-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ehFr/gvAmqxdHptqnklrPyic/fd/IbguO7GMTcO72fhWGHQEz3X4WISDlmGNw0CO T+jxMY36WoTPBLbYAk5WTA== 0000950148-94-000344.txt : 19940810 0000950148-94-000344.hdr.sgml : 19940810 ACCESSION NUMBER: 0000950148-94-000344 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19940624 FILED AS OF DATE: 19940805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JEFFERIES GROUP INC CENTRAL INDEX KEY: 0000717867 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 952848406 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11669 FILM NUMBER: 94542046 BUSINESS ADDRESS: STREET 1: 11100 SANTA MONICA BLVD CITY: LOS ANGELES STATE: CA ZIP: 90025 BUSINESS PHONE: 3104451199 MAIL ADDRESS: STREET 1: 11100 SANTA MONICA BLVD STREET 2: 10TH FLR CITY: LOS ANGELES STATE: CA ZIP: 90025 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 24, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 0-11669 JEFFERIES GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 95-2848406 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11100 Santa Monica Boulevard, Los Angeles, California 90025 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (310) 445-1199 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of June 24, 1994, the Registrant had 5,664,616 common shares, $.01 par value, outstanding. Page 1 of 21 Pages 2 JEFFERIES GROUP, INC. AND SUBSIDIARIES INDEX TO QUARTERLY REPORT ON FORM 10-Q JUNE 24, 1994
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Financial Condition - June 24, 1994 (unaudited) and December 31, 1993 3 Consolidated Statements of Earnings - Three Months and Six Months Ended June 24, 1994 (unaudited) and June 25, 1993 (unaudited) 4 Consolidated Statements of Changes in Stockholders' Equity - Six Months Ended June 24, 1994 (unaudited) 5 Consolidated Statements of Cash Flows - Six Months Ended June 24, 1994 (unaudited) and June 25, 1993 (unaudited) 6 Notes to Consolidated Financial Statements (unaudited) 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 4. Submission of Matters to a Vote of Security Holders 18 PART II. - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 19
Page 2 of 21 Pages 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS JEFFERIES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (DOLLARS IN THOUSANDS)
June 24, December 31, 1994 1993 ------------ ------------ ASSETS (unaudited) Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 94,851 $ 26,910 Receivable from brokers and dealers . . . . . . . . . . . . . . . . . 1,210,431 1,069,384 Receivable from customers, officers and directors . . . . . . . . . . 89,360 116,935 Securities owned . . . . . . . . . . . . . . . . . . . . . . . . . . 139,994 114,808 Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . 19,936 18,638 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,437 41,728 ----------- ----------- $ 1,601,009 $ 1,388,403 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 370 $ 45,928 Payable to brokers and dealers . . . . . . . . . . . . . . . . . . . 835,886 615,216 Payable to customers . . . . . . . . . . . . . . . . . . . . . . . . 406,733 405,726 Securities sold, not yet purchased . . . . . . . . . . . . . . . . . 49,968 74,235 Accrued expenses and other liabilities . . . . . . . . . . . . . . . 90,402 92,772 ----------- ----------- 1,383,359 1,233,877 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,405 9,968 Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . 5,415 -- ----------- ----------- 1,448,179 1,243,845 ------------ ----------- Stockholders' equity: Preferred stock, $.01 par value. Authorized 1,000,000 shares; none issued . . . . . . . . . . . -- -- Common stock $.01 par value. Authorized 25,000,000 shares; issued 8,989,610 shares in 1994 and 8,907,817 shares in 1993 . . . . . . . . . . . . . . . . . . . . . . . . 90 89 Additional paid-in capital . . . . . . . . . . . . . . . . . . . 37,172 34,930 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 156,989 146,949 Less treasury stock, at cost; 3,324,994 shares in 1994; and 3,212,390 shares in 1993 . . . . . . . . . (39,866) (35,695) Less currency translation adjustments . . . . . . . . . . . . . . (492) (652) Less additional minimum pension liability . . . . . . . . . . . . (1,063) (1,063) ------------ ------------ Total stockholders' equity . . . . . . . . . . . . . . . . . 152,830 144,558 ------------ ---------- $ 1,601,009 $ 1,388,403 ============ ===========
See accompanying unaudited notes to consolidated financial statements. Page 3 of 21 Pages 4 JEFFERIES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended --------------------------- --------------------------- June 24, June 25, June 24, June 25, 1994 1993 1994 1993 ------------ ------------ ------------ ------------ Revenues: Commissions . . . . . . . . . . . . . . . . . . . $ 38,092 $ 30,408 $ 77,746 $ 61,613 Principal transactions . . . . . . . . . . . . . 13,500 19,262 31,154 44,844 Corporate finance . . . . . . . . . . . . . . . . 4,744 14,027 13,619 21,682 Interest . . . . . . . . . . . . . . . . . . . . 11,160 4,472 19,498 7,998 Other . . . . . . . . . . . . . . . . . . . . . . (257) 1,788 912 2,168 ------------ ------------ ------------ ------------ Total revenues . . . . . . . . . . . . . . . . 67,239 69,957 142,929 138,305 Interest . . . . . . . . . . . . . . . . . . . . 9,309 3,682 15,797 6,576 ------------ ------------ ------------ ------------ Revenues, net of interest expense . . . . . . . . 57,930 66,275 127,132 131,729 ------------ ------------ ------------ ------------ Non-interest expenses: Compensation and benefits . . . . . . . . . . . 32,957 36,297 69,574 72,885 Floor brokerage and clearing fees . . . . . . . . 4,402 3,823 8,801 7,449 Telecommunications and data processing services . . . . . . . . . . . . . . . . . . . 5,219 4,640 9,723 8,731 Occupancy and equipment rental . . . . . . . . . 3,621 2,944 6,977 5,995 Other . . . . . . . . . . . . . . . . . . . . . . 10,729 7,845 20,809 14,672 ------------ ------------ ------------ ------------ Total non-interest expenses . . . . . . . . . 56,928 55,549 115,884 109,732 ------------ ------------ ------------ ------------ Operating income . . . . . . . . . . . . . . . . . 1,002 10,726 11,248 21,997 Other income: Gain on initial public offering of Investment Technology Group, Inc. . . . . . . . 8,257 -- 8,257 -- ------------ ------------ ------------ ------------ Earnings before income taxes, minority interest and cumulative effect of change in accounting principle . . . . . . . . . 9,259 10,726 19,505 21,997 Income taxes . . . . . . . . . . . . . . . . . . . 4,275 4,654 8,682 8,659 Minority interest . . . . . . . . . . . . . . . . . 202 -- 202 -- ------------ ------------ ------------ ------------ Earnings before cumulative effect of change in accounting principle . . . . . . . . . 4,782 6,072 10,621 13,338 Cumulative effect on prior years of change in accounting principle . . . . . . . . . -- -- -- 1,358 ------------ ------------ ------------ ------------ Net earnings . . . . . . . . . . . . . . . . . . . $ 4,782 $ 6,072 $ 10,621 $ 14,696 ============ ============ ============ ============ Earnings per share of common stock: Primary earnings per share - Earnings before cumulative effect of change in accounting principle . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 2.76 Cumulative effect on prior years of change in accounting principle . . . . . . . -- -- -- .28 ------------ ------------ ------------ ------------ Net earnings . . . . . . . . . . . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 3.04 ============ ============ ============ ============ Fully diluted earnings per share - Earnings before cumulative effect of change in accounting principle . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.27 Cumulative effect on prior years of change in accounting principle . . . . . . . -- -- -- .22 ------------ ------------ ------------ ------------ Net earnings . . . . . . . . . . . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.49 ============ ============ ============ ============ Weighted average shares of common stock: Primary . . . . . . . . . . . . . . . . . . . . 6,245 4,838 6,150 4,835 Fully diluted . . . . . . . . . . . . . . . . . 6,246 6,200 6,151 6,207
See accompanying unaudited notes to consolidated financial statements. Page 4 of 21 Pages 5 JEFFERIES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 24, 1994 (DOLLARS IN THOUSANDS)
Currency Add'l Total Additional Trans- Minimum Stock- Common Paid-in Retained Treasury lation Pension holders' Stock Capital Earnings Stock Adjustment Liability Equity ------ ---------- ---------- ---------- ---------- --------- ---------- Balance, December 31, 1993. $ 89 $ 34,930 $146,949 $(35,695) $ (652) $ (1,063) $144,558 Exercise of stock options (91,793 shares).. 1 2,242 145 2,388 Purchase of 126,800 shares of treasury stock............. (4,443) (4,443) Capital Accum- ulation Plan distribution (4,196 shares)..... 127 127 Cash dividends, $.05 per share.... (581) (581) Translation adjust- ment.............. 160 160 Net earnings....... 10,621 10,621 ---- -------- -------- -------- -------- -------- -------- Balance, June 24, 1994..... $ 90 $ 37,172 $156,989 $(39,866) $ (492) $ (1,063) $152,830 ==== ======== ======== ======== ======== ======== ========
