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Exhibit (a)(1)(A)
-----------------
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
National Discount Brokers Group, Inc.
at
$49.00 Net Per Share
by
Deutsche Acquisition Corp.
an indirect wholly owned subsidiary
of
Deutsche Bank AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, NOVEMBER 21, 2000,
UNLESS THE OFFER IS EXTENDED.
The offer is being made pursuant to the Agreement and Plan of Merger, dated
as of October 11, 2000, as amended, among Deutsche Bank AG, Deutsche
Acquisition Corp. and National Discount Brokers Group, Inc.
The Board of Directors of NDB (other than Deutsche Bank's representative,
who was absent and did not vote) unanimously approved the offer and the merger
and determined that the merger agreement and the transactions contemplated
therein, including the offer and the merger, are advisable and fair to, and in
the bests interests of, NDB's stockholders (other than Deutsche Bank and its
wholly owned subsidiaries) and recommends that such stockholders accept the
offer and, if stockholder approval of the merger is required by law, vote for
the approval and adoption of the merger agreement.
A summary of the principal terms of the offer appears on pages (1) through
(4). You should read this entire document carefully before deciding whether to
tender your NDB shares.
Neither the Securities and Exchange Commission nor any state securities
commission has: (a) approved or disapproved of the transaction; (b) passed
upon the merits or fairness of the transaction; or (c) passed upon the
adequacy or accuracy of the disclosure in this document. Any representation to
the contrary is a criminal offense.
----------------
The Information Agent for the Offer is:
[GEORGESON SHAREHOLDER COMMUNICATIONS INC.]
The Dealer Manager for the Offer is:
[Deutsche Banc Alex. Brown]
October 24, 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY TERM SHEET......................................................... 1
INTRODUCTION............................................................... 5
SPECIAL FACTORS............................................................ 8
Background of the Offer and the Merger..................................... 8
Recommendation of the NDB Board of Directors; Fairness of the Offer and the
Merger.................................................................... 14
Opinion of U.S. Bancorp Piper Jaffray...................................... 16
Position of Deutsche Bank and Purchaser Regarding Fairness of the Offer and
the Merger................................................................ 23
Purpose and Effects of the Offer and the Merger............................ 23
Plans for NDB.............................................................. 24
Interests of Certain Persons............................................... 25
Beneficial Ownership of Shares............................................. 26
THE TENDER OFFER........................................................... 29
1. Terms of the Offer................................................... 29
2. Acceptance for Payment and Payment for Shares........................ 31
3. Procedures for Tendering Shares...................................... 32
4. Withdrawal Rights.................................................... 34
5. Certain United States Federal Income Tax Consequences of the Offer... 35
6. Price Range of Shares; Dividends..................................... 36
7. Possible Effects of the Offer on the Market for the Shares; NYSE
Listing; Exchange Act Registration and Margin Regulations............ 36
8. Information concerning National Discount Brokers Group............... 38
9. Information concerning Deutsche Bank and Purchaser................... 40
10. The Merger Agreement and Stockholder Tender Agreement................ 41
11. Source and Amount of Funds........................................... 52
12. Certain Conditions of the Offer...................................... 52
13. Certain Legal and Regulatory Matters................................. 54
14. Fees and Expenses.................................................... 56
15. Miscellaneous........................................................ 57
SCHEDULE A Information Concerning Members of the Management Board
(Vorstand) and the Supervisory Board (Aufsichtsrat) of Deutsche Bank and
Members of the Board of Directors and the Executive Officers of
Purchaser................................................................. S-1
</TABLE>
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SUMMARY TERM SHEET
Deutsche Acquisition Corp., which is referred to in this offer to purchase
as "Purchaser," is offering to purchase all outstanding shares of common stock
of National Discount Brokers Group, Inc., which is referred to in this offer
to purchase as "NDB," for $49.00 per share in cash. The following are some of
the questions you, as a stockholder of NDB, may have and answers to those
questions. We urge you to read the remainder of this offer to purchase and the
letter of transmittal carefully because the information in this summary is not
complete and additional important information is contained in the remainder of
this offer to purchase and the letter of transmittal.
Who is offering to buy my shares?
Deutsche Acquisition Corp. is a recently formed Delaware corporation that
has not conducted any significant business operations to date other than in
connection with the merger agreement and the offer. Deutsche Acquisition Corp.
is an indirect wholly owned subsidiary of Deutsche Bank AG, a banking company
with limited liability organized under the laws of the Federal Republic of
Germany, which is referred to in this offer to purchase as "Deutsche Bank."
See Section 9 of this offer to purchase--"Information Concerning Deutsche Bank
and Purchaser."
What shares are being sought in the offer?
Purchaser is offering to purchase all of the outstanding shares of common
stock of NDB that Deutsche Bank and its affiliates do not already own.
Deutsche Bank and its affiliates now own 3,502,119 shares, about 16.7% of the
outstanding shares. See "INTRODUCTION" and Section 1 of this offer to
purchase--"Terms of the Offer."
How much are you offering to pay and what is the form of payment?
Purchaser is offering to pay $49.00 per share, net to you, in cash. See
"INTRODUCTION" and Section 1 of this offer to purchase--"Terms of the Offer."
Do you have the financial resources to make payment?
Deutsche Bank, the ultimate parent of Purchaser, will provide Purchaser
with sufficient funds from its own resources or existing facilities to acquire
all shares validly tendered and not withdrawn in the offer and to provide
funding for the merger which is expected to follow the successful completion
of the offer in accordance with the terms and conditions of the merger
agreement. The offer is not conditioned upon any financing arrangements. See
Section 11 of this offer to purchase--"Source and Amount of Funds."
Is your financial condition relevant to my decision to tender in the offer?
We do not think our financial condition is relevant to your decision
whether to or not to tender shares and accept the offer because:
. the offer is being made for all outstanding shares solely for cash,
. if we consummate the offer, we will acquire all remaining shares for the
same cash price in the merger, and
. the offer is not subject to any financing condition.
How long do I have to decide whether to tender in the offer?
You will have at least until 12:00 midnight, New York City time, on
Tuesday, November 21, 2000, to decide whether to tender your shares in the
offer. Further, if you cannot deliver everything that is required in order to
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make a valid tender by that time, you may be able to use the guaranteed
delivery procedure that is described in this offer to purchase. See Sections 1
and 3 of this offer to purchase--"Terms of the Offer" and--"Procedures for
Tendering Shares--Guaranteed Delivery."
Can the offer be extended and under what circumstances?
Yes. We have agreed with NDB that we may extend the offer from time to time
for up to an aggregate of ten business days from the initial November 21
expiration date or if we are required to extend the offer by the rules of the
Securities and Exchange Commission. See Section 1 of this offer to purchase--
"Terms of the Offer."
We may also elect to provide a "subsequent offering period" for the offer.
A subsequent offering period, if one is included, will be an additional period
of time beginning after we have purchased shares tendered in the offer, during
which stockholders may tender, but not withdraw, their shares and receive the
offer consideration. If we have acquired less than 90% of the outstanding
shares of NDB on the expiration date of the offer, we intend to elect to
provide a subsequent offering period. See Section 1 of this offer to
purchase--"Terms of the Offer."
How will I be notified if the offer is extended?
If we extend the offer, we will inform ChaseMellon Shareholder Services,
L.L.C. (which is the depositary for the offer) of that fact and will make a
public announcement of the extension, by not later than 9:00 a.m., New York
City time, on the day after the day on which the offer was scheduled to
expire.
What are the most significant conditions to the offer?
We are not obligated to purchase any tendered shares if:
. the number of shares validly tendered and not withdrawn, when added to
the number of shares then owned by Deutsche Bank and its affiliates,
does not equal at least a majority of the shares outstanding on a fully
diluted basis;
. we have not obtained required approvals or the applicable waiting
periods have not expired or been terminated under United States
antitrust and competition laws;
. the merger agreement has been terminated; or
. there has occurred any event, change or development that would cause a
material adverse change in NDB or its business.
The offer is also subject to a number of other conditions. The offer is not
structured so that approval of at least a majority of the unaffiliated
stockholders is required. See Section 12 of this offer to purchase--"Certain
Conditions of the Offer."
How do I tender my shares?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal and any other
documents required, to ChaseMellon Shareholder Services, L.L.C., the
depositary for the offer, not later than the time the offer expires. If your
shares are held in street name, the shares can only be tendered by your
nominee through The Depository Trust Company. If you cannot deliver something
that is required to the depositary by the expiration of the offer, you may get
a little extra time to do so by having a broker, a bank or other fiduciary,
which is a member of the Securities Transfer Agents Medallion Program or other
eligible institution, guarantee that the missing items will be received by the
depositary within three New York Stock Exchange trading days. However, the
depositary must receive the missing items within that three trading day
period. See Section 3 of this offer to purchase--"Procedures for Tendering
Shares."
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Until what time can I withdraw previously tendered shares?
You can withdraw shares at any time until the offer has expired. If we
decide to provide a subsequent offering period, we will accept shares tendered
during that period immediately and thus you will not be able to withdraw
shares tendered during any subsequent offering period. See Sections 1 and 4 of
this offer to purchase-- "Terms of the Offer" and "Withdrawal Rights."
How do I withdraw previously tendered shares?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary prior to the
expiration of the offer. See Sections 1 and 4 of this offer to purchase--
"Terms of the Offer" and "Withdrawal Rights."
What does the NDB Board of Directors think of the offer?
We are making the offer pursuant to a merger agreement with NDB. The NDB
Board of Directors, by unanimous vote of all directors other than Kevin E.
Parker, who was absent and did not vote because he is an officer of an
affiliate of Deutsche Bank, approved the merger agreement, this offer and the
merger. The NDB Board has determined that the offer and the merger are
advisable and fair to, and in the best interests, of NDB's stockholders (other
than Deutsche Bank and its wholly owned subsidiaries) and the Board recommends
that stockholders accept the offer and tender their shares. See "Background of
the Offer." NDB has prepared a Solicitation and Recommendation Statement on
Schedule 14D-9 containing additional information regarding the Board's
determination and recommendation, which is being sent to stockholders together
with this offer to purchase.
Do the officers and directors of NDB have interests that differ from, or are
in addition to, other stockholders' interests in the offer?
As a result of the offer and the merger, stock options held by officers,
directors and other employees will become immediately exercisable and these
individuals will be entitled to receive the difference between the offer price
and the option exercise price for their vested and unvested options if the
offer price is in excess of the option exercise price. Officers, directors and
other employees who hold stock options with an option exercise price equal to
or greater than the offer price will be entitled to receive $2.00 for each
Share underlying such options. In addition, NDB's officers and directors will
be entitled to continued directors and officers insurance coverage and
indemnification benefits for six years following the merger. You should also
be aware that prior to the consummation of the merger, NDB or one or more of
its subsidiaries will enter into retention agreements with certain of its
senior executives providing for, among other things, a retention stock bonus
and minimum compensation guarantee package for such executive officers.
Have any stockholders agreed to tender their Shares?
Yes, several stockholders. Arthur Kontos, the President and Chief Executive
Officer of NDB, and certain of his affiliates, Dennis Marino, the Executive
Vice President and Chief Administrative Officer of NDB, Thomas W. Neumann, the
Executive Vice President of NDB, Peter R. Kellogg and certain of his
affiliates, Go2Net, Inc. and Vulcan Ventures Incorporated, who collectively
own approximately 29.1% of the outstanding common stock of NDB, 26.7% on a
fully diluted basis, have agreed to tender their shares in the offer. See
Section 10 of this offer to purchase--"The Merger Agreement and Stockholder
Tender Agreement."
Is this tender offer the first step in a going private transaction?
Yes. The tender offer by Purchaser is the first step in a going private
transaction. If Purchaser purchases in the offer at least the number of shares
which, when added to the number of shares then owned by Deutsche Bank, equals
at least a majority of NDB shares outstanding on a fully diluted basis,
Purchaser will be merged
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into NDB. If Purchaser owns more than 90% of the outstanding shares of NDB
following the close of the offer, Purchaser will be able to effect the merger
without obtaining the approval of the stockholders of NDB. If Purchaser owns
less than 90% of the outstanding shares of NDB following the close of the
offer, Purchaser will seek stockholder approval for the merger. If the merger
takes place, Deutsche Bank will own indirectly all of the shares of common
stock of NDB and all remaining stockholders of NDB will receive $49.00 per
share. See "INTRODUCTION," "Purpose and Effects of the Offer and the Merger"
and Section 10--"The Merger Agreement and Stockholder Tender Agreement."
If the merger takes place, Deutsche Bank will seek to delist the shares of
common stock of NDB from the New York Stock Exchange and terminate the
registration of the shares of common stock of NDB under the Securities
Exchange Act of 1934. See "Purpose and Effects of the Offer and the Merger,"
"Plans for NDB" and Section 7--"Possible Effect of the Offer on the Market for
the Shares; NYSE Listing; Exchange Act Registration and Margin Regulations."
There are no dissenters' rights available in connection with the offer.
However, if the merger takes place, stockholders who have not sold their
shares in the offer will, under certain circumstances, have dissenters' rights
under Delaware law. See Section 13 of this offer to purchase--"Certain Legal
and Regulatory Matters."
If I decide not to tender, how will the offer affect my shares?
If the merger takes place, stockholders who do not tender in the offer will
receive in the merger the same amount of cash per share which they would have
received had they tendered their shares in the offer. Therefore, if the merger
takes place, the only difference to you between tendering shares and not
tendering shares is that you will be paid earlier if you tender your shares.
Moreover, until the merger is consummated or if the merger were not to take
place for some reason, the number of stockholders of NDB and the shares of NDB
which are still in the hands of the public may be so small that there no
longer will be an active public trading market (or, possibly, any public
trading market) for the shares. Also, the shares may no longer be eligible to
be traded on the New York Stock Exchange or any other securities exchange, and
NDB may cease making filings with the Securities and Exchange Commission or
otherwise cease being required to comply with the Securities and Exchange
Commission's rules relating to publicly held companies. See "Plans for NDB"
and Section 7 of this offer to purchase--"Possible Effects of the Offer on the
Market for the Shares; NYSE Listing; Exchange Act Registration and Margin
Regulations".
What is the market value of my shares as of a recent date?
The last sale price of the shares reported on the New York Stock Exchange
was:
. $25.19 per share on October 6, 2000, the last trading day before
Deutsche Bank proposed to NDB to acquire the remaining shares of NDB;
. $47.31 per share on October 11, 2000, the last trading day before
Deutsche Bank and NDB announced that we had signed the Merger Agreement;
and
. $48.44 per share on October 23, 2000, the last trading day before we
commenced this offer.
We recommend that you obtain a recent quotation for NDB shares before
deciding whether to tender your shares. See Section 6 of this offer to
purchase--"Price Range of Shares; Dividends."
Who can I talk to if I have questions about the tender offer?
You can call Georgeson Shareholder Communications Inc. at (800) 223-2064
(toll free) or Deutsche Bank Securities Inc. at (877) 305-4919 (toll free).
Georgeson is acting as the Information Agent, and Deutsche Bank Securities
Inc. is acting as the Dealer Manager, for our offer. See the back cover page
of this offer to purchase.
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To the Holders of Shares of Common Stock
of National Discount Brokers Group, Inc.:
INTRODUCTION
Deutsche Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Deutsche Bank AG, a banking company with
limited liability organized under the laws of the Federal Republic of Germany,
hereby offers to purchase all of the outstanding shares of common stock, par
value $.01 per share (the "Shares"), of National Discount Brokers Group, Inc.,
a Delaware corporation, at a purchase price of $49.00 per Share, net to the
seller in cash (the "Offer Price") (less any required withholding taxes),
without interest thereon, upon the terms and subject to the conditions set
forth in this offer to purchase and in the related letter of transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "offer").
Stockholders of record who hold NDB shares registered in their name and
tender NDB shares directly to ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") will not be required to pay brokerage fees or commissions or,
except as described in Instruction 6 of the letter of transmittal, stock
transfer taxes on the sale of NDB shares in the offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they will be charged any service fees. However, if a tendering
stockholder does not complete and sign the Substitute Form W-9 included in the
letter of transmittal, such stockholder may be subject to a required backup
United States federal income tax withholding of 31% of the gross proceeds
payable to such stockholder. See Section 5. Purchaser will pay all charges and
expenses of the Depositary, Deutsche Bank Securities Inc., as Dealer Manager,
and Georgeson Shareholder Communications Inc., as Information Agent, incurred
in connection with the offer. See Section 14.
The offer is conditioned upon, among other things, there being validly
tendered in the offer and not properly withdrawn that number of Shares which,
together with any Shares then beneficially owned by Purchaser or Deutsche Bank
or any of their respective affiliates, represents at least a majority of the
total number of outstanding Shares on a fully diluted basis on the date of
purchase (the "Minimum Tender Condition"). The offer is also subject to
certain other terms and conditions. See Section 12.
The offer will expire at 12:00 midnight, New York City time, on Tuesday,
November 21, 2000, unless extended. See Sections 1, 12 and 13.
The offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 11, 2000, as amended (the "Merger Agreement"), among Deutsche
Bank, Purchaser and NDB pursuant to which, after the completion of the offer
and the satisfaction or waiver of certain conditions, Purchaser will be merged
with and into NDB and NDB will be the surviving corporation. At the effective
time of the merger, each outstanding Share (other than Shares owned by
Deutsche Bank, Purchaser or any subsidiary of Deutsche Bank, Purchaser or NDB
or held in the treasury of NDB or held by stockholders who properly exercise
dissenters' rights, if any), will by virtue of the merger, and without action
by the holder thereof, be canceled and converted into the right to receive an
amount in cash, without interest, equal to the per Share price paid pursuant
to the offer (the "Merger Consideration") upon the surrender of the
certificate formerly representing such Share. The Merger Agreement is more
fully described in Section 10 below.
Simultaneously with the execution of the Merger Agreement, Purchaser
entered into a Stockholder Tender Agreement, dated as of October 11, 2000 (the
"Stockholder Tender Agreement"), with Arthur Kontos, the President and Chief
Executive Officer of NDB, and certain of his affiliates, Dennis Marino, the
Executive Vice President and Chief Administrative Officer of NDB, Thomas W.
Neumann, the Executive Vice President of NDB, Peter R. Kellogg and certain of
his affiliates, Go2Net, Inc. and Vulcan Ventures Incorporated (each, a
"Principal Stockholder" and collectively, the "Principal Stockholders"). The
Principal Stockholders have represented in the Stockholder Tender Agreement
that they beneficially own an aggregate of 6,113,882 Shares (not including
Shares subject to options), representing approximately 26.7% of the Shares on
a fully diluted basis. Pursuant to
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the Stockholder Tender Agreement, the Principal Stockholders have agreed,
among other things, to tender all such Shares pursuant to the offer and have
agreed to vote such Shares in favor of the merger. The Stockholder Tender
Agreement is more fully described in Section 10.
The Board of Directors of NDB (other than Deutsche Bank's representative,
who was absent and did not vote) unanimously approved the offer and the merger
and determined that the Merger Agreement and the transactions contemplated
therein, including the offer and the merger, are advisable and fair to, and in
the bests interests of, NDB's stockholders (other than Deutsche Bank and its
wholly owned subsidiaries) and recommends that such stockholders accept the
offer and, if stockholder approval of the merger is required by law, vote for
the approval and adoption of the Merger Agreement.
U.S. Bancorp Piper Jaffray, NDB's financial advisor, has delivered to the
board of directors of NDB a written opinion, dated October 11, 2000, to the
effect that as of that date and based upon and subject to the assumptions,
factors and limitations set forth in the written opinion, the $49.00 per Share
cash consideration to be received in the offer and the merger pursuant to the
Merger Agreement by the holders of Shares was fair from a financial point of
view to such holders (other than Deutsche Bank and its wholly owned
subsidiaries). A copy of the opinion, which sets forth the procedures
followed, assumptions made, matters considered and limitations on the review
undertaken, is attached as Schedule I to NDB's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") filed with the U.S.
Securities and Exchange Commission in connection with the offer, a copy of
which (without certain exhibits) is being furnished to stockholders
concurrently herewith. U.S. Bancorp Piper Jaffray's advisory services and
opinion were provided for the information of the NDB board of directors in its
evaluation of the offer and the merger and the opinion is not intended to be,
nor does it constitute a recommendation to any stockholder as to whether such
holder should tender Shares in the offer or vote in favor of the merger, if
applicable.
If the Minimum Tender Condition and the other conditions to the offer are
satisfied and the offer is consummated, Purchaser will own a sufficient number
of Shares to ensure that the merger will be approved. Under the Delaware
General Corporation Law (the "DGCL") if, after consummation of the offer,
Purchaser owns at least 90 percent of the Shares then outstanding, Purchaser
will be able to cause the merger to occur without a vote of NDB's
stockholders. In such event, Deutsche Bank, Purchaser and NDB have agreed in
the Merger Agreement to take, subject to the satisfaction of the conditions
set forth in the Merger Agreement, all necessary and appropriate actions to
cause the merger to become effective as soon as practicable after the
acceptance for payment of Shares by Purchaser pursuant to the offer without a
meeting of the stockholders, in accordance with Section 253 of the DGCL. If,
however, after consummation of the offer, Purchaser owns less than 90 percent
of the then-outstanding Shares, a vote of NDB's stockholders will be required
under the DGCL to approve the merger, and a significantly longer period of
time will be required to effect the merger. See Section 10.
The offer is conditioned upon, among other things, the Minimum Tender
Condition being satisfied. NDB has informed Purchaser that, as of October 20,
2000, there were 21,010,399 Shares issued and outstanding and there were
1,891,806 Shares subject to issuance pursuant to NDB's outstanding stock
options. As of the date of this offer to purchase, Deutsche Bank beneficially
owns 3,502,119 Shares which represent approximately 16.7% of the Shares issued
and outstanding as of such date, 15.3% on a fully diluted basis. See
Section 9.
Based on the foregoing, and assuming no additional Shares (or warrants,
options or rights exercisable for, or securities convertible into, Shares)
have been issued (other than Shares issued pursuant to the exercise of the
options referred to above), Purchaser believes there are approximately
22,902,205 Shares outstanding on a fully diluted basis. Accordingly, Purchaser
believes that the Minimum Tender Condition would be satisfied if at least
approximately 7,948,983 Shares are validly tendered prior to the Expiration
Date (as defined in Section 1) and not properly withdrawn (1,835,101
additional Shares, assuming the Principal Stockholders tender all their
6,113,882 Shares).
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No appraisal rights are available in connection with the offer; however,
under certain circumstances, stockholders may have appraisal rights in
connection with the merger. See Section 13.
Certain United States federal income tax consequences of the sale of Shares
pursuant to the offer and the merger, as the case may be, are described in
Section 5 below.
This offer to purchase and the related letter of transmittal contain
important information that should be read carefully and in their entirety
before any decision is made with respect to the offer.
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SPECIAL FACTORS
Background of the Offer and the Merger
From time to time during the past two years, NDB has engaged in informal
discussions with regard to the possibility of entering into a strategic
alliance or business combination. However, except as set forth herein, no firm
proposals for any such alliance or business combination have been received by
NDB.
In March, 2000, Deutsche Bank and NDB first met to discuss a possible
transaction in which Deutsche Bank would make a significant investment in NDB
and form a strategic alliance with NDB to make available certain of Deutsche
Bank's proprietary research on equity securities to NDB's retail customers
through its website, to cooperate with regard to the online distribution of
initial public offerings of securities in the United States and, through joint
ventures, to provide online discount brokerage services in Western Europe and
other areas worldwide. On May 15, NDB and Deutsche Bank entered into a
Securities Purchase Agreement pursuant to which Deutsche Bank agreed to
purchase 3,000,000 Shares at a purchase price of $45.31 per Share. The
transaction was consummated on June 15. At that time, Deutsche Bank, NDB and
certain of their affiliates entered into additional agreements, including a
registration rights agreement, a stockholder agreement (the "Existing
Stockholder Agreement"), a U.S. securities research agreement and term sheets
for proposed European and worldwide joint ventures. The Existing Stockholder
Agreement, among other things, prohibits Deutsche Bank and its affiliates from
acquiring more than 19.3 percent of the voting capital stock of NDB, and
prohibits Deutsche Bank and its affiliates from acquiring, or proposing to
acquire, any securities or assets of NDB or entering into any merger or other
business combination transaction with NDB without the consent of NDB's board
of directors.
In late July, 2000, Mr. Arthur Kontos, Vice Chairman, President and Chief
Executive Officer of NDB, was contacted by a senior executive officer (the
"Senior Executive") of a financial services company (the "First Potential
Acquiror"), with whom NDB had previously discussed a possible business
combination or strategic alliance transaction. At the request of the Senior
Executive, an initial meeting was scheduled for July 27, at which
representatives of the First Potential Acquiror met with Mr. Kontos, Ms.
