-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, PzHRBg35/YmY5QFXfzdsOMowT290Omva83EYGDA6zUZwGY80W3hetarYLaNUR/yB GO1tY9WqYK6Jc9vfDcDQiA== 0000815917-94-000001.txt : 19940331 0000815917-94-000001.hdr.sgml : 19940331 ACCESSION NUMBER: 0000815917-94-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES FINANCIAL COMPANIES L P CENTRAL INDEX KEY: 0000815917 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 431450818 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 000-16633 FILM NUMBER: 94518234 BUSINESS ADDRESS: STREET 1: 201 PROGRESS PKWY CITY: MARYLAND HEIGHTS STATE: MO ZIP: 63043 BUSINESS PHONE: 3148512000 10-K 1 FORM 1O-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 1993 Commission file number 0-16633 THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP ______________________________________________________________________ (Exact name of registrant as specified in its Partnership Agreement) MISSOURI 43-1450818 ________________________________________________________________________ (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 201 Progress Parkway Maryland Heights, Missouri 63043 ________________________________________________________________________ (Address and principal executive office) (Zip Code) Registrant's telephone number, including area code (314) 851-2000 Securities registered pursuant to Section 12(b) of the act: Name of each exchange Title of each class on which registered NONE _________________________________ __________________________________ Securities registered pursuant to Section 12(g) of the Act: NONE ________________________________________________________________________ (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be file by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days YES X NO ___ ___ As of March 26, 1994 there were no voting securities held by non- affiliates of the registrant. DOCUMENTS INCORPORATED BY REFERENCE Part 1 None ITEM 1. BUSINESS The Jones Financial Companies, a Limited Partnership (the "Registrant" and also referred to herein as the "Partnership") is organized under the Revised Uniform Limited Partnership Act of the State of Missouri. The terms "Registrant" and "Partnership" used throughout, refer to The Jones Financial Companies, a Limited Partnership and any or all of its consolidated subsidiaries. The Partnership is the successor to Whitaker & Co., which was established in 1871 and dissolved on October 1, 1943, said date representing the organization date of Edward D. Jones & Co., L.P. ("EDJ"), the Partnership's principal subsidiary. EDJ was reorganized on August 28, 1987, which date represents the organization date of The Jones Financial Companies, a Limited Partnership. The Partnership is engaged in business as a broker/dealer in listed and unlisted securities, including governmental issues, acts as an investment banker, and is a distributor of mutual fund shares. In addition, the Partnership engages in sales of various insurance products and renders investment advisory services. The Partnership is heavily oriented towards serving individual retail customers. The Partnership is a member firm of the New York, American and Midwest exchanges, and is a registered broker/dealer with the National Association of Securities Dealers, Inc. As of February 25, 1994, the Partnership was comprised of 111 general partners, 2,000 limited partners and 54 subordinated limited partners. The Partnership employed 8,086 persons, including 2,013 part-time employees. As of said date, the Partnership employed 2,776 full-time investment representatives actively engaged in sales in 2,704 offices in 48 states. The Partnership anticipates opening its first offices in Hawaii and Ontario, Canada in 1994. The Partnership owns 100 percent of the outstanding common stock of EDJ Holding Company, Inc., a Missouri corporation and 100 percent of the outstanding common stock of LHC, Inc., a Missouri corporation. The Partnership also holds all of the partnership equity of Edward D. Jones & Co., L.P., a Missouri limited partnership and EDJ Leasing Co., L.P. a Missouri limited partnership. EDJ Holding Company, Inc. and LHC, Inc. are the general partners of Edward D. Jones & Co., L.P. and EDJ Leasing Co., L.P., respectively. In addition, the Partnership owns 100 percent of the outstanding common stock of Conestoga Securities, Inc., a Missouri corporation and also owns, as a limited partner, 49.5 percent of Passport Research Ltd., a Pennsylvania limited partnership, which acts as an investment advisor to a money market mutual fund. The Partnership owns 100% of the equity of Edward D. Jones & Co., an Ontario limited partnership and the general partner is Edward D. Jones & Co. Canada Holding Co. Inc., which is wholly owned by the Partnership. The Partnership has an equity position in several entities formed to act as general partners of various direct participation programs sponsored by the Nooney Corporation as follows: Nooney Capital Corp. (a Missouri corporation), 66-2/3% of outstanding Class B non-voting stock; Nooney-Five Capital Corp. (a Missouri Corporation), 100% of outstanding Class B non-voting stock; Nooney-Six Capital Corp. (a Missouri corporation), 100% of outstanding Class B non-voting stock; Nooney-Seven Capital Corp. (a Missouri corporation), 100% of outstanding Class B non-voting stock; Nooney Income Investments, Inc. (a Missouri corporation), 100% of outstanding Class B non-voting stock; Nooney Income Investments Two, Inc. (a Missouri corporation), 100% of outstanding Class B non-voting stock; Nooney Income Investment Three, Inc., (a Missouri corporation), 100% of outstanding Class B non-voting stock. The Partnership holds all of the partnership equity in a Missouri limited partnership, EDJ Ventures, Ltd., which acts as a partner and renders advisory and other management services to direct participation program partnerships. Conestoga Securities, Inc. is the general partner of EDJ Ventures, Ltd. The Partnership is the sole shareholder of Tempus Corporation, a Missouri corporation, which was formed strictly to facilitate the issuance of certain debt securities of the Partnership in a private transaction. The Partnership is a limited partner of EDJ Insurance Agency of New Jersey, L.P., a New Jersey limited partnership; EDJ Insurance Agency of Arkansas, an Arkansas limited partnership; EDJ Insurance Agency of Montana, a Montana limited partnership; EDJ Insurance Agency of New Mexico, a New Mexico limited partnership; EDJ Insurance Agency of Utah, a Utah limited partnership; and is a general partner in EDJ Insurance Agency of California, a California general partnership; each of which engage in general insurance brokerage activities. The Partnership owns all of the outstanding stock of EDJ Insurance Agency of Ohio, Inc., which is also engaged in insurance brokerage activities. Affiliates of the partner include EDJ Insurance Agency of Nevada, EDJ Insurance Agency of Texas, EDJ Insurance Agency of Alabama, EDJ Insurance Agency of Florida, EDJ Insurance Agency of Wyoming, EDJ Insurance Agency of Arizona and EDJ Insurance Agency of Massachusetts. The Partnership holds all of the Partnership equity of Unison Investment Trusts, L.P., d/b/a Unison Investment Trusts, Ltd., a Missouri limited partnership, which sponsors unit investment trust programs. The general partner of Unison Investment Trusts, L.P. is Unison Capital Corp., Inc., a Missouri corporation wholly owned by the Partnership. The Partnership owns 100% of the outstanding common stock of Edward D. Jones Homeowners, Inc., a Missouri corporation which, in turn, serves as the general partner of EDJ Residential Mortgage Services, a Missouri limited partnership wholly owned by the Partnership, which formerly provided mortgage brokerage and ancillary services. The Partnership owns 100% of the outstanding common stock of Cornerstone Mortgage Investment Group, Inc., a Delaware limited purpose corporation which has issued and sold collateralized mortgage obligation bonds, and Cornerstone Mortgage Investment Group II, Inc., a Delaware limited purpose corporation which has structured and sold secured mortgage bonds. The Partnership owns 100% of the outstanding stock of CIP Management, Inc., which is the managing general partner of CIP Management, L.P. CIP Management, L.P. is the managing general partner of Community Investment Partners, L.P. and Community Investment Partners II, L.P., business development companies. Other affiliates of the Partnership include Patronus, Inc. and EDJ Investment Advisory Services. Neither has conducted an active business. The Partnership owns as a general partner, 1/3 of Commonwealth Pacific Limited Partnership, a Washington limited partnership, which formerly operated as a syndicator of various real estate limited partnership programs, for which the Partnership had served as an underwriter and distributor. Revenues by Source. The following table sets forth, for the past three years the sources of the Partnership's revenues by dollar amounts, (all amounts in thousands): 1993 1992 1991 Commissions Listed $ 70,634 $ 59,256 $ 44,115 Mutual Funds 272,020 187,411 110,499 O-T-C 20,786 14,424 10,136 Insurance 64,424 42,585 34,964 Other 596 274 60 Principal Transactions 92,471 131,366 104,426 Investment Banking 45,001 60,635 67,376 Interest & Dividends 38,084 30,520 25,533 Money-Market Fees 10,048 10,751 9,320 IRA Custodial Service Fees 4,387 3,310 999 Other Revenues 13,001 9,080 4,160 _________ _________ _________ Total Revenue $ 631,452 $ 549,612 $411,588 Because of the interdependence of the activities and departments of the Partnership's investment business and the arbitrary assumptions involved in allocating overhead, it is impractical to identify and specify expenses applicable to each aspect of the Partnership's operations. Furthermore, the net income of firms principally engaged in the securities business, including the Partnership's, is effected by interest savings as a result of customer and other credit balances and interest earned on customer margin accounts. Listed Brokerage Transactions. A large portion of the Partnership's revenue is derived from customers' transactions in which the Partnership acts as agent in the purchase and sale of listed corporate securities. These securities include common and preferred stocks and corporate debt securities traded on and off the securities exchanges. Revenue from brokerage transactions is highly influenced by the volume of business and securities prices. Customers' transactions in securities are effected on either a cash or a margin basis. In a margin account, the Partnership lends the customer a portion of the purchase price up to the limits imposed by the margin regulations of the Federal Reserve Board (Regulation T), New York Stock Exchange (NYSE) margin requirements, or the Partnership's internal policies, which may be more stringent than the regulatory minimum requirements. Such loans are secured by the securities held in customers' margin accounts. These loans provide a source of income to the Partnership since it is able to lend to customers at rates which are higher than the rates at which it is able to borrow on a secured basis. The Partnership is permitted to use as collateral for the borrowings, securities owned by margin customers having an aggregate market value generally up to 140 percent of the debit balance in margin accounts. The Partnership may also use the interest-free funds provided by free credit balances in customers' accounts to finance customers' margin account borrowings. In permitting customers to purchase securities on margin, the Partnership assumes the risk of a market decline which could reduce the value of its collateral below a customer's indebtedness before the collateral is sold. Under the NYSE rules, the Partnership is required in the event of a decline in the market value of the securities in a margin account to require the customer to deposit additional securities or cash so that at all times the loan to the customer is no greater than 75 percent of the value of the securities in the account ( or to sell a sufficient amount of securities in order to maintain this percentage). The Partnership, however, imposes a more stringent maintenance requirement. Variations in revenues from listed brokerage commissions between periods is largely a function of market conditions; however, some portion of the overall increases in recent years is due to the growth in the number of registered representatives over these periods. Mutual Funds. The Partnership distributes mutual fund shares in continuous offerings and new underwritings. As a dealer in mutual fund shares, the Partnership receives a dealers' discount which generally ranges from 1 percent to 5 3/4 percent of the purchase price of the shares, depending on the terms of the dealer agreement and the amount of the purchase. The Partnership also earns service fees which are generally based on 15 to 25 basis points of its customers' assets which are held by the mutual funds. The Partnership does not manage any mutual fund, although it is a limited partner of Passport Research, Ltd., an advisor to a money market mutual fund. Over-the-Counter and Principal Transactions. Partnership activities in unlisted (over-the-counter) transactions are essentially similar to its activities as a broker in listed securities. In connection with customers' orders to buy or sell securities on an agency basis, the Partnership charges a commission. In dealing on a principal basis, the Partnership charges its customers a net price approximately equal to the current inter-dealer market price plus or minus a mark-up or mark-down from such market price. The National Association of Securities Dealers (NASD) Rules of Fair Practice require that such mark-up (or mark-down) be fair and reasonable. The Partnership has executed several agency agreements with various national insurance companies. Through its approximately 2,056 investment representatives who hold insurance sales licenses, EDJ is able to offer term life insurance, health insurance, and fixed and variable annuities to its customers. The sale of annuities is the primary product. Revenues from the sale of insurance products approximated 10% of total revenues in 1993, and this area has experienced growth in recent years largely as a result of the growth in the number of representatives licensed to engage in insurance sales. The Partnership makes a market in over-the-counter corporate securities, municipal obligations, including general obligations and revenue bonds, unit investment trusts and mortgage-backed securities. The Partnership's market-making activities are conducted with other dealers in the "wholesale" market and "retail" market wherein the Partnership acts as a dealer buying from and selling to its customers. In making markets in over-the-counter securities, the Partnership exposes its capital to the risk of fluctuation in the market value of its security positions. It is the Partnership's policy not to trade for its own account. As in the case of listed brokerage transactions, revenue from over- the-counter and principal transactions is highly influenced by the volume of business and securities prices, as well as by the varying number of registered representatives employed by the Partnership over the periods indicated. Investment Banking. The Partnership's investment banking activities are carried on through its Syndicate and Underwriting Departments. The principal service which the Partnership renders as an investment banker is the underwriting and distribution of securities either in a primary distribution on behalf of the issuer of such securities or in a secondary distribution on behalf of a holder of such securities. The distributions of corporate and municipal securities are, in most cases, underwritten by a group or syndicate of underwriters. Each underwriter has a participation in the offering. Unlike many larger firms against which the Partnership competes, the Partnership does not presently engage in other investment banking activities such as assisting in mergers and acquisitions, arranging private placement of securities issues with institutions or providing consulting and financial advisory services to corporations. The Syndicate and Underwriting Departments are responsible for the largest portion of the Partnership's investment banking business. In the case of an underwritten offering managed by the Partnership, the Departments may form underwriting syndicates and work closely with the branch office system for sales of the Partnership's own participation and with other members of the syndicate in the pricing and negotiation of other terms. In offerings managed by others in which the Partnership participates as a syndicate member, the Departments serve as active coordinators between the managing underwriter and the Partnership's branch office system. The underwriting activity of the Partnership involves substantial risks. An underwriter may incur losses if it is unable to resell the securities it is committed to purchase or if it is forced to liquidate all or part of its commitment at less than the agreed purchase price. Furthermore, the commitment of capital to underwriting may adversely affect the Partnership's capital position and, as such, its participation in an underwriting may be limited by the requirement that it must at all times be in compliance with the net capital rule. The Securities Act of 1933 and other applicable laws and regulations impose substantial potential liabilities on underwriters for material misstatements or omissions in the prospectus used to describe the offered securities. In addition, there exists a potential for possible conflict of interest between an underwriter's desire to sell its securities and its obligation to its customers not to recommend unsuitable securities. In recent years there has been an increasing incidence of litigation in these areas. These lawsuits are frequently brought for the benefit of large classes of purchasers of underwritten securities. Such lawsuits often name underwriters as defendants and typically seek substantial amounts in damages. Interest and dividend income is earned on securities held and margin account balances. Other revenue sources include money market management fees and IRA custodial services fees, accommodation transfer fees, gains from sales of certain assets, and other product and service fees. The Partnership has an interest in the investment advisor to its money market fund, Daily Passport Cash Trust. Revenue from this source has increased over the periods due to growth in the fund, both in dollars invested and number of accounts. In 1991 EDJ became the trustee for its IRA accounts. Each account is charged an annual service fee for services rendered to it by the Partnership. The Partnership has registered an investment advisory program with the SEC under the Investment Advisors Act of 1940. This service is offered firmwide and involves income and estate tax planning and analysis for clients. Revenues from this source are insignificant and included under "Other Revenues." Also included in the category "Other Revenues" are accommodation transfer fees, gains from sales of certain assets, other non-recurring gains and revenue from management fees charged by mutual funds. Research Department. The Partnership maintains a Research Department to provide specific investment recommendations and market information for retail customers. The Department supplements its own research with the services of various independent research services. The Partnership competes with many other securities firms with substantially larger research staffs in its research activities. Customer Account Administration and Operations. Operations employees are responsible for activities relating to customers' securities and the processing of transactions with other broker/dealers. These activities include receipt, identification, and delivery of funds and securities, internal financial controls, accounting and personnel functions, office services, storage of customer securities and the handling of margin accounts. The Partnership processes substantially all of its own transactions. It is important that the Partnership maintains current and accurate books and records from both a profit viewpoint as well as for regulatory compliance. To expedite the processing of orders, the Partnership's branch office system is linked to the St. Louis headquarters office through an extensive communications network. Orders for all securities are centralized in St. Louis and executed there. The Partnership's processing of paperwork following the execution of a security transaction is automated, and operations are generally on a current basis. There is considerable fluctuation during any one year and from year to year in the volume of transactions the Partnership processes. The Partnership records transactions and posts its books on a daily basis. Operations' personnel monitor day-to-day operations to determine compliance with applicable laws, rules and regulations. Failure to keep current and accurate books and records can render the Partnership liable to disciplinary action by governmental and self-regulatory organizations. The Partnership has a computerized branch office communication system which is principally utilized for entry of security orders, quotations, messages between offices and cash receipts functions. The Partnership clears and settles virtually all of its listed transactions through the National Securities Clearing Corporation ("NSCC"), New York, New York. NSCC effects clearing of securities on the New York, American and Midwest Stock Exchanges. In conjunction with clearing and settling transactions with NSCC the Partnership holds customers' securities on deposit with Depository Trust Company ("DTC") in lieu of maintaining physical custody of the certificates. The Partnership is substantially dependent upon the operational capacity and ability of NSCC/DTC. Any serious delays in the processing of securities transactions encountered by NSCC/DTC may result in delays of delivery of cash or securities to the Partnership's customers. These services are performed for the Partnership under contracts which may be changed or terminated at will by either party. Automated Data Processing, Inc., ("ADP") provides automated data processing services for customer account activity and records. The Partnership does not employ its own floor broker for transactions on exchanges. The Partnership has arrangements with other brokers to execute the Partnership's transactions in return for a commission based on the size and type of trade. If for any reason any of the Partnership's clearing, settling or executing agents were to fail, the Partnership and its customers would be subject to possible loss. While the coverages provided by the Securities Investors Protection Corporation (SIPC) and protection in excess of SIPC limits would be available to customers of the Partnership, to the extent that the Partnership would not be able to meet the obligations of the customers, such customers might experience delays in obtaining the protections afforded them by the SIPC and the Partnership's insurance carrier. The Partnership believes that its internal controls and safeguards concerning the risks of securities thefts are adequate. Although the possibility of securities thefts is a risk of the industry, the Partnership has not had, to date, a significant problem with such thefts. The Partnership maintains fidelity bonding insurance which, in the opinion of management, provides adequate coverage. Employees. Including its general partners, the Partnership has approximately 8,086 full and part-time employees, including 2,776 who are registered salespeople as of February 25, 1994. The Partnership's salespersons are compensated on a commission basis and may, in addition, be entitled to bonus compensation based on their respective branch office profitability and the profitability of the Partnership. The Partnership has no formal bonus plan for its non-registered employees. The Partnership has, however, in the past paid bonuses to its non-registered employees on an informal basis, but there can be no assurance that such bonuses will be paid for any given period or will be within any specific range of amounts. Employees of the Partnership are bonded under a blanket policy as required by NYSE rules. The annual aggregate amount of coverage is $30,000,000 subject to a $2,000,000 deductible provision, per occurrence. The Partnership maintains a training program for prospective salespeople which includes eight weeks of concentrated instruction and on-the-job training in a branch office. The first phase of training is spent reviewing Series 7 examination materials and preparing for and taking the examination. The first week of the training after passing the examination is spent in a comprehensive training program in St. Louis. The next five weeks include on-the-job training in branch locations reviewing products, office procedures and sales techniques. The broker is then sent to a designated location to establish the EDJ office, conduct market research and prepare for opening the office. After the salesperson has opened a branch office, one final week is spent in a central location to complete the initial training program. Three and nine months later, the investment representative attends additional training classes in St. Louis, and subsequently, EDJ offers periodic continuing training mechanisms to its seasoned sales force. Although the Partnership pays the broker during the transition period, the broker must fulfill special tasks before being awarded full branch status. EDJ's basic brokerage payout is similar to its competitors. A bonus may also be paid based on the profitability of the branch and the profitability of the Partnership. The Partnership considers its employee relations to be good and believes that its compensation and employee benefits which include medical, life, and disability insurance plans and profit sharing and deferred compensation retirement plans, are competitive with those offered by other firms principally engaged in the securities business. Competition. The Partnership is subject to intensive competition in all phases of its business from other securities firms, many of which are substantially larger than the Partnership in terms of capital, brokerage volume and underwriting activities. In addition, the Partnership encounters competition from other financially oriented organizations such as banks, insurance companies, and others offering financial services and advice. In recent periods, many regulatory requirements prohibiting non-securities firms from engaging in certain aspects of brokerage firms' business have been eliminated and further removal of such prohibitions is anticipated. With minor exceptions, customers are free to transfer their business to competing organizations at any time. There is intense competition among securities firms for salespeople with good sales production records. In recent periods, the Partnership has experienced increasing efforts by competing firms to hire away its registered representatives although the Partnership believes that its rate of turnover of investment representatives is not higher than that of other firms comparable to the Partnership. Regulation. The securities industry in the United States is subject to extensive regulation under both federal and state laws. The SEC is the federal agency responsible for the administration of the federal securities laws. The Partnership's principal subsidiary is registered as a broker-dealer and investment advisor with the SEC. Much of the regulation of broker-dealers has been delegated to self-regulatory organizations, principally the NASD and national securities exchanges such as the NYSE, which has been designated by the SEC as the Partnership's primary regulator. These self-regulatory organizations adopt rules (which are subject to approval by the SEC) that govern the industry and conduct periodic examinations of the Partnership's operations. Securities firms are also subject to regulation by state securities administrators in those states in which they conduct business. The Partnership is registered as a broker-dealer in 50 states and Puerto Rico. Broker-dealers are subject to regulations which cover all aspects of the securities business, including sales methods, trade practices among broker-dealers, use and safekeeping of customers' funds and securities, capital structure of securities firms, record-keeping and the conduct of directors, officers and employees. Additional legislation, changes in rules promulgated by the SEC and self- regulatory organizations, or changes in the interpretation or enforcement of existing laws and rules, may directly affect the mode of operation and profitability of broker-dealers. The SEC, self- regulatory organizations and state securities commissions may conduct administrative proceedings which can result in censure, fine, suspension or expulsion of a broker-dealer, its officers or employees. The principal purpose of regulation and discipline of broker-dealers is the protection of customers and the securities markets, rather than protection of the creditors and stockholders of broker-dealers. Uniform Net Capital Rule. As a broker-dealer and a member firm of the NYSE, the Partnership is subject to the Uniform Net Capital Rule (Rule) promulgated by the SEC. The Rule is designed to measure the general financial integrity and liquidity of a broker-dealer and the minimum net capital deemed necessary to meet the broker-dealer's continuing commitments to its customers. The Rule provides for two methods of computing net capital and the Partnership has adopted what is generally referred to as the alternative method. Minimum required net capital under the alternative method is equal to 2% of the customer debit balances, as defined. The Rule prohibits withdrawal of equity capital whether by payment of dividends, repurchase of stock or other means, if net capital would thereafter be less than 5% of customer debit balances. Additionally, certain withdrawals require the consent of the SEC to the extent they exceed defined levels even though such withdrawals would not cause net capital to be less than 5% of aggregate debit items. In computing net capital, various adjustments are made to exclude assets which are not readily convertible into cash and to provide a conservative statement of other assets such as a company's inventories. Failure to maintain the required net capital may subject a firm to suspension or expulsion by the NYSE, the SEC and other regulatory bodies and may ultimately require its liquidation. The Partnership has, at all times, been in compliance with the net capital rules. ITEM 2. PROPERTIES All of its headquarter offices are owned by the Partnership. The Partnership conducts its headquarters operations from St. Louis County, Missouri. The headquarters facilities are comprised of 17 separate buildings containing approximately 822,000 usable square feet. One additional building on the campus is leased. The Partnership acquired an existing 397,000 square foot building in St. Louis County in December, 1992, of which 170,000 square feet is occupied at December 31, 1993. This building was substantially renovated in 1993. The Partnership plans to use the unoccupied space for growth in future headquarters personnel which is planned to parallel the growth of the salesforce. The Partnership also maintains facilities in 2,655 branch locations which (as of December 31, 1993) are predominantly rented under cancellable leases. Further information concerning leased computer equipment, branch satellite equipment and other obligations of the Partnership is given in the Notes to the Consolidated Financial Statements appearing elsewhere herein. ITEM 3. LEGAL PROCEEDINGS In recent years there has been an increasing incidence of litigation involving the securities industry. Such suits often seek to benefit large classes of industry customers; many name securities dealers as defendants along with exchanges in which they hold membership and seek large sums as damages under federal and state securities laws, anti- trust laws, and common law. There are various actions pending against the Partnership which have arisen in the normal course of business. In view of the number and diversity of claims against the Partnership, the number of jurisdictions in which litigation is pending and the inherent difficulty of predicting the outcome of litigation and other claims, the Partnership cannot definitely state what the eventual outcome of these pending claims will be. However, in the opinion of management, after consultation with legal counsel, the impact of this litigation will not have a material adverse affect on the Partnership's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is no market for the Limited or Subordinated Limited Partnership interests and their assignment is prohibited. ITEM 6. SELECTED FINANCIAL DATA The following information sets forth, for the past five years, selected financial data. (All amounts in thousands, except per unit information.) Summary Income Statement Data: 1993 1992 1991 1990 1989 Revenues $631,452 $549,612 $411,588 $316,503 $280,429 Net income 66,211 62,282 40,875 22,553 15,703 Net income per weighted average $1,000 equivalent limited partnership unit outstanding $194.62 $238.41 $185.92 $130.52 $82.50 Weighted average $1,000 equivalent limited partnership units outstanding 50,381 41,160 42,616 25,874 27,274 Net income per weighted average $1,000 equivalent subordinated limited partnership unit outstanding $350.32 $418.21 $322.38 $212.86 $154.82 Weighted average $1,000 equivalent subordinated limited partnership units outstanding 16,936 12,941 10,624 10,190 9,779 Summary Balance Sheet Data: 1993 1992 1991 1990 1989 Total assets $800,478 $653,253 $513,730 $422,257 $387,618 ======= ======= ======= ======= ======= Long-term debt $ 33,317 $ 23,847 $ 24,769 $ 19,977 $ 20,075 Other liabilities, exclusive of subordinated liabilities 514,386 414,110 326,229 250,772 234,732 Subordinated liabilities 73,000 78,000 48,000 50,400 52,800 Total partnership capital 179,775 137,296 114,732 101,108 80,011 ________ ________ ________ ________ ________ Total liabilities and partnership capital $800,478 $653,253 $513,730 $422,257 $387,618 ======== ======== ======== ======== ======== ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table summarizes the changes in major categories of revenues and expenses for the last two years (Dollar amounts in thousands.) 1993 vs. 1992 1992 vs. 1991 Increase - (Decrease) Amount % Amount % Revenues Commissions $ 124,510 41 $ 104,176 52% Principal transactions (38,895) (30) 26,940 26 Investment banking (15,634) (26) (6,741) (10) Interest and dividends 7,564 25 4,987 20 Other 4,295 19 8,662 60 _________ ___ _________ ___ 81,840 15 138,024 34 _________ ___ _________ ___ Expenses Employee and partner compensation and benefits 53,859 16 88,142 37 Occupancy and equipment 10,069 20 3,867 8 Communications and data processing 4,898 17 3,556 14 Interest 3,632 23 2,155 16 Payroll and other taxes 1,767 11 3,192 24 Floor brokerage and clearance fees 781 15 691 15 Other operating expenses 2,905 7 15,014 53 ________ ___ ________ ___ 77,911 16 116,617 31 ________ ___ ________ ___ Net income $ 3,929 6% $ 21,407 52% ======== === ======== === RESULTS OF OPERATIONS (1993 VERSUS 1992) Revenues increased 15% ($82 million) over 1992 to $631 million. Expenses increased by 16% ($78 million) resulting in net income of $66 million, an increase of 6% ($4 million) over 1992. These results were significantly influenced by the Partnership's activities in connection with the expansion of its salesforce. The number of investment representatives increased 24% in 1993 to 2,745. By comparison, 1992's growth in investment representatives was 22%. The vast majority of these new investment representatives are beginners in the industry who generally achieve profitability after about 30 months. In the interim, the Partnership incurs significant training, salary and support costs. The net impact of these direct expenses amounted to nearly $21 million during 1993 ($14 million in 1992). Additionally, the Partnership made significant increases in home office overhead to support the increased salesforce. Commission revenues increased $125 million fueled by a $85 million (45%) increase in mutual fund commissions and service fees. Listed and over-the-counter agency commissions increased $18 million or 24% over 1992. Insurance commissions increased 51%, with variable annuity commissions increasing $20.6 million and fixed annuities decreasing by $5 million. The increasing level of securities prices along with lower interest rates turned individual investors to equity markets and equity based investments in search of more attractive returns. The continued strength of the securities markets led to solid increases in commission generated from the sales of securities products. Principal transaction revenues decreased 30% ($39 million). Collateralized mortgage obligations (CMOs) revenues decreased $11.3 million, government and municipal bond revenues decreased by $9.7 million and $3.7 million, respectively. Prior to 1993, municipal bond syndicate revenues were included in principal transaction revenues. In 1993, these revenues, totalling $10.3 million, were included in investment banking revenues. The majority of the principal transaction revenue decreases largely resulted from historically low interest rates and the resulting popularity of equity based investments. Investment banking revenues declined $15.6 million resulting from decreases in certificate of deposit revenues ($8 million), CMO revenues ($11 million), and equity and debt originations. Interest and dividend revenues increased 25% or $7.6 million. Customers' margin loan balances increased 36% in 1993 ($120 million) ending the year at $451 million. The increase in customers' loan balances was attributable to higher securities prices, continuation of marketing efforts targeting individuals to view their securities as access to a personal line of credit and lower interest rates. The increase in loan balances more than offset the decline in short term interest rates during the year resulting in increased interest earnings. Other revenues increased $4 million (19%) over 1992. Revenues from non-bank custodian IRA accounts resulted in an increase of $1 million in 1993. Overall expenses increased 16% ($78 million). The Partnership's compensation structure for its investment representatives is designed to expand or contract substantially as a result of changes in revenues, net income and profit margins. Similarly, non-sales personnel compensation from bonuses and profit sharing contributions expands and contracts in relation to net income. The Partnership's non-compensation related expenses are less responsive to changes in revenues and net income. Rather, these expenses are influenced by the number of salespeople, growth of the salesforce, the number of customer accounts and, to a lesser extent, the volume of transactions. As a result of its expense structure, the Partnership's compensation expense increase of 16% matched the overall increase in expenses of 16%. The Partnership's expenses other than compensation increased 15%. The increase in other expenses resulted from several items. Increased expense levels related to supporting a larger number of investment representatives and branch offices were primarily responsible for the increase in operating expenses. RESULTS OF OPERATIONS (1992 VERSUS 1991) Revenues increased 34% ($138 million) over 1991 to $550 million. Expenses increased by 31% ($117 million) resulting in net income of $62 million, an increase of 52% ($21 million) over 1991. The number of investment representatives increased 22% in 1992 to 2,216. By comparison, 1991's growth in investment representatives was 9%. The increased size of the salesforce and higher securities prices along with a very steeply sloped yield curve were significant factors contributing to 1992's financial results. Commission revenues increased $104 million fueled by a $77 million (70%) increase in mutual fund commissions and service fees. Listed and over-the-counter agency commissions increased $19 million or 36% over 1991. Insurance commissions increased 22%, with variable annuity commissions increasing $10 million and fixed annuities decreasing by $4 million. The increasing level of securities prices along with lower interest rates turned individual investors to equity markets and equity based investments in search of more attractive returns. Principal transaction revenues increased 26% ($27 million) with taxable and tax free fixed income securities increasing $21 million. At the same time, O-T-C principal stock sales increased by $3 million. Individual investors were attracted to longer term fixed income products to increase or maintain their returns compared to other shorter term alternatives. Additionally, tax free bonds experienced relatively high yields during the year when compared to treasury securities with similar maturities. The increase in O-T-C stock sales resulted from higher equity prices and investors directing their investment dollars into smaller capitalization companies. The returns experienced during the year from investing in smaller capitalization companies was higher than the investment returns of larger exchange listed securities. Investment banking revenues declined $6.7 million from substantial decreases in certificate of deposit revenues ($6 million) and CMOs revenues ($4 million). These decreases were partially offset by equity originations and syndicate equity participation increases of $3 million. Initial public offerings continued to be popular during the year along with investor interest in utility unit investment trust underwritings. The decrease in investment banking CMO revenues was partially offset by increased sales of CMOs on a principal basis. Interest and dividend revenues increased 20% or $5 million. Customers' margin loan balances increased 66% in 1992 ($132 million) ending the year at $331 million. The increase in customers' loan balances was attributable to higher securities prices, continuation of marketing efforts targeting individuals to view their securities as access to a personal line of credit and lower interest rates. The increase in loan balances more than offsets the decline in short term interest rates during the year resulting in increased interest earnings. Other revenues increased $9 million (60%) over 1991. During the last quarter of 1991, the Partnership qualified as a non-bank custodian for its IRA accounts resulting in an increase of $2.3 million in 1992 from IRA service fee revenues. Revenues for fees and services received from the Edward D. Jones & Co. Daily Passport Cash Trust money market account and a related tax free money market account offered through Edward D. Jones & Co. increased $1.4 million over 1991. Overall expenses increased 31% ($117 million). The Partnership's compensation structure for its investment representatives is designed to expand or contract substantially as a result of changes in revenues, net income and profit margins. Similarly, non-sales personnel compensation from bonuses and profit sharing contributions expands and contracts in relation to net income. The Partnership's non-compensation related expenses tend to be less responsive to changes in revenues and net income. Rather, these expenses tend to be more influenced by the number of salespeople, growth of the salesforce, the number of customer accounts and, to a lesser extent, the volume of transactions. As a result of its expense structure, the Partnership's compensation expense increase of 37% exceeded the overall increase in expenses of 31%. The Partnership's expenses other than compensation increased 22%. Other operating expenses increased 53% or $15 million over 1991. The increase in other operating expenses resulted from several items. Increased expense levels related to supporting a larger number of investment representatives and branch offices were primarily responsible for the increase in operating expenses. THE EFFECTS OF INFLATION The Partnership's net assets are primarily monetary, consisting of cash, securities inventories and receivables less liabilities. Monetary net assets are primarily liquid in nature and would not be significantly affected by inflation. Inflation and future expectations of inflation influence securities prices, as well as activity levels in the securities markets. As a result, profitability and capital may be impacted by inflation and inflationary expectations. Additionally, inflation's impact on the Partnership's operating expenses may affect profitability to the extent that additional costs are not recoverable through increased prices of services offered by the Partnership. LIQUIDITY AND CAPITAL ADEQUACY The Partnership's equity capital at December 31, 1993, was $179.8 million compared to $137.3 million at December 31, 1992. Overall, equity capital increased 31%, primarily due to the retention of earnings and issuance of partnership interests. The Partnership issued additional limited partnership interests in August 1993 of $24.8 million and additional subordinated limited partnership interest of $4.4 million in January 1993. At December 31, 1993, the Partnership had a $28.8 million balance of cash and cash equivalents. Lines of credit are in place at nine banks aggregating $445 million ($420 million of which are through uncommitted lines of credit), of which $310 million was available at December 31, 1993. The Partnership believes that the liquidity provided by existing cash balances and borrowing arrangements will be sufficient to meet the Partnership capital and liquidity requirements. As a result of its activities as a broker/dealer, EDJ, the Partnership's principal subsidiary, is subject to the Net Capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934 and the capital rules of the New York Stock Exchange. Under the alternative method permitted by the rules, EDJ must maintain minimum Net Capital, as defined, equal to the greater of $150,000 or 2% of aggregate debit items arising from customer transactions. The Net Capital rule also provides the partnership capital may not be withdrawn if resulting Net Capital would be less than 5% of aggregate debit items. Additionally, certain withdrawals require the consent of the SEC to the extent they exceed defined levels even though such withdrawals would not cause Net Capital to be less than 5% of aggregate debit items. At December 31, 1993, EDJ's Net Capital of $89,790,000 was 20% of aggregate debit items and its net capital in excess of the minimum required was $80,681,000. Net Capital and the related capital percentage may fluctuate on a daily basis. CASH FLOWS Cash and cash equivalents decreased $8,932,000 from December 31, 1992, to December 31, 1993. Cash flows were primarily provided from net income, decreases in securities owned, short and long term bank loans and the issuance of partnership interests. Cash flows were primarily used to increase net receivables from customers and brokers, purchase equipment, property and improvements, and fund withdrawals and distributions. Cash and cash equivalents increased $5,308,000 from December 31, 1991, to December 31, 1992. Cash flows were primarily provided from net income, short term bank loans and the issuance of subordinated debt. Cash flows were primarily used to increase net receivables from customers, increase securities owned, purchase equipment, property and improvements, and fund withdrawals and distributions. Cash and cash equivalents increased $5,078,000 from December 31, 1990, to December 31, 1991. Cash flows were primarily provided from net income, an increase in accounts payable and accrued expenses, short term bank loans and the issuance of long term debt. Cash flows were primarily used to increase net receivables from customers, increase securities owned, purchase equipment, property and improvements, and fund withdrawals and distributions. There were no material changes in the Partnership's overall financial condition during the year ended December 31, 1993, compared with the year ended December 31, 1992. The Partnership's consolidated statement of financial condition is comprised primarily of cash and assets readily convertible into cash. Securities inventories are carried at market value and are readily marketable. The firm carried lower trading inventory levels in 1993 as compared to 1992. Customer margin accounts are collateralized by marketable securities. Other customer receivables and receivables and payables with other broker/dealers normally settle on a current basis. Liabilities, including amounts payable to customers, checks and accounts payable and accrued expenses are non-interest bearing sources of funds to the Partnership. These liabilities, to the extent not utilized to finance assets, are available to meet liquidity needs and provide funds for short term investments, which favorably impacts profitability. The Partnership's growth in recent years has been financed through sales of limited partnership interest to its employees, retention of earnings and private placements of long-term and subordinated debt. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements Included in this Item Page No. Report of Independent Public Accountants Consolidated Statements of Financial Condition as of December 31, 1993 and 1992 Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991 Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991 Consolidated Statements of Changes in Partnership Capital for the years ended December 31, 1993, 1992 and 1991 Notes to Consolidated Financial Statements REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To The Jones Financial Companies, a Limited Partnership: We have audited the accompanying consolidated statements of financial condition of The Jones Financial Companies, a Limited Partnership (a Missouri limited partnership) and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, cash flows and changes in partnership capital for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Jones Financial Companies, a Limited Partnership and subsidiaries as of December 31, 1993 and 1992, and the results of their operations, their cash flows and the changes in their partnership capital for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN & CO. St. Louis, Missouri, February 22, 1994 THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ASSETS December 31, December 31, (Amounts in thousands) 1993 1992 Cash and cash equivalents $ 28,798 $ 37,730 Receivable from: Customers (Note 2) 464,760 352,686 Brokers or dealers and clearing organizations (Note 3) 32,550 13,880 Securities owned, at market value (Note 4): Inventory securities 60,371 67,873 Investment securities 73,575 78,797 Office equipment, property and improvements, at cost, net of accumulated depreciation and amortization of $79,903 and $69,989, respectively 102,434 72,125 Other assets 37,990 30,162 __________ __________ $ 800,478 $ 653,253 ========== ========== The accompanying notes are an integral part of these statements. THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION LIABILITIES AND PARTNERSHIP CAPITAL December 31, December 31, (Amounts in thousands) 1993 1992 Bank loans (Note 5) $ 139,261 $ 123,000 Payable to: Customers (Note 2) 242,584 167,884 Brokers or dealers and clearing organizations (Note 3) 8,092 13,915 Securities sold but not yet purchased, at market value (Note 4) 17,766 9,588 Accounts payable and accrued expenses 37,419 37,600 Accrued compensation and employee benefits 69,264 62,123 Long-term debt (Note 6) 33,317 23,847 ____________ __________ 547,703 437,957 Liabilities subordinated to claims of general creditors (Note 7) 73,000 78,000 Partnership capital (Notes 8 and 9): Limited partners 71,222 47,328 Subordinated limited partners 19,163 14,716 General partners 89,390 75,252 ____________ __________ 179,775 137,296 ____________ __________ $ 800,478 $ 653,253 ========== ========== The accompanying notes are an integral part of these statements. THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF INCOME Years Ended (Amounts in thousands, Dec. 31, Dec. 31, Dec. 31, except per unit information) 1993 1992 1991 Revenues: Commissions $ 428,460 $ 303,950 $199,774 Principal transactions 92,471 131,366 104,426 Investment banking 45,001 60,635 67,376 Interest and dividends 38,084 30,520 25,533 Other 27,436 23,141 14,479 _________ _________ _________ 631,452 549,612 411,588 _________ _________ _________ Expenses: Employee and partner compensation and benefits (Note 10) 381,805 327,946 239,804 Occupancy and equipment (Note 11) 59,549 49,480 45,613 Communications and data processing 34,167 29,269 25,713 Interest (Notes 5, 6 and 7) 19,128 15,496 13,341 Payroll and other taxes 18,180 16,413 13,221 Floor brokerage and clearance fees 6,141 5,360 4,669 Other operating expenses 46,271 43,366 28,352 _________ _________ _________ 565,241 487,330 370,713 _________ _________ _________ Net income $ 66,211 $ 62,282 $ 40,875 ======== ======== ======== Net income allocated to: Limited partners $ 9,805 $ 9,813 $ 7,923 Subordinated limited partners 5,933 5,412 3,425 General partners 50,473 47,057 29,527 _________ _________ _________ 66,211 $ 62,282 $ 40,875 ======== ======== ======== Net income per weighted average $1,000 equivalent partnership units outstanding: Limited partners $ 194.62 $ 238.41 $ 185.92 ======== ======== ======== Subordinated limited partners $ 350.32 $ 418.21 $ 322.38 ======== ======== ======== Weighted average $1,000 equivalent partnership units outstanding: Limited partners 50,381 41,160 42,616 ======== ======== ======== Subordinated limited partners 16,936 12,941 10,624 ======== ======== ======== The accompanying notes are an integral part of these statements. THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended Dec. 31, Dec. 31, Dec. 31, (Amounts in thousands) 1993 1992 1991 CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES: Net income $ 66,211 $ 62,282 $ 40,875 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 16,800 14,728 11,203 Increase in net receivable from/payable to customers (37,374) (90,526) (82,200) (Increase) decrease in net receivable from/payable to brokers or dealers and clearing organizations (24,493) 13,401 9,939 Decrease (increase) in securities owned, net 20,902 2,573 (27,365) Increase in accounts payable and other accrued expenses 6,960 106 37,069 Increase in other assets (7,828) (7,744) (2,700) _________ _________ _________ Net cash provided (used) by operating activities 41,178 (5,180) (13,179) _________ _________ _________ CASH FLOWS USED BY INVESTING ACTIVITIES: Purchase of office equipment, property and improvements (47,109) (28,872) (20,284) _________ _________ _________ CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES: Increase in bank loans, net 16,261 50,000 63,400 Issuance of long-term debt 11,700 - 13,300 Repayment of long-term debt (2,230) (922) (8,508) (Repayment) issuance of subordinated liabilities (5,000) 30,000 (2,400) Issuance of partnership interests 29,195 2,396 802 Redemption of partnership interests (1,193) (1,326) (2,176) Withdrawals and distributions from partnership capital (51,734) (40,788) (25,877) _________ _________ _________ Net cash (used) provided by financing activities (3,001) 39,360 38,541 Net (decrease) increase in cash _________ _________ _________ and cash equivalents (8,932) 5,308 5,078 CASH AND CASH EQUIVALENTS, beginning of year 37,730 32,422 27,344 _________ _________ _________ end of year $ 28,798 $ 37,730 $ 32,422 ======== ======== ======== The accompanying notes are an integral part of these statements. THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL YEARS ENDED DECEMBER 31, 1993, 1992 and 1991 Subordinated Limited Limited General Partnership Partnership Partnership (Amounts in thousands) Capital Capital Capital Total Balance, December 31, 1990 $ 46,173 $ 10,635 $ 44,300 $101,108 Issuance of partnership interests - 802 - 802 Redemption of partnership interests (2,044) (132) - (2,176) Net income 7,923 3,425 29,527 40,875 Withdrawals and distributions (5,365) (2,942) (17,570) (25,877) _________ _________ _________ _________ Balance, December 31, 1991 $ 46,687 $ 11,788 $ 56,257 $114,732 Issuance of partnership interests - 2,396 - 2,396 Redemption of partnership interests (1,175) (151) - (1,326) Net income 9,813 5,412 47,057 62,282 Withdrawals and distributions (7,997) (4,729) (28,062) (40,788) _________ _________ _________ _________ Balance, December 31, 1992 $ 47,328 $ 14,716 $ 75,252 $137,296 Issuance of partnership interests 24,763 4,432 - 29,195 Redemption of partnership interests (1,193) - - (1,193) Net income 9,805 5,933 50,473 66,211 Withdrawals and distributions (9,481) (5,918) (36,335) (51,734) _________ _________ _________ _________ Balance, December 31, 1993 $ 71,222 $ 19,163 $ 89,390 $179,775 ======== ======== ======== ======== The accompanying notes are an integral part of these statements. THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1993, 1992 AND 1991 NOTE 1 - SUMMARY OF ACCOUNTING POLICIES The Partnership's Business and Basis of Accounting. The accompanying consolidated financial statements include the accounts of The Jones Financial Companies, a Limited Partnership, and all wholly owned subsidiaries (the "Partnership"). All material intercompany balances and transactions have been eliminated. The Partnership conducts business throughout the United States with its customers, various brokers and dealers, clearing organizations, depositories and banks. The Partnership's principal operating subsidiary is Edward D. Jones & Co., L.P. (EDJ), a registered broker/dealer. Cash and Cash Equivalents. The Partnership considers all short-term investments with original maturities of three months or less, which are not held for sale to customers, to be cash equivalents. Securities Transactions. The Partnership's securities activities involve execution, settlement and financing of various securities transactions for customers. These transactions (and related revenue and expense) are recorded on a settlement date basis, generally representing the fifth business day following the transaction date, which is not materially different than a trade date basis. They may expose the Partnership to risk in the event customers, other brokers and dealers, banks, depositories or clearing organizations are unable to fulfill contractual obligations. For transactions in which it extends credit to customers, the Partnership seeks to control the risks associated with these activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines. Securities Owned. Securities owned are valued at current market prices. Unrealized gains or losses are reflected in revenues as "principal transactions." Office Equipment, Property and Improvements. Office equipment is depreciated using straight-line and accelerated methods over estimated useful lives of five to eight years. Buildings are depreciated using the straight-line method over estimated useful lives approximating thirty to forty years. Amortization of property improvements is computed based on the remaining life of the property or economic useful life of the improvement, whichever is less. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized. Segregated Cash Equivalents and Securities Owned. Rule 15c3-3 of the Securities and Exchange Commission requires deposits of cash or securities to a special reserve bank account for the benefit of customers if total customer related credits exceed total customer related debits, as defined. No deposits of cash or securities were required as of December 31, 1993 or 1992. Income Taxes. Income taxes have not been provided for in the consolidated financial statements since the Partnership is organized as a partnership, and each partner is liable for its own tax payments. Reclassifications. Certain 1992 and 1991 amounts have been reclassified to conform to the 1993 financial statement presentation. Fiscal Year End Change. The Partnership changed its year end from the last Friday in September to December 31, effective December 31, 1992, for various reporting purposes. The 1991 amounts have been restated on a calendar year basis. NOTE 2 - RECEIVABLE FROM AND PAYABLE TO CUSTOMERS Accounts receivable from and payable to customers include margin balances and amounts due on uncompleted transactions. Values of securities owned by customers and held as collateral for these receivables are not reflected in the financial statements. Substantially all amounts payable to customers are subject to withdrawal upon customer request. NOTE 3 - RECEIVABLE FROM AND PAYABLE TO BROKERS OR DEALERS AND CLEARING ORGANIZATIONS The components of receivable from and payable to brokers or dealers and clearing organizations are as follows: (Amounts in thousands) 1993 1992 Securities failed to deliver $ 7,030 $ 2,485 Deposits paid for securities borrowed 22,048 9,255 Deposits with clearing organizations 2,446 1,971 Other 1,026 169 __________ __________ Total receivable from brokers or dealers and clearing organizations $ 32,550 $ 13,880 ========== ========== Securities failed to receive $ 6,580 $ 10,434 Deposits received for securities loaned 1,239 3,481 Other 273 - __________ __________ Total payable to brokers or dealers and clearing organizations $ 8,092 $ 13,915 ========== ========== "Fails" represent the contract value of securities which have not been received or delivered by settlement date. NOTE 4 - SECURITIES OWNED Security positions are summarized as follows (at market value): 1993 1992 ____________________ ___________________ Securities Securities Sold but Sold but Securities not yet Securities not yet Owned Purchased Owned Purchased Inventory Securities: Certificates of deposit $ 3,691 $ 49 $ 2,498 $ 86 U.S. government and agency obligations 4,123 15,070 5,702 7,299 State and municipal obligations 34,306 839 45,708 284 Corporate bonds and notes 10,045 818 11,108 566 Corporate stocks 8,206 990 2,857 1,353 _________ _________ _________ _________ $ 60,371 $ 17,766 $ 67,873 $ 9,588 ======== ======== ======== ======== Investment Securities: U.S. government and agency obligations $ 73,575 $ 78,797 ======== ======== NOTE 5 - BANK LOANS The Partnership borrows from banks primarily to finance customer margin balances and firm trading securities. Interest is at a fluctuating rate (weighted average rate of 4.17%, 4.35% and 4.97%at December 31, 1993, 1992 and 1991, respectively) based on short-term lending rates. The average of the aggregate short-term bank loans outstanding was $99,100,000, $57,794,000, and $23,257,000 and the average interest rate (computed on the basis of the average aggregate loans outstanding) was 4.04%, 4.40%, and 6.35% for the years ended December 31, 1993, 1992 and 1991, respectively. The highest month-end borrowing was $154,500,000, $142,000,000 and $96,200,000 during the years ended December 31, 1993, 1992 and 1991, respectively. Short-term bank loans outstanding at December 31, 1993, 1992 and 1991, consist of $139,261,000, $109,000,000 and $73,000,000 of loans collateralized by securities owned by the Partnership and customers' margin securities with a market value of $363,740,000, $197,514,000 and $140,000,000, respectively. At December 31, 1992, the Partnership had a $14,000,000 short term loan secured by property with a carrying value of $16,198,000. Cash paid during the year for interest on bank loans, capital notes and other liabilities was $14,059,000, $10,956,000, and $8,956,000 for the years ended December 31, 1993, 1992 and 1991, respectively. NOTE 6 - LONG-TERM DEBT Long-term debt is comprised of the following: (Amounts in thousands) 1993 1992 Note payable, secured by property, interest at 9.0% per annum, interest due in monthly installments, principal due on June 1, 1994. $ 9,600 $ 9,600 Note payable, secured by property, interest at 9.875% per annum, principal and interest due in monthly installments of $141,907 with a final installment of $6,840,192 due on August 5, 2001. 12,282 12,747 Note payable, secured by property, interest at 8.5% per annum, principal and interest due in monthly installments of $115,215 through April 5, 2008. 