EXECUTION COPY
Exhibit 10.1
INVESTMENT AGREEMENT
By and Between
LEUCADIA NATIONAL CORPORATION
and
JEFFERIES GROUP, INC.
Dated as of April 20, 2008

 

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

 

TABLE OF CONTENTS

              Page  
ARTICLE I DEFINITIONS
    1  
 
       
Section 1.01. Definitions
    1  
 
       
Section 1.02. General Interpretive Principles
    3  
 
       
ARTICLE II SALE AND PURCHASE OF THE SECURITIES
    3  
 
       
Section 2.01. Sale and Purchase of the Securities
    3  
 
       
Section 2.02. Closing
    3  
 
       
ARTICLE III REPRESENTATIONS AND WARRANTIES
    4  
 
       
Section 3.01. Representations and Warranties of Jefferies
    4  
 
       
Section 3.02. Representations and Warranties of Leucadia
    8  
 
       
ARTICLE IV ADDITIONAL AGREEMENTS OF THE PARTIES
    12  
 
       
Section 4.01. Taking of Necessary Action
    12  
 
       
Section 4.02. Securities Laws; Legends
    12  
 
       
Section 4.03. Regulatory Matters
    13  
 
       
Section 4.04. Share Listing
    14  
 
       
Section 4.05. Registration Rights Agreement; Letter Agreement
    14  
 
       
ARTICLE V ADDITIONAL AGREEMENTS
    14  
 
       
Section 5.01. Leucadia Closing Deliverables
    14  
 
       
Section 5.02. Jefferies Closing Deliverables
    14  
 
       
ARTICLE VI MISCELLANEOUS
    14  
 
       
Section 6.01. Survival of Representations and Warranties
    14  
 
       
Section 6.02. Notices
    14  
 
       
Section 6.03. Entire Agreement; Third Party Beneficiaries; Amendment
    15  
 
       
Section 6.04. Counterparts
    16  
 
       
Section 6.05. Governing Law
    16  
 
       
Section 6.06. Public Announcements
    16  
 
       
Section 6.07. Expenses
    16  
 
       
Section 6.08. Successors and Assigns
    16  
 
       
Section 6.09. Remedies; Waiver
    16  
 
       
Section 6.10. Consent to Jurisdiction
    16  
 
       
Section 6.11. Severability
    17  
 
       
Section 6.12. Headings
    17  

 

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

 

Exhibits
A — Form of Standstill Agreement

 
 ii

 

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

 

INVESTMENT AGREEMENT
     INVESTMENT AGREEMENT (the “Agreement”), dated as of April 20, 2008 , by and
between Leucadia National Corporation, a New York corporation (“Leucadia”), and
Jefferies Group, Inc., a Delaware corporation (“Jefferies”). Capitalized terms
not otherwise defined where used shall have the meanings ascribed thereto in
Article I.
     WHEREAS, Jefferies has agreed to purchase, and Leucadia has agreed to sell,
subject to the terms and conditions of this Agreement, the Leucadia Shares (as
defined below) in exchange for the Jefferies Shares (as defined below) and cash;
     WHEREAS, Jefferies and Leucadia desire to set forth certain agreements
herein.
     NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
Definitions
     Section 1.01. Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
     “Affiliate” or “affiliate” shall mean, with respect to any Person, any
other Person which directly or indirectly controls or is controlled by or is
under common control with such Person. As used in this definition, “control”
(including its correlative meanings, “controlled by” and “under common control
with”) shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). To the extent that any such term is used in relation to or in
connection with any statute and the definition of such term in such statute is
broader or different, then, in such context, such term shall have the meaning
set forth in such statute.
     “Agreement” shall have the meaning set forth in the preamble hereto.
     “Ancillary Documents” shall mean the Standstill Agreement and the
Registration Rights Agreements.
     “Closing” and “Closing Date” shall have their meanings set forth in Section
2.02(a).
     “DGCL” shall mean the Delaware General Corporation Law.
     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
     “GAAP” shall mean generally accepted accounting principles in the United
States of America.

 

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

 

     “Governmental Entity” shall mean any court, administrative agency or
commission or other governmental authority or instrumentality, whether federal,
state, local or foreign, and any applicable industry self-regulatory
organization.
     “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
     “Jefferies” shall have the meaning set forth in the preamble hereto.
     “Jefferies Common Stock” shall mean the common stock, par value $.0001 per
share, of Jefferies.
     “Jefferies Shares” shall have the meaning set forth in Section 2.01.
     “Leucadia” shall have the meaning set forth in the preamble hereto.
     “Leucadia Common Stock” shall mean the common shares, par value $1.00 per
share, of Leucadia.
     “Leucadia Shares” shall have the meaning set forth in Section 2.01.
     “Leucadia Voting Debt” shall have the meaning set forth in Section 3.02(e).
     “Material Adverse Effect” shall mean any material adverse effect on (a) the
financial condition, results of operations, assets, liabilities or business of
Jefferies and its Subsidiaries taken as a whole or Leucadia and its Subsidiaries
taken as a whole, as the case may be, (provided, however, that, with respect to
this clause (a), a “Material Adverse Effect” shall not be deemed to include any
effects to the extent resulting from (i) changes, after the date hereof, in
generally accepted accounting principles or regulatory accounting requirements
applicable to banks or savings associations and their holding companies
generally, (ii) changes, after the date hereof, in laws, rules or regulations of
general applicability or interpretations thereof by Governmental Entities,
(iii) actions or omissions of Jefferies taken with the prior written consent of
Leucadia or actions or omissions of Leucadia taken with the prior written
consent of Jefferies, as the case may be, or (iv) changes, after the date
hereof, in general economic or market conditions generally affecting the other
companies in the industries in which Jefferies and its Subsidiaries, or Leucadia
and its Subsidiaries, as the case may, operate, except, with respect to clauses
(i), (ii) and (iv), to the extent that the effects of such changes are
disproportionately adverse to the financial condition, results of operations,
assets, liabilities or business of Jefferies and its Subsidiaries, taken as a
whole, or Leucadia and its Subsidiaries, taken as a whole), (b) the ability of
Jefferies or Leucadia to perform its respective obligations under this Agreement
or the Ancillary Documents or (c) the validity or enforceability of this
Agreement or any of the Ancillary Documents or the rights or remedies of
Jefferies or Leucadia hereunder and thereunder.
     “NYSE” shall mean the New York Stock Exchange.
     “Person” or “person” shall mean an individual, corporation, association,
partnership, group (as such term is used in Section 13(d)(3) of the Exchange
Act), trust, joint venture,

2

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

 

business trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
     “Registration Rights Agreements” shall mean the separate registration
rights agreements to be executed by Jefferies and Leucadia, which shall each be
consistent with the terms set forth in Annex A to Exhibit A of this Agreement.
     “Reports” shall mean all periodic reports, registration statements and
proxy statements, together with any amendments required to be made with respect
thereto, that were required to be filed with the SEC under the Securities Act or
the Exchange Act.
     “SEC” shall mean the United States Securities and Exchange Commission.
     “Securities Act” shall mean the Securities Act of 1933, as amended.
     “Standstill Agreement” shall mean the standstill agreement executed by
Jefferies and Leucadia at the Closing, which shall be in the form attached
hereto as Exhibit A.
     “Subsidiary” shall mean those certain entities listed on Exhibit 21 to the
most recent Annual Report on Form 10-K as filed with the SEC by Jefferies or
Leucadia, as the case may be.
     “Transactions” shall have the meaning set forth in Section 3.01(c).
     Section 1.02. General Interpretive Principles. Whenever used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders. The name assigned this Agreement
and the section captions used herein are for convenience of reference only and
shall not be construed to affect the meaning, construction or effect hereof.
Whenever the words “include,” “includes,” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.” Unless otherwise specified, the terms “hereto,” “hereof,” “herein”
and similar terms refer to this Agreement as a whole (including the exhibits,
schedules and disclosure statements hereto), and references herein to Articles
or Sections refer to Articles or Sections of this Agreement.
ARTICLE II
Sale and Purchase of the Securities
     Section 2.01. Sale and Purchase of the Securities. Subject to all of the
terms and conditions of this Agreement, and in reliance upon the representations
and warranties hereinafter set forth, at the Closing provided for in
Section 2.02 hereof, Leucadia will sell to Jefferies, and Jefferies will
purchase from Leucadia, 10,000,000 shares of Leucadia Common Stock (the
“Leucadia Shares”), for an aggregate purchase price of (i) $100,021,353 and
(ii) 26,585,310 shares of Jefferies Common Stock (the “Jefferies Shares”).
     Section 2.02. Closing. (a) Subject to the satisfaction or waiver of the
conditions set forth in this Agreement, the purchase and sale of the Leucadia
Shares hereunder (the “Closing”) shall take place at the offices of Morgan,
Lewis & Bockius LLP at 101 Park Avenue, New York,

3

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

 

New York 10178, on April 21, 2008 beginning at 9 A.M. (New York time) or such
other place and date as the parties hereto may agree upon (the date that the
Closing occurs, the “Closing Date”).
     (b) At the Closing: (i) Leucadia will deliver to Jefferies certificates for
the Leucadia Shares registered in the name of Jefferies or its nominee;
(ii) Jefferies, in full payment for the Leucadia Shares, will deliver to
Leucadia immediately available funds, by wire transfer to such account as
Leucadia shall specify, in the amount of $100,021,353 and certificates for the
Jefferies Shares registered in the name of Leucadia or its nominee; and
(iii) each party shall take or cause to happen such other actions, and shall
execute and deliver such other instruments or documents, as shall be required
under Article V.
ARTICLE III
Representations and Warranties
     Section 3.01. Representations and Warranties of Jefferies. Except as
disclosed in the Reports filed with or furnished to the SEC by Jefferies prior
to the date hereof, Jefferies represents and warrants to, and agrees with,
Leucadia, as of the date hereof (or as of such earlier date in the case of any
representation or warranty expressly made as of an earlier date), as follows:
     (a) Organization and Good Standing of Jefferies; Organizational Documents.
Jefferies is duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority and governmental authorizations to own, operate and lease its
properties and to carry on its business as it is being conducted on the date of
this Agreement. Jefferies is duly licensed or qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, except where the failure to be so
licensed or qualified in any such jurisdiction would not reasonably be expected
to have a Material Adverse Effect.
     (b) Organization of Subsidiaries. Each Subsidiary of Jefferies is duly
incorporated and validly existing under the laws of its jurisdiction of
organization, and has all requisite corporate power and authority and
governmental authorizations to own, operate and lease its properties and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
except where the failure to be so authorized, licensed or qualified in any such
jurisdiction, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
     (c) Authorization; No Conflicts. (i) Jefferies has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Documents and
to consummate the transactions contemplated hereby and thereby (the
“Transactions”). The execution, delivery and performance by Jefferies of this
Agreement and each Ancillary Document and the consummation of the Transactions
have been duly authorized by the Board of Directors of Jefferies. No other
corporate proceedings on the part of Jefferies are necessary to authorize the
execution, delivery

4

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

 

and performance by Jefferies of this Agreement and each Ancillary Document and
consummation of the Transactions. This Agreement has been, and at or prior to
the Closing or at such time as such Ancillary Document is entered into, each
Ancillary Document to which it is a party will be, duly and validly executed and
delivered by Jefferies. This Agreement is, and upon its execution at or prior to
the Closing or at such time as such Ancillary Document is entered into, each
Ancillary Document to which it is a party will be, a valid and binding
obligation of Jefferies, enforceable against it in accordance with its terms.
     (ii) The execution, delivery and performance of this Agreement and the
Ancillary Documents, the consummation by Jefferies of the Transactions and the
compliance by Jefferies with any of the provisions hereof and thereof will not
conflict with, violate or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both would
constitute a default) under, or result in the termination of or accelerate the
performance required by, or result in a right of termination or acceleration
under, (A) any provision of the Amended and Restated Certificate of
Incorporation or By-laws of Jefferies or the certificate of incorporation,
charter, by-laws or other governing instrument of any Subsidiary of Jefferies or
(B) any mortgage, note, indenture, deed of trust, lease, loan agreement or other
agreement or instrument or any permit, concession, grant, franchise, license,
judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or
regulation applicable to Jefferies or any of its Subsidiaries or any of their
respective properties or assets.
     (d) Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required on
the part of Jefferies or any of its Subsidiaries in connection with the
execution, delivery and performance by Jefferies of this Agreement and the
Ancillary Documents to which it is a party and the consummation by Jefferies of
the Transactions.
     (e) Capitalization. The authorized capital stock of Jefferies consists of
(i) 500,000,000 shares of Jefferies Common Stock of which, as of April 18, 2008,
133,059,610 shares were issued and outstanding and (ii) 10,000,000 shares of
preferred stock, par value $.0001, of Jefferies, of which 125,000 shares,
designated as 3.25% Series A Cumulative Convertible Preferred Stock, were issued
and outstanding as of April 18, 2008. As of April 18, 2008, Jefferies held
31,542,113 shares of Jefferies Common Stock in its treasury. As of December 31,
2007 there were 38,426,001 shares of Jefferies Common Stock reserved for
issuance in connection with employee benefit, stock option and dividend
reinvestment and stock purchase plans and 23,733,127 shares of Jefferies Common
Stock remaining available for future issuance under such employee benefit, stock
option and dividend reinvestment and stock purchase plans. As of the three
months ended December 31, 2007 and March 31, 2008, the weighted average number
of shares of Jefferies Common Stock outstanding (basic and diluted treasury
method) was 140,726,000 and 141,784,000, respectively. All of the issued and
outstanding shares of Jefferies capital stock have been duly and validly
authorized and issued and are fully paid and nonassessable, and are not subject
to preemptive rights. No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which the stockholders of Jefferies may vote
(“Jefferies Voting Debt”) are issued and outstanding. Other than as set forth in
this subsection (e) or pursuant to this Agreement or the Certificate of
Designations for the 3.25% Series A Cumulative Convertible Preferred Stock,
(A) no equity securities or Jefferies Voting Debt of Jefferies are or may be
required to be issued by reason of

5

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

 

any options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever, (B) there are outstanding no securities or rights
convertible into or exchangeable for any equity securities or Jefferies Voting
Debt of Jefferies and (C) there are no contracts, commitments, understandings or
arrangements by which Jefferies is bound to issue additional equity securities
or Jefferies Voting Debt or options, warrants or rights to purchase or acquire
any additional equity securities or Jefferies Voting Debt.
     (f) Reports; Financial Statements; Controls.
     (i) Since January 1, 2005, Jefferies has filed all Reports, and has paid
all fees and assessments due and payable in connection therewith. As of their
respective dates, the Reports complied in all material respects with applicable
requirements of the Securities Act or the Exchange Act and the published rules
and regulations of the SEC and did not as of the date of filing thereof with the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
     (ii) Each of the consolidated balance sheets, and the related consolidated
statements of income, changes in stockholders’ equity and cash flows, included
in the Reports filed with the SEC under the Exchange Act fairly present in all
material respects the consolidated financial position of Jefferies and its
consolidated Subsidiaries as of the dates shown and the results of the
consolidated operations, changes in stockholders’ equity and cash flows of
Jefferies and its consolidated Subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth, subject, in the case of any
unaudited financial statements, to normal recurring year-end audit adjustments,
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto and have been prepared in
accordance with GAAP consistently applied during the periods involved, except as
otherwise set forth in the notes thereto.
     (iii) Jefferies (A) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to Jefferies, including its consolidated
Subsidiaries, is made known to the chief executive officer and the chief
financial officer of Jefferies by others within those entities, and (B) has
disclosed, based on its most recent evaluation prior to the date hereof, to
Jefferies outside auditors and the audit committee of Jefferies Board of
Directors (x) any significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely
affect Jefferies ability to record, process, summarize and report financial
information and (y) any fraud, whether or not material, that involves management
or other employees who have a significant role in Jefferies internal controls
over financial reporting.
     (g) Absence of Certain Changes. Since January 1, 2008 until the date
hereof, and except as publicly disclosed by Jefferies in the Reports filed by it
with the SEC and publicly available prior to the date hereof, and except for its
results of operations for the three month period ended March 31, 2008 previously
disclosed to Leucadia, (i) Jefferies and its Subsidiaries have conducted their
respective businesses in all material respects in the ordinary course,

6

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

 

consistent with prior practice, (ii) except for publicly disclosed ordinary
dividends on the Jefferies Common Stock and the 3.25% Series A Cumulative
Convertible Preferred Stock, Jefferies has not made or declared any distribution
in cash or in kind to its stockholders or issued any shares of its capital stock
or other equity interests and (iii) no event or events have occurred that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect.
     (h) No Undisclosed Liabilities, etc. Neither Jefferies nor its Subsidiaries
has any liabilities or obligations of any nature (absolute, accrued, contingent
or otherwise) which are not fully reflected or reserved against in the financial
statements described in Section 3.01(f), except for liabilities that have arisen
since December 31, 2007 in the ordinary and usual course of business and
consistent with past practice and that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Material Adverse Effect.
     (i) Compliance with Applicable Law. Each of Jefferies and its Subsidiaries
holds all licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business under, and has complied in all material respects
and is not in default or violation in any respect of, any law, statute, order,
rule, regulation, policy or guideline of any Federal, state or local
governmental authority applicable to Jefferies or such Subsidiary, other than
such non-compliance, defaults or violations that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect.
     (j) Legal Proceedings. Except as set forth in the Reports filed and
publicly available prior to the date hereof, neither Jefferies nor any of its
Subsidiaries is a party to any, and there are no pending, or to the knowledge of
Jefferies, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against Jefferies
or any of its Subsidiaries or to which any of their assets are subject (i) that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect or (ii) relating to or which challenges the
validity or propriety of the Transactions. Neither Jefferies nor any of its
Subsidiaries is subject to any order, judgment or decree of a Governmental
Entity that, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect.
     (k) State Takeover Laws. Jefferies’ Board of Directors has taken all action
necessary to render inapplicable to Leucadia the restrictions on “business
combinations” set forth in Section 203 of the DGCL and, to the knowledge of
Jefferies, any similar “moratorium,” “control share,” “fair price,” “takeover”
or “interested stockholder” law applicable to transactions between Leucadia and
Jefferies.
     (l) Status of Jefferies Shares. The Jefferies Shares have been duly
authorized by all necessary corporate action. When issued and sold against
receipt of the consideration therefor, the Jefferies Shares will be validly
issued, fully paid and nonassessable, will not subject the holders thereof to
personal liability and will not be subject to preemptive rights of any other
stockholder of Jefferies.
     (m) Offering of Securities. Neither Jefferies nor any Person acting on its
behalf has offered the Jefferies Shares for sale to, solicited any offers to buy
any of the Jefferies Shares or

7

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

 

from or otherwise approached or negotiated with respect to any of the Jefferies
Shares with any Person other than Leucadia. Neither Jefferies nor any Person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of Jefferies under circumstances
which would require the integration of such offering with the offering of any of
the Jefferies Shares under the Securities Act and the rules and regulations of
the SEC thereunder) which might subject the offering, issuance or sale of any of
the Jefferies Shares to the registration requirements of the Securities Act.
     (n) Securities Act. Jefferies is acquiring the Leucadia Shares solely for
the purpose of investment and not with a view to, or for resale in connection
with, any distribution thereof in violation of the Securities Act.
     (o) Brokers and Finders. Neither Jefferies nor any of its Subsidiaries nor
any of their respective officers, directors, employees or agents has utilized
any broker, finder, placement agent or financial advisor or incurred any
liability for any fees or commissions in connection with any of the
Transactions.
     (p) Ownership of Leucadia Stock. As of the date hereof, Jefferies and it
Subsidiaries beneficially own (determined in accordance with Rule 13d-3 of the
Exchange Act) an aggregate of 6,181 shares of Leucadia Common Stock and
$17,794,000 principal amount of Leucadia’s 3-3/4% Convertible Senior
Subordinated Debt that is currently convertible into 774,775 shares of Leucadia
Common Stock. After giving effect to the issuance of Leucadia Common Stock
pursuant to the Transactions, the shares of Leucadia Common Stock beneficially
owned by Jefferies will represent less than 5% of Leucadia Common Stock then
outstanding as determined in accordance with Rule 13d-3.
     Section 3.02. Representations and Warranties of Leucadia. Except as
disclosed in the Reports filed with or furnished to the SEC by Leucadia prior to
the date hereof, Leucadia represents and warrants to, and agrees with,
Jefferies, as of the date hereof (or as of such earlier date in the case of any
representation or warranty expressly made as of an earlier date), as follows:
     (a) Organization and Good Standing of Leucadia; Organizational Documents.
(i) Leucadia is duly incorporated, validly existing and in good standing under
the laws of the State of New York and has all requisite corporate power and
authority and governmental authorizations to own, operate and lease its
properties and to carry on its business as it is being conducted on the date of
this Agreement. Leucadia is duly licensed or qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, except where the failure to be so
licensed or qualified in any such jurisdiction would not reasonably be expected
to have a Material Adverse Effect.
     (b) Organization and Good Standing of Subsidiaries. Each Subsidiary of
Leucadia is duly incorporated and validly existing under the laws of its
jurisdiction of organization, and has all requisite corporate power and
authority and governmental authorizations to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each other jurisdiction in which it
owns or leases properties, or

8

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

 

conducts any business, so as to require such qualification, except where the
failure to be so authorized, licensed or qualified in any such jurisdiction,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
     (c) Authorization; No Conflicts. Leucadia has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Documents and
to consummate the Transactions. The execution, delivery and performance by
Leucadia of this Agreement and each Ancillary Document and the consummation of
the Transactions have been duly authorized by the Board of Directors of
Leucadia. No other corporate proceedings on the part of Leucadia are necessary
to authorize the execution, delivery and performance by Leucadia of this
Agreement and each Ancillary Document and consummation of the Transactions. This
Agreement has been, and at or prior to the Closing, each Ancillary Document to
which it is a party will be, duly and validly executed and delivered by
Leucadia. This Agreement is, and upon its execution at or prior to the Closing
each Ancillary Document to which it is a party will be, a valid and binding
obligation of Leucadia, enforceable against it in accordance with its terms.
     (i) The execution, delivery and performance of this Agreement and the
Ancillary Documents, the consummation by Leucadia of the Transactions and the
compliance by Leucadia with any of the provisions hereof and thereof will not
conflict with, violate or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both would
constitute a default) under, or result in the termination of or accelerate the
performance required by, or result in a right of termination or acceleration
under, (A) any provision of the Restated Certificate of Incorporation or By-laws
of Leucadia or the certificate of incorporation, charter, by-laws or other
governing instrument of any Subsidiary of Leucadia or (B) any mortgage, note,
indenture, deed of trust, lease, loan agreement or other agreement or instrument
or any permit, concession, grant, franchise, license, judgment, order, decree,
ruling, injunction, statute, law, ordinance, rule or regulation applicable to
Leucadia or any of its Subsidiaries or any of their respective properties or
assets.
     (d) Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required on
the part of Leucadia or any of its Subsidiaries in connection with the
execution, delivery and performance by Leucadia of this Agreement and the
Ancillary Documents to which it is a party and the consummation by Leucadia of
the Transactions.
     (e) Capitalization.
     (i) The authorized capital stock of Leucadia consists of (i) 600,000,000
shares of Leucadia Common Stock of which, as of March 31, 2008, 222,610,840
shares were issued and outstanding and (ii) 6,000,000 shares of preferred stock,
par value $1.00 per share, of Leucadia, of which no shares were issued and
outstanding as of March 31, 2008. As of March 31, 2008, Leucadia held 56,886,204
shares of Leucadia Common Stock in its treasury. As of March 31, 2008 there were
22,649,801 shares of Leucadia Common Stock reserved for issuance in connection
with outstanding warrants, the Company’s stock option plan and the Company’s
outstanding 3-3/4 % Convertible Senior Subordinated Debt. All of the issued and
outstanding shares of Leucadia capital stock have been duly and validly
authorized and issued and are fully paid and nonassessable, and are not subject
to preemptive rights. No bonds, debentures, notes or

9

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

 

other indebtedness having the right to vote on any matters on which the
stockholders of Leucadia may vote (“Leucadia Voting Debt”) are issued and
outstanding. Other than as set forth in this subsection (e) or pursuant to this
Agreement or the 3-3/4 % Convertible Senior Subordinated Debt, (A) no equity
securities or Leucadia Voting Debt of Leucadia are or may be required to be
issued by reason of any options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever, (B) there are outstanding no securities
or rights convertible into or exchangeable for any equity securities or Leucadia
Voting Debt of Leucadia and (C) there are no contracts, commitments,
understandings or arrangements by which Leucadia is bound to issue additional
equity securities or Leucadia Voting Debt or options, warrants or rights to
purchase or acquire any additional equity securities or Leucadia Voting Debt.
     (f) Reports; Financial Statements; Controls.
     (i) Since January 1, 2005, Leucadia has filed all Reports, and has paid all
fees and assessments due and payable in connection therewith. As of their
respective dates, the Reports complied in all material respects with applicable
requirements of the Securities Act or the Exchange Act and the published rules
and regulations of the SEC and did not as of the date of filing thereof with the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
     (ii) Each of the consolidated balance sheets, and the related consolidated
statements of income, changes in stockholders’ equity and cash flows, included
in the Reports filed with the SEC under the Exchange Act fairly present in all
material respects the consolidated financial position of Leucadia and its
consolidated Subsidiaries as of the dates shown and the results of the
consolidated operations, changes in stockholders’ equity and cash flows of
Leucadia and its consolidated Subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth, subject, in the case of any
unaudited financial statements, to normal recurring year-end audit adjustments,
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto and have been prepared in
accordance with GAAP consistently applied during the periods involved, except as
otherwise set forth in the notes thereto.
     (iii) Leucadia (A) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to Leucadia, including its consolidated
Subsidiaries, is made known to the chief executive officer and the chief
financial officer of Leucadia by others within those entities, and (B) has
disclosed, based on its most recent evaluation prior to the date hereof, to
Leucadia outside auditors and the audit committee of Leucadia Board of Directors
(x) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely
affect Leucadia ability to record, process, summarize and report financial
information and (y) any fraud, whether or not material, that involves management
or other employees who have a significant role in Leucadia internal controls
over financial reporting.

10

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

 

     (g) Absence of Certain Changes. Since January 1, 2008 until the date
hereof, and except as publicly disclosed by Leucadia in the Reports filed by it
with the SEC and publicly available prior to the date hereof, and except as
previously disclosed to Jefferies in connection with the Transactions,
(i) Leucadia and its Subsidiaries have conducted their respective businesses in
all material respects in the ordinary course, consistent with prior practice,
(ii) except for publicly disclosed ordinary dividends on the Leucadia Common
Stock, Leucadia has not made or declared any distribution in cash or in kind to
its stockholders or issued any shares of its capital stock or other equity
interests and (iii) no event or events have occurred that, individually or in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.
     (h) No Undisclosed Liabilities, etc. Neither Leucadia nor its Subsidiaries
has any liabilities or obligations of any nature (absolute, accrued, contingent
or otherwise) which are not fully reflected or reserved against in the financial
statements described in Section 3.02(f), except for liabilities that have arisen
since December 31, 2007 in the ordinary and usual course of business and
consistent with past practice and that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Material Adverse Effect.
     (i) Compliance with Applicable Law. Each of Leucadia and its Subsidiaries
holds all licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business under, and has complied in all material respects
and is not in default or violation in any respect of, any law, statute, order,
rule, regulation, policy or guideline of any Federal, state or local
governmental authority applicable to Leucadia or such Subsidiary, other than
such non-compliance, defaults or violations that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect.
     (j) Legal Proceedings. Except as set forth in the Reports filed and
publicly available prior to the date hereof, neither Leucadia nor any of its
Subsidiaries is a party to any, and there are no pending, or to the knowledge of
Leucadia, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against Leucadia or
any of its Subsidiaries or to which any of their assets are subject (i) that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect or (ii) relating to or which challenges the
validity or propriety of the Transactions. Neither Leucadia nor any of its
Subsidiaries is subject to any order, judgment or decree of a Governmental
Entity that, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect.
     (k) Status of Leucadia Shares. The Leucadia Shares have been duly
authorized by all necessary corporate action. When issued and sold against
receipt of the consideration therefor, the Leucadia Shares will be validly
issued, fully paid and nonassessable, will not subject the holders thereof to
personal liability and will not be subject to preemptive rights of any other
stockholder of Leucadia.
     (l) Offering of Securities. Neither Leucadia nor any Person acting on its
behalf has offered the Leucadia Shares for sale to, solicited any offers to buy
any of the Leucadia Shares or from or otherwise approached or negotiated with
respect to any of the Leucadia Shares with any Person other than Jefferies.
Neither Leucadia nor any Person acting on its behalf has taken or

11

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

 

will take any action (including, without limitation, any offering of any
securities of Leucadia under circumstances which would require the integration
of such offering with the offering of any of the Leucadia Shares under the
Securities Act and the rules and regulations of the SEC thereunder) which might
subject the offering, issuance or sale of any of the Leucadia Shares to the
registration requirements of the Securities Act.
     (n) Securities Act. Leucadia is acquiring the Jefferies Shares solely for
the purpose of investment and not with a view to, or for resale in connection
with, any distribution thereof in violation of the Securities Act.
     (m) Brokers and Finders. Neither Leucadia nor any of its Subsidiaries nor
any of their respective officers, directors, employees or agents has utilized
any broker, finder, placement agent or financial advisor or incurred any
liability for any fees or commissions in connection with any of the
Transactions.
     (n) Ownership Interest in Jefferies. As of the date hereof, Leucadia
beneficially owns in the aggregate 4,265,800 shares of Jefferies Common Stock.
     (o) Antitrust. The waiting period (and any extension thereof) applicable to
the Transactions under the HSR Act and any other clearances or approvals
required under applicable competition, merger control, antitrust or similar law
have been granted, terminated or have expired, without any conditions,
restrictions, requirements or change of regulation or any other action taken.
ARTICLE IV
Additional Agreements of the Parties
     Section 4.01. Taking of Necessary Action. Subject to the conditions set
forth in Article V hereof, each of the parties hereto agrees to use all
reasonable best efforts promptly to take or cause to be taken all action and
promptly to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
Transactions. Each party shall execute and deliver both before and after the
Closing such further certificates, agreements and other documents and take such
other actions as the other party may reasonably request to consummate or
implement the Transactions or to evidence such events or matters.
     Section 4.02. Securities Laws; Legends. (a) Leucadia acknowledges and
agrees that as of the date hereof that the Jefferies Shares have not been
registered under the Securities Act or the securities laws of any state and that
they may be sold or otherwise disposed of only if registered under the
Securities Act or pursuant to an exemption therefrom. Leucadia acknowledges
that, except as provided in the Ancillary Documents, Leucadia has no right to
require Jefferies to register the Jefferies Shares. Leucadia further
acknowledges and agrees that each certificate for the Leucadia shall bear a
legend substantially as set forth in paragraph (c) of this Section 4.02.
     (b) Jefferies acknowledges and agrees that as of the date hereof that the
Leucadia Shares have not been registered under the Securities Act or the
securities laws of any state and

12

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

 

that they may be sold or otherwise disposed of only if registered under the
Securities Act or pursuant to an exemption therefrom. Jefferies acknowledges
that, except as provided in the Ancillary Documents, Jefferies has no right to
require Leucadia to register the Leucadia Shares. Jefferies further acknowledges
and agrees that each certificate for the Leucadia Shares shall bear a legend
substantially as set forth in paragraph (c) of this Section 4.02.
     (c) Certificates for the Jefferies Shares and the Leucadia Shares shall
bear legends in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF
COMPANY’S COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
     (d) When issued pursuant hereto, the certificates evidencing the Jefferies
Shares and the Leucadia Shares shall also bear any legend required by any
applicable state blue sky law.
     Section 4.03. Regulatory Matters.
     (a) Leucadia and Jefferies shall use commercially reasonable efforts to
promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the Transactions. Jefferies and Leucadia shall have the right to consult the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
Transactions. In exercising the foregoing right, each of the parties hereto
shall act reasonably and as promptly as practicable. The parties hereto agree
that they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the Transactions and
each party will keep the other apprised of the status of matters relating to
completion of the Transactions.
     (b) Leucadia and Jefferies shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any statement, filing, notice or application made by or on
behalf of Leucadia, Jefferies or any of their respective Subsidiaries to any
Governmental Entity in connection with the Transactions.
     (c) Leucadia and Jefferies shall promptly furnish the other with copies of
written communications received by them or their Subsidiaries from, or delivered
by any of the foregoing to, any Governmental Entity in respect of the
Transactions (other than in respect of information filed or otherwise submitted
confidentially to any such Governmental Entity).

13

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

 

     (d) Leucadia and Jefferies shall, and shall cause their Subsidiaries to,
use commercially reasonable efforts (i) to take, or cause to be taken, all
actions necessary, proper or advisable to comply promptly with all legal
requirements that may be imposed on them or their Subsidiaries with respect to
the Transactions and, subject to the conditions set forth in Article V hereof,
to consummate the Transactions and (ii) subject to the conditions set forth in
Article V hereof, to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by Jefferies or Leucadia or any of their respective Subsidiaries in connection
with the Transactions, and to comply with the terms and conditions of such
consent, authorization, order or approval.
     Section 4.04. Share Listing. Each of Jefferies and Leucadia shall promptly
use its reasonable best efforts to cause the Jefferies Shares and the Leucadia
Shares, respectively, to be, upon official notice of issuance, listed on the
NYSE.
     Section 4.05. Registration Rights Agreements; Letter Agreement. As soon as
reasonably practicable after the date hereof, Leucadia and Jefferies shall
execute (i) Registration Rights Agreements consistent with the terms described
in Annex A to Exhibit A of this Agreement, and (ii) a letter agreement providing
that no request of Leucadia or its subsidiaries for any additional capital
investment in Jefferies High Yield Holdings, LLC shall be made without the
unanimous consent of the Board of Directors of Jefferies, including Leucadia’s
designees to the Jefferies Board of Directors (the “Letter Agreement”).
ARTICLE V
Additional Agreements
     Section 5.01. Leucadia Closing Deliverables. At the Closing, Leucadia shall
have executed and delivered to Jefferies the Standstill Agreement, in the form
attached hereto as Exhibit A.
     Section 5.02. Jefferies Closing Deliverables. At the Closing, Jefferies
shall have executed and delivered to Leucadia the Standstill Agreement, in the
form attached hereto as Exhibit A.
ARTICLE VI
Miscellaneous
     Section 6.01. Survival of Representations and Warranties. All
representations and warranties shall survive the Closing Date for a period of
twelve months following the Closing Date, and all covenants and agreements shall
survive the Closing Date until the expiration of any applicable statutes of
limitation.
     Section 6.02. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:

14

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

 

                  (a)   If to Leucadia, to:
 
                    Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
 
           
 
      Attention:   Joseph S. Steinberg
 
          315 Park Avenue South
 
          New York, New York 10010
 
          Fax: (212) 598-4869
 
                    With copies to:           Weil, Gotshal & Manages, LLP      
  767 Fifth Avenue         New York, New York 10153-0119
 
           
 
      Attention:   Andrea A. Bernstein, Esq.
 
          Fax: (212) 310-8007
 
                (b)   If to Jefferies, to:
 
                    Jefferies Group, Inc.         520 Madison Avenue         New
York, New York 10021
 
                    Attention: General Counsel         Fax: (212) 284-2280
 
                    With a copy to:
 
                    Morgan, Lewis & Bockius LLP         101 Park Avenue        
New York, New York 10178
 
           
 
      Attention:   Stephen P. Farrell, Esq.
 
          Robert W. Dickey, Esq.
 
          Fax: (212) 309-6001

or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
     Section 6.03. Entire Agreement; Third Party Beneficiaries; Amendment. This
Agreement, the Registration Rights Agreements, and the Standstill Agreement and
the documents described herein and therein or attached or delivered pursuant
hereto or thereto set forth the entire agreement between the parties hereto with
respect to the Transactions, and are not intended to and shall not confer upon
any person other than the parties hereto any rights or

15

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

 

remedies hereunder. Any provision of this Agreement may be amended or modified
in whole or in part at any time by an agreement in writing between the parties
hereto executed in the same manner as this Agreement. No failure on the part of
any party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof nor shall any single or partial exercise by any party of any
right preclude any other or future exercise thereof or the exercise of any other
right. No investigation by Leucadia or Jefferies prior to or after the date
hereof shall prevent or limit Leucadia or Jefferies from exercising any right
hereunder or be deemed to be a waiver of any such right.
     Section 6.04. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute any original, but all
of which together shall constitute one and the same documents.
     Section 6.05. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York.
     Section 6.06. Public Announcements. Subject to each party’s disclosure
obligations imposed by law, each of the parties hereto will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement and any of the
Transactions, and no party hereto will make any such news release or public
disclosure without first consulting with the other party hereto.
     Section 6.07. Expenses. Each party hereto shall bear its own costs and
expenses (including attorneys’ fees) incurred in connection with this Agreement
and the Ancillary Documents and the Transactions.
     Section 6.08. Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, Jefferies’ successors and assigns and Leucadia’s successors and
assigns, and no other person; provided, that, subject to applicable law,
Leucadia may assign its rights under this Agreement to any of its Affiliates,
but no such assignment shall relieve Leucadia of its obligations hereunder.
     Section 6.09. Remedies; Waiver. To the extent permitted by law, all rights
and remedies existing under this Agreement or any Ancillary Documents are
cumulative to, and are exclusive of, any rights or remedies otherwise available
under applicable law. No failure on the part of any party to exercise, or delay
in exercising, any right hereunder shall be deemed a waiver thereof, nor shall
any single or partial exercise preclude any further or other exercise of such or
any other right.
     Section 6.10. Consent to Jurisdiction. Each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Federal or
state court located in the Borough of Manhattan in the City of New York, New
York in the event any dispute arises out of this Agreement, any of the Ancillary
Documents or the Transactions, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to this
Agreement, any of the Ancillary Documents or the Transactions in any court other
than a Federal or state court located in the Borough of Manhattan in the City of
New York, New York.

16

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

 

     Section 6.11. Severability. If any provision of this Agreement is
determined to be invalid, illegal, or unenforceable, the remaining provisions of
this Agreement shall remain in full force and effect provided that the economic
and legal substance of, any of the Transactions is not affected in any manner
materially adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith to modify this Agreement to fulfill as
closely as possible the original intent and purpose hereof. To the extent
permitted by law, the parties hereby to the same extent waive any provision of
law that renders any provision hereof prohibited or unenforceable in any
respect.
     Section 6.12. Headings. The headings of Articles and Sections contained in
this Agreement are for reference purposes only and are not part of this
Agreement.

17

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

 

     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
or by their respective duly authorized officers, all as of the date first above
written.

            LEUCADIA NATIONAL CORPORATION
      By:   /s/ Barbara L. Lowenthal         Name:   Barbara L. Lowenthal       
Title:   Vice President        JEFFERIES GROUP, INC.
      By:   /s/ Richard B. Handler         Name:   Richard B. Handler       
Title:   Chief Executive Officer     

[Investment Agreement Signature Page]

18

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

 

Exhibit A
Form of Standstill Agreement