EXHIBIT 10.15
JEFFERIES & COMPANY, INC.
DEFERRED COMPENSATION AGREEMENT
As Amended and Restated as of December 29, 2005
     WHEREAS, Richard B. Handler (“Executive”) previously has entered into
agreements with Jefferies & Company, Inc. (the “Company”) under which he
deferred certain cash compensation, which deferred compensation has been
notionally invested in a variety of investment vehicles at the direction of
Executive (the “Deferral Agreement”); and
     WHEREAS, Executive and the Company desire to amend and restate the terms of
the Deferral Agreement governing such deferred compensation in order to cause
such deferred compensation to be subject to Section 409A of the Internal Revenue
Code (the “Code”), to conform the terms of the deferred compensation to the
requirements of Section 409A, to specify distribution dates for such deferred
compensation as permitted under Proposed Treasury Regulation (“PTR”) § 1.409A,
Preamble § XI.C. and IRS Notice 2005-1, Q/A 19(c), and to amend certain other
terms of the Deferral Agreement as permitted under Section 409A, PTR § 1.409A
and IRS Notice 2005-1, and with the intention to confirm the other terms of the
Deferral Agreement.
     NOW, THEREFORE, for good and valuable consideration the receipt and
adequacy of which the parties hereby acknowledge, and intending to be legally
bound, Executive and the Company hereby agree as follows (the “Agreement”):
     1. Scope of Agreement. This Agreement amends and restates the Deferral
Agreement of the parties with respect to the deferral of cash amounts payable by
the Company to Executive, as referenced in Section 1 of the “Election to Defer
Receipt of Incentive Compensation” currently in effect. The parties hereto agree
that the deferred amounts subject to this Agreement as of September 30, 2005,
and the notional investments of such deferred amounts at that date, are
reflected in the “Statement of Account” dated as of September 30, 2005, and that
the Agreement does not apply to any other deferral accounts or deferred amounts.
This Agreement makes no change in the amounts originally deferred and credited
to Executive’s Deferral Account maintained hereunder (the “Deferral Account”),
in the notional investments by which the value of Executive’s Deferral Account
currently is measured or in the amounts previously credited or debited to such
Deferral Account in connection with those notional investments. This Agreement
does not apply to deferrals under the Jefferies Group, Inc. Deferred
Compensation Plan and deferrals governed by the Jefferies Group, Inc. Stock
Option Gain and Stock Award Deferral Program.
     2. Notional Investments.
     (a) Notional Investment Vehicles. The Company has previously and will
hereafter make available a reasonable variety of investment vehicles in which
the balance of Executive’s Deferral Account may be deemed invested on a notional
basis, for the purpose of determining gains and losses in the Deferral Account.
Executive is permitted to request specific investment vehicles, which the
Company will make available on a notional basis if the Company reasonably
determines that (i) the Company can adequately hedge its notional deferred
compensation obligation to Executive, (ii) the Executive has and will have a
cash or cash equivalent balance in his Deferral Account available and sufficient
to provide for the notional investment, including

 

--------------------------------------------------------------------------------

 

