<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-34149
PROSPECTUS SUPPLEMENT
SEPTEMBER 12, 1997
(TO PROSPECTUS DATED AUGUST 22, 1997)
$350,000,000
DONALDSON, LUFKIN & JENRETTE, INC.
GLOBAL FLOATING RATE NOTES
DUE SEPTEMBER 2002
The Global Floating Rate Notes due September 2002 (the "Notes") are being
offered hereby by Donaldson, Lufkin & Jenrette, Inc. (the "Company") for sale
worldwide. The Notes will bear interest at a floating rate equal to
three-month LIBOR plus a spread of 25 basis points, payable quarterly,
commencing on December 17, 1997, and will mature on September 18, 2002 (the
"Maturity Date"). The Notes will be subject to redemption at the option of
the Company on any Interest Payment Date beginning with the Interest Payment
Date occurring in September 2000 (the "Initial Redemption Date") in whole or
from time to time in part in increments of $1,000 at the Redemption Price (as
defined herein) together with unpaid interest accrued to the date of
redemption. The Notes are not entitled to any sinking fund. The Notes will
not be repayable by the Company at the option of the holders thereof prior to
maturity. See "Description of Notes" herein.
The Notes will be issued only in fully registered form and will be
represented by one or more global notes (the "Global Notes") registered in
the name of a nominee of The Depository Trust Company ("DTC"), as depositary
(the "Depositary"). Beneficial interests in Global Notes will be shown on,
and transfers thereof will be effected through, the records maintained by the
Depositary (with respect to participants' interest) and its participants,
including the U.S. Depositary (as defined herein) for each of Cedel and
Euroclear. Except as described in the accompanying Prospectus, the Notes will
not be available in definitive form. All payments of principal and interest
on Global Notes will be made by the Company in U.S. dollars in immediately
available funds. See "Description of Securities--Book-Entry System" in the
accompanying Prospectus and "Additional Information Regarding Book-Entry and
Clearance" elsewhere herein.
Application has been made to the Luxembourg Stock Exchange for listing of
the Notes thereon.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTA TION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus Supplement has been prepared for use by Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJSC") in connection with offers and
sales of the Notes which may be made by it from time to time in market-making
transactions at negotiated prices relating to prevailing market prices at the
time of sale. The Company has been advised by DLJSC that it currently intends
to make a market in the Notes; however, it is not obligated to do so. Any
such market-making may be discontinued at any time, and there is no assurance
as to the liquidity of, or trading market for, the Notes. DLJSC may act as
principal or agent in such transactions. See "Plan of Distribution."
<PAGE>
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION (THE "STABILIZING
AGENT") MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE
AFFECT THE PRICE OF THE NOTES OR OTHER DEBT SECURITIES INCLUDING STABILIZING
THE PURCHASE OF THE NOTES TO COVER SYNDICATE SHORT POSITIONS AND THE
IMPOSITION OF PENALTY BIDS. SPECIFICALLY, THE STABILIZING AGENT MAY
OVER-ALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE,
NOTES IN THE OPEN MARKET OR OTHERWISE EFFECT TRANSACTIONS WHICH STABILIZE THE
MARKET PRICE OF THE NOTES AT A LEVEL WHICH MIGHT NOT OTHERWISE PREVAIL. SUCH
TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME AND WILL BE
CARRIED OUT IN ACCORDANCE WITH APPLICABLE LAWS AND REGULATIONS.
References herein to "U.S. dollars" or "dollars" or "U.S. $" or "$" are to
the lawful currency of the United States of America.
S-2
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1996, and the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997, and the Company's Current Report on Form
8-K, filed September 9, 1997, all previously filed by the Company with the
Securities and Exchange Commission, are incorporated by reference in this
Prospectus Supplement.
All documents filed by the Company after the date of this Prospectus
Supplement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), prior to the
termination of the offering of the Notes offered hereby, shall be deemed to
be incorporated herein by reference and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of the accompanying Prospectus and this
Prospectus Supplement to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statements as modified or superseded shall be deemed, except as so
modified or superseded, to constitute a part of the accompanying Prospectus
and this Prospectus Supplement.
The Company will provide without charge to each person to whom a copy of
the accompanying Prospectus and this Prospectus Supplement is delivered, upon
written or oral request of such person, a copy of any or all of the documents
referred to above which have been or may be incorporated by reference in the
accompanying Prospectus and this Prospectus Supplement (other than certain
exhibits to such documents). Requests for such documents should be directed
to Donaldson, Lufkin & Jenrette, Inc., 277 Park Avenue, New York, New York
10172, Attention: Corporate Secretary (Telephone: (212) 892-3000). The
documents incorporated by reference herein will be available free of charge
at the office of Banque Internationale a Luxembourg S.A., 69, route d'Esch,
L-1470 Luxembourg (Telephone: (352) 4590-3550), in Luxembourg.
S-3
<PAGE>
SUMMARY DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Senior Debt
Securities") supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Notes set forth in
the Prospectus, to which description reference is hereby made. Capitalized
terms not defined herein have the meanings given to such terms in the
accompanying Prospectus. See "Description of Debt Securities" in the
accompanying Prospectus.
The Notes ..................... $350,000,000 aggregate principal amount of
Global Floating Rate Notes due September
2002 issued pursuant to an Indenture dated
as of September 3, 1997 (the "Indenture").
Maturity Date ................. The Notes will mature on September 18, 2002
(the "Maturity Date"). If the Maturity Date
is not a Business Day (as defined elsewhere
in this Prospectus Supplement), payment of
interest and principal otherwise payable on
the Notes will be made on the next
succeeding Business Day. Interest on
principal shall accrue for the period from
and after the Maturity Date to such next
succeeding Business Day but no interest
shall accrue on the interest payable on the
Maturity Date from and after the Maturity
Date to such next succeeding Business Day.
See "Description of Notes--General."
Specified Currency ............ The Notes will be denominated in U.S.
dollars and all payments of principal and
interest will be made in U.S. dollars in
immediately available funds.
Issue Price ................... The Notes are being offered at an issue
price of 99.785% of the principal amount of
the Notes.
Original Issue Date
(Settlement Date) ............. September 18, 1997.
Interest Rate ................. The Notes will bear a floating interest rate
equal to three-month LIBOR (as defined
herein) plus 25 basis points (the "Spread").
Interest will be calculated by reference to
each period beginning on the Original Issue
Date and ending on (but excluding) the first
Interest Payment Date (as defined below) and
each successive period beginning on (and
including) an Interest Payment Date and
ending on (but excluding) the next
succeeding Interest Payment Date or the
Maturity Date or date of redemption of a
Note. The initial interest rate (the
"Initial Interest Rate") will be determined
based on three-month LIBOR on September 16,
1997 (two London Business Days (as defined
herein) prior to the Original Issue Date).
Commencing on December 17, 1997 (the
"Initial Interest Reset Date"), the interest
rate will be reset quarterly on each
Interest Payment Date of each December,
March, June and September (each an "Interest
Reset Date") based on three-month LIBOR on
the second London Business Day preceding
such Interest Reset Date. See "Interest and
Interest Rates," herein.
S-4
<PAGE>
Interest Payment Dates ........ Interest on the Notes will accrue from
September 18, 1997 and is payable quarterly
on the third Wednesday of each December,
March, June and September (each, an
"Interest Payment Date"), commencing on
December 17, 1997 to holders of record at
the close of business 15 calendar days
preceding each Interest Payment Date
(whether or not a Business Day). If any
Interest Payment Date is not a Business Day,
payment of interest otherwise payable on
Notes will be made on the next succeeding
Business Day and interest on principal shall
accrue for the period from and after the
Interest Payment Date to such next
succeeding Business Day and no interest
shall accrue on the interest payable on the
Interest Payment Date for the period from
and after such Interest Payment Date to such
next succeeding Business Day. See
"Description of Notes--Interest and Interest
Rates" in this Prospectus Supplement.
Book-Entry or Certificated
Note .......................... The Notes will be issued only in fully
registered form and will be represented by
one or more Global Notes registered in the
name of a nominee of DTC, as Depositary.
Beneficial interests in Global Notes will be
shown on, and transfers thereof will be
effected through, the records maintained by
the Depositary (with respect to
participants' interests) and its
participants. Investors may elect to hold
interests in the Global Notes through either
DTC (in the United States) or Cedel Bank,
societe anonyme ("Cedel") or Morgan Guaranty
Trust Company of New York, Brussels Office,
as operator of the Euroclear System
("Euroclear") (in Europe) if they are
participants in such systems, or indirectly
through organizations which are participants
in these systems. Except as described in the
accompanying Prospectus and this Prospectus
Supplement, the Notes will not be available
in definitive form.
Secondary market trading between DTC
participants will occur in the ordinary way
in accordance with DTC's rules and will be
settled in immediately available funds using
DTC's Same-Day Funds Settlement System.
Secondary market trading between Cedel
Participants and/or Euroclear Participants
will occur in the ordinary way in accordance
with the applicable rules and operating
procedures of Cedel and Euroclear and will
be settled using the procedures applicable
to conventional eurobonds in immediately
available funds. Cross-market transfers
between persons holding directly or
indirectly through DTC, on the one hand, and
directly or indirectly through Cedel or
Euroclear Participants, on the other, will
be effected in DTC in accordance with DTC
rules on behalf of the relevant European
international clearing system by its U.S.
Depositary. See "Description of Debt
Securities--Book-Entry System" in the
accompanying Prospectus and see "Description
of Notes--General" and "Additional
Information Regarding Book-Entry and
Clearance--Global Clearance and Settlement
Procedures" elsewhere in this Prospectus
Supplement.
S-5
<PAGE>
Minimum Denomination .......... The Notes will be issued in minimum
denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
Payment of Additional Amounts . The Company will, subject to the exceptions
and limitations set forth herein, pay as
additional interest on the Notes, such
additional amounts as are necessary in order
that the net payment by the Company or a
paying agent of the principal of and
interest on the Notes to a Non-U.S. Holder
(as defined under "Certain United States
Federal Income Tax Considerations"), after
deduction for any present or future tax,
assessment or governmental charge of the
United States or a political subdivision or
taxing authority thereof or therein, imposed
by withholding with respect to the payment,
will not be less than the amount provided in
the Notes to be then due and payable. See
"Description of Notes--Payment of Additional
Amounts" herein.
Redemption by the Company
Upon a Tax Event .............. If (a) as a result of any change in, or
amendment to, the laws (or any regulations
or rulings promulgated thereunder) of the
United States (or any political subdivision
or taxing authority thereof or therein), or
any change in, or amendments to, official
position regarding the application or
interpretation of such laws, regulations or
rulings, which change or amendment is
announced or becomes effective on or after
the date of this Prospectus Supplement, the
Company becomes or will become obligated to
pay additional amounts as described herein
under the heading "Payment of Additional
Amounts" or (b) any act is taken by a taxing
authority of the United States on or after
the date of this Prospectus Supplement,
whether or not such act is taken with
respect to the Company or any affiliate,
that results in a substantial probability
that the Company will or may be required to
pay such additional amounts, then, subject
to certain conditions specified herein, the
Company may, at its option, redeem, as a
whole, but not in part, the Notes on any
Interest Payment Date on not less than 30
nor more than 60 days' prior notice, at a
redemption price equal to 100% of their
principal amount, together with interest
accrued thereon to the date fixed for
redemption. See "Description of
Notes--Redemption by the Company Upon a Tax
Event" herein.
Optional Redemption by the
Company ....................... The Notes will be subject to redemption at
the option of the Company on any Interest
Payment Date beginning with the Interest
Payment Date occurring in September 2000
(the "Initial Redemption Date") in whole or
from time to time in part in increments of
$1,000 (provided that any remaining
principal amount thereof shall be at least
$1,000), at the Redemption Price (as defined
herein), together with unpaid interest
accrued to the date of redemption, on notice
given not more than 60 nor less than 30
calendar days prior to the date of
redemption and
S-6
<PAGE>
in accordance with the provisions of the
Indenture. "Redemption Price" means, with
respect to any Note, an amount equal to 100%
of the unpaid principal amount to be
redeemed. See "Description of
Notes--Optional Redemption by the Company"
in this Prospectus Supplement.
Optional Repayment ............ The Notes will not be repayable by the
Company at the option of the holders thereof
prior to maturity. See "Description of
Notes--Repayment at the Noteholder's Option;
Repurchase" in this Prospectus Supplement.
Sinking Fund .................. The Notes are not entitled to any sinking
fund.
Subordination ................. The Notes will be direct, unsecured and
unsubordinated obligations of the Company.
Except as described under "Description of
the Debt Securities--Negative Pledge" in the
accompanying Prospectus, the Notes will not
limit other indebtedness or securities which
may be incurred or issued by the Company or
any of its subsidiaries or contain financial
or similar restrictions on the Company or
any of its subsidiaries. The operations of
the Company are conducted through its
subsidiaries, and therefore, the Company is
dependent upon the earnings and cash flow of
its subsidiaries to meet its obligations,
including obligations under the Notes. The
Notes will be effectively subordinated to
all indebtedness of the Company's
subsidiaries. See "Description of
Notes--General" in this Prospectus
Supplement.
Trustee and Paying Agent ...... The Chase Manhattan Bank, 450 West 33rd
Street, New York, New York 10001 is Trustee
under the Indenture and the Paying Agent.
Chase Manhattan Bank Luxembourg S.A., 5, rue
Plaetis, L-2338 Luxembourg, will be the
Luxembourg Paying Agent.
Use of Proceeds ............... The Company will not receive any proceeds
from the sale of the Notes in any
market-making transaction with which this
Prospectus Supplement and accompanying
Prospectus may be delivered.
Listing ....................... Application has been made to the Luxembourg
Stock Exchange for listing of the Notes
thereon.
S-7
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Senior Debt
Securities" or the "Offered Securities") supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions set forth in the Prospectus, to which description reference is
hereby made. See "Description of Debt Securities."
The Notes will be issued under an Indenture dated as of September 3, 1997,
as supplemented by the First Supplemental Indenture, to be entered into on or
before the Original Issue Date (the Indenture and the First Supplemental
Indenture, together the "Indenture"), each between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"). The following summaries of
certain provisions of the Indenture do not purport to be complete, and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain
terms.
The Notes will be direct, unsecured and unsubordinated obligations of the
Company. Except as described under "Description of Debt Securities--Negative
Pledge" in the accompanying Prospectus, the Notes will not limit other
indebtedness or securities which may be incurred or issued by the Company or
any of its subsidiaries or contain financial or similar restrictions on the
Company or any of its subsidiaries. The operations of the Company are
conducted through its subsidiaries, and therefore, the Company is dependent
upon the earnings and cash flow of its subsidiaries to meet its obligations,
including obligations under the Notes. The Notes will be effectively
subordinated to all indebtedness of the Company's subsidiaries. As of June
30, 1997 the aggregate amount of indebtedness of the Company's subsidiaries
to which holders of the Notes would have been structurally subordinated was
approximately $584.6 million, substantially all of which was incurred under
customary arrangements utilized by the securities brokerage industry. The
Company's rights and the rights of its creditors, including holders of Notes,
to participate in the distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization will be subject to prior claims of
such subsidiary's creditors, including trade creditors, except to the extent
the Company may itself be a creditor with reorganized claims against such
subsidiary. In addition, net capital requirements under the Securities
Exchange Act of 1934, as amended, and New York Stock Exchange, Inc. rules
applicable to certain of the Company's subsidiaries could limit the payment
of dividends and the making of loans and advances to the Company by such
subsidiaries.
