<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration File No.: 333-53499
PROSPECTUS SUPPLEMENT
JUNE 3, 1998
(TO PROSPECTUS DATED JUNE 1, 1998)
$500,000,000
DONALDSON, LUFKIN & JENRETTE, INC.
6 1/2% SENIOR NOTES DUE 2008
The 6 1/2% Senior Notes due 2008 (the "Notes") are being offered hereby by
Donaldson, Lufkin & Jenrette, Inc. (the "Company" or "DLJ"). The Notes will
bear interest at the rate of 6 1/2% per annum, payable semi-annually in
arrears on June 1 and December 1 of each year, commencing on December 1,
1998, and will mature on June 1, 2008. The Notes are not redeemable by the
Company prior to maturity and are not entitled to any sinking fund. 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 registered in the name of a nominee
of The Depository Trust Company ("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. Except as described in the
accompanying Prospectus, the Notes will not be available in definitive form.
See "Description of Debt Securities --Book-Entry System" in the Prospectus.
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 SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note ..................... 99.585% 0.650% 98.935%
Total ......................... $497,925,000 $3,250,000 $494,675,000
- -------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from June 8, 1998 to the date of
delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $650,000.
The Notes are being offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters and subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and
to reject orders in whole or in part. It is expected that the Notes will be
ready for delivery in book-entry form only through the facilities of The
Depository Trust Company of New York on or about June 8, 1998, against
payment therefor in immediately available funds.
Donaldson, Lufkin & Jenrette
Bear, Stearns & Co. Inc.
Goldman, Sachs & Co.
Lehman Brothers
Salomon Smith Barney
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used by the Company
for the reduction of short-term indebtedness and general corporate purposes.
S-3
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the 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 Prospectus.
The Notes ..................... $500,000,000 aggregate principal amount of 6
1/2% Senior Notes due 2008.
Maturity Date ................. The Notes will mature on June 1, 2008 (the
"Maturity Date"). If the Maturity Date is
not a Business Day (as defined below),
payment of interest and principal otherwise
payable on the Notes will be made on the
next succeeding Business Day and no interest
on such payment shall accrue for the period
from and after the Maturity Date to such
next succeeding Business Day. "Business Day"
means any day that is not a Saturday, Sunday
or 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.
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 to the public at
an issue price of 99.585% of the principal
amount of the Notes.
Original Issue Date
(Settlement Date) ............ June 8, 1998.
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 The Depository Trust
Company, 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. Except as described in
the accompanying Prospectus, the Notes will
not be available in definitive form. See
"Description of Debt Securities--Book Entry
System" in the Prospectus.
Minimum Denomination .......... The Notes will be issued in minimum
denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
Interest Rate ................. The Notes bear a fixed interest rate of 6
1/2% per annum. Interest will be computed
and paid on the basis of a 360-day year of
twelve 30-day months.
Interest Payment Dates ........ Interest on the Notes will accrue from June
8, 1998 and is payable on June 1 and
December 1 of each year (each, an "Interest
Payment Date"), commencing on December 1,
1998, to holders of record at the close of
business on the May 15 or November 15 next
preceding each Interest Payment Date
S-4
<PAGE>
(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 no interest on such payment
shall accrue for the period from and after
such Interest Payment Date to such next
succeeding Business Day.
Redemption by the Company ..... The Notes are not redeemable at the option
of the Company prior to maturity.
Sinking Fund .................. The Notes are not entitled to any sinking
fund.
Ranking ....................... The Notes will be direct, unsecured and
unsubordinated obligations of the Company.
Except as described under "Description of
Debt Securities--Negative Pledge" in the
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. 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.
Trustee and Paying Agent ...... The Chase Manhattan Bank, 450 West 33rd
Street, New York, New York 10001.
Listing ....................... The Notes will not be listed on any trading
system or any exchange.
S-5
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated the date hereof (the "Underwriting Agreement"), the Company has agreed
to sell to each of the Underwriters named below (the "Underwriters"), and
each of the Underwriters, for whom Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC") is acting as representative has severally agreed to
purchase the aggregate principal amount of Notes set forth opposite its name
below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
- ----------- --------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation $100,000,000
Bear, Stearns & Co. Inc. ............................ 100,000,000
Goldman, Sachs & Co. ................................ 100,000,000
Lehman Brothers Inc. ................................ 100,000,000
Salomon Brothers Inc ................................ 100,000,000
------------
Total ............................................... $500,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase and accept delivery of the Notes offered hereby are
subject to approval of certain legal matters by counsel and to certain other
conditions. If any Notes are purchased by the Underwriters pursuant to the
Underwriting Agreement, all such Notes must be purchased.
There is currently no public market for the Notes. The Company does not
intend to apply for listing of the Notes on any national securities exchange.
