<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 14, 1997
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, 11TH 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, 11TH 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:
JOHN F. HARTIGAN, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
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>
<S> <C> <C> <C> <C>
======================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE FEE(1)
- ------------------------------------------------------------------------------------------------------
Series B
7 1/2% Senior Notes due
2007.......................... $100,000,000 100% $100,000,000 $30,303.03
======================================================================================================
</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
- ------ -------------------------------------------------- --------------------------------------------
<C> <S> <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............ Not Applicable
9. Disclosure of Commission Position of
Indemnification for Securities Act Liabilities.... Not Applicable
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>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 14, 1997
PROSPECTUS
JEFFERIES GROUP, INC.
OFFER TO EXCHANGE ITS
7 1/2% SERIES B SENIOR NOTES
DUE 2007
FOR
ANY AND ALL OF ITS OUTSTANDING
7 1/2% SENIOR NOTES
DUE 2007
------------------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, 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 $100,000,000 principal
amount of its 7 1/2% Series B Senior Notes due 2007 (the "New Notes") for an
equal principal amount of its issued and outstanding 7 1/2% Senior Notes due
2007 (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
August 18, 1997 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.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission can be inspected and
copied during normal business hours at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at its regional offices at Seven World Trade
Center, Suite 1300, New York, New York 10048; and Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of the Commission's web site is
http://www.sec.gov.
The Company intends, and is required by the terms of the Indenture, to
furnish Holders of New Notes 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.
The Company's common stock trades on the New York Stock Exchange under the
symbol "JEF."
2
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference documents which are not presented
herein or delivered herewith. Copies of any such documents filed by the Company
with the Commission, other than exhibits to such documents, are available upon
request, and without charge, from Jefferies Group, Inc., 11100 Santa Monica
Boulevard, 11th 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 [date five business days prior to the
Expiration Date].
The Company's Quarterly Report on Form 10-Q for the period ended September
26, 1997, and the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, which have been filed with the Commission by the Company
pursuant to the Exchange Act, are incorporated herein by reference in their
entirety. All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering described herein shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document that 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.
3
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements (including notes thereto)
appearing elsewhere, and incorporated by reference, in this Prospectus.
THE COMPANY
The Company is a holding company which, through its four primary
subsidiaries, Jefferies & Company, Inc. ("JEFCO"), Investment Technology Group,
Inc. ("ITGI"), Jefferies International Limited ("JIL") and Jefferies Pacific
Limited ("JPL"), is engaged in securities brokerage and trading, corporate
finance and other financial services. 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 investment banking. JEFCO is one of
the leading national brokerage firms engaged in the distribution and trading of
blocks of equity securities and often conducts such activities in the "third
market." The term "third market" refers to transactions in listed equity
securities effected away from national securities exchanges. Total revenues and
net earnings of the Company for the nine months ended September 26, 1997 were
$554.8 million and $45.6 million, respectively, representing a 43% and 46%
increase from the nine months ended September 27, 1996. Total revenues and net
earnings of the Company for fiscal 1996 were $540.8 million and $43.6 million,
respectively, representing a 29% and 53% increase from fiscal 1995.
ITGI is a holding company which is publicly traded (Nasdaq: ITGI) and is
approximately 83% owned by the Company. Its wholly-owned subsidiary, ITG Inc.
("ITG"), is a leading provider of technology-based equity trading services and
transaction research to institutional investors and brokers. ITG's services help
clients to access liquidity, execute trades more efficiently, and make better
trading decisions. ITG's expanding range of services includes: POSIT(R), the
world's largest intra-day electronic equity matching system; QuantEX(R), a
fully-integrated trade routing, analysis, and management system; and ISIS, a set
of analytical tools for systematically lowering the costs of trading.
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"). In 1995, JIL formed a
wholly-owned subsidiary, Jefferies (Switzerland) Ltd. In 1996, JIL formed a
wholly-owned subsidiary, Jefferies (Japan) Limited, which maintains a branch
office in Tokyo.
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 on the New York Stock Exchange under the
symbol "JEF." On November 12, 1997, the Company's closing stock price was $67
per share.
The Company and its various subsidiaries maintain offices in Los Angeles,
New York, Short Hills, Jersey City, Chicago, Dallas, Boston, Atlanta, New
Orleans, Houston, San Francisco, Stamford, London, Hong Kong, Zurich and Tokyo.
The Company's executive offices are located at 11100 Santa Monica Boulevard, Los
Angeles, California 90025, and its telephone number is (310) 445-1199.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
Termination of Certain
Rights..................... The Old Notes were sold by the Company on August
18, 1997, pursuant to the purchase agreement, dated
August 18, 1997 (the "Purchase Agreement"), by and
between the Company and each of the purchasers of
the Old Notes (the "Purchasers"). Each of the
Purchasers is a qualified institutional buyer, as
defined in Rule 144A under the Securities Act, or
an institutional accredited investor, as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities
4
<PAGE> 7
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, $100,000,000 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 , 1997, 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. Any or 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
5
<PAGE> 8
Exchange Offer. See "The Exchange Offer -- Certain
Conditions of the Exchange Offer."
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 via the ATOP System (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 Notes 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."
6
<PAGE> 9
SUMMARY DESCRIPTION OF THE NOTES
The terms of the Old Notes and the New Notes are identical in all material
respects, except for certain transfer restrictions and registration rights
relating to the Old Notes.
Securities Offered......... $100,000,000 aggregate principal amount of New
Notes, less the aggregate principal amount of Old
Notes not exchanged. See "Description of the
Notes."
Issuer..................... The Company
Maturity Date.............. August 15, 2007.
Interest Payment Dates..... February 15 and August 15, commencing February 15,
1998.
Ranking.................... The New Notes are senior unsecured obligations of
the Company ranking pari passu in right of payment
with all existing and future senior indebtedness of
the Company and will be senior in right of payment
to all existing and future subordinated
indebtedness of the Company.
Redemption................. The New Notes are not redeemable prior to maturity
and will not be entitled to the benefit of any
sinking fund.
Covenants.................. The indenture under which the New Notes will be
issued (the "Indenture") will limit, among other
things, (i) consolidations, mergers or transfers of
assets as an entirety or substantially as an
entirety, (ii) the creation of certain liens on
Voting Stock (as defined herein) of Material
Subsidiaries (as defined herein), and (iii) certain
transactions with Affiliates (as defined herein).
See "Description of the Notes."
Events of Default.......... Events of default include: (i) failure to pay
installments of interest on the New Notes as and
when due and continuance of such failure for 30
days; (ii) failure to pay all or part of the
principal or premium on the Notes as and when due;
(iii) failure for 60 days after a notice of default
to comply with any other agreement or 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 (as defined
in the Indenture) is outstanding or may be issued,
in certain circumstances; and (vi) the failure of
JEFCO to maintain Net Capital (as defined herein)
greater than or equal to the Minimum Net Capital
Amount (as defined herein) for a period of 30
consecutive days. See "Description of the
Notes -- Events of Default."
Governing Law.............. The Indenture, the Registration Rights Agreement,
and the New Notes are governed by the laws of the
State of New York.
For a more detailed discussion of the terms of the New Notes, see
"Description of the Notes."
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
7
<PAGE> 10
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 New Notes.
The Company does not intend to apply for listing of the New 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.
8
<PAGE> 11
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The summary consolidated financial information set forth below for the
fiscal years ended December 31, 1996, December 31, 1995, and December 31, 1994,
has been derived from the consolidated financial statements of the Company which
have been audited by KPMG Peat Marwick LLP, independent auditors. The summary
consolidated financial information for the nine months ended September 26, 1997,
and September 27, 1996, is unaudited. This information should be read in
conjunction with the consolidated financial statements and notes thereto
incorporated herein and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED,
YEAR ENDED DECEMBER 31, -----------------------------
---------------------------------- SEPTEMBER 26, SEPTEMBER 27,
1996 1995 1994 1997 1996
-------- -------- -------- ------------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA:
Revenues:
Commissions................................. $ 239.8 $ 178.2 $ 155.3 $ 220.5 $ 176.3
Principal transactions...................... 143.9 98.0 67.0 132.3 108.1
Corporate finance........................... 104.3 73.5 40.7 145.3 63.6
Interest.................................... 47.8 65.8 51.2 52.5 36.2
Other....................................... 5.0 4.2 1.9 4.2 3.8
-------- -------- -------- -------- --------
Total revenues..................... 540.8 419.7 316.1 554.8 388.0
Interest Expense............................ 37.9 54.3 41.6 46.0 28.2
-------- -------- -------- -------- --------
Revenues, net of interest expense........... 502.9 365.4 274.5 508.8 359.8
-------- -------- -------- -------- --------
Non-interest expenses:
Compensation and benefits................... 264.0 195.3 145.4 281.7 187.7
Floor brokerage and clearing fees........... 27.3 20.3 18.7 25.8 19.7
Telecommunications and data processing
services.................................. 35.2 25.0 21.0 33.0 24.9
Occupancy and equipment rental.............. 17.2 16.0 14.3 15.4 12.2
Travel and promotional...................... 15.4 10.8 8.9 14.4 11.7
Software royalties.......................... 8.8 6.0 5.0 7.3 6.5
Other....................................... 51.8 38.8 30.5 47.9 37.4
-------- -------- -------- -------- --------
Total non-interest expenses........ 419.7 312.2 243.8 425.5 300.1
-------- -------- -------- -------- --------
Operating Income............................ 83.2 53.2 30.7 83.3 59.7
Other Income:
Gain on initial public offering of ITGI..... -- -- 8.3 -- --
-------- -------- -------- -------- --------
Earnings before income taxes and minority
interest.................................. 83.2 53.2 39.0 83.3 59.7
Income taxes................................ 35.4 21.9 17.6 34.1 25.4
-------- -------- -------- -------- --------
Earnings before minority interest........... 47.8 31.3 21.4 49.2 34.3
Minority interest........................... 4.2 2.8 1.2 3.6 3.1
-------- -------- -------- -------- --------
Net earnings....................... $ 43.6 $ 28.5 $ 20.2 $ 45.6 $ 31.2
======== ======== ======== ======== ========
Earnings per share of common stock:(1)
Primary..................................... $ 3.68 $ 2.39 $ 1.63 $ 4.01 $ 2.62
======== ======== ======== ======== ========
Fully diluted............................... $ 3.66 $ 2.37 $ 1.63 $ 3.99 $ 2.61
======== ======== ======== ======== ========
SELECTED BALANCE SHEET DATA:
Total assets................................ $1,568.1 $1,537.0 $1,557.3 $ 2,179.1 $ 1,335.2
Total long-term debt........................ 53.0 56.3 59.6 152.8 56.5
Total stockholders' equity.................. 195.4 186.3 163.2 223.2 194.6
Book value per common share(1).............. 18.86 16.55 14.56 22.28 18.23
INTEREST COVERAGE:
Fixed charge coverage ratio(2).............. 12.1x 7.9x 7.4x 13.6x 11.6x
</TABLE>
- ---------------
(1) Adjusted for a two for one stock split.
(2) Earnings used in computing the Fixed Charge Coverage Ratio consist of net
earnings before income taxes plus fixed charges. Fixed charges consist of
interest expense on long-term debt (including amortization of deferred debt
discount, financing costs and the portion of rental expense deemed to
represent the interest factor).