See accompanying notes to consolidated financial statements. Page 5 of 21 Pages 6 JEFFERIES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
For the Six Months Ended ---------------------------- June 24, June 25, 1994 1993 --------- --------- Cash flows from operating activities: Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 10,621 $ 14,696 --------- --------- Adjustments to reconcile net earnings to net cash provided (used) by operations: Depreciation and amortization . . . . . . . . . . . . . . 3,490 2,717 (Increase) decrease in receivables: Brokers and dealers . . . . . . . . . . . . . . . . . . (141,047) (143,476) Customers, officers and directors . . . . . . . . . . . 27,575 (2,793) (Increase) decrease in securities owned . . . . . . . . . (25,186) 359 (Increase) decrease in other assets . . . . . . . . . . . (4,709) (15,660) Increase (decrease) in operating payables: Brokers and dealers . . . . . . . . . . . . . . . . . . 220,670 (1,562) Customers . . . . . . . . . . . . . . . . . . . . . . . 1,007 97,203 Increase (decrease) in securities sold, not yet purchased . . . . . . . . . . . . . . . . . . . (24,267) 21,697 Increase (decrease) in accrued expenses and other liabilities . . . . . . . . . . . . . . . . . (2,370) 13,246 --------- --------- Total adjustments . . . . . . . . . . . . . . . 55,163 (28,269) --------- --------- Net cash provided (used) by operating activities . . . . . . . . . . . . 65,784 (13,573) --------- ---------
Continued on next page. See accompanying unaudited notes to consolidated financial statements. Page 6 of 21 Pages 7 JEFFERIES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED) (DOLLARS IN THOUSANDS)
For the Six Months Ended --------------------------- June 24, June 25, 1994 1993 -------- ------- Cash flows from financing activities: Net proceeds (payments) on term debt . . . . . . . . . . $ 49,314 $ -- Net proceeds (payments) from bank loans . . . . . . . . . (45,558) 12,300 Net payments for: Repurchase of treasury stock . . . . . . . . . . . . . (4,443) (1,209) Dividends paid . . . . . . . . . . . . . . . . . . . . (581) (462) Distribution of CAP plan shares . . . . . . . . . . . . . 127 -- Proceeds from exercise of stock options . . . . . . . . . 2,388 320 -------- ------- Net cash provided (used) by financing activities . . . . . . . . . . . . 1,247 10,949 -------- ------- Cash flows from investing activities - purchase of premises and equipment . . . . . . . . . . . (4,665) (3,976) -------- ------- Increase (decrease) in minority interest . . . . . . . . . . . 5,415 -- Effect of foreign currency translation on cash . . . . . . . . 160 (131) -------- ------- Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . 67,941 (6,731) Cash and cash equivalents at the beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . 26,910 21,078 -------- ------- Cash and cash equivalents at the end of the period . . . . . . . . . . . . . . . . . . . . . . . . $ 94,851 $14,347 ======== ======= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,980 $ 6,458 ======== ======= Income taxes . . . . . . . . . . . . . . . . . . . . . . . $ 9,819 $11,985 ======== =======
See accompanying unaudited notes to consolidated financial statements. Page 7 of 21 Pages 8 JEFFERIES GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS The accompanying consolidated financial statements include the accounts of Jefferies Group, Inc. and all subsidiaries, including Jefferies & Company, Inc. (Jefferies) and Investment Technology Group, Inc. The accounts of W & D Securities, Inc. (W & D) are also consolidated because of the nature and extent of Jefferies Group Inc.'s ownership interest in W & D. Jefferies Group, Inc.'s subsidiaries are engaged in securities brokerage and trading, corporate finance and other financial services. The term "Company" refers, unless the context requires otherwise, to Jefferies Group, Inc., its subsidiaries, predecessor entities, and W & D. The term "ITG" refers, unless the context requires otherwise, to Investment Technology Group, Inc. and its subsidiaries including its broker-dealer subsidiary ITG Inc. All significant intercompany accounts and transactions are eliminated in consolidation. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for the fair statement of the results for the interim period and should be read in conjunction with the Company's annual report for the year ended December 31, 1993. SECURITIES TRANSACTIONS The Company records its commission and principal transaction revenues and related expenses on a trade date basis. SECURITIES OWNED AND SECURITIES SOLD, NOT YET PURCHASED The following is a summary of the market value of major categories of securities owned and securities sold, not yet purchased, as of June 24, 1994:
(Dollars in Thousands) --------------------------- Securities Sold, Securities Not Yet Owned Purchased ---------- ---------- Corporate equity securities . . . . . . . . . . . . . . . $ 70,182 $43,146 High-yield securities . . . . . . . . . . . . . . . . . . 26,308 3,633 Corporate debt securities . . . . . . . . . . . . . . . . 10,553 2,564 U.S. Government and Agency obligations . . . . . . . . . . 22,643 -- Bank certificates of deposit . . . . . . . . . . . . . . . 10,000 -- Options . . . . . . . . . . . . . . . . . . . . . . . . . 308 625 -------- ------- $139,994 $49,968 ======== =======
In the regular course of its business, Jefferies takes securities positions as a market-maker to facilitate customer transactions and for investment purposes. In making markets and when trading for its own account, Jefferies exposes its own capital to the risk of fluctuations in market value. Trading profits (or losses) depend primarily upon the skills of the employees engaged in market-making and position taking, the amount of capital allocated to positions in securities and the general trend of prices in the securities markets. Jefferies monitors its risk by maintaining its securities positions at or below certain pre-established levels. These levels reduce certain opportunities to realize profits in the event that the value of such securities increases. However, they also reduce the risk of loss in the event of a decrease in such Page 8 of 21 Pages 9 value and result in controlled interest costs incurred on funds provided to maintain such positions. The Jefferies' Capital Division includes the activities of the Corporate Finance Department and the Taxable Fixed Income Division. The Taxable Fixed Income Division trades high grade and non-investment grade public and private debt securities. The Division specializes in trading and making markets in over 300 unrated or less than investment grade corporate debt securities and accounts for these positions at market value. Risk of loss upon default by the borrower is significantly greater with respect to unrated or less than investment grade corporate debt securities than with other corporate debt securities. These securities are generally unsecured and are often subordinated to other creditors of the issuer. These issuers usually have high levels of indebtedness and are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than are investment grade issuers. There is a limited market for some of these securities and market quotes are generally available from a small number of dealers. INCOME TAXES In 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash in banks, U.S. Treasuries purchased under agreements to resell to a financial institution and investments in money market funds. The U.S. Treasuries were held in the Company's safekeeping account at a bank. Cash equivalents are part of the cash management activities of the Company and generally mature within 90 days. The following is a summary of cash and cash equivalents as of June 24, 1994:
(Dollars in ----------- Thousands) ----------- Cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . $10,710 U.S. Treasuries purchased under agreements to resell to a financial institution . . . . . . . . . . . . 64,500 Investments in money market funds . . . . . . . . . . . . . . . 19,641 ------- $94,851 =======
MINORITY INTEREST Minority interest represents the minority stockholders' proportionate share of the equity of Investment Technology Group, Inc. At June 24, 1994, Jefferies Group, Inc. owned 80.2% of Investment Technology Group, Inc.'s common stock. NET CAPITAL REQUIREMENTS As registered broker-dealers, Jefferies, W & D and ITG Inc. are subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital. Jefferies, W & D and ITG Inc. have elected to use the alternative method permitted by the Rule, which requires that they each maintain minimum net capital, as defined, equal to the greater of $200,000 or 2% of the aggregate debit balances arising from customer transactions, as defined. Page 9 of 21 Pages 10 Net capital changes from day to day, but as of June 24, 1994, Jefferies' net capital of $67.7 million exceeded its minimum net capital requirements by $59.3 million. ITG Inc.'s net capital of $10.1 million exceeded its minimum net capital requirements by $9.9 million. W & D's net capital of $820,000 exceeded its minimum net capital requirements by $620,000. QUARTERLY DIVIDENDS In 1988, the Company instituted a policy of paying regular quarterly dividends. There are no restrictions on the Company's present ability to pay dividends on common stock, other than the governing provisions of the Delaware General Corporation Law. Dividends per Common Share (declared and paid):