Denise Isaac, Executive Vice President and Treasurer of NDB, and Mr. Gregg
Sharenow, Executive Vice President of National Discount Brokers Corporation.
The representatives of the First Potential Acquiror requested certain non-
public information from NDB with respect to its financial position, results of
operations and business activities, as a preliminary step in developing a
proposal for further discussion. On July 31, NDB and the First Potential
Acquiror entered into a confidentiality agreement, and NDB made available to
the First Potential Acquiror certain of the information that had been
requested. Mr. Kontos informally advised members of the NDB board of directors
of these developments.
In order to prepare for further discussions with the First Potential
Acquiror, NDB contacted U.S. Bancorp Piper Jaffray with a view to engaging
them to act as a financial advisor to NDB in connection with any proposed
strategic alliance or business combination transaction. U.S. Bancorp Piper
Jaffray entered into a confidentiality agreement with NDB, dated August 1,
2000, pursuant to which NDB subsequently provided to U.S. Bancorp Piper
Jaffray certain non-public information concerning NDB's financial position,
results of operations and business activities. NDB also at that time disclosed
to U.S. Bancorp Piper Jaffray the identity of the First Potential Acquiror,
and the fact that discussions between the two companies had commenced that
could result in a proposed business combination or strategic alliance.
Representatives of the First Potential Acquiror met with representatives of
NDB on August 14, 17 and 23 to conduct a due diligence review of NDB, during
the course of which NDB supplied additional non-public information. During
this period, the Senior Executive and Mr. Kontos spoke by telephone on several
occasions. The Senior Executive initially proposed a transaction structured as
a stock-for-stock merger that would qualify for accounting treatment as a
pooling of interests at a purchase price per Share of $43.00. The proposed
price was rejected by NDB as inadequate. A subsequent proposal at a purchase
price per Share of $47.00 was also rejected.
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On August 14 and September 1, Mr. Kontos spoke by telephone with the Senior
Executive regarding the results of the First Potential Acquiror's due
diligence review and potential terms of a business combination transaction. On
September 14, at the request of the Senior Executive, Mr. Kontos, Mr.
Sharenow, the Senior Executive and another senior official of the First
Potential Acquiror met in New York City to discuss specific details of a
potential offer to acquire NDB. Among the matters discussed were the potential
effect of such a transaction on NDB's online brokerage subsidiary and its
employees, and the possibility that pooling accounting treatment might not be
a necessary condition of the transaction. Throughout this period, Mr. Kontos
kept members of the NDB board of directors apprised of his discussions with
the First Potential Acquiror.
On September 18, NDB was contacted by a second potential acquiror (the
"Second Potential Acquiror"), seeking to schedule a meeting for the purpose of
discussing a potential business combination transaction. The following day,
representatives of the Second Potential Acquiror met with representatives of
NDB, at NDB's executive offices in Jersey City, New Jersey. Representatives of
NDB also met with representatives of a third potential acquiror (the "Third
Potential Acquiror") on September 19 at NDB's executive offices in
Jersey City, New Jersey. NDB entered into a confidentiality agreement with the
Second Potential Acquiror on September 20, and with the Third Potential
Acquiror on September 22.
Because of Deutsche Bank's existing equity position in NDB, the First
Potential Acquiror requested that Mr. Kontos contact Deutsche Bank to disclose
to Deutsche Bank the First Potential Acquiror's interest in acquiring NDB. On
September 19, Mr. Kontos and Mr. Sharenow met with Mr. Kevin Parker, Deutsche
Bank's representative on the NDB board of directors for this purpose. As a
result of this discussion, Mr. Parker informed Mr. Kontos that Deutsche Bank
would also consider making a proposal to acquire NDB and that he would not
participate in the NDB board of director's consideration of any prospective
proposal.
On September 21, representatives of the Second Potential Acquiror met with
Mr. Kontos, Mr. Thomas Neumann, Executive Vice President of NDB, and Mr.
Sharenow and other officials of NDB, in connection with their due diligence
review of NDB. On September 24, representatives of the Third Potential
Acquiror also met with representatives of NDB, at NDB's executive offices. At
these meetings, certain non-public information regarding NDB's financial
position, results of operations and business activities was provided to such
representatives.
On September 25, NDB engaged U.S. Bancorp Piper Jaffray to act as its
financial advisor in connection with a potential business combination
transaction. On the same date, Deutsche Bank entered into a confidentiality
agreement with NDB, and began a review of non-public financial and operating
information of NDB. Also on that day, NDB engaged Credit Suisse First Boston
to act as an additional financial advisor to NDB. In the evening, Mr. Neumann
met with senior executives of the Third Potential Acquiror and discussed the
possible combination of certain business operations of the two companies.
On September 26, U.S. Bancorp Piper Jaffray sent a letter to the Second
Potential Acquiror, advising it that NDB expected to receive specific
indications of interest from one or more prospective acquirors, and requesting
that they indicate any interest they might have in a business combination
transaction with NDB on or prior to September 28, 2000. Enclosed with the
letter was a form of merger agreement prepared by counsel to NDB. Separately,
prior to September 26, NDB was informed that if the Third Potential Acquiror
were to make a proposal to acquire NDB, it would be at a price below $40.00
per Share. NDB responded to representatives of the Third Potential Acquiror
that such a proposal would not be of interest, and no such proposal was made.
From September 20 to September 26, Mr. Kontos and Mr. Frank Lawatsch,
Executive Vice President, Secretary and General Counsel of NDB, kept each
member of the NDB board of directors (other than Deutsche Bank's
representative) apprised of these communications.
On September 28, the First Potential Acquiror sent a preliminary indication
of interest, together with a discussion paper setting forth the terms upon
which it proposed to acquire 100% of the equity of NDB, including all options,
warrants and other rights to purchase shares of NDB or any of its
subsidiaries. The transaction proposed was structured as a stock-for-stock
merger at a price of $51.00 per fully diluted share of NDB, the exchange ratio
for which would be fixed on the date of execution of a definitive merger
agreement. The
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discussion paper specifically stated that no collar mechanisms or other
approaches perceived to create price protection would be agreed by the First
Potential Acquiror. The transaction was structured to qualify as a tax free
reorganization for NDB stockholders and to qualify for accounting treatment as
a pooling of interests. The First Potential Acquiror also requested that NDB
grant it a "lock-up" option to purchase Shares, and a termination fee of $35
million. The First Potential Acquiror also requested that Mr. Kontos, Mr.
Neumann and other employees of NDB identified by the First Potential Acquiror
enter into three-year employment and non-competition agreements that would
replace the existing employment agreements and bonus arrangements for those
individuals, to the extent such agreements and arrangements existed. The terms
of employment for Mr. Kontos and Mr. Neumann and the positions they would
occupy at the acquiring company were briefly discussed in the letter. In
connection with its preliminary indication of interest, the First Potential
Acquiror also proposed to create a retention pool in an amount not to exceed
$22 million for certain key employees to be jointly designated by the parties.
The discussion paper also noted that the conditions to execution of
definitive agreements would include but not be limited to satisfactory
completion by the First Potential Acquiror of its due diligence investigation,
a satisfactory restructuring of NDB's relationship with Deutsche Bank,
contemporaneous execution of voting agreements with major stockholders of NDB
and approval of the transaction by the board of directors of the First
Potential Acquiror.
The letter also stated that nothing in the letter or the attached
discussion paper was intended to create any obligation binding on NDB or the
First Potential Acquiror (other than certain confidentiality obligations).
The First Potential Acquiror did not provide a marked up copy of the draft
merger agreement previously circulated by NDB.
On the following day, September 29, the NDB board of directors met to
discuss the proposal made by the First Potential Acquiror. The meeting took
place at the executive offices of NDB. All members of the NDB board of
directors (other than Mr. Parker) attended the meeting in person or by
conference telephone call. Also present were Mr. Lawatsch, Mr. Sharenow, and
representatives of Credit Suisse First Boston and U.S. Bancorp Piper Jaffray.
At the meeting, Mr. Kontos reviewed the history of his discussions with
each of the companies which had expressed interest in a potential business
combination with NDB. The NDB board of directors then considered the written
indication of interest received from the First Potential Acquiror. The
representatives of Credit Suisse First Boston reviewed with the NDB board of
directors the terms proposed by the First Potential Acquiror, and responded to
questions from members of the NDB board of directors regarding the proposed
termination fee and retention arrangements, as well as the conditions to
execution of a definitive agreement and consummation of a transaction that the
First Potential Acquiror had outlined. They also presented information to the
NDB board of directors with respect to the business activities, historic
financial results and operating performance of the First Potential Acquiror
and the recent trading performance of its stock.
Representatives of U.S. Bancorp Piper Jaffray presented information to the
NDB board of directors with respect to recent mergers in the brokerage,
market-making and e-finance industries and selected market, analyst and
operating data and statistics regarding Deutsche Bank, the First Potential
Acquiror, NDB and a group of comparable companies.
Counsel also reviewed certain specific terms of the discussion paper,
including the benefit of obtaining price protection in the form of a collar or
right to terminate in the event of deterioration in the market price of the
stock to be received by NDB's stockholders in the transaction, the risks
associated with structuring a transaction to require pooling of interests
accounting treatment, the inability of NDB to grant a "lockup" option, due to
the restrictions on NDB set forth in the Existing Stockholder Agreement, and
the negative effect such a provision would have, if granted, on NDB's ability
to enter into a pooling transaction with any other person, in the event the
proposed transaction with the First Potential Acquiror were not successfully
completed. Counsel also
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suggested the proposed retention arrangements for key employees would need to
be addressed in detail before entering into a definitive agreement. Among
other things, counsel also noted that imposing as a condition to the
transaction that the relationship between NDB and Deutsche Bank be
satisfactorily restructured could adversely affect the ability of NDB to
successfully complete the transaction.
The NDB board of directors discussed the potential impact of a transaction
in the form proposed by the First Potential Acquiror on NDB and its business
activities, and in particular on the employees of NDB. Concern was expressed
that a transaction of this type could create uncertainty that might lead to
loss of key employees, adversely affecting the value of NDB. In this regard,
the NDB board of directors requested management to obtain additional
information from the First Potential Acquiror regarding the details of its
proposals regarding retention of employees of NDB, and whether such provisions
could be put in place prior to consummation of any proposed transaction.
The NDB board of directors authorized management to continue discussions
with all of the potential bidders and to report back to the board on the
progress of such discussions. Later that day, Mr. Kontos spoke by telephone
with the Senior Executive and described to him the elements of the discussion
paper that would need to be developed further to make progress toward a
definitive agreement.
On October 4, several senior executive officers of the First Potential
Acquiror held a telephone conference with Mr. Kontos and Mr. Lawatsch
regarding issues presented by the proposal set forth in the discussion paper.
On October 5, Mr. Lawatsch conferred with counsel and certain senior
officials of the First Potential Acquiror, to discuss the potentially
significant issues presented by the discussion paper previously reviewed with
the NDB board of directors. Among other things, he explained the risks
perceived by the NDB board of directors in entering into a stock-for-stock
transaction at a fixed exchange ratio without any price protection for NDB's
stockholders, the uncertain nature and amount of compensation available to
retain key employees of NDB and the potential risks presented to NDB if such
employees perceived the arrangements as inadequate. He also explained the
risks to NDB from structuring the transaction to require pooling of interests
accounting treatment, and the inability of NDB to grant a "lockup" option, due
to the restrictions on NDB set forth in the Existing Stockholder Agreement.
Among other things, Mr. Lawatsch also explained that requiring that the
relationship between NDB and Deutsche Bank be restructured prior to
consummation of the transaction would be impracticable. Officials of the First
Potential Acquiror inquired about what response NDB had received from Deutsche
Bank to the information regarding the First Potential Acquiror's indication of
interest, and whether a transaction could be successfully effected without
Deutsche Bank's cooperation.
On October 6, the NDB board of directors met by conference telephone call.
Mr. Kontos conveyed the results of the further discussions with the First
Potential Acquiror, and the likelihood that no further substantive
developments would occur until some response had been received from Deutsche
Bank, as to whether it would present an acquisition proposal. At the time of
this conference, no such proposal had been received. In addition, counsel to
NDB added that the preliminary indication of interest submitted by the First
Potential Acquiror had a condition relating to a satisfactory restructuring of
the relationship between NDB and Deutsche Bank. After the close of business on
October 6, Mr. Parker called Mr. Kontos to propose the price and terms upon
which Deutsche Bank would be willing to acquire all of the outstanding equity
of NDB. Mr. Parker initially proposed a price of $46.50 per Share in cash. The
transaction proposed by Mr. Parker was structured as a first-step tender offer
for all of the outstanding Shares, followed by a second-step merger. Mr.
Parker also indicated that Deutsche Bank would make available a pool of up to
$60 million for retention of key employees of NDB and its subsidiaries. Mr.
Kontos suggested that the price was not adequate. After further discussion,
Mr. Parker agreed to a proposed purchase price of $49.00 per Share, subject to
satisfactory resolution of additional business and legal issues. Later in the
evening of October 6, counsel to Deutsche Bank distributed drafts of the
Merger Agreement and Stockholder Tender Agreement to counsel to NDB.
On October 7, Mr. Kontos called the Senior Executive to communicate that an
offer had been received from Deutsche Bank to purchase all of the outstanding
equity of NDB at a price per Share in cash that was close to
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the stock price proposed by the First Potential Acquiror and that the
retention package offered by Deutsche Bank was nearly three times larger than
that offered by the First Potential Acquiror, thus making potentially damaging
departures of employees less likely.
On October 7, Mr. Kontos, Mr. Sharenow, Mr. Daniel Fishbane, Executive Vice
President and Chief Financial Officer of NDB, and counsel to NDB met with Mr.
Parker, Mr. Thomas Curtis, Managing Director and Head of Corporate and
Regulatory Affairs for Deutsche Bank Group-Americas, and counsel to Deutsche
Bank, to review elements of the proposed retention package and to continue
Deutsche Bank's due diligence investigation of recent financial results of
NDB. Mr. David Kloeppel of Deutsche Bank Securities Inc. also spoke with Mr.
Fishbane to confirm certain financial information.
On October 8, a meeting of the NDB board of directors was held; all members
(other than Mr. Parker and Mr. Kellogg) attended the meeting either in person
or by conference telephone call. Counsel to NDB were also present as well as
representatives of Credit Suisse First Boston and, by telephone,
representatives of U.S. Bancorp Piper Jaffray.
Mr. Lawatsch reviewed the developments to date in the discussions with the
First Potential Acquiror and Deutsche Bank. He also noted that communications
had been received from the Second Potential Acquiror and the Third Potential
Acquiror indicating that neither of those companies was likely to present an
offer. He discussed his communications with senior officials and counsel to
the First Potential Acquiror, and that little response had been received,
other than requests for details regarding Deutsche Bank's proposal. He noted,
in particular, that they had been unresponsive to NDB's request for a collar
or some other form of price protection. Mr. Kontos explained that a
transaction with the First Potential Acquiror might result in a significant
reduction in the existing workforce at NDB.
Mr. Lawatsch then described the status of discussions with representatives
of Deutsche Bank, and the schedule for further discussions. He noted that
Deutsche Bank had proposed that Mr. Kontos and Mr. Peter Kellogg and their
respective affiliates and other individuals to be designated by Deutsche Bank
enter into an agreement with Purchaser, more extensive than the Stockholder
Tender Agreement on which the parties ultimately agreed, pursuant to which
they would agree to tender Shares owned by them into the offer, grant an
irrevocable proxy to Purchaser, and grant an option to Purchaser to purchase
such Shares at the Offer Price. Mr. Kontos explained that he would not be
willing to grant Deutsche Bank an option of the type requested in the draft
agreement. Members of the NDB board of directors then expressed their concern
that the restrictive provisions of the proposed agreement could make it more
difficult to accept a proposal superior to that proposed by Deutsche Bank.
Deutsche Bank's proposals for a $42.5 million termination fee, and for
additional expense reimbursement in the event of termination, were then also
described and discussed by the directors.
Mr. Lawatsch explained that Deutsche Bank's proposal would become public
upon the filing of an amendment to its Schedule 13D, which was required as a
result of the proposal made by Mr. Parker to Mr. Kontos in the evening of
October 6. It was also noted that the Management Board of Deutsche Bank was
scheduled to consider the transaction in the morning of October 10, and that
it would be preferable from NDB's perspective not to enter into a definitive
agreement until the approval of the Management Board had been obtained. The
NDB board of directors considered the potential risk to NDB that would arise
from public announcement of a potential transaction, and particularly the risk
of losing certain key employees. Counsel to NDB discussed the circumstances
under which the proposed termination fee could be payable, and the board
considered the potential impact of such a termination and payment on NDB.
Counsel also explained the provisions of the draft Merger Agreement that
would permit the NDB board of directors to engage in negotiations with another
prospective purchaser, if it determined in the exercise of its fiduciary
duties that such discussions could result in a superior proposal, and the
provisions which would permit NDB to terminate the Merger Agreement.
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No recommendations were made with respect to either the indication of
interest presented by the First Potential Acquiror or the proposal presented
by Deutsche Bank. In the absence of any substantive response from the First
Potential Acquiror on the issues presented to them, management was instructed
by the board to continue negotiation of the agreements with a view to
completing documentation of the transaction proposed by Deutsche Bank.
Arrangements were then made to provide to the directors revised drafts of
the Merger Agreement and the Stockholder Tender Agreement, and draft materials
to be presented by U.S. Bancorp Piper Jaffray in connection with its analysis
of the fairness of the offer and merger to stockholders of NDB (other than
Deutsche Bank and its wholly owned subsidiaries), prior to the meeting of the
NDB board of directors scheduled for the following evening.
During the day on October 9, discussions continued between representatives
of NDB and of Deutsche Bank. In the evening, the NDB board of directors again
met in person and by conference telephone call. All members of the NDB board
of directors (other than Mr. Parker) attended this meeting. Among those also
in attendance were counsel to NDB and representatives of U.S. Bancorp Piper
Jaffray and Credit Suisse First Boston. Counsel reviewed a number of the
issues currently open between NDB and Deutsche Bank, including the proposed
terms of the Stockholder Tender Agreement, particularly the "lock-up" option
requested by Deutsche Bank, and the proposed terms of the Merger Agreement,
particularly the condition in favor of Deutsche Bank in the event its
Supervisory Board disapproved the proposed transaction, the non-solicitation
provisions and the related provisions permitting the NDB board of directors to
pursue a superior proposal in the exercise of its fiduciary duties, the amount
of the proposed termination fee and the related provisions governing when such
a fee would be payable, NDB's request for a reciprocal termination fee, the
definition of a "Material Adverse Effect" and certain of the conditions to the
offer, in particular those providing for termination in the event any person
accumulates 10% or more of the Shares, or in the event that the NASDAQ index
declined 20% or more after the date of the Merger Agreement, and certain
elements of the proposed retention arrangements, which remained to be drafted
and negotiated.
The NDB board of directors questioned counsel regarding provisions of the
draft agreements.
On October 10, the Management Board of Deutsche Bank approved the making of
the proposal and the offer and the merger. Deutsche Bank filed an amendment to
its Schedule 13D on file with the SEC, disclosing that it had proposed an
acquisition of NDB at a purchase price of $49.00 per Share, net to the seller
in cash, and NDB issued a press release to that effect. That morning, the
Senior Executive contacted Mr. Kontos and withdrew the First Potential
Acquiror's indication of interest in proceeding with a business combination
transaction. Shortly thereafter, Mr. Lawatsch and the Senior Executive
discussed whether the First Potential Acquiror might make an improved offer,
and Mr. Lawatsch referred to the points he had previously discussed with
counsel and other senior officials of the First Potential Acquiror on October
5. NDB has not subsequently received a revised proposal from the First
Potential Acquiror.
Also on October 10, representatives of NDB met with representatives of
Deutsche Bank at the offices of Deutsche Bank's counsel to further negotiate
the Merger Agreement and the Stockholder Tender Agreement, and to secure
agreement regarding the employee retention arrangements proposed by Deutsche
Bank. Subject to final agreement by the parties on the form of the definitive
agreements, it was agreed among other things that the option would be removed
from the Stockholder Tender Agreement, that the condition relating to the
decline in the NASDAQ index would be removed from the Offer Conditions and the
condition relating to a person accumulating Shares would be revised to apply
only if such an accumulation were 20% or more of the outstanding Shares, that
the provisions regarding the circumstances in which NDB would be required to
pay a termination fee would be revised and the amount of the fee reduced from
$42.5 million to $35 million. Subject to final documentation, the parties also
agreed on the scope of the representations and warranties to be made by NDB.
The agreements were then reviewed by counsel and distributed to the parties.
On October 11, the revised agreements and written fairness presentation
prepared by U.S. Bancorp Piper Jaffray were distributed to the NDB board of
directors. During the day, representatives of the parties continued
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to discuss the form of the definitive agreements and arrangements regarding
employee retention. In the evening, a meeting of the NDB board of directors
was held at NDB's executive offices and by conference telephone call. All of
the members of the NDB board of directors (other than Mr. Parker) attended the
meeting. At this meeting, counsel to NDB reviewed the status of negotiations
with Deutsche Bank, and the changes that had been made in the Merger Agreement
and the Stockholder Tender Agreement and explained the material terms of the
proposed retention agreements offered to Messrs. Kontos, Neumann and Lawatsch.
U.S. Bancorp Piper Jaffray presented financial information relating to its
opinion concerning the proposed consideration to be paid in the offer and the
merger proposed by Deutsche Bank. The directors expressed concern that in the
absence of a definitive agreement and appropriate retention arrangements,
significant personnel of NDB could be attracted by other employment
opportunities. At the conclusion of the meeting, U.S. Bancorp Piper Jaffray
delivered its opinion that the cash consideration proposed to be received by
the stockholders of NDB in the proposed offer and the merger was fair, from a
financial point of view, to such stockholders (other than Deutsche Bank and
its wholly owned subsidiaries). Following the meeting of the board of
directors, the Merger Agreement and the Stockholder Tender Agreement were
executed and delivered by the parties thereto. Prior to the opening of trading
on October 12, Deutsche Bank and NDB issued a press release announcing
execution of the Merger Agreement and the transactions contemplated thereby.
On October 23, 2000, the Supervisory Board of Deutsche Bank approved the
offer and the merger. On that same day, Deutsche Bank, Purchaser and NDB
amended the Merger Agreement to eliminate Supervisory Board approval as an
Offer Condition and to permit Deutsche Bank and Purchaser to commence the
offer on October 24, 2000.
Recommendation of the NDB Board of Directors; Fairness of the Offer and the
Merger
The NDB board of directors (other than Deutsche Bank's representative, who
was absent and did not vote) unanimously approved the offer and the merger and
determined that the Merger Agreement and the transactions contemplated
therein, including the offer and the merger, are advisable and fair to, and in
the best interests of, the holders of Shares (other than Deutsche Bank and its
wholly owned subsidiaries) and recommends that such stockholders accept the
offer and, if stockholder approval of the merger is required by law, vote for
the approval and adoption of the Merger Agreement.
In considering the recommendation of the NDB board of directors with
respect to the offer and the merger, you should be aware that certain officers
and directors of NDB have certain interests that are in addition to, or
different from, the interests of the public stockholders of NDB. See
"Interests of Certain Persons."
In view of the wide variety of factors considered in connection with the
evaluation of the offer and the merger, the NDB board of directors did not
find it practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors it considered in reaching its
determinations.
The discussion herein of the information and factors considered and given
weight by the NDB board of directors is not intended to be exhaustive but is
believed to include all material factors considered by the NDB board of
directors.
In evaluating the offer and the merger, the NDB board of directors relied
upon its knowledge of the business, financial condition and prospects of NDB
as well as the advice of legal and financial advisors. In reaching its
decision that the offer and the merger were advisable and fair to, and in the
best interests of, the holders of Shares (other than Deutsche Bank and its
wholly owned subsidiaries), the NDB board of directors considered a number of
factors, including the following, which the NDB board of directors concluded
supported its decision to recommend the offer and the merger:
. Market Price and Premium. The NDB board of directors considered the
historical market and recent trading activity of the Shares, including
the fact that the $49.00 per Share cash consideration represents a
premium of approximately 94% over the $25.25 per Share closing price on
the New York Stock Exchange ("NYSE") on October 9, 2000, the last full
trading day before the public announcement of
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Deutsche Bank's proposal to acquire the Shares it did not already own,
and approximately 71% over the $31.08 per Share closing price average on
the NYSE over the 20 trading days prior to the October public
announcement of Deutsche Bank's proposal.