The Notes have the following terms: (i) the Notes will be denominated in
U.S. dollars and payments of principal and interest on such Notes will be
made in U.S. dollars; (ii) the Notes will bear a floating rate of interest
equal to three-month LIBOR (as defined herein) plus 25 basis points (the
"Spread"); (iii) the Notes will be issued at a price of 99.785% of the
principal amount (the "Issue Price"); (iv) the Notes will be issued on
September 18, 1997 (the "Original Issue Date"); (v) the initial interest rate
(the "Initial Interest Rate") on the Original Issue Date will be determined
based on three-month LIBOR on September 16, 1997 (two London Business Days
prior to the Original Issue Date); (vi) the Notes will mature on September
18, 2002; (vii) interest on the Notes will be paid quarterly on the third
Wednesday of each December, March, June and September, commencing on December
17, 1997; (viii) the Notes may be redeemed at the option of the Company on
any Interest Payment Date beginning with the Interest Payment Date occurring
in September 2000 at the Redemption Price of 100% of the unpaid principal
amount to be redeemed; (ix) under certain conditions, the Company will pay
additional interest on the Notes as are necessary in order that net payment
of principal of and interest on the Notes to a person who is not a U.S.
Holder will not be less than the amount provided for in the Notes, provided
that upon the occurrence of certain tax events, the Company may at its option
redeem, as a whole, but not in part, the Notes, and (x) the Notes may not be
repaid at the option of the holder, prior to their stated maturity.
The Notes will mature on September 18, 2002. In the event that such
maturity date of any Note or any date fixed for redemption or repayment of
any Note (collectively, the "Maturity Date") is not a Business Day (as
defined below), principal and interest payable at maturity or upon such
redemption or repayment will be paid on the next succeeding Business Day with
the same effect as if such Business Day
S-8
<PAGE>
were the Maturity Date. Interest on principal shall accrue for the period
from and after the Maturity Date to such next succeeding Business Day but no
interest shall accrue on the interest payable on the Maturity Date from and
after the Maturity Date to such next succeeding Business Day. All Notes will
mature at par.
The Notes will be issued in denominations of $1,000 and integral multiples
of $1,000 in excess thereof, unless otherwise specified herein.
Notes will be issued in the form of one or more fully registered global
securities (each, a "Global Note") deposited with or on behalf of a
depositary (the "Depositary") which will be The Depository Trust Company
("DTC"), and registered in the name of a nominee of the Depositary, in each
case as specified herein. See "Description of Debt Securities--Book-Entry
System" in the Prospectus.
DTC has advised the Company that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of the New York banking law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. DTC's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.
Principal of and interest on the Notes will be payable in the manner
described herein, the transfer of the Notes will be registrable, and the
Notes will be exchangeable for Notes bearing identical terms and provisions,
at the office of The Chase Manhattan Bank, the Company's paying agent (the
"Paying Agent," which term includes any successor paying agent appointed by
the Company, and any successor, appointed by the Company) and registrar for
the Notes (the "Registrar," which term includes any successor registrar),
currently located at 450 West 33rd Street, New York, New York 10001 and at
the office of Chase Manhattan Bank Luxembourg S.A. as the Luxembourg Paying
Agent, currently located at 5, rue Plaetis, L-2338 Luxembourg; provided, that
payment of interest, other than interest at maturity or upon redemption or
repayment, may be made by check mailed to the address of the person entitled
thereto as it appears on the security register at the close of business on
the Regular Record Date (as defined herein) corresponding to the relevant
Interest Payment Date (as defined herein). Notwithstanding the foregoing, (i)
a depositary, as holder of the Notes or (ii) a holder of more than $5 million
in aggregate principal amount of Notes in definitive form, shall be entitled
to receive payments of interest, other than interest due at maturity or upon
redemption, if any, by wire transfer of immediately available funds into an
account maintained by the holder in the United States, if appropriate wire
transfer instructions have been received by the Paying Agent not less than
ten days prior to the applicable Interest Payment Date. See "Description of
Debt Securities--Book-Entry System" in the Prospectus.
The principal and interest payable in U.S. dollars on a Note at maturity
or upon redemption will be paid by wire transfer of immediately available
funds against presentation of a Note at the office of the Paying Agent, or
the Luxembourg Paying Agent.
INTEREST AND INTEREST RATES
Interest payments on the Notes will accrue from and including the most
recent Interest Payment Date to which interest has been paid or duly provided
for or, if no interest has been paid or duly provided for, from and including
the Original Issue Date to but excluding the related Interest Payment Date,
the Maturity Date or any Redemption Date, as the case may be. Each Note will
bear interest at a floating rate equal to 25 basis points above three-month
LIBOR from its date of issue or from the most recent date to which interest
on such Note has been paid or duly provided for, until the principal thereof
is paid or made available for payment. Interest will be calculated by
reference to each period (an "Interest Accrual Period") beginning on the
Original Issue Date and ending on (but excluding) the first Interest Payment
S-9
<PAGE>
Date and each successive period beginning on (and including) an Interest
Payment Date and ending on (but excluding) the next succeeding Interest
Payment Date, the Maturity Date or Redemption Date of a Note. Interest will
be payable on each Interest Payment Date and at maturity or on redemption, if
any.
The rate of interest on the Notes will be reset quarterly on each Interest
Payment Date (each, an "Interest Reset Period"). Commencing on the Initial
Interest Reset Date, the rate at which interest on such Note shall be payable
shall be reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period from the Original Issue Date to the
Initial Interest Reset Date will be the Initial Interest Rate. The Initial
Interest Rate on the Original Issue Date will be determined based on
three-month LIBOR on September 16, 1997 (two London Business Days prior to
the Original Issue Date).
If any Interest Reset Date for any Note would otherwise be a day that is
not a Business Day, such Interest Reset Date will be postponed to the next
succeeding day that is a Business Day. As used herein, "Business Day" means
any day (i) that is not a Saturday or Sunday, (ii) that is not a day on which
banking institutions are generally authorized or obligated by law, regulation
or executive order to close in The City of New York and any other place of
payment with respect to the Notes and (iii) that is also a day on which
dealings in U.S. dollars are transacted in the London Interbank Market (a
"London Business Day").
The Notes do not have either of the following: (i) a maximum numerical
limitation, or ceiling, on the rate at which interest may accrue during any
interest period and (ii) a minimum numerical limitation, or floor, on the
rate at which interest may accrue during any interest period. The interest
rate on the Notes will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application.
Interest on the Notes will be payable quarterly, on a Business Day that
occurs on the third Wednesday of each December, March, June and September. If
any Interest Payment Date for any Note would otherwise be a day that is not a
Business Day, such Interest Payment Date will be the next succeeding day that
is a Business Day and interest on principal shall accrue for the period from
and after the Interest Payment Date to such next succeeding Business Day and
no interest shall accrue on the interest payable on the Interest Payment Date
for the period from and after such Interest Payment Date to such next
succeeding Business Day. If the Maturity Date falls on a day that is not a
Business Day, the payment of principal, premium, if any, and interest, if
any, will be made on the next succeeding Business Day, and interest on
principal shall accrue for the period from and after such Maturity Date to
such next succeeding Business Day but no interest shall accrue on the
interest payable on the Maturity Date from and after the Maturity Date to
such next succeeding Business Day.
The amount of interest payable in respect of any Note for any period shall
be calculated by applying the interest rate for that period to the
outstanding principal amount of such Note and multiplying the product by the
actual number of days in the Interest Accrual Period concerned divided by
360.
All percentages resulting from any calculation on the Notes will be to the
nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards (e.g., 5.876545% (or
.05876545) would be rounded to 5.87655% (or .0587655)), and all dollar
amounts used in or resulting from such calculation will be rounded to the
nearest cent (with one-half cent being rounded upward).
The interest rate applicable to each Interest Reset Period commencing on
the Interest Reset Date with respect to such Interest Reset Period will be
the rate determined on the "Interest Determination Date." The Interest
Determination Date will be the second London Business Day preceding each
Interest Reset Date. Three-month LIBOR will be determined and computed on
such date, and the applicable interest rate will take effect on the related
Interest Reset Date.
The Chase Manhattan Bank will be the Calculation Agent (the "Calculation
Agent," which term includes any successor calculation agent appointed by the
Company), and for each Interest Reset Date will determine the interest rate
with respect to the Notes as described below. The Calculation Agent will
notify the Company, the Paying Agent, the Trustee and (for as long as the
Notes are listed on the Luxembourg Stock Exchange) the Luxembourg Stock
Exchange, and the Company shall cause to be
S-10
<PAGE>
published in a leading daily newspaper in Luxembourg, which is expected to
be the Luxemburger Wort (for as long as the Notes are listed on the
Luxembourg Stock Exchange), the interest rate, the amount of interest per
Note, and the period for which the interest rate will apply promptly after
such determination is made, but no later than the Calculation Date. The
Calculation Date is the tenth calendar day after such Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business Day.
The Trustee will, upon the request of the holder of any Note, provide the
interest rate then in effect and, if determined, the interest rate which will
become effective as a result of a determination made with respect to the most
recent Interest Determination Date relating to such Note.
"LIBOR" for each Interest Reset Date will be determined by the Calculation
Agent as follows:
(i) With respect to any Interest Determination Date, LIBOR will be the
arithmetic mean of the offered rates (unless the specified Designated
LIBOR Page by its terms provides only for a single rate, in which case
such single rate shall be used) for three-month deposits in the London
interbank market in U.S. dollars and commencing on the second London
Business Day immediately following such Interest Determination Date that
appear on the Designated LIBOR Page as of 11:00 a.m., London time, on such
Interest Determination Date, if at least two such offered rates appear
(unless, as aforesaid, only a single rate is required) on such Designated
LIBOR Page. If no rate appears on the Designated LIBOR Page (or, if the
Designated LIBOR Page by its terms provides for more than a single rate
but fewer than two offered rates appear on such Page), LIBOR in respect of
such Interest Determination Date will be determined as if the parties had
specified the rate described in clause (ii) below.
(ii) With respect to an Interest Determination Date to which the last
sentence of clause (i) above applies, the Calculation Agent will request
the principal London offices of each of four major reference banks in the
London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotation for three-month deposits
in U.S. dollars commencing on the second London Business Day immediately
following such Interest Determination Date to prime banks in the London
interbank market at approximately 11:00 a.m., London time on such Interest
Determination Date and in a principal amount that is representative for a
single transaction in U.S. dollars in such market at such time. If at
least two such quotations are provided, LIBOR determined on such Interest
Determination Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR determined on such Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m. in The City of New York, on such Interest
Determination Date for three-month loans made in U.S. dollars to leading
European banks commencing on the second London Business Day immediately
following such Interest Determination Date and in a principal amount that
is representative for a single transaction in U.S. dollars in such market
at such time by three major banks in The City of New York selected by the
Calculation Agent; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this sentence, LIBOR
will be LIBOR determined with respect to the Interest Reset Date preceding
the applicable Interest Determination Date.
"Designated LIBOR Page" means the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank offered
rates of major banks for U.S. dollars (or such other page as may replace that
page on that service for the purpose of displaying such rates).
Interest will be payable to the person in whose name a Note is registered
at the close of business on the Regular Record Date immediately preceding the
related Interest Payment Date; provided, however, that: (i) if the Company
fails to pay such interest on such Interest Payment Date, such defaulted
interest will be paid to the person in whose name such Note is registered at
the close of business on the record date to be established for the payment of
defaulted interest; and (ii) interest payable at maturity, redemption or
repayment will be payable to the person to whom principal shall be payable.
The Interest Payment Dates for the Notes shall be the third Wednesday of each
December, March, June and September and each Regular Record Date for the
Notes will be the fifteenth calendar day (whether or not a Business Day) next
preceding each Interest Payment Date (a "Regular Record Date").
S-11
<PAGE>
PAYMENT OF ADDITIONAL AMOUNTS
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest on the Notes, such additional amounts as
are necessary in order that the net payment by the Company or a paying agent
of the principal of and interest on the Notes to a person that is not a U.S.
Holder (as defined under "Certain United States Federal Income Tax
Considerations," below), after deduction for any present or future tax,
assessment or governmental charge of the United States or a political
subdivision or taxing authority thereof or therein, imposed by withholding
with respect to the payment, will not be less than the amount provided in the
Notes to be then due and payable; provided, however, that the foregoing
obligation to pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the holder, or a fiduciary, settlor,
beneficiary, member or shareholder of the holder if the holder is an estate,
trust, partnership or corporation, or a person holding a power over an estate
or trust administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in trade or business in the
United States or having or having had a permanent establishment in the
United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) being or having been a foreign or domestic personal holding company,
a passive foreign investment company or a controlled foreign corporation
with respect to the United States or a corporation that has accumulated
earnings to avoid United States federal income tax; or
(d) being or having been a "10-percent shareholder" of the Company as
defined in section 871(h)(3) of the United States Internal Revenue Code or
any successor provision;
(2) to any holder that is not the sole beneficial owner of the Notes, or a
portion thereof, or that is a fiduciary or partnership, but only to the
extent that a beneficiary or settlor with respect to the fiduciary, a
beneficial owner or member of the partnership would not have been entitled to
the payment of an additional amount had the beneficiary, settlor, beneficial
owner or member received directly its beneficial or distributive share of the
payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the holder or any other person to
comply with certification, identification or information reporting
requirements concerning the nationality, residence, identity or connection
with the United States of the holder or beneficial owner of such Note, if
compliance is required by statute, by regulation of the United States
Treasury Department or by an applicable income tax treaty to which the United
States is a party as a precondition to exemption from such tax, assessment or
other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed otherwise
than by withholding by the Company or a paying agent from the payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after the
payment becomes due or is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth or
personal property tax or a similar tax, assessment or governmental charge;
(7) to any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of or interest on
any Note, if such payment can be made without such withholding by any other
paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5), (6)
and (7).
The Notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading "Payment of
S-12
<PAGE>
Additional Amounts" and under the heading "Description of Notes--Redemption
by the Company Upon a Tax Event," the Company shall not be required to make
any payment with respect to any tax, assessment or governmental charge
imposed by any government or a political subdivision or taxing authority
thereof or therein.
REDEMPTION BY THE COMPANY UPON A TAX EVENT
If (a) as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States (or any
political subdivision or taxing authority thereof or therein), or any change
in, or amendments to, official position regarding the application or
interpretation of such laws, regulations or rulings, which change or
amendment is announced or becomes effective on or after the date of this
Prospectus Supplement, the Company becomes or will become obligated to pay
additional amounts as described herein under the heading "Payment of
Additional Amounts" or (b) any act is taken by a taxing authority of the
United States on or after the date of this Prospectus Supplement, whether or
not such act is taken with respect to the Company or any affiliate, that
results in a substantial probability that the Company will or may be required
to pay such additional amounts, then the Company may, at its option, redeem,
as a whole, but not in part, the Notes on any Interest Payment Date on not
less than 30 nor more than 60 days' prior notice, at a redemption price equal
to 100% of their principal amount, together with interest accrued thereon to
the date fixed for redemption; provided that the Company determines, in its
business judgment, that the obligation to pay such additional amounts cannot
be avoided by the use of reasonable measures available to it, not including
substitution of the obligor under the Notes. No redemption pursuant to (b)
above may be made unless the Company shall have delivered to the Trustee a
certificate, signed by a duly authorized officer, stating that an act taken
by a taxing authority of the United States results in a substantial
probability that it will or may be required to pay the additional amounts
described herein under the heading "Payment of Additional Amounts" and that
the Company is therefore entitled to redeem the Notes pursuant to their
terms.
