EXHIBIT 10.9
November 4, 2002
Mr. Lloyd H. Feller
3448 Clay Street
San Francisco, CA. 94118
Dear Lloyd:
We are pleased to offer you a position as Executive Vice President,
General Counsel and Secretary of Jefferies Group, Inc. ("Group") and Jefferies &
Company, Inc. ("Jefferies") and you will also be a member of the Executive
Committee of Jefferies. Initially, you will be based in our San Francisco
office, it being understood that you will relocate to the New York area prior to
the end of 2003 and thereafter will be based in Jefferies' New York and Stamford
offices. This letter will govern the terms of your employment for a two year
period from the commencement of your employment through the date which is two
years thereafter (the "Term"). You will commence your employment at a mutually
acceptable time and date. You will report to me in the exercise of your duties
and responsibilities.
I. COMPENSATION
A. During the Term, you will receive a base salary at the rate of
$250,000 per annum ("Base Salary"), payable in equal
installments on approximately the 15th and last day of each
month.
B. Except as otherwise provided in Section III, subject to you
remaining in the employ of Jefferies and/or Group on the date
such payments are to be made, you will receive a guaranteed
bonus for each year of the Term, in the amount of $650,000
("Guaranteed Bonus"), which will be paid in equal quarterly
installments.
C. In addition to the foregoing, you may receive an additional
discretionary bonus, the amount and payment of which shall be in
Jefferies' sole discretion.
D. When you commence employment, Jefferies shall invest in your
name and on your behalf, $100,000 (which will be deemed
compensation to you) in the Jefferies Employees Opportunity
Fund.
The amounts set forth in this Section I are gross amounts, and Jefferies
shall be required to withhold from such amounts deductions with respect to
Federal, state and local taxes, FICA, Medicare, unemployment compensation taxes
and similar taxes, assessments or withholding requirements. You will be given
the opportunity to participate in the Jefferies' Deferred
Compensation Plan in 2003 and all other years in which such program is available
to senior executives of Group and/or Jefferies.
Jefferies will pay the expenses of your relocation from San Francisco
to the New York area in accordance with Jefferies' policies with respect to
reimbursement for relocation expenses. If any of such expenses are deemed income
to you, Jefferies will pay you an additional sum to "gross up" the amount of
such expenses that are deemed income to you so that you do not have any tax
liability for such expenses. Jefferies agrees that you will not be required to
relocate to New York until, at the earliest, October 1, 2003.
II. RESTRICTED STOCK AND OPTIONS
In addition to the foregoing, I will recommend to the Compensation
Committee of Group that you receive 25,000 shares of restricted common stock of
Group and options to purchase 25,000 shares of Group common stock. One-fifth of
the restricted stock will vest on each of the first through fifth anniversaries
of the date of grant. The options will be granted and priced at the closing
price of Group common stock on the date this agreement is executed by both
parties and will vest and become exercisable annually over a three year period
from the date of grant.
The grant of the restricted stock and options which are described above
is contingent upon the approval of the Group Compensation Committee and the
execution of a restricted stock agreement (in the form of Exhibit 1). If
Jefferies terminates your employment for Cause (as defined herein) or you resign
your employment without Good Reason (as defined herein) prior to the date the
restricted stock and options would have vested, the restricted stock and options
will be forfeited. In the event of termination of your employment by Jefferies
without Cause or by you for Good Reason prior to the date the restricted stock
and options would have vested, any unvested restricted stock will immediately
vest and the options will become immediately exercisable.
In the event of a "Change of Control" prior to the date the restricted
stock and options would have vested if, but only if, such Change of Control
results in an impact on your duties, any unvested restricted stock will
immediately vest and the options will become immediately exercisable. For
purposes hereof, a "Change of Control" will be defined as and shall occur (a) if
any person (as such term is used in Sections 3(a)(9) and 13(d) of the Securities
Exchange Act of 1934 (the "Act")) becomes a beneficial owner (as such term is
used in Rule 13d-3 of the Act) of more than 51% of the voting stock of Jefferies
or Group, (b) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, holders of
Jefferies' or Group's securities entitled to vote generally in the election of
directors of Jefferies or Group immediately prior to such transaction hold in
the aggregate less than a majority of the then-outstanding securities of
Jefferies or Group (or any successor company or entity) entitled to vote
generally in the election of the directors of Jefferies or Group (or such other
company or entity) after such transaction; or (c) a sale of all or substantially
all of the assets of Jefferies or Group.
