<PAGE> 1
As filed with the Securities and Exchange Commission on June 24, 1994
Registration No. 33-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________________
JEFFERIES GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 6211 95-2848406
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
(310) 445-1199
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices)
_________________
Frank E. Baxter
Chief Executive Officer
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
(310) 445-1199
(Name, address, including zip code, and
telephone number, including area code,
of agent for service of process)
____________________________
with a copy to:
Michael L. Klowden, Esq.
Morgan, Lewis & Bockius
Twenty-Second Floor
801 South Grand Avenue
Los Angeles, California 90017
____________________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
____________________________
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
____________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price Per Unit Aggregate Offering Price Registration Fee(1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series B
8 7/8% Senior Notes due $50,000,000 100% $50,000,000 $17,241.38
2004
=========================================================================================================================
</TABLE>
(1) The Amount of Registration Fee is calculated pursuant to Section 6(b)
of the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE> 2
JEFFERIES GROUP, INC.
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Item
Number Item Location in Prospectus
------ ------------------------------------------------ ------------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus . . . Facing Page; Cross-Reference Sheet; Outside
Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . . Inside Front and Outside Back Cover Pages
3. Risk Factors, Ratio of Earnings to Fixed
Charges, and Other Information . . . . . . . Prospectus Summary; Investment Considerations;
Selected Consolidated Financial Information
4. Terms of the Transaction . . . . . . . . . . . Outside Front Cover Page; Prospectus Summary;
The Exchange Offer
5. Pro Forma Financial Information . . . . . . . . Not Applicable
6. Material Contracts with the Company Being
Acquired . . . . . . . . . . . . . . . . . . Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters . . . . . . . . . . . . . Not Applicable
8. Interests of Named Experts and Counsel . . . . Experts; Legal Matters
9. Disclosure of Commission Position of
Indemnification for Securities Act Not Applicable
Liabilities . . . . . . . . . . . . . . . . .
10. Information with Respect to S-3 Registrants . . Prospectus Summary; Recent Financial Results;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business
11. Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . Incorporation of Certain Information by Reference
</TABLE>
ii
<PAGE> 3
Subject to Completion, dated June 24, 1994
PROSPECTUS
JEFFERIES GROUP, INC.
OFFER TO EXCHANGE ITS
8 7/8% SERIES B SENIOR NOTES
DUE 2004
[LOGO] FOR
ANY AND ALL OF ITS OUTSTANDING
8 7/8% SENIOR NOTES
DUE 2004
_____________________________________________
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON __________, 1994, UNLESS EXTENDED
_____________________________________________
Jefferies Group, Inc., a Delaware corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to an aggregate $50,000,000 principal amount of its
8 7/8% Series B Senior Notes due 2004 (the "New Notes") for an equal principal
amount of its issued and outstanding 8 7/8% Senior Notes due 2004 (the "Old
Notes"). The Old Notes and the New Notes are collectively referred to herein
as the "Notes."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement,
dated April 28, 1994, between the Company and purchasers of the Old Notes (the
"Registration Rights Agreement"). Based on interpretations by the staff of the
Securities and Exchange Commission (the "Commission"), New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any Holder thereof (other than any
such Holder which is (i) an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act of 1933, as amended (the "Securities Act") or
(ii) a Broker-Dealer, except as provided below), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement with any person to participate in
the distribution of such New Notes. Notwithstanding the foregoing, each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with any resale of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The
Company has agreed that, for a period of 90 days after the Expiration Date (as
defined herein), it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The Company
will pay all the expenses incident to the Exchange Offer (which shall not
include the expenses of any Holder in connection with resales of the New
Notes). Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date. In the event the Company terminates
the Exchange Offer and does not accept for exchange any Old Notes, the Company
will promptly return the Old Notes to the Holders thereof. See "The Exchange
Offer."
Prior to this Exchange Offer, there has been no public market for the Notes.
If a market for the New Notes should develop, the New Notes could trade at a
discount from their principal amount. The Company does not currently intend to
list the New Notes on any securities exchange or to seek approval for quotation
through any automated quotation system. Accordingly, there can be no assurance
as to the development or liquidity of any public market for the New Notes.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________, 1994
<PAGE> 4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 5
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
Regional Offices, Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates
from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W. Washington, D.C. 20549.
The Company intends, and is required by the terms of the indenture, dated April
28, 1994 (the "Indenture"), by and between the Company and The Bank of New
York, as trustee (the "Trustee"), to furnish Holders of the Notes with annual
reports containing consolidated financial statements audited by its independent
auditors and with quarterly reports containing unaudited condensed consolidated
financial information for each of the first three quarters of each fiscal year.
This Prospectus is part of a Registration Statement on Form S-4 (together with
all amendments and exhibits thereto, the "Registration Statement") which the
Company has filed with the Commission under the Securities Act, relating to the
New Notes offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
JEFFERIES GROUP, INC., 11100 SANTA MONICA BOULEVARD, 12TH FLOOR, LOS ANGELES,
CALIFORNIA 90025, ATTENTION: JERRY GLUCK (TELEPHONE: (310) 914-1300). IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
THE DATE FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference and made a part hereof: (i) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1993; and (ii) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 25, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering described herein shall be deemed to be
incorporated by reference in this Prospectus from the respective dates those
documents are filed. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of such person, a
copy of any or all of the documents referred to above which have been, or may
be, incorporated in this Prospectus by reference, other than exhibits to such
documents.
2
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed information
and financial statements (including notes thereto) appearing elsewhere, and
incorporated by reference, in this Prospectus. The term "Company" refers,
unless the context requires otherwise, to Jefferies Group, Inc., its
subsidiaries, predecessor entities and W & D Securities, Inc.
THE COMPANY
Jefferies Group, Inc. is a holding company which, through its four primary
subsidiaries, Jefferies & Company, Inc. ("JEFCO"), Investment Technology Group,
Inc. ("ITG Holding"), Jefferies International Limited ("JIL") and Jefferies
Pacific Limited ("JPL"), is engaged in securities brokerage and trading,
corporate finance and other financial services. Total revenues and net
earnings of the Company for fiscal 1993 were a record $318.1 million and
$28.9 million, respectively, representing a 35.1% and 54.5% increase from
fiscal 1992.
The Company's principal subsidiary, JEFCO, was founded in 1962 and is
engaged in equity, convertible debt and taxable fixed income securities
brokerage and trading and corporate finance. JEFCO is one of the leading
national firms engaged in the distribution and trading of blocks of equity
securities and conducts such activities primarily in the "third market." The
term "third market" refers to transactions in listed equity securities effected
away from national securities exchanges.
ITG Holding is a publicly traded corporation of which the Company owns 80.2% of
the outstanding shares of common stock. ITG Holding, through its wholly owned
broker-dealer subsidiary ITG Inc. ("ITG"), is a leading provider of automated
securities trade execution and analysis services to institutional equity
investors. ITG's two principal services are POSIT((R)), the largest automated
stock crossing system operated during trading hours, and QuantEX((R)), a
proprietary decision support system with integrated trade analysis, routing and
management capabilities. POSIT((R)), which is accessed through direct computer
links or by communicating with ITG's trading desk, allows customers to place
confidential buy and sell orders on equity securities and portfolios of equity
securities. POSIT((R)) analyzes these buy and sell orders and determines the
maximum number of securities which may be matched or "crossed" among
participants. After determining the optimal cross, POSIT((R)) executes trades
at the midpoint of the primary market best bid and offer for each security at
the time of the cross.
QuantEX((R)) is a proprietary trade execution and analysis system that provides
valuable support to investment managers in the development and implementation
of portfolio trading strategies and allows equity traders to organize, process
and manage large trading lists. Through its direct routing capabilities,
QuantEX((R)) also allows investment managers and equity traders to route orders
to POSIT((R)), major national and regional stock exchanges, over-the-counter
("OTC") market makers, ITG's trading desk or selected broker-dealers, including
JEFCO.
JIL, a broker-dealer subsidiary of the Company, was incorporated in 1986 in
England. JIL is a member of The International Stock Exchange and The
Securities and Futures Authority. JIL introduces customers trading in U.S.
securities to JEFCO and also trades as a broker-dealer in international equity
and convertible securities and American Depositary Receipts ("ADRs") .
JPL, also a broker-dealer subsidiary of the Company, was incorporated in 1992
in Hong Kong. JPL presently introduces foreign customers trading in U.S.
securities to JEFCO.
The Company's Common Stock trades in the NASDAQ National Market System under
the symbol JEFG. On June 22, 1994, the Company's stock price was $39.50 per
share.
The Company and its various subsidiaries maintain offices in Los Angeles, New
York, Short Hills, Chicago, Dallas, Boston, Atlanta, New Orleans, Houston, San
Francisco, Stamford, London and Hong Kong. The Company's executive offices are
located at 11100 Santa Monica Boulevard, 11th Floor, Los Angeles, California
90025, and its telephone number is (310) 445-1199.
3
<PAGE> 7
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
Termination of Certain Rights: The Old Notes were sold by the Company on
April 28, 1994, pursuant to the purchase
agreements, dated April 28, 1994 (the
"Purchase Agreement"), by and between the
Company and each of the purchasers of the Old
Notes (the "Purchasers"). Each of the
Purchasers is an accredited investor, as
defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act.
Pursuant to the Purchase Agreement, the
Company and the Purchasers entered into the
Registration Rights Agreement, which grants
the Holders of the Old Notes certain
registration rights. See "The Exchange Offer
-- Termination of Certain Rights." The
Exchange Offer is intended to satisfy such
rights which terminate upon the consummation
of the Exchange Offer. The Holders of the
Old Notes not accepted for exchange in the
Exchange Offer will no longer have the
benefits of registration rights, and the
Holders of the New Notes will not be entitled
to registration rights with respect to the
New Notes.
The Exchange Offer: The Company is offering to exchange $1,000
principal amount of its New Notes for each
$1,000 principal amount of its outstanding
Old Notes that are properly tendered and
accepted. As of the date of this Prospectus,
$50,000,000 in aggregate principal amount of
Old Notes were outstanding, which is the
maximum aggregate amount authorized by the
Indenture for all Notes. As of the date of
this Prospectus, there were ____ registered
Holders of Old Notes. Only a registered
Holder of Old Notes (or such Holder's legal
representative or attorney-in-fact) as
reflected on the records of the Trustee under
the Indenture (each an "Eligible Holder") may
participate in the Exchange Offer. See "The
Exchange Offer -- Terms of the Exchange
Offer."
Expiration Date: The Exchange Offer will expire at 5:00 p.m.,
New York City time, on ______________, 1994,
or, at the Company's option, such earlier
date upon which 100% of the Old Notes have
been validly tendered pursuant to the
Exchange Offer and not withdrawn, unless the
Company, in its sole discretion, extends the
Exchange Offer (the "Expiration Date"). See
"The Exchange Offer - Terms of the Exchange
Offer; Expiration Date; Extensions;
Amendments."
Accrued Interest
on the New
Notes and Old Notes: The New Notes will bear interest from their
respective issuance dates at the same rate and
upon the same terms as the Old Notes.
Eligible Holders whose Old Notes are accepted
for exchange will be entitled to receive
accrued but unpaid interest thereon to, but
not including, the issuance date of the New
Notes and will be deemed to have waived the
right to receive any payment in respect of
interest on the Old Notes accrued from and
after the date of issuance of the New Notes.
Such accrued but unpaid interest on the Old
Notes will be payable with the first interest
payment on the New Notes to the registered
Holder of the New Notes.
Certain Conditions of
the Exchange Offer: The Exchange Offer is subject to certain
customary conditions, including (i) no
commencement of any action, legal or
governmental, with respect to the Exchange
Offer or which the Company reasonably
determines would make it inadvisable to
proceed with the Exchange Offer, (ii) no
banking moratorium or similar event or
international calamity involving the United
States, (iii) no change in the business or
prospects of the Company that may have a
material adverse effect on the Company and
(iv) the Exchange Offer not violating any
applicable law. The Company expects that the
foregoing conditions will be satisfied. All
such conditions may be waived by the Company.
Holders of Old Notes may have certain rights
and remedies against the Company under the
Registration Rights Agreement should the
Company fail to consummate the Exchange
Offer. See "The Exchange Offer - Certain
Conditions of the Exchange Offer."
4
<PAGE> 8
Procedures for
Tendering Old Notes: Each Eligible Holder desiring to accept the
Exchange Offer must transmit a properly
completed and duly executed Letter of
Transmittal, including all other documents
required by the Letter of Transmittal, with
the signatures thereon guaranteed if required
by the instructions to the Letter of
Transmittal, to the Exchange Agent (as
defined below) at the address set forth in
the Letter of Transmittal on or prior to 5:00
p.m., New York City time on the Expiration
Date. In addition, prior to 5:00 p.m., New
York City time, on the Expiration Date,
either (i) certificates for such Old Notes
must be received by the Exchange Agent,
together with the Letter of Transmittal;
(ii) confirmation of a book-entry transfer
(a "Book-Entry Confirmation") of such Old
Notes, if such procedure is available, into
the Exchange Agent's account at The
Depository Trust Company (the "Depository")
pursuant to the book-entry transfer
procedures set forth in "The Exchange
Offer -- Book-Entry Transfer," must be
received by the Exchange Agent; or (iii)
the Holder must comply with the guaranteed
delivery procedures described below. Any
beneficial owner of Old Notes ("Beneficial
Owner") whose Old Notes are registered
in the name of a nominee, such as
a broker, dealer, commercial bank, or trust
company, and who wishes to tender Old Notes
in the Exchange Offer, should contact such
nominee promptly and instruct it to tender on
such Beneficial Owner's behalf.
Guaranteed Delivery
Procedures: If an Eligible Holder wishes to tender its
Old Notes and either (i) such Old Notes are
not immediately available, (ii) time will
not permit such Old Notes or other required
documents to reach the Exchange Agent on or
prior to the Expiration Date, or (iii) the
procedure for book-entry transfer cannot be
completed on or prior to the Expiration Date,
tenders may be effected pursuant to the
guaranteed delivery procedures set forth in
"The Exchange Offer - Guaranteed Delivery
Procedures."
Withdrawal of
Tenders: Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time,
on the Expiration Date. See "The Exchange
Offer - Withdrawal Rights."
Acceptance of Old
Notes and Delivery
of New Notes: Subject to the satisfaction or waiver of all
conditions of the Exchange Offer, the Company
will accept for exchange any and all Old
Note which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New
Notes issued pursuant to the Exchange Offer
will be delivered in exchange for the
applicable Old Notes accepted in the
Exchange Offer promptly following the
Expiration Date. See "The Exchange Offer -
Acceptance of Old Notes in
Exchange; Delivery of New Notes."
Certain Federal
Income Tax
Consequences: For a discussion of certain federal income
tax consequences of the exchange of the Old
Notes, see "Certain Federal Income Tax
Consequences."
Exchange Agent: The Bank of New York is the Exchange Agent
(the "Exchange Agent"). The address and
telephone number of the Exchange Agent are
set forth in "The Exchange Offer - Exchange
Agent."
5
<PAGE> 9
SUMMARY DESCRIPTION OF NOTES
The terms of the Old Notes and the New Notes are identical in all
material respects, except for certain transfer and registration rights relating
to the Old Notes.
Securities Offered . . . . . . . . Up to $50,000,000 aggregate principal
amount of New Notes, less the
principal amount of Old Notes not
exchanged. See "Description of the
Notes."
Issuer . . . . . . . . . . . . . . The Company
Maturity . . . . . . . . . . . . . May 1, 2004.
Interest Payment Dates . . . . . . May 1 and November 1, commencing
November 1, 1994.
Optional Redemption . . . . . . . . The New Notes are not redeemable
prior to May 1, 1999. On or after
May 1, 1999, the New Notes are
redeemable at the option of the
Company, in whole or in part, at the
redemption prices set forth herein
plus accrued interest to the date of
redemption.
Mandatory Redemption . . . . . . . None.
Ranking . . . . . . . . . . . . . . The New Notes are senior unsecured
obligations of the Company. The New
Notes are senior in right of payment
to all existing and future
subordinated indebtedness of the
Company and rank pari passu in right
of payment with all existing and
future senior indebtedness of the
Company.
Change of Control . . . . . . . . . In the event that a Change of Control
(as defined in the Indenture) has
occurred, each Holder of New Notes
will have the right, at such Holder's
option, to require the Company to
repurchase all or any part of such
Holder's New Notes at a cash price
equal to 101% of the principal amount
thereof, plus accrued and unpaid
interest, if any.
Covenants . . . . . . . . . . . . . The Indenture under which the New
Notes will be issued will limit,
among other things, (i) the
incurrence of additional Long-Term
Indebtedness (as defined in the
Indenture), (ii) consolidations,
mergers or transfers of assets as an
entirety or substantially as an
entirety, (iii) transactions with
affiliates, and (iv) certain liens on
Voting Stock (as defined in the
Indenture) of Material Subsidiaries
(as defined in the Indenture).
Events of Default will include, among
other things, (i) the failure to
maintain a minimum Consolidated Net
Worth (as defined in the Indenture)
greater than or equal to $87 million
for a period of 180 consecutive days
and (ii) the failure of JEFCO to
maintain Net Capital greater than or
equal to the Minimum Net Capital
Amount (as defined in the Indenture)
for a period of 30 consecutive days.
See "Description of the Notes."
6
<PAGE> 10
INVESTMENT CONSIDERATIONS
In addition to the other information contained in this Prospectus, the
following factors should be carefully considered by Holders prior to tendering
their Old Notes in the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant
to the Exchange Offer will continue to be subject to the restrictions on
transfer of such Old Notes as set forth in the legend thereon as a consequence
of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate
that it will register the Old Notes under the Securities Act. Based on
interpretations by the staff of the Commission, New Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
or otherwise transferred by any Holder thereof (other than any such Holder
which is either (i) an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act, or (ii) a broker-dealer, except as provided
below), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes were acquired in
the ordinary course of such Holder's business and such Holder had no
arrangement with any person to participate in the distribution of such New
Notes. Notwithstanding the foregoing, each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with any resale of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The
Company has agreed that, for a period of 90 days from the Expiration Date, it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution." However, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or resold by any Holder unless they have been registered or
qualified for sale in such jurisdictions or an exemption from registration or
qualification is available and the requirements of such exemption have been
satisfied. The Company does not currently intend to register or qualify the
resale of the New Notes in any such jurisdictions.
ABSENCE OF PUBLIC MARKET
The Old Notes are eligible for trading in the Private Offerings, Resale and
Trading through Automated Linkages (PORTAL) market. The New Notes will be new
securities for which there currently is no market. Accordingly, there can be
no assurance as to the development or liquidity of any market for the Notes.
The Company does not intend to apply for listing of the Notes on any securities
exchange or for quotation through the National Association of Securities
Dealers Automated Quotation System. If an active market for the Notes fails to
develop or be sustained, the trading price of such Notes could be adversely
affected.
7
<PAGE> 11
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company
at March 25, 1994:
<TABLE>
<CAPTION>
At March 25, 1994
----------------------------------------------------
Actual As Adjusted(1)
----------------------------------------------------
Amount % Amount %
----------- ------------- --------- ------------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Long-Term Debt:
Senior Notes due 2004 . . . $ -- 0.0% $ 50.0 23.7%
Subordinated Debt . . . . . 10.0 6.2 10.0 4.7
------ ----- ------ -----
Total Long-Term Debt. . . 10.0 6.2 60.0 28.4
Total Stockholders' Equity. . 151.2 93.8 151.2 71.6
------ ----- ------ -----
Total Capitalization. . . $161.2 100.0% $211.2 100.0%
====== ===== ====== =====
</TABLE>
------------------
(1) Adjusted to give effect to the issuance of the Notes.
8
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected historical financial information of the Company and
consolidated subsidiaries should be read in conjunction with the Company's
Consolidated Financial Statements for the three years ended December 31, 1993,
which are included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, which report is incorporated by reference herein,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein and in such report.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------
1993 1992 1991 1990 1989
---------------------------------------------------------------------------------
EARNINGS STATEMENT DATA (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Revenues: $ % $ % $ % $ % $ %
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commissions . . . . . . . $ 138.1 43.4% $106.8 45.4% $ 84.3 43.0% $ 82.1 48.9% $ 87.1 66.7%
Principal transactions. . 83.4 26.2 86.4 36.7 70.0 35.7 43.4 25.8 20.3 15.5
Corporate finance . . . . 72.4 22.8 23.9 10.1 16.8 8.6 8.9 5.3 1.9 1.5
Interest . . . . . . . . 21.7 6.8 16.8 7.1 23.9 12.2 33.0 19.6 20.9 16.0
Other . . . . . . . . . . 2.5 0.8 1.6 0.7 1.0 0.5 0.7 0.4 0.4 0.3
-------- ----- ------ ----- ------ ----- ------ ----- ------ -----
Total Revenues 318.1 100.0% 235.5 100.0% 196.0 100.0% 168.1 100.0% 130.6 100.0%
-------- ----- ------ ----- ------ ----- ------ ----- ------ -----
Expenses:
Compensation and benefits 167.5 52.6% 118.3 50.2% 92.3 47.1% 75.4 44.9% 59.8 45.7%
Floor brokerage and
clearing fees . . . . . 15.9 5.0 13.8 5.9 11.6 5.9 12.2 7.2 12.9 9.9
Telecommunications and
data processing
services. . . . . . . . 19.0 6.0 17.1 7.3 16.0 8.2 13.8 8.2 12.1 9.3
Interest . . . . . . . . 17.5 5.5 13.3 5.6 15.9 8.1 23.8 14.2 12.7 9.7
Occupancy and equipment
rental . . . . . . . . 12.8 4.0 12.1 5.1 12.8 6.5 7.8 4.6 6.6 5.1
Other . . . . . . . . . . 38.1 12.0 27.3 11.6 29.5 15.1 22.9 13.6 19.6 15.0
-------- ----- ------ ----- ------ ----- ----- ----- ------ -----
Total expenses . . . 270.8 85.1 201.9 85.7 178.1 90.9 155.9 92.7 123.7 94.7
-------- ----- ------ ----- ------ ----- ----- ----- ------ -----
Earnings before income
taxes and cumulative
effect of change in
accounting principle 47.3 14.9 33.6 14.3 17.9 9.1 12.2 7.3 6.9 5.3
Income taxes . . . . . . 19.8 6.2 14.9 6.3 8.0 4.1 5.5 3.3 3.2 2.5
-------- ----- ------ ----- ------ ----- ----- ----- ------ -----
Earnings before
cumulative effect of
change in accounting
principle . . . . . . 27.5 8.7 18.7 8.0 9.9 5.0 6.7 4.0 3.7 2.8
Cumulative effect on prior
years of change on
accounting principle . . 1.4 .4 -- -- -- -- -- -- -- --
Net earnings . . . . $ 28.9 9.1% $ 18.7 8.0% $ 9.9 5.0% $ 6.7 4.0% $ 3.7 2.8%
======== ===== ====== ===== ====== ===== ===== ===== ====== ====
Earnings per share of
common stock:
Primary earnings per
share -
Earnings before
cumulative effect
of change in
accounting
principle . . . . . . $ 5.37 $ 3.82 $ 1.74 $ 1.11 $ 0.58
Cumulative effect
on prior years of
change in accounting
principle . . . . . . .26 -- -- -- --
-------- ------ ------ ------ ------
Net Earnings . . $ 5.63 $ 3.82 $ 1.74 $ 1.11 $ 0.58
======== ====== ====== ====== ======
Fully diluted:
Earnings before
cumulative
effect of change in
accounting
principle . . . . . . $ 4.66 $ 3.08 $ 1.57 $ 1.10 $ 0.58
Cumulative effect
on prior years of
change in accounting
principle . . . . . . .22 -- -- -- --
-------- ------ ------ ------ ------
Net Earnings . . $ 4.88 $ 3.08 $ 1.57 $ 1.10 $ 0.58
======== ====== ====== ====== ======
SELECTED BALANCE SHEET
DATA
Total assets . . . . . . 1,388.4 531.0 $529.0 $602.2 $343.4
Subordinated debt . . . . 10.0 41.0 40.4 40.3 40.1
Total stockholders' equity 144.6 96.6 78.1 86.4 80.9
Book value per common
share . . . . . . . . . $ 25.38 $20.84 $17.05 $ 14.53 $ 13.27
INTEREST COVERAGE
Ratio of Earnings
to Fixed Charges(1) . . 3.2 2.9 1.9 1.5 1.5
</TABLE>
- ------------------------
(1) Earnings used in computing the Ratio of Earnings to Fixed
Charges consist of earnings before income taxes plus fixed
charges. Fixed Charges consist of interest expense (including
amortization of deferred debt discount and financing costs) and
the portion of rental expense that is representative of the
interest factor.
9
<PAGE> 13
RECENT FINANCIAL RESULTS
The following selected financial information of the Company and consolidated
subsidiaries for the first quarter ended March 25, 1994, compared to the first
quarter ended March 26, 1993, should be read in conjunction with the Company's
Unaudited Consolidated Financial Statements, which are included in the
Company's Quarterly Report on Form 10-Q for the quarterly period ended March
25, 1994, which report is incorporated by reference herein, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included herein and in such report.
<TABLE>
<CAPTION>
EARNINGS STATEMENT DATA FOR THE
THREE MONTHS ENDED
-----------------------------
MARCH 25, MARCH 26,
1994 1993
---------- ---------
(Dollars in Millions,
Except Per Share Amounts)
<S> <C> <C>
REVENUES:
Commission . . . . . . . . . . . . . . . . . . . . . . . . . $ 39.7 $ 31.2
Principal transactions . . . . . . . . . . . . . . . . . . . 17.7 25.6
Corporate finance . . . . . . . . . . . . . . . . . . . . . 8.9 7.7
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 3.5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 .4
------ -------
Total Revenues . . . . . . . . . . . . . . . . . . . 75.7 68.4
Interest expense . . . . . . . . . . . . . . . . . . . . . . 6.5 2.9
------ -------
Revenues, net of interest expense . . . . . . . . . . . . . 69.2 65.5
------ -------
Non-interest expenses:
Compensation and benefits . . . . . . . . . . . . . . . . . 36.6 36.6
Floor brokerage and clearing fees . . . . . . . . . . . . . 4.4 3.6
Telecommunications and data processing services . . . . . . 4.5 4.1
Occupancy and equipment rental . . . . . . . . . . . . . . . 3.4 3.1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 6.8
------ -------
Total non-interest expenses . . . . . . . . . . . . 59.0 54.2
------ -------
Earnings before income taxes and cumulative effect of
change in accounting principle . . . . . . . . . . . 10.2 11.3
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.1
------ -------
Earnings before cumulative effect of change
in accounting principle . . . . . . . . . . . . . . 5.8 7.2
Cumulative effect on prior years of change in accounting
principle . . . . . . . . . . . . . . . . . . . . . -- 1.4
------- -------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . $ 5.8 $ 8.6
======= =======
Earnings per share of common stock:
Primary earnings per share -
Earnings before cumulative effect of change
in accounting principle . . . . . . . . . . $ .95 $ 1.46
Cumulative effect on prior years of change
in accounting principle . . . . . . . . . . -- .27
------- -------
Net earnings . . . . . . . . . . . . . . . $ .95 $ 1.73
======= =======
Fully diluted earnings per share -
Earnings before cumulative effect of change
in accounting principle . . . . . . . . . . $ .95 $ 1.20
Cumulative effect on prior years of change
in accounting principle . . . . . . . . . . -- .21
------- -------
Net earnings . . . . . . . . . . . . . . . $ .95 $ 1.41
======= =======
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
EARNINGS STATEMENT DATA FOR THE
THREE MONTHS ENDED
---------------------------
MARCH 25, MARCH 26,
1994 1993
---------- ---------
(Dollars in Millions,
Except Per Share Amounts)
<S> <C> <C>
Weighted average shares of common stock:
Primary . . . . . . . . . . . . . . . . 6,051,000 4,971,000
Fully diluted . . . . . . . . . . . . . 6,075,000 6,367,000
SELECTED BALANCE SHEET DATA
Total Assets . . . . . . . . . . . . . . $ 1,440.6 $ 663.1
Subordinated Debt . . . . . . . . . . . 10.0 41.0
Total Stockholders' Equity . . . . . . . 151.2 104.6
Book Value per Common Share . . . . . . $ 26.33 $ 22.63
INTEREST COVERAGE
Ratio of Earnings to Fixed Charges 2.3 3.9
</TABLE>
11
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's principal activities, securities brokerage and the trading of and
market-making in securities, are highly competitive and extremely volatile.
Total assets increased $857.4 million from $531.0 million at December 31, 1992,
to $1,388.4 million at December 31, 1993. 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 customers and payable to brokers and dealers (related to stock
loan).
Total liabilities increased $840.4 million from $393.5 million at December 31,
1992, to $1,233.9 million at December 31, 1993. The increase is mostly due to
the before-mentioned increases in payable to customers and payable to brokers
and dealers. In addition, accrued expenses and other liabilities increased
$45.9 million to $92.8 million in 1993 due to bonuses, accruals related to
deferred compensation and accrued federal and state taxes.
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 summary of
revenues by source for the past three years.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1993 1992 1991
---------------------------------------------------------------------
% OF TOTAL % OF TOTAL % OF TOTAL
AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES
---------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commissions and principal
transactions:
Equity Division:
Listed $ 71,888 22% $ 63,776 27% $ 58,571 30%
Over-The-Counter 41,477 13 34,125 15 23,579 12
International 8,613 3 7,934 3 8,056 4
Other 2,313 1 2,320 1 2,098 1
-------- --- -------- --- -------- ---
Sub-total 124,291 39 108,155 46 92,304 47
-------- --- -------- --- -------- ---
Investment Technology 47,450 15 28,763 12 14,255 7
Convertible 6,995 2 6,695 3 5,242 3
International Convertible 15,154 4 14,575 6 7,367 4
Taxable Fixed Income 24,928 8 33,445 14 32,107 16
Arbitrage 3,182 1 1,502 1 4,209 2
Other Trading (506) 0 (15) 0 (1,173) 0
-------- --- -------- --- -------- ---
Total 221,494 69 193,120 82 154,311 79
-------- --- -------- --- -------- ---
Corporate Finance 72,442 23 23,888 10 16,745 9
Interest 21,693 7 16,801 7 23,939 12
Other 2,512 1 1,632 1 955 0
-------- --- -------- --- -------- ---
Total revenues $318,141 100% $235,441 100% $195,950 100%
======== === ======== === ======== ===
</TABLE>
FIRST QUARTER 1994 VERSUS FIRST QUARTER 1993
Revenues, net of interest expense, increased $3.7 million, or 6%, in the first
quarter of 1994 compared to the same prior year period. The increase was due
primarily to an $8.4 million, or 27%, increase in commissions, a $1.2 million,
or 16%, increase in corporate finance, a $1.2 million increase in net interest
income (interest revenues less interest expense) and a $789,000 increase in
other revenues. These increases were partially offset by a $7.9 million, or
31%, decrease in principal transactions. Commission revenues increased mostly
due to higher commission revenues in the Equity Division and the Investment
Technology Group. Corporate finance
12
<PAGE> 16
revenues increased due to an increase in underwriting fees. Net interest
income increased as the $4.8 million increase in interest revenues exceeded the
$3.6 million increase in interest expense. Interest revenues increased due to
interest on higher stock borrow and customer margin balances. The related
increases in interest on stock loan and customer short balances only partially
offset the higher interest revenues. Partially offsetting the increase in
interest expense was the elimination of interest on the Company's convertible
debt securities, which were converted into shares of the Company's Common Stock
in late 1993. Other revenues increased due mostly to foreign currency
transaction gains. Revenues from principal transactions declined primarily due
to decreased Taxable Fixed Income Division trading revenues.
Total non-interest expenses increased $4.8 million, or 9%, in the first quarter
of 1994 compared to the same prior year period. Other expenses increased $3.3
million, or 48%, primarily due to higher trade volume and business expansion
and includes increased expenses in soft dollar, marketing, research, software
royalties, reserves and corporate finance finder fees. Floor brokerage and
clearing fees increased $773,000, or 21%, due to increased volumes of business
executed on the various exchanges. Telecommunications and data processing
services increased $413,000, or 10%, due to higher trade volume and business
expansion. Occupancy and equipment rental increased $305,000, or 10%, due to
business expansion. Compensation and benefits remained relatively unchanged
from last year. An increase in commissions paid and salaries was offset by a
decrease in profitability based compensation.
As a result of the above, earnings before income taxes and cumulative effect of
change in accounting principle were down $1.0 million, or 9%.
Earnings before cumulative effect of change in accounting principle were down
20% to $5.8 million, as compared to $7.3 million in the 1993 period. The
effective tax rate was approximately 43% in the first quarter of 1994 compared
to approximately 36% in the 1993 period. The 1993 quarter 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
Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes" ("SFAS 109") was a $1.4 million benefit in 1993. This increased
1993's net earnings to $8.6 million.
Primary earnings per share were $.95 in the first quarter of 1994 on 6,051,000
shares compared to $1.73 in the 1993 period on 4,971,000 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 $.95 in the first quarter of 1994 on 6,075,000 shares
compared to $1.41 in the 1993 period on 6,367,000 shares. The cumulative
effect of the change in accounting principle increased 1993's earnings per
share for the first quarter by $.27 on primary shares and $.21 on fully diluted
shares.
1993 COMPARED TO 1992
Total revenues for 1993 increased $82.7 million, or 35%, as compared to 1992.
The increase was primarily due to a $48.6 million, or 203%, increase in
corporate finance activity and a $18.7 million, or 65%, increase in ITG
activity. Commission revenues increased $31.4 million, or 29%, interest
revenues increased $4.9 million, or 29%, and other revenues increased $880,000,
or 54%, while principal transactions decreased $3.0 million, or 3%. The
increase in corporate finance was due to increased activity in underwriting,
private placement and financial advisory fees, including approximately $16
million in fees from one underwriting transaction. The increase in commissions
was mostly attributable to increases in transactions conducted through
POSIT((R)) and QuantEX((R)), two of the Company's investment technology
products. Interest revenues increased primarily due to an increase in stock
borrow balances. The increase in other revenues was mostly due to income
related to the termination of an office lease and foreign currency transaction
gains. Principal trading decreased mostly due to a reduction in trading gains
of the Taxable Fixed Income Division partially offset by the improved
performance of the Company's Over-The-Counter Division.
Total expenses for 1993 increased $69.0 million, or 34%, as compared to 1992.
The increase in total expenses was due to an increase of $49.3 million, or 42%,
in compensation and benefits, an increase of $10.8 million, or 40%, in other
expense, an increase of $4.2 million, or 32%, in interest expense, an increase
of $2.1 million, or 15%, in floor brokerage and clearing fees, and an increase
of $2.0 million, or 12%, in telecommunications and data processing services.
Compensation and benefits increased mostly due to an increase in
profitability-based compensation (including a $4 million increase in expense
related to ITG's performance share plan). Other expense increased mostly due
to increases in four items; travel and entertainment expenses, soft dollar
expenses, research and consulting and royalties related to POSIT((R)) revenues.
These four items not only represent the majority of the increase from 1992 to
1993, but these items also represent the majority of other expense. Interest
expense increased due to increases in
13
<PAGE> 17
customer credit balances and stock loan balances related to the increase in
stock borrow balances. Floor brokerage and clearing fees increased due to
increased volumes of business executed on the various exchanges.
Telecommunications and data processing services increased due to an increase in
the number of offices. Occupancy and equipment rental expenses remained
relatively unchanged as compared to the 1992 period.
As a result of the above, earnings before income taxes and cumulative effect of
change in accounting principle increased from $33.7 million in 1992 to $47.3
million in 1993. The $13.7 million increase was chiefly due to the increase in
revenues from corporate finance activity and investment technology commissions.
Earnings before cumulative effect of change in accounting principle were up 47%
to $27.6 million, as compared to $18.7 million in the 1992 period. The
effective tax rate was approximately 42% for 1993 compared to 44% for the 1992
period. An adjustment of prior years' estimated tax liabilities, to actual,
resulted in the lower tax rate for the 1993 period.
The cumulative effect of the change in accounting for income taxes required by
SFAS 109, was a $1.4 million benefit. This increased net earnings to $28.9
million, which represents an increase of $10.2 million, or 55%, over the 1993
period.
Primary earnings per share were $5.63 on 5.1 million shares in 1993 compared to
$3.82 on 4.9 million shares in 1992. Fully diluted earnings per share were
$4.88 on 6.2 million shares in 1993 compared to $3.08 on 6.7 million shares in
1992. The cumulative effect of the change in accounting principle increased
earnings per share in 1993 by $.26 on primary shares and $.22 on fully diluted
shares.
1992 Compared to 1991
Total revenues for 1992 increased $39.5 million, or 20%, as compared to 1991.
The increase was primarily due to a $22.4 million, or 27%, increase in
commission revenues. Principal transactions increased $16.4 million, or 23%,
and corporate finance increased $7.1 million, or 43%, while interest revenues
decreased $7.1 million, or 30%. The increase in commissions was across the
board with notable increases in POSIT((R)) and QuantEX((R)), the Company's
computerized investment technology products. The increase in principal trading
was mostly due to the Company's Over-The-Counter and International Convertible
Departments. The increase in corporate finance resulted primarily from
participation in a greater number of transactions. The decrease in interest
revenues was due primarily to a decrease in interest rates, although customer
margin debit balances also decreased.