OPTIONAL REDEMPTION BY THE COMPANY
The Notes will not be subject to any sinking fund. The Notes will be
redeemable at the option of the Company on any Interest Payment Date (each, a
"Redemption Date") beginning with the Interest Payment Date occurring in
September 2000 (the "Initial Redemption Date") in whole or from time to time
in part in increments of $1,000 or such other minimum denomination specified
herein (provided that any remaining principal amount thereof shall be at
least $1,000 or such minimum denomination), at the applicable Redemption
Price (as defined herein), together with unpaid interest accrued to the date
of redemption, on notice given not more than 60 nor less than 30 calendar
days prior to the date of redemption and in accordance with the provisions of
the Indenture. "Redemption Price" means, with respect to any Note, 100% of
the unpaid principal amount to be redeemed.
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASE
The Notes will not be repayable by the Company at the option of the
holders thereof prior to maturity.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes purchased by the Company may, at its discretion, be held,
resold or surrendered to the Registrar for cancellation.
GOVERNING LAW
The Indenture and the Notes will be governed by and construed in
accordance with the laws of the State of New York.
S-13
<PAGE>
ADDITIONAL INFORMATION REGARDING BOOK-ENTRY AND CLEARANCE
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered
global notes (the "Global Notes") which will be deposited with, or on behalf
of DTC as the Depositary, and registered in the name of Cede & Co., DTC's
nominee. Beneficial interests in the Global Notes will be represented through
book-entry accounts of financial institutions acting on behalf of beneficial
owners as direct and indirect participants in DTC ("DTC Participants").
Investors may elect to hold interests in the Global Notes through either DTC
(in the United States) or Cedel Bank, societe anonyme ("Cedel") or Morgan
Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System ("Euroclear") (in Europe) if they are participants of such
systems, or indirectly through organizations which are participants in such
systems. Cedel and Euroclear will hold interests on behalf of their
participants through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective depositaries, which in
turn will hold such interests in customers' securities accounts in the
depositaries' names on the books of DTC. The Chase Manhattan Bank will act as
depositary for each of Euroclear and Cedel (in such capacities, the "U.S.
Depositaries"). Beneficial interests in the Global Notes will be held in
denominations of $1,000 and integral multiples thereof. Except as set forth
below, the Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee.
Cedel advises that it is incorporated under the laws of Luxembourg as a
professional depositary. Cedel holds securities for its participating
organizations ("Cedel Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Cedel provides to
Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets
in several countries. As a professional depositary, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the Underwriters. Indirect
access to Cedel is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Cedel Participant either directly or indirectly. Distributions with
respect to the Notes held beneficially through Cedel will be credited to cash
accounts of Cedel Participants in accordance with its rules and procedures,
to the extent received by the U.S. Depositary for Cedel.
Euroclear advises that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear includes various other services,
including securities lending and borrowing and interfaces with domestic
markets in several countries. Euroclear is operated by the Brussels, Belgium
office of Morgan Guaranty Trust Company of New York (the "Euroclear
Operator"), under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on behalf of
Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional
financial intermediaries and may include the Managers. Indirect access to
Euroclear is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
S-14
<PAGE>
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System, and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclear Participants, and has no record of
or relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary
for Euroclear.
Definitive Notes may be issued in the limited circumstances set forth in
"Description of the Debt Securities--Book-Entry System" of the accompanying
Prospectus. If definitive Notes are issued, payment of principal of and
interest on the Notes will be made as set forth under "Description of
Notes--General," above. Definitive Notes can be transferred by presentation
for registration to the Registrar at its New York or Luxembourg offices and
must be duly endorsed by the holder or his attorney duly authorized in
writing, or accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company or the Trustee duly executed by the holder
or his attorney duly authorized in writing. The Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or registration of transfer of
definitive Notes.
The Company has appointed Chase Manhattan Bank Luxembourg S.A. as paying
agent and transfer agent in Luxembourg (in such capacity the "Luxembourg
Paying Agent"). The Company will maintain a paying and transfer agent in
Luxembourg as long as the Notes are listed on the Luxembourg Stock Exchange.
For as long as the Notes are listed on the Luxembourg Stock Exchange, any
changes as to the identity or location of the Luxembourg Paying Agent will be
published in a leading daily newspaper in Luxembourg, which is expected to be
the Luxemburger Wort.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary
market trading between Cedel Participants and/or Euroclear Participants will
occur in the ordinary way in accordance with the applicable rules and
operating procedures of Cedel and Euroclear and will be settled using the
procedures applicable to conventional eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Cedel or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing
system by the U.S. Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time).
The relevant European international clearing system will, if the transaction
meets its settlement requirements, deliver instructions to the U.S.
Depositary to take action to effect final settlement on its behalf by
delivering or receiving Notes in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the Common Depositary.
Because of time-zone differences, credits of Notes received in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during subsequent securities settlement processing and dated the business day
following DTC settlement date. Such credits or any transactions in such Notes
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear
as a result of sales of Notes by or through a Cedel
S-15
<PAGE>
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following
settlement in DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Notes among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
S-16
<PAGE>
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
<S> <C>
John S. Chalsty Chairman and Chief Executive Officer and Director
Joe L. Roby President and Chief Operating Officer and Director
Carl B. Menges Vice Chairman and Director
Anthony F. Daddino Executive Vice President, Chief Financial Officer and Director
Richard S. Pechter Chairman, Financial Services Group and Director
Hamilton E. James Chairman, Banking Group and Director
Theodore P. Shen Chairman, Capital Markets Group and Director
Michael M. Bendik Senior Vice President and Chief Accounting Officer
Michael A. Boyd Senior Vice President and General Counsel
Gerald B. Rigg Senior Vice President and Director of Human Resources
Claude Bebear Director
Henri de Castries Director
Denis Duverne Director
Louis Harris Director
Henri Baron Hottinguer Director
W. Edwin Jarmain Director
Francis Jungers Director
Joseph J. Melone Director
W.J. Sanders III Director
Stanley B. Tulin Director
John C. West Director
</TABLE>
RECENT DEVELOPMENTS
In addition to the subsequent events set forth in the Company's Report on
Form 10-Q for the quarter ended June 30, 1997, the following events have
occurred since June 30, 1997.
The Company exercised its option to redeem the $28.8 million convertible
debentures issued in conjunction with the acquisition of a London based
financial advisory firm. Such debentures were converted into 685,204 shares
of common stock of the Company at the conversion price of $42 per share.
During the third quarter of 1997, the Company issued $110.0 million
Medium-Term Notes under its $300 million Medium-Term Notes program which
commenced in April 1997.
In August 1997, $88.0 million of 7.88% Medium-Term Notes plus accrued
interest were repaid in full.
S-17
<PAGE>
CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES
The following table sets forth the short-term borrowings, long-term
borrowings and capitalization of the Company as of June 30, 1997, and as
adjusted to give effect to the sale by the Company of an aggregate principal
amount of $350,000,000 of Notes offered hereby. This table should be read in
conjunction with "Recent Developments" included elsewhere herein and the
Consolidated Financial Statements, including the notes thereto, incorporated
by reference herein. Except as set forth under "Recent Developments," above,
there has been no material change to the capitalization of the Company since
June 30, 1997.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
----------------------------
(IN THOUSANDS, EXCEPT FOR
PER SHARE DATA)
(UNAUDITED)
ACTUAL AS ADJUSTED
------------- -------------
<S> <C> <C>
Short-term borrowings .......................................... $3,011,911 $3,011,911
============= =============
Long-term borrowings: (1)
Senior Notes, 6 7/8% due in 2005 .............................. 497,322 497,322
Senior subordinated revolving credit agreement due 2000 ...... 325,000 325,000
Subordinated exchange notes, 9-5/8% due in 2003 ............... 225,000 225,000
Structured Notes .............................................. 188,065 188,065
Global Floating Rate Notes due 2002 ........................... -- 350,000
Medium-term notes, 5 5/8% due in 2016 ......................... 249,549 249,549
Medium-term notes, 7.88% due in 1997 .......................... 88,000 88,000
Medium-term notes, 5.8125% due in 2000 ........................ 69,846 69,846
Junior subordinated convertible debentures, 6.1875% due in
2001.......................................................... 36,000 36,000
Junior subordinated convertible debentures, 5% due in 2004 ... 28,779 28,779
Other borrowings .............................................. 31,921 31,921
------------- -------------
Total long-term borrowings .................................. 1,739,482 2,089,482
Company-obligated mandatorily redeemable preferred securities
of subsidiary trust holding solely debentures of the Company .. 200,000 200,000
Stockholders' equity:
Series A Preferred Stock, at liquidation preference ($50.00
liquidation preference, 4,000,000 shares authorized,
issued and outstanding)....................................... 200,000 200,000
Common stock ($0.10 par value)
150,000,000 shares authorized;
55,098,363 shares issued and outstanding...................... 5,510 5,510
Restricted stock units; 5,179,147 units authorized; 3,283,613
units issued and outstanding ................................. 67,305 67,305
Paid-in capital ............................................... 411,533 411,533
Retained earnings ............................................. 1,136,479 1,136,479
Cumulative translation adjustment ............................. 3,568 3,568
------------- -------------
Total stockholders' equity .................................. 1,824,395 1,824,395
============= =============
Total capitalization ....................................... $3,763,877 $4,113,877
============= =============
</TABLE>
- ------------
(1) Long-term borrowings include current maturities of long-term borrowings.
S-18
<PAGE>
SELECTED FINANCIAL DATA OF THE COMPANY AND ITS SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30, YEARS ENDED DECEMBER 31,
----------------------- ------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA AND FINANCIAL
RATIOS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues:
Commissions .............................. $ 326.7 $ 299.0 $ 573.3 $ 460.2 $ 376.1
Underwritings ............................ 338.5 391.0 714.2 441.5 261.1
Fees ..................................... 322.8 184.7 470.0 369.1 281.3
Interest, net (1) ........................ 689.7 481.9 1,074.2 904.1 791.9
Principal transactions-net:
Trading ................................. 266.2 275.1 435.4 364.9 165.7
Investment .............................. 64.4 111.1 163.0 163.7 97.6
Other .................................... 34.3 24.3 60.7 55.1 35.0
----------- ----------- ----------- ----------- -----------
Total revenues ........................ 2,042.6 1,767.1 3,490.8 2,758.6 2,008.7
----------- ----------- ----------- ----------- -----------
Costs and Expenses:
Compensation and benefits................. 865.8 809.0 1,538.8 1,261.4 897.8
Compensation expense -
restricted stock units................... -- -- -- 6.2 --
Interest.................................. 465.2 352.5 733.2 680.6 503.8
Brokerage, clearing, exchange fees and
other.................................... 109.8 97.7 201.3 168.1 135.6
Occupancy and equipment .................. 85.3 67.9 159.3 127.1 90.1
Communications ........................... 29.8 23.8 53.7 42.8 36.6
Other operating expenses ................. 175.7 150.4 330.7 173.9 139.8
----------- ----------- ----------- ----------- -----------
Total costs and expenses .............. 1,731.6 1,501.3 3,017.0 2,460.1 1,803.7
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes . 311.0 265.8 473.8 298.5 205.0
Provision for income taxes ................ 124.4 103.7 182.5 119.4 82.0
----------- ----------- ----------- ----------- -----------
Net income................................. $ 186.6 $ 162.1 $ 291.3 $ 179.1 $ 123.0
=========== =========== =========== =========== ===========
Dividends on preferred stock............... $ 6.2 $ 9.9 $ 18.7 $ 19.9 $ 21.0
=========== =========== =========== =========== ===========
Earnings applicable to common shares ...... $ 180.4 $ 152.2 $ 272.6 $ 159.2 $ 102.0
=========== =========== =========== =========== ===========
Weighted average common shares (2):
Primary .................................. 62,488 59,839 59,918 51,657 --
Fully diluted............................. 64,739 59,839 60,788 51,680 --
Earnings per share (2):
Primary................................... $ 2.89 $ 2.54 $ 4.55 $ 3.08 --
Fully diluted............................. $ 2.79 $ 2.54 $ 4.49 $ 3.08 --
Pro forma weighted average common
shares outstanding (3).................... -- -- -- -- 51,475
Pro forma earnings per common share (3) ... -- -- -- -- $ 1.98
S-19
<PAGE>
SIX MONTHS ENDED JUNE
30, YEARS ENDED DECEMBER 31,
----------------------- ------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA AND FINANCIAL
RATIOS)
(UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA
(AT END OF PERIOD):
Securities purchased under agreements to
resell and securities borrowed............ $39,492.2 $29,872.7 $29,954.2 $27,793.1 $19,166.9
Total assets .............................. 69,722.1 47,746.6 55,503.7 44,576.5 33,261.6
Securities sold under agreements to
repurchase and securities loaned.......... 41,375.8 29,703.2 32,103.1 29,369.0 20,385.4
Long-term borrowings ...................... 1,739.5 1,103.9 1,541.6 983.4 539.9
Preferred stock ........................... 200.0 225.0 200.0 225.0 225.0
Total stockholders' equity ................ 1,824.4 1,337.5 1,647.2 1,198.7 820.3
OTHER FINANCIAL DATA (AT END OF PERIOD):
Book value per common share outstanding .. $ 27.82 $ 22.89 $ 24.79 $ 20.50 $ 16.41
Ratio of net assets to total stockholders'
equity (4)................................ 16.5x 13.36x 15.51x 14.00x 17.18x
Ratio of long-term borrowings to total
capitalization (5)........................ 0.45 0.41 0.44 0.37 0.30
Return on average common stockholders'
equity (6)................................ 23.5% 24.1% 20.6% 17.1% 13.1%
Ratio of earnings to fixed charges ........ 1.17x 1.20x 1.16x 1.11x 1.10x
Ratio of earnings to combined fixed
charges and preferred stock dividends (7). 1.16x 1.19x 1.16x 1.10x 1.09x
</TABLE>
- ------------
(1) Interest is net of interest expense to finance U.S. government, agency
and mortgage backed securities of $1,365.8 million, $991.3 million,
$2,132.6 million, $2,019.2 million and $1,612.8 million, respectively.
(2) Primary and fully diluted earnings per common share are computed by
dividing earnings applicable to common shares (net income less
preferred dividends) by the respective weighted average number of
shares of common stock and common stock equivalents outstanding during
each period presented. Common share equivalents include shares of
common stock issuable under the Company's Restricted Stock Unit Plan
and the dilutive effects of options under the Treasury Stock method. In
addition, in calculating fully diluted earnings per common share,
common share equivalents also include the dilutive effect of
convertible debt using the "if -converted" method.
(3) Pro forma earnings per common share are calculated by dividing earnings
applicable to common shares, (net income less preferred dividends) by
the pro forma weighted average number of common shares and common share
equivalents outstanding. Pro forma common shares outstanding represent
actual historical shares outstanding adjusted for the dilutive effect
of the Restricted Stock Units (RSUs) using the treasury stock method.