. Board of Directors' Arm's-Length Negotiations. The NDB board of
directors considered the fact that the Merger Agreement and the
transactions contemplated thereby were the product of arm's length
negotiations between Deutsche Bank and the NDB board of directors (and
their respective advisors) and the fact that the NDB board of directors
consists of nine directors, only one of whom is employed by Deutsche
Bank and five of whom are not employed by either NDB or Deutsche Bank.
The one director who is Deutsche Bank's representative on the NDB board
of directors did not attend any of the NDB board of directors meetings
to evaluate or vote upon the offer and the merger.
. Offer Price and Merger Consideration. The NDB board of directors
concluded, based on its negotiations with Deutsche Bank, that a price
higher than $49.00 per Share could not likely be obtained.
. Relationship with Deutsche Bank; Available Alternatives. The NDB board
of directors considered Deutsche Bank's ownership of approximately 16%
of the outstanding Shares and the effects of such ownership on the
alternatives available to NDB. The NDB board of directors considered the
existence of an alternative preliminary indication of interest from
another potential bidder and expressly noted that such indication of
interest was conditioned upon a satisfactory restructuring of NDB's
relationship with Deutsche Bank.
. Stockholder Tender Agreement. The NDB board of directors considered the
fact that Deutsche Bank insisted that stockholder tender agreements be
entered into with certain significant NDB stockholders covering shares
of common stock totalling approximately 29.1% of the issued and
outstanding common stock, which when taken together with the Common
Stock owned by Deutsche Bank and its wholly owned subsidiaries,
constitutes approximately 45% of the issued and outstanding common
stock. The NDB board of directors considered the fact that while the
entering into of such agreements by such stockholders would affect any
alternative bidder's future ability to consummate an acquisition
proposal, Deutsche Bank's requirement for such agreements was an
integral part of Deutsche Bank's proposal. The NDB Board also took note
of the support expressed by the Principal Stockholders as evidenced by
their willingness to enter into the Stockholder Tender Agreement.
. Opinion of the NDB Board of Directors' Financial Advisor. The NDB board
of directors considered the opinion of U.S. Bancorp Piper Jaffray, dated
October 11, 2000, to the NDB board of directors as to the fairness, from
a financial point of view and as of that date, of the $49.00 per Share
cash consideration to be received in the offer and the merger by the
holders of Shares (other than Deutsche Bank and its wholly owned
subsidiaries).
. Presentation of the NDB Board of Directors' Financial Advisor. The NDB
board of directors considered the various financial information,
valuation analyses and other factors set forth in the written
presentation delivered to the NDB board of directors by U.S. Bancorp
Piper Jaffray at the meeting of the NDB board of directors on October
11, 2000, including those described below in "Opinion of U.S. Bancorp
Piper Jaffray."
. Transaction Structure. The NDB board of directors evaluated the benefits
of the transaction being structured as an immediate cash tender offer
for all of the outstanding Shares, thereby enabling NDB's stockholders
the opportunity to obtain cash for all of their Shares at the earliest
possible time and the fact that the per Share cash consideration to be
paid in the offer and the merger is the same. The NDB board of directors
also considered the fact that the structure enables the transaction to
be consummated at the earliest possible time, thereby limiting the
potential for the value of NDB to be adversely affected by the employee
attrition that is commonly attendant with a lengthy sale-of-the-company
process. The NDB board of directors also considered the fact that
Deutsche Bank's proposal was publicly announced on Tuesday, October 10,
2000. In the event that the Merger Agreement was not executed in a
timely
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manner, the Board expressly noted that the likelihood of attrition of
key NDB personnel would be increased because of the attendant
uncertainty and thereby could jeopardize the prospects for successfully
concluding any transaction involving NDB.
. Minimum Condition. The NDB board of directors considered the fact that
the offer was conditioned upon a majority of the outstanding Shares
being validly tendered and not withdrawn prior to the expiration of the
offer and that such condition could not be waived by Deutsche Bank
without the prior written consent of NDB. See Section 1--"Terms of the
Offer."
. Financing. The NDB board of directors considered that financing is not a
condition of Deutsche Bank's obligation to complete the merger and the
representation and warranty of Deutsche Bank and Purchaser in the Merger
Agreement that Purchaser will have available all the funds necessary to
consummate the offer and the merger in accordance with the Merger
Agreement, and to make all other necessary payments of fees and expenses
required to be paid by Deutsche Bank and Purchaser relating to such
transactions.
. Terms of the Merger Agreement. The NDB board of directors evaluated the
terms of the Merger Agreement, including the circumstances under which
the NDB Board may withdraw its recommendation of the merger and the
offer and NDB may terminate the Merger Agreement, the parties'
representations, warranties and covenants and the conditions to their
respective obligations. The NDB board of directors also considered the
amount of, and the conditions pursuant to which, a break-up fee would be
paid to Deutsche Bank if the agreement is terminated prior to the
Effective Time and the absence of a reciprocal break-up fee in the event
the offer and the merger are not successfully completed.
. Availability of Dissenters' Rights. The NDB board of directors
considered the fact that dissenters' appraisal rights will be available
under Delaware law with respect to the merger.
. Possible Decline in Market Price of Shares. The NDB board of directors
considered the possibility that if a transaction with Deutsche Bank is
not consummated and NDB remained a publicly-owned corporation, the price
that might be received by the holders of the Shares in the open market
or in a future transaction might be less than the $49.00 per Share to be
received by NDB's stockholders in connection with the offer and the
merger.
. Trends in the Industry. The NDB board of directors considered various
trends in the financial services industry, including the recent
consolidation among those companies that serve as market-makers to
institutions and other broker-dealers and the effect of such
consolidation on NDB's ability to compete effectively in its existing
markets.
. Retention of Senior Executives. The NDB board of directors also
considered the size and scope of Deutsche Bank's proposal with respect
to retention compensation packages for certain of NDB's senior
executives and other employees, as compared with the comparable
arrangements proposed by the First Potential Acquiror. The NDB board of
directors was aware of, and considered, the other respects in which the
directors, officers and employees of NDB had interests that were
different from, or in addition to, those of the NDB public stockholders.
In addition to the factors listed above, the NDB board of directors
considered the fact that the consummation of the offer and the merger would
eliminate the possibility of public stockholders from participating in any
future growth in the value of NDB. The NDB board of directors concluded that
this loss of opportunity was appropriately reflected in the $49.00 per Share
to be paid in the offer and the merger.
Opinion of U.S. Bancorp Piper Jaffray
Pursuant to an engagement letter dated September 25, 2000, NDB retained
U.S. Bancorp Piper Jaffray to act as its non-exclusive financial advisor and,
if requested, to render to the NDB board of directors an opinion as to the
fairness, from a financial point of view, of the consideration to be received
by the stockholders of NDB in the offer and the merger.
16
<PAGE>
U.S. Bancorp Piper Jaffray delivered to the NDB board of directors on
October 11, 2000, its opinion, as of that date and based upon and subject to
the assumptions, factors and limitations set forth in the written opinion and
described below, the cash consideration proposed to be received by the holders
of Shares (other than Deutsche Bank or any of its wholly owned subsidiaries)
in the proposed offer and merger was fair, from a financial point of view, to
such holders.
While U.S. Bancorp Piper Jaffray rendered its opinion and provided certain
analyses to the NDB board of directors, U.S. Bancorp Piper Jaffray was not
requested to and did not make any recommendation to the NDB board of directors
as to the specific form or amount of the consideration to be received by the
holders of Shares in the proposed offer and merger. U.S. Bancorp Piper
Jaffray's written opinion, which was directed to the NDB board of directors,
addresses only the fairness, from a financial point of view, of the proposed
consideration to be received by NDB stockholders (other than Deutsche Bank or
any of its wholly owned subsidiaries) in the proposed Transaction, does not
address NDB's underlying business decision to proceed with or effect the
Transaction and does not constitute a recommendation to any stockholder of NDB
regarding whether to tender Shares in the offer or how to vote in the merger.
In arriving at its opinion, U.S. Bancorp Piper Jaffray's review included:
. a draft of the Merger Agreement dated October 11, 2000;
. publicly available financial, operating, and business information
relative to NDB;
. publicly available market and securities data of NDB and of selected
public companies deemed comparable to NDB;
. to the extent publicly available, financial information relating to
selected transactions involving companies operating in industries deemed
comparable to that in which NDB operates; and
. internal financial information of NDB prepared for financial planning
purposes and furnished by the management of NDB.
In addition, U.S. Bancorp Piper Jaffray visited the headquarters of NDB and
conducted discussions with members of management of NDB concerning the
financial condition, current operating results and business outlook of NDB on
a stand-alone basis and as combined with Deutsche Bank as a result of the
offer and the merger.
The full text of the written opinion of U.S. Bancorp Piper Jaffray, dated
October 11, 2000, which sets forth the assumptions made, matters considered
and limitations on the review undertaken, is attached as Schedule I to the
Schedule 14D-9 and is incorporated by reference herein. This summary of U.S.
Bancorp Piper Jaffray's opinion is qualified in its entirety by reference to
the full text of such opinion. Holders of Shares are urged to, and should,
read carefully such opinion in its entirety.
A copy of U.S. Bancorp Piper Jaffray's written presentation to the NDB
board of directors has been filed with the SEC as an exhibit to the Schedule
TO filed by Deutsche Bank and Purchaser and will be available for inspection
and copying at the principal executive offices of NDB during regular business
hours by any interested stockholder of NDB or any representative of such
stockholder who has been so designated in writing and also may be inspected
and copied at the office of, and obtained by mail from, the SEC. See Section
8--"Information Concerning National Discount Brokers Group--Available
Information."
In delivering its opinion to the NDB board of directors, U.S. Bancorp Piper
Jaffray prepared and delivered to the NDB board of directors written materials
containing various analyses and other information material to the opinion. The
following is a summary of the materials presented:
Consideration
Giving effect to the $49.00 per share offer price and the outstanding
Shares and common Share equivalents, U.S. Bancorp Piper Jaffray calculated the
aggregate equity value of the offer and merger for NDB common stock, on a
fully diluted basis, to be approximately $1.065 billion.
17
<PAGE>
Market Analysis
U.S. Bancorp Piper Jaffray reviewed the trading history of the Shares. U.S.
Bancorp Piper Jaffray presented the recent Share trading information contained
in the following table:
<TABLE>
<S> <C>
Closing price on October 9, 2000................................... $25.25
10 trading day closing average..................................... 28.41
20 trading day closing average..................................... 31.08
30 calendar day closing average.................................... 31.55
60 calendar day closing average.................................... 33.35
90 calendar day closing average.................................... 33.92
180 calendar day closing average................................... 32.00
Year-to-date trading day closing average........................... 32.95
Latest twelve months calendar day closing average.................. 32.08
30 day high trade.................................................. 37.81
30 day low trade................................................... 24.25
90 day high trade.................................................. 39.88
90 day low trade................................................... 24.25
52 week high trade................................................. 59.25
52 week low trade.................................................. 20.38
</TABLE>
U.S. Bancorp Piper Jaffray also reviewed the stock trading history of NDB
common stock since June 22, 1999, the date of NDB's secondary offering, and
presented a weighted average closing stock price of NDB common stock since the
secondary offering of $37.24.
U.S. Bancorp Piper Jaffray also presented selected historical stock price
data of NDB against the comparable groups described below and the Nasdaq and
New York Stock Exchange Composite indices. In addition, U.S. Bancorp Piper
Jaffray presented an analysis of NDB's stockholder base.
Comparable Company Analysis
U.S. Bancorp Piper Jaffray compared financial information and valuation
ratios relating to NDB to corresponding data and ratios from two groups of
publicly traded companies deemed comparable to NDB. The first group included
companies operating in the market making and equity trading services industry.
The second group included companies operating primarily in the online
brokerage industry. The groups were selected from companies with a market
capitalization between $635 million and $42 billion which U.S. Bancorp Piper
Jaffray deemed comparable to NDB. The companies in the market maker and equity
trading services group included Investment Technology Group, Inc., Knight
Trading Group, Inc., and LaBranche & Co. Inc. The companies in the online
brokerage group included AmeriTrade Holdings Corporation, The Charles Schwab
Corporation, DLJ Direct Inc., E*TRADE Group, Inc. and TD Waterhouse Group,
Inc.
The analysis with the comparable market maker and equity trading services
group produced multiples of selected valuation data as follows:
<TABLE>
<CAPTION>
Market Maker/Equity
Services Comparable
Companies
------------------------
NDB(1) Low Mean Median High
------ ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Market capitalization to latest twelve months
revenue...................................... 2.7x 2.6x 4.0x 4.0x 5.4x
Market capitalization to estimated calendar
2000 revenue................................. 2.8x 2.4x 3.1x 3.1x 3.8x
Market capitalization to estimated calendar
2001 revenue................................. 2.4x 2.0x 2.6x 2.6x 3.2x
Share price to latest 12 months net income per
share........................................ 27.5x 10.9x 16.6x 18.4x 20.5x
Share price to estimated calendar 2000 net
income per share............................. 39.5x 11.5x 15.5x 17.1x 17.8x
Share price to estimated calendar 2001 net
income per share............................. 38.2x 10.6x 13.4x 14.1x 15.6x
Market capitalization to book value........... 2.4x 4.4x 5.2x 4.6x 6.8x
</TABLE>
--------
(1) Based on the aggregate equity value of the offer and the merger.
18
<PAGE>
The analysis, with the comparable online brokerage group, produced
multiples of selected valuation data as follows:
<TABLE>
<CAPTION>
Online Brokerage
Comparable Companies
------------------------
NDB(1) Low Mean Median High
------ ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Market capitalization to latest twelve months
revenue...................................... 2.7x 1.9x 4.5x 4.2x 8.5x
Market capitalization to estimated calendar
2000 revenue................................. 2.8x 1.7x 4.0x 3.9x 7.2x
Market capitalization to estimated calendar
2001 revenue................................. 2.4x 1.3x 3.2x 2.7x 6.2x
Share price to latest 12 months net income per
share........................................ 27.5x 32.9x 41.1x 41.1x 49.4x
Share price to estimated calendar 2000 net
income per share............................. 39.5x 29.9x 37.3x 37.3x 44.8x
Share price to estimated calendar 2001 net
income per share............................. 38.2x 16.4x 32.7x 37.5x 50.2x
Market capitalization to book value........... 2.4x 2.4x 6.1x 2.9x 11.5x
</TABLE>
--------
(1) Based on the aggregate equity value of the offer and the merger.
Comparable Transaction Analysis
U.S. Bancorp Piper Jaffray reviewed thirteen acquisition transactions (the
"Comparable Transactions") involving target companies that it deemed
comparable to NDB. Of these transactions, three involved companies in the
market making and equity trading services industry and ten involved companies
that were generally in the securities broker and dealer industry, including
brokerage activities, investment banking, asset management and other related
financial services. These transactions included the following:
Market Maker/Equity Services Transactions
<TABLE>
<CAPTION>
Target Company Acquiring Company
-------------- -----------------
<C> <S>
Spear Leeds & Kellogg Goldman Sachs Group, Inc.
Herzog Heine Geduld Merrill Lynch & Co., Inc.
Arbitrade Holdings LLC Knight Trimark Group
</TABLE>
Brokerage Transactions
<TABLE>
<CAPTION>
Target Company Acquiring Company
-------------- -----------------
<C> <S>
Dain Rauscher Corporation Royal Bank of Canada
Donaldson Lufkin & Jenrette, Inc. Credit Suisse First Boston
Paine Webber Group Inc. UBS AG
JC Bradford & Co. Paine Webber Group Inc.
Hambrecht & Quist Group Inc. The Chase Manhattan Corporation
Ragen MacKenzie Group Inc. Wells Fargo & Company
OLDE Financial Corp. H&R Block Inc.
First Marathon Inc. National Bank of Canada
EVEREN Capital Corp. First Union Corporation
Interstate/Johnson Lane Inc. Wachovia Corporation
</TABLE>
It selected these transactions by searching SEC filings, public company
disclosures, press releases, industry and popular press reports, equity
research reports, databases and other sources and by applying the following
criteria:
. transactions that were announced between October 27, 1998 and September
28, 2000;
. transactions in which the acquiring company acquired 100% of a public or
private target company;
. transactions involving target companies with similar SIC codes as NDB;
. transactions with an aggregate equity value of at least $200 million;
and
19
<PAGE>
. transactions which were not hostile transactions.
U.S. Bancorp Piper Jaffray compared the resulting multiples of selected
valuation data to multiples for NDB derived from the consideration payable in
the offer and the merger.
<TABLE>
<CAPTION>
Market Maker/Equity
Services Comparable
Transactions
---------------------
NDB Low Mean Median High
---- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C>
Aggregate equity value
to latest 12 months
revenue............... 2.7x 1.8x 3.4x 3.4x 4.9x
</TABLE>
<TABLE>
<CAPTION>
Brokerage
Comparable Transactions
------------------------
NDB Low Mean Median High
----- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Aggregate equity value to latest 12 months
revenue....................................... 2.7x 0.8x 2.0x 1.6x 4.2x
Aggregate equity value to latest 12 months net
income........................................ 27.5x 11.3x 16.6x 16.2x 25.9x
Aggregate equity value to book value........... 2.4x 1.8x 2.7x 2.5x 4.4x
</TABLE>
Premiums Paid Analysis
U.S. Bancorp Piper Jaffray reviewed publicly available information for
selected completed or pending transactions to determine the implied premiums
payable in the transactions over recent trading prices. It selected these
transactions by searching SEC filings, public company disclosures, press
releases, industry and popular press reports, databases and other sources and
by applying the following criteria:
. transactions that were announced between October 27, 1998 and September
28, 2000;
. transactions in which the acquiring company acquired 100% of a public
target company;
. transactions involving target companies with similar SIC codes as NDB;
and
. transactions which were not hostile transactions.
U.S. Bancorp Piper Jaffray performed its analysis on ten transactions that
satisfied the criteria, and the table below shows a comparison of premiums
paid in these transactions to the premium that would be paid to NDB
stockholders based on the consideration payable in the offer and the merger.
The premium calculations for the Shares are based upon an assumed announcement
date of October 9, 2000.
<TABLE>
<CAPTION>
NDB Low Mean Median High
---- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C>
One day before announcement..................... 94.1% (7.7)% 15.7% 17.6% 47.2%
One week before announcement.................... 73.1% 0.0 % 27.2% 25.1% 64.0%
One month before announcement................... 60.7% (1.0)% 31.8% 32.0% 70.4%
</TABLE>
20
<PAGE>
Discounted Cash Flow Analysis
U.S. Bancorp Piper Jaffray performed a discounted cash flow analysis for
NDB in which it calculated the present value of the projected hypothetical
future cash flows of NDB using internal financial planning data prepared by
NDB management. U.S. Bancorp Piper Jaffray estimated a range of theoretical
values for NDB based on the net present value of its forecasted annual cash
flows and a terminal value for NDB in fiscal 2004 calculated based upon a
multiple of forecasted net income and book value. U.S. Bancorp Piper Jaffray
applied a range of discount rates of 18% to 22%. U.S. Bancorp Piper Jaffray
performed an analysis applying a range of terminal value multiples of 18.0x to
22.0x to forecasted fiscal 2004 net income, and an additional analysis
applying terminal value multiples of 2.0x to 3.0x to forecasted fiscal 2004
book value. These analyses yielded the following results:
Net Income Multiple
<TABLE>
<CAPTION>
Implied Per Share Equity Value of NDB
-------------------------------------
<S> <C>
Low............................................................ $ 30.95
Mid............................................................ 35.75
High........................................................... 41.06
<CAPTION>
Implied Aggregate Equity Value of NDB
-------------------------------------
<S> <C>
(in thousands)
Low............................................................ $ 663,282
Mid............................................................ 769,390
High........................................................... 887,106
Book Value Multiple
<CAPTION>
Implied Per Share Equity Value of NDB
-------------------------------------
<S> <C>
Low............................................................ $ 32.65
Mid............................................................ 41.75
High........................................................... 51.91
<CAPTION>
Implied Aggregate Equity Value of NDB
-------------------------------------
<S> <C>
(in thousands)
Low............................................................ $ 700,847
Mid............................................................ 902,471
High........................................................... 1,127,737
</TABLE>
In reaching its conclusion as to the fairness of the consideration proposed
to be received in the offer and the merger and in its presentation to the NDB
board of directors, U.S. Bancorp Piper Jaffray did not rely on any single
analysis or factor described above, assign relative weights to the analyses or
factors considered by it, or make any conclusion as to how the results of any
given analysis, taken alone, supported its opinion. The preparation of a
fairness opinion is a complex process and not necessarily susceptible to
partial analysis or summary description. U.S. Bancorp Piper Jaffray believes
that its analyses must be considered as a whole and that selection of portions
of its analyses and of the factors considered by it, without considering all
of the factors and analyses, would create a misleading view of the processes
underlying the opinion.
The analyses of U.S. Bancorp Piper Jaffray are not necessarily indicative
of actual values or future results, which may be significantly more or less
favorable than suggested by the analyses. Analyses relating to the value of
companies do not purport to be appraisals or valuations or necessarily reflect
the price at which companies may actually be sold. No company or transaction
used in any analysis for purposes of comparison is identical to NDB or the
transaction. Accordingly, an analysis of the results of the comparisons is not
mathematical; rather, it involves complex considerations and judgments about
differences in the companies to which NDB was compared and other factors that
could affect the public trading value of the companies.
For purposes of its opinion, U.S. Bancorp Piper Jaffray relied upon and
assumed the accuracy, completeness and fairness of presentation of the
financial statements and the accuracy and completeness of the other
21
<PAGE>
information provided to it by NDB, or otherwise made available to it, and did
not assume responsibility for the independent verification of that
information. U.S. Bancorp Piper Jaffray relied upon the assurances of the
management of NDB that the information provided to it by NDB was prepared on a
reasonable basis, the financial planning data and other business outlook
information reflect the best currently available estimates of management, and
management was not aware of any information or facts that would make the
information provided to U.S. Bancorp Piper Jaffray incomplete or misleading.
For purposes of its opinion, U.S. Bancorp Piper Jaffray also assumed that NDB
is not a party to any material pending transaction, including external
financing, recapitalizations, and acquisitions, other than this transaction or
in the ordinary course of business.
In arriving at its opinion, U.S. Bancorp Piper Jaffray did not perform any
appraisals or valuations of any specific assets or liabilities of NDB and was
not furnished with any such appraisals or valuations. Without limiting the
generality of the foregoing, U.S. Bancorp Piper Jaffray has undertaken no
independent analysis of any owned or leased real estate, or any pending or
threatened litigation, possible unasserted claims or other contingent
liabilities, to which NDB or its affiliates are a party or may be subject and
U.S. Bancorp Piper Jaffray's opinion makes no assumption concerning and
therefore does not consider the possible assertion of claims, outcomes or
damages arising out of any such matters. U.S. Bancorp Piper Jaffray assumed
that the transaction will be taxable for federal income tax purposes to the
holders of the Shares. U.S. Bancorp Piper Jaffray expressed no opinion as to
the liquidation value of any entity. The opinion is based on information
available to U.S. Bancorp Piper Jaffray and the facts and circumstances as
they existed and were subject to evaluation on the date of the opinion. Events
occurring after that date could materially affect the assumptions used in
preparing the opinion. U.S. Bancorp Piper Jaffray has not undertaken to and is
not obligated to update, affirm or revise its opinion or otherwise comment on
any events occurring after the date it was given.
U.S. Bancorp Piper Jaffray was not authorized by the NDB board of directors
to solicit other purchasers for NDB or alternative transactions to the
transaction. U.S. Bancorp Piper Jaffray was not requested to opine as to, and
the opinion does not address, the basic business decision to proceed with or
effect the transaction. The opinion addresses solely the fairness of the cash
consideration to be paid to the holders of Shares (other than Deutsche Bank or
any of its wholly owned subsidiaries) in the transaction and does not address
any other term or agreement relating to the transaction, or the ability of
Deutsche Bank to finance or otherwise successfully consummate the transaction.
U.S. Bancorp Piper Jaffray, as a customary part of its investment banking
business, evaluates businesses and their securities in connection with mergers
and acquisitions, underwritings and secondary distributions of securities,
private placements and valuations for estate, corporate and other purposes.
U.S. Bancorp Piper Jaffray makes a market in the common stock of NDB and
provides research coverage on the common stock of NDB. U.S. Bancorp Piper
Jaffray served as a co-lead manager of NDB's June 22, 1999, secondary offering
of common stock for which U.S. Bancorp Piper Jaffray received compensation
customary for underwriters, which was disclosed in the registration statement
with respect to such offering. In the ordinary course of its business, U.S.
Bancorp Piper Jaffray and its affiliates may actively trade securities of NDB
for their own accounts or the accounts of their customers and, accordingly,
may at any time hold a long or short position in such securities.
