Exhibit 10.4
MASTER AGREEMENT FOR THE
FORMATION OF A LIMITED LIABILITY COMPANY
This is a Master Agreement for the Formation of a Limited Liability
Company, dated as of February 28, 2007 (as in effect from time to time, this
"Agreement"), among (a) Xxxxxxxxx Group, Inc., a Delaware corporation ("JGI"),
(b) Xxxxxxxxx & Company, Inc., a Delaware corporation ("Jefco"), and (c)
Leucadia National Corporation, a New York corporation ("Leucadia"). All
capitalized terms used herein without definition shall have the meanings
ascribed to them in the Operating Agreement (as defined below).
WHEREAS, the parties hereto wish to form a Delaware limited liability
company (the "Company") for the purpose of engaging in the business of
securities brokerage;
WHEREAS, each of the parties hereto desire to participate in the Company
through the contribution to the capital of the Company or its wholly-owned
subsidiaries of cash and/or securities owned by them or their Affiliates in
exchange for membership interests in the Company ("Member Interests"), in each
case upon the terms and conditions more fully set forth herein; and
WHEREAS, the parties hereto desire that the Company enter into certain
servicing arrangements, pursuant to which Jefco will provide to the Company
certain securities clearing, accounting, legal and compliance services for its
business, as more fully set forth in the Services Agreement to be entered into
between Jefco, the Company and JHYT.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants set forth below and for other good and valuable consideration, the
receipt and sufficiency of which are herby acknowledged the parties hereto
hereby agree as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 Certain Defined Terms. In addition to the defined terms found
elsewhere in this Agreement, as used in this Agreement the following terms shall
have the following meanings:
"Affiliate" means with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. As used in
this definition, (a) "control" (including, with its correlative meanings,
"controlling," "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise and (b) with respect to
any Person other than a subsidiary of the Company, the term "Affiliate" shall
not include the Company or any subsidiary of the Company.
"Agreement" has the meaning set forth in the preamble.
"Business" means the business of securities brokerage, including acting as
a broker or dealer in securities, bank loans, high yield debt and special
situation investments on substantially the same basis as conducted prior to the
date hereof by the High Yield Division of Jefco and those broker-dealers managed
by Jefco that participate in the securities brokerage business of the High Yield
Division, and to engage in any activity required thereby or incidental thereto,
including making markets and acting as a block positioner of securities.
"Business Day" means a day other than Saturday, Sunday or any day on which
banks located in the City of New York are authorized or obligated to close.
"Certificate of Formation" has the meaning set forth in Section 3.1.
"Clearing Agreement" means the clearing agreement pursuant to which JHYT
will introduce accounts to Jefco on a fully disclosed basis.
"Closing" has the meaning set forth in Section 3.8.
"Closing Date" means a date not more than three business days following
receipt of the NASD Approval and the fulfillment of all other conditions to
closing set forth in Article 6.
"Closing Conditions" means the conditions set forth in Article 6 which
must be fulfilled prior to Closing.
"Commitment" means, with respect to each member of the Company other than
the Series A Member, the aggregate amount of cash and other property agreed to
be contributed as capital to the Company, as specified in such Member's
Contribution Agreement and reflected on Schedule A to the Operating Agreement
maintained with the books and records of the Company at the Company's principal
office, as such Schedule A may be modified from time to time.
"Company" has the meaning set forth in Article 2.
"Contribution Agreements" means the Series A Contribution Agreement, the
Series B Contribution Agreement, the Series C Contribution Agreement, the Series
D Contribution Agreement and the Series E Contribution Agreement.
"Fund Investor" means a private investment fund organized as a limited
liability company under the Delaware Act, and managed by Jefco or an Affiliate
thereof.
"Governmental Authority" has the meaning set forth in Section 6.1(a).
"JEOF" means Jefferies Employees Opportunity Fund, LLC, a Delaware limited
liability company.
"JHYT" means Jefferies High Yield Trading, LLC, a Delaware limited
liability company that, prior to the Closing and the amendment of its
certificate of formation and limited liability company agreement, is known as
Jefferies Partners Opportunity Fund II, LLC.
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"JPOF" means Jefferies Partners Opportunity Fund, LLC, a Delaware limited
liability company.
"JPOF II" has the meaning set forth in Section 3.3.
"NASD Approval" means the approval of the National Association of
Securities Dealers, Inc. to the proposed reorganization of the secondary high
yield securities brokerage and trading business of Jefco, JPOF, JPOF II and JEOF
contemplated by this Agreement, the Operating Agreement and the other Related
Agreements.
"Operating Agreement" means that certain Amended and Restated Limited
Liability Company Agreement to be dated as of the Closing Date, by and among the
Company, JGI, Jefco, Leucadia and the other parties named therein, and in
substantially the form attached hereto as Exhibit A, as in effect from time to
time.
"Person" means any individual, partnership, corporation, association,
trust, limited liability company, joint venture, unincorporated organization and
any government, governmental department or agency or political subdivision
thereof.
"Regulatory Approvals" shall mean any approval or consent of, or notice to
or filing with any United States federal, state or local regulatory or other
governmental agency or authority.
"Related Agreements" means, collectively, the Certificate of Formation of
the Company, the Operating Agreement, the Contribution Agreements, the Clearing
Agreement, the Management Support Agreement and the Trademark License Agreement.
"Series A Contribution Agreement" means the Contribution Agreement, to be
dated as of the Closing Date, by and between the Company and Jefco and in
substantially the form attached hereto as Exhibit B.
"Series B Contribution Agreement" means a Contribution Agreement, to be
dated as of the Closing Date, by and between the Company, Jefco, JGI or one or
more of their respective Affiliates and in substantially the form attached
hereto as Exhibit C.
"Series C Contribution Agreement" means the Contribution Agreement, to be
dated as of the Closing Date, by and between the Company and Leucadia and in
substantially the form attached hereto as Exhibit D.
"Series D Contribution Agreement" means the Contribution Agreement, to be
dated as of the Closing Date, by and between the Company and Fund Investor and
in such form as may be agreed by the parties thereto.
"Series E Contribution Agreement" means the Contribution Agreement, to be
dated as of the Closing Date, by and between the Company and JEOF and in such
form as may be agreed by the parties thereto.
"Servicer" means Jefco or an Affiliate of Jefco, in its capacity as
Servicer pursuant to the terms of the Management Support Agreement, and any
permitted successor thereto.
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"Services Agreement" means the Services Agreement, to be dated as of the
Closing Date, by and among JHYT, the Company and the Servicer and in
substantially the form attached hereto as Exhibit E.
"Trademark License Agreement" means the Trademark License Agreement, to be
dated as of the Closing Date, by and between Jefco, the Company and JHYT and in
such form as may be agreed by the parties thereto.
Section 1.2 Other Defined Terms. Capitalized terms used herein without
definition have the respective meanings given to such terms in the Operating
Agreement.
ARTICLE 2
FORMATION OF LIMITED LIABILITY COMPANY
The parties hereto agree that, subject to the terms and conditions of this
Agreement and the Related Agreements, JGI shall form the Company as a Delaware
limited liability company and, upon Closing, the terms of the limited liability
company agreement of the Company shall be amended and restated to be as set
forth in the Operating Agreement, and further that, among other things, pursuant
to the Operating Agreement, the Company will hold all of the outstanding
interests in JHYT. It is further understood that (a) this Agreement itself shall
not constitute or create a joint venture, partnership, limited liability company
or any other similar arrangement between the parties hereto and (b) no party
hereto is hereby authorized to act as agent of any other party hereto.
ARTICLE 3
RELATED AGREEMENTS; CLOSING
Section 3.1 Formation of the Company. (a) On or before the Closing Date,
JGI shall cause the Company to be organized and formed by filing a Certificate
of Formation (as in effect from time to time, the "Certificate of Formation"),
with the Secretary of State of the State of Delaware.
(b) On the Closing Date, the parties hereto shall enter into the
Operating Agreement.
Section 3.2 Contribution by Jefco. On the Closing Date, Jefco shall enter
into the Series A Contribution Agreement, pursuant to which Jefco shall
contribute to the Company or, at the direction of the Company, to JHYT for the
account of the Company, the Brokerage Assets, in consideration for Series A
Member Interests, all as more fully set forth in the Series A Contribution
Agreement and the Operating Agreement.
Section 3.3 Contribution by JGI and Jefco. On the Closing Date, JGI and
Jefco shall enter into the Series B Contribution Agreement, pursuant to which
JGI and Jefco shall commit to contribute capital to the Company or, at the
direction of the Company, to JHYT for the account of the Company in the amount
of the JGI Commitment and shall contribute on and as of the Closing Date cash
and securities, including all of the interests in Jefferies Partners Opportunity
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Fund II, LLC, a Delaware limited liability company ("JPOF II"), held by JGI and
Jefco, in consideration for Series B Member Interests, all as more fully set
forth in the Series B Contribution Agreement and the Operating Agreement.
Section 3.4 Contribution by Leucadia. On the Closing Date, Leucadia shall
enter into the Series C Contribution Agreement, pursuant to which Leucadia shall
commit to contribute capital to the Company or, at the direction of the Company,
to JHYT for the account of the Company, in the amount of the Leucadia Commitment
and shall contribute, on and as of the Closing Date, cash and all of the
interests in JPOF II held by Leucadia, in consideration for Series C Member
Interests, all as more fully set forth in the Series C Contribution Agreement
and the Operating Agreement.
Section 3.5 Trademark License Agreement. On the Closing Date, Jefco and
the Company shall enter into the Trademark License Agreement.
Section 3.6 Management Support Agreement. On the Closing Date, Jefco and
the Company shall enter into the Management Support Agreement.
Section 3.7 Clearing Agreement. On the Closing Date, Jefco and the Company
shall enter into the Clearing Agreement.
Section 3.8 Closing. Subject to the provisions of Article 6 hereof, the
consummation of the transactions contemplated by this Agreement shall take place
at a closing (the "Closing") to be held at the offices of Xxxxxx, Xxxxx &
Bockius LLP, on a mutually acceptable date not earlier than the fifth Business
Day after receipt of the NASD Approval or on such other date or at such other
place as shall be agreed to in writing by all of the parties hereto. The date on
which the Closing actually occurs is referred to herein as the "Closing Date".
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each of the parties hereto hereby represents and warrants to each of the
other parties hereto that (a) it is duly authorized, validly existing and in
good standing in the jurisdiction of its formation; (b) the execution, delivery
and performance of this Agreement has been duly authorized by all necessary
corporate action, and will not result in a material violation of any Law
applicable to such party or of any contract binding upon such party or its
property; and (c) except for the NASD Approval and the consents of
non-governmental third parties to be obtained by such party and its Affiliates,
no Regulatory Approvals or consents of non-governmental third parties are
required in connection with the execution, delivery or performance by such party
or any of its Affiliates of this Agreement or any of the Related Agreement to
which such party or any of its Affiliates is or is to be a party.
