PROMISSORY NOTE

 

$750,000.00 Baltimore, Maryland

February 1, 2007

FOR VALUE RECEIVED, STIFEL FINANCIAL CORP., a Delaware corporation (the
"Borrower"), promises to pay to the order of THE MAYOR AND CITY COUNCIL OF
BALTIMORE, a body politic and corporate and a political subdivision of the State
of Maryland, by and through the DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT,
its successors and assigns c/o CITY OF BALTIMORE DEVELOPMENT CORPORATION
(hereafter, the "Lender"), the principal sum of Seven Hundred and Fifty Thousand
Dollars ($750,000.00) (the "Principal Loan Amount") to be advanced to Borrower
(the "Loan") in accordance with the terms and conditions contained in the Loan
Agreement of even date herewith (the "Loan Agreement"). (The Loan Agreement and
this Note collectively referred to as the "Loan Documents.")

Said principal and interest shall be payable as set forth herein below.

1. Interest.

A. Beginning on the date hereof, interest shall accrue on the Principal Loan
Amount at the rate of two percent (2%) per annum (the "Fixed Rate").

B. Interest shall be calculated on the basis of a 360-day year, for the actual
number of days the principal is outstanding.

C. Should an Event of Default (beyond any applicable notice and cure period or
periods) occur under this Note or the Loan Agreement, interest shall accrue from
the date of the Event of Default at the prime rate of interest as published in
The Wall Street Journal on the date of the Event of Default, plus four percent
(4%) (the "Default Rate").

D. Notwithstanding the above provisions as to interest payable, under no
circumstances shall interest accrue or be payable at a rate in excess of the
maximum rate allowed by applicable laws. If the Lender has collected interest in
excess of such maximum rate, then the Borrower's only remedy shall be that the
Lender will apply such excess interest as a full or partial prepayment of the
unpaid balance of the principal amount to the extent of the unpaid principal
balance and refund any additional excess amount to the Borrower.

2. Repayment and Maturity Date.

A. Commencing on March 1, 2007, and continuing on the same calendar day of each
calendar month through February 1, 2011, the Borrower shall pay to the holder
monthly installments of interest only in the amount of One Thousand Two Hundred
Fifty Dollars ($1,250.00) per month.

B. Commencing on March 1, 2011, and continuing on the same calendar day of each
month thereafter until February 1, 2017, the Borrower shall pay the holder
monthly installments of principal and interest in the amount of Six Thousand
Three Hundred Thirty Four Dollars and Forty Three Cents ($6,334.43) per month.

C. Maturity Date. The maturity date of the Loan shall be February 1, 2017 (the "
Maturity Date") and unless extended by the terms of section 2.D, the Borrower
shall make on the Maturity Date a final balloon payment of Three Hundred
Sixty-Seven Thousand One Hundred and Sixteen Dollars and Eighty Five Cents
($367,116.85) plus all unpaid principal and accrued but unpaid interest, late
charges and other fees and charges being due and payable pursuant to the Loan
Documents.

D. Extension. The Maturity Date may be extended to February 1, 2022 (the
"Extended Maturity Date") if Stifel, Nicolaus & Company, Incorporated, a
subsidiary of the Borrower ("Stifel Nicolaus") agrees in writing to exercise at
least one five-year renewal option (the "Renewal") pursuant to the terms of its
lease (the "Lease") at 1 South Street, Baltimore, Maryland (the "Property") and
the Borrower gives the Lender written notice of the Renewal prior to December
31, 2016. Upon the satisfaction of such conditions precedent:

(i) Commencing on March 1, 2017, and continuing on the same calendar day of each
month thereafter until February 1, 2022, Borrower shall pay the holder monthly
installments of principal and interest in the amount of Six Thousand Three
Hundred Thirty Four Dollars and Forty Three Cents ($6,334.43) per month, which
date is the final and absolute maturity date of this Promissory Note, at which
time all sums due hereunder, including principal, interest, charges and fees,
shall be paid in full.

3. Project.

The proceeds of the Loan shall be contributed by the Borrower to Stifel Nicolaus
which shall use such amounts to construct leasehold improvements, purchase
machinery and equipment, and for related matters at the Property (the
"Project").