Total expenses for 1992 increased $23.7 million, or 13%, as compared to 1991.
The increase in total expenses was due to an increase of $26.0 million, or 28%,
in compensation and benefits, an increase of $2.2 million, or 19%, in floor
brokerage and clearing fees, and an increase of $1.0 million, or 6%, in
telecommunications and data processing services. These were partially offset
by a decrease of $2.7 million, or 17%, in interest expense, a decrease of $2.2
million, or 7%, in other expense, and a decrease of $641,000, or 5%, in
occupancy and equipment rental. Compensation and benefits increased mostly due
to profitability-based compensation. In connection with the acquisition of
Integrated Analytics Corporation ("IAC") in 1991, the Company hired certain
employees of IAC. Several of these employees participated in a performance
share plan consisting of a phantom equity interest in ITG as determined by a
formula based primarily on ITG earnings and vesting requirements. The Company
expensed approximately $3.6 million under this plan in 1992. Additionally, the
increase in compensation and benefits related to increased commission revenues
and increased headcount. Floor brokerage and clearing fees increased primarily
because of increased volumes of business executed on the various exchanges.
Telecommunications and data processing services increased due to increased
trade volume and ongoing system development. Interest expense decreased due to
lower interest rates. Other expense decreased mostly due to a reduction in bad
debt and legal expenses. Occupancy and equipment rental decreased primarily
due to a reduction in moving related expenses.
As a result of the above, earnings before income taxes increased from $17.8
million in 1991 to $33.7 million in 1992. The $15.8 million increase in
earnings was chiefly due to the increase in revenues from commissions and
principal transactions.
Net earnings were $18.7 million, an increase of $8.9 million, or 90%, compared
to 1991. The effective tax rate was 44.4% in 1992 and 44.7% in 1991.
Primary earnings per share were $3.82 on 4.9 million shares in 1992 compared to
$1.74 on 5.7 million shares in 1991. Fully diluted earnings per share were
$3.08 on 6.7 million shares in 1992 compared to $1.57 on 7.5 million shares in
1991.
14
<PAGE> 18
LIQUITY AND CAPITAL RESOURCES
A substantial portion of the Company's assets are liquid, consisting of cash or
assets readily convertible into cash. The majority of securities positions
(both long and short) in the Company's trading accounts are readily marketable
and actively traded. Receivables from brokers and dealers are primarily
current open transactions or securities borrowed transactions which can be
settled or closed out within a few days. Receivables from customers, officers
and directors include margin balances and amounts due on uncompleted
transactions. Most of the Company's receivables are secured by marketable
securities.
The Company's assets are financed by equity capital, subordinated debt,
customer free credit balances, bank loans and other payables. Bank loans
represent secured and unsecured short-term borrowings (usually overnight) which
are generally payable on demand. Secured bank loans are collateralized by a
combination of customer, noncustomer and firm securities. The Company has
always been able to obtain necessary short-term borrowings in the past and
believes that it will continue to be able to do so in the future.
Additionally, the Company has letters of credit outstanding which are used in
the normal course of business to satisfy various collateral requirements in
lieu of depositing cash or securities.
The Company's broker-dealer subsidiaries are subject to the net capital
requirements of the Commission, the National Association of Securities Dealers,
Inc. ("NASD"), the Boston Stock Exchange ("BSE"), and the Pacific Stock
Exchange ("PSE"), which are designed to measure the general financial soundness
and liquidity of broker-dealers. The Company's broker-dealer subsidiaries
consistently have operated in excess of the minimum requirements. At December
31, 1993, JEFCO had regulatory net capital, after adjustments as required by
the Commission's Uniform Net Capital Rule, of $76.0 million, which exceeded the
minimum net capital requirements by $66.8 million. At December 31, 1993, ITG
had regulatory net capital, after adjustments as required by the Commission's
Uniform Net Capital Rule, of $1.9 million, which exceeded the minimum net
capital requirements by $1.7 million. At December 31, 1993, W & D had
regulatory net capital, after adjustments as required by the Commission's
Uniform Net Capital Rule, of $821,000, which exceeded the minimum net capital
requirements by $671,000. JEFCO, ITG and W & D use the alternative method of
calculating their regulatory net capital.
In 1992, the Company repurchased 479,339 shares of its Common Stock at prices
ranging from $14.375 to $19. Also in 1992, the Company exchanged $10.7 million
of new subordinated 8 7/8% non-convertible notes, due 1997, for $10.7 million
face amount of its 7% Convertible Subordinated Notes due 2010, which were
convertible into 466,521 shares of the Company's Common Stock. The new
subordinated 8 7/8% non-convertible notes provide for mandatory redemption in
1995 and 1996 of one-third of the principal face amount, respectively.
Although the exchange did not reduce the number of primary shares outstanding,
it reduced the Company's fully diluted shares outstanding by approximately 7%.
In October 1993, the Company called for redemption all of its 8 1/2%
Convertible Subordinated Debentures and all of its 7% Convertible Subordinated
Notes. Holders 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 elected to convert their securities into an
aggregate of 1,366,092 shares of the Company's Common Stock. Also in 1993, the
Company repurchased 351,837 shares of its Common Stock at prices ranging from
$23.375 to $36.50. During the first quarter of 1994, the Company repurchased
35,925 shares of its common stock versus repurchases of 15,000 shares for the
comparable 1993 period.
The repurchased shares of Common Stock are presently being held as treasury
shares.
EFFECTS OF INFLATION
Because the Company's assets are, to a large extent, liquid in nature, they are
not significantly affected by inflation. Increases in the Company's expenses,
such as employee compensation, rent and communications, due to inflation may
not be readily recoverable in the prices of services offered by the Company.
In addition, to the extent that inflation results in rising interest rates and
has other adverse effects on securities markets and on the value of securities
held in the inventory, it may adversely affect the Company's financial position
and results of operations.
EFFECTS OF CHANGES IN FOREIGN CURRENCY RATES
The Company maintains a foreign securities business in its foreign offices
(London and Hong Kong) as well as in some of its domestic offices. Most of
these activities are hedged by related foreign currency liabilities or by
forward exchange contracts. However, the Company is still subject to some
foreign currency risk. A change in the foreign currency rates could create
either a foreign currency transaction gain/loss (recorded in the Company's
Consolidated Statement of Earnings) or a foreign currency translation
adjustment to the Stockholders' Equity section of the Company's Consolidated
Statement of Financial Condition.
15
<PAGE> 19
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on April 28, 1994 to the Purchasers,
pursuant to the Purchase Agreement. The Purchasers are accredited investors,
as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act. As a condition to the Purchase Agreement, the Company and the
Purchasers entered into the Registration Rights Agreement on April 28, 1994.
Pursuant to the Registration Rights Agreement, the Company agreed to (i) file
with the Commission a registration statement under the Securities Act with
respect to the New Notes within 90 days after the date of the original issuance
of the Old Notes (the "Issue Date"), (ii) use its best efforts to cause the
Registration Statement covering the Exchange Offer to become effective under
the Securities Act within 180 days after the Issue Date, and (iii) use its best
efforts to consummate the Exchange Offer within 45 days after the Registration
Statement covering the Exchange Offer is declared effective. The Registration
Statement of which this Prospectus is a part is intended to satisfy such
obligations of the Company under the Registration Rights Agreement. A copy of
the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange $1,000
in principal amount of New Notes for each $1,000 in principal amount of the
outstanding Old Notes. New Notes will be issued only in integral multiples of
$1,000 to each tendering Eligible Holder whose Old Notes are accepted in the
Exchange Offer. The Company will accept any Old Notes validly tendered and not
withdrawn prior to 5:00 p.m. New York City time, on the Expiration Date. Old
Notes that are not accepted for exchange will be returned as promptly as
practicable after the Expiration Date. Eligible Holders may tender all or a
portion of the Old Notes pursuant to the Exchange Offer.
The form and terms of the New Notes under the Indenture will be identical in
all material respects to the form and terms of the Old Notes. The New Notes
evidence the same debt as the Old Notes (which they replace) and will be issued
under, and be entitled to the benefits of, the Indenture governing the Old
Notes. The New Notes will bear interest from their date of issuance at the
same rate and upon the same terms as the Old Notes. See "Description of the
Notes." Accrued and unpaid interest on the Old Notes accepted for exchange for
the period to but not including the date of issuance of the New Notes (the
"Exchange Date") will be paid to the registered Holders of New Notes on the
first interest payment date of the New Notes. Holders whose Old Notes are
accepted for exchange will be deemed to have waived the right to receive any
payment in respect of interest on the Old Notes accrued on and after the
Exchange Date.
As of the Date of this Prospectus, $50,000,000 aggregate principal amount of
the Old Notes are outstanding and there are ______________________ registered
Holders thereof. Solely for reasons of administration (and for no other
purpose) the Company has fixed the close of business of ___________________,
1994, as the record date (the "Record Date") for the Exchange Offer for
purposes of determining the person to whom this Prospectus and the Letter of
Transmittal will be mailed initially. Only an Eligible Holder may participate
in the Exchange Offer. There will be no fixed record date for determining
registered Holders of Old Notes entitled to participate in the Exchange Offer.
Eligible Holders of Old Notes do not have any appraisal or dissenters' rights
under the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes when,
as, and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering Holders of Old
Notes for the purposes of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
any such unaccepted Old Notes will be returned, without expense, to the
tendering Holder thereof as promptly as practicable after the Expiration Date.
Tendering Eligible Holders will not be required to pay broker commissions or
fees or, subject to the instructions in the Letter of Transmittal, transfer
taxes with respect to the exchange of Old Notes for New Notes pursuant to the
Exchange Offer. The Company will pay all charges and expenses, other than
certain taxes which may be levied in the event of any transfer of ownership, in
connection with the Exchange Offer. See "Fees and Expenses" below.
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<PAGE> 20
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
__________, 1994, or, at the Company's option, such earlier date upon which
100% of the Old Notes shall have been validly tendered pursuant to the Exchange
Offer and not withdrawn, unless the Company, in its sole discretion, extends
the Exchange Offer, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 10:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay accepting
any Old Notes, (ii) to extend the Exchange Offer, (iii) to terminate the
Exchange Offer if it is determined that the Exchange Offer does not meet the
conditions set forth in "Certain Conditions of the Exchange Offer" below, in
each case by giving oral or written notice of such delay, extension, or
termination to the Exchange Agent, or (iv) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination, or
amendment will be followed promptly as practicable by a public announcement
thereof. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose
such amendment by means of a prospectus supplement that will be distributed to
the registered Holders of Old Notes, and the Company will extend the Exchange
Offer for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
Holders, if the Exchange Offer would otherwise expire during such five to ten
business day period.
Without limiting the manner in which the Company may choose to make a public
announcement of the delay, extension, termination, or amendment of the Exchange
Offer, the Company shall not have an obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
INTEREST ON THE NOTES
The New Notes will bear interest from their date of issuance. Holders of Old
Notes that are accepted for exchange will be entitled to receive, in cash,
accrued and unpaid interest thereon to, but not including, the date of issuance
of the New Notes and will be deemed to have waived the right to receive any
payment in respect of interest on the Old Notes accrued from and after the date
of issuance of the New Notes. Such accrued and unpaid interest on the Old
Notes will be paid to registered Holders of the New Notes with the first
interest payment on the New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue on the day prior to the issuance of the New
Notes.
The New Notes bear interest (as do the Old Notes) at a rate equal to 8 7/8% per
annum. Interest on the New Notes is payable on each May 1 and November 1,
commencing on November 1, 1994.
PROCEDURES FOR TENDERING OLD NOTES
The tender by an Eligible Holder as set forth below and the acceptance thereof
by the Company will constitute a binding agreement between the tendering
Eligible Holder and the Company upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal.
Except as set forth below, an Eligible Holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit a properly completed
and duly executed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to the Exchange Agent at the address set forth
in the Letter of Transmittal on or prior to 5:00 p.m., New York City time, on
the Expiration Date. In addition, prior to 5:00 p.m., New York City time, on
the Expiration Date, either (i) certificates for such Old Notes must be
received by the Exchange Agent, together with the Letter of Transmittal; (ii) a
Book-Entry Confirmation, if such procedure is available, into the Exchange
Agent's account at the Depository pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent; or (iii) the
Holder must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL, AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE ELIGIBLE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED BE USED. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereof are tendered (i) by a registered Holder of the Old Notes who
has completed either the
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<PAGE> 21
box entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) by an Eligible
Institution (as defined below). In the event that a signature on a Letter of
Transmittal or a notice of withdrawal, as the case may be, is required to be
guaranteed, such guarantee must be by a firm which is a member of a registered
national securities exchange or a member of the NASD, a commercial bank or
trust company having an office or correspondent in the United States or is
otherwise an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (collectively, "Eligible Institutions"). If Old
Notes are registered in the name of a person other than a signer of the Letter
of Transmittal, the Old Notes surrendered for exchange must either (i) be
endorsed by the registered Holder, with the signature thereon guaranteed by an
Eligible Institution or (ii) be accompanied by a bond power, in satisfactory
form as determined by the Company in its sole discretion, duly executed by the
registered Holder, with the signature thereon guaranteed by an Eligible
Institution along with any other documents required upon transfer. The term
"registered Holder" as used herein with respect to the Old Notes means any
person in whose name the Old Notes are registered on the books of the registrar
for the Old Notes.
Tenders may be made only in principal amounts of $1,000 and integral multiples
thereof. Subject to the foregoing, Eligible Holders may tender less than the
aggregate principal amount represented by the Old Notes deposited with the
Exchange Agent provided they appropriately indicate this fact on the Letter of
Transmittal accompanying the tendered Old Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of Old Notes tendered for exchange will be
determined by the Company in its sole, reasonable discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders of any particular Old Notes
not properly tendered or to reject any particular Old Notes which acceptance
might, in the judgment of the Company or its counsel, be unlawful. The Company
also reserves the absolute right to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Old Notes either before
or after the Expiration Date (including the right to waive the ineligibility of
any Holder who seeks to tender Old Notes in the Exchange Offer). The
interpretation of the terms and conditions of the Exchange Offer (including the
Letter of Transmittal and the instructions thereto) by the Company shall be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Notes for exchange must be cured within such
reasonable period of time as the Company shall determine. The Company will use
reasonable efforts to give notification of defects or irregularities with
respect to tenders of Old Notes for exchange but shall not incur any liability
for failure to give such notification. Tenders of the Old Notes will not be
deemed to have been made until such irregularities have been cured or waived.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of such person's authority to so
act must be submitted.
Any Beneficial Owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee and who wishes to
tender Old Notes in the Exchange Offer should contact such registered Holder
promptly and instruct such registered Holder to tender on such Beneficial
Owner's behalf. If such Beneficial Owner wishes to tender directly, such
Beneficial Owner must, prior to completing and executing the Letter of
Transmittal and tendering Old Notes, make appropriate arrangements to register
ownership of the Old Notes in such Beneficial Owner's name. Beneficial Owners
should be aware that the transfer of registered ownership may take considerable
time.
Each Eligible Holder accepting the Exchange Offer is required to make the
representations to the Company described under "Resales of the New Notes"
below.
BOOK ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect to
the Old Notes at the Depository for purposes of the Exchange Offer within two
business days after the date of this Prospectus, and any financial institution
that is a participant in the Depository's system may make book-entry delivery
of Old Notes by causing the Depository to transfer such Old Notes into the
Exchange Agent's account at the Depository in accordance with the Depository's
procedures for transfer. However, although delivery of Old Notes may be
effected through book-entry transfer at the Depository, the Letter of
Transmittal or facsimile thereof, with any required signature guarantees and
any other required documents, must, in any case, be transmitted to and received
by the Exchange Agent at one of the addresses set forth below under "Exchange
Agent" on or prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with.
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<PAGE> 22
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of Old Notes desires to tender such Old Notes and such
Old Notes are not immediately available, or if time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent on
or prior to the Expiration Date, or if the procedure for book-entry transfer
cannot be completed on or prior to the Expiration Date, a tender may be
effected if (i) the tender is made by or through an Eligible Institution, (ii)
prior to the Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by facsimile transmission, mail or hand delivery),
setting forth the name and address of the Holder of Old Notes, the certificate
number or numbers of any Old Notes which will not be tendered by book-entry
transfer, and the amount of Old Notes tendered, stating that the tender is
being made thereby and guaranteeing that within five New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within five New York
Stock Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Except as set forth under "Certain Conditions of the Exchange Offer" below, the
Company will accept, promptly after the Expiration Date, all Old Notes properly
tendered and will issue the New Notes promptly after acceptance of the Old
Notes. For purposes of the Exchange Offer, the Company shall be deemed to have
accepted properly tendered Old Notes for exchange when, as, and if the Company
has given oral or written notice thereof to the Exchange Agent.
In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Depository, a properly completed and duly executed Letter of Transmittal, and
all other required documents; provided, however, that the Company has given
oral or written notice thereof to the Exchange Agent, and provided further that
the Company reserves the absolute right to waive any defects or irregularities
in the tender or conditions of the Exchange Offer. If any tendered Old Notes
are not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Old Notes are submitted for a greater principal amount
than the Eligible Holder desires to exchange, such unaccepted or non-exchanged
Old Notes or substitute Old Notes evidencing the unaccepted portion, as
appropriate, will be returned without expense to the tendering Eligible Holder
thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of the Old Notes may be withdrawn at any time prior to 5:00 P.M., New
York City time, on the Expiration Date. For a withdrawal to be effective, a
written notice of withdrawal must be received by the Exchange Agent at its
address set forth under "Exchange Agent" below. Any such notice of withdrawal
must (i) specify the name of the person having tendered the Old Notes to be
withdrawn, (ii) identify the Old Notes to be withdrawn (including the principal
amount of such Old Notes), and (iii) if certificates for Old Notes were
tendered, specify the name in which such Old Notes were registered, if
different from that of the withdrawing Holder. If certificates for Old Notes
have been delivered or otherwise identified to the Exchange Agent then, prior
to the release of such certificates, the withdrawing Holder must also submit
the serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such Holder is an Eligible Institution. If Old Notes have been tendered
pursuant to the procedure for book-entry transfer, any notice of withdrawal
must specify the name and number of the account at the Depository to be
credited with the withdrawn Old Notes, and otherwise comply with the procedures
of the Depository. All questions as to the validity, form, and eligibility
(including time of receipt) of such notices will be determined by the Company
in its sole, reasonable discretion, which determination shall be final and
binding on all parties. The Old Notes so withdrawn, if any, will be deemed not
to have been validly tendered for exchange for purposes of the Exchange Offer.
Any Old Notes that have been tendered for exchange but which are withdrawn will
be returned to the Eligible Holder thereof without cost to such Eligible Holder
as soon as practicable after withdrawal. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "Procedures for
Tendering Old Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue the New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if, prior to
the exchange of the New Notes for the Old Notes, the Company determines, in its
sole discretion, that (i) there has been a commencement of any action,
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<PAGE> 23
legal or governmental, with respect to the Exchange Offer or which the Company
reasonably determines would make it inadvisable to proceed with the Exchange
Offer, (ii) there has been a banking moratorium or similar event or
international calamity involving the United States, (iii) there has been a
change in the business or prospects of the Company that may have a material
adverse effect on the Company, or (iv) the Exchange Offer violates any
applicable law. If the Company makes any of the foregoing determinations, the
Company may (i) refuse to accept any Old Notes and return all tendered Old
Notes to the tendering Holders or (ii) extend the Exchange Offer, retain all
Old Notes tendered prior to the Expiration Date, and use reasonable efforts to
satisfy any such condition, subject, however, to the rights of Eligible Holders
to withdraw such Old Notes (see "Withdrawal Rights" above). In addition, the
Company will not accept for exchange any Old Notes tendered, and no New Notes
will be issued in exchange for any such Old Notes, if at such time any stop
order shall be threatened or in effect with respect to the Registration
Statement or the qualification of the Indenture under the Trust Indenture Act
of 1939, as amended, as in effect on the date of the Indenture (the "Trust
Indenture Act").
Holders of Old Notes may have certain rights and remedies against the Company
under the Registration Rights Agreement should the Company fail to consummate
the Exchange Offer, notwithstanding any nonfulfillment of the above conditions.
Such conditions are not intended to modify such rights and remedies in any
respect.
TERMINATION OF CERTAIN RIGHTS
Eligible Holders of the Old Notes to whom this Exchange Offer is made have
certain rights under the Registration Rights Agreement and Purchase Agreement
that will terminate upon the consummation of the Exchange Offer, which rights
include, without limitation, (a) the right to require the Company (i) to file
with the Commission the Exchange Offer Registration Statement under the
Securities Act within 90 days following the Issue Date; (ii) to use its best
efforts to cause such Registration Statement to become effective under the
Securities Act within 180 days after the Issue Date; (iii) to consummate the
Exchange Offer within 45 days after the Registration Statement covering the
Exchange Offer is declared effective; and (iv) if certain events described in
the Registration Rights Agreement occur (x) to file a Shelf Registration
Statement covering resales of the Old Notes, (y) to use its best efforts to
cause such Shelf Registration Statement to be declared effective under the
Securities Act and (z) to keep such Shelf Registration Statement effective for
the period described in the Registration Rights Agreement; and (b) the right to
receive liquidated damages from the Company under certain circumstances
described in the Registration Rights Agreement.
EXCHANGE AGENT
All tendered Old Notes, executed Letters of Transmittal, and other related
documents should be directed to the Exchange Agent at one of the addresses set
forth below. In addition, any questions and requests for assistance and
requests for additional copies of this Prospectus, the Letter of Transmittal,
and other related documents should be addressed to the Exchange Agent:
<TABLE>
<S> <C> <C>
If by overnight carrier or by hand: If by registered or certified mail: If by Facsimile:
The Bank of New York The Bank of New York (212) 571-3080
101 Barclay Street 101 Barclay Street - 7E
Corporate Trust Services Window New York, New York 10286 Confirm by telephone:
Ground Level Attn: Reorganization Section
New York, New York 10286 (212) 815-2742
Attention: Reorganization Section
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The principal
solicitation is being made by mail; however, additional solicitation may be
made by facsimile, telephone or in person by officers and regular employees of
the Company and its affiliates. The Company has not retained any
dealer-manager in connection with the Exchange Offer. The Company, however,
will reimburse brokers, dealers, commercial banks and trust companies for
reasonable and necessary costs and expenses incurred by them in forwarding this
Prospectus and the related Exchange Offer documents to the beneficial owners of
Old Notes held by them as
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<PAGE> 24
nominee or in a fiduciary capacity. The Company also will pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith. The cash
expenses to be incurred in connection with the Exchange Offer will be paid by
the Company and are estimated to be approximately $___________. Such expenses
include fees and expenses of the Exchange Agent, accounting and legal fees,
filing fees and printing costs.
The Company will pay all transfer taxes, if any, applicable to the exchange of
Old Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes, as
reflected in the Company's accounting records on the date of the Exchange.
Accordingly, no gain or loss for accounting purposes will be recognized. The
expenses of the Exchange Offer will be amortized over the term of the New
Notes.
RESALES OF THE NEW NOTES
With respect to resales of New Notes, based on an interpretation by the Staff
of the Commission set forth in no-action letters issued to third parties, the
Company believes that an Eligible Holder (other than (i) an affiliate of the
Company within the meaning of Rule 405 under the Securities Act or (ii) a
broker-dealer, except as provided below) who exchanges Old Notes for New Notes
in the ordinary course of its business and who is not participating, does not
intend to participate, and has no arrangement or understanding with any person
to participate, in the distribution of the New Notes, will be allowed to resell
the New Notes to the public without further registration under the Securities
Act and without delivering to the purchasers of the New Notes a prospectus that
satisfies the requirements of Section 10 thereof. However, if any Eligible
Holder acquires New Notes in the Exchange Offer for the purpose of distributing
or participating in a distribution of the New Notes, such Eligible Holder
cannot rely on the position of the Staff of the Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988) or similar no-action
letters or any similar interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless an exemption from
registration is otherwise available.
As contemplated by the above no-action letters and the Registration Rights
Agreement, each Holder of Old Notes accepting the Exchange Offer is required to
represent to the Company in the Letter of Transmittal that (i) any New Notes
are to be acquired in the ordinary course of business of the person receiving
such New Notes, whether or not such person is such Holder, (ii) neither the
Holder of such Old Notes nor any such other person receiving such New Notes is
participating, intends to participate, or has any arrangement or understanding
with any person to participate, in the distribution of the New Notes, and (iii)
except as otherwise disclosed, neither the Holder of such Old Notes nor any
such other person is an affiliate of the Company within the meaning of Rule 405
under the Securities Act. Further, each Holder of Old Notes accepting the
Exchange Offer must acknowledge that any person participating in the Exchange
Offer for the purpose of distributing the New Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale of the New Notes and cannot rely on the
no-action letters discussed above.
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange for Old Notes, where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, for a period of 90 days after ___________, 1994. The Company will
make this Prospectus available to any broker-dealer, at no charge, for use in
connection with any such resale for a period of 90 days after
____________________, 1994. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant
to the Exchange Offer will continue to be subject to the restrictions on
transfer of such Old Notes as set forth in the legend thereon. In general, the
Old Notes may not be offered or sold, unless registered under the Securities
Act and applicable state securities laws. The Company does not intend to
register the Old Notes under the Securities Act or any state securities laws.
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<PAGE> 25
BUSINESS
Jefferies Group, Inc. is a holding company which, through its four primary
subsidiaries, Jefferies & Company, Inc., Investment Technology Group, Inc.,
Jefferies International Limited and Jefferies Pacific Limited, is engaged in
securities brokerage and trading, corporate finance and other financial
services. The term "Company" refers, unless the context requires otherwise, to
the Company, its subsidiaries, predecessor entities, and W & D Securities, Inc.
The Company was originally incorporated in 1973 as a holding company for JEFCO
and was reincorporated in Delaware on August 10, 1983. The Company and its
various subsidiaries maintain offices in Los Angeles, New York, Short Hills,
Chicago, Dallas, Boston, Atlanta, New Orleans, Houston, San Francisco,
Stamford, London and Hong Kong.
As of December 31, 1993, the Company and its subsidiaries had 610 full-time
employees, including 339 representatives registered with the NASD. The
Company's executive offices are located at 11100 Santa Monica Boulevard, Los
Angeles, California 90025, and its telephone number is (310) 445-1199.
JEFFERIES & COMPANY, INC.
Jefferies & Company, Inc. ("JEFCO") was founded in 1962 and is engaged in
equity, convertible debt and taxable fixed income securities brokerage and
trading and corporate finance. JEFCO is one of the leading national firms
engaged in the distribution and trading of blocks of equity securities and
conducts such activities primarily in the "third market." The term "third
market" refers to transactions in listed equity securities effected away from
national securities exchanges. JEFCO's revenues are derived primarily from
commission revenues and market-making or trading as principal in equity,
taxable fixed income and convertible securities with or on behalf of
institutional investors, with the balance generated by corporate finance and
other activities.
INVESTMENT TECHNOLOGY GROUP, INC.
Investment Technology Group, Inc. ("ITG Holding") is a publicly traded corpo-
ration of which the Company owns 80.2% of the outstanding shares of common
stock. ITG Holding, through its wholly owned broker-dealer subsidiary ITG Inc.
("ITG"), is a leading provider of automated securities trade execution and
analysis services to institutional equity investors. ITG's two principal ser-
vices are POSIT((R)), the largest automated stock crossing system operated dur-
ing trading hours, and QuantEX((R)), a proprietary decision support system with
integrated trade analysis, routing and management capabilities. These services
employ proprietary software to enhance customers' trading efficiencies, access
to market liquidity and portfolio analysis capabilities. To supplement ITG's
POSIT((R)) and QuantEX((R)) services, ITG's ISIS service uses a database of
securities, price and liquidity information to provide enhanced decision sup-
port in all aspects of its customers' trade execution and analysis activities.
POSIT((R)), which is accessed through direct computer links or by communicating
with ITG's trading desk, allows customers to place confidential buy and sell
orders on approximately 7,000 different equity securities and portfolios of
equity securities. POSIT((R)) analyzes these buy and sell orders and
determines the maximum number of securities which may be matched or "crossed"
among participants. After determining the optimal cross, POSIT((R)) executes
trades at the midpoint of the primary market best bid and offer for each
security at the time of the cross. Participants using direct computer links
are automatically notified of completed crosses. ITG currently offers three
scheduled daily crosses and can also accommodate additional crosses in response
to customer demand. The system operates on a confidential basis, allowing
customers to trade large blocks of equity securities at reduced transaction
fees while minimizing the price impact of the trade. ITG derives revenue by
collecting transaction fees on each share which is crossed through the system.
Average daily share volume on POSIT((R)) has grown from approximately 288,000
shares in 1988 to approximately 6.3 million shares in 1993. During the last
quarter of 1993, average daily share volume was approximately 8.3 million
shares. In addition to its traditional customer base of quantitative and
passive investors, POSIT((R)) has recently begun to serve fundamental
institutional investors, broker-dealers and international institutional
investors. The system is currently used by approximately 200 customers,
including corporate and government pension plans, insurance companies, bank
trust departments, investment advisors and mutual funds.
QuantEX((R)) is a proprietary trade execution and analysis system that operates
on Sun Microsystems workstations provided to customers by ITG. The integrated
trade analysis, routing and management capabilities of QuantEX((R)) provide
valuable support to investment managers in the development and implementation
of portfolio trading strategies and allow equity traders to organize, process
and manage large trading lists. The automation of these functions enables
users to analyze and trade large portfolios of securities faster and more
effectively than by other traditional means. QuantEX((R)) allows an investment
manager to develop a series of rules based upon the manager's strategy for
trading equity securities and applies these rules to a continuous flow of
current market information in order to generate real-time decision support.
Through its direct routing capabilities, QuantEX((R)) also allows investment
managers and equity traders to route orders to POSIT((R)), major national and
regional stock exchanges, OTC market makers, ITG's trading desk
22
<PAGE> 26
or selected broker-dealers, including JEFCO. QuantEX((R))'s trade management
function automatically tracks and summarizes trades routed through
QuantEX((R)). ITG generally derives revenue by collecting a transaction fee on
each share which is routed for trading through QuantEX((R)).
JEFFERIES INTERNATIONAL LIMITED AND JEFFERIES PACIFIC LIMITED
Jefferies International Limited ("JIL"), a broker-dealer subsidiary of the
Company, was incorporated in 1986 in England. JIL is a member of The
International Stock Exchange and The Securities and Futures Authority. JIL
introduces customers trading in U.S. securities to JEFCO and also trades as a
broker-dealer in international equity and convertible securities and ADRs.
Jefferies Pacific Limited ("JPL"), a broker subsidiary of the Company, was.
incorporated in 1992 in Hong Kong. JPL presently introduces foreign customers
trading in U.S. securities to JEFCO. JPL commenced operations in 1993 and has
not yet generated material revenues.
W & D SECURITIES, INC.
W & D Securities, Inc. ("W & D") provides execution services primarily on the
NYSE and other exchanges to JEFCO and ITG. In order to comply with regulatory
requirements of the New York Stock Exchange ("NYSE") that generally prohibit
NYSE members and their affiliates from executing, as principal and, in certain
cases, as agent, transactions in NYSE-listed securities off the NYSE, the
Company gave up its formal legal control of W & D, effective January 1, 1983,
by exchanging all of the W & D common stock owned by it for non-voting
preferred stock of W & D. The common stock of W & D is presently held by an
officer of W & D who has agreed with the Company that, at the option of the
Company, he will sell such stock to the Company for nominal consideration. In
the event that the Company were to regain ownership of such common stock, the
Company believes that the NYSE would assert that W & D would be in violation of
the NYSE's rules unless similar arrangements satisfactory to the NYSE were made
with respect to the ownership of the common stock.
While the NYSE has generally approved the above arrangements, there can be no
assurance that it will not raise objections in the future. In light of these
arrangements and the high proportion of the equity of W & D represented by the
non-voting preferred stock held by the Company, W & D is consolidated as a
subsidiary of the Company for financial purposes. The Company believes that it
can make satisfactory alternative arrangements for executing transactions in
listed securities on the NYSE if it were precluded from doing so through W & D.
COMMISSION BUSINESS
A substantial portion of the Company's revenues is derived from customer
commissions on brokerage transactions in equity (primarily listed) and debt
securities for domestic and international investors such as investment
advisors, banks, mutual funds, insurance companies and pension and profit
sharing plans. Such investors normally purchase and sell securities in block
transactions, the execution of which requires special marketing and trading
expertise. The Company is one of the leading national firms in the execution
of equity block transactions, and believes that its institutional customers are
attracted by the quality of the Company's execution (with respect to
considerations of quantity, timing and price) and its competitive commission
rates, which are negotiated on the basis of market conditions, the size of the
particular transaction and other factors. In addition to domestic equity
securities, the Company executes transactions in taxable fixed income
securities, domestic and international convertible securities, international
equity securities, ADRs, options, preferred stocks, financial futures and other
similar products.
Most of the Company's equity account executives are electronically
interconnected through a system permitting simultaneous verbal and graphic
communication of trading and order information by all participants. The
Company believes that its execution capability is significantly enhanced by
this system, which permits its account executives to respond to each other and
to negotiate order indications directly with customers rather than through a
separate trading department.
PRINCIPAL TRANSACTIONS
In the regular course of business, the Company 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, the Company 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.
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<PAGE> 27
The Company 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 value and result in controlled interest costs incurred on
funds provided to maintain such positions.
Equities. The Equities Division makes markets in over 400 over-the-counter
equity and ADR securities, operates six specialist posts on the PSE and two
specialist posts on the BSE, and trades securities for its own account, as well
as to accommodate customer transactions.
Taxable Fixed Income. 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. At December 31, 1993, the aggregate long and short market value
of these positions was $34.1 million and $5.2 million, respectively. 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.
Convertible Securities and Warrants. The Company also trades domestic and
international convertible securities and warrants and assists corporate and
institutional clients in identifying attractive investments in these securities
and warrants.
Arbitrage. The Company engages in arbitrage for its own account. The Company
currently conducts arbitrage activities through a relationship with an
independent management firm pursuant to which the Company delegates to the
manager investment decisions involving the purchase and/or sale of securities
in one of the Company's proprietary trading accounts. The manager receives a
fee equal to a percentage of the profits in the account after a deduction of
all costs, expenses, commissions and interest charges applicable to the trading
activity in the account. The Company also engages in international arbitrage
involving securities listed or traded in both domestic and foreign markets. In
addition, the Company has invested in a limited partnership which conducts
arbitrage activity.
CORPORATE FINANCE
JEFCO's Corporate Finance Department offers corporations a full range of
advisory as well as debt and equity financing services which include private
placements and public offerings of debt and equity securities, debt
refinancings, recapitalizations, mergers and acquisitions advice, exclusive
sales advice, structured financings and securitizations, consent and waiver
solicitations, and company and bondholder representations in corporate
restructurings.
Investment banking activity involves both economic and regulatory risks. An
underwriter may incur losses if it is unable to sell the securities it is
committed to purchase or if it is forced to liquidate its commitments at less
than the agreed-upon purchase price. In addition, under the Securities Act and
other laws and court decisions with respect to underwriters' liability and
limitations on indemnification of underwriters by issuers, an underwriter is
subject to substantial potential liability for material misstatements or
omissions in prospectuses and other communications with respect to underwritten
offerings. Further, underwriting commitments constitute a charge against net
capital and the Company's underwriting commitments may be limited by the
requirement that it must, at all times, be in compliance with the Uniform Net
Capital Rule 15c3-1 of the Commission.
The Company intends to continue to pursue opportunities for its corporate
customers which may require it to finance and/or underwrite the issuance of
securities. Under circumstances where the Company is required to act as an
underwriter or to trade on a proprietary basis with its customers, the Company
may assume greater risk than would normally be assumed in certain other
principal transactions.
INTEREST
The Company earns interest on its securities portfolio and on its operating and
segregated balances. The Company also derives net interest income in
connection with its stock borrow/stock loan and margin lending activities.
Stock Borrow/Stock Loan. In connection with both its trading and brokerage
activities, the Company borrows securities to cover short sales and to complete
transactions in which customers have failed to deliver securities by the
required settlement date, and lends securities to other brokers, and dealers
for similar purposes. The Company also has a stock borrow versus stock loan
business with other brokers. From this activity, the Company derives interest
revenues and interest expenses.
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<PAGE> 28
Margin Lending. Customers' transactions are executed on either a cash or
margin basis. In a margin transaction, the Company extends credit to the
customer, collateralized by securities and cash in the customer's account, for
a portion of the purchase price, and receives income from interest charged on
such extensions of credit.
In permitting a customer to purchase securities on margin, the Company is
subject to the risk that a market decline could reduce the value of its
collateral below the amount of the customer's indebtedness and that the
customer might otherwise be unable to repay the indebtedness.
