two thirds of the purchase price per unit of the Raymond James Employee Investment Fund I, L.P. The loan plus interest is intended to be paid back from the earnings of the fund. The fund is invested in the merchant banking activities of the Company and other venture capital limited partnerships. NOTE 13- NET CAPITAL REQUIREMENTS: - ---------------------------------- The broker-dealer subsidiaries of the Company are subject to the requirements of the Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934 and the rules of the securities exchanges of which Raymond James & Associates, Inc. ("RJA") is a member, whose requirements are substantially the same. This Rule requires that aggregate indebtedness, as defined, not exceed fifteen times net capital, as defined. Rule 15c3-1 also provides for an "alternative net capital requirement" which, if elected, requires that net capital be equal to the greater of $250,000 or two percent of aggregate debit items computed in applying the formula for determination of reserve requirements. The New York Stock Exchange, Inc. may require a member organization to reduce its business if its net capital is less than four percent of aggregate debit items and may prohibit a member firm from expanding its business and declaring cash dividends if its net capital is less than five percent of aggregate debit items. As of January 1, 1999 the Company merged its independent contractor broker-dealers, Investment Management & Research, Inc. and Robert Thomas Securities, Inc. into Raymond James Financial Services, Inc. In addition, on May 28, 1999, the Company purchased Roney & Co., a broker-dealer. The net capital position of the Company's clearing broker-dealer subsidiary was as follows: September 24, September 25, 1999 1998 ------------- ------------- Raymond James & Associates, Inc.: (dollar amounts in thousands) - --------------------------------- (alternative method elected) Net capital as a percent of aggregate debit items 19% 17% Net capital $218,456 $149,284 Required net capital 22,848 17,862 --------- --------- Excess net capital $195,608 $131,422 ========= ========= All other broker-dealer subsidiaries were in compliance during all years presented. NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK: - ------------------------------------------------------------ In the normal course of business, the Company purchases and sells securities as either principal or agent on behalf of its clients. If either the client or a counterparty fails to perform, the Company may be required to discharge the obligations of the nonperforming party. In such circumstances, the Company may sustain a loss if the market value of the security or futures contract is different from the contract value of the transaction. The Company also acts as an intermediary between broker-dealers and other financial institutions whereby the Company borrows securities from one broker-dealer and then lends them to another. Securities borrowed and securities loaned are carried at the amounts of cash collateral advanced and received in connection with the transactions. The Company measures the market value of the securities borrowed and loaned against the cash collateral on a daily basis. The market value of securities borrowed and securities loaned was $1,242,224,000 and $1,344,366,000, respectively, at September 24, 1999 and $824,726,000 and $796,504,000, respectively, at September 25, 1998. Additional cash is obtained as necessary to ensure such transactions are adequately collateralized. If another party to the transaction fails to perform as agreed (such as failure to deliver a security or failure to pay for a security), the Company may incur a loss if the market value of the security is different from the contract amount of the transaction. The Company has also loaned, to brokers and dealers, securities owned by clients and others for which it has received cash or other collateral. If a borrowing institution or broker-dealer does not return a security, the Company may be obligated to purchase the security in order to return it to the owner. In such circumstances, the Company may incur a loss equal to the amount by which the market value of the security on the date of nonperformance exceeds the value of the loan from the institution or the collateral from the broker or dealer. The Company has sold securities that it does not currently own and will, therefore, be obligated to purchase such securities at a future date. The Company has recorded $33.4 million and $30.8 million, at September 24, 1999 and September 25, 1998, respectively, which represents the market value of the related securities at such dates. The Company is subject to loss if the market price of those securities not covered by a hedged position increases subsequent to fiscal yearend. The Company utilizes short government obligations and equity securities to hedge long proprietary inventory positions. At September 24, 1999, the Company had $24,670,000 in short government obligations and $1,275,000 in short equity securities which represented hedge positions. At September 25, 1998, the Company had $24,245,000 in short government obligations and $571,000 in short equity securities, which represented hedge positions. The Company enters into security transactions involving forward settlement. The Company has recorded transactions with a contract value of $61,353,000 and $311,252,000 and a market value of $62,257,000 and $315,104,000 as of September 24, 1999 and September 25, 1998, respectively. Transactions involving future settlement give rise to market risk, which represents the potential loss that can be caused by a change in the market value of a particular financial instrument. The Company's exposure to market risk is determined by a number of factors, including the size, composition and diversification of positions held, the absolute and relative levels of interest rates, and market volatility. The majority of the Company's transactions and, consequently, the concentration of its credit exposure is with clients, broker-dealers and other financial institutions in the United States. These activities primarily involve collateralized arrangements and may result in credit exposure in the event that the counterparty fails to meet its contractual obligations. The Company's exposure to credit risk can be directly impacted by volatile securities markets, which may impair the ability of counterparties to satisfy their contractual obligations. The Company seeks to control its credit risk through a variety of reporting and control procedures, including establishing credit limits based upon a review of the counterparties' financial condition and credit ratings. The Company monitors collateral levels on a daily basis for compliance with regulatory and internal guidelines and requests changes in collateral levels as appropriate. NOTE 15 - SEGMENT ANALYSIS: - --------------------------- The Company's reportable segments are: retail distribution, institutional distribution, investment banking, asset management and other. The retail distribution segment includes the retail branches of the Company's broker- dealer subsidiaries located throughout the U.S. These branches provide securities brokerage services including the sale of equities, mutual funds, fixed income products and insurance to their retail clients. The institutional distribution segment includes institutional sales offices in the U.S. and Europe providing securities brokerage services emphasizing the sale of U.S. equities and fixed income products to institutions. The investment banking segment includes management and participation in underwritings (exclusive of sales credits, which are included in the distribution segments), mergers and acquisitions, public finance, trading, research and market making. The asset management segment includes investment portfolio management services of Eagle Asset Management, Inc., Awad Asset Management and RJA's Asset Management Services division and mutual fund management by Heritage Asset Management, Inc. In the various programs offered by these entities, clients' funds are professionally managed either in individual accounts or in mutual funds. RJBank and the trust companies, the results of operations of international joint ventures, stock loan/stock borrow and earnings on firm capital are included in the segment entitled "other." The financial results of the Company's segments are the same as those described in the "Summary of Significant Accounting Policies". Segment data includes charges allocating corporate overhead to each segment. Intersegment revenues and charges are eliminated between segments. The Company evaluates the performance of its segments and allocates resources to them based on return on investment. The Company has not disclosed asset information by segment as the information is not produced internally. All long-lived assets are located in the U.S. The Company's business is predominantly in the U.S., with only 3% of revenues and 4% of net income coming from international operations. Information concerning operations in these segments of business is as follows: 1999 1998 1997 ---------- ---------- ---------- Revenue: (amounts in thousands) Retail distribution $ 847,783 $ 704,598 $ 572,807 Institutional distribution 158,596 146,590 121,411 Investment banking 36,155 57,180 64,192 Asset management 95,055 86,221 61,602 Other 94,617 88,318 76,949 ---------- ---------- ---------- $1,232,206 $1,082,907 $ 896,961 Gain on sale of Liberty * - - 30,646 ---------- ---------- ---------- Total $1,232,206 $1,082,907 $ 927,607 ========== ========== ========== Pre-tax income: Retail distribution $ 90,564 $ 79,062 $ 71,088 Institutional distribution 12,782 15,747 13,892 Investment banking 3,636 25,405 28,217 Asset management 21,603 22,002 14,935 Other 8,934 8,020 1,737 ---------- ---------- ---------- 137,519 150,236 129,869 Gain on sale of Liberty * - - 30,646 ---------- ---------- ---------- Total $ 137,519 $ 150,236 $ 160,515 ========== ========== ========== * see Note 16 NOTE 16 - RELATED PARTIES: - -------------------------- Pursuant to a separation agreement between the Company and the former President and Chief Investment Officer of its Eagle Asset Management, Inc. ("Eagle") subsidiary, Liberty Investment Management, Inc. ("Liberty") assumed responsibility for providing portfolio management services to institutional growth equity accounts formerly managed by Eagle. Eagle was to receive 50% of the revenues from these accounts through December 31, 1999, while bearing none of the expenses. In addition, the Company was granted an option to purchase 20% of Liberty in the Year 2000 at a predetermined price. For the year ended September 26, 1997, Eagle recognized $2,569,000 in fees from Liberty, which are included in investment advisory fees in the consolidated statement of income. On January 2, 1997, Liberty sold substantially all of its assets to Goldman Sachs Asset Management, Inc. Accordingly, the Company received a lump sum settlement of $30.6 million for its remaining three years' interest in Liberty's revenue stream and the Company's option to purchase 20% of Liberty at a future date. A Director and a former employee of the Company, each owned 7.5% of the outstanding shares of common stock of RJ Properties, Inc. ("RJP"), a subsidiary of the Company, until August 1999 when the shares were purchased by RJP for an adjusted book value totaling $517,000 and notes payable of $200,000. They will receive payments on the notes as RJP collects on certain receivables, which were excluded from the adjusted book value calculation. Such shares were acquired for nominal consideration in connection with the organization of RJP in 1980. NOTE 17- ACQUISITION OF RONEY & CO.: - ------------------------------------ On May 28, 1999, the Company purchased Roney from Bank One Corporation for $71.3 million and the assumption of approximately $10 million in deferred compensation liabilities. For consolidated financial statement purposes the acquisition was accounted for as a purchase and, accordingly, Roney's results are included in the consolidated financial statements since the date of acquisition. The aggregate purchase price, which was financed through available cash resources and the Company's line of credit (subsequently replaced by a 3 year term note), has been allocated to the assets of Roney based on their respective fair market values. The excess of the purchase price over assets acquired (goodwill) approximated $35 million and is being amortized over 15 years. The pro forma unaudited consolidated results of operations as though Roney had been acquired as of the beginning of fiscal 1999 and 1998 are as follows: 1999 1998 ---------- ---------- Revenues (000's) $1,349,130 $1,195,153 Net Income (000's) $ 85,831 $ 94,257 Net Income per share: Basic $1.80 $1.96 Diluted $1.77 $1.89 EXHIBIT 11 - ---------- RAYMOND JAMES FINANCIAL, INC. ----------------------------- COMPUTATION OF EARNINGS PER SHARE --------------------------------- (in thousands, except per share amounts) Year Ended ------------------------------------------- September 24, September 25, September 26, 1999 1998 1997 ------------- ------------- ------------- Net income $85,090 $92,704 $98,915(3) Weighted average common shares outstanding during the period (1) 47,606 48,160 47,383 Additional shares assuming exercise of stock options and warrants (1)(2) 843 1,791 1,004 ------- ------- ------- Weighted average diluted common shares (1) 48,449 49,951 48,387 ======= ======= ======= Net income per share - basic (1) $ 1.79 $ 1.92 $ 2.09 ======= ======= ======= Net income per share - diluted (1) $ 1.76 $ 1.86 $ 2.04 ======= ======= ======= (1) Gives effect to the 3-for-2 common stock splits paid on April 2, 1998 and April 3, 1997. (2) Represents the number of shares of common stock issuable on the exercise of dilutive employee stock options less the number of shares of common stock which could have been purchased with the proceeds from the exercise of such options. These purchases were assumed to have been made at the average market price of the common stock during the period, or that part of the period for which the option was outstanding. (3) Amount includes the gain on the sale of Liberty Investment Management, Inc. Excluding this gain net income was $80,126,000 and basic and diluted net income per share were $1.69 and $1.66, respectively. See Note 16 of the Notes to Consolidated Financial Statements for details. EXHIBIT 21 - ---------- RAYMOND JAMES FINANCIAL, INC. ----------------------------- LIST OF SUBSIDIARIES -------------------- The following listing includes the registrant's subsidiaries, all of which are included in the consolidated financial statements: State of Name of Company Incorporation Subsidiary of Raymond James & Associates, Inc. ("RJA") Florida Raymond James Financial, Inc. ("RJF") Awad Asset Management, Inc. Florida RJF Eagle Asset Management, Inc. Florida RJF Gateway Assignor Corporation, Inc. Florida RJF Geovest Energy, Inc. Florida RJF Heritage Asset Management, Inc. Florida RJF Investment Management & Research, Inc. Florida RJF Planning Corporation of America ("PCA") Florida RJA PCAF, Inc. Florida PCA Raymond James Bank, FSB Florida RJF Raymond James Capital, Inc. Delaware RJF Raymond James Credit Corporation Delaware RJF RJEIF, Inc. Delaware RJF Raymond James Financial Services, Inc. Florida RJF Raymond James International Holdings, Inc.("RJIH")Delaware RJF Raymond James Partners, Inc. Florida RJF Raymond James Trust Company Florida RJF RJC Partners, Inc. Delaware RJF RJ Communication, Inc. Florida RJF Raymond James Tax Credit Funds, Inc. Florida RJF RJ Equities, Inc. Florida RJF RJ Equities-2, Inc. Florida RJF RJ Government Securities, Inc. Florida RJF RJ Health Properties, Inc. Florida RJF RJ Leasing, Inc. Florida RJF RJ Leasing-2, Inc. Florida RJF RJ Medical Investors, Inc. Florida RJF RJ Mortgage Acceptance Corporation Delaware RJF RJ Partners, Inc. Florida RJF RJ Properties, Inc. ("RJP") Florida RJF RJ Properties Acquisition Corp. Florida RJP RJ Realty, Inc. Florida RJF RJ Specialist Corp. Florida RJF RJA Structured Finance, Inc. Delaware RJF Robert Thomas Securities, Inc. Florida RJF Roney & Co. Delaware RJF Sound Trust Company Washington RJF Value Partners, Inc. Florida RJF Heritage International, Ltd. Mauritius RJIH Raymond James & Associates, Ltd. Bermuda RJIH Raymond James Dublin, Ltd. Ireland RJIH Raymond James Financial International, Ltd. United KingdomRJIH Raymond James European Holdings, Inc. Florida RJIH Raymond James South American Holdings, Inc. Florida RJIH EX-10 2 571746.5 [Execution] $50,000,000 TERM CREDIT AGREEMENT Dated as of October 26, 1999 among RAYMOND JAMES FINANCIAL, INC., as Borrower, THE LENDERS NAMED HEREIN, BANK ONE, NA, as Administrative Agent, CITIBANK, N.A., as Syndication Agent, BANK OF AMERICA, NATIONAL ASSOCIATION, as Co-Documentation Agent, and THE CHASE MANHATTAN BANK, as Co-Documentation Agent TABLE OF CONTENTS ARTICLE I DEFINITIONS 1 ARTICLE II THE CREDITS 12 2.1. Term Loan 12 2.2. Types of Advances 12 2.3. Minimum Amount of Each Advance 12 2.4. Mandatory Principal Payment 12 2.5. Optional Principal Payments 13 2.6. Permanent Reduction 13 2.7. Upfront Fee 13 2.8. Conversion and Continuation of Outstanding Advances 13 2.9. Changes in Interest Rate, etc 13 2.10. Rates Applicable After Default 14 2.11. Method of Payment 14 2.12. Telephonic Notices 14 2.13. Interest Payment Dates; Interest and Fee Basis 14 2.14. Notification of Interest Rates and Prepayments 15 2.15. Lending Installations 15 2.16. Non-Receipt of Funds by the Agent 15 2.17. Noteless Agreement; Evidence of Indebtedness 15 2.18. Extension of Maturity Date 16 2.19. Replacement of Lender 17 ARTICLE III YIELD PROTECTION; TAXES 17 3.1. Yield Protection 17 3.2. Changes in Capital Adequacy Regulations 18 3.3. Availability of Types of Advances 18 3.4. Funding Indemnification 19 3.5. Taxes 19 3.6. Lender Statements; Survival of Indemnity 20 ARTICLE IV CONDITIONS PRECEDENT 21 4.1. The Loans 21 ARTICLE V REPRESENTATIONS AND WARRANTIES 22 5.1. Corporate Existence; Conduct of Business 22 5.2. Authorization and Validity 23 5.3. Compliance with Laws and Contracts 23 5.4. Governmental Consents 24 5.5. Financial Statements 24 5.6. Material Adverse Change 24 5.7. Taxes 24 5.8. Litigation and Contingent Obligations 25 5.9. Subsidiaries 25 5.10. ERISA 25 5.11. Defaults 25 5.12. Federal Reserve Regulations 25 5.13. Investment Company; Public Utility Holding Company 25 5.14. Ownership of Properties 25 5.15. Material Agreements 26 5.16. Year 2000 26 5.17. Insurance 26 5.18. Disclosure 26 ARTICLE VI COVENANTS 26 6.1. Financial Reporting 27 6.2. Use of Proceeds 28 6.3. Notice of Default 28 6.4. Conduct of Business 28 6.5. Taxes 28 6.6. Insurance 28 6.7. Compliance with Laws 29 6.8. Maintenance of Properties 29 6.9. Inspection 29 6.10. Year 2000 29 6.11. Ownership of Subsidiaries 29 6.12. Indebtedness 29 6.13. Merger 30 6.14. Sale of Assets 30 6.15. Investments and Acquisitions 30 6.16. Contingent Obligations 31 6.17. Liens 31 6.18. Affiliates 32 6.19. Change in Corporate Structure; Fiscal Year 32 6.20. Inconsistent Agreements 32 6.21. Financial Covenants. 32 6.21.1 Minimum Tangible Net Worth 32 6.21.2 Double Leverage Ratio 32 6.21.3 RJA Net Capital 32 6.21.4 RJFS Net Capital 33 6.21.5 RJA/RJFS Excess Net Capital 33 ARTICLE VII DEFAULTS 33 7.1. Representation or Warranty 33 7.2. Non-Payment 33 7.3. Specific Defaults 33 7.4. Other Defaults 33 7.5. Cross-Default 33 7.6. Insolvency; Voluntary Proceedings 33 7.7. Involuntary Proceedings 34 7.8. Condemnation 34 7.9. Judgments 34 7.10. Change in Control 34 7.11. SIPC 34 7.12. Broker-Dealer License 34 7.13. ERISA 35 ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 35 8.1. Acceleration 35 8.2. Amendments 35 8.3. Preservation of Rights 36 ARTICLE IX GENERAL PROVISIONS 36 9.1. Survival of Representations 36 9.2. Governmental Regulation 36 9.3. Headings 36 9.4. Entire Agreement 36 9.5. Several Obligations; Benefits of this Agreement 36 9.6. Expenses; Indemnification 36 9.7. Numbers of Documents 37 9.8. Accounting 37 9.9. Severability of Provisions 37 9.10. Nonliability of Lenders 37 9.11. Confidentiality 38 9.12. Nonreliance 38 9.13. Disclosure 38 9.14. CHOICE OF LAW 38 9.15. CONSENT TO JURISDICTION 38 9.16. WAIVER OF JURY TRIAL 38 ARTICLE X THE AGENT 39 10.1. Appointment; Nature of Relationship 39 10.2. Powers 39 10.3. General Immunity 39 10.4. No Responsibility for Loans, Recitals, etc 39 10.5. Action on Instructions of Lenders 40 10.6. Employment of Agents and Counsel 40 10.7. Reliance on Documents; Counsel 40 10.8. Agent's Reimbursement and Indemnification 40 10.9. Notice of Default 41 10.10. Rights as a Lender 41 10.11. Lender Credit Decision 41 10.12. Successor Agent 41 10.13. Agent's Fee 42 10.14. Delegation to Affiliates 42 10.15. Syndication Agent, Co-Documentation Agents, etc 42 ARTICLE XI SETOFF; RATABLE PAYMENTS 43 11.1. Setoff 43 11.2. Ratable Payments 43 ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 43 12.1. Successors and Assigns 43 12.2. Participations. 44 12.2.1 Permitted Participants; Effect 44 12.2.2 Voting Rights 44 12.2.3 Benefit of Setoff 44 12.3. Assignments. 44 12.3.1 Permitted Assignments 44 12.3.2 Effect; Effective Date 45 12.4. Dissemination of Information 45 12.5. Tax Treatment 45 ARTICLE XIII NOTICES 45 13.1. Notices 45 13.2. Change of Address 46 EXHIBITS Exhibit A Compliance Certificate Exhibit B Assignment Agreement SCHEDULES Schedule I - Material Subsidiaries Schedule II - Existing Indebtedness TERM CREDIT AGREEMENT This TERM CREDIT AGREEMENT, dated as of October 26, 1999, is among RAYMOND JAMES FINANCIAL, INC., a Florida corporation, the Lenders (as hereinafter defined), BANK ONE, NA, a national banking association having its headquarters in Chicago, Illinois, individually and as administrative agent (the "Agent"), CITIBANK, N.A., individually and as syndication agent (the "Syndication Agent"), BANK OF AMERICA, NATIONAL ASSOCIATION, individually and as co-documentation agent ("Co-Documentation Agent") and THE CHASE MANHATTAN BANK, individually and as co-documentation agent ("Co- Documentation Agent"). R E C I T A L S: A. The Borrower has requested the Lenders to provide a term credit facility to it in the aggregate principal amount of $50,000,000, the proceeds of which the Borrower will use for general corporate purposes, including without limitation the refinancing of certain existing indebtedness, friendly acquisitions, share repurchases and asset purchases; and B. The Lenders are willing to extend such credit facility on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the Agent hereby agree as follows: ARTICLE I DEFINITIONS As used in this Agreement: "Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (a) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division or line of business thereof, whether through purchase of assets, merger or otherwise, or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company. "Advance" means a portion of the outstanding Term Loan the interest rate for which is of the same Type and, in the case of Eurodollar Advances, for the same Interest Period. "Advisers Act" means the Investment Advisers Act of 1940, as amended. "Affected Lender" is defined in Section 2.19. "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Agent" means Bank One in its capacity as administrative agent for the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor administrative agent appointed pursuant to Article X. "Agents" means and includes the Agent, the Syndication Agent and the Co-Documentation Agents. "Aggregate Commitment" means the aggregate of the Commitments of all the Lenders hereunder, which is $50,000,000. "Aggregate Debit Items" means, at any time, "aggregate debit items" computed in accordance with Rule 15c3-1. "Aggregate Indebtedness" means, at any time, "aggregate indebtedness" computed in accordance with Rule 15c3-1. "Agreement" means this Term Credit Agreement, as it may be amended, modified or restated and in effect from time to time. "Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with those used in preparing the Financial Statements. "Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (a) the Corporate Base Rate for such day, or (b) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum. "Article" means an article of this Agreement unless another document is specifically referenced. "Authorized Officer" means any of the chief executive officer, president, chief financial officer or controller of the Borrower, acting singly. "Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors. "Bankruptcy Code" means Title 11, United States Code, sections 1 et seq., as the same may be amended from time to time, and any successor thereto or replacement therefor which may be hereafter enacted. "Borrower" means Raymond James Financial, Inc., a Florida corporation, and its successors and assigns. "Business Day" means (a) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market, and (b) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system. "CEA" means the Commodity Exchange Act, as amended from time to time. "CFTC" means the Commodities Future Trading Commission and any successor entity. "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Change" is defined in Section 3.2. "Change in Control" means (a) the acquisition by any Person, or two or more Persons acting in concert, including without limitation any acquisition effected by means of a merger or consolidation, of beneficial ownership (within the meaning of Rule 13d-3 of the Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of the Borrower, or (b) during any period of 25 consecutive calendar months, commencing on the date of this Agreement, the ceasing of those individuals (the "Continuing Directors") who (i) were directors of the Borrower on the first day of each such period or (ii) subsequently became directors of the Borrower and whose initial election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of the Borrower, to constitute a majority of the board of directors of the Borrower. For purposes of making the calculation in clause (a) above, an "acquisition" shall not include a transfer of shares by a shareholder or his estate to members of his immediate family (spouse, children, grandchildren, spouses of children or grandchildren) or to trusts for the benefit of the shareholder or members of his immediate family. "Closing Date" is defined in Section 4.1. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Commission" means the Securities and Exchange Commission and any successor entity. "Commitment" means, for each Lender, the obligation of such Lender to make a single Loan not exceeding the amount set forth opposite its signature below. "Compliance Certificate" means a certificate executed by an Authorized Officer substantially in the form of Exhibit A hereto. "Consolidated" or "consolidated", when used in connection with any calculation, means a calculation to be determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with Agreement Accounting Principles. "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as a general partner of a partnership with respect to the liabilities of the partnership. "Controlled Group" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Conversion/Continuation Notice" is defined in Section 2.8. "Corporate Base Rate" means a rate per annum equal to the corporate base rate or prime rate of interest announced by Bank One or by its parent, Bank One Corporation, from time to time, changing when and as said corporate base rate or prime rate changes. "Default" means an event described in Article VII. "Double Leverage Ratio" means, at any time, as calculated for the Borrower on a parent-only basis in accordance with Agreement Accounting Principles, the ratio of (a) investment in Subsidiaries to (b) the shareholders' equity of the Borrower. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (a) the protection of the environment, (b) the effect of the environment on human health, (c) emission, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (d) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "Eurodollar Advance" means an Advance which, except as otherwise provided in Section 2.10, bears interest at the Eurodollar Rate. "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest Period. "Eurodollar Loan" means a Loan or a portion thereof which, except as otherwise provided in Section 2.10, bears interest at the Eurodollar Rate. "Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (b) 0.75% per annum (or 0.875% if any extension of the Maturity Date shall become effective pursuant to Section 2.18). "Excess Net Capital" means, at any time, "excess net capital" computed in accordance with Rule 15c3-1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it by (a) the jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (b) any jurisdiction in which such Lender or the Agent maintains a lending office. "Extension Date" is defined in Section 2.18. "Extension Period" is defined in Section 2.18. "Extension Request" is defined in Section 2.18. "FOCUS Report" means, for any Person, the Financial and Operational Combined Uniform Single Report required to be filed on a monthly or quarterly basis, as the case may be, with the Commission or the NYSE, or any report that is required in lieu of such report. "Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "Financial Statements" is defined in Section 5.5. "Fiscal Quarter" means one of the four three-month accounting periods comprising a Fiscal Year. "Fiscal Year" means the twelve-month accounting period ending on the last Friday in September of each year. "Floating Rate Advance" means an Advance which, except as otherwise provided in Section 2.10, bears interest at the Alternate Base Rate. "Floating Rate Loan" means a Loan or a portion thereof which, except as otherwise provided in Section 2.10, bears interest at the Alternate Base Rate. "Governmental Authority" means any government (foreign or domestic) or any state or other political subdivision thereof or any governmental body, agency, authority, department or commission (including without limitation any taxing authority or political subdivision) or any instrumentality or officer thereof (including without limitation any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned or controlled by or subject to the control of any of the foregoing. "Indebtedness" of a Person means such Person's (a) obligations for borrowed money, (b) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, or other instruments, (e) Capitalized Lease Obligations, (f) Contingent Obligations, (g) obligations for which such Person is obligated pursuant to or in respect of a Letter of Credit, and (h) any other obligation for borrowed money which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person. "Interest Period" means, with respect to a Eurodollar Advance, a period of one, two, three or six months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months thereafter; provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day; provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day. "Investment" of a Person means any (a) loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; (b) stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; (c) any deposit accounts and certificate of deposit owned by such Person; and (d) structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person; provided, however, that in regard to clauses (b), (c) and (d), "Investment" shall not include any such securities, accounts or instruments owned or acquired by the Borrower or its Subsidiaries in the ordinary course of its business as heretofore conducted, including but not limited to the market making activities of RJA. "Investment Company Act" means the Investment Company Act of 1940, as amended. "Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. "Lending Installation" means, with respect to a Lender or the Agent, the office, branch, subsidiary or affiliate of such Lender or the Agent listed on the signature pages hereof or otherwise selected by such Lender or the Agent pursuant to Section 2.15. "Letter of Credit" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable. "Lien" means any security interest, lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "Loan" means, with respect to a Lender, such Lender's term loan made pursuant to Section 2.1. "Loan Documents" means this Agreement, any Notes issued pursuant to Section 2.17 and the other documents and agreements contemplated hereby and executed by the Borrower in favor of the Agent or any Lender. "MSRB" means the Municipal Securities Rulemaking Board and any successor entity. "Margin Stock" has the meaning assigned to that term under Regulation U. "Material Adverse Effect" means a material adverse effect on (a) the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under the Loan Documents, or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent or the Lenders thereunder. "Material Subsidiary" means (a) any of the Subsidiaries listed on Schedule I hereto and (b) in the case of any specified condition or event, any other Subsidiary or group of other Subsidiaries (i) each of which has suffered such condition or event to occur and (ii) that in the aggregate represents five percent (5%) or more of the net revenues or the consolidated assets of the Borrower and its Subsidiaries, as reflected in the then most recent financial statements delivered pursuant to Section 6.1(a) or (b). "Maturity Date" means October 26, 2002 or such later date as and if extended pursuant to Section 2.18. "NASD" means the National Association of Securities Dealers, Inc. "NYSE" means the New York Stock Exchange, Inc. "Net Capital" means, at any time, "net capital" computed in accordance with Rule 15c3-1. "Net Income" means, for any computation period, with respect to the Borrower on a consolidated basis with its Subsidiaries (other than any Subsidiary which is restricted from declaring or paying dividends or otherwise advancing funds to its parent whether by contract or otherwise), cumulative net income earned during such period as determined in accordance with Agreement Accounting Principles. "Non-U.S. Lender" is defined in Section 3.5(iv). "Note" means any promissory note issued at the request of a Lender pursuant to Section 2.17. "Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent or any indemnified party arising under the Loan Documents. "Other Taxes" is defined in Section 3.5(ii). "PBGC" means the Pension Benefit Guaranty Corporation and any successor thereto. "Participants" is defined in Section 12.2.1. "Payment Date" means the last day of each March, June, September and December. "Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any Governmental Authority. "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person. "pro-rata" means, when used with respect to a Lender, and any described aggregate or total amount, an amount equal to such Lender's pro-rata share or portion based on its percentage of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, its percentage of the aggregate principal amount of outstanding Advances. "Purchasers" is defined in Section 12.3.1. "RJA" means Raymond James & Associates, Inc. and any successor entity. "RJFS" means Raymond James Financial Services, Inc. and any successor entity. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to depositary institutions. "Regulation T" means Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and shall include any successor or other regulation or official interpretation of such Board of Governors relating to the extension of credit by securities brokers and dealers for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by the specified lenders for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "Required Lenders" means Lenders in the aggregate having at least 51% of the aggregate unpaid principal amount of the outstanding Loans. "Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "Revolving Credit Agreement" means the $100,000,000 Revolving Credit Agreement of even date herewith among the Borrower, the Agent and the Lenders providing for a revolving credit facility, as such agreement may be amended, modified or restated and in effect from time to time. "Risk-Based Capital Guidelines" is defined in Section 3.2. "Rule 15c3-1" means Rule 15c3-1 of the General Rules and Regulations as promulgated by the Commission under the Exchange Act, as such rule may be amended from time to time, or any rule or regulation of the Commission which replaces Rule 15c3-1. "Rule 15c3-3" means Rule 15c3-3 of the General Rules and Regulations as promulgated by the Commission under the Exchange Act, as such rule may be amended from time to time, or any rule or regulation of the Commission which replaces Rule 15c3-3. "SIPA" means the Security Investor Protection Act of 1970, as amended. "SIPC" means the Securities Investor Protection Corporation or any successor entity. "Section" means a numbered section of this Agreement, unless another document is specifically referenced. "Self-Regulatory Organization" has the meaning assigned to such term in Section 3(a)(26) of the Exchange Act. "Single Employer Plan" means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group. "Subsidiary" of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled, or (c) any other corporation or entity which for financial reporting purposes is consolidated with the Borrower in accordance with Agreement Accounting Principles. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower. "Substantial Portion" means, with respect to the Property of the Borrower and its Subsidiaries, Property which (a) represents more than 10% of the consolidated assets of the Borrower and its Subsidiaries as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (b) is responsible for more than 15% of the consolidated net sales or Net Income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in clause (a) above. "Tangible Net Worth" means, at any date, the consolidated stockholders' equity of the Borrower and its consolidated Subsidiaries determined in accordance with Agreement Accounting Principles, less their consolidated Intangible Assets, all determined as of such date. For purposes of this definition, "Intangible Assets" means the amount (to the extent reflected in determining such consolidated stockholders' equity) of (i) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of assets of a going concern business made within twelve months after the acquisition of such business) subsequent to June 30, 1999 in the book value of any asset owned by the Borrower or a consolidated Subsidiary, and (ii) all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, organization or developmental expenses and other intangible items. "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes. "Term Loan" means, collectively, all of the Loans. "Transferee" is defined in Section 12.4. "Type" means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance. "Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. "Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "Upfront Fee" is defined in Section 2.7. "Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (b) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. "Year 2000 Issues" means anticipated costs, problems and uncertainties associated with the inability of certain computer applications to effectively handle data including dates on and after January 1, 2000, as such inability affects the business, operations and financial condition of the Borrower and its Subsidiaries and of the Borrower's and its Subsidiaries' material customers, suppliers and vendors. "Year 2000 Program" is defined in Section 5.16. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II THE CREDITS 2.1. Term Loan. Each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make a Loan to the Borrower on the Closing Date in the amount of its respective Commitment. Not later than noon (Chicago time) on the Closing Date, each Lender shall make available funds equal to its Commitment in immediately available funds in Chicago to the Agent at its address specified pursuant to Article XIII. The Agent shall promptly make the funds so received from the Lenders available to the Borrower by wire transfer to such account as the Borrower may designate. 2.2. Types of Advances. The Term Loan may be a Floating Rate Advance or a Eurodollar Advance, or a combination thereof selected by the Borrower in accordance with Section 2.8. Until converted or continued pursuant to Section 2.8, the Term Loan shall be a Eurodollar Advance with a one month Interest Period. 2.3. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum amount of $5,000,000 (and multiples of $1,000,000 if in excess thereof), and each Floating Rate Advance shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof); provided, however, that in no event shall more than three (3) Eurodollar Advances be permitted to be outstanding at any time. 2.4. Mandatory Principal Payment. The aggregate outstanding principal balance of the Term Loan shall be due and payable in full in immediately available funds on the Maturity Date, if not sooner paid in full. 2.5. Optional Principal Payments. Subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, the Borrower may from time to time pay all outstanding Loans, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Loans upon three (3) Business Days' prior notice to the Agent. 2.6. Permanent Reduction. No amount of the Term Loan which is repaid or prepaid by the Borrower may be reborrowed hereunder. 2.7. Upfront Fee. The Borrower agrees to pay to the Agent for the account of each Lender an upfront fee (the "Upfront Fee") in an amount equal to 0.10% of such Lender's Commitment, payable on the Closing Date. 2.8. Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances pursuant to this Section 2.8 or are repaid in accordance with Section 2.5. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.5 or (y) the Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period. Subject to the terms of Section 2.3, the Borrower may elect from time to time to convert all or any part of a Floating Rate Advance into a Eurodollar Advance. The Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of a Floating Rate Advance into a Eurodollar Advance or of the continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least three Business Days prior to the date of the requested conversion or continuation, specifying: (a)the requested date of such conversion or continuation, which shall be a Business Day; (b)the aggregate amount and Type of the Advance which is to be converted or continued; and (c)the amount of such Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the Interest Period applicable thereto, which shall end on or prior to the Maturity Date. 2.9. Changes in Interest Rate, etc. Each Floating Rate Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is automatically converted from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.8, to but excluding the date it is paid or is converted into a Eurodollar Advance pursuant to Section 2.8, at a rate per annum equal to the Alternate Base Rate. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by the Agent as applicable to such Eurodollar Advance based upon the Borrower's selections under Section 2.8 and otherwise in accordance with the terms hereof. No Interest Period may end after the Maturity Date. 2.10. Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.8, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrower, declare that no Advance may be made as, converted into or continued as a Eurodollar Advance. During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that each Eurodollar Advance and Floating Rate Advance shall bear interest (for the remainder of the applicable Interest Period in the case of Eurodollar Advances) at a rate per annum equal to the Alternate Base Rate plus two percent (2%) per annum; provided, however, that such increased rate shall automatically and without action of any kind by the Lenders become and remain applicable until revoked by the Required Lenders in the event of a Default described in Section 7.6 or 7.7. 2.11. Method of Payment. All payments of the Obligations hereunder shall be made, without setoff, deduction or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIII, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by noon (Chicago time) on the date when due and shall be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received by the Agent from such Lender. The Agent is hereby authorized to charge the account of the Borrower maintained with Bank One for each payment of principal, interest and fees as it becomes due hereunder. 2.12. Telephonic Notices. The Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrower, it being understood that the foregoing authorization is specifically intended to allow Conversion/Continuance Notices to be given telephonically. The Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error. 2.13. Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which a Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest shall be calculated for actual days elapsed on the basis of a 360-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (Chicago time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.14. Notification of Interest Rates and Prepayments. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Conversion/Continuation Notice and repayment notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.15. Lending Installations. Each Lender may book its Loan at any Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loan and any Note issued hereunder shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written notice to the Agent and the Borrower in accordance with Article XIII, designate replacement or additional Lending Installations for whose account Loan payments are to be made. 2.16. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (a) in the case of a Lender, the amount of a Loan, or (b) in the case of the Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the first three days and thereafter, the interest rate applicable to the Loans, or (y) in the case of payment by the Borrower, the interest rate applicable to the Loans. 2.17. Noteless Agreement; Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from the Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (b) The Agent shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder and the Type thereof, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. (c) The entries maintained in the accounts maintained pursuant to paragraphs (a) and (b) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded (and, in the case of any inconsistency between the records of the Agent and any Lender, the records of the Agent shall be the prima facie evidence that controls with respect to the Borrower); provided, however, that the failure of the Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms. (d) Any Lender may request that its Loan be evidenced by a promissory note (a "Note"). In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in a form incorporating the terms of this Agreement supplied by the Agent. Thereafter, the Loan evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that the Loan once again be evidenced as described in paragraphs (a) and (b) above. The execution and delivery of each Note shall take place at the principal office of the Agent in Chicago or such other place agreed to by the parties. 2.18. Extension of Maturity Date. The Borrower may request an extension of the Maturity Date for two additional one-year periods by submitting a request for an extension to the Agent (an "Extension Request") no more than 45 days, but no less than 30 days, prior to the then effective Maturity Date. Each extension effected pursuant to this Section 2.18 shall commence on the then effective Maturity Date (the "Extension Date") and shall specify the new Maturity Date requested by the Borrower, which date shall be one year (the "Extension Period") after the Extension Date. Promptly upon receipt of an Extension Request, the Agent shall notify each Lender of the contents thereof and shall request each Lender to approve the Extension Request. Each Lender approving the Extension Request shall deliver its written consent to the Agent no earlier than 30 days prior to the then effective Maturity Date and no later than 20 days after receipt of the Extension Request. In the event that a Lender shall fail to notify the Agent within such period as to whether it agrees to the Extension Request, such Lender shall be deemed to have refused the Extension Request. If the consent of the Required Lenders is timely received by the Agent, the new Maturity Date specified in the Extension Request shall become effective on the Extension Date as to such consenting Lenders only (and not as to any Lender which has not consented to such extension), and the Agent shall promptly notify the Borrower and each consenting Lender of the new Maturity Date and new Term Loan amount; provided, however, that in no event shall the new Maturity Date become effective unless a minimum of two Lenders shall have consented to the Extension Request. Notwithstanding anything contained in this Agreement to the contrary, (a) all Obligations hereunder owing to the non-extending Lenders shall be due and payable on the Maturity Date without giving effect to any requested extension, (b) the Term Loan as of the commencement of the Extension Period shall be reduced to an amount equal to the sum of the Loans of the Lenders ultimately consenting to the Extension Request, and (c) each Lender may, in its sole discretion, grant or deny its consent with respect to any proposed Extension Request. Any Lender not granting the Extension Request shall, if the Borrower has selected an assignee for such Lender reasonably acceptable to the Agent prior to the Extension Date, promptly assign to such assignee its rights and obligations hereunder in respect of all or that portion of such Lender's Loan as such assignee is willing to accept, all in accordance with Section 12.3. 2.19. Replacement of Lender. If the Borrower is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any Lender's obligation to make or continue, or to convert Floating Rate Advances into, Eurodollar Advances shall be suspended pursuant to Section 3.3 (any Lender so affected an "Affected Lender"), the Borrower may elect, if such amounts continue to be charged or such suspension is still effective, to replace such Affected Lender as a Lender party to this Agreement, provided that no Default or Unmatured Default shall have occurred and be continuing at the time of such replacement, and provided further that, concurrently with such replacement, (a) another bank or other entity which is reasonably satisfactory to the Borrower and the Agent shall agree, as of such date, to purchase for cash the Loan and other Obligations due to the Affected Lender pursuant to an assignment substantially in the form of Exhibit B at par and to become a Lender for all purposes under this Agreement and to assume all obligations of the Affected Lender to be terminated as of such date and to comply with the requirements of Section 12.3 applicable to assignments, and (b) the Borrower shall pay to such Affected Lender in same day funds on the day of such replacement all interest, fees and other amounts then accrued but unpaid to such Affected Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Affected Lender under Sections 3.l, 3.2 and 3.5, and an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 3.4 had the Loan of such Affected Lender been prepaid on such date rather than sold to the replacement Lender. ARTICLE III YIELD PROTECTION; TAXES 3.1. Yield Protection. If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: (i) subjects any Lender or any applicable Lending Installation to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender in respect of its Eurodollar Loans, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than the amount of reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining its Eurodollar Loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with its Eurodollar Loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Eurodollar Loans held or interest received by it, by an amount deemed material by such Lender, and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Eurodollar Loans or Commitment or to reduce the return received by such Lender or applicable Lending Installation in connection with such Eurodollar Loans or Commitment, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received. 