(4) Net assets (total assets excluding securities purchased under
agreements to resell and securities borrowed) divided by total
stockholder equity.
(5) Long-term borrowings and total capitalization (the sum of long-term
borrowings, preferred stock and stockholders' equity) exclude current
maturities of long-term borrowings.
(6) Return on average common stockholders' equity is calculated on an
annualized basis for periods of less than one full year and is based on
earnings applicable to common shares.
(7) For the purpose of calculating the ratio of earnings to combined fixed
charges and preferred stock dividends (i) earnings consist of income
before the provision for income taxes and fixed charges and (ii) fixed
charges consist of interest expense and one-third of rental expense
which is deemed representative of an interest factor.
S-20
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Wilmer, Cutler & Pickering, special tax counsel to the
Company, the following summary accurately describes the principal United
States federal income tax consequences of the purchase, ownership and
disposition of the Notes to initial holders purchasing Notes at the "issue
price" (as defined below). This summary is based on the Internal Revenue Code
of 1986, as amended (the "Code"), administrative pronouncements, judicial
decisions and existing and proposed Treasury regulations, changes to any of
which subsequent to the date of this Prospectus Supplement may affect the tax
consequences described herein. Wilmer, Cutler & Pickering undertakes no
obligation to supplement this opinion to reflect any changes in laws that may
occur after the date hereof.
This summary discusses only Notes held as capital assets within the
meaning of Section 1221 of the Code. It does not discuss all of the tax
consequences that may be relevant to a holder in light of the holder's
particular circumstances or to holders subject to special rules, such as
certain financial institutions, insurance companies, dealers in securities or
foreign currencies, persons holding Notes as part of a straddle or hedging
transaction, or United States Holders whose functional currency (as defined
in Code Section 985) is not the U.S. dollar. Finally, this summary does not
discuss Original Issue Discount Notes (as defined below for the purposes of
this summary) which qualify as "applicable high-yield discount obligations"
under Section 163(i) of the Code. Holders of Original Issue Discount Notes
which are "applicable high-yield discount obligations" may be subject to
special rules. Persons considering the purchase of Notes should consult their
tax advisors with regard to the application of the United States federal
income tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
As used in this summary, the term "U.S. Holder" means the beneficial owner
of a Note that is (i) for United States federal income tax purposes a citizen
or resident of the United States (including certain former citizens and
former long-term residents), (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source or (iv) a
trust with respect to the administration of which a court within the United
States is able to exercise primary supervision and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust.
As used in this summary, the term "Non-U.S. Holder" means an owner of a
Note that is, for United States federal income tax purposes, (i) a
nonresident alien individual, (ii) a foreign corporation, (iii) a foreign
estate, (iv) a foreign trust or (v) a foreign partnership, one or more of the
members of which is, for United States federal income tax purposes, a
nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Interest paid or accrued on Notes will be taxable to U.S. Holders as
ordinary interest income. Interest will be included in U.S. Holders' income
at the time such payments are accrued or are received in accordance with the
U.S. Holder's method of accounting for United States federal income tax
purposes, unless the Notes are classified as Original Issue Discount Notes.
The time at which interest paid or accrued with respect to Original Issue
Discount Notes is included in a U.S. Holder's income is described below.
ORIGINAL ISSUE DISCOUNT NOTES
A Note that is issued for an issue price that is less than its stated
redemption price at maturity will generally be considered to have been issued
at an original issue discount for United States federal income tax purposes
(an "Original Issue Discount Note"). The "issue price" of a Note equals the
first price at which a substantial amount of the Notes is sold to the public
for money (not including sales to bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement
S-21
<PAGE>
agents or wholesalers). The "stated redemption price at maturity" of a Note
equals the sum of all payments required under the Note other than payments of
qualified stated interest.
"Qualified stated interest" generally means stated interest
unconditionally payable as a series of payments in cash or property (other
than debt instruments of the Company) at least annually during the entire
term of the Note and equal to the outstanding principal balance of the Note
multiplied by a single fixed rate of interest. In addition, interest
unconditionally payable at least annually with respect to floating rate Notes
may in certain circumstances be treated as qualified stated interest. See
"--Floating Rate Notes" below.
A Note will not be considered to have original issue discount if the
difference between the Note's stated redemption price at maturity and its
issue price is less than a de minimis amount, i.e., 1/4 of 1% of the stated
redemption price at maturity multiplied by the number of complete years to
maturity. Holders of Notes with a de minimis amount of original issue
discount will generally include such original issue discount in income, as
capital gain, on a pro rata basis as principal payments are made on the Note.
A U.S. Holder of Original Issue Discount Notes will be required to include
qualified stated interest payments in income as such payments are received or
accrued in accordance with the U.S. Holder's method of accounting for federal
income tax purposes. U.S. Holders of Original Issue Discount Notes will be
required to include original issue discount in income for federal income tax
purposes as it accrues, regardless of their accounting method, in accordance
with a constant yield method based on a compounding of interest. As a
consequence, U.S. Holders will be required to include interest on Original
Issue Discount Notes in income before receiving the corresponding interest
payments.
In general, the amount of original issue discount included in income by
the initial U.S. Holder of an Original Issue Discount Note will be the sum of
the daily portions of original issue discount with respect to such Original
Issue Discount Note for each day during the taxable year (or portion of the
taxable year) on which the U.S. Holder held the Original Issue Discount Note.
The "daily portion" of original issue discount on any Original Issue Discount
Note is determined by allocating to each day in any accrual period a ratable
portion of the original issue discount allocable to that accrual period. An
"accrual period" may be of any length and the accrual periods may vary in
length over the term of the Original Issue Discount Note, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the final day of an accrual period or
on the first day of an accrual period. The amount of original issue discount
allocable to each accrual period is generally equal to the difference between
(i) the product of the Original Issue Discount Note's adjusted issue price at
the beginning of such accrual period and its yield to maturity (appropriately
adjusted to take into account the length of the particular accrual period)
and (ii) the amount of any qualified stated interest payments allocable to
such accrual period. (An issuer's call option is not taken into account in
determining yield and maturity if, by exercising the option, the issuer would
increase the yield to maturity.) The "adjusted issue price" of an Original
Issue Discount Note at the beginning of any accrual period is the sum of the
issue price of the Original Issue Discount Note plus the amount of original
issue discount allocable to all prior accrual periods minus the amount of any
prior payments on the Original Issue Discount Note that were not qualified
stated interest payments. Under these rules, U.S. Holders generally will have
to include in income increasingly greater amounts of original issue discount
in successive accrual periods.
Constant Yield Election. U.S. Holders may generally, upon election,
include in income all interest (including stated interest, acquisition
discount, original issue discount, de minimis original issue discount, market
discount, de minimis market discount, and unstated interest, as adjusted by
any amortizable bond premium or acquisition premium) that accrues on a debt
instrument by using the constant yield method applicable to original issue
discount, subject to certain limitations and exceptions. This election may be
made separately for each debt instrument or class of debt instrument.
FLOATING RATE NOTES
Floating rate Notes acquired by U.S. Holders are subject to special rules
for determining qualified stated interest or original issue discount. A
floating rate Note will qualify as a "variable rate debt instrument" if (i)
its issue price does not exceed the total noncontingent principal payments
due under the
S-22
<PAGE>
floating rate Note by more than a specified de minimis amount and (ii) it
provides for stated interest, paid or compounded at least annually, at among
other things, current values of one or more qualified floating rates. A
"qualified floating rate" is any variable rate where variations in the value
of such rate can reasonably be expected to measure contemporaneous variations
in the cost of newly borrowed funds in the currency in which the floating
rate Note is denominated. Rates such as the CD Rate, Commercial Paper Rate,
Eleventh District Cost of Funds Rate, Federal Funds Rate, LIBOR, Prime Rate,
CMT Rate and the Treasury Rate, plus or minus a fixed Spread (or a fixed rate
minus one of the above floating rates) will generally be treated as qualified
stated interest.
Because the Notes provide for stated interest at a single qualified
floating rate throughout their term and the interest on the Notes are
unconditionally payable at least annually, all stated interest on the Notes
will constitute qualified stated interest, and will be taxed as described
above under "Original Issue Discount Notes." The Notes will not have original
issue discount unless they are issued for an amount that is less than their
stated principal amount, and the amount of such original issue discount is
more than the de minimis amount described above under "Original Issue
Discount Notes." If a Note is issued with original issue discount, the amount
of original issue discount that accrues during an accrual period is
determined under the rules applicable to fixed rate debt instruments by
converting the variable rate into an equivalent fixed rate. The qualified
stated interest allocable to an accrual period is increased (or decreased) if
the interest actually paid during an accrual period exceeds (or is less than)
the interest assumed to be paid during the accrual period pursuant to the
foregoing rules. Because a Note will bear interest at a floating rate based
on LIBOR and will be issued at or below par, it will qualify as a "variable
rate debt instrument."
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a Note, a U.S. Holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such U.S. Holder's adjusted
tax basis in the Note. For these purposes, the amount realized does not
include any amount attributable to accrued interest on the Note which has not
previously been included in income. Such amounts are treated as payments of
interest. See "--Payments of Interest" above. A U.S. Holder's adjusted tax
basis in a Note will equal the U.S. Holder's cost of acquiring the Note,
increased by the amount of original issue discount the U.S. Holder previously
included in income with respect to such Note and reduced by any amortized
bond premium, principal payments, and the amount of any other payments except
payments of qualified stated interest (as defined above).
Gain or loss realized on the sale, exchange or retirement of a Note will
be capital gain or loss. See "--Original Issue Discount Notes" above. For
certain noncorporate U.S. Holders (including individuals), the rate of
taxation of capital gain will depend upon (i) the U.S. Holder's holding
period for the Note (with preferential rates available for a Note held more
than 18 months) and (ii) the U.S. Holder's marginal tax rate for ordinary
income. U.S. Holders should consult their tax advisors with respect to
applicable rates and holding periods, and netting rules for capital losses.
PURCHASERS OF NOTES AT OTHER THAN ORIGINAL ISSUE PRICE OR DATE
The foregoing does not discuss special rules which may affect the
treatment of purchasers that acquire Notes either (a) other than at the time
of original issuance or (b) at the time of original issuance other than at
the issue price, including those provisions of United States tax law relating
to the treatment of "market discount," "acquisition premium," and
"amortizable bond premium." Such purchasers should consult their tax advisors
as to the consequences to them of the acquisition, ownership and disposition
of the Notes.
BACKUP WITHHOLDING AND INFORMATION REPORTING FOR U.S. HOLDERS
Information reporting to the Internal Revenue Service is required for
interest payments and original issue discount accruals for certain
noncorporate U.S. Holders (including individuals). These noncorporate U.S.
Holders may be subject to backup withholding at a rate of 31% on payments of
principal, premium
S-23
<PAGE>
and interest (including original issue discount, if any) on, and the
proceeds of disposition of, a Note. Backup withholding will apply only if the
U.S. Holder (i) fails to furnish its Taxpayer Identification Number ("TIN")
which, for an individual, would be his Social Security Number, (ii) furnishes
an incorrect TIN, (iii) is notified by the Internal Revenue Service that it
has failed to properly report payments of interest and dividends or (iv)
under certain circumstances, fails to certify, under penalty of perjury, that
it has furnished a correct TIN and has not been notified by the Internal
Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments. The application for exemption is
available by providing a properly completed Internal Revenue Service Form
W-9. U.S. Holders should consult their tax advisors regarding their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a U.S. Holder will
be allowed as a credit against such U.S. Holder's United States federal
income tax liability and may entitle such U.S. Holder to a refund, provided
that the required information is furnished to the Internal Revenue Service.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
INCOME AND WITHHOLDING TAX
Under present United States federal law, and subject to the discussion
below concerning backup withholding:
(a) payments of principal, interest (including original issue discount,
if any) and premium on the Notes by the Company or any paying agent to any
Non-U.S. Holder will not be subject to the 30% United States federal
withholding tax, provided that, in the case of interest, (i) such Non-U.S.
Holder does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, is not a controlled foreign corporation related, directly or
indirectly, to the Company through stock ownership, and is not a bank
receiving interest described in Section 881(c)(3)(A) of the Code and (ii)
the statement requirement set forth in Section 871(h) or Section 881(c) of
the Code has been fulfilled with respect to the beneficial owner, as
discussed below;
(b) a Non-U.S. Holder of a Note will not be subject to United States
federal income tax on gain realized on the sale, exchange or other
disposition of such Note, unless (i) such Non-U.S. Holder is an individual
who is present in the United States for 183 days or more in the taxable
year of disposition, and either (a) such individual has a "tax home" (as
defined in Code Section 911(d)(3)) in the United States (unless such gain
is attributable to a fixed place of business in a foreign country
maintained by such individual and has been subject to foreign tax of at
least 10%) or (b) the gain is attributable to an office or other fixed
place of business maintained by such individual in the United States or
(ii) such gain is effectively connected with the conduct by such Non-U.S.
Holder of a trade or business in the United States.
Sections 871(h) and 881(c) of the Code require that, in order to obtain
the portfolio interest exemption from withholding tax described in paragraph
(a) above, either the beneficial owner of a Note, or a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution") and that is holding the Note on behalf of such beneficial
owner, file a statement with the withholding agent that the beneficial owner
of the Note is not a U.S. Holder. The financial institution must certify
under penalties of perjury, that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnish the payor with a copy thereof. Such requirement
will be fulfilled if the beneficial owner of a Note certifies on United
States Internal Revenue Service Form W-8, under penalties of perjury, that it
is not a U.S. Holder and provides its name and address, and any Financial
Institution holding the Note on behalf of the beneficial owner files a
statement with the withholding agent to the effect that it has received such
a statement (and furnishes the withholding agent with a copy thereof).
If a Non-U.S. Holder of a Note is engaged in a trade or business in the
United States, and if interest (including original issue discount) on the
Note or gain realized on its sale, exchange or other disposition is
effectively connected with the conduct of such trade or business, the
Non-U.S. Holder, although exempt
S-24
<PAGE>
from the withholding tax discussed in the preceding paragraph, will
generally be subject to regular United States income tax on such effectively
connected income in the same manner as if it were a U.S. Holder. See "--Tax
Consequences to United States Holders" above. In lieu of the certificate
described in the preceding paragraph, such a Non-U.S. Holder will be required
to provide to the Company a properly executed United States Internal Revenue
Service Form 4224 or successor form in order to claim an exemption from
withholding tax. In addition, if such Non-U.S. Holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% (or such
lower rate provided by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments.
For purposes of the branch profits tax, interest (including original issue
discount) on and any gain recognized on the sale, exchange or other
disposition of a Note will be included in the effectively connected earnings
and profits of such Non-U.S. Holder if such interest or gain, as the case may
be, is effectively connected with the conduct by the Non-U.S. Holder of a
trade or business in the United States.
Under Section 2105(b) of the United States federal estate tax law, a Note
or coupon held by an individual who is not a citizen or resident of the
United States at the time of his death will not be subject to United States
federal estate tax as a result of such individual's death, provided that the
individual does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of the Company entitled to vote
and, at the time of such individual's death, payments with respect to such
Note would not have been effectively connected to the conduct by such
individual of a trade or business in the United States.