The Company has been advised by the Underwriters that, following completion
of the offering of the Notes, they presently intend to make a market in the
Notes although they are under no obligation to do so and may discontinue any
market-making activities at any time without notice. Accordingly, there can
be no assurance as to whether an active trading market for the Notes will
develop or, if a public market develops, as to the liquidity of the trading
market for the Notes.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement, and in part to certain securities dealers at such
price less a concession of 0.40% of the principal amount. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of 0.25%
of the principal amount to certain brokers and dealers. After the Notes are
released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments that the Underwriters may be required
to make in respect thereof.
DLJSC is a wholly-owned subsidiary of the Company. DLJSC has committed to
purchase from the Company $100,000,000 of the Notes to be purchased in the
offering on the same basis as the other Underwriters. Although the amount of
proceeds derived from the offering by the Company will not be affected by
DLJSC's participation as an underwriter of the offering to the extent that
part or all of the Notes to be purchased by DLJSC are not resold, the Notes
owned by DLJSC will be eliminated in consolidation and will not be shown as
outstanding in the consolidated financial statements of the Company. DLJSC
intends to resell any Notes which it is unable to resell in the offering from
time to time, at prevailing market prices. This Prospectus Supplement,
together with the accompanying Prospectuses, may also be used by DLJSC in
connection with offers and sales of the Notes related to market-making
transactions by and through DLJSC, at negotiated prices related to prevailing
market prices at the time of sale or otherwise. DLJSC may act as principal or
agent in such transactions. The offering of the Notes is being conducted in
accordance with Section 2720 of the NASD Conduct Rules.
Certain Underwriters have engaged and may in the future engage in
investment banking transactions with the Company and its affiliates in the
ordinary course of business.
S-6
<PAGE>
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Notes. Specifically, the Underwriters may overallot in connection with
the offering, creating a short position in the Notes for their own account.
In addition, to cover overallotments or to stabilize the price of Notes, the
Underwriters may bid for, and purchase, the Notes in the open market.
Finally, the Underwriters may reclaim selling concessions allowed to a dealer
for distributing the Notes in the offering, if the Underwriters repurchase
previously distributed Notes in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Notes above
independent market levels. The Underwriters are not required to engage in
these activities and may end any of these activities at any time.
S-7
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
JUNE 1, 1998
$1,625,000,000
DONALDSON, LUFKIN & JENRETTE, INC.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
Donaldson Lufkin & Jenrette, Inc. (the "Company") may from time to time
offer, together or separately, (i) senior or subordinated debt securities
("Debt Securities"), (ii) shares of its preferred stock, par value $0.01 per
share ("Preferred Stock"), (iii) shares of its common stock, par value $0.10
per share ("Common Stock"), or (iv) warrants ("Warrants"), including Warrants
to purchase Debt Securities, Preferred Stock or Common Stock. The Debt
Securities, Preferred Stock, Common Stock and Warrants are collectively
called the "Securities."
The 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 $1,625,000,000 (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 also set forth
with regard to the particular Offered Securities, without limitation, the
following: (i) in the case of Debt Securities, 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, (ii) in the case of
Preferred Stock, the specific designation, number of shares, purchase price
and the rights, preferences and privileges thereof and any qualifications or
restrictions thereon (including dividends, liquidation value, voting rights,
terms for the redemption or exchange or conversion thereof and any other
specific terms of the Preferred Stock) and any listing on a securities
exchange and (iii) in the case of Warrants, the specific designation, the
number, purchase price and terms thereof, any listing of the Warrants or
related securities on a securities exchange and any other terms in connection
with the offering, sale and exercise of the Warrants, as well as the terms of
the securities that can be purchased with such Warrants. Unless otherwise
indicated in the Prospectus Supplement, the Company does not intend to list
any of the Securities on a national securities exchange.
The Common Stock is listed on the New York Stock Exchange, Inc. ("NYSE")
under the symbol "DLJ".
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan of
Distribution." Any such agents, dealers or underwriters will be set forth in
a Prospectus Supplement. If an agent of the Company, or a dealer or
underwriter is involved in the offering of the Offered Securities, the
agent's commission, dealer's purchase price, underwriter's discount and net
proceeds to the Company, as the case may be, will be set forth in, or may be
calculated from, the Prospectus Supplement. Any underwriters, dealers or
agents participating in the offering may be deemed "underwriters" within the
meaning of the Securities Act of 1933, as amended.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
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.
<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 Common Stock and Series A and B Fixed
Adjustable Rate Preferred Stock are listed on the NYSE and reports and other
information concerning the Company can also be inspected at the office of the
NYSE, 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,
1997, Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and
Current Report on Form 8-K filed on April 14, 1998, 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).
2
<PAGE>
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement,
proceeds from the sale of the Offered Securities will be used by the Company
for general corporate purposes, including refinancing of existing
indebtedness, and initially may be temporarily invested in short-term
securities.
