SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 27, 2000
NATIONAL DISCOUNT BROKERS GROUP, INC.
(Exact name of Registrant as specified in Charter)
Delaware 1-9480 22-2394480
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
10 Exchange Place Centre, 15th Floor, Jersey City, New Jersey 07302-3913
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(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (201) 946-2200
--------------
Not Applicable
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(Former name and former address, as changed since last report)
<PAGE>
Item 5. Other Events
National Discount Brokers Group, Inc. (the "Corporation") announced on
March 28, 2000, that it had entered into a non-binding letter of intent (the
"Letter") with Deutsche Bank Americas Holding Corporation ("DB") pursuant to
which the Corporation would sell 3,000,000 shares of its common stock to DB or
one of its designated affiliates for $45.31 per share (the "Investment"). A copy
of the press release announcing the transaction is filed as an exhibit with this
Form 8-K. The Letter is also filed as an exhibit to this Form 8-K.
The Letter in addition provides that DB and the Corporation propose the
following actions: (i) the negotiation and execution of a definitive agreement
relating to the Investment, (ii) coincident with the Investment, the negotiation
of the principal terms (and binding agreement with respect to exclusivity and
non-competition) with respect to a joint venture to be owned 25% by the
Corporation and 75% by DB or one or more of its affiliates with respect to the
offering of on-line discount equity brokerage in Western Europe; (iii)
coincident with the Investment, the negotiation of the principal terms (and
binding agreement with respect to mutual exclusively and non-competition) with
respect to a world wide joint venture (excluding Western Europe and the United
State) 50% owned by the Corporation and 50% owned by DB or one or more of its
affiliates (subject to certain conditions) with respect to the offering of
on-line discount equity brokerage; (iv) coincident with the Investment, the
negotiation and execution of a definitive agreement with respect to the
Corporation or one of its affiliates being a distributor of initial public
offerings of equity securities in the U.S. if DB or one of its affiliates is an
underwriter of the securities and wishes to use the internet as a distribution
channel, and (v) coincident with the Investment, the negotiation and execution
of a definitive agreement for the distribution of certain research prepared by
DB to customers of the Corporation or its subsidiaries in the United States.
The transactions are subject to several conditions including, but not
limited to, the approval of the Board of Directors of DB, the Board of Managing
Directors of Deutsche Bank AG and the Board of Directors of the Corporation,
regulatory approvals and filings and other matters.
DB would be subject to certain standstill provisions regarding
purchasing additional voting stock of the Corporation, conducting proxy contests
and the voting of its shares of the Corporation and would have certain
registration, antidilution and veto rights described in the Letter.
The parties to the Letter have agreed to certain limitations on
negotiations and other matters with third parties regarding alternative
transactions until the execution of a definitive agreement regarding the
Investment.
The foregoing is a summary of the Letter and is not complete. The
Letter is incorporated herein by reference. There can be an assurance that the
transactions contemplated by the Letter will be consummated.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99(a) Press Release dated March 28, 2000
99(b) Letter of Intent dated March 27, 2000 between National
Discount Brokers Group, Inc. and Deutsche Bank Americas
Holding Corporation.
SIGNATURES
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 hereunto duly authorized.
National Discount Brokers Group, Inc.
Registrant
Dated: March 31, 2000 By:/s/ Arthur Kontos
Name: Arthur Kontos
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT 99(A)
FOR IMMEDIATE RELEASE
National Discount Brokers Deutsche Bank
MWW Group - tel. (201) 507 9500 tel. (212) 469-3874
Contact: Rich Tauberman Contact: Jon Murchinson
Email: [email protected] Email: [email protected]
DEUTSCHE BANK AND NATIONAL DISCOUNT BROKERS
FORM E-COMMERCE AND FINANCIAL ALLIANCE
Alliance Will Create Jointly Owned Online Brokerage Initiatives Outside of
U.S. and Provide NDB with Access to World Class Research and IPOs;
Deal Includes Equity Stake in NDB
NEW YORK, NEW YORK AND JERSEY CITY, NJ - March 28, 2000 - Deutsche Bank
(OTC: DTBKY), the world's largest financial services group, and National
Discount Brokers Group, Inc. (NYSE: NDB), a leading Internet brokerage and
financial services company, announced today that the companies have signed a
letter of intent to create a global e-commerce and financial alliance. In line
with Deutsche Bank's recently announced e-commerce strategy, the alliance
heralds the Bank's expansion into online brokerage. Together the companies will
create jointly owned online brokerage capabilities outside of the United States.