9
<PAGE> 12
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at September 26, 1997:
<TABLE>
<CAPTION>
AT SEPTEMBER 26,
1997
------------------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Long-Term Debt:
Senior Notes due 2004................................................ $ 49.5 13%
Senior Notes due 2007................................................ 99.7 27
Subordinated Debt.................................................... 3.6 1
------ ---
Total Long-Term Debt.............................................. 152.8 41
Total Stockholders' Equity............................................. 223.2 59
------ ---
Total Capitalization.............................................. $376.0 100%
====== ===
</TABLE>
10
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected consolidated financial information set forth below for the
fiscal years ended December 31, 1996, December 31, 1995, December 31, 1994,
December 31, 1993 and December 31, 1992 has been derived from the consolidated
financial statements of the Company which have been audited by KPMG Peat Marwick
LLP, independent auditors. The consolidated financial information for nine
months ended September 26, 1997, and September 27, 1996, is unaudited. This
information should be read in conjunction with the consolidated financial
statements and notes thereto incorporated herein and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, -----------------------------
---------------------------------------------------- SEPTEMBER 26, SEPTEMBER 27,
1996 1995 1994 1993 1992 1997 1996
-------- -------- -------- -------- -------- ------------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Commissions................................ $ 239.8 $ 178.2 $ 155.3 $ 138.1 $ 106.8 $ 220.5 $ 176.3
Principal transactions..................... 143.9 98.0 67.0 83.4 86.4 132.3 108.1
Corporate finance.......................... 104.3 73.5 40.7 72.4 23.9 145.3 63.6
Interest................................... 47.8 65.8 51.2 21.7 16.8 52.5 36.2
Other...................................... 5.0 4.2 1.9 2.5 1.5 4.2 3.8
------- ------- ------- ------- ------ ------- -------
Total revenues......................... 540.8 419.7 316.1 318.1 235.4 554.8 388.0
Interest expense........................... 37.9 54.3 41.6 17.5 13.3 46.0 28.2
------- ------- ------- ------- ------ ------- -------
Revenues, net of interest expense........ 502.9 365.4 274.5 300.6 222.1 508.8 359.8
------- ------- ------- ------- ------ ------- -------
Non-interest expenses:
Compensation and benefits.................. 264.0 195.3 145.4 167.5 118.3 281.7 187.7
Floor brokerage and clearing fees.......... 27.3 20.3 18.7 15.9 13.8 25.8 19.7
Telecommunications and data processing
services................................. 35.2 25.0 21.0 19.0 17.1 33.0 24.9
Occupancy and equipment rental............. 17.2 16.0 14.3 12.8 12.1 15.4 12.2
Travel and promotional..................... 15.4 10.8 8.9 8.6 5.6 14.4 11.7
Software royalties......................... 8.8 6.0 5.0 4.0 2.2 7.3 6.5
Other...................................... 51.8 38.8 30.5 25.5 19.4 47.9 37.4
------- ------- ------- ------- ------ ------- -------
Total non-interest expenses............ 419.7 312.2 243.8 253.3 188.5 425.5 300.1
------- ------- ------- ------- ------ ------- -------
Operating Income........................... 83.2 53.2 30.7 47.3 33.6 83.3 59.7
Other Income:
Gain on initial public offering of ITGI.... -- -- 8.3 -- -- -- --
------- ------- ------- ------- ------ ------- -------
Earnings before income taxes, minority
interest and cumulative effect of change
in accounting principle.................. 83.2 53.2 39.0 47.3 33.6 83.3 59.7
Income taxes............................... 35.4 21.9 17.6 19.8 14.9 34.1 25.4
------- ------- ------- ------- ------ ------- -------
Earnings before minority interest and
cumulative effect of change in accounting
principle................................ 47.8 31.3 21.4 27.5 18.7 49.2 34.3
Minority interest.......................... 4.2 2.8 1.2 -- -- 3.6 3.1
------- ------- ------- ------- ------ ------- -------
Earnings before cumulative effect of change
in accounting principle.................. 43.6 28.5 20.2 27.5 18.7 45.6 31.2
Cumulative effect of change in accounting
principle................................ -- -- -- 1.4 -- -- --
------- ------- ------- ------- ------ ------- -------
Net earnings........................... $ 43.6 $ 28.5 $ 20.2 $ 28.9 $ 18.7 $ 45.6 $ 31.2
======= ======= ======= ======= ====== ======= =======
Earnings per share of common stock before
cumulative effect of accounting
change:(1)
Primary.................................... $ 3.68 $ 2.39 $ 1.63 $ 2.69 $ 1.91 $ 4.01 $ 2.62
======= ======= ======= ======= ====== ======= =======
Fully diluted.............................. $ 3.66 $ 2.37 $ 1.63 $ 2.33 $ 1.54 $ 3.99 $ 2.61
======= ======= ======= ======= ====== ======= =======
SELECTED BALANCE SHEET DATA:
Total assets............................... $1,568.1 $1,537.0 $1,557.3 $1,388.4 $ 531.0 $ 2,179.1 $ 1,335.2
Total long-term debt....................... 53.0 56.3 59.6 10.0 41.0 152.8 56.5
Total stockholders' equity................. 195.4 186.3 163.2 144.6 96.6 223.2 194.6
Book value per common share(1)............. 18.86 16.55 14.56 12.69 10.42 22.28 18.23
Shares outstanding (in thousands).......... 10,363 11,257 11,210 11,391 9,267 10,017 10,672
INTEREST COVERAGE:
Fixed charge coverage ratio(2)............. 12.1x 7.9x 7.4x 10.4x 7.2x 13.6x 11.6x
</TABLE>
- ---------------
(1) Adjusted for a two for one stock split.
(2) Earnings used in computing the Fixed Charge Coverage Ratio consist of net
earnings before income taxes plus fixed charges. Fixed charges consist of
interest expense on long-term debt (including amortization of deferred debt
discount, financing costs and the portion of rental expense deemed to
represent the interest factor).
11
<PAGE> 14
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. 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 three
years ended December 31, 1996, December 31, 1995, and December 31, 1994, and for
the nine months ended September 26, 1997, and September 27, 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, NINE MONTHS ENDED
---------------------------------------------------------- ------------------------------------------------
1996 1995 1994 SEPT. 26, 1997 SEPT. 27, 1996
% OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL
AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES AMOUNT REVENUES
------ ---------- ------ ---------- ------ ---------- ------ --------------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commissions and
Principal
Transactions:
Equities
Division........$175.6 32% $139.9 33% $123.2 39% $158.1 29% $129.6 33%
Investment
Technology
Group, Inc...... 113.5 21 71.9 17 54.3 17 102.1 18 83.5 22
International
Division........ 43.3 8 39.6 9 29.4 9 42.7 8 33.1 9
Taxable Fixed
Income
Division........ 28.8 5 11.0 3 7.9 2 26.1 5 20.0 5
Convertible
Division........ 8.1 2 7.2 2 5.2 2 6.3 1 5.7 2
Other Proprietary
Trading......... 14.4 3 6.6 2 2.3 1 17.5 3 12.5 3
------ --- ------ --- ------ --- ------ --- ------ ---
Total......... 383.7 71 276.2 66 222.3 70 352.8 64 284.4 74
------ --- ------ --- ------ --- ------ --- ------ ---
Corporate Finance... 104.3 19 73.5 17 40.7 13 145.4 26 63.6 16
Interest............ 47.8 9 65.8 16 51.2 16 52.4 9 36.2 9
Other............... 5.0 1 4.2 1 1.9 1 4.2 1 3.8 1
------ --- ------ --- ------ --- ------ --- ------ ---
Total
revenues....$540.8 100% $419.7 100% $316.1 100% $554.8 100% $388.0 100%
====== === ====== === ====== === ====== === ====== ===
</TABLE>
FIRST THREE QUARTERS 1997 VERSUS FIRST THREE QUARTERS 1996
Revenues, net of interest expense, increased 41% to $508.8 million,
compared to $359.8 million for the first nine months of 1996. The increase was
due primarily to an $81.8 million, or 129%, increase in corporate finance, a
$44.2 million, or 25%, increase in commissions, and a $24.2 million, or 22%,
increase in principal transactions. Commission revenues increased, led by ITG,
the Equities Division and the International Division. Revenues from principal
transactions increased primarily due to increased trading gains in the Equities
Division, the Taxable Fixed Income Division and the International Division.
Corporate finance revenues benefited from increased debt financing deals. Net
interest income (interest revenues less interest expense) decreased $1.6 million
as the increase in income on securities borrowed, partially offset by decreases
in margin interest income and investment interest income, was outpaced by the
increase in expense on securities loaned and subordinated loans.
Total non-interest expenses increased 42% to $425.5 million, compared to
$300.2 million for the first nine months of 1996. Compensation and benefits
increased $93.9 million, or 50%, mostly due to higher incentive based
compensation accruals. Other expense increased $10.4 million, or 28%, largely
due to higher soft dollar expenses and increased consulting expenses.
Telecommunications and data processing services increased $8.1 million, or 33%,
primarily due to increased trade volume, personnel, and system upgrades. Floor
brokerage and clearing fees increased $6.2 million, or 31%, due to increased
volume of business executed on the various exchanges. Occupancy and equipment
rental increased $3.2 million, or 27%, largely due to office space relocation
and expansion in several divisions. Travel and promotional increased $2.7
million, or 23%, largely due to increased business travel related to corporate
finance activities. Software royalties increased $752,000, or 12%, due to higher
POSIT(R) commission revenues.
Earnings before income taxes and minority interest were up 40% to $83.3
million, compared to $59.7 million for the same prior year period. The effective
tax rate was approximately 41% for the first nine months of 1997 versus
approximately 43% for the first nine months of 1996. The reduction in the
effective tax rate was due largely to a reversal of deferred taxes related to
ITGI shares that were repurchased during 1997.
Minority interest (approximately 17% of the earnings of ITGI) was $3.7
million for the first nine months of 1997 as compared to $3.0 million in the
comparable 1996 period. The increase in minority interest expense was due to
increased ITGI earnings.
Primary earnings per share were $4.01 for the first nine months of 1997 on
11,155,000 shares compared to $2.62 in the 1996 period on 11,818,000 shares.
Fully diluted earnings per share were $3.99 for the first nine months of 1997 on
11,218,000 shares compared to $2.61 in the 1996 period on 11,858,000 shares.
12
<PAGE> 15
1996 COMPARED TO 1995
Revenues, net of interest expense, increased $137.6 million, or 38%, in
1996 as compared to 1995. The increase was due to a $61.5 million, or 35%,
increase in commission revenue, a $46.0 million, or 47%, increase in principal
transaction revenue, a $30.8 million, or 42%, increase in corporate finance
revenue, and a $765,000 increase in other revenue, offset by a $1.5 million, or
13%, decrease in net interest income (interest revenue less interest expense).
Commission revenue increased, led by ITG, the Equities Division, the
International Division and the Convertibles Division. Revenue from principal
transactions increased primarily due to increased trading gains in the Equities
Division, the Taxable Fixed Income Division, the Analytical Trading Division and
the International Division. Corporate finance revenue grew due to an increase in
equity underwritings and advisory fees. Other revenue increased largely due to a
one time expense reimbursement related to prior years. Net interest income
decreased as the $18.0 million decrease in interest revenue exceeded the $16.5
million decrease in interest expense. Interest revenue decreased due primarily
to lower securities borrowed. The related decrease in interest on securities
loaned and customer credit balances only partially offset the drop in interest
revenue.
Total non-interest expenses increased $107.6 million, or 34%, in 1996 as
compared to 1995. Compensation and benefits expense increased $68.8 million, or
35% primarily due to a $30.3 million increase in performance-based compensation,
a $19.1 million increase in sales commission expense and a $10.2 million
increase in salary expense. Salaries increased due largely to expansion in ITG,
the Corporate Finance Division, the Equity Research Division and the Equities
Division. The compensation costs of the Technology Department increased to
support expansion and to strengthen the trading and management information
systems. Other expense increased $13.0 million, or 34%, largely due to higher
soft dollar expenses. Telecommunications and data processing services expense
increased $10.2 million, or 41%, primarily due to increased trade volume and
personnel. Floor brokerage and clearing fee expense increased $7.1 million, or
35%, mostly due to increased volume of business executed on the various
exchanges. Travel and promotional expense increased $4.6 million, or 42%, mostly
due to increased business travel. Software royalty expense increased $2.8
million, or 47%, due to an increase in POSIT(R) commission revenues. Occupancy
and equipment rental expense increased $1.2 million, or 8%, mostly due to the
relocation and addition of office space.
As a result of the above, earnings before income taxes and minority
interest were up $29.9 million, or 56%.
Net earnings were up 53% to $43.6 million, as compared to $28.5 million in
1995. Minority interest of $4.2 million in 1996 represents approximately 18% of
ITGI's net earnings. The effective tax rate was approximately 42.6% in 1996
compared to approximately 41.2% in 1995.
Primary earnings per share were $3.68 in 1996 on 11.7 million shares
compared to $2.39 in 1995 on 12.0 million shares. Fully diluted earnings per
share were $3.66 in 1996 on 11.8 million shares compared to $2.37 in 1995 on
12.0 million shares.
1995 COMPARED TO 1994
Revenues, net of interest expense, increased $90.9 million, or 33%, in 1995
as compared to 1994. The increase was due to a $32.8 million, or 81%, increase
in corporate finance revenue, a $30.9 million, or 46%, increase in principal
transaction revenue, a $23.0 million, or 15%, increase in commission revenue, a
$2.3 million increase in other revenue and a $1.8 million, or 19%, increase in
net interest income (interest revenue less interest expense). Commission revenue
increased, led by ITG and the Equities Division. Revenue from principal
transactions increased primarily due to increased trading gains in the Equities
Division, the Taxable Fixed Income Division and the International Division.
Corporate finance revenue benefited from increases in underwriting and advisory
fees. Other revenue increased largely due to higher ITG-related investment
income. Net interest income increased as the $14.6 million increase in interest
revenues exceeded the $12.7 million increase in interest expense. Interest
revenue increased due primarily to higher securities borrowed and customer
margin interest income. The related increase in interest on securities loaned
only partially offset the growth in interest revenue.
13
<PAGE> 16
Total non-interest expenses increased $68.4 million, or 28%, in 1995 as
compared to 1994. Compensation and benefits expense increased $49.9 million, or
34%, primarily due to a $29.1 million increase in performance-based
compensation, a $13.4 million increase in sales commission expense and a $1.8
million increase in salary expense. Salaries increased due largely to expansion
in the Corporate Finance Division and equity research. Other expense increased
$8.4 million, or 27%, largely due to higher technology development expenses.
Telecommunications and data processing services expense increased $4.0 million,
or 19%, primarily due to increased trade volume and personnel. Travel and
promotional expense increased $1.9 million, or 21%, mostly due to an increase in
ITG's advertising and promotional costs as well as increased travel related to
the Corporate Finance Division. Occupancy and equipment rental expense increased
$1.7 million, or 12%, mostly due to the relocation and addition of offices.
Floor brokerage and clearing fee expense increased $1.6 million, or 9%, mostly
due to increased volume of business executed on the various exchanges. Software
royalties increased $959,000, or 19%, due to an increase in POSIT(R) commission
revenues.
As a result of the above, operating income increased $22.5 million, or 73%.
In 1994, the Company recorded a pre-tax gain of $8.3 million on the initial
public offering of ITGI. The minority stockholders' ownership interest reduced
the Company's ownership of ITGI to approximately 80%.
Earnings before income taxes and minority interest were up $14.2 million,
or 36%.
Net earnings were up 41% to $28.5 million, as compared to $20.2 million in
1994. Minority interest of $2.8 million in 1995 represents approximately 20% of
ITGI's net earnings. The effective tax rate was approximately 41.2% in 1995
compared to approximately 45.0% in 1994. The 1995 effective tax rate was lower
due to a reduction in the effective state tax rates and research and development
tax credits.