any future commitments or capital calls that are mandatory terms of the
investment, and (iii) the Company otherwise has no legal or practical impediment
to the Company making such notional investment available and to the Company
itself making the identical actual investment (if it should choose to do so).
The Company’s determination regarding whether any particular notional investment
vehicles shall be available or remain available is based on considerations as to
the Company’s financial and business interests and legal compliance, and does
not constitute a judgment as to the suitability of the notional investment for
the Executive.
     (b) Reallocation of Deferral Account Balances. Executive will be permitted
to reallocate funds from an existing notional investment to another available
notional investment if the existing notional investment is one that, if an
actual investment had been made therein, such investment could be liquidated for
an ascertainable amount in an active market or through a right of redemption,
unless the Company determines not to permit reallocation because of a legal or
practical impediment affecting the Company. The foregoing notwithstanding, many
of the notional investments that have been and may hereafter be made available
are illiquid in nature, and therefore no election may be made by Executive to
reallocate any Deferral Account balance out of such an illiquid notional
investment in the absence of an independent event that would result in liquidity
for the related actual investment.
     (c) Deferral Account Statements. The Company will periodically furnish a
“Statement of Account” showing the notional investment vehicles in which cash
balances in the Deferral Account are then deemed invested, a current value for
each notional investment (to the extent then reasonably available), aggregate
Deferral Account value, and other relevant information.
     (d) Interest on Cash Balances. Interest on cash balances in the Deferral
Account shall be calculated and credited, from and after December 1, 2005, as
though such balances were invested in the Money Market Fund that is available in
the same period for notional investments of cash in the Jefferies Group, Inc.
Deferred Compensation Plan.
     3. Risks to Executive. Executive acknowledges and agrees that, as a result
of his deferrals of compensation hereunder, Executive is subject to risks and
limitations on his rights relating to such deferrals, including the following:
     (a) Risk as Unsecured Creditor of Company. Executive is an unsecured
creditor of Company, with the rights as such enforceable against the Company. No
assets of the Company or its parent or subsidiaries or affiliates secure the
Company’s obligations to Executive hereunder, and Executive has no claim against
any specific assets. Thus, even if the Company acquires or holds assets that
match Executive’s notional investments, Executive will have no claims or rights
with respect to those particular assets. Other creditors of the Company or its
subsidiaries may have or in the future be granted rights senior to those of
Executive.
     (b) Undiversified Risk. To the extent that Executive holds other
investments in the Company or its parent (Jefferies Group, Inc.) or subsidiaries
or affiliates or depends on the Company or its parent or subsidiaries or
affiliates for payment of other compensation (including other deferred
compensation, health, welfare retirement and other benefits, and equity-based
compensation), the risks of deferral hereunder may be more significant to
Executive because they represent an undiversified risk.
     (c) Investment Risk of Notional Investments. The amount distributable from
the Deferral Account will equal the value of the Deferral Account (or
distributable portion thereof) at

2

--------------------------------------------------------------------------------

 

the time of distribution. Over time, the Deferral Account value will vary based
on the changes in value and investment returns of the notional investments in
which the Deferral Account balance is deemed invested. The Company and its
parent and subsidiaries and affiliates have made no guarantee as to the value of
the Deferral Account. The amount distributable from the Deferral Account may be
less than the amounts originally deferred. Executive has been and will be
permitted to freely choose the amount and timing of the deemed investment of his
Deferral Account balance in the notional investments vehicles made available
hereunder, subject to Section 2 above. The Company, its parent, subsidiaries and
affiliates, and its and their directors, officers, shareholders, employees and
agents, have not provided to Executive any financial, investment or other
advice, and will not provide such advice to Executive, with respect to the
deferral of compensation hereunder or any decision to make any particular
notional investment. Executive bears the full risk that any or all such
investments may decline in value or fail to appreciate at a rate deemed
satisfactory by Executive. Executive is solely responsible for determining the
suitability of such investments. The Company recommends that Executive consult
with his own investment advisors regarding financial or investment decisions
relating to the Deferral Account.
     (d) Other Risks. The Company, its parent, subsidiaries and affiliates, and
its and their directors, officers, shareholders, employees and agents, have not
provided to Executive any financial planning, estate-planning, tax, legal or
other advice, and will not provide such advice to Executive, with respect to the
deferral of compensation hereunder. Executive bears these risks fully with
respect to deferrals of compensation hereunder.
     4. Distributions. The Deferral Account will be distributed in accordance
with this Section 4, subject to Executive’s right to file a different
distribution election under Section 4(e) on or before December 31, 2006.
References to the balance in the Deferral Account refer to the balance at the
time of a given distribution:
     (a) Distributions Elected by Executive. As of the effective date of this
amended and restated Agreement, Executive has elected, and the Company agrees to
distribute, the Deferral Account as follows, subject to earlier distribution as
provided in Section 4(b), (c) and (d) below:

  (i)   100% of the Deferral Account balance will be distributed at the date six
months after termination of Executive’s employment with the Company and its
parent and subsidiaries for any reason other than death in a transaction
constituting a “separation from service” within the meaning of PTR § 1.409A-1(h)
(or a successor regulation thereto) (“Termination”); and     (ii)   0% of the
Deferral Account balance will be distributed in ___[up to ten] installments,
such installments to be paid on the first business day of each January following
Termination except that the first installment will be on the later of the first
business day of January following Termination or the date six months after
Termination.

     (b) Change in Control. In the event of a Change in Control, as defined
below, the Company may determine to terminate this Agreement (and the deferral
plan governed by this Agreement) and to make a distribution in full of the
Deferral Account. Such determination may be made only by the Board of Directors
of Jefferies Group, Inc. in accordance with PTR § 1.409A-3(h)(2)(viii)(B) (and
any successor regulation thereto) and prior to the consummation of the
transaction that constitutes a Change in Control. The distribution shall be made
within the time specified in PTR § 1.409A-3(h)(2)(viii)(B) (and any successor
regulation thereto). For

3

--------------------------------------------------------------------------------

 

purposes of this Agreement, a “Change in Control” shall mean a change in the
ownership or effective control of Jefferies Group, Inc. (or its successor
corporation), or in the ownership of a substantial portion of the assets of
Jefferies Group, Inc. (or its successor corporation), within the meaning of Code
Section 409A(a)(2)(A)(v) and regulations thereunder (including PTR §
1.409A-3(a)(5) & § 1.409A-3(g)(5) and any successor regulation thereto).
     (c) Death. In the event of the death of Executive, the Company will pay the
balance of the Deferral Account to the beneficiary or beneficiaries designated
by Executive or, if Executive has made no such designation or no beneficiary
survives, to Executive’s estate. In either case, such payment will be made in a
single sum at the date three months following the date of Executive’s death but
only if, and not earlier than, such time as (i) the Company shall have received
documentation reasonably satisfactory to the Company establishing the right of
the payee to receive the distribution hereunder, and (ii), if an installment
distribution was due within the period between death and such payment, such
distribution shall be duly made at the specified date. Any designation of a
beneficiary other than Executive’s spouse must be consented to by the spouse.
     (d) Withdrawal Upon Unforeseeable Emergency. Executive and, after
Executive’s death, any beneficiary shall have the right to withdraw the balance
in the Deferral Account in the event of an unforeseeable emergency, but only if
all of the conditions of Code Section 409A(a)(2)(B) are satisfied. A withdrawal
is deemed a distribution for purposes of this Agreement.
     (e) Change in Distribution Date Elected in 2005. Executive may, prior to
December 31, 2006, elect distribution dates different from those specified in
this Section 4 by delivering to the Company a written and signed document
setting forth a new election of distribution dates, provided that (i) any change
in distribution dates will be permitted only to the extent permitted under, and
in accordance with, PTR § 1.409A, Preamble § XI.C & Notice 2005-1, Q/A 19(c);
(ii) any such election must elect distribution dates that in all cases comply
with Code Section 409A and regulations thereunder; and (iii) no distribution may
be elected for a distribution date prior to Termination except if and to the
extent that the distribution will not result in a loss of tax deductibility for
the distributed amount under Code Section 162(m), in the reasonable opinion of
the Company, so that all distributed amounts hereunder remain fully tax
deductible by the Company and its parent.
     (f) Redeferral of Deferral Account. After 2006, at least 12 months prior to
the earliest distribution under Section 4(a), Executive, while still an employee
of the Company or its parent or a subsidiary, may elect to defer the amounts
credited to the Deferral Account for an additional period of at least five
years, but only if all of the conditions of Code Section 409A(a)(4)(C) are
satisfied. An election to extend the Deferral Period shall be made in the manner
prescribed by the Company.
     (g) Form of Payment. The Company will pay any distribution in cash, except
that the Company may elect to distribute assets that match a notional investment
of Executive to settle the portion of Executive’s Deferral Account deemed
invested in such notional investment vehicle at the date of distribution.
     5. Indemnification. Executive agrees to indemnify, defend and hold
harmless, to the fullest extent permitted by law, the Company, its parent,
subsidiaries and affiliates, and its and their respective directors, officers,
shareholders, employees and agents from and against any and all claims,
liability, damages, costs (including, but not limited to, attorneys’ fees), and
other