In addition to monitoring the creditworthiness of its customers, the Company
also considers the trading liquidity and volatility of the securities it
accepts as collateral for its margin loans. Trading liquidity and volatility
may be dependent, in part, upon the market on which the security is traded, the
number of outstanding shares of the issuer, events affecting the issuer and/or
securities markets in general, and whether or not there are any legal
restrictions on the sale of the securities. Certain types of securities have
historical trading patterns which may assist the Company in making its
evaluation. Historical trading patterns, however, may not be good indicators
over relatively short time periods or in markets which are affected by unusual
or unexpected developments. The Company considers all of these factors at the
time it agrees to extend credit to customers and continues to review its
extensions of credit on an ongoing basis.
The majority of the Company's margin loans are made to United States citizens
or to corporations which are domiciled in the United States. The Company may
extend credit to investors or corporations who are citizens of foreign
countries or who may reside outside the United States. The Company believes
that should such foreign investors default upon their loans with the Company
and should the collateral for those loans be insufficient to satisfy the
investors' obligations to the Company, the Company may experience more
difficulty in collecting investors' outstanding indebtedness than would be the
case if investors were citizens or residents of the United States.
Although the Company attempts to minimize the risk associated with the
extension of credit in margin accounts, there is no assurance that the
assumptions on which the Company bases its decisions will be correct or that
the Company is in a position to predict factors or events which will have an
adverse impact on any individual customer or issuer, or the securities markets
in general.
COMPETITION
All aspects of the business of the Company are intensely competitive. The
Company competes directly with numerous other brokers and dealers, investment
banking firms and banks. In addition to competition from firms currently in
the securities business, there has been increasing competition from others
offering financial services. These developments and others have resulted, and
may continue to result, in significant additional competition for the Company.
Member firms of the NYSE generally are prohibited from effecting transactions
when acting as principal and, in certain cases, as agent, in listed equity
securities off the NYSE, and therefore, unlike JEFCO and ITG, are precluded
from effecting such transactions in the third market. Such firms may execute
certain transactions in listed equity securities in the third market for
customers, although typically they do not do so. Since firms which the Company
regards as its major competitors in the execution of transactions in equity
securities for institutional investors are members of the NYSE, any removal of
these prohibitions could adversely affect the Company's business.
REGULATION
The securities industry in the United States is subject to extensive regulation
under both federal and state laws. The Commission is the federal agency
responsible for the administration of federal securities laws. In addition,
self-regulatory organizations, principally the NASD and the securities
exchanges, are actively involved in the regulation of broker-dealers. These
self-regulatory organizations conduct periodic examinations of member
broker-dealers in accordance with rules they have adopted and amended from time
to time, subject to approval by the Commission. Securities firms are also
subject to regulation by state securities commissions in those states in which
they do business. JEFCO is registered as a broker-dealer in 50 states and the
District of Columbia. ITG is registered as a broker-dealer in 49 states and
the District of Columbia. W & D is registered as a broker-dealer in 23 states.
Broker-dealers are subject to regulations which cover all aspects of the
securities business, including sales methods, trade practices among
broker-dealers, use and safekeeping of customers' funds and securities, capital
structure of securities firms, record-keeping and the conduct of directors,
officers and employees. Additional legislation, changes in rules promulgated
by the Commission and self-regulatory organizations, or changes in the
interpretation or enforcement of existing laws and rules, may directly affect
the mode of operation and profitability of broker-dealers. The Commission,
self-regulatory organizations and state securities commissions may conduct
administrative proceedings which can result in censure, fine, suspension,
expulsion of a broker-dealer, its officers or
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<PAGE> 29
employees, or revocation of broker-dealer licenses. The principal purpose of
regulation and discipline of broker-dealers is the protection of customers and
the securities markets, rather than protection of creditors and stockholders of
broker-dealers.
As registered broker-dealers, JEFCO, ITG and W & D are required by law to
belong to the Securities Investor Protection Corporation ("SIPC"). In the
event of a member's insolvency, the SIPC fund provides protection for customer
accounts up to $500,000 per customer, with a limitation of $100,000 on claims
for cash balances.
Net Capital Requirements. Every registered broker-dealer doing business with
the public is subject to the Commission's Uniform Net Capital Rule (the
"Rule"), which specifies minimum net capital requirements. The Company is not
a registered broker-dealer and is therefore not subject to the Rule; however,
its United States broker-dealer subsidiaries are subject thereto.
The Rule provides that a broker-dealer doing business with the public shall not
permit its aggregate indebtedness to exceed 15 times its adjusted net capital
(the "primary method") or, alternatively, that it not permit its adjusted net
capital to be less than 2% of its aggregate debit balances (primarily
receivables from customers and broker-dealers) computed in accordance with such
Rule (the "alternative method"). JEFCO, ITG and W & D use the alternative
method of calculation.
Compliance with applicable net capital rules could limit operations of JEFCO or
ITG, such as underwriting and trading activities, that require use of
significant amounts of capital, and may also restrict loans, advances,
dividends and other payments by JEFCO or ITG to the Company. A significant
operating loss or an extraordinary charge against net capital could adversely
affect the ability of JEFCO or ITG to expand or even maintain their present
level of business. Net capital changes from day to day, but as of December 31,
1993, JEFCO's net capital of $76.0 million exceeded its minimum net capital
requirements by $66.8 million. ITG's net capital of $1.9 million exceeded its
minimum net capital requirements by $1.7 million. W & D's net capital of
$821,000 exceeded its minimum net capital requirements by $671,000.
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<PAGE> 30
PROPERTIES
The Company maintains sales offices in Los Angeles, New York, Short Hills,
Chicago, Dallas, Boston, Atlanta, New Orleans, Houston, San Francisco,
Stamford, London and Hong Kong. In addition, the Company maintains operations
offices in Los Angeles and New York. The Company leases all of its office
space which management believes is adequate for the Company's business.
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<PAGE> 31
MANAGEMENT
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers and directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Frank E. Baxter 57 Director, Chairman of the Board,
President, Chief Executive Officer
Richard G. Dooley 64 Director
Tracy G. Herrick 60 Director
Michael L. Klowden 49 Director
Frank J. Macchiarola 53 Director
Barry M. Taylor 53 Director
Mark A. Wolfson 41 Director
</TABLE>
Frank E. Baxter, 57, has been Chairman since September 26, 1990, Chief
Executive Officer since March 19, 1987, President since January 1986, a
Director of the Company and of JEFCO since 1975 and, between January 1985 and
December 1985, was Managing Director of the Company's U.K. subsidiary. Mr.
Baxter has previously served as Executive Vice President, National Sales
Manager and New York Branch Manager of JEFCO.
Richard G. Dooley, 64, has been Director of the Company since November 1993.
From 1978 until his retirement in June 1993, Mr. Dooley was Executive Vice
President and Chief Investment Officer of Massachusetts Mutual Life Insurance
Company ("Mass Mutual"); Mr. Dooley is currently a consultant to Mass Mutual.
Mr. Dooley is also a director of Advest Group, Inc. (since 1983), Hartford
Steam Boiler Inspection and Insurance Company (since 1984), Kimco Realty
Corporation (since 1990), and of various Mass Mutual sponsored investment
companies. Mr. Dooley is also a trustee of Saint Anselm College and Chairman
of the Board of The New England Education Loan Marketing Corporation. Mr.
Dooley is a member of the Company's Audit and Compensation Committees.
Tracy G. Herrick, 60, has been a Director of the Company since 1983 and of
JEFCO since 1981. He is also President of Tracy G. Herrick, Inc., an economic
consulting firm, and a Director of Anderson Capital Management, a registered
investment adviser, and of The Committee for Monetary Research and Education.
Mr. Herrick is also Chairman of the Company's Audit Committee and a member of
the Compensation Committee.
Michael L. Klowden, 49, has been a Director of the Company since May 1987. He
has been, for more than the past five years, a senior partner of Morgan, Lewis
& Bockius, a law firm which has rendered legal services to the Company. Mr.
Klowden is a member of the Audit and Compensation Committees.
Frank J. Macchiarola, 53, has been a Director of the Company since August 1991.
He is currently Dean at the Benjamin N. Cardozo School of Law at Yeshiva
University in New York City (1991-present). Previously, he was a Professor of
Business in the Graduate School of Business at Columbia University (1987-1991),
and President and Chief Executive Officer of the New York City Partnership,
Inc. (1983-1987). Prior to 1985, he was a faculty member at the City
University of New York and Chancellor of the New York City Public School
System. Mr. Macchiarola is Chairman of the Company's Compensation Committee
and a member of the Audit Committee.
Barry M. Taylor, 53, has been an Executive Vice President and Director of the
Company since 1983 and a Director of JEFCO since 1981. Mr. Taylor has been a
sales executive of JEFCO since 1974 and was Los Angeles Branch Manager from
February 1983 through June 1984.
Mark A. Wolfson, 41, has been Director of the Company since July 1991 and a
Director of Investment Technology Group, Inc. since June 1, 1994. He is
the Dean Witter Professor at the Graduate School of Business, Stanford
University, where he has been a faculty member since 1977. From 1990 through
1993, Mr. Wolfson served as Associate Dean at the Graduate School of Business,
Stanford University. He has taught at the University of Chicago (1981-1982)
and Harvard University (1988-1989). He was a Director of the Academy of
Financial Services (1989-1991), has been a Research Associate at the National
Bureau of Economic Research since 1988, has been a Visiting Scholar at M.I.T.'s
Sloan School of
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<PAGE> 32
Management (1988-1989), was Vice President of the American Accounting
Association (1990-1992), and has been a Director of New American Holdings, Inc.
since 1992. Mr. Wolfson is a member of the Company's Audit and Compensation
Committees.
OTHER EXECUTIVE OFFICERS
The Executive Officers of the Company are appointed by the Board of Directors
and serve at the discretion of the Board. Other than Messrs. Baxter and
Taylor, for whom information is provided above, the following sets forth
information as to the Executive Officers:
Christopher W. Allick, 40, has been an Executive Vice President and Managing
Director of JEFCO since May 1993, and a Director of JEFCO since January 1993,
and Director of Structure Finance of JEFCO since April 1990. From April 1990
through May 1993, Mr. Allick was a Senior Vice President of JEFCO. From
December 1985 through February 1990, Mr. Allick was a First Vice President of
Corporate Finance at Drexel Burnham Lambert, Inc., a registered securities
broker-dealer.
Louis V. Bellucci, Sr., 57, has been National Equities Sales Manager of JEFCO
since January 1991 and Executive Vice President, New York Regional Sales
Manager and a Director of JEFCO since 1985. Prior to 1985, Mr. Bellucci was
Co-Manager of JEFCO's New York branch office.
Alan D. Browning, 53, was a Director of the Company from May 1985 to May 1992,
and has been an Executive Vice President, Chief Financial Officer and Chief
Administrative Officer of the Company since 1986, and a Director, Executive
Vice President and Chief Administrative Officer of JEFCO since March 1984.
David F. Eisner, 36, has been an Executive Vice President of the Company and
Executive Vice President and a Director of JEFCO since August 1992. Prior to
August 1992, Mr. Eisner was Chairman of Madison Capital Advisors, Inc., a
consulting and financial advisory firm (April 1992 to August 1992), Senior Vice
President of Providence Capital, Inc. a securities broker-dealer (January 1991
to March 1992), and a Vice President of JEFCO (March 1988 to December 1990).
Jerry M. Gluck, 46, has been Secretary and General Counsel of the Company and
JEFCO since May 1985 and a Director of JEFCO since November 1984.
Richard B. Handler, 33, has been an Executive Vice President of JEFCO since May
1990 and a Director of JEFCO since January 1993. Prior to May 1990, Mr.
Handler was a Senior Vice President at Drexel Burnham Lambert, Inc., a
registered securities broker-dealer.
Raymond L. Killian, Jr., 56, has been an Executive Vice President of the
Company since January 1985. Mr. Killian was a Director of the Company from May
1985 to May 1992, Executive Vice President and Director of JEFCO from January
1985 to December 1991, and National Sales Manager of JEFCO for the period 1985
through 1990. In 1991, Mr. Killian was responsible for the activities of
JEFCO's Investment Technology Group, including JEFCO's POSIT((R)) and
QuantEX((R)) products. On December 30, 1991, the Company incorporated a new
wholly-owned broker-dealer subsidiary, Investment Technology Group, Inc., to
assume all the business activities of its Investment Technology Group. Mr.
Killian was elected President and Chief Executive Officer of the new
subsidiary. Prior to 1985, Mr. Killian was a Vice President of Goldman Sachs &
Co., a registered securities broker-dealer.
Jeremiah P. O'Grady, 53, has been an Executive Vice President of JEFCO since
May 1992 and a Director and Manager of the Convertible Securities Department of
JEFCO since 1986. From 1986 to May 1992, Mr. O'Grady was a Senior Vice
President of JEFCO. Prior to 1986, Mr. O'Grady was a Vice President with
Goldman Sachs & Co., a registered securities broker-dealer.
Clifford A. Siegel, 37, has been an Executive Vice President of JEFCO since May
1992 and a Director of JEFCO since May 1991. From June 1990 until May 1992,
Mr. Siegel was a Senior Vice President of JEFCO. Prior to June 1990, Mr.
Siegel was President of Cresvale International Inc., a registered securities
broker-dealer.
David A. Sydorick, 47, has been an Executive Vice President and Director of
JEFCO since May 1991, National Sales Manager of the Taxable Fixed Income Sales
Division of JEFCO from March 1990 to March 1994 and is presently Manager of
JEFCO's Capital Markets. Prior to March 1990, Mr. Sydorick was a Senior Vice
President of Drexel Burnham Lambert, Inc., a registered securities
broker-dealer.
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<PAGE> 33
Maxine Syrjamaki, 49, has been Controller of the Company since May 1987, an
Executive Vice President of JEFCO since November 1986 and Chief Financial
Officer of JEFCO since September 1984. Prior to September 1984, Ms. Syrjamaki
was First Vice President and Controller of JEFCO.
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<PAGE> 34
DESCRIPTION OF THE NOTES
The following is a summary of the material terms and provisions of the Notes.
The New Notes will be issued pursuant to the Indenture, a copy of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
constitutes a part. The terms of the Notes include those set forth in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and prospective
purchasers of the Notes are referred to the Indenture, and the Trust Indenture
Act for a statement thereof. The following summary does not purport to be a
complete description of the Notes and is subject to the detailed provisions of,
and qualified in its entirety by reference to, the Notes and the Indenture
(including the definitions contained therein). Definitions of certain
capitalized terms used in the following summary are set forth throughout this
description. Capitalized terms that are used but not otherwise defined herein
have the meanings assigned to them in the Indenture and such definitions are
incorporated herein by reference. References to the "Company" as used in this
"Description of the Notes" are to Jefferies Group, Inc.
GENERAL
On April 28, 1994, the Company issued $50,000,000 principal amount of Old Notes
under the Indenture. The terms of the New Notes are identical in all material
respects to the Old Notes, except for certain transfer restrictions and
registration rights relating to the Old Notes. The Trustee will authenticate
and deliver New Notes for original issue only in exchange for a like principal
amount of Old Notes. Any Old Notes that remain outstanding after the
consummation of the Exchange Offer, together with the New Notes, will be
treated as a single class of securities under the Indenture.
The Notes are limited in aggregate principal amount to $50,000,000 and will
mature on May 1, 2004. The Notes will bear interest at the rate stated on the
cover page hereof from April 28, 1994, or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable semi-annually on
May 1 and November 1 of each year, commencing on November 1, 1994, to the
persons in whose names such Notes are registered at the close of business on
April 15 or October 15 next preceding such Interest Payment Date. Interest on
the Notes will be paid on the basis of a 360-day year consisting of twelve
30-day months. The Notes will be issued only in fully registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
The Notes are senior, unsecured obligations of the Company and rank pari passu
in right of payment with all existing and future senior indebtedness of the
Company and senior to all subordinated indebtedness of the Company. As of
March 25, 1994, the Company had approximately $10 million of subordinated
indebtedness outstanding. The Notes are effectively subordinated to claims of
creditors of the Company's subsidiaries. The business operations of the
Company are conducted through its operating subsidiaries, and therefore the
Company is dependent on the cash flow of its subsidiaries to meet its debt
obligations under the Notes. Dividends, loans and advances from certain
subsidiaries, including JEFCO, to the Company are restricted by net capital
requirements under the Exchange Act and under the rules of certain exchanges
and other regulatory bodies.
Principal of, premium, if any, and interest on the Notes will be payable, and
the Notes may be presented for registration of transfer or exchange, at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan, City of New York, and such other office or agency of the Company as
may be maintained for such purpose. At the option of the Company, payment of
interest may be made by check mailed to the Holders of the Notes at the
addresses set forth upon the registry books of the Company. No service charge
will be made for any registration of transfer or exchange of the Notes, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise
designated by the Company, the Company's office or agency will be the corporate
trust office of the Trustee presently located at 101 Barclay Street, New York,
New York 10286.
OPTIONAL REDEMPTION
The Notes are not entitled to any mandatory redemption or sinking fund
payments. The Notes are redeemable at the option of the Company, in whole or
in part, on any date on or after May 1, 1999 and prior to maturity, upon not
less than 30 nor more than 60
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<PAGE> 35
days' notice given in accordance with the provisions of the Indenture at the
following redemption prices (expressed as a percentage of the principal
amount), in each case together with accrued and unpaid interest to the date of
redemption:
<TABLE>
<CAPTION>
IF REDEEMED DURING THE
12-MONTH PERIOD
BEGINNING MAY 1 REDEMPTION PRICE
<S> <C>
1999 . . . . . . . 103.000%
2000 . . . . . . . 102.400%
2001 . . . . . . . 101.800%
2002 . . . . . . . 101.200%
2003 and thereafter 100.600%
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption pro-rata or by lot or by such other method as
the Trustee shall determine to be fair and appropriate and in such manner as
complies with any applicable legal and stock exchange requirements. The Notes
may be redeemed in part in multiples of $1,000 only. Any notice which relates
to a Note to be redeemed in part only must state the portion of the principal
amount equal to the portion to be redeemed and must state that on and after the
date fixed for redemption, upon surrender of such Note, a new Note or Notes in
a principal amount equal to the unredeemed portion thereof will be issued. On
and after the date fixed for redemption, unless the Company defaults on its
payment obligations, interest will cease to accrue on the Notes or portions
thereof called for redemption.
COVENANTS
The Indenture contains, among others, the following covenants:
Repurchase of Notes at the Option of the Holder Upon a Change of Control. In
the event that a Change of Control (as defined below) occurs, each Holder of
Notes will have the right, at such Holder's option, subject to the terms and
conditions of the Indenture, to require the Company to repurchase all or any
part of such Holder's Notes (provided that the principal amount of such Notes
must be $1,000 or an integral multiple thereof) on the date that is no later
than 40 Business Days after the occurrence of such Change of Control (the
"Change of Control Payment Date"), at a cash purchase price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to and including the Change of Control
Payment Date.
The Company shall notify the Trustee within five Business Days after each date
upon which the Company knows, or reasonably should know, of the occurrence of a
Change of Control. Within 10 Business Days after the Company knows, or
reasonably should know, of the occurrence of each Change of Control, the
Company shall make an irrevocable, unconditional offer (a "Change of Control
Offer") to all Holders of Notes to repurchase all of the Notes at the Change of
Control Purchase Price by sending written notice of a Change of Control Offer,
by first class mail, to each Holder at its registered address, with a copy to
the Trustee. The notice to Holders shall contain all instructions and
materials required by applicable law and shall contain or make available to
Holders other information material to such Holders' decision to tender Notes
pursuant to the Change of Control Offer.
On or before the Change of Control Payment Date, the Company shall (i) accept
for payment Notes or portions thereof properly tendered pursuant to the Change
of Control Offer prior to the close of the third Business Day preceding the
Change of Control Payment Date, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the Change of Control Purchase Price (including
accrued and unpaid interest) of all Notes so tendered and (iii) deliver to the
Trustee Notes so accepted together with an Officers' Certificate listing the
Notes or portions thereof being purchased by the Company. The Paying Agent
shall promptly mail to the Holders of Notes so accepted payment in an amount
equal to the Change of Control Purchase Price (including accrued and unpaid
interest), and the Trustee shall promptly authenticate and mail or deliver to
such Holders a new Note equal in principal amount to any unpurchased portion of
the Note surrendered. Any Notes not so accepted will be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
"Change of Control" means any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) becomes the "beneficial owner" (as the term is used in Rules 13d-3
and 13d-5 under the Exchange Act, whether or not applicable, except that a
person shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
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indirectly, of more than 50% of the total voting power entitled to vote in the
election of directors of the Company; provided however, that a Change of
Control shall not be deemed to have occurred (i) as a result of the formation of
such a "group" or the acquisition of shares of Capital Stock of the Company by
such group if such group includes existing Affiliates and/or persons who
beneficially own in the aggregate, as of the date of the Indenture, 20% or more
of the outstanding shares of Capital Stock of the Company on the date of the
Indenture or (ii) by virtue of the Company, any Subsidiary of the Company, any
employee stock ownership plan or any other employee benefit plan of the Company
or any Subsidiary, or any other person holding Capital Stock of the Company for
or pursuant to the terms of any such employee benefit plan, becoming a
beneficial owner, directly or indirectly, of more than 50% of the total voting
power entitled to vote in the election of directors of the Company.
Failure by the Company to repurchase the Notes when required will result in an
Event of Default with respect to the Notes. The Company's ability to
repurchase the Notes upon a Change of Control may be limited by covenants
contained in future indebtedness.
To the extent applicable and if required by law, the Company will comply with
Section 14 of the Exchange Act and the provisions of Regulation 14E and any
other tender offer rules under the Exchange Act and other securities laws,
rules and regulations which may then be applicable to any offer by the Company
to repurchase the Notes at the option of Holders upon a Change of Control.
Limitation on Incurrence of Long-Term Indebtedness. Except as set forth below,
the Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, incur, issue, assume, guarantee or otherwise become
responsible for (collectively, "incur") any Long-Term Indebtedness (including
Acquired Debt).
The foregoing limitation will not apply to (a) the incurrence by the Company of
Indebtedness if, on the date of the incurrence of such Long-Term Indebtedness,
the Company's Consolidated Net Worth Ratio (after giving effect to such
incurrence of such Long-Term Indebtedness) would be less than or equal to 2.00;
(b) the incurrence by the Company's Subsidiaries of Long-Term Indebtedness if,
on the date of the incurrence of such Long-Term Indebtedness, (i) the Company's
Consolidated Net Worth Ratio (after giving effect to such Subsidiary's
incurrence of such Long-Term Indebtedness) would be less than or equal to 2.00
and (ii) the aggregate principal amount of all Long-Term Indebtedness of the
Company's Subsidiaries (after giving effect to such Subsidiary's incurrence of
such Long-Term Indebtedness) would be less than or equal to the aggregate
Consolidated Net Worth of each of the Company's Subsidiaries (but not including
the Company); (c) the incurrence by the Company of Long-Term Indebtedness
evidenced by the Notes and other obligations under the Indenture up to the
amounts specified therein; (d) the incurrence by any Subsidiary of the Company
of Long-Term Indebtedness to the Company, or to a Subsidiary of the Company,
and the incurrence by the Company of Long-Term Indebtedness to any Subsidiary
of the Company; (e) the incurrence by the Company and its Subsidiaries of
Long-Term Indebtedness so long as such indebtedness is incurred in the ordinary
course of business, consistent with past practices, under (A) Hedging
Obligations, (B) foreign currency hedge obligations, (C) performance bonds, or
letters of credit or reimbursement obligations in respect thereof or (D) letter
of credit obligations related to insurance (including self-insurance) with
respect to claims by employees for work-related injuries; (f) the incurrence by
the Company and its Subsidiaries of Long-Term Indebtedness that is Existing
Indebtedness; and (g) for the purposes of refinancing Long-Term Indebtedness
incurred pursuant to paragraphs (a), (b), (c) and (f) above, the incurrence by
the Company or any Subsidiary of the Company of Refinancing Indebtedness.
Limitation on Certain Liens. The Indenture provides that the Company shall
not, and shall not permit any of its Material Subsidiaries to, issue, incur,
assume, or guarantee any Indebtedness for borrowed money secured by a Lien
(other than Permitted Liens), directly or indirectly, upon any shares of the
Voting Stock of a Material Subsidiary which shares are owned by the Company or
its Material Subsidiaries without effectively providing that the Notes (and if
the Company so elects, any other indebtedness of the Company ranking on a
parity with the Notes) shall be secured equally and ratably with, or prior to,
any such secured Indebtedness so long as such Indebtedness remains outstanding.
Limitations on Transactions with Affiliates. The Indenture provides that the
Company will not, and will not permit any of its Subsidiaries to, sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or asset from, or enter into any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(a) such Affiliate Transaction is on terms no less favorable to the Company or
the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or any such Subsidiary with an unrelated
Person and (b) the Company delivers to the Trustee with respect to any
Affiliate Transaction involving aggregate payments in excess of $10 million in
any fiscal year, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (a) above and such Affiliate Transaction has been approved by a majority
of the disinterested members of the Board of Directors; provided, however, that
(i) any employment agreement entered into by the Company or any of its
Subsidiaries in the ordinary course of the business and consistent with the
past practice of the Company, such Subsidiary or W & D, (ii) transactions
between or among the Company, its Subsidiaries and/or W & D, and (iii)
Affiliate Transactions entered into prior to the Issue Date, shall be deemed
not to be Affiliate Transactions.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference is
made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person: (i) Long-Term
Indebtedness of any other Person existing at the time such other Person merged
with or into such specified Person, including Long-Term Indebtedness incurred
in connection with, or in contemplation of, such other Person merging with or
into such specified Person and (ii) Long-Term Indebtedness encumbering any
asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Capital Lease Obligation" means, at the time any determination thereof is
made, the amount of the liability in respect of a capital lease that would at
such time be so required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Consolidated Net Worth" means, with respect to any Person as of any date, the
sum of (i) the consolidated equity of the common stockholders of such Person
and its Consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock.
"Consolidated Net Worth Ratio" means, with respect to any Person as of the date
of calculation, the ratio of Long-Term Indebtedness of such person and its
Consolidated Subsidiaries as of such date to Consolidated Net Worth of such
person as of such date.
"Default" means any event that is or with the passage of time or the giving of
notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock which by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
final date of maturity of the Notes.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company in existence on the
date of the execution of the Indenture.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Standards
Board or in such other statements by such other entity as have been approved by
a significant segment of the accounting profession, which are in effect on the
date of the Indenture.
"Guaranty" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the Obligations of
such Person under interest rate swap agreements, interest rate cap agreements,
and interest rate collar agreements, and other agreements or arrangements
designed to protect such Person against fluctuations in interest rates.
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"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of
the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, and also includes, to the extent not
otherwise included, the Guaranty of any indebtedness of such Person or any
other Person.
"Investments" means, with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the forms of loans (including a
Guaranty), advances or capital contributions (excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law.
"Long-Term Indebtedness" means, with respect to a Person as of any date, the
aggregate amount of Indebtedness which is characterized as long-term
indebtedness on the balance sheet of such Person in accordance with GAAP.
"Material Subsidiary" means (i) any Subsidiary of the Company which at December
31, 1993 was a Significant Subsidiary or any successor to such Subsidiary and
(ii) any other Subsidiary of the Company or any of its Subsidiaries if the
Company's or any of its Subsidiaries' Investments in such Subsidiary at the
date of determination thereof, represent 20% or more of the Company's
Consolidated Net Worth as of such date; provided, however, that clause (ii)
shall not include any Subsidiary if, at the time that it became a Subsidiary,
the Company contemplated commencing a voluntary case or proceeding under the
Bankruptcy Law with respect to such Subsidiary.
"Minimum Net Capital Amount" means, as of any date, the product of (i) (x) the
total minimum Net Capital required by Rule 15c3-1 under the Exchange Act to be
maintained by JEFCO less (y) the portion of such total minimum Net Capital
required as a result of underwriting activities by JEFCO and (ii) 150%.
"Net Capital" shall have the meaning set forth in Rule 15c3-1 under the
Exchange Act.
"Obligations" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Liens" means (a) Liens in favor of the Company; (b) Liens on any
shares of Voting Stock of any corporation existing at the time such corporation
becomes a Material Subsidiary of the Company (and any extensions, renewals or
replacements thereof); (c) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of business; and (d) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded; provided, that any reserve or
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor.
"Person or person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Refinancing Indebtedness" means Indebtedness (a) issued in exchange for, or
the proceeds from the issuance and sale of which are used to substantially
concurrently repay, redeem, decrease, refund, refinance, discharge or otherwise
retire for value, in whole or in part, or (b) constituting an amendment,
modification or supplement to, or a deferral or renewal of ((a) and (b) above
are, collectively a "Refinancing"), any Indebtedness in a principal amount not
to exceed (after deduction of reasonable and customary fees and expenses
incurred in connection with the Refinancing) the lesser of (i) the principal
amount of the Indebtedness to be Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accredited value
thereof (as determined in accordance with GAAP) at the time of such
Refinancing; provided, that Refinancing Indebtedness shall (x) not have a
Weighted Average Life to Maturity shorter than the Indebtedness to be so
refinanced at the time of such Refinancing, (y) in all respects, be no less
subordinated, if applicable, to the rights of Holders pursuant to the
Securities than was the Indebtedness to be Refinanced and (z) have no scheduled
installment of principal earlier than any installment of principal of the
Indebtedness to be so
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refinanced scheduled to come due prior to the final maturity of the Securities;
and provided further that any Existing Indebtedness or new Indebtedness shall
remain an Obligation of the Company.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the Holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
any Person (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
"Weighted Average Life to Maturity" means, when applied to any Indebtedness at
any date, the number of years obtained by dividing (a) the sum of the products
obtained by multiplying (x) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof, by (y) the number of
years (calculated to the nearest one-twelfth) that will elapse between such
date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
MERGER AND CONSOLIDATION
The Indenture provides that the Company may not, in a single transaction or
through a series of related transactions, consolidate with or merge with or
into any other Person or, directly or indirectly, sell, lease, assign, convey
or transfer its properties and assets as an entirety or substantially as an
entirety to any person or group of affiliated persons unless (A) either the
Company shall be the continuing person, or the successor (if other than the
Company) is a corporation organized under the laws of any domestic jurisdiction
and expressly assumes the Company's obligations under the Indenture and the
Notes issued thereunder; (B) immediately after giving effect to such
transaction, no Default or Event of Default, shall have occurred and be
continuing; and (C) if a supplemental indenture is required in connection with
such transaction, certain certificates and legal opinions are delivered.
The Indenture provides that, upon any consolidation or merger or transfer of
the properties and assets of the Company substantially as an entirety as
described in the preceding paragraph, the successor corporation formed by such
consolidation or into which the Company is merged or to which such conveyance
or transfer is made shall be substituted for the Company with the same effect
as if such successor corporation had been named as the Company. Thereafter,
the Company shall be relieved of the performance and observance of all
obligations and covenants of such Indenture and the Notes, including but not
limited to the obligation to make payment of the principal of and interest, if
any, on all the Notes then outstanding, and the Company may thereupon or any
time thereafter be liquidated and dissolved.
SATISFACTION AND DISCHARGE
The Company will be discharged from its obligations under the outstanding Notes
upon satisfaction of the following conditions: (a) the Company has irrevocably
deposited with the Trustee either (i) money in an amount as will, or (ii) U.S.
Government Obligations as will, together with the predetermined and certain
income to accrue thereon without consideration of any reinvestment thereof, or
(iii) a combination of (i) and (ii) as will (in a written opinion with respect
to (ii) or (iii) of independent public accountants delivered to the Trustee),
be sufficient to pay and discharge the entire principal of, premium, if any,
and each installment of principal and interest to Stated Maturity on the
outstanding Notes; (b) the Company has paid or caused to be paid all other sums
payable with respect to the outstanding Notes; (c) the Trustee has received an
Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent have been complied with; and (d) the Trustee has received
an opinion of tax counsel to the effect that such deposit and discharge will
not cause the Holders of the Notes to recognize income, gain or loss for
federal income tax purposes and that the Holders will be subject to federal
income tax in the same amounts, in the same manner and at the same times as
would have been the case if such deposit and discharge had not occurred. Upon
such discharge, the Company will be deemed to have satisfied all the
obligations under the Indenture, except for obligations with respect to
registration of transfer and exchange of the Notes, and the rights of the
Holders to receive from deposited funds payment of the principal of (and
premium, if any) and interest on the Notes.
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MODIFICATION OF THE INDENTURES
The Indenture provides that the Company and the Trustee thereunder may, without
the consent of any Holders of Notes, enter into supplemental indentures for the
purposes, among other things, of adding to the Company's covenants, adding
additional Events of Default, establishing the form or terms of Notes or curing
ambiguities or inconsistencies in such Indenture or making other provisions;
provided that such action shall not adversely affect the interests of the
Holders of Notes in any material respect.
The Indenture contains provisions permitting the Company, with the consent of
the Holders of not less than a majority in principal amount of the outstanding
Notes, to execute supplemental indentures adding any provisions to or changing
or eliminating any of the provisions of such Indenture or modifying the rights
of the Holders of the Notes, except that no such supplemental indenture may,
without the consent of the Holders of all the outstanding Notes affected
thereby, among other things: (i) reduce the percentage of principal amount of
Securities whose Holders must consent to an amendment, supplement or waiver of
any provision of this Indenture or the Securities; (ii) reduce the rate or
extend the time for payment of interest on any Security; (iii) reduce the
principal amount of any Security or the Redemption Price; (iv) change the
Stated Maturity of any Security or extend any Maturity Date of any Security;
(v) alter the redemption provisions in a manner adverse to any Holder; (vi)
make any changes in the provisions concerning waivers of Defaults or events of
Default by Holders of the Securities or the rights of Holders to recover the
principal or premium of, interest on, or redemption payment with respect to,
any Security; (vii) make the principal of, or the interest on, any Security
payable with anything or in any manner other than as provided for in this
Indenture and the Securities on the Issue Date; or (viii) make the Securities
subordinated in right of payment to any extent or under any circumstances to
any other indebtedness.
EVENTS OF DEFAULT
An Event of Default in respect of the Notes is defined in the Indenture to be:
(i) the failure by the Company to pay installments of interest on the Notes as
and when the same becomes due and payable and the continuance of such failure
for 30 days; (ii) the failure by the Company to pay all or any part of the
principal or premium, if any, on the Notes when the same becomes due and
payable, whether payable at maturity, by call for redemption, repurchase
obligation or otherwise; (iii) the failure by the Company for 60 days after a
notice of default with respect to the performance of any covenant in the
Indenture; (iv) certain events of bankruptcy, insolvency or reorganization; (v)
an event of default under any mortgage, indenture or other instrument under
which any Indebtedness of the Company or any Subsidiary is outstanding if (a)
such default either (i) results from the failure to pay any principal of any
Indebtedness at maturity (after expiration of any applicable grace period) or
(ii) relates to an obligation other than the obligation to pay any principal of
such Indebtedness at maturity and results in the Holder or Holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
maturity and (b) the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to pay
principal at maturity or the maturity of which has been so accelerated,
aggregates $15,000,000 or more at any one time; (vi) the failure of the Company
to maintain a minimum Consolidated Net Worth greater than or equal to
$87,000,000, and the continuance of any such failure for a period of 180
consecutive days; or (vii) the failure of JEFCO to maintain Net Capital greater
than or equal to the Minimum Net Capital Amount, and the continuance of any
such failure for a period of 30 consecutive days.
The Indenture provides that if an Event of Default specified therein in respect
of any outstanding Notes issued under such Indenture shall have occurred and is
continuing, either the Trustee thereunder or the Holders of not less than 25%
in principal amount of the outstanding Notes may declare the principal of all
of the outstanding Notes, together with accrued interest thereon, to be
immediately due and payable.
The Indenture provides that the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee thereunder, or exercising any trust or power conferred
on such Trustee, with respect to the Notes; provided that (i) such direction
shall not be in conflict with any rule of law or with the Indenture, (ii) the
Trustee shall not determine that the action so directed would be unjustly
prejudicial to the Holders not taking part in such direction, and (iii) the
Trustee may take any other action deemed proper that is not inconsistent with
such direction.
The Indenture provides that the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes may on behalf of the
Holders of all of the outstanding Notes waive any past default under the
Indenture and its consequences, except a default (i) in the payment of the
principal of (or premium, if any) or any interest on any of the Notes or (ii)
in respect of a covenant or provision of the Indenture which, under the terms
of the Indenture, cannot be modified or amended without the consent of the
Holders of all of the outstanding Notes affected thereby.
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The Indenture contains provisions entitling the Trustee thereunder, subject to
the duty of such Trustee during an Event of Default in respect of any Notes to
act with the required standard of care, to be indemnified by the Holders of the
Notes before proceeding to exercise any right or power under the Indenture at
the request of the Holders of the Notes.
The Indenture provides that the Trustee thereunder will, within 90 days after
the occurrence of a Default in respect of any Notes, give to the Holders of the
Notes notice of all uncured and unwaived defaults known to it; provided,
however, that, except in the case of a default in the payment of the principal
of (or premium, if any) or any interest on any of the Notes such Trustee will
be protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the Holders of the Notes.
NOTICES
Except as otherwise provided in the Indenture, notices to Holders will be given
by mail to the addresses of such Holders as they appear in the Note Register.
REPORTS
The Company is required to furnish to the Trustee annually a statement as to
the fulfillment by the Company of all of its covenants under the Indenture.