1st Qtr. 2nd Qtr. 1994.................. $.05 $.05 1993.................. $.05 $.05
OFF-BALANCE SHEET RISK In the normal course of business, the Company is involved in the execution, settlement and financing of various customer and principal securities transactions. Customer activities are transacted on a cash, margin or delivery-versus-payment basis. Securities transactions are subject to the risk of counterparty or customer nonperformance. However, transactions are collateralized by the underlying security, thereby reducing the associated risk to change in the market value of the security through settlement date or to the extent of margin balances. The Company also has contractual commitments arising in the ordinary course of business for bank loans, stock loaned, securities sold, not yet purchased, repurchase agreements, future purchases and sales of foreign currency, security transactions on a when-issued basis and underwriting. Each of these financial instruments contains varying degrees of off-balance sheet risk whereby the market values of the securities underlying the financial instruments may be in excess of the contract amount. The settlement of these transactions is not expected to have a material effect upon the Company's accompanying consolidated financial statements. In the normal course of business, the Company had letters of credit outstanding aggregating $22,247,000 at June 24, 1994, to satisfy various collateral requirements in lieu of depositing cash or securities. INITIAL PUBLIC OFFERING OF INVESTMENT TECHNOLOGY GROUP, INC. In March 1994, Investment Technology Group, Inc. (the "ITG Holding Company") was formed for the purpose of holding 100% of the stock of the broker-dealer subsidiary Investment Technology Group, Inc. whose name was then changed to ITG Inc. After its formation, the ITG Holding Company had a capital structure of preferred stock (5,000,000 shares authorized, par value $.01 per share, no shares issued or outstanding) and common stock (30,000,000 shares authorized, par value $.01 per share, no shares issued or outstanding). In May 1994, the ITG Holding Company consummated an initial public offering (the "Offering") and issued 3,700,000 shares of common stock for $48.1 million ($13 per share), less underwriting discounts and commissions of $3.4 million and offering expenses of $1.1 million. Following the Offering, the Company owned 80.2% of the outstanding common stock of the ITG Holding Company. Immediately prior to the consummation of the Offering, Investment Technology Page 10 of 21 Pages 11 Group, Inc. issued 15,000,0000 shares of its common stock in exchange for all of the issued and outstanding shares of common stock of ITG Inc. (10,000,000 shares) held by the Company. This transaction was accounted for as an exchange of ownership interests under common control and therefore, the assets and liabilities of ITG Inc. were not revalued. As a result of this transaction, ITG Inc. became a wholly-owned subsidiary of the ITG Holding Company. Immediately prior to the Offering, the ITG Holding Company declared a dividend payable to its sole stockholder, Jefferies Group, Inc., in an amount of $17.0 million, which dividend was paid by the issuance of a note in the full amount of such dividend. Any future payment of dividends will be at the discretion of the ITG Holding Company's Board of Directors and will depend on the ITG Holding Company's financial condition, results of operations, capital requirements and other factors deemed relevant by such Board of Directors. However, the ITG Holding Company anticipates that all future earnings will be retained by the ITG Holding Company for working capital and that the ITG Holding Company will not pay any dividends to stockholders. In addition, immediately prior to the Offering, the ITG Holding Company entered into an intercompany borrowing agreement with Jefferies Group, Inc. permitting the borrowing by the ITG Holding Company of up to $15,000,000. Any outstanding balance will be due March 31, 1999 and will accrue interest at 1.75% above the one month London Interbank Offering Rate. In connection with the Offering, certain management employment agreements, the Performance Share Plan (consisting of a 12.7% phantom equity interest in ITG Inc. and a profits bonus component) and non-compensatory ITG Inc. stock options (on 10% of the outstanding shares of ITG Inc. Common Stock) were terminated as of May 1, 1994 in exchange for $31.1 million in cash, a portion of which will be used to purchase Jefferies Group, Inc. common stock. Prior to December 31, 1993, ITG paid Jefferies Group, Inc. $9.4 million related to the Performance Share Plan. Immediately prior to the consummation of the Offering, Jefferies Group, Inc. transferred its $9.4 million liability and an equivalent amount of cash to the ITG Holding Company to be applied by the ITG Holding Company as part of the termination of the Performance Share Plan, in addition to the $31.1 million described above. Of the non-recurring expense of $31.1 million, approximately $400,000 was recorded as an expense in the first quarter of 1994 and the remaining $30.7 million was recorded in the second quarter of 1994. Additionally, non-compensatory options to purchase 2,726,178 shares of the ITG Holding Company's Common Stock were granted to certain directors, senior management and other employees at an exercise price equal to the initial public offering price of $13 per share. All of such options will be exercisable on the earlier of May 1, 1997 or upon a change in control of the ITG Holding Company and will expire on April 30, 1999. In addition to the intercompany borrowing agreement discussed above, ITG entered into certain other agreements (e.g., employment agreements, tax sharing agreement, service agreements, clearing agreement, development rights agreement, revenue sharing agreement and lease agreements) as described in the ITG Holding Company's Form S-1 filed on May 3, 1994. The initial public offering of the ITG Holding Company resulted in a net gain (gross gain less expenses related to the termination of the various plans described above) for the Company of $8.3 million. JEFFERIES GROUP, INC. ISSUES $50,000,000 IN SENIOR NOTES In April 1994, Jefferies Group, Inc. issued $50,000,000 face value of 8.875% Senior Notes due 2004 (the "Notes") in a private placement. The Notes were issued at a price equal to 98.6047% of the principal amount and mature on May 1, 2004. The Notes pay interest semi-annually on May 1 and November 1. The Notes Page 11 of 21 Pages 12 will be senior unsecured obligations of Jefferies Group, Inc., and will rank pari passu in right of payment with all existing and future senior indebtedness and senior in right of payment to all subordinated indebtedness of Jefferies Group, Inc. In July 1994, Jefferies Group, Inc. filed a registration statement on Form S-4 in connection with an offer to exchange any and all of the Notes for new 8.875% Series B Senior Notes due 2004. Page 12 of 21 Pages 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ANALYSIS OF FINANCIAL CONDITION Total assets increased $212.6 million from $1,388.4 million at December 31, 1993 to $1,601.0 million at June 24, 1994. The increase is mostly due to an increase in receivables from brokers and dealers related to stock borrow balances. The increased stock borrow balances are a result of an increase in payable to brokers and dealers (related to stock loan balances). The increases in cash and cash equivalents and securities owned mostly represent the net proceeds from Jefferies Group, Inc.'s $50,000,000 Senior Note offering and Investment Technology Group, Inc.'s initial public offering. Total liabilities increased $204.3 million from $1,243.8 million at December 31, 1993 to $1,448.2 million at June 24, 1994. The increase is mostly due to the before-mentioned increases in payable to brokers and dealers and long-term debt. FIRST HALF 1994 VERSUS FIRST HALF 1993 Revenues, net of interest expense, decreased $4.6 million, or 3%, in the first half of 1994 compared to the same prior year period. The decrease was due primarily to a $13.7 million, or 31%, decrease in principal transactions, an $8.1 million, or 37%, decrease in corporate finance and a $1.3 million decrease in other revenues. These decreases were partially offset by a $16.1 million, or 26%, increase in commissions, a $2.3 million increase in net interest income (interest revenues less interest expense). Revenues from principal transactions declined primarily due to decreased Taxable Fixed Income Division trading revenues. Corporate finance revenues decreased due to a decrease in underwriting fees. Other revenues decreased due mostly to a reduction in foreign currency transaction gains. Commission revenues increased mostly due to higher commission revenues in the Investment Technology Group, Equity Division and the International Division. Net interest income increased as the $11.5 million increase in interest revenues exceeded the $9.2 million increase in interest expense. Interest revenues increased mostly due to interest on higher stock borrow, customer margin and investment balances. The related increases in interest on stock loan and customer short balances only partially offset the higher interest revenues. Total non-interest expenses