The strategic alliance also provides NDB with access to Deutsche Bank's U.S.
equity research and initial public offering capabilities. Deutsche Bank will
purchase up to a 19.3% stake in NDB, which includes 3 million shares to be
purchased directly from NDB.
"This alliance supports Deutsche Bank's e-commerce strategy of global
connectivity, linking markets and investors around the world. It's a major
stepping stone to reach online customers without having to rely on bricks and
mortar," said Michael Philipp, Head of Global Equities at Deutsche Bank. "Our
distribution and placement power are greatly enhanced through this alliance
along with our ability to deliver services efficiently to our clients. We are
confident that we can succeed in the competitive U.S. market by combining our
high quality investment banking products and services with the world class
technology of NDB."
Mayo Shattuck, Co-Head of Investment Banking at Deutsche Bank, added, "
the alliance with NDB opens up a number of possibilities to enhance the product
offering to our existing high net worth individual and correspondent clients."
The Deutsche Bank/National Discount Brokers strategic alliance will
provide Deutsche Bank with access to NDB's online investor community. It also
allows Deutsche Bank to take advantage of NDB's technology platform with the aim
of delivering an international online brokerage capability.
"This alliance builds on the combined strengths of our two companies,"
said Arthur Kontos, President and CEO of National Discount Brokers Group.
"Deutsche Bank is a global financial powerhouse and NDB customers will benefit
from the breadth of its research and investment banking capabilities. We look
forward to leveraging our award-winning website, technological leadership and
reputation for innovation to provide for the online investing needs of customers
around the globe."
The parties expect a definitive agreement to be signed during the
second calendar quarter of 2000. The letter of intent calls for Deutsche Bank to
purchase 3 million shares of common stock, a pro forma 14.6% equity stake in
National Discount Brokers Group, for $45.31 per share resulting in gross
proceeds of $135,930,000 and bringing Deutsche Bank's total investment in NDB to
16.3%. Under the terms of the letter of intent, Deutsche Bank will be permitted
to purchase up to a 19.3% stake. The remaining 3% may be acquired through open
market purchases.
The letter of intent between the parties is non-binding, and the
transaction is subject to several conditions, including, but not limited to, the
execution of definitive agreements as well as the approval of regulatory bodies
and the boards of directors of the respective companies. There can be no
assurance that the transaction will be consummated or that the conditions to
closing will be met.
About Deutsche Bank
With over $869 billion in assets as of September 30, 1999 and approximately
90,000 employees, Deutsche Bank offers its clients unparalleled financial
services throughout the world. It ranks among the leaders in asset management,
capital markets, corporate finance, custody, cash management and private
banking. Deutsche Bank is divided into five major business units: Global
Corporates and Institutions, Global Technology and Services, Asset Management,
Corporates and Real Estate and Private and Retail
Banking. Deutsche Bank provides a fully integrated investment and wholesale
banking service to corporate clients from its main centers in London, Frankfurt,
New York, Baltimore, Tokyo, Singapore, Hong Kong and Sydney, as well as its
regional offices around the globe. The keys to the Bank's success remain
constant: customer focus, the spirit of innovation, a broad range of product
skills combined with technological power and financial strength delivered by
highly skilled professionals.