Each Non-U.S. Holder of a Note should be aware that if it does not
properly provide the required Internal Revenue Service form, or if the
Internal Revenue Service form is not properly transmitted to and received by
the United States person otherwise required to withhold United States federal
income tax, interest on the Note may be subject to United States withholding
tax at a 30% rate.
BACKUP WITHHOLDING AND INFORMATION REPORTING FOR NON-U.S. HOLDERS
Under certain circumstances, the United States Internal Revenue Service
requires information reporting and backup withholding of United States
federal income tax at a rate of 31% with respect to payments to certain
noncorporate Non-U.S. Holders (including individuals). Information reporting
and backup withholding will apply unless such noncorporate Non-U.S. Holders
certify to the withholding agent that the beneficial owner of the Note is not
a U.S. Holder. This certification requirement will generally be satisfied by
the certification provided to avoid the 30% withholding tax (described
above).
The payment of the proceeds of a disposition of a Note by a Non-U.S.
Holder to or through the United States office of a broker or through a
non-United States branch of a United States broker generally will be subject
to information reporting and backup withholding at a rate equal to 31% of the
gross proceeds unless the Non-U.S. Holder certifies on Internal Revenue
Service Form W-8 that the beneficial owner of the Note is not a U.S. Holder
or otherwise establishes an exemption. The payment of the proceeds of a
disposition of a note by a Non-U.S. Holder to or through a non-United States
office of a non-United States broker will not be subject to backup
withholding or information reporting unless the non-United States broker has
certain United States relationships.
Non-U.S. Holders of Notes should consult their tax advisors regarding the
application of withholding, information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and
the procedure for obtaining such an exemption, if available.
Any amounts withheld from a payment to a Non-U.S. Holder under the backup
withholding rules will be allowed as a credit against such Non-U.S. Holder's
United States federal income tax liability and may entitle such Non-U.S.
Holder to a refund, provided that the required information is furnished to
the United States Internal Revenue Service.
S-25
<PAGE>
THE FEDERAL INCOME TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. PROSPECTIVE U.S. HOLDERS AND NON-U.S. HOLDERS OF THE
NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE
NOTES, INCLUDING THE TAX CONSEQUENCES UNDER FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE EFFECTS OF CHANGES IN SUCH LAWS.
PLAN OF DISTRIBUTION
This Prospectus Supplement has been prepared for use by DLJSC in
connection with offers and sales of the Notes in market-making transactions
at negotiated prices related to prevailing market prices at the time of the
sale. DLJSC may act as principal or agent in such transactions. DLJSC has
advised the Company that it currently intends to make a market in the Notes,
but it is not obligated to do so and may discontinue any such market-making
at any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or the trading market for, the Notes.
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-laws of the Company and a legal notice relating to
the issuance of the Notes have been deposited prior to listing with the
Greffier en Chef du Tribunal d'Arrondissement de et a Luxembourg, where
copies thereof may be obtained upon request. Copies of the above documents
together with this Prospectus Supplement, the accompanying Prospectus, the
Indenture and the Company's current Annual and Quarterly Reports, as well as
all future Annual Reports and Quarterly Reports, so long as any of the Notes
are outstanding, will be made available for inspection at the main office of
Banque Internationale a Luxembourg S.A. in Luxembourg. Banque Internationale
a Luxembourg S.A. will act as intermediary between the Luxembourg Stock
Exchange and the Company and the holders of the Notes. Also, for as long as
the Notes are listed on the Luxembourg Stock Exchange, all notices to be made
to noteholders will be published in a leading daily newspaper in Luxembourg,
which is expected to be the Luxemburger Wort. In addition, copies of the
Annual Reports and Quarterly Reports of the Company may be obtained free of
charge at such office. The Annual Reports contain consolidated and condensed,
non-consolidated financial statements of the Company.
Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no adverse change in the
financial position of the Company or its subsidiaries since December 31, 1996
that is material to the Company and its subsidiaries taken as a whole.
Except as disclosed in this Prospectus Supplement, the Prospectus and
documents incorporated herein and therein by reference, neither the Company
nor any of its subsidiaries is involved in litigation, arbitration, or
administrative proceedings relating to claims or amounts that are material in
the context of the issue of the Notes and the Company is not aware of any
such litigation, arbitration, or administrative proceedings pending or
threatened.
The Company accepts responsibility for the information contained in this
Prospectus Supplement and accompanying Prospectus.
Resolutions relating to the issue and sale of the Notes were adopted by
the Board of Directors of the Company on May 15, 1997, and by the Pricing
Committee of the Board of Directors on September 4, 1997.
The Notes have been assigned Euroclear and Cedel Common Code No. 8040133,
International Security Identification Number (ISIN) US257661AC28 and CUSIP
No. 257661AC2.
S-26
<PAGE>
PROSPECTUS
AUGUST 22, 1997
$1,000,000,000
DONALDSON, LUFKIN & JENRETTE, INC.
DEBT SECURITIES
Donaldson Lufkin & Jenrette, Inc. (the "Company") may from time to time
offer, together or separately, (i) senior debt securities ("Senior Debt
Securities") or (ii) subordinated debt securities ("Subordinated Debt
Securities") (collectively, the "Debt Securities").
The Debt Securities offered pursuant to this Prospectus may be issued in
one or more series or issuances in U.S. dollars or in one or more foreign
currencies, currency units or composite currencies. The aggregate initial
public offering price of the securities to be offered by this Prospectus
shall not exceed $1,000,000,000 (or its equivalent in one or more foreign
currencies, currency units or composite currencies).
Specific terms of the securities in respect of which this Prospectus is
being delivered (the "Offered Securities") will be set forth in an
accompanying prospectus supplement (a "Prospectus Supplement"), together with
the terms of the offering of the Offered Securities, the initial price
thereof and the net proceeds from the sale thereof. The Prospectus Supplement
will set forth with regard to the particular Offered Securities, without
limitation, the following: the ranking as senior or subordinated debt
securities, the specific designation, aggregate principal amount, authorized
denomination, maturity, rate (which may be fixed or variable) or method of
calculation of interest and dates for payment thereof, and any
exchangeability, conversion, redemption, prepayment or sinking fund
provisions and any listing on a securities exchange. Unless otherwise
indicated in the Prospectus Supplement, the Company does not intend to list
any of the Debt Securities on a national securities exchange.
The Senior Debt Securities, when issued, will be unsecured and will rank
equally with all other unsecured and unsubordinated indebtedness of the
Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Prospectus has been prepared for use by Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJSC") in connection with offers and sales of the
Offered Securities which may be made by it from time to time in market-making
transactions at negotiated prices relating to prevailing market prices at the
time of sale. The Company has been advised by DLJSC that it currently intends
to make a market in the Offered Securities; however, it is not obligated to
do so. Any such market-making may be discontinued at any time, and there is
no assurance as to the liquidity of, or trading market for, the Offered
Securities. DLJSC may act as principal or agent in such transactions. See
"Plan of Distribution." This Prospectus may not be used to consummate sales
of Offered Securities unless accompanied by a Prospectus Supplement.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE DISTRIBUTION OF THE OFFERED
SECURITIES MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE
AFFECT THE PRICE OF THE OFFERED SECURITIES OR OTHER DEBT SECURITIES.
SPECIFICALLY, THE AGENTS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING, AND
MAY BID FOR, AND PURCHASE, OFFERED SECURITIES IN THE OPEN MARKET. SUCH
TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME AND WILL BE
CARRIED OUT IN ACCORDANCE WITH APPLICABLE LAWS AND REGULATIONS.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement of which this Prospectus forms a part, as well as reports, proxy
statements and other information filed by the Company, may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, New York,
New York 10048; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
at prescribed rates from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be
accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov. The Company's common stock, par value $0.10
per share (the "Common Stock"), is listed on The New York Stock Exchange (the
"NYSE"), and reports and other information concerning the Company can also be
inspected at the office of The New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
This Prospectus constitutes a part of the Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Offered Securities. Any
statements contained herein concerning the provisions of any document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission or incorporated by reference herein are not necessarily complete,
and in each instance reference is made to the copy of such document so filed
for a more complete description of the matter involved. Each such statement
is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1996, Quarterly Report on Form 10-Q for the quarter ended March 31, 1997,
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 and Current
Report on Form 8-K filed on April 11, 1997, previously filed by the Company
with the Commission, are incorporated by reference in this Prospectus.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the termination of the offering of the Offered Securities offered hereby,
shall be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statements as modified
or superseded shall be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may
be incorporated by reference in this Prospectus (other than certain exhibits
to such documents). Requests for such documents should be directed to
Donaldson, Lufkin & Jenrette, Inc., 277 Park Avenue, New York, New York
10172, Attention: Corporate Secretary (Telephone: (212) 892-3000).
3
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Offered
Securities in any market-making transaction with which this Prospectus may be
delivered.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (1)............... 1.21 1.20 1.10 1.11 1.16 1.17
</TABLE>
- ------------
(1) For the purpose of calculating the ratio of earnings to fixed charges
(i) earnings consist of income before provision for income taxes and
fixed charges and (ii) fixed charges consist of interest expense and
one-third of rental expense which is deemed representative of an
interest factor.
4
<PAGE>
THE COMPANY
The Company is a leading integrated investment and merchant bank that
serves institutional, corporate, governmental and individual clients. The
Company's businesses include securities underwriting, sales and trading;
merchant banking; financial advisory services; investment research;
correspondent brokerage services; and asset management. While results have
fluctuated from year to year, for the years 1992 through 1996, the Company's
total revenues and net income increased by a compound annual growth rate of
20.4% and 18.7%, respectively. The Company's average annual after-tax return
on common equity for the past five years was 23.6%. At June 30, 1997, the
Company had total assets of $69.7 billion and total stockholders' equity of
$1.8 billion.
The Company's principal strategy is to focus its resources on certain core
businesses where management believes the Company can compete profitably and
be among the leading participants in each targeted market. Over the past
several years, the Company has significantly expanded the scope of its
business activities and its customer base, both in the U.S. and
internationally. It has established strong positions in selected high-margin
activities, including equity and high-yield corporate securities underwriting
as well as merchant banking, and has increased its market share in a broad
range of businesses. Key elements of this expansion have been the Company's
recruitment of experienced professionals during periods of turmoil in the
securities industry, the continued development and retention of the Company's
existing personnel at all levels and the continuity of senior management. In
addition, the Company historically has emphasized economic and investment
research in the development of its business and believes that its commitment
to research has been an important contributor to its success.
The Company conducts its business through three principal operating
groups, each of which is an important contributor to revenues and earnings:
the Banking Group, which includes the Company's Investment Banking, Merchant
Banking and Emerging Markets groups; the Capital Markets Group, consisting of
the Company's institutional debt and equity businesses as well as Sprout, its
venture capital affiliate; and the Financial Services Group, composed of its
Pershing clearing division, high-net-worth retail brokerage and asset
management businesses.
The Company's Banking Group is a major participant in the raising of
capital and the providing of financial advice to companies throughout the
U.S. and has significantly expanded its activities abroad. Through its
Investment Banking group, the Company manages and underwrites public
offerings of securities, arranges private placements and provides advisory
and other services in connection with mergers, acquisitions, restructurings
and other financial transactions. Its Merchant Banking group pursues direct
investments in a variety of areas through a number of investment vehicles
funded with capital provided primarily by institutional investors, the
Company and its employees. Since the Company began investing in leveraged
investments in 1985, it has achieved an average annual internal rate of
return substantially higher than comparable industry benchmarks. The Emerging
Markets group specializes in client advisory services, merchant banking and
the underwriting, sales and trading of securities in Latin America, Asia and
certain other international markets. In addition, the Company recently
acquired Phoenix Group Limited, a leading financial advisory firm in the
United Kingdom.
The Capital Markets Group encompasses a broad range of activities
including trading, research, origination and distribution of equity and
fixed-income securities, private equity investments and venture capital. Its
focus is primarily client-driven, in contrast to that of many other
securities firms which emphasize proprietary trading, an approach that
reduces the Company's exposure to market volatility. Its Fixed-Income
division provides institutional clients with research, trading and sales
services for a broad range of fixed-income products including high-yield
corporate, investment-grade corporate, U.S. government and mortgage-backed
securities. The Institutional Equities division provides institutional
clients with research, trading and sales services in U.S. listed and
over-the-counter equity securities. In addition, the Company's Equity
Derivatives division provides a broad range of equity and index options
products, while Sprout is one of the oldest and largest groups in the private
equity investment and venture capital industry.
The Company's Financial Services Group consists of those businesses that
serve individual investors and financial intermediaries. The group's largest
unit, the Pershing Division, provides trade execution,
5
<PAGE>
clearing and communications services. The group's three other businesses deal
primarily with individual investors. DLJ Asset Management provides money
management and trust services to corporations, high-net-worth individuals and
families. The Company's 300-broker Investment Services Group provides a full
range of traditional, research-based brokerage services, and PC Financial
Network is one of the country's largest on-line discount brokerage services.
Founded in 1959, the Company initially focused on providing in-depth
investment research to institutional investors. In 1970, the Company became
the first member firm of the NYSE to be owned publicly. Fifteen years later,
the Company was purchased by The Equitable Life Assurance Society of the
United States. Prior to October 1995, the Company was an independently
operated, wholly owned (direct and indirect) subsidiary of The Equitable
Companies Incorporated ("EQ") (EQ and its subsidiaries other than the
Company, collectively, "Equitable"). After the completion of an initial
public offering in October 1995, Equitable's ownership in the Company was
reduced from 100% to 80.2%. Equitable, which as of March 31, 1997, owned
approximately 78.2% of the Company's issued and outstanding common stock, is
a diversified financial services organization and one of the world's largest
investment management organizations. AXA-UAP is EQ's largest stockholder,
beneficially owning at March 31, 1997, approximately 60.7% of EQ's
outstanding shares of common stock and $392.2 million stated value of EQ's
Series E convertible preferred stock.
The principal executive offices of the Company are located at 277 Park
Avenue, New York, NY, 10172 and its telephone number is (212) 892-3000.
6
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 150,000,000 shares
of Common Stock, par value $0.10 per share and 25,000,000 shares of Preferred
Stock, par value $0.01 per share. As of August 8, 1997, the Company had
55,801,730 shares of Common Stock outstanding. In October 1996, the Company
exercised its option under the terms of the $8.83 Cumulative Preferred Stock
agreement to exchange all outstanding shares of Cumulative Exchangeable
Preferred Stock for $225 million in aggregate principal amount of 9.58%
Subordinated Exchange Notes due October 15, 2003. In November 1996, the
Company issued 4,000,000 shares of Fixed/Adjustable Rate Cumulative Preferred
Stock, Series A, with a liquidation preference of $50 per share. The
following summary description of the capital stock of the Company is
qualified in its entirety by reference to the Certificate of Incorporation
and the Bylaws of the Company, copies of which have been filed with the
Commission.
COMMON STOCK
Subject to the rights of the holders of any Preferred Stock which may be
outstanding, each holder of Common Stock on the applicable record date is
entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor, and, in the event of
liquidation, to share pro rata in any distribution of the Company's assets
after payment or providing for the payment of liabilities and the liquidation
preference of any outstanding Preferred Stock. Each holder of Common Stock is
entitled to one vote for each share held of record on the applicable record
date on all matters presented to a vote of stockholders, including the
election of directors. Holders of Common Stock have no cumulative voting
rights or preemptive rights to purchase or subscribe for any stock or other
securities, and there are no conversion rights or redemption or sinking fund
provisions with respect to such stock. All outstanding shares of Common Stock
are fully paid and nonassessable.
The Common Stock is listed on the NYSE under the symbol "DLJ."
The transfer agent for the Common Stock is First Chicago Trust Company of
New York.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes 25,000,000 shares of
Preferred Stock. The Company's Board of Directors has the authority to issue
shares of Preferred Stock in one or more series and to fix, by resolution,
the terms of such securities, without any further vote or action by the
stockholders. The Company has designated 4,000,000 shares of Preferred Stock
as Fixed/Adjustable Rate Cumulative Preferred Stock, Series A.
As of June 30, 1997, the Company had outstanding 4,000,000 shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, Series A (the "Series A
Preferred Stock") with an aggregate liquidation value of $200 million. The
Series A Preferred Stock is entitled to cumulative cash dividends, as, if and
when declared by the Board of Directors or a duly authorized committee
thereof, out of funds legally available therefor. The initial dividend for
the dividend period commencing on November 22, 1996 to (but excluding)
February 28, 1997 was $0.8085 per share and was payable on February 28, 1997.
Thereafter, dividends on the Series A Preferred Stock will be payable
quarterly, as, if and when declared by the Board of Directors of the Company
on February 28, May 30, August 30 and November 30 of each year (each a
"Dividend Payment Date") at the annual rate of 5.94% or $2.97 per share
through November 30, 2001. After November 30, 2001, the applicable rate per
annum for each dividend period beginning on or after November 30, 2001 will
be equal to 0.50% plus the highest of three pre-selected rates as determined
in advance of such dividend period, but not less than 6.44% nor greater than
12.44% (without taking into account any adjustments). The holders of shares
of the Series A Preferred Stock generally will not be entitled to vote,
unless the equivalent of six quarterly dividends payable on the Series A
Preferred Stock or any other class or series of preferred stock is in default
or as expressly required by applicable law. On or after November 30, 2001,
each share of the Series A Preferred Stock will be redeemable by the Company,
in whole or in part, out of funds legally available therefor, at a redemption
price of $50 per share, together in each case with accrued and unpaid
dividends (whether or not declared) to the date fixed
7
<PAGE>
for redemption. Holders of the Series A Preferred Stock will have no right to
require redemption of the Series A Preferred Stock, and the Company may not
redeem the Series A Preferred Stock prior to November 30, 2001 except under
certain limited circumstances.
DESCRIPTION OF DEBT SECURITIES
The Company's Debt Securities may constitute either senior debt securities
("Senior Debt Securities") or subordinated debt securities ("Subordinated
Debt Securities") of the Company. The Senior Debt Securities may be issued
under an indenture (the "Senior Debt Indenture") to be entered into between
Donaldson, Lufkin & Jenrette, Inc., as issuer, and a trustee to be named in
the applicable Prospectus Supplement (the "Senior Debt Securities Trustee").
The Subordinated Debt Securities may be issued under an indenture (the
"Subordinated Debt Indenture") to be entered into between Donaldson, Lufkin &
Jenrette, Inc., as issuer and a trustee to be named in the applicable
Prospectus Supplement (the "Subordinated Debt Securities Trustee"). The
Senior Debt Indenture and the Subordinated Debt Indenture are sometimes
hereinafter referred to individually as an "Indenture" and collectively as
the "Indentures." The Senior Debt Securities Trustee and the Subordinated
Debt Securities Trustee, in their capacity as trustee under either or both of
the Indentures, are individually referred to herein as the "Trustee" and
collectively as the "Trustees." Defined terms with respect to the description
of the Debt Securities shall have the meaning set forth below in "Certain
Definitions."
Forms of the Indentures have been or will be incorporated by reference or
included herein as exhibits to the Registration Statement of which this
Prospectus is a part and will also be available for inspection at the offices
of the Trustees. The Indentures will be subject to and governed by the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Section
references contained herein are to the applicable Indenture. The following
summaries of certain provisions of the Indentures do not purport to be
complete, and where reference is made to particular provisions of the
Indentures, such provisions, including definitions of certain terms, are
incorporated by reference as a part of such summaries or terms, which are
qualified in their entirety by such reference. The Indentures are
substantially identical except for provisions relating to subordination and
the Company's negative pledge.
GENERAL
Neither of the Indentures limits the aggregate principal amount of Debt
Securities which may be issued thereunder and each Indenture provides that
Debt Securities may be issued thereunder from time to time in one or more
series. The Debt Securities will be direct, unsecured senior or subordinated
obligations of the Company. Except as described under "--Negative Pledge,"
neither Indenture limits other indebtedness or securities which may be
incurred or issued by the Company or any of its subsidiaries or contains
financial or similar restrictions on the Company or any of its subsidiaries.
The operations of the Company are conducted through its subsidiaries, and,
therefore, the Company is dependent upon the earnings and cash flow of its
subsidiaries to meet its obligations, including obligations under the Debt
Securities. The Debt Securities will be effectively subordinated to all
indebtedness of the Company's subsidiaries. The Company's rights and the
rights of its creditors, including holders of Debt Securities, to participate
in the distribution of assets of any subsidiary upon such subsidiary's
liquidation or reorganization will be subject to prior claims of such
subsidiary's creditors, including trade creditors, except to the extent the
Company may itself be a creditor with recognized claims against such
subsidiary. In addition, net capital requirements under the Exchange Act and
New York Stock Exchange rules applicable to certain of the Company's
subsidiaries could limit the payment of dividends and the making of loans and
advances to the Company by such subsidiaries.
The applicable Prospectus Supplement which accompanies this Prospectus,
sets forth where applicable the following terms of, and information relating
to, the Debt Securities offered thereby: (i) the ranking of such Debt
Securities as senior or subordinated debt securities; (ii) the designation of
such Debt Securities; (iii) the aggregate principal amount of such Debt
Securities; (iv) the date or dates on which principal of and premium, if any,
on such Debt Securities is payable; (v) the rate or rates at which such Debt
Securities shall bear interest, if any, or the method by which such rate
shall be determined, and the basis on which interest shall be calculated if
other than a 360-day year consisting of twelve 30-day months,
8
<PAGE>
the date or dates from which such interest will accrue and on which such
interest will be payable and the related record dates; (vi) if other than the
offices of the Trustee, the place where the principal of, and any premium or
interest on, such Debt Securities will be payable; (vii) any redemption,
repayment or sinking fund provisions; (viii) if other than denominations of
$1,000 or multiples thereof, the denominations in which such Debt Securities
will be issuable; (ix) if other than the principal amount thereof, the
portion of the principal amount due upon acceleration; (x) if other than U.S.
dollars, the currency or currencies (including currency units or composite
currencies) in which such Debt Securities are denominated or payable; (xi)
whether such Debt Securities shall be issued in the form of a Global Security
or securities; (xii) any other specific terms of such Debt Securities; and
(xiii) the identity of any trustees, depositories, authenticating or paying
agents, transfer agents or registrars with respect to such Debt Securities.
(Section 2.3)
Unless otherwise specified in the accompanying Prospectus Supplement,
principal and premium, if any, will be payable, and the Debt Securities will
be transferable and exchangeable without any service charge, at the office of
the Trustee. However, the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection with any
such transfer or exchange. (Sections 2.7, 4.1 and 4.2)
Unless otherwise specified in the accompanying Prospectus Supplement,
interest on any series of Debt Securities will be payable on the interest
payment dates set forth in the accompanying Prospectus Supplement to the
persons in whose names the Debt Securities are registered at the close of
business on the related record date and will be paid, at the option of the
Company, by wire transfer or by checks mailed to such persons. (Sections 2.7,
4.1 and 4.2)
If the Debt Securities are issued as Original Issue Discount Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below their stated
principal amount, the Federal income tax consequences and other special
considerations applicable to such Original Issue Discount Securities will be
generally described in the Prospectus Supplement.
BOOK-ENTRY SYSTEM
If so specified in the accompanying Prospectus Supplement, Debt Securities
of any series may be issued under a book-entry system in the form of one or
more global Debt Securities (each a "Global Security"). Each Global Security
will be deposited with, or on behalf of a depositary (the "Depositary"),
which will be specified in the accompanying Prospectus Supplement. The Global
Securities will be registered in the name of the Depositary or its nominee.
Participants of the Depositary may include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations. Access to the Depositary's book-entry system may also be
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with participants, either
directly or indirectly.
Upon the issuance of a Global Security in registered form, the Depositary
will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such
Global Security to the accounts of participants. The accounts to be credited
will be designated by the underwriters, dealers or agents or another clearing
agency whose participants' accounts at that clearing agency will be credited
as designated by the underwriters, dealers or agents. Ownership of beneficial
interests in the Global Security will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial
interests by participants in the Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained
by such participants. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to own, transfer or pledge
a beneficial interest in a Global Security.
So long as the Depositary or its nominee is the registered owner of a
Global Security, it will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as set forth below, owners of a beneficial
interest in such
9
<PAGE>
Global Security will not be entitled to have the Debt Securities represented
thereby registered in their names, will not receive or be entitled to receive
physical delivery of certificates representing the Debt Securities
represented thereby and will not be considered the owners or holders thereof
under the applicable Indenture. Accordingly, each person owning a beneficial
interest in such Global Security must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any
rights of a holder under the applicable Indenture.
Payment of principal of, and interest on, the Debt Securities will be made
to the Depositary or its nominee, as the case may be, as the registered owner
and holder of the Global Security representing such Debt Securities. None of
the Company, the Trustee, any paying agent or registrar for the Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security or for maintaining, supervising or receiving
any records relating to such beneficial ownership interests.
A Global Security may not be transferred except as a whole by the
Depositary to a nominee or successor of the Depositary or by a nominee of the
Depositary to another nominee of the Depositary. A Global Security
representing all but not part of the Debt Securities being offered pursuant
to the applicable Prospectus Supplement is exchangeable for Debt Securities
in definitive form of like tenor and terms if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for such
Global Security or in other cases specified in the Prospectus Supplement, and
in either case, a successor depositary is not appointed by the Company within
90 days of receipt by the Company of such notice or of the Company becoming
aware of such ineligibility, or (ii) the Company in its sole discretion at
any time determines not to have all of the Debt Securities represented by a
Global Security and notifies the Trustee thereof. A Global Security
exchangeable pursuant to the preceding sentence shall be exchangeable for
Debt Securities registered in such names and in such authorized denominations
as the Depositary for such Global Security shall direct.
Other specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
and a description of the Depositary will be provided in the Prospectus
Supplement.
SENIOR DEBT
Payment of the principal of, premium, if any, and interest, if any, on
Senior Debt Securities issued under the Senior Debt Indenture will rank pari
passu with all other unsecured and unsubordinated debt of the Company.
SUBORDINATED DEBT
Payment of the principal of, premium, if any, and interest, if any, on
Subordinated Debt Securities issued under the Subordinated Debt Indenture
will be subordinate and junior in right of payment, to the extent and in the
manner set forth in the Subordinated Debt Indenture, to all Senior
Indebtedness of the Company. The Subordinated Debt Indenture does not contain
any limitation on the amount of Senior Indebtedness that can be incurred by
the Company.
The Subordinated Debt Indenture provides that no payment may be made by or
on behalf of the Company on account of any obligation or, to the extent the
subordination thereof is permitted by applicable law, claim in respect of the
Subordinated Debt Securities, including the principal of, premium, if any, or
interest on the Subordinated Debt Securities, or to redeem (or make a deposit
in redemption of), defease (other than payments made by the Trustee pursuant
to the provisions of the Indenture described under "--Discharge, Defeasance
and Covenant Defeasance" with respect to a defeasance permitted by the
Indenture, including the subordination provisions thereof) or acquire any of
the Subordinated Debt Securities for cash, property or securities, (i) upon
the maturity of the Designated Senior Indebtedness or any other Senior
Indebtedness with an aggregate principal amount in excess of $1.0 million by
lapse of time, acceleration or otherwise, unless and until all principal of,
premium, if any, and interest on such Senior Indebtedness and all other
obligations in respect thereof are first paid in full
10
<PAGE>
in cash or cash equivalents or such payment is duly provided for, or unless
and until any such maturity by acceleration has been rescinded or waived or
(ii) in the event of default in the payment of any principal of, premium, if
any, or interest on or any other amount payable in respect of the Designated
Senior Indebtedness or any other Senior Indebtedness with an aggregate
principal amount in excess of $1.0 million when it becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise, unless and until such payment default has been cured or waived or
has otherwise ceased to exist.
Upon the happening of a default (any event that, after notice or passage
of time would be an event of default) or an event of default (any event that
permits the holders of Senior Indebtedness or their representative or
representatives immediately to accelerate its maturity) with respect to any
Senior Indebtedness, other than a default in payment of the principal of,
premium, if any, or interest on such Senior Indebtedness, upon written notice
of such default or event of default given to the Company and the Trustee by
the holders of a majority of the principal amount outstanding of the
Designated Senior Indebtedness or their representative or, at such time as
there is no Designated Senior Indebtedness, by the holders of a majority of
the principal amount outstanding of all Senior Indebtedness or their
representative or representatives or, if such default or event of default
results from the acceleration of the Subordinated Debt Securities,
immediately upon such acceleration, then, unless and until such default or
event of default has been cured or waived or otherwise has ceased to exist,
no payment may be made by or on behalf of the Company with respect to any
obligation or claim in respect of the Subordinated Debt Securities, including
the principal of, premium, if any, or interest on the Subordinated Debt
Securities or to redeem (or make a deposit in redemption of), defease or
acquire any of the Subordinated Debt Securities for cash, property or
securities. Notwithstanding the foregoing, unless the Senior Indebtedness in
respect of which such default or event of default exists has been declared
due and payable in its entirety within 180 days after the date written notice
of such default or event of default is delivered as set forth above or the
date of such acceleration as the case may be (the "Payment Blockage Period"),
and such declaration or acceleration has not been rescinded, the Company
shall be required then to pay all sums not paid to the Holders of the
Subordinated Debt Securities during the Payment Blockage Period due to the
foregoing prohibitions and to resume all other payments as and when due on
the Subordinated Debt Securities. Any number of such notices may be given;
provided however, that (i) during any 360 consecutive days, only one Payment
Blockage Period shall commence and (ii) any such default or event of default
that existed upon the commencement of a Payment Blockage Period may not be
the basis for the commencement of any other Payment Blockage Period, unless
such default or event of default shall have been cured or waived for a period
of not less than 90 consecutive days.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company from any source whether in cash,
property or securities, shall be received by the Trustee or the Holders on
account of any obligation or claim in respect of the Subordinated Debt
Securities at a time when such payment or distribution is prohibited by the
foregoing provisions, such payment or distribution shall be held in trust for
the benefit of the holders of Senior Indebtedness, and shall be paid or
delivered by the Trustee or such Holders, as the case may be, to the holders
of the Senior Indebtedness remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay or to provide for the payment in full
in cash or cash equivalents of all such Senior Indebtedness, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization or readjustment of
the Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit of
creditors, or any other marshaling of the assets and liabilities of the
Company or otherwise, (i) the holders of all Senior Indebtedness would first
be entitled to receive payment in full in cash or cash equivalents (or have
such payment duly provided for) of the principal, premium, if any, and
interest payable in respect
11
<PAGE>
therefor before the Holders would be entitled to receive any payment on
account of the principal of, premium, if any, and interest on the
Subordinated Debt Securities, and (ii) any payment or distribution of assets
of the Company of any kind or character, from any source, whether in cash,
property or securities to which the Holders or the Trustee on behalf of the
Holders would be entitled, except for the subordination provisions contained
in the Indenture, would be paid by the liquidating trustee or agent or other
person making such a payment or distribution directly to the holders of
Senior Indebtedness remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay or provide for the payment in full in
cash or cash equivalents of all such Senior Indebtedness, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Indebtedness.