RATIOS OF EARNINGS
TO FIXED CHARGES AND EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends for the
Company for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (1).................. 1.20 1.10 1.11 1.16 1.16 1.19
Ratio of earnings to combined
fixed charges and preferred
stock dividends (2).......... 1.20 1.09 1.10 1.16 1.16 1.18
</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.
(2) For the purpose of calculating the ratio of earnings to combined fixed
charges and preferred stock dividends (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. No preferred
dividends were paid until 1994.
3
<PAGE>
THE COMPANY
Donaldson, Lufkin & Jenrette, Inc. (the "Company) is a leading integrated
investment and merchant bank serving institutional, corporate, governmental
and individual clients both domestically and internationally. The Company is
a holding company which conducts its business through various subsidiaries
including its principal broker-dealer subsidiary, Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC"). The business of the Company
includes securities underwriting, sales and trading, merchant banking,
financial advisory services, investment research, venture capital,
correspondent brokerage services, online interactive brokerage services,
asset management and other advisory 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 ("Equitable Life"). Prior to the Company's initial public
offering in October 1995, the Company was an independently operated indirect
wholly owned subsidiary of The Equitable Companies Incorporated
("Equitable"). At March 1, 1998, Equitable owned 73.1% of the Company's
issued and outstanding common stock. Equitable is a diversified financial
services organization and one of the world's largest investment management
organizations. AXA, a French holding company for an international group of
insurance and related financial services companies, is Equitable's largest
stockholder, beneficially owning, at March 1, 1998, approximately 59.0% of
Equitable's outstanding common stock.
The Company conducts its business through three principal operating
groups: 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 Fixed Income, Institutional Equities and Equity
Derivatives Divisions and Sprout, its venture capital affiliate; and the
Financial Services Group, comprised of the Pershing Division, the Investment
Services Group and the Asset Management Group.
In 1997, the Company took steps toward achieving its goal of establishing
a strong international presence. The acquisition of the Phoenix Securities
Group ("Phoenix"), a London-based investment bank provided the opportunity to
enhance the Company's international merger and acquisition and leveraged
financing capabilities. In 1997, the Company also acquired London Global
Securities ("London Global"), a leading international securities financing
intermediary. In addition to these acquisitions, a new high-yield group was
established in London.
All business groups have planned expansion of their international
activities. An investment banking group is in the process of being
established in Paris, joining the Company's institutional equity sales
operation, as well as investment banking and foreign equity trading
operations in Russia and Germany. The Company continues to target selected
areas in the emerging markets of Eastern Europe, Latin America and Asia. The
Merchant Banking Group has expanded its international efforts, with
significant investments in the United Kingdom, Italy, France, Argentina and
Brazil. By year-end 1997, the Company's London operation employed more than
800 individuals. Total assets and total revenues related to the Company's
foreign operations approximated $8.6 billion and $535.2 million,
respectively, at December 31, 1997. The Company's foreign operations were not
significant in 1996.
The following table illustrates the Company's revenue breakdown by its
principal operating groups, net of all interest. Net revenues, however, are
not necessarily indicative of the profitability of each group. Certain
reclassifications of prior years' amounts have been made to conform to the
1997 presentation.
NET REVENUES BY OPERATING GROUP:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Banking Group............ $ 491.8 $ 390.0 $ 689.2 $ 935.8 $1,311.8
Capital Markets Group ... 1,058.2 702.3 851.9 1,086.4 1,292.5
Financial Services
Group................... 455.3 458.2 619.5 827.6 1,008.9
Other ................... (101.7) (45.6) (82.6) (92.3) (125.9)
-------- -------- -------- -------- --------
Total net revenues....... $1,903.6 $1,504.9 $2,078.0 $2,757.5 $3,487.3
======== ======== ======== ======== ========
</TABLE>
4
<PAGE>
The Company currently conducts its operations in 14 cities in the United
States, including Atlanta, Austin, Boston, Chicago, Dallas, Houston, Jersey
City, Los Angeles, Menlo Park, Miami, New York, Oak Brook, Philadelphia and
San Francisco. The Company also has international offices located in 11
cities, including Bangalore, Buenos Aires, Geneva, Hong Kong, London, Lugano,
Mexico City, Moscow, Paris, Sao Paulo and Tokyo.
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.