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ARTICLE 5
CERTAIN COVENANTS
Section 5.1 Ordinary Course Operation. During the period commencing on the
date hereof and ending on the Closing Date, Jefco agrees to:
(a) operate the Business only in the ordinary course on a basis
consistent with past practice;
(b) use all reasonable efforts to preserve the Business and keep
available the services of the full-time officers and employees engaged therein
to the extent required to conduct the Business in substantially the same manner
as conducted on the date hereof;
(c) use all reasonable efforts to maintain good relations with
Persons having a business relationship with the Business;
(d) preserve and maintain all permits, licenses, approvals and
authorizations necessary to operate the Business and renew the same if any
should expire;
(e) comply in all material respects with all laws, ordinances,
rules and regulations applicable to the Business; and
(f) maintain the books of account and records related to the
Business in the ordinary course consistent with past practices.
Section 5.2 Cooperation. Each of the parties hereto will cooperate in good
faith and use all reasonable efforts to cause the transactions contemplated by
this Agreement and the other Related Agreements to be consummated in accordance
with the terms and conditions hereof and thereof. The foregoing obligations in
this Section 5.2 shall not be deemed to require any party thereto to waive any
right under this Agreement or any other Related Agreement.
Section 5.3 Consents and Approvals. Each of the parties hereto shall use
all reasonable efforts and cooperate in good faith with the other parties hereto
with a view to (a) obtaining as soon as practicable the NASD Approval and all
third-party consents required for the consummation of the transactions
contemplated hereby and by the other Related Agreements, and each party hereto
shall make available to the other parties hereto all information reasonably
required in connection with obtaining such approvals and consents; and (b)
satisfying all other Closing Conditions. Each of the parties hereto shall
deliver to the other parties hereto copies of all proposed filings to be made by
such party with securities regulatory and other Governmental Authorities, shall
use its reasonable efforts to accommodate any suggestions or recommendations
made by the other parties hereto with respect thereto and shall deliver to the
other parties hereto, as soon as practicable, copies of all final applications
to Governmental Authorities, in each case with respect to the transactions
contemplated by this Agreement and the Related Agreements.
Section 5.4 Executive Officers. On the Closing Date, the parties hereto
shall take such action as is necessary and proper to cause the Company to
appoint and employ, on terms satisfactory to the Board (as defined in the
Operating Agreement), the following individuals to serve as executive officers
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of the Company, to hold the offices set forth opposite their respective names in
the table below, and such individuals shall have accepted such offices until
their successors are duly appointed.
Xxxxxxx Xxxxxxx Chief Executive Officer
Xxxxx Xxxxxxxx President
Xxxxxx Xxxxx Chief Financial Officer
Xxxxxx Xxxxx Secretary
Section 5.5 Disclosure Supplements. From time to time prior to the Closing
Date, each party hereto will promptly give notice to the other parties hereto of
any matter hereafter arising which, if existing, occurring or known at the date
of this Agreement, would have been required to be set forth or described by such
party in the Exhibits hereto or any Related Agreement or is necessary to correct
any information provided by such party in the Exhibits hereto or to any Related
Agreement or has caused any representation or warranty of such party herein or
in any Related Agreement to become inaccurate. No such notice shall be deemed to
supplement or amend this Agreement or any Related Agreement or any Schedules or
Exhibits hereto or thereto; provided, however, that upon consummation of the
Closing, all matters disclosed in notices given pursuant to and in accordance
with the terms of this Section 5.5 shall be treated as having been disclosed
herein or in the applicable Related Agreement as of the date hereof for purposes
of such party's indemnity obligations thereunder.
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 Conditions to Obligation of Each Party. The respective
obligations of each of the parties hereto to consummate the Closing under this
Agreement and the other Related Agreements shall be subject to the satisfaction,
prior to or at Closing, of each of the following conditions:
(a) No Injunction. On the Closing Date, there shall be no (i)
injunction, restraining order or decree of any nature of any United States
federal, state or local court, governmental commission, board or other
regulatory authority or agency ("Governmental Authority") of competent
jurisdiction in effect that restrains or prohibits the consummation of any
transaction contemplated under this Agreement or any Related Agreement or (ii)
pending action, suit or proceeding brought by any Governmental Authority which
seeks to restrain or prohibit consummation of any such transaction.
(b) Regulatory Approvals. The NASD Approval shall have been
obtained and any applicable waiting period in respect thereof shall have expired
or been terminated and the NASD Approval shall be in full force and effect.
(c) Other Transactions. Each of the Related Agreements shall have
been duly executed and delivered by each party thereto and shall be in full
force and effect, and the transactions contemplated by the Contribution
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Agreements shall have been consummated and have become effective in accordance
with their respective terms.
(d) Regarding JPOF. Jefco shall have obtained the consent of the
members of JPOF to the merger of JPOF with and into JHYT on and as of the
Closing Date, or shall have otherwise arranged for the sale or contribution of
the assets of JPOF to the Company, or, at the direction of the Company, to JHYT
for the account of the Company.
(e) Regarding JEOF. Jefco shall have arranged for the sale or
contribution of the assets of JEOF to the Company or, at the direction of the
Company, to JHYT for the account of the Company.
(f) Other Matters. The Company shall have received the written
advice referred to in Section 2.10 of the Operating Agreement.
Section 6.2 Additional Conditions to the Obligations of JGI and Jefco. The
obligations of JGI and Jefco to consummate the Closing under this Agreement and
the Related Agreements shall be subject to the satisfaction, prior to or at
Closing, of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of Leucadia or any of its Affiliates which are set forth in this
Agreement or in the Related Agreements shall be true and correct in all material
respects as of the Closing Date as though made at and as of the Closing Date,
except to the extent that any representation and warranty is made as of a
specified date other than the Closing Date, in which case such representation
and warranty shall be true and correct as of such date.
(b) Performance of Covenants. Each of the other parties hereto
shall have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants and conditions,
contained in this Agreement to be performed or complied with by such party prior
to or at the Closing.
(c) Certificates. JGI and Jefco shall have received a certificate
of Leucadia dated the Closing Date, executed on behalf of Leucadia to the effect
that the conditions specified in section 6.2(a) and 6.2(b) with respect to
Leucadia have been fulfilled.
(d) Consents. All consents of non-governmental third parties
required for the consummation of the transactions contemplated by JGI and its
Affiliates shall have been obtained and shall be in full force and effect on the
Closing Date.
(e) Additional Deliveries. Leucadia shall have furnished JGI with
such certificates, instruments or other documents in the name or on behalf of
Leucadia, executed by appropriate officers of such party, including, without
limitation, certificates or correspondence of Governmental Authorities or
non-governmental third parties, to evidence fulfillment of the conditions set
forth in this Article 6 to be fulfilled by Persons other than JGI and its
Affiliates as JGI may reasonably request; provided, however, that any such
certificate, instrument or other document so requested by JGI shall be of a type
that is customary in transactions similar to the transactions contemplated
hereby.
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Section 6.3 Additional Conditions to the Obligations of Leucadia. The
obligations of Leucadia to consummate the Closing under this Agreement and the
other Related Agreements shall be subject to the satisfaction, prior to or at
Closing, of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of JGI and Jefco or any of their Affiliates which are set forth in
this Agreement or the Related Agreements shall be true and correct in all
material respects as of the Closing Date as though made at and as of the Closing
Date, except to the extent that any representation and warranty is made as of a
specified date other than the Closing Date, in which case such representation
and warranty shall be true and correct as of such date.
(b) Performance of Covenants. JGI and Jefco shall each have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by JGI or Jefco prior to or at the
Closing.
(c) Certificates. Leucadia shall have received a certificate of
JGI and Jefco, dated the Closing Date, executed on behalf of each of such
parties to the effect that the conditions specified in Sections 6.3(a) and
6.3(b) with respect to such party have been fulfilled.
(d) Consents. All consents of non-governmental third parties
required for the consummation of the transactions contemplated hereby by
Leucadia and its Affiliates shall have been obtained and shall be in full force
and effect on the Closing Date.
(e) Additional Deliveries. Each of JGI and Jefco shall have
furnished Leucadia with such certificates, instruments or other documents in the
name or on behalf of such party, executed by appropriate officers of such
parties, including, without limitation, certificates or correspondence of
Governmental Authorities or non-governmental third parties, to evidence
fulfillment of the conditions set forth in this Article 6 to be fulfilled by
Persons other than Leucadia and its Affiliates as Leucadia may reasonably
request; provided, however, that any such certificate, instrument or other
document so required by Leucadia shall be of a type that is customary in
transactions similar to the transactions contemplated hereby.
(f) Series C Contribution Agreement. The conditions to Leucadia's
obligations under the Series C Contribution Agreement shall have been satisfied.
ARTICLE 7
TERMINATION
Section 7.1 Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing
(a) by mutual written consent of all of the parties hereto;
(b) by any of the parties hereto (i) thirty (30) days after the
date on which any request or application for the NASD approval shall have been
denied, unless within the thirty (30) day period following such denial a
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petition for rehearing or an amended application has been filed with the
applicable Governmental Authority; provided, however, that no party hereto shall
have the right to terminate this Agreement pursuant to this Section 7.1(b) if
such denial shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe in any material respect the covenants and
agreements of such party set forth herein, or (ii) if any federal or state
securities regulatory or other Governmental Authority shall have issued a final
permanent order, injunction or other legal restraint or prohibition preventing
the consummation of the transactions contemplated hereby and the time for appeal
or petition for reconsideration of such order, injunction, restraint or
prohibition shall have expired without such appeal or petition being granted or
such order, injunction, restraint or prohibition shall otherwise have become
final and non-appealable;
(c) by any of the parties hereto (but only if the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein or in any of the other Related Agreements)
in the event of a material breach by any other party hereto of any
representation, warranty, covenant or other agreement contained herein or in any
of the other Related Agreements, which breach is not cured after thirty (30)
days' written notice thereof is given to the party committing such breach; or
(d) by any of the parties hereto if the Closing shall not have
occurred on or prior to May 30, 2007, unless the failure of the Closing to occur
by such date shall be due to the failure of the party seeking to terminate this
Agreement hereunder to perform or observe in any material respect the covenants
and agreements of such party set forth in this Agreement or in any other Related
Agreements.