The holders of the Senior Indebtedness and their respective
representatives are authorized to demand specific performance of the
provisions with respect to subordination in the Indenture at any time when
the Company or any Holder shall have failed to comply with any provision with
respect to subordination in the Indenture applicable to it, and the Company
and each Holder irrevocably waives any defense based on the adequacy of a
remedy at law that might be asserted as a bar to the remedy of specific
performance of such subordination provision in any action brought therefor by
the holders of the Senior Indebtedness and their respective representatives.
By reasons of such subordination, in the event of the liquidation or
insolvency of the Company, creditors of the Company who are not holders of
Senior Indebtedness, including Holders of the Subordinated Debt Securities,
may recover less, ratably, than holders of Senior Indebtedness.
No provision contained in the Indenture or the Subordinated Debt
Securities will affect the obligation of the Company, which is absolute and
unconditional, to pay, when due, principal of, premium, if any, and interest
on the Subordinated Debt Securities. The subordination provisions of the
Indenture and the Subordinated Debt Securities will not prevent the
occurrence of any Event of Default under the Indenture or limit the rights of
the Trustee or any Holder, except as provided in the seven preceding
paragraphs, to pursue any other rights or remedies with respect to the
Subordinated Debt Securities.
NEGATIVE PLEDGE
The Senior Debt Indenture provides that the Company and any successor
corporation will not, and will not permit any Subsidiary to, create, assume,
incur or guarantee any indebtedness for borrowed money secured by a pledge,
lien or other encumbrance except for Permitted Liens (as defined in the
Senior Debt Indenture) on the Voting Stock of Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJSC") or any other Subsidiary of the Company which
shall hereafter succeed by merger or otherwise to all or substantially all of
the business of DLJSC (a "DLJSC Successor"), without making effective
provision whereby the Senior Debt Securities will be secured equally and
ratably with such secured indebtedness. (Senior Debt Indenture, Section 4.3)
CERTAIN DEFINITIONS
The term "Holder" or "Securityholder" as defined in the applicable
Indenture means the registered holder of any Debt Security with respect to
registered Debt Securities and the bearer of any unregistered Debt Security
or any coupon appertaining thereto, as the case may be.
The term "Designated Senior Indebtedness" means any class of Senior
Indebtedness the aggregate principal amount outstanding of which exceeds $50
million and which is specifically designated in the instrument evidencing
such Senior Indebtedness or the agreement under which such Senior
Indebtedness arises as "Designated Senior Indebtedness."
The term "Original Issue Discount Security" as defined in the applicable
Indenture means any Debt Security that provides for an amount less than the
principal amount thereof to be due and payable upon declaration of
acceleration of the maturity thereof pursuant to Section 6.2 of the
applicable Indenture.
12
<PAGE>
The term "Senior Indebtedness" as defined in the Subordinated Debt
Indenture means the principal of and premium, if any, and interest on: (a)
all indebtedness of the Company, whether outstanding on the date of the
Subordinated Debt Indenture or thereafter created, (i) for money borrowed by
the Company; (ii) for money borrowed by, or obligations of, others and either
assumed or guaranteed, directly or indirectly, by the Company; (iii) in
respect of letters of credit and acceptances issued or made by banks; or (iv)
constituting purchase money indebtedness, or indebtedness secured by property
included in the property, plant and equipment accounts of the Company at the
time of the acquisition of such property by the Company, for the payment of
which the Company is directly liable, and (b) all deferrals, renewals,
extensions and refundings of, and amendments, modifications and supplements
to, any such indebtedness. As used in the preceding sentence, the term
"purchase money indebtedness" means indebtedness evidenced by a note,
debenture, bond or other instrument (whether or not secured by any lien or
other security interest) issued or assumed as all or a part of the
consideration for the acquisition of property, whether by purchase, merger,
consolidation or otherwise, unless by its terms such indebtedness is
subordinated to other indebtedness of the Company. Notwithstanding anything
to the contrary in the Subordinated Debt Indenture or the Subordinated Debt
Securities, Senior Indebtedness shall not include, (i) any indebtedness of
the Company which, by its terms or the terms of the instrument creating or
evidencing it, is subordinate in right of payment to or pari passu with the
Subordinated Debt Securities or (ii) any indebtedness of the Company to a
subsidiary of the Company. (Subordinated Debt Indenture, Section 1.1)
The term "Subsidiary" as defined in the applicable Indenture means with
respect to any Person, any corporation, association or other business entity
of which more than 50% of the outstanding Voting Stock (as defined in the
applicable Indenture) is owned directly or indirectly, by such Person and one
or more other Subsidiaries of such Person.
RESTRICTIONS ON MERGERS AND SALES OF ASSETS
Under each Indenture, the Company shall not consolidate with, merge with
or into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (as an entirety or substantially
as an entirety in one transaction or a series of related transactions) to,
any Person (other than a consolidation with or merger with or into a
Subsidiary or a sale, conveyance, transfer, lease or other disposition to a
Subsidiary) or permit any Person to merge with or into the Company unless:
(a) either (i) the Company shall be the continuing Person or (ii) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of the
Company shall be a corporation organized and validly existing under the laws
of the United States of America or any jurisdiction thereof and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, all of the obligations of the Company on all of the Debt Securities
and under the applicable Indenture and the Company shall have delivered to
the Trustee an opinion of counsel stating that such consolidation, merger or
transfer and such supplemental indenture complies with this provision and
that all conditions precedent provided for in the applicable Indenture
relating to such transaction have been complied with and that such
supplemental indenture constitutes the legal, valid and binding obligation of
the Company or such successor enforceable against such entity in accordance
with the terms, subject to customary exceptions; and (b) the Company shall
have delivered to the Trustee an officer's certificate to the effect that
immediately after giving effect to such transaction, no Default (as defined
in the applicable Indenture) shall have occurred and be continuing and an
opinion of counsel as to the matters set forth in paragraph (a) above.
(Section 5.1)
EVENTS OF DEFAULT
Events of Default defined in the applicable Indenture with respect to the
Debt Securities of any series are: (a) the Company defaults in the payment of
all or any part of the principal of any Debt Security of such series when the
same becomes due and payable at maturity, upon acceleration, redemption or
mandatory repurchase, including as a sinking fund installment, or otherwise;
(b) the Company defaults in the payment of any interest on any Debt Security
of such series when the same becomes due and payable, and such default
continues for a period of 30 days; (c) the Company defaults in the
performance of or
13
<PAGE>
breaches any other covenant or agreement of the Company in the applicable
Indenture with respect to any Debt Security of such series or in the Debt
Securities of such series and such default or breach continues for a period
of 60 consecutive days after written notice thereof has been given to the
Company by the Trustee or to the Company and the Trustee by the Holders of
25% or more in aggregate principal amount of the Debt Securities of all
series under the applicable Indenture affected thereby; (d) an involuntary
case or other proceeding shall be commenced against the Company or DLJSC
(including for purposes of paragraph (d) and (e) hereof any DLJSC Successor)
with respect to the Company or DLJSC or their respective debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of the Company or DLJSC or for any substantial part of
the property and assets of the Company or DLJSC, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Company or DLJSC
under any bankruptcy, insolvency or other similar law now or hereafter in
effect; (e) the Company or DLJSC (i) commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary
case under any such law, (ii) consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or DLJSC or for all or
substantially all of the property and assets of the Company or DLJSC or (iii)
effects any general assignment for the benefit of creditors; (f) an Event of
Default, as defined in any one or more indentures or instruments evidencing
or under which the Company has at the date of the applicable Indenture or
shall thereafter have outstanding an aggregate of at least $25,000,000
aggregate principal amount of indebtedness for borrowed money, shall happen
and be continuing and such indebtedness shall have been accelerated so that
the same shall be or become due and payable prior to the date on which the
same would otherwise have become due and payable, and such acceleration shall
not be rescinded or annulled within ten days after notice thereof shall have
been given to the Company by the Trustee (if such event be known to it), or
to the Company and the Trustee by the holders of at least 25% in aggregate
principal amount of the Debt Securities at the time outstanding under the
applicable Indenture; provided that if such Event of Default under such
indentures or instruments shall be remedied or cured by the Company or waived
by the holders of such indebtedness, then the Event of Default under the
applicable Indenture by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without further action upon the part of
either the Trustee or any of the Securityholders; provided further, however,
that the Trustee shall not be charged with knowledge of any such default
unless written notice thereof shall have been given to the Trustee by the
Company, by the holder or an agent of the holder of any such indebtedness, by
the Trustee then acting under any indenture or other instrument under which
such default shall have occurred, or by the Holders of not less than 25% in
the aggregate principal amount of the Debt Securities at the time
outstanding; (g) failure by the Company to make any payment at maturity,
including any applicable grace period, in respect of at least $25,000,000
aggregate principal amount of indebtedness for borrowed money and such
failure shall have continued for a period of ten days after notice thereof
shall have been given to the Company by the Trustee (if such event be known
to it), or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the Debt Securities at the time outstanding
under the applicable Indenture; provided that if such failure shall be
remedied or cured by the Company or waived by the holders of such
indebtedness, then the Event of Default under the applicable Indenture by
reason thereof shall be deemed likewise to have been thereupon remedied,
cured or waived without further action upon the part of either the Trustee or
any of the Securityholders; or (h) any other Event of Default established
with respect to any series of Debt Securities issued pursuant to the
applicable Indenture occurs. (Section 6.1)
Each Indenture provides that if an Event of Default described in clauses
(a) or (b) of the immediately preceding paragraph with respect to the Debt
Securities of any series then outstanding thereunder occurs and is
continuing, then, and in each and every such case, except for any series of
Debt Securities the principal of which shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Debt Securities of any such affected series then
outstanding under the applicable Indenture (each such series treated as a
separate class) by notice in writing to the Company (and to the Trustee if
given by Securityholders), may declare the entire principal
14
<PAGE>
amount (or, if the Debt Securities of any such series are Original Issue
Discount Securities, such portion of the principal amount as may be specified
in the terms of such series established pursuant to the applicable Indenture)
of all Debt Securities of such affected series, and the interest accrued
thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable. If an Event of
Default described in clauses (c) or (h) of the immediately preceding
paragraph with respect to the Debt Securities of one or more series then
outstanding under the applicable Indenture occurs and is continuing, then, in
each and every such case, except for any series of Debt Securities the
principal of which shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount
(or, if the Debt Securities of any such series are Original Issue Discount
Securities, such portion of the principal as may be specified in the terms
thereof established pursuant to the applicable Indenture) of the Debt
Securities of all such affected series then outstanding under the applicable
Indenture (treated as a single class) by notice in writing to the Company
(and to the Trustee if given by Securityholders), may declare the entire
principal amount (or, if the Debt Securities of any such series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of such series established pursuant to the applicable
Indenture) of all Debt Securities of all such affected series, and the
interest accrued thereon, if any, to be due and payable immediately, and upon
any such declaration the same shall become immediately due and payable. If an
Event of Default described in clauses (d) or (e) of the immediately preceding
paragraph occurs and is continuing, then the principal amount (or, if any
Debt Securities are Original Issue Discount Securities, such portion of the
principal as may be specified in the terms thereof established pursuant to
the applicable Indenture) of all the Debt Securities then outstanding under
the applicable Indenture and interest accrued thereon, if any, shall be and
become immediately due and payable, without any notice or other action by any
Holder or the Trustee to the full extent permitted by applicable law. If an
Event of Default described in clauses (f) or (g) of the immediately preceding
paragraph, or in clauses (c) or (h) of the immediately preceding paragraph
with respect to the Debt Securities of all series then outstanding under the
applicable Indenture, occurs and is continuing, then, in each and every such
case, either the Trustee or the Holders of not less than 25% in aggregate
principal amount (or, if the Debt Securities of any outstanding series are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof established pursuant to the applicable
Indenture) of all Debt Securities of any series then outstanding under the
applicable Indenture except for any series of Debt Securities the principal
of which shall have already become due and payable (treated as a single
class) by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal amount (or, if the Debt
Securities of any such series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of such
series established pursuant to the applicable Indenture) of all Debt
Securities of any series then outstanding under the applicable Indenture, and
the interest accrued thereon, if any, to be due and payable immediately, and
upon any such declaration the same shall become immediately due and payable.
Upon certain conditions such declarations may be rescinded and annulled and
past defaults may be waived by the Holders of a majority in principal of the
then outstanding Debt Securities of all such series that have been
accelerated under the applicable Indenture (voting as a single class), but no
such waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon. (Section
6.2) Because the ability of Holders to declare the Debt Securities of any
series due and payable upon an Event of Default under clauses (c), (f), (g)
or (h) of the immediately preceding paragraph depends on the requisite action
by Holders of all affected series of Debt Securities under the applicable
Indenture, if there is more than one series of Debt Securities outstanding,
Holders of a particular series of Debt Securities may be unable to declare
the Debt Securities under the applicable Indenture due and payable upon an
Event of Default described in clauses (c), (f), (g) or (h) of the immediately
preceding paragraph without action by Holders of such other series.