3.2. Changes in Capital Adequacy Regulations. If a Lender determines the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans or its Commitment to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3. Availability of Types of Advances. If any Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or converted to Floating Rate Advances, subject to the payment of any funding indemnification amounts required by Section 3.4. 3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by the Borrower for any reason other than default by the Lenders, the Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Advance. 3.5. Taxes. (i) All payments by the Borrower to or for the account of any Lender or the Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to the Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. (ii) In addition, the Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note ("Other Taxes"). (iii) The Borrower hereby agrees to indemnify the Agent and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by the Agent or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Agent or such Lender makes demand therefor pursuant to Section 3.6. (iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Lender") agrees that it will, not less than ten Business Days after the date of this Agreement, (i) deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Borrower and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower and the Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Borrower or the Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax. (v) For any period during which a Non-U.S. Lender has failed to provide the Borrower with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Borrower shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes. (vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate. (vii) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly completed, because such Lender failed to notify the Agent of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under this Section 3.5(vii) shall survive the payment of the Obligations and termination of this Agreement. 3.6. Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement. ARTICLE IV CONDITIONS PRECEDENT 4.1. The Loans. The Lenders shall not be required to make the Loans unless the Borrower has furnished the following to the Agent with sufficient copies for the Lenders and the other conditions set forth below have been satisfied, in each case on a date (the "Closing Date") on or before October 30, 1999: (a)Charter Documents; Good Standing Certificates. Copies of the certificate of incorporation of the Borrower, together with all amendments thereto, certified by the Secretary of State of Florida, together with good standing certificates (i) as to the Borrower, from the State of Florida and (ii) as to RJA, from the States of Florida, New York and Michigan. (b)By-Laws and Resolutions. Copies, certified by the Secretary or Assistant Secretary of the Borrower, of its by-laws and of its Board of Directors' resolutions authorizing the execution, delivery and performance of the Loan Documents to which the Borrower is a party. (c)Secretary's Certificate. An incumbency certificate, executed by the Secretary or Assistant Secretary of the Borrower, which shall identify by name and title and bear the signature of the officers of the Borrower authorized to sign the Loan Documents and to make borrowings hereunder, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower. (d)Officer's Certificate. A certificate, dated the date of this Agreement, signed by the chief financial officer of the Borrower, in form and substance satisfactory to the Agent, to the effect that: (i) on such date (both before and after giving effect to the making of any Loans hereunder) no Default or Unmatured Default has occurred and is continuing and (ii) each of the representations and warranties set forth in Article V of this Agreement is true and correct on and as of such date. (e)Legal Opinion. A favorable written opinion of Paul Matecki, Esq., Senior Vice President and Corporate Counsel to the Borrower, addressed to the Agent and the Lenders in form and substance acceptable to the Agent and its counsel. (f)Loan Documents. Executed originals of this Agreement, each of the other Loan Documents (including any Notes requested by a Lender pursuant to Section 2.17 payable to the order of such requesting Lender), and the Revolving Credit Agreement, which shall be in full force and effect, together with all schedules, exhibits, certificates, instruments, opinions, documents and financial statements required to be delivered pursuant hereto and thereto. (g)Financial Statements. Copies of the Financial Statements and the RJA/RJFS FOCUS Reports referred to in Section 5.5. (h)Letter of Direction. Written money transfer instructions with respect to the initial Advance and, until otherwise instructed, as to future Advances in form and substance acceptable to the Agent signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested. (i)Year 2000 Program. Information satisfactory to the Agent regarding the Borrower's Year 2000 Program. (j)Payment of Fees. The Borrower shall have paid all accrued and unpaid fees, costs and expenses to the extent due and payable on or prior to the execution of this Agreement, including, but not limited to, the fees referred to in Section 2.7 and 10.13 and, to the extent invoiced, the attorneys' fees, time charges and disbursements referred to in Section 9.6. (k)Payoff Letter. A bank payoff letter in form and substance acceptable to the Agent from Bank of America to the effect that the total amount due under the Borrower's $50 million loan facility with such lender shall be satisfied (and the related agreement terminated) upon payment of an amount certain, together with such lien releases and other documents as the Agent shall require. (l)Other. Such other documents as the Agent, any Lender or their counsel may have reasonably requested. ARTICLE V REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Lenders that: 5.1. Corporate Existence; Conduct of Business. Each of the Borrower and each Material Subsidiary (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, (b) is duly qualified and in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, except where failure to be so qualified will not have a Material Adverse Effect, and (c) has all requisite corporate power, and possesses all licenses, registrations and authorizations from and with any Governmental Authority, Self-Regulatory Organization or securities exchange, necessary or material to the conduct of its business as now or presently proposed to be conducted. RJA and RJFS each is (i) duly registered with the Commission as a broker-dealer under the Exchange Act, (ii) a member in good standing of the NASD and, as to RJA, a member organization in good standing of the NYSE, (iii) not in arrears in regard to any assessment made upon it by the SIPC, and (iv) has received no notice from the Commission, NASD, MSRB, CFTC or any other Governmental Authority, Self-Regulatory Organization or securities exchange of any alleged rule violation or other circumstance which could reasonably be expected to have a Material Adverse Effect, except as disclosed in the Financial Statements. 5.2. Authorization and Validity. The Borrower has all requisite power and authority (corporate and otherwise) and legal right to execute and deliver each of the Loan Documents and to perform its obligations thereunder. The execution and delivery by the Borrower of the Loan Documents and the performance of its obligations thereunder have been duly authorized by proper corporate proceedings and the Loan Documents constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity limiting the availability of equitable remedies. 5.3. Compliance with Laws and Contracts. The Borrower and its Subsidiaries (including RJA and RJFS) have complied in all material respects with all applicable laws, statutes, and rules, regulations, orders and decrees or restrictions of any Governmental Authority, Self-Regulatory Organization or securities exchange having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties (including, without limitation, the Exchange Act, the Advisers Act, the Investment Company Act, the CEA, and the applicable rules and regulations of the Commission, NASD, NYSE, MSRB and CFTC), except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Without limiting the foregoing, the Borrower and its Material Subsidiaries are in compliance with all applicable capital requirements of all Governmental Authorities (including, without limitation, Rule 15c3- 1). Neither the execution and delivery by the Borrower of the Loan Documents, the application of the proceeds of the Loans, the consummation of any transaction contemplated by the Loan Documents, nor compliance with the provisions of the Loan Documents will, or at the relevant time did, (a) violate any law, rule, regulation (including Regulations T, U and X), order, writ, judgment, injunction, decree or award binding on the Borrower or any Subsidiary, (b) violate or conflict with the Borrower's or any Subsidiary's charter, articles or certificate of incorporation or by-laws, (c) violate the provisions of or require the approval or consent of any party to any indenture, instrument or agreement to which the Borrower or any Subsidiary is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien (other than Liens permitted by Section 6.17) in, of or on the Property of the Borrower or any Subsidiary pursuant to the terms of any such indenture, instrument or agreement, or (d) require the consent or approval of any Person, except for any violation of, or failure to obtain an approval or consent required under, any such indenture, instrument or agreement that could not have a Material Adverse Effect. 5.4. Governmental Consents. No order, consent, approval, qualification, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of, any Governmental Authority, Self-Regulatory Organization or securities exchange is necessary or required in connection with the execution, delivery, consummation or performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents, the application of the proceeds of the Loans, or the consummation of any other transaction contemplated by the Loan Documents. Neither the Borrower nor any Subsidiary is in default under or in violation of any foreign, Federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree or award binding upon or applicable to the Borrower or such Subsidiary, in each case the consequence of which default or violation could reasonably be expected to have a Material Adverse Effect. 5.5. Financial Statements. The Borrower has heretofore furnished to each of the Lenders (a) the September 25, 1998 audited consolidated financial statements of the Borrower and its Subsidiaries and (b) the June 25, 1999 unaudited consolidated financial statements of the Borrower and its Subsidiaries (collectively, the "Financial Statements"). The Borrower has also heretofore furnished to each of the Lenders the December 25, 1998, March 25, 1999, June 25, 1999 and September 24, 1999 quarterly FOCUS Reports of RJA and RJFS (the "RJA/RJFS FOCUS Reports"). Each of the Financial Statements was prepared in accordance with Agreement Accounting Principles and fairly presents the consolidated financial condition, results of operations, changes in shareholders' equity and cash flows of the Borrower and its Subsidiaries at such dates and for the respective periods then ended (except, in the case of the unaudited statements, for normal year-end audit adjustments). The RJA/RJFS FOCUS Reports are correct and complete in all material respects and conform in all material respects to Exchange Act requirements and applicable Commission rules and regulations. 5.6. Material Adverse Change. No material adverse change in the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries taken as a whole has occurred since June 25, 1999. 5.7. Taxes. The Borrower and its Subsidiaries have filed or caused to be filed on a timely basis and in correct form all United States Federal and applicable state tax returns and all other material tax returns which are required to be filed and have paid all material taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any Subsidiary, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. As of the date hereof, the United States income tax returns of the Borrower on a consolidated basis have been audited by the Internal Revenue Service through its Fiscal Year ending September 29, 1995. There are no pending audits or investigations regarding the Borrower's or its Subsidiaries' Federal, state or local tax returns which could reasonably be expected to have a Material Adverse Effect. No tax liens have been filed and no claims are being asserted with respect to any such taxes which could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other governmental charges are in accordance with Agreement Accounting Principles. 5.8. Litigation and Contingent Obligations. There is no litigation, arbitration, proceeding, inquiry or investigation by any Governmental Authority, Self-Regulatory Organization or securities exchange pending or, to the knowledge of any of the Borrower's officers, threatened against or affecting the Borrower or any Subsidiary or any of their respective Properties which could reasonably be expected to have a Material Adverse Effect or to prevent, enjoin or unduly delay the making of the Loans or the consummation of the transactions contemplated by this Agreement. The Borrower and its Subsidiaries have no material contingent obligations not provided for or disclosed in the Financial Statements. 5.9. Subsidiaries. Schedule I hereto contains an accurate list of all of the Borrower's Material Subsidiaries as of the date of this Agreement, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Borrower or other Subsidiaries. All of the outstanding shares of capital stock and other equity interests of each Subsidiary are validly issued and outstanding and fully paid and nonassessable, and all such shares and other equity interests owned by the Borrower or a Subsidiary are owned, beneficially and of record, by the Borrower or such Subsidiary free and clear of all Liens. 5.10. ERISA. There are no Unfunded Liabilities relating to any Single Employer Plan. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other member of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan. The Borrower is not an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Loans hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. 5.11. Defaults. No Default or Unmatured Default has occurred and is continuing. 5.12. Federal Reserve Regulations. Neither the making of any Advance hereunder or the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulation T, Regulation U or Regulation X. Following the application of the proceeds of the Loans, less than 25% of the value of the assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge or other restriction hereunder taken as a whole have been, and will continue to be, represented by Margin Stock. 5.13. Investment Company; Public Utility Holding Company. Neither the Borrower nor any Subsidiary is, or after giving effect to any Advance will be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Neither the Borrower nor any Subsidiary is a "holding company" within the meaning of, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended. 5.14. Ownership of Properties. The Borrower and its Subsidiaries have a subsisting leasehold interest in, or good and marketable title to, free of all Liens, other than those permitted by Section 6.17, all of the properties and assets reflected in the Financial Statements as being owned by it, except for assets sold, transferred or otherwise disposed of in the ordinary course of business since the date thereof. 5.15. Material Agreements. Neither the Borrower nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect or which restricts or imposes conditions upon the ability of any Material Subsidiary to (a) pay dividends or make other distributions on its capital stock, (b) make loans or advances to the Borrower, (c) repay loans or advances from the Borrower or (d) grant Liens to the Agent to secure the Obligations. Neither the Borrower nor any Material Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect or (ii) any agreement or instrument evidencing or governing Indebtedness. 5.16. Year 2000. The Borrower has made a full and complete assessment of the Year 2000 Issues and has a realistic and achievable program for remediating the Year 2000 Issues on a timely basis (the "Year 2000 Program"). Based on such assessment and on the Year 2000 Program, the Borrower does not reasonably anticipate that Year 2000 Issues will have a Material Adverse Effect, except as the securities industry or securities markets may be affected generally. 5.17. Insurance. The Borrower and its Subsidiaries maintain with financially sound and reputable insurance companies insurance on their Property in such amounts and covering such risks as is consistent with sound business practice. 5.18. Disclosure. None of the (a) information, exhibits or reports furnished by the Borrower or any Subsidiary to the Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents, or (b) representations or warranties of the Borrower or any Subsidiary contained in this Agreement, the other Loan Documents or any other document, certificate or written statement furnished to the Agent or the Lenders by or on behalf of the Borrower or any Subsidiary pursuant to this Agreement, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which they were made. There is no fact known to any Authorized Officer (other than matters generally affecting the economy or the financial services industry) that has had or could reasonably be expected to have a Material Adverse Effect and that has not been disclosed herein or in such other documents, certificates and statements furnished to the Lenders for use in connection with the transactions contemplated by this Agreement. ARTICLE VI COVENANTS During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1. Financial Reporting. The Borrower will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with Agreement Accounting Principles, consistently applied, and will furnish to the Lenders: (a)As soon as practicable and in any event within 90 days after the close of each of its Fiscal Years, an unqualified audit report from PricewaterhouseCoopers LLP or other independent certified public accountants acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated and consolidating basis (consolidating statements need not be certified by such accountants) for itself and its Subsidiaries, including balance sheets as of the end of such period and related statements of income, changes in shareholders' equity and cash flows, and accompanied by (i) any management letter prepared by said accountants (when available) and (ii) a certificate of said accountants that, in the course of the examination necessary for the preparation of their audit report, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof. (b)As soon as practicable and in any event within 45 days after the close of the first three Fiscal Quarters of each of its Fiscal Years, for itself and its Subsidiaries, consolidated and consolidating unaudited balance sheets as at the close of each such period and consolidated and consolidating statements of income, changes in shareholders' equity and cash flows for the period from the beginning of such Fiscal Year to the end of such quarter, all certified by its chief financial officer. (c)As soon as practicable and in any event within 25 days after the close of each Fiscal Quarter, the FOCUS Report for such Fiscal Quarter filed by RJA and RJFS with the Commission. (d)Together with the financial statements required by clauses (a) and (b) above, a Compliance Certificate signed by its chief financial officer showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (e)Within 270 days after the close of each Fiscal Year, a statement of the Unfunded Liabilities of each Single Employer Plan, if any, certified as correct by an actuary enrolled under ERISA. (f)As soon as possible and in any event within 10 days after any Authorized Officer of the Borrower learns thereof, notice of the assertion or commencement of any claim, action, litigation, suit or proceeding against or affecting the Borrower or any Subsidiary, including any investigation or proceeding commenced by the Commission, NASD, MSRB, NYSE or any other Governmental Authority, Self-Regulatory Organization or securities exchange, which could reasonably be expected to have a Material Adverse Effect. (g)Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished. (h)Within 15 days after the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower files with the Commission and, upon request, any such reports filed by any Subsidiary. (i)Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary to, use the proceeds of the Advances for general corporate purposes, including without limitation the refinancing of certain existing indebtedness, friendly acquisitions, share repurchases and asset purchases. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to (i) purchase or carry any Margin Stock in violation of Regulation T, Regulation U or Regulation X, (ii) finance the Acquisition of any Person which has not been approved and recommended by the board of directors (or functional equivalent thereof) of such Person, or (iii) fund subordinated loans from the Borrower to any of its Subsidiaries. 6.3. Notice of Default. Within 10 days after any Authorized Officer of the Borrower has knowledge thereof, the Borrower will give notice in writing to the Lenders of the occurrence of (a) any Default or Unmatured Default or (b) any other event or development, financial or otherwise (including, without limitation, developments with respect to Year 2000 Issues), which could reasonably be expected to have a Material Adverse Effect other than matters generally affecting the economy or the financial services industry. 6.4. Conduct of Business. The Borrower will, and will cause each Material Subsidiary to, (a) subject to Section 6.13(c), preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, (b) maintain all registrations, licenses, consents, approvals and authorizations from and with any Governmental Authority, Self- Regulatory Organization or securities exchange necessary or material to the conduct of its business, and (c) qualify and remain qualified as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, except where failure to qualify could not have a Material Adverse Effect. The Borrower will not, and will not permit any of its Material Subsidiaries to, engage in any material line of business substantially different from those lines of business carried on by it on the date hereof. 6.5. Taxes. The Borrower will, and will cause each Subsidiary to, timely file complete and correct United States Federal and applicable foreign, state and local tax returns required by applicable law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles. 6.6. Insurance. The Borrower will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance companies insurance in such amounts and covering such risks as is consistent with sound business practice, and the Borrower will furnish to the Agent and any Lender upon request full information as to the insurance carried. 6.7. Compliance with Laws. The Borrower will, and will cause each Subsidiary to, comply with all laws, statutes (including, without limitation, the Exchange Act, the Advisers Act, the Investment Company Act and applicable Environmental Laws), rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject. 6.8. Maintenance of Properties. The Borrower will, and will cause each Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. 6.9. Inspection. The Borrower will, and will cause each Subsidiary to, permit the Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, corporate books and financial records of the Borrower and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Agent or any Lender may designate. The Borrower will keep or cause to be kept, and cause each Subsidiary to keep or cause to be kept, appropriate records and books of account in which complete entries are to be made reflecting its and their business and financial transactions, such entries to be made in accordance with Agreement Accounting Principles consistently applied. 6.10. Year 2000. The Borrower will take, and will cause each of its Subsidiaries to take, all such actions as are reasonably necessary to successfully implement the Year 2000 Program as to assure that Year 2000 Issues will not have a Material Adverse Effect. At the request of the Agent, the Borrower will provide a description of the Year 2000 Program, together with any updates or progress reports with respect thereto. 6.11. Ownership of Subsidiaries. The Borrower will continue to own, directly or indirectly, beneficially and of record, free and clear of all Liens and restrictions, 75% of the outstanding shares of capital stock each of RJA and RJFS. 6.12. Indebtedness. The Borrower will not, nor will it permit any Subsidiary to, create, incur or suffer to exist any Indebtedness, except: (a)The Term Loan hereunder and Indebtedness under the Revolving Credit Agreement; (b)Existing Indebtedness described on Schedule II hereto; (c)Securities sold under agreements to repurchase (to the extent such obligations constitute Indebtedness); (d)Contingent Obligations permitted by Section 6.16; (e)Capital Lease Obligations and purchase money Indebtedness not exceeding $10,000,000 in the aggregate at any time outstanding; (f)(i) Moneys due to counterparties under stock loan transactions, (ii) liabilities to customers for cash on deposit, and (iii) liabilities to brokers, dealers and clearing organizations relating to the settlement of securities transactions; (g)Indebtedness of Raymond James Credit Corporation in an aggregate principal amount not exceeding $100,000,000 used to finance loans collateralized by public company restricted or control shares; (h)Indebtedness of any Subsidiary for borrowed money from the Borrower which represents unsubordinated Indebtedness of such Subsidiary; and (i) Unsecured Indebtedness not otherwise permitted by this Section 6.12 in an aggregate principal amount not exceeding $5,000,000. 6.13. Merger. The Borrower will not, nor will it permit any Subsidiary to, merge or consolidate with or into any other Person, except that (a) a Wholly-Owned Subsidiary may merge into the Borrower or any Wholly-Owned Subsidiary of the Borrower, (b) the Borrower or any Subsidiary may merge or consolidate with any other Person so long as the Borrower or such Subsidiary is the continuing or surviving corporation and, prior to and after giving effect to such merger or consolidation, no Default or Unmatured Default shall exist, and (c) any Subsidiary may enter into a merger or consolidation as a means of effecting a disposition permitted by Section 6.14. 6.14. Sale of Assets. The Borrower will not, nor will it permit any Subsidiary to, lease, sell, transfer or otherwise dispose of its Property, to any other Person except for (a) sales of securities sold in the ordinary course of business, and (b) leases, sales, transfers or other dispositions of its Property that, together with all other Property of the Borrower and its Subsidiaries previously leased, sold or disposed of (other than sales of securities sold in the ordinary course of business) as permitted by this Section 6.14 during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Borrower and its Subsidiaries. 6.15. Investments and Acquisitions. The Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any Investments (including, without limitation, loans and advances to, and other Investments in, Subsidiaries), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any Person, except: (a)Existing Investments in Subsidiaries and Affiliates; (b)Obligations of, or fully guaranteed by, the United States of America; commercial paper and other short-term notes and securities rated investment grade by a national securities rating agency; demand deposit accounts maintained in the ordinary course of business; and certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000; (c)Publicly-traded securities and private equity participations; (d)Acquisitions of or Investments in Subsidiaries or the capital stock, assets, obligations or other securities of or interest in other Persons provided that (i) each such Person shall be (x) in regard to Material Subsidiaries, incorporated, organized or otherwise formed under the laws of any state of the United States, and (y) engaged in a line of business not substantially different from those lines of business carried on by the Borrower and its Subsidiaries on the date hereof, (ii) the transaction (or any tender offer commencing a proposed transaction) shall have been approved and recommended by the board of directors (or functional equivalent thereof) of such Person, and (iii) no Default or Unmatured Default shall have occurred and be continuing either immediately before or after giving effect to such transaction and no Material Adverse Effect would result therefrom; and (e)Repurchases of up to 5,000,000 shares of the Borrower's common stock to fund the Borrower's incentive stock option and stock purchase plans and other corporate purposes. 6.16. Contingent Obligations. The Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (a) by endorsement of instruments for deposit or collection in the ordinary course of business, (b) guarantees by the Borrower of the Indebtedness of Raymond James Credit Corporation in an aggregate principal amount not exceeding $100,000,000 referred to in Section 6.12(g) and guarantees by the Borrower (or any Subsidiary) of the Indebtedness of any other Subsidiaries in an aggregate principal amount not exceeding $10,000,000, (c) guarantees by the Borrower with respect to settlement of securities transactions by its Affiliates extended to customers of, lenders to, or clearing agencies for, such Affiliates, and (d) guarantees by the Borrower of up to $45,000,000 with respect to the activities of Raymond James Tax Credit Funds, Inc. or any of its Subsidiaries. 6.17. Liens. The Borrower will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, except: (a)Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books; (b)Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure the payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books; (c)Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation; (d)Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or its Subsidiaries; (e)Liens securing the Indebtedness permitted by Sections 6.12(b) and (c); and (f)Liens incurred in the ordinary course of the settlement of securities transactions. 6.18. Affiliates. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except (a) in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms and (b) transactions among the Borrower and Wholly-Owned Subsidiaries of the Borrower. 6.19. Change in Corporate Structure; Fiscal Year. The Borrower shall not, nor shall it permit any Material Subsidiary to, (a) permit any amendment or modification to be made to its certificate or articles of incorporation or by-laws which is materially adverse to the interests of the Lenders (provided that the Borrower shall notify the Agent of any other amendment or modification thereto as soon as practicable thereafter) or (b) change its Fiscal Year to end on any date other than the last Friday in September of each year. 6.20. Inconsistent Agreements. The Borrower shall not, nor shall it permit any Subsidiary to, enter into any indenture, agreement, instrument or other arrangement which (a) directly or indirectly prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence of the Obligations, the amending of the Loan Documents or the ability of any Subsidiary to (i) pay dividends or make other distributions on its capital stock, (ii) make loans or advances to the Borrower, or (iii) repay loans or advances from the Borrower or (b) contains any provision which would be violated or breached by the making of Advances or by the performance by the Borrower or any Subsidiary of any of its obligations under any Loan Document. 6.21. Financial Covenants. 6.21.1 Minimum Tangible Net Worth. The Borrower on a consolidated basis with its Subsidiaries at all times after the date hereof shall maintain Tangible Net Worth of not less than (i) $400,000,000 plus (ii) 50% of cumulative Net Income earned after September 24, 1999. 6.21.2 Double Leverage Ratio. The Borrower on a parent-only basis at all times after the date hereof shall maintain a Double Leverage Ratio of not more than 1.15 to 1.0. 6.21.3 RJA Net Capital. The Borrower shall cause RJA at all times after the date hereof to maintain a ratio (computed in accordance with Exhibit A to Rule 15c3-3, "Formula for Determination of Reserve Requirements for Brokers and Dealers") of Net Capital to Aggregate Debt Items of not less than 10%. 6.21.4 RJFS Net Capital. The Borrower shall cause RJFS at all times after the date hereof to maintain a ratio (computed in accordance with Exhibit A to Rule 15c3-3, "Formula for Determination of Reserve Requirements for Brokers and Dealers") of Aggregate Indebtedness to Net Capital of not more than 9.0 to 1.0. 6.21.5 RJA/RJFS Excess Net Capital. The Borrower shall cause RJA and RJFS at all times to have combined Excess Net Capital of not less than $100,000,000. ARTICLE VII DEFAULTS The occurrence of any one or more of the following events shall constitute a Default: 7.1. Representation or Warranty. Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement, any other Loan Document, any Loan, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be false in any material respect on the date as of which made or deemed made. 7.2. Non-Payment. (a) Nonpayment of any principal of any Loan when due, or (b) nonpayment of any interest upon any Loan or of any fee or other obligation under any of the Loan Documents within five days after the same becomes due. 7.3. Specific Defaults. The breach by the Borrower of any of the terms or provisions of Section 6.2, Section 6.3(a), Section 6.4 (second sentence only) or Sections 6.10 through 6.21. 7.4. Other Defaults. The breach by the Borrower (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement which is not remedied within 30 days after written notice from the Agent or any Lender. 7.5. Cross-Default. Failure of the Borrower or any of its Material Subsidiaries to pay when due any Indebtedness aggregating in excess of $5,000,000; or the default by the Borrower or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement or agreements under which any such Indebtedness was created or is governed (or the occurrence of any other event or existence of any other condition) the effect of any of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Borrower or any of its Material Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Borrower or any of its Material Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as then become due. 7.6. Insolvency; Voluntary Proceedings. The Borrower or any of its Material Subsidiaries shall (a) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (b) make an assignment for the benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (d) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (e) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6, or (f) fail to contest in good faith any appointment or proceeding described in Section 7.7. 7.7. Involuntary Proceedings. Without the application, approval or consent of the Borrower or any of its Material Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Material Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(d) shall be instituted against the Borrower or any of its Material Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 30 consecutive days. 7.8. Condemnation. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Borrower and its Subsidiaries which, when taken together with all other Property of the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion. 7.9. Judgments. (a) The Borrower or any of its Material Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge one or more judgments or orders for the payment of money in excess of $10,000,000 in the aggregate, or (b) the Borrower or any of its Subsidiaries shall fail to pay, bond or otherwise discharge one or more nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case of clauses (a) and (b), is/are not stayed on appeal or otherwise being appropriately contested in good faith. 7.10. Change in Control. Any Change in Control shall occur. 7.11. SIPC. The Commission or any Self-Regulatory Organization has notified the SIPC pursuant to Section 5(a)(1) of the SIPA of facts which indicate that the Borrower, RJA or RJFS is in or is approaching financial difficulty, or the SIPC shall file an application for a protective decree with respect to the Borrower, RJA or RJFS under Section 5(a)(3) of the SIPA. 7.12. Broker-Dealer License. The Commission or other Governmental Authority shall revoke or suspend the license or authorization of RJA and RJFS under Federal or state law to conduct business as a securities broker-dealer (and such license or authorization shall not be reinstated within 5 days), or RJA or RJFS shall be suspended or expelled from membership in the NASD, NYSE or any other Self-Regulatory Organization or securities exchange. 7.13. ERISA. The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $1,000,000 or any Reportable Event shall occur in connection with any Plan that could have a Material Adverse Effect. ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs with respect to the Borrower, the Obligations shall immediately become due and payable without any election or action on the part of the Agent or any Lender. If any other Default occurs, the Required Lenders (or the Agent with the consent of the Required Lenders) may declare the Obligations to be due and payable, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives. If, within 30 Business Days after acceleration of the maturity of the Obligations as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Borrower, rescind and annul such acceleration. 8.2. Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of all of the Lenders: (a)Extend the Maturity Date (otherwise than as provided in Section 2.18). (b)Forgive all or any portion of the principal amount of any Loan or reduce the rate or extend the time of payment of interest or fees thereon. (c)Reduce the percentage specified in the definition of Required Lenders. (d)Permit the Borrower to assign its Obligations or rights under this Agreement. (e)Amend this Section 8.2. No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement. 8.3. Preservation of Rights. No delay or omission of the Lenders or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full. ARTICLE IX GENERAL PROVISIONS 9.1. Survival of Representations. All representations and warranties of the Borrower contained in this Agreement shall survive the making of the Loans herein contemplated. 9.2. Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3. Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 9.4. Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrower, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrower, the Agent and the Lenders relating to the subject matter thereof other than the fee letter described in Section 10.13. 9.5. Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. 9.6. Expenses; Indemnification. The Borrower shall reimburse the Agent for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent) paid or incurred by the Agent in connection with the preparation, negotiation, execution, delivery, review, syndication, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent and the Lenders for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent and the Lenders, which attorneys may be employees of the Agent or the Lenders) paid or incurred by the Agent or any Lender in connection with the collection and enforcement of the Loan Documents. The Borrower further agrees to indemnify the Agent and each Lender, their respective affiliates, and each of their directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent or any Lender or any affiliate is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Loan hereunder, except to the extent that (i) they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification or (ii) they relate solely to a claim or claims between or among the Lenders unrelated to any alleged act or omission of the Borrower. The obligations of the Borrower under this Section 9.6 shall survive the termination of this Agreement. 9.7. Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders. 9.8. Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. 9.9. Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.10. Nonliability of Lenders. The relationship between the Borrower on the one hand and the Lenders and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. The Borrower agrees that neither the Agent nor any Lender shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non- appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 9.11. Confidentiality. Each Lender agrees to hold any confidential information which it may receive from the Borrower pursuant to this Agreement in confidence, except for disclosure (i) to its Affiliates and to other Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and other professional advisors to such Lender or to a Transferee (which Transferee has agreed to be bound by this Section 9.11), (iii) to regulatory officials, (iv) to any Person as required by law, regulation, or legal process, (v) to any Person in connection with any legal proceeding to which such Lender is a party, (vi) to such Lender's direct or indirect contractual counterparties in swap agreements (which counterparties have agreed to be bound by this Section 9.11) or to legal counsel, accountants and other professional advisors to such counterparties, and (vii) permitted by Section 12.4. The obligations of the Lenders under this Section 9.11 shall survive the termination of this Agreement. 9.12. Nonreliance. Each Lender hereby represents that it is not relying on or looking to any Margin Stock for the repayment of the Loans provided for herein. 9.13. Disclosure. The Borrower and each Lender hereby (i) acknowledge and agree that Bank One and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with the Borrower and its Affiliates, and (ii) waive any liability of Bank One or such Affiliate of Bank One to the Borrower or any Lender, respectively, arising out of or resulting from such investments, loans or relationships other than liabilities arising out of the gross negligence or willful misconduct of Bank One or its Affiliates. 9.14. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 9.15. CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK CITY. 9.16. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. ARTICLE X THE AGENT 10.1. Appointment; Nature of Relationship. Bank One, NA is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the "Agent") hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. 10.2. Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent. 10.3. General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non- appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person. 10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of the Borrower or any guarantor of any of the Obligations or of any of the Borrower's or any such guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the Borrower to the Agent (either in its capacity as Agent or in its individual capacity). 10.5. Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro- rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6. Employment of Agents and Counsel. The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent's duties hereunder and under any other Loan Document. 10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 10.8. Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement. 10.9. Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. 10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. 10.11. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 10.12. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of the Borrower or any Lender, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article X shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then the term "Corporate Base Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent. 10.13. Agent's Fee. The Borrower agrees to pay to the Agent, for its own account, the fees agreed to by the Borrower and the Agent pursuant to that certain letter agreement dated August 3, 1999, or as otherwise agreed from time to time. 10.14. Delegation to Affiliates. The Borrower and the Lenders agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles IX and X. 10.15. Syndication Agent, Co-Documentation Agents, etc. None of the Lenders identified in this Agreement as a "Syndication Agent" or a "Co-Documentation Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Agent in Section 10.11. ARTICLE XI SETOFF; RATABLE PAYMENTS 11.1. Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Loan (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 12.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Lenders and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 12.3. The parties to this Agreement acknowledge that clause (ii) of this Section 12.1 relates only to absolute assignments and does not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 12.3. The Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3; provided, however, that the Agent may in its discretion (but shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating to such Loan or Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan. 12.2. Participations. 12.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Loans and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 12.2.2 Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment, extends the Maturity Date, postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan or Commitment, releases any guarantor of any such Loan or releases all or substantially all of the collateral, if any, securing any such Loan. 12.2.3 Benefit of Setoff. The Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. 12.3. Assignments. 12.3.1 Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit B hereto or in such other form as may be agreed to by the parties thereto. The consent of the Borrower and the Agent shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof; provided, however, that if a Default has occurred and is continuing, the consent of the Borrower shall not be required. Such consent shall not be unreasonably withheld or delayed. Each such assignment with respect to a Purchaser which is not a Lender or an Affiliate thereof shall (unless each of the Borrower and the Agent otherwise consents) be in an amount not less than the lesser of (i) $5,000,000 or (ii) the remaining amount of the assigning Lender's outstanding Loan (calculated as at the date of such assignment). 12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent of an assignment, together with any consents required by Section 12.3.1, and (ii) payment of a $4,000 fee to the Agent for processing such assignment (unless such fee is waived by the Agent), such assignment shall become effective on the effective date specified in such assignment. The assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Loans under the applicable assignment agreement constitutes "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and Term Loan assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent and the Borrower shall, if the transferor Lender or the Purchaser desires that its Loan be evidenced by a Note, make appropriate arrangements so that a new Note or, as appropriate, a replacement Note is issued to such transferor Lender and a new Note or, as appropriate, a replacement Note, is issued to such Purchaser, in each case in a principal amount reflecting its outstanding Loan, as adjusted pursuant to such assignment. 12.4. Dissemination of Information. The Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Borrower and its Subsidiaries; provided that each Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement. 12.5. Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(iv). ARTICLE XIII NOTICES 13.1. Notices. Except as otherwise permitted by Section 2.12 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth below its signature hereto or (z) in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Borrower in accordance with the provisions of this Section 13.1. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Agent under Article II shall not be effective until received. 