About National Discount Brokers Group
Headquartered in Jersey City, New Jersey, National Discount Brokers Group, Inc.,
an S&P Small Cap 600 Index company, is the parent company of two financial
services entities: National Discount Brokers Corporation/ndb.com and Sherwood
Securities. National Discount Brokers, which recently was ranked #1 in the
Barron's Best of Online Brokers survey, at February 29, 2000, had 207,900
customer accounts, with assets of $12.2 billion. Sherwood Securities' main
operations are as a market maker in approximately 4,500 Nasdaq and other OTC
securities as of November 30, 1999. The Company has offices in Jersey City, New
York, Los Angeles, Chicago, San Francisco, Denver and Boston. Customers can
access National Discount Brokers Corporation/ndb.com at , via the PowerBroker
automated touch-tone telephone system 800-631-8884 or by calling 800-4-1-PRICE.
Statements made in this press release constitute forward-looking statements, as
that term is defined in the Private Securities Litigation Reform Act of 1995.
These statements are subject to risks and uncertainties. These forward-looking
statements generally are accompanied by words such as "intend", "anticipate",
"believe", "estimate", "expect", "should" or similar expressions. It should be
understood that these forward-looking statements are subject to a number of
assumptions, risks and uncertainties, that could cause actual results to differ
materially from those expressed or implied in the forward-looking statements.
These uncertainties and risks include changes in laws, rules or regulations,
customer growth at NDB.com, and the ability of software and hardware to be
modified to perform the services required by the agreement. Risks also include
unplanned expense increases, due among other things to unplanned expenditures
for software, hardware and marketing alliances, and other risks as set forth in
the Form 10-Q of National Discount Brokers Group Inc. for the quarter ended
November 30, 1999.
The common stock of the Company anticipated to be offered and sold as described
herein will not be registered under the Securities Act of 1933 and may not be
offered or sold in the United States absent such registration or an applicable
exemption from such registration requirements.
This news release shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of the common stock of the Company
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under applicable securities laws, or
absent the availability of an exemption from such registration or qualification
requirements.
# # #
<PAGE>
EXHIBIT 99(B)
March 27, 2000
National Discount Brokers Group, Inc.
10 Exchange Place Centre
15th Floor
Jersey City, NJ 07302
Ladies and Gentlemen:
The purpose of this letter is to confirm, and set forth the
terms and conditions of, the agreement in principle between Deutsche Bank
Americas Holding Corporation ("Deutsche Bank"), and National Discount Brokers
Group, Inc. (the "Company") relating to the proposed acquisition by Deutsche
Bank of an equity interest in the Company (the "Investment") and the formation
of certain strategic relationships described in this letter.
1. Deutsche Bank or one of its designated affiliates will
purchase from the Company 3,000,000 shares of its newly issued common stock, par
value $0.01 per share, of the Company (the "Common Stock") for an aggregate
purchase price (the "Purchase Price") of $135,930,000 ($45.31 per share). The
number of shares of Common Stock issued and outstanding on the date of this
letter is 17,493,883. The shares of Common Stock owned by Deutsche Bank and its
affiliates at the date hereof, together with shares of Common Stock to be
purchased as the Investment, would constitute 16.35% of the issued and
outstanding Common Stock (calculated as of the date hereof). The Purchase Price
will be payable in cash at the closing (the "Closing") of the Investment.