4

--------------------------------------------------------------------------------

 

causes of action arising from Executive’s deferral of compensation governed by
this Agreement, any negative consequence to Executive (including unsatisfactory
performance or returns from investments), any breach by Executive of this
Agreement, or any action or failure to act by Executive relating to the Deferral
Account.
     6. Other Provisions.
     (a) Deferred Compensation Provisions Applicable. The following provisions
of the Jefferies Group, Inc. Deferred Compensation Plan, as in effect at the
date of this Agreement, shall apply to this Agreement:

  •   Section 8.1 (Unsecured Claims)     •   Section 8.2 (Anti-alienation and
Assignment)     •   Section 8.3 (No Rights to Continued Employment)     •  
Section 8.4 (Administration)     •   Section 8.6 (Governing Law)

For purposes of this Agreement, references in the Deferred Compensation Plan to
the “Plan” shall be deemed to mean this Agreement, and defined terms used in the
Deferred Compensation Plan provisions incorporated in this Agreement have
meanings as defined elsewhere in the Deferred Compensation Plan.
     (b) Tax Withholding. The Company and its parent and subsidiaries will have
the right to withhold from any amount payable hereunder and any other right to
payment to Executive any withholding taxes resulting from or attributable to a
distribution from the Deferral Account, and any other taxes relating to the
Deferral Account.
     (c) Changes in Deferral Account Value and Distributions Not Compensation
for Purposes of Other Plans. Amounts credited to Executive’s Deferral Account as
investment returns and amounts distributed in settlement of such Deferral
Account shall not be deemed to be compensation to Executive for purposes of
calculating the amount of Executive’s benefits or contributions under a pension
plan or retirement plan (qualified under Section 401(a) of the Internal Revenue
Code) or any non-qualified supplemental retirement plan, the amount of life
insurance payable under any life insurance plan, the amount of any disability
benefit payments payable under any disability plan, or the amount of any
severance payment or other payment or benefit under an employment agreement or
compensation program or arrangement except to the extent specifically provided
in such plan, employment agreement, program or arrangement (expressly referring
to deferred compensation under this Agreement).
     (d) Compliance with Code Section 409A. All terms of this Agreement, the
deferrals governed by this Agreement, and the Deferral Account are subject to
Code Section 409A. Therefore, the elections and terms set forth or incorporated
in this Agreement notwithstanding, if, under Code Section 409A or any other
provision of the Code or regulations thereunder, as presently in effect or
hereafter amended or promulgated (including Proposed Treasury Regulations), any
elections or rights of Executive with respect to the Deferral Account or the
deferrals hereunder would result in Executive’s constructive receipt of income
(for income tax purposes) relating to the Deferral Account or a tax penalty
prior to the actual distribution of the Deferral Account by the Company, such
elections or rights shall be automatically modified and limited to the extent
necessary such that Executive will not be deemed to be in constructive receipt
of such income or subject to a tax penalty prior to the actual distribution. The
Company

5

--------------------------------------------------------------------------------

 

shall have no authority to accelerate any distribution hereunder except to the
extent permitted under Code Section 409A and regulations thereunder.
Dated this 29th day of December, 2005.

            JEFFERIES & COMPANY, INC.
      By:   /s/ Joseph A. Schenk         Title: Executive Vice President       
        Executive’s Signature:
      /s/ Richard B. Handler       Richard B. Handler           

6