5
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 300,000,000 shares
of common stock, par value $0.10 per share, and 50,000,000 shares of
preferred stock, par value $0.01 per share. As of March 31, 1998, the Company
had 116,926,356 shares (after giving effect to a stock dividend paid to
holders of record on April 27, 1998) of Common Stock, 4,000,000 shares of
Series A Fixed Adjustable Rate Preferred Stock (the "Series A Preferred
Stock") and 3,500,000 shares of Series B Fixed Adjustable Rate Preferred
Stock (the "Series B Preferred Stock") outstanding. 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 50,000,000 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 applicable Prospectus Supplement will describe the following terms of
any preferred stock in respect of which this Prospectus is being delivered
(to the extent applicable to such preferred stock): (i) the specific
designation, number of shares, seniority and purchase price; (ii) any
liquidation preference per share; (iii) any date of maturity; (iv) any
redemption, repayment or sinking fund provisions; (v) any dividend rate or
rates and the dates on which any such dividends will be payable (or the
method by which such rates or dates will be determined); (vi) any voting
rights; (vii) if other than the currency of the United States of America, the
currency or currencies including composite currencies in which such preferred
stock is denominated and/or in which payments will or may be payable; (viii)
the method by which amounts in respect of such preferred stock may be
calculated and any commodities, currencies or indices, or value, rate or
price, relevant to such calculation; (ix) whether such preferred stock is
exchangeable or convertible and, if so, the securities or rights into which
such preferred stock is exchangeable or convertible, and the terms and
conditions upon which such exchanges will be effected including the initial
exchange prices or rates, the exchange period and any other related
provisions; (x) the place or places where dividends and other payments on the
preferred stock will be payable; and (xi) any additional voting, dividend,
liquidation, redemption and other rights, preferences, privileges,
limitations and restrictions.
All shares of preferred stock offered pursuant to the applicable
Prospectus Supplement, or issuable upon exchange or exercise of any Offered
Securities, will, when issued, be fully paid and non-assessable. Any shares
of preferred stock so issued would have priority over the Common Stock with
respect to dividend or liquidation rights or both.
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SERIES A AND SERIES B FIXED ADJUSTABLE RATE PREFERRED STOCK
General. The Series A Preferred Stock is a single series consisting of
4,000,000 shares with a liquidation preference of $50 per share. The Series B
Preferred Stock is a single series consisting of 3,500,000 shares with a
liquidation preference of $50 per share. The holders of the Preferred Stock
have no preemptive rights. The Preferred Stock is not convertible into shares
of Common Stock of the Company and is fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will rank on a parity as to payment of dividends and distribution of
assets upon dissolution, liquidation or winding up of the Company with each
series of preferred stock issued hereunder. The Series A Preferred Stock
ranks on a parity with the Series B Preferred Stock and prior to the Common
Stock of the Company as to the payment of dividends and distribution of
assets upon dissolution, liquidation or winding up of the Company.
Dividends. Dividends on the Series A Preferred Stock are payable
quarterly at the annual rate of 5.94% or $2.97 per share through November 30,
2001. After November 30, 2001, dividends on the Series A Preferred Stock are
payable at the Applicable Rate from time to time in effect. The Applicable
Rate per annum for each dividend period beginning November 30, 2001 will
generally be equal to 0.50% plus the highest of the Treasury Bill Rate, the
Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate
(each as defined by the terms of the Series A Preferred Stock). The
Applicable Rate per annum for each dividend period beginning November 30,
2001, will not be less than 6.44% nor greater than 12.44% (without taking
into account any adjustments as described below under "Changes in the
Dividends Received Percentage").
Dividends on the Series B Preferred Stock are payable quarterly at the
annual rate of 5.30% or $2.65 per share through January 15, 2003. After
January 15, 2003, dividends on the Series B Preferred Stock are payable at
the Applicable Rate from time to time in effect. The Applicable Rate per
annum for each dividend period beginning January 15, 2003 will generally be
equal to 0.40% plus the highest of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate and the Thirty Year Constant Maturity Rate (each as
defined by the terms of the Series B Preferred Stock). The Applicable Rate
per annum for each dividend period beginning January 15, 2003, will not be
less than 5.70% nor greater than 11.30% (without taking into account any
adjustments as described below under "Changes in the Dividends Received
Percentage").
Dividends on the Preferred Stock are cumulative and rights accrue to the
holders of the Preferred Stock if the Company fails to declare one or more
dividends on such series of Preferred Stock in any amount, whether or not the
earnings or financial condition of the Company were sufficient to pay such
dividends in whole or in part.
Changes in the Dividends Received Percentage. If one or more amendments to
the Internal Revenue Code of 1986, as amended (the "Code"), are enacted which
reduce the percentage of the dividends received deduction (currently 70%) as
specified in Section 243(a)(1) of the Code or any successor provision (the
"Dividends Received Percentage"), the amount of each dividend on each share
of the Series A Preferred Stock for dividend payments made on or after the
date of enactment of such change will generally be adjusted upward pursuant
to a specified formula set forth in the terms of the Series A Preferred
Stock.
In addition, if the Dividends Received Percentage is reduced to 50% or
less, the Company may at its option, redeem the Series A Preferred Stock as a
whole but not in part as described below. See "Redemption."