Under the terms of the engagement letter dated September 25, 2000, NDB has
agreed to pay U.S. Bancorp Piper Jaffray a customary fee upon consummation of
an acquisition of NDB, for U.S. Bancorp Piper Jaffray's financial advisory
services. NDB also agreed to pay U.S. Bancorp Piper Jaffray a customary fee
for rendering its opinion, which will be credited against payment of the fee
for financial advisory services. The contingent nature of the financial
advisory fee may have created a potential conflict of interest in that NDB
would be unlikely to consummate the transaction unless it had received the
opinion of U.S. Bancorp Piper Jaffray. Whether or not the transaction is
consummated, NDB has agreed to pay the reasonable out-of-pocket expenses of
U.S. Bancorp Piper Jaffray, and to indemnify U.S. Bancorp Piper Jaffray
against liabilities incurred. These liabilities include liabilities under the
federal securities laws in connection with the engagement of U.S. Bancorp
Piper Jaffray by the NDB board of directors.
22
<PAGE>
Position of Deutsche Bank and Purchaser Regarding Fairness of the Offer and
the Merger
Deutsche Bank and Purchaser believe that the consideration to be received
by NDB's stockholders (other than Deutsche Bank and its wholly owned
subsidiaries) pursuant to the offer and the merger is fair to and in the best
interests of NDB's unaffiliated stockholders. Each of Deutsche Bank and
Purchaser is making the statements included in this sub-section solely for the
purposes of complying with the requirements of Rule 13e-3 and related rules
under the Exchange Act. The position of Deutsche Bank and Purchaser as to the
fairness of the offer and the merger is not a recommendation to any
stockholder as to whether such stockholder should tender his or her Shares, or
as to how such stockholder should vote on the merger, if applicable.
Deutsche Bank and Purchaser believe that the offer and the merger are
substantively and procedurally fair to NDB's unaffiliated stockholders.
Neither Deutsche Bank nor Purchaser has undertaken any formal evaluation of
the fairness of the offer or the merger to NDB's unaffiliated stockholders.
Moreover, neither Deutsche Bank nor Purchaser (nor Deutsche Bank's
representative on the NDB board of directors) participated in the
deliberations of the NDB board of directors or received advice from NDB's
financial advisor. Deutsche Bank and Purchaser base their belief as to the
fairness of the offer and the merger on the following factors:
. the fact that the offer and the merger and the other terms and
conditions of the Merger Agreement were the result of arm's length, good
faith negotiations between Deutsche Bank and NDB, who acted
independently and with the assistance of independent financial and legal
advisors;
. the fact that the price per Share to be paid in the offer and the merger
represents a premium of approximately 95% over the closing price per
share on October 6, 2000 (the last trading day before Deutsche Bank
proposed to NDB to acquire the remainder of NDB);
. the fact that the NDB board of directors received an opinion, dated
October 11, 2000, from U.S. Bancorp Piper Jaffray that as of that date
and based upon and subject to the assumptions, factors and limitations
set forth in the written opinion, the $49.00 per share cash
consideration to be received by holders of Shares (other than Deutsche
Bank and its wholly owned subsidiaries) in the offer and the merger
pursuant to the Merger Agreement was fair from a financial point of view
to such stockholders;
. the fact that the NDB board of directors, by unanimous action (other
than Deutsche Bank's representative on the NDB board of directors who
did not participate in the deliberations or vote), determined that the
offer and the merger are advisable, fair to and in the best interests of
NDB and its unaffiliated stockholders;
. the structure of the transaction, which is designed to result in NDB
stockholders receiving the cash consideration in the offer and the
merger at the earliest practicable time; and
. the historical financial performance of NDB.
Neither Deutsche Bank nor Purchaser found it practicable to assign, nor did
they assign, relative weights to the individual factors considered in reaching
their conclusion as to fairness. Moreover, neither Deutsche Bank nor Purchaser
considered net book value, liquidation value or going concern value in
evaluating the fairness of the offer and the merger to NDB's unaffiliated
stockholders.
Purpose and Effects of the Offer and the Merger
Purpose. The purpose of the offer and the merger is for Deutsche Bank to
acquire control of, and the entire equity interest in, NDB. The offer, as the
first step in the acquisition of NDB, is intended to facilitate the
acquisition of all outstanding Shares. The purpose of the merger is to acquire
all of the capital stock of NDB not purchased pursuant to the offer or
otherwise. If Purchaser owns a majority of the issued and outstanding Shares
following the consummation of the offer, it will have the ability under the
DGCL to approve the merger without the approval of the holders of any other
Shares, although a stockholder vote may be necessary. If, however, after
consummation of the offer, Purchaser owns at least 90 percent of the Shares
then outstanding, Purchaser will be able to cause the merger to occur without
a vote of NDB's stockholders. If the offer and the merger are
23
<PAGE>
completed, Purchaser will merge into NDB. NDB will continue as the surviving
corporation. The transaction is structured as a two-step tender offer and
merger structure, in lieu of the alternative one-step merger structure,
because Deutsche Bank believes that the two-step structure can be completed
more quickly than a one-step merger transaction.
Provisions for Unaffiliated Stockholders. Neither Deutsche Bank nor
Purchaser will grant NDB stockholders that are unaffiliated with Deutsche Bank
access to the corporate files of Deutsche Bank or Purchaser. Neither Deutsche
Bank nor Purchaser will provide unaffiliated NDB stockholders with counsel or
appraisal services at the expense of Deutsche Bank or Purchaser.
Effects. If the offer is successfully completed, Deutsche Bank will have
the right, under the Merger Agreement and subject to the applicable rules and
regulations of the SEC, to cause a majority of the NDB board of directors to
consist of representatives of Deutsche Bank. See Section 10--"The Merger
Agreement--Directors." When the merger is completed, NDB will be an indirect
wholly owned subsidiary of Deutsche Bank.
Following completion of the offer and the merger, Deutsche Bank's interest
in NDB's net book value and net earnings will increase from approximately
16.7% to 100%. Deutsche Bank and its subsidiaries will be entitled to all of
the benefits of owning 100% of NDB, including all income generated by NDB's
operations, any future increase in NDB's value and the right to elect all
members of the NDB board of directors. Similarly, Deutsche Bank will also bear
the risk of losses resulting from NDB's operations and from any decline in the
value of NDB after the merger.
Following completion of the offer and the merger, Deutsche Bank will cause
NDB's common stock to be delisted from the NYSE and deregistered under the
Exchange Act and NDB will be a privately held corporation. Accordingly,
current NDB stockholders who are not affiliated with Deutsche Bank will not
have the opportunity to participate in the earnings and growth of NDB and will
not have any right to vote on corporate matters.
Plans for NDB
If Deutsche Bank acquires 100% control of NDB, it is Deutsche Bank's
present intent to operate NDB as a separate subsidiary under NDB's current
name. In addition, the NDB board of directors will be comprised of designees
of Deutsche Bank. In addition, Deutsche Bank reserves the right to make
recommendations to the NDB board of directors to appoint individuals to fill
vacant senior management positions that may exist at NDB from time to time.
Deutsche Bank will conduct a further review of NDB and its subsidiaries and
their respective assets, businesses, corporate structure, capitalization,
operations, properties, policies, management and personnel. After such review,
Deutsche Bank will determine what actions or further changes, if any, would be
desirable in light of the circumstances that then exist, and reserves the
right to effect such actions or changes. Deutsche Bank's decisions could be
affected by information obtained after the date hereof, changes in general
economic or market conditions or in the business of NDB or its subsidiaries,
actions by NDB or its subsidiaries, and other factors. Except as described in
this offer to purchase, Deutsche Bank and its affiliates have no present plans
or proposals that would require disclosure under United States federal
securities laws.
If, for any reason, the merger is not completed, Deutsche Bank reserves the
right (a) subject to the Existing Stockholder Agreement (defined below), to
acquire additional Shares through private purchases, market transactions,
tender or exchange offers or otherwise on terms and at prices that may be more
or less favorable than those of the offer, or (b) subject to any applicable
legal restrictions, to dispose of any or all Shares controlled by Deutsche
Bank.
24
<PAGE>
Interests of Certain Persons
Employee Retention Plan and Benefit Continuation. Prior to the consummation
of the merger, NDB will offer, or shall cause its subsidiaries to offer,
retention agreements to certain of their respective senior executives
providing for, among other things, a retention stock bonus and minimum total
compensation guarantee package per calendar year for the years 2001 and 2002
to the following executives in the corresponding amounts:
<TABLE>
<CAPTION>
2001/2002 Guaranteed Retention
Name Compensation Total Stock Award
---- -------------------- -----------
<S> <C> <C>
Arthur Kontos(1)........................... $8,000,000 $10,000,000
Thomas W. Neumann(2)....................... 5,000,000 5,000,000
Frank E. Lawatsch, Jr.(3).................. 800,000 1,000,000
Denise S. Isaac............................ 900,000 900,000
</TABLE>
--------
(1) All of Mr. Kontos' entitlements under the retention arrangements
(including an additional $15 million payment) are subject to his prior
written agreement to the termination of his current employment agreement
and the National Discount Brokers Group, Inc. CEO Bonus Plan in which he
currently participates, without any further liability or obligation of
NDB.
(2) All of Mr. Neumann's entitlements under the retention arrangements are
subject to his prior written agreement to the termination of the NDB
Capital Markets CEO Bonus Plan in which he currently participates, without
any further liability or obligation of NDB.
(3) All of Mr. Lawatsch's entitlements under the retention arrangements are
subject to his prior written agreement to the termination of his current
employment agreement and change in control agreement, without any further
liability or obligation of NDB.
In addition, it is contemplated that seven additional employees will enter
into such agreements providing for, among other things, guaranteed annual
compensation for calendar years 2001 and 2002 in an aggregate amount of
$11,600,000 and retention stock awards granted under Deutsche Bank's share
scheme valued at $10,950,000 in the aggregate. A form of the retention
agreement is attached as an exhibit to the Schedule TO and the Schedule 14D-9
filed with the SEC and is incorporated herein by reference.
In addition, with effect from the Effective Time, Deutsche Bank will cause
or permit NDB or its subsidiaries to grant equity awards under Deutsche Bank's
share scheme in such amounts and to such employees as are reasonably
determined in the discretion of NDB, subject to the approval of Deutsche Bank,
which approval will not be unreasonably withheld; provided, however, that the
total amount of such equity awards, with the amount of the equity awards for
the selected employees described above, will not exceed $60,000,000.
Indemnification. Under the Merger Agreement, the directors and officers of
NDB are entitled to certain rights of indemnification and to be insured by the
surviving corporation with respect to certain matters from and after the
completion of the merger. See Section 10.
Option Holders; Conversion of Options. At the time the merger becomes
effective (the "Effective Time"), each option to acquire Shares (the "Existing
Stock Options") that have been granted under any stock option or similar plan
or agreement of NDB (the "Stock Option Plans"), whether or not then
exercisable or vested, will by virtue of the merger and without any action on
the part of NDB, but subject to the written consent of the holder thereof if
Deutsche Bank shall require such written consent, be converted into and will
become a right to receive an amount in cash with respect to each Share subject
to such Existing Stock Option, equal to the excess, if any, of the Offer Price
over the per share exercise or purchase price for such Share (such amount
being hereinafter referred to as the "Option Consideration"); provided that,
in the case of Existing Stock Options under which the per share exercise or
purchase price is equal to or greater than the Offer Price that are held by
employees who do not participate in the retention and guaranteed compensation
package described above, the Option Consideration payable in respect of each
Share subject to such Existing Stock Options will be $2.00.
25
<PAGE>
The Stock Option Plans will terminate as of the Effective Time and any and
all rights under any provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of NDB or any subsidiary of NDB will be canceled as of the
Effective Time. At the request of Deutsche Bank, NDB will use its reasonable
best efforts to obtain the written consent of all holders of Existing Stock
Options to the cancellation of such Existing Stock Options.
Beneficial Ownership of Shares
The following table sets forth information, as of October 24, 2000,
regarding the ownership of Shares by each person known by NDB to be the
beneficial owner of more than 5% of the outstanding Shares, and any director
or executive officer of Deutsche Bank, Purchaser, NDB or any of their
affiliates who is the beneficial owner of Shares or Existing Stock Options. In
the case of Joseph U. Burton, Thomas U. Burton, White Rock Capital Management
L.P. and White Rock Capital, Inc., the information stated in the table below
was obtained from the Schedule 13G filed by them with the SEC on September 21,
2000.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Beneficial Owner Ownership Class
---------------- ----------------- ----------
<S> <C> <C>
GREATER THAN 5% STOCKHOLDERS:
Arthur Kontos..................................... 2,887,000(1) 13.6%
10 Exchange Place Center
Jersey City, New Jersey 07302
Peter R. Kellogg.................................. 2,940,222(2) 14.0%
120 Broadway
New York, New York 10271
Deutsche Bank AG.................................. 3,502,119(3) 16.7%
31 West 52nd Street
New York, New York 10019
Attn: General Counsel
Joseph U. Barton.................................. 1,311,900(4) 6.3%
3131 Turtle Creek Boulevard, Suite 800
Dallas, TX 75219
White Rock Capital Management, L.P. .............. 1,301,900(5) 6.2%
3131 Turtle Creek Boulevard, Suite 800
Dallas, TX 75219
White Rock Capital, Inc. ......................... 1,301,900(6) 6.2%
3131 Turtle Creek Boulevard, Suite 800
Dallas, TX 75219
Thomas U. Barton.................................. 1,301,900(7) 6.2%
3131 Turtle Creek Boulevard, Suite 800
Dallas, TX 75219
</TABLE>
--------
(1) Consists of 1,357,854 Shares held by Mr. Kontos, 197,387 Shares underlying
Mr. Kontos' stock options exercisable within 60 days of October 24, 2000,
125,000 Shares held by the Arthur Kontos Foundation, 753,562 Shares held
by limited partnerships of which Mr. Kontos is the general partner and Mr.
Kontos' children are sole limited partners and 453,197 Shares over which
he has only sole voting power which are subject to a voting trust
agreement with his former wife.
(2) Consists of 730,942 Shares held by Mr. Kellogg, 1,850,000 Shares held by
IAT Reinsurance Syndicate Ltd., a corporation all of whose voting stock is
held by Mr. Kellogg and of which Mr. Kellogg is president, 346,500 Shares
held by the Cynthia and Peter Kellogg Foundation and 12,780 Shares held by
the J.C. Kellogg Foundation. Mr. Kellogg has shared beneficial ownership
over the Shares owned by the Cynthia and Peter Kellogg Foundation and the
J.C. Kellogg Foundation.
26
<PAGE>
(3) Excludes 6,113,882 Shares as to which Deutsche Bank may be deemed to have
beneficial ownership solely as a result of the Stockholder Tender
Agreement.
(4) Consists of 10,000 Shares held for Mr. Joseph Barton's personal account,
1,036,300 Shares held for the accounts of certain institutional clients
(the "White Rock Clients"), 250,600 Shares held for the account of White
Rock Capital Partners, L.P. and 15,000 Shares held for the account of
White Rock Capital Management, L.P.
(5) Consists of 15,000 Shares held for its own account, 1,036,300 Shares held
for the accounts of the White Rock Clients and 250,600 Shares held for the
account of White Rock Capital Partners, L.P.
(6) Consists of 1,036,300 Shares held for the accounts of the White Rock
Clients, 250,600 Shares held for the account of White Rock Capital
Partners, L.P. and 15,000 Shares held for the account of White Rock
Capital Management, L.P.
(7) Consists of 1,036,300 Shares held for the accounts of the White Rock
Clients, 250,600 Shares held for the account of White Rock Capital
Partners, L.P. and 15,000 Shares held for the account of White Rock
Capital Management, L.P.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Beneficial Owner Ownership(1) Class
---------------- ----------------- ----------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS OF NDB:
Arthur Kontos..................................... 2,887,000(1) 13.6
President and Chief Executive Officer of NDB,
Vice Chairman of the Board and Director
James H. Lynch, Jr. .............................. 40,100(2) *
Chairman of the Board and Director
John P. Duffy..................................... 52,472(3) *
Director
Dennis Marino..................................... 168,196(4) *
Executive Vice President and Chief Administrative
Officer of NDB
Thomas W. Neumann................................. 215,949(5) 1.0
Executive Vice President of NDB
Ralph N. Del Deo.................................. 35,000(6) *
Director
James Romano...................................... 29,098(7) *
Retired Executive Vice President of NDB
Capital Markets L.P.
Charles Kirkland Kellogg.......................... 11,500(8) *
Director
Russell C. Horowitz............................... 265,000(9) 1.3
Director
Kevin Parker...................................... 0 *
Director
Denise Isaac...................................... 27,349(10) *
Executive Vice President and Treasurer of NDB
Frank E. Lawatsch, Jr. ........................... 8,100(11) *
Executive Vice President and General Counsel
Daniel Fishbane................................... 0 *
Executive Vice President and Chief Financial
Officer
All Directors and Executive Officers as a Group
(13 persons)..................................... 3,739,764(12) 17.4
</TABLE>
--------
* Represents less than one percent.
(1) Consists of 1,357,854 Shares held by Mr. Kontos, 197,387 Shares
underlying Mr. Kontos' stock options exercisable within 60 days of
October 24, 2000, 125,000 Shares held by the Arthur Kontos Foundation,
27
<PAGE>
753,562 Shares held by limited partnerships of which Mr. Kontos is the
general partner and Mr. Kontos' children are sole limited partners and
453,197 Shares over which he has only sole voting power which are subject
to a voting trust agreement with his former wife.
(2) Consists of 35,100 Shares held by Mr. Lynch and 5,000 Shares underlying
Mr. Lynch's stock options exercisable within 60 days of October 24, 2000.
(3) Consists of 43,472 Shares held by Mr. Duffy, 4,000 Shares held in trust
for Mr. Duffy's children and 5,000 Shares underlying Mr. Duffy's options
exercisable within 60 days of October 24, 2000.
(4) Consists of 116,132 Shares held by Mr. Marino and 52,064 Shares
underlying Mr. Marino's stock options exercisable within 60 days of
October 24, 2000.
(5) Consists of 121,477 Shares held by Mr. Neumann and 94,472 Shares
underlying Mr. Neumann's stock options exercisable within 60 days of
October 24, 2000.
(6) Consists of 20,000 Shares held by Mr. Del Deo, 10,000 Shares held by his
wife and 5,000 Shares underlying Mr. Del Deo's options exercisable within
60 days of October 24, 2000.
(7) Consists of 29,098 Shares underlying Mr. Romano's stock options
exercisable within 60 days of October 24, 2000.
(8) Consists of 6,500 Shares held by Mr. Kellogg and 5,000 Shares underlying
Mr. Kellogg's stock options exercisable within 60 days of October 24,
2000.
(9) Consists of 260,000 Shares held by Go2Net, Inc., a corporation of which
Mr. Horowitz is a director and chief executive officer, and 5,000 Shares
underlying Mr. Horowitz's stock options exercisable within 60 days of
October 24, 2000.
(10) Consists of 1,250 Shares held by Ms. Isaac and 26,099 Shares underlying
Ms. Isaac's stock options exercisable within 60 days of October 24, 2000.
(11) Consists of 3,100 Shares held by Mr. Lawatsch and 5,000 Shares underlying
Mr. Lawatsch's stock options exercisable within 60 days of October 24,
2000.
(12) Includes 429,120 Shares underlying stock options exercisable within 60
days of October 24, 2000.
Transactions and Arrangements Concerning Shares. During the 60 days
preceding the date of this offer to purchase, neither NDB nor any executive
officer, director, affiliate or subsidiary of NDB effected any transactions in
the Shares, except for John P. Duffy, who donated an aggregate of 11,528
Shares on October 12, 2000 to certain charitable institutions and non-profit
organizations.
According to NDB's Form 10-K (as defined in Section 8 below), on June 25,
1999, NDB received approximately $91.6 million, net of underwriting discounts
and commissions and estimated expenses, from the underwritten public offering
of 2,990,000 Shares.
Deutsche Bank and Purchaser have been advised by NDB that, to the knowledge
of NDB after reasonable inquiry, except as described below, all executive
officers and directors of NDB will tender, pursuant to the offer, all Shares
held of record or beneficially owned by them (other than options to acquire
Shares), and those affiliates of NDB that are parties to the Stockholder
Tender Agreement will tender pursuant to the offer those Shares that are
subject to the Stockholder Tender Agreement. Shares held by Deutsche Bank or
any of its subsidiaries and Shares held by the subsidiaries of NDB will not be
tendered pursuant to the Offer but will be canceled without any consideration
being exchanged therefor at the Effective Time pursuant to the terms and
conditions of the Merger Agreement. The foregoing does not include any Shares
over which, or with respect to which, any such executive officer, director or
affiliate acts in a fiduciary or representative capacity or is subject to the
instructions of a third party with respect to such tender.
28
<PAGE>
THE TENDER OFFER
1. Terms of the Offer
Upon the terms and subject to the conditions of the offer (including, if
the offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore properly withdrawn
in accordance with Section 4. The term "Expiration Date" means 12:00 Midnight,
New York City time, on Tuesday, November 21, 2000, unless Purchaser has
extended the initial period of time during which the offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the offer, as so extended by Purchaser, shall expire. If Purchaser shall
decide, in its sole discretion, to increase the consideration offered in the
offer to holders of Shares and if, at the time that notice of such change is
first published, sent or given to holders of Shares in the manner specified
below, the offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including,
the date that such notice is first so published, sent or given, then the offer
will be extended until the expiration of such period of 10 business days. For
purposes of the offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 Midnight, New York City time.
The offer is conditioned upon, among other things, the satisfaction of the
Minimum Tender Condition. See Section 12. The Merger Agreement and the offer
may be terminated by Purchaser and Deutsche Bank if certain events occur. See
Sections 10 and 12.
Purchaser reserves the right (but is not obligated), in accordance with
applicable rules and regulations of the SEC and subject to the limitations set
forth in the Merger Agreement described below, to waive in its sole discretion
any condition to the offer other than the Minimum Tender Condition, which may
only be waived with the consent of NDB. If the Minimum Tender Condition or any
condition set forth in Section 12 has not been satisfied by 12:00 midnight,
New York City time, on Tuesday, November 21, 2000 (or any other time then set
as the Expiration Date), Purchaser may, subject to the terms of the Merger
Agreement and any applicable rules and regulations of the SEC, elect to (1)
extend the offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the offer, as extended, (2) waive all
unsatisfied conditions and accept for payment all tendered Shares and not
extend the offer, (3) terminate the offer and not accept for payment any
Shares and return all tendered Shares to tendering stockholders or (4) amend
the offer.
Subject to the limitations set forth in this offer, the Merger Agreement
and described below, Purchaser reserves the right (but is not obligated), at
any time or from time to time in its sole discretion, to extend the period
during which the offer is open by giving oral or written notice of such
extension to the Depositary. There can be no assurance that Purchaser will
exercise its right to extend the offer. During any extension of the initial
offering period (as opposed to the subsequent offering period), all Shares
previously tendered and not withdrawn will remain subject to the offer and
subject to withdrawal rights. See Section 4.
Pursuant to the Merger Agreement, Purchaser may, without the consent of
NDB, (a) extend the offer from time to time for up to ten business days in the
aggregate, (b) extend the offer for any period required by any regulation of
the SEC applicable to the offer or (c) elect to provide a subsequent offering
period for the offer in accordance with Rule 14d-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In addition, the Offer
Price may be increased and the offer may be extended to the extent required by
law in connection with such increase.
Purchaser expressly reserves the right at any time and from time to time to
modify or amend the terms and conditions of the offer in any respect. However,
pursuant to the Merger Agreement, Purchaser has agreed that it will not,
without the prior written consent of NDB, (a) decrease or change the form of
consideration payable in the offer, (b) decrease the number of Shares sought
pursuant to the offer, (c) impose additional conditions to the offer, (d) make
any other change in the terms or conditions of the offer that is adverse to
the holders of Shares (provided that any decision by Purchaser to waive any
conditions to the offer, other than the Minimum Tender
29
<PAGE>
Condition, or to extend the offer as permitted by the Merger Agreement shall
not be deemed to be adverse to the holders of Shares) or (e) except as
permitted in the Merger Agreement, extend the offer beyond any scheduled
Expiration Date.
Subject to the applicable regulations of the SEC and to the terms set forth
in the Merger Agreement, Purchaser expressly reserves the right, in its sole
discretion, at any time and from time to time, (i) to delay payment of, or,
regardless of whether such Shares were theretofore accepted for payment,
payment for, any Shares pending receipt of any regulatory approvals or in
order to comply in whole or in part with any applicable law and (ii) to
terminate the offer and not accept for payment any Shares if any of the
conditions to the offer have not been satisfied or, upon the occurrence of any
of the events set forth in Section 12, in either case by giving oral or
written notice of such delay or termination to the Depositary. Purchaser's
right to delay payment for Shares which Purchaser has accepted for payment is
limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder
pay the consideration offered or return tendered securities promptly after the
termination or withdrawal of the offer.