Each Indenture contains a provision under which, subject to the duty of
the Trustee during a default to act with the required standard of care, (i)
the Trustee may rely and shall be protected in acting or refraining from
acting upon any officers' certificate, opinion of counsel (or both),
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been
15
<PAGE>
signed or presented by the proper person or persons and the Trustee need not
investigate any fact or matter stated in the document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit; (ii) before the Trustee acts or refrains
from acting, it may require an officers' certificate and/or an opinion of
counsel, which shall conform to the requirements of the applicable Indenture
and the Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate or opinion, subject to the
terms of the applicable Indenture, whenever in the administration of the
trusts of the applicable Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering
or omitting to take any action under the applicable Indenture, such matter
(unless other evidence in respect thereof be specifically prescribed in the
applicable Indenture) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by
an officers' certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted to be
taken by it under the provisions of the applicable Indenture upon the faith
thereof; (iii) the Trustee may act through its attorneys and agents not
regularly in its employ and shall not be responsible for the misconduct or
negligence of any agent or attorney appointed with due care; (iv) any
request, direction, order or demand of the Company mentioned in the
applicable Indenture shall be sufficiently evidenced by an officers'
certificate (unless other evidence in respect thereof be specifically
prescribed in the applicable Indenture), and any Board Resolution may be
evidenced to the Trustee by a copy thereof certified by the secretary or an
assistant secretary of the Company; (v) the Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by the
applicable Indenture at the request, order or direction of any of the
Holders, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might
be incurred by it in compliance with such request, order or direction; (vi)
the Trustee shall not be liable for any action it takes or omits to take in
good faith that it believes to be authorized or within its rights or powers
or for any action it takes or omits to take in accordance with the direction
of the Holders in accordance with the applicable Indenture relating to the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under the applicable Indenture; (vii) the Trustee may consult with counsel of
its selection and the advice of such counsel or any opinion of counsel shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken by it under the applicable Indenture
in good faith and in reliance thereon; and (viii) prior to the occurrence of
an Event of Default under the applicable Indenture and after the curing or
waiving of all Events of Default, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, officers' certificate, opinion of counsel, Board Resolution,
statement, instrument, opinion, report, notice, request, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, or other paper
or document unless requested in writing so to do by the Holders of not less
than a majority in aggregate principal amount of the Debt Securities of all
series affected then outstanding under the applicable Indenture; provided
that, if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of the applicable
Indenture, the Trustee may require reasonable indemnity against such expenses
or liabilities as a condition to proceeding. (Section 7.2)
Subject to such provisions in the applicable Indenture for the
indemnification of the Trustee and certain other limitations, the Holders of
at least a majority in aggregate principal amount (or, if any Debt Securities
are Original Issue Discount Securities, such portion of the principal as may
be specified in the terms thereof established pursuant to the applicable
Indenture) of the outstanding Debt Securities under the applicable Indenture
of all series affected (voting as a single class) may direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee with
respect to the Debt Securities of such series by the applicable Indenture;
provided, that the Trustee may refuse to follow any direction that conflicts
with law or the applicable Indenture, that may involve the Trustee in
personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders not joining in the giving of such
direction; and provided further, that the Trustee may take any other action
it deems proper that is not inconsistent with any directions received from
Holders of Debt Securities pursuant to this paragraph. (Section 6.5)
16
<PAGE>
Subject to various provisions in the applicable Indenture, the Holders of
at least a majority in principal amount (or, if the Debt Securities are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof established pursuant to the applicable
Indenture) of the outstanding Debt Securities under the applicable Indenture
of all series affected (voting as a single class), by notice to the Trustee,
may waive an existing Default or Event of Default with respect to the Debt
Securities of such series and its consequences, except a Default in the
payment of principal of or interest on any Debt Security as specified in
clauses (a) or (b) of Section 6.1 of the applicable Indenture or in respect
of a covenant or provision of the applicable Indenture which cannot be
modified or amended without the consent of the Holder of each outstanding
Debt Security affected. Upon any such waiver, such Default shall cease to
exist, and any Event of Default with respect to the Debt Securities of such
series arising therefrom shall be deemed to have been cured, for every
purpose of the applicable Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereto. (Section 6.4)
Each Indenture provides that no Holder of any Debt Securities of any
series may institute any proceeding, judicial or otherwise, with respect to
the applicable Indenture or the Debt Securities of such series, or for the
appointment of a receiver or trustee, or for any other remedy under the
applicable Indenture, unless: (i) such Holder has previously given to the
Trustee written notice of a continuing Event of Default with respect to the
Debt Securities of such series; (ii) the Holders of at least 25% in aggregate
principal amount of outstanding Debt Securities of all such series affected
under the applicable Indenture shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own name
as Trustee under the applicable Indenture; (iii) such Holder or Holders have
offered to the Trustee indemnity reasonably satisfactory to the Trustee
against any costs, liabilities or expenses to be incurred in compliance with
such request; (iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and (v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Debt Securities of all such affected
series under the applicable Indenture have not given the Trustee a direction
that is inconsistent with such written request. A Holder may not use the
applicable Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over such other Holder. (Section 6.6)
Each Indenture contains a covenant that the Company will file with the
Trustee, within 15 days after the Company is required to file the same with
the Commission, copies of the annual reports and of the information,
documents and other reports which the Company may be required to file with
the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act.
(Section 4.5)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Each Indenture provides with respect to each series of Debt Securities
that the Company may terminate its obligations under the Debt Securities of
any series and the applicable Indenture with respect to Debt Securities of
such series if: (i) all Debt Securities of such series previously
authenticated and delivered, with certain exceptions, have been delivered to
the Trustee for cancellation and the Company has paid all sums payable by it
under the applicable Indenture; or (ii) (a) the Debt Securities of such
series mature within one year or all of them are to be called for redemption
within one year under arrangements satisfactory to the Trustee for giving the
notice of redemption, (b) the Company irrevocably deposits in trust with the
Trustee, as trust funds solely for the benefit of the Holders of such Debt
Securities for that purpose, money or U.S. Government Obligations or a
combination thereof sufficient (unless such funds consist solely of money, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee),
without consideration of any reinvestment, to pay the principal of and
interest on the Debt Securities of such series to maturity or redemption, as
the case may be, and to pay all other sums payable by it under the applicable
Indenture, and (c) the Company delivers to the Trustee an officers'
certificate and an opinion of counsel, in each case stating that all
conditions precedent provided for in the applicable Indenture relating to the
satisfaction and discharge of the applicable Indenture with respect to the
Debt Securities of such series have been complied with. With respect to the
foregoing clause (i), only the Company's obligations to compensate and
indemnify the Trustee under the applicable Indenture shall survive. With
respect to the foregoing
17
<PAGE>
clause (ii), only the Company's obligations to execute and deliver Debt
Securities of such series for authentication, to set the terms of the Debt
Securities of such series, to maintain an office or agency in respect of the
Debt Securities of such series, to have moneys held for payment in trust, to
register the transfer or exchange of Debt Securities of such series, to
deliver Debt Securities of such series for replacement or to be canceled, to
compensate and indemnify the Trustee and to appoint a successor trustee, and
its right to recover excess money held by the Trustee shall survive until
such Debt Securities are no longer outstanding. Thereafter, only the
Company's obligations to compensate and indemnify the Trustee, and its right
to recover excess money held by the Trustee shall survive. (Section 8.1)
Each Indenture provides that the Company (i) will be deemed to have paid
and will be discharged from any and all obligations in respect of the Debt
Securities of any series under the applicable Indenture, and the provisions
of the applicable Indenture will, except as noted below, no longer be in
effect with respect to the Debt Securities of such series ("legal
defeasance") and (ii) may, in the case of the Senior Debt Indenture, omit to
comply with any term, provision or condition of the applicable Indenture
described above under "--Negative Pledge" (or in the case of each Indenture
omit to comply with any other specific covenant relating to such series
provided for in a Board Resolution or supplemental indenture which may by its
terms be defeased pursuant to such Indenture), and such omission shall be
deemed not to be an Event of Default under clauses (c) or (h) of the first
paragraph of "--Events of Default" with respect to the outstanding Debt
Securities of a series under the applicable Indenture ("covenant
defeasance"); provided that the following conditions shall have been
satisfied: (a) the Company has irrevocably deposited in trust with the
Trustee as trust funds solely for the benefit of the Holders of the Debt
Securities of such series, for payment of the principal of and interest on
the Debt Securities of such series, money or U.S. Government Obligations or a
combination thereof sufficient (unless such funds consist solely of money, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee)
without consideration of any reinvestment and after payment of all federal,
state and local taxes or other charges and assessments in respect thereof
payable by the Trustee, to pay and discharge the principal of and accrued
interest on the outstanding Debt Securities of such series to maturity or
earlier redemption (irrevocably provided for under arrangements satisfactory
to the Trustee), as the case may be; (b) such deposit will not result in a
breach or violation of, or constitute a default under, the applicable
Indenture or any other material agreement or instrument to which the Company
is a party or by which it is bound; (c) no Default with respect to such Debt
Securities of such series shall have occurred and be continuing on the date
of such deposit; (d) the Company shall have delivered to the Trustee an
opinion of counsel that (1) the Holders of the Debt Securities of such series
will not recognize income, gain or loss for Federal income tax purposes as a
result of the Company's exercise of its option under this provision of the
applicable Indenture and will be subject to Federal income tax on the same
amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred and (2) the Holders of
the Debt Securities of such series have a valid security interest in the
trust funds subject to no prior liens under the Uniform Commercial Code, and
(e) the Company has delivered to the Trustee an officers' certificate and an
opinion of counsel, in each case stating that all conditions precedent
provided for in the applicable Indenture relating to the defeasance
contemplated have been complied with. In the case of legal defeasance under
clause (i) above, the opinion of counsel referred to in clause (d)(1) above
may be replaced by a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect. Subsequent to legal defeasance
under clause (i) above, the Company's obligations to execute and deliver Debt
Securities of such series for authentication, to set the terms of the Debt
Securities of such series, to maintain an office or agency in respect of the
Debt Securities of such series, to have moneys held for payment in trust, to
register the transfer or exchange of Debt Securities of such series, to
deliver Debt Securities of such series for replacement or to be canceled, to
pay principal of and interest on the Debt Securities, to compensate and
indemnify the Trustee and to appoint a successor trustee, and its right to
recover excess money held by the Trustee shall survive until such Debt
Securities are no longer outstanding. After such Debt Securities are no
longer outstanding, in the case of legal defeasance under clause (i) above,
only the Company's obligations to compensate and indemnify the Trustee and
its right to recover excess money held by the Trustee shall survive.
(Sections 8.2 and 8.3)
18
<PAGE>
MODIFICATION OF THE INDENTURES
Each Indenture provides that the Company and the Trustee may amend or
supplement the applicable Indenture or the Debt Securities of any series
without notice to or the consent of any Holder: (i) to cure any ambiguity,
defect or inconsistency in the applicable Indenture; provided that such
amendments or supplements shall not materially and adversely affect the
interests of the Holders; (ii) to comply with Article 5 of the applicable
Indenture in connection with a consolidation or merger of the Company or the
sale, conveyance, transfer, lease or other disposal of all or substantially
all of the property and assets of the Company; (iii) to comply with any
requirements of the Commission in connection with the qualification of the
applicable Indenture under the Trust Indenture Act; (iv) to evidence and
provide for the acceptance of appointment under the applicable Indenture with
respect to the Debt Securities of any or all series by a successor Trustee;
(v) to establish the form or forms or terms of Debt Securities of any series
or of the coupons pertaining to such Debt Securities as permitted under the
applicable Indenture; (vi) to provide for uncertificated or unregistered Debt
Securities and to make all appropriate changes for such purpose; or (vii) to
make any change that does not materially and adversely affect the rights of
any Holder. (Section 9.1)
Each Indenture also contains provisions whereby the Company and the
Trustee, subject to certain conditions, without prior notice to any Holders,
may amend the applicable Indenture and the outstanding Debt Securities of any
series with the written consent of the Holders of a majority in principal
amount of the Debt Securities then outstanding under the applicable Indenture
of all series affected by such amendment (all such series voting as one
class), and the Holders of a majority in principal amount of the outstanding
Debt Securities under the applicable Indenture of all series affected thereby
(all such series voting as one class) by written notice to the Trustee may
waive future compliance by the Company with any provision of the applicable
Indenture or the Debt Securities of such series. Notwithstanding the
foregoing provisions, without the consent of each Holder affected thereby, an
amendment or waiver, including a waiver pursuant to Section 6.4 of the
applicable Indenture, may not: (i) extend the stated maturity of the
principal of, or any sinking fund obligation or any installment of interest
on, such Holder's Debt Security, or reduce the principal thereof or the rate
of interest thereon (including any amount in respect of original issue
discount), or any premium payable with respect thereto, or adversely affect
the rights of such Holder under any mandatory redemption or repurchase
provision or any right of redemption or repurchase at the option of such
Holder, or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof or the amount thereof provable in bankruptcy, or change any place of
payment where, or the currency in which, any Debt Security or any premium or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the due date therefor; (ii)
reduce the percentage in principal amount of outstanding Debt Securities of
the relevant series the consent of whose Holders is required for any such
supplemental indenture, for any waiver of compliance with certain provisions
of the applicable Indenture or certain Defaults and their consequences
provided for in the applicable Indenture; (iii) waive a Default in the
payment of principal of or interest on any Debt Security of such Holder; or
(iv) modify any of the provisions of this provision of the applicable
Indenture, except to increase any such percentage or to provide that certain
other provisions of the applicable Indenture cannot be modified or waived
without the consent of the Holder of each outstanding Debt Security
thereunder affected thereby. A supplemental indenture which changes or
eliminates any covenant or other provision of the applicable Indenture which
has expressly been included solely for the benefit of one or more particular
series of Debt Securities, or which modifies the rights of Holders of Debt
Securities of such series with respect to such covenant or provision, shall
be deemed not to affect the rights under the applicable Indenture of the
Holders of Debt Securities of any other series or of the coupons appertaining
to such Debt Securities. It shall not be necessary for the consent of any
Holder under this provision of the applicable Indenture to approve the
particular form of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof. After an
amendment, supplement or waiver under this section of the applicable
Indenture becomes effective, the Company shall give to the Holders affected
thereby a notice briefly describing the amendment, supplement or waiver. The
Company will mail supplemental indentures to Holders upon request. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture or waiver. (Section 9.2)
19
<PAGE>
GOVERNING LAW
The Indentures and the Debt Securities will be governed by the laws of the
State of New York. (Section 10.8 and Section 11.8)
CONCERNING THE TRUSTEE
The Company and its subsidiaries maintain ordinary banking and trust
relationships with The Chase Manhattan Bank and its affiliates.
PLAN OF DISTRIBUTION
This Prospectus has been prepared for use by DLJSC in connection with
offers and sales of the Offered Securities in market-making transactions at
negotiated prices related to prevailing market prices at the time of the
sale. DLJSC may act as principal or agent in such transactions. DLJSC has
advised the Company that it currently intends to make a market in the Offered
Securities, but it is not obligated to do so and may discontinue any such
market-making at any time without notice. Accordingly, no assurance can be
given as to the liquidity of, or the trading market for, the Offered
Securities.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Debt Securities and certain other legal matters in connection
with the offering of the Offered Securities will be passed upon by Michael A.
Boyd, Senior Vice President and General Counsel to the Company, and Wilmer,
Cutler & Pickering. Mr. Boyd owns 8,033 shares of Common Stock and 14,433
restricted stock units of the Company and holds options to purchase 39,772
shares of Common Stock. Wilmer, Cutler & Pickering from time to time provides
legal services to the Company and its subsidiaries.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company as of December 31, 1996 and 1995, and for each of the years in
the three-year period ended December 31, 1996, have been incorporated by
reference in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing.
20
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH
ANY OFFERING CONTEMPLATED HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY AGENT OR DEALER. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THEREOF. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS
SHALL CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Information by
Reference ............................... S-3
Summary Description of Notes.............. S-4
Description of Notes...................... S-8
Additional Information Regarding
Book-Entry and Clearance................. S-14
Directors and Principal Executive
Officers of the Company.................. S-17
Recent Developments....................... S-17
Capitalization of the Company and its
Subsidiaries............................. S-18
Selected Financial Data of the Company
and its Subsidiaries..................... S-19
Certain United States Federal Income Tax
Considerations........................... S-21
Plan of Distribution ..................... S-26
General Information....................... S-26
PROSPECTUS
Available Information .................... 3
Incorporation of Certain Information by
Reference ............................... 3
Use of Proceeds .......................... 4
Ratio of Earnings to Fixed Charges ...... 4
The Company .............................. 5
Description of Capital Stock ............. 7
Description of Debt Securities ........... 8
Plan of Distribution...................... 20
Legal Matters ............................ 20
Experts................................... 20
</TABLE>
$350,000,000
DONALDSON, LUFKIN &
JENRETTE, INC.
GLOBAL FLOATING RATE NOTES
DUE SEPTEMBER 2002
PROSPECTUS SUPPLEMENT
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SEPTEMBER 12, 1997