If, prior to July 9, 1999, one or more amendments to the Code are enacted
which reduce the Dividends Received Percentage, the amount of each dividend
on each share of the Series B Preferred Stock for dividend payments made on
or after the date of enactment of such change will generally be adjusted
upward pursuant to a specified formula set forth in the terms of the Series B
Preferred Stock, provided however, that if the Dividends Received Percentage
shall be less than 50%, then the Dividend Received Percentage shall be deemed
to equal 50%.
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Voting Rights. The holders of shares of the Preferred Stock are not
entitled to vote, except as set forth below or as expressly required by
applicable law.
If the equivalent of six quarterly dividends payable on the Preferred
Stock or any other class or series of preferred stock are in default, the
number of directors of the Company will be increased by two, and the holders
of the Preferred Stock, voting as a single class with the holders of shares
of any other class of the Company's preferred stock ranking on a parity with
the Preferred Stock upon which like voting rights have been conferred and are
exercisable, will be entitled to elect such two directors to fill such
newly-created directorships.
In addition, the affirmative vote or consent of the holders of at least 66
2/3% of the outstanding shares of the applicable series of Preferred Stock
will be required for any amendment of the certificate of incorporation of the
Company which will adversely affect the powers, preferences, privileges or
rights of such series of Preferred Stock. The affirmative vote or consent of
the holders of at least 66 2/3% of the outstanding shares of the Preferred
Stock and any other series of the Company's preferred stock ranking on a
parity with the Preferred Stock, voting as a single class without regard to
series, will be required to issue, authorize or increase the authorized
amount of, or issue or authorize any obligation or security convertible into
or evidencing a right to purchase, any additional class or series of stock
ranking prior to the Preferred Stock, or to reclassify any authorized stock
of the Company into such prior shares, but such vote will not be required for
the Company to take any such actions with respect to any stock ranking on a
parity with or junior to the Preferred Stock.
Redemption. Prior to November 30, 2001, the Series A Preferred Stock is
not redeemable, except under certain limited circumstances as described
below. On or after such date, each share of Series A Preferred Stock will be
redeemable, in whole or in part, at the option of the Company, at $50 per
share, plus accrued and unpaid dividends. However, if the Dividends Received
Percentage is equal to or less than 50% and, as a result, the amount of
dividends on the Series A Preferred Stock will be or is adjusted as described
above under "Changes in the Dividends Received Percentage," the Company, at
its option, may redeem all, but not less than all, of the outstanding shares
of the Series A Preferred Stock at a redemption price specified by the terms
of the Series A Preferred Stock.
Prior to January 15, 2003, the Series B Preferred Stock is not redeemable.
On or after such date, each share of Series B Preferred Stock will be
redeemable, in whole or in part, at the option of the Company, at $50 per
share, plus accrued and unpaid dividends.
In addition, if the holders of the shares of the Preferred Stock are
entitled to vote upon or consent to a merger or consolidation of the Company,
and if the Company offers to purchase all of the outstanding shares of a
series of Preferred Stock (the "Offer"), then each holder of such series of
Preferred Stock who does not sell their shares of Preferred Stock pursuant to
the Offer shall be deemed irrevocably to have voted or consented all shares
of Preferred Stock owned by such holder in favor of the merger or
consolidation of the Company without any further action by the holder. The
Offer shall be at a price of $50 per share, together with accrued and unpaid
dividends, if any, to the date fixed for redemption.
Holders of the Preferred Stock have no right to require redemption of the
Preferred Stock and the Preferred Stock is not subject to any mandatory
redemption, sinking fund or other similar provisions.
Transfer Agent and Registrar. The Bank of New York is the transfer agent,
registrar, dividend disbursing agent and redemption agent for the Series A
Preferred Stock and ChaseMellon Shareholder Services, L.L.C. is the transfer
agent, registrar, dividend disbursing agent and redemption agent for the
Series B Preferred Stock.
The Series A Preferred Stock is listed on the New York Stock Exchange
under the symbol "DLJpfA" and the Series B Preferred Stock is listed on the
New York Stock Exchange under the symbol "DLJpfB."
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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 and will be issued in the
case of Senior Debt Securities under an indenture (the "Senior Debt
Indenture") between Donaldson, Lufkin & Jenrette, Inc., as issuer, and Chase
Manhattan Bank, as trustee and in the case of Subordinated Debt Securities
under an indenture (the "Subordinated Debt Indenture") between Donaldson,
Lufkin & Jenrette, Inc., as issuer and Chase Manhattan Bank, as trustee. The
Senior Debt Indenture and the Subordinated Debt Indenture are sometimes
hereinafter referred to individually as an "Indenture" and collectively as
the "Indentures." Chase Manhattan Bank, in its capacity as trustee under
either or both of the Indentures is referred to herein as the "Trustee."