Section 7.2 Effects of Termination. In the event of termination of this
Agreement by any of the parties hereto as provided in Section 7.1, this
Agreement shall forthwith become null and void (other than this Section 7.2,
which shall remain in full force and effect), and there shall be no further
liability on the part of any of the parties hereto or their respective officers
or directors to the other parties hereto, and, in the event of a willful breach
by any of the parties hereto of any representation, warranty, covenant or
agreement contained in this Agreement, in which case the breaching party shall
remain liable for any and all damages, costs and expenses, including all
reasonable attorneys' fees, sustained or incurred by the non-breaching parties
as a result thereof or in connection therewith or with the enforcement of any of
their rights hereunder, whether sustained or incurred prior to, on or after the
date hereof. In no event shall any party hereto or any of such party's officers
or directors have any liability to any other party hereto arising out of or
relating to this Agreement in the event that the Closing occurs; provided that
nothing herein shall limit the liability of the Person under any Related
Agreement.
ARTICLE 8
GENERAL
Section 8.1 Expenses. Except as expressly set forth in this Agreement or
the Related Agreements, each party shall pay its own expenses and costs
incidental to the completion of the transactions contemplated hereby incurred by
such party.
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Section 8.2 Notices. All notices, demands and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if mailed by certified
mail, return receipt requested, postage prepaid or if sent by overnight courier
or sent by written telecommunication (answerback confirmed), or electronic mail
as follows:
If to JGI or Jefco: Xxxxxxxxx Group, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
General Counsel
with a copy sent contemporaneously to: Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx., Esq.
If to Leucadia: Leucadia National Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
with a copy sent contemporaneously to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx, Esq.
Section 8.3 Entire Agreement. This Agreement (including the Exhibits
hereto), together with the Related Agreements (including the Exhibits and
Schedules thereto) contains the entire understanding of the parties hereto and
thereto, supersedes all prior agreements and understandings relating to the
subject matter hereof and thereof and shall not be amended except by a written
instrument hereafter signed by all of the parties hereto or thereto. No waiver
of any provision of this Agreement shall be effective unless evidenced by a
written instrument signed by the waiving party. Each of the parties hereto
further acknowledges and agrees that, in entering into this Agreement and
entering into the Related Agreements, it has not in any way relied upon any oral
or written agreements, statements, promises, information, arrangements,
understandings, representations or warranties, express or implied, not
specifically set forth in this Agreement or the Related Agreements.
Section 8.4 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
without regard to its conflict of laws rules.
Section 8.5 Consent to Jurisdiction. Each of the parties hereto agrees
that any suit, action or proceeding instituted against such party under or in
connection with this Agreement may be brought in a court of competent
jurisdiction in the City of New York. By execution hereof, each party hereto
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irrevocably waives any objection to, and any right of immunity on the grounds
of, improper venue, the convenience of the forum, the personal jurisdiction of
such courts or the execution of judgments resulting therefrom. Each party hereto
hereby irrevocably accepts and submits to the jurisdiction of such courts in any
such action, suit or proceeding.
Section 8.6 Waiver of Certain Damages. EACH OF THE PARTIES HERETO TO THE
FULLEST EXTENT PERMITTED BY LAW IRREVOCABLY WAIVES ANY RIGHTS THAT IT MIGHT HAVE
TO PUNITIVE, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
Section 8.7 Section Headings. The headings of sections and subsections are
for reference only and shall not limit or control the meaning thereof.
Section 8.8 Assigns. This Agreement and the Related Agreements shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns. Neither this Agreement nor any Related
Agreement nor the obligations of any party hereunder or thereunder shall be
assignable or transferable by such party without the prior written consent of
the other parties hereto.
Section 8.9 No Implied Rights or Remedies. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any Person, except the parties hereto, any
rights or remedies under or by reason of this Agreement.
Section 8.10 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 8.11 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.
Section 8.12 Severability. The invalidity or unenforceability of any
particular provision of this Agreement or any Related Agreement shall not affect
the other provisions hereof or thereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision was omitted.
Section 8.13 Waiver of Right to Jury Trial. EACH OF THE PARTIES HERETO
HEREBY WAIVES ITS RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT OR THE
VALIDITY, INTERPRETATION OR ENFORCEMENT HEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
[Signature page follows.]
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IN WITNESS HEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Master Agreement for the Formation of a Limited
Liability Company to be duly executed and delivered as of the date and year
first above written.
XXXXXXXXX GROUP, INC.
By:
---------------------------------------
Name:
Title:
XXXXXXXXX & COMPANY, INC.
By:
---------------------------------------
Name:
Title:
LEUCADIA NATIONAL CORPORATION
By:
---------------------------------------
Name:
Title:
-13-
EXHIBIT A
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
EXHIBIT B
SERIES A CONTRIBUTION AGREEMENT
JEFFERIES HIGH YIELD HOLDINGS, LLC
SERIES A CONTRIBUTION AGREEMENT
This SERIES A CONTRIBUTION AGREEMENT (this "Agreement"), dated as of
______, 2007, by and between Xxxxxxxxx & Company, Inc., a Delaware corporation
("Jefco"), and Jefferies High Yield Holdings, LLC, a Delaware limited liability
company (the "Company"). All capitalized terms used herein without definition
shall have the meanings ascribed to them in the Amended and Restated Limited
Liability Company Agreement of the Company, dated as of the date hereof (as such
agreement may be amended, restated, modified or supplemented from time to time,
the "Operating Agreement").
RECITALS
WHEREAS, in accordance with and pursuant to the Master Agreement for
the Formation of a Limited Liability Company (the "Master Agreement"), Jefco
desires to make a Capital Contribution to the Company in the form of a
contribution of certain assets of Jefco's High Yield Division; and
WHEREAS, in accordance with and pursuant to the Operating Agreement
and the Series B Contribution Agreement, JGI and Jefco have agreed to commit
capital to the Company and to make Capital Contributions to the Company, or at
the direction of the Company, to a wholly-owned subsidiary of the Company, in
the form securities and cash, including the contribution of Jefco's membership
interests in JPOF II to the capital of the Company; and
WHEREAS, in accordance with and pursuant to the Operating Agreement
and the Series C Contribution Agreement, Leucadia desires to commit to
contribute capital to the Company and to make, or to cause to be made on its
behalf, an initial Capital Contribution to the Company in the form of a cash
contribution and a contribution of the membership interests in JPOF II held by
LUK-HY FUND, LLC, a Delaware limited liability company and a wholly-owned
indirect subsidiary of Leucadia.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement and in the Operating Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. CONTRIBUTIONS. Jefco hereby agrees that, at the Closing, Jefco
will assign, convey, transfer and deliver to the Company or, at the direction of
the Company, to a wholly-owned subsidiary of the Company, as a Capital
Contribution, all of its right, title and interest in and to the Brokerage
Assets identified on Exhibit A hereto.
SECTION 2. ACCEPTANCE OF CONTRIBUTIONS BY THE COMPANY. The Company and
Jefco hereby agree that, in consideration for the contribution of Brokerage
Assets made hereunder, Jefco shall be deemed to have made a Capital Contribution
to the Company in the amount of $__________. The Company agrees to accept the
Brokerage Assets at the Closing, and to assume all of Jefco's obligations with
respect thereto, to the extent such obligations arise from and after the Closing
Date.
SECTION 3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF JEFCO. Subject to
the Disclosure Schedule attached hereto as Exhibit B and incorporated by
reference herein (the "Disclosure Schedule"), Jefco hereby represents and
warrants to, and agrees with, the Company and each other Person who acquires an
interest in the Company as follows:
(a) Organization, Power and Authority. Jefco has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Jefco (i) is duly and validly formed, validly existing and in good
standing under the laws of the jurisdiction in which it is organized; and (ii)
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now conducted and as currently proposed to be
conducted. Jefco is presently duly qualified, licensed to do business and in
good standing as a corporation in the State of New York and each jurisdiction
where the failure to be so qualified or licensed could reasonably be expected to
have a material adverse effect on the business, properties or financial
condition of Jefco. Jefco is presently qualified, licensed to do business and in
good standing in each jurisdiction in which the failure to be so qualified or
licensed could reasonably be expected to have a material adverse effect on the
business, properties or financial condition of the Company (a "Material Adverse
Effect").
(b) Execution; Enforceability. This Agreement has been duly executed and
delivered by Jefco and, assuming due authorization, execution and delivery
hereof by the Company, is a valid and legally binding obligation of Jefco,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, reorganization, moratorium
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
(c) No Conflict with Other Instruments, Laws. The execution, delivery and
performance by Jefco of this Agreement and the consummation of the transactions
contemplated hereby do not and will not result in the violation of, constitute a
default or require notice or consent under, or conflict with, (i) any term of
Jefco's certificate of incorporation or other constitutive documents; (ii) any
term of any mortgage, indenture, contract, agreement or instrument to which
Jefco or any of its subsidiaries is a party or by which Jefco, or any of Jefco's
subsidiaries is bound; (iii) any judgment, decree, order, law, statute, rule or
regulation applicable to Jefco or any of Jefco's subsidiaries; or result in the
creation or imposition of any material lien upon any property, asset or revenue
of Jefco, or any of Jefco's subsidiaries or the suspension, revocation,
forfeiture, impairment or non-renewal of any material permit, license,
authorization or approval applicable to Jefco or any of Jefco's subsidiaries or
their respective businesses or operations, or any of their respective assets or
properties except for any lien, suspension, revocation, forfeiture, impairment
or non-renewal that would not, individually or in the aggregate, have a Material
Adverse Effect.
(d) Title. Jefco has good and valid title to, and is the beneficial and
record owner of, the Brokerage Assets. Jefco owns the Brokerage Assets free and
clear of any liabilities, obligations, pledges, security interests, options,
rights of first refusal, rights of first offer, liens, claims, encumbrances or
charges.
(e) Government Consents. Except for the NASD Approval (as defined in the
Master Agreement), no consent, approval, order or authorization of or
registration, qualification, designation, declaration or filing with any
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domestic, foreign or local governmental authority on the part of Jefco or any of
Jefco's subsidiaries is required in connection with the valid execution,
delivery and performance under this Agreement, except to the extent that the
failure to obtain any such consent, approval, order, authorization,
registration, qualification, designation, declaration or filing would not,
individually or in the aggregate, have a Material Adverse Effect.
(f) Compliance with Laws/Permits. Neither Jefco nor any of Jefco's
subsidiaries is in violation of any applicable statute, rule, regulation, order
or restriction of any domestic, foreign or local government or any
instrumentality or agency thereof in respect of the Brokerage Assets or
otherwise relating to Jefco's ownership interest in the Brokerage Assets, which
violation could individually or in the aggregate have a Material Adverse Effect.
(g) Litigation. There is no action, suit, proceeding or investigation
pending or, to Jefco's knowledge, currently threatened against Jefco or any of
Jefco's subsidiaries that questions the validity of this Agreement, or the right
of Jefco to enter into this Agreement, or to consummate the transactions
contemplated hereby, or otherwise relating to Jefco's ownership interest in the
Brokerage Assets, or that would otherwise result in a Material Adverse Effect.
Neither Jefco nor any of Jefco's subsidiaries are parties or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality that would result in a Material Adverse
Effect.
