CONFORMED COPY
NATIONAL DISCOUNT BROKERS GROUP, INC
10 Exchange Place Centre
Jersey City, New Jersey 07302
June 15, 2000
Deutsche Bank AG
Taunusanlage 12
60325 Frankfurt
Germany
Ladies and Gentlemen:
We are writing to memorialize our understanding concerning the involvement by
National Discount Brokers Group, Inc. or any of its broker-dealer subsidiaries
(collectively, "NDB") in underwritten offerings of common stock for which you or
any of your Affiliates (collectively, "DB") shall serve as book-running or a
joint book-running managing underwriter. Any capitalized term used but not
otherwise defined in this letter agreement (this "Letter Agreement") shall have
the meaning set forth in the Stockholder Agreement, dated as of the date hereof,
between NDB and DB (collectively, the "Parties"). It is an express condition to
the consummation of the Securities Purchase Agreement that the Parties enter
into this Letter Agreement and the transactions contemplated hereby.
1. Participation in Qualified Offerings. (a) If DB (the "Managing Affiliate") is
the book-running or a joint book-running managing underwriter in an initial
public offering of equity securities in the United States, and seeks to
distribute in the United States through a U.S. On-Line Discount Broker all or
any portion of such equity securities (a "Qualified Exclusive Offering"), then
DB shall invite NDB (an "Invitation") to participate, subject to applicable law,
in such Qualified Exclusive Offering as a member of the underwriting syndicate
or the selling group, as determined by the Managing Affiliate in its sole
discretion.
(b) For purposes of this Letter Agreement, "U.S. On-Line Discount Broker" means
a securities brokerage firm that (i) is either located within or otherwise doing
business in the United States; (ii) is duly licensed as a broker-dealer with the
U.S. Securities and Exchange Commission and is a member of the National
Association of Securities Dealers, Inc.; (iii) does not employ account
executives or registered representatives who (A) are assigned to, and
responsible for maintaining relationships with, customers for the purpose of
providing advised brokerage and trade execution services (whether provided in
person or electronically and whether general or trade-specific) or (B) are
compensated with a portion of the commissions earned for any trade execution
services performed for such customers; (iv) offers its customers the ability to
execute securities trades directly through computerized on-line or other
electronic or wireless execution systems, including, without limitation, the
Internet and IVR, without the direct assistance or recommendation of any account
executive or registered representative; and (v) generally charges its customers
a lower cost for its services than is customarily charged in the relevant market
for brokerage services by full service advised brokerage firms taking into
account commission charges, account investment advisory fees and such other
charges and fees and minimum balance requirements. The term "U.S. On-Line
Discount Broker" shall include, without limitation, any entity listed on a
schedule to be prepared from time to time by the Parties, as amended from time
to time by mutual consent of the Parties. Such schedule shall not include DB
Alex. Brown LLC or Deutsche Bank Securities, Inc. or any of their respective
successors.
(c) The Managing Affiliate shall not allocate shares in any Qualified Exclusive
Offering to any U.S. On-Line Discount Broker other than NDB; provided, that the
foregoing limitation shall not apply to (i) any allocation by a joint
book-running managing underwriter (other than the Managing Affiliate) for such
Qualified Exclusive Offering to a U.S. On-Line Discount Broker other than NDB;
and (ii) any allocation by the Managing Affiliate to (A) any U.S. On-Line
Discount Broker that is an Affiliate of any co-managing underwriter (other than
the Managing Affiliate); (B) any U.S. On-Line Discount Broker other than NDB, if
the issuer so directs the Managing Affiliate; or (C) any broker-dealer other
than a U.S.On-Line Discount Broker, including any such broker-dealer that uses
computerized on-line or other electronic execution systems, without prejudice in
each case specified in clauses (A), (B) and (C) above to NDB's right hereunder
to participate in such Qualified Exclusive Offering.
(d) The Managing Affiliate shall, in good faith, consider inviting NDB to
participate in any equity offering that has a retail component (other than a
Qualified Exclusive Offering) where the Managing Affiliate is a book-running or
joint book-running managing underwriter and seeks to distribute in the United
States through a U.S. On-Line Discount Broker all or any portion of such equity
securities (a "Qualified Good Faith Offering" and, collectively with a Qualified
Exclusive Offering, a "Qualified Offering").
(e) Notwithstanding paragraph (a), (c) or (d) above, the Managing Affiliate
shall not be obligated to extend an Invitation to NDB in the event the issuer
objects to the inclusion of NDB in such offering. The Managing Affiliate shall
notify NDB of such objection promptly.