4. Repayment.

A. The entire principal balance of the Loan, together with all accrued interest
and any other sums pursuant to the Loan Documents, become immediately due and
payable at the option of the Lender on the occurrence of any of the following:

(i) The Maturity Date, unless extended to the Extended Maturity Date pursuant to
Section 2.D, supra; or

(ii) An Event of Default (beyond any applicable notice and cure period or
periods) as defined in the Loan Documents.

B. Failure to exercise the option to accelerate in Section 4(A)(ii), supra,
shall not constitute a waiver of the right to exercise this option in the event
of any subsequent default or occurrence allowing for acceleration, after any
applicable notice and cure periods in any of the Loan Documents.

5. Prepayment. The Borrower, upon five (5) calendar days advance notice to the
Lender, may prepay the Loan, in whole or in part, at any time from time to time
without penalty. All repayments under this Note shall be applied to the
outstanding principal balance in the inverse order of scheduled maturity.

6. Default. An event of default under this Note (an "Event of Default") shall be
deemed to exist upon the occurrence of any of the following: (1) failure to pay
any principal, late charges, interest, or undisputed expenses within ten (10)
days when due, or failure to perform any other obligations hereunder, after any
applicable notice and cure periods in any of the Loan Documents; (2) a default
in any of the requirements of Borrower, or any other person providing security
for this loan, under any Loan Document referred to above, after any applicable
notice and cure periods in any of the Loan Documents; (3) a default in any other
agreement between Borrower and the Lender or any affiliate of the Lender,
whether previously, simultaneously, or hereafter entered into, after any
applicable notice and cure periods therein; (4) voluntary bankruptcy,
insolvency, or receivership proceedings being instituted in any state or federal
court by the Borrower or an involuntary bankruptcy, insolvency, or receivership
proceedings being instituted in any state or federal court against the Borrower,
in which case the Borrower may receive a grace period as set forth in subsection
(ii), infra; (5) any warranty, representation, or statement to the Lender by or
on behalf of the Borrower proving to have been incorrect in any material respect
when made or furnished; (6) a dissolution or liquidation of the Borrower without
prior written consent of Lender; (7) failure of Borrower to furnish to the
Lender such information as the Lender may require from time to time and as set
forth in any of the Loan Documents; (8) default under any obligation or
indebtedness owed by the Borrower to the Lender under any other loan or to any
other lender, regardless of when created or whether secured or unsecured, after
any applicable notice and cure period(s) therein; (9) failure to comply with
applicable federal, state and local regulations relating to use of the source of
funds of the Loan; and (10) failure to use the proceeds of the Loan for such
purposes as contemplated in the Loan Documents. The contrary, notwithstanding,
no Event of Default shall be deemed to have occurred with respect to the
following events until after the expiration of the applicable grace or curative
period, time being of the essence:

i. Thirty (30) calendar days after receipt of written notice from the Lender to
the Borrower, as to a failure to perform an affirmative nonmonetary covenant, a
violation of a negative covenant, a breach of warranty or representation, or any
other event not previously addressed in this Paragraph, unless such Event of
Default cannot be cured within thirty (30) calendar days after Borrower's
receipt of such written notice, in which case the Borrower shall have a greater
period of time if diligently pursuing such cure.

ii. Except as provided above, in no event shall this Note be deemed to provide a
grace period applicable to an Event of Default based upon (i) the filing of a
voluntary or involuntary bankruptcy petition, except as stated in this Note with
respect to an Event of Default based upon the filing of an involuntary
bankruptcy petition, for which a period of ninety (90) calendar days shall be
permitted for the Borrower to obtain an unconditional dismissal of any petition
filed in connection with any involuntary case, (ii) any Event of Default for
which a specific period for the cure thereof is specified in this Paragraph,
describing such Event of Default, other than as specified in this Subparagraph,
or (iii) any payment of principal due under this Note by scheduled maturity of
acceleration, in Event of Default.