Copies of the Indentures have been included as exhibits to the
Registration Statement of which this Prospectus is a part and are also
available for inspection at the office of the Trustee. The Indentures are
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 will describe the following terms of
any Debt Securities in respect of which this Prospectus is being delivered
(to the extent applicable to such Debt Securities): (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,
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) whether the Debt
Securities are convertible into Common Stock and, if so, the terms and
conditions upon which such conversion will be effected, including the initial
conversion price or conversion rate, the conversion period and other
conversion
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provisions; (xi) if other than U.S. dollars, the currency or currencies
(including composite currencies) in which such Debt Securities are
denominated or payable; (xii) whether such Debt Securities shall be issued in
the form of a Global Security or securities; (xiii) any other specific terms
of such Debt Securities; and (xiv) 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, which, unless otherwise
specified in the accompanying Prospectus Supplement, will be The Depository
Trust Company, New York, New York (the "Depositary"). The Global Securities
will be registered in the name of the Depositary or its nominee.
The Depositary has advised the Company that the Depositary 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. The
Depositary 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. The Depositary's participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations, some of whom (and/or their representatives) own
the Depositary. Access to the Depositary'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.
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. 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 interest 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 beneficial interest in a Global Security.
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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 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. The Company
understands that under existing practice, in the event that the Company
requests any action of a holder or a beneficial owner desires to take any
action a holder is entitled to take, the Depositary would act upon the
instructions of, or authorize, the participant to take such action.
Payment of principal of, premium, if any, 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 reviewing any records relating to such beneficial ownership
interests.
The Company has been advised by the Depositary that the Depositary will
credit participants' accounts with payments of principal, premium, if any, or
interest on the payment date thereof in amounts proportionate to their
respective beneficial interests in the principal amount of the Global
Security as shown on the records of the Depositary. The Company expects that
payments by participants to owners of beneficial interests in the Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the
responsibility of such participants.
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 if at any time the Depositary is no longer eligible to be,
or is not in good standing as, a clearing agency registered under the
Exchange Act, 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.
SENIOR DEBT
Payment of the principal of, premium, if any, and interest 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 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
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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
Subordinated Debt Indenture described under "--Discharge, Defeasance and
Covenant Defeasance" with respect to a defeasance permitted by the
Subordinated Debt 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 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.
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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 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 Subordinated Debt 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 Subordinated Debt Indenture
at any time when the Company or any Holder shall have failed to comply with
any provision with respect to subordination in the Subordinated Debt
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 Subordinated Debt 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 Subordinated Debt 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 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.
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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.
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 of the Company or a sale, conveyance, transfer, lease or other
disposition to a Subsidiary of the Company) 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 the applicable Indenture 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 its terms,
subject to customary exceptions; and (b) the Company shall have delivered to
the Trustee an officers' 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 clause (a) above. (Section 5.1)
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EVENTS OF DEFAULT
Events of Default defined in the applicable Indenture with respect to the
Debt Securities of any series are: (i) 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;
(ii) 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; (iii) the Company defaults in the
performance of or 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; (iv) an
involuntary case or other proceeding shall be commenced against the Company
or DLJSC (including for purposes of clauses (iv) and (v) 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; (v) the Company or DLJSC (a) 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, (b) 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 (c)
effects any general assignment for the benefit of creditors; (vi) 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 Holders; (vii) 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 Holders; or (viii) 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
(i) or (ii) 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
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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 Holders), 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 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 (iii) or (viii) 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 Holders),
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 (iv)
or (v) 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 (vi) or (vii) of the immediately preceding paragraph, or in clauses
(iii) or (viii) 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 Holders), 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). (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 (iii), (vi), (vii) or (viii) 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
(iii), (vi), (vii) or (viii) 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
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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 the applicable Indenture. (Section
6.5)
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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 (i) or (ii) of the first paragraph of "--Events of Default" 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 clause (ii), only the Company's obligations to
execute and deliver Debt Securities of such series for
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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 convert or exchange any
Debt Security which by its terms is convertible or exchangeable for another
security or other property, 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 (iii) or (vii) 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, premium, if any,
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, premium, if any, 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 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 convert or exchange any
Debt Security which by its terms is convertible or exchangeable for another
security or other property, 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)
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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; (vii) to
provide for the conversion or exchange rights, if any, of Holders in
compliance with the applicable Indenture; or (viii) 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; (iv)
if applicable, make any change that adversely affects the right to convert or
exchange any Debt Security or, except as provided in the applicable
Indenture, decrease the conversion or exchange rate or increase the
conversion or exchange price of any such security; or (v) modify any of the
provisions of Section 9.2 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
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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)
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 Chase Manhattan Bank and its affiliates.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), Warrants to purchase Preferred Stock or Common
Stock ("Stock Warrants") as well as other types of Warrants. Warrants may be
issued independently or together with any Debt Securities, Preferred Stock or
Common Stock and may be attached to or separate from such Debt Securities,
Common Stock or Preferred Stock. Each series of Warrants will be issued under
a separate warrant agreement (each, a "Warrant Agreement") to be entered into
between the Company and a warrant agent ("Warrant Agent"). The following sets
forth certain general terms and provisions of the Warrants offered hereby.