Any extension of the period during which the offer is open, delay in
acceptance for payment or payment, termination or amendment of the offer will
be followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rules 14d-4(c) and l4e-1(d) under the Exchange Act. Without
limiting the obligation of Purchaser under such rule or the manner in which
Purchaser may choose to make any public announcement, Purchaser currently
intends to make announcements by issuing a press release to the Dow Jones News
Service (or such other national media outlet or outlets it deems prudent) and
making any appropriate filing with the SEC.
If, subject to the terms of the Merger Agreement, Purchaser makes a
material change in the terms of the offer or the information concerning the
offer, or if it waives a material condition of the offer, Purchaser will
disseminate additional tender offer materials and extend the offer if and to
the extent required by Rules 14d-4(c), 14d-6(d) and l4e-l under the Exchange
Act or otherwise. The minimum period during which a tender offer must remain
open following material changes in the terms of the offer or the information
concerning the offer, other than a change in the consideration offered or a
change in the percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the terms or information
changes. With respect to a change in the consideration offered or a change in
the percentage of securities sought, the offer generally must remain open for
a minimum of 10 business days following such change to allow for adequate
disclosure to stockholders.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, provide a subsequent offering period of from three
business days to 20 business days in length following the expiration of the
offer on the Expiration Date ("Subsequent Offering Period"). A Subsequent
Offering Period would be an additional period of time, following the
expiration of the offer and the purchase of Shares in the offer, during which
stockholders may tender Shares not tendered in the offer. A Subsequent
Offering Period, if one is included, is not an extension of the offer which
already will have been completed.
During a Subsequent Offering Period, tendering stockholders will not have
withdrawal rights and Purchaser will promptly purchase and pay for any Shares
tendered at the same price paid in the offer. Rule 14d-11 provides that
Purchaser may provide a Subsequent Offering Period so long as, among other
things, (i) the initial 20 business day period of the offer has expired, (ii)
Purchaser offers the same form and amount of consideration for Shares in the
Subsequent Offering Period as in the initial offer, (iii) Purchaser accepts
and promptly pays for all securities tendered during the offer prior to its
expiration, (iv) Purchaser announces the results of the offer, including the
approximate number and percentage of Shares deposited in the offer, no later
than 9:00 a.m. Eastern time on the next business day after the Expiration Date
and immediately begins the Subsequent Offering Period and (v) Purchaser
immediately accepts and promptly pays for Shares as they are tendered during
the Subsequent Offering Period. Purchaser will be able to include a Subsequent
Offering Period, if it satisfies the conditions
30
<PAGE>
above, after November 21, 2000. In a public release, the SEC has expressed the
view that the inclusion of a Subsequent Offering Period would constitute a
material change to the terms of the offer requiring Purchaser to disseminate
new information to stockholders in a manner reasonably calculated to inform
them of such change sufficiently in advance of the Expiration Date (generally
five business days). In the event Purchaser elects to include a Subsequent
Offering Period, it will notify stockholders of NDB consistent with the
requirements of the SEC.
Purchaser does not currently intend to include a Subsequent Offering
Period, although it reserves the right to do so in its sole discretion
regardless of whether or not the events or the facts set forth in Section 12
("Certain Conditions of the Offer") have occurred. If Purchaser shall have
acquired less than 90% of the Shares on the expiration date of the offer, it
intends to elect to provide a Subsequent Offering Period. Pursuant to Rule
14d-7 under the Exchange Act, no withdrawal rights apply to Shares tendered
during a Subsequent Offering Period and no withdrawal rights apply during the
Subsequent Offering Period with respect to Shares tendered in the offer and
accepted for payment. The same consideration, the Offer Price, will be paid to
stockholders tendering Shares in the offer or in a Subsequent Offering Period,
if one is included.
NDB has provided Purchaser with NDB's list of stockholders and security
position listings for the purpose of disseminating the offer to holders of
Shares. This offer to purchase and the related letter of transmittal will be
mailed to record holders of Shares whose names appear on NDB's stockholder
list and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the offer (including, if
the offer is extended or amended, the terms and conditions of any such
extension or amendment), Purchaser will accept for payment, and will pay for,
Shares validly tendered and not properly withdrawn as soon as practicable
after the Expiration Date. In addition, Purchaser expressly reserves the
right, subject to applicable rules of the SEC, to delay acceptance for payment
of, or payment for, Shares in order to comply, in whole or in part, with any
applicable law. For information with respect to approvals that Deutsche Bank,
Purchaser and NDB are required to obtain prior to the completion of the offer,
see Section 13. The reservation by Purchaser of the right to delay the
acceptance or purchase of or payment for Shares is subject to the provisions
of Rule 14e-1(c) under the Exchange Act, which requires Purchaser to pay the
consideration offered or to return Shares deposited by or on behalf of
tendering stockholders promptly after the termination or withdrawal of the
offer.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the offer will be made only after timely receipt by the Depositary of (a)
certificates for such Shares or confirmation of the book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3, (b) a letter of transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message (as
defined in Section 3 below) in lieu of the letter of transmittal) and (c) any
other documents required by the letter of transmittal. See Section 3.
For purposes of the offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of its acceptance of such Shares for payment pursuant to the offer.
Payment for Shares accepted for payment pursuant to the offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering stockholders for purposes of receiving payments from
Purchaser and transmitting such payments to the tendering stockholders. Under
no circumstances will interest be paid on the purchase price for Shares,
regardless of any extension of the offer or any delay in making such payment.
31
<PAGE>
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unpurchased Shares
will be returned, without expense to the tendering stockholder (or, in the
case of Shares tendered by book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility pursuant to the procedures set forth in
Section 3, such Shares will be credited to an account maintained with the
Book-Entry Transfer Facility), as soon as practicable following expiration or
termination of the offer.
If, prior to the Expiration Date, Purchaser shall increase the
consideration offered to holders of Shares pursuant to the offer, such
increased consideration shall be paid to all holders of Shares that are
purchased pursuant to the offer, whether or not such Shares were tendered
prior to such increase in consideration.
Purchaser reserves the right to transfer or assign in whole or in part,
from time to time, to one or more direct or indirect subsidiaries of Deutsche
Bank the right to purchase all or any portion of the Shares tendered pursuant
to the offer, but any such transfer or assignment will not relieve Purchaser
of its obligations under the offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the offer. Under the Merger Agreement,
Deutsche Bank and Purchaser may assign any of their respective rights and
obligations to any of their direct or indirect subsidiaries provided that such
assignment will not relieve Deutsche Bank or Purchaser from their obligations
under the Merger Agreement.
3. Procedures for Tendering Shares
Valid Tender. To tender Shares pursuant to the offer, either (a) a properly
completed and duly executed letter of transmittal (or manually signed
facsimile thereof) in accordance with the instructions of the letter of
transmittal, with any required signature guarantees, certificates for the
Shares to be tendered and any other documents required by the letter of
transmittal must be received by the Depositary at one of its addresses set
forth on the back cover of this offer to purchase prior to the Expiration
Date, (b) such Shares must be properly delivered pursuant to the procedures
for book-entry transfer described below and a confirmation of such delivery
received by the Depositary (which confirmation must include an Agent's Message
(as defined below) if the tendering stockholder has not delivered a letter of
transmittal), prior to the Expiration Date, or (c) the tendering stockholder
must comply with the guaranteed delivery procedures set forth below. The term
"Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation (as defined below), which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the participant
in the Book-Entry Transfer Facility tendering the Shares which are the subject
of such Book-Entry Confirmation that such participant has received and agrees
to be bound by the terms of the letter of transmittal and that Purchaser may
enforce such agreement against the participant.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the offer
within two business days after the date of this offer to purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make a book-entry transfer of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer, either the letter of transmittal (or manually signed
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in lieu of the letter of
transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set
forth on the back cover of this offer to purchase by the Expiration Date, or
the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." The letter of transmittal,
and any other documents required therein, must be transmitted to and received
by the
32
<PAGE>
Depositary at one of the addresses set forth on the back cover of this offer
to purchase. Delivery of documents to the Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Depositary.
Signature Guarantees and Stock Powers. Except as otherwise provided below,
all signatures on a letter of transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations
and brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (an "Eligible Institution").
Most commercial banks, savings and loans associations and brokerage houses are
Eligible Institutions. Signatures on a letter of transmittal need not be
guaranteed (a) if the letter of transmittal is signed by the registered holder
(which term, for purposes of this section, includes any participant in any of
the Book-Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the
letter of transmittal or (b) if such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 5 of the letter of transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the letter of transmittal, or if payment is to be made or
certificates for Shares not tendered or not accepted for payment or are to be
returned to a person other than the registered holder of the certificates
surrendered, then the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names
of the registered holders or owners appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as described above.
See Instructions 1 and 5 of the letter of transmittal.
Guaranteed Delivery. A stockholder who desires to tender Shares pursuant to
the offer and whose certificates for Shares are not immediately available, or
who cannot comply with the procedure for book-entry transfer on a timely
basis, or who cannot deliver all required documents to the Depositary prior to
the Expiration Date, may tender such Shares by following all of the procedures
set forth below:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser, is received by the Depositary
(as provided below) prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all such Shares), together with
a properly completed and duly executed letter of transmittal (or manually
signed facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message in lieu of the letter of
transmittal), and any other required documents, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the NYSE is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
The method of delivery of Shares, the letter of transmittal and all other
required documents, including delivery through the Book-Entry Transfer
Facility, is at the election and risk of the tendering stockholder. Delivery
of all such documents will be deemed made only when actually received by the
Depositary (including, in the case of a book-entry transfer, by Book-Entry
Confirmation). If such delivery is by mail, it is recommended that all such
documents be sent by properly insured registered mail with return receipt
requested. In all cases, sufficient time should be allowed to ensure timely
delivery.
Other Requirements. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for (or a
timely Book-Entry Confirmation with respect to) such Shares, (b) a letter of
transmittal (or manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or, in the case
33
<PAGE>
of a book-entry transfer, an Agent's Message in lieu of the letter of
transmittal) and (c) any other documents required by the letter of
transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to Shares are actually received by the Depositary. Under no
circumstances will interest be paid by Purchaser on the purchase price of the
Shares, regardless of any extension of the offer or any delay in making such
payment.
Tender Constitutes a Binding Agreement. The valid tender of Shares pursuant
to one of the procedures described above will constitute a binding agreement
between the tendering stockholder and Purchaser upon the terms and subject to
the conditions of the offer.
Appointment as Proxy. By executing and delivering a letter of transmittal
as set forth above (or, in the case of a book-entry transfer, by delivery of
an Agent's Message, in lieu of a letter of transmittal), the tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
proxies, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder
and accepted for payment by Purchaser and with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date of the Merger Agreement. All such proxies and powers of
attorney will be considered coupled with an interest in the tendered Shares.
Such appointment is effective when, and only to the extent that, Purchaser
deposits the payment for such Shares with the Depositary. Upon the
effectiveness of such appointment, all prior powers of attorney, proxies and
consents given by such stockholder will be revoked, and no subsequent powers
of attorney, proxies and consents may be given (and, if given, will not be
deemed effective). Purchaser's designees will, with respect to the Shares for
which the appointment is effective, be empowered to exercise all voting and
other rights of such stockholder as they, in their sole discretion, may deem
proper at any annual, special or adjourned meeting of the stockholders of NDB,
by written consent in lieu of any such meeting or otherwise. Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's payment for such Shares, Purchaser must
be able to exercise full voting rights to the extent permitted under
applicable law with respect to such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser in its sole and absolute discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser, be unlawful. Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of any other stockholder. No tender of Shares will be deemed to have been
validly made until all defects and irregularities relating thereto have been
cured or waived. None of Deutsche Bank, Purchaser, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's
interpretation of the terms and conditions of the offer (including the letter
of transmittal and Instructions and any other related documents thereto) will
be final and binding.
4. Withdrawal Rights
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the offer are irrevocable, except that Shares tendered pursuant to
the offer may be withdrawn at any time on or prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the offer,
may also be withdrawn at any time after December 22, 2000.
For a withdrawal of shares to be effective, a written facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this offer to purchase.
Any such notice of withdrawal must specify the name of the person having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the recordholder of the Shares to be withdrawn, if different from
that of the person who tendered such Shares. The signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution, unless such Shares
have been tendered for the account of any Eligible Institution. If Shares have
been tendered pursuant to the procedures for book-entry transfer as set forth
in
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<PAGE>
Section 3, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. If certificates have been delivered or otherwise identified to the
Depositary, the name of the registered holder and the serial numbers shown on
such certificates must also be furnished to the Depositary as aforesaid prior
to the physical release of such certificates.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, which determination shall be final and binding. No withdrawal of
Shares shall be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Purchaser, Deutsche Bank,
the Depositary, the Information Agent or any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give such notification.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will be deemed not to have been validly tendered for purposes of the
offer. However, withdrawn Shares may be retendered by following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
If Purchaser extends the offer, is delayed in its acceptance for payment of
Shares or is unable to accept for payment Shares pursuant to the offer for any
reason, then, without prejudice to Purchaser's rights under this offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4.
In the event Purchaser provides a Subsequent Offering Period following the
offer, no withdrawal rights will apply to Shares tendered during such
Subsequent Offering Period or to Shares tendered in the offer and accepted for
payment.
5. Certain United States Federal Income Tax Consequences of the Offer
The following is a summary of the material United States federal income tax
consequences of the sale of Shares pursuant to the offer and the exchange of
Shares for cash pursuant to the merger to NDB's stockholders. This summary
does not purport to be a description of all tax consequences that may be
relevant to NDB's stockholders, and assumes an understanding of tax rules of
general application. It does not address special rules which may apply to
NDB's stockholders based on their tax status, individual circumstances or
other factors unrelated to the offer or the merger. Stockholders are
encouraged to consult their own tax advisors regarding the offer and the
merger.
The receipt of cash in exchange for Shares pursuant to the offer or the
merger will be a taxable transaction for federal income tax purposes, and may
also be taxable under applicable state, local, foreign and other tax laws. For
federal income tax purposes, a stockholder whose Shares are purchased pursuant
to the offer or who receives cash as a result of the merger will recognize
gain or loss equal to the difference between the adjusted basis of the Shares
sold or exchanged and the amount of cash received therefor. Such gain or loss
will be capital gain or loss if the Shares are held as capital assets by the
stockholder and will be long-term capital gain or loss if the stockholder's
holding period in such Shares for federal income tax purposes is more than one
year at the time of the sale or exchange. Long-term capital gain of a non-
corporate stockholder is generally subject to a maximum tax rate of 20
percent. Capital gains recognized by a corporate stockholder will be subject
to tax at the ordinary income tax rates applicable to corporations. In
addition, a stockholder's ability to use capital losses to offset ordinary
income is limited.
Backup Withholding. Under the federal income tax backup withholding rules,
unless an exemption applies, Purchaser is required to, and will, withhold 31
percent of all payments to which a stockholder is entitled pursuant to the
offer, unless such stockholder provides a tax identification number and
certifies under penalties of perjury that the number is correct. If a
stockholder is an individual, the tax identification number is a social
security number. If a stockholder is not an individual, the tax identification
number is an employer identification number. Each stockholder should complete
and sign the substitute Form W-9, which will be included with the letter of
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<PAGE>
transmittal to be returned to the Depositary, in order to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exception exists and is proved in a manner satisfactory to the
Depositary. Certain stockholders, including corporations and some foreign
individuals, are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, however, he or she must submit a certificate of foreign status on
Form W-8BEN attesting to his or her exempt status. Any amounts withheld will
be allowed as a credit against the holder's federal income tax liability for
that year.
The foregoing discussion is included for general information purposes and
may not apply to stockholders who acquired their Shares pursuant to the
exercise of employee stock options or other compensation arrangements with
NDB, or who are not citizens or residents of the United States or who are
otherwise subject to special tax treatment. The tax discussion above is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change, possibly retroactively. Each stockholder is urged to
consult his, her or its own tax advisor with respect to the tax consequences
of the offer and the merger, including the application and effect of state,
local, foreign or other tax laws.
6. Price Range of Shares; Dividends
The Shares are listed on the NYSE under the symbol "NDB". The following
table sets forth, for the fiscal quarters indicated, the high and low sales
prices per Share on the NYSE as reported by published financial sources:
<TABLE>
<CAPTION>
Fiscal Year High Low
----------- ------ ------
<S> <C> <C>
1999:
First Quarter............................................... $11.63 $ 9.38
Second Quarter.............................................. 9.56 8.13
Third Quarter............................................... 47.00 8.75
Fourth Quarter.............................................. 92.94 22.38
2000:
First Quarter............................................... 61.06 24.50
Second Quarter.............................................. 37.69 20.44
Third Quarter............................................... 45.25 21.50
Fourth Quarter.............................................. 59.13 22.50
2001:
First Quarter............................................... 39.88 24.75
Second Quarter (through October 23, 2000)................... 48.44 24.25
</TABLE>
On October 6, 2000, the last full trading day prior to Deutsche Bank's
proposal to NDB that it acquire the remaining shares of NDB, the reported
closing price per Share on the NYSE was $25.19. On October 11, 2000, the last
full trading day prior to the public announcement of the terms of the offer
and the merger, the reported closing price per Share on the NYSE was $47.31.
On October 23, 2000, the last full trading day prior to the commencement of
the offer, the reported closing price per Share on the NYSE was $48.44. NDB
has not paid any dividends since before May 31, 1998.
Stockholders are urged to obtain a current market quotation for the Shares.
7. Possible Effects of the Offer on the Market for the Shares; NYSE Listing;
Exchange Act Registration and Margin Regulations
If there are validly tendered and not properly withdrawn enough Shares so
that, including the Shares Deutsche Bank already owns, Deutsche Bank and
Purchaser would have control over 90% of the outstanding Shares, Deutsche Bank
and Purchaser will complete the merger as soon as possible after the
expiration of the
36
<PAGE>
offer (including any Subsequent Offering Period) and without a vote of the
stockholders of NDB. NDB stockholders who had not previously tendered their
shares will receive the same price per share upon completion of the merger.
If, however, Deutsche Bank and Purchaser acquire a majority of the outstanding
Shares but less than the number of Shares necessary to acquire control over
90% of the outstanding Shares, NDB would need to hold a stockholder meeting to
vote on the approval of the Merger Agreement before Deutsche Bank and
Purchaser could complete the merger. Until Deutsche Bank and Purchaser
complete the merger, the purchase of Shares by Deutsche Bank and Purchaser
pursuant to the offer could have the following effects.
Possible Effects of the Offer on the Market for the Shares. The purchase of
Shares pursuant to the offer will reduce the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the offer can also be expected to reduce the number of holders of
Shares. Neither Deutsche Bank nor Purchaser can predict whether the reduction
in the number of Shares that might otherwise trade publicly would have an
adverse or beneficial effect on the market price for or marketability of the
Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
NYSE Listing. Depending upon the number of Shares purchased pursuant to the
offer, the Shares may no longer meet the standards for continued listing on
the NYSE. According to its published guidelines, the NYSE would give
consideration to delisting the Shares if, among other things, the number of
publicly held Shares falls below 600,000, the number of holders of round lots
of Shares falls below 400 (or below 1,200 if the average monthly trading
volume is below 100,000 for the last twelve months) or the aggregate market
value of such publicly held Shares falls below $8,000,000. Shares held by
officers or directors of NDB or their immediate families, or by any beneficial
owner of 10% or more of the Shares, ordinarily will not be considered as being
publicly held for this purpose. NDB has represented that, as of October 10,
2000, 21,005,037 Shares were issued and outstanding.
In the event the Shares are no longer eligible for listing on the NYSE,
quotations might still be available from other sources. The extent of the
public market for such Shares and the availability of such quotations would
depend, however, upon such factors as the number of stockholders and/or the
aggregate market value of such securities remaining at such time, the interest
in maintaining a market in the Shares on the part of securities firms, the
possible termination of registration under the Exchange Act as described
below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the offer may result in
the Shares becoming eligible for deregistration under the Exchange Act.
Registration of the Shares may be terminated by NDB upon application to the
SEC if the outstanding Shares are not listed on a national securities exchange
or the Nasdaq Stock Market and if there are fewer than 300 holders of record
of Shares.
Termination of registration of the Shares under the Exchange Act would
reduce the information required to be furnished by NDB to its stockholders and
to the SEC and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) and the requirement of
furnishing a proxy statement in connection with stockholders' meetings
pursuant to Section 14(a) and the related requirement of furnishing an annual
report to stockholders, no longer applicable with respect to the Shares.
Furthermore, the ability of "affiliates" of NDB and persons holding
"restricted securities" of NDB to dispose of such securities pursuant to Rule
144 under the Securities Act of 1933, as amended, may be impaired or
eliminated. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be eligible for continued inclusion on
the Federal Reserve Board's list of "margin securities" or eligible for stock
exchange listing or reporting on the Nasdaq Stock Market. Purchaser intends to
seek to cause NDB to apply for termination of registration of the Shares as
soon as possible after consummation of the offer if the requirements for
termination of registration are met.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other
37
<PAGE>
things, of allowing brokers to extend credit using such Shares as collateral.
Depending upon factors similar to those described above regarding listing and
market quotations, the Shares might no longer constitute "margin securities"
for the purposes of the Federal Reserve Board's margin regulations, in which
event the Shares would be ineligible as collateral for margin loans made by
brokers. In addition, if registration of the Shares under the Exchange Act
were terminated, the Shares would no longer constitute "margin securities."
8. Information concerning National Discount Brokers Group
General. The following description of NDB and its business has been taken
from NDB's Annual Report on Form 10-K for the fiscal year ended May 31, 2000
("NDB's Form 10-K"), and Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 2000 ("NDB's Form 10-Q"), and is qualified in its entirety by
reference to NDB's Form 10-K and NDB's Form 10-Q.
NDB is a holding company whose principal wholly owned subsidiaries are
National Discount Brokers Corporation, doing business as NDB.com, and NDB
Capital Markets L.P., formerly Sherwood Securities Corp. NDB and its
subsidiaries, are primarily engaged in the securities business and in
providing related financial services.
NDB.com, a registered broker-dealer, is a deep discount securities
brokerage firm specializing in trade execution for individual investors with
offices in Jersey City, New Jersey. Customers are offered automated securities
order placement and information services through the Internet, as well as,
through touch-tone telephone and registered representatives.
NDB Capital Markets was formed in 1968 and specializes in the market
marking of Nasdaq and other over-the-counter securities and provides trade
execution services primarily to broker-dealer and institutional customers. As
a national trading firm with offices in Jersey City, New Jersey; Chicago,
Illinois; Denver, Colorado; Los Angeles, California; and Boston,
Massachusetts; NDB Capital Markets traded approximately 4,300 Nasdaq and other
over-the-counter securities, as of June 30, 2000, as a market maker and
principal for its own account.
NDB was incorporated under the laws of Delaware in December 1981 under the
name The Sherwood Equity Group Ltd. It changed its name to The Sherwood
Capital Group, Inc. in 1983 and to The Sherwood Group, Inc. in 1987. In
December 1997, NDB adopted its present name. NDB's common stock is listed on
the NYSE under the symbol "NDB".
The principal executive offices of NDB are located at 10 Exchange Place
Centre, Jersey City, New Jersey and its telephone number is (201) 946-2200.
Historical Financial Data. Set forth below is the historical financial data
of NDB as of May 31, 2000, and for each of the two years ending May 31, 1999
and 2000, derived from the audited consolidated financial statements from
NDB's Form 10-K. The historical financial data of NDB as of August 31, 2000,
and for the fiscal quarter ended August 31, 2000, are unaudited and have been
derived from the unaudited consolidated financial statements from NDB's Form
10-Q. The information contained in these tables should be read in conjunction
with the Consolidated Financial Statements of NDB and the Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the years ended May 31, 1999 and 2000 included in NDB's Form
10-K and NDB's Form 10-Q. The following summary is qualified in its entirety
by reference to such reports and all of the financial information contained
therein. Such reports may be inspected and copies may be obtained in the
manner set forth under "Available Information."