7. Remedies,. Upon the occurrence of an Event of Default, and the expiration of
any applicable cure period, the Borrower shall pay the Lender all expenses
incurred by the Lender in collecting the amounts due under this Note. Those
expenses include actual attorney's (and paralegal) fees and court costs. If an
Event of Default occurs, after the expiration of any applicable cure period, the
Lender has the right to declare the entire unpaid balance of principal of this
Note, and all accrued but unpaid interest, immediately due and payable without
notice or demand. The Borrower agrees that an Event of Default shall be a
default under all other liabilities and obligations of Borrower to the Lender,
and that the Lender has the right to declare immediately due and payable all
such other liabilities and obligations. If not then paid, the principal balance,
accrued but unpaid interest, late charges, and any expenses, shall thereafter
bear interest at the Default Rate (but not more than the maximum rate allowed by
applicable laws). If a final, non-appealable judgment is entered against the
Borrower for any sum due under this Note, the Borrower shall pay the Lender upon
demand from time to time interest at the statutory interest rate on the
judgment, plus an additional amount equal to interest calculated at the rate
provided in the next preceding sentence in effect as of the date of judgment,
minus any interest actually paid at the statutory rate on the judgment.

8. Confession of Judgment. If an Event of Default occurs, the Borrower
authorizes any attorney admitted to practice before any court of record, or any
clerk of any court, to appear on behalf of the Borrower in any court in one or
more proceedings or before any clerk thereof, without giving prior notice to or
serving process on such person or persons, and confess judgment against Borrower
in favor of the Lender for such amount as may appear to be unpaid on this Note,
including interest, late charges, expenses, court costs and attorney's (and
paralegal) fees equal to fifteen percent (15%) of the amount in controversy. In
addition to all other courts where jurisdiction and venue would be proper, the
Borrower consents to the jurisdiction and venue of the courts of any county of
the State of Maryland or Baltimore City, Maryland or the United States District
Court for the District of Maryland for the entry of said judgment. Borrower
hereby waives and releases, to the extent not prohibited by law, all errors and
rights of appeal, exemptions and stays of execution upon any real or personal
property to which such person or persons might otherwise by entitled, under any
present or future law. The Borrower waives the benefit of any and every statute,
ordinance or rule of court which may be lawfully waived conferring upon the
Borrower any right or privilege of exemption or other relief from the
enforcement or immediate enforcement of a judgment or related proceeding on a
judgment. The authority and power to appear for and enter judgment against
Borrower shall not be exhausted by one or more exercises hereof or by any
imperfect exercises hereof, and shall not be extinguished by any judgment
entered pursuant thereto; this authority and power may be exercised on one or
more occasions, from time to time, in the same or different jurisdictions, as
often as Lender shall deem necessary or desirable, for all of which this Note
shall be sufficient authority.

9. Transfer. In the event that any holder of this Note transfers this Note for
value, the Borrower agrees that no subsequent non-affiliated holder of this Note
shall be subject to any claims or defenses which the Borrower may have against a
prior holder, all of which are waived as to the subsequent non-affiliated
holder, and that all subsequent holders shall have all of the rights of a holder
in due course with respect to the Borrower even though the subsequent holder may
not qualify, under applicable law, absent this paragraph, as a holder in due
course.

10. Waivers. The Borrower, all endorsers and guarantors hereof, and all others
who may become liable for all or any part of the obligation evidenced hereby,
agree to be jointly and severally bound hereby, all covenants, obligations and
liabilities hereunder shall be joint and several, and they do jointly and
severally waive presentment, demand, protest, notice of nonpayment, and any and
all lack of diligence or delays in collection or enforcement hereof. The
Borrower and all endorsers and guarantors hereof further jointly and severally
agree with the Lender that the Lender may, without notice, in such manner, on
such terms and for such time as the Lender may see fit, (a) agree with the
Borrower to alter, extend, or renew this Note, and/or (b) release any maker,
endorser, or guarantor hereof, and/or substitute or add guarantors, and/or
substitute or release collateral or any part thereof, all without in any way
affecting, releasing, or foregoing the joint and several liability of the
Borrower and all endorsers and guarantors hereof.

11. No Counterclaim. Any action brought by the Borrower against the Lender which
is based, directly or indirectly, or in whole or in part on this Note or any
matter in or related to this Note or any other Loan Document, including but not
limited to the making of the Loan or the administration or collection thereof
shall be brought only in the courts of the State of Maryland. The Borrower may
not file a counterclaim against the Lender in a suit brought by the Lender
against the Borrower in a state other than the State of Maryland unless under
the rules of procedure of the court in which the Lender brought the action the
counterclaim is mandatory and will be considered waived unless filed as a
counterclaim in the action instituted by the Lender.

12. Successors and Assigns. This Note shall inure to the benefit of and be
enforceable by the Lender and the Lender's successors and assigns and any other
person to whom the Lender may grant an interest in the Borrower's obligations to
the Lender, and shall be binding and enforceable against the Borrower and the
Borrower's successors and assigns.

13. Commercial Loan. Borrower hereby represents and warrants to Lender that the
loan evidenced by this Note was made and transacted solely for the purpose of
carrying on or acquiring a business or commercial enterprise within the meaning
of Title 12, Commercial Law Article, Section 12-101(c) (1), Annotated Code of
Maryland (1983 Repl. Vol.), and that the funds evidenced by this Note will be
used for commercial purposes only and solely in connection with such an
enterprise.

14. Notice. All notices required to be given hereunder shall be in writing and
shall be deemed duly given if and when such notice is either personally
delivered or mailed by certified or registered U.S. mail, return receipt
requested, postage prepaid, first class, to the respective addresses as set
forth in Section 10.2 of the Loan Agreement.

15. Conflicts; Venue; Service. This Note shall be construed and enforced
according to and be governed by the laws of the State of Maryland without regard
to principles of conflict of laws. As part of the consideration for the Lender's
advance of funds to the Borrower, Borrower agrees that any and all actions or
proceedings arising directly or indirectly from this Note shall, at the Lender's
option, be litigated in courts having a primary jurisdiction within the State of
Maryland; consents to the jurisdiction of any State or Federal Court located
within the State of Maryland; agrees that they are subject to service of process
under Section 6-103 of the Courts and Judicial Proceedings Article of the
Maryland Code; and agrees to accept such service as is authorized by the statute
and prescribed in the Maryland Rules of Procedure.

16. Cumulative Rights. Each right, power and remedy under this Note, under any
Loan Document, and under applicable law, shall be cumulative and concurrent and
the exercise of any one or more of them shall not preclude the simultaneous or
later exercise by the Lender of any or all such other rights, powers or
remedies. No waiver by the Lender of any default shall be effective unless made
in writing nor operate as a waiver of any other or future default.

17. Severable. If any part of this Note shall be adjudged invalid or not
enforceable then such partial invalidity or unenforceability shall not cause the
remainder of the Note to be or to become invalid or unenforceable, and if a
provision hereof is held invalid or unenforceable in one or more of its
applications, the parties hereto agree that said provisions shall remain in
effect in all valid or enforceable applications that are severable from the
invalid or unenforceable application or applications.

18. Singular/Plural. The use of the singular herein may also refer to the
plural, and vice versa, and the use of the neuter or any gender shall be
applicable to any other gender or the neuter.

19. Assignment. This Note may be assigned by the Lender or any holder at any
time or from time to time. The word "Lender" as used herein shall include all
future holders of the Note, by assignment and otherwise. This Note may be
assigned to any successor to Borrower by merger, consolidation, reorganization,
asset sale or similar transaction provided such successor agrees to be bound by
the terms of this Note and the other Loan Agreements to the same extent as
Borrower.

20. Waiver of Jury Trial. Each of the Lender and the Borrower agrees that any
suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by either party or any of their respective successors or assigns on
or with respect to this Note or any other Loan Document or which in any way
relates, directly or indirectly, to the obligations of either party to the other
party under this Note or any other Loan Document, or the dealings of the parties
with respect thereto, shall be tried only by a court and not by a jury. Each of
the Lender and the Borrower hereby expressly waives any right to a trial by jury
in any such suit, action, or proceeding. Each of the parties acknowledges and
agrees that this provision is a specific and material aspect of the agreement
between the parties and that the other party would not enter into the
transaction with the other party if this provision were not part of their
agreement.

21. MBE/WBE Compliance. Stifel Nicolaus shall at all times during the term of
this Note use minority and women's business enterprises in connection with the
development of the Project, consistent with the procedures established by the
Lender and the obligations set forth in the Loan Documents. The Borrower shall
comply with Article 5, Subtitle 28 of the Baltimore City Code (2000 Edition,
online update 31 July 2006) regarding participation by Minority Business and
Women's Business Enterprises in its development of the Project as set forth in
the Loan Agreement. Lender and its affiliates shall cooperate with, and assist,
Stifel Nicolaus and Borrower in their efforts in this regard.

22. Employment. During the term of this Note, Stifel Nicolaus shall use the
Baltimore City Office of Employment Development ("OED") as a "first source" for
training and recruitment of employees, such that the Borrower will notify OED of
employment opportunities, giving OED an opportunity to present qualified
candidates to the Borrower for consideration in accordance with the First Source
Hiring Guidelines (the "Guidelines") currently in effect. The Borrower will also
use its best efforts to hire, for all available positions, residents of
Baltimore City who meet the Guidelines.

23. Relocation. The Borrower shall maintain its Baltimore Capital Markets
headquarters operations within the boundaries of the City of Baltimore for the
entire term of the Loan. Failure to comply with this requirement shall be an
additional default under the Loan Documents. Notwithstanding anything to the
contrary contained in this Note, if Borrower relocates its Baltimore operations
outside the boundaries of the City of Baltimore at any time during the term of
the Loan, then, upon such event, the Default Rate as calculated at the time of
the relocation shall be substituted as the Fixed Rate and shall relate back to
the commencement of the amortization period and continue through the Maturity
Date. Borrower shall be liable for any difference in the amortization payments
as recomputed due to the change in interest rate. Notwithstanding the foregoing,
the creation or establishment of satellite offices in the Baltimore metropolitan
area (e.g. Towson or Annapolis) shall not constitute a breach of this section
provided that the Borrower continues to maintain its Capital Markets
headquarters operations with the boundaries of the City of Baltimore.

24. Publicity. The Lender and the Borrower agree to cooperate in the preparation
and release of all publicity with respect to the funding hereunder. All press
releases and signage relating to such matters shall be pre-approved, in writing,
by any agent appointed by the Lender and the Borrower and shall reflect the
joint effort of the Lender and the Borrower. Notwithstanding anything in the
foregoing to the contrary, however, either party may respond to telephone calls
and other inquiries from the press of a general nature subsequent to the initial
public announcement thereof provided any such responses are substantially
consistent with such initial public announcement.

25. Conflicts of Interest; City Representatives Not Individually Liable. No
member, official, representative or employee of the City of Baltimore or the
City of Baltimore Development Corporation (the "BDC") shall have any personal
interest, direct or indirect, in the Borrower, nor shall any member, official,
representative or employee participate in any decision relating to this
transaction which affects his/her personal interest or the interest of any
corporation, partnership or association in which he/she is directly or
indirectly interested. No member, official, representative, or employee of the
City of Baltimore or the BDC shall be personally liable to the City of Baltimore
or the BDC, as the case may be (or any successor in interest) in the event of
any default or breach by the City of Baltimore or the BDC for any amount which
may become due to the other party or successor or on any obligation under the
terms of this Promissory Note. The parties acknowledge and agree that the
membership and participation of Francis X. Gallagher, Jr., an employee of Stifel
Nicolaus, on the BDC's Board of Directors shall not constitute a breach of this
section provided that Mr. Gallagher recuses himself from any specific
deliberations of the BDC regarding the Borrower or Stifel Nicolaus.

26. Ancillary Documents and Further Assurances. The Mayor and the Commissioner
of the Department of Housing and Commercial Development, without the further
approval of the Baltimore City Board of Estimates, are each hereby authorized to
execute any and all ancillary, corrective, or confirmatory documents necessary
to effectuate this transaction, provided such documents do not (a) increase the
anticipated expenditure of funds or (b) materially alter the relationship of the
parties or the principal elements of this Promissory Note.

SIGNATURES APPEAR ON THE FOLLOWING PAGE

 

 

IN WITNESS WHEREOF, the Borrower has executed and delivered under seal this note
as of the day and year first above written.

WITNESS:

BORROWER:

 

STIFEL FINANCIAL CORP.

_/s/ David Minnick

By /s/ James M. Zemlyak (SEAL)

 

Name James M Zemlyak

 

Title Senior Vice President

Approved as to Form and Legal Sufficiency this 8th day of November, 2006.

/s/ William Stifler

 

William Stifler, Chief Solicitor

 

Approved: Board of Estimates of the Mayor and City Council of Baltimore.

Clerk: ______________________

 

Date: _______________________