<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
PRE-EFFECTIVE AMENDMENT NUMBER 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
LEGG MASON, INC.
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 52-1200960
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
-------------------------
111 South Calvert Street
Baltimore, Maryland 21202
(410) 539-0000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-------------------------
Theodore S. Kaplan
Senior Vice President and General Counsel
Legg Mason, Inc.
111 South Calvert Street
Baltimore, Maryland 21202
(410) 539-0000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copy to:
James M. Asher, Esq. Phyllis G. Korff, Esq.
Rogers & Wells Skadden, Arps, Slate, Meagher & Flom
200 Park Avenue 919 Third Avenue
New York, New York 10166 New York, New York 10022
212-878-8000 212-735-3000
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [x]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Each Class of Securities Amount to be Proposed Maximum Proposed Amount of
to be Registered Registered (1) Aggregate Price Maximum Registrat-
Per Unit (2) Aggregate ion Fee
Offering Price (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities, Convertible Debt $150,000,000 100% $150,000,000 $51,724
Securities and Common Stock, $.10 par
value (3)
====================================================================================================================================
</TABLE>
<PAGE> 2
(1) In United States dollars or the equivalent thereof in any other
currency, currency unit or units, or composite currency or currencies.
(2) Estimated for the sole purpose of computing the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(3) Also includes such indeterminate number of shares of Common Stock as
may be issued solely upon conversion of any Convertible Debt
Securities; and also relates to offers and sales of Debt Securities
in connection with the broker-dealer business conducted by and
through affiliates of the Registrant, including Legg Mason Wood
Walker, Incorporated.
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
2
<PAGE> 3
THIS PRELIMINARY PROSPECTUS SUPPLEMENT AND THE INFORMATION CONTAINED HEREIN ARE
SUBJECT TO COMPLETION OR AMENDMENT AND PROSPECTIVE PURCHASERS ARE REFERRED TO
THE RELATED FINAL PROSPECTUS SUPPLEMENT FOR DEFINITIVE INFORMATION ON ANY
MATTER CONTAINED HEREIN. THIS PRELIMINARY PROSPECTUS SUPPLEMENT SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.
PROSPECTUS SUPPLEMENT (SUBJECT TO COMPLETION, DATED __________, 1996)
(TO PROSPECTUS DATED __________, 1996)
$100,000,000
LEGG MASON, INC.
% SENIOR NOTES DUE 2006
The Senior Notes will mature on _______ ___, 2006. Interest on the
Senior Notes is payable semiannually on _________ and _________ of each year,
commencing _________, 1996. The Senior Notes are not subject to redemption by
the Company prior to maturity and are not entitled to any sinking fund.
The Senior Notes will initially be represented by a global note
registered in the name of The Depository Trust Company, as depositary ("DTC")
or its nominee. Beneficial interests in the Senior Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
depositary (with respect to participants' interests) and its participants.
Except as described herein, Senior Notes in certificated form will not be
issued in exchange for the global note.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==============================================================================
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) Company(1)(3)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Senior Note . . . . . . . . % % %
- ------------------------------------------------------------------------------
Total . . . . . . . . . . . . . $ $ $
==============================================================================
</TABLE>
(1) Plus accrued interest, if any, from __________, 1996.
(2) See "Underwriting" for information related to indemnification of the
Underwriters.
(3) Before deduction of expenses payable by the Company estimated at
$_____.
The Senior Notes are offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them, and subject to certain
conditions. It is expected that delivery of the Senior Notes will be made on
or about __________, 1996 through the book-entry facilities of DTC against
payment therefor in immediately available funds.
LEGG MASON WOOD WALKER
Incorporated
MORGAN STANLEY & CO.
Incorporated
MERRILL LYNCH & CO.
The date of this Prospectus Supplement is __________, 1996.
<PAGE> 4
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . S-5
Management's Discussion and Analysis of Results
of Operations and Financial Condition . . . . . . . . . . . . . . . . . S-6
Description of Senior Notes . . . . . . . . . . . . . . . . . . . . . . . S-12
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Description of Debt Securities . . . . . . . . . . . . . . . . . . . . . 4
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . 16
Limitations on Issuance of Bearer Securities . . . . . . . . . . . . . . 18
ERISA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
S-2
<PAGE> 5
THE COMPANY
Legg Mason, Inc. (the "Company") is a holding company which, through its
subsidiaries, is engaged in securities brokerage and trading, investment
management of institutional and individual accounts and Company-sponsored
mutual funds, investment banking for corporations and municipalities,
commercial mortgage banking and provision of other financial services. The
Company's principal broker-dealer subsidiary is Legg Mason Wood Walker,
Incorporated ("Legg Mason Wood Walker"), a full service regional broker-dealer
and investment banking firm operating primarily in the Eastern and Mid-South
regions of the United States. The Company's principal investment management
subsidiaries are Western Asset Management Company, Batterymarch Financial
Management, Inc., Legg Mason Fund Adviser, Inc. and Bartlett & Co.
("Bartlett"). Through Legg Mason Wood Walker and its predecessors, the Company
has been engaged in the securities business since 1899.
The Company was incorporated in Maryland in 1981 to serve as a holding
company for Legg Mason Wood Walker and other subsidiaries. The predecessor
company to Legg Mason Wood Walker was formed in 1970 under the name Legg Mason
& Co., Inc. to combine the operations of Legg & Co., a Maryland-based
broker-dealer formed in 1899, and Mason & Company, Inc., a Virginia- based
broker-dealer formed in 1962. The Company's subsequent growth has occurred
through internal expansion as well as through its acquisitions of broker-dealer
and investment management firms.
In 1995, the Company achieved its longstanding goal of increasing its
advisory fee revenues to 25% of total revenues. Advisory fee revenues totalled
26% of total revenues for the six months ended September 30, 1995. Since that
time, the Company has acquired Bartlett, a Cincinnati-based asset manager with
$2.2 billion under management for high net worth individuals and institutions,
and has entered into an agreement to acquire Lehman Brothers Global Asset
Management Limited ("LBGAM"), a London-based institutional and mutual fund
advisor with approximately $3 billion under management. The Company's total
assets under management as of December 31, 1995 (excluding Bartlett and LBGAM)
exceeded $30 billion, including $5 billion in proprietary mutual funds.
The Company's executive offices are located at 111 South Calvert Street,
Baltimore, Maryland 21202 and its telephone number is (410) 539-0000. Unless
the context otherwise requires, the term "Company" means Legg Mason, Inc. and
its predecessors and subsidiaries.
RECENT DEVELOPMENTS
On January 17, 1996, the Company reported revenues for its third fiscal
quarter ended December 31, 1995 of $122.5 million, a 32% increase from revenues
of $92.9 million in the corresponding quarter of the prior year. Net earnings
were $9.2 million, up 122% from net earnings of $4.1 million in the prior
year's quarter. For the nine months ended December 31, 1995, revenues were
$353.7 million, a 30% increase from revenues of $271.2 million in the
corresponding period of the prior year. Net earnings were $26.2 million, 114%
higher than net earnings of $12.2 million in the prior year's period. Advisory
fee revenues as a percentage of total revenues were 27% and 26% for the quarter
and nine months ended December 31, 1995, respectively.
S-3
<PAGE> 6
USE OF PROCEEDS
The net proceeds from the sale of the Senior Notes offered hereby are
estimated to be $________. The Company intends to use the net proceeds for
general corporate purposes. Pending any use of the net proceeds, they may be
invested temporarily in short-term, interest-bearing securities.
CAPITALIZATION
The following table sets forth the unaudited consolidated short-term debt
and capitalization of the Company at September 30, 1995 and as adjusted to
reflect the sale of the Senior Notes offered hereby, as if such transaction had
occurred on September 30, 1995:
<TABLE>
<CAPTION>
September 30, 1995
------------------------
Actual As Adjusted
-------- -----------
(in thousands)
<S> <C> <C>
Short-term debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . $100,607 $100,607
Long-term debt:
Senior Notes offered hereby . . . . . . . . . . . . . . . . . . . -- 100,000
5 1/4% Convertible Subordinated Debentures due May 1, 2003 . . . . 68,000 68,000
-------- --------
Total long-term debt . . . . . . . . . . . . . . . . . . . . 68,000 168,000
-------- --------
Stockholders' equity:
Preferred stock--$10.00 par value; authorized 4,000,000 shares;
none issued . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock--$.10 par value; authorized 20,000,000 shares;
issued and outstanding 13,971,916 shares(2) . . . . . . . . 1,397 1,397
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . 115,167 115,167
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 159,309 159,309
Net unrealized appreciation on investment securities . . . . . . . 288 288
-------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . 276,161 276,161
-------- --------
Total capitalization . . . . . . . . . . . . . . . . . $344,161 $444,161
- -------------------- ======== ========
</TABLE>
(1) Includes $56.6 million of 30-day revolving borrowings relating to cash
compensating balances maintained in connection with the Company's mortgage
servicing business, and $44.0 million of short-term borrowings under
customary arrangements utilized in the securities brokerage industry.
(2) Does not include 1,324,091 shares issued in connection with the
acquisition of Bartlett on January 2, 1996, 2,001,169 shares reserved for
issuance upon exercise of outstanding stock options and 2,635,659 shares
reserved for issuance upon the conversion of the Company's 5 1/4%
Convertible Subordinated Debentures due 2003.
S-4
<PAGE> 7
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for
the Company for the periods indicated.(1) Such financial data should be read
in conjunction with the detailed information and consolidated financial
statements, including notes thereto, included in the documents incorporated by
reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT RATIOS)
SIX MONTHS ENDED YEARS ENDED
SEPTEMBER 30, MARCH 31,
------------------- ----------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA:
Revenues:
Commissions........................... $ 77,942 $ 58,555 $120,735 $141,375 $117,305 $112,556 $ 90,168
Principal transactions................ 32,696 27,030 59,470 53,949 55,000 53,191 42,415
Investment advisory and related fees.. 60,247 40,454 88,345 65,583 50,915 42,887 38,259
Investment banking.................... 19,150 21,297 34,653 79,283 66,575 42,297 30,944
Interest.............................. 25,818 17,225 39,265 29,990 23,973 25,629 28,267
Other................................. 15,361 13,726 29,123 27,354 22,579 15,796 20,968
-------- -------- -------- -------- -------- -------- --------
Total revenues.................... 231,214 178,287 371,591 397,534 336,347 292,356 251,021
-------- -------- -------- -------- -------- -------- --------
Expenses:
Compensation and benefits............. 131,361 105,077 217,028 228,998 193,857 164,595 136,741
Occupancy and equipment rental 17,153 14,336 29,775 26,902 23,437 22,741 22,170
Communications........................ 13,146 12,146 25,933 22,943 20,186 17,988 17,598
Floor brokerage and clearing fees..... 2,653 2,447 5,047 5,816 5,575 6,847 8,036
Interest.............................. 11,843 7,553 17,135 15,396 11,629 13,433 14,394
Other................................. 26,169 23,037 48,984 38,265 32,680 31,737 29,856
-------- -------- -------- -------- -------- -------- --------
Total expenses.................... 202,325 164,596 343,902 338,320 287,364 257,341 228,795
-------- -------- -------- -------- -------- -------- --------
Earnings before income taxes............... 28,889 13,691 27,689 59,214 48,983 35,015 22,226
Income taxes.......................... 11,829 5,587 11,431 23,166 18,780 13,898 8,702
-------- -------- -------- -------- -------- -------- --------
Net earnings............................... $ 17,060 $ 8,104 $ 16,258 $ 36,048 $ 30,203 $ 21,117 $ 13,524
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to fixed charges(2)...... 2.8 2.2 2.1 3.4 3.5 2.6 2.0
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
SEPTEMBER 30, ----------------------------------------------------
1995 1995 1994 1993 1992 1991
------------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $1,024,185 $816,658 $811,488 $640,454 $579,883 $502,678
Subordinated liabilities.............. $ 68,000 $102,487 $102,487 $ 34,597 $ 35,020 $ 35,120
Total liabilities..................... $ 680,024 $487,718 $497,315 $428,929 $396,906 $337,294
Total stockholders' equity............ $ 276,161 $226,453 $211,686 $176,928 $147,957 $130,264
</TABLE>
- -------------------------
(1) Historical data have not been restated to give effect to the Company's
acquisition of Bartlett on January 2, 1996, which will be accounted for as
a pooling of interests.
(2) The ratio of earnings to fixed charges was computed by dividing the sum of
earnings before income taxes plus fixed charges by fixed charges. Fixed
charges consist of all interest expense and one-third of rent expense
(considered representative of the interest factor).
S-5
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Company, like other securities firms, is directly affected by general
economic and market conditions, including fluctuations in volume and price
levels of securities, changes in interest rates and demand for securities
brokerage and investment banking services, all of which have an impact on the
Company's revenues as well as its liquidity. Substantial fluctuations can
occur in the Company's revenues and net earnings due to these and other
factors. The Company's investment advisory activities and their contribution
to operating results have grown significantly, through both internal growth and
acquisition, over the past ten years. Earnings from investment advisory
services tend to be more stable than those from securities brokerage and
investment banking activities because they are less affected by changes in
securities market conditions.