2. The willingness of both Deutsche Bank and the Company to
undertake the transactions contemplated by this letter is subject to the
satisfactory resolution of each provision set forth herein, including:
(i) the negotiation and execution of a definitive
agreement relating to the Investment (the "Investment
Agreement");
(ii) the agreement of the parties, coincident with the
Investment, with respect to the principal terms (as
evidenced by a "heads of agreement" or similar
document, including binding provisions with respect
to mutual exclusivity and noncompetition) relating to
a joint venture to be owned 25% by the Company and
75% by Deutsche Bank or one or more of its affiliates
with respect to areas within Western Europe (the
"European Joint Venture") which European Joint
Venture will be the exclusive means by which Deutsche
Bank, the Company and their respective affiliates
offer on-line discount equity brokerage services in
Western Europe;
(iii) the agreement of the parties, coincident with the
Investment, with respect to the principal terms (as
evidenced by a "heads of agreement" or similar
document, including binding provisions with respect
to mutual exclusivity and noncompetition) relating to
a worldwide joint venture to be owned, to the extent
practicable in light of tax and local regulatory
considerations, 50% by the Company and 50% by
Deutsche Bank or one or more of its affiliates with
respect to territories other than the United States
and Western Europe (the "Territory") (the "Worldwide
Joint Venture"), which Worldwide Joint Venture will
be the exclusive means by which Deutsche Bank, the
Company and their respective affiliates offer on-line
discount equity brokerage services in the Territory;
(iv) the negotiation and execution of a definitive
agreement, coincident with the Investment, pursuant
to which Deutsche Bank shall agree that, insofar as
any affiliate of Deutsche Bank seeks to distribute in
the United States through an on-line discount broker
any portion of the equity securities allotted to such
affiliate acting as an underwriter of an initial
public offering, such affiliate will use the Company
(or one or more of its subsidiaries) as its exclusive
on-line discount broker for such purpose, it being
understood and agreed that Deutsche Bank and its
affiliates have no obligation to distribute any
equity securities through any on-line discount broker
(the "U.S. Underwriting Venture");
(v) the negotiation and execution of a definitive
agreement, coincident with the Investment, pursuant
to which Deutsche Bank and its affiliates appoint the
Company or one or more of its subsidiaries as the
exclusive on-line discount broker in the United
States for purposes of distributing research prepared
by Deutsche Bank's Global Corporates & Institutions
Division (or any successor) (which Division currently
prepares substantially all research on equities of
U.S. issuers for distribution to retail customers of
Deutsche Bank and its affiliates) for distribution to
retail investors in the United States, including but
not limited to, daily calls (video and audio), daily
research reports, investment strategies and any other
types of research, it being understood and agreed
that the Company (or any such subsidiary) shall be
entitled to receive such research no later than any
other third-party with which Deutsche Bank may have
contracted for the distribution of research (the
"U.S. Research Venture"). Deutsche Bank and its
affiliates will provide to the Company
representations, warranties and indemnities no less
favorable to the Company than the most favorable
such provisions given by Deutsche Bank and its
affiliates to any other third party that has
contracted with such affiliate to disseminate
such research. The comprehensive term sheets
relating to the Worldwide Joint Venture and the
European Joint Venture and the definitive agreements
relating to the U.S. Research Venture and the U.S.
Underwriting Venture together with the Investment
Agreement are referred to herein as the "Transaction
Documents", each of the Transaction Documents to be
on the terms and conditions described in this letter
and such other customary terms and conditions as the
parties shall mutually agree;
(vi) receipt of approval of the respective Boards of
Directors of Deutsche Bank and the Company and the
Board of Managing Directors of Deutsche Bank AG;
(vii) satisfactory completion prior to execution of the
Transaction Documents of legal, business and
accounting due diligence investigations by each of
the Company and Deutsche Bank; and
(viii) the establishment of mutually acceptable firewalls
between Deutsche Bank and its affiliates and the
Company and its affiliates with respect to their
respective activities in the United States.