Primary earnings per share were $2.39 in 1995 on 12.0 million shares
compared to $1.63 in 1994 on 12.4 million shares. Fully diluted earnings per
share were $2.37 in 1995 on 12.0 million shares compared to $1.63 in 1994 on
12.4 million shares.
LIQUIDITY 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 funded by equity capital, senior debt,
subordinated debt, temporary subordinated debt to facilitate certain
underwritings, securities loaned, 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, non-customer and firm
securities. JEFCO has obtained a $125 million revolving credit facility, which
is guaranteed by the Company and which is intended to enhance JEFCO's
underwriting capabilities. 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.
Total assets increased $611.0 million from $1,568.1 million at December 31,
1996 to $2,179.1 million at September 26, 1997. The increase in assets is mostly
due to an increase in securities borrowed (included in receivable from brokers
and dealers) and an increase in investments. The increase in securities borrowed
is related to an increase in securities loaned (included in payable to brokers
and dealers). During August 1997, the Company issued $100 million face value of
Old Notes.
JEFCO, ITG and W&D Securities, Inc., a Delaware corporation, the Company's
execution service affiliate ("W&D"), are subject to the net capital requirements
of the Commission and other regulators, which
14
<PAGE> 17
are designed to measure the general financial soundness and liquidity of
broker-dealers. JEFCO, ITG and W&D have consistently operated in excess of the
minimum requirements. As of September 26, 1997, JEFCO's, ITG's and W&D's net
capital was $131.1 million, $24.7 million and $1.1 million, respectively, which
exceeded minimum net capital requirements by $127.3 million, $24.5 million and
$827,000, respectively. JEFCO, ITG and W&D use the alternative method of
calculating their regulatory net capital.
During the first nine months of 1997, the Company repurchased 496,513
shares (including 139,600 shares purchased in connection with the Company's
Capital Accumulation Plan) of its Common Stock versus 824,651 shares (including
163,612 shares purchased in connection with the Company's Capital Accumulation
Plan) for the comparable 1996 period.
In 1996, the Company redeemed $3.6 million face value of its 8.87%
Subordinated Notes due 1997 in accordance with sinking fund requirements. Also
in 1996, the Company repurchased 1,160,176 shares (including 207,312 shares
purchased in connection with the Company's Capital Accumulation Plan) of its
Common Stock at prices ranging from $22.63 to $37.25.
In 1995, the Company redeemed $3.6 million face value of its 8.875%
Subordinated Notes due 1997 in accordance with sinking fund requirements. Also
in 1995, the Company repurchased 727,738 shares (including 267,936 shares
purchased in connection with the Company's Capital Accumulation Plan) of its
Common Stock at prices ranging from $14.31 to $23.25.
EFFECT OF THE COMMISSION'S ORDER HANDLING RULES
In late 1996 the Commission adopted a series of rules which may have a
significant impact on the Company's market making activities in Nasdaq
securities. These rules, referred to as the Commission's Order Handling rules,
require market makers to display, in certain circumstances, a customer's limit
order. The implementation of these rules is being phased-in during 1997. The
impact on the profitability of the Company's activities as a market maker in
Nasdaq securities is unclear, although these rules may have the effect of
reducing the spread for certain Nasdaq securities, thereby decreasing,
potentially, the profitability from such market making activity.
EFFECTS OF CHANGES IN FOREIGN CURRENCY RATES
The Company maintains a foreign securities business in its foreign offices
(London, Hong Kong, Zurich and Tokyo) 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 Statements of Earnings) or a foreign currency translation
adjustment to the stockholders' equity section of the Company's Consolidated
Statements of Financial Condition.
15
<PAGE> 18
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on August 18, 1997 to the
Purchasers, pursuant to the Purchase Agreement. The Purchasers are qualified
institutional buyers, as defined in Rule 144A under the Securities Act, or
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
August 18, 1997. 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, $100,000,000 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 , 1997, as the record
date (the "Record Date") for the Exchange Offer for purposes of determining the
Holders of certificated Old Notes 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.
16
<PAGE> 19
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.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, 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 as 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 7 1/2%
per annum. Interest on the New Notes is payable on each February 15 and August
15, commencing on February 15, 1998.
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
17
<PAGE> 20
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 via the ATOP System, 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 thereto are tendered (i) by a registered Holder of the Old Notes who
has completed either the 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 whose 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.
18
<PAGE> 21
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.
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,
19
<PAGE> 22
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, 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
20
<PAGE> 23
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 If by registered or certified If by Facsimile:
hand: mail:
The Bank of New York The Bank of New York (212) 815-6339
101 Barclay Street 101 Barclay Street -- 7E
Corporate Trust Services Window New York, New York 10286 Confirm by telephone:
Ground Level Attn: Reorganization Section (212) 815-2742
New York, New York 10286
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 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 $100,000. 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
21
<PAGE> 24
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 the Expiration Date. 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 the Expiration
Date. 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.
22
<PAGE> 25
BUSINESS
The Company 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
Jefferies Group, Inc., 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, Jersey City, Chicago, Dallas, Boston, Atlanta, New Orleans,
Houston, San Francisco, Stamford, London, Hong Kong, Zurich and Tokyo.
As of December 31, 1996, the Company and its subsidiaries had 909 full-time
employees, including 429 representatives registered with the National
Association of Securities Dealers, Inc. ("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.
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 both on the national securities exchanges
and 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. JEFCO has continued to add
to its equity research capabilities and currently provides equity research in
the areas of energy, health care, telecommunications, consumer, real estate
investment trusts, gaming and entertainment, business services, and financial
services.
INVESTMENT TECHNOLOGY GROUP, INC.
ITGI is a holding company which is publicly traded (Nasdaq: ITGI) and is
approximately 83% owned by the Company. Its wholly-owned subsidiary, ITG Inc.
("ITG"), is a leading provider of technology-based equity trading services and
transaction research to institutional investors and brokers. ITG services help
clients to access liquidity, execute trades more efficiently, and make better
trading decisions. ITG's expanding range of services includes: POSIT(R), the
world's largest intra-day electronic equity matching system; QuantEX(R), a
fully-integrated trade routing, analysis, and management system; and ISIS, a set
of analytical tools for systematically lowering the costs of trading.
JEFFERIES INTERNATIONAL LIMITED AND JEFFERIES PACIFIC 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 American Depositary Receipts ("ADRs"). In 1995, JIL formed a
wholly-owned subsidiary, Jefferies (Switzerland) Ltd. In 1996, JIL formed a
wholly-owned subsidiary, Jefferies (Japan) Limited, which maintains a branch
office in Tokyo.
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 primarily provides execution services on the New York Stock Exchange
("NYSE") and other exchanges to JEFCO and ITG. In order to comply with
regulatory requirements of the NYSE that generally
23
<PAGE> 26
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 statement 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.
All of JEFCO's equity account executives are electronically interconnected
through a system permitting simultaneous verbal and graphic communication of
trading and order information by all participants. JEFCO 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 its business, JEFCO 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, JEFCO 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.
JEFCO 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, and trades securities for its own account, as well as
to accommodate customer transactions. The International Division engages in
hedged trading involving securities listed or traded in both domestic and
foreign markets.
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
24
<PAGE> 27
September 26, 1997, the aggregate long and short market value of these positions
was $20.8 million and $34.0 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.
Other Proprietary Trading. The Company invests in statistically-defined
market-neutral strategies in the equities markets in an effort to earn above
market rates on invested capital.
CORPORATE FINANCE
JEFCO's Corporate Finance Division 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 JEFCO'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.
JEFCO 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 JEFCO is required to act as an underwriter
or to trade on a proprietary basis with its customers, JEFCO may assume greater
risk than would normally be assumed in certain other principal transactions.
INTEREST
The Company derives a substantial portion of its interest revenues, and
incurs a substantial portion of its interest expenses, in connection with its
securities borrowed/securities loaned activity. The Company also earns interest
on its securities portfolio, on its operating and segregated balances, on its
margin lending activity and on certain of its investments.
Securities Borrowed/Securities Loaned. 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 has an active securities
borrowed and lending matched book business ("Matched Book"), in which the
Company borrows securities from one party and lends them to another party. When
the Company borrows securities, the Company provides cash to the lender as
collateral, which is reflected in the Company's financial statements as
receivable from brokers and dealers. The Company earns interest revenues on this
cash collateral. Similarly, when the Company lends securities to another party,
that party provides cash to the Company as collateral, which is reflected in the
Company's financial statements as payable to brokers and dealers. The Company
pays interest expense on the cash collateral received from the
25
<PAGE> 28
party borrowing the securities. A substantial portion of the Company's interest
revenues and interest expense results from the Matched Book activity.
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 agents, in
listed equity securities off the NYSE, and therefore, unlike JEFCO, 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
26
<PAGE> 29
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, the
District of Columbia and Puerto Rico. 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 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 U.S. 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. Jefferies Group,
Inc. 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 "basic 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. At September 26, 1997,
JEFCO's, ITG's and W&D's net capital was $131.1 million, $24.7 million and $1.1
million, respectively, which exceeded minimum net capital requirements by $127.3
million, $24.5 million and $827,000, respectively.
PROPERTIES
The Company maintains sales offices in Los Angeles, New York, Short Hills,
Chicago, Dallas, Boston, Atlanta, New Orleans, Houston, San Francisco, Stamford,
London, Hong Kong, Zurich and Tokyo. In addition, the Company maintains
operations offices in Los Angeles and Jersey City. The Company leases all of its
office space which management believes is adequate for the Company's business.
(For information concerning leasehold improvements and rental expense, see notes
1, 6 and 11 of Notes to Consolidated Financial Statements.)
LEGAL PROCEEDINGS
For a description of legal proceedings involving the Company and its
subsidiaries, see "Legal Proceedings" included as Part II, Item 1 of the
Company's Quarterly Report on Form 10-Q for the period ended September 26, 1997.
27
<PAGE> 30
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 60 Chairman of the Board, Chief Executive Officer
Richard G. Dooley 68 Director
Tracy G. Herrick 63 Director
Raymond L. Killian, Jr. 60 Director
Michael L. Klowden 52 Director, President, Chief Operating Officer
Frank J. Macchiarola 56 Director
Barry M. Taylor 57 Director
Mark A. Wolfson 45 Director
</TABLE>
Frank E. Baxter, 60, has been Chairman of the Board since September 26,
1990, Chief Executive Officer since March 19, 1987, and a Director of the
Company and JEFCO since 1975. Mr. Baxter has previously served as President of
the Company and of JEFCO from January 1986 until December 1996, Executive Vice
President, National Sales Manager and New York Branch Manager of JEFCO, and
Managing Director of the Company's U.K. subsidiary. Mr. Baxter has been a
Director of ITGI since March 1994, and was a Director of ITG, from January 1994
through January 1997.
Richard G. Dooley, 68, has been a 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), ITGI (since 1996) and 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
Chairman of the Company's Compensation Committee and a member of the Audit
Committee.
Tracy G. Herrick, 63, 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.
Raymond L. Killian, Jr., 60, has been a Director of the Company since
January 1997. Mr. Killian has been the Chairman of the Board of ITGI and of ITG
since January 1997, has been a member of the Board of ITGI since March 1994, and
served as the President and Chief Executive Officer of ITGI from March 1994
until January 1997. Mr. Killian has been on ITG's Board from 1992, directed the
activities of ITG from 1987 until January 1997, and was President and Chief
Executive Officer of ITG from 1992 until January 1997. Mr. Killian was a
Director of the Company from 1985 to 1992, an Executive Vice President of the
Company from 1985 to 1995, a Director and an Executive Vice President of JEFCO
from 1985 to 1991, and served as National Sales Manager of JEFCO from 1985 to
1990.
Michael L. Klowden, 52, has been a Director of the Company since May 1987
and the President and Chief Operating Officer of the Company and of JEFCO since
December 1996. From May 1995 until December 1996, he was Vice Chairman of the
Company and of JEFCO. Mr. Klowden has been a Director of JEFCO since May 1995,
and has been a trustee of the University of Chicago since 1986. From 1978 until
May 1995, Mr. Klowden was a senior partner of Morgan, Lewis & Bockius LLP. Mr.
Klowden has been a Director of ITGI since January 1997.
Frank J. Macchiarola, 56, has been a Director of the Company since August
1991. He is currently the President of St. Francis College. He also serves as
special counsel to the law firm of Newman, Tannenbaum, Halpern, Syracuse &
Hirschtritt. Previously, he was a Professor of Law and Political Science and the
Dean of
28
<PAGE> 31
the Benjamin N. Cardozo School of Law at Yeshiva University in New York City
(1991 to 1996), Professor of Business in the Graduate School of Business at
Columbia University (1987 to 1991), and President and Chief Executive Officer of
the New York City Partnership, Inc. (1983 to 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 has been a Trustee of the Manville
Personal Injury Trust since 1991, and a Director of Johns Manville Corporation
since 1996. Mr. Macchiarola is Chairman of the Company's Audit Committee and a
member of the Compensation Committee.
Barry M. Taylor, 57, 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, 45, has been a Director of the Company since July 1991.
Mr. Wolfson has been a principal of Arbor Investors, a private investment
company, since 1995, President of MW General, Inc. since 1994, and a Vice
President of Keystone, Inc., the primary investment vehicle of Robert M. Bass,
since 1995. He is also a Professor at the Graduate School of Business, Stanford
University, where he has been a faculty member since 1977, including a term as
Associate Dean from 1990 through 1993, and has taught at the University of
Chicago and Harvard University. Mr. Wolfson has been a Director of ITGI since
June 1994, a Director of Oreck Corp. since 1996, a Director of Oreck
Manufacturing Corp. since 1997 and a member of the Board of Advisors of FEP
Capital Holdings, L.P., since 1995. 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,
Klowden and Taylor, for whom information is provided above, the following sets
forth information as to the Executive Officers:
Louis V. Bellucci, Sr., 60, has been a Senior Managing Director and the
Director of the Equities Division of JEFCO since July 1997, was the National
Equity Sales Manager of JEFCO from January 1991 through July 1997, and has been
Executive Vice President and a Director of JEFCO since 1985. Prior to 1985, Mr.
Bellucci was Co-Manager of JEFCO's New York branch office.
Jonathan Cunningham, 35, has been an Executive Vice President of the
Company since 1994, a Director of JEFCO since 1993, and Managing Director of the
Convertible Securities Department of JEFCO since January 1997. Mr. Cunningham
was Senior Vice President of JEFCO from 1991 to 1993 and was the Assistant
National Sales Manager of the Convertible Securities Department from 1994
through 1996.
David F. Eisner, 39, has been an Executive Vice President of the Company
and Executive Vice President and a Director of JEFCO since August 1992. Mr.
Eisner was previously Chairman of Madison Capital Advisors, Inc., a consulting
and financial advisor firm (April 1992 to August 1992), Senior Vice President of
Providence Capital, Inc., a securities broker-dealer (January 1991 to March
1992), a Vice President of JEFCO (March 1988 to December 1990), a Director of
ITGI (March 1994 to January 1997) and a Director of ITG (January 1994 to January
1997).
Jerry M. Gluck, 50, has been Secretary and General Counsel of the Company
and JEFCO since May 1985 and a Director of JEFCO since November 1984. From March
1994 until September 1995, Mr. Gluck was the Secretary of ITGI.
Richard B. Handler, 36, has been an Executive Vice President of JEFCO since
April 1990 and a Director of JEFCO since May 1993. Mr. Handler is the Manager of
the Taxable Fixed Income Division of JEFCO.
Clarence T. Schmitz, 49, has been an Executive Vice President and the Chief
Financial Officer of the Company and an Executive Vice President and a Director
of JEFCO since February 1995. Prior to 1990, Mr. Schmitz founded and chaired
KPMG Peat Marwick's ("KPMG") International Mergers and Acquisitions Group. From
1990 until May 1993, Mr. Schmitz was the Managing Partner of KPMG's Los Angeles
Business Unit and a member of KPMG's Board of Directors. From June 1993 until
January 1995,
29
<PAGE> 32
Mr. Schmitz was the National Managing Partner for KPMG's Manufacturing,
Retailing and Distribution line of business, and was a member of KPMG's
Management Committee. Mr. Schmitz has been a Director of RVI Services Co., Inc.
since February 1995, a Director of Leslie's Poolmart since November 1996, and a
Director of the Los Angeles Area Chamber of Commerce, since 1996.
Clifford A. Siegel, 40, has been an Executive Vice President of JEFCO since
May 1992, a Director of JEFCO since May 1991, and Managing Director of Jefferies
International Limited, the Company's wholly owned U.K. subsidiary, since
February 1995. 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.
Maxine Syrjamaki, 53, 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.
30
<PAGE> 33
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 of 1939 (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 August 18, 1997, the Company issued $100,000,000 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 $100 million and
will mature on August 15, 2007. They will not be redeemable prior to maturity
and will not be entitled to the benefit of a sinking fund. The Notes will bear
interest at the rate stated on the cover page hereof from the date of issuance
or from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semi-annually on February 15 and August 15, of each year,
commencing on February 15, 1998, to the persons in whose names such Notes are
registered at the close of business on February 1 or August 1 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. At
September 26, 1997, the Company had approximately $152.8 million of senior
indebtedness. 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.
31
<PAGE> 34
COVENANTS
Limitation on Certain Liens. The Indenture contains, among other covenants,
a covenant providing that the Company will not, and will not permit any Material
Subsidiary to, issue, assume, incur or guarantee any Indebtedness for borrowed
money secured by a Lien (other than Permitted Liens) 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.
Limitation 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 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.
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.
"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 the 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.
"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.
32
<PAGE> 35
"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).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Financial Accounting 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.
"Holder" or "Security Holder" means the person in whose name a security is
registered on the registrar's book.
"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.
"Material Subsidiary" means (i) any Subsidiary of the Company which at June
27, 1997 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) the
minimum Net Capital required by Rule 15c3-1 under the Exchange Act 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.
33
<PAGE> 36
"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 other agency or political subdivision thereof.
"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 of 1933, as amended, as such Regulation is in
effect on the date of the Indenture.
"Stated Maturity" when used with respect to any Note means August 15, 2007.
"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).
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 in the Indenture.
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 principal 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
34
<PAGE> 37
interest to Stated Maturity on the outstanding Notes on the dates on which any
such payments are due and payable in accordance with the terms of the Indenture;
(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,
the rights of the Holders to receive from deposited funds payment of the
principal of (and premium, if any) and interest on the Notes, and the right of
the Trustee to reimbursement and indemnification.
MODIFICATION OF THE INDENTURE
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 of, among other things, 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 amend the Indenture or 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 amendment or 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 Notes whose Holders must consent to
an amendment, supplement or waiver of any provision of the Indenture or the
Notes; (ii) reduce the rate or extend the time for payment of interest on any
Notes; (iii) reduce the principal amount of any Note; (iv) change the Stated
Maturity of any Note or extend any Maturity Date of any Note; (v) make any
changes in the provisions concerning waivers of Defaults or Events of Default by
Holders of the Notes or the rights of Holders to recover the principal or
premium of, or interest on any Note; (vi) change the unconditional right of the
Holders to receive payment for the Notes on the Maturity Date; (vii) make the
principal of, or the interest on, any Note payable with anything or in any
manner other than as provided for in the Indenture and the Notes on the Issue
Date; or (viii) make the Notes 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, acceleration or repurchase obligation or
otherwise; (iii) the failure by the Company for 60 days after a notice of
default to comply with any other agreement or covenant in the Indenture; (iv)
certain events of bankruptcy, insolvency or reorganization of the Company or any
of its Material Subsidiaries; (v) an event of default under any mortgage,
indenture or other instrument under which any Indebtedness of the Company or any
Subsidiary is outstanding or may be issued if (a) such default 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 $25,000,000 or more at any one time; or (vi) 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.
35
<PAGE> 38
The Indenture provides that if an Event of Default specified therein other
than certain events of bankruptcy, insolvency and reorganization, in respect of
any outstanding Notes issued under such Indenture shall have happened and be
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, premium, if any, and accrued interest thereon, to be
immediately due and payable. If certain events of bankruptcy, insolvency or
reorganization occur, the principal, premium and interest shall be immediately
due and payable without any act by the Trustee or the Holders.
The Indenture provides that the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes may 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.
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 consolidated financial statements prepared in
accordance with GAAP and unaudited condensed quarterly consolidated financial
statements. Such consolidated 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
36
<PAGE> 39
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 OR 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 registered Holder of a Note will be treated as the owner of it for all
purposes.
37
<PAGE> 40
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 a holder of Old Notes who is an
individual citizen or resident of the United States or a United States
corporation (a "U.S. holder"). This discussion is based on the Internal Revenue
Code of 1986, as amended (the "Code"), regulations and announcements promulgated
thereunder and published rulings and court decisions all as in effect on the
date hereof and without giving effect to changes to the federal tax laws, if
any, enacted after the date hereof. The discussion does not cover all aspects of
federal income taxation that may be relevant to U.S. holders, in light of their
specific circumstances, particularly U.S. 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 U.S. holders of the New Notes
will hold the New Notes as "capital assets" (i.e., property generally held for
investments). 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
An exchange of the New Notes for the Old Notes will not constitute a
taxable event for federal income tax purposes because the terms of the New Notes
do not differ materially from the terms of the Old Notes. Consequently, (i) no
gain or loss will be realized by a U.S. holder upon receipt of a New Note, (ii)
the holding period of the New Note will include the holding period of the Old
Note exchanged therefor, and (iii) the adjusted tax basis of New Note will be
the same as the adjusted tax basis of the New Note exchanged therefor
immediately before the exchange and without giving effect to changes to the
federal tax laws, if any, enacted after the date hereof.
SALE OR REDEMPTION OF NEW NOTES
Subject to the market discount rules discussed below, in general, a U.S.
holder whose New Note is sold or redeemed will recognize gain or loss to the
extent of the difference between the amount realized (exclusive of amounts paid
for accrued interest) and the U.S. holder's adjusted tax basis in the New Note.
A U.S. holder's adjusted tax basis in a New Note generally will be the issue
price of the Old Note. Such gain or loss will constitute capital gain or loss.
Under certain circumstances, capital gains derived by individuals are taxed at
preferential rates. Generally, under recently enacted legislation, individuals
will be taxed on (i) net capital gain on assets held for more than one year, but
not more than 18 months, at a maximum rate of 28%, and (ii) net capital gain on
assets held for more than 18 months at a maximum rate of 20%.
MARKET DISCOUNT ON RESALE
U.S. 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 U.S. 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 U.S. holder will be treated as ordinary interest income at the time of
the disposition. The rules also provide that a U.S. 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.
38
<PAGE> 41
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
the Expiration Date, 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 a period of 90 days after the Expiration Date,
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 the Expiration Date, 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 of Jefferies Group, Inc. and
subsidiaries as of December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL MATTERS
The validity of the New Notes will be passed upon for the Company by
Morgan, Lewis & Bockius LLP, Los Angeles, California.
39
<PAGE> 42
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN 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, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
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 BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 3
Prospectus Summary..................... 4
Investment Considerations.............. 7
Capitalization......................... 10
Selected Consolidated Financial
Information.......................... 11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 12
The Exchange Offer..................... 16
Business............................... 23
Properties............................. 27
Legal Proceedings...................... 27
Management............................. 28
Description of the Notes............... 31
Certain Federal Income Tax
Consequences......................... 38
Plan of Distribution................... 39
Experts................................ 39
Legal Matters.......................... 39
</TABLE>
======================================================
======================================================
$100,000,000
JEFFERIES
Group, Inc.
Series B
7 1/2% Senior Notes due 2007
------------------------
PROSPECTUS
------------------------
, 1997
======================================================
<PAGE> 43
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
indemnification for such expenses despite such adjudication of liability.
The Company's Bylaws 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
- ----------- ---------------------------------------------------------------------------------
<C> <S>
4.1 Indenture, dated as of August 18, 1997, by and between The Company and The Bank
of New York, as trustee.
5.1 Opinion of Morgan, Lewis & Bockius LLP.
10.1 Purchase Agreement, dated as of August 18, 1997, by and among the Company and
each of the purchasers signatories thereto.
10.2 Registration Rights Agreement, dated as of August 18, 1997, by and among the
Company and the purchasers signatories thereto.
11.1 Computation of earnings per share.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Morgan, Lewis & Bockius LLP (included in the opinion filed as Exhibit
No. 5.1 to the Registration Statement).
24.1 Power of Attorney (included on the signature page of the Registration Statement).
</TABLE>
II-1
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------
<C> <S>
25.1 Form T-1 of The Bank of New York, as Trustee under the Indenture filed as Exhibit
No. 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 of 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> 45
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 , 1997.
JEFFERIES, INC.
By: /s/ FRANK E. BAXTER
------------------------------------
Frank E. Baxter
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Frank E. Baxter and Michael L. Klowden,
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 in 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 requested 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
- ----------------------------------------------- ------------------------- ------------------
<C> <S> <C>
/s/ FRANK E. BAXTER Chairman of the Board of , 1997
- ----------------------------------------------- Directors and Chief
Frank E. Baxter Executive Officer
(Principal Executive
Officer)
/s/ MICHAEL L. KLOWDEN Director, President and , 1997
- ----------------------------------------------- Chief Operating Officer
Michael L. Klowden
/s/ CLARENCE T. SCHMITZ Executive Vice President , 1997
- ----------------------------------------------- and Chief Financial
Clarence T. Schmitz Officer (Principal
Financial and Accounting
Officer)
/s/ RICHARD G. DOOLEY Director , 1997
- -----------------------------------------------
Richard G. Dooley
/s/ TRACY G. HERRICK Director , 1997
- -----------------------------------------------
Tracy G. Herrick
/s/ RAYMOND L. KILLIAN, JR. Director , 1997
- -----------------------------------------------
Raymond L. Killian, Jr.
/s/ FRANK J. MACCHIAROLA Director , 1997
- -----------------------------------------------
Frank J. Macchiarola
/s/ BARRY M. TAYLOR Director , 1997
- -----------------------------------------------
Barry M. Taylor
/s/ MARK A. WOLFSON Director , 1997
- -----------------------------------------------
Mark A. Wolfson
</TABLE>
II-3
<PAGE> 46
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- ----------------------------------------------------------------------------------
<C> <S>
4.1 Indenture, dated as of August 18, 1997, by and between The Company and The Bank of
New York, as trustee.
5.1 Opinion of Morgan, Lewis & Bockius LLP.
10.1 Purchase Agreement, dated as of August 18, 1997, by and among the Company and each
of the purchasers signatories thereto.
10.2 Registration Rights Agreement, dated as of August 18, 1997, by and among the
Company and the purchasers signatories thereto.
11.1 Computation of earnings per share.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Morgan, Lewis & Bockius LLP (included in the opinion filed as Exhibit
No. 5.1 to the Registration Statement).
24.1 Power of Attorney (included on the 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
No. 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 August 18, 1997
-------------------
$100,000,000
7 1/2% Senior Notes due 2007
================================================================================
<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>
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE................................................................. 1
SECTION 1.01 Definitions................................................................................ 1
SECTION 1.02 Incorporation by Reference of TIA.......................................................... 11
SECTION 1.03 Rules of Construction...................................................................... 12
ARTICLE II.
THE SECURITIES............................................................................................. 13
SECTION 2.01 Forms and Dating........................................................................... 13
SECTION 2.02 Execution and Authentication............................................................... 14
SECTION 2.03 Registrar, Paying Agent.................................................................... 15
SECTION 2.04 Paying Agent to Hold Assets in Trust....................................................... 15
SECTION 2.05 Securityholder Lists....................................................................... 16
SECTION 2.06 Transfer and Exchange...................................................................... 16
SECTION 2.07 Replacement Securities..................................................................... 26
SECTION 2.08 Outstanding Securities..................................................................... 26
SECTION 2.09 Treasury Securities........................................................................ 27
SECTION 2.10. Temporary Securities....................................................................... 27
SECTION 2.11. Cancellation............................................................................... 27
SECTION 2.12. Defaulted Interest......................................................................... 28
SECTION 2.13. CUSIP Numbers.............................................................................. 28
ARTICLE III.
[INTENTIONALLY OMITTED].................................................................................... 28
ARTICLE IV.
COVENANTS.................................................................................................. 28
SECTION 4.01. Payment of Securities...................................................................... 28
SECTION 4.02. Maintenance of Office or Agency............................................................ 29
SECTION 4.03. Corporate Existence........................................................................ 29
SECTION 4.04. Payment of Taxes and Other Claims.......................................................... 30
SECTION 4.05. Compliance Certificate; Notice of Default.................................................. 30
SECTION 4.06. SEC Reports................................................................................ 31
SECTION 4.07. Waiver of Stay, Extension or Usury Laws.................................................... 32
SECTION 4.08. Limitation on Transactions with Affiliates.................................................
SECTION 4.09. Limitation on Liens........................................................................ 33
SECTION 4.10. Delivery of Certain Information............................................................ 33
ARTICLE V.
SUCCESSOR CORPORATION...................................................................................... 34
SECTION 5.01. When Company May Merge, Etc................................................................ 34
SECTION 5.02. Successor Corporation Substituted.......................................................... 35
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES............................................................................. 35
SECTION 6.01. Events of Default.......................................................................... 35
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C>
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................................................................................. 41
SECTION 6.07. Limitation on Suits........................................................................ 41
SECTION 6.08. Unconditional Right of Holders to Receive Principal, Premium and Interest.................. 42
SECTION 6.09. Rights and Remedies Cumulative............................................................. 42
SECTION 6.10. Delay or Omission Not Waiver............................................................... 43
SECTION 6.11. Control by Holders......................................................................... 43
SECTION 6.12. Waiver of Past Default..................................................................... 43
SECTION 6.13. Undertaking for Costs...................................................................... 44
SECTION 6.14. Restoration of Rights and Remedies......................................................... 44
ARTICLE VII.
TRUSTEE.................................................................................................... 45
SECTION 7.01. Duties of Trustee.......................................................................... 45
SECTION 7.02. Rights of Trustee.......................................................................... 46
SECTION 7.03. Individual Rights of Trustee............................................................... 47
SECTION 7.04. Trustee's Disclaimer....................................................................... 47
SECTION 7.05. Notice of Default.......................................................................... 48
SECTION 7.06. Reports by Trustee to Holders.............................................................. 48
SECTION 7.07. Compensation and Indemnity................................................................. 48
SECTION 7.08. Replacement of Trustee..................................................................... 50
SECTION 7.09. Successor Trustee by Merger, Etc........................................................... 51
SECTION 7.10. Eligibility; Disqualification.............................................................. 51
SECTION 7.11. Preferential Collection of Claims.......................................................... 51
ARTICLE VIII.
SATISFACTION AND DISCHARGE................................................................................. 52
SECTION 8.01. Satisfaction, Discharge of the Indenture and Defeasance of the Securities.................. 52
SECTION 8.02. Termination of Obligations Upon Cancellation of the Securities............................. 53
SECTION 8.03. Survival of Certain Obligations............................................................ 54
SECTION 8.04. Acknowledgment of Discharge by Trustee..................................................... 54
SECTION 8.05. Application of Trust Assets................................................................ 55
SECTION 8.06. Repayment to the Company................................................................... 55
SECTION 8.07. Reinstatement.............................................................................. 56
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS........................................................................ 56
SECTION 9.01. Supplemental Indentures Without Consent of Holders......................................... 56
SECTION 9.02. Amendments, Supplemental Indentures and Waivers with Consent of Holders.................... 57
</TABLE>
ii
<PAGE> 6
<TABLE>
<S> <C>
SECTION 9.03. Compliance with TIA........................................................................ 59
SECTION 9.04. Revocation and Effect of Consents.......................................................... 59
SECTION 9.05. Notation on or Exchange of Securities...................................................... 60
SECTION 9.06. Trustee to Sign Amendments, Etc............................................................ 60
ARTICLE X.
MEETINGS OF SECURITYHOLDERS................................................................................ 60
SECTION 10.01. Purposes for Which Meetings May Be Called.................................................. 60
SECTION 10.02. Manner of Calling Meetings................................................................. 61
SECTION 10.03. Call of Meetings by Company or Holders..................................................... 62
SECTION 10.04. Who May Attend and Vote at Meetings........................................................ 62
SECTION 10.05. Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment..... 62
SECTION 10.06. Voting at the Meeting and Record to Be Kept................................................ 63
SECTION 10.07. Exercise of Rights of Trustee or Securityholders May Not Be Hindered
or Delayed by Call of Meeting.............................................................. 64
ARTICLE XI.
RIGHT TO REQUIRE REPURCHASE...................................................................................... 65
SECTION 11.01 Repurchase of Securities at Option of the Holder Upon Change of Control.................... 65
SECTION 11.02 Repurchase of Securities at Option of the Holder Upon Prohibited Restricted Payment........ 67
ARTICLE XII.
MISCELLANEOUS.................................................................................................... 70
SECTION 12.01. TIA Controls............................................................................... 70
SECTION 12.02. Notices.................................................................................... 70
SECTION 12.03. Communications by Holders with Other Holders............................................... 71
SECTION 12.04. Certificate and Opinion as to Conditions Precedent......................................... 71
SECTION 12.05. Statements Required in Certificate or Opinion.............................................. 72
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar.................................................. 72
SECTION 12.07. Legal Holidays............................................................................. 73
SECTION 12.08. Governing Law.............................................................................. 73
SECTION 12.09. No Adverse Interpretation of Other Agreements.............................................. 73
SECTION 12.10. No Recourse against Others................................................................. 74
SECTION 12.11. Successors................................................................................. 74
SECTION 12.12. Duplicate Originals........................................................................ 74
SECTION 12.13. Severability............................................................................... 74
SECTION 12.14. Table of Contents, Headings, Etc........................................................... 74
Exhibit A........................................................................................................ 1
EXHIBIT B........................................................................................................ 1
</TABLE>
iii
<PAGE> 7
<TABLE>
<S> <C>
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>
iv
<PAGE> 8
INDENTURE
INDENTURE, dated as of ___________, 1997, 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 7
1/2% Senior Notes due 2007:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"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; provided, that with respect to the Company,
"Affiliate" shall not mean any Affiliate of ITG, Inc. if such Affiliate is not
otherwise an Affiliate of the Company. 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.
1
<PAGE> 9
"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 if as a result, and within 60 days, of such person or group
becoming the beneficial owner of such voting power, the Notes do not have the
Required Rating; provided, however, that a Change of Control shall not be deemed
to have occurred (a) 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 (b) 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.
2
<PAGE> 10
"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.
"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
3
<PAGE> 11
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.
"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.
"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 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
4
<PAGE> 12
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.
"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 of such Person in accordance with GAAP.
"Material Subsidiary" means (i) any Subsidiary of the Company which at
June 27, 1997, 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
5
<PAGE> 13
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 the Stated Maturity, Change of Control Payment Date,
Section 11.02 Payment Date or by declaration of acceleration or otherwise.
"Minimum Net Capital Amount" means, as of any date, the product of (i) the
minimum Net Capital required by Rule 15c3-1 under the Exchange Act 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
inside counsel to the Company.
6
<PAGE> 14
"Original Notes" means the 7 1/2% Senior Notes due 2007, 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 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, limited
liability company, 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.
"Prohibited Restricted Payment" means a Restricted Payment made (x) if the
Company's senior unsecured debt does not have the Required Rating, and (y) if
after giving effect to the Restricted Payment, the Consolidated Net Worth Ratio
would be greater than 2.00 to one.
"Prohibited Restricted Payment Notice" shall have the meaning specified in
Section 11.02.
"Prohibited Restricted Payment Offer" shall have the meaning specified in
Section 11.02.
"Prohibited Restricted Payment Purchase Price" shall have the meaning
specified in Section 11.02.
7
<PAGE> 15
"Prohibited Restricted Payment Put Date" shall have the meaning specified
in Section 11.02.
"Purchase Agreement" means each of the Purchase Agreements by and between
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.
"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.
"Required Rating" means a rating of the Notes by Standard & Poor's of BBB-
or higher.
"Restricted Payment" means either of the following acts of the Company:
(i) a direct or indirect declaration or payment of any dividends or the
making of any distribution on the Company's Capital Stock or to the holders of
its Capital Stock (other than dividends or distributions payable in the
Company's Common Stock or its shares of Capital Stock of the same class held by
such holders or in options, warrants or other rights to purchase the Company's
Common Stock or such Capital Stock); or
(ii) the direct or indirect purchase, redemption or other acquisition or
retirement for value, or the Company's permitting any Subsidiary of the Company
to, directly or indirectly, purchase, redeem or otherwise acquire for value, any
such Capital Stock (other than in exchange for the Company's Common Stock or
options, warrants or other rights to purchase the Company's Common Stock or such
Capital Stock).
"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
8
<PAGE> 16
(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.
"Section 11.02 Payment Date" shall have the meaning specified in Section
11.02.
"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 7 1/2% Senior Notes due 2007 to be
issued pursuant to this Indenture in connection with the offer to exchange such
Series B 7 1/2% Senior Notes due 2007 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 Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" when used with respect to any Security, means August 15,
2007.
"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 Sections
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
9
<PAGE> 17
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).
"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.
10
<PAGE> 18
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;
(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,
11
<PAGE> 19
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 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 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 $100,000,000 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
12
<PAGE> 20
$100,000,000 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 the Securities may be served. The
Company may act as its own Registrar or Paying Agent, except that, for the
purposes of Articles 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.
13
<PAGE> 21
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 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;
14
<PAGE> 22
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
to the effect that such transfer pursuant to Rule 144 is in
compliance with the Securities Act); or
(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 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
15
<PAGE> 23
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.
(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):
16
<PAGE> 24
(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 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 to the 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.
17
<PAGE> 25
(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 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 TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
18
<PAGE> 26
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) 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
19
<PAGE> 27
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 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 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 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
20
<PAGE> 28
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 9.05, 11.01 and 11.02 hereto).
(iii) The Registrar shall not be required to register the transfer
of or to exchange a Note between a Record Date 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 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.
(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
21
<PAGE> 29
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.
(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
22
<PAGE> 30
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 the Maturity Date the Paying Agent (other than the Company or an
Affiliate of the Company) 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 is not otherwise prohibited,
then
23
<PAGE> 31
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
24
<PAGE> 32
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).
ARTICLE III.
[INTENTIONALLY OMITTED]
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
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
25
<PAGE> 33
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 or 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 and 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
26
<PAGE> 34
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), 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) 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 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
27
<PAGE> 35
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 90 days after the end of each of its fiscal
years and within 45 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 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
28
<PAGE> 36
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 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) 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.
29
<PAGE> 37
SECTION 4.10. 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 two 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 Securities and this Indenture and the
Indenture, so supplemented, shall remain in full force and effect;
30
<PAGE> 38
(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;
(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
31
<PAGE> 39
same becomes due and payable, whether at maturity, 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 $25,000,000
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, 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,
32
<PAGE> 40
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 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.
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.
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,
33
<PAGE> 41
(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.
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 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.
34
<PAGE> 42
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
(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
35
<PAGE> 43
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 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
36
<PAGE> 44
(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 the
case of the Change of Control Purchase Price, on the applicable Change of
Control Purchase Date, in the case of the Prohibited Restricted Payment Purchase
Price, on the applicable Prohibited Restricted Payment 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
37
<PAGE> 45
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 of 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.
SECTION 6.12. Waiver of Past Default.
Subject to Section 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
38
<PAGE> 46
(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 positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
39
<PAGE> 47
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.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in
40
<PAGE> 48
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 such
41
<PAGE> 49
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,
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 February 15 beginning with the February 15
following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such February 15 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).
42
<PAGE> 50
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.
43
<PAGE> 51
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 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
44
<PAGE> 52
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 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.
45
<PAGE> 53
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
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
46
<PAGE> 54
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;
(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 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
47
<PAGE> 55
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.
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, 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
48
<PAGE> 56
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.
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
49
<PAGE> 57
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:
(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;
50
<PAGE> 58
(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 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;
(4) change the Stated Maturity of any Security or
extend any Maturity Date of any Security;
(5) 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, or interest on, any Security;
51
<PAGE> 59
(6) make any changes in Section 6.08, 6.12 or this third
sentence of this Section 9.02;
(7) 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
(8) 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.
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.
52
<PAGE> 60
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 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
53
<PAGE> 61
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.
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
54
<PAGE> 62
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 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
55
<PAGE> 63
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 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
56
<PAGE> 64
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.
57
<PAGE> 65
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
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
58
<PAGE> 66
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, 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
59
<PAGE> 67
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.
SECTION 11.02. Repurchase of Securities at Option of the Holder
Upon Prohibited Restricted Payment.
(a) In the event that a Prohibited Restricted Payment 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
Prohibited Restricted Payment (the "Section 11.02 Payment Date"), at a cash
purchase price (the "Prohibited Restricted Payment Purchase Price") equal to
102% of the principal amount thereof, plus accrued and unpaid interest, if any,
to and including the Section 11.02 Payment Date.
(b) Within 10 Business Days after the Company knows, or reasonably should
know, of the occurrence of a Prohibited
Restricted Payment, the Company shall make an irrevocable, unconditional offer
(a "Prohibited Restricted Payment 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 11.02 at the Prohibited Restricted Payment Purchase Price.
Within five Business Days after each date upon which the Company knows, or
reasonably should know, of the occurrence of a Prohibited Restricted Payment
requiring the Company to make a Prohibited Restricted Payment Offer pursuant to
this Section 11.02, the Company shall give notice (the "Prohibited Restricted
Payment Notice") to the Trustee.
(c) Notice of a Prohibited Restricted Payment Offer shall be sent, at
least 20 Business Days prior to Prohibited Restricted Payment 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
60
<PAGE> 68
to such Holders' decision to tender Securities pursuant to the Prohibited
Restricted Payment Offer. The notice, which shall govern the terms of the
Prohibited Restricted Payment Offer, shall state:
(1) that the Prohibited Restricted Payment Offer is being made pursuant to
this Section 11.02 and that all Securities, or portions thereof, tendered
will be accepted for payment;
(2) the Prohibited Restricted Payment Purchase Price (including the amount
of accrued and unpaid interest), the Section 11.02 Payment Date and the
Prohibited Restricted Payment 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 Prohibited
Restricted Payment Offer shall cease to accrue interest after the Section
11.02 Payment Date;
(5) that Holders electing to have a Security, or portion thereof,
purchased pursuant to a Prohibited Restricted Payment 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 11.02,
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
Section 11.02 Payment Date (the "Prohibited Restricted Payment 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 Prohibited Restricted Payment 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 Prohibited
Restricted Payment.
61
<PAGE> 69
Any such Prohibited Restricted Payment 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 Section 11.02 Payment Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the
Prohibited Restricted Payment Offer prior to the close of business on the
Prohibited Restricted Payment Put Date, (ii) deposit with the Paying Agent U.S.
Legal Tender sufficient to pay the Prohibited Restricted Payment 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 Prohibited Restricted Payment
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
Prohibited Restricted Payment Offer on or as soon as practicable after the
Section 11.02 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 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
62
<PAGE> 70
Los Angeles, California 90025
Telecopy No.: (310) 575-5190
Attention: General Counsel
with a copy to:
Morgan, Lewis & Bockius LLP
801 S. Grand Avenue
Los Angeles, California 90017
Telecopy No.: (213) 612-2554
Attention: Steven Spector, 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 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
63
<PAGE> 71
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
(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.
64
<PAGE> 72
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.
65
<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.
66
<PAGE> 74
Signature Pages To Follow
67
<PAGE> 75
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/ Michael L. Klowden
-----------------------------
Name: Michael L. Klowden
Title: President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Mary Beth Lewicki
-----------------------------
Name: Mary Beth Lewicki
Title: Assistant Vice President
Signature Page
<PAGE> 76
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> 77
Exhibit A
[FACE OF NOTE]
CUSIP No. ____
JEFFERIES GROUP, INC.
7 1/2% Series B SENIOR NOTE DUE 2007
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 August 15, 2007.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
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> 78
(Back of Note)
7 1/2 [Series B] Senior Note due 2007
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 TWO 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
- --------
1/ This paragraph should be included only if the Note is issued in global form.
A-2
<PAGE> 79
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> 80
[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> 81
JEFFERIES GROUP, INC.
7 1/2% Senior Note
due 2007
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 7 1/2% 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 7 1/2% per
annum compounded semi-annually.
The Company will pay interest semi-annually on February 15 and August 15
of each year (each, an "Interest Payment Date"), commencing February 15, 1998.
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 August 18, 1997.
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.
A-5
<PAGE> 82
The Company issued the Securities under an Indenture, dated as of August
18, 1997 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in 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 $100,000,000.
5. 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 and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar shall not be required 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.
6. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it for
all purposes.
7. Unclaimed Money.
A-6
<PAGE> 83
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.
8. Discharge Prior to 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 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).
9. 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.
10. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and its Subsidiaries to, among other things, 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 Jefferies & Company, Inc. to maintain a certain minimum net capital
amount.
11. 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.
13. Change of Control.
A-7
<PAGE> 84
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at each 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. Prohibited Restricted Payments.
In the event there shall occur any Prohibited Restricted Payment, each
Holder of Securities shall have the right, at each Holder's option but subject
to the limitations and conditions set forth in the Indenture, to require the
Company to purchase on the Section 11.02 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 Prohibited Restricted Payment Purchase Price equal to
102% of the principal amount thereof, together with accrued and unpaid interest,
if any, to the Section 11.02 Payment Date. (Article Eleven).
12. 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
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.
13. No Recourse Against Others.
A-8
<PAGE> 85
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.
14. 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.
15. 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).
16. 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.
17. 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
A-9
<PAGE> 86
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)
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. [ ]
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:
A-10
<PAGE> 87
- ---------------------
Signature
(sign exactly as your name appears on the other side of this Security)
Signature Guarantee:__________________
SCHEDULE OF EXCHANGES OF CERTIFICATED NOTES2/
The following exchanges of a part of this Global Note for Certificated
Notes have been made:
<TABLE>
<CAPTION>
Amount of Signature of
Amount of increase in Principal Amount authorized
decrease in Principal of this Global officer of
Principal Amount of Note following Trustee or
Date of Amount of this this Global such decrease Note
Exchange Global Note Note (or increase) Custodian
- ---------- --------------- -------------- ----------------- ------------
<S> <C> <C> <C> <C>
</TABLE>
- -----------
2/ This should be included only if the Note is issued in global form.
A-11
<PAGE> 88
- ------------------------------------------------------------------------------
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF NOTES
Re: [Series B] 7 1/2% Senior Secured Notes due 2007 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).
- ---------------------------------
B-1
<PAGE> 89
* Check Applicable Box
B-2
<PAGE> 90
- 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-3
<PAGE> 91
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 7 1/2% Senior Notes due 2007 (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
C-1
<PAGE> 92
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) 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:
C-2
<PAGE> 93
Address:
Taxpayer ID Number:
C-3
<PAGE> 94
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") 7 1/2%
Notes due 2007 (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> 95
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 LLP LETTERHEAD]
November 10, 1997
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 7 1/2% Series _
Senior Notes due 2007 (the "New Notes") for any and all of its outstanding 7
1/2% Senior Notes due 2007.
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 other similar
<PAGE> 2
Jefferies Group, Inc.
November 10, 1997
Page 2
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 LLP
<PAGE> 1
================================================================================
PURCHASE AGREEMENT
================================================================================
$100,000,000 7 1/2% Senior Notes Due 2007
of
JEFFERIES GROUP, INC.
================================================================================
AUGUST 18, 1997
================================================================================
<PAGE> 2
Table of Contents
Page
----
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............................................... 9
3.1. Conditions to Your Obligations................................... 9
3.1.1 Opinions of Counsel....................................... 9
3.1.2 Officers' Certificates.................................... 9
3.1.3 Representations and Warranties True; No Event of Default..10
3.1.4 Compliance with Agreements................................10
3.1.5 Your Purchase Permitted by Applicable Laws:
Legal Investment..........................................10
3.1.6 The Indenture and the Registration Rights Agreement.......10
3.1.7 Consents and Permits......................................11
3.1.8 Offering Memorandum.......................................11
3.1.9 Proceedings Satisfactory..................................11
3.1.10 No Material Adverse Change................................11
3.1.11 No Material Judgment or Order.............................11
3.2. Conditions to the Obligations of the Company.....................12
3.2.1 Sale of Notes.............................................12
3.2.2 Purchasers' Representations and Warranties................12
3.2.3 No Material Judgment or Order.............................12
3.2.4 The Sale by the Company Permitted by Applicable Laws......12
SECTION 4. PURCHASERS' SPECIAL RIGHTS.......................................12
4.1. Delivery Expenses..................................................13
4.2. Issue Taxes........................................................13
4.3. Direct Payment.....................................................13
-i-
<PAGE> 3
SECTION 5. REPRESENTATIONS AND WARRANTIES.................................. 14
5.1. Organization, Standing and Qualification.......................... 14
5.2. Capitalization.................................................... 14
5.3. Authorization of Agreement and Other Documents.................... 14
5.4. No Violation...................................................... 15
5.5. Use of Proceeds................................................... 15
5.6. No Default........................................................ 15
5.7. Full Disclosure................................................... 15
5.8. Litigation........................................................ 16
5.9. Governmental Consents............................................. 16
5.10. No Violation of Relations of Board of
Governors of Federal Reserve System............................... 16
5.11. Private Offering.................................................. 16
5.12. Governmental Relations............................................ 17
5.13. Brokers........................................................... 17
5.14. Description of Securities......................................... 17
5.15. Licenses.......................................................... 18
5.16. Other Covenants................................................... 18
SECTION 6. MISCELLANEOUS................................................... 18
6.1. Notices........................................................... 18
6.2. Successors and Assigns............................................ 19
6.3. Amendment and Waiver.............................................. 19
6.4. Counterparts...................................................... 19
6.5. Headings.......................................................... 19
6.6. Governing Law..................................................... 19
6.7. Entire Agreement.................................................. 20
6.8. Severability...................................................... 20
6.9. Delivery.......................................................... 20
6.10. Attorneys' Fees................................................... 20
-ii-
<PAGE> 4
JEFFERIES GROUP, INC.
$100,000,000 7 1/2% Senior Notes due 2007
August 18, 1997
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.
Documents: All documents delivered in connection with the
transactions contemplated by the Offering Circular, 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 Circular: The Offering Circular of the Company, dated
August 18, 1997, as amended, modified or otherwise supplemented, relating to the
Securities, including the information incorporated by reference therein.
Placement Agents: Jefferies & Company, Inc., SunAmerica Capital
Services, Inc. and BNY Capital Markets, Inc.
Privately Outstanding 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 distributed to the public pursuant to Rule 144 or (iii) it has 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 144A: Rule 144A as promulgated by the Commission pursuant to
the Securities Act, and any successor rule or regulation thereto.
Rule 501: Rule 501 as promulgated by the Commission pursuant to the
Securities Act, and any successor rule or regulation thereto.
-2-
<PAGE> 6
Securities: The Notes.
Securities Act: The Securities Act of 1933, as amended.
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 $100,000,000 aggregate principal amount of its 7 1/2%
Senior Notes due 2007, 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 99.7221% 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 LLP, New
York counsel to the Company, at 801 South Grand Ave., Los Angeles, California,
90017, at 10:00 A.M., New York City time, on August 18, 1997, 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 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
-3-
<PAGE> 7
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 bank wire transfer in same day available 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, Jefferies
& Company, Inc. ("Jefferies") may, in its discretion, deduct from the purchase
price of the Notes to be remitted to the Company at the Closing the amount of
the fees and expenses of the Placement Agents. 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 your legal, valid and binding obligation
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 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:
-4-
<PAGE> 8
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 TWO 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) 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 Circular and the other Documents, (ii) you and any of your
managed accounts, if applicable, are
-5-
<PAGE> 9
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 its Subsidiaries, and to obtain such information as you require from the
officers and directors, as applicable, of the Company and its Subsidiaries, (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 August 18, 1997, 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;
(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 of special counsel for certain of the Purchasers, incurred by the Company
in connection with the transactions contemplated by this Agreement and the other
Documents.
-6-
<PAGE> 10
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.
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
-7-
<PAGE> 11
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 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.
-8-
<PAGE> 12
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 99.7221% of its stated
principal amount, and the 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 opinions, dated the Closing Date and
addressed to you, from the General Counsel for the Company and Morgan, Lewis &
Bockius LLP, 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 Agents and by government
officials, and upon your representations contained 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 your reasonable satisfaction) admitted to practice in such
jurisdiction. Any opinion relied upon by such counsel shall be delivered to you
together with the opinion of such counsel.
3.1.2 Officers' Certificates
(a) You (or the Placement Agents, on your behalf) shall
have received a certificate or certificates, dated the Closing Date and signed
by the Officers of the Company
-9-
<PAGE> 13
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 Agents, 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 as to such matters as you
(or the Placement Agents,) may reasonably request.
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 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 The Bank of New York, 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.
-10-
<PAGE> 14
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 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 Circular
The Offering Circular shall not have been supplemented or amended
subsequent to August 7, 1997.
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 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 Circular.
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 your or your special counsel's reasonable
judgment 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.
-11-
<PAGE> 15
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:
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
$99,722,100.
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 on 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 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.
-12-
<PAGE> 16
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 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 of the Securities, at maturity 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 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.
(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 Security is payable on a Legal Holiday, as
defined in the Indenture (whether at maturity, upon acceleration or otherwise),
and is paid on the next succeeding day that is not a Legal Holiday,
-13-
<PAGE> 17
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 OF THE COMPANY
The Company represents and warrants to each of you as of the date
hereof as follows:
5.1. Organization, Good Standing and Qualification
(a) The Company and each of its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; 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. The
Company and each of its Subsidiaries 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
could not reasonably be expected to 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 meet the requirements of Rule
144A(d)(3) under the Securities Act.
5.2. Capitalization
The total authorized Capital Stock of the Company as of June 28,
1997 consisted of 25,000,000 shares of Common Stock, of which 18,718,578 shares
were outstanding.
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 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
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).
-14-
<PAGE> 18
5.4. No Violation
(a) None of the Company or its Subsidiaries is (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 could 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 (as defined in the Indenture), other than a Permitted Lien
(as defined in the Indenture), on any properties of the Company or any of its
Subsidiaries 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 or any of its
Subsidiaries 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 Circular and by the terms of this Agreement
and the Indenture.
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) Neither the Offering Circular nor any of the other
Documents contained, as of their respective dates, 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
-15-
<PAGE> 19
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 Circular 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 or any of its Subsidiaries, could
not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) None of the Company or any of its Subsidiaries is
subject to any judgment, order, decree, rule or regulation of any court,
governmental authority or arbitration board or tribunal that could, 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 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 assuming the correctness of such representations, the sale of
the Securities hereunder is exempt from the
-16-
<PAGE> 20
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 Affiliates or any of their 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 or any of its Affiliates 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.
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 Agents. 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 Agents 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.
-17-
<PAGE> 21
5.15. Licenses
The Company and its Subsidiaries have 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. None of
the Company and its Subsidiaries has 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 DTC; and
(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, Esq., with a copy to Morgan, Lewis & Bockius LLP, 801 S. Grand
Avenue, Los Angeles, California 90017, Attention: Peter P. Wallace, 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.
-18-
<PAGE> 22
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
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; Submission to Jurisdiction and 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, 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
-19-
<PAGE> 23
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 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 Jefferies 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.
[Signature Pages to Follow]
-20-
<PAGE> 24
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: /s/ MICHAEL L. KLOWDEN
-------------------------------
President
Signature Page
<PAGE> 25
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
/s/ JAMES K. HUNT
- --------------------------------------
Name of Purchaser
By: Sun America Life Insurance Company
Name:
Title:
Address: 1 SunAmerica Center
Los Angeles, CA 90067-6022
Attn: Yvonne Stevens
Telephone: 310-772-6082
Telecopy: 310-772-6078
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): Sun America Investments
1 Sun America Center
Los Angeles, CA 90067-6022
OKGBO & Co.
Attn: Investment Accounting,
Accounting, 36th Floor
Tax I.D. Number: 13-3020293
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: DTC Participant #0903
Bankers Trust Company
Agent I.D. #20903 14 Wall Street
New York, NY 10005
Institution I.D. #26540 4th Floor, Window 44
Account # 900530
Account No. 099530
Ref: Sun America Life Insurance Company
Aggregate principal amount
of Notes to be purchased by you:
$15,000,000
-22-
<PAGE> 26
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
/s/ JAMES K. HUNT
- ----------------------------
Name of Purchaser
By: Anchor National Life Insurance Company
Name:
Title:
Address: 1 SunAmerica Center
Los Angeles, CA 90067-6022
Attn: Yvonne Stevens
Telephone: 310-772-6082
Telecopy: 310-772-6078
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): Sun America Investments
1 Sun America Center
Los Angeles, CA 90067-6022
OKGBO & Co.
Attn: Investment Accounting,
Accounting, 36th Floor
Tax I.D. Number: 13-3020293
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: DTC Participant #0903
Bankers Trust Company
Agent I.D. #20903 14 Wall Street
New York, NY 10005
Institution I.D. #26540 4th Floor, Window 44
Account # 900527
Account No. 099527
Ref: Anchor National/MAIN
Aggregate principal amount
of Notes to be purchased by you:
$10,000,000
<PAGE> 27
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
Paine Webber Inc.
- ----------------------------
Name of Purchaser
By: /s/ PETER MASCO
- ----------------------------
Name: Peter Masco
Title: Managing Director
Address: 1285 Ave of Americas, 11th Fl.
New York, NY 90013
Telephone: 212-713-3357
Telecopy: 212-713-2698
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser):
----------------------------
----------------------------
----------------------------
_____________________________
Tax I.D. Number: 13-2638166
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated
Bank: Bank of New York
Address: ____________________
ABA No. 021000018
Account No. 8900186933
Attention: Paine Webber Inc. Syndicate
- Arctic Gray
Aggregate principal amount
of Notes to be purchased by you:
$10,000,000
<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
Massachusetts Mutual Life Insurance Company
- -------------------------------------------
Name of Purchaser
By: /s/ ANDREW DICKEY
---------------------------------------
Name: Andrew Dickey
Title: Managing Director
Address: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 0111
Telephone: 413-744-6081 (Jim Nolan)
Telecopy: 413-744-6127
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
____________________________
Address: ____________________
____________________________
ABA No.: ____________________
____________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$ _________
<PAGE> 29
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
Massachusetts Mutual Life Insurance Company
- -------------------------------------------
Name of Purchaser
By: /s/ Andrew Dickey
- -------------------------------------------
Name: Andrew Dickey
Title: Managing Director
Address: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 0111
Telephone: 413-744-6081 (Jim Nolan)
Telecopy: 413-744-6127
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
____________________________
Address: ____________________
____________________________
ABA No.: ____________________
____________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$ _________
<PAGE> 30
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
Massachusetts Mutal Life Insurance Company
- ------------------------------------------
Name of Purchaser
By: /s/ ANDREW DICKEY
-----------------------------------
Name: Andrew Dickey
Title: Managing Director
Address: Massachusetts Mutal Life Insurance Company
1295 State Street
Springfield, Massachusetts 0111
Telephone: 413-744-6081 (Jim Nolan)
Telecopy: 413-744-6127
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
_______________________________
Address: ____________________
_______________________________
ABA No.: ____________________
_______________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$ _________
<PAGE> 31
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
Massachusetts Mutual Life Insurance Company
- -------------------------------------------
Name of Purchaser
By: /s/ ANDREW DICKEY
---------------------------
Name: Andrew Dickey
Title: Managing Director
Address: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 0111
Telephone: 413-744-6081 (Jim Nolan)
Telecopy: 413-744-6127
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
_______________________________
Address: ____________________
_______________________________
ABA No.: ____________________
_______________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$ _________
<PAGE> 32
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
Massachusetts Mutual Life Insurance Company
- -------------------------------------------
Name of Purchaser
By: /s/ ANDREW DICKEY
--------------------------------
Name: Andrew Dickey
Title: Managing Director
Address: Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 0111
Telephone: 413-744-6081 (Jim Nolan)
Telecopy: 413-744-6127
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
_______________________________
Address: ____________________
_______________________________
ABA No.: ____________________
_______________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$ _________
<PAGE> 33
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
/s/ HOBART C. BUPPERT, II
- -------------------------------------
Name of Purchaser
By: ALEX BROWN INVESTMENT MANAGEMENT
---------------------------------
Name: Hobart C. Buppert, II
Title: Vice President
Address: One South Street
Baltimore, Maryland 21202
Telephone: 410-894-4814
Telecopy: 410-895-4800
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): ________________________________
Alex Brown & Sons ________________________________
Tax I.D. Number: 52-0256630 ________________________________
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: Bank of New York
Alex Brown & Sons, Inc.
Address: Credit of Alex Brown & Sons 90 Broad St., 11th Floor
New York, NY 10004
ABA No.: 021000018 Attn: Tom Rizzo
Account No. 201-95050
Attention: Laura Snyder
Aggregate principal amount
of Notes to be purchased by you:
$3,400,000
<PAGE> 34
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
/s/ HOBART C. BUPPERT, II
- -------------------------------------
Name of Purchaser
By: ALEX BROWN INVESTMENT MANAGEMENT
---------------------------------
Name: Hobart C. Buppert, II
Title: Vice President
Address: One South Street
Baltimore, Maryland 21202
Telephone: 410-894-4814
Telecopy: 410-895-4800
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): _______________________________
Nations Bank _______________________________
Tax I.D. Number: 75-2238693 _______________________________
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: Nations Bank
Bankers Trust Co.
Address: Dallas, Texas 16 Wall St., 4th Floor
Window #41
ABA No.: 111000025 New York, NY 10015
Account No. 90091218438 A/C NationsBank Texas
Special #90678
Attention: Jessie Martel A/C #30-900910218438
Aggregate principal amount
of Notes to be purchased by you:
$1,600,000
<PAGE> 35
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
/s/ HOBART C. BUPPERT, II
- -------------------------------------
Name of Purchaser
By: ALEX BROWN INVESTMENT MANAGEMENT
--------------------------------
Name: Hobart C. Buppert, II
Title: Vice President
Address: One South Street
Baltimore, Maryland 21202
Telephone: 410-894-4814
Telecopy: 410-895-4800
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): _______________________________
PNC _______________________________
Tax I.D. Number: 52-1772203 _______________________________
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: PNC
PNC
Address: Philadelphia, PA 40 Broad St., 4th Floor
New York, NY 10004
ABA No.: 031000053
Account No. 340120363060
Attention: Laura Costello
Aggregate principal amount
of Notes to be purchased by you:
$4,000,000
<PAGE> 36
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
/s/ HOBART C. BUPPERT, II
- -------------------------------------
Name of Purchaser
By: Alex Brown Investment Management
---------------------------------
Name: Hobart C. Buppert, II
Title: Vice President
Address: One South Street
Baltimore, Maryland 21202
Telephone: 410-894-4814
Telecopy: 410-895-4800
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): _______________________________
First National Bank of Maryland _______________________________
Tax I.D. Number: 52-0312840 _______________________________
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: First National Bank of Maryland
Bank of New York
Address: Baltimore, MD 67 Broad St., 8th Floor
New York, NY 10004
ABA No.: 052000113 A/C 002-R24000
Account No. OMNIBUS
Attention: Susan Johnson
Aggregate principal amount
of Notes to be purchased by you:
$1,000,000
<PAGE> 37
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
TCW Investment Management Co.
- ------------------------------------
Name of Purchaser
By: /s/ MELISSA V. WEILER
--------------------------------
Name: Melissa V. Weiler
Title: Managing Director
Address: Trust Company of the West
11100 Santa Monica Blvd., Suite 2000
Los Angeles, CA 90025
Telephone: 310-235-5920
Telecopy: 310-235-5966
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): Alena Tabora
11100 Santa Monica Blvd.,
Linchmen & Co. Suite 2000
Los Angeles, CA 90025
Tax I.D. Number: 04-3126900
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: State Street Bank and Trust
Chase Manhattan Bank
Address: 2 International Pl., 4 New York Plaza
Boston, MA 02110 Ground Level - Receiving Win
New York, NY 10004
ABA No.: 011000028 Account: State Street Bank &
Trust
Account No. EW0877 - TCW Leveraged Ref: TCW Leveraged Income Trust
Income Trust, L.P.
Attention: Ray Welliver/617-664-5482
Account No. EW0877
Attn: Roman Morz/
212-612-3211
Aggregate principal amount
of Notes to be purchased by you:
$14,250,000
<PAGE> 38
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
U.S. Financial Life Insurance Co.
- ----------------------------------
Name of Purchaser
By: /s/ ANTHONY L. LONG, JR.
------------------------------
Name: Anthony L. Long, Jr.
Title: Executive Vice President
Address: c/o Pacholder Associates, Inc.
8044 Montgomery Rd., Ste. 382
Cincinnati, OH 45236
Telephone: 513-985-3210
Telecopy: 513-985-3217
Telex: N/A
------------------------------
Nominee (name in which the Securities are Mail Payment Notices to:
to be registered, if different than name of
Purchaser): Anthony L. Long, Jr.
- ----------------------------------
Tax I.D. Number: 38-2046096
(If acquired in the name of a nominee, the
taxpayer I.D. number of such nominee)
Designated Physical Delivery Instructions:
Bank: Star Bank, N.A.
Bankers Trust Co.
Address: Cincinnati, OH 16 Wall St., 4th Fl.
Window 45
ABA No.: 042000013 New York, NY
Account No. 19-0001
Attention: Michelle Williams
Aggregate principal amount
of Notes to be purchased by you:
$750,000
<PAGE> 39
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
TransAmerica Life Insurance & Annuity Co.
- -----------------------------------------
Name of Purchaser
By: /s/ SUSAN A. SILBERT
---------------------------
Name: Susan A. Silbert
Title: Investment Officer
Address: ______________________
______________________
______________________
Telephone: ____________________
Telecopy:______________________
Telex:_________________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
_______________________________
Address: ____________________
_______________________________
ABA No.: ____________________
_______________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$5,000,000
<PAGE> 40
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
Conseco Capital Management
- ------------------------------
Name of Purchaser
By: /s/ ROBERT L. COOK
-------------------------
Name: Robert L. Cook
Title: Assistant Vice President -
Senior Securities Analyst
Address: ______________________
_______________________________
_______________________________
Telephone:_____________________
Telecopy:______________________
Telex:_________________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
_______________________________
Address: ____________________
_______________________________
ABA No.: ____________________
_______________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$4,986,105.00
<PAGE> 41
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
Oka Usi
- -----------------------------
Name of Purchaser
By: /s/ OKA USI
--------------------------
Name: Oka Usi
Title: Managing Director
Address: 222 Broadway
8th Floor
New York, NY 10038
Telephone: 212-412-1175
Telecopy: 212-412-1751
Telex:_______________________
Nominee (name in which the Securities are Mail Payment Notices to:
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 Instructions:
Bank:
_______________________________
Address: ____________________
_______________________________
ABA No.: ____________________
_______________________________
Account No. _________________
Attention: __________________
Aggregate principal amount
of Notes to be purchased by you:
$10,000,000.00
<PAGE> 42
Exhibit A
---------
Form of Indenture
-----------------
<PAGE> 43
Exhibit B
---------
Form of Registration Rights Agreement
-------------------------------------
<PAGE> 44
Exhibit C
---------
Form of Opinion of Company Counsel
----------------------------------
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
DATED AS OF AUGUST 18, 1997
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
August 18, 1997, 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 issue validly and lawfully 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 or 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.
<PAGE> 3
Exchange Offer Notice: As defined in Section 2(d) hereof.
Exchange Securities: The Series B 7 1/2% Senior Notes due 2007 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 August 18, 1997 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 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.
-2-
<PAGE> 4
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 60 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 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 (i) applicable interpretations of the staff of the
SEC do not permit 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
-3-
<PAGE> 5
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
(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).
-4-
<PAGE> 6
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 180 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 with the SEC, as promptly as reasonably
practicable and in any event within 30 days thereafter, 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 until the earlier to occur of (A) the second
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 (the "Effectiveness Period").
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
-5-
<PAGE> 7
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 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. 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
which 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.
-6-
<PAGE> 8
(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 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).
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
-7-
<PAGE> 9
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 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, 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 its 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 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;
-8-
<PAGE> 10
(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, 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;
(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 its 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
-9-
<PAGE> 11
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 its 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 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
-10-
<PAGE> 12
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(n)(i) 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 its 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 such shorter
periods as are 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 canceled 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
-11-
<PAGE> 13
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.
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
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
-12-
<PAGE> 14
managing underwriters, if any, or by the holders of a majority in principal
amount of the Registrable Securities included in or tendered 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
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 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
-13-
<PAGE> 15
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.
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
-14-
<PAGE> 16
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 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
-15-
<PAGE> 17
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 its
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
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.
-16-
<PAGE> 18
(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:
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
-17-
<PAGE> 19
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 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
-18-
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
JEFFERIES GROUP, INC.
By: /s/ Michael L. Klowden
-------------------------------------
Name: Michael L. Klowden
Title: President
-19-
<PAGE> 21
PURCHASERS: Purchaser:
/s/ James K. Hunt
---------------------------------------------
By: SunAmerica Life Insurance Company
Name: James K. Hunt
Title: Authorized Agent
-20-
<PAGE> 22
PURCHASERS: Purchaser:
/s/ James K. Hunt
---------------------------------------------
By: Anchor National Life Insurance
Name: James K. Hunt
Title: Authorized Agent
-21-
<PAGE> 23
PURCHASERS: Purchaser:
Paine Webber Inc.
By: /s/ Peter Masco
-------------------------------------
Name: Peter Masco
Title: Managing Director
-22-
<PAGE> 24
PURCHASERS: Purchaser:
Massachusetts Mutual Life Insurance Co.
By: /s/ Andrew Dickey
-------------------------------------
Name: Andrew Dickey
Title: Managing Director
-23-
<PAGE> 25
PURCHASERS: Purchaser:
Massachusetts Mutual Life Insurance Co.
By: /s/ Andrew Dickey
-------------------------------------
Name: Andrew Dickey
Title: Managing Director
-24-
<PAGE> 26
PURCHASERS: Purchaser:
Massachusetts Mutual Life Insurance Co.
By: /s/ Andrew Dickey
-------------------------------------
Name: Andrew Dickey
Title: Managing Director
-25-
<PAGE> 27
PURCHASERS: Purchaser:
Massachusetts Mutual Life Insurance Co.
By: /s/ Andrew Dickey
-------------------------------------
Name: Andrew Dickey
Title: Managing Director
-26-
<PAGE> 28
PURCHASERS: Purchaser:
/s/ Hobart C. Buppert, II
---------------------------------------------
By: Alex Brown Investment Management
Name: Hobart C. Buppert, II
Title: Vice President
-27-
<PAGE> 29
PURCHASERS: Purchaser:
/s/ Hobart C. Buppert, II
---------------------------------------------
By: Alex Brown Investment Management
Name: Hobart C. Buppert, II
Title: Vice President
-28-
<PAGE> 30
PURCHASERS: Purchaser:
/s/ Hobart C. Buppert, II
---------------------------------------------
By: Alex Brown Investment Management
Name: Hobart C. Buppert, II
Title: Vice President
-29-
<PAGE> 31
PURCHASERS: Purchaser:
/s/ Hobart C. Buppert, II
---------------------------------------------
By: Alex Brown Investment Management
Name: Hobart C. Buppert, II
Title: Vice President
-30-
<PAGE> 32
PURCHASERS: Purchaser:
TCW Investment Management Co.
By: Melissa V. Weiler
Name: Melissa V. Weiler
Title: Managing Director
-31-
<PAGE> 33
PURCHASERS: Purchaser:
U.S. Financial Life Insurance Co.
By: /s/ Anthony L. Long, Jr.
-------------------------------------
Name: Anthony L. Long, Jr.
Title: Executive Vice President
-32-
<PAGE> 34
PURCHASERS: Purchaser:
TransAmerica Life Insurance & Annuity Co.
By: /s/ Susan A. Silbert
-------------------------------------
Name: Susan A. Silbert
Title: Investment Officer
-33-
<PAGE> 35
PURCHASERS: Purchaser:
Conseco Capital Management
By: /s/ Robert L. Cook
-------------------------------------
Name: Robert L. Cook
Title: Assistant Vice President -
Senior Securities Analyst
-34-
<PAGE> 36
PURCHASERS: Purchaser:
/s/ Oka Usi
---------------------------------------------
By: Oka Usi
Name: Oka Usi
Title: Managing Director
-35-
<PAGE> 1
EXHIBIT 11.1
JEFFERIES GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, -----------------------------
----------------------------------------------- SEPTEMBER 26, SEPTEMBER 27,
1996 1995 1994 1993 1992 1997 1996
------- ------- ------- ------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings before cumulative
effect of accounting change... $43,560 $28,529 $20,224 $27,589 $18,732 $45,565 $31,227
Adjustment to subsidiary
earnings -- common stock
equivalents on
subsidiary................. (501) -- (125) -- -- (789) (320)
------- ------- ------- ------- ------- ------- -------
Adjusted primary earnings
before cumulative effect of
accounting change.......... $43,059 $28,529 $20,099 $27,589 $18,732 $44,776 $30,907
------- ------- ------- ------- ------- ------- -------
Eliminate interest expense
(net of taxes) on
convertible subordinated
debentures................. -- -- -- 1,191 1,905 -- --
------- ------- ------- ------- ------- ------- -------
Adjusted fully diluted
earnings before cumulative
effect of accounting
change..................... $43,059 $28,529 $20,099 $28,780 $20,637 $44,776 $30,907
======= ======= ======= ======= ======= ======= =======
Shares of common stock and
common stock equivalents:
Average number of common
shares..................... 10,822 11,100 11,620 9,838 9,310 10,049 10,951
Average common stock
equivalent shares related
to employee stock based
plans...................... 883 860 758 452 486 1,106 867
------- ------- ------- ------- ------- ------- -------
Average shares used in
primary computation...... 11,705 11,960 12,378 10,290 9,796 11,155 11,818
Average common stock
assumed issued pursuant
to convertible
subordinated debentures
and an adjustment of
average common stock
equivalents to period-end
market price, if higher
than average price....... 57 74 -- 2,064 3,592 63 40
------- ------- ------- ------- ------- ------- -------
Average shares used in fully
diluted computation........ 11,762 12,034 12,378 12,354 13,388 11,218 11,858
======= ======= ======= ======= ======= ======= =======
Earnings per share before
cumulative effect of
accounting change:
Primary....................... $ 3.68 $ 2.39 $ 1.63 $ 2.69 $ 1.91 $ 4.01 $ 2.62
======= ======= ======= ======= ======= ======= =======
Fully diluted................. $ 3.66 $ 2.37 $ 1.63 $ 2.33 $ 1.54 $ 3.99 $ 2.61
======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 12.1
JEFFERIES GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, -----------------------------
----------------------------------------------- SEPTEMBER 26, SEPTEMBER 27,
1996 1995 1994 1993 1992 1997 1996
------- ------- ------- ------- ------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges:
Interest expense........ $ 5,235 $ 5,664 $ 4,248 $ 3,339 $ 3,714 $ 4,575 $ 4,004
Interest portion of rent
expense(1/3)......... 2,253 1,999 1,836 1,706 1,703 2,016 1,638
------- ------- ------- ------- ------- ------- -------
Total fixed charges..... $ 7,488 $ 7,663 $ 6,084 $ 5,045 $ 5,417 $ 6,591 $ 5,642
======= ======= ======= ======= ======= ======= =======
Earnings:
Earnings before income
taxes................ $83,187 $53,238 $39,036 $47,344 $33,669 $83,299 $59,670
Total fixed charges..... 7,488 7,663 6,084 5,045 5,417 6,591 5,642
------- ------- ------- ------- ------- ------- -------
Total earnings.......... $90,675 $60,901 $45,120 $52,389 $39,086 $89,890 $65,312
======= ======= ======= ======= ======= ======= =======
Ratio of Earnings to Fixed
Charges................. 12.1 7.9 7.4 10.4 7.2 13.6 11.6
</TABLE>
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Jefferies Group, Inc.:
We consent to the use of our report incorporated herein by reference and to
the references to our firm under the headings "Summary Consolidated Financial
Information", Selected Consolidated Financial Information", and "Experts" in the
registration statement on Form S-4.
/s/ KPMG PEAT MARWICK LLP
- ---------------------------------------------------------
Los Angeles, California
November 12, 1997
<PAGE> 1
CONFORMED COPY
================================================================================
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)
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)
--------------------------
Jefferies Group, Inc.
(Exact name of obligor as specified in its charter)
Delaware 95-2848406
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
11100 Santa Monica Blvd.
Floor 11
Los Angeles, California 90025
(Address of principal executive offices) (Zip code)
--------------------------
7 1/2% Series __ Senior Notes due 2007
(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 10005
</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.
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 17 C.F.R.
229.10(d).
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.)
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.
2
<PAGE> 3
CONFORMED COPY
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 3rd day of November, 1997.
THE BANK OF NEW YORK
By: /s/ THOMAS B. ZAKRZEWSKI
------------------------------
Name: THOMAS B. ZAKRZEWSKI
Title: ASSISTANT VICE PRESIDENT
3
<PAGE> 1
LETTER OF TRANSMITTAL
JEFFERIES GROUP, INC.
OFFER FOR ALL OUTSTANDING
7 1/2% SENIOR NOTES DUE 2007
IN EXCHANGE FOR
7 1/2% SERIES _ SENIOR NOTES DUE 2007
PURSUANT TO THE PROSPECTUS, DATED ________ __, 1997.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ________ __,
1997, 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 Facsimile Transmission Number: By Hand/Overnight Delivery:
Mail: (212) 815-6339
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
For Information Call:
(212) 815-2742
</TABLE>
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 ________ __, 1997 (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 $100,000,000 of
7 1/2% Series _ Senior Notes Due 2007 (the "New Notes") of the Company for a
like principal amount of the issued and outstanding $100,000,000 of 7 1/2%
Senior Notes Due 2007 (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
<PAGE> 2
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 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>
DESCRIPTION OF OLD NOTES 1 2 3
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
----------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
* 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.
[ ] 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______________
<PAGE> 4
[ ] 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.
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
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or
New Notes are to be issued in the name of and sent to someone other than the
person or persons whose signature(s) appear(s) on this Letter above, or if Old
Notes delivered by book-entry transfer which are not accepted for exchange are
to be returned by credit to an account maintained at the Book-Entry Transfer
Facility other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)
------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
(Complete Substitute Form W-9)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or New
Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter above or to such person or persons at an
address other than shown in the box entitled "Description of Old Notes" on this
Letter above.
Mail: New Notes and/or Old Notes to:
Name(s)
------------------------------------------------------------------------
(Please Type or Print)
- --------------------------------------------------------------------------------
(Please Type or Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
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)
<TABLE>
<S> <C> <C>
Dated: ,1997
----------------------------------------------------------------------------
X ,1997
---------------------------------- ------------------------------
X ,1997
---------------------------------- ------------------------------
SIGNATURE(S) OF OWNER DATE
</TABLE>
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: ,1997
- ---------------------------------------------------------------------------
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF
THE EXCHANGE OFFER OF THE 7 1/2% SERIES _
SENIOR NOTES DUE 2007 IN EXCHANGE FOR THE
7 1/2% SENIOR NOTES DUE 2007 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 untendered 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 may require 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, such tendering
holder 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)
are not subject to these backup withholding 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
should provide its correct TIN by completing the "Substitute Form W-9" set forth
below, certifying that the TIN provided is correct and as to certain other
matters. If the tendering holder of Old Notes is a nonresident alien or foreign
entity not subject to backup withholding, such holder should provide 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.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Old Notes in exchange for New Notes 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.
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.
<PAGE> 11
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>
<CAPTION>
Part 1--PLEASE PROVIDE YOUR TIN IN TIN:___________________
THE BOX AT RIGHT AND CERTIFY BY Social Security Number or
SIGNING AND DATING BELOW Employer Identification Number
Part 2--TIN Applied For [ ]
--------------------------------------------------------------------------------------------
SUBSTITUTE CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY
THAT:
<S> <C> <C>
Form W-9 (1) the number shown on this form is my correct Taxpayer Identification
Department of the Treasury Number (or I am waiting for a number to be issued to me);
Internal Revenue Service
(2) I am not subject to backup withholding either because: (a) I am
Payor's Request For exempt from backup withholding, or (b) I have not been notified by
Taxpayer Identification the Internal Revenue Service (the "IRS") that I am subject to backup
Number ("TIN") and withholding as a result of a failure to report all interest or dividends,
Certification or (c) the IRS has notified me that I am no longer subject to backup
withholding; and
(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 the 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
