<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 24, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-11669
JEFFERIES GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2848406
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11100 Santa Monica Boulevard, Los Angeles, California 90025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 445-1199
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of June 24, 1994, the Registrant had 5,664,616 common shares, $.01 par
value, outstanding.
Page 1 of 21 Pages
<PAGE> 2
JEFFERIES GROUP, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
JUNE 24, 1994
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition -
June 24, 1994 (unaudited) and December 31, 1993 3
Consolidated Statements of Earnings - Three Months and
Six Months Ended June 24, 1994 (unaudited) and
June 25, 1993 (unaudited) 4
Consolidated Statements of Changes in Stockholders'
Equity - Six Months Ended June 24, 1994 (unaudited) 5
Consolidated Statements of Cash Flows - Six Months
Ended June 24, 1994 (unaudited) and June 25, 1993
(unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 4. Submission of Matters to a Vote of Security Holders 18
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
Page 2 of 21 Pages
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
June 24, December 31,
1994 1993
------------ ------------
ASSETS (unaudited)
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 94,851 $ 26,910
Receivable from brokers and dealers . . . . . . . . . . . . . . . . . 1,210,431 1,069,384
Receivable from customers, officers and directors . . . . . . . . . . 89,360 116,935
Securities owned . . . . . . . . . . . . . . . . . . . . . . . . . . 139,994 114,808
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . 19,936 18,638
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,437 41,728
----------- -----------
$ 1,601,009 $ 1,388,403
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 370 $ 45,928
Payable to brokers and dealers . . . . . . . . . . . . . . . . . . . 835,886 615,216
Payable to customers . . . . . . . . . . . . . . . . . . . . . . . . 406,733 405,726
Securities sold, not yet purchased . . . . . . . . . . . . . . . . . 49,968 74,235
Accrued expenses and other liabilities . . . . . . . . . . . . . . . 90,402 92,772
----------- -----------
1,383,359 1,233,877
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,405 9,968
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . 5,415 --
----------- -----------
1,448,179 1,243,845
------------ -----------
Stockholders' equity:
Preferred stock, $.01 par value.
Authorized 1,000,000 shares; none issued . . . . . . . . . . . -- --
Common stock $.01 par value.
Authorized 25,000,000 shares; issued
8,989,610 shares in 1994 and 8,907,817
shares in 1993 . . . . . . . . . . . . . . . . . . . . . . . . 90 89
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 37,172 34,930
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 156,989 146,949
Less treasury stock, at cost; 3,324,994
shares in 1994; and 3,212,390 shares in 1993 . . . . . . . . . (39,866) (35,695)
Less currency translation adjustments . . . . . . . . . . . . . . (492) (652)
Less additional minimum pension liability . . . . . . . . . . . . (1,063) (1,063)
------------ ------------
Total stockholders' equity . . . . . . . . . . . . . . . . . 152,830 144,558
------------ ----------
$ 1,601,009 $ 1,388,403
============ ===========
</TABLE>
See accompanying unaudited notes to consolidated financial statements.
Page 3 of 21 Pages
<PAGE> 4
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- ---------------------------
June 24, June 25, June 24, June 25,
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Commissions . . . . . . . . . . . . . . . . . . . $ 38,092 $ 30,408 $ 77,746 $ 61,613
Principal transactions . . . . . . . . . . . . . 13,500 19,262 31,154 44,844
Corporate finance . . . . . . . . . . . . . . . . 4,744 14,027 13,619 21,682
Interest . . . . . . . . . . . . . . . . . . . . 11,160 4,472 19,498 7,998
Other . . . . . . . . . . . . . . . . . . . . . . (257) 1,788 912 2,168
------------ ------------ ------------ ------------
Total revenues . . . . . . . . . . . . . . . . 67,239 69,957 142,929 138,305
Interest . . . . . . . . . . . . . . . . . . . . 9,309 3,682 15,797 6,576
------------ ------------ ------------ ------------
Revenues, net of interest expense . . . . . . . . 57,930 66,275 127,132 131,729
------------ ------------ ------------ ------------
Non-interest expenses:
Compensation and benefits . . . . . . . . . . . 32,957 36,297 69,574 72,885
Floor brokerage and clearing fees . . . . . . . . 4,402 3,823 8,801 7,449
Telecommunications and data processing
services . . . . . . . . . . . . . . . . . . . 5,219 4,640 9,723 8,731
Occupancy and equipment rental . . . . . . . . . 3,621 2,944 6,977 5,995
Other . . . . . . . . . . . . . . . . . . . . . . 10,729 7,845 20,809 14,672
------------ ------------ ------------ ------------
Total non-interest expenses . . . . . . . . . 56,928 55,549 115,884 109,732
------------ ------------ ------------ ------------
Operating income . . . . . . . . . . . . . . . . . 1,002 10,726 11,248 21,997
Other income:
Gain on initial public offering of
Investment Technology Group, Inc. . . . . . . . 8,257 -- 8,257 --
------------ ------------ ------------ ------------
Earnings before income taxes, minority
interest and cumulative effect of
change in accounting principle . . . . . . . . . 9,259 10,726 19,505 21,997
Income taxes . . . . . . . . . . . . . . . . . . . 4,275 4,654 8,682 8,659
Minority interest . . . . . . . . . . . . . . . . . 202 -- 202 --
------------ ------------ ------------ ------------
Earnings before cumulative effect of
change in accounting principle . . . . . . . . . 4,782 6,072 10,621 13,338
Cumulative effect on prior years of
change in accounting principle . . . . . . . . . -- -- -- 1,358
------------ ------------ ------------ ------------
Net earnings . . . . . . . . . . . . . . . . . . . $ 4,782 $ 6,072 $ 10,621 $ 14,696
============ ============ ============ ============
Earnings per share of common stock:
Primary earnings per share -
Earnings before cumulative effect of
change in accounting principle . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 2.76
Cumulative effect on prior years of
change in accounting principle . . . . . . . -- -- -- .28
------------ ------------ ------------ ------------
Net earnings . . . . . . . . . . . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 3.04
============ ============ ============ ============
Fully diluted earnings per share -
Earnings before cumulative effect of
change in accounting principle . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.27
Cumulative effect on prior years of
change in accounting principle . . . . . . . -- -- -- .22
------------ ------------ ------------ ------------
Net earnings . . . . . . . . . . . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.49
============ ============ ============ ============
Weighted average shares of common stock:
Primary . . . . . . . . . . . . . . . . . . . . 6,245 4,838 6,150 4,835
Fully diluted . . . . . . . . . . . . . . . . . 6,246 6,200 6,151 6,207
</TABLE>
See accompanying unaudited notes to consolidated financial statements.
Page 4 of 21 Pages
<PAGE> 5
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 24, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Currency Add'l Total
Additional Trans- Minimum Stock-
Common Paid-in Retained Treasury lation Pension holders'
Stock Capital Earnings Stock Adjustment Liability Equity
------ ---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1993. $ 89 $ 34,930 $146,949 $(35,695) $ (652) $ (1,063) $144,558
Exercise of stock
options
(91,793 shares).. 1 2,242 145 2,388
Purchase of 126,800
shares of treasury
stock............. (4,443) (4,443)
Capital Accum-
ulation Plan
distribution
(4,196 shares)..... 127 127
Cash dividends,
$.05 per share.... (581) (581)
Translation adjust-
ment.............. 160 160
Net earnings....... 10,621 10,621
---- -------- -------- -------- -------- -------- --------
Balance,
June 24, 1994..... $ 90 $ 37,172 $156,989 $(39,866) $ (492) $ (1,063) $152,830
==== ======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5 of 21 Pages
<PAGE> 6
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months Ended
----------------------------
June 24, June 25,
1994 1993
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 10,621 $ 14,696
--------- ---------
Adjustments to reconcile net earnings to
net cash provided (used) by operations:
Depreciation and amortization . . . . . . . . . . . . . . 3,490 2,717
(Increase) decrease in receivables:
Brokers and dealers . . . . . . . . . . . . . . . . . . (141,047) (143,476)
Customers, officers and directors . . . . . . . . . . . 27,575 (2,793)
(Increase) decrease in securities owned . . . . . . . . . (25,186) 359
(Increase) decrease in other assets . . . . . . . . . . . (4,709) (15,660)
Increase (decrease) in operating payables:
Brokers and dealers . . . . . . . . . . . . . . . . . . 220,670 (1,562)
Customers . . . . . . . . . . . . . . . . . . . . . . . 1,007 97,203
Increase (decrease) in securities sold,
not yet purchased . . . . . . . . . . . . . . . . . . . (24,267) 21,697
Increase (decrease) in accrued expenses
and other liabilities . . . . . . . . . . . . . . . . . (2,370) 13,246
--------- ---------
Total adjustments . . . . . . . . . . . . . . . 55,163 (28,269)
--------- ---------
Net cash provided (used) by
operating activities . . . . . . . . . . . . 65,784 (13,573)
--------- ---------
</TABLE>
Continued on next page.
See accompanying unaudited notes to consolidated financial statements.
Page 6 of 21 Pages
<PAGE> 7
JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months Ended
---------------------------
June 24, June 25,
1994 1993
-------- -------
<S> <C> <C>
Cash flows from financing activities:
Net proceeds (payments) on term debt . . . . . . . . . . $ 49,314 $ --
Net proceeds (payments) from bank loans . . . . . . . . . (45,558) 12,300
Net payments for:
Repurchase of treasury stock . . . . . . . . . . . . . (4,443) (1,209)
Dividends paid . . . . . . . . . . . . . . . . . . . . (581) (462)
Distribution of CAP plan shares . . . . . . . . . . . . . 127 --
Proceeds from exercise of stock options . . . . . . . . . 2,388 320
-------- -------
Net cash provided (used) by
financing activities . . . . . . . . . . . . 1,247 10,949
-------- -------
Cash flows from investing activities -
purchase of premises and equipment . . . . . . . . . . . (4,665) (3,976)
-------- -------
Increase (decrease) in minority interest . . . . . . . . . . . 5,415 --
Effect of foreign currency translation on cash . . . . . . . . 160 (131)
-------- -------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . 67,941 (6,731)
Cash and cash equivalents at the beginning
of the period . . . . . . . . . . . . . . . . . . . . . . . . 26,910 21,078
-------- -------
Cash and cash equivalents at the end
of the period . . . . . . . . . . . . . . . . . . . . . . . . $ 94,851 $14,347
======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,980 $ 6,458
======== =======
Income taxes . . . . . . . . . . . . . . . . . . . . . . . $ 9,819 $11,985
======== =======
</TABLE>
See accompanying unaudited notes to consolidated financial statements.
Page 7 of 21 Pages
<PAGE> 8
JEFFERIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts of
Jefferies Group, Inc. and all subsidiaries, including Jefferies & Company, Inc.
(Jefferies) and Investment Technology Group, Inc. The accounts of W & D
Securities, Inc. (W & D) are also consolidated because of the nature and extent
of Jefferies Group Inc.'s ownership interest in W & D. Jefferies Group, Inc.'s
subsidiaries are engaged in securities brokerage and trading, corporate finance
and other financial services. The term "Company" refers, unless the context
requires otherwise, to Jefferies Group, Inc., its subsidiaries, predecessor
entities, and W & D. The term "ITG" refers, unless the context requires
otherwise, to Investment Technology Group, Inc. and its subsidiaries including
its broker-dealer subsidiary ITG Inc.
All significant intercompany accounts and transactions are eliminated in
consolidation. The consolidated financial statements reflect all adjustments
which are, in the opinion of management, necessary for the fair statement of
the results for the interim period and should be read in conjunction with the
Company's annual report for the year ended December 31, 1993.
SECURITIES TRANSACTIONS
The Company records its commission and principal transaction revenues and
related expenses on a trade date basis.
SECURITIES OWNED AND SECURITIES SOLD, NOT YET PURCHASED
The following is a summary of the market value of major categories of
securities owned and securities sold, not yet purchased, as of June 24, 1994:
<TABLE>
<CAPTION>
(Dollars in Thousands)
---------------------------
Securities
Sold,
Securities Not Yet
Owned Purchased
---------- ----------
<S> <C> <C>
Corporate equity securities . . . . . . . . . . . . . . . $ 70,182 $43,146
High-yield securities . . . . . . . . . . . . . . . . . . 26,308 3,633
Corporate debt securities . . . . . . . . . . . . . . . . 10,553 2,564
U.S. Government and Agency obligations . . . . . . . . . . 22,643 --
Bank certificates of deposit . . . . . . . . . . . . . . . 10,000 --
Options . . . . . . . . . . . . . . . . . . . . . . . . . 308 625
-------- -------
$139,994 $49,968
======== =======
</TABLE>
In the regular course of its business, Jefferies takes securities positions
as a market-maker to facilitate customer transactions and for investment
purposes. In making markets and when trading for its own account, Jefferies
exposes its own capital to the risk of fluctuations in market value. Trading
profits (or losses) depend primarily upon the skills of the employees engaged
in market-making and position taking, the amount of capital allocated to
positions in securities and the general trend of prices in the securities
markets.
Jefferies monitors its risk by maintaining its securities positions at or
below certain pre-established levels. These levels reduce certain
opportunities to realize profits in the event that the value of such securities
increases. However, they also reduce the risk of loss in the event of a
decrease in such
Page 8 of 21 Pages
<PAGE> 9
value and result in controlled interest costs incurred on funds provided to
maintain such positions.
The Jefferies' Capital Division includes the activities of the Corporate
Finance Department and the Taxable Fixed Income Division. The Taxable Fixed
Income Division trades high grade and non-investment grade public and private
debt securities. The Division specializes in trading and making markets in
over 300 unrated or less than investment grade corporate debt securities and
accounts for these positions at market value. Risk of loss upon default by the
borrower is significantly greater with respect to unrated or less than
investment grade corporate debt securities than with other corporate debt
securities. These securities are generally unsecured and are often
subordinated to other creditors of the issuer. These issuers usually have high
levels of indebtedness and are more sensitive to adverse economic conditions,
such as recession or increasing interest rates, than are investment grade
issuers. There is a limited market for some of these securities and market
quotes are generally available from a small number of dealers.
INCOME TAXES
In 1993, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes," which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in banks, U.S. Treasuries purchased
under agreements to resell to a financial institution and investments in money
market funds. The U.S. Treasuries were held in the Company's safekeeping
account at a bank. Cash equivalents are part of the cash management activities
of the Company and generally mature within 90 days. The following is a summary
of cash and cash equivalents as of June 24, 1994:
<TABLE>
<CAPTION>
(Dollars in
-----------
Thousands)
-----------
<S> <C>
Cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . $10,710
U.S. Treasuries purchased under agreements
to resell to a financial institution . . . . . . . . . . . . 64,500
Investments in money market funds . . . . . . . . . . . . . . . 19,641
-------
$94,851
=======
</TABLE>
MINORITY INTEREST
Minority interest represents the minority stockholders' proportionate share
of the equity of Investment Technology Group, Inc. At June 24, 1994, Jefferies
Group, Inc. owned 80.2% of Investment Technology Group, Inc.'s common stock.
NET CAPITAL REQUIREMENTS
As registered broker-dealers, Jefferies, W & D and ITG Inc. are subject to
the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1),
which requires the maintenance of minimum net capital. Jefferies, W & D and
ITG Inc. have elected to use the alternative method permitted by the Rule,
which requires that they each maintain minimum net capital, as defined, equal
to the greater of $200,000 or 2% of the aggregate debit balances arising from
customer transactions, as defined.
Page 9 of 21 Pages
<PAGE> 10
Net capital changes from day to day, but as of June 24, 1994, Jefferies'
net capital of $67.7 million exceeded its minimum net capital requirements by
$59.3 million. ITG Inc.'s net capital of $10.1 million exceeded its minimum
net capital requirements by $9.9 million. W & D's net capital of $820,000
exceeded its minimum net capital requirements by $620,000.
QUARTERLY DIVIDENDS
In 1988, the Company instituted a policy of paying regular quarterly
dividends. There are no restrictions on the Company's present ability to pay
dividends on common stock, other than the governing provisions of the Delaware
General Corporation Law.
Dividends per Common Share (declared and paid):
<TABLE>
<CAPTION>
1st Qtr. 2nd Qtr.
<S> <C> <C>
1994.................. $.05 $.05
1993.................. $.05 $.05
</TABLE>
OFF-BALANCE SHEET RISK
In the normal course of business, the Company is involved in the execution,
settlement and financing of various customer and principal securities
transactions. Customer activities are transacted on a cash, margin or
delivery-versus-payment basis. Securities transactions are subject to the risk
of counterparty or customer nonperformance. However, transactions are
collateralized by the underlying security, thereby reducing the associated risk
to change in the market value of the security through settlement date or to the
extent of margin balances.
The Company also has contractual commitments arising in the ordinary course
of business for bank loans, stock loaned, securities sold, not yet purchased,
repurchase agreements, future purchases and sales of foreign currency, security
transactions on a when-issued basis and underwriting. Each of these financial
instruments contains varying degrees of off-balance sheet risk whereby the
market values of the securities underlying the financial instruments may be in
excess of the contract amount. The settlement of these transactions is not
expected to have a material effect upon the Company's accompanying consolidated
financial statements.
In the normal course of business, the Company had letters of credit
outstanding aggregating $22,247,000 at June 24, 1994, to satisfy various
collateral requirements in lieu of depositing cash or securities.
INITIAL PUBLIC OFFERING OF INVESTMENT TECHNOLOGY GROUP, INC.
In March 1994, Investment Technology Group, Inc. (the "ITG Holding
Company") was formed for the purpose of holding 100% of the stock of the
broker-dealer subsidiary Investment Technology Group, Inc. whose name was then
changed to ITG Inc. After its formation, the ITG Holding Company had a capital
structure of preferred stock (5,000,000 shares authorized, par value $.01 per
share, no shares issued or outstanding) and common stock (30,000,000 shares
authorized, par value $.01 per share, no shares issued or outstanding).
In May 1994, the ITG Holding Company consummated an initial public offering
(the "Offering") and issued 3,700,000 shares of common stock for $48.1 million
($13 per share), less underwriting discounts and commissions of $3.4 million
and offering expenses of $1.1 million. Following the Offering, the Company
owned 80.2% of the outstanding common stock of the ITG Holding Company.
Immediately prior to the consummation of the Offering, Investment Technology
Page 10 of 21 Pages
<PAGE> 11
Group, Inc. issued 15,000,0000 shares of its common stock in exchange for all
of the issued and outstanding shares of common stock of ITG Inc. (10,000,000
shares) held by the Company. This transaction was accounted for as an exchange
of ownership interests under common control and therefore, the assets and
liabilities of ITG Inc. were not revalued. As a result of this transaction,
ITG Inc. became a wholly-owned subsidiary of the ITG Holding Company.
Immediately prior to the Offering, the ITG Holding Company declared a
dividend payable to its sole stockholder, Jefferies Group, Inc., in an amount
of $17.0 million, which dividend was paid by the issuance of a note in the full
amount of such dividend. Any future payment of dividends will be at the
discretion of the ITG Holding Company's Board of Directors and will depend on
the ITG Holding Company's financial condition, results of operations, capital
requirements and other factors deemed relevant by such Board of Directors.
However, the ITG Holding Company anticipates that all future earnings will be
retained by the ITG Holding Company for working capital and that the ITG
Holding Company will not pay any dividends to stockholders.
In addition, immediately prior to the Offering, the ITG Holding Company
entered into an intercompany borrowing agreement with Jefferies Group, Inc.
permitting the borrowing by the ITG Holding Company of up to $15,000,000. Any
outstanding balance will be due March 31, 1999 and will accrue interest at
1.75% above the one month London Interbank Offering Rate.
In connection with the Offering, certain management employment agreements,
the Performance Share Plan (consisting of a 12.7% phantom equity interest in
ITG Inc. and a profits bonus component) and non-compensatory ITG Inc. stock
options (on 10% of the outstanding shares of ITG Inc. Common Stock) were
terminated as of May 1, 1994 in exchange for $31.1 million in cash, a portion
of which will be used to purchase Jefferies Group, Inc. common stock. Prior to
December 31, 1993, ITG paid Jefferies Group, Inc. $9.4 million related to the
Performance Share Plan. Immediately prior to the consummation of the Offering,
Jefferies Group, Inc. transferred its $9.4 million liability and an equivalent
amount of cash to the ITG Holding Company to be applied by the ITG Holding
Company as part of the termination of the Performance Share Plan, in addition
to the $31.1 million described above. Of the non-recurring expense of $31.1
million, approximately $400,000 was recorded as an expense in the first quarter
of 1994 and the remaining $30.7 million was recorded in the second quarter of
1994. Additionally, non-compensatory options to purchase 2,726,178 shares of
the ITG Holding Company's Common Stock were granted to certain directors,
senior management and other employees at an exercise price equal to the initial
public offering price of $13 per share. All of such options will be
exercisable on the earlier of May 1, 1997 or upon a change in control of the
ITG Holding Company and will expire on April 30, 1999.
In addition to the intercompany borrowing agreement discussed above, ITG
entered into certain other agreements (e.g., employment agreements, tax sharing
agreement, service agreements, clearing agreement, development rights
agreement, revenue sharing agreement and lease agreements) as described in the
ITG Holding Company's Form S-1 filed on May 3, 1994.
The initial public offering of the ITG Holding Company resulted in a net
gain (gross gain less expenses related to the termination of the various plans
described above) for the Company of $8.3 million.
JEFFERIES GROUP, INC. ISSUES $50,000,000 IN SENIOR NOTES
In April 1994, Jefferies Group, Inc. issued $50,000,000 face value of
8.875% Senior Notes due 2004 (the "Notes") in a private placement. The Notes
were issued at a price equal to 98.6047% of the principal amount and mature on
May 1, 2004. The Notes pay interest semi-annually on May 1 and November 1.
The Notes
Page 11 of 21 Pages
<PAGE> 12
will be senior unsecured obligations of Jefferies Group, Inc., and will rank
pari passu in right of payment with all existing and future senior indebtedness
and senior in right of payment to all subordinated indebtedness of Jefferies
Group, Inc. In July 1994, Jefferies Group, Inc. filed a registration
statement on Form S-4 in connection with an offer to exchange any and all of
the Notes for new 8.875% Series B Senior Notes due 2004.
Page 12 of 21 Pages
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF FINANCIAL CONDITION
Total assets increased $212.6 million from $1,388.4 million at December 31,
1993 to $1,601.0 million at June 24, 1994. The increase is mostly due to an
increase in receivables from brokers and dealers related to stock borrow
balances. The increased stock borrow balances are a result of an increase in
payable to brokers and dealers (related to stock loan balances). The increases
in cash and cash equivalents and securities owned mostly represent the net
proceeds from Jefferies Group, Inc.'s $50,000,000 Senior Note offering and
Investment Technology Group, Inc.'s initial public offering.
Total liabilities increased $204.3 million from $1,243.8 million at
December 31, 1993 to $1,448.2 million at June 24, 1994. The increase is mostly
due to the before-mentioned increases in payable to brokers and dealers and
long-term debt.
FIRST HALF 1994 VERSUS FIRST HALF 1993
Revenues, net of interest expense, decreased $4.6 million, or 3%, in the
first half of 1994 compared to the same prior year period. The decrease was
due primarily to a $13.7 million, or 31%, decrease in principal transactions,
an $8.1 million, or 37%, decrease in corporate finance and a $1.3 million
decrease in other revenues. These decreases were partially offset by a $16.1
million, or 26%, increase in commissions, a $2.3 million increase in net
interest income (interest revenues less interest expense). Revenues from
principal transactions declined primarily due to decreased Taxable Fixed Income
Division trading revenues. Corporate finance revenues decreased due to a
decrease in underwriting fees. Other revenues decreased due mostly to a
reduction in foreign currency transaction gains. Commission revenues increased
mostly due to higher commission revenues in the Investment Technology Group,
Equity Division and the International Division. Net interest income increased
as the $11.5 million increase in interest revenues exceeded the $9.2 million
increase in interest expense. Interest revenues increased mostly due to
interest on higher stock borrow, customer margin and investment balances. The
related increases in interest on stock loan and customer short balances only
partially offset the higher interest revenues.
Total non-interest expenses increased $6.2 million, or 6%, in the first
half of 1994 compared to the same prior year period. Other expense increased
$6.1 million, or 42%, primarily due to higher trade volume and business
expansion and includes increased expenses in soft dollar, software royalties,
marketing, research, travel and entertainment, reserves and legal.
Compensation and benefits decreased $3.3 million, or 5%. A $12.5 million
decrease in profitability based compensation was partially offset by a $5.2
million increase in sales commissions and a $3.4 million increase in salaries.
Sales commissions were up mostly due to higher commission payout rates and
higher commission revenues. Salaries increased due mostly to the increased
number of employees in Corporate Finance, International and the Investment
Technology Group. Floor brokerage and clearing fees increased $1.4 million,
or 18%, due to increased volumes of business executed on the various
exchanges. Telecommunications and data processing services increased
$992,000, or 11%, due to higher trade volume and personnel increases.
Occupancy and equipment rental increased $982,000, or 16%, mostly due to the
depreciation on additional equipment and the addition of new sales offices.
As a result of the above, operating income decreased $10.7 million, or 49%.
In addition, Jefferies Group, Inc. recorded a $8.3 million gain related to
the initial public offering of ITG. The minority stockholders' ownership
interests
Page 13 of 21 Pages
<PAGE> 14
reduce Jefferies Group, Inc.'s ownership of ITG to 80.2%. (See Initial Public
Offering of Investment Technology Group, Inc. in the Notes to Consolidated
Financial Statements).
Earnings before income taxes, minority interest and cumulative effect of
change in accounting principle were down $2.5 million, or 11%.
Earnings before cumulative effect of change in accounting principle were
down 20% to $10.6 million, as compared to $13.3 million in the 1993 period.
Minority interest of $202,000 in 1994, represents 19.8% of ITG's net earnings
since the initial public offering. The effective tax rate was approximately
44.5% in the first half of 1994 compared to approximately 39.4% in the 1993
period. The 1993 period included a $1.1 million adjustment of prior years'
estimated tax liabilities to actual which resulted in a lower tax rate for
1993.
The cumulative effect of the change in accounting for income taxes required
by SFAS 109 was a $1.4 million benefit in 1993. This increased 1993's net
earnings to $14.7 million.
Primary earnings per share were $1.71 in the first half of 1994 on
6,150,000 shares compared to $3.04 in the 1993 period on 4,835,000 shares.
Primary shares increased largely due to the conversion, late in 1993, of
$29,731,000 aggregate principal amount of 8 1/2% Convertible Subordinated
Debentures and $1,690,000 aggregate principal amount of 7% Convertible
Subordinated Notes into an aggregate of 1,366,092 shares of the Company's
Common Stock. Fully diluted earnings per share were $1.71 in the first half of
1994 on 6,151,000 shares compared to $2.49 in the 1993 period on 6,207,000
shares. The cumulative effect of the change in accounting principle increased
1993's earnings per share for the first half by $.28 on primary shares and $.22
on fully diluted shares.
During the first half of 1994, Jefferies Group, Inc. repurchased 126,800
shares of its common stock versus repurchases of 46,270 shares for the
comparable 1993 period.
SECOND QUARTER 1994 VERSUS SECOND QUARTER 1993
Revenues, net of interest expense, decreased $8.3 million, or 13%, in the
second quarter of 1994 compared to the same prior year period. The decrease
was due primarily to a $9.3 million, or 66%, decrease in corporate finance,
$5.8 million, or 30%, decrease in principal transactions and a $2.0 million
decrease in other revenues. These decreases were partially offset by a $7.7
million, or 25%, increase in commissions, and a $1.1 million increase in net
interest income (interest revenues less interest expense). Corporate finance
revenues decreased due to a decrease in underwriting fees. Revenues from
principal transactions declined primarily due to decreased Taxable Fixed Income
Division trading revenues. Other revenues decreased due mostly to a reduction
in foreign currency transaction gains. Commission revenues increased mostly
due to higher commission revenues in the Investment Technology Group, Equity
Division and the International Division. Net interest income increased as the
$6.7 million increase in interest revenues exceeded the $5.6 million increase
in interest expense. Interest revenues increased due to interest on higher
stock borrow, customer margin and investment balances. The related increases
in interest on stock loan and customer short balances only partially offset the
higher interest revenues.
Total non-interest expenses increased $1.4 million, in the second quarter
of 1994 compared to the same prior year period. Compensation and benefits
decreased $3.3 million, or 9%. A $7.5 million decrease in profitability based
compensation was partially offset by a $2.2 million increase in sales
commissions and a $1.8 million increase in salaries. Sales commissions were
up mostly due to higher commission payout rates and higher commission
revenues. Salaries increased due mostly to the increased
Page 14 of 21 Pages
<PAGE> 15
number of employees in Corporate Finance, International and the
Investment Technology Group. Other expense increased $2.9 million, or 37%,
primarily due to higher trade volume and business expansion and includes
increased expenses in travel and entertainment, legal, software royalties, soft
dollar, marketing and research. Occupancy and equipment rental increased
$677,000, or 23%, mostly due to the depreciation on additional equipment and
the addition of new sales offices. Floor brokerage and clearing fees increased
$579,000, or 15%, due to increased volumes of business executed on the various
exchanges. Telecommunications and data processing services increased $579,000,
or 12%, due to higher trade volume and personnel increases.
As a result of the above, operating income decreased $9.7 million, or 91%.
In addition, Jefferies Group, Inc. recorded a $8.3 million gain related to
the initial public offering of ITG. The minority stockholders' ownership
interests reduce Jefferies Group, Inc.'s ownership of ITG to 80.2%. (See
Initial Public Offering of Investment Technology Group, Inc. in the Notes to
Consolidated Financial Statements).
Earnings before income taxes, minority interest and cumulative effect of
change in accounting principle were down $1.5 million, or 14%.
Net earnings were down 21% to $4.8 million, as compared to $6.1 million in
the 1993 period. Minority interest of $202,000 in 1994, represents 19.8% of
ITG's net earnings since the initial public offering. The effective tax rate
was approximately 46% in the second quarter of 1994 compared to approximately
43% in the 1993 period. The higher effective tax rate in 1994 primarily
resulted from the increased impact of non-deductible expenses due to the lower
pre-tax operating income in 1994 compared to 1993.
Primary earnings per share were $.76 in the second quarter of 1994 on
6,245,000 shares compared to $1.26 in the 1993 period on 4,838,000 shares.
Primary shares increased largely due to the conversion, late in 1993, of
$29,731,000 aggregate principal amount of 8 1/2% Convertible Subordinated
Debentures and $1,690,000 aggregate principal amount of 7% Convertible
Subordinated Notes into an aggregate of 1,366,092 shares of the Company's
Common Stock. Fully diluted earnings per share were $.76 in the second quarter
of 1994 on 6,246,000 shares compared to $1.04 in the 1993 period on 6,200,000
shares.
During the second quarter of 1994, Jefferies Group, Inc. repurchased 90,875
shares of its common stock versus repurchases of 31,270 shares for the
comparable 1993 period.
Page 15 of 21 Pages
<PAGE> 16
The Company's principal activities, securities brokerage and the trading of
and market-making in securities, are highly competitive and extremely volatile.
The earnings of the Company are subject to wide fluctuations since many factors
over which the Company has little or no control, particularly the overall
volume of trading and the volatility and general level of market prices, may
significantly affect its operations. The following provides a breakdown of
revenues by division for the six months ended June 24, 1994 and June 25, 1993.
<TABLE>
<CAPTION>
For the Six Months Ended
-------------------------------------------------
June 24, 1994 June 25, 1993
------------------- -------------------
% of % of
Total Total
Amount Revenues Amount Revenues
------ -------- ------ --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Equity Division . . . . . . . . . . . . $ 57,401 40% $ 54,100 39%
International Division . . . . . . . . 18,537 13 14,481 10
Capital Division:
Corporate Finance . . . . . . . . . . 8,175 6 11,755 9
Taxable Fixed Income . . . . . . . . 10,037 7 26,269 19
Investment Technology Group . . . . . . 29,143 20 20,556 15
Convertible Division . . . . . . . . . 3,513 3 5,783 4
Other Unallocated Revenues 16,123 11 5,361 4
-------- ---- -------- ----
Total revenues . . . . . . . . . . . . $142,929 100% $138,305 100%
======== ==== ======== ====
</TABLE>
Page 16 of 21 Pages
<PAGE> 17
The following provides a breakdown of revenues by division for the three
months ended June 24, 1994 and June 25, 1993.
<TABLE>
<CAPTION>
For the Three Months Ended
-------------------------------------------------
June 24, 1994 June 25, 1993
-------------------- -------------------
% of % of
Total Total
Amount Revenues Amount Revenues
------ -------- ------ --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Equity Division . . . . . . . . . . . . $ 27,526 41% $ 27,434 39%
International Division . . . . . . . . 8,656 13 7,034 10
Capital Division:
Corporate Finance . . . . . . . . . . 2,765 4 7,334 11
Taxable Fixed Income . . . . . . . . 3,071 5 11,886 17
Investment Technology Group . . . . . . 14,613 22 9,881 14
Convertible Division . . . . . . . . . 1,676 2 2,964 4
Other Unallocated Revenues 8,932 13 3,424 5
-------- ---- -------- ----
Total revenues . . . . . . . . . . . . $ 67,239 100% $ 69,957 100%
======== ==== ======== ====
</TABLE>
Page 17 of 21 Pages
<PAGE> 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Date of Meeting - - May 5, 1994
Type of Meeting - - Annual Meeting of Stockholders
(b) At the meeting, the following directors were elected by the
stockholders to hold office until the next annual meeting of
stockholders or until their successors have been duly elected and
qualified:
Frank E. Baxter
Richard G. Dooley
Tracy G. Herrick
Michael L. Klowden
Frank J. Macchiarola
Barry M. Taylor
Mark A. Wolfson
(c)(1) At the meeting, with respect to the election of the directors, the
following votes were cast in the following manner:
<TABLE>
<CAPTION>
NAME FOR WITHHELD
---- --- --------
<S> <C> <C>
Frank E. Baxter 3,619,947 50,920
Richard G. Dooley 3,625,247 45,620
Tracy G. Herrick 3,619,906 50,961
Michael L. Klowden 3,619,947 50,920
Frank J. Macchiarola 3,625,247 45,620
Barry M. Taylor 3,600,620 70,247
Mark A. Wolfson 3,619,947 50,920
</TABLE>
(2) The stockholders cast the following votes in the following manner
with respect to the adoption of, and adopted, the Pay-For-
Performance Incentive Plan:
<TABLE>
<S> <C>
FOR 2,712,932
AGAINST 261,650
ABSTAIN 44,089
NO VOTE 652,196
</TABLE>
(3) The stockholders cast the following votes in the following manner
with respect to the adoption of, and adopted, the Non-Employee
Directors' Stock Option Plan:
<TABLE>
<S> <C>
FOR 3,430,114
AGAINST 165,122
ABSTAIN 75,631
</TABLE>
(d) Not applicable
Page 18 of 21 Pages
<PAGE> 19
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(10.1)* Agreement to Terminate Employment Agreement and Stock Options
between Investment Technology Group, Inc., Raymond L. Killian,
Jr. and Jefferies Group, Inc.
(10.2)* Agreement to Terminate Employment Agreement, Phantom Equity
Rights and Profits Bonus Rights between Investment Technology
Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc.
and Dale A. Prouty.
(10.3)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Savyona Abel.
(10.4)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Mark Auburn.
(10.5)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Yossef Beinart.
(10.6)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Mike Earlywine.
(10.7)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Joseph Heled.
(10.8)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Demetri Silas.
(10.9)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Stuart Sperling.
(10.10)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Tuval Chomut.
(10.11)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Andrew Winner.
(10.12)* Agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights between Investment Technology Group, Inc., Jefferies
Group, Inc., Jefferies & Company, Inc. and Mark Wright.
(10.13)* Agreement to Terminate Stock Option between Investment
Technology Group, Inc., Scott P. Mason and Jefferies Group, Inc.
(11)* Computation of Earnings Per Share
(Page 20 attached)
- - ---------------
* Filed herewith
(b) Reports on Form 8-K.
On May 3, 1994, the Company filed a Current Report on Form 8-K
reporting the issuance of $50 million principal amount of 8.875%
Senior Notes Due May 1, 2004.
Page 19 of 21 Pages
<PAGE> 20
EXHIBIT 11
JEFFERIES GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For The Three For The Six
Months Ended Months Ended
----------------------- -----------------------
June 24, June 25, June 24, June 25,
1994 1993 1994 1993*
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Common stock and common stock
equivalents:
Average common stock outstanding . . . . . 5,880 4,630 5,805 4,629
Common stock equivalent shares
related to employee stock
options and restricted stock . . . . . . 365 208 345 206
----- ----- ----- -----
Total average common stock and
common stock equivalents
used for primary computation . . . . . 6,245 4,838 6,150 4,835
Average common stock assumed issued
pursuant to convertible subordinated
debentures and an adjustment of
average common stock equivalents
to period-end market price, if
higher than average price . . . . . . . . 1 1,362 1 1,372
----- ----- ----- -----
Total average common stock,
common stock equivalents
and other dilutive securities . . . . 6,246 6,200 6,151 6,207
===== ===== ===== =====
Earnings:
Net earnings . . . . . . . . . . . . . . . $4,782 $6,072 $10,621 $14,696
Adjustment to subsidiary earnings -
common stock equivalents on
subsidiary . . . . . . . . . . . . . . . 33 -- 125 --
------ ------ ------- -------
Total earnings for
primary computation . . . . . . . . . 4,749 6,072 10,496 14,696
Eliminate interest expense (net
of taxes) on convertible
subordinated debentures . . . . . . . . -- 370 -- 743
------ ------ ------- -------
Total earnings for
fully diluted computation . . . . . . $4,749 $6,442 $10,496 $15,439
====== ====== ======= =======
Earnings per share:
Primary . . . . . . . . . . . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 3.04
====== ====== ======= =======
Fully diluted . . . . . . . . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.49
====== ====== ======= =======
</TABLE>
* The 1993 first quarter includes a benefit for the cumulative effect of
changes in accounting principle of $.28 and $.22 per share primary and fully
diluted, respectively.
Page 20 of 21 Pages
<PAGE> 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JEFFERIES GROUP, INC.
---------------------
(Registrant)
Date: August 5, 1994 By: /s/ Maxine Syrjamaki
-------------- --------------------
Maxine Syrjamaki
Controller
Page 21 of 21 Pages
<PAGE> 1
EXHIBIT 10.1
AGREEMENT TO TERMINATE
EMPLOYMENT AGREEMENT AND STOCK OPTIONS
This agreement to Terminate Employment Agreement and Stock Options
(the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation (the "Company"), RAYMOND L. KILLIAN, JR. (the
"Employee") and JEFFERIES GROUP, INC., a Delaware corporation ("Group").
WHEREAS, the parties to this Agreement entered that certain
Employment Agreement dated as of April 1, 1992 (the "Employment Agreement") (A
copy of the Employment Agreement is attached hereto and made a part hereof as
Exhibit A. Undefined capitalized terms in this Agreement have the same meaning
as in the Employment Agreement.);
WHEREAS, pursuant to Section 3 of the Employment Agreement, Employee
is entitled to a base salary of $425,000 and a bonus equal to ten percent (10%)
of the Company's Profits;
WHEREAS, pursuant to Section 5 of the Employment Agreement, Employee
was granted a nonqualified stock option to purchase 1,000,000 shares of the
Company's common stock (the "Common Stock"), for a price of $2.00 per share
(the "Old Option");
WHEREAS, pursuant to that certain amendment to the Employment
Agreement among the parties dated August 18, 1993, attached hereto as Exhibit
B, the number of shares subject to the Old Option was reduced to 700,000;
WHEREAS, the parties now desire to terminate the Employment Agreement
and the Old Option in anticipation of an initial public offering of the
Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's and
Group's obligations under the Employment Agreement for payment of the base
salary and the bonus and for the Old Option, the Company and Group agree to pay
to Employee, and Employee hereby releases the Company and Group from their
respective obligations under the Employment Agreement, including the Old
Option, in exchange for payments of cash as provided in Sections 2, 3, and 4
below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Four Million Seven
Hundred Forty-eight Thousand Four Hundred Twenty-eight dollars ($4,748,428).
The Initial Cash Payment shall be paid on or before the seventh day following
the closing of the IPO (the "Closing Date") in immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the
- 1 -
<PAGE> 2
Employee shall total Five Million Two Hundred Seventy-six Thousand Thirty-one
dollars ($5,276,031). One half of the Deferred Cash Payments shall be paid on
or before June 30, 1994, and the remainder shall be paid on or before September
30, 1994, in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be One Hundred
Twenty-one Thousand Two Hundred Eighty-seven (121,287) shares in total. The
parties intend that the Group Common Stock shall consist of shares registered
under the Securities Act of 1933. In the event that the Group Common Stock has
not been registered at the time of purchase, Group shall cause a registration
statement to be filed as soon as possible thereafter and the Group Common Stock
shall be issued when the registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. First Quarter 1994 Bonus. Employee shall be paid a cash bonus
for the first quarter of 1994 of One Million Three Hundred Fifty Thousand
dollars ($1,350,000) on or before the seventh day following the Closing Date in
immediately available funds.
5. Withholding for Employment Taxes. The cash payments described
in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from
the cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
6. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company and Group
- 2 -
<PAGE> 3
shall have no further obligation to make any payments under the Employment
Agreement and the Old Option shall be cancelled as of April 30, 1994. In the
event that the IPO does not close, then the Employment Agreement, including
Employee's existing base salary, the bonus and the Old Option shall remain in
effect, and the Employee, Company and Group shall have no obligations under
this Agreement.
7. Release. Employee's release of the Company and Group from
obligations under the Employment Agreement, including those obligations
regarding the Old Option, in Section 1 of this Agreement includes a release of
each of those corporations and their successors, attorneys, assigns, agents,
affiliates, parents, subsidiaries, divisions, officers, employees, directors
and shareholders (altogether, the "Releasees") from all claims demands, debts,
liabilities, obligations, accounts, and causes of action of every kind in law,
equity, or otherwise, whether known or unknown, suspected or unsuspected, which
Employee ever had or asserted, or may now or hereafter have or assert, against
any Releasee and which arise under or with respect to, or in any other way
relate to, the Employment Agreement and the Old Option, or any other rights
contemplated by the Employment Agreement or the Old Option.
Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Employment Agreement and the Old
Option, or any other rights contemplated by the Employment Agreement or the Old
Option.
8. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company and Group.
9. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
10. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
- 3 -
<PAGE> 4
11. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
13. Assignability.
13.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 13.
13.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
14. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company and by the board of directors of Group to be
effective as against Group. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by any party of the breach of
any term or provision contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
15. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company or to Group, addressed to them at 11100 Santa
Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if
to the Employee, addressed to him at the address set forth below his signature
hereto, or to such other address as any party may designate by written notice
to the other.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Dale A. Prouty
__________________________________
Its____________________________
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
__________________________________
FRANK E. BAXTER, Chairman of
the Board and Chief Executive
Officer
"Employee" /s/ Raymond L. Killian, Jr.
____________________________________
RAYMOND L. KILLIAN, JR.
Address for Notices:
111 Marmian Way
Rockport, MA
- 5 -
<PAGE> 1
EXHIBIT 10.2
AGREEMENT TO TERMINATE EMPLOYMENT AGREEMENT,
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Employment Agreement, Phantom Equity
Rights and Profits Bonus Rights (the "Agreement") is made and entered among
INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), DALE
PROUTY (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation
("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco").
WHEREAS, Jefco and Employee entered that certain Employment Agreement
dated as of May 27, 1991 (the "Employment Agreement") (A copy of the Employment
Agreement is attached hereto and made a part hereof as Exhibit A. Undefined
capitalized terms in this Agreement have the same meaning as in the Employment
Agreement.);
WHEREAS, pursuant to Section 3 of the Employment Agreement, Employee
is entitled to a base salary of $250,000;
WHEREAS, pursuant to Exhibit E, regarding certain Employee
Arrangements (attached hereto and made a part hereof as Exhibit B), to that
certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee is
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights;
WHEREAS, the parties now desire to terminate the Employment Agreement
and Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation
of an initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations under the Employment Agreement for payment of
the base salary and for the Phantom Equity Rights and Profits Bonus Rights, the
Company and Group agree to pay to Employee, and Employee hereby releases the
Company, Group and Jefco from their respective obligations under the Employment
Agreement and the Phantom Equity Plan and Profits Bonus Plan in exchange for
payments of cash as provided in Sections 2, 3 and 4 below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Eight Million Four
Hundred Thirteen Thousand One Hundred Thirty-nine dollars and Sixty-four cents
($8,413,139.64). The Initial Cash Payment shall be paid on or before the
seventh day following the closing of the IPO (the "Closing Date") in
immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total Nine
Million Three Hundred Forty-seven Thousand Nine Hundred Thirty-two dollars and
Ninety-three cents ($9,347,932.93). One half of the Deferred Cash Payments
shall be
- 1 -
<PAGE> 2
paid on or before June 30, 1994, and the remainder shall be paid on or before
September 30, 1994, in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Two Hundred
Fourteen Thousand Eight Hundred Ninety-three (214,893) shares in total. The
parties intend that the Group Common Stock shall consist of shares registered
under the Securities Act of 1933. In the event that the Group Common Stock has
not been registered at the time of purchase, Group shall cause a registration
statement to be filed as soon as possible thereafter and the Group Common Stock
shall be issued when the registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or kind
of security, or additional shares or new or different shares or other non-cash
assets are distributed with respect to such shares or other securities (whether
by reason of recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction), then in order to prevent
dilution or enlargement of rights hereunder the board of directors of Group
shall make appropriate and proportionate adjustments in the number of shares of
Group Common Stock.
4. First Quarter 1994 Bonus. Employee shall be paid a cash bonus
for the first quarter of 1994 of One Million Fifty Thousand dollars
($1,050,000) less bonus amounts previously paid for the 1994 bonus, on or
before the seventh day following the Closing Date in immediately available
funds.
5. Withholding for Employment Taxes. The cash payments described
in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from
the cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
6. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Employment Agreement or
the Phantom Equity and Profits
- 2 -
<PAGE> 3
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the Employee, Company,
Group and Jefco shall have no obligations under this Agreement.
7. Release. Employee's release of the Company, Group and Jefco
from obligations under the Employment Agreement and under the Phantom Equity
and Profits Bonus Plans in Section 1 of this Agreement includes a release of
each of those corporations and their successors, attorneys, assigns, agents,
affiliates, parents, subsidiaries, divisions, officers, employees, directors
and shareholders (altogether, for purposes of this paragraph, the "Releasees")
from all claims, demands, debts, liabilities, obligations, accounts, and causes
of action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which Employee ever had or asserted, or may now or
hereafter have or assert, against any Releasee and which arise under or with
respect to, or in any other way relate to, the Employment Agreement and the
Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the
Employment Agreement or the Phantom Equity or Profits Bonus Plans.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Employment Agreement and the
Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the
Employment Agreement or the Phantom Equity or Profits Bonus Plans.
8. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
9. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys, fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
10. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
- 3 -
<PAGE> 4
11. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
13. Assignability.
13.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 13.
13.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
14. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
15. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
---------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Dale Pouty
------------------------------------
DALE PROUTY
Address for Notices:
------------------------------------
------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.3
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), SAVYONA ABEL (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES &
COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2 and 3, below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Twenty Thousand Four
Hundred Eighty-three dollars and Eighty-eight cents ($20,483.88). The Initial
Cash Payment shall be paid on or before the seventh day following the closing
of the IPO (the "Closing Date") in immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total Twenty-two
Thousand Seven Hundred Fifty-nine dollars and Eighty-seven cents ($22,759.87).
One half of the Deferred Cash Payments shall be paid on or before June 30,
1994, and the remainder shall be paid on or before September 30, 1994, in each
case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Five Hundred
- 1 -
<PAGE> 2
Twenty-three (523) shares in total. The parties intend that the Group Common
Stock shall consist of shares registered under the Securities Act of 1933. In
the event that the Group Common Stock has not been registered at the time of
purchase, Group shall cause a registration statement to be filed as soon as
possible thereafter and the Group Common Stock shall be issued when the
registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Withholding for Employment Taxes. The cash payments described
in Sections 2 and 3 are gross amounts, and the Company shall withhold from the
cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
5. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the Employee, Company,
Group and Jefco shall have no obligations under this Agreement.
6. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every
- 2 -
<PAGE> 3
kind in law, equity, or otherwise, whether known or unknown, suspected or
unsuspected, which Employee ever had or asserted, or may now or hereafter have
or assert, against any Releasee and which arise under or with respect to, or in
any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or
any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
7. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
8. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
9. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
10. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
- 3 -
<PAGE> 4
12. Assignability.
12.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 12.
12.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
13. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
14. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
-----------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
-----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
-----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Savyona Abel
--------------------------------------
SAVYONA ABEL
Address for Notices:
4229 Stanbridge Ave.
--------------------------------------
Long Beach, CA 90808
--------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.4
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), MARK AUBURN (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES &
COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2 and 3, below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Twenty One Thousand Three
Hundred Three dollars and Twenty-four cents ($21,303.24). The Initial Cash
Payment shall be paid on or before the seventh day following the closing of the
IPO (the "Closing Date") in immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total
Twenty-three Thousand Six Hundred Seventy dollars and Twenty-seven cents
($23,670.27). One half of the Deferred Cash Payments shall be paid on or before
June 30, 1994, and the remainder shall be paid on or before September 30,
1994, in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Five Hundred
- 1 -
<PAGE> 2
Forty-four (544) shares in total. The parties intend that the Group Common
Stock shall consist of shares registered under the Securities Act of 1933. In
the event that the Group Common Stock has not been registered at the time of
purchase, Group shall cause a registration statement to be filed as soon as
possible thereafter and the Group Common Stock shall be issued when the
registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Withholding for Employment Taxes. The cash payments described
in Sections 2 and 3 are gross amounts, and the Company shall withhold from the
cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
5. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the Employee, Company,
Group and Jefco shall have no obligations under this Agreement.
6. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every
- 2 -
<PAGE> 3
kind in law, equity, or otherwise, whether known or unknown, suspected or
unsuspected, which Employee ever had or asserted, or may now or hereafter have
or assert, against any Releasee and which arise under or with respect to, or in
any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or
any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
7. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
8. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
9. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
10. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
- 3 -
<PAGE> 4
12. Assignability.
12.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 12.
12.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
13. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
14. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
----------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Mark Auburn
-------------------------------------
MARK AUBURN
Address for Notices:
1707 P.C.H., #405
-------------------------------------
Hermosa Beach, CA 90254
-------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.5
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), YOSSEF A. BEINART (the
"Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and
JEFFERIES & COMPANY INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2, 3 and 4 below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Nine Hundred Sixty
Thousand Two Hundred Eighty-four dollars and Thirty-five cents ($960,284.35).
The Initial Cash Payment shall be paid on or before the seventh day following
the closing of the IPO (the closing of the IPO shall be the "Closing Date") in
immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total One Million
Sixty-six Thousand Nine Hundred Eighty-two dollars and Sixty-one cents
($1,066,982.61). One half of the Deferred Cash Payments shall be paid on or
before June 30, 1994, and the remainder shall be paid on or before September
30, 1994, in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Twenty-four
Thousand Five Hundred Twenty-eight (24,528) shares in total. The
- 1 -
<PAGE> 2
parties intend that the Group Common Stock shall consist of shares registered
under the Securities Act of 1933. In the event that the Group Common Stock has
not been registered at the time of purchase, Group shall cause a registration
statement to be filed as soon as possible thereafter and the Group Common Stock
shall be issued when the registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Additional Cash Payment - Profit Bonus Stub. In addition to
the amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be
paid five hundred thousand dollars ($500,000) on or before the seventh day
following the Closing Date.
5. Withholding for Employment Taxes. The cash payments described
in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from
the cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
6. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the Employee, Company,
Group and Jefco shall have no obligations under this Agreement.
7. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors,
- 2 -
<PAGE> 3
attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions,
officers, employees, directors and shareholders (altogether, the "Releasees")
from all claims, demands, debts, liabilities, obligations, accounts, and causes
of action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which Employee ever had or asserted, or may now or
hereafter have or assert, against any Releasee and which arise under or with
respect to, or in any other way relate to, the Phantom Equity Rights and
Profits Bonus Rights, or any other rights contemplated by the Phantom Equity
Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
8. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
9. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
10. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
11. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
- 3 -
<PAGE> 4
13. Assignability.
13.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 13.
13.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
14. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
15. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
---------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Y. Beinart
------------------------------------
YOSSEF BEINART
Address for Notices:
3412 Ocean Front Walk, #211
------------------------------------
Marina Del Rey, CA 90292
------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.6
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), MIKE EARLYWINE (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY
INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2 and 3, below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Seven Thousand Three
Hundred Seventy-four dollars and Twenty cents ($7,374.20). The Initial Cash
Payment shall be paid on or before the seventh day following the closing of the
IPO (the "Closing Date") in immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total Eight
Thousand One Hundred Ninety-three dollars and Fifty-six cents ($8,193.56). One
half of the Deferred Cash Payments shall be paid on or before June 30, 1994,
and the remainder shall be paid on or before September 30, 1994, in each case
in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be One Hundred
- 1 -
<PAGE> 2
Eighty-eight (188) shares in total. The parties intend that the Group Common
Stock shall consist of shares registered under the Securities Act of 1933. In
the event that the Group Common Stock has not been registered at the time of
purchase, Group shall cause a registration statement to be filed as soon as
possible thereafter and the Group Common Stock shall be issued when the
registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Withholding for Employment Taxes. The cash payments described
in Sections 2 and 3 are gross amounts, and the Company shall withhold from the
cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
5. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the Employee, Company,
Group and Jefco shall have no obligations under this Agreement.
6. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every
- 2 -
<PAGE> 3
kind in law, equity, or otherwise, whether known or unknown, suspected or
unsuspected, which Employee ever had or asserted, or may now or hereafter have
or assert, against any Releasee and which arise under or with respect to, or in
any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or
any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
7. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
8. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
9. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
10. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other Counterparts.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
- 3 -
<PAGE> 4
12. Assignability.
12.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 12.
12.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
13. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
14. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
---------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Mike Earlywine
------------------------------------
MIKE EARLYWINE
Address for Notices:
53 Dunbar Street
------------------------------------
Chatham, NJ 07928
------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.7
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), JOSEPH HELED (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES &
COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2 and 3, below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Thirty- four Thousand
Four Hundred Twelve dollars and Ninety-two cents ($34,412.92). The Initial Cash
Payment shall be paid on or before the seventh day following the closing of the
IPO (the "Closing Date") in immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total
Thirty-eight Thousand Two Hundred Thirty-six dollars and Fifty-eight cents
($38,236.58). One half of the Deferred Cash Payments shall be paid on or before
June 30, 1994, and the remainder shall be paid on or before September 30, 1994,
in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Eight Hundred
- 1 -
<PAGE> 2
Seventy-nine (879) shares in total. The parties intend that the Group Common
Stock shall consist of shares registered under the Securities Act of 1933. In
the event that the Group Common Stock has not been registered at the time of
purchase, Group shall cause a registration statement to be filed as soon as
possible thereafter and the Group Common Stock shall be issued when the
registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Withholding for Employment Taxes. The cash payments described
in Sections 2 and 3 are gross amounts, and the Company shall withhold from the
cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
5. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the Employee, Company,
Group and Jefco shall have no obligations under this Agreement.
6. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every
- 2 -
<PAGE> 3
kind in law, equity, or otherwise, whether known or unknown, suspected or
unsuspected, which Employee ever had or asserted, or may now or hereafter have
or assert, against any Releasee and which arise under or with respect to, or in
any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or
any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
7. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
8. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
9. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
10. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
- 3 -
<PAGE> 4
12. Assignability.
12.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 12.
12.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
13. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
14. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
----------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a
Delaware corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Joseph Heled
-------------------------------------
JOSEPH HELED
Address for Notices:
-------------------------------------
-------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.8
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), DEMETRI SILAS (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES &
COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2, 3 and 4 below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Two Hundred Thirty-nine
Thousand Two Hundred Fifty-one dollars and Seventy-three cents ($239,251.73).
The Initial Cash Payment shall be paid on or before the seventh day following
the closing of the IPO (the closing of the IPO shall be the "Closing Date") in
immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total Two Hundred
Sixty-five Thousand Eight Hundred Thirty-five dollars and Twenty-six cents
($265,835.26). One half of the Deferred Cash Payments shall be paid on or
before June 30, 1994, and the remainder shall be paid on or before September
30, 1994, in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Six Thousand One
Hundred Eleven (6,111) shares in total. The parties intend
- 1 -
<PAGE> 2
that the Group Common Stock shall consist of shares registered under the
Securities Act of 1933. In the event that the Group Common Stock has not been
registered at the time of purchase, Group shall cause a registration statement
to be filed as soon as possible thereafter and the Group Common Stock shall be
issued when the registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Deferred Cash Payment - Profit Bonus Stub. In addition to the
amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid
two hundred thousand dollars ($200,000) in two equal installments. The first
installment shall be paid on or before the seventh day following the Closing
Date. The second installment shall be paid on or before one year following the
Closing Date; provided, however, that the Company shall have no obligation to
pay the second installment or related accrued interest if Employee voluntarily
terminates employment prior the date of the second installment. Interest shall
accrue on the second installment at the average noncompounded broker call rate
for the period beginning with the Closing Date, and shall be payable with the
second installment.
5. Withholding for Employment Taxes. The cash payments described
in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from
the cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
6. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the
- 2 -
<PAGE> 3
Employee, Company, Group and Jefco shall have no obligations under this
Agreement.
7. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every kind in law, equity, or
otherwise, whether known or unknown, suspected or unsuspected, which Employee
ever had or asserted, or may now or hereafter have or assert, against any
Releasee and which arise under or with respect to, or in any other way relate
to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights
contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
8. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
9. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
10. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
11. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be
- 3 -
<PAGE> 4
introduced in evidence or used for any other purposes without the production of
any other counterparts.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
13. Assignability.
13.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 13.
13.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
14. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
15. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
---------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Demetri Silas
------------------------------------
DEMETRI SILAS
Address for Notices:
1416 Courtland Avenue
------------------------------------
Los Angeles, CA 90006
------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.9
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), STUART SPERLING (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES &
COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2, 3 and 4 below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Sixty-one Thousand Four
Hundred Fifty-one dollars and Sixty-four cents ($61,451.64). The Initial Cash
Payment shall be paid on or before the seventh day following the closing of the
IPO (the closing of the IPO shall be the "Closing Date") in immediately
available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total Sixty-eight
Thousand Two Hundred Seventy-nine dollars and Sixty cents ($68,279.60). One
half of the Deferred Cash Payments shall be paid on or before June 30, 1994,
and the remainder shall be paid on or before September 30, 1994, in each case
in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be One Thousand Five
Hundred Seventy (1,570) shares in total. The parties intend
- 1 -
<PAGE> 2
that the Group Common Stock shall consist of shares registered under the
Securities Act of 1933. In the event that the Group Common Stock has not been
registered at the time of purchase, Group shall cause a registration statement
to be filed as soon as possible thereafter and the Group Common Stock shall be
issued when the registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Deferred Cash Payment - Profit Bonus Stub. In addition to the
amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid
two hundred thousand dollars ($200,000) in two equal installments. The first
installment shall be paid on or before the seventh day following the Closing
Date. The second installment shall be paid on or before one year following the
Closing Date; provided, however, that the Company shall have no obligation to
pay the second installment or related accrued interest if Employee voluntarily
terminates employment prior the date of the second installment. Interest shall
accrue on the second installment at the average noncompounded broker call rate
for the period beginning with the Closing Date, and shall be payable with the
second installment.
5. Withholding for Employment Taxes. The cash payments described
in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from
the cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
6. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the
- 2 -
<PAGE> 3
Employee, Company, Group and Jefco shall have no obligations under this
Agreement.
7. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every kind in law, equity, or
otherwise, whether known or unknown, suspected or unsuspected, which Employee
ever had or asserted, or may now or hereafter have or assert, against any
Releasee and which arise under or with respect to, or in any other way relate
to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights
contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
8. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
9. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
10. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
11. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be
- 3 -
<PAGE> 4
introduced in evidence or used for any other purposes without the production of
any other counterparts.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
13. Assignability.
13.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 13.
13.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
14. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
15. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
----------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Stuart Sperling
-------------------------------------
STUART SPERLING
Address for Notices:
6443 Lindenhurst Ave.
-------------------------------------
Los Angeles, CA 90048
-------------------------------------
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<PAGE> 1
EXHIBIT 10.10
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), TUVAL CHOMUT (the "Independent
Contractor"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and
JEFFERIES & COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Arrangements (attached hereto and made a part hereof as Exhibit A), to that
certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Independent
Contractor may be entitled to certain Phantom Equity Rights and certain Profits
Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Independent Contractor's Phantom Equity Rights and Profits Bonus Rights in
anticipation of an initial public offering of the Company's Common Stock (the
"IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Independent Contractor,
and Independent Contractor hereby releases the Company, Group and Jefco from
their respective obligations under the Phantom Equity Plan and Profits Bonus
Plan in exchange for cash payments as determined pursuant to Section 2, below.
2. Cash Payments - Profit Bonus Stub. Independent Contractor
shall be paid four hundred thousand dollars ($400,000) in two equal
installments. The first installment shall be paid on or before the seventh day
following the closing date of the IPO. The second installment shall be paid on
or before one year following the closing date of the IPO; provided however,
that if the Independent Contractor voluntarily terminates his contract prior to
the time the second installment is due, the Company shall no longer be
obligated to pay the second installment or related accrued interest. Interest
shall accrue on the second installment at the average noncompounded broker call
rate for the
- 1 -
<PAGE> 2
period beginning with the closing date of the IPO, and shall be payable with
the second installment.
3. Withholding for Employment Taxes. The cash payments described
in Section 2 are gross amounts, and the Company shall withhold from the cash
payments to Independent Contractor the total amount that the Company is
required to withhold, if any, with respect to Federal, state and local taxes.
4. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Independent Contractor's rights under the
Phantom Equity and Profits Bonus Plans shall remain in effect, and the
Independent Contractor, Company, Group and Jefco shall have no obligations
under this Agreement.
5. Release. Independent Contractor's release of the Company,
Group and Jefco from obligations relating to the Phantom Equity Plan and
Profits Bonus Plan in Section 1 of this Agreement includes a release of each of
those corporations and their successors, attorneys, assigns, agents,
affiliates, parents, subsidiaries, divisions, officers, employees, directors
and shareholders (altogether, the "Releasees") from all claims, demands, debts,
liabilities, obligations, accounts, and causes of action of every kind in law,
equity, or otherwise, whether known or unknown, suspected or unsuspected, which
Independent Contractor ever had or asserted, or may now or hereafter have or
assert, against any Releasee and which arise under or with respect to, or in
any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or
any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Independent Contractor and
executors, administrators, heirs, successors, transferees and assignees of
Independent Contractor (altogether, for purposes of this paragraph, the
"Releasees") from any and all claims, demands, debts, liabilities, obligations,
accounts, and causes of action of every kind in law, equity, or otherwise,
whether known or unknown, suspected or unsuspected, which any of them ever had
or asserted, or may now or hereafter have or assert, against any Releasee which
arise under or with respect to, or in any other way relate to, the Phantom
Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom
Equity or Profits Bonus Plans.
- 2 -
<PAGE> 3
6. [This paragraph intentionally omitted.]
7. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Independent Contractor, the Company, Group,
and Jefco.
8. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
9. Necessary Acts. The Independent Contractor agrees to perform
all acts and execute and deliver any documents that may be reasonably necessary
to carry out the provisions of this Agreement, including but not limited to all
acts and documents related to compliance with federal and/or state securities
laws.
10. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
12. Assignability.
12.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 12.
12.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim
- 3 -
<PAGE> 4
under or by reason of this Agreement or of any term, covenant or condition
hereof.
13. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
14. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Independent Contractor, addressed to him at the address set
forth below his signature hereto, or to such other address as any party may
designate by written notice to the other.
15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
----------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a
Delaware corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Tuval Chomut
-------------------------------------
TUVAL CHOMUT
Address for Notices:
-------------------------------------
-------------------------------------
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<PAGE> 1
EXHIBIT 10.11
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), ANDREW WINNER (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES &
COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2, 3 and 4 below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Three Hundred Forty
Thousand Thirty-two dollars and Forty-three cents ($340,032.43). The Initial
Cash Payment shall be paid on or before the seventh day following the closing
of the IPO (the closing of the IPO shall be the "Closing Date") in immediately
available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total Three
Hundred Seventy-seven Thousand Eight Hundred Thirteen dollars and Eighty-one
cents ($377,813.81). One half of the Deferred Cash Payments shall be paid on or
before June 30, 1994, and the remainder shall be paid on or before September
30, 1994, in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Eight Thousand Six
Hundred Eighty-five (8,685) shares in total. The parties
- 1 -
<PAGE> 2
intend that the Group Common Stock shall consist of shares registered under the
Securities Act of 1933. In the event that the Group Common Stock has not been
registered at the time of purchase, Group shall cause a registration statement
to be filed as soon as possible thereafter and the Group Common Stock shall be
issued when the registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Deferred Cash Payment - Profit Bonus Stub. In addition to the
amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid
two hundred thousand dollars ($200,000) in two equal installments. The first
installment shall be paid on or before the seventh day following the Closing
Date. The second installment shall be paid on or before one year following the
Closing Date; provided, however, that the Company shall have no obligation to
pay the second installment or related accrued interest if Employee voluntarily
terminates employment prior the date of the second installment. Interest shall
accrue on the second installment at the average noncompounded broker call rate
for the period beginning with the Closing Date, and shall be payable with the
second installment.
5. Withholding for Employment Taxes. The cash payments described
in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from
the cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
6. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the
- 2 -
<PAGE> 3
Employee, Company, Group and Jefco shall have no obligations under this
Agreement.
7. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every kind in law, equity, or
otherwise, whether known or unknown, suspected or unsuspected, which Employee
ever had or asserted, or may now or hereafter have or assert, against any
Releasee and which arise under or with respect to, or in any other way relate
to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights
contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
8. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
9. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
10. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
11. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be
- 3 -
<PAGE> 4
introduced in evidence or used for any other purposes without the production of
any other counterparts.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
13. Assignability.
13.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 13.
13.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
14. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
15. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
-----------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
-----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
-----------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Andrew Winner
--------------------------------------
ANDREW WINNER
Address for Notices:
7411 W. 82nd St.
--------------------------------------
Westchester, CA 90045
--------------------------------------
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<PAGE> 1
EXHIBIT 10.12
AGREEMENT TO TERMINATE
PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS
This agreement to Terminate Phantom Equity Rights and Profits Bonus
Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP,
INC., a Delaware corporation (the "Company"), MARK WRIGHT (the "Employee"),
JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES &
COMPANY, INC., a California corporation ("Jefco").
WHEREAS, pursuant to that certain Exhibit E, regarding certain
Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to
that certain Stock Purchase Agreement among Jefco and Integrated Analytics
Corporation, a California corporation ("IAC"), shareholders, Employee may be
entitled to certain Phantom Equity Rights and certain Profits Bonus Rights
pursuant to the Phantom Equity Plan and Profits Bonus Plan;
WHEREAS, the parties now desire to terminate any and all of
Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an
initial public offering of the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's,
Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus
Rights, if any, the Company and Group agree to pay to Employee, and Employee
hereby releases the Company, Group and Jefco from their respective obligations
under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash
payments as determined pursuant to Sections 2, 3 and 4 below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Employee shall be Two Hundred Eighty-five
Thousand Nine Hundred Fifty-four dollars and Ninety-eight cents ($285,954.98).
The Initial Cash Payment shall be paid on or before the seventh day following
the closing of the IPO (the closing of the IPO shall be the "Closing Date") in
immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Employee shall total Three
Hundred Seventeen Thousand Seven Hundred Twenty-seven dollars and Seventy-six
cents ($317,727.76). One half of the Deferred Cash Payments shall be paid on
or before June 30, 1994, and the remainder shall be paid on or before September
30, 1994, in each case in immediately available funds.
Employee hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Employee shall be Seven Thousand
Three Hundred Four (7,304) shares in total. The parties intend
- 1 -
<PAGE> 2
that the Group Common Stock shall consist of shares registered under the
Securities Act of 1933. In the event that the Group Common Stock has not been
registered at the time of purchase, Group shall cause a registration statement
to be filed as soon as possible thereafter and the Group Common Stock shall be
issued when the registration statement becomes effective.
Employee shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Employee of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Deferred Cash Payment - Profit Bonus Stub. In addition to the
amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid
five hundred thousand dollars ($500,000) in two equal installments. The first
installment shall be paid on or before the seventh day following the Closing
Date. The second installment shall be paid on or before one year following the
Closing Date; provided, however, that the Company shall have no obligation to
pay the second installment or related accrued interest if Employee voluntarily
terminates employment prior the date of the second installment. Interest shall
accrue on the second installment at the average noncompounded broker call rate
for the period beginning with the Closing Date, and shall be payable with the
second installment.
5. Withholding for Employment Taxes. The cash payments described
in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from
the cash payments to Employee the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
6. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have
no further obligation to make any payments under the Phantom Equity and Profits
Bonus Plans as of April 30, 1994. In the event that the IPO does not close,
then the Employment Agreement and Employee's rights under the Phantom Equity
and Profits Bonus Plans shall remain in effect, and the
- 2 -
<PAGE> 3
Employee, Company, Group and Jefco shall have no obligations under this
Agreement.
7. Release. Employee's release of the Company, Group and Jefco
from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in
Section 1 of this Agreement includes a release of each of those corporations
and their successors, attorneys, assigns, agents, affiliates, parents,
subsidiaries, divisions, officers, employees, directors and shareholders
(altogether, the "Releasees") from all claims, demands, debts, liabilities,
obligations, accounts, and causes of action of every kind in law, equity, or
otherwise, whether known or unknown, suspected or unsuspected, which Employee
ever had or asserted, or may now or hereafter have or assert, against any
Releasee and which arise under or with respect to, or in any other way relate
to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights
contemplated by the Phantom Equity Plan or Profits Bonus Plan.
Except for any rights created under separate confidentiality
agreements, Company, Group and Jefco hereby release Employee and executors,
administrators, heirs, successors, transferees and assignees of Employee
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Phantom Equity and Profits Bonus
Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus
Plans.
8. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Employee, the Company, Group, and Jefco.
9. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
10. Necessary Acts. The Employee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
11. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be
- 3 -
<PAGE> 4
introduced in evidence or used for any other purposes without the production of
any other counterparts.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
13. Assignability.
13.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 13.
13.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
14. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company, by the board of directors of Group to be
effective as against Group and Jefco. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by any party of the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
15. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100
Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel,
and, if to the Employee, addressed to him at the address set forth below his
signature hereto, or to such other address as any party may designate by
written notice to the other.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
---------------------------------
RAYMOND L. KILLIAN, JR.,
Chief Executive Officer
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Jefco" JEFFERIES & COMPANY, INC., a
Delaware corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman and
Chief Executive Officer
"Employee"
/s/ Mark Wright
------------------------------------
MARK WRIGHT
Address for Notices:
4211 Berryman Avenue
------------------------------------
Los Angeles, CA 90066
------------------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.13
AGREEMENT TO TERMINATE STOCK OPTION
This agreement to Terminate Stock Option (the "Agreement") is made
and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation
(the "Company"), SCOTT P. MASON (the "Director") and JEFFERIES GROUP, INC., a
Delaware corporation ("Group").
WHEREAS, the parties to this Agreement entered that certain Stock
Option Agreement dated as of August 18, 1993 (the "Stock Option Agreement") (A
copy of the Stock Option Agreement is attached hereto and made a part hereof as
Exhibit A. Undefined capitalized terms in this Agreement have the same meaning
as in the Stock Option Agreement.);
WHEREAS, pursuant to Section 1 of the Stock Option Agreement,
Director was granted a nonqualified stock option to purchase 300,000 shares of
the Company's common stock (the "Common Stock"), for a price of $2.00 per share
(the "Old Option");
WHEREAS, the parties now desire to terminate the Stock Option
Agreement and the Old Option in anticipation of an initial public offering of
the Company's Common Stock (the "IPO");
NOW THEREFORE, in consideration for the following mutual promises,
the parties agree:
1. Consideration. In exchange for a release of the Company's and
Group's obligations under the Stock Option Agreement for the Old Option, the
Company and Group agree to pay to Director, and Director hereby releases the
Company and Group from their respective obligations under the Stock Option
Agreement in exchange for payments of cash as provided in Sections 2 and 3,
below.
2. Initial Cash Payment. The amount of the initial cash payment
(the "Initial Cash Payment") to the Director shall be Two Million Thirty-five
Thousand Forty-one dollars ($2,035,041). The Initial Cash Payment shall be
paid on or before the seventh day following the closing of the IPO (the
"Closing Date") in immediately available funds.
3. Deferred Cash Payments. The amount of the deferred cash
payments (the "Deferred Cash Payments") to the Director shall total Two Million
Two Hundred Sixty-one Thousand One Hundred Fifty-seven dollars ($2,261,157).
One half of the Deferred Cash Payments shall be paid on or before June 30,
1994, and the remainder shall be paid on or before September 30, 1994, in each
case in immediately available funds.
- 1 -
<PAGE> 2
Director hereby agrees to purchase Group shares of common stock (the
"Group Common Stock") for an amount equal to the total amount of the Deferred
Cash Payments, not reduced by the amount of any related withholding, in two
equal installments on June 30, 1994 and September 30, 1994. The number of
shares of Group Common Stock purchased by Director shall be Fifty-one Thousand
Nine Hundred Eighty (51,980) shares in total. The parties intend that the
Group Common Stock shall consist of shares registered under the Securities Act
of 1933. In the event that the Group Common Stock has not been registered at
the time of purchase, Group shall cause a registration statement to be filed as
soon as possible thereafter and the Group Common Stock shall be issued when the
registration statement becomes effective.
Director shall not dispose of more than ten percent (10%) of the
Group Common Stock in any calendar quarter, beginning with the calendar quarter
that includes the Closing Date, with carryforwards of unused amounts; provided,
however, that this restriction on the amount of Group Common Stock that may be
sold in a quarter shall not apply in the event of a change of control of Group,
a tender offer for Group stock, or a merger of Group with or into an
unaffiliated entity.
In the event that after the Closing Date and prior to the issuance to
Director of the Group Common Stock that the number of authorized shares of
Group stock are increased, decreased or exchanged for a different number or
kind of security, or additional shares or new or different shares or other
non-cash assets are distributed with respect to such shares or other securities
(whether by reason of recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction), then in order to
prevent dilution or enlargement of rights hereunder the board of directors of
Group shall make appropriate and proportionate adjustments in the number of
shares of Group Common Stock.
4. Withholding for Employment Taxes. The cash payments described
in Sections 2 and 3 are gross amounts, and the Company shall withhold from the
cash payments to Director the total amount that the Company is required to
withhold with respect to Federal, state and local taxes, FICA, Medicare,
unemployment compensation taxes and similar taxes or assessments to satisfy
withholding requirements.
5. Effective Date. This Agreement shall be effective upon
closing of the IPO. At the Closing Date, Company and Group shall have no
further obligations under the Stock Option Agreement and the Old Option shall
be cancelled as of April 30, 1994. In the event that the IPO does not close,
then the Old Option shall remain in effect, and the Director, Company and Group
shall have no obligations under this Agreement.
- 2 -
<PAGE> 3
6. Release. Director's release of the Company and Group from
obligations under the Stock Option Agreement for the Old Option in Section 1 of
this Agreement includes a release of each of those corporations and their
successors, attorneys, assigns, agents, affiliates, parents, subsidiaries,
divisions, officers, employees, directors and shareholders (altogether, the
"Releasees") from all claims, demands, debts, liabilities, obligations,
accounts, and causes of action of every kind in law, equity, or otherwise,
whether known or unknown, suspected or unsuspected, which Director ever had or
asserted, or may now or hereafter have or assert, against any Releasee and
which arise under or with respect to, or in any other way relate to, the old
Option, or any other rights contemplated by the Old Option.
Company, Group and Jefco hereby release Director and executors,
administrators, heirs, successors, transferees and assignees of Director
(altogether, for purposes of this paragraph, the "Releasees") from any and all
claims, demands, debts, liabilities, obligations, accounts, and causes of
action of every kind in law, equity, or otherwise, whether known or unknown,
suspected or unsuspected, which any of them ever had or asserted, or may now or
hereafter have or assert, against any Releasee which arise under or with
respect to, or in any other way relate to, the Old Option, or any other rights
contemplated by the Old Option.
7. Agreement Binding on Successors. The terms of this Agreement
shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Director, the Company and Group.
8. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the unsuccessful
party to such litigation, as determined by the court in a final judgement or
decree, shall pay the successful party or parties all costs, expenses and
reasonable attorneys' fees incurred by the successful party or parties
(including without limitation costs, expenses and fees on any appeals), and if
the successful party recovers judgment in any such action or proceeding such
costs, expenses and attorneys' fees shall be included as part of the judgment.
9. Necessary Acts. The Director agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities laws.
10. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and may be introduced in evidence or used for any
other purposes without the production of any other counterparts.
- 3 -
<PAGE> 4
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (and
not the laws of conflicts) of the State of New York.
12. Assignability.
12.1. This Agreement is personal in nature and none of the
parties hereto shall, without the written consent of the other parties hereto,
assign or transfer this Agreement or any rights or obligations hereunder,
except by operation of law or pursuant to the terms of this Section 12.
12.2. Nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person, other than the parties
hereto, any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition hereof.
13. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. Any such written
instrument must be approved by the board of directors of the Company to be
effective as against the Company and by the board of directors of Group to be
effective as against Group. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by any party of the breach of
any term or provision contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.
14. Notice. Any notice to be given hereunder shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, and, if to the Company or to Group, addressed to them at 11100 Santa
Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if
to the Director, addressed to him at the address set forth below his signature
hereto, or to such other address as any party may designate by written notice
to the other.
15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of May 1, 1994.
"Company" INVESTMENT TECHNOLOGY GROUP, INC.,
a Delaware corporation
By /s/ Raymond L. Killian, Jr.
---------------------------------
Its____________________________
"Group" JEFFERIES GROUP, INC., a Delaware
corporation
By /s/ Frank E. Baxter
---------------------------------
FRANK E. BAXTER, Chairman of
the Board and Chief Executive
Officer
"Director"
/s/ Scott P. Mason
------------------------------------
SCOTT P. MASON
Address for Notices:
46 Glen Road
Wellesley, Mass. 02181
- 5 -
<PAGE> 1
EXHIBIT 11
JEFFERIES GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For The Three For The Six
Months Ended Months Ended
----------------------- -----------------------
June 24, June 25, June 24, June 25,
1994 1993 1994 1993*
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Common stock and common stock
equivalents:
Average common stock outstanding . . . . . 5,880 4,630 5,805 4,629
Common stock equivalent shares
related to employee stock
options and restricted stock . . . . . . 365 208 345 206
----- ----- ----- -----
Total average common stock and
common stock equivalents
used for primary computation . . . . . 6,245 4,838 6,150 4,835
Average common stock assumed issued
pursuant to convertible subordinated
debentures and an adjustment of
average common stock equivalents
to period-end market price, if
higher than average price . . . . . . . . 1 1,362 1 1,372
----- ----- ----- -----
Total average common stock,
common stock equivalents
and other dilutive securities . . . . 6,246 6,200 6,151 6,207
===== ===== ===== =====
Earnings:
Net earnings . . . . . . . . . . . . . . . $4,782 $6,072 $10,621 $14,696
Adjustment to subsidiary earnings -
common stock equivalents on
subsidiary . . . . . . . . . . . . . . . 33 -- 125 --
------ ------ ------- -------
Total earnings for
primary computation . . . . . . . . . 4,749 6,072 10,496 14,696
Eliminate interest expense (net
of taxes) on convertible
subordinated debentures . . . . . . . . -- 370 -- 743
------ ------ ------- -------
Total earnings for
fully diluted computation . . . . . . $4,749 $6,442 $10,496 $15,439
====== ====== ======= =======
Earnings per share:
Primary . . . . . . . . . . . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 3.04
====== ====== ======= =======
Fully diluted . . . . . . . . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.49
====== ====== ======= =======
</TABLE>
* The 1993 first quarter includes a benefit for the cumulative effect of
changes in accounting principle of $.28 and $.22 per share primary and fully
diluted, respectively.