(f) Each Invitation shall take the form of a terms telex customary in form and
scope to similar communications used for the purpose of forming underwriting
syndicates or selling groups (as the case may be) in similar offerings and shall
be extended to NDB as and when extended to each other proposed members of the
underwriting syndicate or selling group (as the case may be) in the related
Qualified Offering.
(g) The Managing Affiliate shall circulate to NDB copies, in Adobe Acrobat
(".pdf") or equivalent "read only" electronic format, of each preliminary
prospectus, final prospectus and amendments or supplements thereto to be used in
connection with each Qualified Offering in which NDB agrees to participate. Such
documents shall be provided to NDB at such times as they are made available in
written or electronic format to other members of the underwriting syndicate or
selling group (as the case may be). Subject to the terms of any agreement among
underwriters, underwriting agreement or selling group agreement applicable to
such Qualified Offering, NDB shall have complete discretion concerning NDB
customer accounts to which shares in the Qualified Offering are sold and the
number of shares sold to a particular NDB account and not be required to divulge
to the Managing Affiliate or any underwriting syndicate member information
relating to any individual customer's participation in the Qualified Offering or
any other proprietary customer or technological information; provided, however,
that NDB shall promptly upon request by the Managing Affiliate provide such
information with respect to NDB's participation in any Qualified Offering,
including customer account information, to the extent (and only to the extent)
as is necessary for purposes of complying with any law, regulation or request of
the issuer or of any Governmental Entity, including for these purposes the NASD,
the New York Stock Exchange, Inc. and any U.S. or foreign exchange on which any
equity securities distributed as part of a Qualified Offering may be listed;
provided, however, that any such request contemplated hereby shall be subject to
any and all customary confidentiality agreements that may exist between NDB (or
any of its Affiliates) and a customer of NDB (or any of its Affiliates) prior to
the date of such request.
(h) This Letter Agreement shall not in any way restrict NDB from participating
as an underwriter or selling group member in any offering regardless of whether
DB is the book-running or a joint book-running managing underwriter or
otherwise. Except as expressly required hereunder, DB shall not be prohibited
from participating as an underwriter or selling group member in any offering in
which NDB is neither an underwriter nor a selling group member.
2. Disclaimer. This Letter Agreement is being entered into in order to outline
the Parties' working relationship for any Qualified Offering in general, and
therefore does not evidence an obligation of the Parties to purchase, sell or
underwrite securities for any particular issuer or offering. Neither NDB nor any
of NDB's accounts has offered to purchase or has agreed to purchase any
particular security in connection with this Letter Agreement. The Parties agree
that, subject to the terms of this Letter Agreement and each Invitation, to the
extent NDB accepts any such Invitation, NDB's obligation to underwrite
securities and right to derive compensation in connection with any Qualified
Offering shall be consistent with the terms applicable to the other underwriters
or selling group members in such Qualified Offering as such terms are specified
in the final prospectus and terms telex concerning the Qualified Offering and in
the underwriting agreement, agreement among underwriters and selected dealers
agreement applicable to such Qualified Offering.
3. Publicity. NDB and DB shall jointly advertise or market the arrangements
relating to this Letter Agreement and their participation in a Qualified
Offering. Notwithstanding the foregoing, the Parties understand and agree that
DB's private presentation materials for its issuer clients do not require
pre-clearance from NDB, except as they pertain to NDB. DB and NDB agree not to
disclose this Letter Agreement in any manner and further agree not to make
copies available to any third party without the prior written consent of the
other Party to this Letter Agreement, except as required by law. In the event
that either Party is requested pursuant to, or required by, applicable law or
regulation or by legal process to disclose this Letter Agreement it shall
promptly inform the other Party of such request or requirement in order to
enable the Parties jointly to seek an appropriate protective order or other
remedy, or to resist or narrow the scope of such request or legal process. In
any such event, each Party agrees to use its reasonable best efforts to obtain
from the Party to whom disclosure is made written assurances that this Letter
Agreement will be accorded confidential treatment.
4. Termination. (a) Either Party may terminate this Letter Agreement by written
notice to the other Party (i) upon the occurrence of a For Cause Termination
Event with respect to the other Party; or (ii) upon the giving of a notice of
termination, by any party, of any of the other Joint Venture Agreements
delivered not less than 30 days prior to the effective date of termination set
forth in such notice; provided that the rights and obligations set forth in
Sections 2, 3 and 4 shall survive termination of this Agreement; and provided
further, that no such termination shall relieve NDB or DB of liability it may
have incurred hereunder prior to such termination. Except as otherwise provided
in this Letter Agreement, upon termination or expiration of this Letter
Agreement for any reason, all rights of NDB hereunder shall terminate and NDB
shall delete or destroy any and all materials, as contemplated by Paragraph 1(g)
above, in NDB's possession, custody or control and provide written confirmation
of such deletion or destruction to DB within 30 days of such termination or
expiration and NDB shall not use such material for any purpose. The rights of
each Party under this Section 4 are without prejudice to any other rights of the
parties pursuant to this Letter Agreement or otherwise and shall not be affected
by any dispute between the parties with respect to this Letter Agreement or any
other matter.
(b) For purposes of this Letter Agreement, "For Cause Termination Event" means,
with respect to any Party, (i) a material breach by such Party or any of its
Affiliates of any covenant contained in this Agreement, which breach shall not
have been cured within 90 days following delivery of a notice in writing to the
breaching party that specifies in detail the matter constituting such breach and
such action as may be reasonably required to effect its cure; (ii) an Insolvency
Event of the non-terminating Party; and (iii) a Change in Control of the
non-terminating Party.
(c) For purposes of this Letter Agreement, "Insolvency Event" means with respect
to any Person, any of the following: (i) such Person is dissolved, (ii) an order
for relief against such Person is entered, if in the United States, under
Chapter 11 of the federal bankruptcy law or, if not in the United States, under
any applicable statute providing generally for relief comparable to that
provided by the United States federal bankruptcy law ("Foreign Bankruptcy Law"),
(iii) such Person makes a general assignment for the benefit of creditors or
other marshaling of assets and liabilities of such Person, (iv) such Person
files a voluntary petition under the federal bankruptcy law or Foreign
Bankruptcy Law, (v) such Person files a petition or answer seeking for such
Person any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, other winding up or similar relief under any statute, law, or
regulation, whether or not involving insolvency or bankruptcy, (vi) such Person
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against such Person in any proceeding of this
nature, (vii) such Person seeks, consents to, or acquiesces in the appointment
of a trustee, receiver or liquidator of such Person or of all or any substantial
part of such Person's assets and properties, (viii) within 60 days after the
commencement of any proceeding against such Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, other winding
up or similar relief under any statute, law or regulation, whether or not
involving insolvency or bankruptcy, such proceeding has not been dismissed or
(ix) within 60 days after the appointment without such Person's consent or
acquiescence of a trustee, receiver or liquidator of such Person or of all or
any substantial part of such Person's properties, such appointment is not
vacated or stayed, or within 60 days after the expiration of any such stay, the
appointment is not vacated.
5. Assignment. Neither Party shall assign this Letter Agreement without the
other Party's prior written consent, which consent may be withheld in the other
Party's sole discretion. Any purported assignment in violation of this Paragraph
5 shall be null and void.
6. Miscellaneous. (a) The notice provisions of the Securities Purchase Agreement
shall apply to this Letter Agreement.
(b) Nothing contained herein shall make the Parties partners or render any of
them liable to make payments not expressly identified or referred to in this
Letter Agreement.
(c) The Parties hereby agree that this Letter Agreement, and the respective
rights, duties and obligations of the parties hereunder, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws thereunder.
(d) If any provision of this Letter Agreement is held invalid or otherwise
unenforceable, the enforceability of the remaining provisions shall not be
impaired thereby.
(e) The failure by any Party to exercise any right provided for herein shall not
be deemed a waiver of any right hereunder.
(f) Each Party agrees to bear its own expenses in connection with this Letter
Agreement and the transactions contemplated hereby.
(g) This Letter Agreement sets forth the entire understanding of the Parties as
to its subject matter and may not be modified except in a writing executed by
both Parties. In particular, this Letter Agreement supersedes the letter of
intent, dated March 27, 2000, between NDB and Deutsche Bank Americas Holding
Corporation, with respect to the subject matter hereof, among other matters.
(h) No waiver by either Party of a breach of any provision of this Letter
Agreement by the other Party shall operate or be construed as a waiver of any
subsequent breach.
(i) This Letter Agreement and any exhibit hereto may be executed in multiple
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument. One or more counterparts of this
Letter Agreement or any exhibit hereto may be delivered via telecopier, with the
intention that they shall have the same effect as an original counterpart
hereof.
Sincerely,
National Discount Brokers Group, Inc.
By: /s/ Arthur Kontos
-----------------
Name: Arthur Kontos
Title: President and Chief Executive Officer
Agreed and acknowledged as of the date set forth above:
Deutsche Bank AG
By: /s/ Thomas A. Curtis
---------------------
Name: Thomas A. Curtis
Title: Attorney-In-Fact