In periods of reduced market activity, profitability is likely to be
adversely affected because certain expenses, consisting primarily of salaries
and benefits, communications and occupancy expenses, remain relatively fixed.
Accordingly, net earnings for any period should not be considered
representative of any other period.
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
The Company's net earnings in the six months ended September 30, 1995
increased 111% to $17.1 million from $8.1 million in the prior year's
corresponding period. Revenues rose 30% to $231.2 million from $178.3 million.
Commission revenues rose 33% to $77.9 million because of increases in
sales of listed and over-the-counter stocks and non-affiliated mutual funds.
Revenues from principal transactions increased 21% to $32.7 million
because of increased sales of corporate bonds and over-the-counter stocks and
higher trading profits on firm proprietary positions.
Investment advisory and related fees increased 49% to $60.2 million,
reflecting the addition of fees earned by Batterymarch Financial Management,
Inc. ("Batterymarch"), and growth in assets under management in
Company-sponsored mutual funds and the Company's fixed-income investment
advisory subsidiary.
Investment banking revenues fell 10% to $19.2 million as a result of a
substantial decline in the number and size of co-managed offerings of real
estate investment trusts, offset in part by an increase in energy-related
public offerings and fees from other corporate finance activities.
Other revenues rose 12% to $15.4 million, primarily because of increased
loan originations at the Company's mortgage banking subsidiaries.
Compensation and benefits increased 25% to $131.4 million as a result of
higher sales and profitability-based compensation and the addition of expenses
of Batterymarch.
Occupancy and equipment rental increased 20% to $17.2 million because of
the addition of retail brokerage office locations, the addition of expenses of
Batterymarch and higher transaction volume processed by the Company's data
processing service bureau.
S-6
<PAGE> 9
Communications expense increased 8% to $13.1 million, primarily because of
increased quote services related to brokerage office and product area
expansion.
Floor brokerage and clearing fees rose 8% to $2.7 million reflecting
higher transaction volume.
Other expense increased 14% to $26.2 million, attributable to the addition
of expenses of Batterymarch, including amortization of intangibles.
Interest revenue increased 50% to $25.8 million because of higher interest
rates earned on larger customer margin account balances and higher levels of
conduit stock and firm proprietary stock loan balances.
Interest expense increased 57% to $11.8 million because of higher interest
rates paid on larger customer credit balances and increased levels of conduit
stock loan balances.
Income taxes increased 112% to $11.8 million, principally because of an
increase in pre-tax earnings. Effective tax rates were 40.9% and 40.8% in the
current and prior year periods, respectively.
FISCAL YEARS ENDED MARCH 31, 1995, 1994 AND 1993
The following table sets forth, for the periods indicated, items in
the Consolidated Statements of Earnings as percentages of total revenues and
the increase (decrease) by item as a percentage of the amount for the previous
period:
<TABLE>
<CAPTION>
Percentage of Total Revenues Period to Period Change
---------------------------- -----------------------
Years Ended March 31, 1995 1994
---------------------------- Compared Compared
1995 1994 1993 to 1994 to 1993
----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C>
REVENUES
Commissions . . . . . . . . . . . . . . 32.5% 35.6% 34.9% (14.6)% 20.5%
Principal transactions . . . . . . . . . 16.0 13.6 16.4 10.2 (1.9)
Investment advisory and related fees . . 23.8 16.5 15.1 34.7 28.8
Investment banking . . . . . . . . . . . 9.3 19.9 19.8 (56.3) 19.1
Interest . . . . . . . . . . . . . . . . 10.6 7.5 7.1 30.9 25.1
Other . . . . . . . . . . . . . . . . . 7.8 6.9 6.7 6.5 21.1
----- ----- -----
100.0 100.0 100.0 (6.5) 18.2
----- ----- -----
EXPENSES
Compensation and benefits . . . . . . . 58.4 57.6 57.6 (5.2) 18.1
Occupancy and equipment rental . . . . . 8.0 6.8 7.0 10.7 14.8
Communications . . . . . . . . . . . . . 7.0 5.8 6.0 13.0 13.7
Floor brokerage and clearing fees . . . 1.3 1.4 1.7 (13.2) 4.3
Interest . . . . . . . . . . . . . . . . 4.6 3.9 3.4 11.3 32.4
Other . . . . . . . . . . . . . . . . . 13.2 9.6 9.7 28.0 17.1
----- ----- -----
92.5 85.1 85.4 1.6 17.7
----- ----- -----
EARNINGS BEFORE INCOME TAXES . . . . . . . 7.5 14.9 14.6 (53.2) 20.9
Income taxes . . . . . . . . . . . . . . 3.1 5.8 5.6 (50.7) 23.4
----- ----- -----
NET EARNINGS . . . . . . . . . . . . . . . 4.4% 9.1% 9.0% (54.9)% 19.4%
===== ===== =====
</TABLE>
S-7
<PAGE> 10
In fiscal 1995, revenues and net earnings declined from record levels
reached in the prior fiscal year. Revenues were $371.6 million, a 7% decrease
from revenues of $397.5 million in fiscal 1994. Net earnings were $16.3
million, down 55% from net earnings of $36.0 million in the prior fiscal year.
Revenues derived from securities transactions for individual investors
constituted approximately 50% of the Company's total revenues in fiscal 1995,
and the Company believes this will continue to be the largest single source of
its revenues in the foreseeable future.
REVENUES
COMMISSIONS
Commissions fell 15% to $120.7 million in fiscal 1995, principally as a
result of lower sales of non-affiliated mutual funds and listed and
over-the-counter securities. Commission revenues were adversely affected by
rising interest rates and investor caution, particularly on the part of
individual investors.
In fiscal 1994, commissions rose 21% to $141.4 million from levels in
fiscal 1993, principally because of increases in sales of listed securities,
non-affiliated mutual funds, variable annuities and over-the-counter
securities. During most of fiscal 1994, commission revenues benefited from an
active and rising stock market, attributable in part to investors seeking
higher investment returns than those available on money market accounts and
other short-term investments.
PRINCIPAL TRANSACTIONS
Revenues from principal transactions rose 10% to $59.5 million in fiscal
1995, principally as a result of increased sales of municipal and corporate
debt securities, offset in part by lower sales of mortgage-backed securities.
Higher sales of municipal securities in the secondary markets substantially
offset sharp declines in municipal new issue volume. Sales of corporate debt
securities benefited from the Company's expansion of its taxable fixed-income
marketing capabilities.
In fiscal 1994, principal transactions fell 2% to $53.9 million because of
lower sales of taxable fixed-income securities and a decline in profits on
firm-owned securities positions, substantially offset by increased sales of
over-the-counter securities.
INVESTMENT ADVISORY AND RELATED FEES
Investment advisory and related fees rose 35% in fiscal 1995 to $88.3
million, principally as a result of the addition of fees earned by Batterymarch
and Gray, Seifert & Co., Inc. ("Gray Seifert") and growth in assets under
management in Company-sponsored mutual funds and the Company's fixed-income
advisory subsidiary. Excluding fees earned by Batterymarch and Gray Seifert,
investment advisory and related fees rose 19% in fiscal 1995. Fees from assets
under management and from fee-based brokerage accounts accounted for 24% of
total revenues in fiscal 1995, up from 16% in the prior year.
In fiscal 1994, investment advisory and related fees rose 29% because of
growth in assets under management in Company-sponsored mutual funds and the
Company's fixed-income advisory subsidiary, as well as growth in various types
of fee-based brokerage accounts.
S-8
<PAGE> 11
INVESTMENT BANKING
Investment banking revenues declined 56% to $34.7 million in fiscal 1995
from record levels achieved in the prior fiscal year as significantly higher
interest rates led to industry-wide declines in corporate and municipal
securities offerings.
In fiscal 1994, investment banking revenues rose 19% to $79.3 million as a
result of selling concessions and management fees earned on a substantially
higher level of corporate underwritings, particularly co-managed offerings of
real estate investment trusts and closed-end fund issuances. Low interest
rates and higher securities valuations were important factors in the growth of
investment banking revenues during fiscal 1994.
OTHER REVENUES
Other revenues rose 6% to $29.1 million, primarily because of increased
account maintenance fees and rental income from an office building purchased in
fiscal 1995.
In fiscal 1994, other revenues rose 21%, primarily because of increased
mortgage banking loan origination fees and the addition of certain fees earned
by The Fairfield Group, Inc. subsequent to its acquisition in April 1993.
EXPENSES
COMPENSATION AND BENEFITS
Compensation and benefits fell 5% to $217.0 million in fiscal 1995, as
lower commission and profitability-based compensation was partially offset by
personnel additions in certain product and support areas and in twelve new
branch office locations.
In fiscal 1994, compensation and benefits rose 18% to $229.0 million,
reflecting higher sales compensation on increased commission-based revenues,
personnel additions, and higher profitability-based compensation.
A substantial part of compensation expense fluctuates in proportion to the
level of business activity. Other compensation costs, primarily salaries and
benefits, are fixed and may not decline with reduced levels of volume.
Therefore, profitability may be adversely affected by sustained periods of
unfavorable market conditions or slow revenue growth in acquired businesses or
new product areas.
OCCUPANCY AND EQUIPMENT RENTAL
Occupancy and equipment rental rose 11% to $29.8 million because of the
inclusion of expenses of Batterymarch and Gray Seifert and higher depreciation
and data processing expenses related to branch office and product area
expansion.
In fiscal 1994, occupancy and equipment rental rose 15% to $26.9 million,
principally because of increased transaction-related data processing costs and
higher rental payments at corporate headquarters and certain branch office
locations.
S-9
<PAGE> 12
COMMUNICATIONS
Communications costs rose 13% to $25.9 million in fiscal 1995, principally
reflecting increased quote services for branch offices and product areas, and
higher printing and paper expenses.
In fiscal 1994, communications costs rose 14%, reflecting increases in
telephone and transaction-related variable expenses attributable to increased
business activity.
FLOOR BROKERAGE AND CLEARING FEES
Floor brokerage and clearing fees fell 13% to $5.0 million in fiscal 1995,
following a 4% increase in fiscal 1994, reflecting changes in securities
transaction volume.
OTHER EXPENSE
Other expense rose 28% and 17% in fiscal 1995 and 1994, respectively,
because of increased litigation-related expenses (including a $2.0 million
charge in fiscal 1995 for the proposed settlement of a class action lawsuit
discussed in Note 8 of Notes to Consolidated Financial Statements incorporated
by reference herein) and higher promotional and programming expense. In
addition, fiscal 1995 includes the expenses of Batterymarch and Gray Seifert
subsequent to their acquisitions.
INTEREST REVENUE AND EXPENSE
Interest revenue increased 31% to $39.3 million in fiscal 1995, primarily
as a result of higher interest rates earned on substantially larger customer
margin account balances and stock loan conduit activity, offset in part by a
reduction in interest earned on proprietary securities positions. Interest
expense increased 11% to $17.1 million because of higher interest rates paid on
customer credit and conduit stock loan balances, offset in part by a decline in
interest paid on short-term borrowings.
In fiscal 1994, interest revenue increased 25% to $30.0 million, as a
result of increased stock loan conduit activity, larger customer margin account
balances and investment of proceeds of the Company's $68.0 million convertible
subordinated debenture offering completed in April 1993. These increases were
partially offset by lower interest earnings on proprietary fixed-income
securities positions. Interest expense increased 32% to $15.4 million,
primarily because of debt service on the convertible subordinated debentures
and increased stock loan conduit activity.
As a result of substantially larger customer margin account balances and
higher interest rates, the Company's net interest margin increased to 56.4% in
fiscal 1995 from 48.7% in fiscal 1994.
INCOME TAXES
Income taxes fell 51% to $11.4 million in fiscal 1995 because of lower
pre-tax earnings. The Company's effective tax rate increased to 41.3% from
39.1% as a result of federal tax law changes and higher effective state income
tax rates.
In fiscal 1994, income taxes increased 23% because of higher pre-tax
earnings. The Company's effective tax rate increased to 39.1% from 38.3% as a
result of higher corporate income tax rates following the enactment of the 1993
Omnibus Budget Reconciliation Act.
S-10
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets are substantially liquid, consisting mainly of cash
and assets readily convertible into cash. These assets are financed primarily
by free credit balances, equity capital, bank lines of credit, subordinated
borrowings and other payables.
On July 26, 1995, the Company called for redemption, effective August 25,
1995, the $34.5 million aggregate principal amount outstanding of its 7%
Convertible Subordinated Debentures due June 15, 2011 (the "Debentures").
Substantially all holders converted their Debentures into 45.96 shares of the
Company's common stock for each $1,000 principal amount of Debentures (based on
the conversion price of $21.76 per share of common stock), with cash paid in
lieu of fractional shares.
During the six months ended September 30, 1995, cash and cash equivalents
increased $53.5 million. Cash flows from financing activities generated $99.7
million, attributable to higher short-term borrowings by the Company's mortgage
banking and securities brokerage affiliates. The Company used $93.3 million of
cash in operating activities, primarily to fund higher securities inventories.
Cash flows from investing activities provided $47.2 million, principally from
reduced levels of investments in resale agreements.
On January 5, 1995, the Company acquired the assets of Batterymarch. The
Company paid $54.1 million cash at closing. An additional payment, due in
early 1998 and based on Batterymarch's achievement of specified revenue levels
for calendar 1997, could increase the total consideration up to $120.0 million.
If the amount of any 1998 payment exceeds $40.0 million, the Company may pay
all or any portion of the excess in the form of shares of the Company's common
stock.
The Company's broker-dealer subsidiaries are subject to the requirements
of the Securities and Exchange Commission's net capital rule which is designed
to measure the general financial soundness and liquidity of broker-dealers. At
September 30, 1995, the brokerage subsidiaries had aggregate net capital of
$93.4 million, which exceeded minimum net capital requirements by $84.3
million.
The principal sources of the Company's funds are its investment advisory
and broker-dealer subsidiaries. The amount of the broker-dealers' net assets
that may be distributed is subject to restrictions under applicable net capital
rules. In addition, the Company has a revolving bank line of credit in the
amount of $50.0 million, none of which is currently outstanding, and the
Company's subsidiaries have lines of credit, aggregating $240.0 million as of
December 31, 1995, pursuant to which they may borrow on a short-term demand
basis generally at prevailing broker call rates. Management believes that
funds available from operations, its lines of credit and the sale of the Senior
Notes are sufficient to meet its present and reasonably foreseeable capital
needs, although the Company may augment its capital funds for continued
expansion by internal growth and acquisition.
The Company borrows and lends securities in the normal course of business
to facilitate the settlement of its customer and proprietary transactions. In
addition, the Company engages in conduit securities borrowing and lending
activities in which it acts as an agent to facilitate settlement for other
institutions. In both firm and conduit transactions, the Company deposits or
receives cash, generally equal to 102% of the market value of securities
exchanged, and monitors the adequacy of collateral levels on a daily basis.
S-11
<PAGE> 14
INFLATION
The Company's assets are not significantly affected by inflation because
they are primarily monetary, consisting of cash, resale agreements, securities
and receivables. However, the rate of inflation affects various expenses,
including employee compensation, occupancy, and communications, which may not
be readily recoverable in charges for services provided by the Company.
DESCRIPTION OF SENIOR NOTES
The following description of the terms of the Senior Notes offered hereby
(referred to in the Prospectus as the "Debt Securities") supplements the
description of the general terms of Debt Securities set forth in the
Prospectus, to which description reference is hereby made. The Senior Notes
will constitute a series of Debt Securities and will be issued under the Senior
Debt Indenture, dated as of __________, 1996 between the Company and The Bank
of New York, as Trustee (the "Indenture"). The following summary of the Senior
Notes is qualified in its entirety by reference to such description and to such
Indenture.
The Senior Notes will be limited to $100,000,000 in aggregate principal
amount, as a result of which, as of ___________, 1996, $50,000,000 aggregate
principal amount of debt Securities remains currently available to be offered
by the Company under the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part. The Senior Notes will
constitute part of the senior debt of the Company and will rank pari passu with
all other unsecured and unsubordinated debt of the Company. The Company is a
holding company and the Senior Notes will be effectively subordinated to
indebtedness of the Company's subsidiaries. At September 30, 1995,
indebtedness of such subsidiaries for money borrowed totalled approximately
$101 million, which includes approximately $57 million of 30-day revolving
borrowings relating to cash compensating balances maintained in connection with
the Company's mortgage servicing business, and $44 million of short-term
borrowings under customary arrangements utilized in the securities brokerage
industry. The Company's rights and the rights of its creditors, including
holders of Senior Notes, to participate in the distribution of assets of any
subsidiary upon such subsidiary's liquidation or recapitalization, or
otherwise, will be subject to the prior claims of such subsidiary's creditors,
except to the extent that the Company may itself be a creditor with recognized
claims against the subsidiary. See "Description of Debt Securities--General"
in the accompanying Prospectus. The Senior Notes will be issued only in fully
registered form without coupons, in denominations of $1,000 and integral
multiples thereof. Initially the Senior Notes will be issued in the form of a
global note (the "Global Note") registered in the name of DTC or its nominee,
as described below. The Senior Notes will bear interest from ___________,
1996, at the annual rate set forth on the cover page of this Prospectus
Supplement. The Senior Notes will mature on __________. Interest on the
Senior Notes will be payable semiannually on _____ and ______, commencing
_________, 1996, to the persons in whose names the Senior Notes are registered
at the close of business on the preceding ________ or _______, respectively.
The Senior Notes will not be redeemable prior to maturity and will not be
subject to any sinking fund.
The Indenture permits the defeasance of Debt Securities upon the
satisfaction of the conditions described under "Description of Debt
Securities--Defeasance and Discharge" and "Description of Debt
Securities--Defeasance of Certain Obligations" in the accompanying Prospectus.
The Senior Notes are subject to these defeasance provisions.
BOOK-ENTRY PROCEDURES
The Senior Notes will initially be issued in the form of a Global Note,
which will be deposited with, or on behalf of, DTC and registered in the name
of DTC or its nominee. Except as set forth below, the Global Note may not be
transferred except as a whole by DTC to a nominee of DTC or by a nominee of
S-12
<PAGE> 15
DTC to DTC or another nominee of DTC or by DTC or any nominee to a successor of
DTC or a nominee of such successor.
Principal and interest payments on the Senior Notes represented by the
Global Note will be made by the Company to DTC or its nominee, as the case may
be, as the registered owner of the Global Note. The Company expects that DTC
or its nominee, upon receipt of any payment of principal or interest in respect
of the Global Note, will credit immediately the accounts of the related
participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interests in such Global Note as shown on the
records of DTC. Neither the Company nor the trustee or any Paying Agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the Global
Note, or for maintaining, supervising or reviewing any records relating to such
beneficial interests. The Company also expects that payments by participants
to owners of beneficial interests in the Global Note held through such
participants will be governed by standing customer instructions and customary
practices, as is the case with securities registered in "street name." Such
instructions will be the responsibility of such participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Senior Notes in certificated form in exchange for
beneficial interests in the Global Note. In addition, the Company may at any
time determine not to have its Senior Notes represented by the Global Note,
and, in such event, will issue Senior Notes in certificated form in exchange
for beneficial interests in the Global Note. In any such instance, an owner of
a beneficial interest in the Global Note will be entitled to physical delivery
in certificated form of Senior Notes equal in principal amount to such
beneficial interest and to have such Senior Notes registered in its name.
Senior Notes so issued in certificated form will be issued in denominations of
$1,000 or any amount in excess thereof that is an integral multiple of $1,000
and will be issued in registered form only, without coupons.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. DTC's participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own DTC. Access to DTC's book-entry system
is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
A further description of DTC's procedures with respect to the Global Note
is set forth in the Prospectus under "Description of Debt Securities--Global
and Book-Entry Debt Securities." DTC has confirmed to the Company, the
Underwriters and the Trustee that it intends to follow such procedures.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Senior Notes will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be
made by the Company in immediately available funds so long as the Senior Notes
are maintained in book-entry form.
S-13
<PAGE> 16
Secondary trading in long-term notes and debentures of corporate issuers
is generally settled in clearinghouse or next-day funds. In contrast, the
Senior Notes will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Senior Notes will
therefore be required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Senior Notes.
UNDERWRITING
Subject to the terms and conditions of the Pricing Agreement dated
________, which incorporates by reference the Underwriting Agreement dated
___________ (together, the "Underwriting Agreement"), Legg Mason Wood Walker,
Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") have agreed, severally, to purchase from the
Company the principal amount of Senior Notes set forth opposite their
respective names below. The Underwriting Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent,
and that the Underwriters will purchase all Senior Notes offered hereby if any
of such Senior Notes are purchased.
<TABLE>
<CAPTION>
Principal
Amount of
Underwriter Senior Notes
----------- ------------
<S> <C>
Legg Mason Wood Walker, Incorporated . . . . . . . . . . . . $
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . .
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . .
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $
============
</TABLE>
The Company has been advised that the Underwriters propose to offer the
Senior Notes to the public at the initial offering price set forth on the cover
page of this Prospectus Supplement and to certain dealers at such price less a
concession not in excess of __% of the principal amount of the Senior Notes.
The Underwriters may allow, and such dealers may re-allow, a concession not in
excess of __% of the principal amount of the Senior Notes to certain other
dealers. After the initial offering of the Senior Notes, the offering price
and other selling terms may from time to time be varied by the Underwriters.
The Underwriters intend to resell any Senior Notes which they are unable
to sell in this offering from time to time, at prevailing market prices,
subject to applicable prospectus delivery requirements.
The Company does not intend to apply for listing of the Senior Notes on a
national securities exchange, but has been advised by the Underwriters that
they presently intend to make a market in the Senior Notes offered hereby;
however, the Underwriters are not obligated to do so, and any market making
activity may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of,
or trading market for, the Senior Notes.
Legg Mason Wood Walker is a wholly owned subsidiary of the Company and its
participation in this offering is in compliance with the requirements of
Schedule E of the Bylaws of the National Association of Securities Dealers,
Inc. regarding underwriting securities of an affiliate. Certain of the
Underwriters and their affiliates engage in transactions (which may include
commercial banking transactions) with and perform services for the Company or
one or more of its affiliates in the ordinary course of business and may do so
in the future.
The Prospectus Supplement and the accompanying Prospectus may be used by
Legg Mason Wood Walker in connection with offers and sales of Senior Notes.
Legg Mason Wood Walker may act as principal or agent in such transactions.
Such offers will be made at prices related to prevailing prices at the time.
S-14
<PAGE> 17
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments the Underwriters may be required to make in
respect thereof.
S-15
<PAGE> 18
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1996
PROSPECTUS
$150,000,000
LEGG MASON, INC.
DEBT SECURITIES
CONVERTIBLE DEBT SECURITIES
-------------------------
Legg Mason, Inc. (the "Company") may offer from time to time, together
or separately, notes, debentures or other evidences of indebtedness ("Debt
Securities") in one or more series, which may be convertible ("Convertible Debt
Securities") into shares of the Company's Common Stock, par value $.10 per
share (the "Common Stock"). Debt Securities, including any Convertible Debt
Securities, may be issuable in registered form without coupons or in bearer
form with or without coupons attached. The Company will offer Debt Securities
to the public on terms determined by market conditions. Debt Securities may be
sold for U.S. dollars, foreign denominated currency or currency units;
principal of and any interest on Debt Securities may likewise be payable in
U.S. dollars, foreign denominated currency or currency units -- in each case,
as the Company specifically designates. The Debt Securities, including any
Convertible Debt Securities, and the Common Stock underlying any such
Convertible Debt Securities are hereinafter collectively referred to as the
"Securities."
The accompanying Prospectus Supplement will set forth the specific
terms of the Debt Securities, including the ranking as senior or subordinated
Debt Securities, the specific designation, aggregate principal amount, purchase
price, maturity, redemption terms, interest rate (or manner of calculation
thereof), time of payment of interest (if any), terms for any conversion
(including the terms relating to the adjustment thereof), listing (if any) on a
securities exchange and any other specific terms of the Debt Securities. Debt
Securities may be issued as Original Issue Discount Securities. The
accompanying Prospectus Supplement will also set forth the name of and
compensation to each dealer, underwriter or agent (if any) involved in the sale
of the Debt Securities being offered and the managing underwriters with respect
to each series sold to or through underwriters. Such underwriters (and any
representative thereof), dealers or agents may include Legg Mason Wood Walker,
Incorporated ("Legg Mason Wood Walker"), a wholly owned subsidiary of the
Company.
The Securities may be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. See "Plan of Distribution." If agents of the Company or any dealers
or underwriters are involved in the sale of the Securities in respect of which
this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commissions or discounts will be set forth in
or may be calculated from the Prospectus Supplement with respect to such
Securities. The net proceeds to the Company from such sale also will be set
forth in the applicable Prospectus Supplement.
Following the initial distribution of a series of Securities, Legg
Mason Wood Walker may offer and sell previously issued Debt Securities in the
course of its business as a broker-dealer. Legg Mason Wood Walker may act as
principal or agent in such transactions. This Prospectus and the accompanying
Prospectus Supplement may be used by Legg Mason Wood Walker in connection with
such transactions. Such sales, if any, will be made at varying prices related
to prevailing market prices at the time of sale.
-------------------------
This Prospectus may not be used to consummate sales of 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 SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is , 1996
<PAGE> 19
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY
REFERENCE HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN
OR THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
BY ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS AND ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY THE SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements, and other
information filed by the Company can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: 7 World Trade Center, 13th Floor, 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 from the Public
Reference Section of the Commission, Washington, D.C. 20549, at prescribed
rates. Certain securities of the Company are listed on, and reports, proxy
statements and other information concerning the Company can be inspected and
copied at the offices of, the New York Stock Exchange, Inc. (the "New York
Stock Exchange"), 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933 (the
"Securities Act") with respect to the Securities offered hereby. This
Prospectus and any accompanying Prospectus Supplement do not contain all
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Reference is made to the Registration Statement and to the exhibits relating
thereto for further information with respect to the Company and the Securities
offered hereby.
-------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act (File No. 1-8529) are incorporated herein by
reference:
(1) Annual Report on Form 10-K for the fiscal year ended March 31,
1995;
(2) Quarterly Report on Form 10-Q for the quarter ended June 30,
1995;
(3) Quarterly Report on Form 10-Q for the quarter ended September 30,
1995; and
(4) the description of the Company's Common Stock, par value $.10 per
share (the "Common Stock"), contained in the Amendment on Form 8 filed
July 17, 1991, amending the Company's Registration Statement on Form
8-A.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the filing of a post-effective
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<PAGE> 20
amendment which indicates the termination of the offering of the Securities
made by this Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of filing of such
documents. Any statement contained in a document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
referred to above which have been or may be incorporated by reference in this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Such written or oral request
should be directed to Legg Mason, Inc., 111 South Calvert Street, Baltimore,
Maryland 21202, Attention: Charles A. Bacigalupo, Secretary, telephone number
(410) 539-0000.
THE COMPANY
The Company is a holding company which, through its
subsidiaries, is engaged in securities brokerage and trading, investment
management of institutional and individual accounts and Company-sponsored
mutual funds, investment banking for corporations and municipalities,
commercial mortgage banking and provision of other financial services. The
Company's principal broker-dealer subsidiary is Legg Mason Wood Walker, a full
service regional broker- dealer and investment banking firm operating primarily
in the Eastern and Mid-South regions of the United States. The Company's
principal investment management subsidiaries are Western Asset Management
Company, Batterymarch Financial Management, Inc., Legg Mason Fund Adviser, Inc.
and Bartlett & Co. Through Legg Mason Wood Walker and its predecessors, the
Company has been engaged in the securities business since 1899.
The executive offices of the Company are located at 111 South Calvert
Street, Baltimore, Maryland 21202 and its telephone number is (410) 539-0000.
Unless the context otherwise requires, all references to the "Company" herein
include Legg Mason, Inc. and its predecessors and subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
The following table sets forth the Company's ratio of earnings to
fixed charges for the periods indicated.
<TABLE>
<CAPTION>
Six Months Ended Years Ended
September 30, March 31,
- ---------------------- --------------------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
2.8 2.2 2.1 3.4 3.5 2.6 2.0
</TABLE>
The ratio of earnings to fixed charges was computed by dividing the
sum of earnings before income taxes plus fixed charges by fixed charges. Fixed
charges consist of all interest and one-third of rent expense (considered
representative of the interest factor).
-3-
<PAGE> 21
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of
Securities offered hereby for general corporate purposes, which may include the
continued expansion and diversification, both by internal growth and by
acquisition, primarily of its securities brokerage and investment advisory
businesses; repayment of any outstanding indebtedness of the Company or its
subsidiaries; or for such other uses as may be set forth in a Prospectus
Supplement. Pending any of the foregoing applications, the net proceeds may
be invested temporarily in short-term, interest bearing securities.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may not
apply to the Debt Securities so offered will be described in the Prospectus
Supplement relating to such Debt Securities.
The Debt Securities will constitute either senior debt (the "Senior
Debt Securities") or subordinated debt (the "Subordinated Debt Securities") of
the Company. The Senior Debt Securities will be issued under an Indenture (the
"Senior Indenture"), to be entered into between the Company and the trustee
named in the Senior Indenture. The Subordinated Debt Securities will be issued
under a separate Indenture (the "Subordinated Indenture"), to be entered into
between the Company and the trustee named in the Subordinated Indenture. The
Senior Indenture and the Subordinated Indenture are sometimes referred to
collectively as the "Indentures." Copies of the forms of the Senior Indenture
and the Subordinated Indenture have been filed as exhibits to the Registration
Statement. The trustees under the Senior Indenture and under the Subordinated
Indenture are referred to herein as the "Trustees."
The following summaries of certain provisions of the Senior Debt
Securities, the Subordinated Debt Securities and the Indentures do not purport
to be complete and are subject to, and qualified in their entirety by reference
to, all the provisions of the Indenture applicable to a particular series of
Debt Securities, including the definitions therein of certain terms. Wherever
particular Sections, Articles or defined terms of the Indentures are referred
to herein or in a Prospectus Supplement, it is intended that such Sections,
Articles or defined terms shall be incorporated by reference herein or therein,
as the case may be. Section and Article references used herein are references
to the applicable Indenture. Except as otherwise indicated, the terms of the
Senior Indenture and the Subordinated Indenture are identical. Capitalized
terms not otherwise defined herein shall have the meanings given to them in the
applicable Indenture. As used in the discussion under the caption "Description
of Debt Securities," the term "Company" means Legg Mason, Inc.
GENERAL
The Indentures do not limit 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 up to the aggregate amount from time to time authorized by the Company
for each series. (Section 3.1) Unless otherwise specified in the Prospectus
Supplement, the Senior Debt Securities when issued will be unsecured and
unsubordinated obligations of the Company and will rank equally and ratably
with all other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities when issued will be unsecured obligations of the
Company, subordinated in right of payment to the prior payment in full of all
Senior Debt (as defined in the Subordinated Indenture) of the Company as
described in the applicable Prospectus Supplement. (Section 15.1 of the
Subordinated Indenture) Substantially all of the assets of the Company are
owned by its subsidiaries. Therefore, the Company's rights and the rights of
its creditors, including holders of Debt Securities, to participate in the
distribution of the assets of any subsidiary upon such
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subsidiary's liquidation or recapitalization, or otherwise, will be subject to
the prior claims of such subsidiary's creditors, except to the extent that the
Company may itself be a creditor with recognized claims against the subsidiary.
In addition, dividends, loans and advances from certain of the Company's
subsidiaries, including Legg Mason Wood Walker, to the Company are restricted
by net capital requirements under the Exchange Act and under rules of certain
exchanges and various domestic and foreign regulatory bodies.
Reference is made to the Prospectus Supplement relating to the
particular series of Debt Securities offered thereby for a description of the
following terms or additional provisions of the Debt Securities: (1) the title
of the Debt Securities; (2) whether the Debt Securities are Senior Debt
Securities or Subordinated Debt Securities; (3) the aggregate principal amount,
and any limit thereon, of the Debt Securities; (4) whether the Debt Securities
are to be issuable as Registered Securities or Bearer Securities or both,
whether any of the Debt Securities shall be issuable in whole or in part in
temporary or permanent global form or in the form of Book-Entry Securities and,
if so, the circumstances under which any such global securities or Book-Entry
Securities may be exchanged for Debt Securities registered in the name of, and
any transfer of such global or Book-Entry Securities may be registered to, a
Person other than the depository for such temporary or permanent global
securities or Book-Entry Securities or its nominee; (5) the price or prices
(expressed as a percentage of the aggregate principal amount thereof) at which
the Debt Securities will be issued; (6) the date or dates on which the Debt
Securities will mature; (7) the rate or rates per annum at which the Debt
Securities will bear interest, if any, and the date from which any such
interest will accrue; (8) the Interest Payment Dates on which any such interest
on the Debt Securities will be payable, the Regular Record Date for any
interest payable on any Debt Securities which are Registered Securities on any
Interest Payment Date and the extent to which, or the manner in which, any
interest payable on a temporary global Security on an Interest Payment Date
will be paid; (9) any mandatory or optional sinking fund or analogous
provisions; (10) each office or agency where, subject to the terms of the
applicable Indenture as described below under "Payment and Paying Agents," the
principal of and any premium and interest on the Debt Securities will be
payable and each office or agency where, subject to the terms of the applicable
Indenture as described below under "Form, Exchange, Registration and Transfer,"
the Debt Securities may be presented for registration of transfer or exchange;
(11) the date, if any, after which and the price or prices at which the Debt
Securities may, pursuant to any optional or mandatory redemption provisions, be
redeemed, in whole or in part, and the other detailed terms and provisions of
any such optional or mandatory redemption provisions, which may include with
respect to a particular series or particular Debt Securities within a series, a
redemption option of Holders upon certain conditions, as defined in the
applicable Indenture; (12) the denominations in which any Debt Securities which
are Registered Securities will be issuable, if other than denominations of
$1,000 and any integral multiple thereof, and the denomination or denominations
in which any Debt Securities which are Bearer Securities will be issuable, if
other than the denomination of $5,000; (13) the currency or currency units of
payment of the principal of (and premium, if any) and interest on the Debt
Securities; (14) any index used to determine the amount of payments of the
principal of (and premium, if any) and interest on the Debt Securities and the
manner in which such amounts shall be determined; (15) the terms and
conditions, if any, pursuant to which such Debt Securities are convertible or
exchangeable into Common Stock; (16) theterms pursuant to which such Debt
Securities are subject to defeasance; and (17) any other terms of the Debt
Securities not inconsistent with the provisions of the applicable Indenture.
Any such Prospectus Supplement will also describe any special provisions for
the payment of additional amounts with respect to the Debt Securities.
Debt Securities may be issued as Original Issue Discount Securities.
An Original Issue Discount Security is a Debt Security, including any
Zero-Coupon Security, which is issued at a price lower than the amount payable
upon the Stated Maturity thereof and which provides that upon redemption or
acceleration of the maturity, an amount less than the amount payable upon the
Stated Maturity, determined in accordance with the terms of such Debt Security,
shall become due and payable. (Sections 3.1 and 5.2) Certain special United
States federal income tax considerations applicable to Debt Securities sold at
an original issue discount will be described in the Prospectus Supplement
relating thereto. In addition, certain special United States federal income tax
or other considerations applicable to any Debt Securities which are denominated
in a currency or currency unit other than United States dollars may be
described in the applicable Prospectus Supplement relating thereto.
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Under the Indentures, the Company will have the ability, in addition
to the ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, without the consent of the holders, to reopen a
previous issue of a series of Debt Securities and issue additional Debt
Securities of such series (unless such reopening was restricted when such
series was created), in an aggregate principal amount determined by the
Company. (Section 3.1)
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in definitive form solely
as Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. (Section 3.1) Unless otherwise indicated in
an applicable Prospectus Supplement, Bearer Securities will have interest
coupons attached. (Section 2.1) The Indentures also provide that Debt
Securities of a series may be issuable in temporary or permanent global form
and may be issued as Book-Entry Securities that will be deposited with, or on
behalf of, The Depository Trust Company (the "Depository") or another
depository named by the Company and identified in a Prospectus Supplement with
respect to such series. See "Global and Book-Entry Debt Securities."
In connection with its original issuance, no Bearer Security
(including a Debt Security exchangeable for a Bearer Security or a Debt
Security in global form that is either a Bearer Security or exchangeable for
Bearer Securities) shall be mailed or otherwise delivered to any location in
the United States (as defined under "Limitations on Issuance of Bearer
Securities") and a Bearer Security may be delivered in connection with its
original issuance only if the Person entitled to receive such Bearer Security
furnishes written certification of the beneficial ownership of the Bearer
Security as required by Treasury Regulation Section 1.163-5(c)(2)(i)(D)(3) (or
any comparable successor provisions). In the case of a Bearer Security in
permanent global form, such certification must be given in connection with
notation of a beneficial owner's interest therein in connection with the
original issuance of such Debt Security. See "Global and Book-Entry Debt
Securities" and "Limitations on Issuance of Bearer Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities
of any series are issuable as both Registered Securities and Bearer Securities,
at the option of the Holder upon request confirmed in writing, and subject to
the terms of the applicable Indenture, Bearer Securities (with all unmatured
coupons, except as provided below, and all matured coupons in default) of such
series will be exchangeable into Registered Securities of the same series of
any authorized denominations and of a like aggregate principal amount and
tenor. Bearer Securities surrendered in exchange for Registered Securities
between a Regular Record Date or a Special Record Date and the relevant date
for payment of interest shall be surrendered without the coupon relating to
such date for payment of interest and interest accrued as of such date will not
be payable in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such coupon when due
in accordance with the terms of the applicable Indenture. Registered
Securities will not be issued in exchange for Bearer Securities (Section 3.5).
Each Bearer Security, and any coupon attached thereto, other than a temporary
global Bearer Security will bear the following legend: "Any United States
person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections
165(j) and 1287(a) of the United States Internal Revenue Code." A Book-Entry
Security may not be registered for transfer or exchange (other than as a whole
by the Depository to a nominee or by such nominee to such Depository) unless
the Depository or such nominee notifies the Company that it is unwilling or
unable to continue as Depository or the Depository ceases to be qualified as
required by the applicable Indenture or the Company instructs the Trustee in
accordance with the applicable Indenture that such Book-Entry Securities shall
be so registrable and exchangeable or there shall have occurred and be
continuing an Event of Default or an event which after notice or lapse of time
would be an Event of Default with respect to the Debt Securities evidenced by
such Book-Entry Securities or there shall exist such other circumstances if
any, as may be specified in the applicable Prospectus Supplement.
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<PAGE> 24
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented or surrendered for registration of
transfer or for exchange (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar or at the office of any
transfer agent designated by the Company for such purpose with respect to any
series of Debt Securities and referred to in an applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the applicable Indenture. Such transfer
or exchange will be effected upon the Security Registrar or such transfer
agent, as the case may be, being satisfied with the documents of title and
identity of the person making the request. If a Prospectus Supplement refers
to any transfer agents (in addition to the Security Registrar) initially
designated by the Company with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that, if Debt Securities of a series are issuable solely as Registered
Securities, the Company will be required to maintain a transfer agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (in
addition to the Security Registrar) a transfer agent in a Place of Payment for
such series located outside the United States. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities. (Section 10.2)
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange Debt Securities of
any series during a period beginning at the opening of business 15 days before
any selection of Debt Securities of that series to be redeemed and ending at
the close of business on (A) if Debt Securities of the series are issuable only
as Registered Securities, the day of mailing of the relevant notice of
redemption and (B) if Debt Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if Debt Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption; (ii) register the transfer of or exchange any Registered Security
being redeemed in part, except the unredeemed portion of any Registered
Security being redeemed in part; or (iii) exchange any Bearer Security so
selected for redemption, except that such Bearer Security may be exchanged for
a Registered Security of that series and like tenor, provided that such
Registered Security shall be simultaneously surrendered for redemption.
(Section 3.5)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement,
payment of the principal of (and premium, if any) and interest on Bearer
Securities will be made, subject to any applicable laws and regulations, at the
offices of such Paying Agents outside the United States as the Company may
designate from time to time, at the option of the Holder, by check or by
transfer to an account maintained by the payee with a bank located outside the
United States. Unless otherwise indicated in an applicable Prospectus
Supplement, payment of interest on Bearer Securities on any Interest Payment
Date will be made only against surrender to the Paying Agent of such coupon
relating to such Interest Payment Date. (Section 10.1) No payment with respect
to any Bearer Security will be made at any office or agency of the Company in
the United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States.
Notwithstanding the foregoing, payments of the principal of (and premium, if
any) and interest on Bearer Securities denominated and payable in U.S. dollars
will be made at the office of the Company's Paying Agent in the Borough of
Manhattan, The City of New York, if (but only if) payment of the full amount
thereof in U.S. dollars at all offices or agencies outside the United States is
illegal or effectively precluded by exchange controls or other similar
restrictions. (Section 10.2)
Unless otherwise indicated in an applicable Prospectus Supplement,
payment of the principal of (and premium, if any) and interest on Registered
Securities will be made at the office of such Paying Agent or Paying Agents as
the Company may designate from time to time, except that at the option of the
Company payment of any interest may be made by check mailed to the address of
the person entitled thereto as such address shall appear in the Security
Register. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on Registered Securities will be made to
the Person in whose name
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such Registered Security is registered at the close of business on the Regular
Record Date for such interest. (Section 3.7)
Unless otherwise indicated in an applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee in The City of New York will be
designated as a Paying Agent for the Company for payments with respect to Debt
Securities which are issuable solely as Registered Securities and the Company
will maintain a Paying Agent outside of the United States for payments with
respect to Debt Securities (subject to the limitations described above in the
case of Bearer Securities) which are issuable solely as Bearer Securities or
both Registered Securities and Bearer Securities. (Section 10.2) Any Paying
Agents outside the United States and any other Paying Agent in the United
States initially designated by the Company for the Debt Securities will be
named in an applicable Prospectus Supplement. The Company may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that, if Debt Securities of a series are issuable solely as Registered
Securities, the Company will be required to maintain a Paying Agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (i) a
Paying Agent in the Borough of Manhattan, The City of New York for payments
with respect to any Registered Securities of the series (and for payments with
respect to Bearer Securities of the series in the circumstances described
above, but not otherwise), and (ii) a Paying Agent in a Place of Payment
located outside the United States where Debt Securities of such series and any
coupons appertaining thereto may be presented and surrendered for payment;
provided that if the Debt Securities of such series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland or the Luxembourg
Stock Exchange or any other stock exchange located outside the United States
and such stock exchange shall so require, the Company will maintain a Paying
Agent in London or Luxembourg or any other required city located outside the
United States, as the case may be, for the Debt Securities of such series.
(Section 10.2)
Payments of the principal of (and premium, if any) and interest on
Book-Entry Securities registered in the name of the Depository or its nominee
will be made to the Depository or its nominee, as the case may be, as the
registered owner of the global security representing such Book-Entry
Securities. The Company expects that the Depository, upon receipt of any
payment of the principal of (and premium, if any) or interest on any Debt
Securities, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests as shown on the
records of such Depository or its nominee. Neither the Company, the Trustee,
any Paying Agent nor the Securities Registrar for such Debt Securities will
have any responsibility or liability for any aspects of the records relating
to, or payments made on account of, such beneficial ownership interests in the
Book-Entry Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
All moneys paid by the Company to a Paying Agent for the payment of
the principal of (and premium, if any) or interest on any Debt Securities which
remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and
the Holder of such Debt Security or any coupon will thereafter, as an unsecured
general creditor, look only to the Company for payment thereof. (Section 10.3)
GLOBAL AND BOOK-ENTRY DEBT SECURITIES
If so specified in an applicable Prospectus Supplement, the portion of
the Debt Securities of a series which are issuable as Bearer Securities will
initially be represented by one or more temporary or permanent global Debt
Securities, without interest coupons, to be deposited with a common depositary
in London for the benefit of the Euroclear System ("Euroclear") and Cedel Bank,
Societe Anonyme ("Cedel") for credit to the respective accounts of the
beneficial owners of such Debt Securities (or to such other accounts as they
may direct). (Section 3.4) Unless otherwise indicated by an applicable
Prospectus Supplement, on or after 40 days following its issuance, each such
temporary global Debt Security will be exchangeable for definitive Bearer
Securities, definitive Registered Securities or all or a portion of a permanent
global Debt Security, or any
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combination thereof, as specified in an applicable Prospectus Supplement, only
upon written certification in the form and to the effect described under "Form,
Exchange, Registration and Transfer." No Bearer Security (including a Debt
Security in permanent global form) delivered in exchange for a portion of a
temporary or permanent global Debt Security shall be mailed or otherwise
delivered to any location in the United States in connection with such
exchange. (Section 3.5)
A person having a beneficial interest in a permanent global Debt
Security will, except with respect to payment of the principal of (and premium,
if any) and interest on such permanent global Debt Security, be treated as a
Holder of such principal amount of Outstanding Debt Securities represented by
such permanent global Debt Security as shall be specified in a written
statement of the Holder of such permanent global Debt Security or, in the case
of a permanent global Debt Security in bearer form, of the operator of
Euroclear or Cedel which is provided to the Trustee by such Person. (Section
2.3)
If Debt Securities to be sold in the United States are designated by
the Company in a Prospectus Supplement as Book-Entry Securities, a global
security representing the Book-Entry Securities will be deposited in the name
of Cede & Co., as nominee for the Depository representing the securities to be
sold in the United States. Upon such deposit of the Book-Entry Securities, the
Depository shall credit an account maintained or designated by an institution
to be named by the Company or any purchaser of the Debt Securities represented
by the Book-Entry Securities with an aggregate amount of Debt Securities equal
to the total number of Debt Securities that have been so purchased. The
specific terms of any depository arrangement with respect to any portion of a
series of Debt Securities to be represented by one or more global securities
will be described in the applicable Prospectus Supplement. Beneficial interests
in such Debt Securities will only be evidenced by, and transfers thereof will
only be effected through, records maintained by the Depository and the
institutions that are Depository participants.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt. (Section 15.1 of the Subordinated Indenture) In
the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relative to the Company or to its creditors, as such,
or to its assets, or (b) any liquidation, dissolution or other winding up of
the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Debt shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt,
or provision shall be made for such payment in cash, before the Holders of
Subordinated Debt Securities are entitled to receive any payment on account of
principal of (or premium, if any) or interest on Subordinated Debt Securities,
and to that end the holders of Senior Debt shall be entitled to receive, for
application to the payment thereof, any payment or distribution of any kind or
character, whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of
Subordinated Debt Securities, which may be payable or deliverable in respect of
the Subordinated Debt Securities in any such case, proceeding, dissolution,
liquidation or other winding up event. (Section 15.2 of the Subordinated
Indenture)
By reason of such subordination, in the event of liquidation or
insolvency, creditors of the Company may recover less, ratably, than Holders of
Senior Debt and may recover more, ratably, than the Holders of the Subordinated
Debt Securities.
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In the event of the acceleration of the maturity of any Subordinated
Debt Securities, the Holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of (and premium, if any) or
interest on, the Subordinated Debt Securities. (Section 15.3 of the
Subordinated Indenture)
No payments on account of the principal of (and premium, if any) or
interest in respect of the Subordinated Debt Securities may be made if there
shall have occurred and be continuing a default in any payment with respect to
Senior Debt, or an event of default with respect to any Senior Debt resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default. (Section 15.4 of the
Subordinated Indenture) For purposes of the subordination provisions, the
payment, issuance and delivery of cash, property or securities (other than
stock and certain subordinated securities of the Company) upon conversion of a
Subordinated Debt Security will be deemed to constitute payment on account of
the principal of such Subordinated Debt Security. (Section 15.14 of the
Subordinated Indenture)
The Subordinated Indenture does not limit or prohibit the incurrence
of additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities constitute Senior Debt under the
Subordinated Indenture.
"Senior Debt" is defined to include the principal of (and premium, if
any) and interest (including interest accrued on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company to the
extent that such claim for post-petition interest is allowed in such
proceeding) on all indebtedness of the Company (including indebtedness of
others guaranteed by the Company), other than the Company's 5-1/4% Convertible
Subordinated Debentures due 2003, the Securities and any other obligations
specifically designated as being subordinate in right of payment to Senior
Debt, whether outstanding on the date of the Subordinated Indenture or
thereafter created, incurred or assumed, which is for money borrowed or
evidenced by bonds, debentures, notes or similar instruments and amendments,
renewals, extensions, modifications and refundings of any such indebtedness or
obligation. (Section 1.1 of the Subordinated Indenture)
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
CONVERSION OR EXCHANGE RIGHTS
The terms on which Debt Securities of any series are convertible into
or exchangeable for Common Stock will be set forth in the Prospectus Supplement
relating thereto. Such terms will include provisions as to whether conversion
or exchange is mandatory, at the option of the Holder or at the option of the
Company, and may include provisions pursuant to which the number of shares of
Common Stock to be received by the Holders of Debt Securities would be subject
to adjustment. (Section 3.1 and Article XIV)
CERTAIN COVENANTS
Negative Pledge. The Senior Debt Indenture provides that the Company
and any successor corporation will not, and will not permit any Subsidiary (as
defined in such Indenture) to create, assume, incur or guarantee any
indebtedness for borrowed money secured by a pledge, lien or other encumbrance
(except for certain liens specifically permitted by such Indenture) on the
Voting Securities (as defined in such Indenture) of Legg Mason Wood Walker
without making effective provision whereby the Debt Securities issued under
such Indenture will be secured equally and ratably with such secured
indebtedness. (Senior Debt Indenture, Section 10.7)
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Unless otherwise specified in the Prospectus Supplement, the
Indentures contain no other restrictive covenants or other provisions providing
for a put or increased interest or otherwise, including any that would afford
holders of the Debt Securities protection in the event of a highly leveraged
transaction involving the Company or any of its affiliates, or any covenants
relating to total indebtedness, interest coverage, stock repurchases,
recapitalizations, dividends and distributions to shareholders, current ratios
and acquisitions and divestitures.
Consolidation, Merger or Sale of Assets. The Company, without the
consent of the Holders of any of the Outstanding Debt Securities under the
applicable Indenture, may consolidate with or merge with or into, or sell,
lease, transfer or otherwise dispose of its assets substantially as an entirety
to, any Person which is a corporation, partnership or trust organized and
validly existing under the laws of any domestic jurisdiction, or may permit any
such Person to consolidate with or merge with or into the Company or sell,
lease, transfer or otherwise dispose of its assets substantially as an entirety
to the Company, provided that, among other things, any successor Person assumes
the Company's obligations on the Debt Securities and under the applicable
Indenture, that after giving effect to the transaction no Event of Default, and
no event which, after notice or lapse of time, would become an Event of
Default, shall have occurred and be continuing, and that certain other
conditions are met. (Section 8.1)
EVENTS OF DEFAULT
An Event of Default is defined under each Indenture with respect to
Debt Securities or any series issued under such Indenture as being: (a)
default in payment of any principal of the Debt Securities of such series,
either at maturity (or upon any redemption), by declaration or otherwise; (b)
default for 30 days in payment of any interest on any Debt Securities of such
series; (c) default for 60 days after written notice in the observance or
performance of any other covenant or agreement in the Debt Securities of such
series or such Indenture other than a covenant included in such Indenture
solely for the benefit of a series of Debt Securities other than such series;
(d) certain events of bankruptcy, insolvency or reorganization involving the
Company; (e) failure by the Company to make any payment at maturity, including
any applicable grace period, in respect of indebtedness, which term as used in
each of the Indentures means obligations (other than non-recourse obligations
or the Debt Securities of such series issued under such Indenture) of, or
guaranteed or assumed by, the Company for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments ("Indebtedness") in an amount in
excess of $10,000,000 and continuance of such failure for a period of 30 days
after written notice thereof to the Company by the Trustee, or to the Company
and the Trustee by the Holders of not less than 25% in principal amount of such
outstanding Debt Securities (treated as one class) issued under such Indenture;
or (f) a default with respect to any Indebtedness, which default results in the
acceleration of Indebtedness in an amount in excess of $10,000,000 without such
Indebtedness having been discharged or such acceleration having been cured,
waived, rescinded or annulled for a period of 30 days after written notice
thereof to the Company by the Trustee, or to the Company and the Trustee by the
Holders of not less than 25% in principal amount of such outstanding Debt
Securities (treated as one class) issued under such Indenture; provided,
however, that if any such failure, default or acceleration referred to in
clause (e) or clause (f) above shall cease or be cured, waived, rescinded or
annulled, then the Event of Default by reason thereof shall be deemed likewise
to have been thereupon cured. (Section 5.1)
Each Indenture provides that (a) if an Event of Default due to the
default in payment of principal of, premium, if any, or interest on, any series
of Debt Securities issued under such Indenture or due to the default in the
performance or breach of any other covenant or warranty of the Company
applicable to the Debt Securities of such series but not applicable to all
outstanding Debt Securities issued under such Indenture shall have occurred and
be continuing, either the Trustee or the Holders of not less than 25% in
principal amount of such Debt Securities of each affected series issued under
such Indenture and then outstanding may then declare the principal of all Debt
Securities of each such affected series and interest accrued thereon to be due
and payable immediately; and (b) if an Event of Default due to a default in the
performance of any other of the
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covenants or agreements in such Indenture applicable to all outstanding Debt
Securities issued under such Indenture and then outstanding or due to certain
events of bankruptcy, insolvency and reorganization of the Company shall have
occurred and be continuing, either the Trustee or the Holders of not less than
25% in principal amount of all Debt Securities issued under such Indenture and
then outstanding (treated as one class) may declare the principal of all such
Debt Securities and interest accrued thereon to be due and payable immediately,
but upon certain conditions such declarations may be annulled and past defaults
may be waived (except a continuing default in payment of principal of (or
premium, if any) or interest on such Debt Securities) by the Holders of a
majority in principal amount of the Debt Securities of all such affected series
then outstanding. (Section 5.2)
Each Indenture provides that no holder of Debt Securities issued under
such Indenture may institute any action against the Company under such
Indenture (except actions for payment of overdue principal or interest) unless
such Holder previously shall have given to the Trustee written notice of
default and continuance thereof and unless the Holders of not less than 25% in
principal amount of the Debt Securities of each affected series (treated as one
class) issued under such Indenture and then outstanding shall have requested
the Trustee to institute such action and shall have offered the Trustee
reasonable indemnity, the Trustee shall not have instituted such action within
60 days of such request and the Trustee shall not have received direction
inconsistent with such written request by the Holders of a majority in
principal amount of the Debt Securities of each affected series (treated as one
class) issued under such Indenture and then outstanding. (Sections 5.9 and
5.12)
Each Indenture contains a covenant that the Company will file annually
with the Trustee a certificate of no default or a certificate specifying any
default that exists. (Section 10.8 of the Senior Indenture; Section 10.7 of
the Subordinated Indenture)
DEFEASANCE AND DISCHARGE
If so specified with respect to any particular series of Debt
Securities, the Company may discharge its indebtedness and its obligations or
certain of its obligations under the applicable Indenture with respect to such
series by depositing funds or obligations issued or guaranteed by the United
States of America with the Trustee. (Section 4.3)
The Indentures provide that, if so specified with respect to the Debt
Securities of any series, the Company will be discharged from any and all
obligations in respect of the Debt Securities of such series (including, in the
case of Subordinated Debt Securities, the subordination provisions described
under "Subordination of Subordinated Debt Securities" herein and, except for
certain obligations relating to temporary Debt Securities and exchange of Debt
Securities, registration of transfer or exchange of Debt Securities of such
series, replacement of stolen, lost or mutilated Debt Securities of such
series, maintenance of paying agencies to hold monies for payment in trust and
payment of additional amounts, if any, required in consequence of United States
withholding taxes imposed on payments to non-United States persons) upon the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any), each installment of interest on, and
any sinking fund payments on, the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the applicable
Indenture and the Debt Securities of such series. (Section 4.6) Such a trust
may only be established if, among other things, (a) the Company has delivered
to the applicable Trustee an Opinion of Counsel to the effect that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of the applicable Indenture there has
been a change in applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of Debt Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance
and discharge, and will be subject to federal income tax on the same amounts
and in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge had
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not occurred; (b) the Debt Securities of such series, if then listed on any
domestic or foreign securities exchange, will not be delisted as a result of
such deposit, defeasance and discharge; and (c) in the case of the Subordinated
Debt Securities, (x) no default in the payment of the principal of (and
premium, if any) or any interest on any Senior Debt beyond any applicable grace
period shall have occurred and be continuing, or (y) no other default with
respect to any Senior Debt shall have occurred and be continuing and shall have
resulted in the acceleration of such Senior Debt. In the event of any such
defeasance and discharge of Debt Securities of such series, Holders of Debt
Securities of such series would be able to look only to such trust fund for
payment of principal of and any premium and any interest on their Debt
Securities until Maturity. (Section 4.6)
DEFEASANCE OF CERTAIN OBLIGATIONS
The Indentures provide that, if so specified with respect to the Debt
Securities of any series, the Company may omit to comply with any covenants
applicable to such Debt Securities which are subject to covenant defeasance and
any such omission shall not be an Event of Default with respect to the Debt
Securities of such series, upon the irrevocable deposit with the Trustee, in
trust, of money and/or U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of (and premium, if
any), each installment of interest on and any sinking fund payments thereof on
the Debt Securities of such series on the Stated Maturity of such payments or
upon optional redemption and any mandatory sinking fund payments or analogous
payments on the Debt Securities of such series on the day on which such
payments are due and payable in accordance with the terms of the applicable
Indenture and the Debt Securities of such series. (Sections 4.5 and 4.6 ) The
obligations of the Company under the applicable Indenture and the Debt
Securities of such series other than with respect to such covenants shall
remain in full force and effect. (Section 4.5) Such a trust may be
established only if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that (i) 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 such deposit, defeasance and discharge of
certain obligations 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, defeasance and discharge had not occurred and (ii) the Debt
Securities of such series, if then listed on any domestic or foreign securities
exchange, will not be delisted as a result of such deposit, defeasance and
discharge. (Section 4.6)
In the event the Company exercises its option to omit compliance with
the covenants described under "Covenants" above with respect to the Debt
Securities of any series or in any Prospectus Supplement with respect to the
Debt Securities of such series and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default, then the amount of
money and U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Debt Securities of such series at the time
of their Stated Maturity but may not be sufficient to pay amounts due on the
Debt Securities of such series at the time of the acceleration resulting from
such Default. The Company shall in any event remain liable for such payments as
provided in the Indentures.
The Trustee must deliver or pay to the Company from time to time, upon
request of the Company, any amounts held by it with respect to any Securities
which, in the opinion of a nationally recognized firm of independent public
accountants, are in excess of the amount which would then be required to be
deposited to effect a satisfaction, discharge or defeasance, as the case may
be, with respect to such Securities.
MEETINGS, MODIFICATION AND WAIVER
Each Indenture provides that the Company and the Trustee may enter
into supplemental indentures without the consent of the Holders to: (a) secure
any Debt Securities, (b) evidence the assumption by a successor corporation of
the obligations of the Company, (c) add covenants for the protection of the
Holders of Debt Securities, (d) cure any ambiguity or correct any inconsistency
in such Indenture, (e) establish the forms
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or terms of Debt Securities of any series and (f) evidence the acceptance of
appointment by a successor trustee. (Section 9.1)
Modifications and amendments of the Indentures may also be made by the
Company and the Trustee under the applicable Indenture with the consent of the
Holders of not less than a majority in principal amount of the Outstanding Debt
Securities issued under the applicable Indenture and affected by such
modification or amendment (voting as one class) unless a greater percentage of
such principal amount is specified in the applicable Prospectus Supplement;
provided, however, that no such modification or amendment may, without the
consent of each Holder of each Outstanding Debt Security affected thereby, (a)
change the Stated Maturity of the principal of, or any installment of principal
of or interest on, any such Debt Security, (b) reduce the principal amount of
(and premium, if any) or interest on, any such Debt Security, (c) change any
obligation of the Company to pay additional amounts, (d) reduce the amount of
principal of an Original Issue Discount Security or any other Debt Security
payable upon acceleration of the maturity thereof, (e) change the coin or
currency in which any Debt Security or any premium or interest thereon is
payable, (f) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security, (g) adversely change the
right to convert or exchange, including decreasing the conversion rate or
increasing the conversion price of, such Debt Security (if applicable), (h) in
the case of the Subordinated Indenture, modify the subordination provisions in
a manner adverse to the Holders of the Subordinated Debt Securities, (i) reduce
the percentage in principal amount of Outstanding Debt Securities of any
series, the consent of whose Holders is required for modification or amendment
of the applicable Indenture or for waiver of compliance with certain provisions
of the applicable Indenture or for waiver of certain defaults, (j) reduce the
requirements contained in the applicable Indenture for quorum or voting, (k)
change any obligations of the Company to maintain an office or agency in the
places and for the purposes required by the Indentures, or (l) modify any of
the above provisions. (Section 9.2)
The Holders of at least a majority in principal amount of the
Outstanding Debt Securities of each series may, on behalf of the Holders of all
the Debt Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the applicable
Indenture and, if applicable, such Debt Securities, unless a greater percentage
of such principal amount is specified in the applicable Prospectus Supplement.
The Holders of not less than a majority in principal amount of the Outstanding
Debt Securities of each series may, on behalf of all Holders of Debt Securities
of that series and any coupons pertaining thereto, waive any past default under
the applicable Indenture, except a default (a) in the payment of principal of
(and premium, if any) or any interest on any Debt Security of such series, and
(b) in respect of a covenant or provision of the applicable Indenture and, if
applicable, such Debt Securities, which cannot be modified or amended without
the consent of the Holder of each Outstanding Debt Security of such series
affected. (Section 5.13)
The Indentures provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or are present at a meeting of Holders of Debt Securities for quorum purposes,
(i) the principal amount of an Original Issue Discount Security that shall be
deemed to be Outstanding shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon acceleration
of the Maturity thereof, and (ii) the principal amount of a Debt Security
denominated in a foreign currency or currency units shall be the U.S. dollar
equivalent, determined on the date of original issuance of such Debt Security,
of the principal amount of such Debt Security or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent, determined on the date of
original issuance of such Debt Security, of the amount determined as provided
in (i) above.
The Indentures contain provisions for convening meetings of the
Holders of Debt Securities of a series if Debt Securities of that series are
issuable as Bearer Securities. A meeting may be called at any time by the
Trustee, and also, upon request, by the Company or the Holders of at least 25%
in principal amount of the Outstanding Debt Securities of such series, in any
such case upon notice given in accordance with "Notices"
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below. (Sections 13.1 and 13.2) Except for any consent which must be given by
the Holder of each Outstanding Debt Security affected thereby, as described
above, any resolution presented at a meeting or adjourned meeting at which a
quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except for any consent which must be given by the
Holder of each Outstanding Debt Security affected thereby, as described above,
any resolution with respect to any consent or waiver which may be given by the
Holders of not less than a majority in principal amount of the Outstanding Debt
Securities of a series may be adopted at a meeting or an adjourned meeting at
which a quorum is present only by the affirmative vote of a majority in
principal amount of the Outstanding Debt Securities of that series; and
provided, further, that, except for any consent which must be given by the
Holder of each Outstanding Debt Security affected thereby, as described above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which may be made, given or taken by
the Holders of a specified percentage, which is less than a majority in
principal amount of the Outstanding Debt Securities of a series may be adopted
at a meeting or adjourned meeting duly reconvened at which a quorum is present
by the affirmative vote of the Holders of such specified percentage in the
principal amount of the Outstanding Debt Securities of that series. Any
resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the applicable Indenture
will be binding on all Holders of Debt Securities of that series and the
related coupons. The quorum at any meeting called to adopt a resolution or with
respect to a consent or a waiver which may be given by the Holders of not less
than a majority in principal amount of the Outstanding Debt Securities of a
series, and at any reconvened meeting, will be persons holding or representing
a majority in principal amount of the Outstanding Debt Securities of a series;
provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver which may be given by the Holders of less or
greater than a majority in principal amount of the Outstanding Debt Securities
of a series then, with respect to such action (and only such action) the
Holders entitled to vote such lesser or greater percentage in principal amount
of the Outstanding Securities of such series shall constitute a quorum.
(Section 13.4)
NOTICES
Except as otherwise provided in the applicable Indenture, notices to
Holders of Bearer Securities will be given by publication at least twice in a
daily newspaper in The City of New York and in such other city or cities as may
be specified in such Debt Securities. Notices to Holders of Registered
Securities will be given by mail to the address of such Holders as they appear
in the Security Register. (Section 1.6)
TITLE
Title to any temporary global Debt Security, any Bearer Securities
(including Bearer Securities in permanent global form) and any coupons
appertaining thereto will pass by delivery. The Company, the Trustee and any
agent of the Company or the Trustee may treat the bearer of any Bearer Security
and the bearer of any coupon and the registered owner of any Registered
Security as the absolute owner thereof (whether or not such Debt Security or
coupon shall be overdue and notwithstanding any notice to the contrary) for the
purpose of making payment and for all other purposes. (Section 3.8)
REPLACEMENT OF DEBT SECURITIES AND COUPONS
Any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining thereto will be replaced by the Company at the expense of the
Holder upon surrender of such Debt Security to the Trustee. Debt Securities or
coupons that became destroyed, stolen or lost will be replaced by the Company
at the expense of the Holder upon delivery of the Trustee of the Debt Security
and coupons or evidence of the destruction, loss or theft thereof satisfactory
to the Company and the Trustee; in the case of any coupon which becomes
destroyed, stolen or lost, such coupon will be replaced by issuance of a new
Debt Security in exchange for the Debt Security to which such coupon
appertains. In the case of a destroyed, lost or stolen Debt Security
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or coupon, an indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Debt Security or coupon before a
replacement Debt Security will be issued. (Section 3.6)
GOVERNING LAW
The Indentures, the Debt Securities and the coupons will be governed
by, and construed in accordance with, the laws of the State of New York without
regard to principles of conflicts of laws. (Section 1.13)
REGARDING THE TRUSTEE
The Indentures contain limitations on the right of a Trustee, as a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security
or otherwise. (Section 6.11) In addition, a Trustee may be deemed to have a
conflicting interest and may be required to resign as Trustee if at the time of
a default under one of the Indentures it is a creditor of the Company. (Section
6.9) The Company and its subsidiaries may from time to time maintain deposit
accounts and credit facilities and conduct its banking transactions with a
Trustee in the ordinary course of business. (Section 6.4) In addition, The
Bank of New York, which may act as a Trustee under the Indentures, acts as
trustee under an indenture, dated as of May 1, 1993, related to the Company's 5
1/4% Convertible Subordinated Debentures due 2003.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, par value $.10 per share, and 4,000,000 shares of
Preferred Stock, par value $10.00 per share. As of December 31, 1995, there
were 14,006,872 shares of Common Stock and no shares of Preferred Stock
outstanding. Prior to the issuance of Convertible Debt Securities under the
Indentures, the Company may need to increase its authorized Common Stock, which
would require the approval of its stockholders.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on matters
to be voted upon by the stockholders, to receive dividends out of funds legally
available for distribution when and if declared by the Board of Directors and
to share ratably in the assets of the Company legally available for
distribution to its stockholders in the event of liquidation, dissolution or
winding up of the Company, after provisions for distributions to the holders of
any Preferred Stock.
The Company may not pay any dividend (other than in shares of Common
Stock) or make any distributions of assets on shares of Common Stock until
cumulative dividends on any Preferred Stock then outstanding have been paid.
Holders of Common Stock have no preemptive, subscription, redemption
or conversion rights. The outstanding shares of Common Stock are, and the
shares which may be issued upon conversion of the Convertible Debt Securities
will be, when issued, fully paid and nonassessable.
The holders of the Common Stock do not have cumulative voting rights,
which means that holders of more than half of the shares can elect all of the
directors and holders of the remaining shares will not be able to elect any
directors. The Company's By-laws provide for a classified board of directors
consisting of three classes with staggered three-year terms.
TRANSFER AGENT
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The transfer agent and registrar for the Company's Common Stock is
First Union National Bank of North Carolina, Charlotte, North Carolina.
PREFERRED STOCK
The Company's Articles authorize the Board of Directors to issue
shares of Preferred Stock, par value $10.00 per share, and to fix the terms
(including voting rights, dividends, redemption and conversion provisions, if
any, and rights upon liquidation) of any shares issued. Outstanding shares of
Preferred Stock which are redeemed or are converted to Common Stock are
restored to the status of authorized and unissued shares of Preferred Stock
issuable in series by the Board of Directors of the Company. There are
presently no shares of Preferred Stock outstanding.
The Board of Directors has the authority, under the Company's Articles
of Incorporation, to classify or reclassify any unissued Preferred Stock from
time to time by setting or changing the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of the stock.
TWO-TIER BUSINESS COMBINATION PROVISIONS
Maryland law requires the affirmative vote of at least a majority of
all of the outstanding shares entitled to vote to approve a merger,
consolidation, share exchange or disposition of all or substantially all of the
Company's assets. The Company's Articles require the affirmative vote of not
less than 70% of the then outstanding voting shares of the Company to approve
any "business combination" of the Company with any "Related Person" unless
certain conditions have been met. In addition, the 70% vote must include the
affirmative vote of at least 55% of the outstanding shares of voting stock held
by stockholders other than the Related Person. Accordingly, the actual vote
required to approve the business combination may be greater than the 70%,
depending upon the number of shares controlled by the Related Person. A
Related Person is defined to include any person or entity which is, directly or
indirectly, the beneficial owner of 15% or more of the outstanding shares of
the Company's voting stock, including any affiliate or associate of such person
or entity. The term "business combination" is defined to include a wide variety
of transactions between the Company and a Related Person, including a merger,
consolidation, share exchange or sale of assets having a fair market value
greater than 10% of the book value of the Company's consolidated assets.
However, if the Related Person pays a "fair price" to the Company's
stockholders in the transaction, the 70% requirement would not be applicable
and the proposed business combination could be approved by a simple majority of
the stockholders unless otherwise required by Maryland law, provided that such
affirmative vote includes at least 55% of the voting stock held by persons
other than the Related Person. Under the Articles, the "fair price" must be at
least equal to the greater of the highest price paid or agreed to be paid by
the Related Person to purchase shares of the Company's Common Stock, or the
highest market price of the Common Stock, in each case during the 24-month
period prior to the taking of such vote, or the per share book value of the
Common Stock at the end of the calendar quarter immediately preceding the
taking of such vote. In addition, the "fair price" consideration to be received
by the Company's stockholders must be of the same form and kind as the most
favorable form and kind of consideration paid by the Related Person in
acquiring any of its shares of Common Stock of the Company.
The special voting provisions are not applicable to a business
combination authorized by the Board of Directors by a vote which includes a
majority of the "Disinterested Directors" of the Company. A Disinterested
Director is defined to include any member of the Board of Directors who is not
the Related Person (or an affiliate or associate of the Related Person) and who
was a Director prior to the time that the Related Person became a Related
Person, and any successor of a Disinterested Director who is not the Related
Person (or an affiliate or associate of the Related Person) and who is
recommended to succeed a Disinterested Director by a majority of the
Disinterested Directors then on the Board.
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These special voting provisions may not be amended, altered, changed
or repealed except by the affirmative vote of at least 70% of the shares of
stock entitled to vote at a meeting of the stockholders called for the
consideration of such amendment, alteration, change or repeal, and at least 55%
of the outstanding shares of stock entitled to vote thereon held by
stockholders who are not Related Persons, unless such proposal shall have been
proposed by the Board of Directors by a vote which includes a majority of the
Disinterested Directors.
The business combination provisions under the Company's charter could
have the effect of delaying, deterring or preventing a change in control of the
Company. Any possible change in control could also be affected by the
applicability of certain Maryland anti-takeover statutes dealing with business
combinations and acquisitions of controlling blocks of shares, as well as by
the Company's classified board of director provisions.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations,
Bearer Securities (including Debt Securities that are exchangeable for Bearer
Securities and Debt Securities in permanent global form that are either Bearer
Securities or exchangeable for Bearer Securities) may not be offered, sold,
resold or delivered in connection with their original issuance in the United
States or to United States persons (each as defined below) except as otherwise
permitted by Treasury Regulation Section 1.163-5(c)(2)(i)(D) including offers
and sales to offices located outside the United States of United States
financial institutions (as defined in Treasury Regulation Section
1.165-12(c)(1)(v)) which agree in writing to comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Code, as defined below, and the
regulations thereunder, and any underwriters, agents and dealers participating
in the offering of Debt Securities must agree in writing that they will not
offer, sell or resell any Bearer Securities to persons within the United States
or to United States persons (except as described above) nor deliver Bearer
Securities within the United States. In addition, any such underwriters,
agents and dealers must represent in writing that they have in effect, in
connection with the offer and sale of the Debt Securities, procedures
reasonably designed to ensure that their employees or agents who are directly
engaged in selling the Debt Securities are aware that Bearer Securities cannot
be offered or sold to a person who is within the United States or is a United
States person except as otherwise permitted by Treasury Regulation Section
1.163-5(c)(2)(i)(D). Furthermore, the owner of the obligation (or the financial
institution or clearing organization through which the owner holds the
obligation) must certify to the Company that the owner is not a United States
person. Bearer Securities and any coupons attached thereto will bear the
following legend: "Any United States person who holds this obligation will be
subject to limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United States
Internal Revenue Code." Purchasers of Bearer Securities may be affected by
certain limitations under United States tax laws.
As used herein, "United States person" means (i) an individual who is,
for United States Federal income tax purposes, a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of which is subject
to United States Federal income taxation regardless of its source, and "United
States" means the United States of America (including the States and the
District of Columbia), its territories and its possessions.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Internal Revenue Code of 1986, as amended (the
"Code") impose certain restrictions on (1) "employee benefit plans" (as defined
in Section 3(3) of ERISA), (2) "plans" described in Section 4975(e)(1) of the
Code, including individual retirement accounts or Keogh plans, (3) entities
whose underlying assets include plan assets by reason of a plan's investment in
such entities (each of (a), (b) and (c) a "Plan") and (4) persons who have
certain specified relationships to Plans ("parties in interest" under ERISA and
"disqualified persons" under the Code).
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ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA, and both ERISA and the Code prohibit certain transactions
between a Plan and parties in interest or disqualified persons.
Because of its activities or the activities of its affiliates,
the Company may be deemed to be a party in interest or disqualified person with
respect to a number of Plans, e.g., those to which it provides brokerage,
investment or other financial services. If the Securities are acquired and
held by a Plan with respect to which the Company is a party in interest or
disqualified person, such acquisition and holding could be deemed to be a
direct or indirect prohibited transaction, which could result in the imposition
of taxes or penalties on the parties to the prohibited transaction.
Such transactions may, however, be exempt from the otherwise
applicable taxes and penalties by reason of one or more statutory or
administrative exemptions such as those described below. Such administrative
exemptions may include Prohibited Transaction Class Exemption ("PTE") 95-60, 60
FR 35925, July 12, 1995, which exempts certain transactions involving insurance
company general accounts; PTE 90-1, 55 FR 2891, January 29, 1990, which exempts
certain transactions involving insurance company pooled separate accounts; PTE
91-38, 56 FR 31966, June 12, 1991, which exempts certain transactions involving
bank collective investment funds; and PTE 84-14, 49 FR 9494, March 13, 1984,
which exempts certain transactions entered into on behalf of a Plan by a
qualified professional asset manager. If the conditions of one or more of
these exemptions (or some other applicable exemption) are met, the acquisition
and holding of the Securities by or on behalf of a Plan should be exempt from
certain of the prohibited transaction provisions of ERISA and the Code. It
should be noted, however, that even if such conditions are met, the scope of
relief provided by such exemptions may not necessarily cover all acts that
might be construed as prohibited transactions under ERISA and the Code.
Further, each Plan fiduciary should take into account, among
other considerations, whether the fiduciary has the authority to make the
investment; whether the investment constitutes a direct or indirect transaction
with a party in interest or disqualified person; the composition of the Plan's
portfolio with respect to diversification by type of asset; the Plan's funding
objectives; the tax effects of the investment; and whether under the general
fiduciary standards of investment procedure and diversification an investment
in the Securities is appropriate for the Plan, taking into account the overall
investment policy of the Plan, the composition of the Plan's investment
portfolio and all other appropriate factors.
Prior to making an investment in the Securities, a Plan
investor must determine whether the Company is a party in interest or
disqualified person with respect to such Plan and, if so, whether such
transaction is subject to one or more statutory or administrative exemptions,
including those described above, and whether the investment is otherwise a
permissible and appropriate investment for the Plan. Prospective investors
should consult with their legal and other advisors concerning the impact of
ERISA and the Code and the potential consequences of such investment with
respect to their specific circumstances.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters or dealers,
which may include Legg Mason Wood Walker, Goldman, Sachs & Co., Lehman Brothers
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley &
Co. Incorporated, directly to other purchasers, or through agents. The
Prospectus Supplement with respect to the Securities will set forth the terms
of the offering of the Securities, including the name or names of any
underwriters, dealers or agents, the price of the offered Securities and the
net proceeds to the Company from such sale, any underwriting discounts or other
items constituting underwriters' compensation, any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchanges on which
the Securities may be listed.
-19-
<PAGE> 37
If underwriters are used in the sale, the Securities will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public price or at varying prices determined at the time of sale. The
underwriter or underwriters with respect to a particular underwritten offering
of Securities will be named in the Prospectus Supplement relating to such
offering, and if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such Prospectus Supplement.
Unless otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters or agents to purchase the Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all the
Securities if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If a dealer is utilized in the sale of any Securities in respect of
which this Prospectus is delivered, the Company will sell such Securities to
the dealer, as principal. The dealer may then resell such 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 transaction will be set forth in
the Prospectus Supplement relating thereto.
Securities may be sold directly by the Company to one or more
institutional purchasers, or through agents designated by the Company from time
to time, at a fixed price, or prices, which may be changed, or at varying
prices determined at time of sale. Any agent involved in the offer or sale of
the Securities will be named, and any commissions payable by the Company to
such agent will be set forth, in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
In connection with the sale of the Securities, underwriters or agents
may receive compensation from the Company or from purchasers of Securities for
whom they may act as agents in the form of discounts, concessions, or
commissions. Underwriters, agents, and dealers participating in the
distribution of the Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on
the resale of the Securities by them may be deemed to be underwriting discounts
or commissions under the Securities Act.
Each underwriter, dealer and agent participating in the distribution
of any Debt Securities which are issuable in bearer form will agree that it
will not offer, sell or deliver, directly or indirectly, Debt Securities in
bearer form in the United States or to United States persons except as
otherwise permitted by Treasury Regulation Section 1.163-5(c)(2)(i)(D). See
"Limitations on Issuance of Bearer Securities."
Each underwriter, dealer and agent participating in the distribution
of any Securities will agree that (a) it will not offer or sell any Securities
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which do not constitute an offer to the public in the United
Kingdom for the purposes of the Public Offers of Securities Regulations 1995,
(b) it will comply with all applicable provisions of the Financial Services Act
1986 of Great Britain with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom and (c) it will
only issue or pass on in the United Kingdom any document in connection with the
issue of the Securities to a person who is of a kind described in Article 8 of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) (No.
2) Order 1995 of Great Britian or is a person to whom the document may
otherwise lawfully be issued or passed on.
Each series of Securities will be a new issue with no established
trading market. Any underwriters to whom Securities are sold by the Company
for public offering and sale may make a market in such Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for any Securities.
-20-
<PAGE> 38
Agents, dealers, and underwriters may be entitled under agreements
entered into with the Company to indemnification by the Company against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers, or
underwriters may be required to make with respect thereto. Underwriters,
dealers, or agents and their associates may be customers of, engage in
transactions with and perform services for, the Company in the ordinary course
of business.
Legg Mason Wood Walker, a member of the National Association
of Securities Dealers, Inc. (the "NASD") and an affiliate of the Company, may
participate in distributions of the Securities. Accordingly, each offering of
Debt Securities and any market-making activities by Legg Mason Wood Walker with
respect to Securities will be conducted in compliance with the requirements of
Schedule E of the By-Laws of the NASD regarding a NASD member firm's
distributing the securities of an affiliate. Following the initial
distribution of any Securities, Legg Mason Wood Walker may offer and sell Debt
Securities in the course of its business as a broker-dealer. Legg Mason Wood
Walker may act as principal or agent in such transactions. This Prospectus may
be used by Legg Mason Wood Walker in connection with such transactions. Such
sales, if any, will be made at varying prices related to prevailing market
prices at the time of sale or otherwise. Legg Mason Wood Walker is not
obligated to make a market in any Securities and may discontinue any
market-making activities at any time without notice.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for
the Company by Rogers & Wells, New York, New York, and certain legal matters
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher &
Flom, New York, New York, each of whom will rely on the opinion of Theodore S.
Kaplan, Esq., the Company's General Counsel, as to all matters of Maryland law.
Mr. Kaplan beneficially owns, or has rights to acquire under an employee
benefit plan of the Company, less than one percent of the Common Stock of the
Company.
EXPERTS
The consolidated statements of financial condition as of March 31,
1995 and 1994 and the consolidated statements of earnings, cash flows, and
stockholders' equity for each of the three years in the period ended March 31,
1995, and the consolidated financial statement schedules listed in Item
14(a)(1) and (2) of the 1995 Form 10-K incorporated by reference in this
Prospectus from the 1995 Form 10-K, have been incorporated herein in reliance
on the reports of Coopers & Lybrand L.L.P., independent accountants, given on
the authority of that firm as experts in accounting and auditing.
-21-
<PAGE> 39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses to be borne by the Company
in connection with the offerings described in this Registration Statement. All
such expenses other than the Securities and Exchange Commission registration
fee and National Association of Securities Dealers, Inc. filing fee are
estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee . . . . . . . . . $ 51,724
National Association of Securities Dealers, Inc. Filing Fee . . . . . 15,500
Trustees' Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 15,000
Printing and Engraving Fees and Expenses . . . . . . . . . . . . . . . 20,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 15,000
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 20,000
Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Rating Agency Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Miscellaneous (including Listing
Fees, if applicable) . . . . . . . . . . . . . . . . . . . . . . . 37,776
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's By-laws provide for indemnification of any person who
is serving or has served as a director or officer of the Registrant, against
all liabilities and expenses incurred in connection with any action, suit or
proceeding arising out of such service to the full extent permitted under
Maryland law.
Section 2-418 of the Maryland General Corporation Law establishes
provisions whereby a Maryland corporation may indemnify any director or officer
made a party to an action or proceeding by reason of service in that capacity,
against judgments, penalties, fines, settlements and reasonable expenses
incurred in connection with such action or proceeding unless it is proved that
the director or officer (i) acted in bad faith or with active and deliberate
dishonesty, (ii) actually received an improper personal benefit in money,
property or services or (iii) in the case of a criminal proceeding, had
reasonable cause to believe that his act was unlawful. However, if the
proceeding is a derivative suit in favor of the corporation, indemnification
may not be made if the individual is adjudged to be liable to the corporation.
In no case may indemnification be made until a determination has been reached
that the director or officer has met the applicable standard of conduct.
Indemnification for reasonable expenses is mandatory if the director or officer
has been successful on the merits or otherwise in the defense of any action or
proceeding covered by the indemnification statute. The statute also provides
for indemnification of directors and officers by court order. The
indemnification provided or authorized in the indemnification statute does not
preclude a corporation from extending other rights (indemnification or
otherwise) to directors and officers.
The Registrant's officers and directors are insured against certain
liabilities under a policy maintained by the Registrant with aggregate coverage
of $10,000,000.
II-1
<PAGE> 40
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-3, including those incorporated herein by
reference.
Exhibit
Number Description of Exhibit
- ------ ----------------------
1 The Form of Underwriting Agreement will be filed as an exhibit
to a Current Report of the Registrant on Form 8-K and
incorporated herein by reference.
*4(a) Form of Indenture for Senior Debt Securities between Legg
Mason, Inc. and The Bank of New York, as Trustee.
*4(b) Form of Indenture for Subordinated Debt Securities between
Legg Mason, Inc. and The Bank of New York, as Trustee.
4(c) The form or forms of Securities with respect to each
particular series of Securities registered hereunder will be
filed as an exhibit to a Current Report of the Registrant on
Form 8-K and incorporated herein by reference.
*5.1 Opinion of Rogers & Wells.
*5.2 Opinion of Theodore S. Kaplan, Esq.
*12 Statements re: Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
*23(a) Consent of Coopers & Lybrand L.L.P., Independent Public
Accountants.
*23(b) Consent of Rogers & Wells (included in Exhibit 5.1).
*23(c) Consent of Theodore S. Kaplan, Esq. (included in Exhibit 5.2)
*24 Powers of Attorneys.
*25(a) The Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of the Trustee for the Senior Indenture.
*25(b) The Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of the Trustee for the Subordinated
Indenture.
*99(a) The Form of Prospectus Supplement.
____________________
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933; (ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective
II-2
<PAGE> 41
registration statement; (iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that (i) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective and (ii) for the purpose of determining any
liability under the Securities Act of 1933, each post- effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions set forth in Item 15, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
amendment no. 2 to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Baltimore, State of
Maryland, on February 5, 1996.
LEGG MASON, INC.
(Registrant)
By/s/ Raymond A. Mason
------------------------------------
Name: Raymond A. Mason
Title: Chairman of the Board,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment no. 2 to registration statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Raymond A. Mason Chairman of the Board, President, February 5, 1996
- ---------------------------------- Chief Executive Officer and
Raymond A. Mason Director (Principal Executive
Officer)
/s/ F. Barry Bilson * Vice President-Finance (Principal February 5, 1996
- ---------------------------------- Financial Officer)
F. Barry Bilson
/s/ Eileen M. O'Rourke * Controller (Principal Accounting February 5, 1996
- ---------------------------------- Officer)
Eileen M. O'Rourke
/s/ James W. Brinkley * Director February 5, 1996
- ----------------------------------
James W. Brinkley
</TABLE>
II-4
<PAGE> 43
<TABLE>
<S> <C> <C>
/s/ Edmund J. Cashman, Jr. * Director February 5, 1996
- ----------------------------------
Edmund J. Cashman, Jr.
/s/ John F. Curley, Jr. * Director February 5, 1996
- ----------------------------------
John F. Curley, Jr.
/s/ Harry M. Ford, Jr. * Director February 5, 1996
- ----------------------------------
Harry M. Ford, Jr.
/s/ Nicholas J. St. George * Director February 5, 1996
- ----------------------------------
Nicholas J. St. George
/s/ Charles A. Bacigalupo * Director February 5, 1996
- ----------------------------------
Charles A. Bacigalupo
/s/ Richard J. Himelfarb * Director February 5, 1996
- ----------------------------------
Richard J. Himelfarb
/s/ James E. Ukrop * Director February 5, 1996
- ----------------------------------
James E. Ukrop
/s/ John B. Levert, Jr. * Director February 5, 1996
- ----------------------------------
John B. Levert, Jr.
/s/ Harold L. Adams * Director February 5, 1996
- ----------------------------------
Harold L. Adams
/s/ John E. Koerner, III * Director February 5, 1996
- ----------------------------------
John E. Koerner, III
/s/ Roger W. Schipke * Director February 5, 1996
- ----------------------------------
Roger W. Schipke
/s/ W. Curtis Livingston * Director February 5, 1996
- ----------------------------------
W. Curtis Livingston
/s/ Edward I. O'Brien * Director February 5, 1996
- ----------------------------------
Edward I. O'Brien
/s/ Peter F. O'Malley * Director February 5, 1996
- ----------------------------------
Peter F. O'Malley
/s/ Margaret DeB. Tutwiler * Director February 5, 1996
- ----------------------------------
Margaret DeB. Tutwiler
/s/ William Wirth * Director February 5, 1996
- ----------------------------------
William Wirth
</TABLE>
_______________________
* Raymond A. Mason. by signing his name hereto, does hereby sign
this amendment no. 2 to registration statment on behalf of each of the
directors and officers of the Registrant after whose typed names
asterisks appear pursuant to powers of attorney duly executed by such
directors and officers and filed with the Securities and Exchange
Commission as exhibits to this registration statement.
By: /s/ Raymond A. Mason
----------------------------
Raymond A. Mason
Attorney -in-fact
II-5
<PAGE> 44
Exhibit
Number Description of Exhibit
- ------ ----------------------
1 The Form of Underwriting Agreement will be filed as an exhibit
to a Current Report of the Registrant on Form 8-K and
incorporated herein by reference.
*4(a) Form of Indenture for Senior Debt Securities between Legg
Mason, Inc. and The Bank of New York, as Trustee.
*4(b) Form of Indenture for Subordinated Debt Securities between
Legg Mason, Inc. and The Bank of New York, as Trustee.
4(c) The form or forms of Securities with respect to each
particular series of Securities registered hereunder will be
filed as an exhibit to a Current Report of the Registrant on
Form 8-K and incorporated herein by reference.
*5.1 Opinion of Rogers & Wells.
*5.2 Opinion of Theodore S. Kaplan, Esq.
*12 Statements re: Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
*23(a) Consent of Coopers & Lybrand L.L.P., Independent Public
Accountants.
*23(b) Consent of Rogers & Wells (included in Exhibit 5.1).
*23(c) Consent of Theodore S. Kaplan, Esq. (included in Exhibit 5.2)
*24 Powers of Attorneys.
*25(a) The Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of the Trustee for the Senior Indenture.
*25(b) The Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of the Trustee for the Subordinated
Indenture.
*99(a) The Form of Prospectus Supplement.
____________________
* Previously filed.