3. In addition to those expressly set forth elsewhere in this
letter, the Investment Agreement (or a related agreement) will contain customary
agreements and conditions to the parties' obligations, including the following:
(a) representations and warranties with respect to (i)
preparation, accuracy and completeness of the
consolidated financial statements of the Company;
(ii) capitalization of the Company; (iii) the absence
of undisclosed material liabilities; (iv)
intellectual property; (v) employment matters; (vi)
insurance and material contracts; (vii) the Company's
ownership of material properties; (viii) taxes; (ix)
the absence of any material adverse change in the
condition (financial or otherwise) of the Company and
its consolidated subsidiaries since May 31, 1999; (x)
the absence of material transactions; (xi) pending
and threatened material litigation; and (xii)
compliance with applicable laws and regulations;
(b) subject to the provisions of subparagraph (h),
antidilution rights with respect to all new issuances
by the Company of Common Stock (whether made in the
public or private capital markets, including without
limitation upon the conversion, exercise or exchange
of securities convertible, exercisable or
exchangeable for or into Common Stock, but not
including warrants outstanding on the date hereof,
issuances pursuant to any compensatory arrangements
or issuances in connection with stock purchase rights
distributed pro rata to all holders of Common Stock)
requiring the Company, at the option of Deutsche
Bank, to sell to Deutsche Bank or a designated
affiliate an amount of newly issued Common Stock
sufficient to maintain Deutsche Bank's then
percentage ownership position in the Company, at a
market price determined according to mutually agreed
formulas to be set forth in the Investment Agreement;
(c) (i) commencing on the second anniversary (or, if any
of the events described in clause A of the second
proviso shall occur, the first anniversary) of the
Investment Agreement (or, if an event described in
clause B or C of such proviso shall occur, at any
time), subject to the proviso to this clause, demand
registration rights entitling Deutsche Bank to
request three times that the Company effect a
registration of its shares so long as the amount
of securities registrable represents not less than
30% of the ownership interest in the Company held by
Deutsche Bank at the time of each request and in any
case not less than 500,000 shares of Common Stock;
provided, however, that Deutsche Bank will make no
more than one demand in any 12-month period; and
provided further that such rights shall accelerate as
noted above (A) if, by the first anniversary of the
Investment Agreement, the parties shall have failed
to enter into definitive agreements with respect to
the European Joint Venture and the Worldwide Joint
Venture, or shall have exercised its rights to
terminate either such venture, the U.S. Underwriting
Venture or the U.S. Research Venture pursuant to
their respective terms; (B) if there shall occur any
change of control of the Company (other than any
change of control directly resulting from the
acquisition or disposition of Common Stock by
Deutsche Bank or any of its affiliates); or (C) if
there shall occur any change in law or regulation (or
any interpretation thereof) that results in Deutsche
Bank and its affiliates being unable to hold Common
Stock, after Deutsche Bank shall have used
commercially reasonable efforts to comply with such
change in law or regulation without disposing of such
Common Stock; and (ii) customary piggyback rights
commonly found in registration rights agreements;
(d) subject to the provisions of subparagraph (h), veto
rights in favor of Deutsche Bank over sales of voting
capital stock by the Company (other than sales to
underwriters pursuant to a bona fide underwritten
public offering) (i) to direct competitors of
Deutsche Bank (as specified in the list mutually
agreed upon by Deutsche Bank and the Company, which
shall be subject to revision as provided in the
definitive Transaction Documents); and (ii) to any
person (or "group" of persons as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as
amended, acting in concert) if, upon consummation of
such sale, such person (or group) would own more than
19.3% but less than a majority of the then
outstanding voting capital stock of the Company;
(e) a right of first refusal in favor of the Company (or
its nominee) such that if Deutsche Bank proposes to
sell, transfer or assign any of its Common Stock, it
will first offer the Company the opportunity to
purchase such shares on the same terms;
(f) representations and warranties of Deutsche Bank that
will cover matters normally addressed by purchasers
of privately placed securities, including (i)