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<PAGE>
National Discount Brokers Group Inc.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data and selected operating data)
<TABLE>
<CAPTION>
Year ended May
31, Three months
----------------- ended August 31,
2000 1999 2000
-------- -------- ----------------
<S> <C> <C> <C>
Statement of Operations Data:
Revenues................................... $385,758 $207,865 $ 68,124
-------- -------- --------
Income from continuing operations before
income taxes.............................. $ 62,761 $ 34,681 $ (2,152)
Income taxes............................... 30,132 16,462 (859)
-------- -------- --------
Net income from continuing operations...... 32,629 18,219 (1,294)
Income from discontinued operations........ 83 2,786 --
Gain from sale of discontinued operations.. 20,746 -- --
-------- -------- --------
Net income................................. $ 53,458 $ 21,005 $ (1,294)
======== ======== ========
Per share data(1)
Basic:
Income from continuing operations, net of
taxes..................................... $ 1.92 $ 1.30 $ (0.06)
Income from discontinued operations, net of
taxes..................................... -- .20 0.00
Gain from sale of discontinued operations,
net of taxes.............................. 1.22 -- 0.00
-------- -------- --------
Net income................................. $ 3.14 $ 1.50 ($0.06)
======== ======== ========
Diluted:
Income from continuing operations, net of
taxes..................................... $ 1.86 $ 1.29 $ (0.06)
Income from discontinued operations, net of
taxes..................................... -- .20 0.00
Gain from sale of discontinued operations,
net of taxes.............................. 1.19 -- 0.00
-------- -------- --------
Net income................................. $ 3.05 $ 1.49 $ (0.06)
======== ======== ========
Balance Sheet Data:
Total assets............................... $429,182 $217,291 $540,526
Total liabilities.......................... $111,770 $ 75,296 $ 89,705
Common stockholders' equity................ $317,412 $141,995 $450,821
Book value per share--basic(2)............. 18.65 10.13 21.94
Book value per share--diluted(2)........... 18.11 10.04 21.94
</TABLE>
--------
(1) In May 1999, NDB entered into a definitive agreement to sell its ownership
interest in Equitrade. The transaction closed on June 18, 1999 and, as
such, the operations of Equitrade have been reflected in discontinued
operations for all periods reported. In addition, the results of
operations of MXNet, Inc. and the American Stock Exchange Specialist
business of NDBLP, each of which was sold in February 1998, have been
included in discontinued operations for all applicable periods.
(2) Diluted earnings per share and diluted book value per share are computed
by dividing net income and common stockholders' equity, respectively, by
the weighted average number of common shares outstanding (adjusted for the
assumed conversion of outstanding common stock options at average month-
end market price) during each of the years. Basic earnings per share
excludes dilution for the assumed conversion of outstanding common stock
options.
39
<PAGE>
Except as otherwise set forth herein, the information concerning NDB
contained in this offer to purchase has been taken from or based upon publicly
available documents and records on file with the SEC and other public sources
and is qualified in its entirety by reference thereto. Although Purchaser has
no knowledge that would indicate that any statements contained herein taken
from or based on such documents and records are untrue, neither Deutsche Bank
nor Purchaser take responsibility for the accuracy or completeness of the
information contained in such documents and records, or for any failure by NDB
to disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to them.
Available Information. NDB is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is obligated to
file reports and other information with the SEC relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning NDB's directors and officers, their remuneration, stock options
granted to them, the principal holders of NDB's securities, any material
interests of such persons in transactions with NDB and other matters is
required to be disclosed in proxy statements distributed to NDB's stockholders
and filed with the SEC. Such reports, proxy statements and other information
should be available for inspection at the public reference room at the SEC's
office 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C.
20549, and also should be available for inspection and copying at the
following regional offices of the SEC: 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies may be obtained by mail, upon payment of
the SEC's customary charges, by writing to its principal office at 450 Fifth
Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549. Further
information on the operation of the SEC's Public Reference Room in Washington,
D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet worldwide website that contains reports, proxy
statements and other information about issuers, such as NDB, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
Such material should also be available for inspection at the NYSE, 20 Broad
Street, New York, New York 10005.
9. Information concerning Deutsche Bank and Purchaser
Deutsche Bank. Deutsche Bank is a banking company with limited liability
organized under the laws of the Federal Republic of Germany. Deutsche Bank has
its registered office and principal executive offices at Taunusanlage 12,
60325 Frankfurt am Main, Federal Republic of Germany.
Deutsche Bank is the parent company of a group consisting of banks, capital
markets companies, funds management companies, mortgage banks and a property
finance company, installment financing and leasing companies, insurance
companies, research and consultancy companies and other domestic and foreign
companies (the "Deutsche Bank Group"). The Deutsche Bank Group has over 1,500
branches and offices engaged in banking business in the Federal Republic of
Germany and more than 700 in other countries.
As of December 31, 1999, based on International Accounting Standards and
converted at the exchange rate from December 30, 1999 of Euro 1 = U.S.
$1.0046, the Deutsche Bank Group had total assets of approximately Euro 840
billion (U.S. $843 billion), total credits extended of approximately Euro 284
billion (U.S. $285 billion) and capital and reserves of approximately Euro 23
billion (U.S. $23 billion). The Deutsche Bank Group's capital and reserves at
December 31, 1999, in accordance with Bank for International Settlements
standards, were Euro 35.2 billion (U.S. $35 billion). International Accounting
Standards may not conform to GAAP applied by United States banks.
Deutsche Bank beneficially owns 3,502,119 Shares, which represent
approximately 16.7% of the outstanding Shares. This percentage is based upon
the number of Shares outstanding as of October 20, 2000, as disclosed to
Deutsche Bank and Purchaser by NDB for this offer to purchase.
Deutsche Acquisition Corp. Deutsche Acquisition Corp. was formed as a
Delaware corporation on behalf of Deutsche Bank shortly before execution of
the Merger Agreement and is an indirect wholly owned subsidiary of Deutsche
Bank. Deutsche Acquisition Corp. has not conducted any significant business
operations to date other than in connection with the offer, the Merger
Agreement and the transactions contemplated thereby. The
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principal offices of Deutsche Acquisition Corp. are located at
31 West 52nd Street, New York, New York 10019 and its telephone number is
(212) 469-8000.
All of the outstanding stock of Deutsche Acquisition Corp. is owned by DB
U.S. Financial Markets Holding Corporation ("DBUS"), an indirect wholly owned
subsidiary of Deutsche Bank AG. The principal business of DBUS is to be a
holding company of certain Deutsche Bank businesses in the United States. DBUS
is organized as a corporation under the laws of the State of Delaware.
Additional Information. The name, business address, citizenship, present
principal occupation and employment history for the past five years of each of
the Members of the Management Board (Vorstand) and the Supervisory Board
(Aufsichtsrat) of Deutsche Bank and of the Members of the Board of Directors
and Executive Officers of Purchaser are set forth in Schedule I to this offer
to purchase.
None of Deutsche Bank, Purchaser or, to the knowledge of Deutsche Bank and
Purchaser, any of the persons listed in Schedule I to this offer to purchase,
has during the last five years (a) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (b) been a party to
any judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a judgment, decree
or final order enjoining the person from future violations of, or prohibiting
activities subject to, United States federal or state securities laws or
finding any violation of such laws.
Except as set forth elsewhere in this offer to purchase or Schedule I to
this offer to purchase or as previously disclosed in filings with the SEC: (a)
neither Deutsche Bank nor Purchaser nor, to Deutsche Bank's or Purchaser's
knowledge, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of Deutsche Bank or Purchaser or of any of the
persons so listed, beneficially owns or has a right to acquire any Shares or
any other equity securities of NDB; (b) neither Deutsche Bank nor Purchaser
nor, to Deutsche Bank's or Purchaser's knowledge, any of the individuals or
entities referred to in clause (a) above or any of their executive officers,
directors or subsidiaries has effected any transaction in Shares or any other
equity securities of NDB during the past 60 days; (c) neither Deutsche Bank
nor Purchaser nor, to Deutsche Bank's or Purchaser's knowledge, any of the
persons listed in Schedule I to this offer to purchase, has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of NDB (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies, consents or authorizations); (d) in the past two
years, there have been no transactions that would require reporting under the
rules and regulations of the SEC between us or any of our subsidiaries or, to
our knowledge, any of the persons listed in Schedule I, on the one hand, and
NDB or any of its executive officers, directors or affiliates, on the other
hand; and (e) in the past two years, there have been no contacts, negotiations
or transactions between us or any of our subsidiaries or, to our knowledge,
any of the persons listed in Schedule I, on the one hand, and NDB or any of
its subsidiaries or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets.
10. The Merger Agreement and Stockholder Tender Agreement
The Merger Agreement.
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger
Agreement, a copy of which has been filed with the SEC as an exhibit to the
Tender Offer Statement on Schedule TO to which this offer to purchase is an
exhibit (the "Schedule TO") and is incorporated herein by reference. The
Merger Agreement may be examined and copies may be obtained in the manner set
forth under "Available Information" in Section 8. Defined terms used herein
and not defined herein have the meanings assigned to those terms in the Merger
Agreement.
The Offer. The Merger Agreement provides that Purchaser will and Deutsche
Bank will cause Purchaser to commence the offer and that, upon the terms and
subject to prior satisfaction or waiver of the conditions set
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forth in the offer as described in Section 12 (including, if the offer is
extended or amended, the terms and conditions of any extension or amendment),
Purchaser will accept for payment, and pay for, all Shares validly tendered
pursuant to the offer and not withdrawn on or prior to the Expiration Date.
Directors. Pursuant to the Merger Agreement and subject to applicable rules
and regulations of the SEC, after Purchaser has purchased, pursuant to the
offer or otherwise, such number of Shares as represents at least a majority of
the outstanding Shares, and from time to time thereafter, Purchaser has the
right to have persons designated by it become directors of NDB so that the
total number of such persons equals the number, rounded up to the next whole
number, which is the product of the total number of directors on the board of
directors of NDB and the percentage that the number of Shares purchased bears
to the total number of Shares then outstanding. The Merger Agreement provides
that NDB will upon request by Purchaser, promptly increase the size of the
board of directors of NDB or use its best efforts to seek the resignations of
one or more existing directors as is necessary to provide Purchaser with such
level of representation and will cause Purchaser's designees to be so elected.
NDB will also use its best efforts to cause persons designated by Purchaser to
constitute the same percentage as is on the entire board of directors of NDB
to be on each committee of the board of directors of NDB and on each board of
directors and each committee of each subsidiary of NDB. Following the election
or appointment of Purchaser designees and prior to the Effective Time if any
of the directors of NDB then in office is a director of NDB on the date of the
Merger Agreement (the "Continuing Directors"), any amendment of the Merger
Agreement which requires action by the NDB board of directors, any extension
of time for the performance of any of the obligations or other acts of
Deutsche Bank or Purchaser under the Merger Agreement and any consent pursuant
to or waiver of compliance with any of the provisions of the Merger Agreement
providing rights or remedies to NDB, will require the concurrence of a
majority of the Continuing Directors.
The Merger. The Merger Agreement provides that, after completion of the
offer and the satisfaction or waiver of certain conditions, Purchaser will be
merged with and into NDB and NDB will be the surviving corporation. On the
effective date of the merger, each outstanding Share (other than Shares owned
by Deutsche Bank, Purchaser or any subsidiary of Deutsche Bank, Purchaser or
NDB, or held in the treasury of NDB, or held by stockholders who properly
exercise dissenters' rights under the DGCL, if any) will by virtue of the
merger and without action by the holder thereof be canceled and converted into
the right to receive an amount in cash equal to the Merger Consideration. At
the Effective Time, each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time will, by virtue of the
merger be converted into and become one share of common stock of NDB.
NDB has agreed pursuant to the Merger Agreement that, if required by
applicable law in order to consummate the merger, it will (i) convene and hold
a special meeting of its stockholders as soon as practicable following the
consummation of the offer for the purpose of approving the plan of merger
(within the meaning of Section 251 of the DGCL) contained in the Merger
Agreement; (ii) prepare and file with the SEC a preliminary proxy statement
relating to the Merger Agreement, and (A) obtain and furnish the information
required to be included by the SEC in the Proxy Statement and, after
consultation with Deutsche Bank and Purchaser, respond promptly to any
comments made by the SEC with respect to the preliminary proxy statement and
to cause a definitive proxy statement (the "Proxy Statement") to be mailed to
its stockholders and (B) use its commercially reasonable efforts to obtain the
necessary approval of the merger by its stockholders; and (iii) include in the
Proxy Statement the recommendation of the NDB board of directors that
stockholders of NDB vote in favor of the adoption of the Merger Agreement.
Each of Deutsche Bank and Purchaser has agreed in the Merger Agreement that,
at the special meeting, it will vote all Shares acquired by it pursuant to the
offer or otherwise by Deutsche Bank or Purchaser or any of their affiliates in
favor of the approval of the merger.
The Merger Agreement further provides that, notwithstanding the foregoing,
if Purchaser holds at least 90 percent of the outstanding shares of each class
of capital stock of NDB entitled to vote on the merger, each of Deutsche Bank,
Purchaser and NDB will take all necessary and appropriate action to cause the
merger to become effective as soon as practicable after the consummation of
the offer without a meeting of the stockholders of NDB, in accordance with
Section 253 of the DGCL.
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Charter, Bylaws, Directors and Officers. The Certificate of Incorporation
of NDB in effect immediately prior to the Effective Time will be the
Certificate of Incorporation of the surviving corporation until amended. The
Bylaws of Purchaser in effect immediately prior to the Effective Time will be
the Bylaws of the surviving corporation. The directors of Purchaser
immediately prior to the Effective Time will be the initial directors of the
surviving corporation, and the officers of NDB immediately prior to the
Effective Time will be the initial officers of the surviving corporation.
Conversion of Shares. Each Share issued and outstanding immediately prior
to the Effective Time (other than (i) any Shares held by Deutsche Bank,
Purchaser, any subsidiary of Deutsche Bank, Purchaser or NDB or held in the
treasury of NDB, all of which will be canceled without any consideration being
exchanged therefor and (ii) dissenting shares) will, by virtue of the merger
and without any action on the part of the holder thereof, be converted at the
Effective Time into the right to receive in cash an amount per Share (subject
to any applicable withholding tax) equal to the Merger Consideration, upon
surrender of the certificate representing such Share. At the Effective Time,
each Existing Stock Option will be converted into the right to receive the
Option Consideration. At the Effective Time, each share of common stock of
Purchaser, no par value, issued and outstanding immediately prior to the
Effective Time will, by virtue of the merger and without any action on the
part of the holder thereof, be converted into and become one share of common
stock of the surviving corporation.
The Merger Agreement provides that each Existing Stock Option granted under
any Stock Option Plan, whether or not then exercisable or vested, will by
virtue of the merger and without any action on the part of NDB, but subject to
the written consent of the holder thereof if Deutsche Bank shall require such
written consent, be converted into and will become a right to receive the
Option Consideration; provided that, in the case of Existing Stock Options
under which the per share exercise or purchase price is equal to or greater
than the Merger Consideration that are held by employees who do not
participate in the retention and guaranteed compensation packages described
under "Interests of Certain Persons" above, the Option Consideration payable
in respect of each Share subject to such Existing Stock Options shall be
$2.00. No later than 30 days following the Effective Time, each holder of an
Existing Stock Option will be entitled to receive, in full satisfaction of all
of such holder's rights and interests in respect of, and in cancellation of,
such Existing Stock Option, a cash payment equal to the product of (i) the
Option Consideration, multiplied by (ii) the number of Shares subject to such
Existing Stock Option. This payment will be reduced by any applicable income
and employment taxes required to be withheld under the Code or any applicable
provision of state, local or foreign tax law. To the extent that amounts are
so withheld, such withheld amounts will be treated for all purposes of the
Merger Agreement as having been paid to the holder of such Existing Stock
Option. The acceptance of the Option Consideration in respect of an Existing
Stock Option will be deemed a release of any and all rights the holder thereof
had or may have had in respect of such Existing Stock Option. The Stock Option
Plans will terminate as of the Effective Time and any and all rights under any
provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of NDB
or any subsidiary of NDB will be canceled as of the Effective Time. At the
request of Deutsche Bank, NDB will use its reasonable best efforts to obtain
the written consent of all holders of Existing Stock Options to the
cancellation of such Existing Stock Options.
Representations and Warranties. In the Merger Agreement, each of Deutsche
Bank and Purchaser has made customary representations and warranties to NDB
with respect to, among other matters, its organization and qualification,
authority, information to be included in the Offer Documents and the Proxy
Statement, consents and approvals, operations of Purchaser and legal
proceedings.
Deutsche Bank and Purchaser also represented that Deutsche Bank and
Purchaser will have available all the funds necessary to consummate the offer
and the merger in accordance with the Merger Agreement, and to make all other
necessary payments of fees and expenses required to be paid by Deutsche Bank
and Purchaser relating to such transactions. Moreover, Deutsche Bank
represented that the Merger Agreement and the transactions contemplated
thereby are subject, on the part of Deutsche Bank, only to the approval of the
Supervisory Board (Aufsichtsrat) of Deutsche Bank and that the Management
Board (Vorstand) of Deutsche Bank has determined to recommend to the
Supervisory Board (Aufsichtsrat) of Deutsche Bank approval of the Merger
Agreement and
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the transactions contemplated thereby. As described above, the Supervisory
Board has now approved the offer and the merger.
NDB has made customary representations and warranties to Deutsche Bank and
Purchaser with respect to, among other matters, its organization and
qualification, capitalization, authority, consents and approvals, public
filings, financial statements, absence of any material adverse effect on NDB,
information to be included in the Offer Documents and the Proxy Statement,
brokers, employee benefit and labor matters, litigation, tax matters,
compliance with law, environmental matters, intellectual property, real
property, date compliance, material contracts, related party transactions,
inapplicability of state takeover statutes, the vote required by NDB
stockholders to approve the merger, registration as broker-dealer, employment
agreements of directors, officers and employees, and the inapplicability of
the Investment Company Act of 1940.
NDB also represented and warranted that: (i) the making of any offer and
proposal and the taking of any other action by Deutsche Bank or Purchaser in
connection with the Merger Agreement, the Stockholder Tender Agreement and the
transactions contemplated thereby have been consented to by the Board of
Directors of NDB in accordance with the terms and provisions of the Existing
Stockholder Agreement; (ii) its Board of Directors (A) determined that the
offer and the merger are advisable and fair to, and in the best interests of,
the stockholders of NDB (other than Deutsche Bank or any of its wholly owned
subsidiaries), (B) resolved to recommend acceptance of the offer and approval
and adoption of the agreement of merger (as such term is used in Section 251
of the DGCL) contained in the Merger Agreement by the stockholders of NDB,
provided, however, that such recommendation may be withdrawn, modified or
amended as provided below under "No Solicitation", (C) irrevocably taken all
necessary steps to render Section 203 of the DGCL inapplicable to Deutsche
Bank and Purchaser with respect to the merger, the Stockholder Tender
Agreement and the acquisition of Shares pursuant to the offer and (D)
irrevocably resolved to elect, to the extent permitted by law, not to be
subject to any "moratorium," "control share acquisition," "business
combination," "fair price" or other form of anti-takeover laws and regulations
(collectively, "Takeover Laws") of any jurisdiction that may purport to be
applicable to the Merger Agreement or the Stockholder Tender Agreement and
(iii) U.S. Bancorp Piper Jaffray, one of NDB's independent financial advisors,
has advised NDB's board of directors that, in its opinion, the consideration
to be paid in the offer and the merger to NDB's stockholders is fair, from a
financial point of view, to such stockholders (other than Deutsche Bank or any
of its wholly owned Subsidiaries).
Covenants. The Merger Agreement obligates NDB, from the date of the Merger
Agreement until the date on which the majority of NDB's directors are
designees of Deutsche Bank or Purchaser, to, and to cause its subsidiaries to,
conduct its operations according to its ordinary and usual course of business
and consistent with past practice and obligates NDB to, and to cause its
subsidiaries to, use its commercially reasonable efforts to preserve intact
its business organizations, to keep available the services of its present
officers and employees and to preserve the goodwill and maintain satisfactory
relationships with those persons and entities having business relationships
with NDB and its subsidiaries. NDB is obligated to promptly advise Deutsche
Bank and Purchaser in writing of any material change in its or any of its
subsidiaries' condition (financial or otherwise), properties, customer or
supplier relationships, assets, liabilities, business prospects or results of
operations. The Merger Agreement also contains specific restrictive covenants
as to certain activities of NDB prior to the date on which the majority of
NDB's directors are designees of Deutsche Bank or Purchaser, which provide
that NDB will not (and will not permit any of its subsidiaries to) take
certain actions without the prior written consent of Deutsche Bank, including,
among other things and subject to certain exceptions, issuing or selling its
securities, redeeming or repurchasing securities, changing its capital
structure, declaring or paying dividends, making material acquisitions or
dispositions, entering into or amending material contracts, incurring
indebtedness, settling litigation or claims (other than the resolution of
claims over trades settled in the ordinary course of its business consistent
with past practice), increasing compensation or adopting new benefit plans,
taking any action that may result in the offer conditions not being satisfied,
convene any regular or special meeting of the stockholders of NDB other than
the stockholders' meeting contemplated by the Merger Agreement and permitting
certain other material events or transactions.
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No Solicitation. In the Merger Agreement, NDB has agreed not to, and to
cause its subsidiaries and its and their respective officers, directors,
employees, representatives (including investment bankers, attorneys and
accountants), agents or affiliates not to, directly or indirectly, encourage,
solicit, initiate or participate in any way in any discussions or negotiations
with, or provide any information to, or afford any access to the properties,
books or records of NDB or any of its subsidiaries to, or otherwise take any
other action to assist or facilitate, any person or group (other than Deutsche
Bank or Purchaser or any affiliate or associate of Deutsche Bank or Purchaser)
concerning (A) any offer or proposal, or any indication of interest in making
an offer or proposal which is structured to permit such person or group to
acquire beneficial ownership of any material portion of the assets of, or at
least 15% of the equity interest in, or businesses of, NDB pursuant to a
merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer or exchange offer or similar transaction,
including any single or multi-step transaction or series of related
transactions, in each case other than the offer and the merger (an
"Acquisition Proposal") or (B) the possible making of any Acquisition
Proposal.
Notwithstanding the foregoing and subject to NDB complying with its
notification obligations described below and the prior execution by such
person or group of a confidentiality agreement on terms no less favorable to
NDB than those set forth in those provisions of the Mutual Confidentiality
Agreement, dated as of September 25, 2000, between NDB and Deutsche Bank
Americas Holding Corporation (the "Mutual Confidentiality Agreement")
protecting information supplied by NDB, NDB may furnish information to or
enter into discussions or negotiations with any person or entity that has made
an unsolicited bona fide Acquisition Proposal in respect of which the board of
directors of NDB determines in good faith (A) after receiving the opinion of
its independent financial advisors to such effect, that the person or entity
making such inquiry ("Potential Acquiror") has the financial wherewithal to
consummate such Acquisition Proposal without having to obtain new financing
other than financing as to which it has obtained or is reasonably capable of
obtaining binding commitments from reputable sources, (B) after receiving the
opinion of its independent financial advisors to such effect, that such
Acquisition Proposal would involve consideration that is superior to the
consideration under the offer and the merger and (C) after receiving the
advice of its outside counsel and independent financial advisors to such
effect, that such Acquisition Proposal is reasonably likely to be consummated
without undue delay (a "Superior Proposal"), if, and only to the extent that,
the board of directors of NDB determines in good faith that to do so is
required by the fiduciary duty of the board of directors of NDB to the
stockholders of NDB under applicable law.
The Merger Agreement also requires NDB to promptly (and in any event within
one business day) notify Deutsche Bank and Purchaser, orally and in writing,
if any such information is requested or any such negotiations or discussions
are sought to be initiated and to immediately communicate to Deutsche Bank and
Purchaser the identity of the Potential Acquiror and any other material terms
of such request, inquiry or Acquisition Proposal. If NDB (or any of its
subsidiaries or its or their respective officers, directors, employees,
representatives, agents or affiliates) participates in discussions or
negotiations with, or provides information to, a Potential Acquiror, NDB is
obligated to keep Deutsche Bank advised on a current basis of any material
developments with respect thereto.
The Merger Agreement provides that NDB will, and will cause its
subsidiaries and its and their respective officers, directors, employees,
representatives, agents and affiliates to, immediately cease and cause to be
terminated any existing activities, discussions, or negotiations with any
persons other than Deutsche Bank, Purchaser or any of their respective
affiliates or associates conducted prior to the date hereof with respect to
any Acquisition Proposal.
The Merger Agreement further provides that, except as expressly permitted
in the Merger Agreement, NDB shall not (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Deutsche Bank or
Purchaser, its approval or recommendation of the offer or the merger, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, (iii) release any third party from any confidentiality
or standstill agreement to which NDB is a party or fail to enforce to the
fullest extent possible, or
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grant any waiver, request or consent to any Acquisition Proposal under, any
such agreement or (iv) enter into any letter of intent, agreement in
principle, acquisition agreement or other agreement related to any Acquisition
Proposal. Notwithstanding the foregoing, NDB may, prior to the acceptance for
payment of Shares pursuant to the offer, (x) take any of the actions described
under (i), (ii) or (iii) above or (y) terminate the Merger Agreement in
accordance with subparagraph (e) under "Termination" below and take any of the
actions described under (iv) above, but only if, prior to taking such action,
the board of directors of NDB receives a Superior Proposal and determines in
good faith that it is necessary to do so to comply with its fiduciary
obligations under applicable law. However, any withdrawal or modification by
NDB of the approval or recommendation of the offer or the merger shall not
have any effect on the approvals of, and other actions referred to in the
Merger Agreement for the purpose of causing Takeover Laws and the Existing
Stockholder Agreement to be inapplicable to or otherwise permit, the Merger
Agreement, the Stockholder Tender Agreement and the transactions contemplated
thereby, which approvals and actions are irrevocable.