The Company will mail copies of its annual reports and quarterly reports mailed
to its shareholders to Holders of the Notes. If the Company is not required to
furnish annual or quarterly reports to its shareholders, the Company will, upon
request, mail to each Holder, at such Holder's address as appearing on the Note
Register, audited annual financial statements prepared in accordance with GAAP
and unaudited condensed quarterly financial statements. Such financial
statements shall be accompanied by management's discussion and analysis of the
results of operations and financial condition of the Company for the period
reported upon in substantially the form required under the rules and
regulations of the Commission currently in effect.
THE TRUSTEE
The Trustee is a New York banking corporation. The Indenture will provide
that, in case an Event of Default shall occur and be continuing, the Trustee
will be required to use the degree of care of a prudent person in the conduct
of his own affairs in the exercise of its power. Subject to such provisions,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any of the Holders, unless they shall
have offered to the Trustee security and indemnity satisfactory to it. The
Trustee will be permitted to engage in other transactions with the Company and
its subsidiaries; provided, however, that if such Trustee acquires any
conflicting interest at such time as a default is pending under the Indenture,
such Trustee must (with certain exceptions) eliminate such conflict or resign.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
No director, officer, employee, incorporator or shareholder of the Company will
have any liability for any obligations of the Company under the Notes, the
Indenture, or the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
of the Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company is not required to transfer or exchange any Note selected for
redemption. Also, the Company is not required to transfer or exchange any Note
for a period of 15 Business Days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
38
<PAGE> 42
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material Federal income tax
considerations applicable to the exchange of Old Notes for New Notes and the
ownership and disposition of the New Notes by Holders who acquire the New
Notes. This discussion is based on laws, regulations, rulings and decisions
now in effect, all of which are subject to change, possibly retroactively. The
discussion does not cover all aspects of Federal income taxation that may be
relevant to Holders, in light of their specific circumstances, particularly
Holders subject to special treatment under the Federal income tax laws (such as
insurance companies, financial institutions, tax exempt organizations, foreign
persons, and taxpayers subject to the alternative minimum tax). It also does
not address state, local, foreign or other tax laws. The description assumes
that Holders of the New Notes will hold the New Notes as "capital assets"
(generally, property held for investment purposes) under the Internal Revenue
Code of 1986, as amended (the "Code"). EACH HOLDER SHOULD CONSULT HIS TAX
ADVISOR IN DETERMINING THE FEDERAL, STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES
TO THE PARTICULAR HOLDER OF THE EXCHANGE OF OLD NOTES FOR NEW NOTES AND THE
OWNERSHIP AND DISPOSITION OF THE NEW NOTES.
EXCHANGE OF NOTES
There will be no Federal income tax consequences to Holders exchanging Old
Notes for New Notes pursuant to the Exchange Offer and such a Holder will have
the same adjusted basis and holding period in the New Notes as it had in the
Old Notes immediately before the exchange.
DISPOSITION OF NEW NOTES
In general, the Holder of a New Note will recognize gain or loss upon the sale,
exchange, redemption, retirement or other disposition of the New Note measured
by the difference between the amount of cash and the fair market value of
property received (except to the extent attributable to the payment of accrued
interest), and the Holder's tax basis in the New Note. Subject to the market
discount rules discussed below, the gain or loss on the sale, exchange,
redemption or retirement of the New Note should be long-term capital gain or
loss, provided the Holder has a holding period for the New Note (which would
include the holding period of the Old Note) of more than one year.
MARKET DISCOUNT ON RESALE
Holders, other than original purchasers of Old Notes in the Offering, should be
aware that the resale of the New Notes may be affected by the market discount
provisions of the Code. These rules generally provide that if a subsequent
Holder of a Note purchases it at a market discount in excess of a statutorily
defined de minimis amount, and thereafter recognizes gain upon a disposition
(including a partial redemption) of the Note, the lesser of such gain or the
portion of the market discount that accrued while the Note was held by such
Holder will be treated as ordinary interest income at the time of the
disposition. The rules also provide that a Holder who acquires a Note at a
market discount may be required to defer all or a portion of any interest
expense that may otherwise be deductible on any indebtedness incurred or
continued to purchase or carry such Note. Such deferred interest may be taken
into account upon disposition of the Note in a taxable transaction, to the
extent of gain recognized on disposition of the Note in a nonrecognition
transaction and, if the Holder so elects, over the term of the Note to the
extent that interest income on the Note includable in income for any taxable
year exceeds the amount of interest paid or accrued during the taxable year on
indebtedness incurred or accrued to purchase or carry the Note. If a Holder of
a Note elects to include market discount in income currently, neither of the
foregoing rules would apply.
39
<PAGE> 43
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company has agreed that for a period of 90 days after
_______________, 1994, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer, at no charge, for use in
connection with any such resale. In addition, until ___________, 1994, all
dealers effecting transactions in the New Notes, whether or not participating
in the Exchange Offer, may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after ____________, 1994, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Company has agreed to pay all expenses incident to the
Exchange Offer (which shall not include the expenses of any Holder in
connection with resales of the New Notes or commissions or concessions of any
brokers or dealers).
EXPERTS
The consolidated financial statements and schedule of Jefferies Group, Inc. and
subsidiaries as of December 31, 1993 and 1992, and for each of the years in the
three-year period ended December 31, 1993, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL MATTERS
The validity of the New Notes will be passed upon for the Company by Morgan,
Lewis & Bockius, Los Angeles, California.
40
<PAGE> 44
<TABLE>
<S> <C>
No dealer, salesperson or other person has been $50,000,000
authorized to give any information or to make any
representations other than those contained in this
Prospectus, and, if given or made, such information
or representations must not be relied upon as
having been authorized by the Company. This
Prospectus does not constitute an offer to sell, or
a solicitation of an offer to buy, the New Notes in
any jurisdiction where, or to any person to whom, [LOGO]
it is unlawful to make such offer or solicitation. JEFFERIES
Neither the delivery of this Prospectus nor any Group, Inc.
sale made hereunder shall, under any circumstances,
create any implication that the information
contained herein is correct as of any time
subsequent to the date hereof or that there has Series B
been no change in the affairs of the Company since 8 7/8% Senior Notes due 2004
such date.
_____________________________
TABLE OF CONTENTS ______________
Page
Additional Information . . . . . . . . . . . . . . . 2 PROSPECTUS
Incorporation of Certain Information by Reference. . 2 ______________
Prospectus Summary . . . . . . . . . . . . . . . . . 3
Investment Considerations. . . . . . . . . . . . . . 7
Capitalization . . . . . . . . . . . . . . . . . . . 8
Selected Consolidated Financial
Information. . . . . . . . . . . . . . . . . . . . 9
Recent Financial Results . . . . . . . . . . . . . . 10
Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . 12
The Exchange Offer . . . . . . . . . . . . . . . . . 16
Business . . . . . . . . . . . . . . . . . . . . . . 22
Properties . . . . . . . . . . . . . . . . . . . . . 27
Management . . . . . . . . . . . . . . . . . . . . . 28
Description of the Notes . . . . . . . . . . . . . . 31
Certain Federal Income Tax Consequences. . . . . . . 39
Plan of Distribution . . . . . . . . . . . . . . . . 40
Experts. . . . . . . . . . . . . . . . . . . . . . . 40
Legal Matters. . . . . . . . . . . . . . . . . . . . 40
_____________________, 1994
</TABLE>
41
<PAGE> 45
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware permits a
corporation, under specified circumstances, to indemnify its directors,
officers, employees or agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, unless and only to the extent that the court in which the action
or suit was brought shall determine upon application that the defendant
directors, officers, employees, or agents are fairly and reasonably entitled to
indemnity for such expenses despite such adjudication of liability.
The Company's By-laws provide that the Company shall, to the fullest extent
authorized or permitted by law, indemnify any current or former director or
officer of the Company. Subject to applicable law, the Company may indemnify
an employee or agent of the Company to the extent that the Board of Directors
may determine in its discretion.
Article Seven of the Company's Restated Certificate of Incorporation provides
that a director of the Company shall not be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (a) for any breach of the duty of loyalty to the
Company or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the General Corporation Law of the State of Delaware, or (d) for
any transaction from which a director derives an improper personal benefit.
The Company's directors and officers are covered by insurance policies
indemnifying them against certain civil liabilities, including liabilities
under the federal securities laws, which might be incurred by them in such
capacity.
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
- ----------- -----------------------
<S> <C> <C>
4.1 -- Indenture, dated as of April 28, 1994, by and between The
Company and The Bank of New York, as trustee.
5.1 -- Opinion of Morgan, Lewis & Bockius.
10.1 -- Form of Purchase Agreement, dated as of April 28, 1994,
by and among the Company and each of the purchasers
signatories thereto.
10.2 -- Form of Registration Rights Agreement, dated as of April
28, 1994, by and among the Company and the purchasers
signatories thereto.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of KPMG Peat Marwick, independent certified public
accountants.
23.2 -- Consent of Morgan, Lewis & Bockius (included in the
opinion filed as Exhibit No. 5.1 to the Registration
Statement).
24.1 -- Power of Attorney (included on signature page of the
Registration Statement).
</TABLE>
II-1
<PAGE> 46
<TABLE>
<S> <C> <C>
25.1 -- Form T-1 of The Bank of New York, as Trustee under the
Indenture filed as Exhibit 4.1 to the Registration
Statement.
99.1 -- Form of Letter of Transmittal.
</TABLE>
ITEM 22. UNDERTAKINGS.
A. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
B. (1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the
Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
D. The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of any employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
E. The Company hereby undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Item 4,
10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
II-2
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Los Angeles, State of
California, on June 23, 1994.
JEFFERIES GROUP, INC.
By: /s/ FRANK E. BAXTER
-------------------------------
Frank E. Baxter, President
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Frank E. Baxter and Alan D. Browning,
and each or either of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and re-substitution for him and his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same
with all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue thereof. Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ FRANK E. BAXTER Director, President June 23, 1994
- ----------------------------------------- and Chief Executive Officer
Frank E. Baxter (Principal Executive Officer)
/s/ ALAN D. BROWNING Executive Vice President and Chief June 23, 1994
- ------------------------------------------ Financial Officer (Principal
Alan D. Browning Financial and Accounting Officer)
_________________________________________ Director _________, 1994
Richard G. Dooley
_________________________________________ Director _________, 1994
Tracy G. Herrick
_________________________________________ Director _________, 1994
Michael L. Klowden
</TABLE>
II-3
<PAGE> 48
<TABLE>
<S> <C> <C>
/s/ FRANK J. MACCHIAROLA Director June 23, 1994
- ------------------------------------------
Frank J. Macchiarola
/s/ BARRY M. TAYLOR Director June 23, 1994
- ------------------------------------------
Barry M. Taylor
/s/ MARK A. WOLFSON Director June 23, 1994
- ------------------------------------------
Mark A. Wolfson
</TABLE>
II-4
<PAGE> 49
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
- ----------- -----------------------
<S> <C> <C>
4.1 -- Indenture, dated as of April 28, 1994, by and between The
Company and The Bank of New York, as trustee.
5.1 -- Opinion of Morgan, Lewis & Bockius.
10.1 -- Form of Purchase Agreement, dated as of April 28, 1994,
by and among the Company and each of the purchasers
signatories thereto.
10.2 -- Form of Registration Rights Agreement, dated as of April
28, 1994, by and among the Company and the purchasers
signatories thereto.
12.1 -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of KPMG Peat Marwick, independent certified public
accountants.
23.2 -- Consent of Morgan, Lewis & Bockius (included in the
opinion filed as Exhibit No. 5.1 to the Registration
Statement).
24.1 -- Power of Attorney (included on signature page of the
Registration Statement).
25.1 -- Form T-1 of The Bank of New York, as Trustee under the
Indenture filed as Exhibit 4.1 to the Registration
Statement.
99.1 -- Form of Letter of Transmittal.
</TABLE>
<PAGE> 1
==============================================================================
Jefferies Group, Inc.,
Issuer
and
The Bank of New York,
Trustee
__________________
INDENTURE
Dated as of April 28, 1994
___________________
$50,000,000
8 7/8% Senior Notes due 2004
==============================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
---------------------
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08;
7.10
12.02;
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;
12.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.08;
12.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 2.02;
7.02;
12.04;
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 7.02;
12.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05;
7.06;
12.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.08;
6.12;
7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . 2.09
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13;
6.08
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.03
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
</TABLE>
___________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Incorporation by Reference of TIA . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II.
THE SECURITIES
SECTION 2.01. Forms and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.03. Registrar, Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.04. Paying Agent to Hold Assets in Trust . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.05. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.07. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.08. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.09. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE III.
REDEMPTION
SECTION 3.01. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.02. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.03. Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.04. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.05. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.06. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.07. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV.
COVENANTS
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.03. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.04. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.05. Compliance Certificate; Notice of Default . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.06. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.07. Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.08. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<TABLE>
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SECTION 4.09. Limitation on Incurrences of Long-Term
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.10. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.11. Delivery of Certain Information . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.02. Acceleration of Maturity Date; Rescission
and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.03. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.04. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.05. Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.06. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.07. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.10. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.11. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.12. Waiver of Past Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.14. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VII.
TRUSTEE
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.11. Preferential Collection of Claims . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE VIII.
SATISFACTION AND DISCHARGE
SECTION 8.01. Satisfaction, Discharge of the Indenture and
Defeasance of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.02. Termination of Obligations Upon Cancellation
of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.03. Survival of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.04. Acknowledgment of Discharge by Trustee . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.05. Application of Trust Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.06. Repayment to the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.07. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent
of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.02. Amendments, Supplemental Indentures and
Waivers with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.03. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.04. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.05. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.06. Trustee to Sign Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X.
MEETINGS OF SECURITYHOLDERS
SECTION 10.01. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.02. Manner of Calling Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.03. Call of Meetings by Company or Holders . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.04. Who May Attend and Vote at Meetings . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.05. Regulations May Be Made by Trustee;
Conduct of the Meeting; Voting Rights;
Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.06. Voting at the Meeting and Record to Be Kept . . . . . . . . . . . . . . . . . . . 59
SECTION 10.07. Exercise of Rights of Trustee or
Securityholders May Not Be Hindered
or Delayed by Call of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XI.
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of
the Holder Upon Change of Control . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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ARTICLE XII.
MISCELLANEOUS
<TABLE>
<S> <C> <C>
SECTION 12.01. TIA Controls . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.03. Communications by Holders with Other Holders . . . . . . . 64
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.05. Statements Required in Certificate or Opinion . . . . . . . 64
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar . . . . . . . . . 65
SECTION 12.07. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.09. No Adverse Interpretation of Other Agreements . . . . . . . 65
SECTION 12.10. No Recourse against Others . . . . . . . . . . . . . . . . 66
SECTION 12.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.12. Duplicate Originals. . . . . . . . . . . . . . . . . . . . 66
SECTION 12.13. Severability. . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.14. Table of Contents, Headings, Etc. . . . . . . . . . . . . . 66
Form of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
Certificate to be Delivered Upon Exchange or Registration
of Transfer of Notes . . . . . . . . . . . . . . . . . . . . . . Exhibit B
Transferee Letter of Representations . . . . . . . . . . . . . . . Exhibit C
Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S . . . . . . . . . . . . . . . . . . . . Exhibit D
</TABLE>
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<PAGE> 8
INDENTURE, dated as of April 28, 1994, between
Jefferies Group, Inc., a Delaware corporation (the "Company"), and The Bank of
New York, a New York banking corporation, as Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Company's 8 7/8% Senior Notes due 2004:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person:
(i) Long-Term Indebtedness of any other Person existing at the time such other
Person merged with or into such specified Person, including Long-Term
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into such specified Person and (ii) Long-Term
Indebtedness encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
"Affiliate Transaction" shall have the meaning specified in
Section 4.08.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any person, the
Board of Directors of such person or any committee of the Board of Directors of
such person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly
adopted resolution of the Board of Directors of such person.
"Business Day" means a day that is not a Legal Holiday.
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"Capital Lease Obligation" means, at any time any
determination thereof is made, the amount of the liability in respect of a
capital lease that would at such time be so required to be capitalized on the
balance sheet in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participations, rights or the equivalents (however designated) of corporate
stock, including, without limitation, partnership interests.
"Certificated Notes" has the meaning assigned to such term in
Section 2.01.
"Change of Control" means any "person" or "group" (as such
terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act,
whether or not applicable) becomes the "beneficial owner" (as the term is used
in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable,
except that a person shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power entitled to vote in the
election of directors of the Company; provided, however, that a Change of
Control shall not be deemed to have occurred (i) as a result of the formation
of such a "group" or the acquisition of shares of Capital Stock of the Company
by such group if such group includes existing Affiliates and/or persons who
beneficially own in the aggregate, as of the date of the Indenture, 20% or more
of the outstanding shares of Capital Stock of the Company on the date of the
Indenture or (ii) by virtue of the Company, any Subsidiary, any employee stock
ownership plan or any other employee benefit plan of the Company or any
Subsidiary, or any other person holding Capital Stock of the Company for or
pursuant to the terms of any such employee benefit plan, becoming a beneficial
owner, directly or indirectly, of more than 50% of the total voting power
entitled to vote in the election of directors of the Company.
"Change of Control Notice" shall have the meaning specified in
Section 11.01.
"Change of Control Offer" shall have the meaning specified in
Section 11.01.
"Change of Control Payment Date" shall have the meaning
specified in Section 11.01.
"Change of Control Purchase Price" shall have the meaning
specified in Section 11.01.
"Change of Control Put Date" shall have the meaning specified
in Section 11.01.
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<PAGE> 10
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the Indenture and thereafter means
such successor.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (i) the consolidated equity of the common stockholders
of such Person and its Consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that
by its terms is not entitled to the payment of dividends unless such dividends
may be declared and paid only out of net earnings in respect of the year of
such declaration and payment, but only to the extent of any cash received by
such Person upon issuance of such preferred stock.
"Consolidated Net Worth Ratio" means, with respect to any
Person as of the date of calculation, the ratio of (i) the Long-Term
Indebtedness of such person and its Consolidated Subsidiaries as of such date
to (ii) Consolidated Net Worth of such person as of such date.
"Consolidated Subsidiary" means, for any person, each
Subsidiary of such person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated for financial statement reporting purposes with the financial
statements of such person in accordance with GAAP.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time
or the giving of notice both would be an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and successors.
"Disqualified Stock" means any Capital Stock which by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the Holder thereof, in whole or in part, on or
prior to the final date of maturity of the Notes.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Event of Default" shall have the meaning specified in Section
6.01.
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<PAGE> 11
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Exchange Offer" has the meaning ascribed to such term in the
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company in
existence on the date of the execution of this Indenture.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Standards Board or in such other statements by such the entity as
have been approved by a significant segment of the accounting profession, which
are in effect on the date of this Indenture.
"Global Note" shall have the meaning assigned to such term in
Section 2.01.
"Guaranty" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
Obligations of such Person under interest rate swap agreements, interest rate
cap agreements, and interest rate collar agreements, and other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 4.09.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures of similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, and also includes, to
the extent not otherwise included, the Guaranty of any indebtedness of such
Person or any other Person.
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<PAGE> 12
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in forms of
loans (including a Guaranty), advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Issue Date" means the date of first issuance of the
Securities under this Indenture.
"Legal Holiday" shall have the meaning provided in Section
12.07.
"Legend" means the legend initially set forth on the Notes in
the form set forth in Section 2.06.
"Lien" means any mortgage, lien, pledge, charge, security
interest, or other encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law.
"Long-Term Indebtedness" means, with respect to a Person as of
any date, the aggregate amount of Indebtedness which is characterized as
long-term indebtedness on the balance sheet of such Person in accordance with
GAAP.
"Material Subsidiary" means (i) any Subsidiary of the Company
which at December 31, 1993, was a Significant Subsidiary or any successor to
such Subsidiary and (ii) any other Subsidiary of the Company or any of its
Subsidiaries if the Company's or any of its Subsidiaries' Investments in such
Subsidiary at the date of determination thereof, represent 20% or more of the
Company's Consolidated Net Worth as of such date; provided, however, that
clause (ii) shall not include any Subsidiary if, at the time that it became a
Subsidiary, the Company contemplated commencing a voluntary case or proceeding
under the Bankruptcy Law with respect to such Subsidiary.
"Maturity Date," when used with respect to any Security, means
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at
5
<PAGE> 13
the Stated Maturity, Change of Control Payment Date or by declaration of
acceleration, call for redemption or otherwise.
"Minimum Net Capital Amount" means, as of any date, the
product of (i)(x) the total minimum Net Capital required by Rule 15c3- 1 under
the Exchange Act to be maintained by the Company less (y) the portion of such
total minimum Net Capital required as a result of underwriting activities by
Jefferies & Company, Inc. and (ii) 150%.
"Net Capital" shall have the meaning set forth in Rule 15c3-1
under the Exchange Act.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" or "Securities" means, prior to the Exchange Offer,
the Original Notes and, after the Exchange Offer, the Original Notes (if any)
and the Series B Notes, in each case, as amended or modified from time to time
in accordance with the terms hereof, issued under this Indenture.
"Obligations" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means, with respect to the Company, the Chairman of
the Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and otherwise complying with the requirements of Sections 12.04
and 12.05.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee complying with the
requirements of Sections 12.04 and 12.05. Unless otherwise required by the
Trustee, the counsel may be outside counsel to the Company.
"Original Notes" means the 8 7/8% Senior Notes due 2004, as
amended and supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"Paying Agent" shall have the meaning specified in Section
2.03.
"Permitted Liens" means (a) Liens in favor of the Company; (b)
Liens on any shares of Voting Stock of any corporation existing at the time
such corporation becomes a Material Subsidiary of the Company (and any
extensions, renewals
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<PAGE> 14
or replacements thereof); (c) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other Obligations of
a like nature incurred in the ordinary course of business; and (d) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided, that any reserve or
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor.
"Person or person" means any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"principal" of any Indebtedness (including the Securities)
means the principal of such Indebtedness plus any applicable premium, if any,
on such Indebtedness.
"property" means any right or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"Purchase Agreement" means the Purchase Agreement by and among
the Company and the Purchasers, dated as of the date hereof, providing for the
several purchases of the Securities.
"Purchasers" means the Purchasers named on the execution pages
attached to the Purchase Agreement.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to Article Three
of this Indenture and Paragraph 5 of the form of Security.
"Redemption Price," when used with respect to any Security to
be redeemed, means the redemption price for such redemption set forth in
Paragraph 5 of the form of Security, which shall include in each case accrued
and unpaid interest with respect to such security.
"Refinancing Indebtedness" means Indebtedness (a) issued in
exchange for, or the proceeds from the issuance and sale of which are used to
substantially concurrently repay, redeem, decrease, refund, refinance,
discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness in a principal amount not to
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exceed (after deduction of reasonable and customary fees and expenses incurred
in connection with the Refinancing) the lesser of (i) the principal amount of
the Indebtedness so Refinanced and (ii) if such Indebtedness being Refinanced
was issued with an original issue discount, the accredited value thereof (as
determined in accordance with GAAP) at the time of such Refinancing; provided,
that Refinancing Indebtedness shall (x) not have a Weighted Average Life to
Maturity shorter than the Indebtedness to be so refinanced at the time of such
Refinancing, (y) in all respects, be no less subordinated, if applicable, to
the rights of Holders pursuant to the Securities than was the Indebtedness to
be Refinanced and (z) has no scheduled installment of principal earlier than
any installment of principal of the Indebtedness to be so refinanced scheduled
to come due prior to the final maturity of the Securities; and provided further
that, any Existing Indebtedness or new Indebtedness of the Company that becomes
Refinancing Indebtedness shall remain an Obligation of the Company.
"Registrar" shall have the meaning specified in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Purchasers, dated as of the date
hereof.
"Regulation S" means Regulation S under the Securities Act.
"Restricted Security" means a Security, unless or until it has
been (i) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering it, (ii) distributed to the
public pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act and (iii) exchanged for a Series B Note pursuant to the
Registration Rights Agreement.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Series B Notes" means the Series B 8 7/8% Senior Notes due
2004 to be issued pursuant to this Indenture in connection with the offer to
exchange such Series B 8 7/8% Senior Notes due 2004 for Original Notes that may
be made by the Company pursuant to the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulations S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
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"Stated Maturity" when used with respect to any Security,
means May 1, 2004.
"Subsidiary" means any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more of
the other Subsidiaries of that Person or a combination thereof.
"Surviving Person" shall have the meaning specified in Section
5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Section Section 77aaa-77bbbb) as in effect on the date of the execution of
this Indenture, except as provided in Section 9.03.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any vice
president, assistant vice president, secretary, assistant secretary or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at that time shall be
such officers, and also means, with respect to a particular corporate trust
matter, any other officer of the corporate trust department (or any successor
group) of the Trustee to whom such trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"U.S. Government Obligations" means direct noncallable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of any Person (irrespective of whether or not at the time
stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by
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<PAGE> 17
dividing (a) the sum of the products obtained by multiplying (x) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
thereof, by (y) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (b) the
then outstanding principal amount of each Indebtedness.
"W&D" means W & D Securities, Inc., a Delaware corporation.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
words in the plural include the singular;
(5) provisions apply to successive events and
transactions;
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(6) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(7) references to Sections or Articles means
reference to such Section or Article in this Indenture, unless stated
otherwise.
ARTICLE II.
THE SECURITIES
Section 2.01. Forms and Dating.
The Securities and the Trustee's certificate of
authentication, in respect thereof, shall be substantially in the form of
Exhibit A hereto, which is part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. The Company shall approve the form of the Securities and any notation,
legend or endorsement on them. Any such notations, legends or endorsements not
contained in the form of Security attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Security shall be dated the date of
its authentication.
The terms and provisions contained in the form of Securities
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.
Certain of the Notes offered and sold in reliance on Rule 144A
shall be issued in the form of one or more permanent global Notes (the "Global
Note") in registered form, substantially in the form set forth in Exhibit A
attached hereto (including footnotes 1 and 2), deposited with the Trustee, as
custodian for the Depository, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Notes offered and sold in reliance on any the exemption from
registration under the Securities Act other than as described in the preceding
paragraph shall be issued, and Notes offered and sold in reliance on Rule 144A
may be issued, in the form of permanent certificated Notes (the "Certificated
Notes") in registered form in substantially the form set forth in Exhibit A
attached hereto (excluding certain language in accordance with footnotes 1 and
2). Notes offered and sold in offshore transactions in reliance on Regulation
S shall be issued in the
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form of Certificated Notes in registered form in substantially the form set
forth in Exhibit A.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer
at the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless
and the Company shall nevertheless be bound by the terms of the Securities and
this Indenture.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security,
but such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities for original issue
in the aggregate principal amount of up to $50,000,000 upon a written order of
the Company. Such order shall specify the amount of Securities to be
authenticated and the date on which the Securities are to be authenticated.
The aggregate principal amount of Securities outstanding at any time may not
exceed $50,000,000 except as provided in Section 2.07. Upon the written order
of the Company, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar, Paying Agent and Depository.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The City of New York, where Securities may be
presented for payment ("Paying Agent") and an office or agency where notices
and demands to or upon the Company in respect of
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the Securities may be served. The Company may act as its own Registrar or
Paying Agent, except that, for the purposes of Articles Three (including
paragraph 5 of the Notes), Eight, and Eleven neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent,and the Trustee
hereby initially agrees so to act.
The Company shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
The Company initially appoints The Depository Trust Company to
act as Depository with respect to the Global Notes.
SECTION 2.04. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, or interest on, the Securities (whether such assets
have been distributed to it by the Company or any other obligor on the
Securities), and shall notify the Trustee in writing of any Default by the
Company (or any other obligor on the Securities) in making any such payment.
If the Company or a Subsidiary of the Company acts as Paying Agent, it shall
segregate such assets and hold them as a separate trust fund for the benefit of
the Holders or the Trustee. The Company at any time may require a Paying Agent
to distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have
been delivered by the Company to the Paying Agent, the Paying Agent (if other
than the Company) shall have no further liability for such assets.
SECTION 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before the third Business Day preceding each
Interest Payment Date and at such other times as the Trustee may request in
writing a list
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in such form and as of such date as the Trustee reasonably may require of the
names and addresses of Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Certificated Notes. When
Certificated Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Certificated
Notes; or
(y) to exchange such Certificated Notes for an
equal principal amount of Certificated Notes
of other authorized denominations,
the Registrar shall register the transfer to make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Certificated Notes presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his
attorney, duly authorized in writing; and
(ii) in the case of a Certificated Note that is a
Restricted Security, such request shall be
accompanied by the following additional information
and documents, as applicable:
(A) if such Restricted Security is being
delivered to the Registrar by a Holder for
registration in the name of such Holder,
without transfer, a certification to that
effect from such Holder (in substantially the
form of Exhibit B hereto); or
(B) if such Restricted Security is being
transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an
exemption from registration in accordance
with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective
registration statement under the Securities
Act, a certification to that effect from such
Holder (in substantially the form of Exhibit
B hereto) (and, if the Company so requests,
an Opinion of Counsel from such Holder or the
transferee reasonably acceptable to the
Company and to the Registrar to the effect
that such transfer pursuant to Rule 144 is in
compliance with the Securities Act); or
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(C) if such Restricted Security is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certification to that
effect from such Holder (in substantially the
form of Exhibit B hereto) and an Opinion of
Counsel from such Holder or the transferee
reasonably acceptable to the Company and to
the Registrar to the effect that such
transfer is in compliance with the Securities
Act.
(b) Transfer of a Certificated Note for a Beneficial
Interest in a Global Note. A Certificated Note may not be exchanged for a
beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Certificated
Note, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Trustee, together with:
(i) if such Certificated Note is a Restricted
Security, a certification from the Holder
thereof (in substantially the form of Exhibit
B hereto) to the effect that such
Certificated Note is being transferred by
such Holder to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
under the Securities Act; and
(ii) whether or not such Certificated Note is a
Restricted Security, written instructions
from the Holder thereof directing the Trustee
to make an endorsement on the Global Note to
reflect an increase in the aggregate
principal amount of the Notes represented by
the Global Note;
in which case the Trustee shall cancel such Certificated Note and cause, in
accordance with the standing instructions and procedures existing between the
Depository and the Trustee, the aggregate principal amount of Notes represented
by the Global Note to be increased accordingly. If no Global Notes are then
outstanding, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall authenticate a
new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer
and exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture and the procedures of
the Depository therefor, which shall include restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act.
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(d) Transfer of a Beneficial Interest in a Global Note
for a Certificated Note.
(i) Any Person having a beneficial interest in a
Global Note may upon request exchange such
beneficial interest for a Certificated Note.
Upon receipt by the Trustee of written
instructions, or such other form of
instructions as is customary for the
Depository, from the Depository or its
nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in
the case of a Restricted Security, the
following additional information and
documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the Person designated
by the Depository as being the
beneficial owner, a certification to
that effect from such Person (in
substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being
transferred to a "qualified
institutional buyer" (as defined in
Rule 144A under the Securities Act)
in accordance with Rule 144A under
the Securities Act or pursuant to an
exemption from registration in
accordance with Rule 144 or Rule 904
under the Securities Act or pursuant
to an effective registration
statement under the Securities Act,
a certification to that effect from
the transferor (in substantially the
form of Exhibit B hereto) (and, if
the Company so requests, an Opinion
of Counsel from such Holder or the
transferee reasonably acceptable to
the Company and to the Registrar to
the effect that such transfer
pursuant to Rule 144 is in
compliance with the Securities Act);
or
(C) if such beneficial interest is being
transferred in reliance on another
exemption from the registration
requirements of the Securities Act,
a certification to that effect from
the transferor (in substantially the
form of Exhibit B hereto) and an
Opinion of Counsel from the
transferee or transferor reasonably
acceptable to the Company and to the
Registrar to the
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effect that such transfer is in
compliance with the Securities Act,
in which case the Trustee shall, in
accordance with the standing instructions and
procedures existing between the Depository
and the Trustee, cause the aggregate
principal amount of Global Notes to be
reduced accordingly and, following such
reduction, the Company shall execute and,
upon receipt of an authentication order in
accordance with Section 2.02 hereof, the
Trustee shall authenticate and deliver to the
transferee a Certificated Note in the
appropriate principal amount.
(ii) Certificated Notes issued in exchange for a
beneficial interest in a Global Note pursuant
to this Section 2.06(d) shall be registered
in such names and in such authorized
denominations as the Depository, pursuant to
instructions from its direct or indirect
participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such
Certificated Notes to the Persons in whose
names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global
Notes. Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Note may
not be transferred except as a whole (i) by the Depository to a nominee of the
Depository or (ii) by a nominee of the Depository to the Depository or another
nominee of the Depository or (iii) by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Notes in Absence of Depository. If
at any time:
(i) the Depository for the Global Notes notifies
the Company that the Depository is unwilling
or unable to continue as Depository for the
Global Notes and a successor Depository for
the Global Notes is not appointed by the
Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies
the Trustee in writing that it elects to
cause the issuance of Certificated Notes
under this Indenture,
then the Company shall execute, and the Trustee, upon receipt of a written
order of the Company requesting the authentication and
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delivery of Certificated Notes, shall authenticate and deliver, Certificated
Notes in an aggregate principal amount equal to the principal amount of the
Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Note certificate evidencing Global
Notes and Certificated Notes (and all Notes issued in
exchange therefor or substitution thereof) shall bear
legends in substantially the following form:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) (THE "RESALE
RESTRICTION TERMINATION DATE") ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
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REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E)
OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO THE COMPANY AND THE TRUSTEE.
(ii) Upon any sale or transfer of a Restricted Security
(including any Restricted Security represented by a
Global Note) pursuant to Rule 144 under the
Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Restricted Security that
is a Certificated Note, the Registrar shall
permit the Holder thereof to exchange (in
accordance with Section 2.06(a)) such
Restricted Security for a Certificated Note
that does not bear the legend set forth in
(i) above and rescind any restriction on the
transfer of such Restricted Security; and
(B) in the case of any Restricted Security
represented by a Global Note, such Restricted
Security shall not be required to bear the
legend set forth in (i) above, but shall
continue to be subject to the provisions of
Section 2.06(c) and (e) hereof; provided,
however, that with respect to any request for
an exchange of a Restricted Security that is
represented by a Global Note for a
Certificated Note that does not bear the
first legend set forth in (i) above, which
request is made in reliance upon Rule 144,
such exchange shall be made in accordance
with Section 2.06(d) and the Holder thereof
shall certify in writing to the Registrar
that such request is being made pursuant to
Rule 144 (such certification to be
substantially in the form of Exhibit B
hereto).
(iii) Notwithstanding the foregoing, upon consummation of
the Exchange Offer, the Company shall issue and, upon
receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate
Series B Notes in exchange for Original Notes
accepted for exchange in the Exchange Offer, which
Series B Notes shall not bear the first legend set
forth in (i) above, and the Registrar shall rescind
any restriction on the transfer of such Notes, in
each case unless the Holder of such Original Notes is
either (A) a broker-dealer who purchased such
Original Notes
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directly from the Company to resell pursuant to Rule
144A or any other available exemption under the
Securities Act, (B) a person participating in the
distribution of the Original Notes or (C) a person
who is an affiliate (as defined in Rule 144A) of the
Company.
(h) Cancellation and/or Adjustment of Global Notes. At
such time as all beneficial interests in Global Notes have either been
exchanged for Certificated Notes, redeemed, repurchased or cancelled, all
Global Notes shall be returned to or retained and cancelled by the Trustee. At
any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Certificated Notes, redeemed, repurchased or cancelled,
the principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the
Trustee or the Notes Custodian, at the direction of the Trustee, to reflect
such reduction.
(i) General Provisions Relating to Transfers and
Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the
Trustee shall authenticate Certificated Notes
and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder
for any registration of transfer or exchange,
but the Company may require payment of a sum
sufficient to cover any transfer tax or
similar governmental charge payable in
connection therewith (other than any such
transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to
Sections 3.01, 9.05 and 11.01 hereto).
(iii) The Registrar shall not be required:
(A) to register the transfer of or to
exchange Notes for a period of 15
Business Days before mailing of a
notice of a Change of Control Offer
or redemption pursuant to Article
Three hereof; or
(B) to register the transfer of or to
exchange any Note so selected for
redemption in whole or in part,
except the unredeemed portion of any
Note being redeemed in part; or
(C) to register the transfer of or to
exchange a Note between a Record Date
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and the next succeeding Interest
Payment Date.
(iv) All Certificated Notes and Global Notes
issued upon any registration of transfer or
exchange of Certificated Notes or Global
Notes shall be the valid obligations of the
Company, evidencing the same debt, and
entitled to the same benefits under this
Indenture, as the Certificated Notes or
Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer
of or to exchange Notes for a period
of 15 Business Days before mailing
of a notice of a Change of Control
Offer or redemption pursuant to
Article Three hereof; or
(B) to register the transfer of or to
exchange any Note so selected for
redemption in whole or in part,
except the unredeemed portion of any
Note being redeemed in part; or
(C) to register the transfer of or to
exchange a Note between a Record
Date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration
of a transfer of any Note, the Trustee, any
Agent and the Company may deem and treat the
Person in whose name any Note is registered
as the absolute owner of such Note for the
purpose of receiving payment of principal of
and interest on such Notes, and neither the
Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Certificated
Notes and Global Notes upon receipt of an
Officers' Certificate instructing it to do
so.
(viii) Each Holder of a Security agrees to indemnify
the Company and the Trustee against any
liability that may result from the transfer,
exchange or assignment of such Holder's
Security in violation of any provision of
this Indenture and/or applicable U.S. Federal
or state securities law.
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(ix) In the case of a transfer of Securities to an
Institutional Accredited Investor which is
not a QIB, the proposed transferee shall
deliver to the Registrar a certificate
substantially in the form of Exhibit C hereto
and in the case of a transfer to a Non-U.S.
Person pursuant to Regulation S, the proposed
transferor shall deliver to the Registrar a
certificate substantially in the form of
Exhibit D hereto.
(j) Exchange of Original Notes for Series B Notes. The
Original Notes may be exchanged for Series B Notes pursuant to the terms of the
Exchange Offer. The Trustee and Registrar shall make the exchange as follows:
(i) the Company shall present the Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Notes, the
transactions contemplated by the Exchange
Offer have been consummated; and
(B) the principal amount at maturity of Original
Notes properly tendered in the Exchange Offer
which are represented by a Global Note and
the principal amount at maturity of Original
Notes properly tendered in the Exchange Offer
which are represented by Certificated Notes
(together with such Certificated Notes), the
name of each Holder of such Certificated
Notes, the principal amount at maturity
properly tendered in the Exchange Offer by
each such Holder and the name and address to
which Certificated Notes for Series B Notes
shall be registered and sent for each such
Holder.
(ii) The Trustee, upon receipt of such Officers'
Certificate, an Opinion of Counsel that the
Series B Notes have been registered under
Section 5 of the Securities Act and the
Indenture has been qualified under the TIA,
and a written order of the Company, shall
authenticate (A) a Global Note for Series B
Notes in principal amount at maturity equal
to the principal amount at maturity of
Original Notes represented by a Global Note
indicated in such order as having been
properly tendered and (B) Certificated Notes
representing Series B Notes registered in the
names of, and in the principal amounts at
maturity indicated in such order.
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(iii) The Trustee shall exchange such Global Note for
Series B Notes and cancel the Global Note for the
Original Notes pursuant to Section 2.11, or if the
principal amount at maturity of the Global Note for
the Series B Notes is less than the principal amount
at maturity of the Global Note for the Original
Notes, the Trustee shall make an endorsement on such
Global Note for Original Notes indicating a reduction
in the principal amount at maturity represented
thereby.
(iv) The Trustee shall deliver Certificated Notes for
Series B Notes to the Holders thereof as indicated in
the Officers' Certificate described in clause (i)
above.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the effect that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the Company and the
Trustee, to protect the Company, the Trustee or any Agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge such
Holder for its reasonable, out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section 2.08 as
not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security, except as provided
in Section 2.09.
If a Security is replaced pursuant to Section 2.07 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent
(other than the Company or an Affiliate of the Company)
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holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of
the principal and interest due on the Securities payable on that date and
payment of the Securities called for redemption is not otherwise prohibited,
then on and after that date such Securities cease to be outstanding and
interest on them ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, Securities owned by the Company and Affiliates of the
Company shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
amendment, supplement, waiver or consent, only Securities that the Trustee
actually knows are so owned shall be disregarded.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company reasonably and in good
faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent (other than the Company or an Affiliate of the Company), and no one else,
shall cancel and, at the written direction of the Company, shall return all
such cancelled Securities to the Company. Subject to Section 2.07, the Company
may not issue new Securities to replace Securities it has paid or delivered to
the Trustee for cancellation. No Securities shall be authenticated in lieu of
or in exchange for any Securities cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by
this Indenture.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest, plus (to the extent lawful)
interest on the defaulted interest, to the persons who are Holders on a
subsequent Record Date (or at its option on
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a subsequent special record date), which date shall be the fifteenth day
preceding the date fixed by the Company for the payment of defaulted interest,
whether or not such day is a Business Day. At least 15 days before the
subsequent special record date, the Company shall mail to each Holder with a
copy to the Trustee a notice that states the subsequent special record date,
the payment date and the amount of defaulted interest, and interest payable on
such defaulted interest, if any, to be paid.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers
in notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE III.
REDEMPTION
SECTION 3.01. Right of Redemption.
Redemption of Securities, as permitted by Paragraph 5 of the
Securities, shall be made in accordance with such provision and this Article
Three. At its election the Company may redeem Securities, as a whole, or from
time to time in part, at any time on or after May 1, 1999, in each case at the
Redemption Prices specified under the caption "Redemption," in the form of
Security attached hereto as Exhibit A, including accrued and unpaid interest to
the Redemption Date.
SECTION 3.02. Notices to Trustee.
If the Company elects to redeem Securities pursuant to
Paragraph 5 of the Securities and this Article Three, it shall notify the
Trustee in writing of the Redemption Date and the principal amount of
Securities to be redeemed and whether it wants the Trustee to give notice of
redemption to the Holders.
If the Company elects to reduce the principal amount of
Securities to be redeemed pursuant to Paragraph 5 of the Securities by
crediting against any such redemption Securities it has not previously
delivered to the Trustee for cancellation, it shall so notify the Trustee of
the amount of the reduction and deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for
in this Section 3.02 at least 45 days before the
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Redemption Date (unless a shorter notice shall be satisfactory to the Trustee);
provided, however, that the Trustee shall have no liability to any Holder if it
deems such shorter period satisfactory to it.
SECTION 3.03. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed
pro rata or by lot or by such other method as the Trustee shall determine to be
fair and appropriate and in such manner as complies with any applicable legal
and stock exchange requirements.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.
SECTION 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail a notice of redemption by first class mail,
postage prepaid, to the Trustee and each Holder whose Securities are to be
redeemed. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the
amount of accrued and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone
number of the Paying Agent;
(4) that Securities called for
redemption must be surrendered to the Paying Agent at the address specified in
such notice to collect the Redemption Price;
(5) that, unless (a) the Company
defaults in its obligation to deposit U.S. Legal Tender with the Paying Agent
in accordance with Section 3.06 hereof or (b) such redemption payment is
prevented for any reason, interest on Securities called for redemption ceases
to accrue on and after the
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Redemption Date and the only remaining right of the Holders of such Securities
is to receive payment of the Redemption Price, including accrued and unpaid
interest, upon surrender to the Paying Agent of the Securities called for
redemption and to be redeemed;
(6) if any Security is being redeemed in
part, the portion of the principal amount, equal to $1,000 or any integral
multiple thereof, of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued;
(7) if less than all the Securities are
to be redeemed, the identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate principal amount of such
Securities to be redeemed and the aggregate principal amount of Securities to
be outstanding after such partial redemption;
(8) the CUSIP number of the Securities
to be redeemed; and
(9) that the notice is being sent
pursuant to this Section 3.04 and pursuant to the optional redemption
provisions of Paragraph 5 of the Securities.
SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.04, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest. Upon
surrender to the Trustee or Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price including interest, if any, accrued and
unpaid on the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the Interest Payment Date, the accrued
interest shall be payable to the Holder of the redeemed Securities registered
on the relevant Record Date; and provided, further, that if a Redemption Date
is a Legal Holiday, payment shall be made on the next succeeding Business Day
and no interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.06. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit
with the Paying Agent (other than the Company or an Affiliate of the Company)
U.S. Legal Tender sufficient to pay the Redemption Price of, including accrued
and unpaid interest on, all Securities to be redeemed on such Redemption Date
(other than Securities or portions thereof called for redemption on that date
that have been delivered by the Company to the Trustee for cancellation). The
Paying Agent shall promptly return to the
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Company any U.S. Legal Tender so deposited which is not required for that
purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the
other provisions of this Article Three and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph and the other
provisions of this Article Three, interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on such unpaid principal,
in each case at the rate and in the manner provided in Section 4.01 hereof and
the Security.
SECTION 3.07. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE IV.
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal, premium, if any, or interest on the
Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on that date, U.S. Legal Tender in immediately
available funds deposited and designated for and sufficient to pay the
installment.
The Company shall pay interest on overdue principal and on
overdue installments of interest at the rate specified in the Securities
compounded semi-annually, to the extent lawful.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the
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Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the address of the Trustee set forth in Section 12.02.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency. The Company hereby initially designates the principal
corporate trust office of the Trustee as such office of the Company.
SECTION 4.03. Corporate Existence.
Subject to Article Five, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate or other existence of each of its
Subsidiaries in accordance with the respective organizational documents of each
of them and the rights (charter and statutory) and corporate franchises of the
Company and each of its Subsidiaries; provided, however, that the Company shall
not be required to preserve, with respect to itself, any right or franchise,
and with respect to any of its Subsidiaries, any such existence, right or
franchise, if (a) the Board of Directors of the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall, and shall cause each of its Subsidiaries
to, pay or discharge or cause to be paid discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon the Company or any of its Subsidiaries or
properties and assets of the Company or any of its Subsidiaries and (ii) all
lawful claims, whether for labor, materials, supplies, service or anything
else, which have become due and payable at which by law have or may become a
Lien upon the property and assets of the Company or any of its Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in
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good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 4.05. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee
within 120 days after the end of its fiscal year an Officers' Certificate (one
of the signatories of which shall be the Company's principal executive officer,
principal financial officer or principal accounting officer) complying with
Section 314(a)(4) of the TIA and stating that a review of its activities and
the activities of its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture (all without regard to periods of grace (other than the
periods set forth in Section 6.01 (vii) and (viii), which shall be deemed
fulfilled unless and until the expiration of such periods) or notice
requirements) and further stating, as to each such Officer signing such
certificate, whether or not the signer knows of any failure by the Company or
any Subsidiary of the Company to comply with any conditions or covenants in
this Indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end
on any date other than the current fiscal year end date.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
Company shall deliver to the Trustee within 120 days after the end of each of
its fiscal years a written report of a firm of independent certified public
accountants with an established national reputation stating that in conducting
their audit for such fiscal year, nothing has come to their attention that
caused them to believe that the Company or any Subsidiary of the Company was
not in compliance with the provisions set forth in Section 4.09 of this
Indenture.
(c) The Company shall, so long as any of the
Securities are outstanding, deliver to the Trustee, immediately upon becoming
aware of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto. The Trustee shall
not be deemed to have knowledge of a Default or an Event of Default unless one
of its Trust Officers receives notice of the Default giving rise thereto from
the Company or any of the Holders.
SECTION 4.06. SEC Reports.
(a) The Company shall file with the Trustee,
simultaneously with any filing of the same with the SEC, copies
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of the quarterly and annual reports and the information, documents, and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe), if any, which it is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the Company is not
subject to the requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall file with the Trustee, at the time it would have been required to
file such information with the SEC were it required to do so, financial
statements, including any notes thereto (and, in the case of a fiscal year end,
an auditors' report by an independent certified public accounting firm of
established national reputation), and a "Management's Discussion and Analysis
of Financial Condition and Results of Operations," comparable to that which it
would have been required to include in such quarterly or annual reports,
information, documents or other reports if it had been subject to the
requirements of Section 13 or 15(d) of the Exchange Act (the "MD&A").
(b) The Company shall cause its annual reports to
stockholders containing audited consolidated financial statements and any
quarterly or other financial reports furnished by it to stockholders pursuant
to the Exchange Act, if any, to be mailed to the Holders (no later than the
date such materials are mailed or made available to its stockholders) at their
addresses appearing in the registrar of Securities maintained by the Registrar.
If the Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, the Company shall cause its
financial statements referred to in Section 4.06(a) above, including any notes
thereto (and, in the case of a fiscal year end, an auditors' report by an
independent certified public accounting firm of established national
reputation), together with the MD&A, to be so mailed to the Holders within 125
days after the end of each of its fiscal years and within 50 days after the end
of each of the first three fiscal quarters of each fiscal year. If the Trustee
(at the Company's request and expense) is to mail the foregoing information to
the Holders, the Company shall supply such information to the Trustee at least
three Business Days prior thereto.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.07. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other
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law wherever enacted which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law insofar as such law applies to the
Securities, and covenants that it shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
SECTION 4.08. Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or asset from, or enter into
any transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (a) such Affiliate Transaction is made on
terms that are no less favorable to the Company or the relevant Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Subsidiary with an unrelated person and (b) the Company delivers to the
Trustee with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10
million in any fiscal year, a resolution of the Board of Directors set forth in
an Officers' Certificate certifying that such Affiliate Transaction or series
of related Affiliate Transactions complies with clause (a) above and such
Affiliate Transaction or series of related Affiliate Transactions has been
approved by a majority of the disinterested members of the Board of Directors;
provided, however, that (i) any employment agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company, such Subsidiary or W&D; (ii)
transactions between or among the Company, its Subsidiaries and/or W&D, and
(iii) Affiliate Transactions entered into prior to the Issue Date, shall be
deemed not to be Affiliate Transactions.
SECTION 4.09. Limitation on Incurrences of Long-Term
Indebtedness.
Except as set forth below in this Section 4.09, the Company
shall not, and the Company shall not permit any of its Subsidiaries to,
directly or indirectly, issue, incur, assume, guarantee, become directly or
indirectly liable with respect to, extend the maturity of, or otherwise become
responsible for, contingently or otherwise (individually and collectively, to
"incur," or, as appropriate, an "incurrence"), any Long-Term Indebtedness
(including Acquired Debt) from and after the Issue Date.
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(a) The Company may incur Long-Term Indebtedness
if, on the date of the incurrence of such Long-Term Indebtedness, the Company's
Consolidated Net Worth Ratio (after giving effect to such incurrence of such
Long-Term Indebtedness) would be less than or equal to 2.00.
(b) The Company's Subsidiaries may incur
Long-Term Indebtedness if, on the date of the incurrence of such Long- Term
Indebtedness, (i) the Company's Consolidated Net Worth Ratio (after giving
effect to such Subsidiary's incurrence of such Long-Term Indebtedness) would be
less than or equal to 2.00 and (ii) the aggregate principal amount of all
Long-Term Indebtedness of the Company's Subsidiaries (after giving effect to
such Subsidiary's incurrence of such Long-Term Indebtedness) would be less than
or equal to the aggregate Consolidated Net Worth of each of the Company's
Subsidiaries (but not including the Company).
(c) The Company may incur Long-Term Indebtedness
evidenced by the Securities and other obligations under this Indenture up to
the amounts specified herein and therein as of the date hereof.
(d) Any Subsidiary of the Company may incur
Long-Term Indebtedness to the Company, or to a Subsidiary of the Company, and
the Company may incur Long-Term Indebtedness to any Subsidiary of the Company.
(e) The Company and its Subsidiaries may incur
Long-Term Indebtedness so long as such indebtedness is incurred in the ordinary
course of business, consistent with past practices, under (A) Hedging
Obligations, (B) foreign currency hedge obligations, (C) performance bonds, or
letters of credit or reimbursement obligations in respect thereof or (D) letter
of credit obligations related to insurance (including self-insurance) with
respect to claims by employees for work-related injuries.
(f) The Company and its Subsidiaries may incur
Long-Term Indebtedness that is Existing Indebtedness;
(g) For the purposes of refinancing Long-Term
Indebtedness incurred pursuant to paragraphs (a), (b), (c) and (f) ,the Company
or any Subsidiary of the Company may incur Refinancing Indebtedness.
SECTION 4.10. Limitation on Liens.
The Company shall not, and shall not permit any of its
Material Subsidiaries to, issue, incur, assume or guarantee any Indebtedness
for borrowed money secured by a Lien (other than Permitted Liens), directly or
indirectly, upon any shares of the Voting Stock of a Material Subsidiary which
shares are owned by the Company or its Material Subsidiaries without
effectively providing that the Notes (and if the Company so elects, any other
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indebtedness of the Company ranking on a parity with the Notes) shall be
secured equally and ratably with, or prior to, any such secured Indebtedness so
long as such Indebtedness remains outstanding.
SECTION 4.11. Delivery of Certain Information.
At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, upon the request of a Holder of a Security, the
Company will promptly furnish or cause to be furnished Rule 144A Information
(as defined below) to such Holder, to a prospective purchaser who is a
"qualified institutional buyer," within the meaning of Rule 144A under the
Securities Act, of such Security designated by such Holder in order to permit
compliance by such Holder with Rule 144A in connection with the resale of such
Security by such Holder; provided, however, that the Company shall not be
required to furnish such information in connection with any request made on or
after the date which is three years from the later of (i) the date such
Security (or any predecessor Security) was acquired from the Company or (ii)
the date such Security (or any predecessor Security) was last acquired from an
"affiliate" of the Company within the meaning of Rule 144 under the Securities
Act. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144(d)(4) under the Securities Act as in effect on the date
hereof.
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc.
The Company may not, in a single transaction or
through a series of related transactions, consolidate with or merge with or
into any other person, or, directly or indirectly, sell, lease, assign,
transfer or convey its properties and assets as an entirety or substantially as
an entirety (computed on a consolidated basis) to another person or group of
affiliated persons, unless:
(1) the Company shall be the continuing person,
or the person (if other than the Company) formed by such consolidation
or into which the Company is merged or to which all or substantially
all of the properties and assets of the Company are transferred as an
entirety or substantially as an entirety (the Company or such other
person being hereinafter referred to as the "Surviving Person"), shall
be a corporation organized and validly existing under the laws of the
United States, any State thereof or the District of Columbia, and
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form and substance satisfactory to
the Trustee, all the obligations of the Company under the
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Securities and this Indenture and the Indenture, so supplemented,
shall remain in full force and effect;
(2) immediately after giving effect to such
transaction and the assumption of the obligations as set forth in
clause (1), above, no Default or Event of Default shall have occurred
and be continuing; and
(3) if a supplemental indenture is required in
connection with such transaction, the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, assignment, or transfer and
such supplemental indenture comply with this Article Five and that all
conditions precedent herein provided relating to such transaction have
been satisfied.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.01, the Surviving Person formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such Surviving
Person had been named as the Company herein. When a Surviving Person duly
assumes all of the obligations of the Company pursuant hereto and pursuant to
the Securities, the predecessor shall be relieved of the performance and
observance of all obligations and covenants of this Indenture and the
Securities, including but not limited to the obligation to make payment of the
principal of and interest, if any, on all the Securities then outstanding, and
the Company may thereupon or any time thereafter be liquidated and dissolved.
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation,
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(i) failure by the Company to pay installments of
interest on the Notes as and when the same becomes due and payable and
the continuance of any such failure for 30 days;
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(ii) the failure by the Company to pay all or any
part of the principal of or premium, if any, on the Notes when the
same becomes due and payable, whether at maturity, by call for
redemption, acceleration, repurchase obligation or otherwise;
(iii) the failure by the Company for 60 days after
notice to the Company by the Trustee or the holders of at least 25%
percent in aggregate principal amount of the Notes then outstanding to
comply with any other agreement or covenant in this Indenture;
(iv) any default under any mortgage, indenture or
other instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness of the Company or any of its
Subsidiaries whether such Indebtedness now exists or is created after
the date of this Indenture if (a) such default either (i) results from
the failure to pay any principal of any Indebtedness at maturity
(after expiration of any applicable grace period) or (ii) relates to
an obligation other than the obligation to pay any principal of such
Indebtedness at maturity and results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its
stated maturity and (b) the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at maturity or which has been so
accelerated, aggregates $15,000,000 or more at any one time;
(v) a decree, judgment, or order by a court of
competent jurisdiction shall have been entered adjudging the Company
or any of its Material Subsidiaries as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the
Company of any of its Material Subsidiaries under any bankruptcy or
similar law, and such decree or order shall have continued
undischarged and unstayed for a period of 60 days; or a decree or
order of a court of competent jurisdiction over the appointment of a
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency
of the Company or any of its Material Subsidiaries, or of the property
of any such person, or for the winding up or liquidation of the
affairs of any such person, shall have been entered, and such decree,
judgment, or order shall have remained in force undischarged and
unstayed for a period of 60 days;
(vi) the Company or any of its Material
Subsidiaries shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking
reorganization under any bankruptcy or similar law or similar statute,
or shall consent to the filing of any such petition, or shall consent
to the appointment of a custodian, receiver, liquidator,
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trustee, or assignee in bankruptcy or insolvency of it or any of its
assets or property, or shall make a general assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall, within the meaning of any
Bankruptcy Law, become insolvent, fails generally to pay their debts
as they become due, or takes any corporate action in furtherance of or
to facilitate, conditionally or otherwise, any of the foregoing;
(vii) the failure of the Company to maintain a minimum
Consolidated Net Worth greater than or equal to $87,000,000, and the
continuance of any such failure for a period of 180 consecutive days;
or
(viii) the failure of Jefferies & Company, Inc. to maintain
Net Capital greater than or equal to the Minimum Net Capital Amount,
and the continuance of any such failure for a period of 30 consecutive
days.
Notwithstanding the 30-day period and notice requirement
contained in Section 6.01(iii) above, with respect to a default under Article
Eleven (i) the 30-day period referred to in Section 6.01(iii) shall be deemed
to have begun as of the date the Change of Control Notice is required to be
sent in the event that the Company has not complied with the provisions of
Section 11.01, and the Trustee or Holders of at least 25% in principal amount
of the outstanding Securities thereafter give the Notice of Default referred to
in Section 6.01(iii) to the Company and, if applicable, the Trustee; provided,
however, that if the breach or default is a result of a default in the payment
when due of the Change of Control Purchase Price on the Change of Control
Payment Date, such default shall be deemed, for purposes of this Section 6.01,
to arise no later than on the Change of Control Payment Date.
SECTION 6.02. Acceleration of Maturity Date; Rescission and
Annulment.
If an Event of Default (other than an Event of Default
specified in Section 6.01(v) or (vi)) occurs and is continuing, then, and in
every such case, unless the principal of all of the Securities shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of then outstanding Securities, by a
notice in writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all of the principal of the Securities (and
premium, if applicable) determined as set forth below, together with accrued
interest thereon, to be due and payable immediately. If an Event of Default
specified in Section 6.01(v) or (vi) occurs, all principal of, premium
applicable to, and accrued interest on, the Securities shall be immediately due
and payable on all outstanding Securities without any declaration or other act
on the part of the Trustee or the Holders.
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At any time after such a declaration of acceleration being
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this Article Six, the
Holders of not less than a majority in aggregate principal amount of then
outstanding Securities, by written notice to the Company and the Trustee, may
waive, on behalf of all Holders, an Event of Default or an event which with
notice or lapse of time or both would become an Event of Default if:
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all
Securities,
(B) the principal of (and premium, if
any, applicable to) any Securities which would become due otherwise than
by such declaration of acceleration, and interest thereon at the rate
borne by the Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate borne by
the Securities,
(D) all sums paid or advanced by the
Trustee hereunder and the compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the
non-payment of amounts which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.12,
including, if applicable, any Event of Default relating to the covenants
contained in Section 11.01.
Notwithstanding the previous sentence of this Section 6.02, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Security, unless all such affected Holders agree, in writing, to
waive such Event of Default or event. No such waiver shall cure or waive any
subsequent default or impair any right consequent thereon.
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clauses (1) or (2) of Section 6.01
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal, premium (if any) and
interest, and, to the extent that payment of such interest shall be legally
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enforceable, interest on any overdue principal (and premium, if any) and on any
overdue interest, at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including compensation to, and expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.04. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise to take any and
all actions under the TIA, including
(i) to file and prove a claim for the
whole amount of principal (and premium, if any) and interest
owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel) and of the
Holders allowed in such judicial proceeding, and
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(ii) to collect and receive any moneys
or other property payable or deliverable on any such claims
and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment, or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession
of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
SECTION 6.06. Priorities.
Any money collected by the Trustee pursuant to this Article
Six shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium (if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant
to Section 7.07;
SECOND: To the Holders in payment of the amounts then due and
unpaid for principal of, premium (if any) and interest on, the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable
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on such Securities for principal, premium (if any) and interest, respectively;
and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
SECTION 6.07. Limitation on Suits.
No Holder of any Security shall have any right to order or
direct the Trustee to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(A) such Holder has previously
given written notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than
25% in principal amount of then outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(C) such Holder or Holders have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities to be incurred or reasonably probable
to be incurred in compliance with such request;
(D) the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity has failed
to institute any such proceeding; and
(E) no direction inconsistent with
such written request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of the
outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium (if any) and
interest on, such Security on the Maturity Dates of such payments as expressed
in such Security (in
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the case of redemption, the Redemption Price on the applicable Redemption Date,
in the case of the Change of Control Purchase Price, on the applicable Change
of Control Purchase Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
SECTION 6.09. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 2.07,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event of Default
shall impair the exercise of any such right or remedy or constitute a waiver of
any such Event of Default. Every right and remedy given by this Article Six or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Holders, as the
case may be.
SECTION 6.11. Control by Holders.
The Holder or Holders not less than of a majority in aggregate
principal amount of then outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee; provided, that
(A) such direction shall not be in
conflict with any rule of law or with this Indenture,
(B) the Trustee shall not determine that
the action so directed would be unjustly prejudicial to the
Holders not taking part in such direction, and
(C) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent
with such direction.
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SECTION 6.12. Waiver of Past Default.
Subject to Sections 6.08, the Holder or Holders of not less
than a majority in aggregate principal amount of the outstanding Securities
may, by written notice to the Trustee on behalf of all Holders, prior to the
declaration of the acceleration of the maturity of the Securities, waive any
past default hereunder and its consequences, except a default
(A) in the payment of the principal of,
premium, if any, or interest on, any Security as specified in
clauses (i) and (ii) of Section 6.01, or
(B) in respect of a covenant or
provision hereof which, under Article Nine, cannot be modified
or amended without the consent of the Holder of each
outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair the exercise of any right arising
therefrom.
SECTION 6.13. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted to be taken by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant
in such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section 6.13
shall not apply to any suit instituted by the Company, to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in aggregate principal amount of the
outstanding Securities, or to any suit instituted by any Holder for enforcement
of the payment of principal of, or premium (if any) or interest on, any
Security on or after the Maturity Date of such Security.
SECTION 6.14. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former
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positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE VII.
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. Duties of Trustee.
(a) If a Default or an Event of Default
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a
Default or an Event of Default:
(1) The Trustee need perform only
those duties as are specifically set forth in this Indenture and no
others, and no covenants or obligations shall be implied in or read
into this Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on
its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or
other facts stated therein).
(c) The Trustee may not be relieved from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(1) This paragraph does not limit
the effect of paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable
for any error of judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts.
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(3) The Trustee shall not be liable
with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or to
take or omit to take any action under this Indenture or at the request, order
or direction of the Holders or in the exercise of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of such funds
or adequate Indemnity against such risk or liability is not reasonably assured
to it.
(e) Every provision of this Indenture
that in any way relates to the Trustee is subject to paragraphs (a), (b), (c),
(d) and (f) of this Section 7.01.
(f) The Trustee shall not be liable for
interest on any assets received by it except as the Trustee may agree in
writing with the Company. Assets held in trust by the Trustee need not be
segregated from other assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains
from acting, it may consult with counsel and may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to Sections 12.04 and
12.05. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through its
attorneys and agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for
any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(e) The Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, notice, request, direction,
consent, order, bond, debenture, or other paper or document, but the Trustee,
in its discretion, may make
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such further inquiry or investigation into such facts or matters as it may see
fit.
(f) The Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the Holders, pursuant to
the provisions of this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities and it shall not be accountable
for the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal (or premium, if any) of, or
interest on, any Security (including the payment of the Change of Control
Purchase Price on the Change of Control Purchase Date or the payment of the
Redemption Price on the Redemption Date), the Trustee may withhold the notice
if and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each November 1 beginning with the
November 1 following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such November 1 that complies with
TIA Section 313(a) if such report is required by such TIA Section 313(a).
The Trustee also shall comply with TIA Sections 313(b) and 313(c).
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The Company shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or automatic quotation
system.
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC and each
stock exchange, if any, on which the Securities are listed.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation for its services as the Company and the Trustee shall from time to
time agree in writing. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
accountants, experts and counsel.
The Company shall indemnify each of the Trustee (in its
capacity as Trustee) and any predecessor Trustee and each of their respective
officers, directors, attorneys-in-fact and agents for, and hold it harmless
against, any claim, demand, expense (including but not limited to reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel),
loss, charges (including taxes (other than taxes based upon the income of the
Trustee)) or liability incurred by them without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this trust and their rights or duties hereunder including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall provide reasonable cooperation at the Company's
expense in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need
not pay for any settlement made without its written consent. The Company need
not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Securities on all assets held
or collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(v) or (vi) occurs, the expenses and
the compensation for the services are
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intended to constitute expenses of administration under any Bankruptcy Law.
The Company's obligations under this Section 7.07 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article Eight of this
Indenture and any rejection or termination of this Indenture under any
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing.
The Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee
in writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply
with Section 7.10;
(2) the Trustee is adjudged
bankrupt or insolvent;
(3) a receiver, Custodian, or other
public officer takes charge of the Trustee or its property; or
(4) the Trustee becomes incapable
of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holder or Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.07
have been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 7.07,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holder or Holders of at
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least 10% in principal amount of the outstanding Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b).
SECTION 7.11. Preferential Collection of Claims against
Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VIII.
SATISFACTION AND DISCHARGE
SECTION 8.01. Satisfaction, Discharge of the Indenture and
Defeasance of the Securities.
The Company shall be deemed to have paid and discharged the
entire Indebtedness on the Securities and the provisions of this Indenture
shall cease to be of further effect (subject to Section 8.03), if:
(1) The Company irrevocably
deposits in trust with the Trustee, pursuant to an irrevocable trust
and security agreement in form and substance reasonably satisfactory
to the Trustee, (i) U.S. Legal Tender in an
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amount, (ii) U.S. Government Obligations in an amount, or (iii) a
combination thereof in an amount, which in the case of U.S.
Government Obligations after payment of all Federal, state and local
taxes or other charges or assessments in respect thereof payable by
the Trustee, which through the payment of principal and interest will
provide, not later than one day before the due date of payment in
respect of the Securities, U.S. Legal Tender in an amount which, in
the opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof
delivered to the Trustee, is sufficient to pay the principal of,
premium, if any, and each installment of principal and interest to
Stated Maturity on the Securities then outstanding on the dates on
which any such payments are due and payable in accordance with the
terms of this Indenture and of the Securities;
(2) the Company has paid or caused
to be paid all other sums payable with respect to the outstanding
Securities;
(3) Such deposits shall not cause
the Trustee to have a conflicting interest as defined in and for
purposes of the TIA;
(4) No Default or Event of Default
shall have occurred or be continuing on the date of such deposit, and
such deposit will not result in a Default or Event of Default under
this Indenture or a breach or violation of, or constitute a default
under, any other material instrument to which the Company or any
Subsidiary of the Company is a party or by which it or its property is
bound;
(5) The Trustee has received an
opinion of tax counsel to the effect that the deposit, defeasance and
discharge will not cause the Holders of the Notes to recognize income,
gain or loss for federal income tax purposes and that the Holders will
be subject to Federal income tax in the same amounts and in the same
manner and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(6) The deposit shall not result in
the Company, the Trustee or the trust becoming an "investment company"
under the Investment Company Act of 1940;
(7) Ninety days (or any greater
period of time in which any such deposit of trust funds may remain
subject to Bankruptcy Laws insofar as those laws apply to the Company)
have elapsed following the deposit of the trust funds and such funds
are not subject to any Bankruptcy Laws affecting creditors' rights
generally;
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(8) Holders of the Securities have
a valid, perfected and unavoidable first-priority security interest in
the trust funds; and
(9) The Company has delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each
in form and substance satisfactory to the Trustee, stating that all
conditions precedent specified herein relating to the defeasance
contemplated by this Section 8.01 have been complied with.
In the event all or any portion of the Securities are to be
redeemed through such irrevocable trust, the Company must make arrangements
satisfactory to the Trustee, at the time of such deposit, for the giving of the
notice of such redemption or redemptions by the Trustee in the name and at the
expense of the Company.
In the event that the Company takes the necessary action to
comply with the provisions described in this Section 8.01 and the Securities
are declared due and payable because of the occurrence of an Event of Default,
the Company will remain liable for all amounts due on the Securities at the
time of acceleration resulting from such Event of Default in excess of the
amount of money and U.S. Obligations deposited with the Trustee pursuant to
this Section 8.01 at the time with such acceleration.
SECTION 8.02. Termination of Obligations Upon Cancellation of
the Securities.
In addition to the Company's rights under Section 8.01, the
Company may terminate all of its obligations under this Indenture (subject to
Section 8.03) when:
(1) all Securities theretofore
authenticated and delivered (other than Securities which have
been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.07) have been delivered to the
Trustee for cancellation;
(2) the Company has paid or caused
to be paid all sums payable hereunder by the Company; and
(3) the Company has delivered to
the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent specified
herein relating to the satisfaction and discharge of this
Indenture have been complied with and that such satisfaction
and discharge will not result in a breach or violation of, or
constitute in Default under, this Indenture or any other
instrument to which the Company or any of its Subsidiaries is
a party or by which it or their property is bound.
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SECTION 8.03. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this
Indenture and of the Securities referred to in Section 8.01 or 8.02, the
respective obligations of the Company and the Trustee under Sections 2.02,
2.03, 2.04, 2.05, 2.06, 2.07, 2.11, 2.12, Article Three, 4.01, 4.02, 4.04,
6.07, 6.08, 7.07, 7.08, 8.05, 8.06, 8.07, 12.01, 12.02, 12.04, 12.05, 12.07,
12.08, 12.11 and this Section 8.03 shall survive until the Securities are no
longer outstanding, and thereafter the obligations of the Company and the
Trustee under Sections 6.08, 7.07, 7.08, 8.05, 8.06, 8.07, 12.04, 12.05, 12.11
and this Section 8.03 shall survive. Nothing contained in this Article Eight
shall abrogate any of the obligations or duties of the Trustee under this
Indenture.
SECTION 8.04. Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.01 or 8.02 have been
satisfied, (ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company and (iii) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i), above, relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.03.
SECTION 8.05. Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S.
Government Obligations deposited with it in the irrevocable trust established
pursuant to Section 8.01. The Trustee shall apply the deposited U.S. Legal
Tender or U.S. Government Obligations, together with earnings thereon, through
the Paying Agent (other than the Company or any Affiliate of the Company), in
accordance with this Indenture and the terms of the Securities, to the payment
of principal of and interest on the Securities.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Legal Tender
or U.S. Government Obligations deposited pursuant to Section 8.01 or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of outstanding
Securities.
SECTION 8.06. Repayment to the Company.
Upon termination of the trust established pursuant to Section
8.01, the Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess U.S. Legal Tender or U.S. Government Obligations held by
them.
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The Trustee and the Paying Agent shall pay to the Company upon
request, and, if applicable, in accordance with the irrevocable trust
established pursuant to Section 8.01, any U.S. Legal Tender or U.S. Government
Obligations held by them for the payment of principal of or interest on the
Securities that remain unclaimed for two years after the date on which such
payment shall have become due; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may, at the
expense of the Company, cause to be published once, in a newspaper customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining shall be repaid to the Company. After payment to the Company,
Holders entitled to such payment must look to the Company for such payment as
general creditors unless an applicable abandoned property law designates
another person.
SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S.
Legal Tender or U.S. Government Obligations in accordance with Section 8.01 or
8.02 by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture
and the Securities shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 or 8.02 until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender or U.S.
Government Obligations in accordance with Section 8.01 or 8.02; provided,
however, that if the Company has made any payment of principal of, premium, if
any, or interest on any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the U.S. Legal Tender or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Company, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
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(1) to cure any ambiguity, defect,
or inconsistency, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture, provided such
action pursuant to this clause (1) shall not adversely affect the
interests of any Holder in any respect;
(2) to add to the covenants and
Events of Default of the Company for the benefit of the Holders, or to
surrender any right or power herein conferred upon the Company or to
make any other change that does not adversely affect the rights of any
Holder;
(3) to provide for collateral for
the Securities;
(4) to evidence the succession of
another person to the Company, and the assumption by any such
successor of the obligations of the Company, herein and in the
Securities in accordance with Article Five;
(5) to comply with the TIA; or
(6) establishing the form or terms
of Notes or to provide for uncertificated Securities in addition to or
in place of certificated Securities and to provide for the issuance
and authorization of Series B Notes in exchange for Original Notes in
compliance with this Indenture and the Registration Rights Agreement.
SECTION 9.02. Amendments, Supplemental Indentures and Waivers
with Consent of Holders.
Subject to Section 6.08, with the consent of the Holders of
not less than a majority in aggregate principal amount of then outstanding
Securities, by written act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolutions, and the Trustee may
amend or supplement this Indenture or the Securities or enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or the Securities or of modifying in any manner the rights of the
Holders under this Indenture or the Securities. Subject to Section 6.08, the
Holder or Holders of a majority, in principal amount of then outstanding
Securities may waive compliance by the Company with any provision of this
Indenture or the Securities. Notwithstanding any of the above, however, no
such amendment, supplemental indenture or waiver shall, without the consent of
the Holder of each outstanding Security affected thereby:
(1) reduce the percentage of
principal amount of Securities whose Holders must consent to an
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amendment, supplement or waiver of any provision of this Indenture or
the Securities;
(2) reduce the rate or extend the
time for payment of interest on any Security;
(3) reduce the principal amount of
any Security or the Redemption Price;
(4) change the Stated Maturity of
any Security or extend any Maturity Date of any Security;
(5) alter the redemption provisions
of Article Three (or Paragraph 5 of the Securities) in a manner
adverse to any Holder;
(6) make any changes in the
provisions concerning waivers of Defaults or Events of Default by
Holders of the Securities or the rights of Holders to recover the
principal or premium of, interest on, or redemption payment with
respect to, any Security;
(7) make any changes in Section
6.08, 6.12 or this third sentence of this Section 9.02;
(8) make the principal of, or the
interest on, any Security payable with anything or in any manner other
than as provided for in this Indenture and the Securities on the Issue
Date; or
(9) make the Securities
subordinated in right of payment to any extent or under any
circumstances to any other indebtedness.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
In connection with any amendment, supplement or waiver under
this Article Nine, the Company may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or
waiver.
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SECTION 9.03. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may
revoke the consent as to his Security or portion of his Security by written
notice to the Company or the person designated by the Company as the person to
whom consents should be sent if such revocation is received by the Company or
such person before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be the date so fixed
by the Company notwithstanding the provisions of the TIA. If a record date is
fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those persons who were Holders at such record date, and only those
persons (or their duly designated proxies), shall be entitled to revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder unless it makes a change described in any of
clauses (1) through (9) of Section 9.02, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security;
provided, that any such waiver shall not impair or affect the right of any
Holder to receive payment of principal and premium of and interest or a
Security, on or after the respective dates set for such amounts to become due
and payable expressed in such Security, or to bring suit for the enforcement of
any such payment on or after such respective dates.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an
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appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Any failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture.
ARTICLE X.
MEETINGS OF SECURITYHOLDERS
SECTION 10.01. Purposes for Which Meetings May Be Called.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article Ten for any of the
following purposes:
(a) to give any notice to the Company or
to the Trustee, or to give any directions to the Trustee, or to waive or to
consent to the waiving of any Default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of Article Six;
(b) to remove the Trustee or appoint a
successor Trustee pursuant to the provisions of Article Seven;
(c) to consent to an amendment,
supplement or waiver pursuant to the provisions of Section 9.02; or
(d) to take any other action (i)
authorized to be taken by or on behalf of the Holder or Holders of any
specified aggregate principal amount of the Securities under any other
provision of this Indenture, or authorized or permitted by law or (ii) which
the Trustee deems necessary or appropriate in connection with the
administration of this Indenture.
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SECTION 10.02. Manner of Calling Meetings.
The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 10.01, to be held at such time and at
such place in The City of New York, State of New York or elsewhere as the
Trustee shall determine. Notice of every meeting of Securityholders, setting
forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be mailed by the Trustee,
first-class postage prepaid, to the Company and to the Holders at their last
addresses as they shall appear on the registration books of the Registrar, not
less than 10 nor more than 60 days prior to the date fixed for a meeting. The
Company shall pay the costs and expenses of preparing and mailing such notice.
Any meeting of Securityholders shall be valid without notice
if the Holders of all Securities then outstanding are present in person or by
proxy, or if notice is waived before or after the meeting by the Holders of all
Securities outstanding, and if the Company and the Trustee are either present
by duly authorized representatives or have, before or after the meeting, waived
notice.
SECTION 10.03. Call of Meetings by Company or Holders.
In case at any time the Company, pursuant to a Board
Resolution, or the Holders of not less than 10% in aggregate principal amount
of the Securities then outstanding, shall have requested the Trustee to call a
meeting of Securityholders to take any action specified in Section 10.01, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within 20 days after receipt of such request, then the Company or the
Holders of Securities in the amount above specified may determine the time and
place in The City of New York, State of New York or elsewhere for such meeting
and may call such meeting for the purpose of taking such action, by mailing or
causing to be mailed notice thereof as provided in Section 10.02, or by causing
notice thereof to be published at least once in each of two successive calendar
weeks (on any Business Day during such week) in a newspaper or newspapers
printed in the English language, customarily published at least five days a
week of a general circulation in The City of New York, State of New York, the
first such publication to be not less than 10 nor more than 60 days prior to
the date fixed for the meeting.
SECTION 10.04. Who May Attend and Vote at Meetings.
To be entitled to vote at any meeting of Securityholders, a
person shall (a) be a registered Holder of one or more Securities, or (b) be a
person appointed by an instrument in writing as proxy for the registered Holder
or Holders of Securities. The only persons who shall be entitled to be present
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or to speak at any meeting of Securityholders shall be the persons entitled to
vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
SECTION 10.05. Regulations May Be Made by Trustee; Conduct of
the Meeting; Voting Rights; Adjournment.
Notwithstanding any other provision of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
action by or an meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspect of votes, and submission and examination of
proxies, certificates and other evidence of the right to vote, such other
matters concerning the conduct of the meeting as it shall think appropriate.
Such regulations may fix a record date and time for determining the Holders of
record of Securities entitled to vote at such meeting, which case those and
only those persons who are Holders of Securities at the record date and time so
fixed, or their proxies, shall be entitled to vote at such meeting whether or
not they shall be such Holders at the time the meeting.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 10.03, in which case
the Company or the Securityholders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the Holders of a
majority in principal amount of the Securities represented at the meeting and
entitled to vote.
At any meeting each Securityholder or proxy shall be entitled
to one vote for each $1,000 principal amount of Securities held or represented
by him; provided, however, that no vote shall be cast or counted at meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not then outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Securities held by
him or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Securityholders. Any meeting of Securityholders duly
called pursuant to the provisions of Section 10.02 or Section 10.03 may be
adjourned from time to time by vote of the Holder or Holders of a majority in
aggregate principal amount of the Securities represented at the meeting and
entitled to vote, and the meeting may be held as so adjourned without further
notice.
SECTION 10.06. Voting at the Meeting and Record to Be Kept.
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be
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subscribed the signatures of the Holders of Securities or of their
representatives by proxy and the principal amount of the Securities voted by
the ballot. The permanent chairman of the meeting shall appoint two inspectors
of votes, who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of Securityholders shall
be prepared by the secretary of the meeting and there shall be attached to such
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts, setting forth a copy of the notice of the meeting and showing that such
notice was mailed as provided in Section 10.02 or published as provided in
Section 10.03. The record shall be signed and verified by the affidavits of
the permanent chairman and the secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 10.07. Exercise of Rights of Trustee or
Securityholders May Not Be Hindered or Delayed by Call of Meeting.
Nothing contained in this Article Ten shall be deemed or
construed to authorize or permit, by reason of any call of a meeting of
Securityholders or any rights expressly or impliedly conferred hereunder to
make such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Securityholders under any
of the provisions of this Indenture or of the Securities.
ARTICLE XI.
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the
Holder Upon Change of Control.
(a) In the event that a Change of
Control occurs, each Holder of Securities shall have the right, at such
Holder's option, subject to the terms and conditions of the Indenture, to
require the Company to repurchase all or any part of such Holder's Securities
(provided that the principal amount of such Securities at maturity must be
$1,000 or an integral multiple thereof) on the date that is no later than 40
Business Days after the occurrence of such Change of Control (the "Change of
Control Payment Date"), at a cash purchase price (the "Change of Control
Purchase Price") equal to 101% of the principal amount
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thereof, plus accrued and unpaid interest, if any, to and including the Change
of Control Payment Date.
(b) Within 10 Business Days after the
Company knows, or reasonably should know, of the occurrence of a Change of
Control, the Company shall make an irrevocable, unconditional offer (a "Change
of Control Offer") to the Holders to purchase for U.S. Legal Tender all of the
Securities pursuant to the offer described in clause (c) of this Section 11.01
at the Change of Control Purchase Price. Within five Business Days after each
date upon which the Company knows, or reasonably should know, of the occurrence
of a Change of Control requiring the Company to make a Change of Control Offer
pursuant to this Section 11.01, the Company shall give notice (the "Change of
Control Notice") to the Trustee.
(c) Notice of a Change of Control Offer
shall be sent, at least 20 Business Days prior to Change of Control Put Date
(as defined below), by first class mail, by the Company to each Holder at its
registered address, with a copy to the Trustee. The notice to the Holders
shall contain all instructions and materials required by applicable law and
shall contain or make available to Holders other information material to such
Holders' decision to tender Securities pursuant to the Change of Control Offer.
The notice, which shall govern the terms of the Offer, shall state:
(1) that the Change of Control
Offer is being made pursuant to this Section 11.01 and that all
Securities, or portions thereof, tendered will be accepted for
payment;
(2) the Change of Control Purchase
Price (including the amount of accrued and unpaid interest), the
Change of Control Payment Date and the Change of Control Put Date (as
defined below);
(3) that any Security, or portion
thereof, not tendered or accepted for payment will continue to accrue
interest;
(4) that, unless the Company
defaults in depositing U.S. Legal Tender with the Paying Agent in
accordance with the last paragraph of this clause (c) or payment to
Holders thereof is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment
Date;
(5) that Holders electing to have a
Security, or portion thereof, purchased pursuant to a Change of
Control Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Security completed, to the Paying Agent (which may not for
purposes of this Section 11.01,
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<PAGE> 69
notwithstanding anything in this Indenture to the contrary, be the
Company or any Affiliate of the Company) at the address specified in
the notice prior to the close of business on the third Business Day
prior to the Change of Control Payment Date (the "Change of Control
Put Date");
(6) that Holders will be entitled
to withdraw their election, in whole or in part, if the Paying Agent
receives, prior to the close of business on the Final Change of
Control Put Date, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities the Holder
is withdrawing and a statement that such Holder is withdrawing his
election to have such principal amount of Securities purchased; and
(7) a brief description of the
events resulting in such Change of Control.
Any such Change of Control Offer shall comply with all
applicable provisions of Federal and state laws, including those regulating
tender offers, if applicable, and any provisions of this Indenture which
conflict with such laws shall be deemed to be superseded by the provisions of
such laws.
On or before the Change of Control Payment Date, the Company
shall (i) accept for payment Securities or portions thereof properly tendered
pursuant to the Change of Control Offer prior to the close of business on the
Change of Control Put Date, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the Change of Control Purchase Price (including
accrued and unpaid interest) of all Securities so tendered and (iii) deliver to
the Trustee Securities so accepted together with an Officers' Certificate
listing the Securities or portions thereof being purchased by the Company. The
Paying Agent shall promptly mail to the Holders of Securities so accepted
payment in an amount equal to the Change of Control Purchase Price (including
accrued and unpaid interest), and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the
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imposed duties, upon qualification of this Indenture under the TIA, shall
control.
SECTION 12.02. Notices.
Any notices or other communications to the Company or the
Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
if to the Company:
Jefferies Group, Inc.
1100 Santa Monica Boulevard
12th Floor
Los Angeles, California 90025
Telecopy No.: (310) 575-5190
Attention: General Counsel
with a copy to:
Morgan, Lewis & Bockius
801 S. Grand Avenue
Los Angeles, California 90017
Telecopy No.: (213) 612-2554
Attention: Michael Klowden, Esq.
if to the Trustee:
The Bank of New York
101 Barclay Street
21st Floor
New York, New York 10286
Telecopy No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company or the Trustee by notice to each other party may
designate additional or different addresses as shall be furnished in writing by
such party. Any notice or communication to the Company or the Trustee shall be
deemed to have been given or made as of the date so delivered, if personally
delivered; when receipt is acknowledged, if telecopied; and five Business Days
after mailing if sent by registered or certified mail, postage prepaid (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail or other equivalent means at his address
as it appears on the registration books of the Registrar and shall be
sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its
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<PAGE> 71
sufficiency with respect to other Securityholders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
SECTION 12.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section
312(b) with other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the Registrar and any
other person shall have the protection of TIA Section 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under TIA:
(1) Each such Officers' Certificate
(in form and substance reasonably satisfactory to the Trustee) shall
state that, in the opinion of the signers, all conditions precedent,
if any, provided for in this Indenture relating to the proposed action
have been complied with; and
(2) Each such Opinion of Counsel
(in form and substance reasonably satisfactory to the Trustee) shall
state that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person
making such certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the
nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate
or opinion are based;
(3) a statement that, in the
opinion of such person, he has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or
condition has been complied with; and
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<PAGE> 72
(4) a statement as to whether or
not, in the opinion of each such person, such condition or
covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on
an Officers' Certificate or certificates of public officials.
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
SECTION 12.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in The City of New York, Borough of Manhattan are not
required to be open. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 12.08. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Company or any of its Subsidiaries. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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<PAGE> 73
SECTION 12.10. No Recourse against Others.
A director, officer, employee, stockholder or incorporator, as
such, present or future, of the Company or any successor to the Company shall
not have any liability for any obligations of the Company under the Securities,
this Indenture or the Registration Rights Agreement or for any claim based on,
in respect of or by reason of such obligations or their creations. Each
Securityholder by accepting a Security waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Securities.
SECTION 12.11. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 12.12. Duplicate Originals.
All parties may sign any number of copies or counterparts of
this Indenture. Each signed copy or counterpart shall be an original, but all
of them together shall represent the same agreement.
SECTION 12.13. Severability.
In case any one or more of the provisions in this Indenture or
in the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
SECTION 12.14. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and the Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.
Signature Pages To Follow
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<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
JEFFERIES GROUP, INC.
By: /s/ Alan D. Browning
-------------------------------
Name: Alan D. Browning
Title: Executive Vice President
THE BANK OF NEW YORK,
as Trustees
By: /s/ Robert F. McIntyre
-------------------------------
Name: Robert F. McIntyre
Title: Assistant Vice President
Signature Page
<PAGE> 75
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Certificate to be Delivered Upon Exchange or Registration of
Transfer of Notes
Exhibit C - Transferee Letter of Representations
Exhibit D - Transferor Letter Pursuant to Regulation S Transfers
<PAGE> 76
Exhibit A
[FACE OF NOTE]
CUSIP No. ____
JEFFERIES GROUP, INC.
8 7/8% [Series B] SENIOR NOTE DUE 2004
No. R[A][B]- $
Jefferies Group, Inc., a Delaware corporation (hereinafter
called the "Company," which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to _____________________ , or registered assigns, the principal sum of
_________________ Dollars, on May 1, 2004.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Reference is made to the further provisions of this Security
on the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be duly executed.
JEFFERIES GROUP, INC.
By: ________________________________
Attest:
______________________________
Secretary
A-1
<PAGE> 77
(Back of Note)
8 7/8% [Series B] Senior Note due 2004
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.1/
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM OR NOT SUBJECT
TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) (THE "RESALE RESTRICTION TERMINATION
DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW
____________
1/ This paragraph should be included only if the Note is issued in global
form.
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<PAGE> 78
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO THE COMPANY AND THE TRUSTEE."
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
A-3
<PAGE> 79
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By _________________________________
Authorized Signatory
Dated:
A-4
<PAGE> 80
JEFFERIES GROUP, INC.
8 7/8% Senior Note
due 2004
1. Interest.
Jefferies Group, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at a rate of
8 7/8% per annum. To the extent it is lawful, the Company promises to pay
interest on any interest payment due but unpaid on such principal amount at a
rate of 8 7/8% per annum compounded semi-annually.
The Company will pay interest semi-annually on May 1 and
November 1 of each year (each, an "Interest Payment Date"), commencing November
1, 1994. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from April 28,
1994. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. Except as provided below, the Company shall pay principal and
interest in such coin or currency of the United States of America as at the
time of payment shall be legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
wire transfer of Federal funds, or interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or the Company may mail any such interest payment to a Holder at the
Holder's registered address.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of April 28, 1994 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in
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<PAGE> 81
the Indenture unless otherwise defined herein. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of the
Indenture. The Securities are subject to all such terms, and Holders of
Securities are referred to the Indenture and said Act for a statement of them.
The Securities are unsecured senior obligations of the Company limited in
aggregate principal amount to $50,000,000.
5. Redemption.
The Securities may be redeemed in whole or from time to time
in part at any time on and after May 1, 1999, at the option of the Company, at
the Redemption Price (expressed as a percentage of principal amount) set forth
below with respect to the indicated Redemption Date, in each case, together
with any accrued but unpaid interest to the Redemption Date. The Securities
may not be so redeemed before May 1, 1999.
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
On or after May 1
1999 . . . . . . . . . . . . . 103.000%
2000 . . . . . . . . . . . . . 102.400
2001 . . . . . . . . . . . . . 101.800
2002 . . . . . . . . . . . . . 101.200
2003 and thereafter. . . . . . 100.600
</TABLE>
Any such redemption will comply with Article Three of the
Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Securities called for
redemption shall have been deposited with the Paying Agent on such Redemption
Date, the Securities called for redemption will cease to bear interest and the
only right of the Holders of such Securities will be to receive payment of the
Redemption Price including any accrued and unpaid interest to the Redemption
Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may
register the transfer of, or exchange Securities in accordance with, the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements
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and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar shall not be required: (a) to
register the transfer of or to exchange Notes for a period of 15 Business Days
before mailing of a notice of a Change of Control Offer or redemptions pursuant
to Article Three of the Indenture; (b) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or (c) to register the
transfer of or to exchange a Note between a Record Date and the next succeeding
Interest Payment Date.
Pursuant to the Registration Rights Agreement among the
Company and the Holders of the Notes, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for a Series B Note issued under the
Indenture in accordance with the terms of the Registration Rights Agreement
which have been registered under the Securities Act, in like principal amount
and having identical terms as the Notes. The Holders of the Notes shall be
entitled to receive certain additional payments in the event such exchange
offer is not consummated and upon certain other conditions, all pursuant to and
in accordance with the terms of the Registration Rights Agreement. Within five
days after the occurrence of an event so resulting in such additional payments,
the Company shall provide the Trustee with an Officers' Certificate describing
such event and providing the Trustee with all necessary details relating to the
payments, including, without limitation, the method of calculating the
payments.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money
back to the Company at its written request. After that, all liability of the
Trustee as such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust
with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to
pay the principal of and interest on the Securities to redemption or maturity
and complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding its obligation to
pay the principal of and interest on the securities).
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<PAGE> 83
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture or the Securities to, among other things, cure any ambiguity, defect
or inconsistency, or to make any other change that does not adversely affect
the rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company and its Subsidiaries to, among other things, incur additional
Long-Term Indebtedness, enter into transactions with Affiliates, incur liens,
merge or consolidate with any other person and sell, lease, transfer or
otherwise dispose of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations. The Indenture also requires the Company to maintain a minimum net
worth and for Jefferies & Company, Inc. to maintain a certain minimum net
capital amount.
13. Change of Control.
In the event there shall occur any Change of Control, each
Holder of Securities shall have the right, at such Holder's option but subject
to the limitations, and conditions set forth in the Indenture, to require the
Company to purchase on the Change of Control Payment Date in the manner
specified in the Indenture, all or any part (in integral multiples of $1,000)
of such Holder's Securities at a Change of Control Purchase Price equal to 101%
of the principal amount thereof, together with accrued and unpaid interest, if
any, to the Change of Control Payment Date. (Article Eleven).
14. Successors.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
15. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities
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<PAGE> 84
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest), if it determines that withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for its Affiliates, and may otherwise deal or its Affiliates as if it were not
the Trustee.
16. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator,
as such, past, present or future, of the Company or any successor corporation
shall have any liability for any obligation of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities.
17. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
18. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP
numbers to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
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<PAGE> 85
20. Governing Law.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
[FORM OF ASSIGNMENT]
I or we assign this security to
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of
assignee
_______________________
and irrevocably appoint _______________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
Dated: _______________ Signed: __________________________________
______________________________________________________________________________
(Sign exactly as name appears on
the other side of this security)
A-10
<PAGE> 86
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Article Eleven of the Indenture, check the box: [ ]
Article Eleven
If you want to elect to have only part of this Security
purchased by the Company pursuant to Article Eleven of the Indenture, state the
amount you want to be purchased: $__________
Date: __________________ Signature: ________________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee: _________________________________________________________
A-11
<PAGE> 87
SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES 2/
The following exchanges of a part of this Global Note for
Certificated Notes have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal
Amount Amount Amount of Signature of
of decrease of increase this Global authorized
in Principal in Principal Note following officer of
Date Amount of this Amount of this such decrease Trustee or
of Exchange Global Note Global Note (or increase) Note Custodian
- ----------- -------------- -------------- -------------- --------------
</TABLE>
_______________________
2/ This should be included only if the Note is issued in global form.
A-12
<PAGE> 88
______________________________________________________________________________
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: [Series B] 8 7/8% Senior Secured Notes due 2004 of Jefferies Group, Inc.
This Certificate relates to $________ principal amount of Notes held
in (*)_______ book-entry or (*)________ certificated form by _______________
(the "Transferor").
The Transferor(*):
[ ] has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Note held by the depository a Note or
Notes in certificated, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or
register the transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and, as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:(*)
[ ] Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A), Section
2.06(d)(i)(A) of the Indenture).
[ ] Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i)(B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
[ ] Such Note is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
_________________________________
(*) Check Applicable Box
B-1
<PAGE> 89
[ ] Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of
Counsel to the effect that such transfer does not require registration under
the Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).
____________________________________
[INSERT NAME OF TRANSFEROR]
By: ________________________________
Date: ________________________________
B-2
<PAGE> 90
EXHIBIT C
TRANSFEREE LETTER OF REPRESENTATIONS
THE BANK OF NEW YORK
101 Barclay Street
21st Floor
New York, New York 10286
Dear Sirs:
In connection with our proposed purchase of $_______ aggregate principal amount
of the ___% Senior Notes due 2004 (the "Notes") of JEFFERIES GROUP, INC., a
Delaware corporation (the "Company"):
(1) We understand that the Notes have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may
not be sold except as permitted in the following sentence. We agree on our own
behalf and on behalf of any investor account for which we are purchasing the
Notes to offer, sell or otherwise transfer such Notes prior to the date which
is three years after the later of the date of original issue and the last date
on which the Company or any affiliate of the Company was the owner of such
Notes, or any predecessor thereto (the "Resale Restriction Termination Date")
only (a) to the Company, (b) pursuant to a registration statement which has
been declared effective under the Securities Act, (c) for so long as the Notes
are eligible for resale pursuant to Rule 144A under the Securities Act, to a
person we reasonably believe is a qualified institutional buyer under Rule 144A
(a "QIB") that purchases for its own account or for the account of a QIB to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales to non-U.S. persons that occur outside the
United States within the meaning of Regulation S under the Securities Act, (e)
to an institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring
the Notes for its own account or for the account of such an institutional
"accredited investor" for investment purposes and not with a view to, or for
offer for sale in connection with, any distribution thereof in violation of the
Securities Act or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or such investor account or accounts be at all times within our or their
control and to compliance with any applicable state securities laws. The
ongoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Notes is
proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Trustee, which shall
provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or
(7) of Rule 501 under the Securities Act and that it is acquiring such Notes
for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act. We
acknowledge that the Company and the Trustee reserve the right prior to any
offer, sale or other transfer prior to the Resale Restriction Termination Date
of the Notes pursuant to clauses (d), (e) and (f)
C-1
<PAGE> 91
above to require the delivery of an opinion of counsel, certifications and/or
other information satisfactory to the Company and the Trustee.
(2) We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Notes for investment purposes
and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act and we have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Notes, and we and any accounts for
which we are acting are each able to bear the economic risk of our or its
investment.
(3) We are acquiring the Notes purchased by us for our
own account or for one or more accounts as to each of which we exercise sole
investment discretion.
(4) You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By: ___________________________________
(Name of Purchaser)
Date: _________________________________
Upon transfer, the Notes should be registered in the name of new beneficial
owner as follows:
Name: _________________________________
Address: ______________________________
Taxpayer ID Number: ___________________
C-2
<PAGE> 92
Exhibit D
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
_________________, _____
The Bank of New York
101 Barclay Street
21st Floor
New York, New York 10286
Re: Jefferies Group, Inc. (the "Issuer") 8 7/8%
Notes due 2004 (the "Securities")
Dear Sirs:
In connection with our proposed sale of $__________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act
of 1933, as amended (the "Securities Act"), and, accordingly, we represent
that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
D-1
<PAGE> 93
You and the Issuer are entitled to rely upon this letter and
are irrevocable authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ________________________________
Authorized Signature
D-2
<PAGE> 1
[MORGAN, LEWIS & BOCKIUS LETTERHEAD]
June 23, 1994
Jefferies Group, Inc.
11100 Santa Monica Boulevard
Los Angeles, CA 90025
Re: Issuance of Senior Notes Pursuant to the
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to Jefferies Group, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), of a Registration Statement on Form S-4
(the "Registration Statement") relating to the offer to exchange the Company's
8 7/8% Series B Senior Notes due 2004 (the "New Notes") for any and all of its
outstanding 8 7/8% Senior Notes due 2004.
In so acting, we have examined originals, or copies certified
or otherwise identified to our satisfaction, of the Certificate of
Incorporation of the Company, the By-Laws of the Company and such other
documents, records, certificates and other instruments of the Company as in our
judgment are necessary or appropriate for purposes of this opinion.
Based on the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Delaware.
2. When the New Notes shall have been issued in
accordance with appropriate authorizing resolutions of the Board of Directors
of the Company and upon (i) the due execution, authentication and issuance of
the New Notes and (ii) the delivery and exchange of the New Notes as
contemplated by the Registration Statement, the New Notes will be binding
obligations of the Company enforceable against the Company in accordance
with their terms, except to the extent that enforcement thereof may be
<PAGE> 2
Jefferies Group, Inc.
June 23, 1994
Page 2
limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
We render the foregoing opinion as members of the Bar of the
State of New York and express no opinion as to any law other than the General
Corporation Law of the State of Delaware.
We consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission.
Very truly yours,
/s/ MORGAN, LEWIS & BOCKIUS
<PAGE> 1
______________________________________________________________________________
PURCHASE AGREEMENT
______________________________________________________________________________
$50,000,000 8 7/8% Senior Notes Due 2004
of
JEFFERIES GROUP, INC.
______________________________________________________________________________
APRIL 28, 1994
______________________________________________________________________________
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Sale and Purchase of the Securities; the Closing . . . . . . . . . . . . . . . . . . 3
2.3. Purchasers' Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4. Failure to Deliver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8. Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9. Issue Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1. Conditions to Your Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.1 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.2 Officers' Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1.3 Representations and Warranties True; No Event of Default . . . . . . . . . . 11
3.1.4 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1.5 Your Purchase Permitted by Applicable Laws: Legal Investment . . . . . . . . 11
3.1.6 The Indenture and the Registration Rights Agreement . . . . . . . . . . . . . 11
3.1.7 Consents and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1.8 Offering Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1.9 Proceedings Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1.10 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1.11 No Material Judgment or Order . . . . . . . . . . . . . . . . . . . . . . . 12
3.2. Conditions to the Obligations of the Company . . . . . . . . . . . . . . . . . . . . 12
3.2.1 Sale of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2.2 Purchasers' Representations and Warranties . . . . . . . . . . . . . . . . . 13
3.2.3 No Material Judgment or Order . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2.4 The Sale by the Company Permitted by Applicable Laws . . . . . . . . . . . . 13
SECTION 4. PURCHASERS' SPECIAL RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1. Delivery Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2. Issue Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3. Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1. Organization, Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . 15
5.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3. Authorization of Agreement and Other Documents . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
5.4. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.7. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.8. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9. Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10. No Violation of Relations of Board of Governors of Federal Reserve System . . . . . . 18
5.11. Private Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12. Governmental Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.13. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.14. Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.15. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16. Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3. Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9. Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
ii
<PAGE> 4
JEFFERIES GROUP, INC.
$50,000,000 8 7/8% Senior Notes due 2004
April 28, 1994
To Each of the Purchasers
Who Are Signatories Hereto
Ladies and Gentlemen:
Jefferies Group, Inc., a Delaware corporation (the
"Company"), hereby agrees with each of you as follows:
SECTION 1. DEFINITIONS
Any capitalized term used herein and not otherwise
defined herein shall have the meaning ascribed to such term in the Indenture
(as defined below).
As used in this Agreement, the following terms shall
have the following meanings:
Agreement: This Purchase Agreement, as the same may
be amended, supplemented or modified from time to time in accordance with the
terms hereof.
Charter Documents: The Certificate of Incorporation
and By-Laws or similar organizational documents, as amended to the Closing
Date, of the applicable Person.
Closing: As defined in Section 2.2 hereof.
Closing Date: As defined in Section 2.2 hereof.
Code: The Internal Revenue Code of 1986, as amended.
Document: All documents delivered in connection with
the transactions contemplated by the Offering Memorandum, including without
limitation, this Agreement, the Securities, the Indenture, the Registration
Rights Agreement, or each of such documents singularly, and any documents or
instruments contemplated by or executed in connection with any of them or any
of the transactions contemplated hereby or thereby.
ERISA: The Employee Retirement Income Security Act
of 1974, as amended.
ERISA Affiliate: As defined in Section 407(d) of
ERISA.
<PAGE> 5
Indemnified Parties: As defined in Section 2.6
hereof.
Indenture: The Indenture, dated as of the date
hereof, by and among the Company and the Trustee (substantially in the form of
Exhibit A attached hereto), as the same may be amended from time to time, in
accordance with the terms thereof.
Losses: As defined in Section 2.6 hereof.
Material Adverse Effect: A material adverse effect on
the properties, business, operations, earnings, assets, liabilities or
financial condition of the Company and its Subsidiaries taken as a whole, or on
the ability of the Company or any of its Subsidiaries taken as a whole to
perform their respective obligations under this Agreement, the Securities or
any of the other Documents.
Notes: As defined in Section 2.1 hereof.
Offering Memorandum: The Offering Memorandum of the
Company, dated April 28, 1994, as amended, modified or otherwise supplemented,
relating to the Securities, including the information incorporated by reference
therein.
Placement Agent: Jefferies & Company, Inc.
Privately Outstanding Securities: The Notes upon
original issuance thereof and at all times subsequent thereto until, in the
case of any such Notes, (i) it has been registered effectively pursuant to the
Securities Act and disposed of in accordance with the registration statement
covering it, (ii) it is distributed to the public pursuant to Rule 144 or (iii)
have been exchanged for Series B Notes pursuant to the Registration Rights
Agreement.
Proceeding: An action, claim, suit or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or, to the knowledge of the Company,
threatened.
Purchasers: Those Persons who have executed a
counterpart of this Agreement on any one of the signature pages hereto who are
to be purchasers of the Securities.
Registration Rights Agreement: The Registration
Rights Agreement of even date herewith by and among the Company and each of the
Purchasers, relating to the registration of the Notes pursuant to the
Securities Act (substantially in the form of Exhibit B attached hereto).
Rule 144: Rule 144 as promulgated by the Commission
pursuant to the Securities Act, and any successor rule or regulation thereto.
2
<PAGE> 6
Rule 501: Rule 501 as promulgated by the Commission
pursuant to the Securities Act, and any successor rule or regulation thereto.
Securities: The Notes.
Trustee: As defined in Section 3.1.6 hereof.
SECTION 2. PURCHASE AND SALE OF SECURITIES
2.1. Issuance of Securities
The Company has taken all necessary corporate action
to authorize the issuance and sale of $50,000,000 aggregate principal amount of
its 8 7/8% Senior Notes due 2004, to be issued pursuant to, and as defined in,
the Indenture (the "Notes"). The Notes will be issued in the principal amount
of $1,000 and integral multiples thereof and will otherwise be substantially in
the form of Note included as Exhibit A to the Indenture.
2.2. Sale and Purchase of the Securities; the Closing
(a) Subject to the terms and conditions set
forth herein, the Company hereby agrees to sell to each Purchaser the aggregate
principal amount of Notes set forth opposite such Purchaser's name on the
signature page hereto. All of the Notes shall be sold at a price equal to
98.6047% of the principal amount thereof.
(b) In reliance upon the representations and
warranties of the Company contained herein and in the other Documents, and
subject to the terms and conditions set forth herein and therein, you each
hereby agree, severally and not jointly, to purchase the Notes to be purchased
by each of you at the purchase price set forth in Section 2.2(a) hereof. Each
Purchaser shall, severally and not jointly, be liable for only the purchase of
that portion of such Notes indicated on the execution page hereof that relates
to such Purchaser.
(c) The sales of Notes to the Purchasers are
deemed by the parties hereto to be separate sales and this Agreement is deemed
by the parties hereto to be separate agreements between the Company on the one
hand and each Purchaser on the other.
(d) The sale and purchase of the Notes shall
take place at a closing (the "Closing") at the offices of Morgan, Lewis &
Bockius, New York counsel to the Company, at 101 Park Avenue, New York, New
York, 10178, at 8:30 A.M., New York time, on April 28, 1994, or such other
place, Business Day and time as may be agreed upon by the Purchasers and the
Company (such time and date being referred to as the "Closing Date"). At the
Closing, the Company will deliver to the Purchasers (i) one or more of the
Securities in definitive form, registered in the name
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of Cede and Co., as nominee of The Depository Trust Company ("DTC"), having an
aggregate principal amount corresponding to the aggregate principal amount of
Securities sold to qualified institutional buyers ("Qualified Institutional
Buyers") within the meaning of Rule 144A under the Securities Act
(collectively, the "Global Securities"), and (ii) one or more Securities in
definitive form (provided that such denominations with respect to the Notes may
only be integral multiples of $1,000), registered in such names and
denominations as the Purchasers may so request, having an aggregate principal
amount corresponding to the aggregate principal amount of the Securities sold
to accredited investors (within the meaning of Rule 501 under the Securities
Act) other than Qualified Institutional Buyers (collectively, the "Certificated
Securities"), in each case with any transfer taxes payable upon initial
issuance thereof duly paid by the Company, for the Purchasers' respective
accounts against payment of the purchase price therefor no later than 4:00
P.M., New York City time, on the Closing Date by Federal Funds bank transfer
wire in same day funds to such account as the Company shall designate at least
two Business Days prior to the Closing Date. The Company agrees that in
connection with the placement of the Notes, the Placement Agent may, in its
discretion, deduct from the purchase price of the Notes to be remitted to the
Company at the Closing the amount of its fees and expenses as Placement Agent.
The Global Securities in definitive form shall be made available to the
Purchasers at the offices of the Trustee (or at such other place as shall be
acceptable to you) for inspection not later than 9:30 A.M. New York City time,
on the Business Day immediately preceding the Closing Date.
2.3. Purchasers' Representations
(a) You represent to the Company that you
are authorized to enter into this Agreement, to perform your obligations
hereunder and to consummate the transactions contemplated hereby. You further
represent that, when executed, this Agreement will be a legal, valid and
binding obligation of you, enforceable against you in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law).
(b) You further represent to the Company
that you are purchasing the Notes being purchased by you hereunder for your own
account, and with no intention of distributing or reselling said Notes or any
part thereof in any transaction that would be in violation of the securities
laws of the United States of America or any state thereof without prejudice,
however, to your right at all times to sell or otherwise dispose of all or any
part of said Notes pursuant to an effective registration statement under the
Securities Act and in compliance with applicable state securities laws, or
under an
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exemption from such registration available under the Securities Act and other
applicable state securities laws and subject, nevertheless, to the disposition
of your property being at all times within your control.
(c) If you desire to offer, sell or
otherwise transfer, pledge or hypothecate all or any part of the Notes (other
than pursuant to an effective registration statement under the Securities Act
or pursuant to Rule 144A) you shall deliver to the Company a written opinion of
counsel, which counsel and opinion are reasonably satisfactory to the Company,
that there is available therefor an exemption from the registration
requirements of the Securities Act. Upon original issuance thereof, and until
such time as no longer required by law, each certificate evidencing the Notes
(and all securities issued in exchange therefor or substitution thereof) shall
bear a legend in substantially the following form:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) (THE "RESALE
RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D), (E) OR (F)
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TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO THE COMPANY AND THE TRUSTEE.
At such time that any such legend is no longer
required by law to be borne by such certificate, the Company shall, at the
request of the holder thereof, and upon delivery to the Company of an opinion
of counsel that such legend is no longer required by law to be borne by such
certificate, cause such legend to be removed or replace such certificate with
an unlegended certificate.
(d) You further represent that (i) you have
received a copy of the Offering Memorandum, (ii) you and any of your managed
accounts ("managed accounts"), if applicable, are institutional "accredited
investors" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act, (iii) you have had an opportunity to investigate
the business and financial condition of the Company, and to obtain such
information as you require from the officers and directors, as applicable, of
the Company, (iv) in the normal course of your business you invest in or
purchase securities similar to the Notes, (v) you have such knowledge and
experience in financial and business matters that you are capable of evaluating
the merits and risks of purchasing the Notes, (vi) you are aware that you (or
any of your managed accounts) may be required to bear the economic risk of an
investment in the Notes for an indefinite period of time and you (or such
accounts) are able to bear such risk for an indefinite period of time, and
(vii) if you are acting on behalf of managed accounts, you have sole investment
discretion and authority with respect to the purchase of Notes.
2.4. Failure to Deliver
If the Closing fails to occur on or before April 28,
1994, you shall, at your election and notwithstanding anything to the contrary
in this Agreement, be relieved of all further obligations under this Agreement
without thereby waiving any rights you may have by reason of such
nonfulfillment or failure. Nothing in this Section 2.4 shall operate to
relieve the Company from its obligations hereunder.
2.5. Expenses
Whether or not the Notes are sold, the Company shall
pay all reasonable expenses relating to this Agreement and the other Documents,
including, but not limited to:
(a) the cost of printing, reproducing and
filing this Agreement, the other Documents and any other documents contemplated
hereby or thereby;
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(b) the cost of delivering to your home
office or the office of your designee the Notes purchased by you at the Closing
upon the issuance thereof;
(c) subject to the Indenture, fees and
expenses of the Trustee;
(d) all expenses and listing fees incurred
in connection with the application for quotation of the Securities on the
PORTAL Market;
(e) any fees charged by investment rating
agencies for the rating of the Securities; and
(f) all other expenses, including reasonable
attorneys' fees, incurred by the Company in connection with the transactions
contemplated by this Agreement and the other Documents.
2.6. Indemnification
(a) The Company shall indemnify and hold
harmless you, and your officers and directors (individually, an "Indemnified
Party" and collectively, the "Indemnified Parties"), to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, reasonable costs of preparation and
reasonable attorneys' fees) and expenses, including expenses of investigation
(collectively, "Losses"), incurred by any Indemnified Party, arising out of or
in connection with this Agreement or the other Documents or the transactions
contemplated hereby or thereby (or any other document or instrument executed
herewith or pursuant hereto or thereto); provided, however that the Company
shall not be liable to any Indemnified Party for any Losses to the extent that
such Losses arose from the gross negligence or willful misconduct of such
Indemnified Party. The obligations of the Company to each Indemnified Party
hereunder shall be separate obligations, and the liability of the Company to
any Indemnified Party hereunder shall not be extinguished solely because any
other Indemnified Party is not entitled to indemnity hereunder.
(b) If any proceeding shall be brought or
asserted against any Indemnified Party in respect of which indemnity may be
sought from the Company hereunder, such Indemnified Party promptly shall notify
the Company in writing, and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with the
defense thereof; provided that the failure of any Indemnified Party to give
such notice shall not relieve the Company of its obligations pursuant to this
Agreement except to the extent that it shall be determined by a court of
competent jurisdiction that such failure shall have materially and adversely
prejudiced the Indemnifying Party.
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Any such Indemnified Party shall have the right to
employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless: (1) the
Company has agreed to pay such fees and expenses; or (2) the named parties to
any such action, claim or proceeding (including any impleaded parties) include
both such Indemnified Party and the Company, and such Indemnified Party shall
have been advised in writing by its counsel that a conflict of interest may
exist if counsel represents such Indemnified Party and the Company (and in the
case of any of (1) or (2), if such Indemnified Party notifies the Company in
writing that it elects to employ separate counsel at the expense of the
Company, the Company shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Company), it being understood,
however, that, the Company shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all such Indemnified Parties,
which firm shall be designated in writing by such Indemnified Parties. The
Company shall have the right to employ separate counsel in, and to participate
in the defense of, any action or proceeding with respect to which it has no
right to assume the defense, but the fees and expenses of such counsel shall be
at the expense of the Company. No Indemnified Party will be subject to any
liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). The Company shall not consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release, in form and substance reasonably satisfactory to the Indemnified
Party, from all liability in respect of such action, claim or proceeding for
which such Indemnified Party would be entitled to indemnification hereunder
(whether or not any Indemnified Party is a party thereto). All fees and
expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend
such action or proceeding in a manner not inconsistent with this Section 2.6)
shall be paid to the Indemnified Party, as incurred, upon written notice
thereof to the Company (regardless of whether it is ultimately determined that
an Indemnified Party is not entitled to indemnification hereunder); provided
that the Company may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined by
a court of competent jurisdiction (which determination is not subject to appeal
or review) that such Indemnified Party is not entitled to indemnification
hereunder.
2.7. Contribution
(a) If a claim by an Indemnified Party for
indemnification under Section 2.6 is found unenforceable in a
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final judgment by a court of competent jurisdiction (not subject to further
appeal or review) even though the express provisions hereof provide for
indemnification in such case, then the Company, in lieu of indemnifying such
Indemnified Party, shall, jointly and severally, contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the Company, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as
any other relevant equitable considerations. The relative fault of the
Company, on the one hand, and any Indemnified Party, on the other hand, shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, the Company, on the one hand or such
Indemnified Party, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any proceeding.
(b) The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 2.7 were
determined by pro rata allocation or by any other method of allocation that
does not account for the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 2.7, no Indemnified Party shall be required to contribute any amount in
excess of the amount by which the price at which the Notes sold by such
Indemnified Party, exceeds the amount of any damages that such Indemnified
Party has otherwise been required to pay by reason of such statement or
omission, as applicable. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who is not guilty of such fraudulent
misrepresentation.
2.8. Further Actions
During the period from the date hereof to the Closing
Date, the Company and each Purchaser shall take all actions necessary or
appropriate to cause its representations and warranties contained in Section 5
or Section 2.3 hereof, as the case may be, to be true and correct as of the
Closing Date, after giving effect to the transactions contemplated by this
Agreement and the Offering Memorandum, as if made on and as of such date.
2.9. Issue Price
The Company and the Purchasers agree that for
purposes of section 1271 et seq. of the Code, the issue price of each Note is
98.6047% of its stated principal amount, and the
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Company and the Purchasers shall treat the Notes as having such issue price for
all Federal and other tax purposes.
SECTION 3. CLOSING CONDITIONS
3.1. Conditions to Your Obligations
Your obligation to purchase and pay for the Notes to
be delivered to you at the Closing shall be subject to the satisfaction of the
following conditions as of the Closing Date.
3.1.1 Opinions of Counsel
You shall have received an opinion, dated the Closing
Date and addressed to you, from Morgan, Lewis & Bockius, counsel to the
Company, in form and substance reasonably satisfactory to you and, in each
case, substantially in the form set forth in Exhibit C hereto.
In rendering such opinion, such counsel may rely as
to factual matters upon certificates or other documents furnished by officers
and directors of the Company, representations of the Placement Agent and by
government officials, and upon your representations contain in this Agreement
and such other documents as such counsel deem appropriate as a basis for their
opinion. Each such counsel may specify the jurisdictions in which they are
admitted to practice and that they are not admitted to practice in any other
jurisdiction or experts in the law of any other jurisdiction. To the extent
such opinion concerns the laws of any other such jurisdiction such counsel may
rely upon the opinion of counsel (the counsel and the form and substance of
such opinion being subject to the reasonable satisfaction of you) admitted to
practice in such jurisdiction. Any opinion relied upon by such counsel as
aforesaid shall be delivered to you together with the opinion of such counsel.
3.1.2 Officers' Certificates
(a) You (or the Placement Agent, on your
behalf,) shall have received a certificate or certificates, dated the Closing
Date and signed by the Officers of the Company certifying that the conditions
set forth in Sections 3.1.3 and 3.1.4 and Sections 3.1.6 through 3.1.11 hereof
have been satisfied on and as of such date.
(b) You (or the Placement Agent, on your
behalf,) shall have received a certificate, dated the Closing Date and signed
by the Secretary or an Assistant Secretary of the Company certifying such
matters as you (or the Placement Agent,) may reasonably request.
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3.1.3 Representations and Warranties True; No Event of Default
The representations and warranties of the Company
contained herein shall be true and correct in all material respects at and as
of the Closing Date, after giving effect to the transactions contemplated by
this Agreement and the other Documents, as if made on and as of such date.
There shall exist at and as of the Closing Date (after giving effect to the
transactions contemplated by this Agreement and the other Documents) no Default
or Event of Default.
3.1.4 Compliance with Agreements
The Company shall have performed and complied in all
material respects with all agreements, covenants and conditions contained
herein and in the other Documents that are required to be performed or complied
with by the Company on or before the Closing Date.
3.1.5 Your Purchase Permitted by Applicable Laws: Legal Investment
Your purchase of and payment for the Notes to be
purchased by you (a) shall not be prohibited by any applicable law or
governmental regulation, release, interpretation or opinion (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System), (b) shall not subject you to any penalty or other materially
onerous condition under or pursuant to any applicable law or governmental
regulation, and (c) shall be permitted by the laws and regulations of the
jurisdictions to which you are subject. The Company shall have delivered to
you factual certificates or other evidence as you shall reasonably request, in
form and substance reasonably satisfactory to you, to enable you to establish
compliance with this condition. As of the date of this Agreement, you are not
aware that this condition would not be satisfied.
3.1.6 The Indenture and the Registration Rights Agreement
(a) The Company and a bank or trust company
with combined capital and surplus of not less than $50,000,000, and otherwise
satisfactory to you, as trustee (the "Trustee"), shall have duly entered into
the Indenture, and you shall have received counterparts, conformed as executed,
of the Indenture.
(b) The Company shall have duly executed and
delivered to you the Registration Rights Agreement.
3.1.7 Consents and Permits
The Company shall have received all consents, permits
and other authorizations, and made all such filings and declarations, as may be
required pursuant to any law, statute, regulation or rule (Federal, state,
local and foreign), in
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connection with the transactions to be consummated on or prior to the Closing
Date contemplated by this Agreement and the other Documents including the
issuance and sale of the Notes to the Purchasers, and pursuant to all other
agreements, orders and decrees to which it is a party or to which it is
subject, in connection with the transactions to be consummated on or prior to
the Closing Date contemplated by this Agreement and the other Documents.
3.1.8 Offering Memorandum
The Offering Memorandum shall not have been
supplemented or amended subsequent to April 28, 1994.
3.1.9 Proceedings Satisfactory
All corporate proceedings taken in connection with
the sale of the Notes and all documents relating thereto, shall be reasonably
satisfactory in form and substance to you, and your special counsel, if any.
You, and your special counsel, if any, shall have received copies of such
documents as you or they may reasonably request in connection with the Closing,
or as a basis for the Closing opinions, all in form and substance reasonably
satisfactory to you and them. Each Document shall be reasonably satisfactory
in form and substance to you, and your special counsel, if any.
3.1.10 No Material Adverse Change
There shall not have occurred any material adverse
change in the properties, business operations, earnings, assets, liabilities or
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, subsequent to the date of the Offering
Memorandum.
3.1.11 No Material Judgment or Order
There shall not be on the Closing Date any judgment
or order of a court of competent jurisdiction or any ruling of any agency of
the Federal, state or local government that, in the reasonable judgment of you
or your special counsel would prohibit the sale or issuance of the Notes
hereunder or subject the Company to any material penalty if the Notes were to
be issued and sold hereunder.
3.2. Conditions to the Obligations of the Company
The obligations of the Company to sell the Notes to
be delivered to you at the Closing shall be subject to the satisfaction of the
following conditions:
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3.2.1 Sale of Notes
The Purchasers shall have delivered payment to the
Company, in respect of the several purchases of the Notes, in an aggregate
amount of $49,302,350.
3.2.2 Purchasers' Representations and Warranties
All of your representations and warranties made in
Section 2.3 herein shall be true and correct in all material respects at and as
of the Closing Date, after giving effect to the transactions contemplated by
this Agreement, as if made at and as of such date.
3.2.3 No Material Judgment or Order
There shall not be on the Closing Date any judgment
or order of a court of competent jurisdiction or any ruling of any agency of
the Federal, state or local government that, in the reasonable judgment of the
Company, would prohibit the sale or issuance of the Notes hereunder or subject
the Company to any material penalty if the Notes were to be issued and sold
hereunder.
3.2.4 The Sale by the Company Permitted by Applicable Laws
The sale by the Company and your payment for the
Notes to be purchased by you (a) shall not be prohibited by any applicable law
or governmental regulation, release, interpretation or opinion (including,
without limitation, Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System), (b) shall not subject the Company to any penalty under
or pursuant to any applicable law or governmental regulation, and (c) shall be
permitted by the laws and regulations of the jurisdictions to which the Company
is subject.
SECTION 4. PURCHASERS' SPECIAL RIGHTS
The provisions of this Section 4 shall apply,
notwithstanding anything to the contrary in this Agreement or the other
Documents, to Privately Outstanding Securities only; provided that all of the
obligations of the Company set forth in this Section 4 that are outstanding
with respect to any Security at the time such Security ceases to be a Privately
Outstanding Security shall survive until such time as such obligations with
respect to such Security shall be satisfied in full.
4.1. Delivery Expenses
If a holder of a Privately Outstanding Security
surrenders such Security to the Company, or the Trustee for substitution,
replacement or exchange, the Company will pay the cost of delivering to and
from such holder's home office (or to and from the office of such holder's
designee(s)) and the office of the Company or the Trustee, as the case may be,
insured to
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such holder's satisfaction, the surrendered Security and each Security issued
in substitution, replacement or exchange therefor.
4.2. Issue Taxes
The Company shall pay all stamp, transfer and other
similar taxes and governmental fees in connection with (a) the issuance, sale,
delivery or transfer by the Company to the Purchasers of the Privately
Outstanding Securities, (b) the execution and delivery of the Documents, and
(c) any modification of the Securities or any of the Documents. The Company
will hold you and each other holder of Privately Outstanding Securities
harmless, without limitation as to time, against any and all liabilities with
respect to all such taxes and fees. Notwithstanding the foregoing, except as
set forth in the Securities, the Company will not be responsible for any
transfer taxes in connection with the transfer of the Securities by any
Purchaser (other than to the Company). The obligations of the Company under
this Section 4.2 shall survive the payment or prepayment of the Securities, at
maturity, upon redemption or otherwise, any transfer of the Securities by you,
and the termination of this Agreement.
4.3. Direct Payment
(a) Notwithstanding the provisions of the
Securities and the Indenture, the Company shall pay or cause to be paid all
amounts payable with respect to any Privately Outstanding Security held by you
(if you are the registered holder) or your registered nominee(s) (without any
presentment of such Privately Outstanding Security and without any notation of
such payment being made thereon) by crediting such amount, before 12:00 Noon,
New York City time, on the date such amount is payable, by Federal funds bank
wire transfer in same day available funds, to the registered holder's account
in any bank in the United States of America as may be designated by you or such
nominee(s), as the case may be, not less than two Business Days prior to such
payment. Your initial bank account for this purpose is set forth on your
signature page hereof. Each registered holder of the Securities is solely
responsible for advising the Company of any changes in its designated bank
account and the Company shall not have any responsibility for delays in
transfers because of any registered holder's failure to advise the Company of
any such change. You agree, before any sale, transfer or other disposition of
any Security that is a Privately Outstanding Security, to make a notation
thereon, or submit the same to the Trustee under the Indenture for notation
thereon, of the date to which interest has been paid thereon and the amount of
all redemption payments previously made in respect thereof.
(b) Notwithstanding anything to the contrary
contained in any provision of the Securities or the Indenture, if the principal
amount of any Note that is a Privately Outstanding
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Security is payable on a Legal Holiday, as defined in the Indenture (whether at
maturity, upon acceleration, redemption or otherwise), and is paid on the next
succeeding day that is not a Legal Holiday, interest shall accrue on such
principal amount from and including such Legal Holiday to and including the
date on which such principal amount is paid and the Company shall cause the
Trustee to pay such accrued interest concurrently with the payment of such
principal amount.
SECTION 5. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each of you as
of the date hereof as follows:
5.1. Organization, Standing and Qualification
(a) The Company is duly organized, validly
existing and in good standing under the laws of the State of Delaware; has all
requisite power and authority to own or lease, and operate its respective
properties and assets, and to carry on its respective businesses as now
conducted and as proposed to be conducted; and is duly qualified or licensed to
do business and is in good standing as a foreign corporation in all
jurisdictions in which it owns or leases property or in which the conduct of
its respective businesses requires it so to qualify or be licensed, except in
each case as would not result in a Material Adverse Effect.
(b) The Company has all requisite corporate
power and authority to enter into and perform all of its obligations under this
Agreement and the other Documents to which it is a party, to issue, sell and
deliver the Securities to be issued by it, and to carry out the transactions
contemplated by this Agreement or any other Document.
(c) The Securities qualify for exemption
pursuant to Rule 144A(d)(3).
5.2. Capitalization
The total authorized Capital Stock of the Company as
of March 25, 1994 consisted of 26,000,000 shares of Common Stock, of which
5,745,043 shares were outstanding as of March 25, 1994.
5.3. Authorization of Agreement and Other Documents
The Company has taken all corporate actions necessary
to authorize it to enter into and perform its respective obligations under each
of this Agreement and the other Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Securities). This Agreement is, and,
as of the Closing Date, each of the Documents to which the Company is a party
will be, a legal, valid and
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binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be subject to (i)
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws now or hereafter affecting creditors' rights and
remedies generally and (ii) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
5.4. No Violation
(a) The Company is not (i) in violation of
its Charter Documents, or (ii) in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any indenture, mortgage, deed of trust or any
other agreement or instrument to which it is a party other than such defaults
that would not, singly or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. There exists no condition that, with the passage of
time or otherwise, would constitute (i) a violation of such Charter Documents,
or (ii) a default under any such document or instrument or result in the
imposition of any penalty or the acceleration of any indebtedness or other
obligation other than such defaults that would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(b) Neither the execution or delivery by the
Company of this Agreement or the other Documents to which it is a party, the
issuance, sale or delivery of the Securities, the performance by the Company of
any of its obligations pursuant to this Agreement and the other Documents, nor
the consummation of the transactions contemplated hereby or thereby will
conflict with, violate, constitute a breach of or a default (with the passage
of time or otherwise) under, require the consent of any Person (other than
consents already obtained) under, result in the imposition of any penalty, or
result in the imposition of a Lien (other than Liens permitted under the
Indenture) on any properties of the Company or an acceleration of indebtedness
or other obligation pursuant to, (i) the Charter Documents of the Company, (ii)
any bond, debenture, note or any other evidence of indebtedness or any
indenture, mortgage, deed of trust or any other agreement or instrument to
which the Company is a party or by which it is bound or to which any of the
property or assets of the Company is subject, or (iii) any applicable law.
5.5. Use of Proceeds
The proceeds from the sale of the Securities shall be
used by the Company as provided in the Offering Memorandum and by the terms of
this Agreement and the Indenture.
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<PAGE> 20
5.6. No Default
Were the Indenture and the Registration Rights
Agreement in effect as of the date hereof, after giving effect to the
transactions contemplated hereby, including application of proceeds from the
sale of the Securities, there would be no Default, Event of Default thereunder
or breach thereof.
5.7. Full Disclosure
(a) None of the Offering Memorandum or any
of the other Documents contained as of its respective date, or would now
contain were the information contained therein made available to you as of the
date of this Agreement, any untrue statement of a material fact or as of such
date omitted, or now omits, to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
(b) There is no fact known to the Company
which the Company has not disclosed to you in writing which could reasonably be
expected to have a Material Adverse Effect.
(c) The financial statements of the Company
included in the Offering Memorandum were prepared in accordance with generally
accepted accounting principles applied on a consistent basis and present fairly
the financial position, results of operations and changes in financial position
of the Company as of the dates and for the periods indicated, subject, in the
case of unaudited interim financial statements, to normal year-end adjustments.
5.8. Litigation
(a) There is no Proceeding against or
affecting the Company or any of its properties or assets except for such
Proceedings that, if finally determined adversely to the Company, would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) The Company is not subject to any
judgment, order, decree, rule or regulation of any court, governmental
authority or arbitration board or tribunal that would, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.9. Governmental Consents
No consent, approval or authorization of, or filing,
registration or qualification with, any governmental or regulatory authority or
body is required in connection with or as a condition to the execution and
delivery of this Agreement or any of the other Documents or the consummation of
transactions contemplated hereby or thereby (including, without limitation, the
offer, issuance, sale or delivery of the Securities at the
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<PAGE> 21
Closing), except for such consents, approvals, authorizations, filings,
registrations or qualifications as have been made or obtained on or before the
Closing Date (and copies of which will be delivered to you upon your request)
or are not required to be obtained prior to the Closing Date.
5.10. No Violation of Relations of Board of Governors of Federal Reserve
System
None of the transactions contemplated by this
Agreement (including, without limitation, the use of the proceeds from the sale
of the Securities) shall violate or result in a violation of Section 7 of the
Exchange Act including, without limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System.
5.11. Private Offering
(a) Based in part on representations made by
the Purchasers and the Placement Agent, and assuming the correctness of such
representations, the sale of the Securities hereunder is exempt from the
registration and prospectus delivery requirements of the Securities Act and it
is not necessary in connection with the sale of the Securities to the
Purchasers in accordance herewith to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.
(b) In the case of each offer or sale of the
Securities, no form of general solicitation or general advertising was used by
the Company or any of its officers, directors or employees including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees had been invited by the
Company by any general solicitation or general advertising. No offers were
made by the Company other than to persons whom the Company reasonably believed
to be an institutional "accredited investor" within the meaning of
subparagraphs (a)(1)(2)(3) and (7) of Rule 501. No securities of the same
class as any of the Securities have been issued and sold by the Company within
the six-month period immediately prior to the date hereof. The Company agrees
that neither it nor anyone acting on its behalf will, with the Company's
knowledge, offer any Securities so as to bring the issuance and sale of any of
the Securities within the provisions of Section 5 of the Securities Act nor
offer any similar securities (other than securities offered in exchange for any
Securities) for issuance or sale to, or solicit any offer to acquire any of the
same from, or otherwise approach or negotiate with respect thereto with, anyone
if the sale of any of the Securities and any such securities could be
integrated as a single offering for purposes of the Securities Act.
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<PAGE> 22
5.12. Governmental Relations
The Company is not subject to regulation, and will
not become subject to regulation upon the consummation of the transactions
contemplated by this Agreement or any of the other Documents, under the
Investment Company Act of 1940, as amended, or any Federal or state statute or
regulation limiting its ability to incur or assume indebtedness for borrowed
money or consummate the transactions contemplated hereby.
5.13. Brokers
The Company has not dealt with any broker, finder,
commission agent or other Person in connection with the sale of the Securities
and the transactions contemplated by this Agreement and the other Documents
other than the Placement Agent. The Company is not under any obligation to pay
any broker's fee, advisory fee or commission in connection with such
transactions, other than the commissions and fees payable to the Placement
Agent for investment banking services rendered in connection with such
transactions.
5.14. Description of Securities
The Securities, the Indenture and the Registration
Rights Agreement conform in all material respects to the descriptions thereof
in the Offering Memorandum and such descriptions are complete and accurate in
all material respects.
5.15. Licenses
The Company has all material governmental licenses,
permits, certificates, consents, orders, approvals and other authorizations
necessary to own or lease, as the case may be, and to operate its properties
and to carry on its business as presently conducted by it, and the Company has
not received any notice of proceedings relating to revocation or modification
of any such licenses, permits, certificates, consents, orders, approvals or
authorizations which, if the subject of any unfavorable decisions, rulings or
findings, could cause a Material Adverse Effect.
5.16. Other Covenants
The Company will:
(a) use its best efforts to permit the
Global Note to be designated a PORTAL security in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the PORTAL Market and to permit the Global Note to be
eligible for clearance and settlement through The Depository Trust Company; and
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<PAGE> 23
(b) while any of the Securities remain
outstanding, make available, upon request, to any seller of the Securities the
information specified in Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act.
SECTION 6. MISCELLANEOUS
6.1. Notices
Prior to the Closing, and thereafter with respect to
matters pertaining to this Agreement only, all notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
next-day air courier, certified first-class mail, return receipt requested,
telex, or facsimile:
(a) if to you, at your address set forth
below your signature on the signature page hereto; and
(b) if to the Company, at Jefferies Group,
Inc., 11100 Santa Monica Boulevard, 12th Floor, Los Angeles, California 90025,
Attention: Jerry Gluck, with a copy to Morgan, Lewis & Bockius, 801 S. Grand
Avenue, Los Angeles, California 90017, Attention: Michael L. Klowden, Esq.
All such notices and communications shall be deemed
to have been duly given: when delivered by hand, if personally delivered; one
business day after being timely delivered to a next-day air courier; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back if telexed; and when receipt is acknowledged by the
recipient's telecopier machine, if telecopied.
From and after the Closing, the foregoing notice
provisions shall be superseded by the notice provisions of the Document under
which notice is given.
6.2. Successors and Assigns
This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, and to the
extent set forth in Sections 2.6 and 2.7 hereof the Indemnified Parties and
their respective heirs, personal representatives, successors and assigns and no
other persons shall acquire or have any right under or by virtue of this
Agreement.
6.3. Amendment and Waiver
Prior to the Closing Date, this Agreement and the
other Documents may be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may be given, provided that
the same are in writing and signed by you and the Company. Thereafter, this
Agreement may only be amended, and such waivers be given, with the consent of
the holders of a
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<PAGE> 24
majority of the then outstanding aggregate principal amount of the outstanding
Notes (other than Securities owned or acquired by the Company or its
Affiliates).
6.4. Counterparts
This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
6.5. Headings
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
References herein to a "Section" or a "paragraph" mean such Section or
paragraph herein, unless expressly stated otherwise.
6.6. Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
6.7. Entire Agreement
This Agreement, together with the other Documents and
the Securities are intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and therein. This Agreement, together with the other Documents and the
Securities, supersedes all prior agreements and
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<PAGE> 25
understandings between the parties with respect to such subject matter.
6.8. Severability
If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.
6.9. Delivery
Each Purchaser hereby appoints the Placement Agent to
accept delivery of the Securities to be purchased by such Purchaser and the
other Documents to be delivered to such Purchaser at the Closing and execute a
receipt for such Securities and Documents on such Purchaser's behalf.
6.10. Attorneys' Fees
In any action or proceeding brought to enforce any
provisions of this Agreement, or where any provision hereof is asserted as a
defense, the prevailing party, as determined by the court and to the extent
permitted by applicable law, shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.
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<PAGE> 26
Signature Pages To Follow
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<PAGE> 27
If this Agreement is satisfactory to you, please so
indicate by signing the acceptance at the foot of a counterpart of this
Agreement and return such counterpart to the Company whereupon this Agreement
will become binding between us in accordance with its terms.
JEFFERIES GROUP, INC.
By:
--------------------------------
Name: Alan D. Browning
Title: Executive Vice President
Signature Page
<PAGE> 28
PURCHASE AGREEMENT SIGNATURE
EACH PURCHASER EXECUTING THIS SIGNATURE PAGE ON BEHALF OF ONE OR MORE MANAGED
ACCOUNTS SHOULD PROVIDE THE NAME OF, AND THE REQUESTED INFORMATION WITH RESPECT
TO, EACH MANAGED ACCOUNT.
Accepted and Agreed as of
the date first above written
_____________________________
Name of Purchaser
By:__________________________
Name:
Title:
Address:_____________________
_____________________
_____________________
Telephone:___________________
Telecopy:____________________
Telex:_______________________
Nominee (name in which the Mail Payment Notices to:
Securities are to be
registered, if different ___________________________________:
than name of Purchaser):
___________________________________:
____________________________________ ___________________________________:
Tax I.D. Number:____________________
(If acquired in the name of
a nominee, the taxpayer I.D.
number of such nominee)
Designated Physical Delivery
Bank: _____________________ Instructions:
Address:___________________ ____________________
ABA No.:___________________ ____________________
Account No.________________ ____________________
Attention:_________________ ____________________
Aggregate principal amount
of Notes to be purchased by
you: $____________
Signature Page
<PAGE> 29
Exhibit A
Form of Indenture
<PAGE> 30
Exhibit B
Form of Registration Rights Agreement
<PAGE> 31
Exhibit C
Form of Opinion of Company Counsel
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
Dated as of April 28, 1994
by and among
JEFFERIES GROUP, INC.
and
THE PURCHASERS WHO ARE SIGNATORIES HERETO
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as
of April 28, 1994, by and among Jefferies Group, Inc. a Delaware corporation
(the "Company"), and the purchasers of securities of the Company whose
signatures appear on the execution pages of this Agreement (the "Purchasers").
This Agreement is made pursuant to the Purchase Agreement,
dated of even date herewith, among the Company and each of the Purchasers
(collectively, the "Purchase Agreement"). The execution of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
Any capitalized term used herein and not otherwise defined
herein shall have the meaning ascribed to such term in the Indenture (as
defined below).
As used in this Agreement, the following terms shall have the
following meanings:
Advice: As defined in the last paragraph of Section 6 hereof.
Agreement: This Registration Rights Agreement, as the same
may be amended, supplemented or modified from time to time in accordance with
the terms hereof.
Consummate: When used to qualify the term "Exchange Offer"
shall mean to validly and lawfully issue the Exchange Securities pursuant to
the Exchange Offer for all Registrable Securities tendered pursuant thereto.
Consummation Date: The date 45 days from the Effectiveness
Date, provided that, in the event such date is not a Business Day the next
succeeding day which is a Business Day.
Effectiveness Date: The date 180 days from the date hereof,
provided that, in the event such date is not a Business Day, the next
succeeding day which is a Business Day.
Effectiveness Period: As defined in Section 3 hereof.
Exchange Date: As defined in Section 2(d) hereof.
Exchange Offer: An offer to issue, in exchange for any and
all of the Registrable Securities, a like aggregate principal amount of
Exchange Securities, which offer shall be made by the Company pursuant to
Section 2 hereof.
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<PAGE> 3
Exchange Offer Notice: As defined in Section 2(d) hereof.
Exchange Securities: The Series B 8 7/8% Senior Notes due
2004 of the Company that are identical to the Notes in all material respects,
except that the issuance thereof pursuant to the Exchange Offer shall have been
registered pursuant to an effective Registration Statement under the Securities
Act.
Filing Date: The date 90 days from the date hereof, provided
that, in the event such date is not a Business Day, the next succeeding
Business Day.
Indemnified Party: As defined in Section 8(c) hereof.
Indemnifying Party: As defined in Section 8(c) hereof.
Indenture: The Indenture, dated as of April 28, 1994 between
the Company and the Trustee thereunder, pursuant to which the Notes are being
issued, as amended or supplemented from time to time in accordance with the
terms thereof.
Liquidated Damages: As defined in Section 4(a) hereof.
Losses: As defined in Section 8(a) hereof.
Participating Broker-Dealer: As defined in Section 2(e)
hereof.
Proceeding: An action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities or the Exchange Securities covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Registrable Securities: The Notes, upon original issuance
thereof, and at all times subsequent thereto, until, in the case of any such
Note, (i) it has been registered effectively pursuant to the Securities Act and
disposed of in accordance with the Registration Statement covering it, (ii) it
is sold by the holder thereof pursuant to Rule 144 (or any similar provisions
then in effect) or (iii) it has been exchanged for Exchange Securities pursuant
to the Exchange Offer.
Registration Statement: Any registration statement of the
Company that covers any of the Notes or the Exchange
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<PAGE> 4
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
Shelf Notice: As defined in Section 2(c) hereof.
Shelf Registration: As defined in Section 3 hereof.
Special Counsel: Any special counsel to the holders of
Registrable Securities, for which holders of Registrable Securities will be
reimbursed pursuant to Section 7.
Underwritten registration or underwritten offering: A
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective Registration
Statement.
2. Exchange Offer
(a) The Company shall file a Registration Statement
relating to the Exchange Offer with the SEC no later than the Filing Date. The
Company shall use its best efforts to cause the Registration Statement to be
effective no later than the Effectiveness Date. The offer and sale of the
Exchange Securities pursuant to the Exchange Offer shall be registered pursuant
to the Securities Act on the appropriate form and duly registered or qualified
for initial issuance under applicable state securities or Blue Sky laws and
will comply with all applicable tender offer rules and regulations of and
pursuant to the Exchange Act and state securities or Blue Sky laws. Unless the
Exchange Offer is not permitted by a policy of the SEC, the Company shall use
its best efforts to Consummate the Exchange Offer by the Consummation Date.
The Company will keep the Exchange Offer open for not less than 30 days after
the date the Exchange Notice is mailed to holders at the Notes. No securities
shall be included in the Registration Statement covering the Exchange Offer
other than the Notes and the Exchange Securities.
(b) The Company may require each holder of Registrable
Securities participating in the Exchange Offer to represent to the Company and
its counsel that at the time of the consummation of the Exchange Offer (i) any
Exchange Securities received by
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<PAGE> 5
such holder will be acquired in the ordinary course of its business and (ii)
such holder will have no arrangement or understanding with any person to
participate in the distribution of the Notes or the Exchange Securities within
the meaning of the Securities Act.
(c) In the event applicable interpretations of the staff
of the SEC do not permit (i) the Company to effect the Exchange Offer or (ii)
any holder of Registrable Securities promptly notifies the Company that it may
not sell the Exchange Securities acquired by it in the Exchange Offer without
delivering a prospectus meeting the requirements of the Securities Act and the
prospectus contained in the Registration Statement (as amended or supplemented)
is not appropriate or available for such sales by such holder, the Company
shall promptly deliver to the holders of the Registrable Securities and the
Trustee notice thereof (the "Shelf Notice") and shall thereafter, at its cost,
file a Shelf Registration pursuant to Section 3. Following the delivery of a
Shelf Notice in accordance with the provisions hereof, other than as provided
in this Section 2(c), the Company shall not have any further obligation under
this Section 2.
(d) The Company shall commence the Exchange Offer by
mailing the related exchange offer prospectus and appropriate accompanying
documents (the "Exchange Offer Notice") to each holder of Registrable
Securities providing, in addition to such other disclosures as are required by
applicable law:
i) that the Exchange Offer is being made pursuant to
this Agreement and that all Notes validly tendered will be accepted
for exchange;
ii) the date of acceptance for exchange (the "Exchange
Date"), which date shall in no event be later than the Consummation
Date;
iii) that holders of Registrable Securities electing to
have a Note exchanged pursuant to the Exchange Offer will be required
to surrender such Note, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the Exchange Date; and
iv) that holders of Registrable Securities will be
entitled to withdraw their election to exchange Notes, not later than
the close of business on the Exchange Date;
As soon as practicable after the Exchange Date (but in no
event later than the Consummation Date), the Company shall:
(i) accept for exchange all Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
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<PAGE> 6
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by
the Company, and issue, or cause the Trustee to authenticate and mail
to each holder, an Exchange Security equal in principal amount to the
principal amount of the Notes surrendered by such holder.
(e) Each purchaser acknowledges that it is aware that the
staff of the SEC has taken the position that any broker-dealer that owns
Exchange Securities that were received by such broker-dealer for its own
account in the Exchange Offer (a "Participating Broker-Dealer") may be deemed
to be an "underwriter" within the meaning of the Securities Act and must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Securities (other than a resale of
an unsold allotment resulting from the original placement of the Notes).
The Company has also been informed that it is the position of
the staff of the SEC that if the Prospectus contained in the Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker Dealers may resell the
Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligations under the Securities Act in connection with resales of
Exchange Securities for their own accounts, so long as the Prospectus otherwise
meets the requirements of the Securities Act. The Company will, for a period
of 90 days after the Consummation Date, make available a prospectus meeting the
requirements of the Securities Act to any broker-dealer for use in connection
with any resale of any such Exchange Notes.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section
2(c), then the Company shall prepare and file, as promptly as reasonably
practicable and in any event within 30 days thereafter, with the SEC a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act covering all of the Registrable
Securities (the "Shelf Registration") and shall use its best efforts to cause
such Shelf Registration to become effective under the Securities Act. Except
as set forth below, the Company shall use its best efforts to keep the Shelf
Registration continuously effective under the Securities Act (the
"Effectiveness Period") until the earlier to occur of (A) the third anniversary
of the date of this Agreement or (B) if sooner, the date following the date
that all Registrable Securities covered by the Shelf Registration have been
sold pursuant thereto.
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<PAGE> 7
4. Liquidated Damages
(a) The parties hereto agree that the holders of Registrable
Securities will suffer damages if the Company fails to fulfill its obligations
under Section 2 or Section 3 and that it would not be feasible to ascertain the
extent of such damages. Accordingly, if, other than as a result of action by
the holders of Registrable Securities, (i) a Registration Statement relating to
the Exchange Offer is not filed with the SEC on or prior to the Filing Date
(and the Company as of such date is obligated to file such Registration
Statement pursuant to Section 2 hereof), (ii) the Registration Statement
relating to the Exchange Offer has not been declared effective by the SEC by
the Effectiveness Date, or (iii) on or prior to the Consummation Date, either
(x) the Shelf Registration has not become effective under the Securities Act
or, if such Shelf Registration has become effective, it thereafter ceases to be
effective prior to the last day of the Effectiveness Period or (y) the Exchange
Offer has not been Consummated, then the Company agrees to pay, as liquidated
damages, and not as a penalty, to each holder of a Registrable Security, an
additional amount (the "Liquidated Damages") equal to $0.05 per week (or
partial week) per $1,000 principal amount of Registrable Securities held by
such holder, during the first 90-day period immediately following the Filing
Date referred to in (i) above, the Effectiveness Date referred to in (ii)
above, or a Consummation Date or the date the Shelf Registration ceases to be
effective referred to in (iii) above, provided that the amount of Liquidated
Damages will increase by an additional $0.05 per week, or partial week, per
$1,000 principal amount at the beginning of each subsequent 90-day period in
the case of (i), (ii) or (iii) above, up to a maximum amount of liquidated
damages of $0.25 per week per $1,000 principal amount. Such Liquidated
Damages, in each case, will cease to accrue (subject to the recommencement of
the accrual of such Liquidated Damages in accordance with the terms of this
Section 4(a)) on and after the date (x) with respect to Liquidated Damages for
failure to file by the Filing Date, a Registration Statement relating to the
Exchange Offer is filed with the SEC, (y) with respect to Liquidated Damages
for failure to have the Registration Statement declared effective by the
Effectiveness Date, a Registration Statement is declared effective relating to
the Notes or the Exchange Notes or (z) with respect to Liquidated Damages for
failure to have a Shelf Registration declared effective by the Consummation
Date or the failure to Consummate the Exchange Offer by the Consummation Date
or the ceasing to be effective of the Shelf Registration, a Registration
Statement relating to the Shelf Registration is declared effective or the
Exchange Offer is Consummated or a Shelf Registration which ceased to be
declared effective is again declared effective, as applicable.
(b) The Company shall pay the Liquidated Damages due on the
Registrable Securities by depositing with the Paying Agent (which may not be
the Company for these purposes), in trust, for the benefit of the holders
thereof, at least one Business Day prior to the next interest payment date
specified by the
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<PAGE> 8
Indenture, sums sufficient to pay the Liquidated Damages then due. The
Liquidated Damages due shall be payable on each interest payment date specified
by the Indenture to the record holder entitled to receive the interest payment
to be made on such date.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 4 constitute a reasonable estimate of the damages
that will be suffered by holders of Registrable Securities by reason of the
failure of the Shelf Registration, or the Exchange Offer, to be filed, to be
declared effective, to be Consummated or to remain effective, as the case may
be, in accordance with this Agreement.
5. Hold-Back Agreements
(a) Restrictions on Sale by Holders of Registrable
Securities. Each holder of Registrable Securities agrees, if requested
(pursuant to a timely written notice) by the Company or the managing
underwriters in an underwritten offering of the Company's debt securities
(including the Registrable Securities) not to effect a distribution of any of
the Notes (except pursuant to an Exchange Offer), during the period beginning
10 days prior to, and ending 90 days after, the closing date of the
underwritten offering. If a proper request is made pursuant to this Section
5(a) at any time when a Shelf Registration is effective, then the time period
during such a Shelf Registration is required to remain continuously effective
for such holders of Registrable Securities pursuant to the terms of this
Agreement shall be extended by 100 days.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is prevented by applicable statute or
regulation from entering into any such agreement.
(b) Restrictions on Public Sale by the Company and Others.
The Company agrees (i) without the written consent of the managing underwriters
in an underwritten offering of Registrable Securities covered by a Registration
Statement filed pursuant to Section 3 hereof, not to effect any public or
private sale or distribution of its debt securities, including a sale pursuant
to Regulation D under the Securities Act, during the period beginning 10 days
prior to, and ending 90 days after, the closing date of each underwritten
offering made pursuant to such Registration Statement (provided, however, that
such period shall be extended by the number of days from and including the date
of the giving of any notice pursuant to Section 6(c) hereof to and including
the date when each seller of Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(k) hereof).
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<PAGE> 9
6. Registration Procedures
In connection with the Company's registration obligations
hereunder, the Company shall use its best efforts to effect such registrations
on the appropriate form available for the sale of the Registrable Securities or
Exchange Securities, as applicable, to (i) permit the sale of Exchange
Securities and (ii) in the case of a Shelf Registration, permit the sale of
Registrable Securities in accordance with the method or methods of disposition
thereof specified by the holders of a majority in aggregate principal amount of
Registrable Securities, and pursuant thereto the Company shall as expeditiously
as possible:
(a) In the case of a Shelf Registration, no fewer than 10
Business Days prior to the initial filing of a Registration Statement or
Prospectus and no fewer than two Business Days prior to the filing of any
amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), furnish to the
holders of the Registrable Securities, their Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such holders, their Special Counsel
and such underwriters, if any, and cause the officers and directors of the
Company, counsel to the Company and independent certified public accountants to
the Company to respond to such inquiries as shall be necessary, in the opinion
of respective counsel to such holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act; provided,
further, that the Company shall not be deemed to have kept a Registration
Statement effective during the applicable period if it voluntarily takes any
action that results in selling holders of the Registrable Securities covered
thereby not being able to sell such Registrable Securities pursuant to Federal
securities laws during that period (and the time period during which such
Registration Statement is required to remain effective hereunder shall be
extended by the number of days during which such selling holders of Registrable
Securities are not able to sell Registrable Securities). The Company shall not
file any such Registration Statement or Prospectus or any amendments or
supplements thereto to which the holders of a majority in aggregate principal
amount of the Registrable Securities shall reasonably object on a timely basis;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary
to keep such Registration Statement continuously effective for the applicable
time period; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all securities covered by such Registration Statement during
such
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<PAGE> 10
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or in such
Prospectus as so supplemented;
(c) Notify the holders of Registrable Securities to be sold
or, in the case of an Exchange Offer, tendered for, their Special Counsel and
the managing underwriters, if any, promptly (i) (A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed, and,
(B) with respect to a Registration Statement or any post-effective amendments
when the same has become effective (ii) in the case of a Shelf Registration, of
any request by the SEC or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any stop
order, order or injunction suspending or enjoining the use or the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose, (iv) if at any time any of the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby cease to be true and correct in all material respects, (v)
of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities or Exchange Securities for sale in any jurisdiction, or
the initiation or threatening of any proceeding for such purpose, and (vi) in
the case of a Shelf Registration, of the happening of any event that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, not misleading and that in the case
of the Prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(d) Use their reasonable best efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of any order enjoining or suspending
the use or effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities or Exchange Securities for sale in any jurisdiction, at
the earliest practicable moment;
(e) If a Shelf Registration is filed pursuant to Section 3
and if requested by the managing underwriters, if any, or the holders of a
majority in aggregate principal amount of the Registrable Securities being sold
in connection with such
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<PAGE> 11
offering make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
required to take any action pursuant to this Section 6(e) that would, in the
opinion of outside counsel for the Company, violate applicable law;
(f) Furnish to each holder of Registrable Securities and
Exchange Securities, their Special Counsel and each managing underwriter, if
any, without charge, at least one conformed copy of each Registration Statement
and each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by each holder (including those previously
furnished or incorporated by reference) as soon as practicable after the filing
of such documents with the SEC;
(g) Deliver to each holder of Registrable Securities and
Exchange Securities, their Special Counsel, and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto as such
Persons reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto;
(h) Prior to any public offering of Registrable Securities
and prior to the consummation of the Exchange Offer, use its reasonable best
efforts to register or qualify or cooperate with the holders of Registrable
Securities to be sold or tendered for, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities or Exchange Securities for offer and sale under the securities or
Blue Sky laws of the State of New York and of such other jurisdictions within
the United States as any holder or underwriter reasonably requests in writing;
keep each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities or Exchange
Securities covered by the applicable Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any such jurisdiction where
it is not then so subject or subject the Company to any tax in any such
jurisdiction where it is not then so subject;
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<PAGE> 12
(i) Cooperate with the holders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities or Exchange Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company and to enable such
Registrable Securities or Exchange Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or holders may
request at least two Business Days prior to any sale of Registrable Securities
or Exchange Securities;
(j) Use their reasonable best efforts to cause the
Registrable Securities and Exchange Securities covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities within the United States, except as may be required solely as a
consequence of the nature of such selling holder's business, in which case the
Company will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals as may be necessary
to enable the seller or sellers thereof or the underwriters, if any, to
Consummate the disposition of such Registrable Securities and Exchange
Securities; provided, however, that the Company shall not be required to
register the Registrable Securities and Exchange Securities in any jurisdiction
that would subject it to general service of process in any such jurisdiction
where it is not then so subject or subject the Company to any tax in any such
jurisdiction where it is not then so subject or to require the Company to
qualify to do business in any jurisdiction where it is not then so qualified;
(k) Upon the occurrence of any event contemplated by
Paragraph 6(c) (ii) or (vi), as promptly as practicable, prepare a supplement
or amendment, including a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, such Prospectus will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(l) Use their reasonable best efforts to cause the
Registrable Securities or the Exchange Securities, as applicable, covered by a
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the holders of a majority in aggregate principal amount of
Registrable Securities relating to such Registration Statement or the managing
underwriters, if any;
(m) Prior to, the effective date of the first Registration
Statement relating to the Registrable Securities and Exchange Securities, as
applicable, to provide a CUSIP number for
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<PAGE> 13
the Registrable Securities and Exchange Securities, as applicable;
(n) If a Shelf Registration is filed pursuant to Section 3,
enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings) and take all such
other reasonable actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the holders of a majority in
aggregate principal amount of the Registrable Securities being sold) in order
to expedite or facilitate the disposition of such Registrable Securities, and
in such connection, whether or not an underwriting agreement is entered into
and whether or not the registration is an underwritten registration, (i) make
such representations and warranties to the holders of such Registrable
Securities and the underwriters, if any, with respect to the business of the
Company and its subsidiaries, and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and Special
Counsel to the holders of the Registrable Securities being sold), addressed to
each selling holder of Registrable Securities and each of the underwriters, if
any, covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such Special Counsel and underwriters; (iii) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data is, or is required to be,
included in the Registration Statement), addressed to each selling holder of
Registrable Securities and each of the underwriters, if any, such letters to be
in customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings (in each case, to
the extent permitted by applicable accounting rules and guidelines); (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the selling holders and the
underwriters, if any, than those set forth in Section 8 hereof (or such other
provisions and procedures acceptable to holders of a majority in aggregate
principal amount of the holders of Registrable Securities covered by such
Registration Statement and the managing underwriters); and (v) deliver such
documents and certificates as may be reasonably requested by the holders of a
majority in aggregate principal amount of the Registrable Securities being
sold, their Special Counsel and the managing underwriters, if any, to evidence
the continued validity of the representations and warranties made pursuant to
clause 6(o)(i)
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<PAGE> 14
above and to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company;
(o) Provide an indenture trustee for the Registrable
Securities and the Exchange Securities, as the case may be, and cause the
Indenture to be qualified under the TIA not later than the effective date of
the first Registration Statement relating to the Registrable Securities or the
Exchange Securities, as applicable; and in connection therewith, cooperate with
the trustee under the Indenture and the holders of the Registrable Securities
and the Exchange Securities, to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its reasonable efforts to cause such trustee to
execute, all customary documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to their securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act), no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Securities are sold to underwriters
in a firm commitment or reasonable efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement, which statement shall cover said 12-month periods, or
end shorter periods as is consistent with the requirements of Rule 158; and
(q) If an Exchange Offer is to be Consummated, upon delivery
of the Registrable Securities by such holders to the Company in exchange for
the Exchange Securities, the Company shall mark, or cause to be marked, on such
Registrable Securities that such Registrable Securities are being cancelled in
exchange for the Exchange Securities; in no event shall such Registrable
Securities be marked as paid or otherwise satisfied.
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as is
required by law to be disclosed in the applicable Registration Statement and
the Company may exclude from such registration the Registrable Securities of
any seller who fails to furnish such information within a reasonable time after
receiving such request.
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<PAGE> 15
In the case of a Shelf Registration pursuant to Section 3
hereof, each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(c)(ii), 6(c)(iii),
6(c)(v) or 6(c) (vi) hereof, such holder will forthwith discontinue disposition
of such Registrable Securities pursuant to such Registration Statement or
Prospectus provided that each holder of Registrable Securities may transfer
such securities pursuant to an available exemption under the Securities Act
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(k) hereof, or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. If the Company shall give any such notice, the
time periods mentioned in Section 3 hereof shall be extended by the number of
days during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Securities
covered by such Registration Statement shall have received (x) the copies of
the supplemented or amended Prospectus contemplated by Section 6(k) hereof or
(y) the Advice, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. At the time of any notice contemplated by this
paragraph, if so instructed by the Company, each holder of Registrable
Securities shall deliver to the Company all copies then in its possession of
the Prospectus covering such Securities.
7. Registration Expenses
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registration Statement is filed or becomes effective and
whether or not any securities are issued or sold pursuant to any Registration
Statement (unless such Registration Statement is not filed or does not become
effective or securities are not issued or sold pursuant to such Registration
Statement as a result of any action by the holders of Registrable Securities
requesting such registration). The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration,
stock exchange, and filing fees (including, without limitation, fees and
expenses (A) with respect to filings required to be made with the National
Association of Securities Dealers, Inc. and (B) in compliance with securities
or Blue Sky laws (including, without limitation and in addition to that
provided for in (b) below, fees and disbursements of counsel for the
underwriters or holders in connection with Blue Sky qualifications of the
Registrable Securities or Exchange Securities and determination of the
eligibility of the Registrable Securities or Exchange Securities for investment
under the laws of such jurisdictions as the managing underwriters, if any or
holders of a majority in
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<PAGE> 16
aggregate principal amount of Registrable Securities may designate), (ii) word
processing, printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities or Exchange Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or by the holders of a majority in principal amount of
the Registrable Securities included in or tendered for in connection with any
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and Special Counsel for the
holders (in accordance with the provisions of Section 7(b) hereof), (v) fees
and disbursements of all independent certified public accountants (including,
without limitation, the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), (vi) underwriters' fees
and expenses (excluding discounts, commissions or fees of underwriters, selling
brokers, dealer managers or similar securities industry professionals relating
to the distribution of the Registrable Securities), (vii) rating agency fees,
(viii) Securities Act liability insurance, if the Company so desires such
insurance, and (ix) fees and expenses of all other persons retained by the
Company. In addition, the Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange on which similar securities issued by
the Company are then listed, if it chooses, or is required, so to list and
rating agency fees (plus any local counsel, deemed appropriate by the holders
of a majority in aggregate principal amount of the Registrable Securities and
reasonably satisfactory to the Company).
(b) In connection with any Registration hereunder, the
Company shall reimburse the holders of the Registrable Securities being
registered or tendered for in such registration for the reasonable fees and
disbursements of not more than one firm of attorneys chosen by the holders of a
majority in aggregate principal amount of the Registrable Securities.
8. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding termination of this Agreement and without limitation as to
time, indemnify and hold harmless each holder of Registrable Securities, the
officers and directors of such holder, each Person who controls any such holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers and directors of each such controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or based upon any untrue
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<PAGE> 17
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading, except to the extent based upon
information furnished in writing to the Company by or on behalf of such holder
expressly for use therein.
(b) Indemnification by Holder of Registrable Securities.
In connection with any Registration Statement in which a holder of Registrable
Securities is participating, such holder of Registrable Securities shall
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus
and agrees to indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling persons, to
the fullest extent lawful, from and against all Losses, as incurred, arising
out of or based upon any untrue statement of a material fact contained in any
Registration Statement, Prospectus, or form of prospectus, or arising out of or
based upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such holder to the Company expressly for
use in such Registration Statement or Prospectus. In no event shall the
liability of any selling holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds received by such holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party promptly
shall so notify the person from whom indemnity is sought (the "Indemnifying
Party") in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with the defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations pursuant to this Agreement, except to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have materially prejudiced the Indemnifying Party.
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<PAGE> 18
Any such Indemnified Party shall have the right to employ
separate counsel in any such action, claim or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed to pay such fees and expenses; or (2) the Indemnifying Party
shall have failed promptly to assume the defense of such action, claim or
proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such action, claim or proceeding; or (3) the named parties to any
such action, claim or proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised in writing by counsel that a conflict of interest may
exist if such counsel represents such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the expense of
the Indemnifying Parties, the Indemnifying Parties shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party), it being understood, however, that, the Indemnifying Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) at any time for all such Indemnified
Parties, which firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any proceeding
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are or may be the subject matter of
such proceeding.
(d) Contribution. If a claim by an Indemnified Party for
indemnification under Section 8(a) or 8(b) hereof is found unenforceable in a
final judgment by a court of competent jurisdiction (not subject to further
appeal) (even though the express provisions hereof provide for indemnification
in such case), then each applicable Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying
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<PAGE> 19
Party or Indemnified Party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include, subject to the limitations set forth in Section
8(c), any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or Proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8(d), an
Indemnifying Party that is a holder of Registrable Securities or Exchange
Securities shall not be required to contribute any amount in excess of the
amount by which the total price at which the securities sold by such
Indemnifying Party and distributed to the public were offered to the public
exceeds the amount of any damages that such Indemnifying Party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation.
9. Rules 144 and 144A
The Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any holder of Registrable Securities,
make available public or other information so long as necessary to permit sales
of their securities pursuant to Rules 144 and 144A. The Company further
covenants that it will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rules
144 and 144A. Upon the request of any holder of Registrable Securities, the
Company shall deliver to such holder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 9 shall be deemed to require the Company to register any of their
securities pursuant to the Exchange Act.
10. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
manage the offering will be selected by the Company; provided that such
Underwriters must be reasonably acceptable to the holders of a majority of the
-18-
<PAGE> 20
principal amount of the Registrable Securities to be included in such
underwritten offering.
Any registered holder of a Registrable Security may
participate in any underwritten registration hereunder provided that such
holder (a) agrees to sell such holder's Registrable Securities on the basis
reasonably provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting arrangements.
11. Miscellaneous
(a) Remedies. The Liquidated Damages shall constitute
the sole and exclusive remedy of any holder of Registrable Securities with
respect to the failure of the Company to fulfill, or breach by the Company of,
its obligations under Section 2 or Section 3. Except as provided in the
immediately preceding sentence, in the event of a breach by the Company, or by
a holder of Registrable Securities, of any of its obligations under this
Agreement, each holder of Registrable Securities or the Company, as the case
may be, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the holders of a majority of the then outstanding aggregate
principal amount of Registrable Securities; provided, however, that, for the
purposes of this Agreement, Registrable Securities that are owned, directly or
indirectly, by the Company or an Affiliate of the Company are not deemed
outstanding. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other holders of Registrable Securities may be given by
holders of a majority in aggregate principal amount of the Registrable
Securities being sold by such holders pursuant to such Registration Statement;
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(c) Notices. All notices and other communications
provided for herein shall be made in writing by hand-delivery, next-day air
courier, certified first class mail, return receipt requested, telex or
facsimile to:
-19-
<PAGE> 21
i) the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof, or
ii) if to any other person who is then the
registered holder of any Registrable Securities, to the address of
such holder as it appears in the note register of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by
hand, if personally delivered; one business day after being timely delivered to
a next day air courier; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(d) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, permitted assigns and
permitted transferees of each of the parties and shall inure, without the need
for an express assignment, to the benefit of each subsequent holder of
Registrable Securities. The Company may not assign its rights or obligations
hereunder without the prior written consent of each holder of any Registrable
Securities. Notwithstanding the foregoing, no transferee shall have any of the
rights granted under this Agreement until such transferee shall acknowledge its
rights and obligations hereunder by a signed written statement of such
transferee's acceptance of such rights and obligations.
(e) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which, when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement.
(f) Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH
-20-
<PAGE> 22
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY HOLDER OF A REGISTRABLE SECURITY TO SERVE PROCESS IN
ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
(g) Severability. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement unless
expressly stated otherwise.
(i) Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
asserted as defense, the prevailing party, as determined by the court and to
the extent permitted by applicable law, shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
(j) Termination. This Agreement shall terminate and be
of no further force and effect from and after the earliest of (x) with respect
to any holder of Registrable Securities, the date on which all of the Notes
held by such holder may be sold pursuant to Rule 144(k), (y) with respect to
any holder of Registrable Securities, the date on which all of the Notes held
by such holder may be sold in a three-month period pursuant to Rule 144 and (z)
10 years from the date hereof.
Signature Pages to Follow
-21-
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
JEFFERIES GROUP, INC.
By:
--------------------------------
Name: Alan D. Browning
Title: Executive Vice President
PURCHASERS:
By: ________________________________
Name:
Title:
Signature Page
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ in 000'S)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 25, 1994 MARCH 26, 1993 1993 1992 1991 1990 1990
----------------- ------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Occupancy and Equipment Rental $ 3,356 $ 3,051 $ 12,757 $ 12,126 $ 12,767 $ 7,755 $ 6,610
Fixed Charges:
- --------------
Interest Expense $ 6,488 $ 2,894 $ 17,457 $ 13,250 $ 15,959 $ 23,825 12,727
Interest Portion of Rental
Expense (1/3) 1,119 1,017 4,252 4,042 4,256 2,585 2,203
-------- -------- --------- --------- --------- -------- -------
Total Fixed Charges $ 7,607 $ 3,911 $ 21,709 $ 17,292 $ 20,215 $ 26,410 $14,930
Earnings:
- ---------
Earnings Before Income Taxes $ 10,246 $ 11,271 $ 47,344 $ 33,669 $ 17,845 $ 12,182 $ 6,894
Fixed Charges 7,607 3,911 21,709 17,292 20,215 26,410 14,930
--------- -------- --------- --------- --------- -------- -------
Total Earnings $ 17,853 $ 15,182 $ 69,053 $ 50,961 $ 38,060 $ 38,592 $21,824
Ratio of Earnings to Fixed
Charges 2.3 3.9 3.2 2.9 1.9 1.5 1.5
--- --- --- --- --- --- ---
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Jefferies Group, Inc.:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK
Los Angeles, California
June 23, 1994
<PAGE> 1
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING
SUBMITTED PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
____________________________
JEFFERIES GROUP, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-2848406
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
(Address of principal executive offices) (Zip code)
</TABLE>
______________________
8 7/8% Senior Notes due 2004
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of
1939 (the "Act") and Rule 24 of the Commission's Rules of
Practice.
1. A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to
Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4
to Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of
New York, a corporation organized and existing under the laws of the
State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized,
all in The City of New York, and State of New York, on the 9th day of
June, 1994.
THE BANK OF NEW YORK
By: /S/ WALTER N. GITLIN
--------------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the
Federal Reserve System, at the close of business March 31, 1994, published in
accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ...... $ 2,984,207
Interest-bearing balances ............................... 652,882
Securities:
Held-to-maturity securities ............................. 1,554,924
Available-for-sale securities ........................... 2,323,498
Federal funds sold in domestic offices of the bank ........ 861,621
Loans and lease financing receivables:
Loans and leases, net of unearned income ................ 25,419,340
LESS: Allowance for loan and lease losses ............... 736,749
LESS: Allocated transfer risk reserve ................... 29,510
Loans and leases, net of unearned income, allowance,
and reserve........................................... 24,653,081
Assets held in trading accounts ........................... 2,269,729
Premises and fixed assets (including capitalized leases)... 649,048
Other real estate owned ................................... 63,724
Investments in unconsolidated subsidiaries and associated
companies ............................................... 166,985
Customers' liability to this bank on acceptances
outstanding .......................................... 1,068,405
Intangible assets ......................................... 83,775
Other assets .............................................. 1,519,064
-----------
Total assets .............................................. $38,850,943
===========
LIABILITIES
Deposits:
In domestic offices ..................................... $19,552,324
Noninterest-bearing ........................... 7,628,562
Interest-bearing ..............................11,923,762
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ............................... 9,092,181
Noninterest-bearing ........................... 58,771
Interest-bearing .............................. 9,033,410
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
Federal funds purchased ................................. 1,459,117
Securities sold under agreements to repurchase .......... 95,459
Demand notes issued to the U.S. Treasury .................. 289,163
Trading liabilities ....................................... 968,864
Other borrowed money:
With original maturity of one year or less .............. 896,720
With original maturity of more than one year ............ 33,969
Bank's liability on acceptances executed and outstanding .. 1,069,639
Subordinated notes and debentures ......................... 1,064,780
Other liabilities ......................................... 1,368,384
-----------
Total liabilities ......................................... 35,890,600
-----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............. 75,000
Common stock .............................................. 942,284
Surplus ................................................... 525,666
Undivided profits and capital reserves .................... 1,429,219
Net unrealized holding gains (losses) on available-for-sale
securities .............................................. (6,246)
Cumulative foreign currency translation adjustments........ (5,580)
-----------
Total equity capital ...................................... 2,960,343
------------
Total liabilities, limited-life preferred stock, and
equity capital ......................................... $38,850,943
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true
and correct.
Alan R. Griffith |
Thomas A. Renyi | Directors
J. Carter Bacot |
- ------------------------------------------------------------------------------
<PAGE> 1
LETTER OF TRANSMITTAL
JEFFERIES GROUP, INC.
OFFER FOR ALL OUTSTANDING
8 7/8% SENIOR NOTES DUE 2004
IN EXCHANGE FOR
8 7/8% SERIES B SENIOR NOTES DUE 2004
PURSUANT TO THE PROSPECTUS, DATED _____________, 1994.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
___________, 1994, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery To: THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: Facsimile Transmission Number: By Hand/Overnight Delivery:
(212) 571-3080
The Bank of New York (For Eligible Institutions Only) The Bank of New York
101 Barclay Street - 7E Confirm by Telephone: 101 Barclay Street
New York, New York 10286 (212) 815-2742 Corporate Trust Services Window
Attn: Reorganization Section Ground Level
New York, New York 10286 New York, New York 10286
Attn: Reorganization Section
</TABLE>
For Information Call:
(212) 815-6333
Delivery of this instrument to an address other than as set
forth above, or transmission of instructions via facsimile other than as set
forth above, will not constitute a valid delivery.
The undersigned acknowledges that he or she has received and
reviewed the Prospectus, dated _____________, 1994 (the "Prospectus") of
Jefferies Group, Inc., a Delaware corporation (the "Company"), and this Letter
of Transmittal (the "Letter"), which together constitute the Company's offer
(the "Exchange Offer") to exchange an aggregate principal amount of up to
$50,000,000 of 8 7/8% Series B Senior Notes Due 2004 (the "New Notes") of the
Company for a like principal amount of the issued and outstanding $50,000,000
of 8 7/8% Senior Notes Due 2004 (the "Old Notes") of the Company from the
holders thereof.
For each Old Note accepted for exchange, the holder of such
Old Note will receive a New Note having a principal amount equal to that of the
surrendered Old Note. The New Notes will bear interest from and including the
date of consummation of the Exchange Offer. Holders whose Old Notes are
accepted for exchange will have the right to receive, in cash, accrued interest
thereon to, but not including, the date of consummation of the Exchange Offer,
such interest to be payable to the registered holders of the New Notes with the
first interest payment on the New Notes, but will be deemed to have waived the
right to receive any payment in respect of interest on the Old Notes accrued
after such date. The Company reserves the right, at
<PAGE> 2
any time or from time to time, to extend the Exchange Offer at its discretion,
in which event the term "Expiration Date" shall mean the latest time and date
to which the Exchange Offer is extended. The Company shall notify the holders
of the Old Notes of any extension by means of a press release or other public
announcement prior to 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date.
This Letter is to be completed by a holder of Old Notes either
if certificates are to be forwarded herewith or if a tender of certificates for
Old Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Holders of Old
Notes whose certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry tender of their
Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility
(a "Book-Entry Confirmation") and all other documents required by this Letter
to the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and
signed this Letter to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
<PAGE> 3
List below the Old Notes to which this Letter relates. If a space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
________________________________________________________________________________________________
DESCRIPTION OF OLD NOTES 1 2 3
________________________________________________________________________________________________
Aggregate
Principal Principal
Name(s) and Address(es) of Registered Certificate Amount of Amount
Holder(s) (Please fill in, if blank) Number(s)* Old Note(s) Tendered**
________________________________________________________________________________________________
______________________________________________
______________________________________________
______________________________________________
Total
________________________________________________________________________________________________
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered ALL of the Old Notes represented by the Old Notes
indicated in column 2. See instruction 2. Old Notes tendered hereby
must be in denominations of principal amount at maturity of $1,000
and any integral multiple thereof. See Instruction 1.
________________________________________________________________________________________________
</TABLE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution__________________________________________
Account Number___________________ Transaction Code Number___________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)________________________________________
Window Ticket Number (if any)__________________________________________
Date of Execution of Notice of Guaranteed Delivery_____________________
Name of Institution which guaranteed delivery__________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number __________________ Transaction Code Number___________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
<PAGE> 4
Name:___________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
<PAGE> 5
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange
Offer, the undersigned hereby tenders to the Company the aggregate principal
amount of Old Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Old Notes tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Old Notes as are being tendered
hereby.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, sell, assign and transfer
the Old Notes tendered hereby and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are
accepted by the Company. The undersigned hereby further represents that any
New Notes acquired in exchange for Old Notes tendered hereby will have been
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the undersigned, that neither the holder
of such Old Notes nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes and that
neither the holder of such Old Notes nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is
being made in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC") that the New Notes issued in exchange for the
Old Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is
(i) an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) a broker-dealer, except as provided below), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangements with any
person to participate in the distribution of such New Notes. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of New Notes. If
the undersigned is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver the Prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering the Prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Old Notes tendered hereby.
All authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box
entitled "Special Delivery Instructions" below, please send the New Notes (and,
if applicable, substitute certificates representing Old Notes for any Old Notes
not exchanged) to the undersigned at the address shown above in the box
entitled "Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION
OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED
THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE.
<PAGE> 6
<TABLE>
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certificates for Old To be completed ONLY if certificates for Old Notes
Notes not exchanged and/or New Notes are to be not exchanged and/or New Notes are to be sent to
issued in the name of and sent to someone other someone other than the person or persons whose
than the person or persons whose signature(s) signature(s) appear(s) on this Letter above or to such
appear(s) on this Letter above, or if Old Notes person or persons at an address other than shown in the
delivered by book-entry transfer which are not box entitled "Description of Old Notes" on this Letter
accepted for exchange are to be returned by credit above.
to an account maintained at the Book-Entry Transfer
Facility other than the account indicated above.
Mail: New Notes and/or Old Notes to:
Issue: New Notes and/or Old Notes to:
Name(s) . . . . . . . . . . . . . . . . . . . . . .
(PLEASE TYPE OR PRINT) Name(s) . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE TYPE OR PRINT)
. . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE TYPE OR PRINT)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address . . . . . . . . . . . . . . . . . . . . . . (PLEASE TYPE OR PRINT)
. . . . . . . . . . . . . . . . . . . . . . . . . .
(ZIP CODE) Address . . . . . . . . . . . . . . . . . . . . . . . .
(Complete Substitute Form W-9)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
[ ] Credit unexchanged Old Notes delivered by (ZIP CODE)
book-entry transfer to the Book-Entry
Transfer Facility account set forth below.
______________________________
(Book-Entry Transfer Facility
Account Number, if applicable)
</TABLE>
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR
THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE> 7
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,1994
X. . . . . . . . . . . . . . . . . . . . . . . . . . . . ,1994
X. . . . . . . . . . . . . . . . . . . . . . . . . . . . ,1994
SIGNATURE(S) OF OWNER DATE
Area Code and Telephone Number . . . . . . . . . . . . . . . . . . .
If a holder is tendering any Old Notes, this Letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Old Notes or by any person(s) authorized to become registered holder(s)
by endorsements and documents transmitted herewith. If signature is by a
trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s): . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE TYPE OR PRINT)
Capacity: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Address: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUESTED BY INSTRUCTION 3)
Signature(s) Guaranteed
by an Eligible Institution: . . . . . . . . . . . . . . . . . . . . . . . .
(AUTHORIZED SIGNATURE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(TITLE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(NAME AND FIRM)
Dated: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,1994
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
OF THE 8 7/8% SERIES B SENIOR NOTES DUE 2004 IN EXCHANGE FOR THE
8 7/8% SENIOR NOTES DUE 2004 OF JEFFERIES GROUP, INC.
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by noteholders either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Certificates
for all physically tendered Old Notes, or Book-Entry Confirmation, as the case
may be, as well as a properly completed and duly executed Letter (or manually
signed facsimile thereof) and any other documents required by this Letter, must
be received by the Exchange Agent at the address set forth herein on or prior
to the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of maturity of $1,000 and any integral
multiple thereof.
Noteholders whose certificates for Old Notes are not
immediately available or who cannot deliver their certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date, or
who cannot complete the procedure for book-entry transfer on a timely basis,
may tender their Old Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through
an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
must receive from such Eligible Institution a properly completed and duly
executed Letter (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of Old
Notes and the amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Notes, or a Book-Entry
Confirmation, and any other documents required by the Letter will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and all other documents required
by this Letter, are received by the Exchange Agent within five NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER, THE OLD NOTES AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS,
BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED
BY THE EXCHANGE AGENT. IF OLD NOTES ARE SENT BY MAIL, IT IS SUGGESTED THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT THE
DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
See "The Exchange Offer" section in the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER).
If less than all of the Old Note evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Old Notes to be tendered in the box above
entitled "Description of Old Notes--Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on this
Letter, promptly after the Expiration Date. All of the Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
<PAGE> 9
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Old
Notes tendered hereby, the signature must correspond exactly with the name as
written on the face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more
joint owners, all such owners must sign this Letter.
If any tendered Old Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders
of the Old Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the New Notes
are to be issued, or any untendered Old Notes are to be reissued, to a person
other than the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered
holder or holders of any certificate(s) specified herein, such certificate(s)
must be endorsed or accompanied by appropriate bond powers, in either case
signed exactly as the name or names of the registered holder or holders
appear(s) on the certificate(s) and signatures on such certificate(s) must be
guaranteed by and Eligible Institution.
If this Letter or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in- fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON
BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH
IS A MEMBER OF A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR
TRUST COMPANY HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES OR BY SUCH
OTHER ELIGIBLE INSTITUTION WITHIN THE MEANING OF RULE 17(A)(d)-15 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (COLLECTIVELY "ELIGIBLE
INSTITUTIONS").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED
HOLDER OF OLD NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES
ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS
ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH OLD NOTES) TENDERED WHO
HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL
DELIVERY INSTRUCTIONS" ON THIS LETTER, OR (II) FOR THE ACCOUNT OF AN ELIGIBLE
INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the
applicable box the name and address to which New Notes issued pursuant to the
Exchange Offer and/or substitute certificates evidencing Old Notes not
exchanged are to be issued or sent, if different from the name or address of
the person signing this Letter. In the case of issuance in a different name,
the employer identification or social security number of the person named must
also be indicated. Noteholders tendering Old Notes by book-entry transfer may
request that Old Notes not exchanged be credited to such account maintained at
the Book-Entry Transfer Facility as such noteholder may designate hereon. If
no such instructions are given, such Old Notes not exchanged will be returned
to the name and address of the person signing this Letter.
<PAGE> 10
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering
holder whose Old Notes are accepted for exchange must provide the Company (as
payor) with such holder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 below, which in the case of a tendering holder who is an
individual, is his or her social security number. If the Company is not
provided with the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, delivery to such tendering holder of New Notes
may be subject to backup withholding in an amount equal to 31% of all
reportable payments made after the exchange. If withholding results in an
overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the
"W-9 Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Old
Notes must provide its correct TIN by completing the "Substitute Form W-9" set
forth below, certifying that the TIN provided is correct (or that such holder
is awaiting a TIN) and that (i) the holder is exempt from backup withholding,
or (ii) the holder has not been notified by the Internal Revenue Service that
such holder is subject to backup withholding as a result of a failure to report
all interest or dividends or (iii) the Internal Revenue Services has notified
the holder that such holder is no longer subject to backup withholding. If the
tendering holder of Old Notes is a nonresident alien or foreign entity not
subject to backup withholding, such holder must give the Company a Completed
Form W-8, Certificate of Foreign Status. These forms may be obtained from the
Exchange Agent. If the Old Notes are in more than one name or are not in the
name of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a
TIN, check the box in Part 2 of the Substitute Form W-9 and write "applied for"
in lieu of its TIN. Note: Checking this box and writing "applied for" on the
form means that such holder has already applied for a TIN or that such holder
intends to apply for one in the near future. If such holder does not provide
its TIN to the Company within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to
the transfer of Old Notes to it or its order pursuant to the Exchange Offer.
If however, New Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to
the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE
NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN
THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction
of any or all conditions enumerated in the Prospectus.
<PAGE> 11
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering holders of Old Notes, by execution of this
Letter, shall waive any right to receive notice of the acceptance of their Old
Notes for exchange.
Neither the Company, the Exchange Agent nor any other person
is obligated to give notice of any defect or irregularity with respect to any
tender of Old Notes nor shall any of them incur any liability for failure to
give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen
or destroyed should contact the Exchange Agent at the address indicated above
for further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as
requests for additional copies of the Prospectus and this Letter, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
<PAGE> 12
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: __________________________
<TABLE>
<S> <C>
Part 1--PLEASE PROVIDE YOUR TIN IN THE BOX TIN:___________________
AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security
BELOW Number or Employer
Identification Number
Part 2--TIN Applied For [ ]
SUBSTITUTE CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification
Form W-9 Number (or I am waiting for a number to be issued to me);
Department of the
Treasury (2) I am not subject to backup withholding either because: (a) I am
Internal Revenue Service exempt from backup withholding, or (b) I have not been notified by
the Internal Revenue Service (the "IRS") that I am subject to
Payor's Request For backup withholding as a result of a failure to report all interest
Taxpayer Identification or dividends, or (c) the IRS has notified me that I am no longer
Number ("TIN") and subject to backup withholding; and
Certification
(3) any other information provided on this form is true and correct.
SIGNATURE . . . . . . . . . . . . DATE . . . . . . . . . . . . . . .
</TABLE>
You must cross out item (2) of the above certification if you have been
notified by IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup
withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments to me thereafter
will be withheld until I provide the number.
___________________________________ _________________________________
Signature Date