(h) Bankruptcy. Jefco is not the subject of a voluntary or involuntary
petition for relief under the United States Bankruptcy Code or any other
jurisdiction, and is not a named defendant in any court action wherein the
relief requested or sought includes a receivership, assignment for benefit or
creditors, or other liquidating procedure. Jefco has no any intention of filing
any bankruptcy or insolvency proceeding for protection from its creditors. Jefco
is generally able to pay its debts in the ordinary course as they become due.
SECTION 4. CLOSINGS AND CAPITAL CONTRIBUTIONS.
(a) Closings. Subject to Section 4(b), the closing of the transactions
contemplated hereunder, including Jefco's contribution of Brokerage Assets to
the Company (the "Closing"), shall take place at such place as shall be mutually
agreed by the Company and Jefco, and on the date mutually agreed by the parties
that is not less than five (5) Business Days immediately following the
satisfaction of the conditions set forth in this Section 4 or on such other date
as shall be mutually agreed by the Company and Jefco (the "Closing Date").
(b) Conditions for the Company's Obligation to Consummate the Closing. The
obligation of the Company to consummate the Closing shall be subject to the
satisfaction of each of the following conditions, any of which may be waived, in
writing, by the Company:
(i) Except as disclosed in the Disclosure Schedule, (i) the
representations and warranties of Jefco in this Agreement shall be true and
correct in all respects on and as of the date of this Agreement, and (ii) Jefco
shall have performed and complied in all respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by it as of the Closing.
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(ii) The Company shall have been provided with a certificate
executed on behalf of Jefco by an authorized officer of Jefco to the effect set
forth in Section 4(b)(i).
(c) Additional Conditions for Obligation to Consummate the Closing. The
obligation of each of Jefco and the Company to consummate the Closing shall be
subject to the receipt by JPOF II of the NASD Approval.
SECTION 5. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES. All
covenants, agreements, representations and warranties of the parties contained
herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by Jefco or on its behalf and the contribution of
the Brokerage Assets.
SECTION 6. FURTHER ASSURANCES. Each party hereto shall execute, deliver,
file and record, or cause to be executed, delivered, filed and recorded, such
further agreements, instruments and other documents and take, or cause to be
taken, such further actions, as any other party hereto may reasonably request as
being necessary or advisable to effect or evidence the transactions contemplated
by this Agreement.
SECTION 7. GENERAL PROVISIONS.
(a) Notice. All notices, requests and other communications required or
permitted to be given by or to any party hereto pursuant to this Agreement shall
be in writing and shall be deemed to have been duly given or delivered for all
purposes hereof (i) when personally delivered to the intended recipient, (ii) on
the third Business Day after mailing, if mailed from within the United States by
first class U.S. mail, postage prepaid, (iii) on the date of sending, if sent by
prepaid telegram, facsimile transmission, telex or electronic mail, or (iv) on
the first Business Day after transmittal thereof to a reputable overnight
courier service for overnight delivery to the intended recipient. All such
notices, requests and other communications shall be addressed, in each case: (i)
if to the Company, to Jefferies High Yield Holdings, LLC, [INSERT ADDRESS],
facsimile: (___) ___-____, Attn: ______________________; and (ii) if to Jefco,
to Xxxxxxxxx & Company, Inc., [INSERT ADDRESS], facsimile: (___) ___-____, Attn:
______________________.
(b) Binding Nature. This Agreement shall be binding upon Jefco, the
Company and their respective successors and permitted assigns.
(c) Amendments. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated except with the written consent of Jefco and
the Company.
(d) No Assignment. Jefco shall not assign or otherwise transfer this
Agreement or any of its rights or obligations hereunder to any other Person, and
any such purported assignment or transfer shall be null and void, except that
Jefco may assign its rights to any wholly-owned subsidiary of Jefco, which
assignment shall not relieve Jefco from its obligations hereunder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one Agreement.
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(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to any rules
or principles of conflicts of law that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(g) Entire Agreement. This Agreement and the Operating Agreement and the
Schedules and Exhibits thereto, supersede any and all oral or written agreements
or understandings heretofore made, and contain the entire agreement of the
parties hereto or thereto, with respect to the subject matter hereof or thereof.
(h) Section Headings. Captions in this Agreement are for convenience only
and do not define, limit or otherwise affect any term of this Agreement. Unless
the context otherwise expressly requires, all reference herein to Sections are
to Sections of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
a duly authorized officer of each party hereto as of the date first above
written.
XXXXXXXXX & COMPANY, INC.
By:
-------------------------------------
Name:
Title:
JEFFERIES HIGH YIELD HOLDINGS, LLC
By:
-------------------------------------
Name:
Title:
6
EXHIBIT C
SERIES B CONTRIBUTION AGREEMENT
JEFFERIES HIGH YIELD HOLDINGS, LLC
SERIES B CONTRIBUTION AGREEMENT
This SERIES B CONTRIBUTION AGREEMENT (this "Agreement"), dated as of
______, 2007, by and among Xxxxxxxxx Group, Inc., a Delaware corporation
("JGI"), Xxxxxxxxx & Company, Inc., a Delaware corporation ("Jefco"), and
Jefferies High Yield Holdings, LLC, a Delaware limited liability company (the
"Company"). All capitalized terms used herein without definition shall have the
meanings ascribed to them in the Amended and Restated Limited Liability Company
Agreement of the Company, dated as of the date hereof (as such agreement may be
amended, restated, modified or supplemented from time to time, the "Operating
Agreement").
RECITALS
WHEREAS, Jefco is a wholly-owned indirect subsidiary of JGI; and
WHEREAS, the Company is a wholly-owned subsidiary of JGI; and
WHEREAS, Jefco is a member of Jefferies Partners Opportunity Fund
II, LLC, a Delaware limited liability company ("JPOF II"); and
WHEREAS, in accordance with and pursuant to the Master Agreement for
the Formation of a Limited Liability Company (the "Master Agreement"), Jefco
desires to commit to contribute capital to the Company and to make a Capital
Contribution to the Company or, at the direction of the Company, to a
wholly-owned subsidiary of the Company, in the form of a contribution of
securities and membership interests in JPOF II held by Jefco; and
WHEREAS, in accordance with and pursuant to the Master Agreement for
the Formation of a Limited Liability Company, JGI desires to commit to
contribute capital to the Company and to make a Capital Contribution to the
Company in the form of a cash contribution; and
WHEREAS, in accordance with and pursuant to the Operating Agreement
and the Series A Contribution Agreement, Jefco desires to contribute the
Brokerage Assets to the Company; and
WHEREAS, in accordance with and pursuant to the Operating Agreement
and the Series C Contribution Agreement, Leucadia desires to commit to
contribute capital to the Company and to make, or to cause to be made on its
behalf, an initial Capital Contribution to the Company in the form of a cash
contribution and a contribution of membership interests in JPOF II held by
LUK-HY FUND, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of Leucadia.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement and in the Operating Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. COMMITMENT. JGI hereby commits to contribute, or to cause Jefco
or another of its Affiliates (including Jefferies Employees Opportunity Fund,
LLC, a Delaware limited liability company ("JEOF")) to contribute to the Company
or, at the direction of the Company, to a wholly-owned subsidiary of the
Company, cash and/or securities having a Market Value (determined as of the date
of each such Capital Contribution) equal, in the aggregate (but exclusive of any
value attributed to the Brokerage Assets contributed by Jefco pursuant to the
Series A Contribution Agreement), to $600 million (the "Commitment" of JGI).
SECTION 2. CONTRIBUTIONS BY JEFCO; ACCEPTANCE BY THE COMPANY.
(a) Contributions by Jefco. In partial satisfaction of JGI's Commitment,
Jefco hereby agrees that, at the Closing, (a) Jefco will assign, convey,
transfer and deliver, as a Capital Contribution to the Company all of its right,
title and interest in the membership interests held by Jefco in JPOF II
(including the Class B Interest held by Jefco) and the capital account
maintained by JPOF II for Jefco with respect to such interests, including,
without, limitation, Jefco's right to receive allocations and distributions from
JPOF II (collectively, the "JPOF II Membership Interest"), and all other rights
with respect to the JPOF II Membership Interest under the operating agreement of
JPOF II (the "JPOF II Operating Agreement") and (b) Jefco will assign, convey,
transfer and deliver, as a Capital Contribution, Securities having a Market
Value equal to $__________ (the Securities comprising such position to be
referred to as the "Contributed Securities"; such contribution to be referred to
as the "Securities Contribution").
(b) Acceptance by the Company. The Company and Jefco hereby agree that,
in consideration for the JPOF II Membership Interest and the Securities
Contribution, Jefco shall be deemed to have made Capital Contributions in the
amounts of $__________ and $__________, respectively, for an aggregate initial
Capital Contribution in the amount of $__________, and that the value thereof
shall reduce the Commitment of JGI by an equal amount. The Company agrees to
accept the JPOF II Membership Interest and the Securities Contribution at the
Closing, and to assume all obligations with respect to the JPOF II Membership
Interest (as a member but not as a Manager) arising from and after the Closing
Date under the JPOF II Operating Agreement.
SECTION 3. CONTRIBUTIONS BY JGI; ACCEPTANCE BY THE COMPANY.
(a) Contributions by JGI. JGI hereby agrees that, at the Closing, JGI
will contribute to the Company in cash, as a Capital Contribution, an amount
equal to $__________ (the "Initial Cash Contribution").
(b) Acceptance by the Company. The Company and JGI hereby agree that, in
consideration for the Initial Cash Contribution made hereunder, JGI shall be
deemed to have made a Capital Contribution to the Company in the amount of
$__________. The Company agrees to, accept the Initial Cash Contribution at the
Closing, and that the value thereof shall reduce the Commitment of JGI by an
equal amount.
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SECTION 4. CONTRIBUTIONS BY JEOF; ACCEPTANCE BY THE COMPANY. The Company
and JGI hereby agree that any Capital Contribution made by JEOF to the Company
shall have such value as is agreed between the Company and JEOF at the time of
such Capital Contribution, and that the value thereof shall reduce the
Commitment of JGI by an equal amount.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF JEFCO AND JGI.
Subject to the Disclosure Schedule attached hereto as Exhibit A and incorporated
by reference herein (the "Disclosure Schedule"), each of Jefco and JGI (each a
"Contributor"), on a several and not joint basis, and solely as to itself as a
Contributor except as otherwise required by the context, hereby represents and
warrants to, and agrees with, the Company and each other Person who acquires an
interest in the Company as follows:
(a) Organization, Power and Authority. Contributor has all requisite
power and authority to execute and deliver this Agreement, and to perform its
obligations hereunder. Contributor (i) is duly and validly formed, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized; and (ii) has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now conducted and as
currently proposed to be conducted. Contributor is presently duly qualified,
licensed to do business and in good standing as a corporation in the State of
New York, and each jurisdiction where the failure to be so qualified or licensed
could reasonably be expected to have a material adverse effect on the business,
properties or financial condition of Contributor. Contributor is presently duly
qualified, licensed to do business and in good standing in each jurisdiction
where the failure to be so qualified or licensed could reasonably be expected to
have a material adverse effect on the business, properties or financial
condition of the Company (a "Material Adverse Effect").