Further terms of the Warrants and applicable Warrant Agreement will be set
forth in the applicable Prospectus Supplement.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the following terms of
the Debt Warrants in respect of which this Prospectus is being delivered: (i)
the title of such Debt Warrants; (ii) the aggregate number of such Debt
Warrants; (iii) the price or prices at which such Debt Warrants will be
issued; (iv) the currency or currencies (including composite currencies) in
which the price of such Debt Warrants may be payable; (v) the designation,
aggregate principal amount and terms of the Debt Securities purchasable upon
exercise of such Debt Warrants; (vi) the price at which and currency or
currencies (including composite currencies) in which the Debt Securities
purchasable upon exercise of such Debt Warrants may be purchased; (vii) the
date on which the right to exercise such Debt Warrants shall commence and the
date on which such right shall expire; (viii) if applicable, the minimum or
maximum amount of such Debt Warrants that may be exercised at any one time;
(ix) if applicable, the designation and terms of the Debt Securities, Common
Stock or Preferred Stock with which such Debt Warrants are issued and the
number of such Debt Warrants issued with each such Debt Security or share of
Common Stock or Preferred Stock; (x) if applicable, the date on and after
which such Debt Warrants and the related Debt Securities, Common Stock or
Preferred Stock will be separately transferable; (xi) information with
respect to book-entry procedures, if any; (xii) if applicable, a discussion
of certain United States Federal income tax considerations; and (xiii) any
other terms of such Debt Warrants, including terms, procedures and
limitations relating to the exchange or exercise of such Debt Warrants.
STOCK WARRANTS
The Company may issue Stock Warrants. The applicable Prospectus Supplement
will describe the following terms of any such Stock Warrants in respect of
which this Prospectus is being delivered: (i) the title of such Stock
Warrants; (ii) the aggregate number of such Stock Warrants; (iii) the price
or prices at which such Stock Warrants will be issued; (iv) the currency or
currencies (including composite currencies)
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in which the price of such Stock Warrants may be payable; (v) the securities
purchasable upon exercise of such Stock Warrants; (vi) the price at which and
the currency or currencies (including composite currencies) in which the
securities purchasable upon exercise of such Stock Warrants may be purchased;
(vii) the date on which the right to exercise such Stock Warrants shall
commence and the date on which such right shall expire; (viii) if applicable,
the minimum or maximum amount of such Stock Warrants which may be exercised
at any one time; (ix) if applicable, the designation and terms of the Debt
Securities, Common Stock or Preferred Stock with which such Stock Warrants
are issued and the number of such Stock Warrants issued with each such Debt
Security or share of Common Stock or Preferred Stock; (x) if applicable, the
date on and after which such Stock Warrants and the related Debt Securities,
Common Stock or Preferred Stock will be separately transferable; (xi)
information with respect to book-entry procedures, if any; (xii) if
applicable, a discussion of certain United States Federal income tax
considerations; and (xiii) any other terms of such Stock Warrants, including
terms, procedures and limitations relating to the exchange and exercise of
such Stock Warrants.
UNIVERSAL WARRANTS
The Company may also issue other Warrants ("Universal Warrants") (i) to
purchase or sell securities of any entity unaffiliated with the Company, a
basket of such securities, an index or indices of such securities or any
combination of the foregoing, (ii) currencies or composite currencies or
(iii) commodities, on terms to be determined at the time of sale. The Company
may satisfy its obligations, if any, with respect to any Universal Warrants
by delivering the underlying securities, currencies or commodities or, in the
case of underlying securities or commodities, the cash value thereof, as set
forth in the applicable Prospectus Supplement. The applicable Prospectus
Supplement will describe the following terms of any such Universal Warrants
in respect of which this Prospectus is being delivered: (i) the title of such
Universal Warrants; (ii) the aggregate number of such Universal Warrants;
(iii) the price or prices at which such Universal Warrants will be issued;
(iv) the currency or currencies (including composite currencies) in which the
price of such Universal Warrants may be payable; (v) whether such Universal
Warrants are put Warrants or call Warrants, (vi) (a) the specific security,
basket of securities, index or indices of securities or any combination of
the foregoing and the amount thereof, (b) currencies or composite currencies
or (c) commodities (and, in each case, the amount thereof or the method for
determining the same) purchasable or saleable upon exercise of such Universal
Warrants; (vii) the purchase price at which and the currency or currencies
(including composite currencies) with which such underlying securities,
currencies or commodities may be purchased or sold upon such exercise (or the
method of determining the same); (viii) whether such exercise price may be
paid in cash, by the exchange of any other Security offered with such
Universal Warrants or both and the method of such exercise; (ix) whether the
exercise of such Universal Warrants is to be settled in cash or by the
delivery of the underlying securities or commodities or both; (x) the date on
which the right to exercise such Universal Warrants shall commence and when
such right shall expire; (xi) if applicable, the minimum or maximum number of
such Universal Warrants that may be exercised at any one time; (xii) if
applicable, the designation and terms of the Securities with which such
Universal Warrants are issued and the number of Universal Warrants issued
with each such Security; (xiii) if applicable, the date on and after which
such Universal Warrants and the related Securities will be separately
transferable; (xiv) information with respect to book-entry procedures, if
any; (xv) if applicable, a discussion of certain United States Federal income
tax considerations; and (xvi) any other terms of such Universal Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Universal Warrants.
PLAN OF DISTRIBUTION
Offered Securities may be sold (i) through agents, (ii) through
underwriters, (iii) through dealers or (iv) directly to purchasers.
Offers to purchase Offered Securities may be solicited by agents
designated by the Company from time to time. Any such agent involved in the
offer or sale of the Offered Securities will be named, and any commissions
payable by the Company to such agent will be set forth, in the Prospectus
Supplement. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts
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<PAGE>
basis for the period of its appointment. Any such agent may be deemed to be
an underwriter, as that term is defined in the Securities Act, of the Offered
Securities so offered and sold.
If an underwriter or underwriters are utilized in the sale of Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is
reached, and the names of the specific managing underwriter or underwriters,
as well as any other underwriters, and the terms of the transactions,
including compensation of the underwriters and dealers, if any, will be set
forth in the Prospectus Supplement, which will be used by the underwriters to
make resales of Offered Securities.
If a dealer is utilized in the sale of Offered Securities, the Company
will sell such Offered Securities to the dealer, as principal. The dealer may
then resell such Offered Securities to the public at varying prices to be
determined by such dealer at the time of resale. The name of the dealer and
the terms of the transactions will be set forth in the Prospectus Supplement
relating thereto.
If DLJSC, a wholly owned subsidiary of the Company, participates in the
distribution of Offered Securities, the offering of the Offered Securities
will be conducted in accordance with Section 2720 of the Rules of the
National Association of Securities Dealers, Inc.
Offers to purchase Offered Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to
institutional investors or others. The terms of any such sales will be
described in the Prospectus Supplement relating thereto.
Agents, underwriters and dealers may be entitled under agreements which
may be entered into with the Company, to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act,
and any such agents, underwriters or dealers, or their affiliates may be
customers of, engage in transactions with or perform services for the
Company, in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Offered Securities from the Company at the public offering price set forth in
the Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date stated in the
Prospectus Supplement. Such Contracts will be subject to only those
conditions set forth in the Prospectus Supplement. A commission indicated in
the Prospectus Supplement will be paid to underwriters and agents soliciting
purchases of Offered Securities pursuant to any such Contracts accepted by
the Company.
This Prospectus, together with the Prospectus Supplement, may also be used
by DLJSC in connection with offers and sales of Offered Securities related to
market-making transactions by and through DLJSC, at negotiated prices related
to prevailing market prices at the time of sale or otherwise. DLJSC may act
as principal or agent in such transactions.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Securities and certain other legal matters in connection with
the offering of the Securities will be passed upon by Michael A. Boyd, Senior
Vice President and General Counsel to the Company, and Davis Polk & Wardwell.
Mr. Boyd owns 36,398 shares of Common Stock, 8,534 restricted stock units and
options to purchase 79,544 shares of Common Stock. Davis Polk & Wardwell 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, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997, have been incorporated by
reference herein and 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.
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NO DEALER, SALESMAN OR OTHER 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, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
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. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOTES 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.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Use of Proceeds........................................................ S-3
Description of Notes................................................... S-4
Underwriting........................................................... S-6
PROSPECTUS
Available Information.................................................. 2
Incorporation of Certain Information by Reference...................... 2
Use of Proceeds........................................................ 3
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends ................................ 3
The Company............................................................ 4
Description of Capital Stock........................................... 6
Description of Debt Securities......................................... 9
Description of Warrants................................................ 21
Plan of Distribution................................................... 22
Legal Matters.......................................................... 23
Experts................................................................ 23
===============================================================================
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$500,000,000
DONALDSON, LUFKIN &
JENRETTE, INC.
6 1/2% SENIOR NOTES
DUE 2008
-----------------
PROSPECTUS SUPPLEMENT
-----------------
DONALDSON, LUFKIN & JENRETTE
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
SALOMON SMITH BARNEY
JUNE 3, 1998
===============================================================================