11,435 - Note payable, secured by property, interest at prime rate per annum, interest due in monthly installments. - 1,500 __________ __________ $ 33,317 $ 23,847 ========== ========== Required annual principal payments, as of December 31, 1993, are as follows: Principal Payment Year (Amounts in thousands) _____ ___________________ 1994 $ 10,540 1995 1,031 1996 1,130 1997 1,239 1998 1,359 Thereafter 18,018 __________ $ 33,317 ========== The Partnership has land and buildings with a carrying value of $45,971,000 at December 31, 1993, which are subject to security agreements that collateralize various real estate related notes payable. The Partnership has estimated the fair value of the long- term debt to be approximately $36,493,000 and $25,368,000 as of December 31, 1993 and 1992, respectively. Subsequent to December 31, 1993, the Partnership arranged to refinance its long-term debt. After the refinancing is complete, the Partnership will have a $21,759,000 8.72% note due in monthly installments of approximately $290,000 through May 5, 2003, and a $14,900,000 8.23% note due in monthly installments of $150,000 through April 5, 2008. These notes replace all long-term debt which existed as of December 31, 1993, and will have the same underlying collateral. NOTE 7 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS Liabilities subordinated to the claims of general creditors consist of: (Amounts in thousands) 1993 1992 Capital notes, 10.6%, due in annual installments of $7,000,000 commencing on March 15, 1994, with a final installment on March 15, 1997 $ 28,000 $ 28,000 Capital notes, 9.375%, due in annual installments of $5,000,000 commencing on July 1, 1993, with a final installment on April 1, 1996 15,000 20,000 Capital notes, 8.96%, due in annual installments of $6,000,000 commencing on May 1, 1998, with a final installment on May 1, 2002 30,000 30,000 __________ __________ $ 73,000 $ 78,000 ========== ========== The capital note agreements contain restrictions which, among other things, require maintenance of certain financial ratios, restrict encumbrance of assets and creation of indebtedness and limit the withdrawal of partnership capital. As of December 31, 1993, the Partnership was required, under the note agreements, to maintain minimum partnership capital of $65,000,000 and Net Capital as computed in accordance with the uniform Net Capital rule of 7.5% of aggregate debit items (See Note 9). The subordinated liabilities are subject to cash subordination agreements approved by the New York Stock Exchange and, therefore, are included in the Partnership's computation of Net Capital under the Securities and Exchange Commission's uniform Net Capital rule. The Partnership has estimated the fair value of the subordinated capital notes to be approximately $76,726,000 and $81,300,000 as of December 31, 1993 and 1992, respectively. Subsequent to year end the Partnership intends to exercise its right to repay $17,000,000 of the capital notes prior to maturity. NOTE 8 - PARTNERSHIP CAPITAL The limited partnership capital, consisting of 64,280 and 40,710 $1,000 units at December 31, 1993 and 1992, respectively, is held by current and former employees and general partners. Each limited partner receives interest at seven and one-half percent on the principal amount of capital contributed and a varying percentage of the net income of the Partnership. Interest expense includes $ 3,781,000, $3,090,000, and $3,198,000 for the years ended December 31, 1993, 1992 and 1991, respectively, paid to limited partners on capital contributed. The subordinated limited partnership capital, consisting of 17,290 and 12,858 $1,000 units at December 31, 1993 and 1992, respectively, is held by current and former general partners. Each subordinated limited partner receives a varying percentage of the net income of the Partnership. The subordinated limited partner capital is subordinated to the limited partnership capital. Included in partnership capital at December 31, 1993 and 1992, are undistributed profits of $17,964,000 and $18,438,000, respectively, that will be withdrawn by the partners. NOTE 9 - NET CAPITAL REQUIREMENTS As a result of its activities as a broker/dealer, EDJ, is subject to the Net Capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934 and the capital rules of the New York Stock Exchange. Under the alternative method permitted by the rules, EDJ must maintain minimum Net Capital, as defined, equal to the greater of $150,000 or 2% of aggregate debit items arising from customer transactions. The Net Capital rule also provides that partnership capital may not be withdrawn if resulting Net Capital would be less than 5% of aggregate debit items. Additionally, certain withdrawals require the consent of the SEC to the extent they exceed defined levels even though such withdrawals would not cause Net Capital to be less than 5% of aggregate debit items. At December 31, 1993, EDJ's Net Capital of $89,790,000 was 20% of aggregate debit items and its Net Capital in excess of the minimum required was $80,681,000. Net Capital as a percentage of aggregate debits after anticipated capital withdrawals was 17%. Net Capital and the related capital percentage may fluctuate on a daily basis. EDJ's Net Capital excludes $19,782,000 of undistributed profits which will be withdrawn by the partners and $27,254,000 of cash capital contributions that were pending New York Stock Exchange approval. Subsequent to December 31, 1993, EDJ received approval from the New York Stock Exchange to add $27,254,000 of cash capital contributions that were made during 1993 as allowable Net Capital. EDJ also received permission to prepay in advance of its scheduled maturity $17,000,000 of subordinated debt. The effect of these approvals would have been to increase Net Capital to $117,044,000 and excess Net Capital to $107,935,000 as of December 31, 1993. The percentage of Net Capital to aggregate debits and the percentage of Net Capital to aggregate debits after anticipated capital withdrawals, would have been 26% and 19%, respectively. Net Capital in excess of 5% of aggregate debit items would have been $94,272,000. NOTE 10 - EMPLOYEE BENEFIT PLAN The Partnership maintains a profit sharing plan covering all eligible employees. Contributions to the plan are at the discretion of the Partnership. However, participants may contribute on a voluntary basis. Approximately $16,716,000, $15,625,000, and $10,347,000 were provided by the Partnership for its contributions to the plan for the years ended December 31, 1993, 1992 and 1991, respectively. No post retirement benefits are provided. NOTE 11 - COMMITMENTS Branch office facilities, computer system equipment and branch satellite equipment are rented under various operating leases. Additionally, branch offices are leased on a three to five year basis, and are cancellable at the option of the Partnership. The Partnership's computer system equipment and branch satellite equipment lease commitments are $10,823,000 in 1994, $5,321,000 in 1995, $3,661,000 in 1996, and $2,770,000 in 1997 and $1,221,000 in 1998 and thereafter. Rent expense was $28,385,000, $24,837,000, and $24,703,000 for the years ended December 31, 1993, 1992 and 1991, respectively. NOTE 12 - CONTINGENCIES Various legal actions, primarily relating to the distribution of securities, are pending against the Partnership. Certain cases are class actions (or purported class actions) claiming substantial damages. These actions are in various stages and the results of such actions cannot be predicted with certainty. In the opinion of management, after consultation with legal counsel, the ultimate resolution of these actions will not have a material adverse impact on the Partnership's financial condition. ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Jones Financial Companies, a Limited Partnership, being organized as a partnership, does not have individuals associated with it designated as officers or directors. Presently, the Partnership is comprised of 111 general partners, 2,000 limited partners and 54 subordinated limited partners. Under the terms of the Partnership Agreement, John W. Bachmann is designated Managing Partner and in said capacity has primary responsibility for administering its business, determining its policies, controlling the management and conduct of the Partnership's business and has the power to appoint and dismiss general partners of the Partnership and to fix the proportion of their respective interests in the Partnership. Subject to the foregoing, the Partnership is managed by its 111 general partners. The Executive Committee of the Partnership is comprised of John W. Bachmann, James W. Harrod, Douglas E. Hill, Charles R. Larimore, Richie L. Malone, Darryl L. Pope, Ray L. Robbins, Jr., Edward Soule and James D. Weddle. The purpose of the Executive Committee is to provide counsel and advice to the Managing Partner in discharging his functions. Furthermore, in the event the position of Managing Partner is vacant, the Executive Committee shall succeed to all of the powers and duties of the managing partner. None of the general partners are appointed for any specific term nor are there any special arrangements or understandings pursuant to their appointment other than as contained in the Partnership Agreement. No general partner is or has been individually, nor in association with any prior business, the subject of any action under any insolvency law or criminal proceeding or has ever been enjoined temporarily or permanently from engaging in any business or business practice. A listing of the names, ages, dates of becoming a general partner and area of responsibility for each general partner follows: BECAME NAME AGE G.P. AREA OF RESPONSIBILITY Warren K. Akerson 51 1974 Sales Allan J. Anderson 51 1992 Sales Management John W. Bachmann 55 1970 Managing Partner Thomas M. Bartow 44 1989 Sales Training James D. Bashor 39 1990 Regional Sales Leader Robert J. Beck 39 1983 Municipal Trading John D. Beuerlein 40 1979 Sales Management John S. Borota 53 1978 Sales Hiring William H. Broderick, III 41 1986 Syndicate Morton L. Brown 47 1978 Managed Investments Alan J. Bubalo 40 1984 Regional Sales Leader Spencer B. Burke 45 1987 Investment Banking Daniel A. Burkhardt 46 1979 Investment Banking Jack L. Cahill 44 1980 Sales Management Brett A. Campbell 35 1993 Marketing Donald H. Carter 50 1994 Regional Sales Leader John J. Caruso 47 1988 Data Processing Guy R. Cascella 36 1992 Regional Sales Leader Craig E. Christell 37 1994 Regional Sales Leader Richard A. Christensen, Jr.46 1978 Mutual Funds Processing Robert J. Ciapciak 38 1988 Market Research David W. Clapp 44 1978 Sales Management Stephen P. Clement 44 1990 Video Communications Loyola A. Cronin 36 1987 Branch Staff Training Harry J. Daily, Jr. 47 1985 Regional Sales Leader A. Randal Dickinson 42 1984 Regional Sales Leader Terry A. Doyle 44 1992 Regional Sales Leader William T. Dwyer, Jr. 38 1994 Regional Sales Leader Abe W. Dye 49 1984 Sales Management Allen R. Eaker 47 1989 Regional Sales Leader Norman L. Eaker 37 1984 Securities Processing Kevin Eberle 43 1993 Regional Sales Leader Michael J. Esser 45 1983 Advanced Sales Training Kevin N. Flatt 45 1989 Fixed Income/Equity Trading John A. Fowler 46 1979 Customer Tax Support Steve Fraser 38 1993 Securities Processing Chris A. Gilkison 40 1994 Branch Locations Barbara G. Gilman 55 1988 Trust Marketing Steven L. Goldberg 35 1987 Central Services James R. Gonso 38 1986 Regional Sales Leader Ronald Gorgen 44 1993 Field Services Robert L. Gregory 51 1974 Sales Hiring Patricia F. Hannum 33 1988 Financial Services Stephen P. Harrison 45 1990 Regional Sales Leader James W. Harrod 58 1974 Sales Training David L. Hayes 38 1994 Regional Sales Leader Randy K. Haynes 38 1994 Operations John M. Hess 46 1992 Regional Sales Leader Mary Beth Heying 36 1994 Communications Douglas E. Hill 49 1974 Product Management Stephen M. Hull 49 1994 Regional Sales Leader Earl H. Hull, Jr. 48 1990 Regional Sales Leader Glennon D. Hunn 51 1984 Data Processing Gary R. Hunziker 53 1994 Regional Sales Leader Paul C. Husted 40 1990 Regional Sales Leader Thomas G. Iorio 33 1994 Regional Sales Leader Mellany F. Isom 40 1984 Sales Hiring Myles P. Kelly 40 1989 Accounting Loren G. Kolpin 48 1985 Regional Sales Leader Charles R. Larimore 53 1981 Branch Administration Ronald E. Lemonds 57 1972 Equity Marketing Michele Liebman 37 1994 Data Processing Steven F. Litchfield 38 1983 Regional Sales Leader Richie L. Malone 45 1979 Data Processing Richard G. McCarty 54 1990 Regional Sales Leader James A. McKenzie 49 1977 Regional Sales Leader Thomas Migneron 33 1993 Internal Audit Richard G. Miller, Jr. 38 1991 Regional Sales Leader Thomas W. Miltenberger 46 1985 Mutual Funds Marketing Merry L. Mosbacher 35 1986 Investment Banking Joseph M. Mott, III 36 1989 Insurance/Annuities Marketing William D. Murphy 53 1980 Regional Sales Leader Matt B. Myre 37 1988 Regional Sales Leader Rodger W. Naugle 52 1992 Regional Sales Leader Steven Novik 44 1983 Accounting Cynthia Paquette 33 1993 Data Processing Robert K. Pearce 44 1989 Human Resources Darryl L. Pope 54 1971 Operations Gary D. Reamey 38 1984 Canada Division James L. Regnier 36 1994 Sales Training Ray L. Robbins, Jr. 49 1975 Research Stephen T. Roberts 41 1981 Compliance Wann V. Robinson 43 1992 Regional Sales Leader Douglas Rosen 33 1993 Regional Sales Leader Harry John Sauer, III 36 1988 Dividend Processing Philip R. Schwab 45 1978 Syndicate Darrell G. Seibel 59 1985 Regional Sales Leader Robert D. Seibel 59 1974 Regional Sales Leader Festus W. Shaughnessy, III 38 1988 Sales Training Connie M. Silverstein 38 1988 Sales Hiring Alan F. Skrainka 32 1989 Research John S. Sloop 45 1990 Sales Management Ronald H. Smith 54 1984 Regional Sales Leader Lawrence R. Sobol 43 1977 General Counsel Edward Soule 41 1986 Accounting Lawrence E. Thomas 38 1983 Government Bond Trading Terry R. Tucker 39 1988 Data Processing Richard G. Unnerstall 38 1989 Data Processing Robert Virgil, Jr. 59 1994 Headquarters Administration JoAnn Von Bergen 44 1986 Cash Processing John R. Wagner 46 1987 Regional Sales Leader Donald E. Walter 48 1983 Compliance Director Bradley T. Wastler 41 1989 Sales Management James D. Weddle 40 1984 Sales Management Vicki Westall 34 1993 Product Review Thomas J. Westphal 35 1989 Customer Statements Heidi Whitfield 33 1993 Product Review Robert D. Williams 32 1994 Regional Sales Leader A. Thomas Woodward 47 1985 Sales Management Price P. Woodward 31 1993 Regional Sales Leader Alan T. Wright 47 1994 Investment Banking Except as indicated below, each of the General Partners has been a general partner of the Partnership for more than the preceding five years. Allan J. Anderson, joined the Partnership in 1984 as a registered representative and became a general partner in 1992. James D. Bashor, joined the Partnership in 1983 as a registered representative and became a general partner in 1990. Brett A. Campbell, joined the Partnership in 1984 as a registered representative and became a general partner in January 1993. Donald H. Carter, joined the Partnership in 1982 as a registered representative and became a general partner in January 1994. Guy Cascella, joined the Partnership in 1983 as a registered representative and became a general partner in 1992. Stephen P. Clement, joined the Partnership in 1987 as Video manager and became a general partner in 1990. Prior to this, he was a news director for an ABC affiliate television station. Craig E. Christell, joined the Partnership in 1982 as a registered representative and became a general partner in January 1994. Terry Doyle, joined the Partnership in 1981 as a registered representative and became a general partner in 1992. William T. Dwyer, joined the Partnership in 1982 as a registered representative and became a general partner in January 1994. Kevin Eberle, joined the Partnership in 1985 as a registered representative and became a general partner in 1993. Steve Fraser, joined the Partnership in 1985 in the Operations Department and became a general partner in January, 1993. Prior to this, he was employed by Automated Data Processing Inc. Chris A. Gilkison, joined the Partnership in 1987 as a registered representative and became a general partner in January 1994. Ron Gorgen, joined the Partnership in 1980 as a registered representative and became a general partner in January 1993. David L. Hayes, joined the Partnership in 1977 active in hiring and training and became a general partner in January 1994. Stephen P. Harrison, joined the Partnership in 1978 as a registered representative and became a general partner in 1990. Randy K. Haynes, joined the Partnership in 1984 as a registered representative and became a general partner in January 1994. John Hess, joined the Partnership in 1982 as a registered representative and became a general partner in 1992. Mary Beth Heying, joined the Partnership in 1984 in the Communications Department and became a general partner in January 1994. Earl H. Hull, Jr., joined the Partnership in 1975 as a registered representative and became a general partner in 1990. Steven M. Hull, joined the Partnership in 1973 as a registered representative and became a general partner in 1994. Gary R. Hunziker, joined the Partnership in 1986 as a registered representative and became a general partner in January 1994. Paul C. Husted, joined the Partnership in 1982 as a registered representative and became a general partner in 1990. Thomas G. Iorio, joined the Partnership in 1982 as a registered representative and became a general partner in January 1994. Michele M. Liebman, joined the Partnership in 1985 in the Data Processing Department and became a general partner in January 1994. Richard G. McCarty, joined the Partnership in 1980 as a registered representative and became a general partner in 1990. Thomas Migneron, joined the Partnership in 1985 as an internal auditor and became a general partner in January, 1993. Richard G. Miller, Jr., joined the Partnership in 1981 as a registered representative and became a general partner in 1991. Rodger Naugle, joined the Partnership in 1981 as a registered representative and became a general partner in 1992. Cynthia Paquette, joined the Partnership in 1985 in the Data Processing Department and became a general partner in January 1993. James L. Regnier, joined the Partnership in 1983 as a registered representative and became a general partner in January 1994. Wann V. Robinson, joined the Partnership in 1985 as a registered representative and became a general partner in 1992. Douglas Rosen, joined the Partnership in 1982 as a registered representative and became a general partner in January 1993. John S. Sloop, joined the Partnership in 1983 as a registered representative and became a general partner in 1990. Robert Virgil, Jr., joined the Partnership in 1993 as a general partner. Prior to this, he served as dean of the John M. Olin School of Business at Washington University. Vicki Westall, joined the Partnership in 1984 in the Product Review Department and became a general partner in January, 1993. Prior to this, she was an accountant with Peat, Marwick, Mitchell & Co. Heidi Whitfield, joined the Partnership in 1982 as an equity analyst and became a general partner in January 1993. Robert D. Williams, joined the Partnership in 1986 as a registered representative and became a general partner in 1994. Price P. Woodward, joined the Partnership in 1984 as a registered representative and became a general partner in January 1993. Alan T. Wright, joined the Partnership in 1985 in Investment Banking Department and became a general partner in January 1994. Daniel A. Burkhardt is a director of Essex County Gas Company, Amsebury, Massachusetts; Galaxy Cablevision Management, Inc., Sikeston, Missouri; Dial Reit, Omaha, Nebraska; Met Life Farm & Ranch Properties, Kansas City, Missouri; Southeastern MI Gas Enterprises, Port Huron, Michigan; and Community Investment Partners, L.P. John C. Heisler, Philip R. Schwab and John D. Beuerlein are directors of Cornerstone Mortgage Investment Group, Inc. and Cornerstone Mortgage Investment Group II, Inc. Ray L. Robbins, Jr. is a director of Community Investment Partners, L.P. Robert Virgil, Jr. is a director of CPI Corp., St. Louis, Missouri; Angelica Corp., St. Louis, Missouri; and Allied Healthcare Products, Inc., St. Louis, Missouri. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth all compensation paid by the Partnership during the three most recent years to the five general partners receiving the greatest compensation (including respective shares of profit participation). Returns to General Partner Capital _____________________ (1) (2) (3) & (4) General Net income Partner Deferred allocated invested Total Compen-to General Capital at (1) (2) Year Salaries sation Partners 12/31/93 (3) John W. Bachmann1993 120,000 10,707 2,350,562 3,213,597 2,481,269 1992 120,000 11,306 2,298,834 3,408,360 2,430,140 1991 120,000 10,111 1,556,853 2,752,555 1,686,964 Douglas E. Hill 1993 118,000 10,707 1,994,416 2,726,688 2,123,123 1992 118,000 11,306 1,948,536 2,888,991 2,077,842 1991 115,000 10,111 1,318,416 2,330,993 1,443,527 Ron Larimore 1993 118,000 10,707 1,994,416 2,726,688 2,123,123 1992 118,000 11,306 1,992,323 2,953,912 2,121,629 1991 115,000 10,111 1,346,468 2,380,588 1,471,579 Richie L. Malone1993 118,000 10,707 1,899,444 2,596,846 2,028,151 1992 118,000 11,306 1,810,493 2,596,846 1,939,799 1991 115,000 10,111 1,122,057 1,983,823 1,247,168 Darryl W. Pope 1993 118,000 10,707 1,994,416 2,726,688 2,123,123 1992 118,000 11,306 1,926,642 2,856,530 2,055,948 1991 115,000 10,111 1,304,391 2,306,195 1,429,502 (1) Each non-selling general partner receives a salary presently ranging from $78,000 - $120,000 annually. Selling general partners do not receive a specified salary, rather, they receive the net sales commissions earned by them (none of the five individuals listed above earned any such commissions). Additionally, general partners who are principally engaged in sales are entitled to office bonuses based on the profitability of their respective branch office, on the same basis as the office bonus program established for all investment representative employees. (2) Each general partner is a participant in the Partnership's profit sharing plan which covers all eligible employees. Contributions to the plan, which are within the discretion of the Partnership, are made annually and have historically been determined based on approximately twenty-four percent of the Partnership's net income. Allocation of the Partnership's contribution among participants is determined by each participant's relative level of eligible earnings, including in the case of general partners, their profit participation. (3) Each general partner is entitled to participate in the annual net income of the Partnership based upon the respective percentage interest in the Partnership of each partner. These interests in the Partnership held by each general partner currently range from 1/10 of 1% to 4.95% in 1993. (1/10 of 1% to 5.25% in 1992 and 1/10 of 1% to 5.55% in 1991). At the discretion of the Managing Partner, the partnership agreement provides that, generally, the first five percent of net income allocable to general partners be distributed on the basis of individual merit as determined by the Managing Partner. Thereafter, the remaining net income allocable to general partners is distributed based upon each individual's percentage interest in the Partnership. In 1993, 6% of net income was distributed on the basis of individual merit. (4) Net income allocable to general partners is the amount remaining after payment of interest and earnings on capital invested to limited partners and subordinated limited partners. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Being organized as a limited partnership, management is vested in the general partners thereof and there are no other outstanding "voting" or "equity" securities. It is the opinion of the Partnership that the general partnership interests are not securities within the meaning of federal and state securities laws primarily because each of the general partners participates in the management and conduct of the business. In connection with outstanding limited and subordinated limited partnership interests (non-voting securities), 82 of the general partners also own limited partnership interests and 37 of the general partners also own subordinated limited partnership interests, as noted in the table below. As of February 25, 1994: Name of Amount of Beneficial Beneficial Percent of Title of Class Owner Ownership Class Limited Partnership All General Interests Partners as a Group $ 5,448,000 8% Subordinated All General Limited Partnership Partners as Interests a Group $13,715,000 64% ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In the ordinary course of its business the Partnership has extended credit to certain of its partners and employees in connection with their purchase of securities. Such extensions of credit have been made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with non-affiliated persons, and did not involve more than the normal risk of collectibility or present other unfavorable features. The Partnership also, from time to time and in the ordinary course of business, enters into transactions involving the purchase or sale of securities from or to partners or employees and members of their immediate families, as principal. Such purchases and sales of securities on a principal basis are effected on substantially the same terms as similar transactions with unaffiliated third parties. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K INDEX (a) (1) The following financial statements are included in Part II, Item 8: Page No. Report of Independent Public Accountants Consolidated Statements of Financial Condition as of December 31, 1993 and 1992 Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991 Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991 Consolidated Statements of Changes in Partnership Capital for the years ended December 31, 1993, 1992 and 1991 Notes to Consolidated Financial Statements All schedules are omitted because they are not required, inapplicable, or the information is otherwise shown in the financial statements or notes thereto. (b) Report on Form 8-K No reports on Form 8-K were filed in the fourth quarter of 1993. (c) Exhibits Reference is made to the Exhibit Index hereinafter contained. EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1993 Exhibit Number Page Description 3.1 * Amended and Restated Agreement and Certificate of Limited Partnership of Registrant dated October 1, 1993. 3.2 * Form of Limited Partnership Agreement of Edward D. Jones & Co., L.P., dated November 1, 1993 10.1 * Form of Cash Subordination Agreement between the Registrant and Edward D. Jones & Co., incorporated herein by reference to Exhibit 10.1 to the Company's registration statement of Form S-1 (Reg. No. 33-14955). 10.2(a) * Note Purchase Agreement between Tempus Corporation and Edward D. Jones & Co. dated as of April 15, 1986, incorporated herein by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 28, 1986. 10.2(b) * Note Purchase Agreement between Tempus Corporation and Edward D. Jones & Co., L.P. dated as of March 15, 1988, incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 25, 1988. 10.3 * Complaint for Permanent Injunction and Other Equitable Relief and Final Judgment of Permanent Injunction in re: SEC v. Edward D. Jones & Co. (U.S. Dist. Ct. for Dist. of Columbia; Civil Action No. 85-3078), incorporated herein by reference to Exhibit 10(i) to the Company's current report on Form 8-K dated September 24, 1985. 10.4 * Volume Discount Agreement dated May 27, 1987, between Digital Equipment Corporation and Edward D. Jones & Co., incorporated herein by reference to Exhibit 10.13(c) to the Company's registration statement on Form S-1 (Reg. No. 33-14955). 10.5 * Master Lease Agreement dated as of May 29, 1987, between Digital Equipment Corporation and Edward D. Jones & Co., incorporated herein by reference to Exhibit 10.13(b) to the Company's registration statement on Form S-1 (Reg. No. 33-14955). 10.6 * Master Lease Agreement dated as of October 17, 1988, between Edward D. Jones & Co., L.P., and BancBoston Leasing, incorporated herein by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1988. 10.7 * Satellite Communications Agreement dated as of September 12, 1988, between Hughes Network Systems and Edward D. Jones & Co., L.P., incorporated herein by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1988. 10.8 * Agreements of Lease between EDJ Leasing Company and Edward D. Jones & Co., L.P., dated August 1, 1991, incorporated herein by reference to Exhibit 10.18 to the Company's Annual Report or Form 10-K for the year ended September 27, 1991. 10.9 * Loan Agreement between EDJ Leasing Co., L.P. and Nationwide Insurance Company dated August 2, 1991, incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report or Form 10-K for the year ended September 27, 1991. 10.10 * Edward D. Jones & Co., L.P. Note Purchase Agreement dated as of May 8, 1992, incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 26, 1992. 10.11 * Purchase and Sale Agreement by and between EDJ Leasing Co., L.P. and the Resolution Trust Corporation incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report or Form 10-K for the year ended December 31, 1992. 10.12 Master Lease Agreement between EDJ Leasing Company and Edward D. Jones & Co., L.P., dated March 9, 1993, and First Amendment to Lease dated March 9, 1994. 10.13 Purchase Agreement by and between Edward D. Jones & Co., L.P. and Genicom Corporation dated November 25, 1992. 10.14 Mortgage Note and Deed of Trust and Security Agreement between EDJ Leasing Co., L.P. and Nationwide Insurance Company dated March 9, 1993. 10.15 Mortgage Note and Amendment to Deed of Trust between EDJ Leasing Co., L.P. and Nationwide Insurance Company dated March 9, 1994. 24.1 Consent of Independent Public Accountants 25 * Delegation of Power of Attorney to Managing Partner contained within Exhibit 3.1. ________________________________________________________________________ * - Incorporated by reference. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized: (Registrant) THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP ___________________________________________________ By (Signature and Title) /s/ John W. Bachmann __________________________________ John W. Bachmann, Managing Partner Date March 28, 1994 __________________________________ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated. (Registrant) THE JONES FINANCIAL COMPANIES, A LIMITED PARTNERSHIP ___________________________________________________ By (Signature and Title) /s/ John W. Bachmann __________________________________ John W. Bachmann, Managing Partner Date March 28, 1994 __________________________________ SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT. There have been no annual reports sent to security holders covering the registrant's last fiscal year nor have there been any proxy statements, form of proxy or other proxy soliciting material sent to any of registrant's security holders. EX-1 2 JFC PARTNERSHIP AGREEMENT THE JONES FINANCIAL COMPANIES, a Limited Partnership SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP Dated as of October 1, 1993 THE JONES FINANCIAL COMPANIES, a Limited Partnership (a Missouri Limited Partnership) SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP THIS SIXTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP entered into as of this first day of October, 1993, by and among John W. Bachmann as General Partner, and John W. Bachmann as the Attorney- In-Fact for all of the other General Partners, all of the Limited Partners and all of the Subordinated Limited Partners. W I T N E S S E T H: WHEREAS, the Partnership was formed as a limited partnership under the Missouri Revised Uniform Limited Partnership Act pursuant to an Agreement and Certificate of Limited Partnership dated June 5, 1987; WHEREAS, the Partnership filed on July 15, 1987 its Amended and Restated Agreement and Certificate of Limited Partnership dated July 15, 1987 (the "Restated Agreement"); WHEREAS, the Partnership filed on August 28, 1987, November 16, 1987, August 5, 1988, August 29, 1988, January 31, 1989, March 21, 1989 and August 10, 1989 its Amendments No. 1, 2, 3, 4, 5, 6 and 7 respectively, to its Restated Agreement; WHEREAS, the Partnership filed on June 22, 1989 its Partner List as of May 31, 1989; WHEREAS, the Restated Agreement as amended is hereinafter referred to as the "First Restated Agreement"; WHEREAS, the First Restated Agreement was amended and restated in its entirety pursuant to a Second Amended and Restated Agreement and Certificate of Limited Partnership dated as of January 31, 1990 (the "Second Restated Agreement"); WHEREAS, the Missouri Revised Uniform Limited Partnership Act was amended in August of 1990 and no longer requires certain information in certificates of limited partnership (filed with the Secretary of State) and now requires corresponding amendments to be made to agreements of limited partnership; WHEREAS, the Partnership desired that the aforesaid Second Restated Agreement become two separate documents, namely a Third Amended and Restated Agreement of Limited Partnership (the "Third Restated Agreement") and a separate restated Certificate of Limited Partnership; WHEREAS, the Second Restated Agreement was amended and restated in its entirety pursuant to said Third Restated Agreement dated as of January 31, 1991; and WHEREAS, the Third Restated Agreement was amended and restated in its entirety pursuant to the Fourth Amended and Restated Agreement of Limited Partnership (the "Fourth Restated Agreement") dated as of January 1, 1993; and WHEREAS, the Fourth Restated Agreement was amended and restated in its entirety pursuant to the Fifth Amended and Restated Agreement of Limited Partnership (the "Fifth Restated Agreement") dated as of May 24, 1993; and WHEREAS, the parties now desire to amend and restate said Fifth Restated Agreement pursuant to this Sixth Amended and Restated Agreement of Limited Partnership; NOW, THEREFORE, pursuant to the terms, covenants and conditions set forth herein and the mutual promises contained herein, the parties hereto agree as follows: ARTICLE ONE DEFINED TERMS The defined terms used in this Agreement shall have the meanings specified below: "Affiliate" means (1) any Person directly or indirectly controlling, controlled by or under common control with another Person, (2) any Person owning or controlling ten percent (10%) or more of the outstanding voting securities of such other Person, (3) any officer, director or partner of such Person, or (4) if such other Person is an officer, director or partner, any company for which such Person acts in any such capacity. "Agreement" means this Sixth Amended and Restated Agreement of Limited Partnership, as amended from time to time. "Capital Account" means an account established by the Partnership and maintained for each Partner, for federal income tax purposes, which account shall be credited with: (i)the amount of the Partner's Capital Contributions; and (ii)the amount of Partnership income (including income exempt from federal income tax) and gain (or items thereof) allocated to the Partner pursuant to Article Eight hereof; and which shall be debited by: (iii)the amount of Partnership losses and deductions (or items thereof) allocated to the Partner pursuant to Article Eight hereof; (iv)the amount of Partnership expenditures described in Treasury Regulations Section 1.704-1(b)(2)(iv)(i) allocable to the Partner in the same proportion as that in which the Partner bears the economic burden of those expenditures; and (v)the amount of all distributions to the Partner pursuant to Article Eight hereof. In addition, the Capital Account of each Partner shall be adjusted as necessary to comply with Treasury Regulations Section 1.704- 1(b)(2)(iv). In the event the Managing Partner shall determine that it is prudent to modify the manner in which the Capital Accounts or any debits or credits thereto are completed in order to comply with such regulations, the Managing Partner may amend this Agreement to reflect such modification, provided that it is not likely to have a material effect on the amounts distributable to the Partners pursuant to Article Eight upon dissolution of the Partnership. If any Partner would otherwise have a negative balance in his Capital Account, the amount of any such negative balance shall be reduced (but not in excess of such negative balance) by the amount of such Partner's share of Partnership Minimum Gain (determined in accordance with Treasury Regulations Section 1.704-1(b)(4)(iv)(f)) after taking into account all increases and decreases to such Partnership Minimum Gain during the taxable year. In the event that the Partnership is deemed to be terminated for federal income tax purposes due to the sale or exchange of fifty percent (50%) or more of the Partnership interests within a twelve (12) month period, appropriate adjustment shall be made to the Capital Accounts to reflect the constructive liquidation and reformation deemed to occur upon a termination. In the event that interests in the Partnership are sold, exchanged or otherwise transferred, and the transfer is recognized under Article Six or Article Seven hereof, or by operation of law, the Capital Account of the transferee will equal the Capital Account of the transferor immediately before the transfer. However, if such a sale or exchange, either alone or in combination with other sales or exchanges within a twelve-month period results in a transfer of fifty percent (50%) or more of the Partnership interests causing a termination of the Partnership for federal income tax purposes, the adjustment required by the immediately preceding paragraph shall be made. "Capital Contribution" means the total amount of cash or property contributed to the Partnership by each Partner pursuant to the terms of this Agreement. The Capital Contributions of the Partners have been previously set forth on exhibits to this Agreement. From the date hereof, the Capital Contributions of the Partners shall be reflected in the books and records of the Partnership. "Certificate of Limited Partnership" means the document, as amended or restated from time to time, filed as a certificate of limited partnership under the Missouri Act. "Event of Withdrawal" means, as to a General Partner, the occurrence of death, adjudication of mental incompetence, bankruptcy, dissolution, or voluntary or involuntary withdrawal or removal from the Partnership or any other event of withdrawal set forth in the Missouri Act. "Frozen Appreciation Amount" means each General Partner's share of the unrealized appreciation of certain real estate (the "Real Estate") owned by EDJ Leasing Co. on the date such General Partner contributes his general partnership interest in EDJ Leasing Co. to the Partnership plus such General Partner's share of the unrealized appreciation of all stock exchange seats (the "Exchange Seats") owned by or for the benefit of Edward D. Jones & Co. on the date such General Partner contributes his general partnership interest in Edward D. Jones & Co. to the Partnership., The Frozen Appreciation Amount shall be maintained in the books and the records of Partnership. The Real Estate currently consists of the land and improvements located at 201 Progress Parkway, 141 Progress Parkway, 158 Progress Parkway, 115 Progress Parkway, 135 Progress Parkway, 9 American Industrial Dr. and 20 American Industrial Dr., all in St. Louis County, Missouri. The Exchange Seats consists of one (1) seat on the New York Stock Exchange, one (1) seat on the American Stock Exchange, one (1) seat on the Midwest Stock Exchange and two (2) seats on the New York Futures Exchange. Each year, as of December 31, the Partnership shall appraise (to the extent not previously sold) the Real Estate and the shares of unrealized appreciation shall be appropriately and proportionately adjusted for each General Partner on the books of the Partnership. on the each Valuation Date, if needed for the purpose of making a calculation for purposes of this Agreement, the Partnership shall appraise (to the extent not previously sold) the Exchange Seats and the shares of unrealized appreciation shall be appropriately and proportionately adjusted for each General Partner on the books of the Partnership. The unrealized appreciation per each separate tract of Real Estate and per each separate Exchange Seat as set forth on the books of the Partnership may never exceed the amount used in making the original calculation even if a given appraised value later exceeds such amount. When, as and if a given tract of Real Estate or Exchange Seat is sold, the unrealized appreciation then attributable to such tract of Real Estate or Exchange Seat shall no longer be included in the calculation of the Frozen Appreciation Amount on the books of the Partnership. "General Partners" means those persons who have executed this Agreement and whose names are set forth in the books and records of the Partnership as being General Partners, and any other Person who becomes a successor or additional General Partner of the Partnership as provided herein. "General Partner's Adjusted Capital Contribution" means the Capital Contribution of the General Partner plus all Net Income thereafter allocated to the account of the General Partner minus (a) all Net Loss thereafter allocated to the account of the General Partner, and (b) any cash or property thereafter distributed to (or for the benefit of) the General Partner. Payments of salaries, bonuses or expenses to a General Partner by the Partnership shall not affect such General Partner's Adjusted Capital Contribution. "General Partner Interest" means a General Partner's entire ownership interest in the Partnership. "General Partner Percentage" means a percentage determined by dividing a General Partner's Adjusted Capital Contribution by the Adjusted Capital Contributions of all of the General Partners. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. "Limited Partners" means those persons who have executed this Agreement and whose names are set forth in the books and records of the Partnershipas being Limited Partners, and any other person who becomes a Limited Partner of the Partnership as provided herein. "Limiteds" means those persons whose names are set forth in the books and records of the Partnership as being the Limited Partners and the Subordinated Limited Partners, and any other person who becomes a Limited of the Partnership as provided herein. "Missouri Act" means the Missouri Revised Uniform Limited Partnership Act, as amended from time to time. "Net Income or Net Loss" means, with respect to any fiscal period, the net income or the net loss of the Partnership, determined in accordance with generally accepted accounting principles; provided, however, there shall be excluded from such net income or net loss any unrealized gains or losses on securities held (whether at the discretion of the Partnership or otherwise) by the Partnership (or by any entity whose financial statements are consolidated with the financial statements of the Partnership) as a hedge against fixed rate borrowings (as opposed to other securities held by the Partnership [or by any entity whose financial statements are consolidated with the financial statements of the Partnership] as inventory for resale in the ordinary course of business). "Notice" means a writing, containing the information required by this Agreement to be communicated to a party, delivered personally or sent by U.S. mail, postage prepaid, to such party at the last known address of such party as shown on the records of the Partnership, the date of personal delivery or the date of mailing thereof being deemed the date of receipt thereof. "Partner" means any General Partner or Limited. "Partnership" means the limited partnership formed by this Agreement by the parties hereto, as said limited partnership may from time to time be constituted. "Partnership Minimum Gain" means, for Partnership tax purposes, as set forth in Treasury Regulations Section 1.704-1(b)(4)(iv)(c), the amount of gain, if any, that would be realized by the Partnership if it were to sell or dispose of (in a taxable transaction) property subject to a non-recourse liability of the Partnership, in full satisfaction of such liability. "Person" means a natural person, partnership, limited partnership (domestic or foreign), trust, estate, association or corporation. "Profits and Losses For Tax Purposes" means, for Partnership accounting and tax purposes, the various items set forth in Section 702(a) of the Internal Revenue Code and all applicable regulations or any successor law, and shall include, but not be limited to, each item of income, gain, deduction, loss, preference or credit. "Subordinated Limited Partners" means those persons who have executed this Agreement and whose names are set forth in the books and records of the Partnership as Subordinated Limited Partners, and any other person who becomes a Subordinated Limited Partner of the Partnership as provided herein. "Valuation Date" means as of the last Friday of each month except for the month of December in which case it means as of the last day of the month. ARTICLE TWO CONTINUATION, NAME AND OFFICE, PURPOSES, TERM AND DISSOLUTION, REGISTERED AGENT, PARTNER LIST 2.1 Continuation. The parties hereto hereby continue the Partnership as a limited partnership pursuant to the provisions of the Missouri Act. 2.2 Name, Place of Business and Office. The Partnership shall be conducted under the name of "The Jones Financial Companies, a Limited Partnership". The principal office and place of business shall be 201 Progress Parkway, Maryland Heights, Missouri 63043. The General Partners may at any time change the location of such principal office. Notice of any such change shall be given to the Partners on or before the date of any such change. 2.3 Purposes. The purposes of the Partnership shall be to act as a limited partner in Edward D. Jones & Co., L.P., ("EDJ") to act as a general partner, limited partner, guarantor, stockholder or holding partnership for any other limited partnership, general partnership, corporation or other entity and to engage in such other activities as may be approved by the General Partners. 2.4 Term and Dissolution. A. The Partnership shall continue in full force and effect until December 31, 2087, or until dissolution prior thereto upon the happening of any of the following events: (i) The sale of all of the assets of the Partnership; (ii) An Event of Withdrawal of a General Partner if no General Partner remains; or (iii) The dissolution of the Partnership by the General Partners. B. Upon dissolution of the Partnership, the General Partners shall cause the cancellation of the Partnership's Certificate of Limited Partnership, liquidate the Partnership's assets and apply and distribute the proceeds thereof in accordance with Section 8.2 hereof. 2.5 Registered Office and Agent. The name and address of the Registered Agent and Registered Office for service of process on the Partnership are as set forth in the Certificate of Limited Partnership. 2.6 Amendment to Certificate of Limited Partnership. The Certificate of Limited Partnership shall be amended within thirty days of the admission or withdrawal of a General Partner. ARTICLE THREE PARTNERS AND CAPITAL 3.1 General Partners. A. The name, last known mailing address and current Capital Contribution of each General Partner are reflected in the books and records of the Partnership. B. Any General Partner, in addition to being a General Partner, may also become a Limited by complying with the provisions of Section 3.4 hereof. In such event, said General Partner shall have all the rights and powers and be subject to all the restrictions of a General Partner, except that, in respect to its Capital Contribution as a Limited, he shall have the rights against the other Partners which he would have had if he were not also a General Partner. C. Any General Partner may, with the consent of the Managing Partner, increase his Capital Contribution from time to time. Such increased Capital Contribution shall be made in such manner and at such time as determined by the Managing Partner and the General Partner Percentages shall be appropriately adjusted and transferred. All such changes shall be reflected in the books and records of the Partnership. 3.2 Admission of Additional General Partners. A. The Managing Partner may at any time designate additional General Partners with such interest in the Partnership as the Managing Partner and such additional General Partners may agree upon. The additional General Partner shall make his Capital Contribution to the Partnership in such manner and at such time as determined by the Managing General Partner and the General Partner Percentages shall be appropriately adjusted and transferred. All such changes shall be reflected in the books and records of the Partnership. The Managing Partner may admit additional General Partners to the Partnership at any time without the consent of any current General Partner or Limited. B. Each additional General Partner shall agree, as a condition to becoming an additional General Partner, to be bound by the terms and provisions of this Agreement and any other agreement (including cash subordination agreements) as deemed appropriate by the Managing Partner. 3.3 Limiteds. A. There shall be two classes of Limiteds, namely, Limited Partners and Subordinated Limited Partners. The name, last known mailing address and current Capital Contribution of each Limited Partner are reflected in the books and records of the Partnership. The name, last known mailing address and current Capital Contribution of each Subordinated Limited Partner are reflected in the books and records of the Partnership. B. Each Limited Partner shall be paid 7-1/2% per annum, on the principal amount of his Capital Contribution. Such payments shall be made yearly or more frequently, as determined by the Managing Partner. All such payments shall be treated as guaranteed payments. 3.4 Admission of Limiteds. A. The Managing Partner is authorized to admit to the Partnership Limiteds who may be admitted as Limited Partners or as Subordinated Limited Partners, at the discretion of the Managing Partner. B. The Capital Contributions of the Limiteds shall be made in such manner and at such time as determined by the Managing Partner. All such changes shall be reflected in the books and records of the Partnership. C. Each Limited shall agree, as a condition to becoming a Limited, to be bound by the terms and provisions of this Agreement and any other agreements (including cash subordination agreements) as deemed appropriate by the Managing Partner. 3.5 Partnership Capital. A. The total capital of the Partnership shall be the aggregate amount of the Capital Contributions of the Partners as provided for herein. B. Except as provided herein, or as otherwise determined by the Managing Partner, no Partner shall be paid interest on any Capital Contribution to the Partnership. C. Except as otherwise provided herein, prior to dissolution of the Partnership, no Partner shall have the right to demand the return of his Capital Contribution. No Partner shall have the right to demand and receive property other than cash in return for his Capital Contribution. D. The General Partners shall have no personal liability for the repayment of the Capital Contribution of any Limited. 3.6 Liability of Limiteds. A Limited shall only be liable to make the payment of his Capital Contribution. Except as provided in the Missouri Act, no Limited shall be liable for any obligations of the Partnership. After his Capital Contributions shall be paid to the Partnership, no Limited shall be required to make any further Capital Contribution or lend any funds to the Partnership, except as otherwise expressly provided in this Agreement.. 3.7 Participation in Partnership Business by Limiteds. No Limited (except one who may also be a General Partner, and then only in his capacity as a General Partner) shall participate in or have any control over the Partnership business (except as required by law) or shall have any authority or right to act for or bind the Partnership. The Limiteds hereby consent to the exercise by the Managing Partner and the General Partners of the powers conferred on them by this Agreement. 3.8 Priority Among Limiteds. Priorities as between classes of Limiteds as to distributions are set forth in Article Eight hereof. ARTICLE FOUR RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNERS 4.1 Authorized Acts; Management and Control. A. Subject to the other provisions set forth below, the General Partners have the exclusive right to manage the business of the Partnership and are hereby authorized to take any action (including, but not limited to, the acts authorized by Section 4.1C below) of any kind and to do anything and everything in accordance with the provisions of this Agreement. B. John W. Bachmann is hereby designated by the General Partners as the Managing Partner of the Partnership. As the Managing Partner he shall serve as Chairman of the Executive Committee. As Managing Partner, he shall have the absolute right (subject to Section 4.4C hereof) to manage the business of the Partnership on behalf of the General Partners and is hereby authorized to take on behalf of the Partnership and the General Partners any action (including, but not limited to, the acts authorized by Section 4.1C below) of any kind and to do anything and everything in accordance with the provisions of this Agreement. The Managing Partner shall have all the rights, powers and duties usually vested in the managing partner of a partnership including the administration of this Partnership's business and the determination of its business policies and he shall control the management and conduct of all of the business transacted by the Partnership. In particular, but not in limitation of the foregoing, the Managing Partner for, in the name and on behalf of, the Partnership and the General Partners is hereby specifically authorized (i) to admit to the Partnership any General Partner or Limited; (ii) to dismiss (in accordance with Section 6.2 hereof) from the Partnership any General Partner or Limited; (iii) to determine the General Partner's Adjusted Capital Contribution (and the related General Partner Percentage) that each General Partner (including the Managing Partner) shall be entitled to maintain; (iv) to determine the guaranteed draw (described in Section 4.5A hereof) to be paid to each General partner (which guaranteed draw shall be set forth on a list to be maintained in the Managing Partner's office which list shall be available for inspection by the General Partners; (v) to fix the Capital Contribution that each Limited shall be entitled to maintain; (vi) to determine all amounts, if any, to be distributed to the Limiteds pursuant to Section 8.5 hereof; (vii) to convey title to any assets of the Partnership; and (viii) to execute all documents (including, but not limited to, any loan documents or guarantees) on behalf of the Partnership. C. The General Partners for, in the name and on behalf of, the Partnership are hereby authorized to take any and all actions, and to engage in any kind of activity and to perform and carry out all functions of any kind necessary to, or in connection with, the business of the Partnership (including but not limited to): (i) executing any instruments on behalf of the Partnership; (ii) acquiring or selling assets of the Partnership; (iii) entering into loans, guarantees in connection with the business of the Partnership; (iv) acting as a partner or shareholder of, or adviser to, any other organization; (v) contributing capital, as a limited partner or as a general partner, or purchasing other securities in or otherwise investing in EDJ or any other limited partnership, general partnership, corporation or other entity and taking all actions required as a partner, shareholder or investor in any such entity. D. The special authority granted herein to the Managing Partner shall not be construed to restrict the authority of any General Partner to act as the agent of the Partnership and to execute instruments in the Partnership name for the purpose of carrying on the ordinary business of the Partnership. E. The Managing Partner may delegate to any General Partner the authority from time to time to execute documents or otherwise exercise the authority of the Managing Partner, but such authority shall not include the authority to increase the capital or change the business policies of the Partnership unless such authority is expressly and specifically granted in writing to such General Partner. F. Whenever authority is herein conferred upon the Managing Partner or the General Partners, any person, other than a General Partner, dealing with the Partnership may rely conclusively upon the authority and signature of the Managing Partner or any one other General Partner to exercise such authority without determining that such Managing Partner or such General Partner is acting with the approval of the other General Partners. In addition, third parties dealing with the Partnership may rely upon the certification of the Managing Partner or any other General Partner as to the continued existence of the Partnership, the identity of its current Partners and the authority of any Partner to execute any document. 4.2 Restrictions on Authority of the Managing Partner and Executive Committee. In the event that a meeting of General Partners is called by the General Partners in accordance with Section 5.1 hereof to vote upon the removal of the Managing Partner or an Executive Committee member, neither the Managing Partner nor the Executive Committee shall from the time of notice of such meeting until after adjournment thereof: (i) change the General Partner Percentage of any General Partner or (ii) admit or dismiss any General Partner as a Partner. 4.3 Removal or Dismissal of Certain Partners. The Managing Partner may be removed from such office and any General Partner may be dismissed as a General Partner (in accordance with Section 6.2 hereof) by a vote of General Partners holding a majority of the General Partner Percentages in the Partnership. 4.4 Executive Committee. A. An Executive Committee is hereby created consisting of the Managing Partner and nine (9) additional General Partners. Among the purposes of the Executive Committee is to provide counsel and advice to the Managing Partner in discharging his functions. B. Each member of the Executive Committee shall have one vote. C. Upon the majority vote of the Executive Committee, the Executive Committee may override any determination made by the Managing Partner as to (i) the General Partner's Adjusted Capital Contribution (and the related General Partner Percentage) that each General Partner (including the Managing Partner) shall be entitled to maintain, (ii) the admission of a new General Partner and (iii) the dismissal of a General Partner. D. Upon the majority vote of the Executive Committee, the Managing Partner may be removed from his office as the Managing Partner. Upon the majority vote of the Executive Committee a new Managing Partner may be elected whenever the office of Managing Partner is vacant. E. At any time during which there is no Managing Partner the Executive Committee shall succeed to all of the powers and duties of the Managing Partner. F. The Managing Partner shall have the right to appoint and dismiss any member of the Executive Committee; provided however that the Managing Partner shall not have the right to dismiss any member of the Executive Committee from the time Notice is given of a meeting of the Executive Committee until the adjournment thereof if the purpose of such meeting is to vote upon one or more of the matters set forth in Sections 4.4C or 4.4D hereof. G. By a vote of the General Partners holding a majority of the General Partner Percentages in the Partnership, the General Partners may remove any Executive Committee member from his position as an Executive Committee member and elect in his place a new Executive Committee member. H. If the General Partners remove any Executive Committee member from his position as an Executive Committee member, the Managing Partner may not appoint such removed Executive Committee member to the Executive Committee for a period of six (6) months thereafter. Any Executive Committee member elected to the Executive Committee by a vote of the General Partners may not be dismissed as an Executive Committee member by the Managing Partner. I. A meeting of the Executive Committee shall be held (i) at any time on call of the Managing Partner after one (1) day's Notice has been delivered to the Executive Committee members or (ii) on at least ten (10) day's Notice in advance to the Executive Committee members, jointly signed by any two (2) Executive Committee members, specifying the date, place, hour and purpose of the meeting. 4.5 Guaranteed Draw; Time and Effort; Independent Activities. A. Each General Partner shall receive a guaranteed draw for his services as determined by the Managing Partner in his sole discretion. Such guaranteed draw shall be treated by the Partnership as a guaranteed payment. Such guaranteed draw shall be reduced by any net commissions earned by any such General partner (and paid to such General Partner by EDJ) who is principally engaged in the sale of securities to the public. If any such General Partner who is principally engaged in the sale of securities to the public at EDJ incurs any reasonable expenses through usual and ordinary means of generating the sales upon which such General Partner is entitled to receive commissions from EDJ, then such General Partner must personally and individually pay, without reimbursement from the Partnership or from EDJ, such expense but such General Partner shall be entitled to deduct such expenses on his personal income tax return. B. Each General Partner shall devote his entire time, energy, skill and ability to the duties of operating the Partnership and the entities it owns. General Partners shall not engage in outside business activities without the prior written consent of the Managing Partner. Each General Partner agrees not to use the name or property of the Partnership or any entity it owns for his own private business, nor for any purpose whatsoever except those that may be incidental to the conduct and management of the Partnership, nor shall any General Partner use the name of the Partnership or any entity it owns for the use or accommodation of any other person. No General Partner shall incur any obligation in the name of the Partnership or transfer Partnership property except in connection with Partnership business. C. Each General Partner agrees that he will not, without the written consent of the Managing Partner (i) become a guarantor or surety for any person, firm or corporation; (ii) in the name of the Partnership or any entity it owns or in his own name buy or sell stocks, securities or commodities on margin, either for the account of the Partnership or for his own account; or (iii) pledge or hypothecate any of the property of the Partnership or any entity it owns for any purpose whatsoever. D. Each General Partner shall submit annually for inspection a copy of his personal federal income tax return to the independent accountants selected by the Managing Partner. E. Each Partner is expected, and it is regarded as such Partner's duty, to supplement expenses reimbursable to such Partner by the Partnership by additional expenditures of such Partner's personal funds in the furtherance of the Partnership's business which expenditures such Partner shall be entitled to deduct on his personal income tax return; in this connection, as deemed appropriate under the circumstances, such additional expenditures have included in the past and shall include in the future, but shall not be limited to (a) subscribing to professional journals, (b) maintaining active memberships in professional associations, other associations, luncheon clubs and other clubs where the Partner will have an opportunity to further the development of, and to maintain the Partnership's relationship with, its customers, (c) providing space and facilities in the Partner's home in order that the Partner may work on the Partnership's business while at home, (e) providing for transportation to customers' offices, (f) entertaining customers and prospective customers and (g) continuing the Partner's business-related education, including attendance at seminars and obtaining advanced educational degrees. 4.6 Duties and Obligations of the Managing Partner. A. The Managing Partner shall prepare (or cause to be prepared) and file such amendments to this Agreement or any certificate of limited partnership as are required by law or as he deems necessary to cause this Agreement or any certificate of limited partnership to reflect accurately the agreement of the Partners, the identity of the Limiteds or the General Partners and the amounts of their respective Capital Contributions. B. The Managing Partner shall prepare (or cause to be prepared) and file such tax returns and other documents, as are required by law or as he deems necessary, for the operation of the Partnership. 4.7 Liability for Acts and Omissions; Indemnification. Neither the Managing Partner nor any General Partner shall be liable, responsible or accountable in damages or otherwise to any of the Partners for, and the Partnership shall indemnify and save harmless the Managing Partner and any General Partner from any loss or damage incurred by reason of, any act or omission performed or omitted by him in good faith on behalf of the Partnership and in a manner reasonably believed by him to be within the scope of the authority granted to him by this Agreement and in the best interests of the Partnership, provided that the Managing Partner or the General Partner shall not have been guilty of gross negligence or gross misconduct with respect to such acts or omissions and, further, provided that the satisfaction of any indemnification and any saving harmless shall be paid out of and limited to Partnership assets and no Partner shall have any personal liability on account thereof. 4.8 Dealing with an Affiliate. The Managing Partner may for, in the name of and on behalf of, the Partnership enter into such agreements, contracts or the like with any Affiliate of any General Partner or with any General Partner, in an independent capacity, as distinguished from his capacity (if any) as a Partner, to undertake and carry out the business of the Partnership as if such Affiliate or General Partner were an independent contractor; and the Managing Partner may obligate the Partnership to pay reasonable compensation for and on account of any such services. ARTICLE FIVE MEETINGS AND VOTING OF PARTNERS 5.1 Meetings of General Partners; Voting at Such Meetings. A. A meeting of General Partners shall be held (i) on the call of the Managing Partner after five (5) days Notice thereof has been delivered to the General Partners, or (ii) on at least 10 days Notice in advance to the General Partners, jointly signed by any five (5) General Partners, specifying the date, place, hour and purposes of the meeting. B. Except as otherwise expressly provided, at any meeting of the General Partners, each General Partner shall have voting power equal to his General Partner Percentage at the time of the meeting. A quorum for any purpose at any meeting of the General Partners shall exist if General Partners then holding more than 50% of the voting power of all General Partners are present or voting by proxy. Any General Partner may vote on any matter if not present in person, by general or specific written proxy given to another General Partner. No proxy shall be valid after two (2) months from the date of its execution. General Partners may participate in any meeting by means of conference telephone or similar communications equipment whereby all persons participating in such meeting can hear each other. Participation in a meeting in this manner shall constitute presence in person at the meeting. C. Unless otherwise permitted by the Managing Partner, the only matters to be voted upon by the General Partners at any meeting of the General Partners shall be those matters set forth in Sections 4.3 and 4.4 hereof. 5.2 Percentage of Voting Power for Partnership Decisions. A. Except as otherwise specifically provided in this Agreement, the affirmative vote of more than 50% of the voting power of all General Partners shall determine all issues at any meeting of the General Partners. B. Any percentage of voting power of the General Partners required by this Agreement shall relate to the percentage of the total voting power of all General Partners entitled to vote on the issue and not to a percentage of the voting power of the General Partners present at a meeting. 5.3 Robert's Rules to Govern. Except as otherwise specifically provided in this Agreement, all matters of parliamentary procedure at meetings of the General Partners shall be governed by Robert's Rule of order Revised. The Managing Partner may appoint a parliamentarian. 5.4 Consent of General Partners in Lieu of a Meeting. A. Notwithstanding anything to the contrary contained in this Agreement, any action required or permitted by this Agreement to be taken at any meeting of the General Partners may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by Partners having not less than the minimum voting power that would be necessary to authorize or take such action at a meeting of the Partners. B. Prompt Notice of the taking of any action pursuant to this Section 5.4 by less than unanimous written consent of the General Partners shall be given to those General Partners who have not consented in writing. ARTICLE SIX EVENT OF WITHDRAWAL OF A PARTNER 6.1 Voluntary Event of Withdrawal. Any General Partner shall have the right to retire or voluntarily withdraw from the Partnership upon 30 days prior written notice to the Managing Partner. In the event that there is only one General Partner, he shall give notice to the Limiteds of his intent to withdraw from the Partnership at least 30 days prior to the date of withdrawal. Any Limited shall have the right to retire or voluntarily withdraw from the Partnership upon six (6) months prior written notice to the Managing Partner. 6.2 Withdrawal Upon Request. The Managing Partner or any number of General Partners holding in the aggregate a majority of the General Partner Percentages, may request in writing that any Partner withdraw from the Partnership, and each Partner agrees that he will so withdraw within 30 days of the receipt of such request. 6.3 Return of Capital and Purchase of Interest. A. In the event of any withdrawal by a Limited from the Partnership, pursuant to Sections 6.1 or 6.2 hereof, there shall be returned (subject to the provisions of Section 6.7 hereof) to the withdrawing Limited, within six (6) months after the actual date of his withdrawal, his Capital Contribution to the Partnership. In addition, such Limited shall receive (within 75 days after the actual date of his withdrawal) his pro rata share of any cash distributions to which he was entitled as set forth in Section 8.1 hereof, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. Until a Limited Partner's Capital Contribution is returned to him, he shall continue to receive all sums due him pursuant to Section 3.3B hereof. B. In the event of any withdrawal by a General Partner from the Partnership, pursuant to Section 6.1 or 6.2 hereof (and subject to the provisions of Section 6.7 hereof), the remaining General Partners, or any of them shall have the option to purchase the General Partner Interest (including his Frozen Appreciation Amount) of the withdrawing General Partner, subject to the approval of the Managing Partner. Such purchases shall be consummated within 60 days after the actual date of such withdrawal. The price of the General Partner Interest of the withdrawing General Partner shall be the value (as shown on the books of the Partnership) of his Frozen Appreciation Amount plus the value of such General Partner's Adjusted Capital Contribution, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. Goodwill, if any, and the Partnership name shall not be deemed assets or as having any property value in making the foregoing calculation. In addition, any withdrawing General Partner shall receive (within 75 days after the actual date of his withdrawal) his pro rata share of any cash distributions to which he is entitled as set forth in Section 8.1 hereof, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. Any General Partner Interest (including his Frozen Appreciation Amount) not purchased by the remaining General Partners within such 60 day period shall be converted (as of the actual date of his withdrawal) to that of a Subordinated Limited Partner interest and shall be redeemed by the Partnership within one (1) year, the specific date to be determined by the Managing Partner. Upon the conversion of a General Partner's Interest to that of a Subordinated Limited Partner, the General Partner Percentages of the remaining General Partners shall be recalculated (as of the actual date of withdrawal) on the same relative basis so as to aggregate 100% (and the related General Partner Adjusted Capital Contributions shall also be appropriately adjusted). 6.4 Death of a Limited. In the event of the death of any Limited, the Capital Contribution of such deceased Limited shall be returned (subject to the provisions of Section 6.7 hereof) to his estate within six (6) months after the actual date of death of the Limited. In addition such Limited's estate shall receive (within 75 days after the actual date of death of the Limited) the Limited's pro rata share of any cash distributions to which such deceased Limited was entitled as set forth in Section 8.1 hereof, calculated as of the previous Valuation Date if such withdrawal takes place on or prior to the 15th day of a month or calculated as of the next Valuation Date if such withdrawal takes place on or after the 16th day of a month. Until a deceased Limited's Capital Contribution is returned to his estate, his estate shall continue to receive all sums which would have been due to such Limited pursuant to Section 3.3B hereof. As stated herein, all such payments shall be made to the estate of the deceased Limited unless the Partnership has received evidence, satisfactory to the Partnership, in its sole discretion, that such payments should be made to some other entity or person. 6.5 Death or Disability of a General Partner. A. In the event of the death of a General Partner, the interest of the deceased General Partner in the Partnership shall terminate as of such date. The General Partner Interest (including his Frozen Appreciation Amount) of the deceased General Partner shall be treated in the same manner as that of a withdrawing General Partner pursuant to Section 6.3B hereof and subject to the provisions of 6.7 hereof with payment therefor being made, however, to the estate of the deceased General Partner. As stated herein, all such payments shall be made to the estate of the deceased General Partner unless the Partnership has received evidence, satisfactory to the Partnership, in its sole discretion, that such payments should be made to some other entity or person. B. In the event of full or partial disability (as determined in the absolute discretion of the Managing Partner) of a General Partner under age 65 due to illness, accident, or injury, such General Partner shall be entitled to receive his normal share of Partnership Net Income notwithstanding his inability to perform his normal work functions, for a period of up to six (6) full months following the date he suffered the disability. If the disability shall continue for a period greater than six (6) months but less than one (1) year, then during such period of time the disabled General Partner shall be entitled to receive one-half (1/2) of his normal share of Partnership Net Income. If the disability shall continue for a period greater than one (1) year in length, then the disabled General Partner must terminate his status as a General Partner, unless otherwise directed by the Managing Partner. In event of termination, the General Partner Interest (including his Frozen Appreciation Amount) of the disabled General Partner shall be treated in the same manner as that of a withdrawing General Partner pursuant to Section 6.3B hereof. 6.6 General Partner Interest - 56th Birthday. A General Partner shall not acquire any additional General Partner Interest after he reaches his 56th birthday. His General Partner Interest (including his Frozen Appreciation Amount) as it exists on his 56th birthday is his "Retiring Interest." On the first day of the calendar year following the year in which a General Partner's 56th birthday falls and on the first day of each subsequent calendar year, the General Partner shall sell 1/10th of this Retiring Interest to such other General Partners who have not attained 56 years of age, who are willing to purchase such additional interest, and who have received approval from the Managing Partner to make such purchase. The sale price of the Retiring Interest shall be determined in the same manner as set forth in Section 6.3B hereof. Upon payment of the sales price to the selling General Partner by the purchasing General Partner, the books of the Partnership shall be adjusted as of the effective date of sale to show the appropriate reductions and increases in the General Partner Adjusted Capital Contributions (and related General Partner Percentages) of the selling and purchasing General Partners. Notwithstanding any other provisions of this Section to the contrary, the Managing Partner may exempt any General Partner from the application of this Section or modify the terms of the sale of any Retiring Interest as he deems advisable. 6.7 Restriction on Capital Contribution Return. It is understood and agreed that the Capital Contributions of the Partners to the Partnership will be used, in part, by the Partnership as part of the Partnership's capital contribution to EDJ, a brokerage firm (which is regulated by the Securities and Exchange Commission and the New York Stock Exchange and other regulatory agencies), and that in order for the Partnership to return to any Partner his Capital Contribution (or any part thereof), the Partnership will have to obtain such funds from EDJ. Therefore, notwithstanding any other provision contained in this Agreement to the contrary, without the written consent of the Managing Partner, no Partner shall have returned to him (under any provision of this Agreement) his Capital Contribution or his General Partner's Adjusted Capital Contribution, if after giving effect thereto, the Partnership or any Affiliate thereof (including, but not limited to, EDJ) would, if such payment had been made directly by EDJ, be in violation of (i) any rule of the New York Stock Exchange Inc., (ii) any rule issued under the Securities Exchange Act of 1934, any agreement (cash subordination or otherwise) which has been entered into by the Partnership or any Affiliate thereof (including, but not limited to, EDJ) or (iv) any other law, rule or regulation to which the Partnership or any Affiliate thereof (including, but not limited to, EDJ) is subject. In the event there is returned to any Partner all or any portion of his Capital Contribution or his General Partner's Adjusted Capital Contribution and because of such return the Partnership or any Affiliate thereof (including, but not limited to, EDJ) violated any of the aforementioned rules, agreements or regulations, then such Partner hereby irrevocably agrees (whether or not such Partner had any knowledge or notice of such facts at the time of such return) to repay to the Partnership, its successors or assigns, the sum so returned to such Partner to be held by the Partnership pursuant to the provisions hereof as if such return had never been made; provided, however, that any suit for the recovery of any such return must be commenced within two years of the date of such return. 6.8 Liability of a Withdrawn General Partner. If on the Event of Withdrawal of a General Partner the business of the Partnership shall continue, the General Partner who shall have withdrawn shall be and remain liable for all obligations and liabilities incurred by him as General Partner prior to such Event of Withdrawal, but he shall be free of any obligation or liability incurred on account of the activities of the Partnership from and after the time of such Event of Withdrawal. 6.9 Effect of Event of Withdrawal. Upon the withdrawal (by reason of death or otherwise) of a Partner the Partnership shall not dissolve and the business of the Partnership shall be continued by the remaining General Partners. ARTICLE SEVEN TRANSFERABILITY OF PARTNER INTERESTS 7.1 Restrictions on Transfer. A. Each Partner agrees that he will not sell, pledge exchange, transfer or assign his interest in the Partnership to any Person without the express written consent of the Managing Partner. B. Each Partner agrees that he will not sell or exchange any of his interest in the Partnership if the interest sought to be sold or exchanged, when added to the total of all other Partner interests sold or exchanged within the period of 12 consecutive months prior thereto, would, in the opinion of counsel for the Partnership, result in the Partnership being considered to have been terminated within the meaning of Section 708 of the Internal Revenue Code (or any successor statute). C. Each Limited agrees that he will not sell, exchange, transfer or assign any of his interest in the Partnership unless, if required by the Partnership, the Partnership has received an opinion of counsel, satisfactory to the Partnership, that such transfer or assignment may be effected without registration of the Limited's interest under the Securities Act of 1933 or under any applicable state securities law. D. Except as otherwise expressly provided in this Agreement, the death or withdrawal of a Partner shall terminate (as of such date) all his interest in the Partnership and neither the estate of a deceased Partner nor any other third party shall become or have any rights as a Partner. E. Any sale, exchange, assignment or other transfer in contravention of any of the provisions of this Section 7.1 shall be void and ineffectual and shall not bind or be recognized by the Partnership. 7.2 Substituted Limited Partners. No Limited shall have a power to grant the right to become a substituted Limited to an assignee of any part of such Limited's Partnership Interest. ARTICLE EIGHT DISTRIBUTIONS AND ALLOCATIONS 8.1 Distribution of Net Income. A. All Net Income, if any, of the Partnership for each calendar year (except for Net Income generated in any transaction in connection with the dissolution and liquidation of the Partnership) shall be distributed in the following order of priority: (i)Each Limited Partner shall be paid at least annually (with respect to such Limited Partner's Capital Contribution), from time to time, a total amount of cash equal to the product of Net Income times a percentage, calculated annually, which shall equal the product of the following three factors: (a) one-fourth of one percent (.0025) multiplied by (b) the quotient of $1,900,000 divided by the sum of the General Partners' Adjusted Capital Contributions multiplied by (c) the quotient of the total Capital Contribution of the respective Limited Partner divided by $25,000. This calculation of percentage of participation shall be made at the end of each calendar year and used in distributing Net Income earned during the following year. Notwithstanding the foregoing, for the year 1987 each Limited Partner shall be paid (with respect to such Limited Partner's Capital Contribution) a total amount of cash equal to the product of Net Income times a percentage which shall equal the product of the following three factors: (a) one-fourth of one percent (.0025) multiplied by (b) the quotient of $1,900,000 divided by $24,251,182 multiplied by (c) the quotient of the total Capital Contribution of the respective Limited Partner divided by $25,000. (ii) Each Subordinated Limited Partner shall be paid, from time to time, a total amount of cash in each year equal to the product of (a) the then remaining Net Income times (b) a percentage derived by the following formula: (x) 50% of the Capital Contribution of the Subordinated Limited Partner (excluding any undistributed Net Income allocated to the Subordinated Limited Partner) divided by (y) the sum of (aa) 50% of the Capital Contributions of all the Subordinated Limited Partners plus (bb) the Adjusted Capital Contributions of the General Partners (less any Net Income allocated to the General Partners which is not scheduled to be retained by the Partnership). In the event the Capital Contribution of a Subordinated Limited Partner has been reduced by the operation of Section 8.1B hereof (the "Reduced Amount"), then each Subordinated Limited Partner shall have right to make additional cash Capital Contributions to the Partnership from any cash to be distributed to such Subordinated Limited Partner pursuant to this Section 8.lA(ii) up to the Reduced Amount. (iii)There shall be set apart a sum equal up to 8% of the remaining Net Income. Of such 8%, if any is set apart, there shall be distributed 62.5% thereof among the General Partners on the basis of individual merit as determined by the Managing Partner. Of such 8%, if any is set apart, there shall be distributed 37.5% thereof among the General Partners on the basis of individual need as determined by the Managing Partner. (iv)It is intended that a sum equal to 30% of the remaining Net Income will be retained by the Partnership as capital and shall be credited to the Adjusted Capital Contributions of the General Partners in a proportion equal to their then respective General Partner Percentages. Such amount shall not be withdrawn by the General Partners. Notwithstanding the foregoing, the decision of whether to make this retention of capital in accordance with this Section or whether to vary the amount of capital to be retained in any given year, is vested in the Managing Partner, and it is agreed that his decision in this matter shall be final. (v)The balance of the Net Income remaining, if any, shall be distributed among the General Partners in proportions to their General Partner Percentages. B. In any year in which there is a Net Loss and the Partnership is not dissolved and liquidated in accordance with Section 8.2 hereof, such Net Loss, on the books of the Partnership, shall be borne by the Subordinated Limited Partners to the extent as set forth in the formula described in Section 8.lA(ii) hereof and the balance shall be borne by the General Partners in proportion to their respective General Partner Percentages. Any such Net Losses borne by the Subordinated Limited Partners shall only be applied against and reduce their respective Capital Contributions. The total amount of all such Net Losses to be borne by the Subordinated Limited Partners may never exceed the total amount of the Capital Contributions of the Subordinated Limited Partners as shown on the books of the Partnership. C. Notwithstanding the foregoing, where losses are caused by the willful neglect or default, the gross negligent conduct, or the intentional negligent conduct of any Partner, those net cash losses shall be borne solely and made good by the Partner so causing the net cash loss. D. Notwithstanding any other provision of this Agreement to the contrary, the aggregate interest of the General Partners in each material item of Partnership income, gain, loss, deduction, preference or credit shall be equal to at least one percent (1%) of each such item at all times during the existence of the Partnership. 8.2 Distributions Upon Dissolution. A. Upon the dissolution of the Partnership as a result of the occurrence of any of the events set forth in Section 2.4 hereof, the Managing Partner shall proceed to liquidate the Partnership, and the proceeds of liquidation (the "Proceeds of Liquidation") shall be applied and distributed in the following order of priority: (i)To the payment of debts and liabilities of the Partnership, including the expenses of liquidation. (ii)To the payment of any accrued but unpaid amounts due under Section 8.1 hereof. (iii)To the repayment of the Capital Contributions of the Limited Partners. (iv)To the repayment of the Capital Contributions of the Subordinated Limited Partners. (v)To the repayment of the General Partners' Adjusted Capital Contributions. (vi)The balance of the Proceeds of Liquidation, if any, shall be distributed to the General Partners in proportion to their respective General Partner Percentages. B. Notwithstanding the foregoing, in the event the Managing Partner shall determine that an immediate sale of part or all of the Partnership assets would cause undue loss to the Partners, the Managing Partner, in order to avoid such loss, may, after having given Notice to all the Limiteds, either defer liquidation of, and withhold from distribution for a reasonable time, any assets of the Partnership except those necessary to satisfy the Partnership debts and obligations, or distribute the assets to the Partners in kind. C. Net Income generated by transactions in connection with the dissolution and liquidation of the Partnership shall be allocated in accordance with Section 8.2A hereof. 8.3 Distribution of Frozen Appreciation Amount. Notwithstanding the provisions of Section 8.1 or 8.2 hereof, in the event any tract of Real Estate or any Exchange Seat is sold, then there shall be distributed from the net proceeds of such sale (prior to making any distributions pursuant to the provisions of Section 8.1 or 8.2 hereof) to each General Partner an amount equal to his Frozen Appreciation Amount with respect to such tract of Real Estate or Exchange Seat. The balance of any proceeds resulting from any such sale shall then be distributed in accordance with Sections 8.1 or 8.2 hereof or shall otherwise be used or retained by the Partnership as provided herein. 8.4 Sale of Assets to Third Party. A. In the event the Partnership shall sell or otherwise dispose of, at one time, all, or substantially all, of its assets (a "Sale") to any one Person or to any one Person and its Affiliates and the Partnership is thereafter liquidated within 180 days, then the provisions of this Section 8.4 shall be applicable with respect to the order of priority of distribution of the Proceeds of Liquidation. B. For the purposes of this Section 8.4 the term "substantially all" shall be deemed to mean assets of the. Partnership representing 80% or more of the net book value of all of the Partnership's assets determined as of the end of the most recently completed fiscal year. C. Prior to making any payments to the General Partners pursuant to Section 8.2A(vi) hereof (but after making all other payments required by Section 8.2A and all payments required by Section 8.3 hereof) the Partnership shall distribute: (i) to the Limited Partners a percentage of the Premium (as hereinafter defined) equal to the same percentage of the Net Income of the Partnership which the Limited Partners shall receive (pursuant to Section 8.lA hereof) from the Partnership for the current fiscal year of the Partnership; and (ii) to the Subordinated Limited Partners an amount equal to the product of the Premium (remaining after the payment required by Section 8.4C(i) hereof) times a fraction the numerator of which is the total Capital Contributions of the Subordinated Limited Partners (on the date of the Sale) and the denominator of which is (X) the total Capital Contributions of the Subordinated Limited Partners (on the date of the Sale) plus (Y) the total of the Adjusted Capital Contributions of the General Partners (on the date of the Sale). D. "Premium" means the Proceeds of Liquidation remaining after the payment of the items set forth in Sections 8.2A(i), (ii), (iii), (iv) and (v) hereof. E. Any amounts payable to the Limiteds pursuant to this Section 8.4 shall be disbursed pro-rata to the Limiteds based on their Capital Contributions on the date of the Sale. F. Neither the Partnership nor the General Partners shall have any obligation to cause a Sale to occur. 8.5 Other Sales or Dispositions to Third Party. In the event the Partnership, in a transaction (dealing with all or substantially all of the business of the Partnership) not covered by Section 8.4 hereof (but similar in scope to such a transaction), sells assets, merges or has a public offering, it is hereby stated that it is the intention of the General Partners that the Limiteds shall share in any "profit" or "premium" recognized from such transaction. Because it is impossible at this time to foresee all possible factual situations that may occur with respect to a given transaction, it is equally impossible to determine a fair, just and equitable formula at this time to distribute a portion such "profit" or "premium" to the Limiteds. It is stated, however, at this time, as a matter of policy of the Partnership that it is the intention of the General Partners to allow the Limiteds to share a portion of such "profit" or "premium" (assuming any "profit" or "premium" is also actually distributed to the General Partners) in a fair, just and equitable manner in such amount, if any, as determined in the sole and absolute discretion of the Managing Partner at the time of such transaction. In making such determination of such amount, if any, the Managing Partner shall not be bound by the formula set forth in Section 8.4 hereof. Neither the Partnership nor the General Partners shall have any obligation, however, to cause such transaction to occur and no Limited shall have any right to bring any cause of action against the Partnership or its General Partners by reason of any statement made in this Section 8.5. 8.6 Allocation of Profits and Losses for Tax Purposes. A. Except as provided in Sections 8.6B, C or D hereof, all Profits And Losses For Tax Purposes of the Partnership shall be allocated as follows: (i)In any calendar year in which the Partnership has a net profit for tax purposes, to the Partners with each Partner sharing therein in the proportion that Net Income distributed to the Partner and/or credited to the Adjusted Capital Contribution of the Partner bears to all Net Income of the Partnership for the calendar year. (ii)In any calendar year in which the Partnership has a net loss for tax purposes, first to the Subordinated Limited Partners with each Subordinated Limited Partner bearing an amount of loss to the extent set forth in the formula described in Section 8.lA(ii) hereof; provided, however, that the total amount of losses allocated to a Subordinated Limited Partner shall not reduce such Partner's Capital Account below zero (determined after taking into account all prior or contemporaneous cash distributions and all prior or contemporaneous allocations of income, gain, loss, deduction or credit and as determined at the close of the taxable year in respect of which such loss or deduction is to be allocated); and any remaining losses shall be allocated to the General Partners in proportion to their respective General Partner percentages. B. The Managing Partner is authorized to allocate Profits and Losses For Tax Purposes arising in any calendar year differently than otherwise provided for in this Section 8.6 to the extent that the Managing Partner determines, in his discretion, that such modifications are appropriate to cause the allocations to comply with the principles of Section 704 of the Internal Revenue Code and such modifications are in the overall best interests of the Partners. Any allocation made pursuant to this Section 8.6B shall be deemed to be a complete substitute for any allocation otherwise provided for in this Article Eight and no amendment of this Agreement or approval of any Partner shall be required. C. Notwithstanding any other provisions of this Agreement to the contrary, if the amount of any Partnership Minimum Gain at the end of any taxable year is less than the amount of such Partnership Minimum Gain at the beginning of such taxable year, there shall be allocated to any Partner having a negative Capital Account at the end of such taxable year (determined after taking into account any adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) gross income and gain (in respect of the current taxable year and any future taxable year) in an amount sufficient to eliminate such negative Capital Account in compliance with Treasury Regulations Section 1.704-1(b)(4)(iv)(e). Such allocation of gross income and gain shall be made prior to any other allocation of profits and losses for tax purposes. Any such allocation of gross income or gain pursuant to this Section 8.6C shall be in proportion with such negative Capital Accounts of the Partners and such allocations of gross income and gain shall be taken into account, to the extent feasible, in computing subsequent allocations of Profits and Losses For Tax Purposes of the Partnership so that the net amount of all items allocated pursuant to each Partner pursuant to this Article Eight shall, to the extent possible, be equal to the net amount that would have been allocated to each such Partner pursuant to the provisions of this Article Eight if the allocations made pursuant to the first sentence of this Section 8.6C had not occurred. D. Notwithstanding any other provisions of this Agreement to the contrary, except as provided in Section 8.6C hereof, if any Limited Partner or Subordinated Limited Partner receives any adjustment, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that reduces such Partner's Capital Account below zero or increases the negative balance in such Partner's Capital Account, gross income and gain shall be allocated to such Partner in an amount and manner sufficient to eliminate any negative balance in his Capital Account created by such adjustments, allocations, or distributions as quickly as possible in accordance with Treasury Regulations Section 1.704-1(b)(2)(ii)(d). Any such allocation of gross income or gain pursuant to this Section 8.6D shall be in proportion with such negative Capital Accounts of such Partners. Any allocations of items of gross income or gain pursuant to this Section 8.6D shall (i) not duplicate any allocations of gross income or gain made pursuant to Section 8.6C hereof, and (ii) be taken into account, to the extent feasible, in computing subsequent allocations of Profits and Losses For Tax Purposes of the Partnership, so that the net amount of all items allocated to each Limited Partner and Subordinated Limited Partner pursuant to this Article Eight shall, to the extent possible, be equal to the net amount that would have been allocated to each such Partner pursuant to the provisions of this Article Eight if such adjustments, allocations or distributions had not occurred. E. If and to the extent upon dissolution of the Partnership pursuant to Section 2.4 hereof the allocations under Section 8.6A are inconsistent with the following provision, then such allocations shall be adjusted to conform to the following provision: income and gain (whether ordinary income, gain under Section 1231 of the Internal Revenue Code, or capital gain) from disposition of all remaining Partnership assets shall be allocated among the Partners so that the positive balance of each Partner's Capital Account is equal to the cash to be distributed to such Partner pursuant to Article 8.2 determined after all Capital Accounts have been adjusted to reflect the allocations of Profits and Losses For Tax Purposes of the Partnership and cash distributions made pursuant to Section 8.1 hereof. ARTICLE NINE BOOKS, RECORDS AND REPORTS, ACCOUNTING, TAX ELECTIONS, ETC. 9.1 Books, Records and Reports. A. Proper and complete records and books of account shall be kept (or caused to be kept) by the Managing Partner in which shall be entered all transactions and other matters relative to the Partnership's business. The Partnership's books and records shall be prepared in accordance with generally accepted accounting principles, consistently applied. The books and records shall at all times be maintained at the principal office of the Partnership and shall be open for examination and inspection by the Partners or by their duly authorized representatives during reasonable business hours. In particular, the following books and records shall be kept: (i)a current list and a past list of the full name and last known mailing address of each Partner, specifying the General Partners and the Limited Partners and the Subordinated Limited Partners, in alphabetical order, including the date of admission or withdrawal of each Partner. To the extent provided by the Missouri Act, these lists shall be provided to the Secretary of State of Missouri, without cost, upon his written request; (ii)a copy of the Certificate of Limited Partnership and all Certificates of Amendment thereto, together with executed copies of any Powers of Attorney pursuant to which any Certificate has been executed; (iii)copies of the Partnership's federal, state and local income tax returns and reports, if any, for the three most recent fiscal years; and (iv)copies of any written Partnership Agreements in effect and any financial statements of the Partnership for the three most recent years. B. The Managing Partner shall have prepared at least annually, at the Partnership's expense, financial statements (balance sheet, statement of income or loss, partners' equity, and changes in financial position) prepared in accordance with generally accepted accounting principles which shall fairly reflect the Partnership's financial position at the date ' shown and its results of operations for the period indicated. Copies of such statements and report shall be made available to the Partners annually. C. The Managing Partner shall have prepared at least annually, at the Partnership's expense, a report containing Partnership information necessary in the preparation of the Partners' federal income tax returns. Copies of such report shall be distributed to each Partner as promptly as possible. 9.2 Bank Accounts. The bank accounts of the Partnership shall be maintained in such banking institutions as the Managing Partner shall determine, and withdrawals shall be made only in the regular course of Partnership business on such signature or signatures as the Managing Partner may determine. 9.3 Depreciation and Elections. A. All elections required or permitted to be made by the Partnership under the Internal Revenue Code shall be made by the Managing Partner. B. Notwithstanding anything to the contrary in this Section 9.3, the Managing Partner shall not be responsible for initiating any change in accounting methods from the methods initially chosen. C. The Managing Partner is hereby designated as the "Tax Matters Partner" under Section 6231(a)(7) of the Internal Revenue Code. 9.4 Fiscal Year. The fiscal year of the Partnership shall be the calendar year for tax purposes. ARTICLE TEN GENERAL PROVISIONS 10.1 Appointment of Attorneys-in-Fact. A. Each Partner, by the execution hereof, hereby irrevocably constitutes and appoints John W. Bachmann, Lawrence R. Sobol, and the then Managing Partner (at any time the Managing Partner is not John W. Bachmann), his true and lawful attorney-in-fact, and each of them, with full power and authority in his name, place and stead, to execute or acknowledge under oath, deliver, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Agreement including: (i)All certificates and other instruments (including this Agreement or any certificate of limited partnership and any amendment thereof) which the Managing Partner deems appropriate to qualify or continue the Partnership as a limited partnership under the Missouri Act (or a partnership in which the Limited Partners will have limited liability comparable to that provided by the Missouri Act) or under the laws of any other jurisdiction in which the Partnership may conduct business; (ii)All amendments to this Agreement or any certificate of limited partnership which are required to be filed or which the Managing Partner deems to be advisable to file; (iii)All instruments which the Managing Partner deems appropriate to reflect a change or modification of the Partnership in accordance with the terms of this Agreement; (iv)All conveyances and other instruments which the Managing Partner deems appropriate to reflect the dissolution and termination of the Partnership; and (v)All other instruments, documents or contracts (including, without limiting the foregoing, any deed, lease, mortgage, note, bill of sale, contract, trust agreement, guarantee, partnership agreement, indenture, underwriting agreement or any instrument or documentation which may be required to be filed (or which the Managing Partner deems advisable to file) by the Partnership under the laws of any state or by any governmental agency) requisite to carrying out the intent and purpose of this Agreement and the business of the Partnership and its Affiliates. B. The appointment by all Limited Partners of John W. Bachmann, Lawrence R. Sobol, and the then Managing Partner (at any time the Managing Partner is not John W. Bachmann), as attorney-in-fact, and each of them, shall be deemed to be a power coupled with an interest in recognition of the fact that each of the Partners under this Agreement will be relying upon the power of John W. Bachmann, Lawrence R. Sobol, and the then Managing Partner (at any time the Managing Partner is not John W. Bachmann), and each of them, to act as contemplated by this Agreement in any filing and other action by them on behalf of the Partnership. The foregoing power of attorney shall survive the death, disability or incompetency of a Partner or the assignment by any Partner of the whole or any part of its interest hereunder. 10.2 Word Meanings. The words such as "herein", "hereinafter", "hereof", and "hereunder" refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. The singular shall include the plural and the masculine gender shall include the feminine and neuter, and vice versa, unless the context otherwise requires. 10.3 Binding Provisions. The covenants and agreements contained herein shall be binding upon, and inure to the benefit of the heirs, executors, administrators, successors and assigns of the respective parties hereto. 10.4 Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Missouri. 10.5 Counterparts. This Agreement may be executed in several counterparts, all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties have not signed the same counterpart, except that no counterpart shall be binding unless signed by the Managing Partner. 10.6 Entire Agreement. This Agreement contains the entire agreement between the parties and supersedes all prior writings or representations. 10.7 Separability of Provisions. Each provision of this Agreement shall be considered separable and if for any reason any provision or provisions hereby are determined to be invalid or unenforceable such validity or unenforceability shall not impair the operation of or affect any other portion of this Agreement and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted. 10.8 Representations. Each person who becomes a Limited hereunder does hereby represent and warrant by the signing of a counterpart of this Agreement or an amendment to this Agreement that the Partnership interest acquired by him was acquired for his own account, for investment only, not for the interest of any other person and not for resale to other persons or for further distribution. The Managing Partner has not made and hereby makes no warranties or representations other than those specifically set forth in this Agreement. 10.9 Section Titles. Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. 10.10 Partition The Partners agree that the Partnership's assets are not and will not be suitable for partition. Accordingly, each of the Partners hereby irrevocably waives any and all right he may have to maintain any action for partition of any of the Partnership's assets. 10.11 No Third Party Beneficiaries This Agreement is made solely and specifically for the benefit of the Partners and their respective successors and permitted assigns, and no other person whatsoever shall have any rights, interests or claims hereunder or be entitled to any benefits hereunder or on account of this Agreement as a third party beneficiary or otherwise. 10.12 Arbitration Any dispute hereunder shall be settled by arbitration in St. Louis County, Missouri, in accordance with the Code of Arbitration Procedure of the National Association of Securities Dealers, Inc., as then in effect. The parties consent to the jurisdiction of the Supreme Court of the State of Missouri and of the United States District Court for the Eastern District of the State of Missouri for all purposes in connection with arbitration. The award entered by the arbitrator(s) shall be final and binding on all parties to the arbitration. Each party shall bear its respective arbitration expenses and shall each pay fifty percent (50%) of the arbitrator's charges and expenses. 10.13 Amendments. In addition to the amendments otherwise authorized herein, this Agreement may be amended, from time to time, without the consent or approval of (and without prior notice to) any Limited, by the Managing Partner or by the affirmative vote of General Partners.holding an aggregate of at least a majority of the total General Partner Percentages. In particular, but without limiting the foregoing, the interests of the Limited Partners and the Subordinated Limited Partners in the Net Income or the Proceeds of Liquidation of the Partnership or in any other allocation or distribution to be received by them from the Partnership pursuant to Article Eight hereof or otherwise may be reduced or increased or otherwise modified in accordance with this Section 10.13 without the consent or approval of (and without prior notice to) any Limited. 10.14 Revocable Trusts. Notwithstanding anything to the contrary herein contained, it is recognized that certain of the Partners are not persons but are revocable trusts ("Trusts"), the grantors of which ("Grantors"), except for the transfer of their partnership interests to (or the designation of) such Trusts created by them, would be the Partners. Thus, when used herein the phrases "General Partner", "Limited Partner", "Limited", "Partner" or "Subordinated Limited Partner" shall be deemed, when the context hereof so requires (such as, without limiting the generality of the foregoing, death, disability or withdrawal of a Partner, gross negligent conduct of a General Partner, a General Partner receiving a guaranteed draw for services rendered, General Partner required submission of tax returns, sale by a General Partner of Retiring Interests after his 56th birthday) to be a reference to the Grantor of such Trust. In addition, to the extent that any General Partner has obligations or liabilities imposed upon such General Partner pursuant to this Agreement, then, if such General Partner is a Trust, such General Partner, by such General Partner's signature hereto (and the Grantor of such Trust by such Grantor's signature hereto), hereby agrees that said obligations and liabilities are also obligations and liabilities of such Grantor. IN WITNESS WHEREOF, the undersigned has executed this Sixth Amended and Restated Agreement of Limited Partnership as of the day and year first above written. GENERAL PARTNER: John W. Bachmann GENERAL PARTNERS AS SHOWN IN THE BOOKS AND RECORDS OF THE PARTNERSHIP* *By John W. Bachmann Attorney-In-Fact LIMITED PARTNERS AS SHOWN IN THE BOOKS AND RECORDS OF THE PARTNERSHIP* *By John W. Bachmann Attorney-In-Fact SUBORDINATED LIMITED PARTNERS AS SHOWN IN THE BOOKS AND RECORDS OF THE PARTNERSHIP* *By John W. Bachmann Attorney-In-Fact EX-2 3 EDJ PARTNERSHIP AGREEMENT EDWARD D. JONES & CO., L.P. FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP Dated: November 1, 1993 EDWARD D. JONES & CO., L.P. (a Missouri Limited Partnership) FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP entered into this first day of November, 1993, by and between EDJ Holding Company, Inc., a Missouri corporation, as the General Partner, and The Jones Financial Companies, a Limited Partnership, as the Limited Partner, as provided herein. W I T N E S S E T H: WHEREAS, the Partnership was formed as a limited partnership under The Uniform Limited Partnership Law of the State of Missouri on May 23, 1969; and WHEREAS, the Partnership elected to be governed by the provisions of the Missouri Revised Uniform Limited Partnership Act on August 28, 1987; and WHEREAS, the parties restated in full Amendment No. 40 dated August 28, 1987 and the Agreement of Limited Partnership dated as of May 23, 1969 of Edward D. Jones & Co., L.P. and the related Certificate of Limited Partnership dated August 28, 1987 into the Amended and Restated Agreement and Certificate of Limited Partnership (the "First Restated Agreement") of Edward D. Jones & Co., L.P. dated August 28, 1987; and WHEREAS, the parties amended and restated the First Restated Agreement pursuant to the Second Amended and Restated Agreement of Limited Partnership (the "Second Restated Agreement") of Edward D. Jones & Co., L.P. dated January 31, 1991; and WHEREAS, the parties amended and restated the Second Restated Agreement pursuant to the Third Amended and Restated Agreement of Limited Partnership (the "Third Restated Agreement") of Edward D. Jones & Co., L.P. dated May 7, 1992; and WHEREAS, the parties hereto now desire to amend Section 8.1D of the Third Restated Agreement by the addition of a second paragraph thereto and restate the Third Restated Agreement in its entirety; NOW, THEREFORE, pursuant to the terms, covenants and conditions set forth herein and the mutual promises contained herein, the parties hereto agree as follows: ARTICLE ONE DEFINED TERMS The defined terms used in this Agreement shall have the meanings specified below: "Affiliate" means (l) any Person directly or indirectly controlling, controlled by or under common control with another Person, (2) any Person owning or controlling ten percent (l0%) or more of the outstanding voting securities of such other Person, (3) any officer, director or partner of such Person, or (4) if such other Person is an officer, director or partner, any company for which such Person acts in any such capacity. "Agreement" means this Fourth Amended and Restated Agreement of Limited Partnership, as amended from time to time. "Capital Account" means an account established by the Partnership and maintained for each Partner, for federal income tax purposes, which account shall be credited with: (i) the amount of the Partner's Capital Contributions; and (ii) the amount of Partnership income (including income exempt from federal income tax) and gain (or items thereof) allocated to the Partner pursuant to Article Eight hereof; and which shall be debited by: (iii) the amount of Partnership losses and deductions (or items thereof) allocated to the Partner pursuant to Article Eight hereof; (iv) the amount of Partnership expenditures described in Treasury Regulations Section l.704-l(b)(2)(iv)(i) allocable to the Partner in the same proportion as that in which the Partner bears the economic burden of those expenditures; and (v) the amount of all distributions to the Partner pursuant to Article Eight hereof. In addition, the Capital Account of each Partner shall be adjusted as necessary to comply with Treasury Regulations Section l.704- l(b)(2)(iv). In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts or any debits or credits thereto, are completed in order to comply with such regulations, the General Partner may amend this Agreement to reflect such modification, provided that it is not likely to have a material effect on the amounts distributable to the partners pursuant to Article Eight upon dissolution of the Partnership. If any Partner would otherwise have a negative balance in his Capital Account, the amount of any such negative balance shall be reduced (but not in excess of such negative balance) by the amount of such Partner's share of Partnership Minimum Gain (determined in accordance with Treasury Regulations Section l.704-l(b)(4)(iv)(f)) after taking into account all increases and decreases to such Partnership Minimum Gain during the taxable year. In the event that the Partnership is deemed to be terminated for federal income tax purposes due to the sale or exchange of fifty percent (50%) or more of the Partnership interests in the capital or profits of the Partnership (the "Partnership Interests") within a twelve (l2) month period, appropriate adjustment shall be made to the Capital Accounts to reflect the constructive liquidation and reformation deemed to occur upon a termination. In the event that interests in the Partnership are sold, exchanged or otherwise transferred, and the transfer is recognized under Article Seven hereof, or by operation of law, the Capital Account of the transferee will equal the Capital Account of the transferor immediately before the transfer. However, if such a sale or exchange, either alone or in combination with other sales or exchanges within a twelve-month period results in a transfer of fifty percent (50%) or more of the Partnership Interests causing a termination of the Partnership for federal income tax purposes, the adjustment required by the immediately preceding paragraph shall be made. "Capital Contribution" means the total amount of cash or property contributed to the Partnership by each Partner (and not thereafter returned to such Partner by the Partnership) pursuant to the terms of this Agreement. The Capital Contributions of the Partners have been previously set forth on exhibits to this Agreement. From the date hereof, the Capital Contributions of the Partners shall be reflected in the books and records of the Partnership. "Certificate of Limited Partnership" means the document, as amended or restated, filed as a certificate of limited partnership under the Missouri Act. "General Partner" means EDJ Holding Company, Inc., a Missouri corporation. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time. "Limited Partner" means The Jones Financial Company, a Limited Partnership, a Missouri limited partnership. "Missouri Act" means the Missouri Revised Uniform Limited Partnership Act, as amended from time to time. "Net Income or Net Loss" means, with respect to any fiscal period, the net income or the net loss of the Partnership, determined in accordance with generally accepted accounting principles; provided, however, there shall be excluded from such net income or net loss any unrealized gains or losses on securities held (whether at the discretion of the Partnership or otherwise) by the Partnership in Trading Account Number 001-00103-12 (or any successor account) as a hedge against fixed rate Partnership borrowings (as opposed to other securities held by the Partnership in trading accounts as inventory for resale in the ordinary course of business). "Notice" means a writing, containing the information required by this Agreement to be communicated to a party, delivered personally or sent by U.S. mail, postage prepaid, to such party at the last known address of such party as shown on the records of the Partnership, the date of personal delivery or the date of mailing thereof being deemed the date of receipt thereof. "Partner" means the General Partner or the Limited Partner. "Partnership" means the limited partnership continued by this Agreement by the parties hereto, as said limited partnership may from time to time be constituted. "Partnership Minimum Gain" means, for Partnership tax purposes, as set forth in Treasury Regulations Section l.704-l(b)(4)(iv)(c), the amount of gain, if any, that would be realized by the Partnership if it were to sell or dispose of (in a taxable transaction) property subject to a non-recourse liability of the Partnership, in full satisfaction of such liability. "Person" means a natural person, partnership, limited partnership (domestic or foreign), trust, estate, association or corporation. "Profits and Losses For Tax Purposes" means, for Partnership accounting and tax purposes, the various items set forth in Section 702(a) of the Internal Revenue Code and all applicable regulations or any successor law, and shall include, but not be limited to, each item of income, gain, deduction, loss, preference or credit. ARTICLE TWO CONTINUATION, NAME AND OFFICE, PURPOSES, TERM AND DISSOLUTION 2.1 Continuation. The parties hereto hereby continue the Partnership as a limited partnership pursuant to the provisions of the Missouri Act. 2.2 Name, Place of Business and Office. The name of the Partnership shall be "Edward D. Jones & Co., L.P". The principal office and place of business shall be 201 Progress Parkway, Maryland Heights, Missouri 63043. The General Partner may at any time change the location of such principal office. Notice of any such change shall be given to the Limited Partner on or before the date of any such change. 2.3 Purposes. The Partnership shall continue to conduct its business under the firm name of Edward D. Jones & Co., L.P. (or under the name of Edward D. Jones & Co. if such name is registered as a fictitious name with the State of Missouri) and shall engage in a general brokerage and commission business including without limitation the purchase of, sale of, and dealing in stocks, bonds, notes and evidences of indebtedness of any person, firm, enterprise, corporation or association domestic or foreign, and bonds and any other political subdivision thereof, domestic or foreign, and bills of exchange and commercial papers, and any and all securities of any kind, nature or description whatsoever; and any kind of commodities and provisions usually dealt with on exchanges, or upon the over-the-counter market, or any option contracts upon any of the foregoing, or otherwise as principals, brokers, agents, or otherwise to act as investment adviser under the Investment Advisers Act of 1940, as amended and the rules and regulations thereunder; the general conduct of any securities transfer business; the general conduct of any trustee service business; the general conduct of any insurance business, including but not limited to acting in the capacity of an insurance agency, to act as a depositor under any and all forms of trust indentures providing for the deposit of bonds, stocks, debentures, and any other type of security and the issuance of beneficial interests in the securities so deposited and to perform any and all acts necessary or incidental thereto; to conduct through itself or any associated enterprise in which it has an interest, a mortgage processing and lending business; and in general, without limitation of the foregoing, such business as is usually conducted in the City of New York by so-called stock exchange and commodity exchange brokers or such business as is permitted under the Missouri Act. The Partnership may enter into such financing arrangements and guarantees as the General Partner may deem appropriate in connection with the business of the Partnership. The Partnership may act as a partner or shareholder of, or act as an advisor to, any other organization as the General Partner may deem advisable. No business, however, shall be conducted which shall be forbidden by, or be contrary to, any applicable law, or any lawful rules and regulations, promulgated thereunder, including without limitation any of the provisions of the Securities Exchange Act of 1934, as amended, or any of the rules and regulations of the Securities and Exchange Commission promulgated thereunder, or any of the rules and regulations of the National Association of Securities Dealers, Inc., or of the constitution, rules, regulations, and practices of the New York Stock Exchange, Inc. or any other exchange or exchanges in which the Partnership or its Affiliates may hold a membership. 2.4 Term and Dissolution. A. The Partnership shall continue in full force and effect until December 3l, 2087, or until dissolution prior thereto upon the happening of any of the following events: (i) The sale of all of the assets of the Partnership; (ii) The withdrawal of either Partner; or (iii) The dissolution of the Partnership by the General Partner. B. Upon dissolution of the Partnership, the General Partner shall cause the cancellation of the Partnership's Certificate of Limited Partnership, liquidate the Partnership's assets and apply and distribute the proceeds thereof in accordance with Section 8.2 hereof. 2.5 Registered Office and Agent. The name and address of the Registered Agent and Registered Office for service of process on the Partnership are set forth in the Certificate of Limited Partnership. 2.6 Amendment to Certificate of Limited Partnership. The Certificate of Limited Partnership shall be amended within thirty days of the admission or withdrawal of a General Partner. ARTICLE THREE PARTNERS, CAPITAL AND DEMAND NOTES 3.1 General Partner. A. The name, last known mailing address and Capital Contribution of the General Partner are reflected in the books and records of the Partnership. B. The General Partner may increase or decrease its Capital Contribution from time to time. 3.2 Limited Partner. A. The name, last known mailing address and Capital Contribution of the Limited Partner are reflected in the books and records of the Partnership. B. The Limited Partner shall, if requested by the General Partner, increase or decrease its capital contribution from time to time. 3.3 Partnership Capital. A. The total capital of the Partnership shall be the aggregate amount of the Capital Contributions of the Partners as provided for herein. B. No Partner shall be paid interest on any Capital Contribution to the Partnership. C. Except as otherwise provided herein, prior to dissolution of the Partnership, no Partner shall have the right to demand the return of its Capital Contribution. No Partner shall have the right to demand and receive property other than cash in return for its Capital Contribution. D. The General Partner shall have no personal liability for the repayment of the Capital Contribution of the Limited Partner. E. The Limited Partner shall contribute its Capital Contribution in the form of cash or pursuant to a subordination agreement in a form acceptable to the New York Stock Exchange. 3.4 Liability of the Limited Partner. The Limited Partner shall only be liable to make the payment of its Capital Contribution. Except as provided in the Missouri Act, the Limited Partner shall not be liable for any obligations of the Partnership. 3.5 Participation in Partnership Business by the Limited Partner. The Limited Partner shall neither participate in or have any control over the Partnership business (except as required by law) nor have any authority or right to act for or bind the Partnership. The Limited Partner hereby consent to the exercise by the General Partner of the powers conferred on it by this Agreement. 3.6 Demand Notes and Cash Subordination Agreements. The General Partner or the Limited Partner may, from time to time, upon prior approval from the General Partner, execute and deliver a Secured Demand Note (together with a Secured Demand Note Collateral Agreement) or a Cash Subordination Agreement to the Partnership in the form and under the terms and conditions presented by Rule 325 of the New York Stock Exchange or shall deliver to the Partnership such other documents as are acceptable to the New York Stock Exchange, and such Secured Demand Note (together with the Secured Demand Note Collateral Agreement) or Cash Subordination Agreement or such other documents shall be treated as a contribution of additional capital (for regulatory purposes) to the Partnership by the Partner executing and delivering the same to the Partnership. In conjunction with any such Secured Demand Notes (and related Secured Demand Note Collateral Agreements) or Cash Subordination Agreements or such other documents, the General Partner or Limited Partner may also execute and deliver to the Partnership in the form and under the conditions and terms prescribed by Rule 326.13 of the New York Stock Exchange, a subordination agreement for the purpose of enabling the Partnership to include in its "net worth", the prescribed value of the securities held by the Partnership under the Secured Demand Note Collateral Agreement or such other documents of the General Partner or the Limited Partner. ARTICLE FOUR RIGHTS, POWERS, AND DUTIES OF THE GENERAL PARTNER 4.1 Authorized Acts; Management and Control. A. The General Partner has the exclusive right to manage the business of the Partnership and is hereby authorized to take any action (including, but not limited to, the acts authorized by Section 4.1B below) of any kind and to do anything and everything in accordance with the provisions of this Agreement. B. The General Partner through any of its officers for, in the name and on behalf of, the Partnership is hereby authorized to take any and all actions, and to engage in any kind of activity and to perform and carry out all functions of any kind necessary to, or in connection with, the business of the Partnership including, but not limited to: (i) executing any instruments on behalf of the Partnership; (ii) acquiring or selling assets of the Partnership; (iii) entering into loans or guarantees in connection with the business of the Partnership; (iv) acting as a partner or shareholder of, or adviser to, any other organization; (v) contributing capital, as a limited partner or as a general partner, or purchasing other securities in or otherwise investing any limited partnership, general partnership, corporation or other entity and taking all actions required as a partner, shareholder or investor in any such entity; or (vi) doing any other act in furtherance of the purposes of the Partnership 4.2 Time and Effort; Independent Activities. The General Partner shall devote its full time to the business of the Partnership. The Limited Partner may engage independently or with others in other business ventures of every nature and description, including, without limitation, the ownership, operation, management, syndication and development of business ventures related to or competitive with the business of the Partnership. The General Partner may also, indirectly through subsidiaries or affiliated entities, or directly, simultaneously independently engage in other related or unrelated activities. Neither the Partnership nor the other Partner shall have any rights in or to such independent ventures or the income or profits derived therefrom. 4.3 Duties and Obligations of the General Partner. A. The General Partner shall prepare (or cause to be prepared) and file such amendments to this Agreement or any certificate of limited partnership as are required by law or as it deems necessary to cause this Agreement or any certificate of limited partnership to reflect accurately the agreement of the Partners the identity of the Partners and the amounts of their respective Capital Contributions. B. The General Partner shall prepare (or cause to be prepared) and file such tax returns and other documents, as are required by law or as it deems necessary, for the operation of the Partnership. 4.4 Liability for Acts and Omissions; Indemnification. The General Partner shall not be liable, responsible or accountable in damages or otherwise to the Limited Partner for, and the Partnership shall indemnify and save harmless the General Partner from any loss or damage incurred by reason of, any act or omission performed or omitted by it in good faith on behalf of the Partnership and in a manner reasonably believed by it to be within the scope of the authority granted to it by this Agreement and in the best interests of the Partnership, provided that the General Partner shall not have been guilty of gross negligence or gross misconduct with respect to such acts or omissions and, further, provided that the satisfaction of any indemnification and any saving harmless shall be paid out of and limited to Partnership assets and no Partner shall have any personal liability on account thereof. 4.5 Dealing with an Affiliate. The General Partner may for, in the name of and on behalf of, the Partnership enter into such agreements, contracts or the like with any Affiliate of the General Partner or with the General Partner, in an independent capacity, as distinguished from its capacity (if any) as a Partner, to undertake and carry out the business of the Partnership as if such Affiliate or General Partner were an independent contractor; and the General Partner may obligate the Partnership to pay reasonable compensation for and on account of any such services. 4.6 Appointment of Special Committee. Pursuant to rights granted to the General Partner pursuant to Section 4.1 hereof, the General Partner hereby appoints John W. Bachmann, Darryl L. Pope and the then Managing Partner of The Jones Financial Companies, a Limited Partnership (at any time the Managing Partner thereof is not John W. Bahcmann), as committee members of a special committee of the Partnership, which committee (acting through one or more of its members) shall have full power and authority on behalf of the General Partner, at any time and from time to time, (a) to designate one or more Persons (i) to assign securities registered in the name of the Partnership, (ii) to execute powers of substitution, (iii) to guarantee the signatures of others to assignments of securities and (iv) to make any certification or guarantee of any signature or document submitted in support of the transfer of any securities, all with the same effect as if the name of the Partnership had been signed under like circumstanced by the General Partner, (b) to adopt and authorize the use of a mechanically reproduced facsimile signature of the Partnership in connection with (i) the assignment of securities registered in the name of the Partnership and (ii) the execution of powers of substitution and (c) to designate one or more Persons to sign written contracts covering "seller's option," "when issued," and "when distributed" transactions in the name of the Partnership with the same effect as if the name of the Partnership had been signed under like circumstances the General Partner, any and all such powers of attorney, agreements, and other instruments (including agreements of idemnification) as may be required to evidence or support action under (a), (b), or (c) above. ARTICLE FIVE WITHDRAWAL OF A PARTNER Neither Partner shall have the right to retire or voluntarily withdraw from the Partnership without the prior written consent of the other Partner. ARTICLE SIX RESTRICTIONS ON RETURN OF CAPITAL CONTRIBUTIONS AND CERTAIN OTHER TRANSACTIONS A. The Limited Partner may by written notice to the General Partner request that all or a portion of its Capital Contribution be returned prior to the maturity of its Cash Subordination Agreement; however, the General Partner may, in its absolute discretion, refuse to return all or any portion of such Capital Contribution to the Limited Partner until the Partnership is dissolved pursuant to Section 2.4 hereof. B. It is understood and agreed that the Capital Contributions of the Partners to the Partnership will be used, in part, by the Partnership as part of the Partnership's required capital as a brokerage firm regulated by the Securities and Exchange Commission and the New York Stock Exchange and other regulatory agencies. Therefore, notwithstanding any other provision contained in this Agreement to the contrary, no Partner shall have returned to it (under any provision of this Agreement) its Capital Contribution, if after giving effect thereto, the Partnership be in violation of (i) any rule of the New York Stock Exchange Inc., (ii) any rule issued under the Securities Exchange Act of 1934, (iii) any agreement (cash subordination or otherwise) which has been entered into by the Partnership or (iv) any other law, rule or regulation to which the Partnership is subject. In the event there is returned to any Partner all or any portion of its Capital Contribution and because of such return the Partnership violated any of the aforementioned rules, agreements or regulations, then such Partner hereby irrevocably agrees (whether or not such Partner had any knowledge or notice of such facts at the time of such return) to repay to the Partnership, its successors or assigns, the sum so returned to such Partner to be held by the Partnership pursuant to the provisions hereof as if such return had never been made; provided, however, that any suit for the recovery of any such return must be commenced within two years of the date of such return. C. Notwithstanding any other provision contained herein, no Partner shall, without the prior written approval of the New York Stock Exchange, Inc. and without the prior written approval of the General Partner, withdraw its Capital Contribution to the Partnership on less than six (6) months written notice, given no sooner than six (6) months after such contribution was first made, of its intent to withdraw such Capital Contribution; provided, however, that the Capital Contribution of any Partner may not be withdrawn nor may any unsecured advance or loan to the Partnership which qualifies as capital under Rule 15c3-1 promulgated under the Securities Exchange Act of 1934 be withdrawn nor may any unsecured advance or loan be made to a Partner or employee or any Affiliate hereof, if, after giving effect thereto and to any other withdrawals, advances, or loans which are scheduled to occur within six (6) months following such withdrawal, advance, or loan, the Partnership would be in violation of said Rule. D. Notwithstanding anything to the contrary contained in this Agreement, in the event of the termination of the Partnership on the expiration of the term of this Agreement, or any extension or renewal thereof, each Partner agrees if withdrawals of Capital Contributions on any such termination would cause the Partnership's capital position to violate Rules 326(a) and 326(b) of the Rules of the Board of Directors of the New York Stock Exchange, Inc. during the six (6) months immediately preceding the date of termination, such withdrawals may be postponed for a period of up to six (6) months from the state date of termination, as the General Partner may deem necessary to insure compliance with said Rules and any such Capital Contributions so retained by the Partnership after the date of termination shall continue to be subject to all debts and obligations of the Partnership. E. The Partnership will not, and it will not permit any Subsidiary of the Partnership (as defined in the Note Purchase Agreement as of April 15, 1986 relating to the 9-3/8% Secured Guaranteed Notes due 1996 of Tempus Corporation and the 9-3/8% Capital Notes due 1996 of Edward D. Jones & Co., the Note Purchase Agreement dated as of March 15, 1988 relating to the 10.60% Secured Guaranteed Notes due 1997 of Tempus Corporation and the 10.60% Capital Notes due 1997 of Edward D. Jones & Co., L.P. and the Note Purchase Agreement dated as of May 1992 relating to the 8.96% Subordinated Capital Notes due 2002 of Edward D. Jones & Co., L.P.) [referred to herein collectively as the "Note Agreements"] to, directly or indirectly, incur, assume or otherwise become or be or remain liable to any partner, officer or director, or any former partner, officer or director, of the Partnership or any subsidiary, or to the heir or legal representatives of any such person, with respect to any Indebtedness (as defined in the Note Agreements) relating to such person's status as a partner, director or officer of the Partnership or any subsidiary (but excluding in any event Indebtedness with respect to any account of such person or such heirs or legal representatives or transactions and securities or commodities), unless such Indebtedness shall be subordinated to the 9- 3/8% Capital Notes due 1996, the 10.60% Capital Notes due 1997, the 8.96% Subordinated Capital Notes due 2002, the 9-3/8% Secured Guaranteed Notes due 1996, the 10.60% Secured Guaranteed Notes due 1997 and the Guarantees (as contained in the Note Agreements) to at least the same extent as the 9-3/8% Capital Notes due 1996, the 10.60% Capital Notes due 1997 and the 8.96% Subordinated Capital Notes and the related Guarantees, are subordinated to the claims of general creditors as contained in the Note Agreements. ARTICLE SEVEN TRANSFERABILITY OF PARTNER INTERESTS 7.1 Restrictions on Transfer. A. Each Partner agrees that it will not sell, pledge exchange, transfer or assign its interest in the Partnership to any Person without the express written consent of the other Partner. B. Any sale, exchange, assignment or other transfer in contravention of any of the provisions of this Section 7.l shall be void and ineffectual and shall not bind or be recognized by the Partnership. 7.2 Substituted Limited Partners. No Limited Partner shall have a power to grant the right to become a substituted Limited Partner to an assignee of any part of such Limited Partner's Partnership interest. ARTICLE EIGHT DISTRIBUTIONS AND ALLOCATIONS 8.1 Distribution of Net Income. A. All Net Income, if any, of the Partnership for each calendar year shall (except for Net Income generated in any transaction in connection with the dissolution and liquidation of the Partnership) be distributed 99% to the Limited Partner and 1% to the General Partner. B. In any year in which there is a Net Loss and the Partnership is not dissolved and liquidated in accordance with Section 8.2 hereof, such Net Loss, on the books of the Partnership, shall be borne 99% by the Limited Partner and 1% by the General Partner. Any such Net Losses borne by the Limited Partner shall only be applied against and reduce its Capital Contribution. The total amount of all such Net Losses to be borne by the Limited Partner may never exceed the total amount of the Capital Contributions of the Limited Partner as shown on the books of the Partnership. C. Notwithstanding any other provision of this Agreement to the contrary, the aggregate interest of the General Partner in each material item of Partnership income, gain, loss, deduction, preference or credit shall be equal to at least one percent (1%) of each such item at all times during the existence of the Partnership. D. Notwithstanding any other provision of this Agreement to the contrary, the General Partner, in its sole and absolute discretion, may withhold cash distributions to the Partners if the General Partner determined that such cash should be retained by the Partnership for working capital or other purposes. It is intended that a sum ranging between 15%-35% of the Net Income of the Partnership will be retained by the Partnership as additional equity for qualified net capital and shall be credited as additions to the capital accounts of the General Partner and Limited Partner in the same proportion equal to their entitled share of distributions described above. Notwithstanding the foregoing, the decision of whether to make this retention of capital in accordance with this Section or whether to vary the amount of capital to be retained in any year, is vested in the General Partner, and it is agreed that its decision in this matter shall be final. 8.2 Cash Distributions Upon Dissolution. A. Upon the dissolution of the Partnership as a result of the occurrence of any of the events set forth in Section 2.4 hereof, the General Partner shall proceed to liquidate the Partnership, and the proceeds of liquidation (the "Proceeds of Liquidation") shall be applied and distributed in the following order of priority: (i) To the payment of debts and liabilities of the Partnership, including accrued salaries and the expenses of liquidation. (ii) To the repayment of the 9-3/8% Capital Notes due 1996, the 10.60% Capital Notes due 1997 and the 8.96% Subordinated Capital Notes due 2002. (iii) To the payment of any accrued but unpaid amounts due under Section 8.1 hereof. (iv) To the repayment of the Capital Contribution of the Limited Partner. (v) To the repayment of the Capital Contribution of the General Partner. (vi) The balance of the Proceeds of Liquidation, if any, shall be distributed 99% to the Limited Partner and 1% to the General Partner. B. Notwithstanding the foregoing, in the event the General Partner shall determine that an immediate sale of part or all of the Partnership assets would cause undue loss to the Partners, the General Partner, in order to avoid such loss, may either defer liquidation of, and withhold from distribution for a reasonable time, any assets of the Partnership except those necessary to satisfy the Partnership debts and obligations, or distribute the assets to the Partners in kind. C. Net Income generated by transactions in connection with the dissolution and liquidation of the Partnership shall be allocated in accordance with Section 8.2A hereof. 8.3 Allocation of Profits and Losses for Tax Purposes. A. Except as provided in Sections 8.3B,C or D hereof, all Profits And Losses For Tax Purposes of the Partnership shall be allocated 99% to the Limited Partner and l% to the General Partner, provided however, if any allocation of loss or deduction would reduce the Limited Partner's Capital Account below zero (determined after taking into account all prior or contemporaneous cash distributions and all prior or contemporaneous allocations of income, gain, loss, deduction or credit and as determined at the close of the taxable year in respect of which such loss or deduction is to be allocated), such excess losses or deductions shall be allocated to the General Partner; and provided further however, that the General Partner shall not be allocated any income, gain or loss with respect to the amount of the Partnership's unrealized receivables (within the meaning of Section 751(c) of the Internal Revenue Code) or inventory items which have appreciated substantially in value (within the meaning of Section 751(d) of the Internal Revenue Code) on the date such General Partner first became a Partner hereof. For purposes of this provision, the term "Partnership" shall include any subsidiary partnerships. B. The General Partner is authorized to allocate Profits and Losses For Tax Purposes arising in any calendar year differently than otherwise provided for in this Article Eight to the extent the General Partner determines, in his discretion, that such modifications are appropriate to cause the allocations to comply with the principles of Section 704 of the Internal Revenue Code and such modifications are in the overall best interests of the Partners. Any allocation made pursuant to this Section 8.3B shall be deemed to be a complete substitute for any allocation otherwise provided for in this Article Eight and no amendment of this Agreement or approval of any Partner shall be required. C. Notwithstanding any other provisions of this Agreement to the contrary, if the amount of any Partnership Minimum Gain at the end of any taxable year is less than the amount of such Partnership Minimum Gain at the beginning of such taxable year, there shall be allocated to any Partner having a negative Capital Account at the end of such taxable year (determined after taking into account any adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) gross income and gain (in respect of the current taxable year and any future taxable year) in an amount sufficient to eliminate such negative Capital Account in compliance with Treasury Regulations Section 1.704-1(b)(4)(iv)(e). Such allocation of gross income and gain shall be made prior to any other allocation of profits and losses for tax purposes. Any such allocation of gross income or gain pursuant to this Section 8.3C shall be in proportion with such negative Capital Accounts of the Partners and such allocations of gross income and gain shall be taken into account, to the extent feasible, in computing subsequent allocations of Profits and Losses For Tax Purposes of the Partnership so that the net amount of all items allocated pursuant to each Partner pursuant to this Article Eight shall, to the extent possible, be equal to the net amount that would have been allocated to each such Partner pursuant to the provisions of this Article Eight if the allocations made pursuant to the first sentence of this Section 8.3C had not occurred. D. Notwithstanding any other provisions of this Agreement to the contrary, except as provided in Section 8.6C hereof, if any Partner receives any adjustment, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that reduces any Partner's Capital Account below zero or increases the negative balance in such Partner's Capital Account, gross income and gain shall be allocated to such Partner in an amount and manner sufficient to eliminate any negative balance in his Capital Account created by such adjustments, allocations, or distributions as quickly as possible in accordance with Treasury Regulations Section 1.704- 1(b)(2)(ii)(d). Any such allocation of gross income or gain pursuant to this Section 8.3D shall be in proportion with such negative Capital Accounts of the Partners. Any allocations of items of gross income or gain pursuant to this Section 8.3D shall (i) not duplicate any allocations of gross income or gain made pursuant to Section 8.3C hereof, and (ii) be taken into account, to the extent feasible, in computing subsequent allocations of Profits and Losses For Tax Purposes of the Partnership, so that the net amount of all items allocated to each Partner pursuant to this Article Eight shall, to the extent possible, be equal to the net amount that would have been allocated to each such partner pursuant to the provisions of this Article Eight if such adjustments, allocations or distributions had not occurred. E. If and to the extent upon dissolution of the Partnership pursuant to Section 2.4 hereof the allocations under Section 8.3A are inconsistent with the following provision, then such allocations shall be adjusted to conform to the following provision: income and gain (whether ordinary income, gain under Section 1231 of the Code, or capital gain) from disposition of all remaining Partnership assets shall be allocated among the Partners so that the positive balance of each Partner's Capital Account is equal to the cash to be distributed to such Partner pursuant to Article 8.2 determined after all Capital Accounts have been adjusted to reflect the allocations of Profits and Losses For Tax Purposes of the Partnership and cash distributions made pursuant to Section 8.1 hereof. ARTICLE NINE BOOKS, RECORDS AND REPORTS, ACCOUNTING, TAX ELECTIONS, ETC. 9.1 Books, Records and Reports. A. Proper and complete records and books of account shall be kept (or caused to be kept) by the General Partner in which shall be entered all transactions and other matters relative to the Partnership's business. The Partnership's books and records shall be prepared in accordance with generally accepted accounting principles, consistently applied. The books and records shall at all times be maintained at the principal office of the Partnership and shall be open for examination and inspection by the Partners or by their duly authorized representatives during reasonable business hours. In particular, the following books and records shall be kept: (i) a current list and a past list of the full names and last known mailing address of each Partner, specifying the General Partners and the Limited Partners in alphabetical order, including the date of admission or withdrawal of each Partner. To the extent provided by the Missouri Act, these lists shall be provided to the Secretary of State of Missouri, without cost, upon his written request; (ii) a copy of the Certificate of Limited Partnership and all Certificates of Amendment thereto, together with executed copies of any Powers of Attorney pursuant to which any Certificate has been executed; (iii) copies of the Partnership's federal, state and local income tax returns and reports, if any, for the three most recent fiscal years; and (iv) copies of any written Partnership Agreements in effect and any financial statements of the Partnership for the three most recent years. B. The General Partner shall have prepared at least annually, at the Partnership's expense, financial statements (balance sheet, statement of income or loss, partners' equity, and changes in financial position) prepared in accordance with generally accepted accounting principles which shall fairly reflect the Partnership's financial position at the date shown and its results of operations for the period indicated. Copies of such statements and report shall be made available to the Partners annually. C. The General Partner shall have prepared at least annually, at the Partnership's expense, a report containing Partnership information necessary in the preparation of the Partners' federal income tax return. Copies of such report shall be distributed to each Partner as promptly as possible. 9.2 Bank Accounts. The bank accounts of the Partnership shall be maintained in such banking institutions as the General Partner shall determine, and withdrawals shall be made only in the regular course of Partnership business on such signature or signatures as the General Partner may determine. 9.3 Depreciation and Elections. A. All elections required or permitted to be made by the Partnership under the Internal Revenue Code shall be made by the General Partner. B. Notwithstanding anything to the contrary in this Section 9.3, the General Partner shall not be responsible for initiating any change in accounting methods from the methods initially chosen. C. The General Partner is hereby designated as the "Tax Matters Partner" under Section 6231(a)(7) of the Internal Revenue Code. 9.4 Fiscal Year. The fiscal year of the Partnership shall be the calendar year for tax purposes. ARTICLE TEN GENERAL PROVISIONS 10.1 Appointment of Attorneys-in-Fact. A. The Limited Partner, by the execution hereof, hereby irrevocably constitutes and appoints the General Partner its true and lawful attorney-in-fact, with full power and authority in its name, place and stead, to execute or acknowledge under oath, deliver, file and record at the appropriate public offices such documents as may be necessary or appropriate to carry out the provisions of this Agreement including: (i) All certificates and other instruments (including this Agreement or any certificate of limited partnership and any amendment thereof) which the General Partner deems appropriate to qualify or continue the Partnership as a limited partnership under the Missouri Act (or a partnership in which the Limited Partner will have limited liability comparable to that provided by the Missouri Act) or under the laws of any other jurisdiction in which the Partnership may conduct business; (ii) All amendments to this Agreement or any certificate of limited partnership which are required to be filed or which the General Partner deems to be advisable to file; (iii) All instruments which the General Partner deems appropriate to reflect a change or modification of the Partnership in accordance with the terms of this Agreement; (iv) All conveyances and other instruments which the General Partner deems appropriate to reflect the dissolution and termination of the Partnership; and (v) All other instruments, documents or contracts (including, without limiting the foregoing, any deed, lease, mortgage, note, bill of sale, contract, trust agreement, guarantee, partnership agreement, indenture, underwriting agreement or any instrument or documentation which may be required to be filed (or which the General Partner deems advisable to file) by the Partnership under the laws of any state or by any governmental agency) requisite to carrying out the intent and purpose of this Agreement and the business of the Partnership and its Affiliates. B. The appointment by the Limited Partner of the General Partner as attorney-in-fact shall be deemed to be a power coupled with an interest in recognition of the fact that each of the Partners under this Agreement will be relying upon the power of the General Partner to act as contemplated by this Agreement in any filing and other action by them on behalf of the Partnership. 10.2 Word Meanings. The words such as "herein", "hereinafter", "hereof", and "hereunder" refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. The singular shall include the plural and the masculine gender shall include the feminine and neuter, and vice versa, unless the context otherwise requires. 10.3 Binding Provisions. The covenants and agreements contained herein shall be binding upon, and inure to the benefit of the heirs, executors, administrators, successors and assigns of the respective parties hereto. 10.4 Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Missouri. 10.5 Counterparts. This Agreement may be executed in several counterparts, all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties have not signed the same counterpart, except that no counterpart shall be binding unless signed by the General Partner. 10.6 Entire Agreement. This Agreement contains the entire agreement between the parties and supersedes all prior writings or representations. 10.7 Separability of Provisions. Each provision of this Agreement shall be considered separable and if for any reason any provision or provisions hereby are determined to be invalid or unenforceable such validity or unenforceability shall not impair the operation of or affect any other portion of this Agreement and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted. 10.8 Section Titles. Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. 10.9 Amendments. This Agreement may be amended, from time to time by the written agreement of the Limited Partner and the General Partner provided, however, that the provisions of Section 10.10 hereof shall not be amended without the prior written consent of the holders of 66-2/3% in aggregate principal amount of the Capital Notes. 10.10 Payments Prohibited. The Partnership shall not (i) return to either Partner all or any portion of its Capital Contribution or (ii) make any distribution of Net Income at any time when a default in the payment of the principal of or premium or interest on any of the 15% Capital Notes Due 1992, the 9-3/8% Capital Notes Due 1996 or the 10.60% Capital Notes Due 1997 of the Partnership (the "Capital Notes") or any indebtedness for money borrowed of the Partnership ranking on a parity with such Notes shall have occurred and be continuing; and any such act shall constitute a violation of this Agreement prohibited by Article Six (B)(iii). IN WITNESS WHEREOF, the undersigned has executed this Fourth Amended and Restated Agreement of Limited Partnership as of the day and year first above written. GENERAL PARTNER: EDJ HOLDING COMPANY, INC. By: Vice President LIMITED PARTNER: THE JONES FINANCIAL COMPANIES, a Limited Partnership By: John W. Bachmann Managing Partner EX-3 4 LEASE AGREEMENT & AMMENDMENT 3/9/94 MASTER LEASE AGREEMENT THIS MASTER LEASE AGREEMENT ("Lease") is made and entered into by and between EDJ LEASING CO., a Missouri limited partnership, hereinafter referred to as "Landlord" and EDWARD D. JONES & CO., a Missouri limited partnership, hereinafter referred to as "Tenant". WITNESSETH: 1. Premises and Term. In consideration of the obligation of Tenant to pay rent as herein provided, and in consideration of the other terms,provisions and covenants hereof, Landlord hereby demises and leases to Tenant and Tenant hereby accepts and leases from Landlord certain Premises situated in Des Peres, Missouri, and more particularly described on Exhibit "A" attached hereto and incorporated herein by reference, together with all rights, privileges, easements, appurtenances and immunities belonging to or in any way pertaining to the Premises and together with the buildings and other improvements situated upon said Premises (said real property, buildings and improvements hereinafter referred to as the "Premises"). Landlord hereby assigns to Tenant and Tenant hereby assumes and agrees to take the Premises subject to all existing Tenant leases in the Premises (collectively referred to as "Space Leases") and Landlord shall simultaneously with the execution of this Lease, deliver to Tenant the original copies of all Space Leases and Tenant shall have the right to collect all rents and charges arising therefrom. Landlord hereby transfers to Tenant all security deposits for all Space Leases and Tenant agrees to assume the Landlord's duties and liabilities arising under the Space Leases from and after the date hereof. TO HAVE AND TO HOLD the same for a term commencing and ending as described on Exhibit "B". Tenant acknowledges that it has inspected and accepts the Premises, and specifically the buildings and improvements comprising the same, in their present condition as suitable for the purpose for which the Premises are leased. Taking of possession by Tenant shall be deemed conclusively to establish that said buildings and other improvements are in good and satisfactory condition as of when possession was taken. Tenant further acknowledges that no representations as to the repair of the Premises nor promises to alter, remodel or improve the Premises have been made by Landlord unless such are expressly set forth in this Lease. 2. Rent. Tenant agrees to pay to Landlord rent for the Premises, in advance, without demand, deduction or set-off, for the entire term hereof as set forth on Exhibit "B". An $132,500.00 installment shall be due and payable on the date hereof ("Commencement Date") and a like $132,500.00 installment shall be due and payable on or before the first day of each calendar month succeeding the Commencement Date recited above during the hereby demised term, except that the rental payment for any fractional month at the commencement or end of the Lease period shall be prorated. 3. Use and Governmental Compliance. The demised Premises may be used for any lawful purpose. Tenant shall at its own cost and expense obtain any and all licenses and permits necessary for any such use. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises, and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances in or upon or connected with, the Premises, all at Tenant's sole expense. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, nor take any other action which would constitute a nuisance or would disturb or endanger any other tenants of the building in which the Premises are situated or unreasonably interfere with their use of their respective Premises. Without Landlord's prior written consent, Tenant will not permit the Premises to be used for any purpose or in any manner (including without limitation any method of storage) that would render the insurance thereon void or the insurance risk more hazardous. 4. Taxes. A. Tenant agrees to pay as additional rental, before they become delinquent, all taxes, assessments and governmental charges of any kind and nature whatsoever (hereinafter collectively referred to as "taxes") lawfully levied or assessed against the building and the grounds, parking areas, driveways and alleys around the building. B. Tenant shall have the right to employ at Tenant's expense, a tax consulting firm to attempt to assure a fair tax burden on the building and grounds within the applicable taxing jurisdiction. C. Tenant shall have the right to contest the amount or validity of any tax by appropriate legal proceedings, but such right shall not be deemed or construed in any way as relieving Tenant of its covenant to pay any such tax. Landlord shall join in any such proceeding to the extent necessary to permit Tenant to properly prosecute the same, provided, however, that Landlord shall not be subjected to any such proceeding brought by Tenant, and Tenant hereby covenants to defend, indemnify and hold Landlord harmless from any such costs or expenses. D. Any payment to be made pursuant to this Section 4 with respect to the real estate tax year in which this Lease commences or terminates shall be prorated. E. Nothing contained in this Lease shall require Tenant to pay any franchise, estate, inheritance, succession, capital levy or transfer tax of Landlord, of any income, excess profits or revenue tax or any other tax, assessment, charge or levy upon the rent payable by Tenant under this Lease. 5. Tenant's Repairs. A. Tenant shall promptly make all necessary repairs and replacements to the Premises at Tenant's own cost and expense, including but not limited to, the roof, exterior walls, foundation, structural components, windows, glass and plate glass, doors, any special office entry, interior walls and finish work, floors and floor covering, downspouts, gutters, heating and air conditioning systems, dock boards, truck doors, dock bumpers, paving, plumbing work and fixtures, termite and pest extermination, regular removal of trash and debris, regular mowing of any grass, trimming, weed removal and general landscape maintenance, including rail spur areas, keeping the parking areas, driveways, alleys and the whole of the Premises in a clean and sanitary condition and Tenant shall be responsible for all management services for the Premises. Tenant may hire a reputable, established property manager acceptable to Landlord. B. Tenant shall not damage any demising wall or disturb the integrity and support provided by any demising wall and shall, at its sole cost and expense, promptly repair any damage or injury to any demising wall caused by Tenant or its employees, agents or invitees. C. The Premises constitute a portion of a multiple occupancy Real Property and accordingly Tenant and its employees, customers and licensees shall have the non-exclusive right to use all of the parking areas and drives described in Exhibit A,subject to such reasonable rules and regulations as Landlord may from time to time prescribe and subject to rights of ingress and egress of other tenants. Landlord shall not be responsible for enforcing Tenant's parking rights against any third parties. Further, in multiple occupancy buildings, Landlord reserves the right to perform the paving and landscape maintenance, exterior painting and common sewage line plumbing that are otherwise Tenant's obligations under subsection A above, and Tenant shall, in lieu of the obligations set forth under subsection A above with respect to such items, be liable for its proportionate share of the cost and expense of the care of the common areas of the Real Property, including but not limited to the mowing of grass, care of shrubs, general landscaping, maintenance of parking areas, driveways and alleys, exterior repainting and common sewage line plumbing; provided, however, that Landlord shall have the right to require Tenant to pay such other reasonable proportion of said mowing, shrub care and general landscaping costs as may be determined by Landlord in its reasonable discretion. Tenant shall pay when due its share, determined as aforesaid, of such costs and expenses along with the other tenants of the Real Property to Landlord upon demand, as additional rent for the amount of its share as aforesaid of such costs and expenses in the event Landlord elects to perform or cause to be performed such work. D. Landlord shall, and hereby does, assign to Tenant all warranties and guarantees involving the Premises or its components available to the Landlord from any contractors, subcontractors, materialmen and suppliers involved in the construction of the Premises. 6. Alterations. A. Tenant may, at Tenant's sole expense, make any and all alterations, additions or improvements to the Premises (including but not limited to roof and wall penetrations) without the prior consent of Landlord (all referred to as "Alterations"); provided that no Alteration shall at any time be made which (1) shall impair the structural soundness or diminish the value of the Buildings or the Premises, or (2) shall cause any default under the Deed of Trust described on Exhibit B, affecting the Premises, said Deed of Trust hereinafter referred to as "Mortgage". B. Except as provided in subsection C, all Alterations made on or to the Premises by or on behalf of Tenant and in existence upon the termination of this Lease shall immediately upon such termination be and become the property of Landlord without payment therefor by Landlord. C. All machinery and equipment, trade fixtures, movable partitions, furniture, machinery and furnishings installed by Tenant or subtenants or licensees of Tenant (in this Subsection collectively referred to as "owner") shall remain the property of the owner thereof with the right of removal, whether or not affixed and/or attached to the real estate and the owner thereof shall be entitled to remove the same or any part thereof during the term or at the end of the term provided herein, or if the term shall end prior to the date specifically fixed for such termination, then within a reasonable time thereafter. D. Tenant shall indemnify and hold Landlord harmless against any and all costs and expenses which Tenant may incur in connection with any construction of any Alterations effected by Tenant or subtenants and licensees of Tenant on or at the Premises. All such work shall be done in a good and workmanlike manner in compliance with all applicable building, zoning and/or other laws, ordinances, governmental regulations or requirements. 7. Inspections. Landlord and Landlord's agents and representatives shall have the right to enter and inspect the Premises at any reasonable time during business hours, for the purpose of ascertaining the condition of the Premises. During the period that is three months prior to the end of the term hereof, Landlord and Landlord's agents and representatives shall have the right to enter the Premises at any reasonable time during business hours for the purpose of showing the Premises and shall have the right to erect on the Premises a suitable sign indicating the Premises are available. Tenant shall give written notice to Landlord at least 45 days prior to vacating the Premises and shall arrange to meet with Landlord for a joint inspection of the Premises prior to vacating. In the event of Tenant's failure to give such notice or arrange such joint inspection, Landlord's inspection at or after Tenant's vacating the Premises shall be conclusively deemed correct for purposes of determining Tenant's responsibility for repairs and restoration. 8. Utilities. Tenant shall pay for all sewer, water, gas, electricity, telephone, sprinkler charges and other utilities and services used on or from the Premises, together with any taxes, penalties, surcharges or the like pertaining thereto and any maintenance charges for utilities. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion as determined by Landlord of all charges jointly metered with other premises under the Space Leases. Landlord shall in no event be liable for any interruption or failure of utility services on the Premises. 9. Subletting. Tenant shall have the right to sublet the whole or any part of the Premises without the prior consent of Landlord but subject to the lender's rights pursuant to the Mortgage. But no such sublease shall release the Tenant of its obligations. 10. Fire, Casualty and Liability Insurance. A. All fire, casualty and liability insurance shall be maintained in compliance with the Mortgage. All costs and payments incurred as a result of maintaining said insurance shall be borne by the Tenant. B. Landlord may with Tenant's consent, procure and maintain the insurance coverages described above and may do so by way of blanket insurance policies, subject to 10A. above. In such event, Tenant agrees to pay to Landlord, as additional rental, Tenant's full proportionate share of such insurance cost. Said payments shall be made to Landlord within 10 days after presentation to Tenant of Landlord's statement setting forth the amount due. Any payment to be made pursuant to this Subsection with respect to the year in which this Lease commences or terminates shall bear the same ratio to the payment that would be required to be made for the full year as the part of such year covered by the term of this Lease bears to a full year. 11. Liability and Indemnity. A. Landlord shall not be liable to Tenant or Tenant's employees, agents, patrons or visitors, or to any other person whomsoever, for any injury to person or damage to property on or about the Premises, resulting from and/or caused in part or whole by the negligence or misconduct of Tenant, its agents, servants or employees, or of any other person entering upon the Premises, including claims arising from a lack of or insufficient security to protect invitees of the Premises from the criminal acts of third parties, or caused by the buildings and improvements located on the Premises becoming out of repair, or caused by leakage of gas, oil, water or steam or by electricity emanating from the Premises, or due to any cause whatsoever, and Tenant hereby covenants and agrees that it will at all times indemnify and hold safe and harmless the property, Landlord (including without limitation the trustee and beneficiaries if Landlord is a trust), Landlord's agents and employees from any loss, liability, claims, suits, costs, expenses, including without limitation attorneys' fees and damages, both real and alleged, arising out of any such damage or injury; except injury to persons or damage to property the sole cause of which is the negligence of Landlord. B. Landlord hereby releases Tenant and Tenant hereby releases Landlord from and against any and all claims, demands, liabilities or obligations whatsoever for damage to the Premises or loss of rents or profits of either Landlord or Tenant resulting from or in any way connected with any fire or accident or other casualty whether or not such fire, accident or other casualty shall have been caused by the negligence or contributory negligence of any of Landlord or Tenant or by any agent, associate, employee or invitee of any of them, to the extent that such damage or loss is covered under any insurance policy which at the time of such damage or loss permits waiver of subrogation rights prior to a loss thereunder. Landlord and Tenant agree to use due diligence to obtain any necessary endorsement on any insurance policies in order to obtain the result desired under Section 11. 12. Damage or Destruction. A. If the building or improvements situated upon the Premises should be damaged or destroyed by fire, tornado or other casualty, Tenant shall give immediate written notice thereof to Landlord. B. Except as may be otherwise specifically provided in this section, this Lease shall not be terminated or affected in any way by any damage or destruction to the Premises. In the event of any damage or destruction to the Premises, by fire or other casualty, rent due hereunder shall not be abated in any manner and Tenant (subject to the availability of insurance proceeds and other funds under the provisions of Subsection E hereof) shall diligently proceed to repair any damage or destruction and to rebuild and replace the Premises to the condition in which it existed prior to said damage or destruction. Provided, however, that in the event any amount is paid to Landlord or its mortgagee from any rental insurance policy maintained by Tenant, the amount of rental insurance proceeds payable to landlord or its mortgagee shall be credited against rental payments required to be made by Tenant hereunder and the rent paid by Tenant shall be reduced by such amount. C. Subject to any contrary provisions of the Mortgage subsequently placed upon the Premises, which shall take precedence over the following clause (but only so long as said Mortgage is in effect), and notwithstanding the foregoing, in the event that 15% or more of the Building is damaged or destroyed during the term of this Lease or any extension, then either party may terminate this Lease by giving the other party written notice of its election to terminate on or before 30 days following the date of such damage or destruction. The effective date of such termination shall be the date of notice provided that a later time may be specified in Tenant's notice of termination to Landlord. Notwithstanding the foregoing, any such election by Landlord to terminate this Lease shall be null and void and of no force or effect if Tenant, within 30 days after receipt of Landlord's notice to so terminate, exercises one or more options to extend the term of this Lease in which event, Tenant shall rebuild and repair pursuant to this Section 12. In the event of such termination, Tenant shall assign all insurance and other proceeds payable as a result of such damage or destruction to the Landlord and Tenant shall have no further rights in any such insurance proceeds (other than those proceeds payable to Tenant as a result of any damage or destruction to any personal property or trade fixtures or machinery or equipment belonging to Tenant and allowed to be removed from the Premises by Tenant under the terms of this Lease) and this Lease shall thereafter terminate and be of no further force or effect. D. Landlord shall make all insurance proceeds available for repair and rebuilding of the Premises and shall cooperate with Tenant in order to obtain such proceeds from any insurer; provided that Landlord and Tenant shall be subject to the terms and conditions on the availability and use of said insurance proceeds imposed by the holder of any such Mortgage. E. Subject to any additional requirements, conditions or approvals contained in the Mortgage which shall control as long as said Mortgage is in effect, proceeds of insurance or amounts in lieu thereof paid by Landlord for rebuilding or repair of the Premises shall be paid from time to time as the work progresses subject to the following conditions: (1) Tenant shall not be in default under this Lease; (2) Tenant shall pay the cost of such repairs in excess of the amount of insurance proceeds and deposit the difference between the cost of repairs and amount of insurance proceeds with Landlord so that there are sufficient funds on deposit at all times with Landlord to complete the repairs as certified by an architect approved by Landlord provided that so long as the Mortgage is in effect Tenant shall continue its payment without any reduction for said credit; (3) Tenant shall provide suitable completion and performance bonds and builder's all-risk insurance; (4) Such other conditions as would customarily be required by a local construction lender, or are otherwise reasonable. F. Tenant assumes all risks of any damage to Tenant's property that may occur by reason of water or the bursting or the leakage of any pipes or waste water upon the Premises or from any act of negligence of any other person, or fire or hurricane or other act of God or from any cause whatsoever. 13. Condemnation. A. Condemnation means the taking of all or any part of the Premises or possession thereof under the power of eminent domain; or the voluntary sale of all or any part of the Premises to any person having the power of eminent domain, provided that the Premises or a portion thereof is then under the threat of condemnation. B. Subject to any contrary provisions in the Mortgage which shall control as long as said Mortgage is in effect, if during the term of this Lease, 15% or more of the building on the Premises is taken by condemnation or if the parking spaces on the Premises are reduced by more than 15% as a result of condemnation then at the option of Tenant this Lease shall terminate and the rent shall be abated during the unexpired portion of the term, effective on the date of vesting of title in the condemning authority. The option to terminate in this section must be exercised within 30 days following the date of vesting of title in the condemning authority or shall be deemed to be waived. C. If during the term of this Lease, less than 15% of the buildings on the Premises are taken by condemnation or parking spaces on the Premises are reduced by 15% or less as a result of condemnation or if Tenant does not elect to terminate this Lease as provided in Section B above, then this Lease shall not terminate, but shall remain in full force and effect and the Tenant (subject to the provisions of Section G hereof) shall reconstruct the Premises to a complete architectural unit. D. If all or any portion of the Premises is taken by condemnation for a limited period of time, this Lease shall not terminate and Tenant shall continue to perform its obligations hereunder, including but not limited to the payment of rent, as though such taking had not occurred except to the extent that it may be prevented from so doing pursuant to the terms of the order of the authority which made the condemnation. In the event of such a temporary taking, Tenant shall be entitled to the entire award made for such taking (whether paid by way of damages, rent or otherwise), subject to the rights of the Mortgagee, unless the period of governmental occupancy extends beyond the termination of the term, in which case the award shall be apportioned between Landlord and Tenant as of the date of such termination, subject to the rights of the Mortgagee. E. Upon any termination of this Lease as a result of a condemnation, all rent, impositions and charges of all types shall be adjusted and prorated to the date of such termination and all other rights and obligations of the parties hereunder shall cease to accrue after said date except for the distribution of any award or compensation for such taking, and provided that Tenant shall be allowed a reasonable time to remove its property from the Premises. F. In the event of any condemnation, except as may be specifically provided herein, Tenant shall not be entitled to any part of the award paid for such condemnation and Landlord shall receive the full amount of such award. Notwithstanding the foregoing, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant for Tenant's own right on account of any and all damage to Tenant's business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant's furniture, fixtures, Leasehold improvements and equipment, and for the Leasehold improvements made by Tenant, provided that any compensation therefor shall not reduce the award payable to Landlord. G. (1) Landlord shall make all condemnation proceeds available for repair and rebuilding of the Premises and shall cooperate with Tenant in order to obtain such proceeds from the condemning authority; provided that Landlord and Tenant shall be subject to the terms and conditions on the availability and use of said condemnation proceeds imposed by the holder of any Mortgage. (2) In the event that any condemnation proceeds are not available to Tenant for repair and rebuilding of the Premises as a result of any default or action by Landlord or the payment of such proceeds to any holder of a lien or security interest in the Premises (except a lien or security interest made by Tenant) then Tenant may (unless Landlord elects to provide the funds for such repair and rebuilding): (a) cancel this Lease by giving Landlord notice of such election within 30 days following Tenant's demand for payment and in such event no rental shall be payable from and after 60 days after Tenant's demand for payment; or (b) repair and rebuilding the Premises and keep this Lease in full force and effect except that Tenant's base rent as specified in Exhibit B hereof shall be abated until such time as the total amount of abated rent is equal to the amount of condemnation proceeds plus interest (determined by first applying abated rent to interest and then principal) and if the remaining term is not long enough to allow for Tenant to cover the full amount of the condemnation proceeds plus interest at the rate of 8-1/2 (eight and one-half) percent, and if the remaining term is not long enough to allow for Tenant to cover the full amount of the condemnation proceeds plus interest, then at Tenant's option, the initial term or extended term during which such damage or destruction occurred shall be extended until the total amount plus interest can be recovered, provided that the foregoing provisions of (a) and (b) shall be abated so long as the Mortgage is in effect. H. Subject to any additional requirements, conditions or approvals contained in the Mortgage which shall control as long as the Mortgage is in effect, condemnation proceeds or amounts in lieu thereof paid by Landlord for rebuilding or repair of the Premises shall be paid from time to time as the work progresses subject to the following conditions: (1) Tenant shall not be in default under this Lease; (2) Tenant shall pay the cost of such repairs in excess of the amount of condemnation proceeds and deposit the difference between the cost of repairs and amount of condemnation proceeds with landlord so that there are sufficient funds on deposit at all times with Landlord to complete the repairs as certified by an architect approved by Landlord and so long as the Mortgage is in effect, Tenant shall continue payments without any reduction for said credit; (3) Tenant shall provide suitable completion and performance bonds and builder's all-risk insurance; (4) Such other conditions as would customarily be required by a local construction lender or are otherwise reasonable. 14. Holding Over. Tenant will, at the termination of this Lease by lapse of time or otherwise, yield up immediate possession to Landlord. If Landlord agrees in writing to the terms of such holding over, the holder-over tenancy shall be subject to termination by Landlord at any time upon not less than 15 days advance written notice, or by Tenant at any time upon not less than 15 days advance written notice and all of the other terms and provisions of this Lease shall be applicable during that period, except that Tenant shall pay Landlord from time to time upon demand, as rental for the period of any hold over, an amount equal to one and one-half (1-1/2) times the rent in effect on the termination date, computed on a daily basis for each day of the hold-over period. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided. The preceding provisions of this Section 14 shall not be construed as Landlord's consent for Tenant to hold over. 15. Quiet Enjoyment. Landlord covenants that it now has, or will acquire before Tenant takes possession of the Premises, good title to the Premises, free and clear of all liens and encumbrances, excepting only the lien for current taxes not yet due, zoning ordinances and other building and fire ordinances and governmental regulations relating to the use of such property, and easements, restrictions and other conditions of record. In the event this Lease is a sublease, then Tenant agrees to take the Premises subject to the provisions of the prior Leases. Landlord represents and warrants that it has full right and authority to enter into this Lease and that Tenant, upon payment of the rental herein set forth and performing its other covenants and agreements herein set forth, shall peaceably and quietly have hold and enjoy the Premises for the term hereof without hindrance or molestation from Landlord, subject to the terms and provisions of this Lease. 16. Subordination. This Lease shall be subordinate to the Mortgage. 17. Events of Default. The following events shall be deemed to be events of default by Tenant under this Lease: (a) Tenant shall fail to pay any installation of the rent herein reserved when due, or any payment with respect to taxes hereunder when due, or any other payment or reimbursement to Landlord required herein when due, and such failure shall continue for a period of 10 days after written notice thereof from Landlord. (b) Tenant shall become insolvent, or shall make a transfer in fraud of creditors, or shall make an assignment for the benefit of creditors. (c) Tenant shall file a petition under any section or chapter of the United States Bankruptcy Code, as amended, or under any similar law or statute of the United States or any state thereof, or Tenant shall be adjudged bankrupt or insolvent in proceedings filed against Tenant thereunder. (d) Tenant shall fail to comply with any terms, provision or covenant of this Lease (other than the foregoing in this Section 17), and shall not cure such failure within 10 days after written notice thereof to Tenant, or, if such failure cannot reasonably be cured within 10 days, then the failure of Tenant to commence to perform the same within 30 days after notice thereof and to thereafter diligently pursue the appropriate action to cure same. 18. Remedies. A. Upon the occurrence of any of the events of default described in Section 17 hereof, Landlord shall have the option, without any notice or demand whatsoever, to enter upon the Premises by force, if necessary, without being liable for prosecution or any claim for damages therefor, and do whatever Tenant is obligated to do under the terms of this Lease; and Tenant agrees to reimburse Landlord on demand for any expenses that Landlord may incur in thus effecting compliance with Tenant's obligations under this Lease, and Tenant further agrees that Landlord shall not be liable for any damages resulting to the Tenant from such action, whether caused by the negligence of Landlord or otherwise. B. Upon regaining possession of the Premises, Landlord shall utilize reasonable efforts to relet the Premises. Landlord may relet the Premises at such rental and upon such terms as may be reasonably obtained under the circumstances. Landlord is authorized to make all necessary repairs and alterations in or to the Premises for the new lessee and to charge the cost thereof to Tenant. The net amount of rent received by Landlord from such reletting, after deduction of any and all costs and expenses incurred in connection with such repossession and reletting, shall be credited upon Tenant's obligations to Landlord. If the net rent collected by Landlord is not sufficient to pay the full amount of rent, additional rent, damages, attorneys' fees, expenses and other amounts required to be paid by Tenant under this Lease, then Tenant shall pay the amount of such deficiency to Landlord upon demand. C. In the event Tenant fails to pay any installment of rent hereunder as and when such installment is due, to help defray the additional cost to Landlord for processing such late payments Tenant shall pay to Landlord interest on demand on such installments; and the failure to pay such amount within 10 days after demand therefor shall be an event of default hereunder. The provision for interest shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord's remedies in any manner. D. Any and all of Tenant's property, including, without limitation, machinery, equipment, fixtures, furniture, furnishings, stock and inventory remaining on or in the Premises for more than 30 days after termination of this Lease, shall be conclusively deemed to have been forever abandoned by Tenant, and at the option of Landlord, shall become the sole and absolute property of Landlord. Landlord may handle, remove, store, sell or otherwise dispose of said property, at the cost and expense of tenant and without liability to Landlord. E. In the event of any default under this Lease by Tenant, Landlord may, after 15 days written notice to Tenant, cure such default for the account and at the expense of Tenant. Any money spent or cost or expenses incurred by Landlord in curing such a default for the account of Tenant shall be deemed additional rental due from Tenant to Landlord, payable upon demand and shall bear interest from the date incurred until paid. F. If either party should default under the terms of this Lease and such default is not cured in accordance with the terms hereof, the other party shall be entitled to recover from the defaulting party all reasonable costs, charges, expenses and attorneys' fees incurred in connection therewith and in connection with the other party's remedies undertaken on account of such default and any negotiations in regard thereto. G. Pursuit of the foregoing remedy shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law, nor shall pursuit of any remedy herein provided constitute a forfeiture or waiver of any rent due to Landlord hereunder or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants herein contained. No act or things done by Landlord or its agents during the term hereby granted shall be deemed a termination of this Lease or any acceptance of surrender of the Premises. 19. Landlord's Default. In the event Landlord should become in default in any payments due on any such mortgage described in Section 16 hereof or in the payment of taxes or any other items that might become a lien upon the Premises and that Tenant is not obligated to pay under the terms and provisions of this Lease, Tenant is authorized and empowered after giving Landlord 15 days prior written notice of such default and Landlord's failure to cure such default, to pay any such items for and on behalf of Landlord, and the amount of any item so paid by Tenant for or on behalf of Landlord. In the event Tenant pays any mortgage debt in full, in accordance with this section, it shall, at its election be entitled to the mortgage security by assignment or subrogation. 20. Mechanic's Liens. Tenant shall have no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any manner to bind, the interest of Landlord in the Premises or to charge the rentals payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs, and each such claim shall affect and each such lien shall attach to, if at all, only the leasehold interest granted to Tenant by this instrument. Tenant covenants and agrees that it will pay or cause to be paid all sums legally due and payable by it on account of any labor performed or materials furnished in connection with any work performed on the Premises on which any lien is or can be validly and legally asserted against its leasehold interest in the Premises or the improvements thereon and that it will save and hold Landlord harmless from any and all loss, cost or expense based on or arising out of asserted claims or liens against the leasehold estate or against the right, title and interest of the Landlord in the Premises or under the terms of this Lease. 21. Notices. Each provision of this instrument or of any applicable governmental laws, ordinances, regulations and other requirements with reference to the sending, mailing, or delivery of any notice or the making of any payment by Landlord to Tenant or with reference to the sending, mailing or delivery of any notices of the making of any payment by Tenant to Landlord shall be deemed to be complied with when and if the following steps are taken: A. All rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address set forth below or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. Tenant's obligation to pay rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such rent and other amounts actually have been received by Landlord, and the Mortgagee, if required by the Mortgage. B. All notices required to be delivered by Landlord to Tenant hereunder shall be delivered to Tenant at the address set forth below, or at such other address within the continental United States as Tenant may specify from time to time by written notice delivered in accordance herewith. C. Any notice or document required or permitted to be delivered hereunder shall be deemed to be delivered, whether actually received or not when deposited in the United States Mail, postage prepaid, Certified or Registered Mail, addressed to the parties hereto at the respective addresses set out below, or at such other address as they have theretofore specified by written notice delivered in accordance herewith. D. If and when included within the term "Landlord" as used in this instrument, there are more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such a notice specifying some individual at some specific address for the receipt of notice and payments to Landlord. If and when included within the term "Tenant", as used in this instrument, here are more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of such a notice specifying some individual at some specific address within the continental United States for the receipt of notices and payments to Tenant. All parties included with the terms "Landlord" and "Tenant", respectively, shall be bound by notices given in accordance with the provision of the section to the same effect as if each had received such notice. 22. Miscellaneous. A. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural unless the context otherwise requires. B. The terms, provisions, covenants and conditions contained in this Lease shall apply to,inure to the benefit of, and be binding upon, the parties permitted assigns, except as otherwise herein expressly provided. Landlord shall have the right to assign any of its rights and obligations under this Lease. Each party agrees to furnish to the other, promptly upon demand, a corporate resolution proof of due authorization by partners, or other appropriate documentation evidence the due authorization of such party to enter into this Lease. C. The captions inserted in this Lease are for convenience only and in no way define, limit or otherwise describe the scope of intent of this Lease or any provision hereof, or in any way affect the interpretation of this Lease. D. Tenant agrees from time to time within 30 days after request of Landlord, to deliver to Landlord, or Landlord's designee an estoppel certificate in the form of Exhibit C, attached hereto and made a part hereof by this reference. It is understood and agreed that Tenant's obligation to furnish such estoppel certificates in a timely fashion is a material inducement for Landlord's execution of this Lease. E. This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties herein and approved by Landlord's mortgagee, if any. F. All obligations of Tenant hereunder not fully performed as of the expiration or earlier termination of the term of this Lease shall survive the expiration or earlier termination of the term hereof, including without limitation payment obligations with respect to taxes and insurance and all obligations concerning the condition of the Premises. Upon the expiration or earlier termination of the term hereof, and prior to Tenant vacating the Premises, Tenant shall pay to Landlord any amount reasonably estimated by Landlord as necessary to put the Premises, including without limitation all heating and air conditioning systems and equipment herein, in good condition and repair. Tenant also, prior to vacating the Premises, shall pay to Landlord the amount, as estimated by Landlord, of Tenant's obligation hereunder for real estate taxes and insurance premiums for the year in which the Lease expires or terminates. All such amounts shall be used and held by Landlord for payment of such obligations of Tenant hereunder, with Tenant being liable for any additional costs therefor upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied as the case may be. Tenant hereby waives any notice of default and non- payment thereof. G. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the term of this Lease, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby, and it is also the intention of the parties to this Lease that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there be added as a part of this Lease contract a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provisions as may be possible and be legal, valid and enforceable. H. All references in this Lease to "the date hereof" or similar references shall be deemed to refer to the last date on which all parties hereto have executed this Lease. 23. Notice of Default. Upon the occurrence of any event of default, Tenant hereby waives any notice or demand whatsoever. 24. Additional Provisions. Any additional provisions are set forth on Exhibit "B" attached hereto and incorporated hereby this reference. 25. Subject to Deed of Trust. To the extent of any inconsistencies between the terms of this Lease and the terms of the Mortgage, the terms of the Mortgage shall govern and further provided that this Lease shall not be cancelled so long as the Mortgage is in effect. EXECUTED AS OF THIS day of , 19 . TENANT: LANDLORD: EDWARD D. JONES & CO., L.P. EDJ LEASING CO., L.P. By: EDJ Holding Company, Inc., By: LHC, Inc., General Partner General Partner By: By: Edward Soule Edward Soule Treasurer Treasurer EXHIBIT A The Premises are known as 12555 Manchester and are located in Des Peres, Missouri and consist of the following: (a) That certain building and improvements containing approximately 397,058 gross square feet and any additions or expansions thereto (all hereinafter referred to as the "Buildings") together with the non- exclusive rights to use all drives, parking areas, sidewalks and other improvements, located on the real property described on Attachment 1 ("Real Property"). The Buildings, drives, parking areas, sidewalks and other improvements are collectively referred to herein as the "Improvements". (b) All rights, easements and privileges of record, if any, appurtenant to the Real Property, as to which Tenant agrees to be bound and comply. The foregoing (a) and (b) are herein collectively referred to as the "Premises". EXHIBIT B TERM OF LEASE 1. The "Initial Term" of this Lease shall be for a period of 15 years which shall commence on March 9, 1993 ("Commencement Date") and end on April 8, 2008. 2. Tenant shall have the option to extend the term of this Lease under the same terms and conditions (including rent) of this Lease in existence at the time of renewal for two additional, separate and consecutive terms of five years ("Extended Term" or "Extended Terms"). The first five year Extended Term, if exercised, will commence at the expiration of the Initial Term, and each succeeding Extended Term will commence at the expiration of the immediately preceding Extended Term. Failure to exercise any option to extend shall terminate Tenant's option to extend for any subsequent Extended Terms. Landlord agrees to give Tenant notice of Tenant's option to extend at least six months and no more than nine months prior to the expiration of the Initial Term and each Extended Term. Tenant shall exercise its option by giving Landlord notice thereof within three months following the date that Landlord gives Tenant notice of its option to extend. 3. For the purposes of this Lease whenever the word "term" or the phrase "term hereof" or any similar phrase is used in this document, it shall be deemed to include the Initial Term as well as any and all Extended Terms unless a contrary interpretation is clearly expressed. RENT. 1. For and during the term of this Lease (including any Extended Term), Tenant agrees to pay to Landlord, at Landlord's address for notices, as set forth herein, or to such other address or such other person as may be directed from time to time by notice to Tenant from Landlord, and without deduction or offset, rent as provided in this Exhibit B. 2. Beginning on the Commencement Date of this Lease and thereafter throughout the term of this Lease including any Extended Term, Tenant shall pay to Landlord annual base rent at the rate of $1,590,000.00 per year payable in equal monthly installments of $132,500.00 on the 1st day of each month during the term of this Lease. Rent for any partial month shall be prorated based on 30 days to the month. MORTGAGE. 1. The Mortgage referred to in this Lease is that certain Deed of Trust entered into as of March 9, 1993 by and between EDJ Leasing Co., L.P. ("Mortgagor"), Robert C. Graham III Trustee, and Nationwide Life Insurance Company ("Mortgagee"). ATTACHMENT 1 LEGAL DESCRIPTION The land located in the County of St. Louis, State of Missouri and described as follows: A tract of land being lot 1 of "Community Federal Subdivision", a subdivision according to the plat thereof recorded in Plat Book 240 page 75 of the St. Louis County Records, in Sections 27 and 34, Township 45 North-Range 5 East, St. Louis County, Missouri and being more particularly described as: Beginning at the Northwest corner of said Lot 1 of "Community Federal Subdivision"; said point being also the Southwest corner of Lot 2 of said Subdivision; thence Eastwardly and Northwardly along the line dividing Lots 1 and 2 South 89 degrees 17 minutes 50 seconds East 1111.06 feet and North 00 degrees 42 minutes 41 seconds East 10.00 feet to a point in the North line of said Lot 1; thence Eastwardly along said North line of Lot 1 South 89 degrees 15 minutes 08 seconds East 178.36 feet to a point in the West line of Ballas Road as widened; thence Southwardly along said West line of Ballas Road South 00 degrees 42 minutes 41 seconds West 380.81 feet to a point in the North line of property conveyed to Reproco, Inc., as described in the deed recorded in book 6562, page 2239 of the St. Loius County Records; thence along the boundary line of said Reproco, Inc. property North 89 degrees 16 minutes 29 seconds West 288.00 feet, and South 00 degrees 28 minutes 31 seconds West 99.57 feet to a point in the North line of Manchester Road, as widened; thence along the right-of-way line of Manchester Road, as widened, the following courses and distances; North 89 degrees 16 minutes 29 seconds West 178.49 feet, North 88 degrees 18 minutes 59 seconds West 94.01 feet North 30 degrees 34 minutes 38 seconds West 114.69 feet, North 89 degrees 16 minutes 29 seconds West 60.00 feet, South 36 degrees 25 minutes 32 seconds West 117.60 feet, North 89 degrees 16 minutes 29 seconds West 55.47 feet, along a curve to the left whose radius point bears South 00 degrees 43 minutes 31 seconds West 867.90 feet from the last mentioned point, a distance of 346.38 feet, South 67 degrees 51 minutes 31 seconds West 80.21 feet, North 22 degrees 08 minutes 29 seconds West 61.02 feet, South 88 degrees 12 minutes 27 seconds West 34.28 feet, and South 67 degrees 51 minutes 31 seconds West 17.15 feet to a point in the East line of J.J. Kelly Memorial Drive, 60 feet wide; thence Northwardly along said East line, being also along the West line of aforesaid Lot 1 of "Community Federal Subdivision" North 00 degrees 28 minutes 18 seconds East 146.83 feet and North 00 degrees 41 minutes 41 seconds East 370.44 feet to the point of beginning according to a survey by Volz Engineering & Surveying, Inc. dated November 4, 1992. FIRST AMENDMENT TO LEASE THIS FIRST AMENDMENT TO LEASE, made and entered into as of the 9th day of March , 1994, by and between EDJ LEASING CO., L.P., a Missouri limited partnership ("Landlord") and EDWARD D. JONES & CO., L.P., a Missouri limited partnership ("Tenant"). W I T N E S S E T H: WHEREAS, Landlord and Tenant entered into a certain Master Lease Agreement dated March 9, 1993 ("Master Lease"), demising the premises commonly known and numbered as 12555 Manchester Road, Des Peres, Missouri as more particularly described in the Master Lease; WHEREAS, Landlord and Tenant desire to amend the Master Lease in certain respects as a result of certain financing transactions entered into by Landlord which will benefit Tenant; NOW, THEREFORE, in consideration of $10.00 and other good and valuable considerations, the parties hereto stipulate and agree as follows: 1. The Master Lease is hereby amended as follows: (i) commencing April 1, 1994, the annual base rent payable to Landlord as set forth in Exhibit B to the Master Lease shall be increased from $1,590,000 to $2,065,000, and (ii) commencing with the rent payment due April 1, 1994, the monthly rent payable to Landlord as set forth in Exhibit B and Section 2 of the Master Lease shall be increased from $132,500 to $172,083.34. 2. To the extent that any of the provisions of this First Amendment conflict with the provisions of the Master Lease, the provisions of this First Amendment shall govern. All other provisions of the Master Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this First Amendment to Master Lease as of the day and year first above written. LANDLORD: TENANT: EDJ LEASING CO., L.P. EDWARD D. JONES & CO., L.P. By: LHC, Inc., general partner By: EDJ Holding Company, Inc., general partner By: By: Edward Soule, Treasurer Edward Soule, Treasurer EX-4 5 GENICOM PURCHASE AGREEMENT PURCHASE AGREEMENT THIS PURCHASE AGREEMENT ("Agreement") is made and entered into this Twenty-fifth (25th) day of November, 1992, by and between EDWARD D. JONES & CO., L.P., a limited partnership organized and existing under the laws of the State of Missouri, with its principal place of business located at 201 Progress Parkway, Maryland Heights, Missouri 63043 ("EDJ") and GENICOM Corporation, a corporation organized and existing under the laws of the State of Delaware, with its principal place of business located at One Genicom Drive, Waynesboro, Virginia 22980-1999 ("GCC") (EDJ and GCC are each individually referred to as a "Party" and collectively as the "Parties"). RECITALS WHEREAS, GCC is in the business of designing, manufacturing, selling, reselling and servicing certain computer printers; and WHEREAS, EDJ desires to purchase certain computer printers from GCC in order to supply EDJ's existing and anticipated needs, provided that certain modifications and improvements are made by GCC to such printers in order that such printers meet EDJ's specific and unique business needs; NOW, THEREFORE, in consideration of the premises and mutual promises and covenants contained herein, the Parties hereby agree as follows: 1. Definitions: For the purposes of this Agreement, the following are defined terms: 1.1 The term "Branch Office" shall mean any office (other than the Headquarters (as hereinafter defined in paragraph 1.5)) owned, leased or maintained by EDJ. 1.2 The term "Confidential Information" shall mean any information which either Party designates as confidential, proprietary, restricted or otherwise as not to be disclosed generally, in accordance with the provisions contained herein. Except as otherwise expressly provided hereinbelow, to be considered Confidential Information, all tangible information must be marked with the words "proprietary" or "confidential" or words of similar import. Non-tangible information must be (i) reduced to a writing by the disclosing Party, which must describe the information as confidential or proprietary and (ii) delivered to the recipient Party within thirty (30) days after the date of disclosure. Confidential Information may include, but is not limited to, copyrighted material, notes, memoranda, writings, records, files, working papers, reports, opinions, drawings, schematics, specifications, computer programs, documentation, data, technical data, ideas, concepts, plans, models, samples, calculations, tables, methods, processes, applications, technology, know-how, techniques, and any other material relating to the Equipment (as hereinafter defined in paragraph 1.4), Firmware (as hereinafter defined in paragraph 1.7), or Documentation (as hereinafter defined in paragraph 1.3) or to a Party's business methods or customers, in whatever form, manner or medium recorded, including any and all copies thereof. Notwithstanding anything contained herein to the contrary, Confidential Information shall include all tangible and intangible information related to EDJ's present, former or prospective customers, its existing or prospective office locations (including, without limitation, branch names and addresses of such offices) and its business methods and practices, whether or not such information is marked as "confidential" or "proprietary" and whether or not such information is reduced to writing. Confidential Information shall not include the following: 1.2.1 information which is in the public domain at the time of disclosure; 1.2.2 information which is published after disclosure to a Party pursuant to this Agreement, unless such publication is a breach of this Agreement or other obligation of confidence; 1.2.3 information which, prior to disclosure to a Party pursuant to this Agreement, was already lawfully in that Party's possession as evidenced by written records kept in the ordinary course of business or by proof of such actual, prior, rightful use by that Party; and 1.2.4 information which, subsequent to the disclosure to a Party pursuant to this Agreement, is obtained by that Party from a third party who is lawfully in possession of such information, and not in violation of any contractual, legal or fudiciary obligation with respect to such information and who does not require that Party to refrain from disclosing such information to others. 1.3 The term "Documentation" shall mean the product specification, the user manual or other user materials, and any installation instructions, specifications or service manuals applicable to the Equipment (as hereinafter defined in paragraph 1.4) or Firmware and any written or other materials relating to use of the Equipment or Firmware which are specified in Schedule A attached hereto. 1.4 The term "Equipment" shall mean all laser printers and/or accessories shown in Schedule B hereto for delivery to EDJ, as specified by the Documentation shown in Schedule A and including the Modifications (as hereinafter defined in paragraph 1.6) shown in Schedule C. 1.5 The term "Headquarters" shall mean any and all office buildings or structures owned or occupied by EDJ at or adjacent to 201 Progress Parkway, Maryland Heights, Missouri 63043 or, should EDJ move or expand its administrative offices, then at such new or expansion locations as well. 1.6 The term "Modifications" shall mean those changes or alterations to the Equipment, Firmware or Documentation which are specified in Schedule C attached hereto including, without limitation, the back channel and the custom font firmware containing the fonts defined in Schedule H. 1.7 The term "Firmware" shall mean the computer code contained in the Programmable Read Only Memory chips ("PROM's") internal to the Equipment listed in Schedule B hereto (and compliant with the specifications contained in Schedules A, C and H hereof). 1.8 The term "Printer" shall mean and refer to an individual laser printer specified in Schedule B hereto, including a 7170 printer incorporating the Modifications as defined in Schedule C, duplexer, exit gate, 4MB memory, and custom EDJ font card containing the fonts defined in Schedule H. 1.9 The term "Spare Parts" shall mean spare parts used to support the Printers purchased under this Agreement. The Recommended Spare Parts List ("RSPL") is shown in Schedule F. 1.10 The term "Supplies" refers to items listed in Schedule B which may be used by EDJ to support the Equipment. 1.11 The term "Specifications" shall mean all parts of the Documentation and Modifications which provide functional and/or performance specifications for any or all of the items covered by this Agreement and all Schedules attached hereto. 2. Sale 2.1 GCC hereby agrees to sell to EDJ the products specified in Schedule B attached hereto on the terms and conditions contained herein. 2.2 Quarterly during the term hereof, EDJ shall provide GCC with a non-binding rolling forecast of its Equipment requirements for the ensuing twelve (12) month period. 2.3 Subject to EDJ's rights to terminate this Agreement as set forth in paragraphs 6.1, 13.2, 13.3 and 16.12 hereof, EDJ hereby commits to the following: A.) To issue a purchase order for an initial one hundred (100) Printers, to be delivered by 12/31/92. GCC hereby acknowledges receipt of this order. B.)To issue a purchase order concurrent with the execution of this Agreement for an additional quantity of one thousand four hundred (1,400) Printers to be scheduled for delivery within twelve (12) months after the Test 7170 has been accepted by EDJ pursuant to and as defined in paragraph 6.1 hereof. (C.) To pay one hundred fifty thousand dollars ($150,000.00) towards the non-recurring engineering development costs to develop the back channel interface portion of the Modifications, payable in increments of twenty-five thousand dollars ($ 25,000.00) on October 1, 1992, fifty thousand dollars ($ 50,000.00) on December 1, 1992 and twenty- five thousand dollars ($ 25,000.00) on January 1, 1993 and with a final payment of fifty thousand dollars ($ 50,000.00) due upon EDJ's acceptance of the Test 7170. GCC hereby acknowledges receipt of the initial $25,000 payment from EDJ. EDJ further commits that, in addition to the fifteen hundred (1,500) Printers indicated above, EDJ intends to purchase during the term of this Agreement an additional total of two thousand one hundred and eight (2,108) Printers. GCC acknowledges that this intent is dependent on the continuation of favorable market conditions for EDJ and is not a firm committment to purchase, but EDJ agrees that any such requirement shall in fact be purchased from GCC provided that GCC maintains performance in accordance with the terms and conditions of this Agreement and market conditions remain favorable as determined by EDJ. In addition to the above committments, EDJ hereby commits that it intends to purchase all Supplies for Printers from GCC. This committment is understood by both Parties to be contingent upon GCC maintaining competitive pricing, quality and delivery in accordance with the terms and conditions of this Agreement. 2.4 Equipment, and other products listed on Schedule B, shall be ordered by EDJ from GCC by purchase orders referencing this Agreement. The purchase orders shall state the quantities, description, applicable prices, requested monthly delivery schedules and shipping instructions. Within seven (7) working days after GCC's receipt of such purchase order, GCC will issue and mail a sales order acknowledgement ("SOA") to EDJ acknowledging acceptance of EDJ's purchase order and advising EDJ of GCC's delivery date(s). The delivery date contained in the SOA will not be more than fourteen (14) working days later than the delivery date requested by EDJ in EDJ's purchase order. Delivery dates for large unforecasted orders will be negotiated by the Parties in good faith. All purchase orders must be received by GCC prior to the expiration of the term of this Agreement and all Equipment shall be delivered no later than ninety (90) days after expiration of the term of this Agreement. The terms and conditions of this Agreement shall remain in full force and effect until all deliveries have been made, and thereafter with regard to any continuing obligations of either Party. 2.5 Equipment and other products sold hereunder shall be invoiced in accordance with the prices set forth in Schedule B. The prices listed therein shall be firm for all Equipment shipments through December 31, 1993. Commencing January 1, 1994, the Parties hereby agree to negotiate in good faith to mutually share any lncrease or decrease in unit costs to GCC from Toshiba Corporation which are associated with the fluctuation in the exchange rates between the U.S. dollar and the Japanese Yen. Notwithstanding the foregoing, the Parties agree to negotiate new prices for shipments during the period beginning January 1, 1995 and ending December 31, 1995. Such prices shall be determined based on thencurrent market conditions. GCC hereby commits that such prices shall be competitive and shall not exceed pricing offered to any of its other commercial customers purchasing similar quantities of comparable equipment. GCC further agrees that, on or before August 1, 1994, it shall provide EDJ with notice relative to any anticipated price change from Toshiba to become effective January 1, 1995. EDJ may, based on such notice, place an order on or before September 1, 1994, regardless of quantity, for delivery no later than December 31, 1994 at the then-current price for Equipment. 2.6 If, during the term of this Agreement, GCC develops and/or is marketing a product which is functionally similar, more efficient and/or less expensive than the Equipment sold hereunder (all as determined by EDJ in EDJ's sole and absolute discretion), EDJ shall have the option of substituting such product for some or all of the Equipment at a price that is equal to the lowest price charged by GCC to any of GCC's customers for such product under substantially similar terms and conditions and at the same or lower volume requirements. 2.7 A. At any time during the term of this Agreement EDJ may request, and GCC shall comply with, changes in the Equipment configuration by providing written notice to GCC at least fifteen (15) days prior to the scheduled delivery date(s) of the next order of Equipment; however, if such configuration changes result in an increase in price and/or a delay in delivery of Equipment, GCC shall be under no obligation to implement such changes nor to delay the delivery of Equipment until an equitable price adjustment has been agreed upon in writing by EDJ. B. GCC reserves the right to change the Equipment and/or Supplies, at GCC's sole cost and expense, at any time prior to delivery of a specific order of Equipment and/or Supplies in order to include electrical, mechanical or other such improvements deemed appropriate by GCC but without incurring any liability to so modify or change any Equipment or Supplies previously delivered; provided, however, that if such changes affect the form, fit or function of such Equipment or Supplies, GCC will provide fifteen (15) days advance written notice of such change(s) to EDJ using GCC's Engineering Change Notification ("ECN") process. Unless EDJ gives GCC written notice to the contrary within fifteen (15) days from the date of receipt of GCC's ECN, EDJ shall be conclusively presumed to have accepted such change(s). If EDJ does notify GCC, in writing and within such fifteen (15) day period, that EDJ does not accept the change(s), GCC shall not make the change(s). EDJ hereby agrees to withhold approval only where there is impact on form, fit or function and will not unreasonably withhold such approval, provided however that GCC agrees to the following: In the event GCC elects not to notify EDJ of a change which GCC does not deem to affect form, fit or function but which change upon implementation is found by EDJ to affect its cost or ability to utilize the Equipment and/or Supplies in its computer system environment in the same manner as prior to the change, GCC shall (i) immediately cancel the change for all new Equipment and/or Supplies to be shipped to EDJ, (ii) immediately retrofit or replace all Equipment and/or Supplies previously shipped to EDJ, at GCC's sole cost and expense, to eliminate the effects of such change, and (iii) reimburse EDJ for its reasonable costs and expenses incurred directly as a result of such change; provided, however, that this provision shall in no way expand GCC's limitation of liability as stated in paragraph 16.17 hereof. It is expressly agreed that changes to Supplies affecting packaging (with the exception of package markings and/or labeling), storage or shipping requirements, user instructions, or chemical composition shall be presumed to affect form, fit and function and shall require written approval from EDJ prior to implementation. 2.8 GCC reserves the right, at any time during the term of this Agreement, to implement a remanufacturing program for the Process Units specified in Schedule B hereof. The Parties acknowledge that all Process Units supplied to EDJ (or to EDJ's third party maintenance provider, for exclusive use with EDJ Equipment) are recycleable and EDJ hereby commits to use its reasonable best efforts to return substantially all of such Process Units to GCC upon end of life. Accordingly, GCC agrees to credit EDJ with two dollars ($ 2.00) for each Process Unit returned to GCC. The cost of shipping to GCC shall be paid by GCC via GCC's mutually agreeable return program parameters. Prior to shipment of any such remanufactured Process Units to EDJ, GCC shall (i) provide to EDJ a complete summary of its remanufacturing process to include necessary quality control procedures, (ii) provide to EDJ a reasonable quantity of such remanufactured Process Units to allow EDJ to test and verify such units meet all performance specifications for new Process Units, and (iii) secure written approval from EDJ, which approval shall not be unreasonably withheld, to provide such remanufactured Process Units against any subsequent purchase orders issued by EDJ for such Process Units. GCC hereby commits that it has estimated an approximate cost for such remanufacturing of Process Units, which cost is proprietary to GCC. On the six (6) month anniversary of the implementation of such remanufacturing program, EDJ may request a written verification from GCC that its actual cost is not more than ten percent (10%) below said cost estimate. In the event such actual cost is more than ten percent (10%) below said cost estimate, GCC agrees to renegotiate the price for Process Units shown in Schedule B to provide an equitable sharing of the cost savings with EDJ. The Parties will thereafter, on each anniversary date of this Agreement or any extension(s) thereof, review such costs and related Supplies pricing to insure that the pricing afforded EDJ hereunder for Supplies shall remain competitive and, based on such agreement between the Parties, EDJ shall continue to purchase such Supplies exclusively from GCC. 3. Delivery and Installation 3.1 Shipment of Equipment ordered under this Agreement shall be scheduled in accordance with EDJ's purchase order and GCC's acknowledgement of such purchase order. Quantities scheduled for delivery shall be mutually agreed to. GCC's delivery lead time for Equipment is normally thirty (30) days for forecasted orders. Lead time will be negotiated in good faith for large unforecasted orders. 3.2 Delivery shall be F.O.B. GCC's designated facility within the continental United States. Freight will be prepaid and billed to EDJ unless otherwise instructed in writing by EDJ and, provided that EDJ allows GCC to specify the freight carrier, the cost of such shipment shall include insurance coverage for the full replacement value of each shipment. The Equipment shall be shipped to the location specified in EDJ's purchase order or as otherwise directed by EDJ in writing. 3.3 EDJ shall be responsible, at no cost to GCC, for preparing prior to the scheduled install date a suitable installation site in accordance with GCC's reasonable written site preparation procedures as set forth in the Documentation. GCC will install all Equipment delivered hereunder, unless notified by EDJ to the contrary in writing, either at no charge if an LZR 1230 printer is traded in per paragraph 3.4 below or at the installation price of one hundred ninety-eight ($198.00) per Printer. Provided that EDJ utilizes GCC's service organization to install Printers, GCC commits that all items included in the definition of the Printer shall be installed at the user site and made ready for use as part of the standard installation process. Such installation shall further include removal of any reference manuals or other documentation from the user location. Provided that EDJ notifies GCC of its intent to have GCC install Equipment at a specific location no later than the ship date for such Equipment, GCC shall use its reasonable best efforts to install Equipment within two (2) working days of its receipt by EDJ at the installation site. 3.4 For a period of twelve (12) months after the Test 7170 (as hereinafter defined in paragraph 6.1) has been accepted pursuant to paragraph 6.1 hereof, EDJ may trade in the LZR 1230 printer at the time GCC installs the replacement Printer, on a one for one basis. EDJ may trade in such LZR 1230 printer(s) by notifying GCC in writing at any time prior to the scheduled installation date of the Printer that is intended to replace the particular LZR 1230. In such event, GCC shall, at the time it installs the Printer(s) pursuant to 3.3 above, de-install, at GCC's sole cost and expense, the LZR 1230 printer(s). Additionally, GCC shall pack and ship, at GCC's sole cost and expense, the LZR 1230 printer(s) to a GCC facility. GCC will credit EDJ with one hundred dollars ($100.00) against the purchase of the replacement Printer for each such trade-in. Installation under such trade in program will be at GCC's sole cost and expense. 3.5 GCC shall at all times during the term of this Agreement and for a period of five (5) years after the date of the last shipment of Equipment hereunder accord EDJ most-favored customer treatment with respect to delivery of Equipment, Spare Parts and Supplies. If at any time during said term there is an insufficient supply of printers, accessories, spare parts and/or supplies identical or functionally equivalent to the Equipment, Spare Parts and/or Supplies such that it is not possible for GCC to deliver these items in a timely manner in accordance with EDJ's requested delivery dates, and provided that EDJ has provided the forecasts required by paragraph 2.2 hereof and that such requested delivery dates are reasonably consistent with said forecast(s), GCC commits that it will allocate the available items on the basis of a "first-in, first-out" sequence of all purchase orders placed, including GCC's other customers. GCC specifically agrees that it will not accept and ship new orders for such items while it is delinquent to any previously existing EDJ orders. GCC shall, upon request, make available to EDJ personnel all documentation reasonably necessary to determine that GCC has complied with its obligations hereunder. GCC further agrees that in such event, provided that the shortage is not due to causes beyond GCC's reasonable control (which is understood by the Parties to include failure by GCC's engine supplier to perform in a timely manner to orders placed by GCC with such supplier in accordance with the leadtimes and terms of GCC's written contractual agreement with such supplier), and provided that GCC is not able to correct such situation within thirty (30) days of the first scheduled delivery date GCC is unable to meet, then (i) EDJ shall be relieved of any and all of its obligations under paragraph 2.2 hereof, and (ii) EDJ may secure replacement items from other source(s) until such time as GCC is again able to deliver such items in accordance with EDJ's requested schedule(s) as noted above. In the event EDJ elects to secure such items from other source(s) and if such action results in an increase in cost to EDJ, then GCC agrees to negotiate a reasonable reimbursement to EDJ for such increased cost incurred by EDJ. Both Parties agree that any such settlement shall be specifically subject to the arbitration provisions of paragraph 16.8 hereof. GCC agrees, in the event that any such delays are indicated by GCC to have been caused by the failure of GCC's engine supplier to deliver as noted above, and if requested by EDJ, to allow EDJ personnel access to its internal records to any extent deemed reasonably necessary by EDJ to verify such claim. GCC hereby agrees to maintain a thirty (30) day strategic buffer inventory of Equipment based on EDJ's forecast provided pursuant to paragraph 2.2 hereof to minimize the probability of any such shortage(s). EDJ agrees that any delivery requests for which GCC is unable to respond that exceed such forecasts shall not be subject to the provisions of this paragraph 3.5. 4. Title and Risk of Loss 4.1 Title to and risk of loss or damage to the Equipment, Spare Parts and Supplies shall pass to EDJ upon delivery to the carrier. EDJ shall notify GCC in writing relative to any shortages within ten (10) business days after receipt of shipment to a Branch Office or within twenty (20) business days after receipt of shipment to the Headquarters. GCC shall not be obligated to consider any such claims made after that period. Equipment will be packaged to conform with the standard commercial practices of GCC and, in the absence of special instructions, GCC will ship by what it considers to be an appropriate method. 4.2 EDJ shall be responsible for filing claims for any damage and/or loss incurred subsequent to delivery by GCC to the freight carrier. GCC agrees, if requested by EDJ, to render all reasonable assistance to help EDJ perfect any such claim against said carrier. 4.3 GCC shall not be liable for delays in delivery or failure to manufacture due to causes beyond its reasonable control, such as acts of God, acts or omissions of EDJ, acts or omissions of civil or military authority, fire, flood, epidemics, quarantine, riots, or war. In the event of any such delay, the date of delivery shall be extended for a period equal to the time lost by reason of the delay. 5 Firmware and Documentation Rights 5.1 GCC hereby grants to EDJ the non-exclusive and perpetual right to distribute and use the Firmware and Documentation solely in connection with the Equipment wherever the Equipment is located. EDJ shall not alter or remove any copyright, legend, logo, trademark or other notice or identifying sign associated with and/or appearing in or upon the Firmware and/or Documentation. FIRMWARE IS AND SHALL REMAIN THE EXCLUSIVE PROPERTY OF GCC AND/OR ITS LICENSORS, AND NO TITLE TO OR OWNERSHIP OF THE FIRMWARE IS HEREBY TRANSFERRED. 5.2 GCC agrees that, except as defined in paragraph 11.5 hereof, the right to use any portion of the Firmware related to the Modifications, including without limitation any firmware related to EDJ's custom fonts, shall be exclusive to EDJ. 5.3 GCC UNDERSTANDS THAT EDJ IS PURCHASING EQUIPMENT HEREUNDER FOR ITS OWN USE. GCC FURTHER UNDERSTANDS THAT EDJ MAY WISH TO TRANSFER USED EQUIPMENT TO THIRD PARTIES. IN THE EVENT EDJ TRANSFERS USED EQUIPMENT TO ANY THIRD PARTY, GCC AGREES THAT THE RIGHT TO DISTRIBUTE AND USE THE FIRMWARE AND DOCUMENTATION GRANTED ABOVE SHALL AUTOMATICALLY BE TRANSFERRED TO SUCH THIRD PARTY, PROVIDED THAT EDJ AGREES TO GIVE AND HAS GIVEN SUCH THIRD PARTY WRITTEN NOTICE OF THE ABOVE PROVISIONS. 5.4 GCC grants to EDJ the limited non-exclusive right and license to reproduce all or any part of the Documentation for use by EDJ employees in the use or maintenance of Equipment. GCC further grants EDJ the right to distribute such information to its third party maintenance organization, provided that (i) any such distribution is made for the purpose of allowing such third party maintenance organization to service Equipment purchased pursuant to this Agreement, and (il) EDJ gives written notice to such third party service organization of the provisions of this Agreement related to the confidentiality and limits of useof such information. 5.5 In the event that GCC, during the term of this Agreement, makes improvements in the Equipment (excluding the Modifications) which are not subject to the provisions of paragraph 2.7 B. regarding affecting form, fit or function but which changes improve the efficiency or effectiveness of the Equipment, then GCC shall notify EDJ of such improvements, EDJ shall have the option of requesting that such improvements be incorporated into all future deliveries of Equipment hereunder, and such improvements will then be included in such deliveries; provided, however, that if such improvements increase GCC's cost the Parties agree to negotiate a mutually agreeable adjustment to EDJ's prices for the affected Equipment prior to any such incorporation, and provided further that EDJ shall have no obligation to accept any such change or price increase. GCC shall have no obligation to incorporate such improvements in Equipment previously delivered to EDJ, however EDJ shall have the option of requesting that such previously delivered Equipment be upgraded to include such improvements and, if practicable, GCC shall provide a reasonable estimate of EDJ's cost for such upgrade. 5.6 GCC hereby grants EDJ the perpetual right to use the Firmware, source code and/or related documentation defined as the "Escrow Materials" in Schedule E hereto (the "Escrow Agreement"); provided, however, that EDJ shall have complied fully with the terms of Schedule E before receiving the Escrow Materials from the Escrow Agent (as defined in the Escrow Agreement). GCC shall, within thirty (30) days of acceptance by EDJ of the Test 7170 defined in paragraph 6.1 below, place a copy of the Escrow Materials defined in Schedule E and listed in Schedule D hereto in escrow pursuant to the Escrow Agreement. GCC shall improve, add to, or otherwise modify the Escrow Materials at such time as any modifications are made such that the Escrow Materials shall be maintained at the same level of functionality as for any of GCC's other commercial customers. The Parties agree to cooperate with the Escrow Agent with regard to any reasonable changes to Escrow Agreement requested by the Escrow Agent prior to its execution of the Escrow Agreement. 6. Acceptance 6.1 GCC shall, on or before January 31, 1993, provide EDJ with a preproduction prototype Printer (the "Test 7170") for preliminary acceptance testing. EDJ shall have thirty (30) days from receipt of the Test 7170 to conduct acceptance tests. Such acceptance test shall include, without limitation, tests which evaluate the Test 7170's conformity to the Specifications. If the Test 7170 conforms to such Specifications, as reasonably determined by EDJ, EDJ shall notify GCC in writing within such thirty (30) day period and the date such notice is sent shall be the date the Test 7170 is accepted. If EDJ reasonably determines that the Test 7170 does not conform to the Specifications, it shall so notify GCC in writing within such thirty (30) day period and shall provide particulars as to all nonconformities. In such event, GCC shall correct all such nonconformities and deliver a revised Test 7170 to EDJ within thirty (30) days. EDJ shall have thirty (30) days from the receipt of the revised Test 7170 to conduct acceptance tests. If the revised Test 7170 conforms to the Specifications, as reasonably determined by EDJ, EDJ shall notify GCC in writing within such thirty (30) day period and the date such notice is sent shall be the date the Test 7170 is accepted. If the revised Test 7170 does not conform to the Specifications, as reasonably determined by EDJ, EDJ shall, within such thirty (30) day period either (i) terminate this Agreement by providing written notice to GCC, or (ii) notify GCC in writing that the revised Test 7170 does not conform to the Specifications, in which case GCC shall immediately correct such nonconformities and notify EDJ in writing that such corrections were made and the date such notice is sent shall be the date the Test 7170 is accepted. If EDJ fails to give notice to GCC during any acceptance period as set forth in this paragraph, the Test 7170 shall be deemed accepted by EDJ at the expiration of such period. If this Agreement is terminated pursuant to the foregoing contingency after certain Equipment, Documentation, and/or Firmware has been delivered to EDJ, EDJ shall have the option of returning all or some of such Equipment, Documentation and/or Firmware within thirty (30) days after such termination. In the event EDJ elects to return any such Equipment, Documentation and/or Firmware, the Parties shall determine a mutually agreeable dollar amount of value for any such returned items, which amount shall be based on the price paid by EDJ to GCC less a reasonable amount for the actual usage of such items by EDJ, and GCC shall immediately refund said amounts to EDJ for such returned items. The provisons of this Agreement will continue with respect to any items retained by EDJ. The Parties further agree that in the event this Agreement is terminated pursuant to the foregoing contingency, GCC shall immediately repay to EDJ all or any portion of the non-recurring engineering development costs previously paid by EDJ pursuant to paragraph 2.3 C. hereof. 6.2 After installation of each order of Equipment by GCC, EDJ may inspect and test the Equipment for conformance to the Specifications referred to herein and set forth in the schedules attached hereto. The period during which EDJ may inspect and test each order of Equipment and notify GCC of any nonconformities (the "Acceptance Period") shall be as follows: for Equipment ordered at any time before the Test 7170 has been tested and accepted and for a period of twelve (12) months after the first production lot of Equipment is installed after the Test 7170 has been tested and accepted, the Acceptance Period shall be ninety (90) days from the date of shipment by GCC; and for Equipment delivered on any subsequent order placed by EDJ, the Acceptance Period shall be thirty (30) days from the date of shipment by GCC. If a particular order of Equipment conforms in all material respects to the Specifications set forth in all schedules attached hereto, EDJ shall notify GCC within the applicable Acceptance Period that the Equipment is accepted. If EDJ fails to give notice to GCC to the contrary within the applicable Acceptance Period, the order of Equipment at issue shall be deemed accepted by EDJ at the expiration of such period. In the event that any item of Equipment delivered to EDJ does not conform to the Specifications, EDJ shall attempt to isolate and correct the problem. If EDJ is unable to accomplish the correction, EDJ shall contact GCC's technical services department for telephonic assistance. Should these steps prove unsuccessful, EDJ shall contact either GCC's maintenance organization or its third party service organization to correct the defect. In the event EDJ elects to use GCC's service organization, GCC hereby commits to comply with the average response times by location shown in Schedule G hereto with respect to the initial service call placed by EDJ. GCC shall repair or replace on a best effort basis on the following schedule: (a) For those locations having an average four (4) hour response time, GCC will repair or replace the Equipment within twenty-four (24) hours (excluding weekends and GCC designated holidays) of the initial call from EDJ. (b) For those locations having an average eight (8) hour or next day response time, GCC will repair or replace the Equipment within fourty- eight (48) hours (excluding weekends and GCC designated holidays) of the initial call from EDJ. All costs for such repair or replacement shall be borne by GCC provided, however, that if the Equipment in question is reasonably found not to be non-conforming then EDJ shall reimburse GCC for all reasonable labor, travel and other expenses incurred by GCC. In such event, GCC will provide EDJ with documentation to support its claim that the Equipment in question is found not to be nonconforming. 7. Payment 7.1 Terms of payment for any invoice issued under this Agreement shall be payment in full net thirty (30) days from invoice date, which date shall be no earlier than the date of shipment. The place of payment shall be as specified on GCC's invoice. 7.2 As of the effective date hereof, EDJ's credit limit with GCC is one million U.S. dollars ($ 1,000,000.00). Provided that EDJ is not in material default of its obligations hereunder, shipments of all items to be supplied hereunder will continue up to such established credit limit. In the event EDJ fails to make payments when due hereunder, or if in GCC's reasonable judgement EDJ's financial position materially changes, or if EDJ otherwise commits a material breach hereunder, GCC shall provide EDJ written notice of credit suspension. If EDJ is unable to correct such condition within seven (7) days of said notice, GCC may without further notice (i) suspend credit, adjust the credit limit and/or delay shipment until such terms are met, (ii) alter the terms of payment, (iii) cancel any order then outstanding and receive reimbursement in accordance with the cancellation charges set forth Schedule B hereof, and/or (iv) pursue any other remedies available at law or equity. GCC may charge the lesser of one percent (1%) per month or the highest lawful amount on delinquent accounts. Notwithstanding the foregoing, the seven (7) day notice period in the preceeding paragraph shall not apply in the event EDJ declares bankruptcy or enters into insolvency proceedings. Should EDJ withold payment beyond the above payment terms due to a bona fide claim of defective or non-conforming Equipment, and provided that EDJ has notified GCC of such, affected invoices will not be considered delinquent or subject to the above stated remedies until the Equipment is repaired or replaced with conforming Equipment in accordance with GCC's obligations hereunder. Equipment which GCC elects to defer shipment of or reassign as a result of EDJ's failure to make payments when due shall be deemed to have been rescheduled or reassigned for the convenience of EDJ and GCC may invoice EDJ and EDJ agrees to pay reasonable rescheduling charges at the rate of one and one half percent (1-1/2%) of the purchase price of the Equipment for each month that shipment is deferred as may be reasonably determined by GCC. In case of partial shipments, pro rata payments shall become due on each shipment in accordance with the payment terms set forth herein. 7.3 All fees and charges hereunder are exclusive of local, state or federal sales, use, excise, personal property or other similar taxes or duties, all of which shall be paid by EDJ. 8. Confidentiality 8.1 The Parties acknowledge that any Confidential Information they may receive is a special, valuable and unique asset and agree at all times to keep in confidence and trust all Confidential Information. Each Party agrees that it will not directly or indirectly disclose Confidential Information to any other person (other than such Party's own employees or suppliers who must have such information for the performance of such Party's obligations under this Agreement) or entity except as expressly authorized in writing by the other Party to this Agreement. 8.2 Each Party shall refrain from doing any act which may in any way prejudice, endanger or otherwise weaken the legal protection of any Confidential Information, as well as any patent, copyright, trademark, service mark or trade secret belonging to the other Party. 8.3 Each party agrees that it will protect Confidential Information from disclosure in the same manner and to the same extent as it protects its own comparable confidential information. 8.4 All tangible Confidential Information shall, immediately upon the disclosing Party's request, be returned to the disclosing Party, including any and all copies, translations, interpretations and adaptations thereof. This paragraph 8.4 shall not be construed to limit or interfere with the rights granted to EDJ under the provisions set forth in paragraphs 5.1 and 5.4 above. 8.5 All title, right and interest in Confidential Information shall at all times be in the disclosing Party. 8.6 With respect to each item of Confidential Information disclosed, the obligations of the Parties shall expire five (5) years from the date of each such disclosure or the maximum period permitted by law if such period is less than five (5) years. 9. Warranties 9.1 GCC warrants that it (i) has the right to enter into this Agreement, (ii) owns all right, title and interest in and to the Equipment, and (iii) has full power and authority to grant the rights herein granted without the consent of any other person (including without limitation the right for EDJ to use the Firmware and Documentation and any copyrights related thereto). 9.2 GCC hereby warrants and represents that the use of the Equipment, Firmware and Documentation pursuant to this Agreement and the performance of any services hereunder will not in any way constitute an infringement or other violation of any copyright, trade secret, trademark, patent, invention, proprietary information, nondisclosure or other rights of any third party. 9.3 GCC warrants that this Agreement is not subject or subordinate to any right of GCC's creditors and that all goods sold hereunder are free and clear of all liens and encumbrances. 9.4 GCC warrants that (i) all Equipment, Spare Parts and Supplies delivered pursuant to this Agreement shall conform to the Specifications attached hereto in Schedules A, C and H, (ii) all Equipment delivered hereunder shall be new and in good working order, (iii) all Spare Parts and Supplies delivered hereunder shall be in good working order and shall be new or remanufactured to meet Specification requirements (and further provided that any remanufactured Supplies must conform to the requirements of paragraph 9.5(B.)(ii) hereof), and (iv) it maintains, and shall continue to maintain for a period of five (5) years after the date of the last shipment of Equipment under this Agreement, an adequate supply of Spare Parts for the Equipment. 9.5 A. Equipment Warranties GCC warrants the Equipment under normal use and service, which shall include operation in accordance with the duty cycle limititations and operating conditions indicated in the Specifications, and when installed and maintained in accordance with GCC's written recommended procedures, will be free from defects in material and workmanship for a period of twelve (12) months. The date such warranty coverage begins with respect to Printers shall be the date each Printer is installed at the EDJ location provided, however, that such warranty period shall in no event commence later than (i) ten (10) days from the date of shipment of each Printer to EDJ for Printers shipped directly from GCC to EDJ's Branch Office(s) or (ii) fourty-five (45) days from the date of shipment of Printers to EDJ's Headquarters. The date such warranty period begins with respect to any accessory shall be the date any such accessory is installed in the Printer and shall end on the same date as the Printer it was installed in. In the event any Equipment is believed by EDJ to be defective within such warranty period(s), EDJ shall give GCC's Service Dispatch verbal notice of such problem. GCC shall respond in accordance with response times by location defined in Schedule G and according to the provisions of paragraph 6.2 hereof; provided, however, that the defective Equipment has not been subject to excessive duty cycle, misuse or abnormal operation, improper alteration, improper installation, repair or improper maintenance by EDJ or its agent in a manner which GCC reasonably determines to have adversely affected the performance or reliability of the Equipment. If the same problem occurs in ten percent (10%) or more of the Equipment within the warranty period, GCC agrees to use its best efforts to ensure that the problem does not occur in future Equipment sold hereunder and to inform EDJ in writing as to what steps GCC has taken to correct such problems. THE UTILIZATION OF SUPPLIES NOT PURCHASED FROM GCC AND/OR NOT STORED, HANDLED OR USED IN ACCORDANCE WITH GCC'S RECOMMENDED PROCEDURES (AS SPECIFIED IN WRITING TO EDJ) MAY IMPAIR PERFORMANCE OR DAMAGE THE EQUIPMENT. EQUIPMENT DAMAGED DUE TO THE FAILURE TO ACT IN ACCORDANCE WITH SUCH PROCEDURES SHALL BE EXCLUDED FROM WARRANTY COVERAGE. B. Spare Parts and Supplies Warranties (i) GCC warrants that all Spare Parts shall be free from defects in materials and workmanship for a period of ninety (90) days from the date of shipment thereof to EDJ. GCC agrees to promptly repair or replace defective Spare Parts (normal wear and tear excluded) which are returned to GCC F.O.B. factory of origin (or other GCC repair facility as may be designated by GCC) and marked "Defective" within such warranty period, provided the Spare Part has not been damaged, subjected to excessive duty cycle, misuse or abnormal operation, or altered or improperly installed, repaired or maintained by EDJ or its agent in a manner which GCC reasonably determines to have adversely affected performance or reliability. (ii) Supplies GCC warrants that Supplies sold hereunder, whether new or remanufactured, will be free from defects in material and workmanship and wlll meet or exceed the following service life when used in Equipment maintained in accordance with GCC's recommended procedures set forth in the Documentation, and provided such Supplies are stored, handled and used in accordance with such procedures: Supplies Item Guaranteed Page Life (At 5% Print Density) Process Kit 13,000 pages PM Kit 150,000 pages PM Kit 240,000 pages (availability TBD) In the event that EDJ follows GCC's recommended procedures and a Supplies item purchased by EDJ hereunder fails to meet the page life specified above, EDJ shall so notify GCC and GCC shall credit EDJ, on a pro rata basis, for the difference in cost between the page life provided by the Supply item in question and the specified page life above. GCC reserves the right to test, at its sole cost and expense, such nonconforming Supply items to determine if possible the cause of such nonconformity and, if such testing reasonably indicates that such Supply item was subjected to procedures outside those recommended by GCC, to suspend any such credit on that basis. In the event GCC determines that an excessive number of Supply items are failing to meet the guaranteed page life specified above, GCC shall have the right to request that both GCC and EDJ re-test the benchmark print samples to determine if EDJ's average print density has increased from the initial benchmark of three and nine-tenths percent (3.9%). EDJ's approval for such testing shall not be unreasonably witheld, and the cost and expense for such testing shall be borne by each of the testing Parties. If such testing indicates the average print density has increased by more than thirty percent (30%) from that benchmark, the Parties agree to negotiate a reasonable modification to the guaranteed page life specified above. In the event more than five percent (5%) of a particular production lot of Supplies delivered to EDJ fails to meet the guaranteed page life shown above, EDJ may request that GCC replace any Supplies from such production lot remaining in EDJ's inventory, and GCC will comply with such request. GCC reserves the right to make a reasonable investigation to determine the cause of such failures, but agrees that it's approval to replace such Supplies shall not be unreasonably witheld. GCC further agrees that it shall pay all shipping costs resulting from any such replacement. 9.6 GCC warrants that all services performed hereunder including, without limitation, the maintenance services provided in Article 10 hereof, shall be rendered in accordance with the Specifications stated herein, and shall be performed in a timely, reasonable and workmanlike manner by qualified professional personnel, consistent with the standards prevailing in the industry. 9.7 Except as otherwise provided herein, the above warranties extend solely to EDJ and its subsidiaries and affiliates and all warranty claims must be made by EDJ and not by customers or other third parties. 9.8 The Parties agree that EDJ may hire a third party to provide maintenance services on all or some of the Equipment purchased under this Agreement. In the event such third party is hired to provide maintenance on any Equipment during the time in which such is covered by any warranty specified herein, GCC agrees that (i) such third party may fulfill GCC's warranty and maintenance obligations hereunder, (ii) GCC will reimburse such third party for reasonable labor costs; provided, however, that such costs shall be negotiated and agreed to by GCC prior to any such service, and further provided that EDJ shall assist GCC by participating with GCC in negotiating such labor costs, and (iii) GCC will provide such third party with all products that GCC is obligated to provide to EDJ hereunder on the same terms and conditions provided to EDJ; provided, however, that any such third party shall agree in writing that any such products shall be used solely and exclusively to provide the aforementioned service for Equipment purchased by EDJ hereunder. The Parties acknowledge and agree that EDJ's third party maintenance provider, if any, may, upon EDJ's direction, return defective material and GCC shall return repaired material to said third party maintenance provider. 9.9 THE WARRANTIES CONTAINED IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY AND SET FORTH EDJ'S EXCLUSIVE REMEDIES IN CONNECTION WITH SUCH WARRANTIES. 10. Maintenance 10.1 Subject to paragraphs 9.5(A), 9.5(B) and 9.8 hereof, during the warranty period(s) defined in Article 9 of this Agreement, GCC shall provide maintenance services on the Equipment free of charge. After the warranty period and at any time thereafter during the term of this Agreement, GCC shall, upon the written request of EDJ, provide on-site maintenance service on the Equipment at the rates set forth in Schedule F hereto, provided however that such rates shall be subject to the same provisions as Equipment prices as stated in paragraph 2.5 hereof. Optionally, GCC reserves the right to provide an alternative bid for service and support of the entire EDJ Branch Office equipment configuration utilizing the capabilities of a GCC business partner, and EDJ hereby agrees to give reasonable consideration to any such bid. Subsequent to the term of this Agreement and for a period of five (5) years after delivery of the last Equipment hereunder, GCC agrees, at EDJ's request, to provide on-site maintenance services at it's then- current maintenance prices. GCC agrees that, during any such extended maintenance period, it shall extend to EDJ its then current most favored customer rates for such services. 10.2 Maintenance shall include providing new releases, enhancements and improvements (including but not limited to, extensions and other changes to the Equipment developed by GCC which GCC has provided free of charge to any of its customers using equipment similar to the Equipment) and all corrections to the Equipment. GCC will provide all reasonable telephone assistance and consultation to assist EDJ in resolving problems with the function of the Equipment. GCC will provide a designated technician in St. Louis, Missouri to work directly with EDJ to assure the performance of the Equipment. 10.3 GCC will provide on-site maintenance on Equipment after receipt of verbal notice from EDJ. Maintenance service will be available Monday through Friday, 8:00 AM through 5:00 PM local time except for GCC designated holidays. GCC on-site response times will be in accordance with the list of locations and response times shown in Schedule G hereof. GCC designated holidays shall be as shown on GCC's most current fiscal calendar, which may be changed by GCC from year to year and which is incorporated herein by reference as Schedule I. GCC shall designate the phone number(s) to be used by EDJ for notification of such problems and shall provide such telephone availability from 8:00 AM(EST) to 8:00 PM(EST). GCC shall also designate specific contact persons that EDJ may contact for maintenance. For the purpose of maintenance as required herein, GCC shall, at its own expense, correct such defect, error or non- conformity comprising a problem by, among other things, suppplying to EDJ and installing such corrective materials and making such additions, modifications or adjustments to the Equipment as may be necessary to keep the Equipment in conformity with the Specifications and warranties contained in this Agreement. GCC shall respond to EDJ's request for maintenance notwithstanding GCC's opinion that the problem is due to software or hardware not supplied by GCC. In the event GCC responds and the problem is reasonably determined to be due to software and/or hardware not supplied by GCC, operator errors, operator responsibility tasks, interconnect defects, telecommunication problems, abuse, misapplicaton, customer damage, negligence, utilities malfunction, natural or civil disaster, and/or acts of God, then EDJ will reimburse GCC for GCC's reasonable expenses. 10.4 GCC assumes all risk for injuries to or death of its employees and for damage to its property while on the premises of, or traveling to or from, EDJ's offices, caused by the negligent acts or omissions of GCC, its employees, or agents. 11. Modifications 11.1 Modifications shall be incorporated into and are to be considered an integral part of the Printers shown in Schedule B hereof. 11.2 After the Test 7170 is accepted by EDJ pursuant to paragraph 6.1 hereof, the Modifications shall beprovided for all Equipment shipped to EDJ. Beforethe Test 7170 is accepted by EDJ pursuant to paragraph 6.1 hereof, the Equipment will be shipped without the Modifications. Within thirty (30) days after the Test 7170 has been accepted by EDJ, GCC technicians will install the Modifications in all Equipment previously delivered to EDJ. Such installation shall be performed at the sole cost and expense of GCC and shall be performed at each location of EDJ's where any Equipment is installed. 11.3 GCC shall provide EDJ with detailed written documentation for each custom font created in accordance with the Modifications. This documentation shall be incorporated herein as Schedule H and shall include, but not be limited to, font spacing tables and character maps. 11.4 Notwithstanding anything herein to the contrary, EDJ and/or its service/maintenance provider shall have the right (and GCC hereby grants EDJ the perpetual right) to copy, modify and make derivative works of all software included in the Modifications including, without limitation, the back channel and custom font firmware. 11.5 GCC hereby agrees that in the event GCC should make the EDJ back channel interface (as defined in Schedule C, Modifications) commercially available, GCC shall reimburse EDJ the one hundred fifty thousand dollar ($ 150,000.00) NRE cost previously paid by EDJ. GCC further agrees that in the event such back channel interface is used for the purpose of meeting an individual customer's requirements (other than EDJ), then GCC will so advise EDJ and the Parties agree to negotiate in good faith a reasonable reimbursement to EDJ relative to the incremental profit GCC is able to realize from the use of such back channel interface for said customer(s). In no event would any such reimbursement exceed the total NRE previously paid by EDJ. GCC further agrees that if, in the process of offering an industry- standard back channel interface in any of its current or future products, it utilizes any portion of the Firmware or Modifications which was paid for by EDJ as part of the aforementioned NRE, GCC will so advise EDJ and the Parties agree to negotiate a reasonable reimbursement to EDJ based on such usage and the commercial value realized therefrom. In the event GCC offers such industry-standard back channel interface, EDJ reserves the right to request written verification from GCC of its use or nonuse of said Firmware and/or Modifications in such interface, and such written verification shall not be unreasonably withheld by GCC. 12. Spare Parts 12.1 At all times during the term of this Agreement, EDJ and/or its third party maintenance provider shall be entitled to order Spare Parts and Supplies directly from GCC and GCC shall supply such Spare Parts and Supplies. Any such third party maintenance provider of EDJ may purchase such items solely and exclusively for use in maintaining and servicing Equipment purchased by EDJ hereunder, and EDJ shall so advise any such third party maintenance provider in writing. EDJ must notify GCC of the existence of any such third party maintenance provider, in writing, in advance of GCC's acceptance of any purchase order(s) from any such third party maintenance provider for such purpose. 12.2 GCC will provide EDJ with a Recommended Spare Parts List (RSPL) for Equipment covered by this Agreement. Spare Parts shall be available from GCC for a period of five (5) years from the last shipment of Equipment under this Agreement. The Spare Parts may be either original or remanufactured, provided they meet Specifications requirements. The price for Spare Parts for the initial term of this Agreement shall be as set forth in Schedule F. The price of Spare Parts subsequent to the initial term of this Agreement shall be negotiated by the Parties, however GCC hereby commits that such pricing shall not exceed pricing offered to any of its other commercial customers purchasing similar quantities of like equipment. 12.3 GCC is developing a database that will contain (i) GCC's 7170 printer inventory, (ii) GCC's spare parts inventory, and (iii) the status of all shipments of Equipment and Spare Parts to EDJ. GCC agrees to allow EDJ to access (and GCC hereby grants EDJ the right and license to use) such database via an on-line real-time interface. GCC shall provide EDJ with written instructions explaining in full detail how to access and use the database and shall supply EDJ with the appropriate communications protocol. Until such time as the database is available (or if at any time during the term of this Agreement the database is unavailable), within ten (10) days after GCC receives a written request from EDJ, GCC shall prepare and send to EDJ a report listing, as of the date of the report, (a) GCC's 7170 printer inventory, (b) GCC's spare parts inventory, and (c) the status of all shipments of Equipment and Spare Parts to EDJ. EDJ agrees to hold all such information confidential, as defined by this Agreement, and agrees that all information contained in this database is available only to EDJ personnel and is not to be made available to any other party or agent. 12.4 GCC agrees that the Spare Parts supplied hereunder will conform to GCC's published specifications. Any changes made to such Spare Parts that would affect their functional performance shall be subject to the provisions of paragraph 2.7 B. hereof. 13. Term and Termination 13.1 This Agreement is effective upon the date first written above and shall continue for a term of thirty-six (36) months unless earlier terminated or canceled pursuant to the terms of this Agreement. This Agreement may be extended for additional one (1) year terms by mutual written agreement of the Parties. 13.2 In the event either Party fails to perform, observe or comply with any material term, covenant or condition of this Agreement, then the other Party shall have the right to declare a default. A Party may declare default by giving the Party it claims is in default written notice of such claim (such notice shall set forth the manner by which the defaulting Party may cure the default) and affording the defaulting Party thirty (30) days after such written notice to cure the default. If the defaulting Party fails to cure the default within such thirty (30) day period, the Party claiming default may terminate this Agreement upon thirty (30) days written notice to the defaulting Party. 13.3 Each Party shall have the right to terminate this Agreement thirty (30) days after giving written notice of termination after the occurrence of any of the following events (and this Agreement shall automatically terminate at the expiration of such thirty (30) day period): 13.3.1 a judicial finding that the other is insolvent or bankrupt; 13.3.2 the filing of a petition in bankruptcy by the other or the filing of any such petition against the other if not dismissed or withdrawn within sixty (60) days thereafter; 13.3.3 appointment of a receiver, trustee or other custodian for all or substantially all of the property of the other or for any lesser portion of such property if the result is materially and adversely to affect the ability of the other to fulfill its duties hereunder; 13.3.4 an assignment by the other for the benefit of creditors; 13.3.5 the dissolution or liquidation of the other, other than in consequence of a merger, amalgamation or other corporate reorganization to which it is a party. 13.4 If any Party hereto should suffer any event of the type enumerated in paragraph 13.3 above, such Party shall immediately notify the other Party hereto of the occurrence of such event. 13.5 Notwithstanding anything to the contrary herein, all confidentiality obligations of this Agreement shall survive termination, cancellation or expiration of the Agreement, and continue for the period specified hereinabove. Cancellation of this Agreement by EDJ shall not terminate the Firmware use and/or reproduction rights granted hereunder. Cancellation of the Agreement for default shall not release either of the Parties hereto from any liability, obligation or agreement which at said time has already accrued to the other Party hereto, nor affect in any way the survival of any other right, duty or obligation of either of the Parties hereto which is explicitly stated in this Article or elsewhere in the Agreement to survive such cancellation. Further, the cancellation of this Agreement for default shall not be deemed to be a waiver or release of, or otherwise prejudice or adversely affect any right, remedies or claims, whether for damages or otherwise, which either Party hereto may then or hereafter possess under this Agreement. 14. Indemnity 14.1 GCC agrees to (i) settle and/or defend EDJ, EDJ's affiliates, and/or any of EDJ's agents or employees (collectively, the "Indemnified Parties") at GCC's sole cost and expense, against all liabilities, expenses, losses, damages, claims and demands to the extent arising from (a) the gross negligence of GCC or any of its agents or employees and/or (b) the use of the Equipment, the Firmware and/or the Documentation (provided that said use is in accordance with the Specifications contained in this Agreement) by any of the Indemnified Parties including, without limitation and except as noted in the last sentence of this paragraph 14.1 below, the violation (or alleged violation) by any of the Indemnified Parties of any third party trade secrets, proprietary information, trade mark, copyright or patent rights, (ii) indemnify and hold all Indemnified Parties harmless from and against any of the foregoing liabilities (or similar claims), and (iii) pay damages awarded against any of the Indemnified Parties attributable to any of the foregoing liabilities (or similar claims); provided, however, that (I) GCC is notified in writing of any such claim and is furnished with all papers received in connection therewith within a reasonable time after GCC has received actual notice of such claim, (II) GCC shall have direction and control of any negotiations or of any suit which may be brought, and (III) EDJ shall assist GCC in GCC's defense in any way reasonably requested by GCC's attorneys. With regard to the indemnities contained in this paragraph 14.1, no warranty against infringement and no patent or copyright indemnity whatever against foreign patents or copyrights, excluding Canada, is granted by GCC, and GCC does not agree to hold EDJ harmless for use by EDJ of the Equipment abroad, excluding Canada. 14.2 If EDJ's quiet enjoyment or use of the Equipment, Firmware and/or Documentation is seriously endangered or disrupted by reason of any claim stated in paragraph 14.1 above, GCC shall, at its option, (i) modify the Equipment, Firmware and/or Documentation to make it non- infringing, (ii) substitute for the Equipment, Firmware and/or the Documentation other functionally equivalent noninfringing equipment, firmware and/or documentation, or (iii) obtain for EDJ the right and license to continue to use the Equipment, Firmware and/or Documentation and pay any applicable fees in connection with such license. If GCC is unable to accomplish any of the foregoing alternatives, then, at EDJ's option, GCC shall (a) remove the particular item at issue and refund to EDJ the then-current value of such item (such value to be determined by the Parties based on the original purchase price paid by EDJ less a reasonable amount for use or damage), or (b) remove all of the items delivered hereunder and refund to EDJ the entire amounts paid under this Agreement. To the extent any character sets, fonts or font software or any portion of the backchannel interface are developed by GCC to meet EDJ's particular specifications, GCC shall have no liability under this provision for any claim that such character sets, fonts or backchannel interface infringe the rights of a third party and EDJ agrees to defend, protect and save harmless GCC against all suits at law or in equity and from and against all expenses, loss, liability, damage, claims and demands arising from such actual or alleged infringement. 14.3 GCC's obligations hereunder shall not apply to any use of the Equipment and/or Firmware not authorized by this Agreement. If infringement is alleged prior to completion of delivery, GCC may decline to make further shipments without being in breach of this Agreement. GCC's liability under this Article 14 shall be limited to (i) the amounts paid by EDJ to GCC hereunder and/or (ii) the extent of any personal injury claims as finally settled. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY OF ITS COLLATERAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR EXEMPLARY DAMAGES ARISING OUT OF PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT OR MISAPPROPRIATIONS OF TRADE SECRETS. THE FOREGOING STATES THE SOLE AND EXCLUSIVE LIABILITY OF EDJ AND GCC FOR PATENT OR COPYRIGHT INFRINGEMENT OR MISAPPROPRIATIONS OF TRADE SECRETS AND IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, IN REGARD THERETO. 15. Notice Any notice required or permitted pursuant to this Agreement shall be made by first class mail or by private courier capable of delivering messages with comparable speed. Notices given as herein provided shall be considered to have been given upon receipt. 15.2 Routine and special communications shall be deemed sufficient if sent to the following addresses: Notice to GCC: Dept. of Contracts Administration Copy: Sr. V.P., Sales GENICOM Corporation Waynesboro, VA 22980-1999 Notice to EDJ: Edward D. Jones & Co., L.P. 201 Progress Parkway Maryland Heights, MO 63043 ATTN: Rich Malone 15.3 Notices of change of address may be made at any time and shall be effective upon receipt. 16. Miscellaneous Provisions 16.1 GCC shall provide EDJ with summaries of all testing results of the Equipment including, without limitation, the results of testing performed by SSS in Japan. The latter results will be provided as received by GCC, and will be provided to EDJ written in the English language. 16.2 EDJ acknowledges that part of the Equipment is manufactured by Toshiba Corporation. For the duration of this Agreement, GCC agrees to provide to EDJ, within thirty (30) days of their availability to GCC, complete and total written results of all quality engineer audits of all parts of the Equipment manufactured by Toshiba Corporation. Such results shall be provided to EDJ written in the English language. 16.3 GCC agrees not to contact any of EDJ's Branch Offices, or employees thereof, without the prior written consent of EDJ; provided, however, that GCC can contact such offices and employees in the normal performance of warranty and maintenance of Equipment. 16.4 Beginning on the date of execution of this Agreement, GCC agrees to supply EDJ with written reports every month for (i) all of GCC's customers using 7170 printers and (ii) all of EDJ's facilities using the Equipment. Such reports shall set forth all problem calls on the 7170 printer and the Equipment, respectively, for the previous month. The reports will explain, among other things, the nature of the problem and the solution. 16.5 GCC acknowledges that some of the Equipment may be used by non- EDJ personnel and at non-EDJ locations such as, but not limited to, homes of EDJ employees or third party mutual fund offices. Accordingly, GCC agrees that, notwithstanding anything contained herein to the contrary, such use will not invalidate any warranty or other right granted hereunder. 16.6 To the extent that any of the covenants set forth herein, or any word, phrase, clause or sentence thereof, shall be found to be illegal or unenforceable for any reason, such covenants, word, phrase, clause or sentence shall be modified or deleted in such manner so as to make the Agreement as modified legal and enforceable under applicable laws, and the balance of the Agreement or part thereof shall not be affected thereby, the balance being construed as severable and independent. 16.7 This Agreement represents the entire agreement between EDJ and GCC with respect to the subject matter hereof, superseding all other previous oral or written communications, representations, or agreements with respect to the subject matter herein. This Agreement may be modified only by a writing duly authorized and executed by both Parties. Any terms and conditions contained on EDJ's purchase orders or GCC's SOA's which add to or conflict with the terms and conditions of this Agreement shall not be binding on either Party. 16.8 Any controversy or claim related to or arising out of the matters addressed in this Agreement shall be finally settled by binding arbitration conducted on a confidential basis pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Any decision or award as a result of any arbitration proceeding shall include the assessment of costs, expenses and reasonable attorneys' fees and shall be final, binding and enforceable in any court of competent jurisdiction. Absent agreement to the contrary, any arbitration shall be conducted by three arbitrators, at least one of whom shall be knowledgeable in data processing and business information systems and at least one of whom shall be an attorney. The arbitration shall be conducted at a mutually agreed location. If the Parties cannot agree upon a location, then the arbitrators shall select a site for the arbitration which is, in the discretion of the arbitrators, approximately equally convenient for both Parties. Neither Party shall be precluded hereby from seeking provisional remedies in the courts with jurisdiction including, but not limited to, temporary restraining orders and preliminary injunctions, to protect its rights and interests, but such shall not be sought as a means to avoid or stay arbitration. 16.9 No waiver of any right or breach of any provision of this Agreement shall constitute a waiver of any other right or breach of any other provisions, nor shall it be deemed to be a general waiver of such provision by that Party or to sanction any subsequent breach thereof by the other Party. Should legal action become necessary to enforce any of the terms and conditions set forth herein, the losing Party shall pay to the prevailing Party all costs and expenses incurred in connection with such action, including reasonable attorney's fees. 16.10 Headings in the Agreement are included for convenience only and are not to be used in construing or interpreting this Agreement. 16.11 Each Party hereto shall execute and deliver all such further instruments and documents as may reasonably be requested by the other Party in order to carry out fully the intent and accomplish the purposes of this Agreement and transactions referred to herein. 16.12 This Agreement shall be binding on the Parties and their successors and permitted assigns. Neither Party may assign this Agreement or delegate rights, powers, duties or obligations hereunder without the prior written consent of the other Party. Any assignment made contrary to this paragraph 16.12 shall be void and the nonassigning Party may immediately terminate this Agreement by sending written notice to the other Party. In the event that GCC, during any term of this Agreement, consumates the sale of (i) stock of GCC which changes the control of GCC or (ii) all or substantially all of the assets of GCC (whether or not there is also an attempted assignment of this Agreement), then EDJ shall have the right, at its option, to terminate this Agreement and any outstanding orders previously placed with GCC. 16.13 This is a contract for the sale of goods. 16.14 This Agreement may be executed in separate counterparts and, if so executed, shall have the same force and effect as though all signatures were on the same document. 16.15 In the event EDJ exports or re-exports the Equipment, EDJ shall have full responsibility for obtaining all necessary approvals, licenses, permits and the like which may be required by regulatory or government body. EDJ agrees to abide by the rules and regulations of the U.S. Department of Commerce, Office of Export Administration, when exporting or re-exporting the Equipment or Spare Parts thereof. 16.16 EDJ shall have no right to use GCC's trademarks, trade names, logos or other GCC indicia in EDJ's advertising or promotional material in such a manner as might convey to the reader or viewer that EDJ is a distributor or representative of GCC. Absent another express written agreement between GCC and EDJ, EDJ is not and shall in no way hold itself out as a distributor or representative of GCC. 16.17 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY COLLATERAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR EXEMPLARY DAMAGES ARISING OUT OF, OR CONNECTED IN ANY WAY WITH, THIS AGREEMENT OR ANY GOODS SOLD PURSUANT HERETO. 16.18 EDJ agrees that the Equipment purchased hereunder will be used by EDJ as a constituent part of an integrated system or systems for use by EDJ in its business either on its premises or the premises of EDJ's customers or vendors. GCC represents that as of the effective date hereof, it intends to market, sell and otherwise make commercially available equipment substantially similar to the Equipment (excluding the Modifications that contain any custom font software) as part of its standard product offering. GCC agrees that, except as provided in paragraph 11.6 hereof, it shall not market, sell or otherwise make commercially available any product incorporating any part of the Modifications. GCC further agrees that, irrespective of the provisions of paragraph 11.6 hereof, it shall not market, sell or otherwise make available to any other customer any software or firmware incorporating any portion of EDJ's custom fonts as defined in Schedule H hereof. 16.19 In the event of any work by GCC on the premises of EDJ or EDJ'S customers, EDJ shall take (or cause its customers to take) reasonable precautions to prevent the occurrence of any injury to person or property, including personnel and property of GCC, during the progress of such work; and except as and to the extent that such injury is due solely and directly to the negligence of a GCC employee while on the premises of EDJ or EDJ' s customers, EDJ hereby indemnifies GCC against all claims, demands, liabilities or loss which may result in any way from any act or omission of EDJ, its customers or their agents, employees or subcontractors. 16.20 Time is of the essence with respect to GCC's obligations hereunder. 16.21 This Agreement shall be governed by the laws of the State of Missouri. 16.22 No right or remedy conferred herein is exclusive of any other right or remedy conferred herein or by law, but all such remedies are cumulative of every other right or remedy conferred hereunder or at law or in equity, by statute or otherwise, and may be exercised concurrently or separately from time to time. 16.23 Schedules The following Schedules attached hereto are hereby incorporated into this Agreement (in the event of a conflict between the terms contained in this Agreement and any of the terms contained in any of the Schedules or amendments thereto, the terms of this Agreement shall control): Schedule Referenced Paragraph Schedule A - Printer 1.3, 1.7, 2.3, 9.4 Specification Schedule B - Equipment 1.4, 1.7, 1.8, 1.10, Upgrades & 2.4, 2.5, 2.8, 11.1 Pricing Schedule C - Modifications 1.6, 1.7, 1.8, 2.1, 2.3, 9.4, 11.1, 11.5 Schedule D - Firmware 5.6 Schedule E - Firmware 5.6 Escrow Agreement Schedule F - Maintenance 1.9, 3.3, 10.1, 12.2 Schedule G - Service 6.2 Response Times Schedule H - Specification 1.7, 1.8, 9.4 Schedule I - GCC Holidays 10.3 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in duplicate by their duly authorized representatives as of the day and year above written. THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY ENFORCED BY THE PARTIES. "EDJ" EDWARD D. JONES & COMPANY, L.P. By: "GCC" GENICOM CORPORATION By: EX-5 6 DEED OF TRUST & 11.7 NOTE DEED OF TRUST AND SECURITY AGREEMENT (With Future Advances and Future Obligations Governed by Section 443.055 R.S.Mo.) THIS DEED OF TRUST AND SECURITY AGREEMENT (hereinafter referred to as the "Mortgage") is made and executed this 9th day of March, 1993, by and among EDJ LEASING CO., L.P., a Missouri limited partnership having its principal address at 201 Progress Parkway, Maryland Heights, Missouri 63043, Attention: Edward Soule (hereinafter referred to as "Mortgagor"), and Robert C. Graham III of the County of St. Louis, Missouri hereinafter referred to as "Trustee"), and NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its successors and assigns, having its principal office at One Nationwide Plaza, Columbus, Ohio 43216, Attention: Real Estate Investments, or at such other place either within or without the State of Ohio, as it may from time to time designate (hereinafter referred to as "Mortgagee"); W I T N E S S E T H: WHEREAS, Mortgagor is justly indebted to Mortgagee in the principal sum of Eleven Million Seven Hundred Thousand and 00/100 Dollars ($11,700,000.00) with interest thereon, which indebtedness is evidenced and represented by a certain Mortgage Note of even date herewith in the sum of Eleven Million Seven Hundred Thousand and 00/100 Dollars ($11,700,000.00) payable to Nationwide Life Insurance Company (said Mortgage Note being hereinafter referred to as the "Note"), which Note shall be due and payable on April 5, 2008, and all other notes given in substitution therefor or in modification, increase, renewal or extension thereof, in whole or in part; and WHEREAS, Mortgagee, as a condition precedent to the extension of credit and the making of the loan evidenced by the Note, has required that Mortgagor provide Mortgagee with security for the repayment of the indebtedness evidenced by the Note as well as for the performance, observance and discharge by Mortgagor of various covenants, conditions and agreements made by Mortgagor to, with, in favor of and for the benefit of Mortgagee with respect to said indebtedness and such security; NOW THEREFORE, in consideration of and in order to secure the repayment of the indebtedness evidenced and represented by the Note, together with interest on such indebtedness, as well as the payment of all other sums of money secured hereby, as hereinafter provided; and to secure the observance, performance and discharge by Mortgagor of all covenants, conditions and agreements set forth in the Note, this Mortgage and in all other documents and instruments executed and delivered by Mortgagor to and in favor of Mortgagee for the purpose of further securing the repayment of the indebtedness evidenced and represented by the Note; and in order to charge the properties, interests and rights hereinafter described with such payment, observance, performance and discharge; and in consideration of the sum of One Dollar paid by Trustee to Mortgagor and the trust hereinafter mentioned and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, Mortgagor does hereby Grant, Bargain and Sell, Convey and Confirm, and alien, remise, release, assign, transfer, pledge, deliver, set over, hypothecate, and warrant unto Trustee forever, all of Mortgagor's right, title and interest in and to the following described properties, rights and interests and all replacements of, substitutions for, and additions thereto (all of which are hereinafter together referred to as the "Property"), to wit: ALL THAT certain piece, parcel or tract of land or real property of which Mortgagor is now seized and in actual or constructive possession, situate in St. Louis County, Missouri, more particularly described on Exhibit A attached hereto and by this reference made a part hereof (hereinafter referred to as the "Real Property"); TOGETHER WITH all buildings, structures and other improvements of any kind, nature or description now or hereafter erected, constructed, placed or located upon said Real Property (which buildings, structures and other improvements are hereinafter sometimes together referred to as the "Improvements"), including, without limitation, any and all additions to, substitutions for or replacements of such Improvements; TOGETHER WITH all minerals, royalties, gas rights, water, water rights, water stock, flowers, shrubs, lawn plants, crops, trees, timber and other emblements now or hereafter located on, under or above all or any part of the Real Property; TOGETHER WITH all and singular, the tenements, hereditaments, strips and gores, rights-of-way, easements, privileges and other appurtenances now or hereafter belonging or in any way appertaining to the Real Property, including, without limitation, all right, title and interest of the Mortgagor in any after-acquired right, title, interest, remainder or reversion, in and to the beds of any ways, streets, avenues, roads, alleys, passages and public places, open or proposed, in front of, running through, adjoining or adjacent to said Real Property (hereinafter sometimes together referred to as "Appurtenances"); TOGETHER WITH any and all leases, contracts, rents, royalties, issues, revenues, profits, proceeds, income and other benefits, including accounts receivable, of, accruing to or derived from said Real Property, Improvements and Appurtenances and any business or enterprise presently situated or hereafter operated thereon and therewith (hereinafter sometimes referred to as the "Rents"); TOGETHER WITH any and all awards or payments, including interest thereon, and the right to receive the same, as a result of (a) the exercise of the right of eminent domain, (b) the alteration of the grade of any street, or (c) any other injury to, taking of, or decrease in the value of, the Property, to the extent of all amounts which may be secured by this Mortgage at the date of any such award or payment including but not limited to the Reasonable Attorneys' Fees (as hereinafter defined), costs and disbursements incurred by the Mortgagee in connection with the collection of such award or payment. AS WELL AS all of the right, title and interest of Mortgagor in and to all fixtures, goods, inventory, chattels, construction supplies and materials, fittings, furniture, furnishings, equipment, machinery, apparatus, appliances, and other items of personal property, whether tangible or intangible, of any kind, nature or description, whether now owned or hereafter acquired by Mortgagor, including, without limitation, all signs and displays, all heating, air conditioning, water, gas, lighting, incinerating and power equipment; all engines, compressors, pipes, pumps, tanks, motors, conduits, wiring, and switchboards; all plumbing, lifting, cleaning, fire prevention, fire extinguishing, sprinkling, refrigerating, ventilating, waste removal and communications equipment and apparatus; all boilers, furnaces, oil burners, vacuum cleaning systems, elevators, and escalators; all stoves, ovens, ranges, disposal units, dishwashers, water heaters, exhaust systems, refrigerators, cabinets and partitions; all rugs, attached floor coverings, curtains, rods, draperies, and carpets; all building materials, tools, shades, awnings, blinds, screens, storm doors and windows; and all other general intangibles, contract rights, accounts receivable, chattel paper, documents and business records, of every kind, including, without limitation, any and all licenses, permits, or franchises; any of which is, are or shall hereafter be, attached, affixed to or used or useful, either directly or indirectly, in connection with the complete and comfortable use, occupancy and operation of the Real Property and Improvements and Appurtenances as an office building, or any other business, enterprise or operation as may hereafter be conducted upon or within said Real Property, Improvements and Appurtenances, as well as the proceeds thereof or therefrom regardless of form (hereinafter sometimes together referred to as the "Fixtures and Personal Property," which term expressly excludes any toxic wastes or substances deemed hazardous under federal, state, regional or local laws). Mortgagor hereby expressly grants to Mortgagee a present security interest in and a lien and encumbrance upon the Fixtures and Personal Property (Notwithstanding anything herein to the contrary, nothing contained herein shall be deemed to grant Mortgagee a security interest in any furnishings, furniture, or computer equipment owned by any tenant including, but without limitation, Jones [as herein defined], under any lease affecting the Property and used by such tenant, with respect to the conduct of its business on the Property and the term Fixtures and Personal Property shall not be deemed to include any such furnishings, fixtures or computer equipment.); TO HAVE AND TO HOLD the foregoing Property and the rights hereby granted for the use and benefit of the Trustee and the Trustee's successors and assigns forever in trust, for the uses and purposes set forth, possession of the Property being hereby granted and conveyed to the Trustee; AND Mortgagor covenants and warrants with and to Mortgagee that Mortgagor is indefeasibly seized of the Property and has good right, full power, and lawful authority to convey and encumber all of the same as aforesaid; that Mortgagor hereby fully warrants the title to the Property and will defend the same and the validity and priority of the lien and encumbrance of this Mortgage against the lawful claims of all persons whomsoever; and Mortgagor further warrants that the Property is free and clear of all liens and encumbrances of any kind, nature or description, save and except only (with respect to said Real Property, Improvements and Appurtenances) for real property taxes for years subsequent to 1992 (which are not yet due and payable) and those matters set forth in the title insurance policy issued to Mortgagee insuring the first lien priority of this Mortgage (hereinafter referred to as the "Permitted Exceptions"); PROVIDED ALWAYS, however, that if Mortgagor shall pay unto Mortgagee the indebtedness evidenced by the Note, and if Mortgagor shall duly, promptly and fully perform, discharge, execute, effect, complete and comply with and abide by each and every one of the agreements, conditions and covenants of the Note, this Mortgage and all other documents and instruments executed as further evidence of or as security for the indebtedness secured hereby, then this Mortgage and the estates and interests hereby granted and created shall cease, terminate and be null and void, and shall be discharged of record by a proper deed of release furnished by the Mortgagee and executed in recordable form, at the request and expense of Mortgagor, which expense Mortgagor agrees to pay; AND Mortgagor, for the benefit of Mortgagee and Trustee does hereby expressly covenant and agree: PAYMENT OF PRINCIPAL AND INTEREST 1. To pay the principal of the indebtedness evidenced by the Note, together with all interest thereon, in accordance with the terms of the Note, promptly at the times, at the place and in the manner that said principal and interest shall become due, and to promptly and punctually pay all other sums required to be paid by Mortgagor pursuant to the terms of the Note, this Mortgage and all other documents and instruments executed as further evidence of, as additional security for or in connection with the indebtedness evidenced by the Note and secured by this Mortgage (hereinafter together referred to as the "Loan Documents"). PERFORMANCE OF OTHER OBLIGATIONS 2. To perform, comply with and abide by each and every one of the covenants, agreements and conditions contained and set forth in the Note, this Mortgage and the other Loan Documents and to comply with all laws, ordinances, rules, regulations and orders of governmental authorities now or hereafter affecting the Property or requiring any alterations or improvements to be made thereon, and perform all of its obligations under any covenant, condition, restriction or agreement of record affecting the Property and to insure that at all times the Property constitutes one or more legal lots capable of being conveyed without violation of any subdivision or platting laws, ordinances, rules or regulations, or other laws relating to the division or separation of real property. PRESERVATION AND MAINTENANCE OF PROPERTY; ACCESSIBILITY; HAZARDOUS WASTE 3. To keep all Improvements now existing or hereafter erected on the Real Property in good order and repair and not to do or permit any waste impairment or deterioration thereof or thereon, nor to alter, remove or demolish any of the Improvements or any Fixtures or Personal Property attached or appertaining thereto, without the prior written consent of Mortgagee (provided, however, this provision shall not apply to any repair, remodeling or renovation work, structural or otherwise), nor to initiate, join in or consent to any change in any private restrictive covenant, zoning ordinance or other public or private restrictions limiting or defining the uses which may be made of the Property or any part thereof, nor to do or permit any other act whereby the Property shall become less valuable, be used for purposes contrary to applicable law or used in any manner which will increase the premium for or result in a termination or cancellation of the insurance hereinafter required to be kept and maintained on the Property. In furtherance of, and not by way of limitation upon the foregoing covenant, Mortgagor shall effect such repairs as Mortgagee may reasonably require, and from time to time make all needful and proper replacements so that the Improvements, Appurtenances, Fixtures and Personal Property will, at all times, be in good condition, fit and proper for the respective purposes for which they were originally erected or installed. Mortgagor at all times shall maintain the Property in full compliance with all federal, state or municipal laws, ordinances, rules and regulations currently in existence or hereinafter enacted or rendered governing accessibility for the disabled, including but not limited to The Architectural Barriers Act of 1968, The Rehabilitation Act of 1973, The Fair Housing Act of 1988, and The Americans with Disabilities Act (hereinafter collectively called the "Accessibility Laws"). Mortgagor at all times shall keep the Property and ground water of the Property free of Hazardous Materials (as hereinafter defined) in excess of limits prescribed by Hazardous Waste Laws (hereinafter defined). Mortgagor shall not knowingly permit its tenants or any third party requiring the consent of Mortgagor to enter the Property, to use, generate, manufacture, treat, store, release, threaten release, or dispose of Hazardous Materials in, on or about the Property or the ground water of the Property in violation of any federal, state or municipal law, decision, statute, rule, ordinance or regulation currently in existence or hereinafter enacted or rendered (hereinafter collectively referred to as "Hazardous Waste Laws"). Mortgagor shall give Mortgagee prompt written notice of any claim by any person, entity, or governmental agency that a significant release or disposal of Hazardous Materials has occurred on the Property. Mortgagor, through its professional engineers and at its cost, shall promptly and thoroughly investigate suspected Hazardous Materials contamination of the Property. Mortgagor shall forthwith remove, repair, clean up, and/or detoxify any Hazardous Materials in excess of limits prescribed by Hazardous Waste Laws from the Property or the ground water of the Property whether or not such actions are required by law, and whether or not Mortgagor was responsible for the existence of the Hazardous Materials in, on or about the Property or the ground water of the Property. Hazardous Materials shall include but not be limited to substances defined as "hazardous substances," "hazardous materials," or "toxic substances" in The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by The Superfund Amendments and Reauthorization Act of 1986, The Hazardous Materials Transportation Act, The Resource Conservation and Recovery Act of 1976, as amended by The Used Oils Recycling Act of 1980, The Solid Waste Disposal Act amendment of 1984, The Toxic Substances Control Act, The Clean Air Act, The Clean Water Act, the Missouri Hazardous Waste Management Law (Mo. Rev. Stat. SS 260.350-260.434), the Missouri Abandoned or Uncontrolled Sites Law (Mo. Rev. Stat. SS 260.435- 260.546), the Missouri Air Conservation Law (Mo. Rev. Stat. Chapter 643), the Missouri Clean Water Law (Mo. Rev. Stat. Chapter 644), the Missouri Underground Storage Tank Law (Mo. Rev. Stat. SS 319.100- 319.137) or in any other Hazardous Waste Laws. Mortgagor and the general partner of Mortgagor, LHC, Inc., and any other current or future general partner of Mortgagor ("General Partner") hereby agree to indemnify Mortgagee and Trustee and hold Mortgagee and Trustee harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against Mortgagee or Trustee for, with respect to, or as a direct or indirect result of, the non-compliance of the Property with the Accessibility Laws and/or the presence in, on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or release from, the Property of any Hazardous Materials in excess of limits prescribed by Hazardous Waste Laws (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Hazardous Waste Laws), regardless of the source of origination and whether or not caused by, or within the control of, Mortgagor. Mortgagee, and/or its agents, shall have the right and shall be permitted, but shall not be required, at all reasonable times, to enter upon and inspect the Property to insure compliance with the foregoing covenants and any and all other covenants, agreements and conditions set forth in this Mortgage. Liability under this Paragraph shall extend beyond repayment of the Note and compliance with the terms of this Mortgage; provided, however, Mortgagor and General Partner shall have no liability under this Paragraph 3 regarding Hazardous Materials if (a) the Property becomes contaminated subsequent to Mortgagee's acquisition of the Property by foreclosure, acceptance by Mortgagee of a deed in lieu thereof, or subsequent to any transfer of ownership of the Property which was approved or authorized by Mortgagee in writing, provided that such transferee assumes all obligations of Mortgagor with respect to Hazardous Materials or (b) at such time Mortgagor provides Mortgagee with an environmental assessment report acceptable to Mortgagee, in its sole discretion, showing the Property to be free of Hazardous Materials and not in violation of any Hazardous Waste Laws. The burden of proof under this paragraph with regard to establishing the date upon which any Hazardous Material was placed or appeared in, on or under the Property shall be upon Mortgagor. PAYMENT OF TAXES, ASSESSMENTS AND OTHER CHARGES 4. To pay all and singular such taxes, assessments and public charges as already levied or assessed or that may be hereafter levied or assessed upon or against the Property, when the same shall become due and payable according to law, before the same become delinquent, and before any interest or penalty shall attach thereto, and to deliver official receipts evidencing the payment of the same to Mortgagee not later than thirty (30) days following the payment of the same. Mortgagor shall have the right to contest, in good faith, the proposed assessment of ad valorem taxes or special assessments by governmental authorities having jurisdiction over the Property; provided, however, Mortgagor shall give written notice thereof to Mortgagee and Mortgagee may, in its sole discretion, require Mortgagor to post a bond or other collateral satisfactory to Mortgagee in connection with any such action by Mortgagor. PAYMENT OF LIENS, CHARGES AND ENCUMBRANCES 5. To immediately pay and discharge from time to time when the same shall become due all lawful claims and demands of mechanics, materialmen, laborers and others which, if unpaid, might result in, or permit the creation of, a lien, charge or encumbrance upon the Property or any part thereof, or on the rents, issues, income, revenues, profits and proceeds arising therefrom and, in general, to do or cause to be done everything necessary so that the lien of this Mortgage shall be fully preserved, at the cost of Mortgagor, without expense to Mortgagee. Mortgagor shall have the right to contest, in good faith and in accordance with applicable laws and procedures, mechanics' and materialmens' liens filed against the Property; provided however, that Mortgagor shall give written notice thereof to Mortgagee, and Mortgagee may, at its sole option, require Mortgagor to post a bond or other collateral satisfactory to Mortgagee (and acceptable to the title company insuring the Mortgage) in connection with any such action by Mortgagor. PAYMENT OF JUNIOR ENCUMBRANCES 6. To permit no default or delinquency under any other lien, imposition, charge or encumbrance against the Property, even though junior and inferior to the lien of this Mortgage; provided however, the foregoing shall not be construed to permit any other lien or encumbrance against the Property. PAYMENT OF MORTGAGE TAXES 7. To pay any and all taxes which may be levied or assessed directly or indirectly upon the Note and this Mortgage (except for income taxes payable by Mortgagee) or the debt secured hereby, without regard to any law which may be hereafter enacted imposing payment of the whole or any part thereof upon Mortgagee, its successors or assigns. Upon violation of this agreement to pay such taxes levied or assessed upon the Note and this Mortgage, or upon the rendering by any court of competent jurisdiction of a decision that such an agreement by Mortgagor is legally inoperative, or if any court of competent jurisdiction shall render a decision that the rate of said tax when added to the rate of interest provided for in the Note exceeds the then maximum rate of interest allowed by law, then, and in any such event, the debt hereby secured shall, at the option of Mortgagee, its successors or assigns, become immediately due and payable, anything contained in this Mortgage or in the Note secured hereby notwithstanding, without the imposition of a Prepayment Premium (as defined in the Note). The additional amounts which may become due and payable hereunder shall be part of the debt secured by this Mortgage. HAZARD INSURANCE 8. To continuously, during the term hereof, keep the Improvements, the Fixtures and Personal Property, now or hereafter existing, erected, installed and located in or upon the Real Property, insured with extended coverage insurance against loss or damage resulting from fire, windstorm, flood, sinkhole and such other hazards, casualties, contingencies and perils including, without limitation, other risks insured against by persons operating like properties in the locality of the Property, or otherwise deemed necessary by Mortgagee, on such forms as may be required by Mortgagee, covering the Property in the amount of the full replacement cost thereof, less excavating and foundation costs (provided however, in no case shall the amount of insurance be less than the difference between the amount of the Note and eighty percent (80%) of the appraised value of the Real Property) and covering loss by flood (if the Property lies in a specified Flood Hazard Area as designated on the Department of Housing and Urban Development Maps, or other flood prone designation) in an amount equal to the outstanding principal balance of the indebtedness secured hereby or such other amount as approved by Mortgagee. All such insurance shall be carried with a company or companies acceptable to Mortgagee, which company or companies shall have a rating at the time this Mortgage is executed equivalent to at least A:VIII as shown in the most recent Best's Key Rating Guide, and the original policy or policies and renewals thereof (or, at the sole option of Mortgagee, duplicate originals or certified copies thereof), together with receipts evidencing payment of the premium therefor, shall be deposited with, held by and are hereby assigned to Mortgagee as additional security for the indebtedness secured hereby. Each such policy of insurance shall contain a non- contributing loss payable clause in favor of and in form acceptable to Mortgagee and shall provide for not less than thirty (30) days' prior written notice to Mortgagee of any intent to modify, cancel or terminate the policy or policies, or the expiration of, such policies of insurance. If the insurance required under this Paragraph 8 or any portion thereof is maintained pursuant to a blanket policy, Mortgagor shall furnish to Mortgagee a certified copy of such policy, together with an original certificate indicating that Mortgagee is an insured under such policy in regard to the Property and showing the amount of coverage apportioned to the Property which coverage shall be in an amount sufficient to satisfy the requirements hereof. Not less than fifteen (15) days prior to the expiration dates of each policy required of Mortgagor hereunder, Mortgagor will deliver to Mortgagee a renewal policy or policies marked "premium paid" or accompanied by other evidence of payment and renewal satisfactory to Mortgagee; and in the event of foreclosure of this Mortgage, any purchaser or purchasers of the Property shall succeed to all rights of Mortgagor, including any rights to unearned premiums, in and to all insurance policies assigned and delivered to Mortgagee pursuant to the provisions of this Paragraph 8. In the event of loss by reason of hazards, casualties, contingencies and perils for which insurance has been required by Mortgagee hereunder, Mortgagor shall give immediate notice thereof to Mortgagee, and Mortgagee is hereby irrevocably appointed attorney-in-fact coupled with an interest, for Mortgagee to, at its option, make proof of loss if not made promptly by Mortgagor, and each insurance company concerned is hereby notified, authorized and directed to make payment for such loss directly to Mortgagee, instead of to Mortgagor and Mortgagee jointly. Provided Mortgagor is not in default hereunder or under any other Loan Documents, Mortgagor and Mortgagee shall jointly adjust and compromise any losses for which insurance proceeds are payable under any of the aforesaid insurance policies; provided that if Mortgagor and Mortgagee cannot agree on such adjustment within thirty (30) days, Mortgagee shall adjust and compromise any losses in its sole discretion, which Mortgagor authorizes Mortgagee to do. Mortgagor authorizes Mortgagee, after deducting the costs of collection, to apply the proceeds of such insurance, at its option, as follows: (a) to the restoration or repair of the insured Improvements, Fixtures and Personal Property, provided that, in the opinion and sole discretion of Mortgagee, such restoration or repair is reasonably practical and, provided further, that, in the opinion and sole discretion of Mortgagee, either: (i) the insurance proceeds so collected are sufficient to cover the cost of such restoration or repair of the damage or destruction with respect to which such proceeds were paid, or (ii) the insurance proceeds so collected are not sufficient alone to cover the cost of such restoration or repair, but are sufficient therefor when taken together with funds provided and made available by Mortgagor from other sources; in which event Mortgagee shall make such insurance proceeds available to Mortgagor for the purpose of effecting such restoration or repair; but Mortgagee shall not be obligated to see to the proper application of such insurance proceeds nor shall the amount of funds so released or used be deemed to be payment of or on account of the indebtedness secured hereby, or (b) to the reduction of the indebtedness secured hereby, notwithstanding the fact that the amount owing thereon may not then be due and payable or that said indebtedness is otherwise adequately secured, in which event such proceeds shall be applied at par against the indebtedness secured hereby and the monthly payment due on account of such indebtedness shall be reduced accordingly. None of such actions taken by Mortgagee shall be deemed to be or result in a waiver or impairment of any equity, lien or right of Mortgagee under and by virtue of this Mortgage, nor will the application of such insurance proceeds to the reduction of the indebtedness serve to cure any default in the payment thereof. In the event of foreclosure of this Mortgage or other transfer of title to the Property in extinguishment of the indebtedness secured hereby, all right, title and interest of Mortgagor in and to any insurance policies then in force and insurance proceeds then payable shall pass to the purchaser or grantee. In case of Mortgagor's failure to keep the Property so insured, Mortgagee or its assigns, may, at its option (but shall not be required to) effect such insurance at Mortgagor's expense. Notwithstanding anything set forth in this Paragraph 8 to the contrary, in the event of loss or damage to the Property by fire or other casualty for which insurance has been required by Mortgagee and provided by Mortgagor, Mortgagee hereby agrees to allow the proceeds of insurance to be used for the restoration of the Property and to release such insurance proceeds to Mortgagor as such restoration progresses, provided: (a) Mortgagor is not in default under any of the terms, covenants and conditions of this Mortgage, the Note or any of the other Loan Documents; (b) The Improvements, after such restoration, shall be at least eighty percent (80%) leased pursuant to leases approved in writing by Mortgagee; (c) The plans and specifications for the restoration of the Property are approved in writing by Mortgagee; (d) Mortgagor has deposited with Mortgagee funds which, when added to insurance proceeds received by Mortgagee, are sufficient to complete the restoration of the Property in accordance with the approved plans and specifications, all applicable building codes, zoning ordinances and regulations, and further, that the funds retained by Mortgagee are sufficient to complete the restoration of the Property as certified to Mortgagee by Mortgagee's inspecting architect/engineer; (e) Mortgagor provides completion, payment and performance bonds and builders' all risk insurance for such restoration in form and amount acceptable to Mortgagee (provided, however, that Mortgagor may guarantee completion of construction to Mortgagee in lieu of completion and performance bonds); (f) The insurer under such policies of fire or other casualty insurance does not assert any defense to payment under such policies against Mortgagee, Mortgagor or any tenant of the Property; (g) Mortgagee shall have the option, upon the completion of such restoration of the Property, to apply any surplus insurance proceeds remaining after the completion of such restoration, at par, to the reduction of the outstanding principal balance of the Note; notwithstanding the fact that the amount owing thereon may not then be due and payable or that said indebtedness is otherwise adequately secured; (h) The funds held by Mortgagee shall be disbursed no more often than once per month and in amounts of not less than Fifty Thousand and No/100 Dollars ($50,000.00) each (except the final disbursement of such funds which may be in an amount less than Fifty Thousand and No/100 Dollars ($50,000.00); (i) Mortgagee's obligation to make any such disbursement shall be conditioned upon Mortgagee's receipt of written certification from Mortgagee's inspecting architect/engineer (whose fees shall be paid by Mortgagor) that all construction and work for which such disbursement is requested has been completed in accordance with the approved plans and specifications and in accordance with all applicable building codes, zoning ordinances and all other local or federal governmental regulations, and, further, that Mortgagor has deposited with Mortgagee sufficient funds to complete such restoration in accordance with subparagraph 8(d) above; and (j) Mortgagee shall be entitled to require and to impose such other conditions to the release of such funds as would be customarily or reasonably required and imposed by local construction lenders for a project of similar nature and cost. LIABILITY INSURANCE 9. To carry and maintain such comprehensive general liability insurance as may from time to time be required by Mortgagee, taking into consideration the type of property being insured and the corresponding liability exposure, on forms, in amounts and with such company or companies as may be acceptable to Mortgagee. All such comprehensive general liability insurance shall be carried with a company or companies which have a rating at the time this Mortgage is executed equivalent to at least A:VIII as shown in the most recent Best's Key Rating Guide. Such policy or policies of insurance shall name Mortgagee as an additional insured and shall provide for not less than thirty (30) days' prior written notice to Mortgagee of the intent to modify, cancel, or terminate the policy or policies or the expiration of such policy or policies of insurance. Not less than fifteen (15) days prior to the expiration dates of such policy or policies, Mortgagor will deliver to Mortgagee a renewal policy or policies marked "premium paid" or accompanied by other evidence of payment and renewal satisfactory to Mortgagee. The original policy or policies and all renewals thereof (or, at the sole option of Mortgagee, duplicate originals or certified copies thereof), together with receipts evidencing payment of the premium therefor, shall be deposited with, held by and are hereby assigned to Mortgagee as additional security for the indebtedness secured hereby. COMPLIANCE WITH LAWS 10. To observe, abide by and comply with all statutes, ordinances, laws, orders, requirements or decrees relating to the Property enacted, promulgated or issued by any federal, state, county or municipal authority or any agency or subdivision thereof having jurisdiction over Mortgagor or the Property, and to observe and comply with all conditions and requirements necessary to preserve and extend any and all rights, licenses, permits (including, but not limited to, zoning, variances, special exceptions and nonconforming uses), privileges, franchises and concessions which are applicable to the Property or which have been granted to or contracted for by Mortgagor in connection with any existing, presently contemplated or future use of the Property. MAINTENANCE OF PERMITS 11. To obtain, keep and constantly maintain in full force and effect during the entire term of this Mortgage, all certificates, licenses and permits necessary to keep the Property operating as an office building and, except as specifically provided for in this Mortgage, not to assign, transfer or in any manner change such certificates, licenses or permits without first receiving the written consent of Mortgagee. OBLIGATIONS OF MORTGAGOR AS LESSOR 12. To perform every obligation of Mortgagor (as the lessor) and enforce every obligation of the lessee in that certain Master Lease Agreement dated of even date herewith, between Mortgagor and Edward D. Jones & Co., L.P., a Missouri limited partnership ("Jones"), as tenant (the "Master Lease") and cause Jones to perform every obligation of the lessor and enforce every obligation of the lessee in any and every lease or other occupancy agreement of or affecting the Property or any part thereof (hereinafter referred to as the "Occupancy Leases"), and not to modify, alter, waive, or cancel the Master Lease to allow Jones to modify, waive, or cancel any such Occupancy Leases or any part thereof, without the prior written consent of Mortgagee (but such consent shall not be required for such action as to Occupancy Leases of 10,000 square feet or less if such action is in the ordinary course of business of owning and operating the Property in a prudent manner), nor collect for more than thirty (30) days in advance any rents that may be collectible under the Master Lease, or allow Jones to do so with respect to any such Occupancy Leases and, except as provided for in this Mortgage, not to assign the Master Lease or rents thereunder or allow Jones to assign any such Occupancy Lease or any such rents to any party other than Mortgagee, without the prior written consent of Mortgagee. In the event of default under the Master Lease or any such Occupancy Lease by reason of failure of the Mortgagor or Jones, as the case may be, to keep or perform one or more of the covenants, agreements or conditions thereof, Mortgagee is hereby authorized and empowered, and may, at its sole option, remedy, remove or cure any such default, and further, Mortgagee may, at its sole option and in its sole discretion, but without obligation to do so, pay any sum of money deemed necessary by it for the performance of said covenants, agreements and conditions, or for the curing or removal of any such default, and incur all expenses and obligations which it may consider necessary or reasonable in connection therewith, and Mortgagor shall repay on demand all such sums so paid or advanced by Mortgagee together with interest thereon until paid at the lesser of either (i) the highest rate of interest then allowed by the laws of the State of Missouri or, if controlling, the laws of the United States, or (ii) the then applicable interest rate of the Note plus five hundred (500) basis points; all of such sums, if unpaid, shall be added to and become part of the indebtedness secured hereby. Except as set forth below, all such Occupancy Leases hereafter made shall be subject to the approval of Mortgagee and (a) shall be at competitive market rental rates then prevailing in the geographic area for an office building comparable to the Property, (b) shall have lease terms of not less than three (3) years, and (c) at Mortgagee's option, shall be superior or subordinate in all respects to the lien of this Mortgage. The Master Lease shall, at the option of the Mortgagee, be subordinated to the lien of this Mortgage by an agreement in form and content acceptable to the Mortgagee. In the event of any default by a tenant under any occupancy lease under which the net rentable area, including expansion options, is less than 10,000 square feet, Mortgagor or Jones shall be entitled to enforce the terms of such Occupancy Lease (provided such Occupancy Lease has been approved by the Mortgagee or is not required to be so approved) against such tenant by any appropriate action at law or in equity, or as otherwise permitted thereunder, provided, Jones notifies Mortgagee regarding any such action (provided however, that so long as the failure so to notify Mortgagee arises out of the negligence of Jones, such failure shall not be a default under this Mortgage). Mortgagee shall not require approval in advance of any Occupancy Leases which conform to the Mortgagor's Form Lease (as hereinafter defined) as previously approved by Mortgagee, except as set forth below. Neither the right nor the exercise of the right herein granted unto Mortgagee to keep or perform any such covenants, agreements or conditions as aforesaid shall preclude Mortgagee from exercising its option to cause the whole indebtedness secured hereby to become immediately due and payable by reason of Mortgagor's default under the Master Lease or Jones' default under the Master Lease with respect to its obligations to Mortgagor, or Jones' default under any Occupancy Lease (in each instance, after the expiration of any applicable cure period, if any) in keeping or performing any such covenants, agreements or conditions as hereinabove required (except with respect to any Occupancy Lease under which the net rentable area, including expansion options, is less than 10,000 square feet). Mortgagee has heretofore approved a form of Occupancy Lease to be used with respect to subtenants under the Mater Lease in connection with the Property without Mortgagee's prior consent (hereinafter referred to as the "Form Lease"). Neither Mortgagor nor Jones shall, without the prior written consent of Mortgagee, modify or alter the Form Lease in any material respect. In addition, neither Mortgagor nor Jones shall, without the prior written consent of Mortgagee, surrender or terminate, either orally or in writing, any Occupancy Lease now existing or hereafter made with any Major Tenant (as hereinafter defined) for all or part of the Property, permit an assignment or sublease (except on account of the Master Lease) of any such Occupancy Lease, or request or consent to the subordination of any Occupancy Lease to any lien subordinate to this Mortgage. Mortgagor shall furnish Mortgagee with copies of all executed Occupancy Leases of all or any part of the Property now existing or hereafter made, and Mortgagor shall assign to Mortgagee the Master Lease and Mortgagor and Jones, to the extent of their respective interests, shall assign, as additional security for the Note, all Occupancy Leases now existing or hereafter made for all or any part of the Property (which assignments shall be in form and content acceptable to Mortgagee). Notwithstanding the foregoing approval by Mortgagee of Mortgagor's Form Lease, Mortgagee hereby specifically reserves the right to approve all prospective tenants under all Occupancy Leases hereafter proposed to be made if: (i) the term thereof, excluding options to renew the same, exceeds five (5) years; or (ii) the net rentable area to be occupied thereunder, including expansion options, exceeds ten percent (10%) of the net leasable area of the Improvements (the tenants under such leases being hereinafter referred to as "Major Tenants"). Mortgagor shall notify Mortgagee in writing of all prospective Major Tenants and shall deliver to Mortgagee, at Mortgagor's sole cost and expense, a copy of the prospective Major Tenant's current financial statement and the most recent Dun & Bradstreet credit report on said prospective Major Tenant. Said financial statement shall be certified as true and correct by the Major Tenant, or, if available, by a certified public accountant. MAINTENANCE OF PARKING AND ACCESS; PROHIBITION AGAINST ALTERATION 13. To construct, keep and constantly maintain, as the case may be, all curbs, drives, parking areas and the number of parking spaces heretofore approved by Mortgagee or heretofore or hereafter required by any governmental body, agency or authority having jurisdiction over Mortgagor or the Property, and as required by the terms of the Occupancy Leases, and not to alter, erect, build or construct upon any portion of the Property, any building or structure of any kind whatsoever, the erection, building or construction of which has not been previously approved by Mortgagee in writing, which approval shall be at the sole discretion of Mortgagee; provided, however, that this provision does not apply to any repair, remodeling, or renovation work, structural or otherwise. EXECUTION OF ADDITIONAL DOCUMENTS 14. To do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers, assurances and other instruments, including security agreements and financing statements, as Mortgagee shall from time to time require for the purpose of better assuring, conveying, assigning, transferring and confirming unto Mortgagee the Property and rights hereby encumbered, created, conveyed, assigned or intended now or hereafter so to be encumbered, created, conveyed or assigned or which Mortgagor may now be or may hereafter become bound to encumber, create, convey, or assign to Mortgagee, or for the purpose of carrying out the intention or facilitating the performance of the terms of this Mortgage, or for filing, registering, or recording this Mortgage, and to pay all filing, registration, or recording fees and all taxes, costs and other expenses, including Reasonable Attorneys' Fees (as defined in Paragraph 40), incident to the preparation, execution, acknowledgment, delivery, and recordation of any of the same. AFTER-ACQUIRED PROPERTY SECURED 15. It is understood and agreed that all right, title and interest of Mortgagor in and to all extensions, improvements, betterments, renewals, substitutions and replacements of, and all additions and appurtenances to, the Property hereinabove described, hereafter acquired by or released to Mortgagor, or constructed, assembled or placed by Mortgagor on the Real Property, and all conversions of the security constituted thereby, immediately upon such acquisition, release, construction, assembling, placement or conversion, as the case may be, and in each such case, without any further mortgage, encumbrance, conveyance, assignment or other act by Mortgagor, shall become subject to the lien of this Mortgage as fully and completely and with the same effect as though now owned by Mortgagor and specifically described herein, but at any and all times Mortgagor will execute and deliver to Mortgagee any and all such further assurances, mortgages, conveyances, or assignments thereof or security interests therein as Mortgagee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien of this Mortgage. PAYMENTS BY MORTGAGEE ON BEHALF OF MORTGAGOR 16. Should Mortgagor or Jones, as the case may be, fail to make payment of any taxes, assessments or public charges on or with respect to the Property before the same shall become delinquent, or shall Mortgagor or Jones, as the case may be, fail to make payment of any insurance premiums or other charges, impositions, or liens herein or elsewhere required to be paid by Mortgagor, then Mortgagee, at its sole option, but without obligation to do so, may make payment or payments of the same and also may redeem the Property from tax sale without any obligation to inquire into the validity of such taxes, assessments and tax sales. In the case of any such payment by Mortgagee, Mortgagor agrees to reimburse Mortgagee, upon demand therefor, the amount of such payment and of any fees and expenses attendant in making the same, together with interest thereon at the lesser of either (i) the highest rate of interest then allowed by the laws of the State of Missouri or, if controlling, the laws of the United States, or (ii) the then applicable interest rate of the Note plus five hundred (500) basis points; and until paid such amounts and interest shall be added to and become part of the debt secured hereby to the same extent that this Mortgage secures the repayment of the indebtedness evidenced by the Note. In making payments hereby authorized by the provisions of this Paragraph 16, Mortgagee may do so whenever, in its sole judgment and discretion, such advance or advances are necessary or desirable to protect the full security intended to be afforded by this instrument. Neither the right nor the exercise of the right herein granted unto Mortgagee to make any such payments as aforesaid shall preclude Mortgagee from exercising its option to cause the whole indebtedness secured hereby to become immediately due and payable by reason of Mortgagor's default in making such payments as hereinabove required. FUNDS HELD BY MORTGAGEE FOR TAXES, ASSESSMENTS, INSURANCE PREMIUMS, AND OTHER CHARGES 17. In order to more fully protect the security of this Mortgage, Mortgagor shall deposit with Mortgagee, together with and in addition to each monthly payment due on account of the indebtedness evidenced by the Note, an amount equal to one-twelfth (1/12) of the annual total of such taxes, assessments, insurance premiums, and other charges (all as estimated by Mortgagee in its sole discretion) so that, at least thirty (30) days prior to the due date thereof, Mortgagee shall be able to pay in full all such taxes, assessments, insurance premiums, and other charges as the same shall become due, and Mortgagee may hold without paying interest and commingle with its general funds the sums so deposited and apply the same to the payment of said taxes, assessments, insurance premiums, or other charges as they become due and payable. If at any time the funds so held by Mortgagee are insufficient to pay such taxes, assessments, insurance premiums, or other charges as they become due and payable Mortgagor shall immediately, upon notice and demand by Mortgagee, deposit with Mortgagee the amount of such deficiency, and the failure on the part of Mortgagor to do so shall entitle Mortgagee, at its sole option, to make such payments in accordance with its right and pursuant to the conditions elsewhere provided in this Mortgage. Whenever any default exists under this Mortgage, Mortgagee may, at its sole option but without an obligation so to do, apply any funds so held by it pursuant to this Paragraph 17 toward the payment of the indebtedness secured hereby, notwithstanding the fact that the amount owing thereon may not then be due and payable or that said indebtedness may otherwise be adequately secured in such order and manner of application as Mortgagee may elect. CONDEMNATION; EMINENT DOMAIN 18. All awards and other compensation heretofore or hereafter made to Mortgagor and all subsequent owners of the Property in any taking by eminent domain or recovery for inverse condemnation, either permanent or temporary, of all or any part of the Property or any easement or any appurtenance thereto, including severance and consequential damages and change in grade of any street, are hereby assigned to Mortgagee. Provided Mortgagor is not in default hereunder or under any of the other Loan Documents, Mortgagor and Mortgagee shall jointly adjust and compromise the claim for any such award, provided that if Mortgagor and Mortgagee cannot agree on such adjustment within thirty (30) days, Mortgagee shall adjust and compromise the claim for any such award in its sole discretion. Subject to the foregoing, Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-fact, coupled with an interest, and authorizes, directs and empowers such attorney, at the option of said attorney, on behalf of Mortgagor, its successors and assigns, to adjust or compromise the claim for any such award and alone to collect and receive the proceeds thereof, to give proper receipts and acquittances therefor and, after deducting any expenses of collection, at its sole option: (i) to apply the net proceeds as a credit upon any portion of the indebtedness secured hereby, as selected by Mortgagee, notwithstanding the fact that the amount owing thereon may not then be due and payable or that said indebtedness is otherwise adequately secured. In the event Mortgagee applies such awards to the reduction of the outstanding indebtedness evidenced by the Note, such proceeds shall be applied at par and the monthly installments due and payable under the Note shall be reduced accordingly; however no such application shall serve to cure an existing default in the payment of the Note; or (ii) to hold said proceeds without any allowance of interest and make the same available for restoration or rebuilding the Improvements. In the event that Mortgagee elects to make said proceeds available to reimburse Mortgagor for the cost of the restoration or rebuilding of the buildings or improvements on the Property, such proceeds shall be made available in the manner and under the conditions that Mortgagee may require as provided under Paragraph 8 hereof. If the proceeds are made available by Mortgagee to reimburse Mortgagor for the cost of said restoration or rebuilding, any surplus which may remain out of said award after payment of such cost of restoration or rebuilding shall be applied on account of the indebtedness secured hereby at par notwithstanding the fact that the amount owing thereon may not then be due and payable or that said indebtedness may otherwise be adequately secured. Mortgagor further covenants and agrees to give Mortgagee immediate notice of the actual or threatened commencement of any proceedings under eminent domain and to deliver to Mortgagee copies of any and all papers served in connection with any proceedings. Mortgagor further covenants and agrees to make, execute and deliver to Mortgagee, at any time or times, upon request, free, clear and discharged of any encumbrance of any kind whatsoever, any and all further assignments and/or other instruments deemed necessary by Mortgagee for the purpose of validly and sufficiently assigning all such awards and other compensation heretofore or hereafter made to Mortgagee (including the assignment of any award from the United States government at any time after the allowance of the claim therefor, the ascertainment of the amount thereof and the issuance of the warrant for payment thereof). It shall be a default hereunder if any part of any of the Improvements situated on the Property shall be condemned by any governmental authority having jurisdiction, or if lands constituting a portion of the Property shall be condemned by any governmental authority having jurisdiction, such that the Property is in violation of applicable parking, zoning, platting, or other ordinances, or fails to comply with the terms of the Master Lease or the Occupancy Leases with Major Tenants, and in either of said events, Mortgagee shall be entitled to exercise any or all remedies provided or referenced in this Mortgage, including the application of condemnation proceeds to the outstanding principal balance of the Note at par and the right to accelerate the maturity date of the Note and require payment in full without the imposition of a Prepayment Premium. COSTS OF COLLECTION 19. In the event that the Note secured hereby is placed in the hands of an attorney for collection, or in the event that Mortgagee shall become a party either as plaintiff or as defendant, in any action, suit, appeal or legal proceeding (including, without limitation, foreclosure, condemnation, bankruptcy, administrative proceedings or any proceeding wherein proof of claim is by law required to be filed), hearing, motion or application before any court or administrative body in relation to the Property or the lien and security interest granted or created hereby or herein, or for the recovery or protection of said indebtedness or the Property, or for the foreclosure of this Mortgage, Mortgagor shall save and hold Mortgagee harmless from and against any and all costs and expenses incurred by Mortgagee on account thereof, including, but not limited to, Reasonable Attorneys' Fees, title searches and abstract and survey charges, at all trial and appellate levels, and Mortgagor shall repay, on demand, all such costs and expenses, together with interest thereon until paid at the lesser of either (i) the highest rate of interest then allowed by the laws of the State of Missouri, or, if controlling, the laws of the United States, or (ii) the then applicable rate of interest of the Note plus five hundred (500) basis points; all of which sums, if unpaid, shall be added to and become a part of the indebtedness secured hereby. DEFAULT RATE 20. Any sums not paid when due, whether maturing by lapse of time or by reason of acceleration under the provisions of the Note or this Mortgage, and whether principal, interest or money owing for advancements pursuant to the terms of this Mortgage or any other Loan Document, shall bear interest until paid at the lesser of either (i) the highest rate of interest then allowed by the laws of the State of Missouri or, if controlling, the laws of the United States, or (ii) the then applicable rate of interest of the Note plus five hundred (500) basis points; all of which sums shall be added to and become a part of the indebtedness secured hereby. SAVINGS CLAUSE; SEVERABILITY 21. Notwithstanding any provisions in the Note or in this Mortgage to the contrary, the total liability for payments in the nature of interest including but not limited to Prepayment Premiums, default interest and late fees shall not exceed the limits imposed by the laws of the State of Missouri or, if controlling, the United States of America relating to maximum allowable charges of interest. Mortgagee shall not be entitled to receive, collect or apply, as interest on the indebtedness evidenced by the Note, any amount in excess of the maximum lawful rate of interest permitted to be charged by applicable law. In the event Mortgagee ever receives, collects or applies as interest any such excess, such amount which would be excessive interest shall be applied to reduce the unpaid principal balance of the indebtedness evidenced by the Note. If the unpaid principal balance of such indebtedness is paid in full, any remaining excess shall be forthwith paid to Mortgagor. If any clauses or provisions herein contained shall operate or would prospectively operate to invalidate this Mortgage, then such clauses or provisions only shall be held for naught, as though not herein contained and the remainder of this Mortgage shall remain operative and in full force and effect. BANKRUPTCY, REORGANIZATION OR ASSIGNMENT 22. It shall be a default hereunder if Mortgagor or General Partner shall: (a) elect to dissolve and liquidate its business organization and windup its business affairs without prior written approval of Mortgagee, or (b) consent to the appointment of a receiver, trustee or liquidator of all or a substantial part of Mortgagor's assets, or General Partner's assets, or (c) be adjudicated as bankrupt or insolvent, or file a voluntary petition in bankruptcy, or admit in writing its inability to pay its debts as they become due, or (d) make a general assignment for the benefit of creditors, or (e) file a petition under or take advantage of any insolvency law, or (f) file an answer admitting the material allegations of a petition filed against Mortgagor or General Partner in any bankruptcy, reorganization or insolvency proceeding or fail to cause the dismissal of such petition within thirty (30) days after the filing of said petition, or (g) take action for the purpose of effecting any of the foregoing, or (h) if any order, judgment or decree shall be entered upon an application of a creditor of Mortgagor or General Partner by a court of competent jurisdiction approving a petition seeking appointment of a receiver or trustee of all or a substantial part of Mortgagor's assets or General Partner's assets and such order, judgment or decree shall continue unstayed and in effect for a period of thirty (30) days. TIME IS OF THE ESSENCE; MONETARY AND NON-MONETARY DEFAULTS 23. It is understood by Mortgagor that time is of the essence hereof in connection with all obligations of Mortgagor herein, in the Note, the Assignment (as defined in Paragraph 34) and any of the other Loan Documents evidencing or securing the Note. If default be made in the payment of any installment of the Note, whether of principal or interest, or both (and it is hereby understood that if such payment is postmarked by the United States Postal Service on or before the due date for such payment, is correctly addressed and bears adequate first class postage, Mortgagor shall not be considered to have defaulted in making such payment), or in the payment of any other sums of money referred to herein or in the Note, promptly and fully when the same shall be due without notice or demand from Mortgagee to Mortgagor in regard to such Monetary Default (as hereinafter defined), or in the event a breach or default be made by Mortgagor in any one of the agreements, conditions and covenants of the Note, this Mortgage, the Assignment or any other Loan Documents evidencing or securing the Note, or in the event that each and every one of said agreements, conditions and covenants are not otherwise duly, promptly and fully discharged or performed, and any such Non- Monetary Default (as hereinafter defined) remains uncured for a period of thirty (30) days after written notice thereof from Mortgagee to Mortgagor, has been delivered in the manner prescribed in Paragraph 41 hereof, unless such Non-Monetary Default cannot be cured within said thirty (30) day period, in which event Mortgagor shall have an extended period of time to complete cure, provided that action to cure such Non- Monetary Default is commenced within said thirty (30) day period, and Mortgagor is, not substantially diminishing or impairing the value of the Property, and is diligently pursuing a cure to completion, Mortgagee, at its sole option, may thereupon or thereafter declare the indebtedness evidenced by the Note, as well as all other monies secured hereby, including, without limitation, all Prepayment Premiums (to the extent permitted by the laws of the State of Missouri) and late payment charges, to be forthwith due and payable, whereupon the principal of and the interest accrued on the indebtedness evidenced by the Note and all other sums secured by this Mortgage, at the option of Mortgagee, shall immediately become due and payable as if all of said sums of money were originally stipulated to be paid on such day, and thereupon, Mortgagee may avail itself of all rights and remedies provided by law and may foreclose or prosecute a suit at law or in equity as if all monies secured hereby had matured prior to its institution, anything in this Mortgage or in the Note to the contrary notwithstanding. Mortgagee shall have no obligation to give Mortgagor notice of, or any period to cure, any Monetary Default or any Incurable Default (as hereinafter defined) prior to exercising its right, power and privilege to accelerate the maturity of the indebtedness secured hereby. As used herein, the term "Monetary Default" shall mean any default which can be cured by the payment of money such as, but not limited to, the payment of principal and interest due under the Note, taxes, assessments and insurance premiums when due as provided in this Mortgage. As used herein, the term "Non-Monetary Default" shall mean any default which is not a Monetary Default or an Incurable Default. As used herein, the term "Incurable Default" shall mean (i) any voluntary or involuntary sale, assignment, mortgaging, encumbering or transfer in violation of the covenants contained herein; or (ii) if Mortgagor, or any person or entity comprising Mortgagor, should make an assignment for the benefit of creditors, become insolvent, or file a petition in bankruptcy (including but not limited to, a petition seeking a rearrangement or reorganization). Mortgagee may institute an action to foreclose this Mortgage as to the amount so declared due and payable, and this Mortgage shall remain in force, and thereupon the Trustee shall, after receiving notice of the election and demand for sale from the Mortgagee, proceed to sell the Property as one parcel in its entirety or any part thereof, either in mass or in parcels, at the absolute discretion of the Trustee, at public vendue at the door of the Court House or other location then customarily employed for the purpose, in the County where the Property is located, to the highest bidder for cash, first making or causing to be made or given such demands or notices of the time, terms, and place of sale, and a description of the property to be sold, by advertisement published and as is provided by the laws of the State of Missouri then in effect, and upon sale, the Trustee shall (subject to any applicable statutory periods and rights of redemption) execute and deliver a deed of conveyance of the property sold to the purchaser or purchasers thereof, and any statement or recital of fact in such deed, in relation to the non-payment of the indebtedness secured hereby, existence of the indebtedness secured hereby, notice of advertisement, sale, and receipt of the proceeds of sale, shall be presumptive evidence of the truth of such statements or recitals, and the Trustee shall receive the proceeds of such sale out of which the Trustee shall pay the following in any order Mortgagee shall elect: (1) the cost and expenses of executing this trust, including compensation to the Trustee for services as provided by law and Reasonable Attorneys' Fees to any attorneys employed by the Trustee or the Mortgagee for their services; (2) upon the usual vouchers therefor, all amounts paid by the Mortgagee for insurance, taxes, lien claims, and other payments made by Mortgagee as provided herein, with interest thereon until paid at the lesser of either (i) the highest rate of interest then allowed by the laws of the State of Missouri or, if controlling, the laws of the United States, or (ii) the then applicable rate of interest of the Note plus five hundred (500) basis points; (3) the amount due on the indebtedness secured hereby then due and unpaid; (4) the amount due on any junior encumbrances, with interest. The remainder of such proceeds, if any, shall be paid to Mortgagor. The Mortgagee may bid and become purchaser at any sale under this Mortgage. Any sale of the Property under this Mortgage shall, without further notice, create the relation of landlord and tenant at sufferance between the purchaser and Mortgagor or any person holding possession of the Property through Mortgagor, and upon failure of Mortgagor or such person to surrender possession thereof immediately, Mortgagor or such person may be removed by a writ of possession of the purchaser in any Court having venue. The Trustee or Substitute Trustee covenants to faithfully to perform the trust herein created. The Trustee may sell and convey the Property under the power aforesaid, although the Trustee has been, may now be or may hereafter be attorney or agent of the Mortgagee in respect to the loan made by the Mortgagee evidenced by the Note or any part thereof or this Mortgage or in respect to any matter of business whatsoever. The Trustee hereby lets the Property to the Mortgagor until a sale be had under the foregoing provisions, upon the following terms and conditions, such letting being to-wit: The Mortgagor and every and all persons claiming or possessing the Property, or any part thereof, by, through or under Mortgagor shall pay rent therefor during said term at the rate of one cent per month, payable monthly upon demand, and without notice or demand shall surrender immediate peaceable possession of said premises, to the purchaser thereof, under such sale. Should possession not be surrendered as provided for herein the purchaser shall be entitled to institute proceedings for possession as aforesaid. Except to the extent contrary to law, Grantor waives the benefit of all laws now existing or that hereafter may be enacted providing for (i) any appraisement before sale of any portion of the Property, (ii) any exemption, under and by virtue of any statute of the State of Missouri, and (iii) the benefit of all laws that may be hereafter enacted in any way extending the time for the enforcement and collection of the indebtedness secured hereby or creating or extending a period of redemption from any sale made in collecting the indebtedness secured hereby. In any action or proceeding to foreclose this Mortgage, Mortgagee shall be at liberty to apply, without notice, for the appointment of a receiver for the rents and profits of the Property, and shall be entitled to the appointment of such a receiver as a matter of right without regard to the value of the Property as security for the indebtedness due Mortgagee or the solvency of any person, or corporation, liable for the payment of such indebtedness. If the indebtedness secured hereby is paid after the beginning of publication of notice of sale, as herein provided, or in the event the Mortgagee shall, at its sole option, permit Mortgagor to pay any part of the indebtedness secured hereby after the beginning of publication of notice of sale, as herein provided, then Mortgagor shall pay on demand all expenses incurred by the Trustee and Mortgagee in connection with said publication, including fees to the attorneys for the Trustee and for the Mortgagee, and a reasonable fee to the Trustee, and this Mortgage shall be security for all such expenses and fees. The failure or omission on the part of Mortgagee to exercise the option for acceleration of maturity of the Note and foreclosure of this Mortgage following any default as aforesaid or to exercise any other option or remedy granted hereunder to Mortgagee when entitled to do so in any one or more instances, or the acceptance by Mortgagee of partial payment of the indebtedness secured hereby, whether before or subsequent to Mortgagor's default hereunder, shall not constitute a waiver of any such default or the right to exercise any such option or remedy, but such option or remedy shall remain continuously in force. Acceleration of maturity of the Note, once claimed hereunder by Mortgagee, at the option of Mortgagee, may be rescinded by written acknowledgment to that effect by Mortgagee, but the tender and acceptance of partial payments alone shall not in any way affect or rescind such acceleration of maturity. PROTECTION OF MORTGAGEE'S SECURITY 24. At any time after default hereunder and the expiration of the applicable cure periods, if any, expressly provided for herein, Mortgagee is authorized, without notice and in its sole discretion, to enter upon and take possession of the Property or any part thereof and to perform any acts which Mortgagee deems necessary or proper to conserve the security herein intended to be provided by the Property, to operate any business or businesses conducted thereon and to collect and receive all rents, issues and profits thereof and therefrom, including those past due as well as those accruing thereafter. APPOINTMENT OF RECEIVER 25. If, at any time after a default hereunder and the expiration of the applicable cure periods, if any, expressly provided for herein, in the sole discretion of Mortgagee, a receivership may be necessary to protect the Property or its rents, issues, revenue, profits or proceeds, whether before or after maturity of the Note and whether before or at the time of or after the institution of foreclosure or suit to collect such indebtedness, or to enforce this Mortgage, Mortgagee, as a matter of strict right and regardless of the value of the Property or the amounts due hereunder or secured hereby, or of the solvency of any party bound for the payment of such indebtedness, shall have the right, upon ex parte application and without notice to anyone, and by any court having jurisdiction, to the appointment of a receiver to take charge of, manage, preserve, protect and operate the Property, to collect the rents, issues, revenues, profits, proceeds and income thereof, to make all necessary and needful repairs, and to pay all taxes, assessments and charges against the Property and all premiums for insurance thereon, and to do such other acts as may by such court be authorized and directed, and after payment of the expenses of the receivership and the management of the Property, to apply the net proceeds of such receivership in reduction of the indebtedness secured hereby or in such other manner as the said court shall direct notwithstanding the fact that the amount owing thereon may not then be due and payable or the said indebtedness is otherwise adequately secured. Such receivership shall, at the option of Mortgagee, continue until full payment of all sums hereby secured or until title to the Property shall have passed by sale under this Mortgage. Mortgagor hereby specifically waives its right to object to the appointment of a receiver as aforesaid and hereby expressly agrees that such appointment shall be made as an admitted equity and as a matter of absolute right to Mortgagee. RIGHTS AND REMEDIES CUMULATIVE; FORBEARANCE NOT A WAIVER 26. The rights and remedies herein provided are cumulative and Mortgagee, as the holder of the Note and of every other obligation secured hereby, may recover judgment thereon, issue execution therefor and resort to every other right or remedy available at law or in equity, without first exhausting any right or remedy available to Mortgagee and without affecting or impairing the security of any right or remedy afforded hereby, and no enumeration of special rights or powers by any provisions hereof shall be construed to limit any grant of general rights or powers, or to take away or limit any and all rights granted to or vested in Mortgagee by law, and Mortgagor further agrees that no delay or omission on the part of Mortgagee to exercise any rights or powers accruing to it hereunder shall impair any such right or power or shall be construed to be a waiver of any such event of default hereunder or an acquiescence therein; and every right, power and remedy granted herein or by law to Mortgagee may be exercised from time to time as often as may be deemed expedient by Mortgagee. MODIFICATION NOT AN IMPAIRMENT OF SECURITY 27. Mortgagee, without notice and without regard to the consideration, if any, paid therefor, and notwithstanding the existence at that time of any inferior mortgages or other liens thereon, may release any part of the security described herein or may release any person or entity liable for any indebtedness secured hereby without in any way affecting the priority of this Mortgage, to the full extent of the indebtedness remaining unpaid hereunder, upon any part of the security not expressly released. Mortgagee may, at its option and within its sole discretion, also agree with any party obligated on said indebtedness, or having any interest in the security described herein, to extend the time for payment of any part or all of the indebtedness secured hereby, and such agreement shall not, in any way, release or impair this Mortgage, but shall extend the same as against the title of all parties having any interest in said security, which interest is subject to this Mortgage. PROPERTY MANAGEMENT AND LEASING 28. The exclusive manager of the Property shall be Mortgagor or such other manager as may be first approved in writing by Mortgagee (and Mortgagee hereby approves Turley Martin Company as such manager). The exclusive leasing agent of the Property, if other than the foregoing party, shall be first approved in writing by Mortgagee. The governing management and leasing contracts (or in the absence of any such written contract, a letter so stating and further identifying the name of the person or entity charged with the responsibility for managing and/or leasing the Property) shall be subordinate to this Mortgage and satisfactory to and subject to the written approval of Mortgagee throughout the term of the indebtedness secured hereby. Upon default in either of these requirements after the expiration of applicable cure periods, if any, then the whole of the indebtedness hereby secured shall, at the election of Mortgagee, become immediately due and payable, together with any default premium and late payment charges required by the Note, and Mortgagee shall be entitled to exercise any or all remedies provided for or referenced in this Mortgage. MODIFICATION NOT A WAIVER 29. In the event Mortgagee: (a) releases, as aforesaid, any part of the security described herein or any person or entity liable for any indebtedness secured hereby, or (b) grants an extension of time for the payment of the Note, or (c) takes other or additional security for the payment of the Note, or (d) waives or fails to exercise any rights granted herein, in the Note, or any of the other Loan Documents, any said act or omission shall not release Mortgagor, subsequent purchasers of the Property or any part thereof, or makers, sureties, endorsers or guarantors of the Note, if any, from any obligation or any covenant of this Mortgage, the Note, or any of the other Loan Documents, nor preclude Mortgagee from exercising any right, power or privilege herein granted or intended to be granted in the event of any other default then made, or any subsequent default. TRANSFER OF PROPERTY OR CONTROLLING INTEREST IN MORTGAGOR; ASSUMPTION 30. Except as set forth in Paragraph 36(b) hereof, without the prior written consent of Mortgagee, the sale, transfer, assignment or conveyance of all or any portion of the Property or the transfer, assignment or conveyance of a controlling interest in Mortgagor, whether voluntarily or by operation of law, without the prior written consent of Mortgagee, shall constitute a default under the terms of this Mortgage and entitle Mortgagee, at its sole option, to accelerate all sums due on the Note together with any Prepayment Premiums (to the extent permitted by the laws of the State of Missouri), late payment charges, or any other amounts secured hereby (provided, however, that said prohibitions shall not apply to changes among partners of The Jones Financial Companies, a Limited Partnership). Mortgagee may, however, elect to waive the option to accelerate granted hereunder if, prior to any such sale, transfer, assignment or conveyance of the Property, the following conditions shall be fully satisfied: (a) Mortgagee acknowledges in writing that, in its sole discretion, the creditworthiness of the proposed transferee and the ability and experience of the proposed transferee to operate the Property are satisfactory to Mortgagee, and (b) Mortgagee and the proposed transferee shall enter into an agreement in writing that (i) the interest payable on the indebtedness secured hereby shall be at such rate as Mortgagee shall determine, (ii) the repayment schedule as set forth in the Note shall be modified by Mortgagee, in its sole discretion, to initiate amortization or modify the existing amortization schedule in order to amortize the then remaining unpaid principal balance of the Note secured hereby over a period of time as determined by Mortgagee in its sole discretion without a change in the maturity date of the Note, and (iii) the proposed transferee shall assume all obligations under the Note, this Mortgage and the other Loan Documents and an assumption fee equal to one percent (1%) of the outstanding principal balance of the Note shall be charged by Mortgagee in its sole discretion, (c) Mortgagee shall receive for its review and approval copies of all transfer documents, and (d) Mortgagor or the transferee shall pay all costs and expenses in connection with such transfer and assumption, including, without limitation, all fees and expenses incurred by Mortgagee. Mortgagor and any subsequent owner of the Property or any portion thereof shall do all things necessary to preserve and keep in full force and effect its and their existence, franchises, rights and privileges as a corporation or partnership, as the case may be, under the laws of the state of its formation and its right to own property and transact business in the State of Missouri. It shall be a default hereunder if Mortgagor or any subsequent owner of the Property or any portion thereof shall amend, modify, transfer, assign or terminate the partnership agreement, certificate of partnership or articles of incorporation, as the case may be, of Mortgagor or such subsequent owner and, in the reasonable determination of Mortgagee, such amendment, modification, transfer, assignment or termination shall have a material adverse effect on Mortgagee, the Property or the security value thereof; provided that any amendment, modification, transfer, assignment or termination of Mortgagor's partnership agreement or any other action pursuant to which LHC, Inc. shall (A) cease to be the managing general partner of Mortgagor, or (B) except to the extent permitted herein, cease to own or maintain a partnership interest in Mortgagor equal to or greater than its partnership interest at the time this Mortgage is executed shall be deemed to have a material adverse effect upon Mortgagee and the Property and shall be a default hereunder. Mortgagor or such subsequent owner of the Property shall provide Mortgagee with copies of any proposed amendment to its partnership agreement, certificate of partnership or articles of incorporation, as the case may be, so that Mortgagee may, in its reasonable discretion, determine whether such amendment materially adversely affects Mortgagee, the Property or the security value thereof. In the event the ownership of the Property, or any part thereof, shall become vested in a person or entity other than Mortgagor, whether with or without the prior written consent of Mortgagee, Mortgagee may, without notice to Mortgagor, deal with such successor or successors in interest with reference to the Property, this Mortgage and the Note in the same manner and to the same extent as with Mortgagor without in any way vitiating or discharging Mortgagor's liability hereunder or under the Note. No sale, transfer or conveyance of the Property, no forbearance on the part of Mortgagee and no extension of the time for the payment of the Note hereby secured given by Mortgagee to Mortgagor shall operate to release, discharge, modify, change, or affect the original liability of Mortgagor, either in whole or in part, unless expressly set forth in writing executed by Mortgagee. Notwithstanding anything contained herein to the contrary, Mortgagor hereby waives any right it now has or may hereafter have to require Mortgagee to prove an impairment of its security as a condition to exercise Mortgagee's rights under this Paragraph 30. FURTHER ENCUMBRANCE PROHIBITED; SUBROGATION 31. So long as the Note remains unpaid, Mortgagor shall neither voluntarily nor involuntarily permit the Property or any part thereof to become subject to any secondary lien, mortgage, security interest or encumbrance of any kind whatsoever without the prior written consent of Mortgagee, and the imposition of any such secondary lien, mortgage, security interest or encumbrance without the approval of Mortgagee shall constitute an event of default hereunder and entitle Mortgagee, at its sole option, to declare all sums due in accordance with the terms of the Note to be and become immediately due and payable. In the event that Mortgagee shall hereafter give its written consent to the imposition of any such secondary lien, mortgage, security interest or other encumbrance upon the Property, Mortgagee, at its sole option, shall be entitled to accelerate the maturity of the Note and exercise any and all remedies provided and available to Mortgagee hereunder in the event that the holder of any such secondary lien or encumbrance shall institute foreclosure or other proceedings to enforce the same; it being understood and agreed that a default under any instrument or document evidencing, securing or secured by any such secondary lien or encumbrance shall be and constitute an event of default hereunder. In the event all or any portion of the proceeds of the loan secured hereby are used for the purpose of retiring debt or debts secured by prior liens on the Property, Mortgagee shall be subrogated to the rights and lien priority of the holder of the lien so discharged. Notwithstanding the above, secondary financing of the Property shall be permitted as long as (i) the quotient of the aggregate amount of indebtedness placed on the Property (which indebtedness shall include the indebtedness secured hereby) divided by the current market value of the Property does not exceed 0.90; (ii) the net operating income generated by the Property (defined as annual rental income, minus annual taxes and all annual operating expenses) covers the annual debt service on the loan evidenced by the Note and on such secondary financing at least 1.1 times; and (iii) Mortgagor is not in default under the terms, conditions and provisions of the Note, this Mortgage, the Assignment or any of the other Loan Documents. Mortgagee shall have the right to approve the lender under any proposed secondary financing, and to review and approve any and all documentation with respect to such secondary financing such approval not to be unreasonably withheld. All costs incurred in connection with such secondary financing shall be borne by Mortgagor. CONVEYANCE OF MINERAL RIGHTS PROHIBITED 32. Mortgagor agrees that the making of any oil, gas or mineral lease or the sale or conveyance of any mineral interest or right to explore for minerals under, through or upon the Property would impair the value of the Property securing the Note; and that Mortgagor shall have no right, power or authority to lease the Property, or any part thereof, for oil, gas or other mineral purposes, or to grant, assign or convey any mineral interest of any nature, or the right to explore for oil, gas and other minerals, without first obtaining from Mortgagee express written permission therefor, which permission shall not be valid until recorded among the Public Records of St. Louis County, Missouri. Mortgagor further agrees that if Mortgagor shall make, execute, or enter into any such lease or attempt to grant any such mineral rights without such prior written permission of Mortgagee, then Mortgagee shall have the option, without notice, to declare the same to be a default hereunder and to declare the indebtedness hereby secured immediately due and payable. Whether or not Mortgagee shall consent to such lease or grant of mineral rights, Mortgagee shall receive the entire consideration to be paid for such lease or grant of mineral rights, with the same to be applied to the indebtedness hereby secured notwithstanding the fact that the amount owing thereon may not then be due and payable or the said indebtedness is otherwise adequately secured; provided, however, that the acceptance of such consideration shall in no way impair the lien of this Mortgage on the Property. ESTOPPEL CERTIFICATION BY MORTGAGOR 33. Mortgagor, upon request therefor made either personally or by mail, shall certify in writing to Mortgagee (or any party designated by Mortgagee) in form satisfactory to Mortgagee the amount of principal and interest then outstanding under the terms of the Note and any other sums due and owing under this Mortgage or any of the other Loan Documents and whether any offsets or defenses exist against the Mortgage debt. Such certification shall be made by Mortgagor within ten (10) days if the request is made personally, or within twenty (20) days if the request is made by mail. CROSS-DEFAULT 34. The Note is also secured by the terms, conditions and provisions of an Assignment of Leases, Rents and Profits (hereinafter referred to as the "Assignment") recorded among the Public Records of St. Louis County, Missouri and, additionally, may be secured by contracts or agreements of guaranty or other security instruments. The terms, conditions and provisions of each security instrument shall be considered a part hereof as fully as if set forth herein verbatim. Any default under this Mortgage or the Note secured hereby shall constitute an event of default under the Assignment and any of the other Loan Documents, and any default under the Assignment or other Loan Documents shall likewise constitute a default hereunder and under the Note. Notwithstanding the foregoing, the enforcement or attempted enforcement of this Mortgage or any of the other Loan Documents now or hereafter held by Mortgagee shall not prejudice or in any manner affect the right of Mortgagee to enforce any other Loan Document; it being understood and agreed that Mortgagee shall be entitled to enforce this Mortgage and any of the other Loan Documents now or hereafter held by it in such order and manner as Mortgagee, in its sole discretion, shall determine. EXAMINATION OF MORTGAGOR'S RECORDS 35. Mortgagor will maintain complete and accurate books and records showing in detail the income and expenses of the Property, and will permit Mortgagee and its representatives to examine said books and records and all supporting vouchers and data during normal business hours and from time to time upon request by Mortgagee, in such place as such books and records are customarily kept, and will furnish to Mortgagee, within one hundred twenty (120) days after the close of each fiscal year of Mortgagor, a balance sheet and profit and loss statement for Mortgagor and the Property, which shall also include a rent roll, certified by Mortgagor to be true and correct and showing in detail all income derived from and expenses incurred in connection with the ownership of the Property. In the event Mortgagor fails to provide such statements to Mortgagee within the time prescribed above, Mortgagor shall pay Mortgagee the sum of Two Hundred and No/100 Dollars ($200.00) for each successive month for which statements are delinquent. In the event of default hereunder, Mortgagee shall have the right to require that said financial statements be audited and certified by a certified public accountant acceptable to Mortgagee, at the sole cost and expense of Mortgagor. ALTERATION, REMOVAL AND CHANGE IN USE OF PROPERTY PROHIBITED 36. Mortgagor covenants and agrees to permit or suffer none of the following without the prior written consent of Mortgagee: (a) Any structural alteration of, or addition to, the Improvements now or hereafter situated upon the Real Property or the addition of any new buildings or other structure(s) thereto, other than erection or removal of non-load bearing interior walls (provided, however, this provision shall not apply to any repair, remodeling or renovation work, structural or otherwise); or (b) The removal, transfer, sale or lease of the Property, except that the renewal, replacement or substitution of fixtures, equipment, machinery, apparatus and articles of personal property (replacement or substituted items must be of like or better quality than the removed items in their original condition) encumbered hereby may be made in the normal course of business; or (c) The use of any of the Improvements now or hereafter situated on the Real Property for any purpose other than as an office building and related facilities. FUTURE ADVANCES SECURED 37. This Mortgage shall secure not only existing indebtedness, but also future advances, whether such advances are obligatory or to be made at the option of Mortgagee. Upon request of Mortgagor, and at Mortgagee's option prior to release of this Mortgage, Mortgagee may make future advances to Mortgagor. All future advances with interest thereon shall be secured by this Mortgage to the same extent as if such future advances were made on the date of the execution of this Mortgage unless the parties shall agree otherwise in writing Any advances or disbursements made for the benefit or protection of or the payment of taxes, assessments, levies or insurance upon the Property, with interest on such disbursements as provided herein, shall be added to the principal balance of the Note and collected as a part thereof. To the extent that this Mortgage may secure more than one mortgage note, a default in the payment of any such mortgage note shall constitute a default in the payment of all such mortgage notes. The total amount outstanding at any one time which is secured by this Mortgage, excluding any interest and any amounts advanced by Mortgagee for the protection of the security interest herein granted or amounts advanced or obligations incurred for the completion of a contemplated improvement under a construction loan agreement, shall not exceed Twenty-Three Million Dollars ($23,000,000.00). This Mortgage shall be governed by all provisions of Section 443.055 of the Revised Statutes of Missouri. EFFECT OF SECURITY AGREEMENT 38. Mortgagor does hereby grant and this Mortgage is and shall be deemed to create, grant, give and convey a mortgage of, a lien and encumbrance upon, and a present security interest in both real and personal property, including all improvements, goods, chattels, furniture, furnishings, fixtures, equipment, apparatus, appliances and other items of tangible or intangible personal property, hereinabove particularly or generally described and conveyed, whether now or hereafter affixed to, located upon, necessary for or used or useful, either directly or indirectly, in connection with the operation of the Property as an office building, and this Mortgage shall also serve as a "security agreement" within the meaning of that term as used in the Uniform Commercial Code as adopted and in force from time to time in the State of Missouri, and shall be operative and effective as a security agreement in addition to, and not in substitution for, any other security agreement executed by Mortgagor in connection with the extension of credit transaction secured hereby (Notwithstanding anything herein to the contrary, nothing herein shall be deemed to grant or create a security interest in any furnishings, furniture or computer equipment owned by any tenant [including, without limitation, Jones] under the Master Lease affecting the Property and used by such tenant with respect to the conduct of its business on the Property). Mortgagor agrees to and shall, upon the request of Mortgagee, execute and deliver to Mortgagee, in form and content satisfactory to Mortgagee, such financing statements, descriptions of property and such further assurances as Mortgagee, in its sole discretion, may from time to time consider necessary to create, perfect, continue and preserve the lien and encumbrances hereof and the security interest granted herein upon and in such real and personal property and fixtures described herein, including all buildings, improvements, goods, chattels, furniture, furnishings, fixtures, equipment, apparatus, appliances, and other items of tangible and intangible personal property herein specifically or generally described and intended to be the subject of the security interest, lien and encumbrance hereby created, granted and conveyed. Without the prior written consent of Mortgagee, Mortgagor shall not create or suffer to be created, pursuant to the Uniform Commercial Code, any other security interest in such real and personal property and fixtures described herein. Upon the occurrence of a default hereunder and the expiration of the applicable cure periods, if any, or Mortgagor's breach of any other covenants or agreements between the parties entered into in conjunction herewith, Mortgagee shall have the remedies of a secured party under the Uniform Commercial Code and, at Mortgagee's option, the remedies provided for in this Mortgage. Mortgagee, at the expense of Mortgagor, may or shall cause such statements, descriptions and assurances, as herein provided in this Paragraph 38, and this Mortgage to be recorded and re-recorded, filed and refiled, at such times and in such places as may be required or permitted by law to so create, perfect and preserve the lien and encumbrance hereof upon all of the Property. Upon the occurrence of a default hereunder Mortgagee shall, at its option and without notice or demand, be entitled to enter upon the Real Property to take immediate possession of the Fixtures and Personal Property. Upon request, Mortgagor shall assemble and make the Fixtures and Personal Property available to Mortgagee at a place designated by Mortgagee which is reasonably convenient to both parties. Mortgagee may sell all or any portion of the Fixtures and Personal Property at public or private sale in accordance with the Uniform Commercial Code as adopted in the State of Missouri or in accordance with the foreclosure advertisement and sale provisions under this Mortgage. Mortgagor agrees that a commercially reasonable manner of disposition of the Fixtures and Personal Property upon the occurrence of a default shall include, without limitation and at the option of Mortgagee, the sale of the Fixtures and Personal Property, in whole or in part, concurrently with a foreclosure sale of the Real Property in accordance with the provisions of this Mortgage. In the event the Mortgagee shall dispose of any or all of the Fixtures and Personal Property after the occurrence of a default, the proceeds of disposition shall be applied in the following order: (a) to the expenses of retaking, holding, preparing for sale, selling, and the like; (b) to the attorneys' fees and legal expenses incurred by Mortgagee; (c) to the satisfaction of the indebtedness secured hereby; and (d) the balance, if any to subordinate lien holders and Mortgagor as their interests may appear. Mortgagor hereby waives any right of redeeming the Fixtures and Personal Property. TERMS OF CONTRACT SURVIVE CLOSING 39. The terms and provisions of the Application/Contract for Mortgage Loan dated November 18, 1992, and any subsequent amendments thereto (hereinafter referred to as the "Contract"), executed by and between Mortgagor as Applicant and Mortgagee as Nationwide are incorporated herein by reference. All terms and conditions of the Contract not expressly set forth in this Mortgage, the Note, the Assignment and any other Loan Documents additionally securing the Note shall survive the closing hereof and remain in full force and effect. In the event any conflict exists between the terms, conditions and provisions of the Contract and the Loan Documents, the terms, conditions and provisions of the Loan Documents shall prevail. SUCCESSORS AND ASSIGNS; TERMINOLOGY 40. The provisions hereof shall be binding upon Mortgagor and the heirs, personal representatives, successors and assigns of Mortgagor, and shall inure to the benefit of Mortgagee and its successors and assigns. Where more than one Mortgagor is named herein, the obligations and liabilities of said Mortgagor shall be joint and several. Wherever used in this Mortgage, unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, the word "Mortgagor" shall mean Mortgagor and/or any subsequent owner or owners of the Property, the word "Mortgagee" shall mean Mortgagee or any subsequent holder or holders of this Mortgage, the word "Note" shall mean Note(s) secured by this Mortgage, and the word "person" shall mean an individual, trustee, trust, corporation, partnership or unincorporated association. As used herein, the phrase "Reasonable Attorneys' Fees" shall mean fees charged by attorneys selected by Mortgagee based upon such attorneys' then prevailing hourly rates as opposed to any statutory presumption specified by any statute then in effect in the State of Missouri. NOTICES 41. All notices hereunder shall be deemed to have been duly given if mailed by United States registered or certified mail, with return receipt requested, postage prepaid, to the parties at the following addresses (or at such other addresses as shall be given in writing by any party to the others), and shall be deemed complete three (3) days after any such mailing: TO MORTGAGOR: EDJ Leasing Co., L.P. 201 Progress Parkway Maryland Heights, Missouri 63043 Attention: Edward Soule TO MORTGAGEE: NATIONWIDE LIFE INSURANCE COMPANY One Nationwide Plaza Columbus, Ohio 43216 Attention: Real Estate Investments TO TRUSTEE: Robert C. Graham III Armstrong, Teasdale, Schlafly & Davis 1 Metropolitan Square, Suite 2600 St. Louis, Missouri 63102-2740 GOVERNING LAW 42. This Mortgage is to be governed by and construed in accordance with the laws of the State of Missouri and, if controlling, by the laws of the United States and shall be binding upon Mortgagor and shall inure to the benefit of Mortgagee. RIGHTS OF MORTGAGEE CUMULATIVE 43. The rights of Mortgagee arising under the clauses and covenants contained in this Mortgage shall be separate, distinct and cumulative and none of them shall be in exclusion of the others; and no act of Mortgagee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provisions, anything herein or otherwise to the contrary notwithstanding. MODIFICATIONS 44. This Mortgage cannot be changed, altered, amended or modified except by an agreement in writing and in recordable form, executed by both Mortgagor and Mortgagee. EXCULPATION 45. The liability of Mortgagor and General Partner with respect to the payment of principal and interest under the Note shall be "non- recourse" and, accordingly, Mortgagee's source of satisfaction of said indebtedness and Mortgagor's other obligations hereunder and under the other Loan Documents shall be limited to the Property and Mortgagee's receipt of the rents, issues and profits from the Property and Mortgagee shall not seek to procure payment out of any other assets of Mortgagor or any person or entity comprising Mortgagor, or to seek judgment for any sums which are or may be payable under the Note, this Mortgage or any of the other Loan Documents, as well as any claim or judgment (except as hereafter provided) for any deficiency remaining after foreclosure of this Mortgage. Notwithstanding the above, nothing herein contained shall be deemed to be a release or impairment of the indebtedness evidenced by the Note or the security therefor intended by this Mortgage and the other Loan Documents, or be deemed to preclude Mortgagee from exercising its rights to foreclose this Mortgage or to enforce any of its other rights or remedies under the Loan Documents. Notwithstanding the foregoing, it is expressly understood and agreed that the aforesaid limitation on liability shall in no way affect or apply to Mortgagor's and General Partner's continued personal liability for all sums due to: (1) fraud or misrepresentation made in or in connection with the Note or any of the other Loan Documents; (2) failure to pay taxes, or assessments prior to delinquency, or to pay charges for labor, materials or other charges which can create liens on any portion of the Property; (3) the misapplication of (i) proceeds of insurance covering any portion of the Property; or (ii) proceeds of the sale or condemnation of any portion of the Property; or (iii) rentals received by or on behalf of Mortgagor subsequent to the date on which Mortgagee makes written demand therefor pursuant to any Loan Document; (4) causing or permitting waste to occur in, on or about the Property and failure to maintain the Property, excepting ordinary wear and tear; (5) the return to Mortgagee of all unearned advance rentals and security deposits paid by tenants of the Property and not refunded to or forfeited by such tenants; (6) loss by fire or casualty to the extent not compensated by insurance proceeds collected by Mortgagee; (7) the return of, or reimbursement for, all Fixtures and Personal Property owned by Mortgagor taken from the Property by or on behalf of Mortgagor, out of the ordinary course of business, and not replaced by items of equal or greater value than the original value of the Fixtures and Personal Property so removed; (8) (i) any and all costs incurred in order to cause the Property to comply with the Accessibility Laws, and (ii) any indemnity or other agreement to hold Mortgagee and Trustee harmless from and against any and all losses, liabilities, damages, injuries, costs or expenses of any kind arising under Paragraph 3 of this Mortgage regarding accessibility for the disabled or handicapped, or under the separate Indemnity Agreement from Mortgagor and General Partner to Mortgagee; (9) all court costs and Reasonable Attorneys' Fees actually incurred which are provided for in the Note or in any other Loan Document; (10) (i) the removal of any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Federal, State, County, Regional or Local Authority which may or could pose a hazard to the health and safety of the occupants of the Property, regardless of the source of origination; (ii) the restoration of the Property to comply with all governmental regulations pertaining to hazardous waste found in, on or under the Property, regardless of the source of origination; and (iii) any indemnity or other agreement to hold the Mortgagee and Trustee harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses of any and every kind arising under paragraph 3 of this Mortgage and/or the Indemnity Agreement of even date herewith executed by Mortgagor and General Partner. Mortgagor shall not be liable hereunder if the Property becomes contaminated subsequent to Mortgagee's acquisition of the Property by foreclosure or acceptance of a deed in lieu thereof or subsequent to any transfer of ownership which was approved or authorized by Mortgagee pursuant to this Mortgage, provided that such transferee assumes all obligations pertaining to Hazardous Materials pursuant to the Loan Documents. Liability under this subparagraph shall extend beyond repayment of the Note and compliance with the terms of this Mortgage unless at such time Mortgagor provides Mortgagee with an environmental assessment report acceptable to Mortgagee showing the Property to be free of Hazardous Materials and not in violation of Hazardous Waste Laws. The burden of proof under this subparagraph with regard to establishing the date upon which such chemical, material or substance was placed or appeared in, on or under the Property shall be upon Mortgagor. The obligations of Mortgagor in subparagraphs (1) through (10) above, except as specifically provided in subparagraph (10), shall survive the repayment of the Note and satisfaction of this Mortgage. TRUSTEE 46. Mortgagor agrees that the Trustee and any successor or substitute trustee may be an officer, agent, attorney, or employee of the Mortgagee and any objections to such fact which might be made by the Grantor, its heirs, successors, or assigns, are hereby waived. SUBSTITUTE TRUSTEE 47. In case of the death, inability, refusal to act, resignation, or absence of the Trustee from the State of Missouri, or in case the holder of the Note shall desire for any reason to remove the Trustee or any substitute trustee hereunder and to appoint a new trustee in his place and stead, the holder of the Note is hereby granted full power to appoint in writing a substitute trustee for said Trustee, and the substitute trustee shall, when appointed, become successor to the title to the Property and the same shall become vested in him in trust for the purpose and objects of this Mortgage with all the powers, duties, and obligations herein conferred on the Trustee. In the event any foreclosure advertisement is running or has run at the time of such appointment of a substitute Trustee, the substitute Trustee may consummate the advertised sale without the necessity of republishing such advertisement. The making of oath or giving of bond by Trustee or any successor Trustee is expressly waived. CAPTIONS 48. The captions set forth at the beginning of the various paragraphs of this Mortgage are for convenience only and shall not be used to interpret or construe the provisions of this Mortgage. ORAL COMMITMENTS 49. The following is added pursuant to Section 432.045 R.S.Mo.; as used below "borrower(s)" shall mean Mortgagor and "creditor" shall mean Mortgagee: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. IN WITNESS WHEREOF, the undersigned have executed this Mortgage the day and year first above written. EDJ LEASING CO., L.P., a Missouri By: LHC, Inc. By:________________________________ Name:______________________________ Title:_____________________________ STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this ____ day of _________________________, 19__, before me appeared ___________________________________, to me personally known, who, by me being duly sworn did say that he is the _________________ of LHC, Inc., a corporation and the said seal affixed to the foregoing instrument is the corporate seal of said corporation, and the said corporation is the general partner of EDJ Leasing Co., L.P., a limited partnership and said _________________________ acknowledged that he executed and sealed the same in behalf of said corporation and said limited partnership by authority of the Board of Directors of the corporation and said _________________________ acknowledged said instrument to be the free act and deed of said corporation and said limited partnership. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal at my office in the county or city and state aforesaid, the day and year last above written. ___________________________________ Notary Public My Term Expires: __________________ MORTGAGE NOTE $11,700,000.00 St. Louis, Missouri March 9, 1993 FOR VALUE RECEIVED, THE UNDERSIGNED EDJ LEASING CO., L.P., a Missouri limited partnership (the "Maker") promises to pay to the order of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its successors and assigns (the "Holder") the principal sum of Eleven Million Seven Hundred Thousand Dollars ($11,700,000.00), together with interest on the principal balance of this Mortgage Note (the "Note"), from time to time remaining unpaid, from the date of disbursement by Holder hereof at the applicable interest rate hereinafter set forth, together with all other sums due hereunder or under the terms of the Mortgage (as hereinafter defined) in lawful money of the United States of America which shall be legal tender in payment of all debts at the time of such payment. Both principal and interest and all other sums due hereunder shall be payable at the office of Holder at One Nationwide Plaza, Columbus, Ohio 43216, Attention: Real Estate Investment Department, or at such other place either within or without the State of Ohio, as Holder hereof may from time to time designate. Said principal and interest shall be paid over a term, at the times, and in the manner set forth below, to wit: Payment Provision: (i) Interest accrued on the unpaid principal balance of this Note from the date of disbursement hereof at the rate of eight and one-half percent (8.5%) per annum shall be due and payable (a) on the fifth (5th) day of the calendar month of the date of disbursement, if such date of disbursement is before the fifth (5th) day of the month, or (b) on the fifth (5th) day of the first calendar month following the date of disbursement, if such date of disbursement is after the fifth (5th) day of the month. In the event that disbursement occurs on the fifth (5th) day of the month, then there shall be no payment of interim interest and the first payment due from Maker hereunder shall be in accordance with subparagraph (ii) below. (ii) Thereafter, installments of principal and interest on the unpaid principal balance of this Note at the rate of eight and one-half percent (8.5%) per annum, shall be due and payable in one hundred and seventy-nine (179) consecutive monthly installments commencing on the fifth day of the second calendar month following the date of disbursement hereof and continuing on the fifth day of each calendar month thereafter, with each such installment to be in the sum of One Hundred and Fifteen Thousand Two Hundred and Fourteen and 53/100 Dollars ($115,214.53). Maturity: The unpaid principal balance of this Note and all accrued unpaid interest thereon, if not sooner paid, shall be due and payable in full on April 5, 2008 (the "Maturity Date"). Application of Payments: All payments shall be applied first to the payment of accrued unpaid interest on this Note and the balance, if any, shall be applied to the reduction of the outstanding principal balance of this Note. Interest due hereunder shall be calculated on the basis of a 360-day year composed of twelve 30-day months; provided however in no event shall such calculation cause the interest payable under the terms of this Note to exceed the maximum rate of interest permitted under applicable law. Late Payment Charge: The Holder of this Note may collect a late payment charge, prior to the acceleration of this Note, in an amount equal to five percent (5%) of the aggregate monthly installment which is not paid on the due date, for the purpose of covering the extra expenses involved in handling delinquent installments. Any full payment of principal and/or interest which is correctly addressed, bears adequate first class postage and is postmarked by the United States Postal Service on or before the due date shall not be considered delinquent and a late payment charge shall not be assessed. Prepayment: (A) Except as hereinafter provided, Maker shall not have the right to prepay all or any part of the obligation evidenced by this Note at any time. Maker shall have the right to prepay, in full but not in part, the obligation evidenced by this Note upon giving (i) not less than thirty (30) days' prior written notice to Holder of Maker's intention to so prepay this Note, and (ii) payment to Holder of the Prepayment Premium (as hereinafter defined), if any, then due to Holder as hereinafter provided. As used herein, the term "Prepayment Premium" shall mean the greater of (i) one percent (1%) of the outstanding principal balance of this Note at the time of prepayment or (ii) an amount equal to the sum of (a) the present value of the scheduled monthly payments on this Note from the date of prepayment to the Maturity Date and (b) the present value of the amount of principal and interest of this Note due on the Maturity Date (assuming all scheduled monthly payments due prior to the Maturity Date were made when due), minus (c) the outstanding principal balance of this Note as of the date of prepayment. The present values described in (a) and (b) shall be computed on a monthly basis as of the date of prepayment discounted at the yield-to-maturity rate of the U.S. Treasury Note or Bond closest in maturity to the Maturity Date of this Note as reported in the Wall_Street Journal (or, if the Wall Street Journal is no longer published, as reported in such other daily financial publication of national circulation which shall be designated by Holder) on the fifth (5th) business day preceding the date of prepayment, expressed as a decimal equivalent. Maker shall be obligated to prepay this Note on the date set forth in the notice to Holder required hereinabove, after such notice has been delivered to Holder. Notwithstanding the foregoing or any other provision herein to the contrary, if Holder elects to apply insurance proceeds, condemnation awards, or any escrowed amounts, if applicable, to the reduction of the principal balance of this Note in the manner provided in the Mortgage (as hereinafter defined), no Prepayment Premium shall be due or payable as a result of such application and the monthly installments due and payable hereunder shall be reduced accordingly. (B) In the event the Maturity Date of the indebtedness evidenced by this Note is accelerated by Holder hereof at any time due to a default, continuing beyond the expiration of any applicable cure periods, by Maker in the terms, covenants or conditions contained in this Note, the Mortgage or any of the other Loan Documents (as hereinafter defined), then a tender of payment in an amount necessary to satisfy the entire outstanding principal balance and all accrued unpaid interest on this Note made by Maker, or by anyone on behalf of Maker, at any time prior to, at, or as a result of, a foreclosure sale or sale pursuant to power of sale, shall constitute a voluntary prepayment hereunder prior to the contracted Maturity Date of this Note thus requiring the payment to Holder of a Prepayment Premium equal to the applicable Prepayment Premium as set forth in paragraph (A) above; provided, however, that in the event such Prepayment Premium is construed to be interest under the laws of the State of Missouri in any circumstance, such payment shall not be required to the extent that the amount thereof, together with other interest payable hereunder, exceeds the maximum rate of interest that may be lawfully charged under applicable law. (C) Notwithstanding anything contained herein to the contrary, during the ninety (90) day period immediately preceding the Maturity Date, the entire outstanding principal balance and all accrued unpaid interest on this Note may be prepaid in whole, but not in part, without incurring a Prepayment Premium. Additional Conditions: This Note is secured by a Deed of Trust and Security Agreement containing provisions for future advances and future obligations governed by Section 443.055 R.S.Mo. (as amended) and which is a lien on the property therein described executed of even date herewith (hereinafter referred to as the "Mortgage") and by an Assignment of Leases, Rents and Profits (hereinafter referred to as the "Assignment") of even date herewith each encumbering certain real property located in St. Louis County, Missouri and other property as more particularly described in the Mortgage (hereinafter collectively referred to as the "Property"). The Mortgage and the Assignment contain terms and provisions which provide grounds for acceleration of the indebtedness evidenced by this Note together with additional remedies in the event of default hereunder or thereunder. Failure on the part of Holder hereof to exercise any right granted herein or in the aforesaid Mortgage or the Assignment shall not constitute a waiver of such right or preclude the subsequent exercise and enforcement thereof. This Note, the Mortgage, the Assignment and all other documents and instruments executed as further evidence of, as additional security for, or executed in connection with the indebtedness evidenced by this Note are hereinafter collectively referred to as the "Loan Documents". Except as herein otherwise provided, all parties to this Note, including endorsers, sureties and guarantors, hereby jointly and severally waive presentment for payment, demand, protest, notice of protest, notice of demand and of nonpayment or dishonor and of protest, and any and all other notices and demands whatsoever, and agree to remain bound hereby until the principal and interest of this Note are paid in full, notwithstanding any extensions of time for payment which may be granted by Holder, even though the period of extension be indefinite, and notwithstanding any inaction by, or failure to assert any legal rights available to Holder of this Note. If the obligations evidenced by this Note, or any part thereof, are placed in the hands of an attorney for collection, whether by suit or otherwise, at any time, or from time to time, Maker shall be liable to Holder, in each instance, for all costs and expenses incurred in connection therewith, including, without limitation, Reasonable Attorneys' Fees (as hereinafter defined). Default: If default shall be made in the payment of principal and/or interest as stipulated above or in the payment of any other sums due hereunder or under any of the other Loan Documents, or should any default be made in the performance of any of the terms, covenants and conditions contained herein or in any of the other Loan Documents, then in any or all of such events, at the option of Holder, the entire outstanding principal balance of this Note, together with all accrued unpaid interest thereon and all other sums advanced by Holder on behalf of Maker shall become and be immediately due and payable then or thereafter as Holder may elect, regardless of the Maturity Date hereof. All such amounts shall bear interest after maturity, by acceleration or otherwise, at the lesser of either (i) the highest rate of interest then allowed by the laws of the State of Missouri or, if controlling, the laws of the United States, or (ii) the then applicable interest rate of this Note plus five hundred (500) basis points. During the existence of any default, Holder may apply any sums received, including but not limited to, insurance proceeds or condemnation awards, to any amount then due and owing hereunder or under the terms of any of the other Loan Documents as Holder may determine. Neither the right nor the exercise of the right herein granted unto Holder to apply such proceeds as aforesaid shall preclude Holder from exercising its option to cause the entire indebtedness evidenced by this Note to become immediately due and payable by reason of Maker's default under the terms of this Note or any of the other Loan Documents. Notwithstanding any provisions herein to the contrary, Holder's right, power and privilege to accelerate the maturity of the indebtedness evidenced hereby shall be conditioned upon, with respect to any Non-Monetary Default (as hereinafter defined), Holder giving Maker written notice of such Non-Monetary Default and a thirty (30) day period after the date of such notice within which to cure such Non-Monetary Default, unless such Non-Monetary Default cannot reasonably be cured within said thirty (30) day period, in which event Maker shall have an extended period of time to complete cure, provided that action to cure such Non-Monetary Default is commenced within said thirty (30) day period and Maker is not substantially diminishing or impairing the value of the Property, and is diligently pursuing a cure to completion. Any notice required hereunder shall be given as provided in the Mortgage. Holder shall have no obligation to give Maker notice of, or any period to cure any Monetary Default (as hereinafter defined) or any Incurable Default (as hereinafter defined) prior to exercising its right, power and privilege to accelerate the maturity of the indebtedness evidenced hereby and to declare the same to be immediately due and payable and exercise all other rights and remedies herein granted or otherwise available to Holder at law or in equity. As used herein, the term "Monetary Default" shall mean any default which can be cured by the payment of money including, but not limited to, the payment of principal and interest due under this Note and the payment of taxes, assessments and insurance premiums when due as provided in the Mortgage. As used herein, the term "Non-Monetary Default" shall mean any default which is not a Monetary Default or an Incurable Default. As used herein, the term "Incurable Default" shall mean (i) any voluntary or involuntary sale, assignment, mortgaging or transfer in violation of the covenants of the Mortgage; or (ii) if Maker, or any person or entity comprising Maker, should make an assignment for the benefit of creditors, become insolvent, or file a petition in bankruptcy (including but not limited to, a petition seeking a rearrangement or reorganization). Savings Clause; Severability: Notwithstanding any provisions herein or in the Mortgage to the contrary, the total liability for payments in the nature of interest including but not limited to Prepayment Premiums, default interest and late fees shall not exceed the limits imposed by the laws of the State of Missouri or the United States of America relating to maximum allowable charges of interest. Holder shall not be entitled to receive, collect or apply, as interest on the indebtedness evidenced hereby, any amount in excess of the maximum lawful rate of interest permitted to be charged by applicable law or regulations, as amended or enacted from time to time. In the event Holder ever receives, collects or applies, as interest, any such excess, such amount which would be excessive interest shall be applied to reduce the unpaid principal balance of the indebtedness evidenced by this Note. If the unpaid principal balance of such indebtedness is paid in full, any remaining excess shall be forthwith paid to Maker. If any clauses or provisions herein contained operate or would prospectively operate to invalidate this Note, then such clauses or provisions only shall be held for naught, as though not herein contained and the remainder of this Note shall remain operative and in full force and effect. Exculpation: The liability of Maker and the general partner of Maker, LHC, Inc., and any other current or future general partner of Maker ("General Partner") with respect to the payment of principal and interest hereunder shall be "non-recourse" and, accordingly, Holder's source of satisfaction of said indebtedness and Maker's other obligations hereunder and under the other Loan Documents shall be limited to the Property and Holder's receipt of the rents, issues, and profits from the Property and Holder shall not seek to procure payment out of any other assets of Maker, or any person or entity comprising Maker, or to seek judgment for any sums which are or may be payable under this Note or under any of the other Loan Documents, as well as any claim or judgment (except as hereafter provided) for any deficiency remaining after foreclosure of the Mortgage. Notwithstanding the above, nothing herein contained shall be deemed to be a release or impairment of the indebtedness evidenced by this Note or the security therefor intended by the other Loan Documents or be deemed to preclude Holder from exercising its rights to foreclose the Mortgage or to enforce any of its other rights or remedies under the Loan Documents. Notwithstanding the foregoing, it is expressly understood and agreed that the aforesaid limitation on liability shall in no way affect or apply to Maker's and General Partner's continued personal liability for all sums due to: (1) fraud or misrepresentation made in or in connection with this Note or any of the other Loan Documents; (2) failure to pay taxes or assessments prior to delinquency, or to pay charges for labor, materials or other charges which can create liens on any portion of the Property; (3) the misapplication of (i) proceeds of insurance covering any portion of the Property; or (ii) proceeds of the sale or condemnation of any portion of the Property; or (iii) rentals received by or on behalf of Maker subsequent to the date on which Holder makes written demand therefor pursuant to any Loan Document; (4) causing or permitting waste to occur in, on or about the Property and failure to maintain the Property, excepting ordinary wear and tear; (5) the return to Holder of all unearned advance rentals and security deposits paid by tenants of the Property and not refunded to or forfeited by such tenants; (6) loss by fire or casualty to the extent not compensated by insurance proceeds collected by Holder; (7) the return of, or reimbursement for, all Fixtures and Personal Property (as defined in the Mortgage) owned by Maker taken from the Property by or on behalf of Maker, out of the ordinary course of business, and not replaced by items of equal or greater value than the original value of the Fixtures and Personal Property so removed; (8) (i) any and all costs incurred in order to cause the Property to comply with the Accessibility Laws (as defined in the Mortgage) and (ii) any indemnity or other agreement to hold Holder harmless from and against any and all losses, liabilities, damages, injuries, costs or expenses of any kind arising under Paragraph 3 of the Mortgage regarding accessibility for the disabled or handicapped, or under the separate Indemnity Agreement from Maker and General Partner to Holder; (9) all court costs and Reasonable Attorneys' Fees (as hereinafter defined) actually incurred which are provided for in this Note or in any other Loan Documents; (10) (i) the removal of any chemical, material or substance, exposure to which is prohibited, limited, or regulated by any Federal, State, County, Regional or Local Authority which may or could pose a hazard to the health and safety of the occupants of the Property, regardless of the source of origination; (ii) the restoration of the Property to comply with all governmental regulations pertaining to hazardous waste found in, on or under the Property, regardless of the source of origination; and (iii) any indemnity or other agreement to hold the Holder harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses of any and every kind arising under paragraph 3 of the Mortgage and/or the Indemnity Agreement of even date herewith executed by Maker and General Partner. Maker shall not be liable hereunder if the Property becomes contaminated subsequent to Holder's acquisition of the Property by foreclosure or acceptance of a deed in lieu thereof or subsequent to any transfer of ownership which was approved or authorized by Holder pursuant to the Mortgage, provided that such transferee assumes all obligations pertaining to Hazardous Materials (as defined in the Mortgage) pursuant to the Loan Documents. Liability under this subparagraph shall extend beyond repayment of this Note and compliance with the terms of the Mortgage unless at such time Maker provides Holder with an environmental assessment report acceptable to Holder showing the Property to be free of Hazardous Materials and not in violation of Hazardous Waste Laws (as defined in the Mortgage). The burden of proof under this subparagraph with regard to establishing the date upon which such chemical, material or substance was placed or appeared in, on or under the Property shall be upon Maker. The obligations of Maker in subparagraphs (1) through (10), except as specifically provided in this subparagraph (10), shall survive the repayment and satisfaction of this Note. As used herein, the phrase "Reasonable Attorneys' Fees" shall mean fees charged by attorneys selected by Holder based upon such attorneys' then prevailing hourly rates as opposed to any statutory presumption specified by any statute then in effect in the State of Missouri. THE PROVISIONS of this Note shall be governed by and construed in accordance with the laws of the State of Missouri and if controlling, by the laws of the United States and shall be binding upon Maker, its heirs, personal representatives, successors and assigns and shall inure to the benefit of Holder. IN WITNESS WHEREOF, Maker has executed this Note under seal as of the day and year first above written. EDJ LEASING CO., L.P., a Missouri By: LHC, Inc. By:________________________________ Name:______________________________ Title:_____________________________ EX-6 7 AMMENDMENT TO DEED & 14.9 NOTE AMENDMENT TO DEED OF TRUST THIS AMENDMENT is made and executed this 9th day of March, 1994, by and among EDJ LEASING CO., L.P., a Missouri limited partnership having its principal address at 201 Progress Parkway, Maryland Heights, Missouri 63043, Attention: Edward Soule (hereinafter referred to as "Mortgagor"), and Robert C. Graham III of the County of St. Louis, Missouri hereinafter referred to as "Trustee"), and NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its successors and assigns, having its principal office at One Nationwide Plaza, Columbus, Ohio 43216, Attention: Real Estate Investments, or at such other place either within or without the State of Ohio, as it may from time to time designate (hereinafter referred to as "Mortgagee"); WITNESSETH: WHEREAS, Mortgagee has extended certain credit accommodations to Mortgagor , which credit accommodations are secured by a deed of trust executed by Mortgagor dated March 9, 1993, and recorded in Book 9634 beginning at Page 2171 in the Office of the Recorder of Deeds for St. Louis County, Missouri (the "Mortgage") which is a lien upon the real estate described on Exhibit A attached hereto and made a part hereof (the "Real Estate"); and WHEREAS, Mortgagee has agreed to extend additional credit accomodations to the Mortgagor; WHEREAS, the Mortgagor and the Mortgagee desire to make certain modifications to the Mortgage in connection with the extension of additional credit accomodations; NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Mortgagor and the mutual terms, covenants and conditions contained herein, Mortgagor hereby agrees to and with Mortgagee and its successors and assigns as follows: 1. Mortgagor is the current owner of the Real Estate, and there has not been any change in the title to the Real Estate since the date of the Mortgage. 2. The Mortgage is hereby amended in the following respects: a. The last paragraph of Paragraph 3 of the Mortgage is hereby deleted and the following inserted in lieu thereof: Liability under this Paragraph shall extend beyond repayment of the Note and compliance with the terms of this Mortgage; provided, however, Mortgagor and General Partner shall have no liability under this Paragraph 3 regarding: (1) Hazardous Materials if (a) the Property becomes contaminated subsequent to Mortgagee's acquisition of the Property by foreclosure, acceptance by Mortgagee of a deed in lieu thereof, or subsequent to any transfer of ownership of the Property which was approved or authorized by Mortgagee in writing, provided that such transferee assumes all obligations of Mortgagor with respect to Hazardous Materials or (b) at such time Mortgagor provides Mortgagee with an environmental assessment report acceptable to Mortgagee, in its sole discretion, showing the Property to be free of Hazardous Materials and not in violation of any Hazardous Waste Laws, or (2) Accessibility Laws that first become effective, or for any violation of any Accessibility Laws resulting from alterations or improvements to the Property that are performed subsequent to Mortgagee's acquisition of the Property by foreclosure or acceptance of a deed in lieu thereof or subsequent to any transfer of ownership which was approved or authorized by Mortgagee pursuant to this Mortgage, provided that such transferee assumes all obligations pertaining to Accessibility Laws pursuant to the Loan Documents. The burden of proof under this paragraph with regard to establishing the date upon which any Hazardous Material was placed or appeared in, on or under the Property shall be upon Mortgagor. b. Subparagraph (c) of Paragraph 8 of the Mortgage is hereby deleted and the following inserted in lieu thereof: (c) The plans and specifications for the restoration of the Property are approved in writing by Mortgagee, such approval not to be unreasonably withheld; c. The second paragraph of Paragraph 31 of the Mortgage is hereby deleted and the following inserted in lieu thereof: Notwithstanding the above, secondary financing of the Property shall be permitted as long as (i) the quotient of the aggregate amount of indebtedness placed on the Property (which indebtedness shall include the indebtedness secured hereby) divided by the current market value of the Property does not exceed 0.90; (ii) the net operating income generated by the Property (defined as annual rental income, minus annual taxes and all annual operating expenses) covers the annual debt service on the loan evidenced by the Note and on such secondary financing at least 1.2 times; (iii) such secondary financing must provide for a fixed rate of interest to be charged on the loan; and (iv) Mortgagor is not in default under the terms, conditions and provisions of the Note, this Mortgage, the Assignment or any of the other Loan Documents. Mortgagee shall have the right to approve the lender under any proposed secondary financing, and to review and approve any and all documentation with respect to such secondary financing such approval not to be unreasonably withheld. All costs incurred in connection with such secondary financing shall be borne by Mortgagor. d. Paragraph 35 of the Mortgage is hereby deleted and the following inserted in lieu thereof: 35. Mortgagor will maintain complete and accurate books and records showing in detail the income and expenses of the Property, and will permit Mortgagee and its representatives to examine said books and records and all supporting vouchers and data during normal business hours and from time to time upon request by Mortgagee, in such place as such books and records are customarily kept, and will furnish to Mortgagee, within one hundred twenty (120) days after the close of each fiscal year of Mortgagor, a balance sheet and profit and loss statement for Mortgagor, Jones, General Partner, and the Property, which shall also include a rent roll, certified by Mortgagor to be true and correct and showing in detail all income derived from and expenses incurred in connection with the ownership of the Property. In the event Mortgagor fails to provide such statements to Mortgagee within the time prescribed above, Mortgagor shall pay Mortgagee the sum of Two Hundred and No/100 Dollars ($200.00) for each successive month for which statements are delinquent. In the event of default hereunder, Mortgagee shall have the right to require that said financial statements be audited and certified by a certified public accountant acceptable to Mortgagee, at the sole cost and expense of Mortgagor. e. Paragraph 39 of the Mortgage is hereby deleted and the following inserted in lieu thereof: 39. The terms and provisions of the Application/Contract for Mortgage Loan dated December 30, 1993, and any subsequent amendments thereto (hereinafter referred to as the "Contract"), executed by and between Mortgagor as Applicant and Mortgagee as Nationwide are incorporated herein by reference. All terms and conditions of the Contract not expressly set forth in this Mortgage, the Note, the Assignment and any other Loan Documents additionally securing the Note shall survive the closing hereof and remain in full force and effect. In the event any conflict exists between the terms, conditions and provisions of the Contract and the Loan Documents, the terms, conditions and provisions of the Loan Documents shall prevail. f. Paragraph 45 of the Mortgage is hereby deleted and the following inserted in lieu thereof: 45. The liability of Mortgagor and General Partner with respect to the payment of principal and interest under the Note shall be "non- recourse" and, accordingly, Mortgagee's source of satisfaction of said indebtedness and Mortgagor's other obligations hereunder and under the other Loan Documents shall be limited to the Property and Mortgagee's receipt of the rents, issues and profits from the Property and Mortgagee shall not seek to procure payment out of any other assets of Mortgagor or any person or entity comprising Mortgagor, or to seek judgment for any sums which are or may be payable under the Note, this Mortgage or any of the other Loan Documents, as well as any claim or judgment (except as hereafter provided) for any deficiency remaining after foreclosure of this Mortgage. Notwithstanding the above, nothing herein contained shall be deemed to be a release or impairment of the indebtedness evidenced by the Note or the security therefor intended by this Mortgage and the other Loan Documents, or be deemed to preclude Mortgagee from exercising its rights to foreclose this Mortgage or to enforce any of its other rights or remedies under the Loan Documents. Notwithstanding the foregoing, it is expressly understood and agreed that the aforesaid limitation on liability shall in no way affect or apply to Mortgagor's and General Partner's continued personal liability for all sums due to: (1) fraud or misrepresentation made in or in connection with the Note or any of the other Loan Documents; (2) failure to pay taxes, or assessments prior to delinquency, or to pay charges for labor, materials or other charges which can create liens on any portion of the Property; (3) the misapplication of (i) proceeds of insurance covering any portion of the Property; or (ii) proceeds of the sale or condemnation of any portion of the Property; or (iii) rentals received by or on behalf of Mortgagor subsequent to the date on which Mortgagee makes written demand therefor pursuant to any Loan Document; (4) causing or permitting waste to occur in, on or about the Property and failure to maintain the Property, excepting ordinary wear and tear; (5) the return to Mortgagee of all unearned advance rentals and security deposits paid by tenants of the Property and not refunded to or forfeited by such tenants; (6) loss by fire or casualty to the extent not compensated by insurance proceeds collected by Mortgagee; (7) the return of, or reimbursement for, all Fixtures and Personal Property owned by Mortgagor taken from the Property by or on behalf of Mortgagor, out of the ordinary course of business, and not replaced by items of equal or greater value than the original value of the Fixtures and Personal Property so removed; (8) (i) any and all costs incurred in order to cause the Property to comply with the Accessibility Laws, and (ii) any indemnity or other agreement to hold Mortgagee and Trustee harmless from and against any and all losses, liabilities, damages, injuries, costs or expenses of any kind arising under Paragraph 3 of this Mortgage regarding accessibility for the disabled or handicapped, or under the separate Indemnity Agreement from Mortgagor and General Partner to Mortgagee. Mortgagor shall not be liable hereunder for compliance with any Accessibility Laws that first become effective, or for any violation of any Accessibility Laws resulting from alterations or improvements to the Property that are performed subsequent to Mortgagee's acquisition of the Property by foreclosure or acceptance of a deed in lieu thereof or subsequent to any transfer of ownership which was approved or authorized by Mortgagee pursuant to this Mortgage, provided that such transferee assumes all obligations pertaining to Accessibility Laws pursuant to the Loan Documents; (9) all court costs and Reasonable Attorneys' Fees actually incurred which are provided for in the Note or in any other Loan Document; (10) (i) the removal of any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Federal, State, County, Regional or Local Authority which may or could pose a hazard to the health and safety of the occupants of the Property, regardless of the source of origination; (ii) the restoration of the Property to comply with all governmental regulations pertaining to hazardous waste found in, on or under the Property, regardless of the source of origination; and (iii) any indemnity or other agreement to hold the Mortgagee and Trustee harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses of any and every kind arising under paragraph 3 of this Mortgage and/or the Indemnity Agreement of even date herewith executed by Mortgagor and General Partner. Mortgagor shall not be liable hereunder if the Property becomes contaminated subsequent to Mortgagee's acquisition of the Property by foreclosure or acceptance of a deed in lieu thereof or subsequent to any transfer of ownership which was approved or authorized by Mortgagee pursuant to this Mortgage, provided that such transferee assumes all obligations pertaining to Hazardous Materials pursuant to the Loan Documents. Liability under this subparagraph shall extend beyond repayment of the Note and compliance with the terms of this Mortgage unless at such time Mortgagor provides Mortgagee with an environmental assessment report acceptable to Mortgagee showing the Property to be free of Hazardous Materials and not in violation of Hazardous Waste Laws. The burden of proof under this subparagraph with regard to establishing the date upon which such chemical, material or substance was placed or appeared in, on or under the Property shall be upon Mortgagor. The obligations of Mortgagor in subparagraphs (1) through (10) above, except as specifically provided in subparagraphs (8) and (10), shall survive the repayment of the Note and satisfaction of this Mortgage. 3. The lien of the Mortgage and the covenants and agreements therein, except as modified herein, shall be and remain in full force and effect, subject to all the conditions and provisions contained in the Mortgage. IN WITNESS WHEREOF, Mortgagor and Mortgagee have caused this Amendment to be executed as of the day and year first above written. EDJ LEASING CO., L.P., a Missouri By: LHC, Inc. By:________________________________ Name:______________________________ Title:_____________________________ NATIONWIDE LIFE INSURANCE COMPANY By: ____________________________________ Name: __________________________________ Title: _________________________________ STATE OF MISSOURI ) ) SS. COUNTY OF ST. LOUIS ) On this ____ day of _________________________, 19__, before me appeared ___________________________________, to me personally known, who, by me being duly sworn did say that he is the _________________ of LHC, Inc., a corporation and the said seal affixed to the foregoing instrument is the corporate seal of said corporation, and the said corporation is the general partner of EDJ Leasing Co., L.P., a limited partnership and said _________________________ acknowledged that he executed and sealed the same in behalf of said corporation and said limited partnership by authority of the Board of Directors of the corporation and said _________________________ acknowledged said instrument to be the free act and deed of said corporation and said limited partnership. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal at my office in the county or city and state aforesaid, the day and year last above written. ___________________________________ Notary Public My Term Expires: __________________ STATE OF OHIO ) ) SS. COUNTY OF _________ ) On this ____ day of _________________________, 19__, before me appeared ___________________________________, to me personally known, who, by me being duly sworn did say that he is the _________________ of Nationwide Life Insurance Company, a corporation and the said seal affixed to the foregoing instrument is the corporate seal of said corporation, and said _________________________ acknowledged that he executed and sealed the same in behalf of said corporation by authority of the Board of Directors of the corporation and said _____________ acknowledged said instrument to be the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal at my office in the county or city and state aforesaid, the day and year last above written. ___________________________________ Notary Public My Term Expires: __________________ EXHIBIT A A tract of land being Lot 1 of "Community Federal Subdivision", a subdivision according to the plat thereof recorded in Plat Book 240 page 75 of the St. Louis County Records, in Sections 27 and 34, Township 45 North-Range 5 East, St. Louis County, Missouri and being more particularly described as: Beginning at the Northwest corner of said Lot 1 of "Community Federal Subdivision"; said point being also the Southwest corner of Lot 2 of said subdivision; thence Eastwardly and Northwardly along the line dividing Lots 1 and 2 South 89 degrees 17 minutes 50 seconds East 1111.06 feet and North 00 degrees 42 minutes 41 seconds East 10.00 feet to a point in the North line of said Lot 1; thence Eastwardly along said North line of Lot 1 South 89 degrees 15 minutes 08 seconds East 178.36 feet to a point in the West line of Ballas Road as widened; thence Southwardly along said West line of Ballas Road South 00 degrees 42 minutes 41 seconds West 380.81 feet to a point in the North line of property conveyed to Reproco, Inc., as described in the deed recorded in book 6562, page 2239 of the St. Louis County Records; thence along the boundary line of said Reproco, Inc. property North 89 degrees 16 minutes 29 seconds West 288.00 feet, and South 00 degrees 28 minutes 31 seconds West 99.57 feet to a point in the North line of Manchester Road, as widened; thence along the right-of-way line of Manchester Road, as widened, the following courses and distances; North 89 degrees 16 minutes 29 seconds West 178.49 feet, North 88 degrees 18 minutes 59 seconds West 94.01 feet North 30 degrees 34 minutes 38 seconds West 114.69 feet, North 89 degrees 16 minutes 29 seconds West 60.00 feet, South 36 degrees 25 minutes 32 seconds West 117.60 feet, North 89 degrees 16 minutes 29 seconds West 55.47 feet, along a curve to the left whose radius point bears South 00 degrees 43 minutes 31 seconds West 867.90 feet from the last mentioned point, a distance of 346.38 feet, South 67 degrees 51 minutes 31 seconds West 80.21 feet, North 22 degrees 08 minutes 29 seconds West 61.02 feet, South 88 degrees 12 minutes 27 seconds West 34.28 feet, and South 67 degrees 51 minutes 31 seconds West 17.15 feet to a point in the East line of J. J. Kelly Memorial Drive, 60 feet wide; thence Northwardly along said East line, being also along the West line of aforesaid Lot 1 of "Community Federal Subdivision" North 00 degrees 28 minutes 18 seconds East 146.83 feet and North 00 degrees 41 minutes 41 seconds East 370.44 feet to the point of beginning according to a survey by Volz Engineering & Surveying, Inc. dated July 14, 1992. MORTGAGE NOTE $14,900,000.00 St. Louis, Missouri March 9, 1994 FOR VALUE RECEIVED, THE UNDERSIGNED EDJ LEASING CO., L.P. limited partnership (the "Maker") promises to pay to the order of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio corporation, its successors and assigns (the "Holder") the principal sum of Fourteen Million Nine Hundred Thousand Dollars ($14,900,000.00), together with interest on the principal balance of this Mortgage Note (the "Note"), from time to time remaining unpaid, from the date of disbursement by Holder hereof at the applicable interest rate hereinafter set forth, together with all other sums due hereunder or under the terms of the Mortgage (as hereinafter defined) in lawful money of the United States of America which shall be legal tender in payment of all debts at the time of such payment. Both principal and interest and all other sums due hereunder shall be payable at the office of Holder at One Nationwide Plaza, Columbus, Ohio 43216, Attention: Real Estate Investment Department, or at such other place either within or without the State of Ohio, as Holder hereof may from time to time designate. Said principal and interest shall be paid over a term, at the times, and in the manner set forth below, to wit: Payment Provision: (i) Interest accrued on the unpaid principal balance of this Note from the date of disbursement hereof at the rate of eight and twenty- three one-hundredths percent (8.23%) per annum shall be due and payable (a) on the fifth (5th) day of the calendar month of the date of disbursement, if such date of disbursement is before the fifth (5th) day of the month, or (b) on the fifth (5th) day of the first calendar month following the date of disbursement, if such date of disbursement is after the fifth (5th) day of the month. In the event that disbursement occurs on the fifth (5th) day of the month, then there shall be no payment of interim interest and the first payment due from Maker hereunder shall be in accordance with subparagraph (ii) below. (ii) Thereafter, installments of principal and interest on the unpaid principal balance of this Note at the rate of eight and twenty-three one-hundredths percent (8.23%) per annum, shall be due and payable in one hundred and sixty-seven (167) consecutive monthly installments commencing on the fifth day of the next calendar month and continuing on the fifth day of each calendar month thereafter, with each such installment to be in the sum of One Hundred and Forty-Nine Thousand Six Hundred and Fifty-Eight and 87/100 Dollars ($149,658.87). Maturity: The unpaid principal balance of this Note and all accrued unpaid interest thereon, if not sooner paid, shall be due and payable in full on April 5, 2008 (the "Maturity Date"). Application of Payments: All payments shall be applied first to the payment of accrued unpaid interest on this Note and the balance, if any, shall be applied to the reduction of the outstanding principal balance of this Note. Interest due hereunder shall be calculated on the basis of a 360-day year composed of twelve 30-day months; provided however in no event shall such calculation cause the interest payable under the terms of this Note to exceed the maximum rate of interest permitted under applicable law. Late Payment Charge: The Holder of this Note may collect a late payment charge, prior to the acceleration of this Note, in an amount equal to five percent (5%) of the aggregate monthly installment which is not paid on the due date, for the purpose of covering the extra expenses involved in handling delinquent installments. Any full payment of principal and/or interest which is correctly addressed, bears adequate first class postage and is postmarked by the United States Postal Service on or before the due date shall not be considered delinquent and a late payment charge shall not be assessed. Prepayment: (A) Except as hereinafter provided, Maker shall not have the right to prepay all or any part of the obligation evidenced by this Note at any time. Maker shall have the right to prepay, in full but not in part, the obligation evidenced by this Note upon giving (i) not less than thirty (30) days' prior written notice to Holder of Maker's intention to so prepay this Note, and (ii) payment to Holder of the Prepayment Premium (as hereinafter defined), if any, then due to Holder as hereinafter provided. As used herein, the term "Prepayment Premium" shall mean the greater of (i) one percent (1%) of the outstanding principal balance of this Note at the time of prepayment or (ii) an amount equal to the sum of (a) the present value of the scheduled monthly payments on this Note from the date of prepayment to the Maturity Date and (b) the present value of the amount of principal and interest of this Note due on the Maturity Date (assuming all scheduled monthly payments due prior to the Maturity Date were made when due), minus (c) the outstanding principal balance of this Note as of the date of prepayment. The present values described in (a) and (b) shall be computed on a monthly basis as of the date of prepayment discounted at the yield-to-maturity rate of the U.S. Treasury Note or Bond closest in maturity to the Maturity Date of this Note as reported in the Wall_Street Journal (or, if the Wall Street Journal is no longer published, as reported in such other daily financial publication of national circulation which shall be designated by Holder) on the fifth (5th) business day preceding the date of prepayment, expressed as a decimal equivalent. Maker shall be obligated to prepay this Note on the date set forth in the notice to Holder required hereinabove, after such notice has been delivered to Holder. Notwithstanding the foregoing or any other provision herein to the contrary, if Holder elects to apply insurance proceeds, condemnation awards, or any escrowed amounts, if applicable, to the reduction of the principal balance of this Note in the manner provided in the Mortgage (as hereinafter defined), no Prepayment Premium shall be due or payable as a result of such application and the monthly installments due and payable hereunder shall be reduced accordingly. (B) In the event the Maturity Date of the indebtedness evidenced by this Note is accelerated by Holder hereof at any time due to a default, continuing beyond the expiration of any applicable cure periods, by Maker in the terms, covenants or conditions contained in this Note, the Mortgage or any of the other Loan Documents (as hereinafter defined), then a tender of payment in an amount necessary to satisfy the entire outstanding principal balance and all accrued unpaid interest on this Note made by Maker, or by anyone on behalf of Maker, at any time prior to, at, or as a result of, a foreclosure sale or sale pursuant to power of sale, shall constitute a voluntary prepayment hereunder prior to the contracted Maturity Date of this Note thus requiring the payment to Holder of a Prepayment Premium equal to the applicable Prepayment Premium as set forth in paragraph (A) above; provided, however, that in the event such Prepayment Premium is construed to be interest under the laws of the State of Missouri in any circumstance, such payment shall not be required to the extent that the amount thereof, together with other interest payable hereunder, exceeds the maximum rate of interest that may be lawfully charged under applicable law. (C) Notwithstanding anything contained herein to the contrary, during the ninety (90) day period immediately preceding the Maturity Date, the entire outstanding principal balance and all accrued unpaid interest on this Note may be prepaid in whole, but not in part, without incurring a Prepayment Premium. Additional Conditions: This Note is secured by a Deed of Trust and Security Agreement containing provisions for future advances and future obligations governed by Section 443.055 R.S.Mo. (as amended) and which is a lien on the property therein described executed on March 9, 1993, and amended by Amendment to Deed of Trust dated of even date herewith (hereinafter referred to as the "Mortgage") and by an Assignment of Leases, Rents and Profits (hereinafter referred to as the "Assignment") of even date herewith each encumbering certain real property located in St. Louis County, Missouri and other property as more particularly described in the Mortgage (hereinafter collectively referred to as the "Property"). The Mortgage and the Assignment contain terms and provisions which provide grounds for acceleration of the indebtedness evidenced by this Note together with additional remedies in the event of default hereunder or thereunder. Failure on the part of Holder hereof to exercise any right granted herein or in the aforesaid Mortgage or the Assignment shall not constitute a waiver of such right or preclude the subsequent exercise and enforcement thereof. This Note, the Mortgage, the Assignment and all other documents and instruments executed as further evidence of, as additional security for, or executed in connection with the indebtedness evidenced by this Note are hereinafter collectively referred to as the "Loan Documents". Except as herein otherwise provided, all parties to this Note, including endorsers, sureties and guarantors, hereby jointly and severally waive presentment for payment, demand, protest, notice of protest, notice of demand and of nonpayment or dishonor and of protest, and any and all other notices and demands whatsoever, and agree to remain bound hereby until the principal and interest of this Note are paid in full, notwithstanding any extensions of time for payment which may be granted by Holder, even though the period of extension be indefinite, and notwithstanding any inaction by, or failure to assert any legal rights available to Holder of this Note. If the obligations evidenced by this Note, or any part thereof, are placed in the hands of an attorney for collection, whether by suit or otherwise, at any time, or from time to time, Maker shall be liable to Holder, in each instance, for all costs and expenses incurred in connection therewith, including, without limitation, Reasonable Attorneys' Fees (as hereinafter defined). Default: If default shall be made in the payment of principal and/or interest as stipulated above or in the payment of any other sums due hereunder or under any of the other Loan Documents, or should any default be made in the performance of any of the terms, covenants and conditions contained herein or in any of the other Loan Documents, then in any or all of such events, at the option of Holder, the entire outstanding principal balance of this Note, together with all accrued unpaid interest thereon and all other sums advanced by Holder on behalf of Maker shall become and be immediately due and payable then or thereafter as Holder may elect, regardless of the Maturity Date hereof. All such amounts shall bear interest after maturity, by acceleration or otherwise, at the lesser of either (i) the highest rate of interest then allowed by the laws of the State of Missouri or, if controlling, the laws of the United States, or (ii) the then applicable interest rate of this Note plus five hundred (500) basis points. During the existence of any default, Holder may apply any sums received, including but not limited to, insurance proceeds or condemnation awards, to any amount then due and owing hereunder or under the terms of any of the other Loan Documents as Holder may determine. Neither the right nor the exercise of the right herein granted unto Holder to apply such proceeds as aforesaid shall preclude Holder from exercising its option to cause the entire indebtedness evidenced by this Note to become immediately due and payable by reason of Maker's default under the terms of this Note or any of the other Loan Documents. Notwithstanding any provisions herein to the contrary, Holder's right, power and privilege to accelerate the maturity of the indebtedness evidenced hereby shall be conditioned upon, with respect to any Non-Monetary Default (as hereinafter defined), Holder giving Maker written notice of such Non-Monetary Default and a thirty (30) day period after the date of such notice within which to cure such Non-Monetary Default, unless such Non-Monetary Default cannot reasonably be cured within said thirty (30) day period, in which event Maker shall have an extended period of time to complete cure, provided that action to cure such Non-Monetary Default is commenced within said thirty (30) day period and Maker is not substantially diminishing or impairing the value of the Property, and is diligently pursuing a cure to completion. Any notice required hereunder shall be given as provided in the Mortgage. Holder shall have no obligation to give Maker notice of, or any period to cure any Monetary Default (as hereinafter defined) or any Incurable Default (as hereinafter defined) prior to exercising its right, power and privilege to accelerate the maturity of the indebtedness evidenced hereby and to declare the same to be immediately due and payable and exercise all other rights and remedies herein granted or otherwise available to Holder at law or in equity. As used herein, the term "Monetary Default" shall mean any default which can be cured by the payment of money including, but not limited to, the payment of principal and interest due under this Note and the payment of taxes, assessments and insurance premiums when due as provided in the Mortgage. As used herein, the term "Non-Monetary Default" shall mean any default which is not a Monetary Default or an Incurable Default. As used herein, the term "Incurable Default" shall mean (i) any voluntary or involuntary sale, assignment, mortgaging or transfer in violation of the covenants of the Mortgage; or (ii) if Maker, or any person or entity comprising Maker, should make an assignment for the benefit of creditors, become insolvent, or file a petition in bankruptcy (including but not limited to, a petition seeking a rearrangement or reorganization). Savings Clause; Severability: Notwithstanding any provisions herein or in the Mortgage to the contrary, the total liability for payments in the nature of interest including but not limited to Prepayment Premiums, default interest and late fees shall not exceed the limits imposed by the laws of the State of Missouri or the United States of America relating to maximum allowable charges of interest. Holder shall not be entitled to receive, collect or apply, as interest on the indebtedness evidenced hereby, any amount in excess of the maximum lawful rate of interest permitted to be charged by applicable law or regulations, as amended or enacted from time to time. In the event Holder ever receives, collects or applies, as interest, any such excess, such amount which would be excessive interest shall be applied to reduce the unpaid principal balance of the indebtedness evidenced by this Note. If the unpaid principal balance of such indebtedness is paid in full, any remaining excess shall be forthwith paid to Maker. If any clauses or provisions herein contained operate or would prospectively operate to invalidate this Note, then such clauses or provisions only shall be held for naught, as though not herein contained and the remainder of this Note shall remain operative and in full force and effect. Exculpation: The liability of Maker and the general partner of Maker, LHC, Inc., and any other current or future general partner of Maker ("General Partner") with respect to the payment of principal and interest hereunder shall be "non-recourse" and, accordingly, Holder's source of satisfaction of said indebtedness and Maker's other obligations hereunder and under the other Loan Documents shall be limited to the Property and Holder's receipt of the rents, issues, and profits from the Property and Holder shall not seek to procure payment out of any other assets of Maker, or any person or entity comprising Maker, or to seek judgment for any sums which are or may be payable under this Note or under any of the other Loan Documents, as well as any claim or judgment (except as hereafter provided) for any deficiency remaining after foreclosure of the Mortgage. Notwithstanding the above, nothing herein contained shall be deemed to be a release or impairment of the indebtedness evidenced by this Note or the security therefor intended by the other Loan Documents or be deemed to preclude Holder from exercising its rights to foreclose the Mortgage or to enforce any of its other rights or remedies under the Loan Documents. Notwithstanding the foregoing, it is expressly understood and agreed that the aforesaid limitation on liability shall in no way affect or apply to Maker's and General Partner's continued personal liability for all sums due to: (1) fraud or misrepresentation made in or in connection with this Note or any of the other Loan Documents; (2) failure to pay taxes or assessments prior to delinquency, or to pay charges for labor, materials or other charges which can create liens on any portion of the Property; (3) the misapplication of (i) proceeds of insurance covering any portion of the Property; or (ii) proceeds of the sale or condemnation of any portion of the Property; or (iii) rentals received by or on behalf of Maker subsequent to the date on which Holder makes written demand therefor pursuant to any Loan Document; (4) causing or permitting waste to occur in, on or about the Property and failure to maintain the Property, excepting ordinary wear and tear; (5) the return to Holder of all unearned advance rentals and security deposits paid by tenants of the Property and not refunded to or forfeited by such tenants; (6) loss by fire or casualty to the extent not compensated by insurance proceeds collected by Holder; (7) the return of, or reimbursement for, all Fixtures and Personal Property (as defined in the Mortgage) owned by Maker taken from the Property by or on behalf of Maker, out of the ordinary course of business, and not replaced by items of equal or greater value than the original value of the Fixtures and Personal Property so removed; (8) (i) any and all costs incurred in order to cause the Property to comply with the Accessibility Laws (as defined in the Mortgage) and (ii) any indemnity or other agreement to hold Holder harmless from and against any and all losses, liabilities, damages, injuries, costs or expenses of any kind arising under Paragraph 3 of the Mortgage regarding accessibility for the disabled or handicapped, or under the separate Indemnity Agreement executed by Maker and General Partner. Maker shall not be liable hereunder for compliance with any Accessibility Laws that first become effective, or for any violation of any Accessibility Laws resulting from alterations or improvements to the Property that are performed subsequent to Holder's acquisition of the Property by foreclosure or acceptance of a deed in lieu thereof or subsequent to any transfer of ownership which was approved or authorized by Holder pursuant to the Mortgage, provided that such transferee assumes all obligations pertaining to Accessibility Laws pursuant to the Loan Documents; (9) all court costs and Reasonable Attorneys' Fees (as hereinafter defined) actually incurred which are provided for in this Note or in any other Loan Documents; (10) (i) the removal of any chemical, material or substance, exposure to which is prohibited, limited, or regulated by any Federal, State, County, Regional or Local Authority which may or could pose a hazard to the health and safety of the occupants of the Property, regardless of the source of origination; (ii) the restoration of the Property to comply with all governmental regulations pertaining to hazardous waste found in, on or under the Property, regardless of the source of origination; and (iii) any indemnity or other agreement to hold the Holder harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses of any and every kind arising under paragraph 3 of the Mortgage and/or the Indemnity Agreement of even date herewith executed by Maker and General Partner. Maker shall not be liable hereunder if the Property becomes contaminated subsequent to Holder's acquisition of the Property by foreclosure or acceptance of a deed in lieu thereof or subsequent to any transfer of ownership which was approved or authorized by Holder pursuant to the Mortgage, provided that such transferee assumes all obligations pertaining to Hazardous Materials (as defined in the Mortgage) pursuant to the Loan Documents. Liability under this subparagraph shall extend beyond repayment of this Note and compliance with the terms of the Mortgage unless at such time Maker provides Holder with an environmental assessment report acceptable to Holder showing the Property to be free of Hazardous Materials and not in violation of Hazardous Waste Laws (as defined in the Mortgage). The burden of proof under this subparagraph with regard to establishing the date upon which such chemical, material or substance was placed or appeared in, on or under the Property shall be upon Maker. The obligations of Maker in subparagraphs (1) through (10), except as specifically provided in subparagraphs (8) and (10), shall survive the repayment and satisfaction of this Note. As used herein, the phrase "Reasonable Attorneys' Fees" shall mean fees charged by attorneys selected by Holder based upon such attorneys' then prevailing hourly rates as opposed to any statutory presumption specified by any statute then in effect in the State of Missouri. THE PROVISIONS of this Note shall be governed by and construed in accordance with the laws of the State of Missouri and if controlling, by the laws of the United States and shall be binding upon Maker, its heirs, personal representatives, successors and assigns and shall inure to the benefit of Holder. IN WITNESS WHEREOF, Maker has executed this Note under seal as of the day and year first above written. EDJ LEASING CO., L.P., a Missouri By: LHC, Inc. By:________________________________ Name:______________________________ Title:_____________________________ EX-7 8 ARTHUR ANDERSEN CONSENT Exhibit 24.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into The Jones Financial Companies, A Limited Partnership's previously filed S-8 Registration Statements File No. 33-35247 and No. 33-62734. ARTHUR ANDERSEN & CO. St. Louis, Missouri, March 28, 1994 -----END PRIVACY-ENHANCED MESSAGE-----