III. TERMINATION
Termination by Jefferies
A. We may terminate your employment under this agreement without
Cause on thirty (30) days notice.
B. We may terminate your employment under this agreement for
Cause at any time by notifying you of such termination.
C."Cause" shall mean a determination by the Board of Directors,
subject to clause 6 below, that you have:
1. Committed an act that constitutes fraud;
2. Willfully engaged in misconduct that is (a)
materially injurious to Jefferies, or (b) a material violation
of Jefferies' internal policies or procedures, including but not
limited to Jefferies Group, Inc.'s Statement of Employee
Conduct, as amended from time to time;
3. Committed an act, which in the written opinion of
counsel, will lead to your suspension or bar by any regulatory
body or self-regulatory organization having jurisdiction over
you;
4. Willfully failed to execute a directive of the
Executive Committee or your supervisor or committed an act
against the directive of the Executive Committee or your
supervisor (unless such directive in either case would in your
reasonable judgment result in act or failure to act that is
illegal, a breach of a fiduciary duty or unethical); or
5. Negotiated or accepted employment with a competitor
of Jefferies prior to your termination hereunder.
Termination by you
A. You may terminate this Agreement at any time for Good Reason or
without Good Reason by giving notice thereof at least thirty
(30) days before the effective date of such termination.
B. "Good Reason" means
1. Any failure by Group and/or Jefferies to pay or
provide the compensation and benefits, including
the grant of the restricted stock and options,
provided for in this agreement after (i) notice
from you of such failure and (ii) a reasonable
period of time within which to cure such
failure; or.
2. (a) a change in your responsibilities which
represents a materially adverse change in your
responsibilities as in effect at any time within
the preceding three (3) months; (b) any change
in your title, other than by promotion, or (c)
termination of your membership on the Executive
Committee of Jefferies or any committee or
successor to that committee performing a
substantially similar function; or
3. Any request or directive that you take any
action, including any request or directive that
you not take action, that in your reasonable
judgment could involve you in an illegal act,
breach of fiduciary duty or unethical conduct;
provided, however, that for such request or
directive to constitute Good Reason, you shall
give notice of such concern to the Chairman of
the Audit Committee and such request or
directive shall not have been withdrawn or the
action corrected within ten (10) days of such
notice; or.
4. Any request that you relocate to any place other
than the greater New York area (which includes
Jefferies' Connecticut office), without your
prior written agreement to relocate, except for
reasonably required business travel.
Severance Benefits
A. If your employment under this agreement is terminated on or
before the end of the Term by us without Cause or by you for Good Reason, we
shall pay you a lump sum cash payment, within ten (10) days of the date of such
termination, equal to the unpaid Base Salary to the end of the Term and all
unpaid Guaranteed Bonuses to the end of the Term.
B. If the your employment under this agreement is terminated by
the us for Cause or by the you without Good Reason, the we shall pay you a lump
sum cash payment within ten (10) days of the date of such termination, equal to
your unpaid Base Salary to the termination date.
C. If the your employment under this agreement is terminated by
reason of your death or your total disability (as defined in Group's long term
disability plan), we shall pay you your unpaid Base Salary to the date of
termination plus a prorated portion of the Guaranteed Bonus, (prorated from the
date of the last quarterly payment to the date of termination). Notwithstanding
anything to the contrary contained in this or any other agreement, the
restrictions on your restricted stock grant shall be removed and all such stock
shall immediately vest.
D. If you are entitled to receive payments or other benefits
under this agreement upon the termination of your employment, you hereby
irrevocably waive the right to receive any payments or other benefits under any
other severance or similar plan maintained by the Group or Jefferies ("Other
Severance Plan"), provided, however, that if the payments and other benefits
provided under such Other Severance Plan exceed the payments and other benefits
under this Agreement, you, in your sole discretion, may elect to receive the
payments and benefits under such Other Severance Plan in lieu of the payments
and benefits under this Agreement upon the termination of your employment.