opportunity to conduct satisfactory due diligence;
(ii) investment intent; (iii) "accredited investor"
status and knowledge and experience in financial and
business matters; and (iv) corporate existence and
power and authority;
(g) standstill, lockup and voting provisions which shall
remain in effect as long as Deutsche Bank (and any of
its affiliates) directly or indirectly beneficially
owns 10% or more of the outstanding voting capital
stock of the Company. These provisions would include
(i) a prohibition on the acquisition of any additional
shares by Deutsche Bank and its affiliates in excess
of 19.3% of the voting capital stock of the Company
from time to time outstanding; provided, however,
that if Deutsche Bank shall dispose of any of its
shares of Common Stock (other than under the
circumstances described in clause (c)(i)(C) of this
paragraph 3), such percentage shall thereafter be
reduced to the percentage ownership of Deutsche Bank
in the Company after giving effect to such
disposition; and provided further, that Deutsche
Bank's failure to exercise its pre-emptive rights as
described above shall not constitute a disposition
for purposes of the foregoing proviso; (ii) a
requirement that Deutsche Bank (or any such
affiliate) vote its Common Stock with management
(except in the event of certain mergers,
consolidations and sales of substantially all the
assets of the Company); and (iii) a prohibition on
the conduct by Deutsche Bank and any of its
affiliates of proxy contests and tender offers,
except a tender offer for any and all the shares of
the Company which includes as a condition thereof
(which may not be waived by the offeror(s)) that,
upon consummation of such offer, Deutsche Bank and
its affiliates shall own not less than 81% of the
voting capital stock of the Company;
(h) the rights set forth in subparagraphs 3(b) and 3(d)
will terminate upon either (i) the sale by Deutsche
Bank or its affiliates of any Common Stock (other
than under the circumstances described in clause
(c)(i)(C) of this paragraph 3 or in the ordinary
course of broker-dealer activities (including without
limitation market making activities) and the
activities of any affiliate of Deutsche Bank that
maintains and enforces written policies and
procedures reasonably designed to prevent the flow of
information about the Company to such affiliate
(including without limitation merger and acquisition
advisory and ordinary course banking
activities)), or (ii) if, as a result of the sale by
Deutsche Bank and its affiliates of Common Stock
under the circumstances described in clause (c)(i)(C)
of this paragraph 3, Deutsche Bank and its affiliates
hold less than 10% of the then outstanding Common
Stock;
(i) in the event the Company repurchases shares of its
Common Stock generally (whether through an issuer
self-tender or otherwise), Deutsche Bank and its
affiliates will sell sufficient shares so that their
aggregate ownership does not exceed 19.3% of the
Common Stock then outstanding, so long as the
purchase price per share shall equal or exceed the
price paid by Deutsche Bank or such affiliates to
acquire such shares; provided that the Company
shall require a similar covenant from any person
(except for persons holding 10% or more of the
outstanding Common Stock as of the date hereof )
that, after the Closing, purchases from the Company
Common Stock or Common Stock equivalents (other than
purchases of less than one percent of the then
outstanding Common Stock or purchases pursuant to a
bona fide underwritten public offering) as a result
of which such person would own 10% or more of the
then outstanding Common Stock,; and provided further
that such covenants shall be subject to exception
to permit delay in circumstances where compliance
would result in the violation of any law, rule or
regulation; and
(j) Deutsche Bank and its affiliates will agree not to
transfer any Common Stock to a third party (or
"group" of persons as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) that
would, upon consummation of such transfer, own 10% or
more of the then outstanding Common Stock, unless
such third party or group enters into standstill and
lock-up arrangements on substantially the same terms
as those binding upon Deutsche Bank; and
(k) The Company will use commercially reasonable efforts
to include in the group of persons nominated by the
Company for election as a director a person nominated
by Deutsche Bank reasonably acceptable to the
Company, provided such nominee agrees to resign as a
director in the event Deutsche Bank and its
affiliates cease to own 10% or more of the
then-outstanding Common Stock.
4. The Investment Agreement will provide that the
representations and warranties of the Company and Deutsche
Bank will survive the Closing for a period of two years.