Indemnification; Directors' and Officers' Insurance. In the Merger
Agreement, Deutsche Bank and Purchaser have agreed that all rights to
indemnification existing in favor of the present or former directors, officers
and employees of NDB or any of its subsidiaries as provided in NDB's Restated
Certificate of Incorporation, as amended, or Bylaws, or the articles of
organization, bylaws or similar documents of any of NDB's subsidiaries, or
contracts to which NDB or any of its subsidiaries is a party, in each case, as
in effect at the date of the Merger Agreement, with respect to matters
occurring prior to and as of the Effective Time will survive the merger and
continue in full force and effect for a period of not less than the statute of
limitations applicable to such matters, and Deutsche Bank agrees to cause the
surviving corporation to comply fully with these obligations.
The Merger Agreement further provides that the surviving corporation will
cause to be maintained in effect for a period of six years after the Effective
Time, in respect of acts or omissions occurring prior to and as of the
Effective Time (but only in respect thereof), policies of directors' and
officers' liability insurance covering the persons covered by NDB's existing
directors' and officers' liability insurance policies and providing
substantially similar coverage to such existing policies. The surviving
corporation will not be required in order to maintain such directors' and
officers' liability insurance policies to pay an annual premium in excess of
200 percent of the aggregate annual amounts paid by NDB at the date of the
Merger Agreement to maintain the existing policies (which amount was U.S.
$122,936); and provided further that, if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of 200
percent of such amount, the surviving corporation shall only be required to
obtain as much coverage as can be obtained by paying an annual premium equal
to 200 percent of such amount.
The indemnification and directors' and officers' insurance covenants
described above will survive the consummation of the merger and are intended
to benefit, and will be enforceable by, any person or entity entitled to be
indemnified thereunder (whether or not parties to the Merger Agreement).
The Merger Agreement further provides that, in the event Deutsche Bank or
any of its successors or assigns or the surviving corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and will not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to
the extent necessary, proper provision will be made so that the successors and
assigns of Deutsche Bank or the surviving corporation, as applicable, assume
the obligations set forth above.
Employee Matters. The Merger Agreement provides that prior to the Effective
Time, except as set forth below, NDB will, and will cause its subsidiaries to,
and from and after the Effective Time, Deutsche Bank will, and will cause the
surviving corporation to, honor, in accordance with their terms the existing
employment and change in control agreements between NDB or any of its
Subsidiaries and any officer, director or employee of NDB or any of its
subsidiaries disclosed to Deutsche Bank.
Deutsche Bank currently intends to cause the surviving corporation and its
subsidiaries, until the first anniversary of the Effective Time, to provide
pension and welfare benefits to their employees (considered as a
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group) (excluding employees covered by collective bargaining agreements and
excluding benefits that are contingent on a change in control or that are
based on the value of, or require the issuance of, securities) during the
period of any such employee's continued employment under Plans (as defined
below) currently maintained by Deutsche Bank or its subsidiaries, which
benefits will be in the aggregate substantially comparable to those provided
as of the date of the Merger Agreement pursuant to any employment, consulting,
severance, termination, change in control, retention, incentive or deferred
compensation, bonus, stock option or other equity based, fringe benefit or
other employee benefit plan, program, arrangement, agreement or commitment
(collectively "Plans") maintained by NDB and its subsidiaries in the aggregate
to such employees; provided, however, that such intention shall not be deemed
to constitute an amendment of any employee benefit plan, program or
arrangement or to prevent the surviving corporation or any of its subsidiaries
from making any change in any plan, program or arrangement, including any
change required by law or deemed necessary or appropriate to comply with
applicable law or regulation or to create in any employee or former employee
of NDB or any of its subsidiaries any rights to employment or continued
employment with Deutsche Bank, the surviving corporation or any subsidiary or
affiliate thereof or infringe upon the right of any such entity to terminate
the employment of any such employee for any reason or no reason.
The Merger Agreement also provides that NDB will take, or cause to be
taken, all action necessary, as promptly after the date of the Merger
Agreement as reasonably practicable, (i) to amend any Plan, other than the
Stock Option Plans, maintained by NDB or any of its subsidiaries to eliminate,
as of the date of the Merger Agreement, all provisions for the purchase or
grant of Shares directly from or by NDB or any of its subsidiaries or
securities of any subsidiary and (ii) in the case of the Stock Option Plans,
to amend such Stock Option Plan to eliminate, as of the date of the Merger
Agreement, all provisions thereof that provide for any automatic grant of any
awards or other rights under any such Stock Option Plan, including the grant
of any "progressive stock options" within the meaning of any such Stock Option
Plan. In addition, prior to the Effective Time, NDB will not, and will not
permit any of its officers, directors or other employees to, authorize the
extension of any loan pursuant to the terms of any of the Stock Option Plans
or otherwise in connection with any Existing Stock Options.
The Merger Agreement further provides that to the extent that employees of
NDB or any of its subsidiaries become eligible to participate in any Plans of
Deutsche Bank or any of Deutsche Bank's other subsidiaries (collectively the
"Deutsche Bank Plans") following the Effective Time, Deutsche Bank will, and
will cause the surviving corporation to (i) cause service rendered by such
employees prior to the Effective Time to be taken into account for (x) vesting
and eligibility purposes (but not for purposes of benefit accrual or
calculation) under Deutsche Bank Plans, other than the severance plan of
Deutsche Bank, to the same extent as such service was taken into account under
the corresponding Plans of NDB and its subsidiaries for those purposes and (y)
for purposes of vesting, eligibility and benefit calculation under the
severance plan of Deutsche Bank, (ii) waive any pre-existing condition
limitations under any Deutsche Bank Plan that is a health plan for any
condition of any such employee (or the dependent of any such employee) for
which such individual would have been entitled to coverage under the
corresponding Plan of NDB or its subsidiaries in which such individual
participated immediately prior to the Effective Time and (iii) give such
employees credit under the applicable Deutsche Bank Plans for co-payments made
and deductibles satisfied by such employees prior to the Effective Time under
a corresponding Plan of NDB or its subsidiaries for the applicable plan year
that includes the Effective Time.
The Merger Agreement also provides that no later than five business days
prior to its distribution, NDB and its subsidiaries will provide Deutsche Bank
and Purchaser with a copy of any communication intended to be made to any of
their respective employees relating to the transactions contemplated thereby,
and will provide an opportunity for Deutsche Bank and Purchaser to make
reasonable revisions thereto.
Employee Retention Plan and Benefit Continuation. On or prior to the
Effective Time, Deutsche Bank will cause or permit NDB or its subsidiaries to
offer a retention and guaranteed compensation package to certain
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selected employees as described above under "Interests of Certain Persons". In
addition, with effect from the Effective Time, Deutsche Bank will cause or
permit NDB or its Subsidiaries to grant equity awards under Deutsche Bank's
share scheme in such amounts and to such employees as are reasonably
determined in the discretion of NDB, subject to the approval of Deutsche Bank,
which approval will not be unreasonably withheld; provided, however, that the
total amount of such equity awards, together with the amount of the equity
awards for the selected employees, will not exceed $60,000,000.
Conditions to Consummation of the Merger. Pursuant to the Merger Agreement,
the respective obligations of Deutsche Bank, Purchaser and NDB to consummate
the merger are subject to the satisfaction or waiver, where permissible, prior
to the proposed Effective Time of the following conditions: (i) the agreement
of merger (as such term is used in Section 251 of the DGCL) contained in the
Merger Agreement shall have been approved and adopted by the affirmative vote
of the stockholders of NDB required by and in accordance with applicable law
unless, after the offer, Deutsche Bank beneficially owns at least 90% of NDB
shares, in which case no vote is necessary pursuant to Section 253 of the
DGCL; (ii) all necessary waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), applicable to the merger
shall have expired or been terminated, (iii) the consummation of the merger is
not prohibited, restricted or made illegal by any statute, rule, regulation,
executive order, judgment, decree or injunction of any court or any
governmental entity (provided that each party to use all reasonable efforts to
have such prohibition lifted) and (iv) Purchaser shall have accepted for
purchase and paid for the Shares tendered pursuant to the offer, provided that
the condition in clause (iv) above shall not be a condition to Purchaser's
obligation to consummate the merger if Purchaser's failure to purchase any
Shares violates the terms of the offer.
Termination. The Merger Agreement provides that it may be terminated and
the merger may be abandoned at any time (notwithstanding approval thereof by
the stockholders of NDB) prior to the Effective Time (with any termination by
Deutsche Bank also being an effective termination by Purchaser):
(a) by mutual written consent of NDB and Deutsche Bank;
(b) by Deutsche Bank or NDB if any court of competent jurisdiction or other
governmental entity shall have issued an order, decree or ruling, or taken any
other action restraining, enjoining or otherwise prohibiting any of the
transactions contemplated by the Merger Agreement and such order, decree,
ruling or other action shall have become final and non-appealable;
(c) by NDB if (i) Purchaser fails to commence the offer in violation of
Section 1.01 of the Merger Agreement, (ii) Purchaser shall not have accepted
for payment and paid for Shares pursuant to the offer in accordance with the
terms thereof on or before December 31, 2000, (iii) Purchaser fails to
purchase validly tendered Shares in violation of the terms of the Merger
Agreement, or (iv) Purchaser or Deutsche Bank shall have breached any of its
representations, warranties or covenants of the Merger Agreement, which breach
has had or is reasonably likely to have a material adverse effect on the
ability of Deutsche Bank or Purchaser to consummate the transactions
contemplated thereby;
(d) by Deutsche Bank if, due to an occurrence or circumstance which shall
have resulted in a failure to satisfy any of the Offer Conditions, Purchaser
shall have (i) not commenced the offer as required by the Merger Agreement,
(ii) terminated the offer without purchasing any Shares pursuant to the offer
or (iii) failed to accept for payment Shares pursuant to the offer prior to
December 15, 2000;
(e) by NDB, prior to the purchase of Shares pursuant to the offer, if (i)
NDB has complied with its obligations described above under "No-Solicitation,"
(ii) NDB has given Deutsche Bank and Purchaser at least four business days
advance notice of its intention to accept or recommend a Superior Proposal and
of all of the terms and conditions of such Superior Proposal, (iii) NDB's
board of directors, after taking into account any modifications to the terms
of the offer and the merger proposed by Deutsche Bank and Purchaser after
receipt of such notice, continues to believe such Acquisition Proposal
constitutes a Superior Proposal and (iv) the board of directors of NDB
determines in good faith that it is necessary to do so to comply with its
fiduciary obligations to the stockholders of NDB under applicable law;
provided that such termination provided for under this paragraph shall not be
effective unless and until NDB shall have paid to Deutsche Bank all of the
fees and expenses
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described below in "Fees and Expenses" including, without limitation, the
Termination Fee (as defined below in "Fees and Expenses"); or
(f) by Deutsche Bank, prior to the purchase of Shares pursuant to the
offer, if NDB breaches any of its covenants described above under "No-
Solicitation" or the board of directors shall have taken any of the actions
specified above in clauses (i), (ii) or (iii) under "No Solicitation".
Effect of Termination. In the event that the Merger Agreement is terminated
and the merger is abandoned, pursuant to the provision described above in
"Termination" the Merger Agreement will become void and have no effect,
without any liability on the part of any party or its directors, officers or
stockholders, other than the provisions relating to confidentiality
obligations and the payment of certain fees and expenses, including the
Termination Fee, all of which will survive any such termination, along with
the Mutual Confidentiality Agreement; provided that no party would be relieved
from liability for any willful breach of the Merger Agreement.
Fees and Expenses. Except as provided below, whether or not the merger is
consummated, all costs and expenses incurred in connection with the offer, the
Merger Agreement and the transactions contemplated by the Merger Agreement
will be paid by the party incurring such expenses.
In the event that this Agreement is terminated pursuant to (1) subparagraph
(e) or (f) under "Termination" above or (2) (x) subparagraph (b) under
"Termination" above (unless the proceeding that resulted in the order, decree,
ruling or other action giving rise to such termination shall have been
instituted, in the first instance, by a governmental entity and shall not have
been requested or encouraged by NDB or any of its stockholders) or
(y) subparagraph (c)(ii) or subparagraph (d) under "Termination" above if (in
the case of clause (y) only) at the time of such termination either (A) the
Minimum Tender Condition shall not have been satisfied or (B) NDB shall have
breached or failed to comply in any material respect with any of its
obligations, covenants, or agreements under the Merger Agreement or any
representation or warranty of NDB contained in the Merger Agreement that is
qualified as to materiality shall not be true and correct, or any such
representation or warranty that is not so qualified shall not be true and
correct in any material respect which (when taken together with all such other
representations and warranties not true and correct) has had or would
reasonably be likely to have a material adverse effect, in each case either as
of when made or at and as of any time thereafter, and (in the case of clause
(2) only) (AA) after the date of the Merger Agreement and prior to such
termination an Acquisition Proposal shall have been made or publicly announced
and (BB) within twelve months thereafter an Acquisition Proposal shall have
been consummated, then NDB shall pay Deutsche Bank a termination fee of $35
million (the "Termination Fee") in immediately available funds by wire
transfer to an account designated by Deutsche Bank. If such fee becomes
payable pursuant to clause (1) of this paragraph, it shall be payable
simultaneously with such termination (in the case of a termination by NDB) or
within one business day thereafter (in the case of a termination by Deutsche
Bank). If such fee becomes payable pursuant to clause (2) of this paragraph,
it shall be payable simultaneously with completion of such Acquisition
Proposal.
In the event the Merger Agreement is terminated pursuant to subparagraphs
(c)(ii) or (d) under "Termination" above as a result of (A) NDB's breach or
failure to comply in any material respect with any of its obligations,
covenants, or agreements under the Merger Agreement, (B) any representation or
warranty of NDB contained in the Merger Agreement that is qualified as to
materiality not being true and correct or (C) any such representation or
warranty that is not so qualified not being true and correct in any material
respect which (when taken together with all such other representations and
warranties not true and correct) has had or would reasonably be likely to have
a material adverse effect, in each case either as of when made or at and as of
any time thereafter, then NDB shall promptly (and in any event within one
business day after such termination) reimburse Deutsche Bank for the out-of-
pocket fees and expenses of Deutsche Bank and the Purchaser (including
financing or commitment fees, printing fees, filing fees and fees and expenses
of its legal and financial advisors) related to the offer, the Merger
Agreement, the transactions contemplated thereby and any related financing up
to a maximum of $5 million in immediately available funds by wire transfer to
an account designated by Deutsche Bank.
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In the event the Merger Agreement is terminated pursuant to paragraph
(c)(iv) under "Termination" above, then Deutsche Bank shall promptly (and in
any event within one business day after such termination) reimburse NDB for
the out-of-pocket expenses of NDB (including printing fees, filing fees and
expenses of its legal and financial advisors) related to the offer, the Merger
Agreement and the transactions contemplated thereby up to a maximum of $5
million in immediately available funds by wire transfer to an account
designated by NDB.
Amendment. To the extent permitted by applicable law and subject to the
approval of the Continuing Directors after Deutsche Bank's designees
constitute a majority of the NDB board of directors, the Merger Agreement may
be amended by action taken by or on behalf of the boards of directors of NDB,
Deutsche Bank and Purchaser, at any time before or after adoption of the
Merger Agreement by the stockholders of NDB but, after any such stockholder
approval, no amendment shall be made which requires further approval of NDB's
stockholders under applicable law without the approval of the stockholders of
NDB. The Merger Agreement may not be amended, changed, supplemented or
otherwise modified except by an instrument in writing signed on behalf of all
of the parties.
Stockholder Tender Agreement.
Concurrently with the execution of and in order to induce Deutsche Bank and
Purchaser to enter into the Merger Agreement, the Principal Stockholders
entered into the Stockholder Tender Agreement. The following is a summary of
the material terms of the Stockholder Tender Agreement. This summary is not a
complete description of the terms and conditions of the Stockholder Tender
Agreement and it is qualified in its entirety by reference to the full text of
the Stockholder Tender Agreement, a copy of which is filed with the SEC as an
exhibit to the Schedule TO and is incorporated herein by reference. The
Stockholder Tender Agreement may be examined at, and copies may be obtained
from, the offices of the SEC as set forth under "Available Information" in
Section 8 above. All terms not defined herein have the meanings ascribed to
such terms in the Stockholder Tender Agreement.
Tender of Shares. Each Principal Stockholder has agreed to validly tender
(or cause the record owner of such shares to validly tender), not later than
the seventh business day after commencement of the offer, and will cause to
remain validly tendered and not withdrawn until termination of the Stockholder
Tender Agreement all Shares which are beneficially owned by such Principal
Stockholder as of the date of the Stockholder Tender Agreement, in addition to
any Shares which such Principal Stockholder acquires in any capacity after the
date of the Stockholder Tender Agreement and prior to the termination of the
Stockholder Tender Agreement by means of purchase, dividend, distribution,
exercise of options, warrants or other rights to acquire Shares or in any
other way (collectively, the "Subject Shares").
Voting Agreement. Each Principal Stockholder will, at any meeting of the
stockholders of NDB called to consider and vote upon the adoption of the
Merger Agreement (and at any and all postponements and adjournments thereof),
and in connection with any action to be taken in respect of the adoption of
the Merger Agreement by written consent of stockholders of NDB, vote or cause
to be voted (including by written consent, if applicable) all of such
Principal Stockholder's Subject Shares which it has the right to vote in favor
of the adoption of the Merger Agreement and in favor of any other matter
necessary for the consummation of the transactions contemplated by the Merger
Agreement that is considered and voted upon at any such meeting or made the
subject of any such written consent. At any meeting of the stockholders of NDB
called to consider and vote upon any (a) Acquisition Proposal, (b) proposal or
action that would reasonably be expected to result in a breach of any
covenant, agreement, representation or warranty of NDB set forth in the Merger
Agreement, or (c) other alternative transaction or specified action that is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or adversely affect the offer or the merger and the other
transactions contemplated by the Stockholder Tender Agreement and the Merger
Agreement or increase the likelihood that such transactions will not be
consummated (an "Adverse Proposal") (and at any and all postponements and
adjournments thereof), and in connection with any action to be taken in
respect of any Adverse Proposal by written consent of stockholders of NDB,
each Principal Stockholder will vote or cause to be voted (including by
written consent, if applicable) all of such Principal Stockholder's Subject
Shares which it has the right to vote against the adoption
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of such Adverse Proposal except to the extent that any Principal Stockholder
is appointed to act for management of NDB under proxy of the stockholders at
any meeting thereof.
Irrevocable Proxy. Each Principal Stockholder has irrevocably granted to,
and appointed, Purchaser and any designee of Purchaser, each of them
individually, such Principal Stockholder's proxy and attorney-in-fact, with
full power of substitution and resubstitution, to vote or act by written
consent with respect to all of such Principal Stockholder's Subject Shares
which it has the right to vote (i) in accordance with the terms described
above under "Voting Agreement" and (ii) to sign its name (as a stockholder) to
any consent, certificate or other document relating to NDB that the law of the
State of Delaware may permit or require in connection with any matter referred
to above under "Voting Agreement". The proxy is coupled with an interest and
is irrevocable until termination of the Stockholder Tender Agreement pursuant
to the section on "Termination" below, whereupon such proxy and power of
attorney shall automatically terminate. Each Principal Stockholder will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of the proxy. For Subject Shares as to which the
Principal Stockholder is the beneficial but not the record owner, the
Principal Stockholder will cause any record owner of such Subject Shares to
grant to Purchaser a proxy to the same effect as that contained therein.
Restriction on Transfer of Subject Shares, Proxies and
Noninterference. Each Principal Stockholder has undertaken not to, directly or
indirectly: (a) except pursuant to the terms of the Stockholder Tender
Agreement and for the conversion of Subject Shares at the Effective Time
pursuant to the terms of the Merger Agreement, offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Principal Stockholder's
Subject Shares other than any sale, transfer or assignment to members of such
Principal Stockholder's family, a family trust of such Principal Stockholder
or a charitable institution if the transferee of such Subject Shares agrees in
writing to be bound by the terms hereof and notice of such sale, transfer or
assignment, including the name and address of the purchaser, transferee or
assignee, is delivered to Purchaser pursuant to the terms of the Stockholder
Tender Agreement; (b) except pursuant to the terms of the Stockholder Tender
Agreement, grant any proxies or powers of attorney, deposit any Subject Shares
into a voting trust or enter into a voting agreement with respect to any
Subject Shares; or (c) take any action that would reasonably be expected to
make any of its representations or warranties contained herein untrue or
incorrect or have the effect of impairing the ability of such Principal
Stockholder to perform such Principal Stockholder's obligations under the
Stockholder Tender Agreement or preventing or delaying the consummation of any
of the transactions contemplated hereby.
No Solicitation. Each Principal Stockholder has undertaken that neither
such Principal Stockholder nor (if such Principal Stockholder is not a natural
person) any of its affiliates (other than NDB), officers, directors,
employees, agents or representatives (including any investment banker,
financial advisor, attorney or accountant for such Principal Stockholder)
(together "Representatives") shall, directly or indirectly, encourage,
solicit, initiate or participate in any way in any discussions or negotiations
with, or provide any information to, or afford any access to the properties,
books or records of NDB or any of its subsidiaries, or otherwise take any
other action to assist or facilitate, any person or group (other than Deutsche
Bank or Purchaser or any affiliate or associate of Deutsche Bank or Purchaser)
concerning any Acquisition Proposal. Each Principal Stockholder will, and will
cause its Representatives to, immediately cease any existing activities,
discussions or negotiations conducted heretofore with respect to any
Acquisition Proposal. Each Principal Stockholder will promptly communicate to
Purchaser the material terms of any Acquisition Proposal (or any discussion,
negotiation or inquiry with respect thereto) and the identity of the person
making such Acquisition Proposal or inquiry which it may receive.
No Dissenters' Rights. In connection with the merger, each Principal
Stockholder waived any appraisal or dissenters' rights that such Principal
Stockholder may have.
Termination. The Stockholder Tender Agreement will terminate with respect
to any Principal Stockholder on the earliest to occur of (a) the consummation
of the purchase of all the Subject Shares pursuant to the offer,
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(b) the Effective Time or (c) the date which is sixty days after the date on
which the Merger Agreement is terminated in accordance with its terms. The
Stockholder Tender Agreement may be earlier terminated by the mutual consent
of the board of directors of Purchaser and the Principal Stockholders
representing a majority of the Subject Shares subject to the Stockholder
Tender Agreement.
11. Source and Amount of Funds
The offer is not conditioned upon any financing arrangements.
Deutsche Bank and Purchaser estimate that the total amount of funds
required to purchase all outstanding Shares pursuant to the offer and the
merger, based on the number of Shares that were outstanding or subject to
future issuance pursuant to the Existing Stock Options, will be approximately
$895 million (net of the exercise price payable with respect to such Existing
Stock Options) and that approximately $14 million of additional funds will be
required to pay fees and expenses related to the offer and the merger. The
funds needed for the offer and the merger will come from Deutsche Bank's
working capital or existing credit facilities.