(b) Execution; Enforceability. This Agreement has been duly executed and
delivered by Contributor and, assuming due authorization, execution and delivery
hereof by the Company, is a valid and legally binding obligation of Contributor,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, reorganization, moratorium
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
(c) No Conflict with Other Instruments, Laws. The execution, delivery
and performance by Contributor of this Agreement and the consummation of the
transactions contemplated hereby do not and will not result in the violation of,
constitute a default or require notice or consent under, or conflict with, (i)
any term of Contributor's certificate of incorporation or other constitutive
documents; (ii) any term of any mortgage, indenture, contract, agreement or
instrument to which Contributor or any of its subsidiaries is a party or by
which Contributor, or any of Contributor's subsidiaries is bound; (iii) any
judgment, decree, order, law, statute, rule or regulation applicable to
Contributor or any of Contributor's subsidiaries; or (iv) result in the creation
or imposition of any material lien upon any property, asset or revenue of
Contributor, or any of Contributor's subsidiaries or the suspension, revocation,
forfeiture, impairment or non-renewal of any material permit, license,
authorization or approval applicable to Contributor or any of Contributor's
subsidiaries or their respective businesses or operations, or any of their
respective assets or properties except for any lien, suspension, revocation,
forfeiture, impairment or non-renewal that would not, individually or in the
aggregate, have a Material Adverse Effect.
3
(d) Title. Jefco has good and valid title to, and is the beneficial and
record owner of, the JPOF II Membership Interest and the Securities. Jefco owns
the JPOF Membership Interest and the Securities free and clear of any
liabilities, obligations, pledges, security interests, options, rights of first
refusal, rights of first offer, liens, claims, encumbrances or charges.
(e) Government Consents. Except for the NASD Approval (as defined in the
Master Agreement), no consent, approval, order or authorization of or
registration, qualification, designation, declaration or filing with any
domestic, foreign or local governmental authority on the part of Contributor, or
any of Contributor's subsidiaries is required in connection with the valid
execution, delivery and performance under this Agreement, except to the extent
that the failure to obtain any such consent, approval, order, authorization,
registration, qualification, designation, declaration or filing would not,
individually or in the aggregate, have a Material Adverse Effect.
(f) Compliance with Laws/Permits. Neither Jefco nor any of Jefco's
subsidiaries is in violation of any applicable statute, rule, regulation, order
or restriction of any domestic, foreign or local government or any
instrumentality or agency thereof in respect of the JPOF II Membership Interest
or the Securities, or otherwise relating to Jefco's direct or indirect ownership
interest in JPOF II or the Securities, which violation could individually or in
the aggregate have a Material Adverse Effect.
(g) Litigation. There is no action, suit, proceeding or investigation
pending or, to Contributor's knowledge, currently threatened against Contributor
or any of Contributor's subsidiaries that questions the validity of this
Agreement, or the right of Contributor to enter into this Agreement, or to
consummate the transactions contemplated hereby, or otherwise relating to the
ownership interest in JPOF II or the Securities (in the case of Jefco), or that
would otherwise result in a Material Adverse Effect. Neither Contributor nor any
of Contributor's subsidiaries are parties or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality that would result in a Material Adverse Effect.
(h) Bankruptcy. Contributor is not the subject of a voluntary or
involuntary petition for relief under the United States Bankruptcy Code or any
other jurisdiction, and is not a named defendant in any court action wherein the
relief requested or sought includes a receivership, assignment for benefit or
creditors, or other liquidating procedure. Contributor has no intention of
filing any bankruptcy or insolvency proceeding for protection from its
creditors. Contributor is generally able to pay its debts in the ordinary course
as they become due.
4
SECTION 6. CLOSINGS AND CAPITAL CONTRIBUTIONS.
(a) Closings. Subject to Section 4(b), the closing of the transactions
contemplated hereunder, including the Initial Cash Contribution and Jefco's
contribution of the JPOF II Membership Interest and the Securities to the
Company (the "Closing"), shall take place at such place as shall be mutually
agreed by and between the Company and JGI, and on the date mutually agreed by
the parties that is not less than five (5) Business Days immediately following
the satisfaction of the conditions set forth in this Section 4 or on such other
date as shall be mutually agreed by and between the Company and JGI (the
"Closing Date").
(b) Conditions for the Company's Obligation to Consummate the Closing.
The obligation of the Company to consummate the Closing shall be subject to the
satisfaction of each of the following conditions, any of which may be waived, in
writing, by the Company:
(i) Except as disclosed in the Disclosure Schedule, (i) the
representations and warranties of each of Jefco and JGI in this Agreement shall
be true and correct in all respects on and as of the date of this Agreement, and
(ii) each of Jefco and JGI shall have performed and complied in all respects
with all covenants, obligations and conditions of this Agreement required to be
performed and complied with by it as of the Closing.
(ii) The Company shall have been provided with a certificate
executed on behalf of each of Jefco and JGI by an authorized officer of each of
Jefco and JGI to the effect set forth in Section 4(b)(i).
(c) Additional Condition for Obligation to Consummate the Closing. The
obligation of each of Jefco, JGI and the Company to consummate the Closing shall
be subject to the receipt by JPOF II of the NASD Approval.
SECTION 7. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES. All
covenants, agreements, representations and warranties of the parties contained
herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by each of Jefco or JGI or on its behalf and the
contribution of the Initial Cash Contribution, the Securities and the JPOF II
Membership Interest.
SECTION 8. FURTHER ASSURANCES. Each party hereto shall execute, deliver,
file and record, or cause to be executed, delivered, filed and recorded, such
further agreements, instruments and other documents and take, or cause to be
taken, such further actions, as any other party hereto may reasonably request as
being necessary or advisable to effect or evidence the transactions contemplated
by this Agreement.
SECTION 9. GENERAL PROVISIONS.
(a) Notice. All notices, requests and other communications required or
permitted to be given by or to any party hereto pursuant to this Agreement shall
be in writing and shall be deemed to have been duly given or delivered for all
purposes hereof (i) when personally delivered to the intended recipient, (ii) on
the third Business Day after mailing, if mailed from within the United States by
first class U.S. mail, postage prepaid, (iii) on the date of sending, if sent by
5
prepaid telegram, facsimile transmission, telex or electronic mail, or (iv) on
the first Business Day after transmittal thereof to a reputable overnight
courier service for overnight delivery to the intended recipient. All such
notices, requests and other communications shall be addressed, in each case: (i)
if to the Company, to Jefferies High Yield Holdings, LLC, [INSERT ADDRESS],
facsimile: (___) ___-____, Attn: ______________________; and (ii) if to Jefco or
JGI, to such party at [INSERT ADDRESS], facsimile: (___) ___-____, Attn:
____________________.
(b) Binding Nature. This Agreement shall be binding upon Jefco, JGI, the
Company and their respective successors and permitted assigns.
(c) Amendments. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except with the written consent of
Jefco, JGI, and the Company.
(d) No Assignment. Neither Jefco nor JGI shall assign or otherwise
transfer this Agreement or any of its rights or obligations hereunder to any
other Person, and any such purported assignment or transfer shall be null and
void, except that Jefco may assign its rights to any wholly-owned subsidiary of
Jefco, which assignment shall not relieve Jefco from its obligations hereunder,
and JGI may assign its rights to any wholly-owned subsidiary of JGI, which
assignment shall not relieve JGI from is obligations hereunder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one Agreement.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to any rules
or principles of conflicts of law that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(g) Entire Agreement. This Agreement, the other Related Agreements to
which Jefco, JGI and the Company are each a party, the Operating Agreement and
the Schedules and Exhibits thereto, supersede any and all oral or written
agreements or understandings heretofore made, and contain the entire agreement
of the parties hereto or thereto, with respect to the subject matter hereof or
thereof.
(h) Section Headings. Captions in this Agreement are for convenience
only and do not define, limit or otherwise affect any term of this Agreement.
Unless the context otherwise expressly requires, all reference herein to
Sections are to Sections of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
a duly authorized officer of each party hereto as of the date first above
written.
XXXXXXXXX & COMPANY, INC.
By:
-------------------------------------
Name:
Title:
XXXXXXXXX GROUP, INC.
By:
-------------------------------------
Name:
Title:
JEFFERIES HIGH YIELD HOLDINGS, LLC
By:
-------------------------------------
Name:
Title:
7
EXHIBIT D
SERIES C CONTRIBUTION AGREEMENT
JEFFERIES HIGH YIELD HOLDINGS, LLC
SERIES C CONTRIBUTION AGREEMENT
This SERIES C CONTRIBUTION AGREEMENT (this "Agreement"), dated as of
______, 2007, by and between Leucadia National Corporation, a Delaware
corporation ("Leucadia"), and Jefferies High Yield Holdings, LLC, a Delaware
limited liability company (the "Company"). All capitalized terms used herein
without definition shall have the meanings ascribed to them in the Amended and
Restated Limited Liability Company Agreement of the Company, dated as of the
date hereof (as such agreement may be amended, restated, modified or
supplemented from time to time, the "Operating Agreement").
RECITALS
WHEREAS, LUK-HY FUND, LLC, a Delaware limited liability company
("LUK-HY"), is a wholly-owned indirect subsidiary of Leucadia; and
WHEREAS, LUK-HY is a member of Jefferies Partners Opportunity Fund
II, LLC, a Delaware limited liability company ("JPOF II"); and
WHEREAS, in accordance with and pursuant to the Master Agreement for
the Formation of a Limited Liability Company (the "Master Agreement"), Leucadia
desires to commit to contribute capital to the Company and to make, or to cause
to be made on its behalf, an initial Capital Contribution to the Company in the
form of a cash contribution and a contribution of the membership interests in
JPOF II held by LUK-HY; and
WHEREAS, in accordance with and pursuant to the Operating Agreement
and the Series A Contribution Agreement, Jefco desires to contribute the
Brokerage Assets to the Company; and
WHEREAS, in accordance with and pursuant to the Operating Agreement
and the Series B Contribution Agreement, JGI and Jefco have agreed to commit
capital to the Company and to make Capital Contributions to the Company, or, at
the direction of the Company, to a wholly-owned subsidiary of the Company, in
the form of securities and cash, including the contribution of Jefco's
membership interests in JPOF II to the capital of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement and in the Operating Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. COMMITMENT. Leucadia hereby commits to contribute, or to cause
LUK-HY or another of its Affiliates to contribute to the Company, or, at the
direction of the Company, to a wholly-owned subsidiary of the Company, cash
and/or securities having a Market Value (determined as of the date of each such
Capital Contribution) equal, in the aggregate, to $600 million (the "Commitment"
of Leucadia).
