<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration File No.: 333-53499
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PROSPECTUS SUPPLEMENT
FEBRUARY 16, 2000
(TO PROSPECTUS DATED JUNE 1, 1998)
DONALDSON, LUFKIN & JENRETTE, INC.
$500,000,000
8% SENIOR NOTES DUE 2005
- --------------------------------------------------------------------------------
THE COMPANY:
o We are a leading integrated investment and merchant bank that serves
institutional, corporate, governmental and individual clients.
o Donaldson, Lufkin & Jenrette, Inc.
277 Park Avenue
New York, New York 10172
(212) 892-3000
PROPOSED TRADING FORMAT:
o The Notes will be held in global form by The Depository Trust Company.
o The Notes will not be listed on any securities exchange.
THE NOTES AND THE OFFERING:
o Maturity: March 1, 2005
o Interest Payments: semi-annually on March 1 and September 1, commencing on
September 1, 2000
o Use of Proceeds: general corporate purposes.
o Closing: February 22, 2000.
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Per Note Total
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Public offering price: 99.862% $499,310,000
Underwriting fees: 0.60% $ 3,000,000
Proceeds to Company: 99.262% $496,310,000
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Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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DONALDSON, LUFKIN & JENRETTE
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Use of Proceeds ........................................................ S-3
Ratio of Earnings to Fixed Charges ..................................... 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
S-2
<PAGE>
USE OF PROCEEDS
We will use the net proceeds from the sale of the Notes for general
corporate purposes. We estimate that our expenses in connection with the
offering will be $100,000.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------- ------------------
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (1) ............. 1.10 1.11 1.16 1.16 1.13 1.19
</TABLE>
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(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.
S-3
<PAGE>
DESCRIPTION OF NOTES
You should read the following description of the terms of the Notes
together with the more general description of Senior Debt Securities in the
accompanying Prospectus. Capitalized terms that we have not defined in this
Prospectus Supplement 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 8%
Senior Notes due 2005.
Maturity Date............... The Notes will mature on March 1, 2005. If the
maturity date is not a business day, we will pay
principal and interest on the Notes that are due
on the maturity date on the next succeeding
business day and we will not pay any additional
interest as a result of the delay in payment. By
business day we mean 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.......... We will make all payments of principal and
interest in U.S. dollars in immediately available
funds.
Issue Price................. 99.862% of the principal amount of the Notes.
Original Issue Date
(Settlement Date).......... February 22, 2000.
Book-Entry or
Certificated Note........... We will issue the Notes only in fully registered
form and the Notes 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 of Notes 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, we will
not issue Notes in definitive form. See
"Description of Debt Securities--Book Entry
System" in the accompanying 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 8% 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 February
22, 2000 and is payable on March 1 and September
1 of each year, commencing on September 1, 2000,
to holders of record at the close of business on
the preceding February 15 or August 15 (whether
or not a business day). If any interest payment
date is not a business day, payment of interest
otherwise payable on the Notes will be made on
the next succeeding business day and we will not
pay any additional interest as a result of the
delay in payment.
S-4
<PAGE>
Redemption by DLJ........... We cannot redeem the Notes prior to maturity.
Sinking Fund................ The Notes are not entitled to any sinking fund.
Ranking..................... The Notes will be our direct, unsecured and
unsubordinated obligations. Except as described
under "Description of Debt Securities--Negative
Pledge" in the Prospectus, the Indenture does not
limit other indebtedness or securities which we
may incur or contain financial or similar
restrictions.
Re-Opening.................. We may from time to time, without notice to or
the consent of the holders of the Notes, create
and issue further notes ranking equally with the
Notes in all respects (or in all respects except
for the payment of interest accruing prior to the
issue date of such further notes or except for
the first payment of interest following the issue
date of such further notes) so that such further
notes shall be consolidated and form a single
series with the Notes and shall have the same
terms as to status, redemption or otherwise as
the Notes.
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 securities
exchange.
S-5
<PAGE>
UNDERWRITING
Under the terms of the underwriting agreement dated February 16, 2000, we
have agreed to sell to Donaldson, Lufkin & Jenrette Securities Corporation
("DLJSC"), and DLJSC has agreed to purchase, all of the Notes.
If any Notes are purchased by DLJSC pursuant to the Underwriting
Agreement, all such Notes must be purchased.
There is currently no public market for the Notes. We do not intend to
apply for listing of the Notes on any securities exchange, but DLJSC has
advised us that, following completion of the offering of the Notes, DLJSC
presently intends to make a market in the Notes, as permitted by applicable law
and regulation. DLJSC is not obligated to do so, however, and may discontinue
making a market at any time without notice. No assurance can be given 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.
DLJSC proposes 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 0.35% of the principal amount. DLJSC may allow, and such dealers
may reallow, a concession not in excess of 0.20% of the principal amount to
certain brokers and dealers. After the Notes are released for sale to the
public, DLJSC may vary the offering price and other selling terms from time to
time.
We have agreed to indemnify DLJSC against and contribute toward certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
DLJSC is our wholly-owned subsidiary. DLJSC has committed to purchase from
us all of the Notes to be purchased in the offering. Although the amount of
proceeds we will receive from this offering will not be affected by DLJSC's
participation as the 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 our consolidated financial statements. 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
Prospectus, 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.
DLJSC has engaged and may in the future engage in investment banking
transactions with DLJ and its affiliates in the ordinary course of business.
In connection with the sale of the Notes, DLJSC may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes.
Specifically, DLJSC may overallot the offering, creating a short position in
the Notes. In addition, DLJSC may bid for, and purchase, the Notes in the open
market to cover short positions and may make such bids and purchases to
stabilize the price of the Notes. Any of these activities may stabilize or
maintain the market price of the Notes above independent market levels. DLJSC
is not required to engage in these activities and may end any of these
activities at any time.
DLJSC is offering the Notes, subject to prior sale, when, as and if issued
to and accepted by DLJSC and subject to approval of certain legal matters by
counsel for DLJSC. DLJSC reserves 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 though the facilities of The
Depository Trust Company of New York on or about February 22, 2000, against
payment therefor in immediately available funds.
S-6
<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>
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(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.
6
<PAGE>
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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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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FEBRUARY 16, 2000
DONALDSON, LUFKIN & JENRETTE, INC.
$500,000,000
8% SENIOR NOTES DUE 2005
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PROSPECTUS SUPPLEMENT
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DONALDSON, LUFKIN & JENRETTE
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We have not authorized any dealer, salesperson or other person to give you any
written information other than this prospectus or to make any oral
representations as to matters that are not stated in this prospectus. You must
not rely on unauthorized information. This prospectus is not an offer to sell
or a solicitation of your offer to buy the securities in any jurisdiction in
which that is not authorized, or in which the person making the offer or
solicitation is not permitted to do so, or to any person to whom such offer or
solicitation would be unlawful. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create any
implication that the information contained herein or the affairs of the company
have not changed since the date hereof.
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