12. Certain Conditions of the Offer
Notwithstanding any other provision of the offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, to pay
for any Shares tendered in the offer and may terminate or, subject to the
terms of the Merger Agreement, amend the offer, if (i) there shall not be
validly tendered and not properly withdrawn prior to the Expiration Date that
number of Shares which, together with any Shares beneficially owned by
Purchaser or Deutsche Bank, represents at least a majority of the total number
of outstanding Shares on a fully diluted basis (which shall mean, as of any
date, the number of Shares that are actually issued and outstanding plus the
number of Shares that NDB is required to issue pursuant to obligations
outstanding under convertible securities, options and otherwise on the date of
purchase) on the date shares are accepted for payment (the "Minimum Tender
Condition"), (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated, and any applicable approvals or consents have
not been obtained under any applicable foreign laws (or any applicable waiting
periods thereunder have not expired or been terminated) on or prior to the
Expiration Date or (iii) at any time on or after the date of the Merger
Agreement and prior to the acceptance for payment of any Shares, any of the
following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction,
proposed, sought, promulgated, enacted, entered, enforced, issued, amended or
deemed applicable to Deutsche Bank, Purchaser, NDB, any other affiliate of
Deutsche Bank or NDB, the offer or the merger, that would or is reasonably
likely, directly or indirectly, to (1) make the acceptance for payment of, or
payment for or purchase of some or all of the Shares pursuant to the offer
illegal, or otherwise restrict or prohibit or make materially more costly the
consummation of the offer or the merger, (2) restrict the ability of Purchaser
to accept for payment, pay for or purchase some or all of the Shares pursuant
to the offer or to effect the merger, (3) render Purchaser unable to accept
for payment or pay for or purchase some or all of the Shares pursuant to the
offer, (4) impose material limitations on the ability of Deutsche Bank,
Purchaser or any of their respective subsidiaries or affiliates to acquire or
hold, transfer or dispose of, or effectively to exercise all rights of
ownership of, some or all of the Shares including the right to vote the Shares
purchased by it pursuant to the offer on an equal basis with all other Shares
on all matters properly presented to the stockholders of NDB, (5) require the
divestiture by Deutsche Bank, Purchaser or any of their respective
subsidiaries or affiliates of any Shares, or require Purchaser, Deutsche Bank,
NDB, or any of their respective subsidiaries or affiliates to dispose of or
hold separate all or any material portion of their respective businesses,
assets or properties or impose any material limitations on the ability of any
of such entities to conduct their respective businesses or own such assets,
properties or Shares or on the ability of Deutsche Bank or Purchaser to
conduct the business of NDB and its subsidiaries and own the assets and
properties of NDB and its subsidiaries, (6) impose any material limitations on
the ability of Deutsche Bank, Purchaser or any of their respective
subsidiaries or affiliates effectively to control the business or operations
of NDB, Deutsche Bank, Purchaser or any of their respective subsidiaries or
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affiliates, or (7) result in a material reduction in the benefits expected to
be derived by Purchaser, Deutsche Bank or any of their respective subsidiaries
and affiliates as a result of the offer or the merger;
(b) there shall have been threatened, instituted or pending any action,
proceeding or counterclaim by or before any governmental entity, challenging
the making of the offer or the acquisition by Purchaser of the Shares pursuant
to the offer or the consummation of the merger, or seeking to obtain any
material damages, or seeking to, directly or indirectly, result in any of the
consequences referred to in clauses (1) through (7) of paragraph (a) above;
(c) there shall have occurred (1) any general suspension of, or limitation
on prices for, trading in securities on any national securities exchange or in
the over-the-counter market in the United States or the Federal Republic of
Germany, (2) the declaration of any banking moratorium or any suspension of
payments in respect of banks or any limitation (whether or not mandatory) on
the extension of credit by lending institutions in the United States or the
Federal Republic of Germany, (3) the commencement of a war, armed hostilities
or any other international or national calamity involving the United States or
the Federal Republic of Germany, (4) a material adverse change in the United
States currency exchange rates or a suspension of, or limitation on, the
markets therefor, or (5) in the case of any of the foregoing existing at the
time of the execution of the Merger Agreement, a material acceleration or
worsening thereof;
(d) any person or "group" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than Deutsche Bank, Purchaser or the Principal
Stockholders or any of their respective affiliates shall have become the
beneficial owner (as that term is used in Rule 13d-3 under the Exchange Act)
of more than 20% of the outstanding Shares unless such person or group has
publicly disclosed its intention to tender the Shares owned by it in the
offer;
(e) there shall have occurred any change, condition, event or development
that, individually or in the aggregate, has had or is reasonably likely to
have, a material adverse effect on any of the condition (financial or
otherwise), business, properties, assets, liabilities or results of operations
of NDB and its subsidiaries, taken as a whole, excluding and not giving effect
to events, circumstances or conditions affecting the securities markets or the
brokerage or market making industries in the United States generally (a
"Material Adverse Effect");
(f) NDB shall have breached or failed to comply in any material respect
with any of its obligations, covenants, or agreements under the Merger
Agreement or any representation or warranty of NDB contained in the Merger
Agreement that is qualified as to materiality shall not be true and correct,
or any such representation or warranty that is not so qualified shall not be
true and correct in any material respect which (when taken together with all
such other representations and warranties not true and correct) has had or
would reasonably be likely to have a Material Adverse Effect, in each case
either as of when made or at and as of any time thereafter; or
(g) the Merger Agreement shall have been terminated pursuant to its terms
or shall have been amended pursuant to its terms to provide for such
termination of the offer;
which, in the good faith judgment of Deutsche Bank or Purchaser, in any case,
and regardless of the circumstances (including any action or inaction by
Deutsche Bank or Purchaser or any of their affiliates) giving rise to any such
condition, makes it inadvisable to proceed with the offer or with acceptance
for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Deutsche Bank and
Purchaser and may be asserted regardless of the circumstances or (except for
the Minimum Tender Condition) waived by Deutsche Bank or Purchaser in whole or
in part at any applicable time or from time to time in its discretion subject
to the terms and conditions of the Merger Agreement and the applicable rules
and regulations of the SEC. The failure of Deutsche Bank or Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any applicable time and from time to time.
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13. Certain Legal and Regulatory Matters
General. Except as otherwise disclosed herein, Deutsche Bank and Purchaser
are not aware of any licenses or other regulatory permits which appear to be
material to the business of NDB and which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the offer or of any approval or
other action by any governmental, administrative or regulatory agency or
authority which would be required for the acquisition or ownership of Shares
by Purchaser pursuant to the offer. Should any such approval or other action
be required, it is currently contemplated that such approval or action would
be sought or taken. There can be no assurance that any such approval or
action, if needed, would be obtained or, if obtained, that it will be obtained
without substantial conditions or that adverse consequences might not result
to NDB's or Deutsche Bank's business or that certain parts of NDB's or
Deutsche Bank's business might not have to be disposed of in the event that
such approvals were not obtained or such other actions were not taken.
Purchaser's obligation under the offer to accept for payment and pay for
Shares is subject to certain conditions. See Section 12.
Antitrust Compliance. Under the provisions of the HSR Act applicable to the
offer, the purchase of Shares under the offer may be consummated following the
expiration or earlier termination of a 15-calendar-day waiting period
following the filing by Purchaser of a Notification and Report Form with
respect to the offer, unless Purchaser receives a request for additional
information or documentary material from the Antitrust Division of the U.S.
Department of Justice (the "Antitrust Division") or the U.S. Federal Trade
Commission (the "FTC"). Purchaser expects to make its filing with the
Antitrust Division and the FTC on or about October 31, 2000. If, within the
initial 15-day waiting period, either the Antitrust Division or the FTC
requests additional information or documentary material from Purchaser, the
waiting period will be extended and would expire at 11:59 p.m., New York City
time, on the tenth calendar day after the date of substantial compliance by
Purchaser with such request. Only one extension of the waiting period pursuant
to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with
the consent of Purchaser. If the acquisition of Shares is delayed pursuant to
a request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the offer may, at the sole
discretion of Purchaser, be extended and, in any event, the purchase of and
any payment for Shares will be deferred until the Expiration Date. Unless the
offer is extended, any extension of the waiting period may not give rise to
any additional withdrawal rights not otherwise provided by applicable law. See
Section 4.
In practice, complying with a request for additional information or
documentary material can take a significant amount of time. In addition, if
the Antitrust Division or the FTC raises substantive issues in connection with
a proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
NDB. At any time before or after Purchaser's purchase of Shares pursuant to
the offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the offer or
the merger or seeking the divestiture of Shares acquired by Purchaser or the
divestiture of substantial assets of Purchaser or its subsidiaries, or of NDB
or its subsidiaries. Private parties may also bring legal action under the
antitrust laws under certain circumstances. However, Purchaser believes that
consummation of the offer would not violate any antitrust laws; however, there
can be no assurance that a challenge to the offer on antitrust grounds will
not be made or, if a challenge is made, what the result will be. If any such
action is threatened or commenced by the FTC, the Antitrust Division or any
other person, Purchaser may not be obligated to consummate the offer. See
Section 12.
Broker-Dealer Regulations. Because NDB owns registered broker-dealers,
Deutsche Bank and NDB must make certain filings with, or give notifications
to, a number of U.S. federal, state and foreign governmental and self-
regulatory agencies, and securities and other exchanges, before the offer and
the merger are completed.
54
<PAGE>
Other Applications and Notices. Deutsche Bank and NDB conduct operations in
a number of jurisdictions where other regulatory filings or approvals may be
required or advisable in connection with the completion of the merger.
Deutsche Bank and NDB are currently in the process of reviewing whether other
filings or approvals may be required or desirable in other jurisdictions.
Deutsche Bank and NDB have no reason to believe that any of these requirements
cannot be satisfied within the time period contemplated by the Merger
Agreement, but they may not complete some of these filings or obtain some of
these approvals, which may not, as a matter of practice, be required to be
obtained prior to the closing of a tender offer or the effectiveness of a
merger transaction, prior to the closing of the offer or the effectiveness of
the merger.
Stockholder Approval. NDB has represented in the Merger Agreement that the
execution and delivery of the Merger Agreement by NDB and the consummation by
NDB of the transactions contemplated by the Merger Agreement and the
Stockholder Tender Agreement have been duly and validly authorized by the
board of directors of NDB, and no other corporate proceedings on the part of
NDB are necessary to authorize the Merger Agreement or to consummate the
transactions so contemplated, other than, with respect to the merger, the
approval and adoption of the agreement of merger (within the meaning of
Section 251 of the DGCL) contained in the Merger Agreement by the holders of a
majority of the outstanding Shares prior to the consummation of the merger
(unless the merger is consummated pursuant to the short-form merger provisions
contained in Section 253 of the DGCL). In the event that the Minimum Tender
Condition is satisfied, the Purchaser will have sufficient voting power to
cause the approval of the Merger Agreement and the transactions contemplated
thereby without the affirmative vote of any other stockholders of NDB.
Short-Form Merger. Section 253 of the DGCL provides, among other things,
that, if the parent corporation owns at least 90% of the outstanding shares of
each voting class of a subsidiary corporation, the merger of the subsidiary
corporation and the parent corporation may be effected by a resolution adopted
and approved by the board of directors of the parent corporation and the
appropriate filings with the Delaware Secretary of State, without any action
or vote on the part of the stockholders of the subsidiary corporation. Under
the DGCL, if Purchaser acquires at least 90% of the outstanding Shares,
Purchaser will be able to effect the merger without a vote of the stockholders
of NDB. In such event, Deutsche Bank, Purchaser and NDB have agreed in the
Merger Agreement to take all necessary and appropriate action to cause the
merger to become effective as soon as practicable after such acquisition,
without a meeting of NDB's stockholders. In the event that less than 90% of
the Shares then outstanding on a fully diluted basis are tendered pursuant to
the offer, the Purchaser may extend the offer for up to 10 business days, or
may include a Subsequent Offering Period, so that the merger may be
consummated as described in this paragraph.
State Takeover Laws. A number of states (including Delaware where NDB is
incorporated) have adopted takeover laws and regulations which purport, to
varying degrees, to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have substantial
assets, stockholders, principal executive offices or principal places of
business therein.
Section 203 of the DGCL prevents certain "business combinations" with an
"interested stockholder" (generally, any person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) for a period
of three years following the time such person became an interested
stockholder, unless, among other things, prior to the time the interested
stockholder became such, the board of directors of the corporation approved
either the business combination or the transaction in which the interested
stockholder became such. The board of directors of NDB has irrevocably taken
all necessary steps to render Section 203 of the DGCL inapplicable to Deutsche
Bank and Purchaser with respect to the merger, the Stockholder Tender
Agreement and the acquisition of Shares pursuant to the offer.
Purchaser has not attempted to comply with any other state takeover
statutes in connection with the offer or the merger. To the extent that
certain provisions of certain of these state takeover statutes purport to
apply to the offer or the merger, Purchaser believes that such laws conflict
with federal law and constitute an unconstitutional burden on interstate
commerce. Purchaser reserves the right to challenge the validity or
applicability of any state law allegedly applicable to the offer or the
merger, and nothing in this offer to purchase nor any action taken in
55
<PAGE>
connection herewith is intended as a waiver of that right. In the event that
it is asserted that one or more takeover statutes apply to the offer or the
merger, and it is not determined by an appropriate court that such statute or
statutes do not apply or are invalid as applied to the offer or the merger, as
applicable, Purchaser may be required to file certain documents with, or
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or purchase Shares tendered pursuant to the offer
or be delayed in continuing or consummating the offer. In such case, Purchaser
may not be obligated to accept for purchase, or pay for, any Shares tendered.
See Section 12.
Appraisal Rights. No appraisal rights are available in connection with the
offer. If the merger is consummated, however, stockholders of NDB who have not
tendered their Shares will have certain rights under the DGCL to dissent and
demand appraisal of, and to receive payment in cash of the fair value of,
their Shares. Under Section 262 of the DGCL, dissenting stockholders of NDB
who comply with the applicable statutory procedures will be entitled to a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the merger)
and to receive payment of such fair value in cash, together with a fair rate
of interest thereon, if any. Any such judicial determination of the fair value
of the Shares could be based upon factors other than, or in addition to, the
price per Share to be paid in the merger or the market value of the Shares.
The value so determined could be more or less than the price per Share to be
paid in the merger.
The foregoing summary of the rights of dissenting stockholders under the
DGCL does not purport to be a complete statement of the procedures to be
followed by stockholders desiring to exercise any appraisal rights under the
DGCL. The preservation and exercise of appraisal rights require strict
adherence to the applicable provisions of the DGCL.
Legal Proceedings.
Two purported class actions have been filed in the Court of Chancery in and
for New Castle County, Delaware. The complaints allege generally that NDB's
directors breached their fiduciary duties by failing to conduct an adequate
process and by agreeing to a transaction that favors management's interests
and fails to maximize the value of the Shares. The complaints further allege
that the value of the Shares is materially greater than the Offer Price. Each
complaint seeks certification of a plaintiff class, declaratory and injunctive
relief with respect to the transaction, unspecified compensatory damages and
attorneys' fees and costs. In addition to naming the directors as defendants,
the complaints name NDB as a defendant and one of the complaints names
Deutsche Bank alleging that it aided and abetted the alleged breach of
fiduciary duties. The complaints are entitled: Whitney v. National Discount
Brokers Group, Inc., et al., C.A. No. 18421NC and Crandon Capital Partners v.
Kontos, et al., C.A. No. 18422NC. The defendants believe the actions are
without merit and intend to defend them vigorously.
14. Fees and Expenses
Purchaser has retained Deutsche Bank Securities Inc. as Dealer Manager,
ChaseMellon Shareholder Services L.L.C. as Depositary and Georgeson
Shareholder Communications Inc. as Information Agent in connection with the
offer. The Dealer Manager, Depositary and Information Agent will receive
customary compensation and reimbursement for reasonable out-of-pocket
expenses, as well as indemnification against certain liabilities in connection
with the offer, including liabilities under applicable securities laws.
Except as set forth in this Section 14, Purchaser will not pay any fees or
commissions to any broker or dealer or other person for soliciting tenders of
Shares pursuant to the offer. Brokers, dealers, commercial banks and trust
companies will upon request be reimbursed by Purchaser for customary mailing
and handling expenses incurred by them in forwarding the offering material to
their customers.
56
<PAGE>
Including the fees described above, Purchaser has paid or will be
responsible for paying certain out-of-pocket expenses and the following
expenses incurred or estimated to be incurred in connection with the tender
offer and the merger:
<TABLE>
<CAPTION>
IN THOUSANDS
------------
<S> <C>
Dealer Manager and Financial Advisor............................ $6,000
Legal........................................................... 1,500
Filing (HSR and SEC)............................................ 217
Information Agent............................................... 15
Depositary...................................................... 25
Printing........................................................ 150
Accounting and Appraisal........................................ N/A
Miscellaneous................................................... 50
</TABLE>
NDB has paid or will be responsible for paying the following expenses
incurred or estimated to be incurred in connection with the tender offer and
the merger:
<TABLE>
<CAPTION>
IN THOUSANDS
------------
<S> <C>
Financial Advisors.............................................. $5,000
Legal........................................................... 500
Printing........................................................ 50
Miscellaneous................................................... 25
</TABLE>
15. Miscellaneous
The offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the offer in any such jurisdiction and
extend the offer to holders of Shares in such jurisdiction.
Neither Purchaser nor Deutsche Bank is aware of any jurisdiction in which
the making of the offer or the acceptance of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction.
Purchaser and Deutsche Bank have filed with the SEC the Schedule TO
(including exhibits) in accordance with the Exchange Act, furnishing certain
additional information with respect to the offer and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may
be examined and copies may be obtained from the principal office of the SEC in
Washington, D.C. in the manner set forth under "Available Information" in
Section 8.
No person has been authorized to give any information or make any
representation on behalf of Deutsche Bank or Purchaser not contained in this
offer to purchase or in the letter of transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
Neither the delivery of the offer to purchase nor any purchase pursuant to
the offer will, under any circumstances, create any implication that there has
been no change in the affairs of Deutsche Bank, Purchaser, NDB or any of their
respective subsidiaries since the date as of which information is furnished or
the date of this offer to purchase.
DEUTSCHE ACQUISITION CORP.
October 24, 2000
57
<PAGE>
SCHEDULE A
Information Concerning Members of the Management Board (Vorstand) and
the Supervisory Board (Aufsichtsrat) of Deutsche Bank and Members of the Board
of Directors and
the Executive Officers of Purchaser
DEUTSCHE BANK AG
Set forth below are the name, citizenship, business address and current
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of the members of the Management
Board and the Supervisory Board of Deutsche Bank. Unless otherwise indicated,
each person is a citizen of the Federal Republic of Germany. Unless otherwise
noted, the business address of each such person is Deutsche Bank AG,
Taunusanlage 12, 60325 Frankfurt, Federal Republic of Germany. Unless
otherwise indicated, each such person has held his or her present position as
set forth below for the past five years.
<TABLE>
<CAPTION>
Position with Deutsche Bank;
Name and Address Material Positions Held During the Past Five Years
---------------- --------------------------------------------------
<C> <S>
Management Board
Dr. Josef Ackermann........ Member of the Board of Management, Deutsche Bank
AG (since 1996); previously Member of the
Executive Board, Credit Suisse Holding AG; Citizen
of Switzerland.
Carl L. Von Boehm-Bezing... Member of the Board of Management, Deutsche Bank
AG.
Dr. Rolf-E. Breuer......... Member of the Board of Management, Deutsche Bank
AG.
Dr. Thomas R. Fischer...... Member of the Board of Management, Deutsche Bank
AG (since 1999); Chairman of the Management Board
of Landesgirokasse Stuttgart (1996-1999);
previously Vice-Chairman of the Management Board
of Landesgirokasse Stuttgart.
Dr. Tessen von Heydebreck.. Member of the Board of Management, Deutsche Bank
AG.
Hermann-Josef Lamberti..... Member of the Board of Management, Deutsche Bank
AG (since 1999); previously head of IBM Germany.
Edson Mitchell............. Member of the Board of Management, Deutsche Bank
AG (since June 2000); previously Managing
Director, Global Markets, Deutsche Bank Group;
Citizen of the United States.
Michael Phillip............ Member of the Board of Management, Deutsche Bank
Group (since June 2000); previously Managing
Director, Global Equities, Deutsche Bank Group;
Citizen of the United States.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
Position with Deutsche
Bank;
Material Positions Held
During the Past Five
Name and Address Years
---------------- -----------------------
<C> <S>
Supervisory Board
Hilmar Kopper.......................................... Chairman, Supervisory
Board (since May 1997);
previously Member of the
Board of Management,
Deutsche Bank AG.
Heidrun Forster*....................................... Deputy Chairperson,
Supervisory Board;
Employee of Deutsche
Bank AG.
Dr. Karl-Hermann Baumann............................... Member, Supervisory
Board; Chairman of the
Supervisory Board of
Siemens
Aktiengesellschaft
since February 1998;
previously Chief
Financial Officer of
Siemens
Aktiengesellschaft.
Heinz Brulls*.......................................... Member, Supervisory
Board; Employee of
Deutsche
Bank AG.
Dr. Ulrich Cartellieri................................. Member, Supervisory
Board; previously Member
of the Board of
Management, Deutsche
Bank AG.
Klaus Funk*............................................ Member, Supervisory
Board; Employee of
Deutsche
Bank AG.
Sabine Horn*........................................... Member, Supervisory
Board; Employee of
Deutsche
Bank AG.
Prof. Dr. Henning Kagermann............................ Member, Supervisory
Board.
Ulrich Kaufmann*....................................... Member, Supervisory
Board; Employee of
Deutsche
Bank AG.
Adolf Kracht........................................... Member, Supervisory
Board; Consultant.
Professor Dr.-Ing. E.h. Dipl.-Ing. Berthold Leibinger.. Member, Supervisory
Board; Chairman of the
Board
of Management of TRUMPF
GmbH + Co. KG.
Dr. Klaus Liesen....................................... Member, Supervisory
Board; Chairman of the
Supervisory Board of
Ruhrgas AG.
Margret Monig-Raane*................................... Member, Supervisory
Board; First Chairperson
of the
Gewerkschaft, Handel,
Banken und
Versicherungen; Employee
of Deutsche Bank AG.
Dr. Michael Otto....................................... Member, Supervisory
Board; Chairman of the
Board
of Management of Otto-
Versand (GmbH & Co.).
Gerhard Renner*........................................ Member, Supervisory
Board; Executive of
Deutsche Angestellten-
Gewerkschaft; Employee
of Deutsche
Bank AG.
Dr. Hermann Scholl..................................... Member, Supervisory
Board; Chairman of
the Board of Management
of Robert Bosch GmbH.
Klaus Schwedler*....................................... Member, Supervisory
Board; Employee of
Deutsche
Bank AG.
Michael Freiherr Truchseb von Wetzhausen*.............. Member, Supervisory
Board; Employee of
Deutsche
Bank AG.
Lothar Wacker*......................................... Member, Supervisory
Board; Employee of
Deutsche
Bank AG.
Dipl.-Ing. Albrecht Woeste............................. Member, Supervisory
Board; Chairman of the
Supervisory Board and
the Shareholders'
Committee
of Henkel KGaA since
1990.
</TABLE>
--------
* elected by the staff
S-2
<PAGE>
DEUTSCHE ACQUISITION CORP.
Set forth below are the name, citizenship, business address and present
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of the directors and executive
officers of Purchaser. Unless otherwise noted, the business address of each
such person is 31 West 52nd Street, New York, New York 10019. Each such
individual listed below is a citizen of the United States of America and has
held his or her present position as set forth below since or subsequent to
Purchaser's incorporation.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name and Position with Material Positions Held During the Past Five
Purchaser Years
---------------------- ----------------------------------------------
<C> <S>
Kevin E. Parker................ Managing Director, Global Equities, Deutsche
(Director and President) Bank Group (since June 1997); previously Chief
Information Officer, Morgan Stanley.
Thomas A. Curtis............... Head of Corporate and Regulatory Affairs,
Deutsche Bank Group-Americas
(Director and Vice President) (since September 2000); previously Director
and Counsel, Deutsche Bank AG New York.
Michelle Schwabe............... Chief Operating Officer, Deutsche Bank Group-
Americas (since April 2000);
(Director) previously Managing Director, Global Equities,
Deutsche Bank Group.
James T. Byrne, Jr. ........... Office of the Secretary, Deutsche Bank Group-
Americas (since June 1999;
previously Senior Vice President and
(Secretary) Secretary, Bankers Trust Corporation.
130 Liberty Street, 33rd Floor
New York, New York 10006
Office of the Secretary, Deutsche Bank Group-
Sandra L. West................. Americas (since June 1999);
(Assistant Secretary) previously Assistant Secretary, Bankers Trust
130 Liberty Street, 33rd Floor Corporation.
New York, New York 10006
</TABLE>
S-3
<PAGE>
Manually signed facsimile copies of the letter of transmittal, properly
completed and duly executed, will be accepted. The letter of transmittal,
certificates for Shares and any other required documents should be sent by
each stockholder of NDB or such stockholder's broker-dealer commercial bank,
trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Overnight Courier: By Mail: By Hand:
Reorganization
Department Reorganization Department Reorganization Department
85 Challenger Road P.O. Box 3301 120 Broadway, 13th Floor
Mail Stop--Reorg. South Hackensack, NJ 07606 New York, NY 10271
Ridgefield Park, NJ
07660
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions only)
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
Any questions or requests for assistance or additional copies of the offer
to purchase and the letter of transmittal may be directed to the Information
Agent at its telephone number and location listed below. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the offer.
The Information Agent for the Offer is:
[GEORGESON SHAREHOLDER COMMUNICATIONS INC.]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
[Deutsche Banc Alex. Brown]
Deutsche Bank Securities Inc.
130 Liberty Street, 33rd Floor
New York, New York 10006
Call Toll Free: (877) 305-4919