Notwithstanding anything to the contrary in this Agreement, nothing contained
herein shall affect your rights with respect to any stock option, restricted
stock or other equity participation granted pursuant to any stock option,
restricted stock, or other equity participation plan of Group or its affiliates,
all of which shall be governed by the terms of the governing documents,
including the specific grant documents.
IV. MISCELLANEOUS
In addition to and except for the matters governed by this Agreement,
you will be entitled to all employee benefits and perquisites under such plans
and programs as provided to other senior executives of Group and/or Jefferies
from time to time.
Group and Jefferies will indemnify and hold you harmless to the fullest
extent permitted by applicable law if you are or become a party to, a subject or
a target of, or witness or a participant in, or is threatened to be made a party
to, a subject or a target of, or a witness or other participant in, any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that you in good
faith believe might lead to the institution of any such action, suit, proceeding
or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (other than an action by or in the right
of the Group or Jefferies) (a "Claim") by reason of (or arising in part out of)
any event or occurrence related to the fact that you are or was a director,
officer, manager, member, employee, agent or fiduciary of Group, or any
subsidiary of Group, or is or was serving at the request of Group or one its
subsidiaries as a director, officer, manager, member, employee, agent or
fiduciary of another corporation, limited liability company, partnership, joint
venture, trust or other enterprise, or by reason of any action or inaction on
your part while serving in such capacity against any and all Expenses (as
defined below), including any and all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses. Such payment
of Expenses shall be made Group as soon as practicable but in any event no later
than twenty (20) business days after you make written demand therefore to Group.
Group shall pay all Expenses incurred by you in advance of the final
disposition of a Claim as soon as practicable after you incur the same, but in
any event no later than twenty (20) business days after you make written demand
therefore to the Group. You hereby undertake to repay the amount of any Expenses
paid in advance if it is ultimately determined that you are not entitled to be
indemnified by the Group. Group may request that you reconfirm this undertaking
in writing prior to paying any Expense in advance. Any obligation by you to
reimburse Group for any Expense advance shall be unsecured and no interest shall
be charged thereon.
"Expenses" shall mean any and all expenses (including attorneys' fees
and all other costs, expenses and obligations) incurred in connection with
investigating, defending, being a witness in, or a subject or a target of, or
participating in (including on appeal), or preparing to defend, to
be a witness in, or a subject or a target of, or to participate in, any action,
suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or
investigation; any and all judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by Group, which approval
shall not be unreasonably withheld or delayed) of any Claim subject to
indemnification hereunder; and any and all federal, state, local or foreign
taxes imposed on you as a result of the actual or deemed receipt of any payments
under this Agreement.
The indemnification and advancement of expenses provided by this
agreement shall be in addition to any rights to which you may otherwise be
entitled under the Certificate of Incorporation or its Bylaws of Group and/or
Jefferies (as now or hereafter in effect), any other agreement, the Delaware
General Corporation Law, or otherwise.
This letter agreement, including the exhibit, constitutes the entire
agreement between you and Jefferies with respect to the subject matters referred
to herein, and supersedes all prior or contemporaneous negotiations, promises,
covenants, agreements and representations of every kind or nature with respect
thereto, all of which have become merged and finally integrated into this letter
agreement. This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the each of us and our respective successors, assigns
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the Group)
heirs and personal and legal representatives. The provisions of this agreement
that relate to severance benefits, the restricted stock and options terms and
grants and the indemnification and advancement of expenses shall survive the
termination of your employment or the expiration of the Term.
If the above terms are acceptable to you, I request that you signify
your acceptance of the terms of this letter by signing and dating the copy
enclosed and returning it to me.
Sincerely,
/s/ Richard B. Handler
Richard B. Handler
Chairman and Chief Executive Officer
Enclosure
AGREED TO AND ACCEPTED BY:
/s/ Lloyd H. Feller Dated: 11/4 , 2002
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Lloyd H. Feller