13.2. Change of Address. The Borrower, the Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto. [signature pages to follow] IN WITNESS WHEREOF, the Borrower, the Lenders and the Agents have executed this Agreement as of the date first above written. RAYMOND JAMES FINANCIAL, INC. By: Title: Address for Notices: 880 Carillon Parkway St. Petersburg, Florida 33716 Attention: Jeffrey P. Julien Telephone: (727) 573- 3800 Facsimile: (727) 573- 8365 Commitment: BANK ONE, NA, $12,500,000 Individually and as Administrative Agent By: Title: Address for Notices: 1 Bank One Plaza Suite 0159, 16th Floor Chicago, Illinois 60670 Attention: Glenyss Gilliam Telephone: (312) 732- 3642 Facsimile: (312) 732- 3246 Commitment: CITIBANK, N.A., $12,500,000 Individually and as Syndication Agent By: Title: Address for Notices: 399 Park Avenue 12th Floor, Zone 11 New York, New York 10043 Attention: Peter G. Nealon Telephone: (212) 559- 8621 Facsimile: (212) 371- 6309 Commitment: BANK OF AMERICA, NATIONAL $12,500,000 ASSOCIATION, Individually and as Co- Documentation Agent By: Title: Address for Notices: 335 Madison Avenue 5th Floor New York, New York 10017 Attention: James F. Dever Telephone: (212) 503- 7986 Facsimile: (212) 503- 7013 Commitment: THE CHASE MANHATTAN BANK, $12,500,000 Individually and as Co- Documentation Agent By: Title: Address for Notices: One Chase Manhattan Plaza 21st Floor New York, New York 10081 Attention: Richard Cassa Telephone: (212) 552- 6259 Facsimile: (212) 552- 5142 Exhibit A COMPLIANCE CERTIFICATE I, certify that I am the of RAYMOND JAMES FINANCIAL, INC. (the "Borrower"), and that as such I am authorized to execute this Compliance Certificate on behalf of the Borrower, and DO HEREBY FURTHER CERTIFY on behalf of the Borrower that: 1. I have reviewed the terms of that certain Term Credit Agreement dated as of October 26, 1999 among the Borrower, the financial institutions named therein (the "Lenders") and Bank One, NA, as administrative agent (the "Agent") (as amended, supplemented or modified from time to time, the "Credit Agreement") and I have made, or have caused to be made by employees or agents under my supervision, a detailed review of the transactions and conditions of the Borrower during the accounting period covered by the attached financial statements; 2. The examinations described in paragraph 1 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below; and 3. Schedule I attached hereto sets forth financial data and computations evidencing compliance with the covenants set forth in Sections 6.14, 6.21.1, 6.21.2, 6.21.3, 6.21.4 and 6.21.5 of the Credit Agreement, all of which data and computations are true, complete and correct. Capitalized terms not defined herein are defined in the Credit Agreement. Described below are the exceptions, if any, to paragraph 2 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event: _____________________________________________________________ _____ _____________________________________________________________ _____ The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Compliance Certificate in support hereof, are made and delivered this ______ day of ______________, _____. RAYMOND JAMES FINANCIAL, INC. By: Title: Schedule I Section 6.14 - Sale of Assets Asset Dispositions for twelve-month period ending with month in which disposition occurs: (a) Permitted asset dispositions: 10% of consolidated assets of the Borrower at beginning of such twelve-month period* $ (b) Actual asset dispositions for such period $ *Note: must also demonstrate (to the extent calculable) that total asset dispositions for such period do not involve Property which is responsible for more than 15% of the consolidated net sales or Net Income of the Borrower for such twelve-month period. Section 6.21.1 - Minimum Tangible Net Worth 1. Required Tangible Net Worth: $400,000,000 * plus 50% of cumulative Net Income earned after $ $ September 24, 1999 Total 2. Actual Tangible Net Worth: $ Section 6.21.2 - Maximum Double Leverage Ratio 1. Maximum Double Leverage Ratio 1.15 to 1.0 2. Actual Double Leverage Ratio (a) Investment in Subsidiaries $ (b) Shareholders equity (parent only) $ (c) Ratio of (a) to (b) ____ to 1.0 Section 6.21.3 - RJA Net Capital Ratio 10% 1. Minimum RJA Net Capital Ratio 2. Actual RJA Net Capital Ratio $ (a) Net Capital $ (b) Aggregate Debit Items ____% (c) Ratio of (a) to (b) Section 6.21.4 - RJFS Net Capital Ratio 1. Maximum RJFS Net Capital Ratio 9.0 to 1.0 2. Actual RJFS Net Capital Ratio (a) Aggregate Indebtedness $ (b) Net Capital $ (c) Ratio of (a) to (b) ____ to 1.0 Section 6.21.5 - RJA/RJFS Excess Net Capital 1. Minimum combined RJA/RJFS Excess Net Capital $100,000,000 2. Actual combined RJA/RJFS Excess Net Capital $ Exhibit B FORM OF ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between ______________________ (the "Assignor") and _______________________________ (the "Assignee") is dated as of ____________________, ____. The parties hereto agree as follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date. 4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Agent which relate to the portion of the Commitment or Loans assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1. 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor, (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (a) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectibility of any Loan Document, including, without limitation, documents granting the Assignor and the other Lenders a security interest in assets of the Borrower or any guarantor, (b) any representation, warranty or statement made in or in connection with any of the Loan Documents, (c) the financial condition or creditworthiness of the Borrower or any guarantor, (d) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (e) inspecting any of the property, books or records of the Borrower, (f) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans, or (g) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and hold the Assignor harmless against all losses and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non-performance of the obligations assumed under this Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes. 8. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW YORK. 9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement. IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written. SCHEDULE 1 TO ASSIGNMENT AGREEMENT 1. Description and Date of Credit Agreement: That certain Term Credit Agreement dated as of October 26, 1999 among Raymond James Financial, Inc., the Lenders named therein and Bank One, NA, as administrative agent (the "Agent"). 2. Date of Assignment Agreement: , ______. 3. Amounts (as of Date of Item 2 above): (a) Assignee's percentage of Term Loan purchased under the Assignment Agreement* _________% (b) Amount of Term Loan purchased under the Assignment Agreement $__________ 4. Assignee's Loan: $__________ 5. Proposed Effective Date: ___________ 6. Non-standard Recordation Fee Arrangement N/A** [Assignor/Assignee to pay 100% of fee] [Fee waived by Agent] Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By:_________________________ By:_________________________ Title:________________________ Title:________________________ Accepted and Consented to *** by: Accepted and Consented to *** by: RAYMOND JAMES FINANCIAL, INC. BANK ONE, NA By:_________________________ By:_________________________ Title:________________________ Title:________________________ * Percentage taken to 10 decimal places. ** If fee is split 50-50, pick N/A as option. *** Delete if not required by Credit Agreement. ATTACHMENT TO SCHEDULE 1 to ASSIGNMENT AGREEMENT Attach Assignor's Administrative Information Sheet, which must include notice address for the Assignor and the Assignee EX-10 3 569053.5 [Execution] $100,000,000 REVOLVING CREDIT AGREEMENT Dated as of October 26, 1999 among RAYMOND JAMES FINANCIAL, INC., as Borrower, THE LENDERS NAMED HEREIN, BANK ONE, NA, as Administrative Agent, CITIBANK, N.A., as Syndication Agent, BANK OF AMERICA, NATIONAL ASSOCIATION, as Co-Documentation Agent, and THE CHASE MANHATTAN BANK, as Co-Documentation Agent TABLE OF CONTENTS ARTICLE I DEFINITIONS 1 ARTICLE II THE CREDITS 12 2.1. Advances 12 2.2. Ratable Loans 12 2.3. Types of Advances 12 2.4. Facility Fee; Reductions in Aggregate Commitment 12 2.5. Minimum Amount of Each Advance 13 2.6. Optional Principal Payments 13 2.7. Method of Selecting Types and Interest Periods for New Advances 13 2.8. Conversion and Continuation of Outstanding Advances 13 2.9. Changes in Interest Rate, etc 14 2.10. Rates Applicable After Default 14 2.11. Method of Payment 15 2.12. Telephonic Notices 15 2.13. Interest Payment Dates; Interest and Fee Basis 15 2.14.Notification of Advances, Interest Rates, Prepayments and Commitment Reductions 15 2.15. Lending Installations 16 2.16. Non-Receipt of Funds by the Agent 16 2.17. Noteless Agreement; Evidence of Indebtedness 16 2.18. Extension of Facility Termination Date 17 2.19. Replacement of Lender 17 ARTICLE III YIELD PROTECTION; TAXES 18 3.1. Yield Protection 18 3.2. Changes in Capital Adequacy Regulations 19 3.3. Availability of Types of Advances 19 3.4. Funding Indemnification 19 3.5. Taxes 19 3.6. Lender Statements; Survival of Indemnity 21 ARTICLE IV CONDITIONS PRECEDENT 22 4.1. Initial Loans 22 4.2. Each Future Advance 23 ARTICLE V REPRESENTATIONS AND WARRANTIES 23 5.1. Corporate Existence; Conduct of Business 23 5.2. Authorization and Validity 24 5.3. Compliance with Laws and Contracts 24 5.4. Governmental Consents 24 5.5. Financial Statements 25 5.6. Material Adverse Change 25 5.7. Taxes 25 5.8. Litigation and Contingent Obligations 25 5.9. Subsidiaries 26 5.10. ERISA 26 5.11. Defaults 26 5.12. Federal Reserve Regulations 26 5.13. Investment Company; Public Utility Holding Company 26 5.14. Ownership of Properties 26 5.15. Material Agreements 26 5.16. Year 2000 27 5.17. Insurance 27 5.18. Disclosure 27 ARTICLE VI COVENANTS 27 6.1. Financial Reporting 27 6.2. Use of Proceeds 28 6.3. Notice of Default 29 6.4. Conduct of Business 29 6.5. Taxes 29 6.6. Insurance 29 6.7. Compliance with Laws 29 6.8. Maintenance of Properties 29 6.9. Inspection 29 6.10. Year 2000 30 6.11. Ownership of Subsidiaries 30 6.12. Indebtedness 30 6.13. Merger 30 6.14. Sale of Assets 31 6.15. Investments and Acquisitions 31 6.16. Contingent Obligations 31 6.17. Liens 32 6.18. Affiliates 32 6.19. Change in Corporate Structure; Fiscal Year 32 6.20. Inconsistent Agreements 33 6.21. Financial Covenants. 33 6.21.1 Minimum Tangible Net Worth 33 6.21.2 Double Leverage Ratio 33 6.21.3 RJA Net Capital 33 6.21.4 RJFS Net Capital 33 6.21.5 RJA/RJFS Excess Net Capital 33 ARTICLE VII DEFAULTS 33 7.1. Representation or Warranty 33 7.2. Non-Payment 34 7.3. Specific Defaults 34 7.4. Other Defaults 34 7.5. Cross-Default 34 7.6. Insolvency; Voluntary Proceedings 34 7.7. Involuntary Proceedings 34 7.8. Condemnation 34 7.9. Judgments 35 7.10. Change in Control 35 7.11. SIPC 35 7.12. Broker-Dealer License 35 7.13. ERISA 35 ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 35 8.1. Acceleration 35 8.2. Amendments 36 8.3. Preservation of Rights 36 ARTICLE IX GENERAL PROVISIONS 36 9.1. Survival of Representations 36 9.2. Governmental Regulation 37 9.3. Headings 37 9.4. Entire Agreement 37 9.5. Several Obligations; Benefits of this Agreement 37 9.6. Expenses; Indemnification 37 9.7. Numbers of Documents 37 9.8. Accounting 38 9.9. Severability of Provisions 38 9.10. Nonliability of Lenders 38 9.11. Confidentiality 38 9.12. Nonreliance 38 9.13. Disclosure 38 9.14. CHOICE OF LAW 39 9.15. CONSENT TO JURISDICTION 39 9.16. WAIVER OF JURY TRIAL 39 ARTICLE X THE AGENT 39 10.1. Appointment; Nature of Relationship 39 10.2. Powers 40 10.3. General Immunity 40 10.4. No Responsibility for Loans, Recitals, etc 40 10.5. Action on Instructions of Lenders 40 10.6. Employment of Agents and Counsel 41 10.7. Reliance on Documents; Counsel 41 10.8. Agent's Reimbursement and Indemnification 41 10.9. Notice of Default 41 10.10. Rights as a Lender 41 10.11. Lender Credit Decision 42 10.12. Successor Agent 42 10.13. Agent's Fee 43 10.14. Delegation to Affiliates 43 10.15. Syndication Agent, Co-Documentation Agents, etc 43 ARTICLE XI SETOFF; RATABLE PAYMENTS 43 11.1. Setoff 43 11.2. Ratable Payments 43 ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 44 12.1. Successors and Assigns 44 12.2. Participations. 44 12.2.1 Permitted Participants; Effect 44 12.2.2 Voting Rights 44 12.2.3 Benefit of Setoff 45 12.3. Assignments. 45 12.3.1 Permitted Assignments 45 12.3.2 Effect; Effective Date 45 12.4. Dissemination of Information 46 12.5. Tax Treatment 46 ARTICLE XIII NOTICES 46 13.1. Notices 46 13.2. Change of Address 46 EXHIBITS Exhibit A Compliance Certificate Exhibit B Assignment Agreement SCHEDULES Schedule I - Material Subsidiaries Schedule II - Existing Indebtedness REVOLVING CREDIT AGREEMENT This REVOLVING CREDIT AGREEMENT, dated as of October 26, 1999, is among RAYMOND JAMES FINANCIAL, INC., a Florida corporation, the Lenders (as hereinafter defined), BANK ONE, NA, a national banking association having its headquarters in Chicago, Illinois, individually and as administrative agent (the "Agent"), CITIBANK, N.A., individually and as syndication agent (the "Syndication Agent"), BANK OF AMERICA, NATIONAL ASSOCIATION, individually and as co-documentation agent ("Co-Documentation Agent"), and THE CHASE MANHATTAN BANK, individually and as co- documentation agent ("Co-Documentation Agent"). R E C I T A L S: A. The Borrower has requested the Lenders to provide a revolving credit facility to it in the aggregate principal amount of $100,000,000, the proceeds of which the Borrower will use for general corporate purposes, including without limitation friendly acquisitions, share repurchases and asset purchases; and B. The Lenders are willing to extend such credit facility on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the Agent hereby agree as follows: ARTICLE I DEFINITIONS As used in this Agreement: "Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (a) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division or line of business thereof, whether through purchase of assets, merger or otherwise, or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company. "Advance" means a borrowing pursuant to Section 2.1 consisting of the aggregate amount of the several Loans made on the same Borrowing Date by the Lenders to the Borrower of the same Type and, in the case of Eurodollar Advances, for the same Interest Period. "Advisers Act" means the Investment Advisers Act of 1940, as amended. "Affected Lender" is defined in Section 2.19. "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Agent" means Bank One in its capacity as administrative agent for the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor administrative agent appointed pursuant to Article X. "Agents" means and includes the Agent, the Syndication Agent and the Co-Documentation Agents. "Aggregate Commitment" means the aggregate of the Commitments of all the Lenders hereunder. The initial Aggregate Commitment is $100,000,000. "Aggregate Debit Items" means, at any time, "aggregate debit items" computed in accordance with Rule 15c3-1. "Aggregate Indebtedness" means, at any time, "aggregate indebtedness" computed in accordance with Rule 15c3-1. "Agreement" means this Revolving Credit Agreement, as it may be amended, modified or restated and in effect from time to time. "Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with those used in preparing the Financial Statements. "Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (a) the Corporate Base Rate for such day, or (b) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum. "Article" means an article of this Agreement unless another document is specifically referenced. "Authorized Officer" means any of the chief executive officer, president, chief financial officer or controller of the Borrower, acting singly. "Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors. "Bankruptcy Code" means Title 11, United States Code, sections 1 et seq., as the same may be amended from time to time, and any successor thereto or replacement therefor which may be hereafter enacted. "Borrower" means Raymond James Financial, Inc., a Florida corporation, and its successors and assigns. "Borrowing Date" means a date on which an Advance is made hereunder. "Borrowing Notice" is defined in Section 2.7. "Business Day" means (a) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market, and (b) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system. "CEA" means the Commodity Exchange Act, as amended from time to time. "CFTC" means the Commodities Future Trading Commission and any successor entity. "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Change" is defined in Section 3.2. "Change in Control" means (a) the acquisition by any Person, or two or more Persons acting in concert, including without limitation any acquisition effected by means of a merger or consolidation, of beneficial ownership (within the meaning of Rule 13d-3 of the Commission under the Exchange Act) of 30% or more of the outstanding shares of voting stock of the Borrower, or (b) during any period of 25 consecutive calendar months, commencing on the date of this Agreement, the ceasing of those individuals (the "Continuing Directors") who (i) were directors of the Borrower on the first day of each such period or (ii) subsequently became directors of the Borrower and whose initial election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of the Borrower, to constitute a majority of the board of directors of the Borrower. For purposes of making the calculation in clause (a) above, an "acquisition" shall not include a transfer of shares by a shareholder or his estate to members of his immediate family (spouse, children, grandchildren, spouses of children or grandchildren) or to trusts for the benefit of the shareholder or members of his immediate family. "Closing Date" is defined in Section 4.1. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Commission" means the Securities and Exchange Commission and any successor entity. "Commitment" means, for each Lender, the obligation of such Lender to make Loans not exceeding the amount set forth opposite its signature below and as set forth in any assignment which has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time pursuant to the terms hereof. "Compliance Certificate" means a certificate executed by an Authorized Officer substantially in the form of Exhibit A hereto. "Consolidated" or "consolidated", when used in connection with any calculation, means a calculation to be determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with Agreement Accounting Principles. "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as a general partner of a partnership with respect to the liabilities of the partnership. "Controlled Group" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Conversion/Continuation Notice" is defined in Section 2.8. "Corporate Base Rate" means a rate per annum equal to the corporate base rate or prime rate of interest announced by Bank One or by its parent, Bank One Corporation, from time to time, changing when and as said corporate base rate or prime rate changes. "Default" means an event described in Article VII. "Double Leverage Ratio" means, at any time, as calculated for the Borrower on a parent-only basis in accordance with Agreement Accounting Principles, the ratio of (a) investment in Subsidiaries to (b) the shareholders' equity of the Borrower. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (a) the protection of the environment, (b) the effect of the environment on human health, (c) emission, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (d) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "Eurodollar Advance" means an Advance which, except as otherwise provided in Section 2.10, bears interest at the Eurodollar Rate. "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest Period. "Eurodollar Loan" means a Loan which, except as otherwise provided in Section 2.10, bears interest at the Eurodollar Rate. "Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (b) 0.50% per annum. "Excess Net Capital" means, at any time, "excess net capital" computed in accordance with Rule 15c3-1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it by (a) the jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (b) any jurisdiction in which such Lender or the Agent maintains a lending office. "Extension Date" is defined in Section 2.18. "Extension Period" is defined in Section 2.18. "Extension Request" is defined in Section 2.18. "FOCUS Report" means, for any Person, the Financial and Operational Combined Uniform Single Report required to be filed on a monthly or quarterly basis, as the case may be, with the Commission or the NYSE, or any report that is required in lieu of such report. "Facility Fee" is defined in Section 2.4. "Facility Termination Date" means October 24, 2000 or any later date as may be specified as the Facility Termination Date in accordance with Section 2.18 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof. "Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "Financial Statements" is defined in Section 5.5. "Fiscal Quarter" means one of the four three-month accounting periods comprising a Fiscal Year. "Fiscal Year" means the twelve-month accounting period ending on the last Friday in September of each year. "Floating Rate Advance" means an Advance which, except as otherwise provided in Section 2.10, bears interest at the Alternate Base Rate. "Floating Rate Loan" means a Loan which, except as otherwise provided in Section 2.10, bears interest at the Alternate Base Rate. "Governmental Authority" means any government (foreign or domestic) or any state or other political subdivision thereof or any governmental body, agency, authority, department or commission (including without limitation any taxing authority or political subdivision) or any instrumentality or officer thereof (including without limitation any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned or controlled by or subject to the control of any of the foregoing. "Indebtedness" of a Person means such Person's (a) obligations for borrowed money, (b) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, or other instruments, (e) Capitalized Lease Obligations, (f) Contingent Obligations, (g) obligations for which such Person is obligated pursuant to or in respect of a Letter of Credit, and (h) any other obligation for borrowed money which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person. "Interest Period" means, with respect to a Eurodollar Advance, a period of one, two or three months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two or three months thereafter; provided, however, that if there is no such numerically corresponding day in such next, second or third succeeding month, such Interest Period shall end on the last Business Day of such next, second or third succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day; provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day. "Investment" of a Person means any (a) loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; (b) stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; (c) any deposit accounts and certificate of deposit owned by such Person; and (d) structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person; provided, however, that in regard to clauses (b), (c) and (d), "Investment" shall not include any such securities, accounts or instruments owned or acquired by the Borrower or its Subsidiaries in the ordinary course of its business as heretofore conducted, including but not limited to the market making activities of RJA. "Investment Company Act" means the Investment Company Act of 1940, as amended. "Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. "Lending Installation" means, with respect to a Lender or the Agent, the office, branch, subsidiary or affiliate of such Lender or the Agent listed on the signature pages hereof or otherwise selected by such Lender or the Agent pursuant to Section 2.15. "Letter of Credit" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable. "Lien" means any security interest, lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "Loan" means, with respect to a Lender, such Lender's loan made pursuant to Article II (or any conversion or continuation thereof). "Loan Documents" means this Agreement, any Notes issued pursuant to Section 2.17 and the other documents and agreements contemplated hereby and executed by the Borrower in favor of the Agent or any Lender. "MSRB" means the Municipal Securities Rulemaking Board and any successor entity. "Margin Stock" has the meaning assigned to that term under Regulation U. "Material Adverse Effect" means a material adverse effect on (a) the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under the Loan Documents, or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent or the Lenders thereunder. "Material Subsidiary" means (a) any of the Subsidiaries listed on Schedule I hereto and (b) in the case of any specified condition or event, any other Subsidiary or group of other Subsidiaries (i) each of which has suffered such condition or event to occur and (ii) that in the aggregate represents five percent (5%) or more of the net revenues or the consolidated assets of the Borrower and its Subsidiaries, as reflected in the then most recent financial statements delivered pursuant to Section 6.1(a) or (b). "NASD" means the National Association of Securities Dealers, Inc. "NYSE" means the New York Stock Exchange, Inc. "Net Capital" means, at any time, "net capital" computed in accordance with Rule 15c3-1. "Net Income" means, for any computation period, with respect to the Borrower on a consolidated basis with its Subsidiaries (other than any Subsidiary which is restricted from declaring or paying dividends or otherwise advancing funds to its parent whether by contract or otherwise), cumulative net income earned during such period as determined in accordance with Agreement Accounting Principles. "Non-U.S. Lender" is defined in Section 3.5(iv). "Note" means any promissory note issued at the request of a Lender pursuant to Section 2.17. "Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent or any indemnified party arising under the Loan Documents. "Other Taxes" is defined in Section 3.5(ii). "PBGC" means the Pension Benefit Guaranty Corporation and any successor thereto. "Participants" is defined in Section 12.2.1. "Payment Date" means the last day of each March, June, September and December. "Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any Governmental Authority. "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person. "pro-rata" means, when used with respect to a Lender, and any described aggregate or total amount, an amount equal to such Lender's pro-rata share or portion based on its percentage of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, its percentage of the aggregate principal amount of outstanding Advances. "Purchasers" is defined in Section 12.3.1. "RJA" means Raymond James & Associates, Inc. and any successor entity. "RJFS" means Raymond James Financial Services, Inc. and any successor entity. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to depositary institutions. "Regulation T" means Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and shall include any successor or other regulation or official interpretation of such Board of Governors relating to the extension of credit by securities brokers and dealers for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by the specified lenders for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "Required Lenders" means Lenders in the aggregate having at least 51% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 51% of the aggregate unpaid principal amount of the outstanding Advances. "Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "Risk-Based Capital Guidelines" is defined in Section 3.2. "Rule 15c3-1" means Rule 15c3-1 of the General Rules and Regulations as promulgated by the Commission under the Exchange Act, as such rule may be amended from time to time, or any rule or regulation of the Commission which replaces Rule 15c3-1. "Rule 15c3-3" means Rule 15c3-3 of the General Rules and Regulations as promulgated by the Commission under the Exchange Act, as such rule may be amended from time to time, or any rule or regulation of the Commission which replaces Rule 15c3-3. "SIPA" means the Security Investor Protection Act of 1970, as amended. "SIPC" means the Securities Investor Protection Corporation or any successor entity. "Section" means a numbered section of this Agreement, unless another document is specifically referenced. "Self-Regulatory Organization" has the meaning assigned to such term in Section 3(a)(26) of the Exchange Act. "Single Employer Plan" means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group. "Subsidiary" of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled, or (c) any other corporation or entity which for financial reporting purposes is consolidated with the Borrower in accordance with Agreement Accounting Principles. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower. "Substantial Portion" means, with respect to the Property of the Borrower and its Subsidiaries, Property which (a) represents more than 10% of the consolidated assets of the Borrower and its Subsidiaries as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (b) is responsible for more than 15% of the consolidated net sales or Net Income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in clause (a) above. "Tangible Net Worth" means, at any date, the consolidated stockholders' equity of the Borrower and its consolidated Subsidiaries determined in accordance with Agreement Accounting Principles, less their consolidated Intangible Assets, all determined as of such date. For purposes of this definition, "Intangible Assets" means the amount (to the extent reflected in determining such consolidated stockholders' equity) of (i) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of assets of a going concern business made within twelve months after the acquisition of such business) subsequent to June 30, 1999 in the book value of any asset owned by the Borrower or a consolidated Subsidiary, and (ii) all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, organization or developmental expenses and other intangible items. "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes. "Term Credit Agreement" means the $50,000,000 Term Credit Agreement of even date herewith among the Borrower, the Agent and the Lenders providing for a three-year term loan, subject to extension, as such agreement may be amended, modified or restated and in effect from time to time. "Transferee" is defined in Section 12.4. "Type" means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance. "Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. "Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (b) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. "Year 2000 Issues" means anticipated costs, problems and uncertainties associated with the inability of certain computer applications to effectively handle data including dates on and after January 1, 2000, as such inability affects the business, operations and financial condition of the Borrower and its Subsidiaries and of the Borrower's and its Subsidiaries' material customers, suppliers and vendors. "Year 2000 Program" is defined in Section 5.16. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II THE CREDITS 2.1. Advances. (a) From and including the date of this Agreement and prior to the Facility Termination Date, each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Loans to the Borrower from time to time in amounts not to exceed in the aggregate at any one time outstanding the amount of its Commitment. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Advances at any time prior to the Facility Termination Date. The Commitments to lend hereunder shall expire on the Facility Termination Date. (b)The Borrower hereby agrees that if at any time, as a result of reductions in the Aggregate Commitment pursuant to Section 2.4 or otherwise, the aggregate balance of the Loans exceeds the Aggregate Commitment, the Borrower shall repay immediately its then outstanding Loans in such amount as may be necessary to eliminate such excess. (c)Any outstanding Advances and all other unpaid Obligations shall be paid in full by the Borrower on the Facility Termination Date. 2.2. Ratable Loans. Each Advance hereunder shall consist of Loans made from the several Lenders ratably in proportion to the ratio that their respective Commitments bear to the Aggregate Commitment. 2.3. Types of Advances. The Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by the Borrower in accordance with Sections 2.7 and 2.8. 2.4. Facility Fee; Reductions in Aggregate Commitment. (a) The Borrower agrees to pay to the Agent for the account of each Lender a facility fee (the "Facility Fee") in an amount equal to 0.125% per annum times the daily average Commitment of such Lender (regardless of usage) from the date hereof to and including the Facility Termination Date, payable quarterly in arrears on the last Business Day of each calendar quarter hereafter and on the Facility Termination Date. All accrued Facility Fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder. (b)The Borrower may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, upon at least five Business Days' written notice to the Agent, which notice shall specify the amount of any such reduction; provided, however, that the amount of the Aggregate Commitment may not be reduced below the aggregate principal amount of the outstanding Advances. 2.5. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof), and each Floating Rate Advance shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof); provided, however, that (a) any Floating Rate Advance may be in the amount of the unused Aggregate Commitment and (b) in no event shall more than five (5) Eurodollar Advances be permitted to be outstanding at any time. 2.6. Optional Principal Payments. The Borrower may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Floating Rate Advances upon two Business Days' prior notice to the Agent. The Borrower may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurodollar Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Eurodollar Advances upon three Business Days' prior notice to the Agent. 2.7. Method of Selecting Types and Interest Periods for New Advances. The Borrower shall select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable to each Advance from time to time. The Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m. (Chicago time) at least one Business Day before the Borrowing Date of each Floating Rate Advance and three Business Days before the Borrowing Date for each Eurodollar Advance, specifying: (a)the Borrowing Date of such Advance, which shall be a Business Day; (b)the aggregate amount of such Advance; (c)the Type of Advance selected; and (d)in the case of each Eurodollar Advance, the Interest Period applicable thereto, which shall end on or prior to the Facility Termination Date. Not later than noon (Chicago time) on each Borrowing Date, each Lender shall make available its Loan or Loans, in funds immediately available in Chicago, to the Agent at its address specified pursuant to Article XIII. The Agent will make the funds so received from the Lenders available to the Borrower at the Agent's aforesaid address. 2.8. Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances pursuant to this Section 2.8 or are repaid in accordance with Section 2.6. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.6 or (y) the Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest Period. Subject to the terms of Section 2.5, the Borrower may elect from time to time to convert all or any part of a Floating Rate Advance into a Eurodollar Advance. The Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of a Floating Rate Advance into a Eurodollar Advance or of the continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least three Business Days prior to the date of the requested conversion or continuation, specifying: (a)the requested date of such conversion or continuation, which shall be a Business Day; (b)the aggregate amount and Type of the Advance which is to be converted or continued; and (c)the amount of such Advance which is to be converted into or continued as a Eurodollar Advance and the duration of the Interest Period applicable thereto, which shall end on or prior to the Facility Termination Date. 2.9. Changes in Interest Rate, etc. (a) Each Floating Rate Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is automatically converted from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.8, to but excluding the date it is paid or is converted into a Eurodollar Advance pursuant to Section 2.8, at a rate per annum equal to the Alternate Base Rate. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by the Agent as applicable to such Eurodollar Advance based upon the Borrower's selections under Sections 2.7 and 2.8 and otherwise in accordance with the terms hereof. No Interest Period may end after the Facility Termination Date. (b) Notwithstanding anything to the contrary contained in this Agreement, any Advances made or converted into Floating Rate Advances during the period from and including December 1, 1999 through and including January 31, 2000 will bear interest at a rate per annum during such period equal to the highest of (i) the Corporate Base Rate for each day during such period, (ii) the sum of the Federal Funds Effective Rate for each day during such period plus .50% per annum, or (iii) the sum of the then current Federal Reserve Board Open Market Committee's "Target Fed Funds Rate" for each day during such period plus 1.50% per annum. 2.10. Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.7 or 2.8, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrower, declare that no Advance may be made as, converted into or continued as a Eurodollar Advance. During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that each Eurodollar Advance and Floating Rate Advance shall bear interest (for the remainder of the applicable Interest Period in the case of Eurodollar Advances) at a rate per annum equal to the Alternate Base Rate plus two percent (2%) per annum; provided, however, that such increased rate shall automatically and without action of any kind by the Lenders become and remain applicable until revoked by the Required Lenders in the event of a Default described in Section 7.6 or 7.7. 2.11. Method of Payment. All payments of the Obligations hereunder shall be made, without setoff, deduction or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIII, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by noon (Chicago time) on the date when due and shall be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received by the Agent from such Lender. The Agent is hereby authorized to charge the account of the Borrower maintained with Bank One for each payment of principal, interest and fees as it becomes due hereunder. 2.12. Telephonic Notices. The Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrower, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuance Notices to be given telephonically. The Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error. 2.13. Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which a Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest and Facility Fees shall be calculated for actual days elapsed on the basis of a 360-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (Chicago time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.14. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.15. Lending Installations. Each Lender may book its Loans at any Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loans and any Notes issued hereunder shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written notice to the Agent and the Borrower in accordance with Article XIII, designate replacement or additional Lending Installations through which Loans will be made by it and for whose account Loan payments are to be made. 2.16. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (a) in the case of a Lender, the amount of a Loan, or (b) in the case of the Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the first three days and thereafter, the interest rate applicable to the relevant Loan, or (y) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan. 2.17. Noteless Agreement; Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (b) The Agent shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder and the Type thereof, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. (c) The entries maintained in the accounts maintained pursuant to paragraphs (a) and (b) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded (and, in the case of any inconsistency between the records of the Agent and any Lender, the records of the Agent shall be the prima facie evidence that controls with respect to the Borrower); provided, however, that the failure of the Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms. (d) Any Lender may request that its Loans be evidenced by a promissory note (a "Note"). In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in a form incorporating the terms of this Agreement supplied by the Agent. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (a) and (b) above. The execution and delivery of each Note shall take place at the principal office of the Agent in Chicago or such other place agreed to by the parties. 2.18. Extension of Facility Termination Date. The Borrower may request an extension of the Facility Termination Date by submitting a request for an extension to the Agent (an "Extension Request") no more than 45 days, but no less than 30 days, prior to the then effective Facility Termination Date. Each extension effected pursuant to this Section 2.18 shall commence on the then effective Facility Termination Date (the "Extension Date"). The Extension Request must specify the new Facility Termination Date requested by the Borrower, which date shall be no more than 364 days (the "Extension Period") after the Extension Date, including the Extension Date as one of the days in the calculation of the days elapsed. Promptly upon receipt of an Extension Request, the Agent shall notify each Lender of the contents thereof and shall request each Lender to approve the Extension Request. Each Lender approving the Extension Request shall deliver its written consent to the Agent no earlier than 30 days prior to the then effective Facility Termination Date and no later than 20 days after receipt of the Extension Request. In the event that a Lender shall fail to notify the Agent within such period as to whether it agrees to the Extension Request, such Lender shall be deemed to have refused the Extension Request. If the consent of the Required Lenders is timely received by the Agent, the new Facility Termination Date specified in the Extension Request shall become effective on the Extension Date as to such consenting Lenders only (and not as to any Lender which has not consented to such extension), and the Agent shall promptly notify the Borrower and each consenting Lender of the new Facility Termination Date and new Aggregate Commitment. Notwithstanding anything contained in this Agreement to the contrary, (a) all Obligations hereunder owing to the non- extending Lenders shall be due and payable on the Facility Termination Date without giving effect to any requested extension, (b) the Aggregate Commitment as of the commencement of the Extension Period shall be reduced to an amount equal to the sum of the Commitments of the Lenders ultimately consenting to the Extension Request, and (c) each Lender may, in its sole discretion, grant or deny its consent with respect to any proposed Extension Request. Any Lender not granting the Extension Request shall, if the Borrower has selected an assignee for such Lender reasonably acceptable to the Agent prior to the Extension Date, promptly assign to such assignee its rights and obligations hereunder in respect of all or that portion of such Lender's Commitment as such assignee is willing to accept, all in accordance with Section 12.3. 2.19. Replacement of Lender. If the Borrower is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any Lender's obligation to make or continue, or to convert Floating Rate Advances into, Eurodollar Advances shall be suspended pursuant to Section 3.3 (any Lender so affected an "Affected Lender"), the Borrower may elect, if such amounts continue to be charged or such suspension is still effective, to replace such Affected Lender as a Lender party to this Agreement, provided that no Default or Unmatured Default shall have occurred and be continuing at the time of such replacement, and provided further that, concurrently with such replacement, (a) another bank or other entity which is reasonably satisfactory to the Borrower and the Agent shall agree, as of such date, to purchase for cash the Advances and other Obligations due to the Affected Lender pursuant to an assignment substantially in the form of Exhibit B at par and to become a Lender for all purposes under this Agreement and to assume all obligations of the Affected Lender to be terminated as of such date and to comply with the requirements of Section 12.3 applicable to assignments, and (b) the Borrower shall pay to such Affected Lender in same day funds on the day of such replacement all interest, fees and other amounts then accrued but unpaid to such Affected Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Affected Lender under Sections 3.l, 3.2 and 3.5, and an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 3.4 had the Loans of such Affected Lender been prepaid on such date rather than sold to the replacement Lender. ARTICLE III YIELD PROTECTION; TAXES 3.1. Yield Protection. If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: (i) subjects any Lender or any applicable Lending Installation to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender in respect of its Eurodollar Loans, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than the amount of reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining its Eurodollar Loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with its Eurodollar Loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Eurodollar Loans held or interest received by it, by an amount deemed material by such Lender, and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Eurodollar Loans or Commitment or to reduce the return received by such Lender or applicable Lending Installation in connection with such Eurodollar Loans or Commitment, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received. 3.2. Changes in Capital Adequacy Regulations. If a Lender determines the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans or its Commitment to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3. Availability of Types of Advances. If any Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or converted to Floating Rate Advances, subject to the payment of any funding indemnification amounts required by Section 3.4. 3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by the Borrower for any reason other than default by the Lenders, the Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Advance. 3.5. Taxes. (i) All payments by the Borrower to or for the account of any Lender or the Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all Taxes. If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to the Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. (ii) In addition, the Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note ("Other Taxes"). (iii) The Borrower hereby agrees to indemnify the Agent and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by the Agent or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Agent or such Lender makes demand therefor pursuant to Section 3.6. (iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Lender") agrees that it will, not less than ten Business Days after the date of this Agreement, (i) deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Borrower and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Borrower and the Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Borrower or the Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax. (v) For any period during which a Non-U.S. Lender has failed to provide the Borrower with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Borrower shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes. (vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate. (vii) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly completed, because such Lender failed to notify the Agent of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under this Section 3.5(vii) shall survive the payment of the Obligations and termination of this Agreement. 3.6. Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement. ARTICLE IV CONDITIONS PRECEDENT 4.1. Initial Loans. The Lenders shall not be required to make the initial Advance hereunder unless the Borrower has furnished the following to the Agent with sufficient copies for the Lenders and the other conditions set forth below have been satisfied, in each case on a date (the "Closing Date") on or before October 30, 1999: (a)Charter Documents; Good Standing Certificates. Copies of the certificate of incorporation of the Borrower, together with all amendments thereto, certified by the Secretary of State of Florida, together with good standing certificates (i) as to the Borrower, from the State of Florida and (ii) as to RJA, from the States of Florida, New York and Michigan. (b)By-Laws and Resolutions. Copies, certified by the Secretary or Assistant Secretary of the Borrower, of its by-laws and of its Board of Directors' resolutions authorizing the execution, delivery and performance of the Loan Documents to which the Borrower is a party. (c)Secretary's Certificate. An incumbency certificate, executed by the Secretary or Assistant Secretary of the Borrower, which shall identify by name and title and bear the signature of the officers of the Borrower authorized to sign the Loan Documents and to make borrowings hereunder, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower. (d)Officer's Certificate. A certificate, dated the date of this Agreement, signed by the chief financial officer of the Borrower, in form and substance satisfactory to the Agent, to the effect that: (i) on such date (both before and after giving effect to the making of any Loans hereunder) no Default or Unmatured Default has occurred and is continuing and (ii) each of the representations and warranties set forth in Article V of this Agreement is true and correct on and as of such date. (e)Legal Opinion. A favorable written opinion of Paul Matecki, Esq., Senior Vice President and Corporate Counsel to the Borrower, addressed to the Agent and the Lenders in form and substance acceptable to the Agent and its counsel. (f)Loan Documents. Executed originals of this Agreement, each of the other Loan Documents (including any Notes requested by a Lender pursuant to Section 2.17 payable to the order of such requesting Lender), and the Term Credit Agreement, which shall be in full force and effect, together with all schedules, exhibits, certificates, instruments, opinions, documents and financial statements required to be delivered pursuant hereto and thereto. (g)Financial Statements. Copies of the Financial Statements and the RJA/RJFS FOCUS Reports referred to in Section 5.5. (h)Letter of Direction. Written money transfer instructions with respect to the initial Advance and, until otherwise instructed, as to future Advances in form and substance acceptable to the Agent signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested. (i)Year 2000 Program. Information satisfactory to the Agent regarding the Borrower's Year 2000 Program. (j)Payment of Fees. The Borrower shall have paid all accrued and unpaid fees, costs and expenses to the extent due and payable on or prior to the execution of this Agreement, including, but not limited to, the fees referred to in Section 10.13 and, to the extent invoiced, the attorneys' fees, time charges and disbursements referred to in Section 9.6. (k)Other. Such other documents as the Agent, any Lender or their counsel may have reasonably requested. 4.2. Each Future Advance. The Lenders shall not be required to make any Advance unless on the applicable Borrowing Date: (a)There exists no Default or Unmatured Default and none would result from such Advance; (b)The representations and warranties contained in Article V are true and correct as of such Borrowing Date, including the representations and warranties set forth in Section 5.6 and the first sentence of Section 5.8; and (c)A Borrowing Notice shall have been properly submitted. Each Borrowing Notice with respect to each such Advance shall constitute a representation and warranty by the Borrower that the conditions contained in Section 4.2 have been satisfied. Any Lender may require a duly completed Compliance Certificate as a condition to making an Advance. ARTICLE V REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Lenders that: 5.1. Corporate Existence; Conduct of Business. Each of the Borrower and each Material Subsidiary (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, (b) is duly qualified and in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, except where failure to be so qualified will not have a Material Adverse Effect, and (c) has all requisite corporate power, and possesses all licenses, registrations and authorizations from and with any Governmental Authority, Self-Regulatory Organization or securities exchange, necessary or material to the conduct of its business as now or presently proposed to be conducted. RJA and RJFS each is (i) duly registered with the Commission as a broker-dealer under the Exchange Act, (ii) a member in good standing of the NASD and, as to RJA, a member organization in good standing of the NYSE, (iii) not in arrears in regard to any assessment made upon it by the SIPC, and (iv) has received no notice from the Commission, NASD, MSRB, CFTC or any other Governmental Authority, Self-Regulatory Organization or securities exchange of any alleged rule violation or other circumstance which could reasonably be expected to have a Material Adverse Effect, except as disclosed in the Financial Statements. 5.2. Authorization and Validity. The Borrower has all requisite power and authority (corporate and otherwise) and legal right to execute and deliver each of the Loan Documents and to perform its obligations thereunder. The execution and delivery by the Borrower of the Loan Documents and the performance of its obligations thereunder have been duly authorized by proper corporate proceedings and the Loan Documents constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity limiting the availability of equitable remedies. 5.3. Compliance with Laws and Contracts. The Borrower and its Subsidiaries (including RJA and RJFS) have complied in all material respects with all applicable laws, statutes, and rules, regulations, orders and decrees or restrictions of any Governmental Authority, Self-Regulatory Organization or securities exchange having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties (including, without limitation, the Exchange Act, the Advisers Act, the Investment Company Act, the CEA, and the applicable rules and regulations of the Commission, NASD, NYSE, MSRB and CFTC), except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Without limiting the foregoing, the Borrower and its Material Subsidiaries are in compliance with all applicable capital requirements of all Governmental Authorities (including, without limitation, Rule 15c3- 1). Neither the execution and delivery by the Borrower of the Loan Documents, the application of the proceeds of the Loans, the consummation of any transaction contemplated by the Loan Documents, nor compliance with the provisions of the Loan Documents will, or at the relevant time did, (a) violate any law, rule, regulation (including Regulations T, U and X), order, writ, judgment, injunction, decree or award binding on the Borrower or any Subsidiary, (b) violate or conflict with the Borrower's or any Subsidiary's charter, articles or certificate of incorporation or by-laws, (c) violate the provisions of or require the approval or consent of any party to any indenture, instrument or agreement to which the Borrower or any Subsidiary is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien (other than Liens permitted by Section 6.17) in, of or on the Property of the Borrower or any Subsidiary pursuant to the terms of any such indenture, instrument or agreement, or (d) require the consent or approval of any Person, except for any violation of, or failure to obtain an approval or consent required under, any such indenture, instrument or agreement that could not have a Material Adverse Effect. 5.4. Governmental Consents. No order, consent, approval, qualification, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of, any Governmental Authority, Self-Regulatory Organization or securities exchange is necessary or required in connection with the execution, delivery, consummation or performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents, the application of the proceeds of the Loans, or the consummation of any other transaction contemplated by the Loan Documents. Neither the Borrower nor any Subsidiary is in default under or in violation of any foreign, Federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree or award binding upon or applicable to the Borrower or such Subsidiary, in each case the consequence of which default or violation could reasonably be expected to have a Material Adverse Effect. 5.5. Financial Statements. The Borrower has heretofore furnished to each of the Lenders (a) the September 25, 1998 audited consolidated financial statements of the Borrower and its Subsidiaries and (b) the June 25, 1999 unaudited consolidated financial statements of the Borrower and its Subsidiaries (collectively, the "Financial Statements"). The Borrower has also heretofore furnished to each of the Lenders the December 25, 1998, March 25, 1999, June 25, 1999 and September 24, 1999 quarterly FOCUS Reports of RJA and RJFS (the "RJA/RJFS FOCUS Reports"). Each of the Financial Statements was prepared in accordance with Agreement Accounting Principles and fairly presents the consolidated financial condition, results of operations, changes in shareholders' equity and cash flows of the Borrower and its Subsidiaries at such dates and for the respective periods then ended (except, in the case of the unaudited statements, for normal year-end audit adjustments). The RJA/RJFS FOCUS Reports are correct and complete in all material respects and conform in all material respects to Exchange Act requirements and applicable Commission rules and regulations. 5.6. Material Adverse Change. No material adverse change in the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries taken as a whole has occurred since June 25, 1999. 5.7. Taxes. The Borrower and its Subsidiaries have filed or caused to be filed on a timely basis and in correct form all United States Federal and applicable state tax returns and all other material tax returns which are required to be filed and have paid all material taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any Subsidiary, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. As of the date hereof, the United States income tax returns of the Borrower on a consolidated basis have been audited by the Internal Revenue Service through its Fiscal Year ending September 29, 1995. There are no pending audits or investigations regarding the Borrower's or its Subsidiaries' Federal, state or local tax returns which could reasonably be expected to have a Material Adverse Effect. No tax liens have been filed and no claims are being asserted with respect to any such taxes which could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other governmental charges are in accordance with Agreement Accounting Principles. 5.8. Litigation and Contingent Obligations. There is no litigation, arbitration, proceeding, inquiry or investigation by any Governmental Authority, Self-Regulatory Organization or securities exchange pending or, to the knowledge of any of the Borrower's officers, threatened against or affecting the Borrower or any Subsidiary or any of their respective Properties which could reasonably be expected to have a Material Adverse Effect or to prevent, enjoin or unduly delay the making of the Loans or the consummation of the transactions contemplated by this Agreement. The Borrower and its Subsidiaries have no material contingent obligations not provided for or disclosed in the Financial Statements. 5.9. Subsidiaries. Schedule I hereto contains an accurate list of all of the Borrower's Material Subsidiaries as of the date of this Agreement, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Borrower or other Subsidiaries. All of the outstanding shares of capital stock and other equity interests of each Subsidiary are validly issued and outstanding and fully paid and nonassessable, and all such shares and other equity interests owned by the Borrower or a Subsidiary are owned, beneficially and of record, by the Borrower or such Subsidiary free and clear of all Liens. 5.10. ERISA. There are no Unfunded Liabilities relating to any Single Employer Plan. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other member of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan. The Borrower is not an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Loans hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. 5.11. Defaults. No Default or Unmatured Default has occurred and is continuing. 5.12. Federal Reserve Regulations. Neither the making of any Advance hereunder or the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulation T, Regulation U or Regulation X. Following the application of the proceeds of the Loans, less than 25% of the value of the assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge or other restriction hereunder taken as a whole have been, and will continue to be, represented by Margin Stock. 5.13. Investment Company; Public Utility Holding Company. Neither the Borrower nor any Subsidiary is, or after giving effect to any Advance will be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Neither the Borrower nor any Subsidiary is a "holding company" within the meaning of, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended. 5.14. Ownership of Properties. The Borrower and its Subsidiaries have a subsisting leasehold interest in, or good and marketable title to, free of all Liens, other than those permitted by Section 6.17, all of the properties and assets reflected in the Financial Statements as being owned by it, except for assets sold, transferred or otherwise disposed of in the ordinary course of business since the date thereof. 5.15. Material Agreements. Neither the Borrower nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect or which restricts or imposes conditions upon the ability of any Material Subsidiary to (a) pay dividends or make other distributions on its capital stock, (b) make loans or advances to the Borrower, (c) repay loans or advances from the Borrower or (d) grant Liens to the Agent to secure the Obligations. Neither the Borrower nor any Material Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect or (ii) any agreement or instrument evidencing or governing Indebtedness. 5.16. Year 2000. The Borrower has made a full and complete assessment of the Year 2000 Issues and has a realistic and achievable program for remediating the Year 2000 Issues on a timely basis (the "Year 2000 Program"). Based on such assessment and on the Year 2000 Program, the Borrower does not reasonably anticipate that Year 2000 Issues will have a Material Adverse Effect, except as the securities industry or securities markets may be affected generally. 5.17. Insurance. The Borrower and its Subsidiaries maintain with financially sound and reputable insurance companies insurance on their Property in such amounts and covering such risks as is consistent with sound business practice. 5.18. Disclosure. None of the (a) information, exhibits or reports furnished by the Borrower or any Subsidiary to the Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents, or (b) representations or warranties of the Borrower or any Subsidiary contained in this Agreement, the other Loan Documents or any other document, certificate or written statement furnished to the Agent or the Lenders by or on behalf of the Borrower or any Subsidiary pursuant to this Agreement, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which they were made. There is no fact known to any Authorized Officer (other than matters generally affecting the economy or the financial services industry) that has had or could reasonably be expected to have a Material Adverse Effect and that has not been disclosed herein or in such other documents, certificates and statements furnished to the Lenders for use in connection with the transactions contemplated by this Agreement. ARTICLE VI COVENANTS During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1. Financial Reporting. The Borrower will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with Agreement Accounting Principles, consistently applied, and will furnish to the Lenders: (a)As soon as practicable and in any event within 90 days after the close of each of its Fiscal Years, an unqualified audit report from PricewaterhouseCoopers LLP or other independent certified public accountants acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated and consolidating basis (consolidating statements need not be certified by such accountants) for itself and its Subsidiaries, including balance sheets as of the end of such period and related statements of income, changes in shareholders' equity and cash flows, and accompanied by (i) any management letter prepared by said accountants (when available) and (ii) a certificate of said accountants that, in the course of the examination necessary for the preparation of their audit report, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof. (b)As soon as practicable and in any event within 45 days after the close of the first three Fiscal Quarters of each of its Fiscal Years, for itself and its Subsidiaries, consolidated and consolidating unaudited balance sheets as at the close of each such period and consolidated and consolidating statements of income, changes in shareholders' equity and cash flows for the period from the beginning of such Fiscal Year to the end of such quarter, all certified by its chief financial officer. (c)As soon as practicable and in any event within 25 days after the close of each Fiscal Quarter, the FOCUS Report for such Fiscal Quarter filed by RJA and RJFS with the Commission. (d)Together with the financial statements required by clauses (a) and (b) above, a Compliance Certificate signed by its chief financial officer showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (e)Within 270 days after the close of each Fiscal Year, a statement of the Unfunded Liabilities of each Single Employer Plan, if any, certified as correct by an actuary enrolled under ERISA. (f)As soon as possible and in any event within 10 days after any Authorized Officer of the Borrower learns thereof, notice of the assertion or commencement of any claim, action, litigation, suit or proceeding against or affecting the Borrower or any Subsidiary, including any investigation or proceeding commenced by the Commission, NASD, MSRB, NYSE or any other Governmental Authority, Self-Regulatory Organization or securities exchange, which could reasonably be expected to have a Material Adverse Effect. (g)Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished. (h)Within 15 days after the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower files with the Commission and, upon request, any such reports filed by any Subsidiary. (i)Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary to, use the proceeds of the Advances for general corporate purposes, including without limitation friendly acquisitions, share repurchases and asset purchases. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to (i) purchase or carry any Margin Stock in violation of Regulation T, Regulation U or Regulation X, (ii) finance the Acquisition of any Person which has not been approved and recommended by the board of directors (or functional equivalent thereof) of such Person, or (iii) fund subordinated loans from the Borrower to any of its Subsidiaries. 6.3. Notice of Default. Within 10 days after any Authorized Officer of the Borrower has knowledge thereof, the Borrower will give notice in writing to the Lenders of the occurrence of (a) any Default or Unmatured Default or (b) any other event or development, financial or otherwise (including, without limitation, developments with respect to Year 2000 Issues), which could reasonably be expected to have a Material Adverse Effect other than matters generally affecting the economy or the financial services industry. 6.4. Conduct of Business. The Borrower will, and will cause each Material Subsidiary to, (a) subject to Section 6.13(c), preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, (b) maintain all registrations, licenses, consents, approvals and authorizations from and with any Governmental Authority, Self- Regulatory Organization or securities exchange necessary or material to the conduct of its business, and (c) qualify and remain qualified as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, except where failure to qualify could not have a Material Adverse Effect. The Borrower will not, and will not permit any of its Material Subsidiaries to, engage in any material line of business substantially different from those lines of business carried on by it on the date hereof. 6.5. Taxes. The Borrower will, and will cause each Subsidiary to, timely file complete and correct United States Federal and applicable foreign, state and local tax returns required by applicable law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles. 6.6. Insurance. The Borrower will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance companies insurance in such amounts and covering such risks as is consistent with sound business practice, and the Borrower will furnish to the Agent and any Lender upon request full information as to the insurance carried. 6.7. Compliance with Laws. The Borrower will, and will cause each Subsidiary to, comply with all laws, statutes (including, without limitation, the Exchange Act, the Advisers Act, the Investment Company Act and applicable Environmental Laws), rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject. 6.8. Maintenance of Properties. The Borrower will, and will cause each Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. 6.9. Inspection. The Borrower will, and will cause each Subsidiary to, permit the Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, corporate books and financial records of the Borrower and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Agent or any Lender may designate. The Borrower will keep or cause to be kept, and cause each Subsidiary to keep or cause to be kept, appropriate records and books of account in which complete entries are to be made reflecting its and their business and financial transactions, such entries to be made in accordance with Agreement Accounting Principles consistently applied. 6.10. Year 2000. The Borrower will take, and will cause each of its Subsidiaries to take, all such actions as are reasonably necessary to successfully implement the Year 2000 Program as to assure that Year 2000 Issues will not have a Material Adverse Effect. At the request of the Agent, the Borrower will provide a description of the Year 2000 Program, together with any updates or progress reports with respect thereto. 6.11. Ownership of Subsidiaries. The Borrower will continue to own, directly or indirectly, beneficially and of record, free and clear of all Liens and restrictions, 75% of the outstanding shares of capital stock each of RJA and RJFS. 6.12. Indebtedness. The Borrower will not, nor will it permit any Subsidiary to, create, incur or suffer to exist any Indebtedness, except: (a)The Loans hereunder and Indebtedness under the Term Credit Agreement; (b)Existing Indebtedness described on Schedule II hereto; (c)Securities sold under agreements to repurchase (to the extent such obligations constitute Indebtedness); (d)Contingent Obligations permitted by Section 6.16; (e)Capital Lease Obligations and purchase money Indebtedness not exceeding $10,000,000 in the aggregate at any time outstanding; (f)(i) Moneys due to counterparties under stock loan transactions, (ii) liabilities to customers for cash on deposit, and (iii) liabilities to brokers, dealers and clearing organizations relating to the settlement of securities transactions; (g)Indebtedness of Raymond James Credit Corporation in an aggregate principal amount not exceeding $100,000,000 used to finance loans collateralized by public company restricted or control shares; (h)Indebtedness of any Subsidiary for borrowed money from the Borrower which represents unsubordinated Indebtedness of such Subsidiary; and (i) Unsecured Indebtedness not otherwise permitted by this Section 6.12 in an aggregate principal amount not exceeding $5,000,000. 6.13. Merger. The Borrower will not, nor will it permit any Subsidiary to, merge or consolidate with or into any other Person, except that (a) a Wholly-Owned Subsidiary may merge into the Borrower or any Wholly-Owned Subsidiary of the Borrower, (b) the Borrower or any Subsidiary may merge or consolidate with any other Person so long as the Borrower or such Subsidiary is the continuing or surviving corporation and, prior to and after giving effect to such merger or consolidation, no Default or Unmatured Default shall exist, and (c) any Subsidiary may enter into a merger or consolidation as a means of effecting a disposition permitted by Section 6.14. 6.14. Sale of Assets. The Borrower will not, nor will it permit any Subsidiary to, lease, sell, transfer or otherwise dispose of its Property, to any other Person except for (a) sales of securities sold in the ordinary course of business, and (b) leases, sales, transfers or other dispositions of its Property that, together with all other Property of the Borrower and its Subsidiaries previously leased, sold or disposed of (other than sales of securities sold in the ordinary course of business) as permitted by this Section 6.14 during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Borrower and its Subsidiaries. 6.15. Investments and Acquisitions. The Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any Investments (including, without limitation, loans and advances to, and other Investments in, Subsidiaries), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any Person, except: (a)Existing Investments in Subsidiaries and Affiliates; (b)Obligations of, or fully guaranteed by, the United States of America; commercial paper and other short-term notes and securities rated investment grade by a national securities rating agency; demand deposit accounts maintained in the ordinary course of business; and certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000; (c)Publicly-traded securities and private equity participations; (d)Acquisitions of or Investments in Subsidiaries or the capital stock, assets, obligations or other securities of or interest in other Persons provided that (i) each such Person shall be (x) in regard to Material Subsidiaries, incorporated, organized or otherwise formed under the laws of any state of the United States, and (y) engaged in a line of business not substantially different from those lines of business carried on by the Borrower and its Subsidiaries on the date hereof, (ii) the transaction (or any tender offer commencing a proposed transaction) shall have been approved and recommended by the board of directors (or functional equivalent thereof) of such Person, and (iii) no Default or Unmatured Default shall have occurred and be continuing either immediately before or after giving effect to such transaction and no Material Adverse Effect would result therefrom; and (e)Repurchases of up to 5,000,000 shares of the Borrower's common stock to fund the Borrower's incentive stock option and stock purchase plans and other corporate purposes. 6.16. Contingent Obligations. The Borrower will not, nor will it permit any Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (a) by endorsement of instruments for deposit or collection in the ordinary course of business, (b) guarantees by the Borrower of the Indebtedness of Raymond James Credit Corporation in an aggregate principal amount not exceeding $100,000,000 referred to in Section 6.12(g) and guarantees by the Borrower (or any Subsidiary) of the Indebtedness of any other Subsidiaries in an aggregate principal amount not exceeding $10,000,000, (c) guarantees by the Borrower with respect to settlement of securities transactions by its Affiliates extended to customers of, lenders to, or clearing agencies for, such Affiliates, and (d) guarantees by the Borrower of up to $45,000,000 with respect to the activities of Raymond James Tax Credit Funds, Inc. or any of its Subsidiaries. 6.17. Liens. The Borrower will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, except: (a)Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books; (b)Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure the payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books; (c)Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation; (d)Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or its Subsidiaries; (e)Liens securing the Indebtedness permitted by Sections 6.12(b) and (c); and (f)Liens incurred in the ordinary course of the settlement of securities transactions. 6.18. Affiliates. The Borrower will not, and will not permit any Subsidiary to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except (a) in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms and (b) transactions among the Borrower and Wholly-Owned Subsidiaries of the Borrower. 6.19. Change in Corporate Structure; Fiscal Year. The Borrower shall not, nor shall it permit any Material Subsidiary to, (a) permit any amendment or modification to be made to its certificate or articles of incorporation or by-laws which is materially adverse to the interests of the Lenders (provided that the Borrower shall notify the Agent of any other amendment or modification thereto as soon as practicable thereafter) or (b) change its Fiscal Year to end on any date other than the last Friday in September of each year. 6.20. Inconsistent Agreements. The Borrower shall not, nor shall it permit any Subsidiary to, enter into any indenture, agreement, instrument or other arrangement which (a) directly or indirectly prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence of the Obligations, the amending of the Loan Documents or the ability of any Subsidiary to (i) pay dividends or make other distributions on its capital stock, (ii) make loans or advances to the Borrower, or (iii) repay loans or advances from the Borrower or (b) contains any provision which would be violated or breached by the making of Advances or by the performance by the Borrower or any Subsidiary of any of its obligations under any Loan Document. 6.21. Financial Covenants. 6.21.1 Minimum Tangible Net Worth. The Borrower on a consolidated basis with its Subsidiaries at all times after the date hereof shall maintain Tangible Net Worth of not less than (i) $400,000,000 plus (ii) 50% of cumulative Net Income earned after September 24, 1999. 6.21.2 Double Leverage Ratio. The Borrower on a parent-only basis at all times after the date hereof shall maintain a Double Leverage Ratio of not more than 1.15 to 1.0. 6.21.3 RJA Net Capital. The Borrower shall cause RJA at all times after the date hereof to maintain a ratio (computed in accordance with Exhibit A to Rule 15c3-3, "Formula for Determination of Reserve Requirements for Brokers and Dealers") of Net Capital to Aggregate Debt Items of not less than 10%. 6.21.4 RJFS Net Capital. The Borrower shall cause RJFS at all times after the date hereof to maintain a ratio (computed in accordance with Exhibit A to Rule 15c3-3, "Formula for Determination of Reserve Requirements for Brokers and Dealers") of Aggregate Indebtedness to Net Capital of not more than 9.0 to 1.0. 6.21.5 RJA/RJFS Excess Net Capital. The Borrower shall cause RJA and RJFS at all times to have combined Excess Net Capital of not less than $100,000,000. ARTICLE VII DEFAULTS The occurrence of any one or more of the following events shall constitute a Default: 7.1. Representation or Warranty. Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement, any other Loan Document, any Loan, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be false in any material respect on the date as of which made or deemed made. 7.2. Non-Payment. (a) Nonpayment of any principal of any Loan when due, or (b) nonpayment of any interest upon any Loan or of any Facility Fee or other obligation under any of the Loan Documents within five days after the same becomes due. 7.3. Specific Defaults. The breach by the Borrower of any of the terms or provisions of Section 6.2, Section 6.3(a), Section 6.4 (second sentence only) or Sections 6.10 through 6.21. 7.4. Other Defaults. The breach by the Borrower (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement which is not remedied within 30 days after written notice from the Agent or any Lender. 7.5. Cross-Default. Failure of the Borrower or any of its Material Subsidiaries to pay when due any Indebtedness aggregating in excess of $5,000,000; or the default by the Borrower or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement or agreements under which any such Indebtedness was created or is governed (or the occurrence of any other event or existence of any other condition) the effect of any of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Borrower or any of its Material Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Borrower or any of its Material Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as then become due. 7.6. Insolvency; Voluntary Proceedings. The Borrower or any of its Material Subsidiaries shall (a) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (b) make an assignment for the benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (d) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (e) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6, or (f) fail to contest in good faith any appointment or proceeding described in Section 7.7. 7.7. Involuntary Proceedings. Without the application, approval or consent of the Borrower or any of its Material Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Material Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(d) shall be instituted against the Borrower or any of its Material Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 30 consecutive days. 7.8. Condemnation. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Borrower and its Subsidiaries which, when taken together with all other Property of the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion. 7.9. Judgments. (a) The Borrower or any of its Material Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge one or more judgments or orders for the payment of money in excess of $10,000,000 in the aggregate, or (b) the Borrower or any of its Subsidiaries shall fail to pay, bond or otherwise discharge one or more nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case of clauses (a) and (b), is/are not stayed on appeal or otherwise being appropriately contested in good faith. 7.10. Change in Control. Any Change in Control shall occur. 7.11. SIPC. The Commission or any Self-Regulatory Organization has notified the SIPC pursuant to Section 5(a)(1) of the SIPA of facts which indicate that the Borrower, RJA or RJFS is in or is approaching financial difficulty, or the SIPC shall file an application for a protective decree with respect to the Borrower, RJA or RJFS under Section 5(a)(3) of the SIPA. 7.12. Broker-Dealer License. The Commission or other Governmental Authority shall revoke or suspend the license or authorization of RJA and RJFS under Federal or state law to conduct business as a securities broker-dealer (and such license or authorization shall not be reinstated within 5 days), or RJA or RJFS shall be suspended or expelled from membership in the NASD, NYSE or any other Self-Regulatory Organization or securities exchange. 7.13. ERISA. The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $1,000,000 or any Reportable Event shall occur in connection with any Plan that could have a Material Adverse Effect. ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs with respect to the Borrower, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent or any Lender. If any other Default occurs, the Required Lenders (or the Agent with the consent of the Required Lenders) may terminate or suspend the obligations of the Lenders to make Loans hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives. If, within 30 Business Days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination. 8.2. Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of all of the Lenders: (a)Extend the final maturity of any Loan or forgive all or any portion of the principal amount thereof, or reduce the rate or extend the time of payment of interest or fees thereon. (b)Reduce the percentage specified in the definition of Required Lenders. (c)Extend the Facility Termination Date (other than as provided in Section 2.18), or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.1, or increase the amount of the Commitment of any Lender hereunder, or permit the Borrower to assign its Obligations or rights under this Agreement. (d)Amend this Section 8.2. No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement. 8.3. Preservation of Rights. No delay or omission of the Lenders or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full. ARTICLE IX GENERAL PROVISIONS 9.1. Survival of Representations. All representations and warranties of the Borrower contained in this Agreement shall survive the making of the Loans herein contemplated. 9.2. Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3. Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 9.4. Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrower, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrower, the Agent and the Lenders relating to the subject matter thereof other than the fee letter described in Section 10.13. 9.5. Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. 9.6. Expenses; Indemnification. The Borrower shall reimburse the Agent for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent) paid or incurred by the Agent in connection with the preparation, negotiation, execution, delivery, review, syndication, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent and the Lenders for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Agent and the Lenders, which attorneys may be employees of the Agent or the Lenders) paid or incurred by the Agent or any Lender in connection with the collection and enforcement of the Loan Documents. The Borrower further agrees to indemnify the Agent and each Lender, their respective affiliates, and each of their directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent or any Lender or any affiliate is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Loan hereunder, except to the extent that (i) they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification or (ii) they relate solely to a claim or claims between or among the Lenders unrelated to any alleged act or omission of the Borrower. The obligations of the Borrower under this Section 9.6 shall survive the termination of this Agreement. 9.7. Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders. 9.8. Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. 9.9. Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.10. Nonliability of Lenders. The relationship between the Borrower on the one hand and the Lenders and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. The Borrower agrees that neither the Agent nor any Lender shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non- appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 9.11. Confidentiality. Each Lender agrees to hold any confidential information which it may receive from the Borrower pursuant to this Agreement in confidence, except for disclosure (i) to its Affiliates and to other Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and other professional advisors to such Lender or to a Transferee (which Transferee has agreed to be bound by this Section 9.11), (iii) to regulatory officials, (iv) to any Person as required by law, regulation, or legal process, (v) to any Person in connection with any legal proceeding to which such Lender is a party, (vi) to such Lender's direct or indirect contractual counterparties in swap agreements (which counterparties have agreed to be bound by this Section 9.11) or to legal counsel, accountants and other professional advisors to such counterparties, and (vii) permitted by Section 12.4. The obligations of the Lenders under this Section 9.11 shall survive the termination of this Agreement. 9.12. Nonreliance. Each Lender hereby represents that it is not relying on or looking to any Margin Stock for the repayment of the Loans provided for herein. 9.13. Disclosure. The Borrower and each Lender hereby (i) acknowledge and agree that Bank One and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with the Borrower and its Affiliates, and (ii) waive any liability of Bank One or such Affiliate of Bank One to the Borrower or any Lender, respectively, arising out of or resulting from such investments, loans or relationships other than liabilities arising out of the gross negligence or willful misconduct of Bank One or its Affiliates. 9.14. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 9.15. CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK CITY. 9.16. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. ARTICLE X THE AGENT 10.1. Appointment; Nature of Relationship. Bank One, NA is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the "Agent") hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. 10.2. Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent. 10.3. General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non- appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person. 10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of the Borrower or any guarantor of any of the Obligations or of any of the Borrower's or any such guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the Borrower to the Agent (either in its capacity as Agent or in its individual capacity). 10.5. Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro- rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6. Employment of Agents and Counsel. The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent's duties hereunder and under any other Loan Document. 10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 10.8. Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement. 10.9. Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. 10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. 10.11. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 10.12. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of the Borrower or any Lender, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article X shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then the term "Corporate Base Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent. 10.13. Agent's Fee. The Borrower agrees to pay to the Agent, for its own account, the fees agreed to by the Borrower and the Agent pursuant to that certain letter agreement dated August 3, 1999, or as otherwise agreed from time to time. 10.14. Delegation to Affiliates. The Borrower and the Lenders agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles IX and X. 10.15. Syndication Agent, Co-Documentation Agents, etc. None of the Lenders identified in this Agreement as a "Syndication Agent" or a "Co-Documentation Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Agent in Section 10.11. ARTICLE XI SETOFF; RATABLE PAYMENTS 11.1. Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Loans (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 12.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Lenders and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 12.3. The parties to this Agreement acknowledge that clause (ii) of this Section 12.1 relates only to absolute assignments and does not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 12.3. The Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3; provided, however, that the Agent may in its discretion (but shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating to such Loan or Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan. 12.2. Participations. 12.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Loans and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 12.2.2 Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment, extends the Facility Termination Date, postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan or Commitment, releases any guarantor of any such Loan or releases all or substantially all of the collateral, if any, securing any such Loan. 12.2.3 Benefit of Setoff. The Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. 12.3. Assignments. 12.3.1 Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit B hereto or in such other form as may be agreed to by the parties thereto. The consent of the Borrower and the Agent shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof; provided, however, that if a Default has occurred and is continuing, the consent of the Borrower shall not be required. Such consent shall not be unreasonably withheld or delayed. Each such assignment with respect to a Purchaser which is not a Lender or an Affiliate thereof shall (unless each of the Borrower and the Agent otherwise consents) be in an amount not less than the lesser of (i) $10,000,000 or (ii) the remaining amount of the assigning Lender's Commitment (calculated as at the date of such assignment) or outstanding Loans (if the applicable Commitment has been terminated). 12.3.2 Effect; Effective Date. Upon (i) delivery to the Agent of an assignment, together with any consents required by Section 12.3.1, and (ii) payment of a $4,000 fee to the Agent for processing such assignment (unless such fee is waived by the Agent), such assignment shall become effective on the effective date specified in such assignment. The assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Loans under the applicable assignment agreement constitutes "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and Loans assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent and the Borrower shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. 12.4. Dissemination of Information. The Borrower authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Borrower and its Subsidiaries; provided that each Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement. 12.5. Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(iv). ARTICLE XIII NOTICES 13.1. Notices. Except as otherwise permitted by Section 2.12 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth below its signature hereto or (z) in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Borrower in accordance with the provisions of this Section 13.1. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Agent under Article II shall not be effective until received. 13.2. Change of Address. The Borrower, the Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto. [signature pages to follow] IN WITNESS WHEREOF, the Borrower, the Lenders and the Agents have executed this Agreement as of the date first above written. RAYMOND JAMES FINANCIAL, INC. By: Title: Address for Notices: 880 Carillon Parkway St. Petersburg, Florida 33716 Attention: Jeffrey P. Julien Telephone: (727) 573- 3800 Facsimile: (727) 573- 8365 Commitment: BANK ONE, NA, $25,000,000 Individually and as Administrative Agent By: Title: Address for Notices: 1 Bank One Plaza Suite 0159, 16th Floor Chicago, Illinois 60670 Attention: Glenyss Gilliam Telephone: (312) 732- 3642 Facsimile: (312) 732- 3246 Commitment: CITIBANK, N.A., $25,000,000 Individually and as Syndication Agent By: Title: Address for Notices: 399 Park Avenue 12th Floor, Zone 11 New York, New York 10043 Attention: Peter G. Nealon Telephone: (212) 559- 8621 Facsimile: (212) 371- 6309 Commitment: BANK OF AMERICA, NATIONAL $25,000,000 ASSOCIATION, Individually and as Co- Documentation Agent By: Title: Address for Notices: 335 Madison Avenue 5th Floor New York, New York 10017 Attention: James F. Dever Telephone: (212) 503- 7986 Facsimile: (212) 503- 7013 Commitment: THE CHASE MANHATTAN BANK, $25,000,000 Individually and as Co- Documentation Agent By: Title: Address for Notices: One Chase Manhattan Plaza 21st Floor New York, New York 10081 Attention: Richard Cassa Telephone: (212) 552- 6259 Facsimile: (212) 552- 5142 Exhibit A COMPLIANCE CERTIFICATE I, certify that I am the of RAYMOND JAMES FINANCIAL, INC. (the "Borrower"), and that as such I am authorized to execute this Compliance Certificate on behalf of the Borrower, and DO HEREBY FURTHER CERTIFY on behalf of the Borrower that: 1. I have reviewed the terms of that certain Revolving Credit Agreement dated as of October 26, 1999 among the Borrower, the financial institutions named therein (the "Lenders") and Bank One, NA, as administrative agent (the "Agent") (as amended, supplemented or modified from time to time, the "Credit Agreement") and I have made, or have caused to be made by employees or agents under my supervision, a detailed review of the transactions and conditions of the Borrower during the accounting period covered by the attached financial statements; 2. The examinations described in paragraph 1 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below; and 3. Schedule I attached hereto sets forth financial data and computations evidencing compliance with the covenants set forth in Sections 6.14, 6.21.1, 6.21.2, 6.21.3, 6.21.4 and 6.21.5 of the Credit Agreement, all of which data and computations are true, complete and correct. Capitalized terms not defined herein are defined in the Credit Agreement. Described below are the exceptions, if any, to paragraph 2 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event: _____________________________________________________________ _____ _____________________________________________________________ _____ The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Compliance Certificate in support hereof, are made and delivered this ______ day of ______________, _____. RAYMOND JAMES FINANCIAL, INC. By: Title: Schedule I Section 6.14 - Sale of Assets Asset Dispositions for twelve-month period ending with month in which disposition occurs: (a) Permitted asset dispositions: 10% of consolidated assets of the Borrower at beginning of such twelve-month period* $ (b) Actual asset dispositions for such period $ *Note: must also demonstrate (to the extent calculable) that total asset dispositions for such period do not involve Property which is responsible for more than 15% of the consolidated net sales or Net Income of the Borrower for such twelve-month period. Section 6.21.1 - Minimum Tangible Net Worth 1. Required Tangible Net Worth: $400,000,000 * plus 50% of cumulative Net Income earned after $ September 24, 1999 $ Total 2. Actual Tangible Net Worth: $ Section 6.21.2 - Maximum Double Leverage Ratio 1. Maximum Double Leverage Ratio 1.15 to 1.0 2. Actual Double Leverage Ratio (a) Investment in Subsidiaries $ (b) Shareholders equity (parent only) $ (c) Ratio of (a) to (b) ____ to 1.0 Section 6.21.3 - RJA Net Capital Ratio 1. Minimum RJA Net Capital Ratio 10% 2. Actual RJA Net Capital Ratio $ (a) Net Capital $ (b) Aggregate Debit Items ____% (c) Ratio of (a) to (b) Section 6.21.4 - RJFS Net Capital Ratio 1. Maximum RJFS Net Capital Ratio 9.0 to 1.0 2. Actual RJFS Net Capital Ratio (a) Aggregate Indebtedness $ (b) Net Capital $ (c) Ratio of (a) to (b) ____ to 1.0 Section 6.21.5 - RJA/RJFS Excess Net Capital 1. Minimum combined RJA/RJFS Excess Net Capital $100,000,000 2. Actual combined RJA/RJFS Excess Net Capital $ Exhibit B FORM OF ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between ______________________ (the "Assignor") and _______________________________ (the "Assignee") is dated as of ____________________, ____. The parties hereto agree as follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date. 4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Agent which relate to the portion of the Commitment or Loans assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1. 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor, (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (a) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectibility of any Loan Document, including, without limitation, documents granting the Assignor and the other Lenders a security interest in assets of the Borrower or any guarantor, (b) any representation, warranty or statement made in or in connection with any of the Loan Documents, (c) the financial condition or creditworthiness of the Borrower or any guarantor, (d) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (e) inspecting any of the property, books or records of the Borrower, (f) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans, or (g) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and hold the Assignor harmless against all losses and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non-performance of the obligations assumed under this Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes. 8. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW YORK. 9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement. IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written. SCHEDULE 1 TO ASSIGNMENT AGREEMENT 1. Description and Date of Credit Agreement: That certain Revolving Credit Agreement dated as of October 26, 1999 among Raymond James Financial, Inc., the Lenders named therein and Bank One, NA, as administrative agent (the "Agent"). 2. Date of Assignment Agreement: , ______. 3. Amounts (as of Date of Item 2 above): (a) Assignee's percentage of revolving credit facility purchased under the Assignment Agreement* _________% (b) Amount of revolving credit facility purchased under the Assignment Agreement $_________ 4. Assignee's Commitment (or Loans with respect to terminated Commitments): $__________ 5. Proposed Effective Date: ___________ 6. Non-standard Recordation Fee Arrangement N/A** [Assignor/Assignee to pay 100% of fee] [Fee waived by Agent] Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By:_________________________ By:_________________________ Title:________________________ Title:________________________ Accepted and Consented to *** by: Accepted and Consented to *** by: RAYMOND JAMES FINANCIAL, INC. BANK ONE, NA By:_________________________ By:_________________________ Title:________________________ Title:________________________ * Percentage taken to 10 decimal places. ** If fee is split 50-50, pick N/A as option. *** Delete if not required by Credit Agreement. ATTACHMENT TO SCHEDULE 1 to ASSIGNMENT AGREEMENT Attach Assignor's Administrative Information Sheet, which must include notice address for the Assignor and the Assignee EX-27 4
BD 3-MOS 12-MOS SEP-24-1999 SEP-24-1999 SEP-24-1999 SEP-24-1999 221250000 221250000 1551627000 1551627000 1132593000 1132593000 1277692000 1277692000 581110000 581110000 91335000 91335000 5030715000 5030715000 157321000 157321000 2681846000 2681846000 0 0 1378821000 1378821000 33400000 33400000 44183000 44183000 0 0 0 0 490000 490000 557996000 557996000 5030715000 5030715000 1771000 17034000 66872000 229806000 204979000 758136000 28428000 74748000 35917000 128021000 43990000 151494000 210450000 754747000 35874000 137519000 35874000 137519000 0 0 0 0 22252000 85090000 .47 1.79 .46 1.76
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