SECTION 2. CONTRIBUTIONS. Leucadia hereby agrees that, at the Closing,
Leucadia will cause LUK-HY to (a) contribute to the Company in cash, as a
Capital Contribution, an amount equal to $__________ (the "Initial Cash
Contribution"), and (b) assign, convey, transfer and deliver, as a Capital
Contribution, all of its right, title and interest in, to and under the
operating agreement of JPOF II (the "JPOF II Operating Agreement") and the
capital account maintained by JPOF II for LUK-HY, including, without,
limitation, LUK-HY's membership interest in JPOF II and its right to receive
allocations and distributions from JPOF II under the JPOF II Operating Agreement
(collectively, the "JPOF II Membership Interest").
SECTION 3. ACCEPTANCE OF CONTRIBUTIONS BY THE COMPANY. The Company and
Leucadia hereby agree that, in consideration for the Initial Cash Contribution
and the contribution of its JPOF II Membership Interest, Leucadia shall be
deemed to have made a Capital Contribution in the amount of $__________ and
$__________, respectively, for an aggregate initial Capital Contribution in the
amount of $__________, and that the value thereof shall reduce the Commitment of
Leucadia by an equal amount. The Company agrees to accept the Initial Cash
Contribution and the JPOF II Membership Interest at the Closing, and thereupon
to assume all obligations with respect to the JPOF II Membership Interest
arising from and after the Closing Date under the JPOF II Operating Agreement.
SECTION 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LEUCADIA. Subject
to the Disclosure Schedule attached hereto as Exhibit A and incorporated by
reference herein (the "Disclosure Schedule"), Leucadia hereby represents and
warrants to, and agrees with, the Company and each other Person who acquires an
interest in the Company as follows:
(a) Organization, Power and Authority. Leucadia has all requisite power
and authority to execute and deliver this Agreement, and to perform its
obligations hereunder. Each of Leucadia and LUK-HY (i) is duly and validly
formed, validly existing and in good standing under the laws of the jurisdiction
in which it is organized; and (ii) has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now conducted
and as currently proposed to be conducted. Leucadia is presently duly qualified,
licensed to do business and in good standing as a corporation in the State of
New York, and each jurisdiction where the failure to be so qualified or licensed
could reasonably be expected to have a material adverse effect on the business,
properties or financial condition of Leucadia. LUK-HY is presently duly
qualified, licensed to do business and in good standing as a limited liability
company in the State of Delaware. LUK-HY is presently duly qualified, licensed
to do business and in good standing in each jurisdiction where the failure to be
so qualified or licensed could reasonably be expected to have a material adverse
effect on the business, properties or financial condition of the Company (a
"Material Adverse Effect").
(b) Execution; Enforceability. This Agreement has been duly executed and
delivered by Leucadia and, assuming due authorization, execution and delivery
hereof by the Company, is a valid and legally binding obligation of Leucadia,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, reorganization, moratorium
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
2
(c) No Conflict with Other Instruments, Laws. The execution, delivery
and performance by Leucadia of this Agreement and the consummation of the
transactions contemplated hereby do not and will not result in the violation of,
constitute a default or require notice or consent under, or conflict with, (i)
any term of Leucadia's certificate of incorporation or other constitutive
documents; (ii) any term of any mortgage, indenture, contract, agreement or
instrument to which Leucadia or any of its subsidiaries is a party or by which
Leucadia, or any of Leucadia's subsidiaries is bound; (iii) any judgment,
decree, order, law, statute, rule or regulation applicable to Leucadia, LUK-HY
or any of Leucadia's other subsidiaries; or (iv) result in the creation or
imposition of any material lien upon any property, asset or revenue of Leucadia,
or any of Leucadia's subsidiaries or the suspension, revocation, forfeiture,
impairment or non-renewal of any material permit, license, authorization or
approval applicable to Leucadia, LUK-HY or any of Leucadia's other subsidiaries
or their respective businesses or operations, or any of their respective assets
or properties except for any lien, suspension, revocation, forfeiture,
impairment or non-renewal that would not, individually or in the aggregate, have
a Material Adverse Effect.
(d) Title. LUK-HY has good and valid title to, and is the beneficial and
record owner of, the JPOF II Membership Interest, which membership interest is
owned by LUK-HY free and clear of any liabilities, obligations, pledges,
security interests, options, rights of first refusal, rights of first offer,
liens, claims, encumbrances or charges.
(e) Government Consents. Except for the NASD Approval (as defined in the
Master Agreement), no consent, approval, order or authorization of or
registration, qualification, designation, declaration or filing with any
domestic, foreign or local governmental authority on the part of Leucadia,
LUK-HY or any of Leucadia's other subsidiaries is required in connection with
the valid execution, delivery and performance under this Agreement, except to
the extent that the failure to obtain any such consent, approval, order,
authorization, registration, qualification, designation, declaration or filing
would not, individually or in the aggregate, have a Material Adverse Effect.
(f) Compliance with Laws/Permits. Neither Leucadia, LUK-HY nor any of
Leucadia's other subsidiaries is in violation of any applicable statute, rule,
regulation, order or restriction of any domestic, foreign or local government or
any instrumentality or agency thereof in respect of the JPOF II Membership
Interest or otherwise relating to Leucadia's or LUK-HY's direct or indirect
ownership interest in JPOF II, which violation could individually or in the
aggregate have a Material Adverse Effect.
(g) Litigation. There is no action, suit, proceeding or investigation
pending or, to Leucadia's knowledge, currently threatened against Leucadia,
LUK-HY or any of Leucadia's other subsidiaries that questions the validity of
this Agreement, or the right of Leucadia to enter into this Agreement, or to
consummate the transactions contemplated hereby, or otherwise relating to
Leucadia's or LUK-HY's direct or indirect ownership interest in JPOF II, or that
would otherwise result in a Material Adverse Effect. Neither Leucadia, LUK-HY
nor any of Leucadia's other subsidiaries are parties or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality that would result in a Material Adverse
Effect.
3
(h) Bankruptcy. Neither Leucadia nor LUK-HY is the subject of a
voluntary or involuntary petition for relief under the United States Bankruptcy
Code or any other jurisdiction, or is a named defendant in any court action
wherein the relief requested or sought includes a receivership, assignment for
benefit or creditors, or other liquidating procedure. Neither Leucadia nor
LUK-HY has any intention of filing any bankruptcy or insolvency proceeding for
protection from its creditors. Each of Leucadia and LUK-HY is generally able to
pay its debts in the ordinary course as they become due.
SECTION 5. CLOSINGS AND CAPITAL CONTRIBUTIONS.
(a) Closings. Subject to Section 4(b), the closing of the transactions
contemplated hereunder, including the Initial Cash Contribution and LUK-HY's
contribution of the JPOF II Membership Interest to the Company (the "Closing"),
shall take place at such place as shall be mutually agreed by the Company and
Leucadia, and on the date mutually agreed by the parties that is not less than
five (5) Business Days immediately following the satisfaction of the conditions
set forth in this Section 4 or on such other date as shall be mutually agreed by
the Company and Leucadia (the "Closing Date").
(b) Conditions for the Company's Obligation to Consummate the Closing.
The obligation of the Company to consummate the Closing shall be subject to the
satisfaction of each of the following conditions, any of which may be waived, in
writing, by the Company:
(i) Except as disclosed in the Disclosure Schedule, (i) the
representations and warranties of Leucadia in this Agreement shall be true and
correct in all respects on and as of the date of this Agreement, and (ii)
Leucadia shall have performed and complied in all respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by it as of the Closing.
(ii) The Company shall have been provided with a certificate
executed on behalf of Leucadia by an authorized officer of Leucadia to the
effect set forth in Section 4(b)(i).
(c) Additional Conditions for Obligation to Consummate the Closing.
(i) The obligation of each of Leucadia and the Company to
consummate the Closing shall be subject to the receipt by JPOF II of the NASD
Approval.
(ii) The obligation of Leucadia to consummate the Closing shall be
subject to (a) confirmation by the Company of its status and the status of
Jefferies High Yield Trading, LLC, as provided in Section 2.10 of the Operating
Agreement and (b) confirmation that written advice Leucadia has previously
received regarding its acquisition of Series C Interests shall not have been
withdrawn.
SECTION 6. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES. All
covenants, agreements, representations and warranties of the parties contained
herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by Leucadia or on its behalf and the contribution
of the Initial Cash Contribution and the JPOF II Membership Interest.
4
SECTION 7. FURTHER ASSURANCES. Each party hereto shall execute, deliver,
file and record, or cause to be executed, delivered, filed and recorded, such
further agreements, instruments and other documents and take, or cause to be
taken, such further actions, as any other party hereto may reasonably request as
being necessary or advisable to effect or evidence the transactions contemplated
by this Agreement.
SECTION 8. GENERAL PROVISIONS.
(a) Notice. All notices, requests and other communications required or
permitted to be given by or to any party hereto pursuant to this Agreement shall
be in writing and shall be deemed to have been duly given or delivered for all
purposes hereof (i) when personally delivered to the intended recipient, (ii) on
the third Business Day after mailing, if mailed from within the United States by
first class U.S. mail, postage prepaid, (iii) on the date of sending, if sent by
prepaid telegram, facsimile transmission, telex or electronic mail, or (iv) on
the first Business Day after transmittal thereof to a reputable overnight
courier service for overnight delivery to the intended recipient. All such
notices, requests and other communications shall be addressed, in each case: (i)
if to the Company, to Jefferies High Yield Trading, LLC, [INSERT ADDRESS],
facsimile: (___) ___-____, Attn: ______________________; and (ii) if to
Leucadia, to Leucadia National Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, facsimile: (000) 000-0000, Attn: Xxxxxx X. Xxxxxxxxx.
(b) Binding Nature. This Agreement shall be binding upon Leucadia, the
Company and their respective successors and permitted assigns.
(c) Amendments. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except with the written consent of
Leucadia and the Company.
(d) No Assignment. Leucadia shall not assign or otherwise transfer this
Agreement or any of its rights or obligations hereunder to any other Person, and
any such purported assignment or transfer shall be null and void, except that
Leucadia may assign its rights to any wholly-owned subsidiary of Leucadia, which
assignment shall not relieve Leucadia from its obligations hereunder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one Agreement.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to any rules
or principles of conflicts of law that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(g) Entire Agreement. This Agreement, the other Related Agreements to
which Leucadia and the Company are each a party, the Operating Agreement and the
Schedules and Exhibits thereto and the side letter dated the date hereof between
Leucadia and the Company, supersede any and all oral or written agreements or
understandings heretofore made, and contain the entire agreement of the parties
hereto or thereto, with respect to the subject matter hereof or thereof.
5
(h) Section Headings. Captions in this Agreement are for convenience
only and do not define, limit or otherwise affect any term of this Agreement.
Unless the context otherwise expressly requires, all reference herein to
Sections are to Sections of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
a duly authorized officer of each party hereto as of the date first above
written.
LEUCADIA NATIONAL CORPORATION
By:
-------------------------------------
Name:
Title:
JEFFERIES HIGH YIELD HOLDINGS, LLC
By:
-------------------------------------
Name:
Title:
7
EXHIBIT E
SERVICES AGREEMENT
SERVICES AGREEMENT
SERVICES AGREEMENT, dated as of _______, 2007, (this "Agreement"),
between JEFFERIES HIGH YIELD HOLDINGS, LLC, a Delaware limited liability company
("Holdings"), JEFFERIES HIGH YIELD TRADING, LLC, a Delaware limited liability
company and a wholly-owned subsidiary of Holdings (the "Company"), and XXXXXXXXX
& COMPANY, INC., a Delaware corporation ("Jefco").
WHEREAS, the Company has been organized for the purpose of
conducting a securities brokerage business;
WHEREAS, Holdings owns all of the outstanding limited liability
company interests of the Company;
WHEREAS, the Company and Holdings each desires to avail itself of
certain personnel and facilities available to Jefco, and desires to have Jefco
perform for it various support services;
WHEREAS, Jefco is willing to make such personnel and facilities
available to, and to perform such services for, the Company and Holdings on the
terms and conditions hereinafter set forth; and
WHEREAS, Jefco has received a copy of the Amended and Restated
Limited Liability Company Agreement of the Holdings, dated as of _______, 2007
(as amended and restated and in effect from time to time, the "LLC Agreement";
capitalized terms used herein without definition shall have the respective
meanings given to such terms in the LLC Agreement).
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Appointment of Servicer. The Company hereby appoints Jefco as
Servicer of the Company (in such capacity, the "Servicer") and Jefco hereby
accepts such appointment.
2. Designation of Employees.
(a) The Servicer will second to the Company its employees, listed on
Schedule A, to serve as employees of the Company (as such, the "Employees")
during the term of this Agreement; provided that the Servicer shall have the
authority to terminate the employment of any of the Employees with the Servicer,
and/or to remove any Employee from Schedule A, so long as such termination or
removal is, in the reasonable judgment of the Servicer, in the best interest of
the Company and/or the Servicer; provided, further, that the Servicer shall take
commercially reasonable efforts to ensure that the termination of Employees will
not result in the Company's inability to conduct its business in compliance with
applicable Law; and provided further, that the Servicer may amend Schedule A
from time to time in its discretion, so long as no person shall continue as an
8
Employee if such person has been removed from Schedule A or ceased to be an
employee of Jefco for any reason. The Employees shall become "associated
persons" of the Company immediately following such secondment to the Company,
and shall remain "associated persons" of Jefco, in accordance with applicable
rules and regulations of NASD until termination of this Agreement.
(b) Those Employees listed in Table 1 of Schedule A are referred to
as the "Research and Trading Employees". All expense for compensation and
benefits for the Research and Trading Employees will be borne by the Servicer as
a Covered Expense (as defined below).
(c) Those Employees listed in Table 2 of Schedule A are referred to
as the "Administrative Employees". All expense for compensation and benefits for
the Administrative Employees for services to the Company or Holdings will be
borne by the Company or Holdings, as the case may be; provided that the
Administrative Employees will remain on the payroll of the Servicer and the
Company and/or Holdings will reimburse the Servicer from time to time for such
expense as provided in Section 8. For this purpose, (i) awards of shares of the
common stock or common stock equivalents of Servicer's publicly-traded parent
company shall be valued as of the date of grant at the closing price for such
shares on the New York Stock Exchange on the date of grant and (ii) compensation
in the form of options, if any, or other derivative instruments that would
result in a material effect on general and administrative costs will be subject
to valuation in accordance with principles to be adopted by the Board from time
to time in its reasonable discretion.
3. Services. In addition to designating the Employees to serve as
employees of the Company and/or Holdings during the term of this Agreement, the
Servicer will provide the Company and/or Holdings with the following services
(collectively, the "Services"):
(a) Accounting Services, including, but not limited to,
(i) such accounting services as may be required by Holdings
or the Company to assure that its books and records meet with both
applicable regulatory requirements and generally accepted accounting
principles;
(ii) preparation, for the Company's submission, of all
required regulatory accounting reports, including but not limited to FOCUS
Parts I and II;
(iii) cooperation with any certified public accounting firm
appointed by the Company to prepare its annual audited reports or for any
other reasonable purpose; provided that the Servicer shall, on a timely
basis, provide any required information in any format specified, so long
as both form and substance are reasonable in the circumstances; and
(iv) additional support in connection with the Company's
obligations to report to its members, including in connection with the
preparation of tax returns, member capital accounts, allocations and
similar matters.
2
The foregoing shall not be deemed to include (and shall not include) other
accounting services such as audit, preparation of Forms K-1 for members of
Holdings or the Company, or providing accounting, securities inventory and
regulatory haircut software.
(b) Compliance Services, including, but not limited to,
(i) assistance in maintaining registrations, and keeping
supervisory procedures and compliance manuals current and in performing
website review for advertising compliance;
(ii) on an annual basis, performing a review or audit of the
Company's business, conducting compliance meetings with registered
individuals, and analyzing the Firm Element Continuing Education, and
providing the Company with a Continuing Education Plan;
(iii) on a daily basis, surveillance of trading, review and
approval of daily comment for compliance with advertising policies, and
Chinese Wall procedures;
(iv) as needed from time to time, (A) acting as regulatory
liaison, advising on applicable rules and regulation, preparing draft
updates to Forms U-4 and BD, tracking the regulatory element of the
Continuing Education Plan, and administering the Firm Element of
Continuing Education; (B) assisting with regulatory investigations; (C)
addressing customer complaints; (D) addressing special registration
problems; (E) maintaining the Company's Compliance Manual; and (F)
maintaining the Company's Supervisory Manual.
(c) Personnel Services, including, but not limited to,
(i) providing those services customarily performed by an
internal personnel and/or human resources department, including services
associated with the recruitment, hiring and termination of employees by
the Company and Holdings;
(ii) maintaining files on each employee of the Company and
Holdings as required by good business practice and by applicable local,
state and/or federal law or regulation;
(iii) advice on compliance with applicable local, state and/or
federal fair employment practices law and regulation; and
(iv) providing employee benefit plans, policies and
compensation arrangements including without limitation retirement
benefits, group life, health or dental insurance, workers' compensation
insurance, long-term disability insurance, sick leave, vacation leave, pay
policies, incentive plans and administration of executive perquisites.
(d) Operations Services, including operations support consistent
with the Clearing Agreement as amended and in effect from time to time.
3
(e) Legal Services, including consulting with Jefco's Compliance
Department on regulatory issues; review and approval of standard contracts and
agreements; advice regarding maintaining the books and records of Holdings and
the Company; supervision of regulatory and other investigations, claims,
disputes and litigation of any type; supervision of outside counsel; preparation
of material to be included in public reporting documents, including without
limitation proxy statements, reports on Forms 10-Q and 10-K and other reports
required under the Securities Act and the Exchange Act; and qualification of
Holdings and the Company to do business in foreign jurisdictions.
(f) Technology Services, including, but not limited to,
(i) providing and maintaining such computer software as has
been developed by Jefco for purposes of managing the Business, together
with a royalty-free non-exclusive license thereto;
(ii) coordinating with outside vendors, including software
and systems development companies, on behalf of Holdings and the Company;
and
(iii) subject to the availability of adequate Jefco personnel,
providing technology support to Holdings and the Company.
(g) Facilities, including office space and general facilities
support.
(h) Other Services as the Servicer or the Company may determine
necessary or desirable from time to time including, without limitation, such
services as may be necessary for the Company to comply with regulatory
requirements then applicable to the Company.
(i) Service-Related Overhead. It is understood and agreed that the
hourly or other amounts charged by the Servicer or third party vendors in
connection with the provision of the foregoing Services may include a reasonable
allocation of overhead expense ("Service-Related Overhead"); provided that
amounts charged to the Servicer by any third party vendor shall be passed
through to the Company or Holdings without markup.
4. Control by the Company. The Servicer shall submit such
periodic reports to the Company or Holdings regarding the Servicer's activities
hereunder as the Company or Holdings may reasonably request, and a
representative of the Servicer shall be available to attend meetings of the
Board and the board of directors of the Company.
5. Conduct of the Servicer.
(a) All actions engaged in by the Servicer hereunder shall at all
times conform to and be in accordance with the requirements imposed by:
(i) any provisions of applicable Law, including without
limitation, the requirements of the NASD; and
(ii) the provisions of the LLC Agreement and such policies as
may be adopted from time to time by the Board; provided, however, that the
Servicer shall not be bound by any amendment, supplement or revision of
4
any of the foregoing until it has been given notice thereof in accordance
with Section 14(a) hereof.
(b) The Company will maintain copies of this Agreement pursuant to
Rules 17a-3 and 17a-4 under the Exchange Act and all related supporting
documents provided by Holdings or Jefco.
(c) The parties hereby agree to permit inspects of their books and
records by the NASD and other regulatory organizations having jurisdiction with
respect to payment or allocation of expenses by Servicer or its Affiliates that
are proportionately attributable to the Company, and shall take such other
actions as may be required under applicable Law to demonstrate that it is in
compliance with the financial responsibility rules regarding the expenses
covered by this Agreement.
(d) The parties agree that the Company will notify the NASD in the
event this Agreement is amended, terminated or superseded by another agreement
that addresses the matters set forth herein.
6. Fees. As full compensation for the Covered Expenses, Holdings
shall pay (or shall cause the Company to pay) to the Servicer the Management
Fee, which shall be calculated and accrued as provided in the LLC Agreement. The
Management Fee shall be paid within 10 days after the last day of each fiscal
quarter of Holdings.
7. Expenses of the Company and Holdings. The Servicer shall bear
(a) expense for compensation of the Research and Trading Employees, including
benefits, and (b) its overhead expenses (other than Service-Related Overhead),
including the expense of providing facilities, furniture and fixtures, cafeteria
services, telecommunications, computer hardware, information systems support and
business software (excluding for this purpose expense associated with provision
of trading system software, front-office trade processing software,
communication and analytical systems software (e.g. Bloomberg) and systems or
software specifically developed for use by the Company or Holdings) (the items
in clause (a) and clause (b) collectively are referred to as "Covered
Expenses"). Except for the Covered Expenses, the Company and Holdings shall each
bear all its direct and indirect expenses, including any expense reasonably
incurred by Holdings, the Company, the Servicer and any other person in
performing the Services for or on behalf of Holdings or the Company. To the
extent that any expense relates to the operations of Holdings or the Company and
one or more other accounts managed by the Servicer or any of its Affiliates, the
Servicer shall generally allocate such expenses equitably so as to reflect the
proportionate benefits to be received by Holdings or the Company, on the one
hand, and such other account(s) or any of the Servicers other Affiliates, on the
other hand. Attached as Exhibit A are the Expense Allocation Guidelines to be
used by the Servicer for xxxxxxxx to Holdings and the Company hereunder. The
Expense Allocation Guidelines (i) indicate estimates of costs anticipated by the
Servicer with respect to Services described in Section 3, (ii) set forth
guidelines regarding the allocation of expenses between Jefco, on the one hand,
and Holdings and/or the Company, on the other hand, and (iii) contain an
illustration regarding differences in the cost of operation under this Services
Agreement from costs that were applied for fiscal year 2006 for JPOF II that
will serve as an estimate of expenses for the first twelve months of operations
of the Company, excluding adjustments for inflation. Under no circumstances
5
shall any charges by the Servicer to Holdings or the Company include any profit
margin.
8. Reimbursement by the Company. Holdings will (or will cause the
Company) to reimburse the Servicer for such expense as the Servicer may incur on
behalf of Holdings and the Company, other than the Covered Expenses. The
Servicer may rely upon, in its discretion, the advice of legal counsel to
Holdings or the Company in connection with the performance of its activities on
behalf of Holdings and the Company hereunder, and Holdings and the Company shall
bear full responsibility therefor and for the expense of any fees and
disbursements arising therefrom; provided, however, that the provisions of
Section 9 shall govern any claim for exculpation or indemnification made by the
Servicer.
9. Exculpation; Indemnification of Servicer.
(a) None of the Servicer nor any of its Affiliates, nor any of their
respective members, managers, partners, directors, officers, or employees (each,
an "Indemnified Person") shall be liable to the Company or Holdings for any acts
or omissions arising out of or in connection with this Agreement, Holdings, the
Company or any investment made or held by the Company, unless such action or
inaction was made in bad faith or constitutes fraud, willful misconduct or gross
negligence.
(b) To the fullest extent permitted by law, the Company shall
indemnify the Indemnified Persons against any loss, cost or expense suffered or
sustained by an Indemnified Person by reason of (i) any acts, omissions or
alleged acts or omissions arising out of, or in connection with, the Company,
any investment made or held by the Company or the Agreement, including, without
limitation, any judgment, award, settlement, reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding, or claim, provided that such acts, omissions or
alleged acts or omissions upon which such actual or threatened action,
proceeding or claim are based were not made in bad faith or did not constitute
fraud, willful misconduct or gross negligence by such Indemnified Person, or
(ii) any acts or omissions, or alleged acts or omissions, of any broker or agent
of any Indemnified Person, provided that such broker or agent was selected,
engaged or retained by the Indemnified Person with reasonable care. Each of the
Servicer and Indemnified Persons may consult with counsel and accountants in
respect of Company and Holdings affairs and be fully protected and justified in
any action or inaction that is taken in accordance with the advice or opinion of
such counsel and/or accountants, provided that they shall have been selected
with reasonable care.
(c) The Company and/or Holdings shall advance to an Indemnified
Person reasonable attorneys' fees and other costs and expenses incurred in
connection with the defense of any action or proceeding arising out of such
performance or non-performance. The Servicer agrees, and each other Indemnified
Person will agree as a condition to any such advance, that in the event it
receives any such advance, it shall reimburse the Company and/or Holdings for
such fees, costs and expenses to the extent that it shall be determined that it
was not entitled to indemnification under this Section 9.
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(d) Holdings shall cause the Company to fulfill the obligations of
the Company under this Section 9.
10. Activities of the Servicer and Others. Subject to the terms of
the LLC Agreement, the Servicer and the members, managers, partners, employees,
officers and affiliates of the Servicer, who may or may not also be
shareholders, directors, employees or officers of Holdings and/or the Company,
may engage, simultaneously with their management support activities on behalf of
Holdings and the Company, in other businesses and make investments for their own
accounts, and may render services similar to those described in this Agreement
for other individuals, companies, trusts or persons, and shall not by reason of
so engaging in other businesses, making such investments or rendering of
services for others be deemed to be acting in conflict with the interests of
Holdings and the Company. Notwithstanding the foregoing, the Servicer shall
devote such time to the Services as it deems necessary to support the activities
of Holdings and the Company. Subject to the terms of the LLC Agreement, the
members, managers, partners, directors, employees or officers of the Servicer or
its Affiliates, in their individual capacities may engage in Securities
transactions which may be different from, and contrary to, transactions engaged
in by the Company and/or Holdings.
11. Term. This Agreement shall remain in effect through
__________, 2012, and, upon extension of the term of any Member Interest under
Section 6.1 of the LLC Agreement, from year to year thereafter, unless earlier
terminated by the Servicer at any time after the [third] anniversary of the date
of this Agreement upon not less than ___ days written notice to Holdings
provided that a reasonable substitute shall have been identified and approved by
the Board of Holdings prior to the effective date of any such termination, or in
accordance with Section 3.1(a)(xviii) or Section 3.7(d) of the LLC Agreement.
12. Arm's-Length Agreement. The Company and the Servicer each
represents to, warrants and agrees with the other that this Agreement
constitutes an arm's-length agreement between the Company and the Servicer. The
Board and the Company have each reviewed and approved this Agreement and all of
its terms.
13. Attorney-in-Fact.
(a) The Company and Holdings each hereby appoints the Servicer as
attorney-in-fact for the Company and Holdings, with full authority in the place
and stead of the Company or Holdings, as the case may be, as shall be required
or reasonably desirable for the Servicer to perform its services hereunder;
(i) to execute and deliver on behalf of Holdings and the
Company all payment and transfer instructions and all other documents
arising in the ordinary course of business and financial affairs of
Holdings and the Company;
(ii) to execute and deliver on behalf of Holdings or the
Company any and all notices, consents and other communications under the
LLC Agreement and any Contract of Holdings or the Company, except that, to
the extent such notices, consents or other communications require approval
of an Officer or the Board, such execution and delivery shall be subject
to such approval;
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(iii) to take such other actions in the ordinary course of
Holdings' or the Company's business on behalf of Holdings or the Company
as the Servicer may deem necessary or desirable to accomplish the purposes
of this Agreement, including to ask, demand, collect, xxx for, recover,
receive and give acquittance for moneys due or to become due in connection
with the Assets of Holdings or the Company, to receive, endorse and
collect any drafts or other instruments, documents and chattel paper in
connection therewith and to file any claims; and
(iv) to take such other actions as the Servicer may deem
necessary or advisable to accomplish the purposes of Holdings or the
Company, including the giving of notices, the delivery of assignments and
the delivery of instructions and documents;
provided that this grant of power of attorney will expire, and the Servicer will
cease to have any power to act as the attorney-in-fact of Holdings and the
Company, upon termination of this Agreement in accordance with its terms.
(b) Each of Holdings and the Company hereby authorizes the Servicer
to transfer and deposit funds and Securities to and in such bank, securities,
escrow and clearing accounts as may be established in the name of Holdings
and/or the Company and to cause operating expenses of Holdings and/or the
Company to be paid from such deposited funds.
14. Miscellaneous.
(a) Notices. Any notice, consent or other communication made or
given in connection with this Agreement shall be in writing and shall be deemed
to have been duly given when delivered by hand or facsimile, two days after
being sent via overnight courier (or at such earlier time as such overnight
courier shall have committed to effect delivery but in no event less than one
day) or five days after being mailed by certified mail, return receipt
requested, as follows:
If to the Servicer:
Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, General Counsel
Telephone: 000-000-0000
Facsimile No.: 000-000-0000
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With a duplicate copy to :
Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, Chief Financial
Officer
Telephone: 000-000-0000
Facsimile No.: 000-000-0000
If to Holdings:
Jefferies High Yield Holdings, LLC
The Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention Xxxxxx X. Xxxxx, Chief Financial Officer
Telephone: 000-000-0000
Facsimile No.: 000-000-0000
If to the Company:
Jefferies High Yield Trading, LLC
The Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention Xxxxxx X. Xxxxx, Chief Financial Officer
Telephone: 000-000-0000
Facsimile No.: 000-000-0000
(b) Entire Agreement. This Agreement contains all of the terms
agreed upon or made by the parties relating to the subject matter of this
Agreement, and supersedes all prior and contemporaneous agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting such subject matter.
(c) Amendments and Waivers. No provision of this Agreement may be
amended, modified, waived or discharged except as agreed to in writing by the
parties. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver thereof or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(d) Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of Holdings, the Company, the Servicer, each
Indemnified Person and their respective successors and permitted assigns. Any
person that is not a signatory to this Agreement but is nevertheless conferred
9
any rights or benefits hereunder (e.g., members of the Servicer and others who
are entitled to indemnification hereunder) shall be entitled to such rights and
benefits as if such person were a signatory hereto, and the rights and benefits
of such person hereunder may not be impaired without such person's express
written consent. No party to this Agreement may assign or delegate, by operation
of law or otherwise, all or any portion of its rights, obligations or
liabilities under this Agreement without the prior written consent of the other
parties to this Agreement; provided, however, that the Servicer may assign or
delegate all or any portion of its rights, obligations or liabilities under this
Agreement to any person or entity that it controls, is controlled by or in
common control with the Servicer.
(e) Governing Law. Notwithstanding the place where this Agreement
may be executed by any of the parties thereto, the parties expressly agree that
all terms and provisions hereof shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely in that State.
(f) No Third Party Beneficiaries. No provision of this Agreement is
intended to confer upon any person, including any Employee or any employee of
Jefco, other than the parties hereto, any rights or remedies hereunder; except
that in the case of Section 9, the Indemnified Persons and their respective
heirs, executors, administrators, legal representatives, successors and assigns
are intended third party beneficiaries of Section 9 and shall have the right to
enforce this section in their own names.
(g) Headings. The headings contained in this Agreement are intended
solely for convenience and shall not affect the rights of the parties to this
Agreement.
(h) Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Agreement.
(i) Survival. The provisions of Sections 6, 7, 8, 9, 14(d), 14(e)
and 14(f) hereof shall survive the termination of this Agreement.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be executed as of the date first written above.
JEFFERIES HIGH YIELD HOLDINGS, LLC
By:
---------------------------------
Name:
Title:
JEFFERIES HIGH YIELD TRADING, LLC
By:
---------------------------------
Name:
Title:
XXXXXXXXX & COMPANY, INC.
By:
---------------------------------
Name:
Title:
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