5. The Closing will be subject to:
(i) the receipt of all required regulatory approvals and
third-party consents, including without limitation
any applicable U.S. federal, state or foreign bank
regulatory approvals;
(ii) the expiration of the waiting period required under
the Hart-Scott-Rodino Antitrust Improvements Act of
1976, and otherwise as required by any applicable
stock exchange or other self-regulatory organization;
and
(iii) the representations and warranties of each party in
the Investment Agreement and the definitive
agreements relating to the U.S. Underwriting Venture
and the U.S. Research Venture shall be true and
correct, and all of its covenants therein to be
performed prior to the Closing shall have been
performed.
6. Deutsche Bank, the Company and their affiliates (as
applicable) will negotiate in good faith the formation of a strategic alliance,
which may take the form of one or more entities established in or outside of the
United States, in connection with:
(i) the development by the Company of "private label" web
sites for certain affiliates of Deutsche Bank for
retail and institutional trading;
(ii) subject to any regulatory requirements, the formation
of jointly owned U.S. clearance and settlement
operations;
(iii) the provision by the Company of discounted on-line
brokerage services to employees of Deutsche Bank and
its affiliates; and
(iv) the provision by the Company to Deutsche Bank and
institutional customers of Deutsche Bank and its
affiliates, on terms no less favorable than those on
which the Company provides such services generally to
other third parties, certain on-line products and
services offered by the Company as shall be mutually
agreed by the parties (collectively, the "Strategic
Cooperation Arrangements").
7. (a) Following the execution of this letter until the
execution of the Investment Agreement, neither the Company nor any of its
respective subsidiaries, affiliates or Representatives will, directly or
indirectly, (i) solicit or encourage any inquiries, discussions or proposals
regarding; (ii) continue, propose or enter into negotiations or discussions with
respect to; or (iii) enter into any agreement or other understanding providing
for, any Company Alternative Transaction; nor shall any of such persons or
entities provide any information to any other person or entity for the purpose
of making, evaluating, or determining whether to make or pursue, any inquiries
or proposals with respect to, any Company Alternative Transaction. The Company
will promptly advise Deutsche Bank of, and communicate to Deutsche Bank all
material terms of, any such inquiry or proposal and the identity of the person
or entity making any such inquiry or proposal that the Company or any of its
subsidiaries, affiliates or Representatives may receive or of which any of them
may become aware. The term "Company Alternative Transaction" means any
transaction involving an equity investment by any third party in the Company or
any of its affiliates (excluding Common Stock acquired upon exercise of (i) any
warrants outstanding on the date hereof; or (ii) stock-based compensation plans)
and/or a worldwide or regional alliance with such party for the provision of
products and services outside of the United States substantially similar to
those comprising the contemplated scope of the European Joint Venture, the
Worldwide Joint Venture or clause (ii) of the Strategic Cooperation
Arrangements, excluding any co-branding arrangements with banks, savings banks,
savings and loans institutions and credit unions located in the United States.
(b) Following the execution of this letter until the
execution of the Investment Agreement, neither Deutsche Bank nor any of its
respective subsidiaries, affiliates or Representatives will, directly or
indirectly, (i) solicit or encourage any inquiries, discussions or proposals
regarding; (ii) continue, propose or enter into negotiations or discussions with
respect to; or (iii) enter into any agreement or other understanding providing
for, any Deutsche Bank Alternative Transaction; nor shall any of such persons or
entities provide any information to any other person or entity for the purpose
of making, evaluating, or determining whether to make or pursue, any inquiries
or proposals with respect to, any Deutsche Bank Alternative Transaction.
Deutsche Bank will promptly advise the Company of, and communicate to the
Company all material terms of, any such inquiry or proposal and the identity of
the person or entity making any such inquiry or proposal that Deutsche Bank or
any of its subsidiaries, affiliates or Representatives may receive or of which
any of them may become aware. The term "Deutsche Bank Alternative Transaction"
means, with respect to Deutsche Bank or any of its affiliates, any transaction
involving an equity investment in a U.S. on-line discount broker and/or a
worldwide or regional alliance with such party for the provision of products and
services substantially similar to those comprising the contemplated scope of the
U.S. Underwriting Venture, the U.S. Research Venture, the European Joint
Venture, the Worldwide Joint Venture or the Strategic Cooperation Arrangements.