increased $6.2 million, or 6%, in the first half of 1994 compared to the same prior year period. Other expense increased $6.1 million, or 42%, primarily due to higher trade volume and business expansion and includes increased expenses in soft dollar, software royalties, marketing, research, travel and entertainment, reserves and legal. Compensation and benefits decreased $3.3 million, or 5%. A $12.5 million decrease in profitability based compensation was partially offset by a $5.2 million increase in sales commissions and a $3.4 million increase in salaries. Sales commissions were up mostly due to higher commission payout rates and higher commission revenues. Salaries increased due mostly to the increased number of employees in Corporate Finance, International and the Investment Technology Group. Floor brokerage and clearing fees increased $1.4 million, or 18%, due to increased volumes of business executed on the various exchanges. Telecommunications and data processing services increased $992,000, or 11%, due to higher trade volume and personnel increases. Occupancy and equipment rental increased $982,000, or 16%, mostly due to the depreciation on additional equipment and the addition of new sales offices. As a result of the above, operating income decreased $10.7 million, or 49%. In addition, Jefferies Group, Inc. recorded a $8.3 million gain related to the initial public offering of ITG. The minority stockholders' ownership interests Page 13 of 21 Pages 14 reduce Jefferies Group, Inc.'s ownership of ITG to 80.2%. (See Initial Public Offering of Investment Technology Group, Inc. in the Notes to Consolidated Financial Statements). Earnings before income taxes, minority interest and cumulative effect of change in accounting principle were down $2.5 million, or 11%. Earnings before cumulative effect of change in accounting principle were down 20% to $10.6 million, as compared to $13.3 million in the 1993 period. Minority interest of $202,000 in 1994, represents 19.8% of ITG's net earnings since the initial public offering. The effective tax rate was approximately 44.5% in the first half of 1994 compared to approximately 39.4% in the 1993 period. The 1993 period included a $1.1 million adjustment of prior years' estimated tax liabilities to actual which resulted in a lower tax rate for 1993. The cumulative effect of the change in accounting for income taxes required by SFAS 109 was a $1.4 million benefit in 1993. This increased 1993's net earnings to $14.7 million. Primary earnings per share were $1.71 in the first half of 1994 on 6,150,000 shares compared to $3.04 in the 1993 period on 4,835,000 shares. Primary shares increased largely due to the conversion, late in 1993, of $29,731,000 aggregate principal amount of 8 1/2% Convertible Subordinated Debentures and $1,690,000 aggregate principal amount of 7% Convertible Subordinated Notes into an aggregate of 1,366,092 shares of the Company's Common Stock. Fully diluted earnings per share were $1.71 in the first half of 1994 on 6,151,000 shares compared to $2.49 in the 1993 period on 6,207,000 shares. The cumulative effect of the change in accounting principle increased 1993's earnings per share for the first half by $.28 on primary shares and $.22 on fully diluted shares. During the first half of 1994, Jefferies Group, Inc. repurchased 126,800 shares of its common stock versus repurchases of 46,270 shares for the comparable 1993 period. SECOND QUARTER 1994 VERSUS SECOND QUARTER 1993 Revenues, net of interest expense, decreased $8.3 million, or 13%, in the second quarter of 1994 compared to the same prior year period. The decrease was due primarily to a $9.3 million, or 66%, decrease in corporate finance, $5.8 million, or 30%, decrease in principal transactions and a $2.0 million decrease in other revenues. These decreases were partially offset by a $7.7 million, or 25%, increase in commissions, and a $1.1 million increase in net interest income (interest revenues less interest expense). Corporate finance revenues decreased due to a decrease in underwriting fees. Revenues from principal transactions declined primarily due to decreased Taxable Fixed Income Division trading revenues. Other revenues decreased due mostly to a reduction in foreign currency transaction gains. Commission revenues increased mostly due to higher commission revenues in the Investment Technology Group, Equity Division and the International Division. Net interest income increased as the $6.7 million increase in interest revenues exceeded the $5.6 million increase in interest expense. Interest revenues increased due to interest on higher stock borrow, customer margin and investment balances. The related increases in interest on stock loan and customer short balances only partially offset the higher interest revenues. Total non-interest expenses increased $1.4 million, in the second quarter of 1994 compared to the same prior year period. Compensation and benefits decreased $3.3 million, or 9%. A $7.5 million decrease in profitability based compensation was partially offset by a $2.2 million increase in sales commissions and a $1.8 million increase in salaries. Sales commissions were up mostly due to higher commission payout rates and higher commission revenues. Salaries increased due mostly to the increased Page 14 of 21 Pages 15 number of employees in Corporate Finance, International and the Investment Technology Group. Other expense increased $2.9 million, or 37%, primarily due to higher trade volume and business expansion and includes increased expenses in travel and entertainment, legal, software royalties, soft dollar, marketing and research. Occupancy and equipment rental increased $677,000, or 23%, mostly due to the depreciation on additional equipment and the addition of new sales offices. Floor brokerage and clearing fees increased $579,000, or 15%, due to increased volumes of business executed on the various exchanges. Telecommunications and data processing services increased $579,000, or 12%, due to higher trade volume and personnel increases. As a result of the above, operating income decreased $9.7 million, or 91%. In addition, Jefferies Group, Inc. recorded a $8.3 million gain related to the initial public offering of ITG. The minority stockholders' ownership interests reduce Jefferies Group, Inc.'s ownership of ITG to 80.2%. (See Initial Public Offering of Investment Technology Group, Inc. in the Notes to Consolidated Financial Statements). Earnings before income taxes, minority interest and cumulative effect of change in accounting principle were down $1.5 million, or 14%. Net earnings were down 21% to $4.8 million, as compared to $6.1 million in the 1993 period. Minority interest of $202,000 in 1994, represents 19.8% of ITG's net earnings since the initial public offering. The effective tax rate was approximately 46% in the second quarter of 1994 compared to approximately 43% in the 1993 period. The higher effective tax rate in 1994 primarily resulted from the increased impact of non-deductible expenses due to the lower pre-tax operating income in 1994 compared to 1993. Primary earnings per share were $.76 in the second quarter of 1994 on 6,245,000 shares compared to $1.26 in the 1993 period on 4,838,000 shares. Primary shares increased largely due to the conversion, late in 1993, of $29,731,000 aggregate principal amount of 8 1/2% Convertible Subordinated Debentures and $1,690,000 aggregate principal amount of 7% Convertible Subordinated Notes into an aggregate of 1,366,092 shares of the Company's Common Stock. Fully diluted earnings per share were $.76 in the second quarter of 1994 on 6,246,000 shares compared to $1.04 in the 1993 period on 6,200,000 shares. During the second quarter of 1994, Jefferies Group, Inc. repurchased 90,875 shares of its common stock versus repurchases of 31,270 shares for the comparable 1993 period. Page 15 of 21 Pages 16 The Company's principal activities, securities brokerage and the trading of and market-making in securities, are highly competitive and extremely volatile. The earnings of the Company are subject to wide fluctuations since many factors over which the Company has little or no control, particularly the overall volume of trading and the volatility and general level of market prices, may significantly affect its operations. The following provides a breakdown of revenues by division for the six months ended June 24, 1994 and June 25, 1993.
For the Six Months Ended ------------------------------------------------- June 24, 1994 June 25, 1993 ------------------- ------------------- % of % of Total Total Amount Revenues Amount Revenues ------ -------- ------ -------- (Dollars in Thousands) Equity Division . . . . . . . . . . . . $ 57,401 40% $ 54,100 39% International Division . . . . . . . . 18,537 13 14,481 10 Capital Division: Corporate Finance . . . . . . . . . . 8,175 6 11,755 9 Taxable Fixed Income . . . . . . . . 10,037 7 26,269 19 Investment Technology Group . . . . . . 29,143 20 20,556 15 Convertible Division . . . . . . . . . 3,513 3 5,783 4 Other Unallocated Revenues 16,123 11 5,361 4 -------- ---- -------- ---- Total revenues . . . . . . . . . . . . $142,929 100% $138,305 100% ======== ==== ======== ====
Page 16 of 21 Pages 17 The following provides a breakdown of revenues by division for the three months ended June 24, 1994 and June 25, 1993.
For the Three Months Ended ------------------------------------------------- June 24, 1994 June 25, 1993 -------------------- ------------------- % of % of Total Total Amount Revenues Amount Revenues ------ -------- ------ -------- (Dollars in Thousands) Equity Division . . . . . . . . . . . . $ 27,526 41% $ 27,434 39% International Division . . . . . . . . 8,656 13 7,034 10 Capital Division: Corporate Finance . . . . . . . . . . 2,765 4 7,334 11 Taxable Fixed Income . . . . . . . . 3,071 5 11,886 17 Investment Technology Group . . . . . . 14,613 22 9,881 14 Convertible Division . . . . . . . . . 1,676 2 2,964 4 Other Unallocated Revenues 8,932 13 3,424 5 -------- ---- -------- ---- Total revenues . . . . . . . . . . . . $ 67,239 100% $ 69,957 100% ======== ==== ======== ====
Page 17 of 21 Pages 18 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) Date of Meeting - - May 5, 1994 Type of Meeting - - Annual Meeting of Stockholders (b) At the meeting, the following directors were elected by the stockholders to hold office until the next annual meeting of stockholders or until their successors have been duly elected and qualified: Frank E. Baxter Richard G. Dooley Tracy G. Herrick Michael L. Klowden Frank J. Macchiarola Barry M. Taylor Mark A. Wolfson (c)(1) At the meeting, with respect to the election of the directors, the following votes were cast in the following manner:
NAME FOR WITHHELD ---- --- -------- Frank E. Baxter 3,619,947 50,920 Richard G. Dooley 3,625,247 45,620 Tracy G. Herrick 3,619,906 50,961 Michael L. Klowden 3,619,947 50,920 Frank J. Macchiarola 3,625,247 45,620 Barry M. Taylor 3,600,620 70,247 Mark A. Wolfson 3,619,947 50,920
(2) The stockholders cast the following votes in the following manner with respect to the adoption of, and adopted, the Pay-For- Performance Incentive Plan: FOR 2,712,932 AGAINST 261,650 ABSTAIN 44,089 NO VOTE 652,196
(3) The stockholders cast the following votes in the following manner with respect to the adoption of, and adopted, the Non-Employee Directors' Stock Option Plan: FOR 3,430,114 AGAINST 165,122 ABSTAIN 75,631
(d) Not applicable Page 18 of 21 Pages 19 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (10.1)* Agreement to Terminate Employment Agreement and Stock Options between Investment Technology Group, Inc., Raymond L. Killian, Jr. and Jefferies Group, Inc. (10.2)* Agreement to Terminate Employment Agreement, Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Dale A. Prouty. (10.3)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Savyona Abel. (10.4)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Mark Auburn. (10.5)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Yossef Beinart. (10.6)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Mike Earlywine. (10.7)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Joseph Heled. (10.8)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Demetri Silas. (10.9)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Stuart Sperling. (10.10)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Tuval Chomut. (10.11)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Andrew Winner. (10.12)* Agreement to Terminate Phantom Equity Rights and Profits Bonus Rights between Investment Technology Group, Inc., Jefferies Group, Inc., Jefferies & Company, Inc. and Mark Wright. (10.13)* Agreement to Terminate Stock Option between Investment Technology Group, Inc., Scott P. Mason and Jefferies Group, Inc. (11)* Computation of Earnings Per Share (Page 20 attached) - - --------------- * Filed herewith (b) Reports on Form 8-K. On May 3, 1994, the Company filed a Current Report on Form 8-K reporting the issuance of $50 million principal amount of 8.875% Senior Notes Due May 1, 2004. Page 19 of 21 Pages 20 EXHIBIT 11 JEFFERIES GROUP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
For The Three For The Six Months Ended Months Ended ----------------------- ----------------------- June 24, June 25, June 24, June 25, 1994 1993 1994 1993* -------- -------- -------- -------- Common stock and common stock equivalents: Average common stock outstanding . . . . . 5,880 4,630 5,805 4,629 Common stock equivalent shares related to employee stock options and restricted stock . . . . . . 365 208 345 206 ----- ----- ----- ----- Total average common stock and common stock equivalents used for primary computation . . . . . 6,245 4,838 6,150 4,835 Average common stock assumed issued pursuant to convertible subordinated debentures and an adjustment of average common stock equivalents to period-end market price, if higher than average price . . . . . . . . 1 1,362 1 1,372 ----- ----- ----- ----- Total average common stock, common stock equivalents and other dilutive securities . . . . 6,246 6,200 6,151 6,207 ===== ===== ===== ===== Earnings: Net earnings . . . . . . . . . . . . . . . $4,782 $6,072 $10,621 $14,696 Adjustment to subsidiary earnings - common stock equivalents on subsidiary . . . . . . . . . . . . . . . 33 -- 125 -- ------ ------ ------- ------- Total earnings for primary computation . . . . . . . . . 4,749 6,072 10,496 14,696 Eliminate interest expense (net of taxes) on convertible subordinated debentures . . . . . . . . -- 370 -- 743 ------ ------ ------- ------- Total earnings for fully diluted computation . . . . . . $4,749 $6,442 $10,496 $15,439 ====== ====== ======= ======= Earnings per share: Primary . . . . . . . . . . . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 3.04 ====== ====== ======= ======= Fully diluted . . . . . . . . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.49 ====== ====== ======= =======
* The 1993 first quarter includes a benefit for the cumulative effect of changes in accounting principle of $.28 and $.22 per share primary and fully diluted, respectively. Page 20 of 21 Pages 21 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. JEFFERIES GROUP, INC. --------------------- (Registrant) Date: August 5, 1994 By: /s/ Maxine Syrjamaki -------------- -------------------- Maxine Syrjamaki Controller Page 21 of 21 Pages EX-10.1 2 AGREE BET JEFFERIES AND RAYMOND L. KILLIAN, JR. 1 EXHIBIT 10.1 AGREEMENT TO TERMINATE EMPLOYMENT AGREEMENT AND STOCK OPTIONS This agreement to Terminate Employment Agreement and Stock Options (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), RAYMOND L. KILLIAN, JR. (the "Employee") and JEFFERIES GROUP, INC., a Delaware corporation ("Group"). WHEREAS, the parties to this Agreement entered that certain Employment Agreement dated as of April 1, 1992 (the "Employment Agreement") (A copy of the Employment Agreement is attached hereto and made a part hereof as Exhibit A. Undefined capitalized terms in this Agreement have the same meaning as in the Employment Agreement.); WHEREAS, pursuant to Section 3 of the Employment Agreement, Employee is entitled to a base salary of $425,000 and a bonus equal to ten percent (10%) of the Company's Profits; WHEREAS, pursuant to Section 5 of the Employment Agreement, Employee was granted a nonqualified stock option to purchase 1,000,000 shares of the Company's common stock (the "Common Stock"), for a price of $2.00 per share (the "Old Option"); WHEREAS, pursuant to that certain amendment to the Employment Agreement among the parties dated August 18, 1993, attached hereto as Exhibit B, the number of shares subject to the Old Option was reduced to 700,000; WHEREAS, the parties now desire to terminate the Employment Agreement and the Old Option in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's and Group's obligations under the Employment Agreement for payment of the base salary and the bonus and for the Old Option, the Company and Group agree to pay to Employee, and Employee hereby releases the Company and Group from their respective obligations under the Employment Agreement, including the Old Option, in exchange for payments of cash as provided in Sections 2, 3, and 4 below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Four Million Seven Hundred Forty-eight Thousand Four Hundred Twenty-eight dollars ($4,748,428). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the - 1 - 2 Employee shall total Five Million Two Hundred Seventy-six Thousand Thirty-one dollars ($5,276,031). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be One Hundred Twenty-one Thousand Two Hundred Eighty-seven (121,287) shares in total. The parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. First Quarter 1994 Bonus. Employee shall be paid a cash bonus for the first quarter of 1994 of One Million Three Hundred Fifty Thousand dollars ($1,350,000) on or before the seventh day following the Closing Date in immediately available funds. 5. Withholding for Employment Taxes. The cash payments described in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 6. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company and Group - 2 - 3 shall have no further obligation to make any payments under the Employment Agreement and the Old Option shall be cancelled as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement, including Employee's existing base salary, the bonus and the Old Option shall remain in effect, and the Employee, Company and Group shall have no obligations under this Agreement. 7. Release. Employee's release of the Company and Group from obligations under the Employment Agreement, including those obligations regarding the Old Option, in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Employment Agreement and the Old Option, or any other rights contemplated by the Employment Agreement or the Old Option. Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Employment Agreement and the Old Option, or any other rights contemplated by the Employment Agreement or the Old Option. 8. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company and Group. 9. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 10. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. - 3 - 4 11. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 13. Assignability. 13.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 13. 13.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 14. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company and by the board of directors of Group to be effective as against Group. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 15. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company or to Group, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Dale A. Prouty __________________________________ Its____________________________ "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter __________________________________ FRANK E. BAXTER, Chairman of the Board and Chief Executive Officer "Employee" /s/ Raymond L. Killian, Jr. ____________________________________ RAYMOND L. KILLIAN, JR. Address for Notices: 111 Marmian Way Rockport, MA - 5 - EX-10.2 3 AGREE BET JEFFERIES AND DALE A. PROUTY 1 EXHIBIT 10.2 AGREEMENT TO TERMINATE EMPLOYMENT AGREEMENT, PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Employment Agreement, Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), DALE PROUTY (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, Jefco and Employee entered that certain Employment Agreement dated as of May 27, 1991 (the "Employment Agreement") (A copy of the Employment Agreement is attached hereto and made a part hereof as Exhibit A. Undefined capitalized terms in this Agreement have the same meaning as in the Employment Agreement.); WHEREAS, pursuant to Section 3 of the Employment Agreement, Employee is entitled to a base salary of $250,000; WHEREAS, pursuant to Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit B), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee is entitled to certain Phantom Equity Rights and certain Profits Bonus Rights; WHEREAS, the parties now desire to terminate the Employment Agreement and Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations under the Employment Agreement for payment of the base salary and for the Phantom Equity Rights and Profits Bonus Rights, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Employment Agreement and the Phantom Equity Plan and Profits Bonus Plan in exchange for payments of cash as provided in Sections 2, 3 and 4 below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Eight Million Four Hundred Thirteen Thousand One Hundred Thirty-nine dollars and Sixty-four cents ($8,413,139.64). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Nine Million Three Hundred Forty-seven Thousand Nine Hundred Thirty-two dollars and Ninety-three cents ($9,347,932.93). One half of the Deferred Cash Payments shall be - 1 - 2 paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Two Hundred Fourteen Thousand Eight Hundred Ninety-three (214,893) shares in total. The parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. First Quarter 1994 Bonus. Employee shall be paid a cash bonus for the first quarter of 1994 of One Million Fifty Thousand dollars ($1,050,000) less bonus amounts previously paid for the 1994 bonus, on or before the seventh day following the Closing Date in immediately available funds. 5. Withholding for Employment Taxes. The cash payments described in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 6. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Employment Agreement or the Phantom Equity and Profits - 2 - 3 Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the Employee, Company, Group and Jefco shall have no obligations under this Agreement. 7. Release. Employee's release of the Company, Group and Jefco from obligations under the Employment Agreement and under the Phantom Equity and Profits Bonus Plans in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, for purposes of this paragraph, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Employment Agreement and the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Employment Agreement or the Phantom Equity or Profits Bonus Plans. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Employment Agreement and the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Employment Agreement or the Phantom Equity or Profits Bonus Plans. 8. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 9. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys, fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 10. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. - 3 - 4 11. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 13. Assignability. 13.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 13. 13.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 14. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 15. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. --------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Dale Pouty ------------------------------------ DALE PROUTY Address for Notices: ------------------------------------ ------------------------------------ - 5 - EX-10.3 4 AGREE BET JEFFERIES AND SAVYONA ABEL 1 EXHIBIT 10.3 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), SAVYONA ABEL (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2 and 3, below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Twenty Thousand Four Hundred Eighty-three dollars and Eighty-eight cents ($20,483.88). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Twenty-two Thousand Seven Hundred Fifty-nine dollars and Eighty-seven cents ($22,759.87). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Five Hundred - 1 - 2 Twenty-three (523) shares in total. The parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Withholding for Employment Taxes. The cash payments described in Sections 2 and 3 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 5. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the Employee, Company, Group and Jefco shall have no obligations under this Agreement. 6. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every - 2 - 3 kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 7. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 8. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 9. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 10. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. 11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. - 3 - 4 12. Assignability. 12.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 12. 12.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 13. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 15. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. ----------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter ----------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter ----------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Savyona Abel -------------------------------------- SAVYONA ABEL Address for Notices: 4229 Stanbridge Ave. -------------------------------------- Long Beach, CA 90808 -------------------------------------- - 5 - EX-10.4 5 AGREE BET JEFFERIES AND MARK AUBURN 1 EXHIBIT 10.4 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), MARK AUBURN (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2 and 3, below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Twenty One Thousand Three Hundred Three dollars and Twenty-four cents ($21,303.24). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Twenty-three Thousand Six Hundred Seventy dollars and Twenty-seven cents ($23,670.27). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Five Hundred - 1 - 2 Forty-four (544) shares in total. The parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Withholding for Employment Taxes. The cash payments described in Sections 2 and 3 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 5. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the Employee, Company, Group and Jefco shall have no obligations under this Agreement. 6. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every - 2 - 3 kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 7. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 8. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 9. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 10. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. 11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. - 3 - 4 12. Assignability. 12.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 12. 12.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 13. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 15. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. ---------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Mark Auburn ------------------------------------- MARK AUBURN Address for Notices: 1707 P.C.H., #405 ------------------------------------- Hermosa Beach, CA 90254 ------------------------------------- - 5 - EX-10.5 6 AGREE BET JEFFERIES AND YOSSEF BEINART 1 EXHIBIT 10.5 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), YOSSEF A. BEINART (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2, 3 and 4 below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Nine Hundred Sixty Thousand Two Hundred Eighty-four dollars and Thirty-five cents ($960,284.35). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the closing of the IPO shall be the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total One Million Sixty-six Thousand Nine Hundred Eighty-two dollars and Sixty-one cents ($1,066,982.61). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Twenty-four Thousand Five Hundred Twenty-eight (24,528) shares in total. The - 1 - 2 parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Additional Cash Payment - Profit Bonus Stub. In addition to the amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid five hundred thousand dollars ($500,000) on or before the seventh day following the Closing Date. 5. Withholding for Employment Taxes. The cash payments described in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 6. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the Employee, Company, Group and Jefco shall have no obligations under this Agreement. 7. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, - 2 - 3 attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 8. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 9. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 10. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 11. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. - 3 - 4 13. Assignability. 13.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 13. 13.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 14. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 15. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. --------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Y. Beinart ------------------------------------ YOSSEF BEINART Address for Notices: 3412 Ocean Front Walk, #211 ------------------------------------ Marina Del Rey, CA 90292 ------------------------------------ - 5 - EX-10.6 7 AGREE BET JEFFERIES AND MIKE EARLYWINE 1 EXHIBIT 10.6 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), MIKE EARLYWINE (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2 and 3, below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Seven Thousand Three Hundred Seventy-four dollars and Twenty cents ($7,374.20). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Eight Thousand One Hundred Ninety-three dollars and Fifty-six cents ($8,193.56). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be One Hundred - 1 - 2 Eighty-eight (188) shares in total. The parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Withholding for Employment Taxes. The cash payments described in Sections 2 and 3 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 5. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the Employee, Company, Group and Jefco shall have no obligations under this Agreement. 6. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every - 2 - 3 kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 7. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 8. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 9. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 10. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other Counterparts. 11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. - 3 - 4 12. Assignability. 12.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 12. 12.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 13. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 15. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. --------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Mike Earlywine ------------------------------------ MIKE EARLYWINE Address for Notices: 53 Dunbar Street ------------------------------------ Chatham, NJ 07928 ------------------------------------ - 5 - EX-10.7 8 AGREE BET JEFFERIES AND JOSEPH HELED. 1 EXHIBIT 10.7 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), JOSEPH HELED (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2 and 3, below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Thirty- four Thousand Four Hundred Twelve dollars and Ninety-two cents ($34,412.92). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Thirty-eight Thousand Two Hundred Thirty-six dollars and Fifty-eight cents ($38,236.58). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Eight Hundred - 1 - 2 Seventy-nine (879) shares in total. The parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Withholding for Employment Taxes. The cash payments described in Sections 2 and 3 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 5. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the Employee, Company, Group and Jefco shall have no obligations under this Agreement. 6. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every - 2 - 3 kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 7. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 8. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 9. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 10. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. 11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. - 3 - 4 12. Assignability. 12.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 12. 12.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 13. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 15. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. ---------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Joseph Heled ------------------------------------- JOSEPH HELED Address for Notices: ------------------------------------- ------------------------------------- - 5 - EX-10.8 9 AGREE BET JEFFERIES AND DEMETRI SILAS. 1 EXHIBIT 10.8 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), DEMETRI SILAS (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2, 3 and 4 below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Two Hundred Thirty-nine Thousand Two Hundred Fifty-one dollars and Seventy-three cents ($239,251.73). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the closing of the IPO shall be the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Two Hundred Sixty-five Thousand Eight Hundred Thirty-five dollars and Twenty-six cents ($265,835.26). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Six Thousand One Hundred Eleven (6,111) shares in total. The parties intend - 1 - 2 that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Deferred Cash Payment - Profit Bonus Stub. In addition to the amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid two hundred thousand dollars ($200,000) in two equal installments. The first installment shall be paid on or before the seventh day following the Closing Date. The second installment shall be paid on or before one year following the Closing Date; provided, however, that the Company shall have no obligation to pay the second installment or related accrued interest if Employee voluntarily terminates employment prior the date of the second installment. Interest shall accrue on the second installment at the average noncompounded broker call rate for the period beginning with the Closing Date, and shall be payable with the second installment. 5. Withholding for Employment Taxes. The cash payments described in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 6. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the - 2 - 3 Employee, Company, Group and Jefco shall have no obligations under this Agreement. 7. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 8. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 9. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 10. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 11. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be - 3 - 4 introduced in evidence or used for any other purposes without the production of any other counterparts. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 13. Assignability. 13.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 13. 13.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 14. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 15. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. --------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Demetri Silas ------------------------------------ DEMETRI SILAS Address for Notices: 1416 Courtland Avenue ------------------------------------ Los Angeles, CA 90006 ------------------------------------ - 5 - EX-10.9 10 AGREE BET JEFFERIES AND STUART SPERLING. 1 EXHIBIT 10.9 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), STUART SPERLING (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2, 3 and 4 below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Sixty-one Thousand Four Hundred Fifty-one dollars and Sixty-four cents ($61,451.64). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the closing of the IPO shall be the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Sixty-eight Thousand Two Hundred Seventy-nine dollars and Sixty cents ($68,279.60). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be One Thousand Five Hundred Seventy (1,570) shares in total. The parties intend - 1 - 2 that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Deferred Cash Payment - Profit Bonus Stub. In addition to the amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid two hundred thousand dollars ($200,000) in two equal installments. The first installment shall be paid on or before the seventh day following the Closing Date. The second installment shall be paid on or before one year following the Closing Date; provided, however, that the Company shall have no obligation to pay the second installment or related accrued interest if Employee voluntarily terminates employment prior the date of the second installment. Interest shall accrue on the second installment at the average noncompounded broker call rate for the period beginning with the Closing Date, and shall be payable with the second installment. 5. Withholding for Employment Taxes. The cash payments described in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 6. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the - 2 - 3 Employee, Company, Group and Jefco shall have no obligations under this Agreement. 7. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 8. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 9. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 10. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 11. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be - 3 - 4 introduced in evidence or used for any other purposes without the production of any other counterparts. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 13. Assignability. 13.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 13. 13.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 14. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 15. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. ---------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Stuart Sperling ------------------------------------- STUART SPERLING Address for Notices: 6443 Lindenhurst Ave. ------------------------------------- Los Angeles, CA 90048 ------------------------------------- - 5 - EX-10.10 11 AGREE BET JEFFERIES AND TUVAL CHOMUT 1 EXHIBIT 10.10 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), TUVAL CHOMUT (the "Independent Contractor"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Independent Contractor may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Independent Contractor's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Independent Contractor, and Independent Contractor hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Section 2, below. 2. Cash Payments - Profit Bonus Stub. Independent Contractor shall be paid four hundred thousand dollars ($400,000) in two equal installments. The first installment shall be paid on or before the seventh day following the closing date of the IPO. The second installment shall be paid on or before one year following the closing date of the IPO; provided however, that if the Independent Contractor voluntarily terminates his contract prior to the time the second installment is due, the Company shall no longer be obligated to pay the second installment or related accrued interest. Interest shall accrue on the second installment at the average noncompounded broker call rate for the - 1 - 2 period beginning with the closing date of the IPO, and shall be payable with the second installment. 3. Withholding for Employment Taxes. The cash payments described in Section 2 are gross amounts, and the Company shall withhold from the cash payments to Independent Contractor the total amount that the Company is required to withhold, if any, with respect to Federal, state and local taxes. 4. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Independent Contractor's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the Independent Contractor, Company, Group and Jefco shall have no obligations under this Agreement. 5. Release. Independent Contractor's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Independent Contractor ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Independent Contractor and executors, administrators, heirs, successors, transferees and assignees of Independent Contractor (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. - 2 - 3 6. [This paragraph intentionally omitted.] 7. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Independent Contractor, the Company, Group, and Jefco. 8. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 9. Necessary Acts. The Independent Contractor agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 10. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. 11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 12. Assignability. 12.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 12. 12.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim - 3 - 4 under or by reason of this Agreement or of any term, covenant or condition hereof. 13. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Independent Contractor, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 15. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. ---------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter ---------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Tuval Chomut ------------------------------------- TUVAL CHOMUT Address for Notices: ------------------------------------- ------------------------------------- - 5 - EX-10.11 12 AGREE BET JEFFERIES AND ANDREW WINNER. 1 EXHIBIT 10.11 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), ANDREW WINNER (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2, 3 and 4 below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Three Hundred Forty Thousand Thirty-two dollars and Forty-three cents ($340,032.43). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the closing of the IPO shall be the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Three Hundred Seventy-seven Thousand Eight Hundred Thirteen dollars and Eighty-one cents ($377,813.81). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Eight Thousand Six Hundred Eighty-five (8,685) shares in total. The parties - 1 - 2 intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Deferred Cash Payment - Profit Bonus Stub. In addition to the amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid two hundred thousand dollars ($200,000) in two equal installments. The first installment shall be paid on or before the seventh day following the Closing Date. The second installment shall be paid on or before one year following the Closing Date; provided, however, that the Company shall have no obligation to pay the second installment or related accrued interest if Employee voluntarily terminates employment prior the date of the second installment. Interest shall accrue on the second installment at the average noncompounded broker call rate for the period beginning with the Closing Date, and shall be payable with the second installment. 5. Withholding for Employment Taxes. The cash payments described in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 6. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the - 2 - 3 Employee, Company, Group and Jefco shall have no obligations under this Agreement. 7. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 8. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 9. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 10. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 11. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be - 3 - 4 introduced in evidence or used for any other purposes without the production of any other counterparts. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 13. Assignability. 13.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 13. 13.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 14. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 15. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. ----------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter ----------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter ----------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Andrew Winner -------------------------------------- ANDREW WINNER Address for Notices: 7411 W. 82nd St. -------------------------------------- Westchester, CA 90045 -------------------------------------- - 5 - EX-10.12 13 AGREE BET JEFFERIES AND MARK WRIGHT 1 EXHIBIT 10.12 AGREEMENT TO TERMINATE PHANTOM EQUITY RIGHTS AND PROFITS BONUS RIGHTS This agreement to Terminate Phantom Equity Rights and Profits Bonus Rights (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), MARK WRIGHT (the "Employee"), JEFFERIES GROUP, INC., a Delaware corporation ("Group") and JEFFERIES & COMPANY, INC., a California corporation ("Jefco"). WHEREAS, pursuant to that certain Exhibit E, regarding certain Employee Arrangements (attached hereto and made a part hereof as Exhibit A), to that certain Stock Purchase Agreement among Jefco and Integrated Analytics Corporation, a California corporation ("IAC"), shareholders, Employee may be entitled to certain Phantom Equity Rights and certain Profits Bonus Rights pursuant to the Phantom Equity Plan and Profits Bonus Plan; WHEREAS, the parties now desire to terminate any and all of Employee's Phantom Equity Rights and Profits Bonus Rights in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's, Group's and Jefco's obligations for the Phantom Equity Rights and Profits Bonus Rights, if any, the Company and Group agree to pay to Employee, and Employee hereby releases the Company, Group and Jefco from their respective obligations under the Phantom Equity Plan and Profits Bonus Plan in exchange for cash payments as determined pursuant to Sections 2, 3 and 4 below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Employee shall be Two Hundred Eighty-five Thousand Nine Hundred Fifty-four dollars and Ninety-eight cents ($285,954.98). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the closing of the IPO shall be the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Employee shall total Three Hundred Seventeen Thousand Seven Hundred Twenty-seven dollars and Seventy-six cents ($317,727.76). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. Employee hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Employee shall be Seven Thousand Three Hundred Four (7,304) shares in total. The parties intend - 1 - 2 that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Employee shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Employee of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Deferred Cash Payment - Profit Bonus Stub. In addition to the amounts paid to Employee pursuant to Sections 1 and 2, Employee shall be paid five hundred thousand dollars ($500,000) in two equal installments. The first installment shall be paid on or before the seventh day following the Closing Date. The second installment shall be paid on or before one year following the Closing Date; provided, however, that the Company shall have no obligation to pay the second installment or related accrued interest if Employee voluntarily terminates employment prior the date of the second installment. Interest shall accrue on the second installment at the average noncompounded broker call rate for the period beginning with the Closing Date, and shall be payable with the second installment. 5. Withholding for Employment Taxes. The cash payments described in Sections 2, 3 and 4 are gross amounts, and the Company shall withhold from the cash payments to Employee the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 6. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company, Group, and Jefco shall have no further obligation to make any payments under the Phantom Equity and Profits Bonus Plans as of April 30, 1994. In the event that the IPO does not close, then the Employment Agreement and Employee's rights under the Phantom Equity and Profits Bonus Plans shall remain in effect, and the - 2 - 3 Employee, Company, Group and Jefco shall have no obligations under this Agreement. 7. Release. Employee's release of the Company, Group and Jefco from obligations relating to the Phantom Equity Plan and Profits Bonus Plan in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Employee ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the Phantom Equity Rights and Profits Bonus Rights, or any other rights contemplated by the Phantom Equity Plan or Profits Bonus Plan. Except for any rights created under separate confidentiality agreements, Company, Group and Jefco hereby release Employee and executors, administrators, heirs, successors, transferees and assignees of Employee (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Phantom Equity and Profits Bonus Plans, or any other rights contemplated by the Phantom Equity or Profits Bonus Plans. 8. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Employee, the Company, Group, and Jefco. 9. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 10. Necessary Acts. The Employee agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 11. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be - 3 - 4 introduced in evidence or used for any other purposes without the production of any other counterparts. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 13. Assignability. 13.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 13. 13.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 14. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company, by the board of directors of Group to be effective as against Group and Jefco. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 15. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company, Group or Jefco, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Employee, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. --------------------------------- RAYMOND L. KILLIAN, JR., Chief Executive Officer "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Jefco" JEFFERIES & COMPANY, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman and Chief Executive Officer "Employee" /s/ Mark Wright ------------------------------------ MARK WRIGHT Address for Notices: 4211 Berryman Avenue ------------------------------------ Los Angeles, CA 90066 ------------------------------------ - 5 - EX-10.13 14 AGREE BET JEFFERIES AND SCOTT P. MASON. 1 EXHIBIT 10.13 AGREEMENT TO TERMINATE STOCK OPTION This agreement to Terminate Stock Option (the "Agreement") is made and entered among INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation (the "Company"), SCOTT P. MASON (the "Director") and JEFFERIES GROUP, INC., a Delaware corporation ("Group"). WHEREAS, the parties to this Agreement entered that certain Stock Option Agreement dated as of August 18, 1993 (the "Stock Option Agreement") (A copy of the Stock Option Agreement is attached hereto and made a part hereof as Exhibit A. Undefined capitalized terms in this Agreement have the same meaning as in the Stock Option Agreement.); WHEREAS, pursuant to Section 1 of the Stock Option Agreement, Director was granted a nonqualified stock option to purchase 300,000 shares of the Company's common stock (the "Common Stock"), for a price of $2.00 per share (the "Old Option"); WHEREAS, the parties now desire to terminate the Stock Option Agreement and the Old Option in anticipation of an initial public offering of the Company's Common Stock (the "IPO"); NOW THEREFORE, in consideration for the following mutual promises, the parties agree: 1. Consideration. In exchange for a release of the Company's and Group's obligations under the Stock Option Agreement for the Old Option, the Company and Group agree to pay to Director, and Director hereby releases the Company and Group from their respective obligations under the Stock Option Agreement in exchange for payments of cash as provided in Sections 2 and 3, below. 2. Initial Cash Payment. The amount of the initial cash payment (the "Initial Cash Payment") to the Director shall be Two Million Thirty-five Thousand Forty-one dollars ($2,035,041). The Initial Cash Payment shall be paid on or before the seventh day following the closing of the IPO (the "Closing Date") in immediately available funds. 3. Deferred Cash Payments. The amount of the deferred cash payments (the "Deferred Cash Payments") to the Director shall total Two Million Two Hundred Sixty-one Thousand One Hundred Fifty-seven dollars ($2,261,157). One half of the Deferred Cash Payments shall be paid on or before June 30, 1994, and the remainder shall be paid on or before September 30, 1994, in each case in immediately available funds. - 1 - 2 Director hereby agrees to purchase Group shares of common stock (the "Group Common Stock") for an amount equal to the total amount of the Deferred Cash Payments, not reduced by the amount of any related withholding, in two equal installments on June 30, 1994 and September 30, 1994. The number of shares of Group Common Stock purchased by Director shall be Fifty-one Thousand Nine Hundred Eighty (51,980) shares in total. The parties intend that the Group Common Stock shall consist of shares registered under the Securities Act of 1933. In the event that the Group Common Stock has not been registered at the time of purchase, Group shall cause a registration statement to be filed as soon as possible thereafter and the Group Common Stock shall be issued when the registration statement becomes effective. Director shall not dispose of more than ten percent (10%) of the Group Common Stock in any calendar quarter, beginning with the calendar quarter that includes the Closing Date, with carryforwards of unused amounts; provided, however, that this restriction on the amount of Group Common Stock that may be sold in a quarter shall not apply in the event of a change of control of Group, a tender offer for Group stock, or a merger of Group with or into an unaffiliated entity. In the event that after the Closing Date and prior to the issuance to Director of the Group Common Stock that the number of authorized shares of Group stock are increased, decreased or exchanged for a different number or kind of security, or additional shares or new or different shares or other non-cash assets are distributed with respect to such shares or other securities (whether by reason of recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction), then in order to prevent dilution or enlargement of rights hereunder the board of directors of Group shall make appropriate and proportionate adjustments in the number of shares of Group Common Stock. 4. Withholding for Employment Taxes. The cash payments described in Sections 2 and 3 are gross amounts, and the Company shall withhold from the cash payments to Director the total amount that the Company is required to withhold with respect to Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes and similar taxes or assessments to satisfy withholding requirements. 5. Effective Date. This Agreement shall be effective upon closing of the IPO. At the Closing Date, Company and Group shall have no further obligations under the Stock Option Agreement and the Old Option shall be cancelled as of April 30, 1994. In the event that the IPO does not close, then the Old Option shall remain in effect, and the Director, Company and Group shall have no obligations under this Agreement. - 2 - 3 6. Release. Director's release of the Company and Group from obligations under the Stock Option Agreement for the Old Option in Section 1 of this Agreement includes a release of each of those corporations and their successors, attorneys, assigns, agents, affiliates, parents, subsidiaries, divisions, officers, employees, directors and shareholders (altogether, the "Releasees") from all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which Director ever had or asserted, or may now or hereafter have or assert, against any Releasee and which arise under or with respect to, or in any other way relate to, the old Option, or any other rights contemplated by the Old Option. Company, Group and Jefco hereby release Director and executors, administrators, heirs, successors, transferees and assignees of Director (altogether, for purposes of this paragraph, the "Releasees") from any and all claims, demands, debts, liabilities, obligations, accounts, and causes of action of every kind in law, equity, or otherwise, whether known or unknown, suspected or unsuspected, which any of them ever had or asserted, or may now or hereafter have or assert, against any Releasee which arise under or with respect to, or in any other way relate to, the Old Option, or any other rights contemplated by the Old Option. 7. Agreement Binding on Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Director, the Company and Group. 8. Costs of Litigation. In any action at law or in equity to enforce any of the provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined by the court in a final judgement or decree, shall pay the successful party or parties all costs, expenses and reasonable attorneys' fees incurred by the successful party or parties (including without limitation costs, expenses and fees on any appeals), and if the successful party recovers judgment in any such action or proceeding such costs, expenses and attorneys' fees shall be included as part of the judgment. 9. Necessary Acts. The Director agrees to perform all acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities laws. 10. Counterparts. For convenience, this Agreement may be executed in any number of identical counterparts, each of which shall be deemed a complete original in itself and may be introduced in evidence or used for any other purposes without the production of any other counterparts. - 3 - 4 11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal substantive laws (and not the laws of conflicts) of the State of New York. 12. Assignability. 12.1. This Agreement is personal in nature and none of the parties hereto shall, without the written consent of the other parties hereto, assign or transfer this Agreement or any rights or obligations hereunder, except by operation of law or pursuant to the terms of this Section 12. 12.2. Nothing expressed or implied herein is intended or shall be construed to confer upon or give to any person, other than the parties hereto, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof. 13. Amendments; Waivers. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. Any such written instrument must be approved by the board of directors of the Company to be effective as against the Company and by the board of directors of Group to be effective as against Group. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14. Notice. Any notice to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, and, if to the Company or to Group, addressed to them at 11100 Santa Monica Boulevard, Los Angeles, California 90025, Attn: General Counsel, and, if to the Director, addressed to him at the address set forth below his signature hereto, or to such other address as any party may designate by written notice to the other. 15. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 4 - 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of May 1, 1994. "Company" INVESTMENT TECHNOLOGY GROUP, INC., a Delaware corporation By /s/ Raymond L. Killian, Jr. --------------------------------- Its____________________________ "Group" JEFFERIES GROUP, INC., a Delaware corporation By /s/ Frank E. Baxter --------------------------------- FRANK E. BAXTER, Chairman of the Board and Chief Executive Officer "Director" /s/ Scott P. Mason ------------------------------------ SCOTT P. MASON Address for Notices: 46 Glen Road Wellesley, Mass. 02181 - 5 - EX-11 15 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 JEFFERIES GROUP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
For The Three For The Six Months Ended Months Ended ----------------------- ----------------------- June 24, June 25, June 24, June 25, 1994 1993 1994 1993* -------- -------- -------- -------- Common stock and common stock equivalents: Average common stock outstanding . . . . . 5,880 4,630 5,805 4,629 Common stock equivalent shares related to employee stock options and restricted stock . . . . . . 365 208 345 206 ----- ----- ----- ----- Total average common stock and common stock equivalents used for primary computation . . . . . 6,245 4,838 6,150 4,835 Average common stock assumed issued pursuant to convertible subordinated debentures and an adjustment of average common stock equivalents to period-end market price, if higher than average price . . . . . . . . 1 1,362 1 1,372 ----- ----- ----- ----- Total average common stock, common stock equivalents and other dilutive securities . . . . 6,246 6,200 6,151 6,207 ===== ===== ===== ===== Earnings: Net earnings . . . . . . . . . . . . . . . $4,782 $6,072 $10,621 $14,696 Adjustment to subsidiary earnings - common stock equivalents on subsidiary . . . . . . . . . . . . . . . 33 -- 125 -- ------ ------ ------- ------- Total earnings for primary computation . . . . . . . . . 4,749 6,072 10,496 14,696 Eliminate interest expense (net of taxes) on convertible subordinated debentures . . . . . . . . -- 370 -- 743 ------ ------ ------- ------- Total earnings for fully diluted computation . . . . . . $4,749 $6,442 $10,496 $15,439 ====== ====== ======= ======= Earnings per share: Primary . . . . . . . . . . . . . . . . . $ 0.76 $ 1.26 $ 1.71 $ 3.04 ====== ====== ======= ======= Fully diluted . . . . . . . . . . . . . . $ 0.76 $ 1.04 $ 1.71 $ 2.49 ====== ====== ======= =======
* The 1993 first quarter includes a benefit for the cumulative effect of changes in accounting principle of $.28 and $.22 per share primary and fully diluted, respectively. -----END PRIVACY-ENHANCED MESSAGE-----