8. Deutsche Bank agrees that, from the date hereof until six
months after the date of termination of this letter in accordance with the terms
of paragraph 13 hereof, none of Deutsche Bank or any of its affiliates will,
without the prior written consent of the Company and other than in the ordinary
course of broker-dealer activities (including without limitation market making
activities) and the activities of any affiliate of Deutsche Bank that maintains
and enforces written policies and procedures reasonably designed to prevent the
flow of information about the Company to such affiliate (including without
limitation merger and acquisition advisory and ordinary course banking
activities):
(i) acquire, offer to acquire, or agree to acquire,
directly or indirectly, by purchase or otherwise, any
voting securities or direct or indirect rights to
acquire any voting securities of the Company or any
subsidiary thereof (other than acquisitions of Common
Stock in an amount equal to the difference between
19.3% of the then outstanding voting capital stock of
the Company and an amount equal to (A) shares
purchased in the Investment plus (B) shares owned by
Deutsche Bank and its affiliates), or of any
successor to or person in control of the Company, or
any material assets of the Company or any subsidiary
or division thereof or of any such successor or
controlling person except as contemplated by the
Investment;
(ii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" to
vote (as such terms are used in the rules of the
Securities and Exchange Commission), or seek to
advise or influence any person or entity with respect
to the voting of any voting securities of the
Company;
(iii) make any public announcement with respect to, or
submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving
the Company or any of its securities or assets; or
(iv) form, join or in any way participate in a "group" of
persons, as described above, in connection with any
of the foregoing.
9. Deutsche Bank and the Company shall each bear their own
fees and expenses, including, without limitation, fees and expenses of
financial, legal and accounting advisers and other outside consultants, incurred
in connection with the execution of this letter and the transactions
contemplated hereby.
10. THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED WITHIN THAT STATE.
11. This letter may be executed in counterparts, each of
which shall be deemed to be an original, but all of
which shall constitute one and the same instrument.
12. This letter is an expression only of the intent of the
parties to negotiate, document and consummate the Investment, the European Joint
Venture, the Worldwide Joint Venture, the U.S. Underwriting Venture, the U.S.
Research Venture, the Strategic Cooperation Arrangements and the other
transactions contemplated hereby and is not intended to be a binding contract,
except that paragraphs 7, 8, 9, 10, 12 and 13 are intended to be binding upon
and enforceable against the parties hereto and, in the case of paragraphs 8, 9,
10, 12 and 13, to survive the termination of this letter agreement, and that
nothing herein shall be construed to adversely effect the effectiveness of the
letter agreements between the parties of even date relating to protection of the
confidentiality of information provided by the parties to each other thereunder
(the "Non-Disclosure Agreements").
13. If the definitive Transaction Documents have not been
approved by the respective Boards of Directors of the Company and Deutsche Bank
and the Board of Managing Directors of Deutsche Bank AG by April 30, 2000 and
unless otherwise agreed by the parties, this letter will terminate and neither
party shall have any obligation to the other respecting the subject matter
hereof, except to the extent otherwise provided herein and in the Non-Disclosure
Agreements.
* * *
<PAGE>
If the foregoing is in accordance with your understanding and
agreement with Deutsche Bank, please sign and return the duplicate of this
letter enclosed herewith.
Sincerely,
DEUTSCHE BANK AMERICAS HOLDING CORPORATION
By___________________________
Name:
Title:
By___________________________
Name:
Title:
Accepted and agreed to
on the terms set forth above:
NATIONAL DISCOUNT BROKERS GROUP, INC.
By___________________